30 November 2009
Well, I Was Wrong About That
Instapundit posted this coffee ad without comment, but I remembered it as soon as I hit play. In the 80s, coffee was worried that it might be permanently replaced by soda and other soft drinks; that Americans were losing their coffee addiction. These series of ads were meant to boost coffee drinking among the young (which, at the time, included me).
Although by 1984 I was drinking coffee by the pot, I didn't think that the industry had a chance to remain anything but an also-ran. Coke uber alles.
The research into entrepreneurship indicates that one of the few traits that really seems to separate entrepreneurs from the rest of us is a representation bias. That is, entrepreneurs think that their own experience, tastes and judgment are more representative of the population at large than is actually the case. So, if they like some new product, everyone else will, too. If that's true, than I'm the anti-entrepreneur. I think the things that I like are doomed to failure.
28 November 2009
Anthropogenic Global Warming
Seems like a good time to revisit anthropogenic global warming: what do we know, what can we assume, and what can we do it about it.
Anthropogenic global warming is a series of nested propositions:
1. The global temperature is rising. This is the heart of AGW, and until this week, it was the real consensus of informed scientists. After the CRU leaks, it turns out that we can't even be sure that the globe has been getting warmer over the last century. Other questions are, what is "global temperature" and is it even relevant. Maybe we should worry about peaks and not averages. Maybe we should worry more about temperatures at the poles or at the equator rather than global averages. Because it turns out that the only good temperature record we have lasting longer than decades is for particular spots in the US and Japan and some of those will have changed due to local urbanization (and in at least one case, because someone pointed an air conditioner dump vent at the thermometer). Of course, at some point we all agree that the globe's gotten warmer; we used to be in the little ice age, which ended about 1880, so the world has clearly gotten warmer since then. Of course, that's been a good thing, leading to the need for proposition 2.
2. Rising temperatures would be bad. In fact, the experience of mankind is to the contrary. Rising temperatures are good. We get more crops, we gain arable land, fewer seniors drop dead shoveling snow, etc. So AGWists need to posit large increases in temperature that push us past a tipping point at which civilization is devastated (or, at least, Bangladesh is under water). We can't get there through CO2 alone, though, even though AGWists put a lot of time into arguing proposition 3.
3. Carbon dioxide causes higher temperatures. This is probably true. Carbon dioxide is a greenhouse gas in that it absorbs sunlight and emits heat at levels higher than the atmosphere generally. But the direct effects of carbon dioxide on temperature are well understood and relatively mild; about one degree for every doubling of CO2 in the atmosphere. Since we're unlikely to double CO2 even twice from this point on -- even as India and China industrialize -- that really isn't going to get us over the tipping point, so
4. Carbon dioxide warming will be amplified by positive feedback mechanisms -- that we've never seen, can't describe and don't understand. The historical evidence seems pretty clear: temperature increases have been followed by atmospheric CO2 increases but never preceded by them. Even worse for the AGWists, we do understand at least two negative feedback mechanisms: more CO2 leads to more plant growth, which, by reducing the Earth's albedo, cools temperatures be reflecting more energy into space; and rising temperature leads to more cloud cover, which reduces Earth's albedo, etc. Basically, AGW's appeal to science just breaks down here, even though positive feedback is absolutely essential to the AGW as disaster scenarios.
5. Industrialization, which leads to release of CO2 into the atmosphere, causes AGW. This is actually more problematic than it appears, because industrialization also leads to the emission of particulate air pollution and other gases, like sulfur dioxide, that cause atmospheric cooling. Do the traces of CO2 we release into the atmosphere overpower the traces of SO2 we release into the atmosphere? Your guess is as good as the CRU's. At least one AGWist theorizes that the reason there hasn't been any warming over the last 10 years has been because of the increase in SO2 pumped into the atmosphere by India and China. That, of course, implies that the clean air act threatens to destroy the world.
6. Global warming is bad because it's anthropogenic. Lot's of AGWists seem to argue that we are obliged to do something about global warming because it's anthropogenic. But what difference does that make? If global warming were natural but disastrous, should we let it? If it were man-made but good (a real possibility, of course) should we stop it just because we're changing "nature?" This (and the continued opposition to nuclear power) is where it becomes clear that AGW isn't scientific at all for many proponents; rather it is political/religious/spiritual.
Anthropogenic global warming is a series of nested propositions:
1. The global temperature is rising. This is the heart of AGW, and until this week, it was the real consensus of informed scientists. After the CRU leaks, it turns out that we can't even be sure that the globe has been getting warmer over the last century. Other questions are, what is "global temperature" and is it even relevant. Maybe we should worry about peaks and not averages. Maybe we should worry more about temperatures at the poles or at the equator rather than global averages. Because it turns out that the only good temperature record we have lasting longer than decades is for particular spots in the US and Japan and some of those will have changed due to local urbanization (and in at least one case, because someone pointed an air conditioner dump vent at the thermometer). Of course, at some point we all agree that the globe's gotten warmer; we used to be in the little ice age, which ended about 1880, so the world has clearly gotten warmer since then. Of course, that's been a good thing, leading to the need for proposition 2.
2. Rising temperatures would be bad. In fact, the experience of mankind is to the contrary. Rising temperatures are good. We get more crops, we gain arable land, fewer seniors drop dead shoveling snow, etc. So AGWists need to posit large increases in temperature that push us past a tipping point at which civilization is devastated (or, at least, Bangladesh is under water). We can't get there through CO2 alone, though, even though AGWists put a lot of time into arguing proposition 3.
3. Carbon dioxide causes higher temperatures. This is probably true. Carbon dioxide is a greenhouse gas in that it absorbs sunlight and emits heat at levels higher than the atmosphere generally. But the direct effects of carbon dioxide on temperature are well understood and relatively mild; about one degree for every doubling of CO2 in the atmosphere. Since we're unlikely to double CO2 even twice from this point on -- even as India and China industrialize -- that really isn't going to get us over the tipping point, so
4. Carbon dioxide warming will be amplified by positive feedback mechanisms -- that we've never seen, can't describe and don't understand. The historical evidence seems pretty clear: temperature increases have been followed by atmospheric CO2 increases but never preceded by them. Even worse for the AGWists, we do understand at least two negative feedback mechanisms: more CO2 leads to more plant growth, which, by reducing the Earth's albedo, cools temperatures be reflecting more energy into space; and rising temperature leads to more cloud cover, which reduces Earth's albedo, etc. Basically, AGW's appeal to science just breaks down here, even though positive feedback is absolutely essential to the AGW as disaster scenarios.
5. Industrialization, which leads to release of CO2 into the atmosphere, causes AGW. This is actually more problematic than it appears, because industrialization also leads to the emission of particulate air pollution and other gases, like sulfur dioxide, that cause atmospheric cooling. Do the traces of CO2 we release into the atmosphere overpower the traces of SO2 we release into the atmosphere? Your guess is as good as the CRU's. At least one AGWist theorizes that the reason there hasn't been any warming over the last 10 years has been because of the increase in SO2 pumped into the atmosphere by India and China. That, of course, implies that the clean air act threatens to destroy the world.
6. Global warming is bad because it's anthropogenic. Lot's of AGWists seem to argue that we are obliged to do something about global warming because it's anthropogenic. But what difference does that make? If global warming were natural but disastrous, should we let it? If it were man-made but good (a real possibility, of course) should we stop it just because we're changing "nature?" This (and the continued opposition to nuclear power) is where it becomes clear that AGW isn't scientific at all for many proponents; rather it is political/religious/spiritual.
14 November 2009
Stupid President
I don't really dislike Barrack Obama. He's no Bill Clinton -- the best president in my life time I never voted for -- but he isn't (yet) Jimmy Carter, either. I'm all for an arrogant foreign policy but I do understand why the nation was ready for a break.
But Obama's habit of kowtowing (almost literally) to foreign prince's and potentate's is disgusting. And not just disgusting, but stupid. He's the American president. He's the head of state. HE IS THEIR EQUAL. He is their equal on principal, because that's what Americans believe, so no American should give Elizabeth or Abdullah or Emperor What-his-face-sama anything but a brief nod. But he's also their equal as a matter of mere protocol. The Administration just looks dumb when they do this and I wish they would stop it.
12 November 2009
Um...Huh?
I enjoy reading Camille Paglia, who is also responsible for the post below this one. Her most recent Salon column viciously attacks Nancy Pelosi, national health care, Hillary Clinton and Richard Dawkins. What's not to like?
And then she says something like this:
And then she says something like this:
What mal-education goes on at killer prices at the elite schools! Skyrocketing tuition costs are legalized piracy. It's a national scandal, which the mainstream media has shamefully neglected. A few weeks ago, I was bemused to discover the bill from my first semester (fall 1964) at Harpur College of the State University of New York at Binghamton. The tuition was $200, which was offset by my state scholarship for that amount. My shared room was $150; linen was $6.50. Board at the cafeteria was $225. The physical education fee was $2, and there was an activity fee of $17.50 and a general college fee of $12.50. The grand total my parents owed for the semester was $413.50 -- for which I received the superb education that is still the basis of my professional life as a teacher and writer. If only the billions upon billions that this country has thrown down the drain in Iraq and Afghanistan had been redirected to education and healthcare!That someone as smart as Paglia doesn't understand that, not only have we thrown billions (probably trillions) of government dollars at higher education, but that those billions are the reason college costs so much today, is discouraging. Of course, Paglia, like me, feeds at the big ed/governmental trough, which can warp even the smartest observer.
The Second Time As Farce
Remember when the spat between Neil Young and Lynyrd Skynyrd was the battle between good and evil?
02 November 2009
Place Holder
I'm feeling some internal pressure building up to blog (or maybe even write) about how Harvard Business School destroyed American business. Basically, it's a story of two post-war trends. First, a belief in planning -- the more massive the better -- as the answer to every problem. Second, the decision of the large foundations -- Ford, Carnegie and Rockefeller -- to pour money into management education so long as it looked "social scientific."
It turned out that these trends left management a little up in the air. Isn't wasn't quite clear what we should be teaching. As a result, a lot of schools hired psychologists and sociologists and focused on what we call micro management (yes, really). Basically, this was human resource management. The problem is that it's never been possible to convincingly (i.e., scientifically) show that any particular hr technique leads to better firm performance. Basically, hr (also called organizational behavior) focused on reducing absenteeism and turnover while increasing what's called "organizational citizenship behavior, which is doing things for your employer that aren't, technically, your job. For example, the person who takes it upon herself to empty and clean the lunch room refrigerator is demonstrating OCB. Frankly, it's all sort of a mess of warring medium-term theories and we can't even say with certainty that employee satisfaction is a good thing for the company.
This left Harvard with a problem. HBS does not see itself as being in the business of churning out middle managers and vice presidents of human resources. It sees itself as being in the business of turning out CEOs whose value is in their ability to lead their company to sustained high returns. Before the focus on planning and scientification, they did this by hiring retired CEOs to come in and tell war stories to the graduating MBA students. This is probably as good a way of teaching strategic management as any, and survives today in the Harvard case study method. But it's very ad hoc and highly unscientific.
The other problem facing Harvard was that there's no obvious place for economists in this new management education. Economists are social scientists, but they assume that over time there are no meaningful firm level differences. All firms, in the long run, are fungible in economic theory. So it's not just that economists don't have much to say about the proper strategy to pursue to obtain sustained high returns, it's that they don't think that there can be any such thing.
All this came to a head in the person of a economics student at HBS name Michael Porter. Porter was studying IO (industrial organization) economics, which is the branch of economics that advises policy makers on how the legal environment should be structured to promote competition within industries, and thus avoid sustained high returns. Porter, true to his training, accepted that firms within the industry would, in the long term, all look identical and thus there was no point on wasting time on firm strategy. But he turned IO economics on its head and started educating executives on how to use lobbying and industry-level devices (e.g., trade associations and collective bargaining agreements to reduce competition within the industry and block entry, allowing all of the established firms in the industry to share sustained high returns. Basically, the Porter school (Porter, by the way, would object to this as an overly simplified summary of his views) teaches that the most important strategic decision made in business is about what industry to enter, after which there isn't much any individual firm can do to set itself apart from its competition. After that, all you can do is work together with your "competition" to try to rig the game at the industry level.
Porter's success at Harvard, and Harvard's success at educating CEOs, seems to me to explain much of what we've witnessed over the last few decades. (Porter published his early and most influential work in the late 70s and early 80s.) The co-dependent corporate state and the corrupt bargains struck by management, labor and government owe quite a bit to the presence, at the top of the corporation, of CEOs educated to think that management consists of rigging the game.
It turned out that these trends left management a little up in the air. Isn't wasn't quite clear what we should be teaching. As a result, a lot of schools hired psychologists and sociologists and focused on what we call micro management (yes, really). Basically, this was human resource management. The problem is that it's never been possible to convincingly (i.e., scientifically) show that any particular hr technique leads to better firm performance. Basically, hr (also called organizational behavior) focused on reducing absenteeism and turnover while increasing what's called "organizational citizenship behavior, which is doing things for your employer that aren't, technically, your job. For example, the person who takes it upon herself to empty and clean the lunch room refrigerator is demonstrating OCB. Frankly, it's all sort of a mess of warring medium-term theories and we can't even say with certainty that employee satisfaction is a good thing for the company.
This left Harvard with a problem. HBS does not see itself as being in the business of churning out middle managers and vice presidents of human resources. It sees itself as being in the business of turning out CEOs whose value is in their ability to lead their company to sustained high returns. Before the focus on planning and scientification, they did this by hiring retired CEOs to come in and tell war stories to the graduating MBA students. This is probably as good a way of teaching strategic management as any, and survives today in the Harvard case study method. But it's very ad hoc and highly unscientific.
The other problem facing Harvard was that there's no obvious place for economists in this new management education. Economists are social scientists, but they assume that over time there are no meaningful firm level differences. All firms, in the long run, are fungible in economic theory. So it's not just that economists don't have much to say about the proper strategy to pursue to obtain sustained high returns, it's that they don't think that there can be any such thing.
All this came to a head in the person of a economics student at HBS name Michael Porter. Porter was studying IO (industrial organization) economics, which is the branch of economics that advises policy makers on how the legal environment should be structured to promote competition within industries, and thus avoid sustained high returns. Porter, true to his training, accepted that firms within the industry would, in the long term, all look identical and thus there was no point on wasting time on firm strategy. But he turned IO economics on its head and started educating executives on how to use lobbying and industry-level devices (e.g., trade associations and collective bargaining agreements to reduce competition within the industry and block entry, allowing all of the established firms in the industry to share sustained high returns. Basically, the Porter school (Porter, by the way, would object to this as an overly simplified summary of his views) teaches that the most important strategic decision made in business is about what industry to enter, after which there isn't much any individual firm can do to set itself apart from its competition. After that, all you can do is work together with your "competition" to try to rig the game at the industry level.
Porter's success at Harvard, and Harvard's success at educating CEOs, seems to me to explain much of what we've witnessed over the last few decades. (Porter published his early and most influential work in the late 70s and early 80s.) The co-dependent corporate state and the corrupt bargains struck by management, labor and government owe quite a bit to the presence, at the top of the corporation, of CEOs educated to think that management consists of rigging the game.
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