Like any writer, I can look back at my previous work with no shortage of criticality. I will, however, do my best to resist any temptation to actually edit any of it. That said, I’d like to revisit A Discussion on Utopia to elaborate and clarify some of the points.

In the post, I identify three features that I believe we would generally agree a utopian society should possess. I still believe that these three features are pretty all-encompassing, but I am open to additional ideas so please contact me at pkurke@gmail.com if you have some. The three traits of utopia I discuss are:

1. Zero crime
2. Zero poverty
3. Continual progression towards (a) human happiness and (b) understanding the universe

Zero Crime

On the issue of zero crime, first we need to define “crime.” Since civilization has always had substantive gray space between “right” and “wrong,” a certain action could be a crime or not depending on the presiding legal authority who acknowledges and judges the action. We likely evolved our senses of right and wrong. An action is righteous if the actor had pro-social motives, in other words, he was doing something for the good of the tribe. Likewise, a wrongful action feels that way because we suspect that the actor had the intention of benefitting himself or herself at the expense of the tribe. It’s hard to fathom everybody agreeing on right or wrong: one American may feel that a young lady who had an abortion is a criminal, another American may feel that an overpaid CEO is a criminal.

Libertarians are among the only group that have a clear underlying axiom defining right and wrong. The non-aggression principle (NAP) is an ethical principle forbidding any aggressive or coercive act. From this perspective, a woman who pays a man for a sexual act is completely righteous, because they both agreed on the transaction and no coercion has taken place. The exchange was voluntary, and we assume that if it was not beneficial to both parties, they will not agree to do it again. Any aggressive act that transpired is a crime in and of itself, unrelated to the act of prostitution. The exchange of sex for money is illegal in the United States because voters have elected government officials, and the majority of them agree that prostitution is wrong under all circumstances. For contrast, die-hard libertarians maintain that taxation is a violation of NAP, since a taxpayer is being coerced into the transaction. For a lot of folks, achieving a perfect society seems like it would be pretty hard to do without tax.

The point is that we would need to agree on a single definition of right and wrong if we want to have zero crime; only then we can discuss “how.” In the earlier post, I single out three methods of getting to zero crime. This is not intended to be an exhaustive list of ways to achieve zero crime, but it is everything that I can imagine. I have elaborated by adding pros and cons.

1. We could possibly achieve zero crime via some sort of enlightenment that makes people not want to commit crime. It’s easiest to imagine this enlightenment taking the form of a philosophy like Buddhism, but that is certainly not the only option. Perhaps it could be a materialistic enlightenment, e.g. an understanding that altruism, prosocial behavior, and honest business interactions enhance ones own power.
a) pro – positive reinforcement
b) con – may be difficult for there to be no dissension or discord against the “enlightened ones.”

2. We could possibly achieve zero crime via some sort of fear of God or eternal damnation that scares people into behaving prosaically.
a) pro – probably effective for believers
b) con – negative reinforcement, unlikely that everyone will believe, and it seems counter to progress (Most folks might not call such a society utopia.)

3. We could possibly achieve zero crime via some sort of perfect justice system that can adequately assess and analyze all relevant information surrounding every questionable action. Judgment would ensue and the efficiency of the system would deter crime.
a) pro – doesn’t require universal dogmatic beliefs
b) con – negative reinforcement, and any such system is likely to be hackable and compromising of personal privacy, because it would likely involve ubiquitous survelliance

Zero Poverty

In the earlier post, I (more or less) concluded that zero poverty is actually a question of how much equality or inequality society is willing to tolerate.

A society will tolerate inequality so long as (a) the “have-nots” lack the power to overthrow the system, (b) the “haves” don’t feel guilt over the living conditions “have-nots” and (c) the inequality is not believed to be an overall detriment to the system, i.e. it’s generally understood that the “have-nots” would wreak more havoc on society if they receive entitlements.

A society will tolerate equality until they feel that meritocracy no longer exists in any form. Perhaps utopia might adequately achieve meritocracy by rewarding those who contribute to society with something non material, but I believe it’s likely that we will always retain sensitivity in this realm.

We make mental calculations of ourselves and those around us, and it looks like this: contribution divided by compensation. This idea is known as equity theory. I like equity theory because I’m a fan of the IPO model and the two are similar and compatible. I agree that we feel contempt and injustice when we think that we are being stiffed, but I do not think that we work harder when we think we are overpaid or underworked (at least not in modern society). Instead, we just construct mental models of “the ways of the world” to justify our gratuitous compensation. These mental equations and models are often fallacious.

Benoit Mandelbrot wrote the paper
How Long Is the Coast of Britain? Statistical Self-Similarity and Fractional Dimension. The interesting mental experiment concludes that a coast’s length increases as the length of your measuring tool decreases. A gigantic measuring stick ignores all of the intimate and wandering curves of a coastline, while a smaller measuring stick will capture more of those curves and thus measure the coastline as longer.

I think the coastline question is a great metaphor to describe the fallacy of our assessments of other people’s contributions and compensations. We know our own job and our own compensation quite intimately, so the measuring stick we use is quite small. It’s capable of measuring every complication that occurs when doing our job, and respects (or over-glorifies) our job’s complexity. The measuring stick we use for other people’s jobs can be much bigger. We don’t know all the little complications that come up on their job, so we measure with a big stick: “all he does is create reports for the blah blah.” Tragically, we may even have an egocentric view of that person’s role, acknowledging only the one thing that person can do for us in our role: “I don’t know why she hasn’t emailed me back yet. All she needs to do is tell me the blah.”

It could very well be that our human nature will keep us married to some form of meritocracy in which some people will feel cheated. The degree to which the cheated ones are living abjectly is naturally limited by the stability of the society and its cultural views on meritocracy.

Continual Progression

The more I ponder the notion of continual
social progress the more I see it as being central to utopia. I think it’s important to identify what we are progressing towards; surely we don’t want to achieve equality for the sake of equality, industriousness for the sake of industriousness, or wealth for the sake of wealth. If we’re not seeking to maximize human contentment in some way, then progression is in vain.

The previous post additionally mentions progressing towards a more complete understanding of the universe. By this, I’m referring to our continual quest to uncover the laws of the physical, life, and social sciences, the humanities and the arts. I’m making the assumption that this understanding of the universe is what’s behind advancements in medicine, engineering, socioeconomic systems, and entertainment, and that those advancements are what’s behind human contentment and achievement. It follows that in order to get to utopia, the conditions need to be present to allow for as much creativity and innovation as possible.

The conclusion in my previous post was that there must be some sort of reward system (i.e. meritocracy again) in order for citizens of utopia to have the incentive to innovate. If Utopians are capable of innovating without any incentive like recognition or a financial reward, then humanity has successfully indoctrinated utilitarianism, which might be a slippery slope. Utilitarians may invent great things to help society progress, but they may also chose to do weird things like sacrifice a healthy person to harvest his organs if doing so could save the lives of two or more other people.

Conclusion

I wanted to revisit this discussion to elaborate and rationalize some of the criteria for utopia. In order to achieve zero crime, we must first agree on a definition of crime and then either build a perfect justice system, achieve some sort of enlightment, or both. The justice system runs the risk of compromising privacy. The enlightenment could either be spiritual or materialistic. In order to achieve zero poverty, we need to find the perfect balance: enough meritocracy to elicit advancement, but enough equality to not tear us apart. Finally, we should constantly be seeking to expand our understanding of reality and maximize human contentment, which also necessitates some form of meritocracy.

As I stated in the earlier post, it is extremely important to discuss utopia, and I wish our leaders would do so. Imagine two architects teaming up to build a single structure, but one has blueprints for a factory and the other has blueprints for a hotel. We need to argue about what utopia should look like first, and then we can discuss policy in the context of getting there.

Special thanks to D. Tinch for the help!

When you start drilling down into proprietism, a mild paradox emerges. On the one hand, proprietism assumes that everybody is an independent contractor. On the other, I often depict proprietist firms, and describe them as operating like an ESOP, co-op, or other form of profit-sharing organization. So which is it? Is proprietism a world of sole-proprietors, or is it a world of ESOPs and co-ops with a marketing makeover? If we’re all a bunch of self-owned entities, what or whose profit is being shared?

Before answering, we should take a step back and ask ourselves “what is a firm?” The most prevailing paradigm is that a firm is formed when the transaction costs of coordinating activity through a market is higher. This is a very concrete definition of a firm that obviously involves people as the lowest common denominator, and suggests that they will organize themselves into a firm when it is more cost-effective to do so. I agree with this theory, but I think it omits explanation of a very important type of firm: single-person one. A firm “emerges,” when two or more parties “get together,” so therefore a firm of one cannot emerge.

Michael C. Jensen proposes a different but not necessarily opposing view. He describes a firm as a “nexus of contracts,” between suppliers, customers, owners, employees, and other stakeholders. I like this view because it recognizes the firm for what it is, a social fiction that doesn’t actually exist materially, and it doesn’t undermine the existence of single-person firms.

The nexus of contracts is a great description of a firm, even for the simple firms. I buy baking soda, coconut oil, Tupperware containers and spices from Wal Mart. My receipt is like a contract in that provides a description of the products I bought, what and how I paid, the date, time, and some other information about the store and how I can go about rescinding the agreement if they fail to meet my reasonable expectations. I make deodorant out of the materials I bought and package it in the Tupperware and sell it to some people. My sale will also include a receipt or invoice, which is a contract as well. I am now a collision of two contracts, so even without being legally recognized as such, I am a firm.

But what about the labor I exerting making the deodorant? A firm is a fictional arrangement, but it still involves a coordination of resources and human effort, which may not necessarily always be contractually bound.

I propose a firm as a nexus of capital, resources and labor, and to illustrate the point I will once again use the IPO model. An IPO model is a simple and basic model to explain any system. It has input, some sort of processor to turn the input into output, and it can interact by feeding its output to another system as input.

Do you remember microeconomics 101? We can use basic microeconomic terms and abbreviations to identify the inputs and outputs that make a firm. Capital is raised and used for resources or capital goods (K) and combined with labor (L) as inputs into the firm. Through the process of production, the firm manufactures and outputs products (X and Y), which are sold to customers. The customers pay money for the products, and that money is input back into the firm as total revenue (TR). That money is then reinvested back into the firm, and the output is the cost to suppliers (C[K,L]) for more capital goods and labor, which will input back into the firm, and the cycle continues. In this model, an employee is a supplier of labor: her salary is output from the firm in C[L], and she inputs her labor back into the firm as an input L.

This natural and human arrangement: the combining of resources (including raw materials and technology) with human work to output a product is a firm. Some firms, like a manufacturer, input lots of capital goods for the plant and other raw materials. Other firms, like fishermen, are using some equipment and lots of labor. Law firms and consultants use even less capital goods; perhaps they just have an office and office supplies. The price of their end product X (the legal advice or professional consultation), is mostly based on the level of expertise held by those who contributed labor.

The government that allows firms to operate may have taken on many different forms and theories over the course of human history, but the basic nexus has remained intact. The firm has itself evolved over time, and in modern society we have assigned departments to refer to different functions within that nexus.

Most firms start with some sort of product idea. Perhaps there is some market research that concluded the product would be profitable in its intended market, and that if the function of a marketing department. Perhaps the firm started with a focus on a brand new product that has never been made before, or a brand new manufacturing process for an already existing product. This is the role of research and development departments. Once we have done sufficient research, we raise capital to finance the cost of capital goods and labor inputs. The finance department’s job is to manage those funds, accounts payables and payroll departments manage the outgoing funds to suppliers and workers. Purchasing, inbound logistics, and HR departments manage the incoming capital goods, resources, and labor. The inputs of capital goods, resources, and labor all combine in a production or manufacturing process managed by production or operation departments. Finally, products X and Y are the end result. Sales uses research from marketing and finds viable customers for X and Y, and customer service and outbound logistics coordinate the ordering and delivery of X and Y to those customers. Accounts receivables collects the sales from the customers, and the cycle starts all over again.

With the firm now redefined as a nexus of capital and labor, I’m ready to address the question originally posed: what profits are being shared if, in a proprietist system, there is no clear line drawn between a company and its partners?

Let’s turn our attention to the two end-products: X and Y. No matter what you’re doing in an economy, you have some end product X. In the case of the example earlier with me as a one-person firm, the homemade deodorant is X. The end-product X could also represent your labor; if Nathaniel is a logistics supervisor, Nathaniel’s supervision of a team of logistics analysts is X. In that case, there is another X somewhere along the supply chain in which he is also contributing. Maybe Nathaniel works for a logistics firm and is providing a logistics service to another company that sells a widget which ultimately gets sold in stores to consumers.

Here’s the idea: tiny percentages of the selling price of that final consumer product get distributed to everyone who contributed to it.

Kim is a retail associate and it is decided that her selling service is worth 5% the selling price of the widgets she sells. This is similar to commission. Ashley operates a machine that mines minerals, some of which get used to make the widgets that Kim sells, and some of which get used in other products. Ashley’s cut of every widget that Kim sells would be significantly smaller, say 0.1%, but Kim earns based on the sales of all the final products in which she partakes. So Kim earns a lot on a few end-products, and Ashley earns a little with a lot of end-products.

This scheme, which would undoubtedly require extremely agile information systems and planning, would align the entire economy towards consumer products. The obvious technical challenge would be deciding the exact percent share that each person gets. Louis Kelso, who invented the employee stock ownership plan, proposed that a worker responsible for contributing 10% of an operation deserves to keep that 10% share as the company grows. ESOPs function like this; the idea is that employees are compensated with shares of stock that will grow as the company does. Likewise, we can work out an arrangement in which a worker has a personal and permanent invested interest in the success of the end-product to which he or she contributes.

Conclusion

On the question of how proprietism is structured, it could look like a network of sole-proprietorships, and the profit-sharing could look like an ESOP or co-op. The stock each worker receives could be based on sales of the end-products that that worker touches or to which he contributes. This may seem like a complex arrangement, but the structure could solve many modern problems in the realms of compensation and inequality. Additionally, it would align all a product’s stakeholders towards the long-term success of that product, rather than incentivize short-term gains and cost-cutting.

Take a look at this great video featuring Paul Green Jr. of Morning Star. In it, he describes how Morning Star operates without bureaucracy: no titles, no bosses, and no job descriptions.

Paul tells a fictional narrative to illustrate the starkly different way of thinking. If he comes home one night from work to find his kids crying in their pajamas and saying that their mother refused to feed, bathe, and take them to school, how ridiculous it would be for him to tell them, “Sorry but I can’t help. That’s not my job.” Yet that’s exactly the attitude we so often assume at work. Segregation of duties is such a deeply ingrained paradigm that we’re even unapologetic about it, like “how can they have ignorance/audacity to think I need to do that!?”

Paul drops a devastating line at around the 13 minute mark. He states that you can’t ask somebody to take total responsibly without granting them total freedom. I think this might as well be a mantra; the new “no taxation without representation.”

I have a close friend who works at a large and well known IT provider. One of the programming teams with which he works has faced dramatic slashes in headcount and budget while being pressured increase their output and follow all sorts of new, micromanaging rules. If they don’t, their bonuses and jobs are in jeopardy. As a result, the department has been further disrupted with higher than normal turnover, loss of the big picture, and internal squabbles and turf wars. We all know it, but we rarely have the energy to fight it: Bureaucracy Kills Productivity.

Paul’s ideas are all paradigms necessary for proprietism to work. Possibly the strongest takeaway is this: don’t chase numbers; just help each other and your organization will flourish.

CEO Dan Price became a business superstar in 2015 when he announced the implementation of a minimum salary of $70,000 at his company Gravity Payments.
Since then, perhaps not surprisingly, he has met plenty of controversy surrounding what his true motives may have been.

Nevertheless, Price’s move was bold. The documentary Inequality for All with former Secretary of Labor Robert Reich demonstrates the vicious cycle brought about by income inequality. I recommend watching the whole film for a thorough understanding; one of the main main takeaways is that when wages and salaries stagnate, the middle and lower classes stop buying stuff, so businesses make less money and governments receives less income from tax. The truly elusive question is whether or not government redistribution of income or wealth is the right answer to the question of inequality.

There are two schools of thought from which arguments against the redistribution of income and wealth are based. The first is libertarian: taxes are in direct violation of the non-aggression principle, because a government does not have the right to seize justly earned income or property, for such an act is aggressive. The libertarian perspective is black and white: revoking the right to keep your entire income is as much an infringement of personal liberty as revoking your right to free speech.

The second school of thought that argues against redistribution is, when presented earnestly and free of doublespeak, social-Darwinist. The idea of survival of the fittest playing out on a social landscape goes back to very beginnings of Darwinism (and contrary to what Darwin apologists say, he was well aware of these social implications). One interpretation of “fit” in this discussion is wealth. This view justifies a capitalist system in which the strong survive and the weak are weeded out due to their diminished ability to afford safe and healthy lives. The other interpretation of the word “fit” is more biological: producing more offspring. In this view, poor people in modern society are technically more “fit,” as they tend to have higher numbers of children per household than the rest of society. No matter which definition is used, the same utilitarian logic applies: redistribution of income is counterproductive to social progress because it allows the weakest people in society to survive and reproduce at disproportionately high rates, and if we allow it to continue, it follows that the hilarious but slightly uncomfortable film Idiocracy is a prophetic vision America’s future.

The point is that it sucks, for lack of a better word, that inequality is such a problem, and we seem to think the only solution is government-mandated redistribution, which might forever be deeply unpalatable and controversial to most of us.

That’s why we need more Dan Prices and Blake Mycoskies. I’ve written before, specifically here and here, that we need a new “third way.” Businesses have the power to fight inequality by helping their employees. We need to let the product markets do their thing and at the same time compensate employees better or profit-share with them. Businesses also have the power to fight inequality (and protect the environment) with their products or charities. Consumers are changing, and they’re saying they want to buy products from socially responsible companies. Business leaders need to realize that the most competitive thing they can do right now in 2016 is knock their employees’ socks off with compensation, transform into a PBC, or at least declare some sort of improve-the-world vendetta.

In this 2014 Podcast with Social Science Bites, Roberto Mangabeira Unger makes a bold claim: the social sciences have degenerated into pseudoscience.

To summarize his views on economics as an example (perhaps to interpret them loosely as well), the discipline makes imperfect assumptions, primarily about human behavior, then builds theories of exchange on top of it, omits theories of production, and borrows the idea of competitive selection from Darwinism without offering an equivalent to Darwin’s idea of mutations as being the platform on which “survival of the fittest” plays out. At the risk of disrespecting the technical fortitude of Unger’s argument, I must say that I too have been struck at the obvious and largely ignored differences between the natural sciences and the social sciences, mostly because groups of humans are much more complex than particles and objects.

It’s almost as if classical economics was developed as a tribute to Newtonian physics. Economics defines the human as a self-interested, rational individual, and then develops the mathematically predictable behavior exhibited when these humans trade. Similarly, physics defines objects or particles and then develops the mathematically predictable behavior exhibited as those objects interact. The metaphor is elegant but impotent; the problem of course being the assumptions economics makes about the person. We know that humans make choices with imperfect information (yes, even in the Information Age) and are very much temperamental decision makers often motivated by insecurity, short-term pleasure-seeking, and fear of death.

So can we have a theory of economics as thorough as physics? In pondering that question, I was reminded of the wonderful book Thinking Fast and Slow by Daniel Kahneman. It explores a whole spectrum of experimentally documented behavioral biases that go directly against utility theory: the idea that people make decisions to maximize their utility. Maybe one day we could assimilate every documentable logical fallacy and construct a pure theory of economics.

But maybe not. Maybe it’s a mistake to assume that somewhere out there is a clean and perfect science that will precipitate a productive and growing economy forever, and all we need to do is create the right institutions to let that theory play out. Maybe we already know everything we need to know to make a perfect economy.

For example, we’ve learned much in the way of how people interact in closed and open systems. We know what it’s like when there aren’t enough rules, and we’re learning right now in the 21st century that too many rules can create an equally toxic environment. We know that humans need respect and work that feels personal and valuable. We know that happy employees are more productive. We know that the more hierarchical organizations get, the harder it is for them to adapt to change.

Maybe we don’t need all these organizations and institutions; they’re fictitious anyway. My sister’s art instructor Michael Rakowitz demonstrated this perfectly when he drew a square in the floor with tape and put up a sign declaring that anyone who stands within that square is sovereign of the U.S. Constitution. Anyone who considers this exercise may be forced to ask themselves some logical questions such as:

Can he do that?

What authority is required to relinquish oneself of the constitution?

What authority had those who declared the constitution in the first place?

It shouldn’t take long for the absurdity to set in. This thing, this very real document, these words that have built an empire, these ideas that men have died over… aren’t actually real. The question of how to achieve a more perfect society may therefore not be a question of what social fictions we need to invent, but an abolishment of structure altogether. This is the motif throughout my work on proprietism: let’s embrace a system that accepts civilization for the inconceivably complex network it is and try to make it work on its lowest levels rather than organize it better on its highest.

A social science free of social constructs and fictional institutions sounds impossible, right? I don’t think so. In Leaders Eat Last, author Simon Sinek almost does this. He discusses the brain chemicals that our forager ancestors evolved to help them hunt, gather, plan, and work together: endorphins, dopamine, oxytocin, serotonin, and cortisol. Sinek argues that our ancestors were able to get an even balance of these, but the modern working human only gets stressful cortisol shots when work gets tough and cheap, temporary dopamine rushes when work gets done. He tasks leaders everywhere to fix this by creating “circles of safety” in which teams foster trusting and cooperative relationships rather than cynicism and self-interest.

Not that I have the authority to declare this, but I find Sinek’s ideas to be a formidable response to Unger’s call for more scientific social sciences. But then again, authority is just a social construct anyway.

I was checking out at Publix this past weekend and eyeballed the romaine hearts I picked out one last time before they got scanned.

“Are they OK?” asked a cheerful and freckled cashier.

“Oh yeah,” I said, “just double-checking because most of them were questionable.”

“Are you sure? Don’t get it if you’re not sure!” She giggled, reddened slightly and added, “I’m not a very good salesperson.”

“Me neither!” I responded. It’s true! I’m not.

“We should have more sales people like that!” said a tall man in line behind me with a strong African accent and wise eyes. “But then again,” he added, “with social media these days, bad business will come back to bite you!”

(This relates to my posts on Information Symmetry, Proprietism and Employee Rights, and Proprietism: The “Paleo” System).

And so began a 24-hour period in which my own ideas about proprietism confronted me in strange ways.

The next time it happened was in Barnes and Noble when I plucked the latest issue of Adbusters off the magazine rack. Adbusters is a deliciously subverssive and chic publication, and of course I was delighted to open it up to a quote from Jesse Donaldson about Generation Z:

“They use tech and innovation, use the system to change the system. They want endless customization and mobile work environments. They don’t want a brand. THEY ARE THE BRAND – their experiences, their clothes, their check-ins and selfies and online shopping and instant communication.”

(I talk about this quite a bit, and notably in these posts:
Social Media and the New Individualism: Your Brand,
Proprietism and Self-Branding Revisited, and
Your Brand and Your Network.)

Perhaps my mind opened up and I subconsciously went about my weekend looking for proprietism. Sometimes this can happen to me when I’m pondering a post; usually I develop a theme in my head and hone my thoughts before typing it out. Maybe because I had been unusually busy at work and buying a home, I lacked the focus to develop a solid thesis and instead got stuck in inspiration mode.

Finally, and most unexpectedly, I picked up a book I am working through called The Shack by WM Paul Young. In a surreal scene, the main character Mack is having a conversation with the holy trinity. Papa is the father, Sarayu is the holy church, and Jesus is the son. The three are explaining to Mack that none of them are in charge of the other two. Sarayu states that power and hierarchies are a human problem:

“‘Humans are so lost and damaged that to you it’s almost incomprehensible that people could work or live together without someone being in charge.’

‘But every human institution that I can think of, from political to business, even down to marriage, is governed by this kind of thinking; it is the web of our social fabric,’ Mack asserted.

‘Such a waste!’ said Papa, picking up the empty dish and heading for the kitchen.

‘It’s one reason why experiencing true relationship is so difficult for you,’ Jesus added. ‘Once you have a hierarchy you need rules to protect and administer it, and then you need law and the enforcement of the rules, and you end up with some kind of chain of command or a system of order that destroys relationship rather than promotes it. You rarely see or experience relationship apart from power. Hierarchy imposes laws and rules and you end up missing the wonder of relationship that we intended for you.'”

(This theme is all over this blog! Here are some where I talk about the dark side of institutions and hierarchies:
The Paleo System
The Twilight of Institutionalism
Self Branding Revisted II
Holacracy and Proprietism
A Market of Sole-Proprietorships
A Worldview Emerges
The Extremist Group Fallacy)

More than anything, I’m content to know that Mr. Emerson would have been proud of me.

“A man should learn to detect and watch that gleam of light which flashes across his mind from within, more than the lustre of the firmament of bards and sages. Yet he dismisses without notice his thought, because it is his. In every work of genius we recognize our own rejected thought: they come back to us with a certain alienated majesty…

…Trust thyself!”

(from Self Reliance)

In this blog, I write about the theoretical underpinnings and futuristic possibilities of the Gig Economy. What if you’re looking for something more grounded in the status quo? Where can you find a concise, all-encompassing manual, a “helping hand while you navigate or start your career in the freelance world?”

This much-needed void has been filled by The Freelancer’s Essential Guide to Business and Taxes by Justin Gomer and Jackson Hille.

This incisive and surprisingly intelligible guide analyzes the Gig Economy and identifies the three major industries in which freelancing has taken a stronghold: academia, multimedia, and tech startups. For each of these areas, it surveys the business landscape and offers strategies for finding profitable and stable work.

The final section is a lucid snapshot of taxes for freelancers. It answers whether or not you are self-employed, how to file quarterly and annual returns, and how to minimize your tax burden as a freelancer.

I strongly encourage you to read the “Guide.” It is elegantly short and informative, and easily the most readable source on the topic.

The Idea Channel has this great video and this follow-up video about logical fallacies– those errors that we make intentionally or inadvertently when we twist perspectives and facts together to make an argument. The videos got me thinking about a particular fallacy I’ve noticed before, but it wasn’t mentioned so I did some research and decided to write about it. I will call it the extremist group fallacy and develop it in this post.

The extremist group fallacy defined:

The extremist group fallacy is committed when an observable trait is incorrectly ascribed or linked to an entire sample, but the trait is actually only attributable with statistical significance to a group (or subgroup), the “extremists,” within that sample. The rest of the sample, the non-extremists, may exhibit that trait at normal rates on par with rest of the population, but the behavior of the extremist group artificially increases the prominence of the trait when considering the entire sample.

Committing this logical fallacy can lead to the erroneous implication that merely being a member of the greater sample is linked to (or causes) the observed trait, whereas the trait may actually be the result of some other factor that is exclusive to individuals within the extremist group.

Related fallacies and concepts:

Fallacies do not exist in a vacuum, so I’d like to address three related ideas before dissecting two examples of the extremist group fallacy.

The extremist fallacy is like the correlation does not imply causation fallacy, but it additionally addresses the fact that sometimes the correlation itself might be incomplete or flawed. I also believe that it often doesn’t matter whether or not we are aware that published data show correlation and not causality, because the seeds of a causal link might already have been planted in the minds of all who read or hear about the correlation.

The hasty generalization fallacy is somewhat similar to but not as specific as the extremist group fallacy. It involves drawing a fallacious conclusion from an incomplete sample.

When discussing the extremist group fallacy with a friend, he mentioned the concept of outliers in statistics, and I believe this to be a very closely related idea. Outliers are statistical anomalies that are abnormally distant from other data points within a set. Outliers are like an extremist group in that they might mischaracterize an analysis of the set, but the idea of outliers is not a fallacy in and of itself.

Examples of extremist group fallacies:

Due to the very nature of the extremist group fallacy, it will be easiest (and the most fun) to invent scenarios involving it rather than dissecting real situations with baggage in tow. If I keep it fictitious, I can make up both the data that leads to the logic fallacy as well as the data that exposes the fallacy while limiting complexity and confusion.

Fallacy 1: Study finds Muslims four times as likely to commit acts of terrorism.

Let’s say that this fallacious finding was drawn from an analysis of data that found that Muslims have higher rates of committed acts of terrorism than Hindus, Christians, Buddhists, Jews, and atheists. Let’s say that the analysts defined an “act of terrorism” as a religiously or politically motived hate crime.

Now let’s say that we get a team of extremist group fallacy busters, the EGFB, to turn the analysis towards the extremist groups within all religions, rather than just focusing on religions as a whole. They find that the rates of terrorism within extremist groups are all about equal regardless of religion, let’s say around 1.8 acts per every 1,000 extremist organization members. In other words, extremist Muslims may be just as predisposed to terrorism as extremist Christians or Hindus.

Next, the EGFB analyzes the prominence and size of extremist organizations within each religion, and finds that while only 0.003% of all other religious people are extremists, 0.012% of all Muslims are aligned with some sort of extremist group. Here is the obvious answer as to why the original data revealed higher rates of terrorism among Muslims: Muslims are four times as likely as other religious people to belong to an extremist group. (This is a good time to reiterate that I made this data up.)

In their continued analysis of extremist organizations all over the world, the EGFB finds that extremist networks, no matter their doctrine, thrive in environments that have a particular set of political and economic circumstances. With this data, we postulate that extremist groups flourish in places that lack alternative forms of social cohesion. We note that the areas of the world that have large Muslim populations, like the Middle-East, seem to exhibit these political and economic circumstances more frequently than the rest of the world. This makes Muslim regions fertile ground for any kind of extremist group to grow, and Islam happens to be the religion du jour.

Our deeper analysis reveals that the original analysis drew an incomplete correlation. This could have been dangerous, because it would have put the focus of terrorism on the nature of Islam itself or its followers, rather than the political and economic conditions that give numbers and power to extremist organizations in Muslim areas.

Fallacy 2: People who regularly use tanning beds are over 30 times as likely to get skin cancer.

Let’s say that this fallacious finding came from a study stating that out of the 1% of Americans diagnosed with skin cancer, a staggering 50% of them (so 0.5% of the population at large) use tanning beds on a regular basis. Let’s say “regular basis” is defined as at least 20 sun bed visits per year. Let’s say that 3% of the population at large tans on a regular basis, skin cancer diagnosis or not. That means that of the 3% of the population that tans regularly, one-sixth of them have been diagnosed with skin cancer. Since half of the 1% of Americans diagnosed with skin cancer use tanning beds regularly, the other half, (0.5% of the population at large) do not use tanning beds but got skin cancer anyway, out of a pool of 97% of the population that does not use tanning beds on a regular basis.

0.5% (don’t use tanning bed, got cancer) out of 97% (don’t use tanning bed) is only about 0.52%, so this study shows that the odds of getting skin cancer while not using a tanning bed is about 0.52%. On the other hand, 0.5% (use tanning bed, got cancer) out of 3% (use tanning bed) is 16.67%, so the breathtaking odds of getting skin cancer if you use a tanning bed regularly are 16.67%. From 0.52% to 16.67% is an over 30-fold jump, so it’s hard to believe there’s not causality between tanning bed use and skin cancer with such a strong correlation!

Let’s call the EGFB. They survey a sample from the 1% who were diagnosed with skin cancer and ask them thrifty and exhaustive questions about their personal habits. When they analyze their findings, the folks at the EGFB reveal a sharp divide: 55% of those with skin cancer are addicts who tan obsessively whether it’s with a tanning bed or the real sun, while the remaining 45% seem to just be genetically predisposed to get skin cancer easily. It should not be surprising to find out that tanning bed use is high among tanning addicts, since the real sun is less efficient and predictable at giving them what they want.

The EGFB then analyzes a sample of people who use tanning beds but are not diagnosed with skin cancer. They find that while 10% of them behave like tanning addicts but somehow avoid getting cancer, the other 90% of tanning bed users are extremely moderate with their tanning bed use. This group uses lotion and goggles to protect sensitive areas, normally allows 48 to 72 hours between tan sessions, and allows their skin ample time to recover when they may have accidentally “overdone it.”

Once again, our deeper analysis reveals that the correlation from the original study was incomplete. While tanning beds play a role in skin cancer for many people, the extremely high rates of skin cancer among tanning addicts, who tend to seek out tanning beds, artificially elevates the prevalence of skin cancer when considering all those who regularly use tanning beds.

Conclusion:

The extremist group fallacy is a logical fallacy that begins with some sort of statistical oversight, one that failed to recognize the outliers within a sample, and draws a misleading correlation, which can be dangerous even when causality is not explicitly stated. Again, my examples are fictitious, but I made them real enough to make it obvious how a correlation can be misinterpreted. The link between Islam and terrorism is assumed to be cause and effect by many people, otherwise Donald Trump would not have attempted to gain popularity in late 2015 by insisting that Muslims should be subjected to expanded surveillance. Tanning beds have been called “cancer in a box” while tanning salons are forced to pass extra taxes along to their clients based on the assumption that tanning beds themselves, no matter how they’re used, shine cancer directly into your skin.

Awareness of the extremist group fallacy may reveal that social hazards are not so much the direct result of an organization or technology, but rather are the result of something more fundamental: erratic human behavior. Believe it or not, this actually ties in with the rest of my work on proprietism, because it’s yet another plea to abandon our mental model of the world as a giant assembly line of institutions, where we can blame one entire group of people for something as though they are a malfunctioning machine in that assembly line. I suggest instead that we see ourselves for what we are: a living, breathing, granulated and complex network of mostly good but imperfect people who can, on occasion, be quite extreme.

In The Souls of Black Folk, W.E.B. Du Bois prophetically postulates that African Americans have double-consciousness, in which they look at themselves through the eyes of white society. He presents the argument that negative stereotypes associated with African Americans are actually a complex reaction to the way they are treated by the European majority.

Six decades later, a Harvard psychologist by the name Robert Rosenthal would prove the Du Bois hypothesis experimentally. He administered IQ tests to entire schools, and reported back to the teachers which of their students possessed the potential to be superb students. The chosen students excelled over their peers as expected, and then the teachers found out the truth: it was all a lie. The alleged superstars were chosen at random.

Over the next several decades, Rosenthal’s results were repeated in many different environments including the military, businesses, and even in homes. Rosenthal called it the Pygmalion effect after a Greek myth about a sculptor of the same name who falls in love with a statue he made. The cycle goes like this: (1) our preconceptions about ourselves influence (2) our actions towards others, which impacts (3) others beliefs about us, (4) causing others’ actions towards us, which reinforces (1) our preconceptions about ourselves. (This and other information obtained from Great Expectations by Katherine Ellison in the December 2015 issue of Discover Magazine.)

Our society is run by institutions, and it is impersonal and alienating. A world in which the institution is civilaztion’s base unit of measure is one that teaches us to be mistrusting and encourages us to be self-serving. What matters in the institutional world is not doing the right thing nor keeping healthy relationships, but conforming to the rules of the institution. “CYA” (cover your ass) is actually an acceptable paradigm in the organizational world today.

In this blog I have extensively discussed how information technology could transform the world from a cumbersome stack of institutions into a huge, complex, agile, and adaptive network. We could evolve from a planet of several billion led by several thousand to one of several billion led by several hundred-million or even a billion. If we come to be structured in such a way, we shall undo the alienation of the institutionalized world.

Understanding the Pygmalion effect will be central to advancement in a deinstitutionalized world. Rosenthal has made progress uncovering some of the subtle messages leaders deliver that incite either superior or inferior performance. For example, an eyebrow raised at exactly the right moment may instill within a student the confidence to boldly act further on her intuition, while a subtle wince and head shake from a manager to an employee may elicit a crushing feeling that strengthens a defensive and perhaps even self-destructive reflex.

As I leader, I know this. I know what it’s like to blunder repeatedly in front of someone skeptical of my competence. I know what it’s like to soar, empowered by a manager who truly believes in me. I know that I’ve implemented an idea that was OK at best because it came from someone I believe to be exceedingly intelligent. I’ve also been forced to look back at a situation in which, to my horror, I inadvertently undertrained someone because I was so sure they wouldn’t apprehend it anyway.

If the world evolves into a proprietist system, we leaders must become masters at extracting the best out of those around us, for greatness is built upon accountable human relationships, not rules.

Thank you, Du Bois.

Today is “Back to the Future Day,” as it’s now called. No, we don’t have flying cars or hoverboards, but there are a couple things I think ended up being kinda-sorta accurate. Let’s cut the writers and others who had creative input some slack, because having some things turn out to be kinda-sorta accurate ain’t bad for a movie meant to entertain.

On a personal note, the futuristic scenes in Back to the Future Part II so inspired me as a child, I must deviate from writing about proprietism to pay homage to the film. Futuristic sci-fi has been a guilty pleasure of mine ever since, and instilled in me a desire to contribute my ideas to the world in case I can help create an awesome future.

1. The Jaws 19 Hologram – While we don’t have hologram theatres, 3-D movies are now pretty much the norm for action-packed blockbusters. Holograms themselves are pretty well developed now to the point that the Jaws hologram in the movie would be possible, but perhaps in dimmer light.

2. Pepsi Perfect – Pepsi is making this product right now. Current Pepsis don’t look exactly like the one in the movie, but the logo and bottle are certainly more sleek now.

3. Marty’s jacket – Marty’s jacket is not unlike jackets currently in style with the sporty wicking look and pockets on both breasts. If it wasn’t iconized, you wouldn’t think twice seeing a young person wearing such a jacket.

4. Marty’s Nikes – The sneakboot has made it’s debut in 2015, though high-top sneakers and straight-leg jeans are definitely in and have been for a few years. Maybe we would wear our pockets inside out if we didn’t have smartphones.

5. The ridiculousness of their TV – Marty’s son’s attention was divided over many different channels, which is not unlike what kids do today as they zip through different YouTube videos while flipping back and forth between two shows and scanning social media on their phone. The most accurate part however was the comically immense number of channels available and that the TV was huge and flat.

6. Smartphones… ish? – The kids had their attention divided between family and the stuff that was going on inside their Google Glass-like smartphone-ish headsets. Spend a few hours with any teenager today and you’ll see how the kids in the movie (both played by Michael J. Fox) exhibited eerily prophetic behavior.

7. Face-to-face chat and ’round the clock working hours – Needles and Marty’s boss FaceTimed him outside of normal business hours. I’m glad Mr. Fujitsu did because if he only sent the fax that would have been messed up.

8. Lack of paper money – In 2015, we don’t walk around punching account numbers into each other’s calculators (was it supported by an honor system?) but that’s not too far off from the fact that chip-enabled ATM cards are responsible for many or most of our daily transactions.

9. The colors – in general, the future had a very colorful kick to it. I think this is worth mentioning because a lot of futuristic environments in film are very drab, dreary, and gray. This could be because the futuristic environment of Back to the Future II was more of a backdrop for some scenes than a plot-device in it’s own. Since the writers had no ulterior motives in the future they were concocting, they simply took the colorful aura of real-life and splattered it with gadgets and doohickeys.

What they almost got but not really – Biff and his gang had a futuristic punk look, but at the time there was no way to know that punk culture was going to evolve over the next 25 to 30 years and eventually morph into the nerdy hipster look that dominates modern counterculture. Also, the cars had a very sleek, wedge look to them. The creators did not predict that cars would explode in size and take on a luxurious look rather than a speedy look.

10. I almost forgot! What Back to the Future II did not have: doomsday and/or aliens and/or mutant humans and/or an Orwellian police-state (for now let’s set aside arguments that the USA in 2015 is that). In Back to the Future II, life on October 21, 2015 was pretty much the same as it was in the 1980s, just with more technology. Doesn’t that technically make it more prophetic than 95% of all futuristic sci-if?