malvasia bianca

Another blog post in the category of “stuff that I probably should not blog about”, but it’s been bouncing around in my head. So: here are two things that I like about capitalism.

The first one: I like the way capitalism acknowledges risk up front. Over the years, I’ve gotten more and more convinced that predicting what’s going to be important for society is really really hard, but also that the value that comes from working on the right things is really really high.

Capitalism cuts straight through the prediction problem: don’t try to pick winners on a structural level. Instead, let individuals / companies try to do that by putting their money where their mouth is. Make it worth their while by letting people who guess right keep profits off of stuff that’s valuable but hard to predict. If you do that, most individual attempts will fail; that’s totally fine, having enough attempts that succeed is what’s important.

The second one: I like it that capitalism has a simple rule for how to get permission to do something. Right now, in California and much of the company, we need a lot more housing and a lot more clean energy infrastructure. But, in many instances, the way you get permission to do that is gather together the land / money, then submit a proposal to some committee, then wait to see which of your neighbors (or random people elsewhere) complains to that committee, then hope that you can modify the proposal in a way that causes the committee to approve it, then wait for people to file a lawsuit claiming that you missed some part of the process, then wait for that lawsuit to make it through the system, etc.

And by the time that’s all done, it’s years later, the cost of your project has probably significantly increased, and the housing / clean energy benefits have probably significantly decreased. And that’s bad! Maybe the process has resulted in a noticeable improvement to the project in some way; if so, yay, but even when that that’s the case, the time cost and uncertainty cost of the process is not good. And, an awful lot of the time, the altered proposal is worse than the original proposal rather than better. (The bootleggers and baptists concept is relevant here.)

So I really like the simplicity of the rules that the capitalist answer provides: if you’ve got the money and the property rights, you can do it. I’m not saying it’s the best simple rule, but the fact that it gives a quick, clear thumbs up / thumbs down is very much in its favor.

This is where this post could get a lot longer: there are a lot of ways in which what I’ve written could be misinterpreted, and so I could add defensive wording that would triple the length of this post. But I don’t think that sort of defensive writing is particularly healthy; and, fortunately, this blog has very few readers, so I think the benefits of adding in defensive writing would be few. So I’ll skip that.

Or rather, I’ll skip that except to try to be a little more explicit about the limits of what I’m saying. I’m not making grand totalizing claims here; in particular, I am not saying that I believe that these two solutions are perfect solutions to these problems.

What I am saying is:

• I think these are two problems are important. (And it took me a while to appreciate their importance.)
• I think these solutions to these problems have virtues that are worth trying to learn from.