Tough love economics

I was in the grocery store, jam-packed on this gorgeous day, when I saw a lane with nobody in it. Unbelievable, I thought, and went for it. As I was unloading my cart, I joked with the check out person.

“Jeez, was it some thing you said?”

“No, I don’t think so.”  Then she pointed to the bagger: “It must have been him!”

“Sure,” I said, “blame it on the lowest wage person here!”

We all shared a laugh, and then the check out person got this pensive look on her face, like an infant child about to fill its diapers.

“It is funny, though,” she said.  “He works much harder than I do, and gets paid less.”

Well, this got me to thinking.  What if the hardest working people got paid the most?  Would that be fairer?  Would it solve any of our social problems?


If that happened, then everyone would want the hardest jobs.  Before you know it, everything would be done.

There we’d be, nothing to do but sit around and talk revolution.

Alma Mater, Bursa Pater

The purpose of the University is simple.  It is to further the careers of academicians.

For administrators, this means graduating as many people in lucrative fields as possible, so they can donate generously to the endowment as alumni.  This is mutually beneficial, since a large endowment enhances the reputation of the university, and, by reflection, that of its graduates, all the while assuring princely salaries for top administrators.

To achieve a similar impact in less lucrative fields, for example, in the humanities, requires significantly larger numbers of graduates, since each one will be able to contribute significantly less to the endowment.  This, in turn, is reflected in the salaries of the faculty.  By far, the largest salaries are generally paid to faculty in the professional schools: Medicine, law, and even that johnny-come-lately, business.  Funds for educational programs in the various schools are distributed in similar proportions.  Literature, history, and other such poorly remunerated fields suffer accordingly; a bit of a self-fulfilling prophecy, since these graduates are more likely to find work in the university system which trained them, where they will get paid relatively little.  This is especially true in these times, when such faculty are increasingly part time, at truly pathetic salaries with no benefits.

For faculty, career advancement requires an entirely different set of principles.  The motive here is to ensure a slow, but steady supply of young colleagues who will not upend years of pronouncements by established faculty.  This is accomplished in two ways.

The first is to act as gate keepers.  Faculty hiring committees sift through applications for open positions, discarding obviously unqualified candidates, then sparring over how to rank the rest.  This usually breaks down along adherence to schools of thought within the discipline; factions, in other words.  Structuralists will want other structuralists, post-modernists will want more of their kind, and so on.  Almost no one will favor applicants whose work calls into question any of the prevailing factions in the department.  There is some honor among academics, after all.  In this way, serene advancement through a career is ensured without problematic disagreement, except along acceptable factional lines.  The process is disturbingly similar to the way acolytes move up through religious ranks.

The second way is similar; it works through the peer review system for publication of papers.  For professors, advancement occurs through just one avenue: publication in peer reviewed journals.  I don’t think I need to go into detail on the difficulties of publishing a serious objection to accepted dogma, when that publication depends on favorable reviews by the very people who have built their reputations on that dogma.

It’s worth noting the increasing trend to circumvent this entire process by hiring only “adjunct” faculty, a process wryly called “adjunctivitis.”  Adjuncts are hired as part time employees, or as contractors, thereby absolving the institution of any requirements for minimum compensation, especially with regard to health insurance, retirement , and so on.  They are usually hired en masse to teach the large lower-level courses established faculty find so tiring.  This is obviously beneficial for administrators, as it frees up much more money for their own bloated salaries, but many short-sighted faculty also fall into line as well.  Adjunct faculty are no threat to the established faculty, because, in spite of technically being part-time, they are forced to teach so many courses to make ends meet, that they have no time left for the kind of research that leads to publication and career enhancement.  I say short-sighted, because this will inevitably lead to further erosion of prestige for university faculty in general, affecting the upper echelons as well as the lowest.  Of course, some, at the end of their relatively lucrative careers and ready for retirement, hardly care.

The wily reader will have noticed that at no point was the welfare of students, or the contribution to knowledge brought up.  Let me just remind you that we have spent the last few decades selling higher education exclusively as the gateway to lucrative jobs.  The inescapable conclusion is that it is the paper, not the process, which has any true value.

Surprise!  Welcome to our brave new world.

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.

Born yesterday

I’m up in Sault Ste. Marie, MI, in a little gift shop near the great locks that pass ships between the high waters of Lake Superior and the lower Lake Huron, bypassing the St. Mary’s River rapids (sault in French).  A thousand-foot Great Lakes freighter is passing by, on her way to the locks.  A much smaller boat is ahead of her, looking for all the world like a leading dolphin, and someone asks, “Is that a pilot leading the freighter to the lock?”

“No, that’s your $10 million government boat,” answers the clerk, with a knowing smirk.  We’re supposed to smirk back in that knowing way we have when we don’t actually know, but suppose the speaker does.

“Coast guard?”

“Homeland Security.”  This with more of a smirk.  We’re all in the know here; the government can’t pull the wool over our eyes!

“I’ve heard,” the clerk continues, “that they can read your credit card from a mile away.”

That does it.  I’m all over it.  “Who told you that?” I ask.  “That’s ridiculous.  They would have to be within at least ten feet, and that’s only if your card has an RFID, which most don’t.”

That earns me an icy glare, and I just give up and leave.  The clerk’s ignorance of government snooping capabilities is apparently only surpassed by her smug certainty.  Never mind the “$10 million dollar boat” and whether Homeland Security had any business hanging around the Canadian border.

You see this sort of thing more and more these days, this smug rumor mongering, this assumption that we can see through the transparent lies of the government, or big business, or whatever dragons we’re onto.   Everyone’s a hipster these days.  But the skepticism of the hip has become the cynicism of the wannabe, a much easier posture, since it doesn’t require one to actually look into anything, to research it, to know it.  We’re engulfed in hipness, swept away by the deluge of the media we’re addicted to.  Music, film, even books all drone away on the exposure of Big Lies,  But in this anxiousness not to be duped, this obsessive non-rubeness, we are often fed only alternate lies, which, ironically, we accept without question.

By now, you may be thinking I’m in favor of government snooping.  You’re wrong.  I am concerned about it, and I believe we need to seriously consider laws curtailing it.  More to the point, we need to stop giving up all that information to the sacred Private Enterprise that is making it available in the first place.  But we need to get a grip on reality first.  Do you really believe all those loyalty cards are there to make life better for consumers?

Up here in the Soo, as it’s called, people love grousing about the government, which they are convinced exists only for the purpose of taking their money for no return.  Never mind that the wicked bogey-man government supplies virtually all of the employment here, what with the locks, the Air Force base, and the Lake Superior State University, just to name a few.

Well, sure, people say, but there used to be the carbide company, the coal company, shipping companies, all that glorious Private Enterprise, you know, that people worked for.

Well, those lovely businesses all left town, dear people, not because they weren’t making money, but because they weren’t making enough money.  The basic fact about business is that it is all about making the most money possible.  Those fabled mom-and-pop businesses that were run out of town by evil Walmart?  Before that, they had virtual monopolies on your bucks, and as often as not were  gouging you for them.  You knew that, of course, because you switched to Walmart quicker than a three card monte dealer as soon as you got the chance.  Essentially, you drove them out of business, not Walmart, which would dry up and blow away for lack of money if everybody who hated it would stop shopping there.

Same goes for big government.  We’re all for cutting spending, unless it’s something that benefits us personally.  A boondoggle is a project that benefits somebody else.  Let’s face it, we’re not deep thinkers on that account, either.

Similarly, we’re up in arms if the NSA misses a clue, and something gets blown up by terrorists, and then complain that they’re snooping too much when it turns out they’re tapping information we’ve happily provided to businesses, whose stated sacred charge is to get as much money from us as possible.

We cannot get reasonable government until we become reasonable ourselves, and we cannot become that by automatically believing or disbelieving anything.

I hate to spring this on you so late in your life, but you are going to have to work at democracy, if it’s going to make it.  Ignorance just won’t cut it.