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The myth of the $600 hammer (1998)

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Re: The myth of the $600 hammer (1998)

#161

Post by denton-scratch »

enkid wrote: post #58
ekidd wrote: post #9

Earlier quoted context omitted.

> If the government wanted to buy another one, the contractor would have charged them an extra $435. This claim appears to contradict what the story says, as far as I can tell? He's the original: > The military bought the hammer, Kelman explained, bundled into one bulk purchase of many different spare parts. But when the contractors allocated their engineering expenses among the individual spare parts on the list-a b…

Sometimes what's written on paperwork can be silly because it doesn't really matter and the cost to verify or correct stuff that is estimated costs more than an estimate. Other times it has to be more precise than is possible, so you have to figure out a good way to "estimate" it. Being inaccurate isn't always problem if the costs outweigh the benefits of being accurate.

> Being inaccurate isn't always problem if the costs outweigh the benefits of being accurate.

You're speaking of public money; the cost of inaccuracy is much greater than the amount of the inaccuracy itself, it erodes public trust.

Also, the difference between $15 and $600 can't be described as an "inaccuracy".

Re: The myth of the $600 hammer (1998)

#162

Post by MichaelZuo »

mattkrause wrote: post #106
karaterobot wrote: post #31

Earlier quoted context omitted.

If the total R&D cost for all items is split across every single product equally, there's no way to tell how much of the $435 hammer is R&D for the hammer. It's a really weird way to do accounting, almost like they just didn't keep track of how much R&D they did for each item. And that makes you wonder if the amount they are charging is even real in the first place. In general it lowers confidence and makes you think…

> almost like they just didn't keep track of how much R&D they did for each item. That’s often almost the whole point! Tracking the R&D effort for each item in the repair kit would add an enormous amount of overhead and accomplish essentially nothing. The numbers will be wild guesses and you’re going to have to make tons of ad hoc decisions about allocation anyway. Suppose you tweak the design so it a part can be att…

At the very least the cost could be split into

1. actual cost

2. guesstimated additional cost of 'very hard to split X'.

So that people looking at the accounting many degrees of separation removed will still be able to understand which is which and the relative proportion.

Re: The myth of the $600 hammer (1998)

#163

Post by MichaelZuo »

roflyear wrote: post #119
r3trohack3r wrote: post #118

A few years ago my buddy worked construction on a military project. Every morning he’d wake up before sunrise and drive 3 hours out into the middle of no where to work what looked like a gulag. They ran huge capacity wires out to no where. They’d build a structure, tear it down, and build it again 20 feet to the left. They did this for months. Then he was fired for no reason. It seemed common knowledge that they rota…

The truth is somewhere in the middle - there are bidding systems to avoid issues, but there's also calling up your buddy and saying "everyone else bid $nnnk, if you bid $nnnk-$999 you'll win it." Etc.. almost every system can be gamed.

That wouldn't explain why someone would pay to build a structure, tear it down, build the same thing again 20 feet away, over and over.

Re: The myth of the $600 hammer (1998)

#164

Post by db48x »

dmurray wrote: post #158
db48x wrote: post #149

Earlier quoted context omitted.

It was purely a stunt for the congresscritter in question; they were not fooled into thinking that the hammer had really cost that much. If they had been honest, they would have talked about how the repair kit cost a lot of money, and tried to figure out if it had been worth it. Along the way they could have discussed the accounting fiction by which the cost of assembling the kits from bulk purchases of common tools…

If their point was to protest the poor accounting practices, calling attention to the more ridiculous consequences is a good way to do that. Likewise, if their point was to protest potentially wasteful spending and fraud. Even if they couldn't be certain there was waste or fraud because of the lack of transparency in accounting, it's fair for them to call attention to the accounting practices by pointing out how they…

You’re inventing good motives that didn’t exist. The hammer was merely a bad example of government waste. Government waste certainly exists, but this was a flawed example. The congresscritter found the flaw useful, nothing more.

Re: The myth of the $600 hammer (1998)

#165

Post by aflag »

kibwen wrote: post #67
unreal37 wrote: post #11

Earlier quoted context omitted.

I acknowledged in my comment that even if the most charitable explanation was assumed, the method of accounting is misleading and makes determining the cost of anything impossible.

From the article: > The new moral is that numbers, taken as self-explanatory truths by the public and the press, can in fact be the woefully distorted products of a broken accounting system. So it appears you're just in agreement with the OP that the accounting system is broken, while also being the exact same sort of victim of misunderstanding that the broken accounting fosters.

We don't even know if the system is broken. It's not clear whether this was common case or a one off instance that they didn't really have an appropriate form for.

Re: The myth of the $600 hammer (1998)

#166

Post by lmm »

db48x wrote: post #149
lmm wrote: post #144

Earlier quoted context omitted.

I don't see a problem with a congressperson taking the accounting at face value and assuming it means what it says. Our accounting should be trustworthy.

It was purely a stunt for the congresscritter in question; they were not fooled into thinking that the hammer had really cost that much. If they had been honest, they would have talked about how the repair kit cost a lot of money, and tried to figure out if it had been worth it. Along the way they could have discussed the accounting fiction by which the cost of assembling the kits from bulk purchases of common tools…

> It was purely a stunt for the congresscritter in question; they were not fooled into thinking that the hammer had really cost that much.

As far as I can tell the hammer "really did" cost that much in every meaningful sense. The government's accounting said they'd paid $435 for a hammer and they didn't have a problem with that. Whether the government was getting ripped off by some dude buying a hammer at a hardware store for $10 and selling it for $435, or by some lab doing unbudgeted R&D and concealing the cost of it in the hammer invoice, is not really here nor there. It generated outrage because it really was outrageous.

Re: The myth of the $600 hammer (1998)

#167

Post by 6510 »

flavius29663 wrote: post #20
unreal37 wrote: post #11

Earlier quoted context omitted.

I acknowledged in my comment that even if the most charitable explanation was assumed, the method of accounting is misleading and makes determining the cost of anything impossible.

How is that? If you buy an engine, do you itemize by: engine block, alternator, water pump and starter? You might include in the requirements that the engine must come with all 4 extra elements, but you will pay for the whole engine. Now, if someone wants to be misleading, they could say the water pump was 1/4 of the price...

I cant help but think how hard it would have been to do that 60 years ago compared to today. It would not be all that challenging or expensive but it would be revealing.

Re: The myth of the $600 hammer (1998)

#168

Post by SkipperCat »

harry8 wrote: post #153
SkipperCat wrote: post #99

Earlier quoted context omitted.

From Wikipedia... "McDonalds had received more than 700 reports of people burned by their coffee to varying degrees of severity". I remember reading a lot about this. It was the fact that McDonalds knew they had a dangerous product but wanted to keep it "hot" at the drive-thru so it would still be drinkable after people finished their car rides. That was a large factor of why the courts found McDonalds 80% liable in…

yeah if you want to argue the cups were rubbish and negligently so, fine. Go right ahead, there /may/ be a sensible discussion to be had there somewhere. It is at least possible "Caution contents hot" Does not seem to be any way an engineering fix for this though, does it? Like seriously, why do you think that is written there? People expect cold? That fixes it? The mind boggles. So many legal fees on garbage like th…

I think a lot of the case focused on the temperature of the coffee. McDonalds brewed it above 135F and that put it in the category of "burn risk". They could have brewed it slightly cooler, but McDonalds thought it would detract from the taste.

Having "caution hot" was probably not enough of a warning. They should have put "caution burn risk" or something like that on the cups.

Re: The myth of the $600 hammer (1998)

#169

Post by ryathal »

denton-scratch wrote: post #161
enkid wrote: post #58

Earlier quoted context omitted.

Sometimes what's written on paperwork can be silly because it doesn't really matter and the cost to verify or correct stuff that is estimated costs more than an estimate. Other times it has to be more precise than is possible, so you have to figure out a good way to "estimate" it. Being inaccurate isn't always problem if the costs outweigh the benefits of being accurate.

> Being inaccurate isn't always problem if the costs outweigh the benefits of being accurate. You're speaking of public money; the cost of inaccuracy is much greater than the amount of the inaccuracy itself, it erodes public trust. Also, the difference between $15 and $600 can't be described as an "inaccuracy".

having worked in government the amount of time wasted to ensure that money wasn't wasted is itself quite wasteful.

Re: The myth of the $600 hammer (1998)

#170

Post by db48x »

lmm wrote: post #166
db48x wrote: post #149

Earlier quoted context omitted.

It was purely a stunt for the congresscritter in question; they were not fooled into thinking that the hammer had really cost that much. If they had been honest, they would have talked about how the repair kit cost a lot of money, and tried to figure out if it had been worth it. Along the way they could have discussed the accounting fiction by which the cost of assembling the kits from bulk purchases of common tools…

> It was purely a stunt for the congresscritter in question; they were not fooled into thinking that the hammer had really cost that much. As far as I can tell the hammer "really did" cost that much in every meaningful sense. The government's accounting said they'd paid $435 for a hammer and they didn't have a problem with that. Whether the government was getting ripped off by some dude buying a hammer at a hardware…

No, it really wasn’t outrageous. It was bad accounting, but not an outrageous waste of money.

They were essentially building repair kits that could be shipped off to military bases and used to maintain particular pieces of equipment. The contractor bought the tools and spare parts in bulk, marshaled them all at some warehouse somewhere, and then broke down the bulk items into individual kits. A palette full of hammers got broken up so that each kit had exactly one hammer. The same has to happen for all of the other tools and items in the kit.

That’s a useful service and it is definitely worth paying money for. If you want a good example, check out this video: https://www.youtube.com/watch?v=FxBgTDpsUC0. You can see how this would be used: in the 1940s the army was setting up bases everywhere, and they all needed to communicate with each other. So obviously you ship out teletype machines, a repair kit or two, a pile of manuals, and a platoon of Signal Corps engineers to keep the teletypes in working order. The kit is mostly common tools, but if every base had to order every one of those items individually then it would be chaos. Logistics wins wars, and this is a very good example of how.

Then whoever did the bookkeeping recorded it as if they had purchased COTS items each with some normal price, instead of doing it as a contracted service with both material and labor costs. You see how one bookkeeping method can be used to generate outrage for political gain, while the other cannot? It was an entirely cynical manipulation on the part of the politician(s) in question.

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