Arkayar

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The Emergent Design of Failure

I am not letting any secrets slip in saying that the world has become much more authoritarian in the last decade. The largest countries in the world: China, India, the US, Russia, Brazil are all now ruled by authoritarians. The concentration of power in a few hands is not an isolated development; our networked, interconnected world is designed for concentration: of wealth, of fame, of power.

The keyword I want to focus on here is design. I am not a conspiracy theorist - I don't think there's a secret cabal of men in tuxedos smoking cigars and dividing up the world according to their interests. Yet, there's a definite sense in which the world we inhabit today is designed to concentrate power. I am going to call it emergent design.

Consider this wonderful piece by ProPublica about the decreasing powers of the U.S Congress. The article shows how the work of Congress - debating important issues, passing bills - has been hijacked by partisan battle:

"As recently as 2005 and 2006, House committees met 449 times to consider actual legislation, and Senate committees met 252 times; by 2015 and 2016, those numbers plummeted to 254 and 69 times, respectively, according to data compiled by the Policy Agendas Project at the University of Texas."

There's much less room for individual dissent - members of Congress have to follow the party line or face primary challenges down the road, fewer fundraising opportunities and other pathways to power. The delegation no longer decides their vote - the leaders do, and lobbyists have much greater access to the leadership than their own rank and file. The only exception is if you're independently wealthy or famous (or both in the case of Trump), but that means Congress is staffed with two types of people: partisans and oligarchs.

  • Emergent Design Pattern #1: Partisanship has a positive feedback loop with rising campaign costs. Consequence: More power to the party leadership.

But of course, internal fighting within Congress is nested within competition between the three branches of government. So what happens when Congress abdicates its job? The executive steps in; policy is enacted by executive order rather than legislation.

"As heated Senate hearings on a Supreme Court nominee kicked off in early September, Sen. Ben Sasse, R-Neb., devoted his opening statement to explaining why the judiciary confirmation wars have become so rancorous. His argument: Presidents fill the void when Congress cannot act, leading to lawsuits and leaving the courts to resolve disputes."

  • Emergent Design Pattern #2: When the law cannot be enacted, it becomes an instrument of popular contention, with law suits battling with the president and the Supreme Court acting as umpire. Consequence: Supreme Court nominations become a meta-level battleground.

So the executive takes advantage of congressional gridlock to seize more powers. Someone's got to do the job, right? The executive has another advantage: it has an entire bureaucracy working for it, which means that the expansion of executive powers can be institutionalized by expanding the bureaucracy, opening new branches of the executive and asking for more money to pay for these new salaries, equipment etc. The executive now has more money and patronage to offer, so it can hire better people; plus, why would a talented, ambitious person choose to tie their lot with a losing system, i.e., the legislature?

  • Emergent Design Pattern #3: Executive power and wealth translates into expertise and information asymmetries. Consequence: Smart people don't become congresswomen and men. Congress is even less likely to house people who can negotiate the complexities of a complex world. The President (perhaps not this one!) has access to top-drawer talent and large, specialized institutions whose job is to crunch the data to suit his mood. How can generalists who spend most of their time fund-raising hope to compete with the executive branch?

Consequence of 1, 2, 3 put together: Congress loses out in each iteration.

Of course, not all of us care about Congress and not all of us are Americans to start with. But this cascading series of negative design patterns is present everywhere - in economic affairs, international trade and in the tussle over climate change. Anyone who's concerned about the current state of affairs should keep an eye out for these emerging design patterns of global society; at each stage in the game, new patterns emerge that work in the favor of those with power and against the needs of the multitude. What are these patterns? Can we catalog them? Can we devise antidotes to the patterns that work against the people's interest? How?

Moral of the Story: Design is no longer what you buy at Crate and Barrel or an Apple store. It's essential to understanding how the world works today and equally importantly, we will have to pay as much attention to the design of failure as to the design of success.

The Poverty Trap

The economist has a good article about poverty in California. Here's a disturbing statistic:

"19% of Californians were poor in the three years 2015, 2016 and 2017, the highest rate in the country excluding the special case of Washington, DC. The national average was 14.1%."

In one of the richest states in the union, whose "median household income in 2016 was $11,500 above the national average."

There are several reasons for this crisis, including rental costs that are well beyond the means of the poorest. But the most important reason is the nature of wealth creation in CA: both of its world-leading industries, i.e., Hollywood and Silicon Valley, create wealth on the backs of a few highly skilled and educated workers while automating or outsourcing everyone else. As a result:

"a better predictor of poverty is lack of a university education: 35% of those with only a high-school diploma are poor."

In other words, a college degree is a necessity if you want to avoid poverty. Guess who doesn't have a college degree? Children, of course. Which leads to the eye-popping declaration that

"45% of children live in households that are poor or near-poor (living below 150% of the poverty line). By the time they are 18, estimates Mr Flood, half the children of the Golden State will have made use of food stamps or food banks."

We are now living in an era where energy extraction and information extraction are combining to create utopia for the few, uncertainty for the many, disaster for the marginal and catastrophe for the planet.

Sweatshop Finance

There's been a lot of turmoil in the tech industry after the torture-murder of Jamal Khashoggi. We have known for a while that Saudi money (which is to say, the Saudi Royal family's money, or to be even more specific, the Saudi crown prince's money) is a major component of venture capital. Softbank's most recent $100 billion Vision Fund is 45% Saudi, who have major investments in Uber, WeWork etc. Suddenly, that money is looking suspect. A prominent VC, Fred Wilson, wrote a piece which questioned the morals of taking such money.

Of course, foreign capital inflows are hardly unique to Silicon Valley tech. Dodgy capital finds its way wherever speculation and money laundering are to be had. Real estate is a huge example. We have known for a while that some of the priciest real estate in the world in cities such as New York and London is due to capital inflows from the Middle East, Russia, China, India and other places where people have made enormous fortunes through illegal or semi-legal means. But that's only the tip of the iceberg. There's a difference between selling drugs on the street and creating a narco-state. If you want to see the first narco-state of real estate, move to Vancouver, where Chinese capital has turned the city upside down.

The fact is that dodgy capital inflows are central to every speculative bubble: real estate, bitcoin, Uber for X, you name it. Who else has the money to throw around? I feel like we are at the beginning of a sweatshop moment for finance. Way back when it became known that kids were slaving away to produce your shoes, there was a global outcry and enormous pressure put on companies such as Nike to improve their operations. Did that save the world? No it didn't, but it changed the way outsourcing was implemented.

Similarly, we need to change the moral landscape of finance. I don't mean the radical solution of socializing investment or samizdats that people write in secret communist pamphlets. I mean raising the bar for the mainstream - making it impossible for otherwise profit minded people to take certain kinds of money.

Intelligent Capital

Marx started writing his famous book in the early days of capitalism. According to that canonical source of truth, i.e., Wikipedia, James Watt's steam engine was invented between 1763 and 1775. Marx and Engels wrote the Communist Manifesto in 1848. In other words, somewhere between 85 and 73 years after the steam engine. Meanwhile, the first functioning electronic computer, i.e., ENIAC, was first completed in 1945, so we are 73 years past the deployment of that technology. 

Why am I saying this? 

When Marx and Engels wrote their pamphlet, industrial capitalism was just beginning to show its impact on England and Europe. 1848 was also the year of the social unrest across Europe but it was a long ways away from two worlds wars, several revolutions, decolonization and all the other consequences of the mechanical age. Nevertheless, they were right in pointing out that industrial capitalism was a really big deal and that it would change the world. 

Similarly, we are at a relatively early stage in the development of intelligent capitalism, i.e., capitalism powered by information and machine learning. Not so coincidentally, we are also at an early stage of panic over climate change and ecological collapse more broadly. The two go together. 

We may or may not agree with Marx's vision, but he was absolutely right (and he wasn't alone in saying so) in pointing out that the real impact of industrial capitalism wasn't in the new gadgets and gizmos that enter our lives but in the social relations transformed through this influx. Global capitalist society is nothing like the pre-industrial societies it has replaced.

Intelligent capital will cause an equally dramatic shift in life, liberty and the pursuit of happiness, even as individual gadgets come and go. Some of the symptoms of this shift are already upon us: we know surveillance is going to be big, automation bigger and climate change is going to be huge. What else

I have resolutely left-wing sympathies, but the honest thing to do is understand this new condition before passing judgment. My long-term goal is to shine a crystal ball on the future and in doing so, uncover the real transformative forces that are being unleashed. But that's a ways away. For now, I want to share snippets.