Why does centrism always seem to win? I have prepared a nice little demo we can all do together that will help illuminate why politics tends to drift towards centrism. This is a little bit of game theory and economics. In the case of many models that economics teaches us, there are parallels to other ideas.
Have you noticed that intersections often have multiple gas stations next to each other. You might even notice the same thing with other businesses. Outback steakhouse next to Texas Roadhouse; Waffle House next to IHOP; McDonalds next to Burger King and Wendys. If you observe apparently irrational behavior in economics that is so widespread, then you should investigate why large businesses are throwing their money away. Hint, they are not. There is a reason why everyone rushes to the same position, it is the winning strategy.
This demo is in debt to two ideas in economics. Hotelling’s Law, which talks about optimal placement of your business to attract customers. The Median Voter Theorem, which brings the same logic of Hotelling’s Law to optimal placement of your policy positions to attract voters.
One of the best tools you can learn in logic is the power of contradictions. You may think contradictions are illogical, but that is exactly the point. Yes, you can use this to prove something false. This means that its opposite is true. This is a true dichotomy, meaning that if one is true, then the other is false. The ability to entertain and show the flaws in your opponents arguments is the best tool to prove your own. The ancient Greeks invented this logical tool to help them solve philosophical matters. This is known by many names, Reductio Ad Absurdum and Proof by Contradiction. I will share with you two of my favorite stories.
Back in the day in Athens, a bunch of dank philosophy bros got together to philosophize. They had a school run by this guy named Plato called the Academy. Plato was thinking real hard about what a man is. He was like, “man is a featherless biped”. This just means something that is featherless and walks on two legs. The students thought he was so clever. Now get this, a homeless man walked in off the street with a freshly plucked cock(the bird). The homeless dude was like, “Here is Plato’s man”. Was plato going to really say this featherless chicken was a man? Obviously not. This represents a contradiction.
There was a cult of mathematicians in ancient Greece, the Pythagoreans. Their leader, Pythagoras, was an excellent mathematician and the popular Pythagorean Theorem you learn in school is named after him. The pythagorean theorem. A squared plus B squared equals C squared. So back in the day they thought of numbers like this. You got 1, 2, 13, 7; These are called the whole numbers. Then you can divide them like ½ or ⅔; These are called fractions or ratios. So the Pythagoreans were interested in this idea called triples. The basic example: 3 squared plus 4 squared equals 5 squared. So you can have these triangles with perfect whole numbers. But then there were other ones which didn’t appear to have a solution. The most basic was when both the smaller sides, also called legs were equal to each other. In this case what was the larger side, also called the hypotenuse equal to?
While I was still a student, I had the pleasure to attend a lecture by Art Laffer at my university. He is a great economist in his own regard and has also a career tangled in Republican politics. Basically, he is one of the default go to advisors for supply side anti-keynesian economic policy. His theoretical model, the Laffer Curve, has served as a justification for tax decreases. But what exactly is going on here? The reasoning relies on looking at the government as a non-competitive corporation trying to maximize their long term profits. If you think this is boring, consider these profits are the tax revenue which funds the whole operation.
So you learn in basic economics that price is where supply meets demand. This essentially means that you look at the price people are willing to pay you; If you can produce it for less than they are willing to pay you, then you sell it and make a profit. When this can no longer be done supply meets demand. If we had a market for books. Demand is how much people are willing to pay for one more book; Supply is the amount of cost it creates to supply that additional book.
Now the issue here is that this assumes that someone can just come along and produce more. There are costs that don’t show up in supply, fixed costs. Fixed costs are when you pay some upfront cost to enter the market. The cost to make a pizza is factored in supply, but the cost to rent the building of your pizza shop is not. The reasoning here is simple. If you already paid the rent, but hardly sell pizza. This doesn’t mean you should raise your prices to try to compensate. You should make as much money as possible, even if it is at a loss factoring in the rent. This seems simple enough, but it tricks a lot of people. It has even been named the sunken cost fallacy. We will talk more about this later.
Now we don’t want to make a loss, right? People will only make an investment in the market if they can expect to make a sufficient return. This is intuitive and you can even imagine people trying to find the best overall investments. So let us look at an example.
Let us say that you need to choose which industry to invest $100 in. Now shoes will give you a $10 profit over the next year. This factors in the costs to get started and the revenue on each shoe when you enter the market. When a producer enters the market, they are competing with people and pushing the price down. Consumers get more shoes at a cheaper price, but producers don’t make as much money.
Suppose that an investment in cookies will earn you a $20 profit over the next year. Then instead of investing in shoes, you might choose to go with the higher profits in cookies. As more people enter cookie production the rate of profit will fall. This is because higher outputs lead to having to lower prices and more competition over necessary ingredients to make cookies increases costs. Less people invest in Shoes and the opposite happens. You might even imagine that profits will tend to equalize overtime across industries.
Okay so let us get started in the cookie industry. Let us make Oreos… wait that is already a brand… uhhh we can call our cookies, Cremeos. Yes, these are not Oreos.
Now, let us get more specific about our fixed costs. There is a special fixed cost you will need to pay that Oreos does not in order to sell Oreos. This actually means that your expected return will be less than Oreos. These are called your barriers to entry. Oreos already has relationships with food distributors and has paid for the licenses and inspections from regulators. Just like Oreos, you need to continue paying fixed costs, such as replacing old equipment and building new factories. So in terms of profit, Oreos has this advantage.
When you finally bring Cremeos to the market, you will realize that people might still prefer Oreos much more. Maybe they have become accustomed to the specific taste or maybe they just are biased by the branding. There are a variety of psychological effects that come to play. Regardless here, Oreos are able to charge a higher price, because people are willing to pay more. This is true even if the cost to make an Oreo is the same as a Cremeo.
I am going to present this new graph, don’t be intimidated it is based on the supply and demand graph. I will make a connection to the production of Creameos. You have the revenue earned from a particular quantity of Creameos produced. The price people are willing to pay for something goes down the more Creameos you want to sell to people. This is represented in our Average Revenue curve, this is just a fancy way of saying demand. The other curve we have is our Total Revenue curve. If you produce very few Creameos, then people will be willing to buy them at a higher price and thus you will have a lot of revenue per Creameo. If you produce a lot of Creameos, you will have to sell them at a lower price, thus making less revenue per Creameo. There exists a sweet spot where you charge enough to maximize total revenue. The Marginal Revenue curve here just shows the change in Total Revenue if you want to expand production. You want this to be greater than zero, otherwise you are losing revenue.
This reasoning matters much less when you think about competitive prices, such as a basket of apples sold at a farmers market. If you don’t charge prices others are charging, the buyer can just go buy the same thing from other sellers at the market. This doesn’t exactly work when you have something like Oreos. People love Oreos and are willing to buy them at higher prices compared to competitors.
We can recall that we were interested in understanding the Laffer Curve. If you look carefully at the previous graph, the Laffer Curve and total revenue curve both have a similar shape. This is because the Laffer Curve is just the total revenue earned from taxes given a quantity of taxation. It is simple the higher you price Oreos, the less Oreos people will want to consume. Just as the more you tax, the less people will want to do the thing you tax. So just like Oreo, the government can find a revenue maximizing point. This means that both groups get the most amount of money.
This is usually where people stop at explaining the Laffer Curve, but there is another point, the growth maximizing point. What is going on with this point? This point is very rarely understood by people and is a crucial aspect to understanding a lot of economic phenomena.
So we are going to return to Oreos as a company and try to make decisions for the company. We have an established brand and want to focus on making money over a long period of time. For simplicity, I will give you two choices which give different profits over a two year period. These will not be reinvested, they are just your profits.
Now Plan A looks good if you are thinking about total profits earned from Oreos over a two year period. There is a problem with this assumption, you can do stuff with the money earned in Year 1 during Year 2. We have ideas such as an interest rate which is a numerical representation of how much we value money over time. So you can simply take the profits from Year 1 and invest them in an alternative investment. This might be a good idea to do instead of reinvest, because other investments might give a better return.
For simplicity, let us just say we open a savings account and get a ludicrously good deal of 20%. What would be the total profits at the end of Year 2 if we deposit the profits at the end of Year 1?
Total Profit (20% Interest)
$1000 + $200(Interest) + $1505 = $2705
$1100 + $220(Interest) + $1400 = $2710
In the case of 20% Interest, we would prefer more money now. This is because we have better uses for that money, during Year 2. Often reinvesting in the current company is not worth it. We can try this with a different interest rate of say 10% and get different results.
Total Profit (10% Interest)
$1000 + $100(Interest) + $1505 = $2605
$1100 + $110(Interest) + $1400 = $2600
This means that the amount of return on other investments can determine your long term plans for how to deal with Oreo as a brand. When we talk about the long term, we need to think about how pricing, quality, and brand change over time. Oreos might make a lot of money now by pricing high, but it could kill their long run profits. This is not necessarily a bad idea, especially if there are much better alternatives.
How does this fit into pricing? What we have shown is that simply maximizing profits based on what you are earning now is short sighted. Now you could raise your prices to get the most money now. This might work best if large profits or high prices don’t ruin the future market.
How can large profits be bad for business? Normally if you are making a lot of money, then people will try to compete with you. What ultimately stops this is barriers to entry. It is easier to be Oreos than Creameos, because one is established and the other isn’t. This leads to Creameos paying more money and thus lower profits. The government has a lot more power than Oreos to crush their competition. If you want to compete with the government, you will need to worry about getting arrested for black market activities.
This is a very narrow view of the situation though. Black markets can be a large competitor to the government, but also other governments. People and investment move around the world. There are multiple countries and if it is too costly to operate in one country it might lead to future investment and migration going to another country. This is where high prices can be a problem. While a lot of people are loyal to their government, it will drive some people to abandon the market and degrade the demand over time. If Oreos are sufficiently expensive, it may lead to people thinking that Oreos are ripping them off. The name of the brand may be tarnished.
These arguments have very constrained limits. They only apply if you consider the goal of taxation to be maximum revenue generation. The significance of this argument is important to a lot of people. This is more money to spend on social programs, military, public recreation, etc. I mean if you think the goal of the government is to protect its interests, then this is a good start. If you don’t have a large and powerful economy, then you will be less likely to be able to fend off other people trying to loot you. You can also see it as a means to maximize money spent on a variety of social programs that help people. I think it would be useful to look at a variety of objections though.
You might be an anti-government activist, such as an anarchist. An anarchist would look at the desire to maximize revenue, just a more efficient plunder of the people. The government is essentially farming human livestock. The Laffer Curve just argues that you are worth more to them in the future if the government takes less from you now.
You might not actually think the size of the economy is actually important. You might instead want to focus on something like human happiness. You can appeal to the fact that people could feel better with more equality. A very basic argument could be as follows: Even if the economy is worse off, rich people are hardly happier than poor people. Deaton and Kahneman have found that happiness is capped at an annual income of about $75,000 per year. There is a famous supposed and disputed Easterlin paradox showing that national levels of income have no correlation with happiness. Stevenson and Wolfers have proposed that happiness is logarithmic. To understand what logarithmic here means. Consider your happiness at $10,000 per year. Now, in order to double your happiness you would need to make about $100,000,000 dollars. Hence, if we redistribute a lot of the money of the rich, even if it is bad for the economy, poorer people get a lot more happiness. This doesn’t mean you can tax at 100%, but it could mean you might argue for taxes higher than the Laffer Curve would imply is good. This is only one argument. I think this argument is theoretically interesting, but it has a lot of baggage. This might be better discussed in a future piece.
The Laffer Curve is a way of thinking about government services as a company that is operating in an uncompetitive market. They are trying to find a price which will maximize their long run profits. If they tax you too much, they will start to actually make less money. Making the most amount of money this year is short sighted when it can restrict future growth opportunities by charging less now. They want to limit potential competition and maintain the good name of your brand. If they do so the corporation… I mean the government will make lots of money going into the future.
Get comfortable, we’re about to walk you through a Kentucky born corruption in the industrial hemp trade. Imagine making a major investment in which you dotted all of your I’s and crossed all of your T’s through education, law, regulation, and business practice only to have it stolen. The very people who helped you bring new business to their state turn on you.
From the beginning to the end, this is the story of a man who sought to bring purer, more affordable access to hemp and CBD being betrayed, run-around, and even wrongfully arrested while trying to do the right thing.
All of your life you have probably been told that you are not the center of the universe. That there are just bigger things other than oneself. Life is about excellent service. Excellent service to what? This school of thought often asserts you ought to recognize that you are a cog in something greater. We live in a society! If we do not sacrifice for the greatness that is society, then everything will collapse. You don’t want society to collapse, best go back to work.
Let us take a look at this section of The Unique and It’s Property, by Max Stirner. This will help us frame our further thinking on what people mean by “sacrifice for society”.
How is it with mankind, whose cause we are to make our own? Is its cause that of another, and does mankind serve a higher cause? No, mankind looks only at itself, mankind will promote the interests of mankind only, mankind is its own cause. That it may develop, it causes nations and individuals to wear themselves out in its service, and, when they have accomplished what mankind needs, it throws them on the dung-heap of history in gratitude. Is not mankind’s cause — a purely egoistic cause?
I have no need to take up each thing that wants to throw its cause on us and show that it is occupied only with itself, not with us, only with its good, not with ours. Look at the rest for yourselves. Do truth, freedom, humanity, justice, desire anything else than that you grow enthusiastic and serve them?
They all have an admirable time of it when they receive zealous homage. Just observe the nation that is defended by devoted patriots. The patriots fall in bloody battle or in the fight with hunger and want; what does the nation care for that? By the manure of their corpses the nation comes to “its bloom”! The individuals have died “for the great cause of the nation,” and the nation sends some words of thanks after them and — has the profit of it. I call that a paying kind of egoism.
But only look at that Sultan who cares so lovingly for his people. Is he not pure unselfishness itself, and does he not hourly sacrifice himself for his people? Oh, yes, for “his people.” Just try it; show yourself not as his, but as your own; for breaking away from his egoism you will take a trip to jail. The Sultan has set his cause on nothing but himself; he is to himself all in all, he is to himself the only one, and tolerates nobody who would dare not to be one of “his people.”
And will you not learn by these brilliant examples that the egoist gets on best? I for my part take a lesson from them, and propose, instead of further unselfishly serving those great egoists, rather to be the egoist myself.
Let us think about the motivations behind our actions. One way to think about this is to explain our actions as attempting to serve ourselves. The main objection of this selfish theory of human action is to appeal to our sense of morality. People argue that to have selfish motivation is immoral and instead we should submit to a higher end. People argue that life is about service to some ideal or higher cause. It is an interesting retort that we are not all selfish and that the amount of selfishness inside man should be limited.
One such progressive end is the progress of mankind united towards our common destiny. We can think here about lefties and other one world do gooders. Stirner asks us to think about mankind united to serve the interests of mankind. In this kind of arrangement we are thinking of mankind as an actor. In this sense, the idea that mankind should unite and serve mankind is a type of selfish motivation. Each individual working for a single will, the will of mankind. A spirit composed of all human beings which acts for its interest.
Looking at mankind as an acting thing which has selfish ends may sound strange. Stirner is qualifying one way of looking at the situation. This is part of his style to present alternative ways of looking at the world and expose their flaws to reach the truth. People talk about units such as mankind or other groups as a united actor, capable of having an interest and acting. This seems in many ways very absurd, a group is not a living being. This absurdity is part of Stirner’s argument. He is criticizing this worldview by showing the strange logic. I lay out his argument refuting the condemnation of selfishness as illogical.
You should never act for your own interests, but instead a higher interest.
An individual shouldn’t act for their own interest.
An individual should serve the higher interest of mankind, the nation, etc.
Mankind/The Nation/Etc. should act for its own interest???
This violates the idea that serving your own interest is wrong. (1)
The belief in a united mankind is much less dominant than patriotic and nationalistic tendancies. People of Stirner’s day had hoped we were moving past these tendencies, but they still remain today. The majority of demands for a great sacrifice are still the call to national service. Stirner gave the example of the ultimate sacrifice that you can give, your life. The soldiers give their life so that the nation can benefit and grow from the corpses of young men. This depending on your emotional and ideological commitments can invoke very strong feelings. Stirner is not actually taking a side to whether this is good or bad. He is just showing the kind of act people are called to do in service of the group.
To understand his point about the nation, let us consider some additional ideas. Suppose you are living your life in your nation. Now, one day you are dragged out into the street and you are shot. Some could suggest that this sacrifice of part of the nation is done by the nation for the benefit of the nation. This feels something like the rhetorical question: Why are you hitting yourself? This is a clearly perverse interpretation of the facts. Maybe the use of the nation being treated as a unified actor is flowery language covering something up. What really happened you could say is that some group of people shot you for the benefit of another group of people. In some way this kind of national thinking has covered up the functions of the state.
Now we look to the Stirner’s example of the selfless Sultan or in other words the selfless national leader. A lot of people see many including the political class as giving a lot to society. Stirner asks us to consider that maybe these people give to society not because they are selfless, but because they transparently have a stake and benefit from society. They give to you out of a sense of their own gain. Many of the national leaders assume the egoistic pleasure and motivations of the will of the nation. As we had explored earlier maybe looking at the existence of some collective entity representing the group is absurd. They come to society not to serve as a cog in the will of society, but to promote their own good as an egoist.
Maybe you could question this arrangement. You too could come to society as an egoist. This act of serving yourself is revolutionary and is a threat to the powers that be. Some people might immediately reject Stirner and my commentary here as reckless and selfish. If people act selfishly and for their own desires, then society would come to an end. If society wouldn’t function without your exploitation, then maybe that speaks horrible of society. Why even participate if we are being led to slaughter for no benefit of our own?
Max Stirner is not arguing against society. He just believes that ultimately, we want to come to society with a concern for ourselves. This doesn’t mean that being willing to die for something is wrong. The issue is for what end. Stirner argues that other egoists use ideas such as the nation to get you to fulfill their ends. It is very absurd to talk about society as a cohesive will. You should look at society less in a collective sense, but specific and real people.
You may benefit from the relation that other egoists have towards you. You enjoy other people and love their company. Being an egoist doesn’t mean you have to be a jerk to people. The assumption is selfishness harms you, but a leader probably would benefit by treating their subjects nice and having them appreciate what the leader does for them. This doesn’t mean the national leader has your best interest in heart. They will ask you to die for their own benefit. Instead of allowing the nation to become the property of a few egoists, we too could have a stake in the nation. Egoists may be willing to die not for a vague concept, such as the nation, but for the specific people in the nation we love.
The call to be a conscious egoist is a call not to reject society but to be the hero of one’s own life. Those who fail to be the hero serve themselves by mere instinct and only so far as the conscious egoists allow. Will you die for the causes of other egoists and exist in a society which is the private property of another? Sure there is egoist gain to be had here. I however believe that is sad and cucked. Make all of society your property and something which serves you and your greatness.
Mike & Paxton are beyond pleased to present a conversation and Q&A with Maj Toure, founder of Black Guns Matter and fellow liberty-lover! This man knows his shit and he puts in the work, too. Come sit a spell with us and see what he’s about, y’all. You’re going to love this. We sure did!
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