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Monday, February 27, 2017

The Darkness of Light - A Story of Economic Scale

Once upon a time, long ago and far away, it was a dark and stormy night in a small village. Like most small villages of the era, its existence was due to the goods and services its craftsmen provided to the surrounding farmers and to each other. There was a butcher, a baker, and a candlestick maker and a number of other crafts represented (blacksmith, cobbler, etc.). This trading network of a few hundred people (including farmers) was nearly completely self-sufficient, except for the occasional traveling merchant who brought in some critically important goods as well as some more frivolous and luxury goods. This pre-industrial village, while mostly self-sufficient was also quite poor by modern standards as the small size of this economy couldn't enable sufficient specialization to support modern goods and services, even if all the knowledge of the modern world was readily available and understandable.

Glim, the village candlestick maker was happy with his life. His family had always been the candlestick makers in this village and it was comforting to know his place in life. As he gazed out into the storm, he could see flickers of light emanating from the other homes in the village and he had satisfaction knowing that some of that light was his candlesticks pushing back the darkness and providing comfort to the other villagers.

He had to work hard and was hardly rich, but was prosperous enough to support himself, his wife, and his three daughters. When the traveling merchants came to town, he was able to afford some necessities and even an occasional luxury item like the exotically patterned and very warm rug that sat on the floor of his bedroom. In fact, merchants had just arrived that particular evening and would open their booths to trade their wares the following morning. This was good, because Glim's wife was running short on spices, and they could likely remedy that by trading with the merchants in the morn.

When morning came, Glim and his wife went to trade with the merchants. The merchants had their typical wares available, but to Glim's shock and dismay, the merchants had table after table with numerous varieties of candlesticks, and, after inquiring about the price of the candlesticks, Glim discovered that they were selling for less than half the price of Glim's candlesticks. The merchant explained that a village about 50 leagues away (that had recently been renamed Candleton) had discovered a technique that enabled a few dozen people, working together, to churn out an enormous quantity of candles at very low cost and very high quality. Glim was devastated, because he could not make enough money selling his candles at a competitive price to feed his family and survive. Glim, the candlestick maker, was now out-of-business and had no other skills or ways to earn a livelihood.

So now, dear reader, I'll let you choose the fate of Glim and his family. Perhaps the kind villagers, through a mix of charity and giving Glim odd jobs, kept Glim and his family from becoming destitute. Perhaps Glim tried to farm and maybe he succeeded or maybe his family starved. Perhaps Glim moved his family to Candleton where maybe they needed him but maybe they didn't. Perhaps Glim and his wife fell into the depths of despair and drank themselves to death leaving his daughters to become prostitutes in order to survive. Whatever you choose, dear reader, Glim is probably out-of-luck, and your story for him has been repeated countless times over the ages. Chances are, his level of prosperity is probably going to be lower for the rest of his days than it would've been had the folks at Candleton not invented the new candlestick making process.

But Glim's tough luck is everybody else's good luck. Everybody else gets more candlelight for less. And the villagers in Candleton? They're hugely prosperous, especially at first. After a few years, they split into competing companies which drives their prosperity down a bit but makes candles even cheaper for the surrounding villages.

The benefit of more candlelight turned out to be extraordinary. More people learned to read and that additional knowledge inspired a wave of discoveries and inventions. While more folks like Glim lost their livelihoods, new jobs were created at a rapid pace during this heady time of economic and technological growth. In fact, Glim's grandchildren (perhaps bastards born to his daughters when they turned to prostitution?), opened a printing press and shop and became quite prosperous. Too bad Glim never lived to see it (or perhaps he did, dear reader, in your version of Glim's fate?).

Over the next few generations, electricity was discovered and then harnessed to power a very important invention: the electric light bulb. Which brings us back to Candleton.

Between the time of Glim's misfortune and the invention of the lightbulb, Candleton prospered hugely. A hundred people now worked in the village's three candlestick making factories. Further innovations had increased the number of candlesticks made and lowered the cost. Because of the economies of scales, no other village could compete and Candleton provided the vast majoritiy of candlesticks to all villages for hundreds of leagues in all directions.

But now the electric light bulb, being vastly superior to candles, and lasting months instead of hours, rendered the candlestick making talents of the inhabitants of Candleton useless nearly overnight. Revenue ceased to flow into the village. Unlike the case with Glim, where it was one guy and his family who were directly impacted, and where, at least conceivably Glim's fellow villagers could help sustain him, the residents of Candleton were immediately in extremely dire straits: no revenue, no food, no nothing.

Some of the residents of Candleton left to seek their fortunes elsewhere. Some tried to live by hunting. Many, however, became bandits, stealing from travelers and raiding nearby villages. The other villages organized defenses and the clashes with the bandits became increasingly bloody and deadly as all sides became increasingly desperate. After a decade or so, the bandit population dwindled and the area became mostly peaceful once more. Candleton, however, was left in ruins and became a ghost town with the wilderness encroaching on and then devouring the once prosperous village.

That was tough luck for Candleton, it's inhabitants, and the neighboring villages who had to endure the onslaught of desperate bandits, but the surrounding regions were made much better off by the new electric light. The difference between the innovation that hurt Glim and the one that destroyed Candleton is scale. One guy (Glim) losing his livelihood has limited impact. A whole village losing its livelihood is much more catastrophic and much harder for the residents to recover from because there simply aren't the resources from which to build.

With the harnessing of electricity numerous inventions came about and many of these inventions enabled more complex products requiring larger networks of people to create them causing villages to consolidate into towns and towns into cities. In one such city, Carton, thriving automobile and tractor manufacturing companies were created. The tractors made farmers much more productive and the displaced farm workers came to Carton to work in the factories. Jobs were created more rapidly than jobs were destroyed and a large number of jobs required only minimal and/or quickly learned skills. It was a time of great prosperity and economic advancement.

There were over one million inhabitants in Carton, with occupations ranging from miners gathering the raw materials for the cars to school teachers and other supporting professions. People did lose jobs as processes were changed and innovations implemented but such was the prosperity that new endeavors requiring yet more low-skilled workers were being formed all the time, so work was available for all.

In fact, the great prosperity and constant need for labor sowed seeds of problems in the future. The workers realized they could band together and collectively bargain for higher pay, better working conditions, and greater benefits. Management, in return, made the benefits accrue to the future in terms of pensions and health benefits after retirement. The prosperity also enabled management to become lazy and corrupt and they lined their own pockets and did things like hiring incompetent children and nephews.

After a few more decades, the perfect storm hit. Saddled with increasing wages and pension costs from collective bargaining and corruption and incompetence due to human nature, new and distant competitors simultaneously began manufacturing not only cars and tractors, but also steel and other raw inputs. The distant competitors were not saddled with the liabilities of Carton, and ended up having a huge comparative advantage relative to Carton's factories and workers with respect to Carton's products. While this happened over years, Carton and surrounding region was devastated. Hundreds of thousands of people were out of work, poverty and crime skyrocketed, alcoholism and drug abuse decimated the productivity of the potential workforce, and because total revenues declined below subsistence for the population as a whole, and because it was an area for which there was no particular reason for outsiders to invest, people became increasingly desperate.

Along came a leader, Trunald Domp, who realized that while Carton and its people no longer had a comparative advantage in anything productive, they did, like many desperate peoples in the pits of despair who feel they have nothing left to lose, have a yuge comparative advantage in violence. So he organized the people of Carton to produce arms and they attacked the surrounding areas. The bloody war killed tens of thousands of people but eventually Domp and Carton were defeated. The remaining people of Carton fled their collapsing city increasingly desperate to find any means of staving off starvation. The were, of course, met with suspicion and outright hostility, and many were killed on sight. The ones that survived became an underclass and there were frequent violent revolts. Eventually distrust and hatred built to such a fevered pitch that the entire civilization collapsed and everybody died except for a small fraction of the population that fled into the wilderness and formed small groups of farms surrounding small villages. These villages were too small to maintain any sort of advanced economy so they reverted to pre-industrial levels of goods and services.

In one of these villages, a man named Flick was the candlestick maker. It turns out he was a distant descendant of Glim. Flick was proud of his occupation because his candlesticks pushed back the darkness and provided comfort to his fellow villagers.

---

The bigger the scale of the economic trading networks, the more destabilizing the destructive part of Schumpeter's Creative/Destruction. Tough luck for Glim, but everything was perfectly stable and everybody else was more prosperous. Tougher luck for Candleton and the surrounding areas with the bandits but most people were not only unaffected but also much more prosperous. But toughest luck for all for Carton and the rest of the world, where nobody came out ahead. Once a region is sufficiently devastated, there's little hope for the investment and resources required for recovery. The region itself simply doesn't have the resources and outsiders are unlikely to invest in such an unstable and risky region.

Moral of the story: don't put people in a position where they feel they have nothing left to lose - it won't end well for anybody.

121 comments:

Hey Skipper said...

And I thought the moral was to not put all your candles in one socket.

Clovis e Adri said...

The first few paragraphs are among the best things I've ever read in a blog. It is first class material, from the literary point of view- I mean it.

The final ones though are lacking, and I do not mean the literary aspect of it. Carton, like Detroit, may fully decay, but the system keeps being too complex for it to cause the destruction of the whole State, even less Country or World. The riches coming from technology keep being spilled elsewhere, and people move - or try to, depending how hard it is to jump the walls.


I often wonder what may happen when those riches will no longer be available, no matter where you go, because the robots and their overlords took it all. Violence through revolution won't change anything, for the robots will be better at killing too. At some point in future, human life on Earth may no longer be at the hands of their many billions of inhabitants, but will be decided by a handful of unbelievably rich people. All our present models of economics may end up being pretty useless in such a world.

erp said...

Clovis, all the science fiction I've read -- and It's quite a bit -- always leaves room for a comeback by humanity by positing renegade pockets of humans in remote places reliving our primitive phase with twists to deal with new conditions. It might not be Homo sapiens, but some updated version capable of overcoming the robots the same way our predecessors overcame conditions of primal earth.

I'm much more afraid of the fascists all around us and the fact that our children are living in virtual worlds without knowing anything about the past or how to deal with the future.

erp said...

Skipper, er, isn't that supposed to be, don't put all your bees in one bonnet! 🙄

Clovis e Adri said...

Erp,

Well, Bret followed your many sci-fi books here too:

"Eventually distrust and hatred built to such a fevered pitch that the entire civilization collapsed and everybody died except for a small fraction of the population that fled into the wilderness and formed small groups of farms surrounding small villages."

It speaks volumes on how things are in the US now, to the point bloggers start believing this is a possible outcome :-)

I am also a bit surprised, because in past posts Bret used to be more skeptical about inequality being a relevant factor in modern economics. Now he ends up with the best short line possible to summarize it: "don't put people in a position where they feel they have nothing left to lose - it won't end well for anybody."

Before he counters he is not talking about inequality, only about the lower bound, I'd like to add that being poor in the US is almost like middle class in Brazil, so this is more about inequality than destitution.


erp said...

Clovis, brilliant though and I agree that Bret is, brilliant, this is his opinion on a possible outcome of taking away all hope.

As you know, there is no equality except under the law. Take that away as the left has done and people are indeed hopeless.

You must have read Harrison Bergeron, a rife on what a famous scifi writer thought on the subject. When I read that in 1961 (long before your mother was born), I was under 30 and already the mother of three and on our second house.

Human beings are very resourceful and if left along to seek their fortunes as the old fairy tale books taught us, it's amazing what they can do to overcome adverse conditions.

FYI - I didn't watch Trump last night, but my roomie did and I heard snippets. Looks like he's on the reservation -- promising to do end all to make things perfect when all he needs to do is his job administering the Constitution and dismantle those unconsitutional add-ons as he promised.

Bret said...

Clovis wrote: "The first few paragraphs are among the best things I've ever read in a blog."

There were two cliched phrases I've always wanted to write: "it was a dark and stormy night" and "the butcher, the baker, and the candlestick maker" and this was my big chance for both of them in one post! :-)

Clovis wrote: "...and people move - or try to, depending how hard it is to jump the walls."

There can certainly be physical walls that slow people down, but the internal walls are the ones that are harder to overcome. By that I mean that the people who move tend to be the higher energy ones, the more motivated ones, the more resilient ones, and those are the ones with the traits most likely to lead to success. The ones who don't (can't really) move are exactly the ones who are unable to recover. We see this in Appalachia and the rust belt. Don't you have areas like that in Brazil?

Clovis wrote: "All our present models of economics may end up being pretty useless in such a world."

As you know, I think the models of economics are already pretty much useless in the world because they aren't willing to even consider politics and other cultural factors and they completely ignore chaotic components (which is what the story is about, of course).

Bret said...

Clovis wrote: "I'd like to add that being poor in the US is almost like middle class in Brazil, so this is more about inequality than destitution."

The most important word in my summary is "feel" ("don't put people in a position where they feel they have nothing left to lose").

A person can be extraordinarily wealthy and still feel that he has nothing left to lose. For example, perhaps his wife or only child died or something like that. Or, perhaps he feels he no longer has a place in the world, or that things are going to just keep getting worse and worse forever. Or ...

This sort of melancholia has little to do with wealth or inequality and more to do with mental state and what I'll call human spirit. And though it seems completely backwards, my observations is that this sort of despondence is actually MORE likely to occur in rich cultures. For example very rich Japan doesn't look mentally healthy to me. I don't think that Europe and the US are that far behind.

People may be quite wealthy yet still "feel" that they have nothing left to lose.

Bret said...

Clovis wrote: "It speaks volumes on how things are in the US now, to the point bloggers start believing this is a possible outcome..."

I think things are remarkably bad here and not because things are objectively bad but because people "feel" that things are bad.

The worst thing of all? I've had to give up on facebook because I'm so sick of the overwhelming flood of anti- and pro-Trump posts! :-)

erp said...

This is what I meant to say.

Bret said...

erp,

Yes, that's quite a good Fernandez column. An awful lot is magic to an awful lot of people.

erp said...

Worse than having no idea how things work, is that so many now have no purpose -- no reason to get out of bed. Nobody is depending on them, they don't need to earn their bread nor their board. It's very sad and very scary.

Clovis e Adri said...

Erp,

Well, in the same way success today carries within the seeds of the troubles tomorrow - as beautifully illustrated by Bret with his parables in this post - you should not lament so much, Erp. The alienated culture you see now has been sowed in that mighty past you miss so much.

erp said...

Beg to differ.

The past I miss didn't evolve as it should have because it was taken over by the commies and their symps and was turned on its head.

erp said...

This may help clarify my position. Be sure to read the first comment.

erp said...

Try this.

Bret said...

erp,

But the whole reason that "commies and their symps" even exist is because of the rise in overall wealth that started accelerating during Marx's time.

A subsistence lifestyle, nasty, brutish, and short as it is, gives each person his place in life (and if he doesn't live up to his responsibilities in that place, he, and perhaps the whole tribe dies). The progress of humanity which gave us incredible flexibility in lifestyles by basically isolating us from reality sowed the seeds, and more importantly, allowed the seeds to sprout and flourish, seeds that will lead to another collapse of civilization (civilizations will always collapse eventually). While we can blame "commies"* and SJWs and whatever, the progress of the last few centuries guaranteed the existence of those sorts of groups and philosophies.

Don't get me wrong. I agree that it's a serious problem that many have "no reason to get out of bed. Nobody is depending on them..."** Having a lot of young males in that position in the past would be DISASTROUS. Nowadays, with lots of distractions like social media and video games, perhaps that powder key is a least a little bit insulated - but it is still a powder keg.


*I've actually been called a "commie" within the last ten years, so like fascist, I think that term has more or less lost its meaning.

**With my children having grown into competent, strong adults and my wife divorcing me, I find myself in the same situation and it really sucks. While my nature is to mope about depressed, an angry, vengeful, and younger version of me could be extraordinarily deadly, and what do I observe? Millions of younger versions of me. We best hope they keep playing their video games...

erp said...

Bret, I'm so sorry about your breakup and sincerely hope you can find someone with whom you can spend the rest of your life in happiness. It's easy to burrow in and find things to amuse, but human contact is what makes one want to get up in the morning and everything is meaningless unless you have someone to share things with.

When I use the word commie, it's not as a pejorative, it's a fact. It's not a pipe dream that things started looking up after the war, even racial attitudes and other stereotypes were breaking up -- pace Harry -- it's a fact. That's why JFK had to be replaced by Johnson who pushed hard to start the race baiting again. MLK, another real commie just as was Gandhi -- love and peace -- like the christian god says -- the reward is in heaven. Passive and in custodial care nothing to ruffle our brows, so we carry on and argue about whether we are men or women, whether three year olds should have sex changes ... even Caligula would be shocked.

I also disagree that civilizations have to collapse eventually. We know a lot more now than earlier peoples did, but didn't heed the lesson - change can occur organically without violence and IMO would have if we continued to provide an even playing field aka the rule of law and let everyone play the hand they were dealt -- with compassion at a family and local level for those suffering from unforced errors.

You're not there yet, but you may see things in your grandchildren that are unsettling. When we were kids, we couldn't wait to be grown up and on our own. Our kids, who are probably around your age, were allowed to make their own choices are also competent and more, yet our oldest grandchild, the French one, whose 25th birthday is today, is still living at home, works part time on occasion and still travels with her parents.

I'm hopeful things will change before the younger ones in high school need to move up and out.

Bret, may I say what is, indeed, restating the obvious, how much being allowed to be part of this forum means to me. I call you "My Geniuses" and I'd like to say a heart-filled thank you to you all for your indulgence.

A very smart friend of mine, also a geezerette, said something yesterday that I've been pondering all night. She had a terrible tragedy in her life when she was a young person and promised herself if god - the one I don't believe it - allowed her to overcome her bitterness, she would never wallow in self pity again. It worked for her and she's the happiest person I know even though her burden is very heavy. I'd love to unload bitterness myself, but can't see religion as the answer.

Other suggestions gratefully accepted.

Clovis e Adri said...

Bret,

Well, now I understand how you end up writing this masterpiece of a post. We tend to give our best writing when our souls are in most anguish.

May you find warm in the morning light, so you can keep getting out of that bed everyday - for we certainly enjoy your company.

If everything else fails to motivate your waking up, just remember there is always coffee, plenty of good coffee in the world. I should send you some from Brazil.

Harry Eagar said...

Been reading Marx, have you?

Now try Hobsbawm and Mike Davis. Where your parable departs from lived experience is India and Manchester following the proliferation of candlesticks. In real history, it did not require the further steps to Carton to produce legions of despairing people with no path to a livelihood.

But there were police and armies, in plenty, already; it did not require any further steps to see mass destruction and murder.

Hey Skipper said...

[Clovis:] Before he counters he is not talking about inequality, only about the lower bound, I'd like to add that being poor in the US is almost like middle class in Brazil, so this is more about inequality than destitution.

That raises an interesting question about the nature of poverty: is it absolute, or relative?

Aside from the mentally ill and hopelessly addicted, since at least the 1950s, the poor in Europe or the US live longer, eat better, etc, than royalty a century prior. Today, the poor in advanced countries have cell phones, air conditioning, cars, TVs, plenty of food, etc. Which raises the question: at what point are the poor well enough off that they are no longer poor?

But absolute measure of poverty really doesn't satisfy the soul, does it? Human nature being what it is, there is bound to be resentment among those who, in the here and now, are far less well off than most of the people around them. Appeals to how well they have it compared to the poor of a couple generations ago will be no more convincing than a bunch of garbage can lids thrown onto the pavement.

As for the more fortunate, who among them is willing to make that argument, even to themselves?

Hey Skipper said...

Harry:

Are you aware that your comment contains neither facts nor an argument?

Hey Skipper said...

[Bret:] As you know, I think the models of economics are already pretty much useless in the world because they aren't willing to even consider politics and other cultural factors and they completely ignore chaotic components (which is what the story is about, of course).

Wait. What?

Any model of economics that is based upon, say, individualistic markets and strong private property protections surely takes politics and culture into account, because those fundamentals are completely dependent upon economics. No one is applying the same economic models to the US as to, say, Saudi Arabia.

The rest of your comment seems to rubbish a great many other things besides economic models. Weather forecasting doesn't take chaotic components into account. Yet, within their limits, we are perfectly happy to rely upon them. Similarly, at some level, airflow over a wing is chaotic, yet I'll bet you are perfectly happy to get on an airplane.

Hey Skipper said...

[Bret:] For example very rich Japan doesn't look mentally healthy to me. I don't think that Europe and the US are that far behind.

I'm betting you have never been to Japan.

... and my wife divorcing me, I find myself in the same situation and it really sucks.

No one, or at least no one who isn't a sociopath, goes into marriage hoping it will be anything other than until death do us part. Of the entire marriage vow, those were the five words that really hit home.

Damn.

Bret said...

Hey Skipper wrote: "...airflow over a wing is chaotic, yet I'll bet you are perfectly happy to get on an airplane."

I would never be perfectly happy to get on a newly designed plane until the test pilots have put a large number of hours on it. If it was a radically new design, especially for a plane that was much larger? I'd wait a long time before I'd be willing to get on it.

The point is that the economy has gone through rapid changes due to technology and scale and I think the models are no longer applicable.

Bret said...

Hey Skipper wrote: "I'm betting you have never been to Japan."

How much are you willing to bet? If you do decide to actually bet, will a stamp in my passport be sufficient proof for yet? :-)

Hey Skipper wrote: "...until death do us part."

We modified the wedding vows to be "...from this day forward" because (a) it seems more positive and (b) it's even longer and more permanent than until death do us part (i.e. if there's an afterlife we'd be together there as well).

Hey Skipper said...

[Bret:] How much are you willing to bet?

Nothing more than the price of dinner, in as much as I was pretty sure I was on the losing end when I wrote it.

Yet I wrote it anyway. Japanese culture is very, very, umm ... different. In very strange ways that make it almost incomparable to any European culture.

Hey Skipper said...

[erp:] I also disagree that civilizations have to collapse eventually.

I'm with you, erp.

There is a great deal that is simultaneously implicit, and unacknowledged, in that statement.

China. A recognizable Chinese civilization has existed for more than 4,000 years. Has it ever collapsed? Egypt has been around even longer -- 12,000 years. Yet I don't think it is possible to point at any moment during those centuries that could count as civilizational collapse.

I could go on, but I think my point is clear. "Civilizations have to collapse eventually" doesn't say nearly as much as it pretends to.

Clovis e Adri said...

Skipper,

---
China. A recognizable Chinese civilization has existed for more than 4,000 years. Has it ever collapsed? Egypt has been around even longer -- 12,000 years.
---
By that measure, would you ever say the Roman Empire fell? People were writing in Latin for centuries and centuries later.



Hey Skipper said...

Yes, I'd say the Roman Empire fell. Sure, some people wrote in Latin for centuries, but not many; the vast majority had reverted to their native tongue. Moreover, following the fall of Rome, economic activity throughout Western Europe and North Africa collapsed, and didn't exceed Roman era levels for more than 1000 years.

Clovis e Adri said...

Right, Skipper, and what do you think happened with the Egyptian and Chinese Empires?

erp said...

Yes, Skipper and Rome fell because of conditions very like ours today. Reading Cicero is like reading about today's events.

Clovis, China and Egypt weren't taken over by barbarians who destroyed their institutions in the same was as Rome. Different emperors, pharaohs, etc. moved in and out, but little changed for the peasants.

Clovis e Adri said...

Erp,

You should read some history, would do you good.

erp said...

Clovis, I read history before it was politicized and comrade google decided what conformed with the lefty narrative. As I've been advising people, keep your old reference books published in 100 years ago, they may become the equivalent of the classics kept alive by non-Greek scholars during the dark ages.

Hey Skipper said...

[Clovis:] what do you think happened with the Egyptian and Chinese Empires?

I can't claim any particularly detailed knowledge of either, so there's that.

Here is Wikipedia's intro on China:

China emerged as one of the world's earliest civilizations in the fertile basin of the Yellow River in the North China Plain. For millennia, China's political system was based on hereditary monarchies known as dynasties, beginning with the Xia dynasty (c. 2070 bce). Since 221 bce, when the Qin dynasty conquered the other largest six states to form the first unified Chinese empire, China has then expanded, fractured and re-unified numerous times in the following millennia. In 1912, The Republic of China (ROC) replaced the last dynasty, and ruled the Chinese mainland until 1949, when it was defeated by the communist People's Liberation Army in the Chinese Civil War. The Communist Party established the People's Republic of China in Beijing on 1 October 1949, while the ROC government relocated to Taiwan with its present de facto temporary capital in Taipei. Both the ROC and PRC continue to claim to be the legitimate government of all China, though the latter has more recognition in the world and controls more territory.

I don't think there is anything over that interval that counts as civilizational collapse. The Great Leap Forward and the Cultural Revolution were certainly awful enough, but I don't think they belong in that category.

Egypt's intro paragraph reads pretty much the same.

As it happens, one of the podcasts that I am listening to these days is "The Fall of Rome"*. That was entirely different: interior transportation networks, and with them the economy, collapsed. In a matter of decades many parts of Europe lost 90% of the population, Roman culture vanished, and political control extensively fragmented.

The changes were drastic, and occurred quickly: the world of elderly people in 476 was entirely different from that of their youth.

That there is collapse, full stop. Nothing like that happened to either the Chinese or Egyptian civilizations.


(* I am referring to the Western Roman Empire)

Hey Skipper said...

Also, the Mayan and Incan civilizations well and truly collapsed.

The more I think about it, the more it seems "all civilizations will collapse completely" is something that sounds true, but really isn't. Beyond the Roman, Mayan and Incan civilizations, are there any other examples?

Sounds like there are more civilizations that haven't collapsed than those that have.

Clovis e Adri said...

Skipper,

----
That was entirely different: interior transportation networks, and with them the economy, collapsed.
----
Throughout Chinese history, the same happened more than once.

Two hundred years BCE, you could travel a good long journey into China following compasses distributed among intersections of roads. Yes, compass, that thing Westerns 'discovered' as good for navigation after travelling to China more than 1300 years later.

Don't blame the Westerns, the Chinese themselves have forgotten those roads with compasses after one of their collapses. The same ones you think they hadn't.

Harry Eagar said...

I'd say civilization collapsed in Germany in 1933. The Germans were reinfected with civilization after a time but that was external.

And that wasn't the first time. If population reduction by 90% is one criterion, that happened during the wars of religion and some districts have not recovered yet.

There are places, eg, Iran/Afghanistan where destruction by invaders reduced cities to dirt heaps and agricultural production fell to very low levels. After 700 years, the irrigation works have never been repaired.

Examples could be multiplied

erp said...

Clovis, define "collapse."

Going back to our own decline and possible imminent fall, as important as transportation is to trade and prosperity, more important is communication. When Rome was no longer a presence, local dialects came into usage precipitating the babble of languages throughout Europe and the rest of the Roman empire.

When we drove our spiffy new 1956 Merc south for our honeymoon in Sea Island Georgia, we were greeted all the way with many versions of English with a southern drawl and other regional differences -- all but erased when coast-to-coast television came into existence at just about that time.

Should the USofA become balkanized, I wonder how language would change?

Harry Eagar said...

'Are you aware that your comment contains neither facts nor an argument?'

I count 2 facts and 1 argument but am not surprised to find you unwilling to engage them. It's habitual with you but it did not use to be. What has happened to you?

Hey Skipper said...

Harry:

Marx, have you?

Now try Hobsbawm and Mike Davis. Where your parable departs from lived experience is India and Manchester. In real history, it did not require the further steps to Carton to produce legions of despairing people with no path to a livelihood.


I count four dropped names, and two locations. You are right, those are facts, of a kind. I could replace with Cher, Nesmith, George Michael, Specter, Australia and Las Vegas, to produce a sentence every bit as grammatical and devoid of meaning as yours.

And from that piffle, you -- bafflingly -- think you have reached a conclusion.

And I can't hope it's habitual with you to completely fail to provide any citation of background info of any kind.

Hey Skipper said...

[Clovis:] Don't blame the Westerns, the Chinese themselves have forgotten those roads with compasses after one of their collapses. The same ones you think they hadn't.

I have utterly no idea what you are talking about. Not that you are wrong, only that you are pulling a Harry (make some assertion that the rest of us are supposed to take at face value without context or any sort of verification).

So, for Pete's sake, man, feed us come linkage clues.

Hey Skipper said...

[Harry:] I'd say civilization collapsed in Germany in 1933. The Germans were reinfected with civilization after a time but that was external.

Right here is a perfect example of having some consistent idea of what the heck you are talking about. The term in Wikipedia is Societal collapse, but it is completely synonymous with Bret's use.

(Hey, Harry — see how that linking thing works? Now you don't have to take my word for it!)

Germany from 1933-1944 obviously doesn't count. (WWII percentage of Germany's 1939 population killed in WWII: 8.23%)

(Hey, Harry — both those links together took less time than typing this sentence!)

And that wasn't the first time. If population reduction by 90% is one criterion, that happened during the wars of religion and some districts have not recovered yet.

Okay, let's say that's so; we'll take you at your word even though you have given us no reason to. This raises the obvious question: which civilization collapsed during the wars of religion?

There are places, eg, Iran/Afghanistan where destruction by invaders reduced cities to dirt heaps and agricultural production fell to very low levels. After 700 years, the irrigation works have never been repaired.

Specifics, please.

Iran: When did these collapses occur, and how did they qualify as a societal collapses, according to the accepted definition of the term?

Hey Skipper said...

[erp:] When Rome was no longer a presence, local dialects came into usage precipitating the babble of languages throughout Europe and the rest of the Roman empire.

Those local languages existed before the Roman empire. After Rome's political dominance and transportation networks collapse, people reverted to their original languages, modified to varying extents by Latin.

Going back to our own decline and possible imminent fall, as important as transportation is to trade and prosperity, more important is communication.

I think you are being far too pessimistic. Everything you said is true; however, it doesn't say nearly enough.

When the Roman empire fell, communications/transportation was limited to a road system that, while the envy of the world at the time, would be unrecognizably primitive now, or sea lines of communication that wouldn't register as rounding error now.

In order for societal/civilizational collapse to happen now, with multiple, densely interconnected networks, some sort of singular event would have to happen.

The SMOD, or an EMP aimed at our electrical grid would both fit. So would an eruption of the Yosemite caldera.

Or global warming, which is perpetually threatening to wipe out life on Earth any time that is a century from now. More or less.

Absent unprecedented events like that, though, I don't see how you get there. Densely interconnected networks are inherently resilient. Absent unprecedented events -- fully granting that doesn't mean they can't happen -- countries may evolve in ways that you, and I, find repellant, but that doesn't equal civilization collapse.

Here is where I wonder whether a new post is best, or keep it in comments. But since this thread is Bret's idea, comments it is.

I was listening to the Federalist Radio Hour today, which is exactly like, say, Rachel Maddow except for being factually accurate, incisive, and funny. Part of the episode dealt with sexbots. As a rule, I am loath to ever discuss sex in any regard with anyone who doesn't have a death grip on my children and half my assets. At least.

In this case, though, some general speculamatations might pass the PG test.

Axiom 1: women and men have co-evolved over deep time.

Axiom 2: sudden disruptions in the co-evolved balance are almost certainly maladaptive.

Therefore, regardless of theoretical appeals to self-actualization, it is entirely possible that the evolutionarily unprecedented ability of women to control their own fertility -- no matter how important it might be on a moral level -- will cause societal collapse. (Shout out to Japan, Russia, Italy, and, well almost everywhere.)

It is at least arguable that as IT intrudes upon work that only humans can do, that the universe for work only humans can do will shrink without recompense.

Take that a step further. As a boy person, I am am certain that 97% of boy people will do whatever it takes to get to the gates of heaven. That is why civilization exists, why we don't live in mud huts, why there is electricity, and ships, and, well, you get the idea.

When it comes to something as intimate as sex, the uncanny valley is a chasm. But what if sexbots get across it, and men no longer have to step and fetchit in order to reach heaven?

Wars, plague, and disagreeing with Harry wouldn't be a patch on it.

erp said...

Taking the easy one first. Sex is what makes the world go round for every life form. Will VR change things for human boys who are driven to get sex well into their dotage? Human girls until very recently didn't have much to say about things. They had a baby and that, not sex, was the motivating force for them to be docile because they needed a provider for their babies. All that's changed. Where is it going? Have no clue.

Language is a much more interesting subject. The parts of Europe which were part of Rome speak versions of Latin.

The history of the language is a fascinating subject, but I'm using the I-pad and it's too ungainly to get into it -- Albanian is the only language that stands completely alone due to it's rugged terrain and being off trade routes, so we developed independently with little outside interference until fairly modern times. That model is looking better and better to me lately. 😒

Hey Skipper said...

[erp:] . Will VR change things for human boys who are driven to get sex well into their dotage? Human girls until very recently didn't have much to say about things.

No one knows. Women having the evolutionarily unique capacity to control their own fertility, and the (potential) availability to men of convincingly real sexual gratification without co-evolved women's neediness are both perfect examples of Chesterton's Fence.

(Harry, that link took me 45 seconds! I know, an eternity, but still, sometimes extreme sacrifices are required!)

I, and many men, do things for our wives we wouldn't do for ourselves. I think Japan is, for reasons difficult to articulate, showing the way -- towards an entirely unprecedented form of societal collapse: people who don't give enough of a [deleted] to [deleted].

It isn't a matter of if. Japan's population (Harry! Look! No need to take my word for it!) will drop by 6 million within my expected lifetime. It has already lost nearly a million in the last five years. By the end of the century, forty million.

Who the heck knows where that ends? Few societies, even in the face of plague and war, have lost a third of their population in less than a century. And where Japan is already going, Europe isn't far behind.

It's hard to see how convincing sexbots are going to turn that around.

erp said...

Perhaps in a future that will require virtually no "heavy lifting" aka manual/menial labor, there will be no need for mindless bodies to provide it, so lots of people aren't necessary.

Want a baby, check out this seasons fashionable choices. Nothing will be left to chance, so embryos will be created and displayed to tempt every taste.

Gaia can breath a sigh of relief and revert to the wilderness the master planner created before those pesky living organisms got in the act and gummed things up.

Harry Eagar said...

'And from that piffle, you -- bafflingly -- think you have reached a conclusion.'

I assume a degree of knowledge about widely-known and discussed episodes in history (except from erp). At the very least, in a discussion about technological inroads into society, I'd assume familiarity with conditions in Manchester in the 1840s.

I'll admit the destruction of qanats by the Mongols is not common knowledge to westerners, though it is to the people who live in the affected area -- or, rather, it would be if there were any people there.

"The Mongols' destruction of the irrigation systems of Iran and Iraq turned back centuries of effort to improving agriculture and water supply in these regions. The loss of available food as a result may have led to the death of more people from starvation in this area than actual battle did. The Islamic civilization of the Persian Gulf region did not recover until after the Middle Ages.[17]"

Thus Wikipedia. There are parts of eastern Iran/western Afghanistan where the qanats have never been rebuilt and remain depopulated. (Curiously enough, the remaining qanats are said to be undergoing a new wave of destruction due to free market forces.)

Hey Skipper said...
This comment has been removed by the author.
Hey Skipper said...

[Harry:] I assume a degree of knowledge about widely-known and discussed episodes in history ...

I assume that people who aren't complete arrogant jackasses will provide background to their comments. I assume that people who aren't total techtards, or incurably obnoxious, will never EVER provide a direct quote without linking to the source.

It seems pretty clear that the Mongols did cause at least several societal collapses.

And also that WWII Germany and the wars of religion don't count.

However, my point is not that there is no such thing as societal collapse, but rather that what seems true -- all civilizations eventually collapse -- isn't.

except from erp

You continue to earn your reputation.

erp said...

Guess whose family had a factory in Manchester in 1840?

FTA ... While the Manifesto was writen (sic) by Marx, its economic analysis was strongly influenced by Engels's "practical experience of capitalism" in his family's coton frm (sic) in Manchester, England, (sic) in 1842-44.

Bret said...

Hey Skipper wrote: "...that what seems true -- all civilizations eventually collapse -- isn't."

Here's the definition of "collapse" I'm using:

"Collapse also has a specific definition in this context. Collapse is the rapid simplification of society. In other words, the society loses much or all of its complexity in a relatively short period of time, where the time frame is typically less than a couple of generations. A great simplification is sometimes associated with a greatly reduced population, but not always - if the cost of maintaining the complexity prior to the collapse far outweighed the benefits, the population can be better off and better fed after the collapse."

First, "all civilizations collapse eventually" is in some sense nearly guaranteed to be true. "Eventually" the sun will supernova. "Eventually," even if we colonize the rest of the galaxy, it will burn out. "Eventually," there will be a last human (and/or whatever follow-on species there might be). Could it be a perfectly slow decline (as opposed to a collapse) over millions of years? I suppose so, but I find it so unlikely that it's not really worth considering to me.

Second, perhaps you can (or have above) identified A, B, ... where those entities were complex enough to have been considered by you to be a civilization but perhaps didn't quite ever simplify enough to be considered collapsed by you. So let me rephrase my statement to carefully avoid your definitional nitpicks: "all civilizations that I consider to have been adequately significant to have been called such have collapsed (i.e. adequately simplified over a small enough timeframe), again by my definition, except for the remnants of the current global civilization." You may claim that has no meaning, and to you it probably doesn't, but to me it has a very specific meaning and I simply wished to share that.

Third, I'm certain that the current global civilization (the arc of which started in Europe 600+ years ago) will collapse. I'd be really surprised if it makes it another 1,000 years, but that's possible. I wouldn't be surprised if someone who could see the future told me it was going to collapse in less than 100. Why? Because this civilization is doing an increasingly poor job at enabling people to find meaningful lives even though it's making them materially richer. But any collapse will be well past my remaining decades so I'll never know for sure.

Hey Skipper said...

[Bret:] First, "all civilizations collapse eventually" is in some sense nearly guaranteed to be true.

That's what I meant the assertion is true, so far, in only the trivial sense.

So let me rephrase my statement to carefully avoid your definitional nitpicks: "all civilizations that I consider to have been adequately significant to have been called such have collapsed (i.e. adequately simplified over a small enough timeframe), again by my definition, except for the remnants of the current global civilization."

Dear Lord, don't make me diagram that sentence.

How about just using Wikipedia's definition of the term, which is, so far as I can tell, the accepted one. China has never suffered societal collapse, nor has Egypt. Those two exceptions alone are enough to make a hash of your assertion. They are, after all, so old as to be stand as resounding contradictions. India and Japan are probably two more such examples.

Third, I'm certain that the current global civilization (the arc of which started in Europe 600+ years ago) will collapse. I'd be really surprised if it makes it another 1,000 years, but that's possible.

That's exactly the kind of claim warmenists make.

I would never make the counter claim -- after all, I think very likely that between the evolutionarily unprecedented ability of women to control their fertility, and now ever more convincing sexbots, that humanity will be extinct within 300 years simply due to lack of babies.

If I'm wrong on that score, though, I don't buy your prediction. I don't see how people's lives are any more, or less, meaningful than 100 years ago: that is a conclusion without an argument.

Bret said...

Hey Skipper wrote: "How about just using Wikipedia's definition of the term...?"

Sure:

===================================================

There are three main types of collapse:

Reversion/Simplification: A society's adaptive capacity may be reduced by either a rapid change in population or societal complexity, destabilizing its institutions and causing massive shifts in population and other social dynamics. In cases of collapse, civilizations tend to revert to less complex, less centralized socio-political forms using simpler technology. These are characteristics of a Dark Age. Examples of such societal collapse are: the Hittite Empire, the Mycenaean civilization, the Western Roman Empire, the Mauryan and Gupta Empires in India, the Mayas, the Angkor in Cambodia, and the Han and Tang dynasties in China.

Incorporation/Absorption: Alternately, a society may be gradually incorporated into a more dynamic, more complex inter-regional social structure. This happened in Ancient Egypt and Mesopotamia, the Levantine cultures, the Mughal and Delhi Sultanates in India, Sung China, the Aztec culture in Mesoamerica, the Inca culture in South America, and the modern civilizations of China, Japan, and India, as well as many modern states in the Middle East and Africa.

Obliteration: Everyone in the society dies.

===================================================================

Hey Skipper wrote: " China has never suffered societal collapse, nor has Egypt. Those two exceptions alone are enough to make a hash of your assertion."

Note that both of those experienced collapse on the wiki page that defines societal collapse per your request. So I don't think they are exceptions and therefore don't make a hash of my assertion.

Hey Skipper wrote: "I don't see how people's lives are any more, or less, meaningful than 100 years ago..."

Okay. Just like it's hard to explain color to a blind person, if you haven't observed the despair, increased alcohol and addiction rates, lowering life expectancy, etc. that are endemic through much of the midwest, I won't be able to explain it and you certainly should disagree with my prediction. However, I remain certain of it - just like I remain certain that the sky is blue (on non-cloudy days).

Hey Skipper said...

[Bret:] So let me rephrase my statement to carefully avoid your definitional nitpicks:

Now that you mention it, IIRC, my definitional nitpick was that by predicating your discussion of free trade as that which goes across national borders, you were using a parameter that, in and of itself, can't be found in the definition of trade. Consequently, you were at risk of excluding barriers to free trade simply because of their locus.

Not two weeks later (and I am going to pull a Harry here by not taking time to find the link, for two reasons. 1. I could, and 2, it is neither surprising nor controversial, and doesn't accuse anyone of being a nazi.) there was an article in the NYT about the distortions within the French labor market due to legal discrimination between short-term contract employees, and those who are full employees of corporations. (I take that back, I'm not going to pull a Harry. are many articles on internal trade discrimination. Took less time to come up with the evidence than it took to type an excuse.)

If you don't care to accept, say, Harry's concept of civilization collapse, then you, too, are a definitional nitpicker.

Hey Skipper said...

(... Harry. Here are many ...)

Laptop trackpads are unfortunately prone to the stray thumb.

Hey Skipper said...

[Bret:] Note that both of those experienced collapse on the wiki page that defines societal collapse per your request. So I don't think they are exceptions and therefore don't make a hash of my assertion.

I read all the way through to examples, and sure enough, China is there.

Several times, in fact. (Harry, behold the power of citing actual evidence!) The Han and Tang dynasties are examples of collapse through simplification. The Wikipedia entries for both don't come close to substantiating that conclusion, but I am happy to agree that is because the entries are about the dynasties, not what came after. So, strike China from the list.

Does that still leave Egypt?

(I was surprised to see the Norse colony on Greenland on the list. That constitutes a civilization? Really?)

Okay. Just like it's hard to explain color to a blind person, if you haven't observed the despair, increased alcohol and addiction rates, lowering life expectancy, etc. that are endemic through much of the midwest ...

Give me a second while I get a front end loader over here to shove your condescension* aside.

Well, no duh. So by that I take it the midwest is on the verge of societal collapse?

All societies have problems. Not all societal problems are the road to ruin.

* I will never be able to figure out how non-native speakers such as, say, Clovis, manage the chaotic nightmare that is English spelling. The letter "c" is the biggest criminal of all.

Bret said...

Hey Skipper wrote: "Does that still leave Egypt?"

Egyptian civilization had at least one collapse" and then was conquered (collapse by absorption) around 500 BC (or something like that).

Hey Skipper wrote: "So by that I take it the midwest is on the verge of societal collapse?"

Given that the midwest is not a civilization unto itself (I don't think?) and my timeframe for this collapse is more than 100 years, no, probably not "on the verge." Now, picture the midwest festering like it is for 100 years, picture the coastal elites continuing their current panic and grasping for power, picture the elites putting the rest of the country back under their boot when they regain power, repeat for generations or centuries, and I think the whole edifice of western civilization comes crashing down. My view of current civilization is that it's one big hyperfroth".

Hey Skipper wrote: "All societies have problems. Not all societal problems are the road to ruin."

My belief is more fundamental than that: all societies will eventually develop problems that lead to ruin.

(BTW, apologies for my condescending comment)

Bret said...

Hey Skipper wrote: "...my definitional nitpick was that by predicating your discussion of free trade as that which goes across national borders, you were using a parameter that, in and of itself, can't be found in the definition of trade."

Say what?

The term "free trade" doesn't appear in this thread before your comment, nor does it appear in the post, no? In fact, I specifically constructed the story to not have any political borders at all, just so I could avoid that particular issue.

Hey Skipper said...

Bret — apologies, without so much as a hint in that direction, I was referring to another thread. Please unregard.

Hey Skipper said...

Perhaps Detroit qualifies as a case of societal collapse.

Bret said...

Detroit was, of course, the inspiration for Carton in the post. It does seem like a collapse of sorts (population of Detroit 1950: 1,860,000; population of Detroit now: less than 800,000). (I was born just outside of Detroit). More than a million people fled the city in a handful of generations. I don't see how Detroit will ever recover, or much of the midwest. As other parts of the country eventually get mired in "Detroitness," in seems that we perhaps are in the very, very early stages of collapse. Again, it'll take hundreds of years, so we're not on the verge.

erp said...

If society collapses, those who know how to do things, will survive. It will be the coastal elites who will die off while We, the People in fly-over country will figure out how to "make it work" and live to fight another day.

Bret said...

erp wrote: "If society collapses, those who know how to do things, will survive."

Maybe so but maybe not.

Consider food. Most of us, if given seeds appropriate for the climate and soil conditions, could, with a book, grow food.

However, growing food at the scale required to feed 7+ billion people requires an enormous network of participants supported by the institutions of civilization. Tractors, fertilizer, fuel, irrigation networks, insecticides are required for growing and harvesting and transportation, storage and distribution networks are required to get the grown food to where it's needed. No single person exists who knows all of it and the networks of civilization enable that lack of knowledge while enabling extremely efficient food production.

Take away all (or even just some) of those networks, which might well be the result of sort of collapse I'm envisioning, and instead of being able to feed 7+ billion, we'd be lucky to feed 1 billion.

That might be a problem.

erp said...

My scenario envisions small groups of people, not big cities. Depending on what causes the collapse. One thing's certain, the effete elite will not be capable of feeding themselves never mind anyone else.

Harry Eagar said...

'(I was surprised to see the Norse colony on Greenland on the list. That constitutes a civilization? Really?)'


Interesting article on that in the latest issue of Smithsonian. It had a bishop and export-oriented economy, so as much of a civilization as the Netherlands you are so fretful about.

Harry Eagar said...

Detroit was your model for Carton? Really? Detroit is an example of business mismanagement not of technological destruction and replacement.

Handcrafted Fords were not replaced by machine-made Toyotas.

erp, you know what, I do know who had a factory in Manchester. But I am surprised to see you attacking capitalism

erp said...

Harry, I attacked nothing -- only quoted from the article.

BTW - Detroit is an example of unions run amuck and the reason little, if any, new jobs will be in the old union infested rust belt. Another splendid example of how the left destroys everything in its wake.

Bret said...

Harry wrote: "Detroit is an example of business mismanagement..."

Sure. From my post:

"The prosperity also enabled management to become lazy and corrupt and they lined their own pockets..."

Hey Skipper said...

[Hey Skipper:] "I was surprised to see the Norse colony on Greenland on the list. That constitutes a civilization? Really?"


[Harry:]Interesting article on that in the latest issue of Smithsonian. It had a bishop and export-oriented economy, so as much of a civilization as the Netherlands you are so fretful about.


Wikipedia is rather insistent that there is far more than a bishop and an export oriented economy to being considered a civilization.

I think it would be a difficult task, akin to deciding the difference between island and continent, to decide where lies the boundary between a civilization, and societal organization that doesn't qualify. Your challenge doesn't come close to that problem, though. Applying "civilization" to both Greenland and the Netherlands succeeds on one thing only: making the word worthless.



Hey Skipper said...

[Harry:] Detroit is an example of business mismanagement not of technological destruction and replacement.

I know I have linked to the parasitic UAW before. I don't know why I'm doing so again, since there is no one less intellectually curious than you, Harry. But it does provide another opportunity to observe the power of the link.

Not letting Big-Three management off the hook, but anyone who can write "Detroit is an example of business mismanagement" has absolutely no interest in letting reality disturb the cozy comfort of their own preconceptions.

[Bret:] "The prosperity also enabled management to become lazy and corrupt and they lined their own pockets..."

No doubt. But leaving off the horribly corrupt and droolingly stupid UAW -- which was allowed to be a monopoly provider of labor to the Big-Three -- is to ignore at least half the laziness and corruption.

Which kind of ties back in to your parable: sometimes collapse is a self-inflicted wound.

erp said...

Correct. It was mis-management in that in order to make cars they had to play ball with union thugs until their demands hit rock bottom and cars made elsewhere than Detroit took over the market. Rinse and repeat for other industries.

Bret said...

Hey Skipper wrote: "But leaving off the horribly corrupt and droolingly stupid UAW..."

I alluded to that a bit when I wrote (in the original post) the "workers realized they could band together and collectively bargain for higher pay, better working conditions, and greater benefits."

I mostly agree with corrupt (though I don't think much more corrupt than any other quasi-political organization of that size). But what exactly was stupid? The entity (can an entity be stupid)? The leaders? Didn't they make a lot of money and have a lot of power? I thought it was pretty well played, actually. A bunch of folks (the union leaders) did quite well for themselves, didn't they? At a future cost, for sure, but that future cost didn't affect them.

Clovis e Adri said...

Bret,

---
At a future cost, for sure, but that future cost didn't affect them.
---

A good point that begs the question: isn't it true for almost everything successful nowadays?

Almost every CEO, at almost every big company, is guaranteed to be rich for his life even if he leads his company to brankrupcy.

That's equally true for far too many politicians, bankers, and all the other usual suspects often hated Left and/or Right.

It is not a "Too big to fail" world. Is is actually a "Too big to not fail" one.

Hey Skipper said...

[Bret:] I alluded to [union stupidity] a bit when I wrote (in the original post) the "workers realized they could band together and collectively bargain for higher pay, better working conditions, and greater benefits."

I mostly agree with corrupt (though I don't think much more corrupt than any other quasi-political organization of that size). But what exactly was stupid?


Perhaps you aren't overly familiar with the UAW -- no reason you should be; you haven't worked in the auto industry. In a para, here is what made the UAW particularly awful:

Those [post-war] conditions helped foster one of the most significant labor developments in the auto industry: pattern bargaining. As practiced in the auto industry, the UAW selects a company as its strike target, and a contract is negotiated with that company. When that contract is signed, the UAW negotiates with the other automakers, using the target contract as the pattern.

In other words, the UAW acted as a monopoly provider of labor to the automakers. It's strategy was to pick the weakest automaker at any given time, knowing full well several things: 1. The strike was funded by the entire UAW, not just workers at the afflicted automaker; 2. The targeted company would be the least able to hold out; and, 3. It didn't matter to the UAW if the automaker collapsed. What did it matter, Americans were going to buy X number of cars, and the UAW was going to build them, no matter the nameplate.

Until, of course, that was no longer true.

There are many self-inflicted wounds, but the jobs bank is probably the bloodiest.

Why the UAW didn't fall afoul of antitrust laws is a mystery to me -- that it didn't encouraged the very worst monopoly behavior. Contrast that the union I'm in, ALPA. ALPA can act only as an umbrella organization with respect to political advocacy. Each of ALPA's bargaining units (i.e., the pilots at any given ALPA affiliated airline) must bargain with the company on its own, and can get no resources from ALPA national.

Besides that, virtually 100% of airline pilots are college graduates, which, in addition having to pay attention to their own airlines cost structure with respect to the others, might put a brake on stupid demands.

I think I have mentioned it before, but This American Life's podcast on General Motors and the UAW is easily worth an hour, particularly considering TAL's distinctly progressive tilt.

Harry Eagar said...

What does union organizing have to do with the fact that by 1980, Americans no longer wanted to buy American cars? How much input did unions have on the design of the cars its members built?

None.

Whether work rules etc. had an impact on COGS is perhaps an issue, but buyers don't know anything about COGS. If they didn't like the cars, that is entirely management's fault.



erp said...

Thanks for clearing that up Harry. :-)

Bret said...

Harry wrote: "Whether work rules etc. had an impact on COGS is perhaps an issue, but buyers don't know anything about COGS. If they didn't like the cars, that is entirely management's fault."

Well, that comment explains a lot about you Harry.

I don't own (never have and never will) a Ferrari. But you cannot assume that I don't like the Ferrari design and even construction. I, in fact, love, Love, LOVE!!! the design of Ferraris.

It's that pesky little COGS thingy that gets in my way of buying a Ferrari. Because COGS has a very close impact on price. And I simply cannot afford a Ferrari. No matter how much I'd love to have one - it simply cannot happen because of COGS and price.

Potential buyers of american cars probably would've found they liked them just fine - at some price. But, due to many factors, including the unions and deferred benefits, the price was too high because the COGS was too high.

Perhaps, Harry, you rarely or never consider price. Your comment makes it seem so. But for the rest of us who just aren't rich enough to always ignore price, COGS is one of the primary drivers in whether or not I end up buying something because of its relationship to price. Yes, I never know the COGS, but I do, of course, know the price which is significantly tied to the COGS.

erp said...

COGS wasn't the only reason people were buying foreign cars. UAW built cars were shoddy, unreliable, etc compared to the sleek, innovative, models that were snazzier and more efficient. Mgt's biggest mistake was not to stand together against the union and allowed themselves to be played when the union would strike one company allowing the other two to continue to operate. Lots of auto workers retired round here and although most of them were just working on the line, have very impressive bennies. Nice, except they left devastation behind them.

Harry Eagar said...

Bret, I think you are too young to recall what happened. Although US makers reduced and reduced their prices, no one would buy, while buyers paid premiums over list -- often large premiums --to get a Toyota.

Th choice was not between an expensive Ford and a cheap Toyota but between a cheap Ford and an expensive Toyota. Buyers choose the Toyota.

The reason was entirely due to US management.

Hey Skipper said...

[Harry:] Although US makers reduced and reduced their prices, no one would buy ...

Perhaps you could elaborate a bit on "no one". I suspect that doesn't mean what you think it does.

The reason was entirely due to US management.

"Entirely" doesn't mean what you think it does, either.

I know I have recommended to you the This American Life episode entitled "NUMMI". It is very easy to Google -- just scoop up all the words starting with This and ending with NUMMI, then drop them into a blank URL bar.

Then listen to it -- or read the transcript -- then come back and tell us it is all down to management.

NB: TAL is as leftist as the rest of NPR.

Whether work rules etc. had an impact on COGS is perhaps an issue, but buyers don't know anything about COGS. If they didn't like the cars, that is entirely management's fault.

Linking is both easy, and common blog courtesy. Why do you have so much trouble managing it?

Oh, I know, it is a chance to do some lingo-based self-preening. And then there is the "entirely" thing, again.

When my kids were little, I told them there were two words that they should avoid: always and never. Entirely is in the "always" heap. Why is it five year olds can figure out something you can't?

Harry Eagar said...

One of the reasons I have such a low opinion of American management (and its claques) is that its members take credit for everything good and look to shift the blame for everything else. Since in the American system (unlike some others) labor has zero voice in management decisions, labor enjoyszero blame for what happens.



erp said...

Labor has been running the show since even before Hector was a pup and mgt was stupid enough to think they could manage thugs by playing nice. It didn't work for cars, steel ... .

Harry Eagar said...

That is simple nonsense. Ask Skipper, who worked at Ford, how many labor representatives were on the decision team that produced the Taurus. I know the answer, since I spent some time during development with the project leader, but ask Skipper.

erp said...

Harry, your naïveté is childishly touching.

Of course union thugs weren't in on design and other technical matters. They called the shots on non-negotiable labor costs and put the kabosh on labor saving devices, so as those costs rose into the stratosphere, the cuts had to come from the product itself. It didn't take long for that to become apparent to buyers and competitors saw an opportunity and took it.

We were probably among the last to give up on American cars and I can tell you our Honda Civic was a revelation over the Ford station wagon it replaced. My husband thought he'd died and gone to heaven. We stayed with Honda's and Beetle's until the Dodge Caravan replaced them when we moved to Florida in 1989. I've been driving a 1996 Chrysler Concorde and will continue to drive it until one of us gives up our ghost. My husband is using my mother's old Chevy Cavalier as a second car. It's 16 years old and has 32,000 miles on it.

Bret said...

erp,

Harry seems to believe that price doesn't matter. If one believes that, then labor (what you call union thugs) can demand and get very high compensation and it wouldn't affect sales at all. Thus, any reason cars don't sell would then be management's fault. It's pretty simple and airtight logic.

Where I (we?) disagree with Harry is on the premise that costs and therefore price doesn't matter. I believe it matters a great deal - in fact, it's by far the most important thing. Therefore, labor costs and therefore unions did indeed help destroy the midwest and its companies. Were they solely responsible? No, but they played a significant part.

My perspective is based on personal experience. When I choose whether or not to buy something, price is very, very important to me. Apparently, Harry is very, very rich and price is no object so he can't understand why costs and price matter to the rest of us. We can only assure him that price does matter to us, but he clearly is unable to understand the concept of why that might be.

erp said...

Bret, management has a dog in the hunt as they say here in the deep south. Unions don't. They are in the extortion racket. They have invested none of their own resources aka hard-earned money, so when a client goes out of business, they just move on to another sucker.

As a scientist, I very much doubt that price is your only criterion in making choices. The old saying, "best buy for the buck" still holds.

I'd very much like to know what in your opinion auto management did, other than make occasional poor choices in products, like the Edsel, to cause the disaster that is now Detroit. I am quite sincere and not being snarky.

Harry thinks management only wanted to pander to investors and squeeze blood out of the workers -- to be fair, I don't believe he thinks they whipped any of the auto workers, but I wouldn't swear to it -- he does hold some bizarro views.

I understand it was a beautiful vital city decades ago. One of our neighbors is a native and it breaks her heart to see those pictures of beloved landmarks that look like Berlin after the war.

Bret said...

erp wrote: "I'd very much like to know what in your opinion auto management did ... to cause the disaster that is now Detroit."

My understanding was there was this arrogance that no matter what they did, they'd still reign supreme. So instead of always trying to stay lean and efficient and always pushing they were way to complacent and that fed into a lot of incremental decisions that summed up into something very costly.

The one thing they did that eventually caught up with them was the pushing employee benefits (pensions then later health) into the future in order to keep the bottom line strong in the past. Everybody was doing it, and maybe it was impossible to realize it would be as catastrophic as it was, but it definitely did cause the disaster in Detroit. Defined contribution is the only sort of plan that's sustainable in the long term. Defined benefit plans will be catastrophic for almost every company eventually.

erp said...

Yes, but unions didn't want defined contribution. Arrogance leads to mistakes which lead to changes in management. They report to Boards of Directors. These guys weren't masters of the universe as were the dot commers and other Wall Street types.

Hey Skipper said...

[Harry:] One of the reasons I have such a low opinion of American management …

One of the many reasons I have such a low opinion of you is that you avoid contrary facts like water avoids running up hill: it is obvious you didn't listen to the TAL episode, nor even read the transcript.

More fool you.

Ask Skipper, who worked at Ford, how many labor representatives were on the decision team that produced the Taurus.

The one that set sales records, you mean? And, in any event, what useful input could they possibly have provided. Ford didn't ask the software engineering dep't about car design decisions, either.

[Bret:] Harry seems to believe that price doesn't matter. If one believes that, then labor (what you call union thugs) can demand and get very high compensation and it wouldn't affect sales at all.

All the money that the Big Three spent on the jobs bank couldn't be spent on R&D, or content — $300M/year at GM alone. (That figure comes from the DailyKos, which further cements the reputation progs have for being thoroughly innumerate: GM's annual sales are roughly $180B, making the job bank a 0.17% drain on profit margin. Pro-tip, KosKids: sales are not profit.)

Were [the Unions] solely responsible? No, but they played a significant part. I agree. I certainly wouldn't put the whole blame on unions; after all, GM for awhile seemed to have completely forgotten how to make a car. However, the Big Three seem to have escaped the UAW's pattern bargaining stranglehold, and are all making excellent cars for the dollar. Because of all the traveling I do, I rent a lot of cars. Fords are outstanding these days. And I can't help but notice that BMW is building a lot of high quality cars without union assistance.

I'm sure Harry will be able to tell us how that is impossible.

[erp:] I'd very much like to know what in your opinion auto management did, other than make occasional poor choices in products, like the Edsel, to cause the disaster that is now Detroit. I am quite sincere and not being snarky.

Like the UAW, Big Three management thought they had an eternal stranglehold on the American market.

So they pushed fancy sheet metal on increasingly dated mechanicals that were designed to fail at about the four year mark. Lousy gas mileage, rubbish braking and handling. In the late 1970s to mid 80s, GM built diesel engines that were scarcely redesigned gas engines — few made it to the 50,000 mile mark before coming unglued. GM single handedly ruined the market for diesels in the US for at least a generation.

So there is no letting management off the hook. But that said, the unions were stupid beyond belief. It is possible to build high quality cars in the US — Honda, Mercedes, Subaru, BMW are proving it. Notice where they aren't building their cars, though.

[Bret:] Defined contribution is the only sort of plan that's sustainable in the long term. Defined benefit plans will be catastrophic for almost every company eventually.

Exactly. And many city and state governments, too.

erp said...

... be interesting to know what kind of benefit plans unions offer their own employees?

Harry Eagar said...

' I don't believe he thinks they whipped any of the auto workers,'

You'd be wrong, both about what I believe (which is irrelevant to what happened) and about what happened.

OK, Bret, price matters. So how do you explain shoppers paying premiums to get Toyotas? Or, even more dramatically, buying milk at 7-Eleven?

Hey Skipper said...

[Harry:] OK, Bret, price matters. So how do you explain shoppers paying premiums to get Toyotas?

With a question like that, no wonder you don't understand how free markets work.

Shoppers paid a "premium" to get Toyotas because the cars were worth the additional money to the buyers. At the time, both because management felt invulnerable, and union workers were essentially sabotaging the companies (haven't listed to NUMMI yet, have you?), American car quality was sucktastic.

In other words, buyers didn't pay any premium at all. Not only are progs innumerate, they can't comprehend Econ 101.

erp said...

7-11 is a convenience store. People buy milk and other stuff there because it's convenient.

Hey Skipper said...

erp, are you trying to tell me people are willing to pay for convenience?

No way. I refuse to believe it. Next you will be trying to tell me there is some sort of relationship between supply and demand.

Hey Skipper said...

[Harry:] Ask Skipper, who worked at Ford, how many labor representatives were on the decision team that produced the Taurus.

I have to take another pass at this.

Ask Skipper, who works at FedEx, how many labor representatives were on the team that decided to buy TNT. Ask him how many labor representatives were on the team that decided to buy the 777.

In the realm of piloting an airplane, I am an expert. But only a fool would ask my opinion on mergers and acquisitions.

Bret said...

Harry asks: "So how do you explain shoppers paying premiums to get Toyotas?"

I'm not totally sure what you mean by "premium" but I assume you mean they paid over "list price." That simply means that value of the car to them was more than list price. Do you think people would've still bought the Toyota if they had to pay 5 times the list price? Twice the list price? I think not. So price still matters.

Bret said...

Harry asks: "Or, even more dramatically, buying milk at 7-Eleven?"

There's a big difference between a quart of milk and a car - roughly a factor of 10,000.

In the micro-economic world for me personally, it's true that the price-quantity curve is vertical in the range at which I get milk. In other words, the price could double and I'd buy the same amount of milk or the price could halve and I'd still buy the same amount of milk. However, there is some limit. If milk went up by a factor of 10, I'd likely buy substantially less milk. Fortunately, there are enough people at the macro-level that price signals still work, even for milk.

For cars, that cost 10,000 times as much per purchase as milk, I'm exquisitely price sensitive. Again, I'd love a Ferrari, but I drive a Mazda, almost completely because of price. And why a Mazda instead of a Ford? Because the Mazda, for its value to me, was a little cheaper than the Ford. Price, price, price for subjective value. Nothing else.

Harry Eagar said...

We aren't comparing Ferraris to Mazdas but Toyotas to Fords.

So far I have been told the Big Three didn't have enough money to develop better cars, but at the time Datsun was eating Detroit's lunch, it was Datsun that lacked capital. It was Datsun that couldn't afford a nationwide service system. People still bought Datsuns.

It wasn't labor that ruined the US auto industry. It was management.


How do I know? Well, the farm implement industry, which was also UAW, went down the tubes at the same time, although there was no pattern bargaining in that sector.

Management counts. Who knew?

Bret said...

Harry wrote: "We aren't comparing Ferraris to Mazdas but Toyotas to Fords."

I specifically compared Mazda to Ford.

Look, I get it that you don't consider price when you shop. The vast majority of the rest of us do. The UAW and labor made US autos uncompetitive on price.

erp said...

Harry, are you aware that you have just, again, made my point for me?

When intelligent people purchase things like cars or toasters, they take into consideration future costs, not only the purchase price. U.S. made cars and other things like appliances, TV's, etc. made in Japan and elsewhere were cheaper and better -- kinda an unbeatable combination.

Harry Eagar said...

'cheaper and better'

The cars weren't cheaper, and the products weren't always better, though they often were.

To the extent American products were worse and more costly, whose responsibility was that?

Management.

Bret said...

If an organization fails, it can be the responsibility of anyone or everyone in the organization and external factors as well.

In the case of Detroit auto, it was pretty much everyone, including the workers, including the UAW, and yes, including management.

Hey Skipper said...

Harry, if you can't see, from all the widely available evidence, that there was plenty of blame to go around, then you are truly blinkered.

And if unions bear no blame whatsoever for the cratering of the US auto industry, then they certainly deserve not an iota of credit for its resurrection.

Can't have it both ways.

Bret said...

Hey Skipper wrote: "And if unions bear no blame whatsoever for the cratering of the US auto industry, then they certainly deserve not an iota of credit for its resurrection."

Well, union membership was around 25% (of workers) in 1970 when Detroit fell apart and union membership is less than half that today.

So I would (jokingly) claim that the unions are responsible for both the cratering and resurrection. Cratering by having unrealistic demands and resurrection by getting the hell out of Dodge! :-)

Hey Skipper said...

[Bret:] So I would ( ) claim that the unions are responsible for both the cratering and resurrection. Cratering by having unrealistic demands and resurrection by getting the hell out of Dodge!

FIFY.

If Harry was to read that NUMMI transcript I pointed to, he would find plenty of fingers pointed at management. And undeniable examples of union stupidity.

More striking, though, is that as unions have waned in the private sector -- taking car companies as a specific example -- quality and innovation have skyrocketed. BMW's Spartanburg plant is their most efficient, and on its way to becoming its largest. And somehow, despite the lack of a union, people line up to work there.

In contrast, the only sector of the economy where unions still predominate -- government -- states and cities are watching their finances crater specifically because of union stupidity.

erp said...

JFK allowed public sector unions with an EO. Prior to that they were not allowed. Caused havoc almost immediately and now they are more powerful than almost any other entity in the country. Trump should simply outlaw them with an EO and save tax payers the gazillions of tax dollars and the embarrassment of paying thugs protection money not to take down the government.

Hey Skipper said...

If I recall correctly, and I'm going to pull a Harry here and not bother to find the quote, FDR, patron saint of progressives, thought public service unions were toxic.

He was right.

erp said...

Good memory. I guess we'll get a "that was then, this is now" retort from Harry.

Harry Eagar said...

'If an organization fails, it can be the responsibility of anyone or everyone in the organization and external factors as well.'

That can be so, but it is not necessarily so. It was not the case in the US auto industry. The workers made what they were told to make.

And, though it us not a part of the argument, I rent cars too and the idea that Detroit iron is now as good as international standards is a joke. The Jeep Pioneer I rented in January was crap. The Denali I rented 3 years ago was also a joke (an 8-passenger car without carrying space for even one suitcase.)

erp said...

The only constant in the discussion about why US industries (not only the auto industry), formerly the gold standard for the world, were overtaken so easily, is the the dominance of enormously powerful unions. Neither management nor workers had anywhere near the influence.

Hey Skipper said...

[Harry:] That can be so, but it is not necessarily so. It was not the case in the US auto industry. The workers made what they were told to make.

Very, very badly.

They showed up to work drunk. Took drugs on the job. Actively sabotaged cars.

Read the link, Harry. You are starting to sound closed minded.

[erp:] The only constant in the discussion about why US industries (not only the auto industry), formerly the gold standard for the world, were overtaken so easily, is the the dominance of enormously powerful unions.

I don't think that is fair. US automakers were arrogant, and lulled into a false sense of security by too many years of having an effective monopoly on the US market. They responded to competition far too slowly. (That transcript I linked to above, the one Harry is avoiding like Dracula does sunlight and crosses, also details plenty of management buffoonery.)

But not as slowly as the UAW did, which had a very effective monopoly, and the only problem they had was simple math.

[Harry:] And, though it us not a part of the argument, I rent cars too and the idea that Detroit iron is now as good as international standards is a joke.

I rent a lot of cars, too. Way more than you. You are wrong.

Just for one example, The Cadillac CTS ranks ahead of a BMW 5 series.

And, last I heard, US car companies are selling lots of cars.

Hey Skipper said...

Yet another reason unions are so wonderful.

erp said...

Skipper again, the unions made it virtually impossible to fire workers, so they had no reason to maintain good work habits. You may know that there are members of unions in jail for major crimes still getting their salaries and/or pensions and the teachers' unions are so notorious, there are actually buildings full of teachers whose behavior didn't allow them to be in charge of children who show up, put in their time doing nothing, but are still on the payroll and get the automatic raises, etc. and when they "retire," get their full benefits. Since other teachers had to be hired and paid to teach those classes, it's pretty expensive. Even the New Yorker thought to comment on it.

... and let us not forget the railroads essentially destroyed by the unions. We know a couple RR execs who would become apoplectic on the subject.

Bret said...

erp,

Good point on the linkage between the unions preventing terminating really bad employees and the poor quality of workmanship,

Hey Skipper said...

erp, the Longshoremen's union also wreaked havoc.

Unmentioned so far: thoroughgoing union corruption. I'm sure Harry will explain to us how that is management's fault, too.

erp said...

Absolutely. Running a list of all the corrupt unions (sorry for being redundant) would take up all the GG's bandwidth.

erp said...

Our hard earned money working hard to destroy us.

erp said...

Another example of how unions are being used by one-worlders to destroy us.

Hey Skipper said...

One-worlders are beside the point. Unions are strangling municipalities across the land.

erp said...

Yes, but the unions are merely one of the weapons they are using. Another is the "refugees." Everything is politicized and orchestrated to destroy western civilization.