Archive for December, 2009
| Peter Klein |
Joe Mahoney, Anita McGahan, Christos Pitelis, and I have written a paper, “Toward a Theory of Public Entrepreneurship,” exploring the application of concepts, theories, and approaches from the entrepreneurship literature to non-market behavior. We argue that governments, government agencies, social enterprises, charitable organizations, and other “public” actors can be described as being alert to opportunities for value creation and capture, exercising judgment over the deployment of resources under uncertainty, introducing technological and organizational innovations, and so on. These actors are, in a sense, “public entrepreneurs.” This characterization also helps highlight critical differences between private and public actors and organizations, differences relating to the definition and measurement of objectives, the ability to evaluate performance, the nature of external governance, and, of course, the role of coercion. The paper is very much an exploratory effort in this area, and we certainly welcome comments and suggestions.
Here’s the abstract:
This paper explores innovation, experimentation, and creativity in the public domain and in the public interest. Researchers in various disciplines have studied public entrepreneurship, but there is little work in management and economics on the nature, incentives, constraints and boundaries of entrepreneurship directed to public ends. We identify a framework for analyzing public entrepreneurship and its relationship to private entrepreneurial behavior. We submit that public and private entrepreneurship share essential features but differ critically regarding the definition and measurement of objectives, the nature of the selection environment, and the opportunities for rent-seeking. We describe four levels of analysis for studying public entrepreneurship, provide examples, and suggest new research directions.
| Peter Klein |
- Via LRC, Jim Rogers and Marc Faber are bullish on commodities and agribusiness. “Rogers says that it will be farmers not bankers driving Ferraris in the coming decades. Faber likens investing in agriculture to investing in oil in 2001 or 2002.” Rogers is good on macro, BTW.
- The Illinois Department of Agriculture — bless its heart! — has swooped in to protect high-end Chicago restaurant diners from the evils of unregulated designer sausages. Notes Thom Lambert: “The charcuteries’ sophisticated patrons realize they’re dealing with unlicensed meat-preparing facilities, but they know the sausage makers, are aware of the high-quality products they use and the care they take in making their products, and are willing to purchase the products despite the absence of a commercial license.” No, no, reputation effects cannot, I repeat, cannot, substitute for one-size-fits-all, top-down, government regulation! People might start thinking for themselves, you know.
- Christine Harbin writes on libertarian food paternalism. “If America were serious about reducing the caloric intake of its citizens, then officials would eliminate the subsidies that it pays to corn producers rather than instituting sin taxes.”
- Here’s an updated food chain, with zombies.
| Peter Klein |
Did Sidney Poitier Granger-cause Denzel Washington? Chris Cagle discusses. Imagine similar questions in management: Did Harold Geneen Granger-cause Jack Welch? Did Schumpeter Granger-cause Nelson and Winter? Who Granger-caused Nicolai Foss? (Answer: he’s sui generis.)
| Peter Klein |
| Craig Pirrong |
I am reading Vernon Smith’s Rationality in Economics. I highly, highly recommend it. Largely a homage to Hayek, it explores the implications of Hayek’s distinction between constructivist rationality and what Smith relabels ecological rationality. It contains a wealth of methodological and substantive insights. Smith is knowledgeable and thoughtful. He is almost John Stuart Mill-like in his even handed and fair characterizations of competing views, even those he disagrees with. He integrates experimental economics, game theory, institutional economics, neoclassical economics, neurology, and much, much more.
What fascinates Smith is the ineffable process by which an ecologically rational order emerges from the actions of myriad imperfectly informed and incompletely rational (in the constructivist sense) individuals. This process — a sort of economic transubstantiation — is the most fascinating economic mystery. It is also, alas, one that has received far too little attention from economists whose formal tools permit them to analyze (constructively) equilibrium, but which are virtually powerless to analyze the process of getting there; the proverbial drunks looking for their keys under the lamppost.
We live in an era of constructivism regnant. In health care and finance, especially, constructivist schemes will reshape for better or worse — and almost certainly worse — vast swathes of the American economy. What’s more troubling still, this is constructivism refracted through the flawed lens of politics and public choice. Appreciation of the emergent order, the ecologically rational, is sadly rare. Vernon Smith appreciates it, deeply, with an almost religious sense of awe. Read his book and you will appreciate it too.
| Peter Klein |
I took the kids to see Avatar this weekend. From a technical standpoint, Jim Cameron’s film is remarkable, a breakthrough, as good as advertised. The alien world Pandora is stunningly realistic, detailed, convincing. The computer-generated characters look and move like real actors. The battle scenes are phenomenal.
But the storyline didn’t grab me. It’s a twist on that familiar Hollywood trope: evil, materialist, capitalist, militarist humans versus nature-loving, low-carbon-footprint, New Agey savages so noble they would have made Rousseau blush. The computer-generated landscapes are dazzlingly three-dimensional, but the characters, both human and alien, are cartoonish and one-dimensional (especially the Head Evil Capitalist, played here by Giovanni Ribisi, essentially reprising Paul Riser’s role from Cameron’s Aliens). The Pandorans are in their own way as clichéd as Peter Jackson’s much-derided Skull Islanders. I appreciate the film’s antiwar, anti-imperialist message, but really, the Earth First! propaganda is way, way over the top. And consider these ironies:
1. Avatar was written and directed by bazillionaire businessman Jim Cameron, is produced and distributed by giant corporation 20th-Century Fox, and will likely gross hundreds of million dollars. Naturally the film’s villain is — you guessed it — a giant corporation! Because, you know, businesspeople and money and corporations are evil and stuff.
2. The film was made possible by Cameron’s highly innovative, beyond-the-state-of-the-art, years-in-the-making technological innovations. Yet one of the film’s main themes is the evils of technology and capital accumulation and the beauty of live-for-today, pre-industrial society. The Pandorans literally worship their planet and don’t just hug their animals and tress, they physically bond with them through some mystical (and anatomically curious) process. The poor humans, one of the characters explains, have destroyed their own “Mother.” Blech.
Update: Peter Suderman beat me to it, calling Avatar
one of the stupidest major movies in recently memory, blithely peddling a message that its entire production process actually undermines. That Avatar’s melodramatic attacks on corporate interests and its defense of simple, natural living come packaged as one of the most expensive, and probably the most technically advanced, corporate films in history would seem to indicate that only quality bigger than the movie’s stupidity is its head-in-the-clouds hypocrisy. Cameron’s made a movie that he intends to be epic and awesome, but the only thing that’s awesome here is his total lack of self-awareness.
Stephan Kinsella sees a libertarian defense of property rights, and so do I, but for me that message was buried beneath the eco-propaganda. Had the earthlings homesteaded some piece of unoccupied Pandoran land, put it to productive use, and then the natives decided they needed the land or that its economic value belonged to “Mother Pandora,” is there any doubt what side Cameron would be on?
| Peter Klein |
At year-end the Onion is featuring “Top Ten Stories of the Last 4.5 Billion Years” and some are O&M-themed. A look at child labor is cute, if uninformed (some of them little buggers actually worked before the Industrial Revolution, believe it or not). And I liked these person-on-the-street reflections on Henry Ford:
Ethel Smith, Auto Worker: “It’s satisfying to know I’m helping to build an industry and a future for my grandchildren and great-grandchildren right here in Detroit.”
Walter Booker, Craftsman: “It’s about time. I’ve had enough of those mind-numbingly boring jobs where you have to do different things all day.”
And don’t miss “Four Or Five Guys Pretty Much Carry Whole Renaissance”: “Our research indicates that da Vinci, Michelangelo, Shakespeare, and Galileo basically hoisted the entire intellectual transformation of mankind onto their shoulders while everyone else just sat around being superstitious nimrods.”