Resilient Communities are the Foundations of a Resilient America.

Things That Make You Go Hmmm About Diversity and Resilience

My sincere apologies to Grant Williams and his newsletter (Things That Make You Go Hmmm).

In discussions about resilience, “diversity” is a word that gets thrown into the conversation – a lot. “A resilient community’s economy should be diverse.” “We have to build climate resilience so we can have biodiversity.” “We need a diverse population in our community (or school…or nation).” And so on. As if diversity in and of itself is a good that we should strive to attain. In the following, I’ll try to show that focusing on diversity can actually divert attention from what’s really important.

Let’s start by looking at the economy. In one of the CARRI research papers, Lance Gunderson points out that a bio-diverse ecosystem is resilient because it has a variety of ways to respond to stress. The value of diversity to the economic ecosystem is the same, but there’s a catch in both types of systems: the diversity has to result in a variety of responses. If the diverse entities’ responses are all correlated, then the system is susceptible to a common failure mode and not very resilient.

The following graph of the performance of various financial asset classes was produced by Niels Jensen of Absolute Return Partners (www.arpllp.com).

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He has looked at correlations between the performances of the asset classes both prior to and since the Great Recession. I don’t think there’s any reason to believe that there has been any change in the diversity of the economic ecosystem – though there has been a great deal of stress in the last four years! The really disturbing thing is that the increased correlation among asset classes indicates a loss of resilience in the financial ecosystem (One might argue that this is an Unintended Consequence of greater government involvement in the economy – but I won’t.).

This points out that the diversity we’re looking for is not diversity of entities but diversity of responses. This indicates that it may be more important to look at correlations among the various components of a community’s economy rather than simply look for a diverse mix of businesses.

Think about inequality of incomes in our population as another example of diversity diverting our attention from the real issues. We have heard a great deal from the intelligentsia decrying income inequality. “Income inequality” is simply diversity in incomes. Is this good? Bad? Indifferent? As I’ve argued before, there is nothing inherently wrong with having rich and poor – these are part of the human condition. What’s important to look at from a community’s standpoint are things like the rate of movement in and out of Rich-ness and Poor-ness; the number of connections between (and within) each group; the effectiveness of communications between these groups about needs, opportunities, and barriers. Again, concentrating on diversity can be a distraction from these real issues that determine a community’s resilience