‘I’m making money, not losing it, but I guess jealous people have decided that becoming rich and powerful from a national tragedy is suddenly evil.’

The Onion captures one of UD‘s favorite memes – she’s covered it for years on this blog – the Criticism of any Form of Financial Activity is Merely Jealousy of Someone Richer than You Are meme. It’s been fun to quote Greg Mankiw, Eric Cantor, and Lawrence Kudlow (read the whole page) on the “politics of envy” over the decades.

Last time I checked, using sensitive information to enrich yourself at the expense of hundreds of millions of other people was totally fine.

Absolutely; and you can read article after article calling for the legalization of insider trading, a move blocked by the petulant resentment of the many against America’s winners. And now Burr’s getting sued over something that should be totally legit!

Alan Jacobson, a shareholder in Wyndham Hotels and Resorts, sued Burr in federal court on Monday, alleging that the senator used private information to motivate a mass liquidation of his assets. It is illegal for senators to use nonpublic information in conducting securities exchanges.

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There’s something so bracingly, so utterly, so fundamentally human about pleasuring yourself at the thought of screwing the unwashed, of being first in line for goodie bags at events no one else even knows are happening… In a great piece of satire – The Christmas Letter – Gregg Easterbrook captured the pleasuring perfectly. Here’s how it begins:

What a lucky break that I’m in first-class on the plane back from Istanbul, because there’s room to take out the laptop and write our annual Christmas letter. My brand-new laptop receives wireless satellite Internet from anywhere in the world. While I was at the board of directors session during the Danube cruise, I pretended to be listening to the chairman but actually was using the laptop to watch Emily’s oboe recital on live streaming video from Chad’s digital minicam! So the world really is growing smaller. And if you haven’t gotten one of these new laptops, you should. Of course, now there’s a waiting list.

Of course, now there’s a waiting list. When these rare birds are captured, we can, like Diana Henriques, interview them; but the secrecy at the heart of their pathology makes it difficult to yield much.

Now that Burr’s been unveiled, he’s calling for an ethics investigation into himself because, in the immortal words of George Costanza, “if anyone had said anything to me at all [about how] that sort of thing is frowned upon…”

O reason not the need!

This guy calls it tragic that

Harvard is paying a team of professional fund managers as much as $5 million [apiece] per year to lose the university more than $9 billion over the last five years compared to a passive, indexed investment in the S&P 500.

He weeps that if they’d invested more wisely, “[Harvard’s] endowment would have grown to more than $42 billion, instead of $33 billion.”

(Does he know that only a few years ago Harvard fund managers were paid $35 million a year apiece? Let us not tell him! He is sad enough.)

Aye, and if they’d invested yet more wisely, Harvard’s endowment might have grown to $420 billion… Howl, howl, howl, howl! Oh, you professional fund managers are made of stone! If I were you with eyes and a tongue to speak with, I’d crack heaven wide open with my laments! Tens of billions gone forever. I know how to tell when an endowment is alive or dead. Harvard’s is as dead as the cold ground. If you have tears, prepare to shed them now.







Sometimes it’s about mandated vaginal ultrasounds; and sometimes…

… it’s about helicopters.

The Ira Rennert – Michael Bloomberg lifestyle seems finally to have alienated New Yorkers.

Throughout the race, Mr. de Blasio overshadowed his opponent by channeling New Yorkers’ rising frustrations with income inequality…

I’m sure, as Greg Mankiw, Eric Cantor, and Lawrence Kudlow insist, it’s all just petty envy. Once these millions of New Yorkers understand that their progressive politics are simply an embarrassing epiphenomenon of their desire to be as rich as Ira Rennert, no doubt they’ll go back to voting for the I’ll land my fucking helicopter wherever and whenever I fucking want crowd.







Inequality

From William Galston’s review of Tyler Cowen’s book, Average Is Over:

There’s nothing we can do, says Mr. Cowen, to avert a future in which 10% to 15% of Americans enjoy fantastically wealthy and interesting lives while the rest slog along without hope of a better life, tranquilized by free Internet and canned beans.

Bread and circuses is not the policy of a republic, but rather of an empire entering moral senescence. Nonetheless, Mr. Cowen seems untroubled by his hyperpolarized vision.

The kindest description of his stance is moral indifference: “It will become increasingly common to invoke ‘meritocracy’ as a response to income equality,” he writes, “and whether you call it an explanation, a justification, or an excuse is up to you.” While allowing that some might consider extreme socioeconomic inequality unjust, he revives the neoconservative canard that relatively well-off academics lead the charge against such inequality because they envy the status privileges of the wealthy. He seems not to have considered the possibility that his depiction of our future might fill them with justified revulsion.

Over the course of writing this blog about universities and professors, UD has encountered the neoconservative canard about envious academics again and again. A few years ago, Jonathan Chait gathered a few of many examples in a Los Angeles Times column titled Envy Them? No. Tax Them? Oh Yeah. Greg Mankiw, Chait noted, thinks that academics concerned about staggering personal wealth in the context of rising inequality are simply caught up in “the politics of envy.”

What’s depressing is that even highly credentialed conservatives such as Mankiw equate any discussion of class inequality with “envy” of the rich. The accusation is actually bizarre. Liberals want to make the rich pay higher tax rates not because they hate them. (In fact, as conservatives love to point out in other contexts, many liberals are rich.) It’s because somebody has to pay for the government, and the rich can more easily bear higher rates.

Paul Krugman echoes Chait.

To show concern over the growing inequality is to engage in the “politics of envy.”

But the real reasons to worry about the explosion of inequality since the 1970’s have nothing to do with envy. The fact is that working families aren’t sharing in the economy’s growth, and face growing economic insecurity. And there’s good reason to believe that a society in which most people can reasonably be considered middle class is a better society – and more likely to be a functioning democracy – than one in which there are great extremes of wealth and poverty.

Reversing the rise in inequality and economic insecurity won’t be easy: the middle-class society we have lost emerged only after the country was shaken by depression and war. But we can make a start by calling attention to the politicians who systematically make things worse in catering to their contributors. Never mind that straw man, the politics of envy. Let’s try to do something about the politics of greed.

Krugman and Chait were writing in 2005. That Cowen can happily continue the canard suggests that it will be very difficult to kill. You can call it a canard; you can call it bizarre; you can call it a straw man. It will keep coming at you.

What UD has tried to do in some of her writing here is, as Krugman suggests, look in a different direction: the politics of greed. She has been intrigued by this statement from Robert Hughes about the art market:

[T]he present commercialisation of the art world, at its top end, is a cultural obscenity. When you have the super-rich paying $104m for an immature Rose Period Picasso – close to the GNP of some Caribbean or African states – something is very rotten. Such gestures do no honour to art: they debase it by making the desire for it pathological.

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A certain amount of envy toward the rich is normal. It is to be expected. Indeed, that envy can be an engine, a motivator, a thing that helps our economy of entrepreneurs hum along. The politics of envy crowd, however, wants to scare us into believing that this emotion is becoming pathological, even violent, a threat to the republic. Lawrence Kudlow writes that the envious are really saying

“How dare they be successful earners and investors… Should we go out and shoot [the super-rich] for their success?”

Eric Cantor also seems to have in mind French revolutionaries using envy of the rich to trigger civil war:

There are politicians and others who want to demonize people that have earned success in certain sectors of our society. They claim that these people have now made enough, and haven’t paid their fair share. But, pitting Americans against one another tends to deflate the aspirational spirit of our people and fade the American dream.

I believe, with Galston and Krugman, that the greater menace lies in the “moral senescence” of a country of “great extremes.” Senescence, not riots. As Robert Reich remarks, “If you give up on democracy, you are basically saying to the moneyed interests, the powerful people and institutions of society Take it all… Then we are a hundred percent plutocracy.” This is why, on the subject of universities, I dwell on obscene endowments and the universities who pay each of their money managers $35 million a year to make their endowments grow toward… what? They are already in the tens of billions. The hundreds of billions? It’s why I talk about universities who honor trustees like Steven Cohen, a man with a personal fortune of nine billion dollars, and a man in constant trouble with the SEC.







UD Wonders: What will this unwelcome publicity do to NYU’s plans to attract and retain faculty…

…by offering them amazing loans not only for fantastic Manhattan apartments and vacation houses (as described in this article) but also for third homes in European capitals?

To be sure, NYU hasn’t yet extended its two-subsidized-luxury-residences policy to a third subsidized overseas residence; but UD is confident this will be its next move. You can’t expect to draw the best, most committed professors to your unattractive school in Greenwich Village without offering to subsidize a primary residence, a vacation residence, and a place in a foreign capital of the professor’s choosing.

I mean, let’s do what the real estate people call comps; let’s look at how important people in Manhattan tend to live. Take the Murdochs. They own six residences, one on the Upper East Side, and the others in “Beverly Hills, London, Beijing, Cavan in South Australia and Carmel in California.” So say you’re recruiting a new NYU law professor. The legal job market has collapsed, so few of the professor’s students will get good legal jobs, but put that aside. She must be given what the very best professors demand if they are to be successfully recruited: One course per year. Armies of teaching assistants. A huge salary. Time off like crazy. Summer travel and research money. Plenty of freedom (and, once again, time) to pursue all conceivable forms of outside compensation.

You simply cannot expect such a person to buy a house with her own salary. You will need to give her spectacular deals on Murdoch-worthy residences in New York City, in surrounding states, and in a foreign capital.

Charles Grassley, that sour old scold who seems to see his job as superintending the American tax dollar, gets all high and mighty about what NYU is doing:

“Universities are tax-exempt to educate students, not help their executives purchase vacation homes,” he said in a statement on Monday. “It’s hard to see how the student with a lifetime of debt benefits from his university leaders’ weekend homes in the Hamptons.”

Ha! Loser! As Greg Mankiw and Eric Cantor have noted, Grassley’s just envious because he has a shitty little Senator salary, and these people are so much richer.

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UD thanks David.







Stomach-turning greed makes strange bedfellows.

Senator Charles Grassley echt-American right-wing nerd – and Andrew Ross – left Euro hipster – find common ground in their disgust at the big-money machine New York University has become. Both wonder why a non-profit uses its extensive tax breaks to bleed its students for tuition, underpay its faculty, and give millions of dollars to administrators.

The culture gap between faculty and administration is pretty staggering lately. We’re scrambling to offer unpaid MOOCs; they’re looking for more Helen Dragas and Steve Cohens to put on the university’s board of trustees.

And indeed herein lies the problem, if you ask UD. Ross asks:

“Faculty who don’t necessarily get concerned with governance issues or for whom academic governance is not something that turns them on, these revelations I think turned the stomachs of a lot of people,” Ross added. “Just the scale of the payouts, multimillion dollar loans, multimillion dollar homes that were purchased, and the salaries. They really add up to a package of questions that have led to requests for further investigations.”

Part of the answer to this package of questions involves that board of trustees. NYU’s – like most fancy schools’- is dominated by hedge fund managers and the like. This means that over the last couple of decades the people with whom administrators consort on a daily basis are multimillionaires and even (Steve) billionaires. Larry Summers, Ruth Simmons – their immediate world has been the world of Goldman Sachs, where earning less than twenty million dollars a year is a mark of shame.

It’s not merely that high-ranking administrators these days consort with hedgies; like presidents Summers and Simmons, they often are hedgies, or they sit on the boards of hedge funds.

Trustees have always been rich, of course; but when ascending to an administrative university position now means that your compensation standard rises from six figures to seven or, uh, ten (Steve), you are going to feel compelled to shake down the school for big bucks. Otherwise you won’t be able to live with yourself.

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One practical recommendation for NYU from UD: Book a Greg Mankiw “politics of envy” talk and make faculty attendance mandatory.







UD’s buddy, Tenured Radical, deserves all sorts of praise…

… for having understood what Columbia University’s Sudhir Venkatesh was long before the New York Times got wind of it. Her post about Columbia’s adorably rogue sociologist appeared way back in April 2009, and her attack on his book about living in a Chicago housing project tells you a lot about the power of the singular, agile, independent blogger to get out ahead of issues (look how long – with a few exceptions – it took everyone else), and about the power of a true education in the methods and ethics of particular scholarly fields.

Of course TR couldn’t know, when she wrote, that Venkatesh’s financial ethics are apparently as shaky as his scholarly; she couldn’t have read these 2010 accounts of his teaching (missing many classes; making highly-selected, immense-tuition-paying Columbia students watch YouTubes when he was too busy to show up); but no one reading her devastating review of his book can miss the larger picture of this man as another in the lengthening line of Jonah Lehrers, Marc Hausers, and Johan Haris.

All of these men, when cornered, said a version of what Venkatesh has said:

I was overwhelmed, I was working both at Columbia and at the FBI, and I struggled to keep up.

In all of these cases, we’re supposed to sympathize with people making up research (Hauser) and quotations (Lehrer, Hari), misusing funds (Venkatesh), and lying to pretty much everyone — because they’re so destructively ambitious that they’ve taken on more than they can handle.

When Tenured Radical went after Sudhir Venkatesh in 2009, several of her readers, in the comment thread, accused her of envy. One of his friends, quoted in the New York Times story, accuses his detractors of envy.

Envy’s a beaut. UD‘s all-time favorite use of it has to be Greg Mankiw’s and Eric Cantor’s, as they labor away against new tax policies. People who aren’t rich envy rich people and want to hurt them — that’s what changes in taxation are about.

Envy’s a real human emotion, to be sure. A biggie. But just because everyone’s susceptible to it, and just because it’s so low, cynical argumentative opponents realize it can be a hell of a good button to push. Instantly it distracts people from the intrinsic legitimacy of your arguments; it makes it all about you, and your grubbiest motivations. It is the quintessence of ad hominem technique.

Bravo to TR, then, not merely for having seen Venkatesh before others saw him, but for standing up to the you’re envious folk.

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A statistics professor at Columbia recalls:

When Sudhir was in charge of Iserp, he told us that they were out of money and would not be able to honor existing commitments. Or, to be more precise, that things that I considered commitments were not actually so because they had only been transmitted orally, and that more generally Iserp was broke and could not support research in the way that we had expected. I was pretty angry about that, but when Sudhir informed me that he was suddenly stepping down as head of Iserp to work on a project with the Justice department, I assumed that he was better suited to be a researcher than an administrator and I offered him statistical help with his DOJ project if he ever needed it. I figured he was back on the research track and that this was better for all concerned. I don’t think I’d be a very good administrator myself, so I just figured Sudhir had been over his head. I’ve only seen him once since, it was a year or so ago at a sociology seminar, but we were sitting in different areas of the room and I had to leave early, so we did not get a chance to speak.

When I later heard that hundreds of thousands of dollars were missing, that put a different spin on the story. I had heard rumors of an investigation but I’d never known that there was an official document, dated Aug 4, 2011 (nearly a year and a half ago!) detailing $240,000 of questionable expenses including $50,000 for fabricated business purposes. If, as Sudhir is quoted as saying in the news article, he’s only paid pack $13,000 of this, I assume more will happen. It’s not clear why the university would pay a salary to someone who still owes them over $200,000.







“And if you want to have a concrete demand (as OWS observers are always saying), why not push Harvard to make its professors disclose their private consulting clients and the people who fund …

… their outside research?”

That would be one way to go. But extend questions about business ties to trustees.

Another direction UD would suggest: That pesky thirty-two billion dollar endowment. That’s an awful lot of money for one university to be sitting on. What’s Harvard University doing with it? What are the moral obligations attached to having accumulated an endowment bigger than the gross national product of many countries?

Whether frightening a congressional blowhard afraid of dissent, or drawing attention to a professor who thinks concern about economic inequality is “the politics of envy,” campus protesters these days are looking pretty sharp.

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Jonathan Chait in 2005, on the envy meme:

In a recent National Review Online column in which he was forced to acknowledge the higher incomes enjoyed by the super-rich, [Lawrence] Kudlow fired off the following sarcastic ripostes to a New York Times article by reporter David Cay Johnston on the rich: “How dare they be successful earners and investors”; “Should we go out and shoot these 145,000 [taxpayers] for their success?”; and “Germans have an ‘equality sickness’ that makes them dependent on the welfare state. Is that what David Cay Johnston has in mind for America?”

Speaking as a member of the liberal media, I can answer the last question very certainly: Yes, yes it is. If you walk in any newsroom in America, you will find reporters whispering to each other in German, humming “Deutschland Uber Alles” and scheming to install somebody of Teutonic stock in the White House. (Making Arnold Schwarzenegger governor was just the first step in this plot. Shhh.)

A slightly less inflammatory response than Kudlow’s came from Harvard economist and former Bush economic advisor Greg Mankiw. “The data show that the rich take a rising share of income when the economy is booming, such as during the 1920s and 1990s,” Mankiw wrote in a letter to the New York Times, concluding that if policymakers “want economic prosperity for all, they should avoid focusing on the politics of envy.”

Mankiw’s choice of decades to focus on is a bit strange. Although I’m not an economist, I understand that the 1920s did not end well. Moreover, Mankiw ignores the nearly three decades after World War II, when the nation enjoyed high economic growth while the share of income held by the very rich fell. It’s worth remembering that period because although people nowadays tend to think of the rich getting richer and the poor getter poorer as inevitable, some of our most prosperous years coincided with rich and poor growing more equal.

Anyway, it’s not just a matter of which decades you focus on. Mankiw is simply wrong. UC Berkeley economist and former Clinton Treasury official Brad DeLong ran an analysis, finding no connection between general prosperity and the share of income held by the very rich.

What’s depressing is that even highly credentialed conservatives such as Mankiw equate any discussion of class inequality with “envy” of the rich. The accusation is actually bizarre. Liberals want to make the rich pay higher tax rates not because they hate them. (In fact, as conservatives love to point out in other contexts, many liberals are rich.) It’s because somebody has to pay for the government, and the rich can more easily bear higher rates.

Moreover, there are ways of accomplishing this short of shooting the rich or imposing socialism, say raising the top tax rate to where it stood during the Clinton years. That, by the way, was the other decade of prosperity invoked by Mankiw.







Blogoscopy

From The Economic Times, India:

Robert Bruner… the dean of Darden School Of Business at the University of Virginia … has one of the most readable blogs I’ve seen in a long time. His posts are fairly frequent and most of them are so original, well thought out and sincere (as opposed to cynical) that they may actually be called ‘wise,’ a term that’s very seldom used in its true sense these days. Bruner’s posts come with innumerable quotes from literature and his erudition touches subjects ranging from leadership and ethics to innovation and work-life balance, often linking them to contemporary events.

… “A blog is like a huge chalkboard that everyone can read — it helps me extend the reach of my teaching well beyond the classroom,” says Bruner. “I also do it because it allows me to inform my audience, frame an agenda and shape discussion. That’s something leaders need to do.”

… A high grade blog is obviously a time consuming process and Bruner’s advice to busy executives who would be bloggers is to slow down occasionally and make time to reflect on “what it is that delights or pains them most,” when they choose their subjects. “Great writing starts from the heart,” he says. “But then, you have to educate yourself a bit on the subject before you write or else you might express an opinion that has no basis. Finally, when you write, it’s best to pretend you’re speaking to a friend or a sympathetic acquaintance.”

Though he’s been blogging for years now, Bruner never uploads the first draft of his posts — he still takes care to re-work and edit his writing before sending it into the blogosphere. It takes time, but it’s obviously worth it.

“Intellectuals love to blog,” he says. “The blogs of the famous intellectuals constantly refer to each another and contain very stimulating debate. Take Paul Krugman or Gregory Mankiw, economists at two ends of the spectrum. Their arguments are at a level of detail that average readers won’t find interesting, but they do it anyway.”

Academics like Bruner find themselves pulled into the blogosphere in part because their net-savvy students demand it of them. “Once these students graduate into the outside world, they will expect the same thing from the leadership there,” says the dean…







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