On judging large institutions

[nancylebov]

I'm going to be noodling around with some observations here.

As some of you may have noticed, I'm a libertarian with the usual reflexive mistrust of government and fondness (though snarky in my case) for business[1].

It's occurred to me that there's a strong parallel between the way I feel about government/business, and the way a lot of people on the left (very noticably at the BBC) feel about business/government. If I understand it correctly[4], the idea is that profit-seeking is so personal and short-sighted that anyone who's going after profit should be assumed to be untrustworthy.

The truth is that, now and for the forseeable future, business and government are how quite a lot of the useful work of the world gets done. They could go away--slavery pretty much has--but it doesn't look likely at anything like the present tech and social organization level.

Meanwhile, discussion of regulation gets polluted by people feeling rightly that the other side has either business or government on trial. Either people in business are naturally wicked folks who just will not do the right thing or avoid the wrong thing unless they're forced by disinterested bureaucrats backed by police, or else people in government are a bunch of interfering fools (in some cases, bought by a competing business) who just get in the way. This makes it harder to talk about whether any particular regulation makes sense.

There's a similar pattern when the subject of unions comes up. There's a background noise of unions are wonderful/unions are horrible which distracts from the question of whether a particular union is competent and reasonable at negotiation and honest with its members' money.

Even though I've been noticing this for quite a while, it hasn't had much if any effect on my reflexive reactions. So this is an informal essay, not a call to arms.



The top ends of the footnotes are out of order because I entered the footnotes as I felt the need for them so I wouldn't have pseudo-superscripts that I'd forgotten to write footnotes for. I have much more faith in your ability to find footnotes as needed than I have in my ability to renumber my footnotes and get it right.



[1] A lot of people on both the left and right have this delusion that businesses are efficient at profit-seeking, and there must be a good reason for anything a business does. Austrian[2] economists acknowledge the importance of incomplete information, but afaik, they don't do justice to the business effects of stupidity, ignorance, overload, prejudice, and simply not yet having thought of something which will be obvious in retrospect.[3] Slack: Getting Past Burnout, Busywork, and the Myth of Total Efficiency by Tom DeMarco is a fine discussion of a large range of business stupidity and what to do instead. I don't know if there's anything comparable for government. Please let me know if you've heard of any such.

Actually, that might be an angle on the business vs. government thing. There's a large genre of how to do business better books (of wildly varying quality, of course). There's nothing I've seen about how to do government better from the inside, even there are a lot of people working in government and some fraction of them would like to get better at their work.

Why did the economist step over a hundred dollar bill lying in the street? If the bill were any good, someone else would have picked it up already.

[2]"Austrian" because they're in the tradition of Ludvig von Mises. They aren't especially writing about Austria.

[3] Considering all that, why do I like business at all? The feedback loop is shorter, and the relative lack of power means that businesses can't create the level of disaster that governments can. And businesses do a lot of useful work.

[4] Considering how hard it is to understand the underlying beliefs of people with whom you share a language and a culture, it amazes me that people make definitive statements about the metaphysics of ancient cultures known only through their artifacts.

Comments

[dmlaenker.livejournal.com]

Man, if the BBC is "the left", I have to wonder what Democracy Now is.

But regarding [1], there's an entire field of study devoted to governance - i.e. "how to do government better from the inside" - but given the complexity of government and the legal restraints upon it this field is much more academic, and requires much more analysis, than something you can just pick up in a "how-to" book from Borders or the ilk. Believe me, the foundational text on governance I'm having to read this semester (The Public Process: Government And Governance) is much thicker and more complex than How To Do Your Business Right! or whatever.

I don't know about [3], either. Dow's involvement (or neglect), say, in Bhopal was pretty disastrous - having cost thousands of lives directly and tens of thousands more over time - as have been the involvement of many other companies abroad such as DeBeers and Chiquita. Failing this, the businesses can and will constitute a government - and as Mark Rosenfelder argues, private groups (i.e. "business" and the Mafia) will always outgun private citizens in the absence of a structural state.

[nancylebov.livejournal.com]

What does The Public Process cover? Is there really nothing to be said to a mid-level bureaucrat who wants practical advice on doing their work well?

I'm not downplaying Bhopal, but how does it compare to the effects of even a smallish war?

[avram]

What makes you think businesses aren't to blame for wars?

[dmlaenker.livejournal.com]

I would consider myself one of those mid-level bureaucrats, but I don't know how to distill the concepts of governance down into a level dumbed-down enough to be as "practical" as The Seven Concepts of Highly Effective People or one of those things.

[nancylebov.livejournal.com]

A book doesn't have to be a tippy-top best seller. I don't know what you mean by governance, but I'm assuming that a book on how to negotiate inside a bureaucracy would have a market, especially considering that it isn't facing any competition whatsoever.

[dmlaenker.livejournal.com]

Governance is the process of governing a thing, i.e., the practices and relationships of which a government consists.

I will say that if a book like this were "marketable", it would probably have to be written in "developmentese", which feminizes jargon and empahsizes such values as sustainability, rather than the "corporatese" in which most business books are written, which masculinizes jargon and emphasizes values like "effectiveness", which a lot of people who work in government and NGOs (myself included) find off-putting.

[chickenfeet2003.livejournal.com]

Part of the problem with government is that it over-regulates itself to the point where it's hard to get anything done. Couple that with ludicrous budgetary/accounting practices and it's a bit of a wonder anything gets done at all. I'm involved quite a lot with bidding government work and I know that the procurement process results in the government paying more and not getting what it really needs. All in the name of preventing corruption. Private businesses trust their executives to make good buying decisions and, to a degree, hold them accountable.

Same thing with personnel management. The public sector is hog tied by rules that make it difficult to reward or discipline and there is little flexibility, this time in the name of 'fairness'. No room there for the kind of attitude a clothing retailer CEO of my acquaintance displayed when he told me he didn't care if his buyers were taking kick backs from suppliers as long as what they bought sold.

[dmlaenker.livejournal.com]

They didn't fucking care if their buyers and suppliers were totally corrupt? Selling something is that important to them?

Why did your acquaintance's acquaintance find that kind of corruption acceptable?

[nancylebov.livejournal.com]

I don't know if you remember a book called In Search of Excellence. It was about how businesses produce excellent products, and profit thereby. I gather a common complaint about it was that it was too unspecific. I take that to mean many people really don't have the concept of looking at what they're doing to see if it's good. I blame the public schools. I'm willing to bet that simple-minded focus on semi-relevent incentives exists in government, too.

[chickenfeet2003.livejournal.com]

In fashion retail you live or die by how little of your inventory you are stuck with at the end of the season. As long as most everything a buyer bought was being sold at a decent margin he wasn't too bothered about the rest. As an analogy, think of living in a third world country where you have a cook/housekeeper. You know he/she gets a 10% kickback from all the suppliers he/she deals with but you also know they would charge you, as a foreigner, 20% more than he/she pays and you would have to pay your new, kcook more. What's the smart course of action?

[nancylebov.livejournal.com]

It's one thing to move product and take kickbacks, and another to do those things and not care at all about quality. That buyer sounds to me as though he's hoping for the best that he won't buy clothes so mediocre that he starting driving away customers.

On the other hand, it's possible that he had some heuristics for getting good enough quality like only dealing with manufacturers with reasonably good reputations, and not bothering about quality any more than that.

As for the cook/housekeeper, they're not going to knock themselves out finding the best food at the lowest price, but they need to keep both the quality and the price vaguely reasonable, especially the quality.

[selenite.livejournal.com]

Slack is on my wishlist, but I've been holding off on buying it until I move to a company where trying to improve things might actually succeed.

I don't trust businesses, but I like the fact that an incompetent corporation can be dissolved. That has much higher transaction costs when you try it with a government.

The non-profit sector doesn't get much trust from me either. There's a lot of money there without the formal oversight processes the government has or the negative market feedback businesses can get.

[avram]

You're discussing these issues at a level of abstraction that makes it difficult to engage with the real issues. And you seem to be blind (as many libertarians are) to the existence of what leftists call the Ruling Class -- the network of wealthy, powerful people in big business and government who conspire to maintain their own wealth, power, and privilege.

Consider the 1953 CIA overthrow of the Mossadegh government in Iran and restoration of the shah. This was done at the behest of a British oil company (business!) in which 60% of the shares were owned by the British government (government!). After the coup, rights to Iran's oil were shared out among an international consortium including five different US oil companies (business!).

Consider the the US's actions against President Allende in Chile, that led to his removal from power. In 1970, at a board meeting of International Telephone & Telegraph (business!), which owned the Chile Telephone Company, ITT CEO Harold Geneen took aside board member John McCone (a former director of the CIA)(government!) and told him that he was willing to offer up to one million dollars to support a plan to oppose Allende. Another big booster of the plan to remove Allende was Agustín Edwards, a wealthy Chilean newspaper magnate (business!). One of Edwards's old friends and business associates was Donald Kendall, chairman of the board and CEO at Pepsi-Cola (business!). Then-president Richard Nixon (government!) had been a lawyer for Pepsi-Cola in the mid-60s, hired by Kendall. Kendall arranged a meeting between Edwards and several US officials (government!) including CIA director Richard Helms, John Mitchell, and Henry Kissinger. As part of the effort to undermine Allende, American companies (business!) operating in Chile would slow down operations as much as possible, to harm the economy. ("Not a nut or a bolt will be allowed to reach Chile under Allende," the US ambassador to Chile told Chile's Minister of Defense.)

Consider the current war in Iraq. How much of the desire to oust Saddam Hussein came from the Bush administration, and how much from Halliburton and other military contractors and the oil industry? How much does it make sense to talk about those as two separate things?

[firecat]

If I understand it correctly[4], the idea is that profit-seeking is so personal and short-sighted that anyone who's going after profit should be assumed to be untrustworthy.

Most of the people I know who identify themselves as left-wing don't vilify profit-seeking (they support small local business for example) but do vilify large corporations, because they are too large to understand local issues or respond well to specific situations, and because those who benefit from the profits (shareholders) are so many layers removed from the actual work that it's impossible for them to meaningfully care about how the work gets done.

My political views don't fit anywhere on the "right/left" spectrum, but what I think is:

1. Corruption and inefficiency are pretty much inevitable in any human organization (corporation, government, union, religion, etc.), and so is the desire to defend the organization when it is under threat.

2. The larger and more powerful an organization is the more likely it is to cause great harm when corruption, inefficiency, or defensiveness come into play.

I don't think humans really understand how to operate in an interconnected world of billions of people. We haven't ever evolved beyond tribal-level social abilities.

[bradhicks.livejournal.com]

On that famous oversimplification, the Nolan Quiz, I test as left-libertarian, and this is why. I'm equally suspicious of large concentrations of power whether they're political power or economic power; I view the proper purpose of democracy as a check on both, as the (recently abdicated) duty of the rest of us to keep either government or individuals from accumulating toxic levels of power over the rest of us.

[solri.livejournal.com]

Couldn't have put it better myself.

[sturgeonslawyer.livejournal.com]

"In Capitalism, man exploits man. In Communism, it's the other way around."

Who do you trust? It has a lot to do with your comfort zones.

I consider myself a small-l libertarian (I think the Libertarian party is a bad joke), and as such I follow the approach of Professor de la Paz in TMiaHM: Make any rules and laws you want; I'll either live with them or break them and live with the consequences. I am responsible for my life and my behavior and nothing a government can do will change that.

Responsibility is the key. Responsibility IS liberty; freedom = responsiblity, there is no difference between them; they are not two sides of a coin, they are two names for the same "whole coin." You are free to do anything as long as you take responsibility for it; you are -- by definition! -- responsible for anything you freely choose to do.

This is why (as a small-l libertarian) I oppose categorically the concept of the "corporation." It is very specifically a device for diluting and diverting responsibility from persons who make choices.