Cosmic Gambling and Decentralization

Pair of Dice

The success of decentralized power is dependent upon our all being cosmic gamblers. Not only that, but this inherent gambling nature is also the reason that there has never been a better alternative.

In other words, people producing things and trading them free of restriction would not be successful if we didn’t have a process of wager-making to drive the way we analyze everything. This may also be the reason why historical attempts to impose control on production and trade have resulted in disaster. Earlier, I explained how I think this “wager” process works. I submit that whenever we form a belief about p, we are betting that p is confirmed. Simultaneously, we adopt the risk that p is shown to be false. Testing to find out when we are wrong is a crucial component of living life because it serves as the primary method by which we discover what works and what doesn’t.

If this is truly the current state of human beings, then it seems that we should want to have society situated to maximize the benefits of this pseudo-scientific process of testing. I propose that the way to maximize it is to adhere to the principle of decentralization — of limiting the restrictions on and forceful interventions in the lives of the people. This way, we can see more results from more individuals who carry on with their tests, expanding the realm of what we consider possible. And ultimately, the innovation that results from this general state of affairs would bring about the greatest degree of prosperity for society relative to the alternatives.

Suppose that I am an entrepreneur and I want to create a start-up company that sells an online platform with which people can record music. When I develop my idea, every single assumption I make is something that I would (literally) be putting my money on. I assume that my future product will be useful to enough musicians to be profitable. I assume that I will be able to successfully market my product to a wide enough audience. I also assume that I can come up with a cost-structure that enough people will be willing accept in order to use my product. Then I can test all those assumptions by, for instance, polling the opinions of a bunch of musicians with regard to what they think about this kind of product.

Remember, this wager-making process isn’t only applicable when developing a start-up. It is the way we test all our beliefs.  Say I want to go see “Man of Steel 2” in theaters, and I observe online that there is a show-time scheduled for 8:10 PM. Based on this information, I can develop a hypothesis that if I go to the theater, buy a ticket, and sit down in the assigned room, I will be able to watch Ben Affleck‘s performance as Batman on the big screen. Then I can go do all those things, look at my watch as it flips over to “8:10” around the same time the pre-movie trailers are starting, and I will be pretty confident that I was right to bet on my assumption.

A political system that promotes this behavior takes a hands-off approach when it comes to intervention in the lives of people. Using coercion to enforce certain regulations as the norm largely prevents people from placing certain wagers and testing them, which is arguably the most important action that benefits society. The more regulation there is, the more limited regular people are in this capacity.

For example, take the issue of occupational licensing. In essence, this is a piece of paper from a state government that gives one permission to work in a certain field. The reasoning behind such certification is usually related to safety. Lawmakers want to make sure that people are qualified so that they will not bring harm to their customers. This sounds great as far as the intentions are concerned, but in practice, the fact that interior designers, shampooers, florists, home entertainment installers, and more work their craft safely without licenses in plenty of different states is evidence that such licensure is unnecessary. What it effectively does is erect obstacles that delay or block entrepreneurs willing to test their ideas. As a result, there are fewer people in each of these fields that can incentivize one another to innovate through competition.

A more poignant example can be found in public schooling. The evidence is overwhelming that the predominantly public K-12 education system in the United States has been failing hard. While there are attempts at innovation, the structures of control are centralized into bureaucratic school boards. As a result, we have administrators — often with very little experience as educators — developing top-down plans to revamp broken systems. Furthermore, standardization seems to take precedence over models in which power is diffuse. The obsession with standardized tests and common core legislation limits the innovation that can take place at the grassroots level.

The best alternatives in the U.S. can currently be found in school choice initiatives like charter schools. These schools are publicly-funded but typically freer of government regulations. The idea is to allow teachers at these schools more room to test their ideas. Moreover, giving students more options to choose between different educational options provides more incentive for teachers to develop effective methods of teaching in order to attract students. Even in Finland, which has strictly public schools, the suggestion is that teachers need flexibility on the ground as opposed to top-down control: “…the public school system’s teachers are trained to assess children in classrooms using independent tests they create themselves. All children receive a report card at the end of each semester, but these reports are based on individualized grading by each teacher.” This hints that the success is not found necessarily in the method of funding, but in the decentralized structure of planning, which frees teachers from regulatory constraints.

The key point here is that central planning is simply antithetical to the wager-making process that is essential to understanding the world around us and thus, bringing about prosperity in society. People will always go about this process. The goal is to foster the conditions under which it can reach its maximum potential. I am convinced that those conditions involve as much decentralization of power as possible, both economic and otherwise.

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