Browsing Tag: Communism

    What If There Were No Prices? The Railroad Thought Experiment
    Articles, Blog

    What If There Were No Prices? The Railroad Thought Experiment

    August 11, 2019


    To appreciate why market prices are essential to human well-being, consider what a fix we
    would be in without them. Suppose you were the commissar of
    railroads in the old Soviet Union. Markets and prices have been banished. You and your comrades. Passionate communists all. Now, directly plan how to
    use available resources. You want a railroad from city A to city B,
    but between the cities is a mountain range. Suppose somehow you know that
    the railroad once built. Will serve the nation equally well. Whether it goes through the mountains or
    around. If you build through the mountains,
    you’ll use much less steel for the tracks. Because that route is shorter. But you’ll use a great deal of
    engineering to design the trestles and tunnels needed to cross the rough terrain. That matters because engineering is also
    needed to design irrigation systems, mines, harbor installations and
    other structures. And you don’t want to tie up
    engineering on your railroad if it would be more valuable designing
    those other structures instead. You can save engineering for
    other projects. If you build around
    the mountains on level ground. But that way you’ll use much more steel
    rail to go the longer distance and steel is also needed for other purposes. For vehicles, girders, ships, pots and
    pans and thousands of other things. Which route should you choose for
    the good of the nation? To answer, you would need to
    determine which bundle of resources is less urgently needed for
    other purposes. The large amount of engineering and
    small amount of steel for the route through the mountains,
    where the small amount of engineering and large amount of steel for
    the roundabout route. But how could you find out the urgency
    of need for engineering and steel in other uses? Just one way engineering is used
    is to build irrigation systems. To assess the importance of a particular
    irrigation system, you would need to know what the farmers know about how irrigation
    would increase the yield of their fields. And to know the value of that increased
    yield, you’d need to know what grocers know about their customers eagerness for
    that produce. That in turn depends on what customers
    know about the better meals they could fix with that produce. How would you find all this out? Just one way to use steel
    is to build new trucks. To assess the importance of a particular
    new truck, you would need to know what the trucker knows about the capacity
    of his current truck, and how much more quickly he could make the deliveries his
    customers want with a new bigger truck. To know the importance of those
    deliveries, you would need to know what his customers know about the value
    of getting goods delivered. That in turn depends on what still others
    know about the uses of those goods at their destinations. To reason about where
    to route the railroad, you need this kind of information for all
    possible uses of engineering and steel. That’s a massive amount of knowledge, held
    by millions of people throughout society. How might you get it? You might try surveys, but think how
    many people you would need to survey. All those who prepare meals with produce,
    and all those who take delivery by truck for
    starters. The numbers would be staggering. And often people don’t even know what they
    prefer until they face an actual choice. So they might not be able to answer
    survey questions accurately. Even if they could,
    by the time the surveys were returned and processed, much of the information
    would be out of date. And even if you could get complete and
    timely information about what everyone knows, that’s relevant
    to every use of steel in engineering, you would still need to deduce from
    it where to build the railroad. How would you begin to make
    sense of that mountain of data? In the words of Ludwig von Mises,
    you would be groping in the dark. You would face what is known as
    the knowledge problem of central planning. The reason why comprehensive
    socialism inevitably fails. Central planners cannot get the knowledge
    they need in order to plan effectively. You, commissar, simply cannot know on what
    projects scarce resources should be used for the good of the nation. But now change the thought experiment. Imagine that somewhere in the market
    economy part of the world, you are the chief operating
    officer of a railroad company. You work not for the good of the nation,
    but to generate profits for your firm. You want to run a railroad
    line from city C to city D. Again, there’s a mountain
    range between them. Now, how do you decide on the route? You choose what’s cheapest. You would calculate the total
    cost of each route for each one, multiplying the amount of engineering
    required by the price of engineering, and adding that to the amount of steel
    required times the price of steel. Then, you would choose whichever
    cost your company less. You might give no thought at all to the
    good of the nation or society as a whole. But, and here’s the marvel,
    by choosing the route that is cheapest for your company you would thereby choose
    the route that’s best for society. You would use the bundle of resources
    that’s least urgently needed for other purposes. Why? Because those market prices you calculate
    with reflects the urgency of need for engineering and
    steel in all their alternative uses. For example, suppose customers wanting
    to taste your meals, would buy better, more expensive produce, if it were
    on the shelf of their local grocery. In effect,
    they’re offering grocers more for produce. So the grocers will offer farmers more for
    produce. So the farmers who feels would be
    sufficiently improved by irrigation will offer more for irrigation systems. And those who build irrigation systems
    will offer engineers more to design them. Now that designing irrigation
    systems pays engineers better, people who want to hire engineers for
    other projects, such as railroads, will have to offer them at least as
    much to make it worth their while. The higher price tells everyone who
    uses engineering that it’s become, for some reason, more valuable so
    maybe they should use less. In this way, the market prices of
    resources represent the particular knowledge and preferences of
    millions of people who directly or indirectly use those resources. And the prices communicate
    that knowledge and those preferences to everyone interested. Only with market prices to communicate
    this vast amount of human knowledge to us. Can we calculate the least costly
    ways of producing the things we want, coordinator activities with the activities
    of others, use resources where society values the most, and thereby satisfy
    as many human wants as possible?

    North Korean Labor Camps – VICE NEWS – Part 1 of 7
    Articles, Blog

    North Korean Labor Camps – VICE NEWS – Part 1 of 7

    August 10, 2019


    [MODEM NOISE] [CEREMONIAL MUSIC] SHANE SMITH: I’ve
    been to the most fucked up place on Earth– twice. The Hermit Kingdom
    of North Korea. (WHISPERING) It’s
    totally insane. The thing is, when you
    go to North Korea, you’re not a tourist. You’re on a
    government-sanctioned tour. And you can’t go anywhere
    outside your hotel without your guide, your translator,
    and your secret police. You’re also not allowed
    cellphones, radios, or computers of any kind, and are
    taken on a tightly scheduled, highly orchestrated tour– only of the sites and
    monuments that they want you to see. So you end up travelling for
    hours and hours on empty roads only to see the Palace of the
    People, or the Library of the People, or the Soccer
    Team of the People. The only thing you never get to
    actually meet is the people of the people. In fact, you’re not allowed to
    talk to anyone unless they’re officially sanctioned
    as part of the tour. [VOCAL MUSIC] So when I heard that North Korea
    was actually exporting its own people as a way to
    generate much-needed hard currency, I wanted to go and see
    if I could actually talk to them and maybe find out what
    it’s actually like to live inside the Hermit
    Kingdom. We found out from one of our
    correspondents in Russia that there were actually secret
    North Korean labor camps hidden in the depths
    of Siberia. So we flew to the far eastern
    region of Russia and hopped on the Trans-Siberian railway,
    which is essentially the only lifeline for Siberia and
    the Far East region. Her bum was hanging
    out of her shorts. We’re here in Khabarovsk in
    Siberia, we’re about to get on this train for about
    28 hours to go to the middle of nowhere. And we’re going to go check out
    the secret North Korean labor camps in Siberia. It’s hot as shit. [MUSIC PLAYING] SHANE SMITH: Simon, hi. SIMON OSTROVSKY: Hi. SHANE SMITH: My name is Shane. I’m from America. We’re here with our
    friend Simon. We’ve been on the train
    for a long time. We’re going a bit goofy. Where are we going? SIMON OSTROVSKY: We’re going to
    Tynda, in the Amur region of Russia, in the Far East to
    look for the North Koreans. SHANE SMITH: The thing about
    this is, it’s mind boggling that North Korea, the most
    hermetic state in the world, the Hermit Kingdom it’s
    actually called, is outsourcing its labor. But they outsource their labor
    into miniature North Korean villages so that you don’t ever
    lose the North Korean experience. So it’s like North Korean-type
    buildings, North Korean propaganda, North Korean
    pictures, North Korean songs. They wake up and sing the
    North Korean anthem. SIMON OSTROVSKY: They bring
    North Koreans in for three-year contracts. After they’re done working here,
    they get sent back to North Korea. They spend a month in a
    reintegration camp to get all of the propaganda that
    they’ve missed. Most of the workers are over 40
    years old, so they all have families back home. So they know that if they try to
    run away, then their family back home gets in trouble. SHANE SMITH: The North Koreans
    are making money to support the regime. And these poor dudes are out
    there in the middle of nowhere singing “God save Kim Jong-Il”
    and working in near-slave conditions. SIMON OSTROVSKY: This is kind
    of the only place where you can actually have an entre into
    how they actually live day-to-day. SHANE SMITH: Question– are we going to get assassinated
    for going to talk to the North Koreans? SIMON OSTROVSKY:
    Quite possibly. People aren’t going to
    be happy to see us. That’s for sure. SHANE SMITH: Why is it that the
    best stories always take so long to get to? SIMON OSTROVSKY: Because all
    of the easy-to-get-to ones have been done by programs
    better than yours. SHANE SMITH: [LAUGH] He’s a prickly pear, this guy. He’s a prickly pear. You should be British because
    you’re a cunt. [LAUGH] Now, you have to remember that
    everything in Siberia, almost without exception, is very,
    very fucking far away from everything else. And even though it was the
    height of summer and 100 degrees outside, because it’s
    Russia, the heat gauge on the train had been turned on full
    and then broken off– probably circa 1971. So the experience is essentially
    like being trapped on a boiling-hot, reeking,
    drunken sauna 24 hours a day. Oh shit, hello. Now we’ve got crazy dude here. MALE SPEAKER: [SPEAKING RUSSIAN] [LAUGHS] SHANE SMITH: It’s a very good
    thing I’ve taken a Xanax. [MUSIC PLAYING]