The Free Rider Problem

Other countries have struggled to become more "social-istic," like Denmark...and failed. So how do the Danes pull it off?

I think their success relates to their acceptance of their social contract. Any society needs to subscribe to a social contract — basically, what you agree to give up in order to live together peacefully. Densely populated Europe generally embraces Rousseau's social contract: In order to get along well, everyone will contribute a little more than their share and give up a little more than their share. Then, together, we'll all be fine.

The Danes — who take this mindset to the extreme — are particularly conscientious about not exploiting loopholes. They are keenly aware of the so-called "free rider problem": If you knew you could get away with it, would you do something to get more than your fair share? The Danes recognize that if everyone did this, their system would collapse. Therefore, they don't. It seems to me that the Danes make choices considering what would happen to their society (not just to themselves) if everyone cheated on this, sued someone for that, freeloaded here, or ignored that rule there.

In contrast, the United States subscribes to John Locke's version of the social contract: a “don't fence me in” ideal of rugged individualism, where you can do anything you like as long as you don't hurt your neighbor. Just keep the government off our backs. In some ways, this suits us: As we have always had more elbow room, we can get away with our “rugged individualism.” Thanks to our wide-open spaces, determination to be self-sufficient, and relative population sparsity, it's easier — and arguably less disruptive — for us to ignore the free rider problem.

If I had to identify one major character flaw of Americans, it might be our inability to appreciate the free rider problem. Many Americans practically consider it their birthright to make money they didn't really earn, enjoy the fruits of our society while cheating on their taxes, drive a gas-guzzler just because they can afford it, take up two parking spots so no one will bump their precious car, and generally jigger the system if they can get away with it. We often seem to consider actions like these acceptable...without considering the fact that if everyone did it, our society as a whole would suffer.

This was thrown into sharp relief with the crippling financial crisis that began in 2008. In the lead-up to the crisis, smart people knew deep down that existing policies would not be sustainable if everyone jumped in, trying to make money from speculation rather than substance. They gambled that they could pull it off, and the free rider problem wouldn't kick it. But then it did. As Europe, too, got caught up in this "casino capitalism," we saw how interconnected our world has become, and how — with the globalization of our economies — there's now only one game in town.

A good example of how the Danish social ethic differs from others is a simple one: Danes are famous for not jaywalking. Even if the roads are empty at 3 a.m., pedestrians still stop and wait at a red light. If there's no traffic in sight, my American individualism whispers, "Why obey a silly rule?" And so I jaywalk, boldly, assuming that my fellow pedestrians will appreciate my lead and follow me. In most countries, they do. But when I jaywalk in Denmark, the locals frown at me like I'm a bad influence on the children present. That social pressure impacts even a hurried, jaywalking tourist. So, rather than feel like an evil person, I wait for the light.

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