Can Anyone Found a Polity?

Balaji Srinivasan poses a challenge

In the April version of Fantasy Intellectual Teams, several Silicon Valley icons were drafted, but they performed poorly. One of the few who was picked for a team in May was Balaji Srinivasan. (If you are curious about the league standings and you are on a phone, you have to go here. If you want to see which players lead in which categories, go here.)

Anyway, Balaji’s latest essays resonate a lot with me. Consider Founding vs. Inheriting. He argues that the founder of a company has a lot of tacit knowledge and creativity that is likely to be lacking in a CEO who inherits a company later in its life. I believe that this is a valid generalization.

Getting a company off the ground is a different skill set than fighting your way into a CEO position of an established company. In fact, the skill set is so different that sometimes the founder is booted out before the company matures, because the founder may be good at solving the product-market-fit problem but lousy at solving the problem of gluing an organization together.

The founder is playing a game you might call “Will a new company into existence.” The inheritor is playing a game you might call “Excel at organizational politics well enough to make it to the top.” Those are certainly different games.

Balaji mentions Amazon’s amazing logistical system. That reminds me that years ago I scoffed at Amazon. I wrote that for Amazon to compete with WalMart, Amazon had to come up with a logistical system. All WalMart had to do to compete with Amazon was put up a web site. I still can’t believe my analysis turned out to be wrong, but there you go. It shows you how organizationally sluggish a legacy firm can be, and also how remarkably adept Jeff Bezos turned out to be.

As to the Internet democratizing founding, I can relate to that. Without the Internet, I would have been stuck in middle management at a big company, where every creative idea I ever had went through (1) a predictable phase of struggling against internal friction to get the go-ahead for the project and (2) at that point arriving at an equally predictable phase that I called “handing the project over to the credit-takers.”

The Internet allowed me to escape. Starting in 1994, I made what I call a sequence of miscalculations that turned out well in the end.

Balaji applies this idea of founders vs. inheritors to government. The founders of the United States got a lot of things right. But the people who inherited the positions of power are a different breed. Balaji writes,

Over the course of 2020, public health failed, public schools failed, fire departments failed, and police departments failed. National, state, and local governments failed. Media corporations failed and even the US military failed. Just about every Western institution run by a political heir failed, because it was presented with the unanticipated shock of COVID-19.

(links omitted)

His claim is that the way to fix the problem is to found new polities. I have written about this already. A polity is a set of informal and formal conventions. Getting new conventions accepted is hard. And choosing the right set is harder than you might think. Some things work for reasons that you don’t understand until you try to do without them. And some things that you expect to produce improvement may turn out to have failure modes that you are unable to anticipate. As I put it previously,

He strikes me as cavalier about the stickiness and interconnectedness of some of the social conventions that he thinks can be cast aside.

The approach that I favor is to try to figure out how to unbundle government services. I even tried to spell out that idea in a book, which was widely unread. In theory, you should not have to obtain garbage collection, police protection, road maintenance, schooling for your children, and housing regulation from the same entity. If we could get unbundling in practice, then that would open things up for new entrants. Instead, the trend is toward ever-tighter bundling, with Washington D.C. more and more involved in designing, funding, and regulating local services.

All our levels of government have large amounts of unfunded liabilities. You are going to be forced to pay for Medicare, for public pensions for teachers and police, and interest on the national debt, even if you were to opt out of government services yourself in order to obtain them from a new polity. That puts the new polity at a severe disadvantage.

I have come to the depressing view that our social learning system is corrupt. Perhaps new polities could work around that, but I am skeptical.