This appears to be happening in China with electricity quotas. Running AC and machines in empty factories to make quota.

"Local companies and officials are fraudulently boosting electricity consumption and other metrics in order to meet tough new back-to-work targets"

https://asia.nikkei.com/Spotlight/Caixin/Lights-go-on-but-no...

"Video evidence. In #Wenzhou, factory manager told they must consume 3000 kWh electricity by midnight, as the authorities use electricity usage as a criterion of re-open rate. Even this factory has not re-opened for lack of supply and manpower due to #COVID2019, manager had to.."

https://twitter.com/jenniferatntd/status/1233793672497573894

"Argh. A Wenzhou-based factory owner tells how district officials are telling him his closed factory (he has no workers) must turn on the machines and consume electricity or he’ll get “a visit”. Higher ups are watching the electricity numbers."

https://twitter.com/You_Shu_China/status/1233535925185122305

When a metric becomes a target

They used the wrong metric, but an easy one to measure. The right metrics (are the factories producing things correctly? Are those making it to consumers? Are the consumers paying for them?) are too difficult to measure discretely. And so we end up here.

Reminds me of "the 'return 200' health-check endpoint is working; how can the site be down?"

And THIS is why crypto markets are dropping, because China is flooding the network with miners to meet energy quotas

IMO mining costs are dominated by chips, nobody has idle data centers on standby for such an occasion.

You need to look up China mining operations. They pop up “data centers” anywhere there is free or cheap electricity. Sounds like a perfect operation for factories that must use electricity

Just because a cost ain't a large share of the pie doesn't mean it ain't worth shaving anyway.

Aren't all metrics targets?

I think what he is trying to say is that the metrics were meant be a check, a measure of knowing, for whether we are going to meet our vision/target.

Just yesterday, at our dev team at a trading firm, we went through our OKR review for the quarter. The metrics were the target yesterday. It was all about clicking those check boxes and not about delivering the bigger picture.

Goodhart's law: "When a measure becomes a target, it ceases to be a good measure."

https://en.m.wikipedia.org/wiki/Goodhart%27s_law

No, they are supposed to measure progress in one dimension towards a target. They are often misused, but it’s not necessary to conflate the improper use case with the original intent.

I wonder what this will do to the method of estimating Chinas economy via Electricity/Coal usage. What is next on the line that isn't being actively tampered with.

> I wonder what this will do to the method of estimating Chinas economy via Electricity/Coal usage.

I think the causality goes the other way. I think that they are doing this because that is how their economy is measured.

Im pretty sure that before this electricity usage was not the primary measure of productivity. I think the news is that this Is a new "easy" way of attemting to force ramp up

But if you know that people are using this method, so do the party leaders. It would be no surprise they are juicing their metrics.

Same happened on this "New Silk Road" track:

"Empty trains on the modern Silk Road: when Belt and Road interests don’t align"

https://pandapawdragonclaw.blog/2019/08/23/empty-trains-on-t...

Also in US https://www.theverge.com/2012/9/24/3381238/microsoft-power-w...

Not also in the US. They're entirely different situations with entirely different goals by the people doing it.

Microsoft was trying to avoid a penalty for itself, one company.

The businesses in China (not all obviously) are conspiring with the bureaucracy to fake economic activity on a massive scale, to put on a veneer for the outside world. This is about appearances to the world, because China is very scared right now.

I think the thrust of the comment above was that this is not a class of behavior restricted to China or to communist states.

Microsoft was secretly wasting electricity to avoid fines -- gaming an economic system designed to encourage efficiency under bureaucrat-designed rules that make sense within market capitalism, and Chinese companies are secretly wasting electricity to avoid a loss in confidence, ie. business, under the direction of bureaucrats -- gaming a larger economic system designed for efficiency, but here specifically for efficiency of labor to product spend, versus efficiency of product sale.

Curiously, the need to maintain this appearance of productivity is only likely for the sake of capitalist clients who buy the services -- c.f. the classic entrepreneurial slogan, "fake it till you make it!"

Some people are saying in response to this, "only under communism", and in the specifics of who and how and why they may be correct, but waste to satisfy bureaucratic systems is not unique to any economic or social system. People are going to juke the stats under every regime, at all scales, under all circumstances.

How about you stop with the nationalism?

People in China are actual human beings, not part of a hive mind. They react to individual incentives.

Yep, they are human beings forced by the government to hide the truth under the guise of “harmony” with the threat of much worse.

Also, you can criticize the Chinese government without having any issues with Chinese people. Learn the difference or life is going to be hard.

You're literally just agreeing with me, but in a condescending tone. My point is that not literally every Chinese person is "conspiring" to "fake" a "veneer" because they're "scared", because people != government. It's GP who needs to learn the difference.

If they work with the government to participate in this data taking scheme, they are conspiring to fake a veneer. They just have no choice.

This is just another instance of the classic Soviet problem. A scarce resource is allocated by a government bureaucracy instead of a market, and the bureaucracy's design is imperfect, so nonsensical incentives fall out of it sometimes.

There's no irony. It's just kind of quirky for the West to manage flight/landing slots this way, instead of an auction (as the FCC does with spectrum).

To be fair, the auction model doesn't seem to work well when it comes to spectrum. What you end up with is a few big players delivering awful service while having enough money to outbid anyone, essentially preventing any competitor from ever breaking into the market to provide better service.

I would consider that an anti-trust problem, not an scarce-resource-allocation-system problem. The concept of an auction is predicated on having a liquid market—both that there are replacement goods available from other sellers, and that there are many buyers "at the top" with enough bidding power to compete fairly between themselves, such that they'll "pick their battles" by buying only what matters most to them.

The government can only give away slices of a fixed resource for so long. Eventually it runs out.

You literally can't start an airline from scratch. You have to first buy one that already has landing slots, then figure out how to dispose of the planes/staff/operations/debts that come with the package. Is that really better for competition than just having a market for slots?

> You literally can't start an airline from scratch.

Gonna need a citation on this one. I would guess the actual reason airlines are hard to start from scratch is the massive capital required, but would be interested in having this guess proven incorrect.

Porter Airlines in Canada (which presumably has a very similar regulatory regime) was started from scratch about 20 years ago.

Porter tried to go around the problem by partnering with the government to revive a disused island airport, accessible only by ferry. Part of the deal was going to be a bridge.

The community organized vigorously against the prospect of new flights, and succeeded in kneecapping Porter by killing the bridge.

https://en.wikipedia.org/wiki/Porter_Airlines#History

Porter Airlines appears to have started in an entirely unique regulatory regime, actually:

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

In particular, airline monopoly control over allocation of terminal resources at an airport is not a useful prerequisite to generalize from.

> Porter Airlines appears to have started in an entirely unique regulatory regime, actually

I did a quick skim of that wiki article (skimmed a couple sections, ctrl+f'd for "regulat" and "monopoly"), but couldn't find anything about a unique regulatory regime. There has been regulatory issues with the Toronto Island Airport (where porter wants to extend the runway to allow jets to land, but no one* else wants this), but I don't see where they required a unique regulatory regime?

No one wanted it because it would have meant more flights. That's precisely my point. There is no such thing as new traffic capacity anymore. You can only take it from someone else.

> There is no such thing as new traffic capacity anymore. You can only take it from someone else.

JetBlue started in the late 90s, and according to the wiki [0], "was awarded 75 takeoff/landing slots".

Sunwing Airlines [1] started about 15 years ago, with departures from Toronto Pearson. They targeted the southern vacation niche. I don't know the details of the traffic capacity at Pearson, but they didn't get their landing slots by buying some other airline.

I'm not disagreeing with your comment about the limitations of dividing up a limited resource - many airports in North America are at capacity, and there's no room there for new competition to start up. But you followed it up with an absolute "You literally can't start an airline from scratch", which I took issue with because there are several examples that disprove it.

[0] https://en.wikipedia.org/wiki/JetBlue

[1] https://en.wikipedia.org/wiki/Sunwing_Airlines

You can also do like Kenmore Air and just land on the nearest body of water.

Very small airline. They have 29 planes that can hold 74 people. American airlines (including regional partnerships has 1700).

Few notes there:

* The parent comment didn't caveat "large airline".

* Porter is the third-largest airline in Canada. Canada has 10% of the population of the US, so our airlines will be accordingly smaller.

* American Airlines is the largest airline in North America [1], serves the entire country + international. Really not a reasonable comparison to a regional domestic airline.

[1] https://en.wikipedia.org/wiki/List_of_largest_airlines_in_No...

That speaks to the lack of airlines in Canada if the third largest has 74 max people and 29 planes.

> That speaks to the lack of airlines in Canada if the third largest has 74 max people and 29 planes.

No, it speaks to the population of Canada... Porter still comes in at 18th largest in North America [1]

(It might also be because each of the two large carriers, Air Canada and WestJet, has a number of subsidiaries/wholly owned sub brands which would each be larger than Porter - eg Air Canada Rouge, WestJet Encore)

[1] https://en.wikipedia.org/wiki/List_of_largest_airlines_in_No...

Only for them to immediately be gobbled up by 1 or 2 big players.

How about a market for destinations? Oh wait that will be immediately controlled by one player.

Hm it seems consolidation is the natural path we prefer towards solving a problem. Why not let the bureaucracy manage it then?

Give up the pretense. This is all market capture of finance by low effort grifters who will throw a fit when they don’t get privilege for nothing but being an obnoxious talking head.

> Oh wait that will be immediately controlled by one player.

According to[1], the average number of competitors per US domestic city-pair is 3.5 and has been increasing over the last few decades.

[1] http://darinlee.net/pdfs/airline_competition.pdf

They won’t be gobbled up if they aren’t offering a better service. Then that just clears the way for yet another competitor to come in and offer better service again until the large airline improves enough to make entering the market unprofitable.

Big companies buying small companies is good. It’s a reward for improving the market. Big companies preventing smaller companies from even starting via government regulation (i.e. regulatory capture) is what’s bad.

Giving it to the government is just skipping to the worst possible outcome. Nobody has any incentive to compete.

Freakonomics did a good episode related to this [1]

One of the takeaways was that as organizations grow they become more married to spending resources to maintain their existing system which comes at the cost of innovation. So they “innovate” by buying other firms/ideas and it eventually leads to consolidation of an industry.

[1] https://freakonomics.com/podcast/in-praise-of-maintenance/

What I don't like is the DoD keeping the best 5G spectrum to themselves (3GHz-4Ghz) while the rest of the world is using it, putting our future lead in communiciations industry at risk.

Lead? Telecom in the US is an oligopoly, with most of the major spending backed by government grants. Many areas are still supported by rotting copper and old 2g/3g towers because there's no incentive for providers to upgrade them. Unless you meant something else by "communications industry".

That rotting copper is going to be immensely valuable after the collapse.

Yeah, go check out what type of ISP service you can get in Australia for comparison of a similarly sized country. Get ready for ADSL and quotas.

It has nothing to do with size and everything to do with politics. Plenty of small countries have crap internet too.

Australia's internet sucks because the conservative government nerfed the NBN plan.

There is no large country that has amazing Internet everywhere. Size does matter in this regard.

"everywhere" is moving the goalposts. The US (and Australia) doesn't even have amazing internet in the cities.

It does, both of the last two metros I lived in offered gig symmetrical fiber to my apartment for $70/mo.

What's keeping our "lead in communications industry" at risk (and has been for decades) is the broken pricing model for mobile data. With that model, whether you have 4G, 5G or 9G wouldn't change anything because the limiting factor is never the speed but the usage quotas.

To be fair, it seems to work just fine. I can choose from at least 5 carriers in my city for cell phones alone, multiple of which offer unlimited data now. That’s only cell phone spectrum.

For other spectrum, it’s easy enough to acquire spectrum that microwave ISPs are able to get into local markets with very limited capital. I graduated with 2 folks who started an ISP together and the spectrum was cheaper than the hardware to transmit on it at the time.

Yeah, the problem with cellular in the US is that it is moderately expensive.

The institution of rules that aren't suitable when unforeseen conditions arise isn't a purely government thing. It happens in private organizations all the time.

I used to work for a consulting company and heard similar stories for IT budgets. Companies nearing the end of financial year with budget to spare would scramble to get more consultants in to spend the remainder, otherwise the following year their budget would be scaled back to whatever they actually spent.

Don't forget that a company internally is run like a Soviet Style planned economy. 5 year plans, no way for people on the ground to adjust plans, inflexible leadership. I could also mention things like total disconnect between communication from leadership and reality or motivational posters. It's all there.

It's not surprising they create similar behaviors.

And yet, all of these companies that run like command economies have collectively out-competed all the companies that run like market economies. We know this, because the latter... Don't really exist. No company of any note operates like one.

Does that imply that command economies are actually more efficient than market ones?

It might be an issue of scale. Centralized control allows for faster decision making and exploitation of opportunity that outweighs inefficient resource allocation when you're a small organization, but once you get to a certain scale it's simply not feasible to make all the decisions at the top due to how opaque the view from the top becomes. Once you get to the largest of multinational companies, they try to mimic the competition in a market economy by using metrics to allocating more resources to profitable divisions.

That might also explain why centralized command was so common throughout history. The political entities of the past were much smaller than today and could be centrally organized, but they competed against their neighbors for resources in a regional market. It's only in the past 2 centuries that political entities have become large enough to encompass entire markets within themselves and have had to step back and let the market do the large scale economic allocation that they've become too large to do effectively.

The problem of command economies aren't related to being command economies, they tend to be related to communications.

A market is a form of communication, with various forces that are supposed to balance themselves. Many of them actually outside of market (the supposed anti-monopoly aspect heavily depends on externalities preventing concentration, like slow travel/shipping, non trade barriers, etc.)

"Does that imply that command economies are actually more efficient than market ones?"

I think it's probably similar to politics. A well-run dictatorship can do better than a democracy but usually dictatorships deteriorate after a while.

I think it has to do with leadership.

Corporate leaders get sacked by the board rather quickly if they completely screw up. Most of them also don't blatantly steal from their firm.

Regime change in governments happens much slowly.

I've thought about this for different reasons lately and concluded that companies that operate internally as a market would be vulnerable to second system syndrome, ie just becoming a poor imitation of the actual market. You could argue that some (rare) companies that act like markets are those with a safe income stream that insulate them from financial pressures enough to create a market of a second sort. The only sort I can think of is any sort of market of ideas where employees are reasonably free to invest their time as they see fit. Something like Google's 20% time (at least in the old days when that was apparently still a thing) or Valve, where they say the reason desks are on wheels is so you can move to join the team you think is doing the most important work. Whether that's how it works out is another matter...

At least in Britain, there's an open market for the landing slots.

Slots at Heathrow can be sold for tens of millions of pounds.

https://simpleflying.com/flybe-heathrow-slots/

y and this optimizes for the highest bidder, i.e. most profitable and not the airline best serving the user.

Companies are only profitable because they serve their users better than their competitors.

You cannot seriously believe this. Is a parking company only successful due to how well it serves its users? No, it extracts rent.

If the parking compny pays rent to the parking space owner (based on the auction’s highest price), then yes (the owner gets all the rental profits).

I have seen multiple times cases where an establishment has parking spaces outside that are not paying to that establishment. The customer is basically tricked into parking on spots that seem to be free for customers, but is in fact not: those are further away. The only reason it seems is that this gives more fines, and more profit to the parking company. Neither customer nor the establishment benefit from this at all.

Is the parking company the only option? If not, then yes, it's serving it's customers better than competitors.

The proof is the fact that if they charged $100 per hour, they'd have no customers.

Maybe replying with "companies" was too broad, but within the context of airlines its correct

People paying to park there are getting something they value.

Only true in markets and industries where there is a low barrier to entry.

Or because there are no competitors. Allocating parking slots based only on bidding has the potential for one company to become a monopoly by purchasing all the slots, allowing them to charge ridiculous prices while providing bad service.

This is similar, but different. We have an system that works in the normal case, that is struggling with an exceptional case. Could it be improved? Sure. Is it a sign that western civilization is doomed? No.

Yeah, that will never happen. Because we are immortal! All the civilizations before us weren't that smart and rich!

Of course we will evolve into something else. Flying some empty planes isn’t going to be why.

I heard they were running heavily loaded (= not empty) trains back and forth without any purpose other than meeting ton-km quotas, but I wasn't able to find a source...

Edit: Found an article mentioning this practice: https://mont.thesentinel.com/2019/10/03/one-imperfect-day-in...

I read that some types of track require stressing every so often otherwise it loses its properties (in context of Polish railway laying new track then not running heavy trains on it and in consequence track had to be replaced again).

A slightly related issue is that airline pilots need to fly certain amount of time/operations to remain in current training.

Part of the big problem with reactivating MiG-29 squadrons in Poland after the "aftermarket mods" resulted in grounding was that even the instructors lost the legal right to examine training level.

Never heard that, why would they in planed economy?

Same reason large corporations do redundant things and ignore their own best interests; bureaucratic hierarchies just don't scale well. A few layers removed from object reality, all that's left is loyalty politics and meeting your metrics.

I think communism can work, but the Soviet version with a giant state-controlled bureaucracy can't.

Politics and the impact of bureaucracy?

It was common that quotas were created by leadership who were often not close enough to the need to properly design the quota. That got passed down through multiple layers of management, all of whom could care less if the trains were full and were more interested in meeting the quota so could advance in their career.

People complain about unethical behavior in capitalist systems, but that's not a property of capitalism, that's a property of humans.

> why would they in planed economy?

I hope this pun doesn't fly over everyone's heads

In authoritarian states you frequently get situations where you're punished for not meeting certain bureaucratic metrics. For example, in China word is factory output is used as a proxy for productivity, so they're allegedly running factories without producing anything just to raise the power bill to appear productive.

Face is ingrained in Chinese culture partly because in an authoritarian state where your behavior must fall within rigidly defined qualitative and quantitative metrics, appearances are everything.

The American model for government funding is also a bit messed up ( at least what I remember from high school civics in the 1980s) where each department must spend what they are allocated or the department is guaranteed to get less money in the next fiscal year budget. I could be wrong but this creates a disincentive for saving money as most states and the federal government work on the same model.

AIUI, it isn't exactly that it is enshrined into law that if you don't use it, you won't get it next year. It's just that there's never enough money to give everybody what they want, and not using all your money is a primo-grade signal that you don't need it, so of course you lose it. I believe you'll find this isn't an "American" phenomenon at all.

With some kind of award for not using all your money, it's hard to justify it for the people spending it... and "rewards for not spending all the money" are also really easy to cut out of next year's budget...

Certain patterns just naturally emerge with budgeting at scale, and if you've got some brilliant idea about how to fix it I can assure you that with just some minimum business acumen you can become a very rich person.

so.. if I don't need $100 i.e. I can do all my work with $80. Then my budget for next year becomes 80. You have given a scenario where budget of one team is decreased.

So, where did that $20 go ? To some other team, right ?

What about the reverse scenario? If I cannot do all my work with $80, I ask for more, say $100. Then my budget for next year becomes 100.

I don't see a problem with this. Budgets are fluid and change from year to year. Because I saved the company $20 in year 6, I will be rewarded with $20 in year 7 if I ask for it.

It seems reasonable at first: if you weren't able to spend all the money you've got that means you've got too much of them. But you're right, that does create the incentive to needlesly spend.

Also, it is not limited to gorvernment: a Director in a Fortune 100 company that I'm working for right now is buying 40 16" MacBook Pros for a team of .Net developers, because:

a) he had spare $100k in his budget.

b) it is easier to get VPN access approved for external contractors if they are using Macs

Current client wrote-in a stupid policy into intermediate vendor's contract that I have to use a Mac.

Nothing, absolutely nothing that is used in the company is related to the Mac. In fact, a lot of the tools we use would work better on Windows, and many people use Windows. The Macs for direct employees are used as perks.

As much as I've seen people complain about use-it-or-lose-it I've never actually seen an alternative that seems to work better for the amount of effort put into it

It's actually even less efficient than that. On top of keeping spending high, every project that involves contractors must have at least 3 bidders [0]. So for smaller projects people often spend substantially more time modifying contract details and finding contractors than the project itself takes. (By playing with project requirements, you can increase the pool of contractors). At an unnamed national lab, 6-week projects typically took 6-18 months of hunting down contractors until the start of work.

[0] not sure if this is still true, but certainly was in 80s-early 00s.

Big companies often work this way too.

It doesn't have to be an authoritarian state, nor do you need the concept of "face".

It happens often enough in corporations. Which arguably are authoritarian... (with rare exceptions).

I think I recall reading not too long ago about how in isolated cases recently, the price of electricity can go negative. This presumably would mean that people are being paid to waste it. But really, they're being paid to help keep the grid stable and running.

Most utilities don't have any way to store large amounts of energy, and it's non trivial to start up most energy generation. To me the grid looks like something between wizardry and a house of cards.

There are similar ghost trains in the UK: https://www.bbc.com/future/article/20150723-why-britain-has-...

That's not because they have targets to meet, that's because closing a station officially is very difficult.

In both cases it's because of stupid bureaucracy, seems pretty comparable to me.

Any large organisation will tend to run into exactly the same issues that the socialist centrally planned economies did. Centrally planning an economy simply can’t work and the inefficiency gets worse with scale. They have the politburo (the executive team), and apparatchiks (middle management). Large organisations are just a smaller version of a centrally planned economy.

Market forces have very limited opportunity to influence the micro-level internal resource allocation decisions of a large organisation. There’s some things you can to do mitigate this within an organisation, but having efficiency decrease with organisational complexity and scale is inevitable. There’s only two reasons I can see that this doesn’t devolve into soviet style catastrophe. Firstly, some of the lost efficiency is offset by the economies of scale. Secondly, if an organisation becomes too inefficient, their market position can (usually) be usurped by competition. Shareholders can also fire insufficiently competent management, but usually not before the damage is done, and they can’t exactly guarantee the replacements will be any better.

Not really ironic given that these airlines would choose to stop if the expected future profit didn’t make up for it.