No Justification for a Ruling Class

The justification for having or for creating a ‘ruling’ class be it secular (wealth) or an aristocracy (heredity), as it has been historically called is that this class of people are very intelligent (the best families) and well educated (only the best schools) so they should, by their very nature, be given the right to make the economic and political decisions for us.  They can do this because besides those qualifications they have the time and inclination since they come from wealthy families and have no need to work for pay like the rest of us do.  Aristotle, Socrates and Plato wrote about how to get these people the proper education and motivation so they would become good rulers; and much of political philosophy ever since has been devoted to this concept.  So we are lead to believe under these assumptions, proper education and motivation, that this group of people will do what is good for the country and the Citizens even if it is not in their best interest.  This is what is really believed, believe it or not.

That last part, in particular, is a bit much to believe as everyone always does what is in their own best interest but for now we’ll ignore that part and go to the heart of the argument which is that its their intelligence and education that make them so qualified to legislate and run the country.  Because we have the Constitution and there is technically no ruling class they, those that lust for power, are handicapped and they will try to establish themselves here by other means. Those are though legislation and regulations that will be enacted to control business to prevent those businesses from doing things that would not be good for the Citizens.  On the surface this sounds reasonable however the reality is that is will give them the control of those businesses and allow those in power to accumulate wealth as written about in Peter Schweizer’s 2013 book Extortion..

Implicit in this argument, that the government needs to protect the citizens, is the principle that the Citizens, being of lesser intelligence and not as well educated, do not know what is good for them. For example recent legislation in California that bans ‘Happy Meals’ because the parents are not smart enough to know that their kids can’t actually live only on ‘Happy Meals.’

Well let’s look at this and see if it makes any sense that a select group of people could run the country better then the Citizens could.  There are 435 Representatives in the House of Representatives and there are 100 Senators in the Senate for a total of 535 elected representatives.  Then we have the President and the Vice President and his appointed Cabinet of advisors numbering 15 for a total of 17.  Lastly we have the 9 U.S. Supreme Court justices.  Granted that these are not all elected positions but they can logically be said to be the ‘head’ of the Federal Government and the group that sets the policy of the country.  This group totals 561 people. We could add the Obama administration appointed Czars and their staff’s here if we knew who they all were, but we don’t so we’ll skip them in this analysis.

Now each in that group has a core around them let’s say a couple of dozen key staffers so 561 times 24 equals 13,464 people that are the ones running the country, could be a bit more could be a bit less but it’s a reasonable guess.  It is this group of super intelligent and well educated people that we are told should be running the country.  Today under this administration this group is comprised of mostly by progressives and they believe they will be able to make all the decisions for us and thereby we will all be better off.  For reference we will say this group of leaders has an average IQ of 150.

Now there does seem to be some logic here for we do want the best and the brightest right, but is the logic valid?

The country today, that this group of 13,464 is to manage, is in round numbers almost 320,000,000 citizens. But some of those are children and some are retired and in nursing homes so their economic activity is limited.  Let’s say that 68% of the population is economically active so that gives us ~217,000,000 citizens and they will have by definition an average IQ of 100.

Now we have the basis for the rulers and the number of subjects to be ruled. Let’s make this into a computer problem of solving an economic problem.  We can define that problem as how fast can we analyze a block of data, in this case the GDP of the country which is just under $16.0 trillion dollars (2009 dollars) today, 2013. We can then say that we need to process 16.0 trillion bits of information to give us a result.  But let’s break it down into a more reasonable number by dividing it by the number of days in a year, 365.25 days; to give us how much must be processed each day. And that would be $43.8 Billion bits of information per day that represent everything we do each day (actually the number is much greater but will use this for sake of discussion).

So now we have our problem which can be thought of as analyzing a distributed network of multiple computers and how fast can they solve a problem.

So we take our elite group of 13,464 top government officials and say they are 13,464 CPU’s running at 150 Hz (150 times a second) Then we take our 217,000,000 Citizens and say they are 217 million CPU’s running at 100 Hz (100 times a second).  The question is can the 13,464 CPU’s at 150 Hz process 43,800,000,000 bits of data faster then 217,000,000 CPU’s running at 100 Hz.  But let’s be fair and say that this elite group because of their education is faster by a factor of two.

That then gives us the government on the one end with the ability to process 43,800,000,000 data points divided by 4,039,200 (13,464 times 2 times 150 = 4,039,200) which is 10,844 seconds or 3.0 hours. Not bad!

On the other end we have the Citizens with the ability to process 43,800,000,000 data points divided by 21,700,000,000 (217,000,000 times 1 times 100 = 21,700,000,000) which is only 2.0 seconds which is 5,364 times faster and therefore is significantly better the first group.

Clearly the Citizens are significantly faster and therefore better at processing economics data.  Further the Citizens at their level are the ones directly involved in the transactions unlike the government which is removed from the actual transactions by several orders of magnitude.  That means that there are significant time delays and processing errors that can not be avoided so the government is working with “faulty” information and working on a solution to a problem that existed sometime in the “past.”  There is no way for this not to be true.

The planners find that the result of the previous plan was not what they expected so they make an adjustment in the new plan to correct, in the future, for something that was thought to have happened in the past.

To know why something didn’t happen as planed when there are hundreds of millions of transaction is not easy, actually it’s impossible.  For example lets say thin the master plan there was one place that called for 25,000 items X (they are small) to be made and shipped from location A to location B.  When the plan was implemented the truck on the way from A to B had an accident and they were all lost.  The planer sees months later that the output of B was not what was planned so he increases the quantity of X from 25,000 to 50,000 in the next cycle to make up for the loss.  This time they all get there but the plan for B still only calls for a need of 25,000 X and so they just put the difference in stock.  In engineering terms this is a positive feedback where the result of the action is that things get progressive worse.

In a free market system the market place gives both positive and negative feedback. The positive feed back increases the output and gets the planer a raise. The negative feedback allows the planer to find out what is really wrong and fix it or he loses his job when the firm closes down.

 In the United States over the past 20 years there was feedback on job loss going on in the economy as production left the country for China and India. The problem was the high cost of doing business here and it was not all labor. Washington elected officials ignored that and continued to pass laws that were not beneficial to business which resulted in positive feedback and the process accelerated.  The politicians did nothing because of all the money that was coming in to buy T-Bills which then gave them more play money to feed the Citizens that were loosing their jobs.

Back to the example, the planer keeps having A make 50,000 of X to get 25,000 of product at B until B is so full of X that they start giving away or throwing them out, absurd you say that would never happen.  Well this simple example combined with the lack of motivation of the workers in the old U.S.S.R. is exactly what led to their collapse. Further, since in collective systems all jobs are political jobs, there is no incentive to work efficiently.  Therefore there is a misallocation of resources inherent in this systems (meaning it can’t be removed) that makes these economies very un-competitive.   The only thing that kept the U.S.S.R. going as long at as it did was the motivation of a few of their motivated Citizens that worked hard because they knew it was right (to work).

It is clearly impossible for Central Planning run by a Ruling Class (which is what this is all about) to work better then a free market system with de centralized planning.  Further central planning will always make things worse not better since everything is a plan done by legislation and in most cases no one even knows what the plan is.  An actual case can be shown that some of us a bit older may remember.  In 1972 David Halberstam published a book titled The Best and The Brightest which was an account of how we got into the Vietnam War. Halberstam blamed it on the intellectuals and academics (The Best and the Brightest) in the Kennedy administration and after the assassination of Kennedy by the Johnson administration which kept them on. The book is a very interesting read and anyone who has read it would be horrified that anyone would think the government could do anything right.

de Tocqueville in his writing thought that it might be possible for an American Aristocracy or ruling class to form out of the formation of large businesses.   His thinking was that the owners of the businesses would be like the old land owners and they tenant farmers.  In this case the business owners would own the means of production instead of the land and the workers would have no place to go except to the factories to work.  Just like the tenant farmers that couldn’t leave, where were they going to go except to a different land owner?

de Tocqueville was not the only one to see this as Karl Marx certainly had this view and he wrote his Communist Manifesto only 8 years after Tocqueville finished his Volume II of Democracy in America.  It would be hard to believe that Marx’s did not read Tocqueville’s work since they were both in Paris from 1843 to 1845.