Wednesday, March 15, 2017

Can Honesty be a Trait not Developed but Enforced?

A few years back, the author was traveling through the city of Hamburg in northern Germany during his vacation days as a Master's student.  Perhaps one of the most shocking (at least to the author) was how the subway trains crisscrossing the city did not have actual entrance gates in most stations.  Instead of a series of gates where commuters had to stick their train tickets into before emerging on the other side so that they can proceed to the train platforms, the Hamburg metro simply had ticket machines inside the trains to validate tickets, while the stations themselves simply connected to the outside without restraint on entry or exit.

What such systems means for the large number of people depending on the trains for daily transport is clear: that the purchasing and validation of tickets to ride the trains is almost completely dependent on the honesty of the individuals.  Sure, there are occasionally "plainclothes agents" of the train company roaming around trains to check on validity of tickets held by passengers (and then fining people who did not valid tickets), but with chances of being caught quite low and the fines for violation quite low (in comparison to normal ticket prices), the author always wondered what incentivize people to actually buy tickets.

And honestly, the train company should wonder the same.  Let's assume that the train company is turning a decent profit on the trains' operations.  But this is assuming a ridership that is inevitably lower than the actual ridership, because ridership can only be counted by ticket sales.  Had the company be willing to make the practically one-time fixed-cost investments on ticketing machines for all stations, over course of years, it would likely see a jump in overall ridership that would justify the initial investments of the equipments.  This is not to mention the accompanying reduction in costs of hiring "plainclothes agents" to roam around the trains.

But instead of thinking about the pros and cons of getting ticket machines as a cost-and-benefit issue (as the author has done above), perhaps the train company is thinking about it purely as an ethical one.  The idea, that a provider of a public good designs a system with the assumption that the general public is trustworthy enough to provide enough revenue to keep the public good in place, is genuinely priceless if the assumption is proven to be correct.  It is a true leap of faith for the company to believe that the public, being able to think in the larger long-term picture, is willing to contribute to the public good's maintenance out of self-interest.

It makes one wonders just how universal can such level of trust in public intentions be had.  For one, to ensure that the trust is long-lasting, both the provider and the users of the public good need to be convinced that the public good will be consistently provided at the same terms, in the same way, for a prolonged period of time.  After all, if the trains will stop running in the next few months, there really is no reason that people will continue to pay their fares just to avoid fines from seldomly found ticket checkers.  In this situation, it is simply illogical for the provider of the good to trust the public.

In the same vein, the public must be convinced that there will consistently use the public good for a long time, and there will be no credible substitute for the public good that will diminish its current usefulness.  For instance, if everyone in Hamburg can get private vehicles in the next few months, and somehow run them as cheaply and conveniently as they can take subway trains to work, then there should be a spike in number of riders who deliberately avoid purchasing tickets.  The public good in question will be maintained voluntarily by the users only when the users are convinced that they will continue to use them for a long time.

To maintain the indispensability of a particular good, of course, is not easy.  In a capitalist economy, low enough barrier to entry means a monopoly cannot last.  Unless legal regulations and high costs of initial investment deter competitors (as in the case of subway trains), there can be no guarantee that something offered to users on the basis of pure trust will be reciprocated in kindness from the users with pure honesty. This is particularly true with something that the users can live without for sometime until a next, credible provider of the service emerges.

So, unfortunate as it seems, the model of the Hamburg subway trains, without a doubt, an exception to the general rule rather than a norm.  People cannot be trusted to pay for a service when they are not forced to, for the simple reason that they have simply too many competing choices to fall back on if one service falls apart.  This fundamental tendency to dishonesty is a point that is often lost on many people out here that blindly trust others when it comes to monetary matters.  Until the worst is assumed of people when it comes to the issue of honesty and the lack thereof, providing a functional service will remain difficult.  

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