Wednesday, December 31, 2008

Gaming for Exercise

We have had a Wii gaming system in the house for about two years now. I am not a gamer, but my kids are. They have on occasion prevailed on me to play Wii games with them. But that has been fairly rare.

For Christmas my Mom gave our family a second Wii system. This has already reduced tension, since different children can play on different systems simultaneously.

This second system has been set up in the room where I work out and where the family exercise equipment is kept. I have a pretty serious daily workout regimen. The other day when I went to do my cardio workout, my kids got me to play the boxing feature on the Wii Sports program instead.

Holy cow. My eight-year-old consistently beat my tail. The game had me huffing and puffing pretty hard. Three of my kids kept trading off so that I could get a good, long cardio workout. (I jogged in place between bouts.) Although I regularly do strength training that includes working the back, my back muscles have been quite sore from the boxing workout.

From years of regular exercise, I have discovered that I can usually work some of the soreness out of my muscles by repeating three to four days later the same exercise that caused the soreness. So, yesterday I again did the Wii boxing. This time I only competed against the machine (which is still quite challenging for a non-gamer like me). It was still a very intense and strenuous workout. And thankfully, my back muscles are much less sore now.

If you have a Wii system and you want a serious full-body cardio workout, try the boxing feature on the Wii Sports disc (that is included with many Wii systems). You’ll end up panting and sweating. It’s also kind of fun (even if it’s a bit violent).

Wednesday, December 24, 2008

The Christmas I Remember Best

Until a couple of generations ago it was common for ordinary people to write and recite poetry. Then our elitist institutions successfully wrested the poetic art form from the common people. This elite form of poetry has taken on increased complexity to the point that it is not understandable to the average person.

To its practitioners, this is part of the beauty of modern poetry. They haughtily deride commoners that would dare to tread where only professionals should be permitted, eagerly poking fun at clumsy poetic attempts by the semi-literate rabble. Since poetry has become largely not understandable to the masses, the masses rarely engage in reading, listening to, or (especially) writing poetry nowadays.

A notable exception to this is cowboy poetry. Like the mythical ideal of the cowboy, this type of poetry celebrates individuality. Standard forms and rules can be applied with sparing rigidity. Like many facets of the Old West, cowboy poetry is rough hewn by design. Anyone is welcome to try their hand at it, and many do.

The success of a piece of cowboy poetry is not how well it adheres to forms or how well it impresses others that ply the art; but how it affects the average person. It is meant to speak to the heart and to the common experience of ordinary people.

I have tried my hand at various pieces of cowboy poetry for a while now. I claim no greatness or special capacity in the art. I do it because it brings a level of enjoyment to me and occasionally to others.

Several years ago I wrote the following poem as a Christmas gift for my Mom. The poem has been greatly appreciated by my extended family, because it is a story that is absolutely true without embellishment. It is titled The Christmas I Remember Best.
There’s nothing quite like tiptoeing boys
That don’t understand the effect of their noise.
Though they whisper, they make all kinds of other sounds
That to parents are like scents to bloodhounds.

Now, the Christmas I remember best
Was when I was about eight or nine, I guess:
Too sophisticated for the Santa game,
But filled with excitement, all the same.

On Christmas Eve, as we’d always done,
Us kids exchanged gifts and had some fun,
Dad read the story of the Savior’s birth,
Mom led us in songs of peace on earth,
And then we were shipped off to our beds
To rest our little sleepy heads.

But my brother and me, who shared a room,
Lay wide awake in the gathering gloom
Just tingling with anticipation
Of the following morn’s gifts and elation.

Then adventurous Tim, who was two years my senior,
Concocted a plan that couldn’t be keener:
We’d slyly slip on down the hall
Just to take a peek at the gifts and all.
We’d have to be careful, that’s for sure,
‘Cause Mom and Dad were right next-door.

Well, I made it as far as the bedroom door,
Then didn’t dare take another step more.
So I left Tim by himself out there in the hall
And retreated to my bed next to the wall.

But Mom, who knew her boys only too well,
Before lying down to sleep a spell
Had strung a trap of string and cans
Across the hallway along with some pans.

Well, when that alarm clattered loud and clear
I cowered under my covers in dread and fear.
Then in one swift motion, Tim flew in there,
Somehow closing the door in mid-air.
He landed on his bed in perfect position
And his covers settled gently upon him.

By the time Mom and Dad rushed into the hall
Somehow Tim had left no evidence at all
Of who it was that had sprung the trap.
We appeared to be having our long winter’s nap.

Well, our stealthy sneaking was done for the night
And we waited to get up until morning’s light.
We acted like it was a mystery to us
Regarding the trap and all the fuss.

‘Course Mom and Dad knew who it was all along,
For a parent’s intuition is seldom wrong.
And I’m sure that they didn’t have to wonder
About which bed produced that child-landing thunder.
May you and yours have a joyous Christmas celebration and may the new year bring you peace and prosperity.

Tuesday, December 23, 2008


I recently chatted with a friend that has done well as a financial planner for the past couple of decades. Needless to say, work life is pretty difficult for him right now. He hopes that the market has bottomed out, since phone calls requesting to cash out of investments have gone from about 30 per day to one per day.

Incidentally, he has been dumbfounded by the number of people that have come to him saying that they must get out of their investments now, but that they will get back in after the market improves. He asks, “So, you’re telling me that you want to sell low and then buy again when the price goes up?” The fact is that the average investor is an emotionally based creature that sells low and buys high.

During our chat, my wife asked our friend why we continue to get paper prospectuses for the funds in which we are invested. We have, after all, signed documents verifying that we wish to receive these materials electronically. He explained that this is actually a problem industry wide. They want to get to a more electronic system overall, but fund companies are still required to kowtow to government regulations that were instituted prior to Internet usage becoming ubiquitous.

This is far from a singular instance. Since the days of Ronald Reagan, we have been adding about 4,000 new federal regulations every year. No policy maker makes any serious effort to coordinate newly proposed regulations with the existing tangled mess. Why would they? The effort would be nearly impossible.

With few exceptions, existing regulations are rarely revisited or revised to address evolving life realities, such as new technologies and demographic shifts. Thus, it becomes the dour duty of regulators to ensure that long obsolete rules are strictly applied. Their jobs depend on it. And those jobs are part of the reason that elected officials do little to rein in runaway regulations.

Make no mistake; the regulatory regime imposes hidden costs on each of us in the price of each product or service we buy. It is a hidden tax. The Competitive Enterprise Institute reports in its annual Ten Thousand Commandments study that this hidden tax hit $1.157 trillion in 2007. By comparison, total individual income taxes in 2007 were $1.17 trillion.

To put that into a personal perspective, look at the total amount of federal income taxes you paid last year. Then realize that the federal government in essence took double that amount to cover the cost of regulations, many of which are patently useless.

In this WSJ op-ed, Philip K. Howard of Common Good calls for “a dramatic spring cleaning of the law of the land -- all 100 million words of binding requirements, most of which exist only because someone once took the trouble to write them.”

That would be great. We should push to make that happen. But we also need to stop new regulations dead in their tracks. The current financial crisis has caused many (very many) to call for more federal regulations. There is almost no appreciation for the massive failure of our expansive regulatory bureaucracy, except to suggest that it didn’t do enough.

I am not suggesting that new regulations are never appropriate. But Howard is correct to cite historian Henry Steele Commanger’s lament that our nation now has “an almost lawless passion for lawmaking.” Thus, I believe it is necessary to impose significant burdens on the creation of new public policies — a burden at least as great as those that are placed on the private citizens and businesses that are tasked with complying with these policies.

Every single policy or regulation, whether great or small, whether imposed by elected officials or unelected bureaucrats, should require a coordination and impact study that explores the precise interaction with every other federal policy or regulation, and publicly states the cost of compliance.

Yes, this would actually grow the bureaucracy to begin with. But it would turn the bureaucratic beast upon itself, helping to increase liberty by causing the regulators to regulate each other. I must admit that this is a somewhat diabolical scheme. But harsh problems sometimes require harsh solutions.

More regulation is rarely the answer. But when regulation is the answer, it is effective regulation that is needed; not just more regulation. Forcing elected and unelected policy makers to bow to the gods that they themselves create would perhaps impose enough humility to keep illiberal forces at bay for a while.

Monday, December 22, 2008

Serving Others Brings Happiness

My younger children were delighted when big fluffy snowflakes started dropping from the sky this morning. They are already out of school for the holidays. I started worrying.

First I worried about my high school senior. I was grateful that the high schoolers had headed to school before the storm started. Then I worried about my wife and me, since we had to drive about 15 miles to an appointment a couple of hours into the storm. I worried about my Mom-in-law, who was out shopping in the mess. I worried about my Mom, who had driven to a doctor appointment. And, of course, I worried about all the snow removal work that would need to happen.

When the time arrived for us to go driving in the snow, I was grateful for four-wheel drive. Say what you will about 4WD SUVs, but they are most useful in managing road travel in conditions such as those we experienced today. Despite messy roads, we fared just fine.

The huge fluffy snowflakes were still dropping in massive quantities when we arrived home. I usually like to wait until the storm finishes before I start doing snow removal. But I figured I’d go ahead and start anyway. After wrapping up my driveway and walks, I ended up working my way to several neighbors that have health conditions.

When one lady expressed gratitude, I told her that when God blesses you with a snow blower and a day off work when it happens to snow, he’s trying to tell you to use those blessings to help others.

In the meantime, my wife had taken the three younger kids to a nearby park that has wonderful hills that lend themselves well to tubing. While I was working in the neighborhood, the storm broke and stuff started melting. My wife returned home and asked me to go to the park. I spent some time tubing with the kids before bringing them home tired and happy.

By then the high schoolers were home, so I enlisted their help to clear out the ends of driveways, since the plow had come by. Then we drove to my Mom’s home to work on clearing her driveway. After we did that, Mom mentioned that her neighbor doesn’t get home until after 6:00 PM and that her driveway could be cleared, so we did that as well.

After arriving home and finally stripping off my wet outerwear, I realized that I was kind of beat after having spent more than five hours working and playing in the snow. Coupling that with the good feeling from having helped others today leaves me like my kids: tired but happy.

Friday, December 19, 2008

Just Do It Anyway

Q: What’s a president to do when lawmakers can’t achieve enough agreement to approve a provision he wants to pass? A: Do it anyway by executive fiat. That’s what happens in a banana republic. Or rather, that’s what happens in the U.S.A.

The nation’s Big Three automobile makers and their union fellow travelers have dumped about a quarter million dollars into politics this year, all in the hopes of preserving their uncompetitive good-old-boys-centric business model. But when the car companies’ chief executives (and their union cronies) came panhandling the government, they refused to bend enough even for the hooligans in Congress to stomach.

No problem. President Bush decided this morning to use $17.4 billion of the gargantuan financial industry bailout fund (i.e. a boatload of cash the government doesn’t really have — and remember that the Treasury Secretary has authority to use it pretty much however he wants) to make sure that the car company and union execs won’t be kicked out of their plush jobs (see AP report). At least, not just yet.

You see, it’s apparently OK for government to take money from prudent taxpayers and pump it into failing businesses to make sure that your precious resources are used in the least efficient manner. You wily investors wouldn’t do this yourself, so government must force you to do so. For the public good, of course.

But it’s all OK, because these are only “temporary loans.” To get this lucre, the car companies must agree to come up with a plan that will ensure viability within 90 days. Holy guacamole! These guys have been going down the toilet for 30 years (and especially for the past five years), and they don’t yet have a plan for becoming viable?! How is 90 days going to change that?

It works like this. 90 days gives President B the opportunity to make it look like he’s doing something substantive, while merely chucking the ball into President O’s court. The car and union execs don’t need 90 days to develop a plan. They already have one: lobby the new president and Congress to ante up much larger loads of money to preserve their unviable business models; maybe even an ongoing subsidy, kind of like the farm bill.

But the gesture also gives President B the opportunity to throw in a number of provisions that the current Congress, the next Congress, nor President O would dare to think about imposing on the car companies.

The car makers get to use your money until the end of March. If they don’t have satisfactory viability plans (satisfactory to the new administration and Congress, whatever that means), they will have to repay the “loans,” something everyone knows they will be completely incapable of doing. (This is very similar to sub-prime mortgage loans. And we all know how well that worked out.)

President B may be playing a clever ploy. But if that’s the case, it could easily backfire. If these guys come panhandling Washington again in the spring after having squandered $17.4 billion, even a Democratic president and congress may be hard pressed to toss more cash at them.

On the other hand, what’s to stop them from playing the sky-is-falling routine again? “Sure we blew over $17 billion in the first quarter of ’09, but if you don’t cough up another $30 billion we’re going to have economic Armageddon.” The question is whether Americans will allow themselves to be duped yet again.

At least President B knows that by that time, it will be somebody else’s problem and he won’t be blamed for destroying “the American car industry.” Never mind that the other American car industry — Toyota, Honda, Subaru, etc — continues to be economically viable in difficult times, even without massive infusions of taxpayer dollars.

But today you can be proud that the tax dollars of hard working Americans — mechanics, soldiers, nurses, clerks, etc — will go to prop up unionized workers making $75/hour on average (some of them being paid for not working). Just be on the lookout for the huge numbers of others that are now queuing up to seek a bailout from the federal government. Heck, it worked for the car companies. Why not give it a shot?

This is not our nation’s proudest moment.

Thursday, December 18, 2008

When Independence Means Shackles

Last summer as fuel prices hit record highs, the GOP finally found a message that resonated with voters. Thus began the relentlessly repeated cry of “energy independence.” Smug Republicans watched Democrats beholden to the religion of heavy-handed environmental enforcement squirm as voter ire increased with the gasoline prices.

Then fate rendered the GOP’s energy independence mantra largely ineffective, as the same central bank and government policies that had precipitated the meteoric rise in oil prices abruptly caused the bottom to drop out of the proverbial barrel. After the summer peak, oil prices began dropping precipitously. By October, Americans were focusing on the much larger problem of a failing economy than on prices at the gas pump.

Thus, the GOP’s only substantive campaign issue shriveled up like an old grape on a vine and was obscured by the dense gloom of a broad based economic crisis. But the issue didn’t go away completely. Politicians on both sides of the aisle got a glimpse of how powerfully energy independence resonates with voters across the board, including those coveted independent voters.

Now you regularly hear Democrats as well as Republicans offering obeisance to the gods of energy independence. And the beautiful thing is that no one mouthing these words has to actually change policy positions. Oil drilling and nuclear energy enthusiasts have perhaps more ammo than before. Yet supporters of utopian but ethereal ‘green alternative energies’ — as well lovers of unsightly, habitat-destroying wind turbines and subsidy-gobbling corn ethanol — also have lustful hunger for a larger piece of the federal pie reflected in their gleaming eyes as they dutifully recite the energy independence catechism.

The GOP adoption of the energy independence slogan bothered me from the beginning. It particularly troubled me when I heard some of the serious conservo-libertarian types in Congress echo this phrase before and after the election. Why? Because they should know better. And if they do know better they are cynically playing you and I for saps in hopes of generating more GOP friendly votes (which is standard politician behavior).

Protectionism by any other name
On the surface, energy independence sounds marvelous. Wouldn’t it be great to quit buying oil from despots that hate America (some of whom use that money to fund terrorism)? Wouldn’t it be fantastic to no longer be beholden to international price swings? Wouldn’t we all love more stable, relatively low oil prices and the development of new ‘clean and green’ energy sources?

Yes, yes, and yes-yes! The trouble is that none of this bears any semblance to economic and international policy reality. It all seems to make sense on the surface, but in truth energy independence is not desirable from either domestic or foreign policy perspectives. Celebrated economist Arthur Laffer explains why in this WSJ op-ed.

Laffer writes, “The platitude of "energy independence" makes zero economic sense.” The way to lower costs and improve products is to expand the market as broadly as possible. Protectionism that seeks to contain a market to a specific geographic area always drives up costs and results in less efficient uses of precious resources. This is why tariffs ultimately hurt the entities that impose them.

As for dealing with despots, Laffer contends, “The issue of how to handle the anti-American nature of oil-exporting nations is not for the Commerce Department, but for the White House, the State Department and perhaps the Department of Defense.” Why? Because “embargoes don't overturn despotic regimes. More often than not they harden them, as in Zimbabwe, North Korea and Cuba.”

Besides, trading with less savory players keeps them in check far better than refusing to do so. While doing business with them puts us over a barrel, as the argument goes, refusing to trade with them increases their danger to us rather than diminishing it.

Moreover, protectionist energy policies would not mean that the market for oil produced by foreign nations would dry up. Rather, it would mean that competitors like China and India would end up getting oil far more cheaply than we would. Also, Laffer explains, “Businesses that use oil would move offshore, costing American jobs while still polluting the world's environment.”

The artificially limited energy market would bring with it many more faux ‘green’ projects than we are seeing today — heavily reliant on taxpayer subsidies, of course. The only way all of this protectionism and eco-energy could be funded would be dramatically increased energy prices coupled with hefty job-killing tax increases.

In short, energy independence is pure chimera. It should not happen. Thankfully, the laws of reality mean that it can never happen. But that will not stop politicians and their business cronies from trying to reduce liberty and make a quick buck off of promoting it anyway.

Anyone in a position of power that throws around the term ‘energy independence’ and any policy promoted under that umbrella should be regarded with a healthy level of suspicion. Paradoxically, when the word energy is coupled with the word independence, the result ends up being the exact opposite of liberty.

Wednesday, December 17, 2008

Our Cherished Ponzi Schemes

Many are upset by the $50 billion 38-year fraud perpetrated by erstwhile investment guru Bernard Madoff. Madoff appears to have run a massive Ponzi scheme that bilked high rolling investors that purposely sought risky unregulated instruments.

The way a Ponzi scheme works, the promoter uses principle funds from later investors to pay supposed gains to earlier investors. Unlike real investment returns, there is no actual increase in value. The promoter pays out enough faux gains to keep investors from withdrawing their funds and to generate enough interest to attract new investment.

These kinds of schemes are also frequently referred to as pyramid schemes because they require an ever expanding base of new participants and/or capital to provide funds needed to pay fake gains to existing participants. Such schemes ultimately fail because the point unavoidably arrives where the promoter is unable to attract sufficient new capital to pay off investors.

The truly amazing thing about Madoff’s scam is that he was able to keep it going for nearly four decades. Given this term, it is probable that he had some real assets beyond the investors’ seed cash, so it was likely not a pure Ponzi scheme.

Still, Madoff’s feat is so astounding that the WSJ’s Holman W. Jenkins, Jr. was moved to opine (tongue-in-cheek) that Madoff “should immediately be put in charge of the Social Security and Medicare trust funds,” our nation’s largest Ponzi schemes.

Both Social Security and Medicare rely on funding provided by future recipients to pay off current recipients. The perpetual plan is for new generations of workers to cover the costs for retirees and non-producers. And that might work just fine if we were continuously producing enough new workers to keep the worker-to-beneficiary ratio even. But we’re not.

People are living far longer than they used to live, meaning that Social Security and Medicare pay out far more lifetime benefits per recipient than in the past. Despite the baby boom, the U.S. birth rate has roughly steadily declined for the past century (with some ups and downs), dropping from 30.1 per thousand in 1910 to 14 in 2005. During this same period the death rate per thousand has dropped from 14.7 to 8.2.

To put it plainly, we are steadily producing fewer new workers to pay into Social Security and Medicare while simultaneously producing far more longer-term beneficiaries of these programs. The European experience of the past four decades firmly demonstrates that importing immigrant workers does not solve the problem.

Last week Bernard Madoff discovered that he could not forever forestall the collapse of his Ponzi scheme. Similarly, we cannot forever put off the coming collapse of our Social Security and Medicare Ponzi schemes. Even the government’s ability to print money — a luxury Madoff couldn’t apply — will eventually peter out.

The Boston Globe reports that Medicare Part A will become insolvent “somewhere between 2016 and 2018,” earlier than the previous estimate of 2019. The plan could be insolvent before Barack Obama wraps up his presidency. Even with the immanency of the problem, politicians are readying a plan that would basically expand Medicare to cover everyone in the U.S., presumably under the mindset shared by the likes of AIG and GM that making it bigger will somehow keep it from failing.

But we can all breathe a huge sigh of relief when it comes to Social Security. Its trust funds (really just IOUs from the government, as explained in this Heritage Foundation report) won’t be exhausted until about 2038 per this Social Security Administration document. We can still squeeze in a few more presidential administrations before that happens.

If you watch the business world (especially lately), you realize that when an entity becomes insolvent it does not necessarily cease operations. Many airlines have been technically insolvent for years. Many entities have gone through bankruptcy and emerged to become solvent and relatively reliable players. Reorganization bankruptcy allows an otherwise viable operation to restructure both finances and operations. Usually, only completely unviable entities shut down altogether.
As a side note, that’s why the Big-3 automakers’ insistence that bankruptcy would cause them to cease operations is ridiculous. They still produce nearly half of the cars Americans buy. They are still viable businesses outside of their encumbrances. Bankruptcy would allow them to restructure contracts, liabilities, assets, and operations to emerge productive and profitable. The union might not survive in its current form, but that’s a far different issue than automakers shutting down. The only reasons anyone is discussing a government bailout of these firms are the $75 million lobbying dollars the Big-3 have spent and the $150 million campaign contributions the UAW has spent this election cycle.
Likewise, Medicare and Social Security won’t stop making payments the moment they cross the line of insolvency. But eventually the point will be reached that a reordering of services and liabilities will become necessary for operation to continue. If we don’t take care of it sooner, insolvency may be that point. Or the politicians may apply superficial remedies that temporarily push the problem down the road a few years.

No matter what we do, as long as we insist on the Ponzi model for Social Security and Medicare, we are fighting a losing battle. All Ponzi schemes inescapably collapse. The ultimate collapse of Medicare and Social Security may come many years after initial insolvency is reached. But without significantly changing the underlying model, these programs will fail.

Perhaps this will not occur during my lifetime, but I wouldn’t be surprised if it did. At any rate, it’s pretty shoddy business to push an onerous problem we are capable of addressing off to some future generation.

Monday, December 15, 2008

Our Venture Academy Experience So Far

My three younger children have been attending a new charter school named Venture Academy this year (as discussed in this 12/1/07 post). The first trimester ended last week, so we now have an idea of how things are going.

Starting a brand new school is a monumental task. Consider, for example, stocking and cataloging a brand new library for students grades K-8. This was really only possible due to generous donations and copious numbers of hours worked by dedicated volunteers.

The board had spent months gathering donated computer and office equipment, books, and needed supplies. These items were stored in a warehouse in the southern part of town. In July I worked with a crew of (mostly parent) volunteers and staff to move most of this stuff to the school, which is in the northern part of town. Volunteers and staff cleaned and prepared these things. Even with the generous donations, it was necessary to purchase many items.

Unlike your standard public school, almost all students arrive at this school and leave by private vehicle. We carpool with another family. The principal, who has run charter schools in other states, helped devise a drop-off and pick-up plan that provides for some efficiency and safety.

Another dissimilarity with your standard public school is that the entirely voluntary school board consists of parents. (Venture is a non-profit organization.) The board answers to the state board of education. There are no other layers of bureaucracy. Few, if any, of the teachers are unionized. This allows for more freedom in dealing with academic and personnel issues. Much of the field learning that has taken place would never happen in a traditional public school.

Learning Model
Venture is one of the few schools in Utah that follows the expeditionary learning model. Only Kindergarten is a separate grade. All other grades are gathered in multi-grade pods: 1-2, 3-5, and 6-8. (Grade 9 is coming next year.) The more advanced students help mentor less advanced students. In each pod are several mixed-grade ‘crews’ (not classes), each managed by a teacher. Students are active participants in their respective crews, where there is peer-to-peer teamwork.

Every trimester each pod has a primary focus called an expedition. Work from each subject is integrated into the expedition. The idea is to help students apply knowledge in a meaningful way instead of just learning theory. The Kindergarteners focused on trees and their related ecosystems, as did grades 1-2. The 3-5 pod’s expedition centered on birds and their habitats.

Students in the 6-8 pod work through three different expeditions centered around a single major focus. They put down their first, second, and third choice and end up being assigned to an expedition (usually their first choice). My middle child’s expedition focused on liberty. They looked at it from societal, individual, and natural points of view.

One of my middle school child’s electives was astronomy. This resulted in breaking out my Dad’s old telescope, many evenings viewing the autumn sky, and trips to the Ott Planetarium. Another elective is band, where he is rapidly developing into a pretty good euphonium player.

I was intrigued by the business elective in which some 6-8 students engaged. They developed and presented a business proposal to run a ‘school store,’ where they experimented with offering a variety of small-priced products. They learned in real terms about profits and losses, finally ending up with a net profit. They wrapped up the trimester by considering spending the profits on ‘grant proposals’ from teachers for crew supplies. For example, a science teacher applied for funds to build a model rocket launcher.

Volunteer Reliance
Parent involvement is a key principle to this education model. The school asks (but cannot legally require) each family to volunteer 30 hours annually. For part of my family’s volunteer hours, I designed and built a database that the school uses for tracking family volunteer hours. My wife has spent many hours entering data, working on the playground, correcting papers, and helping teachers.

We (like a few other families) have already put in our required time many times over. About 20% of families have already put in 30 hours. Another 30% have put in at least 10 hours. Another 37% have put in over five hours, but less than 10. A handful have put in very little so far. Some of this may be due to parents not being diligent in recording their volunteer time.

The new school is no utopia. There are still the same kinds of problems other schools have. Older students use foul language when they can get away with it. There have been a number of thefts of personal items from student backpacks. Some teacher and school items have disappeared as well. Disruptive students end up in the principal’s office. Some middle schoolers have been caught kissing during lunch free time. We’re not aware any of on-campus substance abuse problems.

My wife, who has had more direct contact with students, teachers, and other parents, says that it is her impression that there is a higher concentration of ‘problem’ students among the older grades. This seems to make sense. Parents are more willing to move kids to a new school when they are younger. Parents are reluctant to move older students with developed a social networks to a new school unless it’s necessary.

Many parents of the younger students at the school wanted a better learning model early in the child’s life. There was a lot of competition for the available spaces in the younger grades, so the population is less likely to be skewed toward kids with difficulties. The higher the grade, the less competition there was. Only parents with a high degree of motivation sought to move students into the higher grades. That favored parents concerned that their child did not work well with the standard model.

If my theory is correct, it would seem likely that as younger children grow and progress into the higher grades, the population will become less skewed toward problem students. We should know within four or five years.

While things are going reasonably well at the school, there are a fair number of glitches that are due to the newness of the situation. While the principal is experienced, the board is dealing with most of matters for the first time and many newly trained staff members have never executed the expeditionary learning model before. Experience will eventually remedy most of these issues.

One of Venture’s major issues has been its facility. The school needed to arrange for a facility prior to actually having any students. But it had no money to do that, since the state does not pay any of the school’s allotment until students are physically attending school.

The way most new charter schools deal with this is to hire a contractor that obtains funding. Then the school repays the contractor once it receives its funds from the state. Venture followed this same pattern, but when construction lending went south nationwide, so did the contractor’s ability to get appropriate financing. As the months passed without construction action, the board finally determined that it would have to lease an existing facility this year.

I am more than a little disgusted that several of the nearby school districts actively worked to stymie Venture’s attempts to lease a facility. It is just another example of how much public school districts hate competition. Despite their dirty tricks, Venture was finally able to lease an elementary school that had been shuttered for a year.

This turned out to be a blessing in disguise, because Venture received its own funding and was able to bond for the construction of a new facility that will support the expeditionary learning model. The new facility will be complete by summer.

So far we have found our experience with the new charter school to be acceptable. I have never seen my third grader as excited about any school subject as he has been about the sage grouse and the peregrine falcon. He knows more about these birds than most college freshman biology students. Moreover, he improved his reading, writing, and math skills as part of this learning.

We’re very grateful for the hard working board members that worked for several years to develop the concept of Venture Academy and turn it into a functioning school. Some of these people do not yet have children old enough to attend school. They did this to provide what they believe will be a superior educational environment for their kids in the future.

We will continue to work to make Venture Academy a success for our children and for many others. It is my hope that others around the state will take heart and do the work necessary to start many new charter schools.

Friday, December 12, 2008

Take It Steady, Illinois

The current political situation in Illinois is most regrettable. From information publicly available, the state’s governor appears to have been caught red-handed engaging in blatant political graft. (Some have suggested that this is just politics as usual in Chicago, except that this time the sleazy politician is experiencing some negative consequences.)

Despite the damning evidence already made public, the governor maintains his innocence. Justice demands that he should have his day in court to properly determine guilt or innocence under the law. But it appears to most political insiders and average John Q. Publics that: 1) the governor should be removed from office, and 2) his political career is pretty much toast. He currently enjoys only an approval rating of eight percent among his constituents.

Nevertheless, the governor has refused widespread calls from members of his own party (including the President Elect) to resign. The Illinois Attorney General has invoked a statute requesting the state’s highest court to declare the governor unfit to serve (see AP story). The statute is similar to one we have in Utah that is designed to replace the governor if he/she should become physically or mentally incapacitated.

I believe that this is an imprudent course to pursue. The statute clearly applies to real physical or mental impairments, not to ethical lapses. Twisting the law to apply to the current situation would create a moral hazard where it would become easier to remove a political opponent through a back door method.

Given that this is a political issue involving a political office, I believe it would be healthier if the matter were handled politically, as well as transparently as possible. The appropriate course is for the legislature to impeach the governor; something the legislature appears quite eager to do.

The AG argues that impeachment would be far too slow and hints that there is concern about what kind of havoc the governor might wreak in the meantime. She argues that “government has become "paralyzed" with its ability to borrow money to pay bills on hold” (see Reuters story).

That’s a bit over the top. But even if it were accurate, impeachment is still the proper and prudent track. It would be more just and would ensure the broadest level of public support of the final outcome. And no matter the outcome, it appears that the governor will eventually face federal consequences for his actions, so there is a good hope that justice will be done.

At any rate, the governor and his wife are now regarded as very unsympathetic characters, given their raw language and verbally abusive treatment, as revealed in taped phone conversations. That is a social cost that may never be fully paid even in a lifetime.

The pros of getting this unsavory matter handled quickly are obvious. It’s a national embarrassment that would be more quickly out of the headlines. Public confidence in the governor is nearly nonexistent. His replacement would have a chance to establish a firm footing before the next election. Political insiders would like nothing better than to just get back to business as usual.

Of national significance, the governor’s replacement would more quickly be able to fill the President Elect’s vacated U.S. Senate seat in probably the cleanest manner ever (since every step would occur under high national public scrutiny). There is also a threat that the affair could besmirch the President Elect and/or members of his transition team. The quicker it goes away, the better for him and them.

Despite the arguments in favor of rapid action, the wheels of a democratic republic rarely move rapidly. This is by design, to ensure full debate, broad consensus, and purposeful action. Although rare occasion requires swift action, often when our political bodies act in haste the results are far worse than the effects of political lethargy. History shows that all such quick actions should be regarded with great suspicion, even if some are finally determined to be necessary.

I do not envy the people of Illinois right now. But handling this sordid political issue in a deliberate and transparent fashion might offer a fine opportunity to do some serious political housecleaning. They might actually ask what needs to be done to change a political climate where 20% of their governors during this past century have gone to jail and where it is not uncommon for the dead to vote. Maybe they could set a good example for the rest of us.

Wednesday, December 10, 2008

Why College Sports?

I’m about to make enemies. The other day, the Standard Examiner ran an editorial expressing discontent with the BCS (Bowl Championship Series). This is the organization that determines which college football teams play in which bowl games.

The BCS replaced the previous system of selecting bowl contenders via AP and coach polling, since that was considered too subjective. Unfortunately, the supposedly more objective BCS system has produced at least as much dissatisfaction as did the old method. Mediocre contenders have been sent to bowl games while less prestigious but superior performers have been sidelined.

As the nation’s sports fans spend copious amounts of time and other resources carping about this system, I am led to a much larger issue. My opinion is hardly unique, but it is considered blasphemous by many. Why do we even have collegiate semi-pro sports? What business does an educational institution have sponsoring what is effectively a semi-pro sports league?

I have this quaint belief that our academic institutions should focus on — well — academics. Participatory intramural sports can certainly play an appropriate role in this type of education. But I question the value of sponsoring semi-pro spectator sports leagues where — let’s be honest — the main purpose of the ‘student-athlete’ is to be a public athletic entertainer.

Our collegiate sport system — particularly men’s football and basketball, but other sports as well — looks and acts like a semi-professional league system, except that we have to be extremely careful about how we ‘pay’ the athletes.

While we pay our college coaches like semi-pro coaches, all player payments must be wink-wink-nod-nod kinds of transactions. Everyone knows what is going on (academic inflation, sweetheart jobs, scholarships, stipends, etc), but we insist on holding up this chimera of scholastic performers that happen to play sports on the side. What are we teaching our children with this?

Why not drop the sham and get semi-pro sports out of our colleges and universities? Let professional sports clubs sponsor minor league teams, as they do in baseball. Let them pay the players what they think the players are worth. Let colleges and universities focus on their actual mission.

“But, Scott,” you say, “sports programs bring a lot of money into our colleges that they use for more worthy academic pursuits.” Do they, now? When all costs are considered (including facilities), how many of our college sports systems regularly produce a significant surplus? Most of our sports programs employ full-time fundraisers that run around pandering for handouts from businesses and individuals. And even for the programs that more than pay for themselves, can we say that this money is worth the moral cost?

“Ah, but you are discounting the community spirit engendered by these programs,” you say. If the private businesses and individuals in a community think that hosting semi-pro sports leagues is a worthy pursuit, by all means let them do it. But why is it necessary to involve taxpayer funds and/or academic institutions?

“You must be a sports hater,” you say. OK, you’ve got me there. I can’t remotely fathom the value of rooting for, aligning myself with, buying promotional paraphernalia for, or wearing clothing with logos of any sports team whatsoever. I mean, these people are playing a GAME, for Pete’s sake.

Why should I give my allegiance to any sports team made up of individuals recruited from all over the place? What common cause do I have with these people? How does it make one iota of difference in reality whether they win or lose a game or a season? Why should I spend even one scintilla of emotion on their performance?

If you’re a sports fan, it’s easy to toss opinions like mine aside as being unbalanced and unimportant. But I implore anyone to effectively explain in an objective manner why our academic institutions should sponsor semi-pro sports teams. I would also like someone to objectively explain why even one cent of taxpayer money should fund this type of entertainment.

Monday, December 08, 2008

College Getting Increasingly Expensive (As Usual)

For anyone that has been paying attention, it’s not news to hear that the cost of attending college has been increasing at rates significantly higher than the general inflation rate for the past 30 years (see NY-Times, MSNBC, CNN Money).

CNN (echoed by NYT) reports, “After adjusting for financial aid, the amount families pay for college has skyrocketed 439% since 1982.” But the rate is not steady. MSNBC reports that it has recently trended even more steeply. “The [past] five years have seen prices rise 31 percent above and beyond the general inflation rate for other goods and services — the worst record on college prices of any five-year period covered by the survey dating back 30 years.” The rise significantly outpaces the rise in medical costs.

Costs are up, but why?
While awareness of precipitously increasing college costs is common, having an understanding of the underlying causes is far less common. As for the steeper increase in costs over the past five years, CNN reports:
“College finance experts point to a record number of applicants in recent years as the baby boomlet comes of age (many of the more selective schools reported double-digit increases for 2008); that trend, coupled with growing demand for degrees (undergraduate enrollment has jumped more than 20% over the past decade), puts heavy upward pressure on prices. Dwindling support for higher education from cash-strapped federal and state governments doesn't help the situation.”
But this isn’t the whole story. CNN continues:
“Normal supply and demand can't begin to explain cost increases of this magnitude, though. If the usual rules applied, tuition would eventually stop rising because families would cut back enrollment, especially at the most expensive private schools, just as they curtailed consumption of gas once prices hit $4 a gallon.”
Without fully explaining her analysis, the CNN reporter concludes that the increasing costs are riding on “the perceived payoff … [by parents] that going to a brand-name school will one day make their children richer.” She surmises that the situation is “like home values during the housing boom or dotcom stocks during the late-'90s tech frenzy: Prices go up on sheer momentum.”

Maybe that helps explain the recent rise, but it hardly begins to explain the trend of the past 30 years. There has been steadily increasing market demand for people with college degrees. In general, people with college degrees earn more than people without them. But as I discussed in this Jan. 2007 post, a college degree may be more of an effect than a cause of higher income.

Despite what the CNN reporter says about reduced government support, government has dramatically increased efforts to ‘make college more affordable’ over the past 30 years. This includes scholarships, grants, tax credits, and—the biggie—subsidized education loans. Many politicians have proclaimed that everyone should attend college, as if college were the only road to success in life.

The effort to get more people into college has produced steadily increasing demand, as noted in this Jan. 2008 post, where I wrote, “The higher education industrial complex has been infused with vast amounts of taxpayer sponsored cash over the past several decades. With student demand exploding, colleges and universities have little reason to keep costs down.” In other words, as with so many other things government does, ‘making college more affordable’ has actually contributed to making it less affordable.

What we are seeing today is the increased demand for a diploma rather than the increased demand for an education. Colleges and universities have responded to this demand with grade inflation and dumbed down curriculum. This reduces the value of a diploma and increases the demand for post graduate diplomas.

The current economic downturn is likely to intensify the problem, since college enrollment tends to increase during hard times. As other opportunities dwindle, people seek more education to improve their job prospects. Also, as the NYT article notes, public universities tend to increase tuition and other student funded costs during economic downturns when other funding decreases. These increases hit students when they are already suffering financially.

College not out of reach
Still, for those that wish to pursue a career that benefits from a college degree, many public four-year non-research institutions offer the best value right now. MSNBC reports, “Including room and board for students living on campus, charges for public four-year colleges were $13,589 [last year]….” If one of these institutions is close enough to home, students can save even more money by sponging off their parents and living at home as long as possible.

While costs at four-year public institutions are also increasing far above the rate of general inflation, they’re still only a fraction of the price of attending a big name prestigious university. And most undergrad courses at the smaller public universities are taught by actual educators, not research assistants.

No one should take for granted that a college degree is the best road to success for them. It pays to do a cost-benefit analysis to determine the actual market value of the type of degree that might be pursued. And if college is the right thing, it pays to do a cost-benefit analysis of the value of gaining that degree from the various institutions a student might qualify to attend.

Last January, I linked to this Money Magazine article that shows the value of certain types of degrees. I would go a step further and compare the net present value of the future earnings and of the cost of getting the diploma to get a more accurate picture.

Don’t forget to factor in interest and the net present value of payments on any student loans that might be incurred. Some have complained that, thanks to student loans the most significant thing our young people gain from a college education these days is years of crushing debt. With prudence and proper planning, much of this problem can be avoided.

Getting a college diploma is expensive, and it is only becoming more so. If the CNN reporter were completely correct in her bubble theory, we’d see the bubble burst at some point. Then we’d see the cost of a college education drop. It’s difficult to conceive of that happening soon, given the long-term trend.

So before spending a load of (often borrowed) cash on pursuing a diploma, make sure it’s the right thing for you (or our student) and that you’re getting the best bang for your education buck.

Thursday, December 04, 2008

UDOT Seeks Hidden Massive Tax Increase for Utah

Our highly-paid executives at UDOT are plying legislators to change the way we pay taxes on gasoline in Utah. Currently we pay 24.5 cents per gallon. That is charged on top of the 18.4 cents we pay in federal gas tax, for a total of 42.9 cents of tax per gallon. Utah’s 24.5-cent fuel tax rate is somewhat below the national average of 28.6 cents per gallon (see Wikipedia article).

Fuel taxes are very close to being a use tax. In general, the more gas you buy the more wear and tear you inflict upon the road infrastructure. And the more gas you buy, the more tax you pay to help build and maintain the roads you use. While this is a regressive tax — the effective rate is higher for those that can least afford it — it is also a transparent tax. You know what you are paying because it is posted right on the pump and it is directly tied to usage.

Fuel taxation carries inherent problems of volatility and inflation for governments. When people drive less or start using more fuel efficient vehicles, fuel tax revenues decline. Since taxes are charged at a flat rate, any inflation eats away at the value of the revenues government collects, even when people buy more gas. Of course, when people buy more gas, government collects more.

Moreover, road infrastructure inflation may not track precisely with the general inflation rate. Road planning and development take years. It’s not a just-in-time kind of thing. Population growth rates can be fickle and difficult to accurately predict. Material costs can exceed inflation, such as when concrete rose drastically in price during the construction boom. The cost of acquiring real estate needed for roads is very localized. Often it is much higher in developing areas where new roads are most needed.

Sometimes these factors conspire to create a situation where fuel tax revenues fall far short of projects demanded by taxpayers. I noted last spring that state Senator Sheldon Killpack (R-Syracuse) unjustly took a lot of flak for saying that Utah would need to increase fuel taxes by more than 40 cents per gallon to meet road infrastructure demands. His point was that we need to look at a variety of options because simply increasing gas taxes wasn’t feasible.

With gas prices at a four-year low, UDOT thinks now is a good time to get the legislature to shift from charging a flat cents-per-gallon gas tax to charging tax as a percentage of the sale, similar to the way sales taxes are currently computed (see D-News article). Reportedly, Gov. Huntsman is on board with this plan.

Many that read this are probably wondering why they should care about this arcane issue. Let me bring it closer to home for you. The plan is to pass this as a revenue neutral measure at a time of very low gasoline prices and then enjoy the bounty provided by a substantial hidden tax increase when gas prices inevitably boomerang back up in the future.

Gas prices are approaching $1.50 per gallon for regular unleaded. They may be even lower by the time the legislature considers this issue, but let’s use $1.50 as a starting point. Subtracting the 24.5-cent state gas tax, that’s $1.255 per gallon. Replacing the 24.5-cent flat tax with a revenue neutral percent rate at this price would require a rate of nearly 20%. (And you thought sales taxes were high.)

As long as gas prices remained at that level, you would see no change in the end price you pay at the pump. If prices go down more, life is good; you pay even less. But when prices shoot back up to last summer’s price of $4.25 (minus the 24.5-cent flat tax = $4.005), you would be paying 80.1 cents of state gas tax per gallon instead of 24.5. Your end price would be $4.81 per gallon instead of $4.25. And, whammy, without any public input or vote by elected officials, your effective state gas tax rate just went up 327%.

It cannot be argued that this would simply reflect inflation. It would reflect inflated gasoline prices, but nothing more. This is one of the most unkind types of inflation because it does not raise any local wages; it just eats deeper into every single pocketbook and raises the prices of every good or service we buy. Dramatically increasing fuel taxes at a time of fuel inflation would be adding insult to injury.

Our legislators would have angry constituents showing up on their front lawns with torches and pitchforks demanding a special session to ease the pain. The governor’s office would be besieged 24x7 with people angrily complaining that the state is collecting record-high gas taxes from people at the time that they are hurting the most from high fuel prices. Each elected official with their hands in this pie would face a painful re-election campaign the next time around, assuming that they dared even run for re-election.

Nor is this plan a good one for UDOT, as well-paid executive director John Njord seems to believe. If he thinks that this year’s revenue shortfall (meaning that UDOT won’t get as much money as planned) is bad, just imagine what it will be like the next time planning is based on $4.81/gallon (including .801 in taxes) and gas prices fall to $1.50/gallon (and only .245 in taxes). Instead of a 10% ‘shortfall,’ UDOT would see something more along the lines of a 50-70% reduction in gas tax revenues.

Road planning is already a tough enough job. There is already enough volatility to create headaches for everyone involved in the process. Now we want to compound that volatility by a factor of seven? This is not a reasonable approach. It’s not healthy for UDOT and it’s not healthy for the citizens of Utah.

There is one more secret you should know about that everyone involved in the transportation industry knows. When Utah’s fuel tax (especially on diesel fuel) is higher than in neighboring states, trucks that are passing through the state don’t buy fuel here. They buy it on the border before entering and after leaving the state. Then these heavy vehicles exact a lot of wear and tear on our highways without contributing tax to help build and maintain those roads. Utah ends up collecting less fuel tax revenue that it would if it charged rates competitive with those of neighboring states.

I do not argue with the proposition that many of the road projects that are on hold are actually and urgently needed. But UDOT and our elected officials must not look at taxpayers as a bottomless money pit that can be tapped whenever revenues fall short. Nor should they go begging to the federal government for more money (see SL-Trib article), because that money must also come from taxpayers.

Most private taxpayers don’t have options like that when times get tough. Government should also learn to tighten its belt during lean times, even though many projects are classed as ‘investments’ needed to support economic growth, and must eventually be done anyway at a higher cost. I also cannot afford to make investments I consider quite important at the moment. Like citizens, government must learn to live within its means, even if the results include difficulties and lost opportunities.

Unless you relish the idea of paying dramatically more at the pump when gas prices go back up (as they must at some point), contact your state representative and state senator and tell them to stop this fuel tax change dead in its tracks. As mentioned above, legislators have a self preservation interest in doing so. Write a letter to the editor. Work with other citizens to keep the heat on throughout the legislative session. This sleight-of-hand tax increase must not pass.

Even if this plan does not see the light of day this session, unless it is slapped down in a big way, it will keep coming back every year, pushed by UDOT executives whose incentives differ dramatically from your own.

Wednesday, December 03, 2008


Most of us view the ‘dismal science’ of economics as a study of mainly financial matters. Economists, on the other hand, consider it to be more a study of interrelationships between humans — a rational study of why humans make the choices they make.

Noted economist Friedrich Hayek took a somewhat different view when he notably said, “The curious task of economics is to demonstrate to men how little they know about what they imagine they can design.” Hayek is one of the most famous economists from the Austrian School of economic thought.

Austrian economic thought differs sharply in several key areas from the Keynesian School of economics, which is much more mainstream. Most of our nation’s politicians and economic scholars align closely with Keynesian theory when it comes to macroeconomics, while adhering to neoclassical theory in microeconomics.

Macroeconomics focuses on regional, national, or global matters, while microeconomics considers how individuals, households, firms, and small political entities “make decisions to allocate limited resources.” While the term ‘neoclassical theory’ was originally coined to define microeconomic thought differing from that of the Austrian School, it has since come to encompass a hodge-podge of thought extracted from a wide variety of economic schools, ranging from Marxian to Austrian and everything in between.

Thus, today the area of economics where the most significant differences exist is in macroeconomics. The orthodox Keynesians and the heterodox Austrians regularly snipe at each other. Keynesians argue that Austrians are laissez faire anarchists; Austrians say that Keynesians are big government socialists that have never seen a deficit they didn’t like. While there is a grain of truth to each of these statements, both are somewhat straw man arguments.

Unlike some of the rank and file in these schools of thought, some of the leading scholars in each school are fairly open to thought coming from outside their own school. These leaders don’t think they’ve got all the answers.

Harvard economist Greg Mankiw considers himself a New Keynesian. Keynesians usually favor a significant government role in the economy, including deficit spending and centralized banking. But in the face of the current economic disaster, Mankiw argues in his Dec. 1 blog post, “Any economist approaching the subject should bring an ample dose of humility.”

Keynesian theory suggests that fiscal policy can be tinkered with to cause people in the economy to act in ways the government believes is best. Austrian theory says that the government’s role is not to manipulate the economy, but rather to ensure a level playing field. Indeed, Austrians suggest that almost any public manipulation of the economy will produce mischievous effects.

Keynesian thought also posits that deficit spending by government will stimulate the economy. In his post, Mankiw cites studies that have found that the actual outcomes of this type of fiscal policy “are not consistent with standard Keynesian theory.” Among these findings are “that both increases in taxes and increases in government spending have a strong negative effect on private investment spending,” and that “a surprise deficit-financed tax cut is the best fiscal policy to stimulate the economy.”

While Mankiw says that this does not conclusively mean that the Keynesian model is in error, he also says, “At the very least, these puzzles should give us reason to pause when using the Keynesian framework for policy analysis.”

While Mankiw doesn’t quite yet sound like Hayek, his admonition of humility is welcome indeed. And that would be just fine if “policy analysis” was the only thing Keynesians were doing. But they’re not. They are actually implementing public policy and they’re doing it on the fly. As Holman W. Jenkins, Jr. notes in this WSJ article, they are doing “an objectively crummy job.”

To be fair, serious scholars on the Austrian side, such as Don Boudreaux and Russell Roberts at their Café Hayek blog have also admitted being somewhat flummoxed by the current crisis. However, the more research they do the more they are convinced that government meddling played a significant role in causing the crisis, and is continuing to play a big role in making matters worse rather than better.

Since non-Keynesian thought has little traction in political circles, we are today engaging in deficit spending on a scale never previously imagined. Elected officials have given unelected officials unprecedented power to use borrowed funds to play god in the national economy. Each passing day brings new policy shifts, injecting massive uncertainty into the market, as noted here.

Our modern gods of finance and central banking sit atop their Mount Olympus wondering why the mortals below aren’t scurrying about using the gifts they have so benevolently bestowed on them to engage in risk and trade. The mighty ones seem oblivious to the fact that these gifts are among the sources of uncertainty that are diminishing the incentive for risk taking. So they assay to endow even more borrowed largesse, thinking that they simply haven’t done enough yet. They end up incentivizing exactly the type of bad behavior that precipitated the mess in the first place. The political climate provides no incentives for the gods to pay attention to the Fates.

Like most other Keynesian acolytes, our politicians and elected officials seem to have no clue that “increases in government spending have a strong negative effect on private investment spending.” They seem oblivious to the fact that uncertainty is the enemy of a robust market. (Consider this post and related links.) Thus, they engage in spending that harms private investment while simultaneously creating new uncertainty non-stop, all under the auspices of doing something about the problem.

The chicken with its head cut off analogy would be useful here if only the activity being undertaken produced as little harm as a headless chicken could inflict.

Like Mankiw, I am not saying that Keynesian thought is conclusively wrong. But I am saying that there is enough uncertainty about the correctness of certain Keynesian theories that we should not be actively using those theories as a basis for substantial public policy. There is a term for insisting otherwise: hubris.

Monday, December 01, 2008

Continuous Revolution

Former IBM Chair Louis V. Gerstner, Jr. successfully turned IBM around between 1993 and 2002. One of his passions over the past four decades has been K-12 school reform. However, Gerstner admits in this WSJ op-ed that he has experienced far less success in this endeavor than he had in re-inventing IBM. He laments:
“We must start with the recognition that, despite decade after decade of reform efforts, our public K-12 schools have not improved. We can point to individual schools and some entire districts that have advanced, but the system as a whole is still failing. High school and college graduation rates, test scores, the number of graduates majoring in science and engineering all are flat or down over the past two decades. Disappointingly, the relative performance of our students has suffered compared to those of other nations. As a former CEO, I am worried about what this will mean for our future workforce.”
Gerstner seems genuinely puzzled as to “why after millions of pages, in thousands of reports, from hundreds of commissions and task forces, financed by billions of dollars, have we failed to achieve any significant progress?” He says that “Answering this question correctly is the key to finally remaking our public schools.” He then goes on, I believe, to answer the question quite incorrectly.

Despite all his confusion and lack of success after 40 years of continuous educational reform (inspiring minimal trust), Gerstner offers his blueprint for one more round of reform that is sure to finally tackle the problems in our public education system. He rehearses the results everyone knows we want to achieve and then amazingly suggests (with one exception) that we do more of what we have been doing that has produced continuous decline.

Gerstner’s overriding thesis is to do away with local involvement in public education and centralize everything in 70 massive school districts under one huge centralized bureaucracy in Washington, D.C. The problem, as he sees it, is not a failure of centralized planning, but a failure of the local buffoons to defer to the all powerful brain trust inside the D.C. beltway. It’s not that Soviet style central planning has failed; it’s that we’re not doing enough of it.

In addition to a centrally planned curriculum, Gerstner says we need “a National Skills Day on which every third, sixth, ninth and 12th-grader would be tested against the national standards.” This would apparently be superior to the national testing we’re already doing. How so? It would eliminate local involvement in determining standards and testing methodologies. We already spend so much time testing our kids that we detract from the time we have to educate them.

The one bright spot Gerstner offers is merit pay for superior teachers. With the educator unions staunchly opposed to true merit pay, this would be an uphill battle. Gerstner couples this provision with more centralized planning: a national standard for teachers. We local idiots are apparently too stupid to know a good teacher when we see one.

Finally, Gerstner says our kids are simply not spending enough time in government run schools. He suggests lengthening the school day and extending the school year by 20 days. Gerstner seems conveniently oblivious to the fact that the last time we did this our educational outcomes got worse.

When we increased the amount of classroom time two decades ago, we actually decreased the amount of classroom time spent on productive activities — at least as far as activities that could actually improve outcomes in the hard core subjects. We substantially increased time spent on soft, less measurable activities. What we really achieved was increasing the amount of time government directly controls our children, allowing parents more time to pursue employment and other activities that require increased child care. In essence, our schools somewhat shifted focus more to providing child care and somewhat away from providing education.

Like most Americans and almost everyone involved in public education, Gerstner ignores the main problem in our public education system: that it is a government run public service. There are many that would be willing to fight to the death to protect their view that this is not the problem, but that does not change the fact that it is the central (no pun intended) problem.

This 10-minute video discusses the push to destroy our largely private preschool system in favor of universal preschool provided by our failing public school system.

One of the commentators in the video notes that our preschools and colleges actually perform very well, and that the only place in education that is failing is K-12, where government has a monopoly. I take some exception with that claim. I have discussed the dumbing down of college curricula, largely thanks to public subsidies of higher education and the push to get increasing numbers of people to attend college. Still, it’s not as bad as K-12 education, where no substantive competition exists.

Utahns overwhelmingly support public education and believe that private education should be reserved for the wealthy. This sentiment is very widespread throughout the nation, with the exception of some inner city areas where public education is simply deplorable. Private education has much broader acceptance among low income populations in these areas.

The fact is that many of the problems we are experiencing in our K-12 education system are inseparable from the educational bureaucratic system. That is, they cannot be resolved without altering the nature of the system itself. Since little public support exists for this kind of thing, we are stuck with having to control the damage done by the system.

To be blunt, many of Gerstner’s suggestions would exacerbate rather than reduce bureaucratic harm. Education is one of the life elements that touch each of us very individually. We are a very diverse nation. Haven’t we learned yet that one-size-fits-all centralized planning is not the answer? Freedom and choice are the answer, but far too many fear what that might entail.