Selfish Genes and Shafting Shareholders

March 2, 2010

Has anybody made the connection between genes and the principal-agent problem? Richard Dawkins wrote a whole book about how we are but machines to reproduce genes, and in Genome, Matt Ridley quotes Bill Hamilton saying that the genome is like “a company boardroom”. But I haven’t ever seen the analogy being made explicit, so I’ll go ahead and do it right now.

The way to think of your genes is as principals, and yourself as the agent. Their objective is to make copies of themselves. To accomplish this, they create you as a vehicle to make more of themselves. So far, the analogy is genes=shareholders, you=management, and genes increasing their presence=return on investment.

What’s missing? Incentive alignment! In the corporate world, this is done through executive compensation, and will theoretically work best with stock options. How do our genes make sure that we’re keen and eager to achieve their objectives? A whole bunch of things that make the process of gene propagation enjoyable – making sex fun, making babies look cute, so on and so forth.

So when Skimpy goes on and on about finding a long-term gene-propagating partner, he’s putting the cart before the horse. It is not the end-result of our genes getting propagated, but the actions we take to do so that make us happy1. The purpose of sex is not to have babies, but to have orgasms2. So when you have the orgasms without the babies, you get to act like the CEOs who give themselves executive jets while shafting the shareholders and driving down the share price. It’s an awesome life.

You might feel a sense of responsibility, and be tempted to propagate your genes keeping in mind all that they have done for you. Resist the temptation! Whatever they have done is for their selfish ends. The fact is, your genes are bastards. They don’t care about you. Some of them are actively trying to make you suffer a painful and agonising death. Yet others are trying to make other people suffer painful and agonising deaths, and as such are responsible for the ills of society. So if the selfish little buggers are too stupid to align incentives properly and they make it possible for you to get the benefits without delivering results – for example, by having sex with contraceptives, cooing over other peoples babies, or even puppies instead of babies – then they’re only getting what they deserve. Go ahead and behave like a 1980s American conglomerate vice-president – you know you want to.

1: This is remarkably Bhagavad-Gita-ish. Honestly, you could see the Bhagavad Gita too as an exploration of the principal-agent problem, with Krishna as the principal and Arjun as the agent. After trying to align incentives for seventeen chapters, Krishna finally reveals his vishwaroopam and tells Arjun clearly who the principal is, who the agent is, what the objective is, and that Arjun had better get cracking. You know, I should get down to reading Gurcharan Das’s The Difficulty of Being Good.

2: Or as Laurensolivius would put it: “Orgasms! Orgasms! We want orgasms!”


Vot a Big… Castle!

April 30, 2009

This Dealbreaker story is awesome. Citi has very few profitable divisions right now, and the people who run them are demanding massive bonuses to stay on and ensure that they stay profitable. But after all the outrage over the AIG bonuses, Vikram Pandit is pre-emptively going to Obama to ask for permission.

The political palatability of giving out the bonuses is, alas, very low because one of the people doing the demanding owns a castle. Seriously. An actual 1000 year old castle outside Hanover.

You might be asking yourself what an investment banker does with a castle. In these times it’s excellent risk management. After all battlements are more reliable than presidents when a mob shows up with pitchforks.