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The economic benefit of metrication

May 30 2002 at 10:54 PM
Ralf 

-
Since Paul asked me nicely to start a new thread in hope of a good debate, here it is.

Companies will no longer have to distinguish between domestic and international market. Since the UK mostly exports to the EU, until now they needed two different sets of machines, imperial and metric ones.
Since imperial and metric products are not interchangeable, fluctuations in those markets couldn't be buffered by using stuff in your imperial stock for the metric market and vice versa.

With being metric, you can design you company slimmer and therefore quicker in reaction since you can re-use both machines and stock for those markets.

After all, the best argument is that of experience, the industry has always been the one for pushing metrication, one would expect they know what's best for themselves.

Cheers,
Ralf

 
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Paul Birch

Re: The economic benefit of metrication

May 30 2002, 11:35 PM 

Thanks Ralf. If you don't mind I'll leave off replying till tomorrow. In the meantime perhaps you could try to quantify some of those claims? (If metrification cost £100 billion but brought in only £10 million a year it obviously wouldn't be worth it - though obviously I'm not suggesting that either of those extreme figures is necessarily even remotely accurate.)

 
 
Conrad

Re: The economic benefit of metrication

May 31 2002, 12:45 AM 

Paul, in the long term it would !

 
 
Ralf

Re: The economic benefit of metrication

May 31 2002, 2:22 AM 

Hmm, putting numbers to this is of course extremely difficult. Considering however that the DTI estimated an overall cost of 30 million pounds for conversion(http://www.dti.gov.uk/cacp/ca/advice/metrication/si-units.pdf), I think you can safely consider that amount of money negligible.
How much there is to gain by metrication is impossible to say, but, as I said, the industry will know why it wants to go metric.

Ralf

 
 

Re: The economic benefit of metrication

May 31 2002, 7:07 AM 

Yes, and we all know that the DTI is the neutral font of all enlightened knowledge, don't we. You may as well have given us a link to "Britain in Metric" and told us to look at those figures.

I'ld contest that industry wants to be metric- industry wants whatever it will not get penalised for, quite often, and when you have the wait of the government and a few pressure groups on your shoulders for thirty-odd years, it must get a little tedious.

And another point: Ralf, before you said people can ask for Imperial, talk in Imperial etc. but it is weighed out in Metric- they are vey compatible you said, however *now* you are saying they are not compatible and it is just too much work. Make up your mind! It is either going to cost us millions and gillians of pounds to remain Imperial or it's not.

 
 

Re: The economic benefit of metrication

May 31 2002, 7:12 AM 

^ *groan* Yes, I know in this meaning "wait" is in fact spelt "weight". Sorry. Another cross brain haywire thing there.

 
 
Ralf

Re: The economic benefit of metrication

May 31 2002, 7:22 AM 

Bryan, read my posting.

Imperial and metric measurements are interchangable, products and the machines that made them are not.

Ralf

 
 
T Bennett

The economic benefits of having just one language

May 31 2002, 8:53 AM 

There may well be economic benefits in the whole world going metric.

There would undoubtedly be economic benefits if we all moved to having one language - just think of the massive translation costs we could save! Come to think of it, just one government would save a lot of money and just one...

T Bennett

 
 
Paul Birch

Conrad:

May 31 2002, 10:12 AM 

No, it wouldn't, not even after 10,000 years, because the interest forgone on the £100 billion would be of order £5 billion a year. The loss to the economy, assuming that the £100 billion came out of funds that would otherwise have been invested in plant and machinery, would be an order of magnitude greater, around £50 billion a year. (Reminder: the £100 billion is illustrative only).

 
 
Paul Birch

Qualitative Ralf:

May 31 2002, 11:03 AM 

Well, it does seem to have started a debate, anyhow!

"Companies will no longer have to distinguish between domestic and international market."

Most companies sell only in domestic markets; most trade is domestic even local trade; and there are good economic reasons why this is so (basically, the further you move something the more it costs). So this is relevant only to the minority of (mostly large) companies with extensive international trade. Most of the differences between countries and markets are nothing to do with weights and measures. For example, labels and manuals have to be printed in many languages; the cost of including two sets of units is negligible by comparison.

"Since the UK mostly exports to the EU"

It doesn't, the actual figure is slightly under half (occasionally fluctuating to slightly over a half). But if, for the sake of argument, we assume that the US (and every other country) is subjected to compulsory metrification too, this won't matter.

"two different sets of machines, imperial and metric ones"

Most products do not need to be separately manufactured for different countries (except on account of other divergent regulations) only relabelled sometimes (which is easy). With just-in-time methods for the final packaging, the same basic stock can be used for all markets (where other regulations and considerations, such as language, do not over-rule). For example, you can ship milk to and from France without having to worry whether it will be sold in pints or litres; and US producers can sell us orange juice without ever needing to know that we'll be putting it in 1 litre cartons.

This isn't true for ALL products, of course. There will always be a few (like sets of spanners) where there is a significant difference. But even here the cost differences are usually pretty small - the same manufacturing plant is used either way.

"the best argument is that of experience"

I agree. And people will voluntarily choose that system that their experience tells them is best for their particular purposes. Compulsion, by contrast, over-rides experience and forces people to use a system that their experience tells them is inferior for those purposes. This, by the way, is a completely general argument; to oversimplify a bit, it is why market economies work and socialism doesn't.

"industry has always been the one for pushing metrication"

This isn't so. Big multinational corporations sometimes do, it is true, but that is because such a change would burden them less than their smaller competitors - giving them an unfair advantage. Much of the profits of big business are in fact spent wastefully attempting to lobby governments to grant them special privileges (wastefully from the perspective of the overall economy, that is).


 
 
Paul Birch

Quantitative Ralf:

May 31 2002, 12:09 PM 

"putting numbers to this is of course extremely difficult"

True. Which is itself a good reason not to impose a system you cannot prove will be beneficial on balance.

I'm afraid I don't believe the DTI "estimate", unless it excludes the costs all the previous and current impositions, which may be considered sunk costs. It can't include the £1 billion or more for the scales that have had to be thrown away and replaced, or the petrol pumps that had to be replaced or drastically and expensively modified. And I don't see how re-signing the roads could be done without dropping another few billions here and there. Then there's the cost of education or re-education, not only of staff, but also of the general public. It is hard to see how the total costs could be much less than £10 billion - and they could easily be a great deal more.

There is another set of costs that may be even more significant - the overall economic loss induced by the loss of choice. This is hard to understand and even harder to measure because by its nature it is invisible. People can see the gains from this or that government project; what they cannot see are the gains it prevented from being realised elsewhere. It's easy to see the jobs created when the government builds a road; it's much harder to see the jobs lost as a result. Compulsory metrification inevitably suffers from the same myopia.

Compulsion removes the competitive bottom line that is necessary for economic efficiency. People can no longer know whether they are doing well or badly - the market mechanism for comparison is lost. Typically (as for instance in the NHS or any other public sector or heavily regulated industry) real economic output is likely to be far lower than the efficient figure, perhaps only a third or less of the value of the compulsorily injected input. Loss of the ability competitively to choose the most economically efficient units (there is no reason to believe that they will always be metric units, still less the particular set of metric units imposed) will inevitably induce a considerable loss of economic efficiency in those areas.

Let's see if we can get at some numbers from another direction. First, remember that economic efficiency ultimately means maximising the utility or satisfaction of consumers, not the monetary profits of firms or government revenues.

Now, if I go to the shop and cannot buy what I want, I am dissatisfied. At a rough estimate, the value to me of being able to buy in imperial units is of the same order as the current market price of those products. For example, I am now becoming willing to make an hour's drive perhaps once a week, to go to Tesco's where I can still buy at least some things in British units. I am perhaps more concerned by this than the average consumer, but on the other hand I probably spend considerably less than the average on such goods. At a very rough estimate, then, the freedom to buy in British units is worth in the region of £100-£200 per consumer per year, or say £5-10 billion a year in all.

The popularity of Tesco's and imperial units generally would tend to back up this estimate. Recently, our local Somerfield supermarket closed for renovations. I expected that the nearby co-op would be packed with the dispaced shoppers, but was surprised to find it as empty as usual, when as a displaced shopper myself I went in to get my usual 4 pint bottle of milk (and a few other odds and ends). They didn't have any - only an inadequate 2 litre. So I left without buying anything. I can't be sure that the co-op's annoying preference for metric was what put off the other displaced shoppers, but I'd think it must have been a major factor.

Now, if metric were fully compulsory, customers would no longer be able to display their preferences by taking their custom elsewhere; the financial loss of compulsory metrification would no longer be apparent. But the economic loss of satisfaction would remain very real; Pareto optimisation would cease; and the market would continue in a distorted and inefficient state. It would not be possible to calculate exactly how much the net loss was increasing or decreasing, as a fraction of GDP, but history suggests that it would definitely tend to increase, that without the bottom line of competition inefficiencies would ineluctably grow.

 
 
Leonard

idea for determining econ. value of customers' units satisfaction

May 31 2002, 2:44 PM 

"Now, if I go to the shop and cannot buy what I want, I am dissatisfied. At a rough estimate, the value to me of being able to buy in imperial units is of the same order as the current market price of those products. For example, I am now becoming willing to make an hour's drive perhaps once a week, to go to Tesco's where I can still buy at least some things in British units. I am perhaps more concerned by this than the average consumer, but on the other hand I probably spend considerably less than the average on such goods. At a very rough estimate, then, the freedom to buy in British units is worth in the region of £100-£200 per consumer per year, or say £5-10 billion a year in all."

Interesting idea. I believe economic researchers, using
random samples of consumers without prior intellectual stake, and with a well-designed model, could put an
testable value on the satisfaction to customers of
using the familiar units. And indeed my understanding is that this kind of technique has already been developed in other contexts and is considered proper as input to cost-benefit analysis by at least some economists. Unfortunately cannot cite example.

I suppose you are thinking of a discounted cost stream
over, say, 10 transitional years. It is the sort of thing you can get cost-benefit analysts to do with
some degree of professional objectivity. Really interesting idea. Beginnings of quantitative approach.

 
 
Paul Birch

Leonard:

May 31 2002, 2:55 PM 

It's tricky to do with any degree of accuracy - and without introducing an element of compulsion that distorts the very thing you're trying to measure. But it's probably okay for ball-park order-of-magnitude figures.

By the way, is there something unusual about the way you input text? I've noticed that your line lengths tend to be, shall we say, unpredictable!

 
 
Leonard

stimulating ideas

May 31 2002, 3:31 PM 

Going back over thread I was impressed at how
many interesting germs of ideas are here. I live in
an academic community and have some casual contact
with economists (one of my nextdoor neighbors, in the
condo, is young faculty on tenure track, but we
know others too they are a common animal around here).
I ask them about their research sometimes. This what
you are talking about is, it seems to me, academic
idea fodder. It is the sort of thing you can get
graduate students to pursue. There are thesis ideas
here! One can sort of smell academic research possibilities. You have turned up some intriguing
thoughts. Is there already a literature of research
articles that you are drawing on? I don't mean the
well-established economic theory I mean applied to this particular case: units of industry and trade.

BTW in reading your points about the orange juice and
just-in-time packaging etc I began to understand for the first time why the US economy has been doing OK
even using traditional units and a kind of ad hoc
mixture of systems. It kind of "wings it" using some
metric and some customary and it gets along without
paying a great penalty it would seem. But really
graduate students (who are the slaves of academia)
should be set to work finding out the solid facts
about this.

Also the point about large global companies pushing metrication because (their relabeling costs are lower
per item and) it is
just another opportunity to screw the smaller
less global competitors is interesting. Ring of truth. It might be verifiable (based on past experience of
how large globals function) Yippeee.

Anyway now more understandable to me that US economy
continues to get along with less compulsive more ad
hoc ad lib blend of unit practice. Unintuitive. The
naive assumption is always that simpler and
more conceptually consistent is automatically better.

 
 
Leonard

uneven lines, pigheadedness

May 31 2002, 3:42 PM 

Hello, nice to hear from you.
I have the impression that somewhere in this
thread the word pigheaded was used and I have
looked through 3 or 4 times and can't find it.

(I have some minor vision problems.)

It is a good word. If you know in whose post
please tell me where.

This word, or maybe a quote from Wm.Blake
damn braces bless relaxes, might be offered
in explanation for uneven lines for which
please accept apology

 
 
Paul Birch

Leonard:

May 31 2002, 4:18 PM 

You don't need to apologise - no one has yet insisted that lines must be exactly 100 characters in length (oops! I'll be giving them ideas!). I just wondered why it was, given that the reply form automatically word-wraps to a pretty consistent length - perhaps you've been hitting the carriage return without realising that? No matter.

"Pigheadedness" is in the "You all beat about the bush" thread (May 27 10:51 pm, para 3) as my explanation of why deprecated units continue to cling to existence within the marble halls of SI.

I'm afraid I don't recall reading any research articles specifically relating to the costs or benefits of imposing systems of measurement, etc. Most economists probably take it for granted that the free choice of units is naturally more efficient and coercive imposition of units just another example of futile central planning; but I don't know whether anyone has thought it worth trying to quantify the loss (or for that matter any offsetting benefits) empirically or theoretically. Sorry.

"The naive assumption is always that simpler and more conceptually consistent is automatically better" is false not least because the world is intrinsically a more complex place than idealists tend to assume. In some respects complexity (even apparently pointless complexity) is what makes life interesting (increases its informational entropy) and thus worth living. Unless you're a cow, I suppose!


 
 
MikeW

Re: The economic benefit of metrication

May 31 2002, 7:13 PM 

{After all, the best argument is that of experience, the industry has always been the one for pushing metrication, one would expect they know what's best for themselves.}

I an industry--or an individual company--decides to go metric, then it must be doing what is best for itself. This has no bearing on local businesses that sell cheese and fruit to local customers. All companies should base decisions on what their customers want, NOT what the beaurocrats think.

 
 
Ralf

Re: The economic benefit of metrication

May 31 2002, 7:29 PM 

Well, but having two systems of measurements running simultaneously is out of the question, since neither the (big) industry nor politics has any interest to do so.

Ralf

 
 
Ralf

Re: The economic benefit of metrication

May 31 2002, 7:31 PM 

Oh, and neither does the Trading Organization have any interest to do so.

Ralf

 
 
MikeW

Re: The economic benefit of metrication

May 31 2002, 7:49 PM 

{Well, but having two systems of measurements running simultaneously is out of the question, since neither the (big) industry nor politics has any interest to do so.
Oh, and neither does the Trading Organization have any interest to do so.}

It's none of their business. Governments have no authority to interfere in a private transaction. Big industry can only make decisions based on it's customer base; they can not interfere with other industries.


 
 
Paul Birch

Ralf:

May 31 2002, 8:23 PM 

"having two systems of measurements running simultaneously is out of the question"

This is utter nonsense. There are now and always have been MANY systems of measurement running simultaneously, even in the most ardently metricated countries, and there is not the slightest reason why this should not continue to be the case far into the future or indeed for ever. Just as there can be more than one television or radio channel, more than one book in the library, more than one song, more than one language, more than one sex, and more than one person.

We don't even need a single system of measurement within a single organisation - sales or corporate finance could happily use completely different units from the engineers, for example. Not even scientists use a single system of measurement.

 
 
MikeW

Re: The economic benefit of metrication

June 2 2002, 3:10 AM 

Paul Birch wrote

{the petrol pumps that had to be replaced or drastically and expensively modified.}

So it's not true that all British gas pumps are in liters already?

{I went in to get my usual 4 pint bottle of milk}

Is it common practice in Britain to say "4 pints" when talking about a half-gallon? I can honestly say I've never heard anyone talk like that on this side of the Atlantic. But then I suppose is someone over there dared to say "half-gallon" a police swat team would barge in to arrest the vicious criminal.




 
 
Ralf

Re: The economic benefit of metrication

June 2 2002, 8:20 AM 

Hmm. pieceing this all together, I realize that you actually only fight against how much you are regulated by institutions, something you never realized before because it always "belonged to the british culture", i.e using the imnperial system.

The reason you fight against metric is because now it is slapped in your face that you actually NEVER had the choice which system to use, it was always pre-determined by either some king or, nowadays, the Trading Organization.

Ralf

 
 
Paul Birch

MikeW:

June 2 2002, 10:53 AM 

"the petrol pumps that had to be replaced or drastically and expensively modified"

Had. Past tense. That's why I said these might be considered "sunk costs" - but still part of the net costs of compulsory metrification.

It's common practice to talk about 4 pints for the sort of things we buy in pints, like milk. Since a pint a day keeps the doctor away, 4 pints is about enough for 4 days, or, given that one tends to drink a bit more from a bigger bottle, about half a week.

We use gallons for petrol and buckets of water. Half a gallon is about a quarter of a bucketful. It's horses for courses. Horses drink in gallons too: "Give him a couple of gallons of water. Do him good."

 
 
Paul Birch

Ralf:

June 2 2002, 11:09 AM 

Pro-metric types keep on trying to tell us we never had a choice before and couldn't have used metric if we'd wanted to (though I know I did, on occasion), but they never give any evidence.

Is there any truth in this - for any previous period of history - or it it just a metric myth?

Please show me the Statute or Act of Parliament that allegedly banned us from using metric or compelled us to use imperial. Or imposed any comparable restriction. Remember, simply defining units of measurement in law does not prevent people using different units; it merely requires them to use whatever units they use honestly.

 
 
Leonard

laws

June 2 2002, 2:48 PM 

Paul, I hope someone on pro-met side can supply what you
are asking for or admit it does not exist. But maybe
there is another issue here also besides one of
legal statute.

I've the notion that the government can sometimes
make laws which "merely" confirm and regularize some
vernacular or common practice in the civil society.

And at other times a law can be enacted which is a
kind of massive insult to or attack on commonly
accepted practice. Or it could be. If the government
is doing it to reform the people or "for their own
good" or being creative. Like maybe enclosing the
commons when it used to be a general practice to
take the cow there to graze.

Or making a law that you cannot distill corn whisky
when for many farmers in the hills it is the only
way they can get their crop to market. (US Government
imposed heavy taxes on home-distilling back in days
when there were not good roads to bring grain to
market.) I trust you can fill in the history more
correctly than I.

Anyway laws can either confirm and regularize what
the civil society has evolved or they can radically
go against it, or somewhere in between?

 
 
Paul Birch

Leonard's Law?

June 2 2002, 5:36 PM 

Make a good title for a TV series ...

Anyway, if I understand you correctly, you're pointing out that a statute that outlaws common or traditional practices is more of an affront to liberty than one that merely outlaws something that almost nobody wants to do. A law against eating excrement, though theoretically repressive and morally unjustified, would not in practice constitute a particularly grave threat to personal freedom - since no one in his right mind would want to do it anyhow.

Not sure I'm quite up to speed on distilling corn whisky. Did they take the whisky to market instead? Or did they use it to fuel the trucks carrying the corn to market? Or just to keep the drovers on the wagons, though not of course on the wagon, so to speak ... ?

 
 
Leonard

reply to Paul

June 2 2002, 6:08 PM 

I kid you not. The farmers could condense
the economic value of a big load of corn
down into a small jug of whisky. Then they
could pack whisky on horseback or muleback
and sell it at distant market, where it would
be too much trouble to take a wagon.

The Whisky Rebellion against early US gov
was not so much because people were drunkards
but because of transport economics in a place with not
enough good roads (and before rail)

Unfortunately I am really forgetful about
historical dates and don't have time to look
it up.

BTW maybe we need to think about historical
parallels like prohibition and whisky rebellion
etc. What happens when gov tries to bend people
out of shape.

 
 
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