Bottom Up
Sir John Cowperthwaite was financial secretary of Hong Kong from 1961 – 1971.
“His administration did not collect any economic data during his tenure.” Jairaj Devadiga
“if I let them compute theses statistics, they’ll want to use them for planning.”
During Cowperthwaite’s administration, Hong Kong grew “ from being only one fourth as rich as the United Kingdom in 1961, to being 40% richer by 1996′.
What should poor countries do? His advice: “Abolish their office of natural statistics”.
When management is driven by statistics. it leads to what is called. . . Surrogation. Metrics get misinterpreted as goals.
Measurement, contrary to all conventional wisdom, leads to mismanagement.
Case in point: Soviet Russia
“Fifty years ago, 180,000 whales disappeared from the oceans”. Charles Homans.
This was due to Soviet fishing. “In one season alone, from 1950 to 1951, Soviet ships killed nearly 13,000 hump back whales.”
But Russia didn’t need whale fishing product.
“The Soviet whalers . . . were motivated by an obligation to satisfy obscure line items in the five year plans that drove the Soviet economy. In the grand calculus of the country’s planned economy – the dictates of the State Planning Committee of the Council of Ministeries – whaling was considered a satellite of the fishing industry”
Gross fish tonnage was the metric goal. Harvesting whales was the easiest way to tonnage.
“No matter what, the plan must be met.”
It is common to think of society as a unitary whole with unitary motivations, something which requires central control, top-down, to achieve focused goals, driven by the statistics of outcomes. “Mussolini made the trains run on time.”
Thomas Friedman:
“. . .when [one party autocracy] is led by a reasonably enlightened group of people, as china is today, it can also have great advantages. That one party can just impose the politically difficult but critically important policies needed to move a society forward in the 21st century.”
And yet societies in history that have flourished, and have been more adaptive and thus more stable, have been more biologic – bottom-up, ecological networks of distributed motivations, interests, and initiatives, with freedom of action and opportunity to learn from experience.
Margaret Thatcher:
”. . . they are casting their problems on society, and who is society? There is NO SUCH THING as Society. There are individual men and women and there are families and no government can do anything except thru people and people look to themselves first.”
Milton Friedman:
”Voluntary exchange is a way to get cooperation among individuals without coercion. The reliance on voluntary exchange, which means on a free market mechanism, is thus central to the liberal creed.”
”Both sides to an economic transaction can benefit from it, if the transaction is voluntary and informed”.
Matthew Ridley:
“Innovative societies are free societies where people are free to express their wishes, and where creative minds are free to experiment to find ways to supply those requests . . .”
