Back to our friends on Wall Street. Here are the results of a survey reported by Andrew Ross Sorkin of the Times in which 250 insiders from dozens of financial companies evaluated their own morality: 23 percent said they had “observed, or had firsthand knowledge of wrong doing in the workplace,” and 24 percent said they would “engage in insider trading to make $10 million if they could get away with it.” And 26 percent “believed the compensation plans or bonus structures in place at their companies incentivize employees to compromise ethical standards or violate the law.”
The key phrase in all this seems to me to be “if they can get away with it.” The only way to keep Wall Street—and, for that matter, other institutions, like unions, universities, and the government itself—on the straight and narrow is to let the people in them know we’re keeping an eye on them, and that the chances they’ll “get away” with malfeasance, misfeasance, or nonfeasance are slim enough to keep them from trying.
At the same time, it’s silly to think we can do without these institutions, an attitude that is most conspicuous among the antigovernment crowd. You want someone to send you that Social Security check, and to make sure that your plane will land safely, and to inspect the bridge you’re crossing so it won’t collapse. But you don’t have to assume that the people performing these functions are super-competent or super-dedicated. You have to keep an eye on them to know how they are hired and how they perform. Your regard for higher education does not mean that you have to uncritically accept every tuition increase, as we have done for far too long. In all these cases, the key is not automatic hostility to the institution, but automatic informed skepticism.
Speaking of sellouts
From the Obama administration, perhaps the most prominent casher-in has been Peter Orszag, who went from serving the public interest at the Office of Management and Budget to selling his skills and knowledge to CitiGroup. (The revolving door brought Jack Lew from CitiGroup to replace Orszag as budget director and ultimately to become secretary of the treasury.)
Now comes the news, supplied by Jim Rutenberg of the Times, that the young geniuses behind the Obama victory in 2012 are also cashing in. They recently formed a new business, Analytics Media Group, “to deliver to commercial advertisers some of the Obama campaign’s secret, technologically advanced formulas for reaching voters.”
An IOU at least
When Bill and Hillary Clinton were being persecuted by Ken Starr’s team of zealots from the Federalist Society, a friend of mine, knowing the Clintons were financially strapped, took on the task of raising money for their legal defense. He was able to persuade thousands of donors, large and small, to provide the needed funds. When the Clintons left the White House, books and speaking engagements quickly made them quite wealthy, but they have still not offered to reimburse those donors. I admire them both, but if you were in their shoes, wouldn’t you feel just a tad guilty, especially about the donors of modest means?
Old tricks, new dogs
Back to the banks’ most recent shenanigans. It seems that the Commodities Futures Trading Commission has, according to Gretchen Morgenson and David Kocieniewski of the Times, “taken the first step” in examining Goldman Sachs’s warehouse operations. They also report that the Federal Reserve is reconsidering its 2004 decision allowing banks to own commodities. (Why on earth did the Fed allow that in the first place?) And a Senate Committee “is expected to focus on how banks have taken advantage of loosening federal regulation to buy warehouses, pipelines, oil tankers and other infrastructure used to store basic goods and deliver them to
consumers.” One place I suggest they investigate is the oil tank cars used to transport oil by train—the kind that exploded and killed all those people in Canada. Most of these tank cars do not meet federal safety regulations, and most are not owned by the railroads. How many are owned by the banks?
Best where most needed
Back to my point about not being automatically in favor or against an institution. You may have heard from public school advocates that charter schools perform no better than public schools. Indeed, this is largely confirmed by the most recent study by Stanford University’s Center for Research on Education Outcomes, although the charters did do slightly better on reading. In some places, however, charter schools made a big difference. In general, poor children, particularly African American and Hispanic, made significant gains at charters. Charters also produced the best results in states that shut down the poorest-performing schools. Among the places where charter schools have performed significantly better are Washington, D.C., and New York City—two cities where teacher’s unions and their allies’ opposition to charters has been fiercest.
Not just a few bad apples
One cause to which this magazine has been dedicated for forty-four years is better teacher training. That we have not been as successful as we would have liked is, alas, the verdict of a recent report by the National Council on Teacher Quality. It rated teacher preparation programs at undergraduate and graduate schools on the basis of selectivity, student teaching requirements, and how well they prepared teachers to teach math and reading. Of the 1,200 programs from 608 colleges and universities included in the study, only four, all for secondary school teachers, got four stars, the top rating. Fourteen percent got zero stars.
If the Times erred in not putting Obama’s Knox College speech on its front page, it earned gold stars by leading with Goldman Sach’s aluminum warehouses. And it deserves credit for another lead story about how Standard & Poor’s has gone back to dishing out overly generous ratings to the securities it evaluates, just as it and other ratings agencies did to help us get into the economic mess of 2008. “Of half of the deals that it rated since last September,” according to Nathaniel Popper of the Times, “S&P has given at least a portion of the deal a higher rating than the other agencies rating the same deals.” As a result, it is no surprise that Standard & Poor’s has tripled its market share in the first half of 2013. If you want an example of what I was talking about by “keeping an eye on our institutions,” these stories are it.
Men in black
Several years ago in this space, I expressed concern about the spread of SWAT teams. But I had no idea how absurd—and dangerous—the situation had become until, thanks to a new book by Radley Balko, The Rise of the Warrior Cop, excerpted in the Journal, I learned that by 2005, 80 percent of towns between 25,000 and 50,000 people have SWAT teams that collectively conducted approximately 50,000 raids nationwide.
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