Decision Quality Blog

Big agriculture is in the news lately, offering some useful examples of the concepts of “trade-off” and “hidden costs.”

An obvious place to start is the noise about rising food prices and the role of ethanol production.

Some top international food scientists Tuesday recommended halting the use of food-based biofuels, such as ethanol, saying it would cut corn prices by 20 percent during a world food crisis.

But even as the scientists were calling for a moratorium, President Bush urged the opposite. He declared the United States should increase ethanol use because of national energy security and high gas prices.

The conflicting messages Tuesday highlighted the ongoing debate over food and fuel needs.

This isn’t a small matter. The press has been flooded with the latest bounty of bad news, food shortage hysteria. Contributing factors include a crippling drought in Australia, capped Argentinian exports (for domestic reasons), the usual miserable harvests in third world countries, burgeoning demand for food stocks, hording by big consumers fearful of supply gaps, upward price pressure from the ethanol business, and yes, upward price pressure from financial speculators who are looking for the next big score now that the debt markets have been brought to their knees.

This is truly a matter in which the various players have different and conflicting interests.

Agriculture is the political and economic backbone of most countries. In the US, it’s more political than it is economic, but it’s astonishing how many matters of “public interest” redound to big agriculture’s benefit. In the end, the answer invariably is to funnel money to big Ag to support production of the Big Five Crops: corn, cotton, rice, wheat, and soy. Writing about the 2007 Farm bill, Deirdre Fulton had this to say . . .

An extremely expensive piece of legislation — one that dictates how much food costs, what kinds of food we’re more likely to eat, and the viability of farming in America — is currently winding its way through Congress. The Farm Bill, which carries a price tag of more than $280-billion to be spent over the next five years, piles hundreds of millions of dollars in subsidies onto Midwestern and southeastern farmers, leaving Maine and other Northeastern states with the dregs at the bottom of the pork barrel — Maine ranks 43rd in the commodity-crop category of Farm Bill funding; all six New England states are in the bottom 10.

Nothing has changed since. In Washington, the answer to every question involving an incredibly wide range of questions is more corn. Aid to poor countries? Corn. Improve nutrition at home? Corn. Energy independence? Corn. Secure some votes come election time? Corn. Granted, it’s an amazingly versatile crop, but it’s not the answer to everything.

Specific to the ethanol craze, corn is particularly problematic notes blogger 4-Reasons Why. 

1. As arable land gets converted for the production of biofuel crops, food prices have been on the rise. As noted in the Guardian, the cost of rice, maize and wheat have risen by 20%, 50% and 100%, respectively, over the past year. While biofuels can’t be held totally accountable for this, the conversion of food crops to biofuel crops only exacerbates any environmental influence.

2. It’s like the gold rush all over again. Governments are becoming blinded by the rush to biofuels and the apparent financial returns, even if it sacrifices the provision of basic needs. In Swaziland, where there is an acute food shortage, the government has allocated thousands of hectares to produce, and export, biofuels made from cassava – one of its staple crops.

3. There are growing arguments that the production of biofuels actually contributes more to greenhouse gases that the world’s reliance on oil. Proponents of biofuels have focused solely on CO2 emissions, while the contribution of nitrogen fertilizers (296 times as powerful as CO2) has largely been ignored. One Hand Clapping suggests that methane and nitrous oxide are not taking their share of the blame in inducing global warming.

4. As noted here, there are between 1.5 and 2.4 billion hectares of arable land on Earth. To replace the current consumption of transport oil, between 35% and 107% of all potential farmland would need to be dedicated to biofuel production. Imagine the impact on the environment and the world’s population if this were to happen!

Not mentioned in that list is all the energy required to create a liquid fuel from a bunch of seeds. When you add it all up and then factor in the fact that ethanol produces less energy per unit than does the same volume of oil-based fuel, and you presently need oil-based fuel to run all the equipment, it’s a very, very thin bet.

Many folks in the know say a far better answer is the use of Cellulosic Ethanol which is derived from plant wastes or switchgrass. These show a net energy content that is three to five times higher than corn based ethanol with much lower uses of fertilizers and about the same levels in production of greenhouse gasses. The biggest problem? It’s not corn and the big players like ADM don’t grow it.

The Hidden Costs of Factory Farming

Another good example of hidden costs comes from a new study published by the Pew Foundation. Here’s a snip from the Seattle Times . . .

The report, sponsored by the Pew Charitable Trusts and Johns Hopkins Bloomberg School of Public Health and released Tuesday, finds that the “economies of scale” long used to justify factory-farming practices are largely an illusion, perpetuated by a failure to account for associated costs.

Among those costs are human illnesses caused by drug-resistant bacteria associated with the rampant use of antibiotics on feedlots and the degradation of land, water and air quality caused by animal waste too intensely concentrated to be neutralized by natural processes.

This will be a tough fight but I can imagine progress being made. If we focus only on the cost of the product on the shelves, we come to one conclusion about factory farming. It’s good because it has driven prices down. It has also shifted huge costs to the environment and the overall health of the nation to someone else’s ledger. Taken together, it’s not such a good deal.

Tags: Ethanol, Ceullulosic Ethanol, Switchgrass, Big Five Crops, rising food prices, factory farming, Agriculture Subsidies, Farm Bill, Decision Making, Pew Foundation

You probably didn’t hear about it and don’t know who he is, but David Einhorn’s speech last year at the Helbrunn Center for Graham & Dodd Investing ranks as a must read if you want some clear and concise analysis of the current credit mess. The PDF text of the full  presentation is at Naked Shorts. Here’s the lead . .

What strikes me the most about the recent credit market crisis is how fast the world is trying to go back to business as usual.  In my view, the crisis wasn’t an accident.  We didn’t get unlucky.  The crisis came because there have been a lot of bad practices and a lot of bad ideas. Securitization is a mediocre idea.  Re-securitization of already securitized assets into a CDO is a bad idea. Re-securitization of CDOs into CDO-squared is a really bad idea.  So is funding a pool of long-term illiquid assets with very short-term funding in the so called asset backed commercial paper market. And as I will get to in a moment, it is a horrendous idea to delegate most of the responsibility for assessing credit risk to a group of credit rating agencies, paid for by the issuers rather than the buyers of bonds.

This crisis came for exactly the right reason.  There is a big flaw in the structure of our credit markets.  The bad structure induced lenders to take imprudent risks and make imprudent loans, which, of course led to losses.  What is unique about this crisis compared to others is that the losses are in illiquid, opaque structures scattered around the world.  Why should anyone be surprised?  We got what we deserved.

Last Saturday’s Wall Street Journal reported that the big fear that the US Treasury department is working to avoid is, “the danger that dozens of huge bank-affiliated funds will be forced to unload billions of dollars in mortgage-backed securities and other assets, driving down their prices in a fire sale. That could force big write-offs by banks, brokerages and hedge funds that own similar investments and would have to mark them down to the new, lower market prices.”   So the fear is that the new prices are actually disclosed.  This is the “don’t ask-don’t tell” method of security valuation.

In my view, the credit issues aren’t just about subprime.  Subprime is what the media says.  Subprime is what parts of our financial establishment say.  Subprime is about them – those people and the people who made foolish loans to them.  The word “Subprime” is pejorative.  Subprime is not about us, for we are not subprime.  How convenient to be able to pass the blame.

There has been much talk from politicians and pundits about predatory lending – that is making loans at high rates to people who couldn’t reasonably be expected to pay them back.  They are right, that is a bad practice, but that is not what’s shaking the markets.  At issue today is that lenders of all sorts have lent too much money and did not demand enough interest to compensate them for the risks they took.  There has been a colossal undercharging for credit across the board. 

It goes on like that, calling a spade a spade. The naked truth is that the captains of finance took unreasonable risks, spurred on by non-existent oversight and no real personal downside if they busted the pinata (which they did). In a sign of rushing backwards from change, the mortgage business is mounting a full scale assault on the latest round of attempts to introduce some transparency and standards into what has become a game of liars poker. See this from the NYT . . .

The plan presented by the Fed was proposed by its chairman, Ben S. Bernanke, and Randall S. Kroszner, a former White House economist in the Bush administration who is now a Fed governor and leads the Fed’s consumer and community affairs committee.

The plan would not cover existing mortgages but would apply only to new ones. It would force mortgage companies to show that customers can realistically afford their mortgages. It would require lenders to disclose the hidden fees often rolled into interest payments. And it would prohibit certain types of advertising considered misleading.

The Fed is expected to issue final rules this summer.

Earlier this month, as the comment period was about to close, the Fed was deluged with more than 5,000 comments, mostly from lenders who said the proposals could affect loans that have not presented problems. Some bankers and brokers also said the rules would discourage them from lending to some creditworthy borrowers.

I can remember what it was like to get my first mortgage a couple of decades ago. It was a lot of work. It was a lot of paper. EVERYTHING had to be explained. But it got done. I can promise you with 99.99999% certainty, the contention that "the rules would discourage them from lending to some creditworthy borrowers" is a complete crock. People will still want to buy and finance homes. It’s a very, very big business. Someone will meet the need.

As to the part about cost rising, they should. I realize that’s profoundly anti-consumer, but I can’t think of a single good reason why risk shouldn’t be properly priced. Governments distort the price of things all the time for all sorts of reasons. Exhibit one is the cost of gasoline at the pump in the US . . . it’s not even close to what it should be given the huge bill the Chinese and Gulf States finance every year so that our vast military can make the Gulf safe for the flow of oil. Sorry, I digress.

Nothing about the debt markets for the past five years has been properly priced. As obnoxious as lenders find the various regulators, they clearly were AOL. So whatever the compliance costs, they were, in retrospect, too low. Same with the ratings firms, whose negligence borders on the criminal. It’s not that the money shape-shifters weren’t taking their vig every time something was transmuted into something else. But none of that drag was staying home in the form of capital. And yes missy, at the end of the day, the mess would be less messy if the firms had spent less energy trying to leverage their capital to the nth degree in service and more energy running sound businesses.

As Ben Stein points out . . .

Tags: BenStein, David Einhorn, Helbrunn Center for Graham & Dodd Investing, CDO, Securitization, Sub Prime, Decision Making

It’s surely a sign of something when editors break out the “consumers are cutting back” articles. The New York Times featured a big one today with lots of interesting statistics and observations. As you would expect, there are lots of signs of cutting back, passing on little indulgences, switching to off brands, shopping the low price stores. All perfectly rational decisions given the general mood. Here’s a bit that I did find surprising . . .

By no means has the economic downturn been bad for all product categories. For instance, sales of big-ticket electronics, like $1,000 flat-panel televisions and $300 video game systems, are on the rise, according to retailers and research firms.

Falling prices for such devices and a looming government deadline to convert to digital television have helped. So has the view, sensible or not, that the technology is a good investment. At a Best Buy in Southfield, Mich., James Szekely, 28, a mechanical engineer, was shopping for a big high-definition TV that he expected would cost at least $2,000, an expense he rationalized because “at least we can watch movies at home.”

(In a survey conducted this month by the NPD Group, a research firm, consumers suggested that they would sooner cut spending on clothing, furniture and eating out than on video games.)

And this . . .

. . . chains that emphasize low prices, like TJ Maxx and Wal-Mart, are thriving. And cut-rate supermarkets, like Save-A-Lot, are swamped.

“People are not not spending, but they are changing how they spend,” said Marshal Cohen, chief analyst at the NPD Group.

What does it all mean? Usually by the time this sort of thing gets written, the turn is here or about to get here. At least that’s how it works on the upswing.

Tags: Recession, Cutting Back, Savings, Decision Making

Several weeks ago–it seems like years ago–I sat in a conference room with Howard Dean, major domo of the DNC, listening to him explain the beauty of the Democratic nominating system.

• Everyone gets a chance to play
• Everyone gets a chance to be heard
• Candidates have to campaign everywhere in front of everyone
• Inclusion, inclusion, inclusion

He even likes the super delegate system . . .

• Gives minorities and unheard voices a place at the table
• They all (mostly) answer to someone so they won’t do something nutty

So here we are in the death throes of the most expensive primary in the history of the Republic without a Democratic nominee, forced to read tea leaves to figure out who the candidate will be. Winning is losing, losing is winning, numbers aren’t what they seem. And in the end, a candidate will emerge from the scorched earth . . . The folks in the other party must be pinching themselves every morning when they wake up. "Can the other side really be that dumb?" Not the best decision making process I’ve ever seen.

Tags: Obama, Clinton, McCain, Red State, Blue State, Pennsylvania Primary, Howard Dean, Decision Making

Defense Secretary Robert M. Gates is beating the drums in front of both the Army and Air Force young officer cadres to become more innovative "forward thinkers with the courage to advance new approaches needed to confront current and emerging threats." A couple of quotes from the pentagon website . . .

He challenged the officers to think outside the box to help the military adapt to a constantly changing strategic environment characterized by persistent conflict.

Bucking convention isn’t easy, Gates conceded. “Virtually every institution is organized in a way to stifle out-of-the-box thinking,” he said.

Ideas that break with the status quo aren’t always met with open arms, he added.

Gates noted the example set by the late Air Force Col. John Boyd, a maverick reformer who turned traditional approaches to air-to-air conflict and principles of maneuver warfare on their head. To do so, Boyd had to overcome “a large measure of bureaucratic resistance and institutional hostility,” Gates said.

The way Boyd saw it, everyone faces a fork in the road in his military career. People choose to “be somebody,” Gates said, making compromises and turning their backs on their friends to get ahead. Or they choose to “do something” — sticking their neck out for their country, their military and themselves — while recognizing that it’s not likely to garner them favor or career advantage.

Three cheers to Bob Gates for a great message, particularly after the complete and utter disdain his predecessor showed for anyone’s ideas other than his own. But it will take a lot more than saying to get the doing. Do a little thought experiment. I’ll flip a coin, you call it. If you’re right, I’ll give you a dollar. If you’re wrong, you get nothing. No buy in. Anyone will take the wager. It’s all upside. Same if the reward was on million dollars. Now do it the other way. If you’re right, you get nothing. If you’re wrong, you owe me $1. Hmmm. That feels different. And in fact, research shows, that we value a gain much less than we value the avoidance of a loss. So the idea that people are going to suddenly start "thinking outside the box" just because is an exercise in hoping and dreaming. Everything needs to change, particularly in a big organization, before people will step out, particularly to the extent that John Boyd did.

After his retirement from the Air Force in 1975, Boyd continued to work as a consultant in the Tactical Air office of the Office of the Assistant Secretary of Defense for Program Analysis and Evaluation. Boyd reputedly wanted to work without pay but was not allowed, and so accepted the bare minimum. He was quoted as telling a fellow maverick, Franklin C. Spinney, that there were "two ways to be free: to become rich, or to cut your needs to the bone", and since he did not think he could become rich, he did the latter.

Tags: RobertGates, John Boyd, Innovation, Innovator, Outside the Box, Maverick, Decision Making

One of the keys to quality decision making is giving yourself good choices. Right behind that is information about those choices so that you can make trade-offs with confidence.

It turns out that both these ideas are they keys to sorting out the mess that is US health care . . . and it is a mess. Check out these statistics from a recent piece in Forbes.

Hospitals are still the heart of the health care industry, consuming a third of the $2 trillion U.S. health care bill. Some are very good. But many are not, brimming with infectious bugs, systemic error and negative hospitality. And because the hospital industry does all it can to thwart competition, many communities are stuck with the hospitals they have. One in 200 patients who spends a night or more in a hospital will die from medical error. One in 16 will pick up an infection. Deaths from preventable hospital infections each year exceed 100,000, more than those from AIDS, breast cancer and auto accidents combined. The presidential candidates are grappling over the plight of the uninsured, yet you’re five times more likely to die from visiting a hospital than from not having health insurance, according to the not-for-profit Committee to Reduce Infection Deaths.

Wow, that’s inconvenient, the biggest killer in the US is hospitals. Here’s where the problems arise. Working in inverse order, there’s the part about information. It’s just plain hard to come by. A good place to start is a company called HealthGrades. Another possibility is RevolutionHealth.  The later relies on “web 2.0″ and consumer generated reviews. Much more cost and outcome visibility is needed. Count on the providers doing everything they can to keep the lid on. It will take either legislation or an enlightened entrepreneur to fix this problem.

The second problem is the part about choices. The truth is that big medicine is no more friendly to choices than it is to transparency.

Patients have a choice, but it’s not widespread yet. It’s called the specialty hospital, a center that focuses on the care of a particular body part such as the heart, spine or joints, or on a specific disease such as cancer. There are 200 specialty hospitals in the U.S. (out of 6,000 hospitals overall), and they often deliver services better, more safely and at lower cost. A recent University of Iowa study of tens of thousands of Medicare patients found that complication rates (bleeding, infections or death) are 40% lower for hip and knee surgeries at specialty hospitals than at big community hospitals. A 2006 study funded by Medicare found that patients of all types are four times as likely to die in a full-service hospital after orthopedic surgery as they would after the same procedure in a specialty hospital.

“Specialization is a law of nature,” says Robert Tibbs, a neurosurgeon and part-owner of the Oklahoma Spine Hospital. “Spine surgery is an elective procedure. One of the biggest risks to any surgery is infections. Here we don’t have sick people.” Last year, out of 1,773 patients who slept over at the hospital, only 7 got an infection. That’s one-third to one-ninth the rate seen for similar patients at a big hospital. At Oklahoma Spine anesthesiologists are practiced in putting patients under in the prone position for back surgery. At a big hospital few anesthesiologists would be skilled in that particular task. “You don’t take your Ford to the VW mechanic,” says Tibbs’ partner Stephen Cagle.

There are arguments against “allowing” specialized hospitals and treatment facilities to propagate, but they’re not very good ones. Where it has happened, laser eye surgery and cosmetic surgery are examples of procedures that grew up and thrived outside the health care department stores that are hospitals, costs have come down and quality and patient satisfaction has gone up. What’s not to like? It turns out competition is what’s not to like.

The big rise in hospital errors and infections has spurred Medicare to reconsider how it pays for services, potentially refusing to pay for procedures ordered as a result of medical error. This plays into the hands of the specialty hospital movement. But don’t expect their quality advantages to win the day in Washington. Political action committees associated with HCA, the American Hospital Association and the Federation of American Hospitals have already donated $2 million this election cycle to political campaigns. “The only way to solve this is to put the cat back in the bag,” says Charles (Chip) Kahn, president of FAH. At the state level hospitals still rule. Hospital safety advocates expect the California Hospital Association to kill a new bill that would force hospitals to report staph infections. Shouldn’t patients be able to comparison-shop for safety? “Consumers do not have the ability to do that,” says Deborah Rogers, a vice president at the CHA.

Keep your eye’s opened. There will be new legislation at the Federal level in the next few years. Key Democratic Congressmen are working the wrong side of this issue.

After fierce lobbying by the hospital industry, Congress in 2003 passed new Medicare rules that effectively banned new physician-owned specialty hospitals. The ban was extended until August 2006. Since then only a couple dozen specialty hospitals have been built. With Democrats controlling both houses of Congress, there is currently a move to restore the ban and make it permanent. Last year California Democrat Fortney (Pete) Stark Jr., chairman of the House subcommittee that controls Medicare spending, added a specialty hospital ban to a bill expanding the program for health insurance subsidies. The bill died in the Senate, but the issue will doubtless come up again this year.

Stark, who 20 years ago helped write the laws that regulate what businesses physicians can invest in, has been trying to ban doctor-owned specialty hospitals since the 1970s. “These doctors are not entrepreneurs. They’re getting a kickback from referring patients,” says Stark. “They make enough money.” Of the patients who prefer smaller facilities: “If that’s what they want, back rubs and silk robes, go to India.”

Tags: HealthGrades, RevolutionHealth, Congressman Pete Stark, HCA, FAH, Federation of American Hospitals, Decision Making

I know of at least one college professor who is planning to discuss the case of Alton Logan in an upcoming ethics class. The facts are there.

• Alton Logan is convicted of killing a man in a McDonald’s.
• Andrew Wilson tells his attorneys that he, not Logan killed the guard.
• The attorney’s, "bound" by the ethical code of privilege, keep this secret for 26 years.
• Wilson is in jail for other heinous crimes. Wilson finally dies.
• The attorney’s come forward and petition the court on behalf of Logan
• Logan may or may not go free.

The attorneys present themselves as wracked with anguish.

Kunz says he knows some people might find his actions outrageous. His obligation, though, was to Wilson.

"If I had ratted him out … then I could feel guilty, then I could not live with myself," he says. "I’m anguished and always have been over the sad injustice of Alton Logan’s conviction. Should I do the right thing by Alton Logan and put my client’s neck in the noose or not? It’s clear where my responsibility lies and my responsibility lies with my client."

So here are the choices that the attorney’s perceived they had:

1. Remain silent. To do otherwise would be to violate their code of ethics.
2. Remain silent. To do otherwise would put their client, already guilty of other capital crimes, at risk of another verdict and perhaps a death sentence.
3. Speak up and risk censure and/or civil action by their client.
4. Resign and speak up and risk the possibility of civil action by their client.

According to the article, it was their plan to "do something" if Logan was sentenced to death which he wasn’t. They also apparently made numerous attempts to find a way through the ethical thicket with no apparent outcome. Finally Wilson died in prison and they came forward. Logan is astonishingly philosophical.

After spending almost half his 54 years as an inmate, this slight man with a fringe of gray beard, stooped shoulders and weary eyes seems resigned to the reality that his fate is beyond his control.

"I have to accept whatever comes down," he says, sitting in a visitor’s room at the Stateville Correctional Center in Joliet.

He insists he’s not angry with Hope — the man who first said he was innocent — or even Wilson. He says he once approached Wilson in prison and asked him to "come clean. Tell the truth." Wilson just smiled and kept walking.

Nor is Logan angry with the lawyers who kept the secret. But he wonders if there wasn’t some way they could have done more.

"What I can’t understand is you know the truth, you held the truth and you know the consequences of that not coming forward?" he says of the lawyers. "Is (a) job more important than an individual’s life?"

Tags: AltonLogan, Ethics, Code, Andrew Wilson, Innocent Man, decision making

Nicholas Kristoff makes some good points about some common decision traps in discussing the predictable reactions to the recent Obama / Clinton Debate.

To understand your feelings about Wednesday night’s debate, consider the Dartmouth-Princeton football game in 1951. That bitterly fought contest was the subject of a landmark study about how our biases shape our understanding of reality.

Psychologists showed a film clip of the football game to groups of students at each college and asked them to act as unbiased referees and note every instance of cheating. The results were striking. Each group, watching the same clip, was convinced that the other side had cheated worse — and this was not deliberate bias or just for show.

“Their eyes were taking in the same game, but their brains seemed to be processing the events in two distinct ways,” Farhad Manjoo writes in his terrific new book, “True Enough: Learning to Live in a Post-Fact Society.” It’s the best political book so far this year.

And this

This resistance to information that doesn’t mesh with our preconceived beliefs afflicts both liberals and conservatives, but a raft of studies shows that it is a particular problem with conservatives. For example, when voters receive mailings offering them free pamphlets on various political topics, liberals show some interest in getting conservative views. In contrast, conservatives seek only those pamphlets that echo their own views.

Likewise, liberal blogs overwhelmingly link to other liberal blogs or news sources. But with conservative blogs, the tendency is much more pronounced; it is almost a sealed universe.

Tags: decisiontraps, decision quality, decision making, information bias, prejudice, Nicolas Kristoff

This will feel arcane if you don’t follow finance, but the short of it is that banks are lying to us and each other to mask how desperate they are for cash. This is chapter 27 of an ongoing saga of people and entities packaging the truth–lying–for business gain. Hard to make good decisions in this environment.

In a development that has implications for borrowers everywhere, from Russian oil producers to homeowners in Detroit, bankers and traders are expressing concerns that the London inter-bank offered rate, known as Libor, is becoming unreliable.

Libor plays a crucial role in the global financial system. Calculated every morning in London from information supplied by banks all over the world, it’s a measure of the average interest rate at which banks make short-term loans to one another. Libor provides a key indicator of their health, rising when banks are in trouble. Its influence extends far beyond banking: The interest rates on trillions of dollars in corporate debt, home mortgages and financial contracts reset according to Libor.

In recent months, the financial crisis sparked by subprime-mortgage problems has jolted banks and sent Libor sharply upward. The growing suspicions about Libor’s veracity suggest that banks’ troubles could be worse than they’re willing to admit.

The concern: Some banks don’t want to report the high rates they’re paying for short-term loans because they don’t want to tip off the market that they’re desperate for cash. The Libor system depends on banks to tell the truth about their borrowing rates. Fibbing by banks could mean that millions of borrowers around the world are paying artificially low rates on their loans. That’s good for borrowers, but could be very bad for the banks and other financial institutions that lend to them.

Tags: LIBOR, lying, banks, mortgage mess, decision making

Two stories in USAToday, both from the sport section, offer a nice lesson in decision making. The first tells how Card’s manager Tony La Russa has defied decades of conventional thinking that says you should place your most dangerous hitter in the fourth slot.

Tony La Russa’s strategy had worked just as he intended.

By placing a position player behind the pitcher in the lineup, La Russa believes he increases the chances of having runners on base for his best run producer, Pujols.

So far, signs point to a beneficial effect from batting the pitcher eighth, the latest unconventional tactic in a 30-year managerial career marked by counterintuitive thinking.

The Cardinals, 9-4 and atop the National League Central this season, have gone 37-32 while improving their key offensive numbers since La Russa revived an experiment he first tried in 1998. In both instances, he was trying to energize a lethargic offense.

If you don’t follow baseball, the only part you need to focus on is that La Russa is having success with an alternative his competitors either refuse to consider, or have considered and dismissed. You would also want to notice that he didn’t pull this alternative out of a hat. He actually did some research. If you do follow baseball, then you have to marvel at the elegance of the idea. The real objective is to increase your odds of having people on base when your most productive hitter comes up to bat. Batting "first" is only a relevant concept in the first inning. Beyond that, it’s all in how the game plays out.

Story two. For years, the Oakland A’s have played high quality baseball with one of the smallest payrolls in the game. Skeptics and naysayers can rightfully point out that they haven’t won a World Series in quite some time, but there’s a useful story in here. In fact three.

"Nobody is ready to make any pronouncements," Oakland Athletics general manager Billy Beane says, "but we’re sure pleased with the start."

Who’d imagine that four months after trading their biggest stars, the Florida Marlins, Baltimore Orioles and the A’s would be in first place?

The Marlins, whose $21 million payroll after trading All-Star third baseman Miguel Cabrera and All-Star starter Dontrelle Willis to Detroit is dwarfed by everyone else in the game, are the lone team in the National League East (7-5) with a winning record. The A’s, who dumped their ace, right fielder and center fielder, are first in the American League West (8-5). The Orioles, who traded their ace and former MVP shortstop, had a half-game lead Monday in the AL East.

Again, for those who don’t follow baseball, the New York Yankees pay one buy more than the entire Marlin’s team. The moral of the story? There are probably many, but the one I’m after here tracks with my first story. There are always divergent, different, off-center, counterintuitive options available. It makes sense to give those ideas more than a passing wave.

Tags: MLB, baseball, Tony La Russa, Oakland A’s, Florida Marlins, Baltimore Orioles, options, alternatives, counterintuitive, decision making