Which is Better, Democracy or Monarchy?
 

First, please read the first post of this thread for an introduction to the terminology and the relationship of time preference to civilization (you can read the rest of the thread as well, of course, but the first post is necessary for this discussion).

As the most far-sighted saver-accumulators amass a larger and larger fortune in capital and capital goods, becoming more and more wealthy, their wealth acts an an incentive to high time preference individuals to aggress against them and take some portion of their property. In other words, it is more and more likely that individuals will choose to simply steal goods rather than toil to produce them or save to acquire them.

This in turn incentivizes these far-sighted saver-accumulators to invest capital in security as a means to deter, prevent, and acquire compensation for acts of aggression against their property. Large fortunes will require large and well trained security forces.

At the same time, the same qualities that allowed the wealthiest saver-accumulators to amass their fortune, far-sightedness and good decision making ability, make their opinions valuable in the community. The demand for labor created by their employment of capital in more roundabout and thus more productive processes makes the community wealthier and leads to a dependence on the wealthiest members of society. His large and well trained security forces make him a natural provider of security for the community, and his far-sightedness and good decision making make him a natural choice for arbitration of disputes.

Thus we have in natural elites all of the elements of a King. The ability of natural elites to then monopolize the provision of services like security and justice (and hence form governments) depends directly on the level of technology. Limited technology means that members of society are limited in their market choices, and monopolies are possible because of the limitations of, and time required for, travel and transport. If for example one man owns the only deposits of iron ore in the region, he has the advantage of an effective natural monopoly. But in a technologically advanced society, there are always dozens, if not hundreds or thousands of readily available producers of any conceivable natural resource or factor of production to choose from, just a phone call, a flight, or a cargo ship's trip away. Thus, natural monopolies become less and less possible as technology advances. Recall that so-called natural monopolies in telecommunications cease to exist with the advent of wireless technologies, for example.

But since society must proceed from a state of primitive civilization and technology to states of higher civilization and technology, it is reasonable to expect that early in this process Kings will arise and therefore governments.

The most important feature of monarchical government that we need to understand is that it is private government. The government coffers are his private fortune. The King's army and police are his private security forces. He owns the government, in a very real sense. Any courts he empowers are an extension of his private judicial decisions. There are several far reaching implications of this private government.

The taxes levied by the monarch, purportedly to provide security and justice, will necessarily remain low. Since the monarch is a wealthy individual, outlandish tax levies will be rightly viewed by the population as unjust and unnecessary, increasing the likelihood of a bloody and costly revolt. But beyond this, because the monarch is wealthy, his time preference is low. It is not in his interest to eat out the sustenance of his country through high levels of taxation. Rather it is in his interest that his subjects retain the far greater portion of their production such that they might reinvest it (because they themselves have low time preference) and allow the kingdom, and thus the king and his heirs, to become ever more wealthy. Hence the incentives point in a direction that acts to minimize the King's violations of his subjects property rights. For the same reason, it is in the monarch's best interest for the police or courts to function well, preserving the wealth of his subjects (so that only he can appropriate a small fraction).

During the entire monarchical age, tax levies rarely exceeded 5%. Government employment rarely exceeded 2%.

Contrast this with democratic-republican government, i.e. a public government. An elected president or other official does not own the government. He is not guaranteed to hold his position of power and hence he must maximize his own gains not via low time preference far-sightedness, but with high time preferenced plunder. Thus, democratic-republican governments will act to raise taxes and pervert justice as quickly as possible, and consume both the government's and citizens' capital as quickly as possible to enrich themselves.

The tendencey of the populace to revolt is curbed, because they are deluded into believing their government is "of the people, by the people, and for the people." It is difficult to see that government consumption is out of control when the government is not the private property of a single monarch or his family.

As the democratic-republican government plunders as quickly as it can, the trend of decreasing time preference slows, and may even halt and reverse. Former savers are incentivized to consume more and more, as they become more an more uncertain whether they will be allowed to keep their capital or the products thereof in the future. Since savings are disincentivized, capital formation slows, halts, and reverses. This drives up time preference even more. As society's time preference increases, the frequency of high time preference actions like robbery, assault, murder, rape, rudeness, hedonism, etc. increases.

In other words, the process of civilization has turned around, and decivilization proceeds at an ever increasing rate. Thus, democratic-republican governments end as cataclysmic kleptocracies that destroy society's capital, vastly increase the society's time preference, and result in an epidemic of violence that reduces the society to armed banditry and the rise of warlords, i.e. Kings, with local monopolies of the remaining capital goods like automatic weapons.

The time it takes the democratic-republican government to reach this end depends largely on the time preference of those in power. Wealthier democratic-republics, that are wealthier because they have a heritage of strong private property rights and capitalism tend to elect the wealthy (since the candidate that spends the most or nearly so wins almost uniformly), so their own time preference is relatively low, and their rate of plunder is constrained.

Poorer democratic-republican countries tend to have little heritage in property rights, elect high time preference offials who promise to take from the wealthy (low time preference) and give to the poor (high time preference), and plunder proceeds as quickly as possible. Such governments are highly unstable and may only last a few years before widespread violence (high time preference behavior) reigns supreme.

The modern wealthy democratic-republics have tax burdens that have risen steadily and quickly and now on average exceed 50%. Government employment now approaches 20%. Savings have plummetted while debit financing has skyrocketted. Real wages (relative to the money supply) have stagnated and begun to fall, indicating that real production is declining, despite ever greater productivity. All of these factors act to increase time preference in society and will exacerbate the problem. Plunder, crime, and violence will all accelerate. Savings, capital formation, productivity, and civlization will all continue to decline.

The western democratic-republics will eventually implode in an orgasm of plunder, violence, and decivilization.

It seems clear that monarchy is far better than democratic-republican government, and I didn't even go into the horrors of democratic-republican total war (beginning with the Napoleonic wars, through Lincoln's War, culminating in the ideological World Wars of the 20th century) versus the almost chess-like maneuverings of monarchic wars.

Many people erroneously conflate American and Western ascendencey with democratic-republic government. Nothing could be further from the truth. It is capitalism and the technological advancement it promotes, through the phenomenon of ever decreasing time preference, that has allowed the western world, and specifically America to flourish. This has been despite its form of government, not because of it. America was blessed by a particularly small government at its founding, and a cultural belief in constraining government, which allowed capitalism to make the nation wealthy. But inevitably the democratic-republican nature of its government will consume it.

Monarchy wins hands down. Unfortunately, monarchies are probably unstable. Because heirs do not have to be natural elites to inherit the throne, they do not have to possess superior qualities of far-sightedness and good decision making. It only takes one heir who does not see that he cannot overtax the population, pervert the definition of justice, and plunder his populace for a bloody and populist revolt to occur. Hence, monarchies may inevitably spawn democratic-republics.

Re: Which is Better, Democracy or Monarchy?
 

"monarchies may inevitably spawn democratic-republics."

And therein lies the rub.

What is a "time preference?" I think I understand it in context, but have never seen the term before. Do you think you could do a better job defining it, since your entire hypothesis seems to rest on it?

Historically, Monarchy is overthrown, and a representative republic is put in its place. You have this romantic game theory ideal of how a rich person will act, though we have seen repeatedly that people do not always choose what is in their best interest, they do not tend toward "low time preference" activities.
In theory I think we could say that the best government is a communist one where everyone loves each other in happy-bunny-land and they do happy low-time-preference things because they don't need to steal or rape or murder. Unfortunately, that is not how people work. The rich get richer and the poor get poorer until the poor kill the rich and take their wealth. This pattern has occurred countless times throughout history.
The only way to prevent it, it seems, is to subsidize the poor like we do in the US as well as more socialist countries. That combined with a large middle class who is content where they are is the only way to protect the wealth of the rich.

Re: Which is Better, Democracy or Monarchy?
 

[ QUOTE ]
What is a "time preference?" I think I understand it in context, but have never seen the term before. Do you think you could do a better job defining it, since your entire hypothesis seems to rest on it?


[/ QUOTE ]

[ QUOTE ]
First, please read the first post of this thread for an introduction to the terminology and the relationship of time preference to civilization (you can read the rest of the thread as well, of course, but the first post is necessary for this discussion).


[/ QUOTE ]

Re: Which is Better, Democracy or Monarchy?
 

I appologize I missed a link hidden in the middle of a sentence.
When he said "this" thread, I for some crazy reason read it as "this thread."
Amazing how that happens sometimes.

Regardless, I am not sure why you feel like you added anything by your quoting a sentence that I obviously read, instead of explaining its intent which I obviously missed. Perhaps you can attempt to be helpful in the future, if it is not too far off from your "time preference."

Re: Which is Better, Democracy or Monarchy?
 

[ QUOTE ]
"monarchies may inevitably spawn democratic-republics."

And therein lies the rub.

What is a "time preference?" I think I understand it in context, but have never seen the term before. Do you think you could do a better job defining it, since your entire hypothesis seems to rest on it?

[/ QUOTE ]

Did you read the other thread first? All of economic analysis depends on time preferece. For example, interest rates are the market aggregate sum of individual time preferences.

Edit: I see now that you missed the link. No problem.

[ QUOTE ]
Historically, Monarchy is overthrown, and a representative republic is put in its place. You have this romantic game theory ideal of how a rich person will act, though we have seen repeatedly that people do not always choose what is in their best interest, they do not tend toward "low time preference" activities.

[/ QUOTE ]

Yes, they do. This is not an abstraction or ideal. Time preference is a real effect. Because all actors do not act in a fashion that you would agree is rational does not mean they act irrationally.

[ QUOTE ]
In theory I think we could say that the best government is a communist one where everyone loves each other in happy-bunny-land and they do happy low-time-preference things because they don't need to steal or rape or murder.

[/ QUOTE ]

No. Communism and socialism are impossible in large economies because no economic calculation is possible. Socialism is only possible among small primitive groups, where time preference will be high, or in so-called household economies where values may be directly imputed by consulting the head of the house's personal value scale.

[ QUOTE ]
Unfortunately, that is not how people work. The rich get richer and the poor get poorer until the poor kill the rich and take their wealth.

[/ QUOTE ]

The rich (the savers) get richer by saving and thus producing more. To do this they must employ the "poor." To do this they must offer some fraction of their savings or production in exchange, or else the poor man would not take the job. Thus the rich get richer and the poor get richer.

[ QUOTE ]
This pattern has occurred countless times throughout history.

[/ QUOTE ]

Perhaps, but it is by no means the norm nor the general trend.

[ QUOTE ]
The only way to prevent it, it seems, is to subsidize the poor like we do in the US as well as more socialist countries.

[/ QUOTE ]

Subsidizing the poor leads to more poverty. Subsidizing anything leads to more of that which is subsidized, obviously.

[ QUOTE ]
That combined with a large middle class who is content where they are is the only way to protect the wealth of the rich.

[/ QUOTE ]

You would do better to identify any logical flaws in my analysis than to regurgitate ideology.

Re: Which is Better, Democracy or Monarchy?
 

[ QUOTE ]
[ QUOTE ]
Historically, Monarchy is overthrown, and a representative republic is put in its place. You have this romantic game theory ideal of how a rich person will act, though we have seen repeatedly that people do not always choose what is in their best interest, they do not tend toward "low time preference" activities.

[/ QUOTE ]

Yes, they do. This is not an abstraction or ideal. Time preference is a real effect. Because all actors do not act in a fashion that you would agree is rational does not mean they act irrationally.

[/ QUOTE ]
Are you asserting that people always act in their own best interest? While I agree that your idea of time preference exists as far as people being far less apt to steal something if they already have it, I think you have generalized and broadened the idea beyond its scope. I don't see how you can assert that "all actors [do not] act irrationally" unless I am misunderstanding you.

[ QUOTE ]

No. Communism and socialism are impossible in large economies because no economic calculation is possible.

[/ QUOTE ]
I do not understand what you mean by "economic calculation."
[ QUOTE ]
Socialism is only possible among small primitive groups, where time preference will be high, or in so-called household economies where values may be directly imputed by consulting the head of the house's personal value scale.

[/ QUOTE ]
What are the major differences between a socialist state and those in Scandanavia? Why does Scandanavia "work?"


[ QUOTE ]

The rich (the savers) get richer by saving and thus producing more. To do this they must employ the "poor." To do this they must offer some fraction of their savings or production in exchange, or else the poor man would not take the job. Thus the rich get richer and the poor get richer.


[/ QUOTE ]
What choice does the poor man have but to accept whatever wages the rich man offers? Why is it in the interest of the rich man to offer more than the minimum wages possible to get the production done? Thus the disparity in wealth becomes greater as the "saver" amasses wealth while the "worker" is unable to, based on his wages and poverty.

[ QUOTE ]
Perhaps, but it is by no means the norm nor the general trend.

[/ QUOTE ]

Can you name a single monarchy in history that did not end through a revolt of the peasantry? It seems that it is historically the trend from examples like Spain, France, Russia, China, even Britain (with the magna carta)


[ QUOTE ]
Subsidizing the poor leads to more poverty. Subsidizing anything leads to more of that which is subsidized, obviously.

[/ QUOTE ]

Is this obvious? I agree that it seems logical, but is there any historical evidence of it? Humans do not want to be poor, even if it is easy. They will always attempt to lower their time preference correct? Subsidizing prevents the extreme poverty that causes social discontent... it prevents the high time preference behavior of stealing. If a poor man is unwilling to work while being subsidized, it does not logically follow that he will want to work once that subsidy is removed. He will however have a higher time preference and therefore resort to the high time preference behavior.
Thus it is in the best interest of society to support its weakest members.

[ QUOTE ]
[ QUOTE ]
That combined with a large middle class who is content where they are is the only way to protect the wealth of the rich.

[/ QUOTE ]

You would do better to identify any logical flaws in my analysis than to regurgitate ideology.

[/ QUOTE ]

Do you disagree with the ideology? Why do you not believe that only a content middle class will prevent the upheaval of the aristocracy?

Re: Which is Better, Democracy or Monarchy?
 

It depends on who my parents are.

Re: Which is Better, Democracy or Monarchy?
 

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
Historically, Monarchy is overthrown, and a representative republic is put in its place. You have this romantic game theory ideal of how a rich person will act, though we have seen repeatedly that people do not always choose what is in their best interest, they do not tend toward "low time preference" activities.

[/ QUOTE ]

Yes, they do. This is not an abstraction or ideal. Time preference is a real effect. Because all actors do not act in a fashion that you would agree is rational does not mean they act irrationally.

[/ QUOTE ]
Are you asserting that people always act in their own best interest? While I agree that your idea of time preference exists as far as people being far less apt to steal something if they already have it, I think you have generalized and broadened the idea beyond its scope. I don't see how you can assert that "all actors [do not] act irrationally" unless I am misunderstanding you.

[/ QUOTE ]

What I mean is that in acting man seeks to exchange a more satisfactory state of affairs for a less satisfying one. He is not guaranteed that his deicision will be a good one or that the information that it is based upon is complete or accurate, but by definition he acts rationally. Even a madman who drills a hole in his head does so because he believes it will be more satisfactory having the demons out of his head than in.

In general, individuals with higher time preference will tend to make poorer decisions in terms of long term consequences (which they are less likely to consider), while individuals with lower time preference will tend to make better decisions.

[ QUOTE ]
[ QUOTE ]

No. Communism and socialism are impossible in large economies because no economic calculation is possible.

[/ QUOTE ]
I do not understand what you mean by "economic calculation."

[/ QUOTE ]

I'll explain it in another thread sometime. Suffice it to say that under socialism or communism (i.e. there is no private ownership of the means of production), there can be no prices, and hence no economic calculation, and no way to tell if scarce resources are being wasted.

[ QUOTE ]
[ QUOTE ]
Socialism is only possible among small primitive groups, where time preference will be high, or in so-called household economies where values may be directly imputed by consulting the head of the house's personal value scale.

[/ QUOTE ]
What are the major differences between a socialist state and those in Scandanavia? Why does Scandanavia "work?"

[/ QUOTE ]

They "work" because they are not fully socialist. Some industries are more socialized than others, there is some ownership of the means of production, and the more socialized industries still exist in a world of market prices, hence they can "cheat off the free market's paper" so to speak, and use those prices (however suboptimal they may be because they do not represent the realities of the supplies of and demands for the factors of production in that place) to make economic calculations. But there is always waste because the prices are always wrong. As socialism expands, the prices become more and more wrong, and there is more and more waste of scare resources.

[ QUOTE ]

[ QUOTE ]

The rich (the savers) get richer by saving and thus producing more. To do this they must employ the "poor." To do this they must offer some fraction of their savings or production in exchange, or else the poor man would not take the job. Thus the rich get richer and the poor get richer.


[/ QUOTE ]
What choice does the poor man have but to accept whatever wages the rich man offers?

[/ QUOTE ]

If the job did not leave him demonstrably better off, he would not take it, would he?

[ QUOTE ]
Why is it in the interest of the rich man to offer more than the minimum wages possible to get the production done?

[/ QUOTE ]

It isn't of course. But what you fail to realize is that there are always far more potential jobs avaiable than there are people to fill them. Thus employers must compete for labor by bidding up the price of labor, i.e. the wages paid to the laborer (they also compete with things like beter working conditions, shorter work days and work weeks, longer vacations, fringe benefits, signing bonuses, etc.).

[ QUOTE ]
Thus the disparity in wealth becomes greater as the "saver" amasses wealth while the "worker" is unable to, based on his wages and poverty.

[/ QUOTE ]

The "disparity" may indeed increase, but who cares if both parties become wealthier, which is the case? As emplyers becomes more productive they can bid more for labor, driving up wages. This is, in fact, the only wage that real wages increase; through increased productivity.

[ QUOTE ]
[ QUOTE ]
Perhaps, but it is by no means the norm nor the general trend.

[/ QUOTE ]

Can you name a single monarchy in history that did not end through a revolt of the peasantry? It seems that it is historically the trend from examples like Spain, France, Russia, China, even Britain (with the magna carta)

[/ QUOTE ]

OK, I thought you meant something else. Obviously I stated in my post that monarchies are unstable and subject to revolt. I thought you meant that the aggression rather than savings and productions as a means to accumulate wealth was the norm and the general trend. My apologies.

[ QUOTE ]

[ QUOTE ]
Subsidizing the poor leads to more poverty. Subsidizing anything leads to more of that which is subsidized, obviously.

[/ QUOTE ]

Is this obvious? I agree that it seems logical, but is there any historical evidence of it?

[/ QUOTE ]

Mountains of it.

[ QUOTE ]
Humans do not want to be poor, even if it is easy. They will always attempt to lower their time preference correct?

[/ QUOTE ]

No. I'm quite certain than the vast majority of people have never heard of time preference, much less always attempt to lower it. The point is that a person with lower time preference is more likely to save, and that savings through capital accumulation and increased productivity results in lowered time preference, which results in a continual tendencey to lower time preference.

[ QUOTE ]
Subsidizing prevents the extreme poverty that causes social discontent...

[/ QUOTE ]

No, it doesn't. Subsidization breeds extreme poverty. It generates high time preference because lack of planning and savings is rewarded with funds that can be immediately consumed in high time preference behaviors like alcohol, drugs, and rims. Occasionally these funds are saved and eventually leads someone out of poverty, but because of the direction of incentives this is very, very, very rare.

[ QUOTE ]
it prevents the high time preference behavior of stealing.

[/ QUOTE ]

Obviously not.

[ QUOTE ]
If a poor man is unwilling to work while being subsidized, it does not logically follow that he will want to work once that subsidy is removed.

[/ QUOTE ]

Incentives are set up such that if he works while being subsidized his effective wage is far, far below market value. The extra money he would receive from work rather than the dole is not worth his time.

[ QUOTE ]
He will however have a higher time preference and therefore resort to the high time preference behavior.

[/ QUOTE ]

Possibly. Or he could simply get a job.

[ QUOTE ]
Thus it is in the best interest of society to support its weakest members.

[/ QUOTE ]

Paying people not to work generates more people who will not work.

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
That combined with a large middle class who is content where they are is the only way to protect the wealth of the rich.

[/ QUOTE ]

You would do better to identify any logical flaws in my analysis than to regurgitate ideology.

[/ QUOTE ]

Do you disagree with the ideology? Why do you not believe that only a content middle class will prevent the upheaval of the aristocracy?

[/ QUOTE ]

I was more concerned with the tone of the sentence and the entire post, which has a lot of anti-capitalist misconceptions.

Re: Which is Better, Democracy or Monarchy?
 

[ QUOTE ]
Monarchy wins hands down. Unfortunately, monarchies are probably unstable. Because heirs do not have to be natural elites to inherit the throne, they do not have to possess superior qualities of far-sightedness and good decision making. It only takes one heir who does not see that he cannot overtax the population, pervert the definition of justice, and plunder his populace for a bloody and populist revolt to occur. Hence, monarchies may inevitably spawn democratic-republics.

[/ QUOTE ]
Hi Borodog.

This is much the same point as I was making in the AC thread although coming from a slightly different angle. the trouble with government is its extremely attractive (in a dynamical sense).

If I may continue my hijack. AC tends to spawn fifedoms which leads to kingdoms which leads to government (one path to government amongst many).


chez

Re: Which is Better, Democracy or Monarchy?
 

I think you're glossing over the issues of taxation by simply metioning rates --- and the impact taxes have on time preference. Specifically, the progressive income tax that disciples of communism have adopted. By employing an agrarian timetable and progressivity to a non-agrarian economy -- delayed gratification and non-consumption are heavily penalized.

BTW- fun topic.