Posts filed under ‘– Klein –’
The Enterprise of Law
| Peter Klein |
Bruce Benson’s terrific 1990 book The Enterprise of Law: Justice Without the State is back in print, courtesy of the Mises Institute.
See also his article archives at the Journal of Libertarian studies and the Independent Review.
Other useful books in this genre: Robert Ellickson’s Order Without Law, Benson’s To Serve and Protect, and David Beito’s From Mutual Aid to the Welfare State.
Unusual Business Ideas That Work
| Peter Klein |
See Uncommon Business for interesting examples of entrepreneurial creativity. (Via Craig Depken)
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…)
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…)
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.”
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.
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.
Do Economists Make Good Leaders?
| Peter Klein |
Hugo Sonnenschein is a rare breed, an accomplished mathematical economist who went on to become a Dean (Penn), Provost (Princeton), and University President (Chicago). I bet he’s the only university president emeritus with a forthcoming Econometrica. And what a cool title: Adam Smith Distinguished Service Professor!
However, like Harvard’s Larry Summers, Sonnenschein ran into problems as Chicago’s president. His attempt to reform the university’s rigid, and increasingly idiosyncratic, undergraduate core curriculum met with strong resistance. The conflict led to Sonnenschein’s resignation in 2000, though without the fireworks accompanying Summers’s departure.
Do economists make good leaders? Many commentators on the Summers brouhaha suggested that Summers’s training as an economist contributed to his poor communication and people-management skills. (One critic complained that “Summers’s thinking is grounded in a discipline that has little sense of fairness and moral obligation, where discriminatory situations are often accepted as the result of Darwinian mechanisms that should be left untouched.” Hmmmmm . . . wanna bet this critic prefers polar bears to Pakistanis?)
NB: I’ve spent much of my own academic career serving under economists, first Charles B. Knapp at the University of Georgia and now Brady J. Deaton at the University of Missouri. What does that say about me . . . ?
Introducing Guest Blogger Richard Langlois
It is a pleasure to welcome Richard Langlois as our newest guest blogger. Dick is Professor of Economics at the University of Connecticut and Adjunct Professor of Strategy and Business History at the Copenhagen Business School. A prolific scholar and accomplished teacher, Dick is author or editor of nine books and dozens of articles in the theory of the firm, organizational boundaries, technology, the economics of institutions, the history of economic thought, and economic methodology. (His impressive CV is here.)
During the next couple of weeks Dick will share his thoughts on these subjects and whatever else strikes his fancy. Please join us in welcoming him to the team.
Why Do Sociologists Lean Left — Really Left?
| Peter Klein |
It’s no secret that academic intellectuals tend to favor socialism and interventionism over the free market, agnosticism and warm-and-fuzzy universalism over orthodox Christianity, cultural relativism over tradition and authority, and so on. Indeed, studies of US professors’ political affiliations consistently find a strong leftward bias. Hayek ascribed the hostility of the intellectual classes toward capitalism to selection bias. Schumpeter noted the intellectual’s “absence of direct responsibility for practical affairs,” emphasizing “the intellectual’s situation as an onlooker — in most cases, also an outsider — [and] the fact that his main chance of asserting himself lies in his actual or potential nuisance value” (Capitalism, Socialism, and Democracy, 3rd ed., p. 147).
Now comes a new study of academics’ political affiliations using voter-registration records for tenure-track faculty at 11 California universities. The study, by Christopher F. Cardiff and Daniel B. Klein, finds an average Democrat:Republican ratio of 5:1, ranging from 9:1 at Berkeley to 1:1 at Pepperdine. The humanities average 10:1, while business schools are at only 1.3:1. (Needless to say, even at the heartless, dog-eat-dog, sycophant-of-the-bourgeoisie business schools the ratio doesn’t dip below 1:1.)
Here’s the most interesting finding. What department has the highest average D:R ratio? You guessed it: sociology, at 44:1. Perhaps some of our readers of the sociological persuasion could tell us why, and what this means. (more…)
Nickels, Dimes, and Wal-Mart
| Peter Klein |
Like many US universities, my school has a summer reading program, in which incoming freshman are assigned a book to read over the summer, for small-group discussions during the fall. A couple of years ago I volunteered to lead one of these discussions. You can imagine my disappointment when I learned that the assigned reading was Barbara Ehrenreich’s extremely silly Nickel and Dimed, a polemic against the low-wage retailing and hospitality sector. (My main complaint against the book was not that I disagreed with nearly all its substantive points, but that it consists of little more than left-wing bromides and platitudes, supported by anecdotal evidence and written in an annoyingly cutesy style. I don’t care if the book is liberal, conservative, libertarian, Green, brown, or purple, but please make it well-reasoned, balanced, and thorough. Why expose these poor freshmen to mush?)
Hence I was glad to see Ehrenreich taken to the cleaners by Jason Furman in this Slate dialog, “Is Wal-Mart Good for the American Working Class?” Furman actually has arguments and evidence for his position, a refreshing addition to the typical Wal-Mart debate. (HT: Fred Tung)
Incidentally, some of the best empirical work on Wal-Mart has been done by my colleague Emek Basker.
Update: Bob V. summarizes the Slate debate this way: “Dr. Furman is an economist. . . . He sees the world as systems and asks the question: how should our systems be designed to make the world a better place? Ms. Ehrenreich, on the other hand, asks: how can I get more stuff?”
Emergence of the East India Company
| Peter Klein |
An example of spontaneous order in the emergence of the large firm: Emily Erikson and Peter Bearman’s “Routes into Networks: The Structure of English Trade in the East Indies, 1601-1833,” forthcoming in the American Journal of Sociology. Working paper here. Abstract:
Drawing on a remarkable data set compiled from ships’ logs, journals, factory correspondence, ledgers, and reports that provide unusually precise information on each of the 4,572 voyages taken by English traders of the East India Company (hereafter EIC), the authors describe the EIC trade network over time, from 1601 to 1833. From structural images of voyages organized by shipping seasons, they map the (over time and space) emergence of dense, fully integrated, global trade networks: of globalization before globalization. The paper shows that the integration of the world trade system under the aegis of the EIC was the unintended by-product of systematic individual malfeasance (private trading) on the part of ship captains seeking profit from internal Eastern trade.
The paper even gets a plug from Scientific American:
The researchers . . . describe how many rogue captains ignored orders to trade in established markets and then return directly to England, choosing instead to explore new locations and trade between local Asian ports for their own personal profit. Although they were breaking the law by appropriating supplies and ship crews for this private trading, in doing so they ultimately benefited the East India Company by building a larger market and gaining a unique knowledge of local market fluctuations.
Via Craig Newmark. Related: my earlier post on market-based management.
Syllabus Bleg
| Peter Klein |
As part of a curriculum review project I’m collecting syllabi for first- or second-year PhD courses in strategy, organization theory, and the economics of organizations. If you have a syllabus you’re willing to share, please send it to me at pklein@missouri.edu. I will discuss broad themes and patterns with my colleagues but will keep details confidential. Thanks!
Fraudulent Management Books
| Peter Klein |
Be careful when purchasing management books in China:
As Chinese economy and private business grow rapidly, books on western company management and leadership strategies have been on the list of top sellers in many bookstores. However, it is discovered recently that a lot of the best-sellers are bogus books.
Execution Ability, a popular series of seven books written by “famous Harvard professor Paul Thomas”, turned out to be bogus. “This professor and his books are now very famous in China,” said Jiang Ruxiang, general manager of Beijing Zion Consulting Co., Ltd. Jiang discovered that there is no such a professor Paul Thomas at all.
Another example is a book titled “No excuse”, with fake American writer and fake New York Times review as “The most perfect reading for company employee training”. It was the best-selling management book in 2004 with sales of 2 million copies. . . .
Examples of [fake] “honors” include “2003 No. 1 sales on Amazon”; “Endorsed by U.S. Land, Navy and Air Forces.”; “Every U.S. government employee has a copy”, etc.
HT: JC Spender.
Patently Silly
| Peter Klein |
It’s a bit unfair to interrupt our serious discussion of intellectual property by taking cheap shots at the US Patent Office, but I can’t resist plugging Patently Silly by Daniel Wright and Alex Eben Meyer. You’d be surprised what the USPTO considers unique, useful, and non-obvious.
(NB: When I worked at the CEA a few years ago, I once asked a USPTO official for his perspective on the marginal benefits and costs of various patent characteristics (length, breadth, etc.), including the pros and cons of having a patent system at all. He literally could not understand what I was talking about. When I brought up the possibility that a patent examiner could make a mistake, and grant legal protection for an invention that was not unique or useful, he stated flatly: “We don’t make those mistakes.”)
Business Ethics and Bioethics
| Peter Klein |
Just as business schools are increasingly emphasizing business ethics and corporate social responsibility (not everyone thinks this is wise), the biological and medical sciences are increasingly emphasizing bioethics. Yet bioethics courses at US universities are usually offered by the philosophy or religious studies departments, or by professional philosophers or theologians in university-wide centers, not by regular faculty in the biology or pharmacology departments. Why? I can think of at least three explanations:
1. Business schools are more serious about ethics than are biology or pharmacology departments, and hence more willing to devote resources to hiring ethicists and creating ethics programs.
2. Business schools are trendy and shallow, using management professors to teach “ethics lite” or “pop ethics” courses rather than outsourcing this material to the academic units where it belongs.
3. Bioethics problems are subtle and complex (Is an embryo a person?). Business-ethics problems are mundane and straightforward (Should you lie to your shareholders?). Philosophers are needed for the former, but not for the latter.
What do readers think?
New Paper by Tan and Mahoney: Integrating TCE, RBV, and Agency Theory
| Peter Klein |
Are transaction cost economics, the resource-based view of the firm, and agency theory substitutes or complements? Most applied studies in organizational economics use one or another framework to explain the phenomenon in question; relatively few studies incorporate multiple frameworks, and even fewer attempt to distinguish among them empirically.
A new paper by Danchi Tan and Joe Mahoney, “Why a Multinational Firm Chooses Expatriates: Integrating Resource-Based, Agency and Transaction Costs Perspectives” (Journal of Management Studies, May 2006), takes the middle approach, developing a new framework that incorporates key elements of TCE, RBV, and AT to explain multinational firms’ decisions to staff their foreign subsidiaries with expatriates or host country nationals. (more…)
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?
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