I’ve written a lot about how people in the mainstream business culture externalize costs in order to improve their personal careers and reputations, and the natural disconnect this creates between them and technologists, who want to get rich by creating new value, and not by finding increasingly clever ways to slough costs to other people. What I haven’t written as much about is how these private-sector social climbers, who present themselves as entrepreneurs but have more in common with Soviet bureaucrats, managed to gain their power. How exactly do these characters establish themselves as leaders? The core concept one needs to understand is one that appears consistently in politics, economics, online gaming, and social relationships: cheap votes.
Why is vote-selling illegal?
First, a question: should it be illegal to buy and sell votes? Some might find it unreasonable that this transaction is illegal; others might be surprised to know that it wasn’t always against the law, even if it seems like the sort of thing that should be. Society generally allows the transfer of one kind of power into another, so why should individual electoral power be considered sacred? On theory alone, it’s hard to make the case that it should be.
I’ll attempt to answer that. The first thing that must be noted is that vote-buying matters. It increases the statistical power of the bought votes, to the detriment of the rest of the electorate. On paper, one vote is one vote. However, the variance contribution (or proportion of effect) of a voting bloc grows with the square of its size. In that way, the power of a 100-person, perfectly correlated (i.e. no defections) voting bloc is 10,000 times that of an individual.
Let’s give a concrete example. Let’s say that the payoff of a gamble is based on 101 coins, 100 white and one black. The payoff is based on the heads flipped, with each white coin worth $1 and the black coin worth $100. The total range of payoffs is $0 to $200, and the black coin will, obviously, contribute $100 of that. So does the black coin have “half of” the influence over the payoff? Not quite; it has more. The white coins, as a group, will almost always contribute between $30 and $70– and between $40 and $60, 95 percent of the time. It’s a bell curve. What this means is that whether a round will have a good payoff depends, in practice, almost entirely on the black coin. If it’s heads, you’ll almost never see less than $130. If it’s tails, you’ll rarely see more than $70. The white coins matter, but not nearly as much, because many of the heads and tails cancel each other out.
Both the white and black coins have the same mean contribution to the payoff: $50. However, the variance of the single black coin is much higher: 2500 (or a standard deviation of $50). The white coins, all together, have a variance of 25, or a standard deviation of $5. Since variance is (under many types of conditions) the best measure of relative influence, one could argue that the black coin has 100 times the mathematical influence of all the white coins added together, and 10,000 times the influence of an individual white coin.
These simplifications break down in some cases, especially around winner-take-all elections. For example, if two factions are inflexibly opposed (because the people in them benefit or suffer personally, or think they do, based on the result of the election) and each has 45% of the vote, then the people in the remaining 10% (“spoilers”) have significantly more power, especially if something can bring them to congeal into a bloc of their own. That is a commonly-cited case in which individual, generally indifferent “swing” voters gain power. Does this contradict my claim about the disproportionate power of voting blocs? Not really. In this scenario, they have disproportionate decisive effect, but their power is over a binary decision that was already set up by the movement of the other 90%.
Moreover, it’s improbable that the people in that 10 percent would form a bloc of their own. What prevents this? Indifference. Apathy. They often don’t really care either way about the matter being voted on. They’d probably sell their votes for a hundred dollars each.
In quite a large number of matters, specific details are too boring for most people to care, even if those issues are extremely important. They’d much rather defer to the experts, throw their power to someone else, and get back to their arguments about colors of bikesheds. Their votes are cheap and, if its legal, people will gain power or wealth by bundling those cheap votes together and selling the blocs.
So why is vote-selling illegal? It causes democracy to degenerate (enough that, as we’ll see, many organizations eschew democracy altogether). The voters who have the most interest in the outcome, and the most knowledge, will be more inclined to vote as individuals. Though they will correlate and may fall into loose clusters (e.g., “conservatives”, “liberals”) this will tend to be emergent rather by intent. On the other hand, the blunt power of an inflexible voting bloc will be attained by… the bought votes, the cheapest votes, the “fuck it, whoever pays me” set. The voting process ceases to reflect the general will (in Rousseau’s sense of the concept) of the people, as power is transferred to those who can package and sell cheap votes– and those who buy them.
Real-life examples
Official buying and selling of votes is illegal, but indirect forms of it are both legal and not uncommon. For example, over ninety percent of voters in a typical election will give their vote, automatically, to the candidate of one of two major political parties. These candidates are usually chosen, at this point in history, through legitimate electoral means: the party’s primary. But what about the stages before that, as incumbents in other offices issue endorsements and campaign checks are cut?
Effectively, the purpose of these parties is to assume that cheap-vote congealment (and bloc formation) has already happened, tell the populace that it’s down between two remaining candidates, and make the voters feel they have a choice between two people who are often quite very similar in economic (in the U.S., right-of-center) and social (moderately authoritarian) policies while differing on superficial cultural grounds (related to religion in a way that is regional and does generalize uniformly across the whole country). The political parties, in a way, are the most legitimate cheap-vote aggregators. They know that most Americans care more about the bike-shed difference between Democratic corporate crooks and Republican corporate crooks– the spectator-sport conflict between Springfield and Shelbyville– than the nuances of political debate and the merits of the issues.
The vote-buying process is more brazen in the media. While expensive and thorough campaigns can’t turn an unlikeable person into a winner, they can have a large effect in “swing states” or close matches. There are some people who’ll be swayed by the often juvenile political commercials that pop up in the month before an election, and those are some of the cheapest voters. The electioneer need not even buy their vote directly; it has already been sold to the television station or radio show (a highly powerful cheap vote aggregator) to whom they’ve lent their agency.
This is one of the reasons I don’t find low voter turnout to be distressing or even undesirable, at least not on first principles. If low voter turnout is an artifact of disenfranchisement, then it’s bad. If poorer people can’t get to the polls because their bosses won’t let them have the time off work (and Election Day ought to be a day off from work, but that’s another debate) then that’s quite wrong. On the other hand, if uninformed people don’t show up, that’s fine. I don’t get involved in civic activities unless I know what and who I’m voting for; otherwise, I’d be, at best, adding statistical noise and, at worse, unwittingly giving power to the cheap vote sellers and buyers who’ve put their preferred brand into my head.
All this said, cheap-vote dynamics aren’t limited to politics. In fact, they’re much more common in economics. Just look at advertising. People vote with their dollars on what products should be made and what businesses should continue. A market, just like an election, is a preference aggregator. The problem? No one knows all of the contenders, or could possibly know. As opposed to a handful of political candidates, there might be twenty or two hundred vendors of a product. Quite a great number of them will buy not based on product quality or personal affinity but on reputation (brand) alone. Advertising has a minimal effect on the most knowledgeable (Gladwell’s “Mavens”) but it’s extremely powerful at bringing in the cheapest votes, the on-the-fence people who’ll go with what seems like the least risky choice.
Venture capital
Maybe it’s predictable that I would relate this to technology, but it’s so applicable here that I can’t leave the obvious facts of the issue unexplored.
Selection of organizational leadership almost always has a cheap-vote issue, because elections with large numbers of indistinguishable alternatives are where cheap votes have the most power. (A yes/no decision that affects everyone is where cheap votes will have the least power.) Most people see the contests as wholly external, because all the credible candidates are (from the individual’s point of view) just “not me”. Or, more accurately, if no one they know is in contention, they’re not going to be invested in the matter of which bozo gets the tallest stilts. As organizations get large, the effect of this apathy becomes dominant.
Therefore, it’s rare in any case that selection of people will be uncorrupted by cheap vote dynamics, no matter how democratic the election or aggregation process may be. While some people are great leaders and others are terrible, it’s nearly impossible to reliably determine who will be which kind until after they have led (and, sometimes, it’s not clear for some time afterward). If asked to choose leaders among 20 candidates in a group of 10,000, you’ll see nuisance (by “nuisance”, I mean, uncorrelated to policy) variables like physical attractiveness, charisma, and even order of presentation (making the person who designs the ballots a potential cheap-vote vendor) take a disproportionate effect. This is an issue in the public sector, but a much more egregious one in the private sector, given the complete lack of transparency into the “leadership” class, in addition to the managerial power relationships and the general lack of concern about organizational corruption.
Corporations (for better or worse, and I’d argue, for the worse) eliminate this effect by simply depriving employees of the ability to choose leaders at all: supervisors and middle managers and executives are chosen from the top down, based on loyalty to those above, and the workers are assumed to be voting for the pre-selected by continuing to work there. The corporation cheapens the worker’s vote, in effect, by reducing its value to zero. “You were going to sell your vote anyway, so let’s just say that the election happened this way.” Unless they can organize, the workers are complicit in the cheapening of their votes if they continue to work for such companies and, sadly, quite a large number do.
There are people, of course, who are energetic and creative and naturally anti-authoritarian. Such people dislike an environment where their votes have already been cheapened, bought for a pittance, and sold to the one-party system that calls itself corporate management. The argument often made about them is that they should “just do a startup”, as if the one-party system of Silicon Valley’s venture capital elite would be preferable to the one-party system of a company’s management. By and large, it’s not an improvement.
In fact, the Silicon Valley system is worse in quite a large number of ways. A corporation can fire someone, but generally won’t continue to damage that person’s reputation, for fear of a lawsuit, negative publicity, and plummeting internal morale. This means that a person who rejects, or is rejected by, one company’s one-party system can, at the least, transition over to another company that might have a better one party in charge. There is, although not to the degree that there should be, some competition among corporate managers, and that generally keeps most of them from being truly awful. On the other hand, venture capitalists, with their culture of note-sharing, collusion, and market manipulation (one which if it were applied to publicly-traded stocks instead of unregulated private equities, would result in stiff prison sentences for all of them; alas, lawmakers don’t much care what happens to the careers of middle-class 22-year-old programmers) frequently do damage the careers of those who oppose the interests of the group. Most of the VC-era “innovations” in corporate structure and culture– stack-ranking, the intentional encouragement of a machismo-driven and exclusionary culture, fast firing, horrendous health benefits because “we’re a startup”– have been for the worse. The Valley hasn’t “disrupted” the corporate establishment. It’s reinvented it in a much more onerous way.
So how do the bastards in charge get away with this? The Silicon Valley elite are, mostly, the discards of Wall Street. They weren’t successful in their original home (the corporate mainstream) and they aren’t nearly as smart as the nerds they manage, so what gives them their power? Who gives up the power that they win? Once again, it’s a cheap vote dynamic in place.
Venture capitalists are intermediaries between passive capital seeking above-normal returns and top technical talent. There’s a lot of passive capital out there coming from people who want to participate, financially, in new technology development. Likewise, there are a lot of smart people with great ideas but no personal ownership of the resources to implement them. The passive capitalists recognize that they don’t have the ability to judge top talent from pretenders (and neither do the narcissistic careerists on Sand Hill Road to whom they trust to their assets, but that’s another discussion) and so they sell their votes. Venture capitalists are the ones who buy those votes and package them into statistically powerful blocs. Once this is done, the decision of a single venture capitalist (bolstered by others in his industry who’ll follow his lead) determines which contender in a new industry will get the most press coverage, the most expensive programming talent, and sufficient evidence of “virality” to justify the next round of funding.
As programmers, we (sadly) can’t do much to prevent pension funds and municipalities from erroneously trusting these Bay Area investor celebrities who couldn’t tell talent from their own asshole. I’ve said enough, to this point, about that side, and the cheap-vote buying that happens between passive capitalists and the high priests who are supposed to know better. In theory, the poor returns delivered by those agents ought to result in their eventual downfall. After all, shouldn’t people lose faith in the Sand Hill Road elite after more than a decade of mediocre returns? This seems not to be happening, largely because of the long feedback cycle and high variance intrinsic to the venture capital game. Market dynamics work in a more regularized setting, but when there is that much noise and delay in the system, capable direct judgment of talent (before the results come in) is the only reliable way to get decent performance. Unfortunately, the only people with that capability are us, programmers, and we’re near the bottom of the social hierarchy. Isn’t that odd?
So let’s talk about what we can do. Preventing the flow of capital from passive investors into careerist narcissists at VC firms who fund their underqualified friends is probably not within our power at the present time. It’s nearly impossible to prevent someone with a completely different set of interests from cheapening his or her vote. Do so aggressively, and the person is likely to vote poorly (that is, against the common interest and often his own) just to spite the regulator attempting to prevent it, just as a teenage girl might date low-quality men to offend her parents. So let’s talk about our votes.
VC-funded companies (invariably calling themselves “startups”) don’t pay very well, and the equity disbursements typically range from the trivial down to the outright insulting. Yet young engineers flock to them, underestimating the social distance that a subordinate, engineer-level role will give them from the VC king-makers. They work at these companies because they think they’ll be getting personal introductions from the CEO to investors, and join that circuit as equals; in reality, that rarely happens unless contractually specified. They strengthen the feudal reputation economy that the VCs have created by giving their own power away based on brand (e.g., TechCrunch coverage, name-brand investors).
When young people work for these VC darlings under such rotten terms, they’re devaluing their votes. When they show unreasonable (and historically refuted) trust in corporate management by refusing to organize their labor, they are (likewise) devaluing not only their political pull, but the credibility and leverage of their profession. That’s something we, as a group, can change. We probably can’t fix the way startups are financed in the next year; maybe, if we play our local politics right and enhance our own status and credibility, we’ll have that power in ten. We can start to clean up our own backyards, and we should.
Sadly, talent does need access to capital, more than capital needs talent. The pressing needs of the day have given capital, for over a century, that basic supremacy over labor: “you need to eat, I can wait.” But does talent need access to a specific pool of capital controlled by narcissists living in a few hundred square miles of California office park? No, it doesn’t. We need money, but we don’t need them. On the other hand, if the passive investors who provide the capital that fuels their careers even begin to pay the littlest bit of attention, the VCs will need us. After all, it’s the immense productive capacity of what we do (not what VCs do) that gives venture capital the “sexiness” that excuses its decade-plus of mediocrity. Their ability to coast, and to fund suboptimal founders, rests on the fact that no one is paying attention to whether they do their jobs well, the assumption being that we (technologists) will stay on their manor, passively keeping our heads down and saying, “politics is someone else’s job; I just want to solve hard problems.” As long as we live on the VCs’ terrain, there is no way for passive investors to get to us except through Sand Hill Road. But there is no reason for that to continue. We have the power to spot, and to vote against, bad companies (and terrible products, and demoralizing corporate cultures) as and before they form. And we ought to be using it. As I’ve said before, we as software engineers and technologists have to break out of our comfort zones and (dare I say it?) get political.
