University Tenure, RIP

From The Chronicle of Higher Education:

What does vanishing tenure mean for higher education? For starters, some observers say that college faculties are being filled with people who may be less willing to speak their minds: contingent instructors, usually working on short-term contracts. Indeed, the American Association of University Professors says instructors need tenure to guarantee that they can say controversial things inside and outside the classroom without being fired.

But others argue that the disappearance of tenure is actually not the worst thing that could happen in academe. The competition to secure a tenure-track job and then earn tenure has become so fierce in some disciplines that academe may actually be turning away highly qualified people who don’t want the hassle. A system without tenure, but one that still gave professors reasonable pay and job security, might draw that talent back.

Ultimately, though, the future of tenure may hinge on a different calculation: Does its absence hurt students enough in the classroom—something research has shown—that the cost savings to institutions are no longer worthwhile?

via Tenure, RIP – Labor & Work-Life Issues – The Chronicle of Higher Education.

(1) I’m not certain if there is any broad danger to free speech in academia. A few high profile cases exist, but they seem much more rare than we might speculate.

(2) I do believe competition will improve all levels of education in the United States. However, other institutional changes must accompany any major change in faculty hiring. Administrators must implement a stable, non-controversial method of evaluating teachers before attempting to reduce tenured faculty. Administrators must bite the bullet too; there ought to be an equivalent evaluation standard for non-instructional staff. Furthermore, schools need to implement broad incentives, making sure successes come with immediate and commensurate rewards.

(3) I don’t believe, prima facie, that reducing tenured faculty harms student achievement. In my personal experience, some of the best teachers I’ve had were not tenured and some of the worse still are. It should be easy to find many instances where a stable tenured faculty harmed student progress – in fact, we know many instances within urban school districts and less-than-Ivy-calibre colleges.

So should tenure die? I don’t think all tenured positions should vanish overnight, and I don’t think any tenured position in a college, primary, or secondary school should get the ax without a careful consideration of other institutional changes (a la (2) above). But neither do I consider tenure indispensable to the educational system.

Salmon on Expensive Home Foreclosures

Exerpt from Felix Salmon (HT: Around the Sphere)

Streitfeld’s piece is bylined Los Altos, California, a town where the median home is $1.5 million. In such towns, you don’t need to be a millionaire to find yourself in a multi-million-dollar home. Let’s say you’re a tech geek who found yourself with $200,000 for a downpayment on a house over the course of the dot-com bubble. So you buy a million-dollar home, and then start up a series of companies. You need to live, of course, and you can’t afford to pay yourself a salary, so you do two or three cash-out refinancings on a home which by 2007 was worth $2.5 million. Before you know it, you’ve got a $2 million mortgage, no way of paying it, and a home which is worth significantly less than the mortgage. Realistically, you have no choice but to default.

Even after accounting for your initial $200,000 downpayment and a series of mortgage-interest payments along the way, you still took out of the house much more money than you put in: the cost of living there over the past 10 years has probably been negative to the tune of well over half a million dollars. Essentially, the house has paid you $50,000 a year — money which is easy to spend, and is now long gone.

In any event, these were jumbo mortgages when they were taken out, and they’re jumbo mortgages now — none of this has anything to do with Fannie or Freddie, except insofar as the homeowning majority of the population might yet wake up and, emulating the rich, default on their underwater homes. And so the GSEs are desperately, and unconvincingly, trying to persuade them not to do so:

Knowing the costs and factoring in the time horizon, some borrowers have made the calculation that it is better to purposely default on the mortgage. While I understand how that might well be a good decision for certain borrowers, that doesn’t make it good social policy. That’s because strategic defaults affect many other families and communities. And these costs – or as they are known in economic jargon, externalities – are not factored into the individual borrower’s calculations.

Well, sure, it’s not good social policy to strategically default. Fine. That doesn’t stop the rich, and it shouldn’t stop the rest of us either. I think it’s pretty clear which direction we’re headed in, and moralistic exhortations aren’t going to turn the tide.