[mywittyname]

MBAs are taught techniques for optimizing for quality and cost. It's not always an either/or decision.

Even when it is an either/or situation, sometimes it's better to build a product that is half the price for a quarter of the lifespan. A buyer who will use a tool for 30 hours doesn't really care if the service life of a tool has been reduced from 1000 hours to 250 if the price is halved.

[ElevenLathe]

I know what you mean, but I think we can say for sure that it's definitely not globally optimal to produce durable goods (of any kind) that are half the cost but a quarter the lifespan. Half price for half utility is fine, but half price for a quarter utility is just pure waste -- even if you don't need the tool for 1000 hours, you can resell it to somebody who will use it for the next 970 hours (or the next 30, after which they sell it again). There are transaction costs here which make it a little more complex, but in a society where this was common, they would be driven down by scale -- more pawn and consignment shops would pop up, culture would teach people how the process works, etc. (By the way, there are also extra transaction costs for the people who need 1000 hours of tool time but have to buy it 30 hours at a time.)

Any system that encourages this behavior (i.e the one we have) is obviously not a winning system.

[hasty_pudding]

> techniques for optimizing for quality and cost

Some of those techniques:

1. hiring each other and bloating bureaucracy in healthcare and education and other industries jacking up prices that werent expensive before

2. come up with ideas like 'shrinkflation' and 'planned obsolescence

3. reducing quality and making products unrepairable so we have massive waste in landfills and things like a giant pacific garbage patch

4. purchasing quality brands , parasiting the brand name, and making the actual product shitty

5. hollowing out every industry in quality and jobs...making private equity monopolies so theres no competition and then hiring more MBAs.

What you call 'optimizing quality and cost' I call 'trying the fuck the consumer to the maximum amount without them noticing'. But, to be fair, those are the same thing.

Just my observations. Capitalism is becoming a zombie and MBAs are the cordyceps.

[lazide]

The issue isn’t MBAs. They are just a symptom.

What the issue is, is that we’re essentially in the third ‘wave’ of US economic change post WW2 manufacturing boom.

Post WW2, the United States was the only manufacturing economy that hadn’t been bombed to smithereens, has not only little to no real debt, but a lot of debtors that would repay them, and had massive amounts of undeveloped land ripe for development, and a major new manufacturing base looking for things to do.

This allowed the US to become the world’s reserve currency (along with gold) in the Bretton Woods agreement in ‘44. That lasted until ‘71.

[https://en.m.wikipedia.org/wiki/Bretton_Woods_system] when the dollar stopped being backed by gold, allowing periods of increased inflation.

At around the same time, the economies of Western Europe and Asia had mostly recovered, and they were starting to catch up on manufacturing to compete with the US.

This led to increasing competitive pressures with US manufacturing, and increasing incentives to go towards Globalization and outsourcing to chase the cheap labor and more willing to compete manufacturers in these locations. Switching the US to a ‘knowledge economy’ was the natural progression.

That easy money is mostly gone now, and the US is also no longer far ahead in many areas on knowledge.

China in particular is starting to come close on almost all metrics. If Europe has a recession, their primary disadvantage (cost) may turn into an advantage.

So then the US is much more on par with everyone else - for the first time in several generations.

And that causes quite a rude awakening economically, as now the US potentially has real and actual competitors it isn’t 5 steps ahead of already.

MBA’ism is because long ago the economy switched from ‘actually leaps and bounds ahead of competitors’ to optimization. As most of the actual structural differences have now equalized, and we’re down to who can make it cheaper/simpler. No one wants a 5 lb drill that costs $100 if they can have a 2lb drill that costs $50 and does the jobs they want well.

[hasty_pudding]

> MBA’ism is because long ago the economy switched from ‘actually leaps and bounds ahead of competitors’ to optimization

False. Many companies make more money now than ever. American GDP and technology is leaps and bounds ahead of other countries as well.

MBA's exist to create shareholder value while fucking the consumer and the laborers as much as possible without getting into trouble.

melanine in baby food, and suicide nets outside of factories, for example, are cost optimization strategies that didnt work out.

I can just picture an MBA running the cost/benefit numbers in an excel spreadsheet comparing treating the workers better versus putting suicide nets outside the windows.

[lazide]

Bwahah.

How easy was it for a normal American to buy a house, get an education, and get health care (in hours of labor) in 1950 vs now?

How about fixing a broken bone? Or getting a basic checkup?

Taiwan makes all the fancy chips.

Apple designs things, but China makes them.

The best cars are generally made in Japan.

The vast majority of daily household items come from China.

Food comes from the US for the most part, and some random heavy manufacturing and other parts.

The US may have the largest GDP, but that is a measure of turnover - and is supported by the Dollar being the reserve currency.

We’ve been inflating it a lot. And we’ll see what happens.

[shiroiuma]

>The best cars are generally made in Japan.

And this isn't even a new thing: it was absolutely true (in fact, more true) way back in the 1980s and 90s, and really started in the mid-to-late 1970s. American cars were utter garbage: poorly engineered, poorly performing, and poorly manufactured, with terrible quality.

So why do people seem to assume that other American-made stuff in that era was so well-made? Sure, there's a few shining examples such as HP test equipment and printers, but the American auto industry was churning out truly bad products, so why isn't it also assumed that other domestic industries were plagued by the same poor standards and management?

[lazide]

It’s all relative. There was competition to compare against, so one can say ‘terrible’ vs ‘good’. Otherwise, it just ‘is’.

Notably, compact transistor radios were quite a marvel - and came out of Japan around that time too. Same with the Walkman, shortly afterwards.

Tools were more commonly American made, and were very heavy - but often durable. German equivalents were notably more expensive but ‘better’. Chinese made tools were originally terrible quality, but by around the early to mid 2000’s that changed.

I forget exactly when, but Mitutoyo (Japanese) started being notably ‘better’ in what - the 90s? Hitachi made power tools are pretty good, but I think that’s been about the last 10 years.

TVs were at first terrible from Asia, then started to get much better. By the 90s, they were pretty much all Asian manufactured no?

[hasty_pudding]

chips, household products....what you're saying is manufacturing has left the US.

fungible shitty unnecessary goods have rock bottom prices. costs of things human beings need to live like education/training, health care, food housing have skyrocketed.

I completely agree with you that getting off the gold standard and letting a leprechaun like Yellen skyrocket inflation to cover for bad political mistakes, is a terrible idea and 1971 is a huge inflection point in United States on numerous economic graphs and indicators, as we've both seen the website.

Keep in mind the late 60s were also when immigration started it's upward trajectory as well with the 1965 immigration act, and now we're letting in the equivalent of an entire new U.S. state every year.

[lazide]

The Bretton woods change was to allow stimulation of the economy - because things at home were losing momentum (relatively speaking) as other countries manufacturing bases and economies recovered from the damage from WW2. It was a way of keeping the US a few steps ahead.

Printing gold backed dollars quickly doesn’t work very well when you can’t increase the rate of mining gold quickly. Non gold backed dollars are a lot easier.

As long as goods and services can be made cheaper every year, it works well since inflation isn’t felt badly - there aren’t any supply restrictions where something is going to get noticeably too expensive.

All the things I talked about though all have that issue - they can’t be made cheaper somewhere else. someone can only build so many houses in LA before there is literally no more room, and someone building a house in Shanghai doesn’t help anyone in SF live closer to work. Building a new college/university in Vietnam isn’t going to help a kid in Oregon get their degree.

We’ve been exporting inflation because it’s worked. But when other countries stop being so much cheaper, or costs of critical things for the population finally exceed affordability, it doesn’t.

Yellen, Powell, and others are just following the rules and mandate they are given.