Friday, June 25, 2010

What Makes Al Gore Run?

Speaking of bad timing, or, at least, bad karma.... On the day that Al Gore acquired the epithet, "crazed sex poodle," he co-authored a Wall Street Journal op-ed about motivations and incentives. Link to op-ed here.

You want the world to see you as a serious thinker, or as the purveyor of serious thought, and the world is trying to digest the fact that you were far more Clintonian than you ever let on. And with a nasty, sadistic streak, to boot. Link here.

Al Gore's co-author and business partner is named David Blood. Naturally, this has thrilled bloggers far and wide... perhaps even more than the incoherent phrase, "crazed sex poodle." By now I have seen more than a few witticisms about Blood and Gore.

One such post is cleverly entitled, "Perverse Incentives." In it Emily Yoffe writes that Blood and Gore are trying to argue that people work best when they are not just in it for the money. She explains that Gore seems to have had some extra experience with "nonfinancial incentives." Link here.

The substance of Blood and Gore's article addresses a serious new theory in behavioral economics. It takes off from a recent book by Nobel laureate George Akerlof and Rachel Kranton and follows them in proposing what they consider a new theory of human motivation. Link here. The Akerlof and Kranton book is called: Identity Economics: How Our Identities Shape Our Work, Wages, and Well Being. A New York Times article on the topic is here.

Akerlof and Kranton challenge the theory that people are motivated by monetary incentives. According to that theory we all work harder when we are paid better. This produces the Wall Street bonus culture. In the articles I've read none of the authors offer a similar critique of the outsized earnings of movie stars, rock stars, and athletes.

Akerlof and Kranton, along with Blood and Gore, want to debunk thus theory, which bases itself on what they call Homo Incentivus.

The new theory declares that financial incentives are not the be-all and end-all of human motivation. It says that we are more importantly motivated by a sense of belonging to a community, contributing to a company, feeling like part of a team, and thus, identifying with a group, its values, and its traditions. This theory worships at the altar of Homo Emoticus.

In Akerlof and Kranton's words: "In organizations that function well, employees identify with their work and their organizations. If employees feel more like insiders-- a key purpose of military rituals-- there is little need for incentive pay or pay-for-performance schemes. The military changes the identity of its recruits, inculcating them in values such as duty and service. In the civilian world, too, the most important determinant of whether an organization functions well is not the monetary incentive system, as standard economic models would imply, but whether its workers identify with the organization and with their job within it. If they do not, they will seek to game the incentive system, rather than to meet the organization's goals."

I have not read their book, so I cannot claim to be offering a critique. It feels to me, however, that the authors have caricatured theories about monetary incentives. If monetary incentives are less important than identifying with an organization, how does it happen that private companies are largely more efficient and effective than government bureaucracies?

Nor am I clear about why people who work for monetary incentives cannot also take satisfaction in a job well done. If your satisfaction at a job well done does not receive a commensurate monetary recognition, then how long are you going to keep doing the job as well as you can. And how long will you continue to feel loyalty to the company.

I mean to say that monetary compensation can be an important way that an organization expresses its appreciation for your work. I doubt seriously that the dichotomy between homo incentivus and homo emoticus is quite as stark as these authors suggest.

And why would we not expand the concept of incentive to include the accumulation of psychological capital... status, prestige,pride, and respect. While soldiers do not work on the Wall Street bonus system, they most often do not live in a social world made up of Wall Street bankers, corporate lawyers, and real estate developers. The currency that confers status in their worlds does not primarily involve money.

Lest we forget, soldiers do receive salary increases with each promotion. If they make a career out of the military they can retire at a relatively young age and receive a pension that is calculated as a function of their highest pay grade. Since many receive their pensions for decades, this does represent a significant monetary incentive.

We must add that military medals are one of the oldest forms of pay-for-performance, not so much for the value of the metal therein, but for the status and prestige associated therewith. Winning medals also contributes to your chances at promotion.

Of course, Akerlof and Kranton are correct to state that military organizations offer training and rituals that inculcate their values in recruits. These values include patriotism, teamwork, uniformity, and competition.

One has to wonder whether thinkers like Blood and Gore really want the culture to include more patriotism, more honest and open competition, more emphasis on uniforms. Does Al Gore remind you of a military commander or of a prophet?

If you want to replicate the military model, you would do best avoid the apocalytpic environmentalism that Al Gore has made his current cause. One cannot fail to notice that Al Gore has made hundreds of millions of dollars from his environmental crusade. Ought we to say that he is less committed to the cause because he has gotten rich off of it?

However much Blood and Gore pay lip service to capitalism, they do not seem to recognize that spirited free market competition does not contradict the values of patriotism and teamwork. Famed Prof. Martha Nussbaum does not seem to recognize it either.

When we read Prof. Martha Nussbaum bemoan the fact that the profit motive has led university students to want to spend more time studying business and less time with the humanities, we certainly take notice.

Does anyone really believe that the humanities, as taught today on college campuses, even by teachers as brilliant as Martha Nussbaum, inculcate values that would be congenial in a military culture? In fact, I would claim that academic humanities courses have worked long and hard to destroy the values of patriotism and fair competition.

Doesn't Martha Nussbaum famously support the notion of a cosmopolitan identity? Doesn't she align herself with those who want us all to overcome our parochial American identity in order to become citizens of the world?

If you undermine the value of patriotism by teaching people that they should identify with national community, then you would, according to these theories, be forcing people to feel that they are merely in it for themselves, thus that they have to game the system.

Keep in mind that when you belong to the military, there are clearly right and wrong ways to do things; your membership in the military, to say nothing of your place in the chain of command, depends on how you conduct yourself, how you lead, how you follow, how well you do in comparison to your peers, and so on.

Being a member of the military requires ethical behavior. Being a citizen of the world does not. Being a member of the human species does not. Academic philosophers often do not even believe in right and wrong. They believe that it's all a matter of taste.

You cannot develop group loyalty, group identity, and group solidarity if you think that it's all a matter of taste.

If we are looking into why business has become so amoral, then perhaps we should look into the value system that Blood and Gore, to say nothing of Nussbaum, have been fostering.

[Addendum: This article from Forbes tells a series of horror stories about interns: link here. The first anecdote, told by filmmaker Murray Nossel offers his observation: "... he has found that they perform better if they're paid. A meager sum can make a difference." I would not claim that this piece of anecdotal evidence disproves a theory offered by a Nobel prize winning economist, but it certainly merits our attention.]

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