Cathleen Black and the Management of Education

Mayor Bloomberg has named Cathleen Black, a “superstar manager” with a background in magazine publishing, to be Chancellor of New York City’s public school system. The dispute about her qualifications has unfortunately gone astray, and the New York Times, the four “prominent management experts” it consulted, and the state’s education commissioner, have not helped to clarify the real issue involved.  The experts, according to the Times, cited the examples of “corporate chieftains who hopscotched successfully from industry to industry” as relevant examples for what Ms. Black was being asked to do, citing as examples executives who went from making food and cigarettes to making computer equipment. The acknowledge some differences in management issues between the public and private sector – different stakeholders, differences in “culture,” but generally holding her “skill set” might be up to the job. But they ignore the central issue.

Private industry and public education have different purposes. The goal of private industry is to produce profit.  Whether the means to it is making cigarettes or computers, the bottom line is the same. The product sought is not the quality of the cigarette or the computers, but the size of the profit. Thus there is a common experience involved, a common task: the production of profit, and that is largely transferable from one industry to another. But profit is not the goal of public education. As Thomas Freedman points out in the same issue of the Times, there are major disputes in education as to whether the goal is the transfer of knowledge as measured by testing or the nurturing of a critical intelligence, to oversimplify a complex heavily debated issue. Ms. Black’s abilities in producing a bottom line profit in no matter how many different industries does not help here.

It is unfortunate that the Times saw fit only to ask management experts to comment on Ms. Black’s qualifications, implicitly seeing the issue as one of management competence, rather than educational competence. The management experts might at least have raised an important issue in most discussions of good management: clarity on what the goals of the enterprise being managed basically are. They did not; too bad. But should not educational experts of equivalent prominence have been asked to comment as well?

David Steiner, the state Commissioner of Education, did not help either in apparently interpreting the state statute requiring education experience and credentials to be satisfied if a second-ranking employee of the education department that does have such qualifications is appointed to serve under her.  That is exactly backwards. Ms. Black’s management expertise is indeed important in education as well as in industry, to make sure the goals of the enterprise are efficiently pursued. But that addresses the means, not the ends. The top position must provide leadership that is clear on the ends, the goals of the enterprise; having someone else in charge of managing the efficiency of the way those goals are pursued is fine, but that is secondary to the main task. Steiner might have suggested to the Mayor that Ms. Black might make an excellent second in command, under a leader with the kind of education background the state statute envisages at the top.

Peter Marcuse

[Responding to “Experts See a Tough Road for Schools Chief Nomineee” by Alison Leigh Cowan, New York Times, New York Times Nov 28, 2010, p. Metropolitan Section, p. 9.]

Social Capital

Bourdieu was very clear: social capital augments the power of holders of real capital. It is class-related, and appropriately ancillary to real capital. Putnam and conformist writers use it to pretend people who
don’t have real capital are not so badly off, after all, they have social capital.

It’s a way of blaming the victim: what, you’re unemployed? Go use your social capital to get a job, or start a business, or something. Go bond or go bridge, but don’t bother us.

Certainly networking and solidarity are important, maybe crucial. But they function, for working people, in opposition to real capital. Words matter; if everyone has one form of capital or another, if baby-sitting for your grandchildren is a form of capital, social capital, for your children too, then capital is a good thing, they  shouldn’t knock it, or tax it, or object when it gets bailed-out.

Investors Expect Profits, But Unemployment Remains High. But? Because!

Investors expect profits BECAUSE Unemployed remains high.

Re: Investors Expect Strong Profits (Christine Hauser, New York Times, July 12, 2010, Business Section, B1.

Investors expect good profits, but employment lags, the story says. “But?” Maybe “”because?”

“…the rebound in corporate profits has not translated into a rebound in jobs. Many companies have cut costs and increased productivity,” the story reads. Exactly. What kind of unconscious repression of logical thought is involved not to recognize that the cutting of costs and increase in productivity comes precisely from laying off workers and speeding up the work of those that remain (increasing productivity)? Labor costs are a major component of cots, reduce them and you increase profits, strategic  layoffs are good for business’ bottom line, they make stock prices go up. And employment go down. Investors know that, even if journalists leave it unrecognized.

Listen to Louis Uchitelle, of the New York Times, who has it right:

The recession camouflages a far
more insidious and long-lasting corporate strategy:
Instead of temporary pay cuts to get through a few
tough months, major corporations have something very,
very different in mind.

As NY Times economics reporter and The Disposable
American author Louis Uchitelle wrote on Sunday, major
firms are on the verge of consolidating a long-sought
goal with a two-tier wage system:

    The managers of some marquee companies are aiming
    to make this concession permanent. If they are
    successful, their contracts could become blueprints
    for other companies in other cities, extending a
    wage system that would be a startling retreat for

    Though union officials said they could not readily
    supply data on the practice, managers have been
    trying to achieve this for 30 years, with limited
Firms See Long-Sought Goal in Sight: Major Pay Cuts

by Roger Bybee
In These Times
November 24, 2010

Even the editorial page writer of the New York Times understands it:

“Of late [sic!], profits and related stock-market gains have been fueled not by increased revenues but by lay[offs and other cults.s.” New York Times, January 19, 2011, p. A20.

Blog #1b – The Myth of Wealth Accumulation through Homeownership

Homeownership for most is only wealth accumulation the same way regular savings in a savings account is, and perhpas riskier.

The Myth of Wealth Accumulation through Home Ownership

Home “ownership” consists of a bundle of rights :in most people’s minds, they include the right to occupy, the right to exclude others, or privacy, the right make physical changes to the unit, the right to remain in occupancy, or security of tenure, the right to pass on to one’s heirs – and the right to sell at a profit.  Of course all these rights are limited: by zoning rules which regulate what kind of business can be done there,, set-back requirements and building codes that regulate what can be done physically with the property, perhaps parking requirements, environmental rules, laws against creating a nuisance (noise, other forms of conduct, fire codes – and in most cases obligations to opay a mortgage, which, as people are increasingly finding, limit security of occupancy quite painfully.

And yet many people believe that home ownership is particularly valuable because it is a form of wealth accumulation, wealth that will be become a stepping stone to perhaps starting a business[1] or paying for retirement or even just a new car, by virtue of the fact that its likely to go up in value and thus be a good investment, and  even if it doesn’t, as one pays off the mortgage one can take out an home equity loan and have funds for other desired purposes.  But those are two quite different hopes: benefiting from increases in property values, and being able to take out a home equity loan whether there’s an increase or not.

On home ownership as an investment that will increase in value, accumulating wealth reliably over time: the facts make that hope a shaky one, particularly today, with over four million foreclosures and an estimated 14 million homes “under water,” with mortgages exceeding their declining values. Studies over the long term suggest that’s not just now, but homes have always been “Shaky Palaces,” as one careful study noted,[2] which pointed out that even where losses could be avoided, gains did not compare favorably with investments in other areas, even with conventional savings account.  And that should be the real test: will wealth accumulate more rapidly from investment in a home, or in alternatives? The evidence does not support ever-increasing prices of homes, and certainly raises questions as to the desirability of such an investment  as an investment over other forms of investment.

But taking out a home equity loan, or holding on to a home over the years as a form of security for one’s old age, do not rely only on speculative value appreciation. As a mortgage is paid off, equity accumulates., and indeed for many that provides a safety net for old age and possible illness. But what is really happening here? Payment on mortgage principal are simply a form of regular savings; as Michael Stone has pointed out,[3] one could easily envisage an arrangement where interest payments on a mortgage remained steadily payable and instead of paying off interest the equivalent amounts were consistently saved, and invested with returns that might well be greater than the slowly declining interest on the mortgage.

The frequently heard statement that “the wealth of most Americans is in the homes they own” is a very deceptive formulation. A home is not usable wealth, not a disposable resource thatcan be usedfor whatever its occupant wants, the way a bank account or a stock certificate or, indeed, a marketable title to someone else’s property is. A home, at least for most people, is what they rely on for shelter, safety, comfort, a place to rest, to eat, to entertain, to enjoy.  They have it for its use value, not for its exchange value – or at least need it first and foremost for its use, not for what they could get if they exchanged it for something else, cash or a car or a boat. When you take $400 out of your savings account to buy a refrigerator to use, your usable “wealth”  isn’t increased by $400, it’s down by $400; if a rich diabetic pays $5,000 for a dialysis machine on which he has to depend, he isn’t $5,000 richer; if anything, he’s $5,000 poorer, less possible resale value after his death. If someone buys a house for $100,000 with a $90,000 mortgage and a $10,000 down payment from savings, he’s plus $10,000 in equity and down $10,000 in savings, and as he pays off the mortgage principal his equity goes up as his alternative savings go  And he can’t use that equity the way he could use the equivalent savings, as an investment in some profit-making enterprise. You don’t” accumulate wealth” by buying a house to live in, except to the extent you’re paying off the principal on the mortgage instead of saving and investing the equivalent amount elsewhere.  If there’s any advantage to buying/owning a house rather than a savings account, it’s in the favorable tax treatment payments and profits on sale (if any) get, an unwarranted distortion of a progressive income tax system.[4]

So treat housing as something that is to be used to meet critical human needs, not something to be bought and sold speculatively for the profit its limited supply might produce  on a sale, or for the forced savings it requires at the cost of alternative investments. Limited equity ownership, mutual housing associations, etc., are a way of providing such non-speculative housing.

Peter Marcuse

July 9, 2010

[1] The unfortunately widely purveyed view of Hernando de Soto in a developing world context. Se, among other discussions,  Marcuse, Peter. 2004. “Comment on Donald A. Krueckeberg’s ‘The lessons of John Locke or Hernando de Soto: What if Your Dreams come True?” Housing Policy Debate, vol. 15, No. 1, pp. 39-49. Available at:

[2] See Elliott Sclar and Matthew Edel, Shaky Palaces, a multi-year study of home prices in the Boston area.

[3] In Stone, Michael. “Alternatives to the Mortgage Trap: Household Savings and the Mutual Housing Association.” In Progressive Planning No.182, Winter 2010, pp. 22-25.

[4] See Peter Dreier and John Atlas’ several writings on the millionare’s tax deduction.”

The Rich Default on their Mortgages

The difference between speculative ownership and residential ownership

The New York Times headlined its article:  “Biggest Defaulters on Mortgages Are the Rich” (David Streitfeld, front page, July 9, 2010).  It seemed surprised. It shouldn’t have been.

There’s an important point that needs to be stressed in the account: these are largely investors engaging in strategic defaults. not  “homeowners” defaulting on mortgages. They are, to put it simply, landlords; these aren’t their homes that they are so heedlessly giving up. They are speculators in real estate, assuming, as the article says, that “real estate would never drop.” When the plain-talking owner of a $2 million house in Houston, quoted as a “plain-talking exception,”  says, “I just decided to let it go, give it back to the bank. I just didn’t feel like it was a good investment,” this isn’t a homeowner speaking, but a businessman talking about making or losing money.

The ownership of housing has two characteristics: it provides a home, shelter, privacy, hoped-for safety, a reflection of personality, for a resident homeowner, and it is an economic asset for the person having title to it. While the two are usually the same person, these two attributes of “ownership” are quite separate, although often confused. If you consider a house only as an asset, of course you would let it go if that’s the most profitable way of dealing with it. If you live in it as your only residence, your considerations are quite different.

If we could only keep these two aspects of ownership separate:  protect homeowners who have mortgages on homes that they need to live in, and take a quite different position as to landlords who own housing only on the speculative hope its value will rise, we’d be way ahead of the game. Of course resident homeowners also would like to make a profit when they sell; but that’s a different order of priorities from being secure in having a place to live. Limited equity ownership, community land trusts, and similar forms of ownership might be one answer.

Peter Marcuse

See the hyperlink:

Community Benefits Agreements and their Limits

The need for Community Benefits Agreements highlights some fundamental weaknesses in the public planning and decision-making process, weaknesses frequent in the planning of mega-projects and thus particularly prominent in the use of community benefits agreements to deal with their impacts.

The Limits of Community Benefit Agreements

The need for Community Benefits Agreements highlights some fundamental weaknesses in the public planning and decision-making process, weaknesses frequent in the planning of mega-projects and thus particularly prominent in the use of community benefits agreements to deal with their impacts.

The problems start at the beginning. Land, once government owned, has been transferred to a private developer, without a publicly-formulated plan for its use. The well-known flaws in the old urban renewal process are repeated: the initiative in planning comes from the private sector, and the planning for the project is essentially privatized in the developer’s hands. Yet  the very first step is already a substantial subsidy given the developer from the transfer to it of a public property of very substantial value, in this case for $1. That was the point at which a fully open and democratic planning process should have taken place, with the development of alternative plans for use of the property, public hearings, full resident participation, etc.

Further, that process, when it does finally come into full play, neglects fundamental issues then belatedly and inadequately dealt with by the community benefits agreements. The economic issues, including those directly addressed by the Agreement here, should be considered in the planning process from the beginning. The economic benefits of a development, including the wages paid in its construction, and wages of the those working within it after it is developed, the description of the profits to be made from its development and use, are all matters of fundamental public concern. It has been a long time since planning was held only to be relevant to the design and use of buildings and land; key economic issues need to be much more specifically and frontally addressed.

Further, the concept of participation in planning is one that has been substantially developed over time, with modern techniques of communication and presentation, community forums, formal hearings, inter-active planning and feed-back on plans, technical assistance to community groups, wide and effective out-reach to make sure those affected, directly and indirectly, have the opportunity to influence the outcome. CBA’s, at their best, are a makeshift attempt to remedy earlier defaults in participation, and themselves often provide only a limited reach for alternative means of making the planning process truly democratic.

Many aspects of conventional city planning in many cities still reflect a time when planning  land use planning, and little more. The justification for such an approach is long past. The frequent reliance on community benefits agreements reflects an awareness of that fact, but a CBA is but a crude and jerry-built response, better than nothing, but not a long-term solution. The whole planning process should be restructured to reflect the contemporary reality.

Community needs likewise need to be introduced much earlier and much more specifically in the planning process. When a proposal is presented for the construction of 10,000 units of housing, largely luxury condominiums, an initial question ought to be the need for such units, compared to the need for other types of housing or other types of development. That is particularly true where, as here or in many other mega-project cases, there is a substantial investment of public funds in the project, whether directly, by the sale or assembly of land, by the provision of infrastructure, by tax concessions (including tax increment financing, which is after all a re-allocation from the general public purse to a particular project of expected tax revenues), good planning should weigh priorities, take into account social needs, look at the distribution of costs and benefits and pursue appropriate and democratically debated and decided priorities. A community benefits agreement is a belated last-ditch effort to make up for the failure to do so earlier.

Community input should not have to wait until a plan has been substantially agreed upon between a developer and a city before major participation takes place. Specifically, professionally-prepared alternatives should be available, prepared with full participation by the interested parties, in an effort, not to achieve consensus, but to clarify alternatives and issues. Development of alternatives should not be left to last minute and sometimes desperate community scrambling to defend a particular alternate to a proposed plan, but should be part of the initial planning process, and a part of the responsibility of the public planning agency – often best done when it includes technical assistance to community grou0s in planning as it proceeds. Alternates should not wait to be developed as minor modifications to an existing plan negotiated at the end of the planning process with limited input and formulated as a community benefits agreement.

Consideration might be given explicitly to raise the economic and community issues typically dealt with in community benefits agreements during the environmental impact review process. That process has slowly become an effective, if sometimes awkward, part of the overall planning process, and often is the main source of information about plans and proposals. Typically it will reference alternative ways to deal with problems that are foreseen, and a good EIS may provide substantial isight into what the larger alternatives might be. Typically also, at least increasingly, the social environment is held to be part of what needs to be addressed in an EIS, and often, although less explicitly, the economic impacts. Formalizing the issues to be considered in all EIS’s might be a way of helping improve the planning process, especially for meg=-projects, with the public sector leading the effort Negotiation of community benefits agreements is perhaps a reflection, among other things, of the inadequacies of full information and social and economic and environmental considerations earlier in the planning process, but is a very belatedly way of doing so.

Community benefit, after all, should be THE purpose of any good planning process, not a an afterthought to it, not a tail desperately trying to wag the dog of development


this is a short version of my cv, which no one should read

Peter Marcuse, a planner and lawyer, is Professor Emeritus of  Urban Planning at Columbia University in New York City. He has a J.D. from Yale Law School, and a Ph. D in planning from the University of California at Berkeley. He practiced law in Waterbury, CT, for twenty years, specializing in labor and civil rights law, and was majority leader of its Board of Aldermen, chaired its anti-poverty agency, and was a member of its City Planning commission. . He  was  thereafter Professor of Urban Planning at UCLA, and President of the Los Angeles Planning Commission and member of Community Board 9M in New York City… His fields of research include city planning, housing, the use of public space, the right to the city, social justice in the city, globalization, and urban history, with some focus New York City. He has taught in both West and East Germany, Australia, the Union of South Africa, Canada, Austria, Spain, Canada, and Brazil, and written extensively in both professional journals and the popular press.  His most recent books include, co-edited with Ronald van Kempen,  Globalizing Cities: A New Spatial Order?, Blackwell, 1999, and Of States and Cities: The Partitioning of Urban Space, 2002, Oxford University Press, and most recently,  a co-edited volume, Searching for the Just City, Routledge, 2009 . His current projects include a historically-grounded political history of urban planning, the formulation of a theory of critical planning, including the attempt to make critical urban theory useful to the U.S. Right to the City Alliance, and an analysis and proposals to deal with the subprime mortgage foreclosure crisis in the United States.