Dan KLEIN: Hi, I’m Dan Klein. I’m a professor of economics at George Mason University. I got into economics very much from a policy, or if you like, political point of view. I got interested in free market economics in high school…
Stephen DUBNER: Which made you very popular as a kid, or no?
KLEIN: Didn’t make me popular with girls. It made me popular with some friends that I still have and cherish.
DUBNER: Now, Dan the reason that we are talking today really is because of an essay that you wrote called “Rinkonomics” that I would like you, since we’re not going to sit here and read it to listeners, I’d like you to describe.
KLEIN: Okay, if you try to imagine never having seen skating, never having been to a roller rink, maybe back in time before it was invented and you heard someone propose the idea, like a friend came up and proposed the idea, I have a great idea of a business I’m going to build this huge arena with a hard wooden floor, and around the perimeter a naked iron handrail, and invite people of all ages and all abilities to come down and strap wheels on their feet and skate around and try to enjoy themselves. We’re not going to like make sure they qualify in their abilities, we’re not going to put helmets on them or shoulder pads. And we’re not going to give them really any instruction.
Now, you might think that’d be pure chaos, wouldn’t you? Sure, that’s what you might think…
KLEIN: You’d expect it to result in catastrophe and collision. How are a hundred people making their moment-by-moment decisions make their own pattern of skating such that all hundred patterns do not collide and intersect. It’s a very complex problem but as it turns out it goes quite, you know, swimmingly as we know. And so if you had to sort of pitch this idea to someone investing in it, you’d have to explain how you think this is going to work. And it’s in that explanation that I think we can enhance our understanding of how things work in society generally. I think the main thing to understand is that people are, you know, looking out for themselves. I’m not saying they’re selfish, but they’re basically looking out for themselves, and most importantly they don’t want to get hurt by colliding with anybody. Now one of the important things about collision is that it’s very mutual. So if I collide with you, you collide with me, and in promoting my interest to avoid collision with you, I simultaneously promote your interest in avoiding collision with me. And so there’s this basic coincidence of interest there, which really is at the micro-structure of how this whole thing works out.
When he talks about “how this whole thing works out,” Dan Klein is talking about the skating rink, on a micro level – but on a macro level he’s talking about… well, the world. He’s talking about an idea known in economics as “spontaneous order” – that is, the idea that people can be quite good at organizing and policing themselves, even when there’s no one imposing order on them from above. Isn’t that a wonderful idea – if, that is, it actually works. So, in today’s program we’ll ask: does it work? If so when, and how, and with what caveats? We’ll take our question to the field of sport. We’ll hear about the role of government – like this viewpoint:
Steve LEVITT: I think that there’s a very fundamental role that government plays, which is to make sure that people are protected. And then after that, probably the less government does the better.
And this viewpoint:
Bill BRADLEY: These people, these Tea Party people that say we do not need government, well, let’s go down the list. There’s water, there’s transportation, there’s the Federal Drug Administration. Do we want pharmaceutical companies deciding?
And then we go all Goldilocks on you. We ask this question: when it comes to oversight, how much is just right?
Matt RIDLEY: Well if I had a simple answer to that question we wouldn’t have argued about it for 250 years.
* * *
Today’s show begins outdoors, on a beautiful athletic field, with my friend Jody Avirgan.
DUBNER: All right so Jody, good morning. Where are we?
Jody AVIRGAN: We are on Randall’s Island, which is off of Manhattan, but it’s a big practice facility, lots of fields out here where the club team, the New York men’s club team, which goes by the name of PoNY, which stands for Pride of New York. It’s where the team practices every weekend.
The sport he’s talking about is Ultimate Frisbee – or, as real Ultimate Frisbee people call it, simply… Ultimate. Jody Avirgan has a day job producing the Brian Lehrer Show, right here at WNYC. But he’s an Ultimate lifer.
AVIRGAN: And I can just tell you that I take it way too seriously.
He played in college, then on high-level club teams like PoNY, which he captained for a few years. Now he plays for the New York Rumble, a team in a new professional league, called Major League Ultimate. If you were watching ESPN back in June, you might have caught him on SportsCenter’s Top 10 Plays of the day, for a crazy-great play he made against the D.C. Current. Avirgan has also coached the U.S. under-19 national Ultimate team to a gold medal at the world championships – twice. If you’ve never seen Ultimate played and you think it’s just a bunch of stoners throwing around a Frisbee, if you think it’s not a sport – you’re wrong. It’s sort of a mix of soccer and basketball, played with a disk. There are seven players per side, on a field roughly the size of a soccer field. You score a goal by passing the disk across the far goal line. You can’t just run with the disk. So as soon as someone passes it to you, you’re immediately looking for a teammate – who’ll be sprinting downfield for a long pass or maybe just coming back for a short one. He’s got a defender on him and you’ve got one on you, trying to block your throw. The play is continuous, which means that if the disk hits the ground or gets intercepted, the defensive team immediately goes on offense and vice versa. One more thing: Ultimate is, technically, a non-contact sport.
AVIRGAN: You decide who gets the disk first by flipping a…Do you want to take a guess?
DUBNER: A disk?
AVIRGAN: You flip a disk. Yeah, come on, a disk has two sides just like a coin. It’s a giant coin.
DUBNER: Okay and is there are referee that stands at midfield and blows a whistle and says gentleman throw your disk?
AVIRGAN: You ask that question so innocently. Is there a referee standing there? And of course that is the reason why I’m here, Stephen, is for so long Ultimate, generally, has been a sport that has been played without refs. That’s the reason I’m here, right?
DUBNER: Ah ha, that is the reason you’re here. This is all idle chit chat getting up to this fascinating point.
AVIRGAN: And actually, can I just hand you, can I had you one little thing that I want you to read, which is…I’m handing you the preface to the official rules of self-policed Ultimate. So you open the rulebook, this is page one of what you see. Read that first paragraph.
DUBNER: From the preface of the official rules of Ultimate: “It is assumed that no player will intentionally violate the rules, thus there are no harsh penalties for inadvertent infractions, but rather a method for resuming play in a manner that simulates what most likely would have occurred absent the infraction.” What we used to call the do-over, right? “In Ultimate, an intentional infraction is considered cheating and a gross offense against the spirit of sportsmanship. Often a player is in a position to gain an advantage by committing an infraction, but that player is morally bound to abide by the rules. The integrity of Ultimate depends on each player’s responsibility to uphold the spirit of the game.”
DUBNER: “And this responsibility should remain paramount.”
AVIRGAN: So you know, there it is, baked into the first thing you read when you open, after the table of contents when you open the rules.
DUBNER: So let’s say there’s a disk in the air, and two players are chasing it down. We’ll call them Friedrich and John Maynard, or J.M. J.M. is on offense. They both jump for the disk, there’s some contact, and neither one catches it. If J.M. thinks that the contact from Friedrich prevented him from making the catch, he’ll yell out “foul.” No ref, no whistle … just J.M.
AVIRGAN: And there are very clear rules of the game. Ultimate isn’t structured so that we make the rules up as we go, Ultimate is structured so that we adjudicate the rules on our own.
DUBNER: Now Friedrich, accused of the foul, has two choices. He can say “contest,” which means he contests the foul call, or say “no contest,” which means he agrees that he committed a foul. If he doesn’t contest, J.M.’s team keeps possession at the spot of the foul. But if Friedrich does contest — well, here’s what happens: J.M.’s team still keeps possession, although the disk goes back to where the throw came from. In other words, it’s a do-over. Or, as someone less charitable might put it: it’s a giant loophole.
AVIRGAN: Yes, and that I think is the crux of the rules as they are structured and self-policed in Ultimate, is ultimately it is…I used “ultimately”… Is in the end it sort of favors the person making the call. In theory I can always retain possession of the disk. I could exploit that. There is a loophole there that you could drive a national championship through if you wanted to.
DUBNER: So if there’s no referee, what stops an Ultimate player from driving through that loophole again and again? Well, believe it or not, it’s morality. Here, again, from the official rulebook: a player is, quote “morally bound to abide by the rules.”
AVIRGAN: One of the big lessons of Ultimate for me is a lesson in empathy, which is that most people, most times, if not almost all the time…think that they are acting fairly. So that when someone makes a call I really have to remind myself that they genuinely think, right, that they were fouled, or they genuinely think that they got their hand under that disk before it came up. I have to remember that they’re…I don’t know if I’ve ever encountered someone who’s just straight up cheating. I honestly don’t know.
DUBNER: So that sounds awesome in theory in that you’re right, I mean the idea of a civil society is if you let people, if you give people enough latitude to behave in a certain way themselves and to kind of adjudicate the actions of others rather than, you know, these kind of bright lines of rules, the idea is that everybody kind of integrates the rules into their behavior from the outset. My question is however, this isn’t just walking down the street or even driving, or giving someone else the right of way, this is inherently a game, which is a competition. So how does it work? In other words, I can imagine that everybody is kind of, you know, very civic minded for the first three quarters of the competition. And then the score is 13 to 12, and all of a sudden I can imagine things get very hairy and there’s nobody to referee. So what begins to happen as the stakes get higher?
AVIRGAN: I think you just pinpointed it exactly, as the stakes get higher, the more pressure is put on this system. But you know, the theory is as Ultimate players we have sort of entered this game knowing what’s at stake. We’ve chosen this sport because it is structured differently, it has this element, spirit of the game that isn’t just, you know, an inconvenient truth, or whatever, it is part of the actual DNA of the game. But, I mean, part of me, I’ll be perfectly honest, as someone who loves Ultimate, I read this stuff, it’s a little high falutin’… to open the rulebook and get a little lecture in moral responsibility might be a little bit much. And I know there’s Ultimate players that say this Ultimate exceptionalism needs to end. This idea that we’re the only ones who can sort of behave in a morally responsible manner is absurd. People do that all the time within refereed sports.
DUBNER: So Jody you know the game of soccer pretty well right, you played soccer growing up?
AVIRGAN: Yes, yes.
DUBNER: Soccer as a game is extremely reliant on the officials. One goal can make a world of difference. And an official can easily make a call that influences or prevents a goal. When you look at the data on referees and bias you see that there’s a ton of it. You see that referees are not great adjudicators. They’re influenced by the crowd, they’re influenced by whatever internal biases we all have and so on.
AVIRGAN: And Singaporean drug dealers.
DUBNER: That’s right too. So what would you think would happen if you could take soccer, the way it’s played now, all over the world, at incredibly high levels, with huge stakes and say you know what for a year let’s play this game everywhere with no referees? Let’s have it be self-policed like the game of Ultimate. What would happen?
AVIRGAN: You know, I tend to believe in this idea of the culture of the sport. So it would be a very rocky transition. Ultimate has this culture that’s been ingrained in it for a long time that I think has led people to behave a certain way. That said, I also believe that people tend to, tend to have the capacity to act as fair brokers and over time you probably could pull it off. But soccer would very quickly, if not immediately start having the same difficult conversations that Ultimate is having right now.
DUBNER: In other words…some people want to bring referees into Ultimate.
AVIRGAN: We are starting to see changes. I think there’s this really interesting sort of laboratory moment in Ultimate where we kind of almost have three different kinds of Ultimate happening at the same time being played in parallel.
DUBNER: Okay, so what do we have? We have the pure self-policing.
AVIRGAN: Right, which is the way it’s been played for year and years and years. And then on the other end of the spectrum we have fully refereed, which is this pro league that I’m playing in, it’s fully refereed. And then you have this sort of hybrid model in between which is called the observer model.
DUBNER: Okay, and what does the observer do, and or have the power to do? It’s not quite a referee it sounds like.
AVIRGAN: Right, exactly. So, the simplest way to think of the observer is they’re there to resolve disputes, but they don’t make active calls.
DUBNER: Okay, back to the scenario with Friedrich and J.M. They jump for the disk, and J.M. calls a foul. Even with an observer on the field, they can still resolve the call themselves – Friedrich can admit he committed the foul or J.M. can retract his call. But if they can’t agree, instead of the do-over, they can send the call to the observer, who now has the power to make a decision. And if he really thinks that Friedrich didn’t foul J.M., he can award the disk to Friedrich’s team.
AVIRGAN: To me this is my preferred, I’m showing my hand here, this is my preferred system because it does provide this sort of safety valve moment where you can go to a third party and they can rule. And then what happens is you don’t have to be mad at your opponent, you can be mad at the observer, which is a real advantage of a sort of third party in a way is this idea that like I don’t have to feel betrayed by you. Right? Which on the one hand Ultimate is really satisfying when the two of us step up to the plate and act in a sort of, act in a moral manner. But it’s also really terrible when I feel like you’re not being a fair broker.
DUBNER: Got you, but let me just for a minute play Pollyanna, or maybe angel’s advocate and say wouldn’t it be amazing if you could play this sport at the very highest level and it were totally self-policed, and in doing so signaled to the world that humans are perfectly capable of policing themselves, of ordering themselves, of being fair to themselves and others even in a highly competitive environment, and therefore by doing so you could kind of set an example for how others in non-sports environments, whether it’s a marketplace, whether it’s in politics, whether it’s in neighborhood relations, tribal relations, could do the same? Wouldn’t that be kind of great?
AVIRGAN: I think I generally agree with that, that the real world has more to learn from Ultimate than Ultimate does form the real world. Now, how do you inject that in a systematic fashion into other areas, I’m realistic enough to know that when we’ve asked politicians and Wall Street to self-regulate, chances are they won’t. So I think it’s really more about sort of the individual lessons of sports. You know, I love sports, I think sports teach you a lot, but I don’t think sports are this sort of microcosm of the real world. I think sports are sports. And the stuff that you learn there is often about how you behave in the real world as opposed to the sort of systems that we can implement elsewhere. I think that’s what makes it unique in the marketplace and I think is what makes Ultimate players good people, and they learn good lessons from this sport.
That was Jody Avirgan, our ultimate guide to Ultimate Frisbee, and a producer with the Brian Lehrer Show at WNYC. So as Avirgan sees it, the people who play Ultimate are “good people” who can police themselves pretty well. Let’s assume that’s true. Does this mean that it’s the self-policing nature of Ultimate that makes them good? Or is this a story about selection – maybe the kind of people who aren’t willing to police themselves don’t play Ultimate? Let’s go back to a question I asked Avirgan — what might happen if you could transplant the self-policing nature of Ultimate onto another sport, like soccer?
Alexi LALAS: My name is Alexi Lalas, I work for ESPN as a soccer analyst. I am a former soccer player for numerous teams, including the U.S. National team. I am a proud ginger, and carrier of the mutant gene. I like Slurpees, and the band Ratt is the greatest rock band ever.
DUBNER: Okay, back to soccer:
LALAS: Well, you know, I think that if you really looked at it, probably I would say 80% of the game that is played in the world at any given moment is done without a referee, in the streets and in the fields and in back rooms; inside, outside, in the cold in the warm. So yeah, soccer is a very simple game, it’s an inexpensive game, and it certainly doesn’t need referees to have fun or to actually take place.
DUBNER: Wouldn’t it be fun, just for kicks, if maybe on a totally randomized basis, we could take the upcoming World Cup, and say, you know, maybe for a segment of certain games, that’s playing without a ref. Now, obviously that’s never going to happen, but you can imagine that at a lower level, how do you think that players on that level would adapt to playing without a ref?
LALAS: Oh, man. This is a…I think that to a certain extent you’re giving players – adults we’re talking about here – much more credit than they deserve. And soccer players in particular much more credit than they deserve in this utopian type of scenario that you are saying. I would love to say that they would revert to their childhood instincts of what is right and what is wrong, and morality, and sportsmanship, and that it would just be this beautiful game filled with butterflies and unicorns, but I fear that unfortunately it would be players doing things that they know they wouldn’t get away with with a referee there, in order to try to get an advantage. But there would be a certain sense of shame among, an honor among thieves, that I think would be there that might propel a little bit your argument. But on the whole, I think that it would be… that it would just descend into complete anarchy.
Coming up on Freakonomics Radio: I’m not quite ready to give up on the idea of sports without referees:
Bill BRADLEY: I think it’s a naïve thought, because fundamental to every game is the authority figure, is the referee.
Okay, now I’m ready to give up on sports without referees. Maybe we’re thinking too small. Maybe we should be talking about humanity without referees.
Matt RIDLEY: I really do genuinely believe that the appearance of social order of technology and social complexity is an evolutionary phenomenon, quite literally a Darwinian phenomenon, a competition between ideas, and as I say a sort of collaborative enterprise.
* * *
On today’s show we’re talking about “spontaneous order,” the idea that people can, under some circumstances at least, do a really good job of policing and regulating themselves. We heard that it works pretty well with Ultimate Frisbee – although Alexi Lalas says it wouldn’t work at all with soccer, at least not where the stakes are high. I wasn’t willing to give up on sports quite yet. What about getting rid of the referee in… basketball? Now we just needed to find someone who really knows basketball but is also super-smart about the world in general. Maybe someone who played in the N.B.A. and had a big political career…
Bill BRADLEY: I’m Bill Bradley, former U.S. senator. I have a program on Sirius XM called American Voices, and I work now at Allen & Company.
DUBNER: I see you just had a big birthday, 70, yes? Happy Birthday.
BRADLEY: I guess thanks.
DUBNER: I see you’re exactly two days younger than Mick Jagger. I’m wondering do you feel you’ve lived your life in parallel to Mick Jagger somehow?
BRADLEY: Well I’ve got a lot of sympathy for the devil.
Truth be told, Bill Bradley’s life has been nearly as eventful as Mick Jagger’s. At Princeton, he was considered the best college basketball player in the country. He won a gold medal with the 1964 U.S. Olympic team, became a Rhodes Scholar, and then won two world championships with the New York Knicks. From 1979 to 1997, he was a U.S. Senator from New Jersey, and in 2000 he ran for President, all as a Democrat. He’s also written seven books, most of them about basketball or politics.
DUBNER: I want to get into politics and basketball a little bit each under the umbrella of spontaneous order, but first I just want to hear your response to it generally as a theory, as an operating theory.
BRADLEY: Well, I think that it’s ideal in the ideal world I think it works as long as there are commonly held values.
DUBNER: And that’s a big as long as there are however.
BRADLEY: It’s giant. Rules exist for a purpose. And rules create a structure in which achievement can take place.
DUBNER: So the commonly held values being key there, you’ve spent a lot of your career in different realms I would argue trying to determine what those commonly held values are and should be and then trying to invoke them. Are you, do you feel that that’s a fight worth fighting? Is it possible, or does human nature conspire against that do you believe?
BRADLEY: I think that the reason you need rules is human nature, you order people. And the way you do that is by setting what the boundaries are. I think there are many situations where within that you find people taking responsibility in ways that would not only fit the rules but go beyond.
I described to Senator Bradley how Ultimate Frisbee is played, how there is often no referee, and I asked him how that might work for his sport, basketball:
BRADLEY: I think it’s a naïve thought, because fundamental to every game is the authority figure, is the referee. To hypothesize a sport that’s had referees from the very beginning not having referees is a different sport. I think it’s interesting that Ultimate Frisbee has developed the way it has. Maybe it’s a function of the times as much as it is a function of spontaneous order.
“A function of the times,” the Senator says. Interesting. I mean, when you think about it, the times are pretty great. As the Harvard psychologist Steven Pinker has argued, the current era is the most peaceful in history. Of course there’s still mayhem, and war, and heartbreak of all sorts. But relative to our past, humankind is getting along pretty well. How? What’s keeping us all together? And economies around the world, even though many of them are relatively fragile at the moment, generally do a pretty good job of providing goods and services and jobs. And who’s in charge of all that? Governments? The U.N. or the World Bank? Well: yes — and not really. You’ve heard of course of the “invisible hand.” That’s the phrase that the economist Adam Smith used, more than 250 years ago, to describe how people and markets organize and regulate themselves. The phrase “spontaneous order” was popularized many years later, by Friedrich Hayek, who updated Adam Smith for the 20th century. To those who believe in the freest of free markets, Friedrich Hayek is almost a god.
DUBNER: So Levitt, are you a Friedrich Hayek guy? Is he one of the economists whose pictures you had on the wall when you were a kid?
Steven LEVITT: No, I’ve always kind of wondered what he was all about to be honest.
That’s my Freakonomics friend and co-author Steve Levitt. He’s an economist at the University of Chicago.
DUBNER: So what do you think when you think of him?
LEVITT: Well, you know, these guys always talk, these intellectuals are always talking about him and Libertarian stuff like that. But I’m kind of ignorant, I don’t think I ever read much of what he wrote, even though he hung out at Chicago for a while.
DUBNER: For a little while. For a while yeah. So one notion he’s known for having developed kind of as an economist-cum-philosopher is this notion of spontaneous order, which is basically that people, and even firms and institutions are better at working things out on their own than if some central planner makes a lot of rules and tells everybody how everything must be done. You must have some thoughts on that notion, yes?
LEVITT: Yeah, I think that to me sounds like economics. I think it’s hard to find an economist who thinks that you do better by having a central planner decide what activities people should be engaged in than letting the market sort it out. I think it’s hard to find an economists who things that you do better by having a central planner decide what activities people should be engaged in than letting the market sort it out. Although, in my own opinion it’s a little bit tempered because I think that so much of what happens in markets depends upon the existence of property rights and a well-functioning society and the background of a government, and a criminal justice system, and all that. So I think to me, when I think about economics, I think that there’s a very fundamental role that government plays, which is to make sure that people are protected. And then after that, probably the less government does the better, except maybe figure out how to redistribute money to poor people if we wanted to do some of that.
Now, if you’re not an economist, what Levitt said probably sounds like a conservative view of government, or maybe a Republican view: the less government, the better. Former Senator Bill Bradley, who’s a Democrat, gets impatient with people who talk about getting rid of government.
BRADLEY: These people, these Tea Party people that say we do not need government, well, let’s go down the list. There’s water, there’s transportation, there’s the Federal Drug Administration. Do we want pharmaceutical companies deciding? You talk to a libertarian, they say, well yeah, if they produce a drug that kills people they’ll stop producing it. I think we can do better than that, right? And then, just a mapping of the mineral resources of the country: that was done by the federal government. The giant water projects in the West: that was done by the federal government. The Army Corps of Engineers: that was done by the federal government. People who argue there’s no government or shouldn’t be any government don’t understand that far-sighted government sets the structure on which the private sector knows what the rules are and can be entrepreneurial. If you had no government involved whatsoever, it would be chaos. I mean, do we really want a financial system without an SEC? They get, they go much further than they need to go, but I don’t think there’s anybody that would argue that we should have no regulations.
DUBNER: So that’s the question, right – where should “spontaneous order” end and regulation begin?
RIDLEY: Well if I had a simple answer to that question we wouldn’t have argued about it for 250 years, I would guess.
That’s Matt Ridley. He’s a scientist and author who leans Libertarian but, instead of beating up on government, he joined it:
RIDLEY: Just recently I had a rush of blood to the head and got myself elected to the U.K. House of Lords, which is possible only if you inherit a hereditary title as it happens that I did. And so I’m now quite busy sitting in Parliament and making speeches there, which is an interesting and new experience.
DUBNER: So your most recent book, “The Rational Optimist,” argues that human beings, and I’ll quote a little bit “are not only wealthier, but happier, cleaner, cleverer, kinder, freer, more peaceful, and more equal than they’ve ever been. Much of this progress you attribute to, and again I’ll quote briefly, “collective intelligence evolving by trial and error resulting from the sharing of ideas through exchange and specialization.” Now, if you’ve — anyone who’s read even a little bit of political economy knows that the sharing of ideas I wouldn’t say it’s code for, but it’s language that gets us into the realm of governments and regulation, and the role of governments. Now, to my mind at least such an environment where ideas and innovation and trade flow freely will not arise necessarily in the presence of intense regulation or policing. That is the theme of our radio today. Is that a theme or at least a sub theme of your book as well?
RIDLEY: Very much so. I use the word how prosperity evolves. And I really do genuinely believe that the appearance of social order of technology and social complexity is an evolutionary phenomenon, quite literally a Darwinian phenomenon, a competition between ideas, and as I say a sort of collaborative enterprise. Because, I mean, of course, you know, really I’m only repeating what Adam Smith said 250 years ago, and he got an awful lot right. But the curious thing was it hadn’t really happened by the time he lived. You know, and this great explosion of human living standards kind of came along after Adam Smith, in a way, and yet he saw so much so clearly. And he very…Was a big influence on Darwin. And Darwin for me is essentially Adam Smith in nature, or vice versa if you like. I gave a lecture recently called “Adam Darwin” about how they are basically saying the say thing, i.e. that there is spontaneous order.
RIDLEY: And at the center of it is this exchange. It turns out that if you want to make biological evolution work you have to exchange genes. You have to have the swapping and the miscegenation of genes to throw up new combinations of genes so as to experiment and select the ones that are good and not the ones that are bad. And very much the same thing is happening in human affairs. Where you have people exchanging goods, exchanging services, and exchanging ideas, then you get extraordinary progress in human conditions.
DUBNER: Now, I think that even the most interventionalist wouldn’t argue with what you just said. It sounds, we kind of accept that as a truism almost of progress and of a functioning commercial society. But then we start to have the conversation about, well, yes but unfettered markets, unfettered trade is not a good thing, because there will always be those who seek to take advantage of another to gain a certain amount of leverage and so on. So talk to me for a moment about how you see that barrier between free trade innovation and so on, progress, and the proper amount of regulation as exercised by a government or some other institution.
RIDLEY: Yeah, it’s a very good question and it’s a very difficult one. My starting point is that on the whole societies that have had too much freedom and therefore have gotten into trouble are really very few and far between. You could argue that the anarchy in Somalia is an example. But there are so many more North Koreas than there are Somalias in history, if you like, that on the whole what causes predation by one human being on another, what causes people to steal from each other rather than to trade with each other and find mutual gain tends to be too much government rather than too little. We’ve got endless examples of this from Napoleon, to the Ming emperors to tyrants today like the North Korean ruling family. So chiefs, priests and thieves as I put it have actually been a continuing problem in the world. Now, that doesn’t mean that you can survive with no government.
DUBNER: Can you give me an example of what you feel is just the kind of perfect, or near perfect self-regulating environment? Maybe it’s an institution large or small, maybe it’s an industry or group of people. I’m just curious to know what would be an environment where you see it working just right.
RIDLEY: Well of course nothing’s perfect is it? But I mean to take an example out of the body, you know, biologically the body is unbelievably complex piece of cooperation between a trillion cells. But to come to human societies there are some rather lovely sort of examples, which Elinor Ostrom used to write about about this problem of the tragedy of the commons and actually there are some quite neat solutions to it that have worked very well over many, many centuries or decades. So inshore fisheries of various kinds, the lobster fishery in Maine, which I write about in “The Origins of Virtue” years ago, you know, there were rules about who could fish where and who couldn’t. And they were totally self-enforced, and there was no government standing behind them. And yet they produced a very, very sort of efficient outcome. I mean, as a general rule the sort of, the market among traders et cetera. I was walking along the street in London the other day and there were, you know, there was a Sunday market, or lots of markets out, and I was just thinking, you know, this is amazing, all these people are trying to give things to other people, give trinkets, or pictures, or food, or fruit, or whatever it is to other people, isn’t it kind of them, and all the other people are wanting to give them bits of money and isn’t that nice of them. Because one lot wants money and the other one wants trinkets and both are getting what they want. And nobody’s getting upset, or not that I could tell, and I haven’t seen a policeman anywhere on the street, et cetera. You know, we overlook this. And sure in the end there’s a policeman somewhere, and in the end, you know, there are frightful rows between stallholders in a market or between them and their customers. But you know, 99 percent of the time that kind of simple system works really nicely. Yeah, I had another thought about this the other day, which was that I’d, you know, I’d gone to the airport and caught a plane to New York, and I’d taken a taxi to my hotel, and I checked in and da, da, da, and I’d interacted with let’s say 20 strangers during the day. And every single one of them had smiled at me, had done what I’d asked them to do in exchange for some dollars of course. No one had tried to predate me and I was under no worry that they would. And I hadn’t tried to fool them. You know, the deals I did with the taxi driver, you know, were fair to both sides. We overlook that a lot I think.
DUBNER: On the other hand, there is the argument made by some economists that while we overlook it, perhaps, and we overlook how well it works, we also overlook the fact that the reason it does work so smoothly and well is because we do have this huge and long-standing infrastructure as one economist put it to me one day, every contract ever agreed upon whether verbally or in print is backed up by the 101st Airborne. That the rule of law is made strong, and the rule of the economy is made strong by the rule of, you know, in this case government or military even. So I guess that’s what we’re talking, what we’re sniffing around here you and I. And it echoes from history, it’s the reason that it was called the invisible hand by Adam Smith is because we don’t necessarily see it. But we do feel it. And we can’t necessarily express it so well, it’s not so tangible. And I guess what I’m looking for is to give whoever’s listening to this program a better way to think about the proper amount of order and regulation from above. And the proper amount from within. And I just wonder if you might have any added thought on that?
RIDLEY: So you know, getting the right balance is clearly key. You can tell from what I’m saying that I think on the whole the balance is more likely to be in favor of too much top downery and not enough bottom uppery in most cases. But of course that doesn’t mean that I…Quite often that position is caricatured as meaning therefore you want no government at all, and I say lordy no, that would be really quite worrying. And you’re quite right, the 101st Airborne is there if we need them and at the end of the day, yeah, you know, the fact that I would eventually go to jail is one of the things that stops me from deciding to kill and murder my way to wealth and power.
DUBNER: Alright, one last scenario I want to run by you. You grew up in England, yes?
DUBNER: You grew up playing football then, or rugby, or both.
RIDLEY: A little bit of both, but very, very badly in my own case.
DUBNER: Now, did you, have you ever played Ultimate, Ultimate Frisbee, the sport called ultimate Frisbee?
RIDLEY: Oh, yeah, funnily enough last weekend I was introduced to that concept by American friends for the first time.
DUBNER: Oh is that right?
RIDLEY: I don’t think I’d heard the phrase before. I may have but it hadn’t clicked with me.
DUBNER: So, so here’s what I want to ask you: so this sport has evolved quite nicely over the last few decades to the point where there are now club teams and even professional teams. And it’s competed on a national and even international level. And in most cases, up until the very highest tiers of the sport it is entirely self-policed. There are no referees.
DUBNER: So, if there’s a dispute on the field, a foul or any kind of infraction the players resolve their own disputes with no central authority policing the field. Now I’m curious, having grown up among the culture of fully refereed sports, you’re the country that invented soccer, or football as you call it, and tennis, and cricket and all these sports. And there’s always…it’s very important to have a referee or a sport policeman present. I’m just curious how you would see let’s say the English national soccer team playing against let’s say the German team, or the Italian, or the Brazilian, with no referee, no officials on the field. What would that scenario look like? Could it be successful, if so what would it take to be successful.
RIDLEY: Well, I think after some teething trouble it might work. The teething troubles obviously would be that somebody would hack somebody down, someone else would take revenge on them and there’d be a brawl, because that’s the way they behave at the moment until the referee stops them brawling. But given that you know that if you hack someone down you’re going to be hacked down yourself in this new system. Given that you know that with a refereed system you can kind of get away with it and without a referee system you won’t get away with it because the other team will take it out on you, I think it would quickly evolve to be quite peaceful.