

Scott Adams: Backwards Economics? - cwan
http://dilbert.com/blog/entry/backwards_economics/

======
SamAtt
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.

~~~
m0th87
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.

~~~
btilly
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.

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jacoblyles
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.

~~~
Raphael
Communism!

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btilly
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.

~~~
barrkel
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.

~~~
btilly
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.

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

------
Groxx
_"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.

------
morisy
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.

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jellicle
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.

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

~~~
jellicle
See for example:

[http://economix.blogs.nytimes.com/2008/10/29/bang-for-
your-s...](http://economix.blogs.nytimes.com/2008/10/29/bang-for-your-
stimulus-buck/)

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.

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

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gojomo
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._

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pw0ncakes
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.

