7. Small Groups vs. Large Groups

A COMMON ECONOMIC ERROR when assessing the effect of a social event or a proposed action is the failure to account for all effects—current and future, obvious and not-so-obvious. In a small setting, it is easy to envision all the effects of an action, thereby giving a proposal a more accurate evaluation. Reasoning and common sense (intuition) can be valuable tools when predicting the outcome of a proposed policy or event within a small group. However, such tools become far less reliable when assessing outcomes in larger groups. When we interact with others in small groups, our instincts, for the most part, tell us without much deliberation, that we can achieve our goals with less effort and conflict when the means to those goals align with “the Golden Rule.” In a family, neighborhood, company, business relationship, or similar small group, most of us will adopt “the Golden Rule” as our guide. However, we tend to abandon that concept when it comes to a large political group.

Should a neighbor need help, we would never consider going around the neighborhood threatening those who do not pitch in. We instinctively understand that charity is voluntary, and we are generally eager to help when we see someone in need. In a small setting, we view the use of force as a means to help others to be the antithesis of charity. However, in a political arena, we find ourselves condoning, even promoting, the use of physical force as the proper means to extract aid. And when such force is used, we paradoxically refer to it as an act of charity and compassion.

Virtue and cooperation are instinctive codes of conduct that have evolved over time because they provide mechanisms for survival and reproduction superior to those based on a code of coercion.⁵ Since our hunter-gatherer ancestors lived in small groups, generally fewer than fifty members, for millions of years, our inherited common-sense instincts are not as keen when large groups are involved. An act that one would consider reprehensible and nonsensical if conducted in a small group may become quite acceptable in a large setting, because our brains are not as adept at sensing and evaluating large group interaction.

⁵Matt Ridley, The Origins of Virtue: Human Instincts and the Evolution of Cooperation (New York: Viking Penguin, 1996). Also see Robert Wright, The Moral Animal: Why We Are the Way We Are (New York: Vintage Books, 1994).