Wednesday, May 18, 2011

Quotes of the day: Tim Harford on innovation and complex systems

You cannot understand why the U.S. military was able to execute this extraordinary operation deep in the heart of Pakistan without first understanding the failures of Iran in 1980.--Andrew Exum

... the message ... isn’t really “practice makes perfect,” or even “learn from your mistakes,” at least not as a straightforward self-help cliché. It’s about building systems – whether markets, businesses, governments or armies – that solve complex problems. And it turns out that complex problem-solving usually means experimenting, quickly discovering what works and what doesn’t, and somehow letting what’s working replace what isn’t.--Tim Harford

What was the return on Henry Cave-Browne-Cave's investment of 10,000 pounds [in developing the Spitfire]? Four hundred and thirty thousand people saved from the gas chambers, and denying Adolf Hitler the atomic bomb. The most calculating economist would hesitate to put a price on that.--Tim Harford

Never in the field of human conflict has so much been owed by so many to so few.--Winston Churchill, speaking about Spitfire and Hurricane fighter pilots

My blood boiled in indignation, for I know that every true Briton would rather sell his last shirt than admit that England could not afford to defend herself against all-comers.--Dame Fanny Houston, who covered the entire development costs of the Spitfire's predecessor, the S6

After Deng Xiaoping took power in the late 1970s, local experiments were tolerated, and if they worked, they were allowed to spread. The “household responsibility system”, which gave rural farmers the right to profit if they were able to generate extra crops, was used in 1 per cent of collectives in 1979 and was almost universal by 1983, largely as a result of benign neglect from Beijing. Nor did Deng’s industrial reforms demolish the planned economy. If corporate managers could produce more than the central plan required, and if they could find a market for the surplus, they were allowed to do so. The brilliance of this idea was that it provided all the traditional free-market incentives for efficient producers to grow and find new markets – and yet the parallel market did not undermine the central plan. This itself was “frozen” in 1985, and slowly became irrelevant as the economy around it grew. Another experiment was the establishment of special economic zones. These areas were designed to encourage foreign investment and industrial development, without requiring the entire economy to be thrown open to market forces. The contrast with China’s earlier Maoist system could scarcely be greater.--Tim Harford
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