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NYU Administrators Create Student Debt Slaves to Subsidize Summer Homes, Ginormous Pensions

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When union members demand decent pay levels and work conditions, they are charged with featherbedding and overmanning or the new neoliberal catchall, “demanding uncompetitive wages”. But when the upper crust loots institutions, the mainstream media is typically missing in action.

The latest find is from Pam Martens, who has been keeping tabs on the administrator-enriching real estate racket at NYU. She ferreted out an egregious housing deal for Jack Lew when he was at NYU. As we wrote in February:

Recall that Lew is essentially a career elite technocrat, with his major stint out of government being during the Bush Administration, when he first served as the Executive Vice President for Operations at NYU (where his noteworthy accomplishment was busting the bargaining rights of grad students) and then became the chief operating officer for Citigroup’s alternative investment group….

Lew came from a job at NYU where he already looks to have been considerably overpaid. He received over $840,000 for the academic year 2002-2003, which had him earning more than most university presidents, including NYU’s president. And on top of that, as Pam Martens ferreted out, he was apparently given a $1.3 million house. I’m not making that up, go read her piece. The mechanism was that NYU lent the $1.3 million to buy the house to Lew and then forgave it over five years. Oh, and they paid him the money to pay the interest too. We will assume that the forgiveness of debt was reported properly to the IRS.

Now the house deal (which is rather bizarre given that NYU owns lots of nice faculty housing) might be what made Lew’s pay deal so out of line relative to his job. But if the forgiveness of debt was not included in the total, it’s even more insane, the equivalent of $1.1 million a year.

There’s simply no way this compensation level (or the house side deal) was justified by any notion of what the position demanded. You don’t need a marquee name for an operations job. I can give a long list of people I know personally who have more relevant experience and be happy with a ton less money. Nor is there any evidence that Lew did enough in the way of fundraising to justify his NYU pay level. This was a low-stress overpaid sinecure arranged by the Rubin mafia.

And it’s important to recognize that this sort of rent extraction by unproductive overhead is a significant contributor to the explosion in education costs. When I was young, the top administrators were modestly paid. They viewed the job as quasi public service. The hours were generally not taxing, although the politics could be fractious. The faculty looked down on you but you had lots of stature in the local community, the top echelon might live in housing the school owned as a perk and you got the bennies of university life. The sort of people who took those jobs were old money who’d spent some time in the private sector and wanted a change of pace in their middle age or executives who’d lost out in corporate intrigue or via a takeover.

Benjamin Ginsberg says that 30% of the increase in educational costs over the last twenty-five years is due to administrative “growth”. That sounds low to me, and I’d imagine the overheads have attributed as much of their costs as possible to program. For instance, universities have also overspent on facilities, and a big building program not only justifies more adminisphere, but some of those costs may have been allocated to the big build rather than as ongoing overheads. I mean, why have Jack Lew types around if they can’t pretty up the books?

Lambert flagged a post from the Homeless Adjunct that makes clear the degree to which the executive classes at universities are using the same playbook that their private sector counterparts have perfected, that of squeezing ordinary workers (in this case, faculty) to fatten their pay packages (emphasis ours):

At latest count, we have 1.5 million university professors in this country, 1 million of whom are adjuncts. One million professors in America are hired on short-term contracts, most often for one semester at a time, with no job security whatsoever….earning, on average, $20K a year gross, with no benefits or healthcare, no unemployment insurance when they are out of work…

If you are old enough to remember when medicine was forever changed by the appearance of the ‘HMO’ model of managed medicine, you will have an idea of what has happened to academia….once Nixon secured passage of the HMO Act in 1973, the organizations went quickly from operating on a non-profit organization model, focused on high quality health care for controlled costs, to being for-profit organizations, with lots of corporate money funding them – and suddenly the idea of high-quality health care was sacrificed in favor of profits – which meant taking in higher and higher premiums and offering less and less service, more denied claims, more limitations placed on doctors, who became a “managed profession”. You see the state of healthcare in this country, and how disastrous it is. Well, during this same time, there was a similar kind of development — something akin to the HMO — let’s call it an “EMO”, Educational Management Organization, began to take hold in American academia. From the 1970s until today, as the number of full-time faculty jobs continued to shrink, the number of full-time administrative jobs began to explode. As faculty was deprofessionalized and casualized, reduced to teaching as migrant contract workers, administrative jobs now offered good, solid salaries, benefits, offices, prestige and power. In 2012, administrators now outnumber faculty on every campus across the country.

Now to the gold-pated administrators at NYU. As Pam Martens tells us:

In September 2009, the New York Times published a remarkable exercise in inanity, profiling John Sexton, President of NYU..

We don’t, for example, learn from the interview that his home on Fire Island has been financed since 1994 by several million dollars in loans from the NYU School of Law Foundation and NYU itself…

This is not the only residence that NYU has made possible for its President. He has the use of two well appointed apartments owned by NYU in Manhattan. Sexton, who turned 70 in September, is also set to receive a length of service bonus of $2.5 million in 2015 and an annual pension of $800,000 when he retires. That pension is the equivalent of NYU taking $10 million of its assets and placing them in an immediate annuity for Sexton.

Sexton has plenty of company when it comes to getting out of the city in the summer through the generosity of NYU. Richard Tsien, Director of the NYU Neuroscience Institute, bought a house in East Fishkill, New York, 76 miles from the university, for $1,125,000 in February 2012 with $500,000 in financing from NYU. According to an online description, it’s a stone house on 7 park-like acres with a flowing stream and a functioning 12-foot water wheel.

Numerous other NYU professors have country homes financed by the NYU School of Law Foundation or NYU. Between primary residences and vacation homes, NYU and its affiliated nonprofits have an estimated $72 million to $96 million outstanding in loans to faculty and administrators. The university has acknowledged 168 loans.

These revelations come on top of other recent outrages at the university, such as the purchase of a $6.15 million condo on East 70th Street to house Robert Grossman, Dean of the NYU Medical Center. Grossman’s combined compensation at NYU as of the fiscal year ending August 31, 2011 was $3,488,960. Five other doctors at the Medical Center receive a combined total of $10.5 million in compensation.

Martens also recounts how Senator Chuck Grassley was outraged by the Jack Lew loan deal and has demanded that NYU produce details of loans made from 2000 onward, including key terms, such as interest charged and whether the loan was forgiven. NYU is stonewalling, refusing to turn over records and only allowing Grassley’s aides to read them and take notes. Senate Democrats aren’t supporting Grassley’s efforts and he can’t issue subpoenas without their votes. Martens also raises the issue of whether the loan schemes run afoul of IRS rules for not for profits, which prohibit them from using net earnings for the benefit of individuals or shareholders.

Higher educational institutions embody what we’d like our youth to become when they grow up. NYU’s leaders send a loud and clear message: plundering large not for profits is an attractive career path. And no one need care what husks they leave in their wake.

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103 comments

  1. Ben Johannson

    The United States seems remarkably good at churning out large numbers of sociopaths. Seems to confirm the significance of the “nurture” apect in the process given American children are trained by the old saying “anything that isn’t nailed down is mine, and anything I can pry loose isn’t nailed down.”

    1. diptherio

      Actually, we teach our children to share and to be kind. It’s not until about 18-19 years old when they get the “serious adult” training, that we teach them that all that stuff about sharing was just a bunch of BS.

    2. washunate

      Nah, we don’t have more of them. We just let the criminals run the show, so it looks like they’re everywhere.

    3. wunsacon

      Lepers largely disappeared from Europe centuries ago. In contrast, we certainly don’t appear to be breeding “lying” out of us. Indeed, I wonder whether human lying is *evolving* to become more prevalent and more sophisticated over the generations.

      Think of a Machiavellian variant of Idiocracy. How else would lying be so prevalent and yet both reviled and tolerated? How else would we have supplanted cultures worried about the “Seventh Generation” with cultures fracking this year’s NG without worrying about next year’s water supply?

  2. Hugo Stiglitz

    Are there any institutions in American society that have not been thoroughly compromised by greed or other human pathologies? Anyone who can cash in on, or take advantage of their position of authority is doing so it seems. Government, education, business, religion, you name it, all these organizations that once bound together society are being exposed as thoroughly rotten.

    Christ, no wonder people are so screwed up there.

    So very depressing.

    1. jake chase

      Yes. The problem is that every large institution is now operated (and plundered) for the benefit of those empowered to run it. Nonstop propaganda and public relations exaggerates the dubious “services” allegedly performed by these institutions. People are sold the sizzle and the executives get the steak.

      Imagine spending more than $100,000 to attend NYU. It doesn’t even have a decent campus or a football team, and the law school is grotesquely overrated. I still get 20 pounds of fund raising drek from NYU every year, the sole reward of a wasted part time odyssey toward an LLM in taxation, a degree which has no value whatsoever unless one longs for a career in corporate tax avoidance. IMHO they ought to just close it down and incarcerate all the administrators.

      Is that wrong?

      1. Finnucane

        At the risk of disclosure of personal details that are none of the Internet’s business, I’ll just say that I’ve been there, brother. For me, it’s debt peonage until age 70 or so.

  3. Dave

    Amazing how mans greed corrupts all things. This is just another example of how our society and world is deteriorating.

    1. Stephen Gardner

      The problem is that we have made greed a virtue. It used to be one of the seven deadly sins. Now it is the value that trumps all others.

    2. OMF

      Greed was always there. The question I ask is — how and why did it get so bad.

      I begin to suspect this has a lot to do with the reason for how the 60′s hippies became the 80′s yuppies.

      1. Glenn Condell

        For the 1% of a generation ago usury and deception were sins. They occurred but were bad form and not a source of pride. Not any more.

  4. tawal

    As egregious as this is, it is a drop in the bucket. The focus is better towards the plutocrats, like the Koch’s who have doubled their wealth since the Great Recession. Occupy the Forbes 400!

    1. washunate

      I would offer the exact opposite perspective. Higher education and healthcare are the nexus of the system, where money and power and the subtle influences of careerism and opportunity intersect. Look at who serves as Trustees and Board members. Look at real estate holdings and employment levels. Look at the compensation packages of students and housekeepers vs. the top administrators. Look at government funded research that later benefits private actors. Look at the size of police forces and disregard for Constitutional rights and participation with government spying and oppression. Look at how student loans and medical debt effectively create classes of indentured servants and second class citizens for whom real choices about participating in our system don’t really exist.

      Higher ed and healthcare aren’t minor sideshows; they are critical institutions in the exercise of stagnating wages and increasing prices, in the rise of the two-tiered justice system and soft corruption of our institutions. They are where credibility is most weakened precisely because these are supposed to be cornerstone institutions serving the public good. This actually makes them more pernicious in their consequences than, say, a Walmart or Monsanto or Goldman Sachs.

        1. washunate

          I hear she’s the reason Democrats imprison a quarter of the world’s prisoners. She learned it from the Russians.

          1. Klassy!

            Truly! Between her and the wingnuts of the variety that wise men such as Charles Pierce direct their invective against, why if we got rid of them everything would be hunky dory. Then finally your Jacob Lews would have some real power and set us on the right course.

  5. Goin' South

    You’re being unfair to Lew and NYU. In addition to the duties you’ve listed, I heard he also coached the squash team. That obviously explains the salary and perks.

    For those who want to lay this all at the feet of “greed,” remember what our Capitalistic system celebrates, indeed requires greed. Some have the moral fiber to resist this constant exaltation of profit uber alles, but most don’t. Now the ethos of Capitalism has infected even the “non-profit” sector.

    1. denim

      I disagree. Capitalism does not require greed. It merely requires that corporations be run and regulated by people with some degree of moral fiber.

      http://scholarlycommons.law.wlu.edu/cgi/viewcontent.cgi?article=1780&context=wlulr

      http://www.professorbainbridge.com/professorbainbridgecom/2012/05/the-vacuity-of-corporate-purpose.html

      http://www.professorbainbridge.com/professorbainbridgecom/2012/05/case-law-on-the-fiduciary-duty-of-directors-to-maximize-the-wealth-of-corporate-shareholders.html

      1. Goin' South

        Wishful dreaming about corporations that choose the public good over profit doesn’t change the reality that the goal of Capitalism is to maximize return on capital. The competitive nature of Capitalism dictates that enterprises adopt that goal or perish.

        Your third cite even provides support for this. When the Dodge brothers sued Henry Ford for using Ford Motor Company’s capital to benefit the public rather than the stockholders, the Michigan Supreme Court agreed with the Dodge boys:

        “A business corporation is organized and carried on primarily for the profit of the stockholders. The powers of the directors are to be employed for that end. The discretion of directors is to be exercised in the choice of means to attain that end, and does not extend to a change in the end itself, to the reduction of profits, or to the nondistribution of profits among stockholders in order to devote them to other purposes.”

        The best Bainbridge can do is to dismiss the above paragraph as dicta and argue that the case still allows a board of directors to consider ends other than profits. In no way does he argue that there is any legal compulsion, much less a principal of Capitalism, that requires any Capitalistic business enterprise to care about anything other than profits.

        (It should be noted historically that Ford’s own concern about the public good and the welfare of his workers was short-lived. Henry was one of the most ruthless and violent union busters of them all who created a Stasi-like secret police on his shop floor.)

        The irony in Late Stage Capitalism is that when return on capital begins to decline, the ethos of a Capitalist culture, focused exclusively on profit and competition, turns social elites into rapacious scavengers looking for ways to profit personally at the expense of society’s institutions from corporations to governments to universities.

        1. Robert

          Ford started out by paying his workers twice the prevailing wage. I am inclined to cut him a great deal of slack

    2. Expat

      Greed and poor character are of course critical, but there is a reason why louts like John Sexton and the NYU trustees who keep his bed in full feather get into their positions.

      It’s the system, a system that could punish but instead rewards such behaviour. And corrupting nonprofits into the behaviours of monopoly capitalists is a sign of the post-deregulation capitalism that is burdening us at present.

      Evidently, corporate executives have become so utterly offensive to themselves that rather than appoint the best qualified people to top positions they must stuff every institution with their own mirror-images so they don’t feel, as a normal person would, the need to commit hari-kari, which would in fact benefit the whole world.

      If our kids are victimized by the high fees needed to support these characters and taught that the only revenge is more of the same, then Sexton’s NYU has done its job.

      1. peace

        I agree. Many of today’s problems are due to more than excessive self-interest and innefficient systems/institutions.

        Dishonesty, nepotism, and other forms of corruption seem to be the core problem.

        1. Massinissa

          Dont most of those things, like nepotism and dishonesty, come from self-interested acquisition of power though?

          1. peace

            I think the cause of dishonesty can alternatively be based on loyalty to a group or to a set of values. If you believe that loyalty is fundamentally or primarily a form of self-interest, then yes.

            There is s similar debate regarding altruism: some people claim there is no pure altruism; it is always at heart based on making yourself feel better about yourself by helping someone else.

            I do not think that self-interest is the fundamental psychological mechanism.

  6. Juneau

    I have met too many grads with hybrid exotic degrees who are literally homeless (couch surfing) or just impoverished.
    The universities have an obligation to the students. That includes helping them understand if they can pay off these loans when they graduate.

    When I attended my graduate training, I attempted to borrow extra funds to live a little more comfortably. The financial aid officer at my school wouldn’t sign off on it-this was 25 years ago-she routinely met with the students in my class to actively discouage borrowing telling us we would regret it.

    She did me an enormous favor. This was a medical school. She knew we would make a living. It still took me until 40 to pay off the debt, I will always be grateful to her.

    1. peace

      Some students will not listen to reason regarding the cost/benefit analysis of graduate school. They default to the opinion of a high status “President” or “Dean.” Students do not realize that high status administrators often encourage graduate school only because it is a cash cow for their institution and personally for their merit-based pay increases.

      A tuition-based budget combined with a profit-focused culture favors institutions and pay-for-performance senior administrators. The legitimating profit narrative dominates much university policies. However, with the threat of default looming for some schools, balancing a budget is fundamental. Some good administrators successfully balance budgets with core values.

  7. Chromex

    there is no question that this is “inurement”-no “investigation” should be needed.

  8. Warren Celli

    “Higher educational institutions embody what we’d like our youth to become when they grow up.”

    Not my kids thanks! This statement, and the article it self, highlights the core problem. The article is a Vanilla Greed For Profit lament that Pernicious Greed for Destruction has cleaned its clocks. “Boo Hoo!”, cries Evilism, as it is overtly and covertly being morphed into Xtrevilism. This sorrowful mourning seeks to bring back the good old days when the Vanilla Greed folks kept the host victims alive for profit rather than killing them off in a herd thinning (euphemism austerity) as the Pernicious Greed folks are now doing.

    Higher educational institutions have always been an incestuous inbreeding ground for greedy excessive wealth adoration and the co-option of knowledge put to use for dominance and the control of the masses by the elite few. The genetic disorder increases. Evilism mutates to Xtrevilism. The little Jivey League Clique, free of any democratic oversight or pretension of a ‘rule of law’’, now sinks the world into unfettered naked cannibalism.

    Vanilla Greed For Profit, brainwashed to the elite greedy corrupt status of Evilism, is the stumbling block here, as their conditioning to, and acceptance of, their elite corrupt status in the first instance makes them the perfect marks for Xtrevilism. The con is so easy to con.

    Deception is the strongest political force on the planet.

    1. skippy

      And some bandy on about gateway drugs… shezzzz~

      Skippy… OJ wants his section of garden hose back… methinks… Blankensfiend et al[tm] are bogarts…

    2. Massinissa

      Does anyone else have absolutely no clue what this person is saying?

      Warren, what pray tell is ‘Evilism’?

      1. Warren Celli

        Massinissa, You can click on my name or google Xtrevilism. It should take you to my Boxthefox™ web site and a few other interesting links.

        Deception is the strongest political force on the planet.

        1. citizendave

          I think of it as a sliding scale that works to the detriment of humanity. The whole scale has improvement of the human condition at one end, and ruination at the other end. So starting at the center of the scale, a person’s actions and life would be neutral, just living an unremarkable life. Mild detriment would be relatively innocent, perhaps believing you are doing a favor for the person by voting to cut unemployment benefits, following the logic that depriving her of sustenance will inspire her to create a job in a community with 13% unemployment (such as my town). Further along the scale, the person realizes that he actually enjoys winning the winner-takes-all competition for a well-paying job. Further still, he starts to think about how to get really good at extracting units of currency from others. Progressing toward ultimate detriment to humanity, the person begins to use the accumulated capital in a grand scheme to rig the whole society by buying influence in the legislatures, changing the rules, consolidating industries to reduce competition, sowing fear in the populace in order to justify funding of weapon systems the military doesn’t want — all geared toward greater accumulation of financial capital and greater influence. But instead of looking kindly toward his fellow denizens of the planet, he regards them as tools, pawns, marks, anonymous currency donors. In short, the extremely evil ones are fully aware they are evil, they thoroughly enjoy it, and they work as hard as they can for constant improvement of their methods.

    3. They didn't leave me a choice

      While your strong moral conviction is appreciated, one can’t help but ask: are you perhaps pals with Gene Ray?

      Your batshit has a… familiar colour.

  9. washunate

    This is what is known as ‘waste’. It does not create prosperity or ‘full employment’. Rather, it entrenches the concentration of wealth and power destroying our country. The credibility of all of our leaders (not just the for profit corporates) is increasingly compromised.

    Modern money trickle downers who can’t see this obvious problem are at some point going to have to confront this wee little problem of distribution before the net deficit spending panacea is taken seriously.

    But hey, I suppose a JG would solve it all. Million dollar compensation packages for university and hospital administrators, $8 an hour for JG workers. Sounds good to me!*

    *As long as I get to pick which category I’m in, of course…

    1. Ben Johannson

      Nice try, but a Jobs Guarantee pushes wages at the bottom higher by tightening the labor market. By definition this is trickle up.

      It never ceases to amaze how many self-proclaimed enemies of the status quo oppose any effort to change the system until the planets align and love rules the stars. They demand nothing at all be done until everything can be made perfect, which is of course impossible, so nothing is ever done.

      1. washunate

        The point is that we need to end corporate welfare. It is oppressive in its own right. But Joe Firestone and others keep posting articles about what matters is that we increase net deficit spending – ignoring how the money is spent.

        Specifically on JG, that is not the JG that many advocate, such as Wray. They argue JG isn’t inflationary because JG won’t compete with the private labor market (ie, it will pay low wages, not good wages). For example:

        http://www.rooseveltinstitute.org/new-roosevelt/navigating-jobs-crisis-time-new-new-deal-jobs-program

        If you advocate paying a living wage instead of a minimum wage, that’s perfectly legitimate.

        But that is a completely different social compact – it is an abandonment of limited government and democratic capitalism in favor of much more centrally planned socialism on a scale our country has never tried. If you simply offered $35K a year with benefits, not exactly a Cushy Job, you would attract half the labor force. Are you prepared to employ 40, 50, 60, 70 million people? Over 90 million workers make less than $35K, and the vast majority of those have insufficient benefits packages, too (medical, dental, life, disability, vacation, sick, holiday, bereavement, jury duty, retirement, etc.)

        JG is something I’ve thought a lot about, both on the economic side and political side, and I disagree that it is good policy. I would be curious to hear exactly what details you support that you argue would make it economically beneficial and politically sustainable (as opposed to social insurance programs, about which we have a lot of data that they are cost effective economically and popular politically).

        In short, the devil is in the details. But of course, to examine the details requires much length.

        1. Tax Lawyer

          A job guarantee would move us a lot closer to “potential GDP” than we are now. The current employment level is at its lowest point since the Great Depression, and all these unemployed and undermployed are simply wasted resources that could be put to some productive use. Moreover, a job guarantee would cut the crime and imprisonment rate substantially. I live in inner city Baltimore. Any idea how hard it is for a convicted felon to get a job here? When there are so many unemployed with clean records? What choice do these people really have other than returning to criminal activities in order to survive. Of course, then they are soon back in prison, costing more resources. The only thing a jobs guarantee would really hurt is the prison industry.

          1. washunate

            Is there a reason that you ignored the distributional problem in this response? That is exactly what bothers me about these arguments. Having top level people in organizations like universities and hospitals making high 6 and even 7 figure compensation packages is completely unjustified when we’re talking about JG jobs paying minimum wage. Inequality itself is the problem.

            Specifically on JG, you are making claims about what the outcome would be without describing how JG would deliver the outcome. It’s like saying we should implement world peace because world peace is good. The details I laid out in my comment are just the tip of the iceberg, but you didn’t address even those. The way to relieve the consequences of the drug war and the prison system is to end the drug war and the two-tiered justice system – that involves spending LESS money and having a SMALLER government! :)

            So let me rebut the one factual warrant you lay out there – that the current employment level is the lowest since the Great Depression. It is true that our employment to population ratio of 25-54 year olds has fallen over the past few decades. But it’s still higher than it was throughout the post-war era (this is a good thing, it is the wonderful potential unleashed by racial and gender equality). The difference is that public policy has gutted decent wages so now groups of people that wouldn’t be in the labor force are looking for jobs. Elizabeth Warren termed this the two income trap.

            http://www.calculatedriskblog.com/2012/08/employment-another-fairly-weak-report.html
            http://www.amazon.com/The-Two-Income-Trap-Middle-Class-Parents/dp/0465090907

      2. F. Beard

        Jobs are not needed at the bottom per se; MONEY is needed.

        Moreover, why should the victims of the banks have to work for their restitution?!

  10. jessica

    @JakeChase “The problem is that every large institution is now operated (and plundered) for the benefit of those empowered to run it.”

    Even some of the political groups that are nominally working to make things better fit in this pattern too.

  11. jessica

    A theory: Decades ago, we finished building the basic industrial infrastructure and had educated so many people that it was time to shift to a knowledge-driven economy. We did not make that shift but continued running under the old rules. So we have an obsolete elite with no remaining positive historical function. Rudderless and soul-shattered, our elite slowly disintegrated morally and now descends deeper and deeper into corruption.
    Meanwhile the knowledge worker strata is turned on its head, with the strata as a whole tasked and paid in part to create the artificial knowing that is required to make this bizarre structure seem, if not good, then normal and if not normal, then at least the only possible way.
    This theory predicts that elites across the first world will be incapable of instituting reforms and will kick the can down the road as long as in any way possible. (So far, accurate.) It also predicts that it will be difficult to develop alternatives because so much of the intelligentsia is standing on its head and interferes so obstructively in ongoing social discussions. On the other hand, this theory also claims that we have enormous, hidden potential that will become available once we find a way to unleash it.

    1. jake chase

      Veblen explained this correctly in 1904. Science and engineering advances created a Machine Process which might have been run for sane industrial purposes, but which instead is sabotaged by Business to create private profits.

      We really have no social need for Business at all, but idealogues have convinced us that organization on any other but business principles is doomed to failure.

      Money talks, but unfortunately it makes no sense.

      1. Jessica

        You (and Veblen) are probably right. We never needed them. However, I think that for a long while, they served a positive purpose amidst their self-serving cruelties and irrationalities, but now even the positive purpose is gone and only the cruelties and irrationalities remain.

        1. jake chase

          William Dean Howells explored all this (circa 1885) in A Hazard of New Fortunes. We are returning to all the problems of the late Nineteenth Century.

      2. walrus

        And socialism was such a resounding success as we all know. The human nature is corrupt, period. It does not matter what ideology a society is built on, eventually there will be small elite parasitizing on great unwashed masses.

        1. Ben Johannson

          Those parasites are overwhelmingly psycopaths. So for any just system to be stable, psychopaths must be excluded from the political process a la Plato’s ideal republic, where rulers would be denied the ability to accumulate wealth. Do that and the psychopaths will exclude themselves.

          1. F. Beard

            So for any just system to be stable, psychopaths must be excluded from the political process a la Plato’s ideal republic, where rulers would be denied the ability to accumulate wealth. Do that and the psychopaths will exclude themselves.

            Well, that still leaves the power-hungry but it’s an improvement.

  12. John F. Opie

    Yves, this article and others like it are the reason I keep on coming back.

    My father is an academic, and the (ab)use of adjuncts and grad students was clear back in the mid-1980s, i.e. this isn’t anything new. It’s part of the reason why I’m not in academia.

    This sort of rent-seeking behavior is only possible if those in charge of preventing it are actively ignoring it or, more likely, part and parcel of the problem. It is corrupt, it is corrupting, and has nothing to do with capitalism or for-profit schools: the institutions have been captured by those who are able to exploit them for their own purposes. It’s a text-book example of moral hazards.

    I might add that it’s also a singularly Democratic problem (given the extreme paucity of Republicans in academia): of course, given what really looks to be endemnic corruption of the Democratic Party in general, rather unsurprising. I know that unions didn’t start off with feather-bedding and corruption (far from it) but that certainly is where they ended/largely are today: too much money in the form of dues (or tuition in this case) leading to waste, cronyism and corruption; activists hiding their agendas and rank-and-file distracted by smoke and mirrors; abandonment of the fundamental principles in the name of personal enrichment and power.

    Just like the state of unions today, it will end in tears for the administrators. It will simply take longer, as it’s universal, rather than only union-shop specific. The real tragedy, just like the union members who ended up paying their dues not to enable having someone represent their interests, but rather to support hidden agendas and enrich union officials, is that it is the students and their parents who are paying for this.

    Rent seeking at its most pernicious.

    1. washunate

      Right on, that’s what’s so sad/despicable to me about the ‘liberals’ who pretend the problem is something else. This isn’t a new or complicated or surprising phenomenon; we’ve known about this trend for a long time. And in areas like higher ed, unions, and urban cities, it’s hilarious to try to blame it on Republicans or the Religious Right or something.

    2. NotTimothyGeithner

      Its a divide and conquer strategy. Teacher unions betrayed labor unions in the 90′s with their support of Clinton. When property values were rising and with a few extra bucks for education, those teacher unions supported policies which decimated their communities. Teacher turnover is quite high, so I don’t know if they thought long term.

      Take the police. The police attack protesters demanding better futures in exchange for the promise they will be rewarded by proving their worth. Of course the police just get tanks they can’t eat and then blame everyone else but themselves for not joining the protesters in the first place when they find their wages are dependent on the wages of jobs they might quit to take not how many hippies they beat or African-Americans they arrested.

      The labor unions had their own problems. I think the rise of an umbrella nature was a disaster because it created a cartel situation at the top. Some will say the mob not being the muscle was the problem, but the mob didn’t stand on picket lines.

    3. peace

      I agree to some of what you say.

      You had the advantage of knowledge before being hired and could avoid the moral hazard.

      (minor note: Your situation may involve adverse selection because it involved information seeking about proper practices before the contract was made (before you took an academic job). You had the advantage of prior knowledge and good due diligence on the state of academia).

  13. Ray Phenicie

    There must be a rule in politics that goes something like: ‘When I find the oppostioin doing wrong it’s a hot stinking mess, but the same hot stinking mess unloaded by one of our guys is business as usual.’ Had a some prospective cabinet member had Lew’s credentials and been put out by Bush Jr, Dems would have been hopping all over the guy.
    Interesting that the New Republic had all of the details of Lew’s hot stinking mess,.
    http://www.newrepublic.com/article/112548/jack-lew-confirmed-treasury-secretary-democrats-gave-him-pass

  14. harry

    Well if you had read greg mankiw’s piece you would understand that they are not looting the institution but rather they have exceptionally high marginal revenue products. Anything else would imply that NYU was not a profit maximising organisation devoted to producing the best education possible at the lowest cost.

    1. Walter Map

      Mankiw is either lying or a blithering idiot. Since it’s well-established that he isn’t stupid he is quite clearly lying, and quite clearly knows that he is lying, and doesn’t care that other people who are not stupid know that he is lying. Mankiw has taken Hitler’s advice to heart: “To win the sympathy of the masses, you must tell them the crudest and most stupid lies.”

      Anyone foolish enough to attend NYU is completely unqualified to pursue higher education.

      It should be obvious by now that the U.S. economy, indeed the global economy, has been repurposed to enrich the wealthy and their well-connected servants to the destruction of the general population. The world has been taken over by vicious pirates who have established a state-corporate syndicalism that is self-selecting for psychopathy. The ruling class expects resistance, hence their emphasis on surveillance, subversion of rights, particularly due process, heavy-handed policing, prisons, and propaganda. Resistance is not only expected but instigated because it will provide ‘justification’ for resort to totalitarian rule. The ultimate goal is to maximize rent extraction, tyrannically and permanently.

      Adam Smith noted that “All for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind.” The bad news is that no one, anywhere, has proposed any probable scenario where this end is prevented, or even effectively mitigated. There no good news. The only possible consolation is that the rapacious psychopaths who now run the world are also virtually certain to destroy the ecological basis for their own survival and will end up ruining themselves as well, and at best will lord it over a ruined civilization and a ruined planet, plotting against each other for the remaining scraps.

      Huis clos.

      I think it is very, very bad policy to allow psychopaths to operate without close supervision, if at all, much less be given carte blanche to commit global genocide and destroy human civilization. But that’s just me. Nature has clearly shown us that cooperation is the ultimate and necessary survival strategy, and now that psychopaths have taken charge, who by their nature repudiate cooperation, survival will inevitably prove impossible.

      “Do you believe,” said Candide, “that men have always massacred each other as they do to-day, that they have always been liars, cheats, traitors, ingrates, brigands, idiots, thieves, scoundrels, gluttons, drunkards, misers, envious, ambitious, bloody-minded, calumniators, debauchees, fanatics, hypocrites, and fools?”

      “Do you believe,” said Martin, “that hawks have always eaten pigeons when they have found them?”

      “Yes, without doubt,” said Candide.

      “Well, then,” said Martin, “if hawks have always had the same character why should you imagine that men may have changed theirs?”

      I thank god that I am not young in so thoroughly finished a world.

  15. ep3

    Senator Grassley is a republican. New York has democrat Schumer.
    This is all about access and kickbacks, as well as looting. My alma mater’s president went to Iraq at the start of the 2003 war and was in charge of having the Iraqi ppl turn in their old Iraqi money and handing out the new Iraqi money. What would a Big Ten college president know about something like that?

  16. Cynthia

    You also see this happening in the hospital industry as well. Nurse and physician executives are paid significantly more than their clinical counterparts — despite the fact that none of these so-called “executives” ever have to put their license on the line to do what they do, nor do any of them ever have to experience the enormous stress and strain of having to deal with life and death situations. They don’t even provide a billable service to patients. In fact, if any of them ever tried to bill a insurance provider for the services they provide to patients, they probably would be investigated for fraud! Patients don’t base their choice of a hospital on the competency and skills of the executive staff, they base it on the competency and skills on the clinical staff. So tell me, how can hospitals justify paying their executive staff significantly more than their clinical staff?

    1. Massinissa

      Easy: The administrative staff decides who gets paid. The clinical staff dont.

      Power is its own justification, at least to those with power.

  17. TC

    The “mainstream media” is a tool of imperial finance and the rogue “deep state” it animates. Thus, the imperative for unequivocal support of Elizabeth Warren’s S.987 to send them all to “F.U.” We can deal with the problem of such excesses as are reported here subsequently.

    Indeed, such proposals as Senator Warren’s–albeit a mere foot in the door–offer qualified, uniquely American solutions to such related problems engendered by imperial finance as the Jefferson County debacle. So, as soon as the order is given to Fed chairman Capo Confetti to ignite the debt bomb constructed by imperial finance since Nixon’s destruction of the Bretton Woods system, then will we have no choice but move to nationalize the Federal Reserve and turn it into a Hamiltonian national bank.

  18. Shutter

    October 1972, a date that will live in infamy – the first issue of ‘Money’ magazine, for your convenience sold in grocery and liquor stores everywhere.

    Reorient those priorities, get in step with the Big Boys! Cast off your tired old ethics, shake off those quaint ideas of right and wrong with MONEY magazine!

  19. kokuanani

    Typo: “Now to the gold-pated administrators at NYU.”

    I think you mean “plated,” but maybe some do have a gold pate.

  20. Tofu Rustico

    Creating debt slaves? That’s got all the earmarks of terrorism. Call C.A. Dutch Ruppersberger to see if he can help put a stop to this. Congressman’s Ruppersberger number is 202-225-3061 up in the Rayburn. Also express support for great patriot James Snowden.

  21. Yancey Ward

    Nothing will change until the customers of universities and colleges revolt and stop taking out ridiculous loans for educations that could be had for next to nothing but time itself.

    1. Larry Barber

      Well, you can get the education for free, but not the diploma, and it’s the diploma that gets you the job. There doesn’t have to be anything behind the diploma, or the person holding it.

      1. Yancey Ward

        Because they let employers get away with this. Once the students and the parents refuse to fall for the con, the employers will fall into line. Until then, no changes are possible.

  22. Another Gordon

    The Soviet communist experiment failed primarily for two reasons. Firstly, their theory of how to run the economy (that the state should own everything) was plain wrong and didn’t work. Secondly, they forgot the importance of ‘agency’. Those in day to day control had no effective sanctions to keep them honest and prevent them from running the system primarily for their own benefit. Hence the hated apparatchiks who enjoyed the best their economy could provide while the rest scratched a bare living.

    Now the US (and the rest of the West) has remarkably similar problems. Firstly, the ruling economic theory (that markets should rule over everything and that greed is therefore good) is plain wrong and didn’t work. Secondly, the importance of ‘agency’ has been forgotten … and Yves’ post attests to the inevitable consequences.

    As a former colleague said in a slightly different context it’s like the extremes just meet around the back.

    1. Ben Johannson

      It can also be argued technology was a major limitation for the Soviet economy, which likely would have been far more efficient with modern computer networks. This of course lends credence to the Mensheviks who argued Russia was too undeveloped for socialism and eventual communism.

  23. Hugh

    This is kleptocracy in action. Kleptocracy is systemic looting. It needs to be seen as a class phenomenon. If it can be looted and if the rich and elites can loot it, it will be looted.

    As I wrote a few days ago, the social goals of higher education are personal fulfillment and the creation of an informed citizenry, and only after these training useful for the general economy.

    In a kleptocracy, higher education has four very different goals:

    1) As a source of looting
    2) Social control through the creation of an indentured servant class
    3) A site for credentialing and networking for the scions of the hereditary rich and elites
    4) Production of propaganda promoting kleptocracy

    1. Jessica

      Hugh,
      I would like to add a fifth purpose: to locate and co-opt the most talented among the non-elite.
      I think that the reduction in racism and sexism from the 70s onward enabled universities (and the system in general) to more successfully pull in talent that might otherwise have been in opposition to it. If Malcolm X had gone into high finance instead of pharmaceuticals and entertainment management, he still would succeeded, but at Goldman Sachs, his moral development would have been prevented and he never would have become a political leader.
      I think that Occupy was one of the first signs of what is to come now that the elite is not absorbing as much talent from non-elites as it did before the financial crisis.
      Jessica

      1. washunate

        Great comment. I whole heartedly agree that this lost potential is one of the biggest hidden costs of the concentration of wealth and power.

    2. Warren Celli

      Good comment!

      You have probably already seen this but it is worth revisiting and a good resource for tracking the mutational development of the aberrant mental disorder of Xtrevilism;

      Excerpt;

      “With such massive wealth and power held by these institutions and “networks” of corporations, those individuals who sit on the boards, executive committees and advisory groups to the largest corporations and banks wield significant influence on their own. But their influence does not stand in isolation from other elites, nor do the institutions of banks and corporations function in isolation from other entities such as state, educational, cultural or media institutions.

      Largely facilitated by the cross-membership that exists between boards of corporations, think tanks, foundations, educational institutions and advisory groups — not to mention the continual “revolving door” between the state and corporate sectors — these elites become a highly integrated, organized and evolved social group. This is as true for the formation of national elites as it is for transnational, or global, elites.”

      - See more at: http://www.occupy.com/article/global-power-project-part-1-exposing-transnational-capitalist-class#sthash.FwSrar7C.dpuf

      Deception is trhe strongest political force on the planet.

  24. jabre

    But, but, it’s for the kids!

    This is a great post. The constant message of ‘underfunded’ universities is nauseating. To hear another perspective is welcome and overdue.

    When you dig just below the surface and look into the average expenditures per student at publically funded universities it is simply stunning.

    University of Texas at Austin 2012/2013 operating budget = $2.5B. Student population is just over 50K. That is $50K per year per student.

    1. Massinissa

      Did you read the goddamn article?

      Theyre not underfunded.

      The parasitic administrators are siphoning off all the money because they are ultimately extraneous.

      Thats where most of the rising costs of education go to.

      In what way does this have to do with ‘underfunding’? Noone is saying anything about that in this article.

      Read. The. Article. Kthx?

  25. Michael Fiorillo

    As a lifelong resident of Greenwich Village, I can tell you NYU has long been The Enemy in this part of town.

    Ever since it parlayed its location into a pretense of being something other than a second-tier school, it has become a real estate development company with a higher education subsidiary.

  26. heresy101

    While the following solution may not work in New York and other states, a state referendum in California would put an end to similar corruption at the University of California and California State Universities.

    The referendum would state simply that “no state, local, or other employee that receives funds from the State may earn total compensation of more that three times the median income of the gross income of all State citizens”. In California, the median income is about $57,000, so the income before retirement and other benefits would be about $110K. Rather, than making the max be a multiple, it could be based on one or two standard deviations from the mean.

    The argument for this referendum is that public service is not to get rich, but to make a decent living serving the public.

    Support would come from both the right and the left with special support from students. It is almost guaranteed to win if the 1% don’t oppose it as a bad precident.

  27. Blurtman

    It’s a good thing the NSA violated our personal freedoms to thwart a plot to bomb Wall Street, isn’t it? I mean, Wall Street is on our side, aren’t they?

    Imagine if the plotters had brought down the Goldman Sachs building. That would have been a bad thing, wouldn’t it?

    1. NotTimothyGeithner

      I think this sign demonstrates their complete “panic” and unpreparedness for the eventuality of a major leak. If General. Alexander had a clue, he would be able to rattle off “successes*” such as Al Qaeda targeting apartment building. Instead they picked something to invoke 9/11 but long after people could care less about what happened to Wall Street.

      *I wouldn’t believe a word Alexander said.

      1. Blurtman

        His view represents the unguarded expectation of the ruling class that we all must view an attack on Wall Street as an attack against our mutual interests. Not so, and the numbers in this camp are swelling. Of course a legal is always sought first and foremost, but Obama has removed that course.

  28. docg

    Thanks, Yves. Aside from the fact that no adjunct is actually a Professor, it is spot on. An ajunct is, very simply, an adjunct, i.e., a convenient, disposable nonentity.

    Also, by the way, you fail to mention that many if not most or even all full professors manage to arrange their schedules so they can appear on campus one day a week. The rest of their week is nobody’s business, but theoretically they are supposed to be doing “research.” Right.

    I’m prooud of the fact that I saw through this corrupt system many years ago, and got out while I could, before my psyche collapsed from under me. And this AFTER I’d been reappointed to my tenure track position. I’ve never regretted it.

    Things have gone from bad to worse to intolerable in the intervening years. I tried to steer student away from the “financial assistance” trap for a long time but realistically few have any real choice. It’s either getting a degree or hanging around home bored and without a (meaningful) job.

    I disagree with you on some points, but all in all I must concede: this country is rapidly disintegrating under our feet.

  29. Jessica

    Worth noting that both the American and global economies are incapable of creating enough jobs for college graduates. This situation is worse since the onset of the global financial crisis but has been present for much longer.
    Some of this has been disguised by college graduates winding up in jobs that do not really require as much education.

  30. JTFaraday

    “when the upper crust loots institutions, the mainstream media is typically missing in action.”

    Well, not this time. This time “a story by Ariel Kaminer and Alain Delaquérière in the N.Y. Region section of today’s New York Times is enraging people all over the Internet.”

    http://www.slate.com/blogs/browbeat/2013/06/18/nyu_loans_for_summer_homes_ny_times_story_about_university_pay_for_john.html

    Meanwhile, according to yesterday’s HuffPo, the real looters are not really Sexton’s law faculty cronies with the vacation houses in the Hamptons, the real looter is “the expansion” in the slums of Manhattan where the faculty schlubs are warehoused:

    “”This is a fundamental clash between faculty and administration,” said Mark Miller, a professor of media and culture at NYU, and a leader of the opposition. “We see this place as a school, where the purpose is teaching and research. They see it as a bundle of assets. I don’t know how to bridge this gap.”

    …It is no coincidence that the movement against the endeavor is being led by faculty, some of whom seem as upset about being disturbed by the sound and inconvenience of construction in their neighborhood as they are about the larger questions of how best to deploy the university’s resources.

    …Even by the absurd measure of Manhattan real estate prices, the Greenwich Village neighborhood that is home to New York University stands out as expensive, with a single square foot fetching an average of $1,600.

    Given this reality, developers have long since squeezed the most out of the properties in the area, adding whatever space they can without violating codes that seek to preserve the neighborhood’s low-rise character.

    Exceptions can be found, however, along the six large blocks that make up the southernmost portion of NYU’s property.

    The area is home to three 1960s-era residential towers and other large buildings that house many of the school’s faculty. But it also contains a community garden, a playground, lawns and a dog run. In one area, a stretch of low-slung businesses spill casually out into a plaza. A single-story grocery store anchors one block, and the school’s Coles gym, another.

    To many of the faculty who live there, and in the opinion of much of the neighboring community, the green space and rambling charm are qualities to be cherished. It is as tranquil a neighborhood as can be found in this part of the city.

    To NYU’s administration, the area presents as something else: underutilized.”

    http://www.huffingtonpost.com/2013/06/17/nyu-expansion-student-debt_n_3437097.html?ir=New+York

    That probably about sums it up.

  31. c

    You can see this here in California as well where one of the UCs recently gutted its asian languages programs, noone needs that these days, to empty out a building which they then completely retrofitted and filled with new administrators. Add to that the fact that the UC presidents get paid 7 figures and UC Berkeley is 1/2bn in the hole trying to build a PAC12 stadium and you have a financial mess. The solution that they are proposing, online courses. Yes the solution to too much bad administration is even fewer faculty!

    Another brilliant solution from the people who continue to employ Linda Katahe.

  32. Jessica

    For each of us, exactly which of the elite’s outrages breaks our heart can be different.

  33. Calgacus

    Specifically on JG, that is not the JG that many advocate, such as Wray. They argue JG isn’t inflationary because JG won’t compete with the private labor market (ie, it will pay low wages, not good wages). For example:

    Navigating the Jobs Crisis: Time for a New ‘New Deal’ Jobs Program [Better link, C]

    If you advocate paying a living wage instead of a minimum wage, that’s perfectly legitimate.

    Wray advocates a living wage with full benefits “good wages” JG. Like all the other MMTers. As he says in the comments to the post you cite, “I would prefer a ‘living wage’. Perhaps that is double the current wage.”

    You seem to be reading things which aren’t in that article or any other. That a JG is a minimum wage is a truth of logic, not something which could or should be changed. The idea that the USA could not afford a “good wages” JG or that it would attract 50 million, or that it would be a bad thing if it did is ludicrous. As Wray recently said to such an objection at economonitor IIRC – that is forgetting the multiplier effect. The specific number you use of $35K / yr works out to be quite close to the $15/hr or “double the current wage”, which is often bandied about – and which is the current minimum wage in Australia IIRC.

    But that is a completely different social compact – it is an abandonment of limited government and democratic capitalism in favor of much more centrally planned socialism on a scale our country has never tried.

    Umm, no. What you are saying is “a completely different social compact” – is more or less the world that I grew up in (to steal a phrase from Krugman).

    The USA and even more, the Europe & Australia of 40 odd years ago could provide more or less full employment and had no homeless people. Ordinary people had lived through the depression & understood basic economics = Keynes = MMT.

    Time passed, the BS artists returned, the economists brainwashed themselves to serve their moron plutocrat masters better, and much worse, brainwashed honest ordinary people who comment at Naked Capitalism. Who convince themselves that their poverty is not amidst plenty, that their much richer and more productive societies cannot very easily afford what their forebears did. That the world that the moron plutocrat BS artists made out of the people’s folly, innumeracy and amnesia is somehow more “natural” or real.

    1. Calgacus

      Of course, this was a (misplaced) reply to Washunate above, meant to supplement Ben Johannson’s & Tax Lawyer’s.

    2. washunate

      Yeah, it’s unfortunate you can’t go back and edit a comment. I’ve definitely done that too thinking I’m replying to one thing but then being somewhere else…

      Anyway, the fact that people advocating JG can’t even decide whether they want to pay $7.25 or $16 an hour or whatever highlights exactly my point. This is a nebulous theory that is neither concrete in its details nor tested in its implementation.

      Let me quote exactly what Wray wrote:

      “To keep it simple, the program wage could be set at the current federal minimum wage ($7.25 an hour), and then adjusted periodically as that is raised.”

      A program paying twice that is an entirely different program, and that’s only adjusting one variable. There are many important variables, from what benefits are included to how workers are trained and supervised to the administrative structure to eligibility criteria to project selection.

      But even aside from the implementation details, this misses the point. It is completely unjustified to pay a university or hospital administrator 6 or 7 figure salaries whether JG workers are making $5 an hour or $25 an hour. The inequality itself, the concentration of wealth and power, is the problem in our system.

      You seem completely unaware of how big a change this would be. The majority of all workers in the US make less than $16 an hour with good benefits. We’re not talking about the CCC or WPA or even the military. We’re talking about employing many tens of millions of workers. Forever.

      Plus, there’s also the underlying philosophy that is controversial, not universal. The very notion that work is good is rather authoritarian and paternalistic. The great advantage that social insurance poses over JG is that it doesn’t force people to do make-work projects. If you think that JG programs are going to create skill sets that increase employability, I am laughing out loud. The best employer training organization on the planet, the US military, has trouble placing people into civilian employment. Doing community service or picking up trash or doing political campaigning or shoveling snow or making copies or answering phones or whatever projects JG workers end up doing are going to have no transferrable skills to employability. The notion that wage stagnation is due to some kind of skills gap is a disgusting meme of the psychopaths. It has nothing to do with the actual economy. If you really believe that, it just demonstrates the scale of ignorance for how the labor market actually works.

      By the way, if you really are unfamiliar with actual hiring, post a decent job on Craigslist. I guarantee you – I will bet everything I own – that you will receive more than one capable applicant eager for the opportunity.

      1. Calgacus

        Apparently too long: so Part 1 of 2:
        Wray:“To keep it simple, the program wage could be set at the current federal minimum wage ($7.25 an hour), and then adjusted periodically as that is raised.” Washunate: A program paying twice that is an entirely different program,
        Nope, within reason [$1/hr would be different], it is the principle that is important. If it looks different, if the JG/ full employment look untested and nebulous, it is because you are looking at things wrongly (apparently, through the distorting spectacles of modern mainstream neoclassical economics) and ignoring mountain ranges of evidence, in addition to truckloads of theory.

        and that’s only adjusting one variable. There are many important variables, from what benefits are included to how workers are trained and supervised to the administrative structure to eligibility criteria to project selection.

        All of the MMTers support a JG with good benefits (retirement contributions, sick and vacation leave, health insurance etc). There are no eligibility criteria. That’s the point. The only important variable is the wage, and within reason, that ain’t too important either. E.g. whether a country is on a gold standard or not is more important than what the price of gold is. The JG just puts the economy on a labor standard. Administration, program selection?: Put any 12 year old in charge; who cares? The point is that our current economic management is so moronic anybody toilet-trained, sane and literate could do a much better job.

        It is completely unjustified to pay a university or hospital administrator 6 or 7 figure salaries whether JG workers are making $5 an hour or $25 an hour. The inequality itself, the concentration of wealth and power, is the problem in our system.

        I agree. But the JG addresses the core, the urgent part of the inequality problem immediately and directly, while what you suggest doesn’t, and imho just provides unrealistic pie-in-the-sky. I am more for high taxes on the rich than most MMTers. But understanding what policies do and don’t do is important.

      2. Calgacus

        Been trying to post the rest for days. Nothing ever appears, will try it in another thread if anybody or Washunate wants to continue this conversation.

  34. Chris E.

    A larger issue here seems to be the two, or three-tiered class of middle class workers.

    We have the lower tier, stuck with 401(k) matching contributions, low-end salary, bad/no health insurance, and no pension.

    We have the middle tier, where you get a nice salary, a legit pension, and sick days and good insurance.

    And then we have the top tier, with an overly-generous salary, unionization, great insurance, full pension. These are usually the public employees in one way or another. They are the upper crust of middle class workers. They represent what most workers enjoy in modern Scandinavia/France/etc.

    The lines between these three classes of worker in America are not iron-clad, but it’s just a general guide to the modern American worker.

    This is in stark contrast to the labor market of the post-war period where unionization rates were the majority, not a 10% minority.

    The right-wing, left with no wars to fight right now, is scrambling for relevance. As the Iraq/Afghan wars are winding down, people are beginning to reflect more on domestic economic isssues and they can see that the class war by the wealthy elite has left the masses totally impoverished, desperate, and stuck under the thumb of a corrupt duopoly of right-wing thugs and center-right faux-liberals.

    But the trend was already in place back in the 1950′s when C. Write Mill made this observation:

    [The petty right] have dramatized the hollowing out of sensibility among a population which for a generation has been steadily and increasingly subjected to the shrill trivialization of the mass means of entertainment and distraction.

    They have brought into public view the higher immorality as well as the mindlessness of selected upper and middle circles. And they have revealed a decayed and frightened liberalis weakly defending itself from the insecure and ruthless fury of political gangsters.

    The Power Elite by C. Wright Mills

    Not only do these examples of elite workers at NYU who manage to exploit students represent the deep immorality that is present within our system, but it’s symptomatic of the way the far-right has dragged liberals into their worldview by taking more extreme positions that force liberals to negotiate with a more extreme version of the right that leaves them in the “normal right”.

    And that leads me to the ultimate example of this phenomenon: Obamacare. Something that the right-wing has managed to label a “far left” program, despite the fact that it was an old Republican “free market” solution to mandate people consume private insurance to ensure coverage and lower the government bill for catastrophic care.

    In a way, the ACA is a major victory for conservatives. Not only did they get the plan they wanted from the 90′s, but they’ve managed to make Obama responsible for it, so that when everyone realizes that bankruptcies and costs and other things won’t improve, the Democrats (and by association “liberals”) will be responsible for it! Quite the strategy, and the greater population is just going along with the whole charade.

  35. A

    Still. too many middle-class parents will take out loans against their houses and decimate their pension funds to pay for their child’s education at a NYU or similar overpriced private unvesity, in the vain hope that only by sending their child there, to mingle with the children of the rich and powerful, their children might have a chance to join the uppermost 1%. It is a desperate gamble, which normally ends with impoverishment of parent and student.–
    (Regarding comment that it is all a student’s fault if he/she does not study a ‘practical’ major: How many of the 1% are STEM majors? Compared to inherited wealth?–

    Regarding comment on research: At research universities,professors in STEM fileds normally need to acquire grant funding for their research, such that the overhead on it, taken out by the university, is a multiple of the Prof’s salary. So they are businessmen, too, needing to sell their research to funding agencies all the time.)

  36. Calgacus

    Have been trying to post the rest of my reply to Washunate above for days. Nothing works. Hope this will get through. Will try posting in another thread if W or anyone else is interested in continuing this conversation.

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