The Fundamental Political Problem

 

It hasn’t slipped my notice, and it shouldn’t slip yours either, that by and large, the services in this country that have been consistently performing the worst in recent times have been the services politicians have been attempting to heavily manage. Think about it; the most financially strained, under-performing, crisis-laden services are the health services, social care, education, and the parts of the economy that politicians attempt to govern. Don’t get me wrong, our health workers, social workers, teachers, etc are doing an amazing job under hugely challenging conditions – this is not their fault – but the industries in which they serve, and in which they are understandably so unhappy, strained and unsettled, are the ones that are most incompetently managed and poorly planned by our political overseers.

Despite the clear warning signs of more deeply rooted issues with this model, remarkably, the majority of the population seem to think that these issues can only be resolved by having even more government involvement in the matters, or more public money thrown at the problems, or that things wouldn’t be quite so severe if only the other party was in charge. This kind of wishful pleading and sub-standard party political group-think has been going on for decades, and it is perpetuating a narrative that has the dual effect of misleading the public further and further, and increasing the damage to society as it does so. I will explain both.

The first thing you should always remember is that humans are primarily selfish – by which I mean that they are primed to put their own interests first, and those of their family and strong tie connections, and think and act in a relatively short-term manner. There’s nothing outrageous or shocking about that – humans have limited capacity (time, energy, resources), so it makes sense that they do this. Just as when you’re on a flight that comes into difficulty, the wisdom of “putting on your own oxygen mask first before helping others” is sensible advice (you need oxygen yourself to enable you to help others, even your own children) – similarly, if you are going to have a widely positive impact on others, you need to get your own house in order first.

The kind of pattern of behaviour I’m describing generally works well in the free market too, where pursuing your own family interests first, also creates wealth and value for others too, in a broad competitive and cooperative society. Jack the furniture maker, Jill the florist, Susie the accountant and Dave the greengrocer all make a living by selling their goods and services, but they are of benefit to their consumers too (these are called consumer and producer surpluses). The key to all the value being created here is that, in a world consisting of billions of complex trade-offs, all the agents of participation know their own wants, needs, skills and individual preferences better than anyone else, so are (usually) optimally equipped to make those decisions.

The problem is, this kind of model does not translate very well into the political sphere. Humans being primed to put their own interests first works a lot better in a market where the Smithian ‘invisible hand’ is at work, than in politics. It doesn’t work brilliantly in the market every time, and it doesn’t work badly in politics every time – but, by and large, human selfishness is a bigger problem in politics than it is in the market. Here’s why. Even if you are selfish, greedy and profit-seeking in the market, you can’t make a living unless you are competent enough to provide goods or services that others want and are willing to pay for. But selfish politicians don’t have the same incentives to be as careful with their money, their actions or their policies as the everyday individual, because politicians rarely feel the full effects of their actions, and almost never pay the price of their bad policies. The only way they pay the price is by being voted out at the next election, but that simply means that those self-interests are most energised in favour of short-term decision-making and narrow perspectives that usually benefit a small minority at the expense of everyone else.

And it’s becoming increasingly difficult for society to hold politicians accountable for acting in such selfish narrow interests, not just because humans generally are self-interested and lack the incentive to bring about changes, but because the whole political charade has been partially created by the volitional endorsement of its model by the electorate. In other words, there is a co-dependency by the governors and the governed that acts as a tacit advocation of the human selfishness problem on which the political sphere operates - and this consists of numerous self-centred, short-termist decisions that range from being annoying and marginally costly, to being absolutely dreadful for society.

For example, the main reasons that the health services, social care and education are in such a mess is because politicians aren’t able to make decisions that factor in the range of complexities required for the services to be optimal. As a consequence, they mismanage the finances, and they continually try to solve problems with short term perspectives, meaning that they never keep up with the changing landscape. It’s not entirely their fault; we’ve become a society that demands that politicians solve problems they are ill-equipped and unmotivated to solve properly, so everyone has to keep up the facade – which is why we get the aforementioned futile cycle of the majority thinking that these issues can only be resolved by having more government involved in the matters, or more public money thrown at the problems, or that things wouldn’t be quite so severe if only the other party was in charge. This has been failing for so long, it is mystifying to me why so few people have got wise to this debacle.

To make matters even worse, the selfish, short termism of politicians is even more damaging when it comes to the influence they have on the economy. Again, many people are struggling with the cost of living, yet they seem to be perpetually convinced that if only the failing model grew even bigger, or another party took over to govern it, things would be better. Let’s take the confusion about inflation, prices and public spending as a good example of a long-standing and snowballing catastrophe.

I have a couple of blogs in the Economics sidebar that go into inflation more deeply, but let’s talk about inflation in relation to price perspective. Consider tomatoes. The media has reported this week that there is a shortage of tomatoes. Suppose for simplicity, tomatoes generally cost £2 per kilo. When a supply shock occurs, with no change in demand, supermarkets raise their price to £2.50 a kilo. This is generally a good thing, because nothing has changed in the UK’s money supply, and with the increased price, those who value tomatoes at less than their new retail price won’t buy them. Unfortunately, most politicians and social media commentators have joined the general public in confusing inflation with price increases. Higher value tomatoes caused by a supply shock or a natural increase in demand is a price increase, not inflation; inflation is largely connected to an increase in the money supply. If there was no change in the supply of tomatoes, but the government decided to increase the money supply to pay for a subsidy so that every citizen in the UK could have a kilogram of tomatoes every week, then the price of tomatoes would go up because people now have more money to buy tomatoes. When the money supply is increased, each pound you own becomes less valuable, because there are more of them in circulation.

Returning to self-serving politicians, part of their short-termism is in vastly increasing the money supply to pay for things that will help them stay in power. But when politicians increase the money supply and the credit supply, purchasing power goes all out of whack with the market’s supply and demand signals, hurting most of the citizens in the country (this is also mostly why house prices have continued to rise faster than real wages). In other words, the government and the banks usually benefit from an inflated money and credit supply, but most other people feel the costs – they just don’t often realise why they are feeling the costs.

All this new money hasn’t created significantly more value or any more material resources, which means there is more of it competing for the same resources, which means that, combined with higher taxes to pay for it, things like food, fuel, energy, etc cost more for the consumer like you and me. It is literally the case that short-termist governments are increasing the money supply to favour their own self-interested priorities first, and in doing so, they are diminishing the wealth and purchasing power of almost everyone else. It is also literally the case that this has been going on for decades, and that the public blithely encourages their own wealth diminution with consistent regularity by continuing to vote for this kind of governance.

Furthermore, such a system of governance has continually been manipulated by special interest lobbyist groups, who bid for first dibs on the extra money or credit that has been generated. The politicians are often happy to support these projects regardless of whether they provide value, whether they allocate resources efficiently and whether they make the nation poorer overall, because a) they know there will be little resistance from a general public that doesn’t really notice how these activities are harming them, and b) they know they can make the very same public pay for it through increased taxation, and burden future generations with much of the debt. At the time of writing, this official national debt (what the state owes to private enterprise, including banks) is about £2,800,459,700,000 (it’s even more than that, really, if you factor in other unmentioned liabilities – but let’s keep it simple), and is growing at the rate of about £5,170 per second.

The above is the kind of consideration you should be having when being forced to confront the daily realities of cost-of-living crises, rising prices, inflation, strained public services and a devalued pound sterling. Covid has only exacerbated the problems, of course – but this cycle of problematic and clumsy economic mismanagement has going on for a long time – and that is largely because of the way that the malaware of human self-interest and short-termism has become so infectious in our politics, and because the anti-viral software of the general public is so badly in need of an upgrade.

Reality Check: There Are Many More Ways To Make The World Worse Than Better

The best way to change the world for the better is to set small but realistic goals. Unfortunately, many people, especially young people, are being encouraged to do the opposite, making them preoccupied with large, unrealistic goals. Many of our young people are huge idealists, believing they can make the world significantly better with their political and social causes. When they grow older, most will come to realise that the world doesn't often improve in this way, as virtually all improvements, even the biggest ones, are small, gradual and incremental. We'll return to this shortly.

To make improvements, we need to think, and apply those thoughts to life - and to do so, we need a coherent mental process of sifting and selecting to build a corpus of views and beliefs we think are correct and beneficial to humanity. Although it's not visible to the naked eye, the brain is undertaking these computations with great frequency in quick execution time - sifting and selecting to expunge the mind of all incorrect data - a bit like how an anti-virus scan on your pc sifts and selects the data that's potentially corrupt (whether the mind embraces truth and facts is an altogether more complex matter that we don't have time to explore here).

For simplicity, let's divide the thought system into 3 categories: correct views, agnostic views and incorrect views:

1) I believe x is correct, and x does happen to be correct. (Correct)

2) I am unsure whether x is correct because I have kernels of ideas but don't know enough to be wholly confident. (Agnostic)

3) I believe x is correct, but x does not happen to be correct. (Incorrect)

Every view or belief you have falls broadly in one of those three categories. These also fall under a scale of varying complexity. Take the proposition of exertions of mutually attractive forces as examples. I would be a category 1 on the proposition that macroscopic objects in the universe exert a mutually attractive force proportionally to their masses, and that therefore force is inversely proportional to the square of the distance between them. I would also be a category 1 on the proposition that with a telescope, the size of the smallest object it can see at any given distance is inversely proportional to the diameter of the telescope lens. These are scientific facts about which we should all be category 1.

But on the proposition that, given a large sample of data, the frequency of any element of that data is at a certain size inversely proportional to its rank in a table that measures frequency - well, I am more of a soft agnostic. That doesn't mean it does not hold for a multitude of cases, just that if examples came out of the epistemological woodwork to undermine the consistency of the rule, I would be all set to revise the strength of my conviction.

This is the sifting and selecting heuristic we use, as best as possible, to guard against being wrong. The fact that many people have faulty cognitive software in this process is not down to the hardware (not usually anyway) - it is usually down to bad learned behaviour. This is why falsehood and being wrong has a negative effect on a person's well-being - and why there is collateral damage on the mind's emotional well-being when it is in a state of cognitive dissonance.

I think we should always pay careful attention to laws of nature that are also rules that govern human beings. One such example is this: it is a lot easier to fail than to succeed. It is a lot easier to make a cacophony of discordant noise on a piano than it is to play a tune; it is a lot easier to drop an egg on the floor than it is to clean it up; it is a lot easier to write a rubbish play than it is to write a masterpiece. But why? The main reason is to do with numbers: there are astronomically more ways to do something badly than do something well; there are astronomically more ways to make a mess to be clean; and there are astronomically more ways to write a load of rubbish than there are to write high quality plays.

We shouldn't be surprised: this law runs through the heart of evolutionary biology. Think of genetic mutations - that is, the genetic material that is duplicated, transposed, deleted, and inserted. The measure of success of any mutation is related to the differential probability of reproductive success that it confers on the mutated offspring. New information comes from the random mutations that take place in the reproductive process of every single offspring. Every offspring gets the DNA from the parents, with a small number of mutations. If an organism gets to reproduce, it will pass on those differences along with the additional mutations that take place in the next generation. So the rule of survival is that mutation creates variation, and selection preserves helpful mutations. Those mutations, once preserved in this manner, propagate and their novel genes are distributed throughout the population. New mutations arise, selection favours or disfavours these mutations, and the complexity builds. Most evolutionary changes are the result of gene duplication and subsequent mutation.

Now here's the kicker: most mutational effects are either neutral or negative - relatively few are beneficial. Just as with the above examples we touched upon, the reason most mutational effects are not beneficial is because there are astronomically more ways to be non-beneficial than to be beneficial. It is this principle to which people who want to make a significant impact on the world should pay closest attention. Give a teenager a set of tools and a dismantled car engine, and he'll soon discover that there are many more ways that he can make a mess of assembling it than there are ways he can assemble it correctly. Compared to a global society and its economies, a car engine is very simple. Imagine, therefore, how many ways there are to make a society worse compared with the number of ways there are to make it better.

It's here that we return to the wisdom that the best way to change the world for the better is to set small but realistic goals. Let me offer an illustration. Imagine an island of 100 people trying to create a better society. The inhabitants who prioritise improving themselves, by seeking the truth, learning facts, embracing goodness, utilising their talents and skills and striving for personal progress are much more likely to make the island a better place than the inhabitants who disregard all that and go all out to change the island with an abstract collectivist agenda.

Another reason why there are so many more ways to get things wrong than right is because the world is highly complex, and because it is not easy to manage highly complex things efficiently from on high. This is because humans are adaptive systems that operate in a world that thrives on collective, bottom-up contributions, based on local knowledge and personal incentives tailored to individual goals. To understand why this is so, just consider what you had for lunch today. I had paella, which consisted of rice, chicken, prawns, chorizo, peas, peppers, saffron, and paprika. To gather all the ingredients of that paella, and get it onto my plate, required the interactions of millions of people - each with unique tastes, skills and knowledge - and innumerable local decisions that are based on the decisions of others, all of which dictate how much that paella costs to buy, and how much of it needs to be produced.

Extend that to every person in the world and the billions of local decisions and tens of billions of goods and services that are supplied, and you can see it is an object of staggering complexity that works better than anything else that has ever existed. The economy is the ultimate success in spontaneous order. The corollary of this is just as telling. Because value is created every time there is a single mutually beneficial transaction between buyer and seller, the aggregation of the value created in a global economy and the exponential progression that occurs the more markets become interconnected is built on those tens of billions of local transactions that occur every day on the planet.

I hope that paints a picture of why there are so many ways to make the world worse than better - and why, if you want to make the world better, far and away the best way to do it is to get your own house in order, and encourage everyone you know to do the same. Everyone doing their best to seek the truth, work hard, improve themselves, apply their skills, do good, and use resources efficiently is the best way to reduce the impact of the rule that there are so many ways to make the world worse than better. Conversely, people who have big visions but uncultivated minds are going to heighten the effect of the rule, and make a mess far more than they ever clean up one.