Incentives and Rules

This is a very good video about how our society deals with problems.

Barry Schwartz makes a passionate call for "practical wisdom" as an antidote to a society gone mad with bureaucracy. He argues powerfully that rules often fail us, incentives often backfire, and practical, everyday wisdom will help rebuild our world. 

Essentially, he argues that in modern society, there are basically two tools we use when faced with trying to make people do the right thing and they both fail.

Rules - Rules exist generally because people have historically screwed up. So you make a rule to ensure the screw up does not happen again. But rules fail to account for an ever changing world and infinite circumstances. Rules are needed, but they can get too detailed and actually cause people to do more harm than good or even prevent people from acting for the good.

Incentives - Incentives exist to entice people to do things. We pay people money to work. If we want them to work harder, we pay them more. Incentives fail because money is not the only motivation of people. It can also corrupt people's action as they turn to game the system to get more incentives. It also corrupts morality as now the motivation to do good is not on its own.

What Schwartz argues for is the need to turn back to virtue. The desire to do good.
The doctor's virtue to want to cure disease.
The engineer's virtue to want to build great reliable things.
The teacher's virtue to educate people and pass on knowledge.

Rules and incentives are not enough, you need virtue.

My Issue: Virtue only for CEOs

My issue with Schwartz is in the very limited presentation of virtue. Throughout the talk, he appeals to stereotypes about CEOs/bankers/doctors. We need to stop appealing to money as motivation. And of course, I don't think you'd find many who would disagree with that.

He then goes to talk about Obama. How Obama doesn't appeal to rules and incentives alone... and instead pushes for virtue.

And yet of course... like Obama, Schwartz preaches the need for virtue ONLY for those not in his political camp.

Somehow, when it comes to say teachers, suddenly the evil monetary incentives that we use for CEOs and doctors are suddenly great motivators.

The Obama administration is full of primal incentive based initiatives that seem to benefit his political camp.
Everything from raises teacher salaries to providing bonuses. I suppose our current lot of teachers and all teachers in the past were just sub par because they weren't making high salaries?

Or for that matter, how about the incentives to keep police and lawyers and prison guard unions involved in the drug war. Millions of youth have their future ruined to keep such people rewarded.

Or doctors who game insurance public or private to get more money.

Or politicians who talk about the need to pay themselves more, so politics can attract the best and brightest.


Indeed as Dan Pink talks about:

People are motivated by many things. You definitely need to pay someone enough so they can live a comfortable life. Beyond that, increasing incentives doesn't really have an impact on its own.

If I were to put a number on it, in a country like Canada, increasing a salary beyond say $70k/year is not really going to impact much. I'd hazard to suggest you wouldn't get any better teachers, engineers, doctors, police officers... if you paid these people $150k.

They would however be motivated by learning from experts in their field, doing a 'good' job, good working conditions, freedom to innovate and many other aspects.

Now, there are certainly some people and some jobs where more money is going to be the main motivator.
But these are not the people you want in professional jobs.
Nor are these the jobs professional.

I know I'm a pretty passionate engineer and I'd take an interesting, stable job with good quality engineers paying $70k over a job that paid me $300k/year.

The Corruption of Morality and Virtue

Indeed, if there is one lesson of our time, it is the corruption of morality and virtue.
When those in professions whose jobs have traditionally depended on morality and virtue (teacher, nurse, fire fighter, engineer...) seem to demand larger and larger incentives just to do their job, can we even remotely claim it to be moral or virtue?

With countries in debt, infrastructure crumbling, millions unemployed, and virtuous demand more and more just to keep working, there appears to be little morality or virtue within these professions as a whole. They fight to keep their position of monopoly and privilege in society. Even in these tough times in say Ontario;  a province in debt and youth unemployment high, a 100k public sector worker will not even consider a 5% cut for the greater good.

This is nothing to say about any individual person within those careers. Just as I would never blame any particular CEO in general. Most people simply act within the system they are in. Teachers are part of unions. CEOs are beholden to shareholders.

Where is this morality and virtue that Barry Schwartz or Obama speaks of?
It is simply not there. A facade of political proportions. I cannot tell if it is done in malice or ignorance, nor would I care to speculate on it.

Morality and Virtue are absolutely needed. On that part, I will never argue.
What is strange is that we no longer expect morality and virtue from those who traditionally embody it in their professions. The rich have always been maligned as greedy. We celebrate their virtue and morality, but as a whole they have never been considered moral or virtuous.
Yet, the corruption of the moral and virtuous caring professions, that is something we as a society are just coming to terms with.

From where I sit, there is little different in morality or virtue between the public servant and a walmart executive.
Both can claim they serve the public good.
Walmart can claim they provide people with cheap goods enabling them to live a good life.
The public servant can claim they provide such and such service to help the poor.

And yet, both seem to profit very well and rarely act in the public good when their financial interest is at stake.


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