Quotulatiousness

September 4, 2012

TANSTAAFL is not the whole story

Filed under: Economics, History, Liberty — Tags: , , , — Nicholas @ 12:25

At The Freeman, Sandy Ikeda points out that the handy little saying “There ain’t no such thing as a free lunch” is not enough to explain modern prosperity::

Economics teaches us the importance of TANSTAAFL and capital investment. Again, the trouble is they are not the whole truth.

As I’ve written before, however, there is such a thing as a free lunch, and I don’t want to repeat that argument in its entirety. The basic idea is that what Israel M. Kirzner calls “the driving force of the market” is entrepreneurship. Entrepreneurship goes beyond working within a budget — it’s the discovery of novel opportunities that increase the wealth and raises the budgets of everyone in society, much as the late Steve Jobs or Thomas Edison or Madam C.J. Walker (probably the first African-American millionaire) did. Yes, those innovators needed saving and capital investment by someone — most innovators were debtors at first — but note: Those savings could have been and were invested in less productive investments before these guys came along.

As McCloskey, as well as Rosenberg and Birdzell, have argued, it isn’t saving, capital investment per se, and certainly not colonialism, income inequality, capitalist exploitation, or even hard work that is responsible for the tremendous rise in economic development, especially since 1800.

It is innovation.

And, McCloskey adds, it is crucially the ideas and words that we use to think and talk about the people who innovate — the chance takers, the rebels, the individualists, the game changers — and that reflect a respect for and acceptance of the very concept of progress. Innovation blasts the doors off budget constraints and swamps current rates of savings.

[. . .]

Indeed, innovation is perhaps what enables the market economy to stay ahead of, for the time being at least, the interventionist shackles that increasingly hamper it. You want to regulate landline telephones? I’ll invent the mobile phone! You make mail delivery a legal monopoly? I’ll invent email! You want to impose fixed-rail transport on our cities? I’ll invent the driverless car!

McCloskey’s book has shown up a few times on the blog.

Paul Wells writes a political obituary for Jean Charest

Filed under: Cancon, Politics — Tags: , , — Nicholas @ 10:25

If Jean Charest somehow overcomes the odds (and the most recent polls), we can just file this column away for the next time:

He’s mostly been a lousy premier. His dreams of “re-engineering” Quebec soon went by the wayside. He spent most of his first mandate struggling to show he even understood Quebec. He stalled on important reforms—he left university tuitions, for instance, frozen until 2008. He did not move to clean up party financing, and when the allegations against his own government mounted, he seemed honestly to believe it was the accusers who were the problem. He stalled until he was weak instead of moving to reform when he was strong.

But he hung on, for as long as any modern Quebec premier has hung on. While he was hanging on, the constitutional debates that made Canadian public life so joyless and distracted from 1976 to, say, 2000 did not reconvene. Charest had no interest in making the argument his predecessors Robert Bourassa and Claude Ryan favoured: that Canada did not deserve to survive if its Constitution could not be amended to suit the whims of Outremont intellectuals. Montreal’s economy recovered, and today the city’s downtown looks better than it has in 40 years, if you survive the drive in without having half of an overpass fall on you. Nothing’s perfect.

On his way to defeat, he implemented important reforms in the way most reforms actually happen in the real world: under fire and in a desperate attempt to avoid further humiliation. The Charbonneau commission of inquiry into corruption in the construction agency, the belated reforms to university financing, the woefully delayed attempts to pay what it takes to have public infrastructure that doesn’t crumble overhead: none of these was his bright idea, but they are in place, almost despite him, and his successors will benefit. He is Quebec’s Gorbachev, a reformer despite himself, swallowed up by forces he hoped only to contain. Like Gorbachev, he will look better in hindsight than he feels while it’s happening.

Enoch Powell said all political lives end in failure. What matters is the word “end.” Public life in a democracy is so cruel that taking a long time to fail is its own kind of success.

Is Charest’s political life really ending? He’s only 54. He once had a future in Ottawa. I cannot imagine he still does. But in his ungainly fashion he has defied imagination before. All I know is that he has been good for more surprises than almost any politician I’ve covered.

US Army’s JTRS program a poster child for development failure

Filed under: Bureaucracy, Military, Technology, USA — Tags: , , , , — Nicholas @ 09:35

Strategy Page has the details:

It’s been eleven months now since the U.S. Army cancelled its 15 year effort to develop the JTRS (Joint Tactical Radio System). This program cost over $6 billion and has been a major embarrassment for the U.S. Department of Defense. Actually, JTRS still exists, on paper, but its goal, to provide better combat radios, has been accomplished by adopting civilian radios that do what the troops needed done and calling it JTRS. In the time the army spent working on JTRS some $11 billion was spent on buying more radios using existing designs, and a lot of off-the-shelf equipment incorporating stuff JTRS was supposed to do.

JTRS was yet another example of a military development project that got distracted, and bloated, trying to please everyone. There was, in a word, no focus. There’s been a lot of this in the last decade. That’s what killed the Comanche light attack helicopter, the Crusader self-propelled howitzer, FCS (Future Combat System), the Seawolf SSN, the DDG-1000 destroyer, B-2 bomber, F-22 fighters and several military space satellite projects. In all cases some of the technology developed was put to use in cheaper systems and sometimes a few of the cancelled systems were built (three Seawolfs, three DDG-1000s, 21 B-2s and 187 F-22s). These cancellations and cutbacks saved over half a trillion dollars. That goes a long way towards paying for projects that were not cancelled and are nearly half a trillion dollars over budget. But overall these failures were expensive and embarrassing.

JTRS, however, was the poster child of what usually goes wrong and how it impacts the combat troops. After all, radios are something personnel in all services use a lot. The main problem with JTRS was that the troops needed digital (for computer stuff) and analog (traditional radio) communications in one box and it had to be programmable, in order to handle new applications and the need to communicate with other radio types. That’s what JTRS was supposed to do but it never happened. The procurement bureaucracy and government contractors consumed over six billion dollars but never quite got anything useful out the door.

Want to ensure that your shipment is opened and fully inspected at least once?

Filed under: Government, Humour, Liberty, USA — Tags: — Nicholas @ 09:01

If you’re not happy unless your package has been thoroughly inspected by trained professionals on its way to the destination, you’ll want to stock up on this new item available from the Electronic Frontier Foundation:

True-but-misleading factoid: “7 kg Of Grain To Make 1 kg Of Beef”

Filed under: Economics, Environment, Food, Health — Tags: — Nicholas @ 00:05

Tim Worstall on the mis-use of a vegetarian-friendly data point:

I asked Larry Elliott where the number came from and was sent this from Fidelity Investments (not online so far as I know).

    The demand for more protein has a significant knock-on impact on grain demand. Livestock is reared on grain-feed, making production heavily resource intensive. Indeed, it takes 7 kilograms of grain to produce just 1 kilogram of meat. As demand for meat rises, this increases the demand for and prices of feedstock — these increased costs of productions flow back to the consumers in the form of higher meat prices. Adding to the upward pressure on feedstock price and much to the dislike of livestock farmers, have been US environmental regulations (the Renewable Fuel Standard) that require a proportion of corn crops be used for the production of bio-fuel.

So, case closed, right? We all need to give up eating meat to save Mother Gaia? Not necessarily. The numbers given are accurate, but only in a particular context: that of raising meat for the US (and, probably, Canadian) market. The rest of the world doesn’t do it this way:

It is only in US or US style feedlot operations than cattle are fed on this much grain. Thus the equation is useful if you want information about what is going to happen with US cattle and grain futures: for that’s the general production method feeding those cattle futures. But very little of the rest of the world uses these feedlots as their production methods. I’m not certain whether we have any at all in the UK for example, would be surprised if there were many in the EU. Around where I live in Portugal pigs forage for acorns (yes, from the same oak trees that give us cork) or are fed on swill, goats and sheep graze on fields that would support no form of arable farming at all (they can just about, sometimes, support low levels of almond, olive or carob growing). Much beef cattle in the UK is grass fed with perhaps hay or silage in the winters.

My point being that sure, it’s possible to grow a kilo of beef by using 7 kilos of grain. But it isn’t necessary. The number might be useful when looking at agricultural futures in the US but it’s a hopelessly misguiding one to use to try and determine anything at all about the global relationship between meat and grain production. And most certainly entirely wrong in leading to the conclusion that we must all become vegetarians.

Which brings us to the lesson of this little screed. Sure, numbers are great, can be very informative. But you do have to make sure that you’re using the right numbers. Numbers that are applicable to whatever problem it is that you want to illuminate. If you end up, just as a little example, comparing grain to meat numbers for a specific intensive method of farming really only used in the US then you’re going to get very much the wrong answer when you try to apply that globally.

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