Sunday, October 25, 2009

The economy of cluelessness

The Office According to the Office is a must read, especially for anyone who watches The Office (if you don't, don't worry, I don't either). Although the post is written semi-tongue-in-cheek, much of it is quite relevant. A natural question to ask after reading the link is: do we really need those pathological organizations, those clueless people, and the friction they create?

We can't easily get rid of the middle 1/3 of our population. Some of us try. That's what start-up culture is about, isn't it? Being more creative by constantly being at the start of MacLeod's cycle? Globalization is also putting pressure on getting rid of the clueless: increased competition means firms have more incentive to produce more efficiently, with less people. Goodbye clueless! Wait, why were you even here in the first place?

I think a potential answer to that question comes from an interesting dilemma: right now, only a fraction of us is needed to feed the entire population. However, because of the way the monetary system is set up, each of us needs to produce something society deems useful in order to put food on the table. As supply overshoots demand, we fight for the demand. Making a contribution becomes harder and harder the more efficient we get, even though efficiency should theoretically make lives easier.

That's what the clueless might be here for: to add friction, to mooch off of others, so at least they can be fed. It's like how in the Great Depressions, the Canadian government hired young men to build roads to nowhere in exchange for being fed (and not cause trouble). Yay for busywork.

High supply and low demand – I doubt our monetary system is built for this. Parkinson's Law states that demand will increase to match supply. Keynesian economists say that we should artificially increasing demand so the economy can grow. Is that really the best? In an ideal world, shouldn't supply be made to match demand, not the other way around? Efficiency should not make people compete doggedly to become more efficient: it should give people more time to do what matters to them the most: discovering new things, learning about the world, being creative, or even spending time leisurely.

Think about it, wouldn't the world be a better place if instead of the distracting everyone with bureaucracy and slowing the world down, the clueless class did nothing? Nothing. Free time. Zero. Of course there are problems with this- lots of problems. Some people like the feeling of importance associated with doing something. Other non-clueless people might want to pretend to be clueless so they can have infinite free time as well (a bit like how the smart guys caused the economic crisis).This change would not be "stable".

Dawkin writes in The Selfish Gene: “An evolutionarily stable strategy or ESS is defined as a strategy which, if most members of a population adopt it, cannot be bettered by an alternative strategy.” For example, the strategy “if resident then fight, if intruder then flee” is an ESS, while “adopt any baby you see” is not (think about what would happen if a majority of the population followed that strategy, but a mutant did not). There is thus no incentive to “cheat” (or deviate from the norm). An economical system should be like an ESS: it should assume that people people will do whatever they can to maximize goal achievement, and it should give no incentive for people to “cheat”. Communism fails badly at this. Capitalism does slightly better, but I think we're on a local maximum, not a global one.

All this is still very abstract. A full sketch of the economics of an ideal world will probably require more work, perhaps by someone who is better versed in economics than I am.

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