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By TheophileEscargot (Thu Mar 14, 2013 at 03:44:27 PM EST) Reading, Watching, MLP, Politics, Museums (all tags)
Reading: "Let IT Go". Watching: "The Umbrellas of Cherbourg". Museums. Random thought on economics. Politics. Links.

What I'm Reading
Finished Let IT Go, the autobiography of Dame Stephanie "Steve" Shirley.

Born in Germany to a Jewish father, as a child she and her sister were sent on a "kindertransport" to foster parents in England. She got in on the ground floor of the computer industry in the late Fifties at a time when most programmers were female. Noticing how many talented programmers were excluded from the workforce by marriage and pregnancy, in 1962 she started a company employing freelance programmers to work from home. Pioneering the ideas of flexible working and trusting employees instead of micromanaging them, the company grew into a highly successful company. Along the way she found that if she signed her letters "Steve" rather than "Stephanie" she got vastly more replies.

Eventually she handed over management of the company. She gave away a large portion of stock to employees, and sold the rest, after which she became one of Britain's major philanthropist, also taking on the role of ""ambassador for philanthropy".

Tragically her only child was afflicted with severe autism and died in his thirties. She had tremendous difficulties and suffering along the way: he was locked up in failing institutions, and the prevailing "refrigerator mother" theory of autism at the time blamed the mother for causing it.

Overall, a fascinating, honest and inspirational book. Well worth reading.


What I'm Watching
Saw The Umbrellas of Cherbourg on disc. Curious 1964 French musical starring a young Catherine Deneuve. The entire script is sung in recitative dialogue, there are no "numbers" or arias where everything stops and characters sing to the audience about how they feel. The effect is a bit exhausting but powerful: there's a lot of emotional momentum which isn't dissipated by grinding the plot to a halt every ten minutes, and it feels less unrealistic than most musicals and operas.

Worth a look. Might be more tolerable even if you don't like most musicals. Or might be less tolerable because the whole thing is sung. Definitely either more, less, or as tolerable as most musicals though.

Saw the Schwitters in Britain exhibition at Tate Britain, concentrating on the few years around WW2 that the artist spent in Britain.

There's a lot of diversity to the works here: largely realistic portraits churned out for the money, impressionistic landscapes, some abstract sculptures.

The most artistically significant and the most hyped works though are apparently the 3D pioneering collages of found objects. I actually didn't like them: they didn't seem to have any interesting form or colour. I thought the portraits and the landscapes were a lot more impressive, and I really liked some of the sculptures, especially the eerily bulbous dancer and some of the stranger abstract forms.

Overall, definitely an interesting and multi-talented artist, well worth investigating.

Random thought on economics
For those who know a bit about economics, the thought is "Coasian transaction costs often take the form of bureaucracy". You can stop reading now, other people might need explanation.

Simple economic models usually feature large numbers of individuals in a market: they're not complex enough to have a need for corporations or firms. So a question is: why do firms exist?

The standard explanation is Coase's idea of transaction costs. Negotiating contracts takes effort. Having multiple individuals in a firm saves that effort: you don't need to have a contract and fee negotiation every time you say to someone: "write up that powerpoint into a document, please".

(There are other factors: economies of scale, influencing society/government for favourable treatment, cartels, but I'm not dealing with those here.)

Now, Girl B is fond of telling me how snowploughing works in Germany. There, all the municipal trucks are designed so that snowploughs can be attached to the front. When it snows heavily, they tell all the regular drivers "you're snowploughing today", and all the roads get cleared quickly.

That of course cannot be done in Britain today. The council will have outsourced all its truck driving and rubbish collection to private companies, who don't have snowploughing in their contracts. They've probably outsourced their vehicle supply to other companies anyway. It would be impossibly complicated to renegotiate all these contracts at short notice. Similarly, they can't just take a few hundred gardeners and garbagemen and janitors and say "today you're shovelling snow", because they're all outsourced too.

What this means is that organizations that rely on multiple levels of outsourcing cannot react quickly to unexpected events. Nothing can be done unless it's been thought about well in advance and written into the contracts.

In other words, Coasian transaction costs often take the form of bureaucracy.

I think this explains why there is often a lot of disappointment at the expectation that you turn slow-moving big organizations into dynamic, responsive, fast-moving networks of small outsourced businesses. Because Coasian transaction costs often take the form of bureaucracy, the result of this process is often an even slower-moving, more bureaucratic network than the big organization it replaced.

Politics: UK Conservative Party
There's been a lot of speculation lately about a leadership challenge to David Cameron, which I think is a bit silly. There are a lot of breathless comparisons to the oustings of Margaret Thatcher and Tony Blair, but I don't think they hold. Getting rid of a leader after two or more full terms in office doesn't mean admitting failure: you can say that they had their time, but you now need energetic new blood; or that their policies were great for a decade but you need new policies now. Getting rid of a leader in his first term on the other hand is an admission of failure. There's little reason for the electorate to trust a party that admits to having made everything worse, especially if they start doing things the opposition has been calling for all along, like softening austerity.

I think another thing the columnists miss is a collective action problem: the self-interest of each backbencher is not necessarily that of the party as a whole.

It might be that the best thing for a party to win power, is to take a high-risk, high-reward strategy. If winning power for the party is the goal, the worse the polls look, the better this kind of strategy looks. By this criteron, if the party loses power, it doesn't matter how badly it loses by, so you might as well take risks.

But if you're an individual MP and your goal is to keep your seat, unless you're in the most precarious of marginals, you don't want a high-risk, high-reward strategy. You want a safe, defensive strategy that will keep the losses low enough that you keep your seat. If your party is in opposition but you still have your job, that's acceptable. By this criterion, it makes a huge difference how badly you lose: the worse the party does, the more likely you are to be out of a job.

So, the media like to talk up exciting possibilities like a leadership challenges. But the backbenchers are not necessarily keen on taking that risk. They might well prefer to cruise to a modest defeat for the party than to take a big risk, because that serves their individual interest.

A change of leadership is a high-risk strategy. But a lurch to the right is a low-risk strategy. By concentrating on mobilizing your base, you can limit your losses by ensuring a certain level of turnout. A lurch to the right isn't likely to result in an outright win, but it could prevent a landslide defeat.

So I think some columnists misunderstand the appeal of a lurch to the right: they portray it as an aggressive strategy to radically change the country, or an irrational response in denial of the reality of winning elections. I don't think it's either: it's a sensible defensive strategy to minimize the losses in a probable defeat. A lurch to the right isn't likely to help win a majority, but it might prevent an electoral wipeout.

I think this is also behind the backbench disquiet over the gay marriage move. This is a high-risk, high-reward strategy for a conservative party: might alienate the base if it goes badly, might attract socially liberal voters if it works. So the backbenchers hate this kind of policy, not because they particularly hate gays, but because they think it risks their seats. If it really backfires they might find themselves squeezed by UKIP to the right while still not gaining from the centre, and so face a huge loss.

So while I don't think there will be a leadership change, I think there will be a lot of mutterings about leadership changes, in the hope of forcing David Cameron into the lurch to the right that the backbenchers think will maximize their chances of individual survival.

Socioeconomics. Consumer surplus from the Internet. Not ready for democracy? British economy without the bad bits?

Articles. Food and the Enlightenment. "Living with less" is easy when you're rich. Thomas Nagel versus the New Atheists. Peak jobs, Euro Truck Simulator.

Sci/Tech. Gender-swapped Donkey Kong. China's Internet censors can be bribed to block your competitors websites (Important because a practical example of how freedom might actually benefit capitalism). Google Reader to close by July, we live in a world of silos now. Mark Lynas on changing his mind about GM crops.

Politics. China Mieville, Richard Seymour & many more resign from Socialist Workers Party. Right wing has learned to deploy political correctness. Inspector Gadget blog disappears. White History Month. Will Self walks on Britain's flag-waving heartlands and far right. Beppe Grillo's 5SM is yet another right-wing cult from Italy. Muslim helpline reveals majority of faith attacks on women, more.

Video. Billiard ball wave pendulum. Breaking the Fourth Wall Supercut. Santa Monica airlines.

Pics. Albanian bunkers. Porn stars with and without makeup.

Random. Mind the Gap tube announcement returns on one station for announcer's widow.

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Umbrella group | 11 comments (11 topical, 0 hidden) | Trackback
and America is right in the middle by georgeha (4.00 / 1) #1 Thu Mar 14, 2013 at 05:18:08 PM EST
Rochester and New York at least. We have huge DOT (Department of Transportation) trucks that carry salters and have snowplows on the front for the main streets, city trucks have plows for side streets, and there also seems to be privately contract pickup trucks with plows out and about.

Then again, New York probably gets a lot more snow than the UK or Germany.

FWIW by ucblockhead (4.00 / 1) #4 Thu Mar 14, 2013 at 10:12:31 PM EST
I was in Tokyo during a relatively rare snowstorm and that city seemed almost completely unequipped to deal with it.  A foot of snowfall completely shut down the route between one of the world's busiest airports and the world's largest city for many hours, in a country renowned for efficiency.

I think you have to factor in "expectation of snow".
[ucblockhead is] useless and subhuman

[ Parent ]
Bureaucracy by LoppEar (4.00 / 1) #2 Thu Mar 14, 2013 at 05:28:55 PM EST
Do you specifically mean that the transaction costs take the form of govt bureaucracy? Because I guess I've always assumed that bureaucracy (in large organizations) was simply what Coase entailed, that large organizations always introduce (internal) bureaucracy because it's cheaper than outsourcing all these things. And the govt is just one case of a large organization.

But you seem to either be saying that's not inherent, or that the opposite is also true? Or perhaps you're saying externally imposed bureaucracy is often the form that these nebulous transaction costs take, leading to large organizations?

Basically I mean by TheophileEscargot (2.00 / 0) #3 Thu Mar 14, 2013 at 05:42:57 PM EST
Inflexibility, lots of administration and paperwork, and inability to respond to changing circumstances.
It is unlikely that the good of a snail should reside in its shell: so is it likely that the good of a man should?
[ Parent ]
I suppose by Herring (4.00 / 1) #5 Fri Mar 15, 2013 at 04:22:10 AM EST
that the ultimate example of this is the PFI school/hospital with a 30 year contract that can't be broken, regardless of whether you still need the facility.

We're rare amongst the various international parts of our company in that we don't outsource all of our mobile workers. This means that we can cope with the unexpected or weird things that crop up.

You can't inspire people with facts
- Small Gods

[ Parent ]
The idea with PFI is that by ambrosen (4.00 / 4) #7 Fri Mar 15, 2013 at 08:34:42 AM EST
when you're an organisation whose core competence isn't building, and you want to get something built that will last 30 years, you get the best total cost of ownership if you let the people who are building it take the responsibility for maintaining it too, so they don't skimp.

Where this falls down is in the cartel like nature of the UK building management industry (not unrelated to the shoddiness of the housebuilding industry), and the temptation, knowing they've saved money by avoiding a huge capital spend, for the public sector provider to relax their guard on agreeing to a large & unsustainable revenue spend.

I can safely say that having PFI massively increases estate costs for the public sector, in my experience.

[ Parent ]
I'm sure it is more expensive by Herring (4.00 / 2) #8 Fri Mar 15, 2013 at 09:37:07 AM EST
Let's face it, a provider of whatever outsourced service is never going to sign a contract where there is a significant risk of them not making a profit. Any talk of "shifting risk to the private sector" is clearly bollocks.

I have a feeling why outsourcing some of our software development appears to be so much more efficient than doing it in-house. It's because every time someone changes their mind there is an obvious and clear cost from an outsourced provider so there is tremendous resistance to scope-creep. If the project is being developed internally, it's more like "Can you just ...". From an accounting point of view, this is probably better. From the point of view of getting the best system developed, well that's less certain.

You can't inspire people with facts
- Small Gods

[ Parent ]
PFI by Breaker (4.00 / 1) #11 Sat Mar 16, 2013 at 04:46:11 AM EST
Great idea, absolutely crap implementation.

Seems that the PFI providers brought their best and brightest along to the contract negotiations, and the government sent their interns.

Forget the current debt and deficit - PFI is going to be one of the largest nails in the coffin of the nation.

[ Parent ]
Yes by Scrymarch (2.00 / 0) #10 Fri Mar 15, 2013 at 09:38:45 PM EST
But that is also the cause of diseconomies of scale in large organizations. As you add more people and departments, you add more layers that say "what the hell are we spending money on, anyway?" and more pressure to standardize across the board at the expense of well suited solutions to the particular domain. Being in a 20k employee corporation that got taken over to make one ten times the size has made this very obvious.

Iambic Web Certified

[ Parent ]
Coase etc. by Metatone (4.00 / 2) #6 Fri Mar 15, 2013 at 05:47:20 AM EST
I date the awakening of my formal interest in economics to when I was managing the IT department of the main site of a telco firm. I'd applied for the job on the understanding that I'd have to build a team etc. However, by the time I arrived, decisions had been taken and I was now managing an outsourced team. Everyone else belonged to $IT_Firm - and in theory I made requests to my opposite number and he managed the team in doing stuff.

Absolutely my experience was that this killed flexibility and destroyed the ability to respond to crisis events.

Fortunately, since I knew as much as anyone on the team and also had enough budget lying around to spend on beer bribes, I was able to fix the worst things. But, in essence, flexibility with an outsourced team involved setting up a black economy. 

On the other hand... by ucblockhead (4.00 / 1) #9 Fri Mar 15, 2013 at 11:03:48 AM EST
One of the things I like about the current outsourced project I am working on is that no one else in the company can steal my people.  Perhaps that mostly says something about my company.
[ucblockhead is] useless and subhuman
[ Parent ]
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