Dave Friedman's Soul of Wit

Winner Take All?

The Eclectecon asks if we are moving away from a "winner takes all" society in which a few large firms dominante a given market for goods or services. My comment: My (non-economist) take on this issue: as technology allows more and more people to become their own publishing house (blogs), video production staff (commoditized consumer electronics plus YouTube), and filters (RSS news aggregators), the idea that any one company should be able to win "all" of a market seems rather ludicrous. Of course, implicit in my argument is the assumption that people will take advantage of the freedoms new technologies afford them. History has shown, of course, that many people do not adopt new technologies, either because they are intimidated by them or don't understand their impact. So, I would hedge my argument: to the extent that a well educated person can take advantage of new technologies to free himself from the dictates of corproate America, corporate America will not be successful at dictating that person's experience. To the extent that a person is either uneducated or unwilling to learn about new technologies and apply them to his personal circumstance, a company will be able to control the market in which the consumer consumes.

Winner Take All?

The Eclectecon asks if we are moving away from a "winner takes all" society in which a few large firms dominante a given market for goods or services. My comment: My (non-economist) take on this issue: as technology allows more and more people to become their own publishing house (blogs), video production staff (commoditized consumer electronics plus YouTube), and filters (RSS news aggregators), the idea that any one company should be able to win "all" of a market seems rather ludicrous. Of course, implicit in my argument is the assumption that people will take advantage of the freedoms new technologies afford them. History has shown, of course, that many people do not adopt new technologies, either because they are intimidated by them or don't understand their impact. So, I would hedge my argument: to the extent that a well educated person can take advantage of new technologies to free himself from the dictates of corproate America, corporate America will not be successful at dictating that person's experience. To the extent that a person is either uneducated or unwilling to learn about new technologies and apply them to his personal circumstance, a company will be able to control the market in which the consumer consumes.

Intelligence, Academic Pedigree, Utopia, Part II

I blogged yesterday in response to an essay by one Doc Searls. First, he runs an online journal, Linux Journal, and therefore is more expert than I about the open-source movement. So, I'll concede he's on better ground than I when he argues, in response to one of my claims: [T]he open source movement doesn't advocate ending corporate hierarchies. It advocates good code. The Cluetrain Manifesto (specifically, Dr. Weinberger) says hyperlinks subvert hierarchy. Which is true. But subversion is not elimination. Nor is observation the same as advocacy. Second, I don't, contrary to his assertion, offer a "full-on disagreement" with his original argument. I merely think his argument, while good, is a utopian one. He argues, essentially, that academic pedigree and degrees should not matter to corporations. What matters, at heart, is that a potential employee can do the job well. Academic distinction should be, for most jobs (but certainly not all), incidental. Degrees are nice to have, but not necessary. I couldn't agree more. However, the trick is this: in the absence of another filtering method by which companies hire people, academic pedigrees are a useful criteria to use. Perhaps some companies are more enlightened than others, and realize that intelligence and capability can be measured in a manner other than the ranking of the academic institution from which one graduated. But most companies are conservative, not enlightened, and are more concerned about protecting themselves. Companies exist, in part, to manage risk, and hiring managers perceive risk when confronted with the prospect of hiring a candidate who does not fit the "normal profile" of what the hiring manager is looking for. I don't advocate this approach; I am merely saying it exists. To deny it exists, or to consider it irrelevant is to miss the point. In the absence of another, better way to screen job applicants, such is what we have to contend with. Finally, Searls disagrees with this statement: IQ distributions are a bell curve: there are very few people at the low (retarded) end of intelligence, and there are very few at the high (genius) end of intelligence. Most of us are bunched in the middle. The distribution is much the same as a distribution of humans' heights: Tom Cruise is below average in height and Yao Ming is above average. (But Tom Cruise is closer to the average than Ming.) He refutes my argument with an irrelevant personal anecdote, and a condemnation of IQ scoring: Wrong. I've been 5'9 the whole time my IQ has been measured everywhere from very smart to very dumb. Intelligence is complicated, conditional and hard to measure. The belief that people have "an IQ," however, comes easy. Too easy. A friend of mine, a Ph.D. with specialties in psychology and statistics, once sat on a plane next to an older woman who had achieved a great deal — and spoke proudly of her five grown children, who were all achievers on their own, holding advanced degrees and honored positions in their professions. The woman credited their success to home schooling. My friend challenged her on that, saying that heredity must also have something to do with their success. "Yes," the woman replied. "It would if they hadn't all been adopted." Whether you buy into the IQ concept or not (I think it has many flaws) is beside the point: IQs are still distributed along a bell curve. What you think of their validity or utility is irrelevant to the consideration that, in fact, their distribution is a bell curve, just like human height. Searls anecdotal observation about a friend's plane trip, while interesting, and perhaps indicative of some of the criticisms leveled at IQ scoring is also merely anecdotal, and therefore conclusive of nothing but interest. But all of this is irrelevant. As I said, and as I thought I made clear, I agree with much of Searls argument. However, in the absence of any better filtering criteria by which companies make hiring decisions, I don't see how academic pedigree will disapear as a proxy for intelligence and capability.

Intelligence, Academic Pedigree, Utopia

IQ distributions are a bell curve: there are very few people at the low (retarded) end of intelligence, and there are very few at the high (genius) end of intelligence. Most of us are bunched in the middle. The distribution is much the same as a distribution of humans' heights: Tom Cruise is below average in height and Yao Ming is above average. (But Tom Cruise is closer to the average than Ming.) Some companies, notably Microsoft and Google, which were each founded by unusually gifted people, have become known as a culture in which IQ, and its correlative value, the prestige of the undergraduate institution one attended (but did not necessarily graduate) are large determinants in job applicants being hired. Doc Searls, the editor of the online Linux Journal, bemoans this state of affairs: A friend who worked at Microsoft once told me he could describe his employer in two words: more school. He explained that the company is built by and for academic achievers like the two guys who founded the company. I read recently that Microsoft's two founders, Paul Allen and Bill gates, had SAT scores of 1600 and 1590, respectively--back when scoring was much tougher than it is today. My friend noted that Microsoft executives "can't go two paragraphs without using the word 'smart'." He asked, "Are there any other companies that want to know your SAT scores? Your GPA? Or that grade you on a curve?" He also said Microsoft was the first company to call its facility a "campus". Not sure if that's true, but it's plausible enough to make his point. I can save Microsoft a pile of time and money by reporting a fact no school wants to admit, one that will flatten the world far more than any other factor: pretty much everybody is smart. What's more, they're all smart in their own ways. Meaning that the sources of innovation in China are a lot higher than 1,300 out of 1.3 billion. Microsoft isn't unusual in the premium it places on school performance and school-type measures of human capacity. We've all been doing that ever since the Industrial Revolution, when modern school systems began. If we want to break free of big company silos and big company thinking, we need to break free of our equally industrial notions about schooling, which are based on the belief that talent and intelligence are rare. Businessweek's new blog, Blogspotting, summarizes Searls' argument: Catching up on blog reading, I came across this recent piece in Linux Journal. Here Doc Searls upbraids Microsoft for focusing too much on a very narrow definition of intelligence, and giving far too much weight to IQ. In the tech world that I'm seeing, the keys to innovation include: * curiosity * knowledge of other cultures * readiness to cross into different disciplines * good communications skills * mastery over at least one specialty Hire someone who has those five covered, and you won't have to worry about IQ. There's probably some truth to this idea--most business functions, and most jobs--can be done by people of average or above-average intelligence. And, at root, an employer's chief concern is whether a person can do the job for which he is applying. But employers also need to feel that they are applying some sort of filter or standard on applicants: if a high school graduate can code as well as a current employee, who has a Master's degree in Computer Science from Stanford, what does that say about the utility of a degree from one of the world's elite universitites? Corporate cultures, therefore, have an incentive to inculcate a sense of intellectual superiority: if I can do the same work as someone with more degrees than me, then that fact implicitly devalues the value and utility of the degrees. Searls is writing from the perspective of the anarchic world of open-source coding: any person can contribute to the code, at any time, regardless of qualification. While this process, and this way of collaborative work, works well for the task in which he's involved, corporations are necessarily much more structured than any open-source environment. It's doubtful that the repudiation of "official" measures of intelligence, or intellectual pedigree, to which Searls aspires, can be accomplished, precisely because running a corporation is an exercise in risk management. Employers want some insurance that the people they hire are competent. What other filter do we have other than IQ tests, SAT scores, or colleges attended, to attest to one's competence? These are imperfect criteria, to be sure. A genius, such as Bill Gates, or Albert Einstein, likely would not be a successful employee at most companies, precisely because they are so smart, and so much more visionary than even most very bright people, that they would quickly become bored. Boredom, and aloofness, are the death knell of anyone trying to make it in a corporate hierarchy. The trick, of course, is that those that propose we end corproate hierarchies, such as the open-source movement advocates, conveniently ignore that corporations exist to collectivize human labor (whether manual or intellectual), and corporations need to be managed in order to avoid a devolution into chaos. Searls describes a utopian vision, in which academic pedigrees, and related qualifications and certifications are rightly consigned to the anachronistic times from which they first sprouted. But he offers no real alternative that a corporation can use in its hiring. A company's first interest, after all, is that the work be done. In order for the work to be done, one who can do the work must be hired. Companies waste billions hiring the wrong person, then removing them, and installing another person in his place. Companies, well aware of the high costs incurred in hiring someone who either cannot do the job well, or who does not fit into the culture, do everything they can to mitigate those risks. While Searls is probably correct that IQ should be an irrelevant consideration in companies' hiring practices, such filters persist primarily because no better alternatives are available, and companies would be remiss in not trying to adduce who is qualified to do a certain job, and who is not. In the absence of other filtering criteria, Searls' argument is merely a utopian one. It's a good argument, but it is still utopian.

Googlephobia, or, "the law of the market is king"

France does not like the fact that Google competes in the free market, and, as a result, has come to dominate over three-quarters of all internet searches performed by the French. Reports the Economist: Googlephobia is spreading. Mr Jeanneney has talked of the “risk of crushing domination by America in defining the view that future generations have of the world.” “I have nothing in particular against Google,” he told L'Express, a magazine. “I simply note that this commercial company is the expression of the American system, in which the law of the market is king.” Advertising muscle and consumer demand should not triumph over good taste and cultural sophistication. The flaws in the French plan are obvious. If popularity cannot arbitrate, what will? Mr Jeanneney [head of France's national library, la Bibliotheque Nationale] wants a “committee of experts”. He appears to be serious, though the supply of French-speaking experts, or experts speaking any language for that matter, would seem to be insufficient. And if advertising is not to pay, will the taxpayer? The plan mirrors another of Mr Chirac's pet projects: a CNN à la française. Over a year ago, stung by the power of English-speaking television news channels in the Iraq war, Mr Chirac promised to set up a French rival by the end of 2004. The project is bogged down by infighting. "The flaws in the French plan are obvious." A better construction: the flaws in the French are obvious. An aversion to free markets, and the growing globalization of the world's economies, compounded with the spread of mass communications platforms such as the internet means that in all instances authority devolves from the government to the individual. I bet a beret and a croque monsieur that the average French internet user cares little that he searches the internet using an American company's technology. If the Saudis use Google, why would the French care if it's American or not? Another odd Google search, which yields this post. I'm confused.

Immigration, Free Markets, and Incoherence on the Right

What do people like Michelle Malkin and Phyllis Schlafly have in common with radical environmentalists? Both camps, normally ideologically opposed to one another, support severe restrictions on immigration. They often argue with an apparent ignorance of economics. A Constrained Vision visited CPAC today and came away with some sour notes on Schlafly debating immigration with the Manhattan Institute's Tamar Jacoby. Immigration is one of those things I don't know much about, but my instinctual reaction to the subject is that a coherent conversation cannot be had without understanding the economics underlying labor markets. Unfortunately, I am not conversant enough in economics, or its application to labor, to discuss immigration at length, but my sense is that, on net, immigration is a good thing, even if it depresses wages for unskilled laborers (which is a common complaint of anti-immigration foes on the right). Markets are generally dynamic, and it is folly to believe, as anti-immigration forces on the right contend, that low-skilled laborers should be paid more than the market is willing to pay them. In essence, this is the same muddied thinking that unions use when complaining about "dumping," NAFTA, free trade, outsourcing, and all manner of other applications of free markets. But little, if anything, substantive is said about the nature of free markets, when these people complain and cavil. Rather, both the anti-immigration right and the pro-union left evince an ignorance of economics in favor of rhetoric.