Are there any situations where competition is bad?
For instance, currently government is about 50% of GDP. This seems like an outcome of median voter theorem in universal suffrage. There is an open political competition for that 50%, but it's not a market based competition.
Would it be better if people did not compete in the government influence market for such a large pie of the economy?
And how do you bring about a political economy where less of the economy is determined by political rather then market competition?
Singapore has 10% of GDP as government with essentially one party rule. France has 58% with a multi-party democracy. Japan is often called one and a half party democracy in-between at 44%.
I'm not a fan of authoritarianism but I can't help but notice that the era of limited government and high growth took place before universal suffrage in most places.
Yes, I can see your point. I had not thought about it in that way.
I think perhaps the problem is not so much the partisan competition as no specific limits that constrain the bidding for votes by increased spending of other people's money. That is why I support a balanced budget amendment.
Another cause might be the heavy use of Value-added tax in most nations, which is almost invisible to voters.
If 51% of the vote confers power (parliamentary coalitions doesn't change this) then there will be strong incentives to buy whatever votes you need to get to 51%.
Adding a layer of legislative checks and balances simply means that it's 60%+, perhaps one time during a crisis (which is a good thing and all). There were legal limits on the size of government up until FDR started winning landslides, and then even the Supreme Court understood it had to get in line or get steamrolled.
Ultimately, I think the only solution is to have political power distributed broadly enough that you don't end up with authoritarianism, but narrowly enough that you don't have lots of "cheap" votes that don't have much of a stake in the system beyond what it can do for them in the here and now. I think this could still include a majority of the population but not be universal (I would include the votes of children exercised by their parents, which would in some ways be an enlargement of the franchise).
How you get there I don't know. The world wars created intense pressure for universal suffrage because the military/economic value of the entire population was at an all time high, and that's been the status quo ever since.
This may be my favorite article you have written yet.
Some questions/feedback…
I agree that constructive competition (my term for what you reference here) is an essential element of effective institutions. I also agree that these institutions developed to ratify and formalize the transparent competition.
What I am not so sure about though is that these same institutions can exist in a form without competition. Free markets without open competition, entry and exit are not free markets. That would be a different institution altogether. Representative government without checks and balances and competing candidates isn’t representative government. Science without competition isn’t science. Soccer without teams competing isn’t soccer.
Free markets are not an institution. Nor is science or soccer or a political candidate. This is one of my fundamental beefs with the Institutional school. They define the term “Institution” so broadly that it covers far more than the common meaning of the term.
A simple test is “Does it have a headquarters in a building?” although this is less useful in the digital era. If yes, it is an institution, if no, it is not.
A corporation is an institution, and it can exist with a market-based sector of the economy. It can also be a monopoly. That leads to very different impacts.
A political party can be in a Totalitarian state with no competition between parties, or within a system of competitive elections. The Chinese Communist party and the Portuguese Communist party are both parties, but one is a monopoly and the other is embedded within competitive election. That makes their impact on society very different.
A church is an institution and it can be an established Church with no competition from other churches or it can be within a system of churches competing with each other.
A representative government can exist without checks and balances. The British system comes close to it today.
Also individuals can engage in competition with individuals being involved at all.
“ Douglas C. North, a prominent economist and Nobel laureate, defines institutions as "the rules of the game in a society or, more formally, are the humanly devised constraints that shape human interaction." According to North, these constraints structure individuals' behaviors and interactions, influencing the outcomes of social, political, and economic processes. In essence, institutions encompass both formal rules (such as laws and regulations) and informal norms (such as customs and traditions) that govern social interactions and relationships within a society or organization.”*
This differs from organizations, which are usually defined more as (again, right out of chat GPT:
“ An organization is a more specific and concrete entity, typically referring to a group of people who come together to achieve a common purpose or goal. It involves structured relationships and activities coordinated to accomplish specific objectives, such as profit-making, providing services, or pursuing a mission.”
You are certainly free to use whichever terms you would like, and I completely understand why you might want to try to stay away from this type of jargon in your book. However, when I use the term, I assume you understand what I am saying, as you have read the same material as I have.
Now, to the point of our disagreement. I am saying that the rules and constraints are what determines whether competition is allowed or not, and how this competition works. Free markets are distinguished by certain rules, constraints and rights. Democracy, the scientific method, and soccer by other rules and constraints. In each case, these institutions (or whatever we want to call them) would not be the same without said competition. A democracy with one party isn’t a democracy. Nor would it be a democracy if the competition allowed violence to determine which party won. A free market with no competition would not be a free market, nor would a market where suppliers were determined by political connections or violence.
I understand what North and other Institutionalists use the definition of “rules of the game” but that is exactly my point. A rule of the game is not an institution. It is a very deceptive word game they are playing which causes much confusion. That is why I use more conventional definitions.
The NFL is an institution. It defines the rules of the game. When the NFL changes a rule it does not become a different institution.
This is your substack, so it would be best if we follow your definitions and terms where practical. I will try to avoid the term institution and (from an earlier discussion) culture.
About the competition breeding cooperation theory,I remember an anthropologist study that remarked that civilizations and communities with high ingroop cooperation and sharing commited nore violent and barbaricl acts with outgroup conflict,meanwhile more individualistic ones fought more nobly.Also are there any books or movies that shifted your political perspectives,ir anything that challenged mainstream views,seems that people see history through a biased lence nowadays,since they look to validate preheld opinions rather than contradict them(confirmation bias).
No, there are no specifically political books that shaped my views. I built my political views from learning history and particularly understanding the factors that created material progress. The most important books that shaped my thinking are in this video:
As for the specific claim that competition between groups create greater cooperation within groups, I believe that I first learned it from “Nonzero” by Robert Wright:
And, yes, you are absolutely correct that most people today now start with ideology and then twist the history to legitimize their prior views, which is exactly the opposite of what I did.
Are there any situations where competition is bad?
For instance, currently government is about 50% of GDP. This seems like an outcome of median voter theorem in universal suffrage. There is an open political competition for that 50%, but it's not a market based competition.
Would it be better if people did not compete in the government influence market for such a large pie of the economy?
And how do you bring about a political economy where less of the economy is determined by political rather then market competition?
Singapore has 10% of GDP as government with essentially one party rule. France has 58% with a multi-party democracy. Japan is often called one and a half party democracy in-between at 44%.
I'm not a fan of authoritarianism but I can't help but notice that the era of limited government and high growth took place before universal suffrage in most places.
Yes, I can see your point. I had not thought about it in that way.
I think perhaps the problem is not so much the partisan competition as no specific limits that constrain the bidding for votes by increased spending of other people's money. That is why I support a balanced budget amendment.
Another cause might be the heavy use of Value-added tax in most nations, which is almost invisible to voters.
If 51% of the vote confers power (parliamentary coalitions doesn't change this) then there will be strong incentives to buy whatever votes you need to get to 51%.
Adding a layer of legislative checks and balances simply means that it's 60%+, perhaps one time during a crisis (which is a good thing and all). There were legal limits on the size of government up until FDR started winning landslides, and then even the Supreme Court understood it had to get in line or get steamrolled.
Ultimately, I think the only solution is to have political power distributed broadly enough that you don't end up with authoritarianism, but narrowly enough that you don't have lots of "cheap" votes that don't have much of a stake in the system beyond what it can do for them in the here and now. I think this could still include a majority of the population but not be universal (I would include the votes of children exercised by their parents, which would in some ways be an enlargement of the franchise).
How you get there I don't know. The world wars created intense pressure for universal suffrage because the military/economic value of the entire population was at an all time high, and that's been the status quo ever since.
Well a balanced budget amendment wouldn't fix our biggest problem, unfunded liabilities.
This may be my favorite article you have written yet.
Some questions/feedback…
I agree that constructive competition (my term for what you reference here) is an essential element of effective institutions. I also agree that these institutions developed to ratify and formalize the transparent competition.
What I am not so sure about though is that these same institutions can exist in a form without competition. Free markets without open competition, entry and exit are not free markets. That would be a different institution altogether. Representative government without checks and balances and competing candidates isn’t representative government. Science without competition isn’t science. Soccer without teams competing isn’t soccer.
Glad that you enjoyed it.
Free markets are not an institution. Nor is science or soccer or a political candidate. This is one of my fundamental beefs with the Institutional school. They define the term “Institution” so broadly that it covers far more than the common meaning of the term.
A simple test is “Does it have a headquarters in a building?” although this is less useful in the digital era. If yes, it is an institution, if no, it is not.
A corporation is an institution, and it can exist with a market-based sector of the economy. It can also be a monopoly. That leads to very different impacts.
A political party can be in a Totalitarian state with no competition between parties, or within a system of competitive elections. The Chinese Communist party and the Portuguese Communist party are both parties, but one is a monopoly and the other is embedded within competitive election. That makes their impact on society very different.
A church is an institution and it can be an established Church with no competition from other churches or it can be within a system of churches competing with each other.
A representative government can exist without checks and balances. The British system comes close to it today.
Also individuals can engage in competition with individuals being involved at all.
Per chat GPT…
“ Douglas C. North, a prominent economist and Nobel laureate, defines institutions as "the rules of the game in a society or, more formally, are the humanly devised constraints that shape human interaction." According to North, these constraints structure individuals' behaviors and interactions, influencing the outcomes of social, political, and economic processes. In essence, institutions encompass both formal rules (such as laws and regulations) and informal norms (such as customs and traditions) that govern social interactions and relationships within a society or organization.”*
This differs from organizations, which are usually defined more as (again, right out of chat GPT:
“ An organization is a more specific and concrete entity, typically referring to a group of people who come together to achieve a common purpose or goal. It involves structured relationships and activities coordinated to accomplish specific objectives, such as profit-making, providing services, or pursuing a mission.”
You are certainly free to use whichever terms you would like, and I completely understand why you might want to try to stay away from this type of jargon in your book. However, when I use the term, I assume you understand what I am saying, as you have read the same material as I have.
Now, to the point of our disagreement. I am saying that the rules and constraints are what determines whether competition is allowed or not, and how this competition works. Free markets are distinguished by certain rules, constraints and rights. Democracy, the scientific method, and soccer by other rules and constraints. In each case, these institutions (or whatever we want to call them) would not be the same without said competition. A democracy with one party isn’t a democracy. Nor would it be a democracy if the competition allowed violence to determine which party won. A free market with no competition would not be a free market, nor would a market where suppliers were determined by political connections or violence.
I understand what North and other Institutionalists use the definition of “rules of the game” but that is exactly my point. A rule of the game is not an institution. It is a very deceptive word game they are playing which causes much confusion. That is why I use more conventional definitions.
The NFL is an institution. It defines the rules of the game. When the NFL changes a rule it does not become a different institution.
I largely agree with your last paragraph.
This is your substack, so it would be best if we follow your definitions and terms where practical. I will try to avoid the term institution and (from an earlier discussion) culture.
About the competition breeding cooperation theory,I remember an anthropologist study that remarked that civilizations and communities with high ingroop cooperation and sharing commited nore violent and barbaricl acts with outgroup conflict,meanwhile more individualistic ones fought more nobly.Also are there any books or movies that shifted your political perspectives,ir anything that challenged mainstream views,seems that people see history through a biased lence nowadays,since they look to validate preheld opinions rather than contradict them(confirmation bias).
Thanks for the comment.
No, there are no specifically political books that shaped my views. I built my political views from learning history and particularly understanding the factors that created material progress. The most important books that shaped my thinking are in this video:
https://frompovertytoprogress.substack.com/p/books-that-influenced-me-the-most
As for the specific claim that competition between groups create greater cooperation within groups, I believe that I first learned it from “Nonzero” by Robert Wright:
https://techratchet.com/2020/01/15/book-review-nonzero-the-logic-of-human-destiny-by-robert-wright/
And, yes, you are absolutely correct that most people today now start with ideology and then twist the history to legitimize their prior views, which is exactly the opposite of what I did.
Excellent,seems I have a lot of homework 😅