Lately, I have been mightily irritated by the politically-correct campaign to permanently banish the old Confederate flag, and all music associated with the Southern cause, or any symbol that it once existed, before it was comprehensively defeated a century-and-a-half ago. Memorials of Robert E. Lee are being treated as memorials of Adolf Q. Hitler.
It strikes me that even under the old lamentable cotton-plantation slave system of the South, people mixed and got to smell one another — rich and poor, black and white, genteel and grotesque. That, the most forgotten slogan of the Dixie Land was her war cry: “Down with the Eagle, and up with the Cross!” That, it is the Cross of Saint Andrew astride the old Confederate flag that is most galling to the hyper-secular, liberal mind. That, the greatest triumph of the Union propaganda was to tar all those flag-bearers in the way our contemporary media demean all dissenters from the current party line as “racists,” “sexists,” “phobes,” and nothing more. That, the principal crime of the South was to stand by the wording of the U.S. Constitution, and from the beginning, to get in the way of a grand national scheme for social engineering, which triumphed with Lincoln (though hardly a liberal by the standards of today). That, in the Southern view, the eagle swooped down on them, with claws.
Something similar is now happening in the division of “Red States” and “Blue”: in an America from which the Christian conception of the “common man” is being systematically expunged. All who resist the categories to which they have been assigned are instinctively rebelling; “victim” and “oppressor” alike. This is what “common men” will do, when tarred and pressed, often without fully understanding why they rebel. They remember, however obliquely, whose sons and daughters they are. That, no matter how low in social station, they are Christ’s, and not the segregated chattels of some malicious and incompetent — and intentionally divisive — Washington Nanny.
The recovery of USA, and more largely, the recovery of Christendom, turns on the recovery of this conception of the “common man” — as Man, not as member of a client group. This has nought to do with “equality,” for it is none of a government’s business to help one group get even with another. Rather it is to serve man as man. This is a matter that goes deeper even than slavery, as Saint Paul explained. It is an unarguable, even mystical point. Where that conception survives, of the common in man, Christendom persists, and can potentially flourish.
David Warren, “The common man”, Essays in Idleness, 2016-08-29.
June 4, 2018
QotD: Pushing the Confederacy down the memory hole
June 3, 2018
QotD: Price controls just make things more expensive in real terms
One of the perennial, and pernicious, political ideas is that if things are “too expensive” then we can fix that by just passing a law to make them less expensive. We see this just about everywhere and its sadly not limited to the more idiot sector of the left. Although of course it thrives there. Venezuela is a complete and total mess because Hugo Chavez and Nicolas Maduro thought they would make life cheaper by limiting prices by law. Payday lending doesn’t exist in certain states because people like Elizabeth Warren insist that interest rates should not go “too high”. Those usury laws mean that interest rates are infinite – as the lending simply isn’t available at all. And yes, people over on the right have made the same sort of mistake – Nixon tried to fix gas prices after all.
Price fixing just always leads to things getting more expensive. As David Friedman explains:
The result – that price control results in a cost to the consumer, pecuniary plus nonpecuniary, higher than the uncontrolled price – does not depend on the details of the [supply and demand] diagram. Consumers cannot consume more gas than producers produce, so the nonpecuniary cost must be large enough to drive quantity demanded down to quantity supplied. Quantity supplied is lower than without price control, so cost to the consumer must be higher.
Tim Worstall, “Memo For Would Be Price Fixers – Price Controls Always Make Things More Expensive”, Forbes.com, 2016-08-16.
June 2, 2018
QotD: The Dunning-Kruger Effect
In the early hours of April 20 1995, police knocked on the door of McArthur Wheeler and arrested him for holding-up two Pittsburgh banks the previous day. Wheeler could hardly have been surprised that the police were on to him: wearing no mask or disguise, he had ambled into the banks during business hours and brandished a gun in full view of security cameras. Nevertheless, he was astonished, protesting “but I wore the juice!” Wheeler had formed the erroneous belief that lemon juice rendered people invisible on video.
Wheeler is now a legend in psychology, since it was his regrettable escapade that inspired two psychologists, David Dunning and Justin Kruger, to figure out whether we have a good sense of our own strengths and weaknesses. Dunning and Kruger set tests of grammar, logic and even having a sense of humour to a group of undergraduates. Then they asked them how they stacked up to others in the group. Was their grasp of logic and grammar better or worse than average? Were they better able than other students to distinguish funny from unfunny jokes?
Most students thought that they were above-average logicians, grammarians and wits but the Dunning-Kruger effect is not mere overconfidence. The competent people in the study had a reasonable grasp of where they stood in the pecking order. The incompetent ones were blissfully unaware of their incompetence. The good students knew that they were good; the bad students had no clue that they were bad.
Perhaps because Dunning and Kruger opened their 1999 research paper with the story of McArthur Wheeler, the Dunning-Kruger effect has now become a popular insult in some corners of the internet. We chuckle at people who are far too stupid to know that they are stupid. Unfortunately, such mockery misses the subtlety and universality of the effect. All of us are incompetent in some areas. When we stray into them, the Dunning-Kruger effect may be lurking.
The fundamental problem is a person trying to diagnose his own incompetence is — almost by necessity — likely to be missing the skills needed to make that diagnosis. Not knowing much grammar means you’re poorly placed to diagnose your ignorance of grammar.
Tim Harford, “Can trivia help us to be less ignorant of our own ignorance?”, TimHarford.com, 2016-09-06.
June 1, 2018
QotD: Travelling with a political campaign
One of the constant nightmares of traveling with politicians is the need to keep them in sight at all times. Every presidential campaign has its own fearful litany of horror stories about reporters – and, occasionally, even a key staff member – who thought they had plenty of time to “run across the street for a quick beer” instead of hanging around in the rear of some grim auditorium half-listening to the drone of a long-familiar speech, only to come back in 20 minutes to find the auditorium empty and no sign of the press bus, the candidate or anybody who can tell him where they went. These stories are invariably set in places like Butte, Buffalo or Icepick, Minnesota, on a night in the middle of March. The temperature is always below zero, there is usually a raging blizzard to keep cabs off the street, and just as the victim remembers that he has left his wallet in his overcoat on the press bus, his stomach erupts with a sudden attack of ptomaine poisoning. And then, while crawling around on his knees in some ice-covered alley and racked with fits of projectile vomiting, he is grabbed by vicious cops and whipped on the shins with a night stick, then locked in the drunk tank of the local jail and buggered all night by winos.
These stories abound, and there is just enough truth in them to make most campaign journalists so fearful of a sudden change in the schedule that they will not even go looking for a bathroom until the pain becomes unendurable and at least three reliable people have promised to fetch them back to the fold at the first sign of any movement that could signal an early departure. The closest I ever came to getting left behind was during the California primary in 1972, when I emerged from a bathroom in the Salinas railroad depot and realized that the caboose car of McGovern’s “victory train” was about 100 yards further down the tracks than it had been only three minutes earlier. George was still standing outside on the platform, waving to the crowd, but the train was moving – and as I started my sprint through the crowd, running over women, children, cripples and anything else that couldn’t get out of my way, I thought I saw a big grin on McGovern’s face as the train began picking up speed….… I am still amazed that I caught up with the goddamn thing without blowing every valve in my heart, or even missing the iron ladder when I made my last-second leap and being swept under the train and chopped in half by the wheels.
Ever since then I have not been inclined to take many risks while traveling in strange territory with politicians. Even the very few who might feel a bit guilty about leaving me behind would have to do it anyway, because they are all enslaved by their schedules, and when it comes to a choice between getting to the airport on time or waiting for a journalist who has wandered off to seek booze, they will shrug and race off to the airport.
Hunter S. Thompson, “Fear and Loathing on the Campaign Trail ’76: Third-rate romance, low-rent rendezvous — hanging with Ted Kennedy, Jimmy Carter, and a bottle of Wild Turkey”, Rolling Stone, 1976-06-03.
May 31, 2018
QotD: Difficulties in using self-reported data
Nick Cohen, over in the Guardian, is busy telling us all that we must drink less and that Scotland raising the minimum price of alcohol (hitting poor people’s cheap cider and bargain booze, but not directly affecting craft lagers, appellation d’origine contrôlée wines and artisan gin) is a Good Thing because the industry makes its profits by exploiting addicts who are drinking themselves to death en masse.
It is a truth universally unacknowledged that, like drugs cartels, the drink industry makes most of its money from addicts. It thrives on hooked customers, who put boosting the brewers’ profits before their and their families’ health and happiness. Sixty per cent of alcohol sales – worth £27bn a year in England – are to “increasing risk” drinkers taking more than 21 units of alcohol a week, in the case of men (about 10 pints or two bottles of wine), and “harmful” drinkers taking more than 50… Twenty one units (14 for women) does not sound much in my world of journalism, but it is a sign of people who cannot go a day without a shot of their drug, which is as good a definition of an addiction as any.
Now, there’s a question there about who decided what that “risk” was and how large it was. Cohen gets into the Salvation Army-style temperance-league apocalyptic warnings about the horrors of heavy drinking and warns that by the time you’re knocking back fifty units a week (for men, thirty-five for women) you’re undergoing “full degeneration”.
But is that based on any firm evidence? One interesting study, reassuring to the toper, can be found here, which among other things makes the gentle point that since we either under-report what we consume, or we pour away half of the booze we buy undrunk, planning policy on what we admit to consuming may not be accurate.
Jason Lynch, “How Much Is ‘Too Much’?”, Continental Telegraph, 2018-05-08.
May 30, 2018
QotD: Microeconomics
… I sincerely believe – believe to the point that I can say that I know – that principles of microeconomics is the most important economics course any student can ever take. Ever. By far. If taught properly, and learned with an open and critical and attentive mind, a principles of microeconomics course will impart to the student more understanding of the operation of economies than will all other economics courses combined – and I include here even well-taught PhD econ courses.
Too many academic economists, in my experience, are bored with microeconomic principles. Such principles are so basic. No genius is required to understand them or to teach them well. Teaching microeconomic principles provides no opportunity to showcase great cleverness or to push out the frontiers of understanding. It is, instead, to repeat timeless verities – and verities the majority of which have been known and understood by wise economists for nearly 250 years, and nearly all of which have been known and understood by wise economists for the past 50 years.
[…]
My goal in teaching Principles of Microeconomics is not to launch my students on a path to earn a doctorate in the subject, or even for them to become econ majors. While I’m always pleased when a student, after taking my class, switches his or her major to economics, I teach the course as if it is the only economics course these students will ever take. (Empirically, this assumption of mine is true.) So unlike many other intro-econ courses, I do absolutely no mathematics; I even draw no cost curves. I define a handful of esoteric terms (such as the “law of diminishing marginal utility”) but never mention many others (such as “perfect competition” or “marginal rates of substitution”) that are typical fare in many other principles-of-microecon courses. I wouldn’t even dream of doing indifference-curve analysis in such a course.
I open the course with some economic history. (“Have you any idea how materially prosperous you are compared to the vast majority of your ancestors?!”) I spend a lot of time on supply and demand. I devote two whole sections to international trade, another to public choice, and one to public goods and taxation. (Each section is two-and-a-half-hours long. And I cover some other topics in addition; I mention these only to give a flavor of my course.)
My goal – by teaching basic, foundational, principles of microeconomics – is to inoculate students against the bulk of the common economic myths that they’ll encounter throughout their lives – myths such as that the great abundance of goods and services available to us denizens of modernity is the result of a process that can be easily mimicked or understood in detail by smart people or planners – that the market value of goods or services can be raised by price floors (such as a legislated minimum wage) or lowered by price ceilings (such as rent control) – that benefits can be created without costs – that government is an institution capable of rising above the realities that ensure that private institutions never perform ‘perfectly’ – that intentions are results – that destruction of property is a source of prosperity – that exchange across political boundaries differs in economically meaningful ways from exchange that takes place within political boundaries – that the only consequences that occur or that matter are those that are easily anticipated and seen.
Don Boudreaux, “Teach the Timeless Verities”, Café Hayek, 2014-08-26.
May 29, 2018
QotD: Gandhi on the Holocaust
I am aware that for many not privileged to have visited the former British Raj, the names Gujarat, Rajasthan, and Deccan are simply words. But other names, such as Germany, Poland, Czechoslovakia, somehow have a harder profile. The term “Jew,” also, has a reasonably hard profile, and I feel all Jews sitting emotionally at the movie Gandhi should be apprised of the advice that the Mahatma offered their coreligionists when faced with the Nazi peril: they should commit collective suicide. If only the Jews of Germany had the good sense to offer their throats willingly to the Nazi butchers’ knives and throw themselves into the sea from cliffs they would arouse world public opinion, Gandhi was convinced, and their moral triumph would be remembered for “ages to come.” If they would only pray for Hitler (as their throats were cut, presumably), they would leave a “rich heritage to mankind.” Although Gandhi had known Jews from his earliest days in South Africa — where his three staunchest white supporters were Jews, every one — he disapproved of how rarely they loved their enemies. And he never repented of his recommendation of collective suicide. Even after the war, when the full extent of the Holocaust was revealed, Gandhi told Louis Fischer, one of his biographers, that the Jews died anyway, didn’t they? They might as well have died significantly.
Richard Grenier, “The Gandhi Nobody Knows”, Commentary, 1983-03-01.
May 28, 2018
QotD: Correcting mistakes in private and public enterprises
… 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 27, 2018
QotD: Epicurus on the ethics of pleasure
Epicurus begins with the question asked by Socrates at the end of the fifth century — what is the good life? His answer is that the good lies not in virtue or justice or wisdom — though these are not to be ignored — but in happiness.
“Pleasure” he writes, “is our first and kindred good. It is the starting point of every choice and every aversion, and to it we come back, inasmuch as we make feeling the rule by which to judge of every good thing.”
Now we have more than enough of Epicurus to know that he is not arguing for what are called the self-indulgent pleasures — of eating and drinking and sex and the like. Aristippus of Cyrene (c435-366 BC), we are told, had already argued for these. He also claimed that happiness was the highest good, but went on to claim that happiness lay in the pursuit of pleasure regardless of convention or the feelings of others or of the future.
This interpretation was attached to Epicurus in his own lifetime, and the attachment has been maintained down to the present — so that the words “Epicure” and “Epicurean” have the meaning of self-indulgent luxury.
What Epicurus plainly means by happiness is the absence of pain. We are driven to act by a feeling of discontent. We seek food because we are hungry. We seek warmth because we are cold. We seek medicine because we are sick. Once we have acted correctly and removed the cause of discontent, we are happy.
Turning to his own words, he says:
When we say… that pleasure is the end and aim, we do not mean the pleasures of the prodigal or the pleasures of sensuality, as we are understood to do by some through ignorance, prejudice or wilful misrepresentation. By pleasure we mean the absence of pain in the body and of trouble in the soul. It is not by an unbroken succession of drinking bouts and of revelry, not by sexual lust, nor the enjoyment of fish and other delicacies of a luxurious table, which produce a pleasant life; it is sober reasoning, searching out the grounds of every choice and avoidance, and banishing those beliefs through which the greatest tumults take possession of the soul. Of this the beginning and the greatest good is wisdom. Therefore wisdom is a more precious thing that even philosophy; from it springs all the other virtues, for it teaches that we cannot live pleasantly without living wisely, honourably and justly; nor live wisely, honourably and justly without living pleasantly.
In this scheme, therefore, happiness is to be defined as peace of mind, or ataraxia. This pursuit of happiness does involve bodily pleasure, but such pleasure is a means to the greater end of ataraxia. “No pleasure” he says, “is a bad thing in itself, but the things which produce certain pleasures entail disturbances many times greater than the pleasures themselves.”
His ethics of pleasure can be summarised as:
The pleasure which produces no pain is to be embraced. The pain which produces no pleasure is to be avoided. The pleasure is to be avoided which prevents a greater pleasure, or produces a greater pain. The pain is to be endured which averts a greater pain, or secures a greater pleasure.
And so the happy man for Epicurus is one who lives simply within his means, who seeks only those pleasures which contribute to his long term peace of mind.
And while hedonism is ultimately a doctrine of selfishness, what Epicurus had in mind was not a life spent in the pursuit of solitary happiness. He says: “Of the means which wisdom acquires to ensure happiness throughout the whole of life, by far the most important is friendship.”
It may be that we seek friendship for selfish reasons. But friendship is to be persistently sought and maintained throughout life. Epicurus himself had an immense capacity for friendship.
Sean Gabb, “Epicurus: Father of the Enlightenment”, speaking to the 6/20 Club in London, 2007-09-06.
May 26, 2018
QotD: Child labour
In response to something I’d written about labor unions, a critic started badgering me about child labor.
What a terrible feature of capitalism, he said.
No, it was a terrible feature of all of world history, I replied.
Thank goodness for people who passed laws against it, he said.
No, I said, thank goodness for capitalism, which created enough wealth that families didn’t have to send their kids to work anymore just to avoid starvation.
Then I was asked: do I really believe my kids would be better off in a factory (than in school, presumably)?
As if the choice we’re talking about is between factory work and school! The actual choice faced by these families is between factory work and starvation.
The British charity Oxfam found that in Bangladesh, where the government caved in to Western demands to suppress child labor, the children — you’ll never guess — didn’t wind up in school! How about that.
Where did they wind up? In prostitution, or dead.
Nice going, geniuses.
Yes, there were laws passed against child labor, but those came when child labor was already practically a thing of the past.
No law is going to keep families from avoiding starvation — and even the left-wing International Labor Organization admits that this is the real reason for child labor. Only capital accumulation makes it possible to end child labor humanely.
My opponent probably isn’t a bad guy. He’s just absorbed the conventional wisdom on pretty much everything.
It’s very easy to blame “capitalism” for child labor. Where is the average person going to hear any other explanation?
Tom Woods, “SJWs Really Mean Well, But Accidentally Starve Some Children”, The Tom Woods Show, 2016-09-13.
May 25, 2018
QotD: Muggeridge’s Law
While Malcolm Muggeridge was the editor of Punch, it was announced that Khrushchev and Bulganin were coming to England. Muggeridge hit upon the idea of a mock itinerary, a lineup of the most ludicrous places the two paunchy pear-shaped little Soviet leaders could possibly be paraded through during the solemn process of a state visit. Shortly before press time, half the feature had to be scrapped. It coincided exactly with the official itinerary, just released, prompting Muggeridge to observe: We live in an age in which it is no longer possible to be funny. There is nothing you can imagine, no matter how ludicrous, that will not promptly be enacted before your very eyes, probably by someone well known.
Tom Wolfe, “Stalking the Billion-Footed Beast: A literary manifesto for the new social novel”, Harpers, 1989-11.
May 24, 2018
QotD: Hunter S. Thompson on the importance of breakfast
It is not going to be easy for those poor bastards out in San Francisco who have been waiting all day in a condition of extreme fear and anxiety for my long and finely reasoned analysis of “The Meaning of Jimmy Carter” to come roaring out of my faithful mojo wire and across 2,000 miles of telephone line to understand why I am sitting here in a Texas motel full of hookers and writing at length on The Meaning of Breakfast……. But like almost everything else worth understanding, the explanation for this is deceptively quick and basic.
After more than ten years of trying to deal with politics and politicians in a professional manner, I have finally come to the harsh understanding that there is no way at all – not even for a doctor of chemotherapy with total access to the whole spectrum of legal and illegal drugs, the physical constitution of a mule shark and a brain as rare and sharp and original as the Sloat diamond – to function as a political journalist without abandoning the whole concept of a decent breakfast. I have worked like 12 bastards for more than a decade to be able to have it both ways, but the conflict is too basic and too deeply rooted in the nature of both politics and breakfast to ever be reconciled. It is one of those very few Great Forks in The Road of Life that cannot be avoided: like a Jesuit priest who is also a practicing nudist with a $200-a-day smack habit wanting to be the first Naked Pope (or Pope Naked the First, if we want to use the language of the church)….… Or a vegetarian pacifist with a .44 magnum fetish who wants to run for president without giving up his membership in the National Rifle Association or his New York City pistol permit that allows him to wear twin six-guns on Meet the Press, Face the Nation and all of his press conferences.
There are some combinations that nobody can handle: shooting bats on the wing with a double-barreled .410 and a head full of jimson weed is one of them, and another is the idea that it is possible for a freelance writer with at least four close friends named Jones to cover a hopelessly scrambled presidential campaign better than any six-man team of career political journalists on the New York Times or the Washington Post and still eat a three-hour breakfast in the sun every morning.
Hunter S. Thompson, “Fear and Loathing on the Campaign Trail ’76: Third-rate romance, low-rent rendezvous — hanging with Ted Kennedy, Jimmy Carter, and a bottle of Wild Turkey”, Rolling Stone, 1976-06-03.
May 23, 2018
QotD: The threaten, bribe, bamboozle hypothesis
Ruling elites have three basic ways to keep the subject population under their thumb: threaten, bribe, and bamboozle. Everything they do is a variant of one of these basic actions. So, if the lush, misleading overgrowth were cut away, all government activities could be undertaken by only three departments: the Department of Cops and Soldiers; the Department of Santa Claus; and the Department of Delusion. However, if such a drastic, visible simplification were undertaken, the efficacy of the bamboozlement would be greatly diminished. It would be a public disservice to load more truth on the public than it can stand.
Much of what the government does ostensibly to carry out some valuable purpose (e.g., assisting the deserving poor, the sick, the struggling millionaire farmers, the domestic sellers facing allegedly unfair import competition, the sober college students, the elderly, people suffering ethnic or racial discrimination; protecting the nation against menacing foreigners and aliens from outer space; containing disastrous global warming; promoting a cleaner, healthier environment; undertaking or subsidizing scientific and technological research) amounts to specific forms of bribery, to buying people’s loyalties by giving them a portion of the loot the government acquires by means of its threats of enforcement and its bamboozlement in regard to the subjects’ “civic duty” to cough up taxes as the government stipulates. The state’s organizational complexity and its associated pragmatic and ideological veils prevent the general public from seeing what is really going on and then, perhaps, opposing it or becoming more recalcitrant in complying with government edicts and demands for tribute, thereby throwing sand in the state’s machinery of oppression and plunder.
As an exercise, you might test the TBB (threaten, bribe, bamboozle) hypothesis. See if you can find any significant government activity that does not fit under one or more of these three rubrics.
Robert Higgs, “The Three Basic Means by Which Ruling Elites Maintain Their Control”, The Beacon, 2016-09-07.
May 22, 2018
QotD: Capitalism is the most feminist economic system ever
We really do need to be pointing out that the Good Old Days are now. Both technological advance and productivity growth have been driven by that combination of capitalism and markets. Capitalism, in its lust for profits, leading to the invention. Markets and the ability to copy what works being what creates the general uplift in standards by the spreading and wide use of those inventions.
The net effect of this has been, well, it’s been to make women’s lives vastly better. Starting with the point that many women actually have lives as a result. Childbirth has moved from being the leading cause of female death* to a mild risk which kills very few – each one a tragedy which is why we’re so happy that we have reduced that risk. We’ve automated all the heavy lifting in society meaning that women can indeed, with their generally lighter musculature, compete in near all areas of work. We’ve done more automation of household drudgery than we have of anything else too, freeing the distaff side from that chain upon their ambitions.
We’ve even freed all from the child bearing consequences of bonking – much to the great pleasure of man and woman alike.
Women today are the most privileged, richest, group of women who have ever stumbled across the surface of this planet. And in comparison to the men in their society they’re the most equal too. All of which leads to an interesting question. Just why are they whining so much?
*Possibly an exaggeration but not much of one. Certainly not about the mid 19th century before Semmelweiss.
Tim Worstall, “Capitalism Is The Most Feminist Economic System Ever”, Continental Telegraph, 2018-04-30.
May 21, 2018
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.
