Results tagged “economics” from Eccentric Eclectica

My recent trawls around the internet have brought up some interesting finds that seem to cross ideological lines. A week ago David Brooks fired off a column linking the recent recession to a decline in America’s financial values. Brooks decries the growth of debt and consumption as a falling away from our previous virtues of hard work and thrift. I put on my very skeptical hat whenever I hear someone talking about decline from a previous golden age, but I think that Brooks may have something.

Our current cultural politics are organized by the obsolete culture war, which has put secular liberals on one side and religious conservatives on the other. But the slide in economic morality afflicted Red and Blue America equally.

If there is to be a movement to restore economic values, it will have to cut across the current taxonomies. Its goal will be to make the U.S. again a producer economy, not a consumer economy. It will champion a return to financial self-restraint, large and small.

It will have to take on what you might call the lobbyist ethos — the righteous conviction held by everybody from AARP to the agribusinesses that their groups are entitled to every possible appropriation, regardless of the larger public cost. It will have to take on the self-indulgent popular demand for low taxes and high spending.

A crusade for economic self-restraint would have to rearrange the current alliances and embrace policies like energy taxes and spending cuts that are now deemed politically impossible. But this sort of moral revival is what the country actually needs.

At the same time I’ve been following some of the depressing links David Pollard has been posting on environmental decline. Pollard and the people he links to approach the problem from a liberal perspective that is different from Brooks. Sharon Astyck starts off with a piece calling for us to dream up a new life for the future.

And other analyses are equally problematic.  It does not take a rocket scientist to figure out that radical lifestyle changes are coming, whether we like them or not - whether they come from adapting to a deeply damaged climate or from addressing the crisis, whether they come from adapting to depletion or from enduring it, our lifestyle will not be the same for very long.   And the danger of telling people that they can have all the things they want - a future for their children and an affluent present now - is that when they realize (and they are realizing right now) that this is not true, that there’s not enough money, or time or alternative energy to provide it, people will be very, very angry indeed.  It is not pleasant to tell people hard truths.  It is less pleasant to deal with people facing hard truths who believe they have been lied to.  I believe we are seeing the early stages of the political unrest that will accompany this sense of being lied to, of having lost more than is being accounted for on both the left or the right, and I also believe quite strongly that unless a true and comprehensible story is offered, false ones will be taken up, and used as bludgeons….

It is a counter-intuitive, and thus difficult thought,  that after a certain critical mass of affluence, better comes from less, not more.  A better future for our children comes not from greater affluence, but less, and the preservation of resources for the future.  A better life for us in the present involves fewer hours of work, and thus, more freedom - and fewer possessions and less affluence.

Astyck and Brooks are saying the same thing: we need to curb our baser impulses and live a thriftier life. One of them sees the problem as impending environmental doom the other as an economic and moral dissolution. Both of them reach the same conclusion that we need to rein in the profligate way of life we’ve become accustomed to during the past 40 years, especially in America. If there is any common ground between conservatives and liberals I think it will be built on this ground.

Another of my favorite economic-moral connections is choice. I recently talked with a friend about health care and choice and was treated to the full-on Republican explanation that as long as people have choices they will do fine. Choice becomes the most important value and making bad choices becomes the fault of the individual. The organizations and social structures that force a particular choice are glossed over or completely ignored. It all fits into the Randian argument of the economic overman.

Lawrence Glickman wrote an article about the defeat of consumer protection in the 1960s and 1970s at Baseline Scenario. He argues that the main conservative argument during the 1960s and 1970s was against government bureaucrats controlling the choices of consumers. Conservatives marched out the standard slippery slope arguments about how the creation of one agency to protect consumers would lead to catastrophe for all businesses. Government could never solve a problem because they were always captured by special interests. Glickman calls this the triumph of conservative populism.

I’m particularly interested in the next rhetorical move that Glickman describes.

The flip-side of bureaucratic arrogance and over-reach, according to the critics of the consumer movement, was the assumption of incompetence on the part of ordinary consumers. The very call for an agency on behalf of consumers was an expression of the bureaucrats’ lack of faith in the abilities of their countrymen and women.  Ronald Reagan, the ex-Governor of California, criticized the consumerists–whom he compared to Orwell’s “Big Brother,” in several op-ed pieces and radio commentaries in 1975–for “promoting the notion that people are too dumb to buy a box of corn flakes without being cheated.”  Reagan concluded that “professional consumerists are, in reality, elitists who think they know better than you do what’s good for you.”  A group of Senators who opposed the CPA also rejected the view, which they claimed was implicit in CPA legislation, “that all consumers are mental midgets who must look to Washington to find out how to manage their personal lives from some bureaucratic consumer `representative’ who will have neither the time nor the knowledge to shop for and cook a decent supper.”  According to the advertising executive, Arthur Fatt, the consumer movement sees “the typical consumer as a moron.” The celebration of the intelligence of ordinary Americans became a component of conservative anti-elitism and an element of its populism.  If consumer advocates were snobs condescending toward those they claimed to protect, it was easy to dismiss their proposal as tainted since, as the business journalist Mary Bennett Peterson wrote, “those the Movement is designed to protect can actually wind up as its victims.”

In time such dismissals of liberal proposals became rote but in the 1970s this was a new line of criticism, one that successfully consolidated conservative ideology.  As the CPA bill languished after its final defeat in 1978, conservative groups correctly foresaw the opportunity for what Jeffrey H. Joseph, of the U.S. Chamber of Commerce called a political and legislative “bonanza.”  And indeed the terms of that victory foreshadow the rhetorical (and electoral) victories of Reaganism and the concomitant delegitimation of liberalism.  The Wall Street Journal did not exaggerate when it noted that the CPA bill was “killed by words” and those words continued to resonate long after the once-popular federal consumer protection idea  faded from public memory.

The rhetoric ties into the “rugged individualist” cliches that have been a mainstay of American culture. I think promoting choice is valuable, but the consumerist view of choice described by the opponents of regulation is a stunted view of choice. In this view the only real choices made by people are choices made on the market.

The current health care debate plays out the same argument. There are some conservatives who argue that giving money to individuals so they can buy their own insurance will automagically reduce the cost of health care because consumer’s will be able to search for the best bargains on drugs, hospitals, doctors, and insurance. But the virtue of consumer choice is being oversold. The problem is that different people will need different amounts of health care during their lifetimes. Is there any just reason for a poor person to get less care than a rich person?

James Kwak at Baseline Scenario finishes the argument

People start out in different economic circumstances, and they suffer different fates in their lives. Without redistribution in some form, the ones who are poor and get sick will simply not be able to afford health care. Cashing out their employer health benefits and giving them “choice” won’t change that – especially if they don’t have employer health benefits to begin with. Yes, insurance can play a redistributive role on its own, but it only works if poor people can afford to buy insurance that will cover them against serious illness. And once they have that insurance, then the price signals so beloved of conservatives won’t function anymore. The problem is really very simple: for price signals to work, you have to be willing to let consumers run out of money, since no one can predict his future health care needs. And then they die.

So what really frustrates me about this whole “consumer choice” fraud is the premise it begins with. It starts out by framing health care as a problem of consumer incentives – health care is too cheap. This is a factually accurate framing that leads you to a dead end (unless you think people who underestimate their future sickness should die).

Back in March there was a brief media flurry over a libertarian rant by Rick Santelli. I was struck at the time by the persistently moral language used by the right to describe economics and capitalism. Making money has become a moral obligation for the right and a reflection of the moral worth of a person. If you’re poor then you are a moral failure, if you are rich then you are an angel.

The language of morality pervades the discussion of economics and may be a cause of so much of the regular debate about economic policies that occurs. Economic decisions, for all the pontificating about rational man, are always moral decisions as much as they are rational decisions.

I recently heard an acquaintance talking about the difficulty of knowing whether the recent economic stimulus is working. Not even the putative experts can agree about whether it is working. A scientific controversy, like global warming or dark matter, is much easier to adjudicate because the moral dimension is reduced or non-existent.

At the New Republic Jonathan Chait reviewed two books on Ayn Rand and found her writings to be a major source for the moralistic tone of right-wing capitalists.

In these disparate comments we can see the outlines of a coherent view of society. It expresses its opposition to redistribution not in practical terms—that taking from the rich harms the economy—but in moral absolutes, that taking from the rich is wrong. It likewise glorifies selfishness as a virtue. It denies any basis, other than raw force, for using government to reduce economic inequality. It holds people completely responsible for their own success or failure, and thus concludes that when government helps the disadvantaged, it consequently punishes virtue and rewards sloth. And it indulges the hopeful prospect that the rich will revolt against their ill treatment by going on strike, simultaneously punishing the inferiors who have exploited them while teaching them the folly of their ways.

There is another way to describe this conservative idea. It is the ideology of Ayn Rand. Some, though not all, of the conservatives protesting against redistribution and conferring the highest moral prestige upon material success explicitly identify themselves as acolytes of Rand. (As Santelli later explained, “I know this may not sound very humanitarian, but at the end of the day I’m an Ayn Rand-er.”) Rand is everywhere in this right-wing mood. Her novels are enjoying a huge boost in sales. Popular conservative talk show hosts such as Rush Limbaugh and Glenn Beck have touted her vision as a prophetic analysis of the present crisis…..

Rand’s most enduring accomplishment was to infuse laissez-faire economics with the sort of moralistic passion that had once been found only on the left. Prior to Rand’s time, two theories undergirded economic conservatism. The first was Social Darwinism, the notion that the advancement of the human race, like other natural species, relied on the propagation of successful traits from one generation to the next, and that the free market served as the equivalent of natural selection, in which government interference would retard progress. The second was neoclassical economics, which, in its most simplistic form, described the marketplace as a perfectly self-correcting
instrument. These two theories had in common a practical quality. They described a laissez-faire system that worked to the benefit of all, and warned that intervention would bring harmful consequences. But Rand, by contrast, argued for laissez-faire capitalism as an ethical system. She did believe that the rich pulled forward society for the benefit of one and all, but beyond that, she portrayed the act of taxing the rich to aid the poor as a moral offense.

Countless conservatives and libertarians have adopted this premise as an ideological foundation for the promotion of their own interests. They may believe the consequentialist arguments against redistribution—that Bill Clinton’s move to render the tax code slightly more progressive would induce economic calamity, or that George W. Bush’s making the tax code somewhat less progressive would usher in a boom; but the utter failure of those predictions to come to pass provoked no re-thinking whatever on the economic right. For it harbored a deeper belief in the immorality of redistribution, a righteous sense that the federal tax code and budget represent a form of organized looting aimed at society’s most virtuous—and this sense, which remains unshakeable, was owed in good measure to Ayn Rand.

I started a series on language and money last spring which I should return to. Once you start listening you realize that all of our talk about money is filled with moral judgments. My first post of the series talked about the difference between borrowing and leveraging, two terms for the same action but one used by the poor and the other by the rich. Some other terms that need pondering: angel investor, consume/invest, save/debt. Accounting also has a rich vocabulary for examination: asset, liability, appreciation, depreciation, balance sheet, double-entry, etc.

A few weeks ago I wrote a bit about the immense amount of talent that gets wasted or ignored in the world today. I claimed that the problem was based on a winner-take-all morality that has infused Western society. CEO salaries are just the most recent example. I think any argument that can be made against oversize CEO salaries can also be made against celebrity salaries in sports or entertainment.

A few days ago I came across this news item on employers squandering the talents of workers at the Work Foundation.

So far in this recession employers have been reluctant to lose the skills, talents and experience of their workforces. Yet at the same time they seem to be failing to make the most of them. Many people could be doing more, but are denied the chance to do so.

It’s nice to have some data and surveys to back up my intuition.

But it’s not just a matter of squandering talent. There’s also a matter of justice. Income disparities are not only a result of a winner-take-all society they also feedback into the system and cause further problems. Over the last 40 years the rich have gotten richer and have been on the hunt for a place to invest their money. They put it into the financial sector and that sector of the economy was overwhelmed and forced to chase after too many bad investments just to keep up. A point Helena Cobban makes at Just World News.

But the richest people and the hundreds of thousands somewhat less rich, could not invest the money themselves. They needed intermediaries, the financial sector. Overwhelmed with such an amount of funds, and short of good opportunities to invest the capital, as well as enticed by large fees attending each transaction, the financial sector became more and more reckless, basically throwing money at anyone who would take it. Eventually, as we know, the bubble exploded.

Recent research about stress and poverty reaffirms the link between opportunity and wasting talent. Money may not be the only way to intervene but it is important.

So what do we do about all this?

There are a lot of imbalances that we need to work out and they cover a lot of different scales.

1. At a world level we need to work on the distribution of resources between countries. America cannot be the consumer of last resort. Other countries need to take up the slack.
2. But replicating Western consumer culture will hurt as much as help. So at the national level we need to prioritize differently. Perhaps a consumption tax or a carbon tax will help America move forward.
3. At a community level we need to rethink work and corporations. The Work Foundation hints at this when it calls for greater flexibility for knowledge workers. Coworking could also help with this.
4. At an individual level we need to live humbly. For me this is easy, perhaps too easy, because of my family and my attitude. For now I’ll declare my solidarity with my friends over at Not An Employee

Sources for this post: Jack Vinson and Jon Husband

I’m struggling to understand and explain a spectrum of opinions about the recession that I see exhibited by conservatives. I have three examples that seem to form a gradient around the idea of self-reliance and group action.

At the extreme is Charles Murray who recently delivered a lecture at the American Enterprise Institute entitled The Europe Syndrome and the Challenge to American Exceptionalism. I found the lecture via a link at Matthew Yglesias weblog.

The central core of Murray’s argument is that happiness requires struggle and that government policies that make happiness easier are fundamentally unfair because they take away the struggle for happiness that we all have a right to. If we don’t work hard for our rewards then our victories will taste sour.

Damon Linker at the New Republic calls this Donner Party Conservatism, a term he borrows from John Holbo.

it refers to the brand of conservative thinking that defends America’s relatively minimal welfare state and anemic economic regulations on the grounds that it’s good for people to have to struggle and suffer to get by — just like those plucky, entrepreneurial pioneers who resorted to cannibalism to avoid starvation while trapped in the Sierra Nevada mountains back in the winter of 1846-1847. For some Donner Party Conservatives, struggle and suffering are good because they call forth and demand great acts of virtue, which serves to replenish the ever-diminishing stockpile of “moral capital” that our nation has inherited from its (pre-liberal) past. Murray himself argues this point at length. But he also claims that struggle and suffering are good because they are a necessary condition of human happiness.

Michael Gerson made a similar call to virtue in the Washington Post last month in a column on Recession’s Hidden Virtues

Recessions and depressions are brutal beasts that stalk the stragglers, especially retirees and the poor. There is too much inherent suffering during a recession to ever welcome it. But times of economic stress, it appears, can also be times of cultural renewal. “One reasonable hypothesis,” argues James Q. Wilson, “is that the Depression pulled families together, and this cohesion inhibited crime.” Many Americans who struggled through the Depression adopted a set of moral and economic habits such as thrift, family commitment, savings and modest consumption that lasted through their lifetimes — and that have decayed in our own.

My third example is from last month by David Brooks at the New York Times. He starts his column in the same individualistic place that Murray begins at:

Our moral and economic system is based on individual responsibility. It’s based on the idea that people have to live with the consequences of their decisions. This makes them more careful deciders. This means that society tends toward justice — people get what they deserve as much as possible

But he ends at a different place, much closer to my own political views.

And they seem to understand the big thing. The nation’s economy is not just the sum of its individuals. It is an interwoven context that we all share. To stabilize that communal landscape, sometimes you have to shower money upon those who have been foolish or self-indulgent. The greedy idiots may be greedy idiots, but they are our countrymen. And at some level, we’re all in this together. If their lives don’t stabilize, then our lives don’t stabilize.

My tentative explanation for these three variations on the theme of individual responsibility and group actions is the fundamental attribution error from psychology. “When we are trying to understand and explain what happens in social settings, we tend to view behavior as a particularly significant factor. We then tend to explain behavior in terms of internal disposition, such as personality traits, abilities, motives, etc. as opposed to external situational factors.”

Murray is completely captured by the fundamental attribution error. Happiness comes from the individual and institutions, especially the government, are barriers to the achievement of “deep satisfaction.” Gerson is in the middle and Brooks starts with the standard conservative appeal to individualism but then concludes by holding his nose and acknowledging the need stabilize the group even if it means rewarding the foolish.

Watch this:

I found this video at Presentation Zen. It’s one of the 34,000 60-second video applications that people all over the world submitted to the Queensland Tourism Board for the “best job in the world”, working as an island caretaker on the Great Barrier Reef in Australia.

Here’s another video, one of 50 that has been put on the short list:

After watching these videos I realized something about the paradox of talent in the contemporary world. All of the finalists are talented, any one of them could do the job of island caretaker very well. But only one of them can get a job and that’s the heart of the problem in today’s winner-take-all world.

Back in 1995 Robert Frank and Philip Cook wrote a book called The winner-take-all society : how more and more Americans compete for ever fewer and bigger prizes, encouraging economic waste, income inequality, and an impoverished cultural life. They convincingly argued that a society with huge winners and a mass of middle-of-the-road losers is destined for conflict and inequality.

In 1997 Pierre Levy wrote Collective intelligence : mankind’s emerging world in cyberspace. He argued that we have a severe talent problem in the modern world; there are an incredible number of people who could contribute to the productive future of humanity but they are held back because of politics, access, or other circumstances.

There is really no significant difference in talent between the 50 people on the short list. The Queensland Tourism Board is faced with the same choice that faces any manager making a hiring decision or an admissions committee choosing who to accept for college — at a certain point a choice must be made and it will be made based on inexpressible qualities, the first impressions and other ineffable qualities that human resource professionals base their careers on. Once someone has met the minimum requirements for a job there is not much more to make a hiring choice on except for gut instinct.

Trying to eliminate this instinct is a fool’s errand. Working together is always about getting along with other people and often the fluffy qualities of personality are much more important than the skills list shown on a resume.

But for every job that opens there are always some people who are rejected. Some are rejected for good reasons, such as missing skills. But among the finalists there are always people who could do the job but just don’t make it. How do we deal with these people — the people who are still talented but didn’t have the right connections, the right network, the right clothes, the right accent, the right skin color, the right family?

This is the justice problem that faces our world today. And the continuing development of social technologies on the internet and elsewhere are going to make the problem worse. In the past we might have been able to ignore all of the others who are shut out. Today that ignorance will kill us.

And the ignorance will grow before it begins to shrink. Our multiple mediums of information exchange will make it easier than ever for the have-nots to see the lives of the haves and vice versa.

If talent is equally distributed throughout the world, and there seems little reason not to suppose that it is, then the world will need to change. We can’t just give access to the talented. We need to grow the total number of opportunities available to all. The current economic system isn’t up to the job. So we will need to build something better.

According to the OED the word bailout was first used in 1930 to describe the actions of pilot jumping out of an airplane.

1. to bale out. [Usually so spelt, as if the action were that of letting a bundle through a trapdoor; but also (esp. U.S.) as bail, as if a use of BAIL v.4, to lade out.] intr. (Of an airman) to make an emergency descent by parachute from his machine. Hence also (rare) n. bail-out. orig. U.S.

1930 C. J. V. MURPHY Parachute 272 Some say the pilot ‘bailed out’ the moment he went into the spin. 1932 N.Y. Times 11 Apr. 3/2 He successfully bailed out of an airplane at an elevation of 1,500 feet. 1939 F. D. TREDREY Pilot’s Summer 28 If you bale out and land in water..a smart rap will release the whole lot and you can swim free. 1940 Times 15 Aug. 4/2 He baled out before his machine crashed. 1955 Sci. News Let. 8 Jan. 23 The purpose..was to explore human tolerances during a high speed bailout from jet planes.

A bale was originally a package or bundle of goods.

My cursory search failed to find any economic citations, although that is no doubt changing as we speak.

The link to a bale of goods didn’t occur to me before I looked. I was thinking along the American lines of bailing out a boat that was sinking, i.e. lading out the water.

It’s 2009 and I’m ready to declare the 2000s as a decade that sucked.

It started with the 2000 election fiasco. Then 9-11, the rush to war in Iraq, the Enron scandal, the Dean scream, and now the economic crisis.

The U.S. income distribution grew increasingly unfair throughout the decade. The real estate bubble grew to such extreme levels that it brought down the entire world economy.

What really annoys me is that it all was so obvious. The Economist has been writing story after story about the housing bubble since 2003. Dean Baker wrote reports and seminars in 2005 and 2006. But none of this seemed to sink into the political establishment or the media.

Stirling Newbery has been saying this since 2005 when I first started reading him on The Blogging of the President. See 4 Great Solutions.

And Jim Kunstler has been sounding the horn at Clusterfuck Nation for a number of years. See his book The Long Emergency Dave Pollard has been beating this drum for a long time as well. 2008 Jon Taplin Grand Theory of Our Present Dilemma

Bill Bonner It’s a Depression, Not a Recession

Even Stiglitz got in on this problem back in September.

Yves Smith on an American Banana Republic with supporting evidence from William Buiter

The contagion continues to spread.

Update - I drafted this on February 8, 2009. Today Economist’s View links to Business Week, A Decade as Bad as the Great Depression.

I’m glad to see this realization continue to spread. I just wish we could have acted sooner to stop some of the destruction.

Steven Pearlstein, business columnist for the Washington Post, wrote a column on the lack of leadership that led to the current financial mess - Just One Real Leader, and We Could Have Avoided This Mess - and thus commits one of the fundamental fallacies of business reporting: the leadership fallacy.

And that’s where leadership comes in. Because real business leaders don’t just sit there and accept a competitive dynamic, let alone a dysfunctional one that is likely to result in a bad outcome for everyone. They figure out a way to change that dynamic.

There are two reasons why this idea is wrong. The first is based on an argument made by Robert Reich in Supercapitalism: The Transformation of Business, Democracy, and Everyday Life. Reich argues, quite convincingly, that the era of ‘business leadership’ Pearlstein pines for has disappeared into the dustbin of history. From after World War 2 to the 1970s American business, government, and culture lived under a kind of social contract that granted many businesses monopolies in return for their support of unions and middle-class wages. Since 1970 this contract has been diminished by deregulation and technology, both of which have made businesses responsible to the overriding drive for profit. There is no room in business any more for the responsible statesman Pearlstein dreams of. Every CEO must fight for capital in a chaotic world and rocking the financial boat is rarely a successful move.

The second problem is one that I’ve been beating my head against a wall on for at least the past three years. In the fall of 2005 I sat in a discussion section for one of my first classes as a master’s student at Michigan, the conversation turned to the topic of CEO power and the ability of a single individual to control the fate of a company. I tried to argue that the power of a CEO was overrated but ultimately failed. Since then I’ve tried to make the same case in discussions at Socrate’s Cafe or elsewhere, especially when the conversation feels like it is too focused on the politics of the situation and ignoring all the other institutional dynamics involved in our daily lives. For some reason people want to talk about actions by people in Washington D.C. much more than they want to discuss the actions of their boss or the company they work for every day. The faraway and glamorous trumps the everyday and local.

Ultimately my second argument is about complexity. Business and the economy are much more complex than the basic economics we learn in school or imbibe from the pundits on television. Everyday life is more full of biases, coincidence, and chance than the hagiographic lives of CEOs presented by the business press ever imagine.

Back when I was an undergraduate at Yale I used to tell my friends that it was all a sham. Then I was usually talking about grades or the system. Today it’s just the system.

Via Dean Baker I read that America is abandoning the twenty-five year dream of the free market.

Through this uniquely American lens, saving businesses from collapse was the sort of thing that happened on other shores, where sentimental commitments to social welfare trumped sharp-edged competition. Weak-kneed European and Asian leaders were too frightened to endure the animal instincts of a real market, the story went. So they intervened time and again, using government largess to lift inefficient firms to safety, sparing jobs and limiting pain but keeping their economies from reaching full potential.

There have been recent interventions in America, of course — the taxpayer-backed bailout of Chrysler in 1979, and the savings and loan rescue of 1989. But the first happened under Jimmy Carter, a year before Americans embraced Ronald Reagan and his passion for unfettered markets. And the second was under George H. W. Bush, who did not share that passion.

So it made for a strange spectacle last weekend as the current Bush administration, which does cast itself in the Reagan mold, hastily prepared a bailout package to offer the government-sponsored mortgage companies, Fannie Mae and Freddie Mac. The reasoning behind this rescue effort — like the reasoning behind the government-induced takeover of Bear Stearns by J. P. Morgan Chase just a month before — sounded no different from that offered in defense of many a bailout in Japan and Europe:

The mortgage giants were too big to be allowed to fail.

I could go through all the nostrums - corporate welfare, class warfare, middle class aspirations - and I could go through all of the evidence - that markets fail as often as they succeed, that no one has ever lived in a completely free market society, that 20% of the population thinks it’s in the top 1% of the income distribution - but what’s the point.

The evidence I see is different from the evidence that others perceive. I read part of “True Enough” by Farhad Manjoo last week and it reaffirmed my bias that bias will never be overcome.

My friend Eric invited me to come to an Isaiah meeting at Westwood Luthern church last night. He’s been working with the group for the past few years on a bunch of different issues, including affordable housing.

The meeting began with two introductory presentations about the problem of affordable housing. The message is pretty simple to state: the current median home price in Minnesota and the nation is significantly higher than the 30% of income that is the threshold for affordability. Anyone working in a service job - nurse, teacher, retail clerk, janitor, food services - makes, on average, less than needed to afford a home or, in some cases, an apartment rental. The only way for a contemporary family to continue to afford housing is for them to have dual incomes, and even then it’s not easy. No wonder so many people feel harried by work and the constant struggle to achieve that modern euphemism of work/life balance.

After the presentations we broke for 30-minutes of small-group discussion. I was at a table with a couple of city staffers, a woman who works for a local land trust, and two people from Isaiah.

I listened to the discussion and was struck by how it wondered in circles around the “complexity” of the problem. Someone would throw out a potential solution to the problem and then another person would say that it’s all more complicated than that. The person who proposed the solution would agree that it really is complicated and then move onto another thread in the discussion.

I tried to steer the question to ask what the barriers to action were. The responses were simple: people’s attitude, money, recalcitrant contractors, and lack of political will. Again the specter of “complexity” was raised.

As a sometimes complexity scholar I have to wonder whether this is really a true description of the problem or a subtle cop-out. To me the problem doesn’t seem that complex at all. The market fails to provide housing. Local governments can act to alleviate this by altering their building codes and requirements. We can all agree on the nature of the problem and the most likely solution. So what is the real problem here?

One suggestions was money. At a deeper level I agree, greed is always a problem in a market economy. But the requirements for affordable housing that set the model across the nation are not onerous. They’re only onerous to those who have been brainwashed to believe that all government action is bad. If you believe that the government can intervene for a collective benefit then the argument should be practically won.

So what stops us from acting?

I am a strong proponent of complexity. A lot of major problems and issues in the world are complex. But this isn’t one of them. It’s pretty simple and straightforward microeconomics. Give builders an incentive, through regulation, and they will build affordable housing. Builders are already regulated so this shouldn’t be hard. We just have to actually do it.

I listened to your story about rising gas prices this afternoon and was disappointed by your coverage. It was filled with cliches and lack of creativity.

I have heard man-at-the-pump interviews for the past 6 months. It is time for journalists to come up with a new way of covering this story. Could you not interview an economist or some other expert? Hell, I’d even listen to a public relations person from an oil company if I could be guaranteed that I would not have to hear another man-at-the-pump interview.

This is lazy reporting. It fails to explain the issue it reports on, fails to give the public any additional information, and fails to delve into the very real economic issues that face America. To continue from this story to a report on the week in politics is the laziest form of reporting.

What I need to hear about is why gas prices are so high? Why has it taken so long for auto makers to produce efficient cars? Why has the government failed to invest in alternative energy, especially in comparison to the billions spent on war? So many question could be asked, but instead your correspondent and editors chose the easy way out.

I know journalism is hard. Time is short and deadlines are looming. But please take some time to plan out an investigation of the deeper issues that are causing Americans pain. Don’t tell us about the rise in gas prices every day or every week. Take a month to do a real in-depth story and then broadcast that story over days or weeks. And repeat the in-depth reporting if you have to. Just don’t be lazy.

I didn’t make it to the final day of Rethinking the University. But here are some concluding notes from day 2. I hope to have more to say about this topic during the upcoming days.

Panel - Surplus Value And The University In Crisis

Morgan Adamson - “Student debt and the finacialization of academic life” Since the early 1970s students have been at the center of experiments in financial life. This trend is in direct reaction to the student movements of the 1960s. with the goal of moving funding for education from state to student. In response to the student activism of the 1960s financial institutions and government created Sallie Mae in 1972. Today this quasi-private company gets an almost 37% profit from student loans. Since the 1970s the university has built an infrastructure to facilitate connections between students and lenders. Moreover, student debtors are exceptional because they can never get away from debt through bankruptcy.

Ellen Messer Davidow - “Situating higher education” Not much to add here. My notes are too sketchy because I was starting to get tired. Will academics ever stop reading papers in front of large audiences? Do these same people read their lectures to students in classrooms?

Elizabeth Kissling - Branding is what you do when there is no difference between your product and others. Kissling is from Eastern Washington University. A few years ago they introduced a new branding campaign - “Start something big and the big red box.” She showed the video to much laughter. She then showed a great editorial cartoon of a student talking to the big red box - “what are you”, “im a metaphor for all your dreams and expectations…”, “man my dreams suck ass.” At the same time as the marketing campaign was being unveiled the university was in protracted contract negotiations with faculty. So the end result of these years is more continget faculty, a costly branding campaign that is an embarrassment, and hiring practices that diminish the distinctiveness the branding campaign promoted.

Jeffrey Williams - “Debt Education” in Dissent 2006. 1982 avg debt $2000, 1992 avg debt $9200, 2002 $18900 from the National Council of Education Statistics, project on student debt. Academia justifies teaching as a progressive endeavor but the rise in student debt teaches different lessons. Two possible solutions might be free higher education which would take a little more than $30 billion to cover all current students or income contingent loans. What academics need to do about debt: develop new methods - ethnography, statistics (ah, methodology, the clarion cry of the academic) ; analyze; propose solutions. Williams concluded by comparing student debt to indentured servitude in early American history.

qa - frameworks: middle of a shift between episteme (Foucault), enveloped by global capital; enfolding of big science by military/industrial complex after ww2 - mentioned from Andrew Pickering; indebting is a political strategy; trilateral commission 1975 - governability, how to control citizen students

The conference continues on from yesterday. I got here late today, in the middle of the second morning session.

Roundtable - inside/outside: the university and the public intellectual

I arrived in time to hear Naomi Scheman make some interesting comments about objectivity as the creation of trust in expertise. But before my thoughts could rush through Galison, Daston, and Giddens her comments were over and it was time for Q&A. There was some interesting back and forth about open access and academic publishing. How are we going to get beyond the current publishing regimen?

Roundtable - labor in neoliberal university

Paula Rabinowitz - Addresses her experience as a department chair during the recent strikes and how it intersected with academic freedom. Academic freedom for research is largely unquestioned, but the current challenge to freedom is in the classroom. Three anecdotes from the strike: she told her dean that she would not cross the picket line so he told her to work from home, she compromised by working at an off-campus cafe — but in one of her classes she got a complaint from a student in her lecture class who staged a sit-in protesting the class being off-campus; then there was a creative writing professor who was challenged with an ethics complaint for teaching/reading literature about work during the strike; and finally a graduate student getting grief for teaching off-campus from another department chair.

Jess Sundin - union worker at UM for 9 years. Neoliberalism is savage capitalism = global capitalism. The tax payers fund plenty of private endeavors - 10 year coca-cola franchise, TCF bank stadium, 3m - guidant - medtronic make billions based on research from the UofM, food services run by aramark, sale of the university hospital, pharmacy benefits make money for self-insured university health plans. Maximizing the profit of the university by eliminating general college, top-3 research university. 2003 strike in the wake of massive layoffs, wage freeze, and health care cuts. 1. workers unwilling to accept terms 2. no way to compel work 3. union willing to fight. Lessons: timing of strike in October was too late, better to walk out at start of school year. 2007 walked out early meant there was less time to build coalitions on campus. 2003 afscme walked lines alone, only union on strike. 2007 coalition of unions. 2003 worked with community partners, this work was fearful to other unions in 2007. Universities will not work with labor, we need to go outside the structure of the university to make change.

Jeff Pilacinski - What will it take to win? We suffer from a failure to organize ourselves. What is the disconnect between academics and activists? Product for activists is also education and the divisions between groups are established by the state and the employer. And they only come together when there is a labor stoppage, between strikes there isn’t much working together. In 2007 more groups participated but still the strike was crushed. We must change how we fight together. What is the difference between on and off campus classes? The production of education continues despite the strike.

Eric Jensen - steward from the teamsters. Mobilizing the neoliberal ideology against the workers by the administration see health care, wage bargaining. In 2003 there was a massive assault by the state government against workers. The university administration complained at the time, by appealing that the university is a public good. It’s not the employers fault, something in the environment causes the problem. Examples from 2003 - claim by administration that the U has no ‘free’ health care, claim that copays are “behavioral modification” to keep people from abusing doctor visits despite the fact that Americans visit doctor’s less than other countries.

QA - product of university is credentialing; teaching during the strike - learning from the struggle. in class teach-ins. faculty governance is meaningless. ; professors conceive of their jobs as a calling, end of the goal is tenured position, a lifetime position — this makes it harder for professors to strike, academics have bought into meritocracy from the start ; most academics do not think of themselves as workers but academics are asked to work more and more today, we are willing to expand our work because we (academics) realize that their lifetime job is a rarity and is in jeopardy ; living wage avengers - trying to build coalitions on a regular basis ; need to defeat the idea of collegiality in faculty governance.

The after lunch panels and discussions.

Roundtable 3 - Valuing the Liberal Arts

Jigna Desai kicked things off with “no time for fancy titles” about her experience in Asian and Women’s studies. She made a few good points about knowledge production as a form of social change, the “driven to discover” U of Mn branding campaign that subscribes to the positivist goal of more creating more facts, and the fact that marketing campaigns always have pictures of diversity. She also observed that the College of Liberal Arts is the center of teaching activity at the University of MN but it is furthest from the the areas of massive financial support. c.f. the recent donation to the medical school by the Masons, and the massive Carlson School of Management where the first day of the conference took place.

Margarat Werry discussed “value, liberalism, the arts: arguments for a viable future.” Arts have historically been underfunded, counter to the central work of university. Arts are activities as opposed to the creation of knowledge. Performance art, especially, is ephemeral and difficult to commodify. The arts appears in the public relations materials for universities but this doesn’t result in increased budgets or salaries. There seems to be an ornamental logic at work, arts add to the capitalist university by showing prospective students, donors, and alumni that self-fashioning can happen in the corporate university. Arts = collective inquiry through doing/action. The arts may be at “vanguard of the neo-liberal university” through the employment paradigms of the creative industries: performance epitomizes the service, or “experience economy,” artists are the ultimate flexible labor, modulating themselves to the current conditions.

Jani Scandura made some general comments about the value of the humanities and mentioned a recent column by Stanley Fish Will the humanities save us?. I particularly liked her comment during the question period about the faculty no longer being a monolithic class or interest of its own. Nowadays the differences in salary between professors can be 5 to 10 times depending on discipline.

Panel 4 - Radical Re-framings

Isaac Kamolo and Eli Meyerhoff on “Creating Commons: divided governance, participatory management, and the enclosure of the university.” Meyerhoff began with a description of the commons as those things that are recognized as accessible to all members. He proposed three types of commons: non-capitalist, capitalist, and anti-capitalist. Enclosure of the commons occurs through the identification of limits to capital, destabilization of commons, struggles over restablization, and the failure of political recomposition. Kamolo applied these ideas to the university. In the 1910s the AAUP reached a bargain with the administration to leave professors alone to publish any work they wished in return for professors leaving the management of the university to the administrations. Today the mantra is participatory governance in which a huge number of committees are created to give the faculty and students the illusion of input into the processes of the university. Some responses to this problem might be to create deeper alliances between workers at the university. So instead of saying “we support university workers” during a strike we should say “we are university workers.” A lot of interesting material here to think about. I didn’t have a chance to ask about open courseware or other technological/electronic commons that are beginning to develop.

Tim ?? from the Counter-Cartographies Collective presented “Mapping the 21st century university.” What does it mean to be a great, 21c, global university? We need to critique corporatization and knowledge factory metaphors. Consider research triangle park in North Carolina, conceived as literally a knowledge factory. During the development of RTP in 1960s university administrators criticized the plan by claiming that corporations wanted universities to be prostitutes for research. The plan was to create a route from pure research, to applied knowledge, to factory floor. Look at the RTP website 4 years ago, focused upon maps, research, triangular geographies. Today the website is focused on people, a transition from factory to affective labor. Companies are now after relationship goals - getting updates at local universities, working over time with grad students. Patent incentives are less salient, they’ve never really made much money for universities and have functioned mostly as a management technique. The largest growth in physical office space on campus has been administrative. Consider Tony Waldrop, whose job description has changed from promoting individual scholarly activities (the knowledge factory model original to research triangle), to a new mission to support interdisciplinary activity and promote economic progress. New spaces are being created that allow collaboration and show, through photos or large open windows into conference rooms, collaboration in process. These photos of students working together end up in marketing brochures, raising enrollment, and pushing the whole edifice forward.

Jack Jackson concluded on “Imperial Knowledge” but I’m afraid my mind was beginning to wander. I did catch some intriguing comparisons between the perceptions of suicide bombers today as terrorists and the writings of Winston Churchill celebrating the sacrifices of potential sticky bombers during WW2.

I had to leave before the day conclude. The rest of the schedule can be seen online.

I rode into Minneapolis today on Metro Transit to attend the first day of a conference entitled “Rethinking the University: Labor, Knowledge, and Value.” The conference is a graduate student production that grew out of the AFSCME strike at the University of Minnesota last fall. The strike prompted a lot of questions about the various labor groups that make up the modern university: faculty, students, technicians, clerical workers, etc. so in the best academic tradition the grad students decided to host a conference on the topic and this is what they came up with. Overall the presentations were good.

Panel 1 - Labor in the “Knowledge Factory”

Randal Cohn started off the morning with a paper, “Artificial Discipline,” on the history of design education by listing three broad movements that have characterized design education since the start of the 20th century. Starting with the design history of Nikolaus Pevsner in Pioneers of the Modern Movement, then moving forward to the design method school exemplified by Herbert Simon and Christopher Alexander, and culminating in the design research school. The final part has fully institutionalized itself as a separate academic program, with the attendant research program and a distinct mode of inquiry. Cohn asked where these developments have left art/design education in the university. The art/design distinction naturalizes the scientific authority of design education over artistic inquiry and leaves us asking whether art has been left behind, and feminized, as the creation of beauty and wonder.

Lisa Disch asked us to “Rethink the place of politically committed academic labor in the corporate university.” She outlined the typical progressive academic labor curve started by committed students and faculty. Establish an academic program, then a get greater legitimacy through an official department, create academic journals around progressive topics, form professional associations, etc. But who does the work to get these programs started? Most of the time it is uncompensated labor that is work beyond the normal burdens of faculty and students. And yet this labor is often appropriated by management/administrations to promote the diversity of a school or some other marketing program. Furthermore, these new fields are institutionalized on unequal grounds from programs that are perceived to be financially useful to the university. There is a de facto separation between well-funded, private sectors of the university and underfunded, progressive/public sectors. So what should we do? We could abandon the uncompensated labor behind these causes as was done with the advanced feminist study program at the UofM or we can continue to raise questions from within the university.

Barb Winkler “Laboring in the Knowledge Factory” described her experiences at South Oregon University in the women’s studies department. In the 1970s and 1980s the problem was legitimizing women’s studies as a scholarly activity. Now the challenge from administrations is to be more profitable, and entrepreneurial. Over the last year she has been working on a program to show the value of women’s studies to the administration of her school by bringing community members together for a conference/review of women’s studies. Again this work is largely uncompensated by the administration and carried out during her sabbatical.

Frank Donoghue concluded the first panel with “Against Publication,” which I thought was the most interesting paper of the panel. According to Donoghue and drawing on the recent report of the MLA about tenure, the current academic publishing system has gone crazy. Since 1968 the number of institutions that have ranked publication as central for hiring and tenure decisions has doubled. The MLA links this to the labor shortages of the 1970s; publication was an easy metric to measure, seemingly objective, and easily incorporated into reports and tenure decisions. Over the same time period the university press has been in serious decline. The result is a discipline that only has the time to read monographs in order to evaluate hiring, and tenure. The abundance of publication encourages all of us to read far more narrowly than we would like. A third factor, the contraction of library budgets, may make the entire system unsustainable. We need to rethink what authorship means to us. I particularly enjoyed his quote from a university president around 1910 that said “scholarship [publication] was a professors private endeavor” and shouldn’t be managed/considered by the university.

Panel 2 - Fictions of Autonomy

Kathleen McConnell introduced us to “Advanced Fantasy, a brief history of free universities.” In 1971 there were approximately 110 free universities, on average they had been in existence for 2.5 years. A few years later most of them were gone. Lichtman (sp?) characterized the content of these schools as one-half “craft” work, one-quarter academic, and one-quarter “head trips.” They free universities appealed to students desire for self-discover and self-invention. The neoliberal university coopted many of the free university inventions, including some of the radical academic programs such as gay or women’s studies, but also the rhetoric of education as a form of self-discovery. Education was, and still is, conceived as a form of personal enlightenment. Left behind, or ignored, were the questions of public goods and community. These schools were reluctant to impose problems of communal activity on their students because it was all about freedom. If we replicate any of these experiments today we may have to change this aversion to imposition.

Chris Roberts talked about “The university as temple of truth and Weber’s ‘Science as a Vocation.’” For Weber, writing at the end of WW1, the state was no longer adequate as a support for research or education, a new justification for science needed to be found. The keys to this new alignment were objective scholarship and political non-alignment. Weber didn’t want science to be sucked back into the disastrous passions that had led to World War 1. He called for an ascetic rejection of the outside world with the goal of keeping the lecture hall a sacred space, like a temple. The result has been the skepticism of modern scholarship that studies the beliefs of people outside the academy, and, at the same time, claims to not partake of those beliefs.

Eli Thokelson asked about the “Will to knowledge and the university.” Where did the university come from? How do we reconcile the contradictory visions of the university as a reproducer of hegemonic culture and the site of intense cultural protest? Today we have committed to a fantasy of the university as a repository of all human knowledge. Knowledge is reified and commodified in the knowledge economy, but it is also unfinishable. There are three categories of definition of the university: functional - the university commodifies knowledge, maintains social class; nominalist - the university is a heterogeneous collection of unrelated departments kept together only by its name as an institution; and idealist - a realization of universal knowledge.

Ingo Schmidt concluded the morning sessions with “Manufacturing Capital Fetishism” which was basically an attempt to understand why people continue to support neoliberalism when it has no benefit to them. Economics has become the new religion of the contemporary world. Self-fulfillment has been reconceptualized as economic fulfillment and consumption. Class has been unmade or discarded throughout the world. And the Chicago Boyz, in economics, have convinced university management that economic decisions are paramount.

Two articles of note about the stock market came to mind today. The first is "Beyond Value Investing: How I Realized the Internet Bubble was a Pyramid Scheme" by Bob Hiler. Hiler's argument is that the internet bubble is a new form of the pyramid scheme - a distributed pyramid scheme in which no one person or group can be blamed, instead a bunch of individual actors, acting in their perceived best interest, created a pyramid which eventually came crashing down. Hiler suggest the following 4 characteristics of a pyramid and then demonstrates how each one of them worked in the internet bubble.

1. Pyramids Tout A Revolutionary High-Return Strategy.


2. Pyramids Have New Investors Transfer Money to Old Investors.


3. All "Levels" Of The Pyramid Sell The Same Stuff To Each Other.


4. Pyramids Make Competition a Good Thing.

Finally he concludes that we were all duped into thinking that the internet was selling opportunity instead of an actual product. Based on how many Time cover stories I remember reading from just a few years ago I have to agree that opportunity was in the air.

Could this have been avoided? We all like to believe that we are immune to the hype of commercialism, whether it be ignoring the latest ad for cola or deciding for ourselves what is a good investment. Unfortunately there is too much information for any of us to digest. Even the so-called experts aren't always right. For that I cite an excellent piece by Malcolm Gladwell from the New Yorker "Blowing Up: How Nassim Taleb turned the inevitability of disaster into an investment strategy"
Taleb is an investor in options. He buys stock options on both sides of the fence, betting that the market will go up or it will go down, and eventually it will go so far that his options will make a lot of money.

What Empirica has done is to invert the traditional psychology of investing. You and I, if we invest conventionally in the market, have a fairly large chance of making a small amount of money in a given day from dividends or interest or the general upward trend of the market. We have almost no chance of making a large amount of money in one day, and there is a very small, but real, possibility that if the market collapses we could blow up. We accept that distribution of risks because, for fundamental reasons, it feels right.

For Taleb there will be a day when everything moves dramatically or unthinkably and that will be the day he makes his money. On normal days nothing much happens or he loses money. But he knows that someday the unthinkable will happen and the other "rational" people who invest in the stock market will cause a bust or a boom that can't be justified and he will be waiting to cash in.

I'm thinking to myself that this is a strategy I need to use. Maybe I should have become a broker. But fundamentally it undermines our notion of rationality. Sometimes the unthinkable happens and it cannot be avoided.