from the book: Shadow Dancing on the Grave of Hope:
The errors of human action are endless, and cataloging and correcting them one by one would be tedious and pointless. A self-correcting system, dependent on economic feedback, will eliminate errors quickly, sometimes by eliminating the system, sometimes by fixing the errors. Whether the corrections are large or small, the errors get eliminated. In a government system, where errors do not provide consequential feedback, feedback which must be obeyed, errors stay. The same analysis holds for efficiencies. When something pays off by saving money or improving product, feedback via economic consequences requires retention and such efficiencies are sought out.
The problem with economics is that it is counterintuitive. Knowledge is scarce, but intuition plentiful. “Some ideas sound so plausible that they can fail nine times in a row and still be believed the tenth time. Other ideas sound so implausible that they can succeed nine times in a row and still not be believed the tenth time. Government controls in the economy are among the first kinds of ideas and the operation of a free market is among the second kind.” Thomas Sowell.
All effectiveness revolves on the axle of incentives.The actions of no one in the social sciences can be understood without knowing the contingencies affecting these actions.
The Law of Contingencies connects the INTEND with the IS and the IS with the DOES. The DOES is usually fruitful under free exchange when contingencies are dependent on real output, not show, spin or pageantry. To be useful, IS must be very detailed and not a vague statement of intention and DOES has to be useful to someone to the extent he will pay for it.
“The real and effectual discipline which is exercised over a workman is…that of his customers. It is the fear of losing their employment which restrains his frauds and corrects his negligence.” Adam Smith. To paraphrase, if you try to cheat customers or don’t perform, they go elsewhere.
"Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer.” Adam Smith
The United Auto Workers, after decades of being propped up by governments, can testify to the ruination that results from concentrating on producers rather than consumers.”We’re not working, but we’re not working at really good jobs with fantastic benefits. Social justice has been served.” Eventually, market discipline is visited upon everyone, like it or not whatever the power of your spin machine. Anyone who knew about the union-inspired waste of labor inside a Big Three auto plant would wonder what the spinners were talking about.
Cheerio and ttfn,
Grant Coulson
Cui Bono–Cherchez les Contingencies
