Sunday, December 14, 2008

Don't Miss This Link

This is maybe the best thing I've read yet on the financial system meltdown. Michael Lewis is perhaps better known as the author of Moneyball, a fascinating look at economics of building a winning baseball team. 

Moneyball chronicles the revolution in empirical analysis of the actual worth of baseball players in what has grown to be a multi-billion industry. It is a celebration, of sorts, of what can be done with an open mind and the realization that much of what we think we know, we don't. 

I actually rekindled my interest in economics because of this transformation in baseball thinking. Baseball had always been a passion of mine- as a kid I religiously read the baseball section of the newspapers every morning before I set out to deliver them. But as I got older, I got tired of the same "analysis". The writers weren't telling me anything new, and they wrote as though there was nothing else to know about the game. By my high school years, I was no longer interested.

With the advent of the internet, however, I found writers and analysts who were not part of the traditionalist network, who questioned everything, and who applied empirical standards to their analysis. Baseball is a sport which prides itself, above all, on tradition. And analysts like Bill James and Billy Beane would have no part of it. 

It's unfortunate that there was no analogue to this on Wall Street. But often, this kind of shift in the way we think can only be effected by a cataclysmic shift in what we experience. If the last few months haven't provided this, I don't know what will.

1 comment:

  1. Fantastic link -- thank you. Have made a note of it. Michael Lewis, "The End", Nov. 11, 2008. One of the best articles on this that I've read. Loved it so much that I want to read everything the man has written starting with Liar's Poker.