I watched the final debate between Britain’s current and two contending Prime Ministers this evening. They represented the Conservative Party, Liberal Democrats, and Labour Party. The contrast between the three was not half as stark as the contrast between British and American conservatives.
Let’s hope that American conservatives are paying attention to David Cameron of Britain’s Conservative Party. The Republican Party has been hijacked by policy makers who have decided that the clearest way to distinguish themselves from reasonable and practical policies is to offer unreasonable and ideological polices. Cameron’s campaign will hopefully remind Republicans that it is possible to distinguish yourself from reasonable policies by offering other reasons rather than just blindly opposing the other side.
For instance, Republicans in this country – the party that supposedly represents conservatives here – are mindlessly opposed to financial reform. Without reform, we will again find ourselves in the position of either bailing out bankers or letting them take down our economy. (And of course, no one wants to admit that even with great reforms we’re likely to find ourselves in this situation, the only difference being the probability and severity of the hostage situation.) Republicans simply don’t want to be seen cooperating with Obama – no matter how obvious or sensible his policies seem to be.
David Cameron, by contrast, rather sensibly wants to change things within London’s banking community in the wake of the Great Recession. He wants more regulation and more consequences for banks that pursue reckless policy. This position has the advantage of making sense whether one’s analysis is sophisticated or simply based in a common sense reaction to the last financial crisis. Cameron even mentioned that his plan for financial reform was very much like Obama’s.
In Britain, policies of liberals and conservatives sometimes align and sometimes clash. There does not appear to be a requirement to oppose everything the opposition party proposes. This used to be true in the US as well. Modern Republicans, as near as I can tell, seem to define themselves less by what they think will work than by opposing what Obama seems to think will work.
The curious thing about this is that Republicans are becoming more insistent on blind ideology in a time when the countries whose economies are performing best defy easy categorization: China is nominally communist but often more aggressively capitalist than the G-7 countries; Peru and Brazil’s economies have performed splendidly with some odd hybrid of socialist and free market policies that generally favor the poor. Anymore, the fastest growing economy is as likely to espouse adherence to free markets as socialism (and all the while adopting pragmatic policies). It seems as though the real solution to economic growth is ideological flexibility, not ideological rigidity. And yet Republicans, bucking the trend of conservatives and socialists alike around the world, are becoming more ideological. But if successful policy is pragmatic rather than ideological, having such an ideologically intent party means that we’re robbed of a practically conservative option in this country. No matter what your ideological orientation, you should find this troubling. We can’t steer right in this country because the party trying to pull the wheel in that direction does not want to pull into the other lane so much as go off-roading through the oleander.
I do believe that the Republican Party will look back at this period as the time of their great hijacking, a time when their only answer to any question was lower taxes and when they let themselves get defined on everything else by their automatic opposition to Democrats. As long as ideologues own the party, the country will either suffer from their rule (as under Bush) or conservatives will suffer from Republicans’ inability to win control in DC (as under McCain). As I said, one can only hope that American conservatives are paying attention to Cameron – and humble enough to learn from Cameron and even – on occasion – agree with Obama.
R World (Ron Davison muses aloud)
27 April 2010
Fun Facts About John Paul Stevens
For some reason I find this little tidbit fascinating: if Supreme Court John Paul Stevens is replaced by someone who is not a Protestant, for the first time in our history our Supreme Court will be completely made up of non-Protestants.
Currently, we have 6 Catholics, 2 Jews, and 1 Protestant serving on the Supreme Court.
I also find it interesting that although John Paul Jones was born more than a quarter century AFTER John Paul Stevens, Jones retired from Led Zeppelin in 1980, more than a quarter century BEFORE John Paul Stevens retired from the Supreme Court. I'm sure that this says something profound about the lifestyles of rock stars and Supreme Court justices.
Currently, we have 6 Catholics, 2 Jews, and 1 Protestant serving on the Supreme Court.
I also find it interesting that although John Paul Jones was born more than a quarter century AFTER John Paul Stevens, Jones retired from Led Zeppelin in 1980, more than a quarter century BEFORE John Paul Stevens retired from the Supreme Court. I'm sure that this says something profound about the lifestyles of rock stars and Supreme Court justices.
24 April 2010
The Slow Mitigation of Madness
Curiously, very little seems to have been made of Obama's recent attempts to secure and reduce the number of nuclear weapons. As with so much in life, this baffles me. This seems to me his most important accomplishment. Nuclear weapons are predicated on the curious notion that a state's existence should somehow outlast the existence of its people. It's hard to imagine any sane future two or three centuries hence that doesn't look back at nuclear weaponry as the most curious evidence of institutionalized madness.
Perhaps the oddest news story I've read in the last couple of years has to do with LBJ, Castro, Nukes and the Kennedy assassination. Apparently, LBJ had evidence suggesting that Castro, weary of the Kennedy brothers' multiple attempts to assassinate him, arranged JFK's assassination. The evidence for this was not conclusive but was suggestive. When LBJ learned about this, he sat on the investigation. His reasoning? The American people would be so outraged at this that they'd demand retaliation and given Cuba was a satellite state for the USSR, Johnson could see things escalating into nuclear war. LBJ decided that retaliation wasn't worth such a risk.
It might be true that nuclear weapons made war so costly that simply having them made states more hesitant to engage in even conventional warfare, much less retaliation for assassination of its leaders. But the fact that we had no nuclear wars does not mean that they were impossible. The simple question is whether it is better to lower the probability of, say, 100,000 casualties from conventional war by 50% if it meant raising the probability of 100 million casualties by 5%.
The eruption of volcano [insert unintelligible Icelandic name here] recently is a reminder of how rapidly surrounding areas could be impacted by something like nuclear war. As my friend Norman pointed out the other day, even a couple of nuclear bombs lobbed back and forth between India and Pakistan would - in addition to devastating populations in those countries - likely radiate out to impact the regions around them. Imagine radioactive volcanic dust and try to project a situation like this month's volcano lasting for years. Madness indeed.
Nuclear materials are unaccounted for. Worse, the states now threatened by them were the ones to produce those materials as part of a national security program.
Most people realize that it would be awful if Iran got nuclear weapons. Because we've had generations to acclimate to the idea, we've lost the realization that it is awful that any state has nuclear weapons. Give credit to Clinton, the younger Bush, and Obama for having the sense to realize that national security and nuclear weapons don't really belong in the same sentence and working to reduce decades of build up.
Recessions come and go, as do tax cuts, health care insurance programs, and attempts to reform education. No other policy has the potential to so negatively, and perhaps irreversibly, impact humanity as nuclear weapon policy. If we're lucky, Obama's successor will continue the escalation of nuclear arms reduction and future generations won't have the strange possibility of nuclear winter to live with.
Perhaps the oddest news story I've read in the last couple of years has to do with LBJ, Castro, Nukes and the Kennedy assassination. Apparently, LBJ had evidence suggesting that Castro, weary of the Kennedy brothers' multiple attempts to assassinate him, arranged JFK's assassination. The evidence for this was not conclusive but was suggestive. When LBJ learned about this, he sat on the investigation. His reasoning? The American people would be so outraged at this that they'd demand retaliation and given Cuba was a satellite state for the USSR, Johnson could see things escalating into nuclear war. LBJ decided that retaliation wasn't worth such a risk.
It might be true that nuclear weapons made war so costly that simply having them made states more hesitant to engage in even conventional warfare, much less retaliation for assassination of its leaders. But the fact that we had no nuclear wars does not mean that they were impossible. The simple question is whether it is better to lower the probability of, say, 100,000 casualties from conventional war by 50% if it meant raising the probability of 100 million casualties by 5%.
The eruption of volcano [insert unintelligible Icelandic name here] recently is a reminder of how rapidly surrounding areas could be impacted by something like nuclear war. As my friend Norman pointed out the other day, even a couple of nuclear bombs lobbed back and forth between India and Pakistan would - in addition to devastating populations in those countries - likely radiate out to impact the regions around them. Imagine radioactive volcanic dust and try to project a situation like this month's volcano lasting for years. Madness indeed.
Nuclear materials are unaccounted for. Worse, the states now threatened by them were the ones to produce those materials as part of a national security program.
Most people realize that it would be awful if Iran got nuclear weapons. Because we've had generations to acclimate to the idea, we've lost the realization that it is awful that any state has nuclear weapons. Give credit to Clinton, the younger Bush, and Obama for having the sense to realize that national security and nuclear weapons don't really belong in the same sentence and working to reduce decades of build up.
Recessions come and go, as do tax cuts, health care insurance programs, and attempts to reform education. No other policy has the potential to so negatively, and perhaps irreversibly, impact humanity as nuclear weapon policy. If we're lucky, Obama's successor will continue the escalation of nuclear arms reduction and future generations won't have the strange possibility of nuclear winter to live with.
01 April 2010
The Difficulty of Predicting History
Apparently it is as hard to predict history as it is to predict the future. History is a story we tell about the past to make sense of it to our own lives.
Westminster Abbey is a burial place for some of the greats of England, and some who are by now, completely inconsequential. I was struck by how arbitrary is the inclusion and exclusion of certain figures of history. As near as I can tell, Jethro Tull is not there - the man whose agricultural inventions helped fight hunger and increase wealth. Yet mere servants to royalty are included there - people whose only contribution to history was to please or befriend the most powerful person in England at the time. But most curiously, Westminster Abbey captures history in real time, revealing how little we understand how lives today will be made important or rendered trivial by subsequent events.
Part of this is a matter of popularity. It seems probable that Vint Cerf will be considered more important to history than, say, Mussolini, and Robert Beyster will be more important to business history than Larry Ellison or Jack Welch, but of course Cerf and Beyster are far less known than the others. Current popularity matters.
But the bigger problem may be the problem of knowing what immediate history will make things different tomorrow. We know that GM was laying off lots of people in the late 1990s but were unaware that Brin and Page were starting Google. Sometimes years later – sometimes decades later – we finally realize the importance of certain events. History is as hard to predict as the future in part because history depends on a prediction of the future.
Westminster Abbey is a burial place for some of the greats of England, and some who are by now, completely inconsequential. I was struck by how arbitrary is the inclusion and exclusion of certain figures of history. As near as I can tell, Jethro Tull is not there - the man whose agricultural inventions helped fight hunger and increase wealth. Yet mere servants to royalty are included there - people whose only contribution to history was to please or befriend the most powerful person in England at the time. But most curiously, Westminster Abbey captures history in real time, revealing how little we understand how lives today will be made important or rendered trivial by subsequent events.
Part of this is a matter of popularity. It seems probable that Vint Cerf will be considered more important to history than, say, Mussolini, and Robert Beyster will be more important to business history than Larry Ellison or Jack Welch, but of course Cerf and Beyster are far less known than the others. Current popularity matters.
But the bigger problem may be the problem of knowing what immediate history will make things different tomorrow. We know that GM was laying off lots of people in the late 1990s but were unaware that Brin and Page were starting Google. Sometimes years later – sometimes decades later – we finally realize the importance of certain events. History is as hard to predict as the future in part because history depends on a prediction of the future.
30 March 2010
It's Worth Asking
A recent poll suggests that nearly one-in-four Republicans believe that Obama is the anti-Christ.
Next time you're with four or five of your Republican friends, when there is a lull in the conversation, lean in conspiratorially and ask, "Okay. Which one of you knows that Obama is the anti-Christ? And why?"
What ensues ought to be more interesting than whatever else you were talking about. Like non-standard uniforms, for instance.
Next time you're with four or five of your Republican friends, when there is a lull in the conversation, lean in conspiratorially and ask, "Okay. Which one of you knows that Obama is the anti-Christ? And why?"
What ensues ought to be more interesting than whatever else you were talking about. Like non-standard uniforms, for instance.
29 March 2010
The Future of Baseball?
Team uniforms are ... well, so uniform.
I wonder how long before we'll have a professional team named, say, The Las Vegas Rebels, or the Santa Cruz Non-conformists whose team members are free to dress as they please. The pitcher in retro-uniform, the Left Fielder in his college jersey, the first basemen in shorts and t-shirt because it is hot.
The beauty of it is that whatever you wore to the game, you'd be showing your support for the team.
I wonder how long before we'll have a professional team named, say, The Las Vegas Rebels, or the Santa Cruz Non-conformists whose team members are free to dress as they please. The pitcher in retro-uniform, the Left Fielder in his college jersey, the first basemen in shorts and t-shirt because it is hot.
The beauty of it is that whatever you wore to the game, you'd be showing your support for the team.
23 March 2010
Health Care Aftermath
Republicans felt that health care reform ought not to focus on expanding the insured but, rather, on limiting lawsuits.
Within hours of Obama signing the new health care bill, Republicans have sued.
Within hours of Obama signing the new health care bill, Republicans have sued.
History from the Future: The Burger Craze of 2014
It was hard to know exactly when futures markets had begun to drive commodities prices. Oil, obviously, was one place where speculations on financial markets drove the everyday price at the pump - causing prices to rise and dip like seagulls in a squall. And then the same thing began to happen to wheat, rice, beef, chicken .... And before long, the prices at restaurants and grocery stores began to move in tandem with these commodities prices, like prices at the gas pump. And then somebody got the really bright idea of pricing food like stocks and the real fun began.
The pushing and shoving in line at the fast food joints as the first indication that something profound had changed. Customers were bidding for burgers like traders on the floor of the stock market. Prices were bouncing up and down like the price of Yahoo stock. From the time someone got into line to the time they ordered, the combo meal they wanted might have gone up or down a dollar. But that was just at first. Soon, this market, like so many before it, began to be defined by derivatives and speculation.
In 2014, there was the great quarter pounder craze. As the pace of social change quickened, demand for comfort food surged. Coupled with a bad wheat harvest that year, savvy speculators realized that beef prices would soon be going up. A day trader who'd become rich speculating on gold around the time of the Great Recession, Chaz Mingus, tried to corner the market on quarter pounders and the folks at Goldman Sacs began to bid against him. It was surprising that quarter pound burgers rose to $10. What was more surprising was that this actually created a resurgence of interest in quarter pounders. Worried that this American classic might soon be priced out of reach, Americans lined up to buy it before prices went higher. This, of course, made prices go even higher. Commentators were soon explaining that it only made sense that quarter pounders would cost $120. Hadn't Americans been paying exorbitant prices for fine dining for decades? And what was more classic than the burger? And then prices hit $500 and as had happened decades before at Ford and GM, the new credit and financing divisions of Burger King and McDonald's began to make more profit than the actual restaurants. Stories abounded of people who were paying the equivalent of monthly mortgages for their quarter pounder habit.
The derivatives market began to trade in the concept of the hamburger. How could you price something so iconic, people began to ask. And then the prices got really out of hand.
Curiously, the market bust about a year later when Wendy's introduced the fifth-pounder. Prices plummeted and millions of Americans were left holding the bag on $2,000 hamburgers.
The pushing and shoving in line at the fast food joints as the first indication that something profound had changed. Customers were bidding for burgers like traders on the floor of the stock market. Prices were bouncing up and down like the price of Yahoo stock. From the time someone got into line to the time they ordered, the combo meal they wanted might have gone up or down a dollar. But that was just at first. Soon, this market, like so many before it, began to be defined by derivatives and speculation.
In 2014, there was the great quarter pounder craze. As the pace of social change quickened, demand for comfort food surged. Coupled with a bad wheat harvest that year, savvy speculators realized that beef prices would soon be going up. A day trader who'd become rich speculating on gold around the time of the Great Recession, Chaz Mingus, tried to corner the market on quarter pounders and the folks at Goldman Sacs began to bid against him. It was surprising that quarter pound burgers rose to $10. What was more surprising was that this actually created a resurgence of interest in quarter pounders. Worried that this American classic might soon be priced out of reach, Americans lined up to buy it before prices went higher. This, of course, made prices go even higher. Commentators were soon explaining that it only made sense that quarter pounders would cost $120. Hadn't Americans been paying exorbitant prices for fine dining for decades? And what was more classic than the burger? And then prices hit $500 and as had happened decades before at Ford and GM, the new credit and financing divisions of Burger King and McDonald's began to make more profit than the actual restaurants. Stories abounded of people who were paying the equivalent of monthly mortgages for their quarter pounder habit.
The derivatives market began to trade in the concept of the hamburger. How could you price something so iconic, people began to ask. And then the prices got really out of hand.
Curiously, the market bust about a year later when Wendy's introduced the fifth-pounder. Prices plummeted and millions of Americans were left holding the bag on $2,000 hamburgers.
19 March 2010
The Simple Financial Reform Act
My plan for financial reform is simple.
Bankers get two kinds of bonuses: positive and negative.
Let me elaborate.
If a bank makes a billion dollars in profits, some banker in it might get a bonus of a million. This kind of thing actually seems like a pretty good deal for banks and their shareholders. If some guy can find you a billion in profit that you weren't going to have before, it only seems fair that you share the wealth. I honestly have no problem with institutions like banks sharing profits with people who take initiative. In this way, banks (or corporations) do what smart governments have done for business people for centuries: let these individuals keep a portion of the money they make. (And countries usually let entrepreneurs and individuals keep about 50% to 70% of what they make, whereas banks and corporations only let their employees keep about 1% to 20% of what they make. If anything, banks and such may give too little for a bonus.)
So business people within a country have an incentive to take risk. They start a business to make money. To get a return, they have to take a risk. One of the simplest rules of business and investing is this: higher risk yields higher return. But the business person is also careful about taking risk. Because the even simpler rule is that more risk means more risk. The business person could lose his business and his house. He's bold but not reckless.
The problem with bankers is that they, too, have an incentive to take risk. They make up new financial instruments, make investments, and try new things in seek of higher returns. If these risks work out, they get a big return. But if these risks don't work out, they get nothing.
It is easy to say that the bankers are greedy. But really, how would any of us play this game? The more risk you take, the more you can make. Oh, and if you lose the bet, you get nothing. That's right. You don't get a negative amount. You simply don't get a bonus. You would be right to take huge risks. But of course, even if you can't do worse than zero, the bank can lose billions or even trillions.
An easy way to continue to motivate bankers to move banks forward is to continue to give a bonus. An easy way to make sure that the risks they take moving forward are bold but not reckless is to mandate that their bonuses can be negative as well as positive. Sure you can make a million but you can also lose a million. Or, if you are playing options and the like, perhaps lose tens of millions.
This is not something that bankers will adopt themselves, any more than popes willingly gave up religious control over regions of Europe or kings willingly gave up control over portions of their kingdom. Nobody with huge power ever just voluntarily gives it up.
But as long as governments are insuring banks - as they should - they can stipulate how something like a bonus is calculated. And I suspect that no one regulation would do more to ensure a balance between the necessary risk taking to keep the industry innovative and the cautious risk avoidance that would keep the financial industry from regularly imploding.
Bankers get two kinds of bonuses: positive and negative.
Let me elaborate.
If a bank makes a billion dollars in profits, some banker in it might get a bonus of a million. This kind of thing actually seems like a pretty good deal for banks and their shareholders. If some guy can find you a billion in profit that you weren't going to have before, it only seems fair that you share the wealth. I honestly have no problem with institutions like banks sharing profits with people who take initiative. In this way, banks (or corporations) do what smart governments have done for business people for centuries: let these individuals keep a portion of the money they make. (And countries usually let entrepreneurs and individuals keep about 50% to 70% of what they make, whereas banks and corporations only let their employees keep about 1% to 20% of what they make. If anything, banks and such may give too little for a bonus.)
So business people within a country have an incentive to take risk. They start a business to make money. To get a return, they have to take a risk. One of the simplest rules of business and investing is this: higher risk yields higher return. But the business person is also careful about taking risk. Because the even simpler rule is that more risk means more risk. The business person could lose his business and his house. He's bold but not reckless.
The problem with bankers is that they, too, have an incentive to take risk. They make up new financial instruments, make investments, and try new things in seek of higher returns. If these risks work out, they get a big return. But if these risks don't work out, they get nothing.
It is easy to say that the bankers are greedy. But really, how would any of us play this game? The more risk you take, the more you can make. Oh, and if you lose the bet, you get nothing. That's right. You don't get a negative amount. You simply don't get a bonus. You would be right to take huge risks. But of course, even if you can't do worse than zero, the bank can lose billions or even trillions.
An easy way to continue to motivate bankers to move banks forward is to continue to give a bonus. An easy way to make sure that the risks they take moving forward are bold but not reckless is to mandate that their bonuses can be negative as well as positive. Sure you can make a million but you can also lose a million. Or, if you are playing options and the like, perhaps lose tens of millions.
This is not something that bankers will adopt themselves, any more than popes willingly gave up religious control over regions of Europe or kings willingly gave up control over portions of their kingdom. Nobody with huge power ever just voluntarily gives it up.
But as long as governments are insuring banks - as they should - they can stipulate how something like a bonus is calculated. And I suspect that no one regulation would do more to ensure a balance between the necessary risk taking to keep the industry innovative and the cautious risk avoidance that would keep the financial industry from regularly imploding.
17 March 2010
Less Jefferson, More Schlafly. If that doesn't make America stronger, we'll have to resort to more drastic measures
Texas is changing textbooks, putting more emphasis on the influence of Phyllis Schlafly and less on Thomas Jefferson.
“By getting married, the woman has consented to sex, and I don’t think you can call it rape.”
- Phyllis Schlafly
“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the pursuit of Happiness.”
- Thomas Jefferson
The Texas State Board of Education approved some controversial right-leaning alterations to what most students in the state – and by extension, in much of the rest of the country – will be studying as received historical and social-scientific wisdom. Here are some of the other signal shifts that the Texas Board endorsed last Friday.
Read the whole thing here.
“By getting married, the woman has consented to sex, and I don’t think you can call it rape.”
- Phyllis Schlafly
“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the pursuit of Happiness.”
- Thomas Jefferson
The Texas State Board of Education approved some controversial right-leaning alterations to what most students in the state – and by extension, in much of the rest of the country – will be studying as received historical and social-scientific wisdom. Here are some of the other signal shifts that the Texas Board endorsed last Friday.
A greater emphasis on “the conservative resurgence of the 1980s and 1990s.” This means not only increased favorable mentions of Schlafly, the founder of the antifeminist Eagle Forum, but also more discussion of the Moral Majority, the Heritage Foundation, the National Rifle Association, and Newt Gingrich’s Contract with America.
Thomas Jefferson no longer included among writers influencing the nation’s intellectual origins. Jefferson, a deist who helped pioneer the legal theory of the separation of church and state, is not a model founder in the board’s judgment.
Read the whole thing here.
15 March 2010
Of course a half century later, there are fewer surprises
When we got into office, the thing that surprised me the most was that things were as bad as we'd been saying they were.
- John F. Kennedy
09 March 2010
Firing Teachers? That'll Change Everything.
Newsweek's cover article argues for firing bad teachers. I'm sure that will change everything. Just like voting out all the bad politicians will change Washington.
We used to burn witches because we didn't understand disease and bad weather. Today we vote out politicians and fire people because we don't understand systems.
Are there bad teachers who should not teach? Probably. Can some of them be rescued themselves by better education about how to teach? Probably. Will more rigorously firing more teachers help? Probably not.
Keep this in mind. We have no more populous profession. How many teachers do we have in this country? 3.7 million, more even than lawyers (952,000), engineers (1.3 million), waiters (1.8 million), janitors, maids and household cleaners (3.3 million), and secretaries (3.6 million).
I am going to assume that we can't afford to pay enough to compete for the engineers or lawyers (and it is not obvious how many would have the personality and skills to deal with and manage kids anyway.) I am also going to assume that very few of the waiters and maids have the background to educate kids. So, assuming that we fire the bad half of teachers, where are we going to find nearly 2 million "good" teachers? (The Gates Foundation is researching what makes for good teachers and one thing that they can report with confidence is that current certification is no predictor of "good.")
We have an educational system. If we want a different output, we have to change the system, not the people working in the system. If you don't like the way the movie ends, you don't hire new actors: you change the script. (And I will agree that changing the system may change who gets through the system to become teachers. I don't deny that there are bad teachers. I just deny that they constitute a big enough problem to change outcomes much given how much we can now afford to pay teachers and the technology we currently use for teaching.)
And I would say that a measure of how well the system performs should begin with accurate measures. The Newsweek article suggests that the US performs about on par with Lithuania, ranking about 10th in the world. I think it would be more telling to know how first generation immigrants from Mexico or China (or Lithuania even) do on standardized tests compared to kids who are still in Mexico, China, or Lithuania. (And even this would not be apples to apples given that English as Second Language kids aren't given provision for learning a new language in most American school systems.) By that measure, I'd be willing to bet that we do pretty well.
No other country in the world brings in more immigrants from more countries. I feel confident that third and fourth-generation American kids would hold their own against kids from any country.
Does this mean that we ought not to change the educational system? I would never say that. I've argued for changing the system numerous times in this blog. (40 posts not counting this one.)
But succeeding at improving the current system would be the booby prize (and I don't mean booby in a good way). It would be like making a better turn table or horse carriage in a world of CD players and cars. If we could find a market for standardized tests, emphasizing them would make sense. We have not and they do not.
If we begin to pay some teachers $130,000 and fire others, we'll just raise the cost of an already costly educational system by increasing turnover, teacher training costs, and raise wages. Paying some teachers far more while firing others sort of reminds me of giving some kids A's and flunking others. If that kind of system gave us results that made people happy, we wouldn't be talking about firing teachers.
We used to burn witches because we didn't understand disease and bad weather. Today we vote out politicians and fire people because we don't understand systems.
Are there bad teachers who should not teach? Probably. Can some of them be rescued themselves by better education about how to teach? Probably. Will more rigorously firing more teachers help? Probably not.
Keep this in mind. We have no more populous profession. How many teachers do we have in this country? 3.7 million, more even than lawyers (952,000), engineers (1.3 million), waiters (1.8 million), janitors, maids and household cleaners (3.3 million), and secretaries (3.6 million).
I am going to assume that we can't afford to pay enough to compete for the engineers or lawyers (and it is not obvious how many would have the personality and skills to deal with and manage kids anyway.) I am also going to assume that very few of the waiters and maids have the background to educate kids. So, assuming that we fire the bad half of teachers, where are we going to find nearly 2 million "good" teachers? (The Gates Foundation is researching what makes for good teachers and one thing that they can report with confidence is that current certification is no predictor of "good.")
We have an educational system. If we want a different output, we have to change the system, not the people working in the system. If you don't like the way the movie ends, you don't hire new actors: you change the script. (And I will agree that changing the system may change who gets through the system to become teachers. I don't deny that there are bad teachers. I just deny that they constitute a big enough problem to change outcomes much given how much we can now afford to pay teachers and the technology we currently use for teaching.)
And I would say that a measure of how well the system performs should begin with accurate measures. The Newsweek article suggests that the US performs about on par with Lithuania, ranking about 10th in the world. I think it would be more telling to know how first generation immigrants from Mexico or China (or Lithuania even) do on standardized tests compared to kids who are still in Mexico, China, or Lithuania. (And even this would not be apples to apples given that English as Second Language kids aren't given provision for learning a new language in most American school systems.) By that measure, I'd be willing to bet that we do pretty well.
No other country in the world brings in more immigrants from more countries. I feel confident that third and fourth-generation American kids would hold their own against kids from any country.
Does this mean that we ought not to change the educational system? I would never say that. I've argued for changing the system numerous times in this blog. (40 posts not counting this one.)
But succeeding at improving the current system would be the booby prize (and I don't mean booby in a good way). It would be like making a better turn table or horse carriage in a world of CD players and cars. If we could find a market for standardized tests, emphasizing them would make sense. We have not and they do not.
If we begin to pay some teachers $130,000 and fire others, we'll just raise the cost of an already costly educational system by increasing turnover, teacher training costs, and raise wages. Paying some teachers far more while firing others sort of reminds me of giving some kids A's and flunking others. If that kind of system gave us results that made people happy, we wouldn't be talking about firing teachers.
Those Anti-Market Forces Are Ruining Everything
From yahoo:
Damn that anti-capitalist, socialist Obama.
One year ago, the economic crisis dragged stocks to their lowest in more than 12 years. The S&P 500 is up 68.5 percent since then --the strongest one-year rally since 1936, according to Standard & Poor's, but still 27.6 percent below its all-time high.
Damn that anti-capitalist, socialist Obama.
03 March 2010
Extended Lives = Extended Childhood
George Will writes about boys who won't become men in this week's Newsweek. George decries the fact that the median age at which boys marry or leave home is going up. He makes some good points but misses the context of extended boyhood: we're living longer.
Life expectancy goes up about 3 months a year. This works out to about 2.5 years per decade or about 5 to 7 years per generation.
So, let's say that we still left home and married at 14, as people did only a century or so ago when life expectancy was about 40-some years. Is that really how much preparation we want them to have for work and parenting? Do we expect 14 year olds to choose who they'll be married to at 85?
If the next generation gets married two years later than their dads and then retires four years later than their dads, they'll still end up married and retired for longer than their dads. That is what happens when life expectancy goes up each generation.
It is not just old age that now lasts longer. So does youth. That life stages - from youth to middle age to old age - would all extend for longer as life itself lasts longer makes every kind of sense to me. But I guess saying that wouldn't make for a very interesting column.
Life expectancy goes up about 3 months a year. This works out to about 2.5 years per decade or about 5 to 7 years per generation.
So, let's say that we still left home and married at 14, as people did only a century or so ago when life expectancy was about 40-some years. Is that really how much preparation we want them to have for work and parenting? Do we expect 14 year olds to choose who they'll be married to at 85?
If the next generation gets married two years later than their dads and then retires four years later than their dads, they'll still end up married and retired for longer than their dads. That is what happens when life expectancy goes up each generation.
It is not just old age that now lasts longer. So does youth. That life stages - from youth to middle age to old age - would all extend for longer as life itself lasts longer makes every kind of sense to me. But I guess saying that wouldn't make for a very interesting column.
01 March 2010
The Secret About Health Care Costs
Rumors are, health care is about 16% of our total GDP. One of the few things that politicians and their constituents seem to agree on is that costs are too high.
So, let's say that the folks in DC reduce health care costs by half - making health care more affordable.
Little problem. Our GDP would suddenly drop by 8%, leaving about 12 million people suddenly unemployed.
People holler about debt and forget that for every dollar of debt there is a dollar of assets.
People holler about costs and forget that for every dollar of costs there is a dollar of revenue.
There will be no sweeping change in health care. It threatens too many jobs and businesses. What we can hope for is coverage for everyone and then incremental cost containment.
The most important thing we could do to contain health care costs, though, has nothing to do with health care. We need to grow new sectors, new industries, that make health care a relatively smaller and smaller portion of our economy. The way to make health care more affordable is to generate more revenue from outside of the health care industry, revenue that can be used to pay for health care.
We aren't just dealing with a health care system. The health care system is, itself, a part of a larger system. Lose track of that and "solving" the health care problem seems nearly impossible.
So, let's say that the folks in DC reduce health care costs by half - making health care more affordable.
Little problem. Our GDP would suddenly drop by 8%, leaving about 12 million people suddenly unemployed.
People holler about debt and forget that for every dollar of debt there is a dollar of assets.
People holler about costs and forget that for every dollar of costs there is a dollar of revenue.
There will be no sweeping change in health care. It threatens too many jobs and businesses. What we can hope for is coverage for everyone and then incremental cost containment.
The most important thing we could do to contain health care costs, though, has nothing to do with health care. We need to grow new sectors, new industries, that make health care a relatively smaller and smaller portion of our economy. The way to make health care more affordable is to generate more revenue from outside of the health care industry, revenue that can be used to pay for health care.
We aren't just dealing with a health care system. The health care system is, itself, a part of a larger system. Lose track of that and "solving" the health care problem seems nearly impossible.
27 February 2010
Excerpt from a Future History Book, or "whatever happened to shopping?"
The popularity of shopping depended on the ancient urge for the modern, that old wish for something new.
No one had considered the possibility that this urge for the new might actually be turned on shopping itself, or that fashion might go out of fashion.
Yet people gradually decided that they had too much stuff and clutter and turned away from the malls. Consumption never again drove the economy like it had throughout the 20th century.
For generations, economic goods had implied economic goods to have. Early in the 21st century, communities realized that people were ready to focus more on economic goods to do. The stuff of life was replaced by experience, and having became less important than doing. As communities adjusted, it was not just philosophers who saw this as positive. Even economists eventually realized that this was progress.
No one had considered the possibility that this urge for the new might actually be turned on shopping itself, or that fashion might go out of fashion.
Yet people gradually decided that they had too much stuff and clutter and turned away from the malls. Consumption never again drove the economy like it had throughout the 20th century.
For generations, economic goods had implied economic goods to have. Early in the 21st century, communities realized that people were ready to focus more on economic goods to do. The stuff of life was replaced by experience, and having became less important than doing. As communities adjusted, it was not just philosophers who saw this as positive. Even economists eventually realized that this was progress.
25 February 2010
The (Un)Health(y We Don't) Care Summit: Or, What's Really Wrong with Washington
I watched about ten minutes of today's bipartisan health care summit, catching some of Lamar Alexander and Nancy Pelosi. Two things struck me as terribly wrong about the summit and convinced me that nothing useful would come from it.
One, they need a facilitator who is truly non-denominational, who can cut them off when they talk too long, and keep moving towards something actionable. The biggest problem with this, of course, is that the folks in Washington seem convinced that there is no one worthy of such a task because they've got the monopoly on wisdom.
Two, they need to move from talking to modeling their assumptions. If a congressperson wants to plan lunch, he talks. If he wants to plan a campaign trip for next month, he talks. If he wants to change health care for the biggest economy in the world, he talks. Compare communication with transportation. If that same congressperson wants to go to lunch, he walks. If he wants to go to a function across town, he drives. If he wants to go back to his district, he flies. He uses different technologies for travel but not for communication and planning. It's no wonder that Congress doesn't get anywhere - it is still doing the planning equivalent of walking everywhere.
Imagine a session in which a facilitator (or two) captures the assumptions that these politicians are making. "You are saying that liability insurance drives doctors out of rural areas. Okay, what is the causation and what is weighting? Liability of more than what triggers an exodus from rural areas?" And bit by bit, the model could be constructed. Then, the causation could be tested. Data that exists could be used. Data could be collected. Assumptions could be tested and collected into a network of causality and then simulated. Technologies exist for this. As the group works on this, a few things would happen. Leverage points would emerge. It may well be that the objectives of covering everyone and holding down costs could be met with a far less comprehensive plan. And the group would gradually be brought together over a model that is grounded in data.
Finally, such an approach might just do something to disarm the ideological who resist practical solutions because of principles. And on that note, an excerpt from Dietrich Dorner's wonderful book, The Logic of Failure: Recognizing and Avoiding Error in Complex Situations, in which he's talking about the success people have with systems simulations.
One, they need a facilitator who is truly non-denominational, who can cut them off when they talk too long, and keep moving towards something actionable. The biggest problem with this, of course, is that the folks in Washington seem convinced that there is no one worthy of such a task because they've got the monopoly on wisdom.
Two, they need to move from talking to modeling their assumptions. If a congressperson wants to plan lunch, he talks. If he wants to plan a campaign trip for next month, he talks. If he wants to change health care for the biggest economy in the world, he talks. Compare communication with transportation. If that same congressperson wants to go to lunch, he walks. If he wants to go to a function across town, he drives. If he wants to go back to his district, he flies. He uses different technologies for travel but not for communication and planning. It's no wonder that Congress doesn't get anywhere - it is still doing the planning equivalent of walking everywhere.
Imagine a session in which a facilitator (or two) captures the assumptions that these politicians are making. "You are saying that liability insurance drives doctors out of rural areas. Okay, what is the causation and what is weighting? Liability of more than what triggers an exodus from rural areas?" And bit by bit, the model could be constructed. Then, the causation could be tested. Data that exists could be used. Data could be collected. Assumptions could be tested and collected into a network of causality and then simulated. Technologies exist for this. As the group works on this, a few things would happen. Leverage points would emerge. It may well be that the objectives of covering everyone and holding down costs could be met with a far less comprehensive plan. And the group would gradually be brought together over a model that is grounded in data.
Finally, such an approach might just do something to disarm the ideological who resist practical solutions because of principles. And on that note, an excerpt from Dietrich Dorner's wonderful book, The Logic of Failure: Recognizing and Avoiding Error in Complex Situations, in which he's talking about the success people have with systems simulations.
“The good and bad participants did not differ … in the frequency with which they developed hypotheses about the interrelation of variables in Greenvale. [That is - we all develop our theories about how the world works.] Both the good and bad participants proposed with the same frequency hypotheses on what effects higher taxes, say, or an advertising campaign to promote tourism in Greenvale would have. The good participants differed from the bad ones, however, in how often they tested their hypotheses. The bad participants failed to do this. For them, to propose a hypothesis was to understand reality; testing that hypothesis was unnecessary. Instead of generating hypotheses, they generated ‘truths.’”
24 February 2010
What if Debt were Driven by Productivity Gains?
I've never seen anyone suggest that growth in productivity might be the fuel for a growth in debt. The rate of productivity growth has been remarkable in the last couple of decades. So has the growth in debt. Maybe the one causes the other. And maybe debt is the result of a good thing (productivity growth) and not a bad thing (a sudden lapse in morality).
Try this thought experiment.
100 people all farm to eat. Then one day, one guy makes a machine that allows him to feed 100 people all by himself. Now, we've created 99 unemployed people who can only beg or borrow in order to eat.
One of two things happens next. Either no one else comes up with new products or services that generate income and the the starving 99 are unable to pay back the inventor, and the whole "economy" collapses back to some uneasy situation with 99 parasites and one productive inventor. Or two, inventors and entrepreneurs emerge from within the 99 to create new goods and services that allow them to eventually pay back the loan for food and create more jobs.
If we stop short at the debt of the 99 hungry hopefuls, we'll be stuck. The way through this is not to take on less debt but, rather, take on more.
This odd little thought experiment suggests that debt - whether of the newly unemployed who want to eat or of the new and would-be inventors and entrepreneurs - follows from productivity gains. And the debt may be really ugly. For instance, in this example, the unemployed food eaters are borrowing money to eat. And the "wealth" the inventor feeding 100 people has is in the form of IOUs from the hungry hopeful. And further, if the successful inventor backs a new inventor, he is actually loaning him money that is just promissory notes and not real cash. And yet if all these loans are not made, the system collapses.
Following this logic, it could be that debt follows from productivity gains. The point then is to stimulate more innovation - even if that means incurring more debt - in order to create the next venture that will provide jobs to the newly unemployed.
So, what is the solution to our current levels of unemployment and increased debt? It is not to worry about debt. It is to worry about creating the next new thing - from building infrastructure to creating new businesses.
I will maintain my contention that our problem is not a problem of too much debt or even of financial institutions that create too much wealth - real or bubbled. Our problem is that we aren't doing enough to translate our excess labor and capital resources into new ventures. This is not a failure of labor or capital markets. It is a failure of entrepreneurship. We need to do more to create entrepreneurship within organizations (what Gifford Pinchot calls intraprenuership) and without. The solution is that simple and that complicated. Focusing on debt right now is a distraction. We need to innovate our way out of this.
Which means, essentially, we're in the same situation we've been in for centuries, only more so.
Try this thought experiment.
100 people all farm to eat. Then one day, one guy makes a machine that allows him to feed 100 people all by himself. Now, we've created 99 unemployed people who can only beg or borrow in order to eat.
One of two things happens next. Either no one else comes up with new products or services that generate income and the the starving 99 are unable to pay back the inventor, and the whole "economy" collapses back to some uneasy situation with 99 parasites and one productive inventor. Or two, inventors and entrepreneurs emerge from within the 99 to create new goods and services that allow them to eventually pay back the loan for food and create more jobs.
If we stop short at the debt of the 99 hungry hopefuls, we'll be stuck. The way through this is not to take on less debt but, rather, take on more.
This odd little thought experiment suggests that debt - whether of the newly unemployed who want to eat or of the new and would-be inventors and entrepreneurs - follows from productivity gains. And the debt may be really ugly. For instance, in this example, the unemployed food eaters are borrowing money to eat. And the "wealth" the inventor feeding 100 people has is in the form of IOUs from the hungry hopeful. And further, if the successful inventor backs a new inventor, he is actually loaning him money that is just promissory notes and not real cash. And yet if all these loans are not made, the system collapses.
Following this logic, it could be that debt follows from productivity gains. The point then is to stimulate more innovation - even if that means incurring more debt - in order to create the next venture that will provide jobs to the newly unemployed.
So, what is the solution to our current levels of unemployment and increased debt? It is not to worry about debt. It is to worry about creating the next new thing - from building infrastructure to creating new businesses.
I will maintain my contention that our problem is not a problem of too much debt or even of financial institutions that create too much wealth - real or bubbled. Our problem is that we aren't doing enough to translate our excess labor and capital resources into new ventures. This is not a failure of labor or capital markets. It is a failure of entrepreneurship. We need to do more to create entrepreneurship within organizations (what Gifford Pinchot calls intraprenuership) and without. The solution is that simple and that complicated. Focusing on debt right now is a distraction. We need to innovate our way out of this.
Which means, essentially, we're in the same situation we've been in for centuries, only more so.
21 February 2010
"No!"
Anything you are not free to say "no" to, you are unable to say "yes" to.
You can't really choose what you are not free to reject.
This is worth remembering if you really are intent on moving away from parental and managerial or even educational models that don't depend on some form of tyranny.
Is it any wonder that one of the first phrases that toddlers learn is "No!"? This is the beginning of taking control over defining self rather than capitulating to others who would gladly define you.
You can't really choose what you are not free to reject.
This is worth remembering if you really are intent on moving away from parental and managerial or even educational models that don't depend on some form of tyranny.
Is it any wonder that one of the first phrases that toddlers learn is "No!"? This is the beginning of taking control over defining self rather than capitulating to others who would gladly define you.
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