Analog and the Economy

Stanley Schmidt had another interesting editorial in the November 2008 Analog magazine. he discusses disruptive technologies and ideas that seem to have a life of their own without any rational for their continued existence. Overall, the article was good and thought provoking.

What I found interesting was his assertion that the marketplace sometimes makes bad decisions that are hard to reverse, and uses examples that seem to me to run counter to his point.

First he discusses the replacement of incandescent bulbs with compact fluorescents. Sure, the fluorescents use less electricity, which is a good thing. But they also contain a small amount of mercury, which will become a bad thing when they start ending up in landfills in large numbers.

His second example involves the replacement of some gasoline with ethanol. the main result of this, at least for the short term, is to drive up the cost of food for humans, as agricultural production for human and animal consumption is replaced with production for fuel.

Now, in the first case especially, and also in the second, we see not market forces, but political forces combined with a non-thinking political correctness among the particularly liberal set of our society driving decisions. It is politicians, not marketers, telling people to replace incancesdents with compact fluorescents. It is politicians, with their subsidies to the farm lobby, that are encouraging the use of ethanol, particularly corn, possibly the worst possible source of biofuel, as an energy “solution.” The marketers are taking advantage of the PC thing to do, and supplying the products, but its the politicians this time, not the markets, that are causing the potential problems.

The best solutions come not from government agencies or regulators, or politicians, but from allowing markets to provide people unique solutions to problems, and allowing the free flow of information, even when you disagree, to arrive at positive solutions.

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One Response to Analog and the Economy

  1. netjeff says:

    “… his assertion that the marketplace sometimes makes bad decisions that are hard to reverse, and uses examples that seem to me to run counter to his point.”

    You could also argue that the marketplace *includes* people (politicians, consumers, celebrities, marketers, etc).

    I suppose you could consider some platonic ideal of the marketplace that did not include human beings, or some ideal of people who behaved differently than they actually do. But that’s not the world we live in, nor the marketplace we live with.

    If you include people as part of the market place, then his examples are perfect demonstrations of how the marketplace can make “bad decisions”. In the case of corn-based biofuels in particular, it is the politicians within the marketplace that may be the root of this particular bad decision.

    In the case of compact fluorescents (CF), I’m not aware of any laws/regulations passed by politicians requiring a switch from incandescent, nor of any significant subsidies paid to CF manufacturers, So I disagree with you that this particular trend (for good or ill) comes from politicians. Certainly there may be politicians who use their position of prominence to promote ideas that will be bad in the long run. But there are others with similarly prominent roles who might make that mistake (religious leaders, actors, etc). So unless the politician is making laws or issuing subsidies, it’s not reasonable to single them out.

    In the case of CF switching, I would agree that a big chunk of the U.S. public thinks it’s better, and the CF manufacturing companies are benefiting. But I don’t think politicians are at the root of the public opinion on the merits of CF.