Signs of the Economic Apocalypse, 6-4-07

From Signs of the Times:

Gold closed at 676.90 dollars an ounce Friday, up 2.3% from $661.40 at the close of the previous Friday. The dollar closed at 0.7435 euros Friday, down less than 0.1% from 0.7439 at the previous week’s close. That put the euro at 1.3449 dollars compared to 1.3442 the Friday before. Gold in euros would be 503.31 euros an ounce, up 2.3% from 492.04 for the week. Oil closed at 65.08 dollars a barrel Friday, down 0.2% from $65.20 at the close of the week before. Oil in euros would be 48.39 euros a barrel, down 0.2% from 48.50 for the week. The gold/oil ratio closed at 10.40, up 2.6% from 10.14 at the close of the previous Friday. In U.S. stocks, the Dow Jones Industrial Average closed at 13,668.11 Friday, up 1.2% from 13,507.28 for the week. The NASDAQ closed at 2,613.92 Friday, up 2.2% from 2,557.19 at the end of the week before. In U.S. interest rates, the yield on the ten-year U.S. Treasury note closed at 4.95%, up nine basis points from 4.86 for the week.

The economic news mostly positive last week. In the U.S., consumer confidence was higher despite falling housing prices and higher gasoline prices. First quarter economic growth numbers came out on Thursday showing almost no growth, but that was overshadowed by better than expected employment numbers, leading analysts to think that growth will pick up in the second quarter. Finally, the Chinese stock market dropped, losing between 2.7% and 5% on Friday alone, but that was due to a deliberate move on the part of the Chinese government to cool the stock boom a bit by increasing taxes on stock profits. Adding to the good feelings, the drop in Chinese stocks didn’t spread to other global stock markets. Markets in Asia, Europe, Canada, and Mexico all rallied.

Most of the good news centered around stocks meaning that the good news is that corporate profits will be higher. Unfortunately for those of us who can’t live on stock investments, that means that pay will be less and jobs will be fewer. Sure enough incomes are down. And, worse is yet to come as world auto production will be moving from developed countries to China. According to the blogger Xymphora, The Cerberus purchase of Chrysler was done for exactly that reason:

American Cars: Made in China

May 31, 2007

Chris Floyd points out that the humanitarian disaster in Somalia is even worse than that in Darfur, and that the Somalia disaster is caused by the kind of American intervention and ‘regime change’ that the Zionists are screaming for in Sudan. Of course, the Somalia regime change was yet another Israeli-inspired replacement of a government which was considered to be too Islamist. Floyd concludes by making the same big mistake that has become commonplace: alleging that the United States is in an energy war in East Africa with the Chinese. It is certainly true that the Zionist infiltrators in the American government we know as neocons have always hated China, and to the extent they still control American foreign policy they are doing whatever they can to cause conflict with China. However, as the American Establishment slowly retakes control of the American government, we will be seeing American foreign policy again reflect the real interests of the Establishment.

Since mathematicians started working on perfecting manufacturing as part of the American war effort in the 1940s, it has taken decades for the utopian dream of the capitalists – manufacturing anything, anywhere, including where labor costs are the lowest – to be realized. There have been many false attempts at dropping factories in the middle of nowhere, but no matter how many Western managers and techniques have been applied, they all ended in financial disaster. It was only in the 1980s that computer control mechanisms were perfected to the extent that capital was completely mobile. Since, both for legal and personal reasons, labor isn’t mobile, an immediate arbitrage situation appeared whereby capital could take even a larger slice of the pie from labor. Thus, the sudden renewed interest in ‘free trade’. China quickly became the obvious choice for manufacturing, with its combination of extremely low wages, totalitarian police state discipline, and welcoming government policies intending to use factories to modernize the country.

Just about everything that can be manufactured for the American market is now manufactured in China. There is no debate in the American Establishment: their wealth, and the financial health of the United States, is dependent on Chinese manufacturing. Since Chinese manufacturing is itself dependent on a reliable source of energy, there is no real conflict between the United States and China over oil (although there may be phony conflicts caused by the continuing malign influence of the Zionists in the American government). This fact has huge repercussion on American policy in the Middle East (more on this to come).

The one industry where manufacturing is still largely done in the United States is the automobile industry. The huge size of the industry, together with the iconic symbolism of the automobile in American life, meant that it was politically impossible to make the obvious move to manufacture automobiles in China. Now that the big three American automobile manufacturers are effectively insolvent, the time has come to make the move to China. Why was the incompetently managed, and serially insolvent, Chrysler attractive to Cerberus? Chrysler is the first American automobile manufacturer to set up manufacturing in China for the American market. Keith Naughton writes:

“Now the new owners at Chrysler promise to rethink what it means to be a car company. Cerberus Capital Management, the Wall Street private-equity firm named for the three-headed dog that guards the gates of Hell, has Motown rabid with speculation this week about the fallout from its $7.4 billion buyout of beleaguered Chrysler. A skilled and secretive turnaround outfit, Cerberus is expected to overhaul Chrysler in a way that could create a new model for Detroit, which badly needs a tuneup. Last year, GM, Ford and Chrysler combined to lose more than $16 billion, as the remnants of Henry Ford’s old model finally ran out of gas. Detroit insiders say they expect Cerberus to shake up the moribund American auto industry by asking this simple question: does a car company have to build all its own cars?

It could prove to be a transformative question. Rather than each Detroit automaker building every kind of car and truck – and losing their shirt on most of them – they could be design and brand houses that build only the things that make them money. After all, the thinking goes, customers only care about the product, the brand and the price. Why not focus on designing a car, marketing it and selling it, rather than manufacturing it?”

Cerberus will want to make Chrysler attractive so it can resell it in a few years at a big profit. There is no way to do that by continuing to manufacture in the United States. Despite some questions, the China deal is still on. Once the profits start rolling in, it is inevitable that all American automobile manufacturers will follow. The television industry disappeared in the United States with nary a whimper, and the automobile industry is sure to follow.

The Nation published an lengthy article on “heterodox” or non-neoclassical economists. These economists’ critiques of “autistic” economics conform to basic common sense and good science, but have been suppressed within the economics discipline. The reaction of the economics establishment is revealing of some truths that even a left publication like The Nation won’t confront: the vectoring of academic disciplines to serve the interest of the pathocracy.

Hip Heterodoxy

Christopher Hayes

[from the June 11, 2007 issue]

It's a Friday night in January, and I am searching for a free drink among 9,000 economists. Every year a sizable portion of the nation's economists descend on some lucky city for the Allied Social Science Associations Annual Meeting, the economics field's largest gathering, a kind of carnival of suits and supply curves. Most academic disciplines have a similar annual convention, but no other can boast the same influence on American politics and policy--after all, Presidents don't appoint a council of anthropological advisers. It doesn't take long for mainstream academic thinking to become the foundation for the government's macroeconomic policy. In 1968 Milton Friedman, then president of the American Economics Association (AEA), devoted his presidential address to arguing against Keynesian meddling in the economy and for a monetary policy focused on restraining inflation. A decade later, his prescriptions would be largely adopted. In 2005 onetime Reagan adviser Martin Feldstein called for Social Security privatization just as Republicans in Washington were mobilizing (unsuccessfully) toward the same end.

This year's conference attendees are packed into the mammoth glass-and-brick Chicago Hyatt. On the second evening, I come across two receptions facing off across a basement hallway. If you wanted to get a sense of the status hierarchies of the profession, this was a perfect tableau. On one side, a reception in honor of the impending rebroadcast of the late Milton Friedman's famed miniseries Free to Choose, a wildly successful bit of laissez-faire propaganda now set to reach a new generation of unsuspecting blue-state audiences. The room is packed and festive, with several Nobel laureates milling about, chicken satay skewers available for noshing and an open bar. (A man behind me in line complains of the free drinks that "Milton wouldn't approve! Because we're not getting the true price of the drinks.") Across the hall, a reception hosted by the Economic Policy Institute (EPI), a left-liberal Washington think tank that advocates policies--higher minimum wage, easier paths to unionization, social insurance--that are in almost every detail the opposite of everything that Friedman stood for. In that room, perhaps thirty people gather, picking at the cheese cubes and shelling out $6 a drink at the cash bar. The EPI's Max Sawicky, an imposing presence with a long gray ponytail and growling voice, tells me the turnout is better than usual.

After grabbing a free drink in the Friedman reception, I strike up a conversation with economist Michael Perelman in the hallway. Balding, with long gray hair, he has the intense, unblinking mien of a self-published science fiction writer, or a former grad student of Timothy Leary's. Perelman, who is there for the EPI reception, works at the margins of the discipline; he is one of a few hundred self-described "heterodox" economists at the conference. His last book, Railroading Economics, was about the creation of the "free market mythology," and his next book is titled The Confiscation of American Prosperity: From Right-Wing Extremism and Economic Ideology to the Next Great Depression. I ask him about how he relates to the so-called mainstream of his profession. "It's a mafia," he says quietly, his eyes roving over to the suits spilling out of the Freedom to Choose room.

Mafia is probably a tad hyperbolic, but there is undoubtedly something of a code of omertà within the discipline. Just ask Alan Blinder and David Card. Blinder, a renowned Princeton economist and former Clinton economic adviser, has long been a zealous advocate of trade liberalization. But this past March, the Wall Street Journal ran a front-page article on Blinder's concerns about the massive dislocations that the current trade regime and outsourcing trends might bring for American workers. He suddenly found himself under fire from fellow economists for stepping out of line. Card, a highly esteemed economist at the University of California, Berkeley, caught flak for his heresy not on trade but on the minimum wage. In 1994 he conducted a study to see whether an increase in the minimum wage in New Jersey had the negative effect on employment that basic neoclassical theory would predict. He found it didn't. In fact, his regression analysis showed that, controlling for other factors, New Jersey gained fast-food jobs after increasing its minimum wage, compared with Pennsylvania, which hadn't raised wages. The paper attracted a tremendous amount of attention and criticism, and Card himself largely abandoned working on the minimum wage. In a 2006 interview, he explained his decision to leave the topic behind this way: "I've subsequently stayed away from the minimum wage literature for a number of reasons. First, it cost me a lot of friends. People that I had known for many years, for instance, some of the ones I met at my first job at the University of Chicago, became very angry or disappointed. They thought that in publishing our work we were being traitors to the cause of economics as a whole."

What a great illustration of how discipline is enforced in academia! If economics were a true science, it wouldn’t have a “cause.” This incident reveals the “cause,” the real agenda: to influence policy to create a society where fundamentally limited people (hence the “autistic” term) have an advantage.

As Card's and Blinder's experiences show, the "mafia" still flexes its muscles, but there are also signs that its hold on power is slipping. While the discipline remains dominated by a "neoclassical" consensus that is generally pro-market and suspicious of government intervention, an explosion of new research programs and methods have provided strong evidence that many of the pillars of that consensus rest on a foundation of sand. In fact, just before the reception, AEA president George Akerlof, a Nobel laureate as respected in the profession as they come, gave what was in many senses a radical address, attacking some of the discipline's most basic assumptions about what drives human economic behavior. (Three men standing near me in the Friedman reception had referred to it as "crap.")

For this reason, I had expected the mood at the EPI reception to be upbeat. But the crowd was desultory. Things in the field were opening up, Sawicky conceded, "but it doesn't matter much, if it's still dominated by a bunch of reactionaries." In other words, while the ideas of Sawicky and his heterodox colleagues may have moved into the mainstream, they themselves have not.

So extreme is the marginalization of heterodox economists, most people don't even know they exist. Despite the fact that as many as one in five professional economists belongs to a professional association that might be described as heterodox, the phrase "heterodox economics" has appeared exactly once in the New York Times since 1981. During that same period "intelligent design," a theory endorsed by not a single published, peer-reviewed piece of scholarship, has appeared 367 times.

It doesn't take much to call forth an impressive amount of bile from heterodox economists toward their mainstream brethren. John Tiemstra, president of the Association for Social Economics and a professor at Calvin College, summed up his feelings this way: "I go to the cocktail parties for my old schools, MIT and Oberlin, and people are all excited about Freakonomics. I kind of wince and go off to another corner or have another drink." After the EPI gathering, Peter Dorman, an economist at Evergreen State College with a gentle, bearded air, related an e-mail exchange he once had with Hal Varian, a well-respected Berkeley economist who's moderately liberal but firmly committed to the neoclassical approach. Varian wrote to Dorman that there was no point in presenting "both sides" of the debate about trade, because one side--the view that benefits from unfettered trade are absolute--was like astronomy, while any other view was like astrology. "So I told him I didn't buy the traditional trade theory," Dorman said. "'Was I an astrologer?' And he said yes!"

The Birth of Orthodoxy

The term "heterodox"--like, say, "infidel"--is necessarily imprecise; it categorizes people by what they don't believe rather than what they do. In the case of heterodox economists, what they don't believe is the neoclassical model that anchors the economics profession. Classical economics refers to the theories laid out by Adam Smith and David Ricardo in the eighteenth and nineteenth centuries, which emphasized the power of the "invisible hand" of the market to promote the division of labor and economic growth. Smith famously summed up the recipe for prosperity as "peace, easy taxes, and a tolerable administration of justice," with "all the rest being brought about by the natural course of things."

A hundred years after Smith, a group of "neoclassical" economists came along and added a few key features to his account, which continue to ground the field to this day--that humans are rational, utility-maximizing agents with fixed preferences, that they make decisions "at the margins" and that the mechanisms of supply and demand (operating free of government interference) will lead to a general equilibrium whereby resources are allocated efficiently.

That view dominated for the next sixty years until John Maynard Keynes came along in a period of global economic crisis and proposed a new way of looking at the economy, one focused on national economies as systems that were decidedly imperfect and prone to failure. In the wake of Keynes's work in the 1930s and '40s, economists had a problem on their hands. They had two models for how an economy worked: the neoclassical account of supply, demand and prices (microeconomics) and Keynes's account of the relationships among consumer demand, employment and money (macroeconomics). In the 1940s and '50s, a series of legendary economists formally fused the two, producing the "neoclassical synthesis." Many of the pioneers of this work, from Paul Samuelson to Kenneth Arrow, were famously liberal. But their work stressed the ways in which markets, functioning on their own without interference, tended to an interdependence described as "general equilibrium." In their wake came a parade of libertarian economists, like Milton Friedman and his Chicago School colleagues, who pushed the neoclassical model to leave Keynes behind completely, to fully embrace the logical extremes of a world of self-interested rational actors--a back-to-the-future gambit dubbed the "new classical" economics.

In terms of the implications for the relative value of market and nonmarket forces in allocating resources, the new classical view didn't differ substantially from Adam Smith's original contention. In the same way classical economics was born as a brief for laissez-faire capitalism, against the prevailing interventionist mercantilism of the day, the new classical model reaffirmed the value of markets in the wake of Keynes's critiques.

And it came to dovetail quite neatly with a worldview that has dominated the past thirty years of globalization, which Notre Dame heterodox economist David Ruccio succinctly summed up to me as one in which "markets, private property and minimal government will achieve maximum welfare."

But the neoclassical model didn't leave its mark only on economics. In an audacious burst of methodological imperialism, Chicago Schoolers like Gary Becker used the framework of rational individuals seeking to maximize their utility to analyze and explain everything from tax evasion to teen pregnancy. This laid the groundwork for the public discourse we have today, in which Freakonomics spends 101 weeks on the bestseller list and policy-makers obsessively invoke "incentives" as the panacea for any given social problem. ("Incentive pay" for teachers! Give poor kids sneakers, and they'll be A students!) Indeed, the cradle for much of our policy discussions can be found in the first chapter of just about any introductory economics textbook, where the basic precepts of the neoclassical framework are described under the rubric of "thinking like an economist."

The problem, then, that heterodox economists face is that they are economists who don't "think like economists." Many point out that humans aren't rational, or not nearly as rational as the theory would have them be (and, further, that in the aggregate this creates market failures). Others point out that humans are social creatures, not individual agents, and their preferences and behaviors are forged by social structures: institutions, habits, social mores and culture all mediate and drive economic behavior. Others say that price and value aren't interchangeable and that prices don't arise from the simple intersection of supply and demand curves, while some argue that unequal power between different sectors of society affects how markets operate. Dissent from the mainstream of economics is not new; indeed, it's nearly as old as the profession itself. Marx was a kind of heterodox economist, as was Thorstein Veblen. John Kenneth Galbraith spent his whole life as an economic dissident, and the political ferment of the 1960s ushered in a relatively large class of radical economists who together founded the Union for Radical Political Economics, which exists to this day.

In 2000 the economics graduate students at the École Normale Supérieure staged a mutiny, signing a manifesto that objected to the "autistic" economics they were being taught. "Too often," the students wrote, "the lectures leave no place for reflection. Out of all the approaches to economic questions that exist, generally only one is presented to us. This approach is supposed to explain everything by means of a purely axiomatic process, as if this were THE economic truth. We do not accept this dogmatism."

The rebellion spread across Europe and gave rise to a fairly vibrant Post-Autistic Economics movement in places like England and Germany. But in the United States, the Post-Autistic movement never caught fire, and dissident economists remain clustered in a handful of locations: the University of Utah; UMass, Amherst; the University of Missouri, Kansas City; The New School; Notre Dame; and in a few professional associations and journals. "We're between 5 and 10 percent in the academy," Frederic Lee, who edits the Heterodox Economics Newsletter, tells me. "That might be generous. It's not very much, but it would be like saying Jews only constitute 5 percent of Europe. Yeah, sure, after you slaughter 'em. The issue isn't that you're small--the issue is that you're there at all."

The chief complaint of heterodox economists is that the social hierarchy of the profession prevents their ideas from getting the hearing they deserve. Thomas Palley, a dissident economist who received his PhD from Yale and once worked for the AFL-CIO, says that many heterodox ideas "can't be rejected on scientific grounds. They meet all the tests of the profession--they don't meet tastes of the profession. So then you have to answer where the tastes come from."

..Richard Jensen, the neoclassical chair of the department, defended the split as solely an issue of "standards." But it's precisely the validity of those standards that's at issue. "They don't see themselves as cleansing alternative approaches," says Frederic Lee. "They simply see themselves as saying, This is good economics, and that's bad economics."

…In his keynote talk to the Association of Social Economists, environmental economist John Gowdy referred to this as the "Clint Eastwood defense: 'We ain't like that no more.'" But he then added that in some respects it was true. The mainstream, he said, has "gone beyond the free-market ideology. There's a wide variety of empirical work being published." The empirical work that Gowdy and other heterodox economists tend to cite most is that of behavioral economists, those who study how humans actually reason about economic decisions, calculate risk and respond to incentives. What they routinely find is that the rational utility maximizer of the neoclassical model is a convenient fiction. A growing literature shows humans to be systematically biased in their calculations of risk, disposed to punish antisocial behavior, even at a cost to themselves. By creating a framework for empirically testing one of the founding axioms of the field, behavioral economics has opened a space for dissenters that can get a hearing from the mainstream. If you were to draw an intellectual Venn diagram of mainstream and heterodox economics, the behavioral economists would be in the intersecting section.

But despite the fact that much of their work is devoted to upending Homo economicus, the behavioralists have achieved widespread mainstream acceptance. Daniel Kahneman, who helped establish the field along with his late colleague Amos Tversky, won the Nobel Prize for his work in 2002. So then one has to ask, Just what set of characteristics defines what gets to be called "mainstream economics"? And the answer can seem maddeningly circular: Mainstream economics isn't defined so much by some limited set of ideas or approaches. Mainstream economics is that work done by mainstream economists and published in mainstream journals.

The More Things Change...

…A month after the conference, I went to talk more with David Ruccio in his Hyde Park apartment. He'd just returned from Brazil, glowing about a country where you could smoke indoors: "There is no repression here!" one of his hosts had told him when he asked if he could light up. Ruccio laughed and lit a cigarette, sitting next to a fireplace. I laid out for him my impressions of the AEA conference: If the mainstream itself is opening up, molting the restrictive Homo economicus and general equilibrium casing, then is the field changing? And does that mean that the worldview of neoliberalism, and market fetishistic policy prescriptions, are losing the important intellectual bedrock in which they are grounded?

Ruccio wasn't quite buying it. "There's a fracturing taking place," he conceded. "It's very hard to put your thumb on what neoclassical economics is. And yeah, there are new research agendas, but what gets taught at every institution in the country from undergraduate to graduate is the same utility-maximizing story. The teaching remains the same, and the policies remain the same."

He continued, "Some of the critiques, as has always been the case, are integrated in some fashion. They take in the critique in order to change the model but not upset the model." Behavioral economists, for example, don't generally argue for abandoning the general equilibrium model, instead choosing to see their work as adding "frictions" to it. "It's what drives people like me crazy," Ruccio went on. "Because the more disturbing questions are ignored--unequal power or exploitation, those critiques never come in. They say, Look, we've changed. And we look and say, No, you haven't."

Another classic establishment manoever: a tactical absorbtion of just enough elements of the critique to strengthen orthodoxy.

'Shoots of Spring'

No one would call Berkeley's George Akerlof a heterodox economist, but his ideas have always been iconoclastic. Back in the 1960s, he noticed that there was something systematically wrong with the market for used cars. His insight was that the problem was "asymmetric information"; the dealer knew if the car was a lemon, and you didn't. Initially no journal would accept his paper "The Market for Lemons," but eventually it was published to much acclaim, and asymmetric information was recognized as a serious breakthrough. He shared the 2001 Nobel Prize for his work on the topic.

Akerlof's AEA address was titled "The Missing Motivation in Macroeconomics," and its purpose was to argue that the basic theory of human behavior upon which neoclassical economics rests is incomplete and that the incompleteness leads to a host of theoretical errors. The "missing motivation" of the title were social norms, people's conceptions of how they should act, which Akerlof argued played a central role in people's economic activity. Once these social norms are integrated into economic theory, Akerlof argued, many of the anti-Keynesian arguments made by Friedman and his ilk begin to fall apart. "The Keynesians based their models on their observation of motivations," Akerlof notes, "rather than on abstract derivations. If there is a difference between real behavior and behavior derived from abstract preferences, New Classical economics has no way to pick up those differences. In contrast, models with norms based on observation will systematically incorporate such behavior." Writing in the New York Times, Louis Uchitelle said the talk could "push prevailing economic theory further away from the free market approach that has generally held sway for the last four decades."

If the heterodox economists were nonplussed or only grudgingly positive about the speech, many mainstream economists weren't psyched about it either. NYU's Mark Gertler told Uchitelle that Akerlof was "stepping out of line," and one Chicago School economist I e-mailed said he "hated it" and added that it had made one of his colleagues "depressed."

The word "depressed" caught my eye. You only get depressed by something you disagree with if you think others are going to find it persuasive--that is, if you think that the pendulum isn't swinging your way.

"There's a recognition that it's pretty hard to believe in the rational expectations and equilibria which were sold to students in the 1980s, when you had to read them, and not only read them but send them up as your benchmark," Thomas Palley, the former AFL-CIO economist, told me. "In 1983 there were more voices and more possibility, but the world was closing. Now we're coming from a black hole and there are shoots of spring."

It’s commencement season in the United States, and the following mock commencement speech depicts the world that the economics profession helped to create: one in which our lives are vectored either to become a pathocrat or serve their interests. It also hints at how such a world will necessarily collapse on itself once all of the society’s creative energy is employed to prop up an entropic system.

The speech grads should hear

Daniel Brook

June 1, 2007

Four years ago, you were all gathered before me on this quad as eager freshmen; today we are gathered here again, to send you off into what MTV has dubbed "the real world." [pause for laugh, look surprised and flattered when it comes]

Back then I urged you to embark upon a liberal arts education. By sophomore year, reality began to set in, and your schedules included a "practical" course or two. You dipped your toes into Economics 101 and, as it's known on this campus, "Accounting for Lemmings." Ultimately, most of you, like most American undergraduates, majored in a pre-professional field.

While it is customary to inspire graduates with a plea to go forth and serve humanity, I will take the advice of one of your eloquent classmates and "cut the crap." This college, like many in our great nation, is sending most of you into the world burdened by five-figures worth of tuition debt and without a loan forgiveness program for public service. Choose to be a teacher in Boston and you'll find you've been priced out of homeownership in 91.7 percent of the region's census tracts. Take a government or nonprofit job in Washington, and get ready to commute two hours a day from affordable West Virginia if you want to start a family. Or you can go corporate and embrace the five-fold pay advantage of entry-level K Street lobbyists over Capitol Hill staffers.

During your four idyllic years here, your class has become known for its creativity. This year, we had a record number of entries in both our entrepreneurship concept contest and our playwrights festival. Should any of you decide to pursue a self-employed existence be sure you don't have any preexisting medical conditions, because if you do, you will not be able to get health insurance. Even those of you with more mundane aspirations must be careful: nearly 40 percent of entry-level jobs for college graduates no longer include employer-provided insurance.

To the parents who are shaking their heads and muttering "it was always thus," I say, it was not. In the 1970s, students could pay nearly three-quarters of their tuition with a Pell Grant; today, a grant covers only one-third. As recently as 1984, the cost of housing in San Francisco was just 63 percent higher than in the average American locale, proverbial Peoria; now it is three times as expensive. When I graduated from this university in the 1960s, my tuition was one-third of what it is today. (And to the chairman of economics: yes, Dr. Wisenheimer, I remembered to adjust for inflation.)

This may sound quite hopeless. Yet, if you managed to squeeze an American history course into your schedule of McKinsey & Company recruiting panels, you might have learned that these seemingly immutable financial facts of life are not foreordained. You might have learned that many public universities used to be free and private tuitions modest. And you might have studied how the rightward political swing of recent decades -- from Barry Goldwater's 1964 campaign up to President Bush's Ownership Society --changed all that.

You'd know about how Ronald Reagan, as governor of California, overturned a hundred-year tradition that the University of California system would be tuition-free and as president, Reagan's federal human resources policy explicitly channeled top candidates into the private sector.

While I have enjoyed flouting convention in this speech, there is one convention I dare not overturn: ending on an upbeat note.

I would be remiss not to mention the remarkable opportunities available to those who successfully stifle their impulses toward service and creativity. With your prestigious degrees, you can easily join the ranks of America's millionaire yes-men and yes-women. In a nation with literally millions of millionaires, there's no need to build a better mouse trap or even to rise to the top of your profession.

It's just a matter of choosing the right field and always answering in the affirmative. "Yes" to hundred-hour workweeks; "yes" to never seeing your children; "yes" to your boss's capricious 3 a.m. BlackBerry demands.

As one of our trustees confided to me, every law partner at the eighth-best law firm in Cleveland is now a millionaire; the dead weight on the Wall Street trading floors get bigger Christmas bonuses than our department chairs make in a year. So think small. Aim low. Aspire to corporate mediocrity. And if you ever feel handcuffed to a job as pocket-lining as it is soul-crushing, then and only then, I urge you to give something back -- preferably in the form of a check to the alumni fund.

Daniel Brook is author of "The Trap: Selling Out to Stay Afloat in Winner-Take-All America."