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Anarchists and libertarians fail to acknowledge the nature of collective action problems, and the ways in which various modalities (including hierarchical organization, of which government is one example) are used to address it. The trick is to most effectively blend these different modalities, not to reduce reality to a caricature that allows us to pretend that that challenge doesn’t really exist.

(There’s a famous example used in economic literature, of a barge-pullers guild in 19th century China, that hired overseers to whip slackers in order to eliminate the free-rider problem. In other words, the barge-pullers themselves chose to impose on themselves an overseer in their own collective interest. It’s a strange and complex world in which we live; we need first and foremost to face up to that fact before rendering judgment in broad brushstrokes that fails to acknowledge fundamental aspects of reality.)

The “problem” with government isn’t its existence or the fact that people rely on it for certain purposes, but what in economic, legal and managerial theory is called “the agency problem.” In a popular sovereignty, government is constituted as an agent of the people, its principal. This is in many ways a reversal of most ancient notions of sovereignty, which saw the people as “subjects” of the sovereign. The problem, or challenge, is the degree to which reality can be made to correspond to theory.

In one view, this reversal of theoretical roles occurred organically, because in the crucible of European internecine warfare the crown’s (particularly the English crown’s) need for revenue to finance such wars drove an ongoing liberalization of the political economy to generate such revenue, In other words, international competition drove sovereigns to empower ever-more ever-broadening swathes of their citizenry, since those that did so fared better in the wars among relatively small and easily swallowed states.

In the Glorious Revolution in England in 1688, this reversal was institutionally recognized, laying the groundwork for the American revolution’s clearer codification of that institutional shift in its break from Great Britain. The challenge then became aligning the agent’s action’s to the principal’s interests, a challenge compounded by the size and diffuseness of the principal in comparison to the agent. This is the ongoing challenge we face.

A centralized agent ostensibly working on behalf of a diffuse principal can always exploit the transaction costs facing the principal in its translation of some hypothetical “popular will” into a mandate to the agent in order to serve the agent’s interests at the expense of the principal’s. This is the challenge we must continually face. But to then leap from the reality of that challenge to the conclusion that the existence of the agent is a sign of our own self-enslavement neglects the real need we have for such an agent, the real function it performs, and the costs of choosing to “liberate” ourselves from any centralized agency through which to address the collective action problems that face us.

The bottom line is that we live in a complex and subtle world, and that our neat reductions of it, our caricatures of reality, do not serve us well. While it’s true that, historically, governments of large political states were established through military conquest and exploitation, it is also true that the benefits of civilization are a derivative of that brutality, and that there are indeed benefits (as well as costs) of civilization, of a large-scale division of labor which freed up some to do things other than produce food. Our challenge now is not to feed our emotionally gratifying sense of superiority to “the Sheeple” for “knowing” that government is our oppressor, but rather to face, intelligently and effectively, the real challenges and real enterprise of aligning the actions of our agent with the interests of its principal, of making government ever more something that serves the interests of the people in general and ever less something that serves the interests of the few who capture it for their own benefit.

And that is a complex challenge, a complex enterprise, best framed in precise, analytical ways. It is our task to work to maximize the robustness, fairness and sustainability of our political economy, by applying disciplined reason and imagination to methodically gathered and verified information in service to our shared humanity. Unfortunately, caricatures of reality like those popular among ideologues of all stripes do nothing to help us accomplish that, and do much to interfere with our ability to do so effectively.

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Changes in the social institutional and technological landscape ripple through the system, demanding and facilitating adjustments and modifications throughout, which in turn demand and facilitate adjustments and modifications of their own. Choices we make affecting the framework within which this occurs help determine how robust this process is, what kinds of positive and negative consequences it generates, and in what ways and to what extent it affects the human and natural world.

One recent set of technological innovations has had epoch-making implications. Accelerating developments in Information Technologies (computer and communications technologies combined) have rippled through the economy and culture, changing the way we communicate, seek and disseminate information, access entertainments (and the entertainments available), and even conceptualize the nature of reality (with complex dynamical systems analysis, a child of computerized mathematical modeling techniques, transforming several of our underlying scientific paradigms).

These developments have partially displaced and challenged the viability of newspapers and the postal service, vastly increased the liquidity and volatility of financial markets, vastly increased the robustness and diffusion of both the flow of information and the unreliable “noise” that accompanies it, and has become an indispensable tool in virtually every economic, academic, professional, and technological human endeavor.

Other examples abound. The invention of the internal combustion engine led to an enormous demand for oil, which turned the Middle East into a region of vital geopolitical significance, and led to a vastly increased rate of environmental contamination and destabilizing climate change. The invention of the airplane led to the development of a widespread rapid global transportation system, and transformations in warfare, economics, and epidemiology.

Even slight modifications can have rippling consequences. Improvements in the thrust of jet engines, for instance, have necessitated improvements in the strength and heat resistance of composite materials (both giving rise to a demand for their creation and providing new engineering opportunities elsewhere, which gave rise in turn to other systemic demands and opportunities). These together made larger jet airliners both technologically and economically feasible, resulting in new demands on airport designs, requiring more space and creating new challenges for municipal governments seeking to establish international airports, all in turn merging into a vibrant international air traffic system.

Not only technological, but also social institutional innovations have similar effects. The invention of currency, for instance, freed markets from the necessity of a double coincidence of bilateral wants imposed by a barter system. (In a barter system, two people each must have something that the other wants more than they want what they already have, whereas currency allows an unlimited ongoing multilateral exchange via a medium that stores and transports value in the abstract). The consequences of this social institutional innovation have been enormous.

The establishment of the American Political system, codified in the American Constitution, drawing on and marginally refining existing forms and emerging ideas, is another example of a highly consequential set of social institutional innovations. It has proven to be a highly robust general model, not just in the United States but around the world. And it too unleashed myriad complex, rippling, unforeseen and unforeseeable dynamics.

Governments have always been vital agents in these processes. From the great architectural monuments of ancient history (e.g., the pyramids and the Great Wall of China) to our most robust modern technologies (e.g., computers, and myriad technologies emanating from space exploration), governments have been uniquely situated to mobilize massive resources in concentrated purposive endeavors that could not have otherwise been accomplished.

Not all such endeavors have necessarily served human welfare, and not all government functions that do are necessarily massive in scale. But the vital role of governments as concentrations of human organizational action for purposes other than profit or cultural expression is undeniable. The challenge is to free ourselves from the stiflingly non-productive debate over whether government has a vital role to play in the human endeavor, and focus our energies instead on the meaningful and multi-faceted question of what precisely that role is.

The answer lies, of course, in understanding the nature of the social systems within which it is embedded, and how the tandem processes of social institutional and technological evolution can most effectively be simultaneously invigorated and channeled by collective decision-making via the instrument of government. To do so, we face several interrelated challenges, some in tension with one another. At a bare minimum, we must liberate and lubricate the processes by which innovation and its rippling effects occur, while catching and mitigating negative effects (i.e., effects ultimately destructive to human welfare).

Despite the conservative myth that government is in general an impediment to economic growth, the exact opposite is true (and has been proven true repeatedly by historical experience). The obsessive ideological commitment to starve and shrink government is the true impediment to economic growth. This is so because it creates a bottleneck in the system, decreasing the fluidity with which innovations ripple through the social institutional field by eliminating our ability consciously to adapt to them, to facilitate and channel them. It impedes the development of human and material infrastructure which has played such a vital role in the astronomical acceleration in the production of wealth that characterizes the modern era.

Moreover, it forces an unconsciousness onto these robust, highly consequential, constant and constantly accelerating transformations rippling through our social institutional landscape. It relies on an empirically discredited certainty that these transformations automatically always serve human welfare as long as we close our collective eyes tightly enough. It relies on a set of idolatries (see “Political Fundamentalism”, “Constitutional Idolatry”, Liberty Idolatry, Small Government Idolatry) rather than on living minds taking on living responsibilities, within a legal and political framework that has developed from the Constitution, and faithful to the Constitution. It eschews the responsibility that comes with freedom and self-governance, the responsibility of thinking, and understanding, and acting in a world that poses constant challenges to those who exist within it, and cannot simply be relegated to blind ideologies and false certainties posing as patriotism.

Social institutional and technological evolution occurs not only through chain reactions of adaptations and innovations rippling through our social system, but also through our own collective adaptations to it. Coordination of efforts and imposition of consciousness and foresight upon them have always been vital, if insufficiently employed, ingredients. Government is nothing more or less than one such organizational overlay of human consciousness on these processes, providing one more vehicle to harness and channel the dynamo that we have created, and that has created us.

As I’ve often said, the agency problems involved, that form the basis of the ideological rejection of government, are both real and normal, common to all principal-agent relationships, though such relationships are a vital and robust aspect of modern social organization. The principal-agent relationtionship between a polity and their government, along with the diverse interests and beliefs of the principal, and the uneven distribution of resources with which factions within the principal can influence the agent, form part of the complexity of the challenge of using government to maximum advantage. They do not mean that government is any more problematic than any other social insitutional arrangement, however, since all such arrangements have similar or analogous problems embedded in them.

It’s time to stop wasting our human cognitive resources on the enervating debate over whether this organizational overlay called “government” is “good” or “bad,” and instead focus on the more meaningful question of how best to use it.

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Most probably recall from a childhood brimming with patriotic American History classes and their echo throughout the culture that the battle cry of the American Revolution was “No taxation without representation!” Until 1763, however, a mere 13 years before the signing of the Declaration of Independence, when the French and Indian War ended and the erstwhile loyal British subjects in the American colonies discovered that the British policy of “Salutary Neglect” (giving the colonies the support of the British Empire, but not asking much in return, in order to give them a chance to grow strong and prosperous) was about to come to an end, those same colonists viewed representation in parliament in much the same way that the rest of the British did: It was not really geographically based (though it formally was). Every Member of Parliament represented every British citizen.

The Americans themselves had a more geographically based, direct system of representation, and so were beginning to develop a conceptualization which diverged from the British one. But the question of “representation” has remained a trickier and subtler one than our easy rhetoric has ever quite acknowledged. Who ever really “represents” me, other than myself, and to what extent, with what fidelity? Does my neighbor who is my ideological, religious, moral, and philosophical opposite represent me better than the person two thousand miles away who thinks very similarly to me? Do we really want a system based on representation of regional interests in our Federal government, but representation of competing points of view being a more ad hoc matter? Does geography matter as much as it once did? These are all questions we need to examine.

The first question is the expression of the agency problem: When an agent represents a principal, the degree to which he or she does so faithfully depends on a variety of factors, including how well the interests of the agent are aligned to those of the principal. “Democracy” is one such mechanism: You don’t act in what the majority of your constituents consider to be their interests, and they vote you out in the next election. Markets are another, to some extent for some purposes so efficient that they eliminate the agency problem altogether: My agents who make goods on my (and others’) behalf do so because I will pay for those goods on the market. They are not actually my agents, though they function as though they were (as though I hired them to perform a service on my behalf).

But the problem is more difficult when the principal is a multitude, the choices presented to them for agent severely constrained, and only about half having actually selected the agent who in fact becomes the agent of that multitude as a whole. Combine that with the exaggerated expectations of those who supported the selection of that particular agent, and the exaggerated enmity of those who didn’t, and you have a very tricky agency problem indeed.

Geographic representation is never precise; it covers a region, and may favor some within that region more than others. Any other form of factional representation suffers the same defect: Subdivisions within the faction are not represented, and so some level of aggregation must be selected. It is not fundamentally different from having national-level representatives only, since, in all cases, a constituency of some delimited size is represented by individuals selected to represent it. And support for representatives of a state or district may come from outside that state or district, so that the interests of the representative are not aligned strictly to the interests of the region represented, nor to the country as a whole.

The primary purpose of the federal government is to solve national level collective action problems, but the combination of any system of factional representation (whether geographic, ideological, or sectoral) with pressures in the political process to focus on short time horizons creates an institutional obstacle to doing so effectively. The question is whether factional interests can be better represented in a way which serves real factional long-term interests by representing their position in  bargaining over national level action, rather than undermining their real long-term interests by devolving into a competition over spoils.

Most of those who vigorously oppose a candidate do not consider that candidate, should he or she win the election, to be their representative. And many of those who most vigorously support a candidate do not consider that candidate to be their representative either, should the candidate win the election and fail to fulfil all of the often impossible demands of those who supported him or her in the election. That leaves only some few among the moderate and the indifferent, along with the recipients of political favors, who end up feeling that their representative represents their interests.

Traditionally, we have sought to peg representation to geographic locale, with competing polarized ideologies simply being a winner-take-all luck of the draw. But we decry some of the more dysfunctional aspects of geographic representation, which drives representatives to try to “bring home the pork,” to divert as large a portion of federal revenues to their constituents, creating a distributional competition which often undermines the efficiency of federal government to act in the overall national interest. The handful of residents in rural Alaska are glad to get the influx of federal money involved in building “a bridge to nowhere,” but few elsewhere believe it is the best investment of their shared resources.

One much discussed incarnation of this problem comes in the form of “earmarks,” by which Congressional representatives (including senators, who represent individual states) stick bills which divert funds to their districts into other bills which may be completely unrelated. The Colorado Constitution prohibits this practice in our state legislature (and includes other anti-pork provisions, such as a line-item veto for the Governor, and a prohibition against “log-rolling,” or vote trading among representatives), but it is rampant in Congress.

The Denver Post reported that Senator Udall, once again, has declared his opposition to airmarks, and also that he has indulged in them in the past (http://blogs.denverpost.com/thespot/2010/11/15/udall-calls-for-an-end-to-earmarks/18617/). The latter fact is a function of a collective action problem rather than of hypocrisy: Opposition to earmarks does not imply that it is rational for a representative to unilateral refuse to utilize them. Giving the president the line-item veto, however, raises separation of powers issues (giving the president too large a hand in legislation), and has already been ruled unconstitutional.

There are alternatives to geographic representation, such as proportional representation, in which candidates in nationwide or expanded regional elections receive seats by political party, according to how many votes their party receives. Alternatively, seats in nationwide or expanded regional elections can be given to several of the top vote getters, so that parties can run more than one candidate if they think they are particularly strong in the region, and smaller parties can get a seat if they have enough support, even if far less than candidates from larger parties have.

Some revolutions have foundered on the assumption of class representation, relying on the notion that those who were historically or nominally members of a particular class will represent the interests of that class once in power. Unfortunately, once they obtain power, they become members of the ruling class, and tend to represent the interests of the ruling class most faithfully, rather than of the class to which they nominally belonged.

However we deal with the challenge of ensuring that our representatives represent our interests, we will always have two interrelated challenges to address: 1) Making sure that our agents acts in our (the principal’s) interests, and 2) Enabling them to do so effectively. Those populists, scattered across the political ideological spectrum, who focus almost exclusively on the first challenge, and aspire to micromanage the way in which our representatives perform their job, undermine our ability to address the second challenge, by removing any ability to mobilize specialized training, experience, skill, knowledge, and expertise in the act of governance. It is “arm-chair quarterbacking” by those who sincerely believe that they are as good a quarterback as anyone else. But governance is an information intensive activity, requiring some knowledge of law and economics, as well as a variety of relevant familiarity with technological and natural systems implicated in public policy decisions. We need to combine accountability with professionalism.

Understanding the complexity of the challenge of “representation” is a first step toward addressing it systematically and rationally. In the end, the real goal is to mobilize our collective genius in service to humanity, so that our interests are systemically represented by the processes of government, whether or not any individual agent within that government represents our particular regional or ideological interests. Within the framework we have created, we should focus on that goal: Activating and channeling our collective genius in service to human welfare, all things considered. Everything else is merely a means to that end.

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