Liars and Outliers: Thoughts and Conclusions

Ina previous post, we looked at the first half of Bruce Schneier's interestingbook.  To recap, Liar and Outliers examineshow trust mechanisms work, whether you're ordering products onlinefrom people you've never met, or you're paying a neighborhood kid to mow yourlawn. In order for commerce to function, there must be a certain level oftrust.
The second half of the book deals with Organizations, Corporationsand Institutions and how their competing interests work out in real worldsituations.  A model often used in thebook is that of fishing.  Overfishing willdeplete the stock and eventually ruin the industry, so most individuals andcompanies don't engage in it.  However,'defectors' may overfish because of the short term benefits and the low risk ofgetting caught.
The fourth and final section explains how societal pressures to acttrustworthy can fail, and how technological advances are changing how we dobusiness.  Inside the technology chapter,Schneier puts forth a list of principles for designing effective societalpressures, and I think it's a key point in the book.
To encourage everyone to act in the best interests of theirsociety, we use moral pressure, reputational pressure, institutional pressureand security systems.  But our cavemanbrains are still best evolved for face-to-face transactions and handling lifein a village.  These pre-sets don't workas 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 oursocietal pressures.  He points out thatwhile modern civilizations may concentrate on laws and security, it's foolishto disregard the value of morals and reputation because they still matter topeople.
He also makes a good point about the need for 'general andreactive security systems.'  In otherwords, it's better to think broadly than on specific tactical threats.  Schneier writes, "One example iscounterterrorism, where society is much better off spending money onintelligence, investigation and emergency response than on preventing specificterrorist threats, like bombs hidden in shoes or underwear."  I think any airline traveler who's had theirshampoo bottle or fingernail clippers taken away, or had to undergo an invasivepat down, would probably agree.
Schneier writes about the need for transparency, too, especiallyin corporations and governments.  Thesystem of checks-and-balances built into many democracies works best when theactions and finances of large actors like governments and corporations are keptopen.  And I think all our governmentsand corporations could do with some transparency.

(Thanks to Bruce Schneier for writing aninteresting book, and to Lori at the ThePRFreelancer.com for the advancecopy.)