PolitiFact’s Caleb McCullough was at it again with more Senate campaign cherry-picking shenanigans on Friday. This time McCullough focused on Iowa Republican Ashley Hinson’s recent ad that accused Democrat Josh Turek of supporting sex changes for minors. McCullough called it “false,” but his actual article suggested it was not quite that simple. The controversy arose over an ad that “makes two similar but distinct claims. Its narration says Turek ‘supports kids changing gender without parental consent.’ But the on-screen text says ‘sex changes for kids,’ while video of surgeons in an operating room plays behind an image of Turek. Hinson’s social media post sharing the ad also used the phrase ‘sex changes for kids.’” If McCullough focused on the narrator, it is likely he would never have written the article because PolitiFact tends not to publish articles about Republicans being true. Instead, McCullough focused on the text: ‘Sex change’ is not a standard medical term. Gender-affirming care can include a range of approaches to support a person's gender identity including, for minors, using a different name or pronouns. According to medical best practices, gender-affirming treatments are available only to adolescents and can include puberty blockers, hormone therapy and in rare cases, surgeries for older teens. Medical intervention for minors requires parental consent. The ad distorts Turek’s position. The law cited in the ad as evidence does not mention medical interventions or ‘sex changes.’ It has to do with notifying parents when a student expresses a different gender identity at school. Which is exactly what the narrator said and McCullough even admitted was correct: The ad cites Iowa's Senate File 496, a 2023 law that regulated school library books with explicit themes and prohibited instruction on gender identity and sexual orientation. Turek voted against the bill. The Republican-led Legislature passed the bill and Republican Gov. Kim Reynolds signed it into law.  The law requires school districts to inform parents if a student requests "an accommodation that is intended to affirm the student's gender identity," including requests that employees "address the student using a name or pronoun" that differs from the school’s records.  McCullough also cited “Hinson campaign spokesperson Addie Lavis” as having “said the ad was not referencing gender-affirming surgeries. In an email to PolitiFact, she said the ad was using gender and sex ‘interchangeably as is the case under Iowa law and nowhere do we mention surgery.’" In that case, the ad is once again correct. Still, when it came to hormones for minors, McCullough tried to give Turek a pass, “Iowa lawmakers had already prohibited medical gender-affirming procedures for minors in 2023. Turek was not present for the vote on that bill, and the Iowa House Journal shows he was granted a leave of absence that day.” He then continued, “Citing the American Medical Association — which said in February that gender-affirming surgeries should ‘generally be reserved until adulthood’  — Turek campaign spokesperson Hannah Goss said he does not support gender-affirming surgeries for minors.” In his summary, McCullough used all that to conclude, “A separate bill the same year banned gender-affirming medical treatments for minors; Turek was absent from the vote. His campaign said he opposes such surgeries for minors.” Every single Democrat in the Iowa House of Representatives voted against the bill that banned gender-altering hormones for minors. There is no reason to believe that if Turek were present, he would have been the lone Democrat to join with Republicans.

“Labour deputy says Farage is a threat to democracy and calls for misinformation clampdown”, the Guardian reports.

Reform UK is destabilising British democracy by spreading divisive material that is being amplified by bots and troll farms, Labour’s deputy leader has said.

Lucy Powell called for tighter laws on social media giants to tackle misinformation, arguing the online space was “open to wealthy individuals, and bad state actors”.

It’s open to everybody, even bad state actors like the UK.

She also highlighted the multimillion-pound donations that have bolstered Reform’s election war chest and “fund their powerful online campaigns”.

Reform UK should put that acknowledgement that they are running a powerful online campaign in their next ad.

Arguing Nigel Farage and his party posed a threat to democracy, she said the law should be strengthened to “tackle the scourge of dis- and misinformation which is ripping communities apart and undermining us all”.

She said Reform’s “exploitation of online algorithms on social media sites is well documented”, as was the way the party had benefited from “bots and troll farms to amplify support”.

A Reform spokesperson said Powell’s claims that its messages were spread by bots and troll farms was “completely untrue” and called her a “conspiracy theorist desperately trying to distract from a failing Labour government”.

“Rather than smearing voters and demanding more state censorship, Labour should be focused on fixing the messes they’ve created,” the spokesperson said.

What do nation states and private companies have in common? Neither is immune to the real world constraints that govern goal-oriented human collaboration. Such endeavors require certain fundamental components: resources, knowledge, and consent. Efficiency of the organization toward achieving their ends scales with each of these. An abundance of one component may (temporarily) offset deficiencies in the others, but in the long run decline will ensue. That is, each is necessary, but not sufficient, for success.

There is truth in the maxim that “big companies suck.” Such behemoths are often more intractable to deal with than government entities (particularly in the realm of customer service when problems arise). Bureaucracy is not exclusively a creature of the state. The smaller the organization the less likely one is to encounter such rigid, brainless structures. But why should this be? How can a private (mostly) free market business devolve into this sort of structure while one’s local town council is often highly solicitous of citizen’s concerns? Size. Bureaucracy is a firm’s attempt to overcome the fracturing of knowledge with expanding size. Information is normalized into SOPs (standard operating procedure) which are then programmed into tabula rasa employees. Independent analysis or thought is actively discouraged or outright forbidden. Just pull the string in the doll’s back and you get the same result every time. The mistake is similar to the one that values legislated “law” over that of common law; the latter adjusts and adapts to each unique situation whereas the former does not, remaining rigid and inflexible. This rigidity renders the entity deploying it weaker in the long run.

A secondary driver in bureaucratic tendencies is accountability. This is why smaller governments are often more responsive to their citizens in contrast to larger governments. Small companies don’t want to lose customers, just as small governments don’t want to lose votes—as both would result in the public facing individual losing their job in the end. Big governments as well as big firms just don’t care. They don’t have to because each “customer” represents an ever decreasing fraction of the firm’s goal (i.e., profit or votes).

The primary differentiator between private firms and nation states is competition. Or is it? Once again size factors into the equation. Competition between Apple and Google has wrought little differentiation in the marketplace. Similarly, competition (for citizens’ tax dollars) between the United States and say Canada reveals little substantive differences. However small states (say Switzerland and Liechtenstein) and small companies (e.g., local restaurants) have more to gain and lose from ebbing clientele and so are far more responsive and solicitous. Hans Hoppe cites just this effect when it comes to competition between smaller states:

A small state cannot afford to be protectionist. A small state that closes its borders would doom its population to poverty and starvation. It must maintain free trade with the outside world. Conversely, a large country like the United States or the former Soviet Union can afford to be highly protectionist and interventionist because it has a large internal market. Thus, the smaller the country, the more pressure there is for it to adopt free trade, and the less it can afford to tax and regulate its citizens.¹

So although competition is laudable, it is less efficient when the competing entities are behemoths. In addition to the incentive factor that Hoppe cites there is the Misesian calculation problem cited by Rothbard in Man, Economy, and State, “The Problem of One Big Cartel.” To efficiently deploy resources the firm must be able to calculate profits and losses for every stage of production. If the firm becomes too large through vertical integration it begins to erase that price information as it absorbs such markets. According to Rothbard this tends to impose a natural upper bound on the size of the firm.

There is an additional coordination problem for large firms that can be neatly summarized as the Ringelmann effect. Stated simply, it is one of the reasons that a family farm runs smoothly while a state run collective does not (informational constraints on economization is another). This effect shows that the more people involved in a particular endeavor the less effort is forthcoming from each one. To overcome this effect modern firm management commonly deploys the concept of “the team” whereby each “team” operates more or less independently. This reduces the tendency toward “slacking” arising from this effect and likewise may be used to re-establish an internalized price system if these team units are permitted to “compete” with each other.²

The last component where we do see a large difference between nation states and private firms is with the aspect of consent. Countries that exert a low degree of consent (totalitarian) over their citizens will always experience less “success” than those that have a high degree. With greater consent comes greater freedom to innovate and solve problems from the bottom up rather than the top down. Formerly socialist/communist countries (e.g., China, Vietnam ) that have embraced the benefits of freedom (i.e., consent (autonomy) being permitted in certain economic interactions) within their borders have seen improved standards of living relative to those that have not (Cuba, North Korea, Venezuela). Because states always reserve the right to compel or impose rules on their citizens they can never be truly optimized in this realm. Businesses cannot force people to work for them or for customers to buy their products. Therefore there will always be a stronger tendency toward the positive benefits of competition in the private realm than in the public one. In this regard a private business is almost always fully optimized in this aspect when compared to a state endeavor (state-cronyism impairs this consent when for example a state granted monopoly is operative). Were a state to forego such compulsion it would de facto cease to be a state. Democracies try to maintain the illusion of consent in order to mollify a credulous citizenry into the quiet acceptance of being ruled. But illusions don’t matter; results do. Although democracies are better than totalitarian dictatorships, this is faint praise indeed.

So if states are more or less structured as a business, why do some fail and some thrive? For the same reasons any business might fail or thrive. Misallocation of resources. This is the reason we see very different outcomes in a variety of nominally socialist countries, e.g., Venezuela vs. Denmark. It is not enough to cite Cuba (excessive level of state control) as a failure and therefore close the case on socialism. Were that the case then one would be susceptible to charges that capitalism doesn’t “work” because sometimes a business goes bankrupt. However it is just as disingenuous for those on the left to cite oil-rich Norway (abundant resources) as proof of socialism’s success. If Cuba had Norway’s oil resources it would be faring far better. Or maybe not, as in the case of oil rich Venezuela which too suffers from excessive state control of the economy and is presently circling the drain.

Resources are necessary to “success” but may be overwhelmed if the endeavor is mismanaged due to inefficient knowledge deployment or shackled by imposed rules and regulations. As cited above we see that as size increases, efficient control declines. This then implies there may exist a middle-ground when it comes to the “optimal” size for an ends-oriented human organization. Too small and there are not enough resources. Too large and those resources are squandered out of ignorance or laziness. The gold-standard in determining if size is optimal is profit. However profit is not an instantaneous feedback mechanism (and is of course entirely absent for nation-states). The optimally run firm may become bloated but still be able to coast for years on built up reserves or temporary cost-cutting measures that sacrifice capital for short term profits. This is true for private firms, nation states, as well as nonprofits.

1. Hoppe, Democracy The God that Failed.
2.  Peter Klein, “Economic Calculation and the Limits of Organization,” p. 14.