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Longreads + Open Thread

Private Government, Cheating, Entropy, Science, Stretch Wrap, Trains

Byrne Hobart

Jun 4

Longreads

ChinaTalk has a nice interview on a city in China that's run by a corporation. Some parts of China's system are monolithic, but one of the country's strengths over the past few decades has been a willingness to experiment. So there are at least a few cases where the economy there supports more diverse models than it does in non-communist countries.
Professor Matt Crump on teaching a class where the majority of students joined a group chat devoted to cheating. One surprise in this is how systematic the cheating was: students were organized, helpful, and prompt, but focused on getting grades rather than learning the material. Those traits translate well to actually learning, though. Plenty of disciplines have agency and measurement problems: CEOs also have a tendency to optimize for what they're rewarded for, not what's in the best interest of the company and its stakeholders. Solving that motivation problem is tricky, but it's important: learning to avoid learning but still get good grades is worse than useless.
Zack Kanter at Stedi has excerpts from a thoughtful annual letter. The core is a meditation on the concept of entropy as it applies to businesses. A company can create entropy by either offering a worse product over time or keeping quality constant while raising price—either way, the amount of energy required to get a given amount of order rises.¹ Worthwhile quote to meditate on, from a description of an older software product: "It has so much surface area that it has to dedicate an overwhelming percentage of its resources just to fight decay, leaving little to build new order and structure."
And on the topic of rising entropy, Matt Clancy at What's New Under the Sun provides evidence that it's getting harder to make meaningful scientific discoveries. An especially interesting point: the number of individual topics mentioned in papers is growing slowly, while the number of pairs of topics has continued rising. So an increasing share of research is the combinatorial process of applying techniques A, B, and C to problems X, Y, and Z. It's good to be thorough, but it does mean that the low-hanging fruit is likely to have been picked first.
Anna and Kelly Pendergrast at The Prepared have a good quick piece on stretch wrap, the material that makes containerized shipping possible. It's a good reminder of how much complexity goes into the cheap, reliable shipping we've all come to expect. None of this is trivial.

Books

The Men Who Loved Trains: A history of the US rail industry in the last half of the twentieth century, this is mostly a story about a mismanaged and misregulated business facing technological headwinds. But it's also a good story about how some industries attract talented executives just because some of us really love impressive machinery, and will tolerate working in an industry with subpar economics if it means working with cool toys. "Return on passion" is a hard variable to calculate. There are some successful executives who seem indifferent to the industry they work in, whether because they're pure finance types or because they're born cost-cutters. Someone who loves an industry will often overinvest in it, and may have trouble making a popular product rather than a perfect one. (This seems to be a problem that restaurants run into—the market thinks it likes authenticity, but has the wrong idea about what's truly authentic.²)

Open Thread

Drop in any links or comments of interest to Diff readers.
I'm interested in other kinds of "economic glue" that play a surprisingly important/ubiquitous role in supplying goods and services, but that don't get much attention. What are other good obscure examples of this?

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1

One partial exception here is that using a new service entails some uncertainty, and requires some training. So a company that raises prices after a year without altering its service might be keeping the ROI constant.

2

One writer who references this fairly often is Michael Crichton, who liked to write hyper-realistic books with a handful of fantastical assumptions, and who often gives characters a monologue or two about how the real world is in some ways a disappointment compared to the fantasy. This shows up in books about dinosaurs, time travel, and robbing a train—clearly a sore point. I can only assume that the origin of these riffs was a conversation with his editors in which they suggested that he remove some evocative and well-researched detail because it made the story lame.