People change – how our robust savings rate shows the genius of systems thinking
The basic idea behind futures analysis is that 1) our whole society is connected in a system 2) trends act on the system 3) people 
act differently due to these changes. This is a more revolutionary concept that you would think; it is met with considerable skepticism. Our culture actively supports the notion that nothing is really systemic, because otherwise it would require complex thinking to understand it, and thus wouldn’t be easily salable to the masses. This is one explanation why our major media rarely approach topics from a systems perspective – they prefer an atomistic approach that prefers celebrities and disjointed headlines to connections.
Regardless, after twelve or so years of this work, I remain steadily convinced that the basic methodology of systems thinking is the way to go if you want to understand what’s next. Because – as stupidly simple as it sounds – people really do change in response to stimuli, as they always have. Take for example our new Asian-style savings rate in the United States – 6.9%, up from 0% in April of 2008. That’s not an incremental change in consumer behavior, it’s a complete revolution in a little more than a year. This is an example of reality outpacing fiction, for if you suggested that the American consumer would on average go from spending like a pack of feral teens on methamphetamine at the mall, mortgaging their children’s future for big screen TVs, to spending nothing and stuffing money in their mattress like a wary old shopkeeper in Hong Kong in just 14 months…well, you had better be pretty convincing to get people to buy it. How did people change so radically in such a short period of time?
Well, the answer couldn’t be simpler. All you need do is scare the bejeezus out of the Boomers, who are facing a structurally uncertain retirement, and BANG, people figure out quickly that your house may be a financial boondoggle, but people still love cold hard CASH. Unsurprisingly, savings accounts begin filling up in ways they haven’t since the World War II generation was at the height if its economic power.
The common myth in America had been such that the Greatest Generation saved cash for a rainy day for the same reasons they beat the Nazis – they were just fantastic, noble, foresighted, brilliant citizens living in a finer age. Of course, this is complete nonsense. The Generation born between 1915 and 1930 was just as venal, dishonest, credulous, and short-sighted as the next batch of humans. Why did they save money where we went nuts at the TV store? There were three main reasons. First, there wasn’t nearly the amount of liquid credit available in the national banking system. Second, many shops did not take credit. And most importantly, they lived through the Depression, when all national governance failed to stop Americans from starving. Basically, they didn’t believe, as many do today, that everything would turn out okay. They knew that complex systems often failed, and many of them literally lost their farms as a result.
Why did Americans start saving all of the sudden? Was it the spirits of their long dead ancestors returned to waggle their fingers in disgust until they were shamed into a 6.9% savings rate? I can’t rule that out, but more importantly credit dried up and people got scared to death. First, credit lines were tightened up, and then people figured out that bad stuff could definitely happen. In other words, two of the systemic requirements for a high national savings rate. The system changed, and then the people responded to the stimuli. Magic.
Question for the week – what are the key parts of your business’s system that could change, and what might it mean for you. If people can start saving 7% on a moment’s notice, they can change in other ways, too.