Notes on the Epidemic of Privatization

Here are two snippets regarding the replacement of public provision of services with less desirable private sources.

Kaplan University has an offer for California community college students who cannot get a seat in a class they need: under a memorandum of understanding with the chancellor of the community college system, they can take the online version at Kaplan, with a 42 percent tuition discount. The opportunity would not come cheap. Kaplan charges $216 a credit with the discount, compared with $26 a credit at California's community colleges.

For better or worse, the tough times for public colleges nationwide have presented for-profit colleges with a promising marketing opportunity.

In California, the memorandum of understanding also requires each community college taking part to sign a credit-transfer agreement with Kaplan -- and most of the state's 112 community colleges are not eager to do so. Thus far, Kaplan has no takers for its courses. "Faculty from across the state were uniformly irate and disappointed about the memorandum of understanding," said Jane Patton, president of the Academic Senate for California Community Colleges, partly because faculty members were not consulted.

Lewin, Tamar. 2010. "For-Profit Colleges Find New Market Niche." New York Times (24 June): p. A 17.

Where the Metropolitan Transportation Authority sees a sure-fire way to lose money, Joel Azumah sees dollar signs." "Mr. Azumah, the president, owner and sometimes-driver of TransportAzumah, thinks he can make money running buses along three routes that the MTA plans to shut down this weekend as part of deep service cuts to fill a yawning deficit. The MTA says it was losing almost $2 million a year on the X90, X25 and X29 express bus routes.

Grossman, Andrew. 2010. "Route to a Fare Profit? One Private Bus Operator Aims to Benefit From MTA's Pain." Wall Street Journal (25 June).

A Racist Screed in the New York Times

Really bad, misguided, even malicious writing serves a purpose, showing in extreme form the faults that, more subtly expressed, can pass under the radar.  That’s my reaction to this execrable column from today’s New York Times on the violation the author felt when her front lawn mini-library was perused by a white couple.

In a nutshell: Erin Aubry Kaplan lives in a historic black neighborhood, Inglewood just outside LA, and wants to sustain it against the forces of gentrification.  She also loves books.  Uniting these passions, she places a small library-on-a-post in front of her house, the sort that passers-by can scan, add titles to or take titles from as they wish.  She hopes it would provide a sense of community among her black neighbors.  But then she sees two young whites stopping to check it out.  She wrote this article to express her horror that her offering, which she placed on her own property, was being “taken” by the forces of gentrification and whiteness, threatening the future of a neighborhood she values, but also her realization that the defense of black spaces requires much more than individual action.

The first problem with the piece, probably obvious to everyone except the woman who wrote it, is that, on the basis of the information she gives, there is no reason to assume that the white couple is any wealthier than she is.  Hell, she doesn’t even know their credit rating.  If the problem with gentrification is that working class people are pushed out of their homes and communities, it’s about money, not race.  Upper-income perusers of books who happen to be black could be vectors of the process just as readily as upper-income whites.

Deeper, however, is the problem of assuming a zero-sum relationship between the well-being of different groups, racial or otherwise.  (This is something I’ve written about earlier.)  If white people have the opportunity to live in a desirable neighborhood, like the Inglewood Kaplan is striving to build, ipso facto black people have less.  Those book-sniffing whites, by their very presence, will make the area inhospitable to black homeowners or at the least deplete their social capital.

Now of course, it is entirely possible that a particular white couple with plans for redeveloping Inglewood and the resources to carry them out, could be a mortal threat.  Or that whites hostile to the customs that have evolved over generations of black settlement could, if numerous and disrespectful enough, destroy the neighborliness Kaplan values.  But neither can be inferred from the sketchy story she tells, and the underlying assumption that more opportunity for some always has to signify less for others is pernicious.

Finally, there is an unspoken assumption that neighborhood improvements like mini-libraries cumulatively add up to gentrification, replacing long-time residents with better-healed newcomers.  If that were true, then it becomes an argument for resisting any such enhancement, whether it be more attractive landscaping around someone’s house, curbside swales, local bakeries with fresh bread, mini-parks and the like.  Is that the implication?

The problem with gentrification is not that neighborhoods get too many amenities; it’s that they are amenities that cater to the rich and drive up housing values beyond the reach of those who aren’t—in an economy bifurcated between those with too much money and those with too little.  (See this earlier discussion.)  Instead of even a smidgeon of clarity about these issues, what we get instead is a screed that truly justifies the label of reverse racism, a term usually invoked by those defending the existing racial order.  This, like the antisemitism of old, is the socialism of fools.

It is also revealing that such a dreadful essay would be published by the Times, which apparently considers it within the realm of reasonable debate.  That too is a statement.

LIFE, melancholy and the American Way

by the Sandwichman

In "The Gospel of Consumption," Jeffrey Kaplan channels the Sandwichman, arguing that if we want to save the earth we can start by sharing the work and the wealth. Kaplan borrows liberally from Ben Hunnicutt's books (Kellogg's Six Hour Day and Work Without End: Abandoning Shorter Hours for the Right to Work) and about the triumph of consumer culture over working less and also features a discussion of the anti-New Deal "American Way" publicity campaign conducted by the National Association of Manufacturers.



Co-incidentally, in my own research on the NAM, I kept stumbling across an article by John Tagg, titled "Melancholy Realism: Walker Evans's Resistance to Meaning". This morning I discovered that I had access to an online version of the article.

Tagg frames his discussion of the NAM American Way campaign with a discussion of the famous LIFE magazine photo by Margaret Bourke-White showing a breadline of African-American flood refugees in front of one of the 60,000 American Way billboards, this one proclaiming the "world's highest standard of living." Later in the article, he goes on to contrast Bourke-White's rhetorical clarity with the melancholic "unreadability" of Walker Evans's photography. In the process, Tagg touches on several of the images that are dear to the Sandwichman's thought.

One of those image in particular binds Kaplan's discussion of the Gospel of Consumption much tighter to the shorter work time movement. It is a leaflet promoting the American Way billboards, which included one proudly proclaiming "World's Shortest Working Hours!" This from an organization that cranked out a steady stream of literature denouncing the "disastrous effects" and "real problem" of the "dangerous fallacy" of shorter working time.



I guess it just goes to show, there's no way like the American Way!

The Corporate Scandal of Higher Education

I have been meaning for some time to offer a series of posts about the plague that is devastating education, even though education is supposed to fuel economic growth. I was stirred to stop procrastinating by a note in yesterday's Wall Street Journal, which reported that the Washington Post's Kaplan "education division, which accounts for more than 60% of total revenue, increased 15% to $747.3 million. The bulk of Kaplan's revenue comes from the higher-education unit, consisting of a group of for-profit colleges that primarily offer certificate, associate's and bachelor's degrees."

I am going to start out with a shocking piece from the New York Times, which describes the enormous salaries given to presidents of elite universities to serve on corporate boards. Administrative salaries alone should be enough to create an outrage now that money for teaching is drying up. These presidents might be expected to offer a patina of respectability for the corporations. Even more, presidents, who want to keep their lucrative board positions, will be careful not to offend corporate America. Others who want to have comparable money thrown at them will be equally careful. Here is the article:

Bowley, Graham. 2010. "The Academic-Industrial Complex." New York Times (1 August): p. BU 1.
http://www.nytimes.com/2010/08/01/business/01prez.html?_r=1&hpw=&pagewanted=all

"What does Shirley Ann Jackson know about shipping parcels? For that matter, what does Steven B. Sample understand about mutual funds? Dr. Jackson, who is a theoretical physicist and the president of Rensselaer Polytechnic Institute in Troy, N.Y., has served as an outside director on the board of FedEx since 1999."

"Dr. Sample, an electrical engineer and the retiring president of the University of Southern California, sits on the boards of directors of the American Mutual and Amcap mutual funds. He is also a director of another company, and stepped down two years ago from the board of the Wm. Wrigley Jr. Company, the candy maker."

"Dr. Jackson and Dr. Sample are part of a cozy and lucrative club: presidents and other senior university officials who cross from academia into the business world to serve on corporate boards. While academics can often bring fresh perspectives, managerial experience and the imprimatur of a respected institution to a board, they are also serving in an era when corporations wrestling with fallout from the financial crisis (think Bank of America, Citigroup and Goldman Sachs) or very public mishaps (think BP, Johnson & Johnson and Toyota) have raised the stakes for board members expected to guide corporations."

"Some analysts worry that academics are possibly imperiling or compromising the independence of their universities when they venture onto boards. Others question whether scholars have the time -- and financial sophistication -- needed to police the country’s biggest corporations while simultaneously juggling the demands of running a large university. "It is prestigious for a company to have a major university president on their board,"says Pablo Eisenberg, senior fellow at the Georgetown Public Policy Institute. "But few college and university C.E.O.’s are even qualified to understand the workings of a major public company"."

"According to a 2008 survey by The Chronicle of Higher Education, presidents from 19 of the top 40 research universities with the largest operating budgets sat on at least one company board. The trend is more widespread among public universities, but the private ones are catching up: the American Council on Education says that from 2001 to 2006, the proportion of presidents from all doctorate-granting institutions sitting on corporate boards rose to 52.1 percent from 47.8 percent at public institutions, and to 50.9 percent from 40.6 percent at private ones."

"Some of the more high-profile and ubiquitous academics include the president of Stanford, John L. Hennessy, who sits on three boards, including that of Google. (Google also has the president of Princeton, Shirley M. Tilghman, on its board.) The chancellor of the University of California, San Diego, Marye Anne Fox, is on three boards. And then there is Dr. Jackson of Rensselaer, the highest-paid private college president and one of the most prominent black university leaders. In addition to FedEx, she sits on the boards of four other companies, including I.B.M. and Marathon Oil, and she recently stepped down from the board of NYSE Euronext."

"The attractions are clear for the president: lucrative extra pay and useful networking, among other reasons. For a dozen hours or so each month for each board served, in addition to preparation time, and their wise advice, they can receive hundreds of thousands of dollars a year. Ruth J. Simmons, the president of Brown University and the first African-American woman to lead an Ivy League university, sat on the Goldman Sachs board until she stepped down this year. In 2009, she earned $323,539 from her Goldman directorship, including stock grants and options, as calculated by Goldman, and left the board with stock worth at the time around $4.3 million. This is in addition to her salary from Brown, $576,000 this year."

"Dr. Jackson earned $1.38 million from her directorships, comprising both cash and stock. That’s in addition to $1.6 million from her day job, including bonuses and other benefits. Beyond personal financial benefits, the interchange of ideas between campus and corporation can allow for a fruitful cross-fertilization. For example, Dr. Hennessy sits on the boards of Cisco Systems and Atheros Communications as well as Google. As an electrical engineer and a pioneer in computer architecture, he is well placed to bring industry expertise to the boards he serves."

"William G. Bowen was president of Princeton University for 16 years and served on two boards, including Merck’s. It was an experience, he says, that was invaluable in helping him build up Princeton’s then-fledgling life sciences activities. "It influenced my understanding of how the field was evolving, where new ideas were most likely to appear, where to look for talent,"he recalls. "It was one long seminar in the sciences and molecular biology"."

"Indeed, the path from academia to corporate boards began broadening in the late 1990s when companies sought to break up the traditionally white, male composition of their boards. Academia, and in particular university presidents, were a good source of prominent minority leaders and women who were established in their fields and had experience running big organizations."

"Phyllis M. Wise, the provost of the University of Washington, is on Nike’s board. Nike said it hired Dr. Wise, an Asian-American, "because of her impressive accomplishments and her record of independent thought, and we believe that through the exchange of ideas, both Nike and the University of Washington will benefit"."

"But according to James H. Finkelstein, a professor in the George Mason School of Public Policy, probably the biggest reason companies have sought out academics is the prestige they bring. Universities are among the few institutions trusted by the public, he says, and companies believe they can associate themselves with this quality by installing an academic on the board."

"Corporations think this is a way of enhancing their prestige and legitimacy, especially in the case of Ivy League presidents,"he says. "I suspect that’s the principal motivation. It’s probably not for their business sense."

"John Gillespie, who has written a book on corporate boards, "Money for Nothing,"says academics are often selected for another reason -- because they are less likely to rock the boat than directors from the business world. Academics may be trained to ask tough questions in their own fields, but when confronted with tricky business issues far above their level of expertise they "often become as meek as church mice,"he says."

"Most corporate governance experts think that a president serving on one board brings benefits to both the company and the university, but the situation becomes problematic as these academics serve on more boards. There may be diminishing returns to the university and less time to be an effective board member."

"Nell Minow, editor of the Corporate Library, an independent research firm focusing on corporate governance, says Goldman Sachs was hurt having Dr. Simmons as a director because she lacks financial expertise and was focused more than she should have been on other things like the firm’s philanthropy. She was chairwoman of the advisory board for a Goldman initiative, 10,000 Women, that provides women outside the firm with business and management education."

"That seat could have been held by someone who understood derivatives,"says Ms. Minow. "What we have learned from the financial crisis is that boards of directors have failed miserably in their No. 1 task of risk management. You don’t go on a board for networking, seeking contributions or working for minorities. You go on a board for one purpose -- to manage risk for the long-term benefit of the shareholder."

"Dr. Simmons declined to comment for this article. In an interview early this year after she announced she was retiring from the Goldman board, she said filling boards with specialists was "exactly the wrong direction." "You need people close to the industry to provide depth of experience, but you also need people with perspective,"she says."

"In the case of Dr. Jackson and her five board appointments, Ms. Minow says, "it is just physically impossible to do the work necessary to be a good director"on so many boards. The Corporate Library estimates that board members must invest 240 hours a year, including meetings and preparation, to do the work properly. But it can become a full-time job if the company runs into trouble."

"At the time, Goldman was being battered by questions about its involvement in the financial crisis and the lucrative pay it doled out to executives and employees even after the firm had received a huge taxpayer bailout. As a director, Dr. Simmons was partly responsible for approving Goldman’s bonuses during the boom years — including the $68 million pay package awarded to its chairman, Lloyd C. Blankfein, in 2007, the largest ever on Wall Street. Early this year Dr. Simmons said the criticism directed at Goldman was not the reason she gave up her position. She would not comment on whether the salaries the board had approved over the past decade were appropriate, except to say, "The environment for salaries on Wall Street has evolved over a period of time, and the environment today is different"."

"As a further sign of how complicated the issue can become, some academics at the University of Washington protested that Dr. Wise’s presence on the board meant they would not be able to criticize Nike over its labor policy, in particular the treatment of workers at factories in the developing world. "She is the chief academic officer of the university, to whom all faculty report, and her affiliation with Nike creates incentives for faculty to be less vocal about Nike’s human rights record," said Angelina S. Godoy, director of the university’s Center for Human Rights. However, Ms. Godoy said a recent landmark agreement between Nike and unions in Honduras made her less concerned about the university’s relationship with Nike."

A Reminder That It Was George W. Bush Who Was Responsible For Letting North Korea Get Nuclear Weapons

Tyler Cowen on Marginal Revolution has provided a link to a 2004 article from Washington Monthly by Fred Kaplan that lays out in great detail how George W. Bush, strongly backed by Cheney and Rumsfeld and against the views of Colin Powell, undid the agreement that Jimmy Carter and Bill Clinton made with the North Koreans in 1994 to shut down the North's plutonium production program for nuclear weapons.  I have blogged on tis here previously, but this article included more details than I had been aware of while confirming all I had previously said here previously about this unfortunate matter, which remains largely unknown to the vast majority of Americans.  One detail is indeed how Bush's obsession with invading Iraq (ironically supposedly to get rid of nonexistent WMDs there) contributed to his complete failure to stop North Korea from building these weapons.

Ironically even Trump looks almost good in comparison with Bush on the matter of destroying agreements made by predecessors that put a potential nuclear power that is hostile in a box regarding its program.  In the case of Trump it is Obama's agreement with Iran, which he regularly denounces and threatens to repeal and indeed nibbles at the edges of by adding new sanctions on Iran. But he has just for the third time recertified that Iran is keeping to the agreement, even as he threatened once again to repeal it if it does not get "fixed."  It would seem that the difference between the Bush and Trump situations is that while the main foreign policy advisers around Trump, Mattis, McMaster, and Tillerson, are clearly working to keep the agreement going, most of those around Bush, especially Cheney and Rumsfeld, were also keen on ending the agreement with North Korea, convinced that they could bring about the collapse of the North Korean regime, which, needless to  say, they failed to achieve, even as they handed a nuclear North Korea to all of us now.

The article also provides details on the matter of how Bush treated South Korean President Kim Dae Jung in a shameful and disrespectful manner in the months shortly after Bush took office, paving the way to the later collapse of the agreement with North Korea, a matter I have previously posted about here.  All of this is worth keeping in mind when we think that Bush was so much more reasonable than Trump.  Trump has done a lot of blundering, but so far has avoided doing anything nearly as dangerous or destructive as either invading Iraq or acting to push North Korea into getting nuclear weapons.

Barkley Rosser