Isegoria

Capital isn’t a thing, Eric Falkenstein says — it’s a ledger, a way of determining who gets the make decisions about various things, and who gets the fruits of those things:

The fact that a minority has most of the power to decide and access the fruits is a consequence of a past where individuals anticipated a future where such a ledger would continue to be valid. It’s always been popular to think, maybe we should have a jubilee, get rid of those ledgers and start again as equals! Given the power law distribution of wealth at all times such a proposal is perennially popular to those ignorant of history. Yet, if you do this every period, capital isn’t owned by any individual, and so would be completely mismanaged as happens in societies without stable property rights. If you do this at all you can expect an immediately higher default premium which would make an economy undercapitalized. Luckily, our Founding Fathers specifically anticipated these problems and so emphasized the republican nature of our government, not making everything a democratic process.

Status-seeking is a human universal, Eric Falkenstein reminds us:

The anthropologist Harold Schneider studied hunter gatherers and noted they had an almost absence of hierarchy, which he saw as the resulting from the maxim that ‘all men seek to rule, but if they cannot, they seek to be equal.’ It’s a reasonable solution for a society without division of labor.  Unfortunately many progressives see the world the same way, and thus like the Rawlsian solution that everyone has the same outcome regardless of one’s talents or wealth. Now, that’s fine for a camping trip, but in modern society unnecessarily.

Reality shows like Top Chef, Project Ink, Project Runway, or Deadliest Catch show people passionate about activities I do not care about in the least, all private sector jobs. With thousands of different remunerative specialties that complement each other, this allows us to focus and then trade with others to get the benefits of other’s specialization focus. In modernity status isn’t limited to one dimension, and so you can be an important part of something bigger than yourself without joining a religion: you are part of a complex network of specialists in a market economy of individuals maximizing their status in their own individual way.

Everyone wants to live on in the future in some way, as part of heaven or something worldly that needed or at least appreciated you. If you obey the laws and social norms, including The Golden Rule, and generate more revenue than you cost, you are making your tribe better off. The egalitarian solution where we have a single-payer state for everything has no risk, but like Hegel’s farmer, promises little potential for self-actualization or what the Greeks called arête (‘excellence’), which in the modern world is consistent with specialization, trade, and productivity growth (arête incents one to do things better than before).  We shouldn’t base our norms on hunter gatherers, which is why most people don’t.

The government spends about 35% of GDP in the US today, Eric Falkenstein notes, and heavily regulates the rest:

It would be far better if, instead of thinking about new tricky ways to squeeze the rich, we instead set government spending to some fraction (say 35%) of the past 5 years of GDP and no more. The endless arguments about the level would stop, and it’s interesting to note that over the past 30 years in the US federal revenues as a percent of GDP has been remarkably consistent across various administrations. By using a moving average of historical GDP this would make spending countercyclical, most importantly instead of politicians being elected for their ability to promise ‘more’ they would instead focus on ‘better.’ That is, it would be nice if the politicians argued about better ways to allocate spending rather than about more or less in aggregate; the net result of the ‘more’ approach has been those who are good at articulating why we need more find they have no idea how to spend it, as when the government had $800B to spend in stimulus, most of it simply went to shoring up state budgets, meaning, state pension deficits, which is just an income transfer to state employees from future taxpayers.