Gresham’s Law: Bad Drives Out Good as Time Passes (2009)(fs.blog)
fs.blog
Gresham’s Law: Bad Drives Out Good as Time Passes (2009)
https://fs.blog/2009/12/mental-model-greshams-law/
113 comments
No employee is simply talented or mediocre or bad. Everyone you meet has strengths and weaknesses. Some people's strengths aren't in demand every day, but crucial when called upon. Others have weaknesses which rarely appear, but are terribly damaging when they do.
And everyone is drawn to the company of others in the workplace based primarily on interpersonal factors, not others' ability or performance or lack thereof.
Certainly, there are toxic personalities which can poison an environment, but they generally have some valuable assets as well.
Deciding to leave an organization because of its people is never a simple calculation.
And everyone is drawn to the company of others in the workplace based primarily on interpersonal factors, not others' ability or performance or lack thereof.
Certainly, there are toxic personalities which can poison an environment, but they generally have some valuable assets as well.
Deciding to leave an organization because of its people is never a simple calculation.
> Deciding to leave an organization because of its people is never a simple calculation.
I think this is the simplest calculation of all, and generally the reason people leave or stay in an organization.
You can say that everyone has strengths and weaknesses, which is probably true, but if their weaknesses are all in the sector in which they’re working, they’re still going to be terrible.
I think this is the simplest calculation of all, and generally the reason people leave or stay in an organization.
You can say that everyone has strengths and weaknesses, which is probably true, but if their weaknesses are all in the sector in which they’re working, they’re still going to be terrible.
How the team is assembled matters. Of heaven and hell:
In heaven, the cooks are French, the lovers are Italian, the mechanics are German, the police are British, and everything is organised by the Swiss.
In hell, the cooks are British, the lovers are Swiss, the mechanics are French, the police are German, and everything is organised by the Italians.
In heaven, the cooks are French, the lovers are Italian, the mechanics are German, the police are British, and everything is organised by the Swiss.
In hell, the cooks are British, the lovers are Swiss, the mechanics are French, the police are German, and everything is organised by the Italians.
Ah but individuals are more complicated than national stereotypes!
And that is a very old joke, from the 19th or early 20th century, when the world was Euro-centric.
And that is a very old joke, from the 19th or early 20th century, when the world was Euro-centric.
From the number of cooking programs on my TV with british cooks at the moment I would assume the british have upped the game a bit on cooking :-)
How many are curries or other imports? ;-)
(Says the cat who's been home-baking crumpets.)
(Says the cat who's been home-baking crumpets.)
I've never seen a bad programmer who starts to produce good code when project begins to fail.
Excusing toxic managers because the project is still rolling does not make sense, since we ignore how much better would it be with someone who can actually do their job.
Unless you're in sales there is no benefit to being the rotten apple.
Excusing toxic managers because the project is still rolling does not make sense, since we ignore how much better would it be with someone who can actually do their job.
Unless you're in sales there is no benefit to being the rotten apple.
Another way to get this is to have high standards, but poor ability to track performance. Then you get more cheaters than honest folks as fewer are able to actually meet the standards.
Imagine, for example, job ads that require 50 years of Java experience from employers who are too clueless to verify such things. Or grading on a curve with a teacher who uses the exact same tests every year. When some people have tests & answers, everyone who doesn't will end up with lower grades.
Imagine, for example, job ads that require 50 years of Java experience from employers who are too clueless to verify such things. Or grading on a curve with a teacher who uses the exact same tests every year. When some people have tests & answers, everyone who doesn't will end up with lower grades.
I've seen it, too. Worse yet is when it's the kind of company that doesn't allow mediocre employees to improve. They're just given more work, crazier deadlines, less input, and no opportunities for advancement. Not only does this hinder the company, but it harms employees who stay too long at these companies. But the companies don't care because, by the time the good employees have left, they've made their money and enough wheels are in motion that the cash cow will continue to produce in the face of mediocrity.
See also: Brain Drain.
https://en.wikipedia.org/wiki/Human_capital_flight
http://en.cnki.com.cn/Article_en/CJFDTotal-KJQB200807051.htm
Somewhat embarrassingly, among the highest-ranked DDG results is one of my own essays:
https://old.reddit.com/r/dredmorbius/comments/69txj8/william...
https://en.wikipedia.org/wiki/Human_capital_flight
http://en.cnki.com.cn/Article_en/CJFDTotal-KJQB200807051.htm
Somewhat embarrassingly, among the highest-ranked DDG results is one of my own essays:
https://old.reddit.com/r/dredmorbius/comments/69txj8/william...
One of the great insights told to me was that popular people in high school are popular because they spend all their time being popular, to the detriment of their future.
Likewise, crappy people and managers in organizations have one full time job: surviving and defending their positions in the organization, and only performing their jobs enough to survive.
Likewise, crappy people and managers in organizations have one full time job: surviving and defending their positions in the organization, and only performing their jobs enough to survive.
I wrote an example of this in How To Destroy A Tech Startup In Three Easy Steps:
https://www.amazon.com/Destroy-Tech-Startup-Easy-Steps/dp/09...
https://www.amazon.com/Destroy-Tech-Startup-Easy-Steps/dp/09...
I've been brought up on the terminology being 'the Elves are leaving Middle Earth'
https://steveblank.com/2009/12/21/the-elves-leave-middle-ear...
Additionally, the 'Evaporative Effect'.
I'm not sure which of these many terms is the most 'punchy' though, but I agree that a common vocabulary is needed.
https://steveblank.com/2009/12/21/the-elves-leave-middle-ear...
Additionally, the 'Evaporative Effect'.
I'm not sure which of these many terms is the most 'punchy' though, but I agree that a common vocabulary is needed.
In most cases it's the leadership that people flee. You can cope with a mediocre teammate, you cannot cope with a manager that doesn't reward
We can adapt the Gresham’s Law for Software Development:
Project [A] is built within "x" months with lot of tech debt, crunch time and stressed out employees
Project [B] is built within "x+y" months with sane architecture and healthy working hours
If management doesn't understand the benefits of good architecture and employee well being, [A] will become the baseline against which all future projects get measured.
The software system gets messier and messier => resulting in more bugs => resulting in working weekends and late nights => employees make poor decisions because of mental fatigue => resulting in more bugs => ...
Project [A] is built within "x" months with lot of tech debt, crunch time and stressed out employees
Project [B] is built within "x+y" months with sane architecture and healthy working hours
If management doesn't understand the benefits of good architecture and employee well being, [A] will become the baseline against which all future projects get measured.
The software system gets messier and messier => resulting in more bugs => resulting in working weekends and late nights => employees make poor decisions because of mental fatigue => resulting in more bugs => ...
I think you're dead right but it goes even deeper. With more bugs the company starts evaluating devs on their ability to fix bugs and put out fires. Eventually the devs who can build a sane product are squeezed out and all the devs are good at is fixing bugs rather than introducing fewer bugs in the first place.
I noticed this when working as a dev in the finance industry. The devs who put out the most fires got the biggest bonuses and float to the top so they have a say in hiring and hire more people like themselves. A textbook case of Gresham's Law.
I noticed this when working as a dev in the finance industry. The devs who put out the most fires got the biggest bonuses and float to the top so they have a say in hiring and hire more people like themselves. A textbook case of Gresham's Law.
Was at a job once where a dev shipped a bug on a Friday, spent the weekend fixing it, then got a bonus for it because he worked hard over the weekend and "got it done".
Or basic Darwinism, which says that the fittest for their niche survive and reproduce. Fittest is relative to current circumstances, so each generation can modify the niche that others find themselves in.
but why does the effect only happen in software engineering, but not physical engineering?
You don't see buildings that are near collapse and require constant repair and redesign. You don't see construction contracts awarded to companies that build poor buildings. In fact, most buildings work fine, and even tho most also have some defects, those defects tend to be minor and can often be overlooked.
So what makes software engineering different?
You don't see buildings that are near collapse and require constant repair and redesign. You don't see construction contracts awarded to companies that build poor buildings. In fact, most buildings work fine, and even tho most also have some defects, those defects tend to be minor and can often be overlooked.
So what makes software engineering different?
You don't see buildings that are near collapse and require constant repair and redesign.
When the covid thing is over, have a trip to Sydney Australia. There;s lots of cheaply done buildings here in all states of disrepair. People cheap out on the invisible stuff like correct wiring, correct plumbing and correct foundations.
And in software people cheap out on those same things because they can take the money and run.
You could fix this by making payment for software as 25% upfront with 20% on deliver and then 50% on 18 months of as advertised use.
But no one would ever do that. When Azzure or GC or AWS goes down every 5 years or so for a few hours, everyone gets server credits back for teh interruption and revenue loss. No liability as assumed.
When the covid thing is over, have a trip to Sydney Australia. There;s lots of cheaply done buildings here in all states of disrepair. People cheap out on the invisible stuff like correct wiring, correct plumbing and correct foundations.
And in software people cheap out on those same things because they can take the money and run.
You could fix this by making payment for software as 25% upfront with 20% on deliver and then 50% on 18 months of as advertised use.
But no one would ever do that. When Azzure or GC or AWS goes down every 5 years or so for a few hours, everyone gets server credits back for teh interruption and revenue loss. No liability as assumed.
You can add Canberra to that list. I know several apartment blocks that are close to collapse, one Owners' Corporation is currently suing the builder (and the local government authority) in a case before the Supreme Court.
The rest of engineering isn't immune to this, but it's most prevalent in software because of it being soft. Just about everything you can imagine can be done.
This tends to pile requirements on, and you end up in a bad place.
You don't often get "I want a building just like that one" becoming "except make it out of glass", then "actually add a floor or two".
But I've come across exactly this in software. Someone I know asked a friend to make a copy of a well known auction site. Then he had to change the whole backend and add a load of features. Needless to say, it ended badly.
This tends to pile requirements on, and you end up in a bad place.
You don't often get "I want a building just like that one" becoming "except make it out of glass", then "actually add a floor or two".
But I've come across exactly this in software. Someone I know asked a friend to make a copy of a well known auction site. Then he had to change the whole backend and add a load of features. Needless to say, it ended badly.
False premise. Building failures occur all the time.
By relative frequency, not so often: physical structures are simpler, tangible, better understood.
But they still fail often.
https://youtube.com/results?search_query=building+collapse
https://youtube.com/watch?v=d8u83VY59Ww
https://youtube.com/watch?v=5PZyXvp1mLw
In 1st-world countries as well:
https://youtube.com/watch?v=dfYLk9dktAY
https://youtube.com/watch?v=EMpQxLfqNNs
https://youtube.com/watch?v=VnvGwFegbC8
By relative frequency, not so often: physical structures are simpler, tangible, better understood.
But they still fail often.
https://youtube.com/results?search_query=building+collapse
https://youtube.com/watch?v=d8u83VY59Ww
https://youtube.com/watch?v=5PZyXvp1mLw
In 1st-world countries as well:
https://youtube.com/watch?v=dfYLk9dktAY
https://youtube.com/watch?v=EMpQxLfqNNs
https://youtube.com/watch?v=VnvGwFegbC8
Software engineering isn't special in this regard. It happens in a lot of other domains. Software often doesn't have a lot of the constraints of other disciplines so effects like these are more pronounced.
I would characterize all the statements you made as false. Though it does depend on what your standards are.
Most of the critical things are done well enough, but that is a pretty low bar.
I would characterize all the statements you made as false. Though it does depend on what your standards are.
Most of the critical things are done well enough, but that is a pretty low bar.
My guess is a lower barrier to entry and lack of enforced building standards.
that's one way to look at it, but it's rarely this clear cut. usually the system is initially built from P1+P2+P3+...PN that are wired together in a somewhat sane manner and do the job.
enter joe, that thinks P2 is over-engineered and thinks he can do a a better job without understanding why P2 is the way it is or why it was even built like this.
joe proceeds to replace P2 with P2'+P2a+P2b that kind-of get the job done but make the system a little bit more complicated. Joe gets a promotion for being a doer and improving "complicated shit".
Now, imagine armies of Joes picking up the least complicated part of the system and making their contribution. The initially sane and straightforward components get replaced with increasingly more complicated ones.
In the end, everything is so complex that no progress can be made.
enter joe, that thinks P2 is over-engineered and thinks he can do a a better job without understanding why P2 is the way it is or why it was even built like this.
joe proceeds to replace P2 with P2'+P2a+P2b that kind-of get the job done but make the system a little bit more complicated. Joe gets a promotion for being a doer and improving "complicated shit".
Now, imagine armies of Joes picking up the least complicated part of the system and making their contribution. The initially sane and straightforward components get replaced with increasingly more complicated ones.
In the end, everything is so complex that no progress can be made.
Microservices
https://www.youtube.com/watch?v=y8OnoxKotPQ
https://www.youtube.com/watch?v=y8OnoxKotPQ
That channel is legit underrated
Technical debt, risk, maintainability, and long-term resilience are all elements that don't get fully accounted for.
This joins a few related concepts: "manifestation" (or: cognizability, perceptibility, tangibility), risk (effectively a measure of probabalistic fiture cost), and resilience, which often contrasts strongly with efficiency.
Sociologist Robert K. Merton pioneered many. of the concepts around manifest vs. covert functions, usually of social institutions or behaviours.
This joins a few related concepts: "manifestation" (or: cognizability, perceptibility, tangibility), risk (effectively a measure of probabalistic fiture cost), and resilience, which often contrasts strongly with efficiency.
Sociologist Robert K. Merton pioneered many. of the concepts around manifest vs. covert functions, usually of social institutions or behaviours.
This rather sounds like short term vs. long term decision making, or accumulating debt. What are the "coins" of Greshams's law in your example?
Short-term consequences (positive or negative) are far mor cognizable than long-term, both to individuals and organisations. Cognizability is, then, the market for exchange and evaluation.
Options with short-term benefit but long-term harm, are excessively adopted.
Options with short-term harm or cost, but long-term benefit, are excessively rejected.
Put another way, markets consistently under-rate risks, and more complex ones to a greater extent. But they also under-value long-term. positive benefits. Markets operate in the now.
Related is Robert K. Merton's work in manifest vs. latent functions, from sociology.
Options with short-term benefit but long-term harm, are excessively adopted.
Options with short-term harm or cost, but long-term benefit, are excessively rejected.
Put another way, markets consistently under-rate risks, and more complex ones to a greater extent. But they also under-value long-term. positive benefits. Markets operate in the now.
Related is Robert K. Merton's work in manifest vs. latent functions, from sociology.
We might also consider that if x is larger than a few weeks y might well be negative.....
related: https://en.wikipedia.org/wiki/The_Market_for_Lemons
> Suppose buyers cannot distinguish between a high-quality car (a "peach") and a "lemon". Then they are only willing to pay a fixed price for a car that averages the value of a "peach" and "lemon" together (p_avg). But sellers know whether they hold a peach or a lemon. Given the fixed price at which buyers will buy, sellers will sell only when they hold "lemons" (since p_lemon < p_avg) and they will leave the market when they hold "peaches" (since p_peach > p_avg). Eventually, as enough sellers of "peaches" leave the market, the average willingness-to-pay of buyers will decrease (since the average quality of cars on the market decreased), leading to even more sellers of high-quality cars to leave the market through a positive feedback loop.
> Thus the uninformed buyer's price creates an adverse selection problem that drives the high-quality cars from the market. Adverse selection is a market mechanism that can lead to a market collapse.
> Suppose buyers cannot distinguish between a high-quality car (a "peach") and a "lemon". Then they are only willing to pay a fixed price for a car that averages the value of a "peach" and "lemon" together (p_avg). But sellers know whether they hold a peach or a lemon. Given the fixed price at which buyers will buy, sellers will sell only when they hold "lemons" (since p_lemon < p_avg) and they will leave the market when they hold "peaches" (since p_peach > p_avg). Eventually, as enough sellers of "peaches" leave the market, the average willingness-to-pay of buyers will decrease (since the average quality of cars on the market decreased), leading to even more sellers of high-quality cars to leave the market through a positive feedback loop.
> Thus the uninformed buyer's price creates an adverse selection problem that drives the high-quality cars from the market. Adverse selection is a market mechanism that can lead to a market collapse.
> Adverse selection is a market mechanism that can lead to a market collapse.
if an uninformed buyer buys a lemon, and they don't suffer the consequences (e.g., a lemon works just as well as a peach, 'cept in aesthetics or some other unimportant metric), then it's not collapsing the market at all. It just means that peaches, as judged by sellers, aren't as valuable as they think.
It's like the stock market in this sense - buyers of a stock doesn't "really" know if the stock is a lemon or a peach. Neither does the original owner of the stock of course.
if an uninformed buyer buys a lemon, and they don't suffer the consequences (e.g., a lemon works just as well as a peach, 'cept in aesthetics or some other unimportant metric), then it's not collapsing the market at all. It just means that peaches, as judged by sellers, aren't as valuable as they think.
It's like the stock market in this sense - buyers of a stock doesn't "really" know if the stock is a lemon or a peach. Neither does the original owner of the stock of course.
It could be that the buyer doesn't suffer the consequences until much later, or that they are suffered only in aggregate by buyers.
For example: cheap smoke detector that doesn't detect smoke, cheap food full of lead contamination, cheap software full of buffer overflow vulnerabilities.
For example: cheap smoke detector that doesn't detect smoke, cheap food full of lead contamination, cheap software full of buffer overflow vulnerabilities.
I wonder if Bezos has thought this through fully for Amazon.com
Amazon always makes money on the transaction. Assuming transactions are cheaper, the customer will be able to spend more. Nothing is cheaper or more expensive than AWS in this regard. That said, Amazon does need to and should improve to remove bad products and bad customer experiences beyond what gets returned or hits the bottom line. It’s not right when a brand has to “compete” with knockoffs using identical package design and item listings, especially as the customer buying the item has the least information about the quality of the item they’re buying — the two coins are not of identical value, as it were.
Akerloff's work is a special case of Gresham's Law.
There are other cases where uncertainty my be general amongst both or all actors, rather than asymmetric as Akerlof discusses.
There are other cases where uncertainty my be general amongst both or all actors, rather than asymmetric as Akerlof discusses.
Gresham's Law is frequently misunderstood. It's not accurate to say that "bad" drives out "good" in a literal sense. It's more like "less desirable" driving "more desirable" out of circulation. The "more desirable" is highly valued, not competed out of existence. It's just not in circulation.
In the case of coinage, gold coins are not in circulation. But they are still more valuable than other types of coins. A monetary system usually consists of both "less desirable" money (e.g. paper money) and "more desirable" money (e.g. gold, Bitcoin). I explain the law in the context of Bitcoin and fiat in this article:
https://bitflate.org/post/2019/11/24/bitcoin-will-not-be-a-m...
If we have a system where "bad" drives "good" out of existence (not circulation), then the system will surely have problems.
In the case of coinage, gold coins are not in circulation. But they are still more valuable than other types of coins. A monetary system usually consists of both "less desirable" money (e.g. paper money) and "more desirable" money (e.g. gold, Bitcoin). I explain the law in the context of Bitcoin and fiat in this article:
https://bitflate.org/post/2019/11/24/bitcoin-will-not-be-a-m...
If we have a system where "bad" drives "good" out of existence (not circulation), then the system will surely have problems.
In other words: Gresham's law doesn't make the "good" disappear altogether. It makes the "good" hoarded and kept instead of passed around, which prevents the "good" from being exchanged between people - or, in other words, removes it from circulation.
This situation is just a special case, in which it's possible for the "good" thing to survive without being actively circulated. It may work for "gold as a store of value", because gold's value is based on scarcity and tradition. It doesn't work for other things. Gresham's law does boil to natural selection: if you iterate a system that selectively prefers one thing over the other, the preferred thing will survive. The preferred thing is usually one that's cheaper in some sense - monetary, energetically, or ethically.
(WRT. bitcoin, I don't think it's a case of "bad" fiat "driving out good" bitcoin, but more of bad bitcoin failing to compete with better fiat.)
(WRT. bitcoin, I don't think it's a case of "bad" fiat "driving out good" bitcoin, but more of bad bitcoin failing to compete with better fiat.)
>> "[..] in other words, removes it from circulation."
And that makes it useless as money and show that, the added value, was not necessary for a practical currency in the first place.
And that makes it useless as money and show that, the added value, was not necessary for a practical currency in the first place.
I believe there is a reference to this law in the movie “No Country for Old Men”.
The movie was set in 1980. In the famous coin toss scene Anton Chigurh explicitly states that the date on the quarter is 1958 and that it had been traveling for 22 years. That means it was a silver coin. The US Coin Act of 1965 changed the make up of coins from 90% silver to cladded nickel and zinc. The old silver coins very quickly disappeared from circulation. Any remaining ones were snatched up especially when the price of silver skyrocketed when the Hunt Brothers in Texas tried to corner the silver market in 1980, right in the time period when the movie was set.
So basically Chigurh had no business having a 1958 silver quarter in his pocket.
I think Cormac McCarthy was implicitly showing Chigurh was a dispassionate force of evil driving out the good.
The movie was set in 1980. In the famous coin toss scene Anton Chigurh explicitly states that the date on the quarter is 1958 and that it had been traveling for 22 years. That means it was a silver coin. The US Coin Act of 1965 changed the make up of coins from 90% silver to cladded nickel and zinc. The old silver coins very quickly disappeared from circulation. Any remaining ones were snatched up especially when the price of silver skyrocketed when the Hunt Brothers in Texas tried to corner the silver market in 1980, right in the time period when the movie was set.
So basically Chigurh had no business having a 1958 silver quarter in his pocket.
I think Cormac McCarthy was implicitly showing Chigurh was a dispassionate force of evil driving out the good.
Ive interpreted Chigurh as an agent of chaos much like the Joker. We've given our lives all this order and civilization but underneath is ultimately chaos.
Same principle drives the amplification of inequality in society. People and companies try to protect their incomes so they lobby or game the system, competing against each other to gain the upper hand. As a consequence they directly harm the common good, which would be a thriving economy. It's a gradual process of accumulation of inflexibility which can become its own downfall.
Let's not forget the opposite extreme though (USSR). If you try to regulate inequality away by redesigning your entire government, what ends up happening is that everyone is equally poor except the elite corrupt government officials
You're also creating a shadow market. A good friend of my grandmother lived in East Germany during the cold war and explained the German term "Bückware" (literally bend-down wares) to me: the sought-after goods in stores that you'd only get by trading favors, stored out of sight under the counter so they'd have to bend down to get it.
It was also called blat in Eastern Europe [1].
[1] https://en.wikipedia.org/wiki/Blat_(favors)
[1] https://en.wikipedia.org/wiki/Blat_(favors)
"Spod lady" (from under the counter) in Polish :)
USSR was dysfunctional for many reasons, the least important of them was economic system, the most was that it was a totalitarian state with no way to change the government. It was shooting its own citizens and starving them to death in millions (and not because it had to - it was simply "better" for their policies).
I agree communism doesn't work, but these particular problems can and did happen just as well in other economic systems too - see British starving Ireland or India for capitalist examples.
On the other hand there are socialist countries that are quite heavily regulated and perfectly fine - see Scandinavia and part of western Europe.
The important part about modern democratic countries isn't that they are capitalist. It's that they are democratic and have rule of law and a way to change the government. I'm focusing on this because I see many democratic countries turn illiberal and autocratic over time thinking they will be ok because capitalism will save them.
I agree communism doesn't work, but these particular problems can and did happen just as well in other economic systems too - see British starving Ireland or India for capitalist examples.
On the other hand there are socialist countries that are quite heavily regulated and perfectly fine - see Scandinavia and part of western Europe.
The important part about modern democratic countries isn't that they are capitalist. It's that they are democratic and have rule of law and a way to change the government. I'm focusing on this because I see many democratic countries turn illiberal and autocratic over time thinking they will be ok because capitalism will save them.
You might appreciater "Resistances to the Adoption of Technological Innovations', by Bernhard J. Stern (1937), which asseses just this dynamic in depth:
https://archive.org/details/technologicaltre1937unitrich/pag...
Markdown: https://pastebin.com/raw/Bapu75is
https://archive.org/details/technologicaltre1937unitrich/pag...
Markdown: https://pastebin.com/raw/Bapu75is
Is this the whole story, though?
The truly wretched coins, and the governments that issue them, tend to exit circulation, too.
Perhaps Gresham's Law has some relationship to regression toward the mean =>https://en.m.wikipedia.org/wiki/Regression_toward_the_mean
The truly wretched coins, and the governments that issue them, tend to exit circulation, too.
Perhaps Gresham's Law has some relationship to regression toward the mean =>https://en.m.wikipedia.org/wiki/Regression_toward_the_mean
In line with this, I sometimes feel that the best way to fix a problem is to make it worse, to the point where it's intolerable.
Kind of like a pot-hole in the street out in front of your house. If it's a small pot-hole it might go unnoticed and unfixed, but if you go take a pick-axe to it to the point where cars start bottoming out, it's more likely to get fixed.
Almost like the squeaky wheel gets the grease.
I recently witnessed someone take this strategy to task on Reddit where the Ubiquiti subreddit had become inundated with low-quality picture posts.
https://reddit.com/r/Ubiquiti/comments/fa1wdw/please_post_mo...
Kind of like a pot-hole in the street out in front of your house. If it's a small pot-hole it might go unnoticed and unfixed, but if you go take a pick-axe to it to the point where cars start bottoming out, it's more likely to get fixed.
Almost like the squeaky wheel gets the grease.
I recently witnessed someone take this strategy to task on Reddit where the Ubiquiti subreddit had become inundated with low-quality picture posts.
https://reddit.com/r/Ubiquiti/comments/fa1wdw/please_post_mo...
Ever seen /r/ProgrammerHumor? It used to be great, until it started being featured on /r/all, and the low quality “bad UI” and “I can’t find my semicolon” posts started flowing in and being upvoted. Now it’s awful. There was one great post yesterday and it was glorious (https://old.reddit.com/r/ProgrammerHumor/comments/g4cr9m/my_...) but it’s back to usual now :(
I dunno, I got a kick out of https://www.reddit.com/r/ProgrammerHumor/comments/g50h6m/a_s...
Wow, that Ubiquity thread is glorious. It's a perfect mix of sarcasm and reflection.
I think the problem stems from a shift in how users "reddit". The upvote button is now analogous to a "like" button. It doesn't encourage users to take context (eg subreddit) of the post into account. Reddit encourages its popular and hot feeds - a meta assortment that strips posts of some of their context.
So, everything is truly reduced to just "good or bad".
I think the problem stems from a shift in how users "reddit". The upvote button is now analogous to a "like" button. It doesn't encourage users to take context (eg subreddit) of the post into account. Reddit encourages its popular and hot feeds - a meta assortment that strips posts of some of their context.
So, everything is truly reduced to just "good or bad".
[deleted]
As long as the leaders don't get blamed for devaluing the currency, there will still be an incentive to do it. Most people's political careers aren't that long.
You see this happen with CEOs today. If it looks like the company is going to collapse, just change jobs. When things fall apart a couple of years later, you can talk about how things were great while you were still in charge. Few will have enough insider knowledge to know you're lying.
You see this happen with CEOs today. If it looks like the company is going to collapse, just change jobs. When things fall apart a couple of years later, you can talk about how things were great while you were still in charge. Few will have enough insider knowledge to know you're lying.
Eventually. The article even mentions this, that a strategy may be a long term loser (i.e., risky loans at super low interest rates), but if in the short term it chokes out competition, it means you not only win in the short term, but make it so there's no competition in the long term when those bad behaviors 'come due'.
I don't believe any government was replaced because of bad coinage.
I don't believe any government was replaced because of bad coinage.
If you mean bad policy and inflation in general, then hyperinflation was a huge factor in the Weimar government's fall and Hitler's rise.
I think an important premise is that both the good coins and the bad coins are accepted as legal tender.
In that case, people know the good coins are worth intrinsically more, so people hoard them, preferring to spend away the bad coins, thereby increasing the circulation of the bad coin.
Of course there is the other aspect, which you mentioned, that these bad coins may no longer be legal tender, perhaps because the government that minted them collapsed. That's quite a different problem.
In that case, people know the good coins are worth intrinsically more, so people hoard them, preferring to spend away the bad coins, thereby increasing the circulation of the bad coin.
Of course there is the other aspect, which you mentioned, that these bad coins may no longer be legal tender, perhaps because the government that minted them collapsed. That's quite a different problem.
But what is cause and what is effect?
Another popular essay on this subject is "Well-Kept Gardens Die By Pacifism", https://www.lesswrong.com/posts/tscc3e5eujrsEeFN4/well-kept-...
Very nice, thanks.
Shades of Bumblebee Labs' "The Evaporative Cooling Effect": https://web.archive.org/web/20101012105003/blog.bumblebeelab...
Shades of Bumblebee Labs' "The Evaporative Cooling Effect": https://web.archive.org/web/20101012105003/blog.bumblebeelab...
Thank you, that was a great read. Did not know about Gresham's Law.
I wish the author would have included some examples in which Gresham's Law is violated. It seems related to "Thiers' Law" (which is described on the Gresham's Law Wikipedia page [0]).
It also seems as if Gresham's Law contains a statement of the dynamics that drive good coins out of circulation that make it a very special kind of race to the bottom. For example, in the excerpt from the Mackenzie King letter, the application to industrial standards seems to reflect a somewhat different dynamic.
0 https://en.wikipedia.org/wiki/Gresham%27s_law#Reverse_of_Gre...
I wish the author would have included some examples in which Gresham's Law is violated. It seems related to "Thiers' Law" (which is described on the Gresham's Law Wikipedia page [0]).
It also seems as if Gresham's Law contains a statement of the dynamics that drive good coins out of circulation that make it a very special kind of race to the bottom. For example, in the excerpt from the Mackenzie King letter, the application to industrial standards seems to reflect a somewhat different dynamic.
0 https://en.wikipedia.org/wiki/Gresham%27s_law#Reverse_of_Gre...
Cases in which a better, or often simply more expensive good dominates over less expensive ones, does occur. See generally Veblen goods.
In almost all cases, the good itself is a signalling. mechanism for a yet-more complex construct, almost always related to identity, status, and/or power.
The expensive good serves as a more readily apprehended or perceived marker for the less clearly discernable status. Price may itself be part of the signalling, or costs. might be in the form of complex and arcane acquisition of knowledge: language, accent, slang, religious tradition & rituals, dress, table manners, food, culinary knowledge, wine, sports knowledge, programming languages, technical tools or skills, cultural or musical knowledge, management practices, academic arcana, ideological dogma, etc.
Almost any domain which might be considered fad-driven. or fad-like, very possibly has an element of this signalling associated with it.
In almost all cases, the good itself is a signalling. mechanism for a yet-more complex construct, almost always related to identity, status, and/or power.
The expensive good serves as a more readily apprehended or perceived marker for the less clearly discernable status. Price may itself be part of the signalling, or costs. might be in the form of complex and arcane acquisition of knowledge: language, accent, slang, religious tradition & rituals, dress, table manners, food, culinary knowledge, wine, sports knowledge, programming languages, technical tools or skills, cultural or musical knowledge, management practices, academic arcana, ideological dogma, etc.
Almost any domain which might be considered fad-driven. or fad-like, very possibly has an element of this signalling associated with it.
Gresham's Law tends to no longer hold when the difference between good and bad is qualitative rather than quantitative, and when there are more than one degree of separation between the two.
Joe's Websearch can be cheaper than Google but is much crappier, parasitic mobile games are profitable but doomed to mayfly longevity, etc.
Joe's Websearch can be cheaper than Google but is much crappier, parasitic mobile games are profitable but doomed to mayfly longevity, etc.
I'm not sure that's true. The more Florence debases the silver florin while Venice stays honest, the more I'm tempted to melt my old florins into Venetian silver ducats. I only get a better and better deal that way.
Sure, but when you take a real qualitative jump---melting down silver coins for use in photography or photovoltaics---quality matters again.
It's not about quantity vs quality, it's about legally mandated fungibility. Can be modeled just like arbitrage but equilibrium is at boundary.
It's interesting, I've noted that bad products tend to drive out good products. This happens with all sorts of products: food, software, etc. A lot of the time, the products are even from the same company: they come out with a good product, the market laps it up; and then begins a process of degradation as they make the product worse for no discernible reason.
Case in point, I can't count how many times I've been to a grocery shop looking for a packaged food product I've come to really like, only to find that it is no longer stocked, or that it has been replaced by an objectively inferior product. This seems to rarely happen with mediocre items
Case in point, I can't count how many times I've been to a grocery shop looking for a packaged food product I've come to really like, only to find that it is no longer stocked, or that it has been replaced by an objectively inferior product. This seems to rarely happen with mediocre items
>>"[..] as they make the product worse for no discernible reason."
Well, they don't make the product worst on purpose, they make it cheaper to produce, in the hope that people keep buying it at the same price.
The metric to optimize is not "quality of product" but "profit".
Basic capitalism.
Well, they don't make the product worst on purpose, they make it cheaper to produce, in the hope that people keep buying it at the same price.
The metric to optimize is not "quality of product" but "profit".
Basic capitalism.
Cool i didn't know this had a name. In a way, its obvious once you are sufficiently cynical - in any system or long-term game, the most common strategy will be the one that wins often. From an evolutionary standpoint an advantage is an advantage, morality has nothing to do with it. The reason morality does matter is that over a long enough time frame, bad behavior becomes clear, good behavior breeds trust but that requires you play a long enough game with a stable set of people.
It has many names. "Natural selection" and "free market competition" are others. It's the same mechanism.
> The reason morality does matter is that over a long enough time frame, bad behavior becomes clear, good behavior breeds trust but that requires you play a long enough game with a stable set of people.
This is an exception rather than a rule, which is why you see little morality in nature, why it's a struggle to keep people behaving, and why it gets harder as societies become larger and more subdivided into specializations and abstraction layers.
> The reason morality does matter is that over a long enough time frame, bad behavior becomes clear, good behavior breeds trust but that requires you play a long enough game with a stable set of people.
This is an exception rather than a rule, which is why you see little morality in nature, why it's a struggle to keep people behaving, and why it gets harder as societies become larger and more subdivided into specializations and abstraction layers.
While it is a competitive advantage inside the system (team, company, country, political system), it decreases the competitiveness of the system as a whole in relation to other systems. For instance the more a company is like this the less actually valuable results it can show (since there is less and less to steal from actual value producers), the more it needs to spend its resources on also fighting off external competitors like other companies who still create results, managing bad press, and stopping customers from leaving to better providers.
It's very much like a parasite-host relationship. Sure in the 1:1 relationship the parasite might keep the upper hand and live longer, but in the end both are dying to make place for another organism.
For the world as a whole it's also not a bad thing. The world changes and new problems need new systems to deal with. But the new systems cannot prosper if old systems are efficient enough to defend their place.
It's very much like a parasite-host relationship. Sure in the 1:1 relationship the parasite might keep the upper hand and live longer, but in the end both are dying to make place for another organism.
For the world as a whole it's also not a bad thing. The world changes and new problems need new systems to deal with. But the new systems cannot prosper if old systems are efficient enough to defend their place.
>Forms of human behavior survive because they have a competitive edge against other behaviors. Self-interested groups naturally tend towards what works, so bad drives out good (in a moral sense) if it causes superior practical effects. This is one large reason why forms of regulation and policing are needed in human systems, to prevent the Law from working its magic.
I don't think that a requirement for regulation and policing follows from that. Regulation and policing can also be caught by these bad practices. Regulatory capture is an example of that.
In my opinion, this suggests instead that we need irregular resets to the system. Wipe the slate clean and start building it up again. That does come with enormous cost, but it seems to me like it's the only way to truly stand against constant degradation without finding a way to counter the degradation.
I don't think that a requirement for regulation and policing follows from that. Regulation and policing can also be caught by these bad practices. Regulatory capture is an example of that.
In my opinion, this suggests instead that we need irregular resets to the system. Wipe the slate clean and start building it up again. That does come with enormous cost, but it seems to me like it's the only way to truly stand against constant degradation without finding a way to counter the degradation.
If you look at human history, that what tends to happen. Empires rise, go through a golden age, fall, and are overtaken by newer empires built on the carcasses of old ones.
I think mandatory attendance in grade school is a regulation that is interesting to consider in the context of Gresham's law.
Is attendance mandatory so that the disruptive (bad) students don't drive out the good ones from attending, or does mandatory attendance create a situation that favors the bad student (by forcing them to attend) at an expense to the good student, who would have attended otherwise?
Is attendance mandatory so that the disruptive (bad) students don't drive out the good ones from attending, or does mandatory attendance create a situation that favors the bad student (by forcing them to attend) at an expense to the good student, who would have attended otherwise?
Attendence is mandatory so that "bad" parents - bad usually because of circumstances, not ill will - do not pull their kids from schools and have them work or help around the house, reaping short-term benefits at the expense of their children's futures.
Hm, death as a practical solution.
When you think about it, that's the direction most lifeforms on the planet take. Instead of trying ensure the survival of their genetic information by being immortal, they make younger copies of themselves with less degradation before dying. Immortality = eventual decline as more and more parts fail and can't be repaired.
It's a path evolution took staring from the first replicator; the "throw stuff at the wall and see what sticks" approach is built into the core of the evolutionary process. That doesn't mean the only solution is to burn the whole thing down and start anew. Partial replacement while preserving the whole could make sense, but it wasn't an option easily accessible to evolution.
Then again, the life's approach isn't all bad on the lowest level. From our, human, point of view, the issue is that at some point, evolution invented brains and consciousness, and that information is more interesting than DNA, and it gets discarded instead of being preserved.
Then again, the life's approach isn't all bad on the lowest level. From our, human, point of view, the issue is that at some point, evolution invented brains and consciousness, and that information is more interesting than DNA, and it gets discarded instead of being preserved.
Nice read, very revealing and eye-opening to me personally. I think this law applies to jobs too. If your superior never calls-out lying narcissistic behavior, and you do not posses such "skills" you will be driven out.
And avoid industries where customer do not care if final product is made from crap or gold.
And avoid industries where customer do not care if final product is made from crap or gold.
"In fact, one might call Gresham’s Law something of a special case of natural selection itself.
Forms of human behavior survive because they have a competitive edge against other behaviors. Self-interested groups naturally tend towards what works, so bad drives out good (in a moral sense) if it causes superior practical effects."
Except we have morals. So no this is a really poor example.
If anything our morals are what's holding up back. a 100,000 year old concept that works well in a village where you live day by day but has little use in the modern world where we can use numbers to tell us the best course of action.
Forms of human behavior survive because they have a competitive edge against other behaviors. Self-interested groups naturally tend towards what works, so bad drives out good (in a moral sense) if it causes superior practical effects."
Except we have morals. So no this is a really poor example.
If anything our morals are what's holding up back. a 100,000 year old concept that works well in a village where you live day by day but has little use in the modern world where we can use numbers to tell us the best course of action.
My view is that Gresham's Law often serves as a complexity constraint within a selection. process.
Given two (or more) means to some end, the mean with the fewest constraints, lowest cost, or least complexity, all else equal, tends to succeed.
Interesting case is where least constraints, costs, and complexity are distributed among several alternatives.
Given two (or more) means to some end, the mean with the fewest constraints, lowest cost, or least complexity, all else equal, tends to succeed.
Interesting case is where least constraints, costs, and complexity are distributed among several alternatives.
Define “we”. Pick any group of 500, actual practiced morals will vary widely in that group.
Apathy with respect to morals is a big problem, it’s letting moral lapses slide from convenience that allows much degradation to occur. And the “righteous” that would point out lapses are often at least viewed as cranks, unless they have a deft touch.
Apathy with respect to morals is a big problem, it’s letting moral lapses slide from convenience that allows much degradation to occur. And the “righteous” that would point out lapses are often at least viewed as cranks, unless they have a deft touch.
I’ve felt for a long time that the political system works this way as well. Speaking strictly from a non-partisan standpoint, there’s a strong case to be made that this perception exists widely in American society.
It’s why Trump’s “drain the swamp” messaging worked so well in 2016, it’s why things like gerrymandering exist, and it’s why we continue to see record amounts of money, much of it of unknown origin, proliferate and direct political discourse and messaging.
It’s why Trump’s “drain the swamp” messaging worked so well in 2016, it’s why things like gerrymandering exist, and it’s why we continue to see record amounts of money, much of it of unknown origin, proliferate and direct political discourse and messaging.
You and Aristophanes, in The Frogs, 405 BCE, as noted and cited in the article.
There's also H.L. Mencken's "Brayard vs. Lionheart", 1920 CE:
[W]hen a candidate for public office faces the voters he does not face men of sense; he faces a mob of men whose chief distinguishing mark is the fact that they are quite incapable of weighing ideas, or even of comprehending any save the most elemental—men whose whole thinking is done in terms of emotion, and whose dominant emotion is dread of what they cannot understand. So confronted, the candidate must either bark with the pack, or count himself lost. His one aim is to disarm suspicion, to arouse confidence in his orthodoxy, to avoid challenge. If he is a man of convictions, of enthusiasm, of self-respect, it is cruelly hard.
http://amomai.blogspot.com/2008/10/hl-mencken-bayard-vs-lion...
Other writers have drawn from Jean Piaget's models of intellectual development, and the distribution of such capabilities in the general population.
I strongly recommend reading the full piece. Several times.
There's also H.L. Mencken's "Brayard vs. Lionheart", 1920 CE:
[W]hen a candidate for public office faces the voters he does not face men of sense; he faces a mob of men whose chief distinguishing mark is the fact that they are quite incapable of weighing ideas, or even of comprehending any save the most elemental—men whose whole thinking is done in terms of emotion, and whose dominant emotion is dread of what they cannot understand. So confronted, the candidate must either bark with the pack, or count himself lost. His one aim is to disarm suspicion, to arouse confidence in his orthodoxy, to avoid challenge. If he is a man of convictions, of enthusiasm, of self-respect, it is cruelly hard.
http://amomai.blogspot.com/2008/10/hl-mencken-bayard-vs-lion...
Other writers have drawn from Jean Piaget's models of intellectual development, and the distribution of such capabilities in the general population.
I strongly recommend reading the full piece. Several times.
This seems like an attempt to justify iron-fist regulation. “For our own good”, of course.
It seems like a fallacy, this law. The bad is only able to survive at the expense of the system. Meanwhile, the good that was driven out is busy making its own new system.
It seems like a fallacy, this law. The bad is only able to survive at the expense of the system. Meanwhile, the good that was driven out is busy making its own new system.
There's a pretty fascinating list of results in Google Books for "a Gresham's Law of" or "a sort of Gresham's Law", dating to the 19th century, suggesting at the very least an ideologically broad, if not agnostic, application of the concept:
https://www.google.com/search?tbm=bks&ei=RGSeXuWpJozdtAa876-...
https://www.google.com/search?tbm=bks&ei=RGSeXuWpJozdtAa876-...
One of my favorite essays on this topic is “Meditations on Moloch”[0]. Does a great job of introducing the topic and pricing a lot of compelling examples, all while tying it in to Alan Ginsberg’s famous poem.
[0]: https://slatestarcodex.com/2014/07/30/meditations-on-moloch/
[0]: https://slatestarcodex.com/2014/07/30/meditations-on-moloch/
Meh. If you have two coins that are nominally worth the same but one is actually worth more - because it can, in a pinch, be melted down for a valuable resource - I wouldn't call this the bad driving out the good.
Of course the point that bad behavior may give a higher fitness score is still true.
I also like the idea of lemon market's in this context: https://en.wikipedia.org/wiki/The_Market_for_Lemons In short and very simplified: if the customer cannot tell the good products from the bad products he will not pay the price of the good products and so the good products disappear.
Of course the point that bad behavior may give a higher fitness score is still true.
I also like the idea of lemon market's in this context: https://en.wikipedia.org/wiki/The_Market_for_Lemons In short and very simplified: if the customer cannot tell the good products from the bad products he will not pay the price of the good products and so the good products disappear.
Great read..
I had always attributed the observation to Mel Books :P
"So, Lone Starr, now you see that evil will always triumph, because good is dumb." — Dark Helmet, Spaceballs.
I had always attributed the observation to Mel Books :P
"So, Lone Starr, now you see that evil will always triumph, because good is dumb." — Dark Helmet, Spaceballs.
Maybe I’m a bit too pessimistic, but are there any examples where “good money drives out the bad”? I can’t think of a single industry... maybe cars?
Cars seems like a good example because the quality manifests itself physically and is independent of how well an individual buyer perceives quality. Also, the buyer is directly responsible for long-term costs associated with their decision which isn't the case in currency exchange.
you mustn't be talking about used cars which are perfect example of https://en.wikipedia.org/wiki/The_Market_for_Lemons where if it is impossible to tell what quality a particular good has the price goes down to the lowest common denominator so to say.
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Of course, in Gresham's day this was called "depravity," a consequence of Original Sin.
Can someone explain how they got a two-letter blog TLD? I thought they were reserved.
That explains Discord.
Board-level executive compensation committees? Discuss.
In what way?
If you're referring to executive compensation, game theory seems to offer clearer understanding.
If you're referring to executive compensation, game theory seems to offer clearer understanding.
Good point. Game theory requires some understood rules and a set of participants, as do any market. Game theory provides a good explanation of the current state given the rules of the game and its participants. The rules could easily be different if participants behaved differently.
Executive comp levels go against the needs of shareholders, who would otherwise benefit from the money being invested in the company or distributed back to themselves.
Game theory can provide insights as to how Gresham’s Law’s effects might play out, and how sticky the stasis will be in any market that has only bad currency.
Executive comp levels go against the needs of shareholders, who would otherwise benefit from the money being invested in the company or distributed back to themselves.
Game theory can provide insights as to how Gresham’s Law’s effects might play out, and how sticky the stasis will be in any market that has only bad currency.
fs is great. I just finished listening to
Episode 72: Happy Habits with Neil Pasricha
Much recommended
Episode 72: Happy Habits with Neil Pasricha
Much recommended
Trump administration in a nutshell
I've also seen this effect take a form where good employees will recognize what is happening and rock the boat, trying to make it clear that there's something wrong and that something should be done about it. Mediocre managers and employees don't like this and eventually the good employee gets fired. The lazy and mediocre then run the show; as long as that paycheck keeps coming in, who cares if we are doing a good job or not?