Stuck in the Old Country

Hanna Rosin’s new book The End of Men–a shorter version of which I read in The Atlantic two years ago–theorizes why women are out-performing men in various economic and employment categories. A recent NYTimes column by David Brooks provides a brief overview of the facts:

In elementary and high school, male academic performance is lagging. Boys earn three-quarters of the D’s and F’s. By college, men are clearly behind. Only 40 percent of bachelor’s degrees go to men, along with 40 percent of master’s degrees.

Thanks to their lower skills, men are dropping out of the labor force. In 1954, 96 percent of the American men between the ages of 25 and 54 worked. Today, that number is down to 80 percent.

Why? Here is Brooks’ brief summary of Rosin’s thesis:

Women . . . are like immigrants who have moved to a new country. They see a new social context, and they flexibly adapt to new circumstances. Men are like immigrants who have physically moved to a new country but who have kept their minds in the old one. They speak the old language. They follow the old mores. Men are more likely to be rigid; women are more fluid.

This theory has less to do with innate traits and more to do with social position. When there’s big social change, the people who were on the top of the old order are bound to cling to the old ways. The people who were on the bottom are bound to experience a burst of energy. They’re going to explore their new surroundings more enthusiastically.

My unscientific anecdotal experience is that female students constitute about 60-75% of my office visits, send about 60% of the emails I receive with questions about course material, and are more receptive to seeking advice about how to improve their course performance.

Double Standard

Recently in class I mentioned that at times it can be a good business decision to default on one’s loan obligations, and that doing so is not necessarily a sign of poor moral character. I recognized that my students–undergraduates all, mostly sophomores–have neither the business nor life experience to truly grasp my point, and even if they did they would not necessarily agree with it.  It’s legalistic, based as it is on non-recourse financing, bankruptcy reorganization, rejection of executory contracts, and other remedies that show a binding promise is not necessarily binding. It was not essential to our discussion and I didn’t belabor the point.

I thought of it again upon read James Surowiecki’s “Living by Default” in the December 19 & 26, 2011 New Yorker. (Keeping current with The New Yorker would require that I cut back on working, working out, sleeping, or other reading.) Surowiecki mentions that American Airlines chose recently to file for bankruptcy:

Declaring bankruptcy will trim American’s debt load and allow it to break its union contracts, so that it can slim down and cut costs. American wasn’t stigmatized for the move. Instead, analysts hailed it as “very smart.” It is now generally accepted that when it’s economically irrational for a company to keep paying its debts it will try to renegotiate them or, failing that, default. For creditors, that’s just the price of business.

Seeing that strategic defaults are an acknowledged business risk dealt with by contract terms, negotiations, and restructured business deals, Surowiecki asks why more homeowners with underwater mortgage debt don’t walk away from their loans?

The bursting of the housing bubble has left millions of homeowners across the country owing more than their homes are worth. In some areas, well over half of mortgages are underwater, many so deeply that people owe forty or fifty per cent more than the value of their homes. In other words, a good percentage of Americans are in much the same position as American Airlines: they can still pay their debts, but doing so is like setting a pile of money on fire every month.

It’s a valid question. Surowiecki provides a few practical answers–dealing with the consequences a loan default is hard work, many homeowners have unrealistic views of the their home’s value–but says the biggest problem is the social stigma of defaulting on one’s home mortgage:

According to one study, eighty-one per cent of Americans think it’s immoral not to pay your mortgage when you can, and the idea of default is shaped by what Brent White, a law professor at the University of Arizona, calls a discourse of “shame, guilt, and fear.”

If you are interested Surowiecki makes the point far better than I made it in class discussion.

Buffet Says Tax the Rich

From Warren Buffet’s 14-Aug NY Times Op-Ed “Stop Coddling the Super-Rich:”

But for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate.

My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.

More on Recent Graduates and Employment

The NY Times Online followed up Many With New College Degree Find the Job Market Humbling (see And Now That You’ve Graduated) with The Downsized College Graduate, seven op-ed articles with reader comments debating “reasons besides the economy to explain why today’s group is different.”  One explanation is that it’s your own damn fault:

[S]ome older readers cited factors other than the economy for the drop in the number of new graduates in the work force: that young people have a sense of entitlement, were sheltered by their parents, and partied through college. Or, if they worked automatons, they took no risks, expecting to be rewarded no matter what.

Richard Arum, co-author of Academically Adrift: Limited Learning on College Campuses,”  (see Not Getting What You Pay For), offers reasons neatly summarized by the title of his piece, Aimless, Misled, and in Debt:

  • “[P]ronounced and unprecedented” indebtedness
  • Young adults who “are highly motivated, but often directionless.”  They are “‘drifting dreamers’ with ‘high ambitions, but no clear life plan for reaching them.’ Indeed, more than a third of college graduates in our study reported that they aspired to own their own businesses, even though there was little evidence that entrepreneurial skills were being developed.”
  • Lest you think Arum lays all blame on this cohort’s character, he states “colleges and universities are implicated in the difficulties that graduates are facing, since not only did they fail to ensure that college students experienced rigorous academic coursework associated with the development of higher order cognitive skills, but, more troubling, they typically have abandoned responsibility for shaping and developing the attitudes and dispositions necessary for adult success.”

Other contributors have different perspectives.  Overall the articles and comments are provocative.  They are worth the time as you sit in the coffee shop reading your laptop with other under-employed graduates.

And Now That You’ve Graduated . . .

. . . you face greater economic uncertainty than your predecessors.  In an article with a headline that says it all, Many With New College Degree Find the Job Market Humbling, the NY Times reports “[e]mployment rates for new college graduates have fallen sharply in the last two years, as have starting salaries for those who can find work. What’s more, only half of the jobs landed by these new graduates even require a college degree, reviving debates about whether higher education is ‘worth it’ after all.”   Some of the grim facts:

  • The median starting salary for college graduates entering the work force in 2009 and 2010 declined 10%, from $30k to $27, compared with college graduates who entered the work force from 2006 to 2008
  • 56% of 2010 grads has held at least one job by this spring, compared with 90% of 2006 and 2007 graduates
  • About 50% “of recent college graduates said that their first job required a college degree”
  • “Young graduates who majored in education and teaching or engineering were most likely to find a job requiring a college degree, while area studies majors — those who majored in Latin American studies, for example — and humanities majors were least likely to do so. Among all recent education graduates, 71.1 percent were in jobs that required a college degree; of all area studies majors, the share was 44.7 percent.”

Timing and luck determine for more of our circumstances than commencement speakers acknowledge.  They say follow your dreams .  Never give up.  Live your passion.  A 1989 or 1990 birth year–not lack of merit, lack of academic achievement, lack of work ethic–will diminish the number and quality of choices available to most 2011 graduates compared to those born in 1985 or 1986.  A sad but true fact of life.

Kidder on the Financial Crisis Inquiry Commission Report

Rushworth Kidder, founder of the Institute for Global Ethics and author of multiple books on ethical decision making including How Good People Make Tough Choices, wrote a short commentary on the recently-issued Financial Crisis Inquiry Commission Report. Why must business schools, in particular, add rigorous ethics courses to their curriculum?  Because “an unethical culture — a ‘pervasive permissiveness,’ in the report’s words — played a key role in this crisis. Through an ‘erosion of responsibility and ethics,’ standards were relaxed, rules were circumvented, and long-term stability was sacrificed for short-term gain.”  Not astonishing conclusions, but changing that culture requires, first, that those who shape it recognize the need for change.