Thursday, September 27, 2012

From Hayek a Warning about the Walmart CEO

At the Clinton Global Initiative's annual meeting on Sunday, President Clinton asked Walmart CEO, Mike Duke, a question: "If the new president of Libya asked you to open a store in Tripoli, would you consider it?"

Duke responded at HuffPo to Clinton with a lot of politically correct BS, instead of simply stating, "We put up Walmart stores wherever we think they will be profitable, we don't wait for governments to call us. It has nothing to do with governments, outside of the fact that a lot of times they get in our way."

But what really struck me about Duke's response was this point:
The CGI theme this year was "Designing for Impact." I'm an engineer by training, and I loved this approach. I really believe that, in order to lead, we have to be intentional about design on the front end so that we get better outcomes on the back end. That's true whether you're creating a new product or driving change on big issues.
Yikes. Clearly Duke doesn't understand the nature of free markets and how many things arose without intentional design, including money and language. Those some might argue are a couple of biggies that no one designed. Indeed, the world is so complex that in the areas of society and economics, it is foolhardy to think intentional design should even be attempted.

Here's Nobel laureate Friedrich Hayek, in The Road to Serfdom, on the thinking of scientists and engineers:
The way in which, in the end, with few exceptions, her [Germany's] scholars and scientists put themselves readily at the service of the new rulers is one of the most depressing and shameful spectacles in the whole history of the rise of National Socialism. It is well known that particularly the scientists and engineers, who had so loudly claimed to be leaders on the march to a new better world, submitted more readily than almost any other class to the new tyranny.
At another point in the book, he writes:
The habits of thought of the natural scientists and engineers...tended to discredit results of past study of society which did not conform to their prejudices and to impose ideals of organization on a sphere to which they are inappropriate. 
Bottom line: The methodology of the physical sciences is not appropriate for the science of human action. Most natural scientists and engineers don't get this, only Austrian economists seem to understand the differences. Hayek wrote a very important book about it, The Counter-Revolution of Science. What's most scary though is that because these scientists and engineers miss the differences, they are generally, as Hayek points out, among the first to buy into central planning schemes.

Thus, it should come as no surprise that Duke, the engineer, cheers on Clinton's conference advancing central planning.

We would do well by paying heed to Hayek's warning about these types.


  1. We should never forget that Herbert Hoover was an engineer who boasted of his "progressive" views.

  2. Wenzel!

    You need to get out more. Engineers, in general, understand how things tend to evolve naturally. They also would tend to laugh at the concept of central planning. Creative people are generally free spirited and open minded. I see nothing wrong with what the ceo said. You don't think things should be thought through before you start them? Yea, I get he is at a central planners ball and he said you should think before you drive change on big issues. I am sure if you take in context you can come up with some nefarious thinking behind it. But taking what he said at face value it sounds like common sense to me.

    It certainly doesn't call for an attack on engineers. Engineers think in a very logical way. You will get many of them to understand austrian economics. In fact, I know I have heard a talk @ by a former engineer.

    Just for fun read up on genetic programing. Its about how engineers simulate design evolution in a computer to find the optimum design. Its very much a trial and error approach. Bottom line there are very solid physics behind most of engineering, but we work with imperfect materials who's behavior is inconsistent. That's why we over design machines by at least a factor of 2, if not 4.

    1. "Its very much a trial and error approach. Bottom line there are very solid physics behind most of engineering, but we work with imperfect materials who's behavior is inconsistent. That's why we over design machines by at least a factor of 2, if not 4."

      I think this proves Wenzel's point i.e. engineers think by trial and error or by over-designing they 'can design' society or they can central plan to within some margin of error.

    2. I don't think Wenzel or yourself actually know what the hell you are talking about on this. You are hunting for something that doesn't exist. Are there people out there that used to be engineers and have claimed they can plan the dickens out of society? Sure, but far more economists own that label than anyone. Its pretty disgusting to say "Most natural scientists and engineers don't get this, only Austrian economists seem to understand the differences."

      You would be very hard pressed to prove that about an entire group of educated folks. I think most scientists can see the difference. The ones that did not were quants that helped blow up walls street. But we are talking a handful again not 51% of a profession.

      Whats the the difference anyway? Does Wenzel suddenly not believe in the division of labor? Why does every scientist need to understand Austrian economics? Most of them remain scientists or engineers and very few get into positions where they influence policy in any way. Most of them are just trying to make a buck doing something they are good at so they can feed their families and have a roof over their head. Most of them just don't concern themselves with applying anything they know to human action because they aren't political scientists or social scientists. And for good reason...They see the damn difference!

  3. Wenzel, I'm the guy who recently sent you my facebook debate with FDR's long lost cousin) I have a mechanical engineering degree. I used to be a neo-con, and never gave a thought to central planning. I was busy working and partying it up on the weekends. I bought a house in 2007. I knew that the market had nosed over a bit, but believed everyone who said it was just a hiccup (including Bernanke.)

    I was given a copy of "Revolution: A Manifesto" as a wedding gift in 2008. I was starting to look into Ron Paul already, but the book sucked me in. My wife and I both got laid off in early 2009. By that time I had been listening to Peter Schiff and sending the audio files of his show around to other guys at work. After the layoff I really got immersed, and figure I'm in about my sophomore year of an autodidactic double major in Austrian Econ and Libertarian Philosophy. A previous co-worker (engineer) is on the same track basically and even hosts a Agorist discussion group. Where I work now, one engineer had read a fair amount of info on before he started here. We became fast friends of course. My manager is a big Ron Paul fan, and while not too well read in this sphere, will agree with me until I get to some of the more anarchist positions. Another guy that quit recently listened to the copy of "Economics is One Lesson" I sent him, but seemed to get into Rand a bit more.
    My point is, there are liklely a LOT of engineers with knowledge of Austrian Econ. Hayek may have a point, but so does the previous poster who points to the fact that engineers have the intelligence ability to follow long strings of logic. We are also trained to find the root cause of a problem, and not get too caught up in the other symptoms.
    Granted all of the guys I'm talking about are product design or manufacturing engineers and not researchers, so we are very close to the customer, and that may make a difference as well.
    I can't remember the source, but read that while scientists and engineers attempt to control materials; city planners, bureaucrats and the like try to control people. Vive la difference