30 Comments
founding

Loved your comments here on incentive systems. I struggle with this at my companies. If you don’t pay bonuses, people think your compensation isn’t “market.” Even if you simply raised their wages to the amount of salary plus bonus. They just assume the raise and then ask, “Where are the bonuses? All the other companies pay bonuses.” If you pay bonuses and someone doesn’t get one then they feel punished and if you simply pay everyone the same bonus, some get mad that others got the same but didn’t work as hard as they did, etc. It’s a total nightmare and I hate the whole system. It seems like the logical approach is to just keep changing the system so that we seem to be addressing concerns and no one can game it consistently.

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There's just no way to compensate that everybody will like and think is fair. This is the least problematic but still true even for tasks for which productivity is the most objectively-measurable, and the farther away one gets from those circumstances, the worse it gets. It must be possible to prove a theorem to this effect starting from just a few basic assumptions about human nature. You could call it the "Lake Wobegon Compensation Theorem" because to make employees happy an organization would have to be a place, "Where all the paychecks are above average."

Just like the hedonic treadmill that keeps ratcheting up the minimally acceptable baseline for 'normalcy' below which one will feel deprived, there is an analogous "pay plus-ups normalcy treadmill."

There were some stories related to this phenomenon during the Greek debt crisis. Of course there was lots of money that was not being added up with or was going missing, and some of this ended up being attributed to either 'whoopsie mistake' or outright intentional fraud as auditors were making the crazy assumption that "monthly pay" was - get this - the amount of pay a Greek employee would receive in a month, so, in a year, he'd get twelve times as much, right? Wrong.

Maybe originally, but contracts for employment were gradually increased by policy with a half month extra "Easter Bonus", another half month "Summer Holiday Bonus", and another full month for "Christmas Bonus", so 14 months total, and Greeks got 14 "monthly payments" per pear. That extra 17% of everybody's pay can go a long way to cooking national books. They were forced to get rid of the bonuses, and of course everybody hated it.

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founding

Good point on integrating the Hedonic Treadmill. That’s exactly it and woe to someone that wants to put that treadmill in reverse. What companies do to fix it is layoffs. They look at the people with the highest comp packages and cut them. At a smaller company, they will pick and choose based on performance but at big companies they tend to just cut without going through that exercise.

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I've always assumed that these bonus structures were just there to smooth the cost structure based on company profitability. They all read something like "if we are on target everyone is going to get 20% +/- 5%, but if we are doing very poorly everyones getting half that or less this year."

It's basically salary with the option to skip a year in a bad recession.

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founding

That’s how it reads but isn’t really true in practice. Once you pay a bonus, it doesn’t matter what you tell people, they will be pissed when they don’t get it again. I do think investment banks and the like approach it differently. Since bonus is such a huge part of comp, they focus all attention on it and as a result people understand how it varies year to year. If your bonus is a smaller part of your comp as it is in most companies, I don’t think focusing everyone’s attention on it might be the best policy.

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When you say the people that run Harvard (or Yale, or Princeton} are spineless that implies that they know what the right thing to do is, but lack the courage to do it. I think the evidence is clear that they firmly believe they are doing the right thing.

Which is worse than spineless.

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founding

this is an interesting question. I think you have a mix of true believers and people who are just good at climbing the greasy pole and would adopt whatever ideology they need to.

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I think on the college leadership point you are missing a third option: The leaders have spine, or at least a cartilaginous version of one, but they don't hold the ideals you want them to. The behavior we see from the college presidents on free speech, for example, seems consistent with the presidents not caring one whit for free speech as a general rule, but want instead of suppress speech they don't like and shield speech they do, while saying whatever is convenient to keep their jobs. That this is also consistent with the successful student's rule of "just write down on the test what the teacher wants you to say, regardless of whether you think it is true", and these people have been successful students, supports this model.

In other words, it seems at least equally likely that the system doesn't select for caring about free speech, truth, or any other values you or I might hold, let alone selecting for the spine to fight for them. Actively supporting the leftist side seems to be the better career move, not questioning whether the leftist side is doing the right thing or standing up against them. Even better if you actually believe the leftist view is absolutely correct, and thus can show spine while making everyone on your side happy.

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Agreed.

Claudine gay underestimated how much solidarity Jews would show over this, but it hasn’t yet caused a rethinking of the principals of how they got there.

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I’m late to the game today having worked on my own post for the past 8 hours, but here goes. Arnold says “The root cause of the problem at Harvard and universities isn’t antisemitism. It’s spineless leadership.”

Let’s dissect this a bit. Harvard is a “public”university, that, like other private universities claims to be a private university, but is in effect a public university, based on its acceptance of state funds and the regulations that come with those funds.* Thus, at “public” universities like Harvard, free speech is not only a good thing, it’s required by the Constitution. For Harvard not to abide by the First Amendment is a violation of the law. Thus, it is our responsibility to ensure justice for Harvard. We are not showing spine, and Harvard’s leadership is corrupt, spineless and either taking advantage of us, or more likely ignorant of the facts.

Hillsdale College and Thales College on the other hand, are truly private colleges. Like any private organization, they choose and prioritize their values, adjusting in real time as needed to fit the context; free speech being one of many possible priorities. For a private organization respect is an equally important value in my opinion to free speech. Thou shall not interrupt, or be disrespectful in my home or classroom. At Challenger School (private) where my kids attend the rule is.

I am here to learn.

I respect my self and my rights.

I respect others and their rights.

Free speech would violate these rules, as students are there to learn. We naturally have rules other than free speech that we seek to enforce. We have work to do. We value productivity. Thus we don’t always prioritize free speech. Sometimes, we prioritize quiet.

Same with the church of X, Y, and Z. Fine church, but not one that recognizes freedom to speak disrespectfully. Free speech for members of the church relative to their government, but not free speech for members relative to their church leadership. It’s not that the church lacks a spine. It’s that the church prioritizes order.

The root causes of Harvard’s free speech problems are ambiguous property rights and poor incentives and our lack of spine to clarify and fix those incentives. Take care of those and the spines with ossify considerably. Let’s accept responsibility by asking questions like, “What can I do to help fixed higher education?”

Questions - Who owns Harvard? Is it a public or private university? What would Ronald Coase and Terry Anderson say about this property rights situation?

*Please note the federal research grants for all manner of useless research that almost no one reads. Please note the tax breaks for Harvard’s housing, food and athletic businesses that have almost nothing to do with academic learning, yet compete against fully taxed private businesses offering nearly identical services. Please note the generous federal loans that incentivize College for All, even for the idiots? Can we at least dump these tax breaks?

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It is interesting that Harvard gets to behave as a private institution and ignore the rules of public institutions, while Grove City had to go so far as to not even accept federal student loans to be allowed to behave like a private institutions. Funny how that works.

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Republicans should embrace Diversity and require edu orgs that get tax exemptions to have at least 30% Republican professors.

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Exactly.

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I agree with your "Done." :)

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So when y'all watch movies, you never look away from the screen - you're not doing something else with your hands - or chatting with other people in the room who may or may not also be watching the movie? Even looking at your phone? You're never glancing out the window, monitoring the weather or someone coming up the drive? Am I understanding this new technology right - you're in a little private screening room with no other stimuli? Your Own Private Ipodaho?

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I mean, ideally I am just watching the movie, yea. Not with the screen on my head, but unless it is a movie I have seen before I am generally looking for fewer interruptions. I generally am not looking for other things to distract me while watching a movie, although I will sometimes have a movie on in the background while I do something else, or just accept the fact that watching a movie with the wife and kids is going to involve a lot of questions.

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A compromise on abortion would be to allow it in some capacity in exchange for massive (non means tested) subsidy of child rearing and school choice.

For the pro-life side you would say that you got rid of Roe v Wade and abortion failed in every single place in the country, so you've got to convince people that having children isn't so bad if you want to get less abortions. There has long been a pro-life faction that supported this idea. This is BTW what Trump is saying about abortion, which puts him way ahead of other republicans on this.

The pro-choice side would get some kind of national right to abortion of some kind, which would stick even when the GOP was in power.

I don't think it will stick for the following reasons:

1) Dems won't want to give child tax credits to anyone but the poor. You can see it with all the income capping on various things. They will say something like "well, middle class people can afford kids and don't need the money." Another subsidy for ghetto single moms to have more kids they can't afford really doesn't address what people on the right want around fertility.

Obviously, Dems hate school choice too.

2) I've long believed that the pro-choice side doesn't want abortions so much as societal approval of abortion and the sexual decisions that lead to abortions.

While such a compromise gives some level of approval to abortion, it still doesn't celebrate it in the way a lot of abortion activists want.

3) At the moment this is one of those issues where Dems benefit more from non-solution than solution.

The GOP should try to claw out of this by making it clear DEMs could have abortion if they gave up X, Y, Z thing that is very unpopular and try their best to make that stick.

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In general there are certain categories of activity that many people instinctively want to put in a 'sacred' tier defined in large part by it being impossible to make any kinds of merely ordinary and pragmatic utilitarian trades or quantity-measurable exchanges for things in that tier, especially for anything from a lower tier, like money.

Those things are "not for sale!" People will interpret the very offer to make such trades or compromises to be immoral, offensive, and insulting for a variety of reasons but key among them is the insinuation that they are the kind of person who would sell-out their loyalties, commitments, values, and principles so long as the amount offered was high enough. There's that old joke* about "now we're just haggling over price" that makes the point.

My impression is that any attempts to trade subsidy benefits regimes for tolerating "baby murder" on the one hand or "control over women's bodies" on the other would get the same reaction no matter how much one tried to sweeten the pot because of this tier-level incompatibility.

*Handle's First Law: The better the quote, the more likely apocryphal.

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I agree, but the status quo is a loser for the right on every level, so they should try something. Even if rejected it shifts the issue a bit.

It’s no surprise to me that a man with the least sense of the sacred is being the most pragmatic about this.

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Anti-abortion was a loser in 2022, or seemed to be so, because so many women are pro-abortion, and so many women, especially young, are also woke.

The biggest pro-life change was not quite demographic, but sonographs - parents can SEE the baby fetus, and hear the heartbeat. But there is a steady, non-college educated woman who wants to be a loving mother, who is anti-abortion -- and the pro-life women have more babies than the pro-abortion.

Trump was elected in 2016, as was Bush in 2000, because so many pro-life voters, many of them ex-Democrats. Who like big govt spending. And are far more numerous than small govt Republican libertarians who are OK with any abortion compromise.

The pro-life culture is unlikely to change, and might become even harsher -- but will be a minority of the college educated. Perhaps a bigger focus on Adoption, not Abortion, is the right compromise solution for women to avoiding caring for an unwanted/ inconvenient baby, after an unwanted pregnancy, after some wanted sex (with or without female orgasm; or the cases of unwanted sex).

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"The root cause of the problem at Harvard and universities isn’t antisemitism. It’s spineless leadership."

I think this is right, but I think there's another dimension, which is similar but not identical: Too much power has been ceded to the DEI "professionals". I think this problem started with a manic desire to appear virtuous to the kinds of people who worry publicly about social justice. It was fueled by fears, sometimes legitimate, of litigation by students and parents. It was further increased by threats of heavy-handed intervention by governments: Federal, state, and even municipal. It became baked in the culture of nearly all right-thinking higher education institutions. Even such "elite" institutions as De Anza Community College (https://www.youtube.com/watch?v=zEVaao8wzYc).

It showed its grand malevolence in the last few years at Stanford and Yale law schools. At Stanford, a DEI administrator (since departed) publicly sided against free speech by interrupting a guest presentation by a federal judge in the name of "protecting" vulnerable demographics. At Yale, a DEI director (also since departed) used heavy-handed threats to intimidate a law student into a public "apology" for some alleged bad language (primarily using the term "trap house", but also advertising fried chicken for a picnic) - conduct so egregious I wouldn't have believed it if the student hadn't surreptitiously recorded the entire session. There's some encouragement in the fact that the officials in these cases are no longer in their roles, but these removals happened only after nationwide publicity of the incidents, with never an explicit repudiation of the actions of the DEI officials.

This problem isn't unique to Harvard, and it's far from past.

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The root cause of Harvard’s problem is the social and governmental acceptance of their illegal, secret, dishonest discrimination against hiring Republican professors. A well known, long known “open secret” practice that has been meekly accepted by the … public? society? spineless Republican Congressmen who don’t even address it nor fight over it? *Ding *Ding *Ding—Spineless Republicans. None of Trump’s critics call him spineless. He fights, look at his mugshot.

It’s exacerbated by pundits like Haidt, Rauch, and even Kling whenever they talk about problems of education or the University, especially Harvard, without noting and condemning the political discrimination that’s been going on for decades. With the mass acceptance of illegal discrimination, the next step is acceptance of false beliefs about those discriminated against, and lies, and then demonization of that group.

Big government supporting high IQ technocrats have long been against small government supporters, but after 1972 Roe v Wade, the Dems have been excommunicating pro-life folk, especially non-college working Christians.

At least a third of the country are anti-abortion, and most vote Republican even if they prefer bigger government and more security over freedom. Republicans are often allowed to accept abortion, have been as recently as Schwarzenegger being CA governor, but the anti-abortion faction has been increasingly effective at making Republican Congressmen pay lip service to pro life. On this cultural issue, like many others, the voters who don’t identify as Republicans but vote that way feel the Reps are both less bad, but too often spineless.

It’s amazing that Arnold can mis-attribute a flaw to the college Presidents, yet be unsure about the attraction of the ex-President who doesn’t have that flaw.

“How to peel away Trump support?”

Find a Republican who has more spine, more fighting spirit.

Ain’t gonna happen in 2024.

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"If Harvard were run by vertebrates, they would say that from now on they will protect free speech full stop ... [and] will expel and/or prosecute anyone who engages in assault or intimidation of students or faculty, commits vandalism, or interferes with classrooms or speakers. Done."

That's perfect for speech outside the classroom. Inside the classroom is trickier. It's not a free speech environment as professors have to control the classroom. How to provide for effectively free speech - i.e. tolerance of divergent world views - there?

Ken

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“But social norms are harder to compromise.” Not so sure. Much depends on the norms. Consider one of the things that goes on with gossip. You and a friend discuss a third party who cheater his business partner. You think this outrageous, but your friend says it’s no big deal. You’re given information about how strict a norm is in certain settings, as well as about how you might expect your friend to behave with you should you do business with him. The norms that you comply with are being modified. Allan Gibbard in his 1990s book, Wise Choices, Apt Feelings, has this view of social and moral norms; we negotiate on them when we talk. (The discussion is brief and can be appreciated independently of the main project of the book.) Christopher Morris

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"If Harvard were run by vertebrates........"

Yeah, that's not going to happen.

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Great note to Emily Oster, who refers to a detailed paper by Roland Fryer -- which indicate that paying kids to be good, and better students, does work a little bit (yay!), but not so much. :(

Very important is the issue of positive incentives which, if not received, becomes a punishment.

"a program that leaves first graders unable to sleep due to anxiety isn’t helping, even if the data says a related version of it might."

All incentives for more effort seem like some punishment for less effort. This is true.

It's also true for Affirmative Action -- helping Blacks, or gays, or women, can't avoid punishing Whites, or straights, or men. Also true for capitalism -- companies getting your business have you giving those businesses a clear positive incentive, and those you don't choose are not. Whether it's a boycott for some reason or merely convenience or whim, the ones not chosen don't get that "win". Similarly, employees wanting a raise or to get hired in the same company for another job, but who do NOT get chosen, can feel like it's a bit of punishment.

(As an age 60+ employee at IBM, who knows COBOL, I was hopeful of getting hired for a COBOL position they were looking for; but not too surprised they wanted somebody younger. Still, there was a twinge of punishment feeling about getting old.)

Life is unfair. Those not getting rewarded are not completely wrong about being, to some extent, punished. All the illegal immigrants who did not have the unearned privilege of being born in America, are being "punished" by not getting the "reward" of living in the US. All the lovely actresses who do NOT get roles in movies, all the dedicated basketball college stars who do NOT make it into the NBA. A lot of effort that goes unrewarded which seems unfair, and it is unfair in some cosmic sense, lack of reward feels like punishment.

Incentives Matter is, along with No Free Lunch, one of the two most important aspects of Economics. There is far too little talk about actual incentives & results & feelings of those incentive systems.

If Apple Vision Pro works, "The experience would potentially be a lot better if the screen moved with me." they should be rewarded by more folk buying it, even at 3.8k$ each, to start. That's a good incentive -- which punishes the competitors. Creatively destroying them?

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Wait - they wanted someone "younger" for COBOL? Does anyone under 55 know COBOL? Or are they hoping to get some young coder who doesn't know what a structured language is to dedicate years to learning? How does that work?

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This sounds more like a vehicle for attacking norms, than preserving them.

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"The root cause of the problem at Harvard and universities isn’t antisemitism. It’s spineless leadership."

The two aren't mutually exclusive. Suppose that the people who appointed Penslar to head the committee believe that his claim that Israel is a colonial apartheid state is not opinion but objective fact. If that were the case, then there could, in their minds, be no rational basis for not placing him at the head of the task force. Why would they choose someone who doesn't believe in what they hold to be objective truth?

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