The Great Realignment: Power, Money, Greed & Bitcoin

Part Three: Greed

Greed

Unlike power and money, greed is not an abstract concept. It is not a human designed and created system. Lao-Tzu, the 6th Century B.C. Chinese philosopher said, “There is no greater calamity than greed. There is no greater disaster than not knowing contentment. There is no greater fault than avarice.” Greed finds itself counted among the Seven Deadly Sins, coming in at number two after pride. Some American Native tribes considered greed a form of psychosis and were (and are) quick to associate that psychosis with the European-Christians. The modern English definition of greed says, “A selfish and excessive desire for more of something (such as money) than is needed.”

Indeed, one would be forgiven if they assumed greed is universally reviled and condemned. Yet the Objectivist-Libertarian philosopher Ayn Rand may not have agreed. In her 1966 treatise, Capitalism: The Unknown Ideal, Rand says, “Since time immemorial and pre-industrial, ‘greed’ has been the accusation hurled at the rich by the concrete-bound illiterates who were unable to conceive of the source of wealth or of the motivation of those who produce it.” In this, it appears Ms. Rand instead argues that the accusation of “greed” is an ignorant misunderstanding of the motivations and intentions of the productive class. While separated by decades, Kate Luckie, a medicine woman of the Wintu Nation, prophesied the following to Cora DuBois in Wintu Ethnography:

When the Indians all die, then God will let the water come down from the north. Everyone will drown. That is because the white people never cared for the land or deer or bear.

When we Indians kill meat, we eat it all up. When we dig roots, we make little holes. When we build houses, we make little holes. When we burn grass for grasshoppers, we don’t ruin things. We shake down acorns and pine nuts. We don’t chop down the trees. We only use dead wood.

But the white people plow up the ground, pull up the trees, kill everything. The tree says, “Don’t. I am sore. Don’t hurt me.” But they chop it down and cut it up. The spirit of the land hates them. They blast out trees and stir it up to its depths. They saw up the trees. That hurts them.

The Indians never hurt anything, but white people destroy all. They blast rocks and scatter them on the ground. The rock says, “Don’t. You are hurting me.” But the white people pay no attention.

When the Indians use rocks, they take little round ones for their cooking. The white people dig deep long tunnels. They make roads. They dig as much as they wish. They don’t care how much the ground cries out. How can the spirit of the Earth like the white man?

That is why God will upset the world — because it is sore all over. Everywhere the white man has touched it, it is sore. It looks sick. So it gets even by killing him when he blasts.

But eventually the water will come.

Taken in the context of Ayn Rand’s approximation of greed, it appears the American Natives were not ignorantly railing against productivity while clamoring for their share. It would rather seem they railed against callous waste and wasteful practices. Which all leaves us in a bit of a conundrum when it comes to the notion of greed. Is greed immoral? Is it just misunderstood? Is it rational self-interest? Or is greed truly a form of psychosis? When we invoke the idea of greed, we collectively do ourselves a disservice. To borrow from one of investor Charlie Munger’s famous quotes, what we really ought to be focusing on are the incentives. Greed is a problematic concept for two big reasons:

1. Greed is a highly imprecise metric that relies upon an even more imprecise moral standard to evaluate; and
2. The very concept of greed violates Hanlon’s Razor.

For those unfamiliar (or who have forgotten from earlier chapters), Hanlon’s Razor says, “Never attribute to malice that which can be adequately explained by incompetence or stupidity.” And if we were to try to reconcile the statements in the previous chapter by Ayn Rand and Kate Luckie, I think Hanlon’s Razor is best situated to do so. Ayn Rand is correct — malicious greed is not necessarily the driving force behind someone like Elon Musk, or indeed, the great oil and rail barons of bygone days. Likewise, Kate Luckie is correct — waste and destruction unquestioningly feature prominently in competitive resource capture economies. And, unquestioningly, Elon Musk and the great oil and rail barons of bygone days have created unfathomable waste and destruction in pursuit of technological advancement.

So, if this does not speak to malice, then where does the incompetence and stupidity of Hanlon’s Razor lie? The answer is found within the structure of the game itself and the rules that naturally follow. To this point in the book, I have done my best to refrain from commenting too extensively on the current political economy we collectively find ourselves operating in. This is a deliberate choice, as I very much want to “prime the pump” so to speak. As I have mentioned more than a few times, the historical record of the last two parts is necessarily condensed to what might be loosely regarded as “first principles.” That term is bandied about rather freely these days. I find that those who most reference first principles seldomly invoke them correctly. I only invoke them hesitantly here.

In the context of this book in particular, greed takes its place among the human systems of power and money for a specific reason: The evaluation of incentives. More specifically, we explore the idea of greed to further and better understand how the in-built incentive structures of power and money can, and often do, lead to negative outcomes, like resource hoarding and waste. But it is also to unpack and explore how the incentive structures can, and often do, lead to highly positive outcomes, like human flourishing and technological advancement. Moreover, the discussion around greed will also (hopefully) lead nicely into the discussion about Bitcoin and how this all fits together.

Incentives

The Charlie Munger quote alluded to above says, “Never, ever, think about something else when you should be thinking about the power of incentives.” I think Mr. Munger was correct. As noted in the Introduction, this book is intended to challenge common assumptions about the modern political economy and how it relates to the invention and adoption of Bitcoin. The first two parts of the book have hopefully provided a richer context and understanding of the evolution of money and power than is customary. If you have made it this far, then perhaps some of it has resonated. Now that we are embarking on the discussion around greed, it seems appropriate to bring the conversation more concretely into the particulars of the modern world. In pursuit of this, let us turn for a moment to the dictionary definition of greed, which says, “A selfish and excessive desire for more of something (such as money) than is needed.”

Seems reasonable enough, does it not?

Yet, without poking too far, we run into a few problems. For instance, what does it mean to be selfish? Turning to our handy dictionary, it says in relevant part, “Concerned excessively or exclusively with oneself: seeking or concentrating on one’s own advantage, pleasure, or well-being without regard for others.” Okay, fair enough. But what of “excessive?” Again we turn to the fine folks at Merriam-Webster who say excessive is that which is, “Exceeding what is usual, proper, necessary, or normal.” If only this were sufficient, we could press on. But, alas! It is not. Our last niggling little definitional problem with greed is what do we mean when we say something is “needed?” With one last turn to the dictionary, we find that need is when, among other things, there is, “A lack of something requisite, desirable, useful” and “A physiological or psychological requirement for the well-being of an organism.” So, when we put this all together then, being greedy means:

1. Seeking or taking advantage for oneself without regard for others
2. By taking more than is usual or “normal”
3. Beyond that which is desirable, useful and/or is physically or psychologically required for well-being.

Easy enough. And, with that in mind, I pose to you the question: Is Elon Musk greedy? Does Elon Musk seek or take advantage for himself without regard for others? It depends on your perspective, right? Likewise, does he take more than is usual or normal? Leaving aside the problem of what “normal” taking means, Elon Musk is currently worth over $200B. Since that is a big number, here is a fun visual. With credit to Humphrey Yang on YouTube, this is what Elon Musk’s net-worth looks like if a grain of rice was equivalent to $100,000:

I am not sure what that looks like from your perspective, but it certainly appears to me that Mr. Musk has “more than is usual or normal,” does he not? Take it a step further and we must ask, is this “desirable, useful, or required for Musk’s psychological or physiological well-being?”

Maybe.

There are plausible arguments to be made in any number of directions. Depending on who you ask and what their particular political, philosophical and ideological leanings may be, given what we know so far, Elon Musk may, or may not be, “greedy.” Right? So, while we are on the topic, let us unpack some of Elon Musk’s motivations for acquiring so much wealth. In a recent court battle over a proposed compensation package for Mr. Musk’s service at Tesla, the court noted:

Musk is motivated by ambitious goals, the loftiest of which is to save humanity. Musk fears that artificial intelligence could either reduce humanity to “the equivalent of a house cat” or wipe out the human race entirely.

Musk views space colonization as a means to save humanity from this existential threat. Musk seeks to make life “multiplanetary” by colonizing Mars. Reasonable minds can debate the virtues and consequences of longtermist beliefs like those held by Musk, but they are not on trial.

What is relevant here is that Musk genuinely holds those beliefs.

Colonizing Mars is an expensive endeavor. Musk believes he has a moral obligation to direct his wealth toward that goal, and Musk views his compensation from Tesla as a means of bankrolling that mission.

The Bolded text is my addition to the judge’s writing. Keep in mind, this is not dicta. This is in the published trial record, which was written by a very capable and competent legal fact finder. Meaning, as a purely legal matter, it is a fact that Elon Musk genuinely believes and thinks it is a moral duty to save humanity from an existential threat by colonizing Mars. To achieve this goal, Musk is apparently doing everything he can to acquire massive amounts of wealth to fund this endeavor. Moreover, in a citation to the quoted text above, the court also said:

Musk does not dally in the conventional amenities of ordinary billionaires. For example, he owns only one home. [Citation omitted] (“I tried to put it on Airbnb, but they banned Airbnb in Hillsborough. They’re so uptight.”).

The point being, someone of good conscience and moral character could very easily look at the enormous wealth and power that Elon Musk has acquired and call it greedy. They would not be wrong. Likewise, another person could look at him and say the complete opposite. They would not be wrong either. This is especially true if they might happen to share Mr. Musk’s rather dim prognostication on the likelihood of humanity’s continued existence after artificial intelligence relegates us to the status of a house cat. Worse yet, a third person could come along and assume Mr. Musk is completely full of beans and argue Musk knows that artificial intelligence would never do such a terrible thing. Based on that evaluation of Musk, they too could conclude Musk is either greedy or not, just depending on how they subjectively view any number of other metrics they might hold dear.

Since Elon Musk is the only person on Earth that can reliably tell us what his motivations are, we can only guess. That said, we could also return to Charlie Munger’s view of the world and look at Musk’s incentives and gauge everything he has done through that lens. For example, there are credible arguments that say electric cars and their batteries are actually more harmful to the environment and humanity writ large than cars burning fossil fuels. In fact, there are credible arguments made that say the entire “Green Revolution” is completely unsustainable. If taken as true, those arguments say that, in fact, the Green Revolution is a rapidly emerging environmental catastrophe, completely contrary to the stated goals. Elon Musk is a highly sophisticated, well-educated person. Is it possible he is just not aware of these problems? I think that is very unlikely. That said, is it possible that Musk is aware climate change concerns command significant attention, government grants and assistance, and is likely a strong source of capital? I think that is very likely.

So, let us put that all together as a little thought experiment. To start, assume you are a person that knows humanity is at risk and the only way to save humanity is by colonizing Mars. You know that is really expensive to do. Knowing both those things, would you create a company that you know is harmful to the environment, does nothing to mitigate climate change, but you think is very likely to receive massive investments and make enough money to fund that dream? And, if so, what is your true incentive? To save an environment that is probably doomed anyway? Or is your incentive to save humanity? Put another way, is it unethical to raise money for something false in pursuit of something noble? What if there was no other feasible way to fund the noble purpose? Does that make the falsehood okay? Regardless of your opinion, this still leaves out another problem: What if your noble purpose is batshit crazy?

With all this in mind, is it also possible that a particularly nasty and self-serving person could lie about both helping the environment AND saving humanity in order to create a company that could potentially make them the richest person in the world? Would it not be possible that someone could lie about two noble purposes in order to convince people they are ethical and noble, when in reality all they care about is acquiring wealth and tricking people into giving it to them? What would Charlie Munger say the incentive was? Lust for power? And, if so, how would he know if this person is legitimate, a con-man, a lunatic, or a psychopath? It gets tricky, does it not?

This highlights a very important point in this book. One of the major issues we come across in a competitive, resource-capture based economy is the problem of hidden information. In a competitive environment, regardless of whether it is football, poker, chess, or indeed, business and politics, it is always advantageous to hide information from your opponent, especially about your motivations. This is a regular feature of advertising and marketing, sales, mergers, acquisitions, electioneering, dating — the list is virtually endless. There is a popular quote, which is incorrectly attributed to Sinclair Lewis, that says, “When fascism comes to America, it will be wrapped in the Flag and carrying a cross.” The authorship is irrelevant. The underlying meaning is what is pertinent here. What the quote is really saying is, fascism will pretend to be pro-America and pro-Christian in order to trick American people into accepting it.

In other words, because fascists know they will be resisted, they must resort to trickery and deception to seize power. With that in mind, we could also, potentially, say the same for Elon Musk. If Elon Musk wants to become the richest and most powerful man in the world, simply telling everyone that is what he wants and demanding that it happen would not work. Let us pretend for a moment that, in the dark recesses of Elon Musk’s mind, he is actually a Bond Villain. He desires nothing more than to wield absolute control and authority over every human being on planet earth. In pursuit of this goal, he decides the way to achieve global domination is by launching a constellation of satellites that completely encircle the planet. After he has his “Iron Dome” of satellites deployed, he plans to use advanced AI and powerful lasers to target all critical infrastructure on earth.

Then, he makes his demand:

You must pay me $1 million or the world will end in a fiery hell!

— Evil Doctor Elon Musk

But before he can pull this off, the evil Dr. Musk has a few problems. First, that is going to be expensive. Those fricking satellites with laser beams attached to them do not come cheap. Second, people might get fussy about satellites with laser beams attached to them pointed at their heads. Third, maybe the good people of the world do not want a despotic, tech-obsessed leader holding them hostage for $1 million. What is an evil genius to do? To get his plan for world domination on track, evil Dr. Musk must first raise some money. Since he is an evil super-genius, he decides on a Master Plan. The Master Plan will ambitiously leverage “green” money to bankroll a car company, simultaneously invest in an AI startup, and launch (no pun intended) a space exploration company.

His evil genius sleight-of-hand will be to parade himself as a champion of the environment, a champion of open access AI, and a champion of a free and open internet. But, while doing this, he will simultaneously parade himself as a savior of humanity. “We must go to Mars!” will be his rallying cry. Instead of buying expensive homes and luxury cars, he will instead live in a pre-fab tiny home. His evil, super-genius mind knows the mid-wit earthlings he despises, drunk on decades of science fiction stories and lives of leisure, will eat this stuff up. If he sells it right and makes it all just bold enough to be possible, then while no one is paying attention, he can bring his evil plan to fruition. The best part? These moronic earthlings will actually pay him to enslave themselves! Brilliant! (Insert evil laugh).

If this were all true, then it would be very easy to characterize Elon Musk as evil, greedy, self-serving and maniacal. The problem is, the only one that can truly know if it is true or not is Elon Musk. The point is, if he is an evil super-genius, then chances are good he will lie to hide those evil intentions. Or we can just take him at his word, believe he is good, that his intentions are good, and he really is just a boy with a dream of saving humanity. Moreover, there still remains the distinct possibility Musk is a moron. The likelihood that human beings can become “multiplanetary” during Musk’s lifetime are functionally close to zero. Meaning, just because Elon Musk is a great salesman and engineer, it does not necessarily follow that he can overcome the major obstacles to living on Mars. Free market champions may blather about some invisible hand and the wisdom of markets, but free markets have never had a filter for bullshit.

The point of all this being, it does not matter if he is being greedy or not. No matter how you shake it all out, Mr. Musk is rapidly accumulating enormous wealth and power. He already has a constellation of satellites surrounding the earth. Partly because of that and partly because he has a fleet of escape velocity transport vehicles, he is also becoming deeply embedded with the U.S. military-industrial complex. Likewise, this satellite array also deeply embeds him in global telecommunications. This is all true without even mentioning that, with his acquisition of Twitter, he is now deeply embedded in global social media as well. Let us also not forget, Mr. Musk has his toes dipped in public infrastructure and energy production to boot. With all that in mind, do you remember the Charlie Munger quote from the beginning of this chapter?

“Never, ever, think about something else when you should be thinking about the power of incentives.”

When we focus on greed, or motivations, or outcomes, we are “thinking about something else,” as Mr. Munger says. Now recall from the section on Money, fiat currency (paper debt) is created when a bank loans money. This is roughly true, whether the bank is lending to itself, to the government, to a business, or to you. Then also recall from the section on Power, the name of the game we are all playing is tournament-style, competitive resource capture. In the very beginning, the resource to capture was other people’s stuff — fruit, wheat, shoes, goats — what have you. As that capture game matured, the resource became land and other people’s stuff. Further refinements to the game made the primary resources to capture gold and land. Today, the latest version of the game makes the resource sovereign issued paper debt. With enough paper debt, you can easily acquire all of the other pieces on the game board.

If you trace that all out, the game is to capture as much sovereign paper debt as you can. And, the way the rules have evolved, there is one primary source where powerful players can compete to acquire nearly unlimited sovereign paper debt: sovereign controlled banks. If the 2008 global financial collapse taught us anything, it was that if you become leviathan enough, the sovereign will do almost anything to keep you afloat. If we think about the power of incentives, what we can see from the “bailouts” of the last 40 years, the real incentive for all major players in the game is to become systemically important. To quote Mr. Charlie Munger again, “Show me the incentive and I’ll show you the outcome.” And, if we work backwards from that with Elon Musk, the outcomes lead me to believe he is following the exact same incentives that every other major corporate behemoth is: mass centralization of the sovereign’s critical resources. Or, put another way, he appears to be doing exactly what all of the other mega-corporations are doing. They are all aligning themselves in such a way that they can essentially hold the sovereign hostage.

Why do this?

Because that is the prize. To become the sovereign. To loosely quote Ayn Rand again, “Whoever says you must sacrifice to the state either is, or wants to be, the state.” Which traces us back to the discussion on power. The sovereign became sovereign because, through tournament-style competition, they wield a monopoly on coercive force within a geographically bounded area. Today, owing in large part to nuclear weapons, maintaining control of geographically bounded areas is a little trickier. Realistically speaking, there are only three truly geographically sovereign nations left:

1. The United States
2. China
3. Russia

No non-nuclear armed military can impose territorial control over any of those countries by force. Moreover, any nuclear armed military force attempting to do so faces the risk of mutual assured destruction. So, if you want to impose control of those territories, the only real avenues left are internal — either through politics, economics, or both. Remember, the name of the game is competitive resource capture. The way the rules of the game have developed over the centuries has created a very clear path to capture sovereign power: Gaining unlimited, unfettered access to sovereign issued paper debt.

Or, in the colloquial understanding, positioning yourself at the head of the line to pull fresh sheets off of the “money printer.” Which is, ultimately, a full-circle return to the grassroots of the game. A game that started in chaos and evolved into looting, then extortion, and on to the formalized version of extortion we call taxation. The same game that has refined into what is, for most people, a life-long scramble up a greased pole. The same game where the winners always sit atop the pole, set the rules for climbing, and everyone else pays them for the privilege of playing. The incentive today is to do everything you can to make sure the pole collapses if you are not on it. That incentive only exists for one reason, and one reason alone: Because the prize has gradually morphed into sovereign issued debt.

Choices

We can scarcely talk about incentives without spending a little time on choices. Unfortunately, when it comes to questions of choice, this necessitates an inquiry into the realms of rather nebulous topics around things like consciousness and free will. For those that have not bothered to run headlong down that rabbit-hole, the crux of the debate orients around the idea that, if you (one) does not truly have free will, then you cannot truly make a choice. The common perception is, that humans, of course, have free will. Our entire legal system is predicated on the idea that people can and do make choices of their own free will and volition. When we are angry, or even worse, disgusted with someone, it is often because we think and believe that they have chosen to do something offensive to us or someone else. But in that same vein, we also have much capacity for forgiving mistakes.

We also have much capacity for forgiving offense because of the other person’s intentions. To give a rough illustration, imagine you see a snake next to your best friend’s leg. In an effort to save your friend from the snake, you inadvertently knock your friend off balance. Because of this your friend falls into a puddle, ruining her favorite trousers. However, when your friend falls, it looks comical, so you begin laughing. This hurts your friend’s feelings, so she becomes cross with you. When you see she is cross with you, you protest. You say, “No, I am sorry for laughing, but I saw a snake right next to your leg.” Unfortunately, when your friend looks, she finds not a snake, but rather a stick. Your friend, who is still cross, says, “You moron, it is not a snake, it is only a stick. You have ruined my favorite trousers for nothing!” You protest again, saying, “I was not trying to ruin your trousers, I really thought there was a snake.”

The question I pose is, did you make a choice when you shoved your friend?

Some might say you just reacted and they would not be wrong. Others, like your friend, might say otherwise. She might say you chose to push her, even though you knew there was a puddle, and there was a very low likelihood of the object being a snake. She would not be wrong either — assuming you have free will, that is. If we presume you have free will, would it not follow that you chose to ignore the circumstances and chose an action that was unreasonable under those circumstances? Perhaps. But what if I told you that you are biologically wired to see snakes where there are none? What if I told you that human beings will almost instinctively react to the presence of a snake and that your actions were out of your conscious control? If that is true, then does it not also follow that, at least sometimes, you do not have free will? And if that is true, then how do you know when you do and when you do not have free will? Do you lose your free will only under circumstances like the snake? Or, can you lose your free will under other circumstances?

What if you are on drugs? What if you are sick? What if you have been misled? What if you are being coerced? What if the threat driving the coercion is fake or unrealistic? What if you are hungry? What if your hormonal levels have changed? What biological processes are involved when you make a choice? Dr. Robert Sapolsky rather elegantly lays this process out in a wonderful lecture. To quote the good doctor:

If we’re going to make any sense of these complex, context dependent behaviors of ours, we have to look at many layers.

From there, Dr. Sapolsky goes on to say that, if we are truly going to understand human behavior and choice, we must look one second before the decision, seconds-to-minutes before, hours and days before, through childhood and, ultimately, back millions of years. By the end of the lecture, and in response to an audience question, Dr. Sapolsky says:

I don’t think it’s possible to look at this whole range of ways in which our behavior is being shaped by biology — I don’t see there being a shred of possibility of free will being in there.

He goes on to say he has no problem with the notion of humans not having free will and no idea how the world can possibly work that way. I agree. It is highly problematic to consider a global society where people are not actually making choices rooted in their own volitional free will. Leaving that aside for the moment, this all begs the question, “What does this have to do with greed?”

In a word, I would say, “Everything.”

Greed is context dependent. Incentives are context dependent. Choices are context dependent. And, within those spheres, all of the context-dependent decisions that are made occur in layer, upon layer, upon layer. That said, in the greater discussion around Power, Money, Greed and Bitcoin, it is important that we evaluate as many layers as we can, as objectively as we are able. This, in a nut-shell, is the entire purpose of the first three parts of this book. It is a quest to better, and more objectively, understand what happened a second before, what happened an hour before, what happened a millennia before the game began. Indeed, to truly be thoughtful on the matter, we should explore what happened 250,000 years before. I think this is important, because we all live on this planet. As such, and the way things are set up, we are all subject to roughly the same rules of roughly the same game that we are all simultaneously and continuously playing — the game of competitive resource capture and control. In that game, we have billions of context-dependent, layered decisions made by billions of people. Among those billions of people, a relatively small number make the most consequential decisions for everyone else.

And they are just as bad at making those decisions as you and I are.

They are subject to the same biological forces, the same incentive structures, the same biases, the same emotions, the same complexity — the same everything. While I was at the London School of Economics, another Masters candidate lived above my flat. His research was on conspiracy theories and why they hold such enduring appeal. His conclusion was it is more comfortable for people to imagine being subjected to intentionally evil plans than it is for people to exist knowing all the horrible things that happen in the world come from chaos. Put another way, he reasoned it is more comforting for people to think an evil person is in control, rather than knowing everything is completely out of anyone’s control. When it comes to perceptions or accusations of greed, I think a similar thought process occurs.

Take, for example, the United States Federal Reserve (the Fed). In author G. Edward Griffin’s book, The Creature from Jekyll Island, Griffin contends the Federal Reserve was created from a “Master plan which was designed from top to bottom to serve private interests at the expense of the public.” The gist of the book revolves around the idea that the Federal Reserve was not created in response to banking crises and unstable banking, as is commonly portrayed in the economics textbooks. The secret meeting at Jekyll Island is, instead, portrayed as a conspiracy by a tiny handful of powerful men to establish a banking cartel. To do this, they drew up a “master plan” that gave them an unlimited and hidden ability to siphon wealth from John Q. Public. As noted in the section on Money, it is hard to say that the Federal Reserve system has created anything but an absolute mess of things. Yet, Mr. Griffin’s contention also violates Hanlon’s Razor — a razor that I am quite fond of.

Of course, no one alive today was at the meeting on Jekyll Island. Likewise, no one alive today participated in the founding and creation of the Federal Reserve. Nor is anyone alive that took part in the associated legal and political processes that occurred at that time. What we do have — among volumes of literature about this topic from that period — is a contemporaneous writing made shortly after the creation of the Federal Reserve. Henry Parker Willis wrote The Federal Reserve System in 1923 — ten years after the creation of the Federal Reserve. To his credit, Mr. Willis does a fine job of laying out the political scene from the perspective of a person on the ground in the years leading up to, and after, the formation of the Fed. The tale Mr. Willis weaves, by contrast, is not one of an elite group secreting off to a mysterious island to lay out plans for a banking cartel. Rather, Willis paints a portrait of a gridlocked Congress, unwilling to tackle the numerous issues surrounding the issuance and redemption of so-called “greenbacks” during and after the Civil War, completely misaligned banking interests between state and federally chartered institutions and struggles over the setting of value.

To wit, Willis writes:

The growth of a highly individualized system of banking management was in these circumstances to be expected . In later years , when banking reform discussion had reached a more advanced stage, the reluctance, or even refusal, of the more influential bankers of the country to accept any responsibility for institutions other than their own was an outstanding element in the general situation.

In the beginning of the banking reform discussion, this reluctance was still nebulous; and, had there been an effort to direct banking thought into scientific channels, a very much earlier advance toward actual improvement might have been made. The struggle over the question of a standard of value, the attempt to substitute the silver dollar — worth at the time perhaps 50 per cent of the gold dollar, which had in effect come to be the established standard of value — is of political rather than of economic, or banking, significance.

In fact, Willis was the first Secretary of the Federal Reserve. Fans of Jekyll Island will, no doubt, assume this makes Mr. Willis an unreliable source. I, on the other hand, find his writing to be thorough and thoughtful. It also happens to align well with very solid modern scholarship on American banking. Calomiris and Haber paint a very similar picture of a deeply fractured unit-banking system that was torn between sharply divided factions and, as a result, was also incredibly fragile. As noted in the section on Money, the United States banking system was formed from rough and tumble beginnings. Keep in mind, the country had just come out of a complete, all-out shooting Civil War only 40 years before the founding of the Fed. For a bit of perspective, Abraham Lincoln was as distant a memory to the founders of the Fed as Ronald Reagan would be for you and me. Nevertheless, since the founding of the country, and very much unlike the “old world,” populist agrarian banking interests were powerful in the United States. They wielded as much — if not more — political capital and sway as the so-called “elites” of the old world banking order Griffin wrote about in Jekyll Island. Republican politicians of the time ran on a platform of sound money. However, when it came time to actually implement those sound money fixes, they routinely punted. Why? Because those same, bitterly divided urban and agrarian banking elites did not want the Republicans (or anyone else) tinkering with their profit models — economic stability be damned. With that political and economic gridlock in mind, Calomiris and Haber go on to say:

The creation of the Fed required a set of compromises that reflected the power of particular constituencies rather than the economic intentions of the Fed founders. First, despite the recognition of the superiority of a branch-banking system, the founding of the Fed did nothing to reform the particular market structure of America’s unit-banking system. That was not an unintended consequence: the creation of the Fed required the support of unit bankers and their political allies.

Let us pause here for a moment and trace back to the conversation about Elon Musk in the last chapter. Elon Musk has hidden information: his motivations for acquiring massive wealth and power. A conspiratorial person could very easily create a narrative much like the one I crafted in the previous chapter. The one where Elon Musk is secretly a diabolical genius, hell-bent on world domination so he can hold us all hostage for $1 million. In fact, a clever and well-versed conspiratorial person could even write a book about it. They could pull in all kinds of anecdotes, interviews with friends, emails from the past, place it all in any context they desire, and easily paint a very reasonable picture of an Evil Dr. Elon Musk. Likewise, another biographer could also paint a picture of Elon Musk that shows a man deeply committed to saving humanity, valiantly struggling against legacy car manufacturers and the legal apparatus that supports them while locking upstart competitors like Musk out. This biographer could show a man that overcame political obstacles, financial obstacles, mockery, disbelief, and near bankruptcy to create an industrial empire. A very reasonable narrative that paints this savior of humanity as a man who lives frugally and humbly, all while his eyes are firmly affixed on the long-term goal of making mankind multiplanetary. I posit the same possibilities are here for the Federal Reserve.

A conspiratorial person can easily write a book that sounds quite reasonable. As the story goes, a group of powerful, elite men met in secret to implement a plan for the domination of the entire global financial system, while ensuring their legacy wealth remains unchallenged. Likewise, another person could paint a picture of a group of people facing a deeply divided country, healing from a catastrophic civil war, struggling with a fractured, unstable banking system and a political class hell-bent on protecting their cronies. A group of men trying desperately to find a way to patch up the bloody mess, so they can stabilize the national finances, and finally bring the USA into the modern era of science. Keeping in mind, of course, these men are also trying to do all of this right on the heels of the massively debt-inducing Spanish-American War. Would it not be possible that the Federal Reserve really was a compromise solution that just barely got over the line politically? Would it not be possible that powerful men might meet in secret to try and figure out a way to make that work because they could all recognize the system they had was a mess? There is that hidden information problem we were talking about.

The point is, it is quite easy to manufacture a narrative that grants powerful people supernatural abilities to effortlessly guide world events. The reality is often quite a bit less fantastic. The reality is political and economic systems in competitive resource capture economies are highly complex, deeply interwoven, and have incredible momentum driving them. In the midst of that complex, interwoven mess are very fallible, imperfect, biased, moronic, short-sighted, overconfident people — just like you and me. People doing their level best to make decisions and implement solutions that are almost always terrible, never complete, and often leave more problems in their wake than they solve. Of course, this does not mean that every person in that mix is doing everything with the best intentions. It does mean that the people trying to do the “right” thing also have a problem with hidden information. In their case, the hidden information crops up when they are dealing with every other person involved in the endeavor that may or may not be trying to do the “right” thing as well.

Remember Hanlon: “Never attribute to malice that which can be adequately explained by incompetence or stupidity.”

When we talk about the choices people make, whether at the Federal Reserve, in the halls of Congress, or in the board rooms of the major corporations, it is imperative we judge objectively. But that objectivity requires humility on our part. The recognition that we do not have all the information. The understanding that, more often than not, there are no good choices to make. The allowance for the unanticipated or unintended knock-on effects for every choice that does get made. And, ultimately, the awareness that these choices, these decisions and these outcomes are wholly incentivized by the game we are all playing.

The flawed incentives are inherent to the design of the game. As alluded to in the section on Power, human beings managed to live quite well for 250,000 years without engaging in coordinated warfare. They managed to exist without market economies. They managed to exist without money. There are still tribes of people today that live much the same way. Nevertheless, about 12,000 years ago is arguably when the trouble begins. That trouble just happens to coincide with the time that agriculture and animal husbandry are introduced into human society and, ultimately, is spread out among hunter-gatherers. And, depending on who you ask, the development of these practices could invoke ancient, unknown societies sharing knowledge, a gradual understanding of farming, or some other means of skill acquisition. Regardless of the origins, what is generally clear from the research is agricultural practices and animal husbandry resulted in far higher population densities, which consisted of far unhealthier humans. Meaning, despite agricultural practices being suboptimal for individual human health, they are supremely optimized for broad scope human thriving. With all of this in mind, I think a few things that have been asserted thus far can be even more comfortably reasserted here:

1. Agriculture and animal husbandry became widespread
2. Which created conditions primed for violent conflict
3. That resulted in the creation of rules to manage those conflicts
4. But also created conditions primed for human thriving
5. Which resulted in increasingly large and complex rule-based societies.

What we might deduce from this are a couple of things. Given the scant, but compelling evidence that widespread, coordinated conflict was low to non-existent among hunter-gatherers, it is possible that either agriculture creates a resource capture incentive, or agriculture creates so many people that they inevitably just start fighting. From my perspective, and given that we have thousands of modern examples of incredible concentrations of people living side-by-side in peace, I do not think it is simply because the population grew. Moreover, as I found in one of my early research papers on intentional homicide, the highest rates of homicidal violence occurred in poor countries with high income-inequality and high rates of adherence to vengeance based Abrahamic religious traditions. Put another way, what that paper, and indeed what history has shown is, if you want to create conditions for violent conflict, make most people poor, have a few at the top with a lot, and have a deep admiration for the notion of taking an eye for an eye.

The trouble is, those conditions are apparently only created in competitive resource capture economies. The even larger trouble is, because it has been a game of competitive resource capture for so long, it is taken for granted that this is all “normal.” But that is an erroneous assumption. The entire structure of modern society may well be built upon what essentially amounts to a several thousand year process of compounding errors. Just going by pure health metrics, hunter-gatherers work less, are better adjusted emotionally, and are more physically fit and healthy than their agriculturally based counterparts. Hunter-gatherers were also a very stable population — estimated to be around 6–10 million globally — for about 150,000 years. There was a population “boom” some 50,000 years ago, as tool making and clothing improved. But the human population absolutely exploded with agriculture 12,000 years ago. This is also when we started competing for resources. It rather appears that competition for resources in an agricultural setting is an abnormality from a behavioral standpoint. The remarkable thing about it all is, despite the historical abnormality, the rules for competition have now been so thoroughly refined, we have collectively managed to stumble right up to the gates of making the game work.

Decisions, decisions

Rationality is a widely utilized assumption in economics. Rationality also just happens to be an arguably less than useful, and grossly over-utilized term in economics. As Professor Hammond says in the linked paper, “Constructing a realistic descriptive model of behavior is perhaps more of a task for psychologists than for economists.” Yet, armed with this admission, Hammond and indeed, the entire field of economics, goes bounding off into the woods in search of said model. Once immeshed in the dark wilds of the human psyche, they desperately search for the rhymes and reasons behind why people make economic decisions. From the Econ 101 normative foundation of rational actors maximizing outcomes, the theories have morphed to ideas of bounded rationality, on to game theoretic Nash Equilibriums, various stage-based models, before middling through the minefield of heuristics and biases, and then trundled off into subjective expected utilities and other “descriptive” models. All the while, and underneath it all, is the rather uncomfortable proposition that people just do stuff because they think it is a good idea at the time, with the even less flattering prospect that what people think is often quite dumb.

Ultimately, understanding the process of making a decision is arguably far less impactful than the results of the decisions that are made. Nevertheless, the biggest problem with all of the various and varied economic theories is the niggling little problem of falsifiability. For those unfamiliar, the idea revolves around the criterion for scientific inquiry put forth by Sir Karl Popper that says a theory can only truly be scientific if it is possible to prove false. It would be a near impossibility to, for instance, falsify the concept of “subjective expected utility.” It would be impossible because there would always be an observable instance of someone behaving according to that criteria and no objective way to disprove the cause of that behavior. Put in a more disparaging light, it seems to me the entire field of economics more appropriately belongs in the realm of the metaphysical inquiry rather than any scientific one.

What is readily observable, however, is the ability for an actor to be able to reliably, and repeatedly, modify the behavior of another actor by altering their incentives. “Give me one of your pigs or I will bash your head in” is a brutish, but simple example of incentive modification. Of course, one could fritter about, extolling the process of this economic actor determining the “subjective expected utility” of not getting conked on the head versus giving up a pig. The observable reality is there is a high likelihood of compliance with that demand, which only increases with the credibility of the threat. Moreover, there is also an observable reality that says a select few will resist, perhaps to their serious detriment — and, then again, perhaps not. Indeed, it is quite possible they will prevail. The broad point being, much of the behavior explored by the economists and philosophers is likely closer to gambling than anything else.

As a gambler finds in a casino, the house has a number of incentives they can use to encourage or retard the behavior of their patrons. Indeed, many of those incentive structures have been well documented and researched. An infamous and related example even ended up as the subject of a Nevada Gaming Commission court case. The core structure of the casino environment is one that is constructed entirely with gambler incentives in mind. Everything from the decor, to the food, to the floor design and lighting and everything in-between — they are all crafted to incentivize gamblers to stay as long as possible. Even when they are broke, or tired, or indeed, spending their next month’s rent. Keeping in mind, of course, that this environment is built within the confines of enormous structures that clearly cost a lot of money to build and maintain. Meaning, everyone who walks through the door is, or should be, immediately on notice that the profit margins are clearly high enough to warrant these exorbitant expenses and that the money in their pocket is the only possible source of those profits.

Within the discussion at hand, when we are talking about greed in the human structures of power and money, there is a distinct line of scholarship devoted to the idea that the entire pseudo-capitalist structure underpinning the global political economy is really nothing more than a giant casino. Unlike a walk-in casino, however, the global political economy casino is not one we can simply leave. Rather, the opposite is true, and the sovereign — your sovereign — demands that we all both play and pay under penalty of death. As Susan Strange writes in Casino Capitalism:

The Western financial system is rapidly coming to resemble nothing as much as a vast casino. Every day games are played in this casino that involve sums of money so large that they cannot be imagined. At night the games go on at the other side of the world. In the towering office blocks that dominate all the great cities of the world, rooms are full of chain-smoking young men all playing these games. Their eyes are fixed on computer screens flickering with changing prices. They play by intercontinental telephone or by tapping electronic machines. They are just like the gamblers in casinos watching the clicking spin of a silver ball on a roulette wheel.

It is, perhaps, disingenuous to relegate the entirety of the global political economy to the ranks of a vast 24-hour casino. But the underlying logic may certainly help explain some of the madness that is otherwise attributed to nefarious secret cabals of lizard people. The reason this underlying logic may prove helpful relates to a notion many find quite troubling. The notion that much of what passes for success may, in fact, be more attributable to simply getting lucky.

Chaos and luck

There is an old saying, “Luck is what happens when preparation meets opportunity.” It is widely credited to Seneca, but the provenance of the quote is disputed. A similar quote, attributed to Samuel Goldwyn says, “The harder I work, the luckier I get.” In the first quote, the core idea is, if you are sufficiently prepared, when an opportunity comes along, you will be in a position to capitalize upon it. In the second quote, the core idea is, if you work hard enough, more opportunities will present themselves. These are perfectly reasonable assumptions. They also comport well with common experience. Intuitively, they also serve as a mild cautionary against another deadly sin, sloth.

Obviously, if you are indolently lazing about, the likelihood of you becoming successful is dramatically decreased. This, of course, depends heavily on your definition of success. Nevertheless, begging for beer money on a street corner is clearly not going to prime you for successful outcomes. That is one end of the scale. At the other end of the scale, however, we also run into problems. Is it possible to work incredibly hard and still be grotesquely unlucky? Of course. It is indisputable. Likewise, is it possible to be incredibly well prepared for life and never have an opportunity to put that preparation to good use? Certainly. This too is indisputable. The point being, I think it largely indisputable that luck plays some role in everyone’s lives, good or bad.

Yet when we are talking about luck, what exactly are we talking about? Are we considering luck a force, a circumstance, or plain randomness? Likely, we are discussing all three at once, depending on the context, our particular ideological or philosophical bend, and how superstitious (or not) we may be. And if this is true, then perhaps, the most troubling aspect of luck is that it is impossible to pin down. The thing is, the core concepts are not locked into isolation when discussing human interaction. Indeed, chaos theory is very much rooted in very similar questions. Is chaos a force, a circumstance, or plain randomness? The reason I invoke luck here is because of the little problem we humans have with causal inferences and patternicity. Just as an aside, patternicity is also referred to in the medical literature as apophenia.

Causality and causation are slightly different sides of the causal coin. Causality is “an existing relationship between the effect and what it was caused by (object, state, or process).” By contrast, causation simply means to be the cause of something. In legal terms, causation is further broken down into factual, or actual causation and proximate causation. As a first-year law student can tell you, the “but-for” test is the means by which a court will determine actual cause. Meaning, but for the act, the result would not have occurred. While this may sound simple enough, legally determining cause is actually a bit of a trip down the old rabbit-hole. This is where the concept of proximate causation comes in. Proximate, or legal cause, tries to roughly sketch out the boundaries of causation from a legal liability standpoint.

For example, you could say, “But for John Wilkes Booth being born, Abraham Lincoln would not have been shot.” If we were really pedantic about things, we could say that John Wilkes Booth’s parents were the “cause” of Lincoln’s assassination. Of course, no one in their right mind would suggest this is a fair, or even logical outcome. This is where proximate or legal cause comes in. Within that line of reasoning, there must be an identifiable sequential connection between the cause and the outcome. For instance, in the John Wilkes Booth scenario, the sequence of events between his birth and his decision to shoot Lincoln is very far removed. Meaning, that time span breaks the causal chain of events. Nevertheless, in this example, the cause is relatively straight-forward. But for John Wilkes Booth pulling the trigger, Lincoln would not have been shot. Easy enough. But what about this scenario? The following is taken from a famous tort law case, Palsgraf v. Long Island Rail Road:

Plaintiff was standing on a platform of defendant’s railroad after buying a ticket to go to Rockaway Beach. A train stopped at the station, bound for another place. Two men ran forward to catch it. One of the men reached the platform of the car without mishap, though the train was already moving. The other man, carrying a package, jumped aboard the car, but seemed unsteady as if about to fall. A guard on the car, who had held the door open, reached forward to help him in, and another guard on the platform pushed him from behind.

In this act, the package was dislodged, and fell upon the rails. It was a package of small size, about fifteen inches long, and was covered by a newspaper. In fact it contained fireworks, but there was nothing in its appearance to give notice of its contents. The fireworks when they fell exploded. The shock of the explosion threw down some scales at the other end of the platform, many feet away. The scales struck the plaintiff, causing injuries for which she sues.

The question is, what caused her injury? The scales falling, obviously. But what caused the scales to fall? The fireworks, right? But what caused the fireworks to go off? They went off when they hit the ground. So, gravity is the culprit there. But what caused the fireworks to hit the ground? Was it the pull from within by the guard, or the push from without by the other guard? Was it the man being late and trying to catch the train? Was it because he did not pack his fireworks very well? It gets a little tricky, does it not? This is important in context, because it is generally within the realms of scientific inquiry or in the assignment of legal liability that causal claims are ever rigorously tested. This is arguably why so few truly understand causal mechanisms. Or, rather it should be said, so few are ever confronted with a need sufficient enough to objectively map out a causal connection.

Meaning, when it comes to determining causality, overly simplistic heuristics tend to dominate. Nevertheless, and returning to chaos theory, a popular idea emerged a few decades ago, colloquially referred to as the Butterfly Effect. The pop-culture understanding of the Butterfly Effect emphasizes large outcomes from minute inputs. This is evidenced by a movie reference in Havana, where the star says, “a butterfly can flutter its wings over a flower in China and cause a hurricane in the Caribbean.” Indeed, this version of the idea shows up in a number of films, including a film named The Butterfly Effect. But, as the linked article notes, the author’s intent was rather to:

Illustrate the idea that some complex dynamical systems exhibit unpredictable behaviors such that small variances in the initial conditions could have profound and widely divergent effects on the system’s outcomes.

I bring this all to your attention here because causality, causation, and indeed, luck all have a profound impact on context and perception. This is especially true in the realm of success, which becomes even more important to understand in the context of a resource capture game predicated on violence. Recall from earlier chapters, there is a common perception and understanding of the world that says, “Life is a competition for scarce resources.” This idea has a certain intuitive appeal and it ignores one very real possibility that the entire earth may well fit the definition of a singular organism. And if that is true, then this “competition” may actually be a means to achieve and maintain homeostasis within that organism. Again, if we are to invoke some sort of “first principles,” indeed, it would be imperative to sort this issue out.

Since no one has — or is even able to — then we are left with subjective observations and academic dithering and debate to guide any inquiry. I return to this idea here because there is a natural tendency to assign some form, or combination, of causal factors to successful participants in any competition. Whether it is football, poker, physical combat or business, if you ask the winners, “Why were you successful today?” they will invariably point to something they did to bring about the outcome. They will say they worked hard, trained harder, were more focused, more dedicated, had God on their side — the list is virtually endless. What you will rarely hear is someone say, “I just got lucky.” Yet given the endless possible combinations of factors in any competition, this is almost always the most honest answer. I give Jeff Bezos an enormous amount of credit for admitting as much about the success of Amazon — a position he maintains to this day.

On a related note, there is a young man that rose to internet infamy by declaring he was a millionaire and was going to chuck it all to start over. His intention was to demonstrate how he could make a million dollars again starting from nothing. He even dubbed it the “Million Dollar Comeback.” Spoiler alert, the experiment did not quite work out that way. Rather, after enduring enormous hardship, he made about $65,000 and gave up. Keep in mind, this young man, by all outward observations, has all of the essential character traits that are generally embodied by successful people. He appears to be very open, conscientious, agreeable, extroverted and low in neuroticism. He is also a young man that has entrepreneurial experience, is technologically capable, highly intelligent and is young and in good health.

Yet despite all of this, he catastrophically failed at achieving his stated goals. While people may, and do, criticize his intentions, his ability, the veracity of the experiment and any number of other things, his core problem can be boiled down to survivorship bias. One of the more famous examples of survivorship bias occurred during World War II. Allied air commanders evaluated planes that had been shot up and returned to the airfield. They observed where the majority of bullet and fragmentation holes were located and then decided to add armor to those sections. A mathematician named Abraham Wald pointed out their error. They were selecting areas to add armor based on planes that made it back. What they needed to do was add armor to the areas of the plane that were hit and caused the plane to go down. Meaning, their bias in determining armor placement occurred because they were incorrectly relying upon the survivors of a selection process and failed to account for the failures.

Survivorship bias shows up everywhere. It occurs in finance, sales, mate selection, you name it. The net effect is people misattribute a causal relationship based on a highly-biased sample — namely the survivors of a selection process. To put this into the context of the “Comeback Millionaire,” the mistake he made was to assume his success was solely related to his inputs, namely hard work, dedication, and determination. What he failed to recognize are the thousands and thousands of other similarly situated, similarly possessed people that undertake the same endeavors and fail. Meaning, he survived a selection process (becoming a millionaire at a young age) and assumed that is replicable because he failed to account for all the people that have tried and failed to do the same.

The same process can roughly be observed in reverse. The “Swiss Cheese Model” describes a series of security failures that result in a harm occurring. This is commonly invoked in medical settings, but is also applicable to industrial accidents, airplane crashes, and indeed, even the fight sciences. The idea is, safety and security processes are implemented in layers. The reason for this is so that one failure, or even multiple failures, in safety and security procedures does not result in a catastrophic system failure. In the case of an air crash, for instance, planes do not simply fall out of the sky for no reason. Rather, a crash is often precipitated by multiple failures on multiple levels. With the right combination, the holes in the Swiss cheese can eventually line up and create conditions where a crash becomes inevitable.

This is the rough reverse of survivorship bias because it implicates a very similar process for success. Meaning, to be successful in any competitive environment, on some level, the holes in the cheese have to line up in your favor in order for you to prevail in the competition. Survivorship bias shows up when people assume the holes will always line up in their favor because the holes lined up for them in the past. When we are talking about a game of competitive resource capture, however, survivorship bias becomes highly problematic. This is especially true when the competition itself is predicated on the use of coercive violence to capture those resources.

In any sort of combat, the most trivial of input alterations can have outsize impacts on combat outcomes. For example, in a well-publicized mixed martial arts (MMA) match between Jose Aldo and Conor McGregor, the two combatants entered the ring as evenly matched as can practically be accomplished. Both men spent an enormous amount of time and resources to prepare for the match. Both men had a demonstrated track record of success in competitive MMA. And when the bell rang, Mr. McGregor knocked Mr. Aldo out with one punch 13-seconds into the match. Keep in mind, this is a highly controlled environment, where the competitors are literally weighed before the competition in an effort to ensure the fairest possible fight. Had Mr. Aldo’s head been turned slightly towards one direction or another, the fight may well have continued. Had Mr. McGregor thrown the punch a quarter-second later, perhaps the fight would have continued as well. This is not even mentioning that Mr. Aldo also connected with a very similar punch milliseconds after Mr. McGregor’s punch landed. On that night, in that ring, the holes in the Swiss cheese lined up against Mr. Aldo. Or, conversely, the holes in the Swiss cheese of success lined up in favor of Mr. McGregor.

It really just depends on your point of view.

The point being, leading up to the outcome, there were unlimited possibilities that could never be fully accounted for by any amount of training, preparation, dedication or determination. There is an old adage among gunfighters that says, “Gunfighting is a game where you can do everything right and still lose.” This adage holds true in every single instance of violent combat because forces of chaos can, and routinely do, overwhelm the best of preparations. In the context of the discussion at hand, the trouble arises when the victors of violent resource capture competitions assume, or presume, their success is attributable to their innate ability, divine providence, purity of purpose, or any number of other things that are far better explained by forces of chaos. Meaning, there is no concrete, legitimate reason to be deferential to the victors of any competition. They may perform admirable feats. They may be exceptionally dedicated or determined. But that does not inherently distinguish them from the thousands, if not hundreds of thousands of other people that have done the same, but were not victorious, or even particularly successful.

Yet our society, and indeed, the entire global political economy is predicated on exactly that model. A model that reifies the demonstrably false idea that, “only the strongest survive,” or that the “cream always rises to the top.” This simply is not true. The more accurate, and certainly less flattering reality is, more often than not, the Swiss cheese just happened to line up for the winners. And once in the winner’s circle, no one pays attention to the thousands and thousands of similarly talented, similarly situated losers left in their wake. But just because the Swiss cheese lined up does not necessarily impart some sort of advanced knowledge, ability, skill, or anything else to make those winners any better than any of their competitors to make rules. In fact, and more likely than not, the people deeply embroiled in the trappings of survivorship bias are probably some of the least best people to be making rules for the governance of a highly complex agrarian society.

Much like discussions around free will, any discourse on the role of luck in success is often met with vehement disagreement. I think even entertaining the notion runs afoul of deeply held beliefs about human beings and the fundamental nature of reality. This is perfectly understandable. At smaller scales, the notion of putting forth effort and seeing the resultant output is a readily observable reality. If I take the time to learn how to woodwork and then build a chair, it would be ridiculous to say it was luck that created the chair. Professor Robert H. Frank of Cornell does a wonderful job of breaking down the role of luck in his book, Success and Luck: Good Fortune and the Myth of Meritocracy. I mention it here because it does a fine job of highlighting some of the more problematic cognitive biases that lead to the reflexive revulsion against the notion of luck being a determining factor in success.

Nevertheless, I will say, of course, it is not simply a matter of luck for someone in the middle of the curve to achieve success that has a proximate causal relationship to their effort. What I am demonstrating here relates to the tails of the curve — thus, the Swiss cheese model. The takeaway should be that, when we are talking about very rare success in very complex competitions, it is a fundamental error to presume it is the conscious inputs of the victorious that led to the outcome. As Frank writes about Bill Gates:

In short, most of us would never have heard of Microsoft if any one of a long sequence of improbable events had not occurred. If Bill Gates had been born in 1945 rather than 1955, if his high school had not had a computer lab with one of the terminals that could offer instant feedback, if IBM had reached an agreement with Gary Kildall’s Digital Research, or if Tim Patterson had been a more experienced negotiator, Gates almost certainly would not have succeeded on such a grand scale.

The point being, when it comes to things like outcomes of the great wars in history, political machinations, the outcomes of assassinations and assassination attempts, the squirrelly paths of seizing power, the leaders that emerge and the rules they create — these cannot coherently be attributed to anyone’s particular personal characteristics. Under the influence of hindsight bias, they can become the source of ideological and political narratives, but they hold no meaningful place in a rational discourse about economics, political economy, or indeed, money. Which is to further say, and keeping Hanlon’s Razor in mind, much of what is attributed to greed is just as likely attributable to survivorship and hindsight biases that favor the victors in competitions that are largely determined by luck. Or, put simply, when we reify the victors, as a practical matter, we may just as well be reifying an exceptional lottery winner.

Waste

In Blackstone’s Commentaries on the Laws of England, Blackstone briefly and sporadically touches upon the duty of people born into the nobility. Writing first that the “inferior” classes may not have the time or inclination to study the rules, “Those, on whom nature and fortune have bestowed more abilities and greater leisure, cannot be so easily excused. These advantages are given them, not for the benefit of themselves only, but also of the public.” Bear in mind, this was written during the rapid ascendancy of the British Empire. Thus it would have been at a time when it seemed to many amongst the nobility that Britain truly was destined to rule the globe. Yet in this quote is a reflection of something thoughtful. The idea that the landed and learned classes were not just there to look pretty and squander wealth. Rather, and because of their station, they owed it to the people to use their time and energy to learn about the world and make life better for the people of England.

By the time the sun did finally start setting on the British Empire, that thoughtful purpose had slowly degraded to the rather crude notion that the nobility was just there to look pretty and provide the commoners with jobs keeping their estate houses running. There is a largely accurate portrayal of this attitude on display in the television series Downton Abbey. This is all noteworthy here because of what ought to be the readily observable waste of resources involved in creating and supporting a noble class. To put it in perspective, Highclere Castle, which is fictionalized as Downton Abbey in the television show, sits on a 1000 acre tract, while the entirety of the estate sits on 5000 acres. Highclere boasts some 200–300 rooms, encompasses 30,000 square-feet, and features neat things like a hand-carved staircase from solid oak, a mile-long driveway, and is worth north of $200 million. An entire village was relocated when the Second Earl of Carnarvon decided the estate needed more room for gardens and whatnot. To maintain this opulent structure requires roughly $1.5 million per year. All of this to give, at its peak, around 100 locals a rather meager existence as employees of the estate.

Keep in mind, the forefathers of those locals would have lived in the “Area of Outstanding natural beauty” that they lost access to when the Earl moved them out. What the Earl got for the commoner’s trouble was 2000 arable acres, and around 1500 acres each of park- and woodland. These nobles put this arable land to good use though. They raise a significant crop of oats, which they use to supply “leading racehorse owners and trainers.” The estate, through rights of heritable property, has been handed down for generations. Meaning, the current occupants own it simply because they were born. They did, quite literally, nothing to enjoy the advantages and life of leisure that Sir William Blackstone spoke about in Commentaries. If one steps back and considers the amount of time and labor that has been devoted to the construction of the various structures that occupy this area of outstanding natural beauty it really ought to be quite astonishing. The current structure of the castle was built in the late 1700s. Meaning, all the lumber, the materials, the glass, the nails, everything was built by hand, without power tools. The material was harvested and moved by animal and human power. All in pursuit of the life of leisure that should, according to Blackstone, give these fine folks the time to think about how to make the world a better place.

Oddly, apparently no one stopped to consider that, perhaps, not wasting all of that time and all of those resources to begin with might be a good idea. In terms of improving the lot of the commoners around you, it would seem self-evident that creating enormous estates and manor houses should probably take a back seat to even the barest philanthropy. But, alas, this was not so. Moreover, Highclere Castle just represents one stately home. Throughout the United Kingdom, to this day, are another 3,700 stately homes, 95% of which are hereditary and privately owned. Since we are on the broad topic of greed, this is as good a time as any to ask, did the nobility build all of this opulence and grandeur simply out of greed? Is this behavior evidence of “A selfish and excessive desire for more of something (such as money) than is needed?” Or, is this evidence of what Ayn Rand was talking about when she said, “Since time immemorial and pre-industrial, ‘greed’ has been the accusation hurled at the rich by the concrete-bound illiterates who were unable to conceive of the source of wealth or of the motivation of those who produce it.” Is the English nobility evidence of the hard-work and motivation required to create wealth? Or, was Ms. Rand talking about someone or something else?

Were the villagers upended by the Second Earl of Carnarvon merely a bunch of mud-bound illiterates? How many of those mud-bound illiterates supported and reified the Second Earl of Carnarvon when they either agreed, or were forced, to relocate? Are there not millions, if not billions, of people around the world that still admire and follow the English monarchy to this day? Objectively speaking, why should the English nobility command and control vast real estate fortunes and spend such exorbitant sums of public money on funerals and coronations? Are they just greedy little goblins? Of course, it is entirely possible that generation after generation of English nobility are simply people that just happen to be born obsessed with “A selfish and excessive desire for more of something (such as money) than is needed.” And it is also entirely possible that generation after generation of English nobility are people that are born naturally able to meet the requirements to be “the source and motivation to create wealth.” Neither strikes me as terribly coherent narratives.

This is especially true given the readily observable and, dare I say, catastrophic waste of resources involved in the creation and maintenance of the intricate human social structure of nobility. With this in mind consider, for a moment, this lengthy passage from Sir William Blackstone’s Commentaries:

If man were to live in a state of nature, unconnected with other individuals, there would be no occasion for any other laws, than the law of nature, and the law of God. Neither could any other law possibly exist; for a law always supposes some superior who is to make it; and in a state of nature we are all equal, without any other superior but him who is the author of our being.

But man was formed for society; and, as is demonstrated by the writers on this subject, is neither capable of living alone, nor indeed has the courage to do it. However, as it is impossible for the whole race of mankind to be united in one great society, they must necessarily divide into many; and form separate states, commonwealths, and nations; entirely independent of each other, and yet liable to a mutual intercourse.

Blackstone mentions the “law of nature” 27 times in Commentaries on the Laws of England. Bear in mind, Commentaries is one of the great texts of the English Common Law. Abraham Lincoln, well known for his self-directed study and eventual acceptance to the bar, almost certainly read Blackstone, despite it being dated by 70 years when he read it. Underpinning the judicial philosophy and common understanding of the rules of the game was the rather (at the time) uncontroversial idea that everything in the world was governed by the “law of nature” or by God.

But what is this law of nature that Blackstone references? It turns out, if we peel back the pages of history a bit, we find the medieval thinkers, philosophers and scientists of the time had a very different conception of things than we do now. Scarcely a surprising statement, and yet, it matters in the context of the discussion at hand. For the medieval scholar, the central idea was that:

Everything in Nature had a place, associated with each place was a norm. Different creatures had different norms to which they were expected to adhere: but to every sort, an ideal pattern of behavior was there. Within the embrace of Nature as a whole, every type of creature had its own ‘nature’, which was a sort of way of conducting itself, a style of being that was proper to it.

Not only this, everything in nature had a purpose as well. Deviations from these norms, these places and these purposes was thought to bring about negative outcomes, or was a source of calamity. This line of reasoning gave birth to the idea of the laws of nature. This notion says that all things strive to obey their natural behavior, purpose and place. To be clear, this is not to say that medieval thinkers ascribed purposeful action to things like rocks or plants. It is rather closer, but still somewhat inaccurate, to say that everything had a purpose assigned by God. Within that purpose, all things “strived” to adhere to that Godly purpose. Reason, it was then presumed, was there to give guidance to understand the nature of things — to “discern the truth about our nature.”

As I risk trundling off into the wilderness here, I shall return to the matter at hand. The broad point of this lengthy exercise is to draw attention to the mechanisms by which medieval thinkers very reasonably created incentive structures that favored class distinctions. These mechanisms are printed right on the pages of Blackstone’s Commentaries for all the economists, historians and anyone else interested in the political economy to see. Yet scant weight is given to them. I highlight them here for the singular purpose of describing why the nobility probably was not greedy, nor were they necessarily particularly adept at being “the source and motivation to create wealth.” While we may scoff at the notion, the broadly accepted idea at the time was that all things had a nature to which they must all strive to obey. If an heir, hundreds of years removed from his competitive resource capturing forbearers, is born into that family, does it strain medieval reasoning to believe that his “nature” is going to be different than that of the commoner who was not? If the laws of nature dictate what purpose all things must be striving for, then certainly one born high will have a different purpose than one born low.

Moreover, once it is established and widely accepted that, “it is the laws of nature that dictates some are nobles, while most will not be,” then it makes a lot more sense why nobles must do noble things. The laws of nature command it. Likewise, if the laws of nature are such that the commoner is to be beholden and in servitude to the nobles, then of course, it is the natural order of things for them to do so. This, perhaps, may seem trite. Indeed, the original Star Trek series rather overtly explored very similar ideas. Nevertheless, it does not strain credulity to say that, perhaps, the nobles did not build grand palaces and expansive estates because they simply had a “selfish and excessive desire for more of something (such as money) than is needed.” Rather, and quite plausibly, they did these things because they very reasonably thought that is exactly what the laws of nature compelled them to do. And the commoners basically went along with it because they very reasonably thought that is what their nature compelled them to do as well. Likewise, the acquisition and utilization of exotic and valuable resources, the capture of land, the relocation of villages, the demand for opulence was, and is apparently still to this day, not objectionable because it is not perceived as wasteful. It is still, arguably, perceived as adhering to the laws of nature to this day. Indeed, the fact that nation-states still exist lends a lot of weight to the idea that we are all, collectively, still operating under these “laws of nature” that Blackstone laid out nearly 300 years ago. Recall, Sir Blackstone said:

However, as it is impossible for the whole race of mankind to be united in one great society, they must necessarily divide into many; and form separate states, commonwealths, and nations; entirely independent of each other, and yet liable to a mutual intercourse.

With that in mind, it begs the question, “Is this true?” If you (or I) randomly asked a stranger on the street, or indeed, if we ask ourselves, “Is it possible for modern society to function without national borders?” What answer do you think will come forth? Given the current political focus on migration and immigration issues, I think it fair to say that most embroiled in that discussion would agree with Blackstone. Yet Blackstone writes these lines in deference to the “laws of nature” that can, and have been, definitively disproven. No scientist today would say with a straight face that rocks have a “nature” they are striving to fulfill.

This is far more important to consider in the grand scheme of things than may be apparent at first blush. When I wrote earlier that the development of modern society may well be a centuries long process of compounding errors, this is but one example. The trouble is, entertaining a discussion such as this is largely academic. There is, quite literally, nothing to be done, save for taking a bit of wisdom from it. The hard reality is, we must work with the world as it exists, not as it could have been, should have been, or otherwise. As noted in the section on Money, there is enormous human thought, effort, energy and momentum embodied in the political economy we find ourselves in today. To forcefully disrupt that can only be calamitous and will undoubtedly result in avoidable harm and much needless suffering. But an awareness of these types of errors, I think, can be of enormous value. This is especially true today, as we all must collectively navigate our inherited, very human created socio-political structures. However, within the context of the discussion about greed broadly and waste narrowly, there are worthy considerations.

If we trace forward from here to a modern issue, we can, perhaps, put this knowledge to good use. Let us use the financial collapse of 2008 and the subsequent “bail-outs” as a test case for that claim. To hear the lay-historians tell the story, the 2008 financial collapse was caused by sub-prime lending and a housing crash. I would direct your attention briefly to the issues with this narrative relating to causation and causality. As noted above, few have the requisite need or desire to delve much deeper than this lay-explanation for the “cause” of the financial collapse. On the other side, those responsible for this collapse have every incentive imaginable to further this narrative and do everything they can to obscure the true causes. By the time the Government Accountability Office issued their 663-page report on the causes, most had moved on to the latest tabloid issue of the day. This is not to say that no one cared. It is rather to say, the reasons behind the collapse are opaque, difficult for those not well versed in financial lingo to unpack and understand, and the majority of the US population does not even possess the ability to read the report.

Nevertheless, if we unpack the financial crisis a little deeper than the sub-prime narrative, what we find is quite a bit more alarming. If you are not inclined to read the 663-page report, Matt Taibbi of Rolling Stone fame does a pretty good job of encapsulating the madness that led to the greatest financial collapse since the Great Depression. He wrote a series of articles that are certainly read in a much more disparaging light than the GAO report might have ventured. But the substance of Taibbi’s reporting rather accurately captures the essence of the GAO version. Indeed, even the authors of the GAO report saw fit to label Chapter 10 “The Madness,” followed by Chapter 11, ignominiously labelled “The Bust.” The short of the story is, throughout the Clinton administration, and under the guidance of Ayn Rand protégé and Fed Chair Alan Greenspan, a number of financial regulations were rolled back from the Glass-Steagall era. Passed in the wake of the Great Depression, Glass-Steagall prevented, among other things, commercial banks from acting as investment banks and disallowed banks of any kind from participating in the insurance game. And, as noted in the section on Money, this all coincided with advances in computing, and quantitative modeling. The sum of which resulted in some really neat ideas like Collateralized Debt Obligations (CDO) and Credit Default Swaps (CDS).

They were neat because, not only could Wall Street sell these things as risk-management tools to the very few regulators looking over their shoulders, they also had a quality most endearing to Wall Street: They were enormously profitable. By the time Warren Buffet was labelling these complex derivative “assets” as financial weapons of mass destruction, the die had already been cast. The looming trouble with these instruments was magnified by the quantitative nature of the risk models. When you are a Wall Street Bro and you have got a PhD math boffin saying his model predicts only a 1 in 10,000 chance of a bet going south, that makes for a pretty compelling sales narrative. That the Wall Street Bro had not the slightest understanding of the math, the modeling, the assumptions, or anything else was largely irrelevant to them. Compound that lack of understanding across thousands of Wall Street Bros, exponentially multiply the sums of money involved and you end up in a spot where the entirety of the global financial system is teetering on the brink of collapse. The thing that so few realized then, and still fail to realize today is, at the bottom of that risk mitigation ladder is a fat goose egg. There is no counter-party to the enormous amount of leveraged risk that supports the entire global financial system.

Quite literally no one, in this entire sordid cast of characters, from the prudential regulators, to the politicians, to the CEOs, down to the traders at the desks, understood any of this. To a man and woman, they saw the numbers go up, they blustered about as if they knew what the hell they were talking about, and then they collectively brought the entire world to its knees. I mention this all here in context because it speaks directly to the issues I highlighted above. The people that were ostensibly responsible for ensuring that a calamity of this magnitude did not happen were entirely incapable of doing so. They rose to those positions as a result of a selection process that they all collectively survived. The political right in America trends towards the idea that these men and women are there because they “earned” it. In doing so, they become inadvertent victims of survivorship bias. Then, with the benefit of hindsight bias, both the “leaders” and their right leaning supporters assign unearned powers of observation, stewardship, and sound judgement to the winners of this selection process. Not because these people necessarily possess those qualities. It is rather because of the erroneous belief that the selection process had somehow filtered out the bad and left only the good as the victors. But as noted above, that is an incorrect assumption. The less flattering version, which comports much better with reality is, the people that end up in those positions of decision making power and authority are there largely due to dumb luck.

In turn, this may help explain how a group of people, who are supposedly the “cream of the crop,” can somehow drive the global financial bus into a ditch without even the slightest inkling they had lost control. Put another way, I argue here that we are collectively making the same mistake our medieval forebears did with the “laws of nature.” There, the erroneous assumption was that the nobility were merely following innate laws that compelled them to act as the nobility should. Modernly, in contrast, the suggestion here is that we are all collectively and erroneously assuming competitive selection processes actually work. Meaning, we have, potentially, swapped the “laws of nature” for a similarly faulty presumption and belief in the “laws of competition.” This is further evidenced by the fact that the very same architects of this catastrophic global financial failure were the same ones tasked to fix the bloody mess. Much to the public chagrin, these same buffoons were afforded luxurious payouts and bonuses. As Matt Taibbi writes:

The following February, when AIG posted $11.5 billion in annual losses, it announced the resignation of Cassano as head of AIGFP, saying an auditor had found a “material weakness” in the CDS portfolio. But amazingly, the company not only allowed Cassano to keep $34 million in bonuses, it kept him on as a consultant for $1 million a month. In fact, Cassano remained on the payroll and kept collecting his monthly million through the end of September 2008, even after taxpayers had been forced to hand AIG $85 billion to patch up his fuck-ups. When asked in October why the company still retained Cassano at his $1 million-a-month rate despite his role in the probable downfall of Western civilization, CEO Martin Sullivan told Congress with a straight face that AIG wanted to “retain the 20-year knowledge that Mr. Cassano had.”

In defense of the payouts, bonuses and other shenanigans, and despite “punching a hole in the fabric of the universe,” Taibbi goes on to report the following conversation with an AIG spokesperson:

“We, uh, needed to keep these highly expert people in their seats,” AIG spokeswoman Christina Pretto says to me in early February.

“But didn’t these ‘highly expert people’ basically destroy your company?” I ask.

Pretto protests, says this isn’t fair.

The point being, there was an enormous amount of waste in the bailouts of 2008, much like there was, and is, an enormous amount of waste in the creation and continued support of the English nobility. Much like the English peasantry did throughout the ages, there were protests and public displays of displeasure. But in the end, the noble classes are still there. Just like the moneyed, asset holding classes are still here. On the flip side of all of this is the left leaning take that all of these people are simply driven by naked greed and nothing more. This is certainly a reasonable assumption and it would be hard to say anything to the contrary. And yet, if we look a little deeper, the machinery that makes our global financial system go is anything but simple. Twitter user @concodanomics has created a wonderful series of graphics that detail a number of Federal Reserve, banking and hedge fund market operations. For just one example, the image below covers “The opening leg of a centrally-cleared relative value (RV) trade”:

I would wager that the number of people that can make heads or tails of that chart, or indeed, find the exercise even remotely tolerable, would probably number in the thousands worldwide. And this is actually a relatively straight-forward process in the grand scheme of the global financial machine. When I say there is enormous human thought, effort, energy and momentum embodied in the political economy, this is only a tiny fraction of what I am referring to. The act of coordinating global trade, settling accounts, creating money, moving commodities, issuing currency, settling foreign exchange and all the other associated plumbing is extraordinarily complex. For us, the mere end-users, it is all pretty simple. We present a card or fork over some paper and we get things. We show up at an office, we send emails, we flutter about the water-cooler, and people fork paper over to us. Maybe, if we are really “sophisticated,” we hop on an online brokerage or sit down with our HR manager to invest some money in a market fund. The depth of understanding about how all of that gets accomplished is largely left to the realm of magic. Or, at least, it may as well be.

So much so that the vast majority in the western world simply take it all for granted. As I pointed out in the section on Power, all of this complexity gives rise to the type of chaos that allows for ascension up the greased pole of power in the modern economy. Those that are best equipped and able to coherently navigate this enormously complex system are the ones that eventually find themselves in the competitive selection process that results in becoming an authority. That said, the idea that nothing more than naked greed can fuel the ambitions of these people is a bit of a stretch. Much like the nobles of ages gone by, many of these people see themselves as destined for this work. And given the broad assumption that “life is a competition for scarce resources” where only the “cream rises to the top,” when these competitors do rise to each successive tier they, naturally and predictably, end up falling victim to their own hindsight biases. This is what makes Jeff Bezos’ admission about “just getting lucky” so interesting. Not because it is an accurate assessment. It is rather because he has the self-reflection and a constitution that allows that thought to exist at all. This is an exceedingly rare trait among the survivors of selection processes that require very rare successes in very complex competitions.

Bearing in mind, of course, that the progenitors of the financial crisis are merely cogs in the greater game of modern competitive resource capture. Going beyond the realms of finance lie the worlds of fashion, agriculture, entertainment, electronics, automobiles, food production, the list is virtually endless. Meaning, woven throughout the entirety of the Western economy are millions of iterations of similar processes dominated by similarly overconfident decision makers. The readily observable outcome of these millions of iterations is a level of waste and material squander that is truly hard to fathom. Half a trillion dollars worth of food is wasted every year in the United States alone. Planned obsolescence, as an industrial practice, dates back to the 1920s. Whether this line of reasoning was a natural by-product of the industrial revolution, or was incentivized by the advent of fiat currency, or some mixture of the two would be near impossible to reconcile. Regardless, the result is an extraordinary waste of natural and human resources in the never ending pursuit of profit. But without that waste and without those profits, there would be no work for everyone to do. Without that work, without that profit and, indeed, without that waste, the great game of resource capture would slowly grind to a halt. It should come as no surprise the largest economy on the planet is also the most wasteful by a wide margin.

To say this is all somehow driven by greed alone is not a defensible statement. It is certainly not lost on the observant that those who most publicly rail against corporate greed are the same people that feel quite comfortable to live within its warm bosom of waste and destruction. They wear fast fashion, they own cell-phones, they use computers, they walk on paved roads and live in houses. None carry water drawn from a polluted stream back to their mud hut in which their children lie suffering from malnutrition. In their anguish and rage against greed, their own biases allow them the fiction of advocacy while being the direct beneficiaries of these wasteful practices. But to ignore, or worse yet, to reify the resultant waste and destruction is also indefensible. To assume that it is all well and good that we create endless mountains of garbage while allowing the global majority to go hungry and live in squalor is outrageous. To say that this competitive system has endowed us all with a righteous place at the top of the hierarchy which affords us an endless variety of choices while the small folk starve is unconscionable.

Yet the trajectory of progress cannot be denied. Prior to the pandemic, the number of people living in extreme poverty had been reduced by 50% between 2010 and 2019. As the forces of globalization pushed outwards, millions of people around the world saw their standards of living rise, their health metrics improve, and their child mortality rates plunge. Of course, this was not uniform progress. Some areas improved much faster than others. Many areas saw declines, and in the worst cases, states failed altogether. The overarching issue and, indeed, the looming trouble with this progress is the fact that it was all created and birthed by debt. As noted earlier, the entirety of the global economy rests on a base-layer of sovereign debt. The resource to be captured is sovereign debt. The incentives are born of sovereign debt. The progress achieved in the global political economy is erratic and uneven largely for that reason. And it is largely for that same reason this progress will naturally retard and eventually must reverse.

“Never attribute to malice that which can be adequately explained by incompetence or stupidity.”

The modern political economy is no more being driven by greed than it is being driven by those that are “the source and motivation to create wealth.” It is merely the latest refinement in a game born of deeply flawed starting assumptions. This particular iteration mandates that debt pay for all progress just as it incentivizes the waste required of that progress. It can work no other way. The players operate within this construct, not necessarily out of naked greed, nor with any particular acumen for success. As stated at the outset, unlike power and money, greed is not an abstract concept. It is not a human designed and created system. It is a social judgement with problematic subtexts.

The point of this section is to highlight some of those problems. The purpose is to peel back the layers to reveal broader view of the complexity in the modern political economy. It is an entirely reasonable thing to march about the world with a certain degree of certitude about the nature of our existence. This manner of functioning is required to navigate physical and social spaces. All of us would be rendered to incapacity if we endeavored, moment by moment, to quantify every interaction with every molecule we encounter. Yet when discussing complex social dynamics, the mental short-cuts that enable us to exist as a species can often prevent us from seeking, and sometimes even block us from achieving, progress in the human condition. Rigid adherence to dogmatic ideas is a time-honored recipe for stagnation of ideas.

The great danger to us all is the desire to succumb to simple solutions for the enormously complex issues we all face as humans writ large. One of the many beauties of Bitcoin is that it is at once both simple and complex. Bitcoin, as a neutral arbiter removes much bias from the social interaction equation. In this book my aim is to highlight the human biases and, often unfounded, assumptions that have guided society thus far. Humanity has made great strides in understanding the physical universe. My fear is we have not come quite so far as we have led ourselves to believe when it comes to the social sphere. It is quite normal for people to compartmentalize humanity through time. Through the time-based fictions of epochs, and ages, and generations, we allow ourselves the deceit that those who came before us were somehow separate from us, solely based on their timeline. The reality is quite different. History is an unbroken narrative. People today are governed by nearly identical biological and social processes as those that lived 50,000 years ago.

We have all been playing the same game of competitive resource capture that our forebears started some 12,000 years ago. The clothing has changed. The language has changed. But there is a compelling reason why history may not repeat, but that it certainly rhymes. Five hundred years from now, the people then will likely look back on us and think us to be as backwards and uninformed as we look back on the people from the 1500s. Yet this assumption of backwardness is yet another bias and error. If time travel were possible and we could go back and share what we know and who we are, those folks would catch up much faster than we might give them credit for. Indeed, in 2012, a group of researchers did something functionally equivalent. They went to remote African villages and delivered Motorola tablets to the kids in the village. These children had no exposure to written language — not even a road sign. They certainly had no exposure to computers and the internet. With no instructions, not even a label on the box, the following experience was reported by one of the researchers:

I thought the kids would play with the boxes. Within four minutes, one kid not only opened the box, found the on-off switch … powered it up. Within five days, they were using 47 apps per child, per day. Within two weeks, they were singing ABC songs in the village, and within five months, they had hacked Android.

I think this does not speak well of our relative advancement. It rather demonstrates, as far as I am concerned, that our relative sense of human progress is not as far along as we might like to believe. Sure, we have electricity and computers and all that fun stuff. But the vast majority of us, including those in leadership positions, are not the architects of this progress. Indeed, most of us are not even the maintainers of it. Much like the kids in the African village, we are, by and large, end users and consumers. The architects have just done such an amazing job in making it all readily accessible and understandable. Even to those who are, ostensibly, “backwards” from us. The point of this book is to help unpack the idea that we may be doing ourselves a collective disservice by assuming our understanding of the global social environment has meaningfully advanced simply because our tech has gotten better. The very notion that our understanding of history, economics, psychology, sociology and biology is distributed amongst our collective consciousness as thoroughly as our gadgets are. “Bitcoin fixes this” is a common trope among the faithful. It also assumes we all collectively know what needs fixing. The argument I will make in the final part of this book is that the fix Bitcoin brings may be very different from what we might be hoping for.

Indeed, it may even be better than we can imagine.