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Peahens select their mates by looking for the largest, most colorful and shapely tail among the males. Thus, in the evolutionary process, the males have developed extremely ornate and large tails.

To an outsider, this might seem like an extremely bizarre and inefficient outcome. After all, peacocks are tasty. Those tails are large and cumbersome, making it harder for the birds to move around. Those tails are large and cumbersome, requiring a large expenditure of energy to support it. Thus, you might think that these characteristics make it unlikely that the species will survive given the increased ease predators have in catching them. Thus, the “social outcome” is not efficient. Peacocks would seem to all be better off if their tails were half the size! In that case, the relative position of the healthiest and strongest males would remain the same, but the average ability of the species to hide and run away from predators would increase.

Bob Frank was an old professor of mine at Cornell, and he uses this analogy to defend the idea that some (much?) of the competition we see in private markets resembles the growing of the peacock’s tail. While that competition may seem to improve the ability of any one person to achieve his objectives, in the long run, the overall distribution of “who gets the peahen” is unchanged, all the while the species is expending enormous resources that could have been devoted to things that would have offered it greater protection from prey.

There are, of course, many compelling arguments for policymakers to do something to stop arms race. But I am struck by how rarely folks who hold this view stop to consider its implications. If people and corporations are prone to arms races, then isn’t it likely that political entities are too? Indeed, the term “arms race” comes from the very fact that nations waste zillions of dollars of resources trying to get more bombs than the other guy. But don’t we observe the very same thing with school districts? There can only be one school district that is the very best, and only one that is second best and so forth. And as we know, at some point spending more money on education does not produce very many gains, and you can imagine it might even produce zero or negative gains. So, for the school districts at the top, the ones spending a lot already, it is very likely that they have reached this point. Thus efforts to spend more and more on lavish facilities, fancy smart-boards and the like are doing little to change their relative position, but all of the efforts to get there are wasted. So where is the proposal for a steep “tax” on school spending? Maybe it is out there, but I have not seen it in the New York Times recently.

Generally, I think the way the Peacock Theory applies to government is not with its size (I can make a case that size does not matter much) but rather its scope. The government, at all levels, simply does too many things, and does not do enough of them well. That is the long peacock tail. Getting its fingers into pies it has no business being in might make a lot of political sense, but it surely has to come at the expense of the ability for government to do other things well – like being prepared to handle biological pandemics, environmental pandemics, provide defense, and execute contract law. I think there are natural and inexorable forces leading to the expansion of government scope no less than some believe that there are natural and inexorable forces leading to the arms race in consumer choices. If there is a case to “do something” about one, it sure seems to me that there necessarily follows a case to do something about the other. We’ll see why shortly.

In a near future post I’ll elaborate on my belief that our political order has emerged, much like our economic order.  STOPPED HERE …

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