SFI President and Distinguished Professor Geoffrey West talked with the Update on January 28 about the outlook for the Institute in 2009.
Update: You did a lot of traveling this last year – China, Dubai, Ireland, Argentina, to name a few. What impressions did your travels leave you with?
Geoffrey: I have done a lot of traveling. It has been a combination of my own work and, as always, promoting the Institute. I
was in Dubai for a world thought leaders forum for major players in Middle Eastern business. Among the other speakers were the likes of Rudolph Giuliani, Mohamed El-Baradei, the head of the World Bank, the explorer and adventurer Sir Ranulf Fiennes, and so on. It was the third year of this event, but I thought it was interesting and quite surprising that I was the first scientist they’ve invited to speak. I think that’s a recognition of SFI’s scientific reputation and its perceived relationship to the major questions facing society and the world today.
One thing that stood out for me was the extraordinary contrast between Dubai as a sort of fantasy land versus the enormous challenges facing the planet. You would never know there might be serious global challenges or shortages of anything anywhere in the world. Unabashed growth and conspicuous consumption permeate the culture of the city. It is a very interesting and truly extraordinary experiment that we ought to be studying! On the other end of the spectrum was Dublin. I was there to talk about complexity and my own work in a public lecture at the Irish Royal Society. Ireland went through an economic miracle in the 1990s but now is suffering tremendously from the global economic crisis. There is a climate of fear developing and a consciousness of the fragility of the social infrastructure, and, in contrast to Dubai, all the questions about long-term sustainability and stability are staring you in the face.
To me these experiences reinforce the need for the kind of thinking that goes on at SFI, and even more important, the need to provide an environment for bringing people together to start to think seriously about these issues.
Update: You’ve announced that you are stepping down. We have a new U.S. president with a different approach to science. The mortgage crisis has become a global financial meltdown. And the Institute is dealing with its own financial difficulties. What will be the net effect of all this on SFI?
Geoffrey: The great irony of what has happened to SFI because of the market meltdown is this: What has been one of the greatest strengths of SFI – the diversity of our revenue sources – has made us uncomfortably vulnerable to the downturn. By design, a significant portion of our support comes from private sources, and this strategy has given us the freedom to pursue research that is often very dif cult to support in conventional academic settings or through federal agencies. We explore questions that are typically a bit more risky, a bit more speculative, and promote thinking broadly about some of the big questions. The freedom to do so has unquestionably been one of the major ingredients of our success.
However, in these unusual circumstances, we are more vulnerable than most research organizations that rely primarily on government funding. Many of our donors are tied very strongly to the financial market, and as they suffer, we suffer. As the end of 2008 approached some of our donors delayed their end-of-year gifts, and by the end of January it was clear that this shortfall for 2008 will result in a potentially serious cash ow problem in 2009.
This put us in a precarious position. We’ve acted as quickly as possible to understand the problem and to work out various possible scenarios. In an anticipatory move last August as the mortgage crisis began looking serious, our nance committee acted quickly to formulate a 10 percent budget cut, which we enacted in early October. Its major components were a salary freeze, a halt of capital construction and renovation, and cutting back on any extra expenditures.
By January it became clear that we needed to take additional measures to avoid putting the Institute seriously at risk. So we began planning for a second 10 percent cut for 2009.
To put the situation in perspective, our effective budget is approximately $11.5 million, of which about 50 percent is from funds committed for specific projects – if we don’t do the work, we don’t receive the funding. So only about $6 million is what could be considered discretionary spending. We’ve already made the first 10 percent overall cut – about $1 million – and we are now initiating a second 10 percent cut – another $1 million. Inevitably, this is going to have some very serious consequences and require some great sacrifices.
Update: How will this affect SFI’s research?
Geoffrey: The bottom line is that cuts were made on the basis of two major philosophical premises. First, preserve SFI’s scientific activity as much as possible, because that’s who we are, and second, protect jobs whenever possible. We’ll continue to work within these parameters. (See “SFI budget cuts” at right.)
One of the things I can assure the Institute’s community is that the effects on science will be minimized. We may not have quite as many workshops or be able to support quite as many visitors, but the work of the Institute, which has grown extraordinarily in the last two to three years, will be maintained at a high level. Our proposed cuts represent in excess of a 25 percent cut in the “discretionary” part of the budget but will only result in a less than 5 percent cut in scientific activity. However, the proposed cuts cannot be maintained indefinitely and a vigorous search for new revenues is under way.
The overall impact of the Institute is growing at a very impressive rate, so it is particularly ironic that, at the very time that SFI thinking is most needed, we’re having to cut back. Having said that, crises always bring opportunities. One of the things we can do as a community is spread the message that we need SFI-style thinking now more than ever.
Update: Any good news on the horizon?
Geoffrey: The obvious answer is the stimulus package. One of the things I fear, however, is that the vast majority of new science funding will be for equipment, infrastructure, and existing research projects, and there will be precious little for new thinking. The counter to that, however, is that the President has made some marvelous choices in his scientific team – for example, John Holdren as his science advisor and Steven Chu as the Energy Secretary. I am confident that these people will bring to the table a longer-term vision. And, of course, I believe SFI through its science should be playing a role in influencing some of the thinking in the administration. One of the things we will try to do is not only go to the agencies at the grassroots level, but also try to inform policy through our research.
More important, and in fact critical to us, is that some of the issues we are talking about – the market meltdown is one of them – arise because of the propensity of stove-pipe thinking and the lack of a more systemic integrated approach. There is hope we will start seeing more money going into global warming, the environment, energy problems, questions of urbanization, and understanding the problems with bank lending – what SFI researcher John Geanakoplos termed “the leverage cycle.” But if funding comes as it has been, in disconnected, highly focused pieces, we may just be fueling the problem. A stimulus package obviously is needed. But without a big vision of the integrated whole – seeing these problems as complex systems, which may lead to unintended consequences, sensitivity to initial conditions, small effects over here having huge effects over there, and so on – we run the risk of repeating past mistakes.
A good example is provided by what I heard in Dublin last week where people were telling me that the doom and gloom they are experiencing was the result of a problem that had to do with how mortgages were financed in this country. This is a marvelous example of the infamous metaphorical buttery effect. Let’s face it, subprime mortgages are an infinitesimal, relatively localized component of the total U.S. economy, and yet they’ve initiated an enormous long-range effect (in both space and time), not only on the U.S. economy, but on the economies of Ireland, Iceland, the U.K., etc., and, in fact, on almost every other problem we’re facing! Because all of these problems are coupled and highly interrelated. And if we don’t start thinking in those terms, we may be doomed to repeat the same problems.
As a physicist, it is tempting to view the financial crisis as having some of the well- known characteristics of a phase transition or tipping point (as when water freezes to ice). We are beginning to see large fluctuations and the subsequent development of an extraordinary long-range order that we now call the global economic meltdown, which has somehow connected the well being of Dub- liners to a mortgage company in Indianapolis, and so on. This is the language of physics. But we must do more than talk metaphorically about tipping points and phase transitions. The real question is can we put this into a serious scientific framework that is quantitative, testable, and predictive? This is the kind of conversation we are facilitating at SFI.
Update: What do you see as some of the most promising SFI research ventures in 2009?
Geoffrey: I just alluded to some of the research in understanding financial markets and risk. For example, the work of Doyne Farmer is very timely – both the financial markets work and the work on metrics for innovation, performance curves, and so forth. This is important in terms of assessing new technology that may help us come to grips with a number of environmental and resource questions. A related problem is to continue to develop ideas around the growth and decline of social organizations, such as corporations, and especially those of cities. Urbanization dominates the planet and cities are the primary source of most of our problems, but also the source of their solutions. We desperately need to develop a serious quantitative theory of urbanization that incorporates theories of innovation and adaptation.
Consolidating the work that Sam Bowles is involved in – understanding altruism and social behavior – is clearly important as is our work on the underlying foundations of conflict where we are beginning a major new initiative. Other new initiatives that could have interesting implications include law as a complex system (with the Kauffman Foundation) and the intersection of history with complexity. All of these could be big winners. It’s too early to tell, but these are the kinds of questions that are quintessentially SFI. Few people are thinking about these things in quite this way, and yet they are all highly relevant to the world today.
One of the things that unquestionably already is a winner is the renaming of the postdoctoral fellows programs as the Omidyar Fellowship Program. Taking the postdoc program to another level by getting it professionally organized will give it much greater visibility, leading to an even greater impact than it already has. It will position SFI’s program to produce the kinds of minds that we need to attack some of these critical questions. Intellectually this gift couldn’t have come at a better time.
Update: Final thoughts?
Geoffrey: Despite the financial situation, I think this is a fantastic time for the Institute. I think we’re seeing a playing out of the kind of phenomena that are manifested in complex systems. There is a developing recognition in the scientific, corporate, and government communities that this is the time for the kind of transdisciplinary, complex systems thinking associated with SFI to thrive. I think the Institute is well positioned intellectually to take advantage of these conditions.