Perverse Incentives

Koestler was a master of analogies. He talked about magnetic storms, where everyone's "moral compass" swerves from "True North" without us realizing it.

The visual image of this led me to think of humanity as a bunch of iron filings around a magnet.  One of the striking things in this image is the fibers of filings - the way they bunch up and line up head to toe under the influence of the magnetic field. Looking closely, you see that each fiber has its own little magnetic field, resulting in the textured pattern.

I've given a lot of thought to the way humans "click" together, usually in "pseudo-persons" like corporations. This image invited me to consider another kind of alignment, the 'head to toe" relationship being the way people are connected, especially "transactional". A special case is a network of "perverse incentives" created by the social environment itself.
Here's an example:

1. We don't like bugs around for various reasons, creating a market for some kind of "solution". Sadly, this "market" may be for improved weapons for wars not yet fought.
2. Chemical companies jump in to take advantage of the "opportunity". This attracts the best and brightest scientists and lots of good middle-class jobs*. A big bump in GNP.
3. Corporations, in general, minimize costs. One way is to externalize these costs - make them somebody else's problem. Such things as pollution and "downstream" health effects on the users of their products. These costs don't show up on the corporate balance sheet. All this attracts shareholders. It looks good on the stock market.
4. "Downstream", people get sick and die, creating more jobs for lawyers and doctors. These unfortunate Joes create more GNP than Joe could ever contribute. In other words, John's death is good for GNP and jobs.
5. Cleanup of downstream pollution creates jobs, which also add to GNP.
6. Fear of polluted water makes people buy bottled water (another huge business). This is another industry that loves to externalize its costs. For example, plastic bottles are somebody else's problem.

The lesson to learn from this example is that we should be skeptical about politicians who claim that they will:

1. Create jobs
2. "Grow" the economy (GNP)

As the example shows, more "jobs" are not necessarily good for society in general, nor is GNP a good way to measure increasing "wealth".

This is just one example of the way we are linked by perverse incentives. Politics is full of them, as are banking. Perhaps these chains of incentives are the fabric of society.
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* New York Times "Daily" Podcast sheds some light on the connection between "demand" for weapons and the ability of corporations to recruit or retain people to work on a new technology. Napalm and Artificial intelligence come up.