Though Hamilton's rule is commonly interpreted as relating to two individuals, an alternative interpretation is that it can apply to an altruistic act with respect to a large group of related persons, such as an ethnic group. Then provision of a public good to such a group can be explained by Hamilton's rule. An important class of public goods is the provision of a “legal system” for the group. Provision of this good can have positive feedback effects: as there is more enforcement, it pays to define more complex and valuable rights, and in turn such rights lead to larger and more effective societies. As societies become larger, the ability to enforce rights increases because the number of enforcers increases. However, as in many other human activities, there may be two conflicting systems for provision of this good. There is the evolutionarily old system that would involve face to face transactions, often with kin. There is also a newer, rule-governed legal system for impersonal exchanges. These may be in conflict. The older rules may sometimes frustrate the more efficient newer system. Moreover, those persons who benefit from kin-based transaction networks may resist the creation of a formal legal system. I also note that altruism within the group may lead to xenophobia outside the group and thus to ethnic conflict. Finally, I discuss some evidence consistent with this analysis.