It's the competition, stupid
Published on , under Politics, tagged with ideas and libertarianism.
Since high school I've always had the hunch that freedom was the obvious way for a society to progress in terms of efficiency, equality, wealth, knowledge and justice. I've been biased to justify everything as lack of freedom or as a consequence worth suffering because of an excess of freedom.
But I later came to a realization: concepts like justice and equality are mere ideals hard to reach universally. What is fair for some, might not be so for others. Concepts like these, only make sense when applied in a pragmatic way in a given time and place.
So maybe socialists, anarchists, conservatives and liberals all have something to add to the table. To some extent, their claims might be relevant or absurd, again, depending on the context of such claims.
Using mantras like seize the means of production, let the free market solve the problem, education should be our priority, etc, are hollow and vague, without proper context, hypotheses and facts.
So now I don't simply praise freedom per se, but freedom as a framework for decision making, freedom to explore different ideas, that on purpose or as an unintended consequence, increase the chances of prosperity for our society, as a whole, in the long run.
...And justice for all¶
There is no way to specify in precise general rules, known beforehand, what might be necessary to achieve results that would meet the standards of cosmic justice.
― Thomas Sowell, The Quest for Cosmic Justice
First we need to understand some key limitations about the nature of our existence.
We live and die in a universe where many things are defined in a way we do not understand nor control and can change for that matter. The flow of time, cancer, gravity, the weather, the certainty of death, the Creation itself 1.
Because of that, we are not 100% free. We are conditioned, limited and biased by what we know and don't know, by what we can and cannot do, by what we perceive and feel, by what we believe.
Every day, all of us are making decisions that involve gambles. These gambles are sometimes big like what occupation to pursue, whom to marry, how to invest your savings or to have unprotected sex. Other times those gambles are small: ignoring a phone call or trying a different menu in your favorite fast-food restaurant.
The decisions we make are based on ideas of a reality we interpret according to our limited vision of partial facts. We also need to factor the cost of opportunity, you only have so much money or some much time.
In every decision we make, we take our chances. Every choice has it's consequences. Since no one knows the future for granted, there are always risks implied, unexpected outcomes. In other words, success cannot be guaranteed for anyone and by anyone.
We can point to an idea of "doing the best according to the circumstances we live in", and that in these circumstances, part of our future depends on the quality of decisions we make, but other times it depends on our luck. Because as it happens, in a sufficiently complex system, often those decisions are not made by us, yet we bear the consequences nonetheless: the candidate you didn't like gets elected president, a lighting strikes your home and burns your appliances, your neighbors were noisy celebrating a birthday party and you couldn't sleep the night before the final exam, etc. You can imagine that, under these circumstances, there is no perfect decision, because the obvious right thing to do might not always be an option.
In a sufficiently diverse society, equality of opportunities is not guaranteed either. Some are born in rich families and some are born in poor ones. Some go to good schools and some don't even go to school. Some suffered an accident and some won the lottery. Some are deaf and some are blind. Some are strong and some are weak. Some are handsome and some are ugly. Some were loved by their parents and some were not even wanted.
Amidst the multiple factors that generate differences in a population there's gender. Very basic and yet very profound in it's impact on personality and behavior.
And even if opportunities are provided, not everyone might be wise to take advantage of them. Some act rationally and some act compulsively. Some might love to travel, some just prefer to stay home 2. Some like to study or work hard and some simply like to slack. Some only read the finance section in the newspaper and some just read the horoscope. Some eat healthy and do sports while others smoke and follow a sedentary lifestyle. Well you get the point, equality of outcome cannot be guaranteed.
Seeing how complex, limited and fragile our existence is, would you say that life is fair? And if not, who should fix it? How should justice be provided? What does justice or equality mean? What if to benefit some, others have to be affected negatively? Can a fair society be built? How would you define fair? 3
But wait, not only we are interested in some form of justice, we also want to have the chance to enjoy the fruits of prosperity. So we have to agree on it's definition too.
Some societies may measure progress by advancements in human rights or the level of happiness of it's individuals 4, others by more concrete figures like GDP, child mortality, use of green energy or number of college graduates.
Maybe all of them are desirable, but which one is more important and how much more important? Remember you always have limited resources, so there will be sacrifices needed to be done.
Moreover, pray consider that there are multiple ways to measure things like efficiency, innovation or even poverty.
If the right thing to do is not self evident, this leads to an obvious conclusion: there is no absolute standard of justice and prosperity. The pursuit of these universal goals is futile. They can only be approximated to an agreed ideal that might change over time and is prone to subjective interpretation, if no reliable metrics are provided.
Something we can do to mitigate this is to agree on a set of artificial impositions and metrics that we are all going to live by. Rules of the game, if you will, that are better, to our understanding, for the kind of society we want to live in.
While these arbitrary rules might come from traditions, the constitution, moral conventions or even scientific papers, they cannot be agreed universally, nor will they be perfect. Ideally we would have the opportunity to be part of their selection and later fine tuning somehow.
Public enemy number one¶
Now how do get there? As it happens, in the search for justice, equality, happiness or a better life for that matter, we come together with people alike and form an organization, that would pursue the common goals we share.
To achieve those goals, different organizations might have different approaches.
There are organizations that allow other organizations to co-exists, ie. multiple newspapers, soccer teams, microprocessors manufacturers, NGOs, etc. Anyone can choose which one to interact with, based on whatever their motivations and possibilities are.
There are other types of organizations that don't allow alternatives to co-exist. Governments are the most representative example of this kind.
I'm considering the government as an organization that defines rules and takes measures that are for all to obey or comply (a.k.a forced collectivism). Governments have the power of law enforcement, which other organizations don't.
Can governments be the right tool for the job, to become agents of change, bring prosperity and justice to it's people? Of course they can!
Yet you might want to hear some aspects to keep in mind before you fully commit to them.
Governments are run by politicians¶
Lets assume politicians are honest and corruption is a thing of the past (left behind with the roman empire). They would rather loose votes than lie to their people and promise things they cannot deliver.
They were elected because they are the right choice for the job, not because they are friends or family of powerful people, nor because they are famous or charismatic and give beautiful speeches. They do what is correct and not what is politically correct. They define themselves as public servants and do not look to increase their influence and power and least they want to perpetuate in it.
They convince people about their ideas by providing reasonable arguments backed by real data, and not through costly advertising campaigns or feeding sensationalism. They do listen to constructive feedback and do not demonize those who have different opinions.
Finally, they do not believe reality can be shaped by laws, but rather understand that changes have to be implemented in scheduled phases and their results tracked down.
We all know that this is asking a lot, but, even if you are not governed by populist, dishonest or mediocre bureaucrats...
Governments are the opium of the people¶
The best way to take control over a people and control them utterly is to take a little of their freedom at a time, to erode rights by a thousand tiny and almost imperceptible reductions. In this way, the people will not see those rights and freedoms being removed until past the point at which these changes cannot be reversed.
― Pat Miller, Willfully Ignorant
See, it's not all about politicians.
Alfred Adler once said: "It is always easier to fight for one's principles than to live up to them", and this is precisely why it is very common to have zombies supporting visions that sometimes they don't fully understand or have the interest in scrutinizing.
This hypocrisy is a golden opportunity for aspiring leaders to influence people's desires and discontent.
Political campaigns nowadays are not that different from marketing campaigns, where ideas of a "better nation" or "let me solve all your problems for free" are being sold by messianic reformers.
In this sense, paternalism, understood as a mechanism of managing individuals, often benevolently, but intrusively for sure, is a real threat for the governed.
The state, as any other organization, is a living organism, that expands trying to survive and perpetuate. There's a natural tendency for governments to grow and freedoms to shrink, taxes are never enough, regulations lead to more regulations 5.
Soon the government becomes a services company, providing or overseeing unemployment insurance, energy production and distribution, health care, education, food stamps, housing, border security, you name it, taking decisions for people as opposed to having each individual figure out their ways to solve their particular necessities, through voluntary transactions. Now there is a government-dependent horde of voters that need someone to fix their problems. Decision making is transfered to the state. The costs, are never accounted for, neither mentioned explicitly.
Governments don't have enough competition¶
An economy has untold possible outcomes. Its complexity comes both from the near infinite variety that can come from permutations of simple rules, and from the fact that billions of humans are playing the game simultaneously, each affecting the outcomes for each other. Many of the rules are written down nowhere, controlled by no one, and constantly evolving. Individuals, businesses, and governments are all players, and none of them can know the full consequences of their decisions.
― Tim O'Reilly, To survive, the game of business needs to update its rules.
Every policy that any organization imposes is an experiment basically. If the organization affects too many people (an entire nation for example), the experiment feels a lot like putting all the eggs in the same basket.
Governments make decisions that are difficult in nature (basically they regulate how people should live), which is very dangerous if there is only one choice.
In this regard, governments have become accepted monopolies. More specifically, they are thought to be good monopolies, managed by well intentioned experts with grand schemes to solve big problems.
Policymakers might only be "experts" on some field but will never come up with a sufficiently intelligent design for social engineering and problem solving, that compares to the vast knowledge embedded in the cultural intelligence 6 of a society, which has developed a luck-affected trial-and-error method for dealing with challenges on top of decentralized flows of information.
Moreover, the way representative democracies work today resembles a lot like a winner takes all kind of game. Sure you can change it every 2, 4 or 5 years, but what voters end up doing is buying a combo of policies, or giving a blank check to full-time employed senators, paid with generous wages, to figure out new regulations. You like the minister of education but you dislike the minister of culture? Want to keep the economic policies but change the immigration policies? You cannot handpick what you want and what you don't want, it's an all-in, pretty much.
In this sense, your choices are limited to picking an ideology and backing it up so that it gets to power and hope the government does more of what you support and less of what you dislike.
Should something go wrong, the cost of switching to a different provider of public affairs planning is too high and sometimes unaffordable for an individual. The only choices left for free citizens are:
- To go outlaw
- To leave the country/state/province/city (if you are lucky you just leave the city, if you are unlucky you leave the country, if you are really unlucky you'll have to leave the region/continent)
- To change government (if you are lucky via elections or, if you are really unlucky, through a ~~violent~~ revolution)
Henceforth, centralized and external decision making doesn't seem like a good idea, even if the ones that make those decisions are doing what they think best, specially when considering the unforetold consequences of well intentioned initiatives 7.
What this really means is that governments as a mean of change, can be slow, inefficient and a bottleneck for progress. But, above all, they are a very risky choice.
The existence of the state is a necessary evil, but a constant menace to free society if strict limits are not imposed to it's responsibilities and size.
To have progress, you want a system that is competitive, not one that is dominated by a single power.
― Joel Mokyr, Why the Industrial Revolution didn't happen in China.
The important thing to note here is that even if the government is the chosen agent of change, the odds of succeeding with top-down central planning are going to be low, compared to a society where decentralized experimentation and discord are the core values.
A society that tests it's ideas constantly, enabled by freedom (understood as a very limited set of artificial impositions 8), and guided by humility (necessary to accept that one does not have all the answers), will see higher chances of success over those who do not have a framework of constant improvement that challenges status quo.
This is precisely what free markets propose and, to some extent, accomplish. Non profit and for-profit organizations compete openly to achieve their goals through transactions and resource management, trying to influence one another, in a profit and loss system.
A handful of governments are also implementing some form of social experimentation to test ideas and their impact and help reduce the risks of new legislation.
Consider the controversial example of universal basic income, in which people are given money for the sole reason of being alive, no strings attached. This idea brings up many intriguing possibilities, like reducing extreme poverty, simplifying governmental aid programs, but at the risk of letting people slack and spend the money on vices or simply bankrupt the system. How much money, how often, etc, are questions hard to answer. Pilot studies are being run by governments and NGOs alike with randomly chosen samples of citizens to confirm hypotheses, before claiming it as a genius or stupid plan.
Lastly, the closer the government is to it's governed, the better. Prefer local institutions over federal governments and direct democracy to help reduce collateral damages and the gap between what the sate does and what people want. This way, lots of small and independent governments can act as socio-economic labs running experiments simultaneously. Cities could be a minimum, viable and independent unit of government.
There is no absolute standard of justice and progress. Justice should be provided and progress should be sought in ways that compete with other views or understandings of the same concepts.
The availability of choices cannot guarantee, but increases the chances of prosperity in a free society, by enabling ideas to be probed in competition with other alternatives.
In the long term, and even in an unfair system, competition is what drives progress, while centralized planning is the public enemy number one in this regard.
It's the competition, stupid 9.
"There is a theory which states that if ever anyone discovers exactly what the Universe is for and why it is here, it will instantly disappear and be replaced by something even more bizarre and inexplicable. There is another theory which states that this has already happened."
"Travel is fatal to prejudice, bigotry, and narrow-mindedness, and many of our people need it sorely on these accounts. Broad, wholesome, charitable views of men and things cannot be acquired by vegetating in one little corner of the earth all one's lifetime."
The container revolution increased world's trade level and productivity enormously. Within 5 years of “containerization,” trade among nations increased 320%; within 20 years, trade increased by 790%. In 1965, before containerization, a crew could move 1.7 tons of goods per hour. After containerization, a crew could move 30 tons per hour — a 17.6x increase in productivity. Prior to their introduction, cargo shipping was a labor intensive job, requiring multiple packing and unpacking of the goods. The container revolution was of course opposed by unions whose jobs would be affected/replaced by automated cranes. What should be done in cases like this, where automation and standardization affects workers but benefits the productivity of a nation? Going further, what would be a just policy for fair trade? When is it ok to apply protectionism? Should it be done at national level? Regional level? For how long? ↩
Gross National Happiness: The term was coined in 1972 by Bhutan's fourth Dragon King, Jigme Singye Wangchuck. Originally the phrase represented a commitment to building an economy that would serve Bhutan's culture based on Buddhist spiritual values, instead of western material development gauged by gross domestic product (GDP). ↩
The effects of regulation -- both benefits and costs -- are difficult to measure, particularly when considered in the aggregate. As a result, analysts often turn to indirect proxies to understand the reach and impact of regulations over time. Some of the statistics used to track aggregate regulatory activity over time are presented here. ↩
Apparently we tend to overstate the importance of the individual genius or leader while understating the gradual, cumulative nature of change. The Evolution of Everything, a book by Matt Ridley, argues that we observe the decentralized, incremental, trial-and-error process of evolution in all human endeavors, including culture, law, business, and technology. All this learning and knowledge is condensed in the Cultural Intelligence of a society. This might also explain why top-down solutions to alleviate extreme poverty are often ineffective. ↩
Plans not always go as expected. Sometimes this is because the solution was narrow-focused on solving just one side of the equation, and the solution backfires because affected agents react. For example, a minimum wage law is focused in getting workers paid more, yet this could increase prices consumers have to pay and increase the willingness of shops to replace employees with self-service kiosks, affecting existing a future employees who were supposed to be benefited by this regulation. Another example is environmental legislation, that forces industries to use/sell energy efficient products, in hopes of reducing energy consumption and pollution, just to later find out that this leads to an overall greater demand of energy. ↩
Innovation is often threatened by regulators who require licenses or interfere with it through incentives and subsidies. Napoleon Bonaparte said: "My motto has always been: A career open to all talents, without distinctions of birth", meaning that every person should not have artificial impositions or obstacles that prevent them from pursuing a career/goal, should they have the opportunity and capacity to do it. ↩