Archive for the ‘Sean Safford’ Category
I don’t envy these people who are tasked with coming up with a memorial quote that is simultaneously pithy and meaningful. Hendrick Hertzberg, among others, is criticizing the architect of Martin Luther King’s memorial for failing to take the context of King’s speech into account when he decided to use this truncated quote on the side of King’s statue:
If you read the sermon, it becomes clear that, not only did the architect commit a hatched job, the paragraph he pulled actually contradicts the whole point King was trying to get across.
King’s point was to rail against the “drum major instinct”; the drive in each of us that says “hey look at me!” But then, toward the end, he sort of makes a verbal personal foul and says: if you want to call me a drum major then at least say I am doing it for the good of mankind because that is not… er… quite as megalomaniacal as… uh… I mean… anyway back to what I was saying….
My take is that the quote came from a moment in which King started down an unfortunate verbal path and was trying to get out of it to get back to his main point. Oops.
Last April, Caroline Alexander brought up the same question of context regarding the use of a quote on the 9/11 Memorial. In that case, the quote “No day shall erase you from the memory of time,” actually came from a longer sentence in which the poet Virgil was lauding his own role as a poet recording history in venerating the memory of an amorous pair of soldiers who died in midst of battle. Virgil is basically saying: it’s a good thing I know what you two were up to, because otherwise you would die in obscurity like every other piker… or something like that.
What is the common thread? Read the rest of this entry »
An incisive rebuttal laying
bear bare the overdetermined intersection of social identity theory, categorization, hierarchy and agency within organizations. Bravo.
Clearly, organizational theory would be better off if it had more bears.
In these challenging times, we want the best and brightest to join and make a difference. But these are also times where all of us are called on to make some sacrifices. And I’m asking civil servants to do what they’ve always done — play their part.
Anyone looking at either the politics or the substance of our America’s budget deficits recognizes that something should be done about the federal budget. But is asking 2.1 million workers to shoulder the burden the right approach? And even if it is, is doing it in an “across the board” freeze, the right way to go? No it’s not. Here’s why. Read the rest of this entry »
Network analysts can roughly be divided into two camps: those who look at the “whole” network and those who concentrate on individuals and their “local” set of network connections. One problem often raised about network analysis is that the two camps have relatively little to do with each other.
Indulging in my side interest in urban transportation planning, I came across a discussion of the different ways that people navigate physical space. It got me thinking about parallels to the way people navigate social space and about how different people approach the question of social “navigation”. It speaks to this bridging of the two network camps.
First, some terminology:
Humans have two methods of navigation. Spatial navigators can construct maps in their heads as they experience a place, and also tend to be good at using maps as navigational aids. Narrative navigators navigate by creating or following verbal directions. For spatial navigators, the answer to the question where? is a position in mapped space. For narrative navigators, the answer to where? is a story about how to get there. Obviously, this is a spectrum; many of us are in the middle with partial capabilities in both directions.
The same concept, put differently:
[Giuseppe] Iaria and McGill University researcher Véronique Bohbot demonstrated in a study they published six years ago that our mapping strategies fall into two basic categories. One is a spatial strategy that involves learning the relationships between various landmarks—creating a map in your head, in other words, that shows where the flower shop is in relationship to the movie theater and to the Wendy’s. The other is a stimulus-response approach that encodes specific routes by memorizing a series of cues, as in: Get off the bus when you see the glass skyscraper, then walk toward the big park.
Lets put this in terms of social structural navigation. Say you have a hipster friend who wants to go on a date with a Polish kid who the friend has been eying for a while, but doesn’t see a route in. Plenty of people think about social structure in the same way that roughly half of the population thinks about physical space; that is in narrative terms: “So, hipster from Williamsburg, you want to figure out how to ask that Polish kid out on a date? Well, Pauline used to own the store with Mitch, but they split up and he started his own store. I think that kid works for Mitch and I am going to dinner with Pauline so I can see if she’d ask Mitch to make an introduction.”
Myself, however, I’m a spatial navigator when it comes to physical geography. When I ask my phone for directions, it initially pops up with a series of “turn left here, go right there” instructions which I ignore completely as I head straight for the map. I then assess the whole map and adjust the route the computer gives me in light of information I might have, for instance, that I know there’s a really great cupcake shop on a slightly altered route. In fact, I do this in a lot of areas involving instructions: for instance, I tend to improvise based on recipes I look up rather than following exactly what the cook-book says.
And, not surprisingly, I do it too when it comes to social space. Rather than specific individuals and their connections, I tend to think in terms of cliques and the key people within those cliques. Carrying on the example from before: “Mitch and Pauline don’t talk any more. No love lost in that breakup. But, I’ve noticed that Mitch has a few Polish kids who are here for the summer working for him. I don’t know if this kid is one of them, but I see a bunch of them downing vodka shots at the Pig Wednesday night. That’s when you and the rest of the hipsters are normally drinking G&Ts at the Governor Bradford. I can’t guarantee it, but you might want to consider boogieing across the street. I bet he’ll be there.”
Both approaches will get you to the destination, but the cognitive map that gets you there is different.
This distinction has the potential to be very useful both for how we teach network concepts and also for pointing toward research directions attempting to bridge individual and network levels of analysis. Read the rest of this entry »
I supported the stimulus package, but agree with the likes of Ryan Avent that the problem with Obama’s stimulus was that it was not only poorly executed, but that that execution is rooted in a systemic problem:
A country committed to stimulus will take care to prepare to use stimulus. It will construct a system of automatic stabilizers that provide immediate counter-cyclical aid as an economy deteriorates. It may have a backlog of needed infrastructure projects at the ready, which can be rushed into action as conditions warrant. A country generally skeptical of stimulus, on the other hand, will reach for it in an emergency and find that it is unprepared. Automatic stabilizers will be too small and will require constant Congressional maintenance. Too few projects will be shovel-ready. The need to legislate will lead to inclusion of pork items that aren’t particularly stimulative. Stimulus will be less targeted, timely, and effective as a result.
My take for some time has been that Larry Summers and Tim Geithner are no more pro-Keynesian than Greg Mankiw or other detractors of a stimulus approach. And, just as it was a bad idea to have a government with a distaste for government running major a government operation like the response to Katrina (i.e., G.W.B.), it has been a problem having economists running the response to the crisis who are implementing a Keynesian approach while quietly holding their noses. Which brings me to Martin Wolf’s insightful post on how the politics of supply-side economics have influenced modern thinking both among Democrats and Republicans: Read the rest of this entry »
Robert Putnam and Jeb Bush have an editorial in the Washington Post today arguing for more coherent — and embracing — approach to immigration. They draw on a theme I also touch on in my book.
A century ago, religious, civic and business groups and government provided classes in English and citizenship. Historian Thomas P. Vadasz found that in Bethlehem, Pa., a thriving town of about 20,000, roughly two-thirds of whom were immigrants, the biggest employer, Bethlehem Steel, and the local YMCA offered free English instruction to thousands of immigrants in the early 20th century, even paying them to take classes. Today, immigrants face long waiting lists for English classes, even ones they pay for.
I figure if Fabio can plug his book, then I can too. In Chapter 4 of Why the Garden Club Couldn’t Save Youngstown, I talk about the differences between how immigrant workers were treated in Bethlehem and Youngstown. In both places, local elites saw the arrival of new immigrants as a threat. But they defined the threat differently. In Bethlehem, the threat was seen as the break down of community. And so business and civic leaders took action to create bridges to immigrant groups (largely through religious outreach: that is, through organizations like the Young Men’s Christian Association). This had the effect of forging ties both between the elites and the working classes and among the various ethnic immigrant communities that made up the working class.
The connections among founding families forged through their economic, civic and neighborhood ties led elites in Youngstown to circle the wagons against the new arrivals. The strategy that emerged to deal with the threat was essentially divide and conquer. By controlling settlement patterns through their control over real estate, [Youngstown's] founding families fragmented the city’s new immigrant working class into separate ethnic enclaves, a strategy later reinforced by the law-and-order and obviously racially and ethnically divisive approach favored by the Ku Klux Klan. Ethnic differences among early northern European settlers subsided as salient sources of identity; class interests were forefront in the minds and actions of various groups in [Youngstown region].
It seems to me that we continue to face this choice and Bush and Putnam are (explicitly) advocating for the approach that prevailed in Bethlehem. History is on their side, as the differences between these two communities turned out to be very important in the long term. The cross-cutting ties that Vadasz discussed laid the ground work for far more cooperative relationships with labor unions and, indeed, much more control on the part of business owners over Bethlehem’s unions. The divide and conquer approach in Youngstown sewed mistrust both among workers and, certainly, between workers and company managers. In the short term, the differences were stark: the Little Steel Strike of 1937 turned violent in Youngstown with dozens of pickets killed. The strike largely missed Bethlehem and, in general, labor relations and social order were far calmer there. More importantly, in the long run, the integrative approach that prevailed in Bethlehem made that community far better prepared for the demands of a global economy than Youngstown has proven to be.
(P.S., the BBC has been doing a series on the revival of the US Rust Belt, including a segment on Youngstown).
I have spent the last couple of years using social networks as the basis of both my research and my teaching. I can geek out about academic terms like network centrality and cliques. I can tell you about multiplexity and eigenvectors (well, that last one, maybe only sorta). But then I come across comments like this one from Sam Biddle, re-posted by Andrew Sullivan this morning:
I am not entirely sure what networking is, and I’m not sure anyone else is either. I am somewhat sure that I am not doing it. I’ve been given the gist of it before. I know that it’s all about meeting the right people, and making new contacts, and following up and other italicized things.
Actually, meeting the right people and making new contacts is a fairly ineffective approach to “networking”. First, you can get much of the information you need through people you already know (or, at least through the people who you know, know). Second, just meeting the right people isn’t enough. You have to close the deal. I study and teach this, and I tell the students in my MBA classes this is the wrong idea. But, how would a hapless philosophy major know that? He simply wants to know what the heck is “networking” and how do I do it better? And, we—as a field—have not done a great job of distilling the key ideas and getting them out there.
So here, in very stylized form, is the state of the academic art on “networking”. (A note to orgheads: there are no “citations” to these ideas, but I’ve provided embedded links to some of the most important ideas. I hope folks will use the comments section to fill in the (probably copious) holes I’ve left out or errors of interpretation I’ve committed.)
First, I’m going to assume that by networking you mean using social contacts to get something you want, whether that thing is a job, an idea, an investment, etc. If so, then there are two pieces to the problem of effectively “networking”: search and trust.
It’s hard to write academic pieces well. Getting the evidence right takes skill, time and patience. Making sure I have the literature down and accounted for means revisiting notes taken years ago and stashed somewhere I can’t quite remember. But for me, the hardest part of writing a paper is the framing because framing is generally about recognizing how I, and most everyone else who has tackled this problem, was wrong in some way. In other words, just about every good piece of organizational theory written in the 20th century follows a general formula which begins by saying: organizational theorists have argued X, but I am going to contradict that to argue that Y holds instead.
After months — sometimes, years — of wrestling with an idea or a data set, finding that contradiction can feel impossible. But it has to be done. It’s what makes people read your work and, to some degree, what makes them believe you. That realization came from the inevitable grad school airing of Murray Davis’s classic essay “That’s Interesting! Toward a Phenomenology of Sociology and a Sociology of Phenomenology.” Murray writes:
An audience will consider any particular proposition to be worth saying only if it denies the truth of some part of their routinely held assumption-ground. If it does not challenge but merely confirms one of their taken-for-granted beliefs, they will respond to it by rejecting its value while affirming its truth. They will declare that the proposition need not be stated because it is already part of their theoretical scheme: “Of course.” “That’s obvious.” “Everybody knows that.” “It goes without saying.”
Recently I was reminded of this idea when I was reading an interview with Ira Glass, the host of public radio’s This American Life. He was asked “what is the big pay off for the listener in stories… ” To which he replied:
Well, if the story works, you become the character, right? You agree with their early point of view, and then when it gets shattered, you are shattered with it. So in the storytelling, you want to manipulate the evidence and the feelings so that the audience is right there agreeing with the person who’s about to be proven wrong. When that happens, if it’s done right, you as the audience get flipped upside down.
He goes on to talk about a few of the best This American Life stories about being wrong and brings up the Squirrel Cop story and their series on the mortgage crisis. [Both well worth listening to.] Or, there is this lovely animation of a story on This American Life which is about being wrong about being wrong.
Sometimes these kinds of switch-backs can lead to juicy interpersonal drama. Intellectual history is rife with examples of students’ “killing the father” which is to say, publicly contradicting the theories that one’s own mentors and advisers championed. But the sweetest examples are those rare, revelatory, instances when big deal thinkers confront and admit their own wrongness after years and decades of towing the line.
It’s all a reminder to me that, while we strive for scientific rigor in our work, the best orgTheorists are also excellent storytellers whose goal is not simply to find sociological “truth”, it is to influence discourse; to change the way people think by exposing their own intellectual struggles in a way that sheds light. And it makes me wonder: where will the next great contradictory switchback come from in OrgTheory?
It’s hard to let David Brooks’s piece in the New York Times this morning go without a comment.
First there’s the title: History’s Return. A reference to Fukyuama’s pronouncement that we had reached:
…not to an “end of ideology” or a convergence between capitalism and socialism, as earlier predicted, but to an unabashed victory of economic and political liberalism.
Brooks extrapolates from this: economics won the game; not just as a discipline, but as the intellectual underpinning of economic and political liberalism from here on out. Oh really? Not so fast, he says:
…the economic crisis of 2008 and 2009… is a climax of sorts because it exposed the shortcomings of the whole field. Economists and financiers spent decades building ever more sophisticated models to anticipate market behavior, yet these models did not predict the financial crisis as it approached. In fact, cutting-edge financial models contributed to it by getting behavior so wrong — helping to wipe out $50 trillion in global wealth and causing untold human suffering… More than a year after the event, there is no consensus on what caused the crisis. Economists are fundamentally re-evaluating their field.
Which leads to this hopeful prediction:
One gets the sense, at least from the outside, that the intellectual energy is no longer with the economists who construct abstract and elaborate models. Instead, the field seems to be moving in a humanist direction. Many economists are now trying to absorb lessons learned by psychologists, neuroscientists and sociologists. They’re producing books with titles like “Animal Spirits,” “The Irrational Economist,” and “Identity Economics,” about subjects such as how social identities shape economic choices.
Words to stir the soul of any self respecting economic sociologist / organizational theorist. Yet, somehow, I’m not stirred. I don’t believe the day of the economists’ intellectual hegemony has ended.
First, its not like we haven’t been saying this all along. Brooks makes it seem like sociologists, psychologists and the like have been waiting for our moment. Sociology and the humanists originated the field and we never really went away (its worth remembering that Max Weber called himself an economist; Act I in Brooks’s formulation was preceded by a whole lot of people we would today call humanists, political scientists and sociologists who were unpacking the nature of economic activity and action). So one has to ask: if we’ve been right all along (and I think we have been) then why should we think that this crisis will be the one to change the game back in our favor?
Otherwise put: why did they win the day for the last half of the 20th Century? One idea: it is because economists give definitive answers. They are comfortable with saying “this is the right answer” or “this is a set of principles on which to make in informed choice”, even if they are eventually proved wrong. That isn’t going to change.
And it isn’t just bravado. People who need to make decisions want a rationale for those decisions to be conveyed with clarity. For as much as I think sociology and our sister — humanist oriented — disciplines come closer to understanding reality, we nevertheless will continue to lose arguments because of the wishy washy way we make our arguments. There is little interest or tolerance among economic sociologists for articulating a coherent, prescriptive, philosophy of economic action.
Until we do, I’m afraid we are always going to be playing second fiddle.
The NY Times has a nice article on Google’s head quarters. My co-blogger, Sean Safford, comments:
Sean Safford, a professor who studies organizations and markets at the University of Chicago, noted that Google was replicating traditional company-town practices by placing housing for its employees near its headquarters.
“It will be so interesting to see how much of their human resources strategy is about creating a community feeling that goes beyond the offices,” Mr. Safford said. “Sometimes when you’re competing for workers and prominence, there’s a need to stick your chest out and say, ‘We’re the big dogs in town.’ ”
Our good ol’ buddy Jerry Davis also chimes in on the topic of different forms of community investment by firms:
Perhaps uniquely, Google is also casting itself as a partner with NASA, now the proprietor of Moffett Field. This partnership is making Mountain View a stop along the virtual route to Mars and the real route to the Moon.
“It’s a cool anomaly because the company-town tradition had basically died in the U.S.,” said Jerry Davis, a professor at the University of Michigan, who has written about the ties between companies and cities. “It’s interesting to see Google put their touches on the idea.”
Historically, company towns have grown up around organizations with large manufacturing operations that can support thousands of local workers. To attract top executives to often less-than-ideal locales, the companies donated large sums to cultural institutions.
“The main reason Ford put money into the Detroit Symphony Orchestra is to make it plausible to recruit executives to Detroit,” Professor Davis said. “It was a human-resources move as much as it was philanthropic.”
Check it out! Hat tip to William S.
Steve Levitt, has a provocative blog post up today. Forwarding a reader’s email he asks:
“What other benefits can be found in poverty? Obviously there is a difference between the regular poverty of say, a good chunk of Western college students versus the extreme poverty of many people in Africa. Depending on the situation, I am thinking there could be a connection between poverty and with things like creative resourcefulness and happiness.” Your thoughts?
As for thoughts, an orgTheorist who shall go nameless posted this on his facebook page questioning whether Steve might have had an aneurysm. Its hard to disagree with that sentiment.
But then it did make me think of Amartya Sen’s argument in Development as Freedom. In a nut shell, Sen’s goal is to shift the debate away from mainstream economists’ notions of utility and from philosophical (sociological?) questions of justice or fairness to emphasize the capability of people to do and be what they value.
Echoing Levitt’s reader’s (puke-worthy, yet nevertheless thought provoking) comparison of Western college students and “people in Africa” (whatever that means given that it is a continent of 1 billion people and countless cultures and subcultures), Sen’s argument is, fundamentally, that poverty is relative.
If a lack of income is standing in the way of doing things you want to do — worship, vote, be comfortable — then you are poor. But those restrictions can come just as easily from social norms, religious edicts or political structure as income. At the same time, simply having a low income does not make one either poor or unhappy. The Botswanan bushman who is living a full and meaningful life within a traditional society is neither unhappy nor poor because he has full capability to achieve what he wants to achieve in life.
Sen likes to point out that in his wanderings in Calcutta’s ghettos, he never encountered anyone who said that their poverty made them unhappy. The same, I venture, could not be said of your average college student living on loans. Myself, I remember spending a few very miserable winters in Ithaca eating ramen noodles. Yet, the capabilities of the Calcuttan ghetto-dweller to achieve the things they may want to achieve are vastly inferior to the capabilities of the students. So why are they happier? The difference is, essentially, ignorance: the poor in Calcutta make-due under overwhelmingly adverse circumstances while students in the US feel worse off relative to others in society. The poor may seem happier, but their happiness is in light of their relative lack of freedom compared to the US student. Which is worse? Sen argues that happy ignorance is not bliss. I’d say I have to agree.
Maureen Dowd went populist in her column yesterday. Picking up on on Matt Tabai’s slimy imagery, she refers to “Goldmine” Sachs as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money”…
The name calling tries too hard to foment middle and working class anger where, frankly, I don’t really see protests forming in the streets. But what I find interesting is Goldman Sachs CEO Lloyd Blankfein’s rebuttal to the claim.
We help companies to grow by helping them to raise capital… Companies that grow create wealth. This, in turn, allows people to have jobs that create more growth and more wealth. It’s a virtuous cycle. We have a social purpose.
So here’s a question… Clearly, banks are brokers; they are intermediaries engaged in managing the two sided market of investors and investees. But, what kind of broker are they?
Ron Burt’s work shows convincingly that brokers realize economic benefits from connecting disconnected actors. For Ron, brokers are tertius gaudens: the third who benefits by exploiting asymmetric resource flows and contests for control. Isabel Fernandez-Mateo built on this to ask the following question: do brokers’ profits come from making transactions more efficient or do they come from the fact that, where two parties lack full information, the left hand doesn’t really know what the right hand is doing? She shows that brokers can pass on greater rewards to partners with which they have a closer relationship and that the pound of flesh is extracted from the other partner to the transaction. One interpretation of this is that the latter mechanism prevails.
Yet, by emphasizing banks’ socially beneficial role, Blankfein is channeling what David Obstfeld refers to as the “tertius iungens” form of brokerage. The intuition behind the iungens idea is that more value is created by connecting disconnected actors than if they weren’t connected. Everyone benefits: the parties to the transaction, the broker and society at large.
So which is it? Are investment banks iungens or are they gaudens? In Fernandez and Gould’s formulation, are they honest brokers or… not?
Michael Roston points out a very interesting tale of two numbers in the news yesterday:
Perhaps you’ve heard that the Dow Jones Industrial Average reached 10,000 today, finally, at long last…
But it turns out that while Mr. Dow Jones believes that our Great Recession is over (that’s a joke), one invisible hand in our market doesn’t know what the other is doing.
That’s right, the Pentagon reported on this day of Dow 10,000 that our strained Armed Forces have beat their recruiting goals for the fiscal year, driven by economic unease. (h/t: the Daily Dish).
Here here! for pointing out the obvious. Seriously. The man makes a good point.
The AFL-CIO and the Economic Policy Institute make another good point: the current recession is hitting women worse than men, and minorities worse than non-minorities.
One reason women workers are so adversely affected by manufacturing job loss is that they are concentrated in industries that have been drastically affected by the surge in cheap imports over the past decade, such as textiles, apparel and leather. Women make up more than 50 percent of the total workforce in these industries. Faced with high levels of foreign competition, these jobs have had high levels of trade-related job displacement.
Not good. So what to do?
One idea that has been proposed is to redirect stimulus and TARP funds to smaller regional banks where it is more likely to go to support small businesses where conventional wisdom suggests more jobs will be created in the short term.
That’s not a bad idea, per se. But it doesn’t solve the larger problem which is that the U.S. economy has been putting off a denouement with itself for decades: the engine that built and sustained the middle-class is broken and we need to figure out what to do about that. Sometimes its important to take a step back and think about the big picture.
Elinor Ostrom has won the Nobel Prize in Economics. Boo rah!
For a lot of orgTheory readers, Oliver Williamson’s win will be the more exciting and relevant of this year’s laureates. Oliver Williamson is really one of us; many orgTheorists find his work compelling or at least a useful foil. But I’ll let others comment on Williamson because, for my money, the questions and topics that Ostrom work on are as (if not more) relevant and compelling to my understanding of organizations and of organization theory.
Sometimes it is the quality of the questions one asks — more, perhaps, even than the answer one gives — that makes for a great thinker. To some degree, I think this applies to Ostrom. In the end, I find her answers somehow incomplete. But, the questions she asks as she breaks down the larger puzzle are compelling.
Her fundamental question is this: in a world of abundant but rapidly depletable resources, where individuals have incentives for survival that, if acted on, would undermine the long-term viability of the resources on which they depend, how does coordination and cooperation emerge? That is, she’s interested in the Tragedy of the Commons. The term derives from the fact that farmers with access to the local grazing land (The Commons) have an incentive to feed their cattle as much as possible. But if all farmers fed their cattle as much as possible it would rapidly deplete the grass leading all of their cattle to suffer. There are two prevailing answers to that dillema: (1) may the best farmer win (which would mean the commons would no longer be a commons) or (2) institute some set of rules and enforcement mechanisms to govern the behavior of farmers. Obviously, the second often wins out. The question is how.
Her conclusion: it’s complex. There is no silver bullet (which makes it all the more surprising that the Nobel committee has decided to honor her work. Economists, I’ve noticed, put a lot of value on “elegance”; Ostrom is a strong writer, but elegant… not so much). There are a series of mechanisms that come into play to keep good order and that, if harnessed and understood, can lead to behavior that sustains survival. Read the rest of this entry »
The Economist airs some inter-disciplinary dirty laundry within the identification movement. On one side, the forces aligned behind isolating causality through the use of instrumental variables:
Often derived from a quirk in the environment or in public policy, [instrumental variables] affect the outcome (a person’s earnings, say, to return to the original example) only through their influence on the input variable (in this case, the number of years of schooling) while at the same time being uncorrelated with what is left out (scholastic ability). The job of instrumental variables is to ensure that the omission of factors from an analysis—in this example, the impact of scholastic ability on the amount of schooling—does not end up producing inaccurate results.
On the other are leading lights such as James Heckman and Angus Deaton:
According to Mr Deaton, using such instruments to estimate causal parameters is like choosing to let light “fall where it may, and then proclaim[ing] that whatever it illuminates is what we were looking for all along.”
Their alternative: model the selection effect directly by first predicting, for instance, whether a woman is likely to want to leave the market for some period of time to raise a family and then use that model as a control when you estimate discrimination.
Here’s the rub: the article poses these as an either-or choice. But choosing to employ a selection model involves its own trade-offs. More importantly, instrumental variables and selection models are hardly the only options available.
Try as I might, I have not been able to figure out how to embed this video: the Daily Show with Jon Stewart takes on the MBA oath and Bruce Kogut plays a staring role.
Having watched it, I am now considering getting some prominent arm tattoos… clearly they generate more respect from MBA students than my current sartorial efforts have achieved to date.
Matt Yglesias makes the point that the price of new cars has not increased as fast as inflation over time, nor have High Definition TVs which have seen costs come down. He wonders why the same hasn’t happened for health care technology:
This gets back to some of the perversities of fee-for-service medicine. The current market creates strong incentives for people to develop “better and more expensive” methods of treatment, but almost no incentive to develop “as good but cheaper” methods of treatment. Both kinds of innovation, however, are extremely valuable. The world’s resources are limited, and the development of cheaper methods of treatment would allow for more overall treatment and thus better outcomes.
In short, I’d say the answer comes down to China, or really its relative absence from the health care market. As an NPR report from a few days ago illustrated nicely, the reason consumer goods like TVs, toasters, shoes and even cars has come down has a lot to do with the unsustainable trading relationship between the U.S. and China.
Key point: consumer goods are transportable. But health care is fixed in place. You get sick where you live. So while capital is free to scurry the globe in search of cheap labor and factor inputs for consumer goods, health care has to contend with the realities of operating in a high-wage, highly-regulated society.
There are a lot of things I like in the health care reform bills passing through Congress. Most importantly, all of them make it easier for individuals and small businesses to buy insurance. But what is not clear is how the reforms will achieve the equally important goal of controlling costs. President Obama gives a two-piece answer to this question. The first is rationalizing care and eliminating wasted dollars, largely by digitizing medical records. The second has to do with moving away from “fee-for-service” system, which provides incentives for doctors to over-treat illnesses, and toward the one where doctors are compensated based on a combination of cost reduction and quality.
To work, both of those fixes have to be effectively implemented at an organizational level. They will require changing the way doctors, nurses and other medical care providers do their job. And that means changing the organizational rules by which hospitals and doctors offices operate. But what that organizational model will look like has not been specified. It might look like the Mayo or the Cleveland Clinics which use computerized records, pay doctors salaries and reward them for patient outcomes rather than per service. Yet as the New York Times points out, only one plan in Congress addresses the organizational model and that one is just a pilot program. Massachusetts is looking at ways of urging doctors to shift into salary-based provider networks. But there’s no discussion of a mandate or of anything with teeth that would move the medical industry in that direction.
How many reform movements have succeeded in winning legislation meant to change society, but then fail to actually change anything? Too many to count. Why? Because the devil in achieving real change is in the details of organizational implementation.
Specifically: even if reforms are enacted, those who want to maintain the status quo can simply let reforms pass and then either comply only symbolically or make sure that the reforms are implemented in ways that effectively maintain the system in place. News that the American Medical Association has signed on to major elements of the reform process is important to getting reform passed through Congress. But what really matters is how reforms are implemented inside hospitals and doctors offices. In other words, in the absence of a specific plan for how to restructure the way medical care is organized, the endorsement doesn’t mean a whole lot.
In fact, I fear that it makes it more likely that history will repeat itself.
Roger Penske is purchasing Saturn and the implications are possibly far reaching. If a crisis, as the saying goes, is a terrible thing to waste then the auto industry circa 2009 presents a golden opportunity to see how a crisis opens opportunities to re-write the rules that govern an industry. Penske’s gambit aims to do that and if he succeeds it could fundamentally change the way cars are designed and manufactured.
Saturn has been cast in the role of change agent before. The company was conceived in 1982 as a “new kind of car company, making a new kind of car.” Back then, the rap on the American car industry was that it produced poor quality goods. That problem, in turn, was blamed on ossified relationships between the car companies and their “stakeholders”: relationships with the unions had become paralyzingly adversarial, relationships with suppliers were dictatorial, the companies’ own designers weren’t cooperating across divisional boundaries and the dealer network were unwieldy. Saturn was meant to push the reset button on all of these relationships.
Saturn’s new model worked, for a while. Its quality ratings were high and the brand developed a strong customer base. But rather than spreading into the rest of GM, the opposite happened: GM re-colonized Saturn. When Saturn opened a new plant in Wilmington, Delaware in 1996, it was stripped of most of the key organizational innovations of the original plant in Spring Hill, Tennessee. Labor-management cooperation was replaced with a regular pattern contract, the car’s design was outsourced to a GM subsidiary, Saturn’s relationships with suppliers reverted to form, and plant’s managers were brought in through GM’s regular management career channels. Saturn became just another GM subsidiary.
That is, with one exception: the brand and the dealer network maintained a good deal of independence. And they are essentially what Roger Penske has now purchased: not a company that makes cars (GM will continue to design and manufacture vehicles for the time being after which Penske plans to outsource manufacturing to a global network of manufacturers), but a brand and a distribution channel.
On first inspection, that doesn’t seem to be the stuff of fundamental industry change. But it could turn out to be just that if Penske is able to capture power in the value chain and use it to influence the way cars are designed and manufactured. The open question is whether Penske has the wherewithal to pull it off.