Skating Lessons

Yesterday I inaugurated the New Year by taking the kids ice skating. Naturally this got me to thinking about economics, specifically Dan Klein's modern classic, Rinkonomics: A Window on Spontaneous Order.

Long ago people didn't know anything of skating. Imagine yourself one of them. Imagine that a friend walks up to you and tells you with great enthusiasm about his new idea for a business:

"I'll build a huge arena with a smooth hard wooden floor and around the perimeter a naked iron hand-rail. I'll invite people to come down to the arena and strap wheels onto their feet and skate round n' round the arena floor. They won't be equipped with helmets, shoulder-pads, or knee-pads. I won't test their skating competence, nor separate skaters into lanes. Speedsters will intermingle with toddlers and grandparents, all together they will just skate just as they please. They'll have great fun. And they'll pay me richly for it!"

Knowing nothing of skating, you would probably expect catastrophe. You exclaim: "How are 100 people supposed to skate around the arena without guidance or direction?…The arena will be a scene of collision, injury, and stagnation. Who will pay for that?!"…

Yet, we have all witnessed roller skating, and we know that somehow it does work out. There are occasional accidents, but mostly people stay whole and have fun, so much so that they pay good money to participate. The spectacle is counter-intuitive. How does it happen?…

An important quality of collision is mutuality. If I collide with you, then you collide with me. And if I don't collide with you, you don't collide with me. In promoting my interest in avoiding collision with you, I also promote your interest in avoiding collision with me.

The key to social order at the roller rink is this coincidence of interest.I do not intend to promote your interest. I am not necessarily even aware of it. Still, by looking out for myself I am to that extent also looking out for you. My actions promote your interest.

Skating on the floor of the roller rink is an example of what Friedrich Hayek called spontaneous order.

John Stossel memorably demonstrated the alternative process of centrally planned skating in this video (starting about 3:16).

Comments

I understand "coincidence of interest" but to me it is just common sense. I wonder if "common sense" is in the Economics lexicon, or if it is not a fancy enough term.

Reminds me of this scenario someone told me: Imagine there are no automobiles, and you go to the government with a proposal.

"So, you're saying you want these vehicles traveling on the same road? Passing within several feet of each other at speed? Each loaded with 15 gallons of gasoline underneath the rear passengers? Burning this gasoline and emitting the products of combustion into the atmosphere?"

On the road, too, common sense generally prevails. I mean, coincidence of interest.

Remember, when skating, keep your knees bent and if you think you are falling, crouch down quickly. I forgot that rule, toppled like a tree, and broke a wrist.

(4.36) ”Much of life would be a drag if a leader directed everything”
Sure – so what’s the solution? Socialism in the workplace?

Skating rinks also have rules imposed by those who run them. You all need to skate in the same general direction. Hooligans who ignore other people and cause accidents are tossed out. When the rink reaches its limit, no more skaters are allowed in. Most have girls only, boys only and couples only times. This makes for some fun and lets people show off, but also makes for some rest time (and not coincidentally increased concession sales). So, from my POV, this makes a nice analogy. A few rules, strictly enforced. Some way to get rid of bad actors. Then let things go.

@david: If he observed traffic in Manila or Cairo, I suspect even John Stossel would be unlikely to extol the "(likely) greater efficiency" of privately enforced norms for traffic enforcement.

As @Steve Sisson points out, a few simple and centrally-enforced rules can make skating much more pleasant and safe. This means neither the silly caricature of some central planner shouting "turn left! slow down!" to each individual, nor the false implication that skating rinks have no centrally-enforced rules at all.

One other factor that hasn't been mentioned is altruism. Skaters avoid crashes not just because of the mutuality. (Most) people are also careful to avoid hurting other people. Thought experiment: put on a helmet, knee and elbow pads, etc. and skate with a group of unprotected five year old girls. Would you be more or less careful to avoid collisions?

Sergey, Good comment, particularly as there is a lot of work on studying complex systems being done at major universities, particularly Oxford.

I think it is ironic, though, that Alex's comment appears on an internet webpage. The internet is an example of a complex system that exists only because of protocols.

Here is a link to a piece "The Internet As a Large-Scale Complex System": http://www.oup.com/us/catalog/general/subject/Com...

Sometimes you move beyond skating rinks.

"But why the regular armies then exist? Just because they win over irregulars."

Ummm, somebody hasn't been paying attention since the Roman Empire.

Bill,

I think you missed Russ Roberts amazing comment. These things do require more management, that is why centralization DOESN'T work!

The probable real reason for regular armies is that we are dumbasses that pay hella taxes. The government creates standing armies because they know insurgencies are more efficient.

They want to keep the marginal cost of organizing an insurgency high. But if you could wave a magic wand and give comparable resources to an irregular army and not only will it overthrow the opponent but it's own government as well. That's why the government wants them regulated.

I suspect even John Stossel would be unlikely to extol the "(likely) greater efficiency" of privately enforced norms for traffic enforcement.

Stossel is simply engaging in the time-honored high-school chemistry lab report game of 'draw-curves-then-plot-points'. Once you know about the CRC Handbook, you don't even have to do some of the labs.

Empiricism can make you late for lunch

Yet more tiresome libertarian propaganda.

As Steve Sisson has pointed out, Klein ignores the fact that there ARE rules created by central authorities in rinks. And without those rules, the spontaneous order that would form would be quite different. On ice rinks, the hockey players would deter just about everybody else who didn't like collisions, getting hit by sticks and pucks, and the necessity of safety equipment. Roller rinks would hqave similar problems with roller derby players. Rink surfaces would become rapidly degraded by spilled liquids and trash, because nobody would be keeping it off the rink.

Spontaneous orders are inescapable: even in systems as tightly controlled as crystals, coordinated behavior for wave transmission and oscillation is possible. The big question is whether the spontaneous order is a desirable one. That can only be decided by mechanisms outside the pathetic scope of individualist libertarian ideology. If not desirable, then it takes social coordination to change the conditions so that another spontaneous order forms. Considering that spontaneous orders form under socially created conditions, it's rather an oxymoronic term.

And once again, we have a libertarian propaganda ploy that proves far too much: the businesses of the world all rely upon central control just as government does. But we don't expect GMU propagandists to note such problems with their arguments.

"the businesses of the world all rely upon central control just as government does."

Good businesses limit central control just as good governments limit central control. Good businesses let decisions be made as close to customer contact as possible, on as local a level as possible. Of course, there are many badly run businesses out there, some of them existing because they happen to be in a good niche and can still succeed despite bad management, just as a poorly run country might become wealthy if they happen to be sitting on a lot of mineral wealth.

If you have ever worked for a company that makes key decisions about a local profit center by central management located elsewhere, you will have observed the stupidity of such an arrangement.

The order we see at a rink is not spontaneous, even if we forget about the rules imposed by the management. If it were truly spontaneous, there would be only a 50% chance of counterclockwise travel emerging as the pattern. Likewise, we might not expect speed segregation with slow traffic to the outside to be so commonplace. What's happening (I take it) is that people are defaulting on the rules of the road: oncoming traffic on the left side, slow traffic in the right lane. Conventional rules are not spontaneous order.

I grew up skating, and have seen this spontaneous cooperation develop many times. The best examples are when lakes or ponds freeze. You will see an informal hockey game in one area, another area where the kids are trying to stay upright. Good skaters will be covering the whole area, enjoying the open ice.

Outdoor rinks also show similar traits. If there are lots of skaters, the hockey games look for somewhere else to go, or skate with the crowd. The direction is essentially set by the first one there, everyone else follows. In some crowds there will be an individual who will holler 'lets change direction', start skating the other way and the crowd will follow. Outdoor rinks in cold climates are usually not a scarce resource.

A business selling rink time will try to maximize their usage and profit by catering to group preferences. Childrens hour, senior citizen, bring your date, whatever.

The least pleasant rinks are ones with most rules, and in a profit facility, will suffer. Why? Because they are selling enjoyment.

The most fun I've ever had skating was on one evening on an uncontrolled rink. It was snowing very large dry flakes, accumulating a couple of inches on the ice. It was like skating in the clouds. Having a nice girl with me helped.

It is easy to come across as a genius central planner by codifying what everyone is already doing.

If it were truly spontaneous, there would be only a 50% chance of counterclockwise travel emerging as the pattern.

Unlikely to be true. I would imagine the selection certainly has a handedness component to it. As a righthander, it certainly feels more natural to plant my left foot into a turn, much like it feels more natural to use it to plant on a layup in basketball.

If you want to see the academic reception of "Rinkonomics" in the 4 years since its publication, search for "Rinkonomics" with Google Books or Google Scholar.

A resounding silence: one English footnote by 2011. It would be difficult to do worse academically. I'm an amateur entomologist, and my scientific publications get much more academic citation. It's like creationism: public relations for their theories first, establish academic validity at some unspecified time in the future.

The big fault of the notion of spontaneous order is the individualist viewpoint it endorses. The term focuses our attention away from the existence of institutions whose influences may actually be driving the ordering. Institutions such as skating culture, parental authority, private property (many outdoor ponds are private but opened to the locals) and other systems of social dominance in this case.

What's happening (I take it) is that people are defaulting on the rules of the road

Is this backed up by study of British skating rinks?

It's easy to say that Andrew and Yancey Ward's proclamations of what "feels natural" to them are based on habit, which they probably are, but if the rules of the road hypothesis is correct, we should expect British skating rinks to travel in the same direction as British traffic circles, i.e. clockwise.

Also, I think this is a particularly important point:
The key to social order at the roller rink is this coincidence of interest.

In many economic situations, you don't have coincidence of interest, you have opposition of interest, or you have a mix of aligned and opposed interest. E.g. buyer and seller -- we might both benefit from the transaction taking place at all, but we have very different views on price, or on hidden defects in quality. The combination of partly-opposed interest and information asymmetry leads to a variety of market failures (e.g. fraud).

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