"While it is tempting to identify a political, emotional, or economic factor as the root cause of our structural troubles - human greed, poor enforcement of regulations, Federal Reserve policies, etc. - I think a compelling case can be made that the one dynamic that ties all the other causal factors together is diminishing returns. The key driver of diminishing returns is easy to understand. We naturally continue to do more of what was successful in the past. As the returns decline, we redouble our efforts, confident that what worked in the past will once again be successful if only we invest more labor, energy, and capital ... Eventually, returns decline to zero or even negative territory, and doing more of what worked well in the past fails in a spectacular fashion ... For example, if regulating the financial sector worked in the past, then let’s do more of it. Thus the Glass-Steagall Act, at 37 pages in length, was the inspiration for the 2,319-page Dodd-Frank Wall Street Reform and Consumer Protection Act ... The $1 trillion F-35 Lightning fighter aircraft program is an excellent illustration of the dynamic. Despite claims by the contractor to the contrary, numerous reports of fundamental inadequacies continue to surface even as delays and cost-overruns have driven the fly-away cost of each fighter to over $200 million each ... By comparison, the previous top-line U.S. aircraft, the F-18 Super Hornet, costs $57 million each. In the view of many defense analysts, the F-35 is decidedly inferior to the aircraft it is replacing. We might expect that an aircraft that costs almost four times more would be four times more capable than the previous generation. Instead, the complexity of the aircraft is yielding such severely diminishing returns that the new aircraft may prove less capable than upgraded F-18 Super Hornets in real-world air-to-air combat and bombing missions ... Anyone pointing out diminishing returns within an organization risks being sacrificed as the messenger of unwelcome news: shunned, demoted, or discredited. There are too many masses of inertia and too many people with stakes in the current system to welcome radical changes and potentially risky attempts at transformation."
Zum Artikel von Charles Hugh Smith, erschienen auf Peak Prosperity (4. November 2013) »
Zum Artikel von Charles Hugh Smith, erschienen auf Peak Prosperity (4. November 2013) »
