Since reading @krnel's discussion of a design failure of Steem, and @tarazkp's piece on circle-jerkers and bidbots, I got my brain back into political gear, and remembered another related concept that goes hand in hand with rent-seeking: Regulatory Capture.
Regulatory capture is said to occur when:
a regulatory agency, created to act in the public interest, instead advances the commercial or political concerns of special interest groups that dominate the industry or sector it is charged with regulating. When regulatory capture occurs, the interests of firms or political groups are prioritized over the interests of the public, leading to a net loss for society.
(https://en.wikipedia.org/wiki/Regulatory_capture)
I know our top 20 witnesses are not strictly speaking a 'regulatory agency', but you can probably see where I'm going with this. They are most certainly not our government, but they do play an important role in the governance of the Steem network. What else does that veritable font of modern wisdom have to say on this?
Regulatory capture occurs because groups or individuals with a high-stakes interest in the outcome of policy or regulatory decisions can be expected to focus their resources and energies in attempting to gain the policy outcomes they prefer.
Sounds familiar, doesn't it?
Total regulatory capture is the political and regulatory the end-state of rent-seeking. Once an agency or instrument of governance is sufficiently captured, financially and ideologically, by special interest groups, it will unflinchingly serve their interests. Thus, everything that we are seeing in terms of whale, bot, and bot-owner behaviour, that seems unfair and economically destructive is likely to continue or even worsen over time.
Here on the Steem network, I wonder how complete the financial and psychological capture of our witnesses by whales and bidbot owners is. I think it's pretty complete though. If you aren't convinced, take a look at who votes for the top 20 witnesses. I'm not saying that they are all in the pockets of accounts with massive stakes. But given that a few key accounts changing their votes could rewrite the top 20, I find it implausible that having this hanging over their heads would have no effect on their behaviour and decision-making.
In terms of system design flaws, the lack of barriers to the capture of governance of the network by special interests is quite severe. I almost have trouble believing it was anything but deliberate. With nothing to curtail rent-seeking, the rent-seekers hold the power required to capture the only positions that can effectively reduce the rent-seeking.
This is a big, big problem.The economy of steemit cannot be nothing but rent-seekers - we can't all be trying to rent space in the attention economy if there are no content producers left to rent it to. If we ever get anywhere near that point, it's all over, and you can all kiss the value of your internet money goodbye. If the witnesses cannot make changes that will avert this market failure, then we are relying totally on the economic self-interest of those holding them hostage aligning with what's good for the wider network and everyone on it.
I will have to think further on this. Whales and bot-owners might be our ruling class here, but the playing field isn't like that everywhere, and they are just as prone to persuasion and leverage as anyone else; you just need to find the right lever. Let's just hope they act for the good of everyone, including themselves - if everything goes pear-shaped, anyone left holding a stack of worthless SP is not going to be well-pleased - so there is actually incentive for them to not let this happen.
Thanks for reading. Upvote, resteem and/or comment, if you dare!
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Yeah the longer I stay here the more corrupt the whole system is revealed to be.
It's like the creature from Jekyll Island and we're all along for the ride.
You know what's doubly scary: this place is in no way the most cut-throat or corrupt of the new blockchain enabled social-media networks - not by a long way.
It's an interesting ride though. I promise I'll try to avoid burning the whole place down in the process.
I don't know what this would do but what if instead of the top 20, there were the top 50 witnesses that shared responsibility for blocks and rewards but, the top 20 would be decision makers for hardforks. It would increase distribution, take away a little of the incentive to game the system. It would also give the impetus for more witnesses to actually get involved in the system rather than running high earning nodes with little cost or engagement.
Yeah it didn't take long at all to realize there was no truth to the decentralized system here that takes out the middle man....there's no such thing in this life, it's amazing how many people can't see that.
Perhaps, more strictly speaking, this will be a case of the principal-agent problem? As quoted from the FT: