Wednesday, November 06, 2024
Midwits and Mentiswave.
Wednesday, September 04, 2024
The State of Assassination
Saturday, March 23, 2024
How not to argue against the Economic Calculation Problem
The Economic Calculation Problem is a serious, possibly fatal, problem for claims that socialism can increase well-being. It posits that planners cannot make rational decisions about resource management without prices formed by profit maximization by private owners of factors of production. So in other words you need a free market, at least in capital, land and labor to maximize the accomplishment of goals, even socialist goals like good houses for everyone.
The first false counterargument is to attack the word “rational” and assume it means a false assumption of what goals are rational. It does not. It merely means the ability to reason about how to achieve those goals. The original article was called “Economic Calculation in the Socialist Commonwealth” but it equally applies to a theocratic commonwealth, a feudal imperialistic state, or any other area where a planner seeks to maximize something through control of the economy. The question isn't “Is this a smart thing to try to do?”, it's “Can we find the best way to do it, given current resources?”. This means rationality is always possible and required, because trying to achieve your goals irrationally is stupid.
Similarly just because socialists aren't trying to maximize money but the provision of needs that doesn't mean you don't need to plan rationally. The ECP isn't about trying to be rich, it's about trying to achieve the goals planners are trying to achieve with the limited means available. It doesn't matter if the planner is trying to maximize yachts and private planes for his employers as possible or food and shelter for the hungry. Optimization is still possible and desirable.
Imagine a world where everyone agrees everyone can have anything, and work is strictly voluntary but they recognize a social duty of the able to create more than they consume. How do you decide whether to use create more solar panels or increase transmission efficiency to get more power? Or should you discourage people from doing the activities that consume power? All approaches reduce total utility, the first two by diverting resources from other useful endeavors the last by reducing the enjoyment of the people, that enjoyment being the goal of the whole thing. Without factor prices you can't tell what's more expensive OR what's more valuable, and they are different things. If you increased solar power when reducing transmission losses would be use less valuable resources or vice versa people have less access to goods. If you encouraged people to use less electricity when generating more is the most efficient way to produce more happiness again, you're failing to optimize what you're trying to optimize.
Using engineers and experts to try and overcome this problem won't work either. Yes, the optimization of resources will involve engineers, agronomists, chemists etc. but they are not specialists in optimizing resources. They all rely on outside price signals to tell them what tasks are worthy of their attention, what is worth doing and what isn't. Consider whether to build a mine to extract a potentially valuable ore. To know whether to do this one must know how much more valued things will happen if you have the ore. But to know this you must know what other means could be substituted for this ore, what those means would otherwise be used for and how valuable that is. It's true that engineers routinely include budget estimates for projects that allow planners to assess the viability of a project. But these budgets don't set their own prices, they observe prices established outside the project. Even if it were possible to establish correct prices in the absence of a private market in factors of production, engineers/chemists/designers don't have that skill. In addition you must know how valuable goals are relative to each other.
Another non-starter of an argument is that prices could be set by a central authority. Prices are there to express the desirability of not using the factors of production. They only work if they indicate the actual utility and difficulty of replacing the factor. The planner doesn't know this, and can't know this. To know enough to set the price of a resource he would have to know the relative scarcity of every resource that could be substituted for it, partly or wholly and the interactions of that substitution with other resources and projects. This is impossible. You can't know everything about every transport route, every mine, every factory, let alone every worker or every technical subject. That's the whole problem.
Profit-maximisers however know enough to quote a price, which is all you need to assess whether to use this resource or another. Profit-maximisers will not price perfectly of course, that's why losses happen, but they have both the information and the incentive to make a good estimation of actual value.
Another thought was to make decisions on resource use without using prices and just account for each resource separately. So a project would use X amount of steel, Y amount of concrete, Z amount of skilled labor etc. But this involves tracking literally thousands of different resources (or even hundreds of thousands depending on how you define categories) and comparing the billions of ways they could be combined. Even if this could be done theoretically with perfect inputs, you don't have perfect inputs. You would have to know the disposition and condition of every useful resource in the economy, including workers, who are not fungible or identical and then run billions of simultaneous equations hoping nobody put in false information. They did.
Speaking of computers, no they don't help. The big problem is not the lack of information processing, it's the amount of information that would have be conveyed to the planner, much of it subjective, possessed by an enormous number of people and/or hard to communicate to a formal body in real time. Only by summarizing the information in a price can it be made simple enough to communicate efficiently. The ECP could just as easily be called the economic communication problem. Imagine spending half your life typing answers into a computer, and then realizing they didn't ask the important question they had no idea even existed. That's how computer would “solve” this problem.
So how serious is the ECP? Some planning can occur under socialist systems. Just because you can't find a precise number for how much more resource approach A would cost versus approach B doesn't mean you can't make decisions. They just won't be very good ones. Resources will be expended to achieve goals that should have gone to other goals, and resources that went to the first goal go to the others. Now there will be cases where the correct choice is obvious. Nobody makes rail tracks out of titanium but the cost is enormous for the more marginal cases. It is not a financial cost but a cost in results. One hospital instead of two, 90 KPH trains instead of 120, cancer deaths reduced by 20% instead of 50%, that sort of thing. It is not trivial.
Friday, December 29, 2023
A better measure than the Bechdel test.
Wednesday, March 15, 2023
Uber, price gouging and class warfare.
Uber's was price gouging in Sydney in the wake of the Cityrail delays on March 8. For the sake of the working class I hope they continue to do so. Price gouging is generally seen as evil businessmen taking advantage of poor, hapless, consumers. In the case of Uber however almost 3/4 of the benefit of "price gouging" goes to the working man. Or possibly the working woman, the Uber computers are not clear on the difference. Given the prices allegedly paid for Uber trips clearly those "price gouged" were relatively rich. Poor people don't generally pay $500 for a trip from the city to Mount Annan. According to google maps that should take a bit over an hour. So some worker got 72.5%*$500 = $362.50 AUD for the trip. This is a good thing for the working class.
But Credible, I hear you cry, you're an anarcho-capitalist, you love rich people and hate the poor right? Wrong. What I love is humans getting what they want, provided it doesn't infringe anyone's rights. Charging a rich person more when something is in short supply doesn't infringe anyone's rights. While in an ideal world neither rich nor poor would have suffered hours-long delays at least because of Uber the rich can get home. This benefitted not just the rich Uber passengers but also bus riders who had less crowding and delays than otherwise would be the case.
Also the voluntary transfer of wealth from rich to poor served the interests of both. The Law of Returns says the marginal utility of money to poor people is greater than to rich people. So a transfer of money from poor to rich would theoretically raise total utility. This is a far better argument for socialism than "fairness" arguments. However obviously a coercive transfers are unlikely raise total utility as history has proven time and time again. Here however the transfer was voluntary, the rich trading time for money at a rate the poor were more than happy with. The higher prices available obviously would have caused some Uber drivers to clock on who otherwise would not have, which didn't happen with traditional taxis to the same extent. Increased supply of useful services and their distribution to those who valued them highest were achieved. Both money and time ended up with the people who wanted them most. Which isn't surprising since getting things to the people who are prepared to trade most for them is what capitalism does.
But didn't the workers and Uber management take unfair advantage of the consumers? Well what makes it unfair? The passengers have no right to have Uber drivers give them a ride. They have no right to get a ride ahead of other passengers. If they were treated unfairly they should be able to point to something they should have been given that they weren't. But they were given everything they were requested. They wanted a ride and they got it. They preference over hundreds of other potential customers and they got it. So what weren't they given? Oh, yeah, all of that for no additional money. That's not a rights violation, that's a reality check. The people complaining about the high prices they were charged didn't complain that they got home ahead of people who weren't prepared to pay as much. So they wanted the benefits of a system that charges high prices, but not to pay the actual high prices. Frankly it's upper class arrogance at it's worst.
Thursday, June 10, 2021
If black lives matter, why do we still have communism?
This essay isn't what you think it is. You probably think that a right-winger is comparing the vast slaughter communism creates with the relatively modest number of killings by police of black men. No I'm saying modest number of killings by police of black men is part of the vast slaughter communism creates.
Some might be skeptical of police communism but they do provide service to citizens "according to their needs" and it gets funded by income tax i.e. "according to their abilities". Don't bring up that they don't actually provide service completely according to need. No communist does and we're not having the "it's not real communism" argument.
But surely racism is the cause not communism, right? Nope. At worst 60% of black deaths at the hands of US police are due to racism. This is assuming that all of the disproportionate black deaths are due to racism. The greater violence of US police compared to UK police is responsible for well over 90% such deaths. This is because the UK has much less than 10% of US police deaths per capita. So even compared to other police services organized on communist lines the US is far more lethal to blacks than it would be if simple racism were the problem.
So why would removing the communist system largely solve the problem? Because the problem is one of incentives and accountability, and communism does both badly. Consider what has to happen for a police officer to be punished for killing someone. The body that employs him, the government, has to admit it's at fault. The people who have to cooperate with the cops to help their prosecutions have to act against them. Fundamentally the system has to decide to inflict harm on it's own support. The only reason this would happen is if the political cost of not punishing the cop is greater than not doing so. This removes accountability but crucially it removes it both ways. If a cop isn't punished when public perception says he should be it's blamed on political efforts to protect him, even if that is not the case.
Privatizing police would remove both problems. The government wouldn't control the private police, so they can't be blamed for their actions. Because there would be multiple competing private police forces any police officer would be investigated by one (or more) independent organizations. His buddies couldn't have his back even if they wanted to. As a private citizen doing a private job he would have no special privileges like "qualified immunity". The government decision to prosecute or not a private cop would not be seen as a political decision, any more than prosecuting any private citizen would be. No interest group would see it as enabling abuse if cops didn't get charged. A failed prosecution wouldn't be seen as a political blow either, merely incompetence.
Lawsuits against private cops would also be more just because they would not be political. It would not be a political matter whether a police organization settles a case of supposed police brutality. There might be accusations of racial injustice, but those accusations wouldn't be used to win elections. They would be a matter of corporate PR.
Speaking of corporate PR the cops would have a great incentive to behave and to hire people who will behave. Even ignoring lawsuits there's the problem that people hire people that protect them, not shoot them. An officer that can't be trusted to refrain from homicide is not an asset to someone trying to compete in a market. What is an asset is an officer that will respond to things that hurt their clients, and only those things. Enforcing drug laws, arresting people who braid hair without a license won't get new clients.
If government provided funds to individuals to buy their own police protection the poor would still have protection. Possibly they would have more protection than they currently have since a private firm would have to protect their clients to avoid losing them. In some cases police forces have failed to protect some minorities for decades, effectively leaving them with no police force (although they still get taxed). In the event of widescale violence against a group police firms would have incentives to protect, rather than abandon, the oppressed.
All problems with police, past and present, ranging from race-based oppression, political spying and intimidation, selective enforcement depending on victim or offender, repression of sexual and religious minorities etc. all stem from the police being part of the State's monopoly of force. All stem from the Marxist mantra being applied to policing. It's time to use the best method for producing cars, holidays, and insulin to producing security. It's time to say no to communism, if you really want to protect black people, or anyone.
Tuesday, June 08, 2021
Stakeholder capitalism is just fascism for a good cause. Which means it's just fascism.
The first claim of "Stakeholder capitalism" (which I will call stakeholderism) is that it treats all stakeholders equally, which is a lie. Stockholders alone under Stakeholderism are not allowed to have anyone represent their interests alone. Customers are allowed to buy solely on their perceived costs and benefits alone. Similarly workers are not compelled to keep at their jobs, either permanently or when they wish to take a break. All other parties can proceed as though their interests were paramount to them except for stockholders.
So it's based on a lie, but might it still be a noble lie, good for society? No. Even assuming that the goals of Stakeholderism are noble and worth taking control of someone else's property, this does not achieve goals easier than current methods. Everything that can be done by taking control of companies policies could be done cheaper and more effectively by simply legislating or paying the companies to do things.
To understand why consider the people who would actually implement the policy of Stakeholderism and their incentives. These would be corporate executives that get promoted and paid bonuses according to at least 3 competing goals. These would be 1) long term profit, 2) short term profit and 3) serving the political goals of the government. Let's not pretend that the goals would be set by anyone else but the government. Their incentive would be to appear to be achieving all of these goals, even if that's impossible. They would not be accountable for the failure of any of these goals because it would be impossible to sort out what was done to achieve which goal. Any failure to be profitable would be blamed on the effort to achieve "social*" goals. Any failure to achieve "social*" goals will be blamed on the necessity to produce profit. They would have no special training in achieving "social*" goals Any training they did have would be inadequate because there simply isn't the time to learn to be a good profit maker, a good social reformer and actually work at either profession.
But the incentive structure gets worse when we consider the government. Large corporations are vulnerable to control by government because even small decisions can cost them millions or even billions of dollars. They need to keep the government sweet at almost all costs. So the corporation has a massive disincentive to pursue solutions that conflict with a government agenda. Actually it's worse than that because no corporate officer could be sure how pursuing social goals might politically influential people. So they would avoid funding or otherwise helping any program that might be politically controversial. This is actually worse than leaving social programs to the government, since the government presumably knows what politically influential people want because they tell them. If Program A has features that might offend feminists, race hustlers, "family values" people or whoever but it actually doesn't offend them, the government would know. The corporation wouldn't even ask for fear of a backlash and potential political costs.
Stakeholderism actually makes the problem of government control of corporations worse. If an organization openly says that it's all about profit they can't be questioned for pursuing it. By claiming to be all about social good it makes it easier for the government to pressure them into supporting programs that suit the government. There is no guarantee that programs the government supports will achieve worthwhile social goals efficiently or at all. There is no guarantee that government goals will be positive. Governments have supported, at various times, racism, classism, inverted classism, religious bigotry, persecution for political opinions and homophobia. Now you might say that the bad days are all behind us. But if that's the case explain why Trump was either needed or happened (depending on whether you're for or against him).
Now consider the control corporations have over government, which is inevitable once corporations realize the government controls them. If a group controls you then human nature makes you want to control them, at least to the extent their control is neutralized. This means that government might be prevented from examining the results of those pursuits by corporate influence. If corporate influence isn't sufficient to prevent an examination the examination is unlikely to be objective. The judgement will be made on political grounds not objective benefits because either the corporation or it's opponents will rig the results. This is almost literally the worst method for determining the worth of a project.
But at least Stakeholderism provides more resources to achieve these noble goals right? No, taxation can already transfer as much resources as Stakeholderism could to "worthwhile" causes. The limit in either case is the potential collapse of the company not the unwillingness of corporate executives to support social goals. If the income is taxes they have no choice but to support such goals. Government doesn't ask. Worse Stakeholderism encourages dodgy accounting to inflate the apparent cost of pursuit of social goals.
Stakeholderism also encourages action on the wrong scale. Large corporations are, or should be, at the most efficient size for their commercial pursuits. Smaller than a certain amount and they cannot access economies of scale, larger and they can be crippled by management problems or other diseconomies of scale. There is no reason why the proper size of an organization to correct a social problem would be even close the the proper size of any particular corporation. If an effort is sufficiently small compared to the organization then it won't have a significant effect on it's decision making, it will be ignored by those in charge. This will lead to either under- or over-resourcing of a project because the organization has no reason to care about small amounts.
A good program to correct a social ill requires a number of things, 1) resources, including labor, 2) a plan to efficiently use those resources, 3) a method to asses the good and bad effects of the program, 4) a way to adapt the program to minimize the bad effects and maximize the good (if necessary by scrapping the project), 5) a way to avoid interference in the program by those who interests are compromised by it. Stakeholderism is worse at all of these criterion that current methods, bad as they often are.
* Actually political goals.