The Probability Broach: Economies of scale


A crowded, futuristic skyline

The Probability Broach, chapter 11

Ed and Win are going to see a client in Laporte’s Old Town district. Win narrates that, where he comes from, “old town” conjures up a Norman Rockwell image of quaint little cottages. But here, the oldest part of the city is a megalopolis, with skyscrapers “swooping five hundred stories into the clear bright air”:

That expression, “Old Town,” conjured up mental pictures that couldn’t have been more wrong. Most Confederates do business out of their living rooms, which discourages undue formality and keeps enterprises small. Mention time clocks or commuting, they’ll look at you like they know where you escaped from. But like many inhabitants of Laporte’s older district, Freeman K. Bertram had things turned around: the high-powered executive’s version of sleeping over the delicatessen.

Paratronics, Ltd., an impressive pile of Aztec Modern rock, was planted where the Poudre River canyon empties onto the plains. We slid into an underground parking lot, dismounted, and pulled three gees getting up to the 223rd floor.

Once again, this section has one of those libertarian/anarchocapitalist sleights of hand we need to pause and unpack. Just like a conjurer distracting the eye with flashy moves, L. Neil Smith’s invocation of massive skyscrapers is meant to distract readers from the precarious assertion one paragraph earlier.

Libertarians always claim that they’re the realists, the ones who understand the cold hard truths of math and economics, not like us silly socialists with our heads in the clouds. Yet at the same time, Smith says that most businesses in the North American Confederacy are small businesses—so small, in fact, that they need nothing more than a home office.

So how does he explain economies of scale?

Large businesses have an inherent advantage over small businesses, because they can take advantage of high volumes to get by on a smaller profit margin. If you own a factory where machines churn out a million widgets per year, you only need to make pennies on each one to turn a profit. Meanwhile, the artisan who crafts each widget by hand obviously has to charge much more to make a living.

Even if the small business buys the same machines as the larger business, there are fixed costs that have to be repaid. The more sales they have, the more they can spread out those costs across each sale, increasing the amount of profit they can squeeze out. So, again, there’s a built-in drive toward bigness. It’s inherently more efficient to be big than to be small.

Of course, there may be sentimental reasons why people prefer to shop at small businesses, even if it costs them more. But in raw economic terms, a bigger business can always undercut a smaller one. And Smith has crafted a world where economics outweighs everything else. Why aren’t people in the North American Confederacy obeying the incentives of the free market?

It would appear that, even though he’s depicted an anarchocapitalist society where nothing limits how big or powerful a corporation can get, L. Neil Smith is uncomfortable with the implications of that.

He wants to depict a Jeffersonian country where most people are homesteaders living under their own vine and fig tree, running small cottage industries from their porches, beholden to no one. He doesn’t want readers to picture a cyberpunk dystopia where colossal, amoral megacorps carve up the world, and most people are impoverished peons who live in company-town slums and spend their lives in indentured servitude to their employers.

But he doesn’t have any explanation of why the latter scenario doesn’t crowd out the former. Why don’t larger businesses outcompete smaller businesses and drive them to extinction? Why don’t companies agree to merge rather than compete with each other, so they face no competitive pressure and can gouge their customers for as much as they want to? Why don’t they try to buy up critical resources to become a monopoly, gain a chokehold on the flow of commerce and raise their prices to eye-watering levels? There seems to be nothing in this world that would prevent any of this from happening, and yet somehow it doesn’t.

High up in that skyscraper, Ed and Win meet their client: Freeman K. Bertram, the head of Paratronics, Ltd.

Bertram was a tallish, nervous type who preferred hornrims to getting his eyeballs resculpted like everybody else; he affected a sort of Italian Renaissance beard and a kilt.

The backstory here is convoluted, but to summarize: Bertram had hired Ed Bear to investigate a series of thefts from one of Paratronics’ warehouses. By coincidence (or is it?), a pen with a Paratronics logo somehow turned up in Win’s world, on the other side of the dimensional portal.

Ed and Win relay this story to him, including the fact that Win comes from a parallel universe, something that Bertram doesn’t seem that shocked by. He’s more annoyed by the fact that Ed hasn’t caught the culprits behind the warehouse theft. To this, Ed replies that he’s advised them on how to tighten their security, and that’s all he’s going to do: “I protect property. I don’t collect people!”

Side note: Is there anyone in this universe who does collect people? Does the North American Confederacy have bounty hunters for hire? Or do you just get away scot-free unless you’re caught red-handed at the scene of the crime?

L. Neil Smith never addresses this question. He makes a big deal out of how everyone here carries weapons at all times to protect themselves, because no one can trample on the rights of an armed individual. If that’s true, it’s hard to see how that profession could exist here, unless they swarm suspects with superior force—but a government can do the same thing, and yet Smith is adamant that his armed anarchists are more than capable of repelling any government intrusion.

Bertram grudgingly accepts Ed’s explanation. He says that to help Win out and solve the mystery of the pen, he can refer them to one of the researchers his company works with, a Dr. Thorens at Laporte University.

On the way out, Win muses, “this country could use a few lessons in elementary sneakiness”. Ed asks what he’s talking about, to which he responds that Bertram was wearing a bronze ring with the eye-in-the-pyramid logo. For some reason, they don’t double back to interrogate him about it, even though this implies that Bertram has ties to the same gang that tried to murder Ed and Win at home.

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Comments

  1. Brendan Rizzo says

    It’s really bizarre that Smith thought capitalism was the best thing since sliced bread, yet was unwilling to go all the way with it. There seem to be two possibilities: 1) Smith thought that capitalism was mom-and-pop stores and the putting-out system, not monopolies and corporations. In that case, he was an idiot. Or 2) He knew that corporations having free rein would be the likely outcome, but thought that anyone made poor by such a system deserved what they got for not working harder, since (in his mind) capitalism is meritocratic, enabling the best people to prosper and sending the undeserving to the indigence they “deserved”. But, since he knew such a world is not attractive to most people, he lied about it being mostly small businesses which don’t compete with one another, much like Marxist-Leninists lie about the vanguard party’s suppression of dissent being necessary to prevent capitalism from reasserting itself after being dismantled.

    So this all means that Smith knew that cooperation is better than competition, yet promoted a system that mandates competition instead of cooperation. I just don’t understand him. He was either a liar or a moron. Even the propertarians themselves wind up arguing for libertarian socialism without realizing it, assuming they argue in good faith at all.

  2. Pierce R. Butler says

    … pulled three gees getting up to the 223rd floor.

    How many, say, 150-lb men (or women) can carry a 300-lb load? Libertarianism makes you really tough!

  3. andrewnotwerdna says

    @Pierce R. Butler: Just what I was going to say. Astronauts and pilots take g-forces sitting (or lying) down, too, but there’s no mention that the elevator has crash couches. Oh, my aching feet, spine and neck.

  4. Katydid says

    What is the population in the Confederation? I ask for several reasons, the most superficial being that not *everybody* can live independently on their 10-acre plot in their fortress of solitude. There just isn’t that much land. And if the population in this world is so small that they can live that way, then what happened to the rest of the population?

    Here’s another facet of economies of scale: periodically the news in this world will run stories about how the midwest towns are emptying of people, leading to shutdowns of grocery stores, schools, entire downtowns, hospitals, etc. If everyone is living “out in the country”, that’s not going to provide them a lot of options. Out here in the real world, a friend of mine just built a retirement house on an acre of land carved from a large farm. Sounds great, and it is in many ways, but they had only one choice of builder and that builder didn’t do good work. Additionally, they can’t get cable tv or broadband internet because it’s not worth a company’s time to run the utilities out there just for them (the cows don’t use internet). Just recently, their heating broke down. There’s one company that services their area, and they had a 3-week backlog.

    I would think all those basics of civilization would be scarce on the ground in Smith’s libertarian world. Why would someone put in a grocery store to serve 100 people?

    But I think I’m starting to see one reason why there’s so much hate toward cities; it’s political.

    • says

      Cows don’t use the Internet in OUR world, but that’s because of taxes!

      And yes, in one sense hatred of cities is political. But calling it that implies that it’s connected to some sort of political reality or circumstance — and the city-haters lost that connection decades ago. The hate has gone from political to pathological. Smith’s abysmally silly depiction of cities proves this.

      • Katydid says

        I forget: does North America cover Canada, too? I googled USA population in 1987 and the answer I got back was 246 million, which is obviously less than half a billion.

        Also, I’m laughing at the Capitalist Magic. Yeah. My retired friend who lives an hour’s drive from Washington, DC can’t get cable tv and has to drive 30 minutes to get to a reasonably-sized grocery store (there are a couple of gas station convenience stores within 10 minutes’ drive of her house, but obviously you can’t do all your shopping from them). Why not? Because our capitalistic system means nobody wants to waste the money to provide these things in a low-density environment. I live in a town of 40k or so, in a congested area that’s surrounded by towns like this that kind of all blend into each other. I’m also 20 – 30 minutes from two major US cities. If my heating breaks down, I have a list of providers to choose from. If I want to go to the grocery store, I’m less than 10 minutes away from four major US chains, plus 5 minutes in either direction from two membesrship big-box stores and 10 minutes from another membership slightly-smaller box store, plus a selection of convenience-store-sized groceries of various ethnicities, and countless actual gas station convenience stores, plus the whole smorgasbord of fast food choices and restaurants large and small. Economies of scale; a grocery store in my area will easily see 100 shoppers a day. That’s success in a capitalistic society.

        @Raging Bee: on the other hand, In everyday life, I am going to run into non-white people, which clearly a lot of city-haters find to be terrifying.

        • jenorafeuer says

          Depending on whose definition you’re using, ‘North America’ could also include Mexico. According to Wikipedia, modern estimates of population are:
          Canada: 41 million
          United States: 340 million
          Mexico: 131 million
          So that totals just over half a billion. But that’s also this year’s numbers, and based on the same Wikipedia pages, the total crossed the 500 million number sometime between 2020 and now, since the numbers at the last 2020/2021 census for all three total closer to 494 million.

          And Smith wrote this in 1979. and set it in 1987. When the real-world population of North America including Mexico was more like a third of a billion.

          So, even assuming some degree of rounding, the population of the Confederacy here is significantly higher than the real world continent of the time, and at the same time more of it lives in smaller communities. And yet at the same time you have these massive city structures.

          It shouldn’t be any shock by now that Smith doesn’t understand infrastructure requirements (and he’s far from the only author to blatantly not understand infrastructure and put out numbers that fall apart under any logical investigation), but still…

          I’m reminded of some research I did for a low fantasy story of my own a few years back, where I realized that Imperial Rome at its height had a population of over a million and a massive amount of infrastructure dedicated just to making that possible. After the fall of Rome, the first European city to hit that mark again was London, a little while after the Industrial Revolution… a millennium and a half later. Dealing with large concentrations of people is a lot harder than most people think, as you have to get food and water in, and waste out.

          Speaking of getting water in, of course, some of the real-world implications of that became big news over the last few days: Tehran is on the edge of running out of water because they’ve drained the aquifers so much that the land has compacted over them by multiple meters and they can’t refill any more. Iran is literally talking about moving the capital elsewhere. Now also remember that similar things have already happened to Mexico City (I remember seeing pictures a couple of decades ago of streets with pipes above the street level because the street had sunk down around the pipes) and chunks of Florida are dealing with seawater getting into the aquifers.

          This version of ‘Tragedy of the Commons’ is hard enough to prevent even with a government capable of giving people orders to stop draining the water. Without one, it’s even less likely to happen.

      • says

        In the real world, shifting people into the suburbs took a lot of government work. Otherwise there’d be incentives to grow as their are in our world. Even small businesses might find advantage in working in a community that already has lots of trained, educated people.
        I’m in the middle of Americans Against The City and Smith’s fantasy of Jeffersonian small business owners doing business out of their living room is much in the anti-urban mode … except he has cities anyway.
        And as we’ve seen the past few years, doing business out of your home is quite compatible with running large companies.

  5. sonofrojblake says

    Here’s something I can say with reasonable certainty – Smith has never “pulled three gees”. Anyone who installed a lift (elevator, if you must) that puts its passengers under that degree of physical stress would be receiving a visit from said passengers the day after… and they’d be armed. Or in this world, they’d be sued out of existence before their second installation was finished. If you need to get to the 223rd floor, you can damn well wait the trivial amount of time it will take, because the alternative is suddenly weighing a quarter of a tonne and seeing how your joints hold up to that. (Hang on – these are Americans… they probably already weigh a quarter of a tonne, but that only makes them less likely to be fit enough to take the acceleration without immediately breaking something).

    Also, in a world where “skyscrapers “swooping five hundred stories [up]”, the HEAD of Paratronics is slumming it on floor 223? How much harder does this poor fucker have to work to get to the top?

    Also, FIVE HUNDRED storeys? (that’s the correct spelling).
    The Empire State building has 102 storeys. Even counting the antenna on the top, it’s a little over 400m tall. The Twin Towers had 110, in again a little over 400m. It’s reasonable, therefore, to count a “storey” as about 4m. So a five hundred storey skyscraper would be (takes off socks) 2 KILOmetres tall. That’s 2.5 Burj Khalifas. What kind of unobtainium are they using to build these things and why don’t they already have an artisan, built-in-someone’s-front-room fucking SPACE ELEVATOR? (Or is that a spoiler for a later chapter?)

    Finally, how sick is everyone of the doublethink inherent in a supposedly Machiavellian genius villain so fucking stupid they walk around with the logo of their super-secret organisation IN PLAIN VIEW IN PUBLIC? (See also that guy wearing the Hydra pin in the otherwise best-movie-in-the-franchise Winter Soldier)

    • Brendan Rizzo says

      Have the conspiracy theorists taught you nothing? The evil organization’s members always wear their insignia in public just to show off how they are utterly untouchable and can’t be stopped. Duh. [/sarcasm]

      But that crack about Americans weighing 500 pounds was really uncalled for, you know. That’s very much an offensive stereotype. People would naturally be furious if you said Mexicans were lazy or Japanese can’t say the letter L properly, and they would be right to do so. This isn’t any different from those.

      • sonofrojblake says

        The difference is I’d never say Mexicans are lazy (you try building a football stadium a mile above sea level then get back to me) and I have a number of Japanese friends who are all perfectly capable of saying the letter L. I can’t imagine why you’d say either, although some of my Japanese colleagues did struggle with the L’s, but I didn’t feel qualified to comment on that given that once the pleasantries, drinks, food orders and martial arts conversations are finished, I’m completely out of Japanese.

        On the flipside, I’ve been to the USA. I’ve seen the people. The first time I went there I’d spent the previous week in one of the most densely populated cities on earth (Tokyo), and in seven days there I was the tallest, fattest man within sight ALL THE TIME. (183cm, 88kg – BMI about 26 so very slightly overweight).

        I flew out of Narita and into JFK and literally all of the first dozen people I saw there were at a minimum twice my bodyweight. In particular, the gentleman with the badge who was rude to me because I was able to read and try to obey the sign at immigration inviting me to put my finger on the pad and look into the camera was, bar none, the fattest person I had ever seen in my life. (That record was broken a number of times in the following days.)

        Now yes, obviously, I did see some people in the USA who weren’t morbidly obese over the course of the next seven days… but I never went more than five minutes, at work or outside it, without being able to see someone at least twice my size. Saying “Americans are fat” is like saying “Japanese people are short” or “Swedish people are blonde” – it ought to be blindingly obvious that it’s something nobody would claim is 100% true, but to pretend it’s other than a reasonable generalisation you could verify just by walking around the place for a few days is perverse.

        • Silentbob says

          A quick Goog shows the average weight of American men is 199 pounds, or about 2.5% more than sonofroj’s self-reported weight.

          Maybe he needs to Google “confirmation bias”.

          X-D

          • Brendan Rizzo says

            And even if his claim about a substantial minority of Americans weighing twice his body mass is true, that’s still significantly less than a quarter tonne.

    • says

      Whaddaya mean “what kind of unobtainium?” Is there, like, more than one isotope of that element? I guess if there was a radioactive isotope of unobtainium, that could provide enough energy to enable a 500-storey building to “swoop”…

  6. andrewnotwerdna says

    For the sake of argument, I can accept “Almost everybody works from home in self-owned businesses” is not technically inconsistent with “Some businesses need 500 stories of office building to hold some fraction of their staff” (remember – they have warehouses, so the office building doesn’t hold all their staff), but it seems like if both are true, then Paratronics is one of the largest businesses in the NAC, if not the largest; nice of the owner to welcome them to his office on such short notice, wasn’t it?

  7. says

    Most Confederates do business out of their living rooms, which discourages undue formality and keeps enterprises small.

    If that’s the case, then when — and WHY — did all those 500-story megalopoli get built, rocket-elevators, car-parks and all?

  8. says

    The thing that leaps out at me is the head of the company living in his corporate skyscraper like a small business owner lives over the store. Um, small business owners did that because it was cheap and convenient, Why would this rich guy be doing it?
    I’m forgiving of the massive skyscraper because insanely tall buildings have been a trope in SF for years. But why would it exist in this world? Because it’s cool? Because being the head of a company staffed by (I presume) wage slave corporate drones proves the dude is baaad?
    Also “Paratronics, Ltd” — in our world a limited company is one where shareholder and owner liability is legally limited. How does that work when there’s no government to establish corporate or LLC charters? Are the owners on the hook for their employees’ actions — which would certainly be a disincentive to big business.

  9. Snowberry says

    Well, I guess if the elevators are stupidly fast, that mostly solves the problem of vertical “traffic jams” without having to devote excessive space to large numbers of elevator shafts.

    There are two usual sci-fi solutions to this problem. One is to have a mix of regular elevators which only travel over a limited range of adjacent floors, and express elevators which only travel between all of the limited number of “hub” floors. The other is “smart” elevators which can switch shafts to go around each other.

    A less common solution is to just ditch the idea of mega-tall elevators and instead use cube buildings, and have horizontal elevator shafts in addition to vertical ones and divide the building into 3D sectors rather than just floors. Though I suspect “elevator” wouldn’t be a technically correct term to use for one which moves horizontally, but I’m not aware of anyone referring to them as anything else. (Levelator? Floor carriage?) But this is the first time I’ve seen “elevators move with crushing acceleration and people just put up with it”.

    • Snowberry says

      mega-tall elevators

      Oops, I meant “mega-tall skyscrapers”. Or mega-buildings in general, I guess, assuming there are such things in the future which are not called “skyscrapers”. Though I should also note: since a cube building would have a low surface area to volume ratio, that means a lot fewer external windows, so I’d guess that wouldn’t be a great option for residential or office buildings. Unless indoor parks become a big thing, acting as sort of an “interior outdoors”, and a lot of people end up being okay with that.

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