Liars and Outliers (15 page)

Commenting on the Hutterites, Hardin suggested, “Perhaps
we should say a community below 150 really is managed—managed by conscience.”

I read somewhere once that police officers represent a failure of the underlying social system.
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The social system should be self-policing, and formal rules and rule enforcement should not be required. But it's not self-policing, and not just because we're wary of vigilantism. It's simply a natural effect of increasing the scale of the underlying social group.

Chapter 9

Institutional Pressures

Store owners generally get to set their own hours. If their customers tend to shop early, the store opens early. If their customers tend to sleep in, the store doesn't open until late morning. Nights, weekends, holidays: a smart store owner is going to match his store's hours to his customers' needs.

This isn't true of stores in a shopping mall. Shopping malls have preset hours, and if you have a store in the mall, you have to adhere to those hours. It doesn't matter who your customers are. Called a “
continuous operations clause
,” it's written into most mall leases.

This solves a societal dilemma: stores are individually better off if they can set their hours to suit their business, but the stores are collectively better off if everyone shares the same hours so customers know that everything will be open when they go. To ensure that stores follow the group interest, mall operators enforce continuous operations clauses through steep fines.

As we saw in the previous chapter, solving a Prisoner's Dilemma involves changing the costs and benefits of acting in the person's selfish interest versus acting in the group interest. Shopping malls solve their Prisoner's Dilemma by using fines. A fine raises the cost of a store owner acting in his self-interest. Raise that cost high enough, and owners will open and close their stores in unison.

The common mall hours, and the fines for violating them, are an example of an institutional societal pressure. It's a rule established by the institution that owns the mall—it might even be a cooperative institution consisting of all the stores—that the society of store owners all agree to.

Political philosophers have long argued that informal societal pressures aren't enough for a successful human society. Thomas Hobbes, writing in the mid-17th century, believed individuals couldn't be trusted, and the opportunities to defect were simply too tempting. In this “state of nature”—that's anarchy, although he never used the word—our lives would be “
solitary, poor, nasty
, brutish, and short.”
Martin Luther said
the same thing, a century earlier.

Immanuel Kant
put it this way at the end of the 18th century:

The problem of organizing a state, however hard it may seem, can be solved even for a race of devils, if only they are intelligent. The problem is: “Given a multitude of rational beings requiring universal laws for their preservation, but each of whom is secretly inclined to exempt himself from them, to establish a constitution in such a way that, although their private intentions conflict, they check each other, with the result that their public conduct is the same as if they had no such intentions.”

The result is Social Contract Theory, which posits that people willingly grant government power that compels them to subordinate their immediate self-interest to the long-term group interest in order to protect themselves and their fellow citizens from harm. Thomas Hobbes,
John Locke
,
Jean-Jacques Rousseau
, and the 20th-century philosopher
John Rawls
all proposed different flavors of this idea. Their conclusions about the ideal way to achieve social order vary, but all maintain that it is both necessary and moral to forcibly limit individual freedoms, reasoning that without a government enforcing laws, defectors would take over, to the detriment of all.

At its basest form, it's an argument we've seen in the previous chapter: fear of punishment is what keeps the tempted honest.
In Plato's
Republic
, Glaucon argues that if you remove that fear, the righteous will behave no differently than the wicked: “Mankind censure injustice, fearing that they may be the victims of it and not because they shrink from committing it.” During the Italian Renaissance,
Niccolò Machiavelli
built an entire political philosophy around this principle.

Men never act well except through necessity: but where choice abounds and where license may be used, everything is quickly filled with confusion and disorder. It is said therefore that Hunger and Poverty make men industrious, and Laws make them good.

Of course, that's not precisely true. The righteous aren't really just calculating scoundrels behaving well only because they fear that someone else—or perhaps God—will punish them if they step out of line. Reciprocal altruism works, and most people are honest most of the time. It's the defectors that Machiavelli was talking about, and for them he got it mostly right.

Laws, regulations, and rules in general are all institutional societal pressures. They're similar to reputational pressure, but formalized. We all agree to comply with all sorts of institutional pressures as a precondition of being part of a group, the most common of which are the laws by which we agree to be bound as a condition of being part of whatever political units we're part of. (It's certainly debatable whether individuals “agree to be bound by” all of the rules that end up being applicable to them, but that's generally how political philosophers look at it.)

It's not always clear exactly when informal social mores become rules. The social pathologists make a distinction between codified and explicit norms established by the government and non-formal norms agreed upon by the group, but that leaves a large grey area for less-official groups. Still, codifying our reputational pressure into laws was a big step for the development of society, and it allowed larger and more complex social groupings—like cities.

Garrett Hardin
, who created the phrase “the Tragedy of the Commons,” later wished he'd called it “the tragedy of the unmanaged commons.” The point of his paper was not that defectors will inevitably ruin things for the group, but that unless things are managed properly, they will. He was stressing the need for institutional pressure.

Institutional pressure requires an institution for implementation and enforcement; I mean the term very broadly. Institutions include governments of all sizes, but also religious institutions, corporations, criminal organizations, and so on. These institutions implement rules, laws, edicts—there are several terms—and sanctions for disobeying them and possibly incentives to obey them.

Burglary has costs that exceed the value of the goods stolen. Burglary costs in the time and effort to replace what's been stolen, the psychological effect of having one's home violated, the cost to the community of investigating the crime and prosecuting the accused, and even the cost of defending the suspect if he happens to be indigent. Sometimes the costs to the burglarized far exceed the value to the burglar: think of someone who steals copper wire out of a data center to sell as scrap metal, or destroys a building to get at valuables inside. But these costs are not borne by the burglar. They are externalities to him.

A well-written law combined with proper enforcement raises the costs to the burglar to the point where he is forced to bear the full costs of his actions. It could even raise the costs to the point where breaking, entering, and stealing is a worse trade-off than buying the same things legitimately.

Voting is another example. In the U.S., voter turnout is so low in part because there's no legal requirement to vote. In countries where
voting is required
by law—Australia, Belgium, Bolivia, etc.—turnout is much higher. This is also true in countries that don't have explicit voting laws, but have laws that raise the cost of not voting in other ways. For example, in Greece, it's harder for non-voters to get a passport or driver's license. If you don't vote in Singapore, you're removed from the electoral rolls and must provide a reason when you reapply. In Peru, your stamped voting card is necessary to obtain some government services. And in Mexico and Italy, there are informal consequences of not voting, harking back to the previous chapter. These “innocuous sanctions,” as they're called in Italy, make it—for example—harder to get day care for your child.

Deacon's Paradox is another example. The societal dilemma looks like this:

Initially,
marriage rites were informal
and reputational; both religious and civil institutions formalized them as we developed rules about property and inheritance. Of course, this isn't perfect. Philandering is as old as human society; rules are generally only selectively enforced, and friends of a philanderer will always be tempted to look the other way. But formalized marriage rules have been in effect throughout history, and they're largely effective.

Gridlock is another example. If you've ever driven in a crowded city center, you know the problem. Drivers stay as close as possible to the car in front of them, so no one will be able to cut in front of them and they will get where they're going as quickly as possible. The inevitable result of this strategy is that cars get stuck in the middle of an intersection when the light turns red, and cars going the other way can't pass. This is both inconvenient and a danger to public safety as emergency vehicles become unable to pass through the congestion. In extreme cases, gridlock can tie up traffic for hours. Everyone would do better if no one entered the intersection until the car was able to completely clear it on the other side, but unless everyone shows restraint, those who do are penalized. The solution: in many cities, it's now illegal to enter an intersection if you are unable to pass completely through without blocking cross-traffic.

Some societal dilemmas are particularly resistant to institutional pressure. Kidnapping and piracy are two examples. The dilemma is obvious. Kidnapping and piracy are bad for society, so paying ransom is bad because it makes these crimes profitable and emboldens those who commit them. Nonetheless, each and every one of us wants an exception to be made if we, our loved ones, or our cargo are held for ransom. So people follow their self-interest, their self-preservation interest, or their relational interest and pay up. This practice has made kidnapping profitable in many countries, most notably Mexico, Colombia, and Iraq, and has contributed to the escalation of piracy in Southeast Asia and off the coast of Somalia. All of these countries could pass laws making it illegal to pay kidnapping ransoms, but those would be hard to enforce. Both parties to these transactions want to hide them from the authorities. It's not enough to declare kidnapping illegal; enforcement matters, and most high-kidnapping and high-piracy countries have ineffective police forces at best, or corrupt police serving as
accomplices at worst
. Piracy has an additional externality; the costs are not borne by the country that hosts the pirates.
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In countries like the United States, harsh enforcement has made kidnapping for ransom a very rare crime, and piracy nearly nonexistent. In other countries, like Somalia, paying ransoms is common, even though the government
occasionally jails
those who do so.

Compare this to bribery. Like kidnapping, bribery of public officials is a societal dilemma. Society is much better off without bribery, but when individuals are faced with a recalcitrant government official, they can be easily motivated to ignore that and pay up. Where bribery is illegal for both the giver and the receiver, both parties have an incentive to hide the bribe from the police, which makes enforcement of anti-bribery laws difficult. (The fact that it's sometimes the police who have to be bribed makes it even worse.) India's chief economic advisor recently argued that, for some classes of bribes,
offering a bribe
should be decriminalized. The rationale here is that if the bribe giver is not treated as a criminal, he will be more willing to help prosecute public employees who demand bribes. Of course, this only works for one-time bribes, where an official is demanding payment for a service that the recipient should normally receive. It doesn't work for bribes in which an official is being asked to do something he shouldn't normally do, or for a series of bribes over time. In all cases, the bribe payer would not want to make his actions public, regardless of the law. But in the more normal case of a government official trying to line his pockets through a one-off transaction, decriminalizing the bribe giver's actions would make it more likely for him to go public.
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Similarly, while it's bad policy to negotiate with terrorists, it's
easy to make exceptions
. At the height of the IRA's bombing campaign in the UK, Prime Minister Thatcher was publicly affirming that her government would never negotiate with terrorists while at the same time conducting secret back-channel negotiations with senior IRA figures. This was in addition to the negotiations the non-militarist wing of the IRA was conducting with the British government.