Adapt and Obliquity

Two pop non-fiction books by two Englishmen who write for the Financial Times, both with one word titles in the mold of Blink. Ignore that similarity.  I highly recommend them both, as their main concepts apply to the theory of competitive governance.

John Kay’s Obliquity is about how it is often the indirect method that best achieves a goal, rather than directly approaching things head on.  (Eric Falkenstein reviewed Kay’s book here.) A couple of examples: those who aim to be happy in an abstract way have a harder time achieving their end than those who lose themselves in an activity pursued for its own sake. And likewise, and perhaps surprisingly, firms with general mission statements calling for profit maximization perform less well than those who speak of a specific goal like providing the best customer service in their industry. The first rule of maximizing shareholder value, according to Kay, is to never explicitly say you’re maximizing shareholder value. At least not in mission statements. GE heavyweight Jack Welch pointed out that the principle of “maximizing shareholder value” tells you nothing about what you should do in the morning when you arrive in your office. Instead you ought to focus on getting work done.

Key doesn’t mention this, but Jack Welch’s quip is equally true of political institutions. It’s hard to fathom how “maximizing justice” would work pragmatically for government service providers. Better to see what systems people prefer to live in when they vote with their feet and then to replicate what works best, learning through trial and error. Applied to the questions of political philosophy, the oblique idea would be to avoid top down design-based systems in favor of filtering processes that cull good policies out of a possibility space. In other words, competitive governance.

These same themes are developed deftly by Tim Harford in Adapt. He even devotes a section to charter cities. Call it the lesson of the Galapagos:

“The Galapagos Islands were the birthplace of so many species because they were so isolated from the mainland and, to a lesser degree, from each other. ‘Speciation’ — the divergence of one species into two separate populations–rarely happens without some form of isolation, otherwise the two diverging species will interbreed at an early stage, and converge again. Innovations, too, often need a kind of isolation to realise their potential.” pg 86-87

This point doesn’t come up in the context of rule set experimentation, but I say let a thousand galapagoi bloom. It’s not a cry for protectionism, but for sovereignty. One hero of Harford’s book is a Russian engineer by the name of Peter Palchinsky, a truth-seeking technocrat shot by Stalin’s secret police for collecting information about failing industries.

“What Palchinsky realised was that most real-world problems are more complex than we think. They have a human dimension, a local dimension, and are likely to change as circumstances change. His method for dealing with this could be summarised as three ‘Palchinsky principles’: first, seek out new ideas and try new things; second when trying something new, do it on a scale where failure is survivable; third, seek out feedback and learn from your mistakes as you go along. The first principle could simply be expressed as ‘variation’; the third as ‘selection’.” pg. 25

I enjoyed the book very much, as Harford is quite skilled at presenting ideas clearly amid story-driven narrative. His chapter on the counterinsurgency in Iraq is excellent. While some might find these ideas obvious or old–fans of Hayek, for instance–I think it’s a good entry point for most anyone else.