How to Buy a University Department
Bradley Foundation and Kochs buy a new UW-Madison economics institute.
James Arthur Pope
Back in June I reported on the new head of the conservative Bradley Foundation’s board of directors, James Arthur Pope, a right-wing plutocrat whose thuggish, my-way-or-the-highway style managed to alienate even the ultra-partisan Republicans in his home state of North Carolina. Pope, I noted, used his foundations to donate half a million dollars to North Carolina’s public university system to create separate free-market-related programs in the economics department and help fund the salaries of a dozen professors. “Don’t be surprised to see the Bradley Foundation follow Pope’s lead in creating privately funded centers” within the UW-System, I predicted.
Sure enough, a new Center for Research on the Wisconsin Economy, was recently created, with $240,000 in funding from the Charles Koch Foundation and $100,000 from the Bradley Foundation, as Madison’s Cap Times has reported. Pope has collaborated for years with the Koch Brothers, and his family foundation, which has assets of $150 million, has given money to at least 27 groups supported by the Kochs, as I noted. If more money is needed for this new right-wing outpost at UW-Madison, Pope can always draw on his own foundation.
Conservatives have been obsessed with what they see as the “liberal bias” of universities for decades. In the mid 1980s, the Bradley Foundation bankrolled the conservative Wisconsin Policy Research Institute to provide balance, as one Bradley board member told me, for the liberal LaFollette Institute at UW-Madison.
I have no doubt many of the professors working with the department are liberal, but that barely begins to describe how the institute operates. This is one of the world’s premier institutions in public administration courses and research, with a wide purview, doing research on social policy, health and aging, public management, energy and the environment, international trade and development, science and public policy, and many other topics.
Like any university department, its goal is to advance the frontiers of knowledge, with peer-reviewed research, often with dull and wonky results: recent research papers include such oh-so-controversial ones as “The Design and Practice of Integrating Evidence: Connecting Performance Management with Program Evaluation” and “Making Sense of Performance Regimes: Rebalancing External Accountability and Internal Learning” and, yawn, “Balance Sheet Effects on Monetary and Financial Spillovers: The East Asian Crisis Plus 20.”
Yes, there are more political topics, like its recent research paper, “The Complicated Partisan Effects of State Election Laws,” which concludes that Republicans rather than Democrats are actually hurt by restrictions on early voting. If anything, that conclusion helps make the GOP look less partisan, but the institute reported the results its research discovered.
But the WPRI, for whatever reason, lacks the clout it once did, and its research always lacked the pedigree of a university. So why not simply create your own department at one of the top universities in the world? The Center for Research on Wisconsin’s Economy, or CROWE, will be caw cawing a conservative tune, presumably to help drown out all those liberal econ professors presumed to dominate academia.
But economics is a quite different matter, than, say, political science, where liberals surely dominate. One study found that those who take economics courses are actually more likely to be conservative. An analysis of economics professors by fivethirtyeight.com found that 60 percent were liberal and 40 percent conservative in their ideology. Another study found econ professors were about twice as likely to vote for Democratic candidates, but I suspect the ratio would have been different as recently as 15 years ago, before the Republican Party began to reject science and other university research. The broader point is there are certainly many economists with a conservative viewpoint whose work could be funded, something the Bradley Foundation has done for decades.
But even conservative professors can’t be counted on to deliver precisely the results demanded by someone like James Pope, which is where CROWE comes in. It will be run by Professor Noah Williams, who lobbied to get a job from Gov. Scott Walker and worked as an advisor to Walker’s presidential campaign, and then did a laughable “study” finding the manufacturing tax credit created all kinds of jobs even though such employment has been flat in this state and has trailed neighboring states in growth. Our Data Wonk columnist Bruce Thompson noted the many problems with Williams research.
Williams followed that up with a report claiming a huge economic multiplier for the Foxconn plant. The consultant hired by Foxconn came up with a 2.7 percent multiplier in jobs, which is grossly inflated, as economists William L. Holahan and Charles O. Kroncke have concluded. But Williams went even higher than Foxonn’s hired gun dared to do, using a multiplier of 3.0 to jack up the jobs numbers.
UW-Madison spokeswoman Meredith McGlone assured the Cap Times that donors to CROWE will not set its research agenda or direct the research conducted there. No indeed. “Decisions about the way resources are allocated rest with the executive committee of the Department of Economics,” she said.
If that turns out to be true, you can bet the Bradley Foundation and Koch Brothers will terminate their funding. They want the kind of research cigarette companies bought for years to “prove” tobacco doesn’t cause cancer. But Williams has already proven he is a Walker toady. And UW officials, after years of seeing their funding targeted by Walker and Republican legislators, no doubt felt they had no choice but to hold their noses and approve this smelly deal. I doubt it’s the last such proposal the Bradley Foundation will offer UW-Madison. The Wisconsin Idea may gradually be replaced by the “golden rule”: he who has the gold rules.
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“One study found that those who take economics courses are actually more likely to be conservative.”
It’s a moral outrage that people who actually know something about how economies work tend to be less liberal than those who know nothing.
“The Wisconsin Idea may gradually be replaced by the “golden rule”: he who has the gold rules.”
Enormous Blind Spot alert: This is and always has been true under the Wisconsin Idea. The difference is that different people control the gold, not that those with the gold don’t control. And in both cases, the controllers are self-interested: each promotes the system they think best.
As for the Wisconsin Idea, one can criticize it as well. For one aspect (from wikipedia entry on Wisconsin Idea ): “The progressive worker’s compensation program was first introduced by German immigrants, who were abundant in Wisconsin. The system was adopted from the existing system in Germany, which was based on the idea that the employer was obligated to take care of his employees and keep paying them as they grew old.”
While reasonable people can certainly think the pension system on balance was a good one, there are a lot of serious problems with the concept, including the fact that ultimately it was a reversion to the old feudal lord and his responsibilities to his peasants concept. How Progressive was that?
How well did it work out for employees when their employers went bankrupt? How well did it work out for children of the employees when death, especially early death, ended the pension payments, instead of death leaving an inheritance which would increase their own independence from the feudal lord?
As a cultural modifier, why would thoughtful people WANT to turn employees and retirees into dependents? Why wouldn’t we prefer retirees to be financially independent of their former master? Why would anyone want a company pension system which demands people stay with the same Lord for many decades, instead of a system which allows employees to go where they want, taking their retirement savings with them? Company pension systems keep people from leaving for a better job, or a preferred locale. I understand why the feudal lord doesn’t want his trained peasants running away, but why would the peasants want that system?
Company pension systems, as well as government pension systems like Social Security promote dependence, not independence. They promote turning responsibility for one’s future well being over to others, and discourage both the benefits (and of course the pitfalls) of independence.
One can reasonably argue that the benefits of corporate and government pension systems outweigh the costs, but one cannot reasonably argue that those costs do not exist.
Now I shall sit back and watch the deep thinkers here refute every point I have made simply by calling me bad names and pontificating about my spelling or grammar. Have at it: by doing so, you only reveal your own inability to engage in reasoned discourse.
The problem with most macro-economist like Noah Williams, is that they base their pronouncements on a hill of presuppositions (or assumptions if you prefer that term) none of which they actually confirm with current or historical data. My experience with economist (I been around them all my life) history only is relevant back to 1960 or possibly to the end of World War II. And then there is the matter of reducing everything to a mathematical formula. In the 19th century economist (save one) considered labor a mere commodity. The formula for generating wealth was to acquire commodities of production as cheaply as possible and sell high. This resulted in a concentration of wealth in the hands of a very small number of individuals leaving the economy unable to withstand cyclical boom/busts and it eventually crashed in 1929.
When economists versed in the other social sciences began to realize that “labor” was not a commodity but in fact the wealth generating mechanism. It therefore should not be treated in the same way as capitol or raw materials. There is also the matter that labor consists of human beings and we have a moral/ethical obligation to treat human being with more respect than iron ore or a sewing machine.
The notion of a pension system then, was to take some of the wealth generated by labor and set it aside for when the laborer was no longer able to physically generate wealth. In that way labor benefits from the wealth it creates. Pensions don’t promote anything other than sharing the wealth labor generates.
BTW I didn’t find an inordinate problems with your grammar or spelling.
We’ll written, mkwagner.
Hi mkwagner, “BTW I didn’t find an inordinate problems with your grammar or spelling.” Thank you. I suspect that if you check back later you will find some who did. You are one of those capable of rational thought and polite discourse, something which is sadly lacking with all to many who disagree these days.
“The notion of a pension system then, was to take some of the wealth generated by labor and set it aside for when the laborer was no longer able to physically generate wealth. In that way labor benefits from the wealth it creates. Pensions don’t promote anything other than sharing the wealth labor generates.”
I agree with you so far as you take it. That is true. However, having the company set aside the money in its own pension fund benefits the company rather than the worker, on two fronts: pensions stop when the retiree dies, or never get paid at all if the worker dies. If the retiree does young, the company gets the benefit of the unspent funds, and the heirs get nothing. In a more tragic case, because it affects all the company’s workers/retirees, companies (and governments, for that matter) which run into financial problems often short their payments to the pension funds. If they return to prosperity they may make up the shortage, but if they fail, once again the dependent worker is left with little or nothing in pension, and again, no capital.
We are seeing this across the country now, with calamitous shortfalls in state and municipal pension funds and health benefit funds, and I suspect the real deficit is FAR higher than stated because so many politicians insist on projecting unreasonably high rates of return on their existing funds.
Why not allow or encourage…even insist…that the worker set aside the money which would have gone into a corporate or government retirement fund? Just as there is today mandatory deductions for Social Security, there could be the same for private Roth IRAs, with restrictions -as today- on what can be bought for those funds.
One downside is that a private system of ownership will not benefit some people because they will still invest foolishly, or unwisely, or unluckily, and may lose much of their savings. that is true. However, the system we see today sees the employees of entire industries shorted, I think a reasonable argument can be made that there is no perfect system, but personal possession and responsibility for one’s own retirement will benefit the greatest portion of workers.
IIRC, CostCo automatically enrolls every new employee in an IRA, with company matching some level of contributions. The default deduction is 2% of income, but can be set up or down to whatever level the employee wishes. Also IIRC the investments are made in one of the T. Rowe Price funds, which historically has been one of the best group in the country.
This means that the employer is pushing employees to save for retirement, gets them into a really good group of mutual funds which change investment strategies as the employee ages, and the money is the employee’s property. When the employee leaves for another company, the money still belongs to the employ. That seems like a vastly better deal that putting several years into a company, then leaving before vesting.
The company benefits in at least two ways: employees who see their own wealth growing are likelier to be happier and more likely to remain, than employees making contributions to a pension fund from which they may never benefit, and from which their heirs will definitely not benefit.
The company also benefits from not being responsible for for the employee retirement fund. that is a big burden off their shoulders.
Since the company is constantly hiring people, they have a constant incentive to make employees satisfied by monitoring the quality of the funds they have gotten them into. I don’t mean the individual accounts, but the quality/honesty/management of the fund family.
While there are no guarantees in life, and some people will surely lose out, I think the vast majority of workers and their families would be better off with personally owned wealth than a possibly unreliable claim against a pension system.
PS mkwagner: “”In that way labor benefits from the wealth it creates. Pensions don’t promote anything other than sharing the wealth labor generates.”
Just to be clear: I disagree with the above statement because the worker doesn’t get the wealth. If the worker works long enough to qualify for a company pension, s/he retiree gets a stream of payments, with zero left over for the worker when s/he dies. To me, sharing the wealth means the employee gets capital, not income the company generates with that capital.
You have made my day brighter Bruce Murphy. There is hope in Madison. Where are the protests? Will the Madison singers scream in the Rotunda. We shall overcome?
@Penrod – a few thoughts on your comments:
1. You seem to imply that it is an either/or answer for retirement – the employer either contributes to a pension on behalf of the worker (or at least makes a promise to do that, even if they don’t make the contribution), or they give the worker that money directly to do as they want. However, I don’t think that’s what has happened – many pension plans have been eliminated, but I haven’t seen a bump in wages that would indicate all those workers now get that money directly. I know some companies started putting that money into employees’ 401(k) accounts, but those discretionary contributions usually end as soon as the employer has a bad quarter, and often never come back at the same level. So workers are getting less than they formerly did.
2. Pensions do have survivor benefits if they are set up that way; I know surviving spouses who are still receiving pension benefits after their spouse passed away, but cannot speak to how common this practice is.
3. The PBGC (Pension Benefits Guarantee Corporation) is supposed to insure pension plans in case they default due to employer bankruptcy. The law needs fixing and updating, but there is a mechanism to protect workers.
4. In your Costco example, you assert that the employer has the incentive to make good choices on choosing a fund manager. I don’t agree – I’ve never heard of a potential job applicant base their decision on who the company’s retirement savings manager is. The applicant will be more concerned about if there is a plan and if the company contributes to it at all.
I’m not going to argue that the current pension system is the best system ever, but I think you overstate the benefits of the move to the IRA/401(k) system as it currently works.
I read the Williams paper on Foxconn, thinking that it would be a breath of fresh air to get an unbiased university perspective. I read it three times, with increasing bafflement. It was not only riddled with typos and seemingly intentional obfuscations but made such bald assumptions that it hardly seemed possible to be the work of a qualified academic.
And then I read the Capital Times backgrounder on CROWE and it instantly made sense.
It’s a travesty to have a propaganda arm of a particularly onerous wing of a political movement which denies facts and shows disdain for academics associated with our great state university.
@ Penrod: I don’t know about “refuting” your points. But I’d offer a few observations or comments.
I think Bruce’s commentary is to the idea, which I’ve seen raised by many others, that economists, as a profession, tend to favor the status quo in terms of thinking. In any event, universities are supposed to be places where free inquiry is promoted. Once you’ve installed money into the equation, free inquiry becomes or will be suspected to be “what do my benefactors expect and want to hear?” I ascribe to the view of Upton Sinclair that: ‘It is difficult to get a man to understand something, when his salary depends on his not understanding it.”
Regarding your comments on the Wisconsin Idea, workers compensation and pensions: You mix two subjects and discuss them as if they were the same thing. Worker compensation was an idea promoted in the Wisconsin idea that allowed workers to be compensated for their job related injuries. Employer funded company pensions for workers was not anything that was ever legislated that I’m aware of before something like it was adopted by the Social Security Act in 1935. Company pensions have generally existed outside of public regulation, with the exception of somethings like the Pension Benefit Guaranty Association, which was mentioned and ERISA (Employee Retirement Income Security Act) which was not. These are noncontroversial forms of regulation that have done what Congress apparently thinks can be done in terms of protecting employee pensions. Which is not much evidently, as the ongoing looting of pensions by corporate employers and investment bankers, advisors and managers continues apace these days.
As far as employees being more responsible for their retirement and managing their retirement funds, you are right in principle. One of the reasons for the shortfalls in retirement pensions by corporate employers is that pensions are often leverage (i.e. looted) by these employers for their own purposes. They are subject to manipulation and disposal like other corporate assets in merger and consolidation deals. Remember Ross Perot made this something of an issue when he ran in 1992. Then we’ve had the orange County disasters. I seem to recall that pension has been looted on at least two occasions. Enron destroyed the pensions of its employees. Then you had 2008 where big investment banks including Goldman Sachs took turns looting public pensions like the one in Jefferson County, Alabama selling “collateralized debt obligations” and “credit default swaps.” One gets the sense that with the country being in the hands of these corporate manipulators, one is more or less helpless to avoid “divestment” despite one’s best efforts to prepare for retirement.
Back to your point, Bruce, it is alarming that the super wealthy are buying departments at colleges and universities. The Upton Sinclair quote in post # 9 is telling in this context. “It is difficult to get a man to understand something when his salary depends on his not understanding it.” Increasingly powerful oligarchs in this country are marginalizing academics because they do not understand them, cannot understand them, and because they fear that they could be understood by people they wish to control. This is about mind control. Colleges which used to promote liberal arts are dropping their drama departments and herding students into majors such as insurance.