Imperial Russia 1801-1917: too slow to reform

     Michael Karpovich. Imperial Russia 1801-1917 (1932) A college text, designed for beginners. It’s bland, uses a lot of impersonal language, and avoids details such as statistics. It assumes the student has a historical atlas handy. I suppose including portraits and maps would have upped the cost.
     I learned a few things about the reforms enacted during the time period, and got some hints as to why they failed, and why they didn’t proceed more rapidly. Aside from the economic and technical obstacles to more rapid reform, the main reason was the Tsars’ inability or unwillingness to push the reforms through. Even autocrats have limited powers; they depend on public opinion and the support of the nobility.
     The author clearly sympathises with pre-Communist Russia, and softpedals the awful conditions of serfdom, or the nastiness of corruption authorised by legal entitlements. The landowning nobility paid no taxes, for example. No modern state can survive that kind of thing.
     The reformers began as little more than debating societies. Later, more widespread education and the establishment of local councils designed to administer some local matters brought more lower class people into the Reform movements. These newcomers were more interested in practical politics, and the more extreme ones advocated overthrow of the existing autocratic order. They got their wish in 1917. But autocracy didn’t die, it simply put on new clothes.
     I have two takeaways: a) autocracy is difficult to change because the privileges are too great for the autocrat and his supporters to give up easily; and b) Russians like autocrats.
     An interesting read, it filled a few gaps in my knowledge. **½

Freight Cars of the 40s and 50s

     Jeff Wilson. Freight Cars of the 40s and 50s (2015) Kalmbach has a long history of publishing railway history and reference books. This is the latest iteration of its histories of North American freight cars. It doesn’t pretend to be complete, but it is comprehensive. It deals with freight car technology, then with the different types. The illustrations are all high quality. Wilson has compiled statistics by type and year, a useful guide for the modeller/operator who wants a representative collection on his layout. An good read for anyone interested in railways or technology generally, as well as modellers. ***

Econ 101: Cost, price, and value

We often use the terms cost, price, and value interchangeably. Economists try to differentiate them. The comments below are a distillation and summary of other people’s ideas as I have come to understand them. I want to give them a precise content. I believe that most of us have very poor notions of these concepts, and these poor notions are a major factor in creating the economic messes that we suffer from. We base our choices on our ideas. Ideas have consequences.

Framework: “The economy” consists of the systems we use to provide ourselves with the goods and services we need and desire. One can define the concept so that it applies to all animals, in the sense that the effort expended by the individual or the group or the hive must yield sufficient food to enable successful reproduction.

Observation: All human economies are trading systems. Regardless of how they are organised in detail, they all feature rules for exchanging goods and labour. All cultures strive for fair distribution of what we need and want. “Fair” varies somewhat between cultures, but all on the one hand promote fair exchange, and on the other hand punish cheating. All strive for equitable distribution of goods, and what inequality exists is justified by appeals to ideas about worth and social roles. Too much inequality creates social stresses that sooner or later cause political strife. In all cultures, economic and political power are intertwined.

Cost: The quantity of resources needed to make something or to provide some service. At the level of the economy, that is of trade, “cost” is some combination of energy (including human labour) and materials. Cost includes waste disposal, which ranges from waste as a new resource (eg, compost for gardening), to a variable fraction of the input cost, to waste as the largest component of cost (eg, nuclear power plants). Technology affects cost, because technological improvement is driven by a desire to reduce costs.

Price: The measure of cost. In a monetised economy it is stated in a currency, such as dollars. Through most of human history, economies were not monetised, trading was done without the convenience of pricing goods and services. Non-monetised pricing survived for a long time. When I was a boy, the cost of travel was measured in time, even when it was paid-for transport.

Archaeological evidence suggests that currency began as a system of IOUs sometime around 4,000 BCE. Clay seals were used to identify goods owed in an incomplete transaction, and clay tags were used to record taxes owing. It’s easy to speculate that the next step was for such seals to become objects of trade themselves. The final step would be inventing some abstract measure of price, such a gold. But the early history of money is not well understood.

Value: The measure of the buyer’s need or desire. In a monetised economy, value, like price, is stated in a currency. If a buyer assesses a price as equal to or less than the value, there will be an incentive to buy. The “law of supply and demand” is about value, not cost.

Trade is asymmetrical. For the seller the goods have a lower value than for the buyer. Needs and desires are mediated and modified by cultural variables such as social obligations and status. Cost is also a factor; the desire to reduce the work of making something for oneself will raise the value of ready-made goods.

Implications

Measurement of Costs: Ultimately, since the production of raw materials requires energy, all cost reduces to energy. This observation implies that cost reduces to physics. In principle, it would be possible to state the cost entirely in terms of energy. “Carbon footprint”, usually stated as tonnes of CO2, is an attempt to state cost in fundamental terms. Since some quantity of CO2 represents a fixed quantity of energy, it’s a proxy for energy. It’s a complicated calculation, and inevitably incomplete and more or less uncertain. But it has the virtue of getting us thinking about cost in material terms.

The Role of Government, among many others, is to price externalities. There are three methods of doing this: regulate the storage and disposal of waste; collect fees for raw materials; and vary taxes on goods. Both producers and consumers resist these methods, but without them goods will be underpriced, which will distort the market.

Prices, Markets, Profits, and Sustainability: In an ideal market, price would be an accurate representation of cost. In practice, that doesn’t happen. The main reason is the cost of externalities, which are defined as unpriced costs. Hence the producer does not pay them, and they are not included in the price of the product. Another reason is the misconception about the role of profit. When inputs are priced, the seller must sell at a higher price than he paid. The difference, raw profit, pays for his input, often termed “added value”. Profit pays for the continued operation of the business, that is, his and his employees’ livelihoods, operation and maintenance of the plant, research and development, and future capital costs. In a share-holder owned company, profit also pays the shareholders a return on their investment.

The Temptation is to demand a greater profit than is needed to pay for continued operation of the business or a reasonable interest to the share holders. So on the one hand, omitting the cost of externalities underprices some goods, which leads to choices that distort the consumer market. On the other hand, excess profit overprices some goods and so sequesters capital, which distorts the capital market. Either way, the economy as a whole fails to operate correctly, and in the long run it will fail to provide a sustainable basis for human life.

2016-03-12

Improbable Research (link)

    The Ig-Nobel prizes are awarded by the Improbable Research people, whose web presence is here. If you like the truth that is stranger than fiction, that's a great place to visit.

HO Railroad That Grows

     Linn Westcott. HO Railroad That Grows (2nd ed, 1972) First published as a series of articles in Model Trains, the book is a nostalgia trip. The hobby has changed enormously since then, but the spectacular technical changes are I think less important than the changes in philosophy. Beginners now learn that they should define their interests, and then consider how a given layout design may meet them. Are they model builders? Train watchers? Operators? Do they want prototypical accuracy, or an invented world? What are their craft skills? And so on. They also have many more resources in local clubs or groups of modellers who welcome newbies and help them avoid mistakes.
      The book leads the reader from an oval (carefully constructed so that future changes entail the least possible effort) to a complicated spaghetti-bowl of a layout on which two trains can be operated through a town, a tunnel, over several bridges, and around two reversing loops so that a train can go round and round clockwise, and then counter clockwise, and then clockwise again. A couple of industrial sidings offer switching, but there’s no discussion of how to operate train.
      Westcott’s strength is his  conversational step-by-step instruction. He  explains why some things are done with the future in mind. He warns about possible glitches, and suggests alternatives. He covers every aspect of layout building. Builders were invited to submit photos of their versions The book includes three of them, sadly not of high enough quality to allow study of the owners’ interpretations of Westcott’s advice.
      This book was a game changer, I think. It made the building of a layout less daunting: at every step,  it would look finished. It inculcated the sense that a layout could be rebuilt any time in any way you liked. More recent books about Model Railroader’s project layouts include a chapter on operations. That’s the only lack here. Even if one will never build this particular layout, the book is worth reading. It’s short, clear, and could well inspire one to start. Out of print, but used copies may be found here and there. **½

Ig Nobel Prizes

     Marc Abrahams. The Ig Nobel Prizes 2 (2005) Another find at the PYS. Abrahams founded the Ig Nobel Prizes with the help of small group of like-minded people, all apparently connected to the Annals of Improbable Research, which you can find at here.
     The ceremony takes place at Harvard. Many of the awards are for real research, some of it done as a hobby, some of it done merely because it could be done, some done for reasons that remain obscure. The Ig Nobel Committee has also given Igs to groups that claim improbable results, such as the CEOs of several tobacco companies, who testified to Congress that nicotine was not addictive. The ceremony includes the making and launching of paper airplanes by the audience, and their return by the people on the stage. There is usually an entertainment, often an opera written to celebrate one of the Igs.
     Most recipients are happy to come and receive their prizes, and most participate in Ig Nobel tours in various parts of the world. The list of prizes records the unquenchable spirit of inquiry, for the most part, and the willingness to obfuscate and mislead for the rest. Abrahams displays a dry wit, but is scrupulously fair in narrating who did and who did not attend, and why (if known). It’s noteworthy that every If Nobel ceremony so far has enjoyed the assistance of Nobel Laureates.
     There’s Canadian Content: Troy Hurtubise of North Bay, Ontario, worked on a bear-proof suit, taking it up to the Mark VII model. He is the only Ig Nobel winner of two Igs.
     An excellent and entertaining reference book. Recommended. ***

Herman, shlemiel extraordinaire

     Jim Unger. The Second Herman Treasury (1980) Herman is shlemiel, a sad sack, the target of fate’s indignities, with enough sly wit to triumph over the occasional assault on his comfort. Like Gary Larson, Unger takes everyday situations a logical step or two beyond common sense to an absurdly real place.
     Eg, two hikers laden with huge backpack: “We forgot the food” says one. Diner to waiter, holding a lobster meal: “Take that back to the cook. It’s already eaten half the french fries.” Wife to husband sitting at table, his head charred and smoking: “The recipe says a pinch of spice. I thought it said pound”.  Man to wife: “I just bought this pack of batteries, and it says Batteries not included.” Teller to would-be bank robber: “Read it yourself. Its says, Dozen eggs, bread, milk, chocolate chip cookies.”
     Found it at the Permanent Yard Sale (PYS), paid a loonie, worth much more. ***