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May 15, 2005

Fault Lines

Some large and important conflicts are raging through our society today:

• Who decides what information is widely disseminated, large organizations purportedly dedicated to objective examination of current events, or individuals and small groups with obvious biases and sometimes distinct agendas?
  
• Who decides how children are educated, their teachers or their parents?
  
• Who controls the borders, the Federal government or the people who own the land along the border?
  
• Who decides how to save for your retirement, the Congress or you?
  
• Who controls your work schedule and methods, the company or the worker?

All of these conflicts - MSM v bloggers; teachers' unions v homeschoolers and voucher proponents; INS v the Minutemen; Social Security statists v privatization advocates; companies v contractors - all of them revolve around the collapse of the assumptions underlying the industrial economy.

In the industrial economy (what Walter Russell Mead, I believe, referred to as "Fordism"), the central assumption was that centralization produced efficiency, and thus all things should centralize. To a degree, they were even correct. Centralization really does produce efficiency. But it does something else, too, it reduces effectiveness. Here, for example, is a wonderful chart comparing centralization against decentralization in IT organizations. This tension - centralize for efficiency and control or decentralize for effectiveness and responsiveness - plays out in most of the conflicts in our society today. It is the collapse of this central assumption that underlies the major fault lines in our society.

The real problem with centralization is, I think, that it doesn't scale well. When a human enterprise is small and geographically concentrated, it can be controlled largely by consensus, with perhaps a person or small group designated as the "final word" on all matters. The amount of information to be handled is small, and the communication channels are rapid. As such an enterprise grows in size, the amount of information to be dealt with grows even faster (because it is a product primarily controlled by the connections between nodes, rather than the number of nodes or their complexity¹); and as it grows in geographic separation, the channels of communication become slower and more lossy. This makes consensus impossible.

I'll avoid the temptation to talk about all of the different ways that larger societies can be controlled, and instead focus on how American governance evolved to where we are now.

The US formed as a Federal Republic. In practice, this means that the central government comprised both semi-autonomous regional governments and the people as a whole. Or, more to the point, that each of these entities could select representatives or agents to form the government. The people selected the House of Representatives, and the States selected the Senate. The Constitution designated the Federal government to handle matters between the States, and between the nation and other nations. The States were left to handle matters dealing with the people. The nice thing about this arrangement is how well it scales, and how much freedom it allows an individual. If you don't like your State's laws, you can move to a different State.

But what this structure doesn't do well is submit to central knowledge or authority. If the Federal government does not have the power directly to regulate the economy as a whole, how do you know what your GDP is? And if you don't know things as basic as how big the economy is, you don't know enough to even begin to try to figure out how to tax and regulate to produce "right" behavior in the society. If the government can't control what's happening, the people will just control their own behavior. To statists, this is anathema. I think, to some degree, statists are mostly just neat freaks: they hate the fact that self-governance and almost unregulated capitalism just careens along without being amenable to control or even real-time comprehension.

And so it was that the industrial revolution changed everything. Prior to the industrial revolution, there was not much advantage to ordinary people when things were centralized. How does a bigger farm help me, when I can only farm so many acres with my sons and hired hands? How does a bigger shop help me, when I can only train and oversee so many apprentices and journeymen anyway? How does the government knowing anything about what I do with my money help me, and so why would I give them that knowledge (and thus power)? But with industrialization, there really is an advantage to centralization, and that advantage is enough to outweigh the disadvantages for many people. The advantage is simple: efficiency.

With tractors, it doesn't take twice as many people (or twice as much work effort) to farm twice as many acres. With industrial machinery and the assembly, people can be trained to do simple and repetitive tasks, so I can control a larger work force; and the output of the factory goes up faster than the labor input, so I can make more profit with the same expense. And letting the government have more centralized control means (theoretically) a smoother-running economy, and thus less chance I'll be out of work, and a way to control the externalities that industrialization creates, like pollution. In other words, with the efficiencies created by industrialization, there are good reasons for a person to like bigger and less accountable companies, and bigger and more intrusive government.

But time does not stand still, and something odd happened towards the middle of the 1980s: it began to be possible for a person to support themselves in the style industrial efficiency had accustomed them to, without giving up the control that a person had over their own lives prior to centralization. I hate the term knowledge worker, but it does express an important truth: precise information gives the same kind of multiplier effect to the efficiency of an industrial organization or a profession that industrialization brought to farms and trades. Since efficiency is so much increased, it can be traded for effectiveness.

This has always been the case in life-critical organizations. The Army cannot afford to have exactly the number of soldiers it needs to fight a battle, because the casualties of the first battle ensure that the second battle will be fought with fewer people and less ammunition and equipment. No area can afford to have exactly the number of hospital beds it needs on an average day, because a local tragedy would then overwhelm the hospitals' ability to respond. But now it is possible for individuals to make such tradeoffs.

As a consultant, I make a relatively high income. In part, this is because I shoulder more of a tax and benefit burden than an employee does, and indemnify my clients for some things that they would have to insure against with an employee in my place. In part, this is because I have skills that few organizations need full-time, and that are rare in the industry. So I can choose to work as much as or more than before, and have a higher income, or take time off between jobs and keep the same income.

And this is true in other ways as well. I can, in my spare time, blog. And thus I can take away the mainstream media's central product: informative entertainment. It is this loss that really threatens the mainstream media, because the media has used the efficiencies of centralized knowledge and control to determine that what people want most from the media is not objective knowledge, but entertainment, and to tailor their offerings to that desire. That's why Michael Jackson is a bigger story than Venezuela's shift towards totalitarianism and anti-Americanism, and why good news in Iraq is less covered than a car bombing that kills no one.

With efficient access to information, I can homeschool my children more effectively than the State can school them institutionally. I can get a better return on investment than Social Security can, because I have good information and fewer constraints. And it is this devolution of control that is causing so many critical rifts in society right now: the self-chosen elites are beginning to realize, however dimly, that we don't need them so much any more, and we too are beginning to realize this.

The world of twenty years in the future will be unrecognizable to us with today's eyes.

Posted by jeff at May 15, 2005 7:08 PM

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