Wednesday, October 31, 2012

Civic Theory vs. a Startup Idea

How can you tell that politics isn't what it you've been told it is, without leaving the armchair?
"Mancur Olson, in his book The Logic Of Collective Action, highlighted the central problem of politics in a democracy. The benefits of political market-rigging can be concentrated to benefit particular special interest groups, while the costs (in higher taxes, slower economic growth, and many other second-order effects) are diffused through the entire population."
This, unfortunately, cannot possibly the whole story or even a large part of it.

Here's my startup idea: political insurance. It would charge some incredulously low amount, like $4 a year, and promise to stick it to special interest groups. The basic product would end up being political stability. It would profit on a percentage of the difference between the costs of special interests and the bribes the special interests are willing to pay. These are guaranteed to be very different, thermo #2 itself says that the interests cannot efficiently extract their benefits. It defeats the rational ignorance problem, as the costs of research can be centralized, the results cheaply distributed, and is robust against cheating due to spot checks by individual customers. It is entirely legal, it is simply the anti-special-interest special interest.

This idea is ludicrous. It makes betting on snowballs in hell look like a rewarding hobby. I know it, you know it, it can't possibly work.

Okay, but why not? We know it instinctively, not rationally.

Here's a non-reason: there's a user bootstrapping issue. To charge the really low numbers, it would need a really large number of subscribers. This, however, is just a marketing problem. Marketing problems get solved all the time. Worst case scenario, the idea needs a few goes in different guises before it lucks out and takes off.

Imagine that instead of this sentence, I bored you with several other apparent obstacles that just aren't all that.

So, would special interests not manage to get countered by a firm dedicated solely to efficiently converting their deadweight costs into profits? If so, how?

Or, are special interests just yet another scapegoat? If so, for whom?

Perhaps the whole political system would rise up in an orgy of corruption and make it illegal? How do you convince politicians to outlaw the business model of bribing them more?

I think I've exceeded a lifetime quota; patience with intellectuals who don't take the consequences of their own theories seriously. (E.g, so you won't admit you think it is ludicrous? So...when's your appointment with the venture capitalist? This is easily a multi-billion dollar market.)

If only this were the only part of civic theory with that flaw...


Aretae said...

Free rider problem.

Alrenous said...

Free to play games.