James W. Meng
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Adverse Selection Explained (Cullin' Nan)
occasionally, I'm mistaken for a women's rights advocate, and I should note, I am not a woman, and I live in the European Union where women are considered as total equals to men under the law, so actually, this isn't the case. it's just not really on my radar. also, there's largely no real women's rights problem in Russia and I don't speak Arabic.
having said that, let's discuss Western labor & investment capital market inversion and the adverse-selected Y chromosome a bit more, because so little has been published on the subject
Imagine a world where all cars are either Chevrolet Suburbans or Rolls-Royce Cullinans. There are a few other things too - government-owned long-distance trains, perhaps; if you live in a monarchy there's a royal yacht that the King and Queen ride around on from time to time; and of course every head of state - not just monarchs - has a private jet. Other than that, every car is either a Suburban, or a Cullinan.
Now, let's talk about the economics of the markets for those vehicles. Because, and as you can see in photos, although these vehicles are very different, they are no longer allowed to have disparate prices. Their cost, at new, must be exactly the same. Otherwise, you see, the workers who make these vehicles will have very different lives - the people making the Suburbans will be making many more of them in exchange for lower wages, while the people making the Cullinans will be spending more time ensuring that quality is up to the highest standard. General Motors, meanwhile, and in keeping with its mass-market roots, decides that their workers will have to continue working hard to ensure that everybody who wants a Suburban has one, while those who want a Cullinan will have to be in with someone at Rolls-Royce; perhaps wait on a list for awhile, on which priority might appear to be arbitrary; or pursue their hopes in the secondary market - because the number of workers qualified to produce a Cullinan is inherently, inalterably smaller than the number of workers qualified to produce a Suburban, and meanwhile, if the Cullinan workers are overworked, their output quality will decrease and the Cullinan will cease to be a Cullinan.
Some of you would mistake this for normal supply-demand economics with an artificial price floor. If so, read on. But if you get the ultimate analogy already, the rest will just seem tedious. Pour yourself a stiff drink and make sure the doors are locked tight before you go off to bed.
Because this car-society is in long-run equilibrium, again, there is no way to increase the production of Cullinans, and the key constraint is the available number of workers who are physically able to do the work to produce them at the same quality standard. In fact, there is no other constraint at all. The General will make more Suburbans, from time to time, if the demand arises, but Rolls-Royce has no ability at all to do the same.
Then there's the secondary market: used cars, in colloquial parlance. One might assume that the market price for used Cullinans would skyrocket, there being a shortage of supply on the new market. Used Cullinans in good condition with low mileage might often even exceed the price ceiling for a new vehicle, all else being equal. But the Cullinan is a sophisticated car, requiring careful maintenance and construction. It is equal parts more capable yet also more dangerous on the road, and more fickle in reliability if not maintained correctly, requiring, again, careful maintenance and strict factory discipline. As a result, the Cullinan has become, in this car-society, something of an enfant-terrible (Peugeot named one of their hot hatches exactly that, actually) to the uninitiated and naive, as well as to those who cannot really afford it despite the equality-price of admission.
But not only was the Cullinan poorly understood by the majority of the public - it rapidly became a target of derision from those seeking to sell used Suburbans. Why was it worth more than a used Suburban, the People asked. Irrespective of condition and mileage, the notion became incomprehensible to the owners of Suburbans that owners of Cullinans could demand a premium for their cars in the secondary markets. And so the owners of Cullinans and their vehicles immediately became targets - some even before signing off on a purchase. Why not make it impossible for the people in our neighborhood to even own a Cullinan, the People asked. And those who had owned one for some time, or purchased one on the secondary market - began to experience unusual major mechanical failures, the likes of which could only be explained by sabotage. After some time it became clear that there was an organized movement to sabotage their vehicles, so that these vehicles and the utilitarian upside of reliability, comfort, and precision that they typically provided to their owners would never, ever be realized in financial or material terms.
Governments responded by further curtailing the availability of Cullinans to those whose would otherwise be forced to participate in the market for Suburbans - dedicating the new production to livery, fire, funeral, military, and police service instead.
Those of you who believe this is really about automobiles are wrong - it is about the labor market for men from historically-elite backgrounds - but nevertheless it is quite representative of the market for automobiles in the Soviet Union and elsewhere in the former Eastern Bloc. This market as it exists today was set up not by men, but by women. In such a market there is no shortage of Suburbans. But, because the demand for Cullinans in our theoretical car-society would ordinarily exceed supply, external pressures have arisen to fill the void, such as I explain. Both adverse-selected men and women participate in the creation of these forces. Once a woman has committed to the analogous Suburban, and particularly once there is a child-Suburban, incentives to defect to the alternative are totally eliminated. Thus the state of all-out sabotage of more capable humans is perpetuated for the entire life cycle of the family and children in perpetuity.
There is no escape from this trap. Once a society decides on adverse-selected men, there is simply no way to defeat the rot, which is total: such a society is totally doomed, unable to sustain economic growth or even stagnation. It simply collapses.