Nothing succeeds like failure. That was made clear by the latest news about Fannie Mae and Freddie Mac, where ten top executives will share $12.8 million in bonuses for persuading Americans to modify mortgages on homes facing foreclosure. Never mind that the federal programs involved — HAMP (the Home Affordable Modification Program) and its benighted offspring, HARP (the Home Affordable Refinance Program) — succeeded in modifying only a handful of mortgages, and those often for people who could not afford them. Never mind also that Fannie and Freddie, which of course got us into this mess to start with, have just asked for another $6 billion to tide them over until their next request for funds. The question is why undead Fannie and Freddie are allowed to continue staggering on, wreaking destruction and wasting money at every step. It’s time to dispatch them with a stake through the heart before they do even more damage.
Once there were the Wise Men — rich WASPs who moved seamlessly between Wall Street and Washington (usually the State Department), building America’s mid-century empire even as they tended their portfolios. Now we have the Wild Men — same career paths, different results. Their epitome is Jon Corzine. The former Goldman Sachs CEO won a Senate seat in New Jersey in 2000, and the governorship in 2005. He spent a combined $100 million in the two races. But the Garden State, under his stewardship, was an even bigger spender. In 2009, New Jerseyans replaced him with Chris Christie. Corzine went back to the private sector as CEO of MF Global, a multinational bond dealer. He snapped up Spanish, Italian, and Portuguese debt, betting that the Eurocrats would not let these countries fail. But as the market in bad euro-debt softened, MF Global went bankrupt. About the only base Corzine hasn’t slid into, spikes flying, is higher education. Are there any Ivy League schools with billion-dollar endowments he might manage?
Michelle Obama was firing up the crowd at a Democratic National Committee fundraiser in Jacksonville, Fla.: “Let’s not forget what it meant when my husband appointed those two brilliant Supreme Court justices, and for the first time in history our daughters and our sons watched three women take their seats on our nation’s highest court.” She continued, “But more importantly, let us never forget the impact their decisions will have on our lives for decades to come — on our privacy and our security, on whether we can speak freely or worship openly, and, yes, love whomever we choose. That is what’s at stake here.” Love whomever we choose. Do Republicans plan to ban love? Is Mrs. O. making an allusion to same-sex marriage? Doesn’t her husband oppose it, currently? Speak freely. Isn’t it Obama-supporting liberals who impose speech codes on campus? Worship openly. Is it conservatives who have driven religion out of the public square? Etc. The first lady’s speeches aren’t any more closely reasoned than her husband’s.
Are teachers overpaid? Andrew Biggs of the American Enterprise Institute and Jason Richwine of the Heritage Foundation have a new paper arguing that they are. Conservatives have long pointed to widening wage gaps between similarly situated public- and private-sector workers as evidence that powerful public unions have hijacked the labor market. Liberals have responded that, when one takes into account the average public-sector worker’s greater education and experience, they are actually underpaid relative to the private sector. But what if all that education isn’t worth that much? Biggs and Richwine marshal data showing that education majors enter university with below-average SAT, GRE, and IQ scores, but receive above-average GPAs, and go on to make more money than other students with similar cognitive abilities. In any generalization there are, of course, many exceptions. But if this is the rule, it is consequential. Arguing that teachers are overpaid because they are relatively dumb is not the easiest sell in a culture that values educators. But acknowledging it, and fixing it, are critical for a culture that values education.