Microsense and Macromadness

By Anjum Altaf

A book that left a lasting impression on me was Micromotives and Macrobehavior (1978) by Thomas Schelling who was awarded the Nobel Memorial Prize for Economics in 2005. Its central message remains unforgettable — what is good for an individual can often be bad for the group. Microsense can be macromadness.

I recalled this phenomenon because of current debate on the language of instruction in early childhood. I have noticed that no matter how much rigorous evidence is presented in support of the mother tongue, the exact same objections are repeated without fail — one, we would be left behind in the world without teaching toddlers in English and, two, parents want to educate their toddlers in English.

The first objection is negated by so much real-world experience that it can only be characterised as silly — despite teaching in English, we have been left far behind by countries that teach in their own languages. And, in any case, teaching in the first language in the early years does not preclude learning English later in school. Once again, there is ample evidence that the latter is actually a better sequencing for learning English — confident students learn everything better than confused ones.

It is the second objection that provides a perfect illustration of ‘microsense and macromadness.’ In Pakistan, English has been made a requirement for a good job and therefore it makes sense for a parent to give his or her child the benefit of that advantage. Failing do so would disadvantage the child with respect to other children educated in English. Since no parent wishes their child to be left behind, all of them end up demanding English as the language of education. But this results in collective harm because the evidence is irrefutable that early education in an alien language is extremely harmful for cognitive development of the human capital that is the primary resource of any country.

It is a poor national policy that forces parents into choices that confer short-term individual benefits but hurt the long-term prospects of the country. The sensible solution is to fix the national policy and eliminate English as the requirement for decent jobs just as is the case in Iran, Turkey, China and many other countries that are doing much better economically than Pakistan.

Microsense and macromadness is not limited to language alone. Pakistanis would grasp this immediately by thinking of traffic jams at railway crossings when the gate is closed. Everyone tries to squeeze ahead but when the gate opens no one can move.

There are more lethal consequences as well. In the USA, every household wants to buy a firearm to feel safe resulting in a country with many more gun-related deaths than in countries where the private purchase of firearms is strictly limited.

The logic applies at the level of countries as well. Every country stockpiling weapons to feel secure results in a world brimming with F-16s, tanks, and bombs while no money is available for hospitals, schools, and safe environments.  

The really profound application is at the level of economic theory itself. The myth of the free market has been built around an interpretation of Adam Smith’s claim that individual selfishness leads to collective good via an invisible hand. Schelling demonstrates, with irrefutable logic, that it can lead just as well to collective ill.

Both outcomes are possible. What determines one rather than the other are rules regulating individual behavior. Consider the fact that a robber will get better off by robbing but rules penalize such selfish behavior that is detrimental to society if adopted by large numbers. 

Along the same lines, markets needs to operate within rules to yield positive outcomes. To be fair to Adam Smith, he had argued that the pursuit of self-interest must operate in an environment well stocked with ethics and morality. Faith in the inherent efficiency of the market overlooks this necessary precondition for its functioning. It is in the interest of profiteers to ignore this caveat and propagate the myth that the ‘free’ market needs to be free of all constraints. 

This situation has become so absurd that many see the economic system in terms of a choice between market and state. The reality is that regulation by the state is essential to ensure markets deliver ethical and good outcomes in the interest of the majority. It is ironical that the denigrators of the state had no compunctions begging it to bail them out when the free market led to the financial crisis of 2008. The situation in the ongoing pandemic is no different.

Of course, the million-dollar question remains: What if the state itself becomes monopolized by Robber Barons? But that is a subject for a separate discussion.

Notwithstanding the above, understanding a simple three-word aphorism — microsense and macromadness — is worth more than any number of textbooks in Economics.

This opinion appeared in Dawn on November 4, 2020 and is cross-posted here with the author’s permission. The writer is a former dean of the School of Humanities and Social Sciences at LUMS.

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