How to steal from the public without public attention
Today's generation is prosperous. But it's also plagued by problems similar to the past.
Increasing wealth gaps, squeezed middle class, low birth rates, public debts that are increasing unsustainable, difficult job market.
Introduction
The mainstream narrative now is that the rich have been exploiting the poor, and that all of the problems will go away if only we tax them enough or regulate their profits such that it is no longer predatory. Or, it's a specific race or cabal that is controlling the strings.
The problem with such reasoning is that the antagonist is too obvious. Too many people talk about them, and in fact most of the time people from the past fell for the same narrative. When revolutions end up happening, it wasn't clear if the rich was actually the problem.
In the French Revolution, it's not about the 99% against the 1% as we so commonly believed. It's more like the top 1% against the top 0.1%. Most of the common people don't even get represented while they get taken into the violent ride.
Put simply, associating wealth with crime is fallacious. The reason why this narrative gets momentum is because it appeals to the envious. I argue it's in the interest of people who are actually doing the stealing to misdirect public attention away from them to people with big numbers.
How then should one find the dishonest actor that explains all of the present problems and injustice without resorting to sloppy reasoning that matches what the mainstream wants you to antagonize?
Discovering the anatomy of the heist
Most understand that problems and inefficiency don't come out of nowhere, therefore something/someone must be responsible. The next thing to be aware would be if the observed inefficiency is deliberate or accidental.
Many things that contribute to the growing wealth gap are participated by market players accidentally.
Example, the growth in job complexity and bureaucracy accidentally created wealth gap between those who have exposed themselves to enough cultural capital (through tertiary education) to perform bureaucratic tasks while leaving behind those who cannot afford tertiary education to gain the cultural capital required to stay compliant to current regulations and complexity demand.
If you look at things objectively, you may understand that dumb regulations and dumb degrees / license to bypass these regulations are the root of problem as to how some people unjustly got ahead / left behind. Yet, you hardly hear the mainstream complaining about this problem.
In fact, getting a degree, expecting stricter regulations, and going through very selective labor vetting process has become a cultural dogma that few even draw the connection that this is a possible vector for social division.
On a related topic, the other day I had an argument with my sister about the effectiveness of state education, the most extreme case being China's Gaokao -- The same system that is the most unfair and repressive to lower class also happened to get the most support and defense from the lower class.
Gaokao creates "unequal" outcomes and "widening social class," in the sense that it forces the lower class youth to live and think that their life is a predictable grind (IE: another form of serfdom). But to many families, having a child that performs well in state exams is their only lotto to have their social status raised. Their defense to such a system is another example of people "accidentally" creating social division.
In effect, the gaokao system seems to be fall under the a category I would classify as "opportunity stealing hero" (OSH).
If you are convinced that China's gaokao creates net inequality (not through measurements of wealth, but through psychology where competitive students lose their independence of thought to conform to the grind culture), then you'll also find that most state's public education don't do better.
In US, public schools spend $20k per student for the results of 20% illiteracy rate. Acquiring information on YouTube, skillshare will not cost a curious individual more than $500/yr.
If the objective of public education is to increase public literacy and standardized knowledge to promote cultural equality, the results have been opposite -- education administrators are overpaid while young students get dumber and taxpayers get even more broke.
Yet, public educators continue to enjoy powerful political advantages, social returns, and positive public opinion. Another example of OSH.
With 3 examples, we can begin to find the anatomy of the heist by observing the commonalities.
- Must have a way to avoid competition, either through political protection (state education) or high barriers to entry (creating more regulations, requiring higher ranking licenses), etc.
- Decisions are undemocratic (regulations setup by "think tanks" and "experts")
- Victims having "Stockholm syndrome" to net negative practices. (The hero convinces the victims who had been taken advantage that they in fact benefit from the transaction)
With such leads, finding out who else fit such a bill is more productive than being told who is the antagonist.
If you enjoy where your logic will take you, stop scrolling and start thinking and see if your answers match with mine later.
I will do the honors and take the risk of exposing institutions with questionable motive and outcomes.
Here goes.
Shortlisted bureaucracies
Central banks
Uncompetitive
Central banks serve as the lender of last resort -- a function that allows them to provide emergency liquidity to banks, thereby forestalling systemic collapse.
But no one else gets this right to create value out of nothing. While it's hard to say they are dishonest, there is no way we can know how accountable too.
In a competitive market, an unaccountable bank would face consequences for poor policies. In central bank's case, mostly its just "bad luck", "bad timing", "oops".
For CB with weaker political power, it is possible for market players to force a competitive decision. (EG: George Soros breaking the BoE by betting against their bad policies)
For stronger CB, especially the US Federal Reserve, it took decades for people to realize and agree some disastrous results done by central banks.
Undemocratic
The public cannot elect a Fed Chair; the selection process is conducted behind closed doors with little transparency -- comparable in its secrecy to the election of a pope.
The Fed Chair can make policies that influence credit markets such that it directly kills business or raise portfolio value.
The 2% inflation target is a dogma, not an expert research or public agreement. I can read the whole link to you. Or I can just tell you it's all vibes.
Enough victims with Stockholm.
Many are “victimized” by policies done by CB. If you own cash, the real value of their money is eroded by inflation.
Yet, most can't reject this poison, especially if you are an office workers with state contracts (where do you think the state gets their money to pay your contract work?), is a homeowners whose asset values grow together with each successive rounds of money printing.
If you work in office, your employment is likely an illusion. They will still raise back enough taxes from you to make back the money they printed to pay you 1. If you have any more left to spend, they will devalue it by printing the next round of money.
We become unwitting “Stockholmers” by growing psychologically dependent on a system that also steals from us.
Human resources and recruiting industry
(There is a whole rabbit hole known as "executive recruiting" that is not covered in this article. Right now I'll just focus on the normal recruiting industry we all know and love.)
Anticompetitive
Have you met a department that is in charge of firing and hiring HR?
A great recruiter should be paid by the quality of candidates they hire. In practice, recruiters get paid by the number of candidates they closed.
This means there is no pressure to properly vet for candidates for employers, or no pressure to help job seekers land jobs. You pay your LinkedIn Premium and they play you for a fool.
In more competitive markets, there is a "money back guarantee" for people who are unsatisfied with the product. A simple way to make HR competitive is to also have a "money back guarantee" system, where the recruiter forfeits their commission if the candidate is bad, or if the candidate couldn't find a job.
Why don't we do it?
Undemocratic
HR and recruitment comes up with lots of policies that have consequential effects to the market, yet they are not subjected to the agreement of their customers.
For example, HR policies routinely use expensive educational degrees as prerequisites for roles -- even when the actual performance gap between degree holders and non-degree holders is negligible in many real-world contexts.
In effect, HR legitimizes the value of expensive educational degrees simply by using it as a prerequisite to the roles they have. This isn't problematic if educational degrees do actually have value as a competency signal.
To find out if degrees, licenses, or other credentials are actually a competency signal, a scientific method would be to look at the data by systematically measuring the quality of both recruits and rejects using an objective function.
I have hardly met any HR that does this 2.
It doesn't help that degree standards are getting lower while jobs are getting more complex. These days, the performance gap of degree owners and non-degree owners are negligible in the real world.
Degrees now function more like a "ticket you buy for the chance to work" that gatekeeps labor supply to include only those who can afford a 4 year hiatus and 100k expense.
HR could easily fix their poor policy by simply letting themselves subjected to a scientific method, where they measure the quality of their recruits and the lack of quality of their rejects. I've suggested a simple way to do it.
Yet, there is simply no market, competitive, moral pressure to do so.
Victims with Stockholm
Business owners, shareholders, and job seekers think we are better off with them.
What people don't ask is how many of the problems the HR / recruitment industry solves are problems created by a bureacracy (that recruiters themselves are part of).
Example: employment rights, unions, protection of workers supposedly protect workers from unfair labor practices (Stockholm warning). But this also make it much harder for business owners to hire and fire employees, thus justifying the need for HR / recruiters.
The 2nd order effect is that business are less willing to hire and invest in employees, given that underperforming employees are so hard to let go.
I can't make the call that we are better off without labor regulations. But its important to understand the more complex we make labor laws, the more power HR and recruiters get.
At some point, job seekers lose and business owners lose.
FAQ
"Is it a "middleman problem"?
I believe most of the bad things in life are not intentional. It's very rare to meet someone with a mission to cause as much damage as they can while getting away with it.
This means its important to inspect for systems that are supposedly "good" but at some point stop serving the interest of the system consumer.
What I notice is that problems that are so complicated to need a middleman tends to attract "careerist"3 to setup uncompetitive bureaucracy (IE: rent-seeking toll).
"But aren't the rich the real final boss?"
It's too convenient, too big of the brush, and often results in bad policies. Instead, I think it's more helpful to expose people to the anatomy of how institutions can take advantage of the public.
So long as the public are uncritical about their practices, the bureacracy can keep masquerading as a value-creator when its a parasite 4.
Footnotes
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Interestingly, federal income taxes we paid for granted started when the CB was invented at 1913. ↩
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I've spoke around recruiters during informal settings. In most of my conversations with recruiters, the best indicator of a good candidate is "what other recruiters" say about them. In logical settings, this is known as "circular reasoning". It's as unscientific as "just vibes". Yeah, you think people who make important decisions are more responsibile. ↩
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Career usually mean something better than job and supposedly requires more respect. But rent-seeking can also be a career. The question is should the public sponsor such careers? ↩
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Parasite is a strong word, but the classification is that it must grow infinitely at the expense of the host's strength. This is consistent with my observations. The Fed gets stronger everytime they print more money and do not hesitate to increase their personnel. Similarly, HR went from 0.5% workforce to 1.5% workforce from 1980 to 2020. In the same time with the growth of these institutions, their "customers" get weaker. This is unlike competitive economic systems (example Nvidia) where their growth is also followed by the growth in strength by their customers. ↩