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Chesterton Fences


Writer G. K. Chesterton noted that people react in two ways, when faced with a fence across a road whose use they do not know. Some move to break it down, while others wisely wait until they understand its use. After all, whoever built it must have had a reason. Tearing it down might have unforeseen consequences. The same applies to laws and institutions. We should be wary of calling out the uselessness of what we do not understand. Chesterton's Fence

Our world is full of Chesterton Fences: objects, institutions, and rituals apparently inefficient and yet effective. For example, in his book “Alchemy", Rory Sutherland explains how London taxi drivers have to spend years memorizing every single street. This seems useless and inefficient, especially in the age of GPS navigation. And yet, it has its use: it is an upfront cost designed to weed out unmotivated candidates who might later provide a degrading service. Chesterton's Fence

Chesterton Fences in business

One component of the typical stock market cycle, “growth → bubble → crash”, is investors increasingly treating common-sense accounting practices as useless fences bounding the potential of stock prices. Those who do usually discover a few years later that such practices did have a purpose. Chesterton's Fence

Some of the most famous companies of the 21st century, such as Uber and Airbnb, seem to be built upon the destruction of fences. Uber obsoleted taxi licenses and Airbnb the lengthy process of befriending the owner of a house where you’d like to live for a week. However, Uber and Airbnb didn’t merely destroy the fence. They acknowledged its use and built a surrogate. Uber gave drivers something else to lose: a 5-stars rating. Similarly, Airbnb introduced a two-way rating system and provided (limited) insurance to both home-owners and visitors. In fact, in a previous essay, I argued that Uber and Airbnb are Trust-As-A-Service businesses: for a fee, customers can buy trust in transactions with strangers. Chesterton's Fence

Chesterton Fences and Ergodicity

There is a difference between what matters when we consider narrow intervals and what does when we consider broader ones. For example, closing a sale using deception is efficient only in the short term and inefficient in the long one. Over the short term, consequences that apply beyond the short-term do not matter. Over the long term, they do. Ergodicity

We often ignore this banal principle in the assessment of Chesterton Fences. We use our assessment of their short-term usefulness as a proxy for the long-term one. This assumption is often unwarranted.

The genesis of Chesterton Fences

Dio Mavroyiannis recently noted, "If the Fence is a result of bottom-up processes (say evolution), Chestertonian skepticism is justified. If an academic put the fence there, you can probably get rid of it."

Bottom-up ideas that spread are more likely to be good than top-down ones. This is because bottom-up ideas tend to spread because they proved to work, whereas top-down ideas tend to spread because they make sense, i.e. before their effectiveness got proven. Ideas Evolution Cultural Evolution

When you fail at something, do not immediately conclude that what you did was wrong. Instead, consider that you might have done something necessary but not sufficient. Failure

Someone who is geographically, socially, or culturally close to the center of an organization is more likely to have a positive opinion of it. This is not necessarily due to tribalism or self-interest, but to data compression. The central management can only measure what it understands. It can only solve problems it feels, and can only do so using the tools it has. A reason why centralization is limiting and inefficient. Data

Coordination at scale means larger successes and larger mistakes. Centralization

Employees overcompensates skill with overtime, managers overcompensate clarity with micromanagement.

Centralization ensures that mistakes hit the maximum number of people. Centralization

Chesterton Fences