Peggy Noonan on Denial

Peggy Noonan has a piece from last week on how nobody seems to get it.

"there's no sense of urgency"

"How could a regular moderate Democrat, or an experienced old Republican bull, not be alarmed at spending projections and their implications?

I think some of the answer has to do with what, for lack of a better word, I’ll call crisis-ism. This is a condition in which you don’t know you’re in crisis because you’re always in crisis, you’ve always been in crisis, and you’ve always gotten through, so what the heck. Crisis-ism is the inability to apprehend that this time it’s different, that this time the crisis is an actual crisis.

There are senators and congressmen who’ve been on the hill for 10 and 25 years, and from the day they walked in, all they heard about was the budget crisis. “This spending will kill us.” But it never did. So maybe it wasn’t so bad, and, ergo, isn’t so bad. They are inured to warning. You can tell them 10 different ways that we’re in crisis and they’ll think, “Some think-tank guy told me that 20 years ago, and we’re still here.”

Another reason for budget denialism is that everyone now in Congress lived through the greatest expansion of wealth in the history of man on earth. It happened here, in America, in the past 30 years. And we were rich even before that. But when you grow up in a time of constant expansion, when you grow up immersed in the assumption that we are rich and will always be rich, that we’re powerful and will always be powerful, you start to think that America can take any amount of damage and still continue. This is called optimism, but it is not optimism, it is Rich Boy Syndrome. A boy is lucky enough to be born to rich parents who are themselves the product of generations of wealth going back as far as the eye can see. But he never got into the habit of making money, never learned to respect it, and never felt protective of the system that allowed it to exist. So the money went away. Rich Boy Syndrome is thinking wealth will just continue no matter what you do. A lot of members of Congress have Rich Boy Syndrome. They think they can do anything and America will always be rich.

A final reason is simply human. It is really convenient and pleasant not to see a crisis, because if you don’t see it, you don’t have to do anything about it. You don’t have to be brave, you don’t have to put yourself on the line, you don’t have to lead. You can tell yourself you don’t have to be brave and lead because really, at the end of the day, despite all the screaming, there is no crisis."

She ends her column with optimism, thankfully.

Politicians refuse to see that we are faced with serious budget issues, and not just in Wisconsin. I heard the other day that it takes 40 working firemen in California to contribute to their pensions to support one retiree, currently. I know that about 76 million people are getting ready to retire in the next few years (if they still can) and so the situation will be waiting for those of us who are still working.

Where the money, and wealth, and hard work to pay for everything is going to come from is something I don't have an answer for. I'm upset because I didn't write those checks - politicians did. And in many cases its politicians in the various states with their sunshine and roses mentality. Or, even worse, with their "screw the rich" mentality.

I'm here to suggest, now, that it won't be the rich getting screwed, it never is.

Michael Moore understands basic economics

Holy Smoke. Just when I thought it couldn't get any better, Michael Moore shows his stripes.

In this video (in case you're disgusted by him and can't force yourself to watch) he suggests that rich people are just sitting on all their money, but that their money is a "national resource."

Question is, how do you define "rich"? Is someone who spent years in school learning to do something and therefore makes a lot of money "rich"?

I bet he'll define rich any way he wants to.

Socialism is socialism. Don't get in their way folks, or you're next on the list.

Good story on Wisconsin in WSJ

A wonderful quote that explains why the Wisconsin thing is so important to both sides:

"Because unlike in the private economy, a public union has a natural monopoly over government services. An industrial union will fight for a greater share of corporate profits, but it also knows that a business must make profits or it will move or shut down. The union chief for teachers, transit workers or firemen knows that the city is not going to close the schools, buses or firehouses."

They have a nifty graph.

Found here. Worth a read. It also points out that if nothing is done, thousands of state workers will lose their jobs (most like the younger ones) and that the union KNOWS if it doesn't back down then future administrations will have to create those jobs again.

Socialism is socialism, folks. Once politicians can just buy votes outright, they will.

Administration announces "plan" for Freddie/Fannie

I dare someone to call it the Fannie Plan. Sounds like something from the Clinton years.

NYT is reporting the "details" of the admin's current thinking on what to do with Freddie Mac and Fannie Mae.

Here are the alternatives, broadly

The first option would eliminate any government guarantee for middle-class mortgages.

Under the second option, the government would offer guarantees to investors mostly in times of financial distress, preserving a steady supply of loans but not reducing interest rates in good times.

The third option comes nearest to the current system. The government still would guarantee a broad range of mortgages, but only if lenders first purchased a guarantee from a private insurer. That would limit the government’s exposure — but also the effect on interest rates.

Offering conditional guarantees won't work. I have yet to see the mechanix of such a plan, but I can promise it won't work. The trouble is a "tipping point" problem, as well as a sheer size of the market participation problem.

"Mostly in times of financial distress" is just another version of "Too Big Too Fail." Anyone else thinking that way?

Screwing the middle class? That sounds like a good option for these guys. After all, they're doing all they can to screw the middle class already.

Note that they're also looking at the mortgage interest deduction - again, going after the middle class. That's one of the last tax breaks available for folks as their income increases over their career. But... that's for "the rich" I guess.

It will be interesting to see what comes out of this, but I'm not hopeful. Politicians are reluctant to do anything without a glaring crisis, and we'll have this one soon enough. At that point it becomes a rescue operation, and they think

Bonuses for the folks at GM - uh, not just execs!

Wow. This just in - the workers at GM are getting huge bucks at the expense of the US taxpayer and carbuyer. Further demonstrating that they just don't get it, General Motors (not THAT one, the NEW one) said it would pay out nearly $400 million to workers for helping the company get out of the slump it was in.

I thought it was STILL in a slump.

How about paying some bucks to all those folks whose bond positions were WIPED OUT when GM went bankrupt. You know, those pension funds and such that lost HUGE dollars? Those folks? How about them?

I refuse to understand how anyone could participate in this madness. Asset managers, you should get yourselves out of GM post haste. Next time it will be YOUR cheese that gets eaten.

What does tenure mean, anyway?

Amazing what you can find on the Web. From a link in yesterday's post, Inside Higher Ed has an article from 2009 regarding accountability in higher ed. Specifically, it links to a piece by a Wall Street Journal person that talks about "academic freedom" and tenure. Naomi Riley documents the history of "academic freedom" and discusses how it was started as part of the larger progressive movement, back in olden days.

From what I read there, she struggles with the definition of "academic freedom". From what I've seen in my 20 years in higher ed, I can tell you what "academic freedom" means: the opportunity to have standards for quality in your classroom. By and large, that has been the effect that I've seen with tenured professors, at least in business schools. The opportunity to work on large, risky projects (pointed out by a colleague of mine) without the "publish or perish" overhang is another benefit (sounds like a real options/capital structure discussion, doesn't it?). Both of those are necessary parts of having a successful curriculum, in just about any field. For all of the BAD things that tenure gives us, and there are plenty, it may be necessary as an institution to keep grade inflation in check, and to make sure that there are actual learning outcomes down the road.

From the main text of the article, out of a presentation on higher ed finance, there's this quote:

"Regional accreditors should continue to be in the business of peer review, but the federal government needs to be the objective protector of taxpayers' dollars,"

Yet another reason for "academic freedom." Be afraid, be very afraid.

What degrees should mean

As we struggle with the NEXT 40 years of college education in this country, a think-tank group has produced a useful framework for education based on the scope of an associates, bachelors and masters degree. You should take a moment to look at it and think about how it fits what YOU learned for each of those degrees (thus far).

Check it out: (from the original link)

The associate degree holder:	Describes the scope and principal features of the field of study, citing core theories and practices, and offers a similar explication of a related field. Illustrates the field’s current terminology. Generates substantially error-free products, exhibits, or performances in the field.
The bachelor's degree holder:	Defines and explains the boundaries, divisions, styles and practices of the field. Defines and properly uses the principal terms in the field, both historical and contemporaneous. Demonstrates fluency in the use of tools, technologies and methods in the field. Evaluates, clarifies and frames a complex question or challenge using perspectives and scholarship from the student’s major field and at least one other. Constructs a project related to a familiar but complex problem in the field of study by assembling, arranging and reformulating ideas, concepts, designs or techniques. Constructs a summative project, paper or practice-based performance that draws on current research, scholarship and/or techniques in the field.
The master's degree holder:	Elucidates the major theories, research methods and approaches to inquiry, and/or schools of practice in the field; articulates relevant sources; and illustrates their relationship to allied fields. Assesses the contributions of major figures and organizations in the field; describes its major methodologies and practices; and implements at least two such methodologies and practices through projects, papers, exhibits or performances. Articulates major challenges involved in practicing the field, elucidates its leading edges, and delineates its current limits with respect to theory, knowledge and practice. Initiates, assembles, arranges and reformulates ideas, concepts, designs and techniques in carrying out a project directed at a challenge in the field beyond conventional boundaries.

Lumina officials and the authors say they went out of their way to fill the degree profile with "concrete, illustrative student learning outcome statements" that use "active verbs that tell all parties -- students, faculty, employers, policymakers and the general public -- what students actually should do to demonstrate their mastery."

Sounds cool, huh? Skeptics, it notes, were initially put off by the idea that the Feds would be involved and planning to shove this down everyone's throat at the first opportunity. (Who says that they aren't? After all bureaucrats aren't bureaucrats if they aren't "doing something," right?)

The actual report is available here at the Lumina homepage.

Historically, there's always been a debate about whether liberal arts or professional degrees (business, etc.) were the best approach, and in the classroom the debate was between knowledge (and critical thinking) versus skills (training).

Believe it or not, professors actually have to THINK about this stuff!