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A management crisis

At the university where I used to work, there was a change in management not too long ago.  The old president left abruptly, without explanation, under a cloud.  The official reasons, time for a change, etc., left us thinking it had to do with either money or sex, possibly both.  In any case, an opportunity presented itself for a change of direction, since our erstwhile leader had championed a thoroughly capitalist model, which included, not surprisingly, lots of money for himself.  And so, with great fanfare, a search was begun for a new leader and, presumably, a new direction.

Well, we got the new leader.  In the wisdom of the Trustees, we also got two or three entirely new six-figure salaried administrative positions.  One of them was for a local contender for president who had failed to be selected; he was given a newly created job as, well, no one really knew what, except that he now made the second highest salary in the university.  All in all, when the dust settled, the ten highest paid people in the university collectively pulled down about$2.5 million, in a university with just about 5,000 students on the home campus.  True, there are numerous outposts worldwide, but they are generally self supporting.  We know this because if they are not, they are unceremoniously axed.

I suppose this would be fine, except for the fact that over 80% of the faculty at this university are adjunct, or, officially, part time.  That means extremely low wages.  An adjunct professor teaching ten courses per year can barely pull down $25,000.  You will note that this is hardly part time, as it is rather a heavy teaching load even for regular, tenure track professors.  It is also less than an average full time hourly employee at Walmart gets, and because it is officially part time, there is no retirement package, no health care, no benefits of any kind.  Even at Walmart, they get to buy into a health care program; not here.  Pressed for an explanation of how such a teaching load can be considered part time, the administration has proposed cracking down on the number of courses an adjunct can teach by simply hiring more of them; how thoughtful.  One adjunct teaching ten courses will cost exactly the same as ten adjuncts teaching one course each, since no training is required, and no benefits are given.  The net result will be more adjuncts teaching at multiple institutions in the city, more “freeway flyers,” as they’re called.  The regular full-time faculty only pay lip service to reforms, as they are worried about getting shipped out themselves, at least the ones who don’t consider themselves superior for having landed the meager allotment of full-time jobs.

This situation might seem beyond the interest of the average American workers, who have problems of their own, and who tend to think teaching isn’t real work anyway.  They would be wrong, because they are, indeed, in the exact same situation themselves: a mentality that decrees that when times are tough, increase management compensation and lay off or decrease the compensation  of the people who actually produce.  It’s the arrogance of the “job creators.”  How did we allow things to come to this?

It goes full circle back to the university.  At our institution, the one school where faculty are remunerated at anything like their value is the business school; it is also, not coincidentally, the biggest money maker.  Yet, as far as I know, there is not one single course offered in how to make anything, or even how to increase the efficiency of making anything, and the same applies to services.  What do they teach, then?

They teach people how to manipulate money, along with major doses of how important they are.  A couple of decades ago, managers were complaining that people coming out of business schools with MBAs didn’t know anything about how to actually produce anything of value.  Well, those old managers are gone, and only the B-school trained golden boys are left, and they make sure they get the lion’s share of the money.  In turn, the revolving door between business and the academy is well oiled and functioning smoothly.

But surely, you say, they’re creating jobs, aren’t they?  Isn’t that how capitalism works?  Well, actually, they’ve got it completely backwards.

Capital does not create jobs, demand creates jobs.  It follows that it’s not capitalists who are job creators, but consumers.  The role of capitalists is to facilitate the meeting of demand and supply.  Even in those cases where apparently new demand is created, it fills some need in society at large, and it still needs consumers to actualize the demand.

But isn’t the job of business to maximize profits?  Well, yes, as far as it goes.  It’s true that the job of business is to maximize profits, but it’s not the job of society.  The job of society is to ensure the maximum welfare of its members.  But didn’t Adam Smith teach us that unconstrained commerce will benefit the most of us?  Again, not exactly.  He did champion the free market, but he also warned that businessmen will collude for their own benefit if left to themselves, effectively trying to control the market instead of allowing it free operation.  True, he despaired of government effectively stopping such collusion.  But he was writing at the end of the 18th century, in a commercial climate that was far different from that today, and with no democratic governments anywhere in the world.  The Wealth of Nations is not a sacred text in any case, and we are as free to disagree with it as with any other.

Smith did get one thing right, though: commerce depends on the consumer, and not vice-versa.

Bottom line, as they like to say: if consumers are strapped for cash, the capitalists will eventually have no money to manipulate.  I know of no B-school course where that is taught.

17 thoughts on “A management crisis

  1. Great read!! As one who’s spent the last [sigh] 30 years in university environs & saloons – 1st as an undergrad; then a semi-professional grad student; later as adjunct faculty (which is, I often say in jest, a step down, as at least grad students still have hope); & currently as a staff employee – I can only say.… Brilliant!! & I’d love to post it on Facebook, but having just read your recent (extremely entertaining!) blog post re: the anti-social media… I defer, pending your approval. (BTW, if you choose to respond in your native Latvian, please translate……)

  2. Ayn Rand as “secular Calvinism”… what a perfect description! If you ever feel the urge to rand…erm, rant on her extraordinary grip on a certain kind of psyche, please follow that urge. Thank you!

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