The issue is whether the nation should have federal regulations requiring transparency in universities, including evidence of student learning. Carey says yes; McCluskey, no. The debate was stirred up by an incisive Pope Center paper on the inner workings of higher ed. The paper's analysis is not in dispute; but what to do to change the incentives in higher ed has sparked this conversation as well as commentary on Phi Beta Cons.
(It's probably best to start with McCluskey's latest post to find the Carey-McCluskey links.)
James Monks, an economist at the University of Richmond, has parsed the figures in the 2004 Department of Education study of part-time faculty. His major conclusion is that you can't make easy generalizations. For example, only 35 percent of part-time faculty want full-time jobs at the institution where they are teaching.
Of this group, 68 percent do not have Ph.D.s (or the first professional degree). Thus, the image of adjunct faculty as Ph.D.-holding tenure-track wannabes is somewhat exaggerated. Those who lack a Ph.D. but still want a full-time position do fit the stereotype, however: There are slightly more women than men in this group, they are youngish compared to other groups (44 years old on average), and they are"disproportionately" in the fields of visual or performing arts or English.
And yes, there is a relatively small group of Ph.D. holders who seek full-time work at their institutions, too. They represent 19 percent of the 35 percent of part-timers who want to work full-time.
All in all, Monks' paper is a valuable contribution from AAUP, I think.
Higher education is riddled with incentives that lead to inefficiency, political control, and higher costs. There’s a serious “principal/agent” problem. (This economic term refers to the tendency of managers [agents] to follow their own interests rather than those of the principals [the owners]). One reason the issue is so important in higher ed: No one knows who the principals are!
Robert E. Martin, a retired economist, has written an enormously important paper that focuses on the causes, rather than the symptoms, of problems in higher education, and especially on the principal/agent problem. “The Revenue-to-Cost Spiral in Higher Education,” specifically addresses higher costs but tells us much more. The Pope Center has just published it and I encourage you to read it. If the paper is a little lengthy for you, read George Leef's column about it instead.
Ironically, Victor defends the actions of Roosevelt and his cronies. The argument: the war against Hitler justified extreme measures to persuade the pacifist/isolationist American people to go to war.
Hitler, according to Victor, needed three years to achieve his plan for exterminating the Jews, so he wanted at all costs to avoid war with the United States.
Unable to provoke a fight with Germany, the United States went after Japan, contriving a situation in which a"surprise" attack would be successful. The attack instantly reversed American public opinion and the nation entered a war against an enemy that was no direct threat to it. Furthermore, according to Victor, the United States had promised to defend the Philippines against Japan but failed to do so. The unkept promise prevented a truce between the Philippines and Japan and led to the loss of more than 1 million lives.
All to fight Hitler.
Our deeds outlive us, but especially when they have to do with sports.
But Ron Charles misses the point. It's not that students aren't reading his favorite books, they are not reading serious books at all. They seem to have lost the interest and ability to imaginatively create mental worlds or to compare alternative explanations of cause and effect.
That is the import of Mark Bauerlein's book The Dumbest Generation and of Tom Bertonneau's series on the Pope Center site (which I have mentioned previously). Dissecting the responses of middle-of-the-road college students on exams in his classic literature class, Bertonneau finds that students are confused about the B.C./A.D. distinction, mix up the Odyssey and the Aeneid, and even misspell words listed on the" cheat sheet" he gives them at test time. They haven't done the reading (even by the end of the course); all that they know they picked up in class, and apparently they weren't paying much attention then, either.
He argues that the rule caused and is causing much of the financial crisis. He notes that banks have"twice the amount of cash on hand that they did a year ago," but the mark-to-market rule makes them leery of lending it.
While no single fix will solve all problems, Forbes' position highlights the dismal misdirection of the policies of the last few months. Something needed to be done to avert a liquidity crisis; but it has mostly been an exercise in raiding the Treasury and putting our children in hock to satisfy current favored constituents.
Forbes' proposal might be a good step -- but if things got better, how could the administration and Congress justify multi-trillion-dollar budgets?
It has a theme, of course--that Roosevelt’s rhetoric about the “forgotten man” was directed at the wrong person; Shlaes’s “forgotten man” is the politically innocent individual who was forced to pay for ad hoc tinkering by intellectuals hankering for socialism. Roosevelt’s amazingly successful rhetoric--fireside chats on the one hand and outrage at big business on the other--allowed the president and his cronies to grab and keep power, even as the depression ground along with no end in sight.
A brief visit at Barnes & Noble resolved my puzzle. The featured books about the Depression tend to be hagiographical, like Jonathan Alter’s and Adam Cohen's, whose titles speak for themselves: The Defining Moment: FDR and the Triumph of Hope and Nothing to Fear: FDR’s Inner Circle and the Hundred Days that Created Modern America. Against these, Shlaes’s book is a refreshing antidote, if a bleak and skeptical book can ever be called refreshing.
In a three-part series, literature professor Thomas F. Bertonneau assesses the scope of their ignorance, the limits of their attention, and the nature of their failure to think. The series starts here at the Pope Center Web site.
Of course, Hoover was the the president at that time (his reign also brought in disastrous tax increases). Sowell is no friend of FDR's but he concludes his column by saying that FDR was simply following in Hoover's footsteps, and"Barack Obama already has his Herbert Hoover to blame for any and all disasters that his policies create: George W. Bush."
I asked Jim Gwartney, professor of economics at Florida State University and former chief economist of the Joint Economic Committee (among other qualifications) to comment. Here's his note (based on just the IBD article):
The analysis of Hummel and Henderson is far too generous toward the Fed. It fails to recognize the role of the Fed's expansionary then restrictive monetary policy during 2002-2006. Hummel and Henderson are correct that
interest rates can be a misleading indicator of monetary policy, but the same is true of the monetary aggregates.
Thus, one needs to look at a combination of things to determine whether Fed policy is expansionary or restrictive. The feedback from markets that adjust quickly is particularly important here. By 2004, the foreign exchange value of the dollar had depreciated substantially, the yield curve was quite steep, and commodity prices were rising. All of these factors along with the prolonged historically low short-term interest rates (the Fed funds rate was 2 percent or less throughout 2002-2004) were indicative of monetary policy that was too expansionary.
But these tell-tale signs were ignored by the Fed, including Alan Greenspan. In my judgment, by this time Mr. Greenspan was believing all of the media reports about his almost magical ability to smooth the ups and downs of the economy. He should have known better. After all, he was well aware of the views of Milton Freidman and other monetarists that the lags associated with changes in monetary policy are long and variable, and therefore policy-makers following stop-go policies in an effort to promote stability will in fact promote instability.
This is precisely what happened. The prolonged low short-term interest rates of 2002-2004 re-enforced the disastrous housing regulation policies, which
had destroyed the mortgage lending standards present prior to the
mid-1990s. The Fed policy along with the housing regulations made it possible for borrowers to take out adjustable rate mortgages and purchase more housing than they could afford. This generated both malinvestment in housing and the housing price bubble.
However, as the Fed responded in 2005 to signs that its policy was causing inflation, short-term interest rates increased, the monthly payments on variable rate mortgages rose, the mortgage default rate soared, and eventually highly leveraged investment banks like Henry Paulson's Goldman Sachs were on the financial brink. Of course, none of this would have happened if the housing regulators had not destroyed sound lending practices. But given that they did, the Fed's manipulation of short-term interest rates during 2002-2006 in creating the current disaster should not be overlooked.
My first thought: clever maybe, but a cheap shot that minimizes the $50 billion fraud. And, by the way, Madoff didn’t do it alone—he had help when the SEC turned a blind eye. Investors were lulled and gulled.
Upon reflection, however, there is something to Keith’s posting.
Our economic system is based on confidence that we are going to be properly treated. This confidence comes about because of past experience, the reputation of the people we deal with, private and public methods of validation, and the knowledge that we have recourse (courts and arbitration systems) to correct a problem when it occurs.
A bad experience like Madoff's trickery will teach some painful lessons, warning many investors to be more careful the next time.
But what lessons will be learned from the crisis and bailout? If any, probably the wrong ones. First of all, the bailouts create a moral hazard in which any organization will push to be “rescued.”
More fundamentally, the lessons of what happened to our economy, and why, may never be learned. At dining tables across the country this holiday season people are discussing what caused the crisis of 2008. Was it the Fed’s laxness? Barney Frank and his friends at Fannie Mae and Freddie Mac? The periodic madness of crowds? And if it was all of these and more, in which proportions?
Nearly 80 years after the Great Depression began, a similar conversation goes on about the cause of that crisis. There is no consensus. Then and now, the country is too large, the forces too many, and people’s political and ideological predilections too strong for widespread agreement to develop. Thus the Madoff scandal, however painful and shocking, will fade into history, but the economic crisis of 2008 may never be understood.
First, the Pope Center for Higher Education Policy (which I head) came up with a wish list for Santa. We tend to be naughty (criticizing the establishment) so we may not get what we want, but we're giving Santa all next year to bring us our four stockings full of reform.
And, second, Rich Vedder reminds us how good a teacher Jesus was, even though untenured, and how the institution he founded keeps its focus, unlike modern institutions of higher learning, where anything goes.
Most libertarian historians are probably not Christian, but they know that Christianity made a distinct and perhaps necessary contribution to the growth of liberty in the West. Whether this happened through providence or the happenstance of competition (for the latter see Deepak Lal’s insightful book Unintended Consequences) is not the subject of this reflection.
Rather, I’d like to make a point about liberty.
For some, perhaps most, Christians, the Christmas season is emotionally overwhelming, to the point where one Episcopal church in Raleigh has a “Blue Christmas Service” for those who find Christmas painful. Some Christians feel sad because a loved one has died and they miss the good times of the past. Others experience the season’s expressions of joy, hope, and salvation as an indictment of themselves because they do not feel joyous or hopeful or capable of being saved. And no one can escape the secular (but non-commercial) pressures of Christmas—to be with family, to give gifts, to make charitable donations, to be extra-friendly and cheerful (and not Scrooge-like).
Beyond that, all Christians experience the gulf between the celebration of an ideal world yet to come and the actual reality we live in. My father, an Episcopal minister, used to shape his sermons to acknowledge that gulf. He ended his Christmas Eve services with a prayer that the world would someday “give back the song the angels sing, of peace and love, good will to men.” But he also recognized that, nearly 2000 years into the project, it hasn’t.
Libertarians experience a parallel gulf. We dream of a world that respects the rights—the negative rights—of all people. Yet we look around and what do we see? Coercive government influence, seemingly increasing by the day. Profound ignorance about government, history, and the incentives that motivate people. Arrogance and self-righteousness. Blindness to the desires of people who want to cross borders and seek jobs. Populism, elitism, hypocrisy.
For us, nearly every day is a blue Christmas.
The good news is that libertarians are not restricted by theology, so they do not have to wait for a day that may never come. They can do something about today’s conditions.
Libertarians can use the tools of public choice, political entrepreneurship, communication skills, wealth accumulation, and more to understand why freedom is always in peril and incrementally restore or strengthen it. They can argue against restrictions on freedom. They can find models of freedom’s successes and promote them. And even in their dark hours they can admit that history, in spite of awful lapses, does reveal expansion of liberty, at the very least by the prosperity launched by the Industrial Revolution.
Rather than feel dejected about constraints on freedom, libertarians can—and I believe, must—keep trying to extend freedom, step by step. Seeking liberty incrementally through persuasion, logic, and example is, I believe, our Social Gospel, with a much better outcome for humanity than was achieved by the adherents of that somewhat distorted Christian philosophy.
The writers for Liberty and Power—and many readers—are trying to safeguard liberty. I wish them all success, whatever the season.
This failure was indeed a whopper. The SEC had received warnings for years about Madoff, as the Wall Street Journal detailed on December 18. But Madoff was also a respected figure in Wall Street, from whom Arthur Levitt Jr., chairman of the SEC during the Clinton years, sought advice.
One could argue that in the case of criminal acts such as fraud, the SEC is in way over its head. After all, its original goal (going back to 1933) was simply to require “full disclosure” of securities-related information.
Trouble is, over the years its powers and interests have stretched way beyond the initial task, something that often happens with regulation. And, as George Stigler famously pointed out, regulators almost always get cozy with the people they are supposed to regulate.
Yet the public is lulled into confidence that the government regulator is watching out for them. In this case, an extraordinary array of sophisticated people, firms, and charitable organizations were gulled.
Like the firms that are “too big to [let] fail,” Madoff Investment Securities was too big to even have doubts about. For years, the SEC went along blithely, throwing its weight around over minor matters, but blind to the securities fraud of the century.
He was an outspoken advocate of limited government; that’s probably why.
Troy Kickler, the historian who heads the North Carolina History Project (and who will soon be a blogger on Liberty and Power), is trying to restore awareness of Macon. Troy is editing Macon’s letters, and on December 1 he gave a talk about the legislator at the John Locke Foundation in Raleigh, N.C.
Nathaniel Macon opposed adopting the Constitution, believing that a powerful national government would destroy the liberties of individuals and state governments. He lost that fight, of course, but once the Constitution was adopted, he consistently opposed expanding the federal government’s powers (expansion that began almost immediately).
Macon became a national figure—and Speaker of the House—by opposing the Sedition Act of 1798, a clearly unconstitutional act that banned “false, scandalous, and malicious writing” about the government. The act was designed to quash the evolving Republican Party. The law “sunset” in 1801 and Macon helped keep it from being reenacted.
Macon opposed debt (public and private) and paper money, favored free trade, and hated government meddling. Among the quotes that Troy shared with his listeners:
“The attempt to govern too much has produced every civil war that ever has been, and . . . probably, every one that ever may be.”
“Principles can never change and what has lately been called the law of circumstances is an abandonment of principle, and has been the ruin of all free governments, and if the Republican party fall in the United States, it is owing to the same cause.”
That last one is something to reflect on at the close of 2008.
