When Friedrich Hayek published “The Use of Knowledge in Society” in a 1945 edition of American Economic Review, he argued that an often neglected reason why capitalist economies create more wealth than centrally planned regimes is because of an information advantage. If you’re trying to sell coffee in Santa Cruz, California, you are going to know about the flavor demands, peak traffic hours, and seemingly idiosyncratic preferences of your customers better than a committee in Washington, D.C.
With stock market investing, we accept that information can be such an advantage that we attach criminal penalties to executives that purchase stock after receiving material information that is not disclosed to the public. Heck, for advocates of the semi-strong efficient market hypothesis, the underpinning is that the current price reflects all publicly known information about the stock.
If you accept the premise that information is the input that leads to rational decision-making, then you should want to live in a society that encourages candor because that is how you gain access to information that would otherwise be hidden.
For this reason, I have come to despise outrage culture because it tries to stamp out unfashionable reality and incentivize mealy-mouthed platitudes into a place where I would prefer to see honest self-assessment and accurate self-appraisal.
Two days ago, Atlanta Braves GM John Coppolella agreed to field questions from fans on Twitter using the Braves account.
User Bryce McPhail asked: “What’s your career advice for a recent college grad with college baseball analytics and operations background?”
Coppolella replied: “Look for internships. Don’t worry about the money. Work hard and don’t have expectations beyond being part of a team. Assume nothing.”
When I saw that response, I appreciated that Coppolella trusted his audience enough to reveal the unpleasant aspects of the industry that confront entry-level employees. I had already known that football coaches Nick Saban and Bill Belichick had begun their careers earning stipends and lunch credits, and I appreciated the public service of learning that baseball industry economics are similar. Presumably, the intended audience is aspirational baseball executives, and the fact that the industry’s compensation is a slow-shifting hyperbola rather linear shift is a piece of information that anyone contemplating a career in the industry would want to know.
Did Twitter users appreciate the candor?
Well, from what I can gather from the string of responses that followed, there were at least eight users that said some derivation of “F— you” to Coppolella. Steve Schreiber said “Boooooooo.” Mike Branom said: “You’re going to regret this tweet.” Jeff Takeoff called him: “Capitalist scum.” Mase_10 called him “Shameful.” Spenser Clark said: “This is your privilege speaking.” Saphia R. responded: “Horrible response. Absolutely horrible.” Tammy Nguyen said: “Delete this.” Another added: “What an awful, awful tweet. Consider deleting it.” Hundreds of similar responses followed.
These types of outraged responses serve to impair the circulation of information that really ought to be known by those whom it may affect.
The critics think they’re “sticking it to the man” by taking out their frustrations on Coppolella, but really, they are harming themselves by cutting off access to future information that ought to known but won’t be disclosed because it’s unpopular.
By the end of the Twitter conversation, Coppolella said: “Sports don’t pay a lot when you start and I went paycheck to paycheck for nearly 15 years. One year I calculated my hourly pay at 79 cents. Would prefer to focus on baseball and assorted stuff and not delve further down this road. Do what makes you happy and let’s talk baseball.”
Do what makes you happy.
Within two hours, the originality and candor was beat out of him and was replaced with the touchy-feely advice that offends no one yet provides no addition of knowledge. Do you really need the Braves’ GM to tell you “do what makes you happy?” Heck no. That generic cliche is repeated anywhere, everywhere. But the Braves GM could provide useful information about the realities of reaching a top baseball executive position, and in the future, he is going to be hesitant to share this type of information.
My guess is that the general managers of other baseball teams will see the reaction that Coppolella has received and be less inclined to do their own Q&A sessions with fans. And when Coppolella or any other executive does participate in the future, the unpleasant realities of the trade will be glossed over with general bromides. The consequence is that vicarious learning is diminished–whichever candid insights get replaced with platitudes must now be learned through experience without the benefit of advanced preparation.
Whether Coppolella gives you advanced warning or not, the independent reality is that a starting baseball gig doesn’t pay well. Personally, I’d want that information and the accompanying specifics to be widely available before embarking on a baseball executive career rather than learning this information first-hand instead.
Because I want to know all the information, I don’t hide unpleasant realities from my audience when I cover stocks. The truth is that the historical performance of cigarettes, alcohol, hard liquor, for-profit prisons, fast food, soda, and candy has led to far superior investment results. That is because things that are bad for you feel good in the short run and the character attribute of delayed gratification is not as wired into the human condition as we would like. Whether or not I discuss it on my site, Diageo shareholders will continue to get rich. I choose to give you that piece of information so that you can decide whether the trade-off is worth it for you under the circumstances.