Sunday, November 27, 2011

From the Management

Blogging will continue to be sparse as I am busy working on moving my family overseas for the indefinite future.  A lot of things I'd like to write about, as well as plenty of things I wish I had time to read, but right now more important matters are pressing.

Monday, November 14, 2011

Does your school need a football team?

60 Minutes did a good profile of UMBC President Freeman Hrabowski last night.  These aspects of UMBC stand out:

"Much of the hard work at UMBC is in science, engineering and math which accounted for 41 percent of the bachelor's degrees earned there last year - well above the national average of 25 percent. Nationwide, most college students who start off in the sciences either change to a different major or don't graduate. UMBC keeps undergrads engaged by including them in research typically left to graduate students...Students can also get jobs and internships at one of 76 companies located on campus. Most are technology startups...(But) one thing you won't find at UMBC..."

A football team. The chess team is great, but there is no football team.  

Hrabowski: "People talk about that. Right. I mean, well-- well, first of all, it takes a lot of money for a football team to win." (emphasis mine)

The rest of the piece is worth reading or watching. So long as the U.S. is graduating fewer math and science majors than it did 25 years ago,  the less it is accumulating capital and productivity growth for the future. UMBC is pushing the other direction, and to do so it recruits and invests in training students and measuring themselves by whether they actually graduate rather than devoting millions to developing "student-athletes" who may never graduate (I put "student-athlete" in quotes since it is a term invented by the NCAA with huge legal ramifications as pointed out in the Taylor Branch piece I think everyone should read).

As a nation, we need to figure out what we want more of-- a higher standard of living or just better sports.  I vote for the former. 

Sunday, November 13, 2011

Book Review (#34 of 2011) Toynbee - Turkey: A Past and a Future

Turkey: A Past and a Future by Arnold Joseph Toynbee. This book was published in 1917 in the midst of World War I (now free at Gutenberg or at Amazon for Kindle).  Toynbee was a British historian who had evolving views on Turkey over his career.  This book gives an overview of where the Ottoman Empire came from, who the Osmanli Turks were, and what their future, and the future of their subjects, looks like.

Toynbee uses several contemporary sources to explain the rise of Turkish Nationalism, which was leading to changes internally that would have immediate consequences following the War. Toynbee fills in some gaps for me, explaining where the nationalism comes from and why Turkey implemented its controversial policy of expelling Armenians and other groups from their country.

The symbiotic relationship between Germany and Turkey is also explored, Germany was eager to help the Turks complete a railroad system and other development projects that would require German workers and expertise and lead to further gains from trade for both nations. All of this was to create a bulwark for their aspirations of empire:

"Thus Germany's economic activity in Turkey has been not for prosperity but for power, not for peace but for war" (l. 480).  

Other people groups subject to the Ottoman Empire were agitating for their autonomy, which was causing some decline in the prosperity in the furthest regions of the Empire as they were often neglected by Istanbul.

There is much eerie foreshadowing in this book. At the time, the Zionist movement in Palestine was growing strong as Jews fleeing Eastern Europe migrated to Palestine, usually through Germany. Toynbee speculates on their fate. The Jewish problem for Germany is sadly foreshadowed by events in Turkey, and several Germans living in Turkey wrote official protests or resigned teaching positions to protest Turkish policy in 1915:

"'If we persist in treating the (questionable policies) an internal affair...then we must change the orientation of our German Kulturpolitik...[W]e teachers must give up telling our pupils in Turkey about German poets and philosophers, German culture and German ideals, to say nothing of German Christianity...The things of which everybody here has been a witness for months past remain as a stain on Germany's shield in the minds of Oriental nations'" (l. 564). 

Just imagine these words being written about Germany itself twenty years later.

Toynbee also quotes statistics of Americans and others who were working in Turkey prior to the start of the war, building schools and hospitals and such. These, too, were closed down as battle lines were drawn.

Like other people writing around this time, Toynbee seems a pessimist on the future of Turkey.  The Turks were seen as less advanced as other nations and with little hope of catching up.  I have some biographies of Ataturk on my list to read very soon, because he steps into this void and strives to move Turkey forward very quickly and reverse the decline of the nation.  That's the part that I want to explore next.

I give this book 4.5 stars out of 5. I consider it a concise must-read for anyone interested in this brief period of Turkish history.

Thursday, November 10, 2011

The eerie calm

The market is more optimistic today, but it just reinforces my belief that sometimes the market is slow to accept what it really doesn't want to, just as it did from late 2006 - 2008. None of the fundamentals changed from yesterday to today.  InTrade is currently giving 70% odds to a country leaving the Eurozone by 2015. Knowing that, it's amazing to me that euro bond yields aren't higher across the board.  It's very much similar to 2006 when delinquencies on home loans started to rise and were expected to get worse, but no one wanted to believe home prices would fall across the board, or that AAA-rated securities based on those loans weren't as advertised. The 17-country euro zone as we know it is done, it's just a matter of time

Wednesday, November 09, 2011

How prices are useful

One frustration I have watching the news is the media's incessant obsession with political polls.  For example, Herman Cain has been showing an approval rating just under Mitt Romney's, which you hear regurgitated every night as "he could be the Republican nominee."  The problem is, we have a better predictor out there of people willing to put their money where their mouth is.

Herman Cain as the GOP nominee is currently trading at  $0.45/share on InTrade, meaning the market gives him a 4.5% chance.  Compare that to Mitt Romney's 68% probability. When I point that out to people, I sometimes hear "Yeah, but the market doesn't know what will happen between now and next summer; markets aren't efficient," etc. etc.  One guy told me "I'd rather listen to the people at 538, because at least they have a proven track record..." He doesn't realize that that is the exact same thing as saying you believe a particular investment advisor that a certain stock is underpriced.  If it's really true, then buy the stock and get rich.

If you think Cain has a decent shot at the nomination then the market says you stand to make a good deal of money by betting on him. And if everyone else feels the same way, they will too, otherwise they're leaving free money on the table.  Once you put your money where your mouth is with everyone else, Cain's value will rise.   The fact that no one is doing that indicates that they don't actually think it will happen.  Prices are very useful things. Why the nightly news show us the Dow and S&P, and sometimes talk about bond yields, but focus on polls rather than market indicators for politics is a mystery to me.

Thursday, November 03, 2011

Book Review (#33 of 2011) Agamemnon of Aeschylus

The Agamemnon of Aeschylus was a play written by Aeschylus in 458 B.C. as part of a series (the Oresteia) that won him first prize in the archonship of Philocles.  This version was translated into English rhyming verse by Gilbert Murray who also adds helpful footnotes.

Given that the original is in Greek, and this version has not only been translated into English but then made to rhyme in English, makes one wonder how true to the original spirit it remains. For example:
"Paris to Argos came;
Love of woman led him;
So God's altar he brought to shame,
Robbing the hand that fed him."

Author Philip Caputo offered the Oresteia as his one reading recommendation last year, which is why I wanted to read it. .

Agamemnon triumphantly returns home from the Trojan War. He is greeted by Clytemnestra who feigns the loving wife longing for her husband.  She then lures Agamemnon and then Cassandra, his captured slave, into the house and murders them. The elders and comrades of Agamemnon move to take revenge against Clytemnestra and her lover, Aegisthus. But Clytemnestra halts the dispute and everyone awaits the return of Agamemnon's son, Orestes, from Troy to exact the revenge.

Early in the play, I found language that sounds biblical enough to make me wonder either about the Greek translation or think about the Gospel authors' exposure to classic Greek literature.

"But the wise Shepherd knoweth his sheep,
And his eyes pierce deep
the faith like water that fawns and feigns."

My favorite part was when Agamemnon is replying to Clytemnestra, who is trying to tempt him to show hubris by treading on tapestries of crimson and gold. He responds by contrasting the honor he seeks with the respect shown only to gods:

"'Tis God that hath 
Such worship; and for mortal man to press
Rude feet upon this broidered loveliness...
I vow there be danger in it. Let my road
Be honoured, surely; but as man, not god"

"God giveth, for I reckon no man blest
Ere to the utmost goal his race be run.
So be it; and if, as this day I have done,
I shall do always, then I fear no ill." 

But alas, poor Agamemnon:
"For woman's sake he endured and battled well,
And by a woman's hand he fell."

An Occupy Wall Street discussion question

This is a message board exercise students in Principles of Microeconomics have to do this weekend.  They will have read Chapter 7 of Good Intentions entitled "How Did Ben & Jerry Get So Rich?"

This chapter deals with CEO compensation.  Many people are outraged that CEOs earn so much more than the average worker. You have likely seen the news coverage of Occupy Wall Street and similar groups protesting this, among other things. 
In 2005, the median annual salary for a CEO of a Fortune 500 company (the largest 500 companies in the U.S.) was $6.7 million.  The median salary of a factory worker was $29,544. Some people think this is unfair.  
Tom Brady, quarterback of the New England Patriots earned $18 million in 2010, while his current wife also earns somewhere around $15 million as a model. Peyton Manning's contract was set to pay him about $23 million this year to QB the Colts (and will still pay him most of that even though he hasn't played a single game due to an injury). 

1. Chapter 4 of Good Intentions discussed how workers are paid according to their productivity-- classical labor theory says workers should be paid according to the marginal product of their labor--about as much as they add value to the overall economy.  Do you think the median Fortune 500 CEO is 227 times more productive than the median factory worker?  Is Tom Brady 609 times more productive?  Is Peton Manning 778 times more productive?

2. Why do you think the media and politicians focus on salary and bonsuses for CEOs and not athletes? 

3. The NFL is a government-granted monopoly, it is exempt from antitrust legislation. Most CEOs and factory workers work for companies competing globally. How do you think this affects the salaries above? 

Tuesday, November 01, 2011

"Book" Review (not counted) - Read This Before Our Next Meeting

Read This Before Our Next Meeting by Al Pittampali; I got this when it was free for Kindle. It's really an essay and not a "book," by my definition-- it's not a Kindle Single either.  It is a simple 80 page manifesto for changing how we do meetings.  You can visit his website at

I work in a College of Business and I often joke to myself "How many MBAs does it take to run an efficient meeting?" The correct answer is either "zero" or "more MBAs than we have on faculty now." I lean toward "zero."  It's amazing to me that we don't incorporate a class on how to hold meetings into curriculum.

Pittampali's suggestions for creating the "Modern Meeting" are almost identical to my own when I ask myself what I would do differently if I ran things.  My college violates just about every one of his tenets.

The author's Modern Meeting:
1. Supports a decision that has already been made.
2. Moves fast and ends on schedule.
3. Limits the number of attendees.
4. Rejects the unprepared.
5. Produces committed action plans.
6. Refuses to be informational. Reading memos is mandatory.
7. Works alongside a culture of brainstorming.

"The Modern Meeting focuses on the only two activities worth convening for: conflict and coordination" (l. 286). In other words, the Boss should have already made a decision and informed everyone of it long before, meeting with people individually if necessary.  The meeting simply exists to implement the decision and openly resolve any conflicts about it.  Concrete tasks will be assigned through the meeting:
"If you don't receive an action plan from the meeting I invited you to attend, you have every right not to attend my next one" (l. 375).

Numbers 3, 4, and 6 above are crucial for me. 90% of our meeting time is listening to someone give a report that is purely informational and could have been written in some bullet points emailed out earlier. This is unproductive and inefficient, wasting everyone's time.

But no one wants to read memos before a meeting, just like students who never read textbooks before coming to class.  Just like Sunday school Christians usually never read their lessons or study the text before Sunday or study about what their pastor is preaching on.  We come wanting to be entertained, wanting new information. But that is not the job of the meeting, the job of the meeting is decision and action.

But, we're a College of Business, we should be better. We demand our students be prepared, and so should we. "This is not high school; we strive to be a world-class organization. We can't tolerate your unpreparedness anymore. Unprepared participants are dead weight" (l. 365).  Save the learning for your own time, a meeting is not a seminar.

I recommend reading the book in your spare time, won't take you any longer than a long-form journal article. Then give it to someone who you wish would run meetings better...