Wednesday, May 18, 2011

what taxis and feral dogs have in common

I can't believe I never mentally articulated the following isomorphism, between two areas of science I find immensely fascinating and devote a great deal of attention to (I am, after all, an economist, and my boyfriend is conveniently an evolutionary biologist...):

free market efficiency via the 'invisible hand' <-> evolution via natural selection.

In the free market (biosphere), slight deviations in trade agreements (mutation) lead to heterogeneity (biodiversity). Only the most efficient (fittest) of these survive. The result is a highly efficient marketplace (ecosystem) in which every sector (species) thrives in its niche, arising seemingly from magic. The only difference is that markets converge much more quickly than life because mutations are chosen by people to be most likely to work, rather than randomly by DNA processes, and the time span between mutation adoption isn't bounded below by lifespan.

Yesterday in Libreville I encountered beautiful examples of each of these processes that are absent in the United States due to various types of central planning: taxis and dogs.

The taxis in Libreville are ubiquitous and cheap. I'm pretty sure it's cheaper to take cabs everywhere than to own a car, because the taxis take advantage of two economies of scale not possible with individual cars that allow the marginal profit margins to be tiny enough that hardly anyone would want to buy and maintain a vehicle to avoid them: First of all, the taxis are shared vehicles so marginal costs are divided between up to four passengers. The taxi can stop anywhere along the route to pick up additional people, as it desires, and can reject anyone who is not traveling along the same route. Second of all, taxis of course drive around for many hours every day, spreading out maintenance costs between many more people than an individual's car.

On every trip, the passenger proposes a price and the driver can accept or negotiate freely. As a result, supply and demand are always in sync. During busier times of the day, more taxis are on the road, and they can charge more because customers are competing for service. At slow times of day, fewer taxis are out, and three people can get where they want to go for less than a dollar altogether. (In fact, even at rush hour we only paid $2 for three people to travel approximately five miles. The supply of cabs efficiently responds to varying demand throughout the day to keep the price fairly level. I've seen neither empty taxis driving around nor passengers unsuccessfully trying to hail one. This morning the person we travelled with who speaks French rejected three cabs who wanted more than $2 for the three of us, and we still got in the fourth within a minute of trying to hail the first one. This system is WAY better than public transit!)

In the U.S., this situation is impossible for many reasons: fixed fares, legal requirements to accept any customer any time, and ride shares arranged exclusively on the demand end, to start with. (Note that even though cabs are shared in Libreville, I'm sure passengers could negotiate a higher price to avoid picking up other people if they so desired. The shared arrangement is a strict improvement.) Central planning of supply via licensing regulations, and labor unions that drag the equilibrium point kicking and screaming in a direction that directs a higher percentage of social surplus to them; the list goes on.

When I got back from spending about 75 cents to get ten miles back to my hotel, I walked onto the beach to watch sunset and attracted two feral dogs looking for handouts. These dogs were gorgeous, sweet, personable, healthy (except for some fleas of course), and acted like they had been diligently very well-trained since puppies. They licked my hands (and gave my back a thorough bath when I let them. Sweat and DEET is a delicious combination you know...) and wagged and let me scratch their heads all I wanted, and then when I sat down to eat, they nuzzled me a bit trying to get to the food but after I gently waved them away they laid down quietly a couple feet away and merely looked at me imploringly. I gave them bits of things periodically, and every time they went right back to sitting there politely. I've never met a domesticated, trained dog in the United States that is as well-behaved as these two were. (And gorgeous! If they went to a pound in the U.S. they would be adopted immediately.)

It seems that when "survival of the fittest" means "best-liked and fed by humans", dogs naturally evolve to be ideal pets. No selective breeding required.

America is a country of overconfident control freaks (myself included =). We need to remember that frequently the best outcomes arise precisely when nature is allowed to take its course.

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