The Morality of Compensation

Sunday night I spent a few hours feeding my continued fascination with the financial crisis, finally getting around to reading things like Matt Taibbi’s piece on Goldman Sachs in Rolling Stone, as well as Michael Lewis’s piece on AIG in Vanity Fair, a trail that finally sent me to Matt Taibbi’s blog at which is, itself, full of other posts hacking away at Goldman Sachs (1, 2, 3, 4, etc.). It’s all enough to make one quite shrill.

Given that I’ve spent the last 11 years of my life at Harvard watching as many of my classmates, then later students[1. Luckily not too many of those.], then even later students, advisees and friends from Eliot House head out the door to places like GS, I think that I’m most sensitive to the “best and brightest” argument that — thank God — people like Matt Taibbi do an excellent job of refuting. I knew a lot of very smart people in college, and have met many more at Harvard since, and after graduating while many are doing very well for themselves most are doing something that has a shred of social utility to it. Which, in my mind, distinguishes them from many highly-paid bankers.

However, the question that always nags in the back of my mind when thinking about the financial crisis and certainly compensation at the firms whose greed pushed us to the edge of the abyss is how can they think that they deserve that much money? You graduated college several years ago, you’re pushing money from pile A to pile B, and somehow you’re worth 10, 100 or even 1000 times as much in salaried compensation as a tenured faculty member at one of the world’s top universities[2. Forgive my example. I'm becoming intimately familiar with faculty salaries during the initial stages of my job search.]? Or 50, 500 or 5000 times as much as a schoolteacher/firefighter/<insert low paying, high social utility job here>? It just doesn’t make any sense. At least not to me. After all, I knew a lot of these people. They seemed like decent, normal Harvard students while they resided in Cambridge. Yet somehow they got to Wall Street and became gods among men, worthy or however many zeros they could squeeze out of the financial system.

The usual argument offered as an answer is some variation on “the market set my salary, so I must have earned it, and I must deserve it.” To me this seems like an interesting dodge, and perhaps akin morally to the “I’m not a racist” defense we see coming out the mouths of people who are supporting — or at least not actively resisting — systems that are themselves structurally racist, and systems from which these people have benefited greatly. This connection occurred to me after reading Malcolm Gladwell’s latest piece in the New Yorker. In the article — which I’ll admit I found a bit thin, if convincing — Gladwell summarizes recent criticism of Atticus Finch, the lead character in Harper Lee’s To Kill a Mockingbird which casts Atticus’ defense of Tom Robinson in a different, less-flattering light. Discussing Jim Folsom, Governor of Alabama from 1947 to 1951, who Malcolm likens to Atticus Finch in the piece, he writes:

Folsom was the same way. He knew the frailties of his fellow-Alabamians when it came to race. But he could not grasp that those frailties were more than personal—that racism had a structural dimension. After he was elected governor a second time, in 1955, Folsom organized the first inaugural ball for blacks in Alabama’s history. That’s a very nice gesture. Yet it doesn’t undermine segregation to give Negroes their own party. It makes it more palatable.

I think that you can make a similar argument about compensation, that there are powerful structural elements within our society that are responsible for the fact that an oil speculator receives a 100 million dollar bonus (while producing no tangible benefit to society), while many Americans are struggling through an economic downturn and watching their wages stagnate and expenses rise.

It seems to me that, like racism, the growing wealth gap in this country is at heart a moral issue that will require some form of moral calculus to truly address. You can’t really end racism without the class that is benefiting from it being willing — usually by being shamed — to put down the privileges that result. And you probably won’t really effectively end the compensation gap, as well as the idea that expensively-educated college graduates deserve to be making fortunes on Wall Street without contributing anything to society, without some of those same people standing up and saying: “I’m really not worth this much. I don’t deserve these millions of dollars. My job isn’t that important. I don’t make a product, and I don’t provide a service. I want to make a good living, like everyone else, but I don’t deserve the yachts, the multi-million dollar homes, the fancy vacations, a car and a driver. Maybe nobody does, but definitely not me. It’s just not fair.” My guess is, as is my (poor) understanding of the dynamics of racial change in American, the fire will have to start down below, but there will have be be kindling on top.

Returning to Harvard, in my darker moments I wonder if we as an institution aren’t more responsible for what is happening than we realize. We have attempted to teach “moral reasoning”, but our graduates seem to find ways to reason, morally, that they are so much better than the people that surround them and should be given permission to extract massive amounts of wealth even if that transfer is predicated on the suffering and sacrifice of others. So maybe we have failed to really teach our students moral reasoning. And if we have failed, I fear we have produced too many students that are like Matt Taibbi’s Goldman Sachs in minature: “great vampire squids wrapped around the face of humanity, relentlessly jamming their blood funnel into anything that smells like money.”

IJ Notes

Up to page 508/endnote 208 or so. Just a few quick notes.

  1. My blog is (currently) the top Google page if you search anticonfluentialism. It’s nice to be up there at the top of at least one one word (or pseudo-word) search.
  2. I keep starring things in Google Reader to come back to at the various other IJ blogs I’m reading. Like this post at which talks about expectation creation and fulfillment in video games. Maybe I starred this because I instinctively flag almost anything and everything negative about video games which I think are ridiculous wastes of time that rival any other time-wasting activity (TV, blogging, staring vacantly into space, etc.). Or this post over at Infinite Detox where the author discusses our habit of over-personalizing our entertainment options[1. Actually I think that Wallace was a bit ahead of the curve when discussing the progression and disintegration of mass media, but that's a subject for a future, non-list-based Infinite Jest post.] and lists a number of “modest proposals for Infinite Jest-inspired solutions for life in our present-day techno-dystopia”. Good stuff, and worth a read.
  3. Finally, as a further progress report, I am still very much enjoying the book, although my specific references to it on this blog have perhaps diminished. I installed the kind-of neat Facebook Infinite Summer application, which is motivating me to read more regularly and in smaller chunks so that I can update my page counter every day. Whee!

When “less is more…”

“…and almost nothing is the best.” While Garrison Keillor was describing organists in this clip from a wonderful edition of A Prairie Home Companion (February 3, 2001)[1. Since I'm still probably 15 years too young to listen to PHC — so 23 years too young in 2001 — let me explain myself. I used to have a Sunday routine that involved attending Memorial Church, followed by brunch at Lowell House and then racing up to my room to catch the 2PM rebroadcast of PHC on our local Boston-area NPR affiliate. This routine, which I entered into during my junior year of college, lasted at least a few weeks if I recall correctly. PHC is a beautiful show but part of me feels comfortable waiting until I get older to listen to it regularly.], the idea of making the best from less is applicable outside of church music.

Indeed, Suzanna and I spent a good part of last night talking about the strange idea of a profession best suited to someone who does not enjoy one of its principal components. Of course that seems strange. Usually our ideal candidates for any job are those who are both capable and excited about doing it! Where would we want to make an exception to this usual standard?

The job we were discussing is any one, particularly at the academy, where a component of the job description involves disciplining students. During the summer we’ve been employed as co-Assistant Deans of the Harvard Summer School. While there are non-disciplinary components of the job — holding study breaks; managing a staff of proctors, Harvard undergraduates who handle most of the student interaction; coordinating move-in and move-out — a portion of it involves ensuring that students have safe and productive summers and handling students that might behave in ways that would threaten these goals. We have a set of rules and expectations in place which we attempt to communicate clearly to students, but of course there are those that violate them, either negligently or willfully, and need to receive some sort of censure for their actions.

Here’s the thing though: both my wife and I positively hate handing out punishments. Don’t get me wrong: we are definitely capable of doing so. But in our former and future role as Resident Tutors at Eliot House we have occasionally played Rock-Paper-Scissors to decide who was going to go and quiet a loud or unregistered party, with the loser headed out the door. Neither of us is particularly withdrawing, so shyness isn’t an issue. If I wanted to put it in the best light I would say that we are hurt when our students disappoint us, given that normally find many of them to be upstanding, honest, etc., all of the qualities that we all seem all to willing to surrender when caught in a tough spot.

Far from interfering with our duties as tutors, a distaste for punishment tends to force us to try and reduce the degree to which discipline is needed. I usually tell my students when I meet them for our first “rules and expectations” meeting in the fall: “You know that there are corners you can back me into where I have no choice but to fight my way out by becoming authoritarian not-nice disciplinary man. But I don’t want to be that person, and you don’t want me to be either, so let’s find a way to avoid finding ourselves in those straights.” And I find that this has, so far, proved strangely effective. And when deterrence doesn’t work, my evident distaste at having to “go all tutor on them” sometimes proves as a future deterrent after students cross the line the first time. I’m pretty sure that the most traumatic thing about having me break up your party is how embarrassed I’m going to be, as I hold open the door and your guests file out into the night. In addition, I believe that not wanting to discipline students encourages authority figures to work in others way to try and create positive environments, since those are less likely to produce disciplinary problems.

Given how unpleasant discipline seems to me, I was sort of surprised to find that some of our colleagues this summer really seem to relish it[2. You'd think that they'd all be working for the CIA by now. OK, bad joke.]. To make things stranger, discipline at the Summer School is really pretty small potatoes in terms of what sort of measures are taken. Usually it’s just students (usually high-school age students) doing dumb and dangerous things that typically don’t really produce many victims. So when we kick out the idiot who got caught with booze in one of the dorms nobody feels “good” about it — I mean, it’s not like we’re locking up Tony Soprano here, guys.

After observing our discipline-happy colleagues we’ve observed that enjoying the process of meting out discipline seems to produce a set of problems:

  • Your colleagues, assuming they are decent people, will find the pleasure you take in the displeasure of others strange and distasteful.
  • When you enjoy the “big stick”, you’re probably more likely to reach for it when it’s not needed, or when something else would work better.
  • Worse still, when you really enjoy the “big stick” you even start to maybe steer kids in that direction:
    • You enforce rules designed to protect the community even when a particular instance of behavior violating them doesn’t meet that standard.
    • You extrapolate wildly from the smallest of infractions. “Hey, we caught them leaving the dorm after hours, but they were probably on their way to do drugs or kill someone!” “The student wasn’t just smoking in their room, they were willfully trying to burn down the dorm and kill everyone inside!”
    • When you do catch a student, you try and push them into lying when they’re already in trouble[3. To me this seems to border on entrapment.]. The lying, if they do it, you take extremely personally, meaning that you can escalate the whole situation, declare the student a “pathological liar” and reach for the “big stick”. (This can also work nicely with the extrapolation strategy. Once you have a “lying liar” on your hands, then they must be lying about everything! “I asked the student if they had ever done stolen a car, and they said no, but because they’re a pathological lying liar and can’t be trusted they probably mean that they’re out driving around town in one right now.”)
  • Lastly, you become extremely insensitive to any changes that might actually occur in the student after they are caught. Call it crocodile tears, call it an attempt to get out of the punishment, call it feeling sorry for themselves, whatever. Just don’t ever identify it as an authentic process of reckoning with their behavior that might prevent future rule-breaking, because this might prevent you from pulling out the “big stick”. The enjoyment of discipline and the desire to empathize and recognize change in others don’t seem particularly compatible.

Given these issues, it seems clear that the best way to hire a person to oversee discipline is to find someone who doesn’t like it. Of course, this produces the problem that if the person actually ends up having to do too much disciplining they are either going to hate their job or learn to enjoy it, at which point we’re back to our problem. It seems like a reasonable solution is to ensure that jobs that have an inherent disciplinary component — whether they be teaching, tutoring, Deaning, etc. — contain a heavy dose of more constructive aspects. This would seem to both help reduce the impact of disciplining that is necessary on the totality of the job while at the same time hopefully providing tools so that the holders can further reduce the amount of discipline they have to do.

All of this said, Suzanna and I were proud to come to our bi-weekly disciplinary meetings with little to nothing to say each week. At first we thought that certain colleagues were just jealous, but now we know that at least some of them felt sorry for us for missing all of the “fun”. Those people need help. Seriously.

Annals of Bad Headline Writing

Headline: New Poll: Bring Down Debt, Don’t Spend More.

Key Graf:

Fifty-six percent of respondents said that they were not willing to pay more in taxes in order to reduce the deficit, and nearly as many said they were not willing for the government to provide fewer services in areas such as health care, education and defense spending.

Look, there’s a way to bring down the debt without spending more, it’s called spending less. But people don’t want that either. So this is the fundamental tension here, completely missing from the headline.

How about: New Poll: Bring Down Debt, Don’t Spend Less.

Is Medicine More Family-Friendly than Academia?

This article — which I picked up off of a friend’s feed — would make you think so. It reports on a study comparing a set of “elite white-collar fields” with respect to “which jobs offer the best chance at balancing work and family life”, and while it spends most of its time dissing finance and consulting as being family-unfriendly, it includes this summary of the study’s findings:

One set of statistics neatly summarizes the findings. After surveying Harvard College alumni 15 years after graduation, Ms. Goldin and Mr. Katz estimated the average financial penalty for someone who had taken a year and a half off and then returned to work. In medicine, that person earned 16 percent less than a similar doctor who had not taken time off. Among people with no graduate degree, the gap was 25 percent. For both lawyers and Ph.D.’s, it was about 29 percent.

Now, while these statistics are certainly interesting, there’s a serious problem with their analysis: while you might be able to argue that most (not all) students that obtain a M.D. become doctors, that most (not all) students that obtain a J.D. become lawyers, this is definitely not true of Ph.D.’s. At least a significant percentage of students earning Ph.D.’s leave academia. I found various references online, with this article the most germane to my own chosen field.

The above graph shows that at its peak my field was sending roughly 60% of people into academia. This is probably higher than many other fields, and has fallen sharply since then to less than a majority in 2004-2005. While the graph is missing a few years, I’m guessing that the downward trend has continued.

Even just arguing from first principles it’s clear that academia cannot absorb most of its newly-minted Ph.D.’s. This is due to the nature of research advising which is, in it’s own way, a two-level pyramid scheme. Assume an academic serves, conservatively, at the median, 20 years as a professor. Now assume, again conservatively, that they graduate on average one student per year. Now clearly, assuming no growth in the number of tenured positions, this means that by the time they retire the professor in question has trained 20 replacements for one position. Clearly this is unsustainable.

Obviously my analysis is simplistic and leaves out two significant ways of absorbing Ph.D.’s into academia: growth in the number of tenured (or otherwise) positions, and positions at teaching or liberal arts colleges that do not grant Ph.D.’s and hence where faculty do not supervise graduate students. I have always been curious about finding a more well-done analysis of the changing career paths of (particularly Computer Science) Ph.D.’s, but at least the CW around these parts and the people I talk to is that as the growth in CS slows the number of available academic positions will fall, competition will become more fierce, post-doctoral work will become more critical to obtaining employment as a tenure-track research academic. My feeling is that other fields — chemistry, biology, many of the humanities — are already farther down this curve, but our progression down this path should probably auger large-scale changes in the way we teach graduate students, as the paucity of academic positions erodes the apprentice-like nature of graduate school further and further.

Returning to my critique of the NYTimes article, I guess my main point was that it’s unclear whether tracking Ph.D.’s really amounts to a verdict on academia, given that so many are likely to have to go and do other things (industry, probably) post-graduation. I was interested to read a discussion of the many freedoms and structural advantages of a career in medicine, but I would love to see a more accurate comparison with the equivalent benefits the actual academic profession.