Re: Why does tenure exist?
Don't federal and state workers effectively have tenure? Isn't it virtually impossible to fire a government worker covered by civil service in America? DBL It's hard to fire government employees, especially civil service employees, partly because we wanted to remove most of these jobs from the political spoils system. Another factor is that government's top management does not worry about their firms going out of business nor do they expect to maximize their own profits or careers by maximizing production or minimizing costs. They know they can better get their customers to shell out their votes and campaign donations by promising more services than by cutting costs. There is a more limited or less enthusiastic market for cost-cutting. Also, making government employees' jobs seem less secure will tend to lose them the votes of government employees, and that is a lot of votes. For education, because supply of teachers tends to exceed demand, tenure will naturally have great appeal for prospective employees. If some colleges or universities decided to eliminate tenure, by how much would they have to increase pay or costly fringe benefits to attract and keep the best talent? Private employers have occasionally tried something like tenure--it has been widely aspired to in Japan since WW2 (although only the larger employers have been able to apply it in practice) and IBM was for many years famous for the degree of employment security it offered--but the cost-pressures of a highly competitive marketplace have eroded these policies. Some business management theorists believe that lifetime employment policies were one of the secrets to the management success of Japan's better corporations. Certainly, some firms (as well as some non-profits) must find that, under the right circumstances, employment guarantees offer substantial benefits to employer as well as employee. Otherwise, such policies would be even less common than they are. Tenure-type practices seem only to be workable when the organization has ways to buffer itself from extreme swings in financial conditions. Educational institutions, in addition to government and private subsidies, may have large numbers of untenured personnel who could be sacrificed' in a financial pinch. Big corporations typically have access to generous lines of credit at favorable rates, and, in Japan, usually employ large numbers of temps who can be dismissed in hard times. (To buffer its own employees, the government can either sell bonds or raise taxes during tight periods.) When lifetime employment is viable for the hiring institution, it is a cheaper way to attract and maintain the best talent, it makes it economically feasible to invest heavily in employee training, trade secrets or other sensitive information is more secure, skilled personnel are not lost during cyclical downturns, and employees will offer less resistance to innovation, automation, and re-organization. One downside is that fear becomes a less effective motivator; but the most serious downsides are that the cost of retaining employees during cyclical downturns may not be fully compensated for during cyclical upswings, that structural adjustments may make some employees permanently superfluous, and that the cost of retaining employees during a downturn may lead to a liquidity crisis before the cycle turns up again. One area where tenure is very common is in family businesses. They can use flexible wages, minimal debt, and the option of flexibly redeployeeing personnel (family members) elsewhere during a crunch. The joint household, a fairly common institution in India and some other parts of the world (although rare in European cultures), might be viewed as an economic institution with tenure-type employment policies. Are there any studies of the economics of joint households (or communes such as those of the Hutterites)? If so, they might shed some further light on the conditions necessary for tenure systems and lifetime employment policies. ~Alypius Skinner
Re: Why does tenure exist?
In a message dated 10/5/02 11:10:41 PM, [EMAIL PROTECTED] writes: Private employers have occasionally tried something like tenure--it has been widely aspired to in Japan since WW2 (although only the larger employers have been able to apply it in practice) and IBM was for many years famous for the degree of employment security it offered--but the cost-pressures of a highly competitive marketplace have eroded these policies. At one time (1970s) the Big Eight public accounting firms offered something down the tenure side of the employment spectrum for new accountants. Not only did the firms never fire during busy season, but they typically kept virtually all new professional staff for the two years that most states require for certification (getting the CPA license). Partners, who in reality are more akin to shareholders than traditional partners, virtually never got fired. Some firms, like the now-infamous Arthur Andersen, went even further. If at some point the partners decided that an accountant no longer merited the partner track, rather than firing the accountant outright they tried to place him or her with a client, keeping Andersen alumni in the Arthur Andersen family. I worked in their Denver office more than a decade and a half ago, and I still get Arthur Andersen Alumni Bulletins mailed to my home. By the mid-1980s, however, the Big Eight (which became the Big Six and then the Big Five as they consolidated in the face of lawsuits and intense competition from second tier firms) began to fire more frequently and not try to place former employees at all. My office fired a tax professional right in the middle of busy season, and then me right after busy season, after merely 9 months with them. They fired me in part, ironically, because one of the partners there had engaged me in a great deal of non-billable recruiting from the university as which I'd gotten my masters degree in taxation, a masters program which had a poor view of Andersen even then and had even tried to persuade me not to work there. After Andersen fired me I'd planned to go chew out the partner who'd had me do all the nonbillable recruitment, only to discover that he'd been fired early that day--after uprooting his whole family and moving it across the country to do exaclty what the firm had him doing. So much for tenure at Arthur Andersen. David Levenstam
Re: Why does tenure exist?
One possible explanation for tenure is that university departments are to a large degree worker managed firms. One problem with a worker David Friedman David's explanations make sense, but I'm empirically skeptical on two grounds: (1) Why is it that only educational worker managed firms have tenure? I could be wrong, but why don't kibbutzes have tenure? or Berkeley's bohemian co-ops? (2) I am beginning to doubt that worker managed firm describes the university. I'm not faculty (yet!) but from what I understand, the university administration has great power in the university. If they want, administrators can change standards for tenure and cut budgets and they control the physical plant, and other stuff. The worker managed lable applies just to the department. There is no reason the administration has to allow tenure to exist. Fabio
Re: Why does tenure exist?
Don't federal and state workers effectively have tenure? Isn't it virtually impossible to fire a government worker covered by civil service in America? DBL
Re: Why does tenure exist?
Obviously the supply side of the academic labor market values this and is willing to forgo some money compensation to get it. Evidently the cost of producing this amenity for academic employers is generally less than the value to the employees so there are very few schools that don't promise tenure. You might ask why people value tenure so much or why it is cheap for schools to provide it, but again I don't think that is too surprising. Academics value their freedom and tenure guarantees a reasonable minimum income if you decide to think unconventional thoughts for a while or pursue a high risk long term project. On the other hand, academic employers still have a fair amount of power over their employees short of firing them. Three percent inflation a year for a decade takes a nasty gouge out of ones real earnings, and of course tenure doesn't protect you if you seriously misbehave. - - Bill Dickens William T. Dickens The Brookings Institution 1775 Massachusetts Avenue, NW Washington, DC 20036 Phone: (202) 797-6113 FAX: (202) 797-6181 E-MAIL: [EMAIL PROTECTED] AOL IM: wtdickens [EMAIL PROTECTED] 09/18/02 01:13AM Seriously, why does tenure exist at all? I know the motivations for tenure, but why isn't it competed away somehow? I would like to know what economic process ensures its continued existence. Fabio
Re: Why does tenure exist?
I don't see why any of the usual motivations would be competed away, if they're true: - up-or-out contracts efficient in presence of certain forms of asymmetric information - gives senior faculty incentive to hire junior faculty better than they are - academic freedom provided would cost a significant compensating wage differential if not offered Chris Auld Department of Economics University of Calgary [EMAIL PROTECTED] On Wed, 18 Sep 2002, fabio guillermo rojas wrote: Seriously, why does tenure exist at all? I know the motivations for tenure, but why isn't it competed away somehow? I would like to know what economic process ensures its continued existence. Fabio
Re: Why does tenure exist?
William Dickens wrote: Obviously the supply side of the academic labor market values this and is willing to forgo some money compensation to get it. Evidently the cost of producing this amenity for academic employers is generally less than the value to the employees so there are very few schools that don't promise tenure. You might ask why people value tenure so much or why it is cheap for schools to provide it, but again I don't think that is too surprising. Academics value their freedom and tenure guarantees a reasonable minimum income if you decide to think unconventional thoughts for a while or pursue a high risk long term project. I have a lot of doubts about this functionalist account of tenure. We generally see that civil servants have a lot of job security, and their jobs don't have a lot of creativity associated with them. Does the near-impossibility of firing high school teachers have anything to do with their creative freedom? While the factors you cite may have some marginal importance, I think the main reason is that people who run non-profits usually want to avoid rocking the boat rather than excel. If they tried to improve faculty incentives, they would suffer a lot of headaches without getting a big raise. Government subsidies and private charity give universities the cushion they need to avoid being put out of competition by performance-oriented for-profits. -- Prof. Bryan Caplan Department of Economics George Mason University http://www.bcaplan.com [EMAIL PROTECTED] He wrote a letter, but did not post it because he felt that no one would have understood what he wanted to say, and besides it was not necessary that anyone but himself should understand it. Leo Tolstoy, *The Cossacks*
Re: Why does tenure exist?
raise. Government subsidies and private charity give universities the cushion they need to avoid being put out of competition by performance-oriented for-profits. Prof. Bryan Caplan While I share Bryan's skepticism, I don't buy his argument because universities/schools are the only non-government organizations that have tenure. Does the Ford Foundation or the YMCA have tenure? Or how about churhes? Do priests or rabbi's have a version of tenure? There may be de factor tenur, because no one wants to rock the boat, but these institutions have not evolved legal rights pertaining to tenure. Fabio
Re: Why does tenure exist?
One possible explanation for tenure is that university departments are to a large degree worker managed firms. One problem with a worker managed firm is that the workers may spend their resources on political rent seeking--trying to make sure they are in a dominant coalition--rather than producing. Tenure lowers the stakes for tenured faculty--and the tenured faculty are the voting body for at least many of the important decisions. I can still try to politic to make sure I get a raise and the people I don't like don't, but I don't have to politic to keep my job and there is no point to politicing to get tenured colleagues I don't like fired. -- David Friedman Professor of Law Santa Clara University [EMAIL PROTECTED] http://www.daviddfriedman.com/
Why does tenure exist?
Seriously, why does tenure exist at all? I know the motivations for tenure, but why isn't it competed away somehow? I would like to know what economic process ensures its continued existence. Fabio
