Quotulatiousness

September 18, 2020

From innovation to absolutism — English inventors and the Divine Right of Kings

In the latest Age of Invention newsletter, Anton Howes looks at how innovations during the late Tudor and Stuart eras sometimes bolstered the monarchy in its financial battles with Parliament (which, in turn, eventually led to actual battles during the English Civil War):

King Charles I and Prince Rupert before the Battle of Naseby 14th June 1645 during the English Civil War.
19th century artist unknown, from Wikimedia Commons.

The various schemes that innovators proposed — from finding a northeast passage to China, to starting a brass industry, to colonising Virginia, or boosting the fish industry by importing Dutch salt-making methods — all promised to benefit the public. They were to support the “common weal”, or commonwealth. And to a certain extent, many projects did. The historian Joan Thirsk did much pioneering work in the 1970s to trace the impact of various technological or commercial projects, revealing that even something as mundane as growing woad, for its blue dye, could have a dramatic impact on local economies. With woad, the income of an ordinary farm labouring household might be almost doubled, for four months in the year, by employing women and children. In the late 1580s, the 5,000 or so acres converted to woad-growing in the south of England likely employed about 20,000 people. That may seem small today, but at a time when the population of a typical market town was a paltry 800 people, even a few hundred acres of woad being cultivated here or there might draw in workers from across the whole region. In the mid-sixteenth century, even the entire population of London had only been about 50-70,000. As Thirsk discovered, innovative projectors also sometimes fulfilled their other public-spirited promises, for example by creating domestic substitutes for costly imported goods, or securing the supplies of strategic resources.

But the ideal of benefiting the commonwealth could also, all too frequently, be elided with serving the interests of the Crown. Projectors might promise the monarch a direct share of an invention’s profits, or that a stimulated industry would result in higher income from tariffs or excise taxes. Increasingly, they proposed schemes that were almost entirely focused on maximising state revenue, with little evidence of new technology. They identified “abuses” in certain industries — at this remove, it’s difficult to tell if these justifications were real — and asked for monopolies over them in order to “regulate” them, then making money by selling licences. Last week I mentioned patents over alehouses, and on playing cards. They also offered to increase the income from the Crown’s property, for example by finding so-called “concealed lands” — lands that had been seized during the Reformation, but which through local resistance or corruption had ostensibly not been paying their proper rents. The projectors would take their share of the money they identified as “missing”. And they proposed enforcing laws, especially if the punishments involved levying fines or confiscating property. The projectors offered to find the lawbreakers and prosecute them, after which they’d take their share of the financial punishments.

Projectors thus came to present themselves as state revenue-raisers and enforcers, circumventing all of the traditional constraints on the monarch’s money and power. They provided an alternative to Parliaments, as well as to city corporations and guilds, in raising money and propagating their rule. Taking it a step further, projectors offered the tantalising possibility that kings like James I and Charles I might rule through proclamation and patents alone, without having to answer to anybody. They thus experimented with absolutism for much of 1610-40, only occasionally being forced to call Parliament for as briefly as possible when the pressing financial demands of war intervened.

In the process, with the growing multitude of projects — a few bringing technological advancement, but many merely lining the pockets of courtier and king — the designation “projector” became mud. It was as if, today, the Queen were to use her prerogative to grant a few of her courtiers monopolies on collecting all traffic fines, or litter penalties, to be rewarded solely on commission. Or if she were to award an unscrupulous private company the right to award all alcohol-selling licences (perhaps on the basis that underage drinking was becoming common). The country would soon be awash with hidden speed cameras and incognito litter wardens, and the price of alcohol would go through the roof. The people responsible would not be popular. A recent book by economic historian Koji Yamamoto meticulously charts the changing public perceptions of projects, describing the ways in which innovators then struggled, for decades, to regain the public’s trust.

August 13, 2020

QotD: The discovery of anaesthesia and antisepsis

Filed under: Health, History, Quotations, Science — Tags: , , — Nicholas @ 01:00

The first demonstration of the ether gas was performed at Massachusetts General Hospital in October, 1846, by a Boston dentist, William T. G. Morton. For the first time, surgical operations could be performed painlessly. Within two months, the invention was known and being applied in every capital of Europe, and in little more time it became commonplace internationally. The number of surgical operations vastly increased, as it was no longer necessary to hold patients down, and act very quickly.

Joseph Lister first used carbolic acid (phenol) to perform sterile surgery at the Glasgow Royal Infirmary, in August, 1865. This would have the effect of vastly increasing the survival rate from these now commonplace surgical operations. But the news took years to circulate, and by the twentieth century surgeons were still working with infected equipment in filthy environments. Indeed, I have read accounts of the horrors of battlefield medicine in the First World War: men with survivable injuries, lost by the hundred thousands from ignorant, unnecessarily unhygienic medical procedures.

As Dr Gawande points out — in passing — both advances made life easier on patients. But the second saved lives on a — vastly — greater scale. The first was unique, in making life easier for doctors, who no longer had to operate on screaming, writhing customers. This also, incidentally, hugely increased their trade, and thus their income. Washing up, effectively, only added nuisance.

I already knew this history — my mommy was a ward matron, after all — but until the comparison was spelt out, the full significance was lost on me. I had read the “official” versions in several standard medical histories. They assume the slow spread of antisepsis was a problem of communications. Gentle reader will note that this is a lie. Methods of communication did not slow in the generation between the two inventions.

David Warren, “Heaven, Hell, & Alder Hey”, Essays in idleness, 2018-05-09.

July 28, 2020

QotD: Incentives and opportunity costs

Filed under: Economics, Quotations — Tags: , , — Nicholas @ 01:00

The first and most important thing in all economics is that incentives matter. If you can grasp that and also get to grips with the second, that there are always opportunity costs, then you’re going to be doing better than 90% of the economics profession itself. But do remember that incentives matter, incentives really, really, matter. Changes in tax law have stopped people from dying for example.

No, really, there was one of those natural experiments, when inheritance tax laws changed at the end of the year. There was a definite blip downwards in the death rate of people rich enough to pay inheritance tax at the end of the year, a corresponding one upwards again as the new, lower, rates came into effect in January. Incentives really, really, matter.

Tim Worstall, “What’s The Over And Under On Tesla’s 200,000th Car Being Delivered On July 1?”, Continental Telegraph, 2019-05-03.

July 26, 2020

QotD: Bureaucracy at its heart

Filed under: Bureaucracy, Business, Government, Quotations — Tags: , , — Nicholas @ 01:00

Nassim Nicholas Taleb summed up in a simple aphorism what most of us instinctively know about bureaucracies:

    Bureaucracy is a construction designed to maximize the distance between a decision-maker and the risks of the decision.

When something goes wrong, the bureaucrats play the blame-shifting game. Musical chairs will begin, and some poor fool will be stuck without a chair. When something goes right, of course, executive management will take credit. Your job as a bureaucrat is to be an implicitly political creature; to make your boss look good and, for yourself, to evade blame.

Bureaucracies become much worse when they are divorced from the profit motive. At least a large corporation must theoretically serve its customers in some positive manner, or they won’t remain in business for long. So while the internal politics of a large corporation are likely to suck like a Hoover, the external face of the company is often still somewhat pleasant for the customer.

With government bureaucracy, even that small consolation is lost. Go to the DMV, or any large government bureau. Long lines, smelly “customers”, and agents with extremely unpleasant attitudes abound. The motive is not to serve citizens well, or even to serve them quickly, but rather to meet the bare minimum necessary to avoid blame — and sometimes not even that.

Thales, “Bureacracy is Designed to Suck”, The Declination, 2018-05-02.

July 15, 2020

Donald Shoup, the “Sir Isaac Newton of parking” or an “‘academic bottom-feeder’ who found a wonderful, rich ecological niche down there in the depths”

Filed under: Business, Economics — Tags: , , , — Nicholas @ 05:00

Colby Cosh, after taunting Ontarians yet again over our just-barely-past-Prohibition views on alcohol in public places, goes on to praise the work of UCLA economist Donald Shoup and his insights into the economics of parking:

Parking — boring topic, ain’t it? Shoup latched onto it as a young-ish man because he was a follower of Henry George (1839-1897), the intriguing “single tax” economic theorist of the 19th century. George favoured a tax on the unimproved value of land parcels as a way of socializing pure rent (the value earned from occupying a mere location) and encouraging development. It is a concept that many economists still like, although it is potentially difficult to apply at scale. The widely used concept of tax increment financing is one example of Georgism in practice.

Shoup started out trying to fit parking spaces into the Georgist picture, but the boring topic was so underexamined that he found himself having to build a general theory of parking. He quantified the relationship between parking and traffic, finding that people “cruising” for parking spots were more destructive than anyone had imagined, and he inspired waves of research into the hidden market values of parking spots, which are rarely bought or sold in their own right. He happily describes himself as an “academic bottom-feeder” who found a wonderful, rich ecological niche down there in the depths.

Shoup has spent decades travelling the world and preaching against the concept of free parking, often meeting with bad-tempered resistance. Nevertheless, he has made a lot of headway in the world of urban planning. Any economist can see immediately how bundling a “free” parking space with an apartment or a job might be inefficient. The renter or homeowner has to pay a hidden extra cost for an amenity he might not choose to use, and the commuter is being given an incentive to drive to work — an incentive whose cash value he might prefer to keep. Shoup soon found, on empirical investigation, that most urban parking lots show signs of less-than-optimum use.

[…]

Of course, too little parking is as much of an efficiency problem as too much, which is why Shoup and his followers want parking to be priced wherever possible: if more is really needed, let a market create it. (To my eyes he has at least as much Hayek in him as Henry George.) In the era of Uber and smartphones, it is a lot easier to imagine a fully Shoupista world in which prices for parking spots update in real time and drivers look up prices at or near their destination before setting out.

May 21, 2020

The Great Exhibition of 1851 also served (for some) as the 19th century equivalent of the “Missile Gap” controversy

In the latest edition of his Age of Invention newsletter, Anton Howes discusses the changing role of the British government and how the Great Exhibition was also useful as subtle domestic propaganda for a more active role for government in the British economy:

The Crystal Palace from the northeast during the Great Exhibition of 1851, image from the 1852 book Dickinsons’ comprehensive pictures of the Great Exhibition of 1851
Wikimedia Commons.

… a whole new opportunity for reform was provided by the Great Exhibition of 1851. As I explained in the previous newsletter, an international exhibition of industry functioned as an audit of the world’s industries. It, and its successors, the world’s fairs, gave some indication of how Britain stood relative to rival nations, especially France, Prussia, and the United States. And whereas some people saw the Great Exhibition as a clear mark of Britain’s superiority, for would-be reformers it was a chance to expose worrying weaknesses. Thus, Henry Cole and the other original organisers of the exhibition at the Society of Arts exacerbated fears of Britain’s impending decline, giving them an excuse to create the systems they desired.

They identified two areas of worry: science and design. Britain of course had many eminent scientists and artists — some of the best in the world — but other countries seemed to have become better at diffusing scientific training and superior taste throughout the workforce as a whole. Design skills were an issue because France appeared to be catching up with Britain when it came to the mechanisation of industry; if it caught up on machinery while maintaining its lead in fashion, then Britain would not be able to compete. And scientific training appeared more useful than ever, with the latest scientific advances “influencing production to an extent never before dreamt of”. Visitors to the Great Exhibition had marvelled at the recent inventions of artificial dyes, a method of processing beetroot sugar, and the latest improvements to photography and the electric telegraph. Thus, for Britain to maintain its lead, it would need to improve the education of its workers.

The reformers’ scare tactics worked. The aftermath of the Great Exhibition saw the creation of a government Department of Science and Art under the direction of Henry Cole, who in turn oversaw the agglomeration of various museums, design schools, and other cultural institutions to what is now the “Museum Mile” in South Kensington. (Curiously, the area was originally called Brompton, but when Cole opened a museum of design and industry there, he named it the South Kensington Museum. Kensington was a much more aristocratic area nearby, though it had no “south” at the time. The museum evolved, rather complicatedly, into what is now the Victoria & Albert Museum. But unlike so many top-down area re-brands, the name South Kensington stuck.)

And that was just the beginning. Cole and his allies then oversaw a dramatic expansion of the state into education, largely through the use of examinations. Although state-funding for education had initially centred on building new schools, getting any more involved was a highly contentious issue. Most schools were controlled and funded by religious organisations, but were split between the established Anglican church and dissenters. When the government first became involved in schools, it was thus bitterly opposed by many dissenters as they feared that their children might become indoctrinated to Anglicanism. And naturally, the government could not teach dissenting religions. Yet the proposed compromise of teaching no religion at all was unacceptable to both sides. Schools were crucial, the groups believed, to keeping religion alive.

So the utilitarians came up with a workaround. Rather than getting the state too involved directly in managing the schools themselves, it would instead influence the curriculum. By holding examinations, and then paying teachers based on the outcomes of the tests, they could incentivise the teaching of certain subjects and leave the schools free to teach whatever religious beliefs they pleased. Indeed, by diverting more and more time towards teaching particular subjects, the reformers saw it as a secularising blow “against parsonic influence”. The tactic was initially applied to adult education. The Society of Arts would first trial out examinations without payments, to test their viability. Then Cole would have his department take over the examinations, first for drawing, and later for science, using his budget to fund payment-by-results. The effects were dramatic. The Society’s relatively popular examinations in chemistry, for example, rarely had more than a hundred candidates a year. But when the department instituted its payments, it soon drew in thousands. By 1862, when the government wanted to improve the teaching of reading, writing, and arithmetic in schools, they adopted Cole’s suggestion that they also use payment-by-results.

May 18, 2020

Safetyism

Matthew Crawford:

Safetyism is a disposition that has been gaining strength for decades and is having a triumphal moment just now because of the virus. Public health, one of many institutions that speak on behalf of safety, has claimed authority to sweep aside whole domains of human activity as reckless, and therefore illegitimate.

I suspect the ease with which we have lately accepted the authority of health experts to reshape the contours of our common life is due to the fact that safetyism has largely displaced other moral sensibilities that might offer some resistance. At the level of sentiment, there appears to be a feedback loop wherein the safer we become, the more intolerable any remaining risk appears. At the level of bureaucratic grasping, we can note that emergency powers are seldom relinquished once the emergency has passed. Together, these dynamics make up a kind of ratchet mechanism that moves in only one direction, tightening against the human spirit.

Acquiescence in this appears to be most prevalent among the meritocrats who staff the managerial layer of society. Deferring to expert authority is a habit inculcated in the “knowledge economy”, naturally enough; the basic currency of this economy is epistemic prestige.

Among those who work in the economy of things, on the other hand, you see greater skepticism toward experts (whether they make their claim on epistemic or moral grounds) and less readiness to accept the adjustment of social norms by fiat ­– whether that means using new pronouns or wearing surgical masks. I am regularly in welding supply stores, auto parts stores and other light-industry venues. Nobody is wearing masks in these places. They are very small businesses: an environment largely free of the moral fashions and corresponding knowledge claims that set the tone in large organisations. There is no HR in a welding shop.

A pandemic is a deadly serious business. But we would do well to remember that bureaucracies have their own interests, quite apart from the public interest that is their official brief and warrant. They are very much in the business of tending and feeding the narratives that justify their existence. Further, given the way bureaucracies must compete for funding from the legislature, each must make a maximal case for the urgency of its mission, hence the necessity of its expansion, like a shark that must keep moving or die. It is clearer now than it was a few months ago that this imperative of expansion puts government authority in symbiosis with the morality of safetyism, which similarly admits no limit to its expanding imperium. The result is a moral-epistemic apparatus in which experts are to rule over citizens conceived as fragile incompetents.

But what if this apparatus were revealed to be not very serious about safety, the very ideal that underwrites its authority? What then?

May 5, 2020

The perverse incentives of the Wuhan Coronavirus outbreak

Filed under: Economics, Government, Health, Media — Tags: , , , — Nicholas @ 03:00

David Warren has clearly taken his cynical pills today:

The daily count of deaths from the Red Chinese Batflu is among the prized, scare-mongering features of our mass media. I am among those who consider these numbers to be significantly overstated, for a reason that Nikolai Gogol would understand. Each corpse is worth cash to some public authority, usually from a higher authority; and as always, finally from the taxpayers. Each also saves money for government programmes, that can be reallocated to the purchase of new votes. As the corpse providers from this virus are very old, and suffering from other life-threatening conditions, in almost every case, this statistical inflation is easy to perform. Death certificates are issued for any who died with “Covid-19,” whether or not they died from it, and more are then added of those who were never tested. Anything respiratory will do. It’s all judgement calls — on which side of the bread is buttered.

Compare if you will the Hong Kong Flu of 1968 and 1969. I was just reading a memoir, from down that memory hole. The death toll was actually higher then, than ours is now, and from within a smaller population; the victims included children and the young. Yet there were no interruptions in economic life; no public emergency theatricals; and at the height of the second wave of that scourge, we had events like Woodstock. (Those were the days, my friend.)

A neat way to correct for all our “judgement calls” might be to look at overall death rates, and see if they have risen or fallen. It is too early to get a clear view, but soon it may be too late, for vested interests will have tampered with them. All my life I have been learning to trust statistics, less — especially from those who dress in labcoats and affect that earnest look. Sometimes an exception must be considered, however. An unpredictable minority may be honest; some others might get numbers right by mistake.

April 24, 2020

Prizes, patents, and the Society of the Encouragement of Arts, Manufactures and Commerce

In the most recent Age of Invention newsletter, Anton Howes explains why the Society of the Encouragement of Arts, Manufactures and Commerce (now the Royal Society of Arts) wasn’t a fan of the British patent system and preferred to award prizes in areas that were unlikely to generate monopoly situations:

The back of the Royal Society of Arts building in London, 25 August 2005.
Photo by C.G.P. Grey (www.CGPGrey.com) via Wikimedia Commons.

… the Society’s early members had an aversion to monopolies, and patents are, after all, temporary monopolies. But there was actually a more practical reason to not give rewards to patented inventions. In fact, quite a few active members of the Society were themselves patentees, and patents for inventions were not generally lumped together for condemnation with practices like forestalling and engrossing. The practical reason for banning patents was that there was no point giving a prize for something that people were already doing anyway. Patents were expensive in the eighteenth century — depending on how you account for inflation, it could cost about £300,000 in modern terms to obtain one — so the fact that there was a patent for a process was a clear indication that it might be profitable. The Society, by contrast, was supposed to encourage things that would not otherwise have been done.

Thus, when a patent had already been granted for a process the Society had been considering giving a premium for, it purposefully backed down — not because the prize would infringe on the patent, but because its encouragement was no longer necessary. And so the effect of the ban on patented inventions was that the Society received, even unsolicited, exactly the kinds of inventions that there was less monetary incentive to invent. Occasionally, this meant trivial improvements — minor tweaks, here and there, to existing processes. An engineer might patent one invention, but not see it worth their time patenting another — through the Society’s prizes, they might at least get a bit of cash for it, or some recognition. The improvement would also be promoted through the Society’s publications. Or, the Society received inventions that were far from trivial, like the scandiscope for cleaning chimneys [here], but which were not all that profitable: inventions that saved lives, or had other beneficial effects on the health and wellbeing of workers and consumers. And finally, the Society received innovations that could not be patented, such as agricultural practices and the opening of new import trades. In the early nineteenth century the Society awarded its prizes to a whole host of naval officers, including an admiral, who came up with flag-based signalling systems between ships — early forms of semaphore.

Another effect of the ban on patents was that the Society also attracted submissions from different demographics. Many of its submissions came from people who were too poor to afford patents, as well as from those who were too rich — wealthy aristocrats for whom commercial considerations might seem vulgar. The poor would generally go for the cash prizes, and the aristocrats for the honorary medals. And the prizes were used by people who might otherwise be socially excluded from invention. In 1758, for example, the Society instructed its members in the American colonies to accept submissions from Native Americans. It also allowed women to claim premiums (just as it allowed them to be members). My favourite example is Ann Williams, postmistress at Gravesend, in Kent, who won twenty guineas from the Society in 1778 for her observations on the feeding and rearing of silk-worms. She kept them in one of the post-office pigeon-holes, referring to them affectionately as “my little family” of “innocent reptiles”. Unlike other elements of society, the Society of Arts accepted, as she put it to them, that “curiosity is inherent to all the daughters of Eve.”

The Society thus encouraged the kinds of inventions that might not otherwise have been created, and catered to the kinds of inventors who might not otherwise have been recognised. Rather than competing with the patent system, it complemented it, filling in the gaps that it left. The Society operated at the margins, and only at the margins, to the better completion of the whole. It found its niche, to the benefit of innovation overall.

April 13, 2020

James J. Hill, US railroading’s premier “market entrepreneur”

Filed under: Business, Government, History, Railways, USA — Tags: , , , — Nicholas @ 03:00

Dane Stuhlsatz outlines the story of US federal government subsidies and other interventions into the 19th century railroad industry and the one tycoon who avoided the lure:

Postcard photo of the Great Northern Railway’s “Empire Builder” streamliner between Everett and Seattle, Washington, circa 1963.
Great Northern Railway postcard via Wikimedia Commons.

Burton W. Folsom, Jr. outlined this story in his book, The Myth of the Robber Barons, identifying two models of entrepreneurship; the “political entrepreneurism” of lines like the Union Pacific and Central Pacific versus the “market entrepreneurism” of James J. Hill and his Great Northern Railway.

Canadian-born James J. Hill (1838-1916) in 1914.
Photo from Famous Living Americans, edited by Mary Griffin Webb and Edna Lenore Webb via Wikimedia Commons.

As Folsom details, the former chased government largesse, ultimately in exchange for loss of control of their business, while the latter chased profits through prudent business decisions. Hill’s success juxtaposed with UP’s and CP’s failure is due in no small part to his steadfast refusal to accept any federal subsidies. In short, UP’s and CP’s government subsidized incentives were vastly different from Hill’s profit driven incentives, which lead to vastly different outcomes.

Federal subsidies incentivized speed, not efficiency. The subsidies were paid in the form of both land grants and direct payments. For each mile of track laid, the UP and CP would receive 20 acres of land and either $16,000 (for track on flat land), $32,000 (for track on hilly terrain), or $48,000 (on mountainous terrain). This incentive for speed resulted in winding, inefficient, routes built with inferior materials, ultimately culminating in a federal price tag of 44,000,000 acres and $61,000,000 (astronomical sums in the 1860s-70s). Despite all this federal assistance, shortly after the golden spike was driven on May 10, 1869 at Promontory Summit, Utah, the UP and CP were nearly bankrupt and required further assistance to stay afloat.

The lines which were born and brought up on federal aid needed federal aid to continue. This led to the passage of the Thurman Law in 1874 which forced UP to pay 25% of its earnings a year to pay its federal debt.

UP’s profitability decisions were also subject to government approval. Branch lines — smaller lines off the main line into rural communities — which could have helped UP’s bottom line, were often not approved by federal bureaucrats. Additionally, the federal Bureau of Railroad Accounts required constant checking of UP’s books. All these measures stifled the ingenuity that UP so desperately needed to make its line profitable. UP quickly found out that the power to subsidize was the power to destroy.

Hill’s line on the other hand was methodically surveyed and built, on the shortest routes possible, with the least gradient possible, and using the best steel and other materials on the market at the time. Rather than political largess, Hill made his decisions based on profit and loss. But, for all the efficiency that Hill built into his line — he was able to transport across the country faster, cheaper, and with less maintenance costs than could the UP and CP — arguably the most important aspect for the viability of his business was the freedom to conduct business untethered by the strings that accompanied government subsidies.

While Hill was free to build when and where he wanted so long as he reached voluntary agreements with landowners, consumers, and employees, UP was tied up in red tape. As Hill’s line grew evermore profitable and reliable for customers, the UP and CP struggled along on federal aid, until they ultimately went bankrupt in 1893.

For his part, Hill’s line was the only transcontinental railroad to never go bankrupt.

Route map from the Great Northern Railway, circa 1920. Red lines are the GN route; dotted lines are other railroads. Created from the Map Maker at nationalatlas.gov and routes drawn in, using a 1920 map as a reference.
Map by Elkman via Wikimedia Commons.

March 16, 2020

QotD: Company incentives to prevent sexual harassment

One of the predictions I’m seeing everywhere, for instance, is how now Human Resources will need a lot more power over companies to prevent more #metoo incidents of sexual importuning of women.

The funny thing about this is that anyone with two eyes and a modicum of understanding of the world knows that this is not where the crazy is headed. As the attempt to drown out the legitimate cases of harassment — mostly by leftists, in leftist-dominated institutions — by claiming #metoo and that all men were essentially harassers becomes more frantic, it has become obvious that any man can be accused of harassment at any time by anyone.

So, here is a genuine prediction: I predict that instead of giving HR more power, this will give companies pause before hiring women, which will lead to a lot of decent and qualified women being left unemployed.

The second-order effect of that, for companies that can’t avoid hiring women, is two-fold: they’ll either hire women to “make-believe” positions, in which they interact only or primarily with other women, creating a drain on the bottom line, or they will allow a lot more work-at-home by both men and women. I predict we’ll see a great move towards that in the next year. Sure, it’s still possible to claim someone is harassing you via the phone, but one-party consent states at least will allow men to record everything in order to defend themselves.

Weirdly, I believe the long-term result of this will be the dismantling of the daycare and child-warehousing practice which has led to a lot of the left’s ascendency in education.

This is because no matter how much you wish to wishful think that companies will just give Human Resources more power, people who actually live and work in the world know this isn’t likely. Human Resources would mostly just make it impossible for anyone to get any work done.

Sarah Hoyt, “Nobody Expects These Predictions”, PJ Media, 2017-12-31.

March 15, 2020

Those damned unintended consequences

Sarah Hoyt on the differences between intention and the real world:

Unintended consequences are the bane of social engineers. They are why the “Scientific” and centralized method of governance never worked and will never work. (Sorry, guys, it just won’t.)

Part of it is because humans are contrary. Part of is because humans are chaotic. And part of it is because like weather systems, societies are so complex it’s almost impossible to figure out what a push in any given place will cause to happen in another place.

This is why price controls are the craziest of idiocies. They don’t work in the way they’re intended, but oh, they work in practically all the ways they’re not. So, take price controls on rent. All they really do is create a market in which housing is scarce, landlords don’t maintain their property AND the only people who can afford to live in cities that have rent control are the very wealthy.

BUT Sarah, you say, aren’t rent controls supposed to make them affordable. Yeah. All that and the good intentions will allow you to go skating in hell on the fourth of July weekend.

Let’s be real, okay? I saw rent control up close and personal in Portugal. Rents were controlled and landlords were penalized for “not keeping the property up”.

In Portugal at the time, and here too, most of the time from what I’ve seen, the administration of property might be some management company, but that’s not who OWNS the damn thing. The owners are usually people who bought the property so it would support them in old age/lean times.

To begin with, you’re removing these people’s ability to make money off their legitimately owned property. And no, they’re not the plutocrats bernie bros imagine. These are often people just making it by.

Second, people are going to get the money some other way, because the alternative is dying. And people don’t want to die or be destitute. So they’re going to find the money. I have no idea what it is in NYC, etc, but in Portugal? it was “key buying.” Sure, you can rent the house for the controlled price, but you have to make a huge payment upfront to “buy the key.” From what I remember this was on the order of a small house down payment. And if you couldn’t do that, you were stuck getting married and living with your parents. And if you say “greedy landlords” — well, see the other thing you could do was leave the lease in your will. So the landlord didn’t know if they’d ever get control of their property back, and they needed to live off this for x years (estimated length of life.) So, that was an unintended consequence. The kind that keeps surfacing in rent-controlled cities in the US.

The same applies to attempts to “help” the homeless. Part of this, as part of all attempts to “fix” poverty is that the people doing it, usually the result of generations of middle class parents and strives assume the homeless and the poor are people like them.

To an extent, they’re correct. The homeless and the poor are PEOPLE. But culture makes a difference, and culture is often based on class and place of upbringing. And the majority of humanity, judging by the world, might be made to strive but are not natural strivers. Without incentive, most of humanity sits back, relaxes and takes what it’s given.

December 27, 2019

QotD: The perils of tax reform

Filed under: Economics, Government, Politics, Quotations, USA — Tags: , , , — Nicholas @ 01:00

Deductions are the Cheez Doodles of tax policy: Everyone likes them; everyone who studies the matter knows they are not good for us; and nonetheless, most people will get very indignant if you attempt to replace them with something more wholesome.

This is why deductions rarely go away, no matter how stupid and detrimental to the fiscal and economic health of the republic. For example, virtually every wonk in Washington, from radical libertarian to fervent socialist, can agree upon at least one thing: the tax deductibility of employer-sponsored health insurance is a terrible idea. On the one hand, it costs the government a packet of money every year, money that has to be raised by higher taxes on someone else. On the other hand, it encourages employers to load as much compensation as possible into the health benefit package, which distorts our economy and contributes to ballooning costs. There is nothing nice to be said about this particular tax deduction, except that it undoubtedly seemed like a good idea during World War II.

And yet, when it comes time to, say, pass a major health-care reform, or reform the tax code, do our nation’s legislators start with the obvious, and get rid of this egregiously stupid deduction? I regret that there is no way to convey my hollow, despairing laugh in pixel form. Of course they don’t touch it. The very egregiousness of its immense costs, the massive distortions it has induced in American consumption patterns, mean that getting rid of it would be far too disruptive.

Megan McArdle, “Republicans Turned the Tax Code Into a Weapon”, Bloomberg View, 2017-11-03.

December 25, 2019

Repost – The market failure of Christmas

Filed under: Economics, Government — Tags: , , , , — Nicholas @ 03:00

Not to encourage miserliness and general miserability at Christmastime, but here’s a realistic take on the deadweight loss of Christmas gift-giving:

Christmas gifts under the tree.
Photo by Kelvin Kay via Wikimedia Commons.

In strict economic terms, the most efficient gift is cold, hard cash, but exchanging equivalent sums of money lacks festive spirit and so people take their chance on the high street. This is where the market fails. Buyers have sub-optimal information about your wants and less incentive than you to maximise utility. They cannot always be sure that you do not already have the gift they have in mind, nor do they know if someone else is planning to give you the same thing. And since the joy is in the giving, they might be more interested in eliciting a fleeting sense of amusement when the present is opened than in providing lasting satisfaction. This is where Billy Bass comes in.

But note the reason for this inefficient spending. Resources are misallocated because one person has to decide what someone else wants without having the knowledge or incentive to spend as carefully as they would if buying for themselves. The market failure of Christmas is therefore an example of what happens when other people spend money on our behalf. The best person to buy things for you is you. Your friends and family might make a decent stab at it. Distant bureaucrats who have never met us — and who are spending other people’s money — perhaps can’t.

So when you open your presents next week and find yourself with another garish tie or an awful bottle of perfume, consider this: If your loved ones don’t know you well enough to make spending choices for you, what chance does the government have?

December 12, 2019

“Socialism” and “Capitalism” in the United States

Filed under: Economics, Government, Politics, USA — Tags: , , , , , , — Nicholas @ 05:00

Antony Davies and James R. Harrigan look at the supposed conflict between sharing, caring socialism and raw, heartless capitalism in the context of the American political theatre:

These terms were once very clearly defined. Socialism is state control of the means of production. The intent is that these means are to be used for the public good. By contrast, capitalism is simply private ownership of the means of production. The intent is that these means are to be used to advance the interests of those who own them, which will in turn create conditions of general prosperity that can be enjoyed by all.

When polled, Americans express relatively well-defined views on both. And while nowhere near a majority of the American electorate favors a completely socialist system, a recent Gallup poll indicates that more than four in ten Americans think “some form of socialism” is a good thing. But what is “some form of socialism?” A society is either socialist or it isn’t. The state either owns the means of production or it doesn’t. There is no middle ground. Even our openly socialist politicians rarely advocate anything near as drastic as government control of the means of production.

[…]

And just as transferism is not actually socialism, the system against which transferists rail isn’t capitalism, either. When they think of “capitalism,” transferists imagine a monied class that defrauds customers, pollutes the environment, and maintains monopoly power, all because the monied class is in bed with government. But capitalism is simply the private ownership of the means of production. What people are actually describing is something more appropriately called “cronyism,” which can manifest in a socialist system as easily as in a capitalist one. Cronyism isn’t a byproduct of the economic system at all; it is a byproduct of politics.

For current examples, one need look no further than North Korea, Cuba, and Venezuela. Socialists say these aren’t examples of “real socialism,” and they’re not. There was a time when these countries were indeed socialist, just as there was a time when the United States was capitalist. But cronyism has overtaken these countries’ economic systems, just as it did in humanity’s grandest socialist experiment: the Soviet Union. Life was simply different for inner-party members than it was for workers. This is the real danger that all countries face, regardless of the animating principles of their economic and political structures.

[…]

We need to answer the core question: how much transferism do we want?

In order to figure this out, we need to come to terms with the fact that any transfer is a confiscation of wealth from the people who created it. That confiscation will decrease wealth creation in the long term by decreasing an important incentive to take the risks necessary for creating wealth. Second, we have to recognize that transferism is addictive. No matter how much we transfer, people will always want more. The United States’ $23 trillion debt, the largest debt the world has ever seen, has come about because of American voters’ voracious appetite for transfers combined with politicians’ obvious incentive to provide them.

The solution politicians have found is to pass off the cost of the transfers to taxpayers who haven’t yet been born by borrowing the money, thereby leaving to the next generation the problem of repaying the debt or enduring unending interest payments. It’s a house of cards to be sure, but from their perspective, it will be someone else’s house of cards.

In the end, we have polluted our political discourse with two words that no longer have much meaning: socialism and capitalism. In the process, we don’t call the animating principle of modern American politics what it actually is: transferism. The only winners have been the politicians who manage to gather votes by keeping the electorate in a near-constant state of friction. And they keep winning if people keep thinking in categories that ceased to have any real meaning years ago.

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