The Disparity Problem in a Nutshell

Disparity Feedback is a very strong force in almost any economic system and could destroy a Just Deserts system.

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Just Deserts is an economic theory that has one interesting element: people in a Just Deserts economic system receive rewards proportional to their contribution to the system, meaning to the society as a whole. There are many problem areas with this economic theory, including: Disparity Feedback, Contribution Measurement, Motivation and Efficiency, Capital Utilization, Resource Exhaustion, Insurance, and Inter-Society Arrangements. Since this element, by itself, has some appeal, let’s discuss these problem areas looking for a means of implementing this element and the existence of possible showstoppers.

The Disparity Feedback problem is simply this. No matter how one arranges the measurement of contributions and the distribution of rewards, it is done by a mechanism that is subject to corruption of some sort. In the Wild West system of contributions and rewards, individuals are largely unfettered in what arrangements they make between themselves. This means that an individual who has accumulated, by luck or nepotism or savings or crime or any other means, a large amount of capital, can use that capital to distort the system so as to increase his/her capital. This is one version of what might be called the Wealth Feedback effect. Since wealth is measured relative to other members of the society, it is not really a wealth feedback effect, but one which runs on disparity of wealth, so a better term for it is the Disparity Feedback problem.

It simply means that disparity finds a way to increase itself. If it is a wild west market that prevails in economic exchanges, disparity serves to distort the market by some mechanism. Monopoly is one that is well-known. In the gold prospector example used previously, having a monopoly on prospecting tools, or a monopoly on gold storage, or a monopoly on transportation to the gold field or to the city that is the jumping off stage for prospecting, or any other item, means that prices can be charged far in excess of any costs. If the monopoly is maintained by covert arrangements, or outright purchase of competitors, or threats of violence or blackmail, or any other means, there is little difference. Monopoly means that one individual or group sets prices for some needed item, and can set any price they choose. This implies that there is no Just Desert reward for their effort, but instead a disparity feedback reward.

In a system where there is government control of economic transactions, holders of large disparity in wealth can find the office or agency or group in the government where rules are made for transactions, or where taxes are collected, or where licenses are granted for certain types of transactions or anything else, and use their wealth to obtain favorable conditions. This can be done by bribery, by blackmail, by threats of violence, by nepotism, or by any other means which are available to holders of a large disparity of wealth. Once again, for the particular transactions governed by this special arrangement, disparity is increased. The disparity feedback effect happens everywhere as it is solely dependent on there being a large disparity and there being some mechanism that can be found or invented, within the economic system that is in operation, which will tilt transactions to favor those who already have the large disparity. Old names for systems such as capitalism, mercantilism, communism, socialism, and more are labels for particular sets or classes of economic transactions, but none of these addresses the root problem, the disparity feedback effect. It is a universal effect, transcending any design of economic transactions.

There are some frills that economic disparity can produce. One is the economic theory frill. The holders of large economic disparity can hire writers in economic theory or novices for that matter to laud the system they are embedded it. This serves two purposes. One is the prolongation of the existence of these particular arrangements. Whatever system that is in existence that produces and amplifies the disparity over time can be described as necessary, or optimal, or justified, or anything else in favorable terms. The more such writing is broadcast, the more likely it would be that the system, whatever it is, continues to exist and continues to produce the disparity that results in this frill.

This frill is well-known, and has been described as there always being economic theorists who serve the needs of those with disparity. The rewards that can be bestowed upon economic theorists who manage to portray the existing system in a very positive light can be large, as they can be collected from all those possessing disparity in the system. They don’t necessarily have to be large, but they could be. All that is necessary is for the holders of disparity to reward those who laud the system which produces the disparity. How this could not happen is the puzzle – it appears so inevitable as to be hardly worth discussing.

Another frill is the promotion of stasis, or the avoidance of change, by other means. Whatever mechanism exists in the society for change can be subjected to the effect of disparity, so that as a society becomes more and more disparate, it should become more and more resistant to change. The mechanism by which this occurs might completely depend on the particular type of system. It could mean that threats of violence are used against anyone attempting or suggesting change could or should be made. It could mean that anyone suggesting change could be co-opted by offering of rewards for silence or retraction or misleading any listeners or other devises. It could be by the legislation of criminal penalties for acts leading or importuning to change of any significant degree.

Perhaps one of the most important frills is the degree of secrecy that is pervasive in the society. If disparity is hidden as much as possible, and the mechanisms that make it possible are also hidden, in both large and small ways, then maintaining the system which produces the disparity is easier. Fewer citizens become aware of these mechanisms and the degree to which they have produced disparity. With secrecy, much can be successfully denied. With secrecy, knowledge of the extent of the disparity and the details of the mechanisms is hard to come by and hard to verify. Any claims can be dismissed as falsehoods. Any law-breaking or immoral but legal acts committed in service of disparity can be concealed. Any theories of disparity’s effects can be pigeon-holed as simply theory without proof, as proof is hidden behind walls of secrecy.

This leads to an interesting conclusion. That excessive disparity and secrecy go hand-in-hand. One cannot exist without the other. In a system where there is strong custom for just deserts and for the prohibition of acts which will produce large disparity, such as monopoly or blackmail or threats of violence or anything similar, in short any system in a society with very high morality, secrecy does no harm but is of little use. These systems however are simply fertile ground for the introduction of breaches of these customs or morals, which is how the disparity feedback system gets started. For a few generations such morality may hold sway, but not for many, and especially not for many in situations where there is a means for disrupting that morality.

Before going too far with the concept of transparency as the antidote for disparity feedback, it should be noted that some secrecy might be necessary to implement just deserts rewards. One example jumps into view immediately. If an individual or group were working on developing some new invention, in other words, doing science or engineering towards some conclusion, such as a new product or a new theory, and their work were broadcast on a daily basis, they would be subject to competition taking advantage of the early part of their work without paying any compensation for it. So, the concept of patentable work or copyrightable work might be the only legitimate use of secrecy as far as the just deserts economic theory goes. Business deal secrecy is not the same thing. There might be some innovative concept involved in a business deal, but remember that innovative concepts are rewarded in the just deserts scheme as the time involved in developing the innovation times the hourly or monthly value of the time of the innovator or innovators. This is typically tiny in comparison to the unearned benefit achieved by some business deals. In the patentable concept situation, this reward is the whole return, so secrecy in this type of innovation is paramount to ensuring that new developments are rewarded with enough value to make the work to produce them motivating.

To summarize, the disparity feedback effect is destructive of any just deserts economic system. The details of the economic system are largely irrelevant if just deserts are used to determine the distribution of rewards. The only obvious mechanism for the elimination of the disparity feedback effect is universal transparency, with only one or perhaps a few exceptions. This can be seen as a cost or a benefit, depending on the background of the person making the judgment.

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