Part 3: Pathbreaking Conceptual Framework, Three examples

Path dependencies and punctuated equilibriums can come in a variety of settings, ranging from the policy issues that True, et al. (2007) discussed, to war and other catastrophic events, to deliberate strategy. Sometimes, two or more of these situations work together and reinforce the dynamics and effects of a punctuated equilibrium. This part looks at three situations that illustrate the processes and types of situations using the conceptual framework discussed in Part 2.

Overview

This part looks uses three case studies to illustrate the pathbreaking conceptual framework. Since these case studies are complex, they only touch on the highlights to illustrate concepts and key points. Each case study looks at a different type of punctuated equilibrium to help show concepts and techniques. One is a war, whose effects we still feel over a hundred years later. The second is a disruptive technology, who effects we do not not completely know. The final is a current social case that may still present a door for change.

WWI Punctuated Equilibrium

Much of Europe entered WWI with kings. Figure 1 shows nine of these kings in 1910. Interestingly, it does not include Tsar Nicholas II of Russia. By the time WWI ended, three empires ceased and the age of royal power was over.

Figure 9 European Kings 1910

But that was not all that changed because of WWI. I remember standing in a square in Bad Wimpfen one spring day during a hand organ convention. I could vividly imagine this square during the pre-WWI days. It was a sad feeling, almost as if a sense of innocence lost. WWI filled Europe with horror as millions died and a generation of young men nearly disappeared. These losses fundamentally changed Europe. Figure 2 shows the WWI Punctuated Equilibrium conceptual framework. The icons illustrate key effects of the war as they transition from the initial equilibrium to the new equilibrium.

Trigger (and Triggered) Events

Figure Pathbreaking in WWI

The horror of WWI devolved into a path dependent state of equilibrium that required massive carnage to maintain. In 1918, however, there were two punctuated equilibriums, supported by a third, earlier event that changed the war and the world.

The Germans developed storm trooper tactics in Italy and then used them successfully in France during Operation Michael. By itself, this created a punctuated equilibrium both literally and theoretically. The offensive ruptured the allied lines and created a large salient. Without the second punctuated equilibrium, WWI and the peace treaty that caused so many post-war problems may have been far different.

The second punctuated equilibrium was the American entry into the war and their first major attack against the salient the Germans created. Four years of brutal, hellish war exhausted the Germans, British, and French. The new German tactics threatened to break the equilibrium of exhaustion. The fresh American troops defeated the Germans and created essentially a counter punctuated equilibrium that lead to the Treaty of Versailles. This treaty created a third punctuated equilibrium, which led to WWII.

The Spanish-American War is the enabling trigger event for the entry into WWI. The war gave the US overseas possessions and placed the US on an empire-building path. Perhaps a key result was the 16^th and 17^th Amendments to the Constitution, and implementing a federal income tax to support these efforts. The US government grew in power and scope from these changes, and America had an appetite for empire and an enhanced presence on the world stage. America displayed its new power when President Theodore Roosevelt negotiated the peace agreement between Russia and Japan that ended the Russo-Japanese War in 1905. The US Great White Fleet in 1909 was a symbol of this aspiration. This American power tipped the balance in WWI. But it came at a price that is still being paid today.

The new German stormtrooper tactics that may have tipped the balance if the Americans had not entered the war were the precursor of the WWII blitzkrieg tactics. The combination of the onerous conditions of the Treaty of Versailles and the stormtrooper tactics led to WWII and the initial German successes. It potentially gave Hitler and his generals the confidence they needed to start the war.

When the US backed away from the peace process, it let the hatred dominate the process. When it did not enter the League of Nations, it allowed Britain and France to dominate it and obtain “mandates” to administer the former provinces of the Ottoman Empire outside of Turkey.

Critical Changes

The population mix in Europe changed dramatically with the tremendous loss of life. Estimates are 10 million military and 10 million civilian deaths. The hole in the people/soldier icon shows the decimation of the European population from the war, which had profound effects on society.

In the new equilibrium, the crown is much lighter and turned to show the changes in empires. The German, Austro-Hungarian, and Russian monarchies and empires ceased to exist. This created enormous instability in Europe and the Middle East. The British promised the Arabs their own countries if they helped them fight the Ottomans. They reneged on this promise and the French and British took League of Nation Mandates to rule former Ottoman provinces. They broke the provinces apart with little regard for history, nationalism, and how the Ottomans administered them. Saddam Hussein used this as a pretext to annex Kuwait. The bitterness over the broken promises may also have influenced the Arabs to turn to the Soviet Union when they chose a path for modernization. When that path failed, many Arabs turn back to Islamic fundamentalism to restore their former greatness. The Islamic icon in the new equilibrium reflects this change.

Note the color changes and sizes for government, law, and the legal system. WWI and the enabling Spanish-American War had profound effects on the legal system, the size of government, and government power. During WWI, the US Congress passed legislation that prohibited criticizing the war and people went to jail for it. They also reflect the changes in the federal bureaucracy brought on by Scientific Management and Woodrow Wilson reforms that coincided with the rise of the US government and power.

What would the world be like if America did not enter WWI and the European powers negotiated a fair treaty?

Uber Punctuated Equilibrium

Let’s step away from the horror of war and look at public transportation, particularly taxies. For years, the taxi market was in a path dependent course. Little ever changed and the players that owned the taxi medallions were happy. Then along came Uber and on demand rides from private drivers. No medallions required. Figure 3 shows the conceptual framework for the Uber innovation.

Figure Uber Pathbreaking

Trigger Event

The Uber trigger event differs significantly from the WWI triggers and the social triggers in the last example. This trigger is a disruptive technology. It is an idea and a strategy, shown by the lightbulb in the arrow leading from the trigger to the current equilibrium. This idea disrupted the public transportation system and brought significant changes to society. This is a critical concept and we will return to it in following parts.

Critical Changes

Most research and writing on the Uber trigger is on the disruption and transformation of the taxi industry and public transportation. But the effects are far more profound and impact society and the legal system.

The bar icon represents societal changes. It goes far beyond bars and drinking, however. Uber and its imitators changed the bar scene. People regularly drink in bars and use Uber and others to get to and from the bars. In 2019, The Economist reported that heavy drinking came along for the ride with Uber. On the positive side, Mothers Against Drunk Driving reports drunken driving is down. While these are correlations rather than proven causations, the consensus opinion drifts to the causation conclusions.

The punctuated equilibrium affects the entire public transportation system to some extent. Uber and its imitators provide flexibility that public transportation systems cannot match. While there is no real danger of the subways and bus systems going out of business, it will affect them. Sadowsky and Nelson (2017) of Bowdoin College concluded that a single ridesharing service may help public transportation, but the addition of other ridesharing services creates cost competition that does lower public transportation ridership. Other studies from the University of Kentucky, University of Toronto and others tend to confirm this concept. For a comparison, look at what FedEx and UPS have done to the US Post Office.

The other significant issue is regulation. City governments heavily regulate taxies and require medallions. This regulation limited competition. Uber sidestepped the regulation and upset the medallion market. The implications of this sidestepping regulatory control are still rippling through society and we may fully understand them all yet.

Likewise, there are most likely other social affects that we have not seen. For example, what happens to inner city residents if public transportation reduces service?

Social Change Punctuated Equilibrium

As a last example, let us look at the current effects of COVID-19 and George Floyd. Now I can hear people saying COVID-19 is a medical issue and not a social issue and that George Floyd is a legal issue. That might be true, but the effects of these two events are social change. Therefore, this analysis does not focus on the medical issues or legal issues per se, but what is happening to society and the follow-on legal and governmental implications of these changes. The intent is not to get into a political discussion, but to show the changes taking place because of the two trigger events.

Figure 4 shows the conceptual framework for the COVID-19/George Floyd social changes.

Figure COVID-19 and George Floyd Pathbreaking

Trigger Events

George Floyd’s death was a significant trigger event. There were other smaller trigger events leading up to it, but this death galvanized action more than the others. These include Trayvon Martin in 2012, Michael Brown in 2014, Freddie Gray in 2015, and the Charleston church shooting in 2015. The two events in 2015 brought Black Lives Matter (BLM) to large-scale public attention. By 2020, however, the BLM movement faded from active public attention and publicity. Floyd’s death brought BLM squarely back into the public focus and Critical Race Theory (CRT). The school systems flocked to BLM, CRT, and a 1619 project. Government organizations and commercial organizations likewise embraced BLM and CRT.

COVID-19 created a lockdown of US society in 2020 that had profound effects on commercial activity, education, and social engagement. Government mandate restrictions shut down businesses and schools and, for the first part of COVID, the restrictions confined people to their homes. While the governments have loosened some of these restrictions, many remain. The federal government also made several COVID-related payments to nearly all citizens and continues to make payments to some citizens.

Critical Changes

The two trigger events reinforce each other. At the same time, schools closed and students attended virtually, social justice advocates pressed for significant changes in education to mandate 1619 and CRT. Standards also continued to fall, with advocates often claiming that they are racist. Some advocates even claimed that subjects, such as mathematics, are racist. School boards often sought to deny parents a voice in education and the Attorney General wrote a letter to the Director of the FBI that many saw as enouragement to treat these parents as domestic terrorists. These events came to a head in Virginia and the Democrats lost a governor race they were highly favored to win,

The social justice advocates also pushed for significant changes to law and law enforcement. Among these are prosecuters that elect not to proscecute some crimes and cities that decriminilize certain crimes and pursue drastic measures to change the structure and methods of policing. Set aside for the moment whether these movements are justified or not. Ignoring the law and changing it by fiat rather than through the legislative process process undermines the rule of law. This can undermine society and the ties that knit it together.

As these significant changes happen, government payments affect the employment market. Everywhere you turn, businesses are advertising for workers. Restaurants throughout the country have signs asking patrons to excuse slow service since they are not fully staffed. I saw a billboard in South Carolina adversting work for billboard hangers, something I have never seen before.

The business shut downs also affected how goods and services are obtained and delivered. Far more shopping is online and delivered the home. This changes the dynamics of consumer activities and the relationship between the business and the consumer.

The interruption in supply chains from the shutdowns also impacts the availability of goods. Most shoppers are getting increasingly familiar with bare shelves in stores. This then impacts the consumers interaction with business.

Small businesses are the most profoundly affected. The Small Business Council estimates that millions of small businesses closed in 2020. This can change the dyamics of small communities and drive even more consumers to large businesses that can fulffill their orders from more reliable supply chains and through online stores and home delivery.

The energy situation is not a direct result of COVID or George Floyd, but is an indirect result of the shift of power to Democrats that came to power from the confusion and concerns surrounding the pandemic and racial issues. The increased costs of gasoline and other energy impact just about every sector in the economy.

The same can be said of illegal immigration. Regard of whether immigrants have a right to enter this country, there are two profound effects. First, with the porous borders, drugs, human trafficing and crime are rising. Second, with the generous social policies, this situation costs billions of dollars to a country that is already deficit spending. These deficits will have consequences at some point.

The net result of these changes are instability and divisions in society. These conditions open a door for change. The question, what kind of change?

References

Sadowsky, Nicole and Nelson, Erik, “The Impact of Ride-Hailing Services on Public Transportation Use: A Discontinuity Regression Analysis” (2017). Economics Department Working Paper Series. 13.
https://digitalcommons.bowdoin.edu/econpapers/13