I recently heard an interview with the author of the book, “The Myth of the Rational Voter” and it got me thinking. What is it about voting that slowly brings about bad government? Why does the electorate seem to give up a tiny piece of their essential rights every election (or follow a one step forward, two steps back cycle)? I’ve got the book on my reading list, so one day I’ll be able to match my theory up with what the book says. For now, though, I’ll just have to speculate.
I thought back to the book, “The Wisdom of Crowds” which talks about group decision making to find part of my answer. You should read it, if you haven’t already. The book contained many examples of groups making decisions, making very good decisions, even though few of the members of the group were experts in the area. What’s the difference between these group decisions and voting?
One difference is cost. The good decisions that groups were able to make always entailed some form of expense to the decision makers if they got it wrong, or a reward if they got it right. Whether it was trying to guess the weight of a bull at a county fair to win a prize (the example the book opens with) or betting against Morton Thiokol in the Challenger shuttle disaster on the stock market; the quality of the individual decisions had a direct link to a reward or expense. Isn’t this also true with voting?
No, it isn’t. Because while in voting the decisions are made by the individual, the costs and rewards are spread over the group. That is, if you vote and get it “right” it won’t affect you at all unless you’re on the winning side. Likewise, if you vote and get it “wrong” it won’t you personally, but everyone. This causes a slight shift in the definition of “right” and “wrong” in the election process.
The meaning of right and wrong change from “selecting the best choice” to “selecting the winning choice.” It’s a subtle change, because quite often those are the same. Consider an election on whether to commit national suicide via drinking poison Kool-Aid. In this case (I hope) the winning choice is also the right choice. But it isn’t always so.
There will be times, however infrequent, that the best choice doesn’t appear to be the most popular one. In that case, when enough voters shift sides because they want to be on the “winning” side of an election, the wrong choice is made. Since this doesn’t happen every time, it explains why voting is a slow slide into fascism and socialism. Even more perverse is the idea that the winning side may not actually have been the most popular, but was portrayed as such by the media; becoming a self-fulfilling prophecy.
You can see this shift in action every time someone tells you that you’re “wasting your vote” by selecting candidate X because they can’t win. The only way such a vote is wasted is if the goal of voting is to predict the winner, not to vote for the most capable person.
Voting has the inherent flaw that it does not scale well. There are times when it is an effective way to judge the interest of a group (where should we have lunch today?) but quickly breaks down as the size of the group grows. If you feel like your vote has no impact on the outcome, but you’re going to be subject to its decision, what’s the point in trying to vote well?
Voting is a topic I will visit again, as I think an understanding of its flaws is critical to breaking the official myth that Democracy = Freedom.
Saturday, May 24, 2008
Saturday, May 17, 2008
Modular Units
I was driving home from a dentist appointment the other day when I heard a piece on the radio about a proposal in the federal Parliament. The proposal is to require grocery stores to post unit pricing for every product in addition to the total price already published. As the MP who was talking put it, “This is a no-brainer.” Is it really? I’m not so sure about that.
To be sure, this isn’t the biggest, most earth-shattering law government can devise, and it does have a good ring to it: Giving the Australian family a little bit more information in the constant battle with their grocery bills. But, like all laws, there is a dark side. And it’s an excellent example of why good intentions aren’t enough.
First, like all regulation, this is one more expense which will be passed on to consumers. So, while it may help some customers to pay less, we’ll all pay a little bit more which will mitigate it some. Not to mention the extra cost for the government, which will be seen in our tax bills. What’s worse, in my opinion, is that this regulation will make it even more difficult for a small company to enter the market, keeping the large companies that much further from competition. Regulation’s deep dark secret is the power it gives to large companies to abuse their market positions. It’s not much, I know, but it’s one more cut added to the other 999.
Second, what will happen if this actually works and consumers start buying the cheaper items? Since the overall demand for certain products won’t actually be changing, just shifting from one to another, it’s going to cause the lower priced items to increase in price. I’m already smart enough to bring a calculator with me to the store, so I know unit prices. It will mean a price increase for those of us who already shop smart. That doesn’t exactly tickle me. But it will probably be mitigated by the third item:
It’s probably not going to affect many shoppers. The unit price is already available for anyone who knows how to divide two numbers. Many stores already display this information (Aldi, for example, does this). Are consumers presented with this information more inclined to use it? Some, perhaps. But the barrier to getting this information is already very small, so eliminating that already tiny barrier isn’t going to cause a flood of people to change the way they shop.
In the end, this law is just one more (albeit small) example of government wasting its time in a place it doesn’t belong. Why is this even on the radar of government anyway? Is it really the intention of the government to round off all of the corners in the world to create utopia? I can’t see good things coming from this constant accretion of micro-management layers.
To be sure, this isn’t the biggest, most earth-shattering law government can devise, and it does have a good ring to it: Giving the Australian family a little bit more information in the constant battle with their grocery bills. But, like all laws, there is a dark side. And it’s an excellent example of why good intentions aren’t enough.
First, like all regulation, this is one more expense which will be passed on to consumers. So, while it may help some customers to pay less, we’ll all pay a little bit more which will mitigate it some. Not to mention the extra cost for the government, which will be seen in our tax bills. What’s worse, in my opinion, is that this regulation will make it even more difficult for a small company to enter the market, keeping the large companies that much further from competition. Regulation’s deep dark secret is the power it gives to large companies to abuse their market positions. It’s not much, I know, but it’s one more cut added to the other 999.
Second, what will happen if this actually works and consumers start buying the cheaper items? Since the overall demand for certain products won’t actually be changing, just shifting from one to another, it’s going to cause the lower priced items to increase in price. I’m already smart enough to bring a calculator with me to the store, so I know unit prices. It will mean a price increase for those of us who already shop smart. That doesn’t exactly tickle me. But it will probably be mitigated by the third item:
It’s probably not going to affect many shoppers. The unit price is already available for anyone who knows how to divide two numbers. Many stores already display this information (Aldi, for example, does this). Are consumers presented with this information more inclined to use it? Some, perhaps. But the barrier to getting this information is already very small, so eliminating that already tiny barrier isn’t going to cause a flood of people to change the way they shop.
In the end, this law is just one more (albeit small) example of government wasting its time in a place it doesn’t belong. Why is this even on the radar of government anyway? Is it really the intention of the government to round off all of the corners in the world to create utopia? I can’t see good things coming from this constant accretion of micro-management layers.
Tuesday, May 6, 2008
The Lust for Power
I recently read the following in an e-mail exchange with a left-leaning friend of mine:
First, no one is really motivated by making money. Money is a means to an end; people are motivated by what money brings them. It would be better to say that people are motivated by power. Power over their own lives, the lives of others, the environment, etc. That’s really what money brings a person so the people who run these potentially corrupt companies are really seeking for some form of power. Indeed, I would say that everyone is motivated by power, to some degree or another. Even someone who espouses something as noble as feeding the poor is looking for power over hunger. Power is what drives us all.
Money is not the only way to achieve power, there are many other ways including politics and religion. Taken in this context it really highlights the problem with this way of thinking. The idea that the public sector doesn’t have a “power motive” and that gives it an advantage should make even the most jaded of us smile at its absurdity. Of course the public sector has a power motive, and that power is no less corrupting there than it is in the free-market. It doesn’t really matter why you seek power (for the common good or for your own) it’s the power itself that is potentially corrupting.
I would think it safe to say that political leaders are just as corrupted by their lust for power as business leaders, if not more so. A profit motive is nothing to be feared, it’s something to be understood. We all have a profit motive (we just all have different definitions for “profit”) and that’s not going to change, because it’s a part of human nature.
Free market theorists seem to say that the only true incentive is money. I disagree with that. There also exists incentive for the common good. And whereas that may not be as strong an incentive to many, that virtue is mitigated in a free market system by the idea of profit, which is itself the built-in inefficiency of the free market. This is one place where a government system has a completely non-theoretical advantage over a free market system. Also in a public system, there is less incentive to bilk, manipulate, monopolize, defraud, or otherwise make choices that antagonize the common good.I get the feeling that the above is a common way of thinking for many (if not most) of those on the left of the political spectrum. The idea that a profit motive is very corrupting and should therefore be avoided if possible. Implicit in this is the idea that any organisation which claims to not be motivated by profit will not be subject to the corruption that the profit motive brings, and is therefore preferable. I have a problem with this way of thinking.
First, no one is really motivated by making money. Money is a means to an end; people are motivated by what money brings them. It would be better to say that people are motivated by power. Power over their own lives, the lives of others, the environment, etc. That’s really what money brings a person so the people who run these potentially corrupt companies are really seeking for some form of power. Indeed, I would say that everyone is motivated by power, to some degree or another. Even someone who espouses something as noble as feeding the poor is looking for power over hunger. Power is what drives us all.
Money is not the only way to achieve power, there are many other ways including politics and religion. Taken in this context it really highlights the problem with this way of thinking. The idea that the public sector doesn’t have a “power motive” and that gives it an advantage should make even the most jaded of us smile at its absurdity. Of course the public sector has a power motive, and that power is no less corrupting there than it is in the free-market. It doesn’t really matter why you seek power (for the common good or for your own) it’s the power itself that is potentially corrupting.
I would think it safe to say that political leaders are just as corrupted by their lust for power as business leaders, if not more so. A profit motive is nothing to be feared, it’s something to be understood. We all have a profit motive (we just all have different definitions for “profit”) and that’s not going to change, because it’s a part of human nature.
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