Archive for March, 2010

A New Organizational Chart

| Peter Klein |

Fodder for dozens of future PhD dissertations, no doubt! (Click to enlarge.)

23 March 2010 at 10:36 am 7 comments

Too Blue for You

| Peter Klein |

I’m partial to Klein Blue, but some of you may prefer Prussian Blue — apparently the first Crayola color to be renamed, as US kids had no idea who or what a “Prussian” could be. See this very cool online essay (via William Bostwick).

23 March 2010 at 8:46 am 1 comment

Rothbard, Friedman on Health Care

| Peter Klein |

Murray Rothbard and Milton Friedman are no longer with us, unfortunately, but their opinions live on. Lew Rockwell is running a 1994 piece by Rothbard on what was then called Hillarycare, while the Saturday WSJ reprinted a 1996 essay by Friedman on “Soviet-Style Health Care.” My favorite excerpts:

Rothbard on “universal access”:

[T]here is one simple entity, in any sort of free society, that provides “universal access” to every conceivable good or service, and not just to health or education or food. That entity is not a voucher or a Clintonian ID card; it’s called a “dollar.” Dollars not only provide universal access to all goods and services, they provide it to each dollar-holder for each product only to the extent that the dollar-holder desires.

Friedman, quoting a a physician character in Solzhenitsyn’s 1967 novel The Cancer Ward, on Soviet-style “free” health care:

What do you mean by “free”? The doctors don’t work without pay. It’s just that the patient doesn’t pay them, they’re paid out of the public budget. The public budget comes from these same patients. Treatment isn’t free, it’s just depersonalized. If the cost of it were left with the patient, he’d turn the ten rubles over and over in his hands. But when he really needed help he’d come to the doctor five times over. . . .

Is it better the way it is now? You’d pay anything for careful and sympathetic attention from the doctor, but everywhere there’s a schedule, a quota the doctors have to meet; next! . . . And what do patients come for? For a certificate to be absent from work, for sick leave, for certification for invalids’ pensions: and the doctor’s job is to catch the frauds. Doctor and patient as enemies — is that medicine?

22 March 2010 at 11:57 am 13 comments

Agribusiness Economics and Management

| Peter Klein |

Congratulations to my colleague Mike Cook for his review paper on “Agribusiness Economics and Management” (with Rob King, Mike Boehlje, and Steve Sonka) in the new issue of the American Journal of Agricultural Economics. It’s a special issue commemorating the centennial of the American Agricultural Economics Association. Lots of good stuff here on the history and development of management theory and pedagogy, the evolution of the food sector, and the effects of the institutional environment on firm structure. Here’s the abstract:

Agribusiness scholarship emphasizes an integrated view of the food system that extends from research and input supply through production, processing, and distribution to retail outlets and the consumer. This article traces development of agribusiness scholarship over the past century by describing nine significant areas of contribution by our profession: (1) economics of cooperative marketing and management, (2) design and development of credit market institutions, (3) organizational design, (4) market structure and performance analysis, (5) supply chain management and design, (6) optimization of operational efficiency, (7) development of data and analysis for financial management, (8) strategic management, and (9) agribusiness education.

21 March 2010 at 10:11 pm Leave a comment

Kauffman Economics Bloggers Forum

| Peter Klein |

I’ll be in Kansas City tomorrow for the Kauffman Economics Bloggers Forum. Speakers include David Warsh, Paul Romer, Tim Kane, Bob Litan, Donald Marron, and many others. You can watch it live here. Hopefully I’ll get some good ideas for increasing blog revenue, so watch out for our new paid subscription policy. Ha ha ha ha.

18 March 2010 at 2:03 pm 6 comments

Jargon Watch

| Peter Klein |

  • Hydrocarbon denier — you know who you are
  • YouTube or it didn’t happen — common response from young people to a report of some event
  • The G-2 — the US and China, jointly controlling the world economy
  • Acluistic — clueless
  • Break your crayons — what that last journal reviewer did to me

Bonus material: Andrew Gelman’s urban dictionary for stats

18 March 2010 at 1:53 pm Leave a comment

Financial Constraints and Innovation

| Peter Klein |

Why are firms in poor countries less productive than firms in rich countries? Is it lack of technical know-how? Poor infrastructure? Insufficient human capital? Weak intellectual-property protection? Actually, the evidence suggests a more prosaic explanation: financial constraints.

One stylized fact that appears from emerging markets and transition economies . . . is that foreign owned fi rms tend to be more productive than domestically owned firms. . . . To the extent that foreign owned fi rms embody the technological frontier, one can interpret this fact as suggesting that some forces prevent domestically owned firms from emulating the best practices and techniques. . . .

We show that a fi rm’s decision to invest into innovative and exporting activities is sensitive to fi nancial frictions which can prevent fi rms from developing and adopting better technologies. Furthermore, we demonstrate that in a world without financial frictions, innovation and exporting goods are complementary activities. Thus, easing financial frictions can have an ampli ed eff ect on firms’ innovation eff ort and consequently the level of productivity. However, as financial frictions become increasingly severe, these activities become eff ectively substitutes since both exporting and innovation rely on internal funds of fi rms.

That’s from “Financial Constraints and Innovation: Why Poor Countries Don’t Catch Up” by Yuriy Gorodnichenko and Monika Schnitzer. One implication is that diversified firms, whose operating units have access to the firm’s internal capital market, have particular advantages in developing countries, an argument explored in several papers by Khanna and Palepu (e.g., here). In the US, these advantages may not outweigh other drawbacks of unrelated diversification.

17 March 2010 at 12:46 am 2 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).
Nicolai J. Foss and Volker Mahnke, eds., Competence, Governance, and Entrepreneurship: Advances in Economic Strategy Research (Oxford, 2000).
Nicolai J. Foss and Paul L. Robertson, eds., Resources, Technology, and Strategy: Explorations in the Resource-based Perspective (Routledge, 2000).