365. System tragedy, populism and conspiracy of the elite

In this blog, in items 109, 159, 187, I discussed what I called ‘system tragedy’. In many areas of society, such as banking, education, housing corporations, health care, defence, policy makers get entangled in Gordian knots, sticky spaghetti, of partly shared, partly rival interests, roles and positions, interests, self-interest, ideologies, personal ethics, diffusion of responsibilities. As a result, people are compelled to compromise themselves with policies that are against their ethics and sense of justice.

They may like to change the system, or rebel, or quit, but cannot afford to do so until others do so as well. This constitutes prisoners’ dilemmas that lock people into what they know is not right. The obvious case is that of banks.

In my discussion of trust I distinguished between trust in competence and trust in intentions. I see system tragedy mostly as a matter of system incompetence rather than bad personal intentions.

In the emerging populism, however, system tragedy is framed as a matter of  bad intentions: conspiracy against the people by the ruling elite. Thus it becomes a matter of high political urgency to somehow mitigate system tragedy. How is this to be done?

People should have more character and courage to follow their ethical sense and rebel against the system. But that is easy to say, if the price is being ostracized, isolated, or expelled from the system.

It is known from system theory that strong coupling of disparate parts decreases the adaptability of the system. Therefore, perhaps the system should be decoupled for the sake of ability to change, in dynamic efficiency, even if that yields some loss of static efficiency of scale or complementarity, and an increased need for negotiation between uncoupled parts. Internal, invisible haggling then becomes more visible and subject to public scrutiny.

In the case of the banks: separate the saving and loans activity from the investment and trade in shares.

Many systems, in business and public services, have become entangled out of a perverse drive towards integration, in an excess of mergers and acquisitions while staying apart and collaborating in alliances would yield more flexibility and adaptability.

That is due, in part, to misguided, exaggerated expectations of efficiencies from a large scale, with neglect of its inefficiencies.

But it is due more, I think, to an established mental frame of hierarchy.

Another aspect of system tragedy lies in a separation, a distancing between management and work. That is due, in part, to the need, in a large scale organization, for intermediate layers of hierarchy between the top and the ‘front line’ of the work floor. Here again, a break-up into smaller, more autonomous units is required.

But perhaps most important is he need for a shift towards a mental frame of virtue ethics, also pleaded for elsewhere in this blog, with the classical virtues of reasonableness, courage, moderation, and justice. Reasonableness in seeing the merit of other views. Courage not to become complicit in system failure. Moderation, in not being obsessed with one’s own interest and reward. And justice in maintaining equity, rights, and inclusiveness.