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Dec. 5, 2006 - Freedomain Radio - Stefan Molyneux
42:24
544 DROs and Self Interest
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Good afternoon, everybody.
It's Seth. Hope you're doing well. Oh, good evening.
It's 6.30, and had an interesting post from Greg Yvonne Eggie today, where he said, there are three basic notions inherent in the DRO, we all watch each other model, which was 541, I think, that I think need further exploration.
I raise these objections not out of a desire to disprove the model, but more from a standpoint of trying to further refine the model in my own mind, and to help build a case that can be most convincing to those inquiring about the stateless society.
In short, these three issues all speak to aspects of self-interest in one way or another, and boil down to this list.
Barriers, external incentives, and internal motivations.
With regards to the barriers to entry into a market, or for the use of some technique, If they are prohibitively high, then it should be safe to assume that only those individuals who are most motivated will enter that market or use that technique.
With regard to violence, then, this means that only the most aggressive or mentally unhinged would ever even consider it, which of course is no different today, except that the barrier is low enough to permit all manner of people to employ it.
But what really concerns me in both today's environment and in the DRO environment is that those sorts of people will not really care what the barrier is.
is they'll use violence regardless of the barrier.
So who then would end up bearing the costs in lure of the madman whom, say, we just killed in self-defense?
So then he goes on a little bit further, but I'd like to just start with this.
His point, he believes that for the D.R.O. model to work, there really needs to be a fundamental shift in the way people think about themselves and the purpose of action itself.
I'm not sure that I agree with that.
So, for instance, do we go for the appearance of integrity or not really integrity itself?
What would stop a rating agency using the example from the podcast from simply catering its results to the desires of the highest bidder?
What would stop both advertisers and broadcasters from simply shopping for ratings agencies that provided data favorable to themselves and then spending the difference fighting each other over the gap between the numbers?
I guess this sounds similar to the critique of libertarian justice.
I condemn you in my court, you condemn me in your court, and nothing is really resolved by that.
Has there been a sufficient response from Long or Hoppy or Amstead, for that matter, that I've missed or maybe forgotten?
Well, these are essential questions, of course, and there's a couple of things that I think are well worth examining in this area.
And the first thing that I'd sort of like to talk about is the issue that comes up, you know, what about the lone crazy lunatic gunman and so on.
And, well, sure, of course, right?
But that's not the job of the philosopher.
The job of the philosopher is not to deal with the crazy lone gunman guy.
I mean, that's never an issue that philosophy can even remotely try to deal with.
Not even a little, little, little bit.
We are nutritionists.
We are oncologists. We don't deal with getting hit by buses.
A philosopher is a long-range thinker designed to set up a society wherein the maximum amount of peace and justice and goodwill and all these kinds of juicy things can occur.
Let me just check my blind spot here.
We can't deal with the lone gunman thing.
I mean, that's just not possible.
And this is a very important thing to realize when it comes to...
Good heavens, somebody broke the...
Somebody just drove right through the barrier getting out of the parking lot, I guess.
It's broken! Anyway, so I know that the lone gunman comes up and the crazy lunatic and this and that comes up all the time when you talk about a stateless society.
How is this going to be dealt with and so on?
But that's not something that anyone who looks for a large-scale social alteration or a deep alteration of social relations, nothing even remotely that we can deal with.
Absolutely, completely and totally impossible.
It's like saying to a nutritionist, well, how does your nutritional plan...
A deal with instantaneous combustion or spontaneous combustion.
It's like, well, that's a really freaky phenomenon and you can't really deal with it through nutrition.
Or, I don't mean I'm just out on a limb here, but maybe, you know, how does your nutritional plan deal When you twist your ankle, it's like, well, it doesn't.
I guess you'll be sort of healthier overall, but it's not going to deal with the accidents and the randomness.
This is a very good insurance plan all around in the sort of contemporary life insurance thing.
How do you deal with a meteor hitting a city?
Well... We kind of don't, right?
I mean, that's not what we're doing.
We're dealing with large-scale averages and aggregates and all this kind of juicy stuff, so it's just not the job.
It's not the job of the philosopher to deal with all of the conceivable randomness, and you're dealing with the very largest abstractions.
You're dealing with probabilities, you're dealing with human nature, you're dealing with rational examples, and so on.
But you can't conceivably deal With the crazy lone guy.
I mean, there's no way that any social organization or any social philosophy can deal with that, because it is far and away the exception.
We do know, I was just listening to a rather annoying but still well-written and well-read Bill Maher book called When You Ride Alone, You Ride With Bin Laden, where he's slavishly licking the calves of the soldiers and the policemen and so on.
In a rather horrifying way, but one thing that he does talk about that I think is quite interesting is he talks about, I think it was Jeffrey Dahmer,
and that there was some young Asian gentleman Who came tearing out of Jeffrey Dahmer's apartment and was bleeding from the rectum and had bites taken out of him or something.
And of course, the cops didn't do anything about this, right?
Despite this savage complaint, this complaint about savage treatment.
So we know that a DRO society is going to absolutely deal more proactively with that kind of issue because, well, naturally they're going to have to pay insurance to people if they don't do it and they'll have to pay escalating fines for people if it's found out that they had information that they could have acted on that they didn't and so on.
So we do know that a...
A DRO-based society will more proactively deal.
But yeah, there's going to be some crazy guy who has a sunstroke and just goes insane and shoots people.
Absolutely. Guaranteed that's going to happen.
Because this is all stuff that comes out of parenting.
And DROs will have positive effects on parenting, as I've written about before.
But you simply can't get rid of...
There is no social system that will get rid of all randomness.
The same way that there is no conceivable diet That will get rid of all cancers.
There's no conceivable diet that will get rid of all kidney stones because of genetic susceptibilities and so on.
We are the long-term healthcare practitioners of society.
We are the people who aim to eliminate or reduce the capacity or the possibility that people get osteoporosis.
We're not how to deal with broken arms.
We are long-term people.
And we're big picture people.
And so when people want to drag us down to the details and say, well, how would a DRO society deal with a lone gunman?
Well, we've got some answers, but that's completely irrelevant to what it is that we're trying to do as a master plan, right?
It's like going to the guy who's planning D-Day and saying, well, what are you going to do if a soldier trips right over here?
It's like, well, I'll just assume that soldier will try and do it.
Why are you even asking me this question?
It's got nothing to do with what it is that we're planning here.
This micro stuff is a great temptation, right?
Because as logical people, we want to tick off everything on the checklist, dot every I and cross every T and so on.
But we can't.
There's a certain amount of random stuff that's just involved in life.
We're not going to have any luck whatsoever trying to deal with that or pretend that it can't happen or won't happen.
What we do want, and this is sort of moving on to his next point, Which is, at the moment, violence is, he said that there's a low barrier to entry for violence at the moment.
And I'm not going to try and guess exactly what he means for that, but I would say that that's not the most accurate characterization.
I'll sort of say why, and then you can let me know if it makes sense.
The problem is not that there's a low barrier to entry for violence at the moment.
The problem is that there is an enormous incentive for violence at the moment.
So let's say that I could snap my...
I sort of, I don't know, I found Stalin's hand was grabbed...
Stalin's hand was sort of stitched onto my hand.
I lost my hand and I could snap my hand and turn free to main radio with Stalin's hand into a state.
Well, what would that look like? Well...
It would mean that every month, I would take $500 out of your Visa account.
If you didn't have a Visa account, I would take it out of your bank account.
If you didn't have a bank account, then you'd have to live in fear and work in a cash-based economy and barter and so on.
And if you changed and didn't give me your visa, then, of course, what would happen is, and this would be everyone, everyone in North America.
So, of course, the first month, I'm going to get, I mean, I'm not even going to guess, but I'm going to get like $2 billion or $10 billion, some enormous, I don't know, $330 billion.
Is it 330 or 430 million people times 500 bucks?
You know, shave off half for kids, shave off half for people, another half for people who aren't working.
So it's 100 million, so it's 500, 500, so 5 billion dollars.
Just a second, 5 billion dollars the first month.
Well, that's quite a lot of money.
I mean, that's quite a lot of money.
And then all I do is I do two things.
I bribe people to cooperate with me, right?
So I will give kickbacks to the visa companies in the bank or whatever to take the money out of your account.
So that's sort of then the nice cop or that's the carrot.
The stick, of course... Would be that if you dared to defy my legitimate claim to your money, the social contract that I had imposed with Stalin's withered dead hand, then I would have to put punishments out so horrendous that people just wouldn't do it.
Or if they would, it would be like crazy loner people who would do it who I don't really care about.
So I would absolutely have to find a way to threaten the most unbelievable punishments for not allowing me to hoover up this money of yours.
So I would, you know, bribe people to agree with me.
I would bribe the people who would go around and drag other people in jail.
And you can bribe a whole lot of people for $5 billion a month, right?
That's, you know, let's say that I bribe, like I hand away 99% of the money.
That's $5 million a month.
That's a pretty... That's 99.9% of the money would give me $5 million.
I mean, that really is quite a...
If I gave away 99% of the money, I'd get $500 million a month, free and clear.
Right? So, when the violence is accepted, and I know that I'm ignoring that you have to believe that I'm a state, and I know that I'm ignoring that you'd have to be raised in public schools, and I'd have to train you, and so on.
But we're just talking in general about...
How this kind of stuff will occur?
Well, because of the amount of money that is hoovered up, right?
And 500 bucks a month is a pittance compared to what most people pay in taxes, right?
The amount of money that's hoovered up, and of course, it's not like 99% of it goes into enforcement in prisons.
I mean, a tiny percent of it goes into...
I think in Canada, the whole budget is 3% for the prison system and the court system and the police.
3% to 4% of the total budget.
It's tiny! The rest of it is just free and clear, right?
So I'd have to bribe people to support me, and of course those would be the teachers, the pundits, the people who run the networks, and all the people who would say what a glorious new rule this is.
Steph Mart and his withered Stalin hand would be, you know, I guess like Willie and the Hand Jive would be some sort of a blues album.
But... I would bribe people to paint a pretty picture, the priests and the teachers and so on, the writers and the pundits.
I would pay them off or threaten them.
To threaten them and to pay them is pretty much the best that you can do.
If you just threaten people, they get irritated.
If you just pay them, then they start shopping around.
But if you threaten them and pay them, then that's a pretty good thing.
But just by the by, I was watching a very interesting Studio 60 on the Sunset Strip, which is quite a wittily written and energetic, with an annoying Christian, but let's sort of take it for granted, but a wittily written teleseries by Aaron Sorkin.
It's not enough to forgive him for the scepter-licking, disgusting stuff that was the West Wing.
But he certainly has written some entertaining stuff here.
And there was episode 60...
Sorry, episode 11 on season 1.
I watched it on tape last night.
And in it, the network has had a live feed from Afghanistan.
And an RPG zoomed in and landed about 50 feet away or 50 yards away.
And the guy being interviewed let rip an unholy curse word.
Just the F word. Nothing too particularly savage.
And the FCC levied a huge fine on them, right?
It was like $330,000 per affiliate, which was like $70 million in total, right?
And so, of course, the guy comes, the head of the network, sits down with his lawyers, and his lawyers say, well, you can take the FCC to court if you want, but the problem is that this is what they're going to do.
They're going to start to look at all of your shows where there's kissing, where there's sex outside of marriage, where there's this, where there's gay couples, and they're going to slap you with indecency.
Shutdowns, right? And then, if you continue to fight them, they're going to pull the transponder license, in which case you can no longer broadcast and the network is totally shut down, right?
So, I mean, clearly this is just a shakedown, and it was the actor who plays the head of the network did a wonderful job of when people realize just how trapped by violence they really are.
Then, of course, the network relies on government sources for a lot of its news and so on and plays within this government arena.
And then if it displeases the government or it does something which the government can sort of, quote, legitimately fine them for, then they realize that they are not the big bully.
And, of course, Ed Asner gives this magnificent speech about fighting the FCC on this, and it's just hilarious, right?
It's just hilarious. The only way that you'd be able to fight the FCC would be to get rid of it.
I mean, actually fight the entity is ridiculous, right?
Anyway, so, because all it does is say that, well, it's okay to fight, then if you're willing to go to the wall and you have millions and millions of dollars to spend on lawyers, then it's reasonable to fight.
But other than that, you know, too bad for you.
If you're a small network without those resources, you should go under without a whimper.
And so, you know, it's going to be interesting to see where they play this, but It is quite fascinating to watch just how...
It was great because they made fun of Christmas and all of the nonsense that goes around at Christmas and so on.
And then they had this FCC thing.
I thought it was pretty well done.
But it will be interesting to see where this story gets taken.
But that's an example of a stick and a carrot, right?
So the carrot is, here's all these government sources for your news stuff, and by the way, the fact that you pay us a big license keeps competitors out of the market, although I guess cable and satellite is not doing good things for this kind of stuff.
But... What we're going to do, that's the carrot.
And then the stick is, if you do anything that we disapprove of, we're going to slap you with huge fines, we're going to start censoring your programs, and we're going to pull your transponder license or transmitter license, which means that you are shit out of luck when it comes to trying to survive as a network.
So that's the kind of stuff that you do when you're sort of in the state.
So if you just sort of look at the economics of what it is that I'm talking about, violence, because of the existence of a state, the violence is enormously profitable, like in a way that you just can't imagine.
I mean, you're really good as a businessman if you make 3% to 6% or 8% maybe, and good years 10%, and then bad years minus 2% or whatever.
You are an excellent businessman if you can sustain that over a significant period of time, just the same way as you're an excellent investor if you can do 7% to 9% return over any decent amount of time.
But the kind of profit that is available to governments, oh, it's just astounding.
It's absolutely mind-blowing.
It's absolutely mind-blowing.
And the costs are never borne by the government.
So up here, they recently nailed trusts, income trusts for taxes, wiped out $14 billion, I think at least, of market capitalization.
And this was in order to collect $500 million in taxes.
Well, nobody would, I mean, individuals would do that to get the $500 million and wipe away other people's abstract, quote, abstract earnings, sure.
But, you know, that's pretty profitable.
The other thing that's amazing, too, is when you realize how little congressmen get bought and sold for, it really is kind of embarrassing.
Like, congressmen get bought and sold for like $50,000 or $100,000.
You know, the legislation that gets swung, which can gain a company a billion or more dollars in a favorable ruling from, you know, favorable law, favorable tariff or something.
I mean, these things get done for a couple of hundred thousand dollars and maybe a half a million at most.
Filtered through a whole bunch of different people.
But the amount of money that comes out of these government transactions is absolutely enormous.
I mean, how much money does the The farm lobby in the state spend on lobbying.
I don't know, $10 million, $20 million a year.
$300 billion of subsidies that come out of that.
I mean, ROI is measured in the nanoseconds.
So, sorry, this is a very long way.
Traffic's moving well, so I'm going to start going very fast now.
But the profit that is in violence when violence is institutionalized in the hands of a state.
In other words, when you get...
The taxpayers to pay for the enforcement.
When you gain all of the profits of violence and force the victims to pay For the enforcement, and you skim massive amounts, massive amounts of money from them, right?
So the reality is that I'm getting 500 bucks a month from everyone with my magic dead Stalin hand state, and it's costing me maybe, maybe 50 bucks a head for enforcement.
Maybe. That's the whole deal of enforcement, right?
And so, of the $5 billion, I'm spending maybe $500 million, and I'm getting to keep $4.5 billion a month.
And there's no cost to get that money.
I don't have to make anything.
I don't have to go and test market stuff.
I don't have to do any of that crap.
I just have to, you know, I mean, the pundits and the priests and the teachers...
Do all the intellectual work.
And the soldiers and the cops and the jail and the prison jailers, they do all of the ugly work.
And of course, when you lock the people into a prison, I mean, the punishment that prison represents is just so savagely inhumane that it just could never be imagined outside of a state.
That you lock people up who are all sociopathic and homicidal and deprive them of sexual companionship and, you know, you let them rape each other as a matter of punishment.
I mean, this really is a Dantean level of hell that exists.
There is no... I mean, the punishment is just...
That's what you have to have. You have to have a punishment that's just way out of league with the transgression, right?
The transgression of what? You want to keep that 500 bucks a month?
Too bad. You know, into the rat hole rape room with you for 10 years, right?
I mean, that's the punishment that would be meted out.
And that, of course, would mean everyone would comply...
And then, I mean, the interesting thing is I'm never exactly sure, and I'll just put this in by the by and see what people think, I'm never exactly sure whether people are frightened of the government and then turn to teachers and priests and pundits and idiots to get justifications.
Or whether people are not frightened because they believe that the government is there for them.
I don't know. I certainly can tell you that now people do not love the state anymore.
People simply do not love the state anymore.
The state has been pretty much revealed as a savage whipmaster.
And people no longer love the state.
There are some people still around who love their country and will get all...
But they're angry now.
Like... I remember reading, I can't even remember where, but someone was talking about the ideal of America and that lump in the throat that you get when you see the flag and so on.
Well, that's gone.
I mean, I haven't seen that in years and years and years and years.
That's l'histoire.
And what it's been replaced with is...
People who are angry. People who are angry.
Bill Moyer is now one of them.
Like, oh, Americans are just not good at sacrifice anymore.
You know, everybody wants to, I don't know, lick JFK's sweaty nutsack or something.
It's just so embarrassing to hear these ex-hippies talk about JFK like he was some sort of hero.
Ask not what you can do for you.
It's like, fuck you. Why do I have to be a slave to you or you be a slave to me?
Why do either of us have to...
Why are those the only two options, right?
Ask not what your country can do for you, but rather what you can do for your country.
Be a fascist or a fascist slave.
Which one would you like?
Have you stopped beating your wife yet?
But what you get is anger.
And that's not very ennobling.
There was a certain amount of square-jawed, teary-eyed, choked-up kind of sentimentality for a lot of people in the past.
Rule Britannia and America the Beautiful and so on.
There was a fair amount of ignorance about the actual policies that went on.
There was a lot of nostalgia for the Second World War, a lot of nostalgia for the Empire in England, and nostalgia for America and its virtue and its beauty and its freedom and this and that.
And the advent of additional sources of information and, of course, the ever-escalating and ever-failing power of the state.
I think people are pretty clear now that the government is not interested in solving the problems in education.
I think people are pretty clear.
The government is not interested in solving poverty or illiteracy or getting rid of drugs.
And yet the government is not withdrawing from those fields.
So clearly it's just a bunch of excuses.
We want to end poverty, saith.
I guess FDR and Johnson were the two major ones.
But we want to end poverty.
And so they put all these programs in place.
Lo and behold, poverty doesn't end.
Massive debts accumulate, huge bureaucracies, diminishments of freedom, higher taxes, and so on.
And unfortunately, then it's sort of too late, right?
Because then people go, hey, wait a minute.
You did all of this to end poverty, and you haven't ended poverty, but you still keep taking my money.
It's like, yeah.
Did you notice that?
Yeah. Did you get that one?
Did that sort of slither into your mental cavities as a completed thought?
Because, yeah, I mean, you can make up all the nonsense you want, but it's pretty embarrassing, right?
Everybody just kind of fundamentally knows that the state had no interest in these things, you know, even remotely to a tiny degree whatsoever.
It's just a bunch of excuses, you know?
It's like the guy who comes up to you and you're sort of walking along the street and he's like...
I need your money because my leg is broken.
It's like, but you're just walking.
You're not even limping. It's like, yeah, it's my arm.
It's like, well, but you've got both your hands out for a handout.
Well, what I mean is that I got a headache.
It's like, really? Because it's bright out.
You don't have sunglasses on. They're clipped around your neck.
So if you had sunglasses... I don't really quite understand.
You're not even squinting, right? Yeah, well, what I mean is that my sister, she is...
She is big, the child.
And, you know, he just keeps making up stuff, right?
I mean, do you, you know, when he's made up the 20th thing, do you say, oh, I see, I see.
You want to give this money to the Salvation Army.
Well, that's fine, then. Here's the money, right?
Well, that's completely ridiculous.
Government just makes up whatever the hell it wants, whatever the hell it thinks will stick, and it sort of mutates around.
I'm always reminded of the scene at the end of Terminator 2, I think, when Arnold Schwarzenegger is in the vat of lava or the vat of molten steel, and he twists into all of these different shapes trying to escape his fate and so on.
Well, that's the government. They'll just sort of morph into whatever they can morph into that is going to make you...
Give them money. If it's this shape, if it's the shape of an orphan child in Africa, then they'll take that shape.
If it's the shape of a ghetto kid in Harlem, they'll take that shape.
If it's equality, they'll take that shape.
If it's freeing the Iraqis, they'll take that shape.
They don't really care.
Whatever shape they have to morph into to get your money, hey, does this work?
It's just like a...
You know, like you grab the massive ring of keys from the superintendent of a large series of buildings and you just go around and you go to some door and you're just trying all these different keys.
One of these is going to open, right?
And so that's sort of the way that works.
And so the idea that the government sort of have to solve problems has always been kind of funny for me.
But the immense profitability that is involved in violence is something that...
It's not that there's a low barrier to entry.
The barrier to entry is actually not that low in some ways to control state violence because you've got to get elected or you've got to rise up in some sort of superintendent rank.
You've got to, I don't know, like this, you've got to be some sort of powerful lobbyist.
You've got to have worked in the government through the revolving doll policy and then go back in as a consultant or whatever, right?
But The barrier to entry to get control of state violence is not that simple.
I wouldn't know how to do it.
I mean, I guess I'd have some idea.
Go get votes or something.
But the barrier to entry is actually quite high.
But once you're over that hump, it's Shangri-La on the other side.
It's absolute Shangri-La on the other side.
They have these expense accounts that are sometimes published on the web from the Canadian government.
My God, it's just astounding.
$800 lunches for three or four people to have lunch.
I mean, that's just ridiculous, right?
You know that that's somebody giving a $100 tip and then just pocketing it or, you know, ridiculous amounts of wine, five bottles of wine that then, you know, three of which or four of which are taken home.
I mean, it's free money, right?
It's like the Fed. It's just print the money, print whatever you want.
I mean, the amount of corruption is just staggering on the far side of this stuff.
It literally is, you know, millions and millions and millions and millions and millions of dollars just lying around in states.
Billions of dollars just lying around.
And so the barrier to entry is not that low, but once you're in there, you just can make such a savage amount of money that it's ridiculous.
I mean, I've worked hard all my life to make money.
It's hard. It's really hard to make money.
It's really hard. It's a lot of concentration.
It's been a lot of late nights, a lot of weekends, a lot of learning on my own dollar, and a lot of success and failure.
But it's hard to make money.
But in government, I mean, you just print it.
You just print it or it's just lying there in a bank account and you can't spend it fast enough.
Sometimes with governments, you simply cannot spend it fast enough.
You're lying around at the end of the year and it's just like, well, I've got $8 million and if I don't find a way to spend it, Then I'm going to lose it out of my budget next year or so.
You just phone people up.
It's like, can you submit anything?
Can you let anything? I mean, whatever you've got.
Ship me your employees.
I'll sell them to Saudi Arabians.
But this is the kind of stuff that goes on in government.
I mean, there's more money than you can just imagine inside the realm of government.
I mean, none of it for the frontline workers, right?
Because they're not in the inner sanctum, right?
They're not in the control in this area.
But... Oh, it's just a staggering amount of money.
So, you know, the barrier to entry thing, you know, when you look at violence within the existing society, there are the exceptions which free society can do nothing about, like this sort of crazy lone gunman guy.
And then let me get to this last point, which is this question of the appearance of integrity versus integrity itself.
And I probably didn't do a good job while I was freezing my noggin off.
I took my hat off and wrapped it around my Zen Vision M so that it wouldn't get too rumbly on the wind.
And only a part of it was rumbly, so it wasn't too bad.
But... I probably didn't do enough of a good job explaining this, but the great thing about the anarcho-capitalist or the DRO model or the stateless society model is that whatever people throw at it, it absorbs.
It's like one of these...
One of these energy beings in Star Trek or whatever, right?
So, you know, it starts off like two feet wide and they all put their phasers on stun and they aim their phasers at it and blast it and then it grows to like four feet, right?
They're like, oh my god, phasers are on kill because we're brain dead.
And then they shoot and then it grows to 20 feet and, you know, they hit it with photon torpedoes and it grows.
I mean, that's exactly the stateless society stuff, right?
It is exactly what happens, right?
So, If we say that human beings have a self-interest to maximize their income, and I think that economically speaking we can say that the maximization of resources and the response to incentives is a pretty basic human trait, certainly a basic biological trait.
Given that we understand that, then if we sort of return to our television station and advertisers and say, well, why wouldn't the third party Who is contracted by both to come up with objective facts, just hand it over to the highest bidder?
Well, because of the same problem that that person exists to solve to begin with.
Because people will act to maximize their resources.
They will act to maximize their resources.
And that creates the problem of the advertiser not being able to trust the television station.
That creates the problem of the advertiser not being able to trust the television station and vice versa.
So that very lack of trust arises from people wanting to maximize their resources.
That's the beauty of the DRO model, which is that the third party also wants to maximize his resources.
The third objective Nielsen rating party, who is supposed to accurately categorize the number of eyeballs available, that person also wants to maximize his resources.
And people don't just want to maximize their resources in the short run.
And this is a very important thing to understand about business.
People don't want to just maximize their resources in the short run.
They want to build stuff that lasts.
They want to build stuff that grows.
And that's one of the reasons why companies that launch new products have to spend a lot of money on advertising and spend a lot of money on promotion.
Because if you're just some company that comes along And says, I'm going to put Product X out on the market.
It's a, I don't know, it's an MP3 player, let's say.
And I'm not going to advertise it at all.
Let me in, let me in, and don't merge yourself.
I'm not going to advertise it at all.
It just kind of pops up in Best Buy, you know, in a back corner.
It's just like, you know, MP3 player.
You know, in a cardboard box, it's $200.
And the spec sheet is sort of written out in crayon.
There's no... You've never heard of it before.
You have no idea what the brand is.
You have never read a review of it.
And you've never heard of the company.
Well, of course you're not going to buy it, right?
Because they'd be like, well, it could be a really good...
Maybe they saved all of their money from advertising and they put it into developing the best conceivable product on the planet.
Maybe that was their strategy.
Why would we want to spend $20 million on advertising when we could take that $20 million and pass the savings on to you and blah, blah, blah, blah, blah.
Well, they don't do that, right?
And then you try and find them on the web, and they're like, no, we saved the $500,000.
We would have spent getting a website going, and we passed the savings along to you, which is why this $400 MP3 player is only $200.
Well, still, you're not going to buy it, because there's too many unknowns.
And you don't know if this thing's going to break tomorrow.
You don't know if it's compatible with other operating systems, or you don't know if it's going to play your, I don't know, DRM-protected WMA files, or OG Vorbis, or whatever, or Free Debate Radio.
So you have no idea, right?
So one of the things that you have to do when you are launching a new product is you have to get people to believe that you're going to stick around to support it.
And the way that you do that is you make a big splash in your marketing.
And you make a big splash and you hire George Clooney to stand there and you have a phantasmidorical kind of website and you do all of this kind of funky stuff.
And you do that so that people realize, A, they know your company, but most importantly, they know that you've put a hell of a lot of money into selling this, like into creating a buzz around this product.
And then what's going to happen is they know that you're going to have to stick around to recoup your investment, right?
So if you just spent $20 million, then you're going to have to stick around because there's no way you can recoup a $20 million investment by selling, you know, I don't know...
You know, 100,000 MP3 players, right?
So you have to stick around for the long run.
And that's one of the reasons why you get these big teaser campaigns and so on.
This is all economic.
Advertising is a very important economic indicator of a company's intention to stick around.
That's why there's, you know, like most places in North America, there's a sort of the China street of computers.
It's not too far from where I used to live.
And you'd sort of go into these dingy stores and you'd say, you know, do you have any computers?
I'd like to pay you cash.
You know, that kind of stuff.
And, you know, I barely speak English and this and that.
And I had a problem with a Radio 9800 card once and brought it back to these guys that they just refused to believe that it was their issue, right?
I mean, this is not customers.
This is not Dell, right? This is not customer service to the sky.
But, you know, they have the cheapest prices around, right?
So if you know what you're doing, it's fine.
You can bypass those kinds of signals.
But not many people want to make purchases on that basis.
So, people, what you would do is, let's say there's some new DRO company that comes along, you know, the Steph's DRO Magic Warehouse of Infinite Justice.
Oh wait, that's the boards.
Anyway, so let's say Steph's DRO comes along and I'm sort of saying, hey, I'll arbitrate your disputes and whatever, whatever, whatever, right?
Or I'll arbitrate, I'm coming up with new rating systems for eyeballs delivered by television or whatever.
Then, what's going to happen?
Well, what's going to happen is that people are going to be skeptical because either my price is going to be higher, in which case they're not going to be interested.
It's like, A, you're a new company, you're risky, blah, blah, blah, so who cares, right?
Or B, my price is going to be the same, in which case, why switch?
Unless I'm really not happy with these people, in which case I'll probably switch to another more established vendor.
Or C, my price is going to be lower.
Now, of course, if my price is lower and I've not done any advertising, then there's the risk that I'm going to be in there just to grab a bunch of contract money and take off to Venezuela or something, right?
So if my price is lower, then it's kind of suspicious, right?
Like the same reason that if somebody offers you a copy of Windows XP for $50 on the Internet, you know, I wouldn't necessarily expect it to validate when you go to the website.
So... That's another issue that can occur.
Now, how do you then launch a new sort of service or product in the face of this kind of skepticism?
How do you get people to switch?
Well, frankly, you spend a shitload of money is what you do, right?
You spend a shitload of money.
So if I spend $10 million promoting my product...
I'm only going to make a profit of a million dollars a year.
I'm going to be around for a bare minimum, assuming that I'm living in my mom's basement and she's feeding me, for a minimum of 10 years.
The reason that you dig yourself a hole in the ground is so that people know you're going to be around to dig yourself out.
So this, I think, is a very important aspect to understand about how it is that you sort of achieve credibility and how the sort of free market works against the problem of, you know, bribery and so on, right?
So if you're a company that's just putting out these ratings, and the reason that you're putting out these ratings is so that you can take a whole bunch of bribes, well...
What is everyone's interest to do that for you?
It's like, okay, so you get some bribes.
Now, you can't lower the numbers that enormously because you can't go to the advertiser and say, like, let's say you used to deliver a million eyeballs for 10,000 bucks, and you say, well, now it's only 500,000 eyeballs because then people will say, well, maybe I don't want to do business with you anymore because it's not enough, right?
So there's a lot of logical checks and balances that occur in this kind of situation.
But if you are a longstanding company, Then you're not going to be someone who was in business for 20 years just to take a couple of bribes and destroy all of the credibility that was built up over many years.
Once you've been in business for a long time, then people understand that you're in it for the long haul.
You don't want to destroy all of the accumulated goodwill.
Because whatever bribes you take, there's going to be far less than the accumulated.
In business, it's called goodwill, or there's other terms for it as well.
But it's basically, what does it mean to say that I've been around for 20 years?
Well, it means that I've got an enormous amount of credibility in the marketplace.
Because obviously, I'm not going to vanish tomorrow.
Or at least that's not the plan.
It could happen, but it's not the plan.
And I'm not going to be swayed by petty financial incentives like bribery and so on, because you don't build a company for 20 years just to make $50,000 on a bribe.
So the longevity of a company is very important, and in the absence of longevity, the investment in the launch is very important.
All of these kinds of things are indications, but of course, fundamentally, what the DRO does, if there's questions around bribery and so on, is like, hey, I'm going to charge you, you know, 50 grand for this market study.
If you find out that anything is falsified, I'm going to pay you $500,000.
I mean, that's as simple as that, right?
I mean, and yes, somebody else would then have to be the independent person or whatever to verify that, but there's lots of ways in which the market tries to deal with the problem of a lack of trust without adding a whole lot of cost.
I mean, remember, there is a limit to the amount of cross-checking and cross-referencing, you know, in the same way that you don't taste your mom's food to see if she's poisoned you every time you eat there, right?
I mean, so you could, right?
Maybe she's gone crazy.
Maybe she's possessed, right? Maybe she's trying to kill me now.
Well, you don't, right? If you're, I don't know, an enemy of Vladimir Putin, you might be tasting everything or getting everything tested, but you won't necessarily do that if you're eating at mom's place.
There's an efficiency principle and the market will find the right amount of cross-checking.
And of course, the cross-checking will diminish.
It certainly could be the case that after a certain amount of time, being in business or whatever, a DRO will ensure your transactions for a tenth of one percent or something like that.
And there may be a certain amount of time Where you've been successful in business, never had a bad rating against you, where nobody's even going to bother with a DRO because you've obviously proven yourself to be so trustworthy or whatever.
So all of these kinds of situations can occur, and I hope that this helps clear up at least some of my thoughts about this.
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