LVTFan's Blog

Working, Begging or Stealing; Workers, Beggars or Thieves -- and putting one's family first

How far is the saying true that "Every one lives either by working, or by begging, or by stealing."' Observe: This is primarily a question merely of fact, and not of right or wrong. There may be (1) Right Work and Wrong Work; (2) Begging that is justifiable, and Begging that is unjustifiable; (3) Stealing which is pardonable, and stealing which is unpardonable. In simply placing, therefore, any class of persons under one or another of these three heads, I am not necessarily either praising or blaming the individual members of that class. Again, of two paid workers one may be greatly underpaid, and the other as greatly overpaid. But neither is this consideration embraced in the question before us. We have not to do, tonight, with the merits of any individual, nor with the value or valuelessness of any kind of work, nor yet with the equitable assignment in any particular case of the reward of work. Let us, in the first place, classify the members of English society by dividing them simply into — I. Workers, and II. NonWorkers. I. Workers, e.g.: — Manual labourers, skilled and unskilled; domestic servants; soldiers; sailors; farmers; clerks and overseers; professional men; retail and wholesale dealers; merchants and manufacturers; bankers (sleeping partners are excepted); teachers and preachers; artists, authors, and editors; high officers and Ministers of State; the Sovereign; housewives. All these are doing work, and are receiving pay in coin or kind in return for their work. Some of them may be doing unpaid (honorary) work as well as paid work; and others may be getting interest (on a capital for which they never worked) in addition to those wages of superintendence which are strictly the reward of a merchant's or manufacturer's work. Again, some of them may be working in appointed places for definite salaries, while others may be working, so to speak, "on their own hook," or, in more elegant language, "paddling their own canoe." By what mark, then, shall we distinguish the type of man who lives by his work? What is his definition? He is the man who lives upon pay, in coin or kind, which is given him in return for his personal services. And only in proportion as his means of living are derived from such pay, or from his personal labour on the soil, can he properly be said to "live by working.'' We have next to consider who are the (II.) Non-Workers of Society, and whether they may all, without exception, be properly included in the two classes, "Beggars," and "Stealers" — whether, in fact, this two-fold division of them is an exhaustive one. Now, Beggars and Thieves are alike in these respects, that they, both of them, consume without producing, enjoy without labouring, are served but render no service to others, receive but give not in return, are clever in subtraction, but failures in addition. Wherein, then, do they differ from each other? They differ, for the purposes of the present argument, only in the different dispositions of their respective victims towards them. The victim of the Beggar is a willing victim; he is influenced by custom, or by compassion for weakness, pain, or privation. On the other hand, the victim of the Thief is an unwilling victim. It may be that he is unconscious of the spoliation that is perpetrated upon him.

John Ruskin on National Debt

National Debt. — "A national debt, like any other, may be honestly incurred in case of need, and honestly paid in due time. But if a man should be ashamed to borrow, much more should a people; and if a father holds it his honour to provide for his children, and would be ashamed to borrow from them, and leave, with his blessing, his note of hand, for his grandchildren to pay, much more should a nation be ashamed to borrow, in any case, or in any manner; and if it borrow at all, it is at least in honour bound to borrow from living men, and not indebt itself to its own unborn brats. If it can't provide for them, at least let it not send their cradles to the pawnbroker, and pick the pockets of their first breeches. A national debt, then, is a foul disgrace at the best. But it is, as now constituted, also a foul crime. National debts paying interest are simply the purchase, by the rich, of power to tax the poor." — John Ruskin, quoted in The Christian Socialist (London), December, 1883.

Shiller: Too Many Graduating Seniors Go Into Finance

One might be led to ask, how many is enough, and how we might go about encouraging our best and brightest into careers that serve others instead of rent-seeking.  Two generations ago, many became doctors, engineers and teachers.  

• What changes in public policy will reduce the returns now funneled so generously to the rent-seekers, leaving more for the folks who labor in the productive sectors of the economy?  
• Why do we pay so little attention to rent-seeking?  
• Why is rent-seeking taught to our MBAs, but the impacts of rent-seeking not taught to our liberal arts, social sciences, political science, public policy students?   
• D'ya think that the rent-seekers might really really like it this way??

Shiller: Too Many Graduating Seniors Go Into Finance

http://www.moneynews.com/Economy/Shiller-financial-field-speculative/2013/09/25/id/527558

Too many of the our brightest people may be choosing careers in finance, undertaking economically and socially useless — and even harmful — activities, Robert Shiller, a Yale University economics professor, writes in an article for Project Syndicate.

A survey of elite U.S. universities showed that 25 percent of Harvard graduating seniors, 24 percent of Yale graduating seniors and 46 percent of Princeton graduating seniors were going into financial services in 2006, notes Shiller, co-creator of the Case-Shiller home price index. 

While those proportions have fallen more recently, he explains that might only be a temporary effect of the financial crisis.

And more are going into speculative fields like investment banking rather than traditional finance such as lending, he says, citing a study by Thomas Philippon of the Stern School of Business, New York University and Ariell Reshef of the University of Virginia. 

We need some traders and speculators, Shiller concedes, as they provide some useful service — sorting through information about businesses and trying to judge their real worth.

"But these people's activities also impose costs on the rest of us," he explains. Much of their speculation and deal making is "pure rent-seeking." 

"In other words, it is wasteful activity that achieves nothing more than enabling the collection of rents on items that might otherwise be free."

Those working in speculative finance fields are like a feudal lord installing a chain across a river to charge fees on passing boats, he argues. Making no improvements to the river, the lord does nothing productive and helps no one but himself. Few people will use the river if enough lords put chains across it to collect fees. 

Those working in speculative fields, he says, "skim the best business deals, creating a 'negative externality' on those who are not party to them."

For example, they can reject bad assets, such as subprime mortgage securities, offloading them to less knowledgeable investors. 

The repeal of the Glass-Steagall Act, which blocked commercial banks from investment banking, allowed bankers to act more and more like those feudal lords collecting fees.

"In fact, the main advantages of the original Glass-Steagall Act," he says, "may have been more sociological than technical, changing the business culture and environment in subtle ways. By keeping the deal-making business separate, banks may have focused more on their traditional core business."

A paper by economists at Columbia University and Princeton published on the Social Science Research Network website showed that over-the-counter (OTC) traders allowed informed dealers to extract excessive rents and to undermine organized exchanges by "cream-skimming" the best deals. 

"The informational rents in OTC markets in turn attract too much talent to the financial industry, which would be more efficiently deployed as real-sector entrepreneurs," the paper asserts.

Plus, OTC dealers' rents tend to increase "as there are more informed dealers, because the greater cream-skimming by dealers worsens the terms entrepreneurs can get for their assets on the organized exchange, and therefore their bargaining power on OTC markets."

The Chicago School

This appears in the current issue of the University of Chicago Magazine:

UChicago perceptions

Recently at a coffee shop near my home, a scruffy young barista looked at the University of Chicago T-shirt I was wearing. His face soured and he disdainfully said, “I don’t know about the University, just their economics department.” It’s a reaction the shirt has been getting more frequently the last few years. He was more or less implicating me by association with creating the economic crisis many of us are still slowly clawing our way out of. I felt stung. I’m a social worker, and not only do my politics not agree with that of the Chicago school’s libertarian bent, but in the wake of the crisis, with the state and federal budgets that pay for my work being slashed, I certainly haven’t reaped any financial rewards from my association with the University or its economics department.

Now, sure, maybe Surly Barista Guy is a die-hard radical leftist and feels the Original Sin of Chicago’s having propagated free market neoliberalism across the globe is so great that all the good done by other alums in the many fields of study and practice the University produces is rendered irrelevant. Maybe, like a lot of millennials, he just feels salty because he’s been stuck doing barista jobs since the recession hit and can barely cover his student debt, let alone save for retirement or buy a home. Maybe he’s upset that the Chicago school he’s read about advanced theories and policies that would ultimately make a very small number of people extraordinarily rich through financial business practices of at least questionable ethics if not legality while everyone else was left struggling to keep their homes. Perhaps he’s also aware that former Treasury secretary Hank Paulson was hired by—the University of Chicago. Paulson’s migration to Chicago remains a direct link in many minds between the free market economic policies that emanate from the University and the global financial meltdown that nearly resulted from them.

When I applied to Chicago, the school’s reputation was for its Great Books curriculum and producing top-notch teachers, not global finance Masters of the Universe. Over the 16 years since I graduated, I’ve been able to watch how reactions have shifted when I tell people where I went to school. Whereas the U of C used to be considered closer in character to schools like Reed or Saint John’s Colleges, it’s now more associated with places like the University of Pennsylvania’s Wharton School. People are surprised to find that I work directly with poor communities and have used my Chicago education to serve the public good.

The University has never addressed its role in forming and advancing the economic policies that destroyed trillions of dollars in wealth during the financial crisis and created epic human misery across multiple continents. It has heavily publicized and promoted its many Nobel Prize for Economics winners, driving the public’s perception of Chicago as a one-dimensional institution. I doubt I’m the only alum who would appreciate the University making a statement addressing the economics department’s role in creating the crisis and articulating a plan for how its policies can benefit the greater good by expanding opportunity and prosperity for all. I also doubt that I’m the only alum who would support the University shifting its focus back to producing graduates who want to live the “life of the mind” rather than to conquer the global marketplace. We would appreciate it, frankly, because we’re getting tired of the guilt by association thing.

Jeff Deeney, AB’97
Philadelphia

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