The Industry choice

Bulba! bulba at
Thu Jan 6 18:40:55 EST 2005

On Thu, 06 Jan 2005 09:42:42 -0500, Steve Holden <steve at>
>> 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.

>> Capital investments per worker in auto industries are reportedly 
>> very high. Simple physical tasks are done largely by machines, 
>> like this 100 million Deutschmark costing laser-cutting installation
>> that I've seen there, where a pile of iron bars is pulled in at one
>> end and the pile of ready components is spitted out of the other end
>> (unlike typical thermal cutting,  laser has the advantage of not
>> destroying the metal structure adjacent to the cut, so the parts 
>> of the machines subject to high-stress are oft produced this way). 
>The same is true of plasma-arc cutting for thicker steels, and I believe 
>it's still not possible to cut 3-inch stainless with a laser. But what's 
>your point?

<shrug> I was just explaining the issue for someone who could
wonder "why bother with cutting that with laser". The components
of those machines, even bigger ones, typically were not as thick 
as 3 inches. 

>> 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
>> company.

>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. 

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". 

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..

>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 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.
>>>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...

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

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