Wednesday, October 3, 2012

How To Explain Return on Coordination to Economists?

commentary by Roger Erickson

It seems obvious once said. Return on coordination = teamwork?

It's amazing how many people ask me for "the original reference."

Is there an original reference for 2+2=4? Why does anyone accept it otherwise? :(

Anyone who's ever learned coordinating customs such as "stay to the right" appreciates the cost of coordination, and the consequences if they can't. Humans even do that natually - given adequate feedback.  Return on coordination is the consequence of investing in that cost. Achieving that insanely great return is what drives all social species.

"It seems odd but it's true that often the most obvious things are the most difficult for people to see. Imagine showing fish what "water" is and explaining to them how it works. They may have an implicit sense of water but they have no explicit knowledge or understanding of it. Translating the implicit to the explicit so that they can see and understand as you do is your job as a writer!"
Derryl Hermanutz

True.  So how do you explain air to 6 year olds?

There are many quick tricks, like asking them to blow on the back of their hand, or sneeze, or yell, etc, etc.  I try to remember such methods and lessons when talking with economists.

If a picture is worth a thousand words, a shared sensori-motor experience is worth a million, and a shared cultural experience a billion words ... or more.

Obviously, written text is still a paltry medium compared to the full bandwidth of face-to-face communication, and even less useful as a replacement for full group experience & feedback, let alone the distributed motivation that follows actual development of group affinity. The more people you know well enough to care about, the less stuff falls through the cracks of a culture.

With growing group numbers, it's unpredictable what few patterns of shared signals will produce optimal group agility in given situations. Efficient messaging is discovered only with group practice, which is one reason why unemployment kills economies. Lack of group practice costs more than all other imagined costs.  It's a failure to invest in the cost of coordination, and it precludes any return on coordination.  Stupid, of course, since that's always the greatest return of all, by far.

So, how does one explain return on coordination to economists? :)

Please list your tricks and suggestions in the comments.

Example: Ask a group of orthodox economists to huff and puff at the same time, and blow an unemployment form off a table (when any amount of hot air from one alone won't suffice).


Kaj Risberg said...

Division of labour?

Kaj Risberg said...

Or perhaps "timing of labour"..

Edmund Kar said...

How's about this for coordination: I need your help.

I've been having interweb arguments about Mitt Romney and Bain. This went off onto a tangent, where the other party was defending Bain's lackluster performance on the (baseless) idea that Bain didn't have the downside risk that the market did - that is, people got something out of their fees because Bain didn't lose as much in the 2002 cluster eff as the S&P did. And that this is a reasonable argument for Mitt's competence because "their investment strategy didn't change much" after he left.

Of course, this stinks from top to bottom, but I cannot estimates of Bain Capital's performance after 1998 that are easily comparable to the S&P. Estimates for 1984-1998 are widely available thanks to books like The Romney Files, but I cannot find 98-early 2000s data.

Can anyone help? It would be appreciated.

PMSS said...

Thanks for posting this. Today I watched documentary film that deals with the subject of Economic Calculation, Market Rationale and its effects, along with considerations of the Scientific Principles of Sustainability titled Culture in Decline: Economics 101. I recommend you to watch this, if you did n't watch yet.

paul said...

"I try to remember such methods and lessons when talking with economists."

…and those that think like them. :-)

Salsabob said...

Perhaps ask them to try to purchase something without the common currency?

Something along the lines of money talks, BS walks. ;-)

paul said...

"Perhaps ask them to try to purchase something without the common currency?"

Yes. You know it's surprising how many people don't seem to think this is a big honking important deal.