The Industry choice

Steve Holden steve at
Thu Jan 6 22:34:03 EST 2005

Bulba! wrote:

> On Thu, 06 Jan 2005 09:42:42 -0500, Steve Holden <steve at>
> wrote:
>>>You see, I'm not disagreeing with you that your model applies
>>>_where it applies_. I only disagree that it applies in face of
>>>stronger forces. Now what kind of forces is dominant in 
>>>most frequent scenarios would have to be worked out in tedious
>>>empirical research I think. Which I haven't done, because
>>>learning some economics is just a hobby to me.
>>Yes, by all means let's just spout our opinions without any of that 
>>inconvenient tedious empirical research which might invalidate them.
> Err, but what did I do that got you visibly pissed off?
> I certainly did not mean offending anyone. If I did smth
> that did, I apologize, but honestly I didn't mean that. I
> just expressed my opinion and cited some small bits of evidence, 
> which I think I'm entitled to.
I am probably not as pissed off as you might think, but I'm beginning to 
find (what I regard as) your naivety a little irritating. However, 
nothing I have said was intended to question your integrity.
>>>Oh, and by the way that installation doesn't get used much.
>>>Somebody at the office didn't check carefully enough the
>>>energy prices before ordering it and later someone discovered 
>>>that off-site specialized cutting firms that take advantage of 
>>>energy available at low prices at special times in other countries
>>>can get it produced cheaper. Moving it elsewhere or selling
>>>is not an option, since it is a specially constructed, low, 50-meters
>>>long hall that stands inside the huge manufacturing hall of the
>>And you are using this example to try and argue that engineers are 
>>better-educated than sales people? 
> Nope. The context was that behavior of companies tends to
> be highly rational, optimized and not wasting resources. My 
> naturally individual experience was that it was oft not the case, 
> and that was the example. 
Well, anyone who *does* believe that companies are managed in a way 
that's any more rational than the way individual humans manage their own 
lives is deluding themselves. But perhaps I'm a little clearer now about 
*your* thinking on this.

> Which was my point when explaining the clustering that
> demonstrably happened: if the behavior of decisionmakers
> is highly informed, rational and not really induced much by 
> risk avoidance as Alex claims, then the clusters are created 
> by "natural economic forces". 
The agent of economic forces, however, are always individual humans. It 
just isn't possible to factor them out.

> However, if the process is not that rational, then maybe 
> clusters are the correlation of "cover your ass" aspect
> in managers' behavior all wanting to get their branch office 
> in yesterday in Tokyo, today in Beijing, and during 
> speculative craze in Russia in Moscow "because everybody
> is doing that". Which observations  of Paul Krugman on 
> "defective investors" seem to support. 
> Now, I'm very strongly opposed to saying that all  that 
> somehow invalidates economics, including economics 
> of software, as _science_.
> All I'm saying is that maybe this particular model is not
> what some people think it is. This is the problem with
> economics, people tend to get hot under the collar about 
> it for some reason and it's oft hard to debate that calmly. 
> Which personally I find a pity, because  e.g. economics 
> of software is such an interesting subject..
I can live with that, I guess.
>>Who sold this installation? Who 
>>bought it? 
> I have no idea, as I were not a manager there and it
> didn't really pertain my work.
I was merely trying to point out that the sales people may well have 
worked a flanker on the "better educated" engineers who might have 
bought the plant.
>>>I was utterly shocked. Having grown up in Soviet times I have
>>>been used to seeing precious resources wasted by organizations
>>>as if resources were growing on trees, but smth like this?! In a
>>>shining ideal country of Germany?! Unthinkable.
>>Indeed not. Quite often the brown paper bag is a factor in purchases 
>>like this. I wouldn't be at all surprised if somebody with a major input 
>>to the decision-making process retired to a nice place in the country 
>>shortly afterwards. You appear to be making the mistake of believing 
>>that people will act in the larger interest, when sadly most individuals 
>>tend to put their own interests first (some would go as far as to define 
>>self-interest as the determinant of behavior).
> But there is a subtler point here: most likely it was NOT in the
> short-term personal interest to make this mistake (as I believe
> corruption was not the case in this decision)! 
> After all, whoever responsible was still running the considerable risk
> of getting fired. It is an example that precisely negates either
> collective or individual, long-term or short-term, interest was
> primary factor in this decision.
Well, you would know better than me, but believe me when I say that such 
decisions being made for the economic benefit of a single individual are 
far from rare.

>>>>The firm I was working for had a consensus decision-making process (even
>>>>I was involved) and managers (and other employees) and stockholders were
>>>>mostly the same people -- it wasn't all that large a firm at the time.
>>>>Nobody needed to practice risk avoidance.  
>>>Again, you may have had good luck. Where I worked (including
>>>some places in Germany and UK) it was almost the only factor 
>>>that seemed to matter to people - they'd do ANYTHING not to 
>>>take a risky decision, to "pass the buck", not to stick their necks
>>>out, not to declare doing some work that involved challenges.
>>Some people are like that. I chose a long time ago to try not to work 
>>with them whenever I could avoid it and, while that may have had 
>>negative economic consequences I an convinced it has improved my quality 
>>of life immensely. Of course, I have no proof for such an assertion.
> Which in economic terms could mean that your "utility function"
> is "modeled" in this particular way (well, strictly speaking utility
> functions regard simple consumption), while most people tend
> to misunderstand it as the idea that supposedly is "vulgar 
> consumption of as much stuff as possible is what makes people 
> happy" and they feel rightly repulsed from such an idiotic idea. 
> The trouble is, well-informed people do not to argue that, while
> people tend to think economists actually do...
Well, even assuming I were to allow that such an intellectual thing as a 
utility function were to apply to my behavior in this case (which would 
be allowing economists more credence than I believe most of them 
deserve, but what the heck), all we are really taking about is that "it 
takes all sorts to make a world".

I'm as fond of what money can buy as the next guy, but there are still 
limits on what I will do to acquire it.

So really a utility function is a very dry and abstract way of looking 
at human behavior, and is simply incapable (at the present stage of the 
game) of modeling human behavioral complexity.

> --
> It's a man's life in a Python Programming Association.

Steve Holden     
Python Web Programming
Holden Web LLC      +1 703 861 4237  +1 800 494 3119

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