Blogging’s been a bit slow because I’m on vacation this week. I expect to keep blogging all week, but it may be a bit lighter than usual.

This post started as a comment to this post, in which Aretae discusses the differences between formalists and "econo-secessionists."

First, he asks where power comes from.

The formalists say, along with Mao, from the barrel of a gun

The secessionists say that scarcity creates power. Slaves with useful skills were paid and treated well, both in ancient greece and the antebellum US. Guns and force doesn’t get you what you want, if the other party is irreplaceable, or even scarce.

The relevant question is: "who has power?" So, to reformulate the answers: formalists say the guys with the guns and secessionists say the guys who control scare resources.

I have a good friend who’s a proud redneck (he has lots of guns, his house doesn’t have a basement but he’s currently digging one with a shovel and a wheelbarrow, and his favorite food "is sandwiches," which is apparently singular). One time I told him that if civilization collapsed he should pick me up – we’d make a good team since I stockpile gold and he stockpiles guns. He said, "why would I team up with you, when I could just make you give me your gold?"

Sometimes, the rednecks know best.

The next question is "what creates effectiveness on corporations":

The formalists say, along with many folks, the corporate governance structure.

The secessionists say that competition and especially the dynamic threat of failure/customer-exit is the cause of corporate goodness. No risk of failure, no exit, no goodness. Full stop.

Here, the formalist answer is "accountability," not corporate governance. For the average pizza restaurant the secessionists’ favored mechanism of failure works well. Governments, however, are not pizza restaurants. "Failure" for a government is not a viable solution. Egypt is showing us what failure looks like for a government – this is precisely what we should avoid.

The goal, for anyone who does not wish to see people killed, should be to create a government system that is accountable without requiring failure.

The final question is "what causes bad government outcomes":

The formalists say distributed power, democracy, the cathedral’s influence, the lack of accountability in Government employees, and point at the USA.

The secessionists say that Rent Seeking, Public Choice and Game Theory issues, and Hayekian power-knowledge differentials are the problem, and point at the USA vs. many smaller contemporary countries with the formalists’ causes but small (relative) problems.

The formalists actually say lack of accountability. The true rulers of the US cannot be held responsible for failures of their favored policies. Things like "rent seeking" only work in settings like this, when the government is totally unaccountable. The things that Aretae lists here, are symptoms, they should not be confused with the underlying disease.


4 Responses to Econo-secessionists

  1. Thomas says:

    I agree that rent seeking ect. are symptoms of unaccountability. It still begs the question whether it’s possible to square sovereignty with accountability. You need somebody who is willing to accept accountability when by definition nobody can force him to do so. Seems like a pretty bad deal to me and thus only possible with some deep cultural sense of duty.

  2. Handle says:

    “Competition” is not altogether dismissible as a rationale for the comparative effectiveness of private corporations.

    I would put it slightly more abstractly; the frequency at which one’s processes are tested by reality and the sensitivity or immunity of those processes (and the agents that execute them) to real-world failure.

    The military, for example, is a more-or-less corporate-style hierarchy with its own systems of accountability and methods of refining standard operating procedures. Briefly, the closer people and processes are to to the tactical mission, the better the system works. Because Soldiers will die when things go wrong.

    The farther away one gets from boots and bullets, then the closer one gets to ordinary government civilian work, “Strategic / Rear Positions” the harder it even becomes to tell whether someone has screwed things up, and the more deteriorated becomes the systems of improvement, adaptation, discipline, and accountability.

    At this level, even the corporate organization of the military does very little good at all, because formal organization does not always equal the actual patterns of operation into which people tend to slide when working in certain environments.

    The collapse of private-sector unions in this country is another case in point of the “reality-test” framework. Corporations which had both strong labor unions and highly-capable non-unionized competitors couldn’t match quality and price because of labor costs. The consumers did the natural thing, and those corporations folded, required favoritism bail-outs, left the country, or outsourced, etc. You can’t sustainably have free-trade, no major competitive edge, and higher labor costs. So private unions have imploded because their employers faced the reality test.

    But public unions have exploded. Even the TSA’s going to get one. FBI is next. Certain DOD civilian groups have been agitating about this for a while. It’s only a matter of time. Why? Because their employer (USG) is a monopoly which doesn’t frequently face the reality test.

    Soon, Unions will be synonymous with public employment, as if it wasn’t already hard enough to
    discipline, motivate, and fire civil servants. The key here though is that the union bosses get to extract their dues directly from your paycheck whether you like it or not, and they get to take that money, write themselves huge checks, and then deliver what remains straight to their Democrat politician allies.

    So, follow the money. Taxpayer -> Gov -> Public
    Employee -> Union -> Democrats. Since this is all completely automatic as a result of the law, it’s really Taxpayer -> Democrats.

    One law could change all this. You simply repeal Jimmy Carter’s 1978 “Federal Labor Relations Act”. That’s all. A one-page bill. With a single stroke of the pen, everything changes overnight.

    Quick guess as to the odds of that ever happening…

  3. aretae says:

    several items

    1. Scarcity is primarily scarcity of skill, not scarcity of stuff. If you’re the only engineer in the country and the main generator breaks…doesn’t matter they’ve got all the guns. They need you too much. Hell, the generator doesn’t even need to break…you win by having scarce skills.

    2. Piggybacking off the first commenter (Thomas). The econo-secessionists might suggest that accountability at the top is the issue, while the formalists seem to be focusing on accountability down the line.

    3. Further on this line…Bruce Bueno de Mesquita can be rephrased as saying “the %age of folks that the person at the top is accountable to strongly determines political outcomes. More is strictly better”

    4. It turns out that the evidence on a lot of fronts suggests that new entrants doing radically different things, and the ability of companies to truly fail (the company closes) are major determinants of effectiveness. I’ve seen it most recently in schools. School choice succeeds with failure and new entrants, and fails without it. If you’re hoping for effectiveness where there are no new entrants and no real option of failure…you ought to be praying, because we haven’t seen a lot of success anywhere ever under those conditions.

    5. FLRA. I propose that as the new target for the republicans come ’12.

  4. There is a test for this theory coming up in the decades ahead…Seasteading. Its based on the model of competition for government. If it fails to effect change for the better in existing governments, the formalists win, if not, the secessionists win. If ‘win’ is too strong, well, then, their credibility is respectively increased/decreased.

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