Sunday, March 7, 2010

Economics 07/03/2010: Consensus governance and failures to compete

Yesterday I tweeted about the case of attempted suppression of academic freedom in France (see here). An interesting paper, published in February 2010 by the Department of Economics, Tilburg University, titled Academic Faculty Governance and Recruitment Decisions sheds some light on the potential impact of the practices of suppressing dissent within our Universities.

In this paper, the authors analyzed the implications of the governance structure in academic faculties for their recruitment decisions. It turns out that “the value to individual members through social interaction within the faculty depends on the average status of their fellow members.” Which, of course, can be interpreted in common English as ‘cronyism’ or ‘collusion’. “In recruitment decisions, existing [faculty] members trade off the effect of entry on average status of the faculty against alternative uses of the recruitment budget if no entry takes place [i.e. getting their own hands on the pot of cash].” The study shows that “the best candidates join the best faculties but that they receive lower wages than some lower-ranking candidates”. The main policy implication raised by the study authors is that “consensus-based faculties, such as many in Europe, could improve the well-being of their members if they liberalized their internal decision making processes.”

Now, I’ve said on many occasions that our consensus-driven model of academic staffing would have never allowed people like Friedrich Hayek, or for that matter Milton Friedman, to be given tenure in Ireland. This is true, because hiring decisions in Irish universities – and I am speaking here from evidence relayed to me over the years in a number of actual cases – are based on social cliques (often organized around political and internal agendas, with loose affiliation with certain political ideologies). Anyone falling outside consensus, or threatening to ‘rock intellectual boat’ of dogmatic thinking and vested interests would never be allowed anywhere near a permanent post.

Of course this does not mean that everyone hired through the consensus process is not up to their jobs. Certainly such an assertion would be wrong. But it does mean that Irish academia is missing on critical thinking - a key ingredient in knowledge creation.

Ditto for our public sector. One example comes to mind.

Last year, the Central Bank was hiring a very senior research director. Amongst the applicants, there was a certain senior employee of the US Fed who holds, in addition to his Fed role, several senior academic positions worldwide in the area of Central Banking-related research. This person already held an exactly comparable position in the Fed for over a decade. He also has a list of central banking-related publications that would exceed those of any other academic in Ireland. This person was not even short-listed for the CB position, which subsequently went through an internal promotion to someone who has no publications on the subject, never had academic or practical experience in the area at the same level, but is a life-timer of the Irish public sector.

Consensus-based hiring at work, folks…
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