Goodhart's Law is one of those neat formulations that codifies something I've been trying to put my finger on for years: "once a social or economic indicator or other surrogate measure is made a target for the purpose of conducting social or economic policy, then it will lose the information content that would qualify it to play such a role."
That is, once you start measuring GDP as a way of gauging social welfare, people will start to figure out ways to make GDP go up without improving social welfare (say, by swapping dirty financial derivatives). Once Google starts measuring inbound links as a way of evaluating the importance of web-pages, people will figure out how to increase the inbound links to unimportant pages (splogging, blogspam). And once you measure fat or calorie content as a proxy for the healthfulness of food, manufacturers will figure out how to decrease fat and calories without making the food more healthful (reducing fat by adding sugar, reducing calories by adding poisonous artificial sweeteners).
The law was first stated in a 1975 paper by Goodhart and gained popularity in the context of the attempt by the United Kingdom government of Margaret Thatcher to conduct monetary policy on the basis of targets for broad and narrow money, but the idea is considerably older. It is implicit in the economic idea of rational expectations. While it originated in the context of market responses the Law has profound implications for the selection of high-level targets in organisations.
Pfizer’s used a tax-dodge called a “reverse-inversion” to sell itself to a much smaller, Irish pharma company, moving its corporate nationality to Ireland at the stroke of a pen.
US police seized $4.5 billion through civil asset forfeiture (through which police can take money and valuables away from citizens without charging anyone with any crimes) in 2014; in the same period, the FBI estimates that burglars accounted for $3.9B in property losses.
Last February, Lenovo shocked its security-conscious customers by pre-installing its own, self-signed root certificates on the machines it sold. These certificates, provided by a spyware advertising company called Superfish, made it possible for attackers create “secure” connections to undetectable fake versions of banking sites, corporate intranets, webmail providers, etc.
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