Summer Reading

Also known as Summer Slump

Hi, Can here. This week’s edition is going to be a short one, as I am graduating from business school tomorrow. Things are a bit hectic, with travels and plans to empty out my apartment in France to move back to US.

Moreover, we only have one piece this week, as opposed to the usual two. The schedule will also be adjusted for next week. We will be back to our twice-a-week routing the week after.

We have been blown away by the feedback we’ve been getting so far and have some cool projects in the works.

Thanks for being a loyal subscriber.

Facebook’s New Competition: The US Dollar: There is already an encyclopedia worth of hot takes on Libra, Facebook’s decentralized, oh wait, not really, cryptocurrency. I am generally ambivalent about cryptocurrencies other than Bitcoin. While I appreciate the excitement it injected into a old, stodgy industry (at least from the outside, sorry Ranjan), I can’t tell what’s real and what’s outright scam generally. Anyway, Max Read skips over the technical mumbo-jumbo, and focuses on what Facebook’s new currency would mean for other currencies, were it to work. There are lots of assumptions there, but I enjoy thought exercises and Max is an excellent writer.

But what if — bear with me now — you had a stable cryptocurrency, created with regulator and institutional accession, and already in frictionless circulation among 2.3 billion people? Plenty of economists and central bankers have suggested that a supranational instrument might make for a better reserve currency than one printed by a national monetary authority. John Maynard Keynes’s proposed currency, the “Bancor,” is notable in that it might actually have a worse name than Libra, but it also seems to presage the ambition of Zuckerberg’s project — albeit as the product of an international system of cooperating sovereign governments, rather than as an app created by a Roman Empire–obsessed programmer.

Libra, Explained: I am sorry. I used to joke that my goal with The Margins is to write the longest standing newsletter without ever mentioning the B-word and here I am mentioning another piece about the Facebook cryptocurrency. As I mentioned above, a lot of my skepticism about the currencies other Bitcoin is that they dilute the original ideas behind the Satoshi paper so much to fit their aims, I lose interest at best, and become hugely suspicious the entire thing is a house of cards, built on technical jargon that’s opaque to practically everyone. Verge writer Elizabeth Lopatto shares some of my concerns, and has a pretty funny and informative take on more technical aspects of the topic.

I keep noticing there’s this stuff in here about being decentralized “in the future,” but from the jump, it’s coming out in centralized form. They call this centralization “permissioned” in the paperwork. Basically, the first version of Libra is controlled by the founding coiners. You know, the ones who also get to keep the interest. (There is a vague plan for expanding this initial cabal in five years or so. Any new members of the cabal will have to meet its requirements, which are substantial.)

The Lingering of Loss: The thing with losing someone close to you is that the loss is the beginning, not the end. From that point on, your life is on a different trajectory. It gets easier, surely with time, but the feeling remains intact. If I may say, at the risk of sounding insensitive, it even becomes “enjoyable” as it becomes part of your life, as you learn to live with that feeling, maybe in a feeble attempt to keep the person alive and well. It hurts, but you know that things haven’t ended. What used to be the hard part, the lingering, becomes the part that makes the sadness be worthwhile. This piece touches on that, and really more. Worth your time.

Another ten years passed. Twenty years: a generation. The boys don’t wear mittens anymore. Their feet are much bigger than mine, even bigger than Jane’s. But I still miss their baby feet, and their patter, and the piffle of childhood. I reel at a baby’s cry. I swoon at strollers. I don’t understand why all the love songs aren’t about babies. I wrote a very long book, a debt paid. I am tired of writing books. The books had always been for Jane. She heard, she knew. Did she know?

The MBA Myth and the Cult of the CEO: A question that comes up is “Why do CEOs get paid so much”? We talked about compensation packages quite a bit here at The Margins. The overarching theory is that the pay is set by the market; you pay people just enough to keep them at employed. This theory sort of breaks when it comes to CEOs however. The most popular theory, at least in public company CEOs, is that their pay should be tied to the stock performance. This piece pierces some holes in that argument, and more. Did I mention I am literally graduating as an MBA tomorrow?

We ran similar regressions controlling for industry and found that — even after controlling for industry — elite MBAs did not produce positive statistically significant alpha. Elite MBAs did perform relatively well as CEOs in healthcare and consumer staples, but relatively poorly in energy and materials businesses, though those results were not statistically significant. Our study is not the only one to come to this conclusion. A study by economists at the University of Hawaii asked similar questions and found that firm performance is not predicted by the educational background of the CEOs.