Anthony Bourdain on Kitchen Hierarchy

Anthony Bourdain on Kitchen Hierarchy

06/08/2018Peter G. Klein

Before Kitchen Confidential made him a celebrity, Anthony Bourdain was a real chef, working upscale New York kitchens at places like the Supper Club and Sullivan’s. Bourdain’s style is not to everyone’s taste, but he knows how to manage a restaurant crew. A chef, after all, is not primarily an artist, but a manager, facing the same set of organizational challenges — delegation, incentives, monitoring — as any administrator.

I mention this because I recently stumbled upon an interview with Bourdain in the July 2002 Harvard Business Review. Despite several attempts by interviewer Gardiner Morse to get Bourdain to endorse creativity, spontaneity, and empowerment in the kitchen, Bourdain remains an unreconstructed devotee of Escoffier’s “brigade system,” a sort of culinary Taylorism in which each member of the cooking staff has a fixed place in the production chain, a very narrow job description, and an obligation to obey his chef de partie (section leader) and the head chef without question.

Q: There’s been a trend in business to move away from hierarchies and empower workers, but you’ve embraced a very rigid staff structure and an old style of management with great success. Why do you think it works?

A: You’re defined by the job you do, not by whatever . . . predilections you have. . . . And to have any delusions that you’re better than anyone else, however true that might be as far as your technical skills are concerned, is not allowed. Your commitment is to the team effort. Everyone lives and dies by the same rules.

You have a tremendous amount of personal freedom in the kitchen. But there’s a trade-off. You give up other freedoms when you go into a kitchen because you’re becoming part of a very old, rigid, traditional society — it’s a secret society, a cult of pain. Absolute rules govern some aspects of your working life: obedience, focus, the way you maintain your work area, the pecking order, the consistency of the end product, arrival time.

This is a case where the advantages of hierarchy — the need for fast, coordinated decision-making, the ability to internalize externalities, the possession of “decisive knowledge” by the top decision-makers, and the like — appear to outweigh the high-powered incentives and Hayekian knowledge benefits of decentralization. Look for a future Foss-Klein paper (with Nils Stieglitz) discussing this tradeoff more systematically.

Originally published January 18th, 2008 on Organization and Markets
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The Purge Is Growing: More Anti-Establishment Web Sites Purged from Social Media

10/12/2018Ryan McMaken

ZeroHedge reports:

Just in time for midterms, Facebook has removed 559 pages and 251 accounts they claim have been spreading misinformation and spam. Several of the pages however - some with millions of followers, were pro-Trump conservatives who had spent years cultivating their followings.

Caitlin Johnstone explains a bit more:

Facebook has purged more dissident political media pages today, this time under the pretense of protecting its users from “inauthentic activity”. In a statement co-authored by Facebook Head of Cybersecurity Nathaniel Gleicher (who also happens to be the former White House National Security Council Director of Cybersecurity Policy), the massive social media platform explained that it has removed “559 Pages and 251 accounts that have consistently broken our rules against spam and coordinated inauthentic behavior.”

This “inauthentic behavior”, according to Facebook, consists of using “sensational political content — regardless of its political slant — to build an audience and drive traffic to their websites,” which is the same as saying they write about controversial things, and posting those political articles “in dozens of Facebook Groups, often hundreds of times in a short period, to drum up traffic for their websites.”

In other words, the pages were removed for publishing controversial political content and trying to get people to read it. Not for writing “fake news”, but for doing what they could to get legitimate indie media news stories viewed by people who might want to view it. The practice of sharing your material around in Facebook groups is common practice for most independent media content creators; I did it myself a lot in late 2016 and early 2017, and pretty much all my indie media peers at the time did too.

Among the sites banned are government accountability sites, as explained by Radley Balko:

As part of its purge, Facebook has removed the pages of several police accountability/watchdog/critic groups, including Cop Block, the Free Thought Project, and Police the Police. They've also apparently severely restricted activity for the Photography Is Not a Crime page.

The purge has clearly been coordinated between both Facebook and Twitter, which have banned many of the same sites at the same time.

Notable this time, however, many of the sites being banned are left-wing sites devoted to anti-war causes, or in calling the government out on abuses of power. In this purge and in previous purges, however, many of the banned sites, whether right or left have one thing in common: they are anti-establishment.

So, media outlets that call for the mass murder or Yemenis or Syrians or Iranians, or which look the other way as domestic agencies violate the civil rights of Americans, will be perfectly find. But if you draw attention to these abuses of power? Then, it's "propaganda" and must be banned. 

It's impossible to predict who the next purge will target, but now is a good time to remind everyone that the best way to ensure you receive mises.org's content every day is to sign up for our daily email. Simply click on the "subscribe" button on the main page.

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Using this Inflation Measure, Wage Growth Isn't Keeping Up with Inflation

10/11/2018Ryan McMaken

As we've noted here in the past, the Federal reserve in recent months has begun publishing its " Underlying Inflation Gauge " which takes into account a broader measure of inflation than the more-often used CPI measure.

When we say "inflation" in this context, of course, we mean price inflation, and not money-supply inflation. And it may prove to be a useful measure when comparing if we wish to compare price-inflation growth to wage or income growth.

After all, if incomes and wages aren't keeping up with price growth, then it may be that the cost of living is outpacing incomes — and thus real incomes are going down.

One simple way of looking at this is simply to compare growth rates in price-inflation measures against average hourly earnings.

Using the BLS's measure of " Average Hourly Earnings of Production and Nonsupervisory Employees " we can compare the year-over-year growth in earnings to the year-over-year growth in the CPI and the UIG:

uig_earnings.JPG
 

In this case, we see that earnings in recent months have tended to outpace the CPI, but have not outpaced the UIG measure.

In fact, in the last 24 months, the CPI has outpaced earnings growth in only 5 months out of the 24. Thus, by t his measure, at least, it looks like real wages are growing.

However, if we compare earnings growth to the UIG measure, we find that price inflation as measured by the UIG has outpaced earnings growth in 16 out of the last 24 months.

Indeed, since 2011, the UIG has either been equal to or higher than earnings growth nearly half the time (in 42 out of 89 months).

In this graph, any time the green line is below zero, that's a month in which UIG price inflation was higher than earnings growth:

earnings_growth.JPG
 

Using this measure, we could conclude that earnings aren't keeping up with price inflation a significant share of the time. Naturally, if wages aren't keeping up with inflation, this would point to declining real wages.

Most of the time, however, we adjust income and wage data to the CPI only — and in that case, incomes tends to grow faster than price inflation more often.

In the last two years, we've finally begun to see income and wage growth climb above the old 2007-2008 peak levels. But that's using CPI numbers. Wage growth may not stack up nearly as well if other, broader measures of price inflation are used.

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Fed: "Underlying Inflation" Climbs to 13-Year High

10/11/2018Ryan McMaken

According to the Federal Reserve's Underlying Inflation Gauge, the 12-month inflation growth in June (the most recent month reported) was at 3.33 percent. That's the highest rate recorded in 158 months, or more than 13 years. The last time the UIG measure was as high was in April 2005, when it was at 3.36 percent. 

The Fed began publicly reporting on new measure in December of last year, and takes into account a broader measure of inflation than the more-often used CPI measure.

uig.JPG

Not shockingly, the UIG has shown a higher rate of inflation than the CPI, most of the time in recent years, although this gap has narrowed in recent months.

For both CPI and UIG, the general trend has been upward since 2014. The UIG, however, stands out because it shows a sizable amount of price inflation compared to the recent past. the CPI growth rate, for example, remains below where it was in 2011, while we must go all the way back to 2004 to find a UIG growth rate comparable to what we're seeing now.

Moreover, the UIG holds promise as a better indicator of an approaching recession. For example, we know that the economy was already softening in 2006 and into 2007 before the last financial crisis. And yet the CPI shows continued and sizable growth right up until late 2008 even though the Great Recession had started in late 2007 — at least according to the NBER. The UIG, however, shows weakening prices before both of the two most recent recessions.

The most recent UIG data, however, is fairly old — being June data — so it remains to be seen if there is any sign, by this measure, of a weakening economy in late 2018.

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Tom Woods on Reason TV: The Making of an Anti-War Libertarian

Tom Woods joined Matt Welch of Reason TV for a wide ranging interview with topics including his transformation from a pro-war Republican to a passionately anti-war libertarian, the impact of Ron Paul on the liberty movement, and politics in the age of Donald Trump. 

Tom Woods: The Making of an Anti-War Libertarian

 

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Trump's Corny New Farm Bailout May Ruin Your Car

10/09/2018Tho Bishop

This week the Trump administration announced it will giving a major gift to American corn farmers by expanding the sale of ethanol in the US.

As Eric Wolff of Politico reports:

Trump, a vocal supporter of corn ethanol, will order EPA to allow year-round sales of gasoline with 15 percent ethanol content, an increase over the 10 percent blends that are sold at most gas stations around the nation. The sale of the blends, known as "E15," is currently prohibited during the summer months in several states because of Clean Air Act restrictions, and corn growers have long sought to expand sales of the higher concentrations.

"This is a big deal," said Jeff Navin, a Democratic former aide to ex-Senate Majority Leader Tom Daschle of South Dakota and former chief of staff in the Obama administration's Energy Department. "It's not something that makes a front page of East and West Coast newspapers, but it's something that farmers watch closely. I’m sure the political team and elected officials in Iowa told [Trump] he has to do something to staunch bleeding."

The “bleeding” in this case is the hit the farm industry has taken as a result of Trump’s trade policies. While last week’s agreements with Mexico and Canada offered Trump “winning” headlines, the changes to NAFTA will do little to offset the hit farmers have taken as a result of the administration's antagonistic approach to China and other foreign markets. The timing, a month away from mid-terms, is likely not a coincidence as Trump seeks to bolster his standing with one of his key bases of support in 2016.

Though the legality of the EPA’s waiver is likely to be challenged by Big Oil, this move is a major victory for ethanol special interest groups. As Emily Skor, the CEO of a prominent ethanol trade association, boasted after the announcement:

We’re very excited to hear the president’s upcoming announcement. He knows farmers are hurting and they want action on E15 in time for the next summer driving season. Year-round sales of E15 nationwide could deliver demand for two billion bushels of American corn and help restore growth in rural communities.

Unfortunately this win for farmers is another example of how the public are the ones that inevitably pay the cost for Trump’s trade battles.

First of all, ethanol never made much sense as a form of fuel. It’s “success” was a direct result of political subsidies – in no small part aided by Iowa’s coveted position as the first presidential contest every four years. For years the industry was reliant upon tax credits that made the price of ethanol profitable. Even though those tax credits were finally allowed to expire in 2012, ethanol has continued to be propped up due to the EPA’s Renewable Fuel Standards. As the name suggests, the Bush-era policy is a mandate that fuel sold in the United States much contain a certain percentage of “renewable fuel.” In the words of Aaron Smith of AEI, “Removing the tax credit but keeping the RFS is like scraping a little frosting from the ethanol-boondoggle cake.”

The result has been government-driven demand for corn-based ethanol. The consequences of this policy include rising food prices, as it not only directly drives up the price of corn but also incentivizes farmers to grow corn at the expense of other crops.

As Randy Holcombe tried to calculate the costs for tax payers in a 2015 Mises Wire article:

The U.S. Department of Agriculture says in 2011 the total value of the corn crop was $63.9 billion, and that there were 400,000 corn farms in the United States. Because the price of corn has doubled due to the mandate, half of that revenue, or $31.95 billion, is a transfer from consumers to corn farmers in the form of higher prices.

Dividing that $31.95 billion cost among 319 million Americans, the cost to each American from the ethanol mandate is just about $100 a year. That includes not only the price of ethanol, but the higher price of corn in all its other uses.

That $31.95 billion is shared among the 400,000 corn farmers, so the average benefit to each farmer is $79,875.

Of course, there is another downside to government ethanol mandates – it’s not particularly good for automobiles.

As Eric Peters noted earlier this year:

The reason the ethanol content of mainstream “gas” has so far been limited to 10 percent is because higher ethanol content will damage engines (and fuel storage/delivery systems) not specifically designed to handle it. The stuff accelerates rusting of gas tanks and fuel lines and can damage rubber seals and gaskets not designed to withstand it – the latter potentially leading to fuel leaks and fires....

Very few cars of any vintage – including most new/recent-model cars – are designed to handle “gas” that is more than 10 percent ethanol. Owners of these vehicles are specifically warned not to use “gas” with more than 10 percent ethanol unless specifically told it’s okay. Advised that using more than E10 if not specifically okay’d will void the warranty and leave them holding the bag for any damage done to the engine and related components, such as the fuel tank, fuel pump and fuel lines.

So here we have a great illustration of the heavy hand of government at work:

  • Government hurts farmers by increasing the cost of doing business overseas.
  • Government creates a new government policy to help farmers.
  • Costs of the policy are passed on to consumers, with the added collateral damage of hurting our cars.

“I’m from the government and I’m here to help.”

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NAFTA 2.0: Free Trade or Central Planning?

10/09/2018Ron Paul


Last week the United States, Mexico, and Canada agreed to replace the North American Free Trade Agreement (NAFTA) with a new United States-Mexico-Canada Agreement (USMCA). Sadly, instead of replacing NAFTA’s managed trade with true free trade, the new USMCA expands government’s control over trade.

For example, under the USMCA’s “rules of origin,” at least 75 percent of a car’s parts must be from the US, Canada, or Mexico in order to avoid tariffs. This is protectionism designed to raise prices of cars using materials from outside North America.

The USMCA also requires that 40 to 45 percent of an automobile’s content be made by workers earning at least 16 dollars per hour. Like all government-set wages, this requirement will increase prices and decrease employment.

The USMCA also requires Mexico to pass legislation recognizing the “right of collective bargaining.” In other words, this so-called free trade agreement forces Mexico to import US-style compulsory unionism. If the Mexican legislature does not comply, the US and Canada will impose tariffs on Mexican goods.

The USMCA also requires the three countries to abide by the International Labour Organization (ILO) standards for worker rights. So, if, for example, the bureaucrats at the ILO declared that Right to Work laws violate “international labor standards”’ because they weaken collective bargaining and give Right to Work states an unfair advantage over compulsory unionism states and countries, the federal government may have to nullify all state Right to Work laws.

The USMCA also obligates the three countries to work together to improve air quality. This sounds harmless but could be used as a backdoor way to impose costly new regulations and taxes, such as a cap-and-trade scheme, on America.

This agreement also forbids the use of currency devaluation as a means of attempting to gain a competitive advantage in international trade. Enforcement of this provision will be difficult if not impossible, as no central bank will ever admit it is devaluing currency to obtain a competitive advantage in international trade. Of course, given that the very act of creating money lowers its value, the only way to stop central banks from devaluing currency is to put them out of business. Sadly, I don’t think the drafters of the USMCA seek to restore free-market money.

The currency provision will likely be used to justify coordination of monetary policy between the Federal Reserve and the Mexican and Canadian central banks. This will lead to region-wide inflation and a global currency war as the US pressures Mexico and Canada to help the Fed counter other countries’ alleged currency manipulation and challenges to the dollar’s reserve currency status.

A true free trade deal would simply reduce or eliminate tariffs and other trade barriers. It would not dictate wages and labor standards, or require inter-governmental cooperation on environmental standards and monetary policy. A true free trade deal also would not, as the USMCA does, list acceptable names for types of cheeses.

Those of us who support real free trade must not let supporters of the USMCA get away with claiming the USMCA has anything to do with free trade. We must also fight the forces of protectionism that are threatening to start a destructive trade war. Also, we must work to stop the government from trying to control our economic activities through regulations, taxes, and (most importantly) control of the currency through central banking and legal tender laws.

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The Trickery Behind Keynes's Flippant Remark about the "Long Run"

10/08/2018Jim Cox

“In the long run we are all dead.”

This famous retort of the most influential economist of the twentieth century, John Maynard Keynes, was meant as a rebuttal to the views of the classical or free market economists. The entire quote reads:

But the long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again. [A Tract on Monetary Reform, p. 80]

Unfortunately, most rejoinders to this quote from Keynes have focused on the value of long-term thinking in economic analysis, when in fact; the issue is just as surely the nature of the analogy itself. And since most casual readers of Keynes’s quote will be taken with the clever and telling point regarding the thought of economists, it has persuasive power.

But if we are to stop would-be Keynesian propagandists from scoring points with the phrase we must reveal the sleight of hand concealed therein. The nature of this sleight of hand is to take an event occurring in nature, a storm, and treating a depression as if it, too, were an equally and randomly occurring event of nature.

So, while a storm may be a natural occurrence, this is not the case with an economic depression. A depression is caused by intervention into the economy in the form of monetary expansion — hence the boom preceding the bust. With this kept closely in mind we can rephrase Keynes’ quote using an act of human shortsightedness that will render Keynes’ cleverness the thinking of fools:

Economists set themselves too easy, too useless a task if in the case of an extensive drinking binge they can only tell us that once the alcohol’s effect is long past the drinker will feel better again.

It becomes very evident why Keynes chose his particular example for ridiculing long-run thinking economists. By rendering the depression as analogous to a storm at sea, Keynes has taken all focus off the act — artificially increasing the money supply and thus lowering interest rates so that malinvestments accumulate — leading up to the consequences of that act, and thus is relieved of any analysis of the activity which would result in an economic depression.

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The anti-Trump Nobel Prize in Economics

10/08/2018Mark Thornton

The Royal Academy made a clear political statement with this year's Nobel Prize in economics. Coming a day after the United Nations panel on climate change issued its dire warning on climate change, this award attempts to emphasize the long term impact of climate change on the economy and economic growth. In Mr. Nordhaus case, he emphasizes how climate change has a significant economic cost. In Mr. Romer's case, he emphasizes how government-stimulated research and technology can be used to address issues such as climate change while enhancing economic growth. They both believe government policy is the key.

The problem here is what we know and what we do not know. What we know is that the climate has always been changing billions of years before humans ever showed up. We know that the climate is changing and that it will continue to change. What we don't know much about is what causes the various changes, what the direction of change is, and whether that change will be good or bad for humans and the economy. We certainly do not know how to control the climate and some our futile efforts, such as electric cars and carbon taxes, have little conceivable impact on climate change and are costly. With President Trump relaxing environmental regulations and pulling out of the Paris Accord on Climate Change, this year's award should be viewed as anti-Trump statement by the Academy.   

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What Hayek Said about the "Nobel Prize" in Economics

10/08/2018Jeff Deist

The Nobel Prize in Economic Sciences is a dubious thing at best.

First, it's not a "real" Nobel Prize in the sense the Nobel Foundation neither chooses nor pays the recipient(s). Technically, it's the "Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel." The award itself is of checkered provenance, created by Swedish central bankers hoping to bolster the scientific image of economics. It's chosen by committee members who purposely apply the same principles used to determine winners in medicine, physics, and chemistry, thereby hoping the public won't much notice its lack of connection to the late Alfred Nobel (or his surviving family, one of whom blasted the prize as a PR effort designed to improve the bad reputation of economists). 

More importantly, though, the "Nobel Prize confers on an individual an authority which in economics no man ought to possess," as none other than Friedrich Hayek exclaimed in his own remarkable acceptance speech upon receiving the award in 1974. 

In Hayek's view, the Prize threatened to create an aura of hard science certainty around the decidedly social science of economics. This veneer, he worried, would influence both government officials and the public to view economic theory more like laws of physics or properties of molecules. 

This was dangerous, in the view of a man who had seen Europe and Russia collapse under "scientific" socialism and written extensively about political economy in The Road to Serfdom and The Constitution of Liberty. He understood the deadly combination of hubris and certainty, and hoped to impress upon the audience that economics remained a discipline that studied humans, with all their irrationalities and frailties. In this sense he demonstrated the degree of respect he still had for the praxeological foundation of his then recently-departed old mentor Ludwig von Mises.

Murray Rothbard, writing in Human Events, had fulsome praise for Hayek as the surprise winner who eschewed the mathematical orientation of previous recipients:

The Nobel award comes as a surprise on two counts. Not only because all the previous Nobel Prizes in economics have gone to left-liberals and opponents of the free market, but also because they have gone uniformly to economists who have transformed the discipline into a supposed "science" filled with mathematical jargon and unrealistic "models" which are then used to criticize the free-enterprise system and to attempt to plan the economy by the central government.

F.A. Hayek is not only the leading free-market economist; he has also led the way in attacking the mathematical models and the planning pretensions of the would-be "scientists," and in integrating economics into a wider libertarian social philosophy. Both concepts have so far been anathema to the Nobel establishment.

Rothbard saw Hayek's achievement not only as a refutation of the Keynesian orthodoxy regarding stumulative monetary policy, but also as a demolition of the whole socialist political program flowing from Keynes's followers:

The political prescription that flows from the Hayekian theory is, of course, the diametric opposite of the Keynesian: stop the artificial inflationary boom, and allow the recession to proceed as fast as possible with its work of readjustment. Postponement and government attempts to stop or interfere with the recession process will only drag out and intensify the agony and lead to our current and probably future turmoil of inflation combined with lengthy recession and depression. The Mises-Hayek analysis is not only the only cogent theory of the business cycle; it is the only comprehensive free-market answer to the Keynesian morass of government planning and "fine tuning" that we are suffering from today.

But F.A. Hayek did not stop with this monumental contribution to economics. In the 1940s he widened his approach to the entire area of political economy. In his best-selling Road to Serfdom (1944) he challenged the prosocialist and pro-Communist intellectual climate of the day, showing how socialist planning must inevitably lead to totalitarianism, and demonstrating examples in the way in which the socialistic Weimar Republic paved the way for Hitler. He also showed how the "worst always get to the top" in a statist society.

So today let us celebrate Friedrich Hayek, the reluctant  and worthy Nobel winner—rather than an economist who once wrote this, in a textbook no less:

The Soviet economy is proof that, contrary to what many skeptics had earlier believed, a socialist command economy can function and even thrive.

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The Kavanaugh Circus is the Result of the Politicization of the Supreme Court

Why is this nomination the subject of such rancor?

I have argued countless times that the federal government has grossly exceeded the limitations the Constitution imposes on it. Wherever you are as you read these words, look around you and try to find something in your line of sight that is not regulated by the federal government. It will be nearly impossible. Today the feds regulate not only our personal private behavior but also the states that created the federal government. More than half of each state’s budgetary expenditures are mandated by the feds.

And passing final judgment on all this — ratifying the Wilsonian view of the federal government (the feds may do whatever there is a political will to do, except that which the Constitution expressly prohibits) and eschewing the Madisonian view (the feds may do only what the Constitution expressly authorizes) — is the Supreme Court.

As the reach of federal power has expanded, the power of the Supreme Court to restrain or unleash that reach has expanded. Add to this the life tenure of Supreme Court justices and the mania for re-election of members of Congress and you can recognize the slow transfer of governmental power from the elected branches to the unelected one.

Should the right to life and the extent of the imperial presidency and whether the government is obligated to provide health care be decided by elected representatives or by the Supreme Court? From those who expect the high court to decide these issues — a court now evenly split, 4 to 4, along ideological lines — is it any wonder the Kavanaugh nomination is worth a bitter battle?

The Supreme Court should not be political. It is the anti-democratic branch of government. Its constitutional obligation is not to do the people’s will but to preserve personal liberty from the tyranny of the majority.

Excerpted from Treating the Court as a Political Branch
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