Re: ECON: The Affluent Society (was Dyson ) (long)

James Rogers (
Wed, 20 Jan 1999 21:42:03 -0800

At 07:38 PM 1/19/99 -0000, Damien R. Sullivan wrote:
>But many people now would take a lower growth of the pool in return for a
>certain share. And they band together or pressure the government for relief
>from the vigors of pure competition. Farmers, manufacturers, workers, the
>elderly, the unemployed in time of depression, and more all seek ways partly
>to maximize their income, but in large part to make more secure the income
>they already have, by means of government action.

Part of the problem is that, in my experience, people spend far more of their time securing their income than securing a certain share (analogous to "job security" vs "employment security"). Thoughtful investment of income (in the broadest sense e.g. educational, monetary, etc.) lowers the volatility of "share" significantly and should generate larger net growth over the long run. However, many people do not have the will to invest income thoughtfully despite the fact that most people are aware of the consequences of their actions, although better education in this regard could certainly help. The cliche "expenses rise to meet income" expresses a common symptom of this behavior. Most cultures implicitly encourage aspects of share retention behavior, but I think few people fully comprehend the impact appropriate investment can have on their long term share retention.

Maximizing income via government action does not decrease volatility; it only attempts to increase the mean around which an individual's share fluctuates. I think it can easily be argued that such attempts generally decrease the mean share for an individual. In any case, I do not see how this could improve the situation.

>Laissez faire might work with a Heinleinian or Randian population, in much
>same way that communism could work with a truly Christian population. Real
>populations will probably be as likely to subvert or frustrate either.

I would tend to agree with this. To apply this to the real world the initial populations would have to be self-selecting.

>Wait, I thought they wanted mansions. You can't have most people having
>higher and higher ideas of what constitutes affluence but also have them go
>fishing once the gov't provides them with $8000 income.

With respect to the "minimum income" society concept:

Minimum income societies have been shown to work. However, there is a very large problem in implementing this in a real world society, a problem large enough that the number of such societies is very small.

Implementing an MIS requires a very large income surplus from the moment of instantiation onward. This turns out to be an immensely large problem for two reasons. First, the initial surplus must be exceed the net income of the total population by many times to be viable in the long term. This requires either aggressive taxation over many decades or the receipt of a large windfall from a source external to the society. Every real world MIS received its instantiation surplus from the latter. Governments and politicians almost never demonstrate the discipline required to amass huge surpluses of cash, particularly over a span of decades. Such government amassments are almost always plundered long before maturity.

The second problem is that the floating surplus must be well managed in perpetuity for the MIS to remain viable. Again, governments and politicians have an appallingly poor record in this regard. The most successful forms of MIS occur when the floating surplus is managed by individuals external to the MIS that have a profit motive in seeing the MIS succeed (e.g. corporate socialism). This motivates the managers to both increase the floating surplus and prevent the surplus from being squandered. Some minimum income societies have actually demonstrated a net increase in the minimum income through shrewd management.

It should be noted that minimum income societies have generally been on a small scale. Many have failed due to mismanagement. However, the well managed minimum income societies have prospered. In my opinion, this is the *only* form of socialism that is demonstrably beneficial over the long term. However, the price of entry is extremely steep and the "free lunch" aspect is only maintainable if the floating surplus is continually increased through intelligent investment. I do not think the entire world could do this without crumbling into the classic socialism that we love to hate; the secret to this model is that individuals external to the society effectively foot the bill for your free lunch.

-James Rogers