Sunday 19 June 2011

The 'Competition Makes Everything Better' Fallacy

One of the pillars of right wing economic thinking is that things are made better by the existence of competition. Without competition, the theory goes, people get lazy and organisations go downhill. On the other hand, create a free market where all the players must fight to succeed, and the competition between them will force them to work harder and run more efficiently - they'll be better.

This thinking has a clear parallel in Darwinism. Only the fittest survive, so species gradually become fitter. The free market believer would probably look on impressive creatures like tigers and sharks and see admirable examples of how the free market of nature produces deadly efficiency. By contrast, isolated ecosystems, protected from the greater competition of the mainland, allow the proliferation of sluggish leaf chewers and dozy flightless birds. The message is clear: greater competition produces stronger, better animals.

This argument has two major flaws: one, we mistake the efficiency of the result for the efficiency of the process; two, we assume that 'fitter' within the market or ecosystem is the same as 'better'.

The first flaw is apparent from a consideration of how evolution works. The resulting organisms are indeed well adapted to their environments and efficient to boot. What we don't see is all the failures, the millions of ill adapted and inefficient organisms which were spewed blindly into the world only to die without offspring. Even well adapted species might produce thousands of young in the hope that just a couple will make it to adulthood. When you consider the success rate of individual organisms, evolution can be the least efficient process imaginable.

This flaw also applies to a free market. A successful organisation is likely to be effective and efficient, but for every winner there will be many failures and also-rans, and it can take a long time to eliminate all these failures. You can't just introduce competition and expect everything suddenly to be better. Moreover, whilst some of these lesser players will be swiftly eliminated, others may continue to plod along being slightly rubbish but never quite bad enough to be knocked out. These successful failures are all over the place in evolution. Wisdom teeth and hay fever are pointless and irritating, but they're not bad enough to kill you so they never get fixed.

The second flaw is a confusion of values. Does the crocodile's high energy efficiency and success as a predator make it better than other animals? I dare say you would not think too highly of the beast were it chewing on your leg. Evolution created the wonder that is humanity; it also created cholera. I don't hear many people using cholera as a great example of the benefits of competition between intestinal bacteria.

Similarly, this applies to free markets. Frequently, the most successful organisation within a market is not the one that makes the best products, or the one providing the best service. The most successful might be the best at marketing, the best at litigation, the most ruthless, the most exploitative, the most corrupt. The measure of success is not necessarily aligned with the interests of the general public.

This is not to say that all competition is bad. It can be a great motivator within individuals of the right mindset, and sometimes the successful are also good. However, it is certainly not a universal cure for inefficiency, and it does not guarantee that the winner will be good at anything except the rules of the game.

In some circumstances, a properly regulated monopoly could be more beneficial than multiple, self interested competitors. When crocodiles, sharks and tigers come to play, the wise hesitate to let the competition in.

Monday 13 June 2011

A Referendum On Truth

We should never have had a referendum on the Alternative Vote in the UK. We should just have had the Alternative Vote, because it is a fact that AV is better that the current system.

That statement is bound to make some people angry. It will sound extremely arrogant. It is there to raise a point about the nature of the UK government. Bear with me.

We have had very few referendums in the UK's history, and these have all been on constitutional issues, but a referendum could theoretically be held regarding any point of policy. We could, for example, have had a referendum on the current government's austerity measures, on student tuition fees, on changes to the NHS, on reform of the House of Lords, etc. We have never been offered a referendum on such matters, yet on 5th May a referendum was held on whether to adopt the Alternative Vote system for general elections.

I am going to argue that all of my examples above are good subjects for a referendum, because they are matters of opinion, and that we should press the UK government for more referendums on such matters. Instead, we were asked a question about a logically provable fact because the government knew they could manipulate us to get the result they wanted and serve their own political ends.

Facts vs Opinions

There is a big difference between a fact and an opinion. A fact can be proven by observation or experiment, whereas an opinion is formed in the absence of proof.

Of course, it is not nearly that simple.

For starters, when we can't prove something, we might call our best guess an opinion. This immediately turns my first, black and white description into a whole smear of different greys: the dark grey of guesswork; the mid grey of partial knowledge; the light grey of expert opinion; the near white of well proven theories like 'the sun will come up tomorrow'.

To confuse matters, no fact can ever be 100% proven. There is always an element of doubt. This means what we call a fact is only a fact for as long as our best evidence holds. For example, it used to be a known fact that the world was flat. Then somebody sailed around it.

On top of that, there are all the things we cannot disprove. I cannot prove there are no unicorns. Actually, I find it quite likely that there could be unicorns lurking somewhere in the forests, it's just we've never seen them. Until somebody finds a unicorn, however, most of us operate on the assumption that there are none.

Does that mean that all facts and opinions are equal? Are the shape of the world and the existence of unicorns opinions, like my opinions on politics and sprouts? Not quite. The key difference is that the truth of these matters is out there somewhere: there is an answer. If I believed the world was flat, I would be wrong. I don't know about unicorns, but either they are real, or not. The truth is not an opinion.

Opinions are most useful when we cannot prove what is the best course of action, but still have to make a decision. Lacking real knowledge, we fall back on subjective qualities: instinct, experience, ethics, ideology. Each person's subjective view will be different, and will guide them in different ways.

Why we want more referendums

Now, when we are talking about politics, we are deciding what is good for an extremely complex system which nobody understands. This means, in most cases, the best course of action is down to opinion. The purpose of democracy is to ensure that the opinions of the whole population are taken into account, and a referendum is the purest form of democracy: every voter is asked their opinion on a specific issue.

This being the case, if we believe in democracy, we should press for more referendums on key matters of opinion. It is too easy for a cabinet member to put their own ideology, or their own political gain, above the will of the people. This is only too evident in UK politics, where a mostly centre-left population is dominated by right wing governments. Right wing ideologies, like the belief that the free market will solve every problem, would be rejected by a majority in the UK, which is precisely why the government has no interest in holding a referendum on any such issue.

Our government despises democracy

I make my final point about the Alternative Vote not to exhume the corpse of electoral reform but to highlight the arrogance of a government which sees its role not as serving the needs of the country but as manipulating the vote by any means necessary to achieve its own ends.

You see, there is another kind of truth: logical truth. An argument is logically valid when the basic starting point leads undeniably to its conclusion, so you can know it is true no matter what situation it is applied to. An example would be "all red buses are red". You could also say "all red things are red". You could even say "all things of a colour are that colour": always true, no matter what things and what colour you are talking about.

Although the details are way beyond the scope of this post, there are ways to analyse voting systems to prove that one system of voting is more democratic than another. In some cases, it is not clear; however in the case of AV and First Past The Post, there is no contest: AV is a more democratic system. If you support democracy, it is logically true that you should support AV.

We could therefore logically expect a government which believes in democracy to switch to AV without question. Arguments around the fringes (such as, is AV too complex for people to understand) can be proven out with trial runs. There is no need for a referendum, because it is not a matter of opinion.

The only reason we held a referendum at all was to put the kibosh on the Lib Dems' demands for electoral reform. The Tories benefit massively from the current system, but they had to address the issue for the sake of the coalition. They knew they could put out lies and disinformation to discredit AV, and it would stand no chance of a 'yes' vote. Once they had their 'no', it would put an end to the discussion.

Their gamble paid off, and their arrogance and disdain for both the electorate and the democratic process were vindicated.

36% of people are getting what they deserve. The rest of us deserve better.