Adaptability needs to be the rediscovered strength of market economies | Hacker News Reader

Adaptability needs to be the rediscovered strength of market economies

wsj.com

18 pointsprostoalex11 comments

I have occasionally thought about so-called "economic uncertainty" over the last couple of years. When I was in undergrad a long time ago, I had a course that touched on cultural differences. One of the claims was that a significant difference between, for example, American culture and several Asian cultures was that Americans tended to be okay with high uncertainty, while Asians preferred low uncertainty. (Let me say for the record that I have no idea if this is true or not; just something I came across in university.)

While the thesis was that this difference held true across many aspects of life, one possible implication was that Americans tended to be more innovative and risk-taking, while Asians tended to be more risk-averse (and conservative in approach) and less likely to fail when finally making an attempt. Maybe this was like "easier to ask forgiveness than permission" versus "look before you leap" mentalities.

Then suddenly in the past 5 or 10 years, I have heard and read so many American business leaders and pundits whining and warning about uncertainty in the business climate. Taxes, regulations, supply chains, demand risks, or whatever else, I don't even know. I mean, I understand that uncertainty is a massive risk for entrenched incumbents and stodgey old behemoths, but I have occasionally wondered where the spirit of innovation, risk-taking, and, as TFA discusses, adaptability has gone. (It's all gone to start-ups, of course; maybe?)

I believe you're on to something here. I also heard that research and small startups in the US (and west in general) tend to take on more risk for potentially higher rewards.

But companies for years have outsourced everything from production to research to product development. And those contract developers both are culturally risk-averse and they also have strong financial incentives to take on only the minimum of risk necessary to get paid for their research contract.

And that's why the innovation speed of large US companies is limited by risk-reduction in Asia.

You can turn most high-uncertainty situations into low-uncertainty situations via simple mechanisms like insurance.

But, some people don't like that, they feel that admitting their successes, and others failures, were partly just random chance, takes away from their feeling of control over their lives and so strongly need to believe they succeeded due to their own efforts (which in their mind helps to guarantee their future luck/success).

So the argument was probably really about how much you should remove the uncertainty post-facto, and highly reward the winners and punish the losers, and the high-uncertainty angle was likely pushed by people who had already got lucky, and/or people who thought they would and so wouldn't suffer the consequences.

The next generation has to run that experiment again, and learn the lesson anew.

  > while Asians tended to be more risk-averse

that teacher should visit china someday; people aren't afraid to take risks when it comes to entrepreneurship... and japan in the bubble days was quite wild with all kinds of risk taking as well...

It is forbidden to build new oil refineries and pipelines. Banks will not provide loans, insurance companies will refuse to insure it, govs will not issue permits and so on. Oil is obsolete industry with limited supply, and it makes sense price increases like with housing.

If you do not like it, buy a Tesla or donkey, it is market economy!

That's because everyone of those entity's also absorb the down stream costs so when they need to pay the full cost for "cheap" oil it ain't worth it

Electric cars are coming. The power dynamics in the oil and energy world is changing..

Maybe adaptability needs to mean also a contracting economy? Who said overall profits in a world with more reliable components and less waste, is overall larger? (Say after the electrification transition is mostly said and done)

Anyway, economy as it is structured now cant handle automation, slowing / declining population, more responsible usage of natural resources etc..

Or otherwise how can it rely on keeping borrowing from the future and leveraging future gains, as the economy is structured right now?

We cant have market economics anymore. We transfered tasks of the state (provide social security|pensions) to large private entitys. Making them by virtue of job fiscal conservative and oligopoly entrenched. Meaning, the state has no interest to disturb there rule over whole sectors of industry. These are basically comand economics in disguise and they will adapt to new things only if they replace there milking cows and they have to buy them.

Turns out you can infect the free market with the state, by overreaching and kill it.

Is there really such things as a free market?

I always found it annoying that people are afraid to as much as fart if it might harm the economy.

The main advantage of free(ish) market economy is that it has ability to adapt to changing conditions.

The main superpower of companies is that they can die and their people and assets can be used by other better adapted companies.

  > I always found it annoying that people are afraid to as much as fart if it might harm the economy.

its because its inherently political: if things go bad, regardless if its "the biz cycle" or rampant speculation and bubbles, the president (and/or political party) usually gets blamed for it... also most peoples retirements are tied up in the private markets now, so there is immense pressure to keep the returns flowing

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