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When a statistic isn't just a statistic
Like many, I was saddened by the news of the Texas flooding and the girls who were in the path of the engorged river. Natural disasters happen, but they don't always victimize school aged girls at a summer retreat. Yet I mentally filed the disaster in the way I do most disasters: the optimal quantity of flooding deaths is not zero, the odds of something bad happening to somebody somewhere is quite high, children need to do things in the outdoors even if there is some risk. And this framing, while dispassionate, isn't incorrect.
Yesterday, one of the bodies was discovered and identified. She wasn't some no-name in a far-flung state. Her family lives three streets over from mine. Her brother and my oldest daughter were in the same class last year. These are neighbors, and in our close-knit community, something akin to extended family. Suddenly, this feels personal.
A number of years ago, I was teaching my oldest to ride a bike. She was a natural, balancing and peddling within minutes of first riding. Within an hour she was shifting gears, accelerating and decelerating, making turns with adroitness. After several hours of practice in a parking lot I decided she was ready for the hilly streets near our house. Unfortunately, there was one thing I had forgotten to teach her in the flat safety of the parking lot: how to brake. She went down the hill outside our house, increasing in speed and with no ability to stop herself. Finally, she hit the curb and somersaulted into the grass of a yard. Despite the relatively soft landing she was scraped and bleeding over most of her body.
So many things could have gone wrong. She could have hit a car. She could have landed in the street and been flayed by the asphalt.
Life is fragile and can be snuffed out at any moment. The day she crashed her bike I hugged her as tightly as her scrapes would allow. Not all parents are so lucky.
"Lying For Money" is a good book, but this turn of phrase is bad. The optimal quantity of [bad thing] is 0; the question is what trade-offs are optimal, given the available options for reducing bad things.
I disagree. I think the book presents a convincing case that, impossible utopias excepted, a world with no fraud would be worse than a world with some amount of fraud. Some amount of fraud is the price you pay for living in a high-trust society (and all the economic and social benefits that entails); a few iatrogenic deaths is the price you pay for a national healthcare system; a few murders is the price you pay for living in a free society etc.
The ideal or perfect amount of [bad thing] is zero. But we don't live in a perfect world, and it's pointless wasting our time on pie-in-the-sky fantasies of what it would be like if we did. As long as there is division of labour in a scarcity economy, people will need to trust each other to get anything done, and where there is trust there are opportunities for fraud.
Not having read the book, explain this to me? A world with no fraud would have to be a high-trust society, would it not? People are honest, keep their word, and don't exploit loopholes or take unfair advantage of the vulnerable and uninformed. Aren't low-trust societies the ones riddled with fraud and corruption? I'm taking from how you put this that a world without fraud would be a low-trust society, or one so heavily monitored by Big Brother that other freedoms would all be lost.
At a guess: A high-trust world would be singularly susceptible to fraud, since people needn't be on their guard at all. Turning a high-trust world into a zero-fraud world requires extremely invasive surveillance. So zero-fraud implies extreme totalitarianism.
Yes, but then we have to explain how a high-trust world has that many fraudsters. Maybe they don't, maybe it just takes one. But in our conditions, you get a high-trust society by cracking down on fraud, teaching kids that fraud and stealing is bad and that honesty is the best policy (yes, all the old saws), punishing fraudsters when you catch them, instructing people to be vigilant about scams, and the likes.
You don't get a high-trust society by shrugging off "well some people are gonna steal, that's just how it goes". Even less with an attitude that "we need some people to be scammers, else we don't get vigorous economic development!" That's simply asking for systemic African nation levels of corruption, bribery, and stealing from the public purse when you're in power. After all, if I, General Warlord Tsombé, don't rob the treasury blind, then my people will not be reduced to abject enough levels of poverty to trigger Western aid, and that means in turns the NGOs and USAID-type bodies can't employ all the college-degree activists to deliver said aid!
"We need scammers to get vigorous economic development" is such a weirdly cargo cult reading of that story.
I frequently stop at a local convenience store, and buy an Arizona diet iced green tea, which costs $1. The store is tiny, normally there is only the owner or his wife present, and when I walk in they're frequently making a sandwich at the counter, stocking something, etc. When they're somewhere else I wave the tea at them and the dollar bill, tell them I'll leave it by the register, and leave.
Now I could definitely steal the tea once, maybe twice. I could probably steal a candy bar or something a few times.
But I would definitely go there less if buying the tea took me three minutes longer.
Which would probably also reduce my purchase of higher profit items like Zyns and hoagies and ice cream at the store.
The way you get a high trust society is because when people trust each other, there's so little friction in economic transactions that you become so rich that the odd scam can be ignored, societally, without serious consequences.
I'm going to assume that alongside whatever native honesty you have in your nature, you were raised not to do something like that: that stealing is wrong, that you pay for the goods, and the rest of it.
That's how we get high-trust societies.
Some people, though, weren't raised like that and/or aren't basically honest. We've all seen the videos, and that's how you get toothpaste has to be locked away and retailers close down because the professional shoplifters aren't afraid of the law since the law won't go after them.
Sure, I think of myself as a fairly honest person. But in my life I have shoplifted, perhaps three or four times, by accident or out of pure cussedness. Certainly if the owners of the store maintain a policy to trust people similarly situated to me, they will suffer additional losses over time compared to what they would if they sought a "zero shoplifting" policy. But they will probably lose more business than it's worth.
We aren't arguing that shoplifting isn't bad. We're arguing that some risk of shoplifting is better than no risk of shoplifting, because in order to achieve zero shoplifting, the convenience store must undermine it's own raison d'etre: convenience. Hence the optimal amount of shoplifting for a convenience store isn't zero. More shoplifting isn't better than less shoplifting, but as the amount asymptotically approaches zero there's a point where the security procedures become too much, where the juice isn't worth the squeeze.
We see this all around us. Self checkout leads to massively increased losses, but not enough to balance avoiding paying a cashier. EZ Pass and toll by plate on highways leads to significant lost revenue compared to toll booths, but reduced costs and increased traffic flow make it worth it. If I put on a pink polo shirt and a white baseball cap with a finance logo on it and throw my golf clubs in my truck and drive to a nice country club and walk out and start hitting balls on the range, no one will stop me, because staff can't constantly be harassing members and it's not worth the risk.
The optimal point isn't zero.
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