The Science of Complexity: Understanding the Global Financial Crisis

The Science of Complexity: 
Understanding the Global Financial Crisis
Co-sponsored by Santa Fe Institute and the Krasnow Institute for Advanced Study at George Mason University
May 16-18, 2012, at the new Founders Hall facility at the GMU Arlington, VA campus.

The time-honored formulas of mainstream economics no longer capture the complex dynamics of today’s financial markets. This three-day symposium offers a view of the recent global financial crises from a new perspective—that of complexity science.  Sponsored by two leading complexity research institutes, the symposium will feature several of the world’s most prominent complex systems thinkers.  These experts will offer insights from non-linear dynamics, social networks, systemic risk, experimental economics, self-organized criticality, computational social science, and other areas that are vital not only to understand the current crises but to develop policies that address the underlying causes.   

The program is open to any interested participants, but is particularly designed for professionals in government, business, and the non-profit sectors.

For more information see Register now.

Lunch with Tyler

I had lunch with my colleague (also famous blogger) Tyler Cowen today at a new Indian place in Fairfax. Our conversation drifted all over the map –from the economic crisis to health care to what higher education might actually look like 10-15 years from now.

We also talked about what other countries might be reasonable to live in for academic types such as ourselves if, as seems perhaps less likely now, economic Armageddon ensues. Tyler liked both Mexico and Thailand (the assumptions here are perhaps $40K/year–not the $10M that Tyler was talking about a while ago in his blog–i.e. reality). I mentioned the Netherlands because of their superb and stable social welfare system, but Tyler was quick to disabuse me of that idea–if the US goes, Western Europe will most assuredly go also. Forget “decoupling”.
But, if you consider decoupling, well then Brazil begins to look pretty good according to Tyler (and I agree with him). They make all their own food. They are essentially energy independent, and they don’t do a lot of trade with either the U.S. or China. So they would probably be able to continue, although they would be much poorer.
Well, in that case, I’d definitely chose Sao Paolo, the Los Angeles of Brazil. The only problem with that pointed out Tyler, is that the housing costs would pretty much be the same as here in DC–not really possible on $40K a year.
So I ask you, dear reader–what country would you chose, in case the U.S. goes broke?

Running an Institute during an Economic Downturn

While the current Recession isn’t the first downturn I’ve lead the Institute through, it’s by far the worst. The combination of cascading negative external factors combined with the uncertainties have created a unique set of challenges. On the other hand, this time around, the Institute is well situated in terms of a scientific critical mass, an excellent sponsored research portfolio and the massive (and still growing) infrastructure of George Mason, Virginia’s public Carnegie Research university in the National Capital Area.

Given the times, and the fact that I’ve been director long enough to have seen downturns before, I thought that it might be useful to put down some of the principles that I am using to get us through the current difficult conditions:

1) Budgeting–prioritize to protect the core scientific/academic mission, realizing that with those two intact, all else can be quickly regenerated.

2) Transparency–keep all stakeholders up to date on exactly what is happening, what the current plan is, and where the uncertainties lie. Do this continuously in multiple contexts throughout the crisis. The result is to strengthen morale and to mitigate distracting what-if scenarios that can damage the scientific/academic programs.

3) Maintain a position that will allow for rapid transformation back into growth. While recessions are macro-economic events that affect scientific institutions, the nature of science funding is such that a massive downturn might happen in tandem with significant increases in federal science investment. It’s important to keep that in mind so that the institution is prepared to opportunistically emerge from hunkering down to compete and win new awards.

4) Protect support staff–those who have invested years to support the science of the institution may not be the feed grain, but they are surely the farmers, who through their experience, can both see us through the difficult times and make possible the conditions for scientific success in the future.

5) Fundraising–realize that the continued engagement with those who have given personally to the institution in the past, but may not be able to under the current circumstances, is central to the building of long-term loyalty so central to leadership level gift opportunities.