Big Bonuses

| Fri Nov. 21, 2008 2:36 PM EST

BIG BONUSES....Dan Ariely writes in the New York Times today about an experiment he did to find out if paying people big bonuses motivated them to produce better results:

We presented 87 participants with an array of tasks that demanded attention, memory, concentration and creativity....We promised them payment if they performed the tasks exceptionally well. About a third of the subjects were told they'd be given a small bonus, another third were promised a medium-level bonus, and the last third could earn a high bonus.

We did this study in India, where the cost of living is relatively low so that we could pay people amounts that were substantial to them but still within our research budget. The lowest bonus was 50 cents — equivalent to what participants could receive for a day's work in rural India. The middle-level bonus was $5, or about two weeks' pay, and the highest bonus was $50, five months' pay.

....The people offered medium bonuses performed no better, or worse, than those offered low bonuses. But what was most interesting was that the group offered the biggest bonus did worse than the other two groups across all the tasks.

The gibes pretty well with my understanding of how to get the best performance out of people. Money matters, but not that much. Being happy in your job matters, but not that much. What really matters is (a) having the skill set for the job and (b) having the support infrastructure (tools, budget, executive buy-in, whatever) needed to allow you to do your job.

Now, obviously, money is important to attract people who have the skill set for the job. If CEOs are all being paid 400x the median salary, the best ones aren't going to work for someone who offers them only 100x. Why would they? Still, the huge secular increase in CEO salaries (and Wall Street bonuses) over the past few decades has almost certainly produced absolutely nothing in the way of higher performance. All it's done is suck money away from blue collar workers, who do respond the way you'd expect to monetary incentives, away from support infrastructure, which genuinely improves the performance of high-skill workers, and away from shareholders.

Bottom line: in a variety of ways, our economy would almost certainly operate more efficiently if the super-rich were paid less. At best it does no good, at worst it motivates reckless behavior, and in the end it prevents the money from being put to its most beneficial use. Quite a mess we've gotten ourselves into since 1980.

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Amateur Video Taken Inside Somalia's "Pirate Town" of Eyl

| Fri Nov. 21, 2008 2:20 PM EST

This footage, taken from CNN, is interesting purely for voyeuristic reasons. Where do these Somali pirates come from? To where do they return when their pirating is done? The town of Eyl in Somalia's Puntland region is believed to be a prime operating base of Somalia's pirate class, a place where virtually everyone is involved in some way in the plundering of commercial ships passing through the Gulf of Aden. Not much happens in this video (and by that I mean, like, nothing), but never has a lonely, windswept walk along a dirt road seemed so fascinating. Take a look.

Quote of the Day - 11.21.08

| Fri Nov. 21, 2008 2:15 PM EST

QUOTE OF THE DAY....From Felix Salmon, on the possibility of Citigroup merging with Goldman Sachs:

"Nothing's unthinkable in this market, not even the idea that you can tie two rocks together and hope that they float."

National Security Musings

| Fri Nov. 21, 2008 12:57 PM EST

NATIONAL SECURITY MUSINGS....I don't have a lot of independent comment on this, but here's a bit of miscellaneous rumormongering on the national security front. First, Joe Klein:

Lots of news from Obamaland on the national security front in the past 24 hours — Hillary Clinton "on track" to become Secretary of State, retired General Jim Jones said to become National Security Adviser (while Republican realist Brent Scowcroft has been advising Obama on National Security)...and some strong flutterings that Obama wants to retain Robert Gates as Secretary of Defense as first reported here last summer, which seems especially credible because no other name has been floated as a potential SecDef.

If true, this is an extremely strong, and wise, national security team. It would reflect a powerful desire on Obama's part to return to the tradition of bipartisan foreign policy, with politics stopping at the water's edge. And it would reflect a growing centrist consensus in the foreign policy/national security spectrum that includes most members of the Bush 41 and Clinton teams — in favor of the primacy of diplomacy over militarism, ready to begin talks with those the Bush Administration considered pariahs (the Taliban, Syria, Iran), but not averse to the use of force — against Al Qaeda, in particular — when necessary.

Hmmm. Here's Andrew Sullivan on John Brennan:

Marc reports the Republican, former chief-of-staff for George Tenet (who authorized war crimes as CIA head), admirer of Dick Cheney, CEO of the company one of whose contract employees improperly accessed Obama's and McCain's passports, and defender of renditions and "enhanced interrogations" is still Obama's front-runner pick to head the CIA. No, I'm not making this up.....Why is such a man even considered for the post under Obama? This man cannot end the taint of Bush-Cheney. He was Bush-Cheney.

From across the pond, Alex Massie considers Obama's views more broadly and concludes that we're not likely to see any dramatic change:

Viewed from outside the United States, the foreign policy "debate" in Washington is a curiously curtailed affair. It concentrates on means, not ends and this rather tends to obscure the fact that, on many and perhaps even most issues, there's less between the parties than might be thought.

....When you get down to the bottom of it, Obama hasn't yet given much indication that he either wants to, let alone will, break from the broad thrust of the Washington foreign policy consensus. That being so, why should hawks on either side of the aisle have anything to fear from him? Means matter, of course, but so do ends.

I'm not yet in the mood to make any thundering pronouncements on any of this stuff. None of these people have actually been announced yet, for one thing, and the rumor mill might be wrong. And even if these do turn out to be Obama's picks, they aren't the whole team. And anyway, Obama never pretended to be some kind of Noam Chomsky acolyte. He's a mainstream liberal American president.

Still — and keep in mind that I'm speaking as someone who's only modestly left of center on foreign affairs — this is a disturbingly hawkish team taken as a whole, isn't it? I get the whole "water's edge" thing, as well as Obama's desire to bring back some kind of consensus in the national security arena, but it would be nice to see at least one or two really serious progressives getting some high profile national security positions that have the president's ear, wouldn't it? I mean, that is why most of us voted for him, right?

US Embassy Guard Suspended After Anti-Obama Comments

| Fri Nov. 21, 2008 12:56 PM EST

An American working as a security guard at the US embassy in London has been fired following comments he made on his website about President-elect Obama. Those comments, according to the Guardian, included:

"… ideals that are the very cornerstone of American liberty and democracy could very well become an ephemeral memory of American history under the socialist leadership of the incumbent Barrack Obama.
"… The real question of concern, now that Obama is the president-elect, is what promises have Obama's camp given in return to these socialist, communist, fascist and terrorist supporting nations and special interest groups? Such accolades and endorsements do not come easy in this nuclear age."

The decision to let the guard go appears to have been made jointly by the American diplomats at the embassy and the Wales-based company that employed him. Not sure how I feel about this. Employees of the federal government don't owe their fealty to the president, they just have to work their hardest for him. I understand how high-level civil servants and political appointees would be let go if they weren't on the same page as the president. They exist to implement his vision. But low-level employees, in my opinion anyway, should be allowed to have a wide range of opinions on their leadership, just as everyday Americans do.

The difference here may be that the man works in security, and his comments call into question whether or not he can be trusted to keep the American embassy, which is functionally on extension of Barack Obama on foreign soil, safe.

Your Friday "Awwwww"

| Fri Nov. 21, 2008 12:18 PM EST

I bet Party Ben misses this one.

It's an awesome rap video from the 83-year-old "Funky Fraulein." ("I have to be in bed by nine.")

All my grandmothers were dead long before I was born, but I'm such a mama's girl I always mourned never having had them. I'm sure at least one of them would have been like her. Cutest of all, the grandson who no doubt talked her into this (she hefts quite a few wine glasses in the video) makes a cameo.


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The Gnomes of Zurich

| Fri Nov. 21, 2008 12:12 PM EST

THE GNOMES OF ZURICH....John Quiggin thinks Switzerland is about to go bankrupt. Just thought I'd mention it.

Trouble in River Citi

| Fri Nov. 21, 2008 11:27 AM EST

TROUBLE IN RIVER CITI....Back in the hazy days of early 2008, Countrywide failed. But hey — they were hugely exposed to subprime mortgages, so that was hardly a surprise. Don't read too much into it. Then Bear Stearns failed. But they were the weakest of the investment banks and had unusual derivative exposures. The others were probably OK. Then Fannie and Freddie failed. But they were GSAs. And Lehman Brothers went under. But Richard Fuld had really screwed the pooch, and the federal bailout plan would keep the other investment banks OK. But then Merrill got eaten, and Morgan and Goldman turned themselves into bank holding companies. No more investment banks. But at least the big money center banks were basically OK, right?

So tell me: now that Citigroup seems to be on the brink of failure, what are we supposed to think? Is anyone safe? Is Brad DeLong right, and full-scale Swedish style nationalization is the only real option still open to us? Does Congress really want to go into recess without passing some kind of major stimulus package before January 20? Really?

Consequences of Gay Marriage, Illustrated

| Fri Nov. 21, 2008 11:18 AM EST

Speaking of things that are falsely hyped as bringing about the apocalypse, here's a graphical representation of gay marriage's ramifications. Enjoy.


From GraphJam via Andrew.

MacBook Update

| Fri Nov. 21, 2008 11:00 AM EST

MACBOOK UPDATE....Thanks to everyone who suggested resetting the SMC controller in my MacBook. It didn't work, but it did cause the white LED on the front of the notebook to start pulsing again, which made me think it was working for a while and allowed me to go to bed happy. When I woke up this morning, though, the battery was still dead after a night of charging and the message on the menu bar was actually more ominous than before. Sigh. Off to the Genius Bar, I guess.

But I'm curious about something. An awful lot of people in yesterday's thread seemed to think that I had committed some kind of technological malpractice by letting the battery discharge completely. Mind you, this wasn't deliberate on my part. I just closed the lid one day (August 29, I think, after using the MacBook to blog about Sarah Palin during a power failure) and then didn't happen to use it for the next two or three months. But frankly, even if I'd known I wasn't going to use it I wouldn't have done anything special. I would have just figured that the battery would discharge completely and I'd have to charge it before I used it next. No big deal.

But that's not so? If you let your battery discharge completely, the entire machine dies and refuses to charge the battery again? Why? Just to teach me a lesson? Or what? I don't understand why completely discharging a battery should have such dire effects. I thirst for knowledge, as always, so can anyone enlighten me?