Earlier quoted context omitted.
The point is that being forbidden and being illegal are different ideas. It’s bad for society to codify too much behaviour in law. Knowing the law is no substitute for knowing the difference between right and wrong. Regulating Facebook is a great example. Congress could easily react to facebook’s indiscretions by passing new laws here which stifle innovation.
I think I got that part. I was referring to the book the tragedy of the commons (very interesting small book that I recommend) which basically says that when you have N users of some common, even if game theory says that it's in their best individual best interest to protect the common as it is the strategy that maximise satisfaction, if N becomes large enough, someone will start damageing it and soon everyone will d…
But the same principle applies to me and my friends eating cookies. Each of us is incentivized to eat as many as we can - because its a limited resource and they're delicious. But in this case we use social, not legal consequences to punish defectors. If my friends see me eat all the cookies, they will be angry with me. This is a strong enough system to keep us honest.
But imagine if we adding a law here, making it a crime to eat all the cookies. Would that improve our behaviour? No. We might not want to share cookies at all if its possible one of us could go to jail for it.
I think laws are often appropriate. But laws are a blunt instrument. They can't be our only tool to protect the commons.