Large bureaucratic organizations have long seemed… strange to me, on an intuitive level. Why do they exist? Like, in a world where the median person is John Wentworth (“Wentworld”), I’m pretty sure there just aren’t large organizations of the sort our world has. Nobody would ever build such an organization, because they’re so obviously wildly inefficient and misaligned. And even if somebody tried, everyone would demand prohibitively high prices to work either for the large organization or with it, since it's just so deeply unpleasant to interface with. Nobody would buy anything sold by such an organization, or vote for such an organization to continue to exist, because the organization as an entity is so obviously both incompetent and untrustworthy. So how on Earth (as opposed to Wentworld) are large organizations stable?

The economists have some theorizing on the topic (google “theory of the firm”), but none of it [...]

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Outline:

(03:42) Background: Dominance-Status

(03:47) Empirical Ontology Justification: Dominance-Status Is A Thing

(08:23) Some Key Pieces Of How Dominance-Status Works

(10:51) The Unconscious Economics of Managers

(13:14) Solve For The Equilibrium

(13:59) Budget Is The Limiting Factor

(15:41) Internal Alignment

(17:36) Increasing Managers’ Dominance-Status Is The Real Job

(19:15) Why Doesn’t Economic Selection Pressure Win?

“Why Large Bureaucratic Organizations? ” by johnswentworth

LessWrong (30+ Karma)