A conspiracy of saints and knaves

Complexity is extremely costly.  It absorbs large amounts of time and energy.  One element in the decline and fall of civilizations, Joseph Tainter has suggested, may be an investment in complexity beyond the reach of available resources.

Why, then, is it in anyone’s interest to increase complexity beyond what is absolutely necessary?

Part of the answer is that impenetrable language and procedures provide a smokescreen for crooks and a good living for specialized technicians – two groups which, for moral purposes, are often identical.

When it comes to the law, complexity sets the table for corruption.  All manner of parasites feast on it:  bureaucrats, lawyers, inside-baseball influence peddlers, technical specialists, and more.  Whatever their motives, and regardless of consequences, these human tapeworms are happy to short-circuit the democratic process.

Joseph Fouche, in Chicago Boyz, cites N. N. Taleb’s perspective on complexity in the regulation of the bond markets:

[T]he more complicated the regulation, the more prone to arbitrages by insiders. So 2,300 pages of regulation will be a gold mine for former regulators. The incentive of a regulator is to have complex regulation.

Fouche, however, digs deeper into the question of motivation.  Borrowing from Peter Turchin, he proposes a three-tiered categorization of individual attitudes toward group interests.

Knaves, he writes, always place self-interest first.  Saints, conversely, always embrace the interest of the group.  Moralists occupy the conditional middle ground:  if a moralist sees knaves punished for not pursuing group interests, he will put these interests ahead of his own – but the moment he decides the knaves will go unpunished, the moralist will opt out of the group and pursue his individual interest.

In this scheme, complexity is generated not only by the knave’s search for cover in his ploys to cheat the community, but just as much – and possibly more – by the saint’s high-minded ambition to improve human behavior.

[Knaves] can create alliances with other knaves to form rent-seeking groups. They can dupe saints into supporting efforts to create institutional complexity to replace simpler tribalism. Saints think they can use such complexity to raise everyone to a higher level of institutional purity. Knaves know they can use such complexity to camouflage pursuit of their own interests instead of the institution’s. Knaves, playing the saint, can even rally moralists to support opportunities to generate complexity secretly intended to pursue knavery. Since the survival of knaves in an institution doesn’t necessarily rely on the good will of moralists who know them intimately, they can actually get away with generating complexity to advance personal interests at the expense institutional interests.

Of course, undermining the intent of a system will ultimately hollow it out and leave only a husk – a sham of what was intended.  Saints and knaves often end up destroying the conditions they labor to improve or exploit:  this is as good an explanation as any for the recent fainting spell of our financial system.

Complexity has side effects that even knavery can’t anticipate. Those side effects can be toxic. They can even sweep knaves away in their wake, even though knaves do their best to entrench themselves in protective complexity. Saints, beacons of well-intentioned virtue, can create complexity in their zeal for earthly perfection that would make even knaves shudder. This complexity of the anointed can generate even more toxic side effects than the complexity of the damned.

All of which has obvious implications to recent discussions between this blog  and Sophistpundit about the reality of the will of the people – but let’s put off being obvious to another day.