Overcoming Bias - Common norms on elites

Robin Hanson argued in two blog-posts his idea behind legalizing blackmail - that elites are able to selectively follow social norms and that blackmail would help getting them back to normal niveau. I would try to argue why I do not think that would be such a good idea.

My definition of elites is that they are defined by their higher capital, be it of social, monetary, moral or intellectual type. The law of diminishing returns then states, that their average valuation of marginal gains/losses in that capital is much lower than those of lesser status. This enables elites to enact many strategies at a personal profit to them, which are pure losses to those of lesser status.

Blackmail in Game Theory

I was wondering where the twitter polls of Robin would lead to. To attack the check-mate on blackmail: I consider blackmail a bad strategy to play in all of the situations mentioned. Every one of the ones I saw could be much better resolved than by directly withdrawing from the shared social capital. So why not legalize it to maximize the freedom of people to do stupid things?

I think the general distaste for blackmail comes from the switch from the cooperative games with surplus of normal human interaction to competitive games with zero-sum or negative payout.

In my mind the purpose of states and laws is providing the enforceable contracts that are necessary to stabilize better payout situations than the equilibria - change the games to some with a higher payout. And blackmail is just a game with no win-win situation.

So should blackmail be an enforceable contract? I think that would actually allow bad strategies/games to flourish. Similar to, but of much weaker degree, than legalizing the use of force.

Blackmail and Elites

Especially those elites mentioned the opening paragraph will easily adapt to the changing laws - the paragraph states this as a common trait of them. So if one would prefer the elites to be beholden to the common norm, why not "just" write that common norm into law?

If we look at the states that legalized blackmail and sometimes even state-sponsored it:

  • The GDR
  • The Sowjet Union and Russia as its successor
  • China.

We find that those states indeed profess higher conformity to social norms, but also that their elites still use their higher social and monetary capital to disregard those norms when it fancies them.

The social effect of legalizing blackmail changes nothing at the power structure, but pushes the state into more authoritarian and illiberal directions.

Capital based incentive scheme

That elites are more directly hit by a legalization of blackmail is due to their higher capital and corresponding reduced utility (value) of those capital gains and losses w.r.t. those of non-elite status. This makes blackmail profitable for those of lower status, but does not help in the elite selection process except for some marginal negative selection - nobody that "deserves" an elite status will drop out of it because of blackmail.

How about just attaching at the definition of elites by making the incentives relative to capital? An example would be the day-fines of some countries.

Maybe even improve the day-fines scheme by using a Harberger scheme as a basis for that fine rate instead of income - your professed/estimated wealth gives your fine and income tax rate (e.g. $1b net-worth -> 90% income tax rate, $/€40000 day fine).

This also allows people to declare themselves as elite by increasing their tax rate to arbitrary heights and that would indeed be a true, because costly, signal of that status.

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