Friday, February 24, 2012

Make reason victorious over ideology - an open letter to the UVA Board of Visitors

Dear Ladies, Gentlemen, Doctors, and Judge,

As the proud older brother of a UVA student who has chosen to forgo food in order to draw attention to the plight of contract workers at the University, I implore you all to take a second or perhaps even third look at the policy of ensuring that all UVA workers, contracted workers included, are paid at an inflation-indexed level that would afford them the basic necessities of life. To do so would require an expense equal only to 0.25% of the annual budget.

And what would this meager cost purchase for the University? Besides a more stable workforce with less turnover and that experiences less day-to-day productivity-impairing stress, instituting such a policy would put UVA among the company of all Ivy League universities, not to mention the University of California at Berkeley. Furthermore, it is the morally right thing to do, and it is sound economics.

Now, some of you may be under the false impression that from an economic point of view, this policy is wrongheaded. Nothing could be further from the truth. There is a school of economic thought, known as the neoclassical school, which would claim that this policy will result in negative outcomes. Sadly, the neoclassical school is dominant within the economics academy in the United States and several other countries, and its prescriptions are often mistaken for economic wisdom. Yet one must remember that it is the neoclassical school of economics that was deafeningly silent during the run-up to the financial crash and the Great Recession. It was the neoclassical school that preached the infallibility and self-policing wonder of the market, and touted the efficient markets hypothesis that claimed that wildly-inflated housing prices were fundamentally sound, and that the pricing of risk in credit default swaps and other weapons of mass destruction derivatives was perfectly accurate and reliable.

That the neoclassical school still claims adherents is not in itself a problem; in our pluralistic society, people are free to believe whatever ideology they fancy. The problem with the neoclassical school is that its adherents hold undue sway over the economics academy, and from there exercise undeserved power over policymaking and economic prescriptions. For a long while, psychology too was under the sway of a demonstrably unscientific paradigm, the Freudian school; luckily for it, the psychology academy was able to shed Freudianism, and diverge into more profitable avenues of scientific inquiry. I urge you to free yourself from the unfortunate anachronism that is neoclassical economics, and closely read the excellent, empirical work describing the issue of remuneration at UVA here.

The Victory of Knowledge Over Ignorance Bartholomeus Spranger (1591)
That the neoclassical school will wither and fade away is not in question. The question is: how long will it take? In a moment of professional frustration, perhaps, the brilliant physicist Max Planck wrote of a principle that was later named after him: that new, superior scientific theories do not gain predominance by convincing scientists of their accuracy; rather, that the old scientists with their outmoded theories slowly die off, and younger scientists who adhere to the superior theories slowly replace them.

Most of you are my elders, leaders in business, medicine and the law. You have the enviable opportunity to disprove the Planck Principle in this one instance. You have the opportunity to make the right economic and moral decision, and to place UVA among the leaders of the academy, by instituting an inflation-indexed wage to allow a decent standard of living for all UVA workers, whether direct or contracted employees. This is not an opportunity to be missed.