Category: Books

A Critical Mass Need to Be Motivated by the Telos of a Practice

(p. 227) The fact that some people are led into a practice in pursuit of goals that are external to the practice– money, fame, or what have you– need pose no threat to the integrity of the practice itself. So long as those goals do not penetrate the practice at all levels, those in pursuit of external goals will eventually drop out or be left behind or change their goals or be discredited by those in pursuit of a practice’s proper goals. However, if external goals do penetrate the practice at all levels, it becomes vulnerable to corruption. Practices are always developing and changing, and the direction that development takes will be determined by participants in the practice. Good practices encourage wise practitioners who in turn will care for the future of the practice.

Source:
Schwartz, Barry, and Kenneth Sharpe. Practical Wisdom: The Right Way to Do the Right Thing. New York: Riverhead Books, 2010.

A somewhat similar point is made in:
Diamond, Arthur M., Jr. “How Institutional Incentives and Constraints Affect the Progress of Science.” Prometheus 26, no. 3 (Sept. 2008): 231-239.

Tesla Cars Are Built on Government Subsidies

(p. A13) Nowhere in Mr. Vance’s book, . . . , does the figure $7,500 appear–the direct taxpayer rebate to each U.S. buyer of Mr. Musk’s car. You wouldn’t know that 10% of all Model S cars have been sold in Norway–though Tesla’s own 10-K lists the possible loss of generous Norwegian tax benefits as a substantial risk to the company.
Barely developed in passing is that Tesla likely might not exist without a former State Department official whom Mr. Musk hired to explore “what types of tax credits and rebates Tesla might be able to drum up around its electric vehicles,” which eventually would include a $465 million government-backed loan.
And how Tesla came by its ex-Toyota factory in California “for free,” via a “string of fortunate turns” that allowed Tesla to float its IPO a few weeks later, is just a thing that happens in Mr. Vance’s book, not the full-bore political intrigue it actually was.
The fact is, Mr. Musk has yet to show that Tesla’s stock market value (currently $32 billion) is anything but a modest fraction of the discounted value of its expected future subsidies. In 2017, he plans to introduce his Model 3, a $35,000 car for the middle class. He expects to sell hundreds of thousands a year. Somehow we doubt he intends to make it easy for politicians to whip away the $7,500 tax credit just when somebody besides the rich can benefit from it–in which case the annual gift from taxpayers will quickly mount to several billion dollars each year.
Mother Jones, in a long piece about what Mr. Musk owes the taxpayer, suggested the wunderkind could be a “bit more grateful, a bit more humble.” Unmentioned was the shaky underpinning of this largess. Even today’s politicized climate modeling allows the possibility that climate sensitivity to carbon dioxide is far less than would justify incurring major expense to change the energy infrastructure of the world (and you certainly wouldn’t begin with luxury cars). Were this understanding to become widespread, the subliminal hum of government favoritism could overnight become Tesla’s biggest liability.

For the full commentary, see:
HOLMAN W. JENKINS, JR. “BUSINESS WORLD; The Savior Elon Musk; Tesla’s impresario is right about one thing: Humanity’s preservation is a legitimate government interest.” The Wall Street Journal (Sat., May 30, 2015): A13.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date May 29, 2015.)

The book discussed in the commentary is:
Vance, Ashlee. Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future. New York: Ecco, 2015.

The Mother Jones article discussing government subsidies for Musk’s Tesla, is:
Harkinson, Josh. “Free Ride.” Mother Jones 38, no. 5 (Sept./Oct. 2013): 20-25.

George Bailey Wanted to Make Money, But He Wanted to Do More than Just Make Money

(p. 219) Actually, it’s not so strange. The norm for bankers was never just moneymaking, any more than it was for doctors or lawyers. Bankers made a livelihood, often quite a good one, by serving their clients– the depositors and borrowers– and the communities in which they worked. But traditionally, the aim of banking– even if sometimes honored only in the breach– was service, not just moneymaking.
In the movie It’s a Wonderful Life, James Stewart plays George Bailey, a small-town banker faced with a run on the bank– a liquidity crisis. When the townspeople rush into the bank to withdraw their money, Bailey tells them, “You’re thinking of this place all wrong. As if I had the money back in a safe. The money’s not here.” He goes on. “Your money’s in Joe’s house. Right next to yours. And in the Kennedy house, and Mrs. Backlin’s house, and a hundred others. Why, you’re lending them the money to build, and they’re going to pay you back, as best they can…. What are you going to do, foreclose on them?”
No, says George Bailey, “we’ve got to stick together. We’ve got to have faith in one another.” Fail to stick together, and the community will be ruined. Bailey took all the money he could get his hands on and gave it to his depositors to help see them through the crisis. Of course, George Bailey was interested in making money, but money was not the only point of what Bailey did.
Relying on a Hollywood script to provide evidence of good bankers is at some level absurd, but it does indicate something valuable about society’s expectations regarding the role of bankers. The norm for a “good banker” throughout most of the twentieth century was in fact someone who was trustworthy and who served the community, who was responsible to clients, and who took an interest in them.

Source:
Schwartz, Barry, and Kenneth Sharpe. Practical Wisdom: The Right Way to Do the Right Thing. New York: Riverhead Books, 2010.
(Note: italics in original.)

Institutional Improvements Can Sometimes Be Designed, Rather than Only Spontaneous

A distinguished school of libertarian and neo-Austrian economic thought argues, following F.A. Hayek, that institutional improvements only arise from spontaneous order, and never from conscious design. There is something to their argument, but the designs of Alvin Roth provide counter-examples.

(p. A13) Mr. Roth’s work has been to discover the most efficient and equitable methods of matching and implement them in the world. He writes with verve and style, describing many market malfunctions–from aboriginal tribes in Australia arranging marriages for children not yet born to judges bending every rule in the book to hire law clerks years before they have graduated from law school–and how we ought to think about them.

Mr. Roth’s approach contrasts with standard debates over free markets versus government regulation. We want markets to be thick, quick, timely and trustworthy, but without careful design markets can become thin, slow, ill-timed and dangerous for the honest. The solution to these problems is unlikely to be regulation legislated from on high. Instead what Mr. Roth practices is nuanced market design created mostly by market participants. Mr. Roth found, for example, that even though the problems in the market for gastroenterologists and law clerks looked the same (hiring started years before schooling ended), the solutions had to be subtly different because of differences in culture, history and norms.

For the full review, see:
ALEX TABARROK. “BOOKSHELF; The Designer of Markets; In some markets, price isn’t the determining factor. You can choose to go to Harvard, but Harvard has to choose to accept you first.” The Wall Street Journal (Tues., JUNE 16, 2015): A13.
(Note: ellipses added.)
(Note: the online version of the review has the date JUNE 15, 2015, and has the title “BOOKSHELF; Matchmaker, Make Me a Market; In some markets, price isn’t the determining factor. You can choose to go to Harvard, but Harvard has to choose to accept you first.”)

The book under review is:
Roth, Alvin E. Who Gets What — and Why: The New Economics of Matchmaking and Market Design. New York: Houghton Mifflin Harcourt Publishing Co., 2015.

To Maintain Enrollments Professors Are Often Pressured to Inflate Grades

(p. 198) Dedicated college professors demand that students do the difficult reading and writing necessary to become skillful in understanding the complexities of the world. But the university distributes resources like research funds and new faculty positions based in part on how many students populate classes and how positively students evaluate courses. How much do you simplify to keep up enrollment and keep resources flowing into your department?

Source:
Schwartz, Barry, and Kenneth Sharpe. Practical Wisdom: The Right Way to Do the Right Thing. New York: Riverhead Books, 2010.

“Nimble” Account of the Creative Destruction of the Music Industry

(p. C1) Stephen Witt’s nimble new book, “How Music Got Free,” is the richest explanation to date about how the arrival of the MP3 upended almost everything about how music is distributed, consumed and stored. It’s a story you may think you know, but Mr. Witt brings fresh reporting to bear, and complicates things in terrific ways.
He pushes past Napster (Sean Fanning, dorm room, lawsuits) and goes deep on the German audio engineers who, drawing on decades of research into how the ear works, spent years developing the MP3 only to almost see it nearly become the Betamax to another group’s VHS.
. . .
(p. C6) Even better, he has found the man — a manager at a CD factory in small-town North Carolina — who over eight years leaked nearly 2,000 albums before their release, including some of the best-known rap albums of all time. He smuggled most of them out behind an oversized belt buckle before ripping them and putting them online.
Mr. Witt refers to this winsome if somewhat hapless manager, Dell Glover, as “the most fearsome digital pirate of them all.”
. . .
Into these two narratives Mr. Witt inserts a third, the story of Doug Morris, who ran the Universal Music Group from 1995 to 2011. At some points you wonder if Mr. Morris has been introduced just so the author can have sick fun with him.
The German inventors and Mr. Glover operate as if they unwittingly have voodoo dolls of this man. Every time they make an advance, and prick the music industry, there’s a jump to Mr. Morris for a reaction shot, screaming in his corner office.
. . .
Mr. Witt covers a lot of terrain in “How Music Got Free” without ever becoming bogged down in one place for long. He is knowledgeable about intellectual property issues. In finding his reporting threads, he doesn’t miss the big picture: He gives us a loge seat to the entire digital music revolution.
He is especially good on the arrival of iTunes and the iPod.

For the full review, see:
DWIGHT GARNER. “Books of The Times; That Download Has a Back Story.” The New York Times (Tues., JUNE 16, 2015): C1 & C6.
(Note: ellipses added.)
(Note: the online version of the review has the date JUNE 15, 2015, and has the title “Books of The Times; Review: In ‘How Music Got Free,’ Stephen Witt Details an Industry Sea Change.”)

The book under review is:
Witt, Stephen. How Music Got Free: The End of an Industry, the Turn of the Century, and the Patient Zero of Piracy. New York: Viking, 2015.

Some Learn in Order to Gain Competence, Others Learn to Gain Direct Rewards

(p. 184) Think about two different tennis pros giving you tennis lessons. The first pro says things like “good shot” and “good swing” all the time, to encourage you. The second one says “good swing” only when you make a good swing. If hearing “good swing” gives you a hedonic charge, then you will prefer the first instructor to the second (more gold stars, more encouragement). But if what gives you the charge is getting better at tennis, you will prefer the second instructor to the first. That’s because the second instructor’s feedback to you is much more informative than the first one’s. You’re not after “good swing” gold stars; you’re after a better tennis game. So feedback is essential to the development of a complex skill– whether it be empathy or a strong forehand. But he-(p. 185)donic feedback, in the form of incentives, is not. It may even be counterproductive, as in the case of instructor number one.
In schools, tests provide an extremely important source of feedback– of information– to the teacher and the student– about how things are going. Tests, or something like them, often offer the best way to diagnose problems and correct them. So tests as a source of information are good and important. The problem is that in addition to providing information, tests provide outcomes that students, and their parents, and their teachers, want and like– outcomes like approval, prizes, awards, honors, special privileges, and school ratings. The hedonic character of these outcomes is what gets students and teachers to orient their work to passing the tests, and to regard what they do in the classroom as merely instrumental, as merely a means to various rewarding ends.
There are important differences between children oriented to getting A’s and children oriented to learning from their mistakes. Psychologist Carol Dweck and her associates have spent thirty years studying the incentive systems that govern the learning of children throughout the educational process. They have uncovered two fundamentally different approaches to learning in kids that can often lead to profound differences in how well kids learn. One group of kids has what Dweck has called performance goals; the other group has what she has called mastery goals. Children with performance goals are primarily interested in gaining favorable judgments of their competence. They want to do well on tests. They want social approval. They want awards. Children with mastery goals are primarily interested in increasing their competence rather than in demonstrating it. They want to encounter things that they can’t do and to learn from their failures. As Dweck puts it, performance-oriented children want to prove their ability, while mastery-oriented children want to improve their ability. Children with performance goals avoid challenges. They prefer tasks that are well within the range of their ability. Children with mastery goals seek challenges. They prefer tasks that strain the limits of their ability. Children with performance goals respond to failure by giving up. Children (p. 186) with mastery goals respond to failure by working harder. Children with performance goals take failure as a sign of their inadequacy and come to view the tasks at which they fail with a mixture of anxiety, boredom, and anger. Children with mastery goals take failure as a sign that their efforts, and not they, are inadequate, and they often come to view the tasks at which they fail with the kind of relish that comes when you encounter a worthy challenge.

Source:
Schwartz, Barry, and Kenneth Sharpe. Practical Wisdom: The Right Way to Do the Right Thing. New York: Riverhead Books, 2010.
(Note: italics in original.)

Woodrow Wilson Violated Free Speech

I viewed part of a CSPAN presentation on June 27, 2015 by Margaret MacMillan, based on her book The War that Ended Peace: The Road to 1914. (It was probably a rebroadcast.) The presentation seemed serious, well-informed, and judicious in trying to be fair and balanced to Woodrow Wilson. MacMillan is more sympathetic to Wilson than I am, but she made it quite clear that he enacted serious violations of free speech.

MacMillan’s book is:
MacMillan, Margaret. The War That Ended Peace: The Road to 1914. New York: Random House, 2013.

Should Students Read to Learn, or to Get Gold Stars?

(p. 181) When a consultant tells teachers to concentrate on the bubble kids and ignore the kids who are most in need of help, something has gone wrong. And if gold stars turn reading from an adventure into a job, something has gone wrong. But what? The typical response to examples like these is not to blame incentives but to blame “dumb” incentives. The presumption is that “smart” incentives, or at least “smarter” incentives, will do the job.
This is a mistake. In many situations, for many activities, no incentives are smart enough. Teachers like Deborah Ball and Mrs. Dewey spend their day figuring out how much time to spend with each student and how to tailor what they teach to each student’s particular strengths and weaknesses. They are continually balancing conflicting aims– to treat all students equally, to give the struggling students more time, to energize and inspire the gifted students. Along comes the incentive to bring up the school’s test scores, and all the nuance and subtlety of Mrs. Dewey’s moment-by-moment decisions go out the window. And what “smarter” incentive is going to replace judgment in making sensitive choices in a complex and changing context like a classroom?
Or what, exactly, would you incentivize to encourage hospital custodian Luke to seek the kind and empathetic response to the distraught father who wanted his son’s room cleaned? Incentives are always based on meeting some specific, measurable criterion: read more books; raise more test scores; wash more floors. Left to his own devices, Luke asks himself, “What can I do to be caring?” and because he has moral skill, he comes up with a good answer. With “caring” incentivized, Luke (p. 182) might ask, “What do I have to do to get a raise or a bonus?” “Reclean the room” might be a right answer. “Look sympathetic” might be a right answer. “Be caring” surely is not. Aristotle thought that good
people do the right thing because it is the right thing. Doing the right thing because it’s the right thing unleashes the nuance, flexibility, and improvisation that moral challenges demand and moral skill enables. Doing the right thing for pay shuts down the nuance and flexibility.

Source:
Schwartz, Barry, and Kenneth Sharpe. Practical Wisdom: The Right Way to Do the Right Thing. New York: Riverhead Books, 2010.
(Note: italics in original.)

Conflict-of-Interest Politics Reduces Medical Collaboration with Industry and Slows Down Cures

(p. A15) The reality of modern medicine, Dr. Stossel argues, is that private industry is the engine of innovation, with productivity and new advances dependent on relationships between commercial interests and academic and research medicine. Companies, not universities or research with federal funding, run 85% of the medical-products pipeline. “We all inevitably have conflicts all the time. You only stop having conflicts when you’re dead. The only conflict-free situation is the grave,” he says.
The pursuit of the illusion “to be pure, to be priestly, to be supposedly uncorrupted by the profit motive,” Dr. Stossel says, often has the effect of banishing or else discounting the expertise of the people who know the most but whose integrity and objectivity are allegedly compromised by industry ties. What ought to matter more, he adds, is simply “Results. Competence. LeBron James–it’s putting the ball in the basket.”
. . .
Zero-tolerance conflict-of-interest editorial policies, Dr. Stossel says, suppress and distort debate by withholding positions of authority. “If you have an industry connection, if you really understand the topic, you can’t say anything,” he notes. “If you’re an editor, and you have an ideological predilection, you have all this power and you can say anything you want.”
Dr. Stossel is equally scorching about the drug and device companies and their trade organizations, which he says drift around like Rodney Dangerfield, complaining they don’t get no respect. They prefer not to be confrontational, they rarely fight back against the conflict-of-interest scolds. “They’re laying responsibility by default to the patients, the people who actually have a first-hand connection to whatever the disease is: ‘Goddammit, I want a cure.’ ”
Which is the larger point: The to-and-fro between publications not meant for lay readers can seem arcane, but the product of conflict-of-interest politics is fewer cures and new therapies. The predisposition against selling out to industry is pervasive, while reputations can be ruined overnight when researchers find themselves in a page-one exposé or hauled before Congress, even if there is no evidence of misconduct or bias.
Better, then, to conform in the cloisters than risk offending the conflict-of-interest orthodoxy–or translating some basic-research insight into a new treatment for patients. Dr. Rosenbaum reports: “The result is a stifling of honest discourse and potential discouragement of productive collaborations. . . . More strikingly, some of the young, talented physician-investigators I spoke with expressed worry about how any industry relationship would affect their careers.”
. . .
‘Pharmaphobia”–part polemic, part analytic investigation, a history of medicine and a memoir–deserves a wide readership. . . . “I’d rather get a conversation started with people who are smarter than I am about how complicated and granular and nuanced and unpredictable discovery is. Let’s not slow it down.”

For the full interview, see:
JOSEPH RAGO. “The Weekend Interview with Tom Stossel; A Cure for ‘Conflict of Interest’ Mania; A crusading physician says medical progress is hampered by a holier-than-thou ‘moralistic bullying.’.” The Wall Street Journal (Sat., June 27, 2015): A15.
(Note: ellipses added.)
(Note: the online version of the interview has the date June 26, 2015, and has the title “A Cure for ‘Conflict of Interest’ Mania; A crusading physician says medical progress is hampered by a holier-than-thou ‘moralistic bullying.’.”)

The book mentioned in the interview, is:
Stossel, Thomas P. Pharmaphobia: How the Conflict of Interest Myth Undermines American Medical Innovation. Lanham, MS: Rowman & Littlefield Publishers, 2015.

Intel Entrepreneur Gordon Moore Was “Introverted”

(p. A11) “In the world of the silicon microchip,” [Thackray, Brock and Jones] write, “Moore was a master strategist and risk taker. Even so, he was not especially a self-starter.” Mr. Moore possesses many of the stereotypical character traits of an introverted Ph.D. chemist: working for hours on his own, avoiding small talk and favoring laconic statements. Indeed, as a manager he often avoided conflict, even when a colleague’s errors persisted in plain sight.
. . .
After two leadership changes at Fairchild in 1967 and 1968, which unsettled its talented employees, Mr. Moore departed to help found a new firm, Intel, with a fellow Fairchild engineer, the charming and brilliant Robert Noyce (another of the “traitorous eight”). They also brought along a younger colleague, the confrontational and hyper-energetic Andy Grove. Each one of the famous triumvirate would serve as CEO at some point over the next three decades.

For the full review, see:
SHANE GREENSTEIN. “BOOKSHELF; Silicon Valley’s Lawmaker; What became Moore’s law first emerged in a 1965 article modestly titled ‘Cramming More Components Onto Integrated Circuits’.” The Wall Street Journal (Tues., May 26, 2015): A11.
(Note: ellipsis, and bracketed names, added.)
(Note: the online version of the review has the date May 25, 2015.)

The book under review is:
Thackray, Arnold, David C. Brock, and Rachel Jones. Moore’s Law: The Life of Gordon Moore, Silicon Valley’s Quiet Revolutionary. New York: Basic Books, 2015.