Reflection on 2nd order consequence - after watching the movie “In Board Daylight”

Hey There,

Welcome to this week’s Sherman's Weekly Digest. Last year, I watched a movie called "In Broad Daylight". The movie narrates a gripping tale where a reporter from the A1 News Agency, Hiu Kei, unearths the horrifying truth of abuse at a disabled home named "Rainbow Bridge". Hiu Kei infiltrates the home, exposing the inhumane conditions the inmates are subjected to. The narrative is based on the real-life incident that occurred in 2015 at the Cambridge Elderly Home in Tai Po, where elderly residents were stripped naked and made to wait outdoors for a bath.

While it's easy to applaud Hiu Kei's endeavour to bring the issue to light, the impact of her actions resulted in the government shutting down the home, leaving the inmates without a place to live. Interestingly, upon digging into the actual news about Cambridge Homes, I discovered the previous owner quickly established a similar entity, continuing operations under a different name.

This brings us to the core discussion of our newsletter this week - the concept of second-order consequences. As individuals, we should do what's considered right, but if you wield power, such as a policy maker, it's crucial to consider the subsequent consequences of your actions. The second-order consequences can sometimes be more impactful than the initial ones, and often, these are the outcomes that are overlooked.

Reflection for myself being a Go Player

Reflecting on my time as a Go player, we were taught to anticipate our opponent's reactions to our moves. Some of the world's top players can predict the next 5 to 10 moves from both sides. The underlying assumption is that our opponents are as strategic and rational as we are, understanding the most valuable options to choose. As a famous Go saying goes, "The point that matters to your opponent will be equally important to you.”

The Unanticipated Consequences of Tax Increases

First, let us delve into the world of economics. When policy makers contemplate increasing taxes, the obvious first-order expectation is to generate more government revenue. However, the second-order consequences may contradict this goal. The wealthy, for instance, could move their assets out of the country or decrease their productivity due to the increase in taxation. This could lead to reduced economic activity and potentially lower tax revenues.

The Paradox of Minimum Wage

Another example would be the establishment of a minimum wage. At first glance, it seems like a beneficial policy for lower-income groups. Yet, the second-order consequences might reveal reverse discrimination. Businesses may opt not to hire the most underprivileged individuals, such as those with disabilities or ethnic minorities, if they perceive the minimum wage exceeds the value these groups bring to their jobs. In the absence of a minimum wage policy (meaning a free market), businesses may be more inclined to employ these groups at a wage rate commensurate with their productivity.

The Cobra Effect: A Tale of Unintended Consequences

Let's examine the Cobra Effect, an intriguing historical incident from colonial India. The region was dealing with an escalating cobra issue. In what British officials perceived as an ingenious solution, they introduced a reward for every dead cobra. Initially, the plan appeared successful as cobra sightings significantly decreased. However, an unanticipated second-order consequence emerged. Some individuals began breeding cobras to profit from the bounty. When the bounty system was discontinued, these breeders, left with now worthless snakes, released them into the wild. Consequently, the cobra population exploded, far surpassing the original numbers. This historical event serves as a compelling reminder that even well-intentioned solutions can sometimes evolve into larger problems.

What might be the 2nd order consequence thinking teach us on how to predict the future?

In the spirit of contemplating second-order consequences, let's draw some inspiration from a legendary tech trend predictor, Kevin Kelly. He's the genius behind the book "The Next 5000 days", and trust me, he knows a thing or two about predicting the future.

In his book, Kelly highlights Arthur C. Clarke's thought-provoking point that the real impact of automation isn't just about replacing a carriage with a car. It's about the secondary effects - traffic congestion, rush hours, drive-in theaters - all the things you wouldn't necessarily think about when you're just trying to figure out how to make a carriage go without a horse.

Now, let's replace that carriage (or car) with AI. What happens when AI is everywhere? When all the tools we use are related to AI, when we're so used to AI that we don't even realize it's there? Imagine a world where some people are still not using AI - what kind of different life will they lead? Or as AI users, how will our communication change? And what about the different levels of AI - will there be some kind of connection between them?

Tickling your curiosity yet? Good. Because this is the kind of thinking we need to be doing if we're going to predict the future.

I know, I know, you might be thinking, "But what about my job? AI is coming for it!" And yes, it might be true that certain jobs will be replaced, but that's just the first-order consequence. What's more interesting, and often overlooked, are the second-order consequences. As AI develops, it's also creating entirely new, and arguably more interesting, careers. Ever heard of a prompt engineer? It's a thing now.

And for all my fellow content creators out there, AI is not the enemy. In fact, it's quite the opposite. It's a tool that can supercharge our ideation and content drafting process, making our jobs more interesting and, dare I say, easier.

So, while it's easy to fear what AI might replace, let's also consider what it might create. Because the future is not just about what we lose to automation, it's about the opportunities we gain from it. And that, my friends, is the beauty of second-order consequences.

In Conclusion: The Power of Second-Order Consequences

We've journeyed through various contexts, from films like "In Broad Daylight" to economic policies and AI, illustrating the importance of second-order consequences. These are the ripple effects that may not align with our initial intentions but can often have a more significant impact. As we navigate through life, whether as policy makers, strategists, or individuals, it's crucial to anticipate and address these consequences. Our aim should be a proactive world that not only reacts to problems but also foresees and manages their ripple effects, protecting the vulnerable and ensuring accountability. This understanding of second-order consequences is our powerful tool for shaping a more compassionate and effective future.

Best,

Sherman

Things that I found interesting this week:

📚 Book — The Next 5000 days by Kevin Kelly

📽️ Movie — In Board Daylight (白日之下) by Lawrence Kan (簡君晉)

📱 Instagram — 白日下仍在發生的事 by 星期日生活 (@sundaymingpao)

📝 Blog — The Cobra Effect: how linear thinking leads to unintended consequences (nesslabs.com)