aretae — 2010-08-23 12:32:11 +0000

Devin,

You say:

"As Jonathan Rauch and Mancur Olson have written, there are nothing special about special interests. Voting blocks that divert national wealth to themselves at the expense of the whole are natural result of our system of popular elections."

Actually, that's not what Mancur Olson says. Olson says that every system of government ever tried results in this. At least, in his book The Rise and Decline of Nations that's what he says.

Otherwise excellent.

aretae — 2010-08-16 11:59:44 +0000

Great post, thanks.

Ken — 2010-08-12 12:44:26 +0000

The flood plain example also includes a heaping helping of moral hazard. The land had value in the first place because until the .gov appropriated the land, they were probably forcing taxpayers to compensate the homeowners every time there was a flood. The land therefore had more apparent value because the apparent risk of building there was shifted to "someone else." But that probably also takes us beyond the scope of the original discussion, and requires a whole Austrian Econ 101 seminar. :-)

2010-08-12 05:02:17 +0000

I have to confess to not being a big fan of drawing too sharp a distinction between smart and wise although I would concede that people of varying talents approach things in different ways that give them advantages in some situations over others. I think it is important to consider that you can be smart but wrong, not because of the ideology or training you bring to the table but just because you got it wrong.

I think Kissinger would have quickly forgotten his ideological line if someone could have convinced him that Mugabe was some kind of communist who would end up in power with universal suffrage. That would have scared him more than the possibility of Rhodesia becoming a second South Africa (which I presume was the primary concern then). I don't know if anyone gave Mr. Smith that suggestion at the time. ;)

I have to admit that I am either too dense to understand Moldbug's quote or just don't have the historical background to makes sense of it.. I guess that is my loss.

2010-08-11 14:29:35 +0000

"Bankruptcy exists when liabilities are greater than assets."

That is an interesting definition of bankruptcy but I think the real definition is when liabilities and commitments exceed your ability to pay.

I think Mr. Finbarr's comment addresses how a fiat currency addresses this, I would address a different point.

All the explicit and implicit liabilities (I would call some of them commitments or obligations) are within the government's ability to limit or control so they can not exceed their ability to pay in any real sense. The government can terminate most of those commitments through legal means should the need arise. Do so might seem impractical now but when push comes to shove it can be done.

Also, how do you quantify the assets of a nation? The tax base of the United States of America is monumental in size and that is the primary asset of the government. I think bankruptcy (what we are really talking about here is default) is unlikely to be a concern for a long time to come, even if the unsustainable behaviour of the last thirty years of government continues.

2010-08-11 13:39:30 +0000

Now I have descended into nit-picking but I just can't help myself... Even if Y pays X one millionth of the fair value of the resource you still have growth.

The odds getting a good deal are not all that small depending on your perspective and the situation. Government appropriation can be a good example. On a floodplain near my home the government appropriated land prone to flooding that have a market value of zero (probably negative because the buildings on them need to be destroyed). They were all paid handsomely for them. For the local economy this represents growth, these people will now buy new land and build new houses with those funds.

It is obviously a complex situation because the land and houses had their value decline over time as it was realised that flood risk in the area changed so then net growth relating to the property over one time period might be negative and over another positive. I think that is just a problem inherent in measuring growth, you have to measure it from a start and an end.

Ken — 2010-08-11 12:39:13 +0000

Well, the sole real-world circumstance under which Society Y's agents would pay the same amount to X's agents while taking unobtanium ore by force as they would pay via voluntary exchange is sheer coincidence, and the odds of that are small.

Devin Finbarr — 2010-08-11 05:21:19 +0000

My reading of the history is that they ruled in the interests of general prosperity but they failed in their most important mission, securing international recognition for the state. Not smart enough I suppose.

My reading is that they were in an impossible position. The white Rhodesians were outnumbered, so they could only beat Mugabe's uprising with mechanized weapons. But that requires oil, which Rhodesia did not have. The U.S. put pressure on Mozambique and South Africa to cut off Rhodesia's oil supply, unless Rhodesia agreed to implement universal suffrage. Without oil, Rhodesia was forced to give in, and they granted universal suffrage. Mugabe won (quite violently) and the rest is history.

I don't really see what Ian Smith could have done differently. The U.S. simply doesn't compromise when it comes to suffrage.

There is also a difference between being smart (cognitively quick) and being right (wise). Very often smart people (people who can process cognitive problems very quickly) get the wrong answers due to ideological training and socialization. The Kissinger was probably much smarter than Mugabe, but he got the wrong answer due to ideology.

Moldbug had a great quote about this the other day: "An important factor to consider when looking at the late ancien regime is that power attracts talent. As the ancien regime started to lose power, it lost talent. Hence the reactionary Jesuits of France, whose prediction of the results of the French Revolution was accurate, do not measure up in talent to the Enlightenment philosophes, whose prediction was inaccurate. Thus we see the paradox, very common over the last two centuries, in which the dumb people are right and the smart people are wrong. Healing this wound is perhaps the great intellectual challenge of the 21st century."

2010-08-11 04:12:54 +0000

What the heck, why does it even need to be voluntary and legitimate? Y takes the resource forcibly from X but then pays them the same amount as above for it, you've still got some kind of growth!

2010-08-11 04:08:37 +0000

I guess my inclination towards the importance of the 95% stems from the need for consumers in sustainable growth. If the consumers can be outside of the society we are evaluating or we are not discussing sustainability then I suppose they matter very little, particularly if you can oppress and abuse them at will having them as dumb as possible might help growth... the whole conversation then enters into uncomfortable territory!

Now, on a bit of a tangent... the evidence for Rhodesia's success seems to be quite convincing, but you seem to be implying that we know that the ruling elites were that much smarter than the rest of the population. My reading of the history is that they ruled in the interests of general prosperity but they failed in their most important mission, securing international recognition for the state. Not smart enough I suppose.

The evidence seems to indicate that Mugabe is (or rather, was, now he seems to be insane) a very smart man but that his interests lean towards maintaining power rather than the interests of the nation. He is of course now famous for violating your first condition and it reaping the rewards as the economy collapses.

Devin Finbarr — 2010-08-11 01:51:13 +0000

What does a balance sheet look like for a sovereign with a fiat currency? It's liabilities are all denominated in dollars. And on the asset side, it has a printing press that can print infinite dollars. If you define sovereign banktupcy to mean liabilities > (assets - the printing press) then yes, the U.S. is bankrupt.

Devin Finbarr — 2010-08-11 01:47:54 +0000

By the "bell curves being what they are" reasoning, both items then sort of become the same thing, right?

No, not if the top 5% is of a different race/caste. Then you can have a top 5% with an IQ of 110 or something, but a bottom 95% with an average IQ in the 70's.

Conversely, if you have a population with an average IQ of 100, it'll be very hard not to have a top 5% that's over 110, unless there was some sort of crazy sci-fi style virus that only killed smart people.

I would really be interested to see information regarding the growth of Congo and Rhodesia (Zimbabwe) during the periods you cite

I talk about the congo in this comment. Moldbug talks about Zimbabwe here.

In my definition, I was referring to economic growth of any sort. I can see the case for not including resource extraction, though.

Foseti — 2010-08-10 15:22:51 +0000

I'm not sure I agree.

First, I think the US is bankrupt. Bankruptcy exists when liabilities are greater than assets. The US government's liabilities (explicit and implicit (e.g. Fannie, Freddie, Social Security, Medicare, Medicaid, benefits to federal employees, etc)) are greater than the US government's assets. Therefore it's bankrupt.

The US can continue to function in this state because it's on a fiat currency - at this point I think we agree.

Ken — 2010-08-10 12:19:07 +0000

With respect to J's point: Assuming the exchange was voluntary and not fraudulent, economic growth did take place. Each party exchanged items from their respective assortments such that they believed their assortments had more value after the exchange than before. If one holds to the utility theory of value, both parties were better off after the exchange.

If one wants to argue there's growth and then there's growth, I tend to agree. Society X may find itself offered lower amounts for future extractions of unobtanium ore, as marginal demand falls and the costs of recovery rise (in other words, the value of each marginal unit of unobtanium to Society Y falls). Society X will then have had to develop other exchangeable assets in order to maintain its higher standard of living.

2010-08-10 05:59:56 +0000

By the "bell curves being what they are" reasoning, both items then sort of become the same thing, right?

I would really be interested to see information regarding the growth of Congo and Rhodesia (Zimbabwe) during the periods you cite. I would suspect that at those periods they were essentially kleptocracies (and might well have relied on foreign labour and expertise to taken anything not nailed down) but I do not have the background to really assess that. I do not know how you could assess the average IQ in those countries at those times, nor the IQ of the leaders.

As I write this I feel a pull towards the question of what economic growth actually means. If society X is sitting on an ore deposit and society Y gives them enough money to triple their GDP in exchange for extracting it and it involves no other effort or participation from society X was there real economic growth? My instincts say no, but I don't know that I could really refute it either. It does not seem to match your definition based on conditions you cite though, I interpret the determinants above imply a self-contained and sustainable growth.

Matt — 2010-08-09 20:49:29 +0000

"But the resident of Autonomion is not free to join a binding community of fellow humans who share a common purpose or ethos."

Says who? If he wants to do that, and can find fellow members for his would-be community, who could or would stop him?

Perhaps the operative word is "binding"? But then, even on Communitarius, the all-encompassing states are constrained from shooting you for trying to leave, so even they aren't all _that_ binding.

Ken — 2010-08-09 12:32:13 +0000

I was thinking about aretae's well-considered comment about exit. I realize it's not part of the condition of instruction, but ceteris parabus, the folks in Autonomion are probably a lot closer to being able to get themselves off that rock permanently than anyone on Communitarius. That's exit, to say the least. :-)

I'm sure Jobsopolis is stuffed to the rafters with nifty technological whizbangitry, but the liberty to innovate, and to enter into voluntary contracts to enjoy the benefits of knowledge one doesn't possess oneself (there appears to be no impediment to either on Autonomion, going by the description) is more important by far.

Foseti — 2010-08-09 12:31:29 +0000

Jobsopolis, for sure.

Honestly, if I had to pick another one it might be Jesusland (even though I'm an agnostic and my wife is half Jewish). If religious societies are well organized, they're tough to beat.

Devin Finbarr — 2010-08-09 04:35:04 +0000

Well, bell curves being what they are, any society that an intelligent 95% of the population, will also have a very intelligent top 5%.

There are examples of societies that have done quite well economically while having a low average IQ but a small cognitive upper class (for instance the Congo in the 1950's, or Rhodesia in the 1970's). But there are no examples of rapid economic growth when the population IQ is less than 85 and there isn't any "talented tenth". So it's vitally important to at least have some people of higher IQ, and very helpful if the entire country is high IQ.

2010-08-08 08:31:11 +0000

> cognitive ability of the top 5% of the population

Ah, the common libertarian myth that it is the elites that drive the economy and that the perfect meritocracy of a market system will allow them to always exercise their excellence.

I would argue that it this is inverted, it is the cognitive ability of the bottom 95% of the population that is "Vitally Important" and the top 5% would be "Very Helpful ". In order for growth to exist there must be a viable market base and labour pool to work with and it takes responsible and productive citizens to have both those things. (One might even argue that it is not the "top 5%" that drive an economy, most the smartest people in the world have more interest in progress and inquiry than financial success, I won't though.)

Andrew — 2010-08-07 06:33:14 +0000

+1 to all this, basically.

Any of the other 4 would have to be managed absurdly better than I imagine for them to hold a candle to Autonomia for me.

Devin Finbarr — 2010-08-06 22:12:33 +0000

Even if the maximum penalty for leaving a binding community was a large fine or expulsion from the territory governed by the community, a person's ability in practice to leave such a community becomes limited.

it strikes me that there might be a natural feedback process that would lead to communities that increase the stringency of their requirements and penalties to experience a decrease in the number of young, innovative individuals willing to sign on.

Perhaps. Or perhaps, strongly binding communities, by being strongly binding, would hold on to members much more than loosely binding communities. The strong communities would offer their youth a lifetime, binding membership, contract at age 18 - it would be very hard for that 18 year old to desert the community that they grew up with.

And note that the hardcore patriarchical communities (Amish, Mormon, Puritans) are far more fertile than libertarian communities. So actually I'd suspect the opposite. Without limits on the size of a binding community, Autonomion over time would turn into Communitarius.

Todd — 2010-08-06 22:00:24 +0000

I think you may be proving a bit too much. Why would Autonomion ban "binding communities" rather than just prohibit the enforcement of contracts that stipulate the abrogation of "certain inalienable rights"?

Also, if contracts are the result of a common law discovery process rather than a legislative statutory process, is it really so hard to imagine that cultural standards would emerge preventing the recognition of particularly heinous penalty clauses?

As to the binding communities themselves, it strikes me that there might be a natural feedback process that would lead to communities that increase the stringency of their requirements and penalties to experience a decrease in the number of young, innovative individuals willing to sign on.

aretae1 — 2010-08-06 21:56:20 +0000

I find all 4 of the nations of Communitarius odious. On the other hand, it's not too hard to increase you 4 to 400 and get a place that looks free-er than Autonomion.

I'm suspicious of any system that doesn't have exit. Exit is the primary vote for freedom anywhere and while Communitarius has marginal exit (to other crappy choices), Autonomion has no exit. No exit means that Autonomion decays faster.

I'd choose Autonomia, because the other 4 all suck badly, and I believe that the feedback system of folks who are actually responsible for their lives (libertarian means, I assume, no welfare but private charity) is fabulous.

Devin Finbarr — 2010-08-06 20:52:56 +0000

Hmm, let me alter the constraint a little bit.

If a binding community is not attached to land, then perhaps it can be of unlimited size. But if the binding community is attached to a piece of property (like a condo association or a homeowners association) there is a size limit of 1,000 people (or perhaps 500 acres).

In the example you gave, if the binding community is linked to property, the offended person could not leave the community because there would be no piece of property in the nation outside of the binding community. So he's stuck.

Even without the property constaint, the lone member might not be able to leave the binding community. The binding community might rules against trading or doing business with "deserters" of the community, which would effectively force that individual to stay in the community.

EDIT: as I think about it more, Autonomion would have to ban all "binding communities" great than a certain size, even one's not linked to land. Any binding community that's actually binding, would have as part of the entrance contract some sort of penalty for leaving or deserting. That leaving might be a substantial fine or boycott, or it might be as harsh as death. Being a place of ultra-strong contract law, the courts of Autonomion will enforce any contract, even contracts that punish breach of contract with death.

Todd — 2010-08-06 20:33:23 +0000

The 1,000 person limit on a binding community seems kind of arbitrary. If it is a voluntary association, why should there be any limit? Let's say that an association became so popular that literally every person subscribed to it. Then, one day, it made a rule that so deeply offended a single person that he decided to become the lone member on the planet to abandon the group. Assuming the group could not make any rules to the affect that it had the right to collect a tribute from non-group members, where exactly is the problem?

Devin Finbarr — 2010-08-06 16:46:04 +0000

I'm curious, which would you choose?

I would probably choose Gaiatopia or Jobsopolis if the implementation was decent. I have some libertarian instincts, but I really wouldn't want to live in a community where was sold at corner stores.

Foseti — 2010-08-06 15:39:07 +0000

I guess I think planet Autonomian has more liberty.

However, I think most people would prefer to live on Communitarius, given the choice.

Devin Finbarr — 2010-08-06 15:29:08 +0000

I think a more common definition of liberty is "freedom of choice". Does using that definition change your answer?

Devin Finbarr — 2010-08-06 15:27:25 +0000

Another question comes to mind: Autonomion is the most minimal of minarchies. How does the .gov _stop_ individuals from joining binding communities for a common purpose* or ethos, provided they don't aggress against non-volunteers?*

When a binding community is greater than 1,000 people, it is considered a "government". As such, it must respect the libertarian constitution, and no longer has the power to create rules such as, "everyone must attend church". It's very similar to how the U.S. supreme court has applied the first amendment to bind against local town and city government.

Along the same lines, how is the freedom of Communitarians to change countries enforced?

I don't that's relevant to the thought experiment. Maybe it's enforced by very, very, very strong tradition.

one decides that one's own common purpose is superior to any other common purposes on offer, and sets out to bring the benefits of common purpose to the rest of the world,

I think the general problem is that multi-polar situations are more unstable than uni-polar alignments. But I don't want to debate it now, so let's just say that on Communitarius the countries are on separate continents that are completely defensible.