Graphic of the Day: The Fundamental Difference between the Private Sector and the Government

It's all about incentives...

(source: Townhall's Glenn McCoy: March 24, 2015) [hat tip: Zero Hedge]

Quote of the Day: The Energy Available to a Society Depends on the Organizational System

Civilizations based on conquest inevitably decline when they meet their match…or just run out of energy. Civilizations that expend their energy building huge monuments have little energy left to defend themselves against invaders or other challenges. But perhaps most often, civilizations die like humans, from the inside out. They develop power structures, aka government, with almost exclusive monopolies on the use of violence. Then, elite groups get control of the government and use it to shift more resources and energy to themselves. The rich get richer. That is why government is fundamentally a reactionary institution; it is almost always used to protect existing interests. Future interests don’t vote…children don’t stab you in the back…and tomorrow’s industries don’t make campaign contributions. In effect, government moves energy from the future to the past…from what will be to what used to be…and finally, to what will be no more…

Joseph Tainter, in his Collapse of Complex Societies, believes the decline in civilizations can be traced to problem solving. Each challenge, he says, leads to a solution, which involves greater complexity. Bureaucracies, hierarchies, rules, and regulations are imposed. These things cost time, energy and resources. Eventually, the cost is too great and the downside is reached.

In the Roman Empire, for example, agricultural output per person dropped as population increased. The problem was addressed by a policy of conquest.

The Romans took resources — grain, slaves, gold — from their neighbors. But this required a large army, which was an expensive, energy-consuming enterprise. The return on investment declined…and eventually went negative. The Empire collapsed. That was not necessarily a bad thing. When the decline on energy investments is negative, you are better off stopping the program. And archeological evidence from bones and teeth suggest that many people were actually better fed after the collapse of the empire.

As the size and complexity of society grows, the governments that are most competitive are those that draw on the most support (energy) of their subject peoples. That is why the Roman policy of conquest was so successful. They were able to turn the conquered peoples into supporters of the regime, with most of the army eventually comprised of non-Roman soldiers. The British Empire was good at this too. The empire began by subduing the Scots, who became the backbone of the British Army. Today’s American army, too, depends heavily on soldiers from the southern states, who were conquered by Abraham Lincoln’s armies in the 1860s.

The energy available to a society depends on many things, probably the least important of which is beneath the ground. More important is the organizational system and its stage of development. In an early stage, the system tends to be robust and efficient — or ‘simple,’ in Tainter’s terms. Later, additional complexity degrades returns on energy investments. While this complexity may be described as a form of problem solving, it is better understood as an attempt by elite groups to hold onto their wealth and power.

This excerpt is from Bill Bonner, publisher of the Daily Reckoning, discussing the ontological cycles of human societies or "the rule of the downside"