Models Of Politics

With the election in Britain and the upcoming one in America let's not forget the whole reason for politics. The real reason for politics is complexity. The primary component of politics is economics, and our economics are as complex as we are.

This makes it very difficult for any of us to see the entire economic picture. It is far easier to just see what we refer to as the "right" or the "left". The right can be said to represent the seller and the left the buyer.

Any economic transaction requires both a buyer and a seller. Both are therefore of equal importance. To say that one is more important than the other is like saying that a right shoe is more important than the left shoe.

But shoes are simple and it is easy to see that the left and right are of equal importance. But economics is not so simple and it is much easier to see either the right or left as more important. 

To fully understand something, we must construct a mental model of it. But this means that we are limited when it comes to understanding ourselves because we would have to be "smarter than ourselves" to be able to contain a complete mental model of ourselves, which is impossible.

This obvious fact that we cannot be "smarter than ourselves" has a number of ramifications. For another thing, the limitation that we cannot be "smarter than ourselves" means that while we can break physics down into formulae, we cannot do that with human behavior. This does not mean that there are no formulae that describe and predict all that humans do, it is just that we cannot arrive at these formulae because we cannot be "smarter than ourselves" in the way that would be necessary for us to break ourselves down in the same way as with physics.

If this could be done, sports would no longer make sense because the actions of each player could be described in advance by formula and it would be completely unnecessary to hold the sports event to see which team would win. There is a formula for all that each person does, as well as the entire world, but we cannot be "smarter than ourselves" to arrive at it.

Now, back to economics. The sum of all economic transactions is a reflection of our own complexity. When we look at economics, we are looking at ourselves. So to completely build a mental model of all of it's complexity, we would have to be "smarter than ourselves" which is impossible.

Economics is a vast reflection of ourselves, and it is much easier to simplify it by looking at either one side or the other. This is what brings systems such as capitalism and Communism into being. These are the two opposite sides of the total economic picture. Both must have valid points or they would not have attracted so many adherents. Yet, both have been shown to have serious flaws. The flaws in one creates believers in the other so that economic history has tended to zig-zag between left and right.

Industrial era economics began with capitalism. People had to start the industries which would produce wealth, but could not be expected to do this if they would not then be the owners of that wealth. Capitalism, at least in it's more extreme forms, is unsustainable. Factories will pay their workers as little as possible, in order to maximize profit, but that will leave too few people with enough money to buy the goods and services that are being produced. A purely capitalistic system will crash like it did in 1929 and repeatedly in the late Nineteenth Century.

Communism began as a reaction to extreme capitalism. Karl Marx, a German Jew in exile in London, put together the theory in the reading room at the British Museum. The theories of Marx were intended for Britain, but Communism never gained significant numbers of followers there. The knock against Communism is simply that, while it does not have the unsustainable concentration of wealth that capitalism does, it destroys the incentive that is necessary for people to work hard. Why should a business person put forth his best effort to create wealth every day if he is only going to have to share the wealth with everybody else?

Capitalism and Communism each represents one side of the complete economic picture. To see the full picture of economics would be to encompass both capitalism and Communism into a middle ground to get the best of both and the worst of neither. Both sides did move away from extremes, and toward the economic center, as time went on and experience was gained with industrial-era economics, but voters are still very much divided between left and right.

I see economics as ultimately coming down to freedom. There are two slants to freedom-"freedom to" and "freedom from". A simple example that I use for illustration is smoking. Should people have "freedom to" smoke, or should they have "freedom from" second-hand smoke?

The truth is that people, being complex, are both competitive and self-interested as well as communal. "Freedom to" represents capitalism, while "freedom from" represents Communism. Both are a fundamental part of human nature, and both must be accommodated by an effective economic system. The best solution is the middle ground halfway between capitalism and Communism.

There will be maximum economic activity when the available wealth is shared equally between the people. But, on the other hand, equal distribution of wealth will destroy incentive. The purpose of an economic system is to find the best balance of these two facts by seeing the total economic picture, even though it is more complex and thus more difficult, than only seeing either left or right.

There are two buildings that provide an illustration of how economics, which is the core of politics, works. One is in Liverpool and the other in Buffalo.

The Royal Liver Building, which is one of the "Three Graces" along the waterfront in Liverpool, has two statues of "Liver Birds" facing in opposite directions. In the following image, from Google Earth, the two Liver Birds are just to the left of the two red dots. 

In the Liberty Building, in Buffalo, there are two Statues of Liberty also facing in opposite directions. As shown just to the left of the two red dots in the following image from Google Earth. 

These pairs of statues show how politics and economics works. Each statue has it's view of reality. The reality is of the same complexity as the statue so the statue would have difficulty grasping the whole 360 degree reality. It is easier to just see in one direction. The same applies to us with regard to left and right. Each statue is not aware that it is seeing in only one direction and thinks that the view of the other statue is absurd. 

About every fifteen years Britain has bounced from one side to the other. As time goes on and we gain more experience with a modern economy the two sides are getting closer together but there is still a wide gap between left and right. Voters are like the two Liver Birds but periodically changing sides. The new ruling party is successful for a while because the previous party has gone too far in one direction, but the new party eventually goes too far in the opposite direction. 

Does anyone remember the "Labour Isn't Working" campaign? This is the campaign that brought Margaret Thatcher to power. When I first revised my native Britain this billboard was everywhere. From the Wikipedia article "Labour Isn't Working".

It shows a very long line of people outside an unemployment office. But yet was an early example of fake news. A few Conservative supporters were photographed multiple times and then the photos stitched together. At far left there appears to be a gap in the line.