Writing: A Basic Skill All Graduates Need

This is the fourth and last  in a series of blogs that I have written  in response to a request from Bob Clary, Webucator’s community manager. The series concerns professional and business competencies that recent grads need. The competencies that I am covering are ethics, job search, interpersonal skills, and writing. This blog concerns writing.

It is important to write well, and it is not too late to learn how. In 2013 CNBC reported that one of the chief reasons that firms reject job applicants is poor writing. CNBC adds: “In survey after survey, employers are complaining about job candidates' inability to speak and write clearly.”  USA Today lists Siemens, UPS, BAE Systems, and Loyalty Factor as firms that emphasize writing skill when they hire recent grads. The USA Today article quotes the MetLife Survey of the American Teacher (p. 147), which indicates that 97%  of executives believe that the ability to write clearly and persuasively is “absolutely essential” for a student to be ready for college and a career.  

Nevertheless, in 2003 the College Board’s National Commission on Writing published a report entitled The Neglected R: The Need for a Writing Revolution. The report notes that only about 25% of students at grades 4, 8, and 12 are at the proficient level of writing. That is, most high school grads “cannot produce writing at the high levels of skill, maturity, and sophistication required in a complex, modern economy.” Moreover, Jill Singleton Jackson finds in her 2003 doctoral dissertation at the University of North Texas that a sample of master’s degree students does not write better than high school seniors.

Three steps are helpful to better writing:  (1) practice, (2) learning, and (3) observation.  The steps do not need to be followed in any order; rather, students and graduates should integrate practice with learning.     

Students can practice by writing at least two 200-word letters to editors or posts to blogs each week.  I comment on Forbes , my favorite business publication, and I have my own blog at http:www.mitchell-langbert.blogspot.com. Having your own blog is an excellent way to practice writing if you post at least two 200-word posts each week.  

The second aspect of practice involves focusing on grammar. Look up grammatical issues online and in textbooks.  When you send a letter or post to a blog, try to perfect your grammar and syntax by referring to grammar books. That leads to learning.  Learn further by reading a few pages about grammar each week.  The Chicago Manual of Style, English Grammar for Dummies, Purdue's Online Writing Lab, and similar books and websites are excellent sources. 

The ambitious student might read a few pages from Strunk and White's classic Elements of Style each week.   The Chicago Manual of Style is available online for $35 for one year.  I also subscribe to the Unabridged Merriam-Webster Dictionary. 

Third, you should read every day. This site posts two lists of great novels (one from critics and one from readers).  Well-written business magazines such as Forbes are also useful reading. The point is to observe how good writers write. 

Common Writing Issues

I grade about 200 student papers per year.  The following are common writing issues with which students grapple.

A. In regards to

 In regards to is wrong.   The following are right:

With regard to,
In regard to,
As regards,
Regarding.

B. Semicolons

Several of my students have been grappling with semicolons. They are simple. They only do three things.  This essay is short and to the point.  Recall that independent clauses can stand as sentences.

Semicolons are used as follows:

(1) To join two independent clauses: I go to class; I learn grammar.

(2) To join lists in which commas are present in each item: To learn, I have traveled to Midwood, Brooklyn; Montevideo, Uruguay; and Los Angeles, California.

(3) To join complicated clauses that include commas: I love to study grammar, my favorite; to do my writing assignments; and to read Hayek's and Hazlitt's books.

  C. "Would" and “could.”

 See  http://www.ecenglish.com/learnenglish/lessons/how-use-would  and

http://www.englishpage.com/conditional/presentconditional.html .

Recently, about one third of my students has misused would or could in their papers. I wish that would and could were easy to use. Making them easier is their limited number of uses. If you commit the common uses of would to memory, you can limit yourself to those uses and so refine your English writing. If I were you, I would not overuse the word would.

Here are five common uses of would:

(1) As the past tense of "will": "You said that you would let me drive your Lamborghini today."

(2) To express a polite request: "I would like a Lamborghini please."

(3) To describe a repeated action in the past: "When I was a lad, I would walk nine miles to school each day. After school I would chop wood."

(4) To express an unreal situation: "Owning a Lamborghini would let me drive fast."

(5) To express an unreal conditional: "If I were a millionaire, I would own a Lamborghini."

Would is not used for statements of fact or general truth: "George Washington would be the first president" is incorrect. It is also incorrect to write "Under most human resource systems today pay equity would be permitted." 

"Would" is used for unreal situations; it is also used for situations that are conditioned upon unreal situations or unreal circumstances: I wouldn't do that if I were you.

These are related to the second and third conditional forms.

Zero or present real conditionals are statements of fact,  generality or law. They state what you usually do. They use the present tense: When I attend Professor Langbert's class, I sleep. 

First (real) present conditionals are statements of conditional fact.  They state the condition that makes a real future event possible and a future real event contingent on a present action: If I attend Professor Langbert's class, then I will sleep.

Second (unreal) present conditionals state an unreal or impossible condition to an unreal or impossible situation. They express the present, but the present condition is expressed with the past tense and the contingent event is expressed with would or could. In the second or unreal conditional you use would to express a situation that you don't think will happen: If I never attended Langbert's class, then I would never sleep.

Third conditionals describe an imaginary past and use the past perfect to express the imaginary past condition and would plus the present perfect to express the unreal past situation that would have resulted: If I had not enrolled in Langbert's class, then I would not have slept this semester.

 If you limit your uses of "would" to unreal situations and conditionals, then you will avoid a common writing error.

D.  Avoid unnecessary or extraneous words like very, extremely, totally, and really. Avoid using the first person (in my opinion).  Don’t insert phrases like  I think that… If you didn’t think it, you wouldn’t be writing it.

E.  Check that the verb tense in each paragraph does not change unless you have a specific reason.  

F. If necessary, check the verb tense that you are using against the discussion on English Page: http://www.englishpage.com/verbpage/verbtenseintro.html .

G. Only words that require capitalization should be capitalized. Check your writing against the capitalization rules on Grammarbook.com: http://www.grammarbook.com/punctuation/capital.asp .

H. Check your writing to make sure that restrictive phrases and clauses are not preceded or followed by commas and that non-restrictive phrases and clauses are preceded and followed by commas. To understand the difference between restrictive and non-restrictive clauses, read these websites: http://gtotd.blogspot.com/2007/08/set-off-non-restrictive-phrases-or.html and http://library.cn.edu/wacn/pdfs/clausetry.pdf  .

Non-restrictive clauses add a little information: George Washington, the first president, rode a white horse.

Restrictive clauses are central to the sentence's meaning: George Washington the first president rode a white horse, but during a parade white horses rode upon George Washington the bridge.

I. Do not use a comma to separate the subject of the sentence from the verb. Do not use a comma to separate a dependent or subordinate clause that ends a sentence unless it contrasts with or contradicts the meaning of the rest of the sentence or is nonrestrictive.    When you inject nonessential remarks into a sentence, enclose them in commas: , in his view, ; , as she remarked, . There should be commas before and after the nonessential or parenthetical remark.

J. Check your sentences for independent clauses, and if two or more are in a sentence, punctuate the linkage or linkages correctly.  An independent clause can be a sentence in its own right. If there is more than one independent clause, then there are four potential options for correct punctuation:

(1) Use a comma followed by a coordinating conjunction. The coordinating conjunctions are FAN BOYS: for, and, nor, but, or, yet, so.

(2)  Use a semicolon.

(3) Use a semicolon followed by a conjunctive adverb or adverbial phrase followed by a comma.

(4) Bite the bullet. Often, the best option is a shorter sentence. Consider breaking the separate independent clauses into separate sentences.

An Example of a run-on sentence, a sentence that lacks proper linkage of independent clauses, is as follows: 

Rudolph Valentino was a famous movie star, he broke box office records and he broke many hearts.

Four alternative potential corrective measures:

1) Rudolph Valentino was a famous movie star, for he broke box office records, and he broke many hearts.

(2)  Rudolph Valentino was a famous movie star; he broke box office records; he broke many hearts.

(3) Rudolph Valentino was a famous movie star; specifically, he broke box office records; also, he broke many hearts.

(4) Rudolph Valentino was a famous movie star. He broke box office records.  He broke many hearts.

As revised, all four are grammatically correct from a technical standpoint. Which is the most effective? I say (4). Yet, students insist on long sentences. One time, I broke one sentence, written by a senior, into six separate sentences.

 K. Compound words

Students grapple with writing compounds. For some compounds there is a single convention, and writing it differently from the convention can be viewed as incorrect writing. For other compounds there is disagreement, and you need to consult a style guide that you use consistently.  For example, mother-in-law is always hyphenated, racetrack is always closed, and post office is always open. Notice that the three ways to handle compound words are hyphenated (part-time), closed (keyboard), and open (real estate, middle class). In other cases the handling of prefixes and suffixes may be controversial, but you can consult a style guide and consistently use the style guide's approach.

In deciding which form to use, the first step is to consult a dictionary. This is true for words with prefixes and suffixes if the prefix or suffix is frequently used. For example, overeater is a closed compound word because Dictionary.com says so (see:  http://dictionary.reference.com/browse/overeater?s=t)

I usually use the Unabridged Merriam-Webster Dictionary or Dictionary.com, which is available for free on the Internet.  If the word is not in the dictionary, then you need to consult a style guide. The Chicago Manual of Style (CMS) is a widely used style guide that is appropriate for business and academia. I subscribe to it for $35 per year and can access it online at http://www.chicagomanualofstyle.org/home.html . I also own the hard copy and, as well, several other style guides. A style guide commonly used in business schools is the American Psychological Association guide.

Happily, CMS's excellent hyphenation table is available for free online at http://www.chicagomanualofstyle.org/16/images/ch07_tab01.pdf . It shows how to handle words with prefixes and suffixes as well as many compounds. For example, a student may wish to write I am an overthinker. The Microsoft spell checker does not accept overthinker, but in the CMS list of words with prefixes it is evident that overthinker rather than over thinker or over-thinker is the right form. This is what the CMS hyphenation table shows:

Over   overmagnified, overshoes, overconscientious

 CMS consistently uses the prefix over with a closed form.

L. Compound Adjectives

If you are unsure of a compound's form, you should look it up in a dictionary, and if it is not in the dictionary, you should consult a style guide that you consistently use.  There is an additional issue: hyphenation of compound adjectives that precede nouns. Note that when compound adjectives follow nouns they are not hyphenated.

 There is a good discussion of compound adjectives at the Kent School of Law website.

Skills Recent Grads Need the Most: Interpersonal Skills, the Sine Qua Non of Business Success

This is the third in a series of blogs that I am writing in response to a request from Bob Clary, Webucator’s community manager. The series concerns professional and business competencies that recent grads need. The competencies that I am covering are ethics, job search, interpersonal skills, and writing. This blog concerns interpersonal skills and communication.

Interpersonal skills are among the competencies that are most critical to early career success.   The classic book on the topic is Dale Carnegie’s How to Win Friends and Influence People. Three other excellent books on interpersonal skills and communication are Whetten and Cameron’s textbook Developing Management Skills, especially Chapters Four, Five, and Seven, Steven Covey’s Seven Habits of Highly Effective People, especially Chapter Five, and Andrew DuBrin’s Winning Office Politics: A Guide for the Nineties. 

Whetten and Cameron point out (p. 285) that junior managers who are insensitive, abrasive, intimidating, cold, aloof, arrogant, or untrustworthy frequently find that their careers have been derailed. Learning how to deal with people is essential to getting ahead and moving up in any organization, whether it is in industry, government, academia, the military, or healthcare.

Empathic Listening

Dale Carnegie gives simple, sound advice: Don’t criticize, condemn, or complain. Give honest appreciation. Be honestly interested in others. Remember others’ names. Smile. Be a good listener. In short, getting others to trust and like you depends on your communication skill as well as your dependability, hard work, and efficiency.  

Steven Covey also emphasizes the importance of what he calls “empathic listening.” In Chapter 5 of Seven Habits, “Seek First to Understand, Then to Be Understood,” Covey emphasizes the importance of putting oneself in the shoes of the person with whom one communicates.  Covey writes (p. 240): “When I say empathic listening, I mean listening with intent to understand.”  In other words, we should care about those with whom we work. 

Certainly, building personal relationships or even friendships with our coworkers is a desirable strategy.  Covey writes of an emotional bank account to which we make deposits when we make others feel good, and from which we make withdrawals when we ask for favors or forgiveness.  Covey shows that empathic listening can be especially effective with respect to integrative or win-win negotiation whereby we attempt to expand the pie rather than to divide it.

There is no question that empathic listening and integrative negotiation are effective much of the time.  They are most valuable in the context of long-term relationships that are important to us.  The more that we can use emotional intelligence to build trust, respect, and understanding through listening, the better our long-term relationships will be.

Contingency Theory of Interpersonal Tactics

Not all relationships in business are long-term, though.  We frequently need to interact with customers, suppliers, consultants, or associates whom we will meet only once or a few times.  Also, we may have colleagues with whom it is difficult to be empathic.  Empathy is a crucial strategy, but it is high in cost.  It is important to be empathic with those who are most important to us, especially our boss, higher ups with whom we work, and employees and colleagues with whom we frequently interact. We need to decide when the empathic strategy works best and when the alternative, managed communication, works best. We manage our communication when we provide responses and information that are appropriate to the situation but may not reflect our natural feelings. 

Management experts call a strategy or tactic that depends on the circumstances a contingency theory. Contingency theories suggest that an appropriate response depends on circumstances, task requirements, personalities, and organizational characteristics.  Organizational culture, for example, may dictate that we always seem smart or that we never seem smart.  Whether we are smart or not is less important than conforming to the requirements of the organizational culture, one way or the other. Other organizational factors such as the organization's tasks and structure also modify how we communicate.

Such organizational demands may pose adjustment difficulties for recent graduates. Most educational institutions emphasize intellectual achievement and ignore interpersonal flexibility.  The idea of appearing in ways other than high achieving is alien to most students' education.  The high-achieving style fits some but not all organizations.  Much as a yogi can bend his or her body in unusual ways, so can an individual adept at interpersonal skills bend his behavior patterns to fit organizational demands.

If an individual works for a firm for a long time, he or she is likely to acclimate to and adopt the organizational culture as part of  their personality.  At first, though, it is necessary to manage responses so that they fit.  

The same is true in dealing with a boss. We need to understand our boss’s aims. Our goals need to coincide with broader departmental and organizational ones.  Moreover, it is useful to mirror.  Mirroring means that we adopt characteristics of our boss or an important client so that we seem to have much in common with them. The characteristics can include interests, appearance, communication style, preference for entertainment, and place of residence. I once worked for a bank in which all of the higher ups lived in Summit, New Jersey.  When an employee was on the fast track, one of the first things that he did was buy a house in Summit.

I once had a student who worked at a major investment bank. He told me that when he had first been hired, he had had trouble fitting in because he had never been interested in sports before, but most of his fellow traders spoke chiefly about sports.  He realized that in order to fit in he would need to follow sports, so he bought subscriptions to Sporting News and Sports Illustrated. After reading these publications religiously, he developed an interest in sports. He found himself fitting in.

A key to the contingency approach to interpersonal skills, then, is deciding when to be empathic and when to adopt a calculated response.  It is important to understand that not everyone in an organization is trustworthy.  For instance, Paul Babiak and Robert Hare’s book Snakes in Suits: When Psychopaths Go to Work outlines the characteristics of workplace psychopaths. As I point out in  Cornell HR Review (and here), between three and six percent of corporate employees may be responsible for the majority of ethical breaches in corporations.  Workplace psychopaths tend to be “manipulative, glib and grandiose."  

Although white collar psychopaths are a small proportion of the population, corporate employees are forced to take on a defensive behavior pattern, creating a Gresham’s Law of psychopathy. In monetary history, Gresham’s Law is the principle that when gold coins were undervalued relative to silver coins, people saved the gold coins and only used the silver coins.  Gresham’s Law is that “bad money drives out good.” Lack of trust drives out trust in many corporations. Under such circumstances, which are common, it is foolish to be overly empathic. One must assess those with whom one deals. If you have seen the HBO series Game of Thrones, you know what I am talking about.

The need for a contingency theory comes up in many interpersonal contexts. In negotiating it may not be possible to share information with a bargaining partner who prefers to be distributive (emphasizing splitting up the pie to their advantage) rather than integrative (expanding the pie).  In motivating others it may not be possible to use Theory Y or trusting leadership because employees may have values that cause them to take advantage of trust; in such circumstances Theory X or controlling leadership is necessary.

Managed Approaches

In developing a managed approach to communication, Whetten and Cameron emphasize the importance of understanding the sensitive lines of others.  The sensitive line is the point at which one’s self-concept is threatened.  If you cross someone’s sensitive line, they are likely to become defensive or disconfirmed.  Defensiveness means one is inclined to protect oneself by attacking the other party. Disconfirmation occurs when one of the parties feels ignored or insignificant. Whetten and Cameron advocate the use of supportive communication tactics. Supportive communication tactics reduce the likelihood of causing defensiveness or disconfirmation in others. 

The supportive communication tactics include being honest, avoiding value judgments, focusing on factual discussion, and validating others by treating them as equals and by being flexible in response to their opinions. When a conflict occurs, the discussion should focus on facts and the behavior rather than the person.  People should take responsibility (or own) their communication, and they should relate what they say to what the other person says.

Whetten and Cameron also emphasize supportive listening. They describe four listening responses: advising, deflecting, probing, and reflecting. These can also be managed to influence the other person's feelings. The point of listening responses is that we can modulate them to encourage or discourage the other party from expressing themselves. Supportive communication means encouraging the other party.   

In advising the listener responds by giving advice. In deflecting the listener responds by changing the subject and  focusing on their own experiences: “If you think what your boss did is bad, take a look at what my boss did.” In probing the listener asks questions. In reflecting the listener responds by acknowledging that he or she is listening. Reflective responses include summarizing and restating what the other person is saying. It involves giving back the message in different words.

The reflecting and probing responses are the most supportive and least likely to cause defensiveness or disconfirmation.  The advising and deflecting responses are the most intrusive and most likely to do so. 

Conclusion

The ultimate key to developing interpersonal skills is practice.  Certainly, empathy is important to developing sound, long-term relationships, but the appropriate response is contingent on factors like personality, ethics, organizational culture, organizational structure, and task.  Good business people need to develop alternative tactics that are appropriate to different settings, personalities, tasks, and organizations and to choose the most appropriate ones. 

Skills Recent Grads Need the Most: Job Search, a Fundamental Competency for Success

This is the second in a series of blogs that I am writing in response to a request from Bob Clary, Webucator’s community manager. The series concerns competencies that recent grads need. The competencies that I am covering are ethics, job search, interpersonal skills, and writing. This blog concerns job search and informational interviewing.

Finding a job, from students’ summer jobs to retirees’ part-time jobs, is a challenge that most of us face at least a few times. The challenge is most acute for those finishing a degree. Finding the right job from the get-go is important to a recent grad’s future, and the sooner that you find the right job, the better off you will be.

 

For one thing, the salary on your first job affects your future pay increases, so decades later you will still feel the ripple effects of your first salary rate.  For another thing, by finding the right job you will be empowered to do what you believe.  That enhances commitment, focus, and purpose. Clear goals lead to successful performance, and by targeting your chief interest you establish clear, motivating goals.

One of the best books on job search is Richard N. Bolles’s bestseller, What Color Is Your Parachute? (also here).  Bolles makes many useful points: The success rate for mass mailings of job letters is painfully low. A job search should start by identifying your aims and interests. The best way to look for a job is not to look for a job, but rather, to interview for information.

Many students think of looking for a job as a bidding process. They set out to find the one job that offers the optimal opportunity, and they don’t consider whether they are really interested in the field, the occupation, the firm, or the position. That is a mistake. You will spend more time with your career than with anything else, and a loveless career is as unfortunate as a loveless marriage. 

As with marriage, focusing chiefly on the financial dimension is likely to lead to divorce.  Without passion for what you do, the money will not be enough.  It is more expensive to change jobs than to figure out what you want to do beforehand, yet it appears that few do.  According to The Wall Street Journal, half of workers between 20 and 24 have been with their employer for less than a year, and in 2008 the typical American was on the job for only 4.1 years. These statistics suggest frequent job changes.

The Importance of Goals

In my teaching career, which began in 1991 and has included teaching organizational behavior and managerial skills classes at nine higher education institutions, I have asked more than 5,000 students to read What Color Is Your Parachute? and then write an essay about their career mission and goals.  Many students have trouble conceptualizing their goals, and many students have little faith that they can execute the goals that they choose.

Besides doing the exercises in What Color Is Your Parachute?, students who have trouble setting goals for themselves can take the Strong Interest Inventory by consulting with a career counselor or other career professional.  The Strong Interest Inventory is more than 85 years old, and it has been revised many times; the questions concern the test taker’s occupational interests, subject area interests, activities interests, leisure activities interests, and personal characteristics.  It gives scores relevant to occupational themes, basic interests, and personal style. These can help you to identify fields that are of interest to you.

To some degree it is not so important that you find a goal that you love as that you find a goal to which you are committed. If you cannot think of anything that you really want to do, then pick something that you think is a likely suspect, and focus on it and only  it. 

Interview Not for a Job, but for Information

Once you have focused on a specific job, field, salary, and set of achievements that reflect your mission, your practical job search can begin. Bolles says that 1,400 letters and resumes are needed if you are going to play the numbers game of mass mailings.  Moreover, it is unlikely that you will find the very best jobs that way.  The reason is the unseen job market.  Applicants fill most jobs, and virtually all of the great entry-level jobs, through personal connections.  If you do not have personal connections, mass mailing of cold letters will not likely help you to get the best jobs.  Advertisements and headhunters won’t either because entry-level jobs are mostly filled through the unseen job market. The unseen job market is the web of personal connections through which employers fill most jobs.

In the early 1990s, before the advent of the Internet, I taught an on-site class at a major cosmetics firm’s Long Island plant.  I asked the class this: “How many of you got your job through newspaper ads, through personnel agents, through headhunters, through career fairs, or through personal connections?” Every single student in the class had gotten his or her job through a personal connection.

If you wish to work in advertising, investment banking, consulting, or in other high-end jobs, you need to consider how to make the contacts that will give you a leg up.  The answer, which Bolles establishes in What Color Is Your Parachute?, is informational interviewing.

Informational interviewing is a way to tap into the hidden job market by establishing personal connections with a number of professionals in your field.  One way to informational interview is to start by identifying people who are already successful in your field.  You can do this in a number of ways: through scanning a listing of alumni available through the college career center, through reading articles about specific managers in the business press, through calling firms, or through visiting professional association websites.

Many professional associations list their members, but they only make the membership list available to other members. That’s one good reason to join the professional association in your field. Another reason is that professional association meetings are great places to use a slightly different method of informational interviewing:  setting up informational interviews at professional association meetings.

After you’ve identified 30 to 100 managers who are likely to have information that will be of value to you in beginning your career search, write each a letter to set up an interview. Don’t write them all at once; rather, write them sequentially.  You will only be able to do one or maybe two informational interviews each day. Job search is a full-time job.

In the letter say that you have heard of them and their achievements and that you would like to request an in-person meeting so that you may learn from them. State explicitly that you are not looking for a job.  The reason is that you are asking for an informational interview, not a job interview.

Using bullets, indicate a few sample questions that you would like to ask in the interview such as how they got into the field, whether your degree is appropriate, and what the emerging problems in the field are. Make a mental list of 10 or 15 questions, but when you actually go on the interview you are unlikely to need a list. Once you ask a few questions, the interviewee will open up, and the meeting will become a free-flowing conversation.

In the letter give a specific date and time on which you will call to set up a meeting.  When you call, attempt to make an appointment with the individual’s secretary, or leave a message on an answering machine. Three failed attempts are the maximum.

Many students wonder whether business people will be willing to meet with them. The answer is a qualified yes. From five to thirty-five percent of the individuals whom you contact will be willing to meet with you in person.  Even if the percentage of yes answers is only five percent, the response rate will be twice that of mass mailings. More likely, you will be able to achieve a ten to  fifteen percent response rate, three-to-seven times better than that of mass mailings. 

The reason more managers will see you because of an informational interview letter than because of a job search letter is, first, that they often don’t have a job opening, but they are interested in meeting an available applicant. Because people hate to say no, they will see you for an informational interview but not for a job interview. Second, most people enjoy giving advice, and this is a great opportunity for someone to indulge themselves in that great pleasure. Third, many managers know about informational interviewing, and they are happy to participate because they may someday be in the same position as you are now. Who knows? Maybe when they are looking for a job in the future, you will be willing to interview them.

After the meeting, ask whether they know of anyone else who might be willing to meet with you. Also, tell them that you will keep them apprised of your progress.

The informational interview serves at least two purposes. First, by going on 20 or 30 informational interviews, you will learn a great deal about the field.  In 1996 I went on a series of a dozen informational interviews, and I found that after about six or seven the interviewees were asking me for information rather than the other way around.  By learning much about the field through an informational interview, you place yourself in an advantageous position when you obtain interviews using traditional job-search methods. In a sense, you are engaging in a benign form of industrial espionage.

Second, by meeting people in the field, you establish connections.  Since most of the best jobs are obtained through the hidden job market, through connections, you are opening up the possibility of an offer in three, six, or twelve months.  Bring a resume, but do not offer it. They are likely to ask for it.

Many students are reluctant to pursue informational interviewing because they fear rejection. Given that only five to thirty-five percent of interviewees say yes, that means that ninety-five to sixty-five percent say no.  That means that people who informational interview have to put up with rejection most of the time. The same is true of many high-value-added business tasks, such as sales. Rejection is a necessary stepping stone to success, whether you aim to be an entrepreneur, a trader, an author, or a scholar.

The job-search skill is important because your first job is likely to define your future ones. It is just as or even more important to know how to look for a job as it is to have gone through the best academic program.  By doing it right the first time, you will make early gains that will multiply over your career.  

Skills Recent Grads Need the Most: The Ethical Dimension

Bob Clary, the community manager of Webucator, has asked me to identify and blog about a valuable skill  that recent grads need to succeed. Bob would like to make the job market a less scary place to recent grads of his program, and he's asked bloggers with relevant knowledge to offer advice.  Bob writes this:  "We’re excited about this newest blogging campaign in our Webucator Asks series, and we look forward to reading about creative ways to help guarantee success!"

I decided to do Bob one better and identify four skills to write about.  The four skills that I am covering are ethics, job search, interpersonal skills, and writing.  Interpersonal skills boil down to communication, and communication is the focus of my discussion on that topic. This blog and my next three will cover these skills just as I discuss them with my students.

I start with ethics, the most basic of all managerial skills. Ethics is a competency or skill just like job search, interpersonal skills, and writing. Many students mistakenly believe that there is a dichotomy between profit-making or high wages and ethics.  That is a false dichotomy. Making money is a good, just as honesty and concern for others are goods.  Our job as business people is to balance these and other goods or virtues so that we, our associates, and society, can flourish.

As Warren Buffett pointed out in a talk he gave in the 1990s to MBA students at the University of North Carolina, ethics is much of the reason high achievers achieve.  It is true that in the short term money can be made through dishonesty; it is also true that low achievers can become successful by dishonest means. Look at those who engage in organized crime or in government corruption. They can be successful, although corrupt executives, as in the cases of Enron, Tyco, and Worldcom, pay a high price when they are caught.  Nevertheless, the reason we seek education is to achieve well, not to become drug dealers, confidence men, or thieves. Education is not necessary for such professions.  We achieve well and successfully on an ethical foundation.

The reason the most successful achievers achieve is that they play by the rules of the game. They respect their customers, their employees, their stockholders, and their society.  As society becomes more concerned with the environment, environmental concerns become business concerns.  That is why customers repeatedly return to a firm that produces great products, and that is why society turns to business in times of crisis. One of the great triumphs of General Motors was its ability to convert to war production to assist the US government during World War II.  Without such assistance American victory would have been more difficult, and more soldiers' lives would have been lost to tyrants in Europe and Japan.

Business's products are moral goods because they help many billions of people.  The ability to expand the availability of such goods to ever greater numbers of people is the moral triumph of business.  Making business more efficient and helping business to better meet customers' needs, the mission of recent grads entering the workplace, fulfills a higher moral good. To do so one must rest his or her actions on a moral foundation.

The moral foundation is a set of competencies that students need to identify for themselves.  These likely include what Warren Buffett called the "Ben Franklin virtues" that were identified by his teacher and the inventor of value-based investing,  Benjamin Graham. Buffett calls them the "Ben Franklin virtues"  because Franklin identifies them in his writings in Poor Richard's Almanac and in his 1758 book The Way to Wealth.  Franklin's virtues include honesty, sobriety, hard work, and prudence.  In ancient Greece, 2,500 years ago, Aristotle listed similar virtues--not geared to commercial life, although there is much overlap--as necessary to success.  The reason that there is much overlap between Aristotle's and Franklin's virtues, written more than 2,000 years apart and in different cultures,  is that Aristotle's students aimed to become leaders of the Athenian city state, and the virtues that he describes in his Nicomachean Ethics were geared to success in that ancient society.  These included the cardinal virtues: moderation, prudence, courage, and justice.

Justice, as in Aristotle's day and in Franklin's day, is the cornerstone of ethical competence when working in business. Just as is the case with emotional intelligence, in order to act well we need to develop ethical intelligence. Ethical intelligence means asking ourselves whether an end is justified, whether we can accomplish it prudently, whether we can reduce or eliminate costs or harm, whether we can improve quality or increase the good that we do, whether any harm is more than balanced by the good, and whether our actions serve our colleagues, society, and ourselves.

Many corporations recognize this balance. For example Johnson and Johnson's Credo describes the firm's vision of ethical intelligence in dealing with nurses, doctors, customers, employees, suppliers, and the greater community.  J&J's conclusion is this: "When we operate according to these principles, the stockholders should realize a fair return."  Compare the success of this great firm with that of any of the dishonest ones that have made the news and often no longer exist.

Ethics is the most important competency because all dealings depend on it.  It is the chief recipe for long-term success. Whether we are looking for a job, dealing with the challenges of interpersonal communication, or negotiating an important deal, it is important to ask ourselves whether we are doing the right thing by balancing all considerations in a way that yields an optimal outcome for others, for society, and for ourselves.

Proposal for a Conference Presentation

Why the Worst Get on Top: The Case of Higher Education

Proposal for a Paper for the Manhattanville Hayek Conference

Mitchell Langbert

May 30, 2014

In “Why the Worst Get on Top,” Hayek argues that, because of the unpredictability of social phenomena, the contradictory demands of interest groups, and the need to adopt a comprehensive plan, socialism requires a coalition of the worst. To lead the coalition, individuals rise to the top if they are willing to sacrifice moral duty to what they interpret to be expedient, social-welfare-maximizing decisions; assumption of leadership positions in a socialist state is of interest only to those who lack a moral compass. 

My claim is that American universities, both as propagandists and as independent economic interests, play a part in this process.  The evolution of universities in the United States has made them dependent on donations from large industrial and financial organizations as well as from the state.   American universities therefore take on characteristics that are similar to public German universities, but they also take on characteristics of allies to and beneficiaries of corporate interests.

I can trace the flow of donations to universities in two ways: through a listing of large donations since 1967 that the Chronicle of Higher Education (2014) publishes and through an examination of the names of buildings at top-tier universities. Universities often name buildings after large donors, and the business careers of at least some of them can be traced.  Then, I can content analyze quotations during the 2008-2009 bailouts from academics working at the same institutions.  I would look at quotations in the second-largest-circulation newspaper, the New York Times and quotations in one of the largest-circulation magazines, such as eleventh-ranked Time or first-ranked AARP The Magazine.   

Universities and Propaganda

In the chapter that follows “Why the Worst Get to the Top,”  “The End of Truth,” Hayek discusses the importance of propaganda.  Hayek argues that totalitarian propaganda destroys morals because it undermines “respect for truth,” (Hayek, 172).  Universities play a role in the production of propaganda. Readings (1996) points out that Wilhelm von Humboldt, the inventor of the modern university, saw the German university as bonded to the state: “The state protects the action of the University; the University safeguards the thought of the state.”  Academic freedom, in Humboldt’s view, correlated with universities’ commitment to sustaining the state.  Readings adds (Readings, p. 82), “The capacity of the [German] University structure [during the Nazi era] to adapt itself to Nazism should give us pause.”  Hayek points out that the symbiosis went further than Readings admits and that the Nazi minister of justice said that all scientific theories must serve National Socialism.

The Humboldtian university served as a model for the American university in terms of the integration of research and teaching and the claim of academic freedom, but the economic foundations of the American university were different from those of the German university.  America’s economy had not proceeded along the syndicalist lines that had earlier proceeded in Germany and gave Germany, in Hayek’s view, a militaristic culture.  Rather, universities in the United States grew out of free-standing religious colleges.  Their transformation and growth was financed by leaders of business and finance.  For instance, the first American university designed along Humboldtian lines, Johns Hopkins, was endowed by a wealthy Baltimore merchant, Johns Hopkins, who consulted about the university’s structure with fellow Baltimorean George Peabody, one of the first important American investment bankers. Their strategy meeting about the founding of Johns Hopkins University occurred during one of Peabody’s rare trips home to Baltimore from his firm’s London headquarters (Parker, 1995).  By then, Peabody had made significant gifts to Harvard and Yale, and he had endowed a Baltimore research library, the Peabody Library, on which Johns Hopkins relied for the first several decades of its existence.

On June 27, 1901 the New York Times wrote that JP Morgan, Peabody’s partner’s son, had made a one million dollar gift to Harvard Medical School for the construction of three buildings. In accordance with the recommendation of Carnegie Foundation-funded Abraham Flexner, Harvard modeled itself along the same lines as Johns Hopkins Medical School--as an allopathic, Humboldtian research institution.

Not to be outdone, the following year John D. Rockefeller also donated one million dollars to Harvard Medical School. Carroll (2009) notes:

In 1903, Rockefeller founded the General Education Board (GEB). In the succeeding decades, the GEB would become the dominant philanthropic enterprise in early-twentieth-century American medical education. It contributed over $94 million to American medical schools by the time of the organization’s termination in 1960.

As well, Rockefeller endowed the University of Chicago and appointed its first president. William Rainey Harper. 

Joseph Wharton, an executive at Bethlehem Steel and a mining entrepreneur, funded Wharton’s endowment so that there would be a basis for dissemination of knowledge about the advantages of protectionism.  There is no shortage of examples; virtually all private major research universities have depended on donations from corporate or financial donors, and they have been intimately integrated with the Progressive model since its inception.  Walter Weyl, for example, one of the three founders, along with Walter Lippmann and Herbert Croly, of the New Republic Magazine, was one of the first Ph.D. graduates of the Wharton School.

Scholars have pointed out that Progressivism reflected specific industrial and financial interests.  Expertise in fields like economics was necessary to justify to the public the formation of the Federal Reserve Bank (Kolko, 1963), while expertise in psychology was necessary to facilitate control in large-scale corporations that Progressivism encouraged (Baritz, 1974).  Croly (1915), in Progressive Democracy, advocates scientific management, and in 1910 Harvard Business School appointed Frederick Winslow Taylor, the founder of scientific management, to its faculty.

My claim, then, is that American universities did not develop according to a pure symbiosis between state and university characteristic of the German university—a symbiosis that is consistent with Hayek’s claims—nor did they develop along the lines of a countervailing model whereby universities speak truth to corporate power in accordance with the claims of critics of the post-modern university (D’souza, 1992).  Rather, the development of American universities has been consistent with the history of Progressivism described by Kolko (1963), Sklar (1988), and Radosh and Rothbard (1972), who see the development of Progressivism as a case of Olsonian (1984) special interest pressure or capture.   The American university’s symbiosis with the American state is less direct than the German university’s symbiosis with the German state, and one of its characteristics is its left-wing opposition to right-wing conservatism, but it remains a defender of sensitive corporate interests, such as banking and Wall Street.   

To illustrate my claims, I will review three sources of information about American universities.  The Chronicle of Higher Education (2014) publishes a list of major donations to universities since 1967.  These are donations in excess of $25 million.  I will tabulate the industry in which each donor has worked.  A large share of the donors will be in finance.  Second, I will review the names of the buildings of 25 major universities.  I predict that a significant percentage will bear the names of financial and business leaders.  Third, I will analyze comments in the media from 2008 and 2009 from academics.  I predict that finance-and-industry donations to universities will correlate with the tone and temper of academics ‘opinions about the desirability of subsidization of industry.

Bibliography

Baritz, L. 1974. The Servants of Power: A History of the Use of Social Science in American Industry. Westport, CT: Greenwood Press.

Carroll, Katherine L. 2009. “Moderning the American Medical School,” Internet file accessed on May 31, 2014 at http://www.rockarch.org/publications/resrep/carroll.pdf . 

Croly, H. 1915. Progressive Democracy. New York: The Macmillan Company, http://books.google.com/books?id=QBUpAAAAYAAJ&printsec=frontcover&source=gbs_ge_summary_r&cad=0#v=onepage&q&f=false

Chronicle of Higher Education. 2014. “Major Private Gifts to Higher Education.” http://chronicle.com/article/Major-Private-Gifts-to-Higher/128264/

D’Souza, Dinesh. 1992.  Illiberal Education: The Politics of Race and Sex on Campus. Vintage Reprint Edition, www.amazon.com

Hayek, FA. 2007.  The Road to Serfdom: The Definitive Edition. Edited by Bruce Caldwell. London: The University of Chicago Press.

Kolko, G. 1963. The Triumph of Conservatism.  New York: The Free Press.

New York Times, June 27, 1901. “JP Morgan Gives over $1,000,000 to Harvard: Offers to Pay for Three Buildings to be Erected in Boston,” http://query.nytimes.com/mem/archive-free/pdf?res=F10E1FF93A5D1A728DDDAE0A94DE405B818CF1D3

Olson, M.  1984. The Rise and Decline of Nations.  New Haven, Ct: Yale University Press

Parker, Franklin.  George Peabody: A Biography.  Nashville, Tenn.: Vanderbilt University Press

Radosh, R. and Rothbard, M.A. 1972. A New History of Leviathan. New York: EP Dutton.

Readings, Bill. 1996. The University in Ruins. Cambridge, Mass: Harvard University Press.

Sklar, MJ. 1988.  The Corporate Reconstruction of American Capitalism, 1890-1916: The Market, the Law, and Politics. New York: Cambridge University Press

Which Little Piggy

Makes me wonder why anyone watches cable news

Is the dumbest

Smells the worst

Is a traitor

Has the most air in her head

Is the ugliest

Grunts the loudest

Emits noxious gas when he speaks

FA Hayek on How Obama's War on Income Inequality Will Nazify America

I'm rereading The Road to Serfdom.  Accessibly written, Hayek lays out many of his most important ideas. According to Bruce Caldwell's introduction to the Definitive Edition, the book has sold 300,000 copies, which is rare for a book written for an academic audience. Hayek comments on income inequality, an issue that the Democrats and their media have adopted this year.  

I do not understand this obsession because the greatest gains to the poor have occurred in countries whose laws are objective, that is, that follow the rule of law and that permit entrepreneurs to innovate.  Such innovation results in increasing real wages, but it allows even greater gains to the entrepreneurs. The result is that in free market economies the poor become better off because of income inequality; the greater the entrepreneurial success, the greater the gains to the poor.

I wonder if the  aim of the advocates of income redistribution is really to enhance state control, further reduce freedom,  and improve the position of the inept rich, crony capitalists, at the expense of the poor.  College professors do well when the inept rich do well because crony capitalism typically benefits universities.   Show me a proposal for regulation, and I will show you a Rockefeller, Ochs-Sulzberger, Bundy, or Bush angling for the fruits of government violence.  I will also show you a clique of academics cheering on the redistributive policy and the inadvertent gains to the inept rich in the interest of additional government subsidies to universities.

In order to effect wealth equality, government must violently compel its victims to give up their wealth to benefit the state's beneficiaries.  Government violence results in declining national wealth, as failed socialist economies such as North Korea's, France's, India's, and the United States' show.  As Winston Churchill put it, "The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries."  Of course, the effect of government violence is never really equality.  Government cronies inevitably do well as the families of Kim Il-sung, George W. Bush, Barack Obama, and John D. Rockefeller illustrate.

Capitalism benefits the poor the most. Life expectancy in early modern Britain was between 25 and 40 years old, and in revolutionary America it was about 35. The gains in life expectancy came about because of improvements in sanitation and public health, and secondarily because of the invention of drugs. Market capitalism made both possible.  For example, the wealth needed to construct sanitary housing did not exist in the precapitalist economy.  The capitalist increases in the real hourly wage that continued in the US until the expansion of government spending in the 1960s, when the US transitioned from a capitalist to a socialist state, meant that the poor working person could improve his lot through saving.  Today, many working Americans cannot save because of the high costs of home ownership, commodities, and taxation, all due to government and Federal Reserve policy.

In The Road to Serfdom Hayek discusses how, in the absence of public resistance,  socialism leads to totalitarianism. The requirements of central planning, economic regulation, and wealth redistribution directly contradict the requirements of the rule of law and democracy.  Wealth redistribution is inherently coercive.  The advocacy of income equality is the advocacy of violence.

With respect to government programs to enforce wealth equality, Hayek draws parallels to Nazis (p. 117):

A necessary and only apparently paradoxical result...is that formal equality before the law is in conflict with, and in fact incompatible with, any activity of the government deliberately aiming at material or substantive equality of different people, and that any policy aiming directly at a substantive ideal of distribution justice must lead to the destruction of the Rule of Law. To produce the same result for different people, it is necessary to treat them differently.  To give different people the same objective opportunities  is not to give them the same subjective chance.  It cannot be denied that the Rule of Law produces economic inequality--all that can be claimed for it is that this inequality is not designed to affect particular people in a particular way.  It is very significant and characteristic that socialists (and Nazis) have always protested against "merely" formal justice, that they have always objected to a law which had no views on how well off particular people ought to be, and that they have always demanded a "socialization of the law," attacked the independence of judges, and at the same time given their support to all such movements as the Freirechtsschule which undermined the Rule of Law.

Hayek, who came from Austria, adds this footnote:

It is therefore not altogether false, when the legal theorist of National Socialism, Carl Schmitt, opposes to the liberal Rechstaat (i.e., the Rule of Law), the National Socialist ideal of the gerechte Staat) ("the just state")--only that the sort of justice which is opposed to formal justice necessarily implies discrimination between persons. [Editor Bruce Caldwell adds the following: German jurist Carl Schmitt (1888-1985) was a critic of liberal parliamentarianism and defender of the authoritarian state. In the 1930s he attempted to reconcile his views with those of the Nazis, offering legal justifications of their takeover of the government and defending the Nuremberg Laws that excluded Jews from public and social life. Though he lost favor with the Nazis by 1936, outside of Germany he was often viewed as the legal theorist of National Socialism.  Hayek also refers to the Freirechtsschule, which is the German term for "legal realism," a doctrine that holds that instinct rather than rule-following is the actual basis of judicial interpretation of the law."--Ed.]

Brooklyn College's Role in the Publication of FA Hayek's Road to Serfdom

I teach at Brooklyn College.  I'm always delighted to see historical references to it.  For instance, I recently learned that John Hospers, the first Libertarian Party presidential candidate, had taught philosophy at Brooklyn before moving on to USC and Harvard.  As well, Ayn Rand spoke at Brooklyn in the early 1960s.  I just learned that a former president of Brooklyn College, Harry Gideonse, had worked on behalf of FA Hayek to secure a publisher of what became Hayek's most famous book, The Road to Serfdom. In his introduction to Volume II of the Definitive Works of FA Hayek, Bruce Caldwell writes this:

In a letter dated August 8, 1942, Hayek asked Fritz Machlup, who was by then in Washington at the Office of Alien Property Custodian, for his help in securing an American publisher...Machlup's first stop was Macmillan, but they turned him down...Machlup's next move was, at Hayek's request, to send the (by now completed) typescript to Walter Lippmann, who would promote it to Little, Brown. This was done, but they also declined...Machlup then turned to Henry Gideonse, by now the [p]resident of Brooklyn College, but who previously had served as the editor of public policy pamphlets in which [Hayek's] "Freedom and the Economic System" had appeared.  Gideonse took the manuscript with his strong endorsement to Ordway Tead, the economics editor at Harper and Brothers.  This initiative also failed...Nearly a year went by...It was at this point that Aaron Director came to the rescue.  Director wrote to fellow Chicago economists Frank Knight and Henry Simons to see if the University of Chicago Press might want to consider publishing it...The acceptance letter to Hayek was dated December 28, 1943.

Did the Jews in the Dachau Gas Chambers Thank Government for Protection from Power Companies?

In my business class yesterday I mentioned my distaste for government regulation. A recent concern is the National Security Agency's use of personal information to retaliate against American dissidents.  The NSA's actions are like  the Soviet Union's 20th century economic retaliation against its dissidents.  In a recent Reason Magazine article and the video above, William Binney, a former NSA official turned whistle blower, describes retaliation for his revealing the NSA's misuse of personal information about US citizens.

A student raised this point: "It is difficult to choose between regulation that suppresses competition and the absence of regulation that allows large firms to take advantage of individual citizens."  The trouble is that there is little evidence that large firms took advantage of citizens when there was no regulation.  There is little evidence that the benefits of regulation, if any, exceed the costs. The growth of large firms coincided with the growth of regulation; regulation is a prerequisite to large scale, so advocates of regulation claim to solve a problem that they have caused.  Before federal intervention, cartelization of industry repeatedly failed.  It did not succeed until the Sherman Antitrust Act and Theodore Roosevelt encouraged it.  The Sherman Antitrust Act encouraged the growth of large-scale firms by illegalizing collusion or cooperation among small firms.

Moreover, the threat that large government poses to private citizens' welfare is worse than large firms' extraction of monopoly rents.  Is a United States government that has expanded through imperialism, murdered Native Americans, enabled the enslavement of Blacks through the US Constitution and the Fugitive Slave Act, murdered a million-and-a-half Vietnamese, exiled immigrants who disagreed with the capitalist system, and funded political correctness in universities to be trusted to make us safe from power companies?

Did the Jews gassed in Dachau feel grateful to the Nazi government for regulating power companies?

Visualizing a Response to the 2070 American Collapse

Misallocation of resources, inefficiency, and absence of innovation cause all civilizations to collapse. China has gone through 20 or 30 dynasties over its 4,000 years, a new one every 200 years or so.  The American case is tragic because the Lockean liberalism on which America was founded held out a possibility of permanent stability and development. Of course, permanence would have depended on restraint, both moral and economic, yet restraint did not obtain.

First, there was a tendency to misallocate and overexploit resources.  Second, there was a failure to live up to the standards required of  Lockean liberalism, especially the requirement to avoid the use of force to extract wealth or to capriciously allocate wealth through the state.  Third, the moral foundation on which America rested was the best the world has seen, yet it was not good enough.  The Calvinism of the nation's founders gave way to materialism. Fourth, the envy and greed that attended wealth inequality was exacerbated by legitimate grievances about the state's use of resources to benefit the few.

The result was an intensified system of state allocation of resources to American elites at the expense of producers, who under Lockean liberalism and the economic law of wages are entitled to the marginal value of their productivity.  America's is not a fair system.

The redistribution of wealth has recently accelerated, and there is little reason to think that it can be reversed. Moreover, the American standard of living today depends on global subsidization through a propped up dollar. The need to prop up the dollar will extend  as Americans grapple with the need to fund retirement,  health care, housing, welfare, and the stock market.

Claims of homeowners, whose houses have inflated values, and house buyers, who are entitled to affordable housing, conflict. So do the claims of baby boomers, to whom government has promised  Social Security benefits, and the millennial generation, who are entitled to their wages.

Entrepreneurship and innovation enable societies to overcome the misallocation of wealth, but the increasingly shrill claims of crackpot environmentalism, corporations, cronies of elected officials, and financial markets lead to ever-greater regulatory rigidity. Such rigidity stalls entrepreneurship, limiting it to already-known domains such as technology. The importance of entrepreneurship is greatest in areas in which its benefits are least known and least anticipated.  This bounded rationality problem leads to diminishing returns to entrepreneurship.

America's universities have contributed to economic decline.  Their claim that social problems can be analyzed and cured through scientific positivism leads to focus on the known as opposed to the yet-to-be-learned. Universities substitute correlation for morality, yet their greatest contribution has been the recognition that correlation is not causation.  They are centers of ignorance and opportunism.

The confluence of declining innovation, increasing indebtedness, and decreasing entrepreneurship transforms America, once the land of achievement, into the land of entitlement.  The end result is stagnation, then decline.  The differences among the nations will likely diminish because other nations lack the confluence of characteristics--need for achievement, a laissez faire economy, and a foundation of morality--that are necessary for a nation to excel as America has.  In the past, military organization, military valor, and luck led to ascendancy. Such will be the characteristics of great nations in the coming two centuries.

In the long term, decentralization, the breakup of the federal republic into the separate republics of the states, may help.  The reason is that elimination of central control stimulates competition, innovation, variety, and alternative approaches.  That is precisely how Western Europe was transformed from an economic laggard in the Middle Ages to the dominant culture of the modern era.

List of Member Banks--Stockholders and Owners--of the Federal Reserve Bank

The following is a complete list of members of and stockholders in the Federal Reserve Bank.  The list includes all regions.  I obtained it through a Freedom of Information Act request. The request and the Fed's response are as follows.  The Fed did not respond to my second request, which was for information about the law governing the fiduciary status of its stockholders.  

My inquiry

Dear FOIA Officer: 

Pursuant to the federal Freedom of Information Act, 5 U.S.C. § 552, I request access to and copies of a list of all (a) stockholders of and, if there are any differences, (b) member banks and other financial institutions of the Federal Reserve Bank. The list would include all members and stockholders in all regions and all types of institutions, including but not limited to national banks and state banks. I agree to pay reasonable duplication fees for the processing of this request up to $150. If my request is denied in whole or part, I ask that you justify all deletions by reference to specific exemptions of the act. I will also expect you to release all segregable portions of otherwise exempt material. I, of course, reserve the right to appeal your decision to withhold any information or to deny a waiver of fees. I look forward to your reply within 20 business days, as the statute requires. Thank you for your assistance. Sincerely, Mitchell Langbert, Ph.D.  mlangbert@hvc.rr.com  

The Fed's response

Dear Dr. Langbert,

 This is in response to your email message dated April 15, 2014, and received by the Board’s Freedom of Information Office on April 16, 2014, in which you request copies of a list of all (a) stockholders of and, if there are any differences, (b) member banks and other financial institutions of the Federal Reserve Bank. Attached is a list of institutions regulated by the Federal Reserve System. We are also providing you with a link to the Board’s website regarding information about stock issues.

Comment

 The link about stock issues says this:

Federal Reserve Act

Section 5. Stock Issues; Increase and Decrease of Capital

1. Amount of shares; increase and decrease of capital; surrender and cancellation of stock

The capital stock of each Federal reserve bank shall be divided into shares of $100 each. The outstanding capital stock 
shall be increased from time to time as member banks increase their capital stock and surplus or as additional banks 
become members, and may be decreased as member banks reduce their capital stock or surplus or cease to be members. 
Shares of the capital stock of Federal reserve banks owned by member banks shall not be transferred or hypothecated. 
When a member bank increases its capital stock or surplus, it shall thereupon subscribe for an additional amount of 
capital stock of the Federal reserve bank of its district equal to 6 per centum of the said increase, one-half of said 
subscription to be paid in the manner hereinbefore provided for original subscription, and one-half subject to call 
of the Board of Governors of the Federal Reserve System. A bank applying for stock in a Federal reserve bank at 
any time after the organization thereof must subscribe for an amount of the capital stock of the Federal reserve bank 
equal to 6 per centum of the paid-up capital stock and surplus of said applicant bank, paying therefor its par value plus o
ne-half of 1 per centum a month from the period of the last dividend. When a member bank reduces its capital stock or 
surplus it shall surrender a proportionate amount of its holdings in the capital stock of said Federal Reserve bank. 
Any member bank which holds capital stock of a Federal Reserve bank in excess of the amount required on the 
basis of 6 per centum of its paid-up capital stock and surplus shall surrender such excess stock. When a member 
bank voluntarily liquidates it shall surrender all of its holdings of the capital stock of said Federal Reserve bank and 
be released from its stock subscription not previously called. In any such case the shares surrendered shall be 
canceled and the member bank shall receive in payment therefor, under regulations to be prescribed by the Board of 
Governors of the Federal Reserve System, a sum equal to its cash-paid subscriptions on the shares surrendered and 
one-half of 1 per centum a month from the period of the last dividend, not to exceed the book value thereof, less any 
liability of such member bank to the Federal Reserve bank.

I mailed the Fed the following inquiry, to which it did not respond:

I teach business at Brooklyn College and have a question; maybe you can help me or direct me to the best person to ask.  Normally, corporation law applies to  corporations in the state in which the corporation is domiciled. For instance, the common law of Delaware applies to the many corporations domiciled in Delaware.

(1) As a corporation owned by its members but authorized by federal law and governed in part through the political process, what body of common law or federal statutory interpretation applies to the Fed? Is it the law of the states where the district Feds are located, federal law, federal regulation, or some other body of law?

(2) As a corollary of (1), where is the Fed domiciled for application of law concerning governance, fiduciary versus business judgment responsibility of its board, and similar kinds of governance issues: Washington, DC; the states where the branches are located; both; or elsewhere?

(3) Is there a specific statute or section of the Federal Reserve Act that concerns governance,  the governors’ fiduciary duty to members, and  what that fiduciary duty would constitute given the Fed’s broad social mandates (reduction in unemployment, reducing inflation, and the like)?

Is there someone at the Fed (maybe a legal officer) who knows the answers to these questions?

Thanks for  your help.

Mitchell Langbert, Ph.D.  

This is the list of Fed member banks and stockholders. It should be available on Scribd by clicking on the link. 

  G-2014-0202 Responsive List (1) List of Member Banks of the Federal Reserve Bank

Obama's Dismal Presidency

In 1951 David B. Truman, president of Mount Holyoke College, published The Governmental Process: Political Interests and Public Opinion, a monumental, scholarly work on the political science of special interest groups and the federal government. Truman illustrates his chief points with history, and he offers insightful anecdotes about many of the chief twentieth century interest groups such as the American Federation of Labor, the National Association of Manufacturers, the Grange, and the American Medical Association. Truman integrates his discussion of interest groups with a discussion of the structure of the federal government; he shows how the structure of Congress, the presidency, and the Supreme Court determine how interest groups behave.

In Truman's chapter on the executive branch, which is near the end of the book, he dissects the characteristics of successful and effective American presidents.  He writes this (p. 403):

The president's leadership of the legislature depends heavily upon his symbolic supraparty position. Although he cannot completely ignore the pleas of partisanship, he must play upon the multiple memberships of both fellow party-members and nominal opponents in order to effect winning support for the cause he is championing.

Truman also writes this (p. 402):

The president's partisanship and partiality among groups must be kept within limits...despite the need to maintain cohesion among the elements that helped him to power.  The process by which he is nominated and elected inevitably gives some groups better access to him than others can command, but as the dominant symbol of the nation, he cannot be completely identified with a segment of it...The measure of detachment imposed on a president by his position as a chief of state is not necessarily a handicap.  The obligation to remain minimally accessible to all legitimate interests in the society can supply him with a measure of independence and a persuasive power that effectively supplements his formal authority.

By these measures, President Barack Obama's presidency has been a failure.  He has failed to represent all of America.  This failure is due to the American media, which no longer offers diversity of viewpoints that reflect the range of legitimate views in America--a problem that Truman discusses at length but which has become more serious since Truman's day, when it was already a matter of concern. Rather, like the media in a totalitarian state, the American media attempts to delegitimize legitimate opinion that deviates from Obama's narrow party line.  

Obama represents the interests of one segment of America: the pro-Wall Street left wing of the Democratic Party.  He has made no effort to compromise, whether it be in his ideologically motivated health reform, his failed cap-and-trade proposal, his use of the IRS to target conservatives and other dissidents,  and his attacks on the states in areas like his No Child Left Behind Act, er, I mean Common Core.

Obama has so divided America that, for the first time since the 1960s, we see pockets of armed resistance to the federal government. The contretemps at the Cliven Bundy ranch is a symptom of failed president who has divided rather than united a nation.  The media's ideologues, ever eager to support the federal government's authority, paint the militia who support Bundy as extremists.  Their extremism is the fruit of Obama's extremism and the extremism of the American media, which does not tolerate dissent.

A Constitutional Amendment to End the US Supreme Court

Former Supreme Court Justice John Paul Stevens has written a book advocating a series of constitutional amendments that aim to, well, increase the power of the supreme court.  According to USA Today the retired federal judge advocates abridging the right to bear arms, abolishing the death penalty, restricting campaign spending, reducing the independence of states, and changing  congressional rules.

The US Supreme Court is a failed, backward-looking institution, and a former supreme court justice's giving advice about government is akin to a former General Motors executive's giving advice about free enterprise or a former Enron executive's giving advice about morals.  Actually, a former Enron executive, including the ones in jail, is better equipped to give ethics advice than is a retired supreme court justice, for the moral turpitude of the supreme court is worse than Enron's.

Instead of Stevens's stale ideas, why not a constitutional amendment to abolish the Supreme Court, which has been a cancer on the American economy since 1803, the year of Marbury v. Madison?  The worst thing Jefferson did wasn't the Louisiana Purchase--it was the failure to overturn Marshall's illegitimate claim that the supreme court has the right to interpret the constitution.  Instead of a Supreme Court, the state courts could set up an arbitration system to adjudicate disputes among states, and Congress could set up an arbitration system to adjudicate disputes with foreign powers.  The rest of the things that the US Supreme Court does, all of which it has mangled, could be done by state courts.  That would encourage diversity, one of the supposed aims of the totalitarian federal state.

Since centralization and excessive federal power has resulted in a stagnant standard of living for most Americans--but not Stevens, who has spent a lifetime living off federal taxes and centralizing policies that have benefited him at the public's expense--it is difficult for me to understand why Americans could possibly care what Stevens has to say.

C Wright Mills, America's Elite, and the Wisdom of Third Parties

I finished reading C. Wright Mills's Power Elite over the past couple of weeks.  Published in 1956, the book offers more insight into current events than most contemporary commentary.  Mills says that there are three levels of power--lower, middle, and upper--and that the pluralism upon which most political science focuses is characteristic of the local (lower) and Congressional (middle) levels. Although interest groups function on the lower and middle levels, there is little diversity at the upper level.  The upper elite does, of course, contain advocates of different social orientations and degrees of socialism, but the underlying viewpoint is stable.  The upper elite that runs America is comprised of presidential appointees selected from the broader power elite, which Mills depicts as coming from multiple sources: the Metropolitan 400 or social register types, the corporate rich, and the senior officers in the military.

When Mills wrote the book, the military and the military budget were more important than now.  Mills was unaware of the Fed's role (hence the centrality of banking interests) in the subsidization of the power elite and the US governmental system. As a result, he understates the importance of banking interests, which Murray Rothbard and Ronald Radosh tease out in their New History of Leviathan and that James Perloff illustrates in his Shadows of Power.

Mills  briefly describes the central role of the white-shoe law firms and investment banks, but these were more central in the 1950s than Mills describes them; they have become  more so since Nixon's ending of the gold standard in 1971.

According to Mills, the president and his advisers select the highest-level elite from the various groups within the power elite.  During the Kennedy years social and intellectual elites, represented by the Bundys, Dean Rusk, and Robert McNamara (recommended by fellow Skull-and-Bonesman and partner of Prescott Bush at Brown Brothers Harriman, Robert Lovett ) were dominant.  More recently, much as in the days of George Washington, bankers like Henry Paulson (who parallels but is not the intellectual equivalent of Hamilton) have been dominant.

The upper elite interacts within itself, and typically there are one or two degrees of separation between any two members.  Mills  does not claim that there is any sort of conspiracy, for that would be foolish.  Rather, each takes cues from the other.  Conformity derived from educational-and-university experiences obviates the need for overt conspiracy.

The last few chapters move from analysis to broadside as Mills criticizes what he calls the crackpot realism of America's narrow-minded upper elite.

Mills's depiction of America as having moved from a public liberal to a mass society is on point.  His emphasis on the mass media as transforming Americans from a free, imaginative people to a nation of cowed serfs (my word, not his) is also on point.  Mills is not that far from writers like James Perloff, who writes about the Council on Foreign Relations.  No president since Hoover has been independent of  the CFR.   That does not imply conspiracy any more than the leadership of a modern corporation's interacting with each other is a conspiracy.  The elite interacts and forms opinions. Its mindset, like that of leading university professors, is conformist, lockstep, cowardly, and lacking in vision.

Mills offers little hope for those who care about America or hope to see a change from the current trend. It occurred to me that his book was the inspiration for Eisenhower's 1961 speech about the military-industrial complex.   If Mills is right, then a useful long-term strategy in politics is to support third parties.  Another is simply to jump ship and move to a smaller country in which a mass culture and an elite bred to narrow-minded arrogance and the subjugation of a foolish mass of TV-news-viewing idiots won't exist because of the smaller scale.

In the Federalist 10 Madison argued that America's large scale was an impediment to the formation of faction.  As transportation and communication modernized, universities began to serve as the proving ground for elite conformity and groupthink.  The power of America's elite is made possible by large scale combined with modern communication methods.  The Internet and other postmodern developments, such as community activism, pose a challenge to America's mass culture.  Nevertheless, as long as Americans continue to support the two mass parties and as long as at least a plurality of Americans derive their news from mass-market newspapers and television,  the trends that Mills observed will continue to escalate.