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Wednesday, July 27, 2005
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The ‘thesdan with the New TV I was at a party at a 'thesdan’s the other day, and at one point, when everyone was chatting in his living room, he suddenly turned on a huge television he’d had installed in the middle of one of the living room’s walls. There was an embarrassed lull in the conversation as we glanced at him. He smiled at us and then back at the screen, which broadcast a technicolor golf tournament. He gave a satisfied nod. After a few seconds, he turned the television off and we went back to our chats. I was reminded of this conspicuous consumption moment when I read Thomas Friedman’s New York Times column today, in which he worries about America’s growing non-competitiveness with scrappy nations like China, Ireland, and India. Friedman sketches a suicidally lazy culture of entitlement in which accomplishment and reward are fully decoupled: John Mack, the new C.E.O. at Morgan Stanley, initially demanded in this contract he signed June 30 that his total pay for the next two years would be no less than the average pay package received by the C.E.O.’s at Goldman Sachs, Merrill Lynch, Lehman Brothers, and Bear Stearns. If that average turned out to be more than $25 million, Mr. Mack was to be paid at least that much. He eventually backed off that demand after a howl of protest, but it struck me as the epitome of what is wrong in America today. Friedman concludes that Americans have decided being on the offensive competitively is “too much work. Maybe that’s the wristband we should be wearing: Live wrong. Party on. Pay later.” The 'thesdan with the new tv is sort of like the Morgan Stanley C.E.O. What matters is not what he generates for the world in terms of value, but where he is on the status chain - a form of competitiveness, to be sure, but, as Friedman notes, a passive and self-destructive one. Juliet Schor and other economists have pointed out that we respond not to absolute but to comparative measures of personal wealth. The 'thesdan’s display of purchase power superiority assumes that, like him, we spend our lives comparing our personal wealth to that of our neighbors. The display intends to generate the sort of envy that compels us to buy our own mounted television. Having bought this expensive toy (party on), we merely increase our debt burden (pay later). Friedman makes the same point about our refusal to give up cars that are bigger than our neighbors’ cars - a gesture with personal debt implications, to be sure, but also, as Friedman notes, one with moral and political implications in terms of American dependency on Middle East oil. But is all of this “the epitome of what is wrong in America today”? Well, maybe, if you push what he’s saying a little further. Push it toward universities, for instance -- the subject of this blog. Harvard University’s money men departed en masse recently because a lot of alumni opposed their compensation, typically around twenty or thirty million dollars a year for each of them. The alumni called it “obscene” for a non-profit institution dedicated to education to be associated with Wall Street forms of compensation. In their defense, the money men basically said: This is how much we’d be earning if we were in the private sector. If you want to keep us, you’ve got to pay us that way. We wouldn’t think of working for a non-profit like Harvard at the sort of pay cut that would bring us in at only ten million dollars a year. Why should we? Harvard’s no different from any other corporation. It’s the lateral competitive thing again. The intrinsic worth of an activity counts for nothing. What counts is your monitoring of the money and goods people in your cohort are getting. This is also a way back into ye olde grade inflation question on American campuses. You get grade inflation when more and more teachers are comparing their salaries -- strongly linked to course evaluation forms -- to other teachers, rather than focusing upon their vocation. (Their salary matters more than it should because they’re planning to buy one of those mounted tv things.) You get grade inflation when more and more students are comparing their GPAs to those of other students, rather than focusing upon the content of a course of study. |