In his book titled The Collapse of Complex Societies (New Studies in Archaeology), Tainter argues that complex societies collapse because devolving becomes impossible. Those layers of bureaucracy and stratification of professionals and regulation become such an inflexible warren that unwinding them becomes impossible. Like large failing firms, orderly downsizing is impossible. The bureaucracy and overhead has devoured the last marginal value and the increased complexity just adds cost. Collapse eventually becomes the only possible avenue to simplify.
Complex societies collapse because they become too inflexible to respond. They fail to downsize not because they do not want to, but because they can not do so.
The topic of license provides real world examples of this phenomenon. Licensing does not just add cost to would be entrepreneurs while providing protective barriers for existing providers. It forces providers to incur extra overhead costs for government inspection and paperwork. But it also forces overhead from the professional class in the form of tax accountants and legal fees and the like, all supposedly meant to protect the customer. But what is the exposure to the customer in the overwhelming majority of these industries? What is the exposure to an unlicensed tax driver or hair stylist? A decrepit car ride to the wrong place? A bad hair cut? A terrible meal?
Remember that the provider has significant incentive to provide value for their service. If they do not, their customers will go away. Do we really believe that significant orders of magnitude of overhead adds an equal measure of security?
So we are left with the question of whether the professional class is actually adding any marginal value to the transaction between provider and customer. Especially as the regulation increases in complexity, most often to protect the professional from their own version of liability, the supposition is easily made that a great portion of the professional class long ago became a non-value added tax to the society in which it thrives. It owes its existence to the complexity of government regulation and licensing, without which the entrepreneur would fill out their taxes on the back of a post card, and perhaps never speak to a lawyer in their entire life time.
As in the earlier article regarding a class society, we see that after we get past the fallacious argument of worker vs. capital, that it is a plodding and bureaucratic state that perpetuates the poor and their ability to produce and climb the ladder to financial security. And while the smartest people in the room continue to debate how it was possible for the auditors and the SEC not to have noticed that Lehman was bankrupt, the more practical question to our ongoing welfare as a nation must be whether we need such professionals to enter into virtually every transaction between provider and customer on the planet. Surely we are approaching Tainter's inflexible societal paradigm when even a haircut requires a government official and a lawyer. Where is the marginal value in that?
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