Michael Lewis’s Moneyball lays tells the story of how the Oakland A’s became successful. Part of the answer is that they appreciated the value of an undervalued asset, the ability to get on base via walk.
In this EconTalk podcast, Skip and I talk about whether this story is true and if it is true, how such an insight about the value of walks could lay undiscovered (or at least underutilized) for so long. One interesting part of the conversation is about just how competitive or uncompetitive the baseball industry is. It appears very competitive. Winners and losers are observable. Unsuccessful managers and general managers are fired all the time. Yet I argue that the costs of failure are very small. Mediocre franchises can be highly profitable because of the inherent monopoly power an owner has in the local market. Even worse, it is very hard to buy out a mediocre owner because the replacement must be approved by the other owners whose incentives in this situation are rather mixed.
The next Econtalk will be Monday with Clint Bolick talking about the virtues of judicial activism.