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The World Isn't Broken, Our Coordination Is - Future IQ

4,640 views Wait, is this logic right? • Dec 27, 2025
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Slog Reference: Coordination Failures

Description

A coordination failure happens when there exists a better outcome that everyone would prefer, but no one can move to it alone, so society stays stuck in a worse system. In this episode of Future IQ, we break down what coordination failure really means and why it shows up everywhere around us.

Using real world examples like traffic chaos, the 70 hour work week, education rankings, medical appointments, scientific research, corruption, and insurance driven healthcare, we show how rational people responding to incentives unintentionally create outcomes that are worse for everyone. We connect these patterns to ideas like the Prisoner’s Dilemma, multipolar traps, the Tragedy of the Commons, and Goodhart’s Law.

The episode also explores why coordination failures are so hard to fix, how they slowly emerge without being designed, and why simply “being a good person” is not enough. Finally, we discuss when coordination does work—vaccinations, ozone protection, functioning governments and the four ingredients required to make coordination possible, along with the danger of coordinating for the wrong goal.

If you’ve ever wondered why everyone agrees something is broken but nothing changes, this episode gives you the mental model you’ve been missing.

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Videos you may like / referenced in today’s episode:
What is Prisoner's Dilemma? https://youtu.be/y9kOyRu6FGU
Goodhart's Law Explained: https://youtu.be/OU5W-b_e8a4
Tradition vs Change: https://youtu.be/M42tCi_5wQE
Tragedy of the Commons: https://youtu.be/u81mslnKOOA
70 Hrs vs 40 Hrs Work Week: https://youtu.be/-RecyHRKWpA

Do hit us up on Twitter:
@ngkabra http://twitter.com/ngkabra
@shrikant https://twitter.com/shrikant

Chapters:
00:00 It's not you, it's not me, it's US
12:30 From a Good Schelling point to a Bad Schelling point
16:10 Coordination successes
18:50 How do we get there?
22:55 The solution is.. WHAT?

Listen it on the podcast provider of your choice: https://tapthe.link/FutureIQRSS
Follow FutureIQ on Instagram: https://www.instagram.com/thefutureiq/

Source / References:
https://www.slatestarcodexabridged.com/Meditations-On-Moloch
https://www.amazon.in/dp/B076Z64CPG/
https://en.wikipedia.org/wiki/Coordination_failure_(economics)

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Coordination Failures

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Transcript

Why is traffic in every Indian city so bad? Like Pune, everyone seems so lawless, right? It's not because everyone is an idiot. I was about It's not because there are people who want bad traffic. Obviously, right? Yeah. An astonishing number of problems in the world are because of a problem called coordination failure. Okay. Okay. Everyone wants the same thing. If everyone just did the right thing together, everyone would be better off. But we are not able to coordinate, right? If everyone would just Yeah. So this is not just restricted to traffic, the education system, the replication crisis in science, the medical system, low-level corruption all around us and much more. Right? In every case, a much
better solution that everyone involved would prefer exists. But and if we could get everyone to switch to the new system, everyone would be happier. But we are not able to. Right. So we are stuck with the old broken system. So we can't improve traffic even though everyone wants to improve it because we can't agree to improve it. Yes. Right. So for example in India, right? If everyone followed the traffic rules which are already in place, the traffic would be so much better. Yeah. Right. There would not be jams, there would not be accidents. Everyone would get home faster.
Yes. But if you just follow traffic rules, that's not useful because other people are breaking traffic rules. Correct. And that is why then you also break some rules, right? And the reason they don't follow traffic rules is because they know that other people are not good, right? I mean, you have to get everyone to agree at the exact same time. Right. Correct. And that is a coordination problem, right? Okay. Or think of it in the reverse, right? We start off, everyone is following traffic rules, all is good.
Then one person decides to take some shortcut, save a little bit of time. Then someone else sees that and say, "Well, why should I? This is unfair to me." So the other person starts breaking rules. Soon everybody is breaking rules. Everybody's getting in each other's way. And now everybody is worse off. Even the first guy who took a shortcut. Yep. Right. Earlier situation was better. Now everyone has gotten one level worse and collectively and got nothing. Yeah. Collectively we get nothing. In fact, we don't even have to go too far.
I bet that if people here watching in India would step out of their houses and walk 20 m, they would see an example of this happening in front of their eyes. No, let's just take a completely different example, right? Okay. you know companies everybody is working 40 hours a day u sorry 40 hours a week right and then one person starts working 50 hours because he wants to impress his manager right he doesn't actually do more work he just sticks around in office for longer okay and manager people manager does seem impressed right so now other people have started sticking around longer at some point manager decides that the ones not sticking around longer are being lazy. So he
insists and now at this point everyone is sticking around 50 hours. Nobody has impressed their manager and everyone is a little worse off for no improvement. Right. Yeah. Then this whole process repeats because the first guy starts sticking around 60 hours and that's how you end up with the 70our work week, right? And everybody is actually worse off as we talked about in an earlier episode. Yeah, we have done an episode on why the 70our work week is not necessarily a necessity. Yeah. And same thing is happening with grades. Okay. You have CBSC board and ICE board and different boards are kind of competing with each other. And what happens is that colleges uh at least
some of the colleges in some situations your admissions are based on who has a better grade. Yeah. So then one board starts grading easily more easier and starts giving higher marks and so for a little while their students have a slight advantage. So now the other board starts doing it and soon everybody's grades have increased system is actually worse than before and nobody has an advantage right yeah there is a point when uh kids from the SSC board would get 99% and whatn not I think they still get it but you know I can imagine some of you are saying you know these are like toy examples okay well let me give an example which is
more complicated okay imagine you have a doctor's appointment. Okay, this is what you are thinking that you know half the day is wasted because you are going to get an appointment of a.m. You will go and sit there from 10:00 and then you will be there till 12:30 because no matter what appointment time is given to you, you just like a mess there and doctor sees you much later. Correct? And every patient that I know pretty much assumes that this is because doctors are greedy people who don't care about their patients.
Most people think yeah I do have some friends who are doctors. So I can explain the situation from the doctor's point of view. Right. So I have a friend who gives appointments and takes patient in at exactly that time. Okay. Correct. And the appointments are 15 minutes. So if you have a 10:30 appointment, you get in at 10:30 and you are out by 10:45. is the next patient. Correct? Okay. Everything going smoothly. One patient comes at 10:45. Now what do you do? The patient has to wait. The patient didn't come on time, right? If you do that, the patient is going to leave such a nasty review on Google. Okay. The other thing is that
patient has to wait. What? There is an entire this patient has to go back home. Yeah. Right. You lose that money. Forget the money also I realize that if it's an emergency and the patient wasn't able to make it on time for whatever reason. Sure. No, let's just keep the even in the simplest case no emergencies and all that. The point is that one is that patients come late because they assume that those appointment times were anyway just you know suggestions and not rules because why? Because all the other doctors they know what the situation is.
appointment you'll never go at because 12:30 is when the doctor is going to take you in. Right. Yeah. So the patients are doing it because all the doctors are doing this and the doctors are forced to you know overbook and not take people on time and all that because all the patients are doing that. Right. Correct. If all the patients started going on appointments at time exactly and if all the doctors started taking patients at exactly their time, everyone would be happier. But one doctor switching over is a complete disaster for that doctor. One patient switching over is just going to increase the time waste for that patient because most doctors are not switching over. Right.
Correct. So you can see that nobody can unilaterally fix this system. It requires coordination not just of both sides but all the doctors at the same time and all the patients at the same time right and it is uh even I mean once you go beyond the simple case you realize that it's not as easy as it looks but I do understand the coordination failure there multiple parties can be involved right so imagine university right so you pick the university as students you go to the best university correct okay unfortunately best is defined as best by ranking, right? Which might have nothing to do with what you actually learn there.
Yeah. Okay. Fine. Employers want to hire students from the best universities. So they pick the students from the best universities, right? Colleges want to be the best university. So they optimize to have the highest ranking. Okay? In all three of these, nobody is looking at what you actually learned, right? colleges. I mean if you go and talk to a administrator in a college you will see the kind of stupid and nasty things they do to get high rankings. Yeah, there are consultants who focus on just increasing the college's ranking.
At that point, it is also goodart's law. But now imagine that there is a college who doesn't have a high ranking but it is excellent, best faculty, best learning that students learn far better than anybody else. Okay. Is a student going to go to that college? No. Because the companies are still hiring from the number one ranked college. Correct. Okay. And then are the companies well the students say you know what I am switching over to this one. This is a better college you should start hiring from here.
The company says no because most of the good students are going to the number one ranked college. They're not going to the better college. Correct. Point being that a company can't switch to the better college because the students are going to the college with the ranking and the students can't switch to this worse college because the companies are going to that right. So unless all companies and of course unless all colleges start optimizing for learning and all students switch over to this and all companies switch over to this this can't be fixed.
It's a three-way coordination problem. Correct. Exactly. Right. And same things happens with research right because you as a scientist right you want to publish in the best journal okay and the research labs and universities who are hiring researchers want to hire from the best journals right so now whatever there is some best journals some journals that became best because they are a shelling point yeah I was just thinking as a result what some smart people realized is that let's buy that journal and let's start charging ridiculously high fees for this. Okay, this has actually happened. This is reality of world. Okay, there are people who own journals and they charge ridiculously high fees for anybody to read the
research. But do they pay any of this to the researcher? No. Researcher gives their research to the journal for free. How do they pick which research gets published here? again research other researchers review this for free. Okay. So all the work is done by this researcher. All the selection is done by other set of researchers and these guys are collecting the fees for giving this same research back to the same researchers to read. Yeah. Okay. This is a stupid ridiculous system. Okay. And there has been for 20 plus years a movement to try to fix this problem. It is called open research, open journals and so on, right? Where researchers are saying let's all start
publishing. Let's us control the results, right? So that the research is available to anyone for free. That will be better for the whole world. We will solve medical problems and we will do more innovation because the research is available to everyone. Agreed. The problem is researchers can't shift to the new journals because the people hiring are still going to the old journals and the people hiring can't switch to the new journals because the best researchers are publishing in the old journals. So this is again the old journals the old journals have become a shelling point for the researchers and for the companies hiring those researchers and unless all the companies in the world and all the researchers in the
world switch over on one specific date right and if you start analyzing medical care between insurance doctors and hospitals and patients you will find exactly the same problem. Now everybody hates the system and even insurance companies you might think insurance companies are like laughing all the way to the bank but no if you analyze it they are not making a lot of money either. It's just a waste in the whole system because there are patients overcharging and doing unnecessary procedures because insurance is covering it and a complete mess. Right.
Yeah. I mean the entire uh uh discussion reminds me of the episode we did on shelling points and it seems to me that all of these coordination problems and coordination failures are happening because they've congregated around a wrong shelling point and that's the kind of well not necessarily right they might congregate towards the right shelling point but there is another interesting pattern right so there is a right shelling point where everybody's cooperating everybody is doing well and then like we saw some example one person decides to take a shortcut and that gives him some advantage and then other people start feeling unhappy that why is that person getting an unfair advantage and they start doing
that and then after enough people are doing that the entire system shifts to a new shelling point which is much worse for everyone and even the first one doesn't get any advantage and this thing can repeat until the system gets worse and worse and worse. So even if you start with a good shelling point, you end up with a bad shelling point, right? Yeah. But now we know this problem. We've identified this problem. So there must be a solution to this problem. Not really, right? Because you have to get everyone to agree. Like let's say you go to every university and every researcher and say that from tomorrow let's start publishing in this journal, right?
Some of them won't believe you. Yeah. Some of them will think you are some sort of a scammer. M some of them will believe that you are a good person, good at heart, but a naive idiot. So this is never going to succeed and if they try anything in your scheme that's just a complete waste of their time. Some of them have uh you know other things to worry about. So because of that they are not going to switch over right shifting to a new shelling point is not easy. Right?
Okay. If solving it is not possible then is it possible to prevent it or stop it from happening? Not really. Because you know this is not a system that anyone designed right. It sort of emerges because of people reacting to changing circumstances and some people taking selfish shortcuts and then other people reacting to the selfish shortcuts like so it is like a river right. A river is not designed for navigation or for looking beautiful. A reserve is designed that okay this is you know this is the terrain and I'm just going to flow around it. And that's what is happening when a large number of people is each acting in their own interest. Right.
Lowest energy. Yeah. Lowest energy. So that's what is happening. And the problem is that the severity of the problems is not noticed until it is too late and a shelling point has been established. Right. So yeah. So the problem is unsolvable, the problem is not preventable, which basically means we'll always have the coordination problem. And there's something slightly worse here, right? Which is that when we notice a problem like this, we don't realize it's a coordination problem, right? We explain it to ourselves and to others with reasons like people are dumb or people are selfish or people are evil or something like this, right? Point like we talked about in case of doctors and patients. Patients assume doctors
are dumb and doctors assume patients are dumb, right? Or selfish, right? Uh so we have to understand the system from first principles that's when we realize what are the incentives of the people here, right? Once you understand systems like this from first principles and incentives, then you start noticing that coordination failures are everywhere. We are surrounded by these coordination failures, right? Hm. So you're saying that we will never be able to coordinate? Well, the good news is that we have solved some coordination problems, right? We fixed the ozone layer.
Ozone layer was a problem and it was a coordination problem because you know one country stopping their uh emissions isn't going to help and other countries get an unfair advantage. So everyone was we sat around and we drove coordination and we fixed the ozone layer right vaccination is also a coordination problem right and we fixed it generally all of 20th century was the entire world coordinating to you know reduce deaths due to measles and this and we completely eliminated smallpox. We are very soon going to eliminate polio but the coordination failure is slowly coming back and now measles is making a comeback because some people again are deciding to take a shortcut and they are
not vaccinating their children. Yeah I mean and causing problems for everyone right ah we almost uh had the climate crisis sort of under control with the climate agreements but then again coordination failure happening there. The lockdown was also coordination success. Yeah, sometimes. Yeah, I mean we did coordinate. Some people don't agree that was the right thing to do, but we did coordinate on it. But think about it, right? Every country that doesn't collapse into chaos is a coordination success. Coordination success, right? Also, think about it. Corruption in lower layers of a bureaucracy is also a coordination failure because uh the thing is that their salary is low.
Because of that they're forced to take bribes to survive right and then once there is a shelling point established that you have to bribe them then people are giving bribes and then there is no incentive to increase the salary right? If simultaneously their salaries were increased to a point where they can have a respectable living on that salary and all the people the culture changed key we don't give bribe it is a horrible thing right we can fix low-level bribes right higher level you can't fix it there are other problem but lower level we know it can be fixed because you know western countries Singapore they don't have low-level corruption right whereas it's a it's a tall ask but I know what
you're saying And I can see uh how that can actually be an example of coordination success. Yeah. H so there is possibility of coordination success if we can manage to drive that coordination on all necessary levels. Yeah. So that I mean what does driving coordination require right? First of all goal alignment. You have to ensure that everyone agrees that the problem should be solved. Corruption should be solved. Yes. traffic I mean I can chaos should be solved at higher levels the people who are corrupt wouldn't agree that corruption should be solved right uh I mean people yeah at higher levels you're no longer talking corruption in terms of money at higher levels you're talking corruption
in terms of power exactly and those you will not get uh agreement but say lower level corruption etc right or education system people will agree that it needs to be solved right um otherwise if people have different priorities nothing gets done but let's Say get everyone agree that this needs to be solved. Then you have to get everyone to agree on the method of solving it. Right? Because otherwise what happens is that everyone says corruption should be solved but some want to solve it by increasing salaries other want to solve it by uh adding punishments adding punishments and like uh and things like that. Right?
Third here is where it gets tricky. Right? You have agreed on the goal. You have agreed on the method. There will be cheaters. There will be people trying to take advantage. Right? We saw those failures multiple times. Yeah. You need enforcement, right? And if you don't have enforcement, this is going to become that problem. As in, you know, one person defects, then the next one defects, then everybody defects, everybody is worse off. It is it is a prisoner's dilemma. Iterated prisoners dilemma. But thing is that you started some initiative to coordinate and there is even punishment happening, enforcement happening but then after 6 months you move on to the next shiny thing right so things
why why do the word swatch bharat abhabhyan come to mind naven yes yes right yeah swatch bharatyan started with such fanfare and now you see kachara under the very uh display holding of swatch bharatan you Think about it right that swatch bharatabyhan a charismatic leader driving thing with the help of media is a excellent shelling point and a lot of people agreed with the goal agreed with the methods but we don't have the capacity to enforce right the people taking shortcuts and uh making the kachara speaking of the capacity to enforce the pune municipal commissioner I think recently said that if you have three driving offenses your license will be suspended I'm like sure I want to see that happen.
Correct. We don't have the capacity to enforce that and even if I mean he can through just sheer force of will will he can do it for one month but he cannot do it for a year and he's going to get transferred at some point right so that sorry sir but that is true you know that um there is one way which actually solves all of these problems there is okay I'm interested religion okay religion establish lishes. This is the goal. Very clear to everyone what uh you are supposed to be doing, right? The method is also very very clear. Uh right, what you are supposed to be doing and because you make it sacred, right?
Going against the religious rules is a sin, right? Which is going to affect you in your afterlife. It is going to affect all your descendants. It is going to affect your ancestors and so on, right? So enforcement sort of becomes automatic and persistence right religion is forever. I mean religion survive longer than any other system we know. Religion is one of the greatest methods of driving coordination known to man. I am so torn between saying this is a brilliant idea and channel and I'm leaning towards channel.
A new thing that might emerge we don't know is technology right okay using social media to coordinate right uh things like carbon offset markets which actually create the incentives to enforce it car pooling apps uh crowdfunding platforms these are also you know showing some signs that they can work for coordination right so it doesn't not necessarily that we have to use religion to solve all our problems right essentially society needs to come together and you know sort of coordinate if we want to become a better civilization. If you want to let's not get carried away too much. The answer is yes and no. Right? No. Because too much coordination especially when you are coordinate for the wrong thing it is
extremely dangerous. Right? Because the opposite of coordination failure is not coordination success. It is tyranny. Yeah. Right. So religious persecution, wars, uh I mean think about it, right? Whenever you think enough about the problems of your country, someone is going to bring up a dictator, right? Leo on you was so great because something something that dictator did something something. That is the good part of coordination, right? The dictator is the shelling point around which all coordination happens. But sooner or later you end up with a bad dictator which is showing you the negative sides of coordination. So yeah, you have to be careful and personally I believe all dictators are bad. There is no such thing as a good dictator because
giving that much power to one single person is a bad idea. Has always been a bad idea has been proven throughout history to be a bad idea. I am not going to debate it any further. I just wanted to put this point across. Sure. Yeah. The other thing to keep in mind is that not all problems are problems of coordination failure. You yourself pointed out that some things are about power and domination. So slavery, cast system, colonial exploitation, domestic violation, domestic violence, right? These are not coordination failures. So coordination is not going to solve those problems, right? But overall I think the point is this that we usually look at some mess in society some really messed
up situation and we explain it with reasons like oh people are dumb selfish evil etc. But when you think about it from a first principles point of view you will really realize that it's a coordination failure and it's a difficult problem to solve. It's not because people don't want it solved. Many times people want it solved but coordination is the problem and it's difficult but may be solvable if you at least know the techniques by which to go about it and if you can design the right incentives because I remember we did an episode on understanding incentives and in which we also covered a little bit of incentive design. Yeah.
So see if you can use these first principles to design incentives that can actually help overcome coordination failure in whatever little area of life that you are fighting for. Try it and let us know for sure. And meanwhile while you're doing that tell us how it goes in our WhatsApp community which the QR code is on your screen link is in the description. We'd love to know more about it. Shriant Naven Future IQ