Monday, November 12, 2012

CEOs and Pigeons

Anybody who has met a fair number of extremely wealthy people knows that they are a motley crew. They certainly aren’t all especially intelligent, stunningly attractive, or obviously charismatic, which is hardly surprising considering that the various ways that people find themselves on top of the world. Obviously having specific talents or personal characteristics, such as a knack for marketing, relentless drive, or utter ruthlessness, account for some great fortunes; but the great game of the world is largely a lottery. The economic system is set up to separate out a very small fraction of the population and reward it willy-nilly with absurdly great prizes. The victors in this rule-less contest do not see it that way, of course, in part because there is a large industry devoted to coming up with some moral or philosophical justification for the outcome as if anybody could be good enough at anything to deserve $46 billion.

What occurs naturally in our system is not so different from the process by which landed estates grew larger and larger in pre-capitalist societies. If you run computer simulations of the evolution of land distribution under the circumstances of the Roman Empire or the Ancien Regime, you’ll see the number of properties shrink as their size increases. Economies of scale and the automatic political power that go along with owning huge pieces of property lead to more and more accumulation of property. Whose crest adorns the castle wall may be a matter of chance or talent, but it’s as sure that somebody will rule the thousands of acres as that the poets will write caressing prefaces to these honey lords. By the same token, it was pretty much written in the stars that somebody would end up with their name on emerging natural monopolies in telecommunications, computer retailing, or hypermarkets. What the goddess Fortuna once gifted the Hapsburgs or the Hohenzollerns she now bestows on new princes, some of whom, inevitably, are idiot princes.

Maybe the gormlessness so many of our moguls showed during the recent political season can be explained by the natural response of animals to random rewards. If you drop food pellets into a pigeon cage at irregular intervals, the pigeons will come to the conclusion that whatever they happen to have been doing at the time was the cause of their good fortune. They caper or coo or bounce up and down on one foot. That’s how you create superstitious pigeons. You make billionaires superstitious by encouraging them to think that their personal characteristics are the reason/explanation of their standing in the world. That’s how you create Donald Trumps.

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