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This is: Coordination as a Scarce Resource, published by johnswentworth on the LessWrong.
Let’s start with a few examples of very common real-world coordination problems.
The marketing department at a car dealership posts ads for specific cars, but the salespeople don’t know which cars were advertised, causing confusion when a customer calls in asking about a specific car. There’s no intentional information-hoarding, it’s just that the marketing and sales people don’t sit next to each other or talk very often. Even if the info were shared, it would need to be translated to a format usable by the salespeople.
Various hard problems in analysis of large-scale biological data likely have close analogues in econometrics. The econometricians have good methods to solve the problems, and would probably be quite happy to apply those methods to biological data, and the bio experimentalists would love some analytic help. But these people hardly ever talk to each other, and use different language for the same things anyway.
When the US invaded Grenada in the ‘80’s, the marines occupied one side of the island and the army occupied the other. Their radios were not compatible, so if an army officer needed to contact their counterpart in the marines, they had to walk to the nearest pay phone and get routed through Fort Bragg on commercial telephone lines.
Various US intelligence agencies had all of the pieces necessary to stop the 9/11 attacks. There were agencies which knew something was planned for that day, and knew who the actors were. There were agencies which knew the terrorists were getting on the planes. There were agencies which could have moved to stop them, but unfortunately the fax(!) from the agencies which knew what was happening wasn’t checked in time.
There are about 300 million people in the US. If I have a small company producing doilies, chances are there are plenty of people in the US alone who’d love my doilies and be happy to pay for them. But it’s hard to figure out exactly which people those are, and even once that’s done it’s hard to get them a message showing off my product. And even if all that works out, if the customers really want a slightly different pattern, it’s hard for them to communicate back to me what they want - even if I’d be happy to make it.
So coordination problems are a constraint to production of all kinds of economic value. How taut are those constraints?
Well, let’s look at the market price of relaxing coordination constraints. In other words: how much do people/companies get paid for solving coordination problems?
When I think of people whose main job is to solve coordination problems, here are some occupations which spring to mind:
Entrepreneurs’ main job is to coordinate salespeople, engineers, designers, marketers, investors, customers, regulators, suppliers, shippers, etc.
Managers’ main job is to coordinate between their bosses, underlings, and across departments
Investment bankers coordinate between investors, companies, lawyers, and a huge number of people within each of those organizations
Real estate developers coordinate between builders, landowners, regulators, renters, and investors
Note that all of these are occupations typically associated with very high pay. Even more to the point: within each of these occupations, people who solve more complicated coordination problems (e.g. between more people) tend to make more money. Even at the small end, the main difference between an employee and a freelancer is that the freelancer has to solve their own coordination problem (i.e. find people who want their services); freelancers make lots of money mainly when they are very good at solving this problem.
Similarly with companies. If we go down the list of tech unicorns, most (though not all) of them solve coordination problems as their prim...
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