Monday, December 21, 2009
Enough said
From Igor Volsky.I find it very hard to believe that kill-billers can construct an argument by which the expected social return of waiting for the next reform is higher than passing this bill. On the plus side, the next reform could be more comprehensive, but that seems easily outweighed by a much, much lower likelihood of success, and a higher cost today in terms of lives lost as we delay needed implementation of the pre-existing condition change.
Monday, December 14, 2009
Monday, November 30, 2009
Don't invest in mutual funds
Mutual fund charts of the day
Post a comment (3)Posted by: Felix SalmonTags: investingFama and French have a very long blog entry (over 5,000 words) about the latest version of their paper on mutual fund returns. As you might expect from research sponsored by an index-fund company, it shows that active mutual-fund managers fail to outperform the market. But at least it does so with pretty charts.
Here’s what happens when you compare actual before-fees returns from mutual-fund managers (the blue line) with what you’d expect if no managers had any skill at all, and the returns were simply distributed by chance (the red line).
On the left hand side of the chart, you see actual fund managers significantly underperforming what you’d expect by luck alone. On the right hand side, however, it seems that if you’re skilled at manager selection, there is a glimmer of hope that you might find a little bit of alpha. Not a lot, but something statistically significant.
Unfortunately, all that alpha — and then some — gets eaten away by fees. Here’s the chart for after-fees returns:
The red line, remember, is the distribution of returns you’d expect if all mutual-fund managers had an alpha of zero. The blue line is actual returns. Fama and French conclude:
For the vast majority of actively managed funds, true α is probably negative; that is, the fund managers do not have enough skill to produce risk adjusted expected returns that cover their costs.
Which comes as no surprise, but it’s still good to see some relatively solid empirics here. Anybody wanting to make an intellectually-credible case in favor of investing in actively-managed mutual funds is going to have to attack this paper head-on.
... succinctly summarizing one solid piece of advice I have gotten at literally every level of economics education -- high school, college and b-school.
This seems perfectly reasonable to me
— Updated: 1:44 pm -->Chicken Little cometh
Readers of classic science fiction may remember the “character” of Chicken Little in Pohl and Kornbluth’s The Space Merchants — a giant hunk of vat-grown meat from which slices were periodically removed to feed the masses.
Via Crooked Timber, it’s here:
SCIENTISTS have grown meat in the laboratory for the first time. Experts in Holland used cells from a live pig to replicate growth in a petri dish.
The advent of so-called “in-vitro” or cultured meat could reduce the billions of tons of greenhouse gases emitted each year by farm animals — if people are willing to eat it.
So far the scientists have not tasted it, but they believe the breakthrough could lead to sausages and other processed products being made from laboratory meat in as little as five years’ time.
Yum.
Monday, November 23, 2009
The world still exists
A Blast at Last at Huge Particle Collider
Fabrice Coffrini/Agence France-Presse — Getty ImagesScientists at CERN, the European Center for Nuclear Research, during the restart of the Large Hadron Collider near Geneva.
via nytimes.com
Or our alien simulators paused the simulation, spent 18 months offline writing code to fix the "Hadron collider bug," spliced the code into the universal physics model, and reverted to the saved simulation from November 23rd, 2009.
Friday, November 20, 2009
Tuesday, November 17, 2009
Naughty Bernanke
Let me remind readers that, according to the Federal Reserve, the Federal Reserve's chief policy mission is:
[C]onducting the nation’s monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates.
Emphasis mine. Clearly something here is badly amiss. The Fed has given up on easing further despite the fact that unemployment is approaching its highest level in 80 years, and despite the fact that prices are not stable but are declining.
via economist.com
Every Fed challenge team in the country better be arguing for more monetary easing. We're still looking at zero/negative inflation (deflation), and rising unemployment, and it's clear that fiscal policy won't step in (because people think the Treasury department should be run like a family budget, or something). Therefore, more aggressive monetary policy, please.
Monday, November 9, 2009
Nonsensical
“A lot of it is sentiment-driven and there the dollar is getting a vote of no confidence,” Mr. Dolan said. “The massive borrowing by the U.S. government is undermining confidence in the longer-term outlook for the dollar.”
Investors appeared to be directing their focus to riskier equities and turning away from the currency markets. The dollar is considered a low-yield investment, given the historically low interest rates in the United States. Last week, the Federal Reserve gave no indication that it planned to raise interest rates anytime soon, leaving investors to reroute their funds toward the stock market, oil and gold.
via nytimes.com
These two paragraphs don't make much sense to me. A vote of no confidence in the government would result in long-term interest rates on US bonds to shoot up to compensate investors for inflation. That isn't happening. In fact, as the next paragraph states, interest rates are historically low.
I'm no expert on currency markets, but it doesn't make sense to me that a wise bet against the dollar in currency markets (driving the dollar lower) wouldn't also be a wise bet in bond markets (selling Treasury bonds and driving long-term interest rates up). It sounds to me like people don't have much faith in American economic growth over the next 10 years, which explains both trends, and could actually be remedied by additional deficits (stimulus spending). See Brad DeLong for more: http://delong.typepad.com/sdj/2009/11/a-joyless-recovery.html.>
Distressing
Politico reported that you told colleagues, “There is now a pro-life majority in the House.” Is that true?
I don’t remember saying that, but it’s not inconsistent with what the votes say. That’s been the situation.
Thursday, November 5, 2009
ZOMFG WTF!!!!! 9.5% THIRD QUARTER PRODUCTIVITY GROWTH NUMBER!!!! - J. Bradford DeLong's Grasping Reality with All Eight Tentacles
ZOMFG WTF!!!!! 9.5% THIRD QUARTER PRODUCTIVITY GROWTH NUMBER!!!!
I WAS EXPECTING A 6% PRODUCTIVITY GROWTH QUARTER, BUT THIS IS RIDICULOUS!!!
Productivity increased 9.5 percent in the nonfarm business sector during the third quarter of 2009 as unit labor costs fell 5.2 percent (seasonally adjusted annual rates). In manufacturing, productivity increased 13.6 percent while unit labor costs fell 7.1 percent...
Back in the 1930s there was a Polish Marxist economist, Michel Kalecki, who argued that recessions were functional for the ruling class and for capitalism because they created excess supply of labor, forced workers to work harder to keep their jobs, and so produced a rise in the rate of relative surplus-value.
For thirty years, ever since I got into this business, I have been mocking Michel Kalecki. I have been pointing out that recessions see a much sharper fall in profits than in wages. I have been saying that the pace of work slows in recessions--that employers are more concerned with keeping valuable employees in their value chains than using a temporary high level of unemployment to squeeze greater work effort out of their workers.
I don't think that I can mock Michel Kalecki any more, ever again.
How long can this productivity growth continue? At some point, businesses will run out of ways to squeeze more production out of their current workers ... But will they be able to meet demand with productivity growth alone?
Tuesday, November 3, 2009
Check yourself before you wreck yourself, Democrats
A Year After Obama’s Election, How Do You Feel?
By The New York TimesOne year ago, we asked NYTimes.com readers for a single word to describe their mood about the presidential election. The response was overwhelming (73,400 words) and varied widely, with “hopeful” and “anxious” as the top choices.
Now, a year after the election of Barack Obama, we want to know: Has your mood changed? Are you energized, hopeful, disappointed, ambivalent or outraged? As Jeff Zeleny wrote Tuesday, Mr. Obama has now seen his pledge to transform the country give way to some of the hardened realities of office. While it will be years before it is possible to gauge the success of his governing agenda, his record for some of the issues on which he campaigned is beginning to come into focus.
What one word best describes how you feel a year after President Obama’s election? Let us know.
Watching Democrats' single words to describe their mood after Obama's election scroll across the page (like "betrayed"), all I could think of was: "We were thiiiis close to a McCain administration that would have driven us right into a second depression."
Progressive anger that Obama isn't living up to their (lofty) expectations is understandable, but misplaced. This administration is so much better than the alternative that we should still be thanking each and every one of our lucky stars that he was able to get elected.
Friday, October 30, 2009
Wednesday, October 28, 2009
Tuesday, October 27, 2009
Altar altered
Monday, October 26, 2009
Friday, October 23, 2009
Yes, my mom's badass
Democrat Nora Bredes for Monroe County Legislature District 18
TOTAL ELEMENTS IN ARRAY: 8
TOTAL CHARACTERS IN ARRAY: 1421
TOTAL CHARACTERS IN PAGES:
LAST PAGE CONTAINS: 1421
-->-->Nora Bredes, who moved to the Rochester area from downstate in 1999, continues to demonstrate she is fully invested in this community.
Bredes, a Democrat, is running for the Monroe County Legislature from District 18, which includes parts of Perinton and Pittsford. Her impressive credentials and vision for improving county government earned her the Democrat and Chronicle's endorsement.
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She just received the endorsement of Rochester's largest newspaper, but it's still going to be a tough uphill battle ...
Thursday, October 15, 2009
Dow 10,000, Goldman $3 Billion: Welcome to the ‘Bush Recovery’ - The Opinionator Blog - NYTimes.com
And yet what is on display in this seemingly nonsensical rise of 10 percent in the value of the Dow over the past few weeks? Nothing more than speculation that certain numbers look promising going forward. In other words, what we have here is a case of the “efficient markets hypothesis” working for the benefit of a Democratic politician, in that the collective wisdom of the market has it that the economy is going to grow at some point relatively soon and that the time to buy is now, so that stocks don’t get more expensive later.
This from John Podhoretz, explaining why it's grossly unfair that liberal economists get to bash conservative, "efficient market hypothesis"-believing economists and take credit for the rising Dow for their man, Obama. Two things:
1. What Podhoretz described isn't the efficient market hypothesis. The "Let's buy now before things get pricier because other people are going to buy now" is a rational response to an inefficient, irrational market -- i.e. one in which you expect crowds of people to stampede in and drive up share prices, even if the underlying assets haven't increased in value. In an efficient market hypothesis world, markets go up because we're getting more information about the underlying assets -- they're making lots of money, and the market prospects are looking good. But we're not hearing uniformly good news. Citi's being dragged down by credit losses; consumers are still stretched thin; unemployment's still going up. All in all, signs are mixed at best. Which is why folks like Robert Reich thinks this is an irrational market movement, not evidence of "efficient markets." So Podhoretz is incoherent.
2. Podhoretz admits that Krugman, whose article about the battles in macroeconomics, won't be taking credit for the market gains. Neither is Robert Reich. So two leading liberal economists who criticize efficient markets aren't taking credit for the market gain. Who is Podhoretz talking about?
So, this isn't evidence of efficient markets, and liberal economists aren't taking credit for it. Why did Podhoretz bother writing all this?
Covered: Matt Layzell covers Avengers 217
Matt Layzell covers Avengers 217
This might be the best covered cover I've seen on Covered so far. I love the conceit of Covered -- amateur or professional artists giving their takes on classic comic book covers. Often I think the covering artists don't go far enough in reinterpreting the classics, frequently opting for a more cartoon-y rendering. But this one really hits the mark.
Sunday, October 4, 2009
Friday, October 2, 2009
Woe is us
Another Bad Employment Report (I-Wish-We-Had-a-Ripcord-to-Pull Department)
The adult civilian employment-to-population ratio drops below 59% to 58.8%, down from a December 2006 peak of 63.4% (and am April 2000 peak of 64.7%):
What's amazing about this chart is that the civilian employment-population ratio is now around where it was in the early 1980s while women were still establishing their current foothold in the labor market. There are more job-seekers now, with more families shooting to have two bread-winners, and yet the actual ratio of the population employed isn't any higher.
Someone should find George W. Bush and force him to continue to hold press conferences, just so we can continue to publicly ridicule him in the fashion he deserves.
Thursday, October 1, 2009
Friday, September 25, 2009
Zeffirelli Adds More of His Own Boos for ‘Tosca’ - ArtsBeat Blog - NYTimes.com
It’s like having married a woman who’s still beautiful in your eyes, still wonderful, and for some legal reason they replace her with another one,” Mr. Zeffirelli, 86, said Friday by telephone from Rome.
This analogy makes no sense to me. Can they replace one's spouse for legal reasons? I mean, they might upgrade you to the newest Stepford wife model, but would they really downgrade you?
Tuesday, September 22, 2009
Yeah, you can see -- but don't look in the mirror
Video: doctors implant tooth into eye, restore sight, creep everyone out
by Vladislav Savov
posted Sep 22nd 2009 at 6:25AM
Osteo-odonto-keratoprosthesis. It's a real procedure that really does revive people's ability to see, yet we get the feeling that people will be more, um, excited about how it's done than why it's done. The seemingly Mary Shelley-inspired doctors extract a tooth from a blind person and drill a hole through it, where a prosthetic lens is placed, and the resulting macabre construction is implanted into the blind person's eye. The tooth is necessary as the body would reject an artificial base. It's not at all pretty, and it cannot repair every type of blindness, but it's still a major step forward. To hear from Sharron Thornton, the first American to have undergone the procedure, check the video after the break, but only if you can handle mildly graphic content -- you've been warned. [Via Daily Tech]
via engadget.com
Let's hit the rewind button on technological progress. We've gone too far.
And yes, that's horribly insensitive.
Thursday, September 17, 2009
Probe gets clearest glimpse yet of cosmic dawn - space - 17 September 2009 - New Scientist
The Planck spacecraft has obtained its first peek at the afterglow of the big bang, revealing it in unprecedented detail. Its first map of the entire sky is set to be complete in about six months.
via newscientist.com
"The afterglow of the big bang" ... We are sending peeping tom probes into deep space. The Planck spacecraft, sitting in a tree staring into the universe's window.
Wednesday, September 2, 2009
Yale and service
Washington Monthly ranks Yale 23rd in its social contribution. While I think it's fair to rank Yale well below the nation's top public universities, I have a nit to pick. WM's "Service" metric includes ROTC participation; for reasons dating back to the Vietnam War, ROTC has a very low profile on Yale's campus. But WM doesn't effectively track community service performed on campus, so the work of Dwight Hall, an independent organization on campus that generates thousands and thousands of student community service hours, goes unnoticed. Yale definitely felt like a place where service was considered extremely important; sadly, that's not reflected in the ranking.
Tuesday, September 1, 2009
Snowy Range, WY
Liz and I drove up to the Snowy Range in Medicine Bow National Forest,
only a few hours north of Boulder. We hiked to the top of Medicine Bow
Mountain where there's still snow at 12000'. We also saw a moose and
her calf when we came around a bend along the Libby Creek trail. We
weren't more than 15' from the two of them. They watched us warily for
a bit before going back to breakfast. Lifelong dream to see a moose:
check. Time to dream bigger.
only a few hours north of Boulder. We hiked to the top of Medicine Bow
Mountain where there's still snow at 12000'. We also saw a moose and
her calf when we came around a bend along the Libby Creek trail. We
weren't more than 15' from the two of them. They watched us warily for
a bit before going back to breakfast. Lifelong dream to see a moose:
check. Time to dream bigger.
Tuesday, August 11, 2009
Friday, August 7, 2009
Dress Like Harvard
HT to Daniela
http://www.pheedcontent.com/click.phdo?i=e0c13888eaec6d0331c4d8d4dc5166c5
The true Harvard man wears Harvard Yard.
Saturday, August 1, 2009
Settlers of Cataan
The game I love to hate -- can't decide if it's worth the family tension or not. I sat this one out.
Friday, June 26, 2009
Wonder what he does in Las Vegas?
HT to Daniela for this amazing man's Global Vision of his Goddess. Inspiring. I was a little confused by this, however:
What is he doing in Las Vegas if he isn't gambling? Perhaps it's research for his forthcoming book:
So brave. I hope and pray he will find what he is looking for. How can you look into his old soul eyes without feeling for him?
I have an apartment in Westside of Los Angeles where I spend most of my time, but I am a Nevada citizen and make several trips per year to Las Vegas (I have zero interest in gambling). With the success of my computer technology, my vision is eventually to have one mansion in Los Angeles and another mansion in Las Vegas.
What is he doing in Las Vegas if he isn't gambling? Perhaps it's research for his forthcoming book:
If she has been a prostitute, that is GOOD!! We can discuss it at length. I have written a book (not yet published) entitled, Resurrecting the Innocence in Prostitutes. Fascinating topic! And it's an important part of my Global Vision.
So brave. I hope and pray he will find what he is looking for. How can you look into his old soul eyes without feeling for him?
Tuesday, June 23, 2009
What a difference 30 years makes
Nixon worried that greater access to abortions would foster “permissiveness,” and said that “it breaks the family.” But he also saw a need for abortion in some cases, such as interracial pregnancies.
“There are times when an abortion is necessary. I know that. When you have a black and a white,” he told an aide, before adding: “Or a rape.”
via nytimes.com
See: Obama, Barack.
Beyond salvation
You really have to wonder at what point these high unfavorables for the Republican party among all ethnic groups other than whites will be beyond repair. Even if the Republicans find a Hispanic national candidate, will that lead to a 180 in the way Hispanics perceive Republicans? Or will Republicans have so badly poisoned the well that Hispanics will revise their view of the candidate to the negative, not of the party to the positive?
Sunday, June 21, 2009
Busted Evan Bayh
Vanilla Ice cream with Nestle Quick Cocoa powder on top, yummy.
— mike allen
Now to go off topic as usual. I just watched Republican Senator Evan Bayh on the Fox Morning Show. Sen. Bayh very intelligently explained that President Obama was handleing the Iran situation in the correct and smart way. How refreshing to see a Republican Senator support our President and break from partisan politics to speak the truth. This is the kind of young Republican that can restore our Republican Party and break from the ignorant nasty rhetoric of the Limbaugh, Hannity mob.
Not sure if this commenter is in on the joke, but I thought his pegging Evan Bayh as the "Republican" Senator to lead his party out of the doldrums was hilarious. It's kinda like when the kid on the other team keeps hitting the volleyball into the net and you're like, "He's the best player on our team."
Saturday, June 20, 2009
Like rabbits? Like macaques.
Do Monkeys Pay for Sex?
So asks Time’s Krista Mahr. I think both the article and the research paper on which it’s based seems to be really stretching to analogize this to human prostitution:
According to the paper, “Payment for Sex in a Macaque Mating Market,” published in the December issue of Animal Behavior, males in a group of about 50 long-tailed macaques in Kalimantan Tengah, Indonesia, traded grooming services for sex with females; researchers, who studied the monkeys for some 20 months, found that males offered their payment up-front, as a kind of pre-sex ritual. It worked. After the females were groomed by male partners, female sexual activity more than doubled, from an average of 1.5 times an hour to 3.5 times. The study also showed that the number of minutes that males spent grooming hinged on the number of females available at the time: The better a male’s odds of getting lucky, the less nit-picking time the females received.
If you think about human society, “paying for sex” denotes a pretty specific kind of social practice—prostitution—and isn’t a catchall phrase to cover every mutually beneficial relationship that involves sex. You could probably do a study of married human couples that would show that sex is more likely after a husband is nice to his wife than after he’s been a jerk; I don’t think you’d call that a study about “paying for sex” among married couples.
3.5 times an hour? I might pay for a break ...
Friday, June 19, 2009
Low blow
CIA Hiring Failed Wall Street Analysts
by Dollars and Sense
According to the Wall Street Journal, the CIA is recruiting out of work financial analysts from Wall Street.
Why would they seek out the financial expertise of the people most directly responsible for the global economic meltdown?The CIA now produces a daily Economic Intelligence Brief for President Barack Obama, chronicling economic, political, and leadership developments that could impact the world economic order.
Describing the importance of the new briefing, CIA Director Leon Panetta told reporters in February that its purpose was “to make sure that we aren’t surprised by “the implications of the world-wide economic crisis and what happens with countries throughout the world as a result of that.â€
We can only hope that this explanation is only a cover for their real mission: covertly placing Wall Street's failed finest in charge of the financial and economic sectors of our worst enemies.
--d.f.
I'm fairly certain that it wasn't the analysts truly at fault -- I wouldn't assign the blame for the financial crisis to them. I'd assign more of it to their supervisors and managers who were most likely the ones guiding the analysis, choosing methods, ignoring problematic results, and setting policy. Blame them for choosing the wrong industry for, potentially, the wrong reasons; don't blame them for blowing that shit up. They're probably guilty of being "yes" men and women, but they weren't setting the course.
(HT to Daniela.)
Thursday, June 18, 2009
Very different from the GMAT essay
Are You Smarter than a French Teenager?
Thursday, 18th June 2009
The Bac began today with, as is traditional, the philosophy paper. Via Charles Bremner and Art Goldhammer, here are some of the questions our French friends had to answer:
For the Literature Stream:
1) Does objectivity in history suppose impartiality in the historian? 2) Does language betray thought ?
For the Science Stream:
1) Is it absurd to desire the impossible? 2) Are there questions which no science can answer?
Well, is it absurd to desire the impossible? Have at it, Spectator readers...
Friday, June 12, 2009
Who is the market supposed to serve? Producers or consumers?
Consumers, I say. I think most people would agree with me, and I think that given the government's role in creating markets, a government that created a market that generated surpluses for producers at the expense of consumers would not be fulfilling its end of the social contract. Producers, generally corporations, are legal constructs, and their surpluses -- economic profits -- would not be evenly distributed among employees and owners of capital. Favoring consumers on the other hand should result in a more egalitarian distribution of benefits. Fo egalitarian reasons, and since its consumers as citizens for whom the government exists, the market as artifact of government action ought to favor consumers. I don't think I've said anything controversial or stunning so far.
But the debate over the public plan and health care reform seems to implicitly challenge this premise. Republicans say, "The public plan is bad because people would get the same service at a lower price, and for-profit insurance companies wouldn't be able to compete." Given that market action ought to benefit consumers, not producers, this on its face is a positive development, not a negative one. I haven't really heard Republicans build their story from there, explaining why despite these lower prices, consumers are worse off. They have blustered about the lack of choice, but couldn't we end up in a situation in which consumers are provided their basic health insurance by the government and purchas supplemental insurance if they wish, providing greater choices in treatments? Is that so unreasonable?
I won't know what the story Republicans will tell about how reducing producer surplus (health insurer profits) for the benefit of consumers will end up hurting us until I hear someone ask the question, and I haven't heard it yet. Somehow, we have come to think of corporations as ends in and of themselves as opposed to means to an end -- our happiness, security, wealth, and health. That is not the explicit argument that Republicans make, but when your dots connecting harm to corporations with harm to consumers are sufficiently far apart and great in number, it's impossible not to wonder whose interests are most important.
But the debate over the public plan and health care reform seems to implicitly challenge this premise. Republicans say, "The public plan is bad because people would get the same service at a lower price, and for-profit insurance companies wouldn't be able to compete." Given that market action ought to benefit consumers, not producers, this on its face is a positive development, not a negative one. I haven't really heard Republicans build their story from there, explaining why despite these lower prices, consumers are worse off. They have blustered about the lack of choice, but couldn't we end up in a situation in which consumers are provided their basic health insurance by the government and purchas supplemental insurance if they wish, providing greater choices in treatments? Is that so unreasonable?
I won't know what the story Republicans will tell about how reducing producer surplus (health insurer profits) for the benefit of consumers will end up hurting us until I hear someone ask the question, and I haven't heard it yet. Somehow, we have come to think of corporations as ends in and of themselves as opposed to means to an end -- our happiness, security, wealth, and health. That is not the explicit argument that Republicans make, but when your dots connecting harm to corporations with harm to consumers are sufficiently far apart and great in number, it's impossible not to wonder whose interests are most important.
Monday, June 1, 2009
The feel good movie of the year
via wired.com
Down to Pixar's Up. Not sure how I feel about the attempt to show the catastrophe that puts the man and his son on the road, since I thought it was more effective as an unknown. I also hope they don't give the man a whole bunch of bullets, since it's a crucial plot point that he only has a couple. The trailer seems to have him constantly shooting at people -- perhaps they're trying to appeal to the action movie audience at theaters this summer.
Saturday, May 23, 2009
Management -- the incomplete profession
I spent two years of my life and a substantial amount of money earning an MBA, a degree I share with many of the people running the largest companies in the world, and many of the people who ran those companies into the ground. NPR recently considered to what degree business schools are responsible for the financial crisis still running its course. After diligently giving voice to both sides of that debate, the story then explores the idea of turning management into a true profession, with a standard set of values, knowledge and, perhaps, a Hippocratic-esque oath akin to medicine or law.
It's indisputable that changes of this sort would be valuable to society. But not for the reasons one might expect. Arguments for teaching a stricter set of values and forcing people to swear to a code of ethics imply a transformative process at work in the MBA education -- people are changed by their experiences in an MBA program. Of course that's true to an extent; livers damaged, vlookup skills gained, networks widened, people walk away from MBA programs with broader horizons, loftier ambitions, and some skills. What they don't learn, even at the Yale School of Management with its commitment to creating leaders for business and society, is a coherent set of professional ethics. There are no required ethics courses, and the State and Society course taught in the core curriculum is a disorganized agglomeration of political science, law and sociology, not a true exploration of business's role in creating social benefit.
This results in some strained conversations about professional ethics and responsibility. When we discussed a case about pharmaceutical companies, I pointed out that the consistently high returns on equity suggested that they were over-compensated for the risk of drug development and that we could afford to shorten patent terms and gain cheap generics more quickly. Rather than addressing the empirical questions of how consistent the returns on equity really are, or what returns are necessary to encourage entry and drug development, my professor called me a "communist" for using that line of argument. In a subsequent class, we discussed the case of the acquisition of one publicly-held government defense contractor by another. The acquired firm was characterized as being deeply committed to delivering unbeatable value to the government, consistently pricing below competition and delivering higher quality work. The acquirer was more profitable, but charged higher prices and had had complaints about quality. I pointed out that the acquisition was a clear social detriment; we as taxpayers would all be paying more money for the same or slightly lower quality services, while the debt- and equity-holders involved in the acquisition would benefit. A few students argued against me, and the professor shrugged his shoulders. In both these cases, there were obvious trade-offs between social benefit and corporate profits, and in both cases the notion that we had a right as a society to determine how those trade-offs were made was dismissed. Conservative students who ascribe to free market orthodoxy over-apply it to these instances where there is no free market; the government creates monopolies with patent law, and is the monopsony buyer of defense contracting. Meanwhile, students who might be more willing to consider social benefit do not have a vocabulary or framework with which to make their arguments. These incidents occurred in the same year that the school released the first issue of its magazine Qn, asking the question, "Can we make management a profession?" The Yale School of Management was asking the right questions, but has shown little desire to implement any answers.
All that said, the Yale School of Management is a very different place from Harvard Business School or Wharton. The curriculum is structured differently, classes are smaller, electives in not-for-profit management are many and of high quality, and the case method is supplemented with a hefty dose of classic rational-market and behavioral economics. However, it is not these differences in curricula that make the Yale School of Management so different -- it is instead the student body. Many people come from not-for-profit backgrounds, and there are a lot of joint degree students with the Forestry School. Even the bankers and consultants If students at the Yale School of Management become leaders for society and business, it has more to do with their values coming in and their mutual support of those values than it does anything they learn while at the school. More generally, for a Hippocratic oath of business or a beefed up curriculum to be most valuable, it will have to change the pool of applicants to business schools, not necessarily change the students once they arrive.
If you want to change the applicant pool to business school, you're going to have to make it attractive to the right people and painful to the wrong people. Unfortunately, I don't think shoving an ethics class or two into the core curriculum and requiring an oath upon a graduation is going to significantly deter the greedy and conniving. And the marketplace does not care enough about ethical MBAs to give those who demonstrate their values a leg-up in hiring, which could serve to attract the right kinds of people. These steps may turn management into a profession, but they won't consistently turn out managers that act like professionals. The people who come into MBA programs who care about social impact will leave with a better sense of what that means and how to achieve it. But those who come in concerned only with the marginal increase in salary, or access to venture capital networks are likely to leave no different than they do now.
The ugly truth is that professions are not constituted only by values and curricula -- they require regulation and punishment. The bar examination and the medical licensing examinations are necessary to police the profession and ensure sound professional practice. Until every vice president or above in a public corporation is required to pass a management licensing exam -- until there are some serious sticks and carrots at work -- management will not be a true profession. These regulations may go against every fiber of the free-market champions that typically enter business schools, but the market has shown itself to be completely incapable of letting the social-value maximizing cream rise to the top of corporate ladders. Instead, we've had villains, hucksters and incompetents, alongside the occasional paragon. If the management profession is going to spot the bad apples before they drive the economy of another cliff, it's going to have to look for them and kick them out. Business school might not be the place to apply that rigorous filter, but it has to exist.
Wednesday, May 20, 2009
Dopey NPR story about the CAFE standards
"It's a very tricky situation," says Marc Cannon, a top executive at AutoNation, the country's biggest car retailer.
Cannon says consumers care about the environment, but they care even more about money. Unless the price of gas is consistently high, Cannon says there just isn't enough demand for the fuel-efficient cars Obama wants manufacturers to build.
"This summer gasoline was $4, and every single automaker was trying to put out fuel-efficient vehicles as fast as they could," Cannon says. "All of a sudden, come December, gasoline drops to $2 and nobody wants fuel-efficient vehicles."
via npr.org
Completely missed the point. The market environment in which consumers switch to/from fuel efficient cars was one without strict CAFE standards. With the standards in place, consumers won't be switching to/from fuel efficient cars -- all the cars will be more fuel efficient (at least all the new ones). That's the whole point of the standard. I don't understand what these paragraphs have to do with anything.
Tuesday, May 19, 2009
Monday, May 18, 2009
Hurrah!
Radiohead Recording New Album
Red alert, batten down the hatches, let the dogs out, etc. Radiohead are currently recording new music with longtime producer Nigel Godrich, according to a BBC interview with bassist Colin Greenwood.
"It's at the stage where we've got the big Lego box out and we've tipped it out on the floor and we're just looking at all the bits and thinking what's next?...It was very noisy and chaotic and really fun," says Greenwood.
via pitchfork.com
Not that the last five albums have gotten old, but this news is like finding out you're going to meet your new best friend.
"New Zealand Launches Hookup Airways"
Register on the website and you can look for love in categories that include American boyfriend, Canadian girlfriend, Kiwi friend, and, our favorite, “business contact. The airline says 75 people have signed up. They’re about evenly split between North Americans and Kiwis. Men and women are also equally represented. Air New Zealand hopes passengers will be in a romantic mood just thinking about their destination.
via wired.com
What's worse, sharing a 13 hour flight with an awkward stranger who thinks you two ought to be soul mates, or finding out your soul mate lives in New Zealand? Love conquers all, but I don't know too many successful long-distance relationships that span the Pacific Ocean. Of course, you could just have sex. Who doesn't look/smell better after a 13 hour flight?
Wednesday, May 13, 2009
Jesse V, large and in charge
Jesse Ventura on Larry King:
Jesse Ventura: I would prosecute every person who was involved in that torture. I would prosecute the people that did it, I would prosecute the people that ordered it, because torture is against the law.”
Larry King: You were a Navy S.E.A.L.
Jesse Ventura: Yes, and I was waterboarded [in training] so I know…It is torture…I’ll put it to you this way: You give me a waterboard, Dick Cheney and one hour, and I’ll have him confess to the Sharon Tate murders.
via harpers.org
Tuesday, May 5, 2009
NL efficiency, 5/4/09
Latest effiiciency data and motion chart here. Bad week for the Mets. Oliver Perez was demoted to the bullpen, and the bullpen let a couple of victories slip away, offsetting continued improvement in offensive efficiency. Now estimating that Mets have third most-losses due to inefficiencies, behind Nationals and Rockies.
Her first album was good, this one's better
Seems rather like what the movie Revolutionary Road would sound like as an album ... yearning, domestic violence, discontent.
Friday, May 1, 2009
Profoundly idiotic Fox business channel anchor doesn't understand "risk"
via prospect.org
Robert Frank takes the uncontroversial position that any personal economic success involves some luck. I don't see how this could possibly be controversial, since making it through any given day takes some luck. But Stuart Varney, anchor, is insulted and outraged at the suggestion that it wasn't his talent and hard-work that got him his high-paying job. Then comes this bit, at the 1:47 mark:
"That's outrageous. That is outrageous. What about the risk I took? .. Do you know what level of risk is required for this level of success?!"
Stuart Varney decides that his strongest argument in contending that luck was not involved in his success is to ... contend that luck was involved in his success. After all, what is risk but luck? Sure, he might have taken good risks, but risk by its nature has a probabilistic element. Even if he took only good risks, say gambles where the chances are 95% of winning and each is needed to "be successful," after 5 of those gambles, he only has a 77% chance of being successful. If, as he says, he was constantly taking risks early in his career, we can reasonably assume that the probability of his having won all those gambles he was taking is pretty small. But he's successful, despite all of his risky behavior. Lucky him.
Thursday, April 30, 2009
Measuring efficiency in the NL, again
The motion chart/data set I've been working on is now at steady-state. I'll try to update this every Monday, not because you care, but because I'm curious about what this will look like. There are a lot of ways to figure out how well a team ought to be doing, and this method is by no means as straightforward as the simple Pythagorean theorem method based on runs scored versus runs allowed. But it does make for some very pretty pictures, and some estimates of losses due to offense versus pitching/defense (assuming all teams' have around the same variance in runs scored from game to game). There's a walkthrough in the second tab that takes you through some potentially interesting views of the data.
Wednesday, April 29, 2009
Swine flu -- now and later
When I first heard news about swine flu, I asked my girlfriend, a medical student, if I should be worried. Having just returned from Uganda where she had worked in a hospital where a resident on call could check in over 60 patients in an evening only to see all but a handful pass away before the end of that call shift, she responded with a simple, "No." Seeking a second opinion, and still worried, I found this blog, written by a Columbia University virologist. He argues that the seasonality of flu transmission will reduce the spread of infection in the northern hemisphere while tending to exacerbate it in the southern over the next few months. Apparently, flu is much harder to transmit in the hot weather of summer, creating, perhaps, the first summer where New Yorkers can be thankful for their steam bath of a city. From the blog:
Q: Should this be considered a prime candidate for next winters flu season? A: It depends on what happens in the southern hemisphere. In the next week or two we will know whether A/California/07/2009 (H1N1) spreads in the lower half of the globe and causes epidemics of disease. If it does, then it is highly likely that the virus will return here in the fall. If the virus fails to spread, then everyone can go back to worrying about H5N1.
Luckily for us, if H1N1 becomes a deadly epidemic in the southern hemisphere, we may have just enough time to produce a working vaccine by the time it attacks the northern hemisphere in force as temperatures drop. So I'm less worried now than I was, but still feel the urge to make swine flu jokes about once an hour -- a real indication of anxiety.
Tuesday, April 28, 2009
Banks complain that stress test is too fair
Regulators have told Bank of America Corp. and Citigroup Inc. that the banks may need to raise more capital based on early results of the government's so-called stress tests of lenders, according to people familiar with the situation.
The capital shortfall amounts to billions of dollars at Bank of America, based in Charlotte, N.C., people familiar with the bank said.
Executives at both banks are objecting to the preliminary findings, which emerged from the government's scrutiny of 19 large financial institutions. The two banks are planning to respond with detailed rebuttals, these people said, with Bank of America's appeal expected ...
via online.wsj.com
This article is behind a subscription wall, but I get the print version of the WSJ at school, so I got to read these final three paragraphs, true journalistic gems that they are:
One question is how the government is projecting banks' revenue streams through 2010. Some bankers are optimistic that the Fed will use their first-quarter numbers to predict their performance for teh enxt two years.
That could inflate the banks' earning potentials--and thus their capital cushions--because many of the companies had strong first-quarter performances.
Analysts, investors and most executives say those results probably aren't sustainable.
Shorter WSJ: Banks want everyone to believe they can sustain first quarter's profitability; everyone thinks that's bullshit. Given that regulators believe Citi and BofA to be undercapitalized by billions of dollars, it's unlikely that they're projecting forward the banks anomalous first quarter results, which are highly suspect as I've written about earlier. So that puts the government in agreement with, apparently, everyone else.
If only there were a "too big to lie about financial performance" corollary to the "too big to fail" maxim. I would also settle for "too big to complain about executive pay caps after destroying the economy." Come on guys, be the bigger banks.
Monday, April 27, 2009
NL Batting Efficiency - 4/27/09, Take 2
Well, after struggling to get this embedded into the post, I've given up (Verifiable -- way easier than Google to embed into Posterous, but sadly lacking a motion chart). Here's a link to a Google motion chart showing NL batting efficiency, now normalized by the number of games each team has played. As you can see, the Mets are not doing so hot. While their efficiency has increased, that's due to their getting fewer hits while scoring the same number of runs -- not the way you want to go. And their winning percentage deteriorated. Plotting runs per game on the x-axis and winning percentage on the y-axis provides a neat picture of how well teams are actually turning offense into wins.You can watch the Mets drop like a rock -- scoring the same number of runs, but getting fewer wins thanks to some truly execrable starting pitching (see: Perez, Oliver).
Thursday, April 23, 2009
Untitled
Wired loves to come up with cool ways of graphically representing data and relationships. I usually like them. But this "Enigmatrix" is bizarre.
- Game theory and Math are unconnected. Huh? Game theory is math. What do you think John Nash was scribbling on all those windows?
- Dungeons & Dragons does not connect to Plot, but Magic: The Gathering does. WTF is the plot of Magic: The Gathering? It's a money-sink that increases your social seclusion in junior high. What's the plot of Dungeons & Dragons? Ask my elven fighter-mage on a quest to restore his homeland.
- The Magic node connects to the Code node. I don't know anything about writing code or magic tricks, but I use Windows -- nothing magical about it.
- Jeopardy is in a connecting chain to Plot with Propaganda. Alex Trebek -- the Joseph Goebbels of game shows.
- Settlers of Cataan is not the central node.
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