gladwell.com

Rhett Bomar

In my "Comment" this week in the New Yorker on zero tolerance policies,  I mentioned, in passing, the case of Rhett Bomar.  Here are a few more thoughts on his case.

Bomar is--or, rather, was--the starting quarterback for the University of  Oklahoma football team. He played last year, as a freshman, and was very good--good enough that people began to think of his team as a national championship contender and Bomar as a potential pro. But this summer he was kicked off the team. His offense? He had a part-time job during last season at a car dealership in town, and he was "overpaid" for his work to the tune of several thousand dollars.  Now's he gone. His NFL prospects are up in the air. And Oklahoma is no longer considered a national title contender.

Let's be clear. Oklahama,  under the rules, had to do what they did. By being "overpaid" Bomar violated the NCAA's rules on amateurism. His  infraction is the kind of thing that gets an entire football program put on probation. But am I wrong, or isn't this whole controversy more than a little nuts?

First, there's Oklahoma. Bomar was one of their best players. He had the ability to put them in line for a national title. Let's say, conservatively, that his presence on that team meant--in additonal regular season revenue, TV money, Bowl game revenue and athleticwear sales--many, many millions of dollars.

Then there's the car dealership. They were entirely complict in "overpaying" him. (Don't you love that word, by the way? It's so quaint! That word hasn't been used, with prejudice, in, oh, at least twenty years).  And why? Because having one of the most famous football players in Oklahoma on your car lot is worth a lot of money.  It would be as if David Sedaris went back to graduate school at NYU. If you were a bookstore in Greenwich Village, would you "overpay" him to work the cash register? Of course you would. And he'd be worth every penny. But if Sedaris was a football player, and not a writer, that would be illegal. Huh?

To re-cap: Oklahoma made money off Bomar. The car dealership made money off Bomar. Everyone was allowed to make money off Bomar--except, of course, Bomar.

There's a second wrinkle here. Bomar's job was off campus. He entered into a private arrangement with a private-sector employer and was renumerated accordingly. And yet the terms of that private arrangement were sufficient to get him in trouble with the NCAA.  Doesn't this make you feel uncomfortable? It's one thing for the NCAA to pass rules concerning the conduct of student-athletes while they are at school. They shouldn't bet on games. They should go to class. They should meet certain entrance requirements. Fine. But isn't it a bit creepy when a organization who's jurisdiction is explictly athletic starts to tell private citizens how much they are allowed to be paid in jobs they hold on their own time, far away from the athletic field? How on earth do they get away with this?

 

On Criticism

A few more thoughts on yesterday's post:

I will confess to having a slightly reverential attitude toward academia. I'm the son of an academic. Much of my writing involves taking academic research and trying to translate it for a more general audience. And I've always believed that if you set out to write about the work of academic specialists, you have a responsibility to treat that work with respect-- to acknowledge your own ignorance and, where appropriate, defer to the greater expertise of others.

I don't always live up to this. And on other occasions, I"m sure, some would say that I take this reverence too far. But that's a criticism I'm more than happy to live with. In the case of the Ireland case study in The Risk Pool, I probably read a dozen studies or so in the literature on demographics and development,and talked to a fairly wide sample of researchers. I don't pretend that I completely understood all of it, or could follow the theoretical parts. I'm not a trained economist. But I did reach several conclusions:

1. That the scholarship in the area was deep and impressive, and I was won over by it.

2  More importantly, that it was really, really interesting--and that it had the effect of making me think about economic development (and pensions) in a way that I had never thought about them before.

In writing about this field, my intention is not--as it never is--to convert readers to my way of thinking, or have them abandon their own worldview for mine. It is simply to invite readers to share in the same wonderful experience that I had when I read through the literature--that is, to step inside a new way of thinking for a moment,  and be  challenged by it. What taking that step requires, though, is that you the grant the specialists involved some of this same deference--particularly if, like me, you are not an expert on demography. Canning and Bloom are not lightweights. They are scholars, who know more about this field than 99.9 percent of us, and it seems to me reasonable to listen to what they have to say.

The frustration I expressed in yesterdays post has to do with the fact that I don't think that some critics are always willing to offer this respect. One of the people I read regularly, for example, is the cultural critics of the The New Republic's, Lee Siegel. I find him really interesting. Sadly, he's not a fan of mine, and often attacks my writing. I have no problem with that, however. He and I are on the same level. We're critics and journalists, and give and take on that level is what journalism is all about.  A few weeks ago, though, Siegel wrote a very nasty piece about a New York Times op-ed written by the psychologist Dan Gilbert--and that piece infuriated me.

Gilbert is a really important figure in contemporary social psychology. He has published widely. He has had enormous influence on the way we understand human behavior and emotion. And as far as I can tell, Siegel launched an attack on him without making any honest attempt to read or understand or appreciate Gilbert's larger perspective and work. That's just wrong. If you want to tackle a giant, you've got to do your homework. Don't call yourself an intellectual journalist, if you are not prepared to take intellectuals seriously.

This was my frustration with some of the reactions of readers to the ideas of Canning and Bloom. It seems to me that when you are confronted with an argument made by two respected economists, you ought to measure your own response. If my trunctated description of their Celtic Tiger paper rings false to you, then read the Celtic Tiger paper for yourself. If you don't see the importance of dependency ratios, then spend a little time on the web, reading the many, many thoughtful papers that have been written on this subject in recent years. It's simply not fair to dismiss Canning and Bloom, purely on the basis of what I wrote about Canning and Bloom. And in point of fact some of the criticisms leveled at their work would have evaporated had the critics even read so much of the first few pages of the Celtic Tiger paper.

I didn't mean to pick on Jane Galt, by the way.  She  has now written a very gracious and thoughtful response . I just wish that she had written that the first time around.

Dependency Ratios: one last time

One of my frustrations with the blogosphere--as those of you who read this blog know--is that I think that the immediacy of web publishing makes some people lazy. They type faster than they think; or they believe that a reaction is the same thing as an argument.

Case in point. The blogger known as Jane Galt had the following criticisms of my "Risk Pool" piece:

For starters,  [Gladwell] attributes Ireland's success as the "Celtic Tiger" to falling birthrates, which (temporarily) reduced the dependancy ratio. He utterly ignores a more parsimonious explanation, which is that Ireland slashed its marginal tax rates in 1987, including a cut in the corporate income tax to 10%, which turned it into Europe's first outsourcing destination. If you look at the handy spreadsheet
I have uploaded, containing data on Irish growth from 1980-2005 obtained from the invaluable Economist Intelligence Unit, you will see that this fits the Celtic Tiger period much better than a 1979 relaxation of birth control restrictions. Moreover, since there is much evidence that economic growth causes falling birthrates by raising the opportunity cost of childrearing, even if there were a correlation it would be hard to say which way it ran. This also applies to his arguments about Asia and Africa.

Where to start? Let's ignore, for the moment, the quaint right-wing affectation of assuming that marginal tax rates are the most "parsimonius" explanation for all variety of complex human behaviors. Instead, let me make two small points.

1. "Gladwell" does not attribute Irish success to falling birth rates. David Bloom and David Canning do. Gladwell is a journalist. Bloom and Canning are two exceedingly prestigious economists at Harvard, who are considered world experts in the field of demography and economics. Gladwell was impressed by them. He talked to them. He read their work. He was convinced by them. But he didn't make this argument up on the back of his journalistic notepad. And to neglect the true source of this argument is to trivilize and demean it. This is not Gladwell v. Jane Galt; journalist v. blogger. It's world experts v. blogger. Just so we are clear on this. And acknowledging the origins of this idea means that you can't depose of the dependency ratio argument just by dismissing Gladwell. You may actually have to read Canning and Bloom.

2. Galt says that Gladwell neglects a more parsimonious explanation: Ireland's tax cuts. As we've seen, Gladwell did no such thing, because Gladwell didn't do an analysis of Ireland's economic growth. What about Bloom and Canning? Did they neglect the larger economic picture? Well, actually, no. In the "Celtic Tiger" paper, they construct a complex mathematical model to try and tease out the various factors that led to the Celtic miracle. They think that the opening up of Ireland's economy in the 1970's was very important. But the data, they argue, also suggest that the country's demographic transition played an important role as well.  Bloom and Canning, apparently, are of the view that sometimes things that happen in the world happen for more than one reason.

All of this information is quite readily available in the "Celtic Tiger" paper, which is in turn quite readily available on a marvelous invention called the world wide web. The paper itself is just under twenty pages long. It can be read in under half an hour. It's not that hard. Trust Gladwell on this one.

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Dependency Ratios

A number of people--both on other blogs and in response to my previous post--have objected to my use of the "dependency ratio" notion to explain the woes of Bethlehem Steel and General Motors. Here is the gist of the argument, from the reader McGurky:

You say that G.M. suffered BECAUSE it successfully reduced the number of workers it needed to produce a given amount of cars by a large percent thus having less workers to pay for retire benefits. But that's just wrong. G.M. can't pay their retiree obligations because they have no profits. The number of current workers they have is irrelevant to their ability to pay or not pay for former employees' benefits. If Rick Wagoner could produce umpteen-billion cars single-handedly after having invested in a 100%-automated assembly line he could be wildly profitable and be able to afford all those old retiree costs and have the worst dependency ratio possible. G.M.'s problem is not that they've reduced the number of their workers but that they haven't reduced the number enough.

This is, I think, a very good example of the "if pigs had wings. . . " line of argumentation. Sure, if Rick Wagoner could produce all of GM's cars by himself, and as a result be wildly profitable, it wouldn't matter how many retirees he had. So what? Rick Wagoner can't do that. He is--like the heads of Bethlehem Steel before him--trapped in a low margin, labor-intensive business, where workforce compensation is a enormous share of the bottom line. McGurky is absolutely right that "GM can't pay their retiree obligations because they have no profits." But why doesn't GM have any profits? Because of the size of their retiree obligations!

The reason I ended the article with the example of what happened when Wilbur Ross took over Bethlehem and started from scratch is because it demonstrates what happens to the core business of old-line manufacturing when the demographic burden is lifted. And the answer is that those seemingly sickly businesses become profitable again!

I think that there's another point here worth exploring. I raise it briefly at the end of "The Risk Pool," but it could easily be the subject of an entire article. Why aren't the heads of the Big Three all campaigning for universal healthcare? One reader points out that Detroit did support the Clinton healthcare initiative, so perhaps their failure to speak up right now around is strategic: that is, they would rather expend political capital on ideas that have an immediate political future. But even if that is true, I don't follow the logic. If the heads of all the old-line manufacturers were to stand up tomorrow and make a combined call for universal healthcare, wouldn't that act alone be sufficient to put the issue at the top of the political agenda?

All I know is that if I were foolish enough to own GM stock right now, I would find Wagoner's silence on this issue to be something very close to a violation of his fiduciary responsibility. 

The Risk Pool

     A few thoughts on my piece in this week's New Yorker on pensions, "The Risk Pool"-- a piece which I note, to my great amusement, has already been dubbed by one blogger ""the worst Gladwell piece ever.""

     If you haven't read it, it's an argument against the peculiarly American notion of tying retiree benefits to individual companies, which, as the current plight of General Motors shows us, is a recipe for disaster. I think that all insurance and pensions systems, to maximize effeciency and security, should be based on the largest risk pool possible--preferably the whole country.

     One of the predictable responses to this is that this is the idea behind Social Security is--and look at the problem that program is in. I have to say, though, that what reading I have done into the Social Security issue hasn't convinced me that the program is in all that much trouble--that is, with a number of not entirely painless (but not debilitating) adjustments now, we can avoid a lot of the trouble down the line. Put it this way: would you rather, as a retiree, put your faith in the federal government or General Motors?

     I was on a NRP talk show today with Olivia Mitchell of the Wharton School who, it's safe to say, has forgotten more about the pension issue than I will ever know, and she pointed out that its not pensions we should we worried about so much as retiree health care. But even there. General Motors is currently $40 billion behind in funding its retiree medical obligations. The federal govermment is behind as well. But I'd still rather take my chances with the feds than with GM.

     A couple of other, small points. One of the drawbacks of the New Yorker, as I think I've said before, is that we don't get to provide footnotes. So here, in lieu of that, are a couple of notes from The Risk Pool piece.

      I learned an enormous amount from Jennifer Klein's  "For All These Rights: Business, Labor, and the Shaping of America's Public-Private Welfare." If you're interested in reading more about the origins of our crazy quilt pension system, I recommend it highly. I was also heavily influenced by Jacob Hacker's work, in particular "The Divided Welfare State." I didn't actually get a chance to mention Hacker in the piece, and I'm sorry about that. But he has a wonderful new book coming out, and I'm hoping to write about it sometime this fall.

The Case for Geothermal

My father Graham, I’m proud to say, has been a environmentalist his entire life. He started the recycling project in our hometown back in the 1970’s. He put solar panels on his roof to heat his water in the 1980’s, and now he’s put in a geothermal heating and cooling system in his backyard.

     I have to confess that I knew nothing about the geothermal option until my father did this: I thought it was some dodgy, speculative technology that wouldn’t really work. Then I went home last winter, and stayed in my parent’s house over a freezing weekend—and not only was the house warm but the difference in the quality of the air inside the marked. Oil heat works through combustion: it uses up oxygen. Geothermal systems heat the house with ambient air, which makes you feel like you are outside when you are inside. This summer, southern Ontario—where my parents live—has had the same heatwave as the rest of us in the Northeast, and now my parent’s house has been as wonderfully cool as it was warm in the winter.

    So what is geothermal heating? I’ve discovered that lots of people know as little about it as I did, and so I asked my father to write a short description of his geothermal system. Keep in mind that he is a mathematician by profession, which will explain the wonderful technical bits in the middle. Keep in mind, as well, that he is my father, so that any parallels between his beautifully lucid prose and my own are not coincidental. (If you like my father’s post, by the way, I encourage you to check out his latest book—“Inverse Problems in Vibration”—currently ranked 2,149,990th on Amazon.)

    Here goes:

    Geothermal heating and cooling is based on one simple fact: that 6 feet down in the ground the temperature is the same—between 50˚F and 60˚F- the whole year round. This means that it is relatively cool in the summer, and relatively warm in the winter. Geothermal heating is thus quite different from solar heating: solar heating works worst when you most need it--in the cold, cloudy, snowy conditions of winter; the source for geothermal heating and cooling is not affected by the weather.

     For geothermal cooling, all one needs to do is to circulate water in a pipe through the ground to cool it, and use this cool water to cool the air pumped through the house in the heating ducts.

     For heating, there is an extra wrinkle. Most of us prefer the temperature in the house in the winter to be nearer 70˚F then 60˚F, so we need to raise the temperature of the relatively warm air a little. For this we use the gas equation that you may remember from High School Physics: PV=RT. Here P is pressure, V is volume, T is absolute temperature, and R is a constant. If we keep the volume constant, we see that the Pressure is proportional to the Temperature. This means that if we want to raise the temperature of the air a little, then we should increase its pressure a little. To see how much, we must work in absolute temperature, which is 273˚+temperature in Celsius (centigrade) . Take an example: suppose the temperature of the water coming out of the ground were 50˚F; that is 10˚C or 273˚+10˚=283˚ absolute. We want to heat the air from 50˚F to say 68˚F. 68˚F is 20˚C or 273˚+20˚=293˚ absolute. Raising the temperature from 283˚ to 293˚, means that we raise it by (293-283)*100/283 percent, or 3.5 %. That small increase in pressure can easily be done by using a compressor.

      That is the theory. Now the technology. First we have to build a trench in which to place the pipes carrying the water (actually they add some glycol to it, to improve the performance). For our installation we had 3 trenches each 300ft long, 5ft wide and 5ft deep. Each trench had four 4inch pvc pipes in it; 3600 ft in all. Typically the trenches are 5ft deep, rather than 6ft, because all kinds of safety regulations come into play in building a 6ft trench. The 4inch pipes are fed from one large pipe coming from the basement, and they are funnelled back into a large pipe as they return to the basement. The whole system is filled with water and sealed. There is a pump in the basement that circulates the water through the pipes, and brings the warm water back into the basement. The water then goes into a heat exchanger. A heat exchanger does just that: it takes the heat out of the water and heats air that runs through pipes through the water. A heat exchanger is rather like two clasped hands, with the fingers of one hand interleaved with the fingers of the other. One set of fingers carries the warm water, the other carries the air to be heated.

      After being heated by the water, the air enters a compressor where it is warmed further, before feeding it into the air ducts. It is possible to have the pipes running deep down into the ground, rather than running horizontally 5ft down. If there is a lake or a deep river, then the pipes can run through the water, rather than through the ground.

     Now the money matters. We live in the country. In the winter of 2004/5 we spent about $2,500 on oil for our oil furnace. If we had kept the furnace, then we would have spent about $3,000 in the winter of 2005/6. The geothermal system has four parts: the pump to move the water around the circuit, the compressor, the heat exchanger, and the fan to blow the air through the house; those cost $18,000. The trench and pipes cost $2,000, and the necessary changes to the electrical system in the house cost another $2,000. We received a rebate of $600 on the items from the Ontario Government, and another $1,400 from a government conservation initiative.

     When the system is running at moderate strength it takes 1500 KWH, about the same as a single baseboard heater; when it is running at high, it uses 2200KWH, and when the fan alone is working, then it uses 500KWH. Our electrical bill has increased by about $150 per month for the winter months.

     We did not have air conditioning before; the air conditioning is set to come on when the temperature in the house reaches 75˚F, which is not often. The biggest difference in the winter months is in the quality of the air inside the house. There is now no combustion, so no loss of oxygen, as there is with an oil furnace. As far as conservation is concerned, we save about 8 tons of carbon dioxide per year!

     A few additional points. Obviously geothermal doesn’t work for everyone. My father has a luxury of a large backyard, so he could fit all that piping easily into shallow trenches. If you don’t have that much room, as he points out, you have to dig down—and that’s obviously more expensive. I’m not suggesting, in other words, that this is going to solve the energy crisis. But surely there are lots of lots of houses—as well as commercial buildings (like malls, with huge parking lots) that could easily install geothermal systems, and even a modest application of technologies like this could begin to make a real difference in our energy problems.

     I think it is also worth noting how absurdly low-tech the system is. It is pvc pipes and a compressor. My father lives in Ontario, where the winters can be vicious, and has thrown out his furnace! The other noteworthy fact is how (relatively) inexpensive the system is. For an investment of $25,000, my father saves, conservatively, $2000 a year (remember; he wasn’t running air conditioning in the summer before this, so the financial benefits of his system are substantially understated.

     One of the frustrating things about the current discussion over our dependence on imported oil is the persistent notion that real solutions will require some future technological breakthrough. I think we have a lot of the answers. We just haven’t made consumers and public officials aware of them.

For the Record....

A reader, Stephen Wood, writes with a correction, after reading my January 12, 2004 New Yorker article on SUV safety. see: here

Wood writes:

     Unfortunately there are two very evident errors, both in the first paragraph of section 5. of "Big and Bad". The first is that although your estimate of 630 billion miles is right on, these are tire miles, not vehicle miles. If the tires were used until worn out, but not rotated in a five-tire rotation, then the vehicle miles would be just under 158 billion; if the spare was included in a five-tire rotation, then the vehicle miles would be 126 billion.   

     The second is that 0.0005% of 500,000 deaths is just under 3 deaths. I think you meant to say 0.05% of 500,000, or equivalently 0.0005 of 500,000. [1% of 500,000 is 5,000; 0.0542 of that latter figure (5,000) is 271.]

     Your arguments would still be strong with the correct numbers: last dramatic, but more robust.