Why simplicity is the solution to the world’s complex problems

PUBLISHED : Monday, 25 July, 2016, 11:01am
UPDATED : Tuesday, 26 July, 2016, 10:31am

Here is my contrarian tip for preparing kids to compete in the modern knowledge economy: raise ‘em dumb. They will get richer and may help prevent world war three.

This seems, on the surface, an unreasonable approach. The modern world is increasingly complex, and the knowledgeable and intelligent have an economic edge. Thus the entire parenting and educational infrastructure is geared towards making the next generation as smart as possible.

The latest advice from cognitive psychologists is that we start reading to kids – as infants. Give them simple puzzles by one year. Ask “what if” questions to encourage abstract thinking and expose them to multifaceted narratives. If they ask why the sky is blue, let them know that it has to do with molecules in the air scattering blue light more than red.

Raising excruciatingly clever kids has been a successful strategy for the past few generations. These are the types of kids who could breeze through one of those physics-blender questions to get a job at Google.

A generation previously, your whizkid may have worshipped, for example, at the altar of Efficient Market Theory. The math behind EMT is impressively rigorous and complex, giving followers a feeling of superiority and exclusivity.

But these days the EMT’s math is mocked as stardust that blinded followers from the obvious: that markets aren’t always efficient at all.

This is why we want to raise kids who... think big picture, who can master simplicity and synthesis

There is a backlash against complexity. Any system that is unnecessarily complicated deserves to fall under suspicion, because such systems add to life stress and distrust in elites.

This is why we want to raise kids who... okay I was kidding about “dumb”. But kids who think big picture, who can master simplicity and synthesis.

Going forward, there will be fewer career promotions for thinking up complex financial products, or phone-menu options on customer service lines requiring Hieroglyphic-deciphering skills. The spoils will increasingly go to the simplifiers. This principle will hold true even in fields that are necessarily complex.

Let’s say your child is to become an accountant. If this junior bean counter works in a country with International Financial Reporting Standards (IFRS), like Hong Kong, he or she will have to know roughly 2,500 pages of accounting code, presumably a lot more than 50 years ago, when companies scarcely ever used derivatives.

But if this budding accountant wants to work on Wall Street, he or she will need to familiarise themselves with at least 20,000 pages of code under Generally Accepted Accounting Principles (GAAP).

Why is GAAP so much more complex? Because it is a rules-based system, and thus a zillion rules are required to cover every possible scenario. IFRS is a principles-based system – learn the principle and use good judgement in applying it.

I would like to raise a kid who recognises that GAAP is inferior. A child who can suggest ways to make systems easier to negotiate, to cut out the red tape and layers of lawyers.

Admittedly, so far I’m having trouble getting my teenager interested in the IFRS vs GAAP debate. But she has been interested in Donald J. Trump – why, she would like to know, are her fellow US citizens going to possibly elect this man as president?

And part of it, I am certain, has to do with the backlash against complexity. Trump offers the allure of simple solutions combined with a protest against those Einsteins who made life so hard in the first place. The constantly multiplying levels of complexity in modern systems are adding to inequality and to distrust in institutions. Does the US tax code, or the European Union rules on salt in cheese, really need to be as complex as they are? Does one really have to be a PhD in engineering to work a TV remote control?

The next generation cannot afford to be smart in the old way. No more Derrida or Foucault, no more EMT, no more spiffy multi-layered financial vehicles. Our future intellects will have to come up with clever ways to make systems more transparent and straightforward.

If the educated don’t start making life simpler, then the rabble-rousing masses will. Just like they did in the last great backlash against modernity – the first world war.

Cathy Holcombe is a Hong Kong based financial writer