Opinionista James Blignaut 16 September 2020

Covid-19 has taught us critical lessons about feedback in systems

While the change in South Africa’s GDP because of Covid-19 tells us that we’re a fifth poorer compared with this time in 2019, we are confronted by the question: What are the potential long-term system-wide ramifications of the way in which the virus has been managed? What are the feedback loops?

The streets fell eerily quiet in March. While few ventured a number as to the price tag associated with this ill-surprised stillness, we all knew that it was going to be big, but how big?  Now we know. The South African GDP in real terms for the second quarter of 2020 is estimated at R654-billion compared to R762-billion in the first quarter and R788-billion in the second quarter of 2019. This implies a decline of R135-billion, or 17.1% on a second-quarter to second-quarter basis.

When averaging it out for the country it means that we are almost a fifth poorer, financially that is, than we were last year this time. This 17.1% is in contrast with the well publicised 51% decline, a subject of much debate. While technically and factually correct on an annualised basis, the figure of 51% does overinflate and distort the actual case by some margin. It is not that the country’s GDP is currently half the size it was in the first quarter. The annualised figure means that if the current trajectory and decline continues for another three consecutive quarters, we will then, and only then, have sacrificed half of the GDP. While knowing that we are “only” a fifth poorer than last year and not 50% as generally perceived is some measure of good news, the rot sadly continues.

The GDP is a measure of the change in the country’s income. In short and simplified terms, it is the sum of the country’s payslips, or earnings. It answers the question: how much money did the residents of the country earn during a specific period? It is therefore an important and valuable economic indicator of a change in welfare and partly also of wellbeing.

Often neglected is to realise that such a number is static and narrow. This is no critique against either the use or the estimation of the GDP, rather a caution as to its interpretation. First, it only reflects monetary income earned. It does not say anything about how the income is earned, neither about the consequences of the income earned (either now or in the future) nor about what the income is used for. It is also not saying anything about anything non-monetary, such as pain, anxiety or environmental degradation. Neither does it comprehensively account for illicit trade or any form of barter.

Secondly, it only reflects the income earned during a specific ring-fenced period. It stands neutral to any other period. This leads us to an especially important matter, something about which the GDP as an indicator of income is silent, namely system feedback.

System feedback loops can either be positive, or reinforcing, thus they are patterns that grow a certain stock, like births that lead to a population increase. Feedback loops can also be negative, which are patterns that deplete the stock, such as deaths depleting the number of people in the population.

Let us consider two extremes of an example to illustrate. In 2019 agriculture, forestry and fishing contributed 2.2% to the national GDP. Let us assume a natural disaster strikes and destroys all production. Under a hypothetical Scenario One, let us assume no system feedback. Under such a scenario the economic contraction would only be 2.2% and thus 97.8% of the GDP would still be intact and we should be able to survive such a tragedy.

Under Scenario Two, a scenario with system feedback, we all die because of hunger and the entire economy collapses. While the truth is likely to be somewhere in between the two scenarios since some people might survive due to changes in technology, behavioural patterns and trade, the realised impact will be disproportionate to the size of the actual impact itself. This disproportionate impact is the result of feedback loops.

Looking at the GDP in isolation, without considering the system in which it operates and the associated feedback loops, both positive and negative, is thus nonsensical and it is clearly an error to omit such feedback in any analysis. Sadly though, ignoring feedback and system thresholds can lead to erroneous analyses and policy advice, as discussed herein with reference to the climate crisis.

While there are many reasons to lament the past and grieve the emotional and financial losses while being anxious about the future, a silver lining does exist. Harnessing the power of reconstructive feedback loops can have an equally strong, yet beneficial, impact.

By considering the impact of the climate crisis as a linear benefit cost analysis within the context of how much it will cost to adapt to change vis-à-vis the benefits of adaptation without acknowledging biophysical feedback is potentially disastrous.

While the change in the GDP informs us that we’re a fifth poorer compared with this time last year, we are confronted by the question: what are the potential long-term system-wide ramifications of the way in which the Covid-19 virus has been managed? We note the increased disillusionment of a deceived citizenry. The strong realisation that we cannot trust the government to manage a crisis, a sad reality compounded by the revealed brutality of government’s corruption and heartless incapability, the strengthening of the agricultural sector as the “growth sector in last resort” (a rather dangerous realisation given the political economy within which the sector finds itself), the increase of mass hunger, and malnutrition, as well as society-wide polarisation and nervousness of a people traumatised.

This is but part of the unfolding disproportionate impact of management decisions taken in isolation of systems thinking. 

While there are many reasons to lament the past and grieve the emotional and financial losses while being anxious about the future, a silver lining does exist. Harnessing the power of reconstructive feedback loops can have an equally strong, yet beneficial, impact.

Consider a simple example. A motorbike is stranded due to a malfunctioning part. A small expense of R1,000 rectifies the problem. While paying for and fixing the individual part, the disproportionate but positive impact is the restored functionality of the entire bike and all the mobility, service and opportunity that renders. That is why restoration is more than an act, it is a lifestyle of care, be it for a motorbike, the environment, the economy, or for fellow human beings.

As a society, we will have to dig deep and garner the strength, from each household and community, and deploy a restorative lifestyle of care. The system-wide impacts thereof are vast. Because of the power of system feedback, let us not discard or despise small beginnings. A farmer who starts to produce regeneratively, a community that organises itself to buy locally, a firm that invests in production while strengthening the local value chain, the neighbour who bakes a loaf of bread or a cake for a friend. 

Let us learn that from Covid-19 – feedbacks matter – and there are myriad ways to regenerate our way to the future. DM

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