Tag Archives: competition

On Government, Morality and Competition

== The age-old enemies of competition ==

As part of my eclectic and contrarian approach to life, I subscribe to a number of conservative and libertarian newsletters and sites… and some rather lefty ones, too. While I am skeptical of all prescriptive-simplistic dogmas, I do keep searching for that germ or core concept are variation that might be worthwhile. As a result, and despite my well-known views about the noxious New Confederacy, I nurse some concepts and notions that shock my left-leaning friends.  Indeed, what follows is sure not to please dogmatists of any stripe. Still, you might learn something.

government-moralOne of the more hard-hitting, Rothbardian-Libertarian sites is Casey Research, headed the brash but smart and sorry-but-I-can’t-help-liking-him master-provocatuer Doug Casey. One of Doug’s Fellows, Mr. Paul Rosenberg, just issued a manifesto assailing the core morality of “government”… a central catechism of the Rand-Rothbard-Cato wing that has taken over libertarianism, for more than a generation. You should read this missive; it will give you a better understanding of the incantations that transfix many of your neighbors. (Hey, you have your own glib and oversimplifying incantations – are you honest enough to admit it?)

I generally shrug off the polemics while sifting for pearls in manure. In this case, however, I felt I simply had to respond. Go have a look… then come back here.

== Hatred of all government – enabling an older enemy of freedom ==

Alas, amid his blanket denunciations of “government” as inimical to liberty, Mr. Rosenberg ignores the elephant in the room — the failure mode that destroyed freedom and competitive markets and enterprise in 99% of human cultures, across the last 6000 years.  Feudal lordships in which owner-oligarchs crushed the hopes of the great masses of peasants below, while quashing any advances that might destabilize their family grip on power.  Steep pyramids of power, in which a few bullies with swords owned everything and used hired priesthoods to declare “it is GOOD that our sons will own your sons!”

Compare the horrific “morality” of any feudal oligarchy to the flawed but often progressively positive morality of a modern, western state.  This is not a comparison that Mr. Rosenberg’s jeremiad can survive… so he evades the contrast, altogether.

Mr. Rosenberg knows darned well that owner-oligarchy is the great failure mode.  The one denounced by Adam Smith as the relentless market destroyer.  The calamity against which our American founders rebelled.  Yet, he is part of the campaign to yell “squirrel!” and point our attention elsewhere.

CompetitionTo be clear, competition is the greatest creative force in the cosmos.  Adam Smith focused on the positive outcomes when competition can be engendered in the best ways.  Competition made us! But in nature it is vicious and inefficient, working slowly, atop mountains of corpses.

It is seldom much better in human affairs. Look across the centuries; we see almost every renaissance of competitive creativity (e.g. in markets) is almost always quickly suborned and ruined by cheaters.  By conniving men with swords or deeds of ownership over everything.  The rentier caste that Adam Smith denounced.  Competition has only survived more than one generation  – anywhere – when it was regulated to minimize cheating. Exactly as Smith recommended.

In fact, that success, getting the good, positive outcomes from creative competition for more than two generations in a row, while excluding the nearly automatic cheating modes that always ruined it in the past, has truly only happened once in all of the history of Homo sapiens… during this marvelous western renaissance we are living in.

COMPETITION-1You’ll notice that my portrayal of the situation fits into neither the simplistic model of the Left nor that of the Right!  One side’s lunacy is to ignore the fantastic fecundity of competition at generating such vast amounts of wealth that we can then afford to do progressive things.  The insanity of the right is to ignore those 6000 years and pretend that the fecundity and productivity can happen amid the usual, festering swarm of opportunist-cheaters!

== Prevention of cheating requires… regulation! ==

sports-regulationThe exact parallel is professional sports, one of the tightest-regulated realms of human experience.  Yes, most of the regulations are decided by cabals of team owners. But I never said regulation has to be “governmental.”  What is key is that most of the regulations in a sporting league are intended to level the playing field and eliminate cheating.  Because if cheating reigns, then the system fails to deliver the desired product… excited fans, eager to buy tickets.  (Do you deny that individual players and teams would cheat, if they could get away with it? Or that the sports franchises become valueless, when the customers notice rampant cheating?)

AdamSmithREgulationAdam Smith knew all of this and recommended state endeavors to balance out the inevitable rise of cheaters and to do what F. Hayek later demanded… to maximize the number of skilled competitors!

You liberals, forget your cliches about Smith!  Actually read and rediscover the founder of your movement.

Smith wanted free public education, state financed infrastructure and health measures, the breaking up of monopolies and other reforms that would ease the way for bright sons of the peasantry to compete with the sons of owner-lords.  The very first acts of the American Founders, after the Revolution, included seizure of half the land in the former colonies from a few lordly families and redistribution, in order to create a (somewhat more) level playing field.

Indeed, many of the reform movements since then have revolved around spreading that circle of fairness.  Not just because it’s nice, but because it is stupid to waste talent and let cheaters stifle competition by the maximum number.

None of which is part of today’s libertarian doctrine!  All talk of level-flat-fair-open competition and Smithian libertarianism is quashed, replaced by the New Dogma — idolatry of unlimited, lordly accumulations of private ownership… which (let me reiterate) was THE failure mode for 6000 years. Property is now the libertarian god! Competition is shrugged off and never appraised for what it is, an explosively creative force that must be maintained, like an engine, lest the grit of cheating destroy it.

WealthNations== To be clear… ==

While I hold many liberal or progressive views, I also proudly and unabashedly proclaim others that are Smithian-Heinleinian Libertarian, in that I deem healthy suspicion of government over-reach to be fit and proper! But I can turn my head and see such dangers – abuse of power – looming from all directions. (Can you?)

Yes, “government” can be captured by crony oligarchs!  That is why the democrats (and never republicans) de-regulated away and erased captured agencies like the ICC and CAB and broke up AT&T and gave an unregulated Internet to the world. And worth-noting: all of those deregulatory measures were opposed by the GOP at the time.

Keeping a close eye on government, skeptical to all over-reach, is a fine role and it inspired my book: “The Transparent Society: Will Technology Make Us Choose Between Privacy and Freedom?

But assuming we do keep the bureaucrats leashed, then it is proper to recall that they… and the scientists too… are “elites” we can use to counterbalance the inevitable cheaters-from-oligarchy who betrayed freedom and competition in every other era.  Indeed, the war on science and all other castes of “smartypants” expertise is being funded precisely by those who want feudal oligarchy to come roaring back.

== But is capitalism a good thing? ==

market-competitionGuardedly, you bet! In that market competition is the engine of our cornucopia and the wealth that enabled us to then take on progressive causes.  Indeed, healthy market capitalism should be viewed as a top victim of crony-oligarchy. Indeed, You liberals need to admit that the issue of “globalization” is not settled and your reflexes were dead wrong.  Aside from the two billion people rising rapidly in China and India…

…read about potential real progress in three more countries that together contain 1.5 billion people.  Nor are these the only such examples.

Have investments in infrastructure, education, science R&D and public health paid off? According to one of the top (still-sane) conservative economics research houses, that “social capital” of shared investment in the future is responsible for most of our current standard of living.

“The United States and the rest of the post-industrial, developed world owe their epic rise in living standards to the underlying “social capital” that properly incentivized innovation, entrepreneurship, and thus technological transformation over the last two centuries.” – says Worth Wray of Mauldin Economics, a noted conservative investment newsletter:

econmics-solowMIT Professor Robert Solow would agree with us on this front. Solow’s work on the US economy – which has become a textbook economics lesson – explains that innovation has accounted for more than 80% of the long-term growth in US per capita income, with capital investments accounting for only 20% of per capita income growth.” 

So much for supply side (voodoo) economics (SSVE), which proclaims that the only way to engender growth and development is huge tax cuts for the uber-wealthy… even at the cost of cutting back on infrastructure, education, science R&D and public health… exactly the opposite prescription cited by Adam Smith.

Funny thing. Not one prediction ever made by SSVE has ever, ever, ever come true.

Liberals, this is your fault too.  Again… until I am blue in the face — instead of bad-mouthing capitalism, embrace Adam Smith and declare true, healthy, flat-open-fair capitalism to be a top victim of the campaign of crony-cabal grabbing by the New Lords.  Investments in infrastructure, education, science R&D and public health are what feed and engender a thriving market economy.

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Is Libertarianism Fundamentally about Competition? Or About Property?

Some folks have heard me beat this drum. But it’s a fresh-enough thought – going to fundamentals that run deep beneath normal politics – so that I am moved to raise it yet again. In part because someone recently asked me, as author of The Transparent Society: “Can transparency and libertarianism complement each other?”

Now let’s have the simple answer first. Yes. A sane, better-focused libertarianism would be utterly compatible with transparency. In fact, it should be the very top priority.

Both Adam Smith and Friedrich Hayek proclaimed that markets are healthy in direct proportion to the number of skilled and knowing player-participants. Indeed, one chief indictment against every  pre-modern economic system is that nearly all of them were based on “allocation” of resources by elites. Allocators are inherently knowledge limited and likely to be delusional, precisely because they are few.

201817627023582025_gCf0T29V_cJust to be doubly clear on that: almost all previous cultures used GAR – or Guided Allocation of Resources – as their guiding economic principle. Whether the allocation was done by kings, feudal lords, priests or communist nomenklatura, it was nearly always the same: decisions over how to invest society’s surplus, which endeavors to capitalize and which products to produce were made by a small clade of delusional elites, as wrong in their models as they were sure of them.

Starting with Adam Smith – and later fervently preached by others, including Hayek – the notion of FIBM, or Faith In Blind Markets, began to compete against GAR.  The core notion? That the mass wisdom of millions of buyers, sellers, voters and investors will tend to emphasize or reinforce better ideas and cancel or punish bad ones. Delusions – the greatest human tendency – will be quickly discovered because no longer will some narrow group be able to nurse them without question.  Hence, getting back to the original question: the more transparency – and the greater the number of participants – the more people can come up with relatively accurate models and act upon them… or acutely criticize flaws in the models of others.

But let’s extend that thought and ask an even more general question.

Isn’t libertarianism fundamentally an appreciation of competition?

CoreEnlightenmentThink about all the core enlightenment processes — entrepreneurial markets, science, democracy and justice. Each of these modern systems produce the modern miracle of positive-sum games… creating win-win scenarios for everybody. The famous rising tide that lifts all boats.

Now sure, there’s a lot more involved than just competition! There are many cooperative or consensus or even moral aspects… read Adam Smith’s The Theory of Moral Sentiments, to see that “competition” does not mean “cut-throat” or the brutal image of social darwinism. Many of today’s libertarians oversimplify, especially the followers of Ayn Rand.

Nevertheless, it is wholly right and proper for a libertarian to emphasize and focus on one main feature of these positive sum processes. The fact that they all arise by harnessing and encouraging fair rivalry among human beings. So let me reiterate.

Competition is the great creative force of the universe.

That’s proved. Competition produced all of nature’s evolutionary marvels… and us.  By far the most successful human enterprise – science – is an inherently competitive process and scientists tend, by personality, to be extremely assertive in going after rivals.  Moreover the arts, supposedly our “highest” endeavors, are inherently – often ferociously – competitive, even when they are lecturing us about cooperation!  And yes, in professing this vast generalization you can see the libertarian in me – (despite my deep disdain for Ayn Rand.)

But the sane libertarian also knows that competition – in nature and primitive human societies – contains an inherent contradiction. A runaway process of self-destruction that historically always led (and I do mean always) to calamity…

Wealth-of-Nations…to the winner turning around and cheating! Victors in ancient combat were never content with incremental or partial success in war. Can you picture the victorious helping their adversaries to their feet and welcoming them to come back to another equal fight the following year? It was human nature, rather, to destroy opponents. The battlefield may have made you great, but you do not want to return there again and again for an endless series of even matches!

Think. In order to have maximum creative output, competition has to go on and on, maximizing innovative aspects and minimizing blood. The clearest example of transforming destruction into endlessly vigorous competition may be the ritualized combat systems called rule-based sports.

Nor is this just about war. Adam Smith saw what had happened in markets and societies for 4000 years. Winners in capitalism tend not to be satisfied with success in the latest market battle, with a cool product or in achieving recent financial or political success. Human nature propels us to use our recent victory to ensure that competitors will fail in future struggles. To bias the next competition. Or to stomp our defeated competitors flat! To absorb their companies. Squat on patents. Create monopolies or cartels to divvy-up markets. Eliminate transparency. Spy on competitors but keep them – and consumers in the dark. Capture regulators and make them work for us. Capture politicians and make the laws favor us.

Suppose that I become rich and powerful. What will I do, if I am one of the 99% who let human nature play out? Then I’ll use wealth and power to game the system so new competitors won’t challenge me! If you deny this, you’re just being silly. It was the way of oligarchy, in 99% of human cultures. The top priority of the owner-lords in all those nations was one distilled goal – to prevent bright sons of the the peasant class from competing fairly with the children of the rich. Admit it. Go ahead, choose a random decade across the last 60 millennia, in some random locale that had metals. And tell me this wasn’t the pattern.

And it worked. It’s in our blood. We’re all descended from the harems of guys who pulled off that trick.

And here is where Adam Smith came in.  He looked around, saw all the cheating by owner-oligarchs destroying the creative effectiveness of markets.  And – in the seminal year 1776 – he called for something new.  A way to get the best, most creative-competitive juices flowing, in the largest possible variety of human beings, while preventing the old failure mode.  And it turned out there was a way.

As in rule-based sports, competition can only becoming self-sustaining… continuing to deliver its positive-sum outcomes… amid a network of transparent, fine-tuned, relentlessly scrutinized — and universally enforced — rules.

The vital importance – and difficult complexity – of “fairness”

Fair competition isn’t just a matter of morality. It is also the way to maximize competitive output, by ensuring that bright people and teams get second, third chances and so on. And creating ever-flowing opportunities for new competitors to keep arising from the population of savvy, educated and empowered folk. That kind of fairness requires rules and careful tending to ensure new competitors can and will always arise to challenge last year’s winners. And that earlier winners can’t cheat. Because… we’ve seen… they will.

the-theory-of-moral-sentimentsLet’s be plain here. The founder of both liberalism and libertarianism – Adam Smith – weighed in about both of these reasons for fairness, To him, they were equally important. All right, liberals and libertarians each emphasize different ones. Liberals talk about the moral reasons for fairness and libertarians the practical, competition-nurturing ones.  They tend to forget that – as followers of Smith – they actually want the same end result!

What they share is something deeper that both movements ought to recognize.  They want every child to hit age 21 ready and eager to join the rivalry of work, skill and ideas.

Liberals should recall that fair competition is the driver, the engine of our cornucopia. The source of the wealth that made social progress possible. And libertarians need to pause, amid their dogmatic, “FDR-was-Satan” incantations, and recall that the word “fair” is the only thing that can make competition last.

Ironically, government can play a role there, if carefully watched. e.g. by ensuring that all poor kids get the care and education needed to become adult competitors! By ensuring that social status – whether poor or hyper-privileged – is never the prime determinant of success or failure. In other words, a sane libertarian who loves competition does not scream “Socialism!” at every state intervention. Instead, that grownup libertarian calmly judges every intervention by one standard.

“Will this help to increase the number of skilled, vigorous competitors?”

And by that standard, suddenly, liberals and libertarians have something to discuss.  Without a scintilla of doubt, measures for civil rights, sanitation and public health, infrastructure, childhood health care  and… yes… the vast increases in literacy wrought by public education… vastly increased the number of citizens capable of independent engagement in markets and innovative goods and services.

Sure, we are finding flaws in our schools! But that judgment (let’s remember) is from the higher plateau of expectations and desires that public education created!  It is only because we achieved 99% literacy that – suddenly – 99% literacy is no longer anywhere near enough. Is it time to bring market tools and competition into education?  Sure. Probably. And I am willing to discuss the assertion that teachers’ unions have “become a cartel.”  Still, when criticism turns into willful dogmatism, a failure to acknowledge the accomplishments and effectiveness of mass society – brought into effect by government, exactly as demanded by Adam Smith(!) – well that’s churlish ingratitude and hardly a basis for saying “let’s move on to something better.”

And there are things government should not do!  Some well-intentioned things that stymie competitive creativity, instead of enhancing it.  “Equalizing all outcomes.  is socialism and I am not on that boat!  But maximizing the number of skilled and ready competitors is a different goal and I am here to hold that conversation. You may be surprised how many liberals and moderates will be willing to discuss it (and occasionally vote libertarian) if you make that the issue, instead of “FDR-was-Satan!”

A Movement based on LOVE of something, not HATE…

Sorry, but this needs to be hammered home, so let me repeat it. Screeching an incantation that government inherently suppresses competition is pure religious cant, disproved by countless counter-examples, from education and public health to the vast stimulative effect of public investments in science and technology and infrastructure. Again, look at 4000 years of history. Instead of simple-minded hatred of government, be more interested in pragmatic ways to enhance creative competition. Then the movement might have the subtlety of a surgeon or mechanic, instead of the sensibility of a berserk lumberjack.  Make it about love of something, not bilious blame and hate.

So… is libertarianism consistent with transparency?

By that standard, transparency is clearly one of the most vital things that libertarians could defend. Hayek himself said that markets (and democracy and science and justice) only work when all participants know as much as possible. Absence of light is death to all four positive-sum games.

Alas, today’s libertarians are (I grieve to say it) in-effect quite mad. They worship unlimited private property, even though it was precisely the failure mode that crushed freedom in 99% of human cultures. And they rage against a system that in general resulted in vastly more wealth, freedom and more libertarians than any other.

This is a quasi-religious idolatry. It makes them complicit allies of the enemies of competition. It makes them murderers of the thing that they should love.


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