EXCERPTS
Book One
LOSING SOCIAL INTELLECT
The books in this series contain some unique analyses of the troubles with the western economic and political systems, and unique proposals to overcome these troubles. Excerpts from such analyses and proposals are not included below, as they can be misunderstood out of the full context of the books.
If the political system fails, the economic system has no choice but to fail sooner or later. The trouble is that, the failure of the political system usually goes unnoticed until the failure of the economic system becomes clear. - Introduction
When economic or political systems fail, it does not necessarily show that there is something wrong with the system. The problem may actually be with the consumer or the voter, for not being intellectual enough to make the system work. - Section 1.2
Historically societies have done their best to get and keep their right to choose, politically and economically. Unfortunately, the right to choose has no practical meaning unless it is accompanied by the ability to choose the rational option for oneself among the many. - Section 1.2
Social Intellect is a relative concept: the intellectual level of the society compared to the complexity of the economic and political environment in which it needs to survive. If the complexity of the economic and political environment is rising faster than the increase in the intellectual level of the society, then the Social Intellect of the society is actually falling in relative terms. And the complexity of the world is increasing at a never-before-seen pace, almost exponentially. - Section 1.3
The magic mix of Free Market Economy and Democracy seemed to be the perfect sustainable solution for a civilized social order. All that was required of the society, were simply the flawless awareness of and the perfect reaction to these systems’ dynamics. Unfortunately, societies are made up of people who are both unaware and incapable of executing their duty of behaving as defined and expected in theory. Naturally, problems arose when theory met practise. - Section 2.1
If the society mistakes the Economic Elite for the Intellectual Elite, and ends up following their guidance instead of that of the Intellectual Elite, that journey rarely ends well. Unfortunately, that is what usually happens when Social Intellect weakens. - Section 2.3
Many values societies have today, are not well appreciated, and even worse, are usually taken for granted by the current generations, under the fatally false assumption that there is no chance of losing them. If the society fails to appreciate them before losing them, it will just lose them first, appreciate them next, and will have to demand them back again by paying a much higher price later. - Section 2.4
In the basic economic logic, individuals should be rewarded in line with their contribution to the welfare of the society, in terms of some monetary value, or in terms of other social values like recognition or respect. The implicit assumption is that the society is able to value the contribution of the individual properly and fairly. And this is where the logic usually blows up. - Section 2.4
While most discussions focus on whether the invisible hand exists or not, few notice the fact that, if the individuals frequently fail to make rational decisions, as it happens when their Social Intellect is inadequate, then, even if there is an invisible hand, it is destined to fail miserably. - Section 3.1
Even in competitive markets, any attribute of any product that goes unobserved by the consumers will be subject to the dynamics of information asymmetry and end up at the lowest quality possible. As the dynamics of markets cover all sorts of relations between counter parties in economics and politics, the negative implications of this simple conclusion are paramount on the welfare of the societies. - Section 3.2
The trick with any interaction involving two sides with interests contradicting each other in economics and politics is that, the side with the full or superior initial information will try to achieve its desired outcome before the other side accumulates enough experience and develops a counter strategy to protect its own interests. - Section 3.2
By the nature of the principal - agent relation, there is an asymmetry of information to the advantage of the agent. As the complexity of the world rises, as the agent has more expertise due to his concentrated interest on the issue subject to the agency relation, the agent’s relative intellect falls much less than that of the principal. As a consequence, the amount of cheating the agent may get away with -without being detected by the principal- increases, which in turn increases the potential benefits the agent can get for himself at the expense of the principal. - Section 3.3
A society is not better governed because it is a Democracy. A society is better governed only because it is intellectually developed. - Section 4.1
Once a society becomes a Democracy, there is no chance of heroes to come around and save the society from the consequences of its weakening Social Intellect. In democracies, the executive and legislative bodies are elected by the society, and the society generally appreciates, likes, trusts and thus elects those who are somewhat above the average intellectual level of the society, but not too much above that they look alien to the society. - Section 4.1
If an individual does not bother to stay aware of the economic and political developments, it is best for the society if he does not bother to vote either. The worst behaviour is not-caring-but-voting, simply because when an individual does not care, he does not vote arbitrarily, but just becomes an easy prey for manipulation by the Cheaters, and then by voting he serves the interests of the Cheaters against the interests of the society and thus against the interests of his own. - Section 4.2
During the recent decades, the cost of staying aware rose significantly. First, the complexity of the world reached unprecedented levels, and that has increased the total amount of time and effort required to stay aware. Second, the opportunity cost of allocating time and effort has also risen, due to factors like the necessity of allocating more effort to surviving the day, or the distraction of attention to irrelevant issues including new ways of technological entertainment. - Section 4.2
When politics is considered, the real powerful and determined manipulator is the Cheating (Economic) Elite, who try to misguide the society to either support the policies that will serve the Cheating Elite’s interests, or at least to elect the politicians whom the Cheating Elite can easily misguide to serve their own interests at the expense of the society. - Section 4.3
Politicians frequently borrow the basic principles of perception management from economics. They try to focus the society’s attention to issues in which they believe they have an edge against their rivals, even though those issues may not be the most critical ones for the welfare of the society under the prevailing conditions at that specific time. - Section 4.3
The intellectually-adult society, which evaluates the past performances of the politicians thinking in relative terms, namely considering what has actually been achieved under the applied policy versus what could have been achieved (with another policy) under the prevailing external conditions, and thus makes the correct evaluations, develops in a sustainable fashion. - Section 4.4
The intellectually-childish society will probably face trouble in making the right political choice. There will be dream-sellers, including all sorts of populists, whose main strategy is to promise to immediately deliver the impossible to satisfy the colourful dreams of the society. For the intellectually-childish voter, such fast and easy solutions are difficult to resist to believe in. In other cases extremists will emerge. They may turn out to be fear-traders, arguing that the very existence of the individual and the society is in danger due to a heavily exaggerated and mispresented risk, and the only path to survival passes through electing the extremist politician himself. - Section 4.4
The right to decide one’s own future in a democracy is a great feeling, however, if done without having the necessary intellectual background, it ends up in selecting the wrong future. - Section 4.4
During the latest decades, fuelled by the domination of economic thinking by neo-liberalistic principles, the state started to be considered as a burden on the society, and that, the size of the state has to be minimized. Such scaling down, coupled with the minimization of the regulatory power of the state, happens to enable widespread cheating and cause a significant decrease in competition in many major markets, which in turn decreases the welfare of the society. The primary concern regarding the state should not be the size of the state within an economy, but its efficiency and its ability to produce economic and social value for the society. - Section 4.5
The inclusion of politicians with both ability and goodwill to the political arena, through the scenario where they are compensated fairly for their service in both material and moral terms, will definitely promote the best interests of the society, including its protection against Cheaters. As a natural consequence, the Cheating Elite are always keen to keep such people away from the political arena by keeping politics to be an unsuitable career for those with superior abilities. - Section 4.5
Contrary to the common belief, a rise in Social Intellect is not a granted development resulting from a rise in the wealth of a society. A society may catch up with the income level of another one within a short time, but may still lag way behind the other’s intellectual level for a long time to come. Or, in worse cases observed in the economically advanced western societies in the latest decades, a society may keep its wealth and income level intact, but lose its Social Intellect. - Section 4.6
By the end of the 20th century, all the structural problems within the societies that have been accumulating for decades, as a result of political mismanagement which in turn stems from the weakening of Social Intellect of the society, have surfaced within a short period of time in such a way that they have created a perfect storm, and eventually a perfect breeding ground for the populists. - Section 4.6
The populist not only worsens the existing problems by not treating them, but also adds new problems to the agenda by his painfully wrong policies. This will steal decades from the future of the society and from the lives of the coming generations. - Section 4.6
On the one hand, the younger generations see that Democracy is functioning worse and worse every passing day. On the other hand, they lack the adequate social memory to value the virtues of Democracy properly. They may easily look for the wrong solution, namely, giving up on democracy too early and unnecessarily, and trying to replace it with some other vague political system. - Section 4.6
When too many major developments occur too frequently, expert advice adds value to the welfare of the society, and significantly decreases the risks of facing catastrophic outcomes that may result in a system breakdown. The problem is the spreading phenomenon of expertise-for-sale to concentrated interest groups, in the sense that the expert opinion presented to the society is misguiding. Once such cases start to spread, society loses faith in the goodwill of the experts, making their ability irrelevant. This results in a self-destruction of the value of expertise at a time when it is needed most. - Section 5.1
The high-tech companies and their big-data algorithms know their users even better than the users know themselves. When the capability to have personal information and analysis for each individual in the society, combines with the capability to control information flow on an individual basis, the manipulation of the opinion and the perception of every individual and thus the society, on every imaginable dimension spanning from economics to politics, becomes possible. - Section 5.3
The freedom and capability to reach other opinions through the digital media to face contradictory ones and thus improve one’s own intellectual level in principle, rather serves the opposite in practise, by enabling an individual to find and cluster with those who think like himself, making him an even firmer believer of his own opinion, even if it is totally nonsense. - Section 5.3
Freedom of speech creates value only when it enables qualified opinions on contradicting sides to reach the whole society, and let the society listen and judge which side is right. What initially seemed to be a perfect environment for freedom of speech, practically ended up censoring out many expert opinions that the society actually needs to hear, as the very many participants in the digital media self-appointed as experts, accompanied by some fake or ill-willed experts deliberately created or fed by the Cheating Elite, shout in unison to crowd out those with real expertise and goodwill. - Section 5.3
Social education has to present all the major alternate and contradictory opinions regarding economic and political issues, as nobody has a definite correct answer to the relevant questions. In fact, the correct answer, even if there is one, definitely changes from society to society, and from time to time. The aim of social education should be to let the individual gain the ability to understand the analysis of experts, to eventually make the final decision of his own. - Section 6.1
To act as a principal in the democratic system, an individual first has to become capable of properly evaluating the political agents and their policies, so that the accountability of the agent, which is at the heart of the legitimacy of the democratic system, will have a practical meaning. - Section 7.2