TCS Daily


The Economy is Not a Machine

By Max Borders - January 13, 2009 12:00 AM

Beware. The fixers have come to Washington. "Fix" because this one little word, in a close race with "run," is now the most dangerous word in the English language. Fix and run, you see, are words that betray the false metaphor upon which most of today's economic vernacular is built: economy as machine.

  • A CNN headline reads: "Obama's priority: Fixing the economy."
  • Paul Krugman says that what's interesting about the Bush Administration "is that there's no sign that anybody's actually thinking about 'well, how do we run this economy?'"
  • Mark Ames of The Nation thinks hiring Larry Summers "to fix the economy makes as much sense as..."

With Google's help I could go on. But even in social studies we learned that FDR and a coven of interventionists -- channeling John Maynard Keynes -- messed with the monetary system and dropped largess from on high to fix the Depression. This was referred to as "priming the pump."

Whenever I hear such talk, I'm reminded of a passage by Larry Eliot of The Guardian that describes, quite literally, an economic model from postwar Britain:

"A sensation when it was unveiled at the London School of Economics in 1949, the Phillips machine used hydraulics to model the workings of the British economy but now looks, at first glance, like the brainchild of a nutty professor...The prototype was an odd assortment of tanks, pipes, sluices and valves, with water pumped around the machine by a motor cannibalised from the windscreen wiper of a Lancaster bomber. Bits of filed-down Perspex and fishing line were used to channel the coloured dyes that mimicked the flow of income round the economy into consumer spending, taxes, investment and exports."

Keynes, the grand old man of the machine metaphor, would have been either delighted or angered by such a contraption—delighted by the idea that economic inputs and outputs could be rendered in tubing and Easter-egg dye, angered, perhaps, that the various inputs and outputs were not represented as faithfully as they could have been by a more enlightened designer.


Deus ex Machina?

But the whole idea of fixing, running, regulating, designing, or modeling an economy rests on the notion that, if the right smart guys are at the rheostats, the economy can be ordered by intelligent design. But the economy is no mechanism. There is no mission control. Government cannot swoop down like a deus ex machina to explain the inexplicable and fix the unfixable. Why? Because the knowledge required to grasp each of the billions of actions, transactions and interconnections would fry the neural circuitry of a thousand Ben Bernankes. This is what F. A. Hayek called the knowledge problem. Knowledge, Hayek reminded us, is not concentrated among a few central authorities but is dispersed around society. That's why bad unintended consequences follow government interventions like black swans.

A few economists have not succumbed to the "fix it" fixation. They know that society is not like a machine at all, but an ecosystem. Faster than you can say market fundamentalism, a Keynesian will scoff at this metaphor. But his favorite trope has helped to stagnate many an economy; making Rube Goldberg apparatuses out of means-ends networks, perversion out of productivity. As Czech President Vaclav Klaus wisely notes: "The market is indivisible; it cannot be an instrument at the hands of central planners."


Society as Ecosystem

So if not the machine metaphor, why an ecosystem? Economies, like ecosystems are complex adaptive systems. Nature, including the economy, can experience episodes of wild wobbles, fluxes and flows. But it almost always returns to a steadier state known as "ordered chaos." That is, when it's left alone. In clumsier but perhaps more familiar language—ecosystems tend towards equilibrium.

Both ecosystems and economies are distributed systems. In the former, billions of interdependent means-ends activities are a reflection of a billion preferences and choices. In the latter, species are dynamic and interwoven in a web of relationships. For both, the whole system is an ever-evolving cascade of change that is unfathomable to a single mind. Data snapshots may be useful for some things, but should not be intended as blueprints for government planners. Even sophisticated computer models will, like the old Philips machine, eventually fail. There are no oracles.

Once we come to discover not only that the economy is an ecosystem -- but that the laws of ecosystems are very different from the laws of machines -- we'll resist our urge to fix things from the top down. We'll realize that economic growth is a holistic process that happens by virtue of countless adjustments and adaptations within the system itself. That's why economic planning is, and always has been, a form of hubris.

Keynesians on the left are eager to dismiss Intelligent Design (ID) as the creationist afterthought to evolution, but just as eager to embrace its analog in economics. Disciples of Adam Smith know better. Darwin, after all, read Smith. As the late naturalist Stephen Jay Gould wrote, "the theory of natural selection is a creative transfer to biology of Adam Smith's basic argument for a rational economy: the balance and order of nature does not arise from a higher, external (divine) control, or from the existence of laws operating directly upon the whole, but from struggle among individuals for their own benefits."

Today, those working at the frontiers of complexity science are beginning to apply Darwin's insights to the social sciences, too. "[Economics in light of complexity] is based on the emergent behavior of systems rather than on the reductive study of them," writes theorist Stuart Kaufmann. "It defies conventional mathematical treatments because it is not prestatable and is nonalgorithmic. Not surprisingly, most economists have so far resisted these ideas. Yet there can be little doubt that learning to apply these lessons from biology to technology will usher in a remarkable era of innovation and growth." (Lest cries of 'social darwinism' go up, remember that we're only talking about the functional aspects of an economic order, not whether a safety net is justified.)

Kaufmann's insights echo those of Hayek and Ludwig von Mises—largely banished as they have been from the ivory towers by economists wishing to play god. Perhaps once these wayward "stimulus" experiments run their course -- like a fix passing from the body of an addict -- those who believe not in market fundamentalism, but in market fundamentals, will be vindicated.


Complexity and Rules

By fundamentals I mean rules. Only rules can be the product of human design. These are the simple rules that lower "transaction costs," which is a fancy way of saying help us trade with each other easily, minimizing conflict. We call these rules "institutions" (property rights, contract enforcement, and so on) -- not legislation meant to regulate failure away, but to protect people from force, theft and fraud. For these are the rules that bring market discipline in a system of prices, profit and loss.

Many continue to blame "greed" for our current state of affairs. But greed is rather more like gravity. When you fall, you can either blame Isaac Newton or the banana peel on the sidewalk. Profit motive is a good thing when it operates in an environment where bad bets are punished with losses and good investments are rewarded. Only government can distort that healthy profit-and-loss system, giving people incentives to make bad decisions. It is in such an environment that greed becomes dangerous.

With the rules right, however, greed can help our economy stabilize faster than government ever could. As the lubricant of our economic system, self-interest leads a billion market participants to redirect resources to projects that create value in our society—all in a kind of large-scale recalibration. When profit and loss bring discipline, we'll behave more "rationally" in this process. But if government continues to change the rules ad hoc to bias the market in favor of corporatism and irrational behavior, the balance between order and chaos will be lost. Invariably, the fixers will continue to descend upon the economy with bad metaphors.


Max Borders is executive editor at Free To Choose Network. He blogs here.
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98 Comments

the 'knowledge problem'
Good article and it's nice to see someone mention F. v.Hayek insight of the knowledge problem. Another way to say it is that statists actually have the incredible conceit to believe that those few elites can replace all the decisions made by people every day of the year. So if there's about 300 million people and most make a few dozen economic decisions a day, how many will that be that the command economy guys have to make on their own. I guess they figure, what's the point of having power if you can't make decisions for people you disdain?

Psychohistory
"Psychohistory is based on group trends, and cannot predict with sufficient accuracy the effects of extraordinary, unforeseeable individuals, and the Second Foundation's true purpose was to counter this flaw."

http://en.wikipedia.org/wiki/The_Foundation_Series

Even Asimov had to acknowledge the power of individual choice.

Rules ...
There also must be rules of ethics, and you do need government, or something like it, to enforce them. Some enforcement can be found in transparent accounting and in analysis of risk. But recently our accounting rules have been jiggered up for purposes I cannot divine, and the supposed guardians of risk (the ratings agencies) have deserted their posts for a share of the shekels.

But readers here probably understand this better than I do.

Government guarantees
The USDA inspects our food supply therefore it is safe.
The SEC regulates Wall Street therefore all those on Wall Street are honest and legal.
The US Government guarantees mortgages therefore they are are a good deal and no risk.



rules of ethics
When you say that there "must be rules of ethics, and government to enforce them" I resent the implication that if there were no government watching me I would be robbing my neighbors and raping my daughters. People had such ethics before, and we don't need any Big Brother to tell us what they should be now. Your statement is very insulting.

It runs all by itself!
...just not very well.

It would be very hard for any intelligent person to not come to the conclusion that the engine that runs our system for generating prosperity has not been tended for some time, and that as a direct consequence it has broken down.

The markets made the meltdown. It was greed enabled by deregulation that allowed lenders to originate bad loans, and sell them to other operators who repackaged and resold them as mortgage based securities.. while still other operators certified those tainted offerings as being AAA.

The market was left ot its own devices. And it failed us, as surely as a traffic grid would fail us if there were no signals or enforcement.

The author ridicules a hydraulic model that was once made of cash flow in a hypothetical economy. But isn't every economist's pet nostrum based on equations in a complex field? And aren't the functions to be gleaned from a complex flow diagram best expressed in an actual hydraulic model? The only distinction to be made between it and a mathematical model is that it's easier to see how it works.

The only way to really know if the guys in the control room know how to run the economy is to let them give it a try and see if it works better once they've taken over. But we do know something very important so far: we know that with no one pulling the levers, the economy doesn't work very well at all. Repeatedly it will sputter and seize up.

Could use some improvement
You make an excellent argument for better methods of control. In none of those cases would things be any better if all controls were lifted.

Would our food supply be safer if there were no FDA? You could compare occurences of food poisoning in this country with any nation that has no such government agency, and I assure you you'd find that our guys do a pretty effective job.

Nonetheless, if you look closely at the rules you'll find they could be greatly improved. And the reason is almost invariably not because government employees are by their nature not as smart as regular people, but rather that they have been bought by the industries they were created to regulate.

Our meat inspection regs, for example, have come about because of the influence groups like the National Cattlemen's Beef Association have on the USDA.

The solution is not to disband the USDA but to improve it. And a good beginning would be to have greater transparency and fewer appointments of officials with grave conflicts of interest with the industries they regulate.

YOU make a case for more government control
I make the case that government can never be perfect and must so state leaving the ultimate responsibility to the customer.

When the customer understands he is responsible for his choices, he makes better choices, especially after being burned once or twice.
Informed customers, with market force, will demand businesses provide quality products.

I am sure the peanuts in the salmonella contaminated peanut butter were certified by USDA inspectors.

Trust Your Government - Afterall Prospective Treasury Secretaries ALWAYS Pay Taxes
...just not very much.

It would be very hard for any intelligent person to not come to the conclusion that the government that pretends to run our system for generating prosperity has ever been tended and that as a direct consequence it has broken down.

The government made the meltdown. It was greed enabled by legislators seeking votes that urged lenders to originate bad loans, and sell them to other instiutions who repackaged and resold them as mortgage based securities.. while still other government sponsored enterprises painted those tainted offerings as being AAA.

The government that interfered with the market was left to its own devices. And it failed us, as surely as a traffic grid would fail us if there were no signals or enforcement.

The author ridicules a hydraulic model that was once made of cash flow in a hypothetical economy. But isn't every government budget analyst’s pet nostrum based on static equations of a dynamic reality? Are the functions of a myriad of intelligent, independent actors to be gleaned from a complex flow diagram best expressed in an actual hydraulic model of an inanimate substance? The only distinction to be made between it and a mathematical model is that it's easier to see how it works.

The only way to really know if the guys in the government know how to run the economy is to let them give it a try and see if it works better once they've taken over. But we do know something very important so far: we know that with no one being accountable, the government doesn't work very well at all. Repeatedly it will sputter and seize up.

TOO much tinkering IS the problem.
Correction:

It was a government backed ".. market (that) made the meltdown. It was greed enabled by deregulation that allowed lenders to originate bad loans, and sell them to other operators who repackaged and resold them as mortgage based securities.. while still other operators certified those tainted offerings as being AAA."

If the government did not guarantee the mortgages, the market would not have made bad loans, for very long.

Just Curious Roy
What is a "complex field". I'm not a mathemetician. Enlighten me.

Insulting
Colonel, keep reading. Roy will regularly attribute all sorts of moral failings to everybody but his favorite leftists.

Tax Problem- Calling Roy
Roy with your vast expertise of taxes, do you think that Mr Geinther should retain you? It apppears he needs help.

Finding foolproof safeguards
"When you say that there "must be rules of ethics, and government to enforce them" I resent the implication that if there were no government watching me I would be robbing my neighbors and raping my daughters."

Say what you will.. if there were no government, someone would certainly be doing those things. You'd be a fool not to understand that.

The rules against orignating and selling shoddy mortgages were inadequate to prevent that from happening. And private industry's firewall against that abuse.. the ratings agencies.. were subverted.

We need better guidelines and better enforcement. If these come from a private agency certifying safe investments, great! Start up such a business and your fortune will be assured.

Just remember that we already had those in place.. the private ratings agencies. And they failed us badly when everyone relied on them.

You're really on a rant, aren't you?
It's too bad you're not capable of offering instructive comments. There's quite a lot you could have chosen to say about this subject.

But as you've decided to say "Roy will regularly attribute all sorts of moral failings to everybody but his favorite leftists" instead, why don't you flesh out this thought? Tell us how greed and artifice had nothing to do with the collapse in the bond markets.

Provide a basis for your belief
There is absolutely no way even an informed consumer can certify that something he buys in a market is safe. One would have to test every morsel he served up for dinner, for bacterial contaminants, heavy metals, filth and prion contamination. Can't be done. We rely on having an agency enjoying authority to test and to ban from the market anything that fails. And only a government agency is appropriate to the magnitude of the task.

"..he makes better choices, especially after being burned once or twice."

Get burned even once with Mad Cow Disease and it's all over. No thanks.

Do you recall the situation in New York, back in 1850? They didn't have a government police force, they had private security outfits, the way they did fire companies.

That worked just fine, didn't it? The Metropolitan Police and the Municipal Police used to fight pitched gunbattles over who would get the lucrative protection trade.

I don't think New Yorkers were the better off for it. You just assert on principal that private is better. But you've never once offered any basis for that uninformed belief.

Glad you asked
It's always a good idea to pay your SE if you think you may be going through the confirmation process some day. They like to check those things.

Back when DC first got their non-voting delegate to sit in the House, the candidate was Eleanor Holmes Norton. And they found out right away that she had failed to file a 1040 for any of the previous six or seven years.

Her excuse? "I always let my husband handle those things."

And it worked okay. I think Mr Geithner's excuse, whatever that turns out to be, will also be found to be adequate.

A complex field
I'm not a mathematician either.. so I've used the term in a colloquial sense. A complex field would be one with a number of different factors acting against each other. As in a macroeconomic model.

The equations involved would be opaque to the typical outsider, whereas a flow system modeled in a physical hydraulic apparatus would make things more understandable. So I like the idea of the guy who built the system as a piece of plumbing.

"Be wary of the society that values its philosophers over its plumbers. For neither its theories nor its pipes will hold water."

This is why you are a joke
I think Mr Geithner's excuse, whatever that turns out to be, will also be found to be adequate.

While Mrs. Holmes-Norton COULD invoke the "innocent spouse" provisions of the tax code, that is supposed to be for a different spouse.

Is Mr. Geinther's excuse going to be I though my wife did it?

For the rest of us, its a good idea to file & pay taxes, not to avoid embarrassment, but fines, penalties, seizure of assets and jail. Ask "Duke" Snider & Wesley Snipes.

AS little sympathy as I have for tax cheater celebs, I understand hitting a baseball or reading a script doesn't mean you can understand that grand tome of the tax code.

Geinther is an "expert". There is no excuse, except the blanket pardon you'll give to anybody on the left or their servants.

You are such an iuntellectually dishonest, what was your word? Oh that's right-ASS.










Government does NOT do this.
"There is absolutely no way even an informed consumer can certify that something he buys in a market is safe. One would have to test every morsel he served up for dinner, for bacterial contaminants, heavy metals, filth and prion contamination. Can't be done. We rely on having an agency enjoying authority to test and to ban from the market anything that fails. And only a government agency is appropriate to the magnitude of the task."

The quality control department of every manufacturer does this regardless of any government inspectors.

Rely on a government agency and you get what we have now, salmonella outbreaks.

"Do you recall the situation in New York, back in 1850? They didn't have a government police force, they had private security outfits, the way they did fire companies.

That worked just fine, didn't it? The Metropolitan Police and the Municipal Police used to fight pitched gunbattles over who would get the lucrative protection trade."

Now government police take payoffs from mobsters to run their rackets. Very peaceful.

And you are on?
The Federal Register, which lists new regulations, annually averaged 72,844 pages between 1977 and 1980. During the Reagan years, the average fell to 54,335. During the Bush I years, they rose to 59,527, to 71,590 during the Clinton years and rose to a record of 75,526 during the Bush II years. Employees in government regulatory agencies grew from 146,139 in 1980 to 238,351 in 2007, a 63 percent increase. In the banking and finance industries, regulatory spending between 1980 and 2007 almost tripled, rising from $725 million to $2.07 billion.

-Economist Walter Williams

Here's another
What caused the financial crisis? What prolonged it? Why did it worsen so dramatically more than a year after it began? Rarely in economics is there a single answer to such questions, but the empirical research I present in this paper strongly suggests that specific government actions and interventions should be first on the list of answers to all three. I focus on the period from the start of the crisis through October 2008 when market conditions deteriorated precipitously and rapidly. I draw on research papers, speeches at central banks, and congressional testimony I have given on the crisis during the past two years.

-Economist John Taylor

Tell us again about "deregulation", Uncle Roy...
We like a good fairy tail...

The economy is a balloon
The gases in the balloon are the participants in the economy exchanging energy with each other keeping the balloon inflated.

When outside forces, like government regulations or stimuli, squeeze the balloon, it distorts into odd shapes.

To live outside the law, you must be honest.
Bob Dylan.

The opposite is true as well. Living inside the law, one must lie.

Guilty as hell.. maybe
Oh, I certainly agree.. not about the part where I'm an ass, of course, or "iuntellectual".. but about Geithner's failure to pay S-E taxes for four years as being an egregious abuse of the tax code. He was so high-profile as to make the lapse appear flagrant.

But my guess is still that he'll sail through the process. I was neither endorsing nor excusing his behavior. I myself would never ever do such a thing. I was just placing a little side bet with myself about the way the confirmation process is likely to work.

We'll see in the morning whether my guess was right. And here's another guess. Whichever way his confirmation goes, I'll bet that he never gets brought up on charges by the IRS. He'll just finish paying and that's it. Despite the appearance of knowingly committing tax fraud.. assuming he failed to file for those years.

Of course if he filed and just didn't pay.. there's no fault. The stories I've read don't address this aspect.

Case in point
If we're talking about the quantity of regulation, as opposed to quality, I would agree. Way too much. OSHA would be the prime example of writing so much gobbledigook that compliance brings businesses to a standstill.

Quality's another thing. I seem to recall just about the first thing Bush did when he came into office was to repeal the rules on workplace injuries. So employers didn't have to find new ways to perform tasks that didn't lead to carpal tunnel and other repetitive motion injuries. That was IMO a giant step backward for workplace safety.

http://archives.cnn.com/2001/ALLPOLITICS/03/20/bush.ergonomics/

I'd be in favor of the minimum rules and enforcement that gets the job done.

Let's carry your analogy a bit farther
Push on the balloon and it bulges out on the other side.

Push it too hard, and...?

A rule book on balloon handling would be very useful. And if it were everyone's balloon, there would have to be stiff penalties against popping it.

Government squeezes too hard, it breaks, like Cuba, USSR,.....
A very simple rule book is needed.

DON'T SQUEEZE

providing basis
And you have also not provided a basis for your belief that they were better off when the municipality took over the protection trade. It could be that when they paid those private security companies, they may have provided better service, than the the shake down artists that call themselves the police; dial 911 and die, that's their policy because they collect from you but don't protect.

Socialism fails again
"Until recently, Chávez had pushed foreign oil companies here into a corner by nationalizing their oil fields, raiding their offices with tax authorities and imposing a series of royalties increases.

But faced with the plunge in prices and a decline in domestic production, senior officials here have begun soliciting bids from some of the largest Western oil companies in recent weeks — including Chevron, Royal Dutch/Shell and Total of France — promising them access to some of the world's largest petroleum reserves, according to energy executives and industry consultants here.

Their willingness to even consider investing in Venezuela reflects the scarcity of projects open to foreign companies in other top oil nations, particularly in the Middle East.

But the shift also shows how the global financial crisis is hampering Chávez's ideological agenda and demanding his pragmatic side. At stake are no less than Venezuela's economic stability and the sustainability of his rule. With oil prices so low, the longstanding problems plaguing Petróleos de Venezuela, the national oil company that helps keep the country afloat, have become much harder to ignore"

http://www.iht.com/articles/2009/01/15/america/15venez.php

Headlines you don't see:

"Dog Bites Man"
"Socialism Fails"
"Socialists Need Capitalism or Go Broke"

Ecosystem analolgy
Interestingly biologists still haven't figured out that real ecosystems aren't machines either, despite innumerable attempts at ecosystem changes that have backfired. Most recently:

http://news.yahoo.com/s/ap/20090113/ap_on_re_au_an/as_australia_rabbit_infestation_1

Ecosystems of all sorts, whether biological or economic, exhibit non-predictable behaviors in response to central planning.

Foolproof Safeguards. A Deal for Roy
There are no "foolproof" safeguards. After the tradegy of the thalidomide-induced birth defects in the early 1960's, there were cries to make the FDA's criteria and process more rigorous. It was-but there was a hidden cost-as there always is with statistical inference-some good drugs stopped getting through.

We only questioned this because Europe was approving some drugs we weren't and afterextensive experience-they were deemed safe.

There's Type I & Type II errors, and reducing the risk of one (the obvious consicuous one, generally) increases the risk of another.

I'll issue a public challenge to Roy: You take a couple weeks off posting, I'll do the same. Read "The Black Swan" by Nicholas Nassim Taleb. Its a fast and fascinating read.
When your done, post your thoughts (just so we know you read it) and we'll see if you have any second thoughts about the efficacy of centrralized direction, clear cause and effect, planning and such things. Amazon sells the book for about $16





Wrong on meat inspection
You're totally off base on government meat inspections:

"The quality control department of every manufacturer does this regardless of any government inspectors."

No they do not. The FDA got started in response to stomach-turning coincidences of filth, contamination and adulteration of meats coming from the nation's largest packing houses. And the owners, being profit oriented over any concern for customer health and safety, only went along kicking and screaming from the severe penalties imposed.

Over the years, whenever inspections have been lax, the amount of contamination goes up. And famously, once Bush was able to pack the USDA with his own hires, the rules got changed and cattle pens only had to test one animal in every 16,000. Which is no test at all.

When the beef gets inspected it is by USDA inspectors. And there aren't nearly enough of them to do a proper job.

"Rely on a government agency and you get what we have now, salmonella outbreaks."

Take us through the process, marjon. Before, when meat packers could do anything they wanted, they scrupulously guarded against salmonella. But now that there are penalties for breaking the rules, they don't care. Huh?

Should we let them sell snake oil?
Surely you've noticed that FDA guidelines have gotten noticeably more lax over the past eight years. And we now allow drugs to be sold that have horrendous side effects for a minority of users. All they have to do is to post the adverse effects in the little piece of paper.

The result? 106,000 deaths each year, just from approved medicines properly administered.

" The report apparently shows there are 2,000 deaths/year from unnecessary surgery; 7000 deaths/year from medication errors in hospitals; 20,000 deaths/year from other errors in hospitals; 80,000 deaths/year from infections in hospitals; 106,000 deaths/year from non-error, adverse effects of medications - these total up to 225,000 deaths per year in the US from iatrogenic causes which ranks these deaths as the # 3 killer. Iatrogenic is a term used when a patient dies as a direct result of treatments by a physician, whether it is from misdiagnosis of the ailment or from adverse drug reactions used to treat the illness. (drug reactions are the most common cause)."

http://www.cancure.org/medical_errors.htm

If you're good with that, okay. I'm not. I would ideally like to have a federal agency that was immune to influence from the fabulously wealthy industry they're supposed to be regulating.

It might not be foolproof, but it would be a better start than just throwing out all the rules and going back to anyone being able to sell nostrums that claimed to cure everything from chilblains to warts, and that actually destroyed your liver instead.

Reading too much socialist propganda
"Today’s history books credit muckraking
novelist Upton Sinclair with the reforms in
meatpacking. Sinclair, however, deflected
the praise. “The Federal inspection of meat
was, historically, established at the packers’
request,” he wrote in a 1906 magazine
article. “It is maintained and paid for by the
people of the United States for the benefit
of the packers.”"

"“The reality of the matter, of
course, is that the big packers were warm
friends of regulation, especially when it primarily
affected their innumerable small
competitors.” Sure enough, Thomas E.
Wilson, speaking for the same big packers
Sinclair had targeted, testified to a congressional
committee that summer, “We are
now and have always been in favor of
the extension of the inspection, also of
the adoption of the sanitary regulations that
will insure the very best possible conditions.”
Small packers, it turned out, would
feel the regulatory burden more than large
packers would"

http://www.cato.org/pubs/policy_report/v28n4/cpr-28n4-1.pdf

"As the fame of their products grew, the Mayers feared that other meat
packers might try to capitalize on their success. Since most meat products
were sold without a brand name, other meat packers could try to use the
Mayers' reputation to sell their products.
In 1904, the Mayers became one of the first meat packers to brand their
products. At first, they used the name "Edelweiss," for a white flower that
grows in the mountains of Germany. They stamped it on rinds of bacon
slabs, and printed it on boxes of pork sausage and on lard pails. Over time,
they used other brand names like "Moose" (for baker's lard and heavier
bacon), "Approved Brand," and "Meats of Good Taste." Finally, in 1929, the
brand name of Oscar Mayer was first printed on Oscar Mayer Weiner
packages and has been used ever since.
Besides having one of the first recognized meat brands, the Mayers were
also among the first to have their products federally approved. In 1906, the
Food Safety Inspection Service (FSIS) was created to ensure the purity of
food products, and the Mayers were among the first to volunteer for
inspection."

http://brands.kraftfoods.com/oscarmayer/pdf/OM_Company_History.pdf

Oscar Mayer, WITHOUT GOVERNMENT COERCION, initiated quality control and branded HIS meat products forcing his big four competitors to run to the government to create a government agency to force government inspection.

Independent businesses will always be the first to provide quality products to stay in business. It is the large corporate interests you SAY you oppose that WANT such regulation because they have the big bucks to control the regulators and do NOT want to compete on quality.

Notice that now in the meat cases are Angus Brand beef. I am sure they want to make sure their beef is of high quality as they brand it and stand by it.

The cure
Lawsuits with all out of court settlements made public.

If people found out the Viagra caused the death of one person and his family sued and were paid millions, it would not be long before Viagra would be fixed or withdrawn to avoid further, larger lawsuits.

Black swans
"I'll issue a public challenge to Roy: You take a couple weeks off posting, I'll do the same. Read "The Black Swan" by Nicholas Nassim Taleb. Its a fast and fascinating read.
When your done, post your thoughts (just so we know you read it) and we'll see if you have any second thoughts about the efficacy of centrralized direction, clear cause and effect, planning and such things. Amazon sells the book for about $16"

Don't need to take the time. It's child's play to build an entertaining and convincing case for anything. In fact this is what the field of dialectics is all about. But my first rule is to believe nothing until one has examined the countercase.

So here's my countercase: traffic control. Runs better without central planning? You tell me how things develop if each driver is given his own free initiative.

There are instances where the black swan theory holds. A good case in point would be the failure of Long Term Capital Management. Just going from memory, two mathematicians came up with an extremely complex equation that allowed them to predict an accurate price point for futures contracts. So they borrowed a stack of capital and began brokering futures.

In normal times their formula held up just great, so they were able to amass, oh, let's call it an even zillion dollars. They were Boy Wonders. And their formula told them the chances of things going wrong were one in ten out to something like 56 zeros.

Then there was a bear turn in the market.. and every one of their option holders decide to execute. Well, we know how that turned out.

So it was a true black swan event. Probably not so rare as they'd thought. However in the real world, most swans are white. And the traffic runs better when there is some central control. It doesn't prevent 100% of accidents. But to me, 99% is more than good enough for us to put the system into place and maintain it.

Taking too long
Your press release is taking way too long to download. Maybe you can summarize it for me.

Since posting my earlier comment I find that in fact there is no mention of G's not filing properly. It's just that he was late to pay. And last I heard, that's no crime.

Thank god you're here!
It was long past getting dreary around here, with my usual inquisitors putting up the same old arguments. You raise not just a good point, but one central to the issue. Please stick around.

When we don't understand a system very well and try to change it in some fundamental way, the results are usually both pronounced and unexpected. Like putting rabbits loose in Australia, just to see what happens.

In fact that can be a way to understand the system better, tinker with it and observe the results. But that approach can sometimes have dire consequences. That's why we haven't done anything drastic with environmental controls.

Back in the 1970s, when we understood just enough about climate to see that the earth would, if nothing unexpected happened, be heading at some point into a fresh ice advance, we figured out we could head such a thing off by dropping plane loads of soot onto the polar ice caps. The soot would change the albedo, the ice would melt and we'd avert disaster. Cool.

Good thing we didn't act on impulse, though. 15-20 years later we were finding undeniable signals of warming.. and linked to phenomena that were entirely new to us. We'd have had to go back up to Greenland with snow blowers, and blow off all that soot we'd spread. Or, if we couldn't do that, paint it all white.

However, you're drawing an entirely unproductive conclusion from this cautionary tale: you're concluding that we should keep our hands off natural systems, and that anything we can ever hope to do will be destined to fail or to complicate matters.

That's kind of a 13th century attitude. One that says everything is better left in the hands of God.

Should we then never tinker with medicine, because God knows best when we should get cancer? Or should we pursue greater scientific understanding.. knowing that some times we reach our limits and the patient dies anyway.

To me, that's how we march forward. One uses the loss of a patient, or the failure of an experiment, as a learning experience. And advances one step further toward a better solution.

In fact we now possess a mountain of observation about introduced species and their effects on an existing ecosystem.. whether the introduction was intentional or accidental. We know a lot more than we did back in the 1940s, and someone thoughtlessly introduced rabbits into an established system.

It's a good body of knowledge to develop, too. With it we know enough to prohibit many classes of introductions, and to have checkpoints at the borders where plant and animal cargo is approved or not. Once something like kudzu or johnson grass comes across the border it can be damn near impossible to eradicate.

Which, come to think of it, is a pretty good argument in favor of having some kinds of sensible central planning, based on the best of our scientific understanding.

It's even a good argument for always moving the state of our understanding forward, so our system repairs will in time become even better and more professional.

To me, one way to look at it, God didn't put us here on earth just to keep making the same mistakes forever. We developed big brains so we could figure out how this whole creation worked. Whether the dirt ball we're living on is God's plan or just an accident (the other way to look at it), we find ourselves in poorly charted territory. And owe it to ourselves to learn how to operate it better.

Otherwise we're like the cave guy hitting two rocks together, trying to light a fire. So he slips and mashes a finger. And tells himself, well, I guess this whole thing was just a bad idea. And puts down his rocks.

More black swans
Thanks for turning me on to an intersting idea. I'd heard about it of course, but never until this morning paid much attention to it.

First, it's the kind of idea that sells books. Very trendy, and turns an accepted paradigm on its head.

Second, the implications are vast. It points to stoicism and quietism. If everything that happens is just some discrete phenomenon, and inexactly comparable to any other phenomenon, we can know nothing. We are at the mercy of a mysterious and opaque universe. Best to give up now, rather than attempt to master it.

If not taken to that absurd extreme, though, it's a useful elucidation of various sorts of logical fallacies. Thus worth reading.

So I'll ask you: in the face of our current incomplete understanding of how the world works.. should we go forward or backward?

Should we devote more of our budget to basic R&D, even though it may not result this year or next in valuable, salable products like Tang? Or should we turn away and just accept the world the way it is, posing problems that God never meant us to solve?

That's your guess
Maybe you ought to actually read about those early days in New York, before the Civil War. It would broaden your understanding. The two opposing police forces were protection gangs.. armed forerunners of the Mafia, and the current NYPD on its worst days.

The amazing thing is, first you hold EXACTLY the same beliefs as everyone else around here. To the letter. You guys are as ditto headed as an Islamist radical. Everyone but you is wrong wrong wrong and that's IT. No proof is ever necessary.

And if anyone ever says maybe you should read up on something, that's just a trick of the Devil. Those crafty words shall not deceive you; you will stay pure, and know what you know because your god, or whoever, whispered the Truth to you.

This is just the weirdest kind of religion to try to argue against. I have no way of understanding the thoughts of someone who doesn't need evidence, and just closes their mind to all information. What is it? Did somebody put a chip in you?

I'm just asking. What is it that makes you so sure?

my guess?
There you are with your normal patronizing and insulting attitude that only you have read anything, or even thought out anything.
One insult is to suggest we are the same as the islamic radical who want to kill infidels and force other to do their will, whereas guys like many of us here don't want to force anyone to do anything, but keep advocating for more freedom. You actually seem more like some sort of fundamentalist, like the bolsheviks or naazzis.

The civilizing force
"There you are with your normal patronizing and insulting attitude that only you have read anything, or even thought out anything."

If you had betrayed in your many comments any evidence at all that you had done any reading-- on any subject at all-- I would not have made those comments. But you seem to be entirely driven by strong inner forces, and actually know, or even care, very little about the real world. The only world that's real for you is the one in your head, and reality consistently fails to meet its high demands.

I would be edified to see you prove me wrong. Read something. Describe it here. Then come to some conclusion that the facts you've uncovered point toward. THAT is the way to convince people your view is the correct one.

I'm going to hazard the guess that you've come by an engineering education, and have been slighted in the area of the liberal arts.

Then you think I've suggested that you are "the same as the islamic radical who want to kill infidels and force other to do their will.."

Ignoring your subject and verb disagreement, I have not done so. This is an example of something you state as a fact.. when no fact backs it up. Correct me if I'm wrong.

The problem is that you whine on and on about your lost freedoms.. and all the while continue to live in a country that relies on everyone following the rules. It's a nice place to live and a productive workplace environment because we do follow those rules.. so long as everyone obeys them. And you should be able to understand that people wouldn't obey them if there were no penalties for noncompliance.

Which leaves you the choice once again: either play by the same rules everyone else does, or go to jail, or get out. Leave for one of those places where there are no rules. Just don't stay here complaining day in and day out.

And this is supposed to prove...?
All you've given us is an introductory paragraph to a paper. You don't identify or link to the paper itself.. which may or may not hold useful information. But the parapgraph itself offers nothing.

Either give us the link or form some conclusion based on the paper, in your own words.

" live in a country that relies on everyone following the rules"
What happens when individuals stop following the rules? Especially when led by the example of our 'leaders'?

A fair question
"What happens when individuals stop following the rules? Especially when led by the example of our 'leaders'?"

The closest we've come to having a rogue presidency, accountable neither to the public will or the constraints imposed by our Constitution, is going to be stepping down in another couple of days. We have no reason yet to suppose that the incoming administration will be similarly unaccountable.

So let's wait and see what develops.

BDS will take some time to recover.
I was thinking of the potential new Treasury Secretary who violated tax laws and BHO who doesn't care among all the other criminals in government positions today.

newsflash for Roy
FYI Roy I haven't just arrived from Mars but have been living on the earth for over 60 years, in many countries, and have read many books, and am not an engineer, and don't care about grammer.
It must be that rather then the complaining you speak of, I make principaled comments that point out the crap in your diatribes to support further tyranny.
Check these words out that you use: noncompliance, follow the rules, as long as everyone obeys, etc. This is the talk of facists, and you've already told us you agree people should be shot for not submitting to the governments arbitrary tyranny.
BTW, another presumption you make is that I live in the US; I've never said that. It could very easily be that I'm a foreigner, or at least live in some other country. But I won't tell you for some very good reasons.

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