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Applying sub-Dunbar thinking to super-Dunbar level problems
One common pattern of argument you often see from people who have not been doing too well in life is that they often blame rich/powerful interests for why they have not been successful, or alternatively why a certain social institution does not seem to work in the best interests of all of society. Their thinking is that to fix the problem, all we need to do is bring these rich/powerful people to heel. The problem according to such people is that fundamentally these small interest groups are disproportionately sucking up value from society and to fix this, they need to be punished.
The quintessential example I can think of is the problem with rising rents here in the UK. Rents have been going up faster than wages due to decades of underbuilding and general NIMBYism. Things are not quite as bad as say Ireland or Berlin (thankfully we've managed to not fall for the populist poison apple of rent control) but they're still becoming quite the issue with ordinary couples in London spending close to 40% of their take home pay on just shelter.
Recent regulations putting additional burden on landlords and making it harder for them to generate a profit (e.g. energy rating requirements and the removal of mortgage interest deduction from taxes) have led to them selling, further reducing supply more than demand goes down (renters who buy tend to buy bigger than what they were renting, thus reducing the total amount of supply in aggregate, e.g. a couple living in a 1 bed rented apartment may buy a 2 bed one, thereby reducing rental demand by 1 room but supply by 2 rooms, leading to a net loss of 1 room) which then pushes up prices even further.
This has gotten to the point where there are now over 20 prospective tenants competing over each property, which naturally leads to people having to bid over the landlord's asking price/paying months of rent in advance/submitting references if they want to actually get the place for themselves. This has lead to cries that landlords are "exploiting" poor tenants who have nowhere else to go and that they are capital-B Bad People who society needs to give a stern scolding to so that they go back to acting in pro-social ways.
If you were to point out that the current situation is in part caused by society making it harder to be a profitable landlord and that the correct remedy is to make things easier for landlords to make a profit (the real correct remedy is to build more, but good luck doing that in NIMBYland) that standard refrain is that the landlords are already doing far better on average than their tenants, so why should society do even more to help them out? Indeed, they say, we should be playing the world's smallest violin for such hard done up landlords who have hundreds of thousands of pounds to their name. No, what is happening here is that Landlords are capturing a disproportionately high percentage of the fruits of the labour of ordinary tenants (true, compared to historical values), and the solution is to do something that prevents so much of the hard earned money of your average Joe ending up in their hands, ergo Rent Control.
This type of thinking is something that actually works pretty well when we're dealing with small groups of up to 250ish not very technologically advanced people you couldn't just easily get up and leave for a different one like those humans spent most of their evolutionary history in. In such a group it is very well possible to use social shaming and exclusion to ensure a more balanced distribution of resources instead of having a few people hog it all. The lack of advanced technology means that there are no large economies of scale to the group as a whole (and thus eventually you) from having resources concentrated in a few hotspots rather than being more widely spread out. Thus in a small, sub Dunbar's number sized group, ostracism and gossip about how someone is behaving selfishly is the correct course of action to take for the betterment of everyone.
Unfortunately it fails catastrophically when applied to our modern society. It doesn't matter one bit that landlords are richer than tenants for why the current rental market in the UK is as bad as it is. Every single property could be owned by Elon Musk, right now the richest man in the world, and if he was selling off his portfolio because it was no longer profitable the situation would be just as bleak for renters (no more, no less) as it is right now with many disparate landlords independently coming to the same conclusion. Equally they could all be owned by a mutual fund investing the life savings of the poorest half of the planet and if that fund was leaving the rental market due to poor returns it would cause rents to rise just as much as they are doing now. The outcomes for the tenants are the exact same in each of the three cases.
The idea of shaming and making life harder for the people who are disproportionately capturing the economic surplus in an area to shame them into being more altruistic and thus improve outcomes for all of society just does not work in environments where people have a lot more freedom of association than you would get in a typical pre-industrial society. As we see in the example above, that can often be quite counterproductive.
The correct way to fix the issue in our large, super-Dunbar sized societies is the mirror opposite of the sub-Dunbar solution, namely we need to make it easier for landlords to make a profit so they enter the market (hopefully through building new units, but even switching a house form owner-occupied to "for rent" helps relieve the pressure on rents) and increase supply. The correct metric to look at here if you care about the tenants doing well is not how badly the landlords are doing, of the difference in how much value the landlords get vs the tenants from renting out their units, but quite simply "how much value are the tenants getting for what they pay" with zero reference to the sum total welfare of the landlords. And the way to increase tenant welfare? Increase rental supply in the area that people want to rent so there is competition amongst landlords and tenants are able to command more market power than the mere morsel they have today.
Another example of where sub-Dunbar level thinking fails in modern society can be seen in funding for technological advancement. Modern research and development has large capital costs, which requires large pockets of concentrated capital to progress. In a smallish society of 250 people where nobody can really get away from the others, if one of the members has a large windfall it makes total sense for the members of the society to want its fruits to be spread out for their own benefit.
Imagine a world where 250 people each have $2,000, but one person suddenly wins a lottery worth $1,000,000,000 (and gets access to goods worth that much, so it's not like the extra cash causes massive demand pull inflation). As a non lottery-winner, it is in your interest to agitate for the money to be distributed equally amongst everyone, giving everyone $4,000,000 rather than letting the winner keep it, even if they protest that they intend to use the money to fund the development of a drug which will add a year onto everyone's life expectancy (most people will take $4M over 1 QALY). Plus, if your society is not technologically advanced, the chances of that drug being successfully developed in the first place are extremely low, even if all the money is spent finding it. It makes complete sense to redistribute the money, the lottery winner will be pretty unhappy about it, but who cares about 1 person vs 249 and anyways that person's survival is strongly tied to the group's success, and he can't just take his money and run elsewhere.
On the other hand if instead of 250 people, your society has modern day technology and consists of 1 billion people each having $60,000 and someone comes into $1,000,000,000 and promises to develop a +1 QALY drug, it makes total sense to let them keep the money. Even if you took it all and redistributed it amongst everyone that's only $1 per person, which is worth a lot less than an extra QALY (compare to the small society case where everyone got $4M instead). Also the existence of modern technology makes it more likely they'll be able to find and manufacture the drug in the first place.
Indeed here is a case where even the famous Egalitarian philosopher John Rawls would have been in favour of the inequality, as his difference principle permits inequalities where their existence is beneficial to the worst off in society as it is here: for a non winner $60,000 + new drug is a better world than $60,001 but no new drug (a crowdfunding effort to raise money to publicly develop the drug isn't going to raise an extra $1 billion if everyone in society has $60,001 vs $60,000; you really need to have the concentration of wealth in the hands of an actor who's willing to embark on this project). The correct course of action for everyone in the super-Dunbar sized society is to let the lottery winner keep his money, the exact opposite of what they should do in the sub-Dunbar sized society.
Given all this, why is it still the case that many people in our modern world are big proponents of sub-Dunbar level thinking? After all, they would all agree with you that we are quite technologically advanced and no longer live in small societies where you can know everyone else who has a significant influence on your life. For most of human history, sub-Dunbar type thinking would have yielded better results for you and yours instead of the opposite, so it sort of makes sense why deep down we default to it so much, but equally for most of human history violence was extremely common and today we're by far the most peaceful we've ever been as a species.
I would say that this aberration is due to a pernicious effect of modern communications technology. We humans have an availability heuristic where we categorize how common something is in the world based on how often we see it. This works quite well when we're deciding between whether there are more yellow berries or red berries in a valley when the last few times we went foraging we saw around twice as many red berries than yellow ones, but it works a lot less well when modern communications deliberately amplifies rare events (after all, you're a lot more likely to hear "man bites dog" on the news than "dog bites man", despite the latter being much more frequent - ironically this is not true at the moment here in the UK due to the XL Bully dogs rampaging around, but the general idea is valid).
As a result of this amplification, modern day humans who are bombarded with media stories of the rich and powerful think deep down in their subconscious that such people are a lot more common than they actually are, and even worse, that such people are in the same 250ish Dunbar "tribe" as themselves (because the frequent updates about such people make one think these are genuine interactions between them and ourselves), in which case it makes complete sense for why they default to their instinctual, limbic thought process and feel that the way to make the modern world a better place for everyone is very similar to the ways that made life better for antediluvian man.
I don't think either of your examples work. The problem of sub-Dunbar thinking certainly exists, but when the stakes are as high as they are in housing or healthcare, actually-existing democracies make better decisions than pure monkey politics would suggest. In both cases, I am happy to defend the policies we are seeing as sane way of pursuing the goals of the median voter (which I do not share in the case of housing). This is an effortpost on the pathologies of UK housing policy that I am structuring as a fisking of your post in order to make it quicker to write rather than because I think your post is bad - I suspect we agree on all the substantive issues and the double crux is about the motivations of our political opponents.
UK housing policy is a simple problem (policy-induced scarcity) with a simple solution (build more houses) that is politically difficult to implement. The various deckchair-rearranging policies to "fix" the housing market while retaining an artificial scarcity of housing are mostly supported by people who know exactly what they are doing, and are likely to succeed at their stated goals within the limits of what is possible by rearranging deckchairs.
The problem is MUCH less bad in Berlin than in London - the whining is worse in Berlin because Berliners got used to low rents in prime central neighborhoods during the period when the city was recovering from the Cold-War era partition, but rents in Berlin are about half London and incomes at a comparable skill level are higher. There was a short period when the legal market didn't clear due to rent controls (a quick Google suggests that people willing to pay illegal key money had no trouble finding flats) but they were struck down by the German federal courts.
These rules were brought in by the Conservative government, and the stated purpose was to encourage homeownership at the margin by forcing amateur landlords to sell out to first-time buyers, not to make life easier for marginal tenants. You can say that encouraging homeownership at this margin is a bad idea because homeowners are more likely to under-occupy (FWIW, I disagree with you), but the consequences of this change were thoroughly intended, and popular (partly because the marginal tenants losing out are disproportionately likely to be non-voting immigrants).
The UK does not have rent control. If the market isn't clearing, then rents need to rise further until it does. The fact that oversubscribed tenancies are allocated by sealed bids (rather than paperwork races) suggests this is happening.
Then you would be wrong, as you yourself acknowledge in the next sentence.
CORRECT. I guessed you were basically sound. If we don't allow developers to build the homes that there is demand for (and that could be built profitably), then millions of prospective Londoners, who have a reasonable want to live in London, will have to go away. Once you let the NIMBYs win, that becomes a matter of arithmetic and not a policy choice. Neither the free market nor the welfare state can alleviate the pain, because at the relevant margin the pain needs to be bad enough to make people leave. Even Gavin Newsome has started to get this - the fact that the UK in general and Sadiq Khan in particular don't is scary for people who have to live here.
That passive investment in land is a form of social parasitism is Econ 101, going back to David Ricardo. We tolerate it because (1) it is too hard to distinguish passive investors in land from passive investors in the structures built on the land, who are socially valuable in the same way as other capitalists, and (2) a lot of them are homeowning boomers, who are ludicrously entitled and vote. In England this is explicit - page 1 of every English Land Law text says that English Land Law is based on the doctrine of tenure and the doctrine of estates. The doctrine of tenure is that William the Conqueror stole all the land in England in 1066, King Charles still owns it as William's heir, and whatever rights you may have in your "own" land are based on stolen property.
Apart from the Corbynite usual suspects, I am not seeing a powerful faction in the UK calling for Berlin-style rent controls, largely because there is no powerful faction in British politics who wants a world where people with a long-term stable address rent from private sector landlords. We don't want the landlords to suffer - we want them to stop landlording and invest in new assets rather than bidding up the price of existing ones. The anti-landlord faction of the Conservatives thinks that people with long-term stable addresses should be homeowners and wants to tax landlords until they are forced to sell out to first-time buyers. The dominant faction of the Labour party thinks that poor people with long-term stable addresses should live in social housing, but that allowing an overpriced spot market to exist for the niche of people who need it is, on balance, a good thing (Sadiq Khan did call for rent controls in a vague non-committal way, but he was slapped down by Keir Starmer. The underlying politics of this is that the post-WW2 housing policy was built around social housing for the working class and homeownership for the middle class, to the point where even after the Thatcher-era selloffs the UK has an unusually high percentage of social housing (see p2 of this OECD report), so the political machines running off long-term low-income tenant voters are focussed on social housing and not rent control.
Without the bold word, this is obviously correct. But the supply issue is the supply of housing, not rental housing. Given the way the UK housing market works (and in particular the lack of dedicated rental buildings where a single private landlord owns the whole multifamily building), there is a single market for housing services in which private renting and mortgaged ownership are effectively different financing options. Because of undersupply, the market for housing is a brutal zero-sum competition which someone has to lose. If policy favours mortgaged ownership as the way of financing the purchase of housing, then the competition is rigged in favour of people with stable jobs, good credit scores and parents able to put down deposits for them. If policy favours private renting, then the competition is rigged in favour of people able and willing to live with multiple employed adults per bedroom in order to cover the rent. Which of these groups of people you prefer is a far stronger motivator for which housing policy you support than whether you hate bankers or landlords more (FWIW, the sub-Dunbar idiotarian left seem to hate developers more than either).
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