Archive for April, 2012

It’s hard to keep up with the examples of the selling of education in the new corporate university. Here are two recent ones.

The first is from West Virginia University, which according to John David [ht: db] has sold its economics department to the Koch brothers.

When I arrived at WVU to study economics, it was a new program staffed by moderate faculty members such as Dick Raymond, Bob Saunders, Don Purcell, Gil Rutman, Bob Britt, Jim Thompson and Leo Fishman. Benedum Professor William Miernyk, who founded WVU’s Regional Research Institute, was a key faculty member, and he became my dissertation chair as I focused on the impact of the 1950 UMWA/BCOA Mechanization Agreement.

One recent night, I dreamed that I talked to Dr. Miernyk and told him that the WVU economics area was sold to the Koch Brothers for slightly more than a half million dollars plus another quarter million for graduate students. He turned over in his grave.

The primary WVU agreement, signed by Jane Martin and Wayne King, who were recent top WVU administrators, states that WVU will hire two professors and prescribes that they will teach under the direction of Professor Russell Sobel. One of the professors would also have a joint appointment with Miernyk’s Regional Research Institute. Another component funded several doctoral fellowships and the Koch brothers also agreed to provide operating expense money to the WVU Foundation. The contract is similar to those signed by ultra conservative Grove City College and schools like Clemson. Clemson, however, may have lost the Orange Bowl to WVU but it bowled over WVU with a Koch contract that was twice as large.

The second is from the University of California-Berkeley, which according to Brad DeLong is searching for a new chancellor to “keep Berkeley great.”

The strategy that Berkeley has settled on is to seek to produce the funding stream necessary to maintain a great University by becoming a finishing school for the superrich of Asia. This may be the wrong strategy–I sometimes think so, many others think so, and you can certainly argue so.

But it is the strategy that we have.

And the worst strategy of all is to have no strategy.

A bad strategy is vastly preferable to no strategy, or to an unimplemented strategy.

So we need a chancellor who can implement the strategy that we have.

Those are just two tales among many of the selling of education currently taking place in the new corporate university.

Ever wonder where all the surplus went?

Now, thanks to the Los Angeles Times, we know at least part of the story. Prior to declaring bankruptcy on 15 September 2008, Lehman Brothers had awarded nearly $700 million to 50 of its highest-paid employees.

Here are two of the millions of pages of documents, which show the list of top earners who were pledged $8 million to $51 million in cash, stock, and other compensation:

Now we know where at least some of the surplus has gone—into the pockets of Robert Millard and other top executives at Lehman Brothers.

Now that we know what one trillion dollars look like, we can picture the derivatives exposure [ht: sg] of a bank like JP Morgan chase: $70.151 trillion.*

That’s the nominal exposure. What we don’t know is (a) what kind of exposure each bank has with respect to the exposure of other banks or (b) how much insurance they have taken out on those derivatives. But we do know we’ve been there before, in the run-up to the global financial crisis of 2007-08. And the derivatives market is no more regulated now than it was then.

* That’s roughly the size of the gross world product in 2011. The $1 trillion dollar towers are double-stacked at 930 feet (or 248 meters).

I don’t know whether a “significant number of American voters seem to believe that the unemployed don’t really want jobs because they would prefer to live off unemployment insurance or other social benefits.” But I do know that that’s how Casey Mulligan and a significant number of neoclassical economists see the world.

Nancy Folbre clearly explains the appeal of the neoclassical argument:

It absolves believers of any responsibility for other people’s hardships. It lends credence to the assertion that the labor market would work just fine if it weren’t jammed up by a social safety net. It lays the blame for persistent unemployment squarely on President Obama, who has urged extensions of unemployment benefits and other forms of public assistance.

She also demonstrates that the neoclassical view doesn’t explain but a tiny percentage of the existing unemployment rate.

So, let me ask the relevant question: if neoclassical economists are so hell bent on identifying and blaming those responsible for idleness, why don’t they search for and pin the blame not on workers but on the idleness of corporate profits?

source: International Labour Organization, World of Work Report 2012

Anyone hear of the Second Great Depression?

Special mention

source [ht: sm]