Posts filed under '- Klein -'
The Higher Education Bubble
| Peter Klein |
Will it be the next to burst? Yes, say Joseph Marr Cronin and Howard E. Horton. “Consumers who have questioned whether it is worth spending $1,000 a square foot for a home are now asking whether it is worth spending $1,000 a week to send their kids to college. There is a growing sense among the public that higher education might be overpriced and under-delivering.” Of course it is, which explains the unbridled hostility of the higher-ed establishment toward alternative organizational models. Adds Mark Taylor:
Make no mistake about it, education is big business and, like other big businesses, it is in big trouble. What people outside the education bubble don’t realize and people inside won’t admit is that many colleges and universities are in the same position that major banks and financial institutions are: their assets (endowments down 30-40 percent this year) are plummeting, their liabilities (debts) are growing, most of their costs are fixed and rising, and their income (return on investments, support from government and private donations, etc.) is falling.
These commentators do not, however, speculate on root causes. There’s no doubt the traditional model for producing higher education is grossly inefficient and that there’s been tremendous overinvestment in facilities and staff (malinvestment, in Austrian lingo) over many decades. But why, and why now? One hypothesis is that the democratization of higher education that began in the 1960s not only increased enrollments, but created a wedge between expectations of faculty (we’re here to create and disseminate knowledge and to challenge, engage, and enlighten our students — in the humanities, to teach them political slogans) and those of students (we’re here to party, find mates, and prepare for the job market). Another possibility is that political correctness has distorted the curriculum, creating large and well-funded departments in ethnic studies and postmodern literatre with high overhead and few students, leaving insufficient resources for, and interest in, traditional subjects like math and history. What are some other hypotheses? (Thanks to Dennis Lubahn for the pointers.)
6 comments 4 July 2009
Scott Shane Blogging at the NYT
| Peter Klein |
Scott joins the “You’re the Boss” blogging team (via Dane Stangler).
Add comment 3 July 2009
The Professional Strategy of the Early Austrian Economists
| Peter Klein |
O&M, like other niche academic blogs, deals occasionally with the history and sociology of this or that school of economic or management thought. We think often about professional strategy — how to promote our ideas, how to secure financial and institutional support, how to recruit students and fellow-travelers (”groupies,” according to Nicolai), what competing and complementary movements and schools of thought (not to mention rival blogs) are up to, and so on.
Given our close association with the Austrian school, you might be surprised to learn that the founding Austrians were not at all “strategic” in this sense. They held strongly to the view that truth wins out in the long run, so there is no need to build formal institutions or establish a “movement.” This comes out in a passage from Mises’s recently released Memoirs (a new translation of his earlier Notes and Recollections):
It is necessary to correct the misunderstandings that can be called forth by using the expression “Austrian School.” Neither Menger nor Böhm-Bawerk wanted to found a school in the sense customarily used in university circles. They never attempted to turn young students into blind disciples, nor did they, in turn, provide these same students with professorships. They knew that through books and an academic course of instruction they could promote an understanding suited to dealing with economic problems, thus rendering an important service to society. They understood, however, that they could not rear economists. As pioneers and creative thinkers, they recognized that one cannot arrange for scientific progress, nor breed innovation according to plan. They never attempted to propagandize their theories. Truth would prevail of its own accord when man possessed the faculties necessary to perceive it. Using impertinent means to cause people to pay lip service to a teaching was of no use if they lacked the ability to grasp its substance and significance. (more…)
7 comments 2 July 2009
Does Macroeconomic Theory Influence Macroeconomic Policy?
| Peter Klein |
Not really, according to John Wood’s History of Macroeconomic Policy in the United States (Routledge, 2008). As David Wheelock notes in his EH.Net review:
Wood argues that U.S. fiscal and monetary policy have been remarkably consistent over the decades and largely uninfluenced by macroeconomic theory. Economists have rationalized more than influenced policy, Wood contends, and the direction of influence between economic theory and practice is primarily from the latter to the former.
This is of course the classic explanation for the spread of Keynesianism after 1936: rather than proposing a new approach to macroeconomic policy, the General Theory simply rationalized the massive deficit-spending and easy-money policies already in place (and long desired by disreputable economists such as Foster and Catchings).
1 comment 30 June 2009
Pioneers of Law and Economics
| Peter Klein |
Profiles of the leading scholars in contemporary law and economics, now out from Edward Elgar. Congratulations to Josh Wright and Lloyd Cohen for putting this together. Table of contents below the fold. (more…)
Add comment 29 June 2009
Journalists Duped Again
| Peter Klein |
From Walter Duranty to Judith Miller to recent reporting on the financial crisis (1, 2), the mainstream press continues to do what it has always done: print what it wants to be true, rather than investigate what’s actually going on. I got a chuckle out of the latest example: a French magazine that gave its student photojournalism award to a series of dramatic pictures of French youth living in poverty, only to learn the pictures were fakes. Oops! Not quite in the same class as the Sokal affair, but in the same spirit. (HT: Mario Rizzo.)
1 comment 27 June 2009
Slides from Foss-Klein PhD Course
| Peter Klein |
Slides from the PhD course, “The Theory of the Firm and Its Applications in Management Research I,” are now available on the course webpage (scroll down to the bottom).
PS: Did you notice the course title ends with “I,” implying there will be a II and maybe a III? Gotta love that precommitment device. It’s as if Stallone had named his first film “Rocky I.”
2 comments 26 June 2009
Doug North Line of the Day
| Peter Klein |
From Bob Margo’s EH.Net review of North, Wallis, and Weingast’s Violence and Social Orders: A Conceptual Framework for Interpreting Recorded Human History:
In my book people are iconic if I can summarize their life’s work in ten words or less. North takes two: “Institutions matter.”
He adds: “The opposite perspective — viewed in isolation most institutions don’t matter much, being Harberger triangles and small ones at that — has its fans in modern economics. But North has convinced the majority of economic historians, a goodly share of world’s development wonks, and the Nobel Prize Committee that he’s right.”
Update: Art Carden beat me to this.
2 comments 25 June 2009
Austrian Theory of the Firm Bleg
| Peter Klein |
This post is for devotees and fellow-travelers of the Austrian school. As some of you know I maintain an online bibliography of articles and books dealing with applications of Austrian economics to the theory of the firm (and strategic management more generally). Happily, this literature has grown dramatically in the last few years. Sadly, I have not had time to update the bibliography on a consistent basis. So, please send me your suggested additions and corrections (ideally with URLs). Self-nominations are welcome!
2 comments 24 June 2009
Sid Winter on Methodology
| Peter Klein |
Overheard at last week’s DRUID conference, in Sid Winter’s discussion of three papers on technology strategy:
“Our near-exclusive focus on statistical significance has distracted us from the main task of scientific explanation: the determination of cause and effect.”
Three cheers to Sid for standing with Menger over Walras!
5 comments 24 June 2009
Copenhagen Fun
| Peter Klein |
A selection of Kleins and Fosses at Gammel Torv in central Copenhagen (another Foss is in the background, hiding behind a lamppost, and the head of Clan Klein is behind the camera). No real reason to post this except to prove that Nicolai and I both smile occasionally. Note to colleagues at home: This is a business trip, I promise.
2 comments 23 June 2009
Rajshree Agarwal on the US Government’s Response to the Financial Crisis
| Peter Klein |
Nice interview with Rajshree Agarwal on the US government’s response to the financial crisis. “Has It Helped?” Rajshree’s answer in brief: No.
1 comment 22 June 2009
Show Us Some Love
| Peter Klein |
Thanks to Randy for these pictures of science-related tatoos. The phrase “beyond awesome” comes to mind. Who among you will be the first to get an O&M-themed body decoration?
4 comments 19 June 2009
Sameulson on the Crisis
| Peter Klein |
Is it wrong to pick on a 94-year-old? Mario Rizzo doesn’t think so, and neither do I — if it’s Paul Samuelson, perhaps the most influential economist of the twentieth century and bête noire to Austrians, libertarians, and many other types I hold near and dear. Samuelson, champion of “scientific” economics (i.e., the nineteenth-century physics model so effectively skewered by Phil Mirowski), the neo-Keynesian synthesis, and the everything-but-the-kitchen-sink approach to economics textbooks, now says prediction is impossible and deficit spending unsustainable. What’s next, a startling pronouncement that, contrary to what Samuelson wrote in the pre-1991 editions of his textbook, the Soviet Union was not actually more productive than the US?
Bonus Keynesian material (via Ross Emmett): Did Keynes die of a bad tooth?
2 comments 18 June 2009
Events @CBS
| Peter Klein |
I’ve just arrived in Copenhagen, where I’m spending a month as a visiting professor at the SMG. Copenhagen Business School has become one of the most intellectually exciting places in Europe. This week alone the school is hosting the DRUID summer conference which features people like Anita McGahan, Sid Winter, Will Mitchell, Russ Coff, Mike Ryall, and many others, along with a workshop on corporate governance with keynotes by Mark Roe, Randall Morck, Annette Poulsen, and Florencio Lopez-de-Silanes Molina. Of course these are only appetizers for the next week’s main course, the PhD seminar on The Theory of the Firm and Its Applications in Management Research conducted by Professors F. and K. Truly an embarrassment of riches!
1 comment 17 June 2009
Peter L. Bernstein (1919-2009)
| Peter Klein |
I was saddened to learn (from Kenneth Anderson) that Peter L. Bernstein, author of Against the Gods: The Remarkable Story of Risk and other popular works, died June 5. Bernstein was a terrific writer and a clear and provocative thinker with a gift for making difficult concepts accessible. I was greatly influenced by an earlier book, Capital Ideas: The Improbable Origins of Modern Wall Street, which I came across in graduate school while searching for a dissertation topic. Bertstein’s characterization of the brokerage industry in the 1960s and early 1970s, before the deregulation of brokerage fees — an Old Boys Club, lacking competition and innovation — inspired me to examine the role of corporate internal capital markets in replicating the resource-allocation function normally performed by external capital markets, and how the growth and development of financial markets following liberalization contributed to the end of the conglomerate period.
Here are obituaries in the WSJ and NYT and here is Bernstein’s wiki.
1 comment 15 June 2009
Men of Few Words
| Peter Klein |
Those of you into Flesch-Kincaid scores and similar metrics probably appreciate men who can say a lot with a few words. The Bud Light “Dude” guy — whose Fog index, if my calculations are correct, is 1 — may be the best-known modern example:
He’s good, but before him there was Donnie Brasco:
Can your favorite academic writers be that parsimonious?
Fughetaboudit.
3 comments 13 June 2009
Schumpeter’s Ten Great Economists
| Peter Klein |
Whatever one thinks of Joseph Schumpeter as an economic theorist, everybody agrees he was a brilliant historian of economic thought. His History of Economic Analysis, published posthumously in 1954, is a dazzling, if sometimes maddening, review of virtually everything written on economic theory up to that time. A shorter collection of Schumpeter’s essays, Ten Great Economists: From Marx to Keynes, published in 1951, is now available as a free PDF, courtesy of the Mises Institute, which continues adding to its fantastic collection of online books. The ten are Marx, Walras, Menger, Marshall, Pareto, Böhm-Bawerk, Taussig, Fisher, Mitchell, and Keynes (with a brief appendix covering Knapp, Wieser, and Bortkiewicz). Great stuff.
Add comment 12 June 2009
De Figueiredo on Political Strategy
| Peter Klein |
We’ve previously mentioned the chapters by Nicolai and Nils Stieglitz and by Lasse and me in the forthcoming Advances in Strategic Management volume titled Economic Institutions of Strategy. John de Figueiredo’s chapter, “Integrated Political Strategy,” is now available as an NBER Working Paper. John is a leader of this emerging field, which studies how firms attempt to influence the legal and political environment to achieve competitive advantage. As he points out:
Legal and acceptable competitive behavior is determined endogenously by legislators, regulators and judges who are influenced, positively and negatively, by the very same firms the regulations are designed to control. By understanding the theories of how firms affect politics, one can better determine how to gain competitive advantage through political institutions. This is a natural extension of the traditional tools of strategic management. Moreover, for young scholars, this is an area in which the lines of investigation are clear and the openings for serious research opportunities available. In this sense, it is robust area for future research and major contributions to understanding firm performance.
1 comment 9 June 2009
2009 SES Boot Camp
| Peter Klein |
Just received the Call for Papers for the 2009 edition of the Society for Entrepreneurship Scholars Manuscript Boot Camp, this year at Johns Hopkins University right before the SMS Conference in October. I participated last year and had a terrific experience (OK, it was at a ski resort, but that has nothing to do with it). Submissions due 4 August 2009. Details below the fold. (more…)
Add comment 7 June 2009
A Reason To Keep Laptops Out of the Classroom
| Peter Klein |
I missed this Doonesbury strip when it came out in 2007 (click to enlarge). Made me cringe. (HT: John Drobak)
2 comments 6 June 2009
Thanks to Mike Sykuta
| Peter Klein |
Thanks to Mike Sykuta for a great series of guest posts on contracting, transaction cost theory, and the crazy political and regulatory world around us. We look forward to Mike’s continued participation in the O&M comment threads and elsewhere in the blogosphere. If you need Mike you can reach him through the usual virtual channels or, if you prefer something meatier, let me know and I’ll walk the 10 feet to his office and bop him over the head.
Add comment 6 June 2009
The MBA Oath
| Peter Klein |
As a manager, my purpose is to serve the greater good by bringing people and resources together to create value that no single individual can create alone. Therefore I will seek a course that enhances the value my enterprise can create for society over the long term. I recognize my decisions can have far-reaching consequences that affect the well-being of individuals inside and outside my enterprise, today and in the future. As I reconcile the interests of different constituencies, I will face choices that are not easy for me and others.
Therefore I promise:
- I will act with utmost integrity and pursue my work in an ethical manner.
- I will safeguard the interests of my shareholders, co-workers, customers and the society in which we operate.
- I will manage my enterprise in good faith, guarding against decisions and behavior that advance my own narrow ambitions but harm the enterprise and the societies it serves.
- I will understand and uphold, both in letter and in spirit, the laws and contracts governing my own conduct and that of my enterprise.
- I will take responsibility for my actions, and I will represent the performance and risks of my enterprise accurately and honestly.
- I will develop both myself and other managers under my supervision so that the profession continues to grow and contribute to the well-being of society.
- I will strive to create sustainable economic, social, and environmental prosperity worldwide.
- I will be accountable to my peers and they will be accountable to me for living by this oath.
This oath I make freely, and upon my honor.
This comes from a group of second-year Harvard MBAs and was featured in last Friday’s New York Times (HT: MGK). Here’s their blog. I eagerly await the analysis of the O&M commentariat.
8 comments 5 June 2009
Seat-of-the-Pants Sports Management
| Peter Klein |
The WSJ recently ran a sort of anti-Moneyball piece on the NBA’s Denver Nuggets that belongs in our “by the numbers” series. Love the title: “Textbook Management? Hardly. — Assembled Largely by Instinct, the Denver Nuggets Keep Winning; Mastering a ‘Curious Business.’” Here’s the central passage:
[The Nuggets] don’t describe their success as the inevitable result of a carefully designed strategy. Rather, in an era when sports executives like to play themselves off as masters of mathematical analysis and risk management — and in a year when most NBA teams chose fiscal prudence over expensive superstars — the Nuggets are an anomaly. They owe their success to a bizarre combination of luck, good health, opportunism and a management strategy that is more six-shooter than Six Sigma.
The story caught my eye partly because it profiles Nuggest owner Stan Kroenke, a real estate developer who lives here in Columbia, Missouri and whose son Josh was Mizzou’s starting shooting guard from 2000 to 2003. (Stan’s wife also happens to be Ann Walton Kroenke, one of Sam Walton’s two nieces; it’s nice to have connections!)
3 comments 4 June 2009
Introducing Guest Blogger Benito Arruñada
| Peter Klein |
We’re delighted to announce Benito Arruñada as our newest guest blogger. Benito is Professor of Business Organization at Pompeu Fabra University in Barcelona, a former President of ISNIE, and a prolific researcher in the areas of organization, law and economics. Most of his work focuses on the organizational conditions that facilitate impersonal exchange, from property titling or business regulation to moral systems. He has published widely in journals such the Journal of Law and Economics, Industrial & Corporate Change, Harvard Business Review, Journal of Law, Economics, and Organization, Journal of Economic Behavior & Organization, Journal of Comparative Economics, and International Review of Law and Economics.
Benito will be blogging about his new book on property and business formalization, Building Market Institutions: Property Rights, Business Formalization, and Economic Development, coming out next year from the University of Chicago Press, and other topics that strike his fancy. Welcome, Benito!
1 comment 3 June 2009
Government-Made Cars
| Peter Klein |
Former Romanian car czar Ion Mihai Pacepa’s confession in today’s WSJ, and Jeff Tucker’s commentary, reminds me of our Trabant series from a while back (the video link is still among our most popular). Look forward to a future video of a GM (i.e., government) worker putting the finishing touches on the next Nova.
1 comment 3 June 2009
Shop Class as Soulcraft
| Peter Klein |
After hearing Matthew Crawford interviewed this morning on the Diane Rehm show I’ve put his book, Shop Class as Soulcraft: An Inquiry Into the Value of Work, on my summer reading list. After earning a PhD in political philosophy at Chicago and doing a postdoc with the Committee on Social Thought, he worked for a while in a DC policy shop, then gave it up to start a motorcycle-repair business. Fixing bikes, he explains, involves complex analytical reasoning, application of scientific methods, Verstehen, and related cognitive skills far beyond those he used in his white-collar job. He also finds the work much more intellectually and emotionally satisfying than typical desk work. “The trades suffer from low prestige,” writes Crawford (see this excerpt published in last week’s Times), “and I believe this is based on a simple mistake. Because the work is dirty, many people assume it is also stupid. This is not my experience.” By contrast:
As in any learned profession, you just have to know a lot. If the motorcycle is 30 years old, from an obscure maker that went out of business 20 years ago, its tendencies are known mostly through lore. It would probably be impossible to do such work in isolation, without access to a collective historical memory; you have to be embedded in a community of mechanic-antiquarians. These relationships are maintained by telephone, in a network of reciprocal favors that spans the country. My most reliable source, Fred, has such an encyclopedic knowledge of obscure European motorcycles that all I have been able to offer him in exchange is deliveries of obscure European beer.
There is always a risk of introducing new complications when working on old motorcycles, and this enters the diagnostic logic. . . . The attractiveness of any hypothesis is determined in part by physical circumstances that have no logical connection to the diagnostic problem at hand. The mechanic’s proper response to the situation cannot be anticipated by a set of rules or algorithms.”
In the excerpt and in this 2006 essay, on which the book is based, Crawford draws out broader social, political, and personal implications of the joy of working with your hands, not all of which I necessarily buy. But I think I understand where he’s coming from. Personally, I don’t really know how to build stuff (unlike, say, Kevin Murphy), but I do enjoy cooking, and find that creating a wonderful meal is, in some ways, more satisfying than producing a wonderful journal article. (No wisecracks about the half-life of the meal versus the article, please.)
3 comments 2 June 2009
The Hawthorne Effect Revisited
| Peter Klein |
The ever-resourceful Steve Levitt, working with John List, uncovers the original data from the Hawthorne experiments — data long thought to have been lost or destroyed — and finds there actually wasn’t much of a Hawthorne effect:
Our analysis of the newly found data reveals little evidence to support the existence of a Hawthorne effect as commonly described; i.e., there is no systematic evidence that productivity jumped whenever changes in lighting occurred. On the other hand, we do uncover some weak evidence consistent with more subtle manifestations of Hawthorne effects in the data. In particular, output tends to be higher when experimental manipulations are ongoing relative to when there is no experimentation. Also consistent with a Hawthorne effect is that productivity is more responsive to experimenter manipulations of light than naturally-occurring fluctuations. . . . We conclude that the evidence for a Hawthorne effect in the studies that gave the phenomenon its name is far more subtle than has been previously acknowledged.
The short paper, “Was there Really a Hawthorne Effect at the Hawthorne Plant? An Analysis of the Original Illumination Experiments,” is available from NBER. I couldn’t find an ungated copy but the search led me to a large secondary literature, much of it by organizational and industrial psychologists, also questioning the original findings, though apparently without use of the primary data.
7 comments 2 June 2009
And Meet the New Bud Fox
| Peter Klein |
Further to my Wall Street post: There’s another scene in which we learn that Bud Fox, the twenty-something broker played by Charlie Sheen, will be made CEO of Blue Star Airlines during its reorganization if Gordon Gekko’s hostile takeover is successful. We’re supposed to laugh at the absurdity of a baby-faced kid with an Ivy League education but no knowledge of airplanes or management running an airline. But when the federal government does it, it’s all good. (HT: Randy.)
Add comment 1 June 2009
Obama’s Facebook Feed
| Peter Klein |
I admit, it made me laugh. (Thanks to Cliff for the pointer.)
I like pensionbook too.
2 comments 1 June 2009
