Henry C. Alphin Jr.

Gallup: American Women are Strong Democrats

June 12, 2009

Women More Likely to Be Democrats, Regardless of Age

Women from 18 to 85 are more Democratic than men of the same age

by Frank Newport

PRINCETON, NJ -- A new Gallup analysis of almost 150,000 interviews conducted from January through May of this year sheds new light on the substantial gender gap that exists in American politics today. Not only are women significantly more likely than men to identify as Democrats, and less likely to identify as independents, but -- with only slight variation -- this gap is evident across all ages, from 18 to 85, and within all major racial, ethnic, and marital-status segments of society.

Gallup article

Stephen Moore Reflects on 'Atlas Shrugged'

'Atlas Shrugged': From Fiction to Fact in 52 Years

By STEPHEN MOORE

Some years ago when I worked at the libertarian Cato Institute, we used to label any new hire who had not yet read "Atlas Shrugged" a "virgin." Being conversant in Ayn Rand's classic novel about the economic carnage caused by big government run amok was practically a job requirement. If only "Atlas" were required reading for every member of Congress and political appointee in the Obama administration. I'm confident that we'd get out of the current financial mess a lot faster.

Getty Images

The art for a 1999 postage stamp.

Many of us who know Rand's work have noticed that with each passing week, and with each successive bailout plan and economic-stimulus scheme out of Washington, our current politicians are committing the very acts of economic lunacy that "Atlas Shrugged" parodied in 1957, when this 1,000-page novel was first published and became an instant hit.

Rand, who had come to America from Soviet Russia with striking insights into totalitarianism and the destructiveness of socialism, was already a celebrity. The left, naturally, hated her. But as recently as 1991, a survey by the Library of Congress and the Book of the Month Club found that readers rated "Atlas" as the second-most influential book in their lives, behind only the Bible.

For the uninitiated, the moral of the story is simply this: Politicians invariably respond to crises -- that in most cases they themselves created -- by spawning new government programs, laws and regulations. These, in turn, generate more havoc and poverty, which inspires the politicians to create more programs . . . and the downward spiral repeats itself until the productive sectors of the economy collapse under the collective weight of taxes and other burdens imposed in the name of fairness, equality and do-goodism.

In the book, these relentless wealth redistributionists and their programs are disparaged as "the looters and their laws." Every new act of government futility and stupidity carries with it a benevolent-sounding title. These include the "Anti-Greed Act" to redistribute income (sounds like Charlie Rangel's promises soak-the-rich tax bill) and the "Equalization of Opportunity Act" to prevent people from starting more than one business (to give other people a chance). My personal favorite, the "Anti Dog-Eat-Dog Act," aims to restrict cut-throat competition between firms and thus slow the wave of business bankruptcies. Why didn't Hank Paulson think of that?

These acts and edicts sound farcical, yes, but no more so than the actual events in Washington, circa 2008. We already have been served up the $700 billion "Emergency Economic Stabilization Act" and the "Auto Industry Financing and Restructuring Act." Now that Barack Obama is in town, he will soon sign into law with great urgency the "American Recovery and Reinvestment Plan." This latest Hail Mary pass will increase the federal budget (which has already expanded by $1.5 trillion in eight years under George Bush) by an additional $1 trillion -- in roughly his first 100 days in office.

The current economic strategy is right out of "Atlas Shrugged": The more incompetent you are in business, the more handouts the politicians will bestow on you. That's the justification for the $2 trillion of subsidies doled out already to keep afloat distressed insurance companies, banks, Wall Street investment houses, and auto companies -- while standing next in line for their share of the booty are real-estate developers, the steel industry, chemical companies, airlines, ethanol producers, construction firms and even catfish farmers. With each successive bailout to "calm the markets," another trillion of national wealth is subsequently lost. Yet, as "Atlas" grimly foretold, we now treat the incompetent who wreck their companies as victims, while those resourceful business owners who manage to make a profit are portrayed as recipients of illegitimate "windfalls."

When Rand was writing in the 1950s, one of the pillars of American industrial might was the railroads. In her novel the railroad owner, Dagny Taggart, an enterprising industrialist, has a FedEx-like vision for expansion and first-rate service by rail. But she is continuously badgered, cajoled, taxed, ruled and regulated -- always in the public interest -- into bankruptcy. Sound far-fetched? On the day I sat down to write this ode to "Atlas," a Wall Street Journal headline blared: "Rail Shippers Ask Congress to Regulate Freight Prices."

In one chapter of the book, an entrepreneur invents a new miracle metal -- stronger but lighter than steel. The government immediately appropriates the invention in "the public good." The politicians demand that the metal inventor come to Washington and sign over ownership of his invention or lose everything.

The scene is eerily similar to an event late last year when six bank presidents were summoned by Treasury Secretary Hank Paulson to Washington, and then shuttled into a conference room and told, in effect, that they could not leave until they collectively signed a document handing over percentages of their future profits to the government. The Treasury folks insisted that this shakedown, too, was all in "the public interest."

Ultimately, "Atlas Shrugged" is a celebration of the entrepreneur, the risk taker and the cultivator of wealth through human intellect. Critics dismissed the novel as simple-minded, and even some of Rand's political admirers complained that she lacked compassion. Yet one pertinent warning resounds throughout the book: When profits and wealth and creativity are denigrated in society, they start to disappear -- leaving everyone the poorer.

One memorable moment in "Atlas" occurs near the very end, when the economy has been rendered comatose by all the great economic minds in Washington. Finally, and out of desperation, the politicians come to the heroic businessman John Galt (who has resisted their assault on capitalism) and beg him to help them get the economy back on track. The discussion sounds much like what would happen today:

Galt: "You want me to be Economic Dictator?"

Mr. Thompson: "Yes!"

"And you'll obey any order I give?"

"Implicitly!"

"Then start by abolishing all income taxes."

"Oh no!" screamed Mr. Thompson, leaping to his feet. "We couldn't do that . . . How would we pay government employees?"

"Fire your government employees."

"Oh, no!"

Abolishing the income tax. Now that really would be a genuine economic stimulus. But Mr. Obama and the Democrats in Washington want to do the opposite: to raise the income tax "for purposes of fairness" as Barack Obama puts it.

David Kelley, the president of the Atlas Society, which is dedicated to promoting Rand's ideas, explains that "the older the book gets, the more timely its message." He tells me that there are plans to make "Atlas Shrugged" into a major motion picture -- it is the only classic novel of recent decades that was never made into a movie. "We don't need to make a movie out of the book," Mr. Kelley jokes. "We are living it right now."

Mr. Moore is senior economics writer for The Wall Street Journal editorial page.

WSJ Article

Math and the City

One of the pleasures of looking at the world through mathematical eyes is that you can see certain patterns that would otherwise be hidden. This week’s column is about one such pattern. It’s a beautiful law of collective organization that links urban studies to zoology. It reveals Manhattan and a mouse to be variations on a single structural theme.

The mathematics of cities was launched in 1949 when George Zipf, a linguist working at Harvard, reported a striking regularity in the size distribution of cities. He noticed that if you tabulate the biggest cities in a given country and rank them according to their populations, the largest city is always about twice as big as the second largest, and three times as big as the third largest, and so on. In other words, the population of a city is, to a good approximation, inversely proportional to its rank. Why this should be true, no one knows.

Even more amazingly, Zipf’s law has apparently held for at least 100 years. Given the different social conditions from country to country, the different patterns of migration a century ago and many other variables that you’d think would make a difference, the generality of Zipf’s law is astonishing.

Keep in mind that this pattern emerged on its own. No city planner imposed it, and no citizens conspired to make it happen. Something is enforcing this invisible law, but we’re still in the dark about what that something might be.

Many inventive theorists working in disciplines ranging from economics to physics have taken a whack at explaining Zipf’s law, but no one has completely solved it. Paul Krugman, who has tackled the problem himself, wryly noted that “the usual complaint about economic theory is that our models are oversimplified — that they offer excessively neat views of complex, messy reality. [In the case of Zipf’s law] the reverse is true: we have complex, messy models, yet reality is startlingly neat and simple.”

After being stuck for a long time, the mathematics of cities has suddenly begun to take off again. Around 2006, scientists started discovering new mathematical laws about cities that are nearly as stunning as Zipf’s. But instead of focusing on the sizes of cities themselves, the new questions have to do with how city size affects other things we care about, like the amount of infrastructure needed to keep a city going.

For instance, if one city is 10 times as populous as another one, does it need 10 times as many gas stations? No. Bigger cities have more gas stations than smaller ones (of course), but not nearly in direct proportion to their size. The number of gas stations grows only in proportion to the 0.77 power of population. The crucial thing is that 0.77 is less than 1. This implies that the bigger a city is, the fewer gas stations it has per person. Put simply, bigger cities enjoy economies of scale. In this sense, bigger is greener.

The same pattern holds for other measures of infrastructure. Whether you measure miles of roadway or length of electrical cables, you find that all of these also decrease, per person, as city size increases. And all show an exponent between 0.7 and 0.9.

Now comes the spooky part. The same law is true for living things. That is, if you mentally replace cities by organisms and city size by body weight, the mathematical pattern remains the same.

For example, suppose you measure how many calories a mouse burns per day, compared to an elephant. Both are mammals, so at the cellular level you might expect they shouldn’t be too different. And indeed, when the cells of 10 different mammalian species were grown outside their host organisms, in a laboratory tissue culture, they all displayed the same metabolic rate. It was as if they didn’t know where they’d come from; they had no genetic memory of how big their donor was.

But now consider the elephant or the mouse as an intact animal, a functioning agglomeration of billions of cells. Then, on a pound for pound basis, the cells of an elephant consume far less energy than those of a mouse. The relevant law of metabolism, called Kleiber’s law, states that the metabolic needs of a mammal grow in proportion to its body weight raised to the 0.74 power.

This 0.74 power is uncannily close to the 0.77 observed for the law governing gas stations in cities. Coincidence? Maybe, but probably not. There are theoretical grounds to expect a power close to 3/4. Geoffrey West of the Santa Fe Institute and his colleagues Jim Brown and Brian Enquist have argued that a 3/4-power law is exactly what you’d expect if natural selection has evolved a transport system for conveying energy and nutrients as efficiently and rapidly as possible to all points of a three-dimensional body, using a fractal network built from a series of branching tubes — precisely the architecture seen in the circulatory system and the airways of the lung, and not too different from the roads and cables and pipes that keep a city alive.

These numerical coincidences seem to be telling us something profound. It appears that Aristotle’s metaphor of a city as a living thing is more than merely poetic. There may be deep laws of collective organization at work here, the same laws for aggregates of people and cells.

The numerology above would seem totally fortuitous if we hadn’t viewed cities and organisms through the lens of mathematics. By abstracting away nearly all the details involved in powering a mouse or a city, math exposes their underlying unity. In that way (and with apologies to Picasso), math is the lie that makes us realize the truth.

NYTimes article

Scholars on the Sidelines

Scholars on the Sidelines

By Joseph S. Nye Jr.
Monday, April 13, 2009; A15

President Obama has appointed some distinguished academic economists and lawyers to his administration, but few high-ranking political scientists have been named. In fact, the editors of a recent poll of more than 2,700 international relations experts declared that "the walls surrounding the ivory tower have never seemed so high."

While important American scholars such as Henry Kissinger and Zbigniew Brzezinski took high-level foreign policy positions in the past, that path has tended to be a one-way street. Not many top-ranked scholars of international relations are going into government, and even fewer return to contribute to academic theory. The 2008 Teaching, Research and International Policy (TRIP) poll, by the Institute for Theory and Practice in International Relations, showed that of the 25 scholars rated as producing the most interesting scholarship during the past five years, only three had ever held policy positions (two in the U.S. government and one in the United Nations). The fault for this growing gap lies not with the government but with the academics.

Scholars are paying less attention to questions about how their work relates to the policy world, and in many departments a focus on policy can hurt one's career. Advancement comes faster for those who develop mathematical models, new methodologies or theories expressed in jargon that is unintelligible to policymakers. A survey of articles published over the lifetime of the American Political Science Review found that about one in five dealt with policy prescription or criticism in the first half of the century, while only a handful did so after 1967. Editor Lee Sigelman observed in the journal's centennial issue that "if 'speaking truth to power' and contributing directly to public dialogue about the merits and demerits of various courses of action were still numbered among the functions of the profession, one would not have known it from leafing through its leading journal."

As citizens, academics might be considered to have an obligation to help improve on policy ideas when they can. Moreover, such engagement can enhance and enrich academic work, and thus the ability of academics to teach the next generation. As former undersecretary of state David Newsom argued a decade ago, "the growing withdrawal of university scholars behind curtains of theory and modeling would not have wider significance if this trend did not raise questions regarding the preparation of new generations and the future influence of the academic community on public and official perceptions of international issues and events. Teachers plant seeds that shape the thinking of each new generation; this is probably the academic world's most lasting contribution." Yet too often scholars teach theory and methods that are relevant to other academics but not to the majority of the students sitting in the classroom before them.

Some academics say that while the growing gap between theory and policy may have costs for policy, it has produced better social science theory, and that this is more important than whether such scholarship is relevant. Also, to some extent, the gap is an inevitable result of the growth and specialization of knowledge. Few people can keep up with their subfields, much less all of social science. But the danger is that academic theorizing will say more and more about less and less.

Even when academics supplement their usual trickle-down approach to policy by writing in journals, newspapers or blogs, or by consulting for candidates or public officials, they face many competitors for attention. More than 1,200 think tanks in the United States provide not only ideas but also experts ready to comment or consult at a moment's notice. Some of these new transmission belts serve as translators and additional outlets for academic ideas, but many add a bias provided by their founders and funders. As a group, think tanks are heterogeneous in scope, funding, ideology and location, but universities generally offer a more neutral viewpoint. While pluralism of institutional pathways is good for democracy, the policy process is diminished by the withdrawal of the academic community.

The solutions must come via a reappraisal within the academy itself. Departments should give greater weight to real-world relevance and impact in hiring and promoting young scholars. Journals could place greater weight on relevance in evaluating submissions. Studies of specific regions deserve more attention. Universities could facilitate interest in the world by giving junior faculty members greater incentives to participate in it. That should include greater toleration of unpopular policy positions. One could multiply such useful suggestions, but young people should not hold their breath waiting for them to be implemented. If anything, the trends in academic life seem to be headed in the opposite direction.

The writer is a professor at Harvard University and former dean of the Harvard Kennedy School. The 2008 TRIP poll of scholars rated his work in international relations as having had the most influence on American foreign policy.

Washington Post article

Where were the Economists? Right Here.

The Last Temptation of Risk
by Barry Eichengreen

04.30.2009

 

From the May/June 2009 issue of The National Interest.

 

THE GREAT Credit Crisis has cast into doubt much of what we thought we knew about economics. We thought that monetary policy had tamed the business cycle. We thought that because changes in central-bank policies had delivered low and stable inflation, the volatility of the pre-1985 years had been consigned to the dustbin of history; they had given way to the quaintly dubbed “Great Moderation.” We thought that financial institutions and markets had come to be self-regulating—that investors could be left largely if not wholly to their own devices. Above all we thought that we had learned how to prevent the kind of financial calamity that struck the world in 1929.

 

We now know that much of what we thought was true was not. The Great Moderation was an illusion. Monetary policies focusing on low inflation to the exclusion of other considerations (not least excesses in financial markets) can allow dangerous vulnerabilities to build up. Relying on institutional investors to self-regulate is the economic equivalent of letting children decide their own diets. As a result we are now in for an economic and financial downturn that will rival the Great Depression before it is over.

 

The question is how we could have been so misguided. One interpretation, understandably popular given our current plight, is that the basic economic theory informing the actions of central bankers and regulators was fatally flawed. The only course left is to throw it out and start over. But another view, considerably closer to the truth, is that the problem lay not so much with the poverty of the underlying theory as with selective reading of it—a selective reading shaped by the social milieu. That social milieu encouraged financial decision makers to cherry-pick the theories that supported excessive risk taking. It discouraged whistle-blowing, not just by risk-management officers in large financial institutions, but also by the economists whose scholarship provided intellectual justification for the financial institutions’ decisions. The consequence was that scholarship that warned of potential disaster was ignored. And the result was global economic calamity on a scale not seen for four generations.

 

SO WHERE were the intellectual agenda setters when the crisis was building? Why did they fail to see this train wreck coming? More than that, why did they consort actively with the financial sector in setting the stage for the collapse?

For economists in business schools the answer is straightforward. Business schools see themselves as suppliers of inputs to business. Just as General Motors provides its suppliers with specifications for the cold-rolled sheet it needs for fabricating auto bodies, J. P. Morgan makes clear the kind of financial engineers it requires, and business schools deem to provide. In the wake of the 1987 stock-market crash, Morgan’s chairman, Dennis Weatherstone, started calling for a daily “4:15 Report” summarizing how much his firm would lose if tomorrow turned out to be a bad day. His counterparts at other firms then adopted the practice. Soon after, business schools jumped to supply graduates to write those reports. Value at Risk, as that number and the process for calculating it came to be known, quickly gained a place in the business-school curriculum.

The desire for up-to-date information on the risks of doing business was admirable. Less admirable was the belief that those risks could be reduced to a single number which could then be estimated on the basis of a set of mathematical equations fitted to a few data points. Much as former–GM CEO Alfred Sloan once sought to transform automobile production from a craft to an engineering problem, Weatherstone and his colleagues encouraged the belief that risk and return could be reduced to a set of equations specified by an MBA and solved by a machine.

Getting the machine to spit out a headline number for Value at Risk was straightforward. But deciding what to put into the model was another matter. The art of gauging Value at Risk required imagining the severity of the shocks to which the portfolio might be subjected. It required knowing what new variables to add in response to financial innovation and unfolding events. Doing this right required a thoughtful and creative practitioner. Value at Risk, like dynamite, can be a powerful tool when in the right hands. Placed in the wrong hands—well, you know.

These simple models should have been regarded as no more than starting points for serious thinking. Instead, those responsible for making key decisions, institutional investors and their regulators alike, took them literally. This reflected the seductive appeal of elegant theory. Reducing risk to a single number encouraged the belief that it could be mastered. It also made it easier to leave early for that weekend in the Hamptons.

Now, of course, we know that the gulf between assumption and reality was too wide to be bridged. These models were worse than unrealistic. They were weapons of economic mass destruction.

For some years those who relied on these artificial constructs were not caught out. Episodes of high volatility, like the 1987 stock-market crash, still loomed large in the data set to which the model was fit. They served to highlight the potential for big shocks and cautioned against aggressive investment strategies. Since financial innovation was gradual, models estimated on historical data remained reasonable representations of the balance of risks.

WITH TIME, however, memories of the 1987 crash faded. In the data used by the financial engineers, the crash became only one observation among many generated in the course of the Great Moderation. There were echoes, like the all-but-failure of the hedge fund Long-Term Capital Management in 1998. (Over four months the company lost $4.6 billion and had to be saved through a bailout orchestrated by the Federal Reserve Bank of New York.) But these warning signs were muffled by comparison. This encouraged the misplaced belief that the same central-bank policies that had reduced the volatility of inflation had magically, perhaps through transference, also reduced the volatility of financial markets. It encouraged the belief that mastery of the remaining risk made more aggressive investment strategies permissible. It made it possible, for example, to employ more leverage—to make use of more borrowed money—without putting more value at risk.

Meanwhile, deregulation was on the march. Memories of the 1930s disaster that had prompted the adoption of restrictions like the Glass-Steagall Act, which separated commercial and investment banking, faded with the passage of time. This tilted the political balance toward those who, for ideological reasons, favored permissive regulation. Meanwhile, financial institutions, in principle prohibited from pursuing certain lines of business, found ways around those restrictions, encouraging the view that strict regulation was futile. With the elimination of regulatory ceilings on the interest rates that could be paid to depositors, commercial banks had to compete for funding by offering higher rates, which in turn pressured them to adopt riskier lending and investment policies in order to pay the bill. With the entry of low-cost brokerages and the elimination of fixed commissions on stock trades, broker-dealers like Bear Stearns, which had previously earned a comfy living off of such commissions, now felt compelled to enter riskier lines of business.

But where the accelerating pace of change should have prompted more caution, the routinization of risk management encouraged precisely the opposite. The idea that risk management had been reduced to a mere engineering problem seduced business in general, and financial businesses in particular, into believing that it was safe to use more leverage and to invest in more volatile assets.

Of course, risk officers could have pointed out that the models had been fit to data for a period of unprecedented low volatility. They could have pointed out that models designed to predict losses on securities backed by residential mortgages were estimated on data only for years when housing prices were rising and foreclosures were essentially unknown. They could have emphasized the high degree of uncertainty surrounding their estimates. But they knew on which side their bread was buttered. Senior management strongly preferred to take on additional risk, since if the dice came up seven they stood to receive megabonuses, whereas if they rolled snake eyes the worst they could expect was a golden parachute. If an investment strategy that promised high returns today threatened to jeopardize the viability of the enterprise tomorrow, then this was someone else’s problem. For a junior risk officer to warn the members of the investment committee that they were taking undue risk would have dimmed his chances of promotion. And so on up the ladder.

WHY CORPORATE risk officers did not sound the alarm bells is thus clear enough. But where were the business-school professors while these events were unfolding? Answer: they were writing textbooks about Value at Risk. (Truth in advertising requires me to acknowledge that the leading such book is by a professor at the University of California.) Business schools are rated by business publications and compete for students on the basis of their record of placing graduates. With banks hiring graduates educated in Value at Risk, business schools had an obvious incentive to supply the same.

But what of doctoral programs in economics (like the one in which I teach)? The top PhD-granting departments only rarely send their graduates to positions in banking or business—most go on to other universities. But their faculties do not object to the occasional high-paying consulting gig. They don’t mind serving as the entertainment at beachside and ski-slope retreats hosted by investment banks for their important clients.

Generous speaker’s fees were thus available to those prepared to drink the Kool-Aid. Not everyone indulged. But there was nonetheless a subconscious tendency to embrace the arguments of one’s more “successful” colleagues in a discipline where money, in this case earned through speaking engagements and consultancies, is the common denominator of success.

Those who predicted the housing slump eventually became famous, of course. Princeton University Press now takes out space ads in general-interest publications prominently displaying the sober visage of Yale University economics professor Robert Shiller, the maven of the housing crash. Not every academic scribbler can expect this kind of attention from his publisher. But such fame comes only after the fact. The more housing prices rose and the longer predictions of their decline looked to be wrong, the lonelier the intellectual nonconformists became. Sociologists may be more familiar than economists with the psychic costs of nonconformity. But because there is a strong external demand for economists’ services, they may experience even-stronger economic incentives than their colleagues in other disciplines to conform to the industry-held view. They can thus incur even-greater costs—economic and also psychic—from falling out of step.

WHY BELABOR these points? Because it was not that economic theory had nothing to say about the kinds of structural weaknesses and conflicts of interest that paved the way to our current catastrophe. In fact, large swaths of modern economic theory focus squarely on the kind of generic problems that created our current mess. The problem was not an inability to imagine that conflicts of interest, self-dealing and herd behavior could arise, but a peculiar failure to apply those insights to the real world.

Take for example agency theory, whose point of departure is the observation that shareholders find it difficult to monitor managers, who have an incentive to make decisions that translate into large end-of-current-year bonuses but not necessarily into the long-term health of the enterprise. Risk taking that produces handsome returns today but ends in bankruptcy tomorrow may be perfectly congenial to CEOs who receive generous bonuses and severance packages but not to shareholders who end up holding worthless paper. This work had long pointed to compensation practices in the financial sector as encouraging short-termism and excessive risk taking and heightening conflicts of interest. The failure to heed such warnings is all the more striking given that agency theory is hardly an obscure corner of economics. A Nobel Prize for work on this topic was awarded to Leonid Hurwicz, Eric Maskin and Roger Myerson in 2007. (So much for the idea that it is only the financial engineers who are recognized by the Nobel Committee.)

Then there is information economics. It is a fact of life that borrowers know more than lenders about their willingness and capacity to repay. Who could know better what motivation lurks in the mind of the borrower and what opportunities he truly possesses? Taking this observation as its starting point, research in information economics has long emphasized the existence of adverse selection in financial markets—when interest rates rise, only borrowers with high-risk projects offering some chance of generating the high returns needed to service and repay loans will be willing to borrow. Indeed, if higher interest rates mean riskier borrowers, there may be no interest rate high enough to compensate the lender for the risk that the borrower may default. In that case lending and borrowing may collapse.

These models also show how borrowers have an incentive to take on more risk when using other people’s money or if they expect to be bailed out when things go wrong. In the wake of recent financial rescues, the name for this problem, “moral hazard,” will be familiar to even the casual newspaper reader. Again this is hardly an obscure corner of economics: George Akerlof, Michael Spence and Joseph Stiglitz were awarded the Nobel Prize for their work on it in 2001. Here again the potential problems of an inadequately regulated financial system would have been quite clear had anyone bothered to look.

Finally there is behavioral economics and its applications, including behavioral finance. Behavioral economics focuses on how cognition, emotion, and other psychological and social factors affect economic and financial decision making. Behavioral economists depart from the simpleminded benchmark that all investors take optimal decisions on the basis of all available information. Instead they acknowledge that decision making is not easy. They acknowledge that many decisions are taken using rules of thumb, which are often formed on the basis of social convention. They analyze how, to pick an example not entirely at random, decision making can be affected by the psychic costs of nonconformity.

It is easy to see how this small step in the direction of realism can transform one’s view of financial markets. It can explain herd behavior, where everyone follows the crowd, giving rise to bubbles, panics and crashes. Economists have succeeded in building elegant mathematical models of decision making under these conditions and in showing how such behavior can give rise to extreme instability. It should not be a surprise that people like the aforementioned George Akerlof and Robert Shiller are among the leaders in this field.

Moreover, what is true of investors can also be true of regulators, for whom information is similarly costly to acquire and who will similarly be tempted to follow convention—even when that convention allows excessive risk taking by the regulated. Indeed, these theories suggest that the attitudes of regulators may be infected not merely by the practices and attitudes of their fellow regulators, but also by those of the regulated. Economists now even have a name for this particular version of the intellectual fox-in-the-henhouse syndrome: cognitive regulatory capture.

And what is true of investors and regulators, introspection suggests, can also be true of academics. When it is costly to acquire and assimilate information about how reality diverges from the assumptions underlying popular economic models, it will be tempting to ignore those divergences. When convention within the discipline is to assume efficient markets, there will be psychic costs if one attempts to buck the trend. Scholars, in other words, are no more immune than regulators to the problem of cognitive capture.

What got us into this mess, in other words, were not the limits of scholarly imagination. It was not the failure or inability of economists to model conflicts of interest, incentives to take excessive risk and information problems that can give rise to bubbles, panics and crises. It was not that economists failed to recognize the role of social and psychological factors in decision making or that they lacked the tools needed to draw out the implications. In fact, these observations and others had been imaginatively elaborated by contributors to the literatures on agency theory, information economics and behavioral finance. Rather, the problem was a partial and blinkered reading of that literature. The consumers of economic theory, not surprisingly, tended to pick and choose those elements of that rich literature that best supported their self-serving actions. Equally reprehensibly, the producers of that theory, benefiting in ways both pecuniary and psychic, showed disturbingly little tendency to object. It is in this light that we must understand how it was that the vast majority of the economics profession remained so blissfully silent and indeed unaware of the risk of financial disaster.

WITH THE pressure of social conformity being so powerful, are we economists doomed to repeat past mistakes? Will we forever follow the latest intellectual fad and fashion, swinging wildly—much like investors whose behavior we seek to model—from irrational exuberance to excessive despair about the operation of markets? Isn’t our outlook simply too erratic and advice therefore too unreliable to be trusted as a guide for policy?

Maybe so. But amid the pervading sense of gloom and doom, there is at least one reason for hope. The last ten years have seen a quiet revolution in the practice of economics. For years theorists held the intellectual high ground. With their mastery of sophisticated mathematics, they were the high-prestige members of the profession. The methods of empirical economists seeking to analyze real data were rudimentary by comparison. As recently as the 1970s, doing a statistical analysis meant entering data on punch cards, submitting them at the university computing center, going out for dinner and returning some hours later to see if the program had successfully run. (I speak from experience.) The typical empirical analysis in economics utilized a few dozen, or at most a few hundred, observations transcribed by hand. It is not surprising that the theoretically inclined looked down, fondly if a bit condescendingly, on their more empirically oriented colleagues or that the theorists ruled the intellectual roost.

But the IT revolution has altered the lay of the intellectual land. Now every graduate student has a laptop computer with more memory than that decades-old university computing center. And she knows what to do with it. Just like the typical twelve-year-old knows more than her parents about how to download data from the internet, for graduate students in economics, unlike their instructors, importing data from cyberspace is second nature. They can grab data on grocery-store spending generated by the club cards issued by supermarket chains and combine it with information on temperature by zip code to see how the weather affects sales of beer. Their next step, of course, is to download securities prices from Bloomberg and see how blue skies and rain affect the behavior of financial markets. Finding that stock markets are more likely to rise on sunny days is not exactly reassuring for believers in the efficient-markets hypothesis.

The data sets used in empirical economics today are enormous, with observations running into the millions. Some of this work is admittedly self-indulgent, with researchers seeking to top one another in applying the largest data set to the smallest problem. But now it is on the empirical side where the capacity to do high-quality research is expanding most dramatically, be the topic beer sales or asset pricing. And, revealingly, it is now empirically oriented graduate students who are the hot property when top doctoral programs seek to hire new faculty.

Not surprisingly, the best students have responded. The top young economists are, increasingly, empirically oriented. They are concerned not with theoretical flights of fancy but with the facts on the ground. To the extent that their work is rooted concretely in observation of the real world, it is less likely to sway with the latest fad and fashion. Or so one hopes.

The late twentieth century was the heyday of deductive economics. Talented and facile theorists set the intellectual agenda. Their very facility enabled them to build models with virtually any implication, which meant that policy makers could pick and choose at their convenience. Theory turned out to be too malleable, in other words, to provide reliable guidance for policy.

In contrast, the twenty-first century will be the age of inductive economics, when empiricists hold sway and advice is grounded in concrete observation of markets and their inhabitants. Work in economics, including the abstract model building in which theorists engage, will be guided more powerfully by this real-world observation. It is about time.

Should this reassure us that we can avoid another crisis? Alas, there is no such certainty. The only way of being certain that one will not fall down the stairs is to not get out of bed. But at least economists, having observed the history of accidents, will no longer recommend removing the handrail

Barry Eichengreen is the George C. Pardee and Helen N. Pardee Professor of Economics and Political Science at the University of California, Berkeley.

National Interest article

On Obituaries

Final Edition
In praise of the newspaper obituary.

By Stefany Anne Golberg

The traditional obituary is an exercise in curtness. It is an art form nasty, brutish, and short, taking the scrambled up, complicated thing that is a human life and smashing it into a tidy, coherent narrative. Take, for example, the 1897 obituary of Margie Zellner in the Allentown, Pennsylvania Morning Call:

Margie, the adopted daughter of Mr. and Mrs. John Rupp. She died of typhoid fever. She was ill over a week. Daughter of James F. ZELLNER and Daniella ZELLNER and at the death of her Mother, which occurred when the deceased was a babe, she was adopted by Mr. and Mrs. Rupp. Burial at West End Cemetery, Allentown, Pa. On Friday, January 8, 1897. She was 12 years, 11 months and 24 days of age.  She lived with the Rupps at 524 Walnut Street.

And that’s the story of Margie. She was born, she was adopted, she got typhoid, she lived on Walnut Street, she died, the end. No mention of what kind of games she liked to play, if she wore ribbons in her hair, if anyone was sad that she was gone. Her obituary serves as witness. It was written, and therefore she existed.

In a letter penned to the grieving Elizabeth Hubbart, his brother John’s stepdaughter, Benjamin Franklin wrote, “A man is not completely born until he is dead.” He was trying to make her feel better about the death of her stepfather by saying that, as a soul now freed from his body, he was just getting started. What Elizabeth thought of as a life completed, Franklin portrayed as a mere rehearsal for the “real life” that is immortality. God gives bodies to all of us wandering souls for a little while, to experience pleasure, learn some tricks. Eventually, these bodies become painful or sad or just too gross to maintain, and are shuffled off while we get back to the business of being eternal. For Franklin, then, life is never done.

I can see how this sentiment might be comforting to a believer, but for those of us living on the other side of faith, the question of what constitutes a completed life is still an open one. Aristotle thought of life as a sum of its total actions that couldn’t be judged until those actions came to an end. This might be reassuring to those hovering about the frustrated middle of their lives, harshly judging their progress. Not to worry, says Aristotle — it ain’t over till it’s over. And it isn’t really over until you’ve been judged by other people at a point when you can no longer prepare a defense, be reformed, pay restitution, be rehabilitated. Judgment completes life.

A classic obituary like Margie’s above is a great example of this Aristotelian view. In essence, you’re not really dead unless you’ve been the subject of an obituary. It doesn’t have to be fancy — a eulogy written by your mom, a notice in the paper, a headstone with dates that say “he was born, he lived, and then he died.” These will all do. Without an obituary, it’s almost as if you never existed.

The obituary seems to be experiencing a renaissance. In her 2006 book The Dead Beat, Marilyn Johnson reveals a worldwide ring of rabid obituary enthusiasts—members of the Church of Obituaries, she calls them. They flip past the Sports and Business sections eager to read the day’s death roll. They “surf the dead beat” poring over blogs and newspapers searching for fascinating facts about Antoinette K-Doe, who turned a nightclub into a public shrine to her husband, or the guy who invented sea monkeys. Obituaries aren’t dirty little secrets as much as they used to be, lurking in hidden corners and ready to terrify those who cross their path. They are public, normal, interesting, fun. There’s howtowriteanobituary.com which involves everyday people in the writing process, and patrickswayzeobituary.com, a forum writing the demise of the movie star even as he lives. There’s even a glossy online magazine with the snappy name Obit.

But the real change is with the obituary writers. Once shamed to the backs of periodicals to deliver dour, Margie Zellner-style obituaries, many are now part of this new movement to “out” death by making it more accessible and “natural.” They are reconsidering the obituary not as the final judgment, but as a way death can be presented as a sum total of its stories. Everyone has stories, everyone dies, and in writing about death, death and life become more of a circle. The obituary is not the period on the sentence of existence, but a mere interpretation.

A career obituary writer herself, Marilyn Johnson removes the power of judgment completely from obituaries. “…Obits are,” she says, “at their best, a form of literature…"

Across the U.S., a hybrid obituary, a cross between short stories and obits, celebrates the life of local characters, the extraordinary in the ordinary person. The school lunch lady, who spent her evenings as a ballroom hostess. The man who could hypnotize lobsters and stand them on their heads….

Take this USA Today obit about Herbert Hamrol. Herbert Hamrol, by all definition, was just a guy who worked and lived a regular life. But his obituary, grabbing the tidbit that he was one of the last survivors of the 1906 San Francisco earthquake, makes an otherwise simple life into one including drama, daring, and, most importantly, history:

Herbert Hamrol was 3 years old when his mother carried him to safety from their crumbling apartment building at 5:12 a.m. on April 18, 1906. "She carried me in her left arm and used her right hand to grab the stair rail," Hamrol told The Associated Press on the earthquake's 99th anniversary. "That's all I remember."

Even the Obituary section in The New York Times — once the paragon of the obituary-as-final-dirt-on-the-grave — is now one of the most widely read sections of any periodical anywhere due to its embrace of the obituary as story.

For an example of the transformation, take this obituary from September 29, 1891, tucked into the lower half of a column with the day’s death notices. It consists of a few lines about some guy named Herman Melville:

Herman Melville died yesterday at his residence, 104 East Twenty-sixth Street, this city, of heart failure, aged seventy-two. He was the author of Typee, Omoo, Mobie Dick, and other sea-faring tales, written in earlier years. He leaves a wife and two daughters, Mrs. M. B. Thomas and Miss Melville.

I would say that’s a pretty fair assessment of Melville’s life, wouldn’t you? Lived in Chelsea, wrote some seafaring tales (did they really misspell Moby Dick?), was married, had a couple of kids, and died in Chelsea. Hey, it’s more than most of us do, plenty enough for a complete life.

Now read this obituary in The New York Times written this past month by Margalit Fox (another change in the obit industry, the honor and agency of the authors) about “Richard Topus, a Pigeon Trainer in World War II.” This is an obituary Melville could only have dreamed of — a heroic tale of one man’s expert bird-handling and his later success as an executive dairy salesman:

To the thousands of American men and boys who raced homing pigeons, a popular sport in the early 20th century and afterward, the government’s message was clear: Uncle Sam Wants Your Birds. Richard Topus was one of those boys. He had no birds of his own to give, but he had another, unassailable asset: he was from Brooklyn, where pigeon racing had long held the status of a secular religion. His already vast experience with pigeons — long, ardent hours spent tending and racing them after school and on weekends — qualified him, when he was still a teenager, to train American spies and other military personnel in the swift, silent use of the birds in wartime.

It goes on to describe his childhood in Brooklyn, where he fell in love with the pigeons his neighbors kept on the roof, and a brief history of the role of pigeons in defeating the Nazis. It’s inspiring, really.

It’s also quite a departure from the Aristotelian view of obituary-as-completion. Rather, it presents life and death as a continuum. Today’s obituaries are more like the optimistic Ben Franklin notion of life as a neverending story. Like literature, an obituary has the power to completely reimagine a life in examining it, for as long as anyone is interested. Life in this view always has potential, as long as we‘re engaged with the past.

In fact, we have no idea what death really is. But obituaries aren’t interesting because of what they say about death. They’re interesting because of the funny and pathetic way they purport to deal with the unfathomable. Obituaries are little fairytales we tell ourselves, while imagining our own lives as one day complete enough to write about. An obituary, any obituary, transforms lives into stories, with interesting characters, a cohesive plot, and most importantly, a good ending. This is what we’ve got as humans — not the ability to understand or be at one with death, but the ability to generate lots of stupid crap to fill in the empty space of the unknown. Obituaries can do that as much as anything, and maybe we can think of them both in the Franklinian and Aristotelian sense: They might not complete life nor make it eternal, but they can make us feel better about living in the constant and terrifying presence of death.

At the end of his letter penned to the grieving Elizabeth Hubbart, Ben Franklin writes “Our friend and we are invited abroad on a party of pleasure — that is to last forever. His chair was first ready and he is gone before us — we could not all conveniently start together, and why should you and I be grieved at this, since we are soon to follow, and we know where to find him.” I like this way of thinking of death as an everlasting ship or maybe a party boat, taking passengers abroad. Many good stories have been inspired by ships. Maybe if we just keep writing them, we can cheat death a little after all. • 22 April 2009

Smart Set article

Does the US Need an Auto Industry?

With Chrysler filing for bankruptcy today, President Obama expressed confidence that the automaker will emerge stronger. But, of course, it will be vastly changed, as will General Motors, which may face the same difficult decision come June 1, when it must complete its own restructuring. Under the administration’s plan, Chrysler will receive upward of $8 billion in government support to get it through bankruptcy and to restart its operations.

With its survival, at least in the short term, so dependent on public assistance, it seems fair to ask, do we need a domestic auto industry? Many American manufacturing industries, like textiles and electronics, long ago moved to other producing countries. Why is the auto industry different?

• Robert Reich, former secretary of labor
• Robert Lawrence, economist, Harvard University
• Tyler Cowen, economist, George Mason University
• Mark Thoma, economist, University of Oregon
• Deborah Swenson, economist, U.C. Davis

NYTime article

Should Universities be Restructured?

GRADUATE education is the Detroit of higher learning. Most graduate programs in American universities produce a product for which there is no market (candidates for teaching positions that do not exist) and develop skills for which there is diminishing demand (research in subfields within subfields and publication in journals read by no one other than a few like-minded colleagues), all at a rapidly rising cost (sometimes well over $100,000 in student loans).

NYTimes article

Shuttin' Detroit Down - John Rich with Kris Kristofferson and Mickey Rourke

Pioneering Drexel President Constantine Papadakis Dies at 63

 

Pioneering Drexel President Constantine Papadakis Dies at 63 PHILADELPHIA (April 6, 2009)— Drexel University president Constantine Papadakis died unexpectedly Sunday evening, Drexel Board of Trustees chairman Richard Greenawalt announced today. Papadakis, who was in remission from cancer, died from pulmonary complications. On April 2, the Drexel board announced that Papadakis had requested a medical leave of absence, and that President Emeritus C.R. “Chuck” Pennoni, a former Drexel trustee, chairman of the board and interim president, had been appointed interim president and CEO. “It is with great personal sadness that I report that President Papadakis has passed away,” said Greenawalt. “This is a day of profound mourning for the entire Drexel community of students, faculty, staff and administrators, our alumni worldwide and friends everywhere. Our deepest condolences go out to the Papadakis family.” Papadakis, called “Taki” by friends, colleagues and loved ones, is survived by his wife of 39 years, Eliana, and daughter Maria, 23, a 2008 Drexel graduate. Known in the national academic community as an innovator and locally as the chief executive who turned around two venerable institutions, Drexel and the former Allegheny University of the Health Sciences, Papadakis was among the longest-serving presidents in higher education today. He was appointed Drexel's president in 1995, and his 14-year tenure surpassed 85 percent of current presidents of major American research universities. His impact on Drexel, on Greater Philadelphia and on higher education is likely to be felt for decades to come. “Taki's greatest legacy, next to his beloved daughter, is today's comprehensive Drexel University, poised to continue its remarkable success far into the future,” said Greenawalt. “As a trustee working alongside Taki since the beginning of his tenure and as a Drexel alumnus, I take great pride in his achievements here.” Papadakis's arrival at Drexel in 1995 ushered in an era of unprecedented growth and excellence. Papadakis, a professional engineer and executive before his move into academia, famously insisted on measurable goals for his managers at Drexel. So numbers are useful in understanding the University's growth under his leadership: In 13-plus years, total enrollment at the University grew by more than 130 percent, from about 9,000 to 21,000, with full-time undergraduate enrollment increasing by 144 percent to more than 11,000. At the same time, selectivity increased, with freshman applications growing by nearly 700 percent to 27,500, and the median SAT score of accepted students rising to 1202. Drexel's success in competing for students was made possible by the financial stability the University achieved under Papadakis. His commitment to sound fiscal management gained him a national reputation, with The Wall Street Journal opining in a 2005 front-page profile that “few university presidents have a hard-core business style quite like Dr. Papadakis's.” His business sense, honed during a decade in private-sector management at national engineering firms including Bechtel, made him the right man for the job at a critical juncture in Drexel's history. By 1995, enrollments had fallen to historic lows, classrooms sat empty and deteriorating and one dormitory had been boarded up for a decade. Three years had passed without a salary increase for staff, and cash flow was so dire that some stakeholders suggested selling off Drexel's collection of art, including an 18th-century David Rittenhouse clock that represented a unique piece of Philadelphia's scientific history. Just as he had done in previous jobs at the University of Colorado and the University of Cincinnati, Papadakis set out to change the sometimes slow-paced, fiscally lackadaisical academic culture. One oft-repeated story involves him arriving on his first day at Drexel in 1995, a summer Friday, to find most of the staff had the day off. He quickly made it clear that four-day work weeks would be an option only if accompanied by a 20 percent pay cut. His prudent, cost-conscious management was critical to the repair of Drexel's finances, as evidenced by four improvements in nine years in the University's Standard and Poor's rating: from an unsatisfactory BBB+ in 1997 to A+ with a stable outlook since 2005. Papadakis's primary strategy for improving Drexel's financial situation was to encourage smart growth. Since his arrival, the University's annual operating budget has grown by more than 300 percent, and the size of Drexel's research enterprise has grown from $15 million to more than $100 million in each of the past three years. Papadakis doubled the size of Drexel's faculty and grew the University's total employment to 7,300, making Drexel the seventh largest private employer in Philadelphia . And salaries increased by 5 percent annually for 10 consecutive years, with a 4 percent increase in 2008-09 even as other institutions were freezing wages and eliminating staff and programs. Drexel's urban campus is tremendously improved, with the University constructing, acquiring or renovating buildings at a rate of one per year under Papadakis. At his direction, Drexel brought in signature architects including Philip Johnson, I. M. Pei and Michael Graves, whose work now stands alongside that of legendary urban architects like Frank Furness and T. P. Lonsdale. The campus reinvention continues under Drexel's $500 million West Philadelphia Campus Master Plan. Despite today's economic downturn the University has an unprecedented four new buildings in various stages of construction in 2009. In addition, a $25 million donation this year from a donor preferring anonymity, the largest individual private gift in Drexel history, allowed the University to purchase two buildings, including one by legendary Philadelphia architect Robert Venturi, for conversion into a design center for the Antoinette Westphal College of Media Arts & Design. Perhaps the most transformative change at Drexel under Papadakis was the increase in the University's comprehensiveness. In 1998 the University trustees signed a landmark agreement to manage the bankrupt Allegheny University of the Health Sciences, followed by a 2002 merger creating the Drexel University College of Medicine. This bold step, undertaken at Papadakis's urging, saved 13,000 jobs and the education of 3,000 medical and nursing students, kept intact a key academic medical resource for Philadelphia and preserved the traditions of two of the cities most historic institutions, Woman's Medical College of Pennsylvania (founded in 1850 as the world's first medical school for women) and Hahnemann Medical College (a pioneer in homeopathic medicine founded in 1848). “At the most critical moment, Taki was instrumental in rescuing both a vital piece of Philadelphia 's health care infrastructure and an irreplaceable part of medical history,” said Manuel N. Stamatakis, a Drexel trustee who has also served as board chair of the medical college since 1998. “He said that Drexel could do it, and Drexel did it.” The merger, which also brought the School of Public Health and College of Nursing and Health Professions into Drexel's fold, resulted in synergies with traditional Drexel research strengths and enhanced Drexel's status as a national research university. Just three years later, in 2005, Papadakis made another startling announcement: Drexel would become the first top-ranked doctoral university in the country to open a law school in more than 25 years. By September of 2006, a faculty was in place, a building was under construction and a talented inaugural class entered Drexel Law. In short order, the school earned provisional accreditation from the American Bar Association and received a major naming gift from Drexel alumnus Earle Mack. In May 2009, the University will celebrate the first graduates of the Earle Mack School of Law. Drexel also made progressive strides in how it reached students. The University was a pioneer in online learning from the early days of Papadakis's administration, culminating in the establishment of e-learning subsidiary Drexel Online with $4 million of capitalization in 2002. Today, more than 5,200 students are enrolled in 60-plus online degree programs, and tuition revenue through Drexel Online grew from $14.4 million in FY2005 to $40 million in FY2008. Drexel has developed agreements that facilitate the entry of graduates from a number of Greater Philadelphia community colleges into the University, including a partnership with Burlington County College under which students complete a Drexel bachelor's degree entirely on BCC's Mount Laurel, N.J., campus. Drexel opened a Center for Graduate Studies in Sacramento, Calif., in January 2009, offering hybrid face-to-face/online classes in one of the nation's biggest growth markets for higher education. The University is also conducting due diligence on an offer of a gift of 1,100 acres of land in Placer County , Calif., 15 miles east of Sacramento. Drexel would build a 600-acre university campus on the site, financed by the sale of the remaining land to developers. Even as Papadakis worked to expand the breadth of Drexel's academic offerings and modes of instruction, he focused the University's marketing message on three main points: its commitment to experience-based learning via one of the nation's leading co-operative education programs, its reputation for cutting-edge academic technology and its engagement with what he called Drexel's “living laboratory,” the city of Philadelphia. During Papadakis's tenure, Drexel also extended its reputation as a technological leader, becoming in 2000 the first major university with an entirely wireless campus, indoors and out, and in 2002 the first to offer a Web portal to University information for wireless devices. Drexel's advanced technological infrastructure also allowed it to become a unique type of service provider, managing a variety of information technology for 40 other educational institutions. Drexel has strengthened its ties to the citizens and communities of Philadelphia through a renewed emphasis on civic engagement. In 2000, Drexel created UNIV 101, a single course required of all Drexel freshmen that included a community service component. And in 2003, Papadakis established the Center for Civic Engagement, a nexus for community service and experiential learning. Each year, Drexel students and staff contribute more than 15,000 hours of service to hundreds of community-based organizations. In many ways, Drexel is a different university today than 14 years ago, and evidence suggests that it looks that way to outside observers. Once a “third-tier” school according to U.S.News & World Report , Drexel has been ranked in the category of Best National Universities in the magazine's “ America 's Best Colleges” for six consecutive years and in 2009 entered the top 100 for the first time at number 89. Drexel is the 50th-ranked private university in the U.S. News survey. Also in 2009, Drexel ranked sixth in the first U.S. News list of “Schools to Watch,” recognizing the nation's top “up-and-coming schools.” The magazine asked university administrators nationwide to name schools that have demonstrated “the most promising and innovative changes in academics, faculty, students, campus, or facilities,” and Drexel ranked ahead of all but one other private university. Drexel's rise to national prominence under Papadakis has coincided with a number of milestone events. In 1997, Jiang Zemin, then-president of the People's Republic of China , made a major international visit to Drexel, his son's alma mater. The next year, Papadakis received a private audience with Pope John Paul II in Rome during the canonization of Saint Katherine Drexel, niece of University founder Anthony J. Drexel. Drexel hosted activities during the 2000 Republican convention in Philadelphia , and in October 2007 hosted a Democratic presidential campaign featuring seven candidates including future president Barack Obama. Papadakis was the only Greek-born president among 2,900 presidents of four-year colleges and universities in the United States . He was born in Athens on February 2, 19 46, to Nicholas Papadakis, a Greek physician, and Rita Masciotti Papadakis, a native of Italy. He finished the private high school Kalpaka ( Athens ) before entering the National Technical University of Athens, where he studied for five years and graduated with a degree in civil engineering. He arrived in the United States in 1969 and settled in Cincinnati where his then fiancée Eliana Apostolides resided with her parents. Papadakis had met Eliana two years previous while she was vacationing in Greece . The two graduated with master's degrees from the University of Cincinnati in 1971 and traveled to Athens for their wedding. They moved to Michigan , where Papadakis enrolled at the University of Michigan Ann Arbor and earned his doctorate in civil engineering in 1973. Their daughter Maria, who graduated from Drexel in 2008 with a bachelor of science in business administration, was born in 1985. In 1974, Papadakis joined Bechtel, where his first assignment was to oversee the construction of the metro in Washington D.C. He later managed a group of engineering specialists who did pioneering work in flood-control systems, hydroelectric power and cooling systems for nuclear reactors. He was recruited by STS Consultants, one of the top 150 engineering design firms in the nation, as vice president in charge of its Water Resources Division, which had 17 offices. His accomplishments there included privatization of small hydroelectric power plants in the early 1980s. Tetra Tech, a Honeywell subsidiary in Pasadena , attracted him next. As vice president of the company he led FEMA and Superfund environmental projects. Papadakis was lured back to academia when he realized that strong management could revolutionize an institution. In 1984, he agreed to head up Colorado State University's civil engineering department, then the second largest in the nation and known for water resources research and an entrepreneurial faculty. Two years later, he became the dean of the University of Cincinnati College of Engineering. There, he built top-quality graduate programs, more than quadrupled research contracts and grants and established relationships with leaders of local industry. During his tenure he increased the size of the faculty from 94 to 170 and commissioned architect Michael Graves to design a research center, completed in 1995. His growing reputation for the relentless pursuit of excellence coupled with a no-nonsense approach to the business of higher education led to Papadakis becoming the target of presidential searches. He was hired by Drexel in 1995 after a national search led by then-interim president Pennoni. A civic leader and cultural patron since his arrival in Philadelphia, Papadakis served on numerous civic boards including the board of directors of the World Trade Center of Greater Philadelphia, the Greater Philadelphia Chamber of Commerce Executive Committee, the board of directors of the Opera Company of Philadelphia and the Judicial Council of the Supreme Court of Pennsylvania. Papadakis was also active on behalf of the broader interests of higher education. He chaired the National Commission for Cooperative Education, served on the boards of the Eisenhower Fellowships and the Hellenic College/Holy Cross and was a member of the Business Higher Education Forum and the Council on Competitiveness. With his unique background in business, engineering and academia, Papadakis was sought after by numerous corporate boards and served as a director of Amkor Technology, Inc., Aqua America, Inc., CDI, Inc., Mace Security International and Met-Pro Corporation. A member of many professional and honorary societies, Papadakis was a fellow of the American Society of Civil Engineers, the American Society of Mechanical Engineers, the American Society for Engineering Education and the College of Physicians of Philadelphia. He was author or co-author of 80 articles and technical publications. For his achievements, commitment to higher education and involvement in charitable organizations, Papadakis received 153 awards and honors including the 2008 Greater Philadelphia Chamber of Commerce William Penn Award, the 2008 Union League Business Leadership Award, the Medal of the City of Athens, the Opera Company of Philadelphia Viva La Diva Award, and the 2006 Gold Medal Award of the Philadelphia Public Relations Association. In 2004, Papadakis was Knighted Cavaliere Ufficiale in the Order of Merit of the Italian Republic by President Berlusconi. He was also awarded the Congressional Medal of Ellis Island for his success as an immigrant. In addition to his wife and daughter, Papadakis is survived by a sister, Katy Papadourakis (Emmanuel), and her family, of Athens, Greece; Mrs. Gregory Papadourakis and family of Patras , Greece ; and cousins, nephews and nieces of Athens and Crete, Greece. His immediate family includes Dr. Anthony and Patty Apostolides and Anthony, Jr., of Hagerstown, Md.; and Dr. Anthony Papadourakis, Kosh McGuigan and their sons Gregory, Antonios and Andreas Papadourakis of Cherry Hill, N.J. A church service will be held at noon on Tuesday, April 14, at St. Luke Greek Orthodox Church in Broomall , Pa. In lieu of flowers, contributions can be made to the “Constantine Papadakis Fund at Drexel University,” Drexel University, 3141 Chestnut Street , Philadelphia , Pa. 19104. Drexel.edu article

Pew Report: Phila Faces Serious Challenges

Philadelphia has made progress in some social and economic areas, but it still faces serious challenges, according to a report released Monday by the Pew Charitable Trusts’ Philadelphia Research Initiative.

“Philadelphia 2009: The State of the City” found that the number of Philadelphians on welfare is less than a third of what it was before federal welfare reform was passed in the 1990s.

At the same time, however, the report found that one out of four people in the city is poor and that the number of poor people in the city has grown by about 57,000 this decade, even though the city’s population declined by the same amount.

The report also said that while test scores of the city’s public school students have increased steadily in recent years, they’ve only improved from miserable to poor.

Additionally, 24 percent of the students were suspended at least once in the past academic year, according to the report.

Another finding was that spending by city government has outpaced inflation by 14 percent this decade, with much of the growth attributable to increases in the cost of providing benefits to city employees. Benefit costs per city employee will top $48,000 by 2013 unless changes are made, the report said.

Phila Business Journal article

Wendell Berry on Professionalism and the Future

"Now we seem to have replaced the ideas of responsible community membership, of cultural survival, and even of usefulness, with the idea of professionalism. Professional education proceeds according to ideas of professional competence and according to professional standards, and this explains the decline in education from ideals of service and good work, citizenship and membership, to mere 'job training' or 'career preparation.' The context of professionalism is not a place or a community but a career, and this explains the phenomenon of 'social mobility' and all the evils that proceed from it. The religion of professionalism is progress, and this means that, in spite of its vocal bias in favor of practicality and realism, professionalism forsakes both past and present in favor of the future, which is never present or practical or real. Professionalism is always offering up the past and the present as sacrifices to the future, in which all our problems will be solved and our tears wiped away - and which, being in the future, never arrives. The future is always free of past limitations and present demands, always stocked with newer merchandise than any presently available, always promising that what we are going to have is better than what we have. The future is the utopia of academic thought, for virtually anything is hypothetically possible there; and it is the always-expanding frontier of the industrial economy, the fictive real estate against which losses are debited and to which failures are exiled. The future is not anticipated or provided for, but is only bought or sold. The present is ever diminished by this buying and selling of shares in the future that rightfully are owned by the unborn."

-Wendell Berry

Life is a Miracle: An Essay Against Modern Superstition

In Defense of Capitalism: A Flaw in Corporations

The current financial crisis and the events that preceded it do not reveal a new problem in capitalism. They do, however, highlight problems that have been obvious to careful observers for many years, and in some cases for centuries. One central problem underscored by the present crisis is the disconnect between the financial interests of senior company managers and the owners of the companies they work for.

 

Brookings Institute article

 

The Economy League's Philadelphia Budget Challenge

http://www.economyleague.org/budget

The American Frontier as Philosophy

The most intriguing attempt to harness the myth in recent memory was John F. Kennedy’s New Frontier, which was the core concept in his acceptance speech as the Democratic Party’s nominee and throughout his 1960 campaign. He recalled the past in the conventional way—the pioneers who settled the American West “were not the captives of their own doubts, nor the prisoners of their own price tags,” he told the convention. “They were determined to make the new world strong and free—an example to the world, to overcome its hazards and its hardships, to conquer the enemies that threatened from within and without.” But then he went on with a more interesting twist:

Some would say that those struggles are all over, that all the horizons have been explored, that all the battles have been won, that there is no longer an American frontier. . . . Beyond that frontier are uncharted areas of science and space, unsolved problems of peace and war, unconquered problems of ignorance and prejudice, unanswered questions of poverty and surplus. It would be easier to shrink from that new frontier, to look to the safe mediocrity of the past, to be lulled by good intentions and high rhetoric. . . . I believe that the times require imagination and courage and perseverance. I’m asking each of you to be pioneers towards that New Frontier.

Kennedy still used the older mythic call as a “race for mastery of the sky . . . , the ocean . . . , the far side of space, and the inside of men’s minds,” but the notion that the frontier was not geographical or spatial, but one of applied knowledge and of human relations, was an innovation and one that has not been surpassed. That Kennedy and his cohort did not live up to this new inflection of the frontier myth scarcely needs noting, but the rhetorical framing of a new kind of frontier, a half century later, might have finally met its moment.

Using the metaphor as a way of galvanizing both the public and our political leaders to adopt new challenges—challenges to be explored and tamed, from which public good can be extracted—may be more plausible given what we now can see about global limits. The need to arrest climate change with sustainable development is just such a challenge, one that must broadly mobilize society. How to reshape our politics to confront this challenge is not a problem with an obvious solution. The frontiers of science or knowledge are hoary notions, but as a counterpoint to the decaying frontier myth, they possess renewed vibrancy—and are especially potent if linked to the new mission as a heroic feat. The hero is the human exponent of the frontier myth, and all heroes embody qualities that speak to the anxieties of the age. Self-sacrifice, an innate sense of purpose, physical or intellectual prowess, and a willingness to confront the dangers of the frontier—all are qualities of the hero.

Meeting the environmental challenge requires more than colossal investments in science and intensive diplomacy; it mandates a shift in the way we think about U.S. goals, our range of action, and our commitment to values beyond self-enrichment. It requires collective, heroic action, the kind that can move a society in times of peril. And it requires a new lens on the world, one that sees in developing countries not bounty but common needs and aspirations. The environmental crisis binds us globally in ways that no previous cataclysm ever has—not war, not epidemics, not other natural disasters. If the oil addiction of the industrial countries is not reversed soon, the resource wars we have suffered already will intensify along with the choking effects on air and oceans. If China and India do not reduce their rate of growth in carbon emissions, the earth’s ecosystem will be dangerously degraded. If Brazilian rainforests continue to be mowed down, we lose precious and possibly irreplaceable sources of oxygen to refresh the atmosphere. If sustainable development cannot be fostered in Mexico and Africa and the Middle East, the migrations to the industrial world will induce intolerable social and economic stress. These are collective problems by dint of their inexorably collective outcomes. And in this, the world now differs radically from the one that was merely a frontier for exploitation.

American Scholar article

The Direction of Affirmative Action

But how do we approach changing a strategy that has had such success and continue with that success on another level? First of all, an independent presidential commission needs to be put in place to examine what the options might be, with an eye toward an affirmative-action program that would help bring more of the working poor into the middle class. The solution would need to be flexible enough to work in urban as well as rural areas, or in small cities in places as diverse as Alabama, Iowa, and Nebraska, where large numbers of Latino workers have settled to work in factories.

As a presidential candidate, Barack Obama’s candor about his white mother from Kansas and black father from Kenya signaled a shift in American culture. Early in his campaign for the Democratic nomination, in response to a journalist’s question regarding affirmative action, Obama said that his daughters don’t deserve affirmative-action preferences. He said they “should probably be treated by any admissions officer as folks who are pretty advantaged.” Although his view of affirmative action is at odds with prevailing liberal orthodoxy, as an African American of mixed-race heritage, Obama is well positioned to take this position. In his speech on race during the Rev. Jeremiah Wright controversy, Obama hinted that he understands the impact this shift is having: “We may not look the same and we may not have come from the same place, but we all want to move in the same direction—toward a better future for our grandchildren.”

Liberal or conservative, America must not let affirmative action wither away just because changing it might violate prevailing principles of political orthodoxy. Since the plight of low-income Americans was one of Obama’s campaign themes, he should make retooled affirmative action central to providing a path for people of all races into the middle class.

My generation of African Americans got a better future because of affirmative action, yet we cannot remain focused on the past. None of us can afford to leave another generation behind without any hope of working toward a better future.

American Scholar article

Charles Manson at 74

California corrections officials released a photograph taken Wednesday of aging convicted mass murderer Charles Manson that shows him with a receding hairline, a fading forehead Swastika carving and a thick, graying beard.

The photo of the 74-year-old cult leader was taken at California State Prison, Corcoran, as part of a periodic update of inmate images, said Terry Thornton, a spokeswoman for the California Department of Corrections and Rehabilitation.

August marks the 40th anniversary of the killings for which Manson is serving a life sentence. He and other members of his so-called "family" were convicted of killing pregnant actress Sharon Tate and six other people during a rampage in the Los Angeles area in 1969.

Manson has made 11 failed bids for parole since 1978. His next parole hearing is set for 2012.

Denver Post article

Wendell Berry on Faustian Economics

It is true that insofar as scientific experiments must be conducted within carefully observed limits, scientists also are artists. But in science one experiment, whether it succeeds or fails, is logically followed by another in a theoretically infinite progression. According to the underlying myth of modern science, this progression is always replacing the smaller knowledge of the past with the larger knowledge of the present, which will be replaced by the yet larger knowledge of the future.

In the arts, by contrast, no limitless sequence of works is ever implied or looked for. No work of art is necessarily followed by a second work that is necessarily better. Given the methodologies of science, the law of gravity and the genome were bound to be discovered by somebody; the identity of the discoverer is incidental to the fact. But it appears that in the arts there are no second chances. We must assume that we had one chance each for The Divine Comedy and King Lear. If Dante and Shakespeare had died before they wrote those poems, nobody ever would have written them.

The same is true of our arts of land use, our economic arts, which are our arts of living. With these it is once-for-all. We will have no chance to redo our experiments with bad agriculture leading to soil loss. The Appalachian mountains and forests we have destroyed for coal are gone forever. It is now and forevermore too late to use thriftily the first half of the world’s supply of petroleum. In the art of living we can only start again with what remains. And so, in confronting the phenomenon of “peak oil,” we are really confronting the end of our customary delusion of “more.” Whichever way we turn, from now on, we are going to find a limit beyond which there will be no more. To hit these limits at top speed is not a rational choice. To start slowing down, with the idea of avoiding catastrophe, is a rational choice, and a viable one if we can recover the necessary political sanity. Of course it makes sense to consider alternative energy sources, provided they make sense. But also we will have to re-examine the economic structures of our lives, and conform them to the tolerances and limits of our earthly places. Where there is no more, our one choice is to make the most and the best of what we have.

Harper's article

The Decline in Manufacturing is Global in Scope

Rapid Declines in Manufacturing Spread Global Anxiety

By NELSON D. SCHWARTZ

Since it was founded by his great-grandfather in 1880, Carl Martin Welcker’s company in Cologne, Germany, has mirrored the fortunes of manufacturing, not just in Europe but around the world.

That is still true today. In a pattern familiar to industrial businesses in Europe, Asia and the United States, Mr. Welcker says his company, Schütte, which makes the machines that churn out 80 percent of the world’s spark plugs, is facing “a tragedy.”

Orders are down 50 percent from a year ago, and Mr. Welcker is cutting costs and contemplating layoffs to prevent Schütte from falling into the red.

That manufacturing is in decline is hardly surprising, but the depth and speed of the plunge are striking and, most worrisome for economists, a self-reinforcing trend not unlike the cascading bust that led to the Great Depression.

In Europe, for example, where manufacturing accounts for nearly a fifth of gross domestic product, industrial production is down 12 percent from a year ago. In Brazil, it has fallen 15 percent; in Taiwan, a staggering 43 percent.

Even in China, which has become the workshop of the world, production growth has slowed, with exports falling more than 25 percent and millions of factory workers being laid off.

In the United States, until recently a relative bright spot for manufacturing despite the steady erosion of blue-collar jobs, industrial output fell 11 percent in February from a year ago, according to statistics released Monday by the Federal Reserve.

NYTimes article

Burden of the Humanities

LAMENTATIONS ABOUT THE SAD STATE OF THE humanities in modern America have a familiar, indeed almost ritualistic, quality about them. The humanities are among those unquestionably nice endeavors, like animal shelters and tree-planting projects, about which nice people invariably say nice things. But there gets to be something vaguely annoying about all this cloying uplift. One longs for the moral clarity of a swift kick in the rear.

Enter the eminent literary scholar Stanley Fish, author of a regular blog for The New York Times, who addressed the subject with a kicky piece entitled "Will the Humanities Save Us?" (Jan. 6, 2008). Where there is Fish there will always be bait, for nothing pleases this contrarian professor more than double-crossing his readers' expectations and enticing them into a heated debate, and he did not disappoint.

He took as his starting point Anthony Kronman's passionate and high-minded book Education's End: Why Oar Colleges and Universities Have Given Up on the Meaning of Life (2007), in which Kronman argues that higher education has lost its soul, and can only recover it by re-emphasizing the building of character through the study of great literary and philosophical texts. Fish was having none of such "pretty ideas" There is "no evidence," he sniffed, that such study has the effect of "ennobling" us or spurring us on to noble actions. If it did, then the finest people on earth would be humanities professors, a contention for which the evidence is, alas, mostly on the other side.

Teachers of literature and philosophy possess specialized knowledge, Fish asserted, but they do not have a ministry. The humanities can't save us, and in fact they don't really "do" anything, other than give pleasure to "those who enjoy them." Those of us involved with the humanities should reconcile ourselves to the futility of it all, and embrace our uselessness as a badge of honor. At least that way we can claim that we are engaged in "an activity that refuses to regard itself as instrumental to some larger good."

Wilson Quarterly article through AccessMyLibrary

Life with Cables

So true:

NYTimes article

Education and Assimilation: Limited Dreams?

WOODBRIDGE, Va. — Walking the halls of Cecil D. Hylton High School outside Washington, it is hard to detect any trace of the divisions that once seemed fixtures in American society.

Two girls, a Muslim in a headscarf and a strawberry blonde in tight jeans, stroll arm in arm. A Hispanic boy wearing a Barack Obama T-shirt gives a high-five to a black student with glasses and an Afro. The lanky homecoming queen, part Filipino and part Honduran, runs past on her way to band practice. The student body president, a son of Laotian refugees, hangs fliers about a bake sale.

But as old divisions vanish, waves of immigration have fueled new ones between those who speak English and those who are learning how.

Walk with immigrant students, and the rest of Hylton feels a world apart. By design, they attend classes almost exclusively with one another. They take separate field trips. And they organize separate clubs.

“I am thankful to my teachers because the little bit of English I am able to speak, I speak because of them,” Amalia Raymundo, from Guatemala, said during a break between classes. But, she added, “I feel they hold me back by isolating me.”

Her best friend, Jhosselin Guevara, also from Guatemala, joined in. “Maybe the teachers are trying to protect us,” she said. “There are people who do not want us here at all.”

In the last decade, record numbers of immigrants, both legal and illegal, have fueled the greatest growth in public schools since the baby boom. The influx has strained many districts’ budgets and resources and put classrooms on the front lines of America’s battles over whether and how to assimilate the newcomers and their children.

Inside schools, which are required to enroll students regardless of their immigration status and are prohibited from even asking about it, the debate has turned to how best to educate them...

...Some students, of course, successfully climb into the middle class and beyond, as generations of immigrants before them have. But Hispanic college graduation rates — 16 percent of 25- to 29-year-old Hispanics born in the United States hold a college degree, compared with 34 percent of whites and 62 percent of Asian-Americans — suggest that many recent immigrants and their children are not going to college.

Ms. Cain’s anecdotal evidence bears that out. A handful of her students go on to four-year colleges, while others enroll in community colleges or join the armed services. The majority, however, eventually move into the same low-skilled jobs as their parents.

“I love hearing from my students,” Ms. Cain said. “But then again, I don’t, because I usually don’t hear what I had hoped.”

Those hopes, for example, had propelled Ms. Cain’s star student, Jorge, to graduation. After his family moved to Alexandria, she adjusted his schedule so his mother could drive him the hour to school.

He loved Hylton, he recalled in an interview. “It is the only place where everybody has the same chance,” he said. But now, without enough money for college — and English skills still so weak that completing community college seems a much more daunting prospect — he installs drywall with his father.

He still remembers the architectural design class he took at Hylton and the ambitions to become a foreman it inspired. “Sometimes when I see the floor plans,” he said wistfully, “I think about high school.”

Amalia, who once thought about becoming a doctor, has also learned to adjust her sights.

“When I came to this country, I had my bags packed with dreams,” she said. “Now I see my dreams are limited.”

NYTimes article

Do Business Schools Need to be Retrained?

“It is so obvious that something big has failed,” said Ángel Cabrera, dean of the Thunderbird School of Global Management in Glendale, Ariz. “We can look the other way, but come on. The C.E.O.’s of those companies, those are people we used to brag about. We cannot say, ‘Well, it wasn’t our fault’ when there is such a systemic, widespread failure of leadership.”

NYTimes article

State Higher Education Institutions See Application Increases

College-bound students seeking less-costly educational alternatives during the economic downturn are turning their attention to state schools.

Applications at most four-year state colleges in New Jersey and Pennsylvania - and around the nation, for that matter - are up.

Some state schools, including Edinboro and East Stroudsburg in Pennsylvania and Montclair, William Paterson, Thomas Edison, and Kean in New Jersey, have charted double-digit increases in applications, while others are reporting larger-than-usual hikes.

But just how many of those applicants will end up choosing a state school by May 1 and how many are only looking for a safe financial backup is uncertain.

In the past, some students applied to state schools as an academic "safety" backup. Now, more appear to be seeking options in case they don't get enough financial aid from their top-choice private school, said Barmak Nassirian, of the American Association of Collegiate Registrars and Admission Officers.

"The meaning of safe has changed," he said. "It may well mean that students are hedging their bets financially."

State schools cost less than half the price of many private schools. The average annual cost of tuition, room, and board at the 14 schools in the Pennsylvania state system is $13,794, and their New Jersey counterparts run $19,297. That compares with price tags pushing $50,000 at some private schools.

The burst in state-school applications also comes during a year when more high school students nationally are expected to graduate than in any year since 1977. Nearly half of the 3.3 million are aiming for four-year colleges.

Private-school applications locally are a mixed bag.

Drexel University, which offers students a paid co-op work program, has seen applications jump 36 percent.

Bryn Mawr, a women's college, has had a 6 percent increase in applications, while Rosemont, a small Catholic college going coed in the fall, jumped 77 percent to 958 applications, including more than 200 from men.

Phila Inquire article

Nonprofits Feel the Pinch of the Assault on the Wealthy

Chicago philanthropist Richard Kiphart contributed generously to Barack Obama's campaign and is glad he backed a winner.

But he's among many donors and recipients in the philanthropic world worrying that Obama's new tax proposals could deter future giving at a time when many nonprofits already are in crisis mode.

"I just think they're wrong on this," said Kiphart, a corporate finance executive at global investment firm William Blair & Company. "All these organizations are crying: 'Why are they doing this to us?'"

MSNBC article

Hitchens on Marx

The Revenge of Karl Marx

The late Huw Wheldon of the BBC once described to me a series, made in the early days of radio, about celebrated exiles who had lived in London. At one stage, this had involved tracking down an ancient retiree who had toiled in the British Museum’s reading room during the Victorian epoch. Asked if he could remember a certain Karl Marx, the wheezing old pensioner at first came up empty. But when primed with different prompts about the once-diligent attendee (monopolizing the same seat number, always there between opening and closing time, heavily bearded, suffering from carbuncles, tending to lunch in the Museum Tavern, very much interested in works on political economy), he let the fount of memory be unsealed. “Oh Mr. Marx, yes, to be sure. Gave us a lot of work ’e did, with all ’is calls for books and papers …” His interviewers craned forward eagerly, to hear the man say: “And then one day ’e just stopped coming. And you know what’s a funny fing, sir?” A pregnant pause. “Nobody’s ever ’eard of ’im since!” This, clearly, was one of those stubborn proletarians for the alleviation of whose false consciousness Marx had labored in vain.

Until comparatively recently, with the slight exception perhaps of certain pockets within the academy, it was a general tendency among educated people as well, even those of radical temper, to put their old volumes of Marx up on the shelf reserved for the phlogiston theory. Would we again need to consult Critique of the Gotha Program, or the celebrated attacks on Dühring and Lassalle? A few of us kept a bit of powder dry, just in case the times should turn dialectical again. One or two writers predicted that Marx’s relevance would be rediscovered: John Cassidy was arguably the most surprising of these in that one hardly expected, in the fall of 1997, an essay from the economic specialist of The New Yorker announcing that the co-author of the 1848 Communist Manifesto could turn out to be “the next” significant intellectual for those whose job it was to study the markets. James Ledbetter, himself an accomplished business journalist, has since produced an admirable Penguin edition of Marx’s journalism (most of the best, which was very good indeed, having been produced for Horace Greeley’s New York Tribune). And Francis Wheen, who wrote a notable biography of Marx in 1999, has now published an anatomy of Capital (as I shall henceforth call it), which concludes with the opinion that Marx “could yet become the most influential thinker of the twenty-first century.”

As I write this, every newspaper informs me of frantic efforts by merchants to unload onto the consumer, at almost any price, the vast surplus of unsold commodities that have accumulated since the credit crisis began to take hold. The phrase crisis of over-production, which I learned so many long winters ago in “agitational” meetings, recurs to my mind. On other pages, I learn that the pride of American capitalism has seized up and begun to rust, and that automobiles may cease even to be made in Detroit as a consequence of insane speculation in worthless paper “derivatives.” Did I not once read somewhere about the bitter struggle between finance capital and industrial capital? The lines of jobless and hungry begin to lengthen, and what more potent image of those lines do we possess than that of the “reserve army” of the unemployed—capital’s finest weapon in beating down the minimum wage and increasing the hours of the working week? A disturbance in a remote corner of the world market leads to chaos and panic at the very center of the system (and these symptoms are given a multiplier effect when the pangs begin at the center itself), and John Micklethwait and Adrian Wooldridge, doughty champions of capitalism at The Economist, admit straightforwardly in their book on the advantages of globalization that Marx, “as a prophet of the ‘universal interdependence of nations,’ as he called globalization … can still seem startlingly relevant … His description of globalization remains as sharp today as it was 150 years ago.” The falling rate of profit, the tendency to monopoly … how wrong could that old reading-room attendant have been?

Not all of these ironies are at capitalism’s expense, or at least not in a way that can bring any smirk, however wintry, to the grizzled features of the old leftist. (After all, who was predicting even 30 years ago that Russia and China would today be turbocharged capitalist systems, however discrepant in type? And the present crisis was actually triggered by a “subprime” attempt to transform low-income people into property owners, albeit indebted ones …) Then there is the apparent truism about another of Marx’s legacies, this time taken from James Buchan, author of Frozen Desire: The Meaning of Money:

Marx is so embedded in our Western cast of thought that few people are even aware of their debt to him. Everybody I know now believes that their attitudes are to an extent a creation of their material circumstances … “that, on the contrary, their social being determines their consciousness”, as Marx wrote—and that changes in the way things are produced profoundly affect the affairs of humanity even outside the workshop or factory.

John Cassidy, in his essay, was so blunt as to reduce this one-dimensional interpretation to that once-famous vulgarism of James Carville’s: “It’s the economy, stupid.”

But Marx did not believe in the existence of any such organism as “the economy.” What he postulated, and what made him different from any previous theorist of materialism whether historical or dialectical, was a sharp distinction between the forces and the relations of production. Within the integument of one system of exploitation, in other words, was contained a systemic conflict that, if not resolved, would lead to stagnation and decline but, if properly confronted, might lead to a higher synthesis of abundance and equality. (War between competitive capitalist states, for example, would be an instance of the negative. Seizure of power by an educated working class that understood and could transcend the logic of private ownership would be an example of human progress. Shall we just say for now that modern history furnishes more illustrations of the former than of the latter?) At all events, those who use the simplistic term the economy are, according to Marx, themselves “stupid.”

In my opinion, therefore, the most powerful Marxist book of the past four decades was Rudolf Bahro’s The Alternative, which showed how and why the East German state and economy were certain to implode. Communism, said Bahro—one of its former functionaries—was compelled to educate and train people up to a certain level. But beyond that level, it forbade them to think, or to inquire, or to use their initiative. Thus, while it created a vast amount of “surplus consciousness,” it could find no way of employing this energy except by squandering and dissipating and ultimately repressing it. The conflict between the forces and relations of production in the eastern part of the homeland of Karl Marx thus became a locus classicus of the sort of contradiction he had originally identified. (Incidentally, and as Václav Havel, following Heidegger, once pointed out in an address to a joint session of Congress, this makes a strong case for “consciousness” having a say in the determination of “social being.”)

Marx was a keen admirer of that other great Victorian Charles Darwin, and according to Engels he wanted to do for the economic system what the author of The Origin of Species had done for the natural order: lay bare its objective laws of motion and thus make it possible at last to dispense with subjective and idealist interpretations. The term exploitation, for example, should be not a moralizing one but a cold measure of the difference between use value and exchange value, or between the wages earned at the coal face and the real worth of that labor to the mine owner. Sometimes, making use of the statistical “Blue Books” furnished by the admirable Engels, Marx did manage to illuminate the ways in which the industrial system really functioned. But very often he allowed sheer outrage to guide his pen, and betrayed a dislike for money and business in themselves. In the first volume of Capital (the only one to be published in his lifetime; the succeeding ones were works of Talmudic exegesis by his disciples), he has capitalism speaking in the words of Shylock; includes an extract from Timon of Athens wherein money is described as the “common whore of mankind”; and offers still another denunciation of the cash nexus, from the Antigone of Sophocles. One of the most famous phrases of Marx’s vast correspondence during the writing of the book expresses his hatred for having to work on “the economic shit,” and one recalls Lenin’s revealing opinion about gold—that it was fit only to supply the flooring for public lavatories. One pleasure in the rereading of Marx is to savor the trenchancy and aptness of his literary allusions. It was actually Engels who said that a Balzac was worth many Zolas, but Marx who—not always with rigorous consistency—tried to enforce the difference between novelist and pamphleteer.

Whether one adopts a moralistic or an analytic approach, there is scant doubt that capitalism continues to outmaneuver all attempts by wage earners to shift the odds in favor of shorter hours and more pay. In the story of the class struggle, it’s invariably a case of one step forward and two steps back. I know of two passages that explain why this is so. One is the section of Robert Tressell’s great proletarian novel, The Ragged Trousered Philanthropists, in which the self-taught construction worker, Owen, borrows some hunks of bread during a lunch break and uses them in an improvised shell game designed to show his fellow workers what easily gulled saps they are. The second is the central chapter of Wheen’s book, which adumbrates Marx’s own version of the same competition—or rather losing struggle.

As Wheen skillfully shows, there was an underlying love-hate relationship between Marx and capitalism. As early as the Manifesto, he had written of capitalism’s operations with a sort of awe, describing how the bourgeoisie had revolutionized all human and social and economic relations, and had released productive capacities of a sort undreamed-of in feudal times. Wheen speculates that Marx was being magnanimous because he thought he was writing capitalism’s obituary, and though this is a nice conceit, it does not quite explain Marx’s later failure, in Capital, to grasp quite how revolutionary capitalist innovation really was. (The chapter on new industrial machinery opens with a snobbish quotation from John Stuart Mill’s Principles of Political Economy: “It is questionable if all the mechanical inventions yet made have lightened the day’s toil of any human being.” This must have seemed absurd even at the time, and it appears preposterous after the third wave of technological revolution and rationalization that modern capitalism has brought in its train.) There’s also the not-inconsiderable question of capitalism’s ability to decide, if not on the value of a commodity, at least on some sort of price for the damn thing. Eugen von Böhm-Bawerk and the other members of the Austrian school were able to point out this critical shortcoming of Capital—no pricing policy—during Marx’s lifetime, and it would have been good if Wheen had found some room for the argument (especially vivid among Austrians for some reason) that went back and forth from Rudolf Hilferding to Joseph Schumpeter, whose imposing “creative destruction” theory of capitalism has its own dualism.

Rereading those wonderful Viennese polemics, I was reminded of a slight but hard-to-forget quip (in both of those respects rather typical) made in my hearing by the late Isaiah Berlin. His own book on Marx was as good as useless, but he would often have fun pretending to “mark” the old man for an exam in Oxford’s course on philosophy, politics, and economics: “I think probably a beta in economics, yes really a beta, but rather better in philosophy and an alpha—one might even want to say an alpha plus—in politics.” Had it been an examination in history, greatest of the muses, then who can say? (A. J. P. Taylor thought that “The Eighteenth Brumaire of Louis Bonaparte” was, as a historical essay, “without flaw.”) But even here, the estimation must give way to irony. At the conclusion of his article, John Cassidy wrote of Marx, “His books will be worth reading as long as capitalism endures.” That would appear to mean that Marxism and capitalism are symbiotic, and that neither can expect to outlive the other, which is not quite what the prophet intended when he sat all those arduous days in that library in Bloomsbury, and swore hotly to Engels, “I hope the bourgeoisie will remember my carbuncles until their dying day.”

The Atlantic article

Business Week 2009 Ranks LeBow in Top 40

BusinessWeek's 2009 Best Undergraduate Business Schools ranking placed the LeBow College of Business 38th among private colleges and universities in the nation and rated LeBow's undergraduate programs an 'A' for job placement.

The Triangle article

Some Financial Institutions Choose the Returning of Funds to Social Engineering

WASHINGTON — The list of demands keeps getting longer.

Financial institutions that are getting government bailout funds have been told to put off evictions and modify mortgages for distressed homeowners. They must let shareholders vote on executive pay packages. They must slash dividends, cancel employee training and morale-building exercises, and withdraw job offers to foreign citizens.

As public outrage swells over the rapidly growing cost of bailing out financial institutions, the Obama administration and lawmakers are attaching more and more strings to rescue funds.

The conditions are necessary to prevent Wall Street executives from paying lavish bonuses and buying corporate jets, some experts say, but others say the conditions go beyond protecting taxpayers and border on social engineering.

Some bankers say the conditions have become so onerous that they want to return the bailout money. The list includes small banks like the TCF Financial Corporation of Wayzata, Minn., and Iberia Bank of Lafayette, La., as well as giants like Goldman Sachs and Wells Fargo.

NYTimes article

The Future of Liverpool's Philosophy Dept., Among Others, in Jeopardy

Future of eight Liverpool departments in doubt

9 March 2009

By Melanie Newman

Disappointing RAE results could lead to cuts, leaked documents show. Melanie Newman reports

Up to eight departments are under threat at the University of Liverpool, according to internal documents seen by Times Higher Education.

Three departments – politics and communication studies, philosophy and statistics – were judged by the 2008 research assessment exercise to have no world-leading (4*) research activity. The university has questioned whether this is “acceptable” for a member of the Russell Group of 20 research-led institutions.

“It is the view of the senior management team and the deans that, given the need to invest in excellence, it is not feasible to continue to support these areas in future,” the document says.

The university is also considering closing the departments of civil engineering, cancer studies, dentistry, American studies and sociology due to their RAE results.

The plans will be discussed by Liverpool’s academic senate on 11 March and its governing council on 18 March, with final proposals going before the senate in June.

In light of the news, the University and College Union will debate a motion to ballot for local industrial action at an extraordinary general meeting on 10 March.

melanie.newman@tsleducation.com

Times Higher Education article

Analysis of Stimulus Transportation Investment in Greater Phila

What it Ultimately Means for the Region

More than a half-billion dollar influx of transportation funds will help to chip away at the region’s backlog of deferred infrastructure maintenance. In southeastern Pennsylvania, state and local governments spend a total of nearly $700 million each year to maintain 14,450 miles of roads and 2,800 bridges. A one-time influx of $318 million would represent a nearly 50 percent increase in highway spending for the five counties.

Stimulus funds will be a particular boon for capital-starved transit agencies like SEPTA. Years of underinvestment have degraded the system’s infrastructure. A one-time influx of $193 million will represent a more than 50 percent increase over SEPTA’s $368 million capital budget for Fiscal Year 2009, helping the agency play catch up.

Still, the stimulus package’s “shovel-ready” criterion limits opportunities for visionary investment. Many of the region’s forward-looking projects require several more months – if not years – of planning and design, and thus would not qualify as a candidate project for stimulus funding. The risk of this approach is devoting scarce resources to expedient, short-term fixes instead of to well-planned investments. The strategy will create jobs and circulate dollars through the economy, but it will do so indiscriminately and without regard to long-run economic impact.

In short, the stimulus will not chart a new course for the future. But, with a coherent strategy to leverage this one-time shot-in-the-arm, it can serve as a catalyst for change. Its ultimate impact will depend on the extent to which stimulus funds fuel progress towards the broader objective of a world class transportation network. In this, Greater Philadelphia has an opportunity to anticipate and plan for future needs. And of course, developing a shared vision now will prepare the region for new opportunities that arise in the future – and, potentially, another stimulus.

Economy League report