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Comment by lend000 | Hacker News Reader

Diseconomies of scale is a very real phenomenon, and it makes a pressing argument for decentralizing by giving power back to the states. Was that a foreseen side effect the founders wanted to avoid with the 10th amendment? Probably not, but freedom is inherently a decentralized proposition, and tends to be more efficient in many cases as a result.

https://en.wikipedia.org/wiki/Diseconomies_of_scale

> Cowen assumes his readers already understand that cost disease exists. I don’t know if this is true.

Unfortunately, "cost disease" has become politicized, so just like some won't accept global warming, others deny basic realities about economics.

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> "cost disease" has become politicized

Citation needed. Where is this term common and where is it broadly discussed?

It's not; I've never heard of the term before the article. I'm referring to the phenomenon itself. For example, Elizabeth Warren was recently quoted as measuring success in dollars spent: http://reason.com/blog/2017/01/19/on-entitlements-elizabeth-...

"Entitlement programs" is politicized as a term, certainly. "Cost disease", though... possibly in search for a new keyword?

> I'm referring to the phenomenon itself.

From your example, Elizabeth Warren and Tom Price are looking at the same appearances (phenomena) and deriving different "noumena".

Lots of downvotes here – any explanation? The GP uses the phrase "the phenomenon itself" referring to the Kantian term "Ding an sich", which (as applied to phenomena) is just a logical error...

I have nothing against being the guy who spends time pointing out small, or even irrelevant errors, but there is no error to correct. I think this is just a misinterpretation on your part, either stemming from not reading the article to understand what the author described as 'cost disease,' or perhaps you did not understand my use of quotation marks around cost disease in my original post.

I don't understand the hate for "entitlement programs"; it's a precise, common, useful category with no better suggestion offered.

citation: https://web.archive.org/web/20110724151936/http://publishing...

it's been a heavily discussed subject amongst economists. it has not fully passed into mainstream conversation. I'm not an economist but I first encountered the term about 10 years ago while reading economists.

But is it really diseconomy of scale and not just increases in profits? While the difference is fuzzy, they are not really the same thing.

I would say most large companies have economies of scale that make them so much more efficient that they can have (a little bit of) diseconomy of scale and yet rake in enormous profits.

At the end, though, I think people (like doctors mentioned in the article) are unhappy because they don't want to be just cogs in a very efficient machine, despite this being a libertarians' dream.

> But is it really diseconomy of scale and not just increases in profits? While the difference is fuzzy, they are not really the same thing.

The concept of diseconomies of scale applies just as much to government bureaucracies as it does to private for-profit organizations. We see public education costs have skyrocketed for no return on investment; did they make profit? Well, perhaps, there are more uselessly employed school administrators and other bureaucrats "profiting." So yes, it is indeed diseconomies of scale at work.

It seems to me then your definition of "diseconomy" is pretty arbitrary - I mean, do you include private profits of the owners? Presumably not.. but why not? What's the difference between renter raking in profit, between CEO having bonuses and golden parachutes, and between a bureaucrat creating useless work for himself? Aren't all these diseconomies? And if you accept that, then eventually whole human existence becomes one big "diseconomy"..

To me, "diseconomy of scale" is a weird concept, and I think it's because it actually has to be normative. This is unlike "economy of scale", which is well-grounded; if I want to make one car, it's not efficient to build a production line first, but for million cars, it can be. So when something is subject to "economy of scale", it is because there are more possible economic solutions; however, I fail to see how something could be (in the physical, and non-normative, sense) subject to "diseconomy of scale" - surely you could in that case just duplicate the original small-scale process as needed (in other words, why would the corresponding "reduction of possible solutions" happen?).

I think you should read the Wikipedia article I linked. Simply put, diseconomies of scale refers to inefficiencies that occur in large organizations.

I actually did, but I don't think it disagrees with what I am saying - that it is a normative concept. In other words, some other form of human organization doesn't have to suffer from the same problems.

Let me put it yet differently. If you fail to utilize economies of scale, nobody will profit. However, if "diseconomies of scale" do exist, then it's because someone profits from these. From the perspective of that person, it's not "diseconomy". I mean, you cannot use the Pareto-efficiency to say that everybody would be better off without "diseconomy", and so it cannot be a positivistic claim.

And a little aside - public organizations are often inefficient because there are private companies profiting from them.

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