Friday, March 2, 2012

Liars and Outliers: Thoughts and Conclusions


In a previous post, we looked at the first half of Bruce Schneier's interesting book.  To recap, Liar and Outliers examines how trust mechanisms work, whether you're ordering products online from people you've never met, or you're paying a neighborhood kid to mow your lawn. In order for commerce to function, there must be a certain level of trust.

The second half of the book deals with Organizations, Corporations and Institutions and how their competing interests work out in real world situations.  A model often used in the book is that of fishing.  Overfishing will deplete the stock and eventually ruin the industry, so most individuals and companies don't engage in it.  However, 'defectors' may overfish because of the short term benefits and the low risk of getting caught.

The fourth and final section explains how societal pressures to act trustworthy can fail, and how technological advances are changing how we do business.  Inside the technology chapter, Schneier puts forth a list of principles for designing effective societal pressures, and I think it's a key point in the book.

To encourage everyone to act in the best interests of their society, we use moral pressure, reputational pressure, institutional pressure and security systems.  But our caveman brains are still best evolved for face-to-face transactions and handling life in a village.  These pre-sets don't work as well in a world where living in a city means having eight million neighbors, and doing business on the Internet with people we've never met.

So Schneier argues that we need to be careful in how we build our societal pressures.  He points out that while modern civilizations may concentrate on laws and security, it's foolish to disregard the value of morals and reputation because they still matter to people.

He also makes a good point about the need for 'general and reactive security systems.'  In other words, it's better to think broadly than on specific tactical threats.  Schneier writes, "One example is counterterrorism, where society is much better off spending money on intelligence, investigation and emergency response than on preventing specific terrorist threats, like bombs hidden in shoes or underwear."  I think any airline traveler who's had their shampoo bottle or fingernail clippers taken away, or had to undergo an invasive pat down, would probably agree.

Schneier writes about the need for transparency, too, especially in corporations and governments.  The system of checks-and-balances built into many democracies works best when the actions and finances of large actors like governments and corporations are kept open.  And I think all our governments and corporations could do with some transparency.


(Thanks to Bruce Schneier for writing an interesting book, and to Lori at the ThePRFreelancer.com for the advance copy.)

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