Waiting for a Crisis

March 09, 2021

I'm currently reading The Shock Doctrine by Naomi Klein where she repaints the impact of US economic influence on South American policies.

A quote from Chicago School economist Milton Friedman:

Only a crisis - actual or perceived - produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes the politically inevitable.

This is a powerful idea that can be applied much more broadly. When a situation is sufficiently special or unique, the constraints and rules in place can be deemed inadequate to address it. This can give us permission to suspend them without consensus.

During this period of suspension policies and ideas can be applied without rigorous review, opening the door for what may come. In South America's case what followed was both unfettered capitalism and genocide. For a crisis such as Covid it was innovation and reduction of wasteful value chain activities. Or a fresh look at how to manage social programs.

The concept of having ideas "lying around" waiting for the right implementation environment is akin to experimentation which is what fuels innovation. Some theories are so big that they require special environments and circumstances to be tested out while others have ready playgrounds. The key to not missing out on the big ideas is to avoid letting the opportunity to test it out pass you buy. This, as was the case in South America, may result in ethical dilemmas.