How to Get Rich (1999) | Hacker News Reader

How to Get Rich (1999)

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118 pointsoldgun50 comments

This article discusses German beer production and Japanese milk production as being less efficient than their equivalent industries in the US as a result of legal and cultural factors (Germans liking local beer, Japanese emphasizing freshness).

It seems to suggest that more efficient industries would be more desirable; but I’d argue that freshness and variety are more important than efficiency in many regards.

(I also say this as someone whose dominant regional milk distributor often distributes milk that’s already sour when opened minutes after purchase a week before the sell-by date, probably because it’s more “efficient” to produce milk a full day’s drive from a factory that’s a full day’s drive from the city; and more “efficient” not to clean their equipment thoroughly. Since few stores here carry any other brands of “normal” milk, I’ve had to start buying a more expensive “organic” brand just to get reliably drinkable milk; but plenty of people can’t afford that.)

I want to point out that the author/speaker points out that efficiency and productivity aren’t the only metrics to consider and in certain scenarios you would want to consider other metrics as well. I personally feel that the examples effect was reduced because the values that led to a loss of productivity in the food processing industry in Japan or the beer making industry in Germany may actually be worth it. But in general they still do illustrate the point he is making about efficiency and productivity arising out of competition.

That being said, the IBM/Microsoft example didn’t really work for me. Because it completely ignores Apple. Apple operates very much like the IBM thst MS vanquished but for the past decade or so it has been crushing Microsoft by any measure of efficiency or productivity. I’d argue that MS still has significantly more innovation than Apple, but is unable to convert that into productivity or efficiency.

And that’s where I think there is a slight hitch in the argument. Competition appears to help with innovation. And innovation often leads to productivity and efficiency. But not always. So if you take the beer example, I would suggest that German beers are likely more innovative than American ones (by which term both the author and I are excluding the fast growing craft beer industry in the US, which is clearly less efficient than the Budweisers the author is discussing) because of the high degree of competition, but in this case, that hasn’t translated into efficiency. I find the author’s claim that this is because of strong localism hard to swallow considering that the effects of competition in other parts of the article are described as strong enough to lead to the demise and conquering of entire continents, but apparently cannot overcome local tastes. Also, the laws argument doesn’t explain why the thousands of breweries within Germany are unable to compete with each other.

It seems to me that in this case American companies are more efficient because they focus on efficiency whereas the German companies prioritize having a distinct taste which disallows productivity gains from mass production and stuff like reducing brewing times by using certain chemicals etc.

Further, the tremendous rise of the American craft beer industry seems to indicate that even Americans, having been exposed to better beers, are valuing less efficient methods of beer production.

So it seems to me the author is making another correlation that does not necessarily stand. Which is a correlation between efficiency and becoming rich.

I think the author describes the conditions under which innovation happens, but incorrectly draws a straight line to efficiency, and continues that line to making money.

> That being said, the IBM/Microsoft example didn’t really work for me. Because it completely ignores Apple. Apple operates very much like the IBM thst MS vanquished but for the past decade or so it has been crushing Microsoft by any measure of efficiency or productivity.

The talk was delivered on June 6, 1999.

Wow. Thanks for pointing that out. The headline was only updated with that information after my comment and I must have missed it on the page.

So it’s a pretty solid talk for 1999 and has several insights which have become mainstream only recently.

TBH the fact that US food production is 3x more efficient does not make me want to eat US produced food... on the contrary.

Bad steel is easy to notice so every industry ends up producing it at the same standards. Bad beer or chicken stuffed full of chemicals... not so much. He should have picked other examples.

It’s fairly easy to distinguish low quality food and the brands or factories that are likely to produce it, if you’re in the habit and educated about it. Many people in the US have very little exposure to higher quality food or alcohol since it’s simply not available from mainstream outlets.

Your statement rings true. It generalizes well.

"It's fairly easy to distinguish low quality news and the brands or companies that are likely to produce it, if you’re in the habit and educated about it. Many people in the US have very little exposure to higher quality news or information since it’s simply not available from mainstream outlets."

It might or might not be easy to distinguish, but that's not the point. The point is that in the original article, the quality differences between US and EU/Japan food explain the "efficiency" difference and ruin the whole argument.

The German beer example is funny and seriously dates the article.

Turns out that "how to get rich" (as opposed to stay rich) in American beer making between 1999 and 2018 was 100% to copy the German model. Regional and microbreweries soared from ~4 bbls ~22 bbls between 2004 and 2017.

And that definitely wasn't the result of "government intervention". It was the result of people realizing they should be able to make and drink good beer without flying to Germany with empty suitcases...

Turns out the Germans are actually looking to revise a 500-year-old law defining beer. You see, the Americans have developed a taste for flavored craft beers, often from these same microbreweries, and exported it worldwide... Meanwhile, in Germany, beer is legally defined as being made solely of barley, hops, water, and yeast. The time-honored German beer industry can't keep up with the shifting tastes.

Labeling it as something other than Beer seems like an easy compromise.

Barley wine, malt liquor, grain champaigne?

Heck -- label it Bier for real beer, and Beer for beer with extra crap.

(Disclaimer: I pretty much dislike all beers I've tried, so I don't have a horse in the race)

My understanding was that Belgium has always been big on a huge variety of non-traditional beer styles; lambic beers, champagne beers, dubbel, tripel, quadrupel, etc. I would think that would be a much closer and longer-term influence than the craft beer movement in the US. I've never been over there but really want visit those two countries specifically for the beer.

One of the things I really like about beer is that its moderate shelf-life means it doesn't transport well. Everyone who goes to Ireland has some sort of variation of, "I don't even like Guinness, but it's amazing and completely different over there." It doesn't help that beers like Newcastle, Becks, and Heineken use clear or green bottles that ruins them more quickly. I've heard anecdotes from Australians who get their hands on American craft brews and were disappointed by off flavors--but later find out it's because it was skunked or stale in transport.

I feel like that moderate shelf life keeps local beers local and makes traveling to new areas interesting.

I don't know if it is like this across the entire US, but at least here in the Pacific Northwest, every small scale brewery seems to offer a choice between an IPA or... another IPA. In this regard, I'd much rather the choice among a Pinkus Alt, a Koeztritzer schwartzbier, or a Bitburger, even if they do outwardly appear outdated following a 500-year old law.

IPAs are definitely a very popular type of beer, but I don't think I've ever seen a brewery that only does IPAs.

In the summer it can be a struggle to find something that's not an IPA or a mass market pilsner around here. My wife hates IPAs and this is a frequent complaint.

I really dislike most all IPAs. I hear the hop craze has been much worse on the west coast. I hate that the choices are often three IPAs or a pilsner--but that seems to be what sells.

I am grateful that places like Stone, known for their IPAs, has a good Stone Smoked Porter...it seems fairly popular, but much less widely distributed. Same with Alaskan Brewing; they have a good Smoked Porter, and it's been around for years, but it's "Limited Edition" and harder to find.

I feel like IPAs have slowly started changing from "punch you in the face with tree sap" to more floral hop varieties, which I like more.

>I hate that the choices are often three IPAs or a pilsner

It often worse than that - three IPAs, a "Pale Ale," a "Golden Ale," a "double IPA," a "Hazy Pale," a "Fresh hop Ale," and another IPA. Then they throw in a hoppy gose just to be edgy.

It's cool, I get it; there are a lot of beer drinkers who like a heavy hop flavor, and they are often passionate and outspoken about their beer. But I about lost it when I went into a place and ordered a schwartzbier that had the flavor profile of an IPA. There is a rich tapestry of beers, for all palates, and I really hope US brewers get back to realizing that.

I think a major factor in the rise of the micro-brew in the US was removal of "government intervention". Brewing your own beer was illegal from Prohibition until Congress and Carter changed the law and 1978. Home brewing was no longer outlawed and now one can legally brew up to 100 gallons of beer a year without paperwork. Much easier to get interested in brewing beer if you can easily do it legally.

In terms of beers I think a lot has changed in the US compared to 1999 when this was written. Craft beers have become big enough business that the established brands cannot ignore them because there is a growing amount of consumers that are choosing quality of efficiency.

Sure, but just like in so many other industries, what the bigger corporations do is buy the largest small brands and then ruin everything about them that made them good.

They also invent pseudo-craft brands that dilute the market and practically mock the entire idea of craft beer by being low quality, mass produced, nationally marketed and corporate backed. It’s noteable how subtly off their packaging and marketing is when they do this. If they understood the product they would have made it in the first place.

The way these companies are not corporate controlled are an integral part of the quality of their product and experience. People passionate and knowledgeable about the product are making decisions at every step, not MBAs. I’d compare it to game studios, or especially music. When a brewery like a Goose Island gets acquired by a major brewer, it’s like they have sold out, similar to when a underground band grows and gets signed by an major label. They lose relevance for true aficionados as the quality predictably decreases along with any feeling of exclusivity.

Meh. I've had great beer from pseudo-craft brands and awful beer from small independent craft breweries. I also haven't seen this effect at all. Have some nice craft breweries been bought out? Yes. But we still have over 80 craft breweries in our metro area alone and we are far from the largest city in the U.S. The options for great beer are endless.

Meh. I've had great beer from pseudo-craft brands and awful beer from small independent craft breweries.

I know for a fact that some independent craft brewers make an IPA, even though the brew master doesn't like them. It's obligatory.

Some of this is on the knowledge and standards of the consumer. My experience with espresso in Tuscany in the 2000's, was that even ordinary corner store espresso there was better than fancy espresso in most places in the US. Why? Simply because the population in Tuscany has higher expectations.

Nowhere did I say that it means we are unable to get a good beer any longer. It ruins that brand, and new, hip brands probably have already sprouted up by then. The one acquired by the large corporation becomes mainstream, and changes to more resemble existing mainstream offerings in every way while appearing to offer the new popular style.

In the UK some years ago as I understand it (while Gordon Brown was chancellor), the tax requirements for alcohol producers were relaxed, so that breweries producing less than a certain amount (measured in litres per year) were subject to lower tax regime. As far as I know, this relates to the entire output of the corporation group, so if a smaller brewery is bought by a larger chain, they would move to the higher taxation group.

In recent years even though I don't drink alcohol myself I have noticed that 'locally produced' beers have become much more prevalent in the supermarkets and I presume that means a lot of small business owners are doing ok at least.

Yes, beer choice has exploded to such an extent in the US that I feel like it is almost out of control.

Yes.

It is desirable to produce _according to specs_ as efficiently as possible.

It isn't desirable to lower specs in order to improve efficiency (for some definition of 'efficiency').

Guns, Germs, and Steel is a really good book. Two hospital MD's independently stopped me at gym to say "that's one of the best books I've ever read." And the department chair where I worked exclaimed similarly.

Another hypothesis I would posit about the evolution of world powers is that WWII Axis members later reached population maximums and declines before Allied powers, and that that somehow shaped their political and situational values to align them together. It's not obvious until you see population graphs of Japan, Italy and other Axis countries are nearly all in population decline unless other unqiue factors like immigration bolster their numbers.

Can't find it back, but I've seen it heavily criticized here on HN for, iirc, sloppy statistics and jumping to conclusions.

EDIT: found it! https://news.ycombinator.com/item?id=17536958#17539380

A lot of those criticisms seem like a not seeing the forest for the trees argument. Yes, not every Spanish mission was successful, but those that lasted are important. Yes, not all diseases come from domestic animals, but those that do can be an important difference with diseases between the natives and colonizers.

Diamond is making some _very_ broad claims to describe the general trend of human history. With a topic so broad there are always going to be exceptions. I'm always disappointed that the criticisms focus on the details exceptions rather than dealing with the broader ideas.

> Diamond is making some _very_ broad claims to describe the general trend of human history.

This is precisely why so many have a problem with it. Diamond waxes on about these grand history ideas and they're not backed by facts. He's generalizing highly complex topics and losing all accuracy in doing so.

Diamond's GG&S effectively minimizes the agency of entire groups of people by providing a false interpretation of history.

> Guns, Germs, and Steel is a really good book.

It really isn't. It's more mass market fiction than anything to sell books and take your money than a serious book on history. Nobody in academia takes it seriously.

> Another hypothesis I would posit about the evolution of world powers is that WWII Axis members later reached population maximums and declines before Allied powers, and that that somehow shaped their political and situational values to align them together.

No. What aligned axis powers together was the existence of dominant empires like the US and Britain. Had nothing to do with population. When most of the world is controlled by the US and Britain and you are a small power wanting to create an empire of your own, it makes sense to join forces against much larger and stronger powers.

> It's not obvious until you see population graphs of Japan, Italy and other Axis countries are nearly all in population decline unless other unqiue factors like immigration bolster their numbers.

The same applies to the US, Britain, China, Soviet Union ( they were ultimately allies ), etc. The only thing keeping the US population growing is immigration and high immigrant birth rates. The native-born US birth rate has been below replacement since the 1970s.

what books you recommed we read in place of the book in question?

It depends heavily on what you're interested in. I'd probably categorize GG&S as general history, so here's an excellent curated list:

https://old.reddit.com/r/AskHistorians/wiki/books/general

I strongly recommend both _How Humans Evolved_ and _Why the West Rules, for Now_.

Never mention that to an anthropologist, they hate that book because it’s largely incorrect.

I've read the book and every criticism of it that I came across, much of it here on HN. Because I could not care less who is right, I have no emotional beef on either side, I'm just a mildly interested bystander (nothing in my life is affected by any of it).

However, every criticism I read felt... thin. It felt like many reddit comment replies - you post something that you happen to actually know a lot about, but any human communication requires the other side to work with you. Human information exchange is not like computer data exchange, not even close. Lots of ambiguity, lots and lots of unmentioned context, lots of other stuff I could not even name. Those reddit replies I mentioned, it's things like - always hard to come up with a concrete example - I think I'll just point to Dilbert:

- http://dilbert.com/strip/2018-07-08 (quite a bit of the criticism was like that, I could not match them to the book that I had read at all)

- http://dilbert.com/strip/2015-06-07

Also, as another commenter pointed out, the criticism focuses on the tree and misses the forest. I have yet to see something that lets me conclude anything even close to your statement.

Also, many - MANY - or, actually, all models are wrong. That's not just some stupid meme. Every single model is "wrong". When you go through learning chemistry, for example, at every new step you learn "oh and by the way what we taught you two years ago is completely wrong". Question is, is it useful? What is the alternative believe that you work with if that book was never written? Note the target audience - just like a Ph.D. chemist will find the models learned in high school useless so will actual anthropologists probably find a book targeted at the masses useless. The question is, what ideas in the heads of the people did the book replace, and what is the alternative? If it's so easy, someone just write a better book and we'll gladly read it and forget about Guns, Germs and Steel.

I have and ever had any doubts that it's all a lot more complicated and different than described in one popular book. It's the same everywhere: the closer you look, the more insane the theories of/for those who don't look closely seem to be.

I literally have no idea what the point of this comment was. It's too rambling to actually come up with a coherent response to.

He's asking for you (or someone) to say how the book is wrong, in a way that deals with the substance of the claims of the book, rather than just with a few specifics.

That's exactly how I feel about all the "criticisms" about the book including your very silly and extremely short and substance-free one.

I don't think I've ever seen so many words say absolutely nothing.

to add to it, and i can't remeber now, first 50 pages he expressed lots of opinion that has no factual basis or he does not support it with evidence.

How to piss off an academic 101.

On what basis do they dislike the book?

I believe most of the criticism stems from the fairly eurocentric/whitewashed view of history portrayed by the book.

(note: I have not read the book myself, but I've heard the criticism from a number of professors that had)

Oh actually, it's giving me an idea. Someone should try to setup two teams, each supposed to develop the same software on its own. The two teams can speak to each other, they can see the other team code, but they can't merge into one team. I bet the resulting software (the best of the two software) could be significantly better than with one team. (at some point one the team could be instructed to copy the other team's software and work from there for another competition cycle)

Isn't that kinda what happens with many open source projects :) ?

- Libre/Open Office

- Pentadactyl/Vimperator

- Nextcloud/Owncloud

I was actually thinking about it as a methodology. Twice the cost, but I bet the gain could be big.

This occurred with the JWARS strategic simulation software, with 3 teams in 3 languages. The result of that, was that the dynamic language team (Smalltalk) soundly trashed the C++ and the other project.

On a tangent, the Mixed Mental Arts podcast episode with Diamond is _very_ entertaining.

They also interviewed Peter Turchin, who proposes an alternative vision to why certain nations succeed, namely multi-level selection (aka group selection) which I find just as interesting. Diamond seems pretty controversial among anthropologists, likewise multilevel selection is topic of debate among evolutionists. I don’t know enough myself to make an informed judgement in these matters.

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