Monday, October 16, 2017

Paul Samuelson: The Model 20th Century Economist

Paul A. Samuelson, the first American Nobel laureate in economics and the foremost academic economist of the 20th century, died at the end of 2009 at 94.  Samuelson was credited with changing the academic discipline of economics, according to The New York Times,  ”from one that ruminates about economic issues to one that solves problems, answering questions about cause and effect with mathematical rigor and clarity.”  Essentially, he redefined twentieth century economics. Mathematics had already been employed by social scientists, but Dr. Samuelson brought the discipline into the mainstream of economic thinking. His early work, for example, presented a unified mathematical structure for predicting how businesses and households alike would respond to changes in economic forces, how changes in wage rates would affect employment, and how tax rate changes would affect tax collections.  He developed the rudimentary mathematics of business cycles with a model, called the multiplier-accelerator, that captured the inherent tendency of market economies to fluctuate.  Mathematical formuli that Wall Street analysts use to trade options and other complicated securities (derivatives) have come from his work (FYI: derivatives too complicated for outsiders such as the government to understand/regulate were at the center of the financial crisis in 2008).

While The New York Times article covers his career in a positive light, I believe the picture is more complicated—and telling of twentieth-century American society.  At the surface, the tale seems to center on a dichotomy—the Keynesian liberal against his conservative monetarist friend, Milton Friedman.  Perhaps the principal issue between them was whether market equilibrium could rest at full employment (i.e., without government help).  Samuelson’s own work on the inherent volitility of markets would suggest that the market mechanism does not necessarily reach an equilibrium, even at less than full employment.  As we saw in September of 2008, a market can collapse from within.  I am reminded of Alan Greenspan’s testimony before Congress shortly thereafter, when he admitted a fundamental flaw in his free market paradigm assumptions.  Clearly, more thought is needed into the nature of a market and how its basic contours can be altered; government regulation alone is not sufficient.

Unfortunately, such “big picture” theorizing was on the wan in twentieth-century economic thought, which focused on narrow problems using technical tools such as mathematical formulas.  To be sure, Samuelson’s technical work gives us reassurance that the market contains a fluctuating element.  However, the reform of an economic system at a basic level is not simply the sum of a bunch of smaller solved problems.   I submit that while mathematics is useful for problem-solving, more is needed to understand our economic system and alter the basic contours of the market mechanism.

  Fundamentally, none of the social sciences is really a science.  To presume the certainty of natural science onto any of them is inherently limited and potentially risky.  To be sure, value can be gained from applying quantitative tools to look at limited problems, but the inherent indeterminacy of human macro systems makes the scientific approach ultimately futile from the macro standpoint of the social “sciences.”  Their phenomena, in other words, are not of the sort that can be measured andpredicted like the speed of a comet in space or a chemical reaction in the isolated environment of a lab.  Economic, social and political systems just aren’t like that.   Explanation, rather than prediction, is primary where human indeterminacy is so salient.

Another way of relativising the “mathematical problem-solving” orientation of 20th century economics is to look at different levels of thinking.  In the wake of the problem-solving orientation, business schools regularly tout “critical thinking,” which is really just problem-solving.  You wouldn’t know it, but higher forms of thinking do exist—namely, synthetic and analytical reasoning.   To treat problem-solving as the litmus test for a discipline is to reduce that discipline from what it could be, academically speaking; it is to short-change it by forcing it into the low-ceilinged box of practicality.  It is to put blinders on. Samuelson’s mathematical axis inadvertantly made the discipline of economics more oriented to solve particular problems than it had been in the past.  Consider by contrast the work of Smith, Marx, Hayak, and Veblen—not a plus or minus sign among them, yet their work addresses economic at the level of systems.  Moreover, their thought transcends mathmatic problem-solving.

I am not dismissing the value of solving specific problems, and Dr. Samuelson deserves credit for providing the tools for it; rather, I am suggesting that the legacy of the twentieth century in general and economic “science” in particular might be a reductionism to a technical orientation to solve particular problems.  That is to say, empiricism as hegemonic.  Problem-solving as the principal activity (and reasoning).  Such an orientation is rather narrow, and therefore not apt to survive on top indefinitely.  The “big picture” questions raised by the financial crisis of 2008 include matters like “too big to fail” and the viability of the market-mechanism itself that go beyond solving particular problems.  So I would not be surprised if a return to the theoretical economy (and political economy, for mathematics in the latter has been part of the wedge that has artificially disected the two) were not too far off.   The twentieth-century is leaving us.  I for one have few regrets over its passing; I think it will go down in history as decadent (meaning decaying from within..the 1970’s being its epitome).  What Samuelson did for economics is more a function of his era than anything else.   Such value is limited.

Source: http://www.nytimes.com/2009/12/14/business/economy/14samuelson.html?

Thursday, May 11, 2017

The University of California: University Governance Gets an “F” on Trust

As part of the government’s 2017 audit of the University of California’s president’s office, California’s auditor, Elaine Howle, sent surveys to administrators at the university’s 10 campuses. The president’s staff directed administrators at the Santa Cruz, San Diego, and Irvine campuses to remove criticism of the office and give higher performance ratings in key areas. The interference was blatant, as it included even a systemwide conference call. As a result, Howle disregarded all of the results as tainted. The audit also uncovered $175 million in undisclosed reserves being held by the president’s office. Janet Napolitano, the U.C. president and former head of the U.S. Homeland Security Department, had betrayed the trust vested in her. The ineptitude likely ran higher, and lower. That is to say, the university’s governance itself was culpable.

For an office with a $686 million budget (the entire university’s budget being $31.5 billion in 2017) and nearly 1,700 employees to betray the trust of the university’s board of regents, the Government of California, and the general public is, as Assemblyman Phil Ting said, “outrageous and unbelievable.”[1] Ting compared the interference to a student who is failing “and magically the professor changes the grade and passes the student.”[2] In fact, the duplicity went beyond Napolitano’s office, for Howle had directed the administrators at the campuses to keep the surveys confidential and yet one UCSF administrator felt entitled to inform Napolitano’s staffers, who in turn began directing administrators on how to respond to the surveys. George Blumenthal, chancellor of the Santa Cruz campus, sent an email to his staff noting that the president’s office was not happy with a long paragraph, so he added, “I suggest you remove the paragraph and submit it.”[3] That a spokeswoman for the president noted that the chancellors had “not been shy in offering opposing views” to that of the president can thus be taken as yet another attempt to mislead.[4]

The irony is that California’s tax-payers had been funding “profligate” salaries of university administrators even as funding cuts mandated by the legislature had hit other areas of the university.[5] For their part, faculty members were not surprised—faculty leaders noted that cynicism had crept in for years as the university governance had increasingly sidelined their voices.[6] Considering both the healthy slush fund and the efforts to manipulate the audit’s survey, as well as the sordid reputation of the university’s administration among the ranks of faculty, the conclusion may be that the university’s board of regents had failed to provide adequate oversight. In other words, the weak link may actually run higher than into the president’s office.


[1] Nanette Asimov, “3 UC Campuses Change Responses in State Auditor’s Survey,” San Francisco Chronicle, May 10, 2017.
[2] Ibid.
[3] Ibid.
[4] Mike McPhate, “California Today: A Cloud Over the University of California,” The New York Times, May 11, 2017.
[5] Ibid.
[6] Ibid.

Tuesday, May 9, 2017

Student Teaching-Assistants Hunger-Strike at Yale: Facing an Implacable Wall

During the Spring term of 2017, some graduate students at Yale began a hunger strike to pressure the administration to negotiate with their union. At the time, about 70 percent of the instructors at American colleges and universities were part-time—including adjunct instructors and graduate students working as teaching assistants. They were poorly paid and lacked “access to affordable health care, job security or a voice in their working conditions.”[1] I contend that we should not gloss over the real differences between adjunct instructors and teaching assistants, the latter contains an employment element that warrants representation by a union.

Graduate students who work as teaching assistants hunger-strike in front of Yale's administration building (to the right). Directly behind the protesters is the Commons dining hall (which I remember for the Belgium waffles...the gym being fortunately close by).  (Source: NYT)

To be sure, the position of a graduate student leading discussion sections of a professor’s course is quite different than that of an adjunct instructor teaching a class or two per term at a university. A graduate student only works as a teaching assistant for a few years, and upon graduation one can look forward to beginning a career; even if as a professor, that vocation is not merely an extension of being a teaching assistant. The unique academic properties of the teaching-assistant role are borne out by the fact that only students qualify. The compensation is a stipend, typically viewed as a form of student financial aid, and the teaching role is designed to teach the student how to teach—and even provide the student with additional knowledge.

As a teaching assistant at Yale, I jumped at the opportunity to teach the History of Modern China and the History of European Integration (e.g., the EC and the E.U.) precisely because I could learn more than what was offered in the courses I was taking. I was by no means a student—not to mention an expert!—of China or the European Union. The Yale administration held that its graduate students could aptly lead discussion sections on material outside of our main area of study because we learn so well. So it is strange that the administration during the Spring term of 2017 hired union-busting lawyers to argue “that for many of the courses [the TAs] teach, these graduate students ‘have no subject matter expertise’ and therefore don’t qualify as professors.”[2] No TA would claim to be a professor! More to the point, Yale’s position, through its lawyers, concerning the lack of subject-matter expertise is misleading, giving the learning aspect of being a teaching assistant—learning not merely how to teach but also about the content of the course. Yale’s administration can be astonishingly stubborn—and I wouldn’t be surprised if the hunger strike weren’t at least in part a reaction to the passive aggressiveness itself. I suspect that its root lies in power and felt superiority; union representation could hardly make a dent economically in such a rich university.

In August, 2016, the National Labor Relations Board had ruled that graduate students engaged in teaching at private colleges and universities are indeed employees and therefore have the right to collective bargaining. The decision reversed a ruling in 2004, which had held that TAs “are primarily students and have a primarily educational, not economic, relationship to their university.”[3] The ruling in 2016 found that the broader relationship does not mean that the teaching role—performed on a paid basis—is not work. In short, the students are also employees. A student who works in a dorm cafeteria—such as me at my first university—is an employee in that job even though being a student is the broader status at the university. To be sure, working as a teaching assistant involves learning—both how to teach and subject-content—but the tight relationship between the work-tasks and pay render the position a job, and thus entitled to be represented by a union.



[1] Jennifer Klein, “Why Yale Graduate Students Are on a Hunger Strike,” The New York Times, May 9, 2017.
[2] Ibid.
[3] Noam Scheiber, “Grad Students Win Right to Unionize in an Ivy League Case,” The New York Times, August 23, 2016.

Saturday, May 6, 2017

When a University Loses Its Way: Business as Usual

A university is clearly functioning sub-optimally when its departments operate with scant regard to any obligation to contribute to the good of the whole (organization). A university’s administration makes matters worse by viewing the university through the lenses of a business firm—seeking to remake what is innately academic in the guise of private enterprise. Fundamentally, when an organization’s management loses sight of the distinct basis of the organization, it is bound to founder from the confounded identity. I had the privilege of attending Yale, whose administration values and protects uniquely academic norms and mores. Unfortunately, university administrations far away from lux et veritas can lose sight of even the distinct academic basis of a university, preferring instead to remake it into something else—a business or, even worse, a conglomerate without a functioning headquarters. In this essay, I discuss one example of such a university, far, far away from the heart and soul of academia, yet where managers take advantage nonetheless of its good name.

The nursing school offered free yoga once a week as part of the school’s holistic approach to health. Although donations were accepted, the yoga was free—and thus of particular appeal to students. The university’s physical athletics recreation facility was state of the art, having a look more of a private fitness center like LA Fitness than a university gym and pool. The price of “membership” was steep, and “group fitiness” classes, which included yoga, was an additional charge. The department’s managerial mentality was that of a business, rather than as part of a university; students were customers who just happen to go to classes. Even being part of something large eluded that department’s management. So, while I was visiting that university, when I suggested to one of the managers that the recreation center would be a good place to publicize the free yoga at the nursing school, she replied in the negative—that it would be a conflict of interest. “We have our own yoga instructors,” she insisted. I did not inform her that conflicts of interest was one of my areas in applied ethics, or that selfishness does not constitute a conflict of interest. An x-ray of her stance would reveal no sign of service to students—let alone being part of a university. Lest business practitioners recognize the pathogen as garden-variety departmental preference over organizational interests, the sui generis nature of a university is also involved.

Students are not customers. In the learning process, for example, students are the work-in-progress. So the easy business categories of customer and even product fall short. The student-faculty relationship is something else; so too is the relationship of the student and the university. For one thing, students are more dependent on their respective colleges and universities than customers are on businesses. Besides the long time element (e.g., undergraduate degrees typically take three to four years), the related financial dynamic (i.e., little disposable income) is unique. Hence traditionally universities provide subsidized services for students. Thus for one department to refuse to publicize free yoga to students suggests that the department’s management is ill-placed in a university. The very notion of “membership” in a department of a university is a red flag regarding the underlying mentality of presumptuous and ill-suitedness.

Besides low-cost student health insurance, (traditionally) low-cost gym access, and subsidized campus bus service, universities typically provide the students living in dorms with university cafeterias. They are not for profit, being part of the universities. To “outsource” to for-profit restaurants leasing space on a campus would mean that students pay not only the cost of the food and labor, but also profit, even though students are typically financially ill-equipped to finance profit in order to eat on campus.

At the same university, students living in the dorms did not have even the option of eating in a dorm cafeteria. Instead, their meal-plan dollars could purchase food in a food court, which consisted of mostly fast-food restaurants in the Student Union. The underlying mentality was the same as that in the recreation services department; namely, the university is a business and the students are customers. Only in this fantasy does it makes sense that students should cover restaurant profit-margins in addition to the businesses’ costs. Even so, providing the restaurants with a guaranteed customer base via the meal plans departs from free-market Capitalism. I’ll illustrate this with a case from my own experience with the assistant manager of the Panda Express in the Student Union food-court, while I was visiting the university.

As I was deciding what to order, he was too hasty--pushy even. I asked for a sample, and as I was going to ask for another (this being permissible), he demanded that I order my food immediately. As I was going to order, he interrupted me by ordering three students standing behind me in line to move up to the counter next to me. Ordinarily, in a normal business context, an employee would say, “May I help who’s next?” The man’s order thus had the ring of presumed power or dominance over young adults—the guaranteed customer base. Then the manager misled me in to having to choose from a false dichotomy of noodles or rice—the veggie options being more costly to the business. Adding insult to injury, he scooped rice even though he had asked if I wanted noodles and I said yes. When I repeated that I wanted noodles, he angrily tossed out the rice as if I had changed my mind. Clearly, the restaurant’s management had developed a sordid sense of entitlement, which I submit is a direct result of superimposing a warped business model on a university-specific context—students living in dorms.

Stopping by the administrative offices of the Student Union, I provided a woman there with a “heads up” concerning the behavior of the restaurant manager. “He’s on a bit of a power-trip with respect to your students,” I said. Stunningly, she disavowed any responsibility to intervene on behalf of the university’s students who regularly eat in the Union—even formally as per the university’s meal-plans that students in the dorms rely on. “The restaurants are not ours,” she said. “But they are on your property—on a university campus,” I reminded her. I had only recently heard a similar disavowal from a manager at Recreation Services with respect to the yoga for students at the Nursing School. Such circumscribed tightness—not to mention the indifference to the students in spite of their vulnerable situs at a university. Herein lies the underlying callous sin of that university, whose pro-business pretentions and departmental hegemonies are mere child’s play in comparison.

On a subtle level, I suspect that the State being heavily Republican furnished the ideological background or undergirding for the university administration’s penchant for modeling the university on the basis of a company. The business model does not fit sector in society. The ideological urge to force a fit at a university disrespects the aspects of university life that are not so readily contorted according to the mold of the business model. The category mistake does not do justice to students as students. In treating them as mere customers, the university’s management betrayed its students. It is no wonder that they unconsciously returned the “favor” by smoking on the non-smoking campus as even the dulled security employees and the myopic library employees refused to enforce the policy even in plain sight while university administrators looked on as if impotent from birth. 

Friday, April 21, 2017

On the Spread of Private Governments in a Democracy: Should Churches and Universities Have Their Own Police Forces?


In mid-April, 2017, Alabama’s Senate approved a bill that would authorize Briarwood Presbyterian Church to create a police department. At the time, the church hired off-duty police employees to provide security-- “a common practice among nonprofit organizations.”[1] With 4,000 congregants, a K-12 school and thousands of events on its land each year, church officials had difficulty finding enough off-duty cops who were available. More important than being able to make up for any shortages, the proposed law “would empower a religious group to do a job usually performed by the government.”[2] That the group is religious in nature whereas police power is governmental (i.e., “church and state”) is less important than that the “job” had come to be viewed societally, as per the quote from The New York Times, as usually performed by government. In other words, the slippery, subtle slope is itself a red flag.

The full essay is at "Private Police Forces."



1. Ian Lovett, “Alabama Church Wants Police Force,” The New York Times, April 17, 2017.
2. Ibid.