Paying for an Education: the University of California, Berkeley

The Campaign for Berkeley sent us alumni a marketing package in hope of obtaining donations.

Yearly tuition and expenses for in-state students living in campus housing is $32,634 (As opposed to the University of California schools, the average annual student budget is $19,700 for a California State University resident undergraduate [Source: Legislative Analyst's Office]).

About 70 percent of students receive financial aid. How could it be any other way, when the average family in California per capita income is around $43,000?

Compare this state of affairs to the cost of a University of California education for me, 1978 to 1982: around $4,000 including campus housing. I paid for my four-year Berkeley undergraduate education easily through savings, summer work, and $5,000 of loans. Why are finances so much more difficult today?

When I was an undergraduate, the state paid 52 percent of UC Berkeley's funding. Today the state pays 10 percent.  The Great Recession, starting in 2008, has crushed the California budget, especially a budget increasingly dependent on capital gains from the very rich. See below.

The Composition of Revenues Has Changed Over Time

• Over the past four decades, personal income tax revenues to the General Fund have increased dramatically—rising from 27 percent to 51 percent of General Fund revenues.
• This growth is due to growth in real incomes, the state’s progressive tax structure, and increased capital gains.
• The reduced share for the sales tax reflects in part the increase in spending on services, which generally are not taxed. Source: Legislative Analyst's Office (link here)

What to do? See my post (here) on whether California can continue on the same path, taxing itself out of austerity and, perhaps, into prosperity.

Telegraph Avenue, Berkeley

Berkeley, California inspires me to write. I spent a lot of my youth there and frequently enjoy traversing the Bay to visit. The New York Times can't quite understand the place. See my last blogs about Berkeley here and here.

However, a recent Times article about the decline of (in)famous Telegraph Avenue was more accurate. See it here.

As a late 1970s and early 1980s college student living two blocks away, Telegraph was the location of head shops, tie dye shirts and hippie culture: Berkeley as an anachronism. The street went through a yuppie-ish renaissance in the 1990s and has recently relapsed. Burned shops and vacant lots have precipitated a decline into a wasteland of homelessness, garbage and vermin at Haste Street and Telegraph, a few blocks from the University.

The Times article interviews stakeholders who want to improve the place. A longstanding bookseller in this area "thinks Berkeley should rebrand Telegraph as the place where the Free Speech Movement happened. The city could erect plaques describing the events of the 1950s and ’60s, which would attract tourists and shoppers." I don't care for this idea. Will Berkeley ever outgrow this piece of history?

The Daily Californian reports that the Berkeley city council is looking into the Telegraph problem. The council "will decide whether to pass on a proposal from the Telegraph Livability coalition to the city manager for cost analysis."

Among the [coalition] suggestions aimed at reducing crime is a proposal to establish Walk the Beat, a program that would have UCPD and Berkeley Police Department officers patrol Telegraph on foot. The recommendation also suggests increasing pedestrian lighting at night to create a safer environment for shoppers.

Other recommendations include demarcating street vendor spaces more clearly, creating a “free speech walk of fame” on the Telegraph sidewalk to commemorate the street’s history and increasing foot traffic by expanding public parking and making transit improvements (The Daily Californian, February 22, 2012).

These solutions are only band-aids. How many people will drive to Berkeley to experience the "free speech walk of fame?" Telegraph can't recover until businesses are built on the location of the vacant lots. The Times reports that the City of Berkeley is suing the owner of the vacant lots, so hopefully, the development will start soon. The University should do its part and develop the fallow "People's Park" located nearby, another magnet for filth, crime, and drugs. Get the homeless out of the mud and in shelters, and start the construction for student housing on this prime location tomorrow!

Gap Between Rich and Poor Widest in Berkeley

Communism still exists--not in Eastern Europe but in Berkeley, California. Thus I was intrigued when I read the New York Times article, Gap Between Rich and Poor in Area Is Widest in Berkeley.  Instead of planning protests about American foreign policy, maybe the aging Marxists should take a look in the mirror. Alas, I wasn't able to bask in schadenfreude for long. The NYT analysis has two major errors.

Mr. Berube’s research has shown that the area of central Berkeley bounded by University Avenue and Oxford Street [pictured partly in the background of the photo above--MS] has one of the highest concentrations of poverty in the Bay Area, on par with perennially distressed areas like West Oakland and the Bayview Hunters Point neighborhood of San Francisco.

The University of California hosts about 30,000 students, most who live as close to campus as possible, that is, in central Berkeley. (The population of Berkeley is about 100,000.) Most college students live under circumstances of near-poverty, especially Cal's 10,000 graduate students. (As a Cal undergraduate, I survived off an income of less than $5,000 per year.) Mr. Berube is describing much of the student ghetto. I don't think these kids getting PhD's in engineering will be impoverished for long. All cities have chronic poor, those on the way up, and rich people. Berkeley has its poor, but the students shouldn't count as part of the city's Gini (inequality) score.
 Secondly, the reporter writes

Other observers said income inequality persisted in Berkeley because the city’s most progressive policies had been blocked by higher authorities. In 2009, for example, the California Supreme Court let stand a ruling voiding ordinances that require developers to set aside units for low-income residents when they build new apartment complexes.

Huh? Since developers weren't forced to build for low-income residents, fewer poor people were able to live in Berkeley, making incomes more equal, not less. Berkeley's "progressive policies" have nothing to do with income inequality.

But Councilman Kriss Worthington said officials were not giving up in efforts to reduce inequality.

I'm sure the Berkeley government will find ways of poorly combating a non-issue. After all, it is Berkeley.

Why Don’t We See More Employee-Owned Corporations?

I am enjoying the dated but wide-ranging Bill Moyers: A World of Ideas: Conversations with Thoughtful Men and Women About American Life Today and the Ideas Shaping Our Future.

The book was finished in 1989 and most of the intellectuals interviewed grapple with the Reagan revolution one way or another. Moyers interviews 41 famous American intellectuals, and I was especially taken by his interview with iconoclast Noam Chomsky (pp. 38-58).

As part of his critique of American society of the 1980s, Chomsky stated that corporations should not be run by their shareholders—private owners or public stockholders. Instead corporations should be run by their employees [what we used to call, “the workers” --MS] because employees would get more share in how the corporation should be managed. Otherwise, a few wealthy shareholders that own most of the stock make the decisions on how the company is run. Chomsky stated that shareholder ownership is anti-democratic because the wealthy own more shares and thus control more votes. The poor are shut out of corporate governance. Chomsky’s argument, radical sounding as it may be, is not a Marxist argument—workers’ labor exploited by the capitalists. Rather, he complains that the workers (or employees) don’t control the corporations that they run. The corporate world is completely controlled by the rich, and corporations act in ways that favor that class and only that class.

Fortunately, employee-owned “cooperatives” do exist, so we can analyze them as an alternative to the traditional corporate structure of outside ownership.

Perhaps the most famous of the San Francisco Bay Area cooperatives, the Cheese Board Collective makes and sells pizza, breads and pastries, and cheese. It has operated in (the People’s Republic of) Berkeley, California as a “worker-owned collective since 1967” (website). Both the products and pizza restaurant are successful—lines stretch around the block every day at lunch and dinner—for good reason. The pizza is very good. The fresh ingredients are organic, local and vegetarian except for the cheese and given to you right out of the oven. The Berkeley community also wants to support the Cheese Board for political reasons (it closes every May 1st), and the Cheese Board donates to non-profit community projects. The Cheese Board’s employment application contains a brief description of their philosophy and how it works. (See also the Cheese Board’s self description)

The Cheese Board Pizza Collective is an independently operated adjunct to the larger Cheese Board Collective. Currently, we are a collective of sixteen people. Everyone who works at the Cheese Board Pizza is a member of the collective with equal decision-making power. There is no boss, manager, or employees—it is worker-owned. Everyone makes the same hourly wage, currently $21 per hour. We receive paid time off, medical and dental benefits. (http://www.cheeseboardcollective.coop/uploads/Pizza_Application.doc)

San Francisco Bay Area cooperatives try to support each other and the Israeli kibbutz movement was the inspiration for the Cheese Board Collective. Sheirin Iravantchi writes in the Daily Californian that the cooperatives share a philosophy: employee satisfaction and ownership are most important.

More specifically, by “giving members more freedom of choice and more conducive work environments, these cooperatives attempt to increase employee satisfaction rather than profit margins…”(Daily Cal, December 7, 2000)

Why are cooperatives so rare in the corporate world? Why don’t we any cooperatives among the larger corporations? I believe that there are a number of reasons. First the cooperative structure does not allow enough flexibility for rapid growth. A growing business must take risks, often taking on debt or a increased monetary investment from its owners or venture capitalists in order to expand. Members of a collective would be less likely to take entrepreneurial risk and unlikely to take money from outside investors.

Secondly, cooperatives hire new employees quite carefully if not painstakingly. Each new employee must serve as a generalist, not a specialist, and must work with everyone, not just within a small department. The cooperative’s employment style slows down the pace of hiring.

Third, only those in the bottom half of the labor pool would be interested in accepting a San Francisco Bay Area job for $21/hour with no possibility of promotion. It’s nice not to have a boss, but it’s also nice to be a boss. It is nearly impossible to buy a house in Berkeley or afford the finer things in life at $21/hour, even if $21 is a generous and superior wage for a food-industry job. The most talented in the labor pool may pass if that’s the best they can do.

The above three explanations show the inflexibility of cooperative labor. Ironically, some investors claim that many corporations are run for the benefit and enrichment of top management, not the shareholders, and CEO pay has reached astronomic levels. Stockholders elect a board of directors, and that board is supposed to monitor management expenses, so if there is a problem with executives grabbing too much of the company cash, it is the stockholders’ fault.

Let’s step back and compare the structure of for-profit corporations with cooperatives. Most corporations respond to the concerns of their owners, shareholders, which are, in order of importance, profitability (passed onto the shareholders through dividends and capital gains in share price), good citizenship and community. Profitability is necessary but is less emphasized in a cooperative. Cheese Board pizzas may be characterized as gourmet pizzas, the restaurant bakes only one type every day and the pizzas are not price competitive. The cooperative is less efficient than for-profit companies and its prices will be higher. (In the words of economists, the cooperative is inferior to the for-profit firm in both productive and allocative efficiency.) In a nutshell, the cooperative produces fewer goods and its prices are higher. Consumers spend more and receive less. Cooperatives have their place, but Chomsky is wrong. For-profit corporations do a better job raising consumers’ standard of living.

Postscript: Shaila Dewan's March 30, 2004 NYT article, Lose the Boss is worth reading for an update on co-ops and inequality.Jonathan Kauffman's August 9, 2015 San Francisco Chronicle article, Food Co-op Survivor Thriving for 40 Years gives the history and management structure of co-op Rainbow Grocery in San Francisco. Could it have thrived anywhere else?

My Dining Experience and Culture Change

I assumed that my childhood dining experience was the norm everywhere until I served, in my late 20s, as a counseling intern in a poor urban area of California. I co-facilitated a group of teens in a diversion program. Similar in philosophy to traffic school, the attendees avoided a worse alternative—juvenile hall—by attending sixteen sessions of group therapy. Most of the kids wanted to quickly get through the program and get on with their lives, but more than a few enjoyed engaging in macho posturing and making the therapist squirm. One time my partner went on vacation and I was on my own with seventeen teens, many of them well over 200 pounds with a recent history of low impulse control. My boss told me to call 911 if things got out of hand. Boy, that made me feel empowered! The group sensed my discomfort and I heard comments like, “I’d like to tear off, one by one, the fingers off that cop that hassled me.” “Have you ever done crack?” And my favorite, “Man, this group sucks.” Somehow I survived. Teaching high school was easy after these experiences.

One day I asked the group what they talked about at the dinner table. I received back seventeen blank stares. My more astute partner was familiar with inner city life, and asked, “How many of you eat dinner with your family at the same time?” None did. Instead they would grab something out of the refrigerator and eat it, in their room, alone. Taken aback, I realized that the family life of many inner city children was qualitatively different from mine. What glued these families together? Perhaps their family glue was less sticky than mine. My family’s dining experience was the centripetal force that held us together.

For my first seventeen years of my life, from birth to when I moved away to college, my family ate together whenever possible but especially at dinner. If someone was away or sick their presence would be missed. Dinnertime was when we kids told everyone about our day, usually what happened at school. Topics included who in class got in trouble for placing a tack on the “kiss up” girl’s chair; whether plants grow from the top or from the bottom; pi to ten digits; who got the weekly “room 13 citizen of the week” award; and who threw up during running drills in P.E. and who was forced to clean it up. If you weren’t talkative, you were angry at a family member or “something was wrong with you.” Religion and politics were also highly prized topics of discussion, and non-believers and political enemies were described in colorful and draconian terms as barbarians and evil-doers. Specifically, I remember a dinner time discussion that included the Vietnam War, President Nixon, and Eugene McCarthy after some Berkeley radical or reactionary tore off my father’s McCarthy for President bumper sticker. After a Christian missionary came to our door, we discussed a few differences between Christianity and our Judaism. I was a good son that agreed with his parents and as a devout junior Hasmonean and budding politician looked forward to dinnertime, hungry or not.

Indeed, when I started forming opinions of my own, the discussions became more heated. Our dinner table conversation would have made excellent court room training. We all used time-tested rhetorical techniques on each other, especially ad hominem attacks, and sarcastically questioned our opponent’s intelligence. Yet we children also learned that our opinions mattered and were valued and were taught how to think and retort quickly and sometimes cleverly.

Update: 
My pulse quickened when I found a New York Times article, Why Does it Matter that Families Eat Together? Sam Sifton writes that this communal time inoculates family members somewhat from depression, drug use, obesity and teenage pregnancy. The children do better in school. Read the article here.