Our Future: Trading Reliability for Power

I've often heard people 40+ grumble in the following way about modern communication technology: "Yeah email and text and voicemail and all that are great. But in 1982, you called a number, and either the person answered, or they didn't. There was no 'Oh your text got buried,' 'It must've gone into my spam folder,' et cetera." (All the more annoying because they're all plausible excuses.) Having all these technologies makes our reach much greater, but ironically, much less reliable.

If you're not sure this is such a great trade, it's worth thinking about, because something similar is increasingly happening with public services. Startups are replacing a lot of the services that local government typically provides in the U.S. - e.g., information reporting for state governments (traffic light is out at Third and Grant), DMV appointments, metro bus routes, trash collection, etc. Yes, sometimes those services are already spotty. The concern is that with, say, trash collection, barring gross dereliction of duty, I know the majority of days they'll get my trash, I know who to call if they miss it, and I know next week and next month and next year it'll be my city that's doing it. In a truly efficient market, there's no guarantee that if Startup A is doing it this week that they'll be doing it next year - yes, Startup B might replace them because it's doing a better job, but with that marginal improvement comes a whole lot of friction - a new schedule, new rules to learn, etc. This is a cost which, in making this trade, I don't think is adequately appreciated. It's already enough of a pain that you have certain friends eat up your bandwidth remembering which media platform is the one the check regularly. Expand this to other domains in life, and pretty soon all you're doing is keeping lists, which change constantly.

The analogy: you have to choose between being Clark Kent who can bench a respectable 400 lbs any day of the week, vs Superman. The catch is that 20% of the time Superman is sick in bed with kryptonite flu and you never know when that will be, and the medicine for kryptonite flu is constantly sold at different pharmacies and his health insurance changes unpredictably.

Business Using Government to Stifle Competition

A smartphone app in New York that would let people find and hail cabs is being profoundly retarded by the city. No doubt such an app would be of great benefit to people hailing cabs and to individual cab drivers, but a disaster for cab companies (and dispatchers). Is there anything more to this story than cab companies protecting their interest at the expense of citizens, and the the city eagerly using regulation to do this for them?

The established businesses are very good at having to avoid defending their behavior; no matter what they say their motivation is, it's pretty obvious that they're acting exactly the same as they would be acting if they were just defending their interests at all costs. The state liquor control board in Pennsylvania has been doing much the same thing.

Regulation is often the friend of big business.

Ridiculous Moral Arguments in Business

Sometimes, a business with a government-backed monopoly on an activity thought to be morally dubious will make funny arguments against the start-up of similar businesses. Here you can read about American states with state-controlled liquor distribution, and the state stores saying as vaguely as possible that we shouldn't have more liquor stores, because they're evil.

The same silliness occurs with casinos and gambling, and especially lotteries. (This particular story reminds me of the hypocrisy around injuries in high school sports, vs. other high school activities). If we're going to rule that there are goods and services too dangerous for the free market, or dangerous enough that they should only exist as government-backed monopolies, we should have a transparent, automated rule for determining which goods and services those are. Otherwise, these decisions will always be made by exactly those parties that have conflicts of interest, and shouldn't be involved in the process.

How Do We Decide When a Good or Service Is Too Dangerous For a Free Market?

There are areas of commerce where markets can be perceived as maintaining a tension with moral values. These areas include but are not limited to: commonly, gambling, prostitution, mind-altering drugs; more centrally in the study of economics, labor arrangements (here and here), and of course health care. We could extend this last category to the laws growing up around the U.S. and elsewhere restricting sale of trans fats or sugary drinks to kids. It's harder to argue (but not impossible) that markets should not be allowed to run their course in things like (for example) clothing. It's surprisingly difficult to think of examples of things that governments have tried to specially insulate from market economics short of 100% centrally planned economies. (In fact if you're worried about the free markets of shoes destroying the world, Douglas Adams anticipated your concern.) What the commonly insulated goods and services have in common is that they're things about which humans have difficulty thinking rationally (short term sensual goods, "vices" - gambling, prostitution, sugary drinks) or no rational basis for their behavior in the first place (avoidance of negatives, like indignity, suffering, and death, i.e. labor arrangements and health care). As a first approximation, the more boring a good or service - i.e., the more that commerce decisions take place entirely in the executive centers of the brain - the fewer problems it will cause on an open market. Shoes are not as dangerous as opiates, or as contentious as indentured servitude.

But humans are not always the rational optimizers we think we are, and it will always be the case that some of us make bad decisions with regards to certain goods or services, and this tendency differs between individuals. Whether it is moral to restrict others from these goods and services is an important question that libertarians wish more people would consider. Case in point: I have given up trying to eat only reasonable, non-health-damaging amounts of chocolate. Is it moral to demand limits, or an outright ban, on chocolate sales for everyone, to protect the weak-willed like myself? Why then for alcohol? Why for prostitution and heroin and gambling? After all, you're mature enough to handle (or just plain avoid) these things, so how can I demand you alter your actions, even though keeping chocolate available absolutely has an impact on my health? So why isn't allowing the poor judgment of some to make the decision for all a classic case of tyranny of the majority?

What's interesting is that as freedoms are extended, the leading narrative-generators in these sorts of debates become less moral and more economic, not to mention more transparently self-serving. That is, at the start of the discussion, we can't make X legal because the world will end, and think about the children! Once X is legal in some polities, it becomes increasingly clear that the world has not ended and the children are fine, so the debate moves to economics. Eventually, no one can remember what the fuss was. Charging interest on loans was considered immoral and an affront to God in European Christianity. How much of that talk have we heard in the Greek crisis so far? Of course, debt can be dangerous, which is exactly what the last few years of economics have shown, but without it, most of us would never own property.

What prompted me to write this post is that, with liberalizing goods (as opposed to de-liberalizing ones like health care in the U.S.) it's during the transition period from world-ending to pure-economics that we hear the funniest arguments. Economic stake-holders want to defend their turf, and their competition is largely held at bay through government-enforced monopolies or oligopolies. At the same time, these stakeholders know that "if you allow more businesses to buy/do X the world will end" is more compelling to a liberal-democratic public than "if you allow more businesses to buy/do X, I'll have more competition", especially if the earlier values that made the good or service a vice persist over time. So a stake holder will pony up to the mic and with a straight face, s/he will tell the public that what s/he does for a living is bad, and there shouldn't be any more allowed. To use two provincial Eastern U.S. examples: "'We have to fight this explosion of gambling all around us,' said Don Marrandino, eastern regional president of Harrah's Entertainment Inc., which has four casinos in Atlantic City." (From "East Coast Casino Market Getting Crowded"; another provincial East Coast issue is the liberalization of alcohol laws in Pennsylvania, allowing sales in supermarkets like most of the U.S. allows, which also gets its share of incoherent moral and economic arguments from, you guessed it, managers of state-run alcohol stores. [Added later: at National Review Reihan Salam analyzes arguments against the spread of online education as being one example of the general phenomenon of traditional producers' inconsistent rhetoric against a shift in production; I would argue the same applies to distribution: "Call it the producer’s lament. Basically, traditional producers — of handicrafts, of pop albums, of community college education — grow accustomed to making a product in a particular way. When cheaper alternatives threaten to put them out of business, we hear a wide array of arguments, many of them conflicting and contradictory (but hey, whatever works!), about why the new mode of production is profoundly dangerous or unjust. Clay Shirky has vividly described how this discourse has played out in the book-selling and publishing industries, as has the always excellent Tim Lee."]
[Added still later - it works in politics too, as in this case where the existing Cherokee Nation is suing Tennessee over its recent recognition of other tribes. Native solidarity, right?]

Of course, there's really no surprise here; people will act in ways that are in their material self-interest, and industry-based rhetoric is no exception. But it's a reminder that capitalists are particularly, as we should expect, materially self-interested - they want wealth, not free markets - and they're willing to use government to that end. Hence we've had admonitions right from the start from the likes of Adam Smith to save capitalism from the capitalists: "The proposal of any new law or regulation of commerce which comes from [businesspeople], ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention."

Note the absence of explicit "the world will end" alarmism from the casino manager's rhetoric, because that would require a little bit too much doublethink even for the average news-consumer aiming to reconfirm his or her values. I'm looking forward to seeing the same kinds of self-oblivious contortions from money-lending banks in majority-Islamic countries this century, as well as from marijuana sellers (or local governments benefiting from tax revenues) in parts of the U.S. that are liberalizing marijuana laws: here, here and here.

Future Corporate Personhood: Union Pacific Meets Skynet

This is cross-posted at my hard science and science fiction blog Speculative Nonfiction.

In 1886, the U.S. Supreme Court issued a legal decision which is regarded as significant because it in effect granted corporations legal personhood. Southern Pacific Railroad was the defendant in a case brought by Santa Clara County, California (the modern day location of Silicon Valley).

We can all concede that this seems strange on its face. A corporation is a social and legal fiction that exists by fiat of its owners and stake-holders, and has no free will of its own. By the same token you can't get out of a car accident by saying (for example) "It was my mirror that clipped you, not me, and the mirror is the car's property, not mine." By the same token, your dog doesn't own his leash, your computer doesn't own your printer, etc. - you do - and you're responsible for them. Thinking about it this way makes it seem even more bizarre that a mere century and a half ago, in much of the U.S., you couldn't own property if your skin wasn't the right color, because you yourself were property (or could be). Again: a computer can't own a printer.

That the legal conceit of corporate personhood seems strange does not mean that it is bad. There are lots of mutually-agreed social hallucinations that have ended up benefiting their participants, materially or otherwise: social mores, nation-states, games, religions, and certifications. Some of these mutual hallucinations differ in that they are considered inarguably "real" constituents of objective reality outside of their human participants, while some are not. Some of them are more voluntary, artificial, and explicitly engineered for a purpose; the trend is toward these. This is a good thing, and corporations are a prime example. Everyone knows that a corporation isn't a person, but legal conceits are like the social equivalent of capital markets or enzymes: as long as it's above board, everyone winks and then is okay calling a spade a club until you get the loan, or you lower the energy of the transition state. Then you get over whatever barrier you had to wealth or energy generation, and everyone gets what they want.

Some seem concerned at the unnaturalness of these legal conceits and fear that once we legitimize such silliness as corporate personhood, we open the door to a future in which humans exist enmeshed in an increasingly byzantine network of such arrangements. This phobia is portrayed darkly in books like The Unincorporated Man, which attempts to convey a dystopia in which one such future legal conceit is the opposite of the Union Pacific decision, where individuals incorporate themselves and sell shares of themselves to investors. In fact, due to a desire for wealth creation driving an increasing profusion of complex social arrangements, a world like that one is almost certain to come to pass, and furthermore I hope it does! No, I personally cannot imagine a world of personal corporatehood, and if I woke up in 2100, I'm sure I would have a hard time adjusting. That in itself is no argument against such an arrangement. In the same vein Julius Caesar would have been equally clueless about (and perhaps frightened of) the concept of corporate personhood, though if he were born in 1960 I bet he would get it just fine.

There is one concern I do have for the future of corporate personhood specifically that I haven't seen discussed and which I grant will seem esoteric. Corporate personhood is a safe legal fiction only when the property owned by the corporation is not equivalent in its abilities to a person. That is, there was no confusion about the bounds of property and person in 1886 or today. None of the steam engines sitting in Southern Pacific railyards had the potential to achieve a place in the Southern Pacific boardroom. This observation will seem less pointless when we recognize that some of the property of corporations will almost certainly, by the end of this century, be at least equal in decision-making ability to board members. In 2100 the steam engines or at least the computers running them will probably have a say in corporate governance. If a corporation consists of a single powerful computer, that corporation will then be a person, both legally and (de facto) cognitively.

If you've read Stross's Accelerando, it's hard not to think of the computer system that was constantly spinning multinational shell corporations around itself to protect its owner's interests. We can argue later whether these machines are "conscious", "intelligent", or any other adjective that interests you. But will we see incorporated expert systems with no human board members? Is this a threat to the human economy? Is this an argument for or against designing a constitution in a legal programming language that has to be compiled and can't execute until its internal logic is consistent? The utility of these legal fictions is that we live in the real world and we can reel them back when they get too non-sensical or damaging; at such time that corporate personhood is deemed a threat to human happiness and survival, we can eliminate the convention. We can't do this with a corporation that has literal vested interests of its own.