Thread by @DellAnnaLuca

FRACTALS & PROSPERITY

In which I argue that fractality of ownership is the most important predictor of sustainable prosperity.

1/ Let me start with an example: AirBnB.

2/ AirBnB houses offer a good experience because ratings are on a per-house basis. If ratings were on a per-city basis, chances are that houses would degrade, because no one would be directly responsible for the rooms he rents.

3/ It turns out that introducing borders between responsibilities is the most effective way to incentivize for proper use of assets.

3B/ Proper use would be:
- Maintenance
- Productive use
- Safe use
- Sold/traded if much less useful to self than market price (i.e.: resources are allocated so that opportunity costs are minimized) (utility to self, of course, subjectively determined)

4/ Of course, if ratings were on a per-city basis, the city council could use coercion to force its hosts to take care of their houses, but this would have limited effectiveness.

Introducing borders (between areas of responsibilities) works wonderfully to PREVENT COERCION.

5/ For the reason above, and for the one below, borders are a wonderful technology to reduce violence. This might feel counterintuitive, but historically, it proved true. Before you think about counterexamples, read the next 3 tweets.

https://twitter.com/DellAnnaLuca/status/1115232282703327232

6/ Flawed counterexample #1: Napoleonic France, which was quite aggressive. It was a country without internal borders (& a resulting strong centralized power). If it had internal borders & a resulting fractal structure (eg. Switzerland) it would have been much more peaceful.

7/ Flawed counterexample #2: medieval Italy. While war was frequent between city states, casualties were quite low, because small scale. Borders make sure that when something bad happens, its scale (& thus consequences) are small.

8/ Flawed counterexample #3: capitalism (which has borders between ownerships; i.e. everything is private. Compare with communism, which has no internal borders defining ownership).

Capitalism works in the measure it fractalizes responsibility (& fails in the measure it doesn’t)

9/ This thread is inspired & partially refers to academia.edu/38433249/Multi…, which is IMHO a required reading for everyone involved in planning and/or politics.

10/ With the tweets above, I explained why borders lead to prosperity.

Now, let's see why borders have to be fractal.

11/ The larger a space, the more distance there can be between an actor & the consequences of his actions.

The larger the distance, the more an actor is incentivized to "consume" rather than to "produce & improve".

12/ There are social technologies that ensure that actors are hold accountable for their decisions even when the space is large (e.g.: the law), but those technologies only work in the measure they can define and measure negligence or maliciousness.

13/ A notable exception is "community policing", the idea that if you do something bad in your community you will be punished by its members (regardless of whether you broke the law), for example through a cut of social ties (e.g. your neighbors don't talk to you anymore).

14/ However, community policing only works up to a limited distance. If someone works in Rome but takes decisions that affect Paris, he will not care if people in Paris think bad of him.

Therefore, "borders of responsibility" should never extend beyond that "social distance".

15/ @nntaleb wrote "Bureaucracy is a construction designed to maximize the distance between a decision-maker and the risks of the decision."

Bureaucracy is particularly pernicious whenever the bureaucrats live "beyond the border where consequences of their actions are felt".

16/ The solution is fractal borders, separating areas of competence & responsibility into a cascade of progressively smaller areas, up to the individual.

Two requirements: 👇

17/ At the lowest level, exactly one person must be responsible for any given asset, and the distance between one person and the one at the level immediately above is small enough so that social policing can occur (as described in tweet #13).

18/ The only person who would benefit from an extension of decision making beyond the social distance is who would abuse it.

Proper, sustainable leverage is exercised on empowering a limited number of decisions makers within social distance.

19/ The problem is not only absolute scale, but also relative one (the distance between repeated structures in a fractal).

As the absolute scale of our world is growing larger than ever, more focus should be devoted to rebuilding those fractal-like structures that bring solidity

20/ Similarly, corporations should realize that lack of fractalization of ownership at their inside is a much larger problem than absolute scale.