“Everybody knows that the boat is leaking
Everybody knows that the captain lied
Everybody got this broken feeling
Like their father or their dog just died”
Leonard Cohen – Everybody Knows
Rather than admit the fundamental errors and pitfalls of the system, European Union officials spend their time in the same parallel existence that lead to the current crisis spending a lot of effort in trying to create an alternative history. This is not working and sometimes it seems to be clear that their surprise is genuine. It is important to note that these symptoms are far from being a European problem, more of a common disease of our times. All will be just fine if this nuisance called “reality check” will be not only delayed, but entirely avoidable. The problem of Euro is not the simple utopian project consisting in a common currency for different governments that are going most often in perfect opposite directions, but total disconnection of policies, actions and solutions from realities. The most important: a stubborn refusal to have an honest look in the mirror and a visceral reaction against any heretics. It is still a time when your life is better if you clap your hands in total admiration for the emperor’s clothes. The fast changing situation is unavoidable for all – some will get out richer, some will have to pay the price of their delusions and most will pay a lot for citizenships’ complacency. Many investors in the common currency realize now that Sarkozy and Merkel can agree on all their plans, but after a successful meeting and general enthusiasm the problem is still there. Why?
To give some clues about the possible answer on this it is important to look at the context. I deeply love that part of Europe where you see the passion for culture and style, the amazing history and constant effort to keep alive the focus on the importance of the quality of life above other things, such as profit. I lived most of my life in Europe and – by working with some of the most important European institutions – I also had the chance to take a glimpse into their functioning, but I have to admit that this part I love in the old continent cannot be found there. In these institutions and their populations you find the reality of the other side of Europe, that of coteries, arrogance and prejudice, the underground legacy of endless wars of the past and stupid stereotypes about the “other”. But I have found that the most frightening side of this system was the depth and spread of incompetence and corruption.
Again, it is naive to think that the current crisis is caused only by the European corruption. However, some were a just a bit more honest about their problems and brave to approach them openly. Here is the crucial difference between US and Europe: Europe annihilated (with the notable exception of some singular voices in written media) all forms of structured intellectual resistance against the official narrative. Jurgen Habermas recently wrote about the sense of exasperation so common for decent hard working Europeans from all EU countries: “The European project can no longer continue in elite modus.” It is an elite of corruption and arrogance: few know that in the middle of a tremendous tragedy the greedy and cynical Greek oligarchs invested heavily in – among others – London property market! This elite caused the crisis and they are part of a European cleptocracy uninterested in any other ideal than bringing more money into their bank accounts. The European philosopher is speaking openly about this reality: “I condemn the political parties. Our politicians have long been incapable of aspiring to anything whatsoever other than being re-elected. They have no political substance whatsoever, no convictions.” Nevertheless, European universities do not join the discussion and have little if any influence in the public sphere. Their silence over what is causing now the European tremendous shakes was generalized. The reason of this cultivated mediocrity can be approached only in a different chapter…
Andrew Haldane, executive director at the Bank of England, offers a good perspective on what happened in this crisis. He caused recently some emotion when he labeled most parts of current global finance as being just a global scam:
“…In fact, high pre-crisis returns to banking had a much more mundane explanation. They reflected simply increased risk-taking across the sector. This was not an outward shift in the portfolio possibility set of finance. Instead, it was a traverse up the high-wire of risk and return. This hire-wire act involved, on the asset side, rapid credit expansion, often through the development of poorly understood financial instruments. On the liability side, this ballooning balance sheet was financed using risky leverage, often at short maturities.
In what sense is increased risk-taking by banks a value-added service for the economy at large? In short, it is not.”
Paul Krugman comments on the paragraph presented above that “Haldane argues that finance fooled investors into believing that it had found a way to earn higher returns, whereas all it was really doing was piling on hidden risk. And he suggests that much if not all of the rise in the share of finance in GDP reflected this deception; in effect, Wall Street and the City were con artists extracting huge rents from an unwary public (and eventually dumping much of the cost, when things went bad, on taxpayers).”
It is important to understand that the current crisis – affecting real lives, destroying real families and blurring the hope for a decent future for millions around the world – was caused by greed and corruption, but most importantly by selling illusions to a majority more than happy to believe them. Whistleblowers were ridiculed as lamentable figures obsessed by jeremiads, depicted as egomaniacs interested to draw attention with some apocalyptic scenarios or simply ignored. The simple history of this phenomenon of the last decade can be a fascinating PhD. The public was not unwary, but enchanted and happy to stay delusional. Unfortunately, history shows that this is always a terrible mistake.
Here is where the Europe is now, still unable to understand that the time to be realistic about its institutions is already gone. The armies of bored and well-related EU bureaucrats match their incompetence with cynicism and private interests are just too dense to allow the necessary changes. It is the (missed) time to talk openly about nepotism and mistresses hired as experts, about elites too corrupt to accept a decent dialogue about rights and responsibilities, privileges and abuse. The illusion is still at the core of what is presented to be the solution: to take just one example, where is the strong European debate about the fact that Germany, the new disciplinarian of this dysfunctional family, is breaking EU financial rules more dangerously than Spain? The European Commission estimates for Germany a debt ratio of 81.7% of GDP, significantly higher than Spain’s debt ratio of 69.6 percent. The problem may be more nuanced than this (even if the myth of a state saving in a sea of spenders is too blatantly against reality to be dismissed so easy), but the missing dialogue is the worrying sign. The missing sign here is on itself the sign of incapacity to start seeking a realistic solution. The fact is that Euro is sinking while the orchestra is singing an idyllic song. There is a striking similarity here with the evolution of higher education since WTO included education into tradable services just a decade ago.
I recently heard again in a conference devoted to higher education various scholars unsure about their intellectual identity that “universities must learn from business”. I have to agree – from different positions and very different reasons – that this is the most important call to be followed now by Academia. Universities must look at what happened in the global financial markets in the last years. The lesson for universities is too important to be ignored as this can have a crucial importance for the future of higher education. It is a complex story with huge scams ignored and accepted for increasing profits, with ideological motivations promoted as moral/political choices to mask new sources of easy money, with the blurring of real meanings for important concepts such as “sustainability”, “regulations”, “responsibility” and “accountability”. This ideal world presented to universities as the model for existence by various actors from different schools of business and economics (it is curious why they even exist in universities and not in vocational education altogether – but I digress) is now shaken by irrational feelings, rumors and emotions. Elaborate software and the science of business is clearly replaced in the Euro-drama by logic closer to psychoanalysis than the pure rational structures of mathematical predictions and actuarial studies. For example, when the newspaper La Stampa published just a week ago an article about a possible massive loan from IMF for Italy, the European currency gained significantly and stock markets moved positively until the world heard IMF saying clearly that this was just a rumor. Nothing real caused this increase: no new policies, no increase in industrial productivity or crops, no innovation or scientific breakthrough, no general decision for a more coherent management and less corruption across EU, but a simple rumor changed the value of immense investments. This seems to be not only the most unpredictable, but the most parallel from reality mechanism of our times. This is also the most influential pillar of the current establishment.
This chaotic puzzle of greed and illusions, irrational triggers and imaginary foundations is also the system presented and adopted with great enthusiasm by institutions of education managed now as speculative businesses. We reached the point when tertiary education is happy with this because we cannot imagine a different rationale than what was sold as the panacea for better functioning. Therefore, universities seek more profits as they need more money to invest – very little investments (if any!) are oriented to the quality of teaching, learning and relevant research as this became marginal in the engine of making money and doing “good business”. The pitfall of this model is that what proved to be very dangerous in the almighty financial world is even more dangerous for universities due to the vast implications for the future of society.
Most universities seem to be still oblivious of the fact that the not only the reality around them is changing very fast (this is why you still hear academics delivering ridiculous tirades urging all to “learn from business”), but the perception about their future is changing at tremendous pace. If you look inside academia and read most recent literature produced about the future of universities is easy to find common themes and solutions with a common ideological source: neoliberalism and the “sound business model”. Simplifying, we can read that that universities should resemble ATMs, producing fast, mobile, accessible and easily standardized knowledge units, that these institutions must be modular and learn how to work from shopping malls. Those who teach must be “dynamic” and function as employees in a relation that may make Walmart proud for being the source of such elaborate debates. This model of McDonalds-university is entirely wrong and it is hard to say that it will be a surprising to see this proven faster than expected.
In a recent editorial published by New York Times we read about this change in perception about the future of higher education – the burst of the bubble is not expected, we already talk about its dimension and effects:
“One of the greatest changes is that a college degree is no longer the guarantor of a middle-class existence. Until the early 1970s, less than 11 percent of the adult population graduated from college, and most of them could get a decent job. Today nearly a third have college degrees, and a higher percentage of them graduated from non-elite schools. A bachelor’s degree on its own no longer conveys intelligence and capability.”
In other words, we talk about pure inflation and the same mechanisms of selling illusions. There are many factors causing this: political parties running for votes, ideological positions making the problem of access to higher education painfully simplistic, lack of vision and many others. However, there is no doubt that the most important source is the same perspective of huge profits. This lured universities to believe that if you have the tenacity to chant the same lies they will become facts. The problem is that – similar with the European facade – there are already big cracks. Students leave university with stunning debts and see that their investment is not giving what was advertised. There is the simple explanation that in the current context there is a shortage of jobs and this is why we have graduates in underpaid positions. This explanation is simply not true! In US, where the Federal Reserve Bank of New York recently announced in a quarterly report that it had significantly undercounted student loans and now estimates the current total of outstanding loans at $845 billion, not $550 billion, ManpowerGroup’s annual 2011 Talent Shortage Survey shows that about 52 percent of U.S. employers reported difficulty filling jobs (and 54% in Australia). I take most of these global rankings at the best as compass points rather than clear pictures – but it is important to remember that this is happening in the context of high unemployment. According to this global survey, employers see a lack of skills such as collaboration, critical thinking, and agility that are critical to generate productivity and innovation. Just to put things in context we have to remember here the recent case of that university professor who was fired from Utah Valley University for “asking students even when they didn’t raised their hands”. Students’ complaints reveal that this professor asked students to work in teams; according to court documents, he was following the Socratic teaching style, asking questions to stimulate discussions. Same court documents record that students did not liked this: students did not want to work in teams and did not want the professor to ask questions: “They wanted him to lecture”. There are many other similar cases reaching courts and we can guess how many others are not reported. It may be a problem when entertaining in class is replaced with genuine critical thinking and is getting some out of the “comfort zone”. Consistent research also shows a constant decrease of time devoted to study and a constant increase in grades – here is another “mystery” of tertiary education. Please do not blame students – the lie about what education is all about is not their creation.
The rhetoric about “critical thinking” is still there and we still count “students’ satisfaction”, which is seen as an inalienable right to be entertained and comfortable. The pressure to pass students even if they are functional illiterates is already well documented and seems to be natural when we think that asking students to… learn may result in less profit. Universities report record numbers of graduates and most governments think that cutting funding for universities is a profitable decision as long as the pressure is to take more students able to bring money into the system. These students take loans and in time banks see these loans as unprofitable as more and more victims of this system discover that being entertained is not giving you knowledge, skills and – ultimately – a job! It is important to understand that many brilliant students do not take a job because they do not know the “right people” and some simply have no idea about what happened during university studies (other than “fun”). However, the effect is the same: the loan cannot be payed. This story of “toxic loans” promoted to sell illusions is very familiar for anyone interested to understand the roots of current financial crisis.
The artificial increase of supply (of graduates and diplomas) brings a fast drop in value and this is just the first effect. It may be the least important as well. Here we go back to our lesson from Europe: floating above reality works well for a while, but once those cracks ruin the polished facade it is impossible to hide from what plebeians simply call “a reality check”.