Crony Capitalism - know your enemy

People often dismiss capitalism as some kind of evil when they see the negative impact of crony capitalism, which is understandable. But crony capitalism is a poor description of the disease, because cronyism has nothing to do with capitalism as such. 

Crony capitalism is not about free markets - but undermining them. It's about becoming powerful enough to directly influence government policy in your own [commercial] favour. 

The thing is, in a capitalist society competitive pressure dictates that the bottomline is the only line. Hence, as soon as it makes sense to influence government policy in your favour, then that's exactly what you will do. Cronyism is not just a potential - it's an inevitably.

A good example (and don't quote me on this): I understand that in New Zealand we pay as much as 3x what we should for building materials, specifically due to cronyism. So how does that work?

Major construction firms influence government by lobbying them to introduce new licencing demands on materials. These licenses heavily favour New Zealand made products over Chinese (and other) products. There's always a do-gooder rationalisation for the changes, of course. The big firms tell government ministers (who are naturally naive) that we need new licenses for safety reasons, or other, which can seem plausible on the face of it, yet, the real reason for the changes is to drive forward a protectionist regime so that New Zealand firms don't have to compete with highly affordable imports - that is, importers who do not have licenses or will have great difficulty obtaining them.

Why do big construction firms, and others, do this? Because they can. Their lobbyists are hired guns whose job is specifically to drive government policy in the direction that favours their clients. If they can do it - they will do it. It's their job. My point again is, we should never be merely suspicious of cronyism - we should expect it. It's commercially academic.

Unions do the same thing. They are a special interest group like any other. Insofar as unions have leverage to influence government, they too will use it. That's their job. We see this most explicitly with teacher unions. Though their hearts bleed for the children of course, their exclusive job is to represent the interests of their paid members - that's teachers, not students.

Another example of a most insidious form of cronyism can be seen with New Zealand's Telecom company, shortly after it was privatised. Telecom made grand donations to both the Labour and National parties, during each election cycle. The effect? Well, he who gives can always take away. It didn't matter which political party gained power, neither would undermine Telecom's monopoly status. Of course this tactic was calculated by Telecom. It made commercial sense - so they did it. It protected their monopoly status at the time and won them historic profits.

Our country, and the world, is more infested with cronyism than ever, and we have the greatly bloated regulatory regimes to prove it. 

I believe that the biggest reason why we have this deep infestation of cronyism, which is so hard to reverse, is because too many people only want to bitch at it rather than properly understand it - and deal with it. Hence the political gravity against it is not there like it should be. 

People seem to think they can morally shame big players out of the practice of cronyism, which is absurd. Cronyism is not their morality - it's their responsibility. They owe it to their shareholders. Again, the only line is the bottomline.

Dealing with cronyism demands transparency, strict limits on political donations, and probably more important than anything we need decentralised government so that the forces of inter-state competition can hold anti-competitive practice to account. (see here for my article relating to this).

Crony capitalism is going nowhere until we think in these terms. It's a deeply politico-systematic problem that requires proper diagnosis, leading to real solutions. Oh, and the solution is not socialism. Socialism (as we know it) is pretty much crony capitalism taken to its zenith - that is, it represents the total destruction of competition and the complete centralisation of power.

A final note. Much cronyism has been with us for so long that we do not even see it for what it is. Over a hundred years ago, institutional schooling as we know it was driven forward by industrialists - not popular demand. The original intent was to create an army of "economic soldiers" for the big industrialists at the time. But alas, when you're born into cronyism you don't always see it for the intrusion that it is. We may only see it as the 'gift' that it isn't. Especially when everyone else sees it that way.

Cronyism has also had an impact on education through the licensing system. It is perverse, for example, for a dentist to charge you hundreds or even thousands of dollars for a 2-hour job pulling your tooth out. But the licensing system, originally driven my union interests, has ensured that you need to spend a decade in university to win the privilege of performing that straightforward low-risk operation. In truth, ten years in a university was never needed for dental work. The hyper-inflated educational prerequisite works as a barrier-to-entry to allow wages for dentists to radically inflate. Again, we think this is normal, but it was never a real public demand. The same can be said for probably most tertiary education today, in fact.

-Andrew Atkin

Can we make Socialism work?

Forward: People say that socialism has failed catastrophically wherever it has been tried. Indeed that is a statement of fact. The historic economic stagnation, devastation, and death tolls attributable to socialism are shameful to say the least.

However! That does not prove that some form of socialism cannot work. At the end of the day you can do any right thing wrong. Man crashed and failed many times before the Right Brothers succeed in flight, so it's fair I believe to at least keep an open mind.

Socialism's dark history demands that we don't just 'believe in' it, like an impassioned faith. That is both a dangerous and absurd intellectual standard. Its history demands that we either dismiss it outright or drastically re-engineer it. 

This article gives Socialism-2.0 an open-minded ponder. And as I believe, that is much better than bluntly dismissing socialism, which would probably only drive the ideology even deeper into blind faith.

-Andrew Atkin

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First I want to be explicit. If we were to ever engineer some form of socialism, it should be treated like any other responsible experiment. It should first be done on a small and isolated scale, so we can see how it rolls without risking serious or widespread damage.

To this end, the 'revolution' before all others should be political decentralisation. Please open and read the attached pic, "The end of Politics". (And note, the included scenario that I express is based on the presumption that an historic form of socialism is tried. That is certainly not what I advocate for here). 

From here, for the sake of curiosity, I would like to suggest some thoughts on how socialism of a sort could possibly work.

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First, we need to realise some things. In this modern age we will see some incredible increases in operating efficiency, giving a new era of easy prosperity. These are the key technologies driving it forward.

1. Driverless car technology (see video here).

2. 5g telecommunications technology.

3. Advanced mobile robotics (see example here).

These technologies will work together to create the situation where there's no functional need for anyone to leave their home (to work, learn or shop) except for recreation and socialising.

This can, and will, lead to the implosion of countless jobs as cloud-computing coupled with the rampage of never-ending software upgrades, enhanced with machine learning, evaporates the need for so many institutional jobs and at a rapid rate.

This new age of extreme automation may demand a kind of universal basic income (UBI) as we reach the point where there are simply too few jobs that require a human over robotics. 

There's another thing that can greatly increase living efficiency, and that is private villages based on modern technologies. Note, the most direct way to improve real living standards is to reduce the very need to consume in the first place. We may move fast in this direction as well (see here for my modern village example).

From here, we might want to entertain expanding into some form of socialism. The model I'm thinking of moves in the direction of a universal basic income, and a voluntary workforce. 

The following is a collection of what I believe to be important insights that relate to that model. I will add and update it over time.

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Markets:

We will not be able to create an effective form of socialism without first learning from free markets.

The need for market signalling is inescapable. If we want to move to a system where everything--or most things--are owned by the state, then we would still need to work with a classic market system to manage the process. The only alternative to normal markets is a 'militarised' economy, where consumption and work is directly controlled - like the army. I would say very few would want that.

If your commercial world is owned by the state, it will need to duplicate the ideal free-market model in that it must respect the need for decentralised control. This means having the state, at the executive level, allow as much freedom as practical for smaller operations to run themselves at their independent discretion. Top-down command-control never works efficiently. It makes everything complicated, inefficient, and interferes with the adaptive needs of an evolving society. That experiment has already been run - and failed.

-Curiously, in an 'ideal' socialist model you could have less regulatory intrusion over individual operations than what exists in the [so-called] free market societies of today. Indeed, the current Western model is typically so heavily regulated that it could almost be described as: "Privately owned - Government run".

As a dynamic, market discipline is vital. All operations would need to be continuously assessed for their profitability and social utility. Competition will need to be preserved as well, as different operations should be allowed to expand and contract in response to evolving demands. 

Market competition is, functionally, market experimentation. There will always be the need for experimentation for improvement and correction.

A socialist model must have a culture of innovation and improvement. And the value of any initiative must be tested against the consumers willingness to pay. There's simply no other robust way to measure value and prioritise investment.

My suggestion for making socialism work:

People are not just motivated by money. People generally care about making a meaningful contribution to their society, as well. The most obvious example can be seen with the incredible sacrifices people make in war. Clearly they were not motivated by money.

So this is my point. Can we make working voluntary, and basically put every man and woman on a universal income, as a base? Could we reward people with social recognition alone, or predominantly, by making their contributions immediately recognisable online? Would people be prepared to give 10 to 20 hours a week of their time, knowing that their only reward will be social recognition and meaningful job satisfaction?

If they respect their society (which is vital) I think they might, especially if there's a degree of social stigma applied to those able-bodied people who choose to do nothing (shame is a powerful human motivator). 

About 20 hours a week is easy for anyone to do (remember, I'm modeling this on an easy starting point - a technologically efficient society). And if the work is voluntary, people should not be threatened by excessive stress. They can tell their boss 'where to go' when they feel they really need to, etc. It's true that when you remove those kinds of professional stressors, the same work can go from pain to fun. The heart of stress is always a feeling of threat - fear. Take out the fear and everything feels different.

We will of course never escape the need for professional discipline to keep things running like they should. Likewise, there will also need to be an accountability system for workers, so their reliability can be assessed and exposed (this is still essential. I model a possible system to support this here). 

Ugly jobs that no-one competent wants to do, may require extra payment at times. That's fine. Realistically, you would probably develop a large collection of pay jobs and voluntary jobs, in practice.

The key point is, when the pressure to pay the mortgage is off, people can enjoy making a contribution in a new way. Compassion - not worry. The result could be a great atmosphere if, again, we can maintain productivity. And if the threat of poverty becomes alien to us, it will generate a more relaxed culture and ambience. This is the plus-side to the socialism I suggest. It can take a great deal of worry off everyone's backs.

What about acquiring necessary skills? People could do that at their leisure, as required. (The entire educational model we live under is outdated - and runs on myths. I have a short but comprehensive video on tertiary education here).

Money: 

Money is the greatest invention for allowing us to precisely motivate and organise people, and distribute resources accurately. However, it's also a perverter of motivation - in some ways. Money sterilises the nature of our motivation and rarely brings out the very best in us. Those who make the greatest social contributions typically do not do it for money - not primarily.  

By putting money aside as the central motivator, we could bring out the best in us as a society - if it's done right. It can spawn more innovation, productive creativity, and progressive enquiry.

The spirit of innovation:

As anyone who has worked in a large institution knows, they are the most dreadful places for inducing independent initiative. May I be blunt? In a typical large operation, your ideas and suggestions--even the commonsense ones--are going to do little more than irritate your boss. If your boss isn't asking for your input, then it's best that you keep it to yourself. And alas they never ask...

A successful kind of socialism must undermine subjugation-type hierarchy to break down communication barriers, so as to ensure that innovation is induced and intelligently responded to, and to ensure operational mistakes and inefficiencies are quickly corrected (without political dramas). 

I have an article relating to institutional communication here. I will add that it's absurd, though sadly normal, that the man at the bottom cannot speak as freely to the man at the top, as he can with his coworker. It's also a major reason, I believe, why large organisations can so often be amazingly "dumb" with how they do things. 

Shooting for meritocracy:

Socialism fails for reasons. If we want to try some kind of socialism 2.0, with any hope of success, then we need to look closely at those reasons. Blaming sociopaths for stuffing things up just means we need to think of how we can identify those people, and block them. 

There will always be sharks, and there will always be people who want power for its own sake. We need to objectively study them and study ourselves. 

You may find that positions of leadership require a lot more than a crude CV to create the certainty that we have the right people running the show. Psychological profiling, IQ, and background checks looking for early child abuse, etc, may be very important to isolate dangerous or deeply apathetic personalities from executive positions. (I talk about testing for psychopathy here).

I have long believed that if you have the right people in the right positions, then it's hard to fail. Getting your personnel systems right is everything. (I talk about achieving meritocracy here).

Further thinking....

Fertility:

My model of socialism, if successful, would make child rearing relatively easy and comfortable. This is important, to ensure that parents can give the best of themselves to their children. 

But there is a dark side to making fertility universally easy. 

Not every person is fit to breed. When I say this, I'm talking about people who have a history of such desperate abuse that they cannot help but pass the abuse on to their own children. I'm talking about people who shake their babies when they cry, throw them against walls, neglect them worse than animals, constantly frighten them, beat them, and sexually violate them...

So the question is, do we want to make it easy for people who should not be having children, to have children? I for one say no. In fact I believe that parents-to-be should be screened before pregnancy to ensure that they have the most basic level of fitness. It's the only way we can stop the inter-generational spread of horrific child abuse. 

I see this as maybe an important complement to my model of socialism, which might otherwise induce the greater fertility of those who, again, should not be having children.

To conclude, when you get rid of serious child abuse, you get rid of gangs, prisons, chronic drug abuse, the worst of mental sickness, and antisocial personality disorder. There's a powerful argument for clamping down on toxic fertility - is there not? I write further about this here.

Decentralised Socialism:

There's nothing new about small-scale socialism, of sorts. Clubs and the family unit are basic examples. We already know they can work well when their scale is tame. And a cruise ship, as an efficient stand-alone economy, is possibly the perfect example of a socialist system at its thus-far known best.

For basic needs, we can see that about 80% of economic life can be efficiently taken care of locally, at the scale of a mere couple of thousand people composing a private village. In fact, using my proposed model (below), the only things the village would need to import (mostly) is some bulk unprocessed foods and a small amount of electricity. 

Decentralisation can provide a strong layer of protection against the dangers of national economic mismanagement, be it within a privatised or socialist national economy. This is a good possibility to think about in any circumstance. 

 

FOODHUBNZ: Proposing a national app for New Zealand eateries

Forward: My assertion is that the proposed app should be owned by the government, as it will form a natural monopoly. If it is successful, and it probably would be, then private ownership would achieve nothing but the syphoning-off of millions of dollars, and for what is really just a commonsense application. 

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The idea is similar to Uber Eats. It's a template that literally all New Zealand eateries can use to sell their products online, with great efficiency. 

From the user end, the app will provide the following options:

1. Eat in.  

2. Delivery. 

3. Pick up.

4. Drive through.

5. Drive up.

Drive up: 

The first 4 are self-explanatory, but the drive-up option is new.

The idea is that the customer has their food dropped off to them directly, in their car, which is parked close by - most typically on the side of the road. 

Using this option, the customer inputs their car type and registration within the app, and alerts the eatery of their approximate arrival time. For example, they may input "15 minutes" at the point that they start driving to the eatery from work. When they arrive at the eatery, they then hit the "here" icon. 

The GPS signal will tell the eatery approximately where the car is. The service person will then run out and drop the food to you while you stay in your car. (They might charge say an extra $1 for their ~50 metre scooter ride)

Each eatery can set their own rates for drive-up's, deliveries and eat-in, etc. It's totally flexible.

Eat in: 

Using QR codes, a customer will be able to sit at a table, scan the QR code of the specific table they're seated at, and then make their order via the app from there. The eatery in turn knows exactly what table to drop the food off to. That's efficient of course, and it's good for the customer as there's no need to wait in a standing queue to order, which can be tedious.

By making FOODHUBNZ a standardised platform that any eatery can use, and ideally for free (again it should be a government service), even the smallest operations can enjoy the efficiencies provided by the app.

Covid-19:

Needless to say, the proposed FOODHUBNZ app offers another critical advantage, right now. It makes it easier to operate an eatery in spite of lockdowns, which could otherwise be commercially devastating. 

If people can have their order dropped off to their cars at level-3 lockdown, then that would be invaluable for optimising quarantining and protecting consumer demand. 

Extension:

There's no reason why the FOODHUBNZ app cannot expand to retail products. Logically it would. This again is why we want to think about making the app a public utility. We don't want to pointlessly give that money away to the next Jeff Bezos.

Development:

I would recommend the government head-hunts for an individual with a track record in successfully developing software in the private sector, and then commissioning them to organise the development of the app. Use someone practical to develop the user-interface. The focus should be 100% ease-of-use and standardisation. The FOODHUBNZ app should be built as a transaction facility - not an advertising platform.

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Further thinking......

Tipping:

A tipping option could also be organised within the app, so customers can tip a specific person in exchange for excellent service, and without any fuss. Tips should not be taxed or recognised as earnings by the government (just like cash tipping). This initiative would probably work wonders for improving customer service in New Zealand.

Flexible pricing:

Prices can be changed instantly via the app. This is a great way for eateries to offer clearance deals and reduce waste. Again, it's similar to Uber taxi's. Prices can also be higher for eat-in ahead of take-away options, as take-away does not require the provision of premises. 

Note also, people can search for discount locations, and/or agree to receiving alerts from eateries offering clearance deals, and the search/alert function can be linked to GPS boundaries so to be particularity efficient.

Webcam view:

If people want to eat out, but do not want to eat in a crowded restaurant or cafe', then they can see a real-time webcam view of a given restaurant. This function can be directly integrated with the app.

Customer accountability:

The app could also provide a customer feedback function, so eateries win the reputations they deserve, positive and negative, and receive the feedback they need. 

GPS-based delivery:

The app can also facilitate GPS-based delivery. For example, if a group of friends on a beach want to order a meal, the meal can be brought to them directly, on the beach. 

Multi-point ordering:

A group of people all want to go to the café and pre-order their meal on the phone. How tedious, slow and confusing if you're the guy taking all the orders...

A better option, is for the app to generate an on-screen QR-code that allows other phones to instantly link to the same master order point, so everyone can take care of their own order at the same time. I'm sure this would be loved by groups.

Food transparency:

It would be ideal to allow eateries to include access to ingredients lists, for every food option. This could be presented as a text script or a short video, so people can see exactly what they are eating. 

This kind of transparency would have the effect of driving a demand-bias for more healthy food, as eateries that create taste with less sugar, fat and salt, will naturally be favoured, other things being equal. 

Indeed, this can be factored into easy searches. The app will filter out (or in) all available meals that have what you do and don't want, making it much easier for people to eat healthy.

Far reaching impact of the app:

The 'killer app' within the app is the drive-up option, as it represents the most timely and painless way to collect a meal, other than home delivery.

I predict the app would spawn the creation of supermarket-sized kitchen complexes, typically built on cheap land to the side of commuter highways, that provide for drive-up collection only. 

Due to the then achievable economies-of-scale with large operations; fast food product throughput (always fresh food); and comprehensive quality control, we could expect the provided meals to be both economical and high quality - compounding demand. Large scale facilities like this could reduce home-cooking to hobby status.

The future (robotics):

When people order prescription glasses online, all they do on the website is punch in their prescription and that alone programmes a computer in America to robotically cut and shape their glasses. The result is perfect prescription-glasses posted to them for about $20 and within a few days. The entire process is automated - ultimate streamlining.

By ordering food on a FOODHUBNZ app we can, over time, do the same thing (in part) with food. Your order can directly programme a robotic coffee machine (they exist) or an automated pizza production line, etc. The result is reduced costs, and more detailed and even exact customisation. The app will of course retain your personal recipes (that are of course saved in the app). 

Superior management for eateries:

The system allows precise demand and cost graphs to be viewed over time, for different items sold, making it easier for eateries to engineer their menu to better match changing demands, and for better pricing. In fact the app can automatically alert eateries on their menus, for where they might want to review things. It can literally tell them, directly, how to make the best profit.

Driverless delivery:

A road-worthy driverless "chilly bin" is inevitable, and hopefully only a couple of years away. These micro-cars will make home delivery much more affordable and timely. The Kiwi-Kai app would seamlessly integrate with this technology and reinforce its utility. 

Micro-cars will also drive new demand for hiring infrequently used products, as opposed buying. The FOODHUBNZ app can accommodate hiring along with other retail.