Don't call it a spade
The Economics of Democracy have Stopped Working
Everybody reading this blog may have noticed that I was ecstatic about Trump’s election. I was really happy. I went out that night and spent days giggling with a MAGA hat on watching the progressives melt down.
That was of course a tribal feeling. I used to look down on people who behaved like that when their soccer team won. “It’s not your team, dumbass, it’s just a bunch of overpaid foreigner jocks”. But the same way that most middle class men in the West put their identity in sports, I’ve always put mine in politics, and having Trump, the closest thing in decades to be close to my thinking, win the election to the highest office in the world, was a huge, huge piece of validation. Progressives say that all politics are identity politics. And it’s true. Human is a social animal, said Aristotle. And the core of human social behavior is forming identity groups (i.e. tribes) and fight each other. And a guy who appeared to be of my own tribe had won. So of course I was happy.
I was also kinda confused. The core part of neoreaction’s theory is that the contemporary political game is rigged so that our tribe just can’t win. The game is set up so that the “Cathedral”, the power base centered on the US bureaucracy and satellites and it’s PR apparatus in the media and universities just control everything. And yet Trump won, with a platform set up by Steve Bannon who is by any account a true and faithful member of our tribe. How could this happen? I wrote shortly after the election that we needed to explain this. We needed a Theory of Trump. And yet for some reason I couldn’t get myself to write one. The whole thing just felt odd. So I waited, to see if I found any clues to explain’s Trump’s ascent to power. To explain the Cathedral’s weakness.
Well it seems I did well in waiting, as the Cathedral isn’t weak at all. The news from the last few weeks is that the whole Trump platform is collapsing. The federal bureaucrat hiring freeze isn’t happening. The wall isn’t being built. The judiciary appropriation of legislative power in the US is untouched. Steve Bannon was publicly demoted. Goldman Sachs and assorted globalist bankstas run the show. And Trump just bombed Syria on the flimsiest of pretexts. Now, I don’t want to commit myself too much on this. The bombing of Syria wasn’t that big, and Trump isn’t sending troops. The wall may get built after all. The immigration ban may happen after all. But the signs don’t look good.
So it looks like Moldbug wasn’t wrong after all. There is a Cathedral deep-state running things completely impervious to the power of the presidency. It seems I wasn’t wrong after all either. Leftism is a memeplex evolved precisely in order to achieve and hold power, its content contingent to whatever works to achieve power. As such, we are not supposed to win. Not that easily, at any rate. Being right, having a correct understanding about how the world works is emphatically not the way to achieve power. There is a collection of games that must be played in order to win. Trump was very good at playign the electoral game; but that’s is just the outmost layer of the power onion. The inner parts are what actually gets you power, and nationalism, let alone HBD, patriarchy and neoreaction is just not very good at that game.
So all that said, I say it’s time we stop caring about Trump and we keep on developing theory.
At its core, the Game of Power is about this:
You might remember I wrote about this. It’s a very good video, based on a very good book. I also like the jargon. The ruler and the keys. Brief and clear. It has some problems, of course. The focus on “treasure”, while quite accurate in practice and a good metaphor, is of course incomplete. A ruler doesn’t necessarily have to grant cash. What humans seek is not money per-se, it’s status. Again, money is more often than not a good enough proxy; but in civilized societies a ruler can sustain its power by granting status, not necessarily money, as Robert Locke so eloquently argued in his apology of the Japanese economy.
But the biggest problem of this video and Bueno de Mesquita’s analysis is how it analyses democracy. Like it’s some end-of-history endgame where everybody is happy because the government gives away public good in order to buy votes from the people. Oh man, that’s just so fucking wrong it’s not even funny.
So the basic argument there is that dictatorships are run on the tight loyalty of a few important supporters (keys). Those keys come from a pool of potential keys, the “selectorate”. They keys will cost more or less money to keep loyal depending on the ratio of keys to potential keys. If the potential keys are few, the keys are scarce, hence expensive. If the potential keys are many, the keys are expendable, and so they will cost less. So what a Ruler wants is to have few keys, but many potential keys. That’s basic economics. A key works better when he has few ministers, but drawn from a vast aristocracy, instead of just a few nobles. Or better even, draw your ministers from the civil bureaucracy, who are dime a dozen. This is why historically aristocratic systems just don’t last very long. The king doesn’t like them. Their loyalty is too expensive.
That’s easy so far: so what about a democracy? How does that work? Who are the keys, and who are the potential keys? The video starts talking democracy at 6:00. And the beginning is pretty good. In an electoral system, the keys are the people who get you elected; i.e. who give you power. In practical terms the keys are interest group leaders, the people who mobilize vote blocks on your way. In order to please these blocks, a ruler gives them treasure.
Well, not quite treasure. We’re not talking kings anymore. The rulers for rulers aren’t just for sovereigns; they apply to any power dynamics, no matter at any level. Politicians in a democracy aren’t at the pyramid of the power hierarchy as a king or dictator would be. They’re at a lower level; so the treasure isn’t quite for them to take. Politicians in a democracy are quite easily replaceable themselves, so they gotta play by the rules, if only up to a plausibly deniable point. There’s a Schelling point, slightly different in different countries, where a politician can deliver treasure to his keys without getting themselves replaced. We generally call that “corruption”, and involves pork, tax loopholes, and that kind of stuff.
The video gets that alright, then notes that democracies tend to have lower tax rates. Which sounds counterintuitive if you’re some form of libertarian obsessed with Scandinavia and public expenditure to GDP rates: but it is true. Tax rates in China are quite outrageous. Tax collection efficiency in dictatorships may be quite bad; but the size and autonomy of the private sector is generally very small. The state really dominates the economy more than in a democracy. Not overwhelmingly so, but it really does. So the point is correct. Politicians want to get elected and lower taxes are always a good incentive, even if interest group dynamics make it easier said than done.
Then at 12:00 the video talks about how democracies compensate for lower tax rates by investing more in public infrastructure to make people more productive! You gotta be kidding me. We’ve talked about how power works. We’ve talked about how democracies nurture interest groups because they are easier to manage and buy off. We’ve talked about tax loopholes and pork. All absolutely correct. And now you’re telling me that democracies want people to be more productive so that they produce more wealth? What the hell? You think dictatorships don’t? Ever been to China? Know of Tsarist Russia? Everybody wants more wealth.
Sure, higher productivity often entails giving people access to stuff that may make it easier to revolt, and to some extent some countries do not encourage productivity that much, especially if they can afford to, having natural resources or something. Stability is a very good thing if you happen to be at the top. You don’t wanna change stuff. You wanna stay on top. But if you can be sure that revolt is not an issue, even the nastiest dictatorship tries to get his subjects to be more productive.
The reason that modern democracies invest a lot in public infrastructure, in hospitals and universities, is not because they want their people to be more productive. It’s because the power dynamics of politician make outright spending of treasure to be forbidden, and thus ever more complicated forms of pork must be found. And the Schelling point for spending public money without being accused of corruption in the USG dominated world order is healthcare, education and public infrastructure. More or less in that order. Those are not about productivity. Spending in public goods in the West hasn’t increased productivity since at least 1970. There’s a good argument to suspect that investment in education has decreased productivity to a catastrophic degree. But the money keeps being spent because it is a good way to pay treasure to key supporters.
There was a pretty obvious example of this last year in Japan. Now I’d like to come up with some example closer to my reader’s concern, say something in America, but East Asian political culture is so honest and straightforward that it’s much easier to come up with corruption cases which map well with this kind of straightforward theory.
So, the Ministry of Education in Japan in 2013 came up with this initiative called “Super Global Universities”. Yes, Super. Not kidding. The idea was to have universities across the country come up with a plan to make them Super Global, say by promising to give more classes in English or getting to invite foreign students from India or whatever, and in exchange the Ministry would give them extra cash. And so they did, some were selected, some weren’t.
Fast forward to 2016, and the Ministry of Finance is desperate to make spending cuts. There’s just no fucking money. They ask around and nobody wants to make cuts. Then they figure out that they hate the most the Ministry of Education. Perhaps some personal vendetta of high-fly bureaucrats there. Whatever the reason, the next day the press is all talking about how the Ministry of Education sent retired bureaucrats to some universities to work as administrators or professors on high salaries. And who would’ve thought, the universities who accepted those retired bureaucrats were selected as Super Global, and got a shitload of extra taxpayer cash thanks to it. I’ll put the guy’s face because he looks so much like a corrupt asshole bureaucrat I think it’s funny.
That is the most classical form of corruption in Japan, the ama-kudari, the sending of retired bureaucrats to cozy sinecures paid on the public purse. That’s just the Schelling point that Japan has come up in order to keep the bureaucrats from being at each other’s throats. You promote one guy, the loser gets a cozy sinecure on double salary, everybody is happy. Except the public purse. But nobody cares about the public purse. It’s public.
The Rules for Rulers guy would want you believe that Japan is investing in Super Global Universities because it wants the Japanese to be more productive. Give me a fucking break. You could’ve said that in the 1950s, when highways and railways and airports were getting built all across the world. But still, it wasn’t even true that the point was higher productivity. Higher productivity was just a convenient Schelling point to get the bureaucrats to not fight each other and get behind the project, and conveniently skim some money for themselves and their cronies (keys). But note that once the higher productivity excuse ceased being true, once all modern countries were bursting full of highways and bridges to nowhere and marginal universities and useless hospitals full of 90 year old vegetables; they didn’t stop building. They kept going. Building more and more without thinking much about it. They just had to pay some more to get the media and academia to justify the more and more obviously useless expense. No Child Left Behind! Like there was anyone being left behind to begin with.
Now a disingenuous liberal, say Scott Alexander, may argue that even if the causal arrow is confused, the fact is that the scattered power system of a democracy still results in more investing in public goods, even if they do it for spurious reasons. And they’d have a point. China started investing in getting their country more wealthy once Mao died and the power of individual Chinese bureaucrats become more unstable, so they had to spend their pork on ostensibly public minded projects. But that’s not a point about democracy per se, it’s a point about unstable bureaucratic systems. And the industrialised nations as a whole are way, way beyond the point of diminishing returns of public good spending. I’d really rather have politicians outright buy votes rather than send more money to universities to poison the minds of the young.
The cycle of politics may turn out to be just as the Greeks saw it: a cycle of monarchy, aristocracy and democracy, underpinned by the economics of the different systems, spending too little, then too much. Now we are spending way, way too much. Which means that we need a change. A change to less democracy. Whose turn is it now?
Not Trump’s at any rate. Sigh.