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Well, at least I admitted I didn't know. :-)

As to your second point, not all Nash equilibria are beneficial. Gang formation is a lot like a Keynesian beauty contest in that appealing to the basest parts of our nature is the safest bet, and I think we can agree that this has nothing to do with anything good.

People do not need to "band together to survive" in that sense. Those gangs were mainly shaking down businesses in their own neighborhoods anyway, and everybody is a lot better off now that they're history.

So now you’re trying to say we should just go back to 1930’s New York (and prisons!) and tell them they should just stop forming those ethnic gangs because clearly they don’t actually need to do that, and they’d be better off without them?

Hey, you’re welcome to if you want. Time travel may be hard, but I’m sure someone would let you into your local Folsom equivalent if you asked.

We do tell people not to form ethnic gangs, it is called "the fight against organized crime."