Bryan Kaplan, writing for The Atlantic:
Suppose your law firm wants a summer associate. A law student with a doctorate in philosophy from Stanford applies. What do you infer? The applicant is probably brilliant, diligent, and willing to tolerate serious boredom. If you’re looking for that kind of worker—and what employer isn’t? – you’ll make an offer, knowing full well that nothing the philosopher learned at Stanford will be relevant to this job.
The labor market doesn’t pay you for the useless subjects you master; it pays you for the preexisting traits you signal by mastering them. This is not a fringe idea. Michael Spence, Kenneth Arrow, and Joseph Stiglitz – all Nobel laureates in economics – made seminal contributions to the theory of educational signaling. Every college student who does the least work required to get good grades silently endorses the theory. But signaling plays almost no role in public discourse or policy making. As a society, we continue to push ever larger numbers of students into ever higher levels of education. The main effect is not better jobs or greater skill levels, but a credentialist arms race.
Lest I be misinterpreted, I emphatically affirm that education confers some marketable skills, namely literacy and numeracy. Nonetheless, I believe that signaling accounts for at least half of college’s financial reward, and probably more.
Aaron Glantz, reporting for Reveal:
The Census Bureau reports that nearly 3 million U.S. homes and 13 million apartment units are owned by LLC, LLP, LP or shell companies – levels of anonymous ownership not seen in American history. The proportion of residential rental properties owned by individuals and families has fallen from 92% in 1991 to 74% in 2015.
The lack of transparency not only represents an opportunity for money laundering, but it also has more prosaic implications. First-time homebuyers are denied the opportunity to buy affordable homes with bank loans because those properties already have been scooped up by shell companies. Tenants can’t figure out to whom to complain when something goes wrong. Local officials don’t know whom to hold responsible for code violations and neighborhood blight.
Fascinating stuff from David E. Hoffmann, writing in The Oligarchs: Wealth And Power In The New Russia:
The Soviet system also had another kind of funds, known as non-cash, or ‘beznalichnye’. This was not banknotes or coins, but a kind of virtual money that was widely distributed as government subsidies to factories. The ‘beznalichnye’, or ‘noncash’, existed only as an accounting unit. A factory would be transferred subsidies in beznalichnye, which it would record on its books and might use to pay another enterprise—but it was not something you could put in your wallet.
The key dilemma for a factory manager was that the system was rigid: mixing the two kinds of money was prohibited. The factory manager was not allowed to take the beznalichnye and turn it into real cash. Both kinds of money were controlled by Gosbank, the official state bank, and by the central planners.
However, factory managers almost always needed more cash than they could get out of the system. The supply of cash was tight, but the supply of beznalichnye was very plentiful — maybe because there was not much use for it. The result was an imbalance in the value of the two kinds of money. Cash was much more valuable and sought after. By some estimates, a cash ruble was worth ten times a noncash ruble.
This imbalance was an invitation to huge profits. Someone who figured out how to turn the beznalichnye into cash would make a fortune. The planners’ greatest nightmare was that someone would do this and pump the relatively worthless state subsidies into real cash rubles.
Guess who figured it out.
David Graeber, via Strike:
The ruling class has figured out that a happy and productive population with free time on their hands is a mortal danger (think of what started to happen when this even began to be approximated in the ’60s). And, on the other hand, the feeling that work is a moral value in itself, and that anyone not willing to submit themselves to some kind of intense work discipline for most of their waking hours deserves nothing, is extraordinarily convenient for them.
I would not presume to tell someone who is convinced they are making a meaningful contribution to the world that, really, they are not. But what about those people who are themselves convinced their jobs are meaningless? Not long ago I got back in touch with a school friend who I hadn’t seen since I was 12. I was amazed to discover that in the interim, he had become first a poet, then the front man in an indie rock band. I’d heard some of his songs on the radio having no idea the singer was someone I actually knew. He was obviously brilliant, innovative, and his work had unquestionably brightened and improved the lives of people all over the world. Yet, after a couple of unsuccessful albums, he’d lost his contract, and plagued with debts and a newborn daughter, ended up, as he put it, “taking the default choice of so many directionless folk: law school.” Now he’s a corporate lawyer working in a prominent New York firm. He was the first to admit that his job was utterly meaningless, contributed nothing to the world, and, in his own estimation, should not really exist.