When Dysfunction is Stable
One undeniable quality of Eliezer Yudkowsky’s latest book Inadequate Equilibria, is that it forces you to think; even if you disagree as to the degree, the style, and the conclusions of the book. Inadequate equilibria abound in the world around us. A typical non-human example is the parasitic relationship between the cuckoo bird and robin. Our civilization has progressed along the lines of righting the wrongs of the law of the jungle, but we sometimes fail. To err, after all, is human. However, when aspects of our civilization breaks down, we intuitively expect it to get fixed, but alas, sometimes and possibly most times this deficiency remains. Now what are the kinds of incentive structures that make an inadequate system keep functioning?
1. Decision makers who are not beneficiaries;
2. Asymmetric information; and above all,
3. Nash equilibria that aren’t even the best Nash equilibrium, let alone Pareto-optimal.
In other words:
1. Cases where the decision lies in the hands of people who would gain little personally, or lose out personally, if they did what was necessary to help someone else;
2. Cases where decision-makers can’t reliably learn the information they need to make decisions, even though someone else has that information; and
3. Systems that are broken in multiple places so that no one actor can make them better, even though, in principle, some magically coordinated action could move to a new stable state.
Chapter three delves into the nature of inadequacy. There is no straw man. Quite like evolution, it takes the path of least resistance and when it sucks, it does in a way that is Nash equilibrium. I particularly like his use of “efficient markets” to describe the no-free energy phenomenon that makes inadequacy inexploitable to self-correct.
Chapter four is a treatise on how to think about these issues to preserve intellectual integrity or prevent the fallacy’s fallacy. Eliezer:
Step one is to realize that here is a place to build an explicit domain theory — to want to understand the meta-principles of free energy, the principles of Moloch’s toolbox and the converse principles that imply real efficiency, and build up a model of how they apply to various parts of the world.
Step two is to adjust your mind’s exploitability detectors until they’re not always answering, “You couldn’t possibly exploit this domain, foolish mortal,” or, “Why trust those hedge-fund managers to price stocks correctly when they have such poor incentives?”
Step three: the fine-tuning against reality.
The book reminds me of Jeffrey Friedman’s post on citizen technocracy. To highlight a paragraph:
When experts disagree with each other, it follows that the experts on one or the other side (or on both sides) must lack the necessary knowledge. (Even if the experts agree, of course, they may still lack the necessary knowledge; an expert consensus can be wrong.) If even experts can lack the necessary knowledge, should we really expect ordinary citizens with limited time to acquire it?
Friedman admitted that even if the experts agree their consensus can still be wrong, and we should not expect any more knowledge from these ordinary citizens. Eliezer argues that if an individual has spent a lot of time thinking about the issue, keenly followed debates by experts and has an object-level understanding of the issue (essentially taken an inside view), we should expect this ordinary citizen (which is no longer an ordinary citizen in the technical sense) to know more about the subject matter, probably more than these warring experts and should not be deterred by an outside-view-shaped modest epistemology.
Some Local Context
Nigerians are sufficiently inured to bad equilibria hence the mantra “if you can’t beat them, you join them.” This is the kind of book that makes you question what you have doing with your life especially if you consider yourself an altruist. Like, what am I for if such and such evil can persist in the world? In 2011, I was on the campaign team of a popular presidential candidate. Most of us were a bunch of young optimistic and idealistic do-gooders. But it didn’t take long for us to confront a microcosm of what was wrong with the political superstructure we sought to change. Eventually our hopes were derailed and sold.
Politics loom large in the life of the average Nigerian so it is somewhat easy to tease out the incentive structure. What I haven’t given much thought to is whether it is Nash equilibrium as is or not. Labour union? Churches?
Let’s take the Kaduna government/teachers/Union as an example with the presumption there is no straw man. Incompetent teachers are a known feature of the education system of the state and many others across the country. But why did the problem persist till now, and why is any kind of solution proving rancorous?
1. Decision makers are not beneficiaries
The decision makers (union leaders and government officials) are not beneficiaries of public schools because their children do not attend public schools. Even if some of the decision makers and teachers have children in the system, their loss are minimized by their undeserved compensation and possible future job security for their children within the same system. On the other hand, all groups are beneficiaries because the existing system provides a useful coalition for the political establishment. How? The incompetent teachers have job security, incompetent workers forms the base of the unions, unions can bargain on behalf of their members (incompetent teachers) with the government. A win-win for everyone except the public school pupils who are supposed to be the main beneficiaries.
2. Information asymmetry
In efficient markets, we would expect competence and reward to go hand in hand. That is, competent workers would go to industries where they would be most rewarded. This is what seem to have happened in the broader labour market. The question now is why is government stuck with the incompetent ones? Union. The labour union have effectively created an artificial market that cannot fully compensate the opportunity cost for good teachers, so they go to private schools that can reward their effort. Unions promise job guarantees and compensation for down times to keep its members. The competent worker wants reward and prestige. So, the information asymmetry here is that the union unbeknownst to them signal for slackers. Government on the other hand also completely missed this trend where the pool of would-be teachers is now abundantly populated by slackers. ‘’Civil service’’ has become a euphemism for laziness that is rewarding.
3. Is it Nash equilibrium?
One major feature of a Nash equilibrium is that the rewards of a system are so evenly distributed in a way that disincentivizes or is costly for an individual person or group to change the arrangement. Politics is not about policy, it is about votes. Teachers as a voting block represents a powerful constituency as well as other civil service blocks within the labour union, an incumbent politician would not want to alienate them i.e. the politician would want to protect his own position. The union knows that about with politician and uses it as a leverage to keep the status quo intact i.e. it gets to keep its member. Members (Teachers in this case) of course are happy and give thanks to God for job security and bonuses.
As we see from the current Kaduna state government deviating from the existing dysfunction having to court controversy from multiple sides. The key players may well be risking their political futures unless they find a new Nash equilibrium around their preferred action.
Politics is zero-sum, policy is not. The imperative for key players and policy wonks is to find a win-win solution to issues confronting us without sacrificing efficiency and other qualities of a working system. It is tough, but possible; this is one example, there are many more. Yudkowsky’s Inadequate Equilibria is a place to start for people who think differently about these issues and feel alien in the mainstream.
What gives? A cognitive niche of like-minded people coming together to think about the myriad issues confronting the country and come up with win-win solutions? Read the book. Comment is free.
