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How informed does an opinion have to be before it’s taken seriously?
How informed should an opinion have to be before it’s taken seriously?
I’m kind of on one end of the spectrum here. I would argue that you only need to know enough to get it right.
The original power of Occupy for me is in the following sentiment: you don’t need to understand the system’s insides and outs in order to know the system is screwing you. Of course it’s a different thing to fix something, but let’s leave that aside for the moment.
So, if you are a student with $80,000 in loans, a degree, and no job prospects, and all your friends are in the same or similar situations, then you can fairly say that the system is broken. And you’d have a powerful argument. The beauty of this argument, in fact, is that you and your friends provides living examples of how the system is broken, and defies all expert opinion to the contrary.
And one thing that we have had enough of lately is expert opinion.
This question came up at a recent Occupy Wall Street Alternative Banking group meeting, and not for the first time. The context was the collapse of MF Global, and we were talking about tri-party repos, which have intermediaries, and (maybe) fiduciary duties, and various questions arose over the legal issues as well as the question of whether Corzine et al had yet been asked these questions by Congress.
The details don’t matter. The point is, it’s complicated, and the question came up whether we had to know absolutely everything in order to be seen as asking an informed opinion and in order to be taken seriously.
Now, it’s a good idea for us to know the basics: the parties involved, their relationship to each other, and especially their individual incentives. But on the question of knowing if a specific question has been asked before, I think that doesn’t really matter. The truth is, we are some of the wonkier people in financial matters, and if we don’t know about it, then probably most people don’t.
And moreover, since we are trying to figure out how to represent the average person in such situations, that’s a good enough test. In fact, even if a question has been asked, if it hasn’t been adequately answered for the sake of the 99%, it’s still fine to ask and ask again until we have a satisfactory answer.
I’m all for being informed myself, and I like informed debates, but I don’t want to get stuck in some “cult of expertise”, where I think nobody is allowed to have an opinion unless they are incredibly well versed in something, especially when the underlying issue is actually one of ethics and justice.
Think about it: such thinking gives experts an incentive to make things more complicated in order to exclude non-experts. In fact I’d argue that such a “cult of expertise” incentive does in fact exist, has existed for some time, and the result is our financial system, tax system, and legal system.
It’s bullshit. We need to allow people who know enough to get it right, and have skin in the game, to enter the debate, and be heard, even if they don’t know the intricacies of the legal issues etc.. Those intricacies, likelier than not, have been partially put in there to confuse the very people the system was putatively set up to serve.
On NPR’s Morning Edition (#OWS)
The Alternative Banking group was on NPR’s Morning Edition with Margot Adler today.
Here’s a recording of the piece.
Bloomberg joins Occupy Wall Street
Yesterday I was astounded to read this article in Bloomberg, explaining how the debt collectors hired by the Department of Education have been illegally screwing people to the ground on their debt. This could have come straight out of an #OWS Alternative Banking meeting. From the article:
Under Education Department contracts, collection companies “rehabilitate” a defaulted loan by getting a borrower to make nine payments in 10 months. If they succeed, they reap a jackpot: a commission equal to as much as 16 percent of the entire loan amount, or $3,200 on a $20,000 loan.
Incentive Pressure
These companies receive that fee only if borrowers make a minimum payment of 0.75 percent to 1.25 percent of the loan each month, depending on its size. For example, a $20,000 loan would require payments of about $200 a month. If the payment falls below that figure, the collector receives an administrative fee of $150.
That differential provides an incentive for collectors to insist on the minimum payment and fail to reveal when borrowers are eligible for a more affordable schedule, according to Loonin, the attorney at the National Consumer Law Center, which is representing borrowers in the Washington talks with the Education Department
Here’s a closeup of Pioneer Credit Recovery, one of the debt collection agencies in contract with the U.S. Education Department. From the Bloomberg article:
Pioneer maintained a “boiler room” environment, with high turnover among those who didn’t perform, said Joshua Kehoe, a former collector. Kehoe worked in Batavia, New York, from July 2006 through October 2008 after managing a pizza stand at a theme park.
Pioneer rewarded collectors with $100 restaurant gift cards, a $500 mahogany jewelry box, televisions and a trip to the Dominican Republic, according to Kehoe, who said he earned $9.60 an hour before the incentives.
It would be “a cold day in Hades” before collectors would tell borrowers about options with lower payments, according to Kehoe, who said “rehab cash was king.” The company pushed collectors to sign borrowers up for the rehabilitation plans, which often required payments equal to 1.25 percent of their loan amount monthly, he said.
Just in case you think student debt is someone else’s problem, read this post from ZeroHedge from a couple of days ago. In it, Tyler Durden throws down two statistics we might want to keep in mind:
- … of the $1 trillion + in student debt outstanding, “as many as 27% of all student loan borrowers are more than 30 days past due.” In other words at least $270 billion in student loans are no longer current, and
- … the unemployment for 18-24 year olds is 46%. Yup: 46%.
When you throw in that student debt cannot be expelled through bankruptcy, you have a major problem for young people. And that means a major problem for all of us.
Random stuff, some good some bad
- In case you didn’t hear, Obama didn’t nominate Larry Summers to head the World Bank. This goes in the category of good news in the sense that expectations were so low that this seems like a close call. But I guess it’s bad news that expectations have gotten so low.
- Am I the only person who always thinks of tapioca when I hear the word “mediocre”?
- There are lots of actions going on in Occupy Wall Street, part of the Spring Resistance. It’s going to be an exciting May Day, what are you plans?
- Did you hear that New Jersey was somehow calculated to be the country’s least corrupt state? This Bloomberg article convincingly blows away the methodology that came to that conclusion. In particular, as part of the methodology they asked questions about levels of transparency and other things to people working in New Jersey League of Municipalities (NJLM). A bit of googling brings up this article from nj.com, exposing that NJLM clearly have incentives to want the state government to look good: it consists of “… more than 13,000 elected and appointed municipal officials — including 560 mayors — as members… its 17 employees are members of the Public Employees’ Retirement System, and 16 percent of its budget comes from taxpayer funds in the form of dues from each municipality.” Guess what NJLM said? That New Jersey is wonderfully transparent. And guess what else? The resulting report is front and center on their webpage. By the way, NJLM was sued by Fair Share Housing to open up their documents to the public, and they lost. So they have a thing about transparency. And just to be clear, the questions for deciding whether a given state is corrupt could have been along the lines whether the accounting methods for the state pension funds are available on the web and searchable on the state government’s website.
- If you know of examples of so-called quantitative models that are fundamentally flawed and/or politically motivated like this, please tell me about them! I enjoy tearing apart such models.
- The Dallas Fed has called for an end to too-big-to-fail banks. Mmmhmmm. I love it when someone uses the phrase, “Aspiring politicians in this audience do not have to be part of the Occupy Wall Street movement, or be advocates for the Tea Party, to recognize that government-assisted bailouts of reckless financial institutions are sociologically and politically offensive”.
- Volcker says more reforms are needed in finance and government. Can we start listening to this guy now that we broke up with Summers? Please?
I regret nothing
There are a few parts of my brain that are missing. I know this not because I used to have them, because I didn’t, but because of how other people refer to their own feelings and thoughts, which I simply can’t relate to or sometimes even decipher.
One of them is the part of the brain that enjoys art. I already explained how I don’t like or understand paintings. I just don’t get why people look at art. The closest I can get to enjoying art is photography, and then usually I only like naked photos. But at that point I don’t think it’s liking it for the artistic part exactly.
Here’s another confession. I don’t have a regret center in my brain. I am someone who regrets nothing. I mean, every now and then I certainly realize I made a mistake, and I do experience an “oh shit!” feeling that I made that mistake. Like, I’ll get in the wrong line at a check-out counter and the other line will go faster (“oh shit!”). But that doesn’t seem to compare with other people’s concept of regret.
Here’s how I argue that nobody should experience regret. Let’s assume you a regret decision you’ve made, that you later believe you should have made differently. But when you’re faced with a choice, there are things you can control and things you can’t. There are things you know and things you don’t. There are consequences that you can measure and those you can’t. You do the best you can with the information you have when you make your decision. Then it’s done. What’s to regret? If you went back to that place and that time, knowing what you knew then, and being that person you were then, you’d do the same thing. It’s kind of a tautology, but it’s convincing to me.
Maybe you are mourning for not being a person who could have made a different, better choice? Even so, (I’d suggest), don’t be regretful about that, but rather try now to become someone who would make the right decision next time.
What is the utility of a regret? Does it help us do better next time? I’m all for learning from mistakes, but I don’t see why it should be such a negative process. Maybe I learn more slowly from my mistakes because I don’t have regretful feelings.
On the other hand, from my observation of this alien emotion, I’d argue that the fear of having future regrets is more of a problem than the possible mistakes people actually make. That fear seems pretty unpleasant and it seems to cloud people’s decisions: they end up experimenting less and taking fewer risks.
Am I missing something? Since I can’t understand regretting, I probable am, so please explain it to me.
The Market Price of Privacy
I recently got annoyed by this New York Times “Bitz” blog, written by Somini Sengupta, about paying for privacy. It correctly pointed out that we get services on the web that seem `free’ to us, but there is an actual price which we pay, namely we are targets of ads and are sometimes forced to hand over personal information. Moreover, when we use `free’ services such as sending invitations to a party, we are subjecting all of our friends to advertising as well. From the post:
It was a perfect microcosm of the bargain we make with the Web every day. Send me ads based on what you know about me (bachelorette party vs. child’s birthday party) or take my money to keep my screen free of ads. That bargain was the topic of a fascinating study that asked how much we are willing to pay to keep our personal data to ourselves.
The article then explained the recent study. Namely, it seems that Germans aren’t willing to pay an extra 50 Euro cents for movie tickets to avoid giving out their cells numbers, but they do claim to care about personal information gathering. If there was no price difference they wanted the less intrusive version. The author seemed to think this is a paradox.
What? That’s kind of like me saying, I like better quality chocolate, but I’m not willing to pay $400 per serving for better chocolate, and then you say I’m a hypocrite and must not like chocolate.
The fact is, it’s all about the price. It’s always all about the price. There is no way, absolutely no way, that a cell phone number, reluctantly given in a situation such as for buying movie tickets, is worth 50 Euro cents to the company collecting the number. Therefore there’s no way you should have to pay that much to avoid giving it.
Here’s another example the blog gave, when explaining sending out a dozen web-based invitations to a party:
Faced with the choice of paying an extra $10 to keep my invitation advertisement-free, I dithered. It would be easy and inexpensive, I thought, to follow Wikipedia’s lead on this (the online encyclopedia is stubbornly ad-free). But then I thought about that little risk that accompanies the ease of digital consumption: Would my credit card information be safe with this online greeting card company? The worrywart in me won out. I did not pay the extra $10. I chose to lob advertisements at my friends.
I’m in internet advertising, and I can tell you right now that a very generous estimate of how much each opportunity to advertise for your guests on an invitation, and presumably the original email and anything you’d click on in receiving the invitation, could be worth up to 10 cents, max. That is to say, the offer of keeping your invitations advertisement free for $10 is an approximately 10x markup, and you’d be a fool to pay that much for something worth so little on the open market.
So here’s what drives me crazy. It’s not that people aren’t willing to pay for privacy. They are. They’re just not willing to overpay by an outrageous amount for privacy. Far from seeming like a paradox, this seems like good intuition for a market price. If there is a web-based company that offers to send out advertisement-free invitations for a dime per guest, I think about my friends and I say, yeah they’re worth a dime each (but actually I just send them an email to come to my party).
Consumers don’t (yet) actually have access to the market price of privacy- that market is dominated for now by large-scale institutional collectors of information, which is why we’re seeing outrageous markups like these for individuals. It will be interesting to see how that changes.
Today is Sonia Kovalevsky Day
Sometimes I imagine what my life would have been life if I’d been born way earlier, like in 1850. Knowing how difficult it was back then to be a female mathematician, and not wanting to assume some special property like I was born royalty or otherwise incredibly rich, I usually settle on something like a farmer’s life, with 7 kids and a butter churn, Little-House-on-the-Prairie style. To satisfy my nerdy urges I imagine myself knitting difficult patterns and formally organizing the community’s crop rotations.
I really don’t have much insight into what it must have been like back then, but even a short thought experiment like this helps me appreciate the story of Sofia Kovalevskaya, who was indeed born in Moscow in 1850 and unbelievably contributed majorly to mathematics, even though (hat tip Robert Lipshitz):
- it was illegal to go to university in Russia at the time so she had a faux marriage in order to get permission from her husband to go abroad to study,
- got a Ph.D. in Berlin studying under some famous men (Helmholtz, Kirchhoff and Bunsen in Heidelberg, Weirstrass), becoming the first woman in Europe to ever get hold the degree,
- after which time nobody in Germany would let her work so she did various jobs including installing streetlamps,
- and finally managed to get some kind of weird position in Sweden (here‘s a more complete bio).
Did I mention that she eventually had a kid with her husband and then died at the age of 41 from the flu?
I’d really love to go back in time for a day, find Sweden, and buy that amazing woman a drink (and I’d try to arrange to slip some antibiotics into said drink).
Today we are celebrating Sonia at Barnard College (here’s the schedule), where for the nth time (where n is at least 5) we’re having a Sonia Kovalevsky Day with a crowd of young women mathematicians, 9th graders from the Urban Assembly Institute of Math & Science for Young Women, will come and enjoy math talks from Barnard and Columbia professors and then engage in a team competition (with their teachers, which is my favorite part) to see who will win incredibly small prizes but for which they will all scream their heads off for 2 hours. It’s fun!
I started this tradition when I was a Barnard math professor back in 2006 with my friend Kiri Soares who runs the UA Institute, and that fact that it’s still going makes me very happy. Every time I go I try to teach the students how to solve the Rubiks cube using a few tricks which stem from group theory. It’s fun to do and they all get to take home their cubes, along with other math toys and goodies. Mmmm… math toys.
The higher education bubble
Yesterday there was a Bloomberg article that explained how badly students understand their student debt. It occurred to me reading this, and not for the first time, that students are really the perfect choice of victim for the educational financing machine: they are typically naive about money, and a combination of incredibly hopeful and incredibly thoughtless about their futures – if they think about the future at all, they project themselves to be as successful as some chosen role model, against all odds. I was lucky enough to go to a state school which my parents could afford and were willing to pay for, graduating in 1994, but looking back I would have signed away on whatever dotted lines if I’d been asked.
Students don’t think to shop around for a better deal, or even bother to understand the deal they’re in. What’s the incentive for good deals in these circumstances?
More generally, the existence and price of college itself is a perfect trap for students. It’s been a growing assumption in the past few decades that one needs a college education to get a good job, and certainly in a poor job market like the one right now that is certainly true. And yet, the student debt load is increasing faster than the opportunities higher education provides.
We are just now finally seeing a “market reaction” to the outrageous costs and relatively meager returns on law school education. For example see this recent New York Times article, which I found through Naked Capitalism (and which also gave me the title for this post).
My mother and I were recently talking about Occupy Wall Street protesters and student debt. She’s been a professor in computer science for more than 40 years, and explained how she sees it:
Academia expands for students and gets subsidized by all the loans to them, without regard to what the society actually can accommodate.
So not only are students fed the line that they have to go to college, no matter the cost, and whatever the resulting debt, but they then go to college and end up with majors and/or knowledge that is actually not needed or useful to them or anybody else when they graduate.
In a given individual situation, you can always sort of blame the choice someone makes- why did you major in that at that over-priced college with that outrageous private loan? Did you really think you’d be a hot item on the job market?
But when you step back and look at this system, it’s maddening. We are essentially forcing, as a rite of passage to adulthood, each generation of our young people to go through a process which leaves them with ever more questionable skills and saddles them with an ever-increasing debt burden. When you add to this that fewer and fewer jobs are willing to train people while paying them, the advantage that a wealthy young person gets from having no debt and being able to intern for free means this system is also increasing inequality.
I understand that professors don’t like to think of their departments as businesses, and I am not someone who wants to corporatize academics in the sense of wanting departments to prove their business models by producing revenue streams or winning grants just to stay alive. But at the same time we’ve got to do a better job with this overall and help give our younger people a better chance.
Update: apropos article from Bloomberg just published here.
Supply side economics and human nature
The original goal of my blog, or at least one of them, was to expose the inner workings of modeling, so that more people could use these powerful techniques for stuff other than trying to skim money off of pension funds.
Sometimes models are really complicated and seem almost like magic, so part of my blog is devoted to demystifying modeling, and explaining the underlying methods and reasoning. Even simple sounding models, like seasonal adjustments (see my posts here and here), can involve modeling choices that are tricky and can lead you to be mightily confused.
On the other hand, sometimes there are “models” which are actually fraudulent, in that they are not based on data or mathematics or statistics at all- they are pure politics. Supply-side economics is a good example of this.
First, the alleged model. Then, why I think it’s actually a poser model. Then, why I think it’s still alive. Finally, conclusions.
Supply-side economics
At its most basic level, supply-side economics is the theory that raising taxes will stifle growth so much that the tax hike will be counterproductive. To be fair, the underlying theory just says that, once tax rates are sufficiently high, the previous sentence is valid. But the people who actually refer to supply-side economics always assume we are already well withing this range.
To phrase it another way, the argument is that tax cuts will “pay for themselves” by freeing up money to go towards growth rather than the government. That extra growth will then result in more taxes taken in, albeit at the lower rate.
Now, as we’ve states this above, it does sound like a model. In other words, if we could model our tax system and economy well enough, and then change the tax rate by epsilon, we could see whether growth grows sufficiently that our tax revenue, i.e. the amount of money that the government takes in with the lower tax rate, is actually bigger. The problem is, both our tax system and economy are way too complicated to directly model.
Let’s talk abstractly, if it’s the best we can do. If tax rates (which are assumed flat, so not progressive) are at either 0% or at 100%, the government isn’t collecting any money: none at 0% because in that case the government isn’t even trying to collect money, and none at 100% because at that level nobody would bother to work (which is an assumption in itself).
On the other hand, at 35% we clearly do collect some money. Therefore, assuming continuity, there’s some point between 0% and 100% which maximizes revenue (note the reference to the Extreme Value Theorem from calculus). Let’s call this the critical point. This is illustrated using something called the Laffer Curve. Now assume we’re above that critical point. Then raising taxes actually decreases revenue, or conversely lowering taxes pays for itself.
Supply-side economics is not a model
Let me introduce some problems with this theory:
- We don’t have flat taxes. In fact our taxes are progressive. This is really important and the theory simply doesn’t address it.
- The idea of a 100% tax rate is mathematically flawed, because it may well be a singular point. We should instead consider how people would behave as we approach 100% taxation from below. For example, I can imagine that at 90% taxation, people would be perfectly happy to work hard, especially if their healthcare, education, housing, and food were taken care of for them. Same for 99% taxation. I do think people want some power over their money, so it makes more sense to think about taxation approaching 100% than it does to imagine it at 100%. Another way of saying this is that the critical point may be at 97%, and the just plummets after that or does something crazy.
- It of course does depend on what the government is doing with all that money. If it’s just a series of Congressional bickering sessions, then nobody wants to pay for that.
- The real problem is that we just don’t know where the critical point is, and it is essentially impossible to figure out given our progressive tax system and the enormous number of tax loopholes that exist and all the idiosyncratic economic noise going on everywhere all the time.
- The best we can do is try to figure out whether a given tax increase or decrease had a positive revenue effect or not on different subpopulations that for some reason are or are not left out, so what’s called a natural experiment. This New York Time article written by Christina Romer explains one such study and the conclusion is that raising taxes also raises revenue. From the article:
Where does this leave us? I can’t say marginal rates don’t matter at all. They have some impact on reported income, and it’s possible they have other effects through subtle channels not captured in the studies I’ve described. But the strong conclusion from available evidence is that their effects are small. This means policy makers should spend a lot less time worrying about the incentive effects of marginal rates and a lot more worrying about other tax issues.
- There are plenty of ways that natural experiments are biased (namely the subpopulations that are left out of tax hikes are always chosen very carefully by politicians), so I wouldn’t necessarily take these studies at face value either.
Supply-side economics is a political model, not a statistical model
In this recent Economix blog in the New York Times, Bruce Bartlett explains the history of supply-side economics and the real reason this flawed model is so popular. He explains an old essay of Jude Wanniski’s entitled “Taxes and a Two-Santa Theory,” which if you read it is an political, idiosyncratic argument for supply-side economics. Bartlett describes Wanniski’s essay thus:
Instead of worrying about the deficit, he (Wanniski) said, Republicans should just cut taxes and push for faster growth, which would make the debt more bearable.
Mr. Kristol, who was very well connected to Republican leaders, quickly saw the political virtue in Mr. Wanniski’s theory. In the introduction to his 1995 book, “Neoconservatism: The Autobiography of an Idea,” Mr. Kristol explained how it affected his thinking:
I was not certain of its economic merits but quickly saw its political possibilities. To refocus Republican conservative thought on the economics of growth rather than simply on the economics of stability seemed to me very promising. Republican economics was then in truth a dismal science, explaining to the populace, parent-like, why the good things in life that they wanted were all too expensive.
The Kristol quoted above is Irving Kristol, the “godfather of neoconservatism”. So he went on record saying that whatever the statistical merits of the supply-side theory were, it was awesome politics.
Conclusions
First, my conclusion is that Christina Romer should be ahead of Larry Summers on the short list to be the head of the World Bank. I mean, at least she’s trying to use actual data to figure this stuff out.
Second, I think there’s some lessons here to be learned about how people think and how they want to be convinced things work. When confronted with something they don’t like, like taxes, they are happy to believe a secondary effect, namely stifled growth, actually dominates a primary effect, namely tax revenue. It’s wishful thinking but it’s human nature.
My first question is, can Democrats come up with something along those lines too, which uses wishful thinking and fuzzy math to get what they want done? How about they come up with an economic model for how getting rid of big banker bonuses and terrible corporate governance will improve the economy, with a reference to a calculus theorem thrown in for authentification purposes?
My second question is, can we get to the point where people can figure out they are being manipulated by wishful thinking and fuzzy math with unnecessary references to calculus theorems? I know, wishful thinking.
Which muppet are you?
I’m kind of into Greg Smith telling us that those guys at Goldman Sachs consider us all muppets, because the muppets fucking rock.
Depending on my mood, I’m either Miss Piggy or one of those guys in the balcony complaining about stuff.
Recruiting against Goldman Sachs
I’m back from Amsterdam. Can I hear a “fuck yeah” for my guest blogger Becky while I was gone?
FUCK YEAH!!
Lots of things to talk about, sausage wall-related and otherwise, but here’s what’s first.
After reading Karen Ho’s book Liquidated, which I blogged about here, it’s impossible not to understand Goldman Sachs and other investment banks recruitment plans as not coincidental but absolutely central to their overall business strategy of seeming elite and smart. That’s one reason Greg Smith’s resignation letter is so awesome: it erodes the brand of GS, and perhaps keeps young people from joining, cutting them off at the source.
This recent article from the New York Times discusses this issue and quotes both Karen Ho and my friend Chris Wiggins, which is cool because Chris told me about Karen’s book. From the article:
“Everything from Occupy Wall Street to larger critical discourses of ‘fat cats,’ all of that has had some trickle-down effect” to young people, said Karen Ho, an associate professor of anthropology at the University of Minnesota, who has studied the culture of Wall Street.
The decline in the finance industry’s allure has been accelerated by the explosion of the technology industry. A 2011 survey of 6,700 young professionals by the consulting firm Universum ranked Google, Apple and Facebook as the most coveted workplaces; JPMorgan Chase, the highest-ranking bank on the survey, was 41st.
This doesn’t really tell us much since i-banks only recruit at certain colleges, and we don’t know where the survey took place. Also, I’m hearing disappointingly large numbers of kids are currently planning to go into investment banking. However, I’m guessing that the numbers of students going into investment banking from Princeton and Harvard are going to go down about two or three years after Occupy started – these older students had already been brainwashed by the time Occupy got to them. More of the article:
At this year’s SXSW Interactive conference in Austin, Tex., a panel called “Keeping Kids off the Street: Wall St. vs. Start-ups” was convened to address questions including whether the finance industry was to blame for what organizers called a “failure to nurture a culture of innovation” in New York. Chris Wiggins, an associate professor of applied math at Columbia University who sat on the panel, said he was seeing students shy away from Wall Street and veer toward industries where they could work and profit without bringing their morality under the microscope.
“The claim of investment banking that it serves a social purpose by ‘lubricating capitalism’ has eroded,” Professor Wiggins said. “It’s simply very difficult for young people to believe that they’re serving any social purpose now.”
First of all, great quote from Chris.
Next, I have no problem trying to talk young people out of going into investment banking and into internet start-ups, because one industry is just too big and the other is enjoying explosive growth. But on the other hand, there’s plenty of reason to worry about the idea that ones morality isn’t under the microscope if one is engaged in highly scalable modeling that affects people’s lives. In fact that’s exactly what I’m worried about right nowadays.
By the way, I’ll be talking about the job of the quant in these two industries, as well as my related concerns, tonight at Emanuel Derman’s Financial Engineering Practitioner’s Seminar at 6pm at Columbia.
Why Larry Summers lost the presidency of Harvard
Some people still think Larry Summers got fired from being the president of Harvard because of the ridiculous comments he made about women in math (see my post about this here) or because of the comments he made about Cornel West. Actually, the truth is something worse, and for which he should actually be in jail. It’s also something that makes Harvard look bad, so maybe that’s why it’s less known.
The subtitle of this post is: Why Larry Summers shouldn’t be made head of the World Bank.
I was inspired to write this by being disgusted at continued rumors that he could get yet another prestigious job. It’s like this guy can’t fail spectacularly enough! Let’s give him another chance!
Let’s set the record straight: Summers was directly involved with defrauding the U.S. Government (see below) and Russia. He admitted to not understand conflict of interest issues (see below). It is particularly appalling, knowing these things, that he would be considered for the World Bank head, which presumably requires nuanced understanding of such issues.
I’m using this article, entitled “How Harvard Lost Russia,” and written in 2006 in Institutional Insider (II), as a reference. More on that article and how it led to getting Summers fired below. And by the way, I’m not claiming this story is completely unkown: see this wikipedia article for a quick overview, for example, in addition to the II article. I just think it needs reviving at this crucial moment, before Summers gets more toys to play with.
Shleifer
So why did Summers lose his job at Harvard? It was because of his protecting a buddy, a fellow economist at Harvard named Andrei Shleifer.
Andrei Shleifer managed to get put in charge of helping Russia privatize stuff in the mid 1990’s. His mission was to make things more useful and transparent to the infant capitalist system. Through his wife and friends, Shleifer instead orchestrated a boondoggle on Russia. He invested money through his wife and helped his friend Jonathan Hay and his lover and friends invest theirs, and set up the very first mutual fund as well as thwarting the efforts of other people to set up their own funds. All of these things were strictly against the conflict of interest policy they were working under.
Shleifer got in trouble, and the U.S Government sued and won against Harvard and Shleifer. From the article:
The judge determined that Shleifer and Hay were subject to the conflict-of-interest rules and had tried to circumvent them; that Shleifer engaged in apparent self-dealing; that Hay attempted to “launder” $400,000 through his father and girlfriend; that Hay knew the claims he caused to be submitted to AID were false; and that Shleifer and Hay conspired to defraud the U.S. government by submitting false claims.
On August 3, 2005, the parties announced a settlement under which Harvard was required to pay $26.5 million to the U.S. government, Shleifer $2 million and Hay between $1 million and $2 million, depending on his earnings over the next decade. Shleifer was barred from participating in any AID project for two years and Hay for five years. Shleifer and Zimmerman were required by terms of the settlement to take out a $2 million mortgage on their Newton house. None of the defendants acknowledged any liability under the settlement. (Forum Financial also settled its lawsuit against Harvard, Shleifer and Hay under undisclosed terms.
Summers and Shleifer
Summers was good friends with this criminal, and used his position to protect him. From the article:
Shleifer remained close to his friend and mentor Summers; they talked to and saw each other frequently and continued vacationing together in the summer on the Cape. Then it became known in early 2001 that Summers was on the short list of candidates to succeed Neil Rudenstine as the president of Harvard University. Shleifer and Zimmerman began campaigning for Summers to get the Harvard post, giving meet-and-greet parties for him at their home. Summers stayed with them when he visited Harvard.
In March 2001, Summers was named president of Harvard. Shleifer, who had been courted by New York University’s Stern School of Business, decided to stay put.
Having his close friend as his boss would turn out to be quite helpful to Shleifer. Summers asserted in his deposition that he recused himself from any involvement in the university’s handling of the Shleifer matter, but the new president stayed involved anyway. Early in his presidency he told the dean of the faculty of arts and sciences, Jeremy Knowles, to keep Shleifer at Harvard.
“I expressed to Dean Knowles,” Summers testified in a deposition in 2002, “. . . that I was concerned to make sure that Professor Shleifer remained at Harvard because I felt that he made a great contribution to the economics department . . . and expressed the hope that Dean Knowles would be attentive to that. . . . I think he recognized and shared the concern.”
“Conflict of interest issues should be left to the lawyers” says Summers
This is the testimony that says to me, in no uncertain terms, that Summers cannot be put in charge of something politically sensitive:
Summers said conflict-of-interest “issues,” in his Washington experience, were “left to the lawyers.” He said he was sensitive to “ethics rules,” but testified that “in Washington I wasn’t ever smart enough to predict them . . . things that seemed very ethical to me were thought of as problematic and things that seemed quite problematic to me were thought of as perfectly fine. . . .”
More intervention on behalf of Shleifer
Maybe you’d think that getting sued by the US Government and losing $40 million might lose your job as a Harvard Professor. But you’d be wrong:
Knowles tells Institutional Investor that he does not remember Summers’ approaching him about Shleifer. “I don’t recall this particular conversation, but the president and I shared the goal of recruiting and retaining the best faculty, so it would have been perfectly natural for us to mention to each other the names of people that we certainly wouldn’t want to lose.” However, not long after Summers says he intervened on the professor’s behalf, Knowles promoted Shleifer from professor of economics to a named chair, the Whipple V.N. Jones professorship.
Shleifer’s legal position changed on June 28, 2004, when Judge Woodlock ruled that he and Hay had conspired to defraud the U.S. government and had violated conflict-of-interest regulations. Still, there was no indication that the Summers administration had initiated disciplinary proceedings. To the contrary, efforts were seemingly made to divert attention from the growing scandal. The message from the top at Harvard was, “No problem — Andrei Shleifer is a star,” says one senior Harvard figure.
The Summers-Shleifer friendship flourished. They spoke on the phone more than once a day, on average. Two months after the court ruling against Shleifer, he hosted Summers at a break-the-fast dinner on Yom Kippur.
One instance was a meeting early in the academic year that began in September 2004, less than two months after the federal court formally adjudicated Shleifer’s liability for conspiring to defraud the U.S. government. A faculty member asked Kirby why Harvard should defend a professor who had been found liable for conspiring to commit fraud. The second confrontation came early in the current academic year when another professor asked Kirby why Harvard should pay a settlement of $26.5 million and legal fees estimated at between $10 million and $15 million for legal violations by a single professor and his employee, about which it was unaware. On both occasions Kirby is said to have turned red in the face and angrily cut off discussion.
On at least one other occasion, Summers himself told members of the faculty of arts and sciences that the millions of dollars that Harvard paid in damages did not come from the budget of the faculty of arts and sciences, but didn’t say where the money came from. Those listening inferred he meant that the matter shouldn’t be of concern to the faculty and that they shouldn’t raise it, a curious notion, given that Shleifer was one of their own.
A spokesman for Summers said he was “unable to schedule” an interview with Summers for II in December, when this article was being prepared. As the lawsuit was against the university, not just the faculty of arts and sciences, the settlement came from “university funds available for these purposes,” the spokesman added.
…
Shleifer has never acknowledged doing anything wrong. Summers has said nothing. And so far as is known, there has been no internal investigation or sanction. “An observer trying to make sense of the University’s position on Shleifer, Ogletree and Tribe is driven to an unhappy conclusion. Defiance seems to be a better way to escape institutional opprobrium than confession and apology. . . . And most of all being a close personal friend of the president probably does one no harm.”
The article gets Summers fired
An anonymous person got a bunch of copies of the II article and stuck one in every Harvard faculty’s mailbox the morning of the no-confidence vote that got Summers ousted.
And just in case you’re wondering, here’s the website of Sheifer, still on faculty of Harvard.
VAM versus what?
A few astute readers pointed out to me that in the past few days I both slammed the Value-added teacher’s model (VAM) and complained about people who reject something without providing an alternative. Good point, and today I’d like to start that discussion.
What should we be doing instead of VAM?
First of all, I do think that not rating teachers at all is better than the current system. So my “compare the the status quo” argument goes through in this instance. Namely, VAM is actively discouraging teachers whereas leaving them alone entirely would neither discourage or encourage anyone. So better than this.
At the same time, I am a realist, and I think there should be, ultimately, a system of evaluating teachers, just as there is a system for evaluating me at work. The difference between my workplace, of 45 people, and the NYC public schools is scale. It makes sense to have a very large and consistent evaluation system in the NYC public schools, whereas my job can have an ad hoc inconsistent system without it being a problem.
There’s another problem which is nearly impossible to tease from this discussion. Namely, the fact that what’s going on in NYC is a disingenuous political game between Bloomberg and the teacher’s union. Just to emphasize how important that fight is, let’s keep in mind that as of now, although the union is much weaker than it historically has been, it still has the tenure system. So any model, VAM or not, of evaluation is somewhat irrelevant for “removing bad teachers” given that they have tenure and tenure still means something.
Probably the best way to decouple the “Bloomberg vs. union/tenure” issue (a massive one here in NYC) from the “VAM versus other” question is to think nationally rather than citywide.
The truth is, the VAM is being tried out all over the country (although I don’t have hard numbers on this) and the momentum is for it to be used more and more. I predict within 10 years it will be done systematically everywhere in the country.
And, sadly, that’s kind of my prediction whether or not the underlying model is any good or not! The truth is, there is a large contingent of technocrats who want control over the evaluation system and believe in the models, whether or not they are producing pure noise or not. In other words, they believe in “data driven decisioning” as a holy grail even though there’s scant evidence that this will work in schools. And they also don’t want to back down now, even though the model sucks, because they feel like they’ll be losing momentum on the overall data-driven approach.
One thing I know for sure is that we should continue to be aware of how badly the current models are, and I want to set up an open source version of the models (see this post to get an idea how it could work) to exhibit that. In other words, even if we don’t turn off the models altogether, can’t we at least minimize their importance while their quality is bad? The first step is to plainly exhibit how bad they are.
It’s hard for me to decide what to do next, though. I’m essentially a modeler who is hugely skeptical of models. In fact, I don’t think using purely quantitative models to evaluate teachers is the right thing to do, period. Yet I feel like if it’s definitely going to happen, better for people like me to be in the middle of it, pointing out how bad the proposed (or in use) models are actually performing, and improving them.
One thing I know I’d do if I were to be put in charge of creating a better model: I’d train on data where the teacher is actually rated as a good teacher or not. In other words, I wouldn’t proxy “good teacher” by “if your students scored better than expected on tests”. A good model would be trained on data where there would be an expert teacher scorer, who would go into 500 classrooms and carefully evaluate the actual teachers, based on things like whether the teacher asked questions, or got the kids engaged, or talked too much or too little, or imposed too much busy work, etc. Then the model would be trying to mimic this expert.
Of course there are lots of really complicated issues to sort out- and they are *totally unavoidable*. This is why I’m so skeptical of models, by the way: people think you can simplify stuff when you actually can’t. There’s nothing simple about teaching and whether someone’s a good teacher. It’s just plain complex. A simple model will be losing too much information.
Here’s one. Different people think good teaching is different. A possible solution: maybe we could have 5 different “expert models” based on different people’s definitions of good teaching, and every teacher could be evaluated based on every model. Still need to find those 5 experts that teachers trust.
Here’s another. The kind of teacher-specific attributes collected for this test would be different from the VAM- things that happen inside a classroom (like percentage of time teacher talks vs. student, the tone of the discussion, the number and percentage of kids involved in the discussion, etc,) and are harder to capture accurately. These are technological hurdles that are hard.
I think one of the most important questions is whether we can come up with an evaluation system that would be sufficiently reasonable and transparent that the teachers themselves would get on board.
I’d to hear more ideas.
Sausage Wall
I’m getting ready to go to Amsterdam this Sunday (get ready for an exciting guest blogger while I’m gone!).
I’ve been to Amsterdam a bunch of times since hooking up with my big-nosed Dutch husband, and I enjoy our visits to his family very much.
But it’s not what you’re thinking. I’m allergic to that stuff (I have very funny, inappropriate stories about that which you’ll have to ask me in person), plus I’m traveling with our 3 sons, so it’s all about bikes, canals, and food. I’m also allergic to art, so the museum scene is kind of irrelevant too. I know that’s blasphemous, but there you go, I just don’t get paintings.
So, about the food. I’ve got street food tastes, and much to the chagrin of my in-law family, I consider true Dutch delicacies to be the stuff you find in carts along the side of the main road between the train station and the place with all the pigeons. Mostly loompjes loompjas (skinny little spring rolls), ollieballen (donuts without holes, literally translated as “balls of oil”), and poffertjes (tiny pancakes). Mmmm… poffertjes.
Anyhoo, what I really wanted to discuss today is the sausage wall, which I dearly dearly love. It’s near the Central Train Station, and I never know exactly where it is but I always find it like a fucking homing device. I’m the pigeon, the sausage wall is my coop.
What is a sausage wall, you ask? It’s a tiny little hole in the wall fast-food restaurant where you put coins into slots, like a vending machine, and you get to open these tiny little doors, inside of which are these delicious sausage sandwiches and other strange things. So, weird little fried things, mostly in buns but sometimes not, of all descriptions, except you never know exactly what anything is made of.
Is it delicious, you may ask? Oh yes, it is. It is, for reals, but my guess is that the crucial ingredient that makes everything so good is that you have about 40,000 high people very nearby getting the munchies, and the result of this is unbelievable turnover.
I have never been to the sausage wall when there are fewer than 15 other people vying for the best sausage windows. On the supply side, there’s an army of Dutch people on the other side of the wall feverishly preparing fresh fried sausages (if that even makes sense). Thank God for those people, and who is the genius I can thank for coming up with this brilliant idea in the first place?
I can’t wait to get to Amsterdam, folks, the sausage wall is calling me and I can hear its cry.
Quants for the rest of us
A few days ago I wrote about the idea of having a quant group working for consumers rather than against them. Today I wanted to spell out a few things I think that group could do.
The way I see it, there’s this whole revolution of data and technology and modeling going on right now, but only people with enough dough to pay for the quants are actually actively benefiting from the revolution. So people in finance, obviously, but also internet advertising companies.
The problem with this, besides the lopsidedness of it all, is that the actual models being used are for the most part predatory rather than helpful to the average person.
In other words, most models are answering question of the form:
- how can we get you to spend money you don’t necessarily want to spend? or
- how good a credit risk are you? or
- how likely are you to come back and spend more money? or
- how can we anticipate the market responding to end-of-month accounting shenanigans? I just threw this one in to give people a sense of how finance models work.
It all makes sense: these are businesses that are essentially bloodthirsty, making their money off your clicks and purchases. They are not going away.
Then there are some models that are already out there trying to make the user experience more enjoyable. They answer questions of the form:
- If you like that, what else may you like? (Pandora, Netflix, Google)
- If you bought that last week, maybe you’d like to buy it again this week?
- If you bought that, maybe you’d like to buy this now?
The problem, as you can see, is that these second, helpfulish kinds of things quickly devolve into the first, predatory kinds of things. In other words, you’re being bombarded by ads and suggestions for spending more money than you actually want to spend.
What about stuff that you actually don’t want to do but that is probably not directly profitable to anyone? I’d love to see technology used to tackle some of these chores:
- Figuring out what the best deal is on loans (credit card, student loans or mortgages), without becoming a lawyer. Here I’m not just saying they should all be clear about their terms- that’s a job for the CFPB. I mean there should be a website that asks me a few questions about what I need a loan for and points me to the best deal available.
- Finding the best price for something. I discussed this briefly here.
- Warnings about weird conditions and agreements, like mandatory arbitration.
- Help finding a good doctor or a good plumber etc.
- Help knowing when to go to the DMV or other public services building so the lines are bearable, or even better a way to do stuff on your computer or phone and avoid the trip altogether.
- Getting your kids’ medical records to their schools and camps safely and efficiently.
Some of these things already exist (like the doctor thing) but aren’t well-known or well-publicized, so wouldn’t it be cool if this quant group also provided an app that would aggregate all these services into one place?
And for the things like #4, where you want to be warned before you buy, it’s too much work to go back to a webpage to check everything before buying. Instead, the app could follow you around the web when you’re shopping and overlay a “bullshit warning” icon on the potential purchase in situations where people have complained about unreasonable terms and conditions.
Let’s use technology in our favor. Instead of the companies collecting information about us, let’s collect information about them. Come to think of it, the CFPB should start this quant group today.
Versus what?
I’m going to specialize in short, curmudgeony blog posts this week.
Today’s topic: you always need something to compare a new thing with. It’s this versus what?
If it’s a model, compare it to noise. That is, go ahead and test a model by scrambling the “y”s and see how well your model predicts randomness. It’s a really good and inexpensive way of seeing whether your model is better than noise, so go ahead and do it. There’s even a name for this but I forget what it is (update from reader: permutation testing).
If it’s a plan for a system or the world, compare it to the status quo. I’m so sick of people discarding good plans because they’re not perfect. If they’re better than what’s currently going on, then let’s go with that. Which brings me to my last example.
If it’s someone’s proposal (person A), compare it to other proposals (person B). I don’t think it’s fair for people (person C) to nix an idea unless they come up with a better one. If person C is consistently doing that, it’s a good bet that they have something to protect in the status quo situation, which brings us to the previous example.
The Value Added Teacher Model Sucks
Today I want you to read this post (hat tip Jordan Ellenberg) written by Gary Rubinstein, which is the post I would have written if I’d had time and had known that they released the actual Value-added Model scores to the public in machine readable format here.
If you’re a total lazy-ass and can’t get yourself to click on that link, here’s a sound bite takeaway: a scatter plot of scores for the same teacher, in the same year, teaching the same subject to kids in different grades. So, for example, a teacher might teach math to 6th graders and to 7th graders and get two different scores; how different are those scores? Here’s how different:
Yeah, so basically random. In fact a correlation of 24%. This is an embarrassment, people, and we cannot let this be how we decide whether a teacher gets tenure or how shamed a person gets in a newspaper article.
Just imagine if you got publicly humiliated by a model with that kind of noise which was purportedly evaluating your work, which you had no view into and thus you couldn’t argue against.
I’d love to get a meeting with Bloomberg and show him this scatter plot. I might also ask him why, if his administration is indeed so excited about “transparency,” do they release the scores but not the model itself, and why they refuse to release police reports at all.
Why experts?
I recently read a Bloomberg article (via Naked Capitalism) about wine critics and how they have better powers of taste than we normal people do.
One of the things I love about this article is how it’s both completely dead obvious and at the same time totally outrageous when you think about it.
Obvious because when we see wine experts going on and on about what they can discern in their tiny sip, we know they either have magical powers or they’re lying, and since some of them can do this shit blindfolded we will assume they aren’t lying.
Outrageous because if you think about it, that means we follow the advice of people whose taste is provably different from ours. In other words, the word of experts is fundamentally irrelevant to us, and yet we care about it anyway.
My question is, why do we care?
Just to go over a couple of ground rules. First, yes, let’s assume that the wine experts really do have powers of discernment that are incredible and unusual, even though we have to trust an expert on that, which may seem contradictory. The truth is, this isn’t the first study that’s shown that, and I for one have hung out with these guys and they really do taste that minerally soil in the wine. I’m not even jealous.
Second, I’m not saying you care about wine experts’ opinions, but lets face it, lots of people do. And you could say it’s because of the performance that the experts give when they smell the wine and describe it, and I’ll agree that some of them can be poets, and that’s nice to see. But the truth is they also rate the wines with a number, and these numbers are printed in books, and lots of people carry these books around to wine shops and devote themselves to only buying wines with sufficiently high numbers, even though those people probably don’t themselves have the mouth smarts to tell the difference.
Now that we’ve framed the question, we can go ahead and make guesses as to why. Here are mine:
- People are hoping that they themselves are also supertasters. This kind of seems like the most obvious one, but I can’t help think that true supertasters would not need other people’s opinions at all.
- People think experts’ opinion of “good”, even if not completely the same as theirs, will be highly correlated, and so is better than nothing.
- People want to be seen drinking wine that supertasters would drink, as a sort of cachet thing.
I think #3 above is pretty much the definition of snob, and I think it exists but is not the major reason people do things (but I could be wrong). I’m guessing it’s more typically #2, but even so it doesn’t explain the really expensive high-end wine market’s huge appeal, unless there are way more supertasters than I thought out there.
I think this question, of why people listen to expert advice even when it’s mostly irrelevant, is an important one, because it happens so much in our culture, and clearly not just about wine.
I for one am attracted to the idea of going one step further and ignoring expert advice. I see a natural progression: first, people are ignorant, second, they learn what experts think, and third, they ignore experts and go with their gut.
But even sexier is the idea of never listening to experts at all: skip step two. Am I the only person who thinks that’s sexy? I mean, I guess it mostly means you’re wasting your time, but it also comes out in the end with less herd mentality.
I think this desire I have of skipping the expert advice is very tied into why I despise the echo chamber of the web and how we are profiled online and how our environment is constantly updated and tailored to our profile. It’s in some sense an expert opinion on what we’d like, given our behavior, and I hate the finiteness of that concept, possibly in part because I’ve designed models like that and I know how dumb they are.
Anyway, I’d love to hear your thoughts, and if I’ve missed any reasons why people like to hear partially relevant expert opinion.
Do not track vs. don’t track
There’s been some buzz about a new “do not track” button that will be installed in coming versions of browsers like google chrome. The idea is to allow people their privacy online, if they want it.
The only problem is, it doesn’t give people privacy. It only blocks some cookies (called third-party cookies) but allows others to stick.
Don’t get me wrong- without third-party cookies, the job I do and every other data scientist working in the internet space will get harder. But please don’t think you’re not being tracked simply by clicking on that.
And as I understand it, it isn’t even clear that third-party cookies won’t be added: I think it’s just an honor system thing, so third-party cookie pasters will be politely asked not to add their cookies.
But don’t believe me, visualize your own cookies as you travel the web. The guy (Atul Varma) who wrote this also open-sourced the code, which is cool. See also the interesting conversation in comments on his blog Toolness.
Let me suggest another option, which we can call “don’t track”. It’s when nothing about what you do is saved. There’s a good explanation of it here, and I suggest you take a look if you aren’t an expert on tracking. They make a great argument for this: if you’re googling “Hepatitis C treatments” you probably don’t want that information saved, packaged, and sold to all of your future employers.
They also have a search engine called “DuckDuckGo” which seems to work well and doesn’t track at all, doesn’t send info to other people, and doesn’t save searches.
I’m glad to see pushback on these privacy issues. As of now we have countless data science teams working feverishly in small companies to act as predators against consumers, profiling them, forecasting them, and manipulating their behavior. I’m composing a post about what a data science team working for consumers would have on their priority list. Suggestions welcome.
Charity auctions and hate crimes
I read an absolutely incredible story last night on Bloomberg.
This Morgan Stanley executive William Jennings (co-head of North American fixed-income capital markets) is being charged with a hate crime. Let me piece it together a bit.
On December 22nd Jennings hosted a charity auction at Morgan Stanley until 6pm, then went to Ink48, a hotel in midtown on the west side. After partying on the rooftops for some time, and drinking, his car service didn’t show up fast enough for him so he hailed a cab to take him to Connecticut, where he lives with his wife and three kids in a $3.4 million house.
When he got to Connecticut, he got into a fight with the cab driver and ended up refusing to pay, stabbing the guy in his hand with a knife (which required 60 stitches) while using ethnic slurs. Then he went away to Florida for two weeks on the DL. My favorite line from the article:
Jennings fell asleep during the trip, the driver said. Once at the destination, though, Jennings said “he did not feel like paying” because he was already home.
Up for debate and the trial: did he really refuse to pay or was he just arguing his fare? Was it really 60 stitches or is that an exaggeration? Did he really use ethnic slurs? I’m throwing in these questions because I want to be correct and because the overall point of my post won’t depend on these details anyway.
Not up for debate: he stabbed the cabbie, it was definitely an argument over money, and he was worried enough to go to Florida for two weeks.
Okay, now that I’ve summed this up I’m gonna connect it to charity auctions. Yes I am.
I’ve been to charity auctions myself. I want to devote an entire post to describing what such an event consists of; for now take it from me that they are orgies of self-congratulatory arrogance. And ironically, they are not at all charitable in the sense of being generous and tolerant.
They are in fact celebrations of self-centeredness, displays of careless overabundance. Yes, I’ll pay $120k to go to Australia for a week to golf, and I’ll do it for the poor children, and by the way also because I can afford to throw away such money and especially by the way because everyone in this room now knows that.
So I think it’s extra deliciously ironic that this guy went from that atmosphere to arguing with an Egyptian cabbie over a $200 fare (or maybe $300, if we want to be generous to Jennings and believe his “extortionist cabbie” sob story).
But my point is that, although the cab ride was a different atmosphere from the charity auction, his was not a different attitude at all: both parts of his evening centered on assumptions of entitlement and selfishness and the idea that he is somehow outside the regular rules and cannot be held accountable like normal people. From the article:
He then went on vacation to Florida, police said. Jennings told officers he subsequently called his lawyer after a friend told him police were looking for a suspect in the stabbing incident, according to the report.
“Jennings said he didn’t know what to do — he just wanted the whole thing to go away,” Darien Police Detective Chester Perkowski said in a court document filed with the report.
The part about the car service not showing up is absolutely key: these guys use car services a lot, and when you do that, you get used to not paying for such trivial little things as rides, or for that matter food or drinks. All such things are handed to you for free when you are this important (read: rich). Paying, writing a check or what have you, is reserved for ostentatious displays of wealth. I know hedge fund guys that don’t even carry money in their wallet because they never use cash. Actually I don’t know them personally but I know that this is true because they brag about it in the elevators.
I’m not trying to generalize this story – most Morgan Stanley execs haven’t been charged with knifing down working class cabbies. But it’s impossible for me not to see the consistency in the two events.
