Posts Tagged ‘assume a can opener’

Why Not Give Them Spoons?

Economics is a topic that seems particularly susceptible to ideologically-driven emotions overtaking reason.

With that in mind, the Assume a Can Opener category is supplemented with illustrations of seemingly logical propositions which, upon further examination, fall short. They demonstrate the need for critical thinking, and highlight those who count it among their achievements.

This one gives opportunity to recognize Milton Friedman, a great mind in 20th century political/economic thought.

[O]ne is reminded of an incident in an Asian country where Milton Friedman upon arrival to a public works program finds that workers are using only shovels and not any earth-moving equipment. Upon questioning about this lack of use of heavy equipment, Friedman is told that this was a public works program and the aim is to employ as many workers as possible. Friedman then quips, “why not give them spoons to dig?”

Source: World Bank

[ The story has been recounted in somewhat different variations, but with the same punch line, in a wide range of publications, from the WSJ to the Huffington Post. PBS Nightly Business Report described it as possibly apocryphal. I looked for an authoritative source but was unable to find it, so chose a version to my liking. No matter the origins, it is insightful. ]

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Green Pipe Dreams I

An article yesterday morning in Mercury News’ tells the story of a “rough patch” that “high-flying Solyndra” has hit. The company manufactures solar panels. Despite $1 billion venture capital funding and a $535 million loan guarantee from DOE, the company is struggling and analysts don’t see a way forward.

President Obama held the firm up as a “green” poster child during a visit less than a year ago.

Jumping to conclusions from one anecdotal data point, in one article, does not generally indicate reasoned understanding. Nonetheless, Mercury News is no right wing puppet and the story includes some damning facts.

The article also raises the obligatory China card (who can compete with their labor costs?), but contains its own refutation of that scaremongering.

Solyndra’s manufacturing costs are $3/watt, but the distractingly vague “many low-cost Chinese manufacturers” have costs in the $1.10-$1.20/watt range. There, that’s it. Those damn Chinese and their “massive government support.” Except Solyndra has received similar support (what is $535 million, if not massive?). Still more relevant is that another competitor, First Solar of Tempe, AZ, has manufacturing costs of $.75/watt, expected to be at $.53 by 2014.

Even if Solyndra could compete with the Chinese, they’d be beat by a company right here in the good ol’ US of A. So why raise China? Maybe to fill the story without having to ask the question: What in God’s green earth makes people believe the gubbermint can pick winners and losers?

I’m not even asking whether government should make such choices (the consequences of which — abuse of power for personal gain — should give liberals the heebie-jeebies, rather than the orgasms it seems to do).  No, the objection is to whether they can make such choices effectively. Government “investment” (a misnomer if there ever was one) will inevitably lead to misallocation of limited resources, making us all worse off.

Before I get the obligatory “ok government hater, don’t call 911 the next time you have an emergency” straw man objections, I’m not advocating no government, but a properly limited one. $535 million (even if “only” loan guarantees) to a company with a possibly fundamentally flawed business model, no matter how great a product, is $535 million down the toilet. It is unavailable (whether privately or publicly, capital is fungible and this capital is gone) for investment  in a viable enterprise that might create 1000 jobs rather than scuttle such plans as Solyndra has done.

A company spokeswoman is quoted, “The company didn’t tell its story as well as it should have.” That sounds like some politicians, who can’t admit their schemes don’t work and aren’t wanted by the citizens. They delude themselves into believing they simply failed to effectively sell them to the ignorant masses.

If those in public positions want to be hedge fund managers, or venture capitalists, then they should choose that route. Decisions like this, and mountains more just like them, prove why they don’t. They couldn’t succeed. But as a politician, or bureaucrat, they’re able to play assume a can opener all day long, with other people’s hard-earned money and without personal accountability. Don’t talk to me about the accountability of the ballot box. There are enough voters with short memories that we’re still electing politicians based on the same failed promises of the last 40 years. (Probably longer, but that’s all I remember.)

Stop already with “green jobs of the future” promoted by those who don’t even know the past. Enough with government “investment.” With apologies to the many teachers who don’t deserve it, consider this epigram: Those who can, do. Those who can’t, teach. Without apology I add the corollary: Those who can’t teach become politicians and bureaucrats.

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Assume a Can Opener

An architect, an engineer, and an economist are trapped on a deserted island. They have no fresh water or food, but have bountiful supplies of coconut (for milk and fruit) and canned tuna. Unfortunately there is no way to open any of them.

The three men sit down to brainstorm a solution.

After some time the engineer steps forward and describes an idea for a catapult hurling a coconut from a distance at a can of tuna, opening it and splitting the coconut simultaneously. Tracing calculations in the sand regarding trajectory, velocity, and gravity, he explains in detail the physics supporting his plan. The other two are intrigued and the three proceed with the implementation. Upon completion, and having positioned the catapult according to the engineer’s specifications, they launch a coconut at a can of tuna. It is a direct hit, but fails to open either the tuna or the coconut.

They sit down again to brainstorm.

Next, the architect stands up saying he has an idea. Using illustrations sketched in the sand, he describes a structure of coconuts and tuna cans with twin stress points, and a chain reaction that would force open a can of tuna and a coconut at the same time. The three men decide to proceed and build the structure according to the architect’s design. The last piece of the structure is placed at the point calculated to start the chain reaction that should direct the force to the precise locations of the target tuna can and coconut. Nothing happens.

The three men sit down again to brainstorm.

After a short time the economist excitedly proclaims, “I have it!” The other two listen expectantly, only to hear the economist begin, “Assume a can opener …”

Partisans and ideologues frequently make unsupported assertions that make me want to object to the assumption of facts not in evidence. People of any political stripe are capable of such a “handwave,” but liberals do it with particular panache.  They are often so wildly presumptuous and factually challenged, yet conveying strangely unflinching certitude, that I find a kind of respect for the sheer audacity. Although the joke pokes fun specifically at the dismal science, “assume a can opener” often springs to mind as generally representative of the ivory tower and, as such, an apt characterization of the short-circuited “logic” and dearth of facts that are the underpinning of neo-liberalism. That is the reference for the category of that name on

A pdf copy of this article is available here.

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