Interview With Starling David Hunter, PhD

For any of our readers not familiar with the blog, The Business of America is Business, you are in for a pleasant surprise should you decide to visit. Like the experience of potato chips, you won’t be able to stop at just one page. For those who already know Starling David Hunter, I hope this interview with him enhances your understanding of what he is doing and why.

At present, Starling teaches at the American University in Dubai, in the UAE. But his path there was a circuitous one. He began with an undergraduate degree in electrical engineering and worked for Boeing and Exxon before going back to Duke to get his PhD in Organizational Theory. From there he went on to teach at MIT’s Sloan’s Master’s programs.

While mulling over the idea of teaching abroad, Starling’s department was one of a group approached by a delegation from the UAE. They were intent on improving the educational system in the Emirates and wanted to engage teachers from top tier colleges to consult on ways to improve. After speaking with one of the delegates, Starling decided to sign on for the job of assisting the UAE’s young people in learning how to assess, analyze, and think critically.

I first “met” Starling in a comment he left on The Belmont Club. Like other of Wretchard’s progeny, after hanging out at the Club, he decided to strike out on his own. And so he has, ending up with his current blog. The experience of reading that first comment – I no longer remember its subject – made me realize that he was an important find. Probably most of us are economically illiterate, and nothing has proved it more vividly than the latest rise in oil prices. It is one thing for private citizens to be ignorant; it is quite another to hear the wrong-headed, downright stupid bloviations and “solutions” emanating from the hallowed halls of our national Congress. That is scary. Starling has become my light in this dark vale of unknowing. When I want to figure out what might be going on, I head over to Biz to see what he might have to say.

You probably know that the title of Starling’s blog comes from a quote of Calvin Coolidge, who was Harding’s vice president and assumed office when Harding died two years after being sworn in. Coolidge’s economic ideas are obviously congenial with Starling’s. On reading him, you see why.

Starling has an easy style, a measured and pleasant tone. Unlike certain of us, he never rants: the consummate teacher. For example, here is his response in the comments to one of the Baron’s posts regarding the obvious bias of National Public Radio:

Now as for the substance of the NPR commentary. Although my research involve the economics of technological innovation, my training is not as an economist. That having been said, I do recognize that economics statistics not placed in a context can be very misleading. Anyone, whether on the left or right can create misleading impressions by what economic indicators they mention and how, as well as by which ones they leave out. What is important to keep in mind is that just as there is no single measure of physical health, there is not single measure of economic health either. The social sciences simply don’t have that degree of precision. Econometric models don’t always do that good of a job predicting and describing the phenomena they consider.

Now as for NPR’s bias, there is not doubt that they do lean left. I’m 42 and have been listening to them regularly since I was 19 and for me their bias is a settled question. Hank noted that NPR appears to work from a script. This they indeed do. Here are some of the ideals that motivate their partisan perspectives:

1)		Capitalism is unjust. It creates winners and losers as evidenced by the unequal distribution of income that it produces.
2)		Business is not, by definition, socially responsible. That is to say, running a business is not in and of itself a responsible thing to do. Providing goods and services that people, keeping people gainfully employed, and paying taxes is not inherently virtuous. It only becomes that when business leaders sign on to various notions of corporate social responsibility.
3)		Private enterprise should exist to serve the needs of the “workers” not the owners and only secondarily customers. That is to say, the profit motive is unseemly and the desire to maximize profits instead of developing people is the closest thing these folks recognize as “sin”. Besides, workers, not managers and “money men” and owners, create all the value.

A few posts from my archives that relate to these topics include: The Road (that ought to be) Less Traveled series about a fawning NYT article on Hugo Chavez’ “21st century Socialism” and Dispatch from a Parallel Universe about the NYT’s coverage of Wal-mart.

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The Interview
How did you end up in Dubai? In the time you’ve been there, what’s your impression? What preconceptions did you have that you’ve since changed?

The UAE has for a few yeas been very interested in upgrading its educational system. They know that they have done poorly in preparing their students to become anything resembling independent thinkers capable of adding to the knowledge economy. One of the ways they have set about offsetting this is to engage top tier US institutions of higher education to consult them on how to improve. One such school was MIT. A few years back a delegation from MIT included my department head and a few other senior colleagues and administrative staff from the business school. They came and visited the Emirates’ universities and spoke with Sheikh Nayhan about a strategic plan for improving colleges and universities. When MIT contingent came here they visited America University of Sharjah. One of the people they met was a beautiful and talent mid-career professional woman by the name of Sheika Lubna al-Qassimi. She was running a software company at the time. Lubna was invited to visit MIT. When she did, an email was sent around asking who wanted to meet with her. I was one of the people who met her that day. We talked and I told her I was soon leaving MIT and considering teaching abroad. She recommend that I check out AU Sharjah and Education City in Qatar. I did and now I am here. Shortly after her visit to MIT, Lubna got appointed to be the UAE Minister of Economy and Planning thereby scuttling all the hopes I had of marrying her! ;-)

Related post: Sand and Deliver

Can you say a bit about your students?

In short, I love them. The photos say it all. They are a fine bunch of kids who are like most undergraduates: they are peer conscious, a little unsure of their place in the world, ambitious, needing of guidance and sometime a swift kick in the shorts, eager to learn, surprisingly attractive; multi-lingual, they all speak more than one language and are cosmopolitan to a degree; all have traveled to several countries. They are perhaps more family oriented and prone to show much more deference and respect to their profs than US students do. On the whole they are very eager to learn more about the US and perhaps to travel or study there. Many, however, cannot. For example, one of my best students is from Saudi Arabia and belongs to a very large and well-connected clan. Unfortunately for him, one or two of 19 hijackers carry the same last name, i.e., they belong to that same clan. There is no way this kind can get into the US to study now. Yet, I think he would make a fine student. Instead, he’ll be studying in the UK or Europe.

In one post, when you were discussing juvenile delinquents you made the point that some of those in Dubai who work with them feel that too much affluence can lead to aimlessness and delinquency. So you’re saying the opposite here of the Leftist mantra: “poverty is the root of all social evil.” Can you comment on the downside of affluence where you are?

There is this idea that too much unearned wealth leads to a certain lack of motivation to achieve more so than dissolute behavior. See this article from the Gulf News for an example of what I mean.

In short, the story says that “locals” , i.e. Emirati citizens, prefer work in the public sector. In the private sector, you see, they do things like make people work 8AM-5PM!

The private sector is preferred by the non-local Arabs and Muslims who are not entitled to the generous state benefits given by the Emirates to its citizens. Only about 15 percent of the population here are citizens.

The women are extraordinarily graceful, considerate, and attractive. The men are also well mannered and respectful. I find myself very comfortable in their presence and, since I like talking about religion, we always have plenty to talk about.

One other thing about the corrupting effects of unearned wealth bears mentioning: If an expat wants to start a business in the UAE, they have to have a local partner. People can start signing on to those at age 16. It is said that many boys in well-connected families start signing up for these deals and drop out of high school and live well on their partnership revenues, driving their fast cars and sometimes partying with fast women. Still, there is a wonderful part about all this: there is a lot of capital here and not as many ideas. If you have a good idea for a business, getting funding is not hard.

How do your students differ from those you had in the US? Or do they?

There are three major groups of students. Locals or Emirati citizens, Arab expat who are not citizens, and Asian expats, e.g. Indian, Pakistanis. There are also small numbers of Africans, Europeans, Chinese, Russians, and other non-Arab Muslims. It’s hard to generalize about them beyond the fact that they are more respectful, a little less comfortable with discursive modes of teaching (they prefer to be lectured to rather than talked with), very eager to learn and very unaware of the subtleties of American culture, politics, and life. Many have traveled there on vacation but only a few have spent any real time there. Virtually all would like to go. A few were studying in the US at the time of 9/11 and their parents made them return, especially the Saudis. These students all recognize that Osama ruined their chances for any further study in the US.

Do you think business is a key to transformation in the Middle East? It doesn’t appear to have a significant middle class — at least that’s how it appears from here. How can that change?

Absolutely I do think so. While I take issue with Tammy Bruce’s assertion that the UAE is an Islamist government, she is on to something. All of the Muslim and Arab governments in the world are caught between two forces. Modernity and radical Islamists. As I see it, there is a battle between those who want to provide a way to integrate their nations in the world economy and those who want to pull back from it until such time as they can figure out how to dominate it. The modernizers recognize that wise investment of oil revenues- while they still last- is the key not only to prosperity, but to marginalizing the Islamists. If they can build something resembling a modern economy, i.e., one not dependent just on income from one source, they have a chance to create conditions where the Islamists have less opportunity to mess it all up. As for those countries without oil and large Islamists populations, e.g. Egypt, I see very little future for them in the near term.

Does Dubai itself encourage small businesses and entrepreneurs?

Yes, they do. But as I mentioned before, there is a “tax” you have to pay, i.e., you have to take on a local partner.

Is there a lot of state regulation?

There are a lot of anti-capitalist rules here. In particular there are state granted monopolies on many staple items. Certain families were granted in some cases the sole right to sell certain products. It was only last fall that there was a decision to break these monopolies. From The Gulf News last October:

The UAE Cabinet on Monday issued a decision breaking the monopoly of agents who have exclusive agency rights to import basic foods. The decision allows traders to directly import 14 staples including milk powder and condensed milk, canned and frozen vegetables, poultry, edible oil, rice and wheat, fish products, meat and meat products, tea, coffee, sugar, all types of cheese, pasta, baby formula and nappies.

You can imagine that these monopolies prevent there from being competition in certain arenas and probably stifle innovation in others by raising the cost of doing business. It is good that these regulations go by the wayside.

From what I read, the government is part of every large corporation. Is that true all the way down?

That part I am not sure about. I don’t think they have a stake in the corner grocery or the local Indian vegetarian restaurant. That would require too much oversight and monitoring. That’s why it has been outsourced to locals, I think.

What’s your impression of where the US may have gone wrong in the DPW deal?

I wrote about it here: Live Blogging CNN, and here: The Unions, The Senators, and the Ports, plus The Unions, The Senators, and the Ports, Part II

In short, somebody neglected to note how badly the long shore unions want into the national security arena. There were some mistakes made over here by the UAE officials too. As I wrote in one post:

Far from being a “business deal” that got politicized”, this was something far more significant: it was a perfect storm of interests and issues and institutions. It was a confluence of forces man, rather than nature, that created a political firestorm rather than a hurricane or nor’easter. It was storm in which the strangest of political bedfellows found common ground and security in homeland security while those at sea found, quite literally, no port safe.

What do you think the blowback will be in the Middle East in general and Dubai in particular re this incident?

Two months ago, I thought a lot. Now, I am not so sure. The way to tell is with the next big purchase of jet airliners. If the UAE airlines start buying more Airbus and less Boeing, you know they are angry. Still, I think they’ll take it in stride. My students were quite offended by it all because many of the political cartoons showing the Emirates, and thus them, in league with OBL was hurtful. Still, if they had stood up a few weeks earlier for the free speech rights of the Danes, I think it would have turned out better for DPW.

You state that your interests are in "the economics of technological innovation." How do you separate that part (the economics of tech progress) from its cultural impact?

My interests are limited to a very narrow subset of questions that fall under the questions “economics of technical progress”. I look at the consequences on firm performance and organization structure from the adoption of information technology. My focus in my thesis was on the retail sector. Now I also investigate quality measure of software and business process patents. I have a paper with a co-author coming out soon in The Berkeley Journal of Law and Technology. It’s very good to read it you have trouble getting to sleep one night.

Which economists do you respect?

Mostly the classical liberal economists. This I have come to realize only lately, however. My training is not in economics but in management and organization theory. Among those I most admire are Friedrich Hayek, Milton Friedman, and Thomas Sowell.

What would you call your own economic philosophy?

In short, markets over hierarchies. That is to say, market-based mechanism should be used wherever possible. Markets are not perfect. There are some areas where they are not appropriate. Still, I favor them more than centralized, government-mandates and controlled arrangements.

I noticed you mention being from Savannah and that it has the largest Irish concentration. Having been to the St. Patrick’s Day parade there (and spent some time at Tybee Beach in my youth), I was aware of that (besides, Flannery O’Connor talks about it somewhere). How young were you when you left? You also mention in passing that your ancestry is Irish (as is mine, obviously). Should we call you Black Irish? Are you familiar with the term? “Hunter” isn’t an Irish name — is this a maternal link? BTW, did you know that Ireland and the Middle East have been said to bear some cultural similarities? As in “tribal” and “suspicious”?

My father’s family is from Savannah. I didn’t grow up there. I grew up in Seattle, Denver, and Phoenix. The Irish blood comes from the fact that my father’s grandfather was Irish. His last name was Innis. He did not raise my grandfather after age 10 or 11 and when My grandfather went back to his people, they renamed him “Hunter”.

I can’t find the post you did on Larry Summers and his tribulations. I remember thinking I’d not seen the conflict described as well anywhere else. Can you offer some quotes from that post or give me a link?

I think I put this on my “Rhetorical Flourishes” blog: Miss Understanding Larry Summers. I hardly write there anymore.

Yes, now I remember it. You really hit the nail on the head in your explanation of what the social sciences do. You said:

I think a big part of the reason Prof. Hopkins was so disgusted by Summers’ remarks is that failed to grasp the fact that there are empirical ways to test the hypotheses that Summers proposed. And given that Summers was arguably the most accomplished economist of his generation (if memory serves me correctly he got tenured at Harvard at age 28, directly out of grad school. That’s equivalent of going pro straight out of high school and then getting league MVP in your rookie year) it’s not hard to imagine that he could easily talk past or over the head of some of any audience.

Hopkins, smart woman that she undoubtedly is, thought that she didn’t have to provide any counter-factual evidence. For her, and others like her, she is the only evidence needed. She’s a woman and a highly capable scientist. In her line of work, one compelling counter-factual piece of evidence is often sufficient to disprove a theory or hypothesis. Thus, the mere suggestion that women might have a lower aptitude for math and science is tantamount to an attack on the very fiber of her being. It flies in the face of every standard of fairness and decency. Moreover, the mere mention of such ideas could serve to discourage a generation of young women, already in the minority, from pursuing careers in science.

This is not, I think, the message Summers, a social scientist, meant to convey.

The more I read your blog, the more I realize I don’t know. Most of us are economically illiterate. Do you have any concrete suggestions for changing that condition? Specific books, blogs, people, that seem to know what is going on and can explain it clearly?

I wish I knew more myself. What I know I picked up by way of hanging around MIT and listening to seminars. My reading in the area is pretty limited. One thing I would say is that there is economics the discipline and economics the approach to understanding. Many of the methods economists use and the assumptions they make are familiar to me and thus I have some rudimentary understanding of what they talk about. The Economics Round table blog might be a good start, as would Café Hayek, the freakanomics blog, the “Conspiracy to keep you poor and stupid” blog, and a few others like Larry Kudlow and Thomas Sowell’s columns on Townhall.

Economics Roundtable
Café Hayek
Freakonomics
The Conspiracy to Keep You Poor and Stupid
Larry Kudlow
Thomas Sowell
Also good is the weekly Carnival of the Capitalists
And The Carnival of Business
Finally, Tech Central Station has excellent reporting as do The Wall Street Journal and The Economist.

If you could change one thing about the US today, what would it be? (I vacillate between a radical change in the tax code and a radical downsizing of the government, beginning with the Department of Education. Just sayin’…)

I have to go for the flat tax. I almost took a teaching job in Hong Kong in 2000. There they have a flat tax of 15%. I thought, if the ChiComs can have a flat tax, why can’t we? The number would be less than 20%. My concern is, though, that optimizing one part of a system could throw the rest out of whack.

Do you have a motto you live by?

I am a human being. As such I don’t define myself by my race, wealth, politics, role, etc.

What person had the most influence in your life?

My father, an Army officer who fought in Vietnam and aspiring politician who died in 1972, and my step-father, a business school professor who is now, in his retirement, a pastor. In a day and age where many black kids grew up without fathers, I was lucky to have two. I thinks this means my mom is a good woman! ;-)

And, of course, “why do you blog?”

Blogging for me is liberating. I had much trouble writing in an academic style. I could do the analytics but the style didn’t fit me. You can see from recent teaching notes that I posted this week on my blog, that I have actually been writing in the blogging style for years. I just never knew what to do with the notes and similar insights. I had grown accustomed to mulling these things over in my head but not recording them. Now I am. Also, I should admit that Wretchard is one of the big reasons why I blog. I never mentioned this to him or in the comments of his blog, but after I read that first post by him, I thought… I should do something like this. Not that I expected to do it as well, but I thought I should try. It was the first blog I think I started reading on a regular basis.

You might find it interesting to know that I rarely read business blogs. Most of my time is spent reading political blogs and applying that kind of analytical perspective to business issues.

Thanks so much for taking the time to do an interview with me. Let me know if anything needs clarifying.

Thank you, Starling. You are certainly very clear. I guess that’s what makes a good teacher. Your students are fortunate.