“Jonathan Cohn”:http://www.tpmcafe.com/story/2005/7/18/114013/338 asks whether there’s any good reason to believe that nice guys do indeed finish first in the business world.

bq. I’d love nothing more to believe that treating employees well is actually better business than treating them shabbily. But at the moment, anyway, count me as skeptical.

As I think I’ve mentioned before, Gary Miller has used economic theory to make exactly this argument, in a series of publications over the last fifteen years (this “piece”:http://www.isnie.org/ISNIE99/Papers/millerg.pdf co-written with Dino Falaschetti, gives a good flavour of his work). Miller uses social choice theory and game theory to argue that managers, if they are to get workers to deliver their full effort, need to be able to make credible commitments to them that their efforts will be rewarded over the longer term. It’s thus a good idea to keep a strict separation between management and owners. Efforts to make the interests of stockholders and managers coincide with each other are going to weaken management’s ability to credibly commit to workers that they will continue to be employed, as managers become more interested in chasing short term stock market gains than in ensuring the long term health of the company. Long term success, for Miller, is produced through “gift exchange” in which managers credibly commit to insulate workers from the pressure for short term profits, and workers reciprocate by giving additional effort. One of Miller’s examples of a firm that used to do this very well is rather timely. From Miller’s 1992 book, “Managerial Dilemmas”:http://www.powells.com/search/DTSearch/search?partner_id=%2029956&cgi=search/search/&searchtype=kw&searchfor=gary%20miller%20managerial%20dilemmas :

bq. Another condition for the achievement of cooperative equilibria in a repeated game is the mutual expectation that the relationship will go on long enough to justify the investment in cooperation. This was achieved at Hewlett-Packard by an early decision by the two founders not to be a “hire and fire company,” but one in which employees would have the security of employment commitment. In the 1980 recession, this policy was tested severely, but everyone in the organization took a 10 percent cut in pay and worked 10% fewer hours so that no one would be fired (Peters and Waterman 1982: 44). This confirmed everyone’s subjective belief that the relationship was long-lasting and that employee efforts were not going to be exploited for short-term gain by Hewlett-Packard.

How “things have changed”:http://www.washingtonmonthly.com/archives/individual/2005_07/006756.php.

Harry’s post on consequentialism and opportunity costs, as applied to the Iraq war, raises a couple of important points about consequentialism, and also leads me to suggest a specific correction to my post on this topic.

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This is a quibble with something in John’s long discourse on the war. It’s more of a question, than a quibble, really. John rightly points out that, in assessing the true consequences of some policy or action, we have to take into account the opportunity costs:

A second common feature of pro-war analysis is a failure to take account of the opportunity cost of the resources used in war. The $300 billion used in the Iraq war would have been enough to finance several years of the Millennium Development project aimed at ending extreme poverty in the world, and could have saved millions of lives. But even assuming this is politically unrealistic, the money could surely have been spent on improved health care, road safety and so on in the US itself. At a typical marginal cost of $5 million per live saved, 60 000 American lives could have been saved. This is morally relevant, but is commonly ignored.

Please don’t think about the war, or John’s more general argument about it, for the moment. Assume that all we are doing is trying to figure out the consequences for the purpose of moral evaluation (whatever weight you think the consequences should have — for me, its less than for John, but more than for some). What are the real opportunity costs that we should figure in?

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Over at the Volokhs, Jim Lindgren gets “upset”:http://www.volokh.com/archives/archive_2005_07_17-2005_07_23.shtml#1121820182 “twice”:http://www.volokh.com/archives/archive_2005_07_17-2005_07_23.shtml#1121843543 at co-blogger Orin Kerr for “claiming”:http://www.volokh.com/archives/archive_2005_07_17-2005_07_23.shtml#1121819891 and “repeating the claim”:http://www.volokh.com/archives/archive_2005_07_17-2005_07_23.shtml#1121843543 that prediction markets did a bad job of prediction the Roberts nomination. For Jim, the issue is whether markets are in general better than experts at aggregating publicly available information; he believes that “markets (however “good” or bad they are in absolute terms) should be better than experts on balance, or at least better than experts who lack actual first-hand knowledge of the forthcoming decision.” For Orin, Tradesports seems to be no more than a “way of monitoring what a few newspapers and blogs are saying,” and, on the whole, it “seems easier to just scan the headlines at How Appealing.”There’s an obvious alternative hypothesis which neither considers. Roberts futures shot up in value from 1% to near-certainty in the few hours before the decision was “officially” leaked. One highly plausible interpretation of this is that word had already leaked to a privileged few with good contacts in the Administration. Then, some of those people with insider knowledge took advantage of their privileged position by betting Roberts and fleecing the rubes. As Steve Bainbridge has “noted”:http://www.professorbainbridge.com/2005/07/inside_informat.html, Tradesports doesn’t seem to have any rules against insider trading. On this interpretation, Lindgren is right in saying that markets like Tradesports can provide more information on executive decisions than scanning the blogs – but only because they’re being used by those who have insider information to take advantage of the less-informed (who naively assume that they’re playing a fair game). In other words, there’s strong reason to suspect that this case doesn’t support Lindgren’s more general claims about the superiority of prediction markets vis-a-vis experts; in this case the markets are arguably being manipulated by people with insider knowledge that isn’t available to the experts. The reason that markets are doing better than experts “without first-hand knowledge” is most likely that they’re being used by experts _with_ first hand knowledge to make money from those who don’t have such knowledge. This is a very bad case to test the efficacy (or lack of same) of prediction markets in aggregating dispersed public knowledge into a usable metric; it seems to me rather unlikely that this sort of aggregation is what is in fact happening here.

Update: Orin Kerr says in comments. “You claim in your post that “Roberts futures shot up in value from 1% to near-certainty in the few hours before the decision was “officially” leaked.” That is incorrect. As best I can tell, Roberts futures shot up to near certainty only after every news website started posting that Bush had picked Roberts.” In which case, it seems to me that Kerr is right on this, and Lindgren and I are wrong, for different reasons.

Update 2: “Brayden King”:http://pubsociology.typepad.com/pub/2005/07/bad_versus_good.html has a very good post on the topic.

In honor of the first manned Moon landing, which took place on July 20, 1969, we’ve added some NASA imagery to the Google Maps interface to help you pay your own visit to our celestial neighbor. Happy lunar surfing.

Be sure to zoom in all the way.

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Reader Ben Lancini points me to this piece by John Dvorak, attacking [or rather, confessing to not seeing the point of] the Creative Commons License. This has prompted me to write a post I promised ages ago, in response to Kim Weatherall and Nicholas Gruen. I won’t recapitulate the debate, but just state my own position.
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If we’re looking for good news from the Islamic world, as most of us are, can I suggest that the best place to look just now is right next door (to Australia, that is) in Indonesia[1]. The Indonesian government has just signed a peace agreement with the Free Aceh Movement (GAM). There’s plenty more to be done, and such agreements have failed before, but the chances this time look better than ever, as GAM has finally abandoned its demand for independence and the central government seems willing, for the first time, to concede real autonomy.
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I see that Avner Greif has made his forthcoming book on economic history “available for download”:http://www-econ.stanford.edu/faculty/Greif_Instutions/GreifBook.html. It tackles the transition from a mediaeval economy in which people traded with identifiable others whom they knew well to a modern economy based on impersonal exchange. A considerable nuisance for me, as I’m trying to write a book that talks to some more-or-less related themes, and now have a few hundred more pages of weighty ideas to ingest (which isn’t to say that the ingestion won’t be beneficial). I’ll be especially interested to see how the book is received both by Greif’s fellow economists and by economic sociologists. Greif argues that the two ought to be talking to each other much more than they do, and the book seems to be at least in part intended as an object lesson in how the two approaches can inform each other. On the one hand, I have the impression that most economists refuse on principle to believe that economic sociologists could have anything useful to tell them. On the other, when economic sociologists see game theorists and rational choice types writing about sociological themes, their first reaction is often to “man the barricades”:http://econsoc.mpifg.de/current/6-3art2.asp against the imperial oppressor. However, there’s a very interesting literature building up in the no-mans-land between the trenches – economists who are beginning to realize that they need a stronger theory of cognition and of the kinds of informal order that sociologists have been exploring for decades, and sociologists who are interested in the kinds of action-oriented theories of human behaviour that more thoughtful rational choice types have been trying to develop. Greif’s book is likely to attract attention from both sides and from those in between; with a bit of luck it’ll help push on the process of dialogue a little.

I’m sorry to get you worried about explosions two posts running, but you really should be reading Countdown to Annihilation! at Hitherby Dragons. (Especially PZ, who likes to keep abreast of scientific advances along these lines.) I feel bad excerpting just the premise because, though hilarious, it’s almost the least hiliarious bit. Make sure to start with the linked segment, then consult ‘latest entries’ for parts II, III & IV and the Lizard Cops bonus wossname.

"There!" says Mr. Lancaster. He rolls back the platform. He dusts
himself off. He rises. "It’s a perfect Origins Bomb, if I do say so
myself."

"Perfection is for God alone," corrects Mrs. Lancaster.

"Oh, Mrs. Lancaster," says Mr. Lancaster, beeping her nose. "You do keep me honest."

"What’s it do?" Iphigenia asks.

"It’s a way to prove Creationism right for once and for all," says Mr. Lancaster. "When I push this button—"

Here he indicates a large red button labeled "Emergency Proof of Creationism."

"—everything in the universe that is older than ten thousand years
old, and every human who evolved from lower life forms, blows up!"

Iphigenia frowns. "But that’s nobody. You said that people were made by God."

Mr. Lancaster’s eyes dance.

Iphigenia will always remember this moment. When Mr. Lancaster is
very happy his eyes get a marvelous crinkle at the edges. It makes
Iphigenia want to laugh and hug him. And sometimes he will sweep her up
and spin her around, or tell her a wonderful secret, like where the
Apostle Paul is really buried, or race her through the house around and
around and around.

His eyes are crinkly like that now.

"That’s the marvel of it," he says, "The absolute marvel of it! It’s
the world’s deadliest bomb—and it won’t hurt hardly anything!"

"We expect there are a few things that will qualify," explains Mrs.
Lancaster. "Sinister bloodlines descended from lizards, ancient
gyroscopes from alternate timelines, the angels of nations, and so
forth. Exceptions. Nothing the world can’t do without."

Those guys at Powerline would totally push the button.

I was delighted when a commenter found my comment spam fiction worthy of connecting with Rebecca Borgstrom’s (previously unknown to me) spam fiction "The Noise Dreams of Signal." She’s got this Roald Dahl, Donald Barthelme sort of sensibility, with a taroty aftertaste worthy of either or both Crowleys. Reminds me of this story I’m never going to write about a congregation of fundamentalist Christian tarot card users who insist on literal readings of the text. ‘You’re going to die, and you’re going to see four cups, and six wands, and a fool, and a guy hanging upside down …’ Course it turns out that’s just how it goes.) I, for one, welcome our new Snavering Lavelwod overlords. (Say it three times fast.)

“Cosmic Variance”:http://cosmicvariance.com/ is a new group blog made up of a bunch of physicists, some of whom — notably “Sean Carroll”:http://cosmicvariance.com/sean/ — are already “well-known”:http://preposterousuniverse.blogspot.com/ for their writing. I used to hang out with a bunch of physicists in college. Never have so many smart people been concentrated in such a brutal job market. On the other hand, they get to have good job titles and cool-sounding research interests. I mean, who wouldn’t want to be in the “Theory Group at Stanford Linear Accelerator”:http://cosmicvariance.com/joanne/ studying “heavy flavor physics”? “Today we will accelerate a particle of this 1989 Château Haut-Brion to very high speeds and smash it into a stationary matrix composed of this bar of “Michel Cluizel”:http://www.cluizel.com/ single-plantation chocolate, in an effort to produce an entity predicted by Larousse but hitherto unobserved, the Michelin 4-star boson.”

Via “Gillian Russell”:http://www.logicandlanguage.net/archives/2005/07/top_ten.html I see that the “results”:http://www.bbc.co.uk/radio4/history/inourtime/greatest_philosopher_vote_result.shtml of the BBC’s “Greatest Philosopher” poll are in. The winner — with 28 percent of the vote, more than twice the share of the philosopher in second-place — was Karl Marx. David Hume is next (just over 12 percent) and Wittgenstein third (6.8 percent). If you are upset that your favorite philosopher didn’t win (or angry over who did), why not listen to Randy Newman’s “The World isn’t Fair”:http://www.randynewman.com/tocdiscography/disc_bad_love/lyricsbadlove, which also has a lot of useful information about Marx.

I’ve been reading Wolfgang Streeck and Kathy Thelen’s edited volume, “Beyond Continuity”:http://www.oup.com/us/catalog/general/subject/Economics/Political/?view=usa&ci=0199280460 over the last several days – Jacob Hacker’s chapter, “Policy Drift: The Hidden Politics of US Welfare State Retrenchment” is particularly good (a draft version is available “here”:http://www.staatlichkeit.uni-bremen.de/download/de/ueber/gast_hacker.pdf ; a closely related article appeared in the _American Political Science Review_ last year). Leftwingers are sometimes entirely too sanguine about the durability of entitlement programs like Social Security; Hacker lays out reasons why this confidence is misplaced. In a political system like the US, it’s extremely difficult to get large scale changes through, such as abolishing programs, because there are so many veto points in the decision making process. It’s even more difficult when the program has an active constituency, which will be unhappy at any changes that disadvantage them. This helps explain, for example, the problems that Bush’s proposed Social Security reforms have run into. But there are still ways in which a program can be dismantled piecemeal. First is what Hacker (and the others writing in this edited volume) call “drift.” As society changes over time, programs are likely to become increasingly badly calibrated to the needs that inspired their creation. But updating these programs may be difficult, especially given that conservatives can use the many veto points to block change. Thus, one may expect to see social programs becoming increasingly unmoored from society’s needs over time – and hence less politically defensible – as attempts to reform them and make them more relevant are blocked. Second is “layering.” When faced with highly popular programs such as Social Security, conservatives have had difficulties in making head-on attacks, so that they have instead sought to create an alternative institutional framework that will attract defection and undermine these programs’ rationale over time. As Hacker concludes:

bq. in a context where social risks are changing and policy drift is ubiquitous and consequential, _conservatives have not had to enact major policy reforms to move toward many of their favored ends_ (emphasis in original). Merely by delegitimizing and blocking compensatory interventions designed to correct policy drift or ameliorate intensified risks, opponents of the welfare state in the United States have gradually transformed the orientation of social policy. The struggle over the welfare state has not simply been concerned [with] whether programs will be cut or scrapped; it has also concerned the degree to which social policies will uphold long-standing goals and adapt to the world around them. We vastly underestimate the strength of the welfare state’s opponents if we do not see the extent to which they have succeeded in this latter debate.

On all of this, see also “Mark Schmitt”:http://markschmitt.typepad.com/decembrist/2005/02/auh20_again.html. If Hacker is right, and I’m pretty sure that he is, the implications are clear. Turning back the right-wing assault on Social Security isn’t enough. What’s needed is a comprehensive program that seeks to update the welfare state to address the massively increased burden of risk that ordinary individuals are expected to bear today. There’s also a strong rationale for increasing the role of the state substantially in such a program – as Hacker notes, programs which seek to deliver the welfare state indirectly, through tax incentives and the like, are substantially more vulnerable to drift than directly administered programs (health insurance being the obvious test case). I presume that the chapter is a taster for Hacker’s forthcoming book on the politics of risk and insecurity; I’m looking forward to seeing how he links his analysis of the parameters of institutional change to the prospect of introducing substantial new reforms.

Two addenda to posts I wrote last week.

First, the “New York Times”:http://www.nytimes.com/2005/07/16/politics/16immigrants.html?ei=5094&en=ed9000bb0979f7ff&hp=&ex=1121572800&adxnnl=1&partner=homepage&pagewanted=print&adxnnlx=1121702930-H0vhXu9rNu0DeaqhsRIh8A picks up on the “OSHA sting”:https://crookedtimber.org/2005/07/12/impersonating-osha/ story; it appears that the immigration officials responsible are getting a lot of flak, as they should be. Thanks to Matthew Lister for the tip.

Second, Sean Carroll provides contact details for WBEZ, the radio station which “cancelled Odyssey”:https://crookedtimber.org/2005/07/14/odyssey-cancellation/ last week. Anyone who wants to suggest politely that they reconsider this decision should contact:

Torey Malatia
General Manager, WBEZ
848 E. Grand
Chicago IL 60611
312-832-3312
tmalatia@wbez.org

Sean and a group of other physicists have just started a new group-blog, “Cosmic Variance”:http://cosmicvariance.com/. Looks good.

Chris’s post on responsibility got me started on what I plan to be the final instalment of my attempts to analyse the ethical justification for war. It’s not quite Holbovian in scale, but quite long enough. Comments much appreciated.
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