Systems Analysis

Quote of the Day

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Dominic Cummings:

The EU has kneecapped itself and is failing in all important areas: productivity, debt, public order, immigration, defence, technology, political extremism. Brussels chose self-sabotage on advanced technology. Unlike Britain which at least has DeepMind here, the EU has none of the leading labs. As the Commission said, we will be leaders not in AI but ‘trust in AI’! Mission semi-accomplished comrades! Brussels can kneecap itself and other countries that choose to follow its regulations but it will not compete with US and PRC or shape the global struggle over AI. Valley companies have already made clear they will simply not release models in the EU rather than follow EU regs. Taliban today can download new models now blocked for Brussels elites. Those who think AI will be like aspects of post-war car regulation are wrong. AI is ultimately about power and Great Powers will not let Brussels set the rules. I’ve watched SW1 repeat soundbites from the EU for 25 years on ‘strategic autonomy’ and ‘now we’re going to get serious on technology’. They’ve always been hollow. I said in 2022-4 that covid predicted that not even wanting to prevail in Ukraine would force either the MoD or Brussels to stop the delusions. They babbled and watched. They left defence industry and procurement a farce. They encouraged deindustrialisation and sabotaged industrial production while babbling about net zero. Thanks to Brexit and the work we did in 2020 with the secret part of the Integrated review exposing the disaster zone of the MoD and agreeing a plan for radical change, we could have sorted ourselves out. Instead, 2021-4 the Tories worked with the worst parts of the MoD to continue the lies and delusions and followed the EU into escalating a dumb war which could have been avoided. The latest defence review is a disaster and the UK and EU will be humiliated month after month.

 

Thoughts:

1. There but for the grace of God go we.

2. UK and EU politics and culture are farther gone than ours. However, as in the 1970s with Thatcher and perhaps now with Trump, political and cultural course reversals are possible given gifted opposition leaders and a preference cascade or two.

3. The British establishment, by criminalizing dissent, insure that even more than our Democrats  they will not see the political wave coming that turns them out of power.

4. It’s never over.

“A Disease of the Public Mind”

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That is the title of a book about the first US Civil War that resulted in the assassination of President Lincoln. The soldiers in the South hated those in the North and vice versa. Northern soldiers have since been credited with undeserved virtue while Southern rebels were labeled racist enemies of the state, a moniker that still survives in the present day. But neither side was fighting over the abolition of slavery.

 

Trump’s opponents claim he will re-institute Jim Crow oppression, put black people back in chains, end democracy and put people in Hitler’s concentration camps. The continuous character assassinations, legal persecutions, numerous impeachments, unfounded accusations and insinuation caused what has been called Trump Derangement Syndrome (TDS), a disease of the public mind resulting in a recent assassination attempt.

 

Follow the Money
The Constitution the North and South agreed upon in 1788 enshrined the economic principles of Adam Smith’s Wealth of Nations, fostering equality under the law, individual sovereignty and limited government. Slavery was still too contentious an issue to settle. Starting in the next century the British led a moral crusade to eliminate slavery globally. While politically virtuous, Britain could afford to pay off slave owners and generally didn’t face the the vexing question for US plantation owners of whether freed slaves could support themselves and, if not, whether this would lead to murderous riots as had happened elsewhere. Abolition was a contentious issue everywhere slavery was practiced, typically with long drawn out steps to complete. But the long simmering political dispute that came to a head in 1860 wasn’t about abolition, but money. The federal government relied almost exclusively on tariffs raised in Southern ports – most of which went to northern states – on imports financed with the fruits of slavery, cotton exports.

 

Since the Civil War, limited government has given way to big government. The Democratic Party has created many dependent constituencies whose continued prosperity depends upon continuing Democratic power and largess: the bureaucracy, the government at all levels, teachers, labor leaders, academic educators and administrators, trial lawyers, government contractors, social security recipients and what are still euphemistically called journalists, among many others. The current Civil War is also about money. Trump has been in both political parties, fits in neither. But ”you are fired” represents an existential threat to Party members.

 

For contemporary Democratic politicians, almost all trained as lawyers, money beyond what is available by taxing the rich exists in banks, especially the Federal Reserve Banks, to be distributed according to the spoils system. For Republican politicians (but not RINOs), mostly former businessmen, prosperity comes from productive work and from savings productively invested. For those businesses and workers who are not on the receiving end of the spoils system, whose taxes pay for political largess, limited government is the only solution. There is very little middle ground.

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Quote of the Day

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When Midwesterners Collide—A Challenge to Bill Quick

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This is a lengthy response, and an implicit challenge to debate, prompted by Bill Quick’s “If Something Cannot Go On Forever, It Will Stop,” published on Thursday 27 April and duly Instalanched on Monday 8 May.

The first thing you need to do is read Bill’s essay; it’s ~4,200 words, reading time 10-20 minutes. I’ll be summarizing it below, but my (brief) summary will not only be explicitly theoretical but will be deliberately contrasted with my subsequent application-oriented response, so you will not get an altogether adequate notion of Bill’s thesis by reading this post alone.

That said, this will not be a mere fisking, and given what I believe is Bill’s current geography, only two states east of mine, a face-to-face debate is a real possibility, and one I hope to learn from.

Pi devan! (“Onward!”)

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“How Twitter Pushed Stakeholders under the (Musk) Bus”

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Here.

Abstract:

This paper provides a case study of the acquisition of Twitter by Elon Musk. Our analysis indicates that when negotiating the sale of their company to Musk, Twitter’s leaders chose to disregard the interests of the company’s stakeholders and to focus exclusively on the interests of shareholders and the corporate leaders themselves. In particular, Twitter’s corporate leaders elected to push under the bus the interests of company employees, as well as the mission statements and core values to which Twitter had pledged allegiance for years.
 
Our analysis supports the view that the stakeholder rhetoric of corporate leaders, including in corporate mission and purpose statements, is mostly for show and is not matched by their actual decisions and conduct (Bebchuk and Tallarita (2020)). Our findings also suggest that corporate leaders selling their company should not be relied upon to safeguard the interests of stakeholders, contrary to the predictions of the implicit promises and team production theories of Coffee (1986), Shleifer-Summers (1988) and Blair-Stout (1999).

There is tension between the interests of owners and those of other “stakeholders”, which is why the interests of non-owner stakeholders require justification as in the linked article. The authors beg the question — they assume stakeholder interests are comparable to owner interests — then find a problem because Musk values his ownership interest in Twitter above the interests of the people he bought out and of the company’s non-owner employees. So what should Musk get in exchange for the $billions he spent? Arguments for more stakeholder rights are arguments for less property rights.