Grantcoulson's Blog

      When taxation, arrogance  and government interference reach critical mass, the public will push back. There is a time when, as in the classic Western, the hero says, “By God, that’s enough”.  Is this what the Tea Party in the US represents? I can fervently hope.

       The firing of all the teachers in a poorly performing Central Falls High School in Rhode Island will not work for a number of reasons.

1). It never has before. That’s a prediction based on the past, but what is the failure based on? The failure is based on lack of proper methods, but what is the lack of proper methods based on? This could be an infinite regress, but the lack of everything is based on, wait for it, the lack of proper incentives.

2). There is no big (or small) Box of Capable which may be opened when necessary to solve the kind of intractable problem presented by the test scores of this school. The teachers are not refusing to open it and consequently, deserve to be fired for their stubbornness.

3). There is no point in blaming the actors for the actions when almost anyone would act the same way in the same circumstances.

4). The “reform” effort is based on spending more time with the children. This only works when there is a “dose-response” curve where more input produces more output. In this case, this is so doubtful that it can be ruled out. If your efforts are failing, redoubling them won’t work.

5). Unless teaching methods are drastically changed, results will not change. Something about the Law of Causation. I don’t know, this Law could be a fad.

Cheerio and ttfn,
Grant Coulson
Cui Bono–Cherchez les Contingencies

from the book: Shadow Dancing on the Grave of Hope:

    If an enterprise is not about results, it’s not about its customers.

     Almost all effective programs will take place outside of government agencies. When the provider is responsible to the customers, he will quickly find that customers generally do not pay for ineffective practices. Anyone who needs anything dependent on knowledge of behavior, rehabilitation, teaching and learning will greatly increase the probability of success by seeking them outside the auspices of any organization which has any connection with government funding. He should seek out someone he pays directly so that he can directly determine the service he gets. Favorable contingencies don’t ensure a positive outcome, but they greatly increase its probability. Unfavorable contingencies don’t ensure a negative outcome, but they greatly decrease the probability of a positive outcome, usually to zero.

    The first thing is to separate rhetoric from reality which means separating the INTEND and IS from the DOES. Requiring effectiveness as defined and monitored by customers is a sure link to reality. Every government employee is a politician so that source motivation will color all his activities. In the social sciences, most, but not all, hysterical, self-congratulatory rhetoric comes from government sources. This drivel must be disregarded for anything good to come of any enterprise. Secondly, only seek advice from those who are paid directly from their customers. These people are not always right, but those who are not paid directly are almost always wrong. For example, do not ask public school teachers for educational advice. All you will hear will be the cultish answers based on myth,  misinformation and lack of knowledge or, worse of all, that which the responders believes based on “personal experience”. In business and science, things improve–in politics, things change. Whatever is politically fulsome is scientifically empty (yes I know fulsome has nothing to do with full–still). It’s easier to be a smoothie than a sharpie, so be aware of those who are politically proficient even though, to many people, government enters most arenas with “an unearned aura of virtue” with emphasis on “unearned”. For those who study such things, government enters any arena with a well-earned aura of incompetence and a probability of political posturing of 1.00. They’re not like us. Keep in mind, in human and horse endeavors, there are show horses and work horses and the two are easily separated when there is work to be done.

Cheerio and ttfn,
Grant Coulson
Cui Bono–Cherchez les Contingencies

    When an economic resource, aka money, is not yours, you don’t spend (allocate) it very carefully. This money can be obtained by criminal stock operators, slick cons, foolish theories, @ etc. Amounts collected by conning and mistaken beliefs are insignificant compared to those collected by coercion. Trickery is self-limiting because people usually don’t go for the same con twice. Coercion lasts forever.

    I put forth the following hypothesis: When money is extracted by coercion, 1) Advertised results will not occur, 2) INTEND will be pumped out of all possibility of recognition using all the tricks of necessity, morality and practicality,  3) IS will be pumped out of all recognition and the waste, incompetence and sheer silliness hidden and renamed. That’s not a bug, it’s a feature. and, 3) DOES will not occur, but every attempt will be made to obscure, lie, obfuscate and pretend.  In spite of great hostility to real accomplishment, governments attempt to mimic the best of free enterprise in terms of cost and effectiveness. They never succeed, but they masquerade really sincerely.

Cheerio and ttfn,
Grant Coulson
Cui Bono–Cherchez les Contingencies

from the book: Shadow Dancing on the Grave of Hope:

     As with the British captains of the convict conveying ships, only an incentive for output will produce better output. These incentives will never occur in a government situation. You can teach a monkey to dance, but once you stop throwing peanuts, he’ll go back to stealing bananas.

    Workers tend to do things which bring them money. Government agencies break this connection between action and income by removing economic feedback for success or failure. Success within a political structure is removed from any but political considerations. Without the discipline of economic feedback, government workers tend to make statements and do things which are related only to political reality and usually, quite nonsensical. Every human is, to a great extent, a captive of his times. This is especially true of the social scientist who absorbs many of the concepts around him. The scientist’s job is to formulate laws which transcend all times. The metacontingencies outlined by Friedman for spending, and by extension, for producing, are true for Confucian China, medieval Europe and contemporary North America. Reforming government institutions is useless unless there are magic repeals of the laws of the human behavior. The largest reform movements in the social sciences have been in education and uniformly unsuccessful.

Cheerio and ttfn,
Grant Coulson
Cui Bono–Cherchez les Contingencies

from the book: Shadow Dancing on the Grave of Hope:

     Number one (from the last post) is obviously the best situation. This occurs when the customer pays for the service or material with his own money and economic benefits go directly to the provider of the program. The provider must work efficiently or the customer will go elsewhere. Number two would represent a situation where the provider scams the payer, the payer has a mistaken belief or the payer is compelled to give him money for unsatisfactory service or product. This situation would not last long nor occur often. The Prozac “epidemic” is an example of a customer paying for an outcome of dubious value.  Number three represents a situation in private enterprise where the person works for someone else who receives the economic benefits when results are good. Efficiency is filtered through the employer who sees that the work produces results.  Number four represents a government worker, someone who works for someone else and from whom results are not required. If you want something done, the first situation is the best, the fourth the worst.

    Reform can only happen by changing the incentive system. It cannot occur by changing who belongs to which committee, who reports to whom, budgetary allocations, action plans, mission statements, new models, quality control procedures, or any of the other cosmetics that government agencies use to produce the illusion of change leading to progress.These procedures are based on this type of logic: If the lifeboats on the Titanic had been a different color, the great ship would still be afloat. This is tried, but still, the ship sinks. New hypothesis: It was the varnish on the railing of Second Class. This is the kind of reform for which public service is justly famous. Reform is necessary: Change something. In case you missed the movie, it was the collision with the iceberg that caused the mischief. The color of the lifeboats, or the kind of varnish, had no bearing.

    “When action is divorced from consequences, no one is happy with the ultimate outcome. If individuals can take from a common pot regardless of how much they put in it, each person has an incentive to be a free rider, to do as little as possible and take as much as possible because what one fails to take will be taken by someone else.” John Stossel. And that’s also government for you.

    All interests allied to, and of, the government engage constantly in what economists, with somewhat obscure language call “rent-seeking”. The origin of this term is presumably from the landed gentry whose lifestyle is supported by “rents” from land. The rent, in the case of rent-seeking, refers to economic advantages conferred by legislation or direct grant above, and usually far above, anything a free market would bestow. Given that these benefits exist in perpetuity and are independent of behavior, none of the favored groups ever willingly gives them up. Thence, the chance of reforming any system run by government workers or reforming handouts to any favored group by introducing earned incentives is zero. The incentives are earned by lobbying, not production. Tremendous effort goes into lobbying because once obtained, the benefits last forever. If you give a man a fish, he will feed himself for a day. If you teach a man to fish and expect him to feed himself, he will get really angry because you stopped giving him fish. And that’s government for you.

Cheerio and ttfn,
Grant Coulson
Cui Bono–Cherchez les Contingencies

from the book: Shadow Dancing on the Grave of Hope:

     “As long as they get paid, they’ll keep doin’ what they’re doin’”. This was folk wisdom from the working class about poor snow plowing in the parking lot of a private building. As every powerful rule of human behavior, it applies to all human activity under all circumstances. As a matter of fact, the plower of snow was arrogant enough to state that plowing snow properly “was not his job”, a statement sure to bring about job loss for poor performance in the real economy. The person doing it wrong was fired. After that, the job was done properly by someone else. And that’s free enterprise for you.

    None of this is to imply that economic consequences are the only relevant motivators for human beings. Surely some government workers are hard working and efficient. Surely some self-employed people are lazy and inefficient. These people do not last long in their jobs, self-employed or employed by others. Unless there are strong unions (employment insurance for the incompetent.) the non-hard working and inefficient will not last in private industry.   

     Although Friedman, one of the few economists who knows of what he speaks, uses different language for describing these outcomes, he outlines the contingency sets for spending-consumption. This is the logical set of possibilities which apply to spending money depending on whose money it is and whether the product is to be enjoyed by oneself or someone else.

        The production side contingencies would look like this:

1).    When a man works for himself, pays his own costs, and the quality of his work has economic consequences, he will concentrate on the costs of production and the quality of his work because both have economic consequences. He needs to produce the highest quality with the lowest cost. He will rarely seek to do the least amount of work because this will have an impact on quality (what his customers value) and quantity (how much money he will make).

2).    When a man works for himself and someone else pays the cost, he will concentrate on quality, less on cost and work as hard and efficiently as he needs to.

3).    When a man works for someone else, but pays the costs himself, he will concentrate on costs and concentrate on quality to the level required by his employer.

4).    When a man works for someone else who pays the cost, and his results have no economic consequences, he will work neither hard nor efficiently. Since  quality and cost has no impact on him, attention will be paid to neither and costs will be high with quality low. That’s government for you.

Cheerio and ttfn,
Grant Coulson
Cui Bono–Cherchez les Contingencies

      So ends the month that makes me cringe as I hear Feb-ew-ary or Febr-rary.

    Here follows one of the most important ideas in economics and psychology, anticipated and articulated by thousands, but articulated by Adam Smith and Milton Friedman, centuries apart.

from the book: Shadow Dancing on the Grave of Hope:

     Human affairs follow paths determined by “The Law of Contingencies”, which is as valid as any law in physics. If effectiveness is not required, effectiveness does not occur. If one is spending other people’s money, profligacy occurs. If competition is absent, inefficiency occurs. The Law of Contingencies pays no attention to the Screed of Intentions.

INCENTIVES, REAL CUSTOMERS AND REAL PRODUCTION

    Milton Friedman,  economist, and Nobel Laureate, noted:

    "When a man spends his own money to buy something for himself, he is very careful about how much he spends and how he spends it.

    When a man spends his own money to buy something for someone else, he is still very careful about how much he spends, but somewhat less what he spends it on.

    When a man spends someone else’s money to buy something for himself, he is very careful about what he buys, but doesn’t care at all how much he spends.

    And when a man spends someone else’s money on someone else, he doesn’t care how much he spends or what he spends it on. And that’s government for you."

Cheerio and ttfn,
Grant Coulson
Cui Bono–Cherchez les Contingencies

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

  “One in four Americans work(sic) for companies with federal contracts, and administration officials see an opportunity to lift more families into the middle class.” New York Times, February 26, 2010. That’s what produces economic progress, federal diktat about wages. Goodness me, how many people believe any of this except for politicians? Just raise wages. FDR did it during the Great Depression and it helped make that depression Great. Let’s do it again.

    Government is the most broken when it’s working best.

from the Book: Shadow Dancing on the Grave of Hope:

      Socialism is such a failure that it exists in partial form only where it can be supported by free enterprise. The postal service, school system, the medical system in many countries, etc. all exist because of external support, not internally generated revenue. Thence, they are inefficient in the extreme and produce the most bizarre and slovenly behaviors in the people who work in them. As an example, over the years, several hundred parcels have been sent to me. These parcels were supposed to be delivered by the Canadian postal system, a government agency. Although my business is open seven days a week from 9 a.m. until 8 p.m. on all but two days of the year, only about 12 of these parcels were delivered. Notices for most of  the others were left in the postal box. They didn’t even make the effort to put the notice on the door of my office where delivery was supposed to occur so they could at least pretend they tried to do their job. The private delivery businesses always deliver inside our door. Just to complete the cycle, the Canadian postal service purchased a package delivery business which has the same dismal delivery techniques and tries its best not to deliver packages. Unionized government services are not known for service. This is too easy, but–The government does not deliver.  As an added bonus, Canada has a government agency which controls cable access which limits competition and makes Canadian internet providers much less efficient and more costly than their U.S. counterparts.

    “Many people are so preoccupied with the notion that their own knowledge exceeds the average knowledge of millions of other people that they overlook the more important fact that their knowledge is not even one-tenth of the total knowledge of those millions. That is the crucial fallacy behind the repeated failures of central planning and other forms of social engineering which concentrate power in the hands of people with less knowledge and more presumption.” Thomas Sowell.

    There is relentless propaganda for state control and intervention in spite of thousands of examples of it not being a very good idea. For example, in Walkerton, Ontario, Canada, seven people died and many hundreds became ill because of e. coli in the town’s drinking water. There was a large outcry about the perils of privatization in public services in spite of the fact that, in the whole chain of errors which led to the tragedy, only the private laboratory provided the correct information. The public servants responsible spent more time drinking beer than doing their jobs, were found criminally guilty for their trouble, but the public faith in government workers remained, and remains, unshaken. The Romance with Socialism lives on with no regard for facts.

Cheerio and ttfn,
Grant Coulson
Cui Bono–Cherchez les Contingencies

     Today’s news is a rich source of “I told you so” and “It cannot be any different when third parties spend my money.” There are three stories:

    The First:

Ontario power risk: Hydro One: Rising debt, higher costs, falling income–National Post, February 25,2010

     “Ontario electricity distributor has 38% more employees delivering 9% less power.”

    This article traces the inevitable decline in productivity from two factors: The “Green Energy” hysteria and inefficiency of a publically-backed utility.

    The Second:

Hit the Brakes–National Post, February 25, 2010.

     “According to Statistics Canada, there are 3.5 million Canadians employed in the public sector out of 16.9 million working Canadians — 20.7%! This means one in five working Canadians are employed by the public sector. These jobs are funded from the taxes paid by the other 80% of Canadians working in the private sector. This has been a worsening condition over the past 40 years. In an inflation-adjusted comparison, the federal government spends 360% more today than it did 40 years ago. In 1969, program spending was $12.9-billion — $75-billion adjusted to 2009 dollars. It has exploded to $273-billion in 2009-10. If spending had grown at the same rate as population and inflation, it would only stand around $150-billion today.”

    Each public employee has the potential to produce three problems. The first two occurs for all of them, the third only for those who hold some regulatory power.  The first is the cost of employing such a person. The second is the loss of having a public employee doing a job which could be done much more efficiently by someone else. The third is the regulatory costs, both direct and indirect,  which stem from such an employee. Bad results all ‘round.

    The Third:

    This is a story of a low-performing high school in Rhode Island where all the teachers will be “fired”. The stories is reported by many sources. The following quotes are from a New York Times article linked to the Central Falls Journal.

    The school has not performed well for years. Instead of starting effective instruction, the usual welter of excuses is offered. Like the caterwauling of all public employees, the results are simultaneously funny and pathetic.

      “We’re carrying this immense burden here,” said George McLaughlin, 60, a guidance counselor at the school. “We have a bag of bricks on our back that you don’t get at places where it’s taken for granted that everyone will succeed.”

     “I leave here at 6, 7 at night, working with kids, coaching, getting lesson plans, doing interactive literacy. That’s what people don’t see,” said Frank DelBonis, who teaches history to English as a Second Language students in a school where 70 percent of students are Hispanic.”

    “Interactive literacy” is an ominous phrase. Why don’t they use effective instruction, one could ask. Public educators do not know about things that work, so that avenue is closed. Being a high school, the teachers do have to contend with lack of effective preparation in the primary grades, but many examples exist of effective instruction beginning in high school.

    I will bet that all of these “fired” teachers who want to be will be employed by the same school board next school year after the posturing is over.

    All three kinds of  mischief come from violating the fundament law of Human Nature, The Law of Contingencies.

Cheerio and ttfn,
Grant Coulson
Cui Bono–Cherchez les Contingencies