Archive for the 'populism' Category

A note to everyone who looks like the people from the bar last night: you’re on my list

[by JSC5]

If you were looking for a concrete example of what I was talking about in my previous post on how terribly puerile our privacy culture is these days, then look no further.* The libertarian/conservative law prof blog Volokh Conspiracy has you covered. Here’s Prof. Kenneth Anderson talking about the effect the JournoList ‘scandal’ has had on his perceptions of reporters in general:

When I was reading Peter Finn’s reporting on the Washington Post website on the CIA for my previous post, and despite this being a widely reported, straight-facts story, and despite my long-time, continuing, unstinting admiration for Peter Finn as a reporter on national security and related issues at the WaPo, I do admit that one of the first thoughts in my head was … is he a JournoLister?  And if he is, do I need to somehow discount his account as being part of a pre-conceived narrative?  And if so, by how much? 

So Kenneth Anderson used to have tremendous respect for Peter Finn’s work as a reporter because of his extensive body of work as a journalist. But post-JournoList, suddenly Kenneth Anderson has grave doubts about Peter Finn’s reporting — so much so that he’s decided to cast aspersions about Finn’s work on a widely-read media outlet.

That’s quite an about-face to be caused by one listserve. For those of you who’ve rationally decided to care more about your own things than the latest inside-the-beltway ‘scandal’, here’s a brief recap. JournoList was a private listserve for center-left journalists, opinion writers, professors, bloggers, and public intellectuals. From what I know, J-Listers used it to chat about current events, policy, sports, gossip, and the state of journalism. Some members clearly used it to let off steam. Dave Weigel, a former journalist/blogger for the Washington Post, famously used it to complain to his friends on JList about Rush Limbaugh and some other celebrities on the right. Someone with an anti-Weigel axe to grind leaked the JournoList archives to a new right-wing website called the Daily Caller. It was a win-win for all involved in the shady deal: the Daily Caller got a bunch of new hits, and the leaker got Weigel fired and may have destroyed his career (we’ll find out in a few years).

Some conservative media outlets decided to run with the story that JournoList was a liberal cabal coordinating stories and manipulating the news. The evidence to support this view is pretty weak / non-existent, but that hasn’t stopped some people – like Kenneth Anderson – from moving into full freak out mode.

It’s probably unfair to single out Kenneth Anderson, since there are plenty of other examples, but I think it’s important to have a concrete example of how insane our culture has become. Anderson used to have a very high opinion of some journalist named Finn based on years of experience consuming and appreciating  his reporting. But now that some partisan hack media outlets are publishing vague accusations of journalistic misconduct among a group of people on J-List, Anderson is suddenly extremely distrustful of ALL JOURNALISTS. I apologize for the profanity, but that’s just fucking nuts. I’ll echo my colleague JSC7 in asking why vague allegations about JList, or specific citations of intemperate words said in private, should be such a powerful signal that should change a person’s professional credibility despite years and years of actual work product that could provide a more accurate source of judgment?

Let me put this another way: A random, untrustworthy dude on the street comes up to you and says that some heinous shit went down at a local bar last night. Do you (A) dismiss the bum’s allegations and go on with your life unless you get some actual, credible information, or (B) gasp in horror and publicly question the morals and credibility of anyone who even looks like the people who would have been in that bar last night — even if you had just recently asked one of them to be your newborn child’s godfather?

Common sense says (A). Certain oh-so-earnest and concerned political operatives on the right say (B).

Does this mean that everything about JournoList was above board? I don’t know. I wasn’t on it. But nothing yet has come out that makes me think JournoList was any more problematical than an office water cooler. So like any sane, good-spirited person, I’m choosing not to believe the worst and most outlandish conspiracy theories until I see some credible evidence. I’d like to even stop reading, writing, or caring about this topic untill/unless this credible evidence materializes. Unfortunately, the cause of maintaining standards of decency and privacy is too important.

* The title of the piece in question, as you’ll notice if you click through, is “A note to all the non-JList reporters”. Combine that with my bar analogy later in the post and you have the odd title to my blog post. Sorry about that.

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Douthat: right policy, wrong politics

[by JSC5]

Ross Douthat’s column today presents a smart critique of the richboy subsidies and corporate welfare enshrined in current law, from the mortgage-interest tax deduction to agricultural subsidies and lack of means testing in Medicare and Social Security. It’s a broad, if not very definitive, endorsement of a more egalitarian state that doesn’t shovel quite so much money towards non-needy recipients each year. There’s a lot of good policy that could come out of Douthat’s vision, and it is heartwarming to have a voice of sanity on the right these days — even if he is (sadly) out of the mainstream of his own party and completely without influence over actual Republican decision-makers. So instead of offering the kind of backhanded compliment you just read in the previous sentence, I should probably be doing my bit to politely encourage engagement on the general principles Douthat lays down.

But I just can’t keep myself from pointing out a very weird moment in Douthat’s column:

“The trick is to channel those [pitchfork] impulses in a constructive direction. The left-wing instinct, when faced with high-rolling irresponsibility, is usually to call for tax increases on the rich. … [But] the class warfare we need is a conservative class warfare, which would force the million-dollar defaulters to pay their own way from here on out.”

So Douthat wants us to believe that leftwingers wake up every morning looking for a tax they can raise, while the conservatives are the adults in the room making sure the government doesn’t subsidize the rich? Pardon me while I scoff. Douthat’s error here is common, if not innocuous. All of us have the tendency to let tribalism infect rational political debate. But it’s still improper to identify a good set of policies and then assume that because (a) you like those policies, and (b) you usually see yourself on Team Red, then (c) those must be conservative policies. It seems to me that means-testing parts of the safety net, rolling back subsidies of McMansions and suburban sprawl, and cutting Big Agra’s welfare checks are all … not conservative policies. They’re broadly ‘liberal’ policies, with everyone from leftwingers like Ezra Klein and Matt Yglesias to libertarians like Tyler Cowen* signing up for the same general principles. To my knowledge, no such broad swatch of leading conservative intellectuals (besides Douthat) are ready to heartily endorse these reforms.

Now, to be fair, you’d be hard pressed to find actual politicians of either political flavor ready to sign on to these reforms. But at least they are operable ideas within the liberal realm of thought!

That said, I now retract my backhanded compliments to Douthat, replace them with forehanded compliments, and politely encourage more people from all political walks of life to seriously engage with the issues Douthat raises in his otherwise excellent column today.

—-

* My apologies for not providing links here. I’m just extrapolating from past posts I’ve read of each of their work. If anyone finds information to the contrary, please let me know and I’ll update.

The advantages of an elite education

I really enjoyed reading William Deresiewicz’s recent essay, The Disadvantages of an Elite Education [h/t to Kris]. I encourage you all to read his piece and think about it. First, let me outline where he and I agree on two points: 1) that elite education discourages risk taking, and 2) that it threatens to distort our perception of the worth of other human beings. Then I’ll mention the many points on which we differ.

First, Deresiewicz is right to worry that an elite education pushes its recipient away from risk-taking and towards comfort and security. As he argues:

An elite education gives you the chance to be rich […] but it takes away the chance not to be. […] How can I be a schoolteacher—wouldn’t that be a waste of my expensive education? Wouldn’t I be squandering the opportunities my parents worked so hard to provide? What will my friends think? How will I face my classmates at our 20th reunion, when they’re all rich lawyers or important people in New York? And the question that lies behind all these: Isn’t it beneath me? So a whole universe of possibility closes, and you miss your true calling.

[…]

Students from elite schools expect success, and expect it now. They have, by definition, never experienced anything else, and their sense of self has been built around their ability to succeed. The idea of not being successful terrifies them, disorients them, defeats them.

I think that neatly captures the thinking of many graduating seniors I knew, at least at Harvard. It’s actually rather difficult to ignore the constant social pressure to go into banking or consulting and earn a steady, good salary. It’s tough to think more broadly about your real goals, and take some risks, when everyone around you is doing the opposite. This absolutely is a disadvantage of an elite education. Point to Deresiewicz.

Secondly, Deresiewicz says that “an elite education inculcates a false sense of self-worth” as ” ‘Better at X’ becomes simply ‘better’ ” in some larger, metaphysical sense. This is definitely something I’ve tried to be conscious about and guard against, but I can see it creeping up every now and then in my own thinking and in that of my former classmates. But I would like to point out that petty parochialism is a universal human trait. A New Yorker’s snobbery is insufferable; so, too, is a Texan’s. I think everyone tends to value most highly those traits they themselves possess, and to give those traits privileged status in judging the overall human worth of others. It’s a nasty way of treating other human beings, and we should all work to limit these inborn tendencies. Certainly elite universities could do more counteract elite snobbery. But so, too, could most other institutions in this world. Still, point Deresiewicz.

But as much as I agree with Deresiewicz’s critique thus far, I have to disagree with him on a number of other issues.

First, Deresiewicz complains about the permissive, entitled culture at elite universities:

Students at places like Yale get an endless string of second chances. Not so at places like Cleveland State. My friend once got a D in a class in which she’d been running an A because she was coming off a waitressing shift and had to hand in her term paper an hour late.

This anecdote is intended to instill a feeling of resentment towards those nasty Ivy League people who don’t have to deal with such supposed real world things like hard deadlines. One “disadvantage of an elite education”, therefore, is that elite students grow up in an entitled atmosphere. But shouldn’t we be viewing this the other way around? Not having second chances, when they’re reasonable, sucks! Getting a ‘D’ instead of an ‘A’, just because you’re an hour late turning in the term paper, sucks! It’s not like that extra hour riding the bus gave Ms. Works For Tips To Pay For School an actual advantage over other students. Hers should not be the normal human experience!

The same goes for other advantages of elite universities that Deresiewicz holds out as problems: the plentiful grants for research, travel, writing, and the arts; the “platoon of advisors and tutors”. Isn’t the real lesson here that elite institutions are a little more humane, that the elite lifestyle Deresiewicz mocks may actually be a better lifestyle, and that instead of fostering resentment of it, we should instead work to make non-elite schools and non-elite lifestyles more humane as well? Just because gramps walked 30 miles to school every day (barefoot, in the snow, and uphill both ways) doesn’t mean he’s right to criticize lazy, bus-spoiled kids these days.

Second, Deresiewicz complains that an elite education “makes you incapable of talking to people who aren’t like you.” He illustrates with an anecdote about he had trouble talking to a plumber that came to his house. But isn’t difficulty communicating with others a common human trait? How well do Christians talk to and understand Muslims? How well do liberal, feminist women tend to talk with women in burqas? Or vice verse? When was the last time you saw a riveting conversation between a west coast granola dude with dreds and a suburban soccer mom? Let me be the first to agree that the average social IQ among Harvard undergraduates is far, far lower than the US population average. There ain’t no awkward like Harvard party awkward, cuz the Harvard party awkward don’t stop. True, these people have trouble relating to other people just like themselves, much less Joe the Plumber. But is that a result of their elite education? Are elite students really that different from the mechanic who doesn’t know how to talk to the local community college professor? Probably not. Failure to communicate is a failure common to all sorts of different identities. And it operates in both directions.

Perhaps Deresiewicz’s least compelling argument is that an elite education is “profoundly anti-intellectual.” He says of elite students:

The system forgot to teach them, along the way to the prestige admissions and the lucrative jobs, that the most important achievements can’t be measured by a letter or a number or a name. It forgot that the true purpose of education is to make minds, not careers. […] Elite education is little more than a] glorified form of vocational training.

This couldn’t be farther from my own experience. Nor does it jive with the popular sentiment of academia as an Ivory Tower. The people I knew in college generally had no idea what careers they wanted to pursue. They could more easily be criticized of aimless, academic wandering than of over-specialization or parochial, vocational interests. These were students more in the  mold of the Renaissance Man than the pre-professional. It was extremely painful watching my fellow classmates go through the agony of specialization and making choices that closed off any opportunity whatsoever. Sure, there were the few who showed up the first day freshman year and, not having actually read anything about the place earlier, got mad that ‘business’ was not a possible major. But those were the outliers (it’s a big, diverse school). Most people I knew loved abstract ideas … probably to a fault. The whole thing about pressure to go into banking and consulting after graduation? That happens suddenly in the last year, partially as a direct result of the liberal-artsiness of our liberal arts education.

Finally, I have to take some exception with Deresiewicz for intimating that the diversity at elite universities is somehow false diversity that shouldn’t be recognized as such. Deresiewicz quips, “Visit any elite campus in our great nation and you can thrill to the heartwarming spectacle of the children of white businesspeople and professionals studying and playing alongside the children of black, Asian, and Latino businesspeople and professionals.” That’s funny, and there is something to that. It was the greatest culture shock of my life showing up freshman year and watching a large group of my classmates gossiping about having come from this or that prestigious private prep school.

But it was shocking precisely because I had no experience with that world! And as it turns out, neither did many, many of my fellow classmates. When Facebook (back when it was called TheFacebook) first started taking off, one of the biggest ‘groups’ on campus was the classic “I went to a public school, bitch.” I’m not saying that Harvard was a hotbed of Horatio Alger, rags-to-riches stories. But I think that too few people realize that Harvard (and, to my knowledge, several other elite universities) has absolutely top-notch financial aid. Does your family, like the median American family, make less than $60,000 a year? Congratulations! You get to go for free. Make less than something like $150,00 a year? Then you won’t be asked to pay more than 10% of your income. Of course, there are still plenty of barriers out there for economically disadvantaged kids, but financial aid at elite universities like Harvard makes it easier to go there than to go to many state schools, and far, far easier than expensive liberal arts colleges with small endowments.

Might this, like many of these other points I’ve argued, not be yet another advantage of an elite education? I don’t want to issue a blanket defense of elite universities. There’s plenty wrong with them. But let’s not lose sight of what’s right with them.

A final aside that will interest only self-involved people who received elite educations, and bore most others: What’s with idolizing the ‘Ivy League’? I refer everyone to Wikipedia, which says right there in the first sentence: “The Ivy League is an athletic conference.” That’s right, an athletic conference. That’s it. Stanford’s not a member, yet no one would say with a straight face that (for whatever reasons, good or bad) Stanford isn’t an overall better-thought-of and more-prestigious university than Dartmouth or Brown (both of which are in the League). The point is, our actual perceptions of academic quality don’t align very well with the Ivy, non-Ivy distinction. So why do writers keep using ‘Ivy League’ as if it has actual meaning? Probably because it’s a good wedge word that reliably pushes people’s buttons and instills certain feelings in the reader. That’s not a good reason, but it’s the only reason I can think of.

Spare the rod, spoil the child

I’m a little late commenting on it, but the official, court-ordered bankruptcy examiner’s report on Lehman Brothers came out last week. The report is extremely detailed (9 volumes!), and most commentators have focused on the shady Repo 105 deals that artificially hid Lehman’s real liabilities while boosting its assets.

I just want to take a minute to talk about basic incompetence, however. When a large proportion of Harvard’s graduating class goes into investment banking each year, what they’re mostly going into is ‘valuation’. It’s not a terribly difficult thing, but it is very time-consuming and requires attention to detail. You employ a standard set of models and theories to derive present value of various companies, assets, commodities, etc. Then you see if present-day prices are less than your calculated value. Buy low, sell high, and all that. One of the most basic concepts in valuation is the intertemporal discount rate. Having a dollar of income today is generally better than having that same dollar of income tomorrow, because with that dollar today I can invest and have more than a dollar tomorrow. So to calculate the net present value of an asset, an investment banker will discount future earnings by a given discount rate. This is Valuation 101, and the bread and butter of an investment banker’s job. If investment bankers ‘deserve’ their ridiculous compensation, then it’s most likely for their skill at valuation.

So it might surprise you to learn that Lehman Brothers was doing an absolutely terrible job of valuation. Frank Partnoy has a great summary of the bankruptcy examiner’s report’s section on valuation, where he finds this nugget in the report (page 556):

The discount rates used by Lehman’s Product Controllers were significantly understated. As stated, swap rates were used for the discount rate on the Ceago subordinate tranches. However, the resulting rates (approximately 3% to 4%) were significantly lower than the approximately 9% discount rate used to value the more senior S tranche. It is inappropriate to use a discount rate on a subordinate tranche that is lower than the rate used on a senior tranche. [emphasis added]

That last sentence is a study in understatement. The ‘tranches’ they’re talking about are the way you slice and dice a pool of mortgages, with the “more senior S tranche” being a less risky pool of mortgages, and the “Ceago subordinate tranches” being a significantly more risky group of mortgages. Lehman’s quality control group operating above the trading desks created valuation models that get valuation completely wrong. When something is more risky, you use a larger discount rate to reflect net present value. The examiner’s report says, moderately, “It is inappropriate to use a discount rate on a subordinate tranche that is lower than the rate used on a senior tranche.” Perhaps a more accurate reading would be, “It is completely fucking boneheaded and a breach of the most basic standards of professaionalism to use a discount rate on a subordinate tranche that is lower than the rate used on a senior tranche.” This isn’t even an issue of the products being too complicated to value properly (though they were); it’s an issue of getting even the most basic parts of the model right.

Which leads me to the title of today’s post: “spare the rod, spoil the child.” We’ve all heard this from certain strict Christian parents who think that a child won’t learn unless you beat them senseless. I don’t personally sign up for that brand of parenting, but at some point there really do have to be consequences for misbehavior. I’m not advocating the US adopt the practice, but it is noteworthy that the North Korean government tried its lead financial and economic planner for incompetence and then executed him by firing squad a couple days ago. Sure, Kim is a dictatorial dickhead, and the poor schmuck was just a fall guy for Kim’s own policies. But say what you will about the DPRK, they don’t spare the rod.

Maybe we don’t need to go that far. Maybe all we need to do is limit the insane, unearned profitability of the financial sector so that incompetent i-bankers don’t get take-home pay that would make a Gilded Age tycoon blush.

Be consistent or else

Surowiecki writes:

Whereas the economic populism of the eighteen-nineties and the right-wing cultural populism of recent years represented reasonably coherent ideologies, this new populism has stitched together incompatible concerns and goals into one “I’m mad as hell” quilt. The people may have spoken. It’s just not clear that they’re making any sense. …

The anger is understandable, and voters are under no obligation to be consistent. But that doesn’t make the new populism any less of a challenge politically, since, at the moment, voters will find something wrong whatever is done.

This seems like a fake, unmerited apology on behalf of ignorance. If voters are under no obligation to be consistent, then it seems to me that politicians are under no obligation to treat voter preference as the be all and end all of political action. When you give up on making sense, you ought to lose your influence, too.


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This is a group blog. JSC5 currently writes from the US. JSC7 writes from behind the Great Firewall of China.

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