EXCERPTS
Book Two
COMPETITION AND CHEATING
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.
Freedom contradicts with equality, and thus necessitates and validates inequality. But freedom does not necessitate the existence or non-existence of fairness. If fairness will ever exist, it will be because of the intellectual choice of the society. - Section 1.1
The society must value, promote and guard fairness, not only because it is ethical, but primarily because it maximises both the individuals’ and the society’s material and social interests and overall welfare in the long run. - Section 1.1
Although people are born unequal and that is unfair, at least they all die equal and that is sort of fair. Fortunately for some, and unfortunately for the society, the recent developments in biological engineering are bringing mankind to the point where more wealth may eventually buy people more time, more life. It does not require a genius to guess the potential effect of these developments on human greed and aggressiveness, or, on the tendency to cheat in the competition, whose prize for winners is now further lifetime, and punishment for losers is (otherwise avoidable) untimely death. - Section 1.2
Fair Competition is a concept beyond the classic definition of free and perfect competition. Fair Competition also requires fair opportunity for all competitors in getting prepared for the competition, and the existence of proper regulation to ensure that the rules of competition are set and enforced to protect and promote the long-term interests of the society. - Section 2.2
Fair opportunity means that the more capable an individual, the more opportunity he has to be given at both education and employment, without any practical limitations. - Section 2.2
Other things being equal, the more a society approaches Fair Competition, the higher will be its economic growth, and the more the inequality within the society will fall towards acceptable levels. - Section 2.2
The components of success can be categorized under four main groups: Merit, Luck, Excessive Risk Taking coupled with good luck, and Cheating. - Section 3.1
Luck is the unfair intervention of the randomness in the nature of the universe, that may even stretch to the occurrence of the utterly improbable from time to time. - Section 3.1
Winning through Merit naturally requires taking calculated risks, but necessitates avoiding excessive risks. In the long run, those who take calculated risks will definitely succeed and this will have nothing to do with good luck, while, those taking excessive risks will definitely fail and again this will have nothing to do with bad luck. - Section 3.2
In Excessive Risk Taking, failure to see the risks is just one part of the story. In many cases, what heavily fuels excessive risk taking is having the means to keep any potential profits to one’s own self while to shift any potential losses to somebody else, through many advanced structures, a phenomenon known as the “heads I win, tails you lose” approach in the financial jargon. These structures serve their purposes in the best possible way when the eventual loss-bearing side happens to be the society, as the society is mostly incapable of protecting its own interests due to its lack of social awareness. - Section 3.3
Success-based-only-on-superior-merit has practical limits in a competitive environment. And those limits are definitely lower and stay within rational boundaries when there is Fair Competition. Any sort of extreme-success contains either extreme-good-luck or cheating, and therefore, against common understanding, cases of extreme-success are not good for the society's welfare in the long run. - Section 3.4
Economics and politics are both about accumulating power over the others in the society. By definition, power is a relative status, and that it will have to be obtained through some sort of competition. Every entity that accumulated power is bright enough to realize that no power remains superior or eternal unless competition is eliminated. Then comes the natural urge for cheating. - Section 4.1
Who cheats? First, those who lack the merit to win under Fair Competition. Second, those who are greedy. Third, those who are forced to cheat as all their rivals are cheating in their market and thus it became impossible to stay competitive and survive on merit alone. Fourth, and the most interesting of all, the merited competitors who fear the intervention of luck. - Section 4.1
Asymmetry of information is an inherent weakness of both the economic and political systems – a weakness that is widely utilised by the Cheaters. - Section 4.2
Even in competitive markets, any attribute of any product that goes unobserved by the consumers will be subject to cheating. The reflections of this vital observation to macro-economic and political matters, and their consequences, are of paramount importance. - Section 4.2
The precondition for effective and sustainable cheating is the asymmetry that there is a concentrated benefit on the Cheater’s side while the cost is distributed to many customers. This phenomenon, which can be called Concentrated Benefits versus Distributed Costs is the essence of cheating. And exactly for that reason, cheating against the state is so attractive: costs are distributed so widely and indirectly to the society that nobody notices their existence and thus no opposition materializes. - Section 4.2
Cheating is not a zero-sum game where the benefit of the Cheater equals to the loss of the rest of the society, but a destroyer of the total wealth of the society such that the loss of the rest of the society is much larger than the benefit of the Cheater. - Section 4.4
Having adequate Social Intellect will enable the society to realise that, their real choice is between the cases where either everybody cheats or nobody cheats. - Section 4.4
Whenever inequality rises to unacceptable levels as the result of widespread cheating, many people tend to support the populists advertising to change the system to introduce more equality, rather than supporting the rational politicians who will preserve the system but just eliminate cheating. - Section 4.5
When the society fails to differentiate the Cheaters from the Fair Players and respect the Cheaters more than the Fair Players, the Fair Players start to question the rationality of their choice. - Section 4.5
In cases where one Cheater is much better at the art of cheating than the others, the competitive advantage obtained through cheating creates a permanent concentration of power. - Section 5.2
The first part of the trouble, namely a monopoly’s increasing its take of the cake too much, is somewhat recognized by the society, while the second part of the trouble, namely the society’s lagging its potential total size of the cake due to decreasing or disappearing competition, goes totally unrecognized, although it is actually the heavier part of the damage to the society’s wealth in the long run. - Section 5.2
Creative destruction may at times be sudden and strong enough to wipe out even the strongest monopolies, but it can not be the solution to eliminating monopolies, for any innovator that overthrows the existing monopoly through creative destruction will itself become the next monopoly in the market. - Section 5.2
While the emergence of concentration of economic power means under-competition for the monopoly in that market, it corresponds to extreme-over-competition for any other existing competitor or potential newcomer. This extreme-over-competition for new capital in monopolised markets, drives free capital to the other markets that look relatively much less competitive, eventually rising the competition in those too. Over-competition is highly contagious even between completely irrelevant markets. - Section 5.4
It is in the best interest of the society to have Lawmakers (Politicians) and Regulators (Bureaucrats) who have both professional ability and expertise, and goodwill and ethical values. Unfortunately, these attributes don’t come for free - and the Cheaters are well aware of that, even though most societies are not. - Section 6.3
In politics, initial outstanding success mostly arises out of a stellar performance in either the economic or the political fronts, and bring undisputed political credit to the Politicians on duty, practically creating a temporary concentration of political power. But again, no success is eternal if competition exists and survives. Even if political power is initially attained through success based on merit or luck, keeping and strengthening it in the long run requires the weakening of the competition in the political arena. - Section 7.3
If and when some concentrated political power somehow emerges, it will need to cooperate with economic powers to reach the financial resources that will enable the continuation of its political interests in the long run. Both the concentrated economic interest groups and the concentrated political power may easily find reliable partners in each other. And as they support and strengthen each other through such cooperation, they start to inflict a heavier harm on the welfare of the society. - Section 7.3
A sudden and catastrophic economic or political crisis may end the reign of the current concentrated political power, but only to replace it with another concentrated political power. As long as the Social Intellect of the society remains to be inadequate, such crises will only change the ruling concentrated political power. - Section 7.3