AMOG the Carp

While the system goes back to the 1800s (and probably further back in various forms), the "Race to the Bottom" has seen a resurgence in American Politics recently. When you combine a sharp economic downturn that decimated state budgets and Tea Party politics, it was inevitable that this idea would come roaring back. Since they want us all to head down to the bottom and feast on the bounty we'll find, I'm going to call these folks Carp (like the bottom-feeding fish).

The quick and dirty on the Race to the Bottom - states (or countries) compete to lower taxes and reduce regulation on businesses and individuals in hopes of luring them to their state (or country) to reap economic gain.

Like so many pillars of conservatism, it seems rational at first glance, but the situation clearly echoes the prisoner's dilemma. As states compete, the only endpoint for the game is zero taxes, environmental or consumer protection, since there's always a short-term incentive to undercut your competitor.

But then everyone hits bottom.

If taxes and regulations are really what make businesses successful, we'd expect to see our most successful companies in the states with the best tax climate. So is that what happens? Here are Fortune 500 companies by state (2011) and here's the Tax Foundation's State Business Tax Climate Index (2011). Notice anything odd?

The ten 'worst states" according to the Tax Foundation?

50. New York (57)
49. California (53)
48. New Jersey (20)
47. Connecticut (12)
46. Ohio (27)
45. Iowa (2)
44. Maryland (5)
43. Minnesota (20)
42. Rhode Island (2)
41. North Carolina (15)

The numbers in parenthesis are the number of Fortune 500 companies located there. So roughly 43% of the 500 biggest companies in this country are in the ten 'worst' states - 213 companies.

How many are in the ten 'best'?

1. South Dakota (0)
2. Alaska (0)
3. Wyoming (0)
4. Nevada (3)
5. Florida (16)
6. Montana (0)
7. New Hampshire (0)
8. Delaware (2)
9. Utah (1)
10. Indiana (5)

27 companies, just above 5%, with Florida the only state in the double digits. Not a lot of economic migration for so much tax code engineering.

So why is a lesson in comparative economics on a game blog?

PUAs are taught to view the dating world as a sexual marketplace and assign values to the options present in it. But just like in other markets, the sexual market is manipulable, and those making deals on the trading floor are prisoners of their own biases, like everyone else.

Remember that a market is a group of people who have collectively decide the absolute value of a commodity - nothing more. And remember that just as one person can make an error in judgment, so can groups of people.

The Fortune 500 example had two purposes.

• One, to inject some progressive politics into game discussions to open the marketplace for ideas up (it's fair to say that more of the politics discussed on most game blogs runs to the arch conservative). New schools of thought carry with them new assumptions about the world - new framing - and have the potential to provide unique value. Anyone who insists on one creed only in their analysis is a close-minded fool.
• Two, and much more importantly, to show you that a 'market' often makes decisions at odds with 'objective reality.'

While a corporate relocation would be costly, it would be fairly simple to move a company from California, a state in turmoil, to Nevada, which has extremely low taxes. The incentives that would come from Nevada for thousands of new jobs would be extremely robust. So why don't these companies move?

Simply put, most of these companies view the world with an Abundance Mentality - they are more concerned with potential opportunities than potential costs. Yet another term that game has borrowed, (coined by Stephen Covey in 7 Habits of Highly Effective People) having an abundance mentality means that one views the world in terms of potential gain, and views resources as plentiful enough that competition can remain friendly and failure is a learning experience (rather than a serious threat to one's security). This also means that a person feels free to take risks, since failure is less of a penalty, leading to greater innovation and creativity, rather than following 'tried-and-true' paths.

Abundance Mentality is contrasted with a Scarcity Mentality, where every conflict is fought over a small, finite pool of resources. This leads to less risk taking, and fiercer competition.

The companies are in high tax states, but high taxes aren't an end. High taxes are a means, just like low taxes. Even the institutions, programs, and investments created from taxes aren't the entire end product - like mice in mazes, our view of the world and path though it is crafted by our surroundings. When you see world-class government institutions around you helping people, government and public investment are vibrant partners and protectors. The opposite scenario is true as well; when you see poorly funded institutions that don't serve the public, government appears impotent and private industry must take up the slack.

Just like every other entity, when governments act, they create more than just end products. Behavior creates belief. So there's a culture that is created in abundance states that is different that scarcity states, of investments in shared goods that hopefully pay off in the long run. In scarcity states, people see no value to pooled resources, as their institutions provide little value (doing this deliberately this is the essence of Norquist's "drown it in the bathtub" quote).

There's another point to make here. Some impressive companies are successful in low tax states, and some are successful in high tax states. The important thing is to know who you are, and control the frames within which you will act. Fencers don't race cars, bakers don't make microchips, and novelists don't sing. That's why California isn't going to act like South Dakota with respect to their tax code or public investment, and expecting them to is moronic.

Contrary to what most game bloggers will tell you - there are millions of ways to be a successful PUA. This is one place that it is imperative you have an abundance mentality. Your goal should be to find out what makes you the most successful without losing your soul. That's the strategic lesson to take home here.

But there's also a tactical lesson - don't fight on bad terrain. Don't sacrifice your own frames just to win a point. This again goes back to the abundance mentality; know that you will remain an attractive option, regardless of whether someone else is an attractive option in a different way. Only if you see value in competing with the other option (see the dance scene in Get Smart) should you engage, but never be afraid to take a smart risk. Otherwise, let the fight come to you on solid footing. Remember, success is as much not fucking up as it is succeeding.

I learned this lesson the hard way when I started out - constantly competing for every point, sucked into the heat of the moment and living for the constant stream of IOIs and kino. But the discipline to be yourself helped elevate my game to a whole new level - armed with unshakable frames and infectious narratives, it was as if I were playing with cheat codes.

So take a lesson from the two worst tax states in the US that also have the two highest number of Fortune 500 companies (over 20% of them, actually) and game the way you know you'll be successful, rather than swim with the Carp.