Thursday, February 16, 2012

Hayekian Lessons from Linsanity

A week ago, I commented on the spectacular rise of New York Knick Jeremy Lin.

The Knicks have four more wins under their belt since that post and are 7-0 since Lin has taken the helm at point guard.

NyPo explains the Lin story:
Lin’s overnight jump to superstardom has taken not only the world by surprise, but Lin himself cannot believe what has happened over the past two weeks. He had 13 assists Wednesday in a 100-85 win over the Kings...

Lin’s story has been well documented. Before becoming the Knicks’ starting point guard, he was waived twice, by the Warriors and Rockets, and was toiling in the D-League. Prior to Feb. 4, Lin had played a combined 55 minutes in eight NBA games.

“There’s definitely been times of doubt, whether it be a rough game or a rough stretch. Even just getting waived,” Lin said. “When I got here I know Iman [Shumpert] went down with an injury and then the Knicks picked me up so I wasn’t sure if I was just insurance until [Shumpert] got back or what their plans were for me because at the end of the day it’s risk-free to pick up a non-guaranteed contract.”

Lin’s impact is not just seen on the court, though. He has changed the entire culture of the team and the city. 
“[What’s surprising is] walking around and seeing the newspapers and all the creative 'Lin this,' 'Linsanity,' all the 'Lin' names, it’s been unbelievable how everyone has just turned 'Lin' into something,” Lin said. “And how much fun our team is having, now that we’re winning, off the court, and I’m not talking about nightlife. I’m talking about hanging out on the road, traveling together, loving being around each other, smiles top to bottom, everyone just having fun and really just being a team.”

Lin admitted that despite all of the excitement surrounding him and the Knicks, he is not abusing his celebrity. After he scored 38 points against Kobe Bryant and the Lakers, the point guard was spotted with his family last weekend at his little brother’s basketball game at Hamilton College.

“No, nope, not changing, we’re packing up the minivan and going to see the little brother play,” Lin said.

I watch a lot of basketball and I have never seen a player like Lin. In the early going, he appears much more talented than even Magic Johnson, Bob Cousy, Allen Iverson or Jason Kidd.

He appears very smart in the way he runs the team. He energizes the team and sets up players for very easy shots. I'm talking very easy shots, like I have never seen done before. You can be sure that other teams are intensely studying game film to find a weakness in Lin's game so they can shut him down. I don't expect they will find much.

Yet, Lin went undrafted. The NBA has super sophisticated scouting operations, where they send scouts across the globe looking for talent and yet they missed a player, playing in Cambridge, MA for Harvard. It is a clear and odd example of what Hayek taught about full knowledge not dispersed evenly so that a central planner can not grab it all.

Even more incredible, there was an NBA scout, of sorts, that recognized Lin's apparent talent before the draft. WSJ reports:
The morning after Jeremy Lin sank a thrilling, last-second three-pointer that lifted the New York Knicks over the Toronto Raptors and gave "Linsanity" its latest, rapturous chapter, the mysterious basketball oracle who saw it coming almost two years ago woke up in Bend, Ore., and blended himself a healthy green shake: celery, spinach, kale, orange juice. He put on his uniform, packed some trail mix for the road and pulled on his winter hat. 
Then he went off to his day job: driving a FedEx Ground delivery truck. 
In May 2010, an unsung numbers hobbyist named Ed Weiland wrote a long-term forecast of Jeremy Lin for the basketball website Hoops Analyst. At the time, Lin was a lightly regarded, semi-known point guard who had completed his final season at Harvard. But Weiland saw NBA material. He emphasized how well Lin played in three nonconference games against big schools: Connecticut, Boston College and Georgetown. He noted how Lin's performance in two unsexy statistical categories—two-point field-goal percentage (a barometer of inside scoring ability) and RSB40 (rebounds, steals and blocks per 40 minutes) compared favorably with college numbers put up by marquee NBA guards like Allen Iverson and Gary Payton. Weiland concluded that Lin had to improve on his passing and leadership at the point, but argued that if he did, "Jeremy Lin is a good enough player to start in the NBA and possibly star." 
In the wake of Lin's historic New York explosion, Weiland's eerily prescient post has quickly recirculated around the Internet, as a rare example of someone who saw potential in a player who wasn't drafted and was abandoned by two teams before getting a chance with the Knicks. Traffic rushing to Weiland's 2010 Lin piece briefly crashed the Hoops Analyst website after Lin torched the Lakers for 38 points Friday, and his wisdom has been compared with the groundbreaking number-crunching in the baseball best seller "Moneyball," which became a recent Hollywood movie. 
So not only did the NBA super scout systems miss a potential great player, they apparently have missed a number cruncher who could have identified Lin. (Don't even get me started on Weiland's lack of entrepreneurial skill in marketing his scouting talent---I blame the anti-entrepreneurial bias in the United States education system.)

That said, in the free market, information does rise to the top. Not because of central planners, but because there is not  a central planning system through which information flows. We are now aware of Weiland and his skill because of something called. Hoop Analyst..

One wonders, if a web site like Hoop Analyst would even exist in a centrally planned economy. Isn't NYT doing a good enough job of covering the Knicks and NBA?  Isn't Hoop Analyst wasted duplication? And what kind of license would Weiland have to get to start giving scouting reports? What's he going to put on his resume? That he drives a UPS truck? The man is going to tell NBA scouts who to draft?

It's only because of a lack of central planning at the web level that something like the Hoop Analyst exists and that they are free to hire someone who doesn't have a license and drives a UPS truck but does appear to have a sound perspective on basketball.

Hayek, Mises, Rothbard and other Austrian economists would understand. There is tremendous danger with central planning that information flows of all kinds will be cut off.  And yet, in many important sectors licensing and regulations hamper information flow.

One wonders what drugs, inventions and capital funding for new projects hasn't occurred because of the arrogant bastards at the FDA FTC, SEC  etc. who think they are the equivalent of the NBA scouting systems that supposedly have all the knowledge in the world covered. Because of FDA, FTC, SEC,    absurd licensing and regulation practices, which do nothing but protect those close to power and block, all kinds of information and knowledge is not getting out.

Yesterday, I spoke with a top research scientist who holds a PhD and MBA and who worked for the FDA. She now works for a major pharmaceutical company. She confessed to me that the pharmaceutical company probably hired her because of her connections and understanding of how the FDA works. She told me that many, many people die because of absurd regulations which prevent drugs from reaching the market---especially those who could be saved by small market orphan drugs. People  die unnecessarily, she repeated.

The FDA, FTC, CFTC, SEC should all be abolished. Not only because they do nothing but protect their crony buddies, but because they prevent the development of new products and  ideas from ever coming to the surface.


David Zirin explains what the NBA scouts missed:
Jeremy Lin in his first five starts just set a record for most points in NBA history. Think about that. This record isn’t held by Wilt, MJ, Kareem or Lebron. It’s held by Jeremy Freaking Lin. He is one of three Knicks ever to have at least twenty points and seven assists in five straight starts and he did it in his first five starts.


  1. Shades of "Moneyball"

  2. This post was good inspiration for me to actually read Hayek's essay "The Use of Knowledge in Society":

    Now that I've read the whole thing, I realize how most of the summaries of it that I've seen were accurate to a point, but subject to information loss that was introduced through the process of condensing its contents into a few sentences.

  3. Minor fix, the article said he was a FedEx driver, not UPS. It's rare that a guy goes from total obscurity to super star overnight. The Lin story is awesome!

  4. I just saw "Moneyball" and was unimpressed. A Yale educated economist brings baseball into the 21st century by creating a model and crunching numbers? Like they advanced economics? Why they don't go into the specifics of the number crunching in the movie, the economist claims to have boiled it all down to a single number. The scouts claim that isn't the way the real world works, an argument familiar to Austrian adherents. No bunting or stealing by anyone in any circumstance? It seems like they became slaves to some Yale economist's model. There are no doubt errors made by scouts and I don't doubt many owners overpaid many "superstars" while ignoring "cheaper" quality players but that doesn't require any elaborate number crunching. BTW do the Minnesota Twins employ an economist? They are also a small market team but have fared better than Oakland since 2002 even counting last year's disaster of a season. 14 more wins than Billy Beane's As.

  5. Great article. One complaint: UPS is NOT Fedex!! We do more business in the US than they do worldwide, and we certainly don't need Tom Hanks to do our marketing for us.