Friday, January 24, 2020

Take This Job And Make Me Love It

A few short thoughts on work.

Time On The Clock:

While it is commonly discussed that employees today in many occupations get lots of time to take care of personal business as well as engage in leisure activities while “on the clock”, it is much less discussed how much time “off the clock” they spend engaged in work. The Animal Spirits Podcast (Everybody's Busy (EP.119)) brought this up recently. For many of us after hours and even being on vacation isn’t anywhere close to as disconnected as it used to be—the mobile phone and email has changed all of that. Of course being at work isn’t as dedicated as it used to be either, and the mobile phone has helped change that too. But perhaps the more things change the more they don’t. I assume this was not the norm. What about work golf--in bygone eras was leisure time more consumed by work functions? Or is that an example of leisure time on the job?

What Would You Do For A 10% Pay Cut?

Would you do it for a Klondike Bar? Seriously, while we commonly dream of wonderful jobs with super pay, perhaps we should think about a more realistic trade off. What new job would you trade in your current job for even though it paid in total compensation 10% less? It has to be a real type of job, not Reading-Comic-Books-in-Your-Pajamas Engineer, but it doesn’t have to be actually on offer. The idea is still to fantasize about pay out of proportion to the work. Think about it both with and without a cost-of-loving adjustment. Something in NYC or SAN Francisco might be on my list with the COLA, but there is almost no way something would be without it. Remember that a COLA is not entirely a housing cost adjustment—so maybe those places are still out. Teaching comes to mind for me. Writing does too. Running if not owning a small business might fit the bill. I would just have to forfeit the ownership upside so maybe no. 

Should We All Have Agents?

Thinking about pay, almost nobody likes asking for a pay raise. Jeffrey Tucker has some great advice along these lines. Let’s think about another solution: agents to do it for us. An astute thinker will immediately consider how unions were suppressed to play this role and how inconsistent it is for me to advocate such. Rest assured I am not. This is not about collective action. I am thinking that for business professionals what if all pay negotiations on the employee side were done by agents? 

One big obstacle would be the convoluted employment law structure we have created. Set that aside for the moment. Also, just consider this for certain high-skilled professionals. 

The advantages include less stress for both employees and supervisors, better relations (potentially) between employee and employer as now the agent bears some responsibility for the pay/work arrangement, and more efficient pay arrangements as an agent might be able to better negotiate for pay to match actual value added and an agent might be able to more openly explore options without the risk of burning bridges. 

Wednesday, January 22, 2020

A Radical Idea

I'm going to propose something that is completely crazy. . . Hear me out on this.

I think we should get the government completely out of the manufacturing and distribution of automobiles. We should fully and completely privatize autos.

I know, I know, this sounds crazy. But I truly think that the free market can best provide automobiles for people.

Oh, I hear your complaint, "But Steve, you're crazy. Many people cannot afford cars." As hard as might be to conceive, I believe the free market could do a much, much better job. I also think that we should give people the trust and respect and dignity by expecting that they can actually make the best choices for themselves and their families. 

It is my firm conviction that if we completely got the government out of the business of making and allocating cars, say over a five-year period, that we would get cars at a third the price if not better. After accounting for quality improvements and specialization of needs met, we might see prices effectively a tenth of what they are today.

Imagine a world where cars are not one size fits all. Imagine that we have various sized trucks and sport utility vehicles. Imagine we have sports cars and family cars; we have cars that are small and highly fuel-efficient. All this would be possible if we would let the free market help people figure out what is best for them. 

And yes I hear the objection: some people simply would not be able or be willing to get themselves an automobile. I hear the concern that some people won't make great choices in this regard. For those people we can come up with other solutions. But there is no reason to totally sacrifice all of our well-being just to try to address the very nuanced and isolated problems of particular cases.

For those people that simply can't or won't provide for their own automobile needs, we can provide a bus service; we can provide funds for taxi and ridesharing; we can help organize carpools.  We see the free market work so splendidly in so many other regards. We don't question its ability to provide for our needs in so many countless ways.

Just imagine if you will some alternate universe where we had a public school system. Imagine in this crazy world we decided that because some people won't make the best choices for their children and some people very truly cannot on their own come up with the resources to get their children's educational needs met, that we force everyone to pay for a government-run, public school system. Imagine how inefficient that would be. Imagine how large the cracks would be in that one-size-fits-all world.

Even if we allowed private school alternatives, we would still be mightily restraining the free market by forcing resources into this public school system. It would also be subject to powerful political influences that would shape the school in ways that were at best suboptimal and at worst abject failure. It is easy for us to see how having the government run education would not in any way address the needs of the most needy. It is easy to conceive of how there would be very large disparities in education between the Haves and the Have Nots that couldn't be rectified and corrected because the market process would be thwarted.

All I ask is that you think about this clearly and realize the same is true of automobiles.

P.S., Thanks to Don Boudreaux and Bryan Caplan for the inspiration.

Monday, January 20, 2020

What is Holding You Back?

Partial list of things I would do if I had more time and/or more money.

Each should be viewed independently. The substitution among them would either imply even more time/money is needed or they simply would not be done any more than they are currently as they compete for room in my basket of things.

Of course, more money almost always can buy more time, but I've chosen to focus here on those things for which time and/or money is the essential scarce resource.

[edited to add] These are in no particular order--just listed as they came to me.

The Things I Would Do More But For...
More Time
More Money
Sports (attending)
Sports (participating)
Food (quality)
Podcast Listening
Podcast Creating
Investing (private equity and other assets with consumption value)
Clothing (quality more so than quantity)
Gaming (video and board)
Wander, Tinker, and Explore

*Look for a future post on philanthropy in which I chastise the field and narrowly define that which passes the "Shazam Test" (TBD). Include in this category advocacy.

Saturday, January 18, 2020

My Plan for a Much Better College Football

Now that a season is behind us, let's dream of a better world. In this case I am limiting the thought experiment to the competitive structure of the college football game leaving aside the ever-important and (thankfully) increasingly popular discussions of allowing players to more fairly benefit financially from their contributions.

The three key features I would envision for the highest level of college football are:

  1. Create a true Power 5 - an elite 60-team top division of football comprised of FIVE 12-team conferences
  2. Continue the 12-game regular season - standardize 8 conference games and a maximum of 2 non-conference opponents outside of Power 5
  3. Crown a champion using an 8-team playoff  - conference title game winners get automatic playoff berth; 3 at large playoff teams determined by CFP committee (see below)
The CFP committee would be comprised of 25 members chosen by the conferences (each conference gets 5 members). The committee members' individual votes would be secret but the discussions in committee would be eventually fully released to the public after the season and playoff concluded. There would be no abstentions or exiting of the room when a member's affiliated school was discussed or any other charades to pretend there isn't bias. Rather, biases would be out in the open for all to examine and take into account. 

In regards to the establishment of a Power 5, we have to consider who is in and who is out. There are currently 130 FBS football teams (the highest level in college football). It is clear this is too many if we mean to group teams competitively. Just about any early-September match up reveals this outside of the handful of games designed to be competitive. Much of conference play itself reflects Have vs. Have Not. 

I would suggest a system where by teams bid to own a seat in the Power 5. The process might be something like the highest 60 bidders would pay the 60th highest bid amount plus 10% of their own bid amount into the pool. The bottom 70 teams would receive out of the pool 50% of their bid amount. Essentially, we would want to elicit from teams good information about how much they value football and how valuable football is to them. The remainder of the pool would be returned to the winning bidders in proportion to their bid size.

For example, say Texas is the top bidder at $200 million, Washington is the 60th bidder at $60 million, Kansas is the 61st bidder at one dollar less than $60 million, and Akron is the 130th bidder at $15 million. In that case Texas pays in $80 million ($60mil plus 10% of $200mil), Washington pays in $66 million, Kansas receives out $30 million (50% of ~$60mil bid), and Akron receives out $7.5 million.

Teams would be able to sell their seat with 50% of the sale price going to the selling team and the remaining 50% equally distributed to the other 59 seat-owning teams. Again, we want to know who should be in the Power 5 on an on-going basis and have a good incentive system to do so. Perhaps this is too capitalistic for American sports, which have always had a strong socialistic tendency as opposed to European sports where relegation rules soccer and revenue sharing and spending limits are less prevalent. But were dreamin' here . . .

A comment on the playoff to determine a champion every season: There exists a tension between a judgment-based approach (AP poll, BCS, CFP committee) and a merit-based approach (computer polls, conference champions feeding playoff). We can have a certain process of crowning a champion or a certain outcome of who is crowned. These two goals cannot both be realized in all cases. Usually there is a tradeoff between them. If we don't clearly define it ex ante, the ultimate criteria people want to use is fluid and subject to biases and inconsistencies. If we do clearly define the criteria out front, we tie our hands. Either approach has a degree of feature and bug. Remember before you condemn any outcome (actual or hypothetical) that we are dealing with sample sizes of 13 just to get into the playoff if we keep a 12-game season plus conference title game. For only the two teams in the championship game of an 8-team playoff do we even get to a 16-iteration test. We NEVER know as much about how good teams actually are as we think we do. In fact one could argue that in today's college football we know less than that implies given that so many games are nonsense gimmes against gravely inferior opponents. Because of this the only system I think we can justify is a structured conference feeder to a multi-team playoff. We can't possibly know who the best team is or even who the best teams are. The best we can do is define the process of earning a title and hope (with confidence) it matches up for who the best teams are most of the time.

Arrogance in Nostalgia

If you were teleported back in time 40 years, how easy and quaint does doing the same job you have now seem at first blush

Assume you don’t know anything specific about the then future to come—you just are used to what the world is like today. Very specifically you are used to that job as it is today. 

I’m sure if you thought about it, you’d realize the stress, monotony, slowness, paperwork, and general frictions would be unbearable. If your job didn’t exist 40-years ago, think of the closest analogue. Remember job doesn’t mean industry. 

Consider it along these dimensions: 
  • tools you work with
  • general work environment
  • your job's status and prestige in the world
  • competition for your job
  • workload and hours on the clock
  • and prospects for the future.

Tuesday, January 14, 2020

Why You Should Sometimes Value Uncertainty

Do you always prefer certainty over uncertainty?

Are you sure?

Uncertainty brings value. There is value to me in charities being uncertain how much money I make and value to me in friends being uncertain how little I make. But there is also value in the uncertainty for each of those groups as well. Charities can play off my desire to look good to my friends while my friends can imagine my generosity is not a big sacrifice.

Perhaps a hypothetical example will convince you. Imagine we are sitting at breakfast and I get up to get us both more coffee. I pick up your cup with my right hand and my cup with my left hand before leaving the table for the kitchen. When I get to the coffee, I put down both cups, pick up the carafe, and fill each cup. I soon return with each cup, but I have not paid attention to see whose cup is in which hand. We are in a state of uncertainty. I can take away this uncertainty very easy--I can spit into each cup and remove all doubt that you will receive "my" cup rather than your own. 

Sunday, January 12, 2020

52 Things I Learned in 2019

I would like to think that I learned more than 52 things last year. Nevertheless, here are 52 notable ones.

1. "The British Empire At Its Territorial Peak Covered Nearly The Same Area As The Moon".

2. Manhattan reached its peak population about 100 years ago.

3. The Millennial Generation exhibits preferences for consumption that are very similar to previous generations. This includes a demand for cars, work preferences, and where to live (suburbs versus the high-density urban core).

4. Army ants "commit" suicide.

5. A quantum physics experiment suggests that objective reality doesn't exist. (categorize my "learning" this as superficial at best)

6. The average state prisoner's time served in prison is surprisingly low.

7. The asteroid that about sixty-six million years ago struck the Yucat√°n peninsula killed over 99.9999% of all living things and unleashed the energy of about 1,000,000,000 Hiroshima bombs.

8. "The vast majority of roads in Sweden and Finland are operated by the private sector and maintained by local communities".

9. Speaking of socialist paradises, Sweden sharply rejected socialism decades ago in favor of capitalism.

10. All perching bird species, about 60% of all birds, may have come from Australia.

11. "Books don't work".

12. Pork Bellies Futures stopped being traded in 2011. Better tell The Dukes.

13. Girl's comparative advantage in reading can explain the math gender gap. I learned a lot from Alex Tabarrok this past year.

14. Adding to the number of whales in the oceans could significantly help reduce CO2.

15. Speaking of whales, the Soviet Union illegally killed over 180,000 whales simply to say they did it.

16. It is overall faster, safer, and more efficient for people to stand rather than walk up the escalator.

17. A great use case for blockchain is insurance markets.

18. Total energy use in the United States is essentially flat for the last decade. And this amazing trend is true of many other resources despite the economy bring much larger today.

19. Mathematicians actually have a system to rate how "crackpot" a theory is.

20. I knew it is false that we only use about 10% of our brain, but I did not know a lot of these neuromyths including that it is false that Individual learners show preferences for the mode in which they receive information (e.g., visual, auditory, kinesthetic).

21. There are perhaps "600 new academic philosophy articles and books written per week in the English-speaking world, or over 30,000 a year".

22. Breathalyzers should not be trusted.

23. Rod Stewart is into model trains.

24. Injuries should be moved (not rested), allowed inflammation (don't ice)--RICE is a myth. More here.

25. You CAN yell "FIRE!" in a crowded theater. This has never been a First Amendment exception in the law.

26. Converting "dog years" to "human years" is not dog age in years times seven, but there is a way to do the conversion.

27. Pasta should be made starting in cold water--not dropping it into boiling water like so many recipe boxes say.

28. The Eiffel Tower, the tallest building in the world for more than 40 years, was built in 2 years and 2 months at a 2019 cost of only about $40 million. There are more amazing speeds of things being brought to life at the link.

29. About 30,000 people each day escape poverty.

30. Turkeys (birds) are named after the country.

31. The main benefit of circumcision is a potentially significant reduction in the risk of penile cancer.

32. The magnitude of personality differences between males and females is large and significant.

33. Sydney, Australia has more foreign-born residents than all of mainland China.

34. Germany owns no nuclear weapons itself, but it does have U.S. nukes that it can use at a moment's notice.

35. The Pilgrims' first encounter with a Native American was him asking if they had any beer.

36. The cost of a standard Thanksgiving dinner was virtually unchanged from 2018 to 2019 rising just one penny.

37. Blind people can hear at an extraordinarily high speed.

38. U.S. life expectancy peaked in 2014, and the death rate of middle-aged Americans has risen for three straight years.

39. Andrew Garrido learned to play the piano without a piano and is now at one of the world’s leading conservatoires.

40. The finest chocolate should be eaten by letting it melt in your mouth never chewing.

41. The placebo effect works even when you tell people they are using a placebo.

42. The nuclear ban in Japan following Fukushima killed more people due to higher electricity prices than the nuclear accident itself.

43. It is a myth that Van Gogh only sold one painting in his lifetime.

44. "Take Me Out To The Ballgame" is about a single woman who loves baseball and is bucking societal norms. As such, it should be celebrated for its pro-feminist message.

45. It is NOT true that failing to take an entire prescribed antibiotic course risks antibiotic-resistance in bacteria.

46. Brazil has more than 60,000 murders per year--more than a good share of the rest of the world combined.

47. The average age for founding entrepreneurs at companies that go on to hire at least one employee is 41.9.

48. World War I was not the deadliest war up to that point--the Taiping Rebellion some 50-years before it was much worse.

49. In 2003 a group of young artists built a secret apartment inside a mall in Providence, RI and lived in it for days at a time for years.

50. Most modern practices and rules of dentistry have very weak to no scientific basis.

51. Hundreds of American cities are (thankfully) abandoning recycling efforts.

52. And finally:
I'm already well into learning things in 2020. I hope you are too!

Saturday, January 11, 2020

Disease Diagnosis - 2019 New Year's Resolution fulfillment

With the unintentional help of Alex Tabarrok and Eric Helland, I fulfilled my annual New Year's Resolution to change my mind on something. Specifically, I changed my mind:
That the runaway cost increases in higher education over the past several decades were simply due to third-party funding (spending other-people's money by the education-industrial complex (Big Chalkboard)). It turns out there is a much more elegant, though less tribally satisfying, answer: the Baumol Effect (aka, Cost Disease).
If relative productivity doesn't rise in a sector for which demand is rising, prices in that sector must rise relative to the sectors for which productivity is rising. This elegant explanation applies to health spending as well. Here is Tabarrok on the prototypical example:
The Baumol effect is easy to explain but difficult to grasp. In 1826, when Beethoven’s String Quartet No. 14 was first played, it took four people 40 minutes to produce a performance. In 2010, it still took four people 40 minutes to produce a performance. Stated differently, in the nearly 200 years between 1826 and 2010, there was no growth in string quartet labor productivity. In 1826 it took 2.66 labor hours to produce one unit of output, and it took 2.66 labor hours to produce one unit of output in 2010.
Fortunately, most other sectors of the economy have experienced substantial growth in labor productivity since 1826. We can measure growth in labor productivity in the economy as a whole by looking at the growth in real wages. In 1826 the average hourly wage for a production worker was $1.14. In 2010 the average hourly wage for a production worker was $26.44, approximately 23 times higher in real (inflation-adjusted) terms. Growth in average labor productivity has a surprising implication: it makes the output of slow productivity-growth sectors (relatively) more expensive. In 1826, the average wage of $1.14 meant that the 2.66 hours needed to produce a performance of Beethoven’s String Quartet No. 14 had an opportunity cost of just $3.02. At a wage of $26.44, the 2.66 hours of labor in music production had an opportunity cost of $70.33. Thus, in 2010 it was 23 times (70.33/3.02) more expensive to produce a performance of Beethoven’s String Quartet No. 14 than in 1826. In other words, one had to give up more other goods and services to produce a music performance in 2010 than one did in 1826. Why? Simply because in 2010, society was better at producing other goods and services than in 1826.
The 23 times increase in the relative price of the string quartet is the driving force of Baumol’s cost disease. The focus on relative prices tells us that the cost disease is misnamed. The cost disease is not a disease but a blessing. To be sure, it would be better if productivity increased in all industries, but that is just to say that more is better. There is nothing negative about productivity growth, even if it is unbalanced.
And this has very interesting implications. Tabarrok again:
  • The Baumol effect predicts that more spending will be accompanied by no increase in quality.
  • The Baumol effect predicts that the increase in the relative price of the low productivity sector will be fastest when the economy is booming. i.e. the cost “disease” will be at its worst when the economy is most healthy!
  • The Baumol effect cleanly resolves the mystery of higher prices accompanied by higher quantity demanded.
Note that this does not change my view that we have inappropriately encouraged too many people to go to college and we have pushed and pulled too many resources into that chasm. Other-people's money and wishful thinking are still in play (as this discussion with Bryan Caplan indicates). But it seems they are only contributing and potentially secondary factors.

See here for lots of brief blog posts. See here, here, and here for very good podcasts on the study.