Saturday, January 31, 2009

My Difficult/Good Summer

The summer I was 16 was unlike any other in my life. It was the first time I was away from home for more than a week. I was 3,000 miles from home, but I was surrounded by several hundred other young men that were in the same situation.

Oh, it sounded exotic up front. A whole summer working in the paradise of Hawaii planting pineapples. But back in those days, the island of Lanai was no paradise. Rather, it was quite the opposite. One tiny dingy town surrounded by miles and miles of red dirt that tinged everything on the island and got into every nook and cranny. There were no five-star resorts, world class golf courses, or million dollar bungalows on Lanai back in those days.

We got up around 4:00 AM and spent our days doing the hardest, most boring agricultural work I have ever done in my life. We rode to and from the pineapple fields in the beds of pineapple hauling trucks. Each group of 17 lived in a dormitory house that consisted of thin walls on a slab of concrete with a corrugated tin or fiberglass roof overhead. Bugs (some quite large) and small critters were regular visitors/residents.

My group’s house was over a mile from the main compound. We covered that distance on foot many times that summer. The next most popular spot, Taka’s Candy Shop, was about halfway between our house and the compound.

Radios were very common. It seemed like we heard the Honolulu radio stations blaring just about everywhere we went. Pineapple pickers got to hear music while they worked because they were always near a pineapple truck that had a radio.

Pineapple planters each worked in their own field and only saw trucks rarely during the day. Personal media device technology hadn’t reached the point where it was feasible for planters to take music with them into the field. Such devices were too expensive and bulky, and the fine red silt of the planting fields quickly ruined them anyway. Still, it was common to hear music at other times.

I haven’t heard many of the songs that were popular that summer for many years, but I can still replay them in my head. Some of the common ones were Easy Like Sunday Morning by the Commodores, I’m Your Boogie Man by KC and the Sunshine Band, Hotel California by the Eagles, Lonely Boy by Andrew Gold, Boogie Nights by Heat Wave, Telephone Line by E.L.O., Give a Little Bit by Supertramp, Jet Airliner by the Steve Miller Band, Knowing Me, Knowing You by ABBA, and many others.

Other common songs with which I was barraged that summer, but that I couldn’t stand include Undercover Angel by Alan O’Day, Barracuda by Heart, and Black Betty by Ram Jam. The worst, however, was Telephone Man by Meri Wilson. Just thinking about that song still creeps me out.

My roommate for the first month of the summer repeatedly played 8-track tapes he had of albums by KISS and Boston. I came to somewhat enjoy the latter, but I never developed a taste for the former.

As a teenager, Top 40 music was a big part of life. One August day I was standing the back of a pineapple truck getting ready to leave the field and head toward the compound when the radio blared the news that Elvis Presley had died. Almost everyone around me thought this was a big deal. I had never been into his music, so I didn’t see how it could be very important in the big scheme of things. (I still feel that way. I will never understand the cult of Elvis.)

Even today when I hear one of the songs that were commonly played that summer, it takes me back in my mind to the three months I spent on the island of Lanai, which we less-than-affectionately referred to as, “The Rock.” Certain songs take me to a specific time and location.

That summer was a harsh growing experience for me. I learned how to manage being away from home for an extended period. This served me well the subsequent two summers when I worked on Boy Scout camp staff and the two years that I served as a missionary in Norway.

That summer I began to learn how to do long days of hard work. I had been a mildly chubby kid, but I trimmed down substantially. I learned how to set and achieve hard goals. I learned deep lessons in dealing with stress and disappointment.

It’s been decades since I’ve seen most of the people that were part of my summer that year. I have no idea what happened to most of them, although, some had a deep impact on my life. My summer in Hawaii was far from the most pleasant experience of my life, but it was a very important experience for me. It was a significant rite of passage.

There are portions of the summer that I can look back on with fondness, but that is not the sentiment I have when I consider the summer as a whole. The overall effect was good for me. But I sure wouldn’t ever want to repeat it.

Although it is difficult to see a child go through a harsh but growing experience, I wish for each of my children an experience similar to my summer in Hawaii, but tailored to their own needs. My two oldest have already begun to have such episodes in their lives. I hope that from this, they will develop valuable character traits that will serve them well in the future.

Friday, January 30, 2009

Utah Legislators Cut Their Own Pay

No Utah legislator is going to get rich on a legislator’s salary alone. Add in campaign contributions and lobbyist gifts and you might have a different story. But at least those items don’t come out of the state budget.

KSL reports that after the close of this legislative session, state legislators will take a 10 percent pay cut from $130/day to $117/day. This really won’t reduce the total state budget by much, but it’s a worthwhile gesture. At a time when state legislators are telling government departments to expect cuts, they are leading by example.

This is yet another thing that federal legislators and legislators in spendthrift states could learn from Utah’s example.

Bailout or Stimulus: Either Way It's Bad

I opposed the Bush bailouts last year, despite the fact that alarmists were loudly warning that Armageddon would ensue if we didn’t immediately spend a lot of money that we don’t have. Likewise, I oppose the current bailout/stimulus/or whatever you want to call it. It is a pork-laden pile of spending nonsense that will do little to effectively stimulate the economy, as it is marketed to do.

I rather agree with Rep. Cynthia Lummis’ (R-WY) assessment that this boondoggle is “a bridge to bankruptcy.” This package will spend loads of money the government doesn’t have in what mostly amounts to political payoffs.

But I don’t imagine for even one second that the Republicans wouldn’t do something along the same lines if they happened to be in power at the moment. Most of the GOP members of the House of Representative that voted against the bill and most of the GOP senators that oppose the bill do not, in fact, disagree with the general idea of spending more than three times (in fake money) in one shot than the size of the entire 2007 budget deficit. Rather, they disagree with the fact that Democratic buddies will get paid off instead of Republican buddies.

Republicans also have their knickers in a twist about being left out of any substantive role in negotiations over the bill in Congress. President Obama graciously met with GOP congressional leaders last week, but the president does not control his allies in Congress, so this didn’t translate into much actual bipartisan compromise. House Democrats’ idea of bipartisanship was to throw in a few paltry items they thought might appease the GOP and then to tell their GOP colleagues that they were required to vote in favor of the bill.

Political nitpicking aside, the main point is that most congressional Republicans are completely in favor of blowing a trillion dollars that don’t actually exist. Contrast this federal debacle with LaVarr Webb’s Jan. 29 commentary about the budgeting process in the Utah Legislature.
“It is remarkable to contrast what’s happening at the federal level and state level with regard to spending, borrowing, and fiscal restraint (or lack thereof). The Congress, with its ability to sink ever deeper into debt without worrying how the debt will be paid, is spending with total abandon, actually looking for more places to spend money and (hopefully) stimulate the economy. We will, of course, be happy to spend that federal money that comes to Utah.

“At the state level, our lawmakers are scrutinizing budgets line by line, looking for places to cut, rather than spend, with a determination to balance the state budget both for fiscal 2009 and 2010. They will use creative means to stimulate the economy, including through investments in highway and building construction, but any borrowing will be based strictly on the state’s ability to pay off the bonds with identified on-going revenue. What an immense difference in budgeting approaches.”
Our federal politicians could learn a thing or two from governors and legislators in fiscally responsible states. Leaders in spendthrift states would gain much longer term benefit by emulating Utah’s budgetary policies than by lobbying Washington politicians for a piece of the stimulus pie. The former is somewhat responsible. The latter is akin to a drunk begging for booze.

Loathing and Adoration

I have been disappointed by some conservatives that have been quick to see evil in absolutely everything that President Obama and his administration do. This attitude is both absurd and wrong.

But it is no more illogical and off kilter than emoting adulation and loyalty to the point of believing that everything the president and his administration do is virtuous. These two attitudes are opposite sides of the same coin. Regardless of who sits in the White House, these attitudes are ultimately misguided and destructive. This applies to every elected office at any level in our society.

The social contract in a democratic society requires that when a leader is fairly elected, we all accept and regard that person as the legitimate leader. The mature way of regarding any such leader is to cheer actions that comport with our understanding of good government and to condemn actions that we believe go against such principles — to encourage the former and discourage the latter. This should be true regardless of underlying ideology or who we voted for.

Unqualified acceptance of a leader’s actions ultimately leads us to embrace actions that we would otherwise reject outright. Adding adoration to this injudicious approval amplifies this by orders of magnitude.

The other side of the coin is just as bad. Reactive rejection of a leader’s actions leads us to forego opportunities. We end up cutting off our noses to spite our faces. Adding hatred and loathing to this blind disapproval poisons the well of compromise upon which democratic societies rely to survive.

We have seen ample evidence of both of these extremes in the first 10 days of the Obama presidency, but that is nothing new. We saw both extremes on regular display during previous presidencies, as well. Historic precedent is hardly a reason to accept or embrace such insidious thought patterns.

A mature approach to political leadership will benefit all of us.

Wednesday, January 28, 2009

Thank Goodness for Grown Ups

The Standard Examiner reports that some of the GOP leaders in the Utah State Senate aren’t very keen on Governor Huntsman’s idea of completely scrapping the sales tax on food. Changes in previous legislative sessions resulted in the state sales tax on food being reduced to 2.75 percent earlier this year. But the governor has wanted to dump the tax completely since his first term campaign.

Each of us must eat, regardless of individual economic situation. This makes taxes on basic needs such as food regressive. It is often considered helpful to the poor to reduce regressive taxes. Investopedia explains regressive tax thusly:
“A tax that takes a larger percentage from low-income people than from high-income people. A regressive tax is generally a tax that is applied uniformly. This means that it hits lower-income individuals harder.”
The problem with the governor’s food tax cut is that the resulting loss of revenue must be compensated for somehow. I have frequently decried our state government’s spendthrift ways; although, Utah looks highly fiscally responsible compared to the likes of California. I have complained about vastly increasing the size of state government during the recent budget surplus years.

But this year our politicians are getting serious about significantly cutting the budget due to the tight economic situation. The good senators can be excused for suggesting that cutting a steady revenue stream in a time when revenues are already sharply down is not a good idea.

Governor Huntsman has proposed compensating for the food tax cut with a huge tax increase on tobacco sales. This is problematic on several fronts. The St-Ex reports Sen. Pete Knudsen (R-Brigham City) as saying that “replacing a steady tax flow with one that is declining (because of reduced smoking) is not a good idea.”

Beyond this is the fact that the revenue stream from tobacco sales will be lower than the Governor’s estimates. Politicians seeking to impose heavy sin taxes consistently underestimate the amount of cash the new taxes will generate. This is a rule that is always followed.

This is partly due to the fact that the heavy tax actually does start to accomplish what it sets out to do: reduce consumption of the products that fall under the tax. Government estimates rarely accurately account for reduced consumption rates.

An even bigger problem arises because the heavy taxes create or bolster black market trade for the products being taxed, especially if the products can be procured more cheaply in nearby jurisdictions. The governor is trying to hedge against this by encouraging neighboring states to drastically increase their tobacco taxes as well. But few are taking his suggestions.

Fort Hall, the Shoshone-Bannock reservation near Pocatello Idaho sells tobacco virtually tax free. It’s not a long drive from the Wasatch Front to stock up on cartons of cigarettes to sell to friends. For many in Utah, it’s not that far to get to a border town in a neighboring state where tobacco products will be far cheaper than in Utah. Of course, this means that the state will have to develop new black market interdiction programs. These programs will not be free. They will further reduce the net revenues from the governor’s big tobacco tax.

This helps explain why some senators aren’t very excited about the governor’s food tax cut. But the senators are even more pragmatic when they point to the basic problem behind all government spending cuts and tax cuts. The St-Ex says that both Sen. Knudsen and Sen. Lyle Hilyard (R-Logan) “said that the public continues to want services but also wants fewer and fewer taxes.”

Sen. Knudsen is quoted as saying, “There's a disconnect in the public in terms of the services they want and the fact that we have to have revenue to provide them.” As Americans, our government is of, by, and for us. Each of us should be interested in governmental fiscal responsibility. Still, it is natural consumer behavior to want to get as much as possible for the lowest price possible.

Believe it or not, some elected officials actually think that government must live within its means. How blessed we are to have some political leaders that actually understand this principle. Unfortunately, they are subverted by peers (plus politicians in other states and federal politicians) that wish to give into the public’s desire to get what they want from government without paying much for it.

Too many of our politicians and citizens act like political children. I have areas where I disagree with the state senators quoted in the Standard Examiner article, but it’s good to see that somebody is willing to play the part of the grown up.

Monday, January 26, 2009

The Real Problem

Congressional earmarking has earned a horrible reputation. Earmarks have been decried by both parties as inherently evil. And yet neither party has been able to refrain from heavily employing earmarks.

The Office of Budget and Management (OMB) provides this definition for the term earmark:
“OMB defines earmarks as funds provided by the Congress for projects or programs where the congressional direction (in bill or report language) circumvents Executive Branch merit-based or competitive allocation processes, or specifies the location or recipient, or otherwise curtails the ability of the Executive Branch to manage critical aspects of the funds allocation process.”
Congress used to create policies, establish a budget for carrying out those policies, and then task the executive branch with executing the policies with the budget supplied. Earmarks make an end run around the priority setting process and the competitive bidding process. They amount to micromanagement of the executive branch.

People have come to loathe earmarks, but perhaps for reasons that most don’t quite grasp. This AP article explains why earmarks may not be as bad as the alternative. The author describes how the new transparency and anti-earmark policies of the Obama administration are driving the earmarking process underground. It’s still happening, but it’s actually less transparent than the bad old way.

Why is it that everyone hates earmarks anyway? After all, earmarks actually amount to a paltry portion of the federal budget. And many federal legislators, such as Utah’s Senator Bob Bennett, are “proud” of their efforts to bring federal pork to their home states via earmarks.

It is not the relative size of the earmarks that upsets Americans. It is what earmarks represent. Earmarks are a symptom of a much larger problem. What is that problem?

Tad DeHaven, commenting on the AP article I referenced writes, “The real problem is that few, if any, limitations remain on what our federal masters can spend our money on.” DeHaven makes a good point. But I think that his analysis actually falls short of the “real problem.”

Lobbyists and politicians that game the system exist only in proportion to the amount of resources controlled by the government. The more resources the government controls, the more people there will be lining up to get a share of the government pie. This is really basic. If you want less earmarking and lobbying, you must reduce the scope of government. Period.

Trying to ban political influence trading is like trying to ban flies from a sewage pond on a warm day. So, in a sense, Senator Bennett was right to stand against an earmark ban, because it would amount to nothing more than symbolism and would actually reduce government transparency. But in a more important way, Senator Bennett is wrong to express pride in this system.

I still haven’t gotten to the root of the problem I alluded to above. The government didn’t gain such massive powers over the nation’s resources in one fell swoop. And contrary to what many suggest, this grab was not executed on an unwilling and unaware citizenry. Rather, it is American citizens themselves that are to blame for the current state of affairs.

Yes, my fellow Americans, WE are “the real problem.” How? Why?

WE demand more and more from government. WE demand that government take more control of our economy and provide more services. Every time I turn around, someone is demanding that the government “do something” about this or that. And yet WE demand that taxes not be raised to cover the expanding federal budget.

Americans are a bunch of spoiled children. Like bratty children enjoying the fruits of their parents’ earning with no care about the family budget, we are completely separated from the cost of the government we consume. Is it any wonder that we have an increasingly paternalistic government?

When there is no connection between what you pay and what you get, you have no incentive to limit what you consume. In fact, you have an incentive to consume unnecessarily.

But we Americans, in general, don’t seem to care. We’d rather take the Alfred E. Newman approach. “What, me worry?”

Friday, January 23, 2009

A Dad's Job

When I was about nine or ten, my Dad had some vacation time that had to be used before the end of summer, but Mom couldn’t take more time off work right then. Usually this kind of situation would mean that Dad would spend his days doing home improvement projects. I don’t remember why, but this time was different.

Every morning during one week late that summer, Dad would load me and my brothers into the family sedan and drive up to Pineview Reservoir. We went to different spots on different days. We’d get our fishing gear out and spend some time fishing from the shore. When the sun rose high enough that it started to feel hot, we’d pack up and go home.

I don’t remember if we ever caught anything. I was certainly hoping to avoid catching a fish on my line. For whatever reason, fishing has never really appealed to me. I never cared to learn the finer points of angling and I never had any desire to clean a fish.

A brother-in-law of mine has been an avid angler. He will fish any time of year, given the chance. He can look at a stream, river, pond, or lake and intrinsically know what kind of fish are in it and what it takes to catch them. If he hangs around such water for very long, an overpowering urge builds up, and he is soon out there with his fishing gear.

I have children than enjoy fishing, but only one of them has much interest in cleaning the fish that are caught. We live near a trout farm. My middle child is spellbound when he watches the workers there clean and fillet fish. He finds fish organs fascinating. He can envision himself working at the fish farm when he’s a couple of years older.

Since my children like to fish on occasion, I actually do sometimes take them fishing. This only happens about once every other year. I probably wouldn’t do it at all, except for that week years ago that Dad took us fishing on summer mornings instead of doing projects around the home.

Hauling a carload of drowsy boys out during the last few days of summer when they could otherwise be sleeping in, only to have them mostly run around and chase each other instead of fishing, making noise enough to scare the fish away, was likely not the most enjoyable thing Dad could have done with his time. But he did it anyway, I assume, because he felt it was important to share that time and experience together.

Tonight I will go winter camping with my 11-year-old son. We will construct a snow shelter and sleep in it. I have done a fair amount of winter survival camping during my life, and this will be yet another episode. The conditions will be messy (and somewhat dangerous) due to the rain. But I know the proper techniques and I have adequate equipment.

Still, I don’t go winter camping for personal enjoyment, as do some of my survivalist acquaintances. I don’t really care to do it. And I wouldn’t do it at all, were it not for children that I think should learn winter survival skills. It is a great adventure for adolescents. They learn that they can survive satisfactorily in conditions that seem quite severe and uninviting. And who better to share those kinds of experiences with than their Dad? These kinds of things can be more peer-oriented when they get a bit older.

I have often told my wife that once my youngest child passes the stage of learning winter camping skills, I’m done with it. Alas, that’s still years away. And despite what I have said, if children other than my own need my help to learn those skills after that, I will still probably find myself going winter camping.

Wednesday, January 21, 2009

The Geithner Dilemma

Timothy Geithner appears headed for confirmation as Treasury Secretary, despite his past underpayment of federal taxes to the tune of $34,000. Politicians in both parties and big business interests want Geithner in that position. Many consider him to be the single most qualified individual in the nation for the job.

(Is that a good thing, or should it sound a warning alarm when all of the various powers line up on an issue? Some of the rhetoric being used in support of Geithner as reported by the AP is downright scary. It is reminiscent of Palpatine’s rise to power portrayed in Star Wars. Geithner is being portrayed as the one guy that can save our economy. This sets him up as a messiah that will wield incredible powers with which no political appointee — no matter how wonderful — should ever be trusted; thanks in no small part to the Bush precedent.)

One of the reasons Republicans favor Geithner is that he is a political independent. He would presumably be more focused on doing the fiscally correct thing rather than the politically correct thing. Republicans worry that they might end up with someone worse if Geithner were dumped for his tax indiscretions.

Most reports make it sound as if Geithner’s tax underpayments were unintentional. As more information has become available, a reasonable suspicion has been raised that such assumptions might be faulty. At any rate, anyone with such a record of underpayment — innocent or otherwise — would be disqualified from IRS employment. Should this be any less true of the person that will head the Treasury Department, of which IRS is a part?

One argument that has been bandied about by some conservatives is that Geithner’s appointment would help point out the insidiously complex nature of our tax code. Shouldn’t a person’s federal taxes be simple enough for a Treasury Secretary to figure? This is a good point, but it is doubtful that Geithner’s tax problems would result in any kind of tax simplification whatsoever.

Besides, even if Geithner were not confirmed, his example effectively makes the point already. And this line of thinking raises the spectre that Geithner might not be qualified to be Treasury Secretary if he can’t even compute his own taxes.

I do not believe that a president’s appointees should be lightly voted down. With the exception of ethical issues or woefully inadequate qualifications, a president’s appointees should generally be confirmed, ideology notwithstanding. No politician or political appointee should be held to a standard of perfection. But there are clearly matters that should disqualify a candidate from service, even if she/he is otherwise qualified.

If the American experience has taught us anything, it should be that no individual is indispensible. Regardless of how qualified a person might be to fill a position, there are other Americans available that could do a great job in the position as well. Republicans can perhaps be excused for fearing that such a person might be less in line with their ideological views, but this hardly constitutes grounds for alleging an appointee’s indispensability.

Beyond this, I believe that Geithner’s confirmation creates a moral hazard. Americans are already jaded about special privileges enjoyed by the elite political and business classes. This will only add fuel to the fire. It is a recipe for reducing tax compliance among citizens.

On the one hand, Geithner’s confirmation will demonstrate that you have to settle up your known tax problems before being allowed to head up the department that oversees taxes. On the other hand, it will demonstrate that people with the right connections can be excused for actions for which regular Americans routinely receive much harsher punishment.

I do not believe that Mr. Geithner is indispensible. The moral hazard of generating cynicism among Americans will exact a higher cost on our system than would finding a different candidate for Treasury Secretary. Mr. Geithner might actually be a fine and highly qualified individual for this job. But his confirmation will ultimately create more problems than it will ever solve.

Monday, January 19, 2009

An Optimistic View

I recently finished reading Simple Wealth, Inevitable Wealth by Nick Murray. Murray has more than four decades of experience advising investors and investment advisors. His book is expensive but quite brief and easy to read. He deals mostly in core principles. There is little fluff.

In this time of economic turmoil, many of us are reeling from the loss of a decade worth of value in our 401k accounts. Many are running away from stocks (equities) for (supposedly) safer havens. Murray says that this is exactly the wrong thing to do. One of the secrets to developing a nest egg that will outlive you and your retirement years is sticking to principle, avoiding emotional responses, and staunchly refusing to do what everyone else is doing.

Murray strongly advises that you find a good long-term financial advisor. He provides information for interviewing potential advisors. This person’s major job, says Murray, is not so much to pick your funds as to prevent you from making one or more of the eight mistakes investors commonly make that prevent them from reaching their investing goals.

Throughout the book, Murray repeatedly demonstrates that the major cause of investment underperformance is not the performance of the mutual funds involved, but rather faulty investor behavior. Most people try hard to control factors beyond their control — all of which amount to 10% or less of their investing outcome. They should instead focus on the one thing they can control: their own behavior. This constitutes 90+% of individual investment outcomes.

Some of the basic rules Murray lists include:
  • Only put long-term investments in equity funds. Savings for short-term needs should be kept in less volatile instruments.
  • When it comes to long-term financial goals, volatility is your friend; not your enemy. Murray’s discussion of Dollar Cost Averaging is a gem. Expect nasty long-lasting bear markets. Don’t panic.
  • Business ownership (equities) is actually safer in the long run than lending (bonds) due to inflation.
  • Make a reasonable plan (he provides a very simple formula) and follow the plan. Adjust as necessary. Be the tortoise, not the hare.
  • Avoid the big mistakes most people make. Most of the mistakes Murray lists have nothing to do with reason and everything to do with emotion and/or ignorance. Everyone would end up well off if this were so easy, but we all face a nearly overwhelming culture that pushes us to do the wrong thing. This is where a good advisor ends up being worth far more than you will ever pay him/her.
  • When it comes to investing, journalism is your enemy. Financial journalists are in the business of generating sales of their wares; they are not in the business of helping you produce wealth. Murray says that financial journalists almost always have the wrong focus and consistently get the important things wrong.
  • When everyone (journalists, pols, pundits, your friends, etc) start using the same terminology to describe financial or economic matters, you can be pretty sure that groupthink is going on and that the conclusions reached are wrongheaded and detrimental.
If you only read the six-page epilogue in Murray’s book, the cover price would be worth it. Murray titles this chapter Optimism is the Only Realism. He writes:
“No one can plan for the future — much less invest successfully in it — without believing in that future. And this becomes my working definition of optimism: an abiding faith in the future.

“And I’m not speaking here of starry-eyed optimism or blind faith. I don’t advocate hope for the future in spite of present reality, but because of it. …

“Pessimism, on the other hand, is deeply counterintuitive, because no one examining history would arrive at a declinist worldview. Thus, for me, pessimism is a lot like race hatred: no one would ever generate it spontaneously. Someone has to teach it to you.”
Murray notes that there have always been reasons to take a dim view of the future. And there have always been reasons to dump equities and run for financial cover (to a faux security). There is always a reason why this time is different than all those other times. But it really isn’t different. The media makes money off of selling doom and gloom. But we don’t have to buy it.

None of this is to say that there aren’t problems — serious problems that need to be addressed. And this does not refute my millennial religious beliefs, which I believe square with optimism when proper preparation is involved.

Murray’s book is an interesting, easy, and quick read. It is also eye-opening. I think that anyone that is interested in a decent retirement would benefit from considering what Murray has to say.

Thursday, January 15, 2009

Fixing Our Defective Learning Model

Yesterday afternoon my third grader came home with a newfound air of confidence and reported excitedly that his teacher had told him that he’s ready to move up to the fourth grade reading class. The charter school he attends focuses more on each student’s needs and abilities than on his/her age.

After having three sons that excelled at reading early on, our fourth seemed to be cut from different cloth. Even from the time he was tiny he didn’t care to be read to. His older brothers had loved that activity. In preschool and Kindergarten, and even first grade, letters and words just didn’t seem to make sense to him. Our painstaking personal training with him didn’t seem to help much. He also had some speaking dysfunction for which he received therapy for quite a while.

Scientists have long known that girls develop language and reading skills earlier than boys. Since the early 90s studies have recognized a significantly higher rate of reading dysfunction among boys than among girls. Recent studies have shown that the brains of girls and boys process language very differently. (See 3/5/08 Science Daily Article.)

When dealing with auditory or written language, girls’ brains engage abstract thinking regions while boys’ brains generally do not. Instead, boys process language in the tactile sensory centers of the brain. One study found that “In boys, accurate performance depended -- when reading words -- on how hard visual areas of the brain worked. In hearing words, boys' performance depended on how hard auditory areas of the brain worked.”

It is possible that this is part of the reason that girls develop language skills earlier than boys. Additional study is needed to determine whether these tendencies continue into adulthood. Some educators are responding by developing language and reading curriculum that is more tactile and sensory based. But even this is not enough to overcome the basic issue of brain development.

The ability to learn anything in our education system is strongly tied to the ability to read. In recognition of this fact, there has been a huge push over the past generation to get children reading earlier and to get each child to a grade appropriate proficiency level.

The problem with this is that we are now realizing that many boys’ brains are often insufficiently developed in the earlier grades to achieve what is demanded of them. The average boy in grades K-3 is physically incapable of reading at the average reading level for the grade. But we have deeply entrenched policies that drive the requirement anyway.

The result is that overwhelming numbers of young boys are treated as defective. This label is not lost on boys. They get the message very early on that they are academically substandard performers. This message deeply informs their self image and identity, producing lifelong individual and far reaching societal results.

Couple this with cultural problems such as the diminution of fathers over two generations and a generation of policies aimed at improving opportunities for girls and women, and you end up turning out far fewer male than female college graduates. Today the college graduation ratio is about 60-40 in favor of females. It is estimated that females will make up two-thirds of all college graduates by 2020.

Early disparity in reading ability is not the only factor lending to this trend. But it is part of an entire culture that has developed and become institutionalized that treats boys as essentially flawed and dysfunctional. This has been studied and well documented by Michael Gurian, Christina Hoff Sommers, Michael Thompson, and others. In reality, we have a defective model; not defective children.

It is time to rethink our reading-centric early education requirements and to develop education models that recognize realities of brain development. We need learning environments and curricula that take advantage of the natural brain development of both girls and boys.

My son’s charter school is one of two in Utah that currently employ the expeditionary learning model. This model involves a lot more hands-on techniques that are sensory rich. There is a lot more moving around inside and outside of the classroom. There are far more off-campus learning experiences. There is more emphasis on the natural world, as opposed to environmental messages that imbue a fear of such (as has been documented by Richard Louv).

We are beginning to see some payoffs from this type of learning approach. We are seeing that the amount of time spent in school is far less important than how school time is spent. I only wish that more children could experience the kinds of benefits our children are seeing.

Monday, January 12, 2009

The Recipe for Despotism

“Modern tyrants understand that there are many ways to manipulate their subjects and most do not require the use of force.” —Mary Anastasia O’Grady

The Wall Street Journal’s Mary Anastasia O’Grady has written a chilling article titled, Dictatorship for Dummies. She lists three elements necessary to a firm dictatorship:
“All police states hold "elections." But they also specialize in combining the state's monopoly use of force with a monopoly in economic power and information control. Together these three weapons easily quash dissent. Venezuela is a prime example.”
While these three elements combine to consolidate dictatorial power, listing them individually might be useful:
  • Monopoly on force
  • Monopoly on economic power
  • Control of information
Although Ms. O’Grady’s article is about Hugo Chavez and Venezuela, it might be a good exercise to see where the U.S. stands on these three elements.

Monopoly on use of force: “Gun nuts” have been derided for buying up weapons and ammo for fear of what the politically ascendant Democrats might do to gun rights in a rush to consolidate all force under government control. But beyond an armed citizenry is the question of how closely the military and police are aligned with the tyrant(s) and how these factors are employed to squelch domestic political dissent. Where are we and where are we headed?

Monopoly on economic power: This does not necessarily mean that the government owns all means of production and finance. It merely means that by and by, only those private concerns that are loyal to the tyrant(s) are permitted to conduct business. This brings to mind bailouts and lobbying. Where are we and where are we headed?

Control of information: Yes, this means control of the media and avenues of free expression that runs counter to the establishment view. But it also means “control of the narrative” by indoctrination in government schools. Where are we and where are we headed?

Although Ms. O’Grady is writing about the tyranny of a traditional dictatorship, it is quite possible to create a de facto dictatorship through a seemingly democratic political process. The majority of Venezuelans were initially extremely enthusiastic about Mr. Chavez.

It is also quite possible for the tyrants to be a mass of people rather than just one despot at the head of a regime. Usually it involves the ruling class and a corrupt business class. Again, where are we and where are we headed?

We’re not in the same boat as Venezuela and we likely never will be. That does not mean that we are free of tyranny. Tyranny doesn’t have to resemble the Venezuelan model to exist.

We Should Have Seen That Coming

AP reports: GM exec says automaker may need more gov't money

Well, that was predictable. But you’d think these guys would at least wait until the Obama administration takes office next week before shooting off their mouths on the subject. This kind of talk won’t win them any popularity contests outside of the rust belt.

This was also predicable:
“UAW President Ron Gettelfinger has said the union will approach President-elect Barack Obama's administration to end what he called unfair requirements in the [auto company bailout] loan terms for concessions from the union.”
Even before the bailout, the union had agreed to take over the trust fund that administers their retirees’ generous health care benefits in 2010. This single measure will go a long way toward bringing Big Three labor costs closer in line with those of domestic-foreign auto makers like Toyota and Nissan.

Among the ‘unfair’ elements of the bailout, per the union, is the requirement that the union “take company stock instead of cash for half the payments into the union-run health care trust.”

Receiving half of the trust payments in stock would incentivize the union to work for improved company stock values. Getting stock while the price is at historic lows is a good deal — if you truly expect the companies to be viable in the future.

If you get a chunk of GM stock at $4/share and the company then performs so well that the price eventually returns to $64, your trust has improved its GM holdings by 1,600%. In this scenario, $100 million would become $1.6 billion.

Of course, if you expect the car companies to tank completely, or you expect stock prices to decline even further and remain depressed for a long time, this provision would seem unfair. If you expect the car companies to continue to press for more largess from the apparently bottomless well of the federal government (many seem to think that it’s like Utgarda Loki’s drinking horn in his challenge to Thor), you’d want cash up front instead of stock.

At any rate, it should be expected for the union to seek better terms from the new Democratic (more union friendly) administration. And everyone knew that when the Bush administration did the car company bailout last month it was merely kicking the ball into the Obama administration’s court. So it shouldn’t shock anyone that the car companies will also lobby the new administration for more cash and easier terms.

The car companies and the banks are just the tip of the iceberg. The Bush administration has established a bailout precedent that will bring the Obama administration an endless line of seekers. But the Chief Executive is not a giant enchanter king like Utgarda Loki, and the federal budget is not a bottomless well.

Nor are these seekers heroes of great feat like Thor and his companions. Rather, they are more akin to wolves that are content to devour the product of others’ labors, even if it means that they are shackled to become the government’s lap dogs.

Friday, January 09, 2009

Just Stop It!

We all get them. Almost everyone I talk to despises them. But I know that some of you out there love them. In fact, you treasure them so much that you must share them. You can’t stop yourselves from doing it. You know who you are. Come on, admit it.

What am I talking about? Banal emails. You know the kind I’m talking about. You get them all of the time. The ones where you’re in the 17th level of the email forwarding chain. Rarely are these things informative in any realistic way. And they’re often incredibly difficult to read.

Sometimes repeated forwarding has created line breaks in the strangest places. Some are written entirely in upper case and/or bold type. That’s the text equivalent of having someone shout directly in your face at close range like a drill sergeant. Other times all line and/or paragraph breaks have been removed from the original text so that it’s like reading a 1,000-word essay in a single paragraph.

Then there are the emails that have been formatted in 48-point type so that they could be read from 20 paces, except that you have to keep your hand on the mouse because you need to scroll three times to read a single sentence.

Some self appointed creative artist occasionally changes the font color or uses a non-standard type face. Sometimes it’s one of those cutesy fonts that looks like something you see on plaques in those boutique shops that smell of scented candles and overpowering faux floral fragrance. And to be extra artsy, people occasionally generously sprinkle cutesy images throughout the email that call to mind big-eyed fluffy baby kittens. Sometimes the ‘real artistic greats’ use animated images.

Apparently even this level of fine art fails to satisfy the repressed artiste that knows how to use PowerPoint. Some believe themselves such masters of inspiration that they throw together PowerPoint presentations consisting of stirring images, often with emotive messages on each slide, all backed up by moving music. This is all great until you get the 14th such soaring message for the week by Tuesday afternoon.

Everyone has already seen most of these emails anyway. Usually many times. Oh, sometimes they’re repackaged. They’re formatted differently, or some elements of the story have been changed, or whatever. The point is that they often simply repeat emails that have been making the rounds for years. In some cases they are the very same message that is just making another seemingly eternal round, because bad emails never go away.

One reason for this is that the message nearly always includes encouragement to forward it to others. Sometimes it’s “ten people you know.” Other times it’s “everyone you can think of.” These insidious forwarding demands often include threats of one sort or another, such as: “if you love this country,” “if you care at all,” “or you could sit there and do nothing,” etc. It’s an age-old chain mail trick.

The guilt tripping implication is that if you don’t immediately forward this piece of drivel to a load of people, you are an America hating, slovenly, uncaring, people hating idiot. You, of course, are none of those things. To prove it, you quickly forward the email and your guilt is assuaged.

Often these time-wasting emails — regardless of whether they’re inspirational, thrilling, endearing, political, fear mongering, humorous, outrageous, etc — are filled with errors, misconceptions, half truths, and outright falsehoods. The prime motive, it seems, is to arouse an emotional response without regard for truth. You can often determine with less than a minute of fact checking how accurate these messages are. But apparently you habitual forwarders have no clue how to use and other similarly useful websites.

Some of you consider yourselves to be highly moral individuals. You would condemn the spreading of lies and gossip in the strongest of terms. But somehow you have no problem distributing deceit and fabrication when you think it is well intended. Accuracy is seemingly of little importance to you when it comes to eliciting gratuitous emotional responses. Especially when a few mouse clicks can quickly spread those feelings to people near and far.

I know that I have offended some of you because you have dropped me from your email lists when I have been boorish enough to reply to everyone on the list providing correct information to counter a deceptive message you sent. Although I’m no longer on your list, you still continue to forward unreliable messages to others because — why? It gives you a sense of power and superiority? You enjoy the feelings involved — and those sensations exceed the value of truth?

Before you sink back into your comfortable web of things you know for sure to be true but that just aren’t so, stop and get help. Go to a loved one and cry out, “Stop me before I forward again!” Then do what I do. Since all of these emails have telltale signs just in the subject line, do not even open them. Just permanently delete them. Or reply and ask your friends and loved ones to stop sending these kinds of messages to you.

It might be difficult for the first few days. You will find yourself drawn to your email client, itching to see what goodies it has brought you today. If you can’t stop yourself, get professional help. You might find yourself at a 12-Step meeting saying, “Hi, I’m [your name], and I’m an addict.” Recovery might be painful, but it will be worth it. Don’t wait. Start your road to healing now. You will be happier.

And if you absolutely must read those emails, at least do the rest of the world a favor and quit forwarding them to others. They will be happier.

Wednesday, January 07, 2009

The Stimulus That Won't

President-Elect Obama and major players on both sides of the aisle in both houses of Congress are rapidly lining up behind an ‘economic stimulus plan.’ Unfortunately, none of the political power brokers seem to have the slightest inkling of what will effectively stimulate the economy.

SmartMoney provides a brief description of the $300 billion tax cut portion of Obama’s stimulus plan. Almost nobody is paying attention to the fact that the package increases government spending by about $600 billion. The Keynesian argument that increasing government spending always stimulates a bad economy seems to be simply taken for granted by most of the political class and the media. Also, few are questioning the other garbage that federal legislators are licking their chops to include in this package.

Moreover, nearly all of the tax breaks being proposed (including those championed by Republicans) are either temporary, wealth transfer payments disguised as tax cuts, or both. In effect, the proposed tax cuts are not much different from those included in last year’s stimulus package, which is generally conceded to have failed to stimulate the economy. Many (including Republicans) are saying that the reason for this is that the package wasn’t big enough.

Let’s parse that reasoning a bit. Distributing a wad of cash that we didn’t even have in a ‘rebate’ to ‘taxpayers’ (including many that didn’t pay taxes) didn’t work because we didn’t use a big enough wad of cash. I guess that makes sense in the weird world of politics, but it makes little sense in the real world.

In truth, every dollar of ‘rebate’ must come from somewhere — and that somewhere is the American taxpayer. It is a tax that must be paid sooner or later; in inflation, decreased interest on savings, eventual tax increases, lost opportunity costs, etc. Any stimulus ‘tax rebate’ results in higher taxes, whether those taxes are visible or hidden. (Most politicians prefer to hide tax increases.)

Tax rebates move money around, but they cannot produce any real economic improvement. The only thing that actually stimulates the economy is for producers to produce more (or more efficiently) than they are currently producing. The only thing the federal government can do to effectively make that happen is to provide permanent incentives, in the form of getting out of the way of producers and taking less of what they earn. Producers tend to sit tight when such incentives are only temporary.

I have been deeply disappointed by some of the tax cut plans being bandied about by ‘conservative’ politicians and wonks. One suggestion, for example, is a tax holiday from payroll taxes (Social Security and Medicare) lasting from six to nine months.

Employee gross income is assessed 12.4% Social Security tax and 2.9% Medicare tax, for a total of 15.3% payroll tax. However, employees only see half of that (6.2% + 1.45% = 7.35%) coming out of their pay because employers are required to pay the other half.

Cutting payroll taxes for a few months, the argument goes, would stimulate the economy because employers (i.e. producers) would be able to put that 7.35% of payroll taxes that they now pay to more productive use. Also, it is argued, employees would freely spend their increased 7.35% take home pay. A side benefit noted by some conservatives would be that employers and employees alike would suddenly discover just how oppressive payroll taxes really are, possibly sparking a revolt when the tax holiday concludes and taxes are increased again.

Why don’t I like this plan? For starters, the payroll holiday would only be temporary. As I mentioned above, temporary tax cuts provide no real incentives for producers to produce more or better, thus, temporary tax cuts do not effectively stimulate the economy. Ergo, this plan would not improve the economy.

Another problem is that Medicare and Social Security are already facing future financial collapse. Giving taxpayers a holiday from paying Social Security and Medicare taxes while continuing to provide (and promising to provide) the same level of benefit from these programs is insane. The promoters argue that the plan would produce enough stimulus to eventually recover the taxes lost during the tax holiday, but per my previous paragraph, that won’t happen.

As ludicrous as the payroll tax holiday is in a fiscal sense, it is no more absurd than every other ‘tax cut’ under serious consideration by federal power brokers. Giving ‘income tax rebates’ to people that never paid income taxes (chiefly non-producers) is just as ridiculous, for example.

If the federal government wants to stimulate the economy, it should immediately and permanently cut tax rates on actual producers. Business and investment tax rates should be cut across the board. Even this will be only partially effective in stimulating the economy unless the federal government insists on fiscal restraint and spending cuts to match the tax cuts.

Unfortunately, nobody with political clout is even willing to think about actual permanent rate cuts, let alone talk about them in a serious fashion. In the current political climate in Washington, ‘permanent tax rate cut’ is the phrase that must not be mentioned. Heretics will be punished. Ditto that when it comes to cutting federal spending.

This leaves me to believe that most people with federal political power: a) are ignorant of how the economy actually functions, b) have little interest in actually stimulating the economy, or c) both of the foregoing. At any rate, ‘economic stimulus’ is a term being used today to further purposes entirely different from what most people understand that term to mean.

It appears inevitable that whatever gets passed in the name of economic stimulus will work pretty much like last year’s stimulus package. Only worse.

Monday, January 05, 2009

Bush #45?

Former President Bush — that would be President #41, George Herbert Walker Bush — says here that he would like to see his son become president someday. But wait, you say, hasn’t his son already been president for eight years? That would be President #43, George Walker Bush (aka W). No, #41 is talking about his son Jeb Bush, the former two-term Governor of Florida.

Jeb has signaled that he may be interested in seeking the U.S. Senate seat that will be vacated by Mel Martinez (R-FL), who has announced his retirement, leaving an open race for the seat in 2010. Jeb was relatively popular as governor, so he likely stands a good chance of being elected by Floridians, should he seek the seat.

But president?! Even the former President Bush admits that “right now is probably a bad time” for another Bush to seek the White House. Gee, you think so?

Let’s assume, for argument sake, that Jeb is elected to the U.S. Senate in two years. And let’s assume that voters find his service in that position as satisfactory as they found his service as Governor of Florida. About the time his six-year term would be drawing to a close, he would be 63 years old, just a year older than his brother will be upon his exit after eight years as president.

Standing alone as an individual politician, it is possible that Jeb could make a reasonable run for the presidency in 2016. But as a Bush, his chances are limited — I think appropriately so — the Bush political machine notwithstanding.

Regardless of how well Jeb performs as a politician, he is inescapably tied — for good or bad — to the Bush brand. It took Americans only one term to sour on Jeb’s father. It took only slightly longer for Americans to sour on Jeb’s brother. Let’s face it: if W had been standing for re-election in 2006 (or 2008), he would not have won, regardless of who is opponent happened to be.

There is no denying that the Bush brand is damaged, perhaps permanently so. Will eight years change that? It is possible that it might be tempered somewhat. It’s generally impossible to accurately say what the future historical view of current events will be. Although American’s didn’t much care for #41, they were willing to give one of his sons a chance at being president. But I wouldn’t expect Americans to give another of #41’s sons a similar chance. I wouldn’t expect them to give a grandchild (or even great-grandchild) such an opportunity.

Do Americans really like dynasties? There is the Kennedy clan that suggests that some do. But frankly, we have a country of 300 million people. There are plenty of other decent candidates for the presidency outside of the established dynasties. When it comes to political campaigns, name recognition buys a lot. But, as Hillary Clinton found, it may not buy enough. It can also work the other way.

I will say this about #41. He demonstrates some good sense and class that some other former presidents obviously lack when he “said it would be “gratuitous” for him to offer advice to the incoming president.” Rather, Bush 41 said that if he saw something amiss, “I'd like to have the feeling I could bring it up with [the President] just based on some experience in the past, war and peace, Middle East, Europe, Germany.” He’s not going to try to publicly insert his opinion of the President’s actions, but he might speak to the President privately about a matter.

It is possible that Jeb Bush could be a great president. But I seriously doubt that fate will give him a chance to ever prove it. I think most Americans are OK with that.

Friday, January 02, 2009

Constitutional Conservatism

Each political party has a constant ongoing debate about policy, priority, and methodology. This debate within the GOP started to get more lively during 2006 when a number of harbingers warned of trouble for the party in that year’s elections. Since the party’s deplorable performance in the 2008 election, this debate has reached boiling point.

There have been countless calls from members of the party’s various factions for ideological purity. In essence, some members of differing factions either want to excommunicate those that don’t agree with them or else divorce themselves from what they see as an uncomfortable union to seek for a better alliance.

It is difficult for me to see how breaking up the present GOP coalition will result in better achieving the main goals of any faction than in the current coalition. As Hoover Institution fellow Peter Berkowitz explains in this WSJ article, “Slice and dice citizens' opinions and voting patterns in the 50 states as you like, neither social conservatives nor libertarian conservatives can get to 50% plus one without the aid of the other.”

The obvious answer seems to be what usually works long term in politics: focus on the areas of greatest agreement and forge a coherent and feasible approach to those matters. Accept that you don’t get everything you want, but that you can sometimes get others to accept something important to you in exchange for supporting something important to them.

Oh, there are other methods of gaining political power, such as Stalin-like ruthlessness, wearing your opponents down through tenacity until they decide to cut you loose (American Revolution), etc. But all of these come at a much higher cost than simple political give and take, so that they should be undertaken only at greatest need.

As for what unites the GOP’s diverse factions, Berkowitz suggests principled “constitutional conservatism.” He cites the following principles: “individual freedom and individual responsibility, limited but energetic government, economic opportunity and strong national defense.”

Berkowitz says that “constitutional conservatism provides a framework for developing a distinctive agenda for today's challenges to which social conservatives and libertarian conservatives can both, in good conscience, subscribe.” He lists nine items that should lead the agenda. I can already see from the list that there is a lot of room for debate about what should be on the list, as well as room for a great depth of debate within each item on the list.

When the chips are down, it’s best to dig down and remember what your core principles are. You can then deal with each matter according to those principles instead of falling back on practiced tactical responses that still leave you without an appropriate anchor.

In this case, there is a coalition whose members must realize that they need each other. The coalition must then figure out what its base principles are — not what other factions can be browbeaten to accept, but where general consensus already exists. Once those principles are understood, the coalition will have a solid basis for dealing with issues as they arise.

This approach might not bring immediate success. But if the principles are tried and true, it will eventually bring long term success.