3,800 people lose jobs- CEO still makes millions

In the Jewish faith there are “mitzvahs“- commandments or “good deeds”- and one of the most respected is that of giving people a job. Yep, the Jewish faith says that full employment is great in God’s eyes.

The idea that firing people wholesale is OK- without suffering any consequences- as an acceptable business practice has to stop. If the company is private, and not traded on the stock exchanges, you are free to do what you want- but, the moment you are playing games with other people’s money- there has to be some code of conduct that stops shifting the pain of bad leadership to the troops. You are the CEO- you fire a bunch of people, your pay can’t exceed that of the average pay of the people you fire. End of story.

Oh yes, and shareholders get paid before you do, so, if you are losing money- you don’t make it- just like the small businesses in this country. Kiss your stock and options goodbye if you decide to toss a bunch of people off onto the public’s shoulders with unemployment.

Wells Fargo bank- already bailed out by us, is playing grim reaper to a whole division according to the Dayton Business Journal:

Wells said closing down Wells Fargo Financial will incur pre-tax charges of about $185 million, with $137 million, or 2 cents per share, hitting in the second quarter for employee-severance costs. The remaining charges are expected to be largely reflected in third-quarter results.

Cost savings from closing Wells Fargo Financial are expected to offset these charges in the first year and a half.

Of the 14,000 employees working at Wells Fargo Financial, about 2,800 positions will be cut in the next 60 days and another 1,000 positions will be eliminated in the next 12 months. The remainder of the employees are being reassigned to other Wells Fargo businesses. Wells employs more than 278,000 people.

The move will also create more empty storefronts in strip centers across the nation.

via Wells Fargo to close financial unit, lay off 3,800 – Dayton Business Journal.

And for the record, the Wells Fargo CEO:

Wells Fargo’s CEO, John Stumpf, received compensation worth $21.3 million for last year, according to materials filed with U.S. regulators on Wednesday.

The San Francisco-based bank, fourth-largest in the United States by assets, last year repaid the $25 billion it received from the Troubled Asset Relief Program.

via Pay czar questions Wells Fargo CEO’s compensation | Reuters.

Simple math: divide 21.3 million by 3,800 people- and you get $5,605 each. Throw in the $185 million in charges and divide out- and it’s $54,289 each. Considering that the CEO is paid to be brilliant and lead the company to growth and prosperity- maybe he should try living on a million a year until he figures things out- that’s over twice what the President of the United States makes. Or maybe, he should find another line of work.

After all- he kept his job, despite having to borrow from the government to keep his company going- at a time while he was dropping the hammer on many small businesses who were facing the problems he helped cause.

If employing people is a mitzvah- firing that many people should send you straight to hell. Of course, “Three of the negative commandment fall under the category of Yeihareig ve’al ya’avor, meaning one should [let himself] be killed rather than transgress the prohibition” according to Wikipedia and although I don’t agree that the three cited commandments should make you want to do hari-kari before committal. Firing employees like this in Japan in days of old, the CEO would fall on a sword first. I’m all for that in this case.

At least in a universe where accountability and responsibility are at the forefront.

It’s time we returned the values of accountability and responsibility to public office and to public companies.

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43 Responses

  1. jstults July 8, 2010 / 10:05 pm
    Jeff of Dayton, the fourth commenter on that economist snippet makes the point to “consider the base” when looking at the rates of change.  Here’s EU unemployment rates since 1985 and here’s US rates over the same time (sorry, I haven’t figured out how to put them on the same graph since they are from different data sources; hear that Google? fix it!).  He also mentions GDP growth (all on the same graph this time), though I’m not sure what conclusions you can draw from that mess of spaghetti.  The other guy mentions GDP per capita, but this is just the mean, and it’s usually the shape of the distribution that gets people all hot and bothered rather than the average.
  2. Robert Vigh July 9, 2010 / 12:14 am
    How is Wells Fargo a public company? Each individual chooses to buy a portion of that company and their share is their private property. Freddie Mac and Fannie Mae are more akin to public companies, as they are truly funded and backed by the tax collection efforts of the country.

    I am utterly confused how you think an openly traded company is now public. No one is forced, nor coerced to buy stock in this company. Every person that wants to disagree on principle is free to voice their opinion and sell their stocks to another willing buyer. I think you have twisted this topic into something very scary. That once a company chooses to offer ownership on the open market that somehow makes it public?

    You are looking for a CEO to blame and you are just simply incorrect. I disagree with your entire opening premise. That you would boldly divide others wealth by the # of people it could help is obscene. That they borrowed or were given Tarp funds as a basis of your argument is also not sound. The thought that a socialist action justifies every new socialist action is ignorant. It concedes the right of the individual, it ignores our natural rights to think in this manner.

    Jeff of Dayton…………..I love the USA, not the EU. I have no desire to immulate the EU. Your graph and attitude suggests that we should import the ideals of the EU. How about we import the ideals of Greece right along with the others. It seems to be working very well for IL and CA.

    This is your own propaganda of fear. Your own version of pointing fingers and blaming names. Freedom is so far removed from topics that it is often scary.

  3. David Esrati July 9, 2010 / 6:01 am

    @Robert Vigh- I know this is hard for you to follow- but, NO individual people no longer make their minds up to buy or sell stocks- and NO they don’t vote their shares, and NO they can’t get valid information about the net worth of the company.

    Most shares are no longer traded by individuals- they are in mutual funds, hedge funds, groups. These are then traded prolifically by “traders” who take a cut on every trade.

    Your vote is turned over by proxy. Financial statements never mean anything because books have become clouded and obscured by funny accounting- and secondary and tertiary notes – like Credit Default Swaps.

    But- you say you have the option to stay OUT of the market? WRONG AGAIN. The market holds you pension fund, if you have insurance (required if you have a home loan or a car)- your money is once again tied up in the market- because insurance companies are key players in the markets. Or, you have a savings account- the interest rate you are paid is dependent upon the gyrations of this casino.

    It’s all interconnected, and it’s not avoidable, nor is it plausible to live like it doesn’t exist.

    And of course, you could work for a company that’s publicly traded- and suffer the same kind of indignities of losing your job because the CEO wanted a $6000 shower curtain and a multi-million dollar office decoration job. There is ZERO accountability of these charlatans- and it has to stop.

    Very few of these companies are run by the founders- who actually staked the company. Steve Jobs at Apple, Bill Gates at Microsoft, or Bill Ford- the third or fourth generation of Ford to run his company. These people would be treated differently.

    Publicly traded companies get access to capital and special rules already that small privately held businesses do not. The same types of principles that you use to invest in a small company need to apply to the big ones. In other words- I wouldn’t ever let someone invest in my company for 12 seconds- why should a Fortune 100?

    I hope you understand the reasoning. I know it’s difficult for you to understand why we have traffic lights and stop signs too- but, there are rules to all games and the rules to the stock market need to be reevaluated.

    As someone said- if you sit down at a blackjack table in Vegas you know the rules and the odds- no one can say that about Wall Street anymore.

  4. jstults July 9, 2010 / 9:05 am
    Robert Vigh:

    I have no desire to emulate the EU. Your graph and attitude suggests that we should import the ideals of the EU.

    Exactly, our current recession puts us into the unemployment territory that lots of those EU countries have been bouncing around for the past 25 years.  None of them approached 4% unemployment over that time-period.  I think they’ve made some choices about the structure of their economies that will prevent them from ever reaching full employment, while our economy clearly can.

  5. Jesse July 9, 2010 / 10:15 am
    Good Lord!  Publicly traded companies are not the same as “public companies.”  David, who do you think owns the shares in the mutual funds?  How do the mutual funds get their money?  If it is true that no “normal” people own stock anymore, it seems that you think only giant institutional investors or very wealthy people own and control the stock.  If this were true, wouldn’t it make it more likely that those individuals would ensure that they gather good information and protect their massive assets?
     
    You then act like pension funds and the gulf between management and ownership are part of the unfettered free market, read this: http://mises.org/journals/scholar/Padilla7.pdf
     
    Also, if you “wouldn’t let people invest in your company for 12 seconds?”  How would you stop them from doing so?  Let me explain how stocks work.  You sell a stock to an individual.  That stock is no longer yours, it is theirs.  They can then sell that to whomever they want for whatever duration they want.  Why does it matter if you sell a share of your company to me and I sell it to Robert 12 seconds later?  You are not involved in my transaction with Robert.  You cannot stop it without limiting my rights to control my property…which seems to be your answer to everything.
  6. David Lauri July 9, 2010 / 10:37 am
    How is Wells Fargo a public company?
     
    Here’s how: Because Wells Fargo “has permission to offer its registered securities (stock, bonds, etc.) for sale to the general public, typically through a stock exchange,” it is by definition a public company. Bloomberg Business Week includes Wells Fargo (go type “Wells Fargo” in Business Week’s public company search page, and see for yourself). Even Wells Fargo itself admits to being a public company.
     
    Robert, you may like to declare that generally accepted usages of words such as “bribe” and “public company” are invalid, but convincing the majority of people who do not share your opinions that they should accept new definitions will be a tough job for you.
  7. Greg Hunter July 9, 2010 / 11:18 am
    How can posting this…..

    Here’s an interesting graph showing US vs EU member job losses in this recession:
    http://www.economist.com/blogs/freeexchange/2010/06/labour_markets_0

    Rate 3 Bozos….. I mean posting data from mises maybe but the economist….hmmm  Me thinks that people do not want to see data or the truth.  Now Jstults parses more data but like all of these stats there is always something lost in translation.  In other words I cannot figure out “who is doing better”  My contention is that Europe has “invested more wisely” than the US when it comes to public allocation of funds, especially Germany.  America has turned into a banana republic that happens to have the Dollar as a reserve currency.

  8. rob degenhart July 9, 2010 / 12:00 pm
    like o’l  Marky Mark Twain said ” figures don’t lie, but all liars figure”…I don’t trust anyone in banking beyond the teller.
  9. Greg Hunter July 9, 2010 / 12:21 pm
    Or as Mark Twain attributed to Benjamin Disraeli: “There are three kinds of lies: lies, damned lies, and statistics.”
  10. Robert Vigh July 9, 2010 / 12:24 pm
    David Lauri,

    By investment and definition standards a public company is any company whose shares are available to the public. Let me revise my contention: Each share is purchased by choice by individuals or people employed to act on the behalf of these individuals. Once held it is the individuals private property. These companies must publicly disclose financial statements and are traded publicly, but the use of public that DE uses is akin to the public school. That with a public school I have no choice but to pay my taxes and I am a part of the “public school” without choice.

    When it comes to Wells Fargo, I most certainly have a choice to participate or not. It is the use of public as applied to the school system that DE likes to employ as a means to limit and control other people’s property. This is the foundation for many of his arguments. I was hoping the nuance of my writing was clear on its own, hopefully this illuminates my meaning.

    @Jstults: Thank you for correcting my spelling. I remember thinking that looked more like destruction by fire than being a mimic.  

  11. Joe_mamma July 9, 2010 / 1:33 pm
     

     

    Kurt Jensen

    USLM Segment Planning

    937-865-6800 ext. 55831

    A couple of questions. 

     

    1.        So if a company like Apple loses money and lays off employees then is Steve Jobs subject to the same pay cap that a publicly traded company without a founder in place?  I think your answer is no on that…

    2.       If a company is profitable and lays off employees  is the CEO pay cap still in effect?

    3.       Is an en masse layoff determined as a certain percentage of the firms work force?  If early retirement buyouts or natural attrition cause the layoff to be less than the defined mass layoff % is the CEO then exempt from the pay cap?   Could a corporation phase the layoffs over a number of years to avoid to the pay cap?

    4.       If a corporation is laying off infrastructure workers and hiring customer facing workers at the same time would they be subject to pay cap?

    5.       If technology allows manufacturing to be done more efficiently with less workers, but a firm is still unprofitable would the pay cap be in effect if they did layoffs?

     

     

    6.       Do you think the pay cap should be extended to all Senior Executive leadership (CFO, COO etc…) and Board of Directors? 

    7.       If instead of complying with the new pay cap regulations the company incorporates offshore would there be any recourse?

    8.       Corporations are creative in designing their compensation particularly for CEOs.  I can totally see a corporation laying off massive amounts of people and complying with the pay cap for one year only to astronomically reward a CEO in out years.  How do you prevent that?

    9.       Sometimes rash actions such as layoffs are necessary to make a business profitable again.  Do you think its possible that the pay cap would incent a CEO and leadership team to not make hard choices and could actually prolong or worsen shareholder pain?

  12. jstults July 9, 2010 / 1:58 pm
    Greg Hunter:

    How can posting this…..

    Here’s an interesting graph showing US vs EU member job losses in this recession:
    http://www.economist.com/blogs/freeexchange/2010/06/labour_markets_0

    Rate 3 [now 5] Bozos…..

    I think you and rob degenhart answered your question pretty well:

    figures don’t lie, but all liars figure
    There are three kinds of lies: lies, damned lies, and statistics.

    And that is the reason I linked several, interactive graphs of various stats, as opposed to the dead, cherry-picked (both the stat and the time-scale) graph in the original Economist thread (and I think the fact that this was likely a politically motivated cherry-pick was also pointed out in the thread on the Economist).  The basic message being: context is important.  If you don’t like my choice of time-scale or stat or countries to compare you can fiddle to your hearts delight (courtesy of the almighty Goog) and call me out for any disingenuous chart-hackery.
     
    Greg, in light of the unemployment numbers I linked above for the past quarter century I’d be interested to hear the narrative you can construct to support this:

    My contention is that Europe has “invested more wisely” than the US when it comes to public allocation of funds, especially Germany.

    That particular conclusion just doesn’t jump out at me from my naive look at the data.  Maybe Germany’s little down-tick at the end is what you’re basing this on?  Did the European’s just suddenly get smart, and we should ignore all that consistently high unemployment over all those years?

  13. David Esrati July 9, 2010 / 2:15 pm

    @Kurt/JoeMama-

    Great questions- and I’m going to point to Ben and Jerry’s ice cream that put a cap of 7-1 pay scale in their company. It was great- until they went public- and then sold out to a big corporation and needed “executive talent”.

    Steve Jobs already works for $1 a year- so he’s not a good example.

    Yes, workforce adjustments are necessary- so- moving jobs from manufacturing to service etc- would be OK.

    If a company lays off employees – and it’s profitable- the people at the top take a cut.

    Normal attrition wouldn’t count.

    Laying off people to outsource- cap. Same to sending jobs overseas. The way we calculate taxes offshore needs to be totally reworked. All one has to do is read about how Transglobal played those games- and it will make you sick. If a majority of either your employees or sales come in the US- and are traded on our exchanges- you are subject to the cap.

    Yes- the pay caps extend to the whole executive staff- or anyone making more than $500K a year. Stock must be purchased with your own cash.

    The compensation boards would have to abide by pay caps based on total US employment, average pay of employees, gross profits, again- putting shareholders first. If you want to make more- as opposed to return dividends- take it private.

    Companies needing “turnaround” and drastic change- typically shouldn’t be traded on the major markets- nor, should they be in that position if leadership is good.
    Restructurings- like the bogus one we supported for GM with tax payer $ need to be closely monitored and regulated.

    Basically- it’s time for the big businesses to have the same kind of liabilities and penalties small ones do.

  14. Robert Vigh July 9, 2010 / 3:23 pm
    Ben and Jerry make $56.00 per hour for salaried employee’s, but they make millions as owners. Good way to market social consciousness, but simply moving around methods of payment. That was some good thinking!

    Bad, big government, control driven ideas being discussed here today.

     
     

  15. jstults July 9, 2010 / 4:21 pm
    I found an Austrian (or at least an admirer of Hayek) that agrees with David (in small part, probably wouldn’t agree with all the rules to “fix” things though):

    Rescuing rich people from the consequences of their decisions with money coming from average Americans is bad for democracy. It is bad for democracy because the Fed and the Treasury are spending trillions of dollars of taxpayer money with very little accountability or transparency. It’s bad for democracy because it means that some people have to live with the consequences of their decisions while others get rescued. That in turn creates a very destructive feedback loop of rent seeking, where losers seek government help after the fact rather than making careful decisions before the fact.
    Gambling with Other People’s Money

    That bit is from the conclusions, it’s a long article, but worth a read.  He mentions “crony capitalism” several times.

  16. David Esrati July 9, 2010 / 4:32 pm

    @Robert- the reality is people who make millions a year- have to be getting a return for taking a risk- that’s what profit is. Business 101.

    Right now- there is ZERO risk as a CEO of having an outcome that’s going to make you risk having to live on SSI. Just like our congressmen have an amazing health plan- yet don’t want you to have the same.

    Wake up.

  17. joe_mamma July 9, 2010 / 10:36 pm
    jstults,

    The author of the article you posted is indeed an Austrian economist.  He is the moderator at CafeHayek.com…which is a wonderful economics blog.

  18. Jeff of Dayton July 10, 2010 / 6:35 am
    Exactly, our current recession puts us into the unemployment territory that lots of those EU countries have been bouncing around for the past 25 years. 

    Yes, excellent point.  We appear to be catching up to the EU when it comes to structural unemployment. 

  19. Jeff of Louisville July 10, 2010 / 6:46 am
    Rate 3 Bozos….. I mean posting data from mises maybe but the economist….hmmm  

    ..the reason it rates three bozos is because this blog is dominated by right wing wingnuts.   Rather that query the data and what it might imply its easier to do what Robert Vigh did in his response, which was a sort of “love it or leave it” sentiment.    Having been to at least one European country (Germany) I don’t think their system isnt that bad.   

    This “American way is the only way” senitment (mixing patriotism with laissez faire economics) reminds me of what Tom Peters called the “Not Invented Here” syndrome in large insluar corporations, where ideas from “outside the system” are dismissed becuase they didn’t come from within the system (in his example the business or corporation).  So these “not invented here” systems are not open to borrowing or tweaking other ways of doing things.    That being said Ido recognize there are cultural differences at play, too, which complicates things.

  20. jstults July 10, 2010 / 10:09 am
    Jeff of Dayton

    We appear to be catching up to the EU when it comes to structural unemployment.

    Which will probably make us less attractive to immigrants (tight labor markets are probably a significant draw), who have been our engine of relatively cheap labor and population growth.  Losing that influx of folks makes us look more and more like one of those declining-population, high-unemployment, dynamos of the old world.
     
    Oh come on original Jeff, you’re not up for a bit of American exceptionalism on a Saturday morning?  USA, USA, USA!!!   Speaking of cold war, the really cool thing about Germany is that they were able to absorb a second world country without totally tanking their economy and turning into another France.  All while taking significant time off (this one’s animated with colors and bubbles and labels, oh my!), how do those Deutschers do it?  Greg, I still want to hear that narrative.  I’m serious I like stories, they’re way more interesting than unadorned data.

  21. Robert Vigh July 10, 2010 / 10:59 am
    Jeff of L: I would like to examine what I did, yes I rated you thumb down.

    I read an article by DE that was geared toward expanding government control and shrinking the rights of an individual. I then saw your near commentless post expressing a chart showing the USA’s rate of employment decline against the EU’s. This seems to imply that you think the EU’s government control is a good idea. I think it is a dangerous infringement on the natural rights of the individual. I have no desire to explore any economic systems other than capitalism………the one based on individual rights and freedom.

    How this makes me a right wing wingnut you will have to explain. I think I laid out clealy, with thought the way I think of the problem. I even went so far as to say you seem to be implying, allowing you a opportunity to elaborate should you choose.

    Your response: “You are an idiot, I have been there. Other people have noticed insular thinking” What did you add? (insert liberal nasy comment here for blog balance and because it really makes my thoughts more provocative).

  22. jstults July 10, 2010 / 11:33 am
    Robert Vigh, Jeff of Dayton and Jeff of Louisville are different posters (unless David is slacking on his “no posting under different names rule”).  To be fair to Jeff of Dayton, he didn’t actually say anything about the graph, so it’s pretty hard to intuit his intent (the one I think you assumed he’s taken is pretty well spelled out by the first poster on that Economist thread, and pretty well addressed by the rest of the thread: drawing sweeping conclusions based on a single cartoon is a little silly, though it may be entertaining).
     
    I think the name calling and cheap sniping is boring too, but Jeff of Louisville has his account paid up in my book with all his usually informative posts (I’m still working through the bio, never thought I’d read a Marxist history of anything, Terry Lussier is right. high quality writing).  We’re all human, sometimes you just can’t resist the cheap shot, even when you know you don’t get any points for it.
     
    I think the really interesting thing that this topic highlights, rather than the same old Left-Right debate, is the moral hazard that’s present in any principal-agent relationship, the problem of aligning incentives.  Maybe that’s too arcane though and people just want grist for the old mill (and a little sideshow disparagement of math nerds never hurts either ; ) .
  23. Greg Hunter July 10, 2010 / 5:35 pm
    I have the narrative in mind but on iPhone … If u want the analogy of the narrative is in article of the nyt that discusses collecting soccer data…basically the stats cannot describe the intricacy of the passes that led to the goal. In other words there are no stats on the passes but I know when the goal is scored ( I need to work on…)…. High fuel taxes, public transportation….
  24. David Esrati July 11, 2010 / 7:54 am

    @jstults- Jeff of is one person- and I’ve been lax at enforcing it- because I made the assumption that everyone could tell it’s the Jeff of Daytonolgy. My bad. Sorry.

    I am tired of labels being applied to theories. I’ve heard “socialism” batted around constantly- and with so little understanding. If we look at laws that are written in this country to benefit a very small number of people- I’d call that socialism – as practiced, not as Marx intended.

    Our systems have gotten more and more complex- thanks in part to technology. As this has happened, people have devised ways to profit ridiculously- the Wall Street Casino being one of the epicenters of this.

    Transparency suffers when things get complicated- and if anything is the root of our growing economic divide- it’s been because it’s becoming harder and harder to even find data that is applicable. People are too complex for simple theories- predictability of the outcome of huge collections of random actions- are bound to have as many exceptions as rules.

    I think our resident quant will agree on this.

    Is full employment actually possible- not ever.

    Is a higher standard of living for all possible- yes- with some shared sacrifice.

    Is it governments job to provide for all- no. But, is it governments job to try to create a higher standard of living for as many as possible? That’s what I believe.

    The question becomes relevant is what should be funded to create a higher standard of living for all?

    I say:

    • Physical infrastructure that supports a sustainable economy.
    • Health and social services that create a healthy workforce.
    • Education to ensure that workers can reach their potential- and voters that can make intelligent decisions.
    • Security- (and this is where Robert Vigh and I will have a death match)

    Security not only means national security- but police and fire- and assurances that what works today- won’t be ruined by vandals without consequence tomorrow.

    To Robert- it means a freedom to do what ever he pleses- damn the rest of anyone else- it’s a free country.

    I’m sure this debate will get heated- so I’m signing off for a bit.

    Please remember to vote on Tuesday- and tell all your friends. Thank you.

  25. jstults July 11, 2010 / 10:44 am
    David Esrati:

    If we look at laws that are written in this country to benefit a very small number of people…
    Our systems have gotten more and more complex-
    Transparency suffers when things get complicated-
    People are too complex for simple theories-

    You’ve covered the basic motivation for libertarian arguments that coercive solutions rather than market ones will fail because of the unintended consequences we don’t imagine (the coercive solutions will also have to grow in complexity over time to compensate for this, which makes the side-effects even more difficult to imagine).
     
    I think you’ve terribly mischaracterized Robert Vigh’s position (based on what he’s written on your site).  I’d bet a frosty beverage that he’d want your vandals and burglars punished for violating your property rights.
     
    A technical nit on the “full employment” thing: it depends on how you define it, for the US economy I think the accepted level of full employment is 4-5%, so we did reach full employment.  Whether this was a Good Thing is up for debate.
     
    Good luck on Tuesday!  I think you’ll represent the people of OH-3 honestly.

  26. Teri Lussier July 12, 2010 / 7:54 am
    Government should fund education
    >to ensure that workers can reach their potential
     
    That’s convoluted, David, not to mention frightening.  Are you really saying that the purpose of education is to teach children to be workers?  Because that’s how I’m reading this, although on this one, I’d love to be wrong.
     
     
     
     
  27. David Esrati July 12, 2010 / 9:49 am

    @Teri- I’m glad you know how to read so you can be frightened. Thank a teacher.

    Would you rather they be educated to be welfare recipients instead of workers?

    How about not educated so they can’t read a ballot to vote?

    Hmmm…. you scare me.

  28. David Lauri July 12, 2010 / 12:14 pm
    Are you really saying that the purpose of education is to teach children to be workers?
     
    Teri, David didn’t say “the purpose” but rather that one function of government that should be funded is “education to ensure that workers can reach their potential.”  Aren’t you convoluting his words a bit by suggesting that he thinks there are no other purposes of education?  If you read his comments more carefully, you’ll see that he did mention on that very same line another purpose of education. And actually, David didn’t even mention children; he could have been talking about retraining for adults who’ve lost their jobs.
     
    And aren’t you freaking out over what’s really just a bit of semantics?  If David had instead said a purpose of education was to ensure that students grow up able to earn a living, would you have been so afraid? Although the word “worker” does have the connotation of manual labor or industrial work, you didn’t seriously think David was suggesting that education be geared only towards carpentry or plumbing or factory work, did you?
     
    But what’s so wrong with being a worker anyway?  Is there something wrong with working with one’s hands?
     
    And google “information technology workers” — you’ll find information on some decent career paths.  Would you really fear a child of yours growing up to be an information technology worker?
     
    And there are also education workers.  God forbid that a child of yours become an education worker, teaching children to become education workers themselves!
  29. Greg Hunter July 12, 2010 / 12:50 pm
    Are you really saying that the purpose of education is to teach children to be workers?

    Hell Yes it is otherwise it would not be structured the way it is…..It is not to explore a child’s talent it is to become a WORKER.  A worker that is pound into a square peg, no other way.  I, and most of the posters on this site, happen to fit in that peg and for no other reason are we are successful.    I try to walk in others shoes unlike the narrow mindedness of some.

  30. Greg Hunter July 12, 2010 / 12:57 pm
    The analogy I was going for is captured in this statement from an article on statistics in soccer.

    “A series of three or four absolutely beautiful passes — how do you capture that?” he said. “It’s just the nature of the game.”

    Yes I cannot site stats on why I think Europe made “better decisions”; however it seems that the support of Nuclear Power (France), alternative energy (Germany) higher carbon taxes, quality construction (Germany in particular), less military budget and public transport are the “right passes” to score a goal going forward as compared to the free market will git r dun amuricans.

  31. Teri Lussier July 12, 2010 / 2:05 pm
    David L-
    >Aren’t you convoluting his words a bit by suggesting that he thinks there are no other purposes of education?
     
    Possibly. That’s why I asked.
    But he didn’t correct me so I don’t believe I’m too far off.
     
    >If David had instead said a purpose of education was to ensure that students grow up able to earn a living, would you have been so afraid?
     
    Of course. If, as three people have now suggested, the purpose is to educate a workforce, then firstly public ed is failing, and secondly it’s inappropriate for the govt to take on that task, which could be done more quickly, efficiently, for less money by privatizing, but that’s way off topic so we’ll not bring that up.
     
    >But what’s so wrong with being a worker anyway?  Is there something wrong with working with one’s hands?
     
    Oh good lord. I’ve encouraged my kids to be plumbers, for what it’s worth.  Alas, to no avail, they insist on doing other stuff with their own lives, but now you can rest easy knowing that  I don’t care how people earn their living, it’s the purpose of a govt education that has me concerned. As I should be since I’m paying for it.
     
    David E-
    >(if) you know how to read… Thank a teacher.
     
    Why that’s clever enough to be a bumper sticker.
  32. jstults July 12, 2010 / 2:10 pm
    Back to Labor!

    Teri Lussier (sorry for misspelling your name up-thread):

    Are you really saying that the purpose of education is to teach children to be workers?

    From a couple papers courtesy of the Economist blog which started this whole thing (emphasis added):

    Common sense suggests that personality traits, persistence, motivation and charm matter for success in life. Marxist economists (Bowles and Gintis, 1976; Edwards, 1976) have produced a large body of evidence that employers in low skill labor markets value docility, dependability, and persistence more than cognitive ability or independent thought (see the survey by Bowles, Gintis, and Osborne, 2001) […]  The least squares estimates reported in Table 1 cannot distinguish whether higher ability (as proxied by our cognitive measure) causes higher wages or whether additional years of schooling cause both higher measured cognitive scores and higher wages. They likely overstate the contribution of ability to wages and understate the contribution of schooling to wages.

    The analysis of Bowles and Gintis (1976) suggests that a similar phenomenon may be at work for non-cognitive skills. They claim that schooling builds traits that are useful in the workplace. In their language, schooling produces a docile proletariat.
    The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior

    Whether schooling’s primary purpose is to increase marketable skills or not (non-cognitive means “soft” skills or social skills), it seems that it does, and employers treat it as a signal to indicate relatively more valuable “human capital”.

    David Lauri:

    And actually, David didn’t even mention children; he could have been talking about retraining for adults who’ve lost their jobs.

    Funny you should mention adult education, the GED is mentioned in that first article (adult education programs being a primary source of GED growth):

    A special challenge is the GED program where the credential (the GED test) conveys multiple conflicting signals. GED recipients are smarter than other high school dropouts but they have lower non-cognitive skills.

    And those same fellows have a paper on the efficacy of the GED, from the abstract:

    Although the GED establishes cognitive equivalence on one measure of scholastic aptitude, recipients still face limited opportunity due to deficits in non-cognitive skills such as persistence, motivation and reliability. The literature finds that the GED testing program distorts social statistics on high school completion rates, minority graduation gaps, and sources of wage growth. Recent work demonstrates that, through its availability and low cost, the GED also induces some students to drop out of school.

    and from further in (emphasis added):

    Given the preponderance of evidence against beneficial effects of GED certification for the average GED recipient, it is surprising that the GED program has grown so dramatically in the past 50 years. We examine explanations for its growth. A primary cause is the growth of government programs that promote the GED as a quick fix for addressing the high school dropout problem.

    None of this would matter if the GED were harmless, like wearing a broken watch and knowing that it is broken. But the GED is not harmless. Treating it as equivalent to a high school degree distorts social statistics and gives false signals that America is making progress when it is not. A substantial part of the measured convergence of black and white high school attainment is fueled by prison-issued GEDs. Counting GEDs as dropouts, the African-American male high school graduation rate in 2000 is at the same level as it was in 1960. Improperly counting GEDs as high school graduates also overestimates the returns to college. We document how American social statistics are distorted by assuming that GEDs are equivalent to ordinary high school graduates. We also show how the GED creates problems. It induces students to drop out of school and lose the benefits of a high school degree.
    The GED

    Greg Hunter:

    I, and most of the posters on this site, happen to fit in that peg and for no other reason are we are successful.

    From the first paper again:

    Noncognitive traits are not valued in the labor market for male four year college graduates, although they are for female college graduates. In most of the educational labor markets, noncognitive factors are valued for both genders. For men, noncognitive traits are valued more highly in low skill markets. For women, noncognitive traits are more uniformly valued.

    Empirical support for the existence of the (male) well-credentialed a$$hole?  The reason most of the posters here are male, and can’t seem to avoid calling each other names?  Just my simple model…

    I think this highlights an interesting thing about Marxist (any -ist really) studies. They can provide a useful analytical framework (as Jeff of Louisville pointed out).  In this case they gave insight into a corner of the labor market (non-cognitive “social” skills are valued in low-skill laborers) that other folks were able to go out and find empirical evidence for.  This empirical work also highlights when the simple assumptions in the framework break-down: the same relationship does not hold for people in the labor market with four-year degrees.  Employers for that market value the cognitive skills and don’t really care about the rest (for men at least, so ladies you still have to be nice, sorry, not my rules).  Simple models can provide useful insight into a “corner” of reality, but they rarely work for all of it.

    Isn’t that the point of a liberal (in the classical rather than the huffpost sense) education? To teach us the reason which tames our passions so we don’t start digging mass graves for the “other class” based on foolish extrapolations of a simple model from some dried up old economist.
    Back on the main topic (I think), maybe the slow return to low unemployment is because of a feed-back between unimaginative government policies that push credentials that aren’t valued by the marketplace and natural up-skilling of the labor force?  Or maybe it’s just difficult to find gainful employment for former elevator attendants in the information age.

    Greg, that was my Marxist Monday Labor Lunchbreak, I’ll have to get back to you with a Socialist Soccer Siesta later in the week.

  33. Greg Hunter July 12, 2010 / 10:57 pm
    Ah Mr. Stults! Played the unholy Grail card…. I will delve into that history…
  34. jstults July 15, 2010 / 1:34 pm
    Interesting graph, from the article that goes along with the graph John Ise linked:

    When employers are able to recover their profits many years before their employees can even hope to attain the income and employment levels they had  prior to recession’s devastation, economic policy is clearly skewed in favor of corporations and not workers.

    That’s one narrative, or it could be that this recession will be like the last two, and unemployment is still a lagging indicator (some folks are arguing that this time is different, but that seems unlikely).

  35. jstults July 15, 2010 / 9:16 pm
    Another narrative on slow employment recovery:

    And if there’s a sick sector in the economy such as housing and people are slow to leave the jobs where they have sector-specific skills such as home construction, employment is going to take a while to recover.
    New Hires or New Jobs

    Thanks to joe_mamma for pointing out Cafe Hayek.

  36. Jesse July 16, 2010 / 8:16 am
    John,
     
    What is the area of the space between the red line and the blue line on the downside?  upside?
     
    What is the area of the space between the red line and the axis?  blue line?
     
    Are you trying to indicate that the reason people are angry is that companies took too many losses and didn’t fire inefficient resources quickly enough?  If that was your goal then congratulations; your chart does a wonderful job.
  37. Teri Lussier July 16, 2010 / 8:51 am
    jstults>
    >Back on the main topic (I think), maybe the slow return to low unemployment is because of a feed-back between unimaginative government policies that push credentials that aren’t valued by the marketplace and natural up-skilling of the labor force?  Or maybe it’s just difficult to find gainful employment for former elevator attendants in the information age.
     
    Exactly. And what both graphs make perfectly and obviously clear is that becoming an entrepreneur is a good choice for anyone to consider. Perhaps, if we are going to have an agenda for public education besides training minds how to think (that would be as opposed to what to think) entrepreneurial skills, spirit, and abilities, might be where we should be pouring our money. We could then give individuals the ability to adjust to natural shifts in employment needs.  People could create jobs for themselves, make bold career changes as necessary and desired, without living lives that suffer not only economically, but mentally, physically, and emotionally through dependency on either the government or one industry or skill set.
     
     
     
     
     
     
     
     
     
  38. jstults July 16, 2010 / 9:09 am
    Teri Lussier:

    And what both graphs make perfectly and obviously clear is that becoming an entrepreneur is a good choice for anyone to consider.

    Could you explain this bit? I didn’t follow that leap.

    Perhaps, if we are going to have an agenda for public education besides training minds how to think (that would be as opposed to what to think) entrepreneurial skills, spirit, and abilities, might be where we should be pouring our money. We could then give individuals the ability to adjust to natural shifts in employment needs.  People could create jobs for themselves, make bold career changes as necessary and desired…

    Back to education, here’s an interesting article on the decline of creativity in K-6 kids in this country:

    Kyung Hee Kim at the College of William & Mary discovered this in May, after analyzing almost 300,000 Torrance scores of children and adults. Kim found creativity scores had been steadily rising, just like IQ scores, until 1990. Since then, creativity scores have consistently inched downward. “It’s very clear, and the decrease is very significant,” Kim says. It is the scores of younger children in America—from kindergarten through sixth grade—for whom the decline is “most serious.”

    The potential consequences are sweeping. The necessity of human ingenuity is undisputed. A recent IBM poll of 1,500 CEOs identified creativity as the No. 1 “leadership competency” of the future. Yet it’s not just about sustaining our nation’s economic growth. All around us are matters of national and international importance that are crying out for creative solutions, from saving the Gulf of Mexico to bringing peace to Afghanistan to delivering health care. Such solutions emerge from a healthy marketplace of ideas, sustained by a populace constantly contributing original ideas and receptive to the ideas of others.

    It’s too early to determine conclusively why U.S. creativity scores are declining. One likely culprit is the number of hours kids now spend in front of the TV and playing videogames rather than engaging in creative activities. Another is the lack of creativity development in our schools. In effect, it’s left to the luck of the draw who becomes creative: there’s no concerted effort to nurture the creativity of all children.
    The Creativity Crisis

    Of course, everything is a crisis these days…

  39. Teri Lussier July 16, 2010 / 11:18 am
    >jstults
    >Could you explain this bit?
     
    I can try.
     
    Why are people angry? Not because corporations are making a profit, people are angry because waiting around for someone else to give you a job is unproductive and frustrating.  We want to be productive, as human beings it’s baked into our DNA cake and we cannot escape it.  It’s unnatural for us to feel useless- creativity, activity, these are things that we naturally do from the very moment we are born- the very moment we are born we begin to learn, absorb, grow. This is us as natural healthy humans.
     
    So the goal might be how do we retain that uninhibited ability to set goals, stretch ourselves, be productive as humans? Entrepreneurs do these things all the time and every day. They are as close to our natural state as you can get.
     
    The further you move away from that- Joblessness- I have to wait to be productive, or much worse, I am dependent on someone else for my own productivity- the unhappier we become. It really truly has less to do with politics and corporate greed and all that other stuff that idealogues on any side would like us to think, and more to do with us as human beings.
     
     
  40. Greg Hunter July 29, 2010 / 8:58 am
    Wow,  I seem to have been a little lost on this thread as we have touched on a great deal of topics including what I consider the holy grail of topics – Gender differences.  Mr. Stults has referenced some articles that indicate schools and employers encourage non-cognitive skills over cognitive.  Of course the paper will cost me 5 dollars so I will not pay for it, I will speak on what I think it might indicate.  My general take is that PREDOMINATELY males are cognitive and females non cognitive.  In essence society is biased against cognitive versus non cognitive or basically the rules are designed for female dominance in most instances.  Now why are males more successful than females as entrepreneurs and ceos?  Because society benefits when logic is applied to a situation and not blinded by the love of the non-cognitive.
    Teri I do not understand the argument….

    Why are people angry? Not because corporations are making a profit, people are angry because waiting around for someone else to give you a job is unproductive and frustrating.

    I am angry because I “see” (cognitive) what needs to be done but I am hamstrung by local laws and ordinances that “prevent/hinder” the response.  I want to put up a solar hot water heater, vertical windmill, chicken coop in the yard and only have a fire break around the house while the yard returns to a natural state….. May I proceed – hell no.

    Now what do I do.  Oh Yeah move where I can do these things or ignore the laws and do it anyway?  Sorry this society is over run by non cognitives and I cannot wait (life is too short) to put up with stupidity, so I will ignore the laws that make no sense and make money on the “fringe” of the economy.  Our corporate/government policies have limited the way we chose to live in harmony with each other or the environment.

    When creative children have a supportive teacher—someone tolerant of unconventional answers, occasional disruptions, or detours of curiosity—they tend to excel. When they don’t, they tend to underperform and drop out of high school or don’t finish college at high rates.

    I will not argue that children have become closer to their parents but I will say that the drop in creativity is probably directly related to the loss of highly skilled teachers that entered the work force in the 60s combined with rise of parental interference in the everyday curriculum from stopping dodge ball to “making everyone feel good” about themselves.  In order to correct this situation pay teachers better (get more males (cognitives)) and insure that creativity is encouraged by all.  My best classes were those where collaboration was encouraged and in MOST respects EVERYONE contributed something of VALUE to the project.  The problem arises when someone takes the lion’s share of the reward with out recognizing the end result would not have been the same without the smallest contributers input.  Good business owners/coaches/teachers/politicians understand this concept.

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