Now we get to the SNAFU Principle-- the idea that information doesn't move in a hierarchy. The people at the bottom know what's going on, but can't take action. The people at the top can take action, but don't know what's going on.
Presumably, the more severe the punishments and the higher the rewards, the less competent the system becomes.
From memory of something Gregory Bateson said: Living systems don't maximize any one thing. Consider a rain forest. Compare it to a money-based economy.
I'd say that governments trying to maximize obedience are in a similar bind.
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