Tag Archives: China

Matt Yglesias’s China Syndrome

24 Sep

Commenting on the recent labor unrest in China, Matt Yglesias makes a comparison with the past and present of the United States.

Conditions in contemporary China have much more in common, structurally speaking, with conditions during the heyday of western labor activism than does anything about the Chicago teachers strike or the apparent American Airlines sickout. The rapid pace of Chinese industrialization means the average wage in a Chinese factories has managed to lag behind the average productivity of a Chinese factory worker (roughly speaking because it’s dragged down by the absymal wages and productivity of Chinese agriculture) which creates a dynamic ripe for windfall profits but also for labor activism. The repressive nature of the Chinese state is an unpromising ground for union organizing, but by the same token Chinese labor organizations have much less to lose (in terms of union-managed pension funds, union-owned buildings, etc.) if they break the law with “wildcat” strikes and the like.

Why are workers rioting in China? Because, says Matt, of the large gap between labor productivity and labor compensation there, which is similar to how things once were in the US and Western Europe but is unlike anything in the contemporary US.

Oh really? Since 1973, labor productivity in the US has risen 80.4 percent. Yet median wages have increased only 4 percent, and median compensation as a whole—which includes benefits—has only increased 10.7 percent.

This is hardly a state secret; mainstream economists talk about it all the time. Which is why I was so puzzled by Matt’s claim.

So I asked him about the discrepancy. He  responded: “I should explain the difference more clearly. US is a median issue, China is a mean issue.” I’m not clear what point he’s trying to make here, but it seems to work against him: if the mean worker wage in China is being depressed by very low wages in agriculture, that means factory work pays better than agriculture, so workers should be flocking to the factories. An increase in the labor supply is not usually conducive to labor activism.

Back to the US.  So where did all that productivity growth between 1973 and 2011 go? Writes Paul Krugman:

One third of the difference is due to a technical issue involving price indexes. The rest, however, reflects a shift of income from labor to capital and, within that, a shift of labor income to the top and away from the middle.

2/3 of the productivity, in other words, went to the “windfall profits” that Matt speaks of above. Not so unlike China after all.

And what about labor activism? Matt is right, of course, about the repressive Chinese state. But as I’ve long argued, a good deal of worker activism in the United States also gets repressed. One in 17 of every eligible voter in a union election gets illegally fired or suspended for his or her support for a union. While it’s true that the American state is not the equivalent of the Chinese state, it’s also true that a great deal of repression in the US has always been outsourced to the private sector—even in “the heyday of western labor activism.”

Over the summer, when Chris Bertram, Alex Gourevitch, and I were advancing our thesis about workplace tyranny, Matt repeatedly professed bafflement as to why we were even talking about this issue. Well, this is one reason: repression and coercion in the workplace actually prevent the union organizing that helps ensure that that growth in worker productivity translates into higher pay and benefits for workers.

Matt gets it. In China.

This post is cross-posted at Crooked Timber.

Eli’s Comin’—Hide Your Heart, Girl: Why Yale is Going to Singapore

20 Jul

In Fall 1998, my penultimate semester at Yale, I TA’d for a course called “Yale and the External World.” Taught by historian Gaddis Smith, it was part of the university’s annual DeVane Lectures, in which a distinguished member of the faculty is given an opportunity to expound over the course of a semester—to students, alums, and the public—on a topic of his or her choice.

Other DeVane Lecturers have included Nancy Cott on the history of marriage, whose lectures ultimately became this excellent book, Michael Denning on democracy, and more. But in 1998, Yale was heading toward its tercentennial, and President Richard Levin wanted someone to take stock of “the evolution of the University’s place in the modern world.” Smith, with his long ties to Yale—he had been an undergrad and a grad student there—was the man for the job.

Back in the 80s and 90s, you’ll recall, there was a lot of huffing and puffing—among liberals and conservatives—about how American students were focusing too much on their identities: black students were enrolled in African American history, women in women’s studies, and so on. Yet here were 500 Yale undergraduates attending lectures on the reorganization of the provost’s office after World War I and writing term papers on topics like the history of the  swim team—I’m not shitting you—and no one on the faculty, anywhere, blinked an eye.

Due to a misprint, the course catalog titled the lectures “Yale and the Eternal World.”

It has always been thus at Yale: the university’s relationship to the external world of money and power are intimately bound up in its conception of itself as the embodiment of, if not the Deity, then at least the World Spirit. It is the place where God and Mammon freely and happily commune. As I wrote over a decade ago in a piece that has barely seen the light of day:

Despite the admission of women and a century of other social transformations, Yale in 2002 remains, in one critical respect, little different from Yale in 1902.  It is still a gentleman’s college, a learned estate where youthful minds amble among the colonnades of western civilization.  Small colleges dotted throughout the campus evoke that medieval fellowship of students and scholars forged long ago at Oxford and Cambridge, while letters of Latin and Hebrew carved into the facades of campus buildings suggest to one and all that even the gods of ancient Rome and Israel went to Yale.

Admissions brochures at Yale offer snapshots of thoughtful intimacy between students and professors, deftly portraying the university’s marriage of promised power to inherited culture.  Every June, students graduate from Yale, ready to embark on their journey to the commanding heights of the international political economy.  But before they go, they must be certified as fully trained in the liberal arts by a Yale professor.  Yale is this communion of privilege and poesy, a stately mansion where the professor stands proudly at the apex of the knowledge class, while the student stirs hopefully on the threshold of the ruling class.

Fast forward to 2012. The University is now preparing to open a campus in the repressive state of Singapore. When students enroll there next year, they’ll be entering a Yale in which they will be forbidden to engage in political protest or join  “partisan political societies.”

Well meaning voices on the right and the left are crying foul. Setting up shop in Singapore, they say, is inconsistent with the university’s values. With a very few exceptions, no one has asked the obvious question: what if it’s not?

While I was at Yale, a very smart labor leader told me something I’ve never forgotten. Everyone at Yale, he said, thinks of the place as a pyramid, with the president at the top, the provost and deans beneath him or her, and the faculty beneath them. The reality, however, is that Yale is an upside-down pyramid. The president is at the bottom (the rest of the administration and faculty don’t matter at all), and it goes up and out from there to the board of trustees (aka “The Yale Corporation“) and the rest of corporate America.

The fact that the Yale administration has consistently and roundly ignored faculty opinion on this Singapore matter should tell you something about who calls the shots—even on vital questions of the university’s academic mission—and whose values matter most.  As Charles Bailyn—future dean of the Singapore campus, member of the Yale faculty, and son of Bernard Bailyn, arguably the most influential historian of the American Revolution in the last half-century—said: “The vote won’t derail our work.”

(Something else this labor leader told me: Yale is like a great big Saint Bernard lumbering through the alpine snow. It focuses on a distant goal—endowment growth, new campus in a peninsular tyranny—never casting a sidelong glance at the passing obstacle. Or protest.)

To its denizens, the place seems like a university; to its managers, as the U. Mass. economist Rick Wolff likes to say, it’s an investment fund—19.4 billion dollars at last count—with a small educational operation on the side.

So why is Yale in Singapore? After all, there are cheaper and easier ways to make money.

For starters, there’s that investment fund.

Members of the Corporation see the Yale board in the same way most wealthy people see their board memberships: not only as a source of cultural prestige but also as an opportunity for building personal economic networks. Corporation members get to make and get to know important contacts that way; they’re also sitting on top of a huge pile of cash in the form of the endowment that, if it gets put in the right places, can open up doors to them and their own investments.

From that perspective, the Singapore adventure could be a goldmine. As Jim Sleeper has written, three current and recent members of the Yale Corporation “are now or have also been directors, advisors, and investment officers of the Singapore Investment Corporation Pte Ltd. (GIC), which is chaired by the country’s prime minister and manages at least $100 billion of assets.” Just a hop, skip, and a jump from China, the Singapore campus will give Yale’s elites an excellent perch from which they can develop the kinds of personal contacts in East Asia that will lead to more and better investment opportunities.

These guys aren’t  just looking at their own pockets; they’re also looking at Yale’s. We forget that a lot of Yale’s spectacular endowment performance over the last two decades was due to its investments in private equity. Success in that arena often depends on insider knowledge and personal contacts, the kind of tactile wisdom one gains from years of experience and immersion in a place. Especially in a place like China, which is undergoing such rapid change—particularly in its regulatory regime—these kinds of contacts and networks are essential. Again, Singapore would be a very nice perch from which to develop them.

But more important than these immediate and even long-term monies is the vital question of class reproduction, specifically, ruling class reproduction. As capitalism becomes ever more global, the institutions that produce and reproduce its ruling classes must become equally global. Not only must students at Yale feel at home in that world—but Yale must feel like a home to that world. Particularly East Asia, which houses some of the largest and fastest growing economies in the world.

In theory Yale could simply expand its campus in New Haven and admit twice as many students, many of them from places like China, Hong Kong, and Singapore. But New Haven is a minefield for development, and its Board of Aldermen—now in the hands of Yale’s unions—can prove a source of thorny opposition (a point of leverage the unions recently exercised in their contract negotiations with Yale.)

Far easier to build a campus in Singapore, where the politics are, shall we say, under control. Singapore’s also more local: it might be easier to attract students from East Asia to Yale if Yale is actually in East Asia.

Insofar as Yale’s in the business of education—and remember what Rick Wolff said—it’s in the business of producing the people who govern (not for nothing did Yale political scientist Robert Dahl title his study of politics in New Haven Who Governs?). With so much of the action in global capitalism happening in East Asia, there’s a premium on breaking into that market, on being the university that trains those new governors, not only in China but ultimately perhaps in India as well.

Yale also knows that if they don’t get there soon, Harvard or Stanford will beat them to it, if they haven’t already. (NYU already has a campus in Abu Dhabi.) That wouldn’t just hurt Yale in the international market; it would also hurt them, ultimately, in the US market.

And what of those Yale faculty, who voted in April to register their “concern” over the deal?  I suspect they’ll ultimately get into line, pack up their pickets, and go home. Don’t get me wrong: their protests are sincere, if largely ineffective. But the same humanism that drives them to protest the Singapore adventure will ultimately compel them to close up shop.  As I concluded in that piece I mentioned above:

The faculty at Yale…juggle two heartfelt commitments:  a devotion to high-minded liberal principles and an equally strong devotion to Yale.  Although they see themselves as the bearers of an exalted tradition of humane learning – which envisions in education an ameliorative path to freedom and progress – they are ineluctably pulled by a not-so-exalted tradition of elitism.  Knowledge and privilege are, for them, necessarily fused; one cannot have the one without the other.  And so, despite their best intentions, they float everyday further and further from the spirit of Socrates, Mill, and Freud.  It’s not that they don’t care about ideas.  It’s just that for them a job at Yale is an idea.

And in time, a job at Yale in Singapore will seem like an idea too.  An idea whose time has come.

Update (July 21, 8 am)

Here’s an excellent—though old—piece by Jim Manzi on Harvard as “a tax-free hedge fund.”

So if you just think about how much cash went into the shoebox and how much came out of it, a more accurate accounting for Harvard for FY 2007 would, in rough numbers, be a lot more like the following:

Receipts = $2 billion of operating revenue + $7.3 billion of investment income + $0.6 billion of gifts to the endowment = ~$10 billion.

Operating costs = ~$3 billion.

Profit = $10 billion – $3 billion = ~$7 billion.

This explains why Harvard’s net assets increased about $7 billion in 2007, from about $35 billion to about $42 billion.



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