April 1, 2006

Econ 101, Hey! George Mason’s Hoops Team and Econ Department Have Common Traits

Filed under: Business Moves,Economy — Tom @ 4:48 pm

On Tuesday, Peter Boettke and Alexander Tabarrok made some interesting analogies between the school’s Final Four-Qualifying basketball teams and it multiple Nobel Prize-winning Economics Department, which I of course saved for today before the Patriots’ game with Florida:

MU has excelled on the court and in the classroom by daring to be different. Its basketball team and academic programs began with the (correct) assumption that they couldn’t hope to compete against the top schools in their fields—say, Harvard Law School or the Duke Blue Devils—by directly imitating their methods. GMU lacks the resources and reputation to recruit McDonald’s All-Americans or Alan Dershowitzes. So instead, GMU has hunted for inefficiencies in its markets. Coach Jim Larranaga follows the Moneyball model of recruitment: hunting for the undervalued players—the ones who everyone else thought were too short, too thin, or too fat—and then building them into a team. In its astonishing defeat of UConn, GMU’s players were giving away 4 inches at nearly every position.

….. This is also the idea behind GMU’s free-market-oriented economics department. The department got started with a heretical premise: The academic market is inefficient, so how can we exploit it? GMU knew it couldn’t afford to be a first-class MIT and didn’t want to be a second-class MIT, so successive chairs of the department, backed by entrepreneurial university presidents George Johnson and Alan Merten, looked for unexploited opportunities.

James Buchanan, GMU’s first Nobel Prize winner, has never had an Ivy League position and indeed he has never taught above the Mason-Dixon Line. Gordon Tullock, a potential future Nobelist, has no degree in economics and took only one class in the subject. Vernon Smith, who moved his team from the University of Arizona (again, no Harvard) to GMU in 2001, had to fight to get people to treat experimental economics as more than a cute parlor game.

In the academic market, herd behavior is compounded by political correctness. In the 1960s, James Buchanan and Gordon Tullock were joined at the University of Virginia by Ronald Coase (who would later win his own Nobel). But the university administration and powerful organizations like the Ford Foundation thought their free-market ideas (limited government, tax cuts, selling radio spectrum!) were disreputable, and they worked hard to push them out of the university.

From the 1960s into the 1980s, a small university such as GMU could hire conservative and free-market thinkers of true genius for the same kinds of reasons that, in the mid-1960s, a middling school like Texas Western University could recruit some of the best basketball players in the nation, so long as they were black, and win the 1966 NCAA championship. Conservative and free-market economists were so undervalued that GMU could afford the best of them.

Pretty cool comparison. Go Patriots.
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Previous Posts:
March 20 — (on making Sweet 16) Econ 101, Hey! Econ 101, Hey! Econ, Econ, Econ 101!
March 27 — Econ 101, Hey! George Mason in the Final Four

Weekend Question 3: Why Is John Boehner Doing an Indefensibe Tom Delay Imitation?

Filed under: Economy,Taxes & Government,TWUQs — Tom @ 2:26 pm

At my suggestion, S.O.B. Alliance member and federal budget subject-matter expert Porkopolis took a look at John Boehner’s latest action in his new job as House Majority Leader.

I was hoping I was wrong, but Porkopolis does not like what he sees, and I have to agree:

The Hill is reporting that House Majority Leader John Boehner is delivering ultimatums to his Republican colleagues ……

….. If this report is accurate, Boehner is picking up where Tom (The Hammer) Delay left off in imposing party discipline over the objections of fiscal conservatives.

Such obedience will just be another nail hammered into the coffin of our ‘Do as we say, not as we do party’ that has lost all claim to fiscal conservatism.

The GOP is Washington has no appreciation of how dangerous their actions are. The danger is not just to their ability retain a majority in November, but to the ability of the country to prevent a slide into French- and German-style stagnation and, as seen recently in both countries (youth marches in France and little-noticed but very harmful public-sector strikes in Germany), social upheaval. With each passing day, that sad scenario becomes more likely, no matter which party is in charge.
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UPDATE: S.O.B. Alliance member NixGuy in the first comment below suggests more patience. Okay, but it’s very limited. Aren’t we on the verge of blowing off doing anything meaningful about budget reform until after the election? If I’m wrong I’ll stand corrected. But, unfortunately, I don’t think I am.

Weekend Question 2: Why Is the Stock Market’s Historically Very Good First Quarter Being Ignored or Downplayed?

Filed under: Economy,MSM Biz/Other Bias,MSM Biz/Other Ignorance,TWUQs — Tom @ 11:05 am

No April Fool’s Joke: Stocks Have Best First Quarter in Many Years; NY Times Fails to Note

From MarketWatch.com via Investors Business Daily:

The Dow had its best first quarter since 2002, scoring a 3.7% quarterly gain. The Nasdaq Composite rose 6.1% during the period, marking its best first quarter since 2000. The S&P 500 increased 3.7%, its biggest first-quarter gain since the opening months of 1999.

“It’s been a strong quarter, even though it’s been built on lot of positive expectations for the future,” said Ed Peters, chief investment officer at Pan Agora.

So did this great news about the financial markets make the front page of The New York Times?

You’re kidding, right? It didn’t even get mentioned anywhere, nor was there any link to an article containing what MarketWatch reported, on The Times’ entire BUSINESS section web page (the “Market Update US” link is to Friday results only; click the picture to enlarge):

NYTbiz0401

The Associated Press was only marginally better, reporting the quarterly results but not providing the historical perspective.

Weekend Question 1: Will This Question Become the Theme of the 2006 Elections?

Filed under: Immigration,TWUQs — Tom @ 8:24 am

S.O.B. Alliance member Porkopolis’s Prediction:

“What part of ‘Illegal’ don’t you understand?” will be the “It’s the economy stupid!” of the 2006 midterm elections.

I believe that he could not be more right — With apologies to Bob Dylan (“Subterranean Homesick Blues“): You don’t need Porkopolis to know which way the wind blows (but it helps).

Positivity: “Deceased” father and son are reunited after 37 years

Filed under: Positivity — Tom @ 6:55 am

Hideous lies from the past that separated the two were overcome as a father and his son met in Mesa, AZ:

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