Escaping the Envy Trap

Lately I’ve been speculating that a high informal envy tax in primitive tribes was an important reason why growth was so slow for so long. I’ve also argued that this is equilibrium behavior. Jane Galt then raises the interesting question of how anyone ever broke out of this equilibrium.

I’ve got a just-so story for this, too. Even in a setting where every tribe is in the high envy tax equilibrium, there is bound to be some variation. The result is that the tribes with lower envy taxes have higher economic growth and get richer. The richer they get, the bigger they get. The bigger they get, the harder it is to impose an envy tax. More successful people can protect themselves by increasing their physical and social distance from their parasitic friends and relatives.

If this virtuous circle endures, you eventually start to approximate a modern, anonymous society, where people no longer worry about having to share their surplus.

Even better, as the society develops techniques for convenient trade between strangers, it becomes less risky to accept immigrants. When all trade is face-to-face, it isn’t worth figuring out how to sort good new guys from bad new guys. The problem just doesn’t arise often enough. In contrast, when a lot of trade is between strangers, the problem is worth solving for domestic and foreign strangers alike. As a result, the anonymous society becomes a magnet for talent. The tribal brain drain has begun.

Admittedly, this is only the benign half of the story. The downside is that the richer, more powerful societies start to conquer their less advanced neighbors. What could be a process of peaceful economic growth turns into a mixed process of expanding trade and expanding bloodshed. It’s not pretty, but that’s how we got where we are today.

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