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Tag Archives: Government

Where Is Eliot Ness?

Eliot Ness, the lawman best known for his major role (1927-1931) in taking down Chicago mega-gangster Al Capone, was known to be incorruptible, as were his hand-picked team members (known as “The Untouchables” because they could not be bribed). Ness also helped clean out the highly corrupt Cleveland city government, weeding out over two hundred crooked police officers and public officials.

So why is ET talking about Mr. Ness? Because integrity is essential, not only for upholding the law, but also for making good decisions.

IF THE INFORMATION WE USE TO MAKE DECISIONS IS CORRUPT
THEN OUR DECISIONS WILL BE WRONG

Engineers know this. We simply cannot do our work without accurate and reliable data. If it’s discovered that an engineer has falsified data, or engaged in any other deceptive behavior, they are (in my experience) always fired. Integrity is mandatory for an engineering professional.

One of the most important decisions we make is whom to elect to represent us in our federal and local governments. If politicians seeking office were subjected to an engineering design review, it would be a straightforward process; i.e. the “spinners” (liars) would be detected and rejected. Unfortunately, the method we use to select politicians is hugely corrupted by bad data, and here’s a major reason why:

You may be aware, in watching or reading the news, that politicians (or their allies in the media) often use exactly the same phrases. e.g., “taxing the rich,” “shared sacrifice,” “pay their fair share,” “balanced approach,” “drive the economy over a cliff,” “the extreme right wing,” etc. The reason these phrases sound like they are all part of a chorus is that, well, they are. “Talking points” (emotionally-laden and focus-group tested phrases) are distributed to all like-minded politicos and their friends, who repeat them at every opportunity. The idea is that the average person, upon hearing the same viewpoint expressed by many supposedly independent sources, will conclude that the viewpoint must be true.

But talking points are not based on the search for truth, they are based on the search for votes, and are simply propaganda, sometimes blatant, sometimes subtle. To the extent that the intent is to make you believe something is true when the speaker knows it is not, they are lies. Unfortunately, they are very effective, and they are extremely destructive; not just because they are false and misleading, but because they very often appeal to our worst nature (e.g. encourage us to be envious of those who make more money than we do, a position that is neither logical or moral (see “Is The President’s Reason For Taxing The Wealthy Logical?“; “Is The President’s Reason For Taxing The Wealthy Moral?“)).

Can we clean this up? Are you today’s Eliot Ness? Are you an Untouchable, the man or woman who cannot be bribed, who will always tell the truth? When you hear a politician utter an emotionally-laden smear, will you speak up and challenge them? Will you change careers or come out of retirement and run against the liars, so we can rid them from our government?

Please step forward, we need you.

-Ed Walker

 

 

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The Government’s Policies And Our Economic Crisis

Engineers review past evidence and build from there; they try not to reinvent the wheel. As mentioned previously, there is ample historical evidence that indicates recessions/depressions — although they can be severe — typically last no longer than about a year, provided the government does not implement anti-business legislation and regulations.

Image: Dali’s “The Average Bureaucrat”

This last statement above is considered by some to be controversial, but to the best of my knowledge it really isn’t: the data are there for everyone to review. The doubters point to the Great Depression (the last one, not this one) and claim that President Roosevelt helped guide the country through the extraordinarily long 10-year downturn. The evidence, however, says that President Roosevelt’s “New Deal” was actually the villain in the story, because his anti-business policies helped extend what would have been a typical downturn of a year or so into ten long years of economic agony.

For an example of this thesis, see “FDR’s policies prolonged Depression by 7 years, UCLA economists calculate,” by Meg Sullivan, 10 Aug 2004. Excerpt: “The fact that the Depression dragged on for years convinced generations of economists and policy-makers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes,” Cole said. “Ironically, our work shows that the recovery would have been very rapid had the government not intervened.”

So what’s the prognosis? Based on the historical record — and also on analysis that strongly indicates that governmental attempts to manage the economy are destined to be highly ineffective or even counterproductive — we can expect a lousy economy (high unemployment, sluggish or no growth, an erratic stock market) until the Obama administration reverses its anti-business policies, or until we have a new pro-business administration in 2012, whichever comes first.

The good news is that, once new policies are in place, the economy can recover quickly. If we persist with the present policies, however, be prepared for many more years of economic turmoil.

-Ed Walker

 

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Feedback, Prices, and Sullen Spouses

To ensure that a desired result is achieved, engineers design systems that measure the system output and compare that output to a reference value. If the output does not match the reference — if there is an error — the system adjusts itself to minimize the error. This type of system, one that samples the output and feeds it back to the input for comparison and correction purposes, is called a feedback system.

As an example of a feedback system, consider the system that consists of you and your automobile, zipping along on the interstate with a police cruiser not far behind. To make it in time to a very important interview for a lucrative new job, without getting a ticket, you plan to accurately drive along right at the speed limit. Visual feedback from the speedometer tells you the system output (speed) and whether or not you are traveling above or below the limit. If an error occurs (whoops, going a bit too fast), your brain sends a signal down to your foot to ease off of the accelerator until the speed is reduced to the limit. This feedback loop, from output (as measured by the speedometer) to your brain to your foot to the gas pedal, maintains your car at the desired speed.

Now imagine that the feedback path is broken; e.g. your speedometer suddenly quits working and always reads zero. In this case you rely on a secondary feedback path, the passing landscape, and estimate your speed. Since it’s only a rough approximation, however, you’ll play it safe and drop your speed a few miles per hour to be sure that you are under the limit, although this might make you a bit late.

But what if it’s a dark night with no moon and your headlights fail? You now have no feedback, and are forced to stop, ruining your chance for the new job.

As feedback decreases,
inefficiency increases.

Because of its extreme importance, feedback is used  everywhere. In many cases, as in the example above, sensors provide feedback to human operators, who act on that feedback to achieve the desired results. In many other cases feedback is completely automated, without any human intervention at all.

Feedback is applicable to social organizations as well. Many commercial organizations exist for the purpose of providing goods or services to the population. These companies receive feedback from their output (how much they sell) and then adjust prices accordingly. A “price discount” in this case is analogous to the accelerator in the auto example, and sales is analogous to the speed. If sales are down, a company will step on the accelerator by offering higher discounts in order to increase sales.

Likewise, individuals who work for private companies experience feedback in the form of salaries and promotions based on their work efficiency. Slackers tend not to be paid as well, if they remain employed at all.

At the personal level, a spouse who provides quick feedback about their partner’s perceived inappropriate behavior will reap the rewards of a much more efficient and positive relationship, than one who remains mysteriously and sullenly silent.

Large bureaucratic systems, such as the federal government, are the least efficient organizations for providing services, because (like a sullen spouse) they do not employ effective feedback. In fact (unlike the sullen spouse), bureaucratic systems have no choice — their very nature precludes the existence of meaningful feedback.

In other words, there is no output/price feedback. Consumers cannot chose Federal Government A over Federal Government B because A charges less for services than B; we are all forced to “buy” government services from a single monopolistic federal entity, under penalty of fines or imprisonment if we don’t.

Although governments don’t have output/price feedback, one could argue that they do have feedback from elections (and sometimes in the interim from noisy constituents). However, the time lag between governmental actions and subsequent voter response on election day is so large as to render the normal benefits of feedback almost moot. Indeed, as we’ll show in an upcoming post, a time lag can create system instability, or even the opposite of the desired result.

If one accepts the fact that quick feedback is essential for efficient and accurate results, then an important Engineering Thinking conclusion is this:

 Regardless of the Intentions or Talent or Compassion
or Political Beliefs of the Individuals Involved,
Excellent Results Are Much More Likely to be Achieved by
Individuals or Organizations That Employ Effective Feedback.
Poor Results Can Be Expected from Those That Don’t.

-Ed Walker

 

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A Practical Alternative to Government Regulations

An Engineering Thinking Solution For Protecting The Public

Let’s challenge the assumption that we need the government to protect us, by regulating commerce at all levels.

Why Regulations Are Not Effective (proof by counterexamples):

a. The Food & Drug Administration is supposed to protect us from tainted foods and harmful drugs. It does neither, by its own admission (“FDA Science and Mission at Risk“).

b. The Security and Exchange Commission is supposed to protect us from financial crooks. It doesn’t (remember Bernie Madoff?).

c. Restaurant inspections are supposed to protect us from food poisoning. They don’t (you’ve seen the newspaper reports of folks getting ill at restaurants, all of which are regularly inspected).

Here’s the basic underlying reason why regulations are ineffective: Although the government is never shy about dipping into the pockets of the taxpayer, there will never be enough money to pay for enough inspectors to inspect businesses often enough to eliminate the problems that the inspectors are supposed to find and stop. Why? Because there is no financial incentive built into this open-ended regulatory system. Regulators are not able to make a profit at regulating, unless they are corrupt and take bribes. Unfortunately, such corruption is not uncommon.

A second reason is that the public says, “Yeah, but we have to at least try to stop the problems or they would get completely out of hand. So even though regulations are not completely effective, we’re still better off having the regulations.” This reasoning, however, will not stand up to analysis.

One, it assumes that other factors, such as loss of business and potential lawsuits, are not significant. To the contrary, these free market incentives are very powerful motives for keeping businesses honest, even in the absence of regulations. In fact, for the great majority of honest and competent businesses, government regulations amount to a useless added burden that drives up costs. And these costs are ultimately paid by you, the consumer.

Second, it assumes that there is no better alternative. To answer this, Engineering Thinking offers the following plan:

The ET Plan For Eliminating Costly Regulations

Replace them with the following single requirement:

Each business shall be required to prominently post an easily readable  certificate at the entry to their place of business (or on their web portal, or on their products, etc.)

-A red certificate if they have no liability insurance

-A green certificate if they have liability insurance (as certified by the applicable government accounting agency, with the insurance carrier and amount of coverage noted on the certificate).

Failure to post a certificate, or posting a false green certificate, will be punishable by a minimum jail term and fine.

That’s it. You buy products or services from a “red certificate” business, you’re largely on your own. Its prices might be lower because they carry no insurance, but your risk will be higher if you have a problem. If so, you will still be able to sue, but you will have had fair notice that the business will likely not have enough assets to cover any damages.

The red certificate also allows small start-up entrepreneurs such as taxi drivers or hair stylists to get a foot in the door with clients who are willing to accept lower prices at increased risk. Presently, licensing and regulations often amount to a corrupt system where established wealthier businesses, through contributions to public officials who pass restrictive licensing/regulation laws, effectively block competition by making it too expensive for potential competitors to start a business. This limits consumer choice and drives up costs.

On the other hand, you may prefer to buy products or services from a “green” business. The prices might be somewhat higher, but you will have financial recourse if something goes wrong. Plus, you will be assured of obtaining safer products or services. Why? Because insurance companies do not like to pay for losses. An insurance company will not provide liability insurance to an unqualified person, so if someone claims to be, for example, a medical doctor, they will need to convince the insurance company that they are qualified to practice medicine. Plus, the insurance companies will provide their own ongoing inspections and monitoring to ensure that their clients maintain safety standards.

The new role of the government? To certify/monitor the financial health of insurance companies, to decertify/prosecute those companies that exhibit unethical behavior regarding claims, and to prosecute businesses who operate without an appropriate certificate. All of the licensing and regulatory nonsense simply drops away, because it is no longer relevant. Insurance companies will now provide the regulatory function in a cost-effective fashion.

The advantages of the above red/green plan are numerous: Lowers the cost to the consumer; eliminates the governmental regulatory bureaucracy and related inept  micromanagement; increases consumer choice; offers entrepreneurs a chance to get a business started; eliminates corrupt artificial barriers to competition; and last but not least, enhances consumer safety.

-Ed Walker

 

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Baloney Alert: PolitiFact Is Light On Logic

The St. Petersburg Times Memorial Day edition had a PolitiFact article with the following headline :

“Bulb warnings are light on facts

There’s no plan to ban incandescents, just make them more efficient”

PolitiFact’s second statement above is so logically absurd it made me laugh out loud when I read it. At ET we believe in straightforward honesty: no lies, no spin, no deception, and no misdirection. This includes having the integrity to accept statements in their clearly-presented context. Unfortunately, PolitiFact often likes to twist and distort the context of statements, in effect gerrymandering them into one of their preferred liberal themes.

In this case, here are the facts: the government has not literally banned incandescent light bulbs, true. But it has passed regulations requiring light bulbs to have efficiencies that are impossible for them to achieve. There is no technology on the horizon that will allow incandescent bulbs to achieve that efficiency. Manufacturers of incandescent light bulbs have reacted accordingly by shutting down production. Therefore — bottom line — the government has indeed, in essence, banned the use of incandescent light bulbs.

PolitiFact’s childish contrary argument earns our maximum 5-baloney rating.

Regarding PolitiFacts’ other comments on the compact fluorescent lighting (CFL) replacement for incandescent bulbs, please see “Unintended Consequences: Nanny Engineering” in the DACI 2nd Qtr 2011 Newsletter, and “Why Government-Directed Energy-Savings ‘Investments’ Are Illogical.”

Notes

The St. Petersburg Times is as good as it is bad. We were planning a piece called “It was the best of Times, it was the worst of Times,” where best refers to their investigative reporting, and worst refers to their editorials and their PolitiFact operation. At this point other priorities have intervened, but we hereby want to provide an honorable mention of their stellar investigative work.

Also, we strive hard to be objective, with our critical commentary targeted at non-ET people or organizations, regardless of political affiliation. Although we believe there are sound reasons that support a small-government-is-better theme, this does not mean that honorable people cannot disagree, or that there are no ET deficiencies in the corporate/business world. If you have a suggestion of a person or firm that would be worthy of an ET review, please let me know.

Update 2011/05/31

Here’s another good summary of the unintended consequences of using CFLs: “The CFL Fraud” by Edmund Contoski.

Update 2011/06/02

For a follow-up discussion on this issue, including some facts on the halogen alternative to the standard light bulb, please check PolitiFact Bias under “Bryan adds.”

-Ed Walker

 

 

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Big or Small Government? Check the Empirical Evidence

One of the key principles of Engineering Thinking is to rely wherever possible on actual evidence. Therefore, given a design challenge, engineers typically start by doing a lot of research; why reinvent the wheel? If good hard data are available that answer the question at hand, then the issue is resolved and the team can move on to other challenges.

This scientific process does not have to be restricted to questions about integrated circuits, robots, nuclear energy, or other hi-tech products; it can be applied to any issue. One of the major issues of our day — and for many decades prior — has been the debate over the pros and cons of big versus limited government. As we’ve pointed out previously (“It’s Just A Systems Thing: An Engineering Thinking Review Of Government As A System“), governmental organizations generally perform poorly compared to free market alternatives.

But what about the empirical evidence? For one example,  please check “Detroit: The Triumph of Progressive Public Policy“, by Jarrett Skorup, 6 July 2009, Mackinac Center for Public Policy.

-Ed Walker

 

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More Big Gorilla Insights: High-Speed Rail

Is High-Speed Rail A Good “Investment”?

In an earlier post (“Hunt The Big Gorillas: Climate Change, Birthers, and Chocolate“), the Engineering Thinking concept of the Big Gorilla was described.  As stated in the prior post, if you are weighing several factors while trying to make a decision, and happen to spot one that is so large that all the other factors become negligible by comparison, you have found a Big Gorilla. Then, by focusing only on the Big Gorilla factor, you can quickly make a good decision.

The Big Gorilla is helpful when evaluating claims by politicians who want to spend our money on “investments” such as high-speed rail. In my state of Florida, our governor recently decided not to accept federal funds for development of a high-speed rail system, part of the Obama administration’s national rail plan.

The reaction of many ranged from dismay to anger. “How can the governor give up federal money?” was one common lament. One could argue that federal money is not free, since it  comes out of the pockets of taxpayers, and the federal government is already so much in debt that it doesn’t make sense to borrow yet more money. The politicians and special interests, however, find clever ways to counter such arguments, saying in essence that the spending will pay for itself and be a net benefit. This is generally the argument that governments always use to extract money from taxpayers: we (the government) know best how to spend your money wisely for the common good.

So here’s where a Big Gorilla can brashly step in and clear away the brambles of confusion: If high speed rail (or any project) is going to pay for itself, then it’s highly likely a private business will already be there, implementing the project.

One of the major benefits of a capitalist system is, if there is a need that justifies an investment, then it will be automatically provided by a private business.

Naturally, private firms would love to have public funding for “community” projects such as high-speed rail (sports stadiums are another good example). Having you — the taxpayer — providing funds and eliminating financial risk is a no-lose deal for the private firm. It is also a prime example of capitalism being corrupted by an inappropriate deal between politicians and private businesses. Invariably, such firms will provide donations and other forms of support to assist in the reelection of  those politicians who helped secure the public financing.

Bottom line: always look for a financial connection between the politicians who promote a project, and those who implement the project. Corruption is its name.

-Ed Walker

 

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