Coordination Problem

Confessions of an Academic Egghead and Hoops Junkie

OK, the attention GMU's great basketball run to the Final Four has been utilized by several of us (and me in particular) to highlight certain similarities with our economics department and our law school in the efforts to compete with more 'prestigious' programs (I said 'prestigious' because I have always loved a line supposedly attributed to Vernon Smith when he moved to Arizona—he was reportedly asked how he could move their since it wasn't a top ranked department and he responded: "Any department that would hire me is by definition a top department." I've never asked Vernon if this story is true or not, but I love it nevertheless). But I feel compelled to say something before tip-off on Saturday night. It is a simple point and one that seems to be getting recognized internationally now, but should be said again and again: Coach Larranaga is outstanding and his teams play the game the way it should be played!

My love of the game of basketball far exceeded my ability to play the game. But I have had a passion for the game since I was in elementary school in NJ. I've loved playing basketball and I've enjoyed teaching it to young players for years—starting when I worked as a counselor at clinics, my HS coach ran for elementary and middle school kids, then at Lehigh Valley Basketball Camp, years of coaching CYO and recreation basketball, and more recently with the Fairfax Stars AAU basketball organization.

I watch hundreds of basketball games during a year: youth games, high school games, college games, European league games, NBDL games, and NBA games. Coach Larranaga's teams over these past 9 years (I moved to GMU in 1998 and have been a season ticket holder starting that season) play some of the most enjoyable basketball to watch for a basketball fan. He has his players play tough defense—the scramble—a defense predicated on pressuring the ball, trapping either the first pass or the dribbler, anticipating and rotating, and rebound and running. He plays 10 players a game, which means his bench is always into the game. He has the players spread the court: "spacing is offense and offense is spacing" as Hubie Brown has taught generations of coaches. They play team ball and are mentally tough. George Evans, the star of the late 1990s teams, was a great college basketball player. Keith Holden, a role player on those Evans' teams, was as fundamentally sound as any player you could watch.  During his tenure at GMU, Coach Larranaga's teams have gone to the NCAA three times and deep in the NIT.

The current team of players has been a joy to watch for several years—Lamar Butler is a fifth year senior (he was injured and red-shirted) and his ability to shoot and stretch out the opponents defense was evident from his first year. And Jai Lewis has made his presences felt as soon as he put on a GMU uniform. GMU plays the game inside-out and Butler and Lewin worked the two-man game against UConn as well as any college duo.

The bottom line: Coaches Coach, Players Play, Fans Cheer, and Academics Study. Coach Larranaga is an excellent coach, he has players that believe in a system and work hard to compete, and he has seniors who have refused to be rattled or overcome by the situation.

I will continue to study the game from the unique perspective of economics, as well as following the latest coaching tips in publications such as Winning Hoops, but the real game is down on the floor, and the real professor of hoops is Jim Larranaga. But I do take great pleasure in the fact that Coach Larranaga was a economics major at Providence College. Assistant Coach Chris Caputo was also an economics and finance major at Westfield College. Perhaps the link between basketball and economics is as tight as I have been suggesting!

GMU Econ Department All Over the News!

In case you were wondering what spillover effects are generated by the Patriots being in the final four, here are a few examples:

• Today in the Washington Post, an article about the economics department with interviews of the main professors, especially Pete Boettke sharing his views on economics and basketball (see here).
• In Slate, an article by Pete Boettke and Alexander Tabarrok on economics and basketball (see here).
• In the Philadelphia Inquirer (see here).
• In FoxNews, Radley Balko says nice things about basketball, GMU, and Mercatus (see here).

George Mason University economics department is one of the most interesting in the world. It’s getting more publicity thanks to the Patriots. This is great!

Good Field Work, Good Analysis, and Good Policy: Solutions to Poverty In Africa — part I

As the editor of the Mercatus Policy Series, I am very happy to present our latest Mercatus Policy Comment by my colleague Karol Boudreaux: Taxing Alternatives: Poverty Alleviation and the South African Taxi/Minibus Industry (see here for pdf). In conjunction with the Free   Market Foundation of Southern Africa (FMF) and the Institute of Economic Affairs (IEA) in London, and with the financial help of the Templeton Foundation, the Mercatus Center started the Enterprise Africa! project in 2005.

As William Easterly puts it in his latest book, The White Man’s Burden, grand plans to eliminate sustained poverty in the developing world have failed for 50 years, and $2.3 trillion were spent in vain. This is the greatest tragedy of our age. In spite of what Jeffrey Sachs and other luminaries say, we do not need another plan doubling foreign aid. In order to understand what the mechanisms of development are, we need to take a radically different approach and understand, in the light of economics (especially the entrepreneurial approach), the actual situation on the ground.

The goal of the Enterprise Africa! project is to provide a unique view of how the institutional environment created by local policy enables or inhibits productive enterprise and ultimately affects the well being of members of the community in question. Our approach relies substantially on local experience and knowledge. We aim at painting a picture which reflects the reality that people live every day and not the fanciful ideas that planners have about the world from their desks in Western capitals.

Karol has been twice to Africa already (she actually just came back from her second trip). This first publication is about the taxi industry in South Africa. It shows how, in spite of the apartheid, black South Africans started taxi businesses and made a living providing a very useful social service. While some deregulation took place in the 1990s, the South African taxi industry is now in crisis and is experiencing bursts of violence. In Taxing Alternatives Karol explains the context for the development of the taxi industry and what policy should be followed to remedy its current ills. It is a great piece of work!

The Clash of Civilizations?

Amartya Sen has a new book out which argues that religious identity is not destiny and in so doing holds out hope for cosmopolitanism and modernity.

Stupid in Advertising

Perhaps you have noticed an advertisement that Shell runs on gas reserves. It reads: “Yes, the world’s remaining gas reserves are getting harder to reach” (see here for the advertisement and here for the website). This statement always makes me smile, as it shows that many companies pay lip service to economics when it comes to communication about environmental issues. This statement is both true and false depending on what one means by “gas reserves.” The crucial word missing in the ad is “known” (in the way Austrian economists use the word).

On the one hand, the statement has been true from the first day gas reserves have been exploited by mankind. At any moment among known gas fields (including the known areas where gas is likely to be located), companies will exploit easy to reach gas reserves first and harder ones later. Thus, the fact that the world’s remaining known gas reserves are getting harder to reach has always been true, it is not a consequence of gas running out.

On the other, the statement is false if one considers that some gas reserves may be truly unknown in their location (people truly don’t suspect there could be gas in a given location or that it could be easy-to-reach), but if discovered it could be easy to exploit (at least easier than others currently exploited). If my knowledge is correct, it has been the case with the discovery in 1969 of the giant Maui gas field in New Zealand, which is located in the Tasman Sea off the Taranaki Coast (with its beautiful volcano).

Final Four for GMU

OK, this isn't going to be about economics.  And I will not say much about basketball except Wow and Congratulations to Coach Larranaga, his staff, and his players.  His team epitomizes what it means to play basketball as a TEAM game.  All five starters in their victory over UConn, just as they have all season, scored double-digits in points, played great team defense and rebounded aggressively.

At Friday night's game I ran into former President George Johnson and congratulated him on his dreams for GMU coming true.  When Johnson came to GMU it was a commuter school with a community college reputation even though it offered undergraduate and graduate degrees.  He saw something others didn't and he acted in a bold fashion to build a great university.  He built up the economics department establishing a new PhD program and orchestrating the move of research teams from VPI (Center for Study of Public Choice) and Rutgers (Center for the Study of Market Processes).  He also enticed Henry Manne to move from Emory to build up GMU's School of Law, and he established the School of Public Policy, built up the English Department and also the Information Technology group.  In short, his dream of building the "Stanford of the East Coast" was pursued as aggressively as one could imagine.

George Johnson, however, also orchestrated the establishment of the Patriot Center --- a beautiful sports arena that is the home of the GMU Patriots.

President Alan Merten inherited Johnson's vision of GMU and built upon it.  Both were there on Sunday March 26th to watch the Patriots make history.

The Political Economy of Exporting Democracy

I am headed to West Virginia University to present in the Economic Department's weekly seminar.  I will be presenting the first chapter from the book manuscript I am currently working on, After War: The Political Economy of Exporting Democracy. 

In addition to my presentation, I am looking forward to catching up with co-blogger Pete Leeson as well as Russ Sobel, Bill Trumbull and Division of Labour's Josh Hall.

Plus Ça Change, Plus C’est Pareil…

The Economist this week has two papers (see here and here) on the current protests in France against the new labor bill (called le contrat première embauche). The new law offers more job market flexibility by allowing employer to hire and fire people under 26 more easily. The last November riots and the very high unemployment rate among the youth (23%) triggered this new policy. I have blogged about unemployment in France during the November riots (see here and here), but here are a few more comments on the current situation.

First, one must reaffirm that the number one problem in France (and in many other EU countries) is labor market laws. In terms of policy reform sequencing, deregulating the labor market would be the first thing I would do if I were in the shoes of the PM (followed by tax and public finance reforms). So there is no doubt that Dominique de Villepin is right in seeing labor market rigidities as the source of many social woes in France.

Second, The Economist is right to point out that rather than segmenting the job market into different groups (young and old, etc) one should rather replace the whole of France’s two-tier system. It is clear that a single, more flexible job contract is desirable. In fact, labor contract law should be placed under the general principle of contract law in the Code Civil as it was written in 1804: le contrat est la loi des parties (contracting is the law of the parties to the contract). This being said, it may make sense, as a second best, to allow more flexibility for young people entering the job market if one cannot reform the whole system. New Zealand for instance, has had a two-tier minimum wage law for years. However, general labor laws in New Zealand were deeply reformed in 1991 with the Employment Contract Act (subsequently changed), which re-introduced, to a large extent, freedom of contract in labor relations. The current low unemployment rate in New Zealand has more to do with the general quality of its labor laws rather than with its two-tier minimum wage.

Third, one more time the current events illustrate the difficulty of social change in the EU, especially in the core countries: France, Germany, Italy, and Belgium. These countries have the highest level of resistance to change. Many French students (a recent CSA poll showed that a total of 68% of the French population is against the new law) do not want a more flexible job market; they want to feel secure in the idea that the law addresses the uncertainties of life, even at the price of the high anxieties and the poverty that come with high unemployment. This is probably where James Buchanan’s essay Afraid to Be Free: Dependency as a Desideratum rings most true. It is not so much paternalism that classical liberals and other libertarians should be concerned with, but the human desire not to be in charge and to reject responsibility onto others (i.e. the State). To use Buchanan’s words, socialism now survives in the form of parentalism; that is, the desire of many human beings to remain children all their lives. [On this topic, and if you read French, see Mathieu Laine's new book: La Grande Nurserie.]

Are You Ready for Some Basketball ...

As anyone near a TV or in an office pool knows, George Mason University defeated University of North Carolina (the defending National Champions) yesterday 65-60.  Coach Jim Larranaga has built a program at GMU that everyone in Northern Virginia can be proud of and should rally around.  First, his teams play a fundamentally solid and defensively minded game.  In fact, Coach L is the author of the "scramble defense" an aggressive trapping  defense that disrupts opponents and creates easy scoring opportunities your team.  This years team is well-balanced offensively with 5 players averaging in double digits.  There is a great story told by Kareem Abdul-Jabbar about when he was playing back in HS at Power Memorial in the 1960s. His coach took them to a game in Madison Square Garden to see the great Boston Celtics play the NY Knicks.  At the end of the game the coach turned to all of them and said, "who was the leading scorer for the Celtics?"  The boys argued among each other because they couldn't tell. The coach explained to them that the Celtics play basketball the way it is supposed to be played. Nobody scored more than 20 points, but they had 5 or 6 players score between 15 and 20.  Kareem was a dominate scorer, but he understood the value of team play as reflected in his teams at Power Memorial, UCLA, and his NBA championships at Milwaukee and then with Los Angeles (especially those Laker teams with Magic Johnson).  Coach Larranaga's team play in a similar way --- tough defense, share the ball on offense, and play inside-out.  Coach L's speech before the game yesterday against UNC --- "Their fans believe their players are Superman, but our fans know we are kryponite" must go down as one of the best lines a coach has given his players before hitting the court, and they played that way.

GMU success is not a fluke.  Coach L has built this program up over 9 years.  His teams with George Evans (a young man who entered the military after HS, but then grew into a 6'9" impressive frame) were fantastic and made the NCAA tournament.  He aggressively recruited in a 90 mile radius from the campus.  His players graduate.  His assistant coaches develop into head coaches throughout the nation.  And he is a coach of great integrity.  Consider the now infamous incident with Tony Skinn in the CAA Tournament that caused so much discussion and ESPN clips.  The low blow delivered by Skinn was not caught by the referees, nor was it caught on camera during game time.  Coach L called Skinn over during the game (after he has just hit a 3 pointer to bring the game to 4 points) and asked him what happened. Skinn told him.  Coach L acted not because of officials (who made no call) or CAA officials (who didn't have a view at the time either), but out of a sense of doing the right thing to teach a lesson to his young player.  Skinn was benched, and subsequently given a 1 game suspension.  This was imposed not by the league or even the NCAA, but by Coach L and GMU.  Rightfully, Coach L received praise from everyone --- most notably Coach K.

Too many mid-major coaches try to take short cuts (academically and otherwise), but Coach L has kept priorities and built a program at GMU.  I have been coaching youth basketball for years and am currently coaching AAU basketball again for the Fairfax Stars organization. I enjoy taking my teams and any young players to see Coach L's teams play because of the way they play.  I have also enjoyed attending Coach L's practices to watch how he organizes his practices and teaches his players.  GMU can be very proud of what Coach L has built over these past 9 years -- he has a clean and classy program.

So GMU's victories against Michigan State and UNC are well-deserved.  But there are also some rational choice mechanics at work that all slightly out of sync organizations can learn from when trying to compete against the heavy weight programs in one's field.

First, the lure of the NBA has skimmed off some top HS talent in recent years and the "costs" of this fell on the major schools.  UNC, for example, should have had JR Smith and Dwight Howard.  Clearly MSU and UNC still has top flight athletes, but due to either skipping college or leaving college early to pursue NBA options does skim the cream of the crop and this has led to greater parity among college basketball teams.

Second, senior led teams are more effective than freshman led teams.  No matter how good freshman players are, a senior player of similar skill level will outcompete the freshman player 8 out of 10 times.  The mid-major players stay for 4 years, the major schools lose their players to the NBA.  Consider Jim Calhoun's comments about Rudy Gay, who he hopes will be around next year, but as Calhoun understands may very well be sitting on an NBA bench making millions rather than helping U Conn continue its championship tradition.

Both the first and second reasons make the heavy weight programs less heavy weight than what they might have been 10 years ago.  But even then there were always a chance for the less recognized programs to compete if they "dared to be different" and pursed high quality, but undervalued assets --- in other words act entrepreneurially in terms of building their organization or team.

This brings us to a third reason. Coach L follows The Money Ball type model of recruiting players.  They are big time players, but their bodies were not quite big time. As Tony Skinn put it: "We have a lot of people on this team that came from big-time high school programs but were too small in the big time [college programs].  Coach Larranaga saw something in us and said 'Hey, come play at my school.'"  Coach L saw something that the major coaches didn't see. His team primarily comes from within a 90 mile radius of Washington, DC (a strong hotbed of basketball talent --- though I am partial to the NJ-NY area as the stronger of the two east coast regions).  But his players tend to be a little big smaller (6'7" center or a 6'0" point guard), a little skinny, or a little fatter, or a little slower, etc.  They are just slightly off what the big time coaches are looking for, so that they are undervalued by the major programs and he is able to scoop them up.  This is exactly the model the GMU Law School has followed (and allowed them to rise through the ranks of law schools) and also the model that our economics department in its best moments has followed and which has enabled us to build a program that can boast of 2 Nobel Prize winners and their research teams.  As I always tell everyone, we are the best weird place to study economics in the world.

And on any given day, we can take on the Harvard's or the Chicago's of our world and walk away holding our own in terms of tackling important economic issues of our day.  It may be surprising to an outsider when a guy like James Buchanan (1986) or Vernon Smith (2002) wins the Nobel Prize, but for those close to the work ethic and brilliant insights of these men and their research teams it is not a suprise at all.  I think of GMU's basketball team the same way. Coach L has worked long and hard in the game of college basketball, he has built a winning approach, and a great tradition of playing basketball with intensity, speed and execution.  When you combine talent with a work ethic good things happen and that is precisely what GMU has done in its approach of building on excellence --- whether that is to be found in the classroom, the court room, or on the basketball court!

Go Patriots!!!

What Does It Take to Get Into GMU's Econ PhD Program?

Over at Steve Levitt's blog there is a debate raging on whether or not Steve Levitt could get into a top PhD program today.  He argues that he probably would not get into Chicago because of the lack of undergraduate math background, but that MIT or Harvard might still have taken a chance on him.

The entire discussion made me think about getting into GMU's PhD program.  I earned my PhD at GMU in 1989 and then taught elsewhere for roughly 10 years before returning in 1998.  Among my closest classmates at GMU in the mid-1980s the alternatives to us attending GMU where UCLA, Yale, NYU, and Chicago.  We had all obtained admission to those programs and offers of financial support, yet we choose to attend GMU because of the unique educational program it offered.

At GMU we have a large PhD program --- approximately 200 students enrolled in the PhD program at various stages of completion.  Each year we get about 200 applications, and we admit roughly 50.  Funding is very limited.  In the comments at that Freakonomics blog it is stated that to get into a top PhD program it requires a GPA of 3.7 or higher, a 800 on the GRE quantitative (or near that), extensive undergraduate math background, already existing research experience, and 3 letters of recommendation from well-known economists strongly supporting your case.

At first a student reading that might say that is insane, but it actually makes sense given what I know of our own program at GMU.  To be admitted to our program this year you needed the following:

GPA -- 3.55; GRE Quantitative -- 770; GRE Verbal -- 610.  To receive funding you needed a much stronger record.  The only offsetting factor to these competitive scores is letters of recommendation from professors that are known to the staff and willing to push their student in our unique areas of strength at GMU (Austrian economics, experimental economics, law and economics, public choice, and religion and economics).  Still a student cannot be significantly under those baseline scores and get admitted to the program, and the opportunities for funding from the department are non-existent if you are under those scores (though there maybe some private funding).

Economics is obviously a very competitive field and it doesn't get any easier after admission to a PhD program.  The market for academic jobs in economics is also very competitive and requires those competing for these positions to really distinguish themselves.

Is it all worth it?

Personally, I can not think of a better way to make a living.

Thanks to Tyler Cowen for the original pointer to Levitt's post, and also I think Tyler is 100% spot on with his wish list for graduate education in economics.