Monday, January 26, 2009

Rules of the Game

In systems theory, rules determine the relationships between the system and its sub-systems, between the system and its environment, and inter-relationships among the components of the system. The "rule of law" is important, for it holds that the rules are the same for all, and aren't changed capriciously: they allow us to plan rationally for the future.

Wretchard quotes management guru Peter Drucker (H/T Dr. Sanity):
Economic activity, by definition, commits present resources to the future, i.e., to highly uncertain expectations … While it is futile to try to eliminate risk, and questionable to try to minimize it, it is essential that the risks taken be the right risks … We must be able to choose rationally among risk-taking courses of action rather than plunge into uncertainty on the basis of hunch, hearsay, or experience, no matter how meticulously quantified.
If we don't know what the rules of the game are, we can't choose rationally among the courses of action before us.

One of the reasons societies spawn governments is to have the means to set, and enforce, the rules by which the society operates. In complex open systems such as our society, legislation and regulations affect behavior for good and bad:
The growth of litigation and regulation has injected a paralyzing uncertainty into everyday choices. All around us are warnings and legal risks. The modern credo is not "Yes We Can" but "No You Can't." Our sense of powerlessness is pervasive.
We have lost the idea, at every level of social life, that people can grab hold of a problem and fix it. Defensiveness has swept across the country like a cold wave. We have become a culture of rule followers, trained to frame every solution in terms of existing law or possible legal risk. The person of responsibility is replaced by the person of caution. When in doubt, don't.
Right now, we are in a period marked by grave doubts about our entire economic system. In the face of massive uncertainty, people prefer to sit on their hands and their cash. They stop spending money, banks quit lending money, and suddenly there's less money changing hands in a given period of time (measured by "velocity").

Over at The Corner, I finally found someone talking about the crash in monetary velocity, economist Bruce Bartlett:
I think Friedman would tell the Fed to pump as much liquidity into the economy as possible. His Monetary History of the United States proved that a shrinkage of the money supply was at the core of the Great Depression and that the Fed failed the country by not increasing the money supply. I believe we are in a similar situation. The problem has been a sharp decline in velocity—the ratio of the money supply to GDP—which has economic effects identical to those that would result from a decline in the money supply. When velocity falls, GDP will fall unless the money supply increases enough the maintain GDP at the reduced level of velocity. The real problem is that the Fed is having difficulty getting money circulating because interest rates on Treasury bills are close to zero. Under these conditions, monetary policy is impotent. It is like pushing on a string.
In "The Forgotten Man" by Amity Schlaes, she points out that FDR did a lot of experimenting to the detriment of business and the economy; her theory is that he actually prolonged the misery by doing so.

The current economic uncertainties with the failures of Fannie Mae and Freddie Mac, bank seizures and fire sales, and ill-crafted "bailout" legislation passed by Congress aren't helping this consumer's confidence because the solons in Washington and New York keep telling us that there's more intervention -- with more changes in the rules -- yet to come.

I can't plan because I don't know what the rules will be in 3 months. And neither does anyone else.

Friday, January 16, 2009

Hero of Flight 1549

Wow! What a feat to ditch an Airbus A320 safely in the Hudson River with no loss of life. As Miles Vorkosigan is wont to say, luck favors the prepared:
This reader comment at the Wall Street Journal pretty well sums it up:

The pilot, co-pilot, attendants, the controllers, the teams of rescue workers, the trainers - simulators for pilot training, the manufacturer are all the heros in this event - everyone played a role and the passengers, people on the ground and the families of all were spared a real tragedy today. Thank the Lord we have dedicated, well-trained people in many walks of life - without them, life would be very difficult for many of us.

Comment by Jim - January 15, 2009 at 11:45 pm

The Smoking Gun shares the resume of Capt Sullennberger (h/t Drudge).

Cross-posted at Thwarting Murphy.

Wednesday, January 14, 2009

Democrats' Principles are MIA

Browsing the WSJ op-eds, I spotted this howler in The Tilting Yard, "Obama Should Act Like He Won":
Democrats have massive majorities these days not because they waffle hither and yon but because their historic principles have been vindicated by events.
Say what? Principles like, control the media and you control the message? Outspend the other side on campaign ads and you can overwhelm the opposition's message? A better ground game on election day makes for victories? Promise her anything, but give her Chanel?

(oops, showing my age there...)

Classical liberal principles that this nation was founded on (e.g. life, liberty, and the pursuit of happiness) have precious little to do with how the Democrats have rolled up "massive majorities" in the last two election cycles. And remember that Barack Obama's coat-tails weren't nearly as long as the Democrats had hoped: neither chamber has the size of Democratic majority of the 95th Congress that came in with Jimmy Carter in 1977.

In October 2006, Sebastian Mallaby penned "A Party Without Principles" in the Washington Post. Key graf:
[T]he infuriating thing about the Democrats is that, just a decade ago, they knew how to empathize with voters' economic insecurities without collapsing into irresponsibility; they combined attractively progressive social policies with sensible pro-market fiscal responsibility. Now many in the party have lost interest in this necessary balance. If the Democrats win a measure of power next month, it's hard to see what they will do with it.
Prophetic words indeed.

The online Stanford Encyclopedia of Philosophy has a nice page that delves into the variations of classic vs new liberalism and their historic roots.

Friday, January 09, 2009

Defective Defect Analysis

Over at American Thinker, Paul Carlson seeks to explain the differences between conservatives and liberals in terms of defect analysis (aka root cause analysis). While his explanations of "common cause" variations and "special cause" variations are sound, I think that he unfairly stereotypes both camps:
The concepts of common and special cause also work in understanding why politicians do what they do. Liberals tend to assume that all social problems are "common," to be addressed by redesigning the whole system. They always call for some new congressional or regulatory or judicial action to impose a blanket "solution" that seldom works. Domestically, such blunt measures usually create new problems, and exacerbate others. Internationally, vague ideas about "America's image abroad" lead to naïve assumptions that a new President will make this country beloved everywhere.

Conservatives tend to assume that all social problems are "special," best handled by a specific tweak addressing that singular case. Thus the best way to fight crime is to prosecute each criminal, even though this does not address the reasons why new criminals will pop up. Internationally, terrorists are best dealt with militarily, often via pinpoint strikes, while PR specialists can worry about America's image later.
Both camps understand that creating rules and regulations by which society is to be governed is an expression of political power. But the philosophical distinction becomes whether more or less legislation and regulation will generally help or exacerbate the problem.

Liberals these days tend to favor more regulation and bigger government, lest the country veer away from the straight and narrow path to utopia. When you're part of the best and brightest, the elite, it's seductive to think that you have better answers than the masses -- or the current administration -- ergo, getting a government post allows you to serve society by being in a position to put your bright ideas into action.

Unfortunately, the do-gooder instinct tends to infantilize the recipient/victim, smothering rather than encouraging growth and development. Consider how much monetary aid has been sent to various African nations since WWII, and how little progress there is to show for it. Martin Durkin contends that aid has destroyed the society in Africa. Furthermore,

There are many on the left – most people on the left I’m sure, who genuinely want to help Africans (and indeed poor people generally). The difficulty is, their desire to help people comes second to their emotional commitment to socialism. The left and the greens are utterly wedded to their anti-capitalist ideology. They refuse to listen to arguments, no matter how cogent or well supported, that contradict their political prejudices. You can tell a green that their opposition to the use of DDT has resulted in the needless deaths of literally millions of people from malaria. What’s their reaction? The greens still support the ban on DDT.

In the end, their subjective self-righteousness counts for nothing. It doesn’t matter what they think they’re doing. It matters what they’re actually doing. So, yes, I think we need to confront people on the left with the consequences of their policies. They are killing people. They have blood on their hands.

Aid we should distinguish from charity of course. There are many people who, with the help of charity from individuals, are doing wonderful work in Africa. But these are sticking plasters when what is needed is surgery. [Emphasis added.]

It's not a proclivity toward considering all problems to be "common cause" variations that lead liberals toward a nanny state, but their prevailing worldview that favors socialism as the fundamental construct of how society should be ordered. That paradigm drives the solution set they consider for any given problem.

I disagree that "[c]onservatives tend to assume that all social problems are 'special'." Rather, many social problems have their root in counterproductive programs, rules, and societal norms that require a different approach than liberals typically endorse.

Ronald Reagan, in his first Inaugural address, illustrated the conservative approach to dealing with the financial mess he inherited from the Carter administration:
In this present crisis, government is not the solution to our problem; government is the problem. From time to time we've been tempted to believe that society has become too complex to be managed by self-rule, that government by an elite group is superior to government for, by, and of the people. Well, if no one among us is capable of governing himself, then who among us has the capacity to govern someone else? All of us together, in and out of government, must bear the burden. The solutions we seek must be equitable, with no one group singled out to pay a higher price.
Rules are necessary, for without them you have anarchy. But Conservatives and Libertarians prefer less government and less micro-managing legislation and regulation because they understand that our country and her imperfect citizens create a complex society that defies central planning and control.

Related posts:
T-2 Days and Counting: Voting God's Politics
When Social Justice is Counterproductive

Atlas Shrugs Again

I'm not the only one noting parallels between Ayn Rand's classic novel "Atlas Shrugged" and the current government fad of taxing productive people and companies to throw money at the less productive.

In today's Wall Street Journal, Stephen Moore pens "From Fiction to Fact in 52 Years":
For the uninitiated, the moral of the story is simply this: Politicians invariably respond to crises -- that in most cases they themselves created -- by spawning new government programs, laws and regulations. These, in turn, generate more havoc and poverty, which inspires the politicians to create more programs . . . and the downward spiral repeats itself until the productive sectors of the economy collapse under the collective weight of taxes and other burdens imposed in the name of fairness, equality and do-goodism.


David Kelley, the president of the Atlas Society, which is dedicated to promoting Rand's ideas, explains that "the older the book gets, the more timely its message." He tells me that there are plans to make "Atlas Shrugged" into a major motion picture -- it is the only classic novel of recent decades that was never made into a movie. "We don't need to make a movie out of the book," Mr. Kelley jokes. "We are living it right now."

'Nuff said.

Tuesday, January 06, 2009

Milestone for Mr. Murphy

It's been 60 years since Mr. Murphy was credited with the "law" that bears his name: Whatever can go wrong, will go wrong.

Marcus Dunk wrote a nice tribute to the US Air Force safety engineer in today's Daily Mail:

Born in 1918, Murphy was the eldest of five children and attended the prestigious United States Military Academy, West Point, from which he graduated in 1940. He was immediately commissioned into the army Air Corps, and during the Second World War saw action against the Japanese in China and Burma.

A fine and conscientious pilot who was often described as 'no-nonsense', Murphy decided after the war to involve himself in the technological aspects of aircraft design, and went to work as a research and development officer for the Air Force.


For Murphy himself, the law and its variations to which he gave his name was the cause of great annoyance. While he preferred to see the law as a principle of good, defensive design - a willingness to be prepared for the worst - he regarded most versions of his Law as 'ridiculous, trivial and erroneous', and said as much before his death in 1990.

Although he may have failed to see the joke, he does have something of a point. While it is easy to label Murphy's Law as the ultimate pessimist's charter, there is an undercurrent of optimism running just beneath the surface of this Law, one that wryly acknowledges that although things will probably go wrong, recognising that fact is the first step in being prepared for when that actually happens. [emphasis added]

As any Scout would say, "Be prepared!"

My cousin Rob's corollary is that simply identifying the "possible" modes of failure reduces the chance of those failures occurring, both during testing and in use.

Dr. W. Edwards Deming, who preached the gospel of statistical process control (SPC), was adamant that you couldn't test quality into a product: it has to be built in. That principle is just as applicable to software projects as widget manufacturing.

For any development project, integration and test (I&T) is the phase where past sins, both technical and managerial, become apparent. Development schedules slip, squeezing testing, while system-of-system design flaws lay undiscovered until the whole product is assembled, leaving no time to recover.

If you expect the piece parts of your software or hardware system to come together smoothly during the I&T phase of your project, you really need to concentrate on identifying the factors that could go wrong during I&T and eliminate or mitigate their risks -- and do it early in the game.

In other words, it's good engineering practice to try and thwart Murphy's Law by eliminating things that can go wrong. Thank you Mr. Murphy!