a failed system of incentives isn't just responsible for this, it's responsible for most of societies avoidable ills. if we would just own up to the reality of many situations and start providing proper incentives we could engineer away many problems.
what incentive does a cop have to stop crime when he makes more money and is safer busting stop sign violators? what incentive does an elected official have to work for the good of his constituents when he will be out of office soon? what incentive do parents have to raise decent children when retirement is socialized and the government baby sits for them? what incentive do businesses have to compete fairly if the government offers easy outs and chances at monopolization (telcos).
It doesn't matter how long they stay in office, as long as they don't do counterproductive things to stay in office. Most corporations have a "One share, one vote" policy, so people tend to have a long tenure if they're good at what they do. If corporations switched to the democratic "One man, one vote" policy, you'd expect that, prior to any election, they'd just redistribute some money from their big institutions to lots of individual investors.
I think democracy is a disaster. Votes based on income would be silly -- what about people who own lots of non income-producing assets, like timber, minerals, early-stage companies, etc? Surely a system of votes based on wealth would be smarter.
The governing business should operate like the cereal business, or the software business, or the anything-but-government business: people pay a reasonable price for a particular service, and get what they pay for. You'll notice that a company like Google is somehow able to make its users happy, even though it doesn't have monopoly power on multiple industries or the ability to print arbitrary amounts of dollars, and yet the government is unprofitable even with these advantages.
Just tell me how you'd convince Larry and Sergei (and their shareholders) to turn Google into a democracy, and I'll concede that perhaps democracy is a sensible system after all.
Except that government, almost by definition, deals with goods that necessarily involve lots of externalities, involve a public good, or require transaction costs too great for any one entity to pay them. One person's service is another person's annoyance.
Think about the highway system. Say that people paid a certain amount for the privilege of driving on the roads. But then what about the folks whose land was taken for the highway? How about the ones who now have to put up with the noise of thousands of automobiles? And then what about positive externalities - the business owners who make more money because cars can get to their businesses, but don't pay to use the roads themselves?
Or think about the legal system, including consumer protection agencies. What happens if someone contracts for a service, and then never pays up? Maybe enforcement of service contracts should itself be a service. But then what if that service itself breaches its agreement? Who do you go to?
Democracy's a pretty shitty solution, but it exists for a reason. All the alternatives seem to be worse.
Except that government, almost by definition, deals with goods that necessarily involve lots of externalities, involve a public good, or require transaction costs too great for any one entity to pay them.
Interesting. Most of the big expenses my government pays seem to involve some sort annuity scheme in which everyone is required to participate in the same retirement plan, even though the plan doesn't have nearly enough capital to handle its obligations. They also do health care, and they blow stuff up. It seems to me that most of the externality-based arguments can be taken care of with insurance and derivatives markets.
For example, if we decide it would be a Good Policy to make everyone eat an apple a day, because it would increase life expectancies by one year on average, we could just mandate that they all do it. But we could also make a bet on the average life expectancy in the US, pay people to eat apples, and pocket the cost differential. I'm not sure the transaction costs would be lower, but 1) the incentive to lower costs would be there -- no bureaucrat DMV ever got a seven-figure bonus for cutting costs, but plenty of bankers, consultants, and private equity executives have, and 2) it would have lower exit costs than our current democratic experiment.
But then what if that service itself breaches its agreement? Who do you go to?
David Friedman claims that they'd form little federations predicated on adhering to certain standards. If one company didn't follow through, it would have to renegotiate separate treaties with every other enforcement agency (and would lose lots of goodwill).
Democracy's a pretty shitty solution, but it exists for a reason. All the alternatives seem to be worse.
Yes, yes, and no. It would be pretty weird for Democracy to be exactly the wrong way to run almost every human institution, even though almost every human institution is run better than the average democracy.
Democracy is not designed to be efficient, in fact, it is designed to be the opposite. Why? Because with efficiency comes power to the top, and with power to the top comes dictatorship - which is the whole thing that democracy is trying to avoid!
Don't compare government to business. It's apples to oranges. Government is designed with checks and balances - which are by definition inefficient - because bickering about the same thing for six years is better than making the wrong decision - we've all ceded the control of our lives to this thing, I want them to take all the time they need.
Be careful not use the current American experience with government as an excuse to throw the baby out with the bathwater.
Democracy is not designed to be efficient, in fact, it is designed to be the opposite. Why? Because with efficiency comes power to the top, and with power to the top comes dictatorship - which is the whole thing that democracy is trying to avoid!
This sounds like a tautology. Democracy avoids centralizing power, which is good because that's why we have a democracy. Not even circular logic; I feel like I just walked along a semantic Möbius Strip.
Don't compare government to business. It's apples to oranges. Government is designed with checks and balances - which are by definition inefficient - because bickering about the same thing for six years is better than making the wrong decision - we've all ceded the control of our lives to this thing, I want them to take all the time they need.
Again, circular logic. We must have an inefficient monopolistic provider of oil|cars|operating systems|law enforcement and defense and pensions and healthcare and education and mail delivery and a host of other unrelated services|hula-hoops because, when we are betting everything on a single provider, it's better for that single provider to muddle around than to do something bad.
I think you just made the argument for splitting the government up, not for keeping it running the same way.
Be careful not use the current American experience with government as an excuse to throw the baby out with the bathwater.
Our crazy populists haven't killed very many people at all, and the rise in crime (and the money paid for crime-avoidance) is much lower in this country than in others that democratized even harder and faster. So it would be unfairly generous to your position if I used the US as a single example -- think of it as a way to handicap my arguments so things will stay fair.
what incentive does a person have to own up to the reality of a situation and engineering away the problems when they can enrich themselves by shirking responsibility and profiting from the problems?
"if we would just own up to the reality of many situations and start providing proper incentives we could engineer away many problems."
Just?! Engineering incentives is the fundamental problem facing humanity. Capitalism is about not money, but aligning the motivations of large groups of people.
Can we improve on capitalism? For sure. But don't underestimate the problem you're taking on.
I suggest you explain your own comment in the first place. Who is closer to anarcho-capitalism in philosophy? The former central banker or the guy who wants to increase taxes?
Prescient.
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