Volitional Science

You can't have freedom of choice without ownership, because ownership means control, and without control, you can't make choices. It's Galambos' concept of 100% control over your own property - the stuff you own - that makes complete freedom of choice practical. Without such a strong and simple boundary around ownership the whole idea of freedom of choice gets very muddled. You hear the usual blather like, "Joe might own that, but we have to force him to do X for the public good." NO! As long as Joe is doing whatever he wants with his own property you don't have to force him to do anything for any reason. To do so is to plunder his property. You only need some kind of mechanim to remedy the situation if Joe starts to affect your property.

The more I think about Galambos' first postulate - the motivation postulate - the less I like it. There's no logical reason to use the word happiness in it. I know he did it as a nod to the Declaration of Independence. Galambos defines happiness as the sum of your positive preferences minus the sum of your negative preferences. Well, that's just the choices you make. But by using the word happiness all kinds of confusing emotional ideas intercede with something that can be modeled very simply - choice. It can be modeled by a random number generator, by chaos theory, or by bell curves. Who cares how someone decides something?

Well, we do care if the decisions a person makes are immoral - that is, infringing on another's property, especially ours. But we don't care how or why someone decides to do that. (We might care why someone is behaving immorally if we want to talk them out of their behavior, but we don't have to do that. There are other solutions.) You might think it's necessary to get everyone on this plan - that this kind of scheme will only work if everyone does it. Therefore we should care how people make decisions and force them to make them properly. Well, that's coercive so that approach isn't consistent with our goal. You can't force people to be non-coercive. That's why, if you want to really own your own property, you have to take defensive measures. It's hard to do, actually, in our current political environment, but you can approximate it.

Luckily, you can get truly amazing things to happen by applying certain principles locally - that is in your local neighborhood, your home, your local workgroup, etc. Because the application of these principles - really just one principle in different disguises - is so effective and productive, you'll out perform everyone around you. Then you will be able to hire people to help you defend yourself against plundering, and you won't care too much what other people do. It's so simple you won't believe it. But you have to wait for the next column for the mega-simplified "answer to systemantics."

The great misapprehension we have in the United States of America is that competition is what made our country great. The great sports metaphor that drives so much of our group behavior is, in short, wrong. There is something deeper driving our productivity. That is choice. One thing choice gives rise to is in fact competition. But forcing competition does not give rise to choice! Forcing competition on a market is coercive! Coercion is not as productive as choice!

Take my good friend the Microsoft Corporation. (I'm an investor in Microsoft, so for many people that might make me a Microsoft-apologist. Oh well.) I don't know if they have a monopoly because I think it is a meaningless word. But supposing they are the sole suppliers of operating systems for Intel x86 platforms in the whole world - which isn't true - but supposing it was - the fix is not to increase - by force - competition in the operating systems market. All that will do is kill a very healthy market.

Nobody has made the case - as far as I've been able to see - that anything Microsoft has done has hurt consumers in anyway. The computer, operating system, and application markets are possibly the healthiest markets the nation has ever seen. I would argue, as Galambos would, that this is because the technology grew so fast that no one had the time or ability to interfere with the development of the market. Now that Microsoft and Bill Gates have been so phenomenally successful, the lesser minds like Scott McNealy are crying out for help. Since they can't win by creating products that people want, they want to coerce Microsoft in some way that will cripple or hinder the company. Scott McNealy, who thinks he is a great competitor, is ... well, a wimp! His company, which is quite healthy, by the way, isn't as big as Microsoft and he is upset over that. The real solution is not coercion but innovation! And to the extent that Sun keeps innovating, it will be successful. Likewise for Apple.

And it's not taking risks that make strong markets. Anyone can take a risk and fail. It happens all the time. There is this stupid idea that the reward should be proportional to the risk! That's a great way to negotiate for more stuff (pay, options, whatever) when you take on a hard project, but, fundamentally, the biggest reward should go to the most productive! It doesn't matter if someone takes a risk or not. The French word entrepreneur means "opportunist", not "risk taker". It's seeing the opportunity - recognizing it - that is the real skill.

Less you think I am an apologist for Microsoft - well, I'm not, even though I am a stockholder. Microsoft has plundered as much as anyone. Microsoft, product-wise, is not hugely innovative. Sometimes they make a better widget than someone else does, but they hardly ever invent a new kind of widget. They have stolen more ideas - plundered them - than any company I can think of. There was horrifying videotape of Steve Ballmer on 60 Minutes a few years ago that showed him exhorting the troops to steal ideas. "If you see a good idea, clone it!" It was scary. (In a later column I better justify why I invest in a plundering company, eh?)

But as far as Microsoft goes - we have a choice. Microsoft has had the brains to keep their prices reasonable over the years. If they don't, there are hundreds of entrepreneurs waiting to eat Microsoft's lunch. Gates knows this and that's why he's so paranoid. And there are hundreds of VC companies waiting to invest in alternatives to Microsoft if the opportunity affords itself. And that would be because Microsoft screws up. But so far MS hasn't screwed up. At least not enough.

Did DirectX kill off OpenGL? Nope. And it wasn't for lack of trying. Using their normal "embrace and extend" approach they hooked up with SGI and tried to dissolve OpenGL in some new mix called Fahrenheit. Now this is the amazing part: SGI is dead as a graphics company (as predicted), but OpenGL lives on! Why is that? Because John Carmack single-handedly brought an awareness of OpenGL to the PC platform and proved that it could work for games. And because Microsoft took so long with Fahrenheit, all of the 3D card companies made full OpenGL ICDs - which Microsoft forced them to do! It was a huge industry-wide effort. And now that the 3D chip vendors finally got these suckers mostly working, OpenGL is institutionalized as part of the PC platform. (And now Fahrenheit is gone but OpenGL remains. So much for Microsoft's monopoly power.)

Did DirectX or Microsoft kill off SGI? No way! Microsoft didn't make the hardware that made a PC out-perform a $250,000.00 Reality Engine. SGI killed themselves off through a lack of understanding of the larger computer market. They even had the technology thanks to the work they did with Nintendo on the N64 and still failed to apply it. They were afraid of killing off their own business - so they let everyone else do it for them.

My point is that we have choices. They may not be the choices we would force on the world if we could, but we have choices nonetheless. And we have choices to the extent that we do not foster coercion. If there is any single reason to be against a monopoly ruling against Microsoft it is this - that such an action will remove more choices from the marketplace than it will create. In fact, it won't create any new choices. Only innovative individuals, or visionaries like John Carmack, will create more choices.

The truly astounding range of productivity in this country is due to the relative lack of coercion applied by our central statist government. That lack of coercion has led to freedom of choice. And the freedom to choose has given individuals and corporations a chance to innovate without getting permission first from a central authority. The absolutely astounding growth of the Internet is due the very small amount of central authority involved in managing it. Emergent behavior comes from lots of individuals doing lots of amazing things - not from a central authority. Even solutions to serious problems like pollution come from individuals inventing new ways to do things that either actively help the environment or at least hurt it less. Not from "lawmakers" who constantly restrict freedom of choice.

What's wrong with the Libertarian Party idea of privatization? The idea is that by privatizing government functions the inefficiency inherent in our statist bureaucracy will be reduced or removed. The so-called profit motive will make that particular service more efficient because the privatized company will be motivated to make money.

The problem is this - if you don't introduce choice into the matter you haven't made much progress at all! You might have made whoever is running the privatized function a bit more accountable because he can't hide inside a large beauracracy. This concept works from a business point-of-view when you create small business units and hold them accountable for their own P&L. (Microsoft does this in spades - there are hundreds of business units inside Microsoft. HP used to be made up of 60 small mini-companies!) The privitization idea solves the wrong problem. All you've done is taken a sole-source commodity or service offered by a statist government and created another sole-source commodity or service sponsored by a statist government.

Well, sometimes a little further progress is made because the statist government from time-to-time has to renew the privatized company's contract, so the private company must provide a decent level of service or they will get the boot.

But the most efficient solution is this: the statist government simply stops providing a certain service - say trash pickup. The end. Then the natural market mechanism takes over. If there is a decent opportunity in a particular community to sell a trash pickup service then someone jumps in and offers that service. If there is enough opportunity then more than one person or company jumps in and offers that service. At all times there is choice. There is choice on the part of the people that decide to enter this business and there is choice on the part of customers to choose who provides the service, if it is available. If it's not available then they have to deal with their own garbage. Or voluntarily band together and create a community solution.

The key is that no one gets to force the solution on anyone else.

But, you say, without a central authority, nothing will happen! People can't provide for their own trash service!

Well, in fact, they can. The emergent behavior that comes from truly free market conditions creates innovation. Better solutions than the statist solutions get invented. How do I know this is true? Because all of our productive services and inventions came from emergent behavior. Do you think our giant supermarkets filled with more kinds of food than the world has ever seen before came from statist, centrist planning? No way! It came from the emergent behavior created by free markets. Now, new ways of delivering food are being created, seemingly spontaneously, from new opportunities created by new technology and new infrastructure. And this new infrastructure - the Internet - was not created by any kind of centrist planning!

Next - how ownership creates choices and many other amazing things as well.

(Nearly everything is this column is an adaptation of Galambos' ideas - especially the idea that a bureaucrat never created anything productive. The marketplace creates solutions to problems created by excesses in the marketplace far faster by any other mechanism. In fact, passing silly laws only slows the process down and usually institutionalizes a bad solution, thus impeding progress. It's my contribution that competition is not the source of innovation. Competition is a result of choice [my idea], just as innovation is a result of choice [Galambos' idea]. Also, the idea that the great sports metaphor [which I have heard frequently used in management books and on TV] is a bad thing is mine.)