Minutiae Sometimes Have Value.

Like most teachers, I am a walking Jeopardy game.  Children ask lots of interesting questions.  I think it is good educational practice to tell children you don't know something or to help them find the answer themselves, but I do generally try to find answers to their questions.  And whenever I am planning a new unit of study I try to learn more about the topic than I plan to teach.

Some develop this skill/habit/eccentricity through teaching; others collect strange facts and obsessions like magpies.  I am one of the latter.  One of my minor sideline interests is risk analysis, and through this I am perhaps overburdened with all kinds of information about Enron.

Strangely enough, this comes in rather handy when discussing education reform.  One of the wealthy deformers attempting to manipulate education like it's demand for electricity in a badly-deregulated market is John Arnold, ex-Enron trader and all in all not someone whose life experience leads me to think he has any place in education policy.

Apparently I'm not the only Enronista who's teaching, because a recent comment thread at the Answer Sheet (now closed) brought it up:

"educationlover54" begins:
Enron used to practice a strategy with their traders they called "Rank and Yank." Each year they would rank their traders by the amount of money they made the company, and then fire the lowest 10-15 percent. Since it was because of the traders that Enron went bankrupt, we can see that "Rank and Yank" wasn't all that good in the long term for the company.  

What RTTT is doing seems equivalent to Enron's "Rank and Yank" policy.


"educator53" chimes in:
Rank and Yank ensured that the most brutal Enron traders would continue their tricks. It pressured the traders to do things that were unethical in order to create false earnings for the company, such as the rolling blackouts that occurred in California.

And then "ramrants" gets irritated:

Enron didn't go bankrupt because of the traders. It went bankrupt because of the deriviative accounting practices they implemented. This is the reason why all the finance and accounting executives are currently in prison and not their traders. 
 
The interent [sic] is a wonderful thing. Where else can you spread your ignorance to the masses?


I'd like to respond to "ramrants": Yes!  You certainly spread your ignorance on the internet today!

Because ramrants?  Is WRONG.  Among the many reasons Enron went bankrupt were its traders:

1. Enron's energy manipulation shenanigans opened them to huge liabilities, and they had to first hold cash and then give it away to settle regulatory issues at a time they could not afford it.
2. Traders went to jail and accepted plea bargains to avoid prison because of their illegal manipulation of energy markets.  In fact, the first Enron plea deals originated in Portland - among electricity traders - prior to the bankruptcy.  (Besides, now that Andy Fastow's out of the halfway house, I am quite certain Jeff Skilling is the only Enrat still in prison.)
3. Traders at Enron rose to positions of power, taking their dubiously legal and morally bankrupt strategies to the company as a whole.  Enron's last President?  A trader.  The person who perhaps  lost the most of Enron's cash while making off the best?  Also a trader.
4. Enron's traders demanded massive "retention" bonuses as the company bled cash, even though the "retention" they were offering was a few months at best.  This made it difficult for Enron to raise cash because its burn rate was worsened.
5. Enron's trading book was essentially valueless; despite the traders' claims, they weren't sitting on any cash to save the company.  Nor did their unit survive after its purchase - UBS laid off the traders and then closed the book.
6. And most critically, Enron's traders burnt through the cash Dynegy gave Enron as part of their merger agreement.  When Dynegy realized the cash was gone, the Hail Mary merger failed, and Enron had no choice but to declare bankruptcy.  That's right: in the end, the traders bankrupted Enron.

I don't know if ramrants is simply misinformed or one of John Arnold's commenting identities.  Regardless, Enron as a whole - traders, Rank and Yank, mark to market, you name it - all of it was built  around the value of being number one no matter the cost.  That's why the elevators showed the stock price.  That's why the traders ran the asylum.  That's why ludicrous deals with great but fake numbers got approved just before annual bonuses.

Enron was built around the idea of absolute, cutthroat competition.  It was a brutal and hostile workplace.  In that environment, moral lapses and cheating became commonplace, even honored.  Honesty got you lousy bonuses and recommendations to find work elsewhere; coming up with ways to bankrupt Californians and giving them catchy names like "Death Star" got you big bucks.  And we can all see how that played out.  John Arnold may have a lucrative career and plenty of cash on hand to bring Enron's values to education, but most of Enron's rank and file employees lost everything.

So in the end, Enron does matter.  Its values are those we see in education reform.  That those values are bankrupt and destructive goes unmentioned or ignored.  I don't think we can allow that: we need to fight the kind of ideology upon which Enronesque deformers rely.

And that's why being an Enronista does still come in handy.

Ad Hominem: Latin for "I don't want to deal with reality."

There is this attitude that we are supposed to take big dollar donations to education at face value. "It's about the children!", you see. And that's true enough, I suppose - although whenever I hear "It's about the children" I cringe, because if someone feels the need to distinguish their input into education by its child-centricity, they must assume that all other stakeholders are not all about the children.*

Any discussion about the values that these individuals and groups appear to espouse in their work is verboten.  Don't like how Deformer X makes money?  Think their industry is antithetical to free, public education?  Prepare to be accused of arguing against straw men.

What nonsense!  The ideals that underlie business interests that engage in education projects are obvious.  Indeed, they regularly state that schools should be like businesses.  They bring in business titles (CEOs, not principals, etc.).  They yammer about free markets and choice, about the power of competition.

These are corporate, capitalist business ideas.  It's what the deformers know, and what they believe needs to happen in education.  So why can't we also look at the actuality of their thought, the base of their ideas?

I think we have to.  Free markets may be wonderful things.  Alas, I'm afraid that John Arnold and his merry band of traders at Enron preferred market manipulation to real competition.  Although no one has ever linked performance bonuses to improved performance, I'm sure nice fat extra checks are quite exciting.  But I note that the performance that required multi-million dollar bonuses was so short-sighted and built on such false premises that we are in a financial crisis.  A long view suggests that these performance bonuses were not justified by objective data.

Going deeper, I think it's fair to ask if the corporate culture in which the deformers thrive is appropriate for our schools.  I'd say it's not.  PRCs and similar employee evaluation systems support the survival of the few and competition over teamwork.  I am obligated to teach all of my students and to ensure that each one masters Kindergarten standards.  I don't get to "fire" or refuse to teach the ones who "just don't get it".  My students need to learn to support each other, to work together and to be active participants.  These are key values for a cohesive, civil democratic society.  They are not the skills prized at hedge funds.

It's a cultural mismatch, and one with very clear outcomes.  We can run our schools like businesses to the detriment of communities and most kids.  A few superstar learners will come out just fine, though.  Or we can run our schools like schools and provide good outcomes for the vast majority of students.




*As I understand deformer talk, they are all about the children.  The dread unions are all about the big big cash dollars and child-destroying that due process rights bring.  The public education system as a whole is about destroying society through low standards, corruption and liberal ideals.  How it is that I am all about the money while hedge funds are all about the children seems factually invalid, but I'm sure they have some quantitative analysis to explain how I am actually becoming extremely rich while they are toiling away on pennies, all FOR THE CHILDREN.

Know Your Deformers: John Arnold

For a number of reasons too boring to recount here, I am an Enronista (if you will).  I have read each and every mass market book on Enron, including the really badly written ones by former employees unassisted by coauthors or ghostwriters.  I've seen the movie and read a number of technical papers about the company.  I've even read the Powers report and some of the similar investigative findings.  I can recount in great detail various financial shenanigans, badly-thought business plans, corruptions and deadly sins that led to Enron's ultimate failure and I have strong opinions about who the most guilty are.

All these details actually come in handy these days.  A number of Enron's financial crimes are largely the same ones committed by today's financial criminals.  I'm not shocked by the inability of our government  to indict, prosecute and ultimately imprison jerk-collar criminals: as yet, there have been eighteen guilty pleas and four criminal convictions in the Enron case.  Once the Supreme Court's latest ruling lets Skilling get free on a "too stupid to understand how my business works" argument ("honest services"), Andy Fastow and his Star Wars memorabilia will be the only Enrat left serving at a Club Fed.

But I digress.

Also, some of the Enrats have decided that their merry free marketeering will be just as fantastic for all in education.  Chief among these is John Arnold, whose eponymous foundation makes big grants to organizations like Teach for America and The New Teacher Project.  He's also handed big chunks of cash to Houston ISD to develop teacher performance assessments and is one of Michelle Rhee's top secret private funders drawn together to pay for the possible new salaries under her Blame the Teachers IMPACT contract.

You see, John Arnold is a big believer in pay as an incentive.  This is why he personally took eight million dollars - $8,000,000 - as a performance and retention bonus after Enron's collapse (while it was still trying to sell itself to Dynegy, whom it did not exactly tell about these fun time payments).  This totally incentivized him to...leave what was left of Enron and its trading book in less than a year.

Well, clearly Mr. Arnold knows retention bonuses don't mean anything, which is probably part of his problem with my due-process rights.

Mr. Arnold is also a gambler.  In less than three months, he managed to go from up $200 million to down $200 million while working as an Enron trader.  This apparently gives him real insight into gambling on unproven and statistically invalid methods of assessment.

If I were held to such a standard, I'd have lost my credential by now.  I have due-process rights, not dumb-process rights.

And most critically, Mr. Arnold has attitudes antithetical to a free public education system that wants the best for all its students.  His philosophy cannot allow for a system of participatory, community-based endeavor with an end goal of success for all.  It gets in the way of winning, you see.  I base this off statements John Arnold made in evaluating the performance of other traders.  Since you might not guess this by reading the statements, let me assure you that his comments were meant positively.


"...learning how to use the Enron bat to push around the market"
"market manipulator...force markets when it's vulnerable"
"further exploit our dominance"

...so much for a free market among the Enrats.  Mr. Arnold can't even be held to his own Randian nonsense.  He doesn't want a free market; he wants a market he controls - or at least one he can game.

The issue is not criminal conduct.  The issue is whether someone who prizes such a me-first, you-never attitude, who apparently deserves a performance bonus no matter what his performance is and who gambles with incredibly high stakes is someone whose philosophy is what we want in our schools.

Personally, I think Mr. Arnold's philosophy is the short-sighted, reptilian-brain impulse that underlies a lot of our current financial and societal problems.  I want our public schools to nurture learners who are creative problem solvers who approach those around them with empathy.  I want smart students who reflect on short-term and long-term outcomes for themselves and for the world around them.

These are skills that the Enron bat crushes.