Freakonomics Radio - 145. What Do Skating Rinks, Ultimate Frisbee, and the World Have in Common?

Episode Date: November 21, 2013

Spontaneous order is everywhere if you know where to look for it.

Hey, podcast listeners. A few episodes ago, we asked for your help. We asked you to go to freeconomics.com, hit the donate button and send us some money so that we could keep making this public radio podcast and keep distributing it for free. And guess what? We are still here, which means that you came through big time, huge time. So thanks a million. Well, thanks a little less than a million, but thanks a lot. 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.

Which made you very popular as a kid or no? Didn't make me popular with girls. It made me popular with some friends that I still have and cherish. Now, Dan, the reason that we are talking today really is because of an essay 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. 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, I have a great idea for 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, you know, 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. You'd expect it to result in catastrophe and collision. How are 100 people making their moment-by-moment decisions going to sort of make their own pattern of skating such that, you know, all 100 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, you know, 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. So there's this basic coincidence of interest there, which really is at the microstructure 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 from above. Now, 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. Hey, coming down zero. Three, two, one. Nice hit. We'll hear about the role of government, like this viewpoint. 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. These people, these Tea Party people say we do not need government. Well, let's go down the list. There's water. there's transportation, there is the Federal Drug Administration. 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? Well, if I had a simple answer to that question, we wouldn't have argued about it for 250 years. From WNYC, this is Freakonomics Radio, the podcast that explores the hidden side of everything. Here's your host, Stephen Dupner. Okay. Hey, it's coming in on zero. Three, two, one, so on. Two, three, four, five. Get there!

Today's show begins outdoors, on a beautiful athletic field, with my friend Jody Avergan. Alright, so Jody, good morning. Where are we? We are on Randall's Island, which is off of Manhattan, but it's a big practice facility, lots of fields out here. And it is 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 Avergan has a day job producing the Brian Lehrer show right here at WNYC, but he is an ultimate lifer. 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. Oh, with a huge defensive. Oh, my goodness. Did he get that? Did he get that? That was amazing.

He gets it. Are you kidding me? Unbelievable catch there. Avergan 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 are wrong. It's sort of a mix of soccer and basketball played with a disc. There are seven players per side on a field roughly the size of a soccer field. You score a goal by passing the disc across the far goal line.

You can't run with the disc. So as soon as someone passes it to you, you're immediately looking for a teammate who will be sprinting downfield for a long pass or maybe 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 disc hits the ground or if it gets intercepted, the defensive team immediately goes on offense and vice versa. One more thing, ultimate is technically at least a non-contact sport. You decide who gets the disc first by flipping a, you want to take a wild guess? A disc itself? You flip a disc. There you go. Head to tails. Okay, good. Makes sense.

Just like a coin, it's a giant coin. Okay. And then is there a referee who stands at midfield and blows a whistle and says, gentlemen, throw your disc? You ask that question so innocently. Is there a referee standing there? And of course, that is the reason why I'm here, Stephen, because for so long, Ultimate generally has been a sport that's played without refs. That's the reason I'm here, right? That is the reason you I'm here, Stephen, because for so long, Ultimate generally has been a sport that's played without refs. That's the reason I'm here, right? That is the reason you're here. This is all idle chit-chat getting up to this fascinating point. Okay. And actually, can I just hand you, can I hand you one little thing that I want you to read, which is, this is, I'm handing you the

preface to the official rules of self-policed Ultimate. So this is, you open the rule book, this is page one. Read that first paragraph. From the preface to 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. And this responsibility should remain paramount. 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. So, one, two, three, big swing. Yes. So, let's say there is a disc in the air and two players are chasing it down. We'll call them Friedrich and John Maynard, or JM. Big hit, baby. JM is on offense. They both jump for the disc. There's some contact and neither one catches it.

Now, if JM thinks that the contact from Friedrich prevented him from making the catch, he'll yell out, foul. There's no ref, no whistle, just J.M. 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 just that we adjudicate the rules on our own. Now, Friedrich, accused of the foul, he has two choices. He can say contest, which means that he contests the foul call, or no contest, which means he agrees that he committed a foul. If he doesn't contest, then JM's team keeps possession at the spot of the foul. But if Friedrich does contest, well, here's what happens. JM's team still keeps possession, although the disc 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. Yes, and that, I think, is, you know, the crux of the rules as they are structured and self-policed in ultimate is that ultimately it's, is that in the end, it sort of favors the person making the call. In theory, I can always retain possession of the disc, right? I could exploit that. There is a loophole there that you could drive a, you know, a national championship through if you wanted to. 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. 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 they are acting fairly. So 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 desk 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. You're right. I mean, the idea of a civil society is if you give people enough latitude to behave in a certain way themselves and to kind of adjudicate the actions of others rather than these kind of bright lines of rules, the idea is that everybody kind the street or even driving and 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 13-12. 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? 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 that 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 sort of, you know, an inconvenient truth or whatever. It is part of the actual DNA of the game. But, I mean, part of me, you know, I'll be perfectly honest.

As someone who loves Ultimate, you know, I read this stuff. It's a little highfalutin, right? I mean, to open the rule book and get a little sort of, you know, a lecture in moral responsibility might be a little much. And I know there's ultimate players who say, you know, this ultimate exceptionalism needs to end. You know, 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. But so, Jody, you know the game of soccer pretty well, right? You played soccer growing up. 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 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. And Singaporean drug dealers. 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. Have it be self-policed like the game of Ultimate.

What would happen? 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 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. In other words, some people want to bring referees into Ultimate.

We're starting to see changes. And what's happening right now is 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. Okay, so what do we have? We have the pure self-policing. Right, which is the way it's been played for years and years and years. And then we have on the other end of the spectrum, we have fully refereed, which is this pro league that I'm playing in is fully refereed. And then you have this sort of hybrid model in between,

which is called the observer model. Okay, and what does the observer do and have the power to do? It's not quite a referee, it sounds like. 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. Okay, back to the scenario with Friedrich and JM. They both jump for the disc and JM calls. Now, even with an observer on the field, they can still resolve the call themselves. Friedrich can admit he committed the foul. Oh, wow. That's my fault. Sorry. Or JM can retract the call. But if they can't agree, instead of the do-over in this case, they will send the call to the observer who now has the power to make a decision. It's Ben. It's Ben, go ahead. And if he really thinks that Friedrich didn't foul JM,

he can award the disc to Friedrich's team. To me, you know, 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. 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 moral manner. But it's also really terrible when I feel like you're not being a fair broker. Gotcha. 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 signal 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, you know, neighborhood relations, tribal relations could do the same. Wouldn't that be kind of great?

I think I generally agree with you that the real world has more to learn from ultimate than ultimate does from the real world. Now, you know, how do you inject that in a systematic fashion into other areas? I'm realistic enough to know that, you know, 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 that's what makes it unique in the marketplace and I think is what makes, you know, ultimate players good people. And they learn good lessons from this sport. That was Jody Avergan, our Ultimate Guide to Ultimate Frisbee and a producer with the Brian Lehrer Show at WNYC. So as Avergan sees it, the people who play Ultimate are, quote, 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 just don't play Ultimate.

Let's go back to a question I asked Avergan. What might happen if you could transplant the self-policing nature of Ultimate onto another sport like soccer? 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 Rat is the greatest rock band ever. Okay, back to soccer. Well, you know, I think that, I mean, if you really looked at it, probably I would say 80% of the game that is played in the world in 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. 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 could imagine at a lower level, how do you think that players on that level would adapt to playing without a ref?

Oh, man. I think that to a certain extent, you're giving players, adults, what 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're saying. I would love to say that they 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 an honor among thieves that I think would be there that might propel a little bit to your argument. But on the whole, I think 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. I think it's a naive thought because fundamental to every game is the authority figure, is the referee. Okay, now I'm ready to give up on the idea of sports without referees. Maybe we're thinking too small. Maybe we should be talking about humanity without referees. I really do genuinely believe that the appearance of social order and of technology and social complexity is an evolutionary phenomenon, quite literally a Darwinian phenomenon, a competition between ideas and a sort of collaborative enterprise. From WNYC, this is Freakonomics Radio.

Here's your host, Stephen Dubner. On today's show, we're talking about spontaneous order. That's 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 Lala says it would not work at all with soccer, at least not when 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 need to find someone who really knows basketball, but is also super smart about the world in general. Maybe somebody who played in the NBA and had a big political career?

I'm Bill Bradley, former U.S. Senator. I have a program on SiriusXM called American Voices, and I work now at Allen & Company. I see you just had a big birthday, 70. Yes? Happy birthday? I guess thanks. I see you're exactly two days younger than Mick Jagger. I'm wondering, do you feel you've lived your whole life in parallel to Mick Jagger somehow?

Well, I 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, 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 he 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. 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. Well, I think that it's ideal in the ideal world. I think that it works as long as there are commonly held values. And that's a big as long as there are. It's a giant. Yeah. I mean, rules exist for a purpose.

And rules create a structure in which achievement can take place. So the commonly held values being key there, you've spent a lot of your career in different realms, I would argue, trying to, you know, determine what those commonly held values are and maybe should be and then trying to invoke them. Do you feel that's a fight worth fighting? Is it possible or does human nature conspire against that, do you believe? 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. 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's often no referee. And I asked him how that might work for his sport, basketball. I think it's a naive 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, it's a different sport. I think it's interesting that Ultimate Frisbee has developed the way it has. You know, 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, heartbreak of all sorts. But relative to our past, humankind is getting along pretty well. How? What is keeping us all together? And economies around the world, even though many of them are relatively fragile at the moment, they generally do a pretty good job of providing goods and services and jobs. And who's in charge of all that? Governments? The UN? The World Bank?

Well, yes, and not really. You have 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. So Levitt, are you a Friedrich Hayek guy? Is he one of the economists whose pictures you had up on your wall when you were a kid? 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. So what do you think when you think of him? Well, you know, these guys always talk, these intellectuals are always talking about him and libertarian and stuff like that. But, you know, I'm kind of ignorant. I don't think I've ever really read much of what he wrote, even though he hung out in Chicago for a while. For a little while, yeah, for a while. 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? 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. and markets depends upon the existence of property rights and a well-functioning society and the background of a government in 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 want to do some of that. Now, if you're not an economist, what Levitt said probably sounds like a conservative view of government, 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. These people, these Tea Party people 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. One pharmaceutical company is 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 the 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. The Army Corps of Engineers, that was done by the federal government. People who argue that there is no government or shouldn't be any government don't understand that farsighted government sets the structure on which the private sector knows what the

rules are and can be entrepreneurial. If you had no government involvement whatsoever, it would be chaos. I mean, do we really want a financial system without an SEC? You know, they can go much further than they need to go. But I don't think there's anybody who would argue that we should have no regulations. So that's the question, right? Where should spontaneous order end and regulation begin? 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. Just recently, I had a rush of blood to the head and got myself elected to the UK House of Lords, which is possible only if you inherit a hereditary title, as it happens that I

did. So I'm now quite busy sitting in Parliament and making speeches there, which is an interesting and new experience. So your most recent book, The Rational Optimist, argues that human beings, and I'll quote a little bit, are not only wealthier, but healthier, 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 episode of radio here today. Is that a theme or at least a sub-theme of your book as well? Very much so. I use the word how prosperity evolves, and I really do genuinely believe that the appearance of social order and 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 he got an awful lot right. But the curious thing was, it hadn't really happened by the time he lived. And this great explosion of human living standards came along kind of after

Adam Smith in a way, and yet he saw so much, I think, so clearly. And he 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're basically saying the same thing i.e that there is spontaneous order and at the center of it is this exchange because it turns out that um 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 to 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. 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 who 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? 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 got into trouble are really very few and far between. You could argue that the anarchy in Somalia is an example, But, you know, 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. 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 a group of people. I'm just curious to know what would be an environment where you see it working just right? complex piece of cooperation between a trillion cells. But to come to human societies, there are some rather lovely sort of examples of which Eleanor Ostrom used to write about, about this problem of the tragedy of the commons, and how 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, so the lobster fishery in Maine, which I wrote 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 market among traders, et cetera. I mean, I a general rule, the sort of market among traders, etc. I mean, I was walking along the street in London the other day, and there were, you know, it was a Sunday market, there were 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. And 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 lot wants trinkets and both are getting what they want. And nobody's getting upset or not that I could tell. I haven't seen a policeman anywhere on the street, etc. 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% 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 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 asked them to do in exchange for some dollars, of course. You know, 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 were fair to both sides. We overlook that a lot. 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 longstanding 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, in this case, government or military even. So I guess that's 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. So 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, you know, quite often that position is then caricatured as meaning, therefore, you want no government at all. And I said, 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, you know, the fact that I would eventually go to jail is one of the things that stops me deciding to kill and murder my way to wealth and power. So one, two, three, four. That's what I say.

All right. One last scenario I want to run by you. You grew up in England, yes? Yes. You grew up playing football then or rugby or both? A little bit of both, but very, very badly in my own case. Now, have you ever played Ultimate? Ultimate Frisbee, the sport called Ultimate Frisbee?

Oh, yeah. Funnily enough, last weekend, I was introduced to that concept by American Friends for the first time. I don't think I'd heard the phrase before. I may have done, but it hadn't clicked with me. 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 club teams and even now 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. 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 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? Well, I think after some teething troubles, it might work. The teething troubles obviously would be that, you know, there would be somebody who would hack someone down and then 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 gonna be hacked down yourself into this new system you know given that you know that that um 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. Hey, podcast listeners. On the next Freakonomics Radio, everybody wants to put an end to poverty. But some people look at it differently. They look for actual evidence of what works and what doesn't. So this is just Economics 101 that says that cash transfers might be great for direct alleviation of poverty at a

very direct level and it's efficient, but there might be other things which have added benefits beyond the mere value of that transfer. Using evidence to fight poverty. That's next time on Freakonomics Radio. Freakonomics Radio is produced by WNYC and Dubner Productions. Our staff includes David Herman, Greg Rosalski, Greta Cohn, Beret Lam, Susie Lechtenberg, and Chris Bannon. If you want more Freakonomics Radio, you can subscribe to our podcast on iTunes or go to Freakonomics.com, where you'll find lots of radio, a blog, the books, and more. Thank you.