Monthly Archives: April 2016

Avenging Inequality

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.

Have the Social Sciences Degenerated to Pseudoscience?

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.