The Nebulous Kingdom

Growing externalities

12/31/2013

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I grew up in sunny southern California but went to school for a couple years in the colder climes of Chicago.  

One of the first things I noticed about Chicago is that these kind people sure like to honk when driving an automobile.  Not the sort of honking to warn you about something you ought to know, or to flirt with a pretty young thing in a mildly obnoxious way, but the kind of apparently useless honking as they're already making a turn behind you so wouldn't even get the benefit of a behavioral improvement (if you so chose to make one), that leaves you a bit puzzled and disgruntled.  After it happened a few times, I asked someone once about it, a Chicagoan native, and they knowingly said, "Ah, they're just trying to teach you a lesson."

Someone once told me about a study that compared different cities and how long on average it would take a motorist behind another car to honk once the light turned green.  The results were as you would imagine, "nicer" cities had longer average time-to-honk - except in Los Angeles, where they would just drive around you without a honk.

They say it takes a village, but there's a cost to living in small communities where everyone knows each other, knows about each other.  Social order is attained through the intangible but colossal power of relationships, of shame, and the need we have for human ties.  It hurts us to be shamed.  When those nice Chicagoans were honking at me, they were essentially giving me feedback - "You screwed up" - and backing it up with the public social shaming of a good toot of the horn.  And it worked - it made me feel bad.  This power can create both great evil as well as the realization and recognition of that evil.

What happens when externalities grow, when general consensus is that we can't afford for people to exercise individual freedoms when it affects others, sometimes many others.  What happens in a world of massive externalities?

"The intertwining of the global financial system is perhaps just an example and a metaphor for an even larger trend towards interconnection and increasing externalities.  After all, as we live more closely in urban mega-cities and interact more regularly over the internet and web-enabled mobile devices, it makes sense that both positive and negative externalities – that is, the impact of transactions on parties outside those transactions – would increase.  In this world, the price mechanism fails more often.  Our models fail more often.  In this world of increasing uncertainty, where positive verification isn’t to be had, the positivist view seems less useful.  This is important - once externalities gets to a certain level, it seems inevitable that our society will try to gain greater control of its constituents, to avoid inflicting the social cost of negative externalities or incent behavior which results in positive externalities.  This points to a trend towards greater regulation and loss of individual liberty."

Everyone's entitled to their own opinion, but I'm seeing more instances of criticism these days where the language being used is a moral vocabulary and backed with the institutional weight of risk-averse corporations and policymakers.  It used to be that we would commonly see this from the political and religious right but now the dynamic is playing out on both ends of the spectrum - from the accusations of glorifying excess in the movie "Wolf of Wall Street" to the demonizing of individuals with sincerely held views on controversial topics such as abortion and gay marriage, or those who are just making art or attempting humor.  We're not just shaming people anymore with a toot of the horn, we're backing it with the consequences of lost jobs, terminated contracts, and fewer future opportunities as well as a permanent record of the public humiliation.  It's the stocks and pillory again.

Everyone's entitled to their own opinion.  But when their opinion, tied to their identity and integrated into one person's moral outlook, is backed by the power-equivalent of the state, it becomes a problem.  

Today will take care of itself.  I worry about the future though.  I can envision one path, a world where we have fewer degrees of freedom, where it's grayer and sadder, and we don't even notice the liberties we've lost.  I'd like to take a different one, a brighter path where we build trust through information, teach through storytelling, and leave individuals their freedom, humanity and opportunities to chase their dreams and make their mistakes.  

And maybe, sometimes, drive around them with a smile and wave instead of a honk.

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