The Symmetry of the Extremes

 

The extreme left and extreme right who continue to dominate the headlines may be extremely opposed in viewpoints, but they are highly alike in terms of instincts, temperament, and having the same blind spots. They may hate each other, but they are similar in their underlying psychological style and the way they process social reality.

To think of one or two examples off the top of my head, the extreme right displays a hugely disproportionate hostility towards immigration, whereas the extreme left is too soft, and in denial, refusing to acknowledge any challenges or trade‑offs at all. Another one, the extreme left tends to trivialise or overlook the complex structural and personal factors that leave people struggling financially, while the extreme right frequently lacks the empathy and attentiveness needed to understand the genuine pressures those same people face. And another, the extreme right tends to idealise tradition by demanding conformity, and trivialising diversity in ethnicity, culture and identity, whereas the extreme left tends to idealise equality by demanding conformity, and trivialising diversity in skill, talent, effort, competence, and risk. It would be easy to think of many more examples.

The upshot is that neither side is a healthy one to be on, because both approaches misunderstand more things than they illuminate. Both overlook the complex structural and personal factors that shape people’s circumstances and constrain their choices; both misunderstand the complexity of how people reveal their preferences, and form meaning and belonging; and both extremes build their politics on half‑truths, oversimplifications and extremities that don’t map onto the highly complex, multifaceted lived reality of society

Beneath the bluster, each extreme is animated by the same moral certainty and ideological intransigence, leaving little room for humility, revision, or the possibility that the world is more complicated than their beliefs, policies and slogans allow. And any politics that forgets that will always get the world more wrong than it does right.

The Mercy in Price Hikes

Some people are getting agitated and hostile at the pumps. Now, I know the cost of living pressures are tough, and I sympathise. But what we have here is an arithmetic challenge that’s basic Econ 101, and it’s not the people selling fuel who are at fault. In fact, quite the contrary – raising prices in a time of shortage is the least bad thing for us. Here’s why.

Before hostilities began, the world consumed roughly 100 million barrels of oil each day. But with Iran limiting the Strait of Hormuz to most international shipping, we read that only about 80 million barrels are now reaching global markets. That’s the arithmetic problem for the global economy: until that bottleneck eases, the remaining 20 million barrels of daily demand must effectively be squeezed out. And the only mechanism capable of enforcing that reduction is higher prices. Now let me reassure you that it’s the least bad thing for us.

As you’ve heard me say before, at its core, economics is the study of human behaviour regarding competing preferences and how societies allocate scarce resources among competing uses. Prices are the signalling system that makes this allocation possible – and higher prices are vital information signals, telling buyers, in real time, that the resource is now more valuable relative to its availability.

Now, here’s what’s happening across society that you won’t fully see because it’s so thinly spread. Many of those who can put the resource to its most productive or urgent use are willing to pay more for it, while many who value it less step back. Tragedy of the commons issues aside, here prices reveal the hierarchy of preferences across millions of people – those transactions are revealed preferences showing those who value the fuel the most at the margin.

Naturally, no price signalling mechanism is perfect – for obvious reasons – but the alternative is far worse. Without price signals, scarcity would have to be managed through much less effective ways. The price system gives us the best whack at creating a relatively orderly, decentralised way of matching limited supply with the people who can use it most effectively and need it most during the tension.

Some Of The Curious Things About Supply & Demand

When it comes to goods and services in the free market, four things will happen: 

1) Increase in Supply

2) Decrease in Supply

3) Increase in Demand

4) Decrease in Demand

I'm sure readers who've been with me this long won't need explaining what the direction of the price and quantity arrows take with the various increases and decreases (here's a wiki page if anyone is unapprised).

The reason I'm writing this is that although most people know the basics, there is often a very wrong assumption made. Given the size and complexity of the market, it's fairly obvious that the variances on prices, supply and demand are impossible to predict precisely in the future, and hard to keep track of in the present. For this reason, in the short term it is not at all unusual to see prince increases and quantity increases for the same product (ditto decreases).

When we see cucumber or coffee or cereal consumption on the up (or down) while at the same time seeing the prices on the up (or down) it is simply a sign that within the laws of prices, supply and demand there are often underlying, unforeseeable events that add a bit of disorder into the mix. That is to say, in the short term, supply and demand arrows are not immutable; they are indicators that predict longer term behaviour, especially if one changes other things stay relatively constant.

Imagine Tom Joad eats lots of rice and a small amount of fish. As rice becomes harder to come by and the price starts to rise, his food budget is strained to the extent that he is has to cut back on fish and demand even more rice. The increased demand ramps up the price further and Tom Joad experiences a vicious rice-fish circle. Contrary to popular opinion, rising prices can in principle lead to increased demand, not decreased demand (this is what is referred to in economics as a 'Giffen good'). 

Put it this way, generally speaking though, if the consumption of rice, fish, cucumber or oranges steadily drops, you can be quite sure that in the long term production and (or) prices will be altered to match, and that's a general rule that's fairy reliable.

About 25 years ago in the UK, petrol pump protesters brought the country to a standstill by creating a shortage of fuel - and there was talk recently of it happening again. Naturally, prices increased and many angry consumers declared that when one or two firms hike up their prices on a particular product that that means they have a monopoly on that product. Not only is that usually not the case, it mostly reveals just the opposite; it exhibits healthy competition – it is competition revealing scarcity in this case that raises prices.

If something is in short supply (like, say, oil when there is a domestic crisis or trouble in the Middle East) it is assumed that the increase in price is due to a monopoly company hiking up its prices. If a company really could increase their supply with a supply restriction, they wouldn’t ned to wait for a domestic crisis or trouble in the Middle East to do so. The economy doesn’t facilitate the simultaneous profit from unrest and a single monopoly. 

At the time of the petrol crisis in Britain, some people even suggested that there should be a mandatory cap placed on individual sales – say of £30 or £40. As I said at the time, that’s a bad idea – a £30 or £40 cap on individual petrol sales probably would not have had the desired effect that many think – it would more than likely increase overall consumption, because even more people would head to the garage, and that would also cause more misallocation. 

It is as crazy as trying to regulate the crude oil supplies by legislation – one might as well forget the near-ineluctable law of economics, which says that prices go up when things are in short supply. That is exactly what happens – price controls play a part in controlling the wholesale level, meaning refiners minimise their fuel supply, meaning the prices at the pump go up, not down. Lower supplies means you pay more at the pump, so oil regulation has a bad effect for the consumer. 

Knowing The Price Of Sex And The Value Of Nothing

As I was cycling through the city earlier this evening, I felt my regular lament at the ugly sight of graffiti tagging that spoils so many buildings. As far as I’m concerned, graffiti tagging on private property is carried out by selfish young men who have no respect for the buildings they are defacing or the people who are associated with them. And sometimes I think, if only females looked down on graffiti tagging (or other acts of criminality or irresponsibility like that) with more ridicule and contempt, boys would eventually stop doing it.

I know that sounds like an outlandish thought, but it has truths that are supported by evolutionary history and psychology (especially in the work of psychologist Roy Baumeister) regarding the dynamics of sex and attraction, where we know that women are largely the "gatekeepers of sex," and influence the behaviours and ambitions of men accordingly. Baumeister posits that women determine the standards men must meet to access sex, which complements a long-standing evolutionary principle that women primarily do the choosing and men compete to be chosen.

Although it works both ways, of course - while women are the primary gatekeepers of sex, men are primarily the gatekeepers of commitment and long-term relationships. Women, due to higher reproductive costs (such as pregnancy and childcare), are typically more selective in choosing sexual partners. This selectivity drives men to compete and adapt to meet women’s standards, shaping behaviours such as ambition, status-seeking, and displays of loyalty. But men are often more selective when it comes to committing to long-term relationships or marriage. While casual sex may require fewer standards, commitment demands more from potential partners - such as trustworthiness, compatibility, shared values, and longevity. Men historically needed to ensure their investment (e.g., time, resources) would be directed toward raising their biological offspring, which meant they were more likely to commit to women they deemed faithful and emotionally supportive.

Here, then, we see how responsibility is shared between the sexes. Women can provide good quality control for male behaviour, and men can improve their conduct to make them more desirable in terms of selectability. In fact, I don’t just mean that as a fanciful whim where one or two minor improvements could make a bit of difference (although that is still true) – I mean that if there were radical societal changes in terms of improvements of attitude, conduct, and mutual accountability between the sexes, we could start to reverse a negative trend and be on the way to becoming a Christian country more than ever before.

In economic terms, this goes back to the price of sex within societal norms. In a Christian society, the price of sex is higher than in a society run ragged by promiscuity and hedonism. This aligns with the Christian ideal of chastity. The female beloved insists on not just commitment, but virtue, respect, patience and noble intentionality from their prospective beloveds. And with sexual intimacy being a sacred act reserved for marriage, males share the responsibility in taking the lead to ensure the relationship is built on friendship, trust, love, and shared Christian values that transcend fleeting physical desire. This higher "price" for sex necessitates a framework where males must rise to moral and ethical standards of Christianity, and chastity would function not as a limitation but as a transformative force. Relationships of such stability, integrity and self-discipline benefit not only the couples themselves but also their roles and influence in the broader community.

As the "price" of sex has decreased in the modern time of easy divorce, sexual liberation and the breakdown of family values, so too have the efforts some men make to meet higher standards and women to insist on them. If sex is too freely available, men won’t aim for higher standards and societal decay will continue. Remember too that there is strong evidence in psychology that delaying gratification to prioritise long-term rewards over short-term pleasures is one of the cornerstones of emotional and psychological maturity.

The Economics of Exaggerated Victimhood

 

We keep hearing about increased anxiety in young people, and an increase in perceived victimhood. This might not be so strange except for the fact that there’s a good argument to be made that, negative social media influences aside, young Brits have been brought up in one of, if not the most, privileged, safest, most prosperous, most peaceable societies that’s ever been created. So, on the surface, you might think it strange that there is increased anxiety in young people, and an increase in perceived victimhood. But I have a theory that probably explains at least some of it.

This current society is one in which material risk and genuine adversity are relatively scarce - so in economic terms, you could say that the demand for meaningful challenges has begun to exceed the available supply. This imbalance creates a kind of market distortion in which individuals, unable to compete effectively in the constrained market for competence, shift toward the effectively more elastic market for perceived victimhood. In other words, because competence is constrained by reality (inelastic) while victimhood claims are effectively limitless (elastic) – the dynamic creates an effect whereby, because claims of harm can be produced at near‑zero marginal cost and yield high and often unjustified social returns in the form of various signalling effects, the result is inflation.

On top of that, there is another tactic employed to expand the supply of available victimhood claims – just keep broadening the definition of a problem until it applies to you. For example, in a society where racism, sexism or other forms of unfair discrimination become less frequent, the incentive emerges to stretch those categories to capture ever‑smaller offences or affronts, effectively increasing the pool of actions or events that can be framed as unfair discrimination.

It’s perhaps to be expected, therefore, that when genuine crises are diminished, synthetic ones emerge to satisfy unmet demand, allowing individuals to capitalise, and help create a market supply that caters for needs that have been exaggerated or fabricated. 

I say all this, not because I’m insensitive to genuine need, victimhood, and harm – because I’m really not. I’m actually highly sensitive and attuned to other people’s pain and suffering. No, I’m saying it because cultivated or courted victimhood is actually a malady for people’s well-being, because it makes them easy to manipulate. In a hyper-connected world, there is no shortage of bad actors who are looking to invoke your outrage, provocation and disharmony – and in the many exaggerated or fabricated cases, this not only diminishes your well-being, it also distracts you from primary responsibilities, and is highly likely to keep you perennially anxious, unsettled, ungrateful and resentful.

Valentine's Special: Is Your Partner Much Of A Catch?

 

Sometimes with beloveds I wonder, through an economist’s lens, what kind of a find he/she is in terms of numbers? 😃 That is to say, what kind of 1 in an n have I got? - where one always hopes n is a large number.  Is he/she a one in a hundred thousand, one in a million, one in a hundred (lol)? Naturally, you could say about any unique individual that they are 1 in n, where n is the number of (wo)men in the world today (or, as a subset, number of viable prospective partners). But we are not really asking that question; we are asking what kind of a catch our beloved is, in terms of the dating equivalent of price systems, matching markets and implicit valuation of preferences.

If you want to play along in your head, start by considering what you think your partner is in terms of catchiness – where someone highly desirable by many scores high in catchiness, and someone less desirable scores low in catchiness. Perhaps, like my wife is, you are with one of those one in a million male beloveds – one of those astounding finds that you almost can’t believe he came along at all 😃. Or maybe you’re with someone who was on the shelf for years, and you had to pull them off to save them from more decades of singleness and tracksuit-bottomed repeats on UK Gold 😃

I guess, suffice to say, the approximate 1 in an n value you assigned in your head definitely comes from an intuitive and rational calculation, because it’s the same kind of mental calculation we make when deciding how much we value fruit, cheese and trousers. That’s what the price system is for.

Similarly, a prospective partner can be viewed as a scarce resource in a two-sided matching market. Each individual possesses a set of attributes - physical, intellectual, emotional - that confer utility to potential matches. The rarity of certain combinations of attributes increases their “market value,” analogous to goods with limited supply but high demand.

What we know intuitively and rationally in terms of our specific partner is that they are part of the equation whereby the probability of encountering a partner with a specific combination of desirable attributes is a function of the distribution of those attributes in the population, alongside the selectivity of other agents in the market. Thus, in contemplating a partner’s “catchiness,” you are implicitly assessing their expected utility relative to the available alternatives and the opportunity cost of forgoing other potential matches.

Do with all that what you wish 😃

 

On Alton Towers & Neurodivergent Queues

 

On this news item making the headlines - depending on the scenario, allowing/disallowing people with invisible disabilities to jump/not jump the queue has an obvious information problem in economics, namely: 

1)         Those who don’t really need to jump the queue but will do so anyway.

2)         Those who do really need to jump the queue but now can’t.

Even if we overlook a further issue – that there are people who potentially suffer more in queues that don’t get to skip the queue – this is still a classic economics problem of how to allocate scarce resources optimally when demand exceeds supply. As regular readers will know, there is nothing better than the market price system to allocate resources efficiently – so here we’d need a price system mechanism that also enables fairness and transparency alongside efficiency.

In a previous post some years ago, I warned of the dangers of demand inflation with increased blue badge allocation - that is, when more people qualify or apply than the system (in this case, parking spaces) can efficiently serve. What’s strange about demand inflation problems is that they are so obvious, easy to understand, and so predictable that it’s strange that the policymakers either totally ignore the trade offs, or act as though the problem won’t materialise. The man with a chronic lung condition who can’t find a parking space in the town centre because the eligibility increased criteria prioritised a less severe need has reasonable grounds to be aggrieved. Similarly, a policy like the above means that priority queues become overcrowded, and wait times rise for disabled guests themselves, thereby increasing the chances that more severely disabled people wait even longer. Because the system doesn’t price in different disabilities (as far as I know), the problems that arise become a predictable outcome of non-priced allocation under rising demand, just as they would if the items in question were bananas, coffee or laptops.

Given that any market-based mechanism would ideally balance three goals for this case: efficiency (optimal waiting times), equity (prioritising greatest need), and legitimacy (public perception of fairness), I’ve thought of three potential solutions, but they are all likely to disappoint one group. 

1)         Differential pricing for priority access: that is, a sliding-scale pricing depending on demand levels, which depends on severity of disability. Prices would act as signals that encourage only those who truly need or value priority access to use it at peak times.

2)         Market-compatible subsidies, such as means-tested disability credits.

3)         Time slots in queues: that is, instead of unlimited queue access, visitors could select ride time slots. When time slots are scarce, small tradeable allocations could allow flexibility and reduce congestion in peak queue times.

I think, given this is a difficult problem, those 3 options are probably the best I can come up with. But….there are significant issues with all 3. The main issue with differential pricing is that tying queue access to prices or severity risks appearing to monetise disability, and may disadvantage genuinely vulnerable people who are less able or willing to pay. The main issue with the market-compatible subsidies is that means-testing and credit systems introduce administrative complexity, and someone has to pick up the cost of that. And the main issue with time-slot allocations is that they impose spillover costs on non-disabled customers and on the business owners who cannot offer the same level of service as broadly or equitably.

No, I think no solution truly satisfies, because this is a complex Hayekian knowledge problem to solve – and probably impossible to resolve in a Pareto efficient manner (by making no other party worse off) without one or more groups feeling hard done by.

Further reading: The Economics Of Queuing, Booking & Paying

Job Vacancy: Low Skill, High Pay

 

The value of labour is conditioned primarily by two things; the knowledge, skills and experience required to do a job - and related to that, how easy it would be for the next person in line to come in and fill a vacancy. That is why lawyers don't earn £19,000 a year and waiters don't earn £70,000 a year. That is also why you are unlikely to obtain a job with a £70,000 a year salary without the skills and experienced required.

There are, however, one or two exceptions to this near-ineluctable law - the most obvious one is being a Member of Parliament, where you can be ludicrously uninformed, with no real skills or experience in anything that equips you to do your job competently, and yet still find yourself earning an annual salary of £93,904.

Apart from perhaps the paid social commentators who earn their living writing similar guff to what most politicians come out with (and most of them aren't on such a high salary), being an MP really is one of those ultra-rare cases where you can earn a reasonably large salary without having much of a clue about what you're talking about.

And if you happen to find yourself fortunate enough to be in a safe seat, whereby enough of the electorate in your particular constituency are pliable enough to keep voting you in, it's a well-paid job in which you can get away with riding on your public-funded gravy train of confusion for decades.

Only in jobs whereby the salary of such incompetent people is forcibly funded by people with no choice in the matter could such highly paid low skill workers earn over three times the average UK wage and get away with being so confused about so many basic principles related to their roles in society.

Calling In The Armey

 

I often lament how large the state has become in the UK, in terms of public services sub-optimally performing because they have become too bloated (as per Gammon’s Law, diseconomies of scale, etc). But in my book Benevolent Libertarianism, I also devote some time to considering the trade-off between money put into public services and money spent in private enterprise. I explore the matter of a healthy ratio of public and private spending in GDP, and ask if most of the spending was on private goods and services and we just had a small state - only functional for defence, law, health, social services, police, welfare, roads, and a few other light regulatory things - would all the money spent in the private sector be money well spent, or would it just mean we buy lots more consumerist stuff we don’t really need?

Last time I looked, total UK government spending was about 45% of GDP, which is large. If you tend to dip into economics, you’ve probably heard of the Armey Curve - an inverted U-shaped relationship where, as the public share of GDP rises from a tiny level, the economy often benefits (via public goods, infrastructure, human capital, etc), but beyond some threshold additional public spending tends to deliver diminishing or negative returns to growth. There has been much debate over the decades about the optimal percentage, but there’s a general consensus that 45% is way too high - although the optimal figure is also contingent on exactly what the money is being spent on. If the UK government was spending 45% of GDP primarily on defence, law, health, social services, police, welfare, roads and a few other light regulatory things, and all those sectors were thriving, it would be a different proposition to the one we are currently faced with; a bloated state that’s out of control with its spending, and the sectors performing poorly (in some cases dreadfully).

A smaller state would shift spending towards greater private consumption and private provision of things the state used to supply, but in many cases with better value for money. But it isn’t self-evident what the optimal trade-off is, because it’s a hugely complex, variable and intractable set of considerations. When private spending is allocative and productive, it increases productive capacity and long-run welfare. But when it’s consumerism with low social return, like unnecessary marketing-driven upgrades, or over-consumption of low-value goods we don’t really need, then shifting public money to private consumption can reduce social welfare if it replaces productive public services.

The big challenge is twofold. Firstly, no single “optimal” ratio exists, because range and composition matter more. And secondly, if we shrink the state to a “minimal” model, private substitutes will emerge - but unless private markets and institutions can fully and equitably fill the gaps, there will be a different kind of deterioration in social cohesion.

I have a chapter in Benevolent Libertarianism devoted to striking this balance. But, alas, there is very little appetite in most developed countries to even acknowledge this problem, let alone attempt to solve it. The Armey Curve should serve as a continual reminder that public spending has a positive impact on the economy up to a certain optimal threshold, after which it has a detrimental, negative effect. But politically, it’s far easier to expand spending than to rein it in, because often the benefits are visible and immediate while the costs are diffuse and long-term - and the general public is frequently seduced by low-hanging fruit and offers of so-called ‘free lunches’.

Why The Poor Should Be Thankful To The Rich

 

If you’ve been paying attention in the past 150 years, you’ll know that as a ratio of total beliefs to correct ones, the left gets most things wrong when it comes to economics, capitalism, socialism, labour, wealth, inequality, and the like. To see why, let’s construct a caricature of a leftist - an extreme one who believes all the false things they are told, and campaigns for a so-called fairer world. Let’s call him Torquil. Torquil believes the system is grossly unfair; that the workers are producing all the wealth for the rich capitalists; that the poorest people in the UK are poor because they have been unjustly disadvantaged; that if we had complete equality of opportunity then almost everyone would do about as well as each other; that there is a ‘fair’ hourly wage based on how hard people work and how much we symbolically value those roles; and so on. Every single one of those propositions is almost entirely wrong - and where it is fractionally right, it is nearly always the fault of political interference.

The reality is this: except for the aforementioned political interference, nearly all jobs make important contributions to society - and in accordance with market power, bargaining, sensible regulation, and alongside fluid information, each individual is paid according to their marginal product (that is, for the value they create) in a supply and demand economy. Except for illegal or unsavoury activity, the money you have demonstrates how much productivity has been created. Low income individuals are on low incomes due to lower productivity, which is usually due to lack of useful skills or knowledge, or a lack of motivation, ingenuity and responsibility. And there is an inequality of talent, effort, good choices, industriousness, luck, ambition, intelligence, creativity, conscientiousness, health, positive influences, and good life circumstances.

In a nutshell, the economic right is largely correct about these matters, and the economic left is largely incorrect.

No worker can do what they do on their own - they rely on the ingenuity, risk and investment of the company owners, and the teams around them. And the more productive the worker, the harder it is to replace them - which means at an individual level each one of them is more valuable than each individual worker they employ. If, for example, a chief executive can make his 2500 employees just 0.5% more productive, he is 12.5 times as productive as a single employee. You might find this statement uncomfortable (though it is true), but in most cases in the labour market, if someone is on a low hourly income they are either unwilling to work hard enough to earn more (sometimes for good reason), unable to earn more, or at the start or end of their career, where they will go on to earn more, or used to earn more but are now winding down. There are practically zero cases where individuals wholly unjustly earn a low hourly income. There are one or two exceptions - but the rule of thumb is that people are paid according to their marginal product, and most people in the private sector (and indirectly, the public sector too) earn their marginal product because of those richer than them making capital investments.

And the rich pay for the majority of the public services too, and the lowest quintile pay for a small fraction of them. Last time I checked, the top 1% of earners in the UK paid a whopping 28% of all income tax; the top 10% paid 60% of all income tax; and the top 50% paid about 90% of all income tax. It’s also true that those on low incomes contribute less in absolute terms, but proportionally more of their income, as the poorest 20% pay about 38–48% of their income in taxes. But that is more to do with ratios and arithmetic scaling than unfairness. And any sociological focus on data, causes, and impacts would show that crime rates are higher in poorer areas, the poor require more public services in health, education, housing, social services and welfare, have lower civic participation, and so forth.

Let me be crystal clear, I am not making any accusations here or looking to blame anyone for being poor or on a low income - there are countless circumstances at play. This post is simply to show the utter absurdity of this constant narrative by the left that the poor should be aggrieved at the rich, or feel hard done by them. It’s almost the opposite of the truth. Modern prosperity depends on both entrepreneurs who take risks and workers who provide the effort and skill to make those risks pay off, sure. But the ratio of wealth creation, productivity, and increased living standards falls so heavily in favour of the rich’s influence, that the poor, far from resenting them, should be thanking them in recognition that much of modern prosperity - the jobs, technology, and material comfort we enjoy - exists because of their innovation and risk-taking.

Why God Likes Science & Capitalism

Suppose you're sent off to another universe in a super cosmos-travel machine and you land on the first planet you find with evolved life. The most intelligent species (which closely resemble humans) has evolved a belief in a god they call Z as their main religion, sustained over thousands of years, with hundreds of other religions that have come and gone over the centuries. You look at their recent history and find that for 199,800 of the previous 200,000 years their progression has been slow and steady with mostly subsistence level living, high infant morality, widespread poverty, where the pattern has been very slow steps up a very gentle slope. Then in their last 200 years they fused science and capitalism with industry, improved travel, population increase and more widespread communication, and suddenly those very slow steps up a very gentle slope became very fast steps up a very steep slope of progression. In fairly quick time they saw the diminution of subsistence level living, high infant morality and widespread poverty being replaced with better health, wealth and prosperity. On seeing this you might be inclined to think that their religious belief has at least in some part been inadequate to the task of lifting people into genuine progression.

With that in mind I'll give you some empirically verified evidence of how the world has gone for human beings on earth in the past 200,000 years. For the past 199,800 of those 200,000 years we had low global populations, and humans lived in meagre conditions, with lots of primitivism, low life expectancy and frequent infant mortality. People's earnings stayed around the subsistence levels (save for a tiny minority of aristocracy and ruling classes), and despite our being religious or worshipfully inclined for most of that time, our beliefs had no real impact on human beings at a scientific or economic level. Yes it is true that great works were produced by some great religious minds - but compared with everyone who ever lived they amount to a tiny minority. And while it is true to say that fabulous cathedrals and temples were built in reverence to God - it is equally true that around those great buildings most people were still barely subsisting - and nothing built or designed or written from worshipful inclinations changed that with any real significance.

The point being, Christian belief is based on supernatural and metaphysical truths, and truthful beliefs are extremely valuable to individuals and communities at a devotional and communal level, but it would be false to say that in the past few hundred thousand years religious belief had any significant impact on people's health, wealth and material standard of living, or on their economic and scientific development, when compared with the effect that science and capitalism had, because it didn't. The argument that some great scientific innovators and pioneers were religious won't help here, because it still fails to account for their relative scarcity, or for the thousands of years that preceded them where not much progress was being made.

So, despite the evolution of religious belief and moral ideas, for the past 199,800 of the aforementioned 200,000 years human progression moved at a snail's pace. Then a couple of hundred years ago something changed. People started to become more scientific, more empirically minded, richer, and populations began to increase more rapidly (it's still going on).  It was primarily science and capitalism that caused this sudden cheetah-like sprint of progression. This science and capitalist-based progression can be explained by a simple rule of thumb - people innovate, improve and provide answers to problems - and the more people, the more innovation, improvements and problems solved.  The more ideas and the more people to share those ideas with, the more humans prosper, and the quicker they do so.

Now let's be clear; science and capitalism haven't created a materialist utopia (far from it), nor a panacea against moral ills, and they are not without their negative spillover effects - but their prominence has seen an exponentiation effect that has brought more progression in the past 200 years than in the previous 198,800 years. In those 200 years, earnings, health, wealth, knowledge, scientific and technological capacity, and overall well-being has improved at an astronomical level not seen in any period of time that predated it.

Failure to recognise this puts one in a potentially knotty situation if one is a theist, because purely on the record of human health, wealth, standard of living, economic development, technological and industrial progress, it cannot be denied that the 200 years when science and capitalism have been most prominent have provided a much better record for humans than the thousands of years prior to that when religious belief was most prominent.

This does not, of course, mean that the progress science and capitalism have provided are the only kind of progression available to us - for it would be impertinent to measure human progression in terms of science and capitalism without mentioning the importance of Christianity in the areas of life into which science and capitalism make no real inroads. It stands to reason that the way Christianity enriches us is both locked into the material tenets of life, but also very much locked into metaphysical tenets too.

If things like science and capitalism show themselves to be good vehicles for human progression, or beneficial tools for lifting us out of poverty, curing diseases, feeding the impoverished, communicating globally, and generally enhancing our knowledge of the world, then they are not at odds with faith, and can work alongside Christianity so long as they enacted with a Christ-centred heart. And that's why if God is a God who values the kind of human progression with which we can lift people out of poverty, cure diseases, feed the impoverished, and generally enhance our knowledge of the world, then it seems to me that God must like science and capitalism at its best, as history has shown them to be the two best vehicles to achieve those things.

Sleight of Hand Costs

 

I get frustrated on your behalf with politicians (frequently egged on by voters) when they sell a bad policy that will cause net harm to everyday citizens but make them sound virtuous and progressive. Foolish impositions of obviously inefficient policies always takes me back to my fundamental political trilemma; are they being dumb, deliberately misleading, or cowardly in refusing to tell voters the truth? It must be one or a combination of the three, because this really is basic econ 101: the fact that someone physically hands over money does not tell us who ultimately bears the cost of a tax or regulation.

Take minimum wage laws, for instance. While employers appear to “pay” higher wages, the burden is not primarily felt by them. Raising wages above the market equilibrium unnecessarily increases the cost of employing workers - so if it’s plainly obvious that to pass on those costs you have to either reduce hours, hire fewer workers, or raise prices for goods and services, the inefficiencies should be just as obvious. To avoid reduced profits, employers pass the costs in part onto workers in the form of lost employment or reduced hours, and in the largest part onto consumers in higher prices. What the government mandates as higher wages is borne at the shelf with reduced consumer purchasing power, giving citizens a bum deal overall.

It's the same with carbon taxes - politicians make energy and carbon-intensive goods more expensive to produce. And while producers might initially write the cheque to the government, the ultimate burden is passed onto consumers through higher prices, where the reduced demand for taxed goods also lowers production, which also hurts employment and wages, also giving citizens a bum deal overall.

Rent controls are no different. While landlords are legally constrained in the rent they can charge, the “cost” is borne in landlords reducing maintenance, not renting out places they could otherwise, converting rental units to other uses, or investing less in new housing. Every time rent controls have been tried anywhere in the world, they have always been a predictable disaster - especially through shortages, longer waiting lists, lower-quality housing, and lack of investment in houses, once again giving citizens a bum deal overall.

The upshot is, because he or she who physically pays the tax or the cost of regulation is usually not the one who bears its economic burden, this means that the actual costs are thinly (often intangibly) spread in ways to which the average citizen never pays much attention. But they see its effect every time they read about unaffordable prices of goods and services, businesses closing, sectors being short-staffed, shops or pubs shutting down, rising food and energy costs, jobs disappearing, and wages stagnating. Yet rarely do they hold politicians to account for it - so politicians carry on giving citizens more of these bum deals year in, year out.

Private Vs. Political Markets

 

If every individual (or firm) makes decisions based on the total net benefit to everyone - not just themselves - then outcomes would be socially optimal. Obviously the market contains negative externalities and public goods issues that can be mitigated or solved by top down central intelligence (a role usually performed by the state), but if you can align private incentives with social net benefits, you get the most efficient outcomes, and the market does that best in most areas of society. Or to put it another way, market failure is the exception in the free market, but is it the rule in the political market?

You may wonder why I’m using ‘market’ for the political landscapes too, so let me explain. Think of society like a whole interconnected market, where that market is a mix of private goods and public goods. We said that outcomes would be socially optimal when decisions are based on the total net benefit to everyone. In a free market, it’s easy to see why failure is the exception not the rule.

Imagine I set up a stall on Norwich Market called The Halloumi Hut, serving the obviously gorgeous freshly cooked halloumi dishes that a character like me would serve up. To run this business, I need to bring together various resources - workers, ingredients, cooking equipment, and my own time and effort. To hire someone, I must offer at least as much as their next best alternative - whether another job or their own leisure - so their cost is passed on to me through wages. When I buy halloumi or other inputs, I either outbid others who want them or pay suppliers enough to cover their production costs. The price system ensures these costs to others are reflected in what I pay. I collect the value of my cooking when customers buy it - their willingness to pay reflects how much they benefit. Any personal effort or time I put in is a cost I bear directly. So, all costs and benefits - to me and to others - are transmitted back to me through prices and wages. If the total benefit outweighs the cost, I open up the shop. If not, I don’t. That’s how markets push us toward choices that are efficient for everyone involved.

I frequently point out the ways in which market failure is rare in the free market and commonplace in political markets - and I do it with such rigour and charisma that I’m always amazed that everyone doesn’t just drop what they are doing and agree with me. Given that this is econ 101, and repeatedly demonstrated empirically throughout history, why do people habitually place too much confidence in governments and not enough in markets? (Read this IEA paper of mine if you can’t see the dangers of that).

I’ve laid this out a lot more comprehensively in my economics book, but my answers in brief would be:

1) Markets work subtly, and governments act more visibly and bombastically. Market coordination happens decentrally and quietly: prices shift, resources reallocate, and innovation happens gradually. Government action, by contrast, is immediate, dramatic and usually at the front of the news - so it feels more responsive, even if it's less efficient.

2) Market failures - rare as they are - often hit the headlines in a dramatic way, reinforcing the left’s incentive to distrust the system.

3) Self-organising systems make people feel intuitively uncomfortable - they prefer to think of top down agents in control.

4) Many people are not exposed to basic economic thinking - price theory, seen and unseen, opportunity cost, incentives, trade-offs, etc - so they are more likely to hold ideological views that override empirical evidence.

5) People are genetically predisposed to favour socialism over markets (see my side bar on Socialism)

6) Politicians lie and distort the truth so readily that they are trusted far more than they deserve to be.

But there is a seventh reason that needs more fleshing out, because I think it might be the primary mistake that leads to overconfidence in governments. When people think of a government, I suspect that (consciously or subconsciously) they think of it as a little like a benevolent uncle who stands firm in the family and has the wisdom and sagacity to organise society according to its superior knowledge. But just as one can see the folly of corporation tax by seeing that corporations are really just a collection of individuals, similarly one can see the folly of overconfidence in government by seeing that governments are really just a bunch of people, acting with their own interests first and with a woefully incomplete and inadequate understanding of the interconnected market. Try this; when you think of the concept of government in the future, don’t think of an abstract wise uncle, think of concrete individuals like Boris Johnson, Ed Miliband, Dianne Abbott, Liz Truss, Jeremy Corbyn, John McDonnell, Ed Davey, Keir Starmer, Caroline Lucas, David Lammy, Angela Raynor, Kwasi Kwarteng, Rachel Reeves, Michael Gove, and so on – they are the typical politician who have put themselves forward and asked you to trust them to manage our complex society. The paradox of government is that most people wouldn’t trust the competence or motives of most individual politicians to act in their interests to engender socially optimal outcomes, yet when they come together as a cluster called a ‘political party’ the confidence increases.

I know that people work collectively better in ways they cannot as individuals, but they don’t work collectively better in the same way that the free market enables us to work collectively better because, as we saw above with my Halloumi Hut sketch, the market most consistently aligns private incentives with social net benefits to produce most efficient outcomes, where failures are the exception, and the political market shows the opposite. This is because they operate under fundamentally different systems and with different incentives at the heart. Free markets increase total aggregate value, where each individual agent bears the net costs of his action, making his interest the same as our interest. The free market does that imperfectly, the political market much more imperfectly. Politicians bear virtually none of the costs of their bad policies, and the electorate is not privy to the full extent of politicians’ short-term, selfish incentives.

The most efficient systems are systems that align local knowledge with personal responsibility, that reward value creation, and penalise waste. The free market, for all its imperfections, is the only mechanism we’ve discovered that does this consistently and organically. It harnesses dispersed information and decentralised decision-making to produce outcomes that, more often than not, benefit everyone involved. Government, by contrast, operates in a fog of incomplete information, distorted incentives, and absent accountability. That people place too much faith in the one system that persistently divorces power from consequence is regrettable. Because the most fundamental difference between markets and politics lies in who bears the costs of failure. In a free market, bad decisions are punished - swiftly and impersonally. If I overpay for ingredients for my Halloumi Hut, if I hire the wrong staff, if no one wants my halloumi, I lose money. I feel the cost. But politicians operate in a system where the feedback loops are weak or broken entirely. They spend other people’s money on behalf of other people and are rarely held accountable for the unintended consequences. When policies fail, the costs are dispersed across millions of people, and the connection between action and outcome is easily obscured.

Look, none of this is to suggest that government has no role to play. There are domains - especially the provision of certain public goods - where collective action through central intelligence is essential, and where market mechanisms alone fall short. But central authority can rarely outperform decentralised incentives, personal responsibility and local knowledge. No, I’m afraid the reality is, through government, incentives are frequently misaligned with the public interest - because they are aligned with appearing virtuous, furthering the career and reputation of politicians, and helping the party stay in power by saying whatever it takes to secure votes. The market is not perfect - but it is the best we have for most societal transactions, and as a result of an aggregation of revealed preferences, it is profoundly more honest and reliable than the fiction of a wise and benevolent state.

It remains one of the strangest and most unfortunate things, that I doubt I've ever met anyone who would endorse the outcomes I know political market failure produces when it occurs, yet the world is replete with people who habitually endorse its mechanisms and repeatedly trust its architects in prospect. The typical voter who trusts these politicians time and time again is a bit like someone who cheers for a magician when he saws the wrong person in half, and then asks for an encore.

Giffen Beliefs

 

In economics, a Giffen good (popularised by economist Alfred Marshall, but named after the economist Robert Giffen) is something that people consume more of as its price rises, because it is a basic necessity and they can't afford alternatives. A classic illustration of a Giffen good is the humble potato, which served as the most affordable calorie source for impoverished Irish farmers in the mid-1800s. When the devastating potato famine struck, the price of potatoes soared. Ironically, instead of reducing consumption, this price hike forced people to abandon more expensive foods like meat and milk, leaving them even more reliant on potatoes. Whereas in economics, rising prices usually reduce demand - Giffen goods become an economic snare; the costlier the staple became, the fewer options remained beyond it.

On my bike ride this morning, I started thinking of Giffen goods analogically in terms of Giffen beliefs, which would constitute bad beliefs that are harmful in society. Imagine false or harmful beliefs as the psychological equivalent of cheap potatoes - accessible, familiar, and “necessary” to make sense of the world in a difficult or unstable situation. Cults play on these types of belief. As the cost of these beliefs rises - in terms of emotional investment, social alienation, cognitive dissonance, sacrifice, and what have you - the individual becomes more dependent on them.

Like the Irish farmers who had to give up meat and milk to buy more potatoes, the cult member may shed better beliefs (critical thinking, outside relationships, and so forth) to afford the escalating demands of the bad belief system. And, of course, the cult leaders play on this too, because the belief system becomes a psychological trap; the more costly it gets, the harder it becomes to leave, because you’ve sacrificed so much else to stay in it.

Giffen beliefs, like their economic analogue, capture the self-reinforcing nature of harmful outcomes, where the loss of alternatives pushes people deeper into a dire situation, and where the more it costs, the harder it is to abandon.

A Flawed Idea About Billionaires

 

Quote from a friend on Facebook that's doing the rounds: 

“Elon Musk’s wealth is projected to more than double over the next five years, placing him on track to become the world’s first trillionaire.
Here’s what that actually looks like:
- $1 trillion = $1,000,000,000,000 — that’s a million million dollars.
- A worker on £30,000/year earns around $38,000/year at current exchange rates.  It would take that worker 26.3 million years to earn what Musk could be worth.
- If Musk dropped $10,000 on the floor, it wouldn’t be worth his time to pick it up — he makes more than that in under 10 seconds.
- If you spent $1 million a day, every single day, it would take 2,740 years to spend $1 trillion.
In a world where millions struggle to eat, there is no moral or economic justification for billionaires to exist — never mind trillionaires.”

My response: If you’re worried about ‘millions struggling to eat’ then the anti-billionaire logic is backwards. Billionaires tend to do disproportionately more for the poor than any other group, because the more money that comes into one person’s treasury, the more they can scale up their beneficence in the wider globe (through investment, job creation and charitable causes). Here I make no comment about Musk as a person, but generally, as wealth accumulates for an individual, every increasing pound or dollar increases the chances of it doing some external good elsewhere. This is because very rich people accumulate wealth with capital that has declining marginal utility.

If you look at the history of the world since the Industrial Revolution, significant individual or corporate wealth is frequently tied to large-scale economic impact for good, like investment in companies, global job creation, infrastructure, technological innovation, philanthropy, aid and lifting millions out of poverty. And as wealthy people’s personal spending needs become more and more trivial compared to their capital, their positive global influence just keeps increasing, where their own personal declining marginal utility engenders rising utility for the world’s poorest people.

Because of declining marginal utility, one single billionaire is likely to do more good across the world than one thousand millionaires, because a single billionaire has more concentrated resources, which can enable very large-scale projects that the single millionaires would not likely facilitate on their own (most single millionaires would have invested a significant chunk of their million in a decent home).

Efficient Use Of Knowledge

It would be remiss here if we didn't elaborate on yesterday’s blog post The inefficiency Trap and tailor the content to one of the most important works in the whole of economics - Hayek's The Use of Knowledge in Society, which is the most natural bedfellow to the inefficiency trap. This essential work by Hayek is a foundational essay in economic and political philosophy. It challenges the idea that central planning can efficiently allocate resources, and argues that the real economic problem is not just resource allocation but the efficient use of dispersed knowledge.

Hayek makes the case that decentralised decision-making through market processes is superior to central planning because it best utilises the knowledge that exists in society. His argument emphasises the role of prices as a communication mechanism that helps coordinate economic activity without requiring any single individual or entity to possess all relevant information. This is standard economic fayre now, and has been for many decades, but it's important to acknowledge how innovative this work was in its day, and how influential it has gone on to be.

Hayek helped challenge the traditional economic problem as framed in classical and neoclassical economics. One of the main issues in economics is how to efficiently allocate scarce resources among competing uses. But we cannot, of course, assume that all relevant information about available resources and technological possibilities is already given to a central planner or decision-maker. In reality, as Hayek argued, knowledge is fragmented and dispersed among individuals - and the key challenge is how to make use of this scattered information effectively.

So, Hayek talked about the role of decentralisation in knowledge utilisation, and he distinguishes between two types of knowledge:

Scientific Knowledge - this includes general rules, principles, and data that can be formally studied and documented.

Local and Tacit Knowledge - this consists of specific, often unarticulated knowledge possessed by individuals, such as an entrepreneur's awareness of local supply constraints or a worker's skills acquired through experience.

The big limitation of central planning is that the planners cannot effectively capture and utilise local and tacit knowledge. The challenge is how to coordinate this dispersed knowledge in a way that leads to efficient economic outcomes. Hayek argues that decentralised decision-making is the only practical way to make use of dispersed knowledge. When decisions are made at the local level by individuals who have first-hand knowledge of their specific circumstances, the economy as a whole can adjust dynamically to changing conditions.

On top of that, one of Hayek's most important contributions is his explanation of how the price system functions as a communication mechanism. Prices convey crucial information about the relative scarcity of goods and services. When a resource becomes scarcer, its price rises, signalling producers to conserve it and consumers to use less of it. Conversely, if supply increases or demand falls, prices drop, signalling increased availability. Each individual reacts to price signals based on their local knowledge and needs. This allows the economy to coordinate millions of independent decisions without any centralised control. This spontaneous order, or 'catallaxy' as Hayek calls it, emerges naturally from market interactions.

Moreover, markets not only distribute existing knowledge, they also help generate new knowledge. Entrepreneurs experiment with different products, production techniques, and business models. When some strategies prove successful, they are imitated and refined, leading to continuous economic innovation and progress. Central planning can stifle this discovery process because it does not allow for optimal decentralised experimentation. As we know from our own successive government top-down failings, over-interference means resources are allocated based on short-sighted directives rather than market signals, leading to inefficiencies, shortages, and surpluses.

Of course, while most of us don't advocate for a completely laissez-faire economy, we can all heed warnings from sound economic principles against excessive government control - especially around price theory; knowing that policies that interfere with the price mechanism - such as price controls, excessive regulations, and subsidies - distort information flow and lead to inefficiencies. This is obvious even to most laypeople with a basic grasp of economics - but the application of the use of knowledge in society is perhaps less obvious, but just as vital a thing to understand.

In the notion of spontaneous order - the idea that complex social and economic systems mostly evolve naturally without central design - economies function best when individuals are free to act on their knowledge and incentives. To that end, Hayek's work The Use of Knowledge in Society remains one of the most profound economic works in demonstrating that the key economic challenge is not merely resource allocation, but the utilisation of dispersed and tacit knowledge. The market system, through the price mechanism, most efficiently coordinates this knowledge - and that is just as important as efficiently allocating resources, because the two go hand in hand.

The Inefficiency Trap

 

There's a classic Econ 101 brainteaser often posed in introductory economics courses (I think I saw it first in Steve Landsburg's work), which I won't quote verbatim, but it's along these lines:

Question: Suppose apples are produced by a competitive industry, while pears are provided by a monopolist. Coincidentally, they both sell for the same price, and you would be equally happy with either. If you care about conserving societal resources, which should you buy?

Answer: You should buy the apple if you care about economic efficiency and conserving societal resources. In a perfectly competitive market, firms produce up to the point where price equals marginal cost (P = MC). This means that the price of an apple reflects the true societal cost of the resources required to produce it.

I hope that makes sense because, by contrast, a monopolist typically restricts output and sets a price above marginal cost (P > MC). This results in underproduction - some consumers who would have been willing to buy at a price above MC are unable to do so, leading to deadweight loss. This artificial scarcity means society is not producing as much as it efficiently could, making the monopoly inefficient from a resource allocation perspective.

Since the price of an apple equals its marginal cost, choosing an apple means you are participating in a market that operates efficiently, ensuring that goods are produced at the optimal level. By contrast, choosing a pear supports a monopolistic market structure that produces inefficiently low quantities, reinforcing the misallocation of resources. Thus, if your goal is to align your purchasing decision with economic efficiency and the best use of societal resources, you should buy the apple.

At first glance, the idea that a seller in a competitive market sells at a price equal to marginal cost (P = MC) does seem counterintuitive - it almost sounds as if they are only breaking even on the last unit produced. However, there's more to the story, because we are considering average cost as well as marginal cost. Marginal cost is the cost of producing one additional unit, but average cost is the total cost (including fixed costs) divided by the number of units produced. In a perfectly competitive market, the price is typically equal to both marginal cost and the minimum average cost in the long run. This ensures that firms cover all costs, including fixed costs, and earn a normal profit, which is the minimum return necessary to keep a business operating in the industry.

That's also why, in the long run, in a market-friendly industry with no barrier to entry or excessive regulations, competitive firms earn this normal profit but not excessive profits, because competition drives prices down to the level of average cost, but not below it. Incidentally, it also shows the foolishness of the statement 'people before profits', to which I can refer you in past blogs (see here and here).

The fact that it's usually better to consume from a competitive industry than a monopoly (natural monopolies sometimes excepted) also shows why it's usually better for the market to provide goods and services than the state. Markets are competitive industries but governments are monopolies. In competitive markets, firms must minimise costs and innovate to survive. This tends to allocate resources efficiently, leading to lower prices and better quality for consumers. Competitive markets produce goods where the price reflects the true societal cost of resources, ensuring that production aligns closely with consumer preferences. And markets tend to adjust quickly to changes in demand or supply, as firms compete to attract customers and maximise profits.

Governments, which are de facto monopolies, usually lack incentives to innovate or reduce costs because they do not face direct competition. And government-provided goods and services usually do not reflect true marginal costs, due to subsidies, taxes, or inefficiencies - meaning an almost inevitable over- or under-consumption of resources.

In his famous dictum, The Four Ways to Spend Money, Milton Friedman outlined the perennial problems of governments spending someone else's money on someone else - the typically least efficient way that money is spent. It's obviously not the case that markets are always preferred over governments in every sector - but politicians are primed to put their own interests first, which means the probability of inefficiency and bad value for money increases. I'll elaborate on that in tomorrow's blog post. 

Political Physics

 

Much of the book I’ve written called Benevolent Libertarianism uses physics as a supporting lens through which to assess economics, markets and human behaviour in society, because there is a lot of overlap. For example, entropy and economic complexity overlap in that, in thermodynamics, entropy is a measure of disorder or the number of possible configurations of a system; and economically, societies tend toward more complex arrangements (akin to higher entropy), especially in free markets where countless agents interact. Just like in physics, where energy moves toward states of higher entropy, markets evolve toward more decentralised, diverse, and adaptive structures. In most cases, a centralised economy is like a low-entropy system - highly ordered but fragile. And in most cases, a decentralised market economy mirrors high entropy – untidy but resilient.

Another example, Newton’s First Law (inertia) states that objects in motion stay in motion unless acted upon. You can think of institutions and social norms as having "inertia" – in that, once they are established, they tend to persist unless disrupted by significant forces (revolutions, economic crises, technological shifts, and so forth). This principle helps explain the resistance to change in economic systems. One of the catch 22s of libertarianism is that the idea of a libertarian reform is likely to come up against institutional inertia, requiring strong catalysing forces to shift public policy.

You can also observe in physics that phase transitions occur when a system hits a critical point. Similarly, in social systems, network effects (like viral trends, revolutions, or financial panics) behave similarly. A small trigger can cause a systemic shift once a critical mass is reached – and this shows similarities around tipping points in markets or social movements.

I’ve also been fascinated for many years in how power laws or trends in society mirror nature's laws, especially tail end distributions or severe deviations from the mean.  Zipf’s Law is an intriguing one (which I’ve written about before in my paper on parsimony and power laws) - it states that the frequency of an item is inversely proportional to its rank. This applies to language (most common words are used exponentially more often) and cities (a few mega-cities dominate, wealth distribution, online traction, etc). It mirrors distribution patterns in natural systems, such as the size distribution of solar flares or earthquakes – and once you delve into more and more examples of this, as I do in the book, it becomes more and more interesting.

The Pareto distribution (the 80/20 rule – although it’s not always exactly that, of course) crops up everywhere too - from income and productivity to software bugs - and resembles the power-law distribution seen in self-organised systems in physics. In Benevolent Libertarianism, I try to argue for outcomes that enable voluntary rebalancing or opportunity creation without coercive equalisation – what you might say (although I might ditch this if it proves too provocative for a publisher) a kind of capitalism with a heart and a socialism with a head.  We also find with consistency that the value of a network increases with the square of the number of its participants. This applies to markets, social networks, and economies of scale – and it’s similar to gravitational attraction increasing with mass - interconnectedness yields increased (sometimes exponential) utility. One of the fundamental principles that has seen this human progression-explosion in terms of material standard of living is that free markets, open communication platforms and mutual connectivity gain value as participation scales, encouraging more and more organic growth.

At this point, it might have occurred to you that we can also discern political manipulation through a similar heuristic. I believe one of the most interesting things happening right now is that, in greater numbers, the public suspect they are not being told the full truth, but it's hard to come together in a co-ordinated way to challenge it. Discerning political manipulation through the above heuristics is really to be seen as analogical and metaphorical, especially in regard to physics, but I try to make it compelling in the book because sometimes when you have a situation that’s hard to capture in your mind, an analogy or metaphor can help bring about a eureka moment. So, here’s one way you could think of it. In physics, massive objects bend space-time, creating gravitational fields that influence smaller bodies. I think that’s similarly what’s happening with powerful political actors (corporations, lobbyists, governments) – they generate a "field" of influence that bends public discourse, policy direction, and media focus – in fact, it has become its own heuristic for gaining more traction (like Wagner’s law predicts in economics) where there is a kind of "gravitational lensing" effect, where the narrative becomes distorted based on proximity to manipulative political or financial mass. It’s a reliable mechanism for sucking people in. There are, of course, many good and noble cases where that happens in a free market economy, where successful innovators enjoy well-deserved spoils – but here I’m taking specifically about the negative aspects of manipulation into perverse and distortionary narratives. 

I also think there are interesting parallels in societal behaviour and conservation of energy in physics. In physics, energy is never destroyed – it is only transformed or redirected. Similarly, I think in many cases, political pressure or dissent is rarely extinguished; it is redirected or channelled elsewhere. Firstly, this means that suppressing people’s free expressions or dismissing them won’t work if the dissent is strong enough – it will pop up elsewhere, manifested in different forms. You can see with the left, how populist social fervour has been co-opted by establishment figures to maintain power under a new guise of extreme environmentalism, for example. When a bottom-up movement is suddenly adopted by the mainstream, just pay attention and analyse where the original intent is being repurposed, and you’ll probably see the patterns I’m talking about. I suppose, also, if you’ll allow me the grace to push the analogy further, with thermodynamic information theory, the higher the signal-to-noise ratio, the clearer the message. And sadly, socio-political manipulation often gains traction by lowering this ratio by flooding the public with noise (misinformation, skewed reasoning, distractions, hyper-partisan content, galvanisation to an external cause that makes participants look good) to drown out clarity and critical thought.

I think in an age where 1) information is so readily available to nearly everyone, and 2) critical thinking is rarely practiced by the majority trying to process all this information, political discourse becomes more fragmented and unstable as political leaders push for polarisation – a bit like a societal equivalent of the second law of thermodynamics. And unless the energy of reason, logic and empiricism is applied to decrease the entropy, it’s likely to get worse. This feedback loop can be seen as analogous to a system of particles in a confined space. When one particle exerts force, the reaction may cause the system to shift, with some particles moving closer together (strengthening the political base) and others moving further apart (deepening polarisation). The interaction between these forces is not one-directional; it's a constant interplay that politicians and the media can navigate to maintain their position, much like how forces in the physical world create dynamic equilibrium.

It’s surely as plain as day at the moment that the official narratives provided by political leaders and the media is so veiled, biased, and intentionally misleading that we must be close to a tipping point. The system of information that is presented to the public is like a quantum system where the "true" state is elusive and constantly shifting, dependent on the perspective of those who observe it. If you sense the position, the momentum is abstracted, and if you sense the abstraction, you no longer pin it down to straightforward empirical justification – and even in cases when you might, the battleground is a morass of often justifiable resentment and partisans.

Just as the universe operates through immutable physical laws, the political landscape is shaped by forces, both seen and unseen, that guide the movement of ideas, policies, and public opinion – and in this day of technological connectivity, we are probably in the advent of a system of organic resistance and bottom-up networked intelligence that can mount a serious challenge to the hegemonies that have pervaded for so many decades. And while we’ll never get rid of top-down central intelligence – and in some cases, we shouldn’t wish to do so - we may be witnessing the birth of a decentralised, self-correcting force capable of at least challenging legacy power structures in a way that’s not been possible before.