Thursday, September 17, 2015

Europe's Principal-Agent Problem

Thanks to qualified majority voting (QMV), the EU's member states won't have a choice in relation to the number of refugees they accept at the behest of the European Commission. Some might see this as a necessary response to a crisis, others might see it as part of a plan:
But in Europe right now, there is a bigger problem than border control, and that is the cynical weakening of national borders, and of the popular sovereignty within those national borders, by an EU oligarchy not remotely interested in freedom and autonomy but rather determined to water down democracy itself in the name of allowing small cliques to set quotas, write regulations and determine national destinies. Here is the great tragedy of the refugee crisis: it’s being used to dilute democracy further. 
And that's from someone who supports open borders. If anything the EU's response to the refugee crisis highlights an even bigger problem, namely the growing disconnection between Europe's leaders and its voters. It's the Principal-Agent Problem of democracy: often it's in the Agent's interest (i.e.: the politicians) to sell out the Principal (i.e.: the electorate). Peggy Noonan describes it quite starkly:
Decision-makers fear things like harsh words from the writers of editorials; normal human beings fear things like street crime. Decision-makers have the luxury of seeing life in the abstract. Normal people feel the implications of their decisions in the particular. 
The decision-makers feel disdain for the anxieties of normal people, and ascribe them to small-minded bigotries, often religious and racial, and ignorant antagonisms. But normal people prize order because they can’t buy their way out of disorder. 
People in gated communities of the mind, who glide by in Ubers, have bought their way out and are safe. Not to mention those in government-maintained mansions who glide by in SUVs followed by security details. Rulers can afford to see national-security threats as an abstraction—yes, yes, we must better integrate our new populations. But the unprotected, the vulnerable, have a right and a reason to worry.
Even The Guardian is beginning to notice that it's the working class who get hit hardest by in a refugee crisis of the kind we are experiencing.

The Principal-Agent Problem arises from asymmetric information: in other words, the people acting on our behalf know more than we do. This has moved Scott Adams to point out that asymmetric information is even worse in politics than in finance:
And if you believe you can make intelligent decisions on politics based on inaccurate information and lies, why aren’t you already rich from doing the same thing with stocks? 
I’m a big fan of voting (when other people do it, not me) because it gives people a sense of ownership in the process. So please vote. But don’t confuse that with being psychic.
Right now the greatest information asymmetry relates to what's going on in the Middle East, especially in Syria. The news editors don't know what's happening, not even the border guards. Though the fact that we're witnessing the 'sudden' the decision of Syrian refugees already in safe havens in Turkey for several years to migrate to Europe does suggest that some people know what's going on.

Then again, I've always subscribed to the cock-up theory of history than to the conspiracy theory. People just aren't that clever, nor consequences all that easy to control. Indeed, if there's any truth in the view that people are getting dumber (or 'cumulative mutation damage of the genome' if you prefer), then things may be worse than we (can begin to) think - take it away Bruce:
However, for the past fifty years and increasingly, we have been getting a taste of something different; and most nations and large organizations are now being run by - not the least impaired people - but energetic incoherent semi-lunatics; because in a mass media democracy, that is what the more-seriously-crazed majority seem to want. 
Democracy as a system for choosing government has never made much sense; mass democracy in a mass media addicted world makes even less sense; democracy in a lunatic asylum is... crazy.
Principal-Agent Psychosis - now there's a Problem.

1 comment:

  1. Scott is overlooking the Dunning Kruger effect. I guess I end up in the 'dumb' group, but primarily based on the observation that the system is constructed to reward this behaviour. It assumes I am a rational entity that is purely self interested and therefore by behaving in this way I have a greater chance of being rewarded. That said this Overton Window business trending left doesn't suit me at all, just the grasshoppers out there. Is Europe tending towards a soviet style managed economy as democracy is eroded?


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