Croplands are monocultures. Jungles are diverse. Which is better?
Photo: M. Connors. Source: Morguefile
It depends on what you want. If you’re looking to get as much food as possible with the least energy input, then you want managed fields. On the other hand, if you’re looking for new types of plants that can survive the stresses and strains of nature, then you want a diverse wilderness.
I thought about this while considering China’s state-managed capitalism in comparison to America’s entrepreneurial system. There is no question that China emerged first from the global recession with their massive state spending. And by importing machinery from Germany and coal from Australia, they helped pull those economies out of the downturn as well. As some observers have noted, there’s a certain appeal to this: the country’s leaders can just say “go” and everything takes off.
But there is a downside to this kind of management. Such economies do fine when it comes to implementing established processes. But to develop totally new ideas, you want a network of innovative trailblazers who can envision a reality that doesn’t even exist yet. Consider the Kindle or the iPad. Before Apple or Amazon came out with their blockbuster products, e-readers and tablet computers were curiosities. Now they’ve transformed publishing and home computing. And China’s transition from export-powerhouse to consumer-driven service economy isn’t going as quickly as its leaders hoped.
Managed systems are productive but brittle. A major change in conditions can destroy a whole crop, or much of an economy. Diverse systems are confusing but highly productive in their own way: a lot goes on in the jungle. And they react to disruptions quickly. When it comes to economics, our diversity really is our strength.
Douglas Tengdin, CFA
Charter Trust Company