The Future of the Equity Premium

Brad DeLong and Konstantin Magin:

Suppose that, at the start of some year since the beginning of the twentieth century, you had taken $1,000,000 that you had invested in bonds and believed you would not want to touch for twenty years, and invested it insteade in a diversified portfolio of equities. (Or suppose you had been able to borrow $1,000,000 at the long-term government bond rate). And suppose you had then let both legs of that investment ride for twenty years. What would have been the results in dollars (adjusted for inflation) twenty years later?

Gibson on Writing a Book

William Gibson:

I think it may actually get worse, each time! But I also suspect that that may be a paradoxical indicator of relative emotional health. If you’ve ever met anyone who’s writing a book that he or she is convinced is *very* good indeed, you’ll know what I mean. (Swift reading to his servants may be the perfect case in point.)

By the time I’m three-quarters through the writing of a novel, I’ve necessarily lost anything like perspective, and must rely on feedback from trusted daily readers to know whether or not I’ve completely driven the thing off the road. I suspect that the biggest part of the labor of writing, for me, has always consisted of bludgeoning the editorial super-ego into relative passivity, though no matter how thoroughly I’ve managed to stun it, it still manages to send messages to the effect that the work is really deeply pathetic, hideously flawed, and should be abandoned immediately. I tend to imagine that this is what writer’s block is really about, though in my case it’s remained only partionally symptomatic. I manage to ignore those messages, as painful as I still find them.

Baseball & Innovation

Bob Sutton:

Jeff Angus over at Management by Baseball sent me an intriguing update about Billy Bean’s approach to Moneyball. Bean is famous in the baseball world for developing quantitative techniques to help identify players that are underpaid by market standards and for developing a system that enables such “bargain” players to contribute to overall team performance. There are many signs that the system works, for example, Oakland’s cost per win in 2005 was $450,000 in salary, while the New York Yankees paid 1.4 million. The 2006 payrolls (when Oakland had a better season than the Yankees) were about 60 million for the A’s and about 200 million for the Yankees. Bean and his staff do impressive analysis to make decisions that gain them cost advantages and increase their odds of success. For example, they stay away for star players that are coming out of high school and prefer college graduates because only 5% of baseball players drafted straight out of high school are in the major leagues in three years, while 17% of college graduates that are drafted make it to the majors.

Beane watching is worthwhile…

Becker & Posner on Milton Friedman

The BeckerPosner Blog:

Milton Friedman died this past week. He was the most influential economist of the 20th century when one combines his contributions to both economic science and to public policy. I knew him for many decades starting first when I was a graduate student at Chicago, and then as a colleague, mentor, and very close friend.

I will not dwell here on what a remarkable colleague he was. However, I do want to describe my first exposure to him as a teacher since he enormously changed my approach to economics, and to life itself. After my first class with him a half-century ago, I recognized that I was fortunate to have an extraordinary economist as a teacher. During that class he asked a question, and I shot up my hand and was called on to provide an answer. I still remember what he said, “That is no answer, for you are only restating the question in other words.” I sat down humiliated, but I knew he was right. I decided on my way home after a very stimulating class that despite all the economics I had studied at Princeton, and the two economics articles I was in the process of publishing, I had to relearn economics from the ground up. I sat at Friedman’s feet for the next six years– three as an Assistant Professor at Chicago– learning economics from a fresh perspective. It was the most exciting intellectual period of my life. Further reflections on Friedman as a teacher can be found in my essay on him in the collection edited by Edward Shils, Remembering the University of Chicago: Teachers, Scientists, and Scholars, 1991, University of Chicago Press.

NCAA: Rein in Sports Spending

Howard Fendrich:

In a task-force report released Monday by NCAA president Myles Brand, Division I schools were encouraged to rein in spending on sports – but there aren’t any requirements everyone must adhere to or punishments if they don’t.

“In the case of academic reform, we had a hammer – namely, by teams not conforming, we could take away scholarships and, if that failed, we could keep them out of the Final Four and postseason. That’s heavy duty. That’s a sledgehammer,” Brand said after speaking at the National Press Club. “The fact is, we don’t have that for fiscal responsibility in intercollegiate athletics.”

The task force of about 50 school presidents and chancellors was formed in January 2005, and the report’s release comes as the NCAA is preparing its response to an Oct. 3 letter from Rep. Bill Thomas, R-Calif., chairman of the tax-writing House Ways and Means Committee. Thomas asked the NCAA to justify its tax-exempt status and sought a reply by the end of October; the NCAA received a two-week extension.

I’ve gone to a variety of sporting events around the country over the past 25 years. It is interesting to observe the explosion in sponsorships, luxury boxes and facilities around college athletics.

SAIC’S Robert Hirsch on Peak Oil

Defense & The National Interest:

10/24/06 Peaking of world oil production, an update by Robert Hirsch, Senior Energy Advisor, SAIC:

Still Built on the Homefront

Timothy Aeppel:

While many U.S. manufacturers are decamping to greener, and cheaper, pastures overseas, Bobcat, a division of Ingersoll-Rand Co. Ltd., has found advantages sticking close to its North Dakota roots to build the little machines that, among other things, are used to clean barns, dig dirt and plow snow. Bobcat has exploited its location to keep a finger on the pulse of its core market of small landscaping and construction contractors, helping it quickly develop and ship products. Also, the company’s rural setting, executives say, has bred the kind of culture where problems are solved with the can-do, make-do ethos of the farm.

“There are a lot of barriers any foreign producer has to overcome to give us a real challenge,” says Richard F. Pedtke, the president of Ingersoll-Rand’s compact vehicle division.

For example, the company usually can deliver any of the hundreds of attachments it sells for its machines to a customer within four days, a feat almost impossible and certainly costly for any company with long supply lines stretching overseas. And by keeping manufacturing, engineering, and marketing closely linked, with people in those roles sometimes living across the street from each other, the company is better able to anticipate how markets are shifting and find new applications for its machines, says Mr. Pedtke.

Facebook & Privacy

Danah Boyd:

Facebook implemented a new feature called "News Feeds" that displays every action you take on the site to your friends. You see who added who, who commented where, who removed their relationship status, who joined what group, etc. This is on your front page when you login to Facebook. This upset many Facebook members who responded with outrage. Groups emerged out of protest. Students Against Facebook News Feeds is the largest with over 700,000 members. Facebook issued various press statements that nothing was going to change. On September 5, Mark Zuckerberg (the founder) told everyone to calm down. They didn’t. On September 8, he apologized and offered privacy options as an olive branch. Zuckerberg invited everyone to join him live on the Free Flow of Information on the Internet group where hundreds of messages wizzed by in the hour making it hard to follow any thread; the goal was for Facebook to explain its decision. In short, they explained that this is to help people keep tabs on their friends but only their friends and all of this information is public anyhow.

WSJ: 2006 Tech Innovation Winners

Wall Street Journal:

Computer systems are notoriously finicky. They’ll hum along just fine and then unaccountably slow down, freeze up or stop working altogether. Finding the cause of some unexplained problem is difficult and time-consuming, especially with complicated systems in real-life settings.

Bryan Cantrill and a team of engineers at Sun Microsystems Inc. have devised a way to diagnose misbehaving software quickly and while it’s still doing its work. While traditional trouble-shooting programs can take several days of testing to locate a problem, the new technology, called DTrace, is able to track down problems quickly and relatively easily, even if the cause is buried deep in a complex computer system.

The DTrace trouble-shooting software from Sun was chosen as the Gold winner in The Wall Street Journal’s 2006 Technology Innovation Awards contest, the second time in three years that a Sun entry has won the top award. The panel of judges, representing industry as well as research and academic institutions, selected Gold, Silver and Bronze award winners and cited one technology for an Honorable Mention.

For the awards, now in their sixth year, judges considered novel technologies from around the world in several categories: medicine and medical devices, wireless, security, consumer electronics, semiconductors and others.

PDF summary of all the winners.