Dueling for Dollars

Tuesday, January 31st, 2006

According to Edward Lazear, managers are Dueling for Dollars:

There’s a good reason corporate CEOs are paid those enormous salaries, and it has little to do with their current performance. According to Stanford Business School economist Edward Lazear, six- or seven-figure compensation packages aren’t a reward for today’s work — it’s a payoff for the long hours put in when the boss was aspiring to the top job. And it isn’t motivating the CEO anymore — it’s motivating the managers who are vying for the top job. ‘The CEO gets to enjoy the money,’ Lazear says, ‘but it’s making everybody else work harder.’

Making Unemployment Insurance Work

Tuesday, January 31st, 2006

I’ve often wondered why unemployment benefits weren’t in the form of a loan. Edward Lazear suggests just that in Making Unemployment Insurance Work:

The main purpose of unemployment insurance is to cushion temporary, unanticipated spells of unemployment. It is not intended to support system those who are chronically out of work or those in industries with relatively high wages and high expected unemployment, like construction.

Unfortunately, it is difficult to eliminate the abuses of unemployment benefits without also eliminating the insurance aspect. [...] To reform the system so that it would provide needed insurance and reward firms and workers who stay off the unemployment rolls, the current subsidy program should become more of a loan program. Under this system, workers would receive benefits during spells of unemployment but would repay a portion of the benefits after returning to work. Firms whose workers stayed off the rolls would pay less; workers who did not draw down benefits would receive more take-home pay.

Man Versus Mine

Tuesday, January 31st, 2006

In Man Versus Mine, Robert Bryce notes how little insurgency has changed over the years:

Nearly a century ago, while serving as a British liaison officer to the Arab tribes during World War I, T. E. Lawrence developed many of the techniques of modern insurgent warfare. Lawrence’s fluency in Arabic and profound understanding of Arab culture helped him invigorate the Arab Revolt of 1916–1918. His savvy military tactics helped ensure its success against the Turks.

In his memoir, Seven Pillars of Wisdom (1922), Lawrence revealed his most effective tactic: ‘Mines were the best weapon yet discovered to make the regular working of their trains costly and uncertain for our Turkish enemy.’ If not for Lawrence’s pioneering use of precisely placed explosives, the Arab Revolt might well have failed.

In Iraq the insurgents are using similar weapons against U.S. forces. Today they are called IEDs — for ‘improvised explosive devices’ — rather than mines, and the insurgents are targeting automobiles rather than trains. But the effect is just as devastating.

The number of mines being used in Iraq, and the share of casualties for which they are responsible, dwarf anything ever before seen by the American military. During World War II three percent of U.S. combat deaths were caused by mines or booby traps. In Korea that figure was four percent. By 1967, during the Vietnam War, it was nine percent, and the Pentagon began experimenting with armored boots. From June to November of 2005, IEDs were responsible for 65 percent of American combat deaths and roughly half of all nonfatal injuries.

Early Retirement

Tuesday, January 31st, 2006

Philip Greenspun, who retired in 2001, at the age of 37, offers his thoughts on Early Retirement:

Ask a wage slave what he’d like to accomplish. Chances are the response will be something like “I’d start every day at the gym and work out for two hours until I was as buff as Brad Pitt. Then I’d practice the piano for three hours. I’d become fluent in Mandarin so that I could be prepared to understand the largest transformation of our time. I’d really learn how to handle a polo pony. I’d learn to fly a helicopter. I’d finish the screenplay that I’ve been writing and direct a production of it in HDTV.”
[...]
Retirement forces you to stop thinking that it is your job that holds you back. For most people the depressing truth is that they aren’t that organized, disciplined, or motivated.

FDA Shows Interest in 18th Century Presbyterian Minister

Tuesday, January 31st, 2006

The Presbyterian minister at the heart of FDA Shows Interest in 18th Century Presbyterian Minister is Thomas Bayes, the creator of Bayesian statistics:

The frequentist approach, familiar to anyone who follows the news of clinical trials, measures the likelihood of an observed result having occurred by chance. That ‘just by accident’ possibility is the null hypothesis, and is usually realized in clinical studies by giving a placebo to some of the trial participants for comparison. Results are expressed as a ‘P value’, with (for example) a P of 0.01 meaning that if the trial were repeated over and over, only one per cent of those studies would show an equivalent result (or better) for the placebo as compared to the drug treatment.

Bayesian statistics, though, don’t address the likelihood that your observed results might have come out by random chance, but rather give you a likelihood of whether your initial hypothesis is true. (Ironically, that’s what many lay people think that’s what the standard approach does). That likelihood is compared to some initial hypothesis, which doesn’t have to be the just-by-accident null one. In fact, you can start with more than one hypothesis and compare things as you go along. One consequence of that setup is that Bayesian trial designs allow you to use the data that comes in to modify the trial while it’s still going on. That’s basically forbidden under the standard statistical approach, where the design and end points of the study have to be decided up front.

What Pit Bulls Can Teach Us About Profiling

Tuesday, January 31st, 2006

Malcolm Gladwell’s latest piece Troublemakers, examines “what pit bulls can teach us about profiling”:

There is no shortage of more stable generalizations about dangerous dogs, though. A 1991 study in Denver, for example, compared a hundred and seventy-eight dogs with a history of biting people with a random sample of a hundred and seventy-eight dogs with no history of biting. The breeds were scattered: German shepherds, Akitas, and Chow Chows were among those most heavily represented. (There were no pit bulls among the biting dogs in the study, because Denver banned pit bulls in 1989.) But a number of other, more stable factors stand out. The biters were 6.2 times as likely to be male than female, and 2.6 times as likely to be intact than neutered. The Denver study also found that biters were 2.8 times as likely to be chained as unchained. “About twenty per cent of the dogs involved in fatalities were chained at the time, and had a history of long-term chaining,” Lockwood said. “Now, are they chained because they are aggressive or aggressive because they are chained? It’s a bit of both. These are animals that have not had an opportunity to become socialized to people. They don’t necessarily even know that children are small human beings. They tend to see them as prey.”

In many cases, vicious dogs are hungry or in need of medical attention. Often, the dogs had a history of aggressive incidents, and, overwhelmingly, dog-bite victims were children (particularly small boys) who were physically vulnerable to attack and may also have unwittingly done things to provoke the dog, like teasing it, or bothering it while it was eating. The strongest connection of all, though, is between the trait of dog viciousness and certain kinds of dog owners. In about a quarter of fatal dog-bite cases, the dog owners were previously involved in illegal fighting. The dogs that bite people are, in many cases, socially isolated because their owners are socially isolated, and they are vicious because they have owners who want a vicious dog. The junk-yard German shepherd — which looks as if it would rip your throat out — and the German-shepherd guide dog are the same breed. But they are not the same dog, because they have owners with different intentions.

19th-Century Ju Jitsu

Tuesday, January 31st, 2006

I’m not sure why the uploader added a hip-hop soundtrack to this 19th-Century Ju Jitsu footage, but it’s always interesting to watch English gentlemen demonstrate martial arts.

Tact Filters

Tuesday, January 31st, 2006

Jeff Bigler explains Tact Filters:

All people have a ‘tact filter’, which applies tact in one direction to everything that passes through it. Most ‘normal people’ have the tact filter positioned to apply tact in the outgoing direction. Thus whatever normal people say gets the appropriate amount of tact applied to it before they say it. This is because when they were growing up, their parents continually drilled into their heads statements like, ‘If you can’t say something nice, don’t say anything at all!’

‘Nerds,’ on the other hand, have their tact filter positioned to apply tact in the incoming direction. Thus, whatever anyone says to them gets the appropriate amount of tact added when they hear it. This is because when nerds were growing up, they continually got picked on, and their parents continually drilled into their heads statements like, ‘They’re just saying those mean things because they’re jealous. They don’t really mean it.’

When normal people talk to each other, both people usually apply the appropriate amount of tact to everything they say, and no one’s feelings get hurt. When nerds talk to each other, both people usually apply the appropriate amount of tact to everything they hear, and no one’s feelings get hurt. However, when normal people talk to nerds, the nerds often get frustrated because the normal people seem to be dodging the real issues and not saying what they really mean. Worse yet, when nerds talk to normal people, the normal people’s feelings often get hurt because the nerds don’t apply tact, assuming the normal person will take their blunt statements and apply whatever tact is necessary.

Edward Lazear

Tuesday, January 31st, 2006

Tyler Cowen has a good round-up of links to articles about Edward Lazear, who has just been nominated to head Bush’s Council of Economic Advisors.

Libertarian Orphans

Tuesday, January 31st, 2006

From David Boaz’s Libertarian Orphans:

The Gallup Poll’s annual survey on government found that 27% of Americans are conservative; 24% are liberal, up sharply because the poll was taken after Katrina, which boosted support for the proposition that ‘government should do more to solve our country’s problems.’ Gallup also found — this year as in others — that 20% are neither liberal nor conservative but libertarian, opposing the use of government either to ‘promote traditional values’ or to ‘do too many things that should be left to individuals and businesses.’ Another 20% are ‘populist’ (supporting government action in both areas), with 10% undefined. Libertarian support, spread across demographic groups, is strongest among well-educated voters.
[...]
With big-government conservatives spending money like Imelda Marcos in a shoe store, and big-government liberals supporting the Patriot Act, even pro-government populists are represented in D.C. It’s the libertarian voters who are orphans.

Stephen Colbert on Dungeons & Dragons

Tuesday, January 31st, 2006

The Onion‘s AV Club interviews Stephen Colbert — and asks some unusual questions:

AVC: You were into Dungeons & Dragons as a kid, were you not?
SC: Yeah, I really was. I started playing in seventh grade, 1977. And I played incessantly, ’til probably 1981 — four years.
AVC: What’s the appeal?
SC: It’s a fantasy role-playing game. If you’re familiar with the works of Tolkien or Stephen R. Donaldson or Poul Anderson or any of the guys who wrote really good fantasy stuff, those worlds stood up. It’s an opportunity to assume a persona. Who really wants to be themselves when they’re teenagers? And you get to be heroic and have adventures. And it’s an incredibly fun game. They have arcane rules and complex societies and they’re open-ended and limitless, kind of like life. For somebody who eventually became an actor, it was interesting to have done that for so many years, because acting is role-playing. You assume a character, and you have to stay in them over years, and you create histories, and you apply your powers. It’s good improvisation with agreed rules before you go in.

Edit: I hear he’s “up to [his] baldric in plus-one scimitars.”

Recommended Reading For New Entrepreneurs

Tuesday, January 31st, 2006

Recommended Reading For New Entrepreneurs from Tim Faley, the managing director of the Samuel Zell & Robert H. Lurie Institute for Entrepreneurial Studies at the University of Michigan’s Ross School of Business in Ann Arbor:

Crossing the Chasm
By Geoffery A. Moore

e-Boys: The First Inside Account of Venture Capitalists at Work
By Randall E. Stross

Instinct: Tapping Your Entrepreneurial DNA to Achieve Business Goals
By Thomas L. Harrison with Mary H. Frakes

The World is Flat: A Brief History of the Twenty-First Century
By Thomas L. Friedman

Innovation and Entrepreneurship
By Peter F. Drucker

The Art of the Start: Time-Tested, Battle-Hardened Guide for Anyone Starting Anything
By Guy Kawasaki

Early Debtors Faced Jail at Own Expense Until All Was Repaid

Monday, January 30th, 2006

If you think a small-business loan is risky, look at how it used to be. From Early Debtors Faced Jail at Own Expense Until All Was Repaid:

One piece of baggage America’s first settlers carried with them from England was the belief that not repaying one’s debts was a moral failure. As in England, the colonists’ penalty for such wickedness was often prison.

The theory behind jailing debtors was that the threat of incarceration might persuade them to reveal hidden assets. Or their families might take pity and pay their ransom. But if the debtor was truly penniless, he could be sentenced to what amounted to life in prison. Unlike murderers, rapists and thieves, the debtors were also responsible for paying their own upkeep, thus putting them even further into debt.

As a 16th-century English judge declared, ‘If a debtor can’t feed and clothe himself, let him die, in the name of God, if he will and impute the cause of it to his own fault, for his presumption and ill behavior brought him to that imprisonment.’

Health Care Crisis? How About a Recreation Crisis?

Monday, January 30th, 2006

John Merline asks, Health Care Crisis? How About a Recreation Crisis?:

Over the past 20 years, spending on recreation, health clubs, even lawyers, has climbed at about the same rate as health care. Yet nobody talks about a national health club crisis, or the need to reform the nation’s recreation industry.

My Kind of Economist

Monday, January 30th, 2006

Tim Worstall declares William Easterly My Kind of Economist for making comments like this:

It doesn’t help the poverty trap story that 11 out of the 28 poorest countries in 1985 had NOT been in the poorest fifth back in 1950. They had gotten into poverty by declining from above, rather than being stuck in it from below, while others escaped. If the identity of who is in the poverty trap keeps changing, it must not be much of a trap.