Thursday, July 30, 2009

Why Wall Street Greed is connected to education matters

Here's a concern for me: what's education worth? Why does it matter? Who cares about funding education and why? Education obviously has pragmatic purposes (learning the basics like spelling, arithmetic, etc.). That goes for earning a 4-year degree, too. Pragmatism isn't necessarily bad when it comes to education policy.

But Wall Street has cast a dark shadow over education in this country. In many ways, it seems that the aim of education has become tied up with only making money. The desire to make money isn't necessarily bad. But what happens to a culture when the financial industry rules above all else?

Before the financial crisis many students who started at the Ivies had one thing in mind - making it to Wall Street and making it big. Everyone wanted to be in finance. I have a hunch that that certainly wasn't out of a true passion to work 80 hours a week in stocks and bonds. Obviously that drive has changed - that's a good thing. Young adults are rethinking their options and looking into other industries. When it comes to the way education matters, it's painful to learn that Wall Street rewarded those who were not entrepreneurial and were not interested in growing companies for the right reasons (to create solid products, develop strong relationships). Instead, they were driven by greed. Some may accuse me of simplifying the aims. Granted, it's a complicated story, and even good writers like Michael Lewis have a hard time untangling the details . But from this angle, it seems clear as day. There is validity in those who can analyze from the outside - that's an example of why education matters and why the financial industry ought to be regulated to some degree.

There's another problematic piece to this whole story of greed and economics. Obama has a mission to improve things, especially education. As I already said, that's admirable. But take a look at those who are closest to him, Larry Summers. It seems Summers has a questionable history when it comes to finance - take Harvard as an example. The school last year had a $36.9 billion endowment (yes, that's correct. I didn't make an error in the numerical evidence). Keep in mind, in 1990 its endowment was at a healthy $4.8 billion. The financial crisis hit its guilded halls and in the first four months of the fiscal year of 2008, Harvard lost a staggering $8 billion. To those who are aware of the endowment numbers for other Ivies, that loss is mundane and shocking. For example Columbia's endowment is around $7 billion, and Brown - my alma mater as a Ph.D. student - in Ivy-circles is known for being the poorest Ivy of them all. Its coffers are at roughly $2 billion. (Brown struggles to keep their graduate programs afloat and sadly many people who have gone there have paid the price, and I don't mean in terms of dollars. That story is to come later).

On top of that, when Summers left the school , the man made millions speaking to companies that later collapsed or needed bailout money from the government. The name Harvard is so powerful in academic and financial circles that any other reputable school's value shrinks by comparison (I'm not suggesting that that is valid or necessarily true). But will Harvard's emblematic prowess disappear with the age of excessive deregulation that defined the post 9/11 world? There are murmurings in the lovely, ueber-intellectual streets of Cambridge, nervous chatter can be heard around Harvard Square and in popular watering holes like Grendel's Den, that Summers drove the university into the ground. He did so by making poor and risky investment decisions, or so many people suggest. One thing is certain, and as VF's article illustrates, Harvard is facing some hard times.

But the U.S. is facing even harder times, and perhaps this economic downturn will result in new analysis and positive change for educational institutions. This moment could also us enable us become better guardians and attend to our educational priorities. It just might allow us to get back to the basics, and that would mean re-emphasiing good, well-rounded education, over a putatively utiltarian approach that equals just getting some degree you can "use" in order to make, for example, oodles of money on Wall Street. All the while your personal life remains distant from your existenial experiences or even worse it is just a continual storm of chaos. After al, if those who earned practical degress (MBAs, business degrees, finance, etc) can't get jobs to pay of their student loans, maybe the sciences - soft and hard - as well as the liberal arts and humanities will benefit.

Crises don't have to lead to future crises. If we seize this moment, reasseess our values about money and finance and Wall Street, and have people educated in stronger, better ways, this society could very well flourish.


Morgan said...

Might Wall Street's shadow be the same sort as WWII's, as described by Tony Judt in "Postwar"? I thought of this at first a little pithily, based on the sudden image in your writing. But the more I think about it, the more apt the comparison seemed, insofar as both shadows have shaped or will shape larger cultural movements of backlash, separation, moving-on, and eventual re-appraisal. Education is receiving attention now, but one wonders how it's going to maintain the spotlight amidst all the other re-evaluating that is happening. That said, you make a good point that education and career values or ambitions (to oversimplify) are related and one should address each through the other.

C. Cryn Johannsen said...

That's an interesting point about WWII, and it sounds like there are similarities between the two things (in terms of policy and approach) from what you describe.

I do agree with your concern that the attention paid to education will fade. The repercussions of that, in my mind, would have far reaching and destructive results.