Building a plausible utopia p3 - Competent government is the wildest dream of all

To answer a question no one has has asked: one of the reasons a utopia is so exciting to me is because it gives me an excuse to think about solving problems. But what is the problem? Why have we not, for example, ended world hunger? Certainly the resources are there. The technology is there, even today. What’s missing? Given that we don’t have another 300 page book and several years of research, I would tend to sum it up in one word: Incentives.

It’s something of a truism. The reason that we have not solved world hunger is because the global rich do not have the incentives to do so. The reasons we haven’t done a lot of things is because we lack the incentive to do so. But despite the seeming obviousness of the statement, the structure of macro incentives can be quite complicated, and very interesting to think about!

Let’s explore an example: You probably don’t like politicians. In general, it seems that almost every culture on Earth agrees that politicians, as a species, kinda suck. But why do they suck? One might criticize greed, or lack empathy, or cowardice, even some kind of ontological evil-ness. And perhaps for a given politician, those critiques might be true. But, in my view, those explanations are misguided, in that I don’t particularly find them useful.

When I look to characterize a problem, I want to understand how to fix the problem. I want to think about structural flaws not outputs. A politician being an all around not-cool guy is an output of a system, a government, a moment in time. We do not intend to fix someone’s personality when we elect them; the selection of a politician is the output to the system we have selected to answer the problem of political control.

So the question I would ask is: “Is there a way to consistently select good politicians?”  As a base, I begin with democracy, described by Winston Churchill as “the worst form of government except all the other ones”. It is obvious that democracy (along with every other form of government) suffers from a key structural problem: misaligned incentives.

What do you want a politician to do? Broadly speaking, we might define the idealized role of a politician to be: “maximize the social welfare of the citizenry”. They might build trains because transit allows people to be more productive, build hospitals because health and welfare are closely linked, and build schools because education improves society. And here we can trivially see the problem: that’s not why they do those things, or at least not quite. In a democracy, a politician does not act for the maximum social welfare of the citizenry. In a democracy, a politician acts to maximize the chance that they will win an election.

In idealized cases, winning elections and maximizing social welfare might incentivize the same behavior. But one can come up with uncounted examples where they do not. Gerrymandering, for example, serves primarily to purposefully disenfranchise voters, yet remains mysteriously popular to those it benefits. The topics that dominate headlines and win elections are often of little to no practical economic consequence. Voters themselves are often completely unaware of the policy platform they profess to support. And, in the end, the day-to-day of governance tends to drift rather far from any sort of academic ideal, as anyone who has ever worked with any government agency might attest.

These things are the result of a design. A politician is incentivized only to get 51% of the vote, however that comes about. The citizenry does not have the time, energy, or expertise necessary to do deep analysis of all policy. Which is reasonable when you think about it. Policy analysis is incredibly complicated! Voting as a mechanism for control serves to ward against the absolute worst behavior, but expecting it to do more is perhaps a little optimistic. And so politics is filled with what I might call “blunt” signals.

It is easy, sometimes, to forget that there are things that the vast majority of people agree on. Outcomes that we all want. We agree that traffic is bad, and water should be clean, and healthcare available. And in an ideal world, the marginal efficiencies of competing plans for transportation infrastructure or the maintenance of utilities would loom large in political debate. But those are not the things that tend to be at the forefront of politics, at least not most of the time. 

So how do we fix this? We know the structural problem, but it has persisted for hundreds of years. Its presence is so ubiquitous that the very idea that a government might be efficient raised more questions than me randomly connecting stars with wormholes!

The solution is simple in principle. If politicians were incentivized to do good, we might find they would do good! Therefore, as economist scum, I took the simplest possible solution: we pay them. 

Let’s reset to square zero, forgetting all the barriers and difficulties and inefficiencies. Let us remember the core problem: that incentives are misaligned. An easy way to incentivize people to do things is to pay them more money when they do what you want. 

This may sound somewhat amoral. After all, it feels dirty to be depending on money to do the heavy lifting. This government is no more noble then ours then, if money greases the wheel. But that is just the thing! They don’t have to be good people! A system of this type might work with mediocre people and bad people! In other words, the system might be plausible!

We are extremely confident that Jamie Diamond (CEO of JPMorgan Chase) is going to do what he can to make the shareholders of JPMorgan Chase richer. Because when shareholders get richer, Jamie Diamond gets richer. What if we could do that for politicians and citizens? As of today, the USA spends about USD 900 bln on its military every year, so it’s not like we don’t have money to spare.

Again, I’m still defining a goal here, not necessarily even saying it’s achievable (and indeed, I’m not sure it would be achievable in any sort of real world sense). But I find the goal at least somewhat plausible, and that alone is exciting for me as a world builder!

Imagine if you will, that we can somehow determine the exact metrics for what a “good society” looks like (more on that in future articles). Let’s explore a dumb fantasy:

Richard Nixon stays up late at night, cracking the whip so that his army of economists can get him that data on exactly how he might effectively reduce the levels of poverty in America! And he demands to know, the next day, why the average hospital wait time is still 12 days rather than 4 days, as was targeted by the last round of investment! He scours the country for experts in medical systems because he’s just got to figure out what he’s doing wrong!

And he does these things, not because he is a good person, but because hundreds of millions of dollars are on the line. He does these things because if poverty levels can be reduced to 2%, he’ll get a check for ten million dollars right then and there. He does these things with money bags in his eyes and an “arooooo” on his lips.

And that’s not to say that I think Nixon is going to be perfect or something, far from it actually! Even if he is really truly trying and so are all his senators, these are very complicated problems.  But ask any civil infrastructure engineer about government civil infrastructure policy. Ask any doctor about government health policy. Ask any economist about government economic policy. Even when the preferred option is in office, almost all will agree that, by their professional standards, the actions of the government are almost nonsensical, if not directly harmful in many cases. 

Imagine how beautiful a world might be. Imagine the upgrades that might be possible when we move from “nonsensical” to “following at least basic academic theory” and then to “iterating on the results of real-world policy research”.

Maybe it always collapses into a dictatorship, who knows. But it’s fun to think about, at least!