Anti-government derivation of Rawlsian justice

The other day, I got into a Facebook argument over the fairness of a progressive income tax and means-testing of the retirement income assurance system (e.g. Social Security and IRAs). When faced with the assertion that it is unfair to discriminate against relatively wealthy citizens, I responded that true impartiality is impossible given that the state does anything, and therefore the closest thing to fairness is to provide income support to the least well-off members of society.

This is essentially Rawls' "maximin" criterion. As I superficially understand it, Rawls took this as an a priori principle of fairness, and used it as justification for extensive state intervention in a fundamentally free-market (liberal) economy. I want to look at it from the perspective where the state has already intervened in the economy, and we use the maximin principle as a way to minimize the unfairness of the outcome. This is similar to Kevin Carson's maxim that the state "breaks our legs and then gives us crutches", and that we must keep the crutches until our legs have healed. For the sincere statist, this can be seen as a principle of fairness; but for the ruling class managers, it can be seen as a social engineering paradigm to minimize the number of individuals who are willing to rebel despite exploitation.

I start with the premise that every state action produces winners and losers. This is true even if most state actions are positive-sum interventions. To neo-liberal economists, positive-sum interventions should be pursued whenever possible without consideration of fairness, because some of the excess produce can (ideally) be redistributed to the losers to achieve Pareto efficiency. The problem is that it's impossible to identify the winners and losers of each action. Given a large population and a large number of interventions, there will be some people who have repeatedly been on the losing end of these interventions, to the point that their ability to make a living (or save for retirement) has been crippled. Abandoning these people to poverty would be a great injustice.

In this context, we can only observe and manipulate the outcomes. Some people will have done very well for themselves -- through a mixture of effort, benefiting from state policies, and luck (i.e. everything else) -- while others will have done poorly. If we were to select the people who have the least success at life, we would probably also be selecting the people who have been harmed the most by state policies, along with those who exerted the least effort and were otherwise the most unlucky. As such, the provision of an economic safety net can be a strategy for mitigating the cumulative unfairness of those who lose out due to numerous state policies. To take it further, if we're asking the state to compel citizens to provide public goods, then we've already accepted the premise that "we're all in this together", and an economic safety net is justified as a way to mitigate bad luck (which is more in line with the Rawlsian idea).

A typical conservative rejection to the above argument may be that very few (if any) people have been impoverished by the policies that have allowed others to become wealthy, and that differences in effort account for the vast majority of the differences in economic success. For instance, they may say that tax rates on poor people are low, so that even if someone doesn't benefit from state spending, they still have not been crippled by it. Likewise, they may assert that the per-person economic costs of interventions like copyright are minimal, either because they believe that culture would collapse in the absence of copyright or because they believe copyrighted items are essentially frivolous luxuries. While I would point to mass-incarceration for victimless crimes as an example of how state policies "for the greater good" can impoverish some individuals, conservatives would likely assert that the criminal activity (e.g. illegal drug use) was bound to leave the prisoner destitute anyway, or that the criminalization of this activity was only a minor imposition on the criminal, and that their poverty is due to their choice to disobey legitimate authority. Many of the other policies that increase living expenses and depress incomes are so complicated that tracing cause and effect is nearly impossible. Suffice to say, I think that they are sufficient to impoverish many people, through the cumulative effect of many small burdens.

To solidify this viewpoint, I turn to a theory of the exploitative state. The first component of this theory is that while some state actions are positive-sum, many are zero-sum or even negative-sum. The reason that such outcomes are common is that political power is unevenly distributed among the population, and the determinant of state action is that it benefits the powerful -- not that it benefits the population as a whole.

This imbalance of power has a consequence that is even more important than the existence of negative-sum outcomes -- it biases the outcomes such that some people (the powerful) systematically win, while others systematically lose. This scenario does not even require that the powerful consciously exploit the powerless, only that they obstruct any policy that hurts them and promote policies that help themselves (regardless of their impact on the powerless). In this environment, the gains and losses of government action pile up and account for a substantial amount of the wealth variation in the population.

Given this systematic transfer of wealth from the powerless to the powerful (and the consequent construction of both a wealthy and an impoverished class), a person concerned with fairness should not be too bothered by policies that appear to exploit the rich. While an excessively populist attitude can be leveraged by the agents of the state to stuff their own pockets and intimidate critics, adding a clearly defined progressive component to a tax system does not facilitate such shake-downs. By shifting the tax burden from the poor to the rich, we can mitigate the systematic unfairness of government actions. It's only a superficial solution, but it definitely is not the problem.

Did Macklemore & Lewis sell out to the NBA?

You may have heard of this hip-hop duo, Macklemore & Ryan Lewis. They are all "anti-consumerist" and shit, but they just made a promo for the NBA with their song "Wings". This has lead to accusations of selling out, with them  responding that it is all part of their grand strategy to bring their message to the masses. I'm not going to criticize their professed strategy, but I couldn't let stand their assertion that the NBA is tangential to the problematic thinking that is targeted in the song.

Basically, they say that the song is about the idea that you are defined by what you wear, and therefore their beef is with Nike but not the NBA. They excuse the NBA on the grounds that it is just an industry that exists within the capitalist/consumerist system. However, the reality is that the NBA (and pro-sports in general) are the epitome of the consumerist pathology. At the one extreme are companies that provide us with simple commodities that provide a simple utility; at the other extreme are the brands that manipulate our perception of society in order to convince us that we have to give them money in order to be accepted. This is just sick, and it is all pervasive in sports fandom.

At some level, the sports leagues are selling us entertainment -- the spectacle of high-performance athletic competition. But as with the Air Nike, the product is only part of what they are selling. In fact, sports may be the industry that sells us the least real product and the most image. We watch sports because our friends are doing so. We wear logos to show solidarity with our neighbors. Our emotions are ridiculously affected by the outcome of the games (and it's not simply a matter of whether the playoffs will include the team whose performance we appreciate most). Pro sport leagues have managed to tap into our primal social impulses, and claim them as their own property.

They have stolen our own society from us. They are making us pay just to participate in our own community. Other industries do similar things (e.g. the music industry and software firms such as Facebook and Microsoft), but pro sports is particularly gratuitous about it.

To top it off, they have special anti-trust exemptions from the Federal Government. What a bunch of pigs.

Creeping communism in a market economy

In a higher phase of communist society, after the enslaving subordination of the individual to the division of labor, and therewith also the antithesis between mental and physical labor, has vanished; after labor has become not only a means of life but life's prime want; after the productive forces have also increased with the all-around development of the individual, and all the springs of co-operative wealth flow more abundantly—only then can the narrow horizon of bourgeois right be crossed in its entirety and society inscribe on its banners: From each according to his ability, to each according to his needs!

Every once in a while, I see little hints of the above dynamic in our capitalist society. Basically, it occurs when a person has so much money that he thinks nothing of parting with it. I've wondered how this plays out with waiters -- their wages are typically lower than is typical for such work, and it is supplemented by tips. As my income has increased over the years, I have increasingly left "large" tips -- tips that exceed the standard percentage, but which are still very affordable to me. I've wondered how this would play out when taken to extremes --could we reach a point where payment for services was essentially voluntary (from each according to his ability)?

I'll continue with the above thought; but first, it appears that "pay what you want" has caught on in a more extensive manner. Panera has introduced a meal that is funded totally by donations. So far, they say it is sustainable.

Of course, we have to assume that Panera is driven purely by profit; but it does say something about the development of our society that this business model is plausible. I like it much better than the model where the seller gives a portion of their profits to charity -- the "pay what you want" model cuts out the middle man and uses the business' own economy of scale to facilitate the charity (rather than relying on an outside organization), and it also offers much more flexibility in terms of how much a person wants to contribute or take. Perhaps most importantly, it doesn't distinguish between the granter and recipient of charity; they are both just people going about their lives and acquiring their dinner in the same way.

That being said, I don't want to be naive. Both the "pay as you go" system and the over-tipping strategy can have unintended consequences. They can even be cynically manipulated. 

First: over-tipping. Waiters know which customers are likely to leave a large tip, and I expect that they provide more attention to those customers in the hopes of securing a larger tip. This could lead to the perverse scenario where people are provided services according to stereotypes rather than their own willingness to pay for service. That may actually be a step backwards. Furthermore, the erratic nature of tips could make it difficult for potential waiters to decide which job to take; over-tipping could actually make low-wage workers less secure economically (if it becomes linked to lower wages for workers who receive tips).

Second: "pay what you want". I assume that Panera wants to attract people who are ready to part with large amounts of money, and will spend some of their money on other products that Panera offers (and tips for the staff). So this model could not cover the expenses of the entire store. We also have to trust that Panera is not pocketing the excess donations. Finally, Panera could manipulate the system to minimize the number of meals that they provide without full payment. For instance, they can place stores in locations that are only accessible to wealthy people. They could even lobby for laws that drive indigent people out of retail districts (such as "Measure S", which was narrowly defeated in Berkeley, CA).

Given the above considerations, I think that the first thing I will look for in any proto-communist retail establishment is that they have publicly accessible bathrooms. That is the simplest implementation of "each according to his need".

Mandatory economic individualization

I just got an email from an administrator at work describing how certain parts of my compensation need to be handled for income tax purposes. I am in an academic position and this administrator handles most issues seamlessly, so I wish I could ask her to take care of this and let me do my research. But no, that's not allowed by law. Even if I hire a tax professional to handle this, I will have to take care of it separately from my normal economic arrangements.

It makes me wonder how income tax is handled for cooperatives and communes. I assume that they need to find some nominal accounting of individual income for tax reporting purposes. So it seems that even if several persons were to integrate all aspects of their economic lives, they would still be required to act and account as individuals once a year. That's annoying, and one more handicap on the development of alternative economic arrangements.

When currencies collapse (conflicted feelings)

Steve Hanke has charted the collapse of the Iranian rial:

I have conflicted feelings about this:

1) Sadness: this must be causing great hardship for the Iranian people
2) Comfort: this must be weakening the regime, particularly their ability to buy foreign weapons.
3) Discomfort: this collapse (following an embargo) was orchestrated by a regime with a history of dominating and exploiting foreign countries. In some sense, this is just another battle in the wars among various ruling classes.
4) Satisfaction: while any community would suffer from economic isolation, I think that the Iranian state has largely brought this on themselves, and this type of collapse is essentially inevitable. Better to get it done sooner than  later (assuming that the regime is replaced with a more humane one). The Iranian state has suppressed the creativity and initiative of the Iranian people, and their economy consequently is weak. This "black-market" deviation from state-sanctioned exchange rates indicates that the Iranian state is being sidelined within the Iranian  economy. Every black-market exchange is a tiny revolution (a la Agorism).


tip Marginal Revolution

Patents as Tribbles

Via Slashdot, I hear that some economists at the St. Louis Fed are making an argument that a patent system will inevitably grow beyond it's original intent, such that it becomes destructive. I haven't had a chance to read this yet, but it sounds like the basic libertarian critique of the state. As a PR tool, it will be nice to have a solid written critique from an establishment source. Maybe this can get people to start thinking about this phenomenon more generally.

The conservative fallacy: "someone -> anyone -> everyone"

Back in my days of Swords Crossed debates, I read an argument that Americans are in control of their own economic success. This argument was built upon the observation that several people from low-income backgrounds had managed to earn high incomes during their working lives. This belief is a cornerstone of economic conservatism, since it dismisses the need for economic reform and supports the idea that differences in wealth are the result of personal choices.

However, this argument is based on some pretty sloppy logic, which is commonly employed by conservatives without much thought. I just encountered it again coming from Bryan Caplan (via Anagory) and figure I should put my criticism up for critique. Caplan's basic argument is that high income people have achieved their success in part by "being meek", and that many low income (i.e. working class) people are held back by their lack of meekness. He concludes by implying that if only the working class would me more meek, America could be saved from the emergence of the permanent underclass that Charles Murray harps about.

So let me break down the argument:

• Some people have achieved success by being meek.
• Anyone else can also achieve success by likewise being meek.
• Everyone can achieve success by following this strategy.

Let me first enter the caveat that Caplan does not explicitly follow this entire chain of logic; he seems to be equivocal on the second point, and perhaps completely deviates from the third point (I'll discuss this at the end). However, he puts this in the context of Charles Murray's campaign to teach the lower classes how to be upper class, so that implies that this could be a strategy by which everyone could achieve prosperity and status.

So here's my criticism. First, the fact that someone achieved success by following a particular strategy does not mean that everyone can achieve success by the same strategy, even leaving aside the issue of variation in talents. There is randomness in the world, and one strategy will produce both winners and losers. That's not to say that some strategies aren't better than others, just that we can't attribute all differences in outcome to different choices.

Second, even if the strategy could work for anyone, that does not mean that it could work for everyone simultaneously. This is evident from some pretty basic and well established economic models relating to the growth of competitive industries -- that large profits in an industry attract new suppliers to enter the trade, resulting in lower prices and smaller profits. In other words, while one person could get rich by entering this particular market, if everyone tried to do the same thing, no-one would get rich (but they would get normal wages, and the customers would be happy with the low prices).

Another scenario where anyone does not imply everyone is illustrated by elections: even if anyone could be President, there can still only be one President. While politics may be a special case of hyper-competition (as opposed to the regular competition described above), I think that a lot of the success stories trotted out by conservatives (e.g. Oprah Winfrey and Michael Jordon) involve the same dynamics, where individuals made their fortune by attaining a prominent position in society, and providing a service that by the nature of being a society-wide service necessarily was limited to only a few providers. In other words, there can only be a limited number of celebrities whom "everyone is talking about".

Finally, to be fair to Caplan, his argument does not precisely fit this chain of logic. First, he points out that some people can benefit from being overly assertive, but they are the people who are already at the top of the hierarchy or otherwise have a major bargaining chip, and the "meekness" prescription only applies to the rest of us slobs. Second, he seems to frame the benefit of "meekness" as a competitive tool for climbing up the professional ladder, not as a way for low income people to generally increase their productivity and wages. As such, he doesn't really imply that this strategy would "work" for everyone. However, in this case he deviates from the philanthropic motivation behind Murray's campaign, and is basically just telling the lower classes to know their place.

International Trade

This is a plank of my "Left-Libertarian Platform". This post may be updated to better explain the left-libertarian position on this issue, and therefore the comments section is not the best place for esoteric discussion. However, I would appreciate comments that help to clarify the left-libertarian position. Please let me know if I have overlooked an important aspect of this issue, if many left-libertarians disagree with my description of the issue, or if there is a particularly good external resource discussing this issue in depth.

America's political and economic elite have internationalized protectionism and monopoly under the deceptive banner of "Free Trade Agreements". These treaties restrict the actions of citizens on both side of the border, while transferring state powers from representative local institutions to international corporations. The entire notion of these agreements is based on the cowardly logic that our domestic economic dysfunction is caused by the economic decisions of foreign countries. Rather than fret over their "unfair" trade practices, our leaders should be focusing on removing the rot from our own institutions.

Free trade does not require hundred-page treaties; it can and should be implemented by simple, unilateral decisions to remove barriers to cross-border trade. If a foreign country wishes to offer us subsidized exports, then we should take advantage of that opportunity rather than waste time pondering what the market would look like in an idealized world where every nation adopted our preferred economic policies. These treaties are one of many ways that America's ruling class co-opts the political system of developing countries, to the detriment of the citizens of both countries, thereby fueling resentment against the USA. [see Copyrights, Patents, and Trademarks]

While there are legitimate concerns about developing commercial relations with tyrannical regimes that plunder their people's wealth, such concerns are rarely a factor in deciding actual American trade policy. More often, trade restrictions are designed to protect the (often ill-gotten) wealth of American companies abroad, or suppress any challenge to American geopolitical superiority.

Left-libertarians support the following changes to American foreign trade policy:

• End the embargo on Cuba
• Stop demanding that trade partners enact domestic economic reforms (particularly with respect to foreign ownership of capital) as a condition for allowing Americans to trade with them.

Politics has failed

The ongoing budget stalemates, at both the state and federal level, are just the most recent demonstration that American political institutions are in decline. As far as such institutions go, they are still pretty good; however, we can only expect them to become an increasing burden on our society. These institutions are committed to maintaining the status-quo, yet they have made so many implicit promises over the past decades that they cannot realistically fulfill all of them, let alone face new challenges. They will continue to devise band-aid solutions to mounting problems, and continue to prop up other failing institutions (e.g. banks), thereby draining an ever increasing amount of our economic produce.

In contrast, many developing countries (e.g. Brazil, India, China) are ambitiously reforming their core political and economic institutions, which may soon be just as good as America's. While nationalists present this as some sort of threat, we should be thankful for the rise of these other economies that will provide alternatives to our own ailing institutions and pick up the slack for our own decreasing ability to innovate. With our institutions becoming increasingly parasitic, the only opportunity for economic growth will come from technological advances and disruption of our lethargic economic institutions (despite political backing) by way of new competitors. America will continue to contribute to some advances, but not enough on our own to maintain our standard of living in a world with fewer natural resources per person.

This is really our only path forward -- to replace our current bloated institutions with new ones. The hope of reform from within the political system is dead. President Obama was elected on the hope that he could bring this reform, and revive the legitimacy of the state. Two years into his term, there's no sign of success. Obama and his allies dedicated their political capital to major initiatives that changed everything but solved nothing. All they did was reallocate the spoils of power among various special interest groups.

Obama hasn't even done much to increase the transparency, efficiency, or lawfulness of the state. Treaties are still negotiated in secret (e.g. ACTA and such), without public comment, but with plenty of input from corporate bosses. Government departments (e.g. Treasury) still cover up mistakes and corruption. We've actually seen a startling increase in harassment of political opponents under Obama, as Wikileaks was systematically crippled the state-corporation cartel, and Private Bradley Manning has been threatened with exaggerated charges and mistreated prior to his trial.

The end fact is that the state is the enemy of the people. It's officials constitute a class with separate interests and ideology than the public at large. They act to increase the power of their offices and their own wealth. They are co-opted by various wealthy interests (e.g. big corporations) who help them acquire power through elections, exercise power once in office, and reward them with plush jobs after retirement -- as long as these officials manipulate the markets to increase the profits of their benefactors.

There is no real hope of reforming the state. It is evil by nature. We can try to restrain it by political means, but our best hope is to directly break its economic grip on our lives, while we build institutions that actually do serve our needs.

Update: Another good essay on this topic at C4SS: The Last “Political” Essay

Cap and Trade: better than the worst

Below are some thoughts on the cap-and-trade system making its way through Congress. This is in response to a discussion by some libertarian Democrats, in which the bill was heralded as a "free market" reform. I'm assuming the audience is familiar with the basic economics of the situation.

Overall, I'm tolerant of this legislation because I believe that we need to get serious about reducing our CO2 emissions. However, I don't think that it illustrates any revolutionary change in our economy or politics. In fact it is a good illustration of "more of the same", where special interest groups use their political power to rob the rest of us, and politicians respond to every problem (even problems they created) by expanding their own power, as discussed after the Freedom Democrats post. Those two tendencies have made substantial contributions to our environmental problems, and ultimately pose a greater threat to humanity than even rising sea levels, megastorms, and the spread of tropical disease.

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I agree that Cap and Trade, being a broad and direct approach to the problem of CO2 accumulation, is better than micromanagement of indirect contributors to the problem (e.g. fuel efficiency standards). However, I don't think that this improvement is due to libertarian influence in the Democratic Party, and think that the "trade" part of the policy should NOT be lauded as a "free market solution".

First, this lighter form of regulation is due to broad changes in our political culture that have developed over the past 30 years -- and probably got their main push from Regan's political success (and possibly from an academic consensus and the development of new tools for enforcing broad regulations).

Second, there is nothing "free" about the invention of a market that has no reason to exist. As far as I can tell, Economists generally prefer a direct emissions tax over a cap and trade system. We only have the CnT system due to general economic ignorance among the populace (such that Republicans can score points by calling it "cap and tax", simply pointing out that it would increase costs in the same general manner that a tax would). CnT also seems to get some support from the fact that it is easily corruptible, allowing massive handouts to powerful special interest groups. The main effect of the market in emission credit will be to cause uncertainty in the price of carbon emissions. A market doesn't do anything productive if the government has already placed a hard limit on the supply of a good.

Which gets to another big "anti-market" aspect of the Cap and Trade system relative to a carbon tax: there is no way for the public to make tradeoffs between different goods. We are not free to decide, in aggregate, that the ability to emit carbon dioxide is valuable or not. No matter how valuable these credits are, we will not be able to produce more carbon dioxide. Conversely, if a technological breakthru allows us to produce clean electricity for the same cost as coal electricity, then the price of the credits will plummet and we will produce the same amount of CO2 as before. The only change is that the rentseekers and speculators will extract less wealth from the rest of us.

A tax would behave much more like an ideal free market where the price of a good tends towards the cost of its production.

Why is our government creating cartels?

In today's commentary on Marketplace, Robert Reich articulated some thoughts that have been bouncing around in my head since the government started bailing out financial firms: Maybe 'too big to fail' is just 'too big':

We seem to have forgotten that the original purpose of antitrust law was also to prevent companies from becoming too powerful. Too powerful in that so many other companies depended on them, so many jobs turned on them and so many consumers or investors or depositors needed them, that the economy as a whole would be endangered if they failed. Too powerful in that they could wield inordinate political influence of a sort that might gain them extra favors from Washington.

Maybe the biggest irony today is that Washington policymakers who are funneling taxpayer dollars to these too-big-to-fail companies are simultaneously pushing them to consolidate into even bigger companies.

These companies aren't quite monopolies, but the fact that they are "too big to fail" seems to imply that they are involved in a form of market manipulation, whether intentional or not.

The prospect of corporate mergers leads me to ask "what is a corporation": it is a legally binding agreement among producers to regulate the production, pricing, and marketing of a good. This is the definition of a cartel, except that a corporation is treated as a single legal entity rather than a collection of entities. The fact that the maintenance of the corporation is legally enforced (shareholders cannot withdraw their capital) is important, because cartels are unstable in the absence of legal enforcement.

The very existence of a corporation (a creation of the state) implies the need for rules regulating how large a corporation can be. We've become very lax in this regard, and I think we're getting screwed for it.

Liberty, security, and luxury

They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety.

-Benjamin Franklin

Over the past decade we have been constantly exhorted to trade our liberties for safety--both economic and physical. Sometimes, the liberties in question have been essential. As I tried to illustrate with a tribute to Frederic Douglass, we should not view our liberty as a luxury to be sacrificed in the name of security; indeed, liberty is the basis of our security. We cannot rely on others (e.g. the Feds) to protect us from a dangerous world, if that requires that we relinquish some of our ability to navigate the threats and challenges in the world on our own.

The sad thing is that even as we have been asked to delegate our personal rights to a government that seems determined to avoid oversight, we have undermined our own security with our thoughtless pursuit of luxury (eloquently described by One Drop at Too Sense). Our financial system is freezing up because everyone, from bankers down to homeowners, was blinded by the easy money that fell into their hands so that they refused to consider the risks that they were taking. Now people are failing to make mortgage payments, banks are failing on their obligations, and we are facing the prospect of a depression--mass business closure, mass unemployment, and mass homelessness.

This is not the recipe for security. Without a functioning economy we will not have the ability to fight terrorists, or any other military threat that may arise. Anyway, an economic depression will damage our health and community much more than any terrorist could.

This financial problem didn't come out of the blue--the signs have been there for years, most prominently in our trade deficit and the total absence of personal savings. To see how deep we're in the hole, consider the magnitude of our total debt (government and private)--it stands at 350% of GDP after growing for a few decades from a baseline of 150% of GDP from the 50's thru the 70's.

After the terrorist attacks of September 2001, you might have thought that Americans would get serious and dedicate our immense resources to the task of creating security at home and in the world. Instead, our President told us to shop and let him take care of our security. We dutifully continued with a binge of self-indulgence unparalleled in human history (perhaps comforted by faith in the paradox of thrift). Not only did we fail to reshape the world, but we couldn't even run our own country in a sustainable manner. Now that our credit has been cut off, what are we to do?

We've had a scare, and we may have tough times ahead of us. We can recover, and I believe that we can go on to transform the world for the better if we recognize that there are still plenty of problems in the world (even in America) and that we are not entitled to anything. We need to face our problems head-on.

Narratives of civil conflict

Posted at Swords Crossed

Much of our political discourse refers to narratives of civil conflict, either using them to frame issues (e.g. Lou Dobbs' War on the Middle Class) or accusing others of promoting these narratives of conflict (e.g. class war, racism) rather than narratives of unity. Below is a haphazard analysis of narratives of civil conflict. I'd love to hear your thoughts, as well as any recommended readings on the topic.

People have disputes for a number reasons; often disputes are tied to specific situations or events, but they can also be viewed as part of a general conflict between two parties. In the later case, the participants in the dispute view the problem as arising from some intrinsic quality of the other participant. These are the situations that I will be discussing as conflicts: their resolution requires a fundamental change in the relationship between the participants, rather than just reaching an agreement about some specific issue that is viewed as being external to the participants.

Civil conflicts exist between groups in a society, and revolve around access to power within that society. Power is often embodied in control of the dominant public institutions of that society (e.g. states, schools, churches, media, businesses, etc). In some societies, such as explicitly multi-ethnic states, the different groups may be relatively equal in power, even as each strives to gain more power. However, in the USA, narratives of conflict seem to be framed in terms of dominant and subordinate groups, so I'll be focusing on conflicts with that structure. The people who control public institutions I'll call "the elite", whereas the rest of society will be "the commoners".

In a stratified society like this, there is a narrative of unity, which is how the elite/commoners are supposed to cooperate harmoniously. Primarily, the narrative of unity requires that the elite acts in the interests of the entire society. The narrative of unity can also require that the elite allow some institutions (e.g. the family) to remain under the jurisdiction of the commoners, that the elite share the culture of the commoners, that the elite have respect for the commoners, and that membership in the elite is based on personal merit. A narrative of conflict describes how the narrative of unity fails.

The simplest narrative of civil conflict proposes that conflict arises directly from the nature of the dominant institutions in society and the separation of the society into the elite and the commoners. This class conflict narrative suggests that the elite form a coherent group, where control of major institutions is mixed or exchangeable, and status is inherited--resulting in a distinct social and cultural group that runs society with the primary interest of assuring its own status. This narrative isn't particularly common in America, and political opponents are often attacked by suggesting that they are promoting this narrative.

A more traditional narrative in America is that of ethnic conflict. The most extreme case involves the legacy of racism in America. For much of American history, the dominant institutions defined a "black" race that was explicitly excluded from power and exploited. Coming out of that period, many members of the resulting ethnic group distrust the dominant institutions in America and has been the source of "black resentment" and "black separatist" movements. From this perspective, affirmative action programs seem to be an attempt to create a narrative of unity between African-Americans (blacks) and the dominant (white) institutions of America, not an attempt to provide individualistic opportunities.

I was inspired to write this as part of an effort to understand another narrative of conflict, which seems to on the rise in recent years. It seems to be embodied in terms like "angry white men", and preached by talk radio hosts and the Fox News network. It is particularly complicated because it blurs the distinction between the elite and commoners, yet still plays on those concepts. It often attacks the elite on the basis that they hate the institutions that they control. Even as the narrators revel in their outsider/commoner status, they celebrate the power of their institutions and culture. There seem to be several aspects to this narrative.

One part seems to be nationalistic, with the idea that the national elite has abandoned its national base in favor of building an internationalist/post-nationalist community. When the nation in question is powerful and prosperous (like white America), this gets confusing because almost all members are relatively privileged, yet many members see themselves being passed over by individuals from groups that had previously been subordinate (as with Affirmative Action).

Aside from this "betrayal of nationality" narrative, this conservative movement also builds on a narrative of "creeping socialism"--or the expansion of public (elite) institutions into private realms, such as child-rearing, that have traditionally been the jurisdiction of the commoners.

This conservative narrative of conflict also seems to include complaints about the shifting balance of power among public institutions, for example, the expanding influence of schools and decreasing influence of churches.

Finally, I've noticed that conservative pundits like to attack professionals (e.g the media and academics) as "the elite" even as they celebrate the political and economic elite. I find this particularly strange since the professional elite is much more meritocratic than the political/economic elite. Furthermore, the professional elite have very little power over the lives of commoners, yet the political/economic elite can turn their lives upside down on a whim.

So, I'd love to hear your thoughts on this issue, particularly any thoughts on how conservatives can favor expansion of police powers and the freedom of corporations even as they rant about "the elite".

Hyper-competition

Our economic opinions are often influenced by our perceptions of how our decisions will influence the competitive environment faced by ourselves and others as producers. The nature of the competition that we face not only influences our productivity, but also influences our personal lives and social structures.

I'd like to see greater consideration of the impact of competition on our lives, but that seems to be difficult in the absence of a formal description of the competitive environments that we may face. If you, dear reader, are familiar with any writings on these issues, please point me to where I may find them. Otherwise, please consider the following analysis and provide any feedback that you may have.

I think that our competitive environments can be described by a point along a spectrum, ranging from monopoly, to competition, to hyper-competition. These environments are described in detail below, but I am specifically interested in hyper-competition, since I have never seen a discussion of this environment*, despite it's widespread occurrence in our economy.

Monopoly (including self-sufficiency): The condition where an actor's welfare is not influenced by competition. Economically, this arises when demand is satisfied by a single producer. The simplest example is an individual producing a good for his own use. However, producers can increase demand for (and hence, the value of) their produce by engaging in markets with others. The standard definition of "monopoly" applies to this condition, where a market is supplied by a single producer, who typically sees very large returns on his productive labors.

Competition: The condition where an actor's welfare is primarily determined by his own actions, but the benefit is limited by others seeking to access to the same resource. Economically, this arises in markets where multiple producers are satisfying the cumulative demand of consumers. Consumers are free to choose among the producers, meaning that producers will be unable to sell their produce unless they compete effectively with the other producers. This is the competitive structure that is typically studied in introductory Economics courses, where market prices tend towards the cost of production.

Hyper-competition: A competitive structure where an actor's welfare is solely determined by his performance relative to others. Hyper-competition is characterized by "winner-take-all" dynamics, and epitomized by sports and politics. Economically, this may take many forms, but it may arise from intense competition for access to monopoly benefits. A good example of this is our patent system, where "inventors may work independently for years on the same invention, but one will beat the other to the patent office by an hour or a day and will acquire an exclusive monopoly, while the loser's work will then be totally wasted."**

Many parts of economy seem to share this structure, to a lesser extent. I propose three ways that hyper-competition may arise:

1. From inflexible demand, such that productive innovations do not expand the market--they only displace other producers.
   
2. From formal bottle-necks in market-entry. One example would be an educational system where school admission is very competitive, but once accepted, students are almost guaranteed to succeed.
   
3. From informal bottle-necks in market entry, arising from bounded rationality (limited information processing ability). This may arise from a positive-feedback loop where successful exploitation of one opportunity produces a reputation that leads to greatly expanded opportunities.
   

Along this competitive spectrum, I expect to see a change in how much reward a person receives for each unit of good that he produces. Under monopolistic conditions, the law of diminishing returns dominates, and rewards decrease with each unit of production. In competitive conditions, market prices are independent of one's own produce, so the producer gains a constant reward for each unit produced. In hyper-competitive conditions, the producer's reward per unit increases as total production increases (this increase may be continuous, or involve thresholds).

Overall, hyper-competition might be expected to produce Pareto distributions in human achievement, where success is not directly proportional to skill, but instead increases as a power function of skill. Conversely, the reduction of hyper-competition would put greater emphasis on the "long-tail". It's interesting to note that a progressive income tax may counter-act the influence of hyper-competition on income.

Any thoughts are appreciated.

Footnotes:
*A Google search for "hyper-competition" turned up two concepts. Most prominently, a business-school professor has been using the term to describe a gradual erosion of market imperfections, thereby eliminating many semi-monopolistic advantages held by assorted producers; this is not what I'm talking about. My concept is most closely reflected by the writings of some random blogger, who discusses "winner take all" market conditions, specifically with respect to high-tech entrepreneurship.

**This quote is from Ayn Rand's essay on Patents and Copyrights, which I remember as the epitome of what I dislike about Rand. Her rejection of this "objection to patent laws" is quite dismissive, even as it exhibits glaring circular logic.