In 2016, the University of Chicago’s welcome letter to the incoming freshman class of 2020 informed students that it would not support “trigger warnings” or a culture of safe spaces. The Dean of Students John Ellison declared that at the academic institution “…we do not cancel invited speakers because their topics might prove controversial, and we do not condone the creation of intellectual ‘safe spaces’ where individuals can retreat from ideas and perspectives at odds with their own."

Both Dean Ellison and the University of Chicago are brazenly at odds with many of this country’s institutions of higher education. At The Quintessential Centrist, we believe that they are correct.

Safe spaces are an outgrowth of both the feminist and LGBTQ movements as they provided a forum for those who felt marginalized from the norms of society. The idea was to be able to speak freely and communicate effectively without suffering vilification. Unfortunately, what was intended to create a protective environment has permeated the intellectual sphere to the point where, at best, divergence of opinion is stifled and freedom of thought is met with vindictive backlash.

Conservatives are now clamoring for the same, not least because they feel increasingly isolated and are now pushing for a safe space culture where they, too, can freely express their views without risking character assassination. This is an absurd and short-sighted response. An article published in New York Magazine on January, 5 2019 delved further into this issue. The journalist cited a work from National Affairs where arguments were presented by Frederick M. Hess and Brendan Bell from the American Enterprise Institute, a conservative think tank. The two scholars asserted that conservatives needed "an ivory tower of our own,” which is clearly a politically loaded turn of phrase. The insinuation is that safe spaces created by liberals are tantamount to creating idyllic and unrealistic isolation from the real world while also imposing intellectual restrictions of alternative points of view. While Hess and Bell are correct in referring to safe spaces as an “ivory tower,” fighting fire with fire won’t put out the flames of dissent.

The Quintessential Centrist rejects the concept of liberal or conservative-driven safe spaces. In our view, it defeats the notion of what free speech is intended to promote and implies that civil discourse, irrespective of political leanings, is a fundamentally unviable concept in America, a nation founded in-part on its differences. The immigrants who have made up this nation represent every race, religion and creed. Many, starting with the Pilgrims, came to this country to escape oppression -- be it of thought, religion, political leanings, gender bias, or homophobia. Interestingly, this chasm between the left and the right has been growing fervently since even before the election of President Donald Trump.

Last week, the Wall Street Journal (WSJ) highlighted Columbia University’s Masters In Fine Art (MFA) Program, the exorbitant amount of debt graduate students incur to complete their degrees, and the low-paying jobs that await them after school. Indeed, gargantuan loans and low remuneration have left a growing number of Columbia MFAs with piles of debt they have little chance of ever paying off.

The Journal did an excellent job explaining the conundrum MFAs at Columbia face. However, scant attention was paid to who should be held accountable – the school, the students, or some combination thereof - for a ticking financial time bomb that is unsustainable.

In our view, both the debt-laden students and Columbia University bear a portion of the responsibility.

Columbia University

According to Julie Kornfeld, Vice Provost for Academic Programs at Columbia, master’s degrees “can and should be a revenue source.” And, indeed, at Columbia they are. Over the last decade, the cost of an MFA at the prestigious Ivy League institution has risen by a greater percentage than for a Bachelors degree in the same discipline. However, a disproportionate amount of financial aid at Columbia is awarded to undergraduates. Said university president Lee Bollinger “undergraduates have the most moral claim to financial aid.”

A strong case could be made to buttress Bollinger’s argument. But that said, another reason Columbia steers a disproportionate number of graduate students towards loans is because it buoys the universities’ bottom-line.

Grad Plus Loan

The federal Grad Plus Loan program was enacted by congress ~15 years ago. The “advantage” of a Grad Plus Loan: a graduate student can borrow as much money as they want (caps are in place for undergraduate borrowers). Funds can be used for tuition, room, and board.

Interest rates on Grad Plus Loans can be as high as ~8%. This is onerous to the borrower but makes no difference to the school. The key stipulation is that the university receives the entire amount of the tuition upfront. If a borrower defaults, the school has zero financial risk. For a set number of years (typically around 25) borrowers pay a fixed percentage of their wages towards debt repayment. Any unpaid balance can be written off; taxpayers absorb the losses.

To set the record straight, this article will explore various themes such as “Colonization,” “Free-Palestine,” “Open Air Prison,” “Apartheid State,” “Genocide,” “Ceasefire,” and “Free-Speech.” The format of this blog post will differ slightly from our usual style, incorporating both facts and rhetorical questions.

Colonization

Jews have lived in and around the Middle East for thousands of years. Before 1948, there was never a “Jewish state” or a “Palestinian state.” In 1947, the United Nations (UN) proposed a Jewish state and Palestinian state. The Jews accepted, but the Palestinians, along with other Arab nations rejected the UN’s two-state solution and declared war on Israel.

Unlike in the United States, where Native American land was appropriated, Israel was established in 1948 through a United Nations (UN) resolution, not land theft.

For argument’s sake, let’s assume that everybody who denies history is right and Israel did steal the Palestinians’ land. If one subscribes to the notion that Hamas’ attacks, which specifically targeted civilians, were “justified” as a form of “resistance” because Israelis “stole” or “colonized” Palestinian land, ask yourself this question: If a group of Native Americans gang raped your daughter and then shot her in the face, would that be “justified” as a form of “resistance” because Americans stole their land?

If the answer is “no,” take a moment to reflect on why that is.

If your answer is, “Well, my daughter had nothing to do with the previous generation of Americans that stole Native American land,” then ask yourself this question: Did the babies Hamas murdered and teenagers they gang raped then burned alive, and children they took as hostages have anything to do with Israel stealing Palestinian land?

If your answer is “yes,” we suggest you seek psychological counseling.

On multiple occasions including but not limited to 1967, 1978, 1993, 1995, 2000, etc., Israel, in concert with other world leaders has offered/proposed land, a two-state solution, and multiple other initiatives for peace. Every time, these offers were rejected by the Palestinian leadership. This is not the fault of ordinary Palestinians; it is the fault of their corrupt “leaders” who depend on and exploit their hopelessness for personal gain and to remain in power.

Palestinians Should Indeed Be Free – From Hamas

In May 2021 we penned a blog titled “Palestinians Should Indeed Be Free – From Hamas.” It remains relevant. We wrote, “We have no gripes about anybody supporting the rights of peaceful Palestinians. However, if you want to advocate for ordinary Palestinians, one correct way is to vociferously condemn Hamas.”

Top henchmen at Hamas, Abu Marzook ($3 billion), Khalad Mashal ($4 billion), and Ismail Haniyea ($4 billion) are billionaires; many others are multi-millionaires.

Multiple choice: How did they amass such wealth?

A) Manufacturing and selling advanced semiconductors.

B) Winning Mega Millions.

C) Stealing from their own impoverished citizens.

The answer is (C). Hamas’ “leaders” steal money intended for the betterment of the Palestinian people and use the funds to enrich themselves. Multiple billions of dollars from the international community intended to build housing, roads, schools, bridges, power plants, water desalination plants, etc., in Gaza are stolen and find their way to Hamas’ leaders bank accounts for their own financial benefit and to procure weapons. To be fair, Hamas does spend a portion of the funds on infrastructure: they built a labyrinth of fortified underground tunnels for the exclusive use of their militants outfitted with advanced climate control features and communications equipment to store munitions, supplies, launch rockets, take hostages, and take cover when Israel defends itself.

Hamas then strategically blames Israel for Palestinians’ decrepit standard of living. “Look, no schools, no roads, no ports, no tunnels (for civilians), poor healthcare” and make bogus claims that Israel is “oppressing them.”

Open Air Prison

One argument “Free Palestine” protesters make is that Israel maintains a highly fortified border, requires onerous security checks for Palestinians to cross into Israel, and carefully monitors the flow of goods in and out of Gaza via their shared border. This makes life difficult and frustrating for Palestinians, some of whom reject Hamas and their ideology. All this is 100% true.

Another argument some “Free Palestine” protesters make is that while the atrocities of 10/7 were regrettable (other protestors think they were “exhilarating”), “you cannot look at them in a vacuum.” Ok then; why did a fortified border wall have to be constructed in the first place? Why do all those checkpoints exist? Why is the flow of goods closely scrutinized? And why does the Israeli government spend billions of dollars per year on these initiatives?

The reason is that Hamas, the terrorist organization that “governs” Gaza openly states in their governing charter (you can find it online) its intent to destroy Israel and murder Jews. (They obliged on October 7th.)

If you lived in country A, and the government of country B’s stated objective was to wipe country A off the face of the earth and murder its Jewish citizens (~20% of Israel is Arab), would it not be prudent for country A to employ every available resource to prevent country B from carrying out its stated intentions?

“Getting a college degree has long been integral to the mythic promise of American opportunity. Yet for millions, it’s become exactly that, a myth---and a very expensive myth at that. The average student leaves school carrying $30,000 in debt. More than 40% of students who enter college fail to earn a degree within 6 years, and many of them wind up in the workforce lacking the credentials and practical skills required to get ahead.” - Bloomberg

A few weeks ago, following an exhaustive investigation by the FBI, dozens of privileged individuals including some public figures were charged by the United States Department of Justice with crimes that included racketeering, fraud, money laundering, obstruction of justice and conspiracy to defraud the United States. The offenses encompassed parents creating fictitious profiles of their children in order to bolster their chances of gaining admissions to selective universities, including highlighting athletic achievements for sports they did not participate in. Some high schools didn’t even field a team for the sport the prospective student was being profiled for! Other despicable actions included paying college entrance exam proctors to supply answers to tests, and outright bribery. Subsequently, both liberal and conservative factions of the mainstream press have had a bonanza highlighting the legitimate inequities regarding the college admissions process.

The Quintessential Centrist agrees that the college admissions cheating scandal is newsworthy. A few in the media have even written about how ultimately, it’s the children who will bear the brunt of their parents’ maleficence. That’s true; however much more widespread problems warranting investigation, thoughtful debate, and corrective action are the overbearing cost of a college education which has consistently outpaced inflation, the increasing amount of debt students incur to secure a college degree, and the fact that a growing number of employers (and students) maintain that the education our colleges provide is not commensurate with the skillsets they are seeking in new hires.

In an effort to frame this slow-moving crisis – and make no mistake, it is a crisis – consider these jarring statistics:

• In 2018, ~70% of college students took out loans to pay for their education.

• “According to figures from the Federal Reserve Bank of St. Louis, between January 1989 and January 2016…the cost to attend a university increased nearly eight times faster than wages did…”.

• Since the late 1990’s, colleges and universities have raised the price of education faster than any sector except healthcare.

• There is $1.56 trillion dollars of student loan debt outstanding. Aside from home mortgages, student loan debt represents largest consumer debt segment in the United States. To put $1.56 trillion dollars of student loan debt in context, consider that total credit card debt in America totals ~1 trillion dollars; and keep in mind, there are many more credit card holders in The United States than student loan borrowers. Hence, not only is the notional value of student debt roughly 50% larger than credit card debt, the dollar amount of student debt per borrower (~$30,000 per person) is exponentially higher than for credit card borrowers (~$5,700 per person).

"It is indeed ironic that tenured economics professors lecture students about the wondrous efficiencies of a free market, but function in a closed ecosystem of their own. When the time comes to discuss oligopolies and cartels, what better example to use than themselves?" - TQC

When the Quintessential Centrist published a piece on the student loan crisis, it touched on some ancillary topics which deserved greater attention. Tenured positions for college and university professors was amongst the drivers to which we alluded that were unnecessarily driving up the cost of a college education and thus, leaving a generation of young Americans bogged down by student debt. For the purposes of this discussion, we provide a brief history of tenure, assess some of its pros & cons, and ultimately delve into whether it makes sense to maintain what many see as an arcane system.

Tenure, which essentially is lifelong guaranteed employment, first emerged in the US in the post-Civil War era as a means of emphasizing the importance of higher education. At the time, the tenure model adopted by German universities was favored by American educators and that model has remained fundamentally unchanged to this day. In the US, the practice of tenure was institutionalized with the founding of the American Association of University Professors (AAUP) in 1915. At inception, freedom of thought and speech without the threat of persecution was one of the central tenets of the AAUP. Faculty members were protected from termination should their academic research and resultant conclusions not be met favorably. In other words, this was the academic equivalent of First Amendment rights.

Not to bore our readers with exhaustive history, but this is a salient and fundamental piece of the story. By 1940 the AAUP formalized a Statement of Principles on Academic Freedom and Tenure. The Statement defined tenure as “(1) freedom of teaching and research and of extramural activities, and (2) a sufficient degree of economic security to make the profession attractive to men and women of ability. Freedom and economic security, hence, tenure, are indispensable to the success of an institution in fulfilling its obligations to its students and to society.” Proponents of tenure point to the wording of this statement as it emphasized both academic freedom as well as economic security.

Furthermore, tenure can add to the cache of institutions of higher education. The process by which to obtain tenure is rigorous. It typically requires in-depth and meticulous independent research and approval through a peer review process, which hopefully leads to a candidate being awarded a PhD. As more published, recognized experts in their respective field add value to a college’s reputation, a positive feedback loop ignites, which leads to the most qualified students vying for admission, driving benefactors to write big checks, and the school to build even more comprehensive research facilities. This attracts the best and the brightest in academia looking for a place to hang their hat and more prospective students to apply.

According to U.S. News & World Report, Harvard University is the 2nd best university in the United States, trailing only Princeton. Earlier this month, however, Harvard made a failing grade. In an act of cowardice, the university caved into a group of students who expressed disdain that Harvard law Professor Ronald Sullivan was among a group of attorneys representing accused sexual predator Harvey Weinstein.

This resulted in Harvard removing Professor Sullivan from Winthrop house, an undergraduate residence hall where he lived and served as a faculty dean. Mr. Sullivan was subsequently stripped of his title as faculty dean - an unacceptable and humiliating way to lose a title he earned ~10 years ago when he became the first black faculty Dean to lead an undergraduate residence hall at Harvard. His wife, Stephanie Robinson, a faculty dean in her own right and also a lecturer at Harvard, sadly became collateral damage in the debacle. Unfortunately, she too was removed and stripped of her title as Dean as well. While Professor Sullivan and his wife will continue to teach at Harvard Law, they are no longer welcome to serve as undergraduate Deans.

That Harvard acquiesced to a group of students’ fantastical claims that having Professor Sullivan continue in his roles at the University was anxiety-producing and contributed to a hostile and unsafe learning environment, is absurd.

In our view, Harvard, a clear global education leader needs to re-examine its priorities and its raison d’etre. Colleges and universities are supposed to shape mores while simultaneously embracing freedom of individuality and choice. Regrettably, by removing Mr. Sullivan, Harvard created an idyllic and unrealistic isolation from the real world for a coddled group of undergraduates. In this case, it also imposed unreasonable professional restrictions on a distinguished faculty member. Although Professor Sullivan was under no obligation to do so, he took a proactive (and costly) step and resigned from Weinstein’s defense team (there were rumblings about Sullivan being concerned for the safety of his family). In the spirit of maintaining order and continuity at Harvard, following these campus protests he made this difficult decision. Ultimately, it was all for naught, as his employer neutered him anyway.

One of the costliest and, unfortunately, consistent mistakes many investors make is to purchase a stock and employ a “stop” price, where they will sell their stock if it declines by a predetermined amount, typically 5% or 10%. Arbitrary stop prices potentially preserve some capital in the short term, but often prevent investors from making multiples of the money they saved from using the “stop” price, in the long term. In fact, utilizing a “stop loss” will almost guarantee that an investor will grossly underperform an appropriate benchmark consisting of a basket of stocks. The reason for this is simple: almost every single publicly listed stock that doubles, triples, quadruples, quintuples or even sextuples over a one, two, five etc., year time horizon declines at least 20% in between doubling, tripling, quadrupling or quintupling, etc., at least once, and often, many times.

Absent a corporate takeover, the results of a late stage clinical trial for a small biotech company, or another atypical event, stock price gains (and losses) are almost never linear. Let’s use a few real-life examples to help frame our argument:

Over the last five years, the shares of Netflix (NFLX) have gained over 500%. However, in between quintupling during half a decade, NFLX suffered a 30% drawdown in March/April of 2014, a 38% sell-off in August of 2015, and plummeted 45% in 2018. Had an investor sold NFLX during anyone of those three corrections they would have missed out on a large percentage of NFLX’s price appreciation. Over the last five years, the shares of Amazon (AMZN) have risen over 550%! However, in between almost sextupling in those five years, AMZN lost 28% in January/February of 2016, 13% in August of 2017, 16% in March of 2018 and 33% in the 4th quarter of 2018. Had an investor dumped AMZN at any point during those four acute sell-offs, they would have forfeited a substantial sum of money.

Worth noting is that this phenomenon is not just limited to technology or biotech stocks. It applies to blue chip companies as well. For example, the shares of Bank of America (BAC) have doubled since 2014. But in between generating a 100% return over a five year period, BAC corrected 17% in April/May of 2014, 17% in August of 2015, 40% in January/February of 2016, 25% in June/July of 2016 and 33% in 2018. Had an investor panicked and sold BAC on a negative headline during any one of the examples listed above, they could very well be sitting on a realized loss, despite BAC doubling over the last five years. Even stodgy, safe and steady Johnson & Johnson (JNJ), one of the lowest volatility stocks in the S&P500, has grinded out a gain of 33% over the last 5 years (investors were also treated to dividends). However, in between rising 33%, JNJ traded down 10% in September/October of 2014, 10% in January of 2016, 10% in the last 6 months of 2016, 14% in January of in 2018 and 14% in December of 2018. If an investor sold JNJ during any one of these drawdowns, their investment portfolio might very well be in need of a JNJ band-aid.

“…what’s transpiring in the retail foreign exchange market is indicative of oligopolistic practices, not capitalism…” - TQC

Billions of dollars are at stake. The targets: The uninformed general public traveling overseas. The perpetrators: The monopolistic foreign exchange (FX) booths situated throughout airports and tourist hotspots & retail banks. No informed person would ever use an FX changing firm (or bank) to source foreign currencies if they had any idea how badly they are being fleeced, especially when an ATM provides far superior rates. Let us provide a window into the world of foreign currency exchange.

First, we must put the foreign exchange market into context. It’s by far the largest and most liquid market in the world. In fact, it dwarfs stock and bond trading. All major currencies trade against one another globally. Two common markets are the "spot" or current market and the "futures" market. Both markets are very liquid and offer buyers and sellers instantaneous access to foreign currency. In Friday's market for the $U.S. Dollar / Euro ($USD/EUR): One Euro could be bought for $1.1319 U.S. Dollars. Hence, the market for the $USD/EUR looked like this: Bid $1.1319 Offer $1.1320. The Euro could be bought for $1.1319 and sold for $1.1320, a difference of less than a penny. Furthermore, the amount of currency bid for and offered at these prices, just fractions of a penny wide, amounts to millions of dollars. Far more than any retail customer would ever seek to exchange at an airport kiosk or retail bank.

FX booths and bank branches sometimes offer to exchange foreign currency for "no commission." Instead, their take amounts to far more than a reasonable standard commission. This is what typically transpires: A foreign exchange booth or retail bank branch offers $U.S. Dollar / Euro but widens the market - the difference between the bid and the offer - out. The “markup” they take amounts to well in excess of any commission any broker could ever expect to make on any foreign exchange trade. For example, vs Friday's quoted current market, they might post that they would buy Euros for $1.02 and sell Euros at say $1.24 when the inside market (see above) is $1.1319 bid and $1.1320 offer. This is absurd. FX booths and banks are in essence locking in a ~10% markup from unsuspecting customers, possibly more, on a trades that should cost less than 1 penny to execute.

On Monday November 9, the pharmaceutical companies Pfizer and BioNTech announced positive Phase 3 results for their coronavirus vaccine candidate. Data suggests their vaccine is over 90% effective in preventing the transmission of COVID-19. This was better news than most experts had anticipated; virologists were hopeful for 70% efficacy and a growing consensus was that a 50% success rate would have cleared the bar for approval.

Additional safety data should be ready within two weeks. Assuming the vaccine is officially deemed safe – there have not been any major problems in trials involving tens of thousands of volunteers - Pfizer and BioNTech will apply for emergency use authorization from the Food & Drug Administration (FDA) by month-end. Immunizations could begin in December; there are 50 million doses (25 million vaccines) ready to be deployed. A vaccine requires two jabs. The firms aim to produce 1.3 billion doses in 2021.

Results from another biotechnology company called Moderna are expected imminently. Hopes are elevated for another dose of positive news; the properties of Moderna’s vaccine are similar to that of Pfizer and BioNTech’s.

A Dose Of History

Throughout history, some of the most important medical breakthroughs involved the successful development of vaccines that neutered an array of highly infectious diseases. Despite some misinformation or shall we say, “fake news,” spread by anti-vaxxers, approved vaccines are very safe and extremely effective.

Below is an abbreviated history coupled with interesting supplemental information on some of the most important vaccines ever developed.

1796: Smallpox. The smallpox virus was caused by two related pathogens, Variola major and Variola minor. Smallpox was one of the most infectious, debilitating, and deadly diseases known to mankind. ~30% of patients who became infected, died. Many of those who survived were left permanently disabled and or disfigured.

Although attempts at inoculation date back to the 1500s, the British physician Edward Jenner is credited with developing the first (albeit rudimentary) smallpox vaccine. Doctor Jenner observed that milkmaids infected with a mild virus called cowpox seemed to be immune from acquiring smallpox. To test his hypothesis, Jenner deliberately infected a small child with cowpox. He accomplished this feat by scratching the boy’s arm and introducing the open wound to the cowpox virus taken from the pustules of an infected milkmaid. A few months later, Doctor Jenner attempted to infect the boy with the deadly smallpox virus via pus taken from an existing smallpox victim. He was not successful. Jenner’s initial suspicion was correct; the cowpox virus had indeed conferred immunity to the deadly smallpox virus. Until a more efficient smallpox vaccine was developed in the mid 1850s, antibodies from the cowpox virus helped protect people against smallpox.

Unfortunately, mankind did not gain an upper hand on the smallpox virus until the back half of the 20th century, when a massive coordinated global inoculation effort resulted in the disease officially being declared eradicated in 1980 (the last naturally occurring case was documented in 1977; the last outbreak in the United States occurred in 1949). To this day, smallpox is the only disease that has officially been 100% eradicated; thank goodness. To put in perspective how deadly smallpox was, consider the following data: In the last 100 years of its existence – 1880 to 1980 - smallpox is thought to have killed ~500 million people. We had to triple check this estimate to ensure it was accurate.

"An investment in knowledge pays the best interest" - Benjamin Franklin

“Time” is a limited resource that has alternative uses. As such, it should be allocated to where the expected returns are highest. “Experts” opining as to why the stock market is moving in one direction or another on a day to day basis represent one of the biggest wastes of human capital. Few endeavors have consumed more energy and money, that’s been empirically proven to be impossible to prove: consistently predicting short term moves in the stock market and explaining why those moves happened.

People tend to feel vulnerable when they can’t draw definitive conclusions as to why something happened. Why did “X” cause “Y” to do this or that? How did “X” and “Y” affect “Z”? The market and its plethora of “experts” serve as a defense mechanism for the human mind. Because there is so much information and events continuously happening, an “expert” can easily "justify" the rationale behind these events. The truth is that absent a major binary event like a terrorist attack or a viral outbreak, nobody can ever have a high or even a reasonable degree of certainty as to the short-term directional movements in the stock market. Usually, “no idea” is the most specific and accurate answer one can offer regarding many market moves.