Further notes on ‘The Culture of Divide’

Roeland Decorte & Albert Beardow. Read 'The Culture of Divide' here.

FROM THE EDITORS: As suggested by a few readers, it is perhaps necessary to clear up a few things from the previous article on the futility of the left-right dichotomy and the rise of a new international political elite. It is important to stress that this ‘new order’, as manifested in the centralization and concentration of political power by a select few in office, is not the result of some 'grand conspiracy' hatched by the powerful to obtain world-domination, rather it is only the result of human nature itself.

It is almost an innate quality of every political being that he or she grabs every opportunity to further personal power and influence. When we allow a select group of individuals free reign over political and economic issues we should thus not be surprised that such abuses arise. The fault lies only with us, as more often than not we allow these abuses to pass by unnoticed.

United States Capitol (photo: ingfbruno)

It is also true that many of those enhancing their own power are convinced they are helping the people as a whole, whether through the popular political belief that the people cannot decide for themselves and need guidance, or, as sadly seems most often the case today, out of a wishful thinking, emboldened by vested-interest economists, that spending massive amounts of money on popular projects not only increases their own popularity but also benefits the economy as a whole for future generations, rather than – as is the sad reality – impoverishing them.

Too many don't seem capable of appreciating that, like was said of the British Empire, this institutional takeover has actually happened in "a fit of absence of mind". Yet, as we know that almost all top-down plans fail, it should be no surprise that even the imposition of top-down control on the economy and populace will have arisen not out of some top-down conspiracy, but from the aggregate of semi-conscious, individual harmful decisions that our political institutions were not robust to.

The idea that this is not the result of our human missteps but rather some kind of grand conspiracy is dangerous indeed. Firstly, it suggests that a top-down conspiracy must be fought with alternative top-down measures, more iatrogenic regulations, or the idea that a simple solution like wealth confiscation or simply changing the people in power (electing a different president, say) will be enough to stop this malaise. Instead this will at best do nothing, at worst make the institutions even less robust to errors. Secondly, it tends to categorise people into "conspirators" and those who do not partake, or the "1%" versus the "99%" (or indeed, "left" versus "right"), ignoring the irregularities in such superficial notions, and thus unfairly penalising or accusing groups who are not guilty. This leads to further division and mistrust, only deepening the culture of divide.

There are of course some people who do actively hold the people in contempt and deliberately work against them, and their effects on the system as a whole are probably scalable, but this still misses the main point. Ask most government regulators, bureaucrats, subsidised CEOs, or economics professors whether he believes in a simple, robust, ethically sound approach, and he will say yes - and genuinely believe it. He will only fail to apply it to his own craft - the temptation to self-serve, both materially and intellectually, is too great. Paradigmatic is the CEO of AIG who, under criticism for his huge bonuses, quoted "Atlas Shrugged" to argue that business leaders were unappreciated. He failed to remember that the villains in "Atlas Shrugged" were CEOs getting government bail-outs.

Houses of Parliament, UK

Many individual regulators also believe that they are helping the economy becoming more ethical by introducing a whole series of limitations on businesses and their dealings, though – as seen in the video in the article below – many of the most powerful and famous amongst them are themselves backed by vested interest groups or on the board of some business benefiting from the regulations. Those regulators that are free of vested interests, however, and who really want to protect the economy and the population as a whole, often fail to see that by creating more complex regulations they are only exacerbating the problem. While the large businesses with their political clout and armies of lawyers will unavoidably find some way to game the system, such complex regulation only makes it more difficult for smaller businesses to rise and compete with the already established giants, thus preventing the rise of diversity and impoverishing the market as a whole. Increased regulation also serves to put more power in the hands of the regulator (i.e. the government), in which the regulator without political incentives and vested interests is, as we have seen, very much the exception. In other words, they are only paving the path for more excesses.

As said in the article below: ‘Though their intentions are commendable, the thought that any political organ – something which exists only to support certain political interests – could ever objectively govern the economy in the interest of all, is sadly vain hope. Only if every single individual were directly represented in government, would the government realistically protect every individual’s interests in economic policy. This is not possible through any sort of indirect representation, or financial committee. It is, however, exactly what defines the free market.’

Ultimately, if everyone believes in robust and ethical actions, but are self-serving and fragile in their own, then the whole system will be fragile and self-serving, without any conscious guidance. The important point it to stop these misdeeds at the source, not counter their effects with some other fragile self-serving top-down solution. Take power away from bureaucrats. Keep regulation simple so that it can't be abused. Let companies fail. Don't subsidise them so they are too big in the first place. Pay heed to the assumptions and vested interests of academic economic models, and their openness to error, rather than just the results of such models. Do not leverage to the point that economies need to be "managed" simply in order to pay down the debt. And don't give those who have shown themselves to be arrogant and self-serving more power and rewards!