The Case Against Regulation

Centralisation Is Bad

Tyrone Monday July 7, 2014

Centralisation is a bad idea. Its disadvantages include a reduction in choices, quality, and opportunity, an increase in arbitrary order, and a concentration of power. Given its various disadvantages, why has it been so frequently adopted? Centralisation generates benefits to those at the centre of power.

So, while the choices available to everyone else from a centralised system are fewer, the quality lower, the opportunities less, those are not things the people at the centre care very much about. Oh, sure, having fewer automobile companies to choose from by haivng a high level of government regulatory barriers to entry makes it worse for the consumer, but the people who operate those automobile companies aren't concerned about the consumers. How do we know?

We know that the people who run General Motors do not care about the consumers of automobiles because they kill drivers with shoddy products. Consider the deaths, at least thirteen that we have been told about, of drivers from an ignition switch error. (In this article: http://articles.latimes.com/2014/mar/13/autos/la-fi-hy-autos-303-deaths-linked-to-recall-gm-20140313 the figure is much higher.) General Motors seems to have known about the error as early as 2004, or ten years ago. Recently, GM executives determined that they would need to offer a million dollars, or more, to be distributed amongst the survivors of those thirteen dead people. A few months ago, GM executives determined that they would have to recall millions of cars with a similar problem. How did millions of cars get on the roads with a problematic ignition switch? Obviously by GM being able to release cars for as many as ten years with the same problem, with utterly no care for the consumers.

The GM ignition switches are not the first design flaw in an automobile released by one of the three remaining "major" or centralised car companies, GM, Ford, and Chrysler, in the United States. Recall notices go out from time to time for foreign made as well as for domestic cars. Many of these recall notices are for issues that could potentially kill the drivers. Sometimes more than 13 drivers are killed before the problem results in a recall. Viewers of the film "Fight Club" may be familiar with the mathematics, the calculation that the cost of the recall be less than the amount of damages the automaker would actually have to pay out in lawsuits if drivers can prove that the defects caused actual harm. (An overview on product recalls going back to 1959 in several industries and countries is found here: http://en.wikipedia.org/wiki/Product_recall )

Centralisation is used in many other ways. The creation of empires by European countries during the sixteenth, seventeenth, eighteenth, and nineteenth centuries resulted in the world map having about 115 countries by the year 1914. Several thousand other groups, tribes, clans, and ethnic populations were consolidated into major empires, including those of the British, French, Spanish, Portuguese, German, Italian, Russian, Dutch, Japanese, American, and Ottoman empires. Even Belgium got into the act with the conquest of the Congo. Somehow, all this consolidation didn't produce enough bad effects, so under Lenin and Stalin, the Soviet Union created its own empire. China, which had been rather thoroughly fragmented by imperial European powers in the 19th Century was re-consolidated by Mao in the mid-20th Century.

Just how many "countries" have been consolidated out of existence? There are about 600 native clans and tribes in North America, something like 2,000 distinct ethnic populations in Africa, to give only two examples. The dissolution of Yugoslavia after 1991 led to the establishment of countries such as Serbia, Bosnia, Croatia, Kosovo, and Montenegro. On the continent of Africa, the major powers met in Berlin in 1885 to draw lines on the map indicating the borders of the countries there. Most of these lines are still in effect. Of course, the only African country present at the conference was the Kingdom of Ethiopia. The rest of the lines were drawn by European powers for European interests.

Now, you might say, why shouldn't the Europeans draw lines on maps? After all, they represent "culture" and "civilisation" not to mention "Christianity." My answer would be, "because it isn't right, and even if it were right, it doesn't work." We have seen, since 1885, dozens of wars to re-arrange Africa, the territories of the former Ottoman empire in the Middle East, and other territories claimed by various imperial or "great" powers. The only thing that seems "great" about them is the enormous piles of dead bodies they generate, a great amount of death.

The psychotic misanthropes in Britain, France, and the other formerly-globe-spanning empires continue to insist on "the territorial integrity" of places like "the Ukraine," Mali, Kenya, and so forth. None of it works. It seems noteworthy that in Russian and Ukrainian languages, ukraina (оукраина) means "outer country" or "borderland" or "fortified borderland" depending on who you ask. Whose borderland? Well, there you go, asking the really deep questions. Again.

What does it mean, "the territorial integrity of Kenya" when Kenya is a set of lines drawn on a map to represent British occupation of a zone in East Africa? There are 69 languages spoken in Kenya, including Somali, Oromo, Rendille, English, Arabic, Hindustani, Turkana, Maasai, Kigiryama, Kiembu, Oluluyia, and the six major languages, Kikuyu (spoken by 7.2 million Kenyans), Dholuo (spoken by 4.3 million), Kamba (spoken by 4 million), Ekegusii (spoken by 2.1 million), Kimiiru (spoken by 1.74 million), and Kalenjin (spoken by 1.6 million). With 41 million people of sundry Bantu, Nilotic, and Cushitic population groups, does it actually make any sense at all to speak of Kenya as though it were one country, Kenyans one people, and the "territorial integrity" of a set of lines drawn exclusively by Europeans for colonial, imperial, psychotic, and misanthropic reasons as if the imaginary lines on the map represent sacred knowledge handed down from Heaven? Clearly, I don't think so.

But I don't matter, because it isn't my country. So, I do not shed my blood for its territorial integrity, nor for control of its central government, although, evidently, quite a few people have done. Nor does it matter toward which country we point. The United States has no legitimate right to the territories of hundreds of native American populations, each of which was sufficiently its own sovereign nation state for the purposes of treaties which were signed and duly ratified by the United States before being completely ignored, trampled on, and treated like the treaties weren't worth the paper upon which they had been written. Even within the white European tradition of the United States, there is contention over the powers of the several states, including the power of a number of them to secede, which power was duly exercised in 1861, leading to a war that shed the blood of more men and women than any other war in USA history. Apparently, centralisation remains very popular over there.

Similarly, in Britain, there is renewed interest in limited independence at least for purposes of a parliament, for Wales, for Scotland, and for England. The Scots themselves had a country under King Robert (the Bruce) in 1314 (and in various other ways under other systems going back hundreds of years prior) which was "united" with England in 1707. But to speak of a central government of Scots is not especially Scottish, given the upwards of 790 islands, 89 major clans, and hundreds of septs and sub-clan groups, each of which has territory, heritage, and related claims. One official-ish list that I consulted had about 270 separate clans identified by name, each with its own page on their site. Of these, a great many related names show up with their own traditions and history. So there is no end to the consolidations one might have in clans, great clans, and clan groups, should anyone ever care to dispute the lineage of "royal" descent. The point being that in country after country, wherever we look, we find nothing like a collective sense of identity, but a plethora of separate groups with their own stories.

So, why centralise? Did the Scottish clans benefit from centralisation after 1707? Judging by their attitude in fighting for further independence as late as 1744, presumably not. Certainly their being cleared off the Highland territories by British soldiers did not indicate a benefit to them. Certain land owners definitely gained a benefit in grabbing lands that were "vacant" after having been "cleared" though these euphemisms make as little sense in Scotland as similar sayings like "manifest destiny" make in the United States. When people are forced off their land, killed, beaten, robbed, sentenced to "transportation" for alleged crimes on scant evidence, and end up in North America against their will, where they are sometimes conscripted into an army to force Native Americans off their lands, to be killed, beaten, robbed, and sentenced to a Trail of Tears, one does begin to wonder where the imaginary benefits of centralisation are to be found. Those who gained by these exercises in racism and brutality should probably raise their hands and step forward to be identified.

Do you imagine, then, that the centralisation of economic power in, say, an electric power utility that has a monopoly to distribute power into a metropolitan area makes any sense for the consumer of electric power? Are you better off with one electric company, or would you be better off with ten to choose from? Wouldn't you be even better off still if you were to buy solar panels and harvest your own electricity?

Yes, there are definitely economies of scale from making a big power plant, burning a large amount of coal, oil, natural gas, or diesel fuel, or generating electricity from nuclear materials. But who profits from these economies? Do the consumers of residential electricity benefit? Do the companies operating malls, office buildings, and factories benefit? One can be sure that the agencies which regulate power consumption and power distribution come into existence and benefit from the monopoly since that monopoly cannot exist without government sanction. The company which holds the monopoly power gets monopoly pricing advantages, subject to approval from the regulators, and they probably buy off those regulators in various ways in a well-known process called "regulatory capture." It is very doubtful that the people in general benefit in any way. Given the lack of disaster preparedness at sites like Fukushima, we can also wonder whether the long term consequences might be even more negative for the people living around these power plants.

For some time, the idea that we are all better off with more centralisation, more single points of failure, and more agglomeration of power, has been questioned. In the period of empire building, roughly the 15th to early 20th Centuries, the number of "countries" in the world was reduced again and again as more territory was grabbed by imperial powers. Since World War Two, the number of countries has been on the rise, roughly tripling in about 70 years. That trend seems destined to continue, with South Sudan being a recent example of a new country being formed out of one of the giant swaths of territory claimed by a former imperial power.

About 1969, the United States military recognised that a devastating nuclear attack by Russia might wipe out a large amount of computing power, but the remaining computer systems might want to communicate through some sort of inter-networking protocol. So they had some very intelligent people develop the Internet. As a result, the protocol developed for that communications system is extremely decentralised. There are reasons to think that the future of computer communications is going to involve continuing decentralisation, the elimination of more and more single points of failure, and the ability for "routers" to automatically route around damaged nodes.

You now find information very widely distributed, stored on an enormous number of computers, and available for download to your own computer any time you need it. So you can access nearly every book ever published, a great many news sources, images, videos, music, art, and other information wherever you are, about as close to instantly as your communications nodes can manage.

Since the 1970s, a trend has emerged to change the way that software is developed. Software is the code used to operate your computer and make applications available to you. The code that operates the hardware of your computer and tells it, for example, what parts of the screen to illuminate with different colours, or how to send a signal to the printer, is called the operating system or OS. You may have heard of "Windows," and "Apple OS" which are fairly common, and Linux, which is an open source operating system. It turns out that having a software company in control over the development, upgrading, and release of an operating system has inherent disadvantages to the users. Since a great many computer users are also skilled software developers, they collaborated on open source development of Linux. There are now a great number of open source operating systems.

Similarly, the software which runs under a given operating system that makes it possible to, say, process words into a text file, or format them into a document, is an application. There are thousands of applications for all kinds of purposes. And, again, people have begun developing them as open source projects. Open source simply means that the source code, or actual logical operations that are performed by the application, is available for scrutiny. That turns out to have advantages in cost, in distribution, in development speed, in error identification, in error correction, and in other ways.

Very recently, the giant central government of the United States decided to crap all over the open source movement. In particular, its Internal Revenue "Service" has decided to attack applications for tax-exempt status from groups developing open source software. So, equality for everyone, but some are more equal than others (to paraphrase Orwell).

Here's a brief excerpt from:

"Luis Villa, a lawyer and well-known open source community member who currently serves as deputy general counsel at the Wikimedia Foundation, told the Times about two nonprofit open source software organizations that were denied tax-exempt status because their use of a targeted keyword triggered a harsh response from the agency.

"'As soon as you say the words 'open source,' like other organizations that use 'Tea Party' or 'Occupy,' it gets you red-flagged," he told the Times. 'None of the groups have been able to find the magic words to get over the hurdle.'"

Presumably, if you are part of the trend toward bank centralisation, documented by the Dallas Federal Reserve here: http://www.dallasfed.org/assets/documents/fed/annual/2011/ar11.pdf and you want to form a non-profit organisation for your banking corporation to pretend to engage in some charitable behaviours, the IRS will be eager like a puppy to help you. But if you oppose in any way the trend toward central control over everything, you are scum of the Earth not to be given an even break.

Or, to quote the Dallas Fed: "When competition declines, incentives often turn perverse, and self-interest can turn malevolent. That's what happened in the years before the financial crisis." The Dallas Fed, part of an enterprise that began in 1914 to consolidate power within the banking industry in the United States, thinks that "we have to end too big to fail, now."

You might share my misgivings that the Federal Reserve, which oversaw the consolidation of the banking industry from 1970 when 12,500 banks controlled 46% of the financial assets of the USA, the top 5 banks controlled only 17% and the remaining 37% was controlled by a further 95 large and medium-sized banks to 2010 when 5,700 smaller banks controlled only 16% of the financial assets, the top 5 banks controlled 52% of the assets, and the remaining 32% was controlled by (a different) 95 large and medium-sized banks, has any meaningful interest in actually doing anything to reverse this trend. You'll notice that in the process of making it possible for those top 5 banks to control more than half of the financial assets (and pay salaries and bonuses every year amounting to millions of dollars to each of their dozens of top executives) the Federal Reserve has seen to the demise of nearly 7,000 banks in one way and another.

Centralisation is where the top one-tenth of one percent of the population controls an outrageous portion of the total income, get whatever they want from big government, and make the lives of tens of millions of others miserable. Centralisation is where one country, the United States, spends more per annum on military activities in all categories than all the other countries in the world combined. It may not be good to be the king so much as it is good to be a military contractor, or one of the financial giants that make that spending possible.

Are you beginning to get the idea that centralised power, information, and control isn't good for you? If not, please leave a comment, and we'll do our best to explain further. If you are confident that you understand the value to you of decentralised systems, you may want to take a look at our Economic Privacy blog series. We're encouraging people to encrypt, use virtual privacy networks, and consider other issues in their search for greater freedom. Decentralisation has a huge role to play in you being more free.