Archive for July, 2006

An Even Brighter Side of Global Warming?

| Richard Langlois |

I remain agnostic about whether global warming is taking place and, if so, whether it is being caused by human behavior.  In part, my skepticism comes from some familiarity with large mathematical models in my graduate student days — and my recollection of how sensitive they are to the assumptions fed in.  I certainly agree with Peter about what the issues are.

But I recently saw a review by Bob Whaples on (the economic history website and list-serve) of a book called Plows, Plagues and Petroleum: How Humans Took Control of Climate by William F. Ruddiman.  According to the review, the earth for the last 900,000 years or so has experienced cycles in which massive glaciation lasting on the order of 100,000 years has alternated with comparatively brief (10,000 year) “interglacials.”  (more…)

27 July 2006 at 1:45 pm 8 comments

The Bright Side of Global Warming

| Peter Klein |

I recall a comment from Gordon Tullock a few years ago at a panel on global warming: If we think that climate is affected by human activity, why aren’t we doing more research on the optimal temperature of the earth? In other words, why is it universally assumed that hotter is worse? Rising temperatures and water levels would be tough for those near the equator and on the coasts, but a few degrees warmer would be a blessing for those near the poles. (Not sure about the net effect on people near the poles and on the coast; sorry Lasse!)

Last Tuesday’s WSJ ran this front-page feature: “For Icy Greenland, Global Warming Has a Bright Side.” Excerpt:

[T]o many of the people who live here in Greenland, the warming trend is a boon, not a threat. . . . Even small increases in temperature can make a big difference in the quality of life for many Greenlanders who scrabble out a living at the whims of the weather. Freezing temperatures are the biggest factor limiting plant growth in Greenland. If the average temperature warms just a degree or two, the number of freezing nights is reduced. Higher temperatures produce stronger, healthier plants and provide farmers larger crop yields.

Of course, identifying beneficiaries does not tell us about net gains. (more…)

27 July 2006 at 8:41 am Leave a comment

A “Commie Austrian”

| Nicolai Foss |

Regular readers may have noticed the comments of a commentator who signs on as “Cliff.” Cliff is in fact a visiting scholar at the Center of Strategic Management and Globalization at Copenhagen Business School. His real name is Zhu Hai Jiu. I mention him here because he embodies what Israel Kirzner has often said that he wished existed: The Socialist Austrian. Cliff is, I believe, a card-carrying member of the Chinese Party -– and an Austrian economist.

27 July 2006 at 8:31 am 2 comments

Frontiers of Shirking, via Scott Adams

| Peter Klein |

Nicolai and I have written on the tradeoff between productive and destructive “entrepreneurial” behavior by employees. Decentralization and incentive compensation can increase effort, foster creativity, and facilitate more effective use of dispersed, specific knowledge. On the other hand, employee empowerment allows for shirking, rent-seeking, and other behaviors that reduce firm value. (See, for example, this paper.)

Who better to chronicle the newest and most creative forms of shirking than Dilbert creator Scott Adams? Here are his ten tips for looking busy, from the August issue of Wired: (more…)

26 July 2006 at 9:41 am Leave a comment

Re: Robustness

| Peter Klein |

Econometric methodology junkies may wish to dig up the December 1988 isssue of the Economic Record, which contains a symposium on same. Contributors include heavyweights Dennis Aigner, Clive Granger, Edward Leamer, Hashem Pesaran, Esfandiar Maasoumi, and P.C.B. Phillips. (If you’re lucky you can get it from EBSCO Host.) I just happened to stumble across a hardcopy of the Leamer article, “Things That Bother Me,” which begins thusly:

I thought I might share with you some things that bother me.
(1) There are too few issues.
(2) There are too many sharp hypotheses.
(3) There are too few graphs.
(4) There is too much asymptotic theory.
(5) There are too many diagnostics.
(6) There is too little testing “the usefulness” of theories/models.
(7) There is too little “confusion.”

26 July 2006 at 9:40 am Leave a comment

Classical Liberal Sociology

| Peter Klein |

At the risk of turning O&M into a sociology blog, let me call your attention to yet another item on the ideological leanings of sociologists. The Summer 2006 issue of The Independent Review, one of my favorite journals, is hot off the press, and it contains an essay by Daniel Klein and Charlotta Stern, “Sociology and Classical Liberalism.” Here is the abstract:

Sociology inspired by classical liberalism isn’t as far fetched as the profession’s current collectivist tilt might suggest. In addition to developing the social insights of Adam Smith, Alexis de Tocqueville, Herbert Spencer, William Graham Sumner, and F. A. Hayek, a classical liberal sociology might take up such topics as the differences between cooperation and coercion; the interrelations between commerce and community; the role of privilege, prestige, status, and power in “rent seeking”; and the social mechanisms that foster and reinforce statism.

O&M readers may also enjoy, from the same issue, “Four Years After Enron: Assessing the Financial-Market Regulatory Cleanup” by Roy C. Smith and Ingo Walter and “Holding ‘Governance’ Accountable: Third-Party Government in a Limited State” (on government outsourcing) by Sheila Suess Kennedy.

26 July 2006 at 12:00 am Leave a comment

More on Sociologists

| Peter Klein |

Regarding the political inclinations of economists and sociologists, my colleague David O’Brien remarks:

As I’m sure you know, the ideological roots of economics come out of “liberal” thought, whereas, as you may not know, the ideological roots of sociological thought emerge from the “romantic conservative reaction” to the French Revolution and Enlightenment thought; hence the inclination of sociologists to define the problem of order in terms of “consensus-building” either in the traditional sociology of Durkheim that focuses on values and norms or the Marxian obsession with “control of the means of production”. . . .

To me, the most intriguing aspect of the paradigmatic biases of economics versus sociology is that the economists’ assumptions are much closer to the long-term “informal” as well as “formal” liberal institutional structure of our society; not only in economics, but in political life as well. Thus, it’s not surprising that ordinary folks, as well as policy makers are more likely to listen to economists than sociologists. Of course, as the previous World-Bank President came to realize, it is difficult to solve development problems solely in terms of the neo-classical economic paradigm. It’s interesting, along these lines, that the concept of “social capital” that has been “embedded” in sociological thought since the 19th century, although in different terms, finally was the idea that made the “breakthrough” in bringing sociological thought into the bankers’ discussions of development; i.e., when a sociological idea could be understood within the language of liberal thought as a factor in capital formation.

Of course, there is a lot of silliness in sociology that reinforces the notion that the discipline is far removed from “practical problem solving.” I think that many sociologists often tend to be their own worst enemies by eschewing incremental — i.e., “liberal” policy alternatives — and to focus on utopian dreams.

25 July 2006 at 11:58 pm 3 comments

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Nicolai J. Foss and Peter G. Klein, Organizing Entrepreneurial Judgment: A New Approach to the Firm (Cambridge University Press, 2012).
Peter G. Klein and Micheal E. Sykuta, eds., The Elgar Companion to Transaction Cost Economics (Edward Elgar, 2010).
Peter G. Klein, The Capitalist and the Entrepreneur: Essays on Organizations and Markets (Mises Institute, 2010).
Richard N. Langlois, The Dynamics of Industrial Capitalism: Schumpeter, Chandler, and the New Economy (Routledge, 2007).
Nicolai J. Foss, Strategy, Economic Organization, and the Knowledge Economy: The Coordination of Firms and Resources (Oxford University Press, 2005).
Raghu Garud, Arun Kumaraswamy, and Richard N. Langlois, eds., Managing in the Modular Age: Architectures, Networks and Organizations (Blackwell, 2003).
Nicolai J. Foss and Peter G. Klein, eds., Entrepreneurship and the Firm: Austrian Perspectives on Economic Organization (Elgar, 2002).
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