Education

We are about to start another school year and we will begin to hear complaints about excessive classroom sizes, crumbling buildings, ill equipped classrooms, poor graduation rates, poor performances against other countries, and of course pleas for more money to solve all those problems. 

The truth is that this money will be spent to mostly line the pockets of political contributors, pay excessive salaries to administrators, lots of studies to see why our school system is failing, and a host of other non-educational related things. Very little of it will find it’s way into the classroom and the salaries of those dedicated teachers on the front lines. Let’s face it, the education system in this country (and most of the world) is broken, and throwing money at it will only compound the problem.

The problem is twofold. First it has become a very profitable way to feed off the public trough. While it might be very difficult to pass a bond issue to improve an intersection or build a government office building, school bond issues usually pass quite easily. Additionally, legislators are always loth to block school related legislation so even ill conceived funding bills pass easily.

Most school systems have more administrative staff than teachers, and a large proportion of those get paid far more than the teachers who actually do the heavy lifting. Additionally since these administrators have little actual work to do they spend their time  dreaming up ways to impede and restrict the teachers from doing their job effectively. A prime example of this is the “standardized test”. Which is used to “evaluate teacher’s performance”. While I agree that some method of evaluating teachers effectiveness is useful, the way that those tests are set up forces teachers to teach students how to pass those tests, rather than useful real skills. In short we have far too many chiefs and not enough indians. 

The second part of the problem is that the curriculum and the teaching methods are the same that they have been for the past several hundred years. The world has changed mightily in the past century and a huge amount in the past 20 years. If we conclude that the purpose of school is to prepare children to be employable, and good members of society, we have to realize that both of those things are completely different than they were even 20 years ago. For example, there is little need for cursive writing and long division skills. Most people write on keyboards and have calculators to do math. While I don’t advocate dropping writing and math from schools, they need to be deemphasized in favor of more useful skills such as keyboarding, computer operation, and skills related to analysis of problems so as to be able to use the tools we have available rather than being to calculate complex math in our head or on paper.

Another thing that has seems to have gotten lost, is the ability to write coherently. Since that is something that is difficult to check on a multiple choice standardized test and is time consuming for overworked teachers to grade, It has received a bit of a deemphasis in today’s classroom. The written word has become even more important in today’s world, where most communication is via text (no longer handwritten but text nevertheless). Clear, concise, communication is more important than ever. Being able to write and of course read and understand the written word is more important than ever. Yet we have a crisis where 3rd graders can’t read or write reasonably well, and the administrators want to advance them anyhow because it’d look bad on their record if they had too many failures to advance. Which is worse, holding a child back or making them take a summer remedial reading class, or setting them up for failure down the road? 

While “No Child Left Behind” sounded good, the result has too many times been “slow everyone to the lowest common denominator”. Which pushes the bright students into boredom and teaches the average students that they don’t have to work hard to meet expectations. In short it has dragged the whole system and a couple of generations of our children down. It’s high time to adopt an “Everyone to the Best of Their Abilities” mantra. With computerized courses being able to allow students to go at their own pace in learning, and the ability of each student to have his own iPad type device, every student should be able to progress at their own pace. Teachers, freed from route teaching, can spend their time on individual instruction and encouragement. Progress can be easily measured without standardized tests, and will free the students and teachers from the stress and wasted classroom time preparing and taking these largely meaningless tests. Most importantly, individual progress can be assessed, and remedies applied frequently, rather than at testing time, when it’s likely too late.

A serious flaw in the system is that it is run by academicians. They got their higher education from people who became teachers immediately after graduation after getting their education from people who became teachers immediately after graduation and so on. Seldom has there been someone in the chain with real world experience in industry or business. Given the rapid pace of change in the world we need teachers that teach our children the skills that are useful to make them productive in the real world. Let’s involve outsiders in textbook writing, and curriculum planning, and invite in guest teachers from time to time. Lots more hands on learning would be a good idea too.

It’ll take some creative work to finance the new equipment and a lot of effort to alter the curriculum. But, in the long run, we’ll have better educated kids more able to get good jobs and a lot fewer dropouts. Also, it'll give those underutilized administrators something productive to do.  I think, ultimately, it won’t cost any more than the current bloated, ineffective system if we can keep the money-grubbers out of it. 

Florida v. George Zimmerman

The Jury has reached a verdict in the case of George Zimmerman and Trayvon Martin. A lot will be heard of about how unfair the verdict was, and that we are allowing racism to run rampant in this country. Since I didn’t hear all the testimony, and the information that I have has been colored by the news media, I have to defer to the jury’s opinion. I trust that they will be able to live with their decision. Whether that decision was absolutely correct, or was influenced by all the publicity, or botched by incompetence of the prosecution is something that I’m sure will be endlessly debated in the media and on line for months. But the verdict is in and we must accept it.

My take on what happened is that two people saw something that, in each of their views of the world, alarmed them, and they reacted to an imagined threat. Fear overruled common sense, and the outcome was unfortunate in the extreme. My heart goes out to the Martin family for their great loss. 

The only silver lining in this is that it makes us reexamine our own reactions to someone who is different than us. Why, in a mixed race neighborhood, (or anywhere) would a black teenager walking home be viewed as anything out of the ordinary? I can see that, in spite of the vast strides we have made since the 60s, our perceptions of other people are still colored by appearance. Some of that is fed to us by the media. How many more times have you heard “the suspect is a black/hispanic/Muslim etc.” than “the suspect was a white/Protestant”. 

After the Oklahoma City bombing I never once heard any mention of Timothy McVey’s religion. There were certainly no threatened or actual burnings of Methodist churches, like there were of mosques after 9-11. After all it is more dramatic if the villain is a ......... (Insert race/gender/age/religion/sexual preference here) than a clean cut well dressed person of our race/gender/age/religion /sexual preference. So we are trained to equate different race/gender/age/religion /sexual preferences with villainy, and therefore all ......... are suspect. It is that perception that we have to overcome. 

It has been 50 years since we struck down  “separate but equal” and got rid of “No Colored Allowed”, or “Back of the bus”. It’s high time we stopped judging people by appearance and started using the same value system for everyone, regardless of race/gender/age/religion /sexual preference.

We need to examine our own feelings. Do we somehow fear the unknown or different? If we were walking along a dark street and came up on another person or someone was walking behind us, would our perception of what we see, or imagine, color our emotional response to the situation? Of course it would. It’s only human nature. The important thing is to temper our reactions. If the threat is only in our perception, then leave it there, perhaps some caution is in order, but don’t let our imagination place us in a situation where we overreact and harm ourselves or someone else.

I’m reminded of the song in Rodgers and Hammerstein’s South Pacific “You’ve Got to be Carefully Taught”.

You've got to be taught To hate and fear You've got to be taught From year to Year It's got to be drummed  in your dear little ear You've got to be carefully taught You've got to be taught To be Afraid Of people whose eyes  are oddly made And people whose skin Is a different shade You've got to be carefully taught You've got to be taught Before it's too late Before you are 6 or 7 or 8  To hate all the people  your relatives hate You've got to be carefully taught

Well, I propose that we can be untaught hate and fear, and to embrace all people as equals and judge everyone as an individual. 

Let us make this Trayvon’s legacy, that we overcame our prejudices and began accepting everyone as valuable human beings, regardless of race/gender/age/religion/sexual preference, and embrace those differences, for adding spice to our lives, instead of being a threat.

Immigration Reform ???

I see in recent news that the government has decided to implement “immigration reform” by building a bigger fence and hiring more border guards to protect us from what? A bunch of hard working people who are willing to do those jobs that most americans sneer at? 

We only have to look at East Germany during the cold war to see how effective fences are at preventing people from seeking a better life. They used 20 foot concrete walls,  mine fields and the guards shot fence jumpers on sight. Hopefully we aren’t quite to that point, but even at that, it was a miserable failure at its intended purpose and blighted the economy of East Germany for years. 

They say its purpose is protection from terrorists and drug cartels, and is a matter of national security. Well, The drug cartels will either tunnel under, fly over or bribe their way through. The terrorists will fly in on commercial flights or pay the drug cartels to use their infrastructure to get in. 

Keeping weapons out? Last I heard, we were the third largest exporter of weapons to terrorists. They have no need to bring them in, just buy them here. OK, maybe a suitcase Nuke might need to be imported. You can bet anyone with one of those has plenty of resources to get it past a fence and a few border guards, or bypass the southern border entirely and bring it in along a coast or via Canada.

So we are back to the people who simply want a better job and a better life. I’m sure that most of them would be much happier staying home, if only those better jobs existed there. 

You can argue that, useless as it is, at least it creates jobs. Yes, short term ones building the fence. Most of those will (I bet) go to immigrant laborers, because, being short term heavy construction in some inhospitable parts of the country, they will be shunned by most Americans. A lot of relatively high paying jobs right across the border just increases the incentive for the immigrants to come across the border to seek work. 

The long term jobs will be the border guards, and the support infrastructure to support them. Thats all well and good, but there is no potential for those expenditures to expand the economy. They are simply a drain on our already stressed federal budget.

Now if we took those billions of dollars budgeted for the fence and guards and put half of it into improving useful infrastructure in the US (i.e. roads and bridges, WiFi nationwide, solar and wind power etc.) we’d create just as many long term jobs, and the result of those expenditures would contribute to the economic well being of the country for years to come, instead of a useless folly of a fence which will be riddled with holes in a few years and whose maintenance will further drain our resources. 

If we then take the other half and invest it in improving the economy of those countries where those illegal immigrants come from we’ll remove the motivation for them to cross the border. Problem solved, and we don’t end up looking stupid.

Economic Stimulus... Who Are They Kidding?

Well, the news is full of our president campaigning for his “economic stimulus” bill. Which any thinking American can see is his way of having the taxpayers dump $447 Billion into the reelection campaign. The one crippling failure in the current administration/congress’s record is the total failure to stimulate a recovery from the economic crisis that admittedly they inherited. What better way to erase that failure than to have the economy make a sudden improvement in the election year. Or, failing that, be able to point to the opposition and blame them for not passing the package and thus transfer the blame to them for the failure to recover.

Now I don’t disagree that we need the government to do something to stimulate the recovery. But really, this is a hodgepodge of things that sound good, but have unintended consequences, are not needed and/or are pouring good money after bad, and are designed to line the pockets of political contributors. What the whole package completely lacks is any kind of inspirational, long term goals that will stimulate the economy beyond the next election.

As I have said in other blogs, economic crises are mostly psychological. Something happens that makes people fear the future so they quit spending and hold on to their money, which slows the economy and makes them hold on to it tighter. This lack of “churn” (money changing hands) compounds in a vicious circle and the economy collapses. The way back out is to inspire people with hope for a bright future and expectation of continued income. They will then open their pockets and the money will “churn” faster and the economy booms. This is the key component of economic stimulus, not creating short term jobs that last only as long as the government funding holds out.

As far as I can determine from the vague statements the president is making, the key components of the stimulation are infrastructure improvements and education. These were obviously picked as being easily “sold” projects. After all, who can argue with better roads and better education. The vagueness and lack of detail in the proposals are unsettling however. What “infrastructure improvements” are we going to pay for? More “bridges to nowhere” or something that is really needed, like fixing deteriorating bridges before they collapse. 

I do not disagree with the need for infrastructure improvements and I agree it is a good way to spend money for short term relief, so long as it is spent for worthwhile projects. However, it will have little long term effect on the economy beyond maintaining the status quo. It will need to be monitored closely as most times in these cases a chunk of money is handed to the states to spend as they will, and a lot of it gets wasted on projects to glorify local politicians and gain them campaign funds for their next election, rather than what’s best for the people in general. Unfortunately, infrastructure improvement has a low-to-medium economic “churn” factor and thus won’t give us the boost we need to get the economy back on track. However, it is needed and useful in the short term and should get a share of the stimulus money. Lets just make sure the money is spent in the US buying made in American goods. No sense stimulating China’s economy.

It is no secret that this country’s educational system is failing. It needs to be fixed, but throwing a large chunk of money at it will not fix the problems, in fact it will make them worse. For a long time the business of education has been a gravy train for a lot of people. The amount of money that is spent on non education related things is a massive drain on the system. We are fortunate in having a dedicated corps of teachers that do the best they can to educate our children in spite of budget cuts, growing classroom sizes, and crushing regulations. All the time watching the “administrators” take luxury vacations, work in lavish offices and pull down huge salaries, while making up rules to make the teachers jobs impossible. More money will just let more hogs feed at the trough and won’t improve the system or our children’s education. We need serious reform and acceptance that we live in a very different world than the one where the current educational system was designed. Some things are simply obsolete and forcing our kids to learn them, when it’s obvious that it’s worthless, merely reinforces the student’s feelings that school is a waste of time. I’ll rant about education more in another blog. The bottom line is that, without a complete overhaul of the educational system, adding more money to it is simply throwing good money after bad. Furthermore, it isn’t the inspirational stimulus we need. Even if we could magically make the educational system work, all we’d get is a bunch of PHDs flipping burgers if the jobs aren’t out there.

As I have said in other blogs, we need an inspiring, long term goal to get the economy moving. There are several things that I can think of that meet the requirements of inspiring and stimulating as well as having the potential to spin off sub industries that will stimulate the economy for years to come. Manned missions to Mars, or moon bases smack of the 60s space program and could provide the stimulus and spinoffs. But, lacking the Cold War and given the hard economic times will be a hard sell. A cure for cancer is a great idea, but given the current climate of suspicion of the medical industry and universal health care (see my blog on that) might not be as inspiring as we’d like. But i’d like to see a few billion thrown that way as we are very near to figuring that out. 

The goal that really stands out to me is achieving energy independence. It’s something that every American can feel positive about. Helping our balance of trade by not pouring large amounts of our money into unstable, and unfriendly governments overseas, using “Green” technologies, as well as enhancing national security, what’s not to like? Furthermore, it has an extremely high economic multiplier as well as a good “churn” multiplier. The government’s involvement needs only to be some basic research funding to figure out the methods, some initial purchases to stimulate the manufacture, and tax incentives to implement them. The economy is ready for this, and it is a patriotic thing to do. So I ask that a substantial amount of the stimulus funding be spent on this goal and the associated development of better batteries for energy storage and electric cars. The only drawback, as I see it, is this won’t have a huge impact per se for a few years and thus won’t impact the elections much (which means it’ll be hard to get it passed) but hopefully the inspiration of the idea will start to have a positive psychological impact on the economy before the real impact is apparent. As before stated however, we must insure that the money is spent in the US on American made goods or it won't have the desired effect.

Then there is a essentially free method of stimulating the economy that we should have done a long time ago. Simply pass a law that states that starting in 5 years the government will not purchase anything that does not have a 75% or larger US made content (substitute your own numbers). Since the government purchases a fairly large percentage of the countries GNP it will bring a lot of manufacturing jobs back to the US from overseas. An offshoot is that as long as they have to have a factory for making whatever in the US they might as well make the product for the whole US market there so the law will have an impact beyond just government purchases. Furthermore, increases in tax revenues from the new industries and their workers should offset any increased costs over foreign made products.

What Is Happening in the Economy

It’s been just over a week since the Congress and the President passed the debt ceiling bill. The fact that it was a complete piece of crap did not miss the attention of Standards & Poor (a credit rating agency) and they rightly downgraded the US’s Credit rating from AAA to AA+. This threw the stock market into a completely irrational panic (which happens often) and it has been in free fall. The amount of (virtual) wealth that has disappeared because of this would have made a substantial dent in the national debt, and precluded the problem in the first place. Of course all this panic will cause consumer spending to go down and the economic boost of “back to school” will be killed. Kinda makes me wonder what those idiots have planned for Christmas.

Of course rationality will prevail, and eventually the stock market will settle down. People will stop hoarding their cash and start spending again and this will all be a bad memory. But, for an economy that was tentatively sticking it’s toe back in the water it will slow the eventual recovery by another year. The brave will buy stock in solid companies and make some money off of the fearful, and the rest of us will struggle on. 

The sad thing is it was unnecessary for it to happen, and even so, the credit downgrade isn’t really a terrible thing. Our rating is still better than Japan’s and no one thinks they are in trouble, in spite of the disaster earlier this year. The rating simply says we aren’t being physically responsible. It’s like we were a person with a $500,000 debt, an income of $75,000, who spends $100,000 a year and wants to borrow money to pay the difference. Any bank would laugh at you, even if you had a perfect payment record. The difference is, the US has assets equivalent to $1,000,000 so the debt is safe in spite of the lousy money management. But I don’t see the government paying down the debt by selling Yellowstone park to condo developers anytime soon though.

The whole thing boils down to matching income with outgo, plus a little extra to pay off the debt. In short, live within your means. It can be done by cutting expenses or by increasing income. Neither is easy. It’s easy to say "cut expenses", but remember, that money eventually pays someone’s salary, so cutting expenses throws people out of work. To raise income means more taxes, which of course means we have less money to spend, and that throws people out of work too. It’s easy for us poor people to say “tax the rich”, but we have to remember it’s those rich that create the companies that give us our jobs. Basically, raising taxes moves workers from the private sector to Government supported jobs or welfare.

There is no good short term solution. There is a excellent long term solution, and that is to move the government’s spending to projects that will have a long term economic benefit, and try not to increase spending until the economy catches up and tax revenue increases naturally. (see my blogs on job creation and energy independence for more details). 

As an example of how screwed up the Government’s thinking is, I just saw that the President has decreed out of the blue that heavy trucks must lower their fuel consumption by 26% in the next few years. This throws a huge cost burden on an industry that is already reeling from high oil prices. This is an industry that affects the price of everything we buy, so we all are getting hit with a cost increase to satisfy his ego. Sure it sounds on the surface like a good idea. But you can’t just decree something without some knowledge that it can be done practically. In an industry whose major expense is fuel, don’t you think they are already doing everything practical to cut fuel consumption? Now if he had started a research project to seek ways of improving efficiency of heavy trucks I could be behind him 100%. But while its easy to decree things, you need to lead by showing a path to the goal. The industry would leap on a way to save 26% of fuel if it were practical. We just don’t need this kind of "say it and it will be so" Godlike attitude at this time of economic “disaster”.

Retirement Age

We hear a lot of rhetoric about raising the retirement age as a means of saving Social Security. On the surface this sounds like an OK idea. After all we are living productive lives a lot longer than we used to. Staying active and engaged keeps us alert and staves off aging so it improves our health. Boy, I can just hear the bean counters rubbing their hands together in anticipation of the savings in both Social Security payments and medical costs, as well as the extra taxes we will be paying.

Unfortunately there is an unintended consequence. Perhaps in a booming economy with a low unemployment rate raising the retirement age might be advantageous. But, we are not in a booming economy, and the unemployment rate is showing no signs of getting better. In fact if you add in the people who are underemployed, the actual figure is much higher than reported, and getting worse. The recession has enabled a lot of companies to close older less efficient plants (and lay off workers) and when the economy started to recover they expanded production by automating and/or moving operations out of the country. Those jobs are lost forever.

So we have an economy with a limited number of jobs. Given that the normal work career is about 40 years, raising the retirement age by 1 year will increase the workforce by 2.5%. (yes, I know this is a bit oversimplified, but I could do a bunch of complicated math and get an accurate figure which will still be something over 2%). Since there is a limited number of jobs to be had, that automatically raises the unemployment rate by 2.5%. During the whole economic recovery, and with all the job stimulus money spent, we haven’t lowered the unemployment rate that much. It doesn’t sound like a good idea to me.

To make it worse, the bulk of those people who enter the ranks of the unemployed will be either the fresh out of college kids looking to start a good paying career (and pay a lot into Social Security) or the older workers (who were going to keep active and healthy an extra year). So, if college graduates can’t get good jobs, whats the reason for kids to go to college? If they’re going to end their career looking for a job and burning their retirement savings it’s not much of an advantage for the older folks as well. Looks kinda like a negative snowball effect to me.

In fact, thinking about it, why not lower the retirement age? If we get 2.5% more unemployment by raising the retirement age 1 year we should get 2.5% less unemployment by lowering it. If we dropped it to 62 from 65 we could wipe out most of the current 10% unemployment in this country. Yes, Thats way simplified and paying for it might be a bitch, but someone should seriously study the economic impact, factoring in savings on unemployment insurance, welfare, defaulted student loans etc. Besides, having all those skilled, vigorous seniors at loose ends might stimulate some them to start businesses and pull this country out of the economic doldrums.

Postmortem of the Economic Collapse

We are now coming up on the third anniversary of the economic collapse. I would like to  discuss an analysis of why it happened and what the long term effects will be. I’d also like to talk a bit about what should have been done (hindsight is always better than foresight) and what we can do to fix the mess. 

The first thing I’d like to point out is the whole thing was to a large extent caused by good intentions, which were thwarted by greed, panic, and the law of unintended consequences. 

Way back in the Clinton administration it was decided that every American had the right to part of the “American Dream” of home ownership. So the government ruled that mortgage lenders had to write mortgages to people who were, prior to that, unqualified to have mortgages. A lot of these people were minorities so it was viewed as a socially responsible thing to do. In order to make these mortgages affordable to these low income people, they were sold adjustable rate mortgages (ARMs) which had really low starting interest rates for the first few years and were then subject to “adjustment” to bring them in line with normal fixed rate mortgages. The mortgages were also set up so as to require almost no down payment, which sometimes made the mortgage 110% of the value of the house, in order to cover closing costs. This wasn’t considered a bad thing in an environment of rising house values, That 10% extra would be covered in a year or so by the rising value of the property.

All went well for a few years people enjoyed their new homes and basked in the rising values. The housing boom boosted the economy and made for a lot of well paying jobs. People feeling the paper wealth of owning a asset with tens or hundreds of thousands of dollars in equity bought goods and cars with abandon. All was well till the time came to adjust the mortgage rates. At that point a lot of the ARMs had rates as low as 3% while fixed rates were around 6% (for people with good credit ratings). Here’s where greed stepped in. Instead of bumping the rate a percent or two, the mortgage lenders decided to jump them all the way to the fixed rate, since a lot of these people had not good credit ratings the interest rates sometimes jumped 3 or 4X. Since mortgage payments in early years are largely interest that made the payments go up 2 or 3 times what they had been. Most of these people were not making enough money to handle that huge increase in expenses and ultimately defaulted. 

The banks found themselves stuck with a lot of property which cut into their required cash reserves and they found themselves unable to loan people money to buy cars or homes. They tried to dump those houses on the market to recover the cash, and sent real estate prices tumbling. Ordinarily investors would have then jumped on these bargain houses and the market would have stabilized but the credit had dried up and they couldn’t borrow the money to take advantage of the low prices. 

A lot of people who had jobs and could make the payments on their mortgages had borrowed heavily on the value of their homes. Suddenly they saw their equity disappearing as prices tumbled, in a panic they tried to sell before they lost it all, which dumped a bunch more houses on the market and the whole thing spiraled out of control. 

Without that equity cushion people stopped spending. Companies couldn’t borrow money for operations cause the credit dried up, and as a final blow, oil prices went through the roof and the country’s economy caved in. The banks were going belly up with all those valueless mortgages and real estate so the government stepped in with massive infusions of money to save the banks who had caused the crash in the first place and the poor homeowners were left to hang.

Ok what should the government done? This is hindsight, but, it seemed to me at the time that the answer was pretty obvious. Since their shortsighted social program to give mortgages to the unqualified was the root cause of the problem the government should have stepped up when the first waves of defaults started and, via Freddy Mack or Fannie Mae, offered low interest mortgage loans to those people who got hit with massive interest increases. Say a 4% loan for whatever the full value of the mortgage was. This would have prevented a large percentage of the defaults. Those that did occur could have been absorbed by the market or bought up by the government to be resold to needy families at reduced rates. This solution surely would have cost far less that the hundreds of billions we sent to the banks so they could pay ridiculous bonuses to their executives and the more hundreds of billions we dumped into salvaging the economy with little thought as to how to do it effectively.

There isn’t much we could do about the oil price hike except to allow it to inspire us to set up a program to achieve energy independence (see my blog on that).

One of the major negative effects of the economic downturn is the permanent loss of manufacturing jobs, especially in the upper midwest. For years the industries in those areas, especially the automotive industry, have been saddled by outdated factories and oppressive union contracts. When the downturn came the companies shuttered a lot of those factories and moved operations to more efficient plants in other parts of the country or the world. When business returned, they expanded those factories with more automation rather than reopening the outdated ones. Those manufacturing jobs are gone forever. The good news is that now the companies are more competitive, and assuming the plants are in the US, it will help the economy. However, until we can come up with some new industries to employ all those displaced workers, unemployment and underemployment are going to be a way of life.