Archive for March, 2010

On Academic Writing

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31 March 2010 at 4:19 pm 4 comments

Top Recruiting Classes

| Peter Klein |

Memphis, Ohio State, and North Carolina have the top-ranked US college basketball recruiting classes for 2010. But how about the Berkeley economics department’s 1963 recruiting class? As I learned this weekend, department head Andreas Papandreou hired five brand-new assistant professors that year: Dan McFadden, Oliver Williamson, Sid Winter, Peter Diamond, and David Laidler. Not a bad haul!

30 March 2010 at 8:48 am 4 comments

Are Index Funds Immoral?

| Lasse Lien |

If I had money to invest, which I don’t, I would probably invest via an index fund. I know just enough empirical finance to realize that beating an index fund is very difficult (impossible according to some) unless you are either very lucky or an inside trader. The reason is of course the efficient markets hypothesis. The stock market factors in all relevant information at lightning speed and without bias. However, this can only be so because there are enough investors that do not invest via index funds. If everyone did, the pricing would not be informative at all. One might argue that index fund investors are free riders on those that do fundamental analysis, and a sinister threat to the very market efficiency that they thrive on.

I guess in equilibrium one would expect index investing to increase until market pricing is so inefficient that the expected returns from it is driven down to around the levels of the best alternative.

29 March 2010 at 8:29 am 6 comments

Mundaneum: The Google of 1910

| Peter Klein |

Fascinating article by Molly Springfield in Triple Canopy on the Mundaneum, an effort by two Belgian lawyers to collect and classify all the world’s information, using notecards and an innovative filing system. Information scientist Paul Otlet “was the first to imagine all the world’s knowledge as one vast ‘web,’ connected by ‘links’ and accessed remotely through desktop screens, and because of this he can be seen as the kooky grandfather of the Internet.” Unfortunately, the analog technology of the early twentieth century was not up to the task. (Here’s the wiki on the Mundaneum, which incidentally might make a good title for my next book.)

See also: The Victorian Internet by Tom Standage.

29 March 2010 at 8:22 am Leave a comment

Posner on Institutions and Organizations, Round Two

| Peter Klein |

Remember the infamous Posner-Coase-Williamson exchange from JITE, 1993? Posner dismissed the New Institutional Economics as a derivative form of Posnerian law and economics, prompting unhappy replies from Coase and Williamson. Here’s Coase:

Posner [1993, 79] says that the first part of his paper describes “the conception of the field [the new institutional economics] held by Ronald Coase.” Reading this part of his paper recalled to my mind Horace Walpole’s opening remarks in his book on King Richard the Third: “So incompetent has the generality of historians been for the province that they have undertaken, that it is almost a question, whether, if the dead of past ages could revive, they would be able to reconnoitre the events of their own times, as transmitted to us by ignorance and misrepresentation” (Walpole [1768, 1]). I have only one foot through the door but should the final yank come before this piece is published, Horace Walpole’s words would apply exactly to Posner’s highly inaccurate account of my views.

Adds Williamson, wryly: “Richard Posner is a prolific writer and distinguished jurist. He is frequently asked to speak with wisdom and authority on many issues. Whether he hits the mark or misses varies with his depth of knowledge and understanding of those issues. . . . I content that Posner’s [1993] commentary mainly misses.”

Now Geoff Hodgson has produced a reboot: a long essay by Posner in the Journal of Institutional Economics titled “From the New Institutional Economics to Organization Economics: with Applications to Corporate Governance, Government Agencies, and Legal Institutions,” with replies from Jürgen Backhaus, Bruno Frey, Lin Ostrom, John Roberts, Tom Ulen, and several others (but not Coase or Williamson!). Posner focuses almost exclusively on the principal-agent problem, perhaps unaware that information, delegation, coordination, and adaptation are also important issues in organizational economics. His main conclusion seems to be that both private firms and public agencies are equally inefficient. Interesting reading, to be sure (and much better than Posner’s solipsistic essay on his conversion to Keynesianism, inexplicably published by the New Republic).


25 March 2010 at 11:11 am Leave a comment

Share with First-Year MBA Students

| Peter Klein |

Mark Goetz’s new wallpaper (via Lynne Kiesling). Cory Doctorow translates: “Militant arm of the infoviz movement gets serious about PowerPoint.”

25 March 2010 at 8:57 am 4 comments

New Issue of EJPE

| Peter Klein |

The new issue of the Erasmus Journal for Philosophy and Economics has several interesting items. Here’s Sen on Adam Smith:

In ethics, Smith’s concept of an impartial spectator who is able to view our situation from a critical distance has much to contribute to a fuller understanding of the requirements of justice, particularly through an understanding of impartiality as going beyond the interests and concerns of a local contracting group. Smith’s open, realization-focussed and comparative approach to evaluation contrasts with what I call the “transcendental institutionalism” popular in contemporary political philosophy and associated particularly with the work of John Rawls.

An essay on Gerard Debreu’s methodology looks promising, along with several of the book reviews. Check it out!

24 March 2010 at 8:45 am Leave a comment

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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).
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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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