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> I don't have suggestions for dealing with it. How about: 1. Keep companies small. 2. Ensure top level management has skin in the game (e.g. partnership).

by dmgd 13y ago

netcan 13y ago
Libertarians find it ridiculous and innocent to think that moneyed people or corporations are not going to lobby, bribe, manipulate and otherwise take advantage of a political system that can arbitrarily create subsidies, trade barriers, zoning laws, etc. If the opportunity to profit by corrupting the system exists, it will happen. Appealing to morality is naive. So is running around trying to plug the holes in our laws and tweak incentives. The only way to plug the whole is to take away the opportunity by constraining and defunding the government, reducing their ability to be corrupted. Neo-Marxists find it ridiculous to think that we can have a handful of billionaires & corporations controlling all the wealth in a country without that handful manipulating and controlling the political system. Big money has always come hand in hand with power. It's silly to expect morality to fix this. The super wealthy will control government. We can either be ruled by the wealthy or we can eliminate wealth of this magnitude. Those are the only choices. Personally I think both of these are naive, in much the same way. They are modernist ideas that assume an understanding we just don't have. Human systems are complex and cannot be designed. The idea that we can start with a limited set of laws and a small government and let everything else emerge, and that the consequences of that emergence (including the political ones that may derail it) will be acceptable is not that different from the old communist 10 year plans. Ideas like skin-in-the-game are in that category, IMO. Useful as a perspective. Sometimes useful in practice. Not realistic as a solution in many/most cases. Sometimes the world present opportunities for asymmetric risk. Even if we go by the Hammurabi code suggested by Nassim Taleb (currently promoting this idea) of killing an architect who's building collapses there is potential for asymmetric risk. Maybe its small and asymmetric enough to be worth it (5% chance of killing 100 people; huge commission; the architect is old anyway) Maybe the immortal legacy of building a temple is worth the risk of death to the architect, but not the risk of death to the worshipers. My point was that I don't think we can build systems (or meta systems that let systems emerge) that don't have a risk of moral hazard. Moral hazards exist. Usually morality is the anecdote. Sometimes it isn't edit: added paragraph
- onetwofiveten 13y ago
  I think the big problem with designing human systems is that as systems evolve there is a parallel unpredictable cultural evolution. I guess the only reasonable way to design human systems is through a slow process of evolution and iterative design, at each point trying to modify rules to adapt to the culture that develops around how people use the system as it exists. When a system is fully formed, along with the system rules there are also a raft of social norms that determine how it functions within society. Moral hazards create situations where individuals are incentivised to break the social norms that align with the goals of the system. Once norms get eroded, that behaviour can become commonplace, and you end up with broken systems. Unfortunately, the meta-systems we have in place restrict what changes are possible/incentivised. Also, people tend to have a limited imagination when it comes to solving broken systems usually wanting either a) more rules, b) harsher punishments or c) to get rid of the system entirely. So, if there's a public outcry, it's usually calling attention to a real problem, but calling for an impractical solution. Personally I don't think the current meta-systems we have in Western capitalist democracies are optimal. I'm sure that better can be done. However, I'm also very sure that we can't do better by building on idealistic principles - because of the massive changes that would entail and the corresponding unpredictability of the results. It's interesting that libertarians and neo-marxists basically want a really extreme change in two directions that almost never happen. The rich tend to always get richer, the government tends to always get bigger in size and scope. I guess this is kind of like the "get rid of it entirely" mentality. Perhaps it would be better to seek out changes to our current system that would allow iterations towards reducing income disparity and shrinking of the government.
- gaius 13y ago
  I think you misunderstand the libertarian position. You can lobby a minimalist government all you like, it can't do anything to help you because it doesn't have the power or resources to do so.
  - pkinsky 13y ago
    You can still have your power company refuse service to potential competitors, or block their trucks from using your toll roads.
quanticle 13y ago
>Ensure top level management has skin in the game (e.g. partnership). It's better than nothing, sure. But let's not forget that over half of Richard Fuld's wealth was in Lehman Brothers stock. It didn't prevent him from flying his company straight into the ground.

> I don't have suggestions for dealing with it. How about: 1. Keep companies small. 2. Ensure top level management has skin in the game (e.g. partnership).

by dmgd 13y ago

> I don't have suggestions for dealing with it. How about: 1. Keep companies small. 2. Ensure top level management has skin in the game (e.g. partnership).

netcan 13y ago

Libertarians find it ridiculous and innocent to think that moneyed people or corporations are not going to lobby, bribe, manipulate and otherwise take advantage of a political system that can arbitrarily create subsidies, trade barriers, zoning laws, etc. If the opportunity to profit by corrupting the system exists, it will happen. Appealing to morality is naive. So is running around trying to plug the holes in our laws and tweak incentives. The only way to plug the whole is to take away the opportunity by constraining and defunding the government, reducing their ability to be corrupted. Neo-Marxists find it ridiculous to think that we can have a handful of billionaires & corporations controlling all the wealth in a country without that handful manipulating and controlling the political system. Big money has always come hand in hand with power. It's silly to expect morality to fix this. The super wealthy will control government. We can either be ruled by the wealthy or we can eliminate wealth of this magnitude. Those are the only choices. Personally I think both of these are naive, in much the same way. They are modernist ideas that assume an understanding we just don't have. Human systems are complex and cannot be designed. The idea that we can start with a limited set of laws and a small government and let everything else emerge, and that the consequences of that emergence (including the political ones that may derail it) will be acceptable is not that different from the old communist 10 year plans. Ideas like skin-in-the-game are in that category, IMO. Useful as a perspective. Sometimes useful in practice. Not realistic as a solution in many/most cases. Sometimes the world present opportunities for asymmetric risk. Even if we go by the Hammurabi code suggested by Nassim Taleb (currently promoting this idea) of killing an architect who's building collapses there is potential for asymmetric risk. Maybe its small and asymmetric enough to be worth it (5% chance of killing 100 people; huge commission; the architect is old anyway) Maybe the immortal legacy of building a temple is worth the risk of death to the architect, but not the risk of death to the worshipers. My point was that I don't think we can build systems (or meta systems that let systems emerge) that don't have a risk of moral hazard. Moral hazards exist. Usually morality is the anecdote. Sometimes it isn't edit: added paragraph

onetwofiveten 13y ago
I think the big problem with designing human systems is that as systems evolve there is a parallel unpredictable cultural evolution. I guess the only reasonable way to design human systems is through a slow process of evolution and iterative design, at each point trying to modify rules to adapt to the culture that develops around how people use the system as it exists. When a system is fully formed, along with the system rules there are also a raft of social norms that determine how it functions within society. Moral hazards create situations where individuals are incentivised to break the social norms that align with the goals of the system. Once norms get eroded, that behaviour can become commonplace, and you end up with broken systems. Unfortunately, the meta-systems we have in place restrict what changes are possible/incentivised. Also, people tend to have a limited imagination when it comes to solving broken systems usually wanting either a) more rules, b) harsher punishments or c) to get rid of the system entirely. So, if there's a public outcry, it's usually calling attention to a real problem, but calling for an impractical solution. Personally I don't think the current meta-systems we have in Western capitalist democracies are optimal. I'm sure that better can be done. However, I'm also very sure that we can't do better by building on idealistic principles - because of the massive changes that would entail and the corresponding unpredictability of the results. It's interesting that libertarians and neo-marxists basically want a really extreme change in two directions that almost never happen. The rich tend to always get richer, the government tends to always get bigger in size and scope. I guess this is kind of like the "get rid of it entirely" mentality. Perhaps it would be better to seek out changes to our current system that would allow iterations towards reducing income disparity and shrinking of the government.
gaius 13y ago
I think you misunderstand the libertarian position. You can lobby a minimalist government all you like, it can't do anything to help you because it doesn't have the power or resources to do so.
- pkinsky 13y ago
  You can still have your power company refuse service to potential competitors, or block their trucks from using your toll roads.

quanticle 13y ago

>Ensure top level management has skin in the game (e.g. partnership). It's better than nothing, sure. But let's not forget that over half of Richard Fuld's wealth was in Lehman Brothers stock. It didn't prevent him from flying his company straight into the ground.