Curt Doolittle

Theme: Incentives

  • CONFIGURING PRODUCTION “Entrepreneurs, through a process of trial and error, fig

    CONFIGURING PRODUCTION

    “Entrepreneurs, through a process of trial and error, figure out how best to configure production. In this process of ongoing discovery, there can be periods in which workers are unemployed, while the market mechanism tries to figure out how to utilize them.” — Arnold Kling.

    I’ve been a supporter of Kling’s argument since he first started talking about it. But in our intellectual climate, an explanation must be reduced to some sort of model so that we are sure that the various causal axis are related in the way that we assume and intuit that they are.

    As yet I haven’t seen such a model, or comparison with that model against data. This deconstruction, which involves painfully detailed research, was one of the many ideas that convinced greenspan of the virtue of the entrepreneurial coordination of production amidst fragmentary knowledge by studying the cotton trade.

    I feel, that in my work, I am trying to express his argument for PSST in operational language of incentives using propertarian terminology.

    (And I’m using PSST in a post that should come out later today.)

    https://www.facebook.com/arnold.kling?

    Source date (UTC): 2013-10-21 05:18:00 UTC

  • Capitalism: How Much Is Wasted In Finding Market-based Solutions?

    I WILL TRY TO DO YOUR QUESTION JUSTICE:

    RE: “That represents a huge expenditure of human and physical resources that is not typically looked at when evaluating the efficiency of the winner.”

    Actually, it is obvious, common sense, and assumed in economics and politics, but we come to the opposite conclusion.  (a) we are constantly researching and developing new products and services, and variations of them through constant refinements of products, services, and prices called ‘entrepreneurial research and development”. It is not a process of PRODUCTION. The market is a process of RESEARCH AND DEVELOPMENT.

    Furthermore, as the world consists of millions of resources, all of which have multiple demands on them, we must constantly look for what we refer to as ‘substitutions’ in the form of different resources, different suppliers, different technology, to adapt to constant changes in the demand for and availability of resources from the most simplistic primary resources to the most complex combination of sophisticated production techniques. 

    So. NONE OF IT IS WASTE.   The market is not a machine following a production program. It is a vast network of individuals working in networks some of us call ‘patterns of sustainable specialization and trade”, dynamically changing our efforts in response to other similar networks, in real time on a momentary basis in some cases (oil prices) and on a long term basis in others (commercial construction) and on a very, very long term basis for others (pharmaceutical research.)

    A COMMON ERROR
    It is very common for people who lack knowledge of economics to apply very simplistic concepts of production to an economy. It is very common for people who lack knowledge of economics and to fail to understand prices as an information system by which we coordinate ALL HUMAN ACTIVITY to serve each other’s needs, in a vast division of knowledge and labor, that is incomprehensible to any individual or group of individuals.  It is very common for people who lack knowledge of economics to confuse the difficulty in producing goods and services, as one of applying labor, when labor is, in fact, the cheapest most ready commodity available, and worth very little. On the other hand, it is extremely difficult to ORGANIZE VOLUNTARY participation in production that is not a constant process of producing what is know, but a perpetually dynamic process of organizing the process of research and development, which produces an infinite variety of goods, wherein the competition between multiple producers forces all production to the lowest price, so that an increasing number of people can afford to consume goods. 

    Each of us produces very little. None of us, individually, matters to production. However, by voluntarily coordinating our efforts through self interest, by using the information system we call prices to guide us, we can cooperate by in a vast division of incomprehensible knowledge and labor.

    For this reason, people who ORGANIZE production are compensated highly for it, but those who CONSUME that production.  Largely, those of us who consume or labor, gain the benefit of our efforts, each of which is very small, in the form of affordable consumer goods and services.  Not necessarily as compensation. Because it is our labor that is of little value, and the organization of labor for the purpose of production as highly valuable. Because risk taking, forecasting, and guessing the future against competitors, so that we make the best use of the world’s resources at any given time, is what determines success or failure of the coordination of many people’s interwoven efforts as successful. And that success is told to us by the information system in the form of ‘profit’.  Profit which is quite hard to obtain it turns out.  That is because, except at the extremes, organizations, whether private or public consume the maximum amount of profit that investors will tolerate. 

    I HOPE THIS ANSWERS YOUR QUESTION.

    It cannot be waste if it is experiment.  The problem with your question is that you assume we know what we do not and cannot know. It may help to remember that the socialists thought like you do and 100 million people are dead because of it. And the entire world has abandoned socialism (central planning of production) for this reason.  Prices and Incentives are inseparable. without prices we literally cannot think, or plan, or coordinate out efforts. Without incentives we cannot voluntarily get people to continue to conduct research and development.  Without research and development we cannot sustain production at low prices, with increasing advancement in technology, goods and services. Without advancement we would eventually become incrementally poorer as all differences between us were equilibrated, and the incentive to cooperate voluntarily declined. 

    EASY ENTRY LEVEL READINGS
    “I Pencil” (Essay)
    “The Use Of Knowledge In Society” (Essay / Hayek)
    “Parable Of The Bees” (Essay)
    “Economics In One Lesson” (Book / Haslitt)

    That’s about it. You get that. You get economics.  We call it The Economic Way of Thinking. 

    Curt Doolittle
    The Propertarian Institute.
    Kiev

    https://www.quora.com/Capitalism-How-much-is-wasted-in-finding-market-based-solutions

  • Capitalism: How Much Is Wasted In Finding Market-based Solutions?

    I WILL TRY TO DO YOUR QUESTION JUSTICE:

    RE: “That represents a huge expenditure of human and physical resources that is not typically looked at when evaluating the efficiency of the winner.”

    Actually, it is obvious, common sense, and assumed in economics and politics, but we come to the opposite conclusion.  (a) we are constantly researching and developing new products and services, and variations of them through constant refinements of products, services, and prices called ‘entrepreneurial research and development”. It is not a process of PRODUCTION. The market is a process of RESEARCH AND DEVELOPMENT.

    Furthermore, as the world consists of millions of resources, all of which have multiple demands on them, we must constantly look for what we refer to as ‘substitutions’ in the form of different resources, different suppliers, different technology, to adapt to constant changes in the demand for and availability of resources from the most simplistic primary resources to the most complex combination of sophisticated production techniques. 

    So. NONE OF IT IS WASTE.   The market is not a machine following a production program. It is a vast network of individuals working in networks some of us call ‘patterns of sustainable specialization and trade”, dynamically changing our efforts in response to other similar networks, in real time on a momentary basis in some cases (oil prices) and on a long term basis in others (commercial construction) and on a very, very long term basis for others (pharmaceutical research.)

    A COMMON ERROR
    It is very common for people who lack knowledge of economics to apply very simplistic concepts of production to an economy. It is very common for people who lack knowledge of economics and to fail to understand prices as an information system by which we coordinate ALL HUMAN ACTIVITY to serve each other’s needs, in a vast division of knowledge and labor, that is incomprehensible to any individual or group of individuals.  It is very common for people who lack knowledge of economics to confuse the difficulty in producing goods and services, as one of applying labor, when labor is, in fact, the cheapest most ready commodity available, and worth very little. On the other hand, it is extremely difficult to ORGANIZE VOLUNTARY participation in production that is not a constant process of producing what is know, but a perpetually dynamic process of organizing the process of research and development, which produces an infinite variety of goods, wherein the competition between multiple producers forces all production to the lowest price, so that an increasing number of people can afford to consume goods. 

    Each of us produces very little. None of us, individually, matters to production. However, by voluntarily coordinating our efforts through self interest, by using the information system we call prices to guide us, we can cooperate by in a vast division of incomprehensible knowledge and labor.

    For this reason, people who ORGANIZE production are compensated highly for it, but those who CONSUME that production.  Largely, those of us who consume or labor, gain the benefit of our efforts, each of which is very small, in the form of affordable consumer goods and services.  Not necessarily as compensation. Because it is our labor that is of little value, and the organization of labor for the purpose of production as highly valuable. Because risk taking, forecasting, and guessing the future against competitors, so that we make the best use of the world’s resources at any given time, is what determines success or failure of the coordination of many people’s interwoven efforts as successful. And that success is told to us by the information system in the form of ‘profit’.  Profit which is quite hard to obtain it turns out.  That is because, except at the extremes, organizations, whether private or public consume the maximum amount of profit that investors will tolerate. 

    I HOPE THIS ANSWERS YOUR QUESTION.

    It cannot be waste if it is experiment.  The problem with your question is that you assume we know what we do not and cannot know. It may help to remember that the socialists thought like you do and 100 million people are dead because of it. And the entire world has abandoned socialism (central planning of production) for this reason.  Prices and Incentives are inseparable. without prices we literally cannot think, or plan, or coordinate out efforts. Without incentives we cannot voluntarily get people to continue to conduct research and development.  Without research and development we cannot sustain production at low prices, with increasing advancement in technology, goods and services. Without advancement we would eventually become incrementally poorer as all differences between us were equilibrated, and the incentive to cooperate voluntarily declined. 

    EASY ENTRY LEVEL READINGS
    “I Pencil” (Essay)
    “The Use Of Knowledge In Society” (Essay / Hayek)
    “Parable Of The Bees” (Essay)
    “Economics In One Lesson” (Book / Haslitt)

    That’s about it. You get that. You get economics.  We call it The Economic Way of Thinking. 

    Curt Doolittle
    The Propertarian Institute.
    Kiev

    https://www.quora.com/Capitalism-How-much-is-wasted-in-finding-market-based-solutions

  • “…. democratic politics tends to concentrate benefits and disperse costs, so t

    “…. democratic politics tends to concentrate benefits and disperse costs, so that politicians in both parties face very strong incentives to promise current and future benefits without regard to the costs of those promises.

    Boettke. Hoppe by less antagonistic means. 🙂

    Source date (UTC): 2013-10-20 10:39:00 UTC

  • MULLER : IS THE MARKET MORAL? (Important Propertarian Concept: Market And Morali

    http://www.project-syndicate.org/commentary/is-the-market-moral-JERRY MULLER : IS THE MARKET MORAL?

    (Important Propertarian Concept: Market And Morality)

    Yes the market is moral in the universal. No it is not in the particular. BUT lets look at this a little more deeply.

    Muller is the author of THE DEFINING intellectual work on Conservatism. It was his work that convinced Jonathan Haidt that there was more than one moral code. Both is book _Conservatism_ and his Teaching Company Lectures, are the first and most important discussion of conservatism in rational and moral terms.

    Conservatism, like libertarianism, has produced a landscape littered with trite entry-level works that are little more than pop entertainment, or statements of personal enlightenment. And there are only a handful of authors who produce more than sentimental, allegorical, or historical works. And that is because conservatism, still, remains an habituated moral philosophy, not a rationally articulated one – Something some of us are trying to change. Muller changed that with _Conservatism_.

    **This particular essay shows however, that even Muller still does not grasp the market as the REPOSITORY into which we have transformed ALL immoral action. It is the ONLY place we allow immorality. And that is because the market produces virtuous consequences as an output of that instinctively immoral activity: competition. The negative feedback to the producer creates the incentive for the producer to improve his or her wares, or to price them more cheaply. It creates a squirrel cage wheel of increasing quality and decreasing prices.

    The market has made LIFE outside of the market, increasingly moral. The virtue of the immoral process of the market, produces virtuously moral longer term outcomes in terms of prices, quality and choices.

    But more importantly, it does not require we eliminate our attempts to outwit each other. It simply gives us a single virtuous venue in which to do it. And the consumer always wins, no matter what bet he places.**

    WHAT YOU SHOULD READ

    _Conservatism_

    http://www.amazon.com/Conservatism-Anthology-Political-Thought-Present/dp/0691037124/

    _The Other God That Failed_

    http://www.amazon.com/The-Other-that-Failed-Deradicalization/dp/069100823X

    “Us and Them : The enduring power of ethnic nationalism”

    http://www.foreignaffairs.com/articles/63217/jerry-z-muller/us-and-them

    “Capitalism and Inequality : What the right and the left get wrong”

    http://www.foreignaffairs.com/articles/138844/jerry-z-muller/capitalism-and-inequality

    WHERE HE IS WRONG

    The Mind and Market

    The Jews and Capitalism

    His failure is perhaps our own failure to articulate property, property rights, reproductive strategy, the mind, moral intuitions and moral codes as the cause of both ‘the mind and market’ and the near universal condemnation of jewish morality despite their success in the market.

    No one is perfect. 🙂

    Source date (UTC): 2013-10-19 09:04:00 UTC

  • ON EDUCATION (Brilliant. Concise) Caplan is the best critic of expensive and ine

    http://econlog.econlib.org/archives/2013/10/the_iron_laws_o.htmlCAPLAN ON EDUCATION

    (Brilliant. Concise)

    Caplan is the best critic of expensive and ineffective university educations.

    Source date (UTC): 2013-10-18 08:29:00 UTC

  • STORY OF MY LIFE (venting) Now that you have once again learned what happens whe

    STORY OF MY LIFE

    (venting)

    Now that you have once again learned what happens when you disagree with my business forecasts, and cost us and shareholders millions, can you please stop disagreeing? Its not like this was a unique case.

    Do us all a f–king favor and try to know more than I do. But dont try to be smarter than I am. It wont work. And it costs us money.

    Without intending to I have integrated Austrian thought so deeply that I pretty much see the world as nothing but incentives.

    You collectively still rely on the error of induction. But the past has little bearing on the future unless past incentives are also current incentives.

    This little twist: merging incentives theory with anti-inductivist critical rationalism, defeats induction and inductive intuition at all times.

    And thats your problem. You think you’re rational but your’e not, because induction is false. It is the result of evolution – a cognitive bias.

    And intuition is also inductive. Its how we evolved to make associations. But induction, whether intuitive, rational, or empirical, is still false.

    And even if you try to model it, Empiricism isn’t enough. Its only enough if you measure incentives. Because the past was a product of past incentives and the present is a product of present incentives and empirical data that is divorced from that relationship is worth precisely zero. The past does not predict the future unless incentives are the same. In that sense incentives, and not the past, are all that matter.

    FURTHERMORE.

    And this may be more relevant to you. People are only moral when their interests are marginally indifferent. We would like to think otherwise. But there isn’t any evidence at all to support that desire.

    Morality is a cost. All moral actions carry costs. Those costs are opportunity costs

    If you are in business with people who have different economic and financial incentives you must treat them as if morality is merely a form of manners, but not a promise of future conduct.

    So please stop trying to be smarter than I am. Cause its not because I am particularly smart. Its because you are not particularly wise.

    Idiots.

    Source date (UTC): 2013-10-09 03:15:00 UTC

  • Always preserve some unsettled point of conflict in any deal for the very end, s

    Always preserve some unsettled point of conflict in any deal for the very end, so that you can blow up a deal once the momentum has taken root and the intellectual investment has been made, and everyone is committed. This allows you to crush minor points of petty theft that tend to occur by the participants in the negotiation and at the eleventh hour use their desire to profit from invested time and energy to veto a large set of sketchy provisions.

    Source date (UTC): 2013-10-08 16:17:00 UTC

  • (quick thought) (serious) (important) DARK ENLIGHTENMENT AND CONSERVATISM VS LIB

    (quick thought) (serious) (important)

    DARK ENLIGHTENMENT AND CONSERVATISM VS LIBERTARIANISM AND INCENTIVES

    More on this later, but I see the problem that we are going to have with the conservatives and their fancy with biology.

    If we remember that the conservative aristocratic method of thinking is very much one of reproduction and family. It’s tribal. It’s cognizant of BREEDING. A word that has been dropped, but was very common in aristocratic egalitarian history. Breeding was an important consideration both in the family and on the farm. Darwin just explained why. But BREEDING has always been part of our history.

    The conservatives have latched onto epigenetic transmission. And I think it’s a rat hole. Even if it’s true, it tells us only that we can evolve FASTER. But it doesn’t tell us much about what changes and how much. Worse, it’s very hard to logically construct a reason why any such change is more significant than the formal and informal institutions that we can construct. Certainly literacy and law are faster means of adaptation than epigenetic transmission every would be.

    So this is why our ideas are even more important. INCENTIVES. Our analysis of property rights and our praxeological analysis of incentives, tells us what institutions we can and cannot build because of incentives rather than relying on norms or intuitions.

    But conservatives reject outright, as either specious or ‘evil’ any presumption that rational arguments such as incentives, are superior to intuitive arguments. (That’s crazy, I agree. But thats how they think.) And they are partly right because the vast majority of people rely on moral intuitions. its ONLY libertarians who rely on MORAL REASONING. If that sinks in. It will partly explain our failure to spread our arguments in the population.

    So what I am not quite settled on – even given that Propertarianism makes all political, ethical and moral arguments commensurable, is how to construct an argument that conservatives will adopt, even if it suits their purposes, because rational arguments are NOT intuitive arguments and only intuitive arguments are ‘appreciated’ by conservatives.

    Source date (UTC): 2013-10-08 07:50:00 UTC

  • WHY PROPERTARIAN REASONING IS THE ANSWER TO MORAL ARGUMENT. “I work entirely by

    WHY PROPERTARIAN REASONING IS THE ANSWER TO MORAL ARGUMENT.

    “I work entirely by arguing with incentives. And I unload them as much as possible. We may not agree on the experience produced by any action, but the transfers produced by any action exist independently of how we react to them. And incentives are nothing more than values attached to transfers.”

    In other words ALL EMOTIONAL AND MORAL STATEMENTS AND EXPERIENCES can be reduced to statements of the transfer of property, and our differences merely different expectations over the distribution of property rights between the private and the common.

    **Propertarianism is what Praxeology should have been if it was complete.**

    Source date (UTC): 2013-10-07 11:36:00 UTC