The easiest way to part me from my money is to make another Jurassic Park movie. Despite the decreasing quality of the movies in the franchise, I keep saying, “Make a million Jurassic Park movies, I’ll watch a million Jurassic Park movies”. The last edition, Jurassic World Dominion, asks the question: What happens when dinosaurs, which went extinct about 67 million years ago, are reintroduced into the wild, mingling freely with today’s world?
Apart from the fact that I certainly would have become a wildlife ranger (focusing only on dinosaurs, of course) as opposed to some boring economist (with apologies to fellow economists, but dinosaurs are far cooler than supply and demand), chaos theory tells us that with so many interacting parts and feedback loops, the ecological impact is nearly impossible to pre-determine.
There are some fun examples, depending on your perspective, from history. In 1859, Thomas Austin, an Englishman who had migrated to Australia as a teenager, imported 24 English rabbits to Australia. The purpose for importing these rabbits was to fulfil a need common to old English country gentlemen — he wanted to hunt them. Austin purportedly said, “The introduction of a few rabbits could do little harm and might provide a touch of home in addition to the sport of hunting.”
As it turned out, rabbits breed like, well, rabbits. Just a decade later, two million rabbits were being shot at annually in Australia and by the 1920s, at the peak of the rabbit population, the country was home to 10 billion rabbits, all because of homesickness. Over the following decades, locals tried all sorts of solutions, including creative ones like sending ferrets into their tunnels to flush the rabbits out and, spectacularly, building a fence of more than 1,800km to keep the rabbits out of Western Australia.
The point I am trying to make is that when it comes to systems and processes that have co-evolved over long periods of time, what might seem like sensible or reasonable ideas may end up causing all kinds of unintended consequences. They may even cause what ecologists call cascade collapse. This is defined as a sudden, system-wide breakdown in an ecosystem that begins with the loss or disruption of a key species or functional group, triggering a chain reaction that destabilises the entire ecological web.
A clear example comes from Mao Zedong’s Four Pests campaign, which sought to eliminate mosquitoes, rats, flies and sparrows. The problem with sparrows, according to the Four Pests logic, is that they eat grain — for every single grain that a sparrow did not eat, a Chinese person could. This sounds great until we remember that sparrows do not just eat grain, they also eat insects, particularly locusts. Freed from the predation of these sparrows, the locusts rampaged through the crops of China, causing utter devastation and contributing to the Great Famine. Removing a perceived problem can be just as devastating as introducing a misguided solution.
In the light of the recent announcement of reciprocal tariffs, and subsequent pause, from US President Donald Trump, I have seen tons of commentary on how other countries should react in the light of their respective tariff burdens. These include the need to negotiate (or not negotiate), to consider diversifying away from the US as the world’s best consumer market, to also consider diversifying away from the role of the US dollar in the global financial system, and others.
It is evident that every single country — be it the US, China or Malaysia — is actively figuring out how to chart its way forward. And this is especially if we believe, and I do, that these increased tariffs on global trade are more structural than cyclical, that is, they are likely to stick around for some time. As countries consider what moves they intend to take, I do have a somewhat more conservative view that essentially echoes the idea, “The more things change, the more things stay the same”.
The reason for this is that if we consider the co-evolution of institutions and culture of the global financial and trade ecosystem, the various permutations of that co-evolution have been manifesting themselves for decades — at the very least, since the end of the second Bretton Woods monetary system in the 1970s. Given the passing of time, such behaviours, structures and mindsets can become stuck in a “kludge”. A kludge, as defined by Jeffrey Ely, an economist at Illinois’ Northwestern University, is “an improvement upon a highly complex system that solves an inefficiency but in a piecemeal fashion and without addressing the deep-rooted underlying problem … the kludge itself — because it makes sense only in the presence of the disease it is there to treat — intensifies the internal inefficiency …”
Things can be further compounded by looking at sociological ideas of power. The system that the world co-evolved, not necessarily by random mutation or even intelligent design, has naturally built winners and losers over time, many of whom get entrenched in their winning or losing positions. There are many powerful people who have gained extraordinary wealth and influence by virtue of the current system. Trying to move away from that system, whether in a wholesale or piecemeal manner, will see furious push back from the powers that be and those can contribute to unintended consequences that essentially seek to maintain the status quo.
So, if we believe that our current global trade and finance ecology are in some sort of “equilibrium”, the entrenchment of cultural evolution and power makes it difficult to break out of that equilibrium. Hence, my conservatism on some of the changes that countries may seek to make, however necessary these countries believe those changes to be.
Yet, that does not mean things never change. In 1985, the Plaza Accord agreement saw countries revalue their currency against the US dollar to try and address current account imbalances between those countries and the US. The most relevant of those countries for Malaysia was Japan, where the Japanese agreed to have the yen appreciate against the US dollar. That appreciation saw increased foreign investments for Japan, with many Japanese further offshoring their production. Many of these companies came to Malaysia, which helped the country accelerate its growth in the late 1980s and 1990s, at least until the 1997/98 Asian financial crisis.
That shock to the ecosystem worked out, for a while. The foreign direct investment and multinational corporation-driven model of growth has its limitations. An overdependence on such a model may put a glass ceiling on the development of local firms, leading them to be suppliers to these MNCs, as opposed to innovators and producers to the world in their own right. The consequences of changes in a given ecology are not straightforward and could hardly be predicted. Japan, of course, went through their “lost decade of growth” in the 1990s.
Thus, as countries navigate these challenges, an appreciation of ecological cascades is important. And economics alone is insufficient. We need to reckon with power dynamics and decades of cultural evolution which led us to the “equilibrium” in which we find ourselves today. But there is hope, of course, by being adaptive and open in our paradigms of the world. In the words of Malka Older, an American author who wrote a brilliant novella called The Mimicking of Known Successes, she writes beautifully on the need for care amid ecological change: “Perhaps there’s a discipline, or trans-discipline, of flexibility and reactiveness, or a calculation of the principles involved in ecosystem survival rather than the literal mimicking of known successes.”