Bernard Madoff, Ponzi Schemes and Ulysses S. Grant (New Word No. 7)

Economic historian John Steele Gordon has a fascinating article in the WSJ entitled "Pyramid Schemes Are as American as Apple Pie." In it, he defines "Ponzi scheme," a word I've heard a lot but never had a clear understanding of.

Ponzi schemes are scams where "early investors are paid dividends out of the money put in by later investors." No real capital is created, however, so it eventually falls apart. It's more commonly referred to as a pyramid scheme, which WordNet defines as "a fraudulent scheme in which people are recruited to make payments to the person who recruited them while expecting to receive payments from the persons they recruit; when the number of new recruits fails to sustain the hierarchical payment structure the scheme collapses with most of the participants losing the money they put in." Ponzi schemes are named after Charles Ponzi, who cooked up such a pyramid in 1919.

As for Ulysses Grant, read the whole thing for how he found himself an anachronistic victim of Mr. Ponzi. It's a great story.

[EDIT: Can anyone help me? Is their a difference between ponzi schemes and pyramid schemes? Can a pyramid scheme be legitimate, like selling Mary Kay cosmetics?]

Our Brains and the Immediate

Another reminder for me to avoid the "tyranny of the urgent" (if you'll pardon the evolutionary biology):

We are easily distracted also because we vastly overvalue what happens to us right now compared with what comes in the future and because novelty is intrinsically rewarding. So whatever we are supposed to be focusing on has to compete with every new email, new task, new blog post and new conversation that wanders into our information sphere. These biases may have served us well in our species' evolutionary past, when the future was uncertain and the new could well be a threat that deserved immediate attention. But nowadays the new is more often trivial than essential, and sacrificing immediate rewards can yield greater ones in the future.

(from a WSJ book review entitled "You Have Too Much Mail" by Christopher Chabris, of the book, The Overflowing Brain, Torkel Klingberg)

Why Do College Coaches Get Paid So Much?

An economics lesson from the WSJ's Mark Yost:

Academic types have long lamented that coaches at many public universities make millions more than their schools' professors and presidents, not to mention the governors of their states. That much is true. Mr. Saban's eight-year contract will pay him $4 million a year -- $5 million if he earns all his performance bonuses. That dwarfs the salary paid to Alabama President Robert Witt ($611,000) and Gov. Bob Riley ($105,000).

But there are two fundamental problems with comparing teaching and coaching salaries. The first is simple supply and demand. With all due respect to the many great teachers, it's easier to replace them than Mr. Saban, Ohio State's Jim Tressel or Penn State's Joe Paterno (who makes a paltry $500,000 a year).

"The talent that Saban, Tressel and other coaches have is relatively scarce," Phil Miller, an assistant professor of economics at Minnesota State University, Mankato, wrote on The Sports Economist blog. "On the other hand, the talent it takes to teach effectively, for example, at the collegiate level is more abundant. So the price of coaching talent is much higher than the salary obtained by most professors." Or, as legendary Ohio State football coach Woody Hayes once told an antisports prof: "I can do your job, but you can't do mine."

The other problem with the salary comparison is that Alabama taxpayers aren't paying Mr. Saban, and so his salary doesn't take any money away from professors. One of the benefits to come out of the rampant commercialism of college athletics is that media conglomerates and sneaker companies are willing to pay huge sums for the broadcast and apparel rights. Thus, Mr. Saban will be paid out of Alabama's $70 million athletic budget, with little or no impact on academic departments.

What about rising tuition costs? Mark Yost has another potential culprit. Read the whole thing and find out.

[EDIT: Eric Gibson agrees with some of Yost's conclusions in "Pleading Poverty: Colleges Want Parents to Foot the Bill for Their Largess."]

Judging a Book by its Cover

If you love roving bookstores, then you must be guilty of judging a book by its cover. You pass over dozens of books to pick up one striking title and cover. There are some books required for classes -- good books -- that I would have never picked up without instruction or previous experience with the author. Maybe there are some that you refuse to buy on principle -- I won't buy any edition of a book whose cover has been changed to include, "Now a Major Motion Picture," especially if the actors are on the cover.

Whatever your standards, if you're a fan of books and design, check out the blog, The Book Design Review. Joseph Sullivan highlights the best, worst and mediocre cover designs. It's a chance for book lovers to see all different kinds of books on all different topics. And it's a chance for those who enjoy graphic design to see some great work.

Start out with Sullivan's post, My Favorite Books Covers of 2008.

Orphany Orphan

The latest list from McSweeneys: "Reasons You Might Die of Consumption in a 19th-Century Novel, in Order From Least Likely to Most Likely."

Distaff Drinking (New Word No. 6)

This Friday marks the 75th anniversary of the 21st amendment, which repealed the 18th amendment and ended Prohibition. Crowds are hosting Repeal Parties in major cities to celebrate. In "Celebrating Cinco de Drinko" (WSJ), Eric Felten agrees and offers some interesting observations on the effect of Prohibition on American drinking culture and on the size of government.

He has a fascinating comment on "distaff drinking." A distaff is a tool used in spinning yarn, a rod which holds the unspun yarn and keeps it from tangling. Used here, it is metonymous for female. Wiktionary offers this definition: "anything traditionally done or considered of importance to women only; women considered as a group."

Here is what Felten has to say about distaff drinking before and after Prohibition:

Since speakeasies might be raided, most Americans did their drinking at home. Not only did this turn the cocktail party into an American institution, but it encouraged distaff drinking. Before Prohibition, reputable women didn't step into saloons. But once cocktails migrated to hearth and home, women joined in the fun. And for some women, a willingness to entertain cocktails coincided with a willingness to entertain other illicit pleasures. Lois Long -- who wrote the "Lipstick" column on nightlife for the New Yorker -- described her speakeasy days bluntly: "You never knew what you were drinking or who you'd wake up with."

Recognizing that this is only a snapshot of the period, what might this phenomenon have to say about the attempt to legislate morality? Does it place limits on legislation or just illustrate the need for better tactics? Should teetotallers try again? Or should we go the opposite direction and legalize marijuana?

EDIT: Here's one editorial encouraging the end of drug prohibition in the same way we ended alcohol prohibition. Good points are made, but I think he glosses over many of the difficulties. Here's a second editorial supporting the current drug policies of the United States, as effective and necessary.

Papers, Holidays, Reading and Exams

Apologies for the lack of posting and responding to comments. I have been wrapping up the semester and now Maggie and I are heading to Florida. It will be a wonderful trip: I'll see my new nephew, wear sandals and bask in 65-degree weather, and relax over my school books on the beach.

Until then, blessings and Happy Thanksgiving.

MTV's TRL Dies

What's a lazy, bored teenager to do? Hopefully something more worthwhile.

(Little known fact: My brother, a friend and I were asked while roaming NYC to be in the TRL audience in 2000 to see Puff Daddy and crew. We declined because we were on our way to the Late Show. I promise we didn't know that Letterman's guests were Mary Tyler Moore and Norah Jones because only three 56 year-old women would choose MTM over Diddy.)

U.S. Soldier Recounts Experience in Nazi Work Camp

Happy Veterans Day.

I am so thankful for the men and women who have defended this country and its ideals in uniform around the world. The life of a soldier is hard for me to imagine. They willingly put themselves in great danger for the sake of us who stay comfortably at home (often unaware), not to mention the months and years spent away from their spouses, children and loved ones, putting their life on hold indefinitely. Their families as well endure months of difficulty, loneliness, and fear. With honor and respect, they submit to those in authority even through questions and disagreements. Perhaps most impressive, they do all this for the sake of conflicts that are often far removed from American soil. They are able to connect their own security and life with that of those on the other side of the world.

I don't believe we can properly celebrate Veterans Day, however, without being sobered by the horrible realities of war. What is it that they face? Who exactly are they up against? What are the particulars of the sacrifice they make and why do they make it?

CNN posted a news article about Anthony Acevedo, a WWII veteran who spent months in a Nazi work camp, an experience he kept silent for decades at the behest of the U.S. Army. I am glad he broke the silence.

Read what he endured and thank God that the valiant efforts of American and Allied soldiers prevailed over the wickedness of Adolf Hitler's regime.

Dawkins the Deist?

Melanie Phillips of The Spectator reports on the second public debate between Richard Dawkins and John Lennox, held on Tuesday, October 21st at the Oxford Natural History Museum.

Apparently, in the opening statements, Dawkins said, "A serious case could be made for a deistic God." This is shocking -- so shocking it was neglected by Lennox during the debate. But Ms. Phillips was able to follow-up with Dawkins afterward.

Read on to find out what he said.

(HT: Chip Lewis)

Bush's Humanity

Continuing my recent posts highlighting favorable assessments of villianized public figures, read this Washington Post column. Michael Gerson commends to us George Bush's character and humanity. Again, Christians charity demands that we strive to give greater weight to positive reviews of others and negative reviews of ourselves.

Here's an excerpt worth reading:

But that humanity is precisely what I will remember. I have seen President Bush show more loyalty than he has been given, more generosity than he has received. I have seen his buoyancy under the weight of malice and his forgiveness of faithless friends. Again and again, I have seen the natural tug of his pride swiftly overcome by a deeper decency -- a decency that is privately engaging and publicly consequential.

Before the Group of Eight summit in 2005, the White House senior staff overwhelmingly opposed a new initiative to fight malaria in Africa for reasons of cost and ideology -- a measure designed to save hundreds of thousands of lives, mainly of children under 5. In the crucial policy meeting, one person supported it: the president of the United States, shutting off debate with a moral certitude that others have criticized. I saw how this moral framework led him to an immediate identification with the dying African child, the Chinese dissident, the Sudanese former slave, the Burmese women's advocate. It is one reason I will never be cynical about government -- or about President Bush.

For some, this image of Bush is so detached from their own conception that it must be rejected. That is, perhaps, understandable. But it means little to me. Because I have seen the decency of George W. Bush.

(HT: Denny Burk)

There Was an Election Last Night?

I'm sure there is much to read on the results of the election last night, profitable and otherwise. I will get to that this weekend after I turn in some assignments. Maybe I'll post some things I find, but here's something to encourage or challenge you in the meantime.

I had a wonderful day sitting under two pastors teaching about authentic gospel life and the church in the company of fellow brothers I dearly love. And guess what? The election didn't come up once!

Why? Because there are more important things to think about. Eternal things. Kingdom things. Gospel things.

Sarah Palin is a Braniac

Sarah Palin's credentials have been questioned and defended countless times in the past (can you believe it?) two-and-a-half months. One of those credentials is her intelligence. The truth is people cannot possibly gather her true intelligence, so they just look for cultural markers of intelligence -- her accent, her attractiveness, her personal convictions all weighing against her. I say this, mind you, full aware of my own heart's tendency to stereotype and cast her aside.


That's why it's helpful to hear an account of someone who's been a little closer to her than any of us have. Elaine Lafferty, a Democrat and former editor-in-chief of Ms. magazine (!!), gives a positive assessment of Palin's intelligence and native ability. While she's at it, she rebukes the cannabilizing comments of many feminists who hurt their cause in the comments about Palin.


Read it in full here. (HT: Middlebrow)


(And, just so you don't think I'm being self-serving, remember my positive comments about Bill Ayers a few weeks ago.)

Sleep and the Kingdom

Justin Mullins passed along to me a word about sleep and the Kingdom. (He thinks he heard it from John Piper, but isn't sure.) It was encouraging and challenging and so I pass it to you.

The Kingdom of God is why we go to bed late and wake up early.

May we remember that our salvation is nearer now than when we first believed, that we are in the last days, and our Savior could come at any moment. Let us work diligently without complaint but with anticipation, as if these were our last moments.