Systems Thinking Can Save New Jersey's Future

Many of New Jersey’s most serious problems—from the pension crisis to the dismal state of NJ Transit and the highest property taxes in the United States -- have resulted from the failure of political leadership to practice what is known as systems thinking. In a classic work on systems thinking, The Fifth Discipline, Peter Senge (1990) writes, “Systems thinking is a discipline for seeing wholes. It is a framework for seeing interrelationships rather than things, for seeing patterns of change rather than snapshots.”

Senge posits eleven laws for systems thinking. An examination of a few system laws in the context of the pension crisis and the upcoming June 30 budget deadline will illustrate how they work and how these laws have been routinely ignored by political leaders at the risk of New Jersey’s future.

Pension and health benefits are the fastest-growing items in the budget and projected to increase in the next four years, from $7.7 billion to $12 billion. These rapidly escalating costs will crowd out other critical priorities, such as education, Medicaid, transportation, public safety, infrastructure, and numerous other state programs

How did the failure of political leadership to practice systems thinking create this crisis? System laws provide the answer.

Today’s problems come from yesterday’s “solutions.”

In 1993 Christie Whitman was narrowly elected governor, defeating Jim Florio by promising to “solve” the state’s financial crisis by cutting income taxes by thirty percent over three years. Whitman didn't reduce spending to match. Instead, Whitman appropriated the “surplus” monies in the pension fund, monies that were there to assure the fund’s solvency going forward. Those monies were never returned to the pension fund.

Few at the time objected. One who did, however, was Bob Herbert, who in the February 22, 1995 issue of the New York Times, in an article titled “Whitman Steals the Future,” wrote--

Governor Christie Todd Whitman has chosen to finance her political ambition with a popular buy-now, pay-later economic policy that will place a financial strangle hold on future generations of New Jerseyans. This is best illustrated by Mrs. Whitman’s decision to withhold billions of dollars that should be going into the public employee pension funds over the next few years and use the bulk of that money to balance the state budget.

Today, Herbert’s words seem prescient.

The easy way out usually leads back in

Governor after governor followed Whitmans’s buy-now, pay-later strategy, refusing to make the tough decisions on taxing, spending, and negotiating with public sector unions. When New Jersey governors have held aspirations for higher political office, such as Chris Christie, the easy way out law is invariably violated.

Cause and effect are not closely related in time and space.

Because most of us—including political leaders—assume the opposite, that cause and effect are closely related, succeeding governors continued to ignore the escalating pension crisis as the crisis was viewed as far off in the distant future. Senge writes, “There is a fundamental mismatch between the nature of reality in complex systems and our predominant ways of thinking about that reality. The first step in correcting this mismatch is to let go of the notion that cause and effect are close in time and space.”

There is no blame

We tend to blame others for our problems. Senge writes, “System thinking shows us that there is no outside; that you and the cause of your problems are part of a single system. The cure lies in the relationship with your ‘enemy.’” Chris Christie was categorized as a wedge politician, who sought to turn opinion against public workers for political gain and was highly vocal in his blame of public sector unions.

The harder you push the harder the system pushes back

When NJ Senate President Steve Sweeney, who to his credit has often appeared as the adult in the room in the pension crisis, supported some of Christie’s pension initiatives, the NJEA blamed Sweeney and mounted a vindictive onslaught to unseat him in what has been described as one of the most expensive legislative campaign in American history, costing $18.7 million, according the New Jersey Election Law Enforcement Commission

Given the track record of New Jersey’s political leaders, it is likely that the “solution” to the pension crisis will neither be long term nor systemic and lead to unanticipated problems in the future. For example, the idea of selling or leasing assets such as the N.J. Turnpike and Garden State Parkway to cover the pension shortfall has been discussed.

The ramifications of systems thinking are seldom popular with voters. It is  imperative that Governor Phil Murphy avoid the easy way out trap in current negotiations for the state budget. However, to do so will require the courage to make hard choices and could jeopardize any aspirations Murphy may have for higher political office.