Authority Capital

Consider this post as a Breaking Bad cold open. S1E01: A guy in underpants and lab apron, driving an RV with 2 corpses and loads of broken lab apparatus, the door with bullet holes, driving through the dessert, veers off road and smashes into a rock.


Do decisions not come at a cost? Why can't we ask the authorities to pay for their choices? With the 'Cost of Authority'.

You are a talented person interested in working for my company so allow me to introduce you to it. It's a company which produces some goods and services and earns a decent profit.

There is tons you can know and learn about cryptocurrency from a plethora of resources from around the web. To our concern is the fact that we can, AND DO produce our very own currency which is as (if not more) well backed as the usual fiat currencies you are comfortable with. To avoid confusion, let us call your regular familiar fiat as Xm and our home made currency as Ym. Ym is only accepted here and is of no worth (known to us) outside the company. It is obviously exchangeable with Xm with an exchange rate revised regularly. The most important aspect is salary here: You can have your stated salary as any proportion of the Xm and Ym from 0:1 to 1:0.

So why would you want to be paid in Ym if it is of no worth outside the company? Because your ability to make any decision for or in the company will come at the EXPENSE of Ym. Remember the opening question? That's right. You'll have to pay to make decisions - Pay to exercise authority.

Authority is no longer an iron throne. It's made out of parchment pulp. It'll deplete to nothing as you use its power. It won't be hereditary. It'll be hard-earned, fluid. Liquid - like 'money' (Xm). Bigger decisions are gonna cost more. You can trade it with others in the company. The Ym is akin to a weakly orthogonal dimension (thus the acronyms) to Xm albeit with a very small finite field (the company).

As said before, you can simply give it up for the friendlier Xm. You don't like this idiosyncratic setup? Just take your paycheck and leave. Squander it away. Like a daily wager. But know for a fact that if you got no Ym to spend, you won't even get to choose the coffee mug you can use. You'll be a well payed slave, at the mercy of your masters.

Sounds imperialist? I don't care but I've kinda begun to impugn the establishment. If we are imperialists, have masters and slaves, who are they? Do we really have a vertically designed hierarchy? Let's re-evaluate. There doesn't seem to be a permanent CEO in general. A CEO is the Chief decision maker and anyone who makes big decisions pays for it and kinda demotes theirself from the rank. Then maybe, we do have a vertical hierarchy based on the amount of Ym a person owns - it's just that this 'hierarchy' is non-stationary in time. It's rather dynamic. You can read its instantaneous state at any given time. Moreover, since all our plans are very long term and very transparent (more on this later) one can estimate the 'flow' of the hierarchy as well. There won't be any more favours. A favour here, is essentially a hand-off.
I think a mathematical simulation of such a model may be possible. At the outset one can easily realise that this system is going to be intimidatingly communist egalitarian.

Some of you intelligent folks here might have already started to compare this with the way companies pay their employees in stocks (options, to be precise). One may feel that it's simply renaming or mangling of the same system (A Soviet Dandification, if you may). Everybody is entitled to opinions but I'd like to express very strongly, my objective of the structure here - decorrelation. Decorrelation of authority and capital, of power and money, of ownership and profit. A nice post/paragraph delineating the differences sounds warm but I won't go through the trouble unless I am called for an elaborate lecture.

Now imagine - What could go wrong with the model? Those acquainted with the macroeconomics of a financial system can probably point out standard problems and solutions.

Before I explain them let me restate a little of what has been said and a bit of what hasn't. The company without the people is a dumb inanimate engine. It makes Ym at a steady, profitable, deterministic rate but can never take a single decision on it's own. Any move it makes is all about disbursal or exchange of Ym and has been hard-coded to it. At the right cost (Ym), everything can be modified. But hear it out even if it seems too obvious, there are no intelligent characters involved in the company other than its employees (people who have a wallet to store the Ym). Best stated: the Ym with the company's wallet (not belonging to any individual) is useless.

Coming back to the question - just like Xm, Ym has its character in its fluidity. Its worth is in its motion. So broadly, there are gonna be 2 classes of obstructions - individuals hoard too much Ym and are unwilling to give it back, or the company has too much Ym and is unable to give it back (people are not interested or are unable to buy it). Think of the company as the central bank, the Ym as Xm, and the Xm as all the Goods and Services that is available and tradable in the country's economy. The Central reserve bank does not want to keep too much money with it, it would want people to trade it and circulate it more. Neither would it want to have too little with itself as that will loosen its control over the economy. In comparison to that, our model (where money is Ym) is more inclined towards high liquidity. Thanks to our capitalist ('Xm'ist) world, the company, the people, everyone has little incentive to 'hoard' Ym. The company may posit a higher rate of production so as to expedite decisions by deprecating the worth of Ym. So let us consider the first form of the problem - The company has too much Ym, leaving too little for the people who are hence unable to make big decisions thus stalling the company progress.

What a central bank does in an analogical situation is it eases out lending. As an end effect, it basically loans out its money more liberally. Loan was the first thing that got to my mind, but give it a little more thought and you'll realise, loan doesn't make a lot of sense in this scenario. Cross-bartering is infinitesimally small as compared to P2C (people to company) periodic exchange. Loaning against Xm is kinda meaningless. Giving up Xm is exactly how company gives you Ym, so duh. I know it is not exactly true and loans can make some sense but broadly, it seems stupid in my analysis.

Exchange rate regulation on the other hand can be a classic way to incentivize buying of more Ym. More Ym the company accumulates, lesser goes its cost (against Xm) and vice versa. While we are at it, it's good to state that the cost of Ym should naturally go up as the company makes more profit. Also it should be noted that since Ym is typically disbursed as salaries, accumulation with the company is a rare adversity.

What I feel as an obvious (and in some way solitary) solution is handoffs. I have an even more edgy name for the process - squirting. Since the company has just no incentive to keep Ym with itself, let it simply 'squirt' out a fraction of its deposits to the employees, as and when its Ym reserves exceed a threshold amount. Crazy? Can't help it but I have paid some thought to an execution plan that may bring some comfort (read familiarity) with it. There are 2 ways to go about squirting:

A) Egalitarian Squirting:
All the expendable amount is given equally to all (or a big chunk of volunteering) employees. Plain and simple. Lovin' it? Probably not.


B)Evaluation Metric based disbursement:
This tiny dude will bring in a lot of 'old' ideas and practises to this weird company. All the decisions (important that you read decisions as plans, or strategies. Delineated, long-term, transparent strategies) made by every participant will be evaluated against the all beloved Xm returns. (Personally, I would want better metrics but let us maintain some skeletals of legacy to allow for better acceptance and easy overlay) Better the return of a particular individual, higher would be their handoff. The evaluation does seem complicated, but is definitely reliable. The evaluation would be perpetual to accommodate a large time-scale of return.

How about disbursement based on existing Ym? Excellent idea. Let us implement it with a small change though. Let the evaluation score be augmented by an additional metric which will be based on a voting scheme. The participants will vote their distribution of Ym disbursal and their votes will be weighted as per the amount of Ym they own currently. The (Ym) rich will become (Ym) richer.

To draw some lose analogies here, This evaluation system is analogous to the credit score system that decides which person is more likely to get a loan passed. The entire process of squirting is analogous to the host of policies govt. lays out, to boast liquidity in the market.

All the grandiloquence and 'it's not entirely crazy' arguments aside, there are a few good downsides to the system that needs to be discussed. The most glaring should be the non-stable hierarchy ('upper' management). Those who lead, learn from their actions, their returns, their mistakes. A leader is moulded by the consequences of their leadership. Unfortunately in this case, his actions will mould someone else. A more practical nuance is the infinite challenges that obfuscate a strategy. A leader decides the strategies as per their calculations and capabilities. He may foresee some challenges as confrontable while avoiding others, and such calculations are highly subjective and varying from person to person. This flaw could be used deliberately by corrupt leaders to sabotage their successors efficacy or review.

If I may flip the pillow to the cooler side however, this will pull out some exceptionally transparent long term strategies, ipso facto some damn good leaders as well. But aren't we expecting a bit too much?

This cool side of the pillow may get warm sooner than expected. Forcing very long term planning, detailed scheme elaboration is an expensive tax on decision makers. It might refine the class of leaders a bit too much. Even if that is palatable, remember all these big decisions come at the cost of authority capital? So after all this careful planning, which most likely has a large time scale of return as well, the leaders lost their 'leadership'. This will reflect on the typical strategies implemented by the company. They'll be short term (not too big to save the hierarchy's Ym) but very bloated (because the company wants it). Bigger strategy demanding bigger explanation basically 'squares' the complexity.

Another gaping problem is the regulation of production itself. Xm can be made in accordance with the GDP of a country, but how do we peg Ym? Summation of all the possible scale and scope of decisions inside the company seems like a very abstract commodity. If it is produced against Xm then the whole thing crashes. External (or internal) actors may flush in Xm just to mess up with the 'authority pricing'. If Ym decides authority, its pricing is all the control you need in the company. If the initial account holders are corrupt, it can limit the intended impact of the system

These can be compensated by relaxation, other bonanza type schemes, and most importantly a good pricing (Ym) plan. There are a lot of pros and cons I've skipped to mention here. If not everywhere, there could be certain scenarios - some time in future maybe - where this is just the thing the world needs. Please feel free to discuss any remarks or apprehensions you may have about our company.

P.S. What would such an 'expendable authority' model look like as a substitute (or an upgrade) of democracy? No more arguing and lobbying the government to make the changes you want. Do it yourself. Own your nation. Beverage for thought! :P

What a bizarre idea? How did he get here? Pretty please read the next post.