Posts filed under ‘Institutions’
State-Owned Firms: Still Inefficient
| Peter Klein |
Generalissimo Francisco Franco is still dead, and state-owned firms are still inefficient. A survey of over 12,000 Chinese firms finds that “even after a quarter-of-century of reforms, state-owned firms still have significantly lower returns to capital, on average, than domestic private or foreign-owned firms.” This from “Das (Wasted) Kapital: Firm Ownership and Investment Efficiency in China” by David Dollar (great name!) and my former Berkeley classmate Shang-Jin Wei. “By our calculation,” they write, “if China succeeds in allocating its capital more efficiently, it could reduce its capital stock by 8 percent without sacrificing its economic growth.”
The paper is light on theory and interpretation, but there is a substantial literature on the problems of state ownership to which one can easily refer (good starting points here, here, and here.)
Open-Source Political Campaigns
| Peter Klein |
Republican Ron Paul’s presidential campaign — a highly decentralized, small-budget, bottom-up effort — is like an open-source software project, writes Jay Roberts. As such, he notes, it has strengths and weaknesses compared to traditional modes of organzation.
Here are some earlier posts on the open-source model.
Schumpeter Podcast
| Peter Klein |
Bloomberg’s Tom Keene interviews Thomas McCraw on his new book Prophet of Innovation: Joseph Schumpeter and Creative Destruction. McCraw discusses Schumpeter’s relationship with Keynes, the impact of Schumpeter’s concept of the entrepreneur, the legacy of Alfred Chandler, and more.
Would You Give Up Your Patents?
| Peter Klein |
“Would you give up your right to sue others for patent infringement in exchange for immunity from all patent lawsuits?” 78 percent of respondents in an informal web poll said yes.
This and much more is in Stephan Kinsella’s summary of anti-IP arguments.
Tulip Mania: Not So Manic After All
| Peter Klein |
Popular and scholarly accounts of the Dutch tulip bubble of 1636-37 — including Robert Shiller’s — greatly exaggerate the magnitude of the crisis. It seems the tulipmania literature tends to rely not on primary sources or other authoritative documents but on popular pamphlets that appeared shortly after the crisis, designed to ridicule tulip-market participants.
So says Larry Neal, reviewing Anne Goldgar’s Tulipmania: Money, Honor, and Knowledge in the Dutch Golden Age for EH.Net. Goldgar’s careful archival research demonstrates, among other things, that tulip-market participants were not hapless dupes but experienced merchants who knew how to price risks and who were part of a small, close-knit community that relied on strong social ties to enforce good behavior. Indeed, tulip transactions were highly complicated ones governed by detailed contractual arrangements designed to protect both buyers and sellers. Goldgar “notes that the participants in the tulipmania largely worked out the terms of the broken contracts among themselves with little impact on the rest of the Dutch economy. . . . So the tulip trade in Holland revived and continued to prosper, as it does to this day.”
Should B-School Students Pay More?
| Peter Klein |
Business professors earn more than their faculty counterparts in history or music. Why shouldn’t business majors pay higher tuition than history or music majors?
That’s the reasoning many US public universities are employing, reports this New York Times piece. Undergraduates majoring in business, engineering, journalism, and other professional programs are starting to face tuition premia. Faculty salaries vary, by discipline, according to supply and demand (at least within limits set by the university cartel), and tuition and fees are starting to adjust to match. An interesting move for institutions that have long resisted using the price mechanism to allocate resources among and within operating units.
Update: See Brian McCann’s commentary here.
Another Great Higher Education Quote
| Peter Klein |
From Jacques Pépin’s delightful memoir The Apprentice: My Life in the Kitchen (Houghton Mifflin, 2003):
By the time I had completed all but one of the required courses for my Ph.D. [in literature at Columbia, around 1972], I was thinking about quitting the kitchen and becoming a university professor. . . . [I] proposed a doctoral thesis dealing with the history of French food presented in the context of French literature. There were plenty of literary references for me to explore, from Ronsard’s “Apology to a Field Salad,” to the wedding feast in Flaubert’s Madame Bovary, to Proust’s well-known madeleine.
But when I proposed the idea, my adviser, a Frenchman, shook his head. “The reason not much has been written on the topic, Mr. Pépin,” he intoned, “is that cuisine is not a serious art form. It’s far too trivial for academic study. Not intellectual enough to form the basis of a Ph.D. thesis.” My proposal was turned down.
Perhaps I could have argued my point, but my adviser’s curt dismissal of a field so important to me, to which I had dedicated my life, helped crystallize some doubts I was having about a career in academia. Though I enjoyed research, the last time I had participated in anything resembling a stimulating intellectual discussion with fellow students was back at [Columbia’s] School of General Studies, when we met after class for drinks and conversation — people of many nationalities and all ages, a mini-United Nation. Now my associates were suddenly twenty-one- or twenty-two-year-olds whose only interest seemed to be grades. Far from being noble and high-minded, many of my professors were petty, focused on trivial departmental squabbles. When two or more of them gathere socially, the conversation was limited to university politics and junior-high-school-level gossip about other professors.
As much as anything, getting an education cured me of my complex about not having an education.
Economic Inquiry Tries “As-Is” Reviews
| Peter Klein |
Economic Inquiry, generally regarded as the best of the second-tier general-interest economics journals, is adding an “as-is” submission option, like the one we discussed here.
More on Social Capital, Historically Considered
| Peter Klein |
For more on social capital in history see Rowena Olegario’s history of credit reporting firms, A Culture of Credit: Embedding Trust and Transparency in American Business (Harvard University Press, 2006). Here is an EH.Net review. Here is Dan Klein’s earlier work on credit bureaus.
Vapor-Articles
| Peter Klein |
Like most academics I list unpublished papers and projects on my CV. I distinguish between “Completed Working Papers” that can be downloaded and circulated and earlier-stage “Research in Progress.” I try to maintain a narrow definition of the latter, including only papers that are at least partially written or analysis that is at least partially complete. Some colleagues list even earlier-stage projects better described as “wishes and dreams.”
Someone recently asked why I list research in progress. Are these papers the academic equivalent of vaporware — attempts to discourage others from working on these topics by signalling that I have the market cornered?
I don’t think so. Most academics list these papers and projects not to deter entry, but to signal to colleagues — potential collaborators, not potential competitors — what they are working on and interested in. Naming the coauthors can also have a certification effect (like the role played by VCs and banks for startup firms). It is also important to communicate, credibly, to current (and potential) employers that one has a good set of projects in the pipeline. In short, the motives are probably benign
Is Social Capital Path Dependent?
| Peter Klein |
Recent work by Robert Putnam, Douglass North, Ed Glaeser, and others has highlighted the role of social capital — membership in organizations, participation in civic activities, social trust — plays in economic development. Empirically, social capital has typically been measured with survey data, making historical comparisons difficult. It is important to know, however, how social capital changes over time. If social capital is largely path dependent, then there is little that can be done to improve the stock or productivity of social capital at a particular time.
A new paper by Marta Felis Rota, “Is Social Capital Persistent? Comparative Measurement in the Nineteenth and Twentieth Centuries,” exploits Adelman and Morris’s (1965) database of socio-economic indicators for 23 countries from 1850 to 1914 to construct social capital indicators for the late nineteenth century, which can be compared to similar indicators for the twentieth century. Evidence for path dependence is weak; all countries enjoy long-run increases in social capital but rates of change vary widely. Check it out.
Are Economists Free-Market Apologists?
| Peter Klein |
This New York Times piece describes contemporary economics as a rigid free-market orthodoxy, challenged by a few courageous iconoclasts who question free trade, support minimum wages, favor tax and spending increases, and the like. To the author: What color is the sky on your planet?
I was to blog a more detailed reaction but Alex Tabarrok, Larry White, and Greg Mankiw, among others, have beaten me to it. Note that Alex and Larry both refer to Dan Klein’s work on the ideological views of economists, which we’ve discussed often here at O&M. The Times piece did not bother to include any data, of course.
Management Journal Impact Factors 2006
| Nicolai Foss |
The new journal impact factors for 2006 are now available from the ISI Web of Knowledge (here). Consider the journal list within “management” or “business” (the former includes information system journals, the latter includes marketing journals). (more…)
Francis Hutcheson’s Classic Text on Natural Law
| Peter Klein |
O&M readers interested in the Scottish Enlightenment (and who isn’t?) may enjoy this new volume from Liberty Fund, Francis Hutcheson’s Philosophiae Moralis Institutio Compendiaria, with A Short Introduction to Moral Philosophy. Hutcheson, of course, was Adam Smith’s teacher at the University of Glasgow. Writes General Editor Knud Haakonssen:
Hutcheson’s Institutio was written as a textbook for university students and it therefore covers a curriculum which has an institutional background in his own university, Glasgow. This was a curriculum crucially influenced by Hutcheson’s predecessor Gershom Carmichael, and at its center was modern natural jurisprudence as systematized by Grotius, Pufendorf, and others. . . . The Institutio is the first major [published] attempt by Hutcheson to deal with natural law on his own terms. . . . It therefore encapsulates the axis of natural law and Scottish Enlightenment ideas, which so many other thinkers, including Adam Smith, worked with in their different ways.
The book includes both the Latin original and an English translation, so you can brush up on your Latin as you work through the text (an added bonus!).
A World Without Supermarkets
| Peter Klein |
It might be like Detroit, now the only major US city without a national chain supermarket. (Thanks to Cliff for the link.)
I’m sure these guys will produce a study soon showing how Detroit residents are better off without the big retailers.
History of Organizations Bleg from J.C. Spender
| Peter Klein |
Our friend J.C. Spender seeks help from the O&M readership:
I’m desperately searching for a history of organizations — not the history of corporations, nor of corporate law, nor of combinations, nor of Guilds, nor of military organizations, nor of religious ones either.
My problems are (1) to find literature about the history of organizations — are there some good books, papers, etc.? Now that I focus my mind on this I cannot come up with much other than the history of corporations and markets, rather than organizations and markets. My one discovery is the history of the Jesuit movement which, one might argue, was the first modernist “organization.”
(2) Barbara Czarniawska told me that the actual term “organization” only came into general use with the rise in “systems theory” — Henderson, Barnard, and Co. I find this unbelievable but I’m hard pressed to refute or in any other way resist her.
My intuition is that there is something here awaiting discovery about the decline of religion and the emergence of strictly secular and profit-oriented organizations — something beyond the Protestant Ethic therefore and entailing or legitimating a set of objectives which are not in the service of the public — quite to the contrary.
Any suggestions? Please share them below.
Industrial Recycling: Nothing New
| Peter Klein |
Popular myth holds that pre-industrial societies were models of environmental sensitivity, practicing “sustainable development” and minimizing waste. Industrialism, it is said, upset the delicate balance between man and environment, encouraging overproduction, overconsumption, and a disregard for the natural world. To many environmentalists, capitalism’s primary legacy is the strip mine and the garbage dump.
Shephard Krech’s Ecological Indian: Myth and History has done much to debunk the fable of pre-modern environmentalism, at least in the North American context. Pre-industrial societies produced massive amounts of garbage and cared little for environmental stewardship. Now we learn from Pierre Desrochers and Karen Lam that industrial recycling — a key component of modern sustainable development programs — was widespread during the Gilded Age. In “‘Business as Usual’ in the Industrial Age” (Electronic Journal of Sustainable Development, vol. 1, 2007) Desrochers and Lam describe how woollen rags, old iron, manure, animal parts, butter-making waste, and other byproducts were recycled, for profit, in the UK and US. Here’s but one of many colorful examples (not for the feint of heart or weak of stomach): (more…)
Design Puzzles II
| Steven Postrel |
When I last posted on whether apparent inefficiencies in the design of objects and institutions were real opportunities or only mirages, there were many well-informed and thoughtful comments. One of the issues I addressed was the use of multiple queues at checkout counters, despite their theoretical inferiority to a single queue where the next available checker gets the next customer in line. (more…)
Signal Extraction Problems: Recommendation Letters
| Nicolai Foss |
Some kinds of recommendation letters need careful interpretation. A letter written for a student to help him or her study abroad usually doesn’t need much interpretation. But a letter written by a colleague for a colleague to a colleague is a different matter. One reason is that writers of recommendation letters differ. Some express themselves very directly, others more indirectly. The same words mean different things to different people. “Solid research” may mean “boring and unimaginative” to one person, but may mean, well, “solid” to another person. (more…)
Human ATMs
| Peter Klein |
As economies grow they tend to substitute capital for labor. Hence the literature on the social effects of technological change focuses on labor displacement and absorption. But what happens when a capital-intensive process appears in a developing economy where labor is cheap?
Here’s a fascinating example of labor displacing capital: a Ugandan financial institution has created an ATM network without ATMs. The machines are too expensive to put in rural areas, so the bank contracts with local shopkeepers who receive and disburse currency using inexpensive smart-card readers linked wirelessly to a central database. (HT: Timbuktu Chronicles)
If this catches on, will we see despondent ATM terminals wandering the streets like that poor robot in the GM Super Bowl commercial?
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