Lion of the Blogosphere

There’s no such thing as a “free market”

When people use the term “free market,” they mean a laissez-faire economy with perfect competition. And among the libertarian types, it’s taken on faith that the former causes the latter.

First of all, there’s no such thing as complete laissez-fairism. The world has seen many collapses of central government authority, and the result has never been the anarcho-capitalism imagined by libertarian types. The result has always been warlordism, which is the modern term for what used to be known as feudalism. Living under warlordism sucks unless you’re the warlord.

Some people may argue that warlordism only seems to appear consistently because central governments collapse in countries where there the people have low IQ. But the term warlordism was first used to describe the disintegration of central authority in China, and China is a nation where people have high IQ.

So we see that the natural state of humanity, in the absence of a strong central government, is feudalism or warlordism, not anarcho-capitalism.

Regarding perfect competition, the existence of billionaires proves that we don’t have perfect competition. In an economy with perfect competition, no one can become very rich, because as soon as people see that activity X produces more profits than other activities, people jump into activity X and the competition from more participants brings down the profits. No one could ever become a billionaire in an economy with perfect competition.

* * *

What we do have are “market economies,” where for the most part prices and levels of production are set by business entities seeking profit rather than by central government command. And a fully centrally-planned government-commanded economy is never something I would argue in favor of, because it didn’t work out very well where it was tried. However, market economies have a lot of room for government regulation.

* * *

Entrepreneurialism: a contest in which the winner gets a monopoly and doesn’t have to deal with profit-reducing free-market competition.

Written by Lion of the Blogosphere

June 24, 2013 at 9:30 PM

Posted in Economics

104 Responses

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  1. “Regarding perfect competition, the existence of billionaires proves that we don’t have perfect competition. In an economy with perfect competition, no one can become very rich, because as soon as people see that activity X produces more profits than other activities, people jump into activity X and the competition from more participants brings down the profits. No one could ever become a billionaire in an economy with perfect competition.”

    A lot of people are trying to replicate Steve Jobs’ success, but somehow they can’t. It’s a seemingly easy job — he’s coming up with products (more like choosing from what his workers are cooking up) and strictly controlling the UI experience. Should be easy to control the UI experience, no? A lot of things look easy after they are proved (like the iPhone). There are many things that are really hard to come up with but look easy after seen:
    – calculus – when explained, it’s easy to understand and get intuition, but it took a long time and someone really smart to invent it
    – google’s page rank — where were similar algorithms, including Jon Kleinberg’s algo, but somebody had to do the hard lifting to also implement it in practice. They got it, and they are ripping the benefits
    – material sciences: once in a while a new material is being invented, which redefines industries. It’s 1 person who does it (and usually only benefits marginally)
    – drugs: hard to make, easy to copy
    – homework: much easier to copy than to solve

    What you’re getting at is saying that people who do their homework should benefit as much as people who copy the homework… even worse… should benefit as much as people who don’t even try to do their homework, ie, the moochers.

    Zack

    June 24, 2013 at 9:47 PM

    • All examples of monopolies protected by intellectual property law. A monopoly is inherently not perfect competition. Yes, monopolies are very profitable because there’s no competition.

      Lion of the Blogosphere

      June 24, 2013 at 9:48 PM

      • Yes, are we talking about the same Steve Jobs that tried to copyright thin rectangular smart phones and sues the crap out of all his competitors. And who replaced the much better default Google maps with default Apple maps on my phone which is way worse just because he was in a pissing contest with Google and wanted to try and use his market share to push a better product out of the market.

        asdf

        June 24, 2013 at 11:07 PM

      • Ayn Rand said all monopolies are caused by government.

        smartandwise

        June 24, 2013 at 11:30 PM

      • ASDF: The whole maps fiasco is the reason why I haven’t updated my iPhone software.

        High Prole & Proud

        June 25, 2013 at 5:51 AM

      • I didn’t update for a long time but then I did so by accident and can’t go back.

        asdf

        June 25, 2013 at 10:24 AM

      • You can install Google Maps on your iPhone 5 just like any other app in the app store. After I finally did that, I realized how much better it is than the Apple Maps.

      • Sure, but its inconvenient. And if you bought an Iphone after the switch and don’t know how much better google maps is you’ll be using a worse product and not know it.

        Also, some aps that link to maps all used to link through google maps, but now some of them link through apple maps.

        asdf

        June 25, 2013 at 2:03 PM

      • Dear God, only a prole has a cell phone of any kind.

        Hendrik Verwoerd

        June 25, 2013 at 5:53 PM

  2. Ever think of doing a podcast?

    Curle

    June 24, 2013 at 10:16 PM

    • He most likely won’t start a podcast for two reasons: 1) he’s self-conscious about his voice and 2) he’s too paranoid about his real identity being discovered.

      bobo

      June 25, 2013 at 5:33 AM

      • My oldest daughter is an aspiring voiceover actress and would gladly record entries for him. She could add accents, funny voices, and animal sounds to make it even more entertaining. On the down side, some people might start to think lion is a teenage girl.

        islandmommy

        June 25, 2013 at 12:04 PM

      • “On the down side, some people might start to think lion is a teenage girl.”

        Well, there was this blogger I used to read called Libertarian Girl. She sounded an awful lot like our Lion. Who knows, perhaps the Lion is merely faking manhood in order to keep focus on serious ideas; as opposed to dealing with beta orbiters and all that.

        Nyk

        June 25, 2013 at 5:15 PM

  3. Inside Anglo: the secret recordings
    laughing and joking as he tells another senior manager, Peter Fitzgerald, how Anglo was luring the State into giving it billions of euro.
    … and in the years ahead would eat up €30bn of taxpayer money.

    Toad

    June 24, 2013 at 11:20 PM

  4. “In an economy with perfect competition, no one can become very rich….”

    That is a core principle in Adam Smith’s system of morality. Adam Smith was a moral philosopher who devised capitalism as a way of compelling people to be virtuous — industrious and kind — not to make people rich. Free-market competition is supposed to drive down profits and make capitalists anxious and uncertain about the success of their enterprise, which should compel them to work hard and treat other people (who are possible customers or suppliers) decently. If, instead, a few people become inordinately rich, it wrecks Smith’s system because rich people can get away with being indolent and cruel.

    Mark Caplan

    June 24, 2013 at 11:22 PM

    • There is a lot of stuff in Smith people never read. The man understood externalities and how the real world wasn’t close to a perfect free market and never was.

      asdf

      June 25, 2013 at 9:47 AM

  5. Regarding perfect competition, the existence of billionaires proves that we don’t have perfect competition. In an economy with perfect competition, no one can become very rich, because as soon as people see that activity X produces more profits than other activities, people jump into activity X and the competition from more participants brings down the profits. No one could ever become a billionaire in an economy with perfect competition.

    You’re assuming human achievements are normally distributed, so no one person can be orders of magnitude more productive at anything than everyone else. Nothing could be further from the truth.

    smartandwise

    June 24, 2013 at 11:28 PM

    • Are you saying there is one person in the world who is orders of magnitude more productive then any other single human in the world that could compete with them?

      asdf

      June 25, 2013 at 9:49 AM

      • I think in certain industries there are masters who are orders of magnitude more productive than anyone else is capable of being anytime soon. Remember that achievement is multiplicative not additive, so one’s productivity is a function of IQ multiplied by special talents multiplied by drive multiplied by years of expertise multiplied by passion etc. Add to that the fact that IQ itself has a very non-linear relationship with productivity. There was a brilliant article published by the Prometheus high IQ society saying that problem-solving speed doubles every 10 IQ points (the author later revised it to every 5 points). so some computer billionaire with an IQ of 170 can solve problems orders of magnitude faster than virtually anyone else in his industry, and then you add to that he’s focused and driven and has been obsessed with computers since age 12, and who the heck can come close to competing with him anytime soon?

        I don’t know if there’s a free market or not, but the mere existence of enormous inequality does not prove market failure.

        smartandwise

        June 25, 2013 at 11:53 AM

      • Are we really assuming that there is one “master” that is just that much more productive then all the other “masters”. Is Bill Gates really the absolute most productive computer engineer or manager at Microsoft? Or are there lots of other equally productive “masters” working there who simply weren’t exposed to the same set of circumstances as he was and thus didn’t become billionaires.

        asdf

        June 25, 2013 at 2:07 PM

      • If IBM had decided to develop their OS in-house instead of outsourcing it to Bill Gates’s little company, you probably would never have heard of Bill Gates.

        How many of you could name any of the engineers who worked on the first IBM PC who worked as employees of IBM?

        Lion of the Blogosphere

        June 25, 2013 at 2:14 PM

      • I don’t know about Bill Gates, my only point is that even perfect competition should result in absurd levels of economic inequality because of huge differences in human productivity which are compounded in the digital age. To make a simple example, suppose you were the first person in some low IQ country who figured out how to build a computer with a word processor and printer. You could print thousands of copies of a book you wrote in the time other authors took to print one and you could quickly become richer than every other author in that country combined. Other people could try to copy what you did and duplicate your success, but by the time they acquire the technology, you’ve already made your profits.

        smartandwise

        June 25, 2013 at 2:52 PM

      • I’d go even further Lion. If IBM took a slightly different legal stance towards Gates company, even if they did still contract Gates to do all the work, you never would have heard of Bill Gates.

        asdf

        June 25, 2013 at 3:39 PM

      • All high IQ societies are for losers, and Bill Gates is UN-impressive in interviews, at least.

        Hendrik Verwoerd

        June 25, 2013 at 5:55 PM

  6. The world has seen many collapses of central government authority, and the result has never been the anarcho-capitalism imagined by libertarian types. The result has always been warlordism

    Agreed. But not all libertarians are anarcho-capitalists. Rather, there is a spectrum running from authoritarian to libertarian with most people somewhere in the middle. You don’t have to be at one extreme or the other to be authoritarian or libertarian. There are moderate authoritarians and moderate libertarians.

    So we see that the natural state of humanity, in the absence of a strong central government, is feudalism or warlordism, not anarcho-capitalism.

    Agreed. But there’s no reason a strong central government should include heavy regulation.

    Regarding perfect competition, the existence of billionaires proves that we don’t have perfect competition.

    It proves no such thing. There may not be perfect competition but that doesn’t mean people aren’t perfectly free to compete.

    Certain things like economies of scale, etc give advantages. You can run into a situation where the richest guy in town pretty much owns everything and runs the show. That’s why I favor a progressive wealth tax on elites. To knock down the compounding and keep them from becoming an economic aristocracy that runs the show. I don’t care that they’re rich. My only concern is that they can and do use their wealth to undermine competition and freedom of others.

    Re: your definition for entrepreneurialism. I’m pretty sure that’s not the definition. Still, it sounds like you’d prefer to replace market competition with government regulation. Which would produce far less competition and freedom.

    destructure

    June 24, 2013 at 11:28 PM

  7. destructure

    June 24, 2013 at 11:33 PM

    • Even Friedman admitted that if politicians and bureaucrats were angels he’d love big government.

      The problem is there are many more ways government can do harm than do good. So the probability is for the former. But the best government is one that can evolve, not “the one which governs least”. So say Soros and his idol Popper.

      Hendrik Verwoerd

      June 25, 2013 at 8:06 PM

  8. LoB…

    What is your act of censorship but evidence of your own radical autonomy?

    A “free market” MUST BE the product of a “free” people.

    So when you say that “free market” is a meaningless term, you are not saying that there can be no such thing as a free market because there can certainly be a free people to create it. Rather, you are saying that Americans are not a free people and therefore can not operate a “free market.”

    But we are in a post-liberation environment. If a population of producers, consumers and parasites act as though they were a “free people” operating a “free market” then it is indeed a reality. “We” have “free markets.”

    Of course, you are perfectly eligible to come along and ACT as though you and the producer, consumer and parasite were not a “free people” and therefore could not operate a “free market” and indeed this would be a reality. “You” would not have “free markets.” And neither would any producer, consumer or parasite.

    The question is how one obtains this kind of freedom and clearly to those seeking such, an all-accepting indiscriminancy is the only way. Nondiscrimination and tolerance are the highest values of America and Corporate American and nearly everyone in between.

    Nondiscrimination + tolerance = radical autonomy

    Just like your censorship policy.

    Totally indiscriminate. And maximum autonomy for the Lion.

    thordaddy

    June 25, 2013 at 2:25 AM

    • “freedom” is another meaningless American term. “We know what works. Freedom works.” — Bush 41

      As Lenin asked, “Freedom for whom to do what?”

      Hendrik Verwoerd

      June 25, 2013 at 5:59 PM

  9. If one identifies as “alt-right” then the modern Western reality can be summed up by no better understanding than the fact of “massive intelligence failure.” In other words, the story of the modern West is the utter failure of the “intellectuals.”

    Of course, this massive failure of the “intellectuals” is rooted in their absolute aversion to loyalty of any kind.

    thordaddy

    June 25, 2013 at 3:05 AM

  10. Lion, I dig the econ. lesson! Preach on brother!

    High Prole & Proud

    June 25, 2013 at 5:55 AM

  11. “Entrepreneurialism: a contest in which the winner gets a monopoly and doesn’t have to deal with profit-reducing free-market competition.”

    Demonize the entrepreneur as much as you want, but without him most people are fucked because they are just waiting for somebody to give them a job… very few people out there willing to become the entrepreneur despite the upside.

    Look it another way: what is the distribution of killings per soldier in a war? Well, most soldiers don’t kill anybody. Big zero. They are just there as sitting ducks. More so with modern weapons. There’s only a handful of people who do all the killings. 1 in 100 is a killer. 1 in 100 is an entrepreneur. They do the hard lifting. Try going to war without the killer. Try having an economy without the entrepreneur.

    Zack

    June 25, 2013 at 7:08 AM

    • A guy who kills 1000 by dropping a MOAB from a plane isn’t a super-soldier, he’s just aided by technology.

      Lion of the Blogosphere

      June 25, 2013 at 8:08 AM

      • No, but if he figured out where to drop the bomb then he is a super-soldier. To just assume everyone would know where to drop the bombs seems like a reach. Can we have billionaires? I thought about oil. Not everybody who owns a ranch can sell a little bit of oil. Some people own ranches with a lot of oil. Perfect competition all you want but some locations and some land is just going to be much more valuable then other places. Occasionally, you figure out the value of the land after you have bought it. I suppose you can say that none if this activity though quite lucrative can make someone a billionaire but it sure would give them a nice head start.

        mark

        June 25, 2013 at 9:19 AM

      • Seems to me that the real super-soldiers are geeky engineers working at defense contractors who designed the bombs and the missiles and the airplanes, but who for the most part don’t get paid huge salaries (whatever is the standard salary for engineers is what they get paid).

    • Zack, your analogy is piss poor. Since Napoleonic times most of the killing in war has been done from a distance with artillery pieces (http://articles.baltimoresun.com/1991-01-31/news/1991031148_1_artillery-howitzers-korean-war)

      A better analogy would be to compare the notion of the Randian entrepreneurial übermensch with Hollywood’s invincible infantryman stock character as neither exist in real life.

      High Prole & Proud

      June 25, 2013 at 8:41 AM

      • There are legendary soldiers but they don’t match the Rambo movie stereotype.

        Like that US Army sniper with 200+ confirmed kills ultimately murdered by his friend.

        Another such person was terrorist/warlord Shamil Basayev likely killed in a accident.

        These people killed hundreds perhaps more but their luck ran out too often bizarrely.

        precisekumshot

        June 25, 2013 at 2:15 PM

      • The geeky engineer who designed the sniper rifle should get some of the credit.

        Lion of the Blogosphere

        June 25, 2013 at 2:18 PM

      • A gal with a porno name?

        Hendrik Verwoerd

        June 25, 2013 at 6:03 PM

      • Among those who follow weaponry, the men who invented the bolt action rifles do get lots of credit (they also lived over 100 years ago).

        The modern sniper rifle is just a very well built bolt action rifle with various, minor, ease of use modifications. A well built Mauser ’98 can be just as, or more, accurate as any modern sniper rifle.

        Some Guy

        June 26, 2013 at 1:59 PM

      • Ditto SomeGuy. A mighty fine sniper rifle can be crafted out of a 100 year old WW1 era Mauser receiver.

        High Prole & Proud

        June 27, 2013 at 12:44 AM

  12. Productivity is a contingent concept. Its based on circumstances. I’ve had jobs where I was really productive, and jobs that sucked. I’ve had ventures that were really productive and ventures that sucked. It wasn’t like my drive or ability changed much between them. Just different circumstances.

    Lets take the job I felt was one of my most productive. I had an excellent manager who trained me well, a supportive team I was working in, a crack IT department that was good at their jobs. I was set up to succeed and did. I ended up doing some projects on my own initiative that made the company a lot of money, but I was able to do so because of the environment I was in.

    By contrast one of my least productive jobs I had the manager that hired me leave and the one they reassigned me to said one sentence to me, “I don’t have time to train you, go away.” Needless to say I didn’t get much done in that job, even though I made what efforts I could.

    You want to know the funny thing though. The former job paid less then the latter. Why? Simple bargaining positions and corporate politics, which is what really drives compensation and not productivity.

    That’s why things like Galt overturning laws of thermodynamics all on his own are silly. Nobody does anything all on their own. We accomplish things because we have training, support, and tools that come from other people, institutions, and society. The individual adds their input, and has some ownership in a sense, but the idea that anyone 100% accomplished anything on their own is silly. In reality there are any number of people you could plug into the same circumstances and they would also produce the same result. It’s those circumstances, more then any heroic effort on the individuals part, that deserve the credit.

    That’s why the whole concept of the strike in Atlas Shrugged is silly. If the CEO of my company went on strike they would immediately promote one of the people below him and they would do basically the same job and get the same results. The whole idea of irreplaceability is silly. If society collapsed in the Atlas Shrugged straw man society its because the incentive to replace those people vanished (as it did in communism) not because there is some group of irreplaceable special people that said, “screw you guys, I’m going home.”

    http://www.amnottheonlyone.com/a-plot-hole-in-atlas-shrugged-to-drive-a-train-through/

    Atlas Shrugged is based on a major plot hole, just like Citizen Kane. You see, a strike is based in numbers. Every union member knows that the biggest danger to a strike comes from ‘scabs’, those unethical or desperate enough to cross the picket line and keep working. In order for a strike to be successful, the number of strikers has to be high enough that they cannot be easily replaced by non-union members. In other words, the success of a strike is dependent on completeness – large numbers of workers acting in unity.

    Rand’s premise is that ‘producers’ are so special, so different from the others around them, that without them the world can’t function. That they are, in fact, irreplaceable. And that, readers, is belly laugh worthy. As any member of the military can tell you, when an officer falls in battle, the person promoted to the position either rises to the occasion or doesn’t – but even if the officer’s absence hurts in the short run, in the long run there is no such thing as someone ‘irreplaceable’.

    The corollary to the idea that business leaders are irreplaceable is the assumption that those who aren’t already leaders are incompetent. There are certainly plenty of incompetent people in the world, especially if you define that as ‘not having a certain set of skills yet’. But there are many, many highly competent people with leadership ability (perhaps as yet undeveloped) that for one reason or another do not function in a leadership role.

    The skills of leadership are everywhere. I’ve seen them in restaurant kitchens and in kindergarten classes. Most people who have completed sufficient education to do a job either possess or can learn the requisite leadership skills to move from being promising underlings to leaders. I’ve seen top notch leadership skills in homeless mentally ill former veterans and in drug dealers.

    The plot of Atlas Shrugged falls apart in the face of reality. It isn’t lack of ability that keeps leaders from rising to the top, it’s lack of opportunity, often stemming from institutional issues that Rand never acknowledged, such as racism or sexism, or from socioeconomic backgrounds. Real world strikes work because large numbers of people work together, not because their skills are irreplaceable.

    What would really happen if the ‘producers’ wandered off? Each and every one of their jobs would be filled, quickly, by someone of similar or even greater competence. There might be a wobble in the learning curve, as there is any time a person is promoted, but those on the outside would barely feel it.

    Why? Because in addition to those leaders are people within the company, underpaid and under appreciated, whose job it is to keep things running smoothly day in and day out, and don’t need much supervision to do it. Leaders lead organizations full of skilled people, organizations structured such that short term disruptions to leadership hardly make a dent in the day to day operations of the organizations.

    In other words, ordinary people and the institutions manned by ordinary people can do just fine without these ‘producers’, as new ones will rise from the ranks. They don’t exist in enough numbers to be able to create a crippling strike situation, and there are dozens of ‘scabs’ eager to pick up their executive bathroom passes when they drop them. The dynamics of leadership are such that an ‘Atlas Shrugged‘ type strike would leave the world, well, shrugging. A plot hole in Atlas Shrugged, indeed.

    asdf

    June 25, 2013 at 10:22 AM

    • This is one of the greatest comments ever written on my blog.

      • I agree. It is really good. I have a Notepad file with memorable posts and this one is going in there.

        FWG

        June 26, 2013 at 9:40 AM

    • [i]Rand’s premise is that ‘producers’ are so special, so different from the others around them, that without them the world can’t function. That they are, in fact, irreplaceable. And that, readers, is belly laugh worthy. As any member of the military can tell you, when an officer falls in battle, the person promoted to the position either rises to the occasion or doesn’t – but even if the officer’s absence hurts in the short run, in the long run there is no such thing as someone ‘irreplaceable’.[/i]

      This is so true. I remember in the Coast Guard, we’d rehearse this by “killing off” senior people during drills just so the junior guys could get a little taste of what it would be like to have to step up and fill the next guy’s shoes.

      High Prole & Proud

      June 25, 2013 at 11:54 AM

    • Nice, long post, but not exactly true.

      1. How is Steve Job’s replacement doing? 🙂

      2. While you might have a claim that one person cannot create a tremendous amount of value (which is actually wrong for inventors), small groups of people can change the world. Taking the fact that people benefit from small groups, such as mentoring, job training, etc, up to the entire society is simply bullshit. If I owe something is to a few people, not the entire society. Most productive units have small group of people that work in somewhat communist way, but the community doesn’t go beyond a small side. You can’t justify from a small community of a few people to hundreds of million people. Just doesn’t work.

      Zack

      June 25, 2013 at 11:57 AM

      • 1) About as well as I’d expect the average bureaucratic manager of a large megacorp to do. Do you not know that Tim Cook was handpicked by Steve Jobs as his successor? Do you not realize that many of the decisions people are criticizing are extensions of decisions Steve had already made or suggested before he left (such as the Apple Maps garbage and suing competitors)?

        2) I went to a university with an endowment. That endowment paid for my scholarship. The endowment comes from the donations of people employed in all sorts of industries and from research grants provided by the government. That’s just one example of society putting resources into me in the implied expectation that I pay them back.

        Moreover, I use goods produced by and sell goods to the fellow members of my society. If they are unable to produce goods for me or buy my goods I can’t be much of a “producer”.

        The supply and demand for the various natural gifts most of us have will wax and wane over time. And we will have children with their own different talents. It seems short sighted to simply assert that one happening to have the right gifts at the right time in the right place is solely responsible for everything. Things change. You and your kids could find yourself not having the most desirable gifts at a given point in history. It’s better to live in a society that tries to bring out the best in everyone and provide them a life of human dignity.

        asdf

        June 25, 2013 at 2:30 PM

      • ” The endowment comes from the donations of people employed in all sorts of industries and from research grants provided by the government.”

        The endowment is not paid by the government. The government doesn’t donate money to the university into the endowment. The university may get grants through research grant proposals, which may pay for some graduate students. No tuition is going to be paid by money “donated” by the government in the endowment. Also, note that the government is getting things back from the research, and being a graduate student is more of a job than a degree, and a low paid job at that.

        I also benefited from the endowment, but I didn’t get in as a charity. I had to contribute to the university prestige, ie, pull my weight. I’m also donating back to my alma mater. I only donate money because I like what the university is doing currently and what it plans for the future. I support their students; actually I support some students, as my money has the condition to be used in a particular department. On the other hand, I do not donate money to the government. Government wastes money and their immigration policy lacks, (ie allows people in who don’t pull their weight) and I don’t agree with this. I also don’t want to support the drones who are happy to coast on the backs of others thru welfare, social housing, etc. All welfare should be limited in time, and only allow people to get on their feet. It should not be a way of life as it is with some people.

        Zack

        June 25, 2013 at 10:44 PM

      • “Moreover, I use goods produced by and sell goods to the fellow members of my society.”

        Apple has 50k engineers. They are what!? At some point were 10% of S&P? I support them by buying their products. Why should I support the drone who chooses to sit on the steps of his building the entire day and never worked a day in his life?

        There is plenty of opportunity in this country, but some people choose to ignore it. I support maximizing the opportunities, not the welfare of the drones.

        Zack

        June 25, 2013 at 10:49 PM

      • BTW, isn’t that logic a little circular?

        You’ve been saying that corporate CEOs are irreplaceable order of magnitude value producers. However, now your saying that Tim Cook, who is a CEO getting paid a ton of money, is not a very good CEO or value producer. Then aren’t you saying the whole idea that CEOs make more money because they are more productive then whoever would replace them is false.

        Or maybe he is a great value producer because the stock is up since 2011 when he took over (and before that when he was frequently filling in for a sick Steve Jobs). But if that’s the case wasn’t Steve Jobs replaceable?

        Which is it?

        asdf

        June 25, 2013 at 3:36 PM

      • “BTW, isn’t that logic a little circular?

        You’ve been saying that corporate CEOs are irreplaceable order of magnitude value producers. However, now your saying that Tim Cook, who is a CEO getting paid a ton of money, is not a very good CEO or value producer. Then aren’t you saying the whole idea that CEOs make more money because they are more productive then whoever would replace them is false.

        Or maybe he is a great value producer because the stock is up since 2011 when he took over (and before that when he was frequently filling in for a sick Steve Jobs). But if that’s the case wasn’t Steve Jobs replaceable?

        Which is it?”

        Circular? Not at all. There are different level of competencies. While you may not find a Steve Jobs clone, Apple should do its best to find the proper replacement.

        Zack

        June 25, 2013 at 11:44 PM

      • “There is plenty of opportunity in this country, but some people choose to ignore it. I support maximizing the opportunities, not the welfare of the drones.”

        By most any measure income mobility is going down, not up. And the many of the “socialistic” countries have higher income mobility then we do. And there seems to be a negative correlation between inequality and income mobility.

        So if our goal is to increase opportunity its clear that many “big government” countries have more economic mobility then us.

        asdf

        June 26, 2013 at 12:23 AM

      • “By most any measure income mobility is going down, not up. And the many of the “socialistic” countries have higher income mobility then we do. And there seems to be a negative correlation between inequality and income mobility.

        So if our goal is to increase opportunity its clear that many “big government” countries have more economic mobility then us.”

        There are a few problems with your comparison:
        1. the numbers themselves. In Europe people cheat on taxes big time. Like they found that apartment in the middle Paris with lots of valuable inside… nobody was paying taxes for that apartment. Also, the latest bank account leak on the offshore accounts showed that most money is from European privates and corporations. Americans pay their taxes and declare their income. Europeans don’t.

        2. if you look at direct comparisons, such as square footage used, or appliances owned, America is on top. The under the poverty level person in America has 40% more space in his home than the average Frenchmen. This is a much more fair comparison. As life is good, there’s no incentive in America for people to put an effort. Countless people that I’ve seen don’t want to become %1 because of the work required, which starts from school. They also don’t want to be at the bottom. What they want is to be in the middle and suck all the fat, ie, easy coasting through school and guaranteed middle class job. The opportunity to be the 1% is there for many, but it’s not the usual choice.

        Zack

        June 26, 2013 at 11:04 AM

      • ” I had to contribute to the university prestige, ie, pull my weight.”

        Yeah, me too brother. I’m sure they loved having their average SAT score go up a tiny bit in USNews rankings. Get over yourself.

        Grants help pay people who also teach. And most of the equipment used for the grants can be used for other purposes. Universities have also gotten various kinds of assistance from governments in the past. It’s another source of funding that helps with the fixed expenses of the university.

        “Circular? Not at all. There are different level of competencies. While you may not find a Steve Jobs clone, Apple should do its best to find the proper replacement.”

        So its your belief hat AAPL stock would be even higher in Steve Jobs was around? How high? How would you compare that to the salary he was paid? We can play just world untestable hypotheticals all day.

        asdf

        June 26, 2013 at 12:38 AM

      • “So its your belief hat AAPL stock would be even higher in Steve Jobs was around? How high? How would you compare that to the salary he was paid? We can play just world untestable hypotheticals all day.”

        Steve Jobs’ salary was 1 dollar. Sergey Brin and Larry Page also have a 1 dollar salary. (ofc, they all have lots of stock since they were founders, and that avoids paying some taxes for them, but mostly the 1$ thing is because they don’t want to say that they do their job for money. at this point it’s more than just money for them)

        Zack

        June 26, 2013 at 11:06 AM

      • Maybe Apple was due for a dip. Hot products/businesses can’t stay hot forever.

        FWG

        June 26, 2013 at 9:43 AM

      • That’s your answer? That statistics for the entire OECD are all a fraud?

        Have you looked at a map. America has more space period so they have more living space. This is like saying a 1% in NYC is poorer then a welfare recipient in bumblefuck because they have a bigger house.

        Re: $1

        Who cares if they take their pay in options or salary. Stop playing semantics when you’ve lost an argument, its pathetic.

        asdf

        June 26, 2013 at 7:48 PM

      • “That’s your answer? That statistics for the entire OECD are all a fraud?

        Have you looked at a map. America has more space period so they have more living space. This is like saying a 1% in NYC is poorer then a welfare recipient in bumblefuck because they have a bigger house.

        Re: $1

        Who cares if they take their pay in options or salary. Stop playing semantics when you’ve lost an argument, its pathetic.”

        1. Different countries have different accounting methods for income and wealth. For example, in Europe, generally it easy to structure around not to get taxes on investment income from other countries, ie, corporations are treated differently. That, and the tremendous amount of cheating, especially in France, Spain, Italy, and ofc Greece.

        2. Re Re $1. First, you were technically wrong. The salary is $1. Second, he already has the shares, because he was the founder. He’s working for himself and convinced others to do the same. It’s not like he’s an outside CEO who got in power and now he’s using influence to get a big salary.

        Zack

        June 27, 2013 at 10:55 PM

      • The US now has the most rigid class system in the developed world. It’s over. Get out while you still can.

        Hendrik Verwoerd

        June 28, 2013 at 5:42 PM

    • Good point.

      I don’t care how good of a “leader” someone is, if the team below him or her sucks, then nothing will get done. In fact, I have seen situations where the leader wasn’t that good, but the team below him was good, so things still got done.

      Which brings up an important point: It is the team that you surround yourself with that really matters.

      Jay

      June 25, 2013 at 12:05 PM

    • Great comment indeed. asdf always posts intelligent stuff.

      It is very funny to observe that postmodern dogmas in economics are actually permeated to the bone by old evil ideas like “born rulers, born slaves”.

      Thomas

      June 25, 2013 at 1:31 PM

      • “Great comment indeed. asdf always posts intelligent stuff.”

        Except for when it comes to the topic of religion, in which case, it’s always total nonsense. “I used to be an atheist, but then I woke up, and the reason that you don’t think like me is because you haven’t woken up.” Etc. etc.

        anon666

        June 25, 2013 at 2:31 PM

    • What about the third world? At the end of the imperial era, the civil services of countries like India were mostly staffed by “Brown Englishmen” All the leaders like Nehru were graduates of the same elite schools the colonists went to. So after they left India should have continued on a path of becoming a clone of the UK (with slightly less curry houses) right? The replacement proprietors knew the system. They kept it going. No today it is politically and economically much worse. Same for Africa, the Middle East etc. Why? Because the third worlders may have absorbed Western culture at a superficial level but they remained warlords at heart.

      It’s the same in the business world. Culture matters and the top producers, innovators, entrepreneurs whatever you want to call them have a completely different worldview to the typical drone. Trying to get the drones to understand the culture of growth, let alone emulate it goes over just as well as GWB trying to install democracy in Iraq. Yes scabs will rush in to fill the power void but you are way too optimistic as to whether they will be of “similar or even greater competence.” I am actually watching this unfold in a silicon alley tech firm.

      This is not to say Rand is right either; the producers won’t be missed. But that’s not because they’re replacable but because the hoi-polloi doesn’t understand and doesn’t care. (“What have the Romans ever done for us?”)

      Sudoless Cosmopolitan

      June 25, 2013 at 3:28 PM

      • Oh and about government regulation. Most of the time it is only a continuation of warlordism by other means. Again, ask the third world.

        Sudoless Cosmopolitan

        June 25, 2013 at 3:31 PM

      • The replacement proprietors knew the system. They kept it going. No today it is politically and economically much worse.

        Being colonized by the Victorian English was the best thing ever to happen to the third world. It’s absurd modern British feel colonial guilt. At least white American guilt over slavery (which I also don’t think whites should feel guilty about since every country in the world from Rome to the Ottomans had slaves and treated them worse to boot) makes more sense from a moral perspective.

        The Undiscovered Jew

        June 25, 2013 at 9:22 PM

      • “Being colonized by the Victorian English was the best thing ever to happen to the third world. It’s absurd modern British feel colonial guilt”.

        Correct and to make this clear, Africa will never achieve anything higher than 3rd world status on their own. Blacks are incapable of building anything of significance.

        The Ancient Greeks and Romans, and even the Babylonians were a lot more evolved than the modern day Blacks in Sub Sahara Africa.

        JS

        June 26, 2013 at 1:31 PM

    • Hear! Hear! Libertarians and conservatives have still not come to grips with the change from family or individual as unit of production to the organization as unit of production, the “socialization”, “collectivization” of production.

      The very words they speak and use to spread their nonsense they did not coin. I speak and write a language, Modern English, which is the work of countless anonymous and some famous men over 500 years, and so forth.

      If one believes Chris Langan is not a fraud his failure was explained by Malcolm Gladwell as, “No one, whatever his native ability, can do anything alone.”

      One, non ideological, reason why some believe that individuals exist alone and pristine independent of the society they “choose” to participate in is that:

      The idea that who and what I am may have been something very different means that I am really nothing in particular.

      Hendrik Verwoerd

      June 25, 2013 at 6:18 PM

    • Margaret Thatcher said, “There is no such thing as society. There are only individuals and families.”

      When I was much younger I agreed. I’ve learned since that this is the OPPOSITE of the truth.

      Hendrik Verwoerd

      June 25, 2013 at 6:23 PM

      • There are two reasons that aspie nerds support these various all or nothing ideologies.

        1) They believe the particular ideology will personally benefit them in some way.

        2) They don’t understand human social interaction well so they have to invent simplified rule sets.

        Normal people draw on many sources to figure out the world. Experience, intuition, reason, tradition, and others. They have to weigh all those things and make some educated guesses about how best to live their lives.

        What most people believe in is gradient locality. That is to say they have certain obligations to themselves and then gradually changing forms of responsibility to those around them as they become more and more distant (mostly diminishing, but not quite a straight line like that). You have different kinds of duty to your family, your neighbors, your colleagues, your social communities, your state, your nation, and the whole world.

        Aspies can’t figure that stuff out. They think you’ve either got to have no responsibilities to anyone or that there is no logical distinction in responsibilities between the different types. They invent closed system metaphysical nightmares like Objectivism because they’ve got no clue how humans work. And I mean that literally. Most of them are incapable of using some of the tools we spoke about earlier like intuition because their aspie brains literally don’t have any. Or they are damaged individuals who have been through immense trauma like Ayn Rand and should be viewed kind of like PTSD patients.

        asdf

        June 25, 2013 at 11:30 PM

    • “In other words, ordinary people and the institutions manned by ordinary people can do just fine without these ‘producers’, as new ones will rise from the ranks. They don’t exist in enough numbers to be able to create a crippling strike situation, and there are dozens of ‘scabs’ eager to pick up their executive bathroom passes when they drop them. The dynamics of leadership are such that an ‘Atlas Shrugged‘ type strike would leave the world, well, shrugging. A plot hole in Atlas Shrugged, indeed.”

      I think you are ignoring the tremendous leverage that modern society can give to a truly “outstanding” individual over a large asset base, as well as the fact that all interesting things happen “at the margin”.

      Yes, Steve Jobs may only have been 1% better as a manager than Tim Cook, but leverage that 1% “better” over Apple’s infrastructure and revenues and it turns out that 1% better in an absolute sense equals some insanely high percentage better in a profits sense. That’s why Atlas Shrugged makes at least a little sense. If the infrastructure for industrialism were to be utilized even 1% less efficiently, the resulting drop in profits would make all of the assets in that infrastructure essentially worthless. When you factor in the cost of capital, due to risk, the entire industrial world essentially operates at break-even, where investors are almost indifferent between providing capital for others to invest and their own consumption. If all capital holders were to suddenly alter their preferences from investing to consuming, the world would go to shit quite quickly, except for those who produced what the capital holders consumed. This would mean that the world would be awash in luxury cars, but no one would invest in making low and medium cost cars.

      As for things happening “at the margin”, let’s say that every “John Galt” in the economy has 100 customers and grows that customer base by 3%/year. If all of those John Galts decide they will only take on 2 new customers this year, economic growth declines by 50%. Let’s say that job growth is directly correlated to economic growth. That would mean 50% fewer jobs created, just from the decision of each John Galt to grow his business by 1 less customer for the year. It is possible that some new entrants could soak up those customers, but what if customers only wanted to be served by a “John Galt” and not some new entrant and so they ceased consuming whatever good or service John Galt provided? I agree with Lion’s point that there would be new entrants, but I disagree that all customers who could be served by that new entrant will, in fact, agree to do so, because the new entrant is not a perfect substitute for what John Galt provided.

      Obviously, these are simple models of the impact a single person or a group of like-minded people can have, but I think they make the intuitive case that there actually is some subset of people who make things happen all out of proportion to their numbers and that people are not exactly fungible.

      I generally agree with the saying “The graveyards are full of indispensable men” but I think that’s just a way of saying that not everyone who seems indispensable actually is, not that there aren’t any indispensable people. Even indispensable people die.

      For a more comical take on my point, just watch “Idiocracy”, where one average guy, in a below-average world, is able to save the entire country from famine.

      BS Inc.

      June 26, 2013 at 12:18 AM

      • “Yes, Steve Jobs may only have been 1% better as a manager than Tim Cook, but leverage that 1% “better” over Apple’s infrastructure and revenues and it turns out that 1% better in an absolute sense equals some insanely high percentage better in a profits sense.”

        The standard argument use by people who defend huge CEO salaries, but there’s absolutely zero proof that the people who choose CEOs (boards of directors, usually) have the ability to determine that candidate A is 1% better than candidate B.

        All the time we see CEO’s who truly f-up their companies, like the guy they hired to run JC Penney.

        Lion of the Blogosphere

        June 26, 2013 at 7:06 AM

      • “because the new entrant is not a perfect substitute for what John Galt provided.”

        Ok, but how much of a difference do you think it is? Is it even 1%?

        I’m by nature an empiricist. In addition to theory I look at real world data, my own experience, tradition (accumulated real world experience of societies), etc. I don’t see any evidence that these “John Galt’s” are that important or progressive taxation destroys the gears of innovation. In fact we often see the opposite. So called “socialistic” countries have higher degrees of economic mobility. They have strong rates of economic growth and business formation. Even in our own countries history our so called “golden age” was at a time of very high tax rates and regulation.

        Moreover, haven’t you experienced this in your real life? Have you worked with executives? I once worked for a company where we had a couple of senior people leave and two others twenty somethings and myself ended up running the entire department and fulfilling the obligations of our departed executives. And you know what, we managed. We not only managed, we did a better job. I ended up pricing billions of dollars worth of business and realized the executive that was doing it was doing it wrong. To the tune of millions of dollars wrong on basic errors. You’re right, 1% can make a big difference (BTW, my own compensation barely moved a hair after saving them millions, though the executive that screwed it up made multiples of my salary when I was there and went on to a job that paid even more).

        Every company I’ve gone to is the same. There are always things being done wrong by people at the top. Sometimes for game theory reasons (I get bonused on sales volume, not long term profit) and sometimes they just aren’t the brilliant Galtian supermen you make them out to be. And I certainly got to meet a lot of them when I was an investment banker and I was never convinced they were a bunch of John Galt’s (though a lot of the silver spoon crowd likes to think they are, like when my millionaire trust fund Rand quoting co-worker cut in line at a homeless shelter to get lunch).

        This is why a lot of Randroids are basically unsuccessful drones or trust fund kids that want to think they are John Galt’s being held back by moochers. If they actually started to have some success and climbed in the world they would get to the top and realize the people there are not a bunch of John Galt’s.

        Theories are nice ways to try and understand data, but if the data demolishes your theory its time for a new theory. Lion already hit on this, but a much better theory for CEO pay is that its determined by boards of directors spending the money of disengaged mutual fund holding shareholders. And those boards have an incestuous relationship where everyone is on the board of everyone else and they scratch each others backs. This theory: bargaining power, political positioning, and market inefficiencies, conforms a lot better to the data then the idea these CEOs are heroic John Galt figures.

        asdf

        June 26, 2013 at 9:59 AM

      • “Moreover, haven’t you experienced this in your real life? Have you worked with executives?”

        I think we need to be specific about what I am actually saying. I do happen to work with executives all the time and the more I work with them, the less respect I have for them. My own managers constantly tell me, “Can you dumb this down a little for the executives?” and I think to myself that he’s got to be kidding, that these executives are getting paid a boatload of money and I’m the one who needs to dumb it down for them? Shouldn’t I be getting paid the boatload and the executives be struggling to figure out for me? I have told everyone in my social circle who will listen that the superficiality of US corporate executives is a big part of what is killing this economy. But those are not the people I am talking about.

        “The standard argument use by people who defend huge CEO salaries, but there’s absolutely zero proof that the people who choose CEOs (boards of directors, usually) have the ability to determine that candidate A is 1% better than candidate B.

        All the time we see CEO’s who truly f-up their companies, like the guy they hired to run JC Penney.”

        The problem is that all the candidates for CEO look alike, so a pooling equilibrium is created and a good candidate is nearly indistinguishable from a bad candidate until the person has actually been hired and then either fails or succeeds. I can guarantee you, though, that no one who failed at being a mail clerk in the mailroom or running a single call center would be considered by the Board as a CEO. You have to succeed all the way UP TO the level just below CEO and then you enter the pool of qualified candidates. From there, the results can seem random as to who succeeds and who fails, though. The problem is that no Board can approve a pay package that doesn’t put a new CEO on the same level with other CEOs in the industry, because it would be taken as a signal that the CEO was not as good as the other CEOs, which would destroy confidence in the company.

        As for JC Penney, it’s a good example of the sort of “if it bleeds, it leads” mentality in the business press. The average Fortune 500 company stays big for a very long time, so when one fails, obviously it’s news, but that’s precisely because most companies aren’t being f-ed up by their CEOs. If they were, the news would be full of stories of companies which miraculously managed to stay solvent.

        Besides that, even if you were to make all the top 100 managers in a company of 10,000 employees take a salary of $0 and gave them no bonus and redistribute their average salary plus bonus of $500K (I don’t have the numbers, but I think this would probably be around the average comp for the top 100 officers of a company this size, maybe a little on the high side, actually) to the remaining workers, that would only be $5000/year for the rest of the workers, which isn’t exactly a game-changer if the average worker is making $40-50K.

        BS Inc.

        June 26, 2013 at 8:54 PM

    • I agree with some of this greatest post ever but I perceive the world differently. Is Migi Cabrera of the Detroit Tigers replaceable? Well, he should be the Tigers could pay the best hitting coach out there a million dollars a year with another million going to a trainer and position coach. Paying a bunch of scouts to find strapping young studs and presto, the Tigers should have a more then adequate replacement for maybe half of what they pay Cabrera. Why do they pay him so much then? Are they stupid? Maybe because 90 percent of a great player isn’t worth that much in many cases. Finally, I do not think that the CEO who currently runs the company I work at could have started the company. Is the CEO replaceable,yes but he didn’t start the company.

      mark

      June 26, 2013 at 1:27 AM

      • Sports is probably the best example of this.

        Baseball was popular decades ago, and yet most of the stars from that era would not be stars today. Improvements in training, technique, and lets face it drugs and supplements would mean that those stars might not even have jobs today. That’s extra true for lots of other popular spots (like the NFL).

        And yet didn’t people go to games in the 1970s? Wasn’t baseball popular? Why did people want to go see these second rate players?

        People want to see a good baseball game. The fan doesn’t notice a difference between a 95 MPH fastball and a 96. He’s told that X is good so he cheers. If he is told Y is good he will still cheer.

        If you took away the 100 best players in baseball the sport would be the same. People would still go. Every team would be slightly less good but they would all be slightly less good together, which means that nothing would change and the fan wouldn’t care. People pay sports stars a ton of money because they get the star and no one else does, which gives them a special advantage. But every winner has to have a loser. Every fan happy their team is doing well has a corresponding disappointed fan that his team sucks. Sports is a true zero sum economy. Higher levels of objective performance don’t change the fan experience at all.

        If anything, higher levels of objective performance are making the game worse. The moneyball strategy of getting unathletic guys who embarrass themselves fielding but who can walk or hit a homer a lot may win ballgames, but it makes them boring as fuck to watch.

        The only thing you can’t do is provide an unprofessional product. Fans can tell the difference between bad fundamentals even if 95 vs 96 MPH is lost on them. So you can’t have a poorly run unprofessional league like say the XFL. But if you pay sports players reasonable salaries, and have the proper trainers, equipment, management, etc then nobody will notice. The hard part in sports is matching the tradition, accumulated mythology, and imprinted loyalty teams and players have based on their histories. Which is pretty hard when it costs billions just to enter the market on a shaky venture.

        asdf

        June 26, 2013 at 10:18 AM

      • If you, like Lion, don’t like people getting paid too much, then you must hate the top athletes. Michael Jordan was making a lot of money. I can tell you right now: I’d be watching basketball if Jordan was still playing. I am not watching now. The same with Formula 1. Ayrton Senna was amazing, and he made more money than Jordan. Are you saying that without Senna or Jordan there wouldn’t be much difference? Maybe so, but I haven’t seen anything comparable since. (I’m sure Chicago Bulls and McLaren made a lot of money from Jordan and Senna, so they were a good business deal)

        Zack

        June 27, 2013 at 11:13 PM

      • “I agree with some of this greatest post ever but I perceive the world differently. Is Migi Cabrera of the Detroit Tigers replaceable?”

        I may be stating the obvious to you, but there is a stat called “Wins Above Replacement” which tries to answer this very question. Baseball is a great place to talk about the “fungibility” of talent because it is so obviously a team game where one superstar rarely makes or breaks a single game and a single game rarely makes or breaks a team’s season.

        Yet, for those instances where a few games at the end of the season and the playoffs do make or break a team’s season, teams are willing to pay superstars much, much more than they would pay the superstar’s replacement.

        BS Inc.

        June 26, 2013 at 8:27 PM

    • asdf is right. I remember reading a few years ago about Yale admissions. An admissions office admitted to the NYT that Yale could select a different set of students for their freshman class and the quality would be the same. The elite are replaceable.

      aki (@DSGNTD_PLYR)

      June 26, 2013 at 5:57 PM

      • “asdf is right. I remember reading a few years ago about Yale admissions. An admissions office admitted to the NYT that Yale could select a different set of students for their freshman class and the quality would be the same. The elite are replaceable.”

        I doubt that. The SAT’s would be different. Yale accepts about 10%. The next 10% would be, at least on SAT’s quite different. A few points difference, and they will lose the top. Ofc, the problem with SAT is that it’s too easy. It measures well the averages, but not the people at the top.

        I’m familiar with the graduate programs in my field, and there’s a difference between the first university and the second, then the difference becomes bigger the third and fourth. Overall, the top 4 are more of a cluster, then about 3 more. The rest… it’s not even on the radar. You then look at the students and their publications and where they end up afterwards, and there’s a big difference. Saying that for grad school the top can just get a different set of students is hilarious.

        But you raise a good point: are there people getting into Yale just because of their elite background — yes, Yale, Princeton and to less extent Harvard are not exactly the most meritocratic universities for undergrad. They get those kids in because they are connected and they have high chances of using those connection after college. Moreover, those connections might benefit the other students from the class (but nevertheless, they have to admit a great deal of smart students too, and they choose the best from the connected part). This is a very different approach to admissions than MIT or Caltech — where they just get the best academically and turn up the heat in the classroom.

        Zack

        June 27, 2013 at 11:08 PM

    • The giant hole in your own argument, asdf, is that while leaders can, indeed, more or less be easily replaced in something that is already an ongoing concern, FOUNDERS cannot be.

      People who are first movers are the important ones. Could anybody have been Henry Ford? Or John D. Rockefeller? Or Larry Ellison? Sure, go find me a dozen people who could have been Larry Ellison. If you can find them, then they’ve already created their own multi-billion dollar entity.

      If they haven’t, then they couldn’t be Larry Ellison.

      peterike

      June 26, 2013 at 8:45 PM

      • “Could anybody have been Henry Ford?”

        He didn’t invent the automobile. Nor did he invent the internal combustion engine. The utility of horseless transportation was obvious. If Ford didn’t exist, someone else would have risen to dominate the industry instead.

        Lion of the Blogosphere

        June 26, 2013 at 9:09 PM

      • FOUNDERS cannot be.

        Steve Jobs in his last decade and a half was irreplaceable and arguably the greatest businessman in American history.

        The Undiscovered Jew

        June 26, 2013 at 11:03 PM

      • “Steve Jobs in his last decade and a half was irreplaceable and arguably the greatest businessman in American history”.

        Bill Gates was a better peddler. He was able to convince the world that his 2nd rate OS was better than that of Apple’s.

        Bill also created that jobs that Jobs didn’t. There was/is a market for MS software saavy, where Proles and non-Asian minorities could get their hands into it and be gainfully employed. Jobs was an elitist snob and status conscious, as with many Bobo freaks, and didn’t want the average Joe Schmoe messing with his stuff.

        JS

        June 27, 2013 at 12:16 AM

    • asdf, you seem to have problems with your bosses…

      sure, there’s plenty of incompetents. in fact most people long term would be incompetent. It’s called the Peter’s principle — people get promoted until they don’t, and they don’t because they don’t do their current job well. This goes double for older people.

      Zack

      June 27, 2013 at 10:48 PM

  13. Some people may argue that warlordism only seems to appear consistently because central governments collapse in countries where there the people have low IQ. But the term warlordism was first used to describe the disintegration of central authority in China, and China is a nation where people have high IQ.

    China’s IQ is 105, but the warlord era was in 1916. If you believe the Flynn Effect reflects a real gain in intelligence (caused by nutrition), an IQ of 105 in 1916 is equivalent to an IQ of around 85 today, so perhaps not even China was smart back then.

    smartandwise

    June 25, 2013 at 3:12 PM

    • No, I don’t believe that the average Chinese person was retarded in 1916.

      Lion of the Blogosphere

      June 25, 2013 at 7:20 PM

      • Retarded is below 70. 85 is much higher than retarded and quite average in unskilled jobs.

        Bottledwater

        June 25, 2013 at 9:08 PM

      • Whatever the Flynn effect is measuring isn’t g. There’s now way Northeast Asians and Europeans had 80-85 IQs in 1916 or that Ashkenazi Jews had 90-95 IQs.

        The Undiscovered Jew

        June 25, 2013 at 9:19 PM

      • Not sure why everyone finds it so hard to believe there could have been a 1.33 Standard Deviation (SD) increase in real intelligence over the last 100 years. We’ve seen parallel increases in brain size and height. Average white American young man is 5’10.5″ tall today, but during World War I was only 5’7″. Since the SD for adult white male height is 2.57″, that’s a 1.4 SD increase over a similar time span.

        Nothing about this contradicts HBD. The 2 SD height difference between men and women is genetic, yet the height for both sexes has increased dramatically because of nutrition. You could make a similar case for ethnic differences.

        Remember in 1916, most people had very little education and worked in very low skill jobs. It’s entirely plausible the average European/Chinese had an IQ of 80-85 by today’s norms. Many countries even today have IQ’s in the 60s with some isolated tribes scoring in the 50s.

        It’s possible we’re not getting smarter and people are just getting better socialized to take tests thanks to more schooling, but if even half these gains are real (and Jensen believed about half is real, caused by rising brain size) then even China may not have been smart enough to form an efficient economy in 1916.

        smartandwise

        June 26, 2013 at 11:13 AM

    • Flynn Effect, lol

      asdf

      June 25, 2013 at 11:18 PM

    • There is a difference between positing that people are getting genetically smarter and that people are receiving proper nutrition and medical care growing up. I can believe that malnutrition, pollution, and illness caused many people in prior generations to not reach their genetic potential, especially if they were poor. However, I find it hard to believe that natural selection increased our raw IQ potential that fast in that short a time period, especially considering there really haven’t been any selection pressures for IQ for some time.

      Moreover, do you really think things like the enlightenment or the industrial revolution could have happened if the average IQ was that low? When you meet a retard today can you imagine a society of those people doing what your ancestors did?

      asdf

      June 26, 2013 at 7:57 PM

      • We can be biologically smarter without being genetically smarter. The theory, proposed decades ago by Richard Lynn, is that better nutrition has caused intelligence to increase by about 2 IQ points per decade over the 20th century and beyond, analogous to the 20th century increase in height. We know that the head circumference of babies have been increasing every generation and that brain weight at autopsy has been going up. It’s also likely that nutrition boosts neurological complexity too.

        Is it possible that average IQ was 80 (by today’s standard) during the enlightenment? Possibly, because the average person was not enlightened, only the elite who were far above average. India has an average IQ around 80 and that doesn’t stop them from having a very bright elite capable of developing nuclear weapons and becoming high tech billionaires

        Bottledwater

        June 26, 2013 at 9:59 PM

  14. Wait a second…
    So the dissolution of government results in clannish/tribal warlordism rather than a free-market of competing defense agencies, each with an overwhelming self-interest in maintaining peace for reasons owing to the bottom line? Shocking. It’s almost as though libertarians have no understanding of human nature…

    Vince, the Lionhearted

    June 26, 2013 at 12:46 AM

    • Surely there must be some role playing computer game that allows people to simulate what would happen in such a scenario. There are games with actual economies where players can make real money (by trading their game currency for real currency)

      smartandwise

      June 26, 2013 at 11:42 AM

      • There is a game like that. It’s called EVE Online. Huge segments of the game world are controlled by armies of raiders who will kill anybody in their territory. The only reason they don’t control the whole world is because the remaining areas have been assigned to AI nations.

        cannibal

        June 26, 2013 at 8:09 PM

  15. The role of government is left out of asdf’s criticism of Atlas Shrugged. A large part of Miss Rand’s thesis is that authoritarian government can get big enough, when aided by a decrepit and compliant culture, to make it impossible for great leaders, inventors and thinkers to achieve their potential. The loss of this potential may then doom the society. This seems to be happening today. More effort goes to filling out Obamacare forms and making sure there are no “gender-specific” labels on restrooms than can be devoted to coming up with the next iPhone. And didn’t Apple suffer when Jobs left?

    Maximo Macaroni

    June 26, 2013 at 8:41 AM

    • Crapple is an entertainment/fashion company. In a perfect world it wouldn’t exist.

      “to make it impossible for great leaders, inventors and thinkers to achieve their potential”

      Randians don’t understand that their free market paradise squanders potential also.

      Hendrik Verwoerd

      June 26, 2013 at 6:20 PM

    • So shitty government is shitty. Congrats. Did that really take Rand 1000+ pages? She must not have much brevity.

      Or did it take 1000 pages because she had to add a bunch of stuff to flesh out the laughably bad metaphysics of her objectivism philosophy. Most of us know bad government is bad. And most of us know that Rand’s ideas about government inevitably descend into warlordism as Lion pointed out. Most normal people are just trying to figure out the best way to make government work, which is actually a difficult process that will probably never be solved because humans are complicated creatures.

      asdf

      June 26, 2013 at 7:52 PM

      • I think Ayn Rand believed in some government, but she wanted to limit it to protecting people from violent force (either from within or outside the country). I’ve never read her work so correct me if I’m wrong, but from what I’ve seen of her on YouTube, warlords would not be permitted in her libertarian utopia.

        Bottledwater

        June 26, 2013 at 10:08 PM

  16. “Entrepreneurialism: a contest in which the winner gets a monopoly and doesn’t have to deal with profit-reducing free-market competition.” aka corporate fascism?

    bobo

    June 26, 2013 at 12:12 PM

  17. I have never heard anybody, let alone a libertarian, claim that one can produce “on their own”.

    I have never heard anybody, let alone a libertarian, claim that anarcho-capitalism is the “natural state of humanity.”

    The Lion of the Blogosphere believes in “strong central government”*, so he should be pretty happy with the state of things now, right? Oh, but it’s not the right kind of strong central government! He’d prefer if his gang were at the helm. We don’t know who these magnificent heroes are, but you can bet they’d be up to date with the science on racial differences in IQ. That’s the key to understanding human nature, see.

    (*not a belief, that would be too aspergy i.e ideological. It’s a scientific conclusion – he has seen Somalians shoot at each other.)

    Carl

    June 26, 2013 at 8:52 PM

  18. Here’s an interesting discussion of the putative connection between “rich” and “productive”:

    http://marginalrevolution.com/marginalrevolution/2013/06/luck-investment-and-the-one-percent.html

    Anthony

    June 27, 2013 at 11:15 AM

    • “Here’s an interesting discussion of the putative connection between “rich” and “productive”:

      http://marginalrevolution.com/marginalrevolution/2013/06/luck-investment-and-the-one-percent.html

      Looking at my friends: several of them who had good jobs, such as big law associate or hedge fund jobs or top consulting, quit (not fired) and now they are just taking time off, thinking what they want to do with their life. Turns out that around 30, there’s a time when people re-evaluate their options. Many decide they don’t want to work or be productive, because it’s easier to take a break. These are people who had opportunities and worked hard for decades, and at some point decided that they don’t want a stressful job. I have a feeling that the rich people would quit sooner rather than later.

      Zack

      June 27, 2013 at 11:31 PM


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