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[Apr 10, 2015] Tyler Cowen's Three-Card Monte on Inequality Beat the Press

Tyler Cowen used his Upshot piece this week to tell us that the real issue is not inequality, but rather mobility. We want to make sure that our children have the opportunity to enjoy better lives than we do. And for this we should focus on productivity growth which is the main determinant of wealth in the long-run.

This piece ranks high in terms of being misleading. First, even though productivity growth has been relatively slow since 1973, the key point is that most of the population has seen few of the gains of the productivity growth that we have seen over the last forty years. Had they shared equally in the productivity gains over this period, the median wage would be close to 50 percent higher than it is today. The minimum wage would be more than twice as high. If we have more rapid productivity growth over the next four decades, but we see the top 1.0 percent again getting the same share as it has since 1980, then most people will benefit little from this growth.

The next point that comes directly from this first point is that it is far from clear that inequality does not itself impede productivity growth. While it can of course be coincidence, it is striking that the period of rapid productivity growth was a period of relative equality. At the very least it is hard to make the case that we have experienced some productivity dividend from the inequality of the post-1980 period.

And many of the policies that would most obviously promote equality also promote growth. For example, a Fed policy committed to high employment, even at the risk of somewhat higher rates of inflation, would lead to stronger wage growth at the middle and bottom of the wage ladder, while also likely leading to more investment and growth.

While Cowen talks about immigration as being a question of low-paid workers who might drive down the wages of the less-educated, they are millions of bright highly educated professionals in the developing world who would be happy to train to U.S. standards and compete with our doctors, lawyers, and other highly-paid professionals, many of whom populate the one percent. This policy would also lead to both more rapid growth and greater equality. (We can repatriate a portion of the earnings of these professionals to their home countries to ensure they benefit as well.)

And, we can have a modest financial transactions tax that would eliminate waste in the financial sector while also reducing the income of many of the richest people in the country. Were it not for the political power of Wall Street, we undoubtedly would have put in place financial transactions taxes long ago. (We do still have very small taxes that are used to finance the operation of the Securities and Exchange Commission and the Commodities and Futures Trading Commission.)

It is also important to remember that the well-being of children depends to a large extent on the well-being of their parents. If the minimum wage had kept pace with productivity growth since 1968 (as it did between 1938 and 1968) it would be over $17 an hour today. The children of a single parent earning $34,000 a year would have much better life prospects than the children of a single parent earning $14,500 a year. In this sense there is a very direct relationship between inequality and mobility.

The long and short is that we know of many measures that can both reduce inequality and increase growth. And, if we want to make sure that everyone's children have a shot at a better standard of living in the future then we should make sure that their parents have a better standard of living today.

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Financial predators produce nothing of value
written by RandallK, April 05, 2015 10:49

The "take-over and loot" artists of Wall Street produce nothing of value and are burdensome to taxpayers - we support the agency which partly funds the stolen pensions - yet rake in more money annually than most wage earners.
What did collateralized debt products produce? Nothing, or close to nothing would be my answer.
We not only need to tax the sales of stocks and bonds, we need to bring back Glass-Steagall(sp?) and make a number of financial products illegal.
Then there's the matter of "too big to fail and too rich to jail," to correct.

Mobility for Whom, to Level What Playing Field Where - For Winners Take All
written by Last Mover, April 05, 2015 11:41

The concept of mobility helps us distinguish between "good inequality" and "bad inequality." Reductions in inequality can follow from a leveling in either direction - by elevating the poor or pushing down the wealthy. It is the plight of the poor that we most need to improve.
Somehow these discussions never get to the part where MNCs used their newfound global mobility to pit workers in different nations against each other in head to head competition and drive wages to subsistence levels in some cases.

That really gave workers a chance to perk up with new mobility opportunities to be more productive as they earned what they were worth, didn't it. After all, it wasn't like MNCs had a lock on the market and overpaid themselves with productivity gains they didn't actually earn, instead extorted with market power. LOL.

These discussions also conveniently ignore the intentional immobility of white collar professionals designed to shield them from competition, especially from abroad, like doctors and CEOs. Cowen would rather talk about reducing regulations on barbers, hairdressers and interior decorators so they can be more mobile and productive. LOL.

written by loneract, April 05, 2015 1:14

The Upshit seems to contain outright lies 2/3 of the time. Usually when Leonardt or Cowen is writing.

Marko, April 05, 2015 4:42

Tyler Cowen is right up there with Laffer , Mankiw , et al in his diligence at defending the perks of the 1%.

The goal is to shift the focus of attention away from anything involving those elites , typically by concentrating instead on poverty or mobility. They can imagine a system of high mobility and low poverty ( as measured relative to median income ) among the 99% in which the 1% captures an even larger share of the income pie than they do currently. Think of plantation slaves as the 99% and plantation owners as the 1% and you get an idea of what their ideal "win-win solution" looks like. High relative mobility and low relative poverty among the 99% , continued concentrated income and wealth flows to the 1%. Problem solved.

Summers is right , for once. The big action in inequality is in the trillion dollars of current gdp that used to flow to the bottom 90% of income-earners that now flows to the top 1%. Similar dynamics apply for wealth.

Ignore the misdirection and focus on the big problem : big money.

watermelonpunch, April 05, 2015 8:16

I'm not sure what that Tyler is rooting for here.

Is he saying that everyone ought to start at the bottom?
For example, someone with a science aptitude born into a wealthy family, ought to be forced to put off their education to mop floors for 2 years, to "earn their chops"?

Because that's the only way I can see his argument having an internal logic at all.

Otherwise, it just sounds like he's saying that people with various disabilities or other limitations, should rightfully (in his mind) be relegated to substandard living conditions struggling for survival with limited access to the benefits our civilization affords "their betters" ... as long as if a child born into that penury has some bit of a chance to "strike it big" if they have enough smarts & ambition & luck.

I fall back to the obvious ... that we - CIVILIZATION AS A WHOLE - NEED people operating the sewage treatment plants, fixing the roads, collecting the trash, cleaning hospitals, working on the farms, packaging & transporting foods etc., and wiping butts when people get too old & infirm to do it for themselves.
Civilization as a whole should be GRATEFUL there are those people who are willing & able to do those things, and recognize that people who do these vital things in society by paying them a fair wage.

In fact, I'd argue that some of these jobs are HARDER and require more aptitude that a lot of "higher jobs" Cowen thinks pay more out of "good inequality".

I'd like to see the branch manager at my bank try to swing the trash cans on my block like my city's garbage crew. (Or live in a neighborhood where the rubbish is piled up for that matter.)

How many accounts department managers would last 2 minutes on a roofing job?

I can think of one manager I knew at a company who would leave her dirty oatmeal dishes in the little bathroom sink all day. Under NO circumstances do I think that woman should ever be trusted to work in a hospital or kitchen.

And then the story I heard from someone about a warehouse manager who would throw fits yelling & start throwing things around when he'd get stressed out. Is that the guy you want alone with you wiping your butt in your hospice room when you're 92?

Would any of us want to buy food sold in a dirty grocery store? And how much luck is a doctor going to have to save your life in a filthy operating room?

Tyler Cowen's shell game is an insult to every citizen.
And it's a injury to every citizen with limitations whether they're born with them or acquire limitations by tragic accident or simply aging.

Richard H. Serlin, April 05, 2015 10:59

High Inequality and High Mobility = Very High Risk Lives

Well, Cowen is always happy to mislead for the libertarian/plutocratic cause, and he has to, as the truth gives no chance to his side in a democracy.

But this extreme inequality is fine of we have high mobility is so wrong, because high mobility is high chance to go up, and high chance to go down. If it's just high chance to go up, that's just growth (which is decreased when you don't invest in the 99+% to give as much as possible to the 1%, or 0.1%).

High inequality with a high probability of plunging into the abyss because of high mobility? That's just a terribly risky life for you and your family, and risk decreases utility and welfare. Who wants to live in a world made that dangerous. And certainly the high mobility that the rich will allow is among the 99%, not among the 0.1%.

bakho, April 06, 2015 5:33

If Cowen is truly concerned about mobility, he would promote policy to encourage mobility.
Improve childhood nutrition
Universal PreK
Health Coach Programs
Programs that would give teens facing double digit unemployment, their first job and on the job training.
Programs that would improve the skill set of youth who are not college bound.
Free Community college, etc.
Raising the MinWage
Less inequality in distribution of resources among communities

I have yet to see him promote any of these measures.

A little parity perhaps?
written by Kat, April 06, 2015 8:34

I just read an AP story about the plight of some poor, poor Americans that had property confiscated under the Castro regime. Congress is on the case-- after all the descendents of these "victims" are so poor they cannot even afford to repair their concrete steps. I did not see skills training mentioned as a fix for their plight.
I think if you thought really, really hard you might be able to come up with a few examples of the US government using its force to confiscate property or support the confiscation of the value of labor from a person. In these cases training is the key to redistributive justice.
And I have yet to see skills training as an answer to all the job creators who simply cannot make a go of it without subsidies and tax breaks.

written by Bloix, April 06, 2015 9:57

"We want to make sure that our children have the opportunity to enjoy better lives than we do."

I have never met an upper middle class parent who wants his kid to have "the opportunity" to have a better life. These parents do not say, "I want my child judged fairly on his merits, and if he winds up as a barista that's fine with me."

written by urban legend, April 06, 2015 2:19

All wage workers need to be organized. The elite forces have spent 200 or so years trying to give the public ill thoughts about labor unions, with but a very brief reprieve roughly between roughly 1934 and 1947 -- with Taft-Hartley "right-to-work" reinforced by the anti-union propaganda film, "On the Waterfront," signalling a return to corporate and corporate media-bashing of all collective bargaining activities. Those toxic forces are really feeling their oats right now, having even compromised the Democratic Party with fundamentally anti-worker people like Rahm Emanuel and Arne Duncan. Only the unions themselves, a few stalwart Democratic office-holders and some bloggers are offering resistance.

There have been embers of recognition that the engineered weakness of labor has coincided with -- and almost surely played a huge causative role in -- the disconnection between productivity and labor compensation. It is going to be a long and continuous, never-ending slog to start the country in the other direction. It's a simple story to make: labor union weakness = low wages = poor demand = weak economy for almost everyone, including small businesses. Hillary Clinton could campaign on that equation, even without attacking Wall Street (other than the dishonest players, whom she must make clear she will not defend), and present herself as the true champion of business because she, unlike the Republican candidates who pretend to be pro-business but actually are the opposite, will follow policies that will promote the growth of demand for their goods and services.

FDR proved you could talk common sense economics like this to the American people. Obama looked like he was campaigning on the equation, but it turned out he was only a little for it and was even actually against it in some respects. He made virtually no push-back against the negative propaganda about unions that has prevailed for three generations. Let's hope this time can be different. But it won't be different unless the people who understand the equation put heavy pressure on all Democratic candidates to think and talk that way.

written by Bob Hertz, April 06, 2015 7:45

I fully support all the posts that call for greater bargaining power for workers.

However, I do wish to point out that many many workers with tiny or nonexistent productivity gains have seen very nice increases in their incomes in the past two decades.

College professors and senior nurses and federal statisticians do very valuable work.
But most of them work fewer hours than they did 20 years ago and have fewer students or patients than 20 years ago.......yet this "EdMed" complex has had very nice wage gains, to say nothing of benefits that private sectors workers can only dream of.

If you rented a meeting hall and had a gathering where the only attendees would be those whose incomes had gone up faster than inflation, I do NOT think that the hall would be filled with persons who increased their productivity. I think it would be filled with persons who had credentials and connections.

accelerating inflation
written by Dishwasher, April 07, 2015 2:01

And many of the policies that would most obviously promote equality also promote growth. For example, a Fed policy committed to high employment, even at the risk of somewhat higher rates of inflation, would lead to stronger wage growth at the middle and bottom of the wage ladder, while also likely leading to more investment and growth.
I agree with you on doctors, lawyers, and other highly-paid professionals.

On minimum wage, to me a minimum wage is a second best solution, a wage subsidy or a basic income guarantee better distributes the burden of helping low income workers.

written by Dishwasher, April 07, 2015 2:23

Above I should have said isn't it accelerating inflation that helps debtors and wage earners and not just inflation? And it cannot continue to be accelerated without very bad consequences.

[Nov 05, 2011] Steve Keen Harvard Starts its Own PAECON Against Mankiw

Neoclassical economists are hacks who "electively pick research to suite their agendas"–and this includes ignoring critical literature generated even when it comes from leading lights within neoclassical economics. Is situation with teaching CS radically different? I think not...
November 3, 2011 | naked capitalism


here is the full text of the economics 10 walkout students' letter to mankiw: ______________________________

Wednesday November 2, 2011

Dear Professor Mankiw-

Today, we are walking out of your class, Economics 10, in order to express our discontent with the bias inherent in this introductory economics course. We are deeply concerned about the way that this bias affects students, the University, and our greater society.

As Harvard undergraduates, we enrolled in Economics 10 hoping to gain a broad and introductory foundation of economic theory that would assist us in our various intellectual pursuits and diverse disciplines, which range from Economics, to Government, to Environmental Sciences and Public Policy, and beyond. Instead, we found a course that espouses a specific-and limited-view of economics that we believe perpetuates problematic and inefficient systems of economic inequality in our society today.

A legitimate academic study of economics must include a critical discussion of both the benefits and flaws of different economic simplifying models. As your class does not include primary sources and rarely features articles from academic journals, we have very little access to alternative approaches to economics. There is no justification for presenting Adam Smith's economic theories as more fundamental or basic than, for example, Keynesian theory.

Care in presenting an unbiased perspective on economics is particularly important for an introductory course of 700 students that nominally provides a sound foundation for further study in economics. Many Harvard students do not have the ability to opt out of Economics 10. This class is required for Economics and Environmental Science and Public Policy concentrators, while Social Studies concentrators must take an introductory economics course-and the only other eligible class, Professor Steven Margolin's class Critical Perspectives on Economics, is only offered every other year (and not this year). Many other students simply desire an analytic understanding of economics as part of a quality liberal arts education. Furthermore, Economics 10 makes it difficult for subsequent economics courses to teach effectively as it offers only one heavily skewed perspective rather than a solid grounding on which other courses can expand. Students should not be expected to avoid this class-or the whole discipline of economics-as a method of expressing discontent.

Harvard graduates play major roles in the financial institutions and in shaping public policy around the world. If Harvard fails to equip its students with a broad and critical understanding of economics, their actions are likely to harm the global financial system. The last five years of economic turmoil have been proof enough of this.

We are walking out today to join a Boston-wide march protesting the corporatization of higher education as part of the global Occupy movement. Since the biased nature of Economics 10 contributes to and symbolizes the increasing economic inequality in America, we are walking out of your class today both to protest your inadequate discussion of basic economic theory and to lend our support to a movement that is changing American discourse on economic injustice. Professor Mankiw, we ask that you take our concerns and our walk-out seriously.


Concerned students of Economics 10

Richard Kline:

So Memory, exactly. Mankiw's synthesis is political propaganda designed to socialize candidates for the ruling class in what their acceptable worldview is to be, nothing more. Analysis would interfere with that, as would contrast-and-compare exercises; thus, both are omitted. What Mankiw is doing is political indoctrination, his snuffling remark in his response to the walk out that "I leave my politics at the door" when teaching notwithstanding. Maybe he does-since all he shows _is_ a political perspective, he can leave 'I' statements out and simply point, disingenuously, at this syllabus. -And it wouldn't matter who was teaching this class, no; the function is exactly the same. Kind of like catechism, really . . . .

Lloyd Blankstein:

Mankiw is world famous economist. Steve Keen is only a nameless blogger, who teaches economics in his spare time. I want to stay on the side of the titans – Mankiw, Summers, Krugman, Greenspan, Bernanke. The only purpose of economics is to justify and legalize theft. If Steve Keen cannot do that, he is a BAD economist. Why listen to him?


I studied 101 economics in 1981, I seem to recall. The analytic component was easy, it's like arithmetic, maths, logic, you know we have the axioms and we proceed. The 'descriptive component' ... basically unions versus management I choked on. I had a sweet lecturer. He actually held to a marxist analysis: roi/s the logic etc etc. It made a lot more sense than the required 'understanding' that the course required. Right at this moment I find myself in awesome agreement with the Harvard protesters.

Mankiw is my opinion (and who am I(?)) is just a semi-second rate academic that rode the wave with his textbook. Nearly any fool can do it given the auspicious historical circumstances. That doesn't make it right, in fact it just makes him cheap, opportunistic, and confused.

Just to expand this criticism I have an interest in clinical psychology. Any idiot that believed Freud after he sold himself out when his m/c//r/c audience kicked up when he told them that their children's problems were the result of their abuse needs to be hanging their heads in shame, as should have Freud. Freud was brilliant but a disgrace to himself.

It is a beautiful analog this moment. You either get this or you don't. My message is "Screw the rich." Analogue: Screw the abusers.



I'm still waiting for your reply, how do you model trustworthiness, see below:

Look, if the model can not describe the human condition, then all you are building is a behavioral template, which you then_shove down_upon_humanity. All Mankiw is doing is reinforcing his worldview cough neoliberal see:

David Harvey notes that the system of embedded liberalism began to break down towards the end of the 1960s. The 1970s were defined by an increased accumulation of capital, unemployment, inflation (or stagflation as it was dubbed), and a variety of fiscal crises. He notes that "the embedded liberalism that had delivered high rates of growth to at least the advanced capitalist countries after 1945 was clearly exhausted and no longer working."[10] A number of theories concerning new systems began to develop, which led to extensive debate between those who advocated "social democracy and central planning on the one hand" and those "concerned with liberating corporate and business power and re-establishing market freedoms" on the other.

Harvey notes that, by 1980, the latter group had emerged as the leader, advocating and creating a global economic system that would become known as neoliberalism.[11]


Skippy…Humanity is the horse pulling the cart. Neoliberalism is nothing more than a glazed apathetic leash to ones own chosen addictions (see economic menu), to justify egregious wealth and power concentration. I find this state deeply wrong. And like Mr. Kline pointed out, one day you_may_wake up and can't pull your head out of the bucket, drowning in recognition of past deeds or even worse, look in the mirror and see Dick Cheney and be OK with it.

Steve Keen:

"Steve Keen is a hack who selectively picks research to suite his agenda".

Cute Brito! From my reading of economics, most neoclassicals are themselves hacks who "electively pick research to suite their agendas"–and this includes ignoring critical literature generated even when it comes from leading lights within neoclassical economics.

Here's a few "selectively picked research papers" on IS-LM and DSGE modelling that I'd like to see you prove are wrong and should be ignored:

Hicks, J.R., (1980). 'IS-LM: an explanation', Journal of Post Keynesian Economics, 3 (2): 139–54:

"I accordingly conclude that the only way in which IS-LM analysis usefully survives – as anything more than a classroom gadget, to be superseded, later on, by something better – is in application to a particular kind of causal analysis, where the use of equilibrium methods, even a drastic use of equilibrium methods, is not inappropriate"

Solow, R. M. (2001). From Neoclassical Growth Theory to New Classical Macroeconomics. Advances in Macroeconomic Theory. J. H. Drèze. New York, Palgrave.

[N]ow … if you pick up an article today with the words 'business cycle' in the title, there is a fairly high probability that its basic theoretical orientation will be what is called 'real business cycle theory' and the underlying model will be … a slightly dressed up version of the neoclasssical growth model. The question I want to circle around is: how did that happen? (Solow 2001, p. 19)

Solow, R. M. (2003). Dumb and Dumber in Macroeconomics. Festschrift for Joe Stiglitz. Columbia University.

. The preferred model has a single representative consumer optimizing over infinite time with perfect foresight or rational expectations, in an environment that realizes the resulting plans more or less flawlessly through perfectly competitive forward-looking markets for goods and labor, and perfectly flexible prices and wages. How could anyone expect a sensible short-to-medium-run macroeconomics to come out of that set-up? My impression is that this approach (which seems now to be the mainstream, and certainly dominates the journals, if not the workaday world of macroeconomics) has had no empirical success; but that is not the point here. I start from the presumption that we want macroeconomics to account for the occasional aggregative pathologies that beset modern capitalist economies, like recessions, intervals of stagnation, inflation, "stagflation," not to mention negative pathologies like unusually good times. A model that rules out pathologies by definition is unlikely to help. (Solow 2003, p. 1)

Solow, R. M. (2007). "The last 50 years in growth theory and the next 10." Oxford Review of Economic Policy 23(1): 3–14.

the main argument for this modeling strategy has been a more aesthetic one: its virtue is said to be that it is compatible with general equilibrium theory, and thus it is superior to ad hoc descriptive models that are not related to 'deep' structural parameters. The preferred nickname for this class of models is 'DSGE' (dynamic stochastic general equilibrium). I think that this argument is fundamentally misconceived… The cover story about 'microfoundations' can in no way justify recourse to the narrow representative-agent construct…

The nature of the sleight-of-hand involved here can be made plain by an analogy. I tell you that I eat nothing but cabbage. You ask me why, and I reply portentously: I am a vegetarian! But vegetarianism is reason for a meatless diet; it cannot justify my extreme and unappetizing choice. Even in growth theory (let alone in short-run macroeconomics), reasonable 'microfoundations' do not demand implausibility; indeed, they should exclude implausibility. (Solow 2007, p. 8)

Lefty :

You hate the word neoliberal because of how much of a failure neoliberal policies have been. Yes, there is some disagreements amongst neoliberal economists, but there are many, many commonalities as well. Same goes with words like socialism. There is, or was, social democracy in Western Europe that was different than the socialism of the Nordic countries, which was different than Yugoslavian socialism which was different than Cuban socialism which was different than Maoist China. They were all different, sometimes radically different, but shared certain characteristics which made them "socialist". You are running away from performance of neoliberal economics, not the label.

"further exposing how completely untrue your lies are about economists being rigidly right wing"

I have a degree in economics, which I mentioned. I am taking classes this fall. Never once had a non-neoclassical teacher. Not once. I wish I had a Yves Smith or a Steve Keen teaching me. I had to work hard to find economists like them. I DID hear lots of hostility to unions, regulation, non-market based solutions to environmental issues. Lots of pretending things about perfectly competitive markets, perfect information, all information being encoded in prices, preferences of all market participants being identical. Was taught how great "free trade" was by teachers who obviously never read Ricardo, never read the assumptions Ricardo articulated in defense of free trade that are radically different than the world we live in today. Again, neoclassical economics HAS dominated the profession and we know the types of ideas and theories neoclassical professors regurgitate.

One last time, the heads of institutions like the ECB, IMF, the US Treasury, the World Bank, the BIS, they all were taught this type of economics. They all have roughly the same ideas, even after their policies have caused economic collapse. I see no evidence they've learned any lessons at all. They're willing to force countries to socialize the losses of their financial puppet masters in order to save their pet theories. Sorry, but its your type of mentality that makes me embarrassed to tell people close to me that I am an economist in training.

They, understandably, are skeptical. Many of my friends are politically astute and progressive, or whatever the term is. They ask, "aren't you economists ruining Europe?" "Didn't you economists deindustrialize the country, financialize the economy, cause wealth inequality to explode, private and governmental debt to balloon?". Yep, and I have to explain that there are many schools of thought in economics and…by that point they have heard enough. They respect me, but not what I am studying. Economics wasn't always such a joke. It used to have meaning, it was a powerful tool to make the world a better place. Neoclassical economists have ruined a wonderful field of study and they've caused lots of harm to people the world over. Go to bed!

Philip Pilkington:

"Nevertheless, economists are constantly disagreeing with each other, it is not a rigid cult, get over it."

Here's the deal, buddy. The accusation we make is this: a training in mainstream economics narrows a person's perspectives so much that they simply cannot see outside the counterfactual and empirically unjustifiable claims the whole discipline (barring a small few) make.

You're caught up in this too. That's why what you think of as dissent is, to the rest of us, just pointless nonsense.

You say Marxism. There are different strains but most believe in the labour theory of value. If I debunk the LTV the WHOLE OF MARXISM GOES WITH IT. Likewise for neoclassical economics. There may be different currents, but if I debunk, say, equilibrium analysis when applied to complex systems constantly subject to entropy THE WHOLE OF NEOCLASSICAL ANALYSIS GOES WITH IT.

You're already trapped, I'm afraid. You've swallowed the party line and you'll never see beyond it. When people raise critiques you'll react as you did above ("But dur-hur, then my ideas about inflation [which are derived from the same system of knowledge being criticised] don't work… therefore you must be wrong"). Do you see the trappings here? It's like a cult.

If I said to an evangelical that evolution is true, they'd respond by saying something like this ("But then my theory of creation doesn't work… therefore you must be wrong"). It's the same thing. Your 'education' has trapped you in a closed, self-referential system of knowledge. This is what the Harvard students protested. AND THEY ARE DAMN RIGHT.


"I don't want to get into a debate about some boring discussion on some technical crap"

I do. I am saying that the assumptions that get mentioned continuously throughout an undergraduate and graduate education have no basis in reality. If you can't prove they do then what exactly are you arguing?

"I'm absolutely certain that you look at certain models and reject the ones that do not fit into your ideology and come up with pseudo-scientific ad hoc justifications for doing so, I simply have no interest in that."

Except when you're the one doing it. You dismissed Dr. Keen's work out of hand. You haven't shown that you have even a passing knowledge of what he's written. I DO have an ideology, as do you. I can at least admit it. I read those I disagree with however and try to keep an open mind. Neoclassical economics is very ideologically rigid and you know it. We both also know how non-neoclassical economists are treated by economics schools, and it has nothing to do with the soundness of their ideas.

"when it can almost always be shown empirically that it's actually a result from massive levels of corruption and corporate capture, leading to policies certainly counter to what not only modern economics would suggest but even common sense."

All of the empirical evidence shows this, huh? The US, New Zealand, Australia, most countries in Europe, they've all moved to the right on economic policy in recent decades. They have privatized services & resources, lowered individual and corporate taxes, deregulated finance, liberalized trade. Left wing, right wing, centrist parties have implemented these policies. Higher, moderate and middle income countries. All are in horrible shape as a result, and it is because of "corruption". the ECB's massive policy failures? All the empirical evidence shows this? Same with with most countries in Latin America. Have many countries in the region seen growth increase, inequality decrease, access to basic services vastly improve, happiness with democracy increase (take a look at latinobarometro polls during and after neoliberal governments took power), because they tackled corruption? Is it just a coincidence that they have largely turned their backs on neoliberal economic policies?

"just because you knowledge of postgraduate economics does not mean you will be able to solve the worlds problems"

Never said that, wasn't my point. Economists, once again, almost without exception, have studied neoclassical economics. It has been their jobs to craft economic policy. Not to solve the world's problems, to craft economic policy. Their policies have been miserable failures, for decades. In the developed, developing and underdeveloped world. Their job has been to draw up and implement economic policy and they have done a horrible job. We can pretend that something other than neoclassical and neoliberal economics is to blame if you'd like.

[Oct 15, 2011] Federal Investigation Assumes Students, Like Home Buyers, Can Be Illegally 'Steered' by Peter Schmidt

October 12, 2011

Breaking new ground in its enforcement of civil-rights laws, the Education Department is investigating whether a Columbia University professor discriminated against a student by steering her away from a course on the basis of her Jewish background.

In the enforcement of federal fair-housing laws, "steering" is said to occur when real-estate agents-even if well-intentioned-consider potential home buyers' race or ethnicity in directing them toward some neighborhoods and away

[Oct 15, 2011] 180 Private Colleges Fail Education Dept.'s Latest Financial-Responsibility Test

See link to a spreadsheet at the bottom of the the page federalstudentaid.ed.go...
October 12, 2011 | The Chronicle of Higher Education

A total of 150 private nonprofit colleges failed the U.S. Department of Education's most recent financial-responsibility test, which covers the 2010 fiscal year, according to data released by the department on Wednesday. More than half of them scored so low that they will be required to post letters of credit to remain eligible to participate in the federal student-aid programs.

The number of failing nonprofit colleges is about the same as in 2009. Among for-profit colleges, 30 failed the test in 2010, seven fewer than in the previous year.

Financial-responsibility scores, which are derived from the audited financial statements that colleges submit annually to the department, are supposed to offer a broad measure of colleges' financial health. By placing restrictions on failing programs, the department seeks to protect students and taxpayers from colleges at risk of financial collapse.

But the test has come under growing scrutiny from accounting experts and higher-education associations, who say the scores are often inaccurate and misleading. They accuse the government of misapplying its own rules and are pressing the department to re-examine how it calculates the scores. The department has said it is willing to consider changes to the formula, but maintains that it applies its rules consistently.

The government has been producing financial-responsibility scores since 1998, but it did not make them public until two years ago, after The Chronicle requested them.

Selected comments


Very, very interesting.

A total of 150 PRIVATE NON-PROFIT colleges FAILED the U.S. Department of Education's most recent financial-responsibility test.

Among for-profit colleges, 30 failed the test in 2010, SEVEN FEWER than the PREVIOUS YEAR..

150 is more than 30. Please try to keep up with the conversation. (Edited by a moderator)



Please tell me that this post, noting that there were 150 private no-profits "in trouble" and 30 for-profits "in trouble," and using thing fact to suggest/imply something good about the for-profits, was put up as a logic test. Without the denominators--that is the number of non-profits (very larger) and the number of for-profits (fairly small) to compare these numerators to these numbers are meaningless or actively misleading. Very cleaver wahtsamattau! I congratulate you for showing us how one must use common sense and never just jump to false conclusions.



There are about 1200 for-profit institutions and 3300 non-profits, per CHE.

[Sep 22, 2011] For-Profit Colleges, Vulnerable G.I.'s

"This gives for-profit colleges an incentive to see service members as nothing more than dollar signs in uniform, and to use aggressive marketing to draw them in and take out private loans, which students often need because the federal grants are insufficient to cover the full cost of tuition and related expenses. "

MILITARY personnel and their families are finding themselves under siege from for-profit colleges. A number of these schools focus on members of the armed forces with aggressive and often misleading marketing, and then provide little academic, administrative or counseling support once the students are enrolled.

Vast sums are involved: between 2006 and 2010, the money received in military education benefits by just 20 for-profit companies soared to an estimated $521.2 million from $66.6 million.

The government provides two important educational benefits to service members: the Tuition Assistance program for service members on active duty, and the G.I. Bill, which is mostly used for education after military service.

Today's veterans are eager to earn post-secondary degrees - and to replicate the example of the generation that returned from World War II and fueled our prosperity. But their desire for learning is too often exploited by unscrupulous for-profit colleges.

The schools have a strong incentive to enroll service members and veterans, in large part because of the "90-10 rule" created by the 1998 amendments to the Higher Education Act. Put simply, the rule says that a for-profit college must obtain at least 10 percent of its revenue from a source other than Title IV education funds, the primary source of federal student aid. Funds from Tuition Assistance and the G.I. Bill are not defined as Title IV funds, so they count toward the 10 percent requirement, just like private sources of financing.

Therein lies a problem. For every service member or veteran (or spouse or child, in the case of the post-9/11 G.I. Bill) enrolled at a for-profit college and paying with military education funds, that college can enroll nine others who are using nothing but Title IV money.

This gives for-profit colleges an incentive to see service members as nothing more than dollar signs in uniform, and to use aggressive marketing to draw them in and take out private loans, which students often need because the federal grants are insufficient to cover the full cost of tuition and related expenses.

[Aug 05, 2011] School Daze, School Daze Good Old Golden Rule Days

PIMCO Investment Outlook

A mind is a precious thing to waste, so why are millions of America's students wasting theirs by going to college? All of us who have been there know an undergraduate education is primarily a four year vacation interrupted by periodic bouts of cramming or Google plagiarizing, but at least it used to serve a purpose. It weeded out underachievers and proved at a minimum that you could pass an SAT test. For those who made it to the good schools, it proved that your parents had enough money to either bribe administrators or hire SAT tutors to increase your score by 500 points. And a degree represented that the graduate could "party hearty" for long stretches of time and establish social networking skills that would prove invaluable later on at office cocktail parties or interactively via Facebook. College was great as long as the jobs were there.

Now, however, a growing number of skeptics wonder whether it's worth the time or the cost. Peter Thiel, an early investor in Facebook and head of Clarium Capital, a long-standing hedge fund, has actually established a foundation to give 20 $100,000 grants to teenagers who would drop out of school and become not just tech entrepreneurs but world-changing visionaries. College, in his and the minds of many others, is stultifying and outdated – overpriced and mismanaged – with very little value created despite the bump in earnings power that universities use as their raison d'être in our modern world of money.

Fact: College tuition has increased at a rate 6% higher than the general rate of inflation for the past 25 years, making it four times as expensive relative to other goods and services as it was in 1985. Subjective explanation: University administrators have a talent for increasing top line revenues via tuition, but lack the spine necessary to upgrade academic productivity. Professorial tenure and outdated curricula focusing on liberal arts instead of a more practical global agenda focusing on math and science are primary culprits.

Fact: The average college graduate now leaves school with $24,000 of debt and total student loans now exceed this nation's credit card debt at $1.0 trillion and counting (7% of our national debt). Subjective explanation: Universities are run for the benefit of the adult establishment, both politically and financially, not students. To radically change the system and to question the sanctity of a college education would be to jeopardize trillions of misdirected investment dollars and financial obligations.

Conclusion to ponder: American citizens and its universities have experienced an ivy-laden ivory tower for the past half century. Students, however, can no longer assume that a four year degree will be the golden ticket to a good job in a global economy that cares little for their social networking skills and more about what their labor is worth on the global marketplace.

Fareed Zakaria, as usual, has a well-thought-out solution. "We need," he writes, "a program as ambitious as the GI Bill," but one that focuses on retraining existing unemployed workers and redirecting our future students. Instead of liberal arts, he suggests focusing on technical education, technical institutes and polytechnics as well as apprenticeship programs. Our penchant for focusing on high tech value-added jobs should be modified and redirected, he claims, to mimic the German path, which allows people with good technical skills but limited college education to earn a decent living.

One thing college does do is to keep 25 million students off the unemployment rolls, much like it did for me when I went on my own four year vacation. The world was a different oyster in 1966, however, and it behooves America to recognize the reversal and the necessity for significant changes if it is to compete in the global marketplace of the 21st century.

[Jul 06, 2011] Plan to Fix the Fractured U.S. Job Market by Bill Gross

Hat tip to Mish for summary

...Gross seems to have a handle on some aspects the problem. Here are two key points from the article on which I agree with Gross.

If we are to compete globally while maintaining a higher wage base, we must train for "middle" in addition to "high" tech. Philosophy, sociology and liberal arts agendas will no longer suffice. Skill-based education is a must, as is science and math.

The private sector is the source of long-term job creation but in the short term, no rational observer can believe that global or even small businesses will invest here when the labor over there is so much cheaper. That is why trillions of dollars of corporate cash rest impotently on balance sheets awaiting global – non-U.S. – investment opportunities. Our labor force is too expensive and poorly educated for today's marketplace.

Gross also cites several facts about the cost of education in the US that also hit the mark.

Conclusion to ponder: American citizens and its universities have experienced an ivy-laden ivory tower for the past half century. Students, however, can no longer assume that a four year degree will be the golden ticket to a good job in a global economy that cares little for their social networking skills and more about what their labor is worth on the global marketplace.

5-Point Summary of the Problem

Bill Gross' Proposed Solution

"We need a program as ambitious as the GI Bill," but one that focuses on retraining existing unemployed workers and redirecting our future students.

Government must step up to the plate, as it should have in early 2009. An infrastructure bank to fund badly needed reconstruction projects is a commonly accepted idea, despite the limitations of the original "shovel-ready" stimulus program in 2009. Disparate experts such as GE's Jeff Immelt, Fareed Zakaria, Jeffrey Sachs and Paul Krugman believe an infrastructure bank to be an excellent use of deficit funds: a true investment in our future.

In the end, I hearken back to revered economist Hyman Minsky – a modern-day economic godfather who predicted the subprime crisis. "Big Government," he wrote, should become the "employer of last resort" in a crisis, offering a job to anyone who wants one – for health care, street cleaning, or slum renovation. FDR had a program for it – the CCC, Civilian Conservation Corps, and Barack Obama can do the same. Economist David Rosenberg of Gluskin Sheff sums up my feelings rather well. "I'd have a shovel in the hands of the long-term unemployed from 8am to noon, and from 1pm to 5pm I'd have them studying algebra, physics, and geometry."

Those who advocate that job creation rests on corporate tax reform (lower taxes) or a return to deregulation of the private economy always fail to address dominant structural headwinds which cannot be dismissed: 1) Labor is much more attractively priced over there than here, and 2) U.S. employment based on asset price appreciation/finance as opposed to manufacturing can no longer be sustained. The "golden" days are over, and it's time our school and jobs "daze" comes to an end to be replaced by programs that do more than mimic failed establishment policies favoring Wall as opposed to Main Street.


I also agree with Mr. Gross. The appropriate role for government investment is for purposes that the private sector cannot or will not make investments. Infrastructure and clean energy are two excellent examples. However, I'm not so sure I agree with regard to the value of a college education. I've seen some interesting economic analyses attributing much of the post-WW II economic expansion to the GI Bill.

Phil :

Government was not alone in causing current problems. Many of us were part of the process by omission or co-mission. Certainly the financial services sector had something to do with our current state of affairs.

However, stubborn leaders who fail to seek accommodation with conflicting solutions continue to be obstacles towards progress. How as it that the 2010 election was about jobs and now it seemed to have been about reducing government?


College is a great discussion, but I was shocked to find out today that 19% of adults in Texas are illiterate! The US education system is failing the masses. While we still bring the top Nobel prize winning scientists on the market your grocery bagger is unable to read your receipt! Wake up everyone. Read more at the KERA website June 5 2011 article about 50 year anniversary of LIFT a DFW literacy organization. I was shocked.

[Jun 25, 2011] What did that degree do to you?

Disciplined Minds

The Ph.D. Trap Revisited by Cude, Wilfred, Dundurn, 2001, ISBN 1-55-002-345-4, price $22.99, £11.99.

Disciplined Minds: A Critical Look at Salaried Professionals and the Soul-Battering System that Shapes their Lives by Schmidt, Jeff, Rowman & Littlefield, 2000, ISBN 0-8476-9364-3, price $26.95, £20.95.

Reviewed by Brian Martin

Brian Martin is an associate professor in Science, Technology and Society at the University of Wollongong, in Australia. He has a PhD in theoretical physics from the University of Sydney.

Credentials are at the core of higher education. A bachelor's degree or, better yet, a doctorate are valuable to their possessors, while for universities it is crucial to be able to award them. Indeed, without a government-protected monopoly over the right to award degrees, universities would virtually collapse. If any small business could grant Harvard or Oxford degrees, what would be the point of having the real thing?

This question highlights the symbolic importance of degrees. If the main value of studying at Harvard or Oxford were what was learned, then having this learning certified with a degree would be superfluous. In reality, degrees often become more important than the learning they are supposed to represent. Why would a student cheat if the only purpose of enrolment was learning? Take away the degrees and any other certification of attendance or performance and possibly nine out of ten students would quit immediately.

Having an appropriate degree is essential for obtaining certain types of jobs, most obviously in law and medicine but also in many other fields. Prospective academics are usually expected to have PhDs, and a professor without even an undergraduate degree is a rare specimen indeed, irrespective of how much learning a person might have acquired independently. Universities are at least consistent, dispensing "meal tickets" for other occupations and expecting their own teachers to have them as well.

Marxists have analysed the role of schooling in the "reproduction of the class structure," namely providing a way to maintain social stratification that seems legitimate to everyone concerned. As near-universal education through high school has become the expectation in many countries, the task of legitimating economic inequality has increasingly fallen to universities, with a first degree being expected for ever more occupations. It is not hard to develop arguments against this trend, for example that most learning in higher education is not relevant to the jobs for which it is a prerequisite, that the quest for credentials undermines the intrinsic motivation to learn, or that remaining in educational institutions for so many years produces burnt out conformist students whose sparks of independence and creativity were extinguished long ago.

Although academics are noted for their willingness to critically analyse every sphere of endeavour, scrutiny of the credential system is unusual, since it strikes at the heart of academics' status and privilege. One of the most powerful critiques is Randall Collins' The Credential Society (1979). Collins argued that little is learned in schools, with most learning occurring on the job. Indeed, grades are not good predictors of subsequent success in any occupation -- except academia. Collins argued that education has not increased social mobility, since cultural goods, namely what it takes to succeed in school, are passed from parents to children more readily than economic and political resources. Educational stratification links together the realms of material production and cultural domination, creating a "sinecure society."

A few years earlier, Ronald Dore (1976) described the explosion of formal education in Third World countries, mainly due to the role of credentials in regulating entry into modern sector jobs. The enormous expansion of the education system is a response to parent and student pressures, but is highly wasteful when there are insufficient relevant jobs for graduates. In late-developing countries, Dore found wide use of educational certificates for occupational selection, massive inflation in qualifications and emphasis on examinations at the expense of genuine learning. With higher education today treated like a business with a large "export market" (Third World students attending First World universities), Dore's critique seems just as relevant as it was a quarter of a century ago.

Whereas deschoolers such as Ivan Illich (1971) received considerable public attention in the 1970s, critics such as Collins and Dore have been largely ignored. While there has long been soul-searching within academia, for example over social irrelevance, declining standards, commercialism and managerialism, it seldom focusses on credentials. Therefore it is worthwhile looking at two recent books that zero in on this issue.

Wilfred Cude is a Canadian literary scholar who, as a result of his own unpleasant experiences while trying to obtain a PhD, turned his critical gaze on the degree. In 1987 he self-published The Ph.D. Trap and, after updating and adding new material, found a commercial publisher for The Ph.D. Trap Revisited, twice the size of the original (Cude, 2001). What exactly is the "trap" to which Cude refers? For prospective PhD students, it is an incredibly long journey with no guarantee of arrival. For US science PhD students in 1995, the average elapsed time from beginning (after the previous degree) to end was 8.4 years, while for humanities the average was an astounding 12.0 years. Years enrolled and elapsed time for completed doctorates have both been steadily increasing in the past several decades. Cude wants to warn potential students that embarking on a PhD course may not be the best way to get ahead, especially as many drop out along the way. Doctoral study is hazardous intellectually as well, encouraging a narrow conformity through the dissertation topic as well as acquiescence to supervisory demands and whims. This is useful training in conformity. Why then should the PhD be the entry requirement for undertaking innovative research and for teaching undergraduates?

The PhD, for Cude, is also a trap for society as a whole, given that enormous social resources are devoted to training PhD students, with dubious returns. He argues for validation of alternative career paths, such as second master's degrees and teaching internships.

The Ph.D. Trap Revisited ranges much more widely than its title would suggest. Cude examines the history of universities, early criticisms of the doctorate and methodological conflicts within disciplines. He tells the sad stories of research students who tried to challenge the way they were treated and offers a few success stories of scholars whose work was recognised and who obtained good academic jobs despite their lack of a doctorate.

Cude's writing is engaging throughout, and even his harshest comments are phrased elegantly. He gives special attention to the humanities, where he is especially scathing. Acknowledging that science PhD graduates from prestigious universities may have learned something and made a contribution to knowledge, he says "A person with the Ph.D. in most areas of the humanities or social sciences, however, especially when acquired from any of the less prestigious universities of the United States, Great Britain, or Canada, has probably demonstrated only tact, tenacity, and a high tolerance for exotic cerebral sadomasochism. Such a person will probably not make any contribution to the advancement of knowledge, and might well teach in a manner deterring those who could." (p. 309). As Cude says, "Very few tenured [academics] would trouble themselves over a book like this." (p. 302). Who indeed would like to contemplate the possibility that the years that they had toiled to obtain a PhD had been a wasteful and limiting process?

A different critique of credentialing is provided by Jeff Schmidt in Disciplined Minds, a powerful dissection of professionals, with the chief charge being that they are selected and moulded to have system-reinforcing attitudes, thereby directing their creative energies to system-specified tasks, where "the system" is the current set of power relationships in society. Schmidt's first task is to show that professionals such as doctors, lawyers and scientists are timid personally and politically. More specifically, while they may take enlightened stands on distant social issues, they are uncritical on the job, for example being against democratisation. A key concept in Disciplined Minds is ideological discipline. Schmidt argues that the training of professionals serves above all to make them able and willing to operate within their employer's value system. In short, professional training is a form of ideological indoctrination.

Schmidt, a physicist, gives many examples from scientific research. He describes how scientists' curiosity is oriented in certain directions by funding and job opportunities, for example research grants from the military, yet researchers prefer not to acknowledge their service to external goals. Schmidt says that researchers have "assignable curiosity," namely a willingness to orient their intellectual energies in whatever direction funding might dictate. That makes them ideal intellectual tools for those groups with power and money.

How do professionals become this way? Nearly half of Disciplined Minds is devoted to selection of professionals. When students enter professional training, many of them are optimistic and idealistic. On leaving they are "pressured and troubled" (p. 120), willing to join occupational hierarchies. Professional training has transformed the students' attitudes -- and this transformation, Schmidt argues, is training's key role. He gives special attention to examinations, with a case study of the PhD qualifying examination. (The equivalent in the British system would be the honours year.) The examination, Schmidt claims, is a social framework endorsing the status quo. He shows this by looking at the exam as a whole, at the collection of problems and at particular questions.

For example, often it's necessary to study earlier exam papers in order to learn how to answer "trick" questions. By accepting this, students submerge their natural curiosity in the field and learn to direct their attention to problems set by teachers, however irrelevant or contrived. In this way, the exam system favours those least critical of the status quo.

While those familiar with quantum mechanics will enjoy his analysis of a trick question on a qualifying exam, Disciplined Minds is not at all a technical book, with examples from various professional fields and long extracts from letters he has received from reflective students.

In professional training, there are some who drop out along the way. Indeed, since professionals have high status and incomes, there are many more who aspire to join the ranks than there are positions. If all those who failed to make it became rebellious, the system of professional privilege would be unstable. Schmidt accordingly spends time describing how losers are "cooled out," by being led to believe that failure is their own responsibility. In this, an ideal mechanism is an exam that is biased -- especially in fostering conformity -- but appears nonpartisan.

Even more provocative than his analysis of professional selection is Schmidt's advice on resistance. He draws on a US military antibrainwashing manual to give hints on resisting professional indoctrination. He concludes the book with a list of 33 suggestions for radical professionals, ranging from encouraging colleagues to connect with radical organisations to refusing self-identification as a professional.

For those seeking a radical critique of professions, Disciplined Minds should be added to a select list including works by Collins (1979) and Illich et al. (1977). In comparison with other studies, especially work in the sociology of professions, Schmidt's book is far more hands-on. He is a genuine radical insider telling what it's like and what you can do about it.

In order to better understand the strengths and weaknesses of both The Ph.D. Trap Revisited and Disciplined Minds, it is useful to compare the books on a number of fronts. What they have in common is an acute awareness of the limitations of professional training, especially the training of academics. They each draw attention to the way that research degrees lead to conformism rather than creativity. They each point to the conservativism of successful academics, at least within the academic system. They each deplore the massive waste of talent as well as the destruction of idealism in the credentialing process.

However, the purposes of their analyses are rather different. Cude's purpose is to show the limitations of the PhD as a training mechanism, whereas Schmidt's is the broader task of revealing how professionals become so timid politically and intellectually. Cude's goal is reform of the PhD system, whereas Schmidt seeks to encourage radical professionals to be part of a wider process of egalitarian social change. Given these divergent purposes, the commonalities in their criticisms of the credentialing process are striking.

Cude, a humanities scholar, writes in elegant essay style, drawing on classic works in a discursive fashion in order to reveal the intellectual continuities in critical perspectives on the PhD. Cude builds on earlier critiques in order not to appear too radical himself. Schmidt, a scientist, essentially has designed his own intellectual framework from first principles, rather analogously to the way a theoretical physicist would start with a set of equations (such as Maxwell's equations for electromagnetism) and derive consequences. This makes Schmidt's work much more original, but by the same token he does not situate it within the large literature on the sociology of education and the sociology of professions (e.g., Collins, 1979; Larson, 1979), as well as works on the "new class" or professional-managerial class (e.g., Ehrenreich and Ehrenreich 1979; Gouldner, 1979). For some readers that will be a weakness in Schmidt's book, but perhaps his independence of earlier scholarship -- given that he has read into these literatures but decided that they do not add to his perspective -- are part of what it takes to produce such an original analysis.

Both authors focus on the North American experience, using frameworks and examples close to their own experience. Credentials and professional training are different elsewhere, to a greater or lesser degree. Readers will need to use their judgement about how much of these critiques apply in other systems.

Both Cude and Schmidt are fascinated by dramatic expressions of frustration by disgruntled students and academics, giving examples of research students who either committed suicide or killed their supervisors, or both. Both authors look at the credentialing process from the point of the view of the student and both are attuned to the enormous waste and frustration involved, perhaps leading them to expect and notice those few cases where frustration manifested itself as violent rage. Their books, in their own ways, show why such rage is predictable. Perhaps the surprising thing is that there is relatively little violence!

Whereas Cude's personal experiences led him to write his book, with Schmidt the sequence was reversed. Employed as an editor at Physics Today for 19 years, he was dismissed after his employer saw Disciplined Minds. That's one provocative book!

It is hard to read these books without asking, "What did doing my degrees do to me?" and becoming either defensive or self-satisfied. Both Cude and Schmidt would like readers to ask the question and be self-reflective but then to go out and do something about the problems. The credential system is enormously powerful and is not going to change quickly. But for those who want to be more aware and make a personal contribution to change, these books are good places to start.


Collins, Randall (1979) The Credential Society: An Historical Sociology of Education and Stratification, Academic Press.

Dore, Ronald (1976) The Diploma Disease: Education, Qualification and Development, Allen and Unwin.

Ehrenreich, Barbara and Ehrenreich, John (1979) "The professional-managerial class," pp. 5-45 in Walker, Pat (ed.), Between Labour and Capital, Harvester.

Gouldner, Alvin W (1979) The Future of Intellectuals and the Rise of the New Class, Macmillan.

Illich, Ivan (1971) Deschooling Society, Calder and Boyars.

Illich, Ivan et al. (1977) Disabling Professions, Marion Boyars

Larson, Magali Sarfatti (1979) The Rise of Professionalism: A Sociological Analysis, University of California Press.

[Jun 09, 2011] Romer versus Geithner

Lower standard of living is what probably should be expected outcome. And I think it is just a continuation of crisis of 1986-1991 which was postponed by the dissolution of the USSR and colonization of this economic space which gave a lift to the USA economy for a decade starting from 1991. With price of gas hovering around $4 per gallon crisis of suburbia is more pronounced. That further depresses prices of houses in this area. Also not a single problem with economics was solved after the financial crisis of 2008.
Economist's View


Ideology clouds focus on both sides of the aisle. Also the notion that generalized solutions in economics fit anything well. The economy is a large set of very specific activities that interact. Some economic activity (e.g., the best of schools) returns a lot more value and economic multiplier that others (hedge funds).

Urban renewal fits both the supply of unemployed labor and the long term needs of the US. The returns from restoring our cities include a broad spectrum of benefits. It should be a no-brainer, but there you go.

That is the really big problem above all other problems (i.e, no brains). The US education problems can be fixed with very little extra capital and probably a reduction in long term costs. The conversation on education needs to be pushed out into center stage. There is a staggering concensus among educational researchers and other critics of our public education (e.g., John Taylor Ghatto) that is lost completely by their infighting over the differences, which are more aesthetic (matters of personnel taste - style) than any real substance. This has been the case for any serious evaluation of our public education shortfalls since the sixties, but nothing is ever changed (for the good at least). The short of it is that relevance matters. Culture dominates communications. One size does not fit all. Adapt to that and the rest is easy.


Link to Wikipedia page on Wendy Kopps education book:

Wendy Kopp has the best take on the scalable system approach to educational reform, which I think of a retro-forming the classical independent local little red school house up to modern times. She has lots of critics and little competition for better ideas. I would love to see her and Ghatto discussing these issues together. They could learn from each other, something that people with different ideas do too little of.


"The wealthy special interests would rather have cheap domestic labor than rapid domestic economic growth."

Good help is so hard to find these days.


I don't think so. When Republicans are in office, raiding the treasury and handing out goodies to their wealthy special interests, deficits don't matter.

This is part of the ongoing class warfare. The wealthy use their power to manipulate the conversation so that they get their way. They don't expect handouts from Obama, so they push for tax cuts accompanied by cuts to the social welfare programs. They push for higher taxes on the poor replaced by tax cuts for themselves.

Obama economic policy is no different than GHW Bush or Reagan. If the GOP had not moved to the right, Obama would be right in line with GOP economic policy of the 80s and out of sync with economic policy of Progressive Democrats. We knew that Obama was the most economically conservative of the Democratic Primary candidates. This is why some of the Big Money Special interests were willing to support Obama or at least not go all out to undermine him.


"Obama economic policy is no different than GHW Bush or Reagan."

Or Clinton. There has always been a fiscally conservative wing of the Democratic Party.


Clinton at least had "Make work Pay" and it was more than a slogan. Poverty rates decreased under Clinton because unemployment dropped to 4% and the subsidies for the working poor (EITC, Child care, health care, min wage) were boosted under Clinton.

Under Bush increases in min wage, etc languished.


The post-industrial, automobile traveling, economy of the early 21st century is far different sociologically than the American industrial and agricultural economoy of the early 1930s. Then 30% of the labor force was still agricultural and lived in relatively tightly knit rural communities. Factory workers lived near where they worked, and when unemployed, were all unemployed together. Both groups could organize and provoke demonstrations and occasional mobs that unnerved the ruling elite and made them afraid of "revolution." Further, the Soviet Union was still more of a dream of a utopian future, not a nightmare reality, against whom the cruel capitalistic system could be compared and found wanting. Under these conditions, individuals who may have shared the Koch brothers, Mark Hanna's, and Karl Rove's ideology of business feudalism were unnerved, at least for a moment, and not able to develop a consistent opposition until well after FDR had gotten much of the New Deal underway. And even for FDR, reform pretty much came to an end in the 1937-38.

About Geithner and the Administration's disinterest in jobs and a second stimulus in the summer and Fall of 2009, I hold Obama respsonsible. The Kossacks work for the Tzar, and Geithner was chosen by President, whose own neo-liberal views were never hidden under a basket (see 2006 speech at the opening of Brookings' Hamilton Project). The President may be lucky and he may win election if the economy sluggishly keeps growing and if the Republicans primary and convention make the nominee repulsive to the majority of Americans, but as Ryan Avent writes, if he does not, he will have nothing but himself to blame.

Of course if a Movement Conservative President takes over 2013, with a Movement Conservative majority in the Senate and a Movement Conservative House, we can expect that group will not be held back by filibusters or all the procedural blocks employed for the last 3 years to strike against Medicare, Social Security, the Clean Air and Water acts, and all the progressive legisltion passeed from 1900 to 2010. And I am sure that national legislation will be passed to disenfrachise large parts of the electorate to ensure permanent Conservative rule.


The only hope Obama has for re-election is GOP over reach. People will have to vote against the GOP candidate and not for Obama. There is nothing about this economy that is a reason for people to vote for Obama. Obama economic policy will not improve our economy enough.

I thought the same about Bush in 2004 but he barely won re-election. So maybe I am wrong again?


But Bush cheated in Ohio, but in a fair election, he still wouldn't have lost by much.

Thing is, if there's a small difference in votes in 2012 like 2004, the republican biased voting machine companies will steal it for their boy and that will give their plutocrat benefactors the green light to pull their grand finale heist of the entitlements and end the New Deal once and for all.

[May 18, 2011] Dealing With Jerks on Campus By Jason B. Jones

May 6, 2011 | The Chronicle of Higher Education

...I happened to see the updated paperback edition of Robert L. Sutton's The No Asshole Rule: Building a Civilized Workplace and Surviving One That Isn't (Hachette, 2007, 2010). This appealed to me for all manner of reasons that I won't get into here–and it turns out to have been an impulse buy that's worth every penny. (No need to take my word for it: The Tenured Radical, who is of course wiser than myself, reached the same conclusion when the book first came out.)

What's different about The No Asshole Rule in part is how many of his examples are drawn from academe. It turns out that colleges and universities–like many places of employment–are cesspools of abusive, disrespectful behavior. Whether it's deans and faculty; faculty and staff; chairs and faculty; students and faculty (or vice versa), there are countless opportunities for bad behavior on campus, and all too many people avail themselves of them. And this has a real cost: Sutton cites research showing that "Assholes have devastating consequences because nasty interactions have a far bigger impact on our moods than positive interactions–five times the punch, according to recent research" (30). This might help explain why that one contentious discussion in your department leaves you nursing whisky all night afterwards.

(It also speaks in part to Dean Dad's observation that there seem to be fewer applications for administrative positions than one might expect.)

Sutton has developed an asshole detection quiz, which Guy Kawasaki has thoughtfully implemented online. The quiz helps explain the special relationship between academics and asshattery:

I wonder how many of these you've observed in any assemblage of faculty?

Even though ProfHacker readers are–it almost goes without saying–a remarkably civil and level-headed bunch, Sutton suggests that you're still not safe, because "a swarm of assholes is like a 'civility vacuum,' sucking the warmth and kindness out of everyone who enters and replacing it with coldness and contempt." His solution is utterly practical: "Listen to author Nick Hornby when he gives 'one of the only pieces of advice that I have to offer younger generations: you're allowed to walk out.' Hornby was talking about boring concerts and movies, but also suggests it is good advice for any occasion–and to me, that includes when you feel surrounded by a bunch of assholes." This is true more often than one thinks about meetings.

In addition to limiting your exposure to academic bullies, Sutton suggests that it's important to try to stay positive and to focus on what you are able to control. The feelings of powerlessness and victimization that can result from facing big problems can, he suggests, be overcome by "looking for small battles that you can win." It's tempting to simply complain about the bad behavior of others, but complaining without acting turns out to make you feel even worse over the long haul. (On this point, see, as always, Matthew Arnold: "What then are the situations, from the representation of which, though accurate, no poetical enjoyment can be derived? They are those in which the suffering finds no vent in action; in which a continuous state of mental distress is prolonged, unrelieved by incident, hope, or resistance; in which there is everything to be endured, nothing to be done.")

The No Asshole Rule is a quick read with numerous concrete suggestions for improving your state of mind. A secondary benefit, as he relates in the new epilogue to the book, is that it can serve as a talisman warding off jerks. Several people reported that the mere presence of The No Asshole Rule on their desks caused local jerks to behave more reasonably or calmly. Possibly worth a try!

Do you have preferred strategies for dealing with campus jerks? Or, how does your campus remain blissfully jerk-free? How do you you short-circuit your own tendencies towards acting out? Let us know in comments!

[May 15, 2011] NIA Releases The "College Conspiracy" Video, Or Why The College Bubble Is Next To Pop by Tyler Durden

Ignore stupid gold promotion in the video. Actually "John Taylor Gatto's The Underground History of American Education will get you deeper into why our "Schooling" system is a wretched mess. " See also Is College Worth It - Pew Research Center
05/15/2011 |

NIA's long anticipated "College Conpsiracy", or "why the college bubble is next to burst" video by the NIA is finally out.

From the Press Release:

We just released 'College Conspiracy' a day early so that NIA members can see the movie before we issue our press release tomorrow morning to not just the nationwide education news wire, but to thousands of college administrators and education journalists through two special education microlists.

Please watch 'College Conspiracy' immediately and spread the word to every single one of your friends, family members, and co-workers:

It is up to every single one of you to help make this movie a success by spreading the word to as many people as possible. Considering how our latest video 'The Day the Dollar Died' has now reached close to 2 million views in 6 months, we are very optimistic that we can get 'College Conspiracy' to be seen by an even larger audience.

We need to get millions of people to watch 'College Conspiracy' if we are going to expose what we believe is the largest scam in U.S. history! NIA is the most pro-education organization in the world, but the college bubble we have today is destroying the lives of millions of Americans who deserve to be receiving a much higher quality of education for only a fraction of the cost.

As you watch this documentary, we hope that you notice and appreciate the quality of work that we put into it. We hired one of the best Hollywood animators and a famous Hollywood narrator to help make this movie our most impressive and professional documentary of all time. It took us three months just to write the script, which used many of the ideas that were submitted to us by NIA members.

We would like to give our most sincere thank you to the thousands of NIA members who emailed us suggestions of topics to cover and expert guests to interview!

'College Conspiracy' is going to open up the minds of millions of students who have been brainwashed their entire lives by the propaganda in the mainstream media. We are a nation of sheep, where nobody thinks for themselves and everybody follows the same system. The system we have today turns everybody into debt slaves, while the Federal Reserve allows bankers on Wall Street to steal the wealth of middle-class Americans through inflation.

Now is the time for all young Americans to think outside of the box and become self-educated. Don't rely on others to provide jobs for you. Go out there and make a job yourself!

Watch 'College Conspiracy' right away at:

NIA's entire staff worked day and night for the past six months producing this movie. Now is your turn to help make a difference by spreading the word!


"The message is on target, but the NIA is just some 2-bit stock hustling boiler room. Lebed is a convicted stock con-artist. This is just a thinly veiled infomercial to get you to subscribe to their "gold/silver newsletter" so they can sell you their investing products, and sell your email address. Don't be fooled. These 2-bit hustlers are just after your money, just like anyone else.? Clearly, they are long metals, and are talking? their book. Please thumbs up this before it scrolls off."

- I wonder if this Youtube comment has any truth to it.


I agree, even though I positively view NIA.

There were some good things about college in the video. Many colleges are degree mills that spent huge $$$ on capital improvement during the period Gen Y was pushing universities to capacity. That, I believe has passed and many of these universities are going to find themselves in trouble.

Certainly the point made about text books is true. they've always been ridiculously expensive but profs seem to have a deal w/ bookstores to change them each year so that students cannot use books even a year old.

I can't quite get to the point where I believe a college degree isn't worth it though. Students should usually go to a state school and "pay as you go" as much as possible. I worked my way through most of my school and had only $1k debt when I graduated. Of course, tuition has gone up quite a bit since then.

Oh regional Indian:

Nice. College, education, University Branding.... these are the new must haves. As someone with many years of education, I have to say it was fun, but I did not learn much.

And the loan followed me back here to india. how much I paid Citi!!! Aaarrrgh!



Read up about the NIA please and the NIA's founders. They suck those with similar ideas and huge followings into following them or collaborating with them. They use that audience to suck more in. Just read. Google NIA scam and you won't be left with a shortage of reading material.

dark pools of soros:

they avoided any counter points, and kept forcing the gold/silver mantra. So it comes off contrived. It comes off like the kid yelling at his mirror instead of going up to the bully.

I agree with many points, but not everyone can make a lab at home for courses that need those. So the solutions presented are half-baked. Also, as we all know here, hold silver and gold won't make you rich, just preserve the wealth you have. If you are living paycheck to paycheck you will have to spend your PMs almost as fast as you are buying them.

By the end of the video, the only answer that comes off is to live like the Mexicans do in the USA. Get any job and live as cheaply as possible.

No word was mentioned about all the other countries that are pumping out kids with degrees so even if you say that if everyone in America has a degree it doesn't give you an advantage, well you get tossed aside if you don't so it is a disadvantage for not having one.

EXCEPT if you just start your own business and make your own jobs.. which is another point it makes but then moves on. Should of stressed more on how kids can do those things. Nothing was mentioned on ways kids CAN do these things. So just lip service.


Frontline produced a 1hr documentary about this phenomenon a while ago.

Last year, Steve Eisman presented the case for shorting for-profit colleges.



You misunderstand.

The education bubble was the lowering of standards and proliferation of " certifications" so that everyone could get a degree in something. The huge amount of money spent on coursework with extremely low standards and little relevance is the bubble, not knowledge itself.

Houses are good things, but lots of shoddily built houses at high prices where the amount of house was not worth the price eas the housing bubble.

Lots of shoddily educated people where the education was never worth the cost is the education bubble.


This system does not produce educated people it produces obedient people. And that's the goal.

Starting at an early age, we program children to go along and not rock the boat by thinking too not questioning too much.

College and the debt that it creates completes this cycle by placing graduates in a position of slavery (debt) to start their "lives".

It's a trap. There is nothing that you can learn in a school that you cannot learn on your own if you have the drive to do so. The only thing school and a diploma confirm is your willingness to do as you are told. It only confirms you are a good slave, not necessarily a smart person.


I have no issues with "higher education". Just with what they teach. I've been looking for a mining engineer reporting to me for over a year. Starting pay $C95K ($US99K). We're the guys that actually mine PM's among other things. No luck. The irony. The Colorado School of Mines graduates about 5 a year and about 2,000 others destined to be a problem to society. If I get less then 3 headhunter calls a week, it's a slow week. Mind you CSI Miami and Law and Order is sexier than Coal.

Cyan Lite:

Just watched the entire "movie". Thought it overall good about making a case for college education being a bubble. No doubt about that, but the shameless plugs for investing in physical gold/silver showed me that they were also trying their hand at brainwashing folks. No doubt that precious metals have a place in a portfolio, but I wouldn't dare suggest someone spend their ENTIRE savings portfoliio ($30,000 as suggested in the movie) on physical silver instead of going to college.

College does have a place in America, the only problem is that not everybody is suited for college. The vast majority of students are majoring in areas that will never be profitable. Dance, Theater, Art History majors will almost certainly not be able to pay back their loans. However, there are some successful people in fields like engineering, computer science, doctors that will go on to make several hundreds of thousands of dollars per year that they couldn't do their jobs without a college degree. I majored in Computer Science where there has consistently been a shortgage of good software engineers over the past 7 years since I graduated. However, I just got back from the local Ruby Tuesday where my waiter had a degree in sports management.

Instead of fully investing in silver, I would suggest going to college instead and just major in a worthwhile field. You'll make more money over your lifetime being a mechanical engineer than investing in silver as the movie fails to mention. And $35k average starting salary for a person without a degree? I've love to see where these folks are being employed.


You failed to mention the movie's statement that most successful people, with hindsight, express they wouldn't have needed their college degree to have success. Does that apply for you too?

Someone I know well got his MS in electrical engineering. Never used it and instead earns a well-paid living as a Senior IT Consultant for over a decade now; mostly self-taught.

Cyan Lite:

Without my college degree, I wouldn't be where I'm at today. I'm in a computing field that was opened up by my college degree when I got my first entry-level job.

I would venture to say the vast majority of folks making $100k or more a year has a college degree. I know there are accounts of Michael Dell's and Bill Gates who went on to be billionaires, but not everybody is truly extraordinary like that.

On the other hand, my plumber that came by last week charged me $75 an hour. I have a master's degree as well and make over $100k a year, and live in the same neighborhood as several other a/c technicians all of whom went to vocational school for two years.


John Taylor Gatto's The Underground History of American Education will get you deeper into why our "Schooling" system is a wretched mess.

There's a good documentary "2 Million Minutes" that is also worth your time.

Gatto's book changed my view on school, and it changed the way I teach my children and my students.


As a former CFO of an online institution, I can say a lot of the info in this documentary is pretty spot on. However, it's unfortunate to hear NIA's plug for online education. Most of these institutions are nothing more than churn 'em and burn 'em organizations geared towards collecting as much taxpayer's money as possible…via Title IV and military funding. I guess that's why NIA wouldn't consider me as an expect witness for this documentary.

The institution I worked for (and believe me it's not the only) was nothing more than an ingenious front for a billionaire convicted felon (Hello Mr. Milken!). It's amazing the lengths to which these players will go to get what they want. I would like to extend my thanks to him personally however as my education through uncovering the truth was priceless.

Nothing short of a real black market MBA. My experiences at this organization would be book worthy. I could call it "Schooled: An Education in Online Higher Ed". It'd have all the juicy details. Fraudulent marketing practices, issuance of illegitimate degrees, wire fraud, bank fraud, self-dealing, conflicts of interest out the ass, numerous IRS-defined excess benefits transactions, etc. etc. I believe the acronym RICO also comes to mind.

You may be surprised, OR NOT, that career politicians, former heads of Sallie Mae, Dept of Ed., national and regional accrediting bodies, etc. will line up and jump hand over fist to serve on these fraudulent universities Board of Directors. All for the right stipend or kickback of course. Great D&O coverage required please. It's all nothing but a big fucking circle jerk. And everyone is getting off....with the student and subsequently taxpayer's money. Never mind though. Nothing to see hear so please move along.

[May 15, 2011] Raghuram Rajan on Delineating the Role of Government

Pay is not determined by the market, as Rajan suggests, but by other factors.
May 12, 2011 naked capitalism


I think Rajan gets more wrong than he gets right.

Rajan begins by arguing that growing inequality in the U.S. is due to the growing gap in educational attainment. But I wonder, is there any empirical evidence to support this? My own personal, anecdotal experience tells me that there is not. Pay is not determined by the market, as Rajan suggests, but by other factors. I think Reinhold Niebuhr, writing in Moral Man & Immoral Society, gets much closer to the truth Rajan:

[I]t is impossible to justify the degree of inequality which complex societies inevitably create by the increased centralization of power which develops with more elaborate civlisations. The literature of all ages is filled with rational and moral justifications of these inequalities, but most of them are specious. If superior abilities and services to society deserve special rewards it may be regarded as axiomatic that the rewards are always higher than the services warrant. No impartial society determines the rewards. The men of power who control society grant these perquisites to themselves. Whenever special ability is not associated with power, as in the case of the modern professional man, his excess of income over the average is ridiculously low in comparison with that of the economic overlords, who are the real centres of power in an industrial society. Most rational and social justifications of unequal privilege are clearly afterthoughts. The facts are created by the disproportion of power which exists in a given social system. The justifications are usually dictated by the desire of men of power to hide the nakedness of their greed, and by the inclination of society itself to veil the brutal facts of human life from itself.

Then Rajan goes on to argue that the economics profession is not corrupt. But the economics profession is corrupt by definition. As Niebuhr goes on to explain, "Since inequalities of privilege are greater than could possibly be defended rationally, the intelligence of privileged groups is usually applied to the task of inventing specious proofs for the theory that universal values spring from, and that general interests are served by, the special privileges which they hold." From Adam Smith right on down to the present, the role of economists is to craft the "rational and social justifications of unequal privilege" that Niebuhr speaks of. They are the modern-day Platos, the modern-day transmogrification of the late-medieval priesthood that colluded with European royalty and gained prominence by trading in superstition, ignorance and arrogance.

In his book Evolution for Everyone David Sloan Wilson has a section entitled "Watch out for the invisible hand." "Adam Smith famously claimed that individuals who care only about their own narrow interests are led by 'an invisible hand' to benefit society," Wilson observes. "[T]he concept of self-interest can be reduced to something like the utility maximization of economic theory, and that self-interest robustly leads to well-functioning societies." This "minimalist assumption," however, is "deeply flawed," Wilson argues. ( Wilson's article on the internet The New Fable of the Bees is about this.) Perhaps no one has put it more succinctly than Robert H. Nelson, writing in Economics as Religion:

The greatest significance of Adam Smith to the economic history of the world was not in any power of economic explanation but in offering a "scientific" doctrine by which the many losers from all this radical change could be persuaded to accept their fate without active revolt--an act of rebellion against the market that in many cases might have been to their individual advantage.

The part of Rajan's talk that I did enjoy was the part where he talks about capitalism vs. democracy. It's important to realize that the two are antithetical to each other. Capitalism is about self-interest. Democracy is about group interest. There is a tension between the two, and the two are natural enemies, regardless of what Milton Friedman with his "capitalism and freedom" nonsense says. Rajan observes that in this conflict between big business and big government, some have copped out by embracing the utopian vision of a return to the small, as if these two big bullies are somehow, magically, going to leave one alone.

But in the conflict between the individual and the group, Rajan somehow manages to miss the fact that economists are not neutral. Quite the contrary, they serve as the evangelists of self-interest, a kind of priestly class for Capitalism. On the other side of the ideological divide fall all the major religious traditions of the world--Hinduism, Buddhism, Judaism, Islam, and Christianity--which hold that it is not selfishness, but on the contrary benevolence that, as Wilson puts it, "results in a shower of material, psychological, and otherworldly benefits" for both the individual and for society. Again, Nelson sums it up succinctly:

If the private pursuit of self-interest was long seen in Christianity as a sign of the continuing presence of sin in the world--a reminder of the fallen condition of humanity since the transgression of Adam and Eve in the Garden--a blessing for a market economy has appeared to many people as the religious equivalent of approving of the existence of sin.

Paul Tioxon:

I liked the overall view presented in the interview, but I agree with you about the naive liberal view of education as the magic bullet. It was in the early 2000s, in the aftermath of the dot com roll out, that for the first time in measured history, a 2 year tech degree from a community college or trade school would put you into a higher income job than a 4 year college degree. The amount of under employed English majors, liberal arts BAs was only exceeded by the number of failed artists wandering around Weimar Germany. And of course, leave it to an intellectual from India to completely neglect outsourcing and H1 visas exploitation by the US IT industry. Talk about cognitive dissonance.

Stelios Theoharidis:

So I have a BA from a public university in the US in a couple of the softer social sciences and an MSc from high end British university that is probably one of the centers of neo-liberal movement. We recently lost a Director over the Libya scandal.

I had numerous conversations with the Maths, Finance, and Economics students and professors. While, I found most of them to be smart, there are lots of problems at these places.

The best ones generally are quite obsessive about their subjects and continue on into academic careers. However, there is a massive amount of path dependency in academics, particularly how it develops into relationships with your professors and publishing with them. If you fall into the wrong theoretical framework you might just spend that brilliance defending assumptions that are fundamentally false. If you deeply question these assumptions you have to be in an environment where that is acceptable or your professors can ruin your academic career.

The individuals that wind up working their way into positions with the 'masters of the universe' aren't that interested in the international financial landscape and current events but rather what the best pathway into that industry is. Many of them spend their formative years pushing into interviews with banks rather than developing the academic breadth necessary for serious critical thinking. While I do not discount the value of their ambition, many of these individuals that want to get into the banks wind up spending all their time playing with psychometrics, going to networking events, training for GMATs, internships, practicing for interviews, etc. They memorize the theory perfectly to get the top marks but rarely question the theories themselves.

Then we worry why the banking and economic system is the way it is. We train people to look at the trees and ignore the forest.

Susan Truxes:

In my own personal memory fog bank I just connected some dots. I remember recently, Geithner saying how important our financial industry was/is to our national interest (i.e. he will protect it to the max – undoubtedly to the taxable max); and ages ago, Galbraith – my fave for irony alone – discussing the long cold war battle to free capital to move around the world without undue constraints. And I realized something really does not make sense. We are devastated. The world is devastated. Finance is a joke because it's illogic has permutated into a swamp of confusion and it has turned against us. And we were the creators. How embarrassing. This is why we are not addressing solutions. We haven't had a convincing idea since 1945.

Chester Genghis:

I completely agree. The education canard is just one of the many justifications of inequality that Down South talks about. It's a convenient way to blame the victims for outsourcing/offshoring.

It is belied by the facts: there are no significant structural areas where there is an unmet demand for labor. And the unemployment level for college grads is about 10% (the real rate, not the official rate). Look at the numbers of where American multi-nationals have been hiring (and where they downsized post meltdown) over the last 10-12 years and tell me with a straight face that its about about education levels…

And the part of this justification narrative that I find really obnoxious is the current movement to bust teachers' unions, deny full pension benefits, and discredit public education in favor of For-Profit charter schools and "universities". Its all part of a marketing campaign to create a phony crisis in order to funnel tax funds into the pockets of a few wealthy "entrepreneurs".

Peripheral Visionary:

Niebuhr makes some important points on self-justification of those in power, but I find his division of people between those in power and those not in power to be too simplistic, and to ignore the natural complexity of society, where power, being dependent on relationships between individuals, is as complex and dynamic as those relationships.

"Capitalism is about self-interest. Democracy is about group interest."

I disagree. Setting aside the issue of capitalism (which in my view has elements of both individualism and collectivism), true democracy has a very individualist orientation.

Karl Popper addresses this point in "The Open Society and Its Enemies", where he clarifies the distinction between individualism and collectivism, which, he asserts, is entirely different from egoism and altruism (although the latter distinction is routinely confused with the former distinction–by collectivists, naturally, who assert that individualism and egoism are synonymous, and that only collectivism can be altruistic).

He then goes on to assert that it is individualism which is the basis for Western humanitarianism, and hence democracy, as follows. (pp. 101, 102)

Why did Plato try to attack individualism? I think he knew very well what he was doing when he trained his guns upon this position, for individualism, perhaps even more than equalitarianism, was a stronghold in the defense of the new humanitarian creed. The emancipation of the individual was indeed the great spiritual revolution which had led to the breakdown of tribalism and to the rise of democracy . . . This individualism, united with altruism, has become the basis of our western civilization.

Tao Jonesing:

Rationalists worship complexity and use it as an excuse for inaction. Realists worship simplicity and use it to drive action.

Neoliberalism, of which Popper was a founding father, is a realist doctrine wrapped in rationalist clothing. This is an essential part of the Double Truth of neoliberalism: paralyze the rationalist masses (i.e., those not in power) with the message so the realists in control (i.e., those in power) can use the actual mechanisms of neoliberalism accumulate more power.

Realists understand that the so-called "complexity" of society is an illusion. It is nothing more nor less than a fractal based on the simple function of how human beings make decisions. Yes, you can never truly understand or even comprehend the fractal as a whole, but you can control the fractal by controlling the inputs to decision-making black box, which is the self-referential seed function that is the basic building block of the societal fractal.

And Popper wasn't really against collectivism. All neoliberals are for collectivism of the elite, the oligarchy, which they accomplish through the corporate form. They're just against collectivism for everybody else, as collectivism is a threat to their power. There's a reason the elite (including the Founding Fathers) are always against true democracy. And there's a reason the elite always dress up realist doctrines in rationalist clothing.

Peripheral Visionary:

If you think Popper was secretly for the collectivism of the elites, you are absolutely mistaken; that is the very idea which was the very antithesis of his political thought. The general notion, still in wide circulation, that the people are incapable of governing themselves, and that they therefore need wise overlords is the very idea that he considered the root of all tyranny.

He freely accepted that giving the people the power to change their own government would result in sub-optimal outcomes, but trusted to a gradual process of carefully measured social change would prevent the worst abuses. He was absolutely opposed to the idealistic utopian dreaming that ran rampant in his day, and still runs rampant in ours, whose visions of radically restructuring society could only be carried out under a totalitarian regime.

Susan Truxes:

The thing I found most interesting was Rajan's metaphor of old plumbing. Complacency leads to antiquated theories and institutions. I liked his example of how the housing crisis was caused by good intentions, based on inadequate theories and then combined with the complacency of regulators. And how the investment banks saw all the loopholes and took the housing market "over a cliff."

But obviously it is not housing alone; it is a deep seated unemployment problem; a plumbing problem if you will. It (opening the flood gates for the housing crisis) created a "debt trap" without a safety net so that "people themselves became the collateral."

And democracy has become a casualty too. I think he underplayed the erosion to democracy this has caused.

L M Brekhovskikh:

Apparently there are still a number of commenters on this blog who would like us to believe that the USA is not a kleptocracy, that there is no class warfare from above, and that no widespread, systematic looting of the taxpayer ever took place.

I imagine these people would say the same thing about the arms trafficking, money laundering, personal enrichment, protection for gangsters, extortion and kickbacks, suitcases full of money and secret offshore bank accounts that occurred in the former Soviet Union, and that is still going on.

According to them (referring to the massive wealth transfers in the USA since 2008) it all just kind of happened by accident, a few mistakes were made, maybe some bad judgement was involved, but there was no widespread criminality and no malevolence, it happened with the best of intentions.

As Anonymous Jones put it the other day, responding to Hugh: "humans are not smart enough or capable enough to pull that off… water runs downhill. People like money……That's the state of the world."

Then I would be curious how these deniers/defenders (of kleptocracy) explain things such as the following excerpt from Matt Taibbi (from a Rolling Stone article recommended by Jeremy Grantham in his 2011 Q1 newsletter to investors):

"The Fed sent billions in bailout aid to banks in places like Mexico, Bahrain and Bavaria, billions more to a spate of Japanese car companies, more than $2 trillion in loans each to Citigroup and Morgan Stanley, and billions more to a string of lesser millionaires and billionaires with Cayman Islands addresses.

But if you want to get a true sense of what the "shadow budget" is all about, all you have to do is look closely at the taxpayer money handed over to a single company that goes by a seemingly innocuous name: Waterfall TALF Opportunity. At first glance, Waterfall's haul doesn't seem all that huge - just nine loans totaling some $220 million, made through a Fed bailout program. That doesn't seem like a whole lot, considering that Goldman Sachs alone received roughly $800 billion in loans from the Fed. But upon closer inspection, Waterfall TALF Opportunity boasts a couple of interesting names among its chief investors: Christy Mack and Susan Karches.

Christy is the wife of John Mack, the chairman of Morgan Stanley. Susan is the widow of Peter Karches, a close friend of the Macks who served as president of Morgan Stanley's investment-banking division. Neither woman appears to have any serious history in business, apart from a few philanthropic experiences. Yet the Federal Reserve handed them both low-interest loans of nearly a quarter of a billion dollars through a complicated bailout program that virtually guaranteed them millions in risk-free income."

from Matt Taibbi: The Real Housewives Of Wall Street: How Morgan Stanley Wives Christy Mack & Susan Karches Ripped Off Taxpayers In Geithner-Bernanke Bailout Scheme

Anyone like to explain how this was not looting but rather mistakes that happened due to bad judgement?

[Apr 03, 2011] Friends don't let friends get into finance

Vivek Wadhwa, visiting scholar in School of Information | 3/29/11 | 6 comments | Leave a comment

After having been a tech executive for many years, I needed to take a break, and I wanted to give back to society. Duke University engineering dean Kristina Johnson gave me a great spiel about how the school's Masters of Engineering Management program churns out great engineers, and how engineers solve the world's problems. She said that I could make a big impact by teaching engineering students about the real world and encouraging them to become entrepreneurs. I felt so excited that I joined the university without even asking for a proper salary. That was in 2005.

I was shocked-and upset-when the majority of my students became investment bankers or management consultants after they graduated. Hardly any became engineers. Why would they, when they had huge student loans, and Goldman Sachs was offering them twice as much as engineering companies did?

So when the investment banks tanked in 2008, I cheered because engineering had become sexy again for engineering grads (read my BusinessWeek column).

But thanks to the hundred-billion-dollar taxpayer bailouts, investment banks recovered and went back to their old, greedy ways. And they began offering even more money to engineering grads (and themselves).

Kauffman Foundation's Paul Kedrosky and Dane Stangler have just published a report that analyses the damage this has done to our economy.

They note that the finance sector today produces a greater percentage of GDP than at any time in history. In the mid-nineteenth century, its contribution was between 1 percent and 2.5 percent of GDP. It peaked at around six percent of GDP at the beginning of the Great Depression, and then fell sharply. Since 1945 it has been steadily increasing, to 8.4 percent over the last two years.

Historians will tell you that empires collapse when they become too dependent on finance, but I'm not so pessimistic. I do, though, share the concern that Kedrosky and Stangler expressed in their paper:

Financial sector as % of U.S. GDP (1850-2009)

Fewer people are being added to industry employment, but they are coming from new and narrower places. The financial services industry used to consider it a point of pride to hire hungry and eager young high school and college graduates, planning to train them on the job in sales, trading, research, and investment banking. While that practice continues, even if in smaller numbers, the difference now is that most of the industry's profits come from the creation, sales, and trading of complex products, like the collateralized debt obligations (CDOs) that played a central role in the recent financial crisis. These new products require significant financial engineering, often entailing the recruitment of master's- and doctoral-level new graduates of science, engineering, math, and physics programs. Their talents have made them well-suited to the design of these complex instruments, in return for which they often make starting salaries five times or more what their salaries would have been had they stayed in their own fields and pursued employment with more tangible societal benefits.

Entrepreneurship participation rates (1986-2009)

An analysis of MIT's graduate-employment data shows that the financial sector increased its hiring from 18 percent of its graduates in 2003 to 25 percent in 2006. So not only are the investment banks siphoning off hundreds of billions of dollars from our economy with financial gimmicks like CDOs; they are using our best engineering graduates to help them do it. This is the talent that our country has invested so much resource in producing.

When most sectors of the economy grow, new companies are created. The authors found, however, that the finance sector is not driving firm formation; it is cannibalizing entrepreneurship in the U.S. economy by offering wage and skill premiums to individuals who might otherwise have started companies. It is also causing far greater volatility among publicly traded firms and a reduction in the quality of businesses started.

The report concludes that a shrinking finance sector will likely lead to a higher entrepreneurship rate and the creation of companies with greater social value, and still provide the financial intermediation services that are most important to young companies. So that's what we need in order to save this empire: to tame this beast.

Paul Kedrosky says that the virus that infects scientists and engineers and causes them to go to Wall Street rather than create something of societal value is "economic Ebola". He wants to be an "economic virus hunter". Let's all help him. Let's save the world by keeping our engineers out of finance. We need them to, instead, develop new types of medical devices, renewable energy sources,and ways for sustaining the environment and purifying water, and to start companies that help America keep its innovative edge.

Cross-posted from Vivek Wadhwa's blog on Tech Crunch.

James R:

March 31, 2011, 1:36 pm

"Corporations are so good at stripping the earth of resources and poisoning what's left that many scientists believe there's a greater than 50/50 chance now we'll be driven extinct."

Exponential population growth, emerging market consumerism, and mass migration of third world people into first world countries already with large carbon footprint lifestyles are the biggest drivers of environmental destruction.

American's have been doing their environmental duty since 1970 by having smaller families, recycling, and driving smaller cars - but instead of being allowed to enjoy a less crowded, less polluted country with higher wages, their posterity are being crowded by post 1965 cheap labor immigrants. In the past decade our country acquired over 13 million new residents due to legal immigration but lost a net 1 million jobs. Immigration flows are controllable by public policy, so why do politicians deny the negative effects of mass immigration and pretend that there is nothing they can do?

Alice Friedemann

March 31, 2011, 10:07 am · Reply

Some day the field of economics will be seen by historians to be as believing in a flat earth. If there are historians, that is. Corporations are so good at stripping the earth of resources and poisoning what's left that many scientists believe there's a greater than 50/50 chance now we'll be driven extinct.

Economics pays no attention to the real world that sustains us - fresh water, at least six inches of good topsoil, forests, unpolluted air, water, and land, and so on. We're like the cartoon character sawing off the limb we're standing on.

Economics as practiced by banks and wall street relies on inventing complex financial instruments to fleece the middle class. That's the main reason the gap between rich and poor is the greatest in the nation's history.

But there is a field of economics that makes sense. It's called "Biophysical economics" and draws on scientific principles such as the Laws of Thermodynamics and systems ecology.

NY Times Reports on Biophysical Economics Conference in Syracuse….pdf

2011 Biophysical Economics Conference
Friday April 15th through Saturday April 16th
SUNY College of Environmental Science and Forestry, Syracuse, New York
Moon Library conference room


March 30, 2011, 9:29 am · Reply

I don't see why you need to target the financial/legal sector specifically. Just increase tax rates on income over a few million to rates that were common from the 1930′s to the 1980′s (when real GDP grew at a healthy 4%). Sure, a few genuine entrepreneurs will be impacted. But in my experience, genuine entrepreneurs are driven by a passion to make the world a better place, not to make the world their private playground with billions in wealth.

Give somebody like Elon Musk the choice between making the world a better place through technology they're created while having a personal net worth of $100 million…or not really change the world at all but have a personal net worth of $100 Billion from some financial derivative they created…and I'm pretty sure people like Musk would choose the former. As for the people who would choose the greater personal wealth over the benefit of society, do we really want those people in a position where their decisions can adversely affect society?

Dave s

March 30, 2011, 7:35 am · Reply

I don't see any way that this can be taxed or regualted away. What we need is a complete rebuilding of our national ethics, perhaps starting with the B-schools.

Jonathan A

March 29, 2011, 6:33 pm · Reply

@James R: I'm not sure the government can selectively tax individuals in certain sectors at a higher income tax rate just because we don't like the effects mentioned in the above article. However, requiring that engineers repay the government for the subsidies that made their education possible if they opt to work in an unrelated field may be more viable.

James R

March 29, 2011, 12:43 pm · Reply

Why not just federally tax salaries in the financial and legal sector down to size? Robert Reich thinks the rich don't pay enough. Fine. Go after predatory capitalists and ambulance chasing lawyers - this way, their lucre is forcibly directed into an IRS sinkhole where it might do some good funding NSF or DOE grants. It will also equalize the opportunity costs for choosing one profession over the other.

[Mar 21, 2011] summary-military-assets-play-operation-odyssey-dawn



Ya'll are wrong. It is not the soldiers' fault. They are isolated (how many times are we being told their internet is not allowed to surf certain addresses, plus they are on bases, on boats) and propagandized to. They are "programmed" and live inside a closed self propagating culture where they are taught loyalty to each other, their chain of command, and this country. I have been told, anymore, the service looks like the population of a junior college. I believe it.

I remember my own students shipping out when the stuff went down in Iraq. Mostly brown folk went (black, Latin, even Asian, men and women), hardly any whites. They were scared to death and head fucked to death too, kept being told they were shipping, then not, then shipping, then not. When it was finally real they did not take it seriously, none of us did. Gave out a lot of incompletes and systemic withdraws.

They come back from war damaged, and they are back in my classes trying to "make something" of their lives. Some of them are pretty fucked up attitude wise others are wise beyond their years and real news hawks like us around here, suspicious of everything. Blaming them is just wrong. So many of them are kids who are still trying to figure out who they are.

If you want to blame some soldiers, blame their leaders

[Mar 09, 2011] Can For-Profit Tech Colleges Be Trusted? by CmdrTaco

Recommended: there multiple interesting comments about selling debt on the base of unrealistic promises...

[Mar 08, 2011] Paul Krugman: Degrees and Dollars

March 07, 2011 | Economist's View

I've noted in the past that education is essential, but it won't work for everyone. What's the answer for everyone else?:

Degrees and Dollars, by Paul Krugman, Commentary, NY Times: It is a truth universally acknowledged that education is the key to economic success. Everyone knows that the jobs of the future will require ever higher levels of skill. ...

But what everyone knows is wrong..., the idea that modern technology eliminates only menial jobs, that well-educated workers are clear winners, may dominate popular discussion, but it's actually decades out of date.

The fact is that since 1990 or so the U.S. job market has been characterized not by a general rise in the demand for skill, but by "hollowing out": both high-wage and low-wage employment have grown rapidly, but medium-wage jobs - the kinds of jobs we count on to support a strong middle class - have lagged behind. And the hole in the middle has been getting wider...

Why is this happening? The belief that education is becoming ever more important rests on the plausible-sounding notion that advances in technology increase job opportunities for those who work with information - loosely speaking, that computers help those who work with their minds, while hurting those who work with their hands.

Some years ago, however, the economists David Autor, Frank Levy and Richard Murnane argued that this was the wrong way to think about it. Computers, they pointed out, excel at routine tasks, "cognitive and manual tasks that can be accomplished by following explicit rules." Therefore, any routine task - a category that includes many white-collar, nonmanual jobs - is in the firing line. ... Most of the manual labor still being done in our economy seems to be of the kind that's hard to automate. ...

And then there's globalization. Once, only manufacturing workers needed to worry about competition from overseas, but the combination of computers and telecommunications has made it possible to provide many services at long range. ... Alan Blinder and Alan Krueger suggest ... that high-wage jobs performed by highly educated workers are, if anything, more "offshorable" than jobs done by low-paid, less-educated workers. If they're right, growing international trade in services will further hollow out the U.S. job market.

So what does all this say about policy?

Yes, we need to fix American education. In particular, the inequalities Americans face at the starting line - bright children from poor families are less likely to finish college than much less able children of the affluent - aren't just an outrage; they represent a huge waste of the nation's human potential.

But ... the notion that putting more kids through college can restore the middle-class society we used to have is wishful thinking. It's no longer true that having a college degree guarantees that you'll get a good job, and it's becoming less true with each passing decade.

So if we want a society of broadly shared prosperity, education isn't the answer - we'll have to go about building that society directly. We need to restore the bargaining power that labor has lost over the last 30 years, so that ordinary workers as well as superstars have the power to bargain for good wages. We need to guarantee the essentials, above all health care, to every citizen.

What we can't do is get where we need to go just by giving workers college degrees, which may be no more than tickets to jobs that don't exist or don't pay middle-class wages.


There isn't much social mobility in US society. Detailed time studies show that it is relatively rare. People tend to live out their lives in the class into which they were born. If there is movement, it is minimal: from lower middle to upper middle, perhaps or sometimes from upper middle to lower upper. Or, working class into lower middle.

cm :

Automation and distributed business processes require higher energy input and throughput. Cooling and provision of power has already become a limiting factor in high performance and mobile computing. I don't see human intellect being replaced at scale for this reason alone. Certain cognitive tasks yes, anything that requires a degree of "holistic" judgement (outside of a narrow and formalized domain), not so much.

reason is worth pointing out that the disfunctional international financial system makes thing worse. Offshoring may make sense to firms today, but it doesn't make sense economically. Why isn't there something better for the thin layer of well educated workers in poor countries to do with their education that covering medium skilled in the west remotely? Because misaligned exchange rates depress median incomes in their own countries - that is why!


There is also historical and social path dependence. The prosperity era of the West has emerged fairly recently. Before WW2 things looked pretty bleak for broad shares of Western populations too.

[Feb 22, 2011] Are Teachers Overpaid

Economist's View


The issue isn't salaries. The issues are pensions, healthcare, tenure/difficulty in removing underperformers and the disconnect between persistent increases in teacher cost with no material improvement in student outcomes. Notice how he pulls in the topic of outcomes when discussing doctors but where is it when discussing teachers?


Notice how when discussing teachers the topic of outcomes always becomes so simplified as to be absurd. How do we know a good teacher v. a bad one? Should the principal decide? Should standardized testing? The teacher unions, accrediting organizations, and most teachers are on board to measure outcomes if those doing the measuring are authentically concerned with improving student thinking and skills. Typically, as in Wisconsin, they are far more concerned with their own aggrandizement or fascist political agendas.

You might read for another look at this.

I would agree with you that education is in need of reform and outcomes should be measured, I just don't think that goal is connected to any of the current attacks on the system.

dw :

how do you exclude the impacts from the parents and the students them selves? if parents don't value education, neither will their children. and if the children don't care about it either, then they won't even try. they might not care because they don't see any improvement from those who did value it.


The question smacks of class war. The better question is: do the rich run state and local governments. More appropriate: can labor bargain with management? Answer is no the jobs have all went off shore.

Fred C. Dobbs:

As teaching is 'labor intensive', with a lot of students in public schools, there are a lot of teachers. Most (non-military) government employees are teachers, presumably. On average, they aren't paid too much, but they often represent the biggest line item on a town budget. (As a former school- board member, this used to keep me up at night.)

The impact of teacher salaries on local tax rates is something an awful lot of people are aware off.

Something most tax-paying parents seem to be cognizant of is that teachers work about 25% fewer hours (not counting all that prep time) per year than ordinary folk, with 'comparable' salaries.

dw -> Fred C. Dobbs...

but not ones with comparable education levels. we seem to always want to exclude that and fixate on just the incomes.

Barkley Rosser:


Well, I agree that the performance of our educational system at the K-12 levels leaves much to be desired. Indeed, I have seen on some other blogs, such as MR, people declaring how crummy teachers are and how they do not deserve high pay because we all know that education majors are the dumbest people in any college or university.

However, I would turn that around. Why are ed majors of such low quality? I would suggest that it is at least partly because teachers are so poorly paid compared to other workers in the US. Much better to go be a doctor or lawyer or accountant or investment banker than a, hah!, teacher. Only losers are teachers.

In the data source I provided, the top country is Korea, whose high performing students are well known. So, we get what we pay for.

Jerome Turner -> Structure...

Peter Temin has a nice paper that deals with exactly that. Teachers wages have not kept up with the increasing salaries in women in other professions. Combine that with reduced revenues from property taxes, which in most areas fund pubic schools, and we have no one to blame but ourselves. Jerome


The pay differential between these two careers in the US is a story of incentives at the undergraduate level. For whatever reason, the teaching profession has become an "easy" path for folks who don't want to study very hard and want to have a relaxed career with a lot of time off. Those who are pre-med majors are the ambitious, hard working ones. These are the folks that didn't choose to go to college to party, but rather to receive an education that would help them land a high-paying job and become competitive in the labor market.

So naturally, you've got all your students with high GPAs and rigorous coursework going for pre-med, while all your mediocre performing, unfocused students are heading out to become teachers. This explains the pay differential.

I'm not sure why the teaching profession has become the 'easy way out' at college. After all, the net benefits to society from teachers and doctors are roughly on par, IMO.

[Feb 21, 2011] Paul Krugman Wisconsin Power Play

Economist's View


Yesterday, I pushed a few buttons on my computer to perform some stress analysis on a structural part. Thirty years ago, there would have been a team of twenty number crunchers working for a week to calculate the results. Now, it is done in about 30 seconds. If unions represented those workers, they would still be there. I, for one, think the progress is good.

I have often wondered why education has not utilized technology to better serve their customers (students). Every day, tens of thousands of lessons are repeated for the 100th time. Each is limited by the skill of the presenter. Most often, the rich schools get the great teachers and the poor schools do not. Imagine a video database where thousands of lessons are professionally produced from the best and brightest teachers. Where every subject is covered three or four times from different perspectives so struggling students have more opportunities to learn. Rich or poor, all schools would be on the same level.

Never going to happen says the three teachers I know. The unions won't allow it. This reminds me of the Long Beach dock workers strike a few years back. The issue was that the shipping companies wanted to electronically transfer the shipping manifests from the ships to the dock instead of printing them out and having union keypunch operators manually enter the data in. After the strike was over, the shipping companies had to pay the keypunch operators >$100,000 a year for life ... to do nothing.

The bottom line is this: Just because there are billionare jerks trying to bust the unions does not mean the unions are inherently good.

Sounds like you're good with anything that replaces someone else's job. How about if that were *your* job ?

Nah, it's all cool as long as it's someone else's life we're ruining, right ? I mean, hell, it's not like a lot of these people spent years of their life dedicated to studying, training, and working in their chosen career.

"Thirty years ago, there would have been a team of twenty number crunchers working for a week to calculate the results. Now, it is done in about 30 seconds. If unions represented those workers, they would still be there. I, for one, think the progress is good. "

This utterly ridiculous thought is ample proof that you should change your name.

And if that is not enough, making a point without any link at all is more than enough.

Icarus Lives:

What is ridiculous?

I can site several examples of work that can now be done with a computer program (all sorts of data warehousing analysis) which used to require dozens of people, thousands of hours, etc, etc.

Automation has altered notions of "work"...and yes, unions definitely prevent such "progress".

Cite them.

Then cite the number of state employees actually doing those jobs.

Just as a thought before you start. About 75% of state employees in Wisconsin are teachers and correctional officers.

"I have often wondered why education has not utilized technology to better serve their customers (students)."

Aside from the "customers", which speaks volumes on its own, you have probably not wondered enough about how teaching, in particular teaching kids, works. It is an interactive and social process. Even in graduate school you don't have just lectures and book assignments, but TA sessions, classes, and labs. Much of the learning is happening in the latter. Passively (FWIW) received lectures or presentations have their place but they can only convey factual knowledge.

You can "utilize technology" but you still need the same number of teachers. Plus you have to pay in addition for the "technology" infrastructure and operation.

[Feb 08, 2011] "Degree Inequality"

Economist's View

Claude Fischer argues that the "education gap may well keep widening for quite a while":

Degree inequality, by Claude Fischer, Berkeley Blog: It is now generally understood that economic inequality has expanded greatly since about 1970. ... Now the debate has shifted to what – if anything at all – should be done about inequality. ... Less discussed is the widening college degree gap. Yet its implications go considerably beyond money, to widening differences in life experiences and ways of life. ...

Payoffs Having a bachelor's degree has always paid off – and having an additional degree or two has also paid handsomely. But this has become truer and truer. In Hout's words, "The correlation between education and economic fortunes in the United States has never been higher." ...

This education-income connection cycles back: Having more money means more education for the children ... in the best ... schools...

In addition..., Americans ... with B.A.s are less likely to be unemployed. They are healthier... The college-educated have more stable family lives. ...

Importantly, the connection between higher education and the good things in life is not, as some contend (famously Herrnstein and Murray in The Bell Curve), simply because smart people go further in school and smart people do well in life. Research shows that being in school longer – whatever is happening in and around the classroom – improves young people's chances of doing well in most areas of life. Moreover, it is the marginal students, the ones who barely get into college, who benefit most from a college education.

Different worlds Even is more happening along the education gap: Increasingly, college graduates marry college graduates and live among college graduates. Increasingly, Americans group by education and their ways of life diverge by education. ...

What is less clear, although certainly plausible, is that this widening separation carries along with its economic and social divisions, a widening gap in values and ways of life: two different Americas, divided educational attainment.

Access The postwar college-graduation boom – in 1950 about 8 percent of American 25-to-34-year-olds had 4 years or more of college; in 1980, 24% did – was largely propelled by public investments in higher education. Campuses ... grew enormously in the 1950s and 1960s and satisfied the growing demand. The United States had more college graduates than anyone. But... Now, as President Obama noted in his State of the Union, "America has fallen to ninth in the proportion of young people with a college degree." He went on to propose a goal: "By the end of the decade, America will once again have the highest proportion of college graduates in the world." (Good luck!)

Further expanding the proportion of our college-educated would do much – for the college-educated, for the national economy, and perhaps to shrink the education-wealth-culture gap. ... Where the funds to invest would come from right now is another matter. We are not in the economic climate of the '50s and '60s, nor in its political climate. Public higher education is shrinking. The education gap may well keep widening for quite a while.

I hope that somehow access to higher education can be at least maintained, and hopefully enhanced, but it's hard to see that happening in the face of declining state support and rising tuition.

Selected Comments


I'm wondering if it is even the right approach to the problem. Education needs a big rethink - we need lifetime education not a once off. And some people just aren't made for school - they need to have a respected place in society as well. I think it is a big issue, but I'm not of the view that a bit of minor tinkering is good enough.


I think the situation is more complex than that.

While college degree gap may exist, nepotism and other forms of getting nice place under the sun actually became recently more prominent. I think that chances of a person out of college with huge debt to get a decent position in the current environment are subject to discussion. I do not see any significant amount of openings in engineering specialties and humanitarian specialties are often a step to a waiter career, anyway. My impression is that, with the exception of, say, top three-five students in the class, connections and status of your parents in society became a more important factor.

Also amount of waiters with college diplomas is disproportionately high. This is partially the result of predation in high education. Like financial industry colleges changed and now many are as close to pushers of sub-prime loans as one can get. Many colleges main goals transformed into loading students with debt instead of providing training for useful, employable occupation.

Those "predatory colleges" has became a beneficiary of the recession, especially shady for profit colleges mostly oriented on getting government funding.

One counterexample: IT departments of large corporations are often staffed with people without even basic CS education. Mid-level IT managers can often be completely IT illiterate to the extent that Dilbert cartoons looks like benign pan rather then biting satire.

Another interesting factor is that, the percentage of psychopaths among them is alarmingly high. In a way, being a psychopath probably ensure career success more reliably in the current large corporate environment (with a typical Enron-comparable levels of criminality of top brass and accounting) then being a graduate of the college (you can buy fake diploma for peanuts and have a "debt-free" start :-)

Fred C. Dobbs :
"There exists a vast gulf of randomness and uncertainty between the creation of a great novel–or piece of jewelry or chocolate-chip cookie–and the presence of huge stacks of that novel–or jewelry or bags of cookies–at the front of thousands of retail outlets. That's why successful people in every field are almost universally members of a certain set–the set of people who don't give up."

The Drunkard's Walk: How Randomness
Rules Our Lives - Leonard Mlodinow

(Especially 'successful people' who have 'networks'.)

(HT to 'The Healthcare Economist' )


in reply to Fred C. Dobbs...

Following that link and scrolling down I come to:
Now that is an interesting topic.


in reply to reason...

P.S. Basically the study reaches the same conclusion as One Flew Over the Cuckoo's Nest. I like especially the bit that other patient's could tell that fake patients were sane, but staff couldn't. I wonder if this has any implications for modern day USA which in many ways resembles a huge mental hospital (except that quite often the patients run it).

Eric :

to Fred C. Dobbs...

Building and maintaining such a network is exactly part of the process of not giving up. It can be hard work and frequently is not so pleasant. But beyond that, 50 people having such networks has not ever, in my experience, prevent a 51st person from being successful.

Eric :
to Fred C. Dobbs...

I can be, but not always. Serving in the US Armed Forces gives a person access to a very, very effective network, for example. And, yes, such service can cost a lot. But plugging into a church-based network is not expensive risk-wise. It can be hard if you don't feel particularly religious, but it's a very common starting point. Another almost ready-made network are local neighborhood councils. Again, time spent away from your family doing a variety of things that you may well find uninteresting, but you hear things early and people mention your name to others that never considered you for some opportunity or other.

cm :

to Eric...

This is one thing that outsiders who have been exposed to the US way of life/business report - instead of (or perhaps rather in addition to?) real friendships/relationships you have people cultivating others just for networking, with the "relationships" being totally hollow until you are called on for job leads or a reference.

Goldilocksisableachblonde :
to cm...

" people cultivating others just for networking "

Yep. 'Networking' , aka being friendly for money , aka the world's oldest profession.

I'm an insider , not an outsider , and I noticed this trend way back when , and am sickened by it. You have to question every friendly gesture received , wondering what the other party is trying to get from the deal , and then you feel bad about yourself for being such a cynic. Then the other party makes his Amway pitch , and you feel bad for feeling bad about yourself.

jrossi :

to Goldilocksisableachblonde...

Well, Dale Carnegie might disagree. Sure, a lot of friendships are fake, but so what? You can have real friendships in addition to the fake ones. And you can have your family.
I'm always exceedingly polite to co-workers and patients and the people I see in town, even if my posts here can be prickly(you folks don't know where I live and who I am, not that you care of course). And most folks are polite to me in return, at least to my face. Does that mean we are all good friends, friends for life? Doubtful. But we're not enemies, not gunning for each other. And that's valuable. Remember that your fellow bipedal locusts can be dangerous from time to time. Politeness, fake or not, is a lubricant. I try to use it copiously.

jrossi :

to Goldilocksisableachblonde...

Well, Dale Carnegie might disagree. Sure, a lot of friendships are fake, but so what? You can have real friendships in addition to the fake ones. And you can have your family.

I'm always exceedingly polite to co-workers and patients and the people I see in town, even if my posts here can be prickly (you folks don't know where I live and who I am, not that you care of course). And most folks are polite to me in return, at least to my face. Does that mean we are all good friends, friends for life? Doubtful. But we're not enemies, not gunning for each other. And that's valuable. Remember that your fellow bipedal locusts can be dangerous from time to time.

Politeness, fake or not, is a lubricant. I try to use it copiously.

Goldilocksisableachblonde :

to jrossi...

Apples and oranges.

Being polite habitually is of course a good thing. Not doing anything to trip the wire of a psychopath is completely justified.

Sucking up to everyone you meet only because you think they might be useful in furthering your career, or an easy mark for a future sales pitch or scam, is reprehensible.

I wonder if Carnegie would disagree. I think he might be disturbed by the mutations his teachings have spawned.

jrossi :

to Goldilocksisableachblonde...

You're never gonna get that big sales promotion with that attitude.

Goldilocksisableachblonde :

to jrossi...

You could be right.

My sales technique is modeled on the "Soup Nazi" of Seinfeld fame , though I'm a bit less 'edgy'.

anotherBudgetWonk :

*sigh* oh dear. What ever happened to education for the sake of learning? I read a line once...whatever it was that Heathcliff was studying, it certainly wasn't chemistry. Somehow we've come to this equation: college == well paying job instead of the correct equation which is undergraduate education == training one to think. This leads to whatever one wishes to do with it.

This is the crux of the problem. You all mistake college for vocational training and not for learning. Liberal Arts majors are waiters (btw, some professional waiter friends of mine make more than anyone posting here) so what? Are they happy? I have students who, god love them, come to my class thinking that they're going to make all sorts of money being a software engineer. Then they meet me and discover that it's a lot of hard work and they have no talent for it. Then they act like I'm a beast because they get a D when CLEARLY everyone told them they were ENTITLED to get a good paying job doing whatever was in demand at the time.

This is the problem with a college education now. And you're all pointing out where the problem is coming from.

cm :

to anotherBudgetWonk...

The focus on credentialism and vocational rhetoric comes from employers, not from "us". Who is complaining all the time that grad schools are not teaching "relevant business skills"? E.g. IT/software shops want computer "scientists" who are (also) trained (not "educated") in the latest versions of enterprise software tools. The less perspective outside the narrow subject matter the better.

Lyle :

to anotherBudgetWonk...

Actually this concern relates to the collapsing of the old 3 track post secondary system into one. You had the State Universities, the land grant schools and the normal schools. All existed for distinct purposes the state universities (and their private peers) where for general education. Land Grant was for engineering, ag, home ec, and ROTC. Normal schools were for k-12 teacher training. Today all colleges want to be all things to all, and train teachers, engineers and liberal arts to provide a wide selection. In the process the fact that the latter 2 systems were explicitly vocational in orientation was lost.

mark :

Society needs incentives to hold in front of children and adolescents to keep them focused on pursuing useful activities like education as opposed to just goofing off. A gap big enough for even children and adolescents to grasp is a good thing in that respect.

Also, many BAs are useless economically. Sunday night, I ran into a recent Ivy League graduate from my town. He graduated last year with a BA in Art. He was waiting on my table.

In fact, I think colleges are guilty of misleading many students and they should be required to provide greater disclosure and counseling concerning the economic costs and benefits of different majors and taking on student debt to pursue them.

Finally, undergraduate education is conducted in a 19th century fashion that leaves it rife with inefficiencies and misallocations of resources that could easily be eliminated to facilitate reduced tuition and greater opportunity

anotherBudgetWonk :

to mark...

See? There we go with "He graduated last year with a BA in Art. He was waiting on my table." You mean while he waits to hear back from Goldman, like a good friend of mine with a degree from the big H in astrophysics who "waited tables" and now works at the World Bank? And let's see, waiting tables...7 hour shift, 3 parties an hour, average $80 bill, tips = $302 in tips, which are mostly tax-free if left in cash and you walk out the door with them. And an $80 average is like at a lower-class restaurant.

I'll repeat this once again. An undergraduate education is to teach you to THINK. It is NOT vocation training. So go and major in whatever strikes your history, economics, astrophysics, sociology, political science, literature. Once you've learned how to think, go to graduate school and learn how to function in a profession.

You're perpetuating the myth of what college means. Or rather you're parroting the marketing literature without thought.

cm :

to anotherBudgetWonk...

At the same time employers are filtering by throwing out everybody without some sort of degree, for most non blue-collar jobs. And where a good part of the blue collar jobs went we all know.

Paine :

to anotherBudgetWonk...

Social gauntleting can be done less expensively

Paine :

to mark...

Most schooling is just cowing. Showing up on time five days a week. Coupled with an ability to stay put for hours while bored to death
good prep for job site attendance. Since this is just orderly jailing. It would be cheaper to hire cops instead of teachers

cm -> Paine...

You must be aware that you are greatly exaggerating. A lot of subjects benefit from if not require a structured approach and being guided by experienced practitioners. You would probably not suggest a trade apprentice can do self-guided "learning on the job" without a master/mentor. It works likewise (or doesn't) with pounding the books.

That said there are scammers and rent collectors out there.

dunkelblau :

I agree that universal access to higher education is critical to progress on socioeconomic stratification. Over the past couple of decades the price of this opportunity has climbed beyond reach for many in the middle class, to the point where young people are forced to make huge bets taking on student loans without any guaranteed outcome-- except that such debts are owed for life. So we risk losing a generation of those born to lower income families who may have the talent but are too risk-averse to accept the possible financial consequences of failure. This is an economic loss that America simply cannot afford.

I think government should step in and help underwrite the risk on its youngest adult citizens. Perhaps a system where in exchange for reduced tuition, the student would agree to pay a more steeply progressive income tax rate for some number of years than for those who choose not to participate. This way those who benefit the most financially from their otherwise unattainable education would payback the most. And it it is set up properly I believe such a system should self-perpetuate.

Cl Oregon Girl :

The comments are ignoring the evidence. Those with degrees have lower unemployment rates and higher incomes. That is what the article states. In the face those facts, the comments above are all about why a college degree does not do this. And it is all anecdotal. So if I just followed the advice of the commentators, not having a college education is the key to success. It makes no sense....


The fact it's used as a job hiring filter is not relevant to schoolings cost and value. We can devise other gauntlets to prep folks for hum drum jobs. Much less wasteful of time and spirit. Not to mention social expense


"Moreover, it is the marginal students, the ones who barely get into college, who benefit most from a college education."

I'm deeply skeptical of this claim and it is a very important point from a policy perspective. Why?

1. Marginal students are far less likely to graduate from college than students with stronger academic credentials, and are far less likely to go to graduate school. A student who just barely makes it into college has something on the order of an 80% chance of not graduating and most who don't graduate won't finish their sophomore year.

2. Direct measures of how much is learned in college correlate closely with the degree to which students are academically prepared. The minority of marginal students who manage to finish college are highly over-represented in the one third of students who don't come out of college having learned anything measurable.

3. SAT scores are actually better predictors of upper division class grades than they are of freshman and sophmore grades.

4. There is a significant gap between the economic value of education at a selective college or university and the economic value of education at a less selective college or university. Since marginal students end up at the latter kind of institution it suggests that they receive less than the average benefit.

5. The strong economic edge of college dropouts over mere high school graduates, and the lack of much economic advantage for associate degree recepients relative to college dropouts with no degree, is suggestive that lots of the economic benefit that marginal college students receive is a sorting effect that demonstrates they have more academic ability than those who didn't even try.

Policy wise it is clear that there are lots of very academically able low income kids who aren't going to college because they can't afford it. These kids, who do very well academically in college, are a better target for improving access to college education than marginal students whose benefits from the experience are actually quite disputable and who still end up with student loans that aren't dischargable in bankruptcy (fat loans if they went to for profit colleges as many marginal students do), without a degree to show for it.

I suspect that the apparent benefit for marginal students is not directly measured but is a result of "rounding error" (i.e. comparing non-average parts of a group of students as if they were average in that group).

[Jan 08, 2011] Paul Krugman The Texas Omen

Economist's View

Fred C. Dobbs:

(In GA, it means some kids are going without cars!)

NYT - January 6, 2011
Georgia Facing a Hard Choice on Free Tuition

ATHENS, Ga. - Students here at the University of Georgia have a name for some of the fancy cars parked in the lots around campus. They call them Hopemobiles. But there may soon be fewer of them.

The cars are gifts from parents who find themselves with extra cash because their children decided to take advantage of a cherished state perk - the Hope scholarship. The largest merit-based college scholarship program in the United States it offers any Georgia high school student with a B-average four years of free college tuition.

But the Hope scholarship program is about to be cut by a new governor and Legislature facing staggering financial troubles. ...

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