Author Archive
To Boldly Go, Where No State Has Gone Before
| Peter Klein |
The better works in science fiction challenge us to explore and reflect upon strange and interesting forms of social and political organization, such as the anarcho-capitalism of Robert Heinlein’s Luna or the (shockingly) rigid social hierarchy of Mary Doria Russell’s Rakhat. The political economy of the Star Trek universe, by contrast, is remarkably dull and familiar. As Tim Cavanaugh reminds us in the new issue of Reason:
[T]he society of the Federation is the kind of thing that might spring fully grown from the hernia scar of Lyndon Baines Johnson — a galacticized Great Society. A vaguely militarized government makes all decisions. Any time the Enterprise crew encounters a private entrepreneur or contractor, that person will almost certainly turn out to be a thief, a swindler, a coward, or all three. (Roger C. Carmel’s mincing, scheming Harry Mudd is Star Trek’s idea of a businessman.) . . . Despite frequent references to a “noninterference” directive in contacting alien civilizations, Star Trek eerily predicts the era of total interventionism, as James T. Kirk, an interstellar Gen. Tommy Franks, routinely smashes planetary autocracies, promising (sometimes) that others will come along later to do the nation building.
Cavanaugh borrows here from Paul Cantor, one of my favorite scholars, about whom I will blog soon.
PowerPoint Peeves
| Peter Klein |
The increasingly ubiquitous PowerPoint has its uses, to be sure, but is no substitute for clear thinking and clear writing, the keys to any decent presentation. Rants and raves: Guy Kawasaki suggests the 10/20/30 rule — no more than ten slides, no more than twenty minutes, and at least a 30pt. font. Gordon Smith hates slides full of text. My own pet peeves include distracting backgrounds and typefaces, inconsistent punctuation and tense, and the obligatory “roadmap” slide (“This presentation, like every other one you’ll see at the conference, goes like this: introduction, literature review, hypotheses, data, results, conclusions. How many minutes do I have left?”). And, of course, not every idea is best communicated through slides (you’ve all probably seen the PowerPoint version of the Gettysburg Address).
Fred Tung objects to people using PowerPoint as a teleprompter, populating their slides with complete sentences then reading them word-for-word. I couldn’t agree more. Then again, in some disciplines, particularly in the humanities, “presenting a paper” has always meant simply reading a prepared text. My father was an academic historian, and I was shocked the first time I accompanied him to a professional meeting at which each panelist merely read his paper aloud. (I understand this is common in philosophy as well; I don’t know about other fields.)
Reading a paper aloud has never made sense to me. Wouldn’t it make more sense simply to hand out the paper and let participants read it on their own?
My First Bleg: Transaction Similarity
| Peter Klein |
A “bleg,” for those who don’t know, is a blog post asking readers for help. (We’ve already written plogs, posted bloggerel, and suffered from blogathy and even blogstipation. No problems yet with blogorrhea.)
Anyway, here’s the bleg. Can readers provide some good references from the capabilities or RBV literatures on Coase’s concept of “transaction similarity,” the idea that firms are more likely to integrate transactions similar to transactions that have been integrated in the past, controlling for current levels of asset specificity, uncertainty, frequency, and so on?
Remind Me, Who Are the Commies?
| Peter Klein |
From the June Harper’s Index:
Price for which China will rent out Beijing’s Great Hall of the People: $12,000
Percentage of Chinese who say the free market is “the best system on which to base the future of the world”: 74
Percentage of the French who say this: 36
(HT: LRC blog)
Addendum: Joe Carter misses the real commies. E.g.:
Remember when the perfect dis was to call someone a pinko? “You don’t eat meat? What, are you . . . communist?” For some reason, “You don’t eat at McDonalds? Are you some kind of anti-globalist?” just doesn’t have the same bite.
Intellectual Property: The New Backlash
| Peter Klein |
In the “new economy” or “knowledge economy” literature it is taken for granted that strong intellectual-property protection is not only efficient, but also just and fair. Without the temporary monopoly protection granted by copyrights and patents, who would have sufficient incentive to innovate? And don’t innovators deserve to reap the benefits of their creations?
There have always been doubters, and lately the critics have become more vocal. Stephan Kinsella makes a strong normative case, based on libertarian principles, against legal protection for intangibles. (See also his bibliography and blog.) For the utilitarian case against IP see Michele Boldrin and David Levine’s Against Intellectual Monopoly (and their blog). And for a summary of arguments against using patent counts to measure innovative activity see this article by Pierre Desrochers.
Latent Variables and Structural Equations Modeling
| Peter Klein |
Among my PhD students I note an increasing interest in structural equations modeling (SEM), particularly for working with latent variables. One student’s dissertation uses SEM to study the effect of the institutional environment on entrepreneurship, treating entrepreneurship as a latent variable and using measures of new business starts, patent filings, and the like as the corresponding manifest variables. Another student is using SEM to examine free-riding among members of a large cooperative, with various observable behaviors serving as indicators for the latent variable free-riding.
More generally, SEM is becoming a standard tool in management, where abstract concepts like trust, knowledge, capabilities can (potentially) be modeled as latent variables in a system of equations. Indeed, when I visited Nicolai in his office in Copenhagen a couple of weeks ago, the first thing I noticed on his desk was a LISREL manual, prominently displayed on the corner. (He assures me it is not for show.) (more…)
Why Economics is Better Than Sociology
| Peter Klein |
We have the American Association of Wine Economists. Tell me, where is the American Association of Wine Sociologists?
Clearly economists, like blondes, have more fun. (Please keep other blonde analogies to yourself.)
A Fan Letter
| Peter Klein |
Received this in an email yesterday:
Yours is about the only blog I read these days (got bored with Volokh Conspiracy and Instapundit). I’m amazed at the range and depth of knowledge you guys have on tap — how in the world do you stay current?
It’s nice that people are beginning to recognize our greatness, especially compared to high-profile, but stuffy and pedestrian, blogs like the two named above.
Did I mention the sender was my Mom?
Information versus Knowledge
| Peter Klein |
Here’s a fascinating symposium from the April 2005 issue of EconJournalWatch on the distinction between information and knowledge in economics. The contributors are Brian Loasby, Thomas Mayer, Bruce Caldwell, Israel Kirzner, Leland Yeager, Robert Aumann, Ken Binmore, and Kenneth Arrow. (Via Jeff Tucker)
George Gilder on the Evolutionary Metaphor
| Peter Klein |
Returning to our previous discussion of teleology in social-science explanation, the current issue of National Review has an essay by George Gilder, co-founder of the pro-ID Discovery Institute, summarizing his complaints about the neo-Darwinian model. (The electronic version is behind a subscription firewall, but a copy is here.) This passage caught my eye:
Turning to economics in researching my 1981 book Wealth & Poverty, I incurred new disappointments in Darwin and materialism. Forget God — economic science largely denies intelligent design or creation even by human beings. Depicting the entrepreneur as a mere opportunity scout, arbitrageur, or assembler of available chemical elements, economic theory left no room for the invention of radically new goods and services, and little room for economic expansion except by material “capital accumulation” or population growth. Accepted widely were Darwinian visions of capitalism as a dog-eat-dog zero-sum struggle impelled by greed, where the winners consume the losers and the best that can be expected for the poor is some trickle down of crumbs from the jaws (or tax tables) of the rich.
In my view, the zero-sum caricature applied much more accurately to socialism, which stifles the creation of new wealth and thus fosters a dog-eat-dog struggle over existing material resources. (For examples, look anywhere in the socialist Third World.) I preferred Michael Novak’s vision of capitalism as the “mind-centered system,” with the word itself derived from the Latin caput, meaning head. Expressing the infinite realm of ideas and information, it is a domain of abundance rather than of scarcity. . . . Ultimately capitalism can transcend war by creating rather than capturing wealth — a concept entirely alien to the Darwinian model.
Leaving aside that Darwin copied Spencer, rather than vice-versa (though Spencer may have been misinterpreted), Gilder correctly notes an analogy between evolutionary explanations in biology — in which outcomes are the result of blind, purposeless forces — and evolutionary models in economics and sociology, in which human agency, too, seems to get short shrift. (more…)
College Sports: Show Me the Money
| Peter Klein |
My European colleagues are generally mystified by US intercollegiate athletics, multi-million-dollar programs closer to semi-professional or European club sports than “amateur” athletics. Why, they ask, do US universities go through this charade, pretending these are regular college students engaging in extracurricular activities?
The answer is obvious: money. At least, that’s what university administrators believe (or say they believe). This week’s Sports Illustrated magazine profiles George Mason University, whose men’s basketball team made an improbable run to the NCAA Final Four this spring. (Copy of article here.)
George Mason’s string of upsets over such name-brand programs as Michigan State, North Carolina and Connecticut was certainly a boon to the basketball program, but officials at the 34-year-old university in Fairfax, Va., believe the wins could give an even greater boost to the school. . . .
George Mason would have had to spend at least $50 million for a public-relations campaign that gave it the exposure it received during the tournament. That’s the conservative estimate of C. Scott Bozman, an associate professor of business marketing at Gonzaga, who studied the benefits of hoops success at his own school. . . . Student inquiries and tour sizes have tripled, and merchandise sales have skyrocketed. . . .
The Birth of Big Business in the US
| Peter Klein |
David L. Mason reviews David O. Whitten and Bessie E. Whitten’s The Birth of Big Business in the United States, 1860-1914: Commercial, Extractive and Industrial Enterprise (Praeger, 2005), in the latest EH.Net book review. It sounds like a valuable overview of an extremely important period:
The roughly fifty-year period between the end of the Civil War and the start of World War I was one of the most dynamic periods in American economic history, in no small part because of the rise of big business. _The Birth of Big Business in the United States_, an introductory work intended for students and the general reader, chronicles the developments and processes that led to the rise of large-scale firms in both well-known industries like oil and steel, as well as in the extractive industries like mining and forestry. Throughout the concisely written narrative, the authors highlight the role of government in both encouraging and restraining the expansion of big business. This work succeeds in placing industrialization in the broader context of American history, an important consideration for first-time students of business history.
Good to see the role of government highlighted. As an aside, many economists and management scholars seem surprisingly uninformed about the role of the state in the emergence of modern business enterprise. As a young lad I was strongly influenced by the Kolko thesis, at least as interpreted by Murray Rothbard and his students (1, 2). Today, while the better strategy and managerial economics texts include some modern political economy, fields like organizational behavior, labor economics, industrial organization, and some others appear stuck with the naive, high-school-civics-class view of government as benevolent and efficient protector of the common man against the rapacious capitalist.
Incidentally, let me take this opportunity to plug one of the best, and underappreciated, recent books in this area: Butler Shaffer’s In Restraint of Trade: The Business Campaign Against Competition, 1918-1938 (Bucknell University Press, 1997).
JSTOR For Non-Academics
| Peter Klein |
Here at O&M we typically cite published papers by their JSTOR links, where available. This is a problem for readers not employed at universities (and occasionally for academics accessing the net from off-campus and without a VPN connection). Now I learn from Alex Tabarrok that almost anyone in the US can get JSTOR access from the local public library, through something called a digital library card. That is great news. (So much for that entry barrier, professors!)
Does anyone know if readers outside the US have a similar option?
Crowdsourcing Blog
| Peter Klein |
Crowdsourcing — discussed here and here — is getting big. How do we know? It now has its own blog. (HT: NMM)
African Entrepreneurship Blog
| Peter Klein |
From the PSD Blog I learn of Timbuktu Chronicles, a blog written by Emeka Okafor (him, not him) dealing with African entrepreneurship, innovation, and technology. Looks like an interesting read.
Intelligent Design and the Sociology of Science
| Peter Klein |
Don’t worry, we’re not getting all weird on you and entering the fray on creationism and evolution. Today’s topic is the theory and practice of science. Specifically, consider the controversy over intelligent design (ID), the idea that purely natural forces — i.e., random mutation and natural selection — cannot explain the origin and diversity of life. What are the most common arguments against including ID in the science curriculum?
1. ID is wrong because it contradicts the scientific evidence.
2. ID is wrong because it isn’t science (e.g., it does not offer testable predictions). Leave it in the philosophy or theology classrooms.
3. ID is wrong because “serious scientists” all think it’s nonsense.
The second and third arguments seem to pop up the most in conversations I’ve seen and heard. They are taken by their proponents as self-evident. But #2 obviously presupposes a particular philosophy of science, and #3 a particular sociology of science. One rarely sees these philosophies articulated and defended. Is prediction the hallmark of science? Does neo-Darwinian theory make falsifiable predictions? How does scientific consensus emerge? On what grounds to scientists accept or reject theories? (Argument #3, in particular, seems to presuppose a charmingly pre-Kuhnian worldview.)
As an aside, I know several “heterodox” economists who reject ID primarily on ground #3, which I find highly ironic. They see themselves as (unjustifabily) outside the mainstream of their own discipline, but assume that in natural science the consensus is always right.
Copying the Physicists
| Peter Klein |
It’s no secret that mainstream economists hold up physics as the model science. (Critics say that economists never got much beyond nineteenth-century classical mechanics, but never mind.) So why should we be surprised that economists also copy the physicists’ style and manners? From T. A. Abinandanan of the Nanopolitan blog we learn that physicists are widely regarded, by their natural-science brethren, as bullies who wander into other fields without much knowledge of or appreciation for the work of specialists.
The natives of the other disciplines, of course, would grumble because they felt that many of these wandering physicists were promiscuous (with no long term commitment to their field) and, more importantly, arrogant. . . . Among the natives, the joke is that these promiscuous physicists were just looking for interesting problems, because there weren’t any in physics.
Just what we’ve been discussing here and here. Incidentally, on “econophysics,” profiled last year in the New York Times, Abinandanan wisely adds that “[g]iven the reputation of physics and economics in their respective domains (natural and social sciences), econophysics sounds like a marriage between two domineering individuals.”
Overview of Behavioral Economics
| Peter Klein |
Behavioral economics is profiled in “The Marketplace of Perceptions,” from the March-April 2006 Harvard Magazine. Not a puff piece, exactly, but certainly a very friendly account. Excerpt:
As recently as 15 years ago, the sub-discipline called behavioral economics — the study of how real people actually make choices, which draws on insights from both psychology and economics — was a marginal, exotic endeavor. Today, behavioral economics is a young, robust, burgeoning sector in mainstream economics, and can claim a Nobel Prize, a critical mass of empirical research, and a history of upending the neoclassical theories that dominated the discipline for so long.
(HT: Greg Mankiw)
Crowdsourcing and Switching Costs
| Peter Klein |
I blogged a while back about crowdsourcing, in which individuals, typically amateurs, complete to supply inputs to large producers or distributors via the web. Crowdsourcing is often likened to distributed computing, an age-old (in computer terms, anyway) method of sharing computationally intensive tasks over many CPUs.
The best-known example of distributed computing is SETI@home, in which individuals donate their spare processing power to the search for extraterrestrial life. There’s a problem, however, as Lee Gomes tells us in today’s Wall Street Journal ($): high switching costs. SETI@home users get points for donating computer time and, like frequent flyers who stick to one airline to rack up miles, many refuse to switch to other, equally worthy distributed computing projects (the search for an Alzheimer’s cure, a difficult problem in theoretical physics, etc.). As a result, says Gomes, SETI@home “is to distributed computing what AARP is to social-security reform.”
Moral of the story: If crowdsourcing projects attract mainly hobbyists, participating for fun or to impress their (virtual) friends, expect lock-in and substantial first-mover advantages. If participants do it for the money, however, the crowdsourcing landscape may be much more competitive.
Glenn Hubbard Defends Business Schools
| Peter Klein |
Columbia’s Glenn Hubbard responds to critics who say that contemporary business education, particularly as taught in US-style MBA programs, is outmoded, irrelevant, and even dangerous. (We’ve been discussing this here, here, and here.) Says Hubbard:
Why, then, is the US adding productivity growth when so many other big economies see negative growth in productivity? Those who say the answer is technology have spent too little time in Tokyo, Seoul and Berlin. The fact is, technology is better in many other countries. So US companies did not become more productive by simply buying faster computers. They became more productive by having managers and entrepreneurs who knew how to integrate these investments with new business models to raise productivity. These abilities to think strategically are teachable; and the central classroom for teaching leaders to “pick these locks” is the business school.
(HT: Mark Thoma)
Update: Here’s Dartmouth’s Paul Danos, responding to “The Management Myth.”
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