Global Financial and Economical Crisis is a Crisis of Management
Vitali Guitberg, Ph.D.
has been failed by its government and the nation now faces catastrophic
consequences unless that government changes its ways, Wharton management
G. Hrebiniak concludes in his new book, The Mismanagement of America,
Inc.” (August 2008)
THE PROBLEM REASON
A suddenly arisen Global Crisis
is a regrettable, but expected result of continually far-reaching management crises
on all levels of government administration and management of technological processes in
workplaces, and in private life.
Through resent decades, both public
and private life became so complicated that any reasonable decisions in the
management field are as reliable as chiromancy. Unfortunately, this is an
objective reality, and it is does not matter who is the leader and parlamentry
decision makers of a country.
This is proven by the fact that
no national leader or recognized economist is able to provide any coherent
explanation for the origin of this crisis, and show the optimal way to overcome
it. A number of reasons are blamed in mass media for this crisis, such as wasteful
consumption, the tendency of populations to live above their income, bank credit frauds and so on. Of
course, they are not actual reasons, but are consequences of social and
financial mismanagement on a government and personal level.
When any new item comes to
reality, for instance a product comes to the market, it will lead to some
consequences (social and economic), which usually cannot be accurately predictable at a stages of item’s design, because it is practically
impossible to consider all the necessary factors for such prognosis. In many government projects the same thing is
happening, their results demonstrate it rather well. Accumulation of new designs
with many unaccounted social and economical factors is similar to a ripening
abscess, which eventually bursts. This actually occurs to economy in those or
Effectiveness of government designed
and managed economy has still not been proved, taking the countries with such
economies: Cuba, North Korea, Zimbabwe, etc as an example.
rulership by a “grand leader”, who makes only “genius”
decisions, benefits only the leader. In democratic countries their leaders
are selected by the people, but ultimately the leaders make decisions on the
basis of subjective opinions, that are without an accurate prognosis the consequences
are also voluntaristic. Very often we can see that
the political and socio-economical projects did not succeed at the goals or
even have miscarried.
is a huge risk that the regulation of the economy by the government in
democratic countries could lead to the same situation currently present in nondemocratic
When meddling in people's
business with the goal to lead a country to prosperity, it is necessary for the
leader to be sure in achieving a positive result. Unfortunately,
it is clear that leaders do not possess a method for accurate prognosis and for
getting the optimal result even when he makes his decision together with a group
American Congress Debates regarding
the Budget of 2009 demonstrate the opposing opinions of the two main parties.
Republicans argue that the budget is doomed to failure and disaster, while
Democrats welcome it as an eminent achievement. Who could be a reliable arbiter between these parties? Who can propose a more
reliable and optimal Budget?
Who declare that “our world is only
as good or bad as our decisions” obviously have trust in correct decisions that
have to be implemented in real life, but decisions cannot be classified as only
good or bad. On one hand it could be good, but on the other hand it could be
not so good (as used to say Tevye
the Milkman from the “Fiddler
on the Roof” musical). With any decision
regarding a project the result of its implementation should be less “bad” and
more “good”. This is possible only when all necessary factors are taken into
account by the designer of the project. But this is not enough. It is necessary
that the designer has a method for doing it correctly and will be able to utilize
At the present stage of
development in human society, it has become much easier to make global
decisions, because they are always voluntaristic regardless of how many people
participate in the decision making. On the other hand, the implementation of
any global decision will require many executive decisions, which could reverse
the plan (project) originally conceived.
Decision making for a medical
doctor is more complicate, because he has an obligation to find the optimal
medical treatment for the patient, but more frequently doctor is not able to do
it, especially in complicated or/and emergency case.
It is unsurprising then that Hippocrates
demanded to: “not do harm”! He did not believe that the doctor could always do
more. It was in that time when physicians were able to retain knowledge necessary for taking into account important
factors for more or less accurate diagnosis and design close to optimal cure. While
today it is no longer possible for individual physician. Neville W Goodman (consultant anesthetist, Southmead Hospital, Bristol) in his review of book “Doctors' Errors and Mistakes of Medicine: Must Health
Care Deteriorate?” By Moshe Wolman, Ruth Manor (2004) wrote: “Medicine is an uncertain activity, in which there is no
substitute for learning and training on sick patients; it is inevitable
that doctors will make mistakes, and some mistakes will kill people.”
The problem of obtaining of knowledge concerns not only medicine.
It is too risky to depend on one’s extremely limited personal knowledge, which becomes
even smaller next to the avalanche of unsystematic scientific knowledge,
distributed through a large number of sources.
From the methodological point of
view, our consciousness uses an algorithm that is common among all living beings
in Nature. Our consciousness is “programmed” in such a way that it addresses the
current situation by analyzing it, assessing it, determining tasks and actions necessary
to reach previously set goals. The problem is that the determination of all
actions is based on taking into account only those immediate factors, which were
found in the field of view, or suddenly came to mind, and this often makes the prognosis
of the desired results inaccurate. Allocation of priorities is in essence a
process of planning actions, then follows their design, and how these actions
should lead to the designated goals, in a most optimal way.
These processes of a) analyzing
the situation while taking into account all important factors, b) selecting the
most appropriate means or ways to reach goal, c) predicting the effects of the
selected actions and d) the final decision - are the essence
of any designing and designing of administrative actions. The quality of any result
depends on the availability of necessary knowledge and on the method of its
World–famous British futurologist James Martin, who founded
the extraordinary 21st Century School
at the University of Oxford, which now has 15 Institutes, expressed his opinion
in an interview with the magazine “Itogi”, “Century of changes” (#26, June 24, 2008)
that without the establishment of a universal Knowledge Base and System, which
will use artificial intelligence for optimal decision making, humanity will return
to the Stone Age. He affirms that in the nearest
20-30 years world economy will depend more on unity in global network
artificial intelligence modules, than on the cost of petroleum. I do not know
if the time predicted by him is right, but as an author of such unified Knowledge Base that included knowledge of different
applied field, which practically could be as “global Knowledge Base”, I completely
support his opinion regarding their necessity.
Conventional Information systems of Ministries and their databases even in developed countries were mostly created 10-15
years ago even upgrading remain
heavy-handed, and until today have been
used as tools for the development of social programs and political decisions. They
have practically become obsolete since then particularly in methodological use. This is
completely true regarding the existing decision
support systems as well. “Software errors
cost the U.S. economy $60 billion annually in rework, lost
productivity and actual damages” according to a newly released study commissioned by the Department of
Institute of Standards and Technology (NIST).
From the autonomy and compartmentalization of Ministers and
their departments Information systems, very
serious problems in administration arise. As it has been shown by many years of
public experience, the lack of inter-operability
in communication could take a tragic turn, especially in emergency situations,
which require immediate and optimal decision making. John Ozimek, Associate Director, Mi liberty, (London,
March 2009) in his article “Ministers spending billions on unlawful databases” cited the following data: “A report on the Database State (pdf) claims that 40 out of 46 key
government databases are not fit for purpose, and 11 of those are "almost
certainly illegal under human rights or data protection law and should be
scrapped or substantially redesigned”… and also "The current spend on
IT within the UK public sector is over £16bn a year on IT, with (approximately)
£100bn planned for the next five years: yet only about 30 per cent of
government IT projects succeed.”
A common methodological error in
such systems development is the limited utilization of the full technological
capability of available computer technology. Basically, they are just aimed at
the computerization of routine paperwork, but not on the optimization process
itself or its results.
Records standards in databases of different Ministers are
not unified, and due to this there are a lot of data duplications. Interoperability
between such systems with a system-on-system review does not exist and the
systems have accumulated a large number of files with duplicate information
(data), or files with inaccurate and unreliable data.
Constantly growing duplicate files
necessitate large expenses for their storage and processing, require extra
inspection and comparison and records updating in all Ministries’ databases. Unreasonable
demands for the protection of private information have resulted in difficulty
of data access, which is necessary for making the urgent decisions. On the
other hand these demands have opened up splendid opportunities for
falsification, forgery and concealment of crime.
Duplication of personal, private
data in official forms (passport, identification card, medical card, driver’s
license, etc.) is fraught with a lot of mistakes and deliberate fraud. This
situation requires unnecessary maintenance cost and salary expenditures, for
reviewing and correction of data, because without it a thorough search for people
who committed frauds, crime or threatened state
security, would be almost impossible.
problem that exists in Ministries’ databases
is an incompleteness of information necessary for making optimal administrative decisions, but officials
usually do not paying attention to this.
Knowledge for producing optimal
decision requires the availability of necessary and sufficient reliable
current information, but due to unsystematic character of data it is very
difficult to achieve the goal. Only using System Analysis method is it possible
to detect missing data and factors, and have a clear idea about the degree of uncertainty,
when making a decision.
There is no doubt, that the existing method of registering
and storing personal and business information requires a radical improvement,
and the sooner the better, otherwise, we will be left wondering when the next offender,
who committed robbery or terrorist act, will be caught.
In competition between offender and investigator, the
advantage goes to the “troublemaker”, because the registration system helps him
hide his trace.
Developments of former
computerized control system or design (expert) systems in various industrial
fields did not use the methodology that conforms to computer technological facilities;
therefore they did not live up to their developers expectations. This applies
to the information systems currently being designed at a great cost. For
example: methodological approach for design of the Information database named “Electronic
Health (Medical) System”, which is in the process of development and implementation
in almost all developed countries. These systems have to be used as a substitute
of conventional paper-files to Data Base files, but are not able to assist medical
specialists in design of optimal medical treatment.
Although the access to a patient’s
personal health data on a computer could be easier and more reliable compared to
finding the same data in a paper-file, it doesn’t mean that the doctor’s
decision regarding the medical treatment will be optimal. The more information
there is about a patient’s health, the more difficult it will be for the
medical doctor to choose the proper treatment, based on his/her limited
knowledge. This paradox is a result of human nature, because it is not possible
for the human mind to consider more than 5-7 factors simultaneously. This is
why medical doctors’ intuitions based on experience are the main means for
diagnostics and treatments. This is why medicine will never get rid of medical
errors, or even reduces them to a minimum, without using a computerized
Computerized advisors are
necessary in any professional field.
Computer Technologies that are capable of accumulating
authentic information and could be used as a professional advisor/assistant are
THE APPROACH TO THE PROBLEM SOLUTION
As mentioned above, conventional
Expert Systems do not use System (s)
Analysis as a necessary method for optimal decision making, however, such
systems became the barest necessity. The DISK Company of Canada in cooperation with a non-government organization, the “Alliance of Technology and Science Specialists
of Toronto Inc.” (ATSS) have developed a model of the architecture and a
demo-version of the “Nation-wide Intelligent Information and Expert System” (NII&ES),
which includes a universal Knowledge Base – Info-Environment© as the
main part of the system. The system’s implementation was
developed by using the CoSMoS© software complex. This feature allows the
user to get the optimal results from control design.
The System architecture is based
on the general “Methodology of Computerized Systems Analysis and Design” (MCAD)©
It has become more evident that even a new Information
Systems with separate databases connected by external networks, cannot be more
effective than a System with intersystem software interoperability.
Without using Systems Analysis for
evaluating the situation and accounting for all necessary factors, it is not
possible to make the optimal decision, and it is not possible to use the Systems Analysis without the necessary knowledge,
which is very limited for individuals. The NII&ES System as a computerized
designer (advisor, assistant) has become more and more necessary for optimal
decision making. The main part of the system is the universal Knowledge Base,
which accumulates scientific information (knowledge) from different fields of
Science with direct intersystem interoperability between them.
The effectiveness of the proposed
System consists also in the reduction of financial and human
resources on its development, maintenance and improvement, when compared with
separate systems connected by external networks.
An integrated implementation of the
System and Knowledge Base will allow making both of them global and thereby
avoiding the information chaos. Without the proposed computer technology the optimal
decision making on any administration level will not be possible.
Edited by Elijah Guitberg, B.A.