Audit Notes: student loans and startups, Clinton’s cronies, mountains of salt

The Atlantic's critical look at a WSJ report

The Atlantic’s Jordan Weissmann has a good takedown of a Wall Street Journal story reporting that ballooning student loans are hampering entrepreneurial types from starting businesses.

Surely that’s true. If you have several hundred dollars a month worth of loans to pay when you start out, you’re going to be less able to spurn a “real” job and start your own business. The problem is in the anecdotes chosen to represent the trend:

While I, too, lament Christine and John’s inability to crank out industrial-scale batches of Brooklyn-appropriate cupcake decorations, I think we can all agree that a couple who are simultaneously pursuing a second bachelor’s degree in Zoology and an MFA are, at best, a cautionary tale about the perils of hipsterism, not a reflection of our economic age.

Here’s the WSJ:

Levi Belnap and Alex Pak graduated from Harvard Business School in May with $250,000 in student loans between them. The pair have received $200,000 in seed capital for FindIt, which helps users locate emails and documents on their iPhones. With loan payments coming due this fall, they will soon have to seek additional funding. “It’s basically forced us down a path, for better or for worse because of that debt burden,” says Mr. Belnap, 29, who is married and has two young children. “We have real responsibilities that we have to face.”

And Weissmann:

Well that’s some real Eugene O’Neill-level tragedy right there. Two heroes with Harvard MBA’s are forced to get another investor for their startup so that one of them can feed their children while pursuing their crazy dream of…creating another email app. We’ll call it “A Long Day’s Journey Into Diluted Equity.” Philip Seymour Hoffman can play the lead when it hits Broadway…

Worrying about the impact of grad school loans on dudes gunning for private equity dollars seems a bit beside the point, no?

I’d question the WSJ’s numbers too. The paper reports that the average graduate’s debt load is $40,000. But FICO, which ought to know, says that number is $27,000.

— Speaking of Democratic candidates and 21st century corruption, Cory Booker’s got company. Check out this NYT reporting on glib Clinton crony Terry McAuliffe, who’s running for governor of Virginia.

He cofounded a green-car company, but it’s been a disaster, despite loads of corporate welfare from Mississippi and Clinton’s influence:

Mr. McAuliffe’s GreenTech career — he resigned as chairman last December to focus on his campaign — fits a pattern of tying into the Clinton network.

His old friend Bill Clinton attended the ribbon cutting at GreenTech’s Mississippi plant in July 2012. Mr. McAuliffe hired Anthony Rodham, Mrs. Clinton’s younger brother, to oversee investor recruitment…

A former executive who worked in the office shared by GreenTech and Gulf Coast, where Mr. Rodham held the title of president, spoke of rarely spotting him. “I don’t recall seeing him on e-mail chains, on conference calls; I don’t recall him having any material involvement whatsoever,” said the former executive, who spoke on the condition of anonymity to protect relationships with other GreenTech figures.

GreenTech got major funding through the EB-5 visa program, which lets rich foreigners buy their way into US residency with $500,000 to $1 million investments, and now the SEC is probing whether the company abused that. Meantime Homeland Security and Chuck Grassley are investigating whether a top DHS official allowed McAuliffe to pressure him into approving visas.

The Washington Post has a very good report too on how McAuliffe used his clout and connections to boost GreenTech. Here’s an internal email at the state of Virginia’s economic development agency:

“We have great doubts that it is a legitimate project, but because of the players involved are being responsive,” wrote Paul H. Grossman Jr., director of international trade and investment at the VEDP.

What a mess.

The New York Times has a nice profile of Evgeny Morozov, who at the age of 29 and not long since he came from Belarus, has become our premier technology-industry critic:

In person, too, Mr. Morozov can quickly turn adversarial, and not only when he threatens to stop talking because his interlocutor’s knowledge “is too limited.” He is as likely to spot a contradiction in his own thinking, saying something like, “You are going to catch me here, but who cares?”

Beyond his gnawing arguments and the way he delivers them, Mr. Morozov has benefited from growing public doubts in the prevailing belief in a “high-tech, techno-libertarian utopia,” said Ian Bogost, a professor of digital media at Georgia Tech and among the few writers in the field Mr. Morozov counts as a friend and ally. “This anxiety is one that needs voices who can identify it and find other paths. The reason why it is him is that he has been willing to pull no punches and be as brazen and direct as his targets.”

Mr. Morozov was born in Soligorsk, a small mining city whose name means “mountains of salt.” His quick answer to the question of why he wanted to come to the United States: “Do you know anything about Belarus?”

I also like this quote from a Times book review of Morozov’s latest, which says he “is taking up the cause of human values against those of the machine.”

Has America ever needed a media watchdog more than now? Help us by joining CJR today.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum. Tags: , , , ,