However, I am sceptical about 9. Many ideas have swept the world though their sheer superiority. Here are some examples from a wide variety of domains:
Outside of politics, things frequently do succeed purely because they are better. Only in politics does “people don’t like my idea? Better threaten to shoot them” sound like a natural result.
Not only that, but incorporation laws are written very differently in different capitalist countries. Economists have debated over whether various apparent differences between Britain, Germany, and USA arose historically from the precise details of the laws and institutional forms for incorporation, partnership, and banking in the three different economies. If I remember correctly, Britain displayed a different pattern of industrialization from the other two due to its laws favoring partnerships of wealthy families over joint-stock companies.
Yes that’s true. But once you have laws permitting (not necessarily making mandatory) limited liability corporations, they tend to out-compete other forms of organization in a wide array of fields. Once given the option, people choose this form of organization because of it’s superiority. Indeed, I think the limited liability corporation has come about as close to “taking over the world” as ideas ever do.
Once given the option, people choose this form of organization because of it’s superiority.
I would be wary of so quickly buying into LLC as only being laws ‘permitting’ it and having ‘superiority’. If a law was passed giving particular companies subsidies of billions of dollars, you might not be surprised if the companies did well and proved their ‘superiority’, but you would be a little nonplussed at people describing the subsidies as ‘permitted’.
As I understand it, LLCs are not so much permitted as subsidized: if you wanted to form a corporation or partnership before various countries fully legalized them, you certainly could, you were indeed ‘permitted’ to form corporations; what you got, however, was also full liability—the people who made up the corporation were liable for its actions. LLCs get a subsidy in shareholders being able to shed liability and risk for their actions beyond the net worth of the LLC. This is not a free lunch, however, and it comes at the expense of everyone who has a claim against an LLC and discovers it’s bankrupt or a shell and that they can’t pierce the corporate veil.
Limited liability is not a free lunch. Being able to be sued is an important right—it gives others the confidence to deal with you, as you can be held accountable. Being able to discharge those obligations in bankruptcy means a LLC has to prove its reliability in other ways—for example, by holding more capital, or posting collateral, or simply offering better prices to make up for it. As it happened, this proved to be more efficient that unlimited personal liability, so LLC’s won out. Third parties could freely choose to deal with non-LLCs if they wanted to, and if they did, they would not be taxed to fund LLCs, so there is no subsidy.
The one case where you have a stronger case is with negative externalities, where an LLC might cause damage to third parties. In this case third parties are paying the ‘tax’ of the externality. However, I do not think this was the most important cause for the rise of the LLC, and there are many other checks and balances—for example, not just any LLC is allowed to own a nuclear power plant, you have to be very well capitalized.
Also LLC’s are generally more heavily taxed than partnerships, etc. - they pay income tax at the corporate level as well as at the individual level. They have risen to prominence despite this (literal) tax.
I was going to make exactly this point. Very few ideas get to 100% on their own, but it’s obvious which ideas are winning and which are losing at most given times. A policy can be implemented more strongly with state power, but state power selects for ideas that pass the political sausage-making process, not for ideas that are actually good or right. Capitalist success is a much better filter for idea quality than government is(in large part, because the sorts of people who run governments tend to be ones who pick a few values to elevate and lose perspective on the importance of others).
Outside of politics, things frequently do succeed purely because they are better.
I am extremely skeptical of this claim, and would like to see a good deal more history for each of your examples. Sushi, in particular, strikes me as a strange thing to list: for what criteria is sushi so clearly the superior answer that it spread and pushed out other competitors? The world’s burger bars appear to be just as intact as the sushi bars, in point of fact.
Only in politics does “people don’t like my idea? Better threaten to shoot them” sound like a natural result.
Which fails to address the example I raised, which was explicitly and purposefully apolitical. If things spread and succeed purely on their own merits, rather than on the effort and power put into spreading them by people, then why are frequentist statistics still the standard in most of science?
I mean, are you really going to claim that some political party has been threatening to shoot people who win at probability?
And of course, “threaten to shoot them” is a libertarian applause light.
Sushi, in particular, strikes me as a strange thing to list: for what criteria is sushi so clearly the superior answer that it spread and pushed out other competitors?
I’m not a connoisseur, but I’m sure if you asked a Sushi fan they could tell you.
The world’s burger bars appear to be just as intact as the sushi bars, in point of fact.
Good point. The franchise burger chain was another excellent innovation that spread like wildfire … a special kind of wildfire that doesn’t kill people and where getting burnt is both entirely optional and quite pleasant. In this case I can explain some of the advantages:
Consistency: you can travel widely and yet be able to trust that the food served, prices, and style of restaurant will be the same.
Low capital cost for parent: a company like McDonalds could open a very large number of franchises quickly without too much capital investment.
Strong incentives: direct ownership by the franchisee meant the local manager’s incentives were very strongly aligned with the parent company.
Replicating best practices: franchises can learn best practices from the parent, which is incentivized to share
Incentivizing operational research: the parent company is incentivized to discover new and more efficient ways to run a restaurant, as it can easily spread them to its franchisees.
why are frequentist statistics still the standard in most of science?
Because they are easy, and frequently good enough. In cases where the difference matters (Machine Learning, some areas of Finance) it’s very bayesian.
Furthermore, I don’t think the field of statistics would have been improved if the government had appointed a Statistics Tsar to crack down on anyone using non-ideologically-compliant techniques.
And of course, “threaten to shoot them” is a libertarian applause light.
Most applause lights … can be detected by a simple reversal test… [If] the reversal sounds abnormal, the unreversed statement is probably normal, implying it does not convey new information.
But of course it is. Libertarians shoot people who violate private property titles. Wanting to enforce a different set of laws does not mean one is actually an anarchist, nor should any sensible consequentialist put himself in the situation of competing to signal greater anarchism-virtue.
Interesting post.
However, I am sceptical about 9. Many ideas have swept the world though their sheer superiority. Here are some examples from a wide variety of domains:
Mini-mills
Limited liability corporations
Sushi
Use of benchmarks (e.g. S&P500) in finance
Washing Machines
Outside of politics, things frequently do succeed purely because they are better. Only in politics does “people don’t like my idea? Better threaten to shoot them” sound like a natural result.
I think limited liability corporations are a very political thing. I would guess that they don’t exist in some communist countries.
Not only that, but incorporation laws are written very differently in different capitalist countries. Economists have debated over whether various apparent differences between Britain, Germany, and USA arose historically from the precise details of the laws and institutional forms for incorporation, partnership, and banking in the three different economies. If I remember correctly, Britain displayed a different pattern of industrialization from the other two due to its laws favoring partnerships of wealthy families over joint-stock companies.
(Points (1) and (4) all over again.)
Yes that’s true. But once you have laws permitting (not necessarily making mandatory) limited liability corporations, they tend to out-compete other forms of organization in a wide array of fields. Once given the option, people choose this form of organization because of it’s superiority. Indeed, I think the limited liability corporation has come about as close to “taking over the world” as ideas ever do.
I would be wary of so quickly buying into LLC as only being laws ‘permitting’ it and having ‘superiority’. If a law was passed giving particular companies subsidies of billions of dollars, you might not be surprised if the companies did well and proved their ‘superiority’, but you would be a little nonplussed at people describing the subsidies as ‘permitted’.
As I understand it, LLCs are not so much permitted as subsidized: if you wanted to form a corporation or partnership before various countries fully legalized them, you certainly could, you were indeed ‘permitted’ to form corporations; what you got, however, was also full liability—the people who made up the corporation were liable for its actions. LLCs get a subsidy in shareholders being able to shed liability and risk for their actions beyond the net worth of the LLC. This is not a free lunch, however, and it comes at the expense of everyone who has a claim against an LLC and discovers it’s bankrupt or a shell and that they can’t pierce the corporate veil.
Limited liability is not a free lunch. Being able to be sued is an important right—it gives others the confidence to deal with you, as you can be held accountable. Being able to discharge those obligations in bankruptcy means a LLC has to prove its reliability in other ways—for example, by holding more capital, or posting collateral, or simply offering better prices to make up for it. As it happened, this proved to be more efficient that unlimited personal liability, so LLC’s won out. Third parties could freely choose to deal with non-LLCs if they wanted to, and if they did, they would not be taxed to fund LLCs, so there is no subsidy.
The one case where you have a stronger case is with negative externalities, where an LLC might cause damage to third parties. In this case third parties are paying the ‘tax’ of the externality. However, I do not think this was the most important cause for the rise of the LLC, and there are many other checks and balances—for example, not just any LLC is allowed to own a nuclear power plant, you have to be very well capitalized.
Also LLC’s are generally more heavily taxed than partnerships, etc. - they pay income tax at the corporate level as well as at the individual level. They have risen to prominence despite this (literal) tax.
Yes, and those countries’ economies aren’t doing to well.
I was going to make exactly this point. Very few ideas get to 100% on their own, but it’s obvious which ideas are winning and which are losing at most given times. A policy can be implemented more strongly with state power, but state power selects for ideas that pass the political sausage-making process, not for ideas that are actually good or right. Capitalist success is a much better filter for idea quality than government is(in large part, because the sorts of people who run governments tend to be ones who pick a few values to elevate and lose perspective on the importance of others).
Thanks for the mini-mills link.
I am extremely skeptical of this claim, and would like to see a good deal more history for each of your examples. Sushi, in particular, strikes me as a strange thing to list: for what criteria is sushi so clearly the superior answer that it spread and pushed out other competitors? The world’s burger bars appear to be just as intact as the sushi bars, in point of fact.
Which fails to address the example I raised, which was explicitly and purposefully apolitical. If things spread and succeed purely on their own merits, rather than on the effort and power put into spreading them by people, then why are frequentist statistics still the standard in most of science?
I mean, are you really going to claim that some political party has been threatening to shoot people who win at probability?
And of course, “threaten to shoot them” is a libertarian applause light.
I’m not a connoisseur, but I’m sure if you asked a Sushi fan they could tell you.
Good point. The franchise burger chain was another excellent innovation that spread like wildfire … a special kind of wildfire that doesn’t kill people and where getting burnt is both entirely optional and quite pleasant. In this case I can explain some of the advantages:
Consistency: you can travel widely and yet be able to trust that the food served, prices, and style of restaurant will be the same.
Low capital cost for parent: a company like McDonalds could open a very large number of franchises quickly without too much capital investment.
Strong incentives: direct ownership by the franchisee meant the local manager’s incentives were very strongly aligned with the parent company.
Replicating best practices: franchises can learn best practices from the parent, which is incentivized to share
Incentivizing operational research: the parent company is incentivized to discover new and more efficient ways to run a restaurant, as it can easily spread them to its franchisees.
Because they are easy, and frequently good enough. In cases where the difference matters (Machine Learning, some areas of Finance) it’s very bayesian.
Furthermore, I don’t think the field of statistics would have been improved if the government had appointed a Statistics Tsar to crack down on anyone using non-ideologically-compliant techniques.
I’m not sure this is true here. According to the original article,
Yet here this is not the case. Some people really do advocate threatening to shoot people who disagree: revolutionaries explicitly, and many other people implicitly—including you. The phrase is conveys information—it shows how many people apply fail to hold politicians, policemen and the state more broadly to the moral standards they ordinarily use to judge people.
edit: unclear sentence structure fixed
But of course it is. Libertarians shoot people who violate private property titles. Wanting to enforce a different set of laws does not mean one is actually an anarchist, nor should any sensible consequentialist put himself in the situation of competing to signal greater anarchism-virtue.
If the reversed sentence sounds coherent then the original sentence carried content, so it’s not an applause light.