CNBC Values

September 30, 2013
Posted by Jay Livingston

“He’s makin’ more money than you’ll ever see.”

That was the preferred argument of Tommy Fiedler (not his real name but close enough), a classmate who lived across the street when I was a kid.  I sometimes would disagree with Tommy about the talents or behavior of some celebrity – a rock star or an actor.  Today’s equivalent might be Ke$ha or a Kardashian. Tommy’s response was usually, “He’s makin’ more money than you’ll ever see.”  And that settled the issue as far as Tommy was concerned.  A huge income trumped just about anything.

In sociology, we talk about values. Intro texts usually define values as abstract ideas about what is good, ideas that people use as guides to action.  Maybe. But the definition I prefer sees values as “legitimations” – ideas about what is good that people use to justify behavior or to win arguments.*  For Tommy, money was this kind of ultimate legitimation. His behavior did not evidence a strong value on money  – we were only about eleven at the time  – but his judgments did. Values are what we use to evaluate.

I thought of Tommy and values today when I read the transcript of a CNBC interview with Alex Pereene.  Pereene has recently gone on record (here) criticizing Jamie Dimon, the CEO of JPMorgan. That bank currently faces an $11 billion fine for having dealt in shoddy mortgage-backed securities.  JP Morgan can afford it, of course, but $11billion begins to be real money.** The question on CNBC was whether Dimon should continue as its CEO. 

Pareene says no. The CNBC anchor, Maria Bartiromo then says.

Legal problems aside, JP Morgan remains one of the best, if not the best performing major bank in the world today. You believe the leader of that bank should step down?

Or as Tommy Fiedler would have put it, “His bank is makin’ more money than you’ll ever see.”

Here’s Pareene’s response:

 If you managed a restaurant, and it got the biggest health department fine in the history of restaurants, no one would say “Yeah, but the restaurant’s making a lot of money. There’s only a little bit of poison in the food.”

CNBC then brings in a Dimon booster, Duff McDonald. Asked to respond to Pareene’s charge of corruption, McDonald says,

It’s preposterous. The stock’s touching a ten-year high. It’s a cash-generating machine. Sure they’ve had their regulatory issues . . .

In McDonald’s view, the charge of corruption is preposterous because JP Morgan is makin’ more money than you’ll ever see. 

Bartiromo’s reaction is especially telling. She seems to take Pereene’s criticism of JP Morgan personally. I thought that anchors were supposed to be neutral and try to draw guests out. But Bartiromo is openly hostile. She loudly interrupts Pereene and demands evidence of the bank’s questionable tactics. When Pereene gives an example, she defends Dimon by again appealing to the value on profits above all else.

Even with all these losses, the company continues to churn out tens of billions of dollars in earnings and hundreds of millions in revenues. How do you criticize that? [emphasis added]

Her assumption is that anyone who makes so much money cannot be criticized. Such criticism is immoral. The reporting about JP Morgan’s shortcomings is, she says,  “a witch hunt.”

[A video of the interview is on Felix Salmon’s blog (here). Must-see TV.]

The problem with legitimations is that they work only if everyone in the room shares the same values. Members of the same culture, almost by definition, share values; effective arguments appeal to those values. Americans, for example, are suckers for arguments based on appeals to individual freedom. We find them very hard to resist. But people in other cultures might not find those arguments so persuasive.

This brief CNBC interview hints at cultures or moral worlds in collision. In the CNBC world, people take the value on making money for granted. When they encounter someone who does not share that value, who is not persuaded by arguments based on it, they act as though threatened by some uncomprehending and dangerous alien, a creature from another world. It is a clash of cultures, a clash of values, and the way we discover those values is not by watching what people do (values as guides to action)  but by listening to how they justify what they and others do (values as legitimations).

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* I think this idea about values originates with Berger and Luckman (1966), The Social Construction of Reality.

** Other fines JP Morgan has paid were far less. For its part in rigging the LIBOR, for example, they paid $450 million – pocket change.

The Dean's Speech

September 25, 2013
Posted by Jay Livingston

After the Navy Yard massacre, David Guth, a professor of journalism at the University of Kansas, posted an intemperate tweet.

The university put him on leave, and Guth consented. The debate – in the comments section at InsiderHigherEd for example, and on various blogs rehashes issues of gun control, the NRA, free speech, and academic freedom.  But it was this response from an administrator, as reported by IHE (here), that struck me.

Ann Brill, dean of the William Allen White School of Journalism and Mass Communication, said in a separate statement that while the First Amendment allows free expression, “that privilege is not absolute and must be balanced with the rights of others. That’s vital to civil discourse. Professor Guth’s views do not represent our school and we do not advocate violence directed against any group or individuals.”

I guess Deans at KU are not hired to offer clear and incisive thinking, because even these few sentences have some standout mistakes. 

First, Dean Brill converts free speech from a right into a privilege.  Perhaps she does not recall that the First Amendment is part of the Bill of Rights, not the Bill of Privileges. Then she claims that this right must be “balanced with the rights of others.” But she does not specify who these others might be, what these rights might be, or how Prof. Guths’s tweet violated those rights. Obviously, some people were outraged and offended. But whose legal or Constitutional rights did the tweet violate? There is no Constitutional right not to be offended.

Dean Brill also implies that the tweet advocated violence directed at some group or at individuals.  That too is quite a stretch. Guth was not issuing a fatwa calling for the slaughter of innocent children. He was saying that the next time a mass shooting happens, he hopes that the victims will be the children of the NRA, presumably so that the gun lovers might suffer the negative consequences of the policies they support.

I can only assume that the Dean’s objective in this statement was not to offer a cogent analysis but to assuage the anger of state legislators and other people that the university has to make nice with. 

Arguments Going to Extremes

September 24, 2013
Posted by Jay Livingston

Extreme comparisons must be irresistible.  Why else would people argue that same-sex marriage is no different than marriage between a man and a dog or that aborting a 12-week fetus is as the moral equivalent of killing a twelve-month old child?  And then there’s Hitler.   

Godwin’s Law: As an online discussion grows longer, the probability of a comparison involving Nazis or Hitler approaches 1.

But it’s not just online. It happens in print, and it happens in face-to-face discussions. Perhaps in math puzzles, the extreme hypothetical can be an effective strategy. But people are not math puzzles, and in the real world, those extremes rarely happen.

Despite its attractiveness to the speaker, the extreme comparison rarely convinces anyone who doesn’t already agree, and it can often backfire. The person who makes the extreme analogy looks morally obtuse, unable to tell the difference between Hitler and Obama, or Hitler and Bush, or Hitler and economic and social change.*

Recently, Greg Mankiw, a prominent economist not given to immoderate language, didn’t summon Hitler, but he used an equally silly analogy in a paper defending the very rich and attacking government aid to the poor.  He began,

government has increasingly used its power to tax to take from Peter to pay Paul. Discussions of the benefits of government services should not distract from this fundamental truth.

Hence the next subhead:

The Need for an Alternative Philosophical Framework

Mankiw then used that alternative philosophy to draw an analogy between the money we pay in taxes and our precious bodily organs:

Thus, the same logic of social insurance that justifies income redistribution similarly justifies government-mandated kidney donation.

Give them an inch, and they’ll take a kidney.

And now we have Robert Benmosche, top guy at AIG, going Mankiw one better in defending the huge bonuses that banks and financial firms paid out while they were crashing the economy.   The uproar over bonuses,  says Benmosche,

was intended to stir public anger, to get everybody out there with their pitch forks and their hangman nooses, and all that – sort of like what we did in the Deep South [decades ago]. And I think it was just as bad and just as wrong.

Yes, you read that correctly. Complaining about those bonuses is “sort of like” lynching, and the executives and traders sitting on their multi-million dollar bonuses are like Black people killed by racists. Sort of like lynching and “just as bad.”

The Wall Street Journal tactfully omitted this quote in their article (here) lauding Benmosche (“At AIG, Benmosche Steers a Steady Course”). The WSJ probably thought that Benmosche’s comparison would draw attention away from the idea that the bonus-critics were misguided and focus that attention instead on questions about the CEO’s moral universe.

Only three days later did the WSJ print the fuller version of the interview ( “AIG’s Benmosche and Miller on Villains, Turnarounds and Those Bonuses” )

HT: Ryun Chittum at the Columbia Journalism Review


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* During the 2008 primary campaign, Hillary Clinton, talking about the decline in good jobs, said, “They came for the steel companies and nobody said anything. They came for the auto companies and nobody said anything. . . .” an obvious reference to ““First they came for the Socialists, and I did not speak out, because I was not a Socialist. Then they came for the Jews . . .”  (The NYT story is here. I remember this one because I blogged it at the time.)

UPDATE Sept. 25: As I was writing this, Ted Cruz was on the floor of the Senate arguing against funding Obamacare. Giving in to the President on healthcare, he said, was like  – you guessed it  –  appeasing Hitler in 1938.

How to Misread a Graph (It’s Not Easy, but The Heritage Foundation Finds a Way)

September 20, 2013
Posted by Jay Livingston

My post of a few days ago (here) showed The Heritage Foundation presenting a graph and deliberately drawing a conclusion that the graph clearly showed to be wrong.  Apparently, that’s something of a specialty at The Heritage Foundation.

Here’s their graphic purporting to show that preschool programs don’t work. (The original is here.)

The problem in the Oklahoma graph is the lag time between cause and effect.  For example, the baby boom began in 1947, but we would not look for its effects on healthcare and Social Security costs until much, much later.

Most people know this, but  Heritage seems to be lagging behind. “Fourth grade reading achievement scores in Oklahoma have actually declined.” True, they are lower now than in 1998, when universal preschool started. But is that the year should we use for a starting point for data on fourth grade reading scores?

Pre-school kids are three or four years old.  They don’t take the fourth-grade reading test until six or seven years later – in Oklahoma, that would be 2005 for the first cohort.  Amazingly (amazing to Heritage, I guess), that was the year reading scores began to increase, and despite a slight dip last year, they are still above that level.

As for the Georgia graph, anyone glancing at it (anyone except for people at The Heritage Foundation) would see this: reading scores in Georgia began increasing in 1995, two years after universal preschool began, and continued to rise when the first preschoolers reached fourth grade; scores have continued to rise faster than the national average.  Georgia was behind, now it’s ahead. Something good has been happening.

Heritage, however, manages not to see this and instead complains about how long it took Georgia to reach that point. (“Georgia’s program was in place for 13 years before scores caught up to the U.S. average.”)

A simple graph of scores is not really an adequate assessment of universal preschool. Those assessments, which include many other relevant variables,* have been done, and they generally conclude that the programs do work.  But that’s not the point.  The point is that Heritage is again misreading its own graph. So again I repeat, “Who you gonna believe, the Heritage Foundation or your lyin’ eyes?”

HT: Philip Cohen, who apparently thinks the Heritage deliberate obtuseness is so obvious as to be unworthy of elaboration.

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* These include the usual demographics, especially to see if preschool effects are different for different groups. But there’s also the problem of post-preschool education. A state might have great preschools, but if it also has lousy primary schools, the benefits of preschool will be eroded away by the time the kids are in fourth grade.