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Outliers, The Story Of Success 357

Posted by samzenpus
from the read-all-about-it dept.
TechForensics writes "Outliers, by Malcolm Gladwell, is subtitled "the story of success." It is a book that purports to explain why some people succeed far more than others. It suggests that a success like Bill Gates is more attributable to external factors than anything within the man. Even his birth date turns out to play a role of profound importance in the success of Bill Gates and Microsoft Corporation." Look below for the rest of Leon's review.
author Malcolm Gladwell
pages 301
publisher Little, Brown and Co.
rating Excellent.
reviewer Leon Malinofsky
ISBN 978-0-316-03669-6
summary Success comes from external factors or unsuspected internal ones.

Outliers also tries to answer such diverse questions as what Gates has in common with the Beatles; why Asians have superior success at math; and the reason the world's smartest man is one of the least accomplished. All of these things are viewed in terms of generation, family, culture, and class. Outliers — those persons of exceptional accomplishment — typically have lives that proceed from particular patterns.

Chapter 1 is an examination of similar towns in Italy with vastly disparate life expectancies and no apparent reason. Though the towns were only miles apart, the life expectancy in Roseto was surprisingly longer-- longer, in fact, than any neighboring town in the region, making Roseto an outlier. The eventual explanation, namely, the prevalence of multigenerational families under a single roof with the attendant reduced stress of lifestyle, while not one of the book's more shocking revelations, nevertheless serves as an example of an outlier and the sometimes hidden causes of their status.

Chapter 2 seeks to answer the curious question why athletes on elite Canadian teams were all born in the same few months of their birth year. In a system in which achievement is based on individual merit, one would assume the hardest work would translate to the best achievement. The fact this criterion on was wholly overmastered by timing of birth was studied and showed that hidden advantage, namely being older and stronger than persons born later in the year of eligibility brought continuous, cascading, even snowballing advantage, which ultimately produced Canada's most elite players. If everyone born, in, say, 1981 was eligible to begin play only in a single year, then naturally the older boys, being larger and better coordinated, would dominate. Hockey player selection in Canada is shown to be a self-fulfilling prophecy, namely a situation where a false definition in the beginning invokes a new behavior which makes the original false conception come true.

Chapter 3 is far and away the most interesting in the book. It sets forth the so-called 10,000 hour rule, and in its course, shows why Bill Gates and the Beatles succeeded for essentially the same reason. Gladwell begins by noting that musical geniuses such as Mozart, and chess grandmasters, both achieved their status after about 10 years. 10 years is roughly how long it takes to put in 10,000 hours of hard practice. 10,000 hours is the magic number of greatness. Both Bill Joy at the University of Michigan and Bill Gates at Seattle's famous Lakeside school, two schools with some of the first computer terminals, had access to unlimited time-sharing computer time at essentially the beginning of the modern industry and before anyone else. Because both were absorbed and drawn into programming, spending countless hours in fascinated self-study, both achieved 10,000 hours of programming experience before hitting their level. Because hitting that level took place at exactly the time need for that level of computer expertise manifested in society, ability came together with need and unique uber programmers were born. The Beatles played seven days a week on extended stints in Hamburg Germany and estimated by the time they started their phenomenal climb to greatness in England that they had played for 10,000 hours. Subsequent studies of musicians in general in music school showed that elite, mid-level, and low-level musicians hewed very closely to the "genius is a function of hours put in and not personal gifts" school of thought: members of each group had similar amounts of total lifetime practice. This book makes a fascinating case that genius is a function of time and not giftedness, validating both Edison's famous saw about 98% perspiration and Feynman's claim that there is no such thing as intelligence, only interest.

The next chapter tells the tale of Bill Langen, whose IQ is one of the highest in recorded history. However, he was a spectacular failure in his personal life. Prof. Oppenheimer, on the other hand ascended to work on the Manhattan Project though in graduate school he had tried to poison his adviser. The difference is shown to result from an astonishing lack of charisma and a sense of what others are thinking in Langen, and an extreme personability in Oppenheimer, which is said to show that success is not a function of hard work or even genius but more of likability and the ability to empathize.

Chapter 5 tells the tale of attorney Joseph Flom, of Skadden Arps Slate Meagher and Flom. According to Gladwell, Flom did not succeed through hustle and ability but rather by virtue of his origins. Intelligence, personality and ambition were not enough, but had to be coupled with origins in a Jewish culture in which hard work and ingenuity were encouraged, and in fact a necessary part of life. This, along with having to scrabble in a firm cobbled together out of necessity because Jews were not hired by white-shoe law firms, gave the partners and unusual and timely expertise: Flom's firm decided it had to take hostile takeover cases when no one else would, and that turned Flom and his partners into experts in a kind of legal practice just beginning to boom when they hit their stride.

Chapter 6 traces the influence on a person's culture of origin and how it marks him more in the present day then may be generally appreciated. Psychological experiments proved that a so-called culture of honor, such as that found in the South, where people of necessity had nothing but their reputations, caused the products of such a culture to be much more aggressive in defending themselves, their reputations and honor.

Chapter 7 traces the influence of Korean culture and deference to superiors as significant facts in a high number of plane crashes in the national airlines. It was only when cultural phenomena such as the inability to contradict a superior were corrected by cultural retraining that Korean Air Lines began to achieve the same safety levels of the airlines of other countries. This chapter is interesting for its treatment of flight KAL 007 alone.

Chapter 8 will have strong interest for most Slashdot readers. There is an Asian saying that no one who can rise before dawn 360 days a year can fail to make his family rich. The hard, intricate work of operating a successful rice paddy, equal in complexity to an organic chemical synthesis almost, is shown to have produced an ability for precision and complexity which outstrips growers of other crops. The fact that Asian languages in many cases use shorter and more logical words for numbers confers a strong early advantage which, like the age advantage in the hockey player example, snowball significantly over time. Gladwell argues Asians are not innately more able at math, but culturally more amenable to it based on the felicity of a language which is to our language as the metric system of weights and measures is to the English.

The final chapters of the book show that inner-city kids placed in intensive study schools achieve as much as kids from rich suburbs. The reason is found to be cultural: the long hours in those schools take up evening hours which would be spent at home and also take up summer hours, which in the special schools are full of math instead of the less than well-directed extracurricular pursuits typically found in the lower-income family home.

On the whole this book is going to provoke some ire and certainly some head scratching. It is bound to bear out in the minds of many Prof. Richard Feynman's assertion, which we may modify to say that giftedness and IQ are not inherent but conferred by accidents or benefits of culture, or at least via mechanisms that are not obvious. Even if such a conclusion sounds laughable to you, this book may change your thinking.

You can purchase Outliers from Slashdot welcomes readers' book reviews -- to see your own review here, read the book review guidelines, then visit the submission page.


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Outliers, The Story Of Success

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  • by spineboy (22918) on Wednesday March 04, 2009 @01:22PM (#27066393) Journal

    Reminds me of stock market games people play. Someone usually winds up increasing their money by a ridiculous factor. The winner just happened to guess a good set of buys/moves. Another analogy is the million monkeys typing - pure chance will eventually produce a winner.
    I don't believe in luck - but in chance yes. Successful people usually make their own "luck" by doing things to better their odds. Bill Gates might be an example of both.

  • by Maxo-Texas (864189) on Wednesday March 04, 2009 @01:25PM (#27066423)

    Some people do everything right, research, come to correct conclusions, and yet random events destroy them.

    Other people make a series of long odds, even terrible choices and yet do great because of random events.

    Given classic random theory, given a series of 50/50 type decisions, out of 32 people, one person will be completely screwed and one person will win every time. For larger data sets, the lucky runs are only longer.

    I'm sure Gates determination and business acumen made a difference. But winning so big had a lot to do with luck.

  • by richg74 (650636) on Wednesday March 04, 2009 @01:33PM (#27066517) Homepage
    It is bound to bear out in the minds of many Prof. Richard Feynman's assertion, which we may modify to say that giftedness and IQ are not inherent but conferred by accidents or benefits of culture, or at least via mechanisms that are not obvious.


    As it happens, I have just finished reading Outliers, and I liked it a lot. (I've also liked Gladwell's two previous books, The Tipping Point and Blink.)

    I would summarize Gladwell's conclusion slightly differently. I think he would accept that some people are inherently gifted -- in several places, he is careful to say that people like Bill Joy and Bill Gates were very talented. It seems to me the kernel of his argument is that they had inherent talent, but became truly exceptional owing to a combination of favorable circumstances. In other words, their talent was a necessary but not sufficient condition for great success.

    It's perhaps similar to what has been said about sex: to turn out really well, it requires both experience and enthusiasm, and no amount of one can compensate for a complete lack of the other. :-)

  • by PiSkyHi (1049584) on Wednesday March 04, 2009 @01:39PM (#27066629)
    ... why ? because having access to a computer in an age where having ones own helicopter would be similar had no affect on the outcome of Bill's life ?
  • by gfxguy (98788) on Wednesday March 04, 2009 @01:40PM (#27066651)

    What you say is true, but it never ceases to amaze me that people who:

    - have natural talent
    - develop that talent through hard work and education
    - are tirelessly ambitious
    - and incredibly hard working

    Seem to to magically have the best "luck."

  • Mr. Anecdote (Score:4, Insightful)

    by blamanj (253811) on Wednesday March 04, 2009 @01:56PM (#27066863)

    I've decided that Malcolm Gladwell is a storyteller. As such, he learns what stories resonate with people, and because he's a good storyteller, he's become very successful at spinning his tales.

    While I haven't read Outliers, I did read "Blink" and found that while he provided lots of anecdotes to support his premise, there was no mechanism, no measurement, and no way to verify it. In fact, he provided a number of other anecdotes that showed just the opposite.

    What he did in that book, I think, was to state a premise that we'd like to believe, that our gut instincts are right, and tell stories to reinforce that, but never go so far as to make a claim that could be verified. I'm not alone in this view [].

    Based on what I've read so far, "Outliers" seems like more of the same.

  • by mr_mischief (456295) on Wednesday March 04, 2009 @02:06PM (#27066999) Journal

    "Be not afraid of greatness: some are born great, some achieve greatness and some have greatness thrust upon them." (Twelfth Night, Act 2, Scene 5)

    It's quite plain to see that the author is talking about greatness. If he's well read, he should know the idea that some are bound to greatness by chance was written long ago.

    Explaining some of the happenings of chance that confer this effect is a useful goal. Perhaps knowing more ways to improve one's odds at greatness will allow more people to improve them. Perhaps it will even allow more great breakthroughs.

    We all in the modern world stand on the shoulders of giants. Some of us put that to better use than others. Some of us by chance are given different giants, too.

    Sure, a Chinese or Japanese child may have an easier number system to learn. A European or American child, though, has a much smaller and simpler alphabet. People born with safe running water and household electrical current live a life different from people who spend part of their time hauling water and burn candles or kerosene lamps for light. Which child do you expect to write the next great computer application? It's probably not one who has think about getting power to cook his food. It'll probably be a child who doesn't have to worry about power for his computer.

    Of all those who have most of the advantages of a Bill Gates or a Warren Buffet, how many actually take advantage of all of them?

  • by hellfire (86129) <deviladv AT gmail DOT com> on Wednesday March 04, 2009 @02:13PM (#27067071) Homepage

    It seems to me the lesson is that you not only need to be smart, but you need to be willing to do the work to find opportunities, and willing to act upon them. Also, you need to have a little luck to be in the right place at the right time.

    Not to beat a very bad fanboi cliche to death, but Steve Jobs vs Bill Gates. Steve saw an opportunity to sell a computer to the masses in the 70s and kick start the personal computer market. Bill saw an opportunity to tie his DOS to the IBM PC when he saw more business people wanted the PC over an Apple II. Steve saw the opportunity to create a graphical UI after visiting PARC and find a way to sell it, but wasn't nearly successful this time, because conditions were not in his favor (thanks to Bill Gates well timed opportunity). Bill then copied Steve's project and used his previous well timed success to do what Steve didn't quite have the leverage to do, get the GUI out to the masses.

    Also look at Steve recognizing the market for ripping and mixing CDs, and the coming of the MP3, to create a music player at the right time that's easy to use, and to come up with a marketing plan that made everyone want it.

    Both these men have skills and experience I'll never have. But they'd be nothing if the opportunity didn't arise. They'd be even less if the opportunity did arise, and no one took advantage of it. They'd just be here like the rest of us pontificating on how some other guy is a genius or not, struggling to install their copy of Ubuntu or something.

    I guess my point is that this isn't something entirely new. This sounds like another book about the butterfly effect, so I'm not sure how useful it would be, though I'm sure its interesting entertainment.

  • by IgnoramusMaximus (692000) on Wednesday March 04, 2009 @02:14PM (#27067085)

    Not true at all. You only notice (and catregorize as "successful") a tiny percentage of all those who did all these things, but of whom a vast majority failed regardless. You are simply ignoring them because they do not fit your theory. It takes only one unfortunate event beyond one's control, of which there is an essentially an infinite supply, to utterly destroy and erase years of hard work and many, many long-odds "victories". On the other hand a one-off fortunate random event of great magnitude is not consistent with the attribution of the reasons for "success" you present, only a long series of hard-earned ones fits the bill. Subsequently, given equal effort, far many more people will fail then will succeed. It's simple probability distribution.

    But of course this patently obvious reasoning is severely inconvenient for people who demand massive privileges and wholly insane allocation of society's resources toward themselves based upon their notion of single-handedly "raising themselves by their bootstraps" or some such nonsense, an image which is massively damaged when one starts any sort of analysis of influence external factors on their "self-made" success. Which in the end is no different really from the kings of old who believed the same based upon "divine providence" and were equally upset when someone dared to question their claim to their disproportionate privileges.

  • by Maximum Prophet (716608) on Wednesday March 04, 2009 @02:18PM (#27067141)
    Dans les champs de l'observation le hasard ne favorise que les esprits préparés. - Louis Pasteur

    In the fields of observation chance favors only the prepared mind.

    Bad luck will strike you down no matter how talented you are, but good luck only works if you are smart enough to recognize and capitalize on it.
  • by DeadChobi (740395) <> on Wednesday March 04, 2009 @02:19PM (#27067153)

    Well yeah, but the way the book is described, it sounds a lot to me like a way to excuse not trying at all. "Oh, I'm never going to get my 10,000 hours in because I don't have the good fortune of having a good computer terminal and the societal situation where my skills will be needed." The Fundamental Attribution Error is the other side of the fine line that needs walking. On one side we have the idea that everyone can outstrip everyone else through sheer force of will and intelligence. On the other side we have the idea that there is no way to control our lives and that everyone who succeeds in life is simply lucky enough to be in conditions that allow them to succeed. The latter mistaken view would result in people waiting their whole lives for an opportunity instead of seeking one out. Yes, conditions are important, but you have to seek out conditions for your success rather than just standing around waiting for it to happen.

    It sounds like the author neglects to mention that Bill Gates put in those 10,000 hours through sheer tenacity. Programming is actually hard work, and so is self-teaching. There was no luck involved in the things that determined his personality, unless you want to go so far as to say that everything we do is through sheer chance and that there is no real cognition. Cognition is a deterministic process, not a wholly unpredictable process. For whatever reason Bill Gates fixated on computer programming. You might even say that he decided to study computer programming.

  • by retchdog (1319261) on Wednesday March 04, 2009 @02:28PM (#27067279) Journal

    A much greater chance; meaning 5 out of ten million, rather than 1 out of ten million?

  • by nine-times (778537) <> on Wednesday March 04, 2009 @02:43PM (#27067481) Homepage

    What about people who work really hard and never get anywhere, or people who are handed success for no reason and run with it...or people who are prevented from having any success due to circumstances beyond their control in life

    I think a lot of this was already addressed in my post, but maybe not spelled out very well. What I'm saying is that you can't have real success handed to you, at least not exactly. You could come from a rich family and be given lots of money, but unless you have some raw talent, some willingness to work, and a good sense of which opportunities to take, then the most you can do is sit on your pile of money. You won't accomplish anything for yourself. Lots of people have fewer opportunities and still accomplish a lot with what they have. But still, you can only take the opportunities that are open to you, and some people aren't given many opportunities.

    Mostly what I'm trying to get across, though, is that I've known plenty of people who seem to be pretty unsuccessful by their own measures, but the problem wasn't a lack of opportunity. I've seen people where they say they want to go someplace, they get the opportunity to get to that place, and they don't grab the opportunity when it's there. They blame their circumstances, the fact that things aren't easy, the roadblocks in their way, but they don't take the opportunities in front of them.

    At the same time, I've known quite a few people who are fairly successful and at any point in conversation they can squeeze it in, they talk about how they did it all themselves. They talk about how smart they were and how hard-working, and lecture everyone on what we should do if we want to be successful too. The one thing they tend not to mention, however, is how if one event-- something beyond their control-- had happened differently, they might be bigger failures than the people they're lecturing.

    What I've gathered from these observations is that you can't necessarily judge people by their current state of "success"-- insofar as "success" is a position or an amount of money. If someone is actively accomplishing impressive things, however, that does tell you something. Failure doesn't necessarily tell you anything, unless you actually know them well enough to see why they're failing and know the opportunities that they're passing up.

    And what I'd try to advise is that people watch for opportunities, and try to muster the courage to take opportunities when they present themselves.

  • Ecclesiastes (Score:3, Insightful)

    by ObsessiveMathsFreak (773371) <> on Wednesday March 04, 2009 @03:16PM (#27067859) Homepage Journal

    I returned and saw under the sun, that the race is not to the swift, nor the battle to the strong, neither yet bread to the wise, nor yet riches to men of understanding, nor yet favour to men of skill; but time and chance happeneth to them all

  • by ScentCone (795499) on Wednesday March 04, 2009 @03:17PM (#27067873)
    They did this by incorporating in states where shareholders have no rights.

    And those shareholders were forced to invest in that company... how? Or is it possible that those shareholders actually wanted to see their shares become more valuable, and were happy to reward whoever can make that happen with a big fat paycheck?

    Because if all a well-paid executive is is a load on the company, with no benefit, then that means that the shareholders aren't getting what they should get. And when that happens, they unload their shares. The value of the shares goes down. The company's capital shrinks. The visibility of that shrinking value causes concern among other investors, who also divest. And you get companies with worthless stocks, just as ought to happen.

    Is it really your contention that the person who guides a multi-billion dollar company is only worth - to the shareholders, the customers, and the other employees of that company - 5 times what the janitor is making? Since you're choosing numbers, why not say he's not worth any more? Gee, maybe because there are very few people in the world who can effectively do that job, and the company needs to compete for them? How are you going to do that when only offering a janitor's wages? Or five times the janitor's wages? Why should someone who knows how to do that job settle for one that pays that much when another company might pay more? And since you're looking to control what shareholders are allowed to decide to pay the people they employ, and cap everyone's pay, why aren't you also talking about capping the janitor's pay? Perhaps all janitors, everywhere, should make the same Government Approved Janitor Salary? We can even have a Bureau Of Wages that centrally manages what each person's pay should be! And since everyone will finally be equally miserable, we can all make ourselves feel better by calling each other "comrade." That'll be great!

    Or, you can let the people who choose to invest in a company decide what sort of compensation is reasonable, and let them pull their investment out of that company if they don't like it. Yeah, I know, no governement job is created in that scenario, and no need to tax private citizens to pay for that job. Bummer!
  • by Khashishi (775369) on Wednesday March 04, 2009 @03:25PM (#27067961) Journal
    That's because you've never heard of any of the people who
    - have natural talent
    - develop that talent through hard work and education
    - are tirelessly ambitious
    - and incredibly hard working
    who don't also have good luck.
  • Re:Overrated (Score:2, Insightful)

    by jeffc128ca (449295) on Wednesday March 04, 2009 @03:31PM (#27068035)

    Blink - go with your first feeling. There, that's the whole 100+ page book in a five word sentence.

    Actually that's incorrect. The book says that intuition in experienced people works well. It's quite lousy in people without experience. Your brain is intuitively capable of processing lots of data and coming up with a correct action to a problem based on your past experience. It can do this way faster than it takes to consciously work it out. There are many many people who can't seem to grasp this concept.

    Perhaps you should give the book a second read.

  • by Knuckles (8964) <knuckles@dan t i a n . org> on Wednesday March 04, 2009 @03:39PM (#27068133)

    There was no luck involved in the things that determined his personality

    Not to take anything away from hard work, but coming from a rich family that allowed him to put 10,000 hours into programming instead of, say, shoveling ditches at 16 certainly was not *bad* luck.

  • by jeffc128ca (449295) on Wednesday March 04, 2009 @03:40PM (#27068145)

    "And the kids with straight A's in grade school only rarely grow up to be intellectual leaders"

    Just because you got straight A's doesn't mean you had to work for them. Much of Gladwell's work shows that effort, time, and experience trump natural talent, if it exists. Who works harder to get the grade they did, the grade A wiz kid that finishes home work in no time or the D student who spends hours and hours trying to understand something.

    Not sure if it's true or a myth, but I heard Einstein failed high school a few times before hitting on that relativity thing. I have also known in my own life a couple of academic super stars with Phd's that became useless in the career world. Last I heard one of them took a job on the factory floor at John Deere.

  • by Knuckles (8964) <knuckles@dan t i a n . org> on Wednesday March 04, 2009 @03:48PM (#27068263)

    And had you happened to have cancer or a car accident at the wrong time it would all have been for nothing.

  • by Obfuscant (592200) on Wednesday March 04, 2009 @03:48PM (#27068271)
    Taking Bill Gates as an example,

    The book's use of Bill Gates as an example of the 10,000 hour rule is rather poor. Bill Gates did not build Microsoft by being a good programmer. He built it by taking other people's good programs. He didn't even need any skill to identify "good", because he took those that lots of people were using. He let the public determine what was good and leveraged that.

  • by GargamelSpaceman (992546) on Wednesday March 04, 2009 @04:06PM (#27068509) Homepage Journal

    I understand where that sort of statement come from. It's what you tell yourself when trying to convince yourself to have all those, no doubt useful attributes, i.e. value your natural talent whatever that may be, develop it, be ambitious, and hard working, but in getting to the bottom of things, this sort of propaganda has to be abandoned as it distorts one's perception of reality as much as defeatist statements, like 'talent doesn't matter, even mine', 'why bother developing it then', 'Why be ambitious, it's a lost cause', and 'If you can't win, why work so hard?'

  • by ShakaUVM (157947) on Wednesday March 04, 2009 @04:15PM (#27068627) Homepage Journal

    >>Well yeah, but the way the book is described, it sounds a lot to me like a way to excuse not trying at all. "Oh, I'm never going to get my 10,000 hours in because I don't have the good fortune of having a good computer terminal and the societal situation where my skills will be needed."

    Actually, Gladwell says just that in an interview with Charlie Rose. []

    He surmises that the reason really smart people (people with high IQs) don't do noticeably better than merely smart people (IQs around 120) is that they know how much work it'll take, and choose to not do it. He says they are noticeably happier than the general population, so maybe that's the key.

    I finished Outliers last week, and came away with it with the same impression that I get from all of Gladwell's books, which is that it's half insightful, half complete nonsense.

    For example, his central thesis is that our heroic model isn't accurate, that Bill Joy and Gates are more the product of their times than anything having to do with their own skills, and that they just happened to be given the necessary 10,000 hours of training before anyone else had access to them, and since they were born at the right time to capitalize on the digital revolution, that's why they're successful.

    Personally, I'd flip it around. I'd say, "Sure, training, skill, being born at the right time, and luck in general, are all critical elements of success. But why was it that Joy and Gates became the 'successful' people, when their compatriots, who also had the 10,000 hours of training, early access to computer systems, and were bright and ambitious, did not?"

    In other words, Gladwell goes too far in destroying the idea of individual effort in becoming 'successful'. While we might often fail to consider the environment that produced these people, we also have to realize (which Gladwell doesn't) that these guys weren't, by any means, unique in their backgrounds.

    I also take some exception with his notion of success, which is to use wealth as a sort of scorecard. I take Benjamin Franklin's point of view on money, which is to say that it's important up to a certain point, and relatively unimportant after that. If you have enough money to do whatever it is you want to do, that's all the money you really need. It's served me pretty well.

    Perhaps Gladwell should have dug down a little more on those high IQ people that are "failures" (in the sense that they didn't go out and win Nobels at a significantly higher rate) and figured out why they are indeed happier than the general population, since, in my mind, that is the primary indicator of success.

  • by FrankieBaby1986 (1035596) on Wednesday March 04, 2009 @05:07PM (#27069237)
    Here, Here, between 10 and 15 I put in a lot of time self-studying computers (old (2/3)86 machines that people gave away), and generally excelled in school. But when 16 came along, it was time to start working if I wanted anything, all thew way up through my 4 years so far in college. Needless to say, my progress has been less than stellar. Partly my own fault, partly because after working 20 hrs a week outside of class to pay for college, the less-than-fascinating classes take a hit.
  • by neo (4625) on Wednesday March 04, 2009 @05:27PM (#27069491)

    "Bad luck" is when a situation comes upon you that you are not prepared for and in some way is "bad". If you had been prepared for the situation then you would have avoided it. Hence the more prepared you are, the less likely you are to have "bad luck."

  • by ultranova (717540) on Wednesday March 04, 2009 @05:33PM (#27069613)

    If the company is foolish enough to pay the execs based on short-term gains which ultimately cost them billions, the company loses. Everything works itself out.

    Except that the shareholders win. After all, in a highly liquid stock market they can simply sell their stocks as soon as the short-term gains cause the stock price to temporarily rise. This means that for the shareholders, the best kind of exec is exactly the kind who sacrifices long-term viability for short-term gains; the shareholders get the gains and let someone else deal with the mess. Consequently, this kind of behaviour gets rewarded again and again, and repeated by execs of every company until they are all looted empty and the economy collapses, which is happening now.

    So no, it doesn't work itself out. In the current market it is the best strategy, and thus one that a rational actor will engage in again and again, and a fine example of a tragedy of the commons. In order to stop it, we'd need to make the market less liquid, but I can't think of any way to do that which wouldn't cause more problems. Yet stop it we must, or keep facing the rather unpleasant results of parasite economy over and over again.

    Another possible fix would be to somehow twist the market towards favouring small companies over large ones. People tend to have more emotional relationships to small companies, which are often run by the very people who found them, and this deters rational but destructive behaviour. Again, I can't think of a way to do this without causing unintended side effects.

    What breaks this system is when the company makes horrific decisions and the taxpayers bail them out.

    No, what breaks this system is that only the sucker left with the stock when the company folds pays the bill, rather than everyone who took part in the looting. Bailouts make the problem worse, of course, since they remove the risk completely, but the problem would exist even without them.

    Now we're paying the huge salaries and there's no penalty for bad investment. Guess what that creates? (Hint: not "valuable jobs and products.")

    The problem is that it is possibly, even easy, to take short-term gains and have someone else suffer the long-term costs. No one believes that they'll be the one holding the stock when the sucked-dry husk of the company finally gives up the ghost, and in all likelihood they're right. It's simply that with all other companies also in bad state, there will be - and was and is currently happening - a cascade effect of failure.

    Taking short-term gains over long-term ones in a highly liquid market is not a bad investment, but a pretty good one. That's why everyone is doing it. It's simply one that causes the whole market to collapse when everyone is doing it.

  • by Knuckles (8964) <knuckles@dan t i a n . org> on Wednesday March 04, 2009 @06:00PM (#27070069)

    Where I live, people who, for some reason or other, don't go into higher education start an apprenticeship at 16, if they are lucky and don't end up as unskilled workers. Part of that apprenticeship is to attend formal education at a public vocational school for 3 months per year or so. There, they are supposed to practice their craft in a regulated setting and learn the theoretical stuff they need. The school is also partly supposed to ensure that their masters/educators at the company do a reasonable job, which sadly is often not the case.

    Friends of mine teach at such a vocational school, and they report that the students are generally in a sad state. Usually they come from less than stellar homes, which makes them prone to being more used to drinking and watching TV than educating themselves. In addition they are often used more as cheap labor than actual apprentices at their jobs, and they are often doing really hard work for their age, which often is mindless, too. As a result, the efforts at school largely go to waste, despite the best efforts of most of the teachers.
    Any talented kids that grow up in such an environment are IMHO very likely to end up below the level that is possible for them.

    I myself always worked during summers from 16 all through my university years, and earlier-on, during my school year and early uni time when I was not skilled enough to get actually interesting jobs in my field of study, I usually worked quite demanding jobs in construction, factories, etc., because they paid reasonably.
    I doubt that many people are able to educate themselves properly in their free time in addition to doing jobs like these, even if they are highly intelligent and interested. I'm not saying that it is impossible, and we all know that there are examples for that. However, it takes a very special state of mind, a lack of which says little about the other talents of a human being.

  • by Descalzo (898339) on Thursday March 05, 2009 @11:41PM (#27087059) Journal
    If that's the case, then it seems that one company would find these good managers that supposedly are willing to work for 5x the wages of the janitor, and use the savings to become more profitable.

"The vast majority of successful major crimes against property are perpetrated by individuals abusing positions of trust." -- Lawrence Dalzell