Incentives

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What leads to action? Incentives. The world is full of stories about improperly incentivized folks making otherwise illogical decisions in order to get whatever it is they want.

For several months years now, I've had a new cynical worldview boiling in my head related to the tradeoffs and relationships between economic growth, income disparity, political power, business regulation, education, media, profit, and shifting/rejecting/avoiding societal costs. I've tried writing a half-dozen blog posts, and they're all four or five paragraphs long before I just sort of stop. The idea is too big and complex to communicate simply... and if you can't communicate ideas simply, it's very difficult to actually communicate them (your audience will generally just disengage). Yet, if you choose to communicate simply, your ideas are easily picked apart by those who understand at least some aspect of the complexity of the situation.

But today, spurred on by the first 75 pages of "The Big Short" by Michael Lewis, and an interesting rant that Myles alerted me to, I've got another angle to approach my idea from: Incentives. And the bonus is, I think this angle helps to fill in some gaps that are hard to bridge.

As my thesis, I'll select the following statement:

The mainstream United States power structure is improperly incentivized. Futhermore, as reformers gain the power that would allow them to reform the system of incentives, the allure of those incentives becomes so great, even the most ardent reformer is distracted from their goals, compromised, and eventually puts self interest above societal interest, thus ending the push for reform.

I'm sure I'll refine this statement later on. I already know it's too broad, too ambitious, and too unnuanced, but it's a beginning. It's something I can print, and something I can try and build off.

Major topics:
• There is a trade-off between Economic growth and income disparity/wealth distribution. The less income and less wealth you have, the more economic growth you are prepared to sacrifice. • With few exceptions, the only way to amass large amounts of wealth is through redistributive means, rather than productive capacity. This incentivizes and rewards those who become experts at capital allocation, rather than those who are the most productive. This is ultimately detrimental to society.
• Capital redistribution aids economic growth, but causes income disparity.
• The democracy of the vote is one of the last refuges of the masses and underclasses.
• The masses and underclasses primarily see and use government to impose their will to reverse (or flatten) the distribution of wealth and income.
• Large corporations and wealthy individuals seek to use their resources to influence government in ways that are advantageous to themselves.
• Government officials use their power predominantly for self-interest (power, wealth, fame, influence, etc.) rather than social interest.
• The media dictates much of the national agenda, it is the chief regulator of government officials.
• The media is by-and-large owned by large corporations. These large corporations often use their media holdings to self-interested purposes.

There's some more, but I've got to cut this short. More to follow, hopefully.

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This page contains a single entry by Byron published on June 4, 2010 12:18 PM.

Insomniac's guide to a clutter-free condo was the previous entry in this blog.

An appropriate response to the BP Oil Spill? is the next entry in this blog.

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