Thursday, September 20, 2012

Lies, damned lies, and the financial meltdown



Luther Burbank, visionary, namesake.
A recent article in the Attleboro Sun Chronicle welcomes three new principals to our local school system (“Class Acts”, 9/3/2012). It is a heartwarming article and we all share in the excitement and promise of these promotions. But then, almost an afterthought, we notice something – the three new principals are all female.

There is a little known statistic that approximately half of our population is male. So when three executive positions are filled in the district, mightn’t we expect that at least one would be male?

Curious, we check the district’s website. Of the ten executive positions (nine principals and the superintendent), two are male and eight female. It looks pretty grim for the local guys.

On its face, just based on the numbers, this is highly discriminatory.

But there are lots of good reasons for the disparity. There are cultural and social forces at work that make the pool of female educators much larger than that of males. Females enter the profession at a much higher rate than males. The federal government (National Center for Education Statistics) reports that as of 2008, 76% of all public school teachers were female. So the fact that 80% of Attleboro’s school executives are female is not far off the mark.

It just goes to show that sometimes prima facie (“on its face”) discrimination can be explained by a deeper understanding of background facts.

Meanwhile, there is a small California savings and loan institution named after Luther Burbank, the famed botanist. Luther Burbank Savings was founded in 1983, committed to serving and retaining its customers rather than profiting public stockholders.

The bank is financially conservative and handily survived the financial meltdown of 2008. It did so by avoiding exotic financial vehicles such as sub-prime mortgages and collateralized mortgage obligations. It held the mortgages it issued for its own portfolio and did not sell them off. The funds released to mortgage borrowers came from the bank’s own depositors to whom it owed a fiduciary duty of care. It was successful because it required borrowers to qualify for the mortgage commitments they were about to undertake.

It would seem that this behavior should be congratulated and emulated. If more banks had behaved like this, there would have been no housing bubble and no financial meltdown.

So to honor Luther Burbank, your Department of Justice sued them for maintaining loan policies that had a “disparate impact” on African-Americans and Hispanics. The government observed that loans were made to the minority community at a statistically lower rate than their population.

The bank, admitting no guilt, settled the suit to avoid ruinously expensive litigation. It has loosened its lending standards and its depositors money is now at much greater risk. This is all due to the government’s “disparate impact” theory which says, regardless of fundamental causes, that if statistical variances exist, they must be discriminatory. No analysis of underlying causes is permitted.

If the problem is that minorities fail to qualify for standard mortgages, then we need to address those core issues. Holding a figurative gun to the head of a small community bank and forcing it to take greater risks runs counter to the lessons learned since 2008. And basing this on superficial statistics seems nonsensical at best.

If similar reasoning were applied to the Attleboro School district’s hiring policies, heads would roll.

Monday, September 10, 2012

Learning the ropes

Main-mast, Joseph Conrad, Mystic Seaport
Mystic Seaport Village is a living museum on the Mystic River in eastern Connecticut.  The museum memorializes our rich New England maritime history and several restored wooden sailing vessels show us how fishing and whaling and trade were accomplished in the age of sail. The town, famous for Mystic Pizza and its eponymous movie, is situated several miles north of Fisher’s Island Sound and is reached from the sea by navigating a circuitous channel and negotiating several ponderous bridges.

The first, a swing bridge, carries Amtrak trains across the river.  After contacting the bridge operator by radio, the bridge swings open when train schedules allow.  After waiting for one northbound and one southbound high speed Acela to pass, the bridge slowly swings open and we slip though. The next bridge carries busy US Route 1 through the middle of Mystic.  It opens at 40 minutes past each hour – if you arrive late, you must wait.

After negotiating both of the bridges and carefully staying within marked channels (the mud flats are treacherously shallow), we arrive at the Seaport.

The museum features a number of large sailing ships, notably the Charles W. Morgan (a whaling ship built in 1841 in New Bedford, MA), the L.A. Dunton (a fishing smack built in Essex, MA), and the Joseph Conrad (a 111 foot, square rigged training ship). All of these ships share the use of wind power, intricate sails strung from masts and yardarms, hoisted and canted by multitudinous lines.  Knowledgeable docents vividly describe life at sea, the jobs that the crew performed, and how they climbed through the ranks.

On a large capital ship of the late 18th century, twenty or more sails hung on three masts provided power to the ship. Well over 300 lines were used to control and support the sails, and an able seaman must know all of their names and their functions. These were a combination of halyards (to haul the yards, i.e., raise the sail), sheets (to control sail angle and shape), and stays (to steady the masts). More, there were cunninghams, and vangs, and topping lifts, all used to control and refine sail shape, and hence deliver power to the ship.

In days of sail, the able seamen who mastered the complexity of their ships were the highly skilled workers of their time. They were the equivalent of today’s firemen and engineers who tend the engines of huge container ships and oil tankers.

Rising though the ranks, the sailing ship officers were educated and skilled in the arcane science of navigation.  Charts and sextants and trigonometry were used to ascertain the ship’s position and plot a course to the desired destination. Those mastering these skills were the technology wizards of their time, and handsomely paid.

After several days spent pleasantly reliving our maritime heritage, we fondly bid the Seaport adieu and head down the river.  Early, sun just risen, mist hangs on the water but begins to dissolve as we negotiate the two bridges. But upon reaching the base of the Mystic and entering Fisher’s Island Sound, we encounter a heavy fog, barely able to see the bow from the stern. Time to deploy our modern miracle, an iPhone with a marine GPS navigation app. We creep through the treacherous shoals and reefs, watching the navigational buoys loom from the fog, each on time and in position as predicted by the app. After some time, we emerge into the expanse of Block Island Sound, and the fog eases.

It becomes clear that what was of value then, and now, is knowledge. The able seamen and navigators of the sailing ships were the diesel engineers and Apple programmers of their day. Knowledge and skill must be learned, and earned, and applied to our common good. Anything we can do, collectively or individually, to motivate our children to learn, to enable their academic journey, is the highest good. We, and they, will benefit mightily.