Systems versus Goals

Scott AdamsThe world has an abundance of great intellectual giants in all sorts of domains, some living and some dead. Most of us can gain a lot of knowledge and wisdom from them — if we had the time, the motivation, the inclination and the ability to do so.

Unfortunately as it happens we lack one or more of those, and can’t appreciate their works and don’t directly benefit from their genius. Most likely we’ll never be able to understand the works of the likes of Nietzsche, Ramanujan, Einstein, Hayek, Turing, et al. They are supremely important for humanity as a whole but we ordinary individuals gain very little practical wisdom from them.

Instead we are more likely to gain quite a bit from much lesser people. Why? Because they are not that far removed from us in our mundane lives. I call them “persons with mundane practical wisdom.” Continue reading

Epic vs Apple

costcoIn a comment Sanjay Srivastava asked, “What do you think about the Epic vs Apple legal case? Would you allow Apple to continue their way of managing the App eco-system?”

I confess that I was unaware of the legal battle until Sanjay asked about it. I have subsequently read a bit about the case. The core conflict appears to be that Epic is challenging Apple for the latter’s decision to remove Epic from its app store for violating the Apple app store’s terms of service. Continue reading

The Tragedy of Collectivism

F A Hayek“The tragedy of collectivist thought is that while it starts out to make reason supreme, it ends by destroying reason because it misconceives the process on which the growth of reason depends. It may indeed be said that it is the paradox of all collectivist doctrine and its demand for the “conscious” control or “conscious” planning that they necessarily lead to the demand that the mind of some individual should rule supreme — while only the individualist approach to social phenomena makes us recognise the super-individual forces which guide the growth of reason. Individualism is thus an attitude of humility before this social process and of tolerance to other opinions, and is the exact opposite of that intellectual hubris which is at the root of the demand for comprehensive direction of the social process.”

The Road to Serfdom. Friedrich August von Hayek. He was born on this day in 1899. Happy birthday, dear Prof Hayek.

Ask me anything – the Aron Ra edition

Greetings from the San Francisco Bay area. It’s great to be back in the old neighborhood visiting friends. I’ve been away for almost 15 months. The weather is as usual wonderful. Traffic on 101 and 880 is lighter than normal because of the pandemic-induced work from home situation. I’ve been driving around a bit. I miss being here.

Here are a couple of videos for your pleasure. I respect Aron Ra. He is a straight shooter, an activist atheist. I like his no-bullshit style. Here are a couple of videos of his I watched today. Continue reading

A Bit on Rent Seeking

Cherry BlossomsThis is a continuation of two previous posts: Is Competition Always Good, and Competition in Free Markets.

Prabhudesai referred to JEE (Joint Entrance Exam) in a comment and wrote, “An examination that has too much of competition resulting to very high cost of producing one engineer. For a poor country like India it is a massive blow.”

Is that type of competition good? That is socially wasteful competition. It belongs to a broad class of activities that are technically known as “rent seeking.”

One of the principal ways of obtaining wealth is by earning a profit. Profits are the difference between the cost of producing something and the price obtained from its sale. Profits indicate that wealth has been created and value delivered. Rent seeking occurs when one attempts to obtain some wealth without actually creating wealth. 

Continue reading

Competition in Free Markets

wine tomato

I ended the previous bit with the claim that competition in a second-best world can be bad.

Competition in a free market is nearly always good because it is that process which provides the incentive to market participants to do the best they can, which leads to all the advances we all enjoy.

Remember that every one of us is a market participant. Therefore we all have to compete. It doesn’t have to be cutthroat but it we cannot avoid competing.

But what about cooperation? Doesn’t that matter? Yes. It matters enormously. We even have to compete in our cooperation. Individuals who are good at cooperating out compete those who are bad at cooperating. This holds true for higher levels of aggregation too. More cooperative, high trust cultures do better than cultures that mistrust and don’t honor their word.

In a perfect world, which in our case we don’t have, competition would always be good for everyone. Even those who lose out in their particular competition would nevertheless be better off in this world of competition because competition raises the general level of welfare, than they would be in a world without competition.

Continue reading

Is Competition Always Good?

lion gazelleIn a comment to a post, Prabhudesai asked “Is competition always good?” The simple answer is “It depends.” It depends on the circumstances and on whether one gains or loses from competition.

Competition

Competition is a feature of the biological world. The competitive struggle for survival is ubiquitous and ineradicable. And one may argue that it is also necessary and desirable for evolution to do its magic. The competition between predator and prey improves both groups. Competition is good for the group but not for the individuals who are unable to come up on the top. Continue reading

The Cost of Things

Mountain streamWe humans value economic goods. But everything we value doesn’t necessarily have to be an economic good. What’s the defining characteristic? The demand for the good has to exceed the supply for it to be thought of as an economic good.

Let’s look at some goods and ask if they are economic goods or not. You are walking along a clear mountain stream in the wilderness. Is the water an economic good? No, because the demand for the water in the stream (only you are the consumer for miles around) is much less than the supply. Is the water of value to you? It certainly is: you can drink the water or take a bath. A thing of value need not be an economic good but any economic good has a positive value (and conversely, an economic bad has a negative value.) Continue reading

Leaving in a Jet Plane

Airbus A380

The last time I was on a flight was the end of January 2020 — return from San Francisco Bay area after attending the Mont Pelerin meeting at Stanford University’s Hoover Institution.

Because of the Chinese virus, I have avoided flying. Because I like road trips, it wasn’t too much of a constraint for me, except of course I couldn’t do a road trip to Finland or India.

I am off to Austin, TX today. From Philadelphia to Austin on an American Airlines flight.

I am amazed at the big jet planes and the commercial aviation industry. Airliners are some of the most beautiful things humans have ever designed. The development of aviation surpasses all imagination. Just think: the first successful heavier-than-air powered aircraft flight in all of recorded history happened for the first time in 1903. The Wright Flyer took to the air in Kitty Hawk.

Continue reading