I, Government: Blue pills soaked in Red #12

If you’ve ever taken an introductory economics class you’ll likely have heard some rendition of I, pencil. While it is not always presented in full essay form the discussion none the less is a common subject. It begins with the teacher making the claim that no one person knows how to make a pencil.  To which some unwitting student usually challenges him on. The teacher then explains that one person might know how to manufacture a pencil, but they wouldn’t know how to make the machinery or mine the ore to make that machinery or know how to log the wood etc. One can go on with this line of thought for quite a while. You can read the original essay here. The conclusion from the original essay was that knowledge is distributed. But I’ll take a different direction with the same line of thought.

This post is part of my Blue Pill series as and as always please see my sharing policy and disclaimers.

Also huge thanks to @CountNullFace without whom this post may never have seen the light of day.  Go read him at https://countnothingface.wordpress.com/

Let’s assume we have a closed economy. This is a ridiculous assumption for any economic analysis, but fortunately I won’t be using this story to analyze economies. I promise you’ll see why later. Let’s take this story to a ridiculous end. What if the major graphite supplier was run as a family business. Let’s say one day in a family tragedy the entire family died in a plane crash. The surviving relative, a niece of the father, sells off the business to a couple of bankers. They, knowing nothing of graphite manufacturing, run the business into the ground. The price of graphite skyrockets as a major part of the market is gone. Other suppliers of inferior quality graphite race to fill the void but their pencil tips break too easily especially after the rush to fill a 250% increase in their orders. The pencil industry as a whole loses millions while the other suppliers profit greatly.

Let’s add another layer to the story.  Say in a freak accident the only steel mill in town blows it’s roof. The stock of refined steel skyrockets in price. The steel mill had been running at a deficit for years and will have to take out a loan to rebuild it’s mill. The tools for logging quickly become too expensive and timber harvesting begins to slow greatly as the tools begin to wear out and aren’t being replaced. Worse yet the steel at the end of the pencils becomes too expensive and the pencil industry has to find substitutes. This requires retooling the factory’s machines which require some steel, which because of the accident has become ridiculously expensive.  This leads to a complete slow down in pencil production.  While pencils are still being manufactured they have become to expensive for the average person to afford fortunately most poor people begrudgingly switch to using pens.  This series of ridiculous accidents has created a pencilless society.  In reality, because no economy is totally closed and there truly are millions of people involved in the manufacture of pencils in various locations worldwide, pencil manufacturing is actually pretty robust.  However not every good’s production is quite so robust.  Bear with me for one more pencil story.

Let’s go off the deep end for a second. Let’s say we just replaced all the workers in this country with strangers. This is pre-disaster though so all the equipment and factories are intact. My question is would they be able to produce a pencil? Well maybe anyone can be a logger. I doubt they would be as productive as the last bunch. There would probably have way more limbs lost to chainsaws and deaths by falling trees.  In short these strangers would probably produce a lot less lumber. By the time we get to the factory cohort of strangers, it might take years for the poor saps to finally figure out how to work the factory, and given the lack of knowledge on upkeep it might not run at all. The flip side of no one person knowing how to make a pencil is that the specialized knowledge of each part of the process is diffuse. This makes the process of pencil making very anti-fragile, since the loss of any one actor is unlikely to upset the system, since they only understand a small part. The loss of specialized knowledge is non-trivial.  The loss of any piece of the process of making a pencil, would be disastrous. Since the knowledge is diffuse there is not a central place from which all of the information could be transferred to strangers. Not that even such a process would be efficient. Again since it is unlikely that every logger, miner or factory engineer will die in one event the knowledge is safely distributed. This does not mean that the entire system could be run by “anyone” it still requires cohorts possessing specialized knowledge of every step. So while the process of pencil building is robust it is not impervious to change.

Now back to the premise of why I asked you to make the ridiculous assumption that we were working with a closed economy. In a real economy there are plenty of suppliers and many goods can be substituted for foreign ones or close substitutes. Any of these events would have a real tragic effect on the market, however the market would in most cases quickly compensate. Even in dire circumstances, people might just switch to pens: there are plenty of substitution goods. There is one important good for which there is no direct substitution. Can you guess which one I’m speaking of? Government. You can’t outsource, trade or otherwise substitute government. If you did, it would be by nature a completely different good. While a pen and pencil are both writing implements and they aren’t perfectly substitutable, they both write. If you were to bring in a foreign government to run the show, you would switch from a sovereign nation to a puppet state or worse a colony. Even worse the way governments run is often quite different. One might tax one amount the other another. One might have a large military the other a single tank. One might support education, the other might hang academics. Governments are fundamentally different products despite all being lumped together. They are all bespoke one off deals highly influenced by the citizens the bureaucrats and environment where they are formed. People regardless of the efficacy of a particular system are typically sensitive to the way governments run, at least its marginal effect on them. Seeing any changes however neutral to their lives generally causes distress. They would eventually get used to it, but the country would never be the same.

Nobody knows how to make government! *Gasp* The slow kid in the classroom half paying attention says “that’s ridiculous, there are plenty of people who know how the government works.” People know how the system generally works. But a congressman does not know how to run the treasury, the person in the treasury doesn’t know how to run the department of defense, the department of defense doesn’t know how to run a political campaign, the campaign runners don’t know how to pass a bill etc. etc”. Knowing how a system works is not the same as possessing working knowledge of the intricacies of the day to day processes. Just like pencil manufacturing knowledge required to run Government is diffuse and robust but not impervious. This being a democratic country, it roughly matters who is in power and who runs the various subsystems.

The inputs to the system are important. However in a democracy a major inputs of government are in fact the people themselves. Who is a elected is an output of the function of who votes. Any politician can theoretically sway a population, but he can only sway so many minds and his audience will determine how well his positions are received. So if up and replacing the government produces a very different good, and democratic governments are a output derived from the voters. What happens when you up and replace the voter population?  Don’t we get a different output?

If one were asked if they would let some set of strangers run their government, they would quickly ask who they were and what they were about. Our entire democratic system is based on the assumption that it matters WHO is running the show, or whatever part of the show has a position open. People are usually chosen based on the prior knowledge of important actors. very few nobodies get elected and if they do, they never reach the highest echelons of power. While many people by be nobodies to the general public the important part is that they are already known to someone in power. The American public is often presented with a set of choices of people they may never have heard about, and yet they accept those choices if the powers that be seem to know them. Often times a candidate isn’t necessarily creating a platform de novo but advertising a platform in the genre of their party with a few elements of unique flair tacked on so it doesn’t seem stale. Clearly not any stranger could be elected. Imagine the election prospects of a presidential candidate if the news media instead of examining their past just shrugged their shoulders and said we don’t know him, nobody knows him. The candidate might be the best candidate in the world but, a lack of knowledge by important actors would quickly dissuade the public. Clearly no democratic people would elect just anybody to power, they would have to be SOMEBODY or at least somebody with which the media, or the parties were “familiar” with.

This familiarity is a functional implicit acknowledgment of the distributed nature of specialized knowledge within government.  At the lowest levels of government there is less need for this sort of knowledge, but as one gets increasingly closer to the halls of power the need for specialized knowledge increases.  There are cohorts of people who “know” collectively how to run the government.  Any sort of rash wholesale substitution could break a part of the system.  The churn of government has to maintain some level of consistency in order to maintain a cohort who have been there and done it.  In the same way a company needs experienced managers brought up in the culture of the company, government needs people who have absorbed the culture and rites in order to maintain its nature.  These actors may or not be the best “governors” but the maintenance of acquired knowledge is essential for smooth operations.

So while my example of breaking an economy is ridiculous, it is so ridiculous to say we could break a government?  I’m certain you could name a number of countries with broken governments.  Many of them are even democratic. Clearly there is more to good government than just a constitution, some buildings and an election.  There is a wealth of hidden, specialized knowledge, tradition, insider secrets and practice which is required to make things run smoothly or just run for that matter.  So could we break a government?  If the government is a function of which the people are the input, what if the people change?  How fast can we change the demos before the churn of government starts to destroy some of that specialized knowledge?  How fast can we change things before they start to break?  Maybe there should be questions about who is voting, or at the very least the rate of change of who is voting?

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3 thoughts on “I, Government: Blue pills soaked in Red #12

  1. Pingback: This Week in Reaction (2015/04/03) | The Reactivity Place

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