A long-winded econo-speak explanation for anybody interested in finding out why OWS gets nothing done:

Lets just imagine for a moment that OWS truly does represent 99% of America. Here’s a couple of reasons they still wouldn’t get anything done:

1. 99% of America is a large group. Mancur Olson describes three “separate but cumulative factors that keep large groups from furthering their own interests” in his 1971 edition of The Logic of Collective Action:

A. The larger the group, the smaller the fraction of the total group benefit any person acting in the group interest receives, and the less adequate the reward for any group-oriented action, and the farther the group falls short of getting an optimal supply of the collective good, even if it should get some.

B. Since the larger the group, the smaller the share of the total benefit going to any individual…the less the likelihood that any small subset of the group, much less any single individual, will gain enough from getting the collective good to bear the burden of providing even a small amount of it.

C. The larger the number of members in a group the greater the organization costs, and thus the higher the hurdle that must be jumped before any of the collective good at all can be obtained.

(Olson 48)

This is a problem of costs and incentives. To illustrate, who would pay taxes if we were not forced to? Probably very few people because the more people in our group, the less noticed any of our individual contributions will be, and so what incentive do we have? Without coercion, we would have no government. But there is more. Not only do we have less incentive to contribute as the size of the group increases, we also have less chance of achieving any coherent group consensus. This follows logically from the size of the group: the larger it is, the less any individual voice is heard. This tendency is observable when large organizations utilize small sub-groups to take action, for example the use of subcommittees in legislatures. Small groups reach consensus and take action much easier, where large group consensus is “at best rare” (Olson 60). OWS clearly faces this problem, considering there is no unified manifesto of demands or something equivalent. I suppose a solution would be to develop subcommittees to give them some sort of coherent direction.

2. The “Miracle of Aggregation” does not apply to emotionally-charged issues (I don’t think it’s a far stretch to call OWS “emotionally-charged”, but I welcome your challenges). This point flows logically from my first point, but first I have some explaining to do:

It is well-established in the field of economics that people often remain politically ignorant because the cost of being informed exceeds the benefit of voting (because the larger the group, the less likely any individual voice is heard). However it has been argued, in particular by Donald Wittman in The Myth of Democratic Failure, that this has no harmful effects on democracy because of the “Miracle of Aggregation”. This idea is best explained as such: if 99% of people are ignorant but not systematically biased, and 1% are well-informed, the ignorant voters will tend to cancel each other out because of the law of large numbers, and, in effect, the well-informed 1% will tend to be the decisive voters. As an example, “in a contest to guess the weight of an ox, the average of 787 guesses was off by a single pound” (Caplan 8). So, even if it is true that large groups tend to be ignorant for the most part, on average they will make informed decisions. Right?

The truth is, when it comes to emotionally-charged issues, people are systematically biased. Because everyone that is part of a large group knows they have little chance of affecting the outcome of group actions, they tend to be expressive rather than informed when it comes to voicing their opinions, which leads to aggregate systematic biases. The weight of an ox is not emotionally-charged, so the miracle of aggregation rings true. But strong sentiments that take hold of voters such as nationalism often result in poor outcomes. This is why bad policies persist: though widely agreed upon by experts that policies such as trade tariffs are economically harmful, it feels good to ‘protect American jobs’. People vote expressively. Random error is no longer random, it is biased.

So after that long-winded econo-speak, how does this apply to OWS? Well, even if the movement was able to overcome the collective action problems I outlined in section 1, their group consensus would be expressive rather than well-informed. In other words, because individuals in groups tend to put less thought (and more emotion) into issues–because of the correct belief that they have a very small individual effect on outcomes–in aggregate outcomes are biased toward emotions rather than objective analysis. So, while a solution to Occupier’s problems may exist, the conclusion the group would reach would simply be the one that gets the most people the most riled-up. As in our democracy, or in relationships, or in arguments, this can easily lead to harmful outcomes.

So what’s the solution here? I’m with Socrates–OWS needs an all-knowing, benevolent philosopher-king to guide them all, lest they face the consequences of collective action. But, since I suspect that’s not in the works, suffice it to say that OWS might stick around for a little while, but they won’t get anything done. And if they do it will be something stupid. Please tell me why I am wrong.



2 responses to “A long-winded econo-speak explanation for anybody interested in finding out why OWS gets nothing done:

  1. coffeeshoprhino

    Have you looked into the smaller working groups within OWS?

  2. Pingback: What is “Occupy Wall Street”? | Occupy Wall Street Analysis

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s