Time is on our side... or is it not?

Where I live now you find many so-called Saxon farm houses. The Saxons (Saksen in Dutch) used to live in this area, they were moving away from what is now Germany. They were pushed away from there by the Huns who attacked the late Roman empire. The Saxons moved westwards, together with the Angles, another tribe, and went as far as Britain. That explains the term Anglo-Saxon when we talk about Britain. I learned about this when I investigated the past of the place where I live now. The whole process of this move of the Saxons took a few hundred years, but when you read about it in history books it takes one paragraph or even one sentence: "The Saxons decided to move to Brittanica". Can you imagine one Saxon talking to another: "Let's move to Brittanica and build some farmhouses underway". In history books the timescale of events is often a few hundred years. Looking back it is easy to describe the whole picture, it makes sense. Looking forward that is much more difficult.

By the way,there was another reason for the Saxons to move, the climate changed and large parts of their territory was flooded.:

They were chased by the Huns and their lands were flooded. That provided some reason to move. Did they plan for it? 

In general, people don't look that far ahead. Scientific investigations show that time horizons of individuals differ, but in general people look 20 years ahead at most. Often shorter time horizons are much more important, for instance when bankers want to get their bonus at the end of the year or when the president wants to be re-elected after 4 years. But in general people are simply not able to think more than 20 years ahead. Apartheid was abandoned in South Africa in 1994 and people expected a much better country in a few years and did not expect that to take 3 generations or so. The same is true for parts of the former Eastern Germany, where some people wanted to get back to the time of communism, because the change did not come fast enough and in some cases it even got worse. This short term view has of course everything to do with the life expectancy of people. They want to see it happen in their lifetime.

Do we ever plan for the real long term? I think the answer is no. You might give an example like the Delta works in the Netherlands. There was a large flood in the Netherlands in 1953 and after that the government decided to invest in an enormous set of measures that would prevent that ever happening again.  It was designed such that a flood could only take place once every 10,000 years. Is that long term planning? Of course not. If the flood takes place every 10,000 years, the chance of getting it in your life time is less than 1%. That seemed reasonably safe for the decision makers. Shortening the 10,000 years to a substantially shorter period would lead to a risk in their lifetime! And besides, some 50 years later the whole planning turned out to be unreliable, because of the unforeseen circumstance of the rising sea level. But even without unforeseen things people do not look far ahead, it is not part of our nature.

When I worked for Philips in the 1980's and 1990's it was common that money reserved for pensions was transferred to the business result, because the pension pot of gold was too full.  Also the government took money from the pension fund of their employees to do more or less useful things with it. It was not in their mindset that pension money would be needed later on. Worries about the pension funds arose much later. In the same timeframe the existence of Philips Medical Systems (where I worked) was at risk, it made no money and it had no future. It should be closed or sold. Only at the end of the 1990's, in 1997, management realized that healthcare would become more and more important, because of the aging of the people in the western world. From that moment onwards investments were made in Philips Medical. As if a new fact came to the table...

Between 2000 and 2010 changes were made in the pension system, company managements and government realized that people were getting older and that the percentage of older people would grow substantially.Was that a new fact?

After World War 2 the population grew substantially. People that were born in that period are called the baby boom generation. Baby boomers are born between 1945 and 1955. You should expect that it was realized that those people would be getting older over the years and that they would be 65 in the period between 2010 and 2020. None of that. As sketched above the first actions took place at the end of the 1990's. You could simply calculate that things would happen but it was simply out of time horizon of people until that time. A completely predictable event was simply ignored until it came in the 20 years horizon of decision makers. By the way, the decision makers before that time were the baby boomers themselves.

Close to 2040 the percentage of older people will go down again. Did you hear somebody talking about what effect that will have? Within a few years you will, then it becomes important for decision makers because it falls within the 20 years time frame. And most of all, it provides a reason to spend money on things in the next 20 years. Surprise, money wil be available again. Surprise?

Where does that 20 years time horizon come from? It has to do of course with the human life cycle. There is hardly any planning done by individuals in their first 20 years. But when you become an adult you make first steps in a career, find a partner, plan for a family life, etcetera. All with the idea that it will be wonderful and... endless. You are not planning for the end of your career or even worse the end of your life when you are between 20 and 30. It is simply too far out and not part of today. When you are 40-45 years life is still endless, but then you realize that if you still want to achieve something you want you have to do it in the next 20 years. For the first time there is a limited time horizon to do things. Some people ignore these signals, they just continue living their endless life. Others switch their life style, find a new partner, find a new job or whatever. The midlife crisis. There is still plenty of time to build something new. Life is still endless. Only when they are 60-70 years old people realize that life is not endless. Of course they knew that before, but now it becomes personal. Their planning for 20 years ahead becomes uncertain. There is still a kind of taboo discussing that. Hey, you are going to die, how do you deal with that? One of the most important things in life and nobody talks about it. People that have a very bad or even deadly disease are all of a sudden in that phase, no matter what their age is and that may change their view on life completely. But that is a different subject. Anyway, the 20 years time horizon you also find back in peoples individual planning.

Sometimes, you hear politicians say: "We have to think about the effect of our decisions on the life of our children and even our grandchildren". As if their vision goes beyond the ultimate horizon. None of that, they simply realize that their grandchildren's life still has a large overlap with their own life. They might even blame them for making the wrong decisions.

By now, you got my point I assume. Decision makers only make plans for 20 years. And because that period is already so long there is never a plan B. That brings me to the climate change that is taking place. Do you see the link? Let me go back to the Saxons of the beginning of this blog. They did not start moving to the west when the Huns were coming. They started to defend themselves and strengthen their cities. For tens of years they fought the Huns, a lost battle to start with. And finally they moved to the west. Found out that there were even better places to build their farmhouses. Why did they not realize that in the first place? Why loose so many people in their fights against the Huns? Because they could not imagine the change. Britannica was more than 20 years away. In the mean time their feet got wet also.

Next time more on climate change. Change for the better? Why not? You will read about it in the history books of 2100.

Regards and a great Holiday season from dr.B.