‘Our Problem is a Problem of Design’

The editor at Cato Unbound, Jason Kuzicki, wrote the lead-off article this month under the title topic of Libertarian Social Engineering. The objective is to further investigate how to engineer markets intended to fulfill objectives of public interest, or to socially engineer a marketplace so that people can privately produce goods to solve collective needs in their communities.

He breaks it down further though, that at the most basic level where we must start is understanding the design of such interaction:

“The problem is … our lack of a suitable organizational technology: our problem is a problem of design. It may turn out to be an insoluble design problem, and it is a design problem no doubt exacerbated by our selfish, predatory, and malicious propensities, but a design problem, I think, is what we’ve got.” Jason Kuznicki

I don’t think it is an insoluble problem.  In fact I think the design has been waiting to be excavated for quite some time. It will be necessary to cut away our selfish impulses, machete through our predatory and malicious propensities, chisel off the mucky biases, dust and sift away the norms that cloud reality. Then we will be prepared to isolate its structure out of real world examples.  And in doing so the design will be found.

We need to learn the architecture of the systems society uses to pursue goods and services that are, for a variety of reasons, most readily shared within groups rather than metered out to individuals. The benefits of hard infrastructure like roads and bridges being open and available to everyone raise little controversy, but as we shift over to the softer offerings like provisions for the poor and health benefits, the degree of support and obligations of all parties becomes stickier.

We need to better define the components that build the structure and look closely at the words we use to describe them.  Much of the vocabulary that we employ has loaded connotations or is so overused as to have little specific meaning.  This keeps our conversations vague and off-balance.  If there is ever to be a mathematical approach to distinguishing between the large spectrum of gray values between choices, we will need to properly identify the components.

One of the keystone words in this conversation is the public. But rarely if ever is this group specifically denoted.  For the most part the implication is a group of individuals that fall within the geopolitical boundaries implied by the speaker. These start with a national identity under the general guise that all infrastructure and benefits are public to all citizens.  If the conversation is regarding a city park in Minnesota there is a shift of use and obligation to the very local city level that no one seems to question despite its open nature to the residents of 49 other states.

This seems like a benign bias, that although parks are maintained at the local level, others that swing through are not free riders, and are not charged or excluded from their use. Especially since a common structural nature of groups is a nesting effect.  The family lives in the neighborhood, that is part of a city, which joins with others to make a metropolitan area which is located in a state. It’s the open-arm-extended-family trait of when you are in my neighborhood we can entertain you, then you will have a turn to entertain us. We’re not going to nit-pick about the bill.

This all changes when the discussion turns to pros and cons of a city’s right to increase the minimum wage.  The Minnesota legislator tried to preempt Minneapolis’ push increase its minimum wage to $15/hr. The city’s mission is to provide for Minneapolis’ working poor.  The legislators argued unsuccessfully that if the calculation were done by identifying the public group as comprised of metropolitan businesses and their employees,  Minneapolitan working poor would lose employment opportunities.  This would occur due to an increase in business expenses in tracking different wages over small geographic areas.  Both groups claim an interest in advancing the working poor, but their delineated interests are cross-cutting instead of nested.

In the first example the park is public in the traditional sense- that anyone in the nation can walk across it, bring a picnic lunch and enjoy the scenic lake view.  The wages are public to Minneapolis residents alone. And the business community would like to be recognized as public across metropolitan city boundaries. Each public grouping speaks to a separate, sometimes overlapping collection of individuals. Each one is unique.

Building on the concept of public is the concept of the products we are actually trying to create: public goods. As Alex Tabarrock points out in his essay:

“Public goods are one of the biggest challenges to markets and it was long thought that because of the free rider problem markets could not produce public goods. In Tabarrok (1998) I showed that such reasoning was wrong; a large class of public goods can be produced voluntarily..” Alex Tabarrok

When Tabarrok posted this piece on his website, Marginal Revolution, more than one commentator remarked that the definition of a public good is outdated and inaccurate as virtually every good can be privatized with a little ingenuity. And I propose that the non-rival part of the definition has lead to the financial woe we now find ourselves in.  Non-rival means that my use of the good does not diminish its availability to others. So once a good is pronounced to be an entitled public good, like health care – then individuals are right to expect unbridled usage.

Why is it surprising that the cries of, ‘we can’t afford universal health care at the present rate of consumption,’ go unheeded when the definition of a public good implies its availability?  The reality is that public goods are very much constrained by resources.  Roads deteriorate based on usage and become congested necessitating enlargement of the transportation system. Housing ages and deteriorates whether it houses the disadvantaged or the elite. Judicial systems need the personnel to match the work load. All goods are restricted by  limited resources. This is precisely why capitalism matters.

In order to understand how to adjust, influence and tweak the market for public goods we need to nail down these definitions.  What marketplace are we in?  Who is part of the public relevant to this market?  What good is being produced and what is the exchange that enables its production? We need to look to the voluntary provision of social goods across our communities identify these components and look for a structure.

“But we have lacked even a vague idea of how crucial types of voluntary social interaction might be carried out in the absence of a state, or with little to nothing in the way of state participation.” Kuznicki

The reason for the lack of interest in the study of freely taken action on behalf of a cause is because – well –  it’s a bit boring.  The super-smart and socially inquisitive have preferred to delve into things like a potential nuclear stand off with North Korea rather than observe the social interactions that pull off a successful homerun derby fundraiser at the neighborhood ball fields.  And you can’t really blame them. National defense and millions of lives on the balance is much more seductive than the dynamics of a hundred people hoping to raise a $1000.

It is at this most basic and natural level of social interaction, however- where every action is without compensation, that the intent of the group and its willingness to exchange and devote resources, is most clearly viewed.  Until recently our school district did not track how many parent volunteer hours went into PTA and grandparents’ day and book fair and teacher appreciation meals and chess club and fall festival and so on.  These community hours are present at Zachary Lane Elementary School where the students score 73.7% on the reading MCA’s but are completely missing across the district at Northport Elementary where the scores come in at 29.3%

Even though an army of labor hours have marched through the history of our successful public schools – amongst our community there is not even the most basic record of their deployment. It would be useful to know for instance how many volunteers are needed to pull off a book fair to evaluate whether Northport could muster up such a strike against their reading scores. The soldiers in this battalion, however, prefer a word-of-mouth, training on the job type of intelligence conveyance. And instead of a battle for the top jobs, the organizers are coddled and pushed and pleaded with to take on the responsibility.

These workers do not crave the limelight, which is a good thing as they do not receive it.  One must pay attention to the brief mentions in the small circulation neighborhood newspapers to see mention of a recognition event. The motivation for their efforts is driven by a belief that what they give is profitable to the group.   When the citizenry truly values an issue they will show up without the state.  At the recent withdrawal of funding for Planned Parenthood, a local newspaper reporter wrote about the tsunami of volunteers calling into offer their skills on behalf of the organization.  Her article ran in the Variety section, right next to the summer reading list- giving the impression that such work is delightfully optional like enjoying the latest mystery on your hammock as the summer sun filters through the tree leaves.

It is in these places, however, where people show up voluntarily, willing to give their talents and resources to advance to their interests- that is where we need to focus our attention.

Communal, voluntary solutions are secured in the business world as well.  Ed Stringham notes this is his response:  “The second approach is to look for real-world examples of how a specified problem or a similar problem was solved by voluntary associations. My recent book Private Governance gives numerous examples of private parties getting together to solve problems others assume must be solved by government.” 

Stringham offers examples in the business world or more specifically at the locale where the payment processors and PayPal work together to root out fraudsters. Traditional security enforcement mechanisms are inadequate across international boundaries, so all parties who share this common interest set up new norms that address methods of exposing the thieves who have become savvy to the ways and weaknesses of new technology. Through this civilian and cooperative work of setting norms, abiding by them, enforcing them, all involved gain a more secure environment. All involved lose less money to fraud. You could say that the work has created a public good for a collection of private enterprises residing under a variety of political boundaries.

The public is not to be penned in exclusively by geopolitical boundaries. Nor is it clear that distinctions of ownership are the final say on group propriety. A paycheck given in name to an employee in exchange for their labor appears to be entirely private. If that worker should get divorced, however, the courts could very well impound a portion of that check payable to the soon-to-be ex-partner to provide for the care of their children. In the view of the court the wage is a public good, at least in part, to their offspring.

At our lake up north the county road runs along the shoreline for a couple of miles. The beach is especially nice at this spot and the sand keeps the weeds at bay well out into the lake making for an excellent swimming area. The land owner at this juncture owns a large parcel which both skirts the beach and extends generously over on the other side of the road. For the past twenty years or more, on most sunny days there is at least one vehicle from town pulled off where tire treads have smashed down the long grass, and the car’s trunk has been emptied of floaty’s, coolers and beach toys. On the weekends a flow of folk come and go plopping their folding chairs down in their favorite spot in the shallow water where minnows will nibble at their toes while their children splash out a bit deeper.

This property is titled very clearly in the Ottertail County records to a private individual who could post it with ‘no trespassing’ signs. Fences could be installed, authorities could be called- although it probably would never rise to that level. But the point is that the owner allows its use to be public. No-one checks for ID, but realistically these are all near neighbors- and to them the beach is a public good, a local amenity appreciated and used in the heat of summer.

Public is a body of collaborators, working toward a common goal to provide a good or service to all within its membership.  We need to separate the term from one which is determined by state boundaries. We need to abolish the distinction that business endeavors are solely private and government operations are exclusively public. Business can produce public goods as the payment processors did in establishing norms for security checks.  Private goods are usually extracted from government as, for example, when rent-seeking occurs.

The nature of public is also chipped away when speakers voicing unpopular views are disinvited, or bullied and mocked off the stages of our public institutions; when gangs and hoodlums take over city parks so as to scare off playground users, soccer players and Sunday strollers; we need to identify the workers that put the mortar back into the establishments of higher learning to protect free speech, the neighbors who gather and chase the thugs out of the parks.  Then we will start to recognize the value of maintenance workers, giving freely of their time,  receiving recompense in the satisfaction that they jointly with others build and preserve these rather awe-inspiring effices.

Much more needs to be said about the entanglements of what is public and what is private.  For now it is simply important to disassociate any automatic classifications based on traditional assumptions.  We have to get used to the idea that there are many, many groups all around us doing work.  That through our lifetimes we will be members of a variety of them from our families and our neighborhoods, to school communities and workplaces, to youth sports associations and religious communities.  To some we will have lifelong commitments, and to some we just pass through during certain stages of life. With them we share well known concerns for safety and clean water, education and transportation, elderly care and health provisions, and many other communal concerns.

We need to understand the nature of the forces that drive the components to complete their objectives. And when a group gathers and determines that a path should be one that all their kin and kith should be able to travel; when they take action to pound out the trail and develop a structure for its consideration and feedback– then I  propose that we have discovered the building block of our design: a cleavage.

Instead of jumping right to social engineering- we need to first understand the most elementary units of the structure.  We need concrete definitions of the terms. Public bodies are at work everywhere. Groups are cleavages. Common interests draw out the blueprints. Ownership of the land does not necessarily dictate the work.  We must start at the must fundamental part of the design: the building blocks of its architecture.

Capitalism realized its grand élan when people understood the nature and impulses of personal and individual rewards. The industrial revolution engaged in full gear when the design of the traditional, currency accounted, profit motivated marketplace became apparent through its study starting at daybreak of 20th century. Pursuit of this study galvanized industry and engaged it for over 100 years.  I anticipate that the recognition and study of cleavages and their economic implications will also engage efforts to accomplish new goals. I am pleased that CATO has initiated this conversation.




2 thoughts on “‘Our Problem is a Problem of Design’

  1. Seems you’re a student of Ms. Ostrom.

    Elinor Claire “Lin” Ostrom (née Awan; August 7, 1933 – June 12, 2012) was an American political economist whose work was associated with the New Institutional Economics and the resurgence of political economy


    1. Yes, Ray I beleive Lin Ostrom advanced the theories around coorperative behavior. I also see a more specific structure that supports the actions people take on behalf of a group, why they do so and how they benefit. My goal is to devote more time to this site to flush out the theory.


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