Vote with your Feet and Join a Club of your Choice

The Case for Business - Balanced Balance Sheets, Markets & Subsidiarity

 

Blind WatchmakerThe Blind Watchmaker - the only game in town

Bishops, Princes, Generals & Bureaucrats didn't know, they had no privileged access to know how ... but with ever more diversity somewhere, sometime, some folk were certain to discover something better. Persisting with current failures at the expense of experimental improvements, was certain to inhibit future growth; and economic growth was the business of business.

Wonderfully imaginative by Eran Fowler, seed corn for ideas, thank you so much! 
From simple beginnings a copy/vary/select process built immense complexity. Such ideas were powerful enough to explain everything ... a complex adaptive system ... a continuity ... layer upon layer of hierarchical interactivity & emergence - energy, matter, chemistry, biology, immunity, neural circuits, instincts, language, social behaviour and culture.
Changes at any level were naturally tested for survival against competing alternatives. Everything effected everything else, self consistency was guaranteed ... that was natural selection ... differential survival.
Human behaviour itself was embedded in a deep historical trajectory of a nested set of sets ... a whole shebang & caboodle.

Morality

Moral Sentiments - worms in the head 

Charles Darwin -

'I fully subscribe to the judgement of those writers who maintain that of all the differences between man and the lower animals, the moral sense or conscience is by far the most important'

Deep down in the human skull there lurked an independent spirit relentlessly seeking the discovery & accumulation of 'survival know how'; the synergies of specialisation & scale. Everybody knew from simple introspection that such emotions existed ... we felt them ... love & hatred, fear & excitement ... worms in the head.

The human brain evolved and so the flip flopping emotions of moral sentiments ... a universal human survival aid. Why else did they evolve?

In the same way as the genes worked in teams to build organisms, so too folk worked together in groups to build institutions & cultures. Folk were social animals. In this way the human gene pool built an ever expanding network of interdependences which benefited everyone ... not only kith & kin, but also friends & associates ... and even strangers ...

Part of the one whole throbbing shebang & caboodle was the human gene pool and brains from which emerged consciousness, self consciousness ... and Adam Smith's 'moral sentiments' and Charles Darwin's 'moral sense'.   

Dancing BackwardsEssential Diversity - the girls danced backwards  

Folk striving for survival 'know how' fed a ground swell of suspicions about the impositions of Bishops, Princes, Generals & Bureaucrats ... who all had different ideas about what was best for the survival of folk. Nobody fathomed out a way to stop evolution ... so different folk, at different times, in different places, had different ideas and behaved differently ... diversity was both the outcome of evolution and necessary for the process of evolution ... OK that might be a tautology? ... but clones just couldn't evolve, one size could never fit all ... think about it?

But folk loved differences and learned to cooperate ... it was not compromise ... it was a celebration of differences. If the girls didn't dance backwards there would be no dancing ... no cooperation, no dancing, no babies ... and the boys and girls both fancied dancing.

Darwin called it natural selection; adaptations were the surviving outcomes of interactions ... and by definition it was synergistic outcomes that differentially survived.   

Survival Know HowSurvival Know How - cooperative synergies of specialisation & scale

So no cooperation, no deals, no customers, no jobs, no growth, no survival? 

This evolutionary process was the discovery & accumulation of survival know how. It was the way of the world, the way of folk and the way of business. Noone 'saw' the failures of the past, they were dead, ignominiously discarded ... everything folk 'saw' was a success by evolutionary definition ... and consequently successes had all the appearance of 'intelligent design' ... and folk were easily conned and confused. The here & now was the only place to start ... and the striving for something better was all about where folk were going. What happened when the pole star dropped below the horizon? 

In the absence of knowledge about the future, it was the cycles of excitement & fear that inevitably drove heuristic evolutionary progress ... the evidence was in history; relentlessly the booms were bigger than the busts as 'know how', economic interactions, our knowledge base, science & technology and complexity grew at 3% pa compound.

Adam the Smith not only cottoned on to the 'moral sentiments' which underpinned social interactions but also explained the beneficial 'synergies of specialisation & scale' which resulted from such interactions in his Pin Factory.

Economic growth 2+2 does equal 5 ... as know how itself grows at 3% compound.

Trial & ErrorTrial & Error - learn from failure not from intelligent design   

Folk were all ignorant about the future ... no one could intelligently design 'success' its was too damned complicated, changing and full of conflict ... we hadn't a clue ... but Darwin's insight explained exactly how folk could learn and contribute to know how by experimental trial & error.

Not only Albert Einstein but also Thomas Edison and Winston Churchill got it right, we learned by failure not by design. The intentions of 'the powers that be' ... and everybody else ... were mere experiments. Behavioural interactions always involved the different responses of different others, making the unfolding of the tale unknowable. 

Bishops, Princes, Generals & bureaucrats, like everybody else, behaved in the same way ... but they had no privileged access to know how. They tried and tried 'intelligent design' but failures were legion, reality was experiment and learn And there's more when they employed physical & spiritual violence their imposed experiments were big big ... enormous ... and the failures were similarly enormous. And there was more more ... imposition reduced the diversity necessary for evolved benefits that nobody had ever thought of!  

The Greeks called the trial & error experiments heuristics ... and there was more more ... it was physically impossible to exclude out the different others ... somebody somewhere was doing a different experiment that worked better ...

The giraffes long neck was the result of the death of short necked giraffes.   

EntropyHard Work, Honesty & Thrift - empirical science

Ingenious folk learned that hard work could create eddies of survival opportunities in the face of the relentless 2nd Law. Folk were resilient and always tried for longevity and had a go for lots of thriving youngsters. They did their deals and discovered their synergies. They nurtured more & larger cooperative associations as they went for economies of scale ... more & more synergies of specialisation & scale.

But no one said it was easy and no one could do it on their own; hard work, honesty and thrift were necessary for the discovery & accumulation process; the 2nd Law of Thermodynamics saw to that.

Richard Dawkins explained much in 'Evidence for Evolution', 2009 -

'Imperfections make perfect sense in the light of evolution. An intelligent creator might be expected to have designed entire ecosystems; nature a planned economy, carefully designed to eliminate waste? It isn't. The natural economy is solar powered. Plants use solar energy to drive 'up hill' chemical syntheses, manufacturing organic fuels, primarily sugars (photosynthesis). Sugar can later be burned in a 'downhill' reaction that releases the energy again to do useful work (mitochondria). At every stage some energy is lost, no energy transaction is perfectly efficient. This brings us face to face with the difference between a designed economy and an evolutionary economy. In a designed economy there would be no trees, trees are a waste. But the natural economy is not planned. Trees grow far taller than any planner would recommend. Not indefinitely taller however. It is the balance of costs and benefits to the individual tree that finally determines the height. The limit is set at the height where the marginal cost of growing more outweighs the gain in photons from growing more'.

An insightful description of how economies work. Richard Dawkins did not suggest human economies were unnatural. He did suggest that planned economies will always die out ... 'cos there will always be one tree mutation which grows a little taller, thus gaining a competitive advantage.

'Natural' economies are the only economies we see, unnatural economies die out. In this way Darwin himself suggested that 'light will be thrown on the origin of man and his history'.  It was the interactive deals of folk that grew the cultural institutions which evolved from the failures of the alternatives ... not from intelligent design.

Winston Churchill told the people,

'Liberal Democracy is the worst form of government apart from the alternatives that have been tried from time to time'.

Lord Melbourne told the Queen,

'for Gods sake leave well alone'

Melbourne was not promoting idleness & sloth but rather, his was a plea for the freedom to beaver away with family and friends; a plea for hard work, honesty and thrift.

Left to get on with their deals folk always tended to discover & accumulate survival know how ... and also prices & values which cleared markets ... 'cos nobody was happy to pay for the expensive inefficiencies of gluts & queues.

Globalisation of the synergies of free trade & fairness of market prices brought abundant mutual economic benefits from simple behavioural rules of thumb ... hard work, honesty & thrft.

Restraint & RestrictionParasites & Predators - subsidiarity & immunity from treachery   

  But ... and it was a big but ...  don't get it wrong ... there was always a sting in the tale of enterprise ... as soon as there were stocks of goodies from the hard work of cooperative synergies there were opportunities for parasites & predators. Stocks created a new survival niche for these beasties ... they were good at 'evolution of evolvability' (Richard Dawkins 1989) 'diversifying, opportunistically filling niches as they became available' ... just as folk had always done. The parasites & predators belonged to a different club and had different behaviours and ideas ... and such gene pools, of course, themselves evolved ... it was an arms race! 

Throughout the ages predators not only thieved stocks but they even had a go at stealing folk themselves but later it became clear that 'money' was perhaps the most flexible goodie of all ... and 'money' proved to be easier to thieve than stocks - 

'why do you rob banks, Mr Smith?', 

'that's where the money is, Sir!'.

Thieves survived, and always will, but wot a risky deal?

Larger groups of folk delivered economies of scale and more goodies ... but there was more ... larger groups led to improved defence against predators ... and, alas, yet more opportunities for theft as the arms race continued?

But all was not lost, those organisms, rules of thumb & institutions which provided some immunity from parasites & predators, differentially survived -

differential survival in physics, chemistry & biology in gene pools produced organisms

differential survival in organisms with immune systems helped survival

differential survival in neural networks produced instincts & imaginations which further helped survival

differential survival of instincts & imaginations produced groups of cooperators with group cultures which themselves differentially survived? 

The searing emotions of 'Fairness of Shares' and 'Resentment of Cheats', which all folk feel, were essential for the cooperation and synergistic ... and survival.

In the early days the terrorists threw their evil weight around and death & destruction was commonplace ... but later the law courts and the ballot box provided cheaper alternatives to violence and slow slowly the culture of liberal democracy emerged.

But as fast as cultures emerged from empathies and cooperation, the parasites played them at their own game -

'turkeys never voted for Christmas' == the 'powers that be' were locked into their attempts at intelligent design ... what else could they do ... would anyone vote for them if they admitted ignorance?

'if it's free put me down for two please' == economic immigrants and free riders sought welfare benefits without paying the premium ... 

There existed in the hierarchy of natural selection a splendid principle of subsidiarity for the democratic institutions of civil society ... the churches, the clubs, the associations, the companies ... such had their own immunities from treachery ... folk could vote with their feet and join a club of their choice ... clubs without such immunities didn't survive.

But power corrupted and absolute power corrupted absolutely and slow slowly subsidiaries with their associated immunities were eroded as the parasites & predators infected & infiltrated the hierarchy and the 'powers that be'.

And there was more. In 1972 Kenneth Arrow received a Nobel Prize for his 'Impossibility Theorem' as he explained how voting in liberal democracies couldn't solve problems and disagreement were rife ... but such was little more than the ancient adage 'de gustibus non disputandum est' ... 'there's no accounting for tastes' ... an adage no Liberal Democrat should ever forget.

In the absence of 'subsidiarity' ... Liberal Democracy itself easily became a licence for 51% to screw 49%.

The Calculus of ConsentExperts Disagreed - 51% screwed 49%

A A Milne got the shenanigans of the Bishops, Princes, Generals & Bureaucrats spot on - 

The King asked the Queen, and the Queen asked the Dairymaid: 'Could we have some butter for the Royal slice of bread?'
The Dairymaid said, ‘Certainly, I’ll go and tell the cow, now before she goes to bed.'
The Dairymaid she curtsied, and went and told the Alderney: 'Don’t forget the butter for the Royal slice of bread.'
The Alderney said sleepily: 'You’d better tell His Majesty that many people nowadays like marmalade instead.'

Nothing stood still and some of the 'checks & balances' and 'separations of powers' were subverted by -

- arrogant hubris of the 51% who won.

- panic & knee jerk hysteria of the 49% who lost and

Alas 'the powers that be' often sought to command & control economic activity 'as if' they possessed privileged access to survival know how ... 'as if' they had a divine right or tablets of stone which revealed 'the truth' ... but the problem was that the experts disagreed and failure was anathema to experts ... they were 'expected' to know ... otherwise they wouldn't be experts would they?

So why did the 'experts' always disagree?

Science - observation, mathematical theory, provable hypotheses, experimental validation, peer review - settled many disagreements by getting at the truth ... the facts under the conditions of the test.

Evidence of simple facts came from science and controlled repeatable experiments. But out of the laboratory in the real world the experts often couldn't 'control' their experiments as the changing environment interfered with the action. Other different experts could always dispute the initial assumptions before start of play ... and then, infuriatingly, during the dispute the numbers changed. Beliefs trumped disputed facts ... and the truth was that Newton's Laws didn't work too well in black holes. This, of course, did not invalidate Newton's reliable expertise it merely motivated Einstein to work harder at a new paradigm. 

Experts found it very humbling trying to explain why future outcomes were unknowable in advance ... after all they were supposed to be experts who believe that 'God does not play dice'. The explanation of such ignorance was not because of immense complexity but rather because -

mutations had to be 'random' for evolution to work and nobody knew which? where? what? who? when? or how?

nobody could foresee the 'emergent' novelty of the dynamic, contemporaneous & interconnected & interactive & interdependent happenings and associated intended nor unintended consequences

nobody knew how the 'flip flopping' emotions of other folk would respond to interactive happenings?

And there were always new fangled ideas coming along to muddy the waters. 'Theory of Mind' ushered in a golden age of ignorance when it was discovered everything depended on everything else and it proved impossible to 'forget about the Chinese' ... we hadn't a clue ... I know that she knows that he knows that I know that he knows that she knows that others know that I know the truth ... but brains can't cope with 'Theory of Mind' ... can they?

But who, how many, 'got it'? And all too often if you didn't agree with me and my mates ... you were lying.

And wot about beer which was purported to be both a poison, a cancer risk and a relaxant for social benefit? Science often compounded the problem by providing 'facts' in evidence supporting both the defendant and the prosecution ... often resolved only by the beliefs of 12 good men and true.

Everybody got excited about cause & effect but few could cope with the fear of effects that were also causes.

No wonder there were so many dodgy dossiers, so much fake news and alternative facts and post facts ... and even the judges and the referees could be 'enemies of the people'? Scare mongering and conspiracy theories were easy to propagate especially when Twitter gained easy access to brains and the 'reputable' BBC and New York Times lost their balance to the highest bidder. Some even suggested that the Supreme Court was up for sale?

Meanwhile Joe Sixpack who was beavering away at the coalface suffered a double whammy from above as 'the powers that be' got bus, often through a rigged system of violence, corruption & waste - 

taxation - power & resources were derived from the 'legal' confiscation of other folk's resources ...

regulation - top down elitist 'command & control' hubris distorted & impeded the bottom up business of business.

For sure, everybody was different, democracy was not never about voting so that 51% could impose their taxes & regulations on 49% but rather democracy was about the protection of folk and minorities from tyranny & oppression so that 100% of everyone could be free to pursue their lawful experiments ... some of which may even turn out to be useful?

So counting the 'votes' never worked to resolve disagreements over fugitive facts. And worse still the majority always believed last year's paradigm ... even though, by evolutionary definition, next year's paradigm always started off as a random experiment albeit with a path dependency ... confusingly the path dependency trend had lots of support from the sages ... but the new experiment was new new ... without any support at all!

Wot a mess. Some were biased & frit ... and some were biased & excited ... and some believed there was an alternative to the pap of intelligent design served up by the Bishops, Princes, Generals & bureaucrats ... but some believed business solved problems 'cos if business didn't solve problems business would go bankrupt ... that was unless there were turned into Zombies and bailed out.

Did anyone believe in the evolutionary function of bankruptcy? Bankruptcy sifted and fed economic growth by weeding out failures -

valuable resources were released for alternative profitable experiments and

some immunity was provided from 'rent seeking' parasites & predators ...

For certain amongst all the angst and intrigue and disagreement many many folk voluntarily purchased solutions from profitable businesses ... and purchased them again ... but only if they worked and satisfied customers? Customers voted with their shillings and their feet ... it proved impossible to stop them ... such folk even managed to find their way through an iron curtain. The iron curtain, no doubt, stopped trucks but always had difficulty in stopping the movement of determined folk and had no chance when it came to stopping ideas.

The greatest idea was simple ... when the penny dropped. Darwin's process of natural selction was underpinned by science and the 2nd Law of Thermodynamics.  

The abundant mutual benefits from trade synergies were the result of instinctive moral sentiments and simple behavioural rules of thumb ...  they were never an alternative to compassion & help but they were solutions to problems.

Don't compromise over the detailed writing of the rules rather cooperate to discover & accumulate synergies.

Restraint of TradeRestraints of Trade & Restrictive Practices - the intelligent design of natural selection   

Bishops, Princes, Generals & bureaucrats and the many intelligent designers perpetrated all manner of ‘Restraints of Trade’ and ‘Restrictive Practices’ in vain attempts to - 

avoid the inevitable failures ... and

rid ourselves of the expected parasites & predators ... 

The arrogance of intelligent designers never suggested that interventions were 'experiments' ... they were always described as 'improved design solutions' ... such more than likely delivered nowt but distortions and imbalances.

In this way the ‘Restraints of Trade’ and ‘Restrictive Practices’ from above invariably threw the baby out with the bath water and inhibited the lawful freedoms of Joe Sixpack and his mates to go about their business and discover their own innovations & improvements.

Liberal Democracy could not have evolved to impose unknowable solutions on the populations but rather it evolved to protect the freedoms of minorities to go about their lawful business ... read Thomas Jefferson's American Constitution.   

And there was the key. Because of synergies, the dice of natural selection were loaded against the parasites & predators ... deep down in the skull the moral sentiments of Adam the Smith, the innate feelings 'resentment of cheats' and 'fairness of shares' pushed human behaviour towards economic cooperation, towards the synergies of specialisation & scale and positive sum activities rather than a downward spiral of beggar thy neighbour and the compromise of zero sums ... read Richard Dawkins' Chapter 12 'Nice Guys Finish First'.

The sifting out of the parasites & predators in business was played out with endless competition & bankruptcy. It was profitable to cooperate and profitable businesses had great difficulty screwing customers ... of course, licensed state monopolies managed to screw customers for longer periods ... but later or sooner the wall collapsed.

It was 'as if' the genes did cost/benefit analysis.

The unknowable outcomes of evolution were not always characterised by 'nature red in tooth & claw' but rather by a better description ... 'the evolution of evolvability' ... as social interactions discovered and accumulated cooperative synergies.

Don't get your knickers in a twist of misunderstanding ... parasites & predators survived but couldn't 'win' zero sum games indefinitely when they were up against those who learned from positive sum games ... those who dealt in synergies had more surviving babies ... the dice were loaded ... and lots of parasites & predators survived in the end by cooperating ... the poacher often turned gamekeeper to survive.

Totally dependent on the synergies of others ... in the same way as others were totally dependent on the synergies of others ... one great chain of being? A whole shebang & caboodle ... DNA survived by 'cooperating' ... uncooperative DNA had no chance.

Did morality itself have a direction? ... think about it?

Intelligent design of evolution was an oxymoron ... think about it?

'Liberal Democracy' evolved it was never about the freedom to harm others in a zero sum game of 2-2=0 but rather all about the freedom to deal with others with positive sum synergies 2+2=5 ... a self organising system ... not anarchy nor laissez faire but deals 'regulated' by moral sentiments and cooperation -

freedom to vote with your feet and join a club of your choice

Choosing in GroupsThe Nature of Clubs & Companies - free to vote with your feet and join a club of your choice

 Different folk, in different places, at different times,  with different behaviours, interact differently with different people producing different results.

Diverse Clubs with their own rules seek to discover synergies from specialisation & scale through 'natural cooperation'.

Characteristics -

voluntary membership - like minded folk join the club of their choice, pay their subscriptions, accept the rules & exit possibilities. Parasites & predators are excluded by ostracism & expulsion providing some immunity from tyranny & oppression and bribery & corruption. Prior acceptance of rules is the effective way of minimising the costs of disputes, squabbles, disagreements and bloody violence.

rules of procedures - constitutions define the umpire and procedures for changing the rules ... and if the umpires decision is not acceptable there are always alternative clubs

trust & exit - contracts are impossible to fully specify long term. Slippage, backsliding & drift in the rules demand 'amendment' possibilities.

Every club had rules, synergies and defence systems otherwise they couldn't survive. Some clubs played a zero some game and chose not to trade specialised skills and suffered low wages and unemployment as prices were fixed and production regulated to produce gluts and queues.

The vast majority of associations in civil society can be rivalous & excludable & hence the 10th Amendment and subsidiarity. Very few activities apart from defence of territory need to be 'public'. The principle of 'subsidiarity' keeps the size of the group in line with the size of the public good.

However the nature of the state, as the custodian of the power to defend territory, although voluntarily mandated initially ... such power in the end corrupted and monolithic defensive Leviathans started to impose their arbitrary rules on the diverse clubs of choice.

ClubsIn this way the elites began to use the Jefferson elections to circumvent the 10th Amendment and fight over revenues as 51% lorded it over 49%. Tax revenues were seized over and above the legitimate needs of the Commander in Chief and his army. Elections became 'uncontested', as one elitist faction fought with another elitist faction, and the associations of civil society became sidelined as 'interest groups' were bribed to join the 51% with taxes raised from the 49%.

Darwinian diversity and associated liberty suffered when faced with such intelligently designed inequality.

Natural Selection of business & market failure == bankruptcy == competitive differential survival.

Intelligent Design of State mandates & monopoly failure == price fixing & regulation == survival of zombies.

Free Market InnovationThe Case for Business - torts, trade & technology

Subsidiarity, Trade Synergies, Market Prices & Balanced Balance Sheets  

Evolutionary Economics describes the unleashing of a process of technological & institutional innovation involving the generating & testing a diversity of ideas which discover & accumulate more survival value for the costs incurred than competing alternatives. The evidence suggests that it could be adaptive efficiency that defines economic efficiency.

The natural selection of trade synergies.

The case for business rests on the science of evolutionary economics and based on evolved natural law and evolved diversity of free trade. Business activity involves mutually beneficial deals with others ... no compulsion ... choosing cooperation within natural competitive alternatives.   

Businesses 'work' only because businesses that don't 'work' go bankrupt.

Lawful free trade involves simple economic principles - 

Natural Law of the Land will tend to be fair based on universal emotions of 'fairness of shares' and 'resentment of cheats' ... businesses can't survive under arbitrary law. 

trade between consenting adults and their companies of choice will tend to be lawful free trade based on avoiding costly distortions, imbalances and gluts & queues ... businesses can't survive as licensed monopolies. 

Lawful free trade is justified by two fundamental ideas of economics -

synergies from specialisation & scale == comparative advantage == everyone can participate  - David Ricardo 

market prices minimise costs == supply & demand == men of system cannot calculate prices   - Adam Smith

The Institutions of Liberal Democracy, as evolved systems, emerged from diverse lawful free trade deals and must offer some immunity from parasites & predators ... protecting both   -

synergies of specialisation & scale from trade & associations and

individual human rights and the choices of folk & minorities

The necessary diversity for the natural selection of businesses results from the experiments of cooperating folk as they vote with their feet and join a club of their choice.

Thriving businesses always interact with different others and environments including the Institutions of State which always became restlessly involved - 

Torts - Laws of the Land, Common Law - morality & cooperation emerged from biological & cultural inheritances rather than from the arrogance of intelligent design, political correctness & regulatory distortions.
NB Malarkey & tomfoolery of the 'powers that be' == arbitrary command & control of human moral behaviour
Don't get it wrong ... business is not laissez faire ... 'moral sentiments' evolve. Folk are free to choose but not free to harm others.
Businesses and clubs enjoyed the lawful protection of Liberal Democratic institutions, constitutional checks & balances and separation of powers 'to make the world safe for diversity' and arrest backsliding into deliberate, rational, purposeful, intentional, plans.
Backsliding was an arrogant drift from the humble Classical Liberalism of Jefferson to the hubristic Modern Liberalism of Hamilton. With diversity Levianthan 'to protect ourselves from ourselves' was unnecessary.
Freedom to lawfully experiment secured economic growth which trumped orchestrated equality of outcomes. The law of the land turned out to be a better alternative than violence for settling differences but technology solved problems.

Trade - Opportunities for Profitable Projects - bottom up discovery & accumulation from trial & error processes of wealth creation in commercial cities.
Specialisation grows from subsidiarity & initiative == 'survival know how' grows @ 3% compound as a science knowledge base, a growing launch pad for further growth == compounding opportunities as a positive sum game == 'jobs, jobs, jobs' == 'education, education, education' == exchange trade == economic growth == high value job vacancies == immigration of high value skills
Scale grows from families, to clubs & companies, to countries & states, to UK & USA == tax revenues from the synergies embedded in hard work, honesty & thrift fund the 'civilised' Welfare State.
NB Malarkey & tomfoolery in business == bankruptcy.
Don't get it wrong ... business learns from mistakes not from intelligent designs. Vested interests, cartels, trade unions are free to choose but not free to harm others. 
Businesses and clubs practiced both free & fair trade, deals free trade across barriers and fair trade at market prices resulted in undistorted discovery & accumulation of global synergies of specialisation & scale.
Trade, comparative advantages, market prices. 

Technology - Institutional Immunity from Parasites & Predators - top down impositions of costs & regulations from Bishops, Princes, Generals & bureaucrats and rent seekers & free riders are parasites & predators == confronted by constitutional/institutional checks & balances on 'powers that be'.
NB Malarkey & tomfoolery of Bishops, Princes, Generals & bureaucrats == corruption and rigged elections from bribery of interest groups for votes with tax revenues from others is an arbitrary zero sum game will tend to fail as 'excess burdens' reduce output and reduce real wages.
But don't get it wrong ... we're biased ... as soon as wealth stocks appear, parasites & predators also appear and must be confronted ... otherwise stocks don't survive. Cooperative synergies of specialisation & scale load the dice.
Businesses and clubs required lower taxes, less regulation and mutual benefits as deadweight burdens were removed = more output, more investment, less cost and less waste == 3-4% growth in 'know how' == real jobs.
Why tax business? Businesses can't pay taxes, tax was a cost to business, only folk can pay tax? ... think about it?

Foreign Policy - Promoted Global Markets. Rice doctrine encouraged institutions of Liberal Democracy, businesses and clubs for mutual benefits and confronted clubs threatening terrorism.
Cultural tit for tat nurtured cooperation.

Education, Health Care & Energy - Promoted Mutual Benefits. From diversity and choice but not subsidies and price fixing which produced expensive gluts & queues. 
Technology provided solutions; subsidies resulted in distortions and imbalances. 'If it’s free put me down for two please', health & education & clean air gluts & queues.

Rules of ThumbThe Tools - Simple Behavioural Rules of Thumb  

Folk and businesses learned from Rules of Thumb ==

tit for tat &

satisficing

In this way cooperation evolved and institutions gained from synergies and found some immunity from treachery.

But the parasites & predators were relentless ... an arms race ...

Intelligent designers had an impossible task with top down command & control but bottom up solutions were the business of business -

don’t vote for them it will only encourage them ... avoid top down, imposition of arbitrary prices & regulations ...

vote with your feet and join a club of your choice ... try bottom up, voluntary experimental initiatives of clubs ...

The economics of competitive business major on the principles of subsidiarity & innovation and the imperative of survival by provision of solutions which satisfy customers.

The economics of the alternative of state corporatism major on economies of monopolistic scale in the public interest. But licensed monopolies have little immunity from tyranny & oppression and bribery & corruption ... and the public interest doesn't exist.

Customers & Suppliers did deals and shook hands for mutual benefits.  

It's economics stupid !Emerging Policy = It's The Economy Stupid!

Structural Reforms - Subsidiarity - Privatisation - Mergers, Acquisitions & Bankruptcies

Vote with your feet and join a club of your choice

The unleashing of a process of technological & institutional innovation involving the generating & testing a diversity of ideas which discover & accumulate more survival value for the costs incurred than competing alternatives. The evidence suggests that it could be adaptive efficiency that defines economic efficiency.

Don't get it wrong this was not luck - it was all about synergies (not greed), and liberté (not égalité) - opportunity & participation - hard work, honesty & thrift.

But don't get it doubly wrong synergies & liberté were never inevitably successful - it was all about discovering & accumulating local improvements which survived better than competing alternatives. 

The process involved diversity and the natural selection of outcomes. Many alternative 'clubs' were necessary for diversity.

Business experiments were bottom up subsidiarity as competitive businesses with healthy Balance Sheets wrestled with the discovery & accumulation of survival know how ... the synergies of specialisation & scale.

Some clubs played positive sum games and chose hard work, honesty & thrift and secured benefits and rainy day funds for the education & health of family & friends ... and the gene pool ... as strange newcomers and immigrants flocked to join the party and find the jobs.

But there was polarisation and crowd trouble as emigrants abandoned the ship ... there was no alternative to education, education, education ... and jobs, jobs, jobs ... things were tough.

The uncowed bankers and the businessmen very occasionally spoke up, Jamie Diamon and Steve Forbes -

'America, one of the most bureaucratic, confusing, societies in the planet, an embarrassment being an American citizen listening to this stupid shit we have to deal with. We been rolling along at 1 and a half-2% in spite of stupidity but American business is powerful and strong is going to grow regardless. People want to get up in the morning and feed their kids. We have to get our act together otherwise we won't do what we're supposed to do for the average Americans. It is not for the benefit of corporations, competitive taxes are important for business growth which is jobs and wages. We should be ringing alarm bells every time we talk to clients'.

'We're not the problem, we'll do OK under any system, it's Joe who will suffer, fewer real jobs & lower real wages'.

Trade Shaped the WorldHistorical Rhymes
= tax, borrow & print monopolies, regulatory burdens & price fixing imbalances

Evolution shaped the word as Sumerian agriculture, sea cargoes, the desert silk roads, the Mediterranean ports, the spies, the slaves, the plagues, science & technology, the new world, finance & limited liability, empire, industrialisation, globalisation ... all thrived on the synergies of trade.

The evidence was in history. From Sumer to the Battle of Seattle, which still continued in 2017, free & fair trade fed economic growth if tariff burdens were removed and prices which cleared markets were discovered. The dice was always loaded against the Bishops, Princes, General & Bureaucrats who ceaselessly tried to slow things down and retain their privileged positions through various and many 'restraints on trade' and 'restrictive practices'.

In 2008 William Bernstein brilliantly described some of the evolutionary developments.

History had to be reinterpreted in the light of learning and current 'know how'.

Could trade be 'managed'?

Could politicos 'protect' national champions from global competition?

Why the endless agonising over free & fair trade?  

Was the WTO a club?

 Could the WTO stop the hubris of price fixing? Could the WTO embrace subsidiarity and be built from the bottom up?

 

How to blow up and drain the swamp?

Why not vote with your feet and join a clubs of your choice? Why not!

Sally End Note - Who spoke up for Business?

In 1986 Sally Rowed for England ... and learned about successful business?

But Mercantilism still alive and well in 2008? Trade was sooooo good a wheeze that, inevitably, in the absence of checks & balances it was turned into a political football?  

The Balance Sheets of Trade had to balance, every deal had to be paid for ... a deficit on current account had to be balanced by a surplus on capital account. But when trade imbalances became large in 2008 problems occurred ... large surpluses of $s from Chinese current account were invested in North American real estate and a 'bubble' followed. The Chinese consumer and American businesses lost out on lots of great deals ... the $s would be better spent on Windows software and Tesla batteries?

Blame Games soon turn to hatred as Mary Barton knew ... and it was easy to misunderstand business & Complex Adaptive Systems -

everything depended on everything else - (Darwin's Conjecture)

brains couldn't cope with complexity of multi levels of iterations - (Theory of Mind) 

It was hoped that the WTO would be a great manifestation of how profitable projects that needed no tax funding could create wealth from which everybody benefited.

But the Doha Round became a political football and not a champion of business?

Focus on business -

Good politics must be good economics ... otherwise how could such survive? Good economics must be evolutionary economics ... businesses that didn't create wealth went bankrupt and released valuable resources ... what was the alternative ... intelligent design?

Successful business must be politics and good economics ... as productivity and real wages rise with lower business taxes & deregulation to drain the swamp of bribery & corruption and the associated waste  

Folk vote with thier feet and join clubs of their choice. Free to choose but not free to harm others.

Rowing EightRichard Dawkins explained about rowing in 'The Selfish Gene, Chapter 3, Immortal Coils' -  

Rowers, Genes and Businessmen
One oarsman cannot win the race; eight specialist colleagues are needed. The boat is a cooperative venture. By definition luck, good and bad, strikes at random. Many good oarsmen get into bad company but an oarsmen who is consistently on the losing side is not unlucky, he is a bad oarsmen. On average the best oarsmen tend to be in the winning boat. One of the qualities of a good oarsman is teamwork.
An oarsman ... or gene ... or business man ... or woman who cooperates well will tend to have a selection advantage in the population.

Richard Dawkins explained about business in 'The Selfish Gene, Chapter 12, Nice Guys Finish First' -

Synergy, Genes and Businessmen 

What really happens is that the gene pool becomes filled with genes that influence bodies in such a way that they behave 'as if' they made complex, if unconscious, cost/benefit calculations.

Businesses coped by following very simple trial & error rules of thumb where competence was not comprehension ...

discover your product or service that was wanted when sold at a price which cleared markets

bankruptcy sifted out the failures 

A simple 'game' of 'social tit for tat' ... 
FT 15th August 2017 -

'Millennia of evolutionary coding is stronger than technocratic fiat'

Bishops, Princes, Generals & Bureaucrats always pushed tyranny & oppression.

Checks & Balances, Separation of Powers and Torts, Trade & Technology drained the swamp of bribery & corruption. 

The 10th Amendment failed to guarantee independent free choice. The 14th Amendment failed to guarantee others were not harmed.

But could the war on egregious terror make the world safe for diversity and encourage folk to vote with their feet and join a club of their choice?

 

 Listen to my mate John Faulkner and understand Kewill Systems.

Read a story about hard work, honesty & thrift under the soap pans in Apapa

Xenophanes - 'A woven web of guesses'.

Plato's conundrum - 'Mob rule and emasculation of the wise' - ‘who will guard the guardians?'

Moral Sentiments & Wealth of Nations - Adam the Smith & The Scottish Enlightenment explained all about innate 'moral sentiments', 'resentment of cheats' and 'fairness of shares'. This 'inner light' of the Quakers, like the 'bad conscience' of the Jews was a universal human emotion; a survival aid, evolved over aeons from the abject failures of alternatives. There was a moral duty to make any unavoidable taxes ... simple, and easy to collect & understand.

Declaration of Independence Liberal Democracy - Tommy Jeffers was clear about political independence & human rights, 

'We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness'

Article I, Section 9, of the Constitution of the USA -

'No tax or duty shall be laid on articles exported from any state. No preference shall be given by any regulation of commerce or revenue to the ports of one State over those of another: nor shall vessels bound to, or from, one State, be obliged to enter, clear, or pay duties in another'.

But Jefferson didn't even convince Alexander Hamilton ... 'Leviathan' backsliding was rife from the start ... as the 10th Amendment confronted the 14th Amendment ...

Power Corrupts - Beware of Soothsayers and Bishops, Princes, Generals, bureaucrats and 'the powers that be'. One of the many who grasped the ubiquitous vulnerability of top down encyclicals was Lord Acton, 1887,

'all power corrupts and absolute power corrupts absolutely'.

The Dilemma of Democracy  - 2nd Viscount Hailsham, 1976,

'instead of Liberal Democracy we have an elected remote dictatorship'

Centesimus Annus  - Pope John Paul II, encyclical 1991,

 'the Welfare State contradicts the principle of subsidiarity by intervening directly and depriving society of its responsibility. This leads to a loss of human energies and an inordinate increase of public agencies which are dominated more by bureaucratic ways of thinking than by concern for serving their clients and which are accompanied by an enormous increase in spending'.

Historical evidence - Edward III in 1345 learned all about fickle fate as everywhere happenings rhymed ... take a little time to understand this memorable example of unpredictable shenanigans.

Since then, and before, claiming the moral high ground for their own, Bishops, Princes, Generals and bureaucrats have continued, relentlessly, in their attempts to manipulate innate moral sentiments and cultural inheritances from the top down ... and always got it all wrong. Repeated violation of human rights by 'the powers that be' who seized unwarrantable jurisdiction over us as they imposed taxes & regulations without consent. This folly of 'restraint of trade' and 'restrictive practices' was all imposed in the name of 'the general will' which never existed.    

Pure Theory of Local Expenditure - Charles Tiebout, 1956, first suggested,

'Vote with your feet and join a club of your choice'

Endogenous Growth Theory - Paul Romer in 1986 demolished the chorus of objections to Tiebout and suggested increasing returns resulted from know how ... discovered & accumulated from interactions in cities and companies ... more diversity, more trade, more ideas, more technology.

Stephen Hawking - optimistic in 1988 -

'Some individuals are better able than others to draw the right conclusions about the world about them and act accordingly. These individuals will be more likely to survive and reproduce so their pattern of behaviour and thought will become dominant' ...

Vote with your feet and join clubs of your choice ... those who say it can't be done are overtaken by those already doing it ... we can be both consumers & citizens ... we have freedom to enjoy choice & we have cooperative social instincts ... there exists a moral instinct. So why can't ... the Scot Nats & the Brexiteers & the Wallonians & Texas & San Francisco & Heathrow & Gatwick & Amazon & Apple & Genentech & Unilever & Moorfield Hospital & King's Chester & the Khan Academy ... choose for themselves and cooperate with their mates ... and do their own lawful things? ... Why not subsidiarity? Why not?

Check it all out ... you never know?

Darwin's explanation didn't appear until 1859.

Read Richard Dawkins 'The Selfish Gene' Chapter 12, 'Nice Guys Finish First'.

Then try some Nobel Laureates & evolutionary economists - James Buchanan, Gene Farmer, Elinor Ostrom and Paul Romer.

 

 

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