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Moneyball and the Limits of Managerial Science

Posted in baseball,Books,Change is Bad,Current Events by bourdaghs on the December 1st, 2010

I’ve finally gotten around to reading Moneyball, Michael Lewis’ now-classic 2003 portrait of Oakland A’s general manager Billy Beane. A decade ago Beane led the statistical revolution in contemporary Major League baseball, using computers, the Internet, and statistics to identify sources of talent that were undervalued by traditional baseball wisdom (meaning, primarily, the collective wisdom of scouts) and thereby helping the A’s to consistently field teams that were competitive despite low payrolls.

Beane clearly is a terrific general manager, and the book on the whole offers a good read. But there is also something troubling about it, something I’ll try to put my finger on here. The book identifies Bill James as the heroic pioneer of the new knowledge that Beane exploited, but it seems to me there is a decisive difference between James’ approach to the game and that of Beane and Lewis–a qualitative change in the nature of our enjoyment of baseball. For James in his classic Baseball Abstracts from the 1980s (I was an avid reader from 1983 on), statistics were a tool for identifying more precisely what made Joe Morgan or George Brett such invaluable figures: his focus was on the marvelous skills that major leaguers brandish on the field.

James was interested in fun, while Lewis’ Beane is interested in power–and I don’t mean slugging average. For Beane and Lewis, statistics are weapons to shift power to the general manager. In their version of baseball, the heroes no longer wear spikes on the diamond; instead, they wear cuff links in the front office. You see this new focus in the explosive popularity of fantasy baseball games (which I enjoy as much as anyone), in which participants take pleasure in imagining themselves not as the batter at the plate in the bottom of the ninth with two outs, but rather as a general manager trying to cobble together the best possible roster on a limited budget. The language used in recent editions of Baseball Prospectus (the annual publication that has largely replaced James’ Abstracts) reflects this: veteran players are perceived as suspect malingerers who want only to eat up too much salary.

In Moneyball, this shift is rendered explicit. Lewis quotes A’s executive Sandy Alderson, the man who hired Beane as GM, as saying “What Billy figured out at some point…is that he wanted to be me more than he wanted to be Jose Canseco.” Alderson, according to Lewis, wanted to “concentrate unprecedented powers in the hands of a general manager,” a stance Lewis describes as “rational.” It requires (in Alderson’s words) shedding “player-type prejudices” (pp. 62-63).

This isn’t just a question limited to baseball, I think. Moneyball crystallizes the celebration of what is sometimes called managerial science, a new branch of knowledge. Again, Lewis is explicit on this: the revolution he describes

…set the table for geeks to rush in and take over the general management of the game. Everywhere one turned in competitive markets, technology was offering the people who understood it an edge. What was happening to capitalism should have happened to baseball: the technical man with his analytical magic should have risen to prominence in in baseball management, just as he was rising to prominence on, say, Wall Street. (p. 88)

The essence: an outsider comes in and radically devalues the forms of specialized knowledge accrued by veteran insiders, reshuffles the deck, and thereby improves the bottom line.

Don’t get me wrong: I recognize that this sometimes works. An outsider’s perspective often provides a valuable rethinking of the way things are done in a given field. Some of the greatest breakthroughs in history arose when someone crossed a boundary and transported knowledge developed in one sphere and applied it in a novel manner in a foreign discipline or field.

It can also, however, lead to disaster. The trainwreck that is the Chicago Tribune arriving on my doorstep each morning provides ample evidence of that. Non-journalist managers have destroyed the paper (and the even better Los Angeles Times) by focusing on their outsider’s version of “the bottom line.” George W. Bush, the “Decider,” is another exemplar and proponent of this version of managerial science. Disasters such as the Iraq War, the Katrina bungle, and the banking meltdown are in large measure products of this version of managerial science. Still to come: radical climate change. In each case, the knowledge accrued by specialized experts over decades was disregarded by managers. We increasingly see this same tendency in education at all levels in the U.S.: managers are brought in from outside to improve “the bottom line,” and they proceed by radically devaluing the knowledge produced within the field over decades.

Often, the error comes in the assumption that the new manager knows better than anyone else what the bottom line is. The bottom line for a baseball fan is, I think, enjoyment. The new approach Lewis champions provides its version of enjoyment, but at the expense of other kinds. In sum, the increasing stress on the power of quantitative knowledge is producing a qualitative change in our experience of the game. We see this change in fans, I think: the quality of watching a game at Wrigley Field today is quite different from what it was when I first visited the park in 1984, and the changes has little to do with the lights (another brilliant “innovation” courtesy of the Chicago Tribune Corporation). In 1984 the thought of booing the Cubs was absurd; it is a regular occurrence nowadays.

This also relates to the increasing dominance of the financial sector in our world. Again, Lewis is quite explicit on this. He describes Beane’s sense of triumph when he acquired Nick Swisher in the 2002 amateur draft:

There’s a new thrust about him, an unabridged expression on his face. He was a bond trader, who had made a killing in the morning and entered the afternoon free of fear. Feeling greedy. Certain that the fear in the market would present him with even more opportunities to exploit….Like any good bond trader, he loves making decisions. The quicker the better. (p. 113)

Again we see a new species of hero being manufactured here, one with an “unabridged expression on his face,” whatever the hell that means. Other kinds of heroes are, of course, being displaced: the “fat scout,” for example, who is driven away with his outmoded knowledge (p. 118).

What’s striking in Moneyball is that the book unconsciously presents a counterargument to its own thesis. Billy Beane’s rise as a general manager is in fact due to the experience he acquired as a (largely failed) major league prospect. The book narrates this as a prime instance of the failings of the “old” knowledge it aims to devalue, but it is Beane’s experience on the field that opened his eyes to the value of certain statistics. The book downplays the ways in which Beane’s knowledge is acquired the old-fashioned way: through hard work on the baseball diamond and the acquisition of “player-type biases.” He wasn’t just a geek with a computer.

The value of so-called managerial science is the opportunity it provides to recognize the limits of existing forms of knowledge. Its disasters come likewise when it fails to recognize the existence of its own limits. Sometimes, the “bottom line” isn’t as clear cut as Lewis and his ilk believe. It’s often more enjoyable to be a fan of a losing team than it is to cheer on a championship club. Why? Because it’s fun.

[Postscript (2 December 2010): I’ve now read a bit more of the book, and the early hints at giddy celebration of finance capitalism have grown even more explicit. It’s almost quaint today to read passages such as the following, celebrating the scientific overcoming of risk by the managerial wizards who invented arcane derivatives: “The fantastic sums of money hauled in by the sophisticated traders transformed the culture on Wall Street, and made quantitative analysis, as opposed to gut feel, the respectable way to go about making bets in the market. The chief economic consequence of the creation of derivative securities was to price risk more accurately, and distribute it more efficiently, than ever before in the long, risk-obsessed history of financial man” (p. 130) That old “fat scout” sounds better and better with each page I read….]

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