export_ofoct.com (1)

[00:00.43] At larger scales, common salience or focal points and conventions, drive a lot of our legal and financial coordination.

[00:10.26] An everyday example is driving on the left, or on the right.

[00:14.78] It doesn't matter as long as everyone agrees to drive on the same side, as in the joke about the woman who calls her husband during his morning commute and says, "Be careful, honey.

[00:23.81] The radio says that there's a maniac driving on the wrong side of the freeway."

[00:27.79] And he says, "One maniac? There are hundreds of them."

[00:32.31] Another everyday example is money.

[00:34.96] I accept a piece of paper in exchange for an old chair, because I know that my grocer will accept it in exchange for some groceries because he knows his supplier will accept it, and so on.

[00:48.78] Now not all the examples are this obvious.

[00:52.76] Why are autocrats terrified of public protests?

[00:56.74] Well the basic reason was explained by Gandhi in the eponymous movie when he said, "100,000 Englishmen cannot control 350 million Indians if the Indians refuse to cooperate."

[01:09.76] The problem is that the Indians can't refuse to cooperate if each one fears that no one will join him.

[01:16.14] In a public demonstration, each protester can see the other protesters see the other protesters, and this common knowledge allows them to coordinate their resistance, whether by literally storming the palace or by bringing the apparatus of the state to a halt through boycotts and work stoppages.

[01:37.65] This is the basis for a joke from the old Soviet Union, in which a man in Red Square is handing out leaflets to passersby.

[01:46.15] Soon enough, the KGB arrest him, only to discover that the leaflets are blank sheets of paper.

[01:52.26] They say, "What is the meaning of this?"

[01:54.39] And the man says, "What's there to say? It's so obvious."

[01:59.70] The point of the joke is the man was generating subversive common knowledge.

[02:09.26] And in a case of life imitating a joke, in recent years, Russian police have arrested several people for holding, yes, blank signs.

[02:14.84] Another non-obvious example comes from the world of investing.

[02:19.09] John Maynard Keynes compared speculative investing to a newspaper beauty contest, in which the winner is not the woman with the prettiest face but the contestant who chooses the face that is chosen by the greatest number of other contestants, each of whom is anticipating the choices of other contestants, and so on.