
The Well Intentioned Commissar - ColinWright
http://highered.blogspot.com/2009/01/well-intentioned-commissar.html
======
greenyoda
Don't miss the punch line, which is at the very bottom: "Permission to copy:
You may share copies of this story with anyone who might enjoy thinking about
its implications in academia."

So this article is really about churning out useless research in academia,
where merit is measured by how many publications you have rather than by what
actual benefit the research has.

~~~
farnsworth
Or by trying to use measures like student evaluations, avg. grade, etc. as a
measure of professor quality. It's always awkward to apply a bureaucracy to
something as 'pure' as education and research.

------
rafski
The story is not really a parable, this is exactly what Communist economy
looked like in Poland and other Eastern Bloc countries. Production levels
weren't supposed to meet market demand, they were supposed to meet The Plan.
As a result, there were shortages of virtually everything but—who would've
guessed—vinegar.

Oddly enough Poland revisited central planning idiocy again when it joined the
EU with its economic absurdities, e.g. production quotas not allowing farmers
to produce more milk or sugar than the plan allows.

A friend of mine living in Poland now told me about a farmer client of hers
who visited her company last year with a large truck and a trailer full of
cucumbers to give away to employees. The cucumbers were either oddly-shaped or
wrong size according to EU norms but perfectly good otherwise. He couldn't
legally sell them, was supposed to dump them instead. Not being OK with
wasting food he drove around the city to people he knew, trying to give away
literally tons of cucumbers...

~~~
cheatercheater
OK, let's amuse your suggestion for a second:

1\. I go to a shop, want to buy a cucumber, what I find is oddly shaped with
bulges on it. Perfectly edible, but not that great for cooking and therefore I
get less value. It is however sold as a cucumber; I am dissatisfied. I
understand it might be a good idea to be able to sell those cucumbers; I do
not trust your assertion that the cucumbers could not be sold legally - they
probably could be sold at prices lower than usual. They could also be sold to
companies that turn them into pulp or something like that; as animal food;
etc. They just couldn't be sold as the Standard Cucumber Type #23.

2\. Farmers are allowed to sell as much as they want. Some of them go for it
and are able to sell the extra and end up making more money; others produce a
lot of shit and end up not selling. I remember reading the news about road
blocks set up by farmers dumping their grain onto highways. Yeah, nice
thinking, Commisar Rafski.

Countries which do not have quotas end up with cheap butter. Why? Because the
government ends up being forced to buy the surplus milk at standard price.
Lots of farmers end up working on the assumption that as much milk as they
produce is good, because it'll get bought at that specific minimal price no
matter what quality it is. They could instead spend their time and resources
making something that's needed, but no, they end up making volatile produce
that'll decay in a week if it doesn't get turned to butter. And so, you end up
having lots of butter. Again you are incentivizing completely pointless work.
Really well intentioned, too. But short-sighted. Think twice the next time you
compare the finance and economic prowess of the leading scholars in the whole
European Union combined, with that of your farmer friend-of-a-friend who
hasn't finished high school (that's the typical educational level of farmers
in Poland).

------
DanI-S
This is certainly a wise parable. However, the way in which we routinely use
stories of this nature from Communist countries as a source of kitsch hilarity
leaves a bad taste in my mouth.

Mismanagement and the subversion of metrics to give the illusion of success
happen universally, whatever economic system you live under. To some extent,
it's human nature to game the system. By using these cliched examples, we're
intimating that our society is somehow different.

In reality, our atrocious metrics for success have caused us to spend the past
couple of decades slinging fantastic financial rewards at those who have
inadvertently sabotaged our economy in their hunt for ever-greater returns.

~~~
nirvana
"In reality, our atrocious metrics for success have caused us to spend the
past couple of decades slinging fantastic financial rewards at those who have
inadvertently sabotaged our economy in their hunt for ever-greater returns."

This is exactly true, but it is also why these parables are relevant. The
"atrocious metrics" you refer to were not created by the free market, but by
the very same people who created them in the parable-- commissars.

For instance, in 2001-2002, after the dotcom crash, I knew there was going to
be a housing boom because the federal reserve made the cost of money lower
than the rate of monetary inflation. (I didn't figure this out myself, though,
but learned it from some wise economists.) Banks were incentivized to lend as
much as possible, because a housing boom is what the commissars wanted (Paul
Krugman wrote about it, for instance.) This created a lot of jobs and while it
also created the real estate bubble and consequential crash, it was good for
the Bush administration.

The interest rates, the regulations on banks, and the inflation rate are all
metrics created by the government. The low rates and high inflation are
metrics that created a carry trade. The Clinton era changes in regulations[1]
incentivized loaning money to people who could not repay it. Of course the
FDIC, Fannie Mae and Freddie Mac are all government entities that distorted
the market and created moral hazard.

Simply eliminating the FDIC (but requiring banks to have deposit insurance)
would have mitigated a lot of damage- the banks who were way over levered
would have seen their deposit insurance rates go up, and thus be incentivized
to not be over levered.

It is not that our economy is immune to the impact of commissars. Our economy
is ruled by commissars... we just pretend it isn't.

If we want to eliminate arbitrary formulas like the ones in the parable,
balancing the federal government (removing much of the need for inflation) and
letting interest rates float in the market (rather than be controlled by the
privately owned Federal Reserve corporation) would help.

However, just like the situation in Communist era Poland in the parable, there
are major political movements who think this is crazy talk and would like to
spin these economic failings as proof that we need more commissars, not less.
I can point to many members of both political parties in the USA who feel this
way.

[1] Early in the Clinton era there was a lot of muckraking about how banks
were not loaning to ethnic minorities. This produced changes in the
regulations. Later an independant study was done that controlled for the
ability of the applicants to repay and found no bias. Bank weren't "greedily"
refusing to loan to minorities, they were greedily loaning to everyone who
could repay. The regulations, however, incentivized loaning even to people who
couldn't repay, hence the boom & bust.

~~~
barrkel
"the banks who were way over levered would have seen their deposit insurance
rates go up, and thus be incentivized to not be over levered."

That relies on the people selling insurance to be rational. Unfortunately,
markets can act irrationally for long enough that disaster still strikes when
they come to their senses. For example, it took way too long for CDS rates
(i.e. insurance on loans) to rise on Greek debt. In the 19th century - before
the creation of the Fed - banking crises and depressions were a dime a dozen
in the US:
[http://en.wikipedia.org/wiki/List_of_banking_crises#19th_cen...](http://en.wikipedia.org/wiki/List_of_banking_crises#19th_century)

Our economy is ruled by people, like our governments are run by people. The
higher up you go, the more scope there is for mistakes, and IMO the less
likely you'll see good quality market mechanics. Instead, you see power games,
financial hostage taking, threats and counter-threats, etc.

------
kabdib
We received a bunch of code from another group in this Large Software Company.
More than half the code consisted of extra do-nothing layers of abstraction;
functions that merely did checking and assertions on their arguments and
passed them down to lower layers. There were many redundant assertions (e.g.,
checking that pointers weren't NULL, many times, and that assignments had
"made it"). Working in this code was awful.

One day it dawned on me: This other group had a requirement that all code pass
a seventy percent code coverage bar before checkin. This extra "safe" stuff
was padding to make it easier for them to pass.

We took this code, ripped it to shreds and shrunk it by a factor of three or
four. Sped it up a lot, too.

I don't believe in blind use of software metrics as a method for improving
software.

------
wpietri
If this has some resonance for you, I'd encourage you to check out one of the
Lean Manufacturing books. The Toyota Way and Toyota Kata are two of my
favorites. Also great is the "This American Life" story NUMMI:
[http://www.thisamericanlife.org/radio-
archives/episode/403/n...](http://www.thisamericanlife.org/radio-
archives/episode/403/nummi)

I bring up Lean Manufacturing because they have a strong analytical approach
that looks at all operations in terms of whether or not they create customer
value. Studying the various Lean techniques (e.g., value stream mapping, one-
piece flow, kanbans) has given me a lot of insight into ways that typical
business thinking goes wrong.

Lean Manufacturing to me is something that happened when engineers maintained
control of a business.

~~~
Game_Ender
Thanks a lot for sharing that NPR story. It was very enlightening to learn
more about the differences between the GM and the Toyota production
methodologies.

------
Zarkonnen
For a very good extended historical view on how this kind of mess-up kept on
happening in communism, also see the book Red Plenty. (
[http://www.amazon.co.uk/Red-Plenty-Francis-
Spufford/dp/05712...](http://www.amazon.co.uk/Red-Plenty-Francis-
Spufford/dp/0571225233) )

~~~
zeteo
If you have any interest at all in the subject, Zarkonnen is making a very
good recommendation. Red Plenty has brought Soviet society to life for me in a
way that no other book or article could (and I've read a few).

------
dbuxton
I have lots of friends who are teachers here in the UK. The only metric that
they really care about is whether or not their pupils achieve a grade C or
higher at GCSE (age 16).

A very high level of effort is focused on D/C borderline students as a result,
with more or less able students more or less abandoned. The ROI from moving a
D to a C is [perceived as] far greater than moving a C to a B.

So much for actual education...

------
davewasmer
The real moral of the story: prices are the only effective mechanism for the
efficient allocation of higher order goods.

~~~
apenwarr
Many, many people have misinterpreted this kind of story and tried to apply
prices to everything (eg. "buying" support time from staff in the IT
department). That doesn't work either, because you can do the same tricks with
money as you can with any other metric.

For example, in the dotcom days, lots of companies would inflate their
revenues (as much as they wanted!) by simply buying ads from each other, back
and forth.

------
temphn
Reminiscent of Eliyahu Goldratt's excellent book, The Goal. Bottom line is
that unless you incentivize on profit, you are incentivizing loss.

------
abecedarius
tldr: an illustration of <http://en.wikipedia.org/wiki/Goodhart%27s_law>

------
shalmanese
I'm sick of reading these parables from the perspective of an all-knowing
outsider with perfect information. All it does is give the reader a smug sense
of satisfaction that they could never be so stupid.

For once, I'd like to see it from the perspective of someone with uncertain,
incomplete information, gathered by people who have their own agendas about a
topic whose towers of abstraction the protagonist barely has a grasp on, on
which they have to make decisions with inadequate time for consideration or
research and of which, 999 will be utterly uneventful and 1 will blow up
completely in their face.

~~~
lazugod
This parable is trying to demonstrate a point; padding it out with "uncertain,
incomplete information" wouldn't make that point clearer.

------
nirvana
I was in Berlin in the fall of 2010 for several months and we went to visit
the DDR museum. (This is the museum about the former East Germany, which was
the communist controlled half of Berlin and Germany.)

One of the things they had in the museum was a simulation of exactly this
situation. You got to be the commissar of an industry and you had to centrally
manage the economy. You almost always failed completely. (You had to deal with
more than production, though, you had to deal with worker housing, and stuff
like that.)

It was very educational. I'd say that at least the curators of the DDR museum
agree with this parable being relevant.

------
gathly
This story took a long time to explain a simple concept.

