Tag Archives: Politics

The Coming World Ruling Class

When I got my Ph.D. in formal political theory, I learned that the politics of large democratic polities today, such as metropolises, states, and nations, are usually aligned along a single “ideological” dimension. (E.g., “left” vs. “right”.) What exactly that dimension is about, however, has varied greatly across times and places. It seems to more result from a game theoretic equilibrium than from a single underlying dimension of choice; the real policy space remains highly dimensional.

However, it wasn’t until years later than I noticed that this is not usually true for the politics of families, firms, clubs, towns, and small cities. These usually are usually run by a single stable dominant coalition, i.e., a ruling class. As were most ancient societies in history, at least eventually.

This ruling class might sometimes offer their larger community some options to choose between. But mostly this is when the ruling elite can’t decide, or wants to make others feel more involved. Such as who exactly to put at the top most visible positions. Sometimes real fights break out among coalitions within the elite, but these fights tend to be short and behind the scenes.

The same applies to communities with no formal organization. That is, to “mobs”. While in the modern world large mobs tend to split along a main ideological dimension, small mobs tend to be dominated by a main consensus, who roughly agree on what to do and how. Though with time, smaller mobs are more often becoming aligned to larger political ideologies.

This one-dimensional story also does not apply to large ancient areas which encompassed many different polities. These areas look more like a disorganized set of competing interests. So a one dimensional political alignment isn’t a fully general law of politics; it has a domain of applicability.

A few centuries ago, the world was composed of many competing nations, with no overall organization. During the great world wars, and the Cold War, there was an overall binary alignment. Since the end of the Cold War, we have seen a single coalition dominate the world. And over recent decades we have seen policy around the world converge greatly around the opinions of an integrated world elite.

I’m tempted to put this all together into the following integrated theory of a standard progression. Imagine suddenly moving a large random group of diverse strangers to a new isolated area, where they could survive indefinitely. At first their choices would be individual. Then they’d organize into small groups that coordinate together. Then into larger groups.

Eventually many large groups might compete for control of the area, or for the allegiance of the people there. In their bids for control, such groups might emphasize how much they respect the many kinds of diversity represented by people in the area. They don’t intend to repress other groups, they just want to rule for the good of all. As people became more similar, they would bother less with such speeches.

Eventually, these groups would merge and align along a single main dimension, which might be labeled in terms of two main rival groups, or in terms of some ideological axis. For a while, the two sides of this main dimension might find themselves at a stalemate. Or one side might tend to win, but the midpoint of their conflict might be continually redefined to result in two roughly equally sized sides. This main ideological dimension would encompass many issues, but hardly all. It might encompass more issues as the fight for control got fiercer. But the fight should get weaker as outside threats became more salient.

Eventually a single coalition would come to dominate. Especially in a society with many “high grounds” which such a coalition could come to control. This situation might then oscillate between a single ruling elite and a main axis of conflict. But slowly over time, a single coalition would win out more. The members of the ruling elite would come to know each other better, become more similar, and agree more on who should be among their members, and on what are the “serious” policies worth considering. They would focus more on reassuring each other of loyal to their class, and on making sure their kids could join that elite.

A ruling coalition who felt insecure in its power might work harder to seek out and repress any potential dissent. At the extreme, it might create a totalitarian regime that demanded allegiance and conformity in every little area of life. And it might focus more on entrenching itself than on improving society as a whole. As a ruling coalition became more secure, it might more tolerate dissent, and demand less conformity, but also focus on internal conflicts and division of spoils, instead of its society as a whole.

This story seems to roughly describe national, and world, history. My nation is becoming more integrated and similar over time, with actions coordinated at larger scales, national politics coming more to dominate local politics, and national politics coming to color more areas and issues in life. And a single issue axis aligned to a global cultural elite is coming to dominate politics across the world.

It seems plausible that toward the end of the transition between a period of one main ideological dimension, and a period of a single integrated ruling class, the final main political dimension would be aligned for and against that final ruling class. The last ideology question would be: shall we let this ruling class take over?

That is, shall we let this small subset of us define for us who are “serious” candidates for leadership and what are “serious” policy positions worthy of consideration? As such ruling classes now decide in firms, towns, etc. today. A sign of the end would be when one side of the political axis kept putting up candidates for office who were consistently declared “not serious” by the elites who controlled the the main commanding heights of power, such as media, law, universities, regulators, CEOs, etc.

The pro-ruling-class side would be more dominant in places that are more integrated with the overall culture, and less dominate in places that cared more about local issues. Such as in larger cities, compared to towns.

This model suggests that our current era of roughly balanced forces on two sides of one main ideological axis may be temporary. As the world becomes more closely integrated and similar, eventually a single integrated elite culture will dominate the world, entrenching itself in mob opinion and via as many institutions as possible, especially global institutions.

This world ruling class may then focus more on further entrenching itself, and on repressing dissent more than on making the world better. As everyone becomes more similar, conformity pressures will become stronger, as in most small towns today. Plausibly cutting many kinds of innovation. And our entrenched global institutions may then rot. After which our total human civilization might even decline, or commit suicide.

This may take centuries, but that’s really not very long in the grand scheme of things.

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Are Political Freedoms a Fluke?

Through most of history, econ density and development went with less political freedom:

For most of the past 5,000 years, … kingdoms and empires were ‘exceptional islands of political hierarchy, surrounded by much larger territories whose inhabitants … systematically avoided fixed, overarching systems of authority. (More)

In contrast, over the last few centuries we’ve seen increasing levels of peace, democracy, and political freedoms. Many take these trends to be strong and nearly inevitable consequences of industry. Here is some interesting skepticism about such views, by Daniel H. Deudney in his great book Bounding Power: Republican Security Theory from the Polis to the Global Village:

United States of America … a “new order of the ages,” distinctive both from the early republican city-states and the “republic” of Europe. … Widely recognized as being “exceptionalistic” in several ways. … It combined familiar forms of popular sovereignty, formal state equality, balance of power, and division of power to create a negarchic political order novel in its overall configuration. (p.161)

The American founding occurred on the eve of the industrial revolution, whose main external security consequence was to increase sharply the scope of the state system and the size of viable units within it. … In this brutally competitive interstate environment, the only reason that republican politics would plausibly survive, let allow prevail, was that the United State of America had combined republication government with empirelike size via feral unions. All other democratic republics were implausible candidates for survival in the global-industrial era, except as allies of the United States. … In the World War II phase of the struggle, democratic republics at the Western core, already shrunk o a handful in northwester Europe, ere either overrun by Nazi German armies, were neutrals vulnerable to assured eventual conquest by Germany, or were snatched from conquest by massive American aid and Hitler’s quixotic grand strategy. Outside of the European core, democracies were few, scattered, and weak. They were spared immediate Axis conquest only by their remoteness and American assistance or their proximity to the United States.

After the defeat of Axis imperialism, liberal democracies faced another mortal peril from communist Russia and China, and the survival, reconstruction, and expansion of democracy in the second half of the twentieth century vitally depended on American military and economic power. … “It is difficult to escape the conclusion that since World War I, the” fortunes of democracy worldwide have largely depended on American power.” …

Looking at the overall picture, two facts stand out. First, without American power, there would probably not be any democracies at the end of the twentieth century. Second, the democracies that have behaved so impressively pacifically toward one another have largely been junior allies of the United States in a very hostile ad competitive interstate environment. (pp.183-185)

Consider the counterfactual world where the American continents never existed. In that counterfactual, there is never a new big place available to try out a new form of government, which then comes to control a huge empire. Most empires are based on more traditional governance forms, which then mostly win the big world wars, and mostly run the world today.

Democratic governments which ensure many political and economic freedoms may be nothing like an inevitable consequence of industry-era changes. In which case it seems less likely that such freedoms will continue long into the future.

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Beware Centralization

Imagine merging three public firms, by making each firm into a division of a single new firm with one new boss. In principle, this new boss has the option to keep these firms running exactly as before. The prior CEOs could become division heads, with complete freedom to run their divisions as before, and paid the same, such as via options on new assets that track the new profits of each division. Under this arrangement, the profits of the new firm could arguably be the same of the profits of the old firms, minus a little bit for the salary of the new boss.

However, this new boss would also have the option to do other things. Like cutting redundancies between some subdivisions, such as shipping or human resources. Or reviewing the major decisions of division managers. Or sharing technology between firms. Or using the larger size of this new firm to negotiate better deals with unions, suppliers, or politicians.

Arguably the fact that there is the option to get at least the old profit levels, combined with many new options for making and using synergies across these firms, suggests that such merged firms can in general make more profits than they could separately. Which suggests that firms should just keep on merging until they are very large. But in fact firms do not do this, because their investors do not support it. For example, firms with more than 250 employees employed only 55% of the private US work force in 2020.

So why don’t firms merge to achieve these gains? Yes, regulators and tax authorities may treat larger firms less favorably. Yes, maybe customers and employees dislike larger firms and so treat them worse. But the typical scale of most firms seems far smaller than can be explained by these effects. There seem to be much stronger reasons why most firms are not much larger.

One usual story is that the manager of the new merged firm just can’t help interfering with and inter-connecting these divisions. After all, he or she has career ambitions which are poorly served by a complete hands-off management style. But after such manager “help”, it becomes harder to evaluate the performance of each division independently from the rest. And the quality of the people wiling to work as heads of these divisions, instead of as CEOs of them as independent firms, gets lower. These costs of size are said to be larger than the benefits to be found from exploiting synergies, which is why firms are not larger.

A similar thing happens with government agencies assigned to manage sectors of society. Imagine that we created a government agency in charge of food for the whole nation. This agency is given an authorization so broad that it could allow exactly the existing food practice and industries, such as farms, grocery stores, restaurants, and personal kitchens. Or it could completely nationalize all these resources, and use tax revenue to reorganize them as it saw fit. Or it could do anything in between. Imagine that such an agency had been created in the U.S. in 1970.

It seems obvious to me that by now such a food agency would have intervened in food production, processing, and distribution far more extensively that has been the case in our actual history. Large government agencies would have formed with many thousands of employees, many of them directly managing food activities. Everyone would get access to some food, and some government activities would achieve larger scale economies than seen in the private sector. But this would be achieved in part via more uniformity, standardization, and stability of food processes. Government managed food would end up with less variety and adaptation to individual circumstances and preferences, and this food would improve and innovate less over time.

The amazing thing is that all this would happen even with high quality oversight and accountability by agencies to politicians, and politicians to voters. Voters would tell politicians about things they liked more and less, politicians would pass on these messages to agencies, and agencies would often change their policies and strategies in the suggested directions. But even in the absence of much corruption, civil servant selfishness, or partisan rancor, and even with the best political processes that we can imagine, a food industry managed by a government agency with broad powers would still probably end up creating a worse world of food over the long run.

Similarly, a new firm that merged three random prior firms would typically earn less profits, even with the sincere and helpful advice of its investors, boards of advisors, and management consulting firms, and even in the absence of stupid or corrupt firm managers and advisors. Processes of governance and oversight can and do help, but they are generally insufficient to cancel the harms from an overly centralized organization structure.

These patterns, if true, are seem important regarding the ideal scales of both business and government. And I fear the U.S. public is insufficiently aware of them, as we seem to be on the verge of a historic increase in the scale and depth of government management of society.

Added 4Oct: Let me emphasize that what I’m describing is theoretically puzzling, in that it isn’t very directly implied by our standard models of profit maximization or democratic accountability. There is something important that we don’t understand well going on here.

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Elite Biases Make Policy Biases

A 2014 paper predicted U.S. policy changes over four years for 1,779 issues, using the positions of four groups of influencers: business-based interest groups (55), mass-based interest groups (31), median public opinion (6), and elite public opinion (100), i.e. that of people at the 90th percentile of income. (I’ve listed their relative influence in parenthesis. Criticism says mid-class (not poor) influence is bigger.) While elite and median public opinion had a 0.78 correlation, the other pairs were uncorrelated. (A poll sets median influencer at 92% income percentile.)

What this says is that, even in a democracy, the ~90th percentile rich have the most influence, business interest groups have about half as much, and mass interest groups have about a third as much. We less rich folks only get what we want, to the extent we do, mainly because these elites mostly agree with us, and because we sometimes influence mass interest groups.

This median influencer household has income of $210K/yr and wealth of $1.2M, and households above this cut pay 70% of US Federal income taxes. This income is near the median doctor ($207K) and U.S. District Judge ($218K), more than the median full professor ($141K), lawyer ($139), lobbyist ($115K), judge ($109K), and CEO ($103K), and much more than the median federal civil servant ($64K) and high school teacher ($63K). (The median household made $64K, while the median CEO of the top 500 firms made $12.7M.)

These elites who set policy get most of their status and income from labor, not capital, and they are quite comfortable with, and in fact love, large bureaucratic organizations. Their highest hopes tend to be of gaining positions in, getting promoted in, or creating, such organizations. When they have dreams for the world, they dream of new versions with higher mandates and bigger budgets. (Think socialism.)

They can distinguish each other by their elite accomplishments, school credentials, org affiliations, and styles of talk, dress, etc. And their internal dynamics are dominated by status and gossip. That is, they are very social and join mutually-supporting coalitions which help get them the right jobs, party invites, speaking invites, etc. Via extensive gossip, they quickly form an apparent consensus on the policy issues of the day, on who is higher status among them, and on who should be ostracized and expelled from their ranks. Today these elite communities of gossip and status are integrated across the world.

Simple as it is, this account of who most influences policy seems to me promising as the basis of a theory of policy bias. That is, the natural biases of the group who most influences policy may plausibly explain many of our overall policy biases.

For example, policy set by elites may give elites too much benefit of the doubt, and defer too much to their status-gossip system. As elites tend to see their internal status-gossip processes as sufficient to discourage malfeasance and encourage excellence, they tend to see little need for other forms of track records, incentives, or accountability within elite professions and organizations, including government agencies. They see themselves as mostly good people, trying to do good things, who should be supported not hassled.

As another example, when there are groups that elites see as more outside of themselves, as rivals competing with them for power, then elites may push for policies that control, suppress, and disrespect such rivals.

The most obvious candidate for such a rival group is business. Even though these elites are richer than most of us, like most of us they focus more on those who are above them in status, relative to those who are below. Furthermore, the study above says that business is in fact their main rival for influence over policy. And while most business profits go to elites, elites don’t think of themselves as having their main influence on the world via business; elites instead identify more with their roles as org leaders and elite gossipers.

Furthermore, while elites see themselves as mostly well-meaning good people, they see business as transparently and dangerously selfish. Elites see businesses as tending to do what makes them more money, even when their leaders are ostracized and not invited to the right parties. Meaning that the usual pressures that work on most elites may not work on business and the super-rich. Thus elites support harsh, intrusive, and punitive business taxes, regulations, and legal liability. Yes when the super-rich are taxed, these elites are also taxed, but that may seem worth the price to take them down a peg or two. Most ordinary people miss this conflict by not distinguishing these two different kinds of “rich”.

Even though ordinary people seem to have little influence on policy, and mostly agree with elites on policy, elites are still wary of them as individuals. After all, we outnumber them at least five to one, we might revolt, and they must rely on us to do most of the things that need doing. So as employees, we must be tracked, assigned, and incentivized. As consumers and investors, we must be regulated. As authors and voters, our thoughts must be shaped and channeled via teachers, censors, media, interest groups, and politicians. As potential criminals we need to be tracked and threatened with punishment. And the poorest of us need even more direct management, such as via social workers and parole officers. All of which not only keeps us under control, but asserts elite status via the fact of their managing such controls.

Mass-based interest groups mostly don’t seem to scare elites as a whole, because usually such groups are dominated by elites at their top levels. It is only when a mass-based group seems to oppose elites as a whole that elites close ranks and warn against the dangers of such “populism”. While our society gives a lot of lip service to populism, populism is usually crushed aggressively whenever it actually seems threatening.

So how does this theory do empirically? It seems to me that policy does tend to be overly trusting of elites and their status-gossip system, and overly punitive and disrespectful of rival groups. For example, policy pushes us to pick docs, lawyers, and other prestigious professionals based more on the prestige of their affiliations, and less on track records or incentives. Business does seem greatly overly regulated, and taxes seem overly punitive. And policy seems to rely too much on the consensus of elite gossip, relative to more accurate sources like experts or prediction markets.

While roughly half of all regulation of individuals seems to be justified as protecting people from themselves, warnings seem just as helpful but would be far less controlling. Free speech (really free hearing) would be as effective at informing as is censorship. Pandemics could be more efficiently handled via law. And the poor could be helped more via simple cash transfers instead of expensive intrusive management of their lives.

Our legal system has high costs of suing people (from not using lotteries) but no required liability insurance. This makes law available to elites to sue each other, and to punish business, but not available to ordinary people to sue elites or each other. Elites can protect themselves well from ordinary people via strong prosecutor powers of plea bargaining together with broad surveillance and huge numbers of crime laws on the books, and also judges who are elites and give elites the benefit of the doubt. Oh and living, shopping, and working in separate neighborhoods.

And that’s my simple theory of who runs society, and policy biases that naturally result from their rule.

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The Coming Cosmic Control Conflict

We moderns like to join factions associated with ideologies, and many of our most inspiring stories are of great conflicts between ideologically-affiliated factions. We like such stories more when they have more morally-intense ideologies, bigger conflicts in space, time, and social scope, more impressive combatants, and more real and well-defined events.

At a cost in realism, science fiction and fantasy often turn up the other dials, making ideologies extreme, conflicts galaxy-wide, and giving combatants god-like powers. But for realism and definition, we tend to retreat to WWII, which ranks high on moral intensity, but less high on other criteria. Or more recent struggles for group respect. Our true stories of the largest scope, about our vast universe, tend to fail badly; past stories lack conflict or combatants, while future stories lack definition.

Having recently given a lot of thought to grabby aliens and UFOs as aliens, it occurs to me that they can offer great conflict stories of substantial moral intensity, plausible realism and definition, and quite unprecedented size, scope, and combatant impressiveness. Let us consider telling such stories!

The combatants in which we can be most confident are grabby aliens; the fact that we have appeared so early in the universe tells us that they are out there, and three other datums tell us we’ll meet them in roughly a billion years, if we last that long. Grabby civilizations will come into direct conflict with each other at their borders, and will compete more widely to influence the culture of the next hundred billion years. These conflicts rate high on reality, scope, and impressive combatants, but alas it seems hard to guess how such civilizations will differ, and thus to guess the ideologies that might orient their conflicts.

We can have less confidence that aliens are behind some UFOs. But they plausibly exist, and we can say a lot about a big ideological conflict they must have with grabby aliens. We can reasonably guess that UFO aliens have developed many millions of years past our level, are not changing fast now, and have coordinated to prevent any part of them from getting grabby, i.e., from aggressively expanding and filling the universe with their descendants. To achieve this, we can be pretty sure that they created a strong persistent “world” governments. And enforcing their anti-grabby rules on us is the obvious reason for them to be here now coyly showing themselves to us.

Furthermore, even if there are no aliens behind UFOs, we can forsee this same conflict in our future; we are likely to coordinate to try to prevent parts of our civilization from getting grabby. Thus the pro- vs. anti- grabby conflict is plausibly the big future ideological divide, whether or not UFOs are aliens. Let me explain.

For at least a million years, human foragers coordinated within each band to enforce local norms; individual humans were not free to do whatever they wanted. With farming, societies became larger and had more contact with outsiders, but within each society they enforced many norms and laws. And in our world today we actually have pretty strong global coordination enforcing many global norms via local laws. Human organizations have consistently been rising in size and scope, making much stronger global governance a likely outcome over the coming centuries. (It certainly happens in Age of Em.)

As an economist, I see that most people feel strongly that individual freedoms must be constrained by governance, and many seem to regret that we do not have stronger and larger scale governance to deal with our biggest problems. Few favor cutting our scales of governance. Even when governments seem to consistently fail at a task they’ve been assigned, like the unwinnable war on drugs, most are reluctant to give up; instead budgets and powers are continually increased.

Furthermore, I see these laments especially among futurists, who consider longer timescales and bigger problems. For example, many are uncomfortable with “capitalist” competition, which they hope will end soon or at least become globally managed, to prevent capitalist competition between nations. And many are wary of plain old biological competition, even without capitalism. For example, many see a big problem with overpopulation, for which their natural solution is global regulation of fertility. Some imagine that local unconstrained evolution might eliminate consciousness from future agents, or allow the values of our descendants to drift far from our own values, and suggest strong global governance as remedies for these.

In addition, we should expect rates of change due to natural selection to greatly increase with the rise of artificial life, which is likely to dominate our future starting in a few centuries. So whatever problems result from unmanaged natural selection are likely to become much stronger soon, and at a time when we in fact have a pretty strong world government.

If within a few centuries we have a strong world government managing capitalist competition, overpopulation, value drift, and much more, we might come to notice that these and many other governance solutions to pressing problems are threatened by unrestrained interstellar colonization. Independent colonies able to change such solutions locally could allow population explosions and value drift, as well as capitalist competition that beats out home industries. That is, colony independence suggests unmanaged colony competition. In addition, independent colonies would lower the status of those who control the central government.

So authorities would want to either ban such colonization, or to find ways to keep colonies under tight central control. Yet it seems very hard to keep a tight lid on colonies. The huge distances involved make it hard to require central approval for distant decisions, and distant colonists can’t participate as equals in governance without slowing down the whole process dramatically. Worse, allowing just one sustained failure, of some descendants who get grabby, can negate all the other successes. This single failure problem gets worse the more colonies there are, the further apart they spread, and the more advanced technology gets.

Thus if our descendants strongly value the regulations and coordinations that their world government allows, and are unwilling to give them up, then they may be strongly tempted to simply ban interstellar colonization beyond some manageable limits. Which is exactly what it seems that any aliens behind UFOs must have done successfully for millions of years. The exact opposite of the aggressive expansion that, for billions of years, has been and will continue to be chosen by grabby aliens.

Yes, banning internal expansion should put any civilization at a great disadvantage should they ever encounter a grabby one. But that distant possibility in perhaps a billion years may just not carry much weight against more immediate concerns. It might be easier to slip into denial, emphasizing the lack of solid proof that there will ever be any grabby aliens.

And there we have it: the grand cosmic conflict between authorities who use a strong world government to prevent local expansion, and grabby-wannabe rebels seeking a way to slip through this blockage and expand. A conflict with big values at stake, very impressive combatants, that takes places on the greatest scales of space, time, and social range, and which seems likely to be very real. Don’t you want to hear stories about that? Won’t someone write stories about that?

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Who Wants Curated Democracy?

Most democratic systems are pretty simple. To a first approximation, anyone can run for office, any adult citizen can vote, and voters can use all their usual ways to associate and talk to evaluate and coordinate on who to vote for in upcoming elections.

Imagine that some academics instead develop and advocate for a “curated” system of democracy. They research how democratic outcomes vary with the candidates, who votes on which candidates, and who talks to who about which candidates and topics. These academics say that if you put someone who knows this literature well in charge of “curating” democracy, you can get better outcomes.

Assume that these researchers have the usual level of academic competence at doing their research. They study a real phenomena and make real progress, but have the usual academic biases, such as playing usual games of hindering rivals via insider clubs and method fashions. Their results tend to be complex, though news media can sometimes offer deceptively simple summaries of them.

How eager are you to replace your simple democratic system with a voting system curated by an expert credentialed by these academics? That is, to put these curators in charge of who can run for office, who can vote on what, and who can talk to who how about what political topics? They wouldn’t suggest simple rules that we could then debate and choose whether to adopt. No, they’d make many detailed context-dependent choices that they couldn’t well explain to us; we’d just have to trust them.

Most of us wouldn’t trust them, and thus would be wary of such curated democracy. Because democracy is less about having a well-oiled machine and more about having a simple neutral system that we can trust when we don’t together trust any particular people that much to run our system.

This is how I feel about the forecasting systems and contests that are now popular among academics, relative to simple prediction markets. In a simple prediction market, you set up a topic on which to bet cash, and then let any individual or group bet cash there at any time, in any amount, and the current price is your best estimate. Biases are to be fixed by traders profiting from finding and correcting them. Yes, each market has some mechanical details, but those matter less when there is lots of trading, and it usually works okay to let people compete to pick details of the markets they pay to create.

In contrast, in curated prediction contests, the curators pick who participates on which questions, assign them to teams in which they work together, assign them each a weight in a final consensus function that they choose, say how and in what units each is rewarded as a function of their predictions and outcomes, adjust their consensus for various “biases” they see. Curators say that in their studies that this approach gives more accurate predictions.

Which may well be true. Except they don’t do the crucial test where a lot is at stake in the decisions that the markets influence, so much that interested parties try to corrupt the curators themselves. By bribing curators, threatening to get them fired, or just taking over the whole process by which they are trained and selected. The more details that curators control, and the harder to understand their reasons for making adjustments, the more room there’d be for curator corruption.

Institution/system/mechanism design is a very different problem between when (a) you can trust someone to run it, and make discretionary adjustments as needed, and (b) there is no one we can agree to trust, so we need to agree on something simple and clear that will run with few such adjustments. I’m most interested in that second kind of design problem.

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Roemer’s Socialism

Several times before I have posted on trying to figure out what just people mean when they propose “socialism”, and which variations seem how attractive. I just tried this exercise again, this time reading respected Yale economist and political scientist John E. Roemer’s paper What is Socialism Today? Conceptions of a Cooperative Economy, published Dec. 2020 in International Economic Review.

Roemer says “My intention in this article is to retrieve, from the history of the socialist idea, several alternatives to these two socialist varieties” of (1) central planning, which was “toxic” when combined with state ownership and one-party politics in the Soviet Union, and (2) “social democracy” that taxes and redistributes in a familiar world of private firms. He has two proposals for us to consider, explained via math models.

In “Socialism 1”, there is one profit-maxing firm wherein each worker and owner of capital gets paid their marginal product. Capital owners get paid because we need “incentives for citizens to invest their wealth productively. The remainder of firm income goes to firm owners, whom he insists are not being paid for prior entrepreneurial or managerial efforts or investments, not unless the firm was “created by individuals” who did not sell any ownership to others. Yet Roemer is reluctant to expropriate such illegitimate owners because then

We would … lose the monitoring advantages that might accrue to having firms be in part privately owned. And having the state own a large share of firms introduces the issue of political interference in firm decisions.

A linear income tax is instead imposed on everyone, which would result in inefficient work and investment choices if people behaved according to standard game theory, but which they do not because everyone instead follows a cooperative “Kantian optimization” (except that they are price takers due to “bounded rationality.” )

In “Socialism 2”, there are many profit-maxing firms, each of which is entirely owned by its workers and which pays a firm-specific tax set by the state, though he worries that this tax would “discourage innovation on the part of the firm’s workers and investors, who would have no incentive to cut costs to earn above-normal profits”.

In both Socialism 1 & 2 that cooperative “Kantian optimization” behavior ensures the production of public goods and the suppression of public bads such as “employing child labor, polluting, or running assembly lines at a breakneck pace”.

Roemer says that we know such cooperative behavior is possible because the U.S. once taxed the rich more:

In the period 1930−1970, a more cooperative ethos existed in the United States than we experience today: the key evidence is the existence of very high, even confiscatory, taxes on the very rich.

And he suggests we could enforce cooperation via labor unions:

Each must trust that others will optimize in the Kantian manner if he/she does. … [To achieve this,] workers may entrust decisions (such as supplies of labor) to organizations that represent them—unions—which can carry out the Kantian optimization for them.

But Roemer thinks this cooperation requires redistribution, as people won’t cooperate “with others whom they see have much higher incomes”. And it requires the right sort of politicians, as “ethnic, linguistic, and religious heterogeneity frustrate” it, and “power-hungry leaders seek to divide their citizenries by emphasizing identity and difference”.

So why don’t we see this cooperation today? We have the wrong “ethos”:

The behavioral ethos of socialism is cooperation. … they are engaged in a cooperative enterprise to transform nature to improve the lives of all. … Capitalism’s behavioral ethos is individualistic: economic activity is characterized as the struggle of each person against all other persons and nature. The ethos may be summarized as one of “going it alone.”

But Roemer is famous for studying, and approving of, political competition. So for some reason he doesn’t think that sort of competition hinders the right ethos. Unless maybe “power-hungry” leaders appear? Are labor unions to stop that somehow?

Here are my reactions:

1) I don’t see how Roemer’s proposal really does much to cut back on economic competition, or how it prevents the bad sort of politicians. Or how even it is “socialism”. Workers still compete within professions and firms, investors compete to pick the best firms, firms compete to max profits, and politicians compete in elections. What exactly is different?

2) I don’t think all the math really adds much to his proposals.

3) I’m not convinced that his “public bads” really fit the definition,

4) I’m pretty convinced in the absence of war, theft, slavery, etc. firm ownership gains really are returns to entrepreneurial or managerial efforts or investments.

5) I agree that humans do often vary in how “cooperative” they feel and act, and that it can be valuable to promote such cooperation, all else equal. But I don’t at all see high taxes on the rich as much evidence of or cause of useful cooperation. Nor do I see the existence of economic competition as reducing cooperation more than does political competition.

6) Most fundamentally, I just don’t see what Roemer is proposing to do to increase our cooperative inclinations. In our competitive world nations, firms, political parties, and other orgs have long competed to promote cooperation internally and among alliances. The world we see is the result of those attempts.

Merely declaring that we now have “socialism” won’t ensure more cooperation, nor will mass redistribution, nor will increased control by governments or labor unions. Those might induce some temporary cooperations, but they also seem to hinder the longer-term search by orgs to find better ways to induce cooperation.

In the end I just don’t see much to Roemer’s proposals beyond “if you agree cooperation is good, then you should do everything I say and then maybe everyone will cooperate.” No thanks.

 

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“If We Win, You Win”

One of the big wins of capitalism is that it creates strong private incentives for some kinds of social change. If someone has an idea for change, they can get investors and employees to work with them, in the hope of rewards if the change earns profits.

Alas, the most fundamental problem with social change in our world is that capitalism doesn’t encourage many other kinds of changes. Yes, under democracy elected politicians can get some weaker rewards for proposing changes. But for anything but small local changes, it isn’t worth a politican’s time to work out change details, explain it to voters, and organize support. That sort of thing is left to social movements and organized interest groups.

While many will deny it, the main promise that movements make to potential recruits is this: “If we win, you win”. Thus we mainly see movements around changes that can credibly make such promises. For example, crypto promises to reward investors with more money, and workers with valued job skills. Academic and technical movements promoting particular tools promise rewards to those who invest in these tools, relative to those who invest in competing tools.

Sometimes a movement has a vague label, and the real message is “As we ‘own’ this label, if our movement grows then we can send rewards to the high status loyalists among us.” Sometimes the movement’s implicit message is simply “We need to replace old folks with young folks like us in positions of influence.”

In entertainment and fashion movements, the reward can just be looking and sounding more knowledgable and “with-it”. For example, if I watch a lot of Game of Thrones, and it is popular, then in conversations I can relate to and say more about what others discuss. If locally sourced foods get popular, then I can seem more with-it when I cook such foods or recommend their restaurants. And if I grow or sell local food, I can gain even more. If I do or don’t wear masks, and then my mask side wins, I can brag that I supported the winning side.

The key point is that there are a lot of good ideas for change, including ideas that most people will admit are good ideas upon examination, where it is hard to organize supporting movements this way. For example, you can make a movement around a new way to teach kids, as you might start a school or be a teacher that uses it, or you might have your kid taught with it. But it is much harder to make a make a movement around the idea that there should just be a lot less school, unless you push a particular alternative to school.

Colleges rate professor teaching via student evaluations, which seems to have zero correlation with how much students learn, even though learning is the main reason given to attend college. But it seems hard to start a moment to fix this. We probably could construct ways to evaluate teacher effectiveness at student learning, but that would take resources away from other things, and would interfere with letting teachers teach any way they like. And a movement to just stop using current evaluations would admit to the public that we don’t care much about teaching quality.

More generally, when the public will mainly listen to people who specialize in X regarding changes in X, it is hard to make a movement to cut back on X. You can have movements to increase investments in X, or change how X is done, but the people who gain from cutting X are not the people listened to much on X.

Note that early on, movements can just promise gains via personal association with prestigious founders. It is later on when movements need to offer other rewards.

Futarchy would solve this, as it could give much stronger rewards for initiating changes. (At least for problems that government can solve.) But what would be gained by those who joined a movement to promote futarchy? The mechanism is simple, so there’s little to gain from investing in learning how to use it. It doesn’t promise to promise the young over the old, or to promote any particular policies for which we could identify the winners. Just making the world, or your nation better, inspires little passion.

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Who Watches Discrimination Watchers?

Two LA area colleges, UCLA and USC, have a famous rivalry. Imagine that local law firms took sides, preferring to hire graduates from one or the other law school. Imagine further that some USC lawyers at a UCLA-favoring firm complained about this, calling it bias, pure and simple; UCLA grads coordinate to prefer other ULCA grads, independent of their qualifications. These USC lawyers demand a quota system, to ensure equitable hiring. If management resists, they plan to go to the media, to get the public mad about this, and then either use legal or norm/mob pressures to get their way.

Firm leaders say instead that UCLA trains better in their type of law, they can find better people by using personal connections, and many of their clients and collaborating specialists (like detectives) are also UCLA grads. Also, there are productivity advantages from having similar kinds of people, trained similarly, working together.

Now both kinds of theories are plausible. There are often productivity advantages from similar people working together, and yet humans also quite consistently, naturally, and even unconsciously coordinate to use relatively arbitrary features to form mutual-admiration societies that promote each other. And disentangling these effects can be quite hard. The UCLA grads involved may themselves not even know why they prefer other UCLA grads. (Random noise is of course also possible.)

What sort of evidence might we collect to decide? We could look at whether UCLA grads talk directly about preferring each other. We might note when they make mean jokes about USC grads, and prefer to socialize with each other. We could experimentally vary the school label for particular applicants, and see if that changes their chances. But even if that does change chances, defenders of the status quo could attribute this to well-calibrated statistical discrimination, as we can’t usually look into the depths of others’ souls.

We could do statistical regressions to predict who gets hired based on which individual features, and also school. But even if those stats found no significant coefficient on school, after controlling for other features, USC grads might claim that the weights used on which desired features count more are biased by what UCLA grads are taught to do and to value, and it isn’t fair if USC grads aren’t taught the same things.

This same sort of story can of course apply to many other features besides schools. Those who hire may prefer candidates who play particular sports, watch particular TV shows, live in particular neighborhoods, and wear particular styles of dress, or have particular work hour preferences. In all such cases, these choices might be due to productivity advantages, or due to arbitrary mutual promoting coordination. And these same processes can also influence who we choose as friends, lovers, and other kinds of associates.

When the purported feature of coordination is rather specific and local, such as school attended or sport preferred, our usual attitude is to allow local associations to “discriminate”, that is, to make choices correlated with such features. We tend to see competition between such associations as sufficient to discipline those who discriminate badly. If a law firm has a hiring strategy that picks worse lawyers, it will suffer naturally as a result; little need for the rest of us to add punishments. And we also balk at the enormous effort that would be required to impose, monitor, and enforce quotas, or other forms of preferential treatment, on a vast number of such features.

But attitudes on preferential treatments may change as (a) choosers face weaker competition and losses from choosing badly, (b) we consider features that are harder to change, (c) wider social scopes all coordinate to prefer the same features together, (d) many features come together as a package preferred across wider social scopes, (e) the choices made look closer to “dominance” relative to “prestige”, and (f) the features involved are strongly correlated with pretty objective and obvious coordinations to mistreat people that we are confident happened in the past, or in current societies of which we disapprove.

Sometimes we are more sympathetic to intervention, that is, to government or social/norm/mob pressure to insist on something closer to preferential treatment to ensure equity. But note: if we believe in a common tendency of humans to coordinate to form self-promoting mutual-admiration societies, and so are tempted to authorize such intervention to suppress this, we must also believe that this same tendency will induce similar group attempts to coordinate to take control over any powers in charge of such intervention. In order to use that power to directly favor themselves.

For example, if a committee is formed at a LA law firm to decide on the details of a USC vs UCLA quota system, a committee full of UCLA grads would probably make different choices than a committee full of USC grads. Thus these groups would vie for control over this committee. And if the problem was that UCLA grads dominate in the firm, wouldn’t they be most likely to win this contest for control?

The key claim might be that while we worry less about many small uncoordinated self-admiration societies, there is in fact a very large social coalition, spread across many associations, and using a large package of features to promote itself. Making it especially able to resist competitive pressures.

But in this case, I have to worry that this coalition seems especially likely to take control of this intervention process, and then use it to favor themselves. So I don’t feel much more confident about the political coalitions and government agencies that would be in charge of choosing preferential treatment regimes, relative to the many smaller organizations which would instead make such decisions in the lack of such intervention.

I’d rather try to increase the strength of competitive pressures on smaller organizations, to break up this larger coalition. For example, if there were one big law firm in LA that most all lawyers worked for, I’d rather try to break this firm up into many smaller law firms. Or imagine most all judges in LA come from UCLA, are in charge of choosing new LA judges, favor UCLA lawyers in the courtroom, and thus induce LA law firms prefer UCLA grads. In this case I’d rather break up this local cabal of judges, by bringing judges into LA from all across the nation or world.

So what I worry most about are centralized choke points controlled by groups responsible mainly to themselves. Groups who take over these choke points can then arbitrarily favor others like themselves for key positions, and punish any of them for favoring anyone else. Central government agencies, academic discipline leaders, professional associations, accreditation bodies, etc. Even if such people claim that their highest priority is global equity, to resist the worst self-promoting coalitions out there, I just find it hard to trust them.

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Managed Competition or Competing Managers?

Competition and cooperation [as] opposites, with vice on one side and virtue on the other … is a false dichotomy … The market-based competition envisioned in economics is disciplined by rules and reputations. … Just as competition is not a shorthand for “anything goes,” the quick and thoughtless inference that cooperation is necessarily virtuous is often unjustified. In many cases, cooperation is a tool for an in-group to take advantage of those outside the group. …

Competition refers to a situation in which people or organizations (such as firms) apply their efforts and talents toward a certain goal, and they receive results based substantially on their performance relative to each other. … Cooperation refers to a situation in which the participants seek out win-win outcomes from working together. (More)

Raw unconstrained competition looks scary; lies, betrayal, predation, starvation, war; so many things can go wrong! Which makes “managed competition” sound so comforting; whew, someone will limit the problems. Someone like a boss, police officer, sports referee, or government regulator.

However, raw unconstrained management also looks scary; that’s tyranny, which can go wrong in so so many ways! Such as via incompetence, exploitation, and rot. And so we can be comforted to hear that managers must compete. For example, when individual managers compete for jobs, firms compete for customers, or politicians compete for votes.

But who will guard the guardians? If we embed competitions within larger systems of managers, and also embed managers within larger systems of competition, won’t they all sit within some maximally-encompassing system, which must then be either competition, management, or some awkward mix of the two? This is the fundamental hard problem of design and governance, from which there is no easy escape. Continue reading "Managed Competition or Competing Managers?" »

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