The Search for Status by Bags of Goo

Posted on 2017 June 4

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We have developed a mania for regulating people. We forbid not only evil practices, but we are beginning to lay the restraining hand of law upon practices that are at the most of only doubtful character. — George Sutherland

Established incumbents [in business] prefer regulations that take the form of predictable, upfront high fixed costs, if only to limit entry. And to some extent they can pass those costs along to consumers and workers. — Tyler Cowen

DNA. Remember? High school biology class. DNA is a long, curled-up molecule at the center of every cell in your body, telling the cell what proteins to build so the cell can do its work. DNA is the thing that evolves and leads to plants, animals, and humans. If DNA gets it wrong, it can die. If it gets things right, it can make more copies of itself and have a future full of descendants.

To that end, right away in the history of life on Earth, DNA evolved to construct bodies that protected it and carried it around as it searched for resources. These bodies were made with whatever was available, mainly water and stuff floating in water, and pretty soon there was all this DNA swimming around inside little bags of goo.

The DNA that cooperated with other, similar bags of goo could get itself a lot more resources. Then, when it was time to divvy it up, some DNA had constructed bags of goo that were better at grabbing the swag. DNA that wasn’t as aggressive would reproduce less well, and after awhile only the assertive, competitive DNA goo bags were left. Eventually every form of life was descended from goo bags that were more aggressive.

Fast-forward to today, when really big bags of goo called humans walk the Earth and work together to build and maintain a modern civilization, which is basically a giant machine for generating resources and using them. Because humans descend from hard-striving, competitive ancestors, each of us tries to grab as much of these resources as we can.

It’s not enough to have plenty. You gotta have more than your neighbors; otherwise, the neighbors are more likely to populate the future while your descendants die out. It’s better, statistically, for your DNA’s future to be a relatively high-resource creature in a poor world than a relatively low-resource creature in a rich world. This works the same for humans, and by now everyone wants as much as they can get … even if they’re polite about it or insist they’re “not that kind of person”. They can’t help it. It’s like sneezing: you just gotta do it.

One of the most powerful ways to acquire lots of resources is to have high status. Thus a human at the top of a social order will tend to have much more in the way of wealth than someone at the bottom of the ladder.

In modern society, it’s possible to develop a useful product, market it cleverly, scale up to produce millions of units, and become stinking rich. Most everyone would love to be rich, and those who aren’t often resent those who are. Worse, sometimes a person gets rich by cheating or defrauding customers.

So groups of humans called democracies band together and vote to establish regulatory systems designed to prevent people from getting rich by cheating. Democracies also enact laws that force rich people to give back much of their wealth in the form of taxes. After all, the rich have more, and “we’re all in this together,” so they really should cooperate and help the less fortunate. Right?

Yet, despite a century of democratic action against the rich, there are more wealthy people than ever, and somehow they’re cheating more than ever, too. How come?

When you think about it, it’s simple, but weirdly ironic. The very system designed to restrict rich people is making them richer.

Stay with me on this. First off, regulations and fees and taxes — set up to prevent fat cats from cheating their way to the top — are often too costly for small entrepreneurs. Thus the fat cats, who can easily afford the regulatory burden, basically are paying fees that make their competition go away. It’s the most cost-effective money they’ll spend. And it’s a feature of government regulation that’s built in from the get-go. The big honchos don’t have to do much more than comply with the regulations; the system automatically wipes out most of their competitors. Then they can raise prices and reduce quality at will. And it’s all perfectly legal.

Second, those fat cats send their lobbyists to Washington, where they buttonhole regulators to get special privileges — more restrictions on competitors, exemptions for their own companies, etc. — and become still wealthier. Legislators benefit from the fat cats’ advice so they don’t write rules that inadvertently cause layoffs to workers who, you know, vote. Lawmakers also benefit from corporations’ “contributions” (read: “bribes”) to their re-election war chests. So it’s win-win all around. Unless you’re the rest of us.

Thus — to return to the evolution analogy — the government regulatory process selects for fat cats, so that now there are more than ever. It’s a system that has backfired.

And, because we human goo bags are, like all other forms of life, ever competitive in our search for resources, this system gets locked into place and doesn’t budge, even though it makes the problem worse. Why? Because (1) the poor vote to extract money from the rich through taxes, and thus improve marginally their own status; (2) the fat cats benefit from the anti-competitive effect of the regulations; and (3) the government gets bigger and more important while overseeing all this activity.

People on the Left will complain, “But we must restrict those rich people or they’ll go wild and ruin everything!” Maybe. Up to a point. Corporations have their own goals — mainly to make money for their shareholders — so trying to browbeat them into behaving as you think they should will merely motivate them to wonder, “How can we use this moralistic campaign from the Left to make more money?” In other words, they’ll be good only if it adds to their bottom line.

Let’s review. Bags of goo, full of DNA, must compete for higher relative resource allocation, or their descendents will tend to die out. None of us can help it. We have to compete for status, lest our line fade away. Putting up walls in an attempt to stop corporate honchos from aggrandizing themselves will simply encourage them to game the system. People wake up long enough to vote for more regulations and then go back to sleep. Corporations are at it 24/7, and they’ll chew up those new laws until they’re a nutritious money-making paste for them.

Thus, no matter how hard idealists try to make society fair and just, and no matter how laudable that goal may be, as long as evolution has a say in the matter — and there’s no turning off evolution — people will always compete to get an edge. And the corporate regulatory system, as it’s constructed today, is a chief edge in the fat cats’ favor.

But there are workarounds for those jealous of people with higher status, and for those fed up with the failures of governance. Technology itself is providing the means for anyone to bootstrap into greater success: the tools for finding work, and for producing apps, books and music, are getting so cheap that someone in a third-world country can begin to use them. Consumer prices, benefitting from advances in automation, have just begun a downward trend that should continue well into the future. (Amazon product prices plunged 40% between 2006 and 2016.) The many new companies and products available today give you, the patron, a vast array of choices that you could never get from voting. And customer rating systems — at online retail stores, at Uber and Lyft and Airbnb, etc. — give power and punitive control to the average citizen that’s far more effective than his or her federal ballot.

Many of us who don’t exactly thrill to the harsh competition of the marketplace — or the unpleasant reality of all that status seeking — can nonetheless find that it’s easier than ever to improve our resources simply by working to develop better products and services and make them available to others. That’s a win-win that doesn’t require special privileges.

People will always compete for status, and laws that try to change that will likely make the problem worse. But technology has opened up a cornucopia of options that any of us can make use of, to help us thrive gracefully in a competitive world, whether the government tries to help us or not.

So take heart. Despite the pavement of regulations and taxes poured onto the commercial playing field by a well-meaning government, new opportunities rise up through the cracks. It’s time to get in there, grab some of that fresh growth, and use it to produce value. The DNA inside your goo bag will thank you.

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Posted in: Politics