… government cannot do just one thing, and some of the repercussions of what it chooses to do will be, as it were, mistakes in the perspective of the public even if the initial action were not. But the public’s dissatisfaction with these adverse outcomes can make itself known only via the politically charged process of complaint to authorities, petition for redress of grievance, lobbying, payoffs to public officials, and all the rest of the endlessly complex apparatus for the operation of the government’s political and bureaucratic setup. One is lucky to get any constructive response at all from the government, whose effective control is apt to be in the hands of entrenched politicians, bureaucrats, and private-sector cronies in the various iron triangles that pervade the state at large. If one does succeed in getting a constructive response, it is likely to come forth only after years of expensive and time-consuming delays.
This lack of an effective feedback-incentive mechanism is among the greatest flaws of all government activities. Markets, in contrast, are certainly not perfect relative to the model criteria economists have devised to evaluate them, but they are undoubtedly superior in the operation of their feedback information and response to mistakes. To remove an activity from the market and place in under government control is to ensure that henceforth mistakes, whether they arise from bad judgement, corruption, or ignorance, will not elicit a proper or timely response. In the government realm, mistakes and the slow, counter-productive responses, like doomed lovers, sink together slowly in the quicksand of bad actions being made ever worse by ill-fated reactions.
Robert Higgs, “Dealing with Mistakes: Government Action versus Private Action”, The Beacon, 2016-08-17.
May 28, 2018
QotD: Correcting mistakes in private and public enterprises
May 23, 2018
May 21, 2018
Work in high tech? You’ll instantly recognize this office
Alistair Dabbs on the utterly interchangeable (except for the bogs) modern high tech office suite:
As an itinerant freelancer, my work takes me to a variety of tech-savvy business premises. And while small companies each have their own style of office layout, every larger organisation from mid-size to corporate looks almost exactly the same as another.
Except for the toilets. You can learn a lot about a business by its bogs.
So as I turn up for an on-site booking and sit for a short while in a reception space that has been arranged identically to those depicted in every business furniture catalogue ever printed, later to stride through yet another open-plan office of the same old rows of grey desks and the same old blue carpet tiles, I am overwhelmed by the tedium of déjà vu.
So on arriving at the designated meeting room – always featuring a frosted glass wall, a boardroom-style table with a faux teak effect surface and luxury adjustable chairs that refuse to be adjusted unless you violently bounce up and down on them like an over-excited child on a Space Hopper – I drop my things in the corner furthest from the door and enquire about using the washroom facilities.
As I am given verbal directions for the nearest toilet, I make a cursory check under the table which has been designed for up to 20 persons and confirm, yes, there are just TWO power sockets, as per usual, and no extension cable of any description. A quick glance behind the massively undersized TV at the end of the room reveals another six wall sockets that are, as I confidently expected, all occupied by plugs already – one for the TV and the other five for various components of the impossibly complicated video conferencing system that no one knows how to use, least of all the IT department that had lobbied strongly against its purchase in the first place.
So far, so identical. Now let’s find out what this place is really like.
[…]
Unlike this particular unfortunate, I return from the grunting rooms this day refreshed and with a spring in my step. My face smarts invigoratingly with aftershave and creamy odours waft from my gesticulating soft palms – vanilla from the left, coconut from the right.
Back in the meeting room, I am soon brought back to Earth and my surroundings merge into the amorphous generic semblance of every other office building in the western world.
A large cupboard that does not match the rest of the furniture has been installed in the most awkward place to squeeze past; it is locked but almost certainly contains nothing but a layer of dust, a torn corner from a Post-It note and a single paperclip. The aircon has just two settings: Arctic or Sahara. Everyone is forced to use a Guest Wi-Fi login whose permissions have been devised by a recent graduate of a free Cyber Security MOOC to prevent access to personal emails, cloud drives and the internet in general. A ceiling light flickers every two minutes. Halfway into the meeting, the room begins to vibrate to the intense scream of a workman’s drill on the other side of a wall, and continues for the next six hours.
I could be anywhere.
QotD: The key difference between private and public enterprise is effective feedback
State bureaucracies are notoriously inept in reacting constructively to their own mistakes. For example, they continuously seek to increase their budgets, staffs, and authority, even when their projects have proven counter-productive or disastrous. It’s almost as if they promote their institutional objectives best by fouling up their programs, then coming back to their funding sources to explain that they cannot succeed unless they receive more resources to do so. Thus do public agencies pour money and effort down the rat hole for years on end, wasting the public’s money every step of the way. The feedback system in this case is obviously perverse so far as serving the public interest is concerned.
Such perversity is practically guaranteed in government operations because government operates outside the realm of private property rights, the price system, and the profit-and-loss accounting that constitute a feedback system in the market realm. In the market, money-losing projects do not persist indefinitely. Their owners and managers eventually decide against throwing good money after bad and close the unprofitable operations. Owners who refuse to read and respond correctly to the clear message transmitted by profits and losses suffer reductions of their own wealth, which serves as a powerful incentive to act correctly and to rectify the mistakes they have made before even more wealth goes down the drain.
Robert Higgs, “Dealing with Mistakes: Government Action versus Private Action”, The Beacon, 2016-08-17.
May 18, 2018
Missing the entire point of the capitalist system
At the Continental Telegraph, Tim Worstall tried to explain why the UK Commons committee looking into the Carillion collapse appear to misunderstand the current economic system in a big way:
Frank Field and his mates on the Commons work and pensions committee really do have some ‘splainin’ to do here. For they’ve entirely missed the structure of our current society and the reasons why that structure both exists and works. They go on about the greed at Carillion, the corporate vanity, the bad management. Then they complain that it’s gone bust. Finally, that we need a management system to prevent corporate greed and vanity from bankrupting companies.
No you fools, that Carillion went bust is the very point and purpose of the system. This is how we leach corporate vanity and greed out of the system, those who practise it leave the system.
[…]
What’s being missed is that this is good. Not the greed, obviously, for that’s something ever present in human nature. But what happens to those who act it out, bankruptcy.
[…]
And haven’t they come up with a likely candidate for making things worse? That a committee of bureaucrats should be making commercial decisions for companies instead of the directors and management. Really, that’ll work wonders, won’t it?
[…]
People who screw up, for whatever reason, disappear from the economic stage. Which is what we want of course, those who screw up to leave said economic stage. We have actually tried bureaucracy as a method of managing this and as the persistence of the National Coal Board, the very existence of British Leyland, show, that’s a system which doesn’t work. Either of those organisations would have disappeared at least a decade before they did without bureaucratic interference. Indeed, that’s how the bureaucracy’s actions were justified, to “save” them. That is, markets are more ruthless at weeding out failures than bureaucracies are.
What have we here? A complaint that markets weeded out a failure and to stop this we must have bureaucracy?
Carillion going bust is the very point of our having a market based economic system. Sure, they screwed up – bye bye Carillion. See, it works!
So why the hell are Frank Field and friends complaining? We already have a system which ensures that failures go kablooie – bankruptcy in our market economy.
May 12, 2018
Grocery stores as visible indicators of economic progress
Steven Horwitz sings the praises of the ordinary grocery store (in North America, anyway):
I have written much about the extraordinary increase in living standards that Americans have enjoyed over the last century, and especially in the last forty years. For me, one of the best indicators of this incredible progress can be seen in the evolution of the grocery store. A great treatment of this evolution is food writer Michael Ruhlman’s recent book Grocery.
The grocery store is in many ways a metaphor for the increase in American living standards experienced by both rich and poor. Those of us who remember the 1970s have perhaps the best sense of this evolution, as we can remember what even good grocery stores were like back then. Stores were generally small, not well lit, not always clean, limited in the variety of goods they stocked (especially fresh produce), and lacking in the prepared foods we take for granted at most grocery stores today.
The 21st century American grocery store, by contrast, is a marvel of higher quality, lower cost, and expanded variety. There is simply no comparison between the quality of the produce, meats, and bread available at even a large middle-market chain like Kroger today and what was available anywhere in the 1970s. Measured in terms of labor hours required for purchase, food has generally never been cheaper. We see that today, as poverty in America is far more likely to be associated with obesity than with being underweight.
The growth in the variety of products available in the market in general is an excellent, if underappreciated, indicator of economic progress, reflecting as it does the Smithian insight that the division of labor is limited by the extent of the market. With growth comes more wealth and larger markets that enable producers to have a market for more finely differentiated products.
An example from the evolution of the grocery store illustrates this point. In the 1970s, there were maybe five or six kinds of potato chips (regular, barbecue, sour cream and onion, ruffled, tortilla chips, and the stuff in the can). Today, the typical grocery store has a potato chip aisle that offers dozens of differentiated products along numerous dimensions. This increase in variety allows consumers to satisfy their preferences more precisely, increasing their subjective well-being. You want your gluten-free, lactose-free chocolate chip cookies? You can probably find them. You want your throwback taco-flavored Doritos? They’re there. The expansion of variety in the typical grocery store has dramatically increased the subjective well-being of American consumers in ways that macroeconomic measures like GDP cannot capture.
Toys Were Us – Now Let’s Build Something Better!
Foundation for Economic Education
Published on 10 May 2018Don’t get nostalgia goggles stuck on your face. The closing of retail stores will be a net win!
Cryptocurrency scammers
A high proportion of initial coin offerings are nothing but scammers doing what scammers do best, says Nouriel Roubini:
Initial coin offerings have become the most common way to finance cryptocurrency ventures, of which there are now nearly 1,600 and rising. In exchange for your dollars, pounds, euros, or other currency, an ICO issues digital “tokens,” or “coins,” that may or may not be used to purchase some specified good or service in the future.
Thus it is little wonder that, according to the ICO advisory firm Satis Group, 81% of ICOs are scams created by con artists, charlatans, and swindlers looking to take your money and run. It is also little wonder that only 8% of cryptocurrencies end up being traded on an exchange, meaning that 92% of them fail. It would appear that ICOs serve little purpose other than to skirt securities laws that exist to protect investors from being cheated.
If you invest in a conventional (non-crypto) business, you are afforded a variety of legal rights – to dividends if you are a shareholder, to interest if you are a lender, and to a share of the enterprise’s assets should it default or become insolvent. Such rights are enforceable because securities and their issuers must be registered with the state.
Moreover, in legitimate investment transactions, issuers are required to disclose accurate financial information, business plans, and potential risks. There are restrictions limiting the sale of certain kinds of high-risk securities to qualified investors only. And there are anti-money-laundering (AML) and know-your-customer (KYC) regulations to prevent tax evasion, concealment of ill-gotten gains, and other criminal activities such as the financing of terrorism.
In the Wild West of ICOs, most cryptocurrencies are issued in breach of these laws and regulations, under the pretense that they are not securities at all. Hence, most ICOs deny investors any legal rights whatsoever. They are generally accompanied by vaporous “white papers” instead of concrete business plans. Their issuers are often anonymous and untraceable. And they skirt all AML and KYC regulations, leaving the door open to any criminal investor.
Of course, for a significant number of people, not having the state involved in their investment is an attraction rather than a drawback. And not just criminals, but people who live in jurisdictions with uncertain reliance on the rule of law (not to mention Russia by name), where property rights are not so much “rights” as “privileges to the right sort of people”.
QotD: Women in I.T.
… any woman who wants to be in a STEM field should be able to get as far as talent, hard work, and desire to succeed will take her, without facing artificial barriers erected by prejudice or other factors. If there are women who dream of being in STEM but have felt themselves driven off that path, the system is failing them. And the system is failing itself, too; talent is not so common that we can afford to waste it.
Now I’m going to refocus on computing, because that’s what I know best and I think it exhibits the problems that keep women out of STEM fields in an extreme form. There’s a lot of political talk that the tiny and decreasing number of women in computing is a result of sexism and prejudice that has to be remedied with measures ranging from sensitivity training up through admission and hiring quotas. This talk is lazy, stupid, wrong, and prevents correct diagnosis of much more serious problems.
I don’t mean to deny that there is still prejudice against women lurking in dark corners of the field. But I’ve known dozens of women in computing who wouldn’t have been shy about telling me if they were running into it, and not one has ever reported it to me as a primary problem. The problems they did report were much worse. They centered on one thing: women, in general, are not willing to eat the kind of shit that men will swallow to work in this field.
Now let’s talk about death marches, mandatory uncompensated overtime, the beeper on the belt, and having no life. Men accept these conditions because they’re easily hooked into a monomaniacal, warrior-ethic way of thinking in which achievement of the mission is everything. Women, not so much. Much sooner than a man would, a woman will ask: “Why, exactly, am I putting up with this?”
Correspondingly, young women in computing-related majors show a tendency to tend to bail out that rises directly with their comprehension of what their working life is actually going to be like. Biology is directly implicated here. Women have short fertile periods, and even if they don’t consciously intend to have children their instincts tell them they don’t have the option young men do to piss away years hunting mammoths that aren’t there.
There are other issues, too, like female unwillingness to put up with working environments full of the shadow-autist types that gravitate to programming. But I think those are minor by comparison, too. If we really want to fix the problem of too few women in computing, we need to ask some much harder questions about how the field treats everyone in it.
Eric S. Raymond, “Women in computing: first, get the problem right”, Armed and Dangerous, 2010-07-15.
May 11, 2018
“65% of managers add zero or negative net value to the company” Jordan Peterson
TheArchangel911
Published on 21 Sep 2017to see the full lecture go to https://youtu.be/Q7GKmznaqsQ
In this lecture, he talks about the thorny problem of predicting performance: academic, industrial, creative and entrepreneurial); about the practical utility of such prediction, in the business and other environments; about the economic value of accurate prediction (in hiring, placement and promotion) — which is incredibly high.
Intelligence (psychometrically measured IQ) is the best predictor of performance in complex, ever changing environments. Conscientiousness is the (next) best predictor, particularly in the military, in school and in conservative businesses. Agreeable people make better caretakers; disagreeable people, better disciplinarians and negotiators (within reasonable bounds). Open people are artistic, creative and entrepreneurial. Extraverts are good socially. Introverts work well in isolation. People low in neuroticism have higher levels of tolerance for stress (but may be less sensitive to real signs of danger).
Match the career you pursue to your temperament, rather than trying to adjust the latter. Although some adjustment is possible, there are powerful biological determinants of the five personality dimensions and IQ (particularly in environments where differences are allowed to flourish).
May 8, 2018
Working at Rolling Stone in the early days
According to Joe Hagan’s Sticky Fingers, the magazine was everything a well-heeled sexual predator could possibly want in a workplace:
Last fall, as the first #MeToo scandals scrolled across the cable news chyron, I happened to be reading Sticky Fingers, Joe Hagan’s superb new biography of Rolling Stone founder Jann Wenner. As Hagan describes the magazine’s early years in the 1960s, just about everyone on the staff — male and female — was having sex with everyone else, under and on top of desks, on the boss’s sofa, wherever the mood struck them. Hagan quotes one writer claiming that Wenner told him that “he had slept with everyone who had worked for him.” Compared with Wenner and the early Rolling Stone crowd, Harvey Weinstein was a wanker.
Did the women of Rolling Stone consent to the goings-on at what today would be regarded as an illegal den of workplace harassment? They appeared to. In the company’s bathroom, women employees scribbled graffiti ranking male staffers for their sexual performance — not, as they do on college campuses today, the names of rapists in their midst. Jane Wenner, Jann’s wife, was known to judge job seekers by “whether a candidate was attracted to her” and, in some cases, to test the depth of their ardor personally. Photographer Annie Leibovitz, who made her name at Rolling Stone, routinely slept with her subjects and was rumored to have had threesomes with the Wenners.
Different as they seem, there’s a direct line between that revolutionary time and our own enraged, post-Weinstein moment. What started out as a clear-cut protest against workplace harassment has mutated into a far-reaching counterrevolution — a revolt against the combustible contradictions that the sexual revolution set in motion 60-odd years ago.
QotD: Pay inequality
It probably doesn’t come as news that airline companies pay pilots more than cabin crew — but according to the dogma of the gender wage gap, we’re supposed to find this fact troubling. The British government now requires companies to report their raw gender gap — that is, the difference in the median hourly wages earned by their male and female employees. Ignoring occupational differences, seniority, employment history, hours worked, or any of the countless other factors affecting salaries, these data are misleading at best. Nevertheless, when budget airline EasyJet reported a 51 percent pay gap between its male and female employees, the company knew that its reputation perched on the edge of a PR abyss.
And that’s the whole point of the exercise: simplify statistics to shock people at the seeming injustice done to women and shame companies into action; refuse to compare similar job functions; ignore the fact that, like every other airline, EasyJet’s pilots are disproportionately male, while their cabin crews skew female; forget that almost all carriers compete for the same 4 percent of the world’s female pilots; and whatever you do, don’t mention that the EasyJet CEO, who was in charge of this bigoted organization and also its highest-paid employee until retiring earlier this year, was a woman. The company should be branded with a scarlet “51 percent” until it … does what? Cuts pilots’ pay? Hikes the salaries of female cabin crew? Hires male attendants instead of female? Goes bankrupt?
Kay S. Hymowitz, “Equal Pay Myths: Activists for wage parity ignore stubborn truths”, City Journal, 2018-04-09.
May 6, 2018
QotD: The hierarchy of success for rock groups
How do you define success for a rock group? The nature of the ladder is very clear at the bottom: the rungs are marked with “playing competently in the same key,” “playing for money for the first time,” “becoming spiritual leaders of a local music scene,” “having a national hit single” … it is all easy to work out. At the top, though, the standards are no longer technical and commercial. They become historical.
Above the level of “mere” successful hit-makers, there are artists whose core discography, or even their entire career in the studio, becomes part of a larger cultural story — the Led Zeppelins, Black Sabbaths and Kinks. And there’s a level above that, at which a group’s individual tracks become the subject of extensive study, entire mini-literatures — where even B-sides and cast-offs attract interest, and every move, every day, is extensively documented. That level’s pretty much Bob Dylan and the Beatles.
Colby Cosh, “The improbable media journey of The Tragically Hip”, National Post, 2016-08-22.
