Limits of financially based motivation

In the past forced labor and systems like serfdom had violence based motivation. Work and you won't die. People usually put minimal possible effort in. Especially intellectually.

• Cheap
• Manual labor bonus
• Intellectual labor penalty

Most people, including me work for money. We need food, shelter, etc... Money is our prime motivation to do our jobs.

• Level of motivation depends on pay (capped)
• Pay must be competitive

I'd like to argue that like forced labor had penalty to intellectual labor, money motivation has penalty to product quality. People aren't motivated to make products perfect, they are only motivated to keep being paid. So are businesses

Sep 12 · 3 months ago

37 Comments ↓

I do have an alternate hypothesis on how pay impacts product quality. Managerial deadlines. So someone ELSE can make money. I do think there are passionate people out there whose quality suffers because it has to be done by a time.

@darkghost Especially when managers deliberately lower the time actual devs said something will require to please a customer and increase their own bonus at expense of everyone else.

In a free market -- NOT CAPITALISM! -- priorities work out much better. Businesses -- NOT CORPORATIONS -- compete on the basis of quality and the entry cost of competitors is extremely low. No business can possibly get too big or too profitable. Product prices are as low as possible to sustain the business at just-above barely profitable.

No one has to work too hard to do ok.

But capitalists would much rather make crap products and be protected and bailed out by politicians who have way too much power.

The only way that can happen is by working people really hard and taking most of what they make, so they have to work even harder

And in Socialism, no one does squat until everything collapses

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@Proton I bet you're a treat at parties. China was a backwater after the Cultural Revolution up until Deng Xiaoping updated the economy to allow some semblance of markets in. Now China as a country runs a system that is very similar to state capitalism (i.e. fascism), so @stack makes reasonable point. How about you keep it civil, or at the very least provide something intellectually useful.

@Proton, who is the stupid prick with a fat ass? Are you referring to me or OP? Just curious.

CCP is performing a limited economic fascism (aka Capitalism) experiment, much like the Soviet Union did (New Economic Plan) almost a century ago when everything started collapsing. I don't doubt that this private property experiment will end in my lifetime.

In the best scenario, worthless real estate holdings of individuals will be purchased by the government as part of a bailout; perhaps same with small businesses. Large ones will be nationalized (if they aren't already).

@darkghost @tenno-seremel I totally agree as I think we are saying the same thing!

When we talk about product quality, financial motivation of all involved is affecting it's quality: makers, managers, business owners, C-suite, shareholders. None are motivated to create the best product, but to extract maximum financial gain. Or at least keep extracting it continuously to keep their current level of income. There are individual idealistic or enthusiastic exceptions but even they have to make a living.

@stack I agree that at pure free market quality of products is better due to competition.

Such competition often also drives the need to "innovate" instead of perfecting already existing solution, or someone else will get paid for a new shiny thing.

The free market is also extremely vulnerable to pitfalls of human nature. It naturally breeds cartels, monopolies and unless not regulated by outside force (like government) eventually self-destructs. Though I'd argue that even government regulation might not be enough to stop free market collapse as we've observed throughout history. It's often more beneficial for government official to join in onto destruction of free market, for their own financial gain.

@Proton I think you belive that I want to dismantle the financially based motivation? That's not true, as I'm not aware of alternative better solution. Blind experiments usually cost lives. I merely point issues in that reward system.

As to my experience:

• I grew up in 90s Russia and was exposed to witnesses of disaster of Planned Economy and newly born Wild Capitalism, that was also birth of an Oligarchy.
• I lived & worked in China 2010-17, with full exposure to CCP and local population.
• And I've been living in Australia since then.

By civil argument rules, insults make you auto-loose.

P.S. My kids keep me fit on my valueless software desk job ;-)

You have it completely backwards.

Free market is imune to cartels and monopolies!

Monopolies are anti-competitive rights granted and enforced by the government and so-called 'regulation'. There are no monopolies in a free market, only in Capitalism, also known in later stages as Economic Fascism.

Cartels and collision are likewise signs that the market is not free! If someone colludes to keep prices up in a free market a competitor will undercut and destroy them.

You are not thinking clearly but are repeating propaganda.

The only thing that can destabilize a free market are thugs with guns who would rather take things away from people instead of working. These are generally politicians and government.

@stack facinating, that doesn't match my thought experiments. Please help me to figure it out.

Let's imagine said free market with 0 government interference or regulation.

I just created a new valuable product after 4-5 years of R&D. I have first movers advantage and quickly take over that segment of a market and become a monopoly. I can then use that leverage to attack other market segments making it less and less free.

Who is there to stop me? Competitors would need at least few years to create a competitive product, and I can always put my prices below profit for few years using profits of my existing monopoly. That would kill them.

That is not a monopoly. You made something no one currently has and can charge any price the market will bear until the competition catches up.

I hate to yell you but people are not that different in intelligence, and if you thought of it I guarantee that others have as well. They are not that far behind.

And if you are making a lot of money, they will work twice as fast to catch up. Especially now that you proved it's possible and opened the market for that new invention.

However, most things people actually need and want are not that complicated. Natural monopolies like you described are extremely rare.

A monopoly is a non-compete on everyone but one preferred party, endorced by government 'regulation'.

Also, you cannot corner the market with money in a free market. In a capitalist regime you can spend millions bribing politicians to block competitors and raise the regulatory bar so only the big colluding players stay in the game to make billions.

In a free market it's always more profitable to slightly undercut the opponent than collude.

It's a brilliant self-stabilizing system.

Putting prices lower to undercut your opponent is exactly doing what you are supposed to. It's called competition.

Why should anyone stop you? You are lowering prices for consumers, great. When you destroy your competition and raise prices, competitors will spring back up. You just wasted a ton of money. Your competitors are now in better shape than you, because only a capitalist dumb-ass does stupid s**t like that!

@AlexusBlack The issue with the monopoly in the case you lay out is that it's almost guaranteed to be extremely temporary without some external (i.e. government) interference to entrench it. If we stick to a standard market case, if you make a new product and people like it then you may have a monopoly for a short while, but as @stack said there are probably other similarly-competent people that can duplicate your efforts in some short amount of time. This is the theoretical reason for patents - it's much easier to replicate something that's already been done than it is to come up with a novel thing, so you we have put a rule in place to protect novelty.

The biggest problem that markets face is that they are vulnerable to attack from outside forces (i.e. government). Markets are an extremely powerful tool for the production of material wealth (which doesn't just mean consumer-grade garbage, it includes things like medical equipment, specialized scientific apparatuses, efficient machines for making microchips, pumps for fresh water, agricultural technologies for growing food, fertilizers, medicines, tools, etc), and because markets are so powerful people *love* to try to put their thumb on the scale to wield the power in a direction they want. This can be done to a certain extent, but in doing so they distort the markets. If it goes too far then the market stops working well and the benefits end up decreasing.

Natural monopolies do spring up for things like utilities. It isn't economical to, for example, have every competing water provider lay pipe for their service. (Water delivery via truck, however, is not a natural monopoly.) But I think I see what you're saying. Things like intellectual property put their thumb on the scale and create artificial monopolies for the benefit of the first to do it (or the first to convince the men with guns and those with the resources to pay the lawyers to make the men with guns enforce it.)

I used to think intelligence was more uniform but I have definitely revised that stance. Intelligence is the sum of motivation and opportunity to learn. Motivation is not uniform.

@darkghost, water pipes are a good example of a conundrum. I don't have all the answers, but keep in mind that:

• Pipe is cheap due to competition;
• Labor is cheap due to lack of unions, guilds and oversight;

I have a core belief that people are capable of cooperating when not forced into a system of rigid laws or regulations, which actually prevent human-to-human conversation. I've been in many situations where a simple good-enough-for-everyone agreement would have prevented a lot of pain, but lawyers got in and convinced one or all parties that they could squeeze more out of the situation and even have an obligation to extract more.

It is possible that some kind of a temporary governing body may have to be formed for the purpose of say, deciding on who puts the pipes in a specific area, standards and qualifications of workers and supplies, and overseing the work. Nothing prevents cooperation in a free market, especially on an opt-in basis, and when it's profitable and/or otherwise improves quality of life.

Likewise, nothing precludes from formation of reputation-based rating organizations (much like Michelin) to assure quality of products and services, as well as ad-hoc industry standards organizations which improve profitability by providing guarantees of quality and interoperability.

Also, people will often step up and do things without a profit motive because they love something or want to improve quality of life. Look at opensource or many low-level charitable stores where people donate without bothering with a tax receipt.

As for intelligence being equally distributed -- yeah, far from it. Sit in on a lecture at Brooklyn College and observe students. But what I was saying, even at far ends of the bell curve, you are not alone!

And ideas tend to become ripe and simultaneously fruit in the minds of several people across continents -- look at the history of radio as a good example.

Perhaps this is my own bias showing here, but given the unevenness of motivation I can foresee issues on collaborative efforts such as dam building. I don't mean the dinky little ones that you put on a brook, I mean the kind that can wash out entire communities in the event of failure.

Easy solution: Don't!

Without a government with infinite money, all kinds of absurdly large, unsafe, pointless and wasteful projects are not even on the radar.

small decentralized solutions have the benefit of not leading to actual or equivalent nuclear meltdown if they are flawed in some way.

Large solutions are what drives society forward though. Microchip manufacturing is an excellent example we all utilize. You don't need the latest and greatest at all times but I wonder if we would have personal computers without the large scale work. Computing would probably still be mechanical without those big expensive early projects that took a power plant to run basic digital calculations.

Societies made little technological progress for millennia and it isn't hard for me to imagine a small scale driven society still stuck in the 800s technologically. These small societies had their own vulnerabilities with things like sanitation (with it disease) and food supply. Meltdowns weren't a concern but the harvest was.

Are we really better off though?

My mother-in-law was born with horses on cobblestoned streets. No wonder she has blown a gasket.

We were not really stuck -- just moving at a human speed. Something went terribly wrong.

It feels like a Star Trek episode: the civilization is not ready for technology and is going to set itself on fire. Actually, it already has. Catalyst: infinite free money from guys with guns.

I can argue we are. Stroll through an old graveyard sometime. People recycled names on their kids if they didn't make it out of childhood. I am personally on my third or forth chance at life based on diseases I have had.

Selfishly, yes, agreed. Although at a certain point it's time to make room for the next generation. We are keeping too many zombies alive.

Big picture -- we made it without antibiotics or doctors washing their hands until mid-last-century. Also largely without destroying everything we touch -- or at least relative to today.

Coincidentally, stumbled across:

This is the third piece of the fourth part of our series (I, II, IIIa, IIIb, IVa, IVb) looking at the lives of pre-modern peasant farmers – a majority of all of the humans who have ever lived. Last time, we started looking at the subsistence of peasant agriculture by considering the productivity of our …

Collections: Life, Work, Death and the Peasant, Part IVc: Rent and Extraction

Can you have something like antibiotics without other technical advancements? You need steam, you need reverse osmosis, you need big steel tanks, you need wet milling of corn, you need filters, you need resins, you need mass scale production of glass. We did fine before antibiotics, we just lost tons of people to disease.

Hand washing doesn't require much except for untainted water. You can saponify with ashes and animal fat to make soap. That is human scale.

I think we would have something like antibiotics with technology achievable without a government-funded effort (and associated violence, confiscation, and debasement of currency).

Bacteriophages and antibiotics have been around forever. Nubian mummies were full of tetracycline. Maybe less effective, but eating fermented moldy crap and drinking holy beer could work.

Surprisingly useful things literally grow on shit.

We are late entrants into an eons old war is why useful things can be found on seemingly gross things. Ethanol is useful and able to be cultivated without special technology. I am a bit skeptical you can get a simple antibiotic in useful quantities with basic tools. The first penicillin culture needed 11 liters of broth per dose. Improvements came about by better mold selection and UV mutagenesis.

If we stop stuffing animals with antibiotics (and eating them in such quantities), we would need a lot less antibiotics... And they would work a lot better.

@stack getting back to original point, I think your free market example is still a financially based motivation with all same effects on product quality. Even if maybe at slightly different scale.

For example website development is unregulated, highly competitive and has super low margins (with rare exceptions). Most players are freelancers to small 2-4 people teams, even for premium projects. But businesses still cut corners, "optimise" processes and deliver minimal acceptable quality when possible.

I'm also not convinced that free market can survive on its own. Network effect like youtube video library or app store collection, are effective barriers against newcommers no matter how smart they are.

You are forgetting that when there are no corporate protections from the government, large business cannot exist. There is a natural upper bound on the size of a business, and a monstrosity like Google would have collapsed of its own weight long ago.

If you've ever worked for a large or even a medium-sized company you know what I am talking about. It is absolutely impossible that such things exist with 6 layers of managers in meetings and layers of approval for everything.

A small, more agile company would immediately run rings around them and take away their business long before anything like 'network effect' would take place.

I can't imagine more than a dozen people cooperating efficiently.

A large number of small, interoperable youtubes would achieve network effect just as easily as it reached a reasonable size. Participants would compete on quality of presentation and content, as well as for advertisers. Need for ownership of a single 'network-effect' corporation is corporate propaganda, of course.

That is assuming that there is any value to something like youtube or facebook. That is also questionable, as these are brainwashing machines developed by corporations to capture your attention with low-cost, low-quality bullshit while they show you ads.

In my experience growing a start up to a monster, it all falls apart around 60 people. Then you don't know everyone's name and vaguely what they're working on. I went from doing my job to filling out forms for permission to do my job.

I think those of us over a certain age recall the early internet when you had a lot of small companies on the internet. Some overly inflated companies towered over others (eg Netscape and Yahoo) but they had a lot of competition too (Mosaic, links, Spyglass and a thousand search engines like Webcrawler Hotbot Lycos and later Altavista).

Early ISPs had a lot of competition as well. Numerous local companies along with the big providers of network services (AOL, Prodigy who eventually added internet connectivity outside their walled gardens.)

But here is the thing. All of this was enabled by the natural monopoly of telephone service. If we had 1,000,000 telephone co-ops operating nationwide without interconnection it all falls apart. Early electricity service was like this, fragmented with every provider a power island operating at different frequencies and voltages.

@darkghost, my startup experience is similar. The one that 'made it', was extremely productive at 3 (although I was burning both ends), became a zoo at around 30, and the big concern was going public while doing decent demos at endless meetings with investors. Then the company was no longer productive (by my definition) and dealt with standards, sales to 'anchor customers', maintenance, compliance and staffing (which went into hundreds in several countries). I was out by then, thank god.

And soon it collapsed, shrunk to around 20 on payroll, and got picked up by Google for chump change, mainly for the patents and a couple of remaining smart people.

The ones that did not make it stayed in low single digits staffwise, created amazing products, but had no chance in retrospect. I was naive, unprepared, and cared too much about things that are not important in Capitalism.

I would assert from experience, that having a product or customers in a Capitalist system is just a ticket to the game -- one that allows you to literally print money (IPO, secondary offerings, spinoffs, borrowing billions at low rates, currency swaps, insane tax insentives, government contracts, bailouts, etc). Quality of product or customer satisfaction -- not that important. It has to be good enough that there are no scandals to tank your stock, hopefully.

I feel completely exhausted summarizing just that part of my professional life. Would not want to do it again.

One I worked for there were 5 of us. The product would "sell itself." It was pretty amazing, with massive market potential. The product was chemically impossible except for our way of making it. Spoiler alert: it didn't sell itself, competitors caught up and ate our lunch. You can buy their products at your local drug store and meanwhile all I have is a jar of this stuff and what should have been. Still a better story than my current gig though.

Interesting. It is a good story. You hear success stories, but there are so many near misses and complete failures no one hears about...

Do you think someone leaked it or was it one of those things that is not that hard to repeat once you know it's possible?

Sounds like a process patent... Did competitors hit upon it before priority date, or did they just work around the patent? I've had both things happen to me.

[I hate IP, but when in Rome...]

There are two main steps to make the product. (I am simplifying here.) It is somewhat obvious if you study it. Step one was in the public domain and extremely efficient. All the IP was around the catalysts to make the magic happen in step two (which was rate limiting) but it turns out there are dozens, possibly hundreds in nature that perform the same function (with varying efficiency) in this application. We locked up about 20 of them, some of them very efficient and some of them lousy. One competitor was stopped from using one but we lost our shirt doing it and they easily worked around the patent. Others just worked around the IP. The engineering to build this is all public domain.

My favorite fail involved an IP attorney I hired to negotiate with a large manufacturer/distributor in a specific market. Turned out he was more interested in getting the manufacturer as a client, and at one point asked me how one could work around my patent, in order to supposedly strengthen it and apply for supplemental patents. Like a fool I told him what I would do (which was pretty specific and not at all obvious), and a couple of days later the manufacturer did just that. The manufacturer told me that he 'had fulfilled all his legal and moral obligations' and told me to f**k off. The product has been a good seller in their catalog for over two decades now.

Oh, and I had to pay the attorney another fifteen thousand to avoid getting sued.

Wow that is pretty bad. I got offered a consulting gig basically doing the same thing, telling someone how to defeat my former company's patents. The offer was $150 for a one hour consultation but the screener questions were specific enough to get the required information without paying. I told them no thanks.