Beware Rent Seekers!

 

Are you Certifiable?

Begin July 11th 2022

The current fixation/religion and general preoccupation with "climate action" reminds us of certain movements of the past, some of which are forgotten by now, and some relating to specialist fields of endeavour, the details of which are not usually visible to the public, but well known to those who make their living by working in those fields.

They all have something in common; a pernicious phenomenon of contemporary society that is known as "rent seeking". As scams go, the idea is breathtakingly simple: Invent a problem, then charge for solving it; and, wherever possible, make the solution mandatory. 

The price of the solution needs to be as high as possible, but not so high as to cause a premature death of your host organism, the golden goose you have captured. To maximize your income, underpin it with some newly created government regulation and legislation that will force your unsuspecting victims to co-operate under threat of violence (penalties, loss of income or even prison). In other words, harness the regulatory and coercive power of the government to sanction and support your parasitic existence.

Here are two examples. The first relates to a specialized field, the second to a well-known world-wide scam that took place over 20 years ago and sucked between $300 to $500 billion out of productive members of society towards parasitic rent-seekers, either directly or via useless government programs.

The first is the true story of an equipment manufacturer. A few years in production, after making one successful product after another, one particular VIP customer requested a “quality control certificate”. This was many years ago, and they were stumped by this never-heard-before request. The customer explained that they needed the supplier to comply with the new ISO 9000 quality standard - otherwise they would not get the order. Obviously, the manufacturer had their own in-house quality standards, and the products were demonstrably very reliable - but in order to satisfy this customer (with many others to follow), they had to hire a subcontractor who created stacks of ISO-prescribed paperwork and pay him $5,000 for that effort. They then faxed the certificate (signed by the ISO-9000 certified "consultant") to that VIP customer, and subsequently got the order.

The manufacturer did not have to change anything in their procedures, all they had to do is pay off the new rent-seeking parasite - who would then come knocking every year asking for the same amount, because, of course,  the quality certification needs to be "audited" regularly, which includes some additional paperwork and a new, pretty, frameable certificate, obviously with an expiry date.

Nowadays, getting an order from the government (of any country) or a large corporation is unthinkable without an ISO certificate. But of course, like with everything else, standards need to be improving, so ISO 9000 was followed by ISO 9001, then ISO 9002, ISO 14001, ISO 27001, etc., etc. All at additional costs for more paperwork and pretty certificates, of course.

But surely this must be good for all of us, because this makes our products better, so everyone benefits? No, they did not change anything, the quality remained. Unfortunately, this was not the case of some of their suppliers. There were several notable cases where the quality of supplied parts decreased dramatically after the company proudly displayed an ISO certification logo in their advertising materials.

Why so?  The manufacturer  came to the conclusion that by having an official certificate, “organic  QA” actually slackens, because the management forgets that product quality rests primarily with the people and ethos, not with quality management manuals and certificates, that tend to collect dust on the shelves, forgotten and almost never read, except during the yearly visit by a "quality certification auditor" who adds a few more pages, wastes a couple of days of management's time, and, importantly issues yet another $5,000 bill.  

This actually made the manufacturer select suppliers on the basis of NOT having a quality certification, because they assumed that they would actually stand behind their product quality, rather than hide behind an ISO logo with two little laurels in it (really).

The lucrative business of quality certification is now common and pervasive, and winding the clock back is now impossible. The manufacturer has been trapped into paying the annual audit ransom, and is still forced to regularly upgrade certifications. Meanwhile, the number of ISO certification "consultants" has mushroomed everywhere in the world, supporting a new, large, non-productive class of bureaucracy - professional rent-seekers carrying impressive business cards.

 

Now onto the second example: The millennium bug, aka Y2K. At that time, an 8-bit microcomputer used to have a 64 Kbyte memory, which was not a lot, was expensive, and therefore the code had to be often optimized and squeezed to fit in the available space. Sometimes programs were too long and had to be shortened by using clever algorithms, and by reducing memory usage to the bare minimum. Such as representing a year by the last two digits only. In 1980s programmers seldom anticipated that anyone would be using their software twenty years later, so this was not considered a problem.  

Then a few years before 2000, someone realized that the next year after 1999 (coded as 99 in some  instances) would become 00. Programs that have not taken this into consideration might malfunction by incorrectly interpreting the year. This started an enormous panic in fear that the world's computer infrastructure would collapse, causing wide-spread disasters resulting in death and famine.  

Governments "invested" millions of dollars to fix this bug. Legislation was put in place requiring any government purchase to be accompanied by a "Y2K certificate", requiring the seller to declare "Y2K compatibility", often for products that contained no electronics.  In total, it is estimated that $300-$500 billion dollars were spent on measures related to the Y2K bug, mostly in developed countries.  Some countries, such as Russia, chose not to do anything, assessing the potential severity of the problem to be manageable as it occurred.

All of a sudden, fly-by-night rent-seekers emerged and descended on the gullible public, selling Y2K auditing and certification services, as well as Y2K fixing application for PC software.

Many experienced developers did not think that the potential problems were worth the disruption of anticipation. Sure, the potentially serious problems should be evaluated – such as the firmware of nuclear plants and automatic pilots, but that would be about it. Even then, there was little evidence this would have led to a catastrophic failure if left unchecked. There are many more opportunities for serious bugs in an average software application than incorrectly remembering a year in a date.

In the middle of 1999, the atmosphere was frantic. Hysteria set in and US sales of survival shelters boomed. Everyone was getting calls trying to create panic and offering us Y2K related services. One of the victims of the pestering played a game with one of the callers: "Hah hah, buddy, isn't this funny, we also happen to sell Y2K software. How is it going on your side? We really need to hurry because the end of the year is here and then the fun is over. Right now everyone thinks this is all for real!" the reply was "Hah hah, you're right. We're doing very well here, raking it in, people are so gullible,  it's great biz. I wish this could go on forever."

Finally, the second millennium had come and gone and the phone calls stopped. Almost nothing happened. It must have been because of all those emergency measures. There were no disasters reported in Russia either. I guess it must have been because they were so technologically backward. Surely it could not have been because everyone was fooled..?

So what would the rent-seeking parasites come up with next? Who could have been daring and smart enough to foresee their next brilliant scam?  A gift from heaven that keeps giving. A Y2K bug that never expires!

Something that could never be conclusively proved. Something based on ambiguous "evidence" - like all the most convincing propaganda; but with endless scope for speculation, fear, uncertainty and doubt. Don't anyone dare say climate change...

"We saved the world by reducing CO2 in the atmosphere from 0.00414% to 0.00413% because without our hard work the world average temperatures would increase by 2 degrees, icebergs would melt and all polar bears would die in the raising seas that would flood 90% of the planet."  And of course it would be next to impossible to prove them wrong.