Politics: A Question of Organization

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I view our political system (and that of most countries) as malfunctioning. It is dysfunctional, root and stem, by its very constitution and setup. Furthermore, its rules and organization guarantee that its malfunctioning grows worse over time. The system will break down. When that occurs, the odds are that it will be replaced by a close relative, another system that does not work properly.

Now, who is to say what properly is? The political system is something that supposedly rationalizes and facilitates decisions that groups of people find it necessary to make. Since there is no known way to aggregate preferences across individuals, there is no fully satisfactory way to devise a political system that satisfies everyone and still ends up making decent decisions about certain critical goods (such as the society’s survival) that we can guess belong in the social preference function.

The Framers tried. Many new countries keep trying. They keep coming up with new Constitutions that look very much like the old ones. They are Rube Goldberg machines. Human beings cannot sit down and devise a political system without creating a monster that in short order will malfunction and lead the society in directions opposite to their social preferences, which we simply have to assume exist. From the point of view of a free society, the U.S. Constitution quickly ran aground.

The case can be made that it ran in the direction it was meant to. Justice Marshall was one man who saw to that. Alexander Hamilton had done his work well, and the U.S. steered toward becoming a centralized empire. If so, maybe we can do a better job the next time by steering in the direction of peace and freedom. We will need to have a very different conception in our hearts of what a political system should and should not be doing. We will need to aim at it doing nil or almost nil. Instead, we need to aim at a system that lacks the incentive for its own growth.

The political system is an organization. It is one of society’s organizations, and this creates a problem. We need a system that is less one of society as a whole and more one that responds to specific individual demands in a seamless fashion while yet accommodating a shared social ethic.

Our society’s aims are vague. They are open to definition and change. They are open to continual expansion. These features create problems. These are very basic problems. They do not go away by changing faces in the political system. They are driven by the fact of the political system itself being in existence in the form that it has as a mirror of the entire society.

Being an organization for all of society, the political system pools problems and resources. It makes a commons, and causes all the problems of a commons. In particular, any "problem" that becomes a social problem to be handled by the political system becomes a commons problem. This means that the resources to handle it come from everyone willy-nilly. The problem-solvers in government are not the people who face the problem. Those who have the problem don’t solve it. Others solve it for them, using the wealth of yet others. In a commons, responsibility is diffused. It dissipates. The ordinary mode of learning what works to improve matters and what does not is undermined.

If a builder wants to find a better way to erect a frame, would he elect officials and tell them to solve this problem? Would he have them tax whom they could? Would he have them legislate a solution? Would he then be forced to accept it and then impose it on house-buyers? The commons method of politics undermines every step by which a builder would ordinarily proceed in a free market. But if the builder wants to monopolize his industry, then indeed he might combine with other builders and seek a political and regulatory "solution" to a problem that he has transformed from private to public. The result will be worse for the home buyer, worse for the taxpayer, and better for the industry cartel — until an innovator arrives that makes an end run around the regulations.

In the commons, after the problem is addressed, there is no good feedback as to whether or not it has been solved satisfactorily. The payers for the problem’s solution are looking elsewhere because they have been made to pay and they cannot affect the solution anyway to a problem that is not theirs. The problem solvers could care less. They are busy looking for new problems to solve. Those whose problem has supposedly been solved are on the receiving end and must do what they are told to do.

Any issue or problem that one might select, be it education, health, defense, or the provision of goods and services for the aged, all fall into the pattern being described. Once they become social problems, then they are addressed by the political system. This system separates us into distinct groups whose connections with each other are tenuous. This is our organization. This is the organization that is malfunctioning, not least because the political system continually brings more and more private problems into the public arena, which is the commons. Our constitution, be it that parchment or be it what we have in our hearts and minds, is transferring more and more private matters into the public political system. Once there, they are open to the malfunctioning that necessarily goes with being in the commons.

The basic misconception that many have is to think that collectivism and central control at the level of a common political system is a good way to solve private problems. The basic misconception that drives the public’s support of the American political system is that problems that are really private problems are not private problems but public problems. The basic social problem is that we have a political system that provides an incentive for various private parties to foster and encourage these misconceptions (and lies) so that they may reap the benefits.

Too many Americans think that private problems should be solved collectively or by public means. This belief is in some sense rational for those seeking gain. If the public can be made to pay for a private problem, then why not get it to foot the bill? There is an incentive within our political system to turn private problems into commons problems and to persuade everyone else that these problems really affect everyone. That is one reason why the system malfunctions at its very root. It encourages the transformation of the private sector into the public sector. But any consuming American who thinks that collectivizing private problems actually leaves him better off has sadly been brainwashed by those cartelists who are skinning him.

Basically, group after group runs to grab what it can through the political system. This is a negative sum game. It is a devastating political competition. More and more of the individual’s and country’s activities become socialized. We should each of us know that the net effect of all of this is harmful. Yet we keep on competing because we do not know how to stop the merry-go-round and get off.

This socialization of problems is not as social as it seems. It always involves specific beneficiaries. There are cartels of various sorts. The free economy has long since disappeared under the weight of welfare for corporations, farmers, unions, teachers, students, the elderly, space engineers, defense companies, lawyers, politicians — you name it.

There are always those who have to foot the bills, which is most of us. The web of taxes is so complex and immense that no one knows how much they are really paying. None of us knows how much better off we would have been if we had not started up this merry-go-round in 1787. It’s now spinning faster than ever.

We have to wake from this bad dream in order to remind ourselves what the original purpose of a political system is. It’s certainly not the current game of grabbing whatever one can before the next guy does. Virtually everything that we do is private to us and should be private to us. Most of the goods and services that we want and make can be made and distributed privately. The political system really should have nothing to do with what agriculture grows and we eat, or what schools and education we wish to have, or how much we save for our old age, or how we care for the infirm. If we make these into public problems, then we make them into commons issues. And then we are guaranteed to get the malfunctioning results that we see everywhere around us. Greed to make the other fellow pay through politics has its comeuppance. Finally, we suffer. We cannot put in place a political system that encourages and nurtures such greed, or else we will get that greed as a result. That is what we have today.

Private has to be private, and that is that. When private becomes public, we write our own doomsday.

What goods and services should be public? And by what system shall we provide ourselves with those goods and services? It is a question of organization. The more that we make felt the choices of the individual operating privately for himself and herself, the better off we become. The fewer the decisions that we collectivize into a political commons, the better off we are. We thereby avoid the disjunctions that make decisions in the commons so maladaptive. Those who have the problems are those who seek the solutions for themselves and pay for them themselves. They receive the benefits themselves. They improve their own welfare. They have an incentive to improve it further.

This does not preclude forming groups, even very large groups and associations. Insurance companies are very large. But these groups are fundamentally not political systems. They do not forcibly make some pay while others benefit. They do not entangle everyone in an indecipherable web of paying and receiving. When no one knows or can tell what they are doing for whom and with what results, as in the commons of our political system, chaos is the outcome. Everyone gets hurt.

My argument has been a negative one. The political systems we routinely encounter malfunction, and for identifiable reasons. They create a collectivized commons for problems that should be private. We need to move away from these systems. They need to be replaced because their structure is what nurtures their own growth, and that growth reduces the private sector even as it increases the collectivized and centralized sector.

The positive solution to the age-old political problem simply has to be far more market-oriented than anything we now imagine or have become accustomed to. We have to restrict drastically those goods and services that we now routinely accept as being properly handled by politics. Nearly all of what the political system is now doing it should not be doing.

How this should or can be done is well beyond the capabilities of any one person to say. I am often asked this question. I don’t know. How could I possibly know? I only know that if we do not have a goal in mind such as a fully-privatized political system, we will not move and keep on moving in that direction. Or if, by chance, we do, we may easily overturn it through our ignorance. We need to know what is right for us and what is wrong for us. I argue that what we have is wrong for us. We have collectivized far too many goods and services, and the system itself is a cause of that. The system must change at the root if we are ever to overturn the work of Hamilton and Marshall and many others since.

I prefer to think of America, not as a domineering globe-circling military colossus, but as one day living up to its promise as a place where each of us can fashion his life and well-being in peace and justice, without being inspected, ID’d, searched, spied on, taxed at every turn, regulated, and regimented by an invisible and unidentified horde of his fellow Americans.

Michael S. Rozeff [send him mail] is a retired Professor of Finance living in East Amherst, New York.

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