Dendi

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James M. Buchanan
“I want economists to quit concerning themselves with allocation problems, per se, with the problem, as it has been traditionally defined. The vocabulary of science is important here, and as T. D. Weldon once suggested, the very word "problem" in and of itself implies the presence of "solution." Once the format has been established in allocation terms, some solution is more or less automatically suggested. Our whole study becomes one of applied maximization of a relatively simple computational sort. Once the ends to be maximized are provided by the social welfare function, everything becomes computational, as my colleague, Rutledge Vining, has properly noted. If there is really nothing more to economics than this, we had as well turn it all over to the applied mathematicians. This does, in fact, seem to be the direction in which we are moving, professionally, and developments of note, or notoriety, during the past two decades consist largely in improvements in what are essentially computing techniques, in the mathematics of social engineering. What I am saying is that we should keep these contributions in perspective; I am urging that they be recognized for what they are, contributions to applied mathematics, to managerial science if you will, but not to our chosen subject field which we, for better or for worse, call "economics.”
James M. Buchanan

James M. Buchanan
“The elementary and basic approach that I suggest places “the theory of markets” and not the “theory of resource allocation” at center stage. My plea is really for the adoption of a sophisticated “catallactics,”…”
James M. Buchanan

Satyajit Das
“Risk management seemed to have completed its transformation into pure entertainment. Dudley seemed the epitome of a risk manager who would drown crossing a river that was 12 inches in depth on average.”
Satyajit Das, Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives
tags: drown, risk

Satyajit Das
“The truth is that banks are the last feudal kingdoms, their rulers omnipotent, divine warlords. Their key lieutenants are 'ronin' (wandering mercenary samurai) who roam financial markets ready to ally themselves to any warlord for a share of plunder. This is not the place to apply the latest management theory.”
Satyajit Das, Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives

Edward N. Luttwak
“In the absence of expert [senior military] advice, we have seen each successive administration fail in the business of strategy - yielding a United States twice as rich as the Soviet Union but much less strong. Only the manner of the failure has changed. In the 1960s, under Robert S. McNamara, we witnessed the wholesale substitution of civilian mathematical analysis for military expertise. The new breed of the "systems analysts" introduced new standards of intellectual discipline and greatly improved bookkeeping methods, but also a trained incapacity to understand the most important aspects of military power, which happens to be nonmeasurable. Because morale is nonmeasurable it was ignored, in large and small ways, with disastrous effects. We have seen how the pursuit of business-type efficiency in the placement of each soldier destroys the cohesion that makes fighting units effective; we may recall how the Pueblo was left virtually disarmed when it encountered the North Koreans (strong armament was judged as not "cost effective" for ships of that kind). Because tactics, the operational art of war, and strategy itself are not reducible to precise numbers, money was allocated to forces and single weapons according to "firepower" scores, computer simulations, and mathematical studies - all of which maximize efficiency - but often at the expense of combat effectiveness.

An even greater defect of the McNamara approach to military decisions was its businesslike "linear" logic, which is right for commerce or engineering but almost always fails in the realm of strategy. Because its essence is the clash of antagonistic and outmaneuvering wills, strategy usually proceeds by paradox rather than conventional "linear" logic. That much is clear even from the most shopworn of Latin tags: si vis pacem, para bellum (if you want peace, prepare for war), whose business equivalent would be orders of "if you want sales, add to your purchasing staff," or some other, equally absurd advice. Where paradox rules, straightforward linear logic is self-defeating, sometimes quite literally. Let a general choose the best path for his advance, the shortest and best-roaded, and it then becomes the worst path of all paths, because the enemy will await him there in greatest strength...

Linear logic is all very well in commerce and engineering, where there is lively opposition, to be sure, but no open-ended scope for maneuver; a competitor beaten in the marketplace will not bomb our factory instead, and the river duly bridged will not deliberately carve out a new course. But such reactions are merely normal in strategy. Military men are not trained in paradoxical thinking, but they do no have to be. Unlike the business-school expert, who searches for optimal solutions in the abstract and then presents them will all the authority of charts and computer printouts, even the most ordinary military mind can recall the existence of a maneuvering antagonists now and then, and will therefore seek robust solutions rather than "best" solutions - those, in other words, which are not optimal but can remain adequate even when the enemy reacts to outmaneuver the first approach.”
Edward Luttwak

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