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The Real Con: "More Complex Is Better"
  (Michael M., December 22, 2009)

Regarding The World Is Too Complex (Guest essay by Subuddh Parekh): I was first positively surprised by the headline, but I found the essay doesn't quite cut it! Let me explain:

Things are getting more and more complex in today's world. That is a statement few would doubt.

However the question is why. Is it necessary? Is it always necessary? How many people can keep up with changes and understand them? How can democracy / any form of participation still work if the majority doesn't even understand the broad overview anymore?

The real con of today is "more complex is better."

I am not proposing everybody is capable or should be allowed to fly a jet airliner or operate a nuclear power plant. And research & development as well as advanced manufacturing is definitely becoming more complex often for good reasons.

But the important or necessary parts of everyday life like shopping, household budgeting, insurance, taxes, and even retirement investments need to be handled adequately by the broad majority of people without weeks of special training or consulting a real or self-declared expert.

Otherwise the highly intelligent have just disenfranchised the masses, from there exploitation is just a tiny step away.

For example, look at the excesses from today's product descriptions on corporate websites to credit card contracts: vital information is intentionally hidden behind dozens of marketing pages or legal blather, or completely withheld, making it an especially tedious or impossible task to try to compare competitors.

Jim Quinn writes that Huxley foresaw that approach ( BRAVE NEW WORLD - 2009). While I sure have read Orwell--and by the way believe the most important point in his book "1984" is not total surveillance but Newspeak--it seems I should also read Huxley's "Brave New World."

The first time I realized that approach myself was funnily enough with Microsoft, the self-declared fighter for the "easy to use" personal computer since the advent of Windows operating system. I however worked as Senior Integrator on small to medium enterprise solutions. Having started with Novell 3.12 and playing around with Windows NT 3.51 during some low workload time, suddenly I got thrown so much new Microsoft stuff at me all the time, new Windows version, new Office version, new NT Server, Windows Domain concept, new Exchange Server - that I never found time to take a closer look at competitor's offerings like NDS (Novell Directory Services) introduced with Novell 4.x release.

After 18 months I reflected on that and realized I need to start to ignore some Microsoft offerings to avoid total capture. I would state this has now become common approach for most IT product vendors.

Another special form manifests itself in the "idiot tax":

The Economics of the HDMI Cable Ripoff (taken from The Economics of the HDMI Cable Ripoff ) I just bought a blu-ray player. There is a puzzle. Why don't any stores stock cheap HDMI cable? I knew cables were a ripoff yet I could not find reasonably priced cables at Best Buy, Radio Shack, Target or even Wal-Mart. Ordinarily, we would expect competition to push prices down but in this case it seem as if the mere existence of Monster is anchoring high prices everywhere but online.

My best guess is that this is an unusually strong version of the hidden fee model of Laibson and Gabaix (1). In that model, firms overprice one aspect of service--such as a hotel charging exorbitant rates for telephone service--as an idiot tax. Crucially, the idiot tax is matched by a "sophisticated-consumer"-subsidy; the price of the hotel room is lower than it would be without the idiot tax--so the idiots don't know to shop elsewhere and the sophisticated-consumer types are, in fact, drawn to stores with an idiot tax. Thus, buy your blu-ray player at places such as Best Buy which sell a lot of expensive cable as well as massively overpriced extended warranties.

(1) Here is the bottom line:

Laibson and Gabaix's explanation relies on a good bit of math, too, but it can be summarized pretty simply using a hypothetical example. Imagine two hotel chains. The first, Hidden Price Inn, has a very low room rate of $80 a night, but makes liberal use of high "shrouded" fees: Three bucks for a minibar Dr Pepper, $25 for parking, $12 for eggs at breakfast.

The unsophisticated traveler cheerily (if unwittingly) forks over the fees, all the while patting herself on the back for getting a cheap room.

Now imagine a second chain, Straightforward Suites. It charges much more reasonably for the extra costs ($1, say, for that Dr Pepper), but because it makes less on the extras, it has to charge slightly more for the room-- $95, instead of $80.

Even an unsophisticated traveler can tell $95 isn't as good as $80. Through an aggressive ad campaign, Straightforward could try to point out how devious the approach of Hidden Price Inn is and how much less deceptive its own prices are. But Laibson and Gabaix show that there's a catch in this strategy: Hidden Price Inn actually has two key types of customers.

Yes, there are the clueless consumers (the economists prefer to call them "myopic"). But there are also the sophisticated ones, who know that if they avoid the hotel restaurant, take a taxi instead of using the parking garage, and call home with a cellphone, they'll actually get a better deal at Hidden Price than at Straightforward.

Straightforward Suites's ad campaign, then, might just end up increasing the ranks of sophisticated consumers who will in turn dial up Hidden Price Inn for a cut-rate room. Rather than play this self-defeating game, Straightforward will most likely just lower its own room prices and stick it to the customers on the extras. (from Why are there hidden fees? )

Subuddh Parekh comes to the wrong conclusion (as pretty much everybody else, I can't blame him): "So what are the 'solutions'? There aren’t any as yet. We just have to deal with this complexity in whatever way we can."

Einstein is attributed of having said: "Make everything as simple as possible, but not simpler."

The solution is: Unnecessary complexity has to be cut down. If we don't do it voluntarily, a societal collapse will do it for us.

Prefer the simpler solution, if it covers your needs. Don't buy something or pay more for a feature you don't understand (unless you have the time, money, and will to take on the early adopter role - please inform others of your experiences).

If things become intertwined, or complex for good reason, buy from the vendor which you believe has, and operates on, simple, sound principles. Even if he is a bit more expensive than the promise-all competitor. So in the above example choose Straightforward Suites. The same should be applied when voting for politicians.

Spread the word (in a rational, calm manner please) if you are feeling tricked by somebody.

But be prepared as well to fight arising trends of oversimplification, like black and white thinking, promises of one-size-fits-all perfect solutions.

Remember: For every complex problem, there is a solution that is simple, neat, and wrong. – H. L. Mencken

But the necessities of life need to remain simple enough that pretty much everyone can comprehend them.


1.) I also believe the '68ers to play an important role towards today's mess. While they started beneficial in breaking up narrow views, they overdid it by finally declaring pretty much every opinion correct and of equal value, thereby (unintentionally?) paving the way to unfettered individualism. When this started to become offensive and/or unsustainable after a decade or so, some con artists started to cover it up with complexity. And this complies with what I (unofficially) call the "Milgram effect": given multiple choices most people will avoid selecting one which would invalidate their previous behavior. (His book remains a must read: Obedience to Authority: An Experimental View )

2.) A banker once told me: Complex investment products are/were only invented so the seller can charge higher fees as no investor can value them himself nor compare them. 3.) The next step is upper management and other "leaders" pretend they understand the newest complex models, the underlying assumptions (!) and the implications. Great article which I fully agree with is Mad Mathesis.

CHS note: I also recommend another book on experiments in inducing obedience to authority: The Lucifer Effect: Understanding How Good People Turn Evil.

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