After practice, Tommy Amaker, the Harvard basketball coach, invited Summers into a lounge to address his team. Over pizza — his gluten-free pie sat off to the side — Summers delivered a 30-minute speech that was part motivational and mostly scholarly. (Imagine what Bobby Knight might sound like if he had an advanced degree in public economics.) The theme was adjustments. Summers began by recalling a recent Harvard game against Brown. The Crimson had blown a 22-point lead in the second half but came back and eked out a win in double overtime. “It’s not that people who win never make mistakes,” Summers said. Then he transitioned to his old boss, President Barack Obama, who botched his first debate against Mitt Romney before adjusting his plan and winning the next two. “Like the president,” he said, “you finished strong!”
Summers segued to an explanation for how he chose a career in economics. The field, he said, provided tools that can be used to make the world, or a basketball team, better. The key is reading data and recognizing what it tells you. Then Summers paused and asked the assembled players a rhetorical question: Did they believe a shooter could get a “hot hand” and go on a streak in which he made shot after shot after shot? All the players nodded uniformly. Summers paused again, relishing the moment. “The answer is no,” he said. “People apply patterns to random data.” A statistical analysis of player performance reveals that streaks are random events. The players listened respectfully. They perked up when it was noted that Summers grew up in the same school district as Kobe Bryant.
A few days later, I witnessed an equally unusual discussion of basketball and economics. Before a crowded lecture hall at Columbia University, the economist and former adviser to both Bush presidents, Glenn Hubbard, wrote a series of words on the blackboard. Among them: Milton Friedman, Yeats, basketball. Hubbard, a mild and genial man, looks as if he entered the world fully formed, wearing a conservative suit with a side part in his hair and an accountant’s pair of thick eyeglasses. Close your eyes and picture an economist — that’s Hubbard. For the next hour, he maintained an oddly cheery tone as he laid out a dystopian vision of the United States’ economic future. He ticked off a series of empires — Rome, medieval China, Spain, 19th-century Britain — and argued that they fell because their leadership ossified and squashed free trade, technological progress or other forces of economic growth.
Hubbard fears that the United States is also veering away from the forces that made it grow into the world’s most powerful economy. Rather than corrupt Roman senators or courtly Spanish twits, he argued, our culprits are myopic politicians who are creating a middle-class entitlement state. If those politicians don’t make fundamental changes to lower our debt — especially by changing the rules governing increasingly expensive Social Security and Medicare policies — the United States may collapse, too.
As he wrapped up, Hubbard pointed to the good news: results can change when the right adjustments are made. This is where he brought up basketball. By the 1940s, he said, the sport had become boring, dominated by extremely tall players who planted themselves next to the rim. Then a Columbia University graduate student who also coached basketball wrote a Ph.D. dissertation arguing that the game could be saved by innovations, like the 3-point shot, which created an incentive to move action away from the hoop. It took decades for the N.B.A. to adopt the 3-pointer, but since its implementation, it has helped make basketball one of the most popular and lucrative sports on earth.
The U.S. economy, in other words, desperately needs to find its own 3-point shot.
Article source: http://www.nytimes.com/2013/05/05/magazine/larry-summers-and-glenn-hubbard-square-off-on-our-economic-future.html?partner=rss&emc=rss