Perhaps Executive Compensation Levels Have Less to Do With Markets and More to Do With Clubs

Economics PhD candidate Owen Zidar writes about research by Kelly Shue, U Chicago business school, suggesting perhaps the huge pay being raked in by our top executives – those risk-taking job creators, you know – has less to do with performance than it does with peer connections.

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`Bout Time

I take some pride in the fact Miles Davis and I were born in the same town. Said town is now erecting a statue to perhaps its greatest native.

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Happy Birthday, Harry!

Been traveling, so away from the blog. Thought I’d start with this:

I’m still not tired of J.K. Rowling’s books. The third is my favorite, but there’s still something particularly compelling – okay, magical – about being introduced to Harry Potter.

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Late Night Listening with Gary U.S. Bonds

Soul Deep Smokin’ cover of the Box Tops tune (their original ain’t half bad) with the Boss and the E Street Band. Crank it up!

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The Economy is Stuck, and It Has Nothing to do With Invisible Hands

Moira Herbst has a a really good piece on the Guardian’s website looking at why the U.S. economy can’t seem to get going.

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Redbirds about to be tested

After stumbling in June, they went 7-3 in their last 10 games leading up to the All-Star break. They’re 4-1 since, and there’s a chance to sweep the Phils tonight, although Lance (One Bad Inning) Lynn is on the hill, so we’ll see. The pitching staff (again, let’s see how Lynn fares tonight) has, at least for the moment, regained its form. Offense has revived, as well, and Post-Dispatch columnist Bernie Miklasz has an appreciative analysis of how good the offense has been with runners in scoring position, and how they haven’t had to rely on home runs (yay!) to win. He also mentions an amazing stat for the pitching staff – they’ve allowed only .64 homers to the opposition per game so far. Only one team in the last 20 seasons – the 2011 Giants – has a better record.

So, there are reasons to be optimistic. On the other side, Carlos Beltran is slumping; Matt Holliday’s hurt; John Jay still has to produce; and people – especially Yadi – need to keep healthy. Lots of “ifs,” but encouraging signs abound.

Which is good; because we’re about to get the real test over the next 15 games. After tonight, the team goes to Atlanta, who leads the NL East, even if they’re in a bit of a slump right now. Then five BIG games against the Pirates, followed by three against the Reds and four (at home) against the white-hot Dodgers, who’ve just won 6 in a row.

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It’s Not the Invisible Hand of the Marketplace; It’s the Hidden Hand of the Speculators

Ever wonder about gas prices? Justin Fox, writing on the Harvard Business Review’s blog, explains.

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Important New Papers on Immobility, Inequality, and the Fast Fade of the American Dream

The phrase The American Dream has long been complementary shorthand for an economic system free of the rigid class boundaries of the Old World, one in which anybody, not matter how modest their station, can, by hard work, application of intelligence, and perhaps a little luck, become financially successful. It goes hand-in-hand with the myth of Rugged Individualism, the Hooverian notion that we rise or fall alone on our own strengths and personal merit. This is nonsense, of course, but it is deeply embedded in our psyche. It allows us, if we choose, to blame those who are poor and struggling for their lot. If they weren’t so weak, lazy, and stupid, they wouldn’t be where they are.

However, the disappearance of our middle class–a creation, after all, of government intervention in the economy (the GI Bill is probably the most familiar example) and the growth of unions, which gave workers a measure of power to negotiate wages, hours and benefits–has become so plain that perhaps that psychic hold might be loosened just a little.

I ran across two new economic studies earlier today that help describe how our supposedly individualist, meritocratic society is actually steered, at least in part, by some familiar forces.

The first of these, reported by David Leonhardt of the NY Times in a terrific story that led the paper today is technically a study of the impact of the Earned Income Tax Credit and other tax expenditures on helping children get out of poverty. What the authors find, more broadly, is that where you live in this country has an impact on how well you’re likely to rise in the economy. Economic segregation, for example, can be a serious obstacle to your finding any measure of financial security.

The other paper was recently published by University of Ottawa economics professor Miles Corak, who also authored this commentary in the New York Times this past weekend, part of their series, The Great Divide. Business Insider has a very good story (with a link) about Prof. Corak’s new paper in the Journal of Economic Perspectives looking at the interconnectedness of privilege and opportunity.

What’s more, as Prof. Corack describes, those who have made a success of it in America tend to be more interested in protecting their privileged position than in helping others join them:

A similar dynamic seems unlikely to unfold in the United States. While the imagined prospect of upward mobility for those in the lower part of the income distribution shares little in common with the generational dynamics of the top 1 percent, the latter may well continue to be an important touchstone for those in, say, the top fifth of the US income distribution. After all, this group too has experienced significant growth in its relative standing, which partly reflects an increasing return to the graduate and other higher degrees for which they exerted
considerable effort, but is also linked to a background of nurturing families and select colleges. This group has both the resources and incentives to turn more intensely to promoting the capacities of their children. With effort and a bit of luck, it is not unreasonable for them to believe they may yet cross the threshold into the top 1 percent, and they can certainly imagine that their children stand
just as good a chance, if not better. For them the “American Dream” lives on, and as a result they are likely not predisposed, with their considerable political and cultural influence, to support the recasting of American public policy to meet its most pressing need, the upward mobility of those at the bottom.

This is not to say that hard work, intelligence, and creativity (and some luck) no longer matter. But alone, they are not the obvious keys to success we’ve been brought up to think they are.

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I’ll Confess; I’m Late to the Game, Which is Afoot, but I’m Now a Big “Sherlock” Fan

If you don’t already, do yourself a favor and watch this! Brilliant.

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Weekend of Survival for the Redbirds

Alan Craig’s leaping catch at the wall saved the weekend for St. Louis. They beat the Pods 9-6 Friday, after the bullpen allowed four runs in 1 1/3 innings to almost spoil Jake Westbrook’s strong game. Lance Lynn got beat up yesterday, allowing 4 runs in a 5-3 loss. Wain-O pitched decently today, but Mujica put runners on second and third with two outs and, had pinch hitter Jeff Gryorko’s ball evaded Craig’s glove, it might have been doom. They got out of it, 3-2.

Onto Philly. 66 games to go, 24 against the Pirates/Reds. Pitching not back on track yet, it appears. Stocking up on Maalox.

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