"Not my problem" big problem for China

A “collective action problem” arises wherever individual self-interest leads people to take actions that leave everybody worse off.

Overfishing to the point that fish stocks collapse is one example. Everyone driving downtown at rush hour is another.

Collective action problems are especially common and severe wherever people are focused on me, me, me and today over tomorrow and government (or management) is too weak to compel socially desirable behavior. One obvious example: Wall Street’s wildly irresponsible behavior following massive financial market deregulation (and the neutering of the SEC) eventually required multi-trillion-dollar bailouts and crashed the U.S. economy.

As a crowded country newly obsessed with getting rich, China’s economy, transportation, environment, and politics all suffer horribly from rampant individualism. Bribery is practically required to accomplish many things. (I read in the book Mr. China that an anti-corruption officer demanded a car and cash before he would investigate charges that a joint venture’s head had disappeared with millions of dollars from the firm’s bank account.)

The L.A. Times offers this shocker:

In Anhui province in eastern China, six environmental inspectors were fired last spring because, as China Central Television reported, they were working too hard: They had the effrontery to check on a tire factory three times in one month. “Doing that to a business really affects our development environment,” a local official explained.

My best personal example comes from my days working at MeetChina a decade ago. We had a horrible problem with bad data, and I was charged with cleaning it up and preventing more bad data from being added. After we cleaned up the bad data, we strengthened the database schema so bad data could no longer be added. To add new data, you now needed to input it properly. We kept in San Francisco one copy of the database, which was used to power our website. In China, our colleagues kept another copy of the database into which they added new data as they collected it. After several weeks, we noticed China had uploaded very little new data. We called to find out what was going on. They eventually told us they were having too many problems adding data to the database (because they were trying to enter improperly formatted data), so they had turned off the database constraints! Our jaws dropped. The whole point of database constraints is to prevent bad data from entering the database. Rather than fix their bad data and enter it properly, they instead turned off the constraints. Now, their database was again full of bad data, which could not be uploaded to the San Francisco database. This occurred because our Chinese colleagues — many of whom were compensated based on how many companies' data they collected rather than whether those companies prospered once in our system — were obsessed with adding data to their database as easily as possible and unconcerned with how that data would be used.

Posted by James on Friday, September 24, 2010