According to Leonhardt in yesterday’s New York Times, the fault line between Clinton and Obama runs through the rationality postulate. Hilary’s citizenry is rational and responds to precisely calibrated market incentives; Barack’s is guided by impulse and habit and can only be moved by big policy objects in bright colors with thick borders. Is this the revolution in economics we’ve been hearing about?
Leonhardt locates the Obama/Goolsbee strategy in the rise of behavioral economics, an approach that replaces robotic rationality with a psychologically realistic characterization of real-world decision-making. In particular, he is drawing on the field of behavioral law and economics, which emphasizes commonplace cognitive “biases” that prevent people from acting consistently in their own interests. Examples include “availability bias” (attributing greater-than-actual probability to outcomes that are vivid or widely publicized), “status quo bias” (resistance to switching from A to B, or if starting with B, from B to A) and the inability to cope with high levels of complexity (such as public benefits few apply for because the forms are too complicated).
With this view of human fallibility, it is not surprising that practitioners of this sort of economic thinking incline to paternalism. The non-biased minority with impeccable cognitive skills (you know who you are) must take it on themselves to guide their less capable brethren toward more rational choices. I exaggerate, but not too much, as those who have delved into this literature will recognize. Yes, there is elitism in the traditional incentive-based approach too, but it is at least honest and transparent in its methods. The flagship policy innovation of the behavior-wonks, making participation in private savings plans the default option, so that workers would have to choose to opt out (rather than making no savings the default and asking them to opt in), combines the we-know-what’s-best-for-you of the incentive school with a kind of tawdry manipulation. Of course, it may also work better.
But loyal readers of this blog should be aware that behavioral economics is much larger than its portrayal by Leonardt. For one thing, much research now focuses on the differences in behavioral patterns across the population. Rather than fixing on the central tendency, attention has shifted to the dispersion. What this will mean for policy is not clear at this point, but it has to lead to greater diversification and decentralization of the means and ends, don’t you think?
Another important departure concerns the emergence, reproduction and evolution of social norms governing economic (and other) behavior. Many, myself included, think this has enormous potential for changing how we think about politics and human well-being. It reintroduces cultural factors that have been banished from proper economics for generations, not least of which are the gender norms emphasized by feminist economists. And what about the effect that changes in governmental policies and business practices have on the norms governing income distribution? We have begun to see empirical work in this area and it is a safe prediction that we’ll see a lot more.
I hate writing these vague, sweeping posts, but it would take much more than a few paragraphs to properly document the upsurge in behavioral research. The point for now is: the policy space spanned by Clinton and Obama is minuscule compared to the opportunities for new thinking in economics that already exist.
Thursday, January 3, 2008
Pith
Thomas Carlyle was in many ways a nasty piece of work. (For an eye-full, see Levy and Peart's How the Dismal Science Got Its Name.) He sure knew how to turn a phrase, though. "Benthamee utility," he says, reduces
"the infinite celestial soul of Man to a kind of Hay-balance for weighing hay and thistles on, pleasure and pain."
A Hay-balance, indeed!
"the infinite celestial soul of Man to a kind of Hay-balance for weighing hay and thistles on, pleasure and pain."
A Hay-balance, indeed!
Do Higher Gasoline Prices Lower U.S. Income?
Mark Thoma reads Jerry Bowyer so we don’t have to. While Mark wonders why he even bothers reading the incessant stupidity from the National Review, we ponder if there may be a way that Mr. Fuzzcharts has a point.
I think the essence of Bowyer’s argument comes down to the following claim:
Simply put – higher gasoline prices transfer income from U.S. consumers to the owners of the various chains that lead into the price at the pump. If the sole reason that gasoline prices went up was an increase in the distributor margin – then Bowyer does have a point. Mr. Bowyer’s graph of gasoline prices may have come from this source, which also shows the components of gasoline prices among the price of oil, the distributor margin, the refinery margin, and taxes. Over the January 2007 to November 2007 period shown by Mr. Bowyer, gasoline prices rose from $2.24 a gallon to $3.08 a gallon. While the distributor margin component rose from $0.13 a gallon to $0.27 a gallon, the refinery margin component fell from $0.41 a gallon to $0.31 a gallon and taxes fell from $0.46 a gallon to $0.40 a gallon. The oil price component rose from $1.28 a gallon to $2.10 a gallon. If we summed up all non-oil price components – which could reasonably be seen as domestic income components, the non-oil price components contributed only $0.02 of the $0.84 per gallon price increase.
I trust that Mr. Bowyer understands that much of our oil is imported from abroad. If so, why doesn’t he realize that this increase in oil prices represents a transfer of income from the U.S. to the oil exporting nations? It would seem higher oil prices, which drove up the price of gasoline, did lower U.S. income. Had Mr. Bowyer checked the details from his own source, he would have realized that his claim really was incredibly stupid – even for the National Review.
I think the essence of Bowyer’s argument comes down to the following claim:
Gas-price hikes will never, ever, ever cut into consumer spending. It’s a mathematical impossibility. Here’s why: Gas prices are a component of consumer spending. You see, when gas prices climb from $2 a gallon to $3 a gallon, one of the components of retail spending goes up. Gas stations are retail establishments. People make money working at gas stations (which now generally serve as convenience stores). People make money managing the corporations that own these stores. And, of course, people make money by owning shares in these companies. Sure, if people spend more money on gas, they may very well spend less on soft drinks. But that’s a substitution, not a decrease in overall spending. The spending simply shifts from one retail category to another.
Simply put – higher gasoline prices transfer income from U.S. consumers to the owners of the various chains that lead into the price at the pump. If the sole reason that gasoline prices went up was an increase in the distributor margin – then Bowyer does have a point. Mr. Bowyer’s graph of gasoline prices may have come from this source, which also shows the components of gasoline prices among the price of oil, the distributor margin, the refinery margin, and taxes. Over the January 2007 to November 2007 period shown by Mr. Bowyer, gasoline prices rose from $2.24 a gallon to $3.08 a gallon. While the distributor margin component rose from $0.13 a gallon to $0.27 a gallon, the refinery margin component fell from $0.41 a gallon to $0.31 a gallon and taxes fell from $0.46 a gallon to $0.40 a gallon. The oil price component rose from $1.28 a gallon to $2.10 a gallon. If we summed up all non-oil price components – which could reasonably be seen as domestic income components, the non-oil price components contributed only $0.02 of the $0.84 per gallon price increase.
I trust that Mr. Bowyer understands that much of our oil is imported from abroad. If so, why doesn’t he realize that this increase in oil prices represents a transfer of income from the U.S. to the oil exporting nations? It would seem higher oil prices, which drove up the price of gasoline, did lower U.S. income. Had Mr. Bowyer checked the details from his own source, he would have realized that his claim really was incredibly stupid – even for the National Review.
Wednesday, January 2, 2008
New Interview on The Confiscation of American Prosperity
Kris Welch interviewed me last week on KPFA. I don't come in until the last 25 minutes or so. She is a great interviewer and always makes conversation lively -- well, as lively as I can be.
http://www.kpfa.org/archives/index.php?arch=24012
http://www.kpfa.org/archives/index.php?arch=24012
Did Musharraf Assassinate Bhutto?
Increasingly the answer looks like at least a partial "yes." Juan Cole yesterday provided a summary of unpleasant evidence: officials washing off the murder site immediately, physicians complaining through lawyers of pressure to cover up evidence that she actually was shot rather than broke her neck on the sunroof lever, and the demand by Batibullah Mahsud for a full investigation internationally organized, he being the Taliban-linked individual currently being blamed by the Musharraf regime, along with some other pieces of evidence. While the US thought Bhutto and Musharraf would work together (and refused her request for the US to provide protection for her), Bhutto denounced Musharraf's firing of the Supreme Court and made it clear she wanted to replace him democratically, sufficient for a power hungry dictator like him to do her in.
While he thinks it was more likely an al Qaeda operation, albeit possibly with the connivance of ISI or other elements of the Musharraf regime, one can find a very thoughtful and informative background piece by Barnett Rubin on Informed Comment: Global Affairs.
While he thinks it was more likely an al Qaeda operation, albeit possibly with the connivance of ISI or other elements of the Musharraf regime, one can find a very thoughtful and informative background piece by Barnett Rubin on Informed Comment: Global Affairs.
Diamond in the Rough
Below, I provide some comments on a recent article concerning an anthropology conference concerning the work of geographer Jared Diamond, author of "Guns, Germs, and Steel" and "Collapse."
The New York Times / December 25, 2007
A Question of Blame When Societies Fall
By GEORGE JOHNSON
The author mixes travelogue with journalism, so you have to be patient.
As I pulled out of Tucson listening to an audiobook of Jared Diamond's "Collapse: How Societies Choose to Fail or Succeed," the first of a procession of blue-and-yellow billboards pointed the way to Arizona's strangest roadside attraction, "The Thing?"
The come-ons were slicker and brighter than those I remembered from childhood trips out West. But the destination was the same: a curio store and gas station just off the highway at a remote whistle stop called Dragoon, Ariz.
Dragoon is also home to an archaeological research center, the Amerind Foundation, where a group of archaeologists, cultural anthropologists and historians converged in the fall for a seminar, "Choices and Fates of Human Societies."
What the scientists held in common was a suspicion that in writing his two best-selling sagas of civilization -- the other is "Guns, Germs and Steel" -- Dr. Diamond washed over the details that make cultures unique to assemble a grand unified theory of history.
"Collapse" doesn't present a GUTH. On the other hand, "Guns, Germs and Steel" (GGS) gets a bit closer to that description. Even that theory isn't supposed to apply to industrialized societies.
"A big-picture man," one participant called him. For anthropologists, who spend their lives reveling in minutiae -- the specifics and contradictions of human culture -- the words are not necessarily a compliment.
This suggests that there are no "big-picture" anthropologists. But that's not true. For example, the late Karl Polanyi was a big-picture kind of guy.
"Everybody knows that the beauty of Diamond is that it's simple," said Patricia A. McAnany, an archaeologist at Boston University who organized the meeting with her colleague Norman Yoffee of the University of Michigan. "It's accessible intellectually without having to really turn the wattage up too much."
There are real problems with any assertion that begins with "everybody knows."
Dr. Diamond's many admirers would disagree. "Guns, Germs and Steel" won a Pulitzer Prize, and Dr. Diamond, a professor of geography at the University of California, Los Angeles, has received, among many honors, a National Medal of Science. It is his ability as a synthesizer and storyteller that makes his work so compelling.
For an hour I had listened as he, or rather his narrator, described how the inhabitants of Easter Island had precipitated their own demise by cutting down all the palm trees -- for, among other purposes, transporting those giant statues -- and how the Anasazi of Chaco Canyon and the Maya might have committed similar "ecocide."
By the time I approached the turnoff for Amerind's boulder-strewn campus, Dr. Diamond had moved on to the Vikings' fate. But for the moment my mind was in the grip of "The Thing."
Detouring past the conference center, I parked in front of the old tourist trap, paid the $1 admission and followed a path of stenciled yellow footprints to a building out back. Inside a cinder-block coffin lay the subject of my quest, what appeared to be the mummified remains of a woman holding a mummified child.
"The Thing" looked human, or maybe like pieces of human dolled up with papier-mâché. Either way, it seemed like a fitting symbol for the complaints I'd been hearing about Dr. Diamond: that through the wide-angle lenses of his books, people appear not as thinking agents motivated by dreams and desires, ideas and ideologies, but as pawns of their environment. As things.
It's pretty clear in "Guns, Germs, and Steel" that people -- or at least groups of us -- are strivers. This sets up competition among societies. The geographic environment plays a crucial role in limiting and shaping the results of the competition. Diamond's emphasis is on the latter, of course, but that's because people are so unpredictable. After all, having so many "dreams and desires, ideas and ideologies" makes our actions pretty hard to predict.
In "Collapse," on the other hand, "dreams and desires, ideas and ideologies" can play a major role in causing collapse. See, for example, the material about the Vikings in Greenland.
The backlash had been brewing since a symposium last year, "Exploring Scholarly and Best-Selling Accounts of Social Collapse and Colonial Encounters," at a meeting of the American Anthropological Association in San Jose, Calif. Although "Guns, Germs and Steel" has been celebrated as an antidote to racism -- Western civilization prevails not because of inherent superiority, but geographical luck -- some anthropologists saw it as excusing the excesses of the conquerors. If it wasn't their genes that made them do it, it was their geography.
Is there any serious scholar who believes that Europeans are made evil by their genetics? This seems a total straw-man argument.
"Diamond in effect argues that no one is to blame," said Deborah B. Gewertz, an anthropologist at Amherst College. "The haves are not to be blamed for the condition of the have-nots."
She here falls for the excessively-common error of confusing an explanation of an historical event with an excuse for it. Just because the victory of the Nazis over Poland can be explained easily does not mean that it was somehow justified. Similarly, just because the Europeans conquered most of the world does not mean that it was justified.
Dr. Diamond anticipated this kind of reaction. In the epilogue to "Guns, Germs and Steel," he acknowledged that human will was an important pivot in the turning of history, as were freak accidents and chaotic "butterfly effects," in which tiny perturbations are amplified into cataclysms. But the accidents of geography -- the availability of raw materials and crops, a hospitable climate, accessible trade routes and even the cartographical shapes of continents -- step forth as prime movers.
They're not "movers" as much as "shapers." In Diamond's theory, geographical creates barriers, which limit the movement of people, diseases, technology, etc.
While "Guns, Germs, and Steel" explored the factors contributing to a society's rise, "Collapse" tried to account for the downfalls. Here, human agency played a more prominent role. In case after case, Dr. Diamond described how a confluence of factors -- fragile ecosystems, climatic change, hostile neighbors and, ultimately, bad decision making -- cornered a society into inadvertently damaging or even destroying itself.
The main contrast (in terms of approach) between the two books is that "Collapse" does not really have a unifying theory. It's more of a matter of applying a laundry list of possible factors to ask questions about why different societies collapsed. It's more of an empiricist (inductive) exercise, while GGS seems a more balanced mixture of theory (deduction) and empirical research (induction).
The two books don't mesh with each other well at all. The anthropologists that this author describes should be much happier with the method of "Collapse" than with that of GGS. That, of course, does not mean that they automatically agree about the facts.
In his haunting chapter about Easter Island, he weighed the data -- radiocarbon dating, charcoal and pollen analysis and botanical and archaeological surveys -- and concluded that the inhabitants had mined the forests to extinction, setting off a cataclysm. What, Dr. Diamond wondered in an often cited passage, was going through the mind of the Easter Islander who cut the last tree?
But what was intended as a cautionary tale was taken by some readers as blaming the victims. Terry Hunt, an archaeologist at the University of Hawaii, came to the Amerind conference with a different story. Deforestation, he said, was caused not by people, but by predatory Polynesian rats, with the human population remaining stable until the introduction of European diseases.
Dr. Diamond, he said, "shifts all of the burden to people and their stupidity rather than to a complex ecosystem where these things interact."
Good! A fact-based critique. That's what's needed. By the way, the role of European diseases fits well with the theory put forth in the GGS book.
Taken together, the two books struck Frederick K. Errington, an anthropologist at Trinity College in Hartford, as a "one-two punch." The haves prosper because of happenstance beyond their control, while the have-nots are responsible for their own demise.
I think it's a mistake to read a moral argument into GGS. On the other hand, "Collapse" is inherently a moral book, since it's asking what we can do to avoid Collapse, i.e., what are the best things to do?
In addition, as noted, the two books do not really form a whole. They deal with different issues in different ways. One could easily agree with one of Diamond's "punches" while rejecting the other. To my mind, the main thing that unifies them is the identity of their author, not their content.
Dr. Errington and Dr. Gewertz, who are husband and wife, work in Papua New Guinea, a treasure trove of ethnic groups speaking more than 700 languages. Dr. Diamond has also spent time on the island, where he first went to study birds.
Dr. Gewertz still bristles as she recalls picking up "Guns, Germs, and Steel" and seeing that it had been framed around what was called "Yali's question."
Yali was a political leader and a member of a "cargo cult" that sprung up after World War II. By building ritualistic landing strips and control towers and wearing hand-carved wooden headsets, islanders hoped to summon the return of the packaged food, weapons, medicine, clothing and other gifts from the heavens that had been airdropped to troops fighting Japan.
One day Yali asked Dr. Diamond, "Why is it that you white people developed so much cargo and brought it to New Guinea, but we black people had little cargo of our own?"
Thus began Dr. Diamond's tale about the combination of geographical factors that led to Europeans' colonizing Papua New Guinea rather than Papua New Guineans' colonizing Europe. "We think he gets Yali's question wrong," Dr. Gewertz said. "Yali was not asking about nifty Western stuff."
That's hard to tell from what Diamond quotes or from the emphasis of cargo cults on "cargo."
With more of the cargo their European visitors so clearly coveted, the islanders would have been able to trade with them as equals. Instead, they were subjugated.
What Yali was really asking, she suggested, was why Europeans had never treated them like fellow human beings. The responsibility and struggle of anthropology, Dr. Gewertz said, is to see the world through others' eyes.
Diamond's GGS book seems to assume that no-one is inherently better at treating other ethnic groups like fellow human beings. If we accept that assumption, Gewertz's interpretation of Yali's question has already been answered. If the Papuans had colonized Europe, in this view, they would not have treated the Europeans well.
Was it really the "colonists" that cargo cults were responding to? In my understanding, they were responding to the commodities that were dumped on them as part of World War II, which were part of the effort by the US to feed its troops and -- and as a side-benefit, to legitimate its side of the war with the locals. Sure, the US is a (neo)colonizing power, but it was different from the Dutch or the Japanese. And WW2 was not about US neo-colonialism as much as inter-imperialist rivalry. Until the US started supporting France in Indochina, the major U.S. strategy in the Pacific region was anti-colonialism, at least on the surface.
In "Collapse," Dr. Diamond proposed that a precipitating factor in the Rwanda genocide of 1994, in which hundreds of thousands of Tutsis were slaughtered by Hutu compatriots, was Malthusian. The country had let its population outstrip its food supply.
Christopher C. Taylor, an anthropologist at the University of Alabama at Birmingham, saw the tragedy through the other end of the telescope. One afternoon, he sat in the living room of Amerind's old mission-style lodge, which looks out onto the desolate beauty of the Little Dragoon mountains, calmly describing how he and his Tutsi fiancée had fled Rwanda just as the massacres began. Safely back in the United States, he studied the country's popular political cartoons, sensing that for many Rwandans, politics was tangled in a web of legends involving sacred kingship and fertility rites. The king, and by implication the president, was the conduit for imaana, a spiritual current symbolized by liquids like rain, rivers, milk, honey, semen and blood.
In times of droughts, floods, crop failures, infant mortality or other misfortunes, he might have to be sacrificed to spill his imaana back into the soil. "In order to understand the motives of the Rwandans, you have to understand the local symbolism and the local cosmology," Dr. Taylor said. "Because, after all, what Diamond is doing is imposing his own cosmology, his own symbolic system."
It seems that both Taylor and Diamond can be right on the explanation of the slaughter: demographic forces may have caused the starvation, which was then see in the terms that Taylor describes.
It's so typical of academics to set up the competitions among theories, asserting that their theory is better, while ignoring the possibility of synthesis. I guess academics have to strive to attain tenure, promotion, prestige, etc.
By the time I left Amerind, I realized that what I had witnessed was a clash of world views. Central to the "cosmology" of Dr. Diamond's tribe is a principle celebrated throughout the physical and biological sciences -- to understand is to simplify and seek patterns.
In an e-mail message, he said that progress in any field depends on syntheses and individual studies. "In both chemistry and physics, the need for both approaches has been recognized for a long time," he wrote. "One no longer finds specialists on molybdenum decrying the periodic table's sweeping superficiality, nor advocates of the periodic table scorning mere descriptive studies of individual elements."
This is right: we need to have a dialog between "big think" and "small think" rather than having another silly academic war. Theory and empirical research should work together, not clash.
For the anthropologists, the exceptions were more important than the rules. Instead of seeking overarching laws, the call was to "contextualize," "complexify," "relativize," "particularize" and even "problematize," a word that in their dialect was given an oddly positive spin. At some moments, the seminar seemed less like a scientific meeting than a session of the Modern Language Association.
But the anthropologists had a point. As Einstein put it, explanations should be as simple as possible -- but no simpler. Is it realistic to hope, as Dr. Diamond did at the end of "Guns, Germs and Steel," that "historical studies of human societies can be pursued as scientifically as studies of dinosaurs"?
Probably not. But it's good to have some understanding of what went on, rather than rejecting theory altogether. The complaining anthropologists should develop an alternative theory. In my experience, the only way to beat a theory is with a better one.
One afternoon I drove out to Casa Grande Ruins National Monument, about 130 miles northwest of Dragoon. Turning off North Arizona Boulevard near a Blockbuster Video store and KFC/Taco Bell, I saw the Great House, four stories high, loom into view. Abandoned over half a millennium ago by the Hohokam people, the earthen ruins have been incongruously protected from the elements by a steel roof on stilts designed in 1928 by Frederick Law Olmsted Jr.
One suspects that the Hohokam were content to let the place melt. Depending on which eyeglasses you are wearing, Casa Grande is a story of environmental collapse or of adaptation and resilience. When conditions no longer favored centralization the people moved on, re-emerging as the O'odham tribes and a thriving casino industry.
Abandonment as a strategy. Driving back on Interstate 10, past an umbilical cord of eastbound railroad container cars owned by Hanjin Shipping and the latest crests of urban sprawl, I tried to imagine the good people of Tucson or Phoenix bowing out with such grace.
At the seminar, Dr. McAnany suggested that the very idea of societal collapse might be in the eye of the beholder. She was thinking of the Maya, whose stone ruins have become the Yucatan's roadside attractions. But the descendants of the Maya live on. She recalled a field trip by local children to a site she was excavating in Belize: "This little girl looks up at me, and she has this beautiful little Maya face, and asks, 'What happened to all the Maya? Why did they all die out?'"
No one visits Stonehenge, she noted, and asks whatever happened to the English.
Sounds like a good line. But was it the English who built Stonehenge? A simple web-search says that "Theories about who built it have included the Druids, Greeks, Phoenicians..." And since it happened so long ago, there were no "English" at the time. The English had nothing to do with Stonehenge, so the question is silly. Even if it were valid, no-one would ask it, since the English gave us the language that's dominating the world (and passed the imperial sceptre to the U.S.
Copyright 2007 The New York Times Company
January 1, 2008 / When Societies Fail (3 Letters to the NYT)
To the Editor:
Re "A Question of Blame When Societies Fall" (Dec. 25): The conference designed to discredit Jared Diamond highlights the worst of what goes on in contemporary academia. The organizers' failure to invite Mr. Diamond might be attributed to elementary rudeness were it not for a more damning explanation: they were afraid he would give the lie to their glib accusation that because his work is widely read, it must be oversimplified. These anthropologists' beef with Mr. Diamond clearly has less to do with the content of his thesis than with the fact that he tries to understand why things happen rather than writing a morality play conforming to their lefter-than-thou politics. -- Steven Pinker / Cambridge, Mass.
Diamond should have been invited (though we can't trust Pinker as a source saying that he wasn't). And I don't see why the folks at this conference were any more "left" than Diamond.
To the Editor:
What an odd, convoluted perspective displayed by those anthropologists who attack Jared Diamond's "Guns, Germs, and Steel" for "excusing the excesses of the conquerors." The book attempts to account for why, after around 3000 B.C., western Eurasian societies became comparatively more economically, militarily and technologically advanced. It does not claim that they were also more ethically or morally advanced. Moreover, to take just one famous example, the Aztecs were engaging in "excesses" as conquerors before any European sails appeared on the horizon. -- Russ Weiss / Princeton, N.J.
right
To the Editor:
The words of the historians Will and Ariel Durant might offer consolation to Jared Diamond and the anthropologists who disagree with his theories. In "The Lessons of History," the Durants write: "History is so indifferently rich that a case for almost any conclusion from it can be made by a selection of instances." -- Brad Bradford / Upper Arlington, Ohio
yes, but some theses do die. It's hard to argue that aliens helped the ancient Egyptians build those pyramids.
----
Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante.
The New York Times / December 25, 2007
A Question of Blame When Societies Fall
By GEORGE JOHNSON
The author mixes travelogue with journalism, so you have to be patient.
As I pulled out of Tucson listening to an audiobook of Jared Diamond's "Collapse: How Societies Choose to Fail or Succeed," the first of a procession of blue-and-yellow billboards pointed the way to Arizona's strangest roadside attraction, "The Thing?"
The come-ons were slicker and brighter than those I remembered from childhood trips out West. But the destination was the same: a curio store and gas station just off the highway at a remote whistle stop called Dragoon, Ariz.
Dragoon is also home to an archaeological research center, the Amerind Foundation, where a group of archaeologists, cultural anthropologists and historians converged in the fall for a seminar, "Choices and Fates of Human Societies."
What the scientists held in common was a suspicion that in writing his two best-selling sagas of civilization -- the other is "Guns, Germs and Steel" -- Dr. Diamond washed over the details that make cultures unique to assemble a grand unified theory of history.
"Collapse" doesn't present a GUTH. On the other hand, "Guns, Germs and Steel" (GGS) gets a bit closer to that description. Even that theory isn't supposed to apply to industrialized societies.
"A big-picture man," one participant called him. For anthropologists, who spend their lives reveling in minutiae -- the specifics and contradictions of human culture -- the words are not necessarily a compliment.
This suggests that there are no "big-picture" anthropologists. But that's not true. For example, the late Karl Polanyi was a big-picture kind of guy.
"Everybody knows that the beauty of Diamond is that it's simple," said Patricia A. McAnany, an archaeologist at Boston University who organized the meeting with her colleague Norman Yoffee of the University of Michigan. "It's accessible intellectually without having to really turn the wattage up too much."
There are real problems with any assertion that begins with "everybody knows."
Dr. Diamond's many admirers would disagree. "Guns, Germs and Steel" won a Pulitzer Prize, and Dr. Diamond, a professor of geography at the University of California, Los Angeles, has received, among many honors, a National Medal of Science. It is his ability as a synthesizer and storyteller that makes his work so compelling.
For an hour I had listened as he, or rather his narrator, described how the inhabitants of Easter Island had precipitated their own demise by cutting down all the palm trees -- for, among other purposes, transporting those giant statues -- and how the Anasazi of Chaco Canyon and the Maya might have committed similar "ecocide."
By the time I approached the turnoff for Amerind's boulder-strewn campus, Dr. Diamond had moved on to the Vikings' fate. But for the moment my mind was in the grip of "The Thing."
Detouring past the conference center, I parked in front of the old tourist trap, paid the $1 admission and followed a path of stenciled yellow footprints to a building out back. Inside a cinder-block coffin lay the subject of my quest, what appeared to be the mummified remains of a woman holding a mummified child.
"The Thing" looked human, or maybe like pieces of human dolled up with papier-mâché. Either way, it seemed like a fitting symbol for the complaints I'd been hearing about Dr. Diamond: that through the wide-angle lenses of his books, people appear not as thinking agents motivated by dreams and desires, ideas and ideologies, but as pawns of their environment. As things.
It's pretty clear in "Guns, Germs, and Steel" that people -- or at least groups of us -- are strivers. This sets up competition among societies. The geographic environment plays a crucial role in limiting and shaping the results of the competition. Diamond's emphasis is on the latter, of course, but that's because people are so unpredictable. After all, having so many "dreams and desires, ideas and ideologies" makes our actions pretty hard to predict.
In "Collapse," on the other hand, "dreams and desires, ideas and ideologies" can play a major role in causing collapse. See, for example, the material about the Vikings in Greenland.
The backlash had been brewing since a symposium last year, "Exploring Scholarly and Best-Selling Accounts of Social Collapse and Colonial Encounters," at a meeting of the American Anthropological Association in San Jose, Calif. Although "Guns, Germs and Steel" has been celebrated as an antidote to racism -- Western civilization prevails not because of inherent superiority, but geographical luck -- some anthropologists saw it as excusing the excesses of the conquerors. If it wasn't their genes that made them do it, it was their geography.
Is there any serious scholar who believes that Europeans are made evil by their genetics? This seems a total straw-man argument.
"Diamond in effect argues that no one is to blame," said Deborah B. Gewertz, an anthropologist at Amherst College. "The haves are not to be blamed for the condition of the have-nots."
She here falls for the excessively-common error of confusing an explanation of an historical event with an excuse for it. Just because the victory of the Nazis over Poland can be explained easily does not mean that it was somehow justified. Similarly, just because the Europeans conquered most of the world does not mean that it was justified.
Dr. Diamond anticipated this kind of reaction. In the epilogue to "Guns, Germs and Steel," he acknowledged that human will was an important pivot in the turning of history, as were freak accidents and chaotic "butterfly effects," in which tiny perturbations are amplified into cataclysms. But the accidents of geography -- the availability of raw materials and crops, a hospitable climate, accessible trade routes and even the cartographical shapes of continents -- step forth as prime movers.
They're not "movers" as much as "shapers." In Diamond's theory, geographical creates barriers, which limit the movement of people, diseases, technology, etc.
While "Guns, Germs, and Steel" explored the factors contributing to a society's rise, "Collapse" tried to account for the downfalls. Here, human agency played a more prominent role. In case after case, Dr. Diamond described how a confluence of factors -- fragile ecosystems, climatic change, hostile neighbors and, ultimately, bad decision making -- cornered a society into inadvertently damaging or even destroying itself.
The main contrast (in terms of approach) between the two books is that "Collapse" does not really have a unifying theory. It's more of a matter of applying a laundry list of possible factors to ask questions about why different societies collapsed. It's more of an empiricist (inductive) exercise, while GGS seems a more balanced mixture of theory (deduction) and empirical research (induction).
The two books don't mesh with each other well at all. The anthropologists that this author describes should be much happier with the method of "Collapse" than with that of GGS. That, of course, does not mean that they automatically agree about the facts.
In his haunting chapter about Easter Island, he weighed the data -- radiocarbon dating, charcoal and pollen analysis and botanical and archaeological surveys -- and concluded that the inhabitants had mined the forests to extinction, setting off a cataclysm. What, Dr. Diamond wondered in an often cited passage, was going through the mind of the Easter Islander who cut the last tree?
But what was intended as a cautionary tale was taken by some readers as blaming the victims. Terry Hunt, an archaeologist at the University of Hawaii, came to the Amerind conference with a different story. Deforestation, he said, was caused not by people, but by predatory Polynesian rats, with the human population remaining stable until the introduction of European diseases.
Dr. Diamond, he said, "shifts all of the burden to people and their stupidity rather than to a complex ecosystem where these things interact."
Good! A fact-based critique. That's what's needed. By the way, the role of European diseases fits well with the theory put forth in the GGS book.
Taken together, the two books struck Frederick K. Errington, an anthropologist at Trinity College in Hartford, as a "one-two punch." The haves prosper because of happenstance beyond their control, while the have-nots are responsible for their own demise.
I think it's a mistake to read a moral argument into GGS. On the other hand, "Collapse" is inherently a moral book, since it's asking what we can do to avoid Collapse, i.e., what are the best things to do?
In addition, as noted, the two books do not really form a whole. They deal with different issues in different ways. One could easily agree with one of Diamond's "punches" while rejecting the other. To my mind, the main thing that unifies them is the identity of their author, not their content.
Dr. Errington and Dr. Gewertz, who are husband and wife, work in Papua New Guinea, a treasure trove of ethnic groups speaking more than 700 languages. Dr. Diamond has also spent time on the island, where he first went to study birds.
Dr. Gewertz still bristles as she recalls picking up "Guns, Germs, and Steel" and seeing that it had been framed around what was called "Yali's question."
Yali was a political leader and a member of a "cargo cult" that sprung up after World War II. By building ritualistic landing strips and control towers and wearing hand-carved wooden headsets, islanders hoped to summon the return of the packaged food, weapons, medicine, clothing and other gifts from the heavens that had been airdropped to troops fighting Japan.
One day Yali asked Dr. Diamond, "Why is it that you white people developed so much cargo and brought it to New Guinea, but we black people had little cargo of our own?"
Thus began Dr. Diamond's tale about the combination of geographical factors that led to Europeans' colonizing Papua New Guinea rather than Papua New Guineans' colonizing Europe. "We think he gets Yali's question wrong," Dr. Gewertz said. "Yali was not asking about nifty Western stuff."
That's hard to tell from what Diamond quotes or from the emphasis of cargo cults on "cargo."
With more of the cargo their European visitors so clearly coveted, the islanders would have been able to trade with them as equals. Instead, they were subjugated.
What Yali was really asking, she suggested, was why Europeans had never treated them like fellow human beings. The responsibility and struggle of anthropology, Dr. Gewertz said, is to see the world through others' eyes.
Diamond's GGS book seems to assume that no-one is inherently better at treating other ethnic groups like fellow human beings. If we accept that assumption, Gewertz's interpretation of Yali's question has already been answered. If the Papuans had colonized Europe, in this view, they would not have treated the Europeans well.
Was it really the "colonists" that cargo cults were responding to? In my understanding, they were responding to the commodities that were dumped on them as part of World War II, which were part of the effort by the US to feed its troops and -- and as a side-benefit, to legitimate its side of the war with the locals. Sure, the US is a (neo)colonizing power, but it was different from the Dutch or the Japanese. And WW2 was not about US neo-colonialism as much as inter-imperialist rivalry. Until the US started supporting France in Indochina, the major U.S. strategy in the Pacific region was anti-colonialism, at least on the surface.
In "Collapse," Dr. Diamond proposed that a precipitating factor in the Rwanda genocide of 1994, in which hundreds of thousands of Tutsis were slaughtered by Hutu compatriots, was Malthusian. The country had let its population outstrip its food supply.
Christopher C. Taylor, an anthropologist at the University of Alabama at Birmingham, saw the tragedy through the other end of the telescope. One afternoon, he sat in the living room of Amerind's old mission-style lodge, which looks out onto the desolate beauty of the Little Dragoon mountains, calmly describing how he and his Tutsi fiancée had fled Rwanda just as the massacres began. Safely back in the United States, he studied the country's popular political cartoons, sensing that for many Rwandans, politics was tangled in a web of legends involving sacred kingship and fertility rites. The king, and by implication the president, was the conduit for imaana, a spiritual current symbolized by liquids like rain, rivers, milk, honey, semen and blood.
In times of droughts, floods, crop failures, infant mortality or other misfortunes, he might have to be sacrificed to spill his imaana back into the soil. "In order to understand the motives of the Rwandans, you have to understand the local symbolism and the local cosmology," Dr. Taylor said. "Because, after all, what Diamond is doing is imposing his own cosmology, his own symbolic system."
It seems that both Taylor and Diamond can be right on the explanation of the slaughter: demographic forces may have caused the starvation, which was then see in the terms that Taylor describes.
It's so typical of academics to set up the competitions among theories, asserting that their theory is better, while ignoring the possibility of synthesis. I guess academics have to strive to attain tenure, promotion, prestige, etc.
By the time I left Amerind, I realized that what I had witnessed was a clash of world views. Central to the "cosmology" of Dr. Diamond's tribe is a principle celebrated throughout the physical and biological sciences -- to understand is to simplify and seek patterns.
In an e-mail message, he said that progress in any field depends on syntheses and individual studies. "In both chemistry and physics, the need for both approaches has been recognized for a long time," he wrote. "One no longer finds specialists on molybdenum decrying the periodic table's sweeping superficiality, nor advocates of the periodic table scorning mere descriptive studies of individual elements."
This is right: we need to have a dialog between "big think" and "small think" rather than having another silly academic war. Theory and empirical research should work together, not clash.
For the anthropologists, the exceptions were more important than the rules. Instead of seeking overarching laws, the call was to "contextualize," "complexify," "relativize," "particularize" and even "problematize," a word that in their dialect was given an oddly positive spin. At some moments, the seminar seemed less like a scientific meeting than a session of the Modern Language Association.
But the anthropologists had a point. As Einstein put it, explanations should be as simple as possible -- but no simpler. Is it realistic to hope, as Dr. Diamond did at the end of "Guns, Germs and Steel," that "historical studies of human societies can be pursued as scientifically as studies of dinosaurs"?
Probably not. But it's good to have some understanding of what went on, rather than rejecting theory altogether. The complaining anthropologists should develop an alternative theory. In my experience, the only way to beat a theory is with a better one.
One afternoon I drove out to Casa Grande Ruins National Monument, about 130 miles northwest of Dragoon. Turning off North Arizona Boulevard near a Blockbuster Video store and KFC/Taco Bell, I saw the Great House, four stories high, loom into view. Abandoned over half a millennium ago by the Hohokam people, the earthen ruins have been incongruously protected from the elements by a steel roof on stilts designed in 1928 by Frederick Law Olmsted Jr.
One suspects that the Hohokam were content to let the place melt. Depending on which eyeglasses you are wearing, Casa Grande is a story of environmental collapse or of adaptation and resilience. When conditions no longer favored centralization the people moved on, re-emerging as the O'odham tribes and a thriving casino industry.
Abandonment as a strategy. Driving back on Interstate 10, past an umbilical cord of eastbound railroad container cars owned by Hanjin Shipping and the latest crests of urban sprawl, I tried to imagine the good people of Tucson or Phoenix bowing out with such grace.
At the seminar, Dr. McAnany suggested that the very idea of societal collapse might be in the eye of the beholder. She was thinking of the Maya, whose stone ruins have become the Yucatan's roadside attractions. But the descendants of the Maya live on. She recalled a field trip by local children to a site she was excavating in Belize: "This little girl looks up at me, and she has this beautiful little Maya face, and asks, 'What happened to all the Maya? Why did they all die out?'"
No one visits Stonehenge, she noted, and asks whatever happened to the English.
Sounds like a good line. But was it the English who built Stonehenge? A simple web-search says that "Theories about who built it have included the Druids, Greeks, Phoenicians..." And since it happened so long ago, there were no "English" at the time. The English had nothing to do with Stonehenge, so the question is silly. Even if it were valid, no-one would ask it, since the English gave us the language that's dominating the world (and passed the imperial sceptre to the U.S.
Copyright 2007 The New York Times Company
January 1, 2008 / When Societies Fail (3 Letters to the NYT)
To the Editor:
Re "A Question of Blame When Societies Fall" (Dec. 25): The conference designed to discredit Jared Diamond highlights the worst of what goes on in contemporary academia. The organizers' failure to invite Mr. Diamond might be attributed to elementary rudeness were it not for a more damning explanation: they were afraid he would give the lie to their glib accusation that because his work is widely read, it must be oversimplified. These anthropologists' beef with Mr. Diamond clearly has less to do with the content of his thesis than with the fact that he tries to understand why things happen rather than writing a morality play conforming to their lefter-than-thou politics. -- Steven Pinker / Cambridge, Mass.
Diamond should have been invited (though we can't trust Pinker as a source saying that he wasn't). And I don't see why the folks at this conference were any more "left" than Diamond.
To the Editor:
What an odd, convoluted perspective displayed by those anthropologists who attack Jared Diamond's "Guns, Germs, and Steel" for "excusing the excesses of the conquerors." The book attempts to account for why, after around 3000 B.C., western Eurasian societies became comparatively more economically, militarily and technologically advanced. It does not claim that they were also more ethically or morally advanced. Moreover, to take just one famous example, the Aztecs were engaging in "excesses" as conquerors before any European sails appeared on the horizon. -- Russ Weiss / Princeton, N.J.
right
To the Editor:
The words of the historians Will and Ariel Durant might offer consolation to Jared Diamond and the anthropologists who disagree with his theories. In "The Lessons of History," the Durants write: "History is so indifferently rich that a case for almost any conclusion from it can be made by a selection of instances." -- Brad Bradford / Upper Arlington, Ohio
yes, but some theses do die. It's hard to argue that aliens helped the ancient Egyptians build those pyramids.
----
Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante.
Greg Mankiw on the Losses From Trade Protection: Is Government Spending Worthless?
Did Greg Mankiw simply slip up with the following passage?
Most economists would recognize the consumer surplus loss as a reduction in economic welfare. The difference between what domestic producers gain and what consumers lose is this “producer surplus” loss so no disagreement there either. Consumer losses also include the extra funds that go into tariff revenues but most economists see government spending as having at least some value. So to include all of the tariff revenue as part of the reduction in economic welfare is either sloppy analysis or just a minor slip up on the part of Dr. Mankiw. But then his quiz on the effects of a Chinese export tariff included this question:
Chapter 9 of my favorite textbook presents the standard analysis of a tariff (a tax on imports) and shows that it reduces economic welfare as measured by the sum of producer surplus, consumer surplus, and tax revenue. Even though the tariff makes domestic producers better off and raises some revenue for the government, these gains are more than offset by losses to consumers, leading to a deadweight loss.
Most economists would recognize the consumer surplus loss as a reduction in economic welfare. The difference between what domestic producers gain and what consumers lose is this “producer surplus” loss so no disagreement there either. Consumer losses also include the extra funds that go into tariff revenues but most economists see government spending as having at least some value. So to include all of the tariff revenue as part of the reduction in economic welfare is either sloppy analysis or just a minor slip up on the part of Dr. Mankiw. But then his quiz on the effects of a Chinese export tariff included this question:
What happens to total welfare in China, as measured by the sum of consumer surplus, producer surplus, and tax revenue?
Tuesday, January 1, 2008
Alfred Chandler and the ghostwriters' unappreciated contribution
A while ago, I posted some material regarding how well-placed academics rely on low-paid researchers to do their work for them, leading them to produce shoddy and sometimes plagiarized work.
An interesting counter example is the ghostwriter, John McDonald, who wrote Alfred P. Sloan's My Years with General Motors. In this case, the ghostwriter was superior to the purported author.
The book was not published for years, until McDonald sued the company to allow the manuscript to be published. McDonald's wrote a very interesting book about his role and the reason for General Motors's fears about its publication:
McDonald, John. 2002. A Ghost's Memoir: The Making of Alfred P. Sloan's "My Years with General Motors." (Cambridge and London: The MIT Press).
1: On March 4, 1959 Sloan called McDonald to say that General Motors did not want the book published because its lawyers feared it would "destroy the company."
75-6: "Hugh Cox, who was chief trial counsel for the Du Ponts during the many years of the government suit against Du Pont/General Motors .... was pleased with the book as American history, and could not see what Cravath had against it, except possibly one line in the Product Policy of 1921: "A monopoly is not planned."
48: Their specific objection was the detailing of the 1921 Product Policy drafted by Sloan. Even though the policy specified, "a monopoly is not planned," the lawyers feared the government would still interpret the document as monopolistic since Sloan wanted GM to "cover the market for all grades of automobiles."
Later, I found that the story became more interesting. McDonald, a writer for Fortune, had already published a very popular book on game theory. I had seen the book around for years, but never opened it and never associated it with Sloan's book.
It turns out that it was McDonald who infused Sloan's book with its highly praised explanation of corporate strategy. In addition, McDonald hired a young research assistant, Alfred Chandler. According to the article cited below, McDonald was instrumental in setting Chandler on a course of appreciating the importance of strategy. Although Chandler won extensive accolades for this work, until recently, McDonald's role had gone unnoticed.
Here are some extracts from the article. I hope you enjoyed this much as I did.
Mckenna, Christopher D. 2006. "Writing the Ghost-Writer Back In: Alfred Sloan, Alfred Chandler, John McDonald and the Intellectual Origins Of Corporate Strategy." Management & Organizational History, 2: 1, pp. 107-26.
109-10: "For historians of management thought, there are few books that can surpass the influence of Chandler's classic Strategy and Structure or Sloan's epic My Years with General Motors. Both books, published in the early 1960s, achieved iconic stature within a short period of their publication, and both books still remain in print more than 40 years later. In 2002, however, John McDonald's book A Ghost's Memoir shattered most academics' unexamined presumption that Alfred Sloan himself had written (with perhaps a bit of editorial help) the management classic My Years with General Motors. Indeed, as journalist Dan Seligman explained in his foreword to John McDonald's memoir, even the publishers of Sloan's book had forgotten McDonald's involvement, despite McDonald's equal share of the royalties, when Currency/Doubleday decided to release a new edition of My Years with General Motors in 1990. Upset by the largely contrived history that Peter Drucker wrote for a new introduction to the book, John McDonald decided to set the record straight by writing his own, firsthand account of the `making' of Sloan's famous book. McDonald's account would blow the lid off the hidden history, exposing in the process just why the various accounts of General Motors' historical evolution, written by multiple people in the 1950s and 1960s, appeared to fit together so precisely."
113: "it seems likely that Chandler was also strongly influenced by McDonald's views on strategy given that he had, according to Sloan's preface to My Years with General Motors, `given his [Chandler's] good mind to reviewing successive drafts of the manuscript'." (Sloan, My Years with General Motors, xiv).
114: "... it was John McDonald's particular interest in `strategy', reconfigured by Alfred Chandler's historical perspective, which would come to dominate the terminology of the emerging discipline of corporate strategy."
114: "we should also consider what Alfred Chandler wrote in the second sentence of his acknowledgements in Strategy and Structure: `First of all, I want to thank John McDonald and Catharine Stevens, with whom I started to learn about the workings of big business and to think about the historical development of corporate structure and strategy.'" Chandler, Strategy and Structure, i.
114: "Thus it is only with our subsequent knowledge of John McDonald's ongoing struggle with General Motors' lawyers to release My Years with General Motors that the following disclaimer in Chandler's preface to Strategy and Structure from 1962 becomes intelligible: `[T]he General Motors story ultimately came to be based on information and materials which had been in the public domain before the summer of 1956. Yet I am confident that should information not yet in the public domain become available, it would not substantially alter the history presented here." In other words, having done substantial research in the archives of General Motors, which had subsequently been suppressed by the corporate lawyers from Cravath, Swaine, and Moore, who were working for the automotive giant." Chandler, Strategy and Structure, ii
115: "Alfred Chandler had no doubt learned a painful lesson while working for Sloan and McDonald -- it was best to stay away from the issue of antitrust in the shaping of corporate strategy during the 1950s or risk losing years of academic research to lawsuits and shuttered corporate archives."
116: "Yet it could be argued that Chandler's own historical analysis of both General Motors and DuPont was also circular because both of the corporate case studies were eventually supported by scholarly biographies of Alfred Sloan and Pierre du Pont that were researched and written by Chandler himself. This is not the only instance where Chandler's `predictions' and subsequent `outcomes' have become intertwined, for Chandler's expectation that the multidivisional form would continue to spread would be predicated on the support that Chandler's account offered to the management consultants from McKinsey & Company who used Strategy and Structure to sell the novel organizational form to their international clients. In retrospect, it was almost impossible for scholars to separate Chandler's theoretical analysis from his historical evidence because he was so active in the collection, production and distribution of both the archival input and the theoretical output."
An interesting counter example is the ghostwriter, John McDonald, who wrote Alfred P. Sloan's My Years with General Motors. In this case, the ghostwriter was superior to the purported author.
The book was not published for years, until McDonald sued the company to allow the manuscript to be published. McDonald's wrote a very interesting book about his role and the reason for General Motors's fears about its publication:
McDonald, John. 2002. A Ghost's Memoir: The Making of Alfred P. Sloan's "My Years with General Motors." (Cambridge and London: The MIT Press).
1: On March 4, 1959 Sloan called McDonald to say that General Motors did not want the book published because its lawyers feared it would "destroy the company."
75-6: "Hugh Cox, who was chief trial counsel for the Du Ponts during the many years of the government suit against Du Pont/General Motors .... was pleased with the book as American history, and could not see what Cravath had against it, except possibly one line in the Product Policy of 1921: "A monopoly is not planned."
48: Their specific objection was the detailing of the 1921 Product Policy drafted by Sloan. Even though the policy specified, "a monopoly is not planned," the lawyers feared the government would still interpret the document as monopolistic since Sloan wanted GM to "cover the market for all grades of automobiles."
Later, I found that the story became more interesting. McDonald, a writer for Fortune, had already published a very popular book on game theory. I had seen the book around for years, but never opened it and never associated it with Sloan's book.
It turns out that it was McDonald who infused Sloan's book with its highly praised explanation of corporate strategy. In addition, McDonald hired a young research assistant, Alfred Chandler. According to the article cited below, McDonald was instrumental in setting Chandler on a course of appreciating the importance of strategy. Although Chandler won extensive accolades for this work, until recently, McDonald's role had gone unnoticed.
Here are some extracts from the article. I hope you enjoyed this much as I did.
Mckenna, Christopher D. 2006. "Writing the Ghost-Writer Back In: Alfred Sloan, Alfred Chandler, John McDonald and the Intellectual Origins Of Corporate Strategy." Management & Organizational History, 2: 1, pp. 107-26.
109-10: "For historians of management thought, there are few books that can surpass the influence of Chandler's classic Strategy and Structure or Sloan's epic My Years with General Motors. Both books, published in the early 1960s, achieved iconic stature within a short period of their publication, and both books still remain in print more than 40 years later. In 2002, however, John McDonald's book A Ghost's Memoir shattered most academics' unexamined presumption that Alfred Sloan himself had written (with perhaps a bit of editorial help) the management classic My Years with General Motors. Indeed, as journalist Dan Seligman explained in his foreword to John McDonald's memoir, even the publishers of Sloan's book had forgotten McDonald's involvement, despite McDonald's equal share of the royalties, when Currency/Doubleday decided to release a new edition of My Years with General Motors in 1990. Upset by the largely contrived history that Peter Drucker wrote for a new introduction to the book, John McDonald decided to set the record straight by writing his own, firsthand account of the `making' of Sloan's famous book. McDonald's account would blow the lid off the hidden history, exposing in the process just why the various accounts of General Motors' historical evolution, written by multiple people in the 1950s and 1960s, appeared to fit together so precisely."
113: "it seems likely that Chandler was also strongly influenced by McDonald's views on strategy given that he had, according to Sloan's preface to My Years with General Motors, `given his [Chandler's] good mind to reviewing successive drafts of the manuscript'." (Sloan, My Years with General Motors, xiv).
114: "... it was John McDonald's particular interest in `strategy', reconfigured by Alfred Chandler's historical perspective, which would come to dominate the terminology of the emerging discipline of corporate strategy."
114: "we should also consider what Alfred Chandler wrote in the second sentence of his acknowledgements in Strategy and Structure: `First of all, I want to thank John McDonald and Catharine Stevens, with whom I started to learn about the workings of big business and to think about the historical development of corporate structure and strategy.'" Chandler, Strategy and Structure, i.
114: "Thus it is only with our subsequent knowledge of John McDonald's ongoing struggle with General Motors' lawyers to release My Years with General Motors that the following disclaimer in Chandler's preface to Strategy and Structure from 1962 becomes intelligible: `[T]he General Motors story ultimately came to be based on information and materials which had been in the public domain before the summer of 1956. Yet I am confident that should information not yet in the public domain become available, it would not substantially alter the history presented here." In other words, having done substantial research in the archives of General Motors, which had subsequently been suppressed by the corporate lawyers from Cravath, Swaine, and Moore, who were working for the automotive giant." Chandler, Strategy and Structure, ii
115: "Alfred Chandler had no doubt learned a painful lesson while working for Sloan and McDonald -- it was best to stay away from the issue of antitrust in the shaping of corporate strategy during the 1950s or risk losing years of academic research to lawsuits and shuttered corporate archives."
116: "Yet it could be argued that Chandler's own historical analysis of both General Motors and DuPont was also circular because both of the corporate case studies were eventually supported by scholarly biographies of Alfred Sloan and Pierre du Pont that were researched and written by Chandler himself. This is not the only instance where Chandler's `predictions' and subsequent `outcomes' have become intertwined, for Chandler's expectation that the multidivisional form would continue to spread would be predicated on the support that Chandler's account offered to the management consultants from McKinsey & Company who used Strategy and Structure to sell the novel organizational form to their international clients. In retrospect, it was almost impossible for scholars to separate Chandler's theoretical analysis from his historical evidence because he was so active in the collection, production and distribution of both the archival input and the theoretical output."
Monday, December 31, 2007
More Health Care Outrages
As if the health care situation were not bad enough, Business Week has an very good report showing how medical providers are signing unwitting patients up to transfer their bills onto credit cards that charge unconscionable rates. How much further can this crap go?
36: "... hospitals and clinics are bringing in more sophisticated help. They are transferring patient accounts wholesale to finance experts, banks, credit-card companies, and even private equity firms. Many of these third parties use credit scores and risk-analysis software to price the debt and impose interest rates as high as 27% on past-due bills."
36: "A host of nimble firms like CompleteCare in North Little Rock, Ark., began exploring this terrain years ago. Bigger players have jumped in more recently, although the market remains fragmented and reliable market share information isn't available. U.S. Bank, a U.S. Bancorp unit, finances about $2 million in patient debt per month through a medical-benefit firm, charging most customers annual interest of 13.5%, and as much as 24% on late bills. General Electric's powerful financial arm markets its CareCredit card to dentists, plastic surgeons, and some hospitals, with loan volume expected to hit $5 billion this year, up 40% from 2006. Citigroup and Capital One now offer similar cards. "Everybody is saying [medical finance] is the next horizon -- whether it is lines of credit or credit cards," says June St. John, a senior vice-president at Wachovia, which is exploring the business. Whetting all these appetites is the $250 billion consumers pay in medical expenses out of their pockets, an amount that doesn't include insurance premiums. That's an estimate for 2005 from the consulting firm McKinsey & Co. The figure could hit $420 billion by 2015."
36: "Many patients say they don't realize their debts are being shifted to such interest-charging middlemen as GE Money Bank, the unit that issues the CareCredit card."
39: "CompleteCare, the small Arkansas firm ... says it works with 40 hospitals and more than 400 physician practices across the country. Addressing potential health-industry clients, the company boasts on its Web site that it "pioneered the concept that patients become consumers the minute they walk out of your facility"."
39: Patients can sign an admission-consent forms that include a small-print section authorizing the hospital to turn over her account.
Grow, Brian and Robert Berner. 2007. "Fresh Pain for the Uninsured." Business Week (3 December): pp. 34-41.
http://www.businessweek.com/magazine/content/07_49/b4061001.htm
36: "... hospitals and clinics are bringing in more sophisticated help. They are transferring patient accounts wholesale to finance experts, banks, credit-card companies, and even private equity firms. Many of these third parties use credit scores and risk-analysis software to price the debt and impose interest rates as high as 27% on past-due bills."
36: "A host of nimble firms like CompleteCare in North Little Rock, Ark., began exploring this terrain years ago. Bigger players have jumped in more recently, although the market remains fragmented and reliable market share information isn't available. U.S. Bank, a U.S. Bancorp unit, finances about $2 million in patient debt per month through a medical-benefit firm, charging most customers annual interest of 13.5%, and as much as 24% on late bills. General Electric's powerful financial arm markets its CareCredit card to dentists, plastic surgeons, and some hospitals, with loan volume expected to hit $5 billion this year, up 40% from 2006. Citigroup and Capital One now offer similar cards. "Everybody is saying [medical finance] is the next horizon -- whether it is lines of credit or credit cards," says June St. John, a senior vice-president at Wachovia, which is exploring the business. Whetting all these appetites is the $250 billion consumers pay in medical expenses out of their pockets, an amount that doesn't include insurance premiums. That's an estimate for 2005 from the consulting firm McKinsey & Co. The figure could hit $420 billion by 2015."
36: "Many patients say they don't realize their debts are being shifted to such interest-charging middlemen as GE Money Bank, the unit that issues the CareCredit card."
39: "CompleteCare, the small Arkansas firm ... says it works with 40 hospitals and more than 400 physician practices across the country. Addressing potential health-industry clients, the company boasts on its Web site that it "pioneered the concept that patients become consumers the minute they walk out of your facility"."
39: Patients can sign an admission-consent forms that include a small-print section authorizing the hospital to turn over her account.
Grow, Brian and Robert Berner. 2007. "Fresh Pain for the Uninsured." Business Week (3 December): pp. 34-41.
http://www.businessweek.com/magazine/content/07_49/b4061001.htm
Leon Walras and the Nobel Peace Prize
Kissinger's nauseating Nobel Peace Prize award might deflate some of the interest in beyond Leon Walras's nomination. Walras wrote his own nomination and had some colleagues submit it.
The basis of his nomination was his work in mathematical economics. Although he wrote almost about free trade, his claim was that his work had produced a scientific basis for free trade and free trade would be certain to establish a regime world peace. Unfortunately, the nomination went to the great advocate of peace, Theodore Roosevelt.
See Sandmo, Agnar. 2007. "Retrospectives: Léon Walras and the Nobel Peace Prize." Journal of Economic Perspectives, Vol. 21, No. 4 (Fall): pp. 217-28.
The basis of his nomination was his work in mathematical economics. Although he wrote almost about free trade, his claim was that his work had produced a scientific basis for free trade and free trade would be certain to establish a regime world peace. Unfortunately, the nomination went to the great advocate of peace, Theodore Roosevelt.
See Sandmo, Agnar. 2007. "Retrospectives: Léon Walras and the Nobel Peace Prize." Journal of Economic Perspectives, Vol. 21, No. 4 (Fall): pp. 217-28.
Holiday Reading
I am currently reading Charles Taylor's A Secular Age. It is making me crazy. I love Taylor - his Sources of the Self was hugely important to my intellectual odyssey (I understand this is not any kind of recommendation!). The theism that was not explicit in Sources is in full force in this new book. What I first learned from Taylor is the what I'll call the autonomy of the normative and the inadequacy, as a a consequence, of naturalistic explanation in the social sciences. Norms have "authority" and part of the explanation of a person's action in accordance with a norm is, I think, the correctness of the norm - just as the explanation of a person's holding a belief is often the truth of that belief - often, not always. I think we can't make sense of science itself without a notion of objective norms (Cf, inter alia, Jean Hampton's The Authority of Reason). But anyway, does a commitment to the autonomy of the normative commit me to theism, as Taylor's later work more and more seems to imply?! Because then I have a major dilemma on my hands, given my long-standing atheism.
Oh well, Happy New Year, everyone!
Oh well, Happy New Year, everyone!
Economists for Edwards
Sometime today in Iowa the Edwards campaign will release its official list of Economists for Edwards. The leader of the group is James K.Galbraith, and I announce here that I am among the 30 on the list that he has assembled.
I think he is the most consistently progressive among the leading Dem candidates. I also think he is the most electable, with polls suggesting he is the only one of the top three who is solidly ahead of all four of the top GOP contenders in the electoral college. I am concerned that at one point he went after Hillary briefly over social security, but it is not in his platform, and she has promised to appoint a commission. Obama seems more clearly down on social security and also has a health plan that will not cover all Americans. On this important issue, Edwards seems to have the best plan. I also note that while Edwards voted for the Iraq war resolution (he was on the Senate Intelligence Committee at the time, giving him more foreign policy experience than many know he has), he has been strongly against it and a war in Iran since, and probably gave the best followup on the Bhutto assassination of any candidate, actually calling Musharraf up on the phone. I disagree with him on the idea of renegotiating NAFTA, but then all the Dem candidates want to do that. I conclude by noting that it is rate that one gets to support someone who is both the most progressive and the most electable, a winning combo, I say.
I think he is the most consistently progressive among the leading Dem candidates. I also think he is the most electable, with polls suggesting he is the only one of the top three who is solidly ahead of all four of the top GOP contenders in the electoral college. I am concerned that at one point he went after Hillary briefly over social security, but it is not in his platform, and she has promised to appoint a commission. Obama seems more clearly down on social security and also has a health plan that will not cover all Americans. On this important issue, Edwards seems to have the best plan. I also note that while Edwards voted for the Iraq war resolution (he was on the Senate Intelligence Committee at the time, giving him more foreign policy experience than many know he has), he has been strongly against it and a war in Iran since, and probably gave the best followup on the Bhutto assassination of any candidate, actually calling Musharraf up on the phone. I disagree with him on the idea of renegotiating NAFTA, but then all the Dem candidates want to do that. I conclude by noting that it is rate that one gets to support someone who is both the most progressive and the most electable, a winning combo, I say.
Sunday, December 30, 2007
Away with Sarbanes Oxley?
Whatever happened to the rabid calls for eliminating Sarbanes Oxley? Does anybody even Enron, Tyco, Worldcom, etc? After calls for strong regulation to prevent such things from happening again, Congress gave us the weak Sarbanes Oxley. Not long after, the business press was squealing about the excessive requirements of Sarbanes Oxley.
Now that the subprime mortgage scam is imploding, Sarbanes Oxley has fallen from notice.
Any thoughts?
Now that the subprime mortgage scam is imploding, Sarbanes Oxley has fallen from notice.
Any thoughts?
Running on empty....
Fasten your seatbelts, it's going to be a bumpy night!
Los Angeles TIMES
New cars that are fully loaded -- with debt Americans are rolling over loans, often ending up owing more for the vehicle than it's worth.
By Ken Bensinger / Staff Writer
December 30, 2007
When Jennifer and Bobby Post traded in their 2001 Chevy Suburban last year for a shiny new Ford F-350 turbo diesel with an extended cab, it seemed like a great deal. Even though they still owed $9,500 on their SUV after the trade-in value, they didn't have to put a penny down.
The dealership, near the Posts' home in Victorville [California], made it easy; it just added the old debt to the price of the new truck and gave the couple a seven-year, $44,276 loan.
The Posts were a little worried about taking on such a long obligation, but they couldn't pass up a monthly payment under $700. Now they're having regrets.
"I didn't realize how much debt was in it," said Jennifer Post, who has since moved with her family to Iowa. Now, she'd like to get rid of the truck but can't, because there's so much debt that she'd literally have to pay someone to take it off her hands.
"We have no options," she said.
Americans haven't just been taking out risky mortgages for homes in the last few years; they've also been signing larger automobile loans for significantly longer terms than they used to.
As a result, people are slipping into a perpetual cycle of automobile debt that experts think could lead to a new credit crunch extending from dealerships to driveways and all the way to Wall Street.
Aren't you glad that they've tightened consumer bankruptcy laws, making this "perpetual cycle" more like good old-fashioned debt peonage?
Gone are the days of the three-year car loan. The length of the average automobile loan hit five years, four months in October, up more than six months from 2002, according to the Federal Reserve. And nearly 45% of loans written today are for longer than six years. Even some staid lenders owned by the carmakers, such as Toyota Financial Services and Ford Credit, are offering seven-year financing. And a few credit unions, particularly in the West, are tinkering with the eight-year note.
Credit unions, alas, are acting more and more like commercial banks. They used to be more responsible to their members.
At the same time, the amount of money drivers owe on their cars is soaring. In October, the average amount financed hit $30,738, up $3,500 in just a year and nearly 40% in the last decade, according to the Fed. More troubling, today's average car owner owes $4,221 more than the vehicle is worth at the time it's sold -- up from $3,529 in 2002, according to industry analyst Edmunds.
it's an understatement to say that that's much too much!
... It's not just individual consumers who are at financial risk. Nationwide, an estimated $575 billion in new and used auto loans are written every year by auto manufacturers, banks, credit unions and other lenders. About 30% of the loans that are originated by banks, and 100% of those issued by automaker financiers, are, like mortgages, repackaged and sold as securities, according to the Consumer Bankers Assn.
Aha! more securitization, in which spreading the risk around so that people can't perceive it anymore is treated as if it were abolishing risk.
Analysts warn that just as investors didn't comprehend the risk inherent in some of the more exotic home mortgages in recent years, they aren't considering how risky these car loans are. If longer loan terms allow debt on the loans to grow too large, many drivers may simply default, leading to expensive repossessions.
And even those who keep paying their bills may reach a point, like Gerhardt, where they simply can't afford another car. That could send vehicle sales down the drain, a nightmare scenario for an industry that has already taken a hit this year from slower consumer spending and higher gas prices.
It could also lead to serious losses among financial institutions that have invested in car debt. Among securitized auto loans, two-thirds have terms longer than 60 months, a fact that Standard & Poor's, which rates auto debt for sale on the secondary market, calls a "credit concern."
This month, S&P reviewed its ratings on $113.5 billion in auto loan securities it rated in the last two years out of concerns over growing losses. It didn't make any downgrades but predicted that "rising losses will continue into 2008 across all segments of the auto loan market."
S&P has found that delinquencies of more than 60 days on car loans issued this year to borrowers with the best credit are up 20% compared to those issued last year, while delinquencies on loans issued this year to subprime borrowers increased by 16%. Delinquency rates on car loans are still far lower than on mortgages, but there is growing concern in the financial services industry. Indeed, Tom Webb, chief economist of used-auto analyst Manheim Consulting, said he expects the tally for 2007 repossessions to be up by 10%.
Sounds like it's time to crank up that old Emilio Estevez movie, REPO MAN.
Mark Pregmon, executive vice president for consumer lending at SunTrust Bank, is among the concerned. "Any time you extend the maturity of the loan, you take on more risk. The question is whether there's enough assessment of that extra risk," he said. "Obviously, it's a problem. It's a house of cards."
You took that cliché right out of my mouth!
In the 1970s and '80s, car loans hovered between 36 and 48 months, and drivers typically kept their cars longer than the life of the loan. A number of factors changed that.
One key was interest rates, which fell from a high of 17.8% in the early 1980s to lower than 5% today, according to the Federal Reserve. Another was affordability. According to an index tracked by Comerica Bank, cars have steadily gotten more affordable -- as compared to median family income -- since the late 1990s.
With cheap money at hand for more-affordable cars, the temptation to keep buying became huge. Today, according to Pregmon, financed cars are typically turned over in 24 to 36 months.
At the same time they were extending loan maturities, lenders, competing with one another, began offering more money and requiring smaller down payments.
Today, most lenders offer financing on 100% or even 125% of the sticker price, and some offer the most credit-worthy buyers loans for twice the value of the vehicle they're purchasing. Last year, the average amount financed for new cars reached 99%, according to the Consumer Bankers Assn., up from 95% in 2005.
Lenders are beginning to brace themselves; many have said they intend to tighten standards and require larger down payments.
Despite warnings from S&P, the Consumer Bankers Assn., Lehman Bros. and others, there is little sign that the automobile industry is willing -- or, with consumers demanding low payments, even able -- to reduce the lengths of the loans they issue.
"For banks, it's a matter of meeting consumer demand: no money down and extend the term," said SunTrust's Pregmon. "But as a lender, you've got a moral obligation as well. Are we putting the clients in loans they can't afford?"
Here's another reason to have the government standardize loan agreements and then have the financial sector compete over interest rates.
ken.bensinger@latimes.com
Copyright 2007 Los Angeles Times
--
Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante.
Los Angeles TIMES
New cars that are fully loaded -- with debt Americans are rolling over loans, often ending up owing more for the vehicle than it's worth.
By Ken Bensinger / Staff Writer
December 30, 2007
When Jennifer and Bobby Post traded in their 2001 Chevy Suburban last year for a shiny new Ford F-350 turbo diesel with an extended cab, it seemed like a great deal. Even though they still owed $9,500 on their SUV after the trade-in value, they didn't have to put a penny down.
The dealership, near the Posts' home in Victorville [California], made it easy; it just added the old debt to the price of the new truck and gave the couple a seven-year, $44,276 loan.
The Posts were a little worried about taking on such a long obligation, but they couldn't pass up a monthly payment under $700. Now they're having regrets.
"I didn't realize how much debt was in it," said Jennifer Post, who has since moved with her family to Iowa. Now, she'd like to get rid of the truck but can't, because there's so much debt that she'd literally have to pay someone to take it off her hands.
"We have no options," she said.
Americans haven't just been taking out risky mortgages for homes in the last few years; they've also been signing larger automobile loans for significantly longer terms than they used to.
As a result, people are slipping into a perpetual cycle of automobile debt that experts think could lead to a new credit crunch extending from dealerships to driveways and all the way to Wall Street.
Aren't you glad that they've tightened consumer bankruptcy laws, making this "perpetual cycle" more like good old-fashioned debt peonage?
Gone are the days of the three-year car loan. The length of the average automobile loan hit five years, four months in October, up more than six months from 2002, according to the Federal Reserve. And nearly 45% of loans written today are for longer than six years. Even some staid lenders owned by the carmakers, such as Toyota Financial Services and Ford Credit, are offering seven-year financing. And a few credit unions, particularly in the West, are tinkering with the eight-year note.
Credit unions, alas, are acting more and more like commercial banks. They used to be more responsible to their members.
At the same time, the amount of money drivers owe on their cars is soaring. In October, the average amount financed hit $30,738, up $3,500 in just a year and nearly 40% in the last decade, according to the Fed. More troubling, today's average car owner owes $4,221 more than the vehicle is worth at the time it's sold -- up from $3,529 in 2002, according to industry analyst Edmunds.
it's an understatement to say that that's much too much!
... It's not just individual consumers who are at financial risk. Nationwide, an estimated $575 billion in new and used auto loans are written every year by auto manufacturers, banks, credit unions and other lenders. About 30% of the loans that are originated by banks, and 100% of those issued by automaker financiers, are, like mortgages, repackaged and sold as securities, according to the Consumer Bankers Assn.
Aha! more securitization, in which spreading the risk around so that people can't perceive it anymore is treated as if it were abolishing risk.
Analysts warn that just as investors didn't comprehend the risk inherent in some of the more exotic home mortgages in recent years, they aren't considering how risky these car loans are. If longer loan terms allow debt on the loans to grow too large, many drivers may simply default, leading to expensive repossessions.
And even those who keep paying their bills may reach a point, like Gerhardt, where they simply can't afford another car. That could send vehicle sales down the drain, a nightmare scenario for an industry that has already taken a hit this year from slower consumer spending and higher gas prices.
It could also lead to serious losses among financial institutions that have invested in car debt. Among securitized auto loans, two-thirds have terms longer than 60 months, a fact that Standard & Poor's, which rates auto debt for sale on the secondary market, calls a "credit concern."
This month, S&P reviewed its ratings on $113.5 billion in auto loan securities it rated in the last two years out of concerns over growing losses. It didn't make any downgrades but predicted that "rising losses will continue into 2008 across all segments of the auto loan market."
S&P has found that delinquencies of more than 60 days on car loans issued this year to borrowers with the best credit are up 20% compared to those issued last year, while delinquencies on loans issued this year to subprime borrowers increased by 16%. Delinquency rates on car loans are still far lower than on mortgages, but there is growing concern in the financial services industry. Indeed, Tom Webb, chief economist of used-auto analyst Manheim Consulting, said he expects the tally for 2007 repossessions to be up by 10%.
Sounds like it's time to crank up that old Emilio Estevez movie, REPO MAN.
Mark Pregmon, executive vice president for consumer lending at SunTrust Bank, is among the concerned. "Any time you extend the maturity of the loan, you take on more risk. The question is whether there's enough assessment of that extra risk," he said. "Obviously, it's a problem. It's a house of cards."
You took that cliché right out of my mouth!
In the 1970s and '80s, car loans hovered between 36 and 48 months, and drivers typically kept their cars longer than the life of the loan. A number of factors changed that.
One key was interest rates, which fell from a high of 17.8% in the early 1980s to lower than 5% today, according to the Federal Reserve. Another was affordability. According to an index tracked by Comerica Bank, cars have steadily gotten more affordable -- as compared to median family income -- since the late 1990s.
With cheap money at hand for more-affordable cars, the temptation to keep buying became huge. Today, according to Pregmon, financed cars are typically turned over in 24 to 36 months.
At the same time they were extending loan maturities, lenders, competing with one another, began offering more money and requiring smaller down payments.
Today, most lenders offer financing on 100% or even 125% of the sticker price, and some offer the most credit-worthy buyers loans for twice the value of the vehicle they're purchasing. Last year, the average amount financed for new cars reached 99%, according to the Consumer Bankers Assn., up from 95% in 2005.
Lenders are beginning to brace themselves; many have said they intend to tighten standards and require larger down payments.
Despite warnings from S&P, the Consumer Bankers Assn., Lehman Bros. and others, there is little sign that the automobile industry is willing -- or, with consumers demanding low payments, even able -- to reduce the lengths of the loans they issue.
"For banks, it's a matter of meeting consumer demand: no money down and extend the term," said SunTrust's Pregmon. "But as a lender, you've got a moral obligation as well. Are we putting the clients in loans they can't afford?"
Here's another reason to have the government standardize loan agreements and then have the financial sector compete over interest rates.
ken.bensinger@latimes.com
Copyright 2007 Los Angeles Times
--
Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante.
Saturday, December 29, 2007
The Airport Security Scam
This is exactly right. We are sheep to accept it. The economic cost in terms of direct resources squandered and lost time is massive. The policy doesn’t stop terrorism, it expresses our condition of being terrorized.
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