The Art of Complaining

“Complain, complain, that’s all you do

Ever since we lost!

If it’s not the crucifixion

It’s the Holocaust.”

L. Cohen

In my brief (five years) and tiny tenure as an administrator responsible for an array of university programs, one of my duties was to receive student complaints.  Students usually had real or at least honestly perceived grounds for complaint.  The typical complaint was about the quality of instruction or the instructor of a particular course.  Frequently, the student would announce a shift of discourse with the phrase “It’s not the reason I’m here, but . . . .”

The irony of the situation was that if a student wanted to complain about a grade or even the evaluation of a particular assignment, that was a situation I could easily deal with--and that was the point students would take twenty minutes to get to.  The university had rules and procedures in place for reassessing a mark.  As I discovered the hard way, the university provided no legal means for dealing with a lackluster or incompetent teacher.  Like the psychoanalyst of the how-many joke trying to change a lightbulb, I could only change an instructor if he/she wanted to change.

Being faced with complaining students reminded me of early days as a steward in my ESL teachers’ union.  The principal duty of a steward was to represent and counsel teachers through the grievance procedure, and we were given a weekend-long course on how to grieve (the legalistic verb for “to complain,” not a synonym for “to mourn”). Step one and rule one of the grievance process was to know what my brother and sister union members wanted; that is, what outcome, of a limited number of possibilities, they were looking for from the grievance.  Sounds simple, right?   I found this advice to be logical, compelling and useful, but the objective is what people most frequently lose track of in the process of complaining.  This lack of focus is, I believe, what gives complaining a bad name.

Decades later at a university department meeting, one after another, my colleagues were complaining bitterly about how prolific and quick students were to complain.  I interrupted the brouhaha to suggest that complaining was a good sign; it meant students cared and, furthermore, I was thinking of preparing a module on “how to complain” for one of my courses.  My colleagues were not amused.

I really believe that complaining is beneficial, that we all benefit from those who have the wherewithal and courage to complain.  They are the whistle-blowers of everyday life, but the problem with complaining is one of degree, of frequency, of being identified with the “boy who cried wolf” once too often.  The conundrum for the would-be complainant then becomes the proverbial “separating of the dancer from the dance”: how to complain without being a complainer.  Although I was told when travelling in Europe that it paid to pretend to be French because the French were known to complain and would, therefore, get good service, I was never able to empirically verify this hypothesis--but it makes sense.

I have also been warned that my attitude toward complaining as being about outcomes was masculinist.  (Excuse the gender stereotyping here.  I’m just the messenger.)  I have been informed that when a woman is complaining, a man’s suggesting a (pre-emptory and perfunctory) solution to a problem simply compounds a woman’s frustration and irritation.  It took me a while to understand this instruction, but I have come to recognize the universal principle that the less you know about a problem the easier it is to imagine a solution.  If you (and I) immediately see an obvious, quick and easy solution to a problem being presented to us, chances are we have failed to understand the details and recognize the complexity and intricacy of the issue.

There is a phenomenon that is usually identified as complaining but is really “self-expression”—as vague as that locution is.  Sometimes it is necessary or at least healthful to decompress, to vent, to exhale with expletives.  What passes for complaining is often just thinking out loud.  Sometimes we just need to hear our own words (in my case read them) in order to clarify our own thinking to ourselves.

I used to be a fan of the television series House.  Dr. Gregory House, out of context, always sounded like he was complaining, but he was carrying out a process of “differential diagnosis.”  I didn’t quite know what that meant until I read Crilly’s definition of “differential calculus.”  Both cases are studies of change:  what has changed, what needs to change, the speed of change, the meaning of change, the prognosis and prescription for change.   Complaining is a differential science and a differential art.

The Sour Bibliography

“Let’s End the Myth that PhDs Are Only Suited for the Ivory Tower.” Really! Why?

“Let’s End the Myth that PhDs Are Only Suited for the Ivory Tower.”  This was the headline for an opinion piece in the Globe and Mail written by Queen’s University’s Dean of Graduate Studies.  The article reminded me of meetings our tiny caucus of English teachers used to  have once or twice a year with our faculty’s Dean.  Invariably, at some point in the meeting, the Dean would turn to my colleague who was responsible for our section’s graduate programs and ask:  “How many new admissions do you have for next semester?”

Everyone in the room knew, with the possible exception of the Dean (and I suspect he may have known as well) that, at this point, we had two or maybe three new admissions.   Invariably my colleague would look surprised and begin to shuffle papers.  Having briefly occupied his position before he did, I had a rough idea of the bafflegab he was preparing to deliver, but I was never as good or practised at it as he was.

“Well,” he would begin, “in order to give the most up-to-date numbers I would have to include the inquiries that the secretary passed on today. With those six, and two students from France who emailed, and of course we have identified eight of our own BA students, and two MAs, as well as the returning students, and that’s right, Theresa Somebody, a really excellent candidate will be coming in as soon as she gets confirmation of her funding request . . . .”

Thanks to the miracle of my colleague’s loaves-and-fishes rhetoric,  the Dean could claim that our two new admissions appeared to be somewhere in the neighbourhood of twenty-two.  As long as no-one insisted on knowing accurate numbers, we all had plausible deniability when, next semester, our graduate seminars turned out to be the size of tutorials.

The “Let’s End the Myth” piece in the Globe is an extension of the same desperate smoke-screen rhetoric designed to dissuade anyone from asking for accurate numbers.  

Sure, let’s end the myth that PhDs want to be professors, and at the same time we can get rid of the myth that people who go to medical school want to be doctors, or that people who go to law school want to be lawyers, or that people who study accounting want to be accountants.  Or, we could go the other route, and take a look at accurate numbers for the occupational outcomes of PhDs and deal with the situation we know exists.

Before we get to the big question, we should stop to consider that—at best—only 50% of people who start a PhD in the humanities actually finish.  The average length of time to complete a PhD is seven years, the mode is ten.  Of the lucky 50%, how many, after five, seven, or ten years of hard work and study, get the tenure-track university positions which at least 86% of them have declared they covet?   And the answer is . . . wait for it . . . we don’t know!

How can we not know something as basic as how many PhDs get tenured jobs?  Just like my colleague who had to hide the fact that we only had two new students, universities in general have to hide the dismal outcomes for PhDs.  To reveal the numbers would put courses, programs, prestige, credibility, funding and ultimately positions at risk.

What do we know?  According to the available statistics, which are somewhat out of date (from 2011) and optimistically inaccurate, 18.6% of PhD graduates got full-time teaching positions in universities.  “Full time” does not mean permanent.  Crunch those numbers!  You start with 100 PhD students, at best only 50 of them complete the hard, five-to-ten-year slog and successfully complete the degree.  Of those 50 successful PhDs we don’t know exactly how many but we do know that fewer than nine (9 of the original 100) got the tenure-track university jobs which, for the great majority of them, were the goal of the PhD in the first place.

Given these depressing outcomes, you might imagine that universities are working hard to increase the number of tenure-track positions or downsize doctoral programs or a bit of both.  On the contrary, from everything I have read, the dominant priority of universities is still to maintain or increase PhD enrolments while hiring small armies of underpaid and underprivileged adjuncts, sessional and part-time lecturers to do most of the teaching.  Why? You might well ask.

Crudely put, screwing over PhDs has for decades been the national sport of academia.  For the university as well as individual departments and programs, the PhD student is a cash cow for government funding.  Additionally, PhDs are still a mark of prestige.  Universities identify themselves as either PhD-granting (one of the big boys) or non-PhD granting (not so big) institutions.  Individual professors applying for research grants will have their prospects vastly enhanced if they can point to PhD candidates who will serve as their research assistants.  The lucky professorial few who win the grant money can use it to travel to conferences in Miami, Mexico and Honolulu, while the bull work of their research projects is carry out by their minimum-wage PhD research assistants.

Despite the foggy and evasive arguments that universities might put out suggesting that the problems and the solutions are incredibly complicated—they aren’t.  The solution isn't for MacDonald's or Rogers or Walmart to hire more PhDs.  The PhD has to be the minimum requirement for teaching in a university (with rare, obvious and fully justified exceptions) and for any other significant position within the university hierarchy for that matter.  Any PhD holder who is teaching at a university should automatically qualify for tenure.  The ballooning administrative and support budgets of universities need to be transferred to pedagogical objectives.

As I pointed out in an earlier post “universities have a vertical monopoly, being both the exclusive producers and major employers of PhDs.”  It’s time universities began to acknowledge and correct their abuse of this monopoly.

Creedence heard it through the grapevine!

If You’re One of “the Good Guys,” Do You Still Have to Worry about the FBI Accessing Your iPhone? With Addendum.

In some ways, we have not completely escaped the prejudices of our oral ancestors.  There is always a lingering suspicion that someone demanding privacy must have something to hide.

Last week the Director of the FBI was on television arguing for the agency’s right to unlock the particular iPhone used by the ISIS-inspired San Bernardino terrorist—and by extension all iPhones.  His justification is that we are “the good guys” and we’re trying to catch “the bad guys.”  It’s hard to imagine a weaker a priori argument for the simple reason that in the history of governments, tyrannies, military juntas, secret police forces, and dictatorships there has never been one that announced to the world “we are not the good guys!”.

Nonetheless, personally, I have nothing to hide, and I'm a Canadian with a very non-ISIS sounding name and a regular readership of less than a dozen people for this blog.  (I am proud to have a select and discriminating readership.)  The ultimate defense against being surveilled by the FBI or some other secretive police force is to remain irrelevant and insignificant.  I have nothing to fear, nor do you, right?

Still, it rubs me the wrong way that it is exactly police forces like the FBI  that insist on the importance of secrecy for themselves which challenge the rights of individuals to have secrets.  I start thinking about the people who probably thought of themselves as one of "the good guys" (in the current, colloquial, gender-neutral sense of the term "guys") who were unfortunate enough to cross paths with the FBI, then I realized that you are only one of "the good guys" until the FBI decides you're not for whatever secret reasons they might have.

Consider some famous cases.

Ernest Hemingway, the renowned American novelist, was hospitalized for six weeks in the psychiatric section of St. Mary’s Hospital in Rochester, New York, where he was receiving electroshock treatments. Hemingway was diagnosed as suffering from paranoid delusions because of his constant ranting that he was under surveillance by the FBI and that even the hospital phone was tapped and his nurse, named Susan, was working for the FBI. One week after he was released from hospital, Hemingway shot himself.

“Fifty years after his death, in response to a Freedom of Information petition, the FBI released its Hemingway file. It revealed that beginning in the 1940s J. Edgar Hoover had placed Ernest [Hemingway] under surveillance because he was suspicious of Ernest’s activities in Cuba. Over the following years, agents filed reports on him and tapped his phones. The surveillance continued all through his confinement at St. Mary’s Hospital. It is likely that the phone in the hall outside his room was tapped and that nurse Susan may well have been an FBI informant” (Hemingway in Love 167).

Sunil Tripathi, a 22-year-old Brown University student, committed suicide after the FBI released surveillance photos of the Boston Bombers, and Sunil was falsely identified as one of them.  His body was discovered in the Seekong River, April 23, 2013.

Monica Lewinsky was a 23-year-old Washington intern when she engaged in various kinds of sexual activity with then President Bill Clinton.  Whatever moral compass you might bring (or not) to Lewinsky's tryst with the President, it seems obvious that the affair did not constitute a crime or a threat to public security.  Nonetheless, on January 16, 1998, Monica Lewinsky was held in a hotel room by FBI agents and threatened with 27 years of imprisonment if she did not reveal the details of her relations with the President.  She was also told that the FBI would arrest her mother who could be imprisoned for two years  (http://law2.umkc.edu/faculty/projects/ftrials/clinton/lewinskyday.html). 

(Whenever I reflect on this kind of prurient political theatre, I think of Prime Minister Pierre Trudeau's 1967 declaration in anticipation of the Omnibus Bill that "There's no place for the state in the bedrooms of the nation."  Someone needs, once and for all, to declare the converse: "There's no place for the nation in the bedrooms of the state.")

December 21, 2001, Martha Stewart propitiously sold stock in a friend's company and thereby avoided a potential loss of $45,673--a minuscule amount considering her estimated wealth at the time was 700 million.  Her friend, Sam Waskal, was being pursued by the FBI for insider trading on the stock of his own company, ImClone.  Martha Stewart was never convicted of insider trading but she did serve five months in a federal prison and two years probation for lying to the FBI about details of the stock sale (http://coveringbusiness.com/2012/05/15/what-martha-stewart-did-wrong/). 

(I still can't figure out exactly what crime Martha Stewart committed if, in fact, she did commit a crime, but it's hard not to compare her case with Wall Street companies which lost hundreds of billions of dollars in what seemed like fairly obvious mortgage and bond fraud schemes and the result was that they were bailed out by taxpayer money, CEOs continued to receive bonuses and severance packages, and not a single Wall Street insider was ever charged with a crime.)

Amy Winehouse heard it through the grapevine.

Addendum

Now perhaps we should include former Secretary of State and presidential candidate Hillary Clinton in this list!

The Sour Bibliography

Privacy Versus Security: Debating a False Dichotomy

Is privacy necessary?

Is privacy really an innate human desire?  Is it normal to want to be alone?  While it seems intuitive and logical to assume that our culture and technology have evolved in response to a basic human desire for privacy, anthropologists, as well as communication and cultural theorists have argued that the cause and effect are the other way around.   Our habits, customs, created environments and mindsets are not a response to a primordial human need.  Technological culture created the idea of and need/desire for privacy.

Oral culture

In oral societies (that is, societies which depended on direct person-to-person oral communication), the desire to be alone was immediately identified as a symptom of illness.  In a world dominated by orality, today’s millennial otaku introvert generation would have fared as either deities or as mad demons.  They might have become the oracles living in caves at Delphi or the first monks dedicating their lives to transcribing ancient scripts or they would have been imprisoned, starved, tortured and burned at the stake.  We should also consider, given cultural ecology’s displacement of natural environment, that the neurodiverse, digi-destined, screen-slaver generation might be the next step in the evolution of our species.

Privacy is a byproduct of visual culture

Privacy is a byproduct of the visual culture created by the development of literacy from basic forms of writing to the phonetic alphabet, to Gutenburg’s printing press to the digital universe we know today.  Reading meant it was possible to be alone and still be connected to the world in important, informative ways.  In fact, the most serious forms of communication and knowledge-gathering were, in this new visual/ literate culture, best done in solitude.  In an oral culture being alone meant you could only be talking to yourself or a god—both of which were suspect if not dangerous activities.

Compartmentalized living

Living in spaces that have one room for cooking, another for sleeping and another for gathering might seem “natural” to us now, but our early ancestors would be mystified by our insistence on compartmentalizing our daily activities. Primitive man might have agreed with the dysphemistic adage that “You don’t shit where you eat,” but beyond the scatological, compartmentalized privacy is cultural not natural.

No doubt our primitive ancestors at times needed to be out of view, literally in hiding from enemies and predators, as a matter of security. Hence the overlap and confusion between privacy and security, between solitude and survival.

A Gun or an Iphone:  Which is more dangerous?

Fast forward to the debate between the FBI and the Apple Corporation about unlocking the iPhone once used by the ISIS-inspired murderer who killed 14 people in San Bernardino. On the surface, the request is to access one iPhone, but the reality is clear that the FBI is asking for the ability to access all iPhones.

The debate is being couched in terms of individual privacy and public security but this is a false dichotomy.  All things being equal (and they never quite are) security trumps privacy.  (And the pun is intended since Republican presidential aspirant Donald Trump [a.k.a Drumf] has already declared that all Americans should boycott Apple.)  History has proven over and over again that this debate is between individual security and collective security; a debate closely tied to the more typical dichotomy of individual rights versus collective rights. In the American context the priority line between collective versus individual rights and security tends to slide around like the dial on old-fashion radio gone wild depending on the issue--abortion, gun ownership, medical insurance, seat belts, drugs, homosexuality, same-sex marriage, civil rights, equality for women, and so on. During debates for the Republican presidential candidates, President Obama was chastised for using the San Bernardino shootings as an opportunity to challenge the Second-Amendment rights of American citizens to "bear arms."  In this mindset a locked cellphone poses a much greater hypothetical threat to public security than an assault rifle and thousands of rounds of ammunition.

NSA, CIA and you:  Who has the right to have secrets?

In his autobiography, Playing to the Edge: American Intelligence in the Age of Terror,  Michael V. Hayden, former director of the NSA and the CIA, points out that "Stellarwind," the CIA program to gather data on Americans' telephone calls which was outed by Edward Snowden,  “did indeed raise important questions about the right balance between security and liberty.”

In his review/commentary of the Hayden autobiography, "Can You Keep a Secret?", New Yorker staff writer George Packer points out that last week Hayden "sided with Apple in its privacy dispute with the F.B.I." while continuing to tacitly support the CIA's programs of torture and human-rights abuses.

Secrets and safety

In his review, Packer comments:

Spooks in general have had a lot to answer for in the past decade and a half: the 9/11 attacks themselves, Iraq’s nonexistent weapons of mass destruction, secret prisons, torture, warrantless eavesdropping, the bulk collection of Americans’ data, and targeted killings.

With this recent history in mind, it seems obvious that individuals, as a matter of personal security, need to protect themselves not just from malfeasance but the mistakes, the callous indifference, the questionable ethics and the politically/ideologically-dictated overreach of secret and secretive police forces like the NSA, CIA and FBI.

Is Your Professor a Better Grader than Moody’s or Standard & Poor's?

If you have been following the thread of my last posts you will have arrived at the question:  Why did savvy investors from around the world buy billions of dollars of worthless bonds from Wall Street companies in 2008?  The answer is that they absolutely believed the ratings.  If the ratings agencies said that a bond was AAA , they accepted that it was a guaranteed, virtually no-risk investment.  Investors in Germany, Japan, Canada, the USA and all over the globe  willingly or willfully ignored the fact that the ratings agencies—Moody’s and Standard & Poors—were being controlled and manipulated by the very companies they were supposed to be evaluating.

If this situation sounds inappropriate to you, stop and consider for a moment:  who evaluates you when you take a university course?  Yes, you are evaluated by exactly the same person who has a vested interest in demonstrating that his/her course has produced knowledgable, skilled graduates.  On the other hand, every course needs to show distribution of grades, but luckily there are always a few students who conspicuously “don’t give a damn” to whom it is possible to assign lower grades—always useful to take note of who sits in the back row.  Overall, non-permanent lecturers (who do most of the teaching)  are likely at risk of losing their jobs if the grades are low enough to cause protest or produce too many failures.  Among lecturers it is widely assumed that if they give their students low marks, the students will retaliate with low course evaluations.

The difference between the ratings agencies on Wall Street and those who evaluate university students is, I assume, that just about everyone is aware of the situation in universities.  I’ve started asking around (on Quora and Workopolis):  Do employers seriously consider a university graduate’s grades?  I infer from the answers I’ve received that the answer is “no, they don’t.”  The answers ranged from “no, they don’t consider them” to “they shouldn’t, if they know what they are doing.”  So, unlike investors who bought worthless bonds from Wall Street, employers are not being deceived by the ratings systems applied to university graduates.  

What does this fact—the disbelief in marks—mean?  Does it matter that grades don’t matter?

In my world, I mean the world inside my head, they mattered a lot.  Grades and their accompanying justification are supposed to give students the feedback they need to progress, and to make sound educational and career decisions.  When I look back on my own experience as a student, I am shocked by how infrequently I was tested in a thorough and convincing fashion.  Grades were used as punishment in some cases; in others they were gestures of sympathy, at best they were a pat on the back.  I never felt I was being reasonably tested or justly evaluated; nevertheless, I still allowed grades to determine my path in university and in high school for that matter.  A low grade meant that subject would be dropped next year; a high grade determined my next major.  No-one ever gave me clear instructions on what I would have to do in order to get higher grades--and it always seemed unfashionable, humiliating and whiney to ask. Besides, my grades were always high enough to get by.  I never clearly understood how my grades were being determined, what specific criteria were being used to evaluate me, and now that I have had a career as a professor, I'm quite sure my professors didn't know either.

Any experienced professor seeing where this argument is heading will be quick to tell you what I am on the verge of suggesting is just not possible.  The system does not allow professors to evaluate students in the clear and comprehensive fashion I am trying to imagine.  Moreover, it never has.  As a consequence it is typical for professors to separate themselves from the entire business of grading.  Marking is turned over to students; marks are arrived at in some comfortable non-judgemental fashion, or avoided in favour of pass/fail "exams" which no-one ever fails.   Many professors, myself included, feel that their jobs are to inform and encourage students, not judge them.

On the other hand, there is no quality control system for university degrees.  The assumption is that this work is being done by the people who teach, but at the same time these teachers are under constant pressure, from university administrations as much as from students, to give good grades.  There is no up-side to teachers' diligently, conscientiously and rigorously evaluating their students--except perhaps the silent pride which comes from the conviction that you are doing your job. The periodic evaluation of students should be an important  part of the educational process.  Grades are a reflection of the underlying education that students are getting (or not getting). The problem isn't in itself that grades are being inflated (and I don't doubt that examples of unjustly harsh evaluations are numerous--exceptions which prove the rule), but the constant growth of grade inflation has correlated to a corresponding devaluation in the worth of university degrees.

The discussions of the "housing bubble," the "financial bubble" and the possibility of an "education bubble" have gone on for years now.  Grade inflation in and of itself is not a great concern, but the fact that it has reached the point of making grades meaningless is a sign that the "education bubble" may have already burst.

How Did University Degrees Become Subprime Mortgages? Part II

If you made it to the end of my last post you will have the same question I did.

Why did Finance Companies and our ersatz Mr. Finance Company Guy arrange a mortgage for Michelle, our hypothetical mortgagee,  when he should have known quite well from experience and the numbers that she would likely be unable to pay it off?  To answer this question we have to introduce a bond trader on Wall Street in New York.  We can even give him a real name.  We can call him Howie Huble

because Howie Hubler really exists and he is the most infamous example of what was happening in the bond markets in 2008.  A bond like a mortgage and like money is a kind of IOU.  It’s a piece of paper that says someone owes someone an amount of money.  Bonds have always been considered good, solid, conservative  low-risk forms of investment.  Usually bonds were IOUs from big companies or banks or even countries, but any kind of debt can be incorporated into a bond and resold to investors.  Unless you are an investment banker you have to get used to the idea that one person’s debt is always someone else’s investment. For the most part, debt is what financial markets buy and sell.

Leading up to 2008, bonds were being created by bundling together a lot of subprime mortgages.  Imagine that Michelle’s mortgage and 99 other mortgages just like hers were put together in a bundle.  All together they would create a bond (or what was called an “asset-backed security” or "collateralized default obligation") which, on paper, was worth 17 million dollars.  Howie Hubler and his ilk on Wall Street would turn around and sell that 17-million-dollar bond to pension funds, banks, and other investment companies around the world.  The answer to our question, the reason Mr. Finance Guy gave Michelle the mortgage in the first place was because he could immediately turn around and sell it to a Hublerite on Wall Street, and the Hublerites would sell it inside a bond to investors all over the world.

Pause and take note that, despite what we are constantly told about capitalism, the people who were making the real money were taking no risks, in fact, as the saying goes, they had no skin in the game. Howie and Mr. Finance Company Guy got paid no matter what.  They could remain indifferent to the quality of the mortgages and bonds they were selling.  In fact, being attentive to the quality and viability of the paper they were selling would have been counter to their financial interests.  The only thing that mattered to them was that they move a lot of "paper" from Main Street to Wall Street to Global Markets.  The hypothetical 17-million-dollar bond I mentioned above was peanuts to the Hublerites on Wall Street.  Merrill Lynch, the company Howie worked for, was paying him 25 million a year and he complained of being underpaid.  Even after Howie lost 9 billion dollars on "credit default swaps" and was fired, he still walked away with a 10-million-dollar severance payment in addition to the millions he would have salted away over the years.

Confession of ignorance #2:  I hadn’t heard of Howie Hubler or “collateralized default obligations” nor did I understand how "credit default swaps" worked until I read The Big Short.  My general impression of how subprime mortgages were bundled into bonds and resold was correct but The Big Short gave me the details and explained how Mr. Finance Guy and Howie could make enormous amounts of money, for as long as the bubble lasted, by moving worthless pieces of paper around.  Actually calling these investments “pieces of paper” gives them more substance than they had in reality.  Not only were the transactions digital, but when Main Street Finance Guys couldn't keep up with the demand on Wall Street for more mortgage paper, some Wall Street gurus, as Michael Lewis reports,  figured out a way to create mortgages out of nothing.  When financial analysts went looking to see what was inside CDOs (“collateralized default obligations”); for example, to find "Michelle's mortgage," they came away saying it was impossible to say what was in a CDO.  

Think about it!  People were paying billions of dollars for CDOs but no-one was able to say exactly what was being purchased when you bought  a CDO.  No problem!  As we now know the government of the USA stepped in and purchased hundreds of billions of dollars worth of this bad, toxic, imaginary debt and all the perpetrators were let off the hook, except of course, Michelle and people like her who were evicted from their homes, lost savings and pensions and were forced into debt and bankruptcy. 

Parallel #2:  In both cases, Michelle’s mortgage and Michelle’s BA, a huge system has been constructed, an upside down pyramid, based on the assumption that Michelle is going to do what is expected of her.  Despite Michelle’s good intentions and hard work, the open question remains:  was Michelle being provided with the conditions which would allow her to succeed?  In the case of her mortgage, the evidence is now clear she had little hope of  paying off the mortgage and owning a house.  The whole venture was to be a losing proposition for her.  What about her BA?

I have to hold back the vitriol in launching accusations against Mr. Finance Company Guy who sold Michelle her mortgage, because in terms of education I am his homologue. I never consciously deceived or mislead a student, and remained convinced throughout my career that I was doing something beneficial for my students.  However, I suspect that the average Mr. Finance Guy could make the same claims about his mortgage customers.  

Like Mr. Finance Guy, I felt pressure to attract students and get them through the program.  I know lots of individuals who were conscientious and diligent, working to ensure that Michelle got the best education possible--and I count myself among them.  Overall, anecdotal evidence I’ve gleaned suggests that my undergraduates have done better than average in finding employment. Nonetheless it seems clear to me that just as the problem with the financial markets was that no-one was playing careful attention to the details of Michelle’s mortgage, no-one  is paying careful attention to the details of her BA.   As the system currently stands there is no incentive for anyone to be particularly attentive to the make-up and quality of the education that Michelle is receiving.  

For university professors interested in advancing their careers, far from "no incentive,"as I have pointed out in earlier posts, there is significant disincentive for any professor getting too fussy about the quality of their courses or teaching, or becoming preoccupied with the overall quality of education their students are receiving.  In universities there are only two roads to advancement: research or administration.  The cliché of "publish or perish" has more purchase than ever.  The number and salaries of university administrators has ballooned, while most of the teaching is left to lowly adjuncts and part-time lecturers who are destined to remain at the bottom of the ladder in terms of salary, job security and status.  

Are administrators and tenured professors concerned about the level of pedagogy in their universities?  The most interesting and telling aspect of this question is that we can't know the answer because the question never gets asked.  Lots of lip service gets passed around as part of every university's sales pitch but it is simply not something that professors ever discuss.

In keeping with a typical business model, universities are concerned with enrolment and completion rates.  The system offers no incentive for anyone to be preoccupied by what happens between registration and graduation.  The system is driven by ideology, narcissism, petty politics, turf wars and the obsessive compulsions of fastidious low-level administrators, but because there is little to no consensus about what students should be taught, there is no tracking or sharing of information about what students are supposed to have learned.  

My recent posts might create the false impressions in readers' minds 1) that I view university education as somehow comparable to the financial markets, and 2) that I have some silver-bullet solution in mind for how to fix university education for all times.  This comparison of universities and the financial markets is a demonstration of how disastrous the business model is for education.  I have seen numerous panaceas proposed to cure all that ills university education and invariably come away with the impression that there is no one solution to fit all situations.  The solutions that seem clear and viable to me are the ones who's outcomes are least predictable.  We need to empower those who teach, those who can facilitate effective teaching, and those who want to learn, and then, to quote Death of a Salesman, "attention must be paid" to what is happening to students every step of the way from pre-registration to career.

Gladys Night heard it through the grapevine.

How Did University Degrees Become Subprime Mortgages?

In the wake of the Wall Street collapse and bailout in 2008, I was repeatedly tempted to present my students with a lecture on subprime mortgages.  I kept imagining the lecture I wanted to deliver but finance and economics were not my fields or a relevant subject for any of my literature classes.  Reading the prologue to Michael Lewis’s The Big Short about the nerdy outsiders who foresaw and actually made money from the collapse and learning that Meredith Whitney with her B.A. in English from Brown University was one of the first whistleblowers to accurately assess the mismanagement that was going on, I am once again feeling inspired to offer my two cents (for those of you who still know what “two cents” means).  

What follows is the lecture that I almost but never quite gave and a comparison of university degrees and subprime mortgages punctuated with confessions of ignorance which will demonstrate that you don’t need to know very much in order to understand what was going on even though the people who were supposed to know everything about big finance still claim they had no understanding of what was going on.

Confession of ignorance #1:  Until recently I misunderstood what the word “subprime” meant in the expression “subprime mortgage.” I knew that the “prime rate” meant the best possible rate at which a bank would lend money.  Since the prefix “sub” means “under,” “beneath,” or “lower,” I assumed that a "subprime mortgage" must be a special low-interest kind of mortgage designed to help poorer people. Based on the words, that’s what the expression should mean but I and the people who took out those mortgages could not have been more wrong; it means exactly the opposite.  To keep it simple the expression “subprime mortgage” is a lie, a sales-pitch expression to convince people that they were getting a deal when in fact they were being tricked into signing mortgage contracts with high-interest rates that ultimately they would be unable to pay. 

In financial circles the expression “subprime mortgage” means that the people borrowing the money are considered “subprime” because they have low incomes and/or poor credit ratings.  The loans are considered riskier for the lender and so the borrowers have to pay higher interest rates.  Hypothetically, if a rich person and a poor person wanted to buy exactly the same house, the rich person would pay less for the house and the poor person would have to pay a higher interest rate on the mortgage and therefore much more for the same house.  This is what is known in capitalist economics as a level playing field. (Yes, I am being sarcastic.)

The day I almost gave my lecture on subprime mortgages, I was lecturing on the Age of Reason, that period in English literary history known as the Enlightenment in antithesis to the Dark Ages, the Medieval period dominated by religious dogma.  As a warm-up to my lecture, I began with the thunderingly impertinent question to the class:  “Why are you here?”

With rapid alacrity a hand shot up in the third row and a handsome young man with loads of puppy-dog charm answered earnestly:  “to procreate.”

“Say what?” I asked.

“You know, to make more people.  To procreate.”

I couldn’t resist.  “I think I should warn the young women sitting around  ‘F.’ that he is here today in class at the University in order to procreate.”

(Just in case you might think I did “F.” some harm, I should point out that when the giggles subsided what I witnessed was a half dozen young women gazing at him in newfound dewy-eyed admiration—and “F.” was nothing if not a good sport. ) 

I was introducing the notion that a university education was the continuation of an idea, which became dominant in and perhaps defined the Enlightenment, that it was possible for individuals and societies to improve.  This concept of progress, of getting better, provided a new answer to the question about why we were here, the purpose of our existence, displacing the established Medieval notion that the human species existed to praise, worship and obey God and, in the words of my grade-school Catholic catechism, “to reflect his glory.”

Before the class could get there, we had to get past the other answer to my “why are you here?” question:  “to get a degree,” and the cut-to-the-chase, more cynical echo, “yeah, to get that piece of paper.”

“To get that piece of paper”:  that was my cue to deliver my “subprime mortgage” lecture, but I chickened out. 

In the lecture I daydreamed but never gave I took a bill out of my wallet and asked the class “and what is this?”  I received the funny joke answers with a smile and a laugh, and collected the “right” answers:  “it’s money,” “Canadian currency,” “it’s a five-dollar bill.” 

I would acknowledge and congratulate the correct answers, but at the same time, I would point out how knowing the right answer can sometimes blind us and prevent us from recognizing the most obvious, empirical, irrefutable, down-to-earth answer.  In this case what I was holding for display was, in the first place,  “a piece of paper with printing on it.”  This particular paper was an IOU issued by the Government saying that Canada owed me five dollars.  It is a very strange kind of IOU because everyone understands that it marks a debt which will never be paid.  (If this intrigues you check out When Should You Repay Your Student Loan.)  We typically assess the value of something in terms of money, but this time the valuation needed to be reversed.  The Government designated the value of this bill as “5” but its real value is unpredictable.  Depending on the time and place a Canadian 5-dollar bill could have a value of 3 litres of gas or maybe 5, 2 bottles of beer or maybe 1 or maybe 5, half a hamburger or maybe 2. You never know what five dollars is worth until you try to spend it.

Now I take out a sheet of paper and write on it in large letters:  MORTGAGE, and underneath an amount, say $170,000.  If I was really well prepared I could have copied out something that looked almost like a real mortgage:

FCG Mortgage

Name:  Michelle

Amount:  $170,000

Starting Interest rate:  3% (variable)

Property:  Nice little house on nice little street.

Lender Signature:  Finance Guy

Borrower Signature:  Michelle

“Again, this is a piece of paper.  Agreed?  If you suspend disbelief a moment, let us imagine that this piece of paper is a real mortgage.  If we compare these two pieces of paper we will discover why people who know about finance consider the mortgage so much better than money.  Ignoring the difference in the amounts (5 versus 170,000), the mortgage is better than money because the value of money is, historically, less certain.  The value of money always goes down over time but the value of mortgages and houses always go up.  Historically, inflation decreases the value of money by around 2% every year, but a typical mortgage increases in value by around 5% every year.  Money used to be backed up by gold, but these days the value of money is based on nothing tangible.  A currency is worth whatever people who trade on money markets decide it is worth for reasons that no-one really knows.  Mortgages on the other hand are backed up by actual buildings.”

[Now I would draw my best grade-school impression of a house on the blackboard.]

[Cut and paste from the net; much better than I could do!]

“So how did mortgages which were less risky and more desirable and solid than cold, hard cash suddenly become 'subprime,' 'toxic,' unreliable and generally worthless?  The answer:  mortgages are only valuable when everyone is following the rules.  When people stop following the rules, mortgages become worthless pieces of paper.  Actually, much worse than worthless because the person who takes out a mortgage is still expected to pay it off or s/he will be punished.”

[Here’s where we can begin to compare university degrees and subprime mortgages.  Spoiler alert:  The moral of both stories is that mortgages and degrees are of value when the people involved in the process are doing what is expected of them, following the rules, and fulfilling their obligations.  Unfortunately, for everything that went wrong with mortgages from 2003 to 2008, it's possible to see a parallel with university degrees.]

“A mortgage has to be taken out by an individual.  In our case, let us imagine that this is Michelle’s mortgage. [There was always at least one Michelle in in my classes and Michelles were invariably nice and smart and would cheerfully accept being my hypothetical.]  Michelle is a student and works part time, so what is she doing taking out a mortgage?  Many people would say that the problem with subprime mortgages is Michelle’s fault.  She just couldn’t afford the house she tried to buy. So why did she?  To answer this question we have to look at the guy from the finance company who arranged her mortgage.”

 “Here’s his sales pitch:  'Michelle, you can buy this house, really nice, huh, for $170,000.  I will give you a mortgage for $170,000 at 3% interest for the first two years.  That means you will be paying $805 a month, which isn’t much more than you are now paying for rent.  Your interest rate might go up after the first two years, but so will the value of your house, so if you're not happy you’ll be able to sell it for a profit.'"

“Sounds like Michelle can’t lose, right.  And how could she resist?  She’s being given $170,000 and a house.  All she has to do is sign the mortgage contract, and supply a few documents like pay cheque stubs, tax form, credit rating.  And if she doesn’t have them, well Mr. Finance Company is a nice guy and wants to be nice to her, so he will approve her mortgage even without the documents.”

“Mr. Finance Company Guy probably knows that eventually Michelle will not be able to afford the house and the mortgage.  She might manage to pay the mortgage, the taxes and the expenses of keeping up a house for the first two years, but after the first two years the 3% interest rate (it’s called the ‘teaser rate') will end.  Suddenly Michelle will have to pay a new variable, non-teaser rate of something like 12%—because students like Michelle who work part time and don’t have high incomes or great credit scores have to pay extremely high mortgage rates.  Assuming Michelle never missed a mortgage payment in the first two years (which isn’t very likely), she will still owe $160,561 on her mortgage.  Her new monthly mortgage payment at 12% will be $1657.00—at least twice as much as she can possibly afford.”

“So what does Michelle do now.  Obviously she has to sell her house.  Maybe she can sell it for $180,000?  Nope.  How about selling it for $170,000?  Still no.  How about if she sells it for just enough to pay what she owes on the mortgage?  Still no buyers.  How about if she sells it for $150,000; she ends up with no house and a debt of $10,000?  For most people in Michelle’s situation in 2008 the answer was still no.  Why?  Because Mr. Finance Company Guy had made the same deal with lots of people that he made with Michelle and they were all in the situation of being unable to pay their mortgages and were trying desperately to sell their houses for less than they paid and less than they owed—so the price of houses was collapsing.”

Parallel #1:  Anyone with a university degree who is unemployed or underemployed and faced with a student loan knows a bit about how Michelle’s situation must feel.  Owning a house, getting a degree--they were both supposed to be no-brainer guarantees of future prosperity but the implied promises have been reneged upon.

To be continued . . .

Jessica Mauboy heard it through the grapevine.

“Derivatives”: When Wall Street Went Postmodern!

Ever since Michael Moore’s 2009 film,  Capitalism, a Love Story, in which Moore stood outside office buildings on Wall Street asking “Can you explain to me what a derivative is?”  the question has stuck in the back of my mind.  What is a derivative?

The fall of the Berlin Wall in 1989 was the end of Communism; 2008 with the biggest financial institutions in the world on the verge of collapse was the end of Capitalism.  In 2008, the world’s leading capitalists—bankers, executives, CEOs, stock-market gurus—became nouveau socialists accepting hundreds of billions of dollars in government bailouts.  (Welfare is so much easier to accept when it isn’t being wasted on poor people like homeless vets and single mothers in need of daycare.) 

But what caused the immanent financial collapse?  Subprime mortgages (poor people again, screwing up the system buying houses they can’t afford) and “derivatives.”  That question again, sounding like a bad joke:  what’s a derivative?  Since they just about caused the apocalypse in 2008, you’d think that by now we would all know exactly what they are.

I had heard that Wall Street financial companies had hired small armies of science geeks and they in turn created derivatives which were super complicated mathematical formulas, logarithms, which no-one understood (other than, I assume, the wizards who created them), but were sold all over the place and created enormous profits for the lucky few who could afford to buy them.  From these tidbits of information I imagined derivatives to be something like a chemical formula which could reduce the effects of ageing, or maybe a computer code which produced the coolest video game ever.

However, reading Tony Crilly’s Mathematics (love this book; it’s sort of a history of mathematics for dummies like me), I discovered that “derivatives” are part of that form of mathematics called “the Calculus.”  The Calculus was developed simultaneously and independently of one another by Gottfried Leibniz and Isaac Newton.  Newton used his newly invented mathematics to explain (quite accurately as we now know) the planets oblong orbit around the sun.  (Crilly is insistent  that it’s always referred to as “the Calculus.”  I actually studied “the Calculus” in high school.  The only thing I remember about it is that we called it “calculus.”)

“Derivatives,” as Crilly explains, are part of that branch of the Calculus called “Differential Calculus.”

“The central purpose of Differential Calculus is to measure the rate of change—how fast or slow change occurs, and this is known as the ‘derivative’” (Crilly 77).  

Crilly eventually gives the example of Black and Scholes who used Differential Calculus “to try to predict stock prices” (Crilly 84).

In short, “derivatives” are mathematical calculations which attempt to predict how prices are going to move on the stock market.  So now we know—or do we?  Even with a scientific definition in hand, I found it hard to imagine that this is what the financial leaders on Wall Street were doing—trading tips with each other like old-fashion bookies and gamblers.  “Hey Bud, I got a hot tip for the seventh race at the Belmont this afternoon!”  Were these guys really paying each other millions and even billions of dollars for the equivalent of a tip that Son of Samantha was going to win the seventh race at Belmont this afternoon based on a calculation using Differential Calculus?

Then I found out what “derivatives” really are.  This week in fact.  What I should have realized is that Wall Street  shysters were doing exactly the same thing as postmodern academics, using a scientific term which connotes something complex, highly technical, and esoteric but which also has an ordinary, accessible meaning in common language.  The gambit is to endlessly obfuscate, never letting slip in what sense the word is being used, creating the illusion that what is being done is far beyond the comprehension of the average human brain and impossible, therefore unnecessary, to explain in straightforward, accessible, transparent language. (For further discussion of this phenomenon see The Postmodern Hoax and How We Train University Students to Write Poorly.)

A derivative is simply something that comes from something else:  orange juice is derived from oranges, maple syrup is derived from the sap of the maple tree, saying “bless you” when someone sneezes is derived from the medieval belief that the devil can enter your body when your orifices are open, and the word “derive” derives from the Latin derivus (meaning down stream). Ironically “derivative” as the term is used in financial markets carries some of the same meaning as it does in literary studies.  Describing a literary or artistic work as “derivative” is generally an insult, meaning that it is an imitation of someone else's style lacking the substance, aura and originality of the source. 

In the financial markets derivatives come in many forms and they have names like “options,” “swaps,” “futures,” “forwards,” warrants,” “LEAPS,”  “baskets” and “swaptions.”  What all these “financial instruments” (as they are called) have in common is that the profit or loss they produce is “derived” from the stock market.  Or, in the literary sense of the term, if your derivative imitates what happens on the stock market you make money, if it doesn’t you lose.  The horse race analogy turns out to be pretty apt.  If your choice of Son of Samantha in the seventh “imitates” what actually happens in the race you will “derive” a profit from the result.  When you purchase a derivative, you are not actually buying a stock or investing in a company, you are not buying or investing in anything, just as when you bet on a horse race you are not buying a horse or a piece of a horse or anything else.  Ultimately the derivative is the equivalent of putting you money on red at the roulette table.  Your profit or lose will be derived from whether or not your choice imitates what the little ball spinning around the roulette wheel does.

Are you still there?  Perfectly justifiable that you started to get a bit bored about two paragraphs back.  You’ve already gotten the idea:  Wall Street billionaires and their middle-management millionaires aren’t investing, or building or growing anything; they are just betting on what’s going to happen on the stock market, the same way you and I might bet on a horse race or football game or buy a lottery ticket.  So what.  Before apathy sets in, consider this:  they are doing it with your money!

If you have a bank account, a pension fund , a loan payment of any kind, your money is invested in derivatives. If you are affected by currency rates, interest rates, the price of food or gas or clothing; then you are affected by the derivatives market.  The problem isn’t that financial institutions are gambling.  In fact, it’s not really gambling for them, because they are using your money. Yes, they are betting your money on Son of Samantha at the track and Number 23 on the roulette wheel, but the financiers on Wall Street and global investment bankers are not that worried about the outcomes . . . because it’s your money and they get paid for betting it no matter what the outcomes.  In addition to any profit they might make themselves, they can charge fees, commissions, and administrative expenses, skimming from any pot of money they touch while accepting salaries, bonuses, and tax exemptions, deferrals and rebates.  In short, yes they are gambling, but they also own the race track and the casino.  

However, unlike race tracks and casinos, the derivatives market is unregulated.  It has been seven years since derivatives nearly collapsed global financial markets.  People lost houses and jobs and pensions, but no-one has ever been charged with a crime.  You can’t be accused of breaking the law when there are no laws.  

How much money are we talking about?  This is when we move beyond any notion of reality and into the realm of fantasy and the fantastic.  No-one knows exactly how much money there is in derivatives right now because . . .  (wait for it)  . . . . derivative markets are unregulated.  The current estimates run between 710 trillion and 1.2 quadrillion US dollars.  

(see "The Size of the Derivatives Bubble").  

How much is 1.2 quadrillion USD?  Think "a lot" then add some more zeros.  To get a handle on how much money we are talking about, let’s use the conservative estimate of 710 trillion.  Now consider:  the GDP (Gross Domestic Product, the value of all goods and services in one year) of the USA last year was 17 trillion dollars.  In other words the derivatives market is estimated to be more than 40 times larger than the US economy.   The total US debt is around 18 trillion dollars.  The total amount of US currency in circulation 1.39 trillion.  

Does anyone else find it funny that the US owes about 15 times as much of its own currency as actually exists?  Or that there are 700 times more American dollars in the derivatives market than actually exist in the world.  This returns us to the question of “what is money” discussed in “When Should You Repay Your Student Loan?”  Liquidity has become so rapid and massive that printed money can’t keep up.  Postmodern money is at least twice removed from reality—beyond paper and material value.  Detached from reality, economy has become little more than the big boys moving big numbers about, but in this context what does “we can’t afford it” mean?

Jessica Mauboy heard it through the grapevine.