Scott Adams: Backwards Economics? | Hacker News Reader

Scott Adams: Backwards Economics?

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18 pointscwan17 comments

From experience I can tell you this won't work. Finding good workers is the hardest thing a company does and any plan based on "we can easily go out and find skilled people" is doomed to failure from the start.

When I first started at my current job they had the idea of hiring one person (me) and then using the money they'd use to hire a second person to outsource using sites like scriptlance. I had to over see these freelancers and it didn't go too well for a few reasons:

1. Most people claim they "have" skills when what they mean is they think they could quickly acquire those skills if you hire them. Which leads to shoddy work.

2. People with no loyalty to you tend to do poorer quality work which again leads to shoddy work.

3. Most unemployed people are the lowest quality workers (the ones who were coasting up until the economy turned). That makes it hard to find the actual good people because the signal-to-noise ratio is so out of whack.

Are you sure that experience can be extrapolated to the labor market as a whole? I get the feeling that the difference in capabilities from one individual to another is much more pronounced in software development relative to many other fields. It's a testament to how hard software development is. While this idea might not work for something like software startups (or anything that requires extremely skilled labor, like medicine), I don't see why those criticisms would apply to fields that don't take a decade to perfect.

Also, I think it would be difficult to confidently infer that the unemployed tend to be the lowest quality workers. That might be true outside of recessions, but during a time of 10% unemployment, (and much higher if you look beyond the bullshit U-3 indicator) a lot of those people were just at the wrong place at the wrong time, or had jobs in shrinking industries.

The little literature that I've seen on this suggests that extremes of ability differences are more the rule than the exception. And if you work with the best, the best improve most readily. Read First Break all the Rules for documented examples with everything from driving trucks safely to data entry.

If only we had someone in charge of planning the economy, someone like Scott Adams, then things would be great. He could think of all these great investment projects that private investors for some reason aren't willing to fund.

Gee Scott, I can't believe nobody's thought of that before.

Although, this is eerily similar to what government did do in the mortgage market starting in the mid '90s - funding projects that private investors weren't willing to fund. It did stimulate the housing market for awhile. So maybe Scott is on to something.

Communism!

Anyone who thinks that this is a good idea should read http://www.cypress.com/?rID=34993 and understand it.

For those who don't recognize the name TJ Rogers, read http://www.paulgraham.com/5founders.html. The link above is to the article that Paul mentioned in that essay. Unfortunately the link in Paul's essay no longer works.

If you've read what Scott wrote, you'll see that it bears little resemblance to what Rodgers says. Scott is explicitly talking about small-scale social organizing and the like, where there isn't a profit business to be made - the intuition being that the government would come out ahead via taxes.

It's explicitly not about trying to create innovation or build profitable enterprises via top-down funding and political patronage, which is what Rodgers was arguing wouldn't work, and Paul has also said wouldn't work.

Paul also says it right here: http://www.paulgraham.com/inequality.html - governments don't like risk, so they try and manage it away via bureaucracy, which in turn attracts companies that are optimized to gain government grants, rather than customers or profitable businesses.

Scott is specifically suggesting that government be the funding source. If government is the funding source, that translates either into government contracts or grants, both of which result in the problems that Rodgers talked about.

This does not mean that government should never fund anything. But it does mean that we should be suspicious of claims that government is better at generating viable or semi-viable businesses on command than the free market.

Isn’t this basically what FDR did with the Works Progress Administration?

"Suppose the initial investor is the government, and the sorts of businesses are only the types that are good for the country: health, education, and energy."

And he settled on those three because...? They're the only businesses that are good for the country? They're just a sample three (all of which are still easily debatable)?

And who would make sure that it only suggests things that are "good for the country"? And how would you even detect that? Every special interest group would be at each other's throats over this. Which sounds identical to what we're already lobbying the government for / against. How is this supposed to do better?

I like the reverse-model idea. That has solid merit, and can be implemented at any time by anyone (and I'd be extremely interested in watching it develop). But scrap the government part, it's doomed to become a cesspool of porkbarrel legislation.

I've always wondered why there weren't some organizations that look for mass layoffs (whole divisions) and swoop in for a discounted business. Many divisions are individually profitable, but are a poor investment of capital so they have to be jettisoned off. Get enough of they key players to buy in at reduced salary + insurance (oh, the insurance) and you can have a nice, tidy standalone company with reasonable margins, at least in some percentage of the cases.

Yes, I can think of a "dozen reasons why it wouldn't work" off the top of my head, but even if we could cut layoffs by some small % percent, it could have a huge dampening effect on recessions.

We have this already: we call it "unemployment insurance".

The government pays you, and you choose what you'd like to do with your time, and the government makes a return on its investment through taxation and the ripple effect. This has been proven to be one of the best ways a government can spend its money when the economy is slumping. The government doesn't even set any limits on what you can do with your time - start any business you wish, not just one in health or energy.

Proven? Really? Who proved this? What were their methods?

See for example:

http://economix.blogs.nytimes.com/2008/10/29/bang-for-your-s...

There are quite a few papers on the subject. Anyone with any knowledge of economics is familiar with the idea, and people without any knowledge of economics ought not to pretend that they do.

The startup world is already on this model as most investors are more likely to bet on people than ideas.

How many flaws can you find in this sentence:

The reason I suggest government funding is that unlike a private investor, the government can make a huge return on a business that simply breaks even, assuming all of the employees pay income taxes.

Interesting article. I like the concept of a supply-side labor market. A few thoughts:

Planned-economy socialism has severe and often fatal imperfections, but it's still better than our corporate oligarchy/ochlocracy, which retains the worst of both worlds between capitalism and socialism. I'd honestly rather live in the world of Scott Adams, where society has the balls to do something about health and energy, than in this doomed, perennially grid-locked corporate mess we've got going on now. We're so hogtied by the legal equivalent of bad legacy code, and our leadership is so gutless, that we can't even get universal healthcare passed.

The optimal solution is somewhere in the middle between the planned economy and free-market capitalism. You need government to prevent corporations from casting a shadow, and to correct for market failures such as widespread unemployment and high housing costs, and to fund public goods that aren't profitable (infrastructure, research) in the short term, and otherwise stay out.

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