Free Harvard, Fair Harvard

As described in the NYTimes article below, I am part of a five person slate running for Harvard's Board of Overseers. The main organizer is Ron Unz, and the best known individual on our team is Ralph Nader. The others are Lee C. Cheng, chief legal counsel for the online electronics retailer Newegg.com, and Stuart Taylor, an attorney, journalist and Nonresident Senior Fellow at the Brookings Institute (also co-author of the book Mismatch).

Our platform is simple. We are in favor of

1. More transparency in Harvard admissions
2. Increased use of endowment income to make Harvard more accessible

If you are a Harvard degree holder (including from the graduate and professional schools), you can sign the petition for us to get on the ballot. Please contact Ron [ ron@freeharvard.org ] directly if you are willing to do so. Even better, you can help us recruit your fellow Harvard alums to sign.

A Push to Make Harvard Free Also Questions the Role of Race in Admissions

Should Harvard be free?

That is the provocative question posed by an outsider slate of candidates running for the Board of Overseers at Harvard, which helps set strategy for the university. They say Harvard makes so much money from its $37.6 billion endowment that it should stop charging tuition to undergraduates.

But they have tied the notion to another equally provocative question: Does Harvard shortchange Asian-American applicants in admissions?

The slate of five candidates was put together by Ron Unz, a conservative from California and software entrepreneur who sponsored ballots initiatives opposing bilingual education. Although the campaign, “Free Harvard, Fair Harvard,” includes one left-leaning member — the consumer advocate Ralph Nader — Mr. Unz and the other three candidates have written or testified extensively against affirmative action, opposing race-based admissions.

Their positions are in lock step with accusations in a federal lawsuit accusing the university of discriminating against Asian-Americans in admissions. Harvard has denied the allegations.

Coincidence or not, the plaintiffs in that case are seeking from Harvard exactly what the slate of candidates wants: disclosure of data showing how the university’s freshman class is selected each year.

The politically charged data holds the potential to reveal whether Harvard bypasses better-qualified Asian-American candidates in favor of whites, blacks and Hispanics, and the children of the wealthy and powerful, the group argues.

“Our focus is entirely on greater transparency in admissions,” Mr. Unz said, “namely urging Harvard to provide much more detailed information on how they select the very small slice of applicants receiving offers of admission, in order to curb the huge potential abuse possible under the entirely opaque system.”

Whatever the political motivations of the slate, Mr. Unz and the other members have hit on two increasingly contentious issues in higher education: astronomical college costs and affirmative action.

... Mr. Unz, whose 2012 data analysis of admissions at Harvard and other Ivy League institutions is cited in the case against the university, said his slate was not pressing to abolish affirmative action at Harvard, it was seeking only to get more information. But several members of the group are known for their past advocacy against using race in admissions.

One is Lee C. Cheng, chief legal counsel for the online electronics retailer Newegg.com, who is co-founder of an organization that filed a brief in support of the white plaintiff in the lawsuit against the University of Texas that is before the Supreme Court.

Mr. Cheng is also quoted in the suit against Harvard, which was brought by Students for Fair Admissions.

Another member of the slate is Stuart Taylor Jr., a former reporter for The New York Times who is co-author of a 2012 book contending that affirmative action harms minority students. And another is Stephen Hsu, a physicist and vice president at Michigan State University who has written against the use of race in college admissions.

Mr. Nader, who got his law degree from Harvard, said the admissions system has been “bollixed up for decades” by legacies and other preferences. ...

This is not the first time a slate of candidates has tried to influence the board. In 1991, a Harvard Law School student named Barack Obama was one of three candidates running on a slate called the Harvard-Radcliffe Alumni Against Apartheid. ...

See also What is best for Harvard and Defining Merit.

Free Harvard, Fair Harvard: Overseer election results

None of the Free Harvard, Fair Harvard candidates were among the winners of the Harvard Overseer election, which ended last Friday. I didn't expect to win, but I thought Ralph Nader had a good chance. Nevertheless, it was worthwhile to bring more attention to important issues such as admissions transparency and use of the endowment. My thanks to the thousands of Harvard alumni who supported our efforts and voted for the FHFH ticket.

NYTimes: Group Urging Free Tuition at Harvard Fails to Win Seats on Board

A rebellious slate of candidates who this year upset the normally placid balloting for the Board of Overseers at Harvard has failed to secure positions on the board, which helps set strategy for the university.

Calling itself Free Harvard, Fair Harvard, the group ran on a proposal that Harvard should be free to all undergraduates because the university earns so much money from its $37.6 billion endowment. It tied the notion to another, equally provocative question: Does Harvard shortchange Asian-Americans in admissions?

The outsider slate, which was formed in January, proposed five candidates against a slate of eight candidates officially nominated by the Harvard Alumni Association. After 35,870 alumni votes were counted, five winners were announced from the alumni group on Monday. ...

Perhaps our efforts emboldened other groups to push for important changes:

WSJ: Asian-American Groups Seek Investigation Into Ivy League Admissions

A coalition of Asian-American organizations asked the Department of Education on Monday to investigate Brown University, Dartmouth College and Yale University, alleging they discriminate against Asian-American students during the admissions process.

While the population of college age Asian-Americans has doubled in 20 years and the number of highly qualified Asian-American students “has increased dramatically,” the percentage accepted at most Ivy League colleges has flatlined, according to the complaint. It alleges this is because of “racial quotas and caps, maintained by racially differentiated standards for admissions that severely burden Asian-American applicants.” ...

See also

NYTimes: Professors Are Prejudiced, Too

... To find out, we conducted an experiment. A few years ago, we sent emails to more than 6,500 randomly selected professors from 259 American universities. Each email was from a (fictional) prospective out-of-town student whom the professor did not know, expressing interest in the professor’s Ph.D. program and seeking guidance. These emails were identical and written in impeccable English, varying only in the name of the student sender. The messages came from students with names like Meredith Roberts, Lamar Washington, Juanita Martinez, Raj Singh and Chang Huang, names that earlier research participants consistently perceived as belonging to either a white, black, Hispanic, Indian or Chinese student.

... Professors were more responsive to white male students than to female, black, Hispanic, Indian or Chinese students in almost every discipline and across all types of universities. We found the most severe bias in disciplines paying higher faculty salaries and at private universities. ... our own discipline of business showed the most bias, with 87 percent of white males receiving a response compared with just 62 percent of all females and minorities combined.

... Were Asians favored, given the model minority stereotype they supposedly benefit from in academic contexts? No. In fact, Chinese students were the most discriminated-against group in our sample. ...

Free Harvard, Fair Harvard: Enrollment Trends

The graph below shows changes in the number of Harvard students by ethnic group, relative to the total college age US population of that group (Harvard Enrollment Per Capita = HEPC). Over the last 20 years, the Asian American HEPC has declined by almost 60%. Unless Asian American applicants to Harvard have, on average, declined significantly in relative quality (anecdotal evidence suggests that is far from true), we are left with a mystery: Why has Asian American HEPC declined so precipitously?

Only the innumerate can fail to be intrigued (alarmed? offended?) by this simple observation.

Some caveats: both numerator and denominator for HPEC are difficult to determine. The former comes from NCES data (National Center for Education Statistics), self-reported by universities. The denominator comes from Census bureau Current Population Survey data, and is a bit noisy year to year. I doubt we can trust the HEPC number from one year to the next, but the 20 year trend is probably roughly reliable.

The Economist covered this topic recently in an article entitled The model minority is losing patience. From their chart, one can see that the HEPC mystery extends to the rest of the Ivy League: Asian American enrollment at the Ivies has mysteriously converged at around 15-20%, despite the huge growth in college age Asian American population over the last 20 years.

Caltech is the one school among those in the graph which explicitly declines to use race as a preference (or penalty) in admissions. Caltech has the academically strongest student body and its alumni win more Nobel Prizes and major science and technology awards per capita than any other school.

If you are a Harvard degree holder, I urge you to vote for the Free Harvard, Fair Harvard slate in the coming Overseer elections this spring. We are asking for greater transparency in Harvard admissions, which would help resolve the HEPC mystery discussed above.

See also 20 years @15 percent: does Harvard discriminate against Asian-Americans?

The historical parallels with anti-semitic practices of the early 20th century are reviewed in detail:

... In a letter to the chairman of the committee, President Lowell wrote that “questions of race,” though “delicate and disagreeable,” were not solved by ignoring them. The solution was a new admissions system giving the school wide discretion to limit the admission of Jewish applicants: “To prevent a dangerous increase in the proportion of Jews, I know at present only one way which is at the same time straightforward and effective, and that is a selection by a personal estimate of character on the part of the Admissions authorities ... The only way to make a selection is to limit the numbers, accepting those who appear to be the best.”

... The reduction in Jewish enrollment at Harvard was immediate. The Jewish portion of Harvard’s entering class dropped from over 27 percent in 1925 to 15 percent the following year. For the next 20 years, this percentage (15 percent) remained virtually unchanged.

... The new policy permitted the rejection of scholastically brilliant students considered “undesirable,” and it granted the director of admissions broad latitude to admit those of good background with weaker academic records. The key code word used was “character” — a quality thought to be frequently lacking among Jewish applicants, but present congenitally among affluent Protestants.

Ralph Nader and Ron Unz on the Free Harvard, Fair Harvard Overseer Campaign

Ralph Nader and Ron Unz discuss the Free Harvard, Fair Harvard Overseer campaign. The discussion starts about 4 minutes in.

Previous posts on Free Harvard, Fair Harvard.

Free Harvard, Fair Harvard: Harvard Magazine and CNN coverage

We are rapidly approaching the February 1 deadline for petition signatures supporting our Free Harvard, Fair Harvard (FHFH) campaign.

Two articles just appeared concerning the campaign. Harvard Magazine's Overseers Petitioners Challenge Harvard Policies contains a thorough and lengthy review of the issues. After a quick read, I have two specific comments.

1. The author seems unaware of research showing that SAT scores are predictive not just of freshman grades, but also of performance in upper division courses and beyond (for example, they predict GRE and LSAT scores obtained by seniors applying to graduate school). These are important facts underlying the mismatch hypothesis that should be clarified.

2. The article points out that

... Faculty of Arts and Sciences [FAS] ... owned $15.4 billion of the endowment, which was valued at $37.6 billion last June 30: about 41 percent. Approximately $2.5 billion (slightly less than 7 percent) of the endowment is presidential funds—the income from some of which may be directed to FAS and the College. But the remaining majority of endowment assets is owned by other schools or units, and presumably the income distributed from them is largely or completely unavailable to pay for undergraduate tuition ...

My understanding, as someone who has endowed a scholarship at Caltech, is that although gifts are typically made with specific restrictions, universities often take liberties when necessary with the returns on these gifts. For example: after the 2008 financial crisis the Caltech President unilaterally (without informing donors like myself) imposed a tax on endowment income in order to cover a shortfall in operating budget. Indeed, I cannot identify any legal restriction in the gift agreement that prevents Caltech from imposing such a tax. I imagine most of Harvard's endowment is in a similar situation.

The second article is a CNN opinion piece by noted author and journalist Jeff Yang. I had a long discussion with Jeff about FHFH, which we recorded just for fun.

For the record, my position on Affirmative Action: I am not against moderate preferences based on ethnicity. However, I am against preferences which are so large that they make it unlikely that the recipient of the preference can succeed in challenging courses at the university.

Free Harvard, Fair Harvard: Let the Voters Decide!

The petitions are in! Thanks to everyone who worked so hard to collect ~300 signatures in just the past two weeks. It appears we'll be on the Overseer ballots sent to 300k Harvard degree holders.

Our slate: Ralph Nader, Ron Unz, Lee Cheng, Stuart Taylor Jr., and myself.

Our platform:
1. More transparency in Harvard admissions
2. Increased use of endowment income to make Harvard more accessible

We are NOT conservative extremists: I voted twice for Obama, as did others on our slate.

We are NOT running against Affirmative Action. I support moderate admissions preferences, and I support diversity on campus. However, I am against preferences which are so large that they make it unlikely that the recipient of the preference can succeed in challenging courses at the university. Any admissions system has to be studied carefully to understand its consequences, and Harvard's is no exception.

Barack Obama (1991 Harvard Overseer petition candidate): He [Steve] looks like someone who can do great things!

Press coverage:

New York Times 1/14/16 (front page)

Harvard Magazine 1/27/16 (9000 words by editor John Rosenberg)

Discussion with CNN contributor and prominent Asian American writer Jeff Yang:

Harvard Overseer Election

Harvard Overseer ballots have been mailed. Please vote for the Free Harvard, Fair Harvard ticket!

Earlier posts here.

Below is my candidate statement.

Stephen Hsu is Vice President for Research and Graduate Studies and Professor of Theoretical Physics at Michigan State University. He oversees roughly $600 million in annual research expenditures on a campus of 50,000 students and over 5,000 faculty and academic staff.

Previously, he was Founder and CEO of SafeWeb, a Silicon Valley information security startup acquired by Symantec, and held faculty positions at Yale and the University of Oregon. Hsu was a Junior Fellow of the Harvard Society of Fellows, 1991–1994. His research areas include quantum field theory, cosmology, and computational genomics.

"As a scientist, university administrator, and technology entrepreneur, I believe I have unique insight into the challenges facing modern research universities.

"My father immigrated here in 1948 to pursue graduate studies, and I was blessed to have a wonderful midwestern upbringing in a small college town. Many teachers, professors, and mentors contributed to my growth and development. Therefore, I am obliged to contribute to the continued vitality of the U.S. educational and scientific enterprise. Toward this goal, it would be my great honor to serve as a Harvard Overseer. Two of my objectives, which I hope you share: 1. let us make Harvard more accessible to talented students of limited means, 2. let us ensure that Harvard admits the students who are most able to benefit from its gifts, and in return benefit the world."

Free Harvard, Fair Harvard: Freeharvard.org

We received confirmation from Harvard today that our petitions have been accepted and that our slate will appear on the Overseer ballots. For more information see FreeHarvard.org.

Our slate: Ralph Nader, Ron Unz, Lee Cheng, Stuart Taylor Jr., and myself.

Our platform:
1. More transparency in Harvard admissions
2. Increased use of endowment income to make Harvard more accessible

We are NOT conservative extremists: I voted twice for Obama, as did others on our slate.

We are NOT running against Affirmative Action. I support moderate admissions preferences, and I support diversity on campus. However, I am against preferences which are so large that they make it unlikely that the recipient of the preference can succeed in challenging courses at the university. Any admissions system has to be studied carefully to understand its consequences, and Harvard's is no exception.

Strange bedfellows?

Vote for the Free Harvard, Fair Harvard Overseer slate!

That vast right-wing conspiracy

Some coverage of the Free Harvard, Fair Harvard campaign has characterized our five person slate as Ralph Nader and four (evil) conservatives.

To set the record straight: I voted for Clinton (twice), Obama (twice), and for Gore and Kerry. I know at least one other "conservative" on our ticket also voted twice for Obama.

Hail to the Chief (2014)

President Obama: He [Steve] looks like someone who can do great things!

Obama! (2008)

An Obama victory would be the only positive legacy of George W. Bush's nightmare presidency.

... from earlier in the year in Oregon.

Free Harvard, Fair Harvard

In the matter of James Damore, ex-Googler

James Damore, Harvard PhD* in Systems Biology, and (until last week) an engineer at Google, was fired for writing this memo: Google’s Ideological Echo Chamber, which dares to display the figure above.

Here is Damore's brief summary of his memo (which contains many citations to original scientific research), and the conclusion:

Google’s political bias has equated the freedom from offense with psychological safety, but shaming into silence is the antithesis of psychological safety.
● This silencing has created an ideological echo chamber where some ideas are too sacred to be honestly discussed.
● The lack of discussion fosters the most extreme and authoritarian elements of this ideology.
○ Extreme: all disparities in representation are due to oppression
○ Authoritarian: we should discriminate to correct for this oppression
● Differences in distributions of traits between men and women may in part explain why we don't have 50% representation of women in tech and leadership.
● Discrimination to reach equal representation is unfair, divisive, and bad for business.


I hope it’s clear that I’m not saying that diversity is bad, that Google or society is 100% fair, that we shouldn’t try to correct for existing biases, or that minorities have the same experience of those in the majority. My larger point is that we have an intolerance for ideas and evidence that don’t fit a certain ideology. I’m also not saying that we should restrict people to certain gender roles; I’m advocating for quite the opposite: treat people as individuals, not as just another member of their group (tribalism).

This actual excerpt is of course very different from the heavily biased (mendacious) characterizations of the memo in the (lying) media. Perhaps that should make you wonder about the reliability of mainstream accounts concerning this matter.

Damore correctly anticipated his own demise! CEO Sundar Pichai's company-wide message seems to ban almost all scientific discussion of statistical or distributional group differences, on threat of termination:

This has been a very difficult time. I wanted to provide an update on the memo that was circulated over this past week.

First, let me say that we strongly support the right of Googlers to express themselves, and much of what was in that memo is fair to debate, regardless of whether a vast majority of Googlers disagree with it. However, portions of the memo violate our Code of Conduct and cross the line by advancing harmful gender stereotypes in our workplace. Our job is to build great products for users that make a difference in their lives. To suggest a group of our colleagues have traits that make them less biologically suited to that work is offensive and not OK. It is contrary to our basic values and our Code of Conduct, which expects “each Googler to do their utmost to create a workplace culture that is free of harassment, intimidation, bias and unlawful discrimination.”

The memo has clearly impacted our co-workers, some of whom are hurting and feel judged based on their gender. Our co-workers shouldn’t have to worry that each time they open their mouths to speak in a meeting, they have to prove that they are not like the memo states, being “agreeable” rather than “assertive,” showing a “lower stress tolerance,” or being “neurotic.”

At the same time, there are co-workers who are questioning whether they can safely express their views in the workplace (especially those with a minority viewpoint). They too feel under threat, and that is also not OK. People must feel free to express dissent. So to be clear again, many points raised in the memo—such as the portions criticizing Google’s trainings, questioning the role of ideology in the workplace, and debating whether programs for women and underserved groups are sufficiently open to all—are important topics. The author had a right to express their views on those topics—we encourage an environment in which people can do this and it remains our policy to not take action against anyone for prompting these discussions. ...

Larry Summers was fired from the Harvard presidency (at least in part) for pointing out (correctly, it seems) that males exhibit higher variance in performance on cognitive tests (more very low- and high-scoring men than women per capita). His detractors justified the termination due to his highly public and symbolic role as the leader of the institution. In contrast, Damore was simply an engineer (with a background in computational biology) expressing his opinion on some basic scientific questions still under active investigation by researchers all over the world. His firing has to be regarded as scary authoritarian policing of thought.

See also Bounded Cognition, Gender differences in preferences, choices, and outcomes, 2:1 faculty preference for women on STEM tenure track (PNAS), and Gender trouble in the valley.

A literature review at Slate Star Codex.

If I worked at Google would this blog post get me fired?


Note Added:

* Damore may be ABD (left Harvard before completing his dissertation) rather than a PhD.

Damore is going to fight Google in court (NYTimes):

Mr. Damore, who worked on infrastructure for Google’s search product, said he believed that the company’s actions were illegal and that he would “likely be pursuing legal action.”

“I have a legal right to express my concerns about the terms and conditions of my working environment and to bring up potentially illegal behavior, which is what my document does,” Mr. Damore said.

Before being fired, Mr. Damore said, he had submitted a complaint to the National Labor Relations Board claiming that Google’s upper management was “misrepresenting and shaming me in order to silence my complaints.” He added that it was “illegal to retaliate” against an N.L.R.B. charge.

According to The Federalist, Damore has a case. This trial of the century might expose large numbers of people to the ideas in his memo...

Bloomberg video interview with Damore.

Support Freedom of Ideas and Inquiry at MSU

These are letters of support sent on my behalf to the MSU President: presidentstanley@msu.edu

Several are deep, detailed scholarly documents. They firmly rebut the false accusations of the Twitter mob.

Corey Washington's individual letter is over 5000 words long. James Lee's is over 3000 words. The authors have graciously allowed them to be made public.

Corey says:

I have known Steve for 30 years and can attest that he is not a racist or a sexist. Steve is one of the most scrupulously fair people I have ever met and I have seen no evidence that he has ever discriminated against anyone on the basis of their race, sex, or any other status.

... Hsu participated in a 2018 debate at MSU’s Institute for Quantitative Health, Science, and Engineering, at the invitation of Director Chris Contag. The topic was human genetic engineering, and Hsu’s counterpart was MSU bioethicist Len Fleck. A number of people who attended tell me that they found Steve’s view thoughtful and balanced. None that I know of came away from the debate thinking he is a eugenicist in the way that the rest of us are not. It is unclear to me why MSU GEU came to a different conclusion.

Sign the support petition. Email the president: presidentstanley@msu.edu

A (not necessarily up to date) list of signatories, which includes hundreds of professors from MSU and around the world, total ~1500 as of early June 19.


Letter from
Corey Washington, Director of Analytics and Strategic Projects, OSVPRI
Joseph Cesario, Associate Professor, Psychology
Wei Liao, Professor and Director, MSU Anaerobic Digestion Research and Education Center, Biosystems and Agricultural Engineering
John (Xuefeng) Jiang, Professor and Plante Moran Faculty Fellow, Accounting and Information Systems

Letter from Corey Washington, Director of Analytics and Strategic Projects, MSU

Letter from Matt McGue, Regents Professor of Psychology, University of Minnesota

Letter from Russell Warne, Associate Professor of Psychology, Utah Valley University

Letter from Mark Dykman, Professor of Physics, MSU

Letter from Zach Hambrick, Professor of Psychology, MSU

Letter from James Lee, Associate Professor of Psychology, University of Minnesota

Letter from Richard Haier, Emeritus Professor, UC Irvine, author of The Neuroscience of Intelligence (Cambridge)

Letter from Steven Pinker, Johnstone Family Professor of Psychology, Harvard University


Media coverage:

A Twitter Mob Takes Down an Administrator at Michigan State (Wall Street Journal June 25)

Scholar forced to resign over study that found police shootings not biased against blacks (The College Fix)

On Steve Hsu and the Campaign to Thwart Free Inquiry (Quillette)

Michigan State University VP of Research Ousted (Reason Magazine, Eugene Volokh, UCLA)

Research isn’t advocacy (NY Post Editorial Board)

Podcast interview on Tom Woods show (July 2)

College professor forced to resign for citing study that found police shootings not biased against blacks (Law Enforcement Today, July 5)

"Racist" College Researcher Ousted After Sharing Study Showing No Racial Bias In Police Shootings (ZeroHedge, July 6)

Twitter mob: College researcher forced to resign after study finding no racial bias in police shootings (Reclaim the Net, July 8)

Horowitz: Asian-American researcher fired from Michigan State administration for advancing facts about police shootings (The Blaze, July 8)

I Cited Their Study, So They Disavowed It: If scientists retract research that challenges reigning orthodoxies, politics will drive scholarship (Wall Street Journal July 8)

Conservative author cites research on police shootings and race. Researchers ask for its retraction in response (The College Fix, July 8)

Academics Seek to Retract Study Disproving Racist Police Shootings After Conservative Cites It (Hans Bader, CNSNews, July 9)

The Ideological Corruption of Science (theoretical physicist Lawrence Krauss in the Wall Street Journal, July 12)

Foundation for Individual Rights in Education: "chilling academic freedom" (Peter Bonilla, July 22)

Toxic assets anyone?

You can be a vulture too :-)

Free leverage from Uncle Sam! What's not to like?

WSJ: ... New York-based fund giant BlackRock is launching a closed-end mutual fund aimed at allowing ordinary investors to put their money into the kind of toxic mortgage-backed securities that nearly brought down the financial system a few months ago. Shares are expected to go on sale in about a month.

The BlackRock Legacy Securities Public-Private Trust, which may raise up to about $1 billion, will be sold through brokers and advisers. It will try to buy mortgage-backed securities at distressed prices from banks looking to shore up their battered balance sheets. The fund will invest alongside the U.S. Treasury as part of the Public-Private Investment Partnership, or PPIP, launched earlier this year. BlackRock is among a small group of firms picked to take part in PPIP.

... The fund will also benefit from helpful financial engineering courtesy of the U.S. government. PPIP was set up to encourage private investors to help bail out the financial system. So for every dollar invested, Uncle Sam will provide another $2—$1 in equity and $1 in debt. The debt’s cheap, too: about two percentage points over the LIBOR interbank rate. That should boost returns.

Sources are hoping that, when you factor in the financial engineering, the fund will be able to earn maybe 10-12% annually over its ten-year life.

... “For now, the bulk of toxic assets are not going to be in play,” Harvard law professor Lucian Bebchuk, one of the intellectual architects of PPIP, told me. Changes to accounting rules and government stress tests, have taken off some of the pressure off banks, so Professor Bebchuk says banks are not as motivated to sell their toxic assets as they were when PPIP was set up in March. “For many types of toxic assets, even if the banks can get a price that’s fair, if it’s at a discount to face value they don’t have an incentive to do it,” he says.

Furthermore, thanks to the stock market rally the banks are feeling more confident—and have a lot more access to capital.

... Meanwhile, the fundamentals of MBS continue to worsen. Fitch Ratings says 6.8% of (non-agency) prime mortgages are now delinquent—twice as many as were delinquent six months ago. The figures for Alt-A are 21%, and for sub-prime, 40%. They’re still getting worse. Fitch director Grant Bailey says mortgage delinquency rates won’t stabilize until house prices and unemployment rates do.

The City and The Street

Michael Lewis writes in the NY Review of Books.

Early 1990s, hanging out in Manhattan with some friends in the derivatives business, one of them an Oxbridge guy who had been at graduate school at Harvard: when I used the then new term "financial engineering" in conversation he burst out laughing. "Is that what they're going to call it?" he asked, incredulous. "It's just bollocks."

See also The illusion of skill.

NYBooks: ... If you had to pick a city on earth where the American investment banker did not belong, London would have been on any shortlist. In London, circa 1980, the American investment banker had going against him not just widespread commercial lassitude but the locals’ near-constant state of irony. Wherever it traveled, American high finance required an irony-free zone, in which otherwise intelligent people might take seriously inherently absurd events: young people with no experience in finance being paid fortunes to give financial advice, bankers who had never run a business orchestrating takeovers of entire industries, and so on. It was hard to see how the English, with their instinct to not take anything very seriously, could make possible such a space.

Yet they did. And a brand-new social type was born: the highly educated middle-class Brit who was more crassly American than any American. In the early years this new hybrid was so obviously not an indigenous species that he had a certain charm about him, like, say, kudzu in the American South at the end of the nineteenth century, or a pet Burmese python near the Florida Everglades at the end of the twentieth. But then he completely overran the place. Within a decade half the graduates of Oxford and Cambridge were trying to forget whatever they’d been taught about how to live their lives and were remaking themselves in the image of Wall Street. Monty Python was able to survive many things, but Goldman Sachs wasn’t one of them.

The introduction into British life of American ideas of finance, and success, may seem trivial alongside everything else that was happening in Great Britain at the time (Mrs. Thatcher, globalization, the growing weariness with things not working properly, an actually useful collapse of antimarket snobbery), but I don’t think it was. The new American way of financial life arrived in England and created a new set of assumptions and expectations for British elites—who, as it turned out, were dying to get their hands on a new set of assumptions and expectations. The British situation was more dramatic than the American one, because the difference between what you could make on Wall Street versus doing something useful in America, great though it was, was still a lot less than the difference between what you could make for yourself in the City of London versus doing something useful in Great Britain.

In neither place were the windfall gains to the people in finance widely understood for what they were: the upside to big risk-taking, the costs of which would be socialized, if they ever went wrong. For a long time they looked simply like fair compensation for being clever and working hard. But that’s not what they really were; and the net effect of Wall Street’s arrival in London, combined with the other things that were going on, was to get rid of the dole for the poor and replace it with a far more generous, and far more subtle, dole for the rich. The magic of the scheme was that various forms of financial manipulation appeared to the manipulators, and even to the wider public, as a form of achievement. All these kids from Oxford and Cambridge who flooded into Morgan Stanley and Goldman Sachs weren’t just handed huge piles of money. They were handed new identities: the winners of this new marketplace. They still lived in England but, because of the magnitude of their success, they were now detached from it. ...

Starship Troopers

This commercial for the video game Halo 3: ODST (Orbital Drop Shock Troops) comes as close as anything I've seen to capturing the flavor of the Heinlein novel Starship Troopers. Forget about the 1997 movie directed by Paul Verhoeven; it's pure camp. Some might classify the original novel as pulp (see excerpt below), but I think it is much more than that.

The ODST project started as a Halo movie project involving Peter Jackson of Lord of the Rings fame. Perhaps this explains the cinematic qualities. (I'm not a gamer; I just noticed the commercial while watching Iowa beat Penn State last night and got interested in what seemed to be an obvious Starship Trooper influence.)

Wikipedia: Starship Troopers is a novel set in an unspecified time in the future, although probably not in the far-flung future. It chronicles the experiences of Juan "Johnnie" Rico, the story's narrator, during his enlistment and training in the Mobile Infantry, and his participation in an interstellar war between the Terran Federation and the Arachnids (referred to as "the Bugs") of Klendathu. It is narrated as a series of flashbacks — one of only a few Heinlein novels to use that narrative device[11] — and contains large sections of character discussion and introspection, as well as exposition, all meant to detail the political theory and philosophical beliefs underlying the society that Juan Rico lives in.

The novel opens with Rico aboard the corvette Rodger Young, platoon transport for "Rasczak's Roughnecks", about to embark on a raid against the planet of the "Skinnies", allies of the Arachnids. We learn that he is a "cap" trooper (called this because they are dropped in capsules from the ship in orbit toward their drop zones) in the Terran Federation's Mobile Infantry (M.I.). The raid itself, one of the few instances of actual combat in the novel, is relatively brief: the Mobile Infantrymen land in the capital city, destroy their targets while trying to avoid unnecessary Skinny casualties, and withdraw, suffering three injured (one fatal) in the process.

The story then flashes back to Rico's graduation from high school and his decision to sign up for Federal Service, rather than attend Harvard University, over the objections of his wealthy father. This is the only chapter that describes Rico's civilian life, and most of it is spent recording the monologues of two people: retired Lt. Colonel Jean V. Dubois, Rico's school instructor in the subject of History and Moral Philosophy, and Fleet Sergeant Ho, a recruiter for the Armed forces of the Terran Federation.

Many readers have felt that Dubois serves as a stand-in for Heinlein throughout the novel. He delivers what is probably the book's most famous soliloquy, on how violence "has settled more issues in history than has any other factor."[12] Fleet Sergeant Ho offers a separate angle on military service to that of Dubois. (Ho has prostheses for several limbs, but does not wear them on duty at the front door of the federal building. This is calculated to remind applicants of the real risks of service, and to weed out those not willing to take such risks in the service of the Federation).

Interspersed throughout the book are other flashbacks to Rico's high school History and Moral Philosophy course, which describe how, in the Terran Federation, the rights of a full Citizen (to vote, and hold public office) must be earned through voluntary Federal service. However, the franchise cannot be exercised until after honorable discharge from the Service, which means that active members of the Service cannot vote. Those residents who opt not to perform Federal Service retain the other rights generally associated with a modern democracy (e.g. free speech, assembly, etc.), but cannot vote or hold public office. This structure arose ad hoc after the collapse of the 20th century Western democracies, brought on by both social failures at home and military defeat by the Chinese Hegemony overseas (i.e. looking forward into the late 20th century from the time the novel was written in the late 1950s).[13]

After enlisting in the Mobile Infantry, Rico is assigned to boot camp at Camp Arthur Currie. Five chapters are spent exploring Rico's training, under the guidance of his chief instructor, Career Ship's Sergeant Charles Zim. Boot camp is deliberately so rigorous that fewer than ten percent of the recruits complete basic training; the rest either resign (with no penalty, save never being able to vote); are expelled (likewise); are given medical discharges (which may however be refused); or assigned to lesser duties (enabling them to vote after their service is finished); or die in training. ...

Here's the version of the book I've had since I was a kid:



Yes, I enjoyed a misspent youth, during which I read all of Heinlein's books and even played the Avalon Hill boardgame version of Starship Troopers.

Give me a few Sergeant Zim's and I'll conquer the galaxy! :-)

Bootcamp for the Mobile Infantry: ... But exercise will keep you warm and they saw to it that we got plenty of that. The first morning we were there they woke us up before daybreak. I had had trouble adjusting to the change in time zones and it seemed to me that I had just got to sleep; I couldn't believe that anyone seriously intended that I should get up in the middle of the night. But they did mean it. A speaker somewhere was blaring out a military march, fit to wake the dead, and a hairy nuisance who had come charging down the company street yelling, "Everybody out! Show a leg! On the bounce!" came marauding back again just as I had pulled the covers over my head, tipped over my cot and dumped me on the cold hard ground. It was an impersonal attention; he didn't even wait to see if I hit. Ten minutes later, dressed in trousers, undershirt, and shoes, I was lined up with the others in ragged ranks for setting-up exercises just as the Sun looked over the eastern horizon.

Facing us was a big broad-shouldered, mean-looking man, dressed just as we were -- except that while I looked and felt like a poor job of embalming, his chin was shaved blue, his trousers were sharply creased, you could have used his shoes for mirrors, and his manner was alert, wide-awake, relaxed, and rested. You got the impression that he never needed to sleep -- just ten-thousand-mile checkups and dust him off occasionally. He bellowed, "C'pnee! Atten . . . shut! I am Career Ship's Sergeant Zim, your company commander. When you speak to me, you will salute and say, `Sir' -- you will salute and `sir' anyone who carries an instructor's baton -- " He was carrying a swagger cane and now made a quick reverse moulinet with it to show what he meant by an instructor's baton; I had noticed men carrying them when we had arrived the night before and had intended to get one myself -- they looked smart. Now I changed my mind. " -- because we don't have enough officers around here for you to practice on. You'll practice on us. ...

Zim turned back to the rest of us, still shivering at attention. He walked up and down, looked us over, and seemed awfully unhappy. At last he stepped out in front of us, shook his head, and said, apparently to himself but he had a voice that carried: "To think that this had to happen to me!" He looked at us. "You apes -- No, not `apes'; you don't rate that much. You pitiful mob of sickly monkeys . . . you sunken-chested, slack-bellied, drooling refugees from apron strings. In my whole life I never saw such a disgraceful huddle of momma's spoiled little darlings in -- you, there! Suck up the gut! Eyes front! I'm talking to you!" I pulled in my belly, even though I was not sure he had addressed me. He went on and on and I began to forget my goose flesh in hearing him storm. He never once repeated himself and he never used either profanity or obscenity. (I learned later that he saved those for very special occasions, which this wasn't.) But he described our shortcomings, physical, mental, moral, and genetic, in great and insulting detail. But somehow I was not insulted; I became greatly interested in studying his command of language. I wished that we had had him on our debate team.

At last he stopped and seemed about to cry. "I can't stand it," he said bitterly. "I've just got to work some of it off -- I had a better set of wooden soldiers when I was six ALL RIGHT! Is there any one of you jungle lice who thinks he can whip me? Is there a man in the crowd? Speak up !" There was a short silence to which I contributed. I didn't have any doubt at all that he could whip me; I was convinced. I heard a voice far down the line, the tall end. "Ah reckon ah can . . . suh." Zim looked happy. "Good! Step out here where I can see you." The recruit did so and he was impressive, at least three inches taller than Sergeant Zim and broader across the shoulders. "What's your name, soldier?" "Breckinridge, suh -- and ah weigh two hundred and ten pounds an' theah ain't any of it `slack-bellied.' " "Any particular way you'd like to fight?" "Suh, you jus' pick youah own method of dyin'. Ah'm not fussy." "Okay, no rules. Start whenever you like." Zim tossed his baton aside. It started -- and it was over. The big recruit was sitting on the ground, holding his left wrist in his right hand. He didn't say anything. Zim bent over him. "Broken?" "Reckon it might be . . . suh." "I'm sorry. You hurried me a little. Do you know where the dispensary is? Never mind -- Jones! Take Breckinridge over to the dispensary."

As they left Zim slapped him on the right shoulder and said quietly, "Let's try it again in a month or so. I'll show you what happened." I think it was meant to be a private remark but they were standing about six feet in front of where I was slowly freezing solid. Zim stepped back and called out, "Okay, we've got one man in this company, at least. I feel better. Do we have another one? Do we have two more? Any two of you scrofulous toads think you can stand up to me?" He looked back and forth along our ranks. "Chicken-livered, spineless -- oh, oh! Yes? Step out." Two men who had been side by side in ranks stepped out together; I suppose they had arranged it in whispers right there, but they also were far down the tall end, so I didn't hear. Zim smiled at them. "Names, for your next of kin, please." "Heinrich." "Heinrich what?" "Heinrich, sir. Bitte." He spoke rapidly to the other recruit and added politely, "He doesn't speak much Standard English yet, sir." "Meyer, mein Herr," the second man supplied. "That's okay, lots of `em don't speak much of it when they get here -I didn't myself. Tell Meyer not to worry, he'll pick it up. But he understands what we are going to do?" "Jawohl," agreed Meyer. "Certainly, sir. He understands Standard, he just can't speak it fluently." "All right. Where did you two pick up those face scars? Heidelberg?" "Nein -- no, sir. Ko:nigsberg." "Same thing." Zim had picked up his baton after fighting Breckinridge; he twirled it and asked, "Perhaps you would each like to borrow one of these?" "It would not be fair to you, sir," Heinrich answered carefully. "Bare hands, if you please." "Suit yourself. Though I might fool you. Ko:nigsberg, eh? Rules?" "How can there be rules, sir, with three?" "An interesting point. Well, let's agree that if eyes are gouged out they must be handed back when it's over. And tell your Korpsbruder that I'm ready now. Start when you like." Zim tossed his baton away; someone caught it. "You joke, sir. We will not gouge eyes." "No eye gouging, agreed. `Fire when ready, Gridley.' " "Please?" "Come on and fight! Or get back into ranks!" Now I am not sure that I saw it happen this way; I may have learned part of it later, in training. But here is what I think happened: The two moved out on each side of our company commander until they had him completely flanked but well out of contact. From this position there is a choice of four basic moves for the man working alone, moves that take advantage of his own mobility and of the superior co-ordination of one man as compared with two -- Sergeant Zim says (correctly) that any group is weaker than a man alone unless they are perfectly trained to work together. For example, Zim could have feinted at one of them, bounced fast to the other with a disabler, such as a broken kneecap then finished off the first at his leisure. Instead he let them attack. Meyer came at him fast, intending to body check and knock him to the ground, I think, while Heinrich would follow through from above, maybe with his boots. That's the way it appeared to start. And here's what I think I saw. Meyer never reached him with that body check. Sergeant Zim whirled to face him, while kicking out and getting Heinrich in the belly -- and then Meyer was sailing through the air, his lunge helped along with a hearty assist from Zim. But all I am sure of is that the fight started and then there were two German boys sleeping peacefully, almost end to end, one face down and one face up, and Zim was standing over them, not even breathing hard.

"Jones," he said. "No, Jones left, didn't he? Mahmud! Let's have the water bucket, then stick them back into their sockets. Who's got my toothpick?" A few moments later the two were conscious, wet, and back in ranks. Zim looked at us and inquired gently, "Anybody else? Or shall we get on with setting-up exercises?" I didn't expect anybody else and I doubt if he did. But from down on the left flank, where the shorties hung out, a boy stepped out of ranks, came front and center. Zim looked down at him. "Just you? Or do you want to pick a partner?" "Just myself, sir." "As you say. Name?" "Shujumi, sir." Zim's eyes widened. "Any relation to Colonel Shujumi?" "I have the honor to be his son, sir." "Ah so! Well! Black Belt?" "No, sir. Not yet." "I'm glad you qualified that. Well, Shujumi, are we going to use contest rules, or shall I send for the ambulance?" "As you wish, sir. But I think, if I may be permitted an opinion, that contest rules would be more prudent." "I don't know just how you mean that, but I agree." Zim tossed his badge of authority aside, then, so help me, they backed off, faced each other, and bowed. After that they circled around each other in a half crouch, making tentative passes with their hands, and looking like a couple of roosters. Suddenly they touched -- and the little chap was down on the ground and Sergeant Zim was flying through the air over his head. But he didn't land with the dull, breath-paralyzing thud that Meyer had; he lit rolling and was on his feet as fast as Shujumi was and facing him. "Banzai!" Zim yelled and grinned. "Arigato," Shujumi answered and grinned back. They touched again almost without a pause and I thought the Sergeant was going to fly again. He didn't; he slithered straight in, there was a confusion of arms and legs and when the motion slowed down you could see that Zim was tucking Shujumi's left foot in his right ear -- a poor fit. Shujumi slapped the ground with a free hand; Zim let him up at once. They again bowed to each other. "Another fall, sir?" "Sorry. We've got work to do. Some other time, eh? For fun . . . and honor. Perhaps I should have told you; your honorable father trained me." "So I had already surmised, sir. Another time it is." Zim slapped him hard on the shoulder. "Back in ranks, soldier. C'pnee!" Then, for twenty minutes, we went through calisthenics that left me as dripping hot as I had been shivering cold. Zim led it himself, doing it all with us and shouting the count.