A Message from Kathleen Sebelius

A few days ago I received in the mail “A Message from Kathleen Sebelius, Secretary of Health & Human Services.” Apparently it went to all of us who are signed up for Medicare, and contains some very comforting promises and assurances for us about the Affordable Care Act signed into law a few weeks ago. Here is a summary of what we can expect:

1. Greater savings
2. Increased quality health care
3. Greater control for us, our families, and our doctors and less for insurance companies
4. Continued strength and solvency of Medicare
5. No change in existing Medicare benefits
6. New Medicare benefits
7. New cost savings
8. Increased focus on quality to ensure we get the care we need
9. She promises to keep us up-to-date on any changes
10. She promises to keep our information safe

All that was on the front page. Reading further, I learned that among the new benefits are $250 checks this year and 50% reductions in drug cost next year for those who are in the Medicare prescription drug “donut hole.” Also, we can now get free annual physicals and free colonoscopies and mammograms.

This message surprised me because I thought that the new law was funded in large part by a big cutback in Medicare spending of about $450B, and I was thinking that cut must surely require some reductions in Medicare coverage, especially since the number of citizens covered by Medicare is increasing annually.

So I had figured that, in order for this new legislation to work, we Medicare recipients were going to be asked to share by giving up some of our benefits, maybe resulting in less frequent physicals and colonoscopies and mammograms, etc., so that those who haven’t had any insurance coverage would get some of their medical expenses paid for.

Now let me be clear. I don’t mind sharing. My parents taught me from an early age to share. I was disappointed that this cowardly and unimaginative way of approaching improvement in health care was chosen rather than a more market based and process re-engineering approach, but I was fully prepared to go along with it and do my part. So, you can imagine how surprised I was to get this letter basically telling me that I don’t have to share…that I am going to get more for less.

I still can’t help wondering how this can be true. There are only so many doctors, and while the new law, as explained in the message from Ms. Sebelius, supposedly, “increases the number of primary care doctors, nurses, and physician assistants…through expanded training opportunities, student loan forgiveness, and bonus payments,” such changes are unlikely to have any immediate effect and, while certainly expensive, may or may not eventually entice more talented folks into what is shaping up to be a very different profession. So, it seems to me that, given the number of doctors we have, and with no plans for fundamental free-market reforms and process improvements, the only way some can get more care is for others to get less or for the doctors to decide to work a lot more hours than they are already working. I don’t believe that is likely. Nor is it likely that we will get more doctors and just pay each of them a little less.

It just made me wonder if this message from Ms. Sebelius is exaggerated somewhat and is really a political campaign tool designed to keep those who voted for the new legislation from losing elections this fall. I don’t believe they are allowed to send out political campaign material at public expense, so surely that is not the case.

I also can’t help wondering if all the various constituencies such as business owners, large company employees, students, unemployed folks, self-employed folks, chronically ill folks, etc., are being given similar messages, telling them not to worry because they are going to be getting more for less. I think it is possible, through fundamental process re-engineering and free market reforms, for us all to get more for less, but this new legislation is not going to do that.

Anyway, in the interest of fairness and openness, I just wanted to share with all of you who are not on Medicare this promise we have been made because apparently you are the ones who are going to have to pay the bills and I just thought you should have a chance to raise your objections. It’s kind of a transparency issue I think. And, if you are getting similar promises, let’s agree that, in the absence of major process changes, such promises are certain to be broken. Then we won’t be facing major disappointment a few years down the road.

I don’t usually share personal correspondence, but in the interest of fairness, I am going to let you see just the front page of this message from Ms. Sebelius to Medicare folks. Click on it for a better view.  I wouldn’t want you think I’m exaggerating.

 

Organizing vs. Community Organizing

I was listening to President Obama’s recorded press conference this morning and suddenly realized a fundamental issue with his leadership style. The problem is that the purpose of “organizing” in a traditional sense is entirely different from the purpose of “community organizing” which is the president’s only professional background.

The purpose of organizing in a traditional sense is to create appropriate and effective and efficient working relationships among a group of people responsible for accomplishing some goal.

The purpose of community organizing is to get a group together to put external pressure on some entity to get that entity to do something different or to make some policy change. If a community organizing effort is successful in bringing about a decision to make some significant change, the entity that is to make the change, must have an actual traditional organization in place to accomplish the policy change which usually requires process changes.

This came to me as I listened to two conflicting statements the President made in his introductory remarks:

1. “BP is responsible for this horrific disaster, and we will hold them fully accountable on behalf of the United States as well as the people and communities victimized by this tragedy. We will demand that they pay every dime they owe for the damage they've done and the painful losses that they've caused. And we will continue to take full advantage of the unique technology and expertise they have to help stop this leak.”

2. “Make no mistake. BP is operating at our direction. Every decision and action they take must be approved by us in advance.”

I cannot imagine, in my corporate life, having given someone responsibility to accomplish some goal and telling them that every decision and action they take must be approved by me in advance. If I had done so, I would have been retaining all responsibility and authority and the only responsibility the person receiving the assignment would have had would have been to come up with ideas for me to assess.

The president may be able to argue successfully that BP is responsible for the disaster (though it now appears that that argument may be undermined by an apparent historical cozy relationship between the US Government and BP) but it seems to me that his statement that, “every decision and action they take must be approved by us in advance,” has relieved BP of responsibility for anything but generation of ideas since the initial platform failure.

For example, let’s suppose the current effort to use a procedure referred to as “top kill” is successful and that by Monday morning the leak is stopped and only clean up is left to be accomplished. Many may want to ask why several weeks passed before that procedure was tried. The president clearly answered that question in his opening comments: “Yesterday, the federal government gave BP approval to move forward with a procedure known as a "top kill" to try to stop the leak.” I think I might have given that approval, if needed, on “day one.”

I don’t mean to just be criticizing without offering anything constructive. I have already outlined, in a May 25th post, a traditional approach to organizing a response to this disaster to accomplish four desired goals. My suggested approach would have left BP fully responsible for stopping the leak and for any delays in doing so. It seems to me that the president has been taking a “community organizing” approach (external pressure) toward stopping this leak and that it has not been working. “Community organizing” might be a good thing on occasion, but this is not an appropriate use of it.

I know I have a biased viewpoint, but I really believe that we need a lot more engineers and business people and scientists in Washington and a lot fewer lawyers and community organizers and professional politicians. Or maybe we can at least send the lawyers, community organizers and professional politicians off for a quickie MBA.

There is a transcript of the press conference here.

How About a Two-Armed Economist?

President Truman is reported to have requested a one-armed economist because economics advice he received always seemed to be followed with the phrase, “On the other hand…,” followed by an explanation of why the advice just given might not be right.

Pure economic theory without government intervention and manipulation is such a simple and beautiful thing. Supply and Demand. Production and Consumption. Debt and Equity. Savings and Investment. Borrowing and Lending. All are simple concepts and pretty much self regulating so long as everybody has skin in the game and has personal responsibility for decisions made and actions taken. Of course there will be winners and losers, and there will be prosperity and poverty, and there will be periods of growth and periods of shrinkage in the economy. All are natural and unavoidable but manageable by individuals with a little foresight and wisdom. Even government can show wisdom! We have an early case of such reported in Genesis 41 where Joseph convinces Pharaoh to work everybody very hard and cut back on consumption for a few years to store up grain for lean years to come. It worked, and the same thing would work today.

Unfortunately government intervention today never puts any emphasis on hard work and saving for the future but always on easy money and prosperity based on spending more than is available and running up the national debt and supporting or even encouraging bubbles and then doing massive bailouts when something too-big-to-fail fails.

There are two fundamental methods of government intervention in the economy, fiscal policy and monetary policy. Fiscal policy has to do with government taxation and spending. It is clearly appropriate for government to collect taxes and spend the money so collected efficiently and effectively to provide for the common defense and national infrastructure. If, however, the government begins spending more than it collects in taxes and/or begins spending on things other than common defense and national infrastructure, fiscal policy comes into play and the folks in Washington begin to believe that they are the key to economic success for the country. And they have no idea where to stop. They may be able, with great wisdom, to help assure success, but it is much easier and their natural inclination to speed us along the road to bankruptcy and failure.

There are two big problems with government fiscal policy. The government first of all does not want anything but prosperity leading up to elections because anything other than prosperity makes it more difficult to stay in office. And it seems there is always an election coming up. Second, government wants to be able to pick the winners and losers rather than leave that up to how well individuals and companies and industries perform. The government tends to want to help big donors and people who control lots of votes be winners. Unions and farmers and retirees and oil companies and Hollywood are good examples. Unfortunately, government deficit spending incurred in trying to maintain prosperity and control who wins eventually makes us all poorer on average. We may enjoy a false prosperity based on borrowed money for even decades, but eventually the bills must be paid. For clear explanations of why this is so, read Economics in One Lesson by Henry Hazlitt.

Monetary policy is different from fiscal policy in that it does not involve taxation and spending. It has to do with how much money is in circulation and interest rates to be charged. It changes the playing field and generally keeps things equal for all players as opposed to fiscal policy which puts government directly in competition with private players. Clearly, once we left the gold standard and started using printed currency as our medium of exchange and once the Federal Reserve took control of basic interest rates and bank reserve requirements, monetary policy became an appropriate role of government.

What brought this all to mind this morning was an article in The Telegraph  about the US economy. The gist of the article is that the US money supply is contracting at a “frightening” pace not seen since The Great Depression and that the US Federal Reserve no longer even monitors the money supply but puts all the emphasis on fiscal policy. Here are the pertinent paragraphs from the lengthy article.

"It’s frightening," said Professor Tim Congdon from International Monetary Research. "The plunge in M3 has no precedent since the Great Depression. The dominant reason for this is that regulators across the world are pressing banks to raise capital asset ratios and to shrink their risk assets. This is why the US is not recovering properly," he said.

The US authorities have an entirely different explanation for the failure of stimulus measures to gain full traction. They are opting instead for yet further doses of Keynesian spending, despite warnings from the IMF that the gross public debt of the US will reach 97pc of GDP next year and 110pc by 2015.

And their diagnosis of the problem in this quote:

Mr Congdon said the dominant voices in US policy-making - Nobel laureates Paul Krugman and Joe Stiglitz, as well as Mr Summers and Fed chair Ben Bernanke - are all Keynesians of different stripes who "despise traditional monetary theory and have a religious aversion to any mention of the quantity of money". The great opus by Milton Friedman and Anna Schwartz - The Monetary History of the United States - has been left to gather dust.

Mr Bernanke no longer pays attention to the M3 data. The bank stopped publishing the data five years ago, deeming it too erratic to be of much use.

This may have been a serious error since double-digit growth of M3 during the US housing bubble gave clear warnings that the boom was out of control. The sudden slowdown in M3 in early to mid-2008 - just as the Fed talked of raising rates - gave a second warning that the economy was about to go into a nosedive.

Read the whole article in The Telegraph.  Its a little different slant than we get from WSJ or NYT.  Maybe what we need is a few two-armed economists who will pay attention to both monetary and fiscal policy and not just try to borrow and spend our way back to prosperity.  And maybe a Grinch or two who would argue for paying off the debt and saving up for the future.

MHS - Secondary Education Success Story

OK, I have a distorted and narrow viewpoint on most important issues and will be glad to admit it if you will admit that you do as well. After all, we are all limited and biased by our education and experiences. My viewpoint of US secondary education, for example, has been negatively and probably unfairly distorted in recent years because of some of the products of it that I encounter in the volunteer work I do. I often talk to high school graduates who show little or no evidence of having been educated or of being employable or capable of further education. I also, of course, encounter many who are very bright and are progressing to or through college to lots of opportunities, but I have tended to give most of the credit for those bright ones to their parents and have put the blame for the lesser examples on the schools. After all, if we are funding an education system with the philosophy of "no child left behind," these lesser examples are pretty strong evidence that there must be failure somewhere in the system.

My viewpoint of secondary education was broadened significantly and my opinions better informed by a two hour tour last Saturday of Maryville (TN) High School, from which I graduated in 1960. Thirty or so from our class were led by the principal on a tour as a part of our 50th reunion weekend. The school and community have changed a lot, but the school still occupies many of the same buildings and the same basic, though somewhat expanded, piece of real estate in the heart of town. The student body has expanded from ~300 to ~1600 and faculty and staff from 18 to 135 currently listed at the school website. And the increase in the number and complexity of problems and issues that must be managed has exceeded even that, I am sure.

Even today Maryville High has a relatively homogeneous and prosperous population of students with 9% minorities compared to 31% in the average Tennessee high school and 15% free/reduced lunch recipients compared to 40% for the average Tennessee high school. (Data from here.)  Still, there are all the standard disciplinary issues to deal with. Oxycontin from home medicine cabinets, ground up and snorted to eliminate the time-release effect, is the number one drug problem. There may be a dozen or so pregnancies during the typical school year. There are foster children who have been passed from home to home and sometimes have difficulty trusting anyone. The administration takes some risks in loving and parenting the students, even to the extent of occasional hugs. But heavy security, with 120 cameras keeping the entire campus under continuous surveillance helps assure that there is no inappropriate behavior by either students or faculty and protects faculty from false accusations.

The key to success is always leadership, and our group expressed nothing but praise for the principal, Michael Casteel, Maryville High School graduate and former University of Tennessee football player. He is a big friendly bear of a guy, and it is easy to see how he is able to eventually win the love and respect of faculty and of even the most difficult students.

Also important to education success in a public school is heavy community involvement, and it is obviously abundant at Maryville High. A well equipped weight and exercise facility was donated on the condition that it be open to everybody, and it is now used not just for school athletics but also by the entire student body and by community groups such as police and fire fighters as part of their training. The same is true of a donated rock climbing facility. And a beautiful and well-equipped corporate style conference-presentation room donated by Ruby Tuesday (founded by a Maryville native and now with corporate headquarters in Maryville) helps students in all grades gain valuable presentation and selling skills and experience. And the room is available for community groups as well.

Special Education at Maryville is truly impressive. Each year, a Special Ed shop class builds three beautiful wooden boats (picture below) that are auctioned off at the end of the year for money to be put back into the program. A café is operated on campus by Special Ed students who develop menus, shop for and prepare food, and then serve it to real customers and clean up the mess. Great practical experience! This special education program is one reason that Maryville schools have become magnets for even out-of-state folks. Only about 30% of the students at Maryville High School are native Maryvillians. And, on a space available basis, non residents can attend Maryville High School by paying tuition of $2,200 per year.

So, I feel better about the possibilities for secondary education but strongly believe that wise and talented and aggressive and well-organized leadership is the key. Pouring more and more public money into a system without that is a waste. And that kind of leadership can even attract significant private donations. As a matter of fact, even I just sent in a donation to the Maryville City Schools Foundation. 

Here's one of the boats, surrounded by admiring Class of 60 folks.  All I ever built in high school shop was work benches, book cases, end tables, and lamps.

Gulf War Complex, Many Combatants, Fuzzy Organization

No, I’m not talking about anything in the Middle East. I am talking about the unfolding disaster in the Gulf of Mexico where everybody has the same goals, stopping the leak and cleaning up the spill, but where the number of entities involved must make progress almost unmanageable, especially with a fuzzy organization and unclear responsibilities. As far as I can tell, the key players are:

BP PLC (British Petroleum) - Largest oil producer in the Gulf, leaser of the oil rig, owner of the oil, and bearer of primary responsibility for stopping the leak and paying for the clean-up. According to James Carville, they might as well go ahead and change their name to Louisiana Petroleum, because “we are going to own them.”

Transocean Ltd. – Owner and operator of the failed oil rig, Deepwater Horizon

Halliburton Co. – Oilfield services firm that was working on (“cementing”) the rig just prior to failure

Cameron Intl. – Builder of the blowout prevention device that did not work properly

United States Coast Guard – Bearer of primary responsibility for US Government response

United States Navy – Provider of booms and skimmers and contractors to install and operate them

United States Homeland Security – Designator of the spill to be of “national significance” and establisher of two Command Centers (Isn’t it confusing to have more than one command center, and does BP have another in addition to these two?)

United States Interior Department – Assembler of “SWAT” teams to review offshore drilling rig safety. (No comment about what the “special weapons” will be.)

Senator Bill Nelson – Introducer of legislation to prevent further offshore oil exploration and development

Representatives Waxman and Stupak – Writers of letters to BP and Transocean telling them to read a WSJ article about a remotely operated shutoff device and demanding release of their policy documents relating to the device

Fishermen – Fishers of their last catches of the season and waiters in line to be asked to help with boom installation, etc.

Barbers and Hairdressers – Collectors of hair for gathering oil (Now judged to be of no value)

Here’s the situation as I see it, given that the blowout has occurred and now must be dealt with. There is a group of people including BP, Transocean, and Halliburton employees who are best equipped to stop the flow of oil, and they should be organized under a single powerful and knowledgeable leader and should not be worrying about any single thing except stopping the leak.

There is a second group of people with expertise in reducing the amount of leaked oil that ever reaches the shoreline. These are folks who have tankers and booms and skimmers and know how to use them to corral and collect or burn the leaked oil, and they should be organized under a single powerful and knowledgeable leader and should not be worrying about a single thing except keeping the oil from reaching the shoreline. The leader of this group is the person who should have been consulted a few weeks ago about the viability of using human hair, or even hay, to collect the oil so all that wasted effort could have been avoided.

There is a third group of people who are best equipped to work along the shorelines, cleaning up oil as soon as it arrives and preventing its penetration further into the wetlands. They need a leader too.

There is a fourth group best equipped to deal with fish and bird and animal contamination and to clean and relocate them as efficiently as possible. Another leader!

There is a fifth group best equipped to figure out what happened and why and to put in place process changes that will prevent a reoccurrence of this terrible event. These folks need to stay out of the way for now.

There is a sixth group best equipped to do grandstanding public hearings, berating all involved except themselves, and they also need to stay out of the way for now. They are fairly independent and don’t work well with leaders so I wouldn’t assign one there.

Finally, one person needs to be in charge of the entire operation and needs to be centrally located in a single command center. These suggestions would result in the following organization for dealing with the crisis, a single person with five direct reports on the scene and the US Congress in the wings, awaiting their chance:

So, BP may be responsible for the total situation, may well have to pay for it all, may have their neck under the foot of the US Government, and may well go bankrupt as a result, but they are not equipped to manage every part of the response and should not be given any excuse not to devote 100% of their effort and resources to stopping the oil at the source. I am not happy to see the president of BP wandering around on the beach lamenting the presence of oil there. He should be designated the Director of Well Plugging in the above organization.

I suggest the best General in our military for the top job. The Coast Guard Admiral on the scene might be the right guy, but I’m guessing he would be a good fit as Director of Spill Collection.

Oh well, I have always been a compulsive organizer.  The distressing thing is that some plan such as this should have been on the shelf prior to the disaster to prevent loss of time.

Shared Experiences and Common Ground - Lessons From a High School Reunion

It seems that in US politics the arts of civil discourse and logical debate have been lost and replaced with barrages of personal insults, accusations, and schoolyard taunts. I suspect it has always been a problem but is now magnified by the 24 hour media coverage, multi year political campaigns, and exponential expansion of information, both true and false. After all, Vice President Aaron Burr killed former Secretary of the Treasury Alexander Hamilton in an 1804 duel. I don’t believe we are likely to see Joe Biden and Paul O’Neill or even Nancy Pelosi and Jim DeMint squaring off with dueling pistols. But, it seems that all the appeals from both sides of the political spectrum are emotional and irrational and targeted to the least educated and most extreme segments of the population, and that is driving accelerated polarization.

I was thinking about this while driving home from my 50th high school reunion in Maryville, TN. I had not been to a reunion of this group in forty years and had not seen most of the attendees since then or earlier. I was unsure what it was going to be like to be suddenly crowded in a big room with these folks and have to find something to talk about. No problem! The biggest problem was rowdy behavior and getting everybody to shut up long enough for announcements and a program. I was impressed with how quickly folks were able to reconnect. And I had a great time and greatly appreciate those who spent the time and energy to organize the events.

I have a simple explanation for why we had such a good time at this reunion. In the 1950’s, Maryville was a small town with small schools. Most of us in the class of 60 lived within a mile or so of each other. Many of our parents knew each other and did business with or went to church with or socialized with or were related to each other. There were about a hundred in our class, fifteen of whom have died. Almost fifty showed up for this reunion. Many of us went all the way from first through twelfth grades together, and some had spent the first six years together already in churches or neighborhoods in the community. So, the point is that we have a large inventory of shared experiences and influences, and that is why we are able to connect quickly and have reasonable conversations.

Thirty years after that first graduation, my wife and I spent a year in Boston as I worked on a Masters at the MIT Sloan School of Management. In that case, 56 students representing 26 countries dropped everything and, usually with corporate sponsorship, moved to the Boston area for twelve months of intensive academic, social, recreational, travel, and sightseeing activities. We got to know each other well as the students spent many hours in classroom discussion and as almost everybody entertained everybody else in their homes at some point during the year. Spousal activities included organization of many parties and field trips and production of a yearbook. So, we students and spouses from the MIT Class of 1990 also have a large inventory of shared experiences and influences based on a much shorter but also more intense period of time together. And we immediately begin having a great time and interesting conversation when we get together every three years or so. 

These examples are not to suggest that all the members of either my Maryville High or Sloan group are always going to agree with each other. But there are mutual respect and willingness to talk and a base of shared experiences within which to frame our discussions and from which to draw examples. 

But back to the issue of US political environment deterioration. I suggest that the root cause is extreme geographical diversity combined with almost no common memory of the last significant and widely shared national experiences, The Great Depression and World War II. There really aren’t any survivors left, and the only ones who still are indirectly influenced by those traumatic experiences are those who were told a lot about them by their parents and grandparents. The situation today is that citizens of Kentucky, Arizona, Alaska, Hawaii, and New York City have no bases for mutual understanding and respect and often resort to mutual demonization. As a result, we have become an every-constituency-for-itself society, and it’s not a happy situation. 

Companies and organizations struggle with this problem continuously on a much smaller scale. During my corporate life, three or four times I was led off into the woods or to a retreat site for some consultant led game playing or tree climbing or rope swinging or white-water rafting or falling-backward-into-the-arms-of co-workers kinds of activities that were designed to provide common experiences and build trust and improve teamwork and communication among diverse groups of employees. Those are expensive and usually enjoyable attempts to replicate true life experiences and can provide some welcome respite from the daily office grind. But they don’t really work very well in accomplishing their intended result. Some kind of national retreat or common experience would be really hard to organize, but I’m wondering if some consultant might have sold President Obama on the idea that this national anti-obesity campaign Mrs. Obama is launching might help get us all in the same boat or on the same page. (Just kidding, I hope.)

Anyway, to wind up this ramble, my diagnosis of the source of our political ills today is simply lack of a solid base of common shared experiences of the citizens. However, I don’t know what the solution or treatment is. I don’t believe that a giant retreat in the woods or white water rafting will fill the gap. I certainly don’t recommend another depression or war. I think the war(s) we are in would either have been such unifying events or (most likely) would have been immediately abandoned if we had all been required to sacrifice from day one to pay-as-we-go for the wars. But that didn’t happen. We sent the soldiers off to fight and left their families to suffer while the rest of us went shopping. Isn’t that the way The Roman Empire conducted wars during its decline? 

There is one concrete step I would take if I had the power to do so. I would change the seating in the United States Senate and House chambers to alternate Democrats and Republicans so each person would be surrounded by members of the opposite party. That would immidiately eliminate at least one small but highly visible and significant geographic divide, and I think that would help a LOT and would send an important message to the American people. No more of this one side of the house standing and applauding while the other sits on its hands! And we would either eliminate all that chattering and gossip going on in the chambers or get Republicans and Democrats talking to each other instead of only to members of their own parties. 

But that may be too much change to hope for.

Easy Money and Easy Living...For a Time

I clearly remember writing a high school term paper on the subject of Inflation and the problems that were sure to come as a result of it. I'd love to find that paper stashed somewhere in the basement at my mother's house and see what I had to say at age 16 or so on that subject.  I don’t remember the course or the teacher, but I remember my primary source was the writings of Henry Hazlitt (1894-1993), libertarian economist and Newsweek columnist who preached continually against the evils of inflation. In 1946 he published Economics in One Lesson focused on this principle: "The art of economics consists of looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups." That book is almost as old as I am, and it is still #1563 in the Amazon sales ranking.  You can find a biography of Hazlitt here.

Mr. Hazlitt’s positions, described as libertarian or as coming from the Austrian School of economics, are not popular today but he can rest in peace knowing that all the recent financial upheavals, bubbles, booms, crashes, bailouts, and deficits are entirely consistent with his predictions of the results of easy money and inflationary policies and that his popularity is on a rebound. The predominant economic theory that has led us into trouble is Keynesianism which is a philosophy of (I should have said "which allows" rather than "of.") instant gratification and avoidance of pain through expansion of the money supply as desired or, to give government the benefit of the doubt, perhaps I should say as needed. Austrian economists, on the other hand, are grouches, arguing for the delayed gratification associated with saving and paying cash, never borrowing just for the purpose of consumption. I didn’t read Hazlitt’s book when I wrote that high school paper, and neither it nor Austrian Economics was ever mentioned in the economics courses I took at Vanderbilt and MIT, but I just ordered a copy of the book from Amazon and look forward to reading it.

There is a new book out on the same subject, and this one has pictures and jokes and is a lot of fun to read even though it ends in disaster. I think it is written at about a 12th grade level and should be required reading for all high school seniors. The name of the book is How an Economy Grows and Why It Crashes by Peter Schiff. It is currently #86 in the Amazon sales rank and has an average 5 Star rating by reviewers.

Schiff’s allegory begins with three guys living on an island with nothing to do but eat and nothing to eat but raw fish and nothing to catch them with except their bare hands. It takes a fish a day to keep them alive and healthy, and it takes all day, on average, to catch a single fish. Talk about a meager existence! One of the guys, reflecting on his dismal future, decides to go hungry for a day, delaying gratification so to speak, and use the time to design and make a net which would enable him to catch two fish a day. No government grants for such research and development were available at the time.

Beginning from that point, the story progresses through formation of a government and development of an economy complete with foreign trade, first with fish as the medium of exchange and later with fishnotes as a substitute with the inevitable result of fishflation. As the end nears, people are eating a hundred very small fish a day for basic sustenance, foreign trading partners have stopped trading and demanded repayment of loans they have made, and Ben Barnacle is on the scene and trying to implement a bailout.

The focus of the book is a fundamental truth that is contrary to today’s popular economic “wisdom” which advocates government deficit spending to prop up the economy: “Spending is merely the yardstick that we use to measure production…nothing can be consumed until it is produced. It’s production that adds the value.”

I’m not going to say anymore because I don’t want to spoil the story. Order the book. You will enjoy it. I’ll comment later on Hazlitt’s classic.

Prisoners of Our Cars?

I grew up in Maryville, TN, always living within easy walking or biking distance of West Side Elementary, Sam Houston elementary, Maryville Junior High, Maryville High, First Baptist Church, Williams Furniture Company, J C Penney, Parks Belk, Dixon’s Barber Shop, Pistol Creek, Gilberts Soda Fountain, The Maryville College Woods, the Capitol Theater, a dozen or so Scouting and fishing buddies, several potential girl friends, and Granddaddy and Grandmother Williams. I used to hop on my bike and go to Grandmother’s house for a slice of Velveeta Cheese and a glass of milk and a little chat with her. Mayberry for sure!

My dad and granddad and uncle were in the furniture business and took turns being off Wednesdays but always worked on Saturdays when folks from the country traditionally came to town to do their shopping. I was usually there on Saturdays beginning around age 12. The immediate upside to that was that I usually had more spending money than most of my friends. The long term upside was that I learned a lot about business and about how to fix things creatively. The immediate downside was that I usually wanted to be somewhere else. 

With that growing up experience, it is probably not surprising that my fantasy was to live on a lake somewhere in the boondocks and have a job working for a big company that never had Saturday office hours. I had that kind of career with Eastman Chemical Company, though punctuated the first twenty years or so with regular bouts of “weekend duty.” I didn’t realize the lake fantasy until we moved to Longcreek Plantation in Blythewood, SC, after retirement and built a house on three acres with a couple hundred feet of shoreline on a private lake.

That was great for five years, but we were eighteen miles from downtown Columbia and found ourselves going there just about every day, often separately, for various reasons. And, the yard work and home maintenance were relentlessly demanding.  So, four years ago we bought a townhouse, pre-construction, in downtown Columbia, sold the Longcreek place, and moved to an apartment in town to wait for the new housing.

We’ve been in the townhouse now for 2 ½ years and it is great. We are within easy biking or walking distance of groceries, museums, churches, theaters, restaurants, doctors, the SC State House, the University of South Carolina, many volunteer opportunities, and a river full of fish. Our annual driving miles have dropped by about 10,000. It’s not Mayberry. Traffic is terrible and people will run over you if you aren’t careful. Suspicious looking folks are sometimes seen in the neighborhood. But the net result is fantastic. When we were discussing the possibility of this move, Karen said, “We’ll regret it if we don’t buy that place.” She was right. Now, if the grandkids just lived nearby so they could drop in for cookies and milk and chats from time to time.

What made me think of this on this particular morning was an article in the current Atlantic about a reversal of the suburban expansion and development that occurred over the past few decades as homebuyers now are demanding walkable neighborhoods with convenient access to work and shopping and recreation. Some are even arguing that abandoned suburbs with plummeting values will become the new slums as people move into the cities. Well, if I am ahead of the curve on this trend, it will be a first for me. If not, at least I will be able to walk to the grocery store after the geriatric police take away my driver’s license.

Multiple Choice Tests and Education Spending

I sometimes get surveys from the Republican National Committee or AARP seeking money and, incidentally, asking my opinions, usually with simplistic multiple-choice questions such as these:

Do you believe spending on education in America is
     A. Too high B. About right C. Too low

Do you believe the quality of education in America is
     A. Unsatisfactory B. Satisfactory C. Superior

I don’t believe these specific questions were on a survey, but I wouldn’t be surprised to find them there. I don’t answer their questions because they are too simplistic, and I don’t send money because I suspect the recipients will waste it developing frivolous surveys.

The subjects of the dummy questions above, cost and quality of education, are very complex, and the questions as stated are, of course, meaningless and impossible to answer.

Does “spending” refer to local and state government spending, federal government spending, consumer spending, or some combination or a total of the three? Does it include private schools and colleges or just public education? Should it be measured as a percent of GDP, or per capita, or per student? Should it include sports, extracurricular activities, political indoctrination, day care, and food services, or should the focus be just on classroom academic activities? Is the implied comparison to be on some historical basis, or to other nations and should it be in constant dollars and, if so, what deflator or currency index should be used?

Is “quality” of education to be determined by graduation rates from high school and college, college admission rates for high school students, employment rates and starting salaries for colleges, scores on standardized tests, parent and student surveys, won-lost records of sports teams, or crime rates in the schools? There are lots of ways to measure quality! I seem to remember that the objective of education is to teach us to think logically and reasonably, but that is difficult to measure, especially with multiple-choice tests. 

I can’t answer all those questions but here is an interesting chart that will surprise those who believe education costs have been growing uncontrollably. It shows that as a percent of GDP, grand total US spending on education, primary, secondary, and college, increased rapidly during the 60’s, perhaps due to the emphasis on education during the space race, declined during the economic troubles beginning with the 1974 oil crunch and ensuing stagflation, and then increased slowly beginning about 1984, reaching about 7% of GDP by 2008. Most of the increase in that last sixteen years was in consumer spending on education rather than in government spending. I guess that money spent by a student getting government loans shows up as consumer spending even if the loans are not repaid. The underlying problem is that, while total costs have not increased significantly, the costs of overhead and other non-classroom activities have increased and pulled resources away from the teacher/student, teaching/learning process. It’s similar to what has happened over the years to the doctor/patient relationship.

With respect to measurement of quality of education, here is my suggestion for high schools: Carefully document the percent of graduates admitted to accredited colleges and universities, the percent of graduates acquiring regular full-time jobs at or above minimum wage, and the percent of graduates admitted to approved apprenticeships or intern programs leading to such jobs. Add those percentages.  Then survey graduates from five years earlier and subtract the percent still on their parents’ health insurance plans. The result is the quality index for the education provided by that school.

I don’t believe that spending more than the current 7% of GDP is likely to improve the quality of education. As a matter of fact, once clear objectives of the education process are in place and a reasonable process is established to accomplish the objectives, further improvements in the process will reduce cost rather than increase it. If you want to see the future of low cost education, check out Kahn Academy on YouTube. 

I do believe, however, that quality of education decreases with expanding use of multiple-choice tests in the classroom and on standardized tests. Studying for multiple choice tests may be good preparation for responding to political questionnaires and playing Trivial Pursuit or TV game shows, but it does not teach thinking and reasoning ability. Here is a test question that would challenge students appropriately:

Q: Write a paragraph describing factors that should be considered in a study of the cost of public education in the United States and suggesting sources of helpful information.

A student who learns to correctly answer such questions is prepared to make a contribution to society and will therefore be able to earn a living.  And cheating on such an exam question is pretty much impossible.

Looking for Editorials in All the Wrong Places

Here's a quote from The State, Saturday, May 15th.

Obama's Rose Garden appearance was part of a White House effort to head off comparisons to President George W. Bush's slow response to Hurricane Katrina and to deflect criticism from cabinet officials such as Interior Secretary Ken Salazar, whose department includes the Minerals Management Service, which allowed oil companies to drill in the Gulf without all the necessary permits.


It was unclear whether the public relations effort would succeed.

These words are the last two paragraphs in a "From Wire Reports" story datelined Washington and published in the print edition of The State. A longer version of the article including the names of the reporters and with these two paragraphs in the middle rather than at the end can be found here. It is unclear why The State chose to end the article with these two paragraphs.

Here's the problem. I seriously doubt that White House Press Secretary Robert Gibbs or anybody else in a responsible position told reporters Margaret Talev, Renee Schoof and Jennifer Lebovich that this speech was an effort to head off comparisons to President Bush and to deflect criticism. I'm pretty sure that Secretary Gibbs' position would be that the president is genuinely upset with progress on stopping and cleaning up the spill and wants to keep the American people informed about what is going on. So those published comments must just represent speculation or editorializing by them. I'm not sure if their point is that Bush was slow and we need to keep reminding people of that to help President Obama out or that Obama is insincere and primarily interested in political gain.

Wouldn't both be inappropriate in a news story? And, anyway, even if their interpretation of the event is correct, to whom was it "unclear that the public relations effort would succeed." Maybe it was unclear to the writers.

I guess if the reporters were totally committed Obama supporters, they would have written it this way:

It was obvious that President Obama is genuinely upset with progress on stopping the spill in spite of the total focus of his administration on it since day one, a much superior response, by the way, than that of the Bush administration to Katrina. Clearly, the American people believe that President Obama is doing a good job, and his efforts will almost certainly pay off in the midterm elections.

Well, one slant is just as bad as the other and we don't need either in our news stories.

Or, they could have made it right or at least honest by prefacing the two final paragraphs quoted above with the words, "We the writers of this article suspect that..." or maybe with, "We don't really agree with her, but our editor suspects that..." Or, as a last resort, they could have used that journalistic out, "According to anonymous sources speaking on condition of confidentiality...."

We don't need that either. Keep the editorializing and gossip on the editorial and entertainment pages so we don't have to look for them!

(Clearly this posting will enhance my reputation as a nit-picker, but we do have to be careful about how we are influenced by the things we read and hear.)
____________________________________________________________
And this was a funny one. Did you see the picture in Friday's The State paper of the German tourist in her bikini on an Alabama beach surrounded by clean up people wearing some kind of protective clothing and shoes? She must have some natural immunity to whatever it is the clean-up people are guarding against. If I lived down there I would be glad to help clean up the beach, but don't come near me with all that protective clothing. Just give me a shovel and a bucket and some sunscreen to keep my dermatologist happy.

Personal Experience, Logic, Data, and Ideas

Yesterday I did a post on Race to the Top, the most recent in a long series of failed initiatives designed to solve our education problems, and found myself a bit depressed when I read it on-line. Well, I guess that was the point.

I don't want to have the reputation of being just another of the numerous malcontents issuing regular complaints about nay-saying Republicans and big spending Democrats and every other political position you can think of. What I want to do that is different is to always base my opinions in some way on personal experience, on logical thinking, and on available data, usually from the federal government.

Still, I have to admit that, philosophically, I am committed to the idea that there is little chance of improvement resulting from bandwagon riding, cheerleading, or big new spending programs. Improvement has to come from discontent...from seeking out and identifying problems, ranking the problems, identifying root causes, and making commitments to implement permanent fixes for them, beginning with the worst. And real improvement for a given process with a defined objective will, through reduction of waste and inefficiency, always result in reduced costs rather than increased spending.

I believe the big problem with our public education system is the gradual shift we have experienced in focus from the teacher-pupil classroom relationship to an expensive bureaucracy rolling out complicated programs that are often peripheral to the education process but demand the time and attention of the teachers who have become mere cogs in the bureaucracy. Is it any wonder that charter schools, private schools, and even home-schooling are growing in popularity and making public school improvements even more difficult because of the removal from the system of so many students with motivated parents?

So, what is the answer? It is to begin dismantling the bureaucracy and putting the experts back to work in what should be the highest paying job in education, the teaching job. Doing so would result in a focus on teaching and learning of language, math, science, history, art, music, business, and geography and end the wasting of time on political correctness, ideology, child care, nutrition, and new acronyms.

(CDCEACMB) Confusion and Depression Caused By Expensive Acronyms Created by Massive Bureaucracies

I like the sound of Race To The Top (RTTT). It sounds so much more positive and ambitious and competitive than No Child Left Behind (NCLB) which I always thought could just as well have been stated as No Child Gets Ahead (NCGA). I guess with the new program everybody will eventually get to the top, but there is at least some acknowledgement that some might get there earlier than others…like in real life. The problem is that both slogans are meaningless government-speak generated by a massive and expensive bureaucracy and have much more to do with competition for and distribution of borrowed federal funds than with the teacher-pupil interface where teaching and learning actually take place.

It was recently announced that Delaware and Tennessee are the first winners in the race for borrowed money available under RTTT. Congress has borrowed $4.35B from China to turn around our K-12 schools and has made that money available as grants and has awarded $600M to these first two states. Here is a chart (click for a high resolution view) that puts these numbers in the context of total K-12 spending. I think the questions asked in the box on the chart are very good questions that deserve straight answers and demand different behaviors in the future. (I got the idea for this chart from an article in National Review by Frederick M. Hess.)

Of course I would have been just as skeptical but a little happier if one of the first winners had been South Carolina. I don’t know why I should be worried because last year Arne Duncan, Secretary of Education, promised to deliver $700B in federal stimulus cash to SC schools, and we didn’t even have to apply for that. That is more than the total RTTT funds awarded to Delaware and Tennessee. Secretary Duncan was quoted as saying, "Let me be clear: We are going to take care of children in South Carolina.” Sounds just like the president!

All those state applications for RTTT funds are available on-line so I took a look at South Carolina’s.  Once you get through the IIBB (Initial Introductory Bureaucratic Boilerplate) section, the first thing you will find is a 17 page glossary of acronyms used in the application. Of course the application would be un-readable unless this glossary is printed out and kept in hand for ready reference during the reading. So I gave up. But, just for laughs, and to give you some feel for the problem, here are six in alphabetical order as listed in the glossary.

SMARTER (Summative Multi-State Assessment Resources for Teachers and Educational Researchers)

SPP (Student Protection Project, training and support for educators on how to help keep students safe)

STELLA (Selection Taxonomy for English Language Learner Accommodations)

STEM (Science, Technology, Engineering, and Mathematics)

SUNS (Student Unique Numbering System)

TA (Technical Assistance)

TAP (Teacher Advancement Program, value-added teacher evaluation)

Depressing, isn’t it?

Later: In Case you couldn't read the questions in the box on the chart, here it is larger.

Education in America (Well, Tennessee Anyway) - 100 Years Ago

I wrote a couple of days ago about some changes in education over the past fifty years, but I also have one first-hand account of what education was like in East Tennessee a hundred years ago.  The story comes from my grandfather, Richard Hobart Williams  (1898-1987).  On the same April, 1985, day he told the story of Dillard Williams' untimely Civil War death, he reminisced about his education experiences.  Below are transcriptions of what he said and links to MP3 files you can listen to.  If you want to hear a genuine East Tennessee dialect, check them out.

My first thought on re-reading these stories was that changes between 1910 and 1960 were more dramatic than in the following fifty years.  Certainly they were for the better since the 1960 system was producing a much higher percentage of well educated people, ready for real contributions to society and to the economy, than the 1910 system.  I think however, that, by that criterion, changes since 1960 have been detrimental rather than helpful.

It seems to me that in both 1910 and 1960, the key player in the education system and the person in whom authority and power resided was the classroom teacher.  My high school teachers did not have hickory switches standing in the corner, but the behavior of the students was nevertheless exemplary and discipline meant being there, paying attention, and doing the work.  It seems to me that during the past fifty years the center of power and authority has shifted to the ever expanding bureaucracy and that the classroom teacher has become just another cog in that bureaucracy.  And discipline has gradually become focused on political correctness rather than on academic achievement. (Before you get all upset, note that key words in this paragraph are, "It seems to me...")

Here's the story in two parts to keep the MP3 files to a reasonable size.  Each part is about three minutes.

Here are the script and audio Part 1 of Hobart's School Days story.

When I first started to school we lived up on the Pigeon River. And we went over to Wilton Springs which was come down the river ‘bout half a mile or three quarters and cross over and back up the river on the other side and then straight into Wilton Springs which I guess was about a mile and a half. In my first year, had us a one room school and a woman teacher. Awful nice lady. She was nice to me as she could be. I remember went in once, it had been raining. I had a sailor collar on. Little ole boys then wore sailor collars. It was all wet and she had a fire in the old log stove. She set me up next to the stove with my back to that to dry that collar out.

That was the first cigarette I ever smoked going around to that school. Very near the last one. We boys sat on a long bench on one side of the school house, girls on the other side, which was the custom at that time. Same way in the church. Women'd sit on one side, men on the other. So I was sitting next to the window one day and a boy that was a good deal older than I was, I'd say at the time he must have been 12 or 14 years old, he got excused and went up in the woods there to the restroom. Up in the woods on one side of the house. Girls on the other side. So when the boy came back down he was smoking a cigarette which the teacher would have given him trouble if she'd seen him. Anyway, he threw it down. Boy I got excused right quick and I run out and grabbed that duck and took up through there smoking that cigarette. So, a few mornings after that, we'd gotten up there to the house. Father, he'd gone down to tend to his horses. My brother was sitting there nursing my sister who was about a year old, year and a half. I was putting on my clothes, shoes, six year old boy. Got to picking at him. He was never bad about telling on anybody. He wasn't that kind. Finally he told me to quit two or three times. I didn’t do it. Finally he says, "I'll tell pop about you smoking that cigarette if you don’t quit." Well that shook me up. I didn't know he even knew that I was smoking. I didn’t think he'd tell it so I kept on picking at him. When pop come in, he said, "Poppa?" Said, "Yeah Claude?" Said, "You're going to have to buy Hobart a pipe so he can smoke." "Why?" "Well, I saw him over there at the school house pick up a cigarette and smoke it." Said, “I’ll smoke him!" And he smoked me! I didn't bother any more cigarettes for a while. 

Next two years then we went over to a different school. Came down the river the same way and went on down past the bridge. It was following a dirt road course we'd cut through the woods and field some. Little closer than Wilton Springs but we went there one, two years. It was still a one room school. Man teacher there and he was the kind that would work on you. He didn't take any foolishness. He'd have a big hickory a hanging, standing up in the corner of the school house all the time up next to the black board. He’d bring in a big long one ever once in a while; he'd stand it up there in the corner. Heck he had me a standing on the floor seemed to me like half the tune or using one of them switches on me one. Last time I remember him whipping me was a couple of Taylor boys lived on up past our house a little ways. We was always fighting going home, my brother and I and them two, was about the same size. Course we wouldn't hurt anybody, each other. We's fighting so he'd let one of us, me and my brother, out one time a little ahead of time. Next day he'd let the others out. But we'd fool along and get together of course. So if they had a little chance to get someone in trouble, why we'd do it. So I was running the oldest one of them boys one day. Just after running him we's just playing and he went in and told the teacher I hit him in the head with a rock or something. I didn't do that. I didn't throw nothing at him. So only thing I could figure out, I had some mud on my foot an it might have flew off and hit him in the back or head or somewhere. Anyhow he went in and told the teacher. Boy he didn't take any explanation from me. He pulled me up there and gave me a whipping with one of them there switches. He gave me more whippings in that two years than my father did in the same length of time.

Here are the script and audio Part 2 of Hobart's School Days story.

Boys and girls had to stay separate. There were restrooms, that was different sides of the house. Sat on a different side of the house. They had, oh, four, five, or six young men and women going there. They must have been sixteen, eighteen years old, maybe twenty. So my uncle had a store up next to where we lived, up the river. Somebody had a watermelon patch down the river. So the girls wanted to go the store, but these boys wanted to go to the watermelon patch. "Well, OK You can go to that but don't you'ns get together." Well, they wouldn't, so they went down the road a little ways and all got together and all went someplace together. I don't know which place they went but anyway, he found out about it. I remember him having them all up there quizzing them you know. Go through a little trial. Find out what they did and what they didn't do. He didn't whip 'em. They was young men, I mean they was up, and young women, sixteen years old anyway and maybe eighteen. Heck, they went to school back then till they was twenty years old, lot of em. When I went to school up at the college, why there was a young man, married couple up there in the seventh grade. They must have been twenty five years old. It was Maryville College.

We came back to Maryville in the last week in December, (19)13, and I started to school up at Maryville College the first of January, (19)14, in the eighth grade. I’d fooled along, should have been farther along than that, but I started in the eighth grade in the winter term as they called it. Started the first of the year. And there were two young women came in the same time I did, had been teaching school in the county there. Had about four months schooling at that time, four or five, and then school would be out at the first of the year and they'd come back up and go to school then in the eighth grade. They had the seventh and eighth grade at that tune. Used to have lower grades than that, but they'd cut it down to the seventh and eighth and high school, the preparatory department they called it, and then college. And one couple there out of somewhere, I believe out of Kentucky maybe, somewhere up that way, married couple it must have been, they must have been anyway thirty years old. Fellow by the name of Williams there that must have been thirty, thirty five years old. He carried the mail from the Post Office over to the college. He came down there, they'd got him up here in Cocke County, or Sevier County somewhere, some of the missionary minded Presbyterians did, and they were going to school him. He came down there and he went through Maryville College, and taught school afterwards. His widow still lives there in Maryville they tell me. I’ve never seen her. 

But there was a lot of people at that time that couldn't read or write, grown people, a lot of young people didn't even ever go to school. In fact I had an uncle, Richard Driscoll, my mother's oldest brother. His father died way back when he was just a boy like. He had to go to farming, looking after the family. He was out in the field plowing a team of steers. Some preacher passed along, saw him out there, and got out talking to him. He lived over north of Newport, near Parrotsville. As I understood it, the Presbyterians had a school over there at Parrotsville. He got my uncle to come over there and started in the school. Twenty, twenty five years old. Never been to school as I understand it. He got an education, went to teaching school there, became county superintendent, principle of the high school, running private schools. My father and mother and their generation, generation a little bit younger would go to school to him. So although he got a late start in life with his education, why he became very popular and prominent in that county as an educator and a good man. He died with a heart attack in '15, I believe it was. We hadn't been here long. '15 or '16. They said it was one of the largest funerals had ever been in Newport at that time. More people attended it. He was known all over the county. Lot of the people had gone to school to him. Although he was a late starter, he got along all right as an educator.

Grandaddy went on to comment that the Richard in his name was from his highly respected Uncle Richard Driscoll and that he wished his parents had called him Richard instead of Hobart.


Note:  If you live in or near or grew up in or near Sevier County, TN, here are some other posts you may find interesting:

http://www.permanentfixes.com/2010/09/sevier-county-tennessee-taliban.html

http://www.permanentfixes.com/2010/03/dillard-l-williams-and-confederate-flag.html

http://www.permanentfixes.com/2011/08/little-red-shack-out-back.html

http://www.permanentfixes.com/2009/11/government-stimulus-program-works.html

Education Report Cards and the New High Schools

I graduated from Maryville High School in 1960. I see in the 1960 Appalachian that we had a principal, 17 teachers, 3 custodians, a dietitian, three lunch room ladies, and an administrative assistant. We had 339 students including 103 seniors, 107 juniors, and 129 sophomores. I guess some early baby boomers were already starting to show up. The city school superintendent’s office had two employees, the superintendent and his administrative assistant. Life was simple. No curriculum coordinators, assistant principals, school nurses, guidance counselors, directors of accountability, coordinators of assessment, grant writers, instructional systems data analysts, directors of community service, chief financial services officers, human resource officers, instructional services officers, information technology officers, coordinators of legal services, directors of communications, or transportation supervisors. These, by the way, are all jobs I find listed at the web sites of local school districts.

I wasn’t a great student, and have copied my report card below to prove it. Last semester of my Senior Year, I had four B’s and one A. I got a scholarship to Vanderbilt probably on the strength of a good math SAT score, a Key Club presidency, the lobbying of future Tennessee Governor and Senator Lamar Alexander who was such a good Vandy student that he paved the way for future Maryville High graduates, and the strong recommendations of the Maryville High School principal, Uncle Pete. But, the secondary education system and the economy were well enough suited to each other at that time that many graduates were able to go directly from high school to full-time jobs with enough income potential to support a family.

A lot has changed since 1960, and the complexity and cost of primary and secondary education have gone along for the ride. Last week in Color TV’s I commented on growth in total US spending on education, but here are some figures on just elementary and secondary education from a US Department of Education web site.

These numbers surprised me. I expected to find that overhead costs had soared and that teachers were still getting paid at the same old low salaries and suffering from higher student to teacher ratios to boot. That doesn’t seem to be the case since teacher pay is up 45% in constant dollars while the average number of students per teacher has dropped from 26 to 12. (I couldn’t believe it either, but look at the data here.) This doesn’t necessarily translate directly to a change in classroom size but is just the total number of students divided by the total number of non supervisory instructional people. My guess is that the dwindling ratio may be a result of teachers being burdened with more and more duties beyond classroom instruction and fewer hours spent in classroom instruction. Still it is true that while teacher costs per pupil are up about 200% (tripling), other spending per student, overhead, is up almost 300% (quadrupling), driven probably by increasing complexity, security concerns, diversity, school size, faster salary growth for administrators, and expanding federal requirements, with or without funding. Federal funding, of course, is not free. It ultimately comes from the taxpayers just the same as local funding, though we can have hope that it will come from the taxpayers in some other state or at least some other county.

Another driver of higher costs is the ever growing facility requirements to accommodate sports activities, meet building codes, and provide safety and security. These requirements also contribute to suburban sprawl and higher transportation expense and longer school days, including transportation time, as schools go further and further out to find land parcels large enough. Here’s what a retiring Richland County Council member, Kit Smith, had to say about it in The State.

I've tried to get the state to set different standards for schools. There are huge requirements for acreage. They prefer one story instead of two, and it's very hard to build a school that can be a center of a community when you've got to build a ranch.

So, here are my suggestions. Let’s limit school size to 500 students per site and locate the schools in the centers of populations to minimize busing activity and associated wasted time and maximize parent involvement, and let's separate out school breakfast programs and after school day care and sports activities and other stuff that aren’t basic education and put the focus on getting students ready to do something productive to earn a living. Courses in fast food management, landscaping, construction, maintenance, housekeeping, home health care, nursing assistance, and customer service could be helpful for those not on a college track and also for those hoping to work their ways through college to avoid burdensome student loans.  Then maybe community colleges won’t have to try to be the new high schools.

Safer Drilling - Back of Envelope Design

Since the main lines of attack on the leaking oil well in the Gulf of Mexico are a dome to enclose the leaking well and a side well to allow access for relieving pressure and/or plugging the offending well, along with a healthy dose of criticism for not having installed a double remote shut-off valve, it seems to me that pre-installation of those three items could have almost guaranteed avoidance of this disaster.  Of course that side well is going to need a dome over it also.  I can't address the economics of this proposal, but suspect that it would make a very few cents per gallon difference in the cost of gasoline.  And, if we can't afford to pay the bills for doing it right first time, how are we going to pay the bills for cleaning it up later.  Anyway, here is my suggestion in the form of a back-of-the-envelope sketch, free to anybody who wants to use it.

Color TV's, Inflation, and Government Spending

In the fall of 1963, Sigma Chapter of Sigma Nu Fraternity at Vanderbilt University became the proud owner of a new color TV (21 Inch RCA I believe) which became the Sunday evening focal point for many of us as we watched the latest adventures of the Cartwright family on Bonanza. The price of the TV was about $700 as I recall, more than a month’s starting pay for most college graduates. In 2008, that same TV, according to US Bureau of Economic Affairs Audio and Video price index data, could have been bought for only about two hundred much less valuable 2008 dollars or maybe only a couple of days of starting pay for today’s college graduates. The only price index in the extensive BEA table that showed a bigger drop over that time period was for Information Processing Equipment (computers) which cost only 1% as much in 2008 as in 1970.

At the other end of the scale are Education (prices up 1400%), Health (prices up 870%), and Housing (prices up 553%). These are all well above the 461% average price index increase for all Personal Consumption Expenditures. These price indices do not reflect how much we spent. They reflect the prices of what we bought. So in 1970, for example, we spent $9.2B on education, and, in 2008, we spent $210.5B on education. The 2008 total is 2288% of the 1970 total. So, the price increase was 1400% as indicated in the chart and table below, and the rest of the increase was due to getting more of it.  (By the way, I don't know how they calculate these indices and adjust for changes in features and quality, etc., but I am just taking them at face value.)

I don't believe it is a coincidence that the biggest price increases have happened in the three areas with the greatest infusions of federal money. Pumping federal funds, especially borrowed federal funds, into any market will absolutely drive up prices in those markets. And the normal reaction of Congress as the prices rise is to pump in more money to compensate. It doesn’t work. Does anyone believe that education, for example, is better today than in 1970? Still, in spite of the huge increases in prices and spending over the last 38 years, most of the solutions proposed to our education ills today call for more spending.

Maybe some of these differences in inflation rates will disappear now that the government is helping us buy cars and appliances.

Data for the chart and table below come from the US Government BEA Tables 2.4.5 and 2.5.4.  Click on them for a high resolution view.

My Obesity Challenge to Congress

After writing yesterday about “Physical Activity and Physician Reimbursements,” a friend referred me to Beating Obesity by Marc Ambinder in the current Atlantic Magazine.  I’m an Atlantic subscriber and really enjoy the longer articles in it, but had not read this particular one.  The ideological slant of articles in The Atlantic is not predictable and can range from what I thought was a small government slant of Goldhill’s How American Health Care Killed My Father to the full nanny state slant of Beating Obesity.  The articles are always thought provoking.

In yesterday’s post, I suggested demonization of inactivity and its results as one way to reduce obesity and then read in Beating Obesity that Dr. David Kessler, former FDA commissioner, also likes the idea of demonization but would target the food industry rather than personal activities.   Perhaps demonization of the tobacco industry had some effect, but I think it was really the personal labeling of those who would subject us to their second hand smoke as boorish and rude that rapidly diminished acceptability of smoking.  Anyway, Dr. Kessler is happy with the emphasis on obesity of the Obama administration and thinks the food companies are beginning to respond appropriately.

Stigmatizing may be a good synonym for demonizing, and Ambinder’s reason why that approach won’t work is my nomination for the most patronizing and outlandish statement in the article: 

Stigma might be more bearable—an unpleasant way station on the path to a thinner, healthier life—if diet and exercise, the most prescribed solutions to obesity, worked. But they don’t. 

What nonsense.  Of course they work, and Ambinder goes on to say that what he really means is that they work but that we the people are unable to follow such regimens. 

And then the full nanny state endorsement: 

The government can’t ask someone to pursue a healthier lifestyle—to attain a “normal” BMI, to become a non-stigmatized being—if it isn’t prepared to provide that person with the foundation for health granted to some of us purely by the accident of birth. “Increasing awareness” about healthy lifestyles is not simply gentle paternalism; in the absence of real support, it’s immoral. 

Wow!  More reasons to go to confession.

There is some discussion in the article about such government programs as corn subsidies having an unfavorable impact on obesity but also the suggestion that the solution may involve, not reducing existing subsidies, but adding more subsidies for healthy products such as tomatoes.

And, in spite of the fact that, “At least five federal agencies have put forward some kind of national strategy on obesity,” with no improvement in sight, Ambinder is pretty happy with anti-obesity initiatives in the new health care legislation including requirements that insurers cover obesity counseling. 

Well, I don’t know what will happen to our tendency to obesity in the future, but I think I do know what will happen to the size and intrusiveness of government.

And here is my challenge to congress:  In the interest of full disclosure, I would like to see annual publication of the BMI’s (Body Mass Indices) of all members of congress.  If they are so worried about us, the least they can do is let us know how they are doing.  I bet none of them can match President Obama on that measure.  

Physical Activity and Physician Reimbursements

February 3, 1979, at age 37, I ran my one and only marathon, 26.2 miles beginning at the SC State House, including two loops through Fort Jackson, and ending at the USC PE Center.  I had averaged 40 miles per week in training for the past twelve months, faithfully documenting each run on a record posted on the refrigerator, and thought I was ready.  I ran twenty miles at a reasonable 8 minute per mile pace but pretty much hobbled the last 6.2 miles to finish in an unimpressive but personally satisfying 3 hours and 43 minutes.  At the finish line, I promptly reclined on the concrete sidewalk, and it felt so good!

There were a couple of famous people associated with the USC PE Center at the time.  One was Dr. Warren Giese, former USC football coach (1956-61), who was a champion of physical fitness and could be seen running in the vicinity of the PE center on a regular basis.  He later became a state senator and retired in 2004.  The other was Dr. Russell Pate, widely published exercise physiologist and marathoner who currently is Associate Vice President for Health Sciences at USC and Director of the Children’s Physical Activity Research Group.  Both men were then and remain well known, especially to the running community.

I was reminded of all this because Dr. Pate, whom I continue to admire, is featured in an article in today’s State newspaper about The National Physical Activity Plan.  It turns out that all the decades-long effort folks such as Dr’s. Giese and Pate have put into getting people to exercise has been part of a losing battle as US citizens have become progressively less active and more obese.  So, a group of experts, including Dr. Pate, presented to Congress on Monday a new report on how to correct the problem.  I’m not blaming them.  If Congress called me up and asked me to write a report and present it to them, I’d jump right on it.

The losing battle started during the Eisenhower administration with the 1956 establishment of The President’s Council on Youth Fitness, first chaired by Richard Nixon.  President Kennedy upped the ante, and government commitment, with a Sports Illustrated article, The Soft American, and promotion of the idea of the fifty-mile hike.  For history buffs, there is an entertaining account in the online John F. Kennedy Historical Library and Museum.  If you remember press secretary Pierre Salinger, you will enjoy reading about his reaction to the Kennedy proposal.

But, here’s the bottom line:  Government involvement in the physical condition of citizens, short of a universal draft and mandatory military obstacle course training, has not, does not, and will not improve physical fitness.  Still, there is always an expensive new idea.  The particular lines in today’s newspaper article that caught my eye were from a Q&A about the new report that has been presented to Congress:

Q. The report calls for making inactivity a “treatable condition” at doctors’ offices. What does that mean?

“In the health care environment, evaluating a patient’s physical activity is often not a reimbursable health care service. Physicians can’t be paid for doing it. We need health care providers’ service in evaluating and promoting physical activity in patients to be funded or reimbursed the same way they get reimbursed for measuring height, weight and blood pressure.”

So, let me get this straight.  Doctors have been being reimbursed for measuring weight and blood pressure even as weight and blood pressure have been continually increasing, and the reason, or at least one of the reasons for those increases, is that doctors have NOT been being reimbursed for suggesting that patients do something to reduce weight and blood pressure!  I’ve written several times about the physician-insulting reimbursement systems that have become integral parts of US healthcare, and this is just one more example of their counterproductive influence.

And we wonder why government spending keeps growing.

One idea in the article seems to have merit, and that is the idea of demonizing (my word, not theirs) inactivity and its results just as smokers and smoking have been demonized.  Here is how Dr. Pate said it:

  “In my lifetime, smoking has gone from seeming cool, to questionable, to now we’re at the point where it really is socially unacceptable to smoke cigarettes, especially in public. We do need something analogous to that with physical activity. It’s certainly acceptable to be active, but we haven’t gotten to the point where we feel it’s unacceptable to be inactive.”

It's true!  Smokers have been driven into hiding and can usually be found lurking in alleys around the corners from building entrances indulging their vice and there is no good reason overeaters and couch potatoes can’t be treated the same way…except that folks who look like they might be overeaters and/or couch potatoes are in the majority and are protected by the PC Police from criticism and profiling. 

By the way, in a spirit of confession, I am an overeater, but not a couch potato.

Don't Worry. Clean-Up Funds Available...Maybe

“The federal government has a large rainy day fund on hand to help mitigate the expanding damage on the Gulf Coast, generated by a tax on oil  for use in cases like the Deepwater Horizon spill.”

That is the first sentence of this The New York Times May 1 update on the Oil Spill Liability Trust Fund which has a balance of about $1.6B accumulated from a tax of 8 cents per barrel of oil produced in this country or imported plus fines and penalties imposed on spillers and leakers.  Establishment of the fund is part of a package that limits liability of oil companies to the total clean-up costs plus $75M in damages. 

I just have one question which doesn’t seem to be addressed in the article.  Is this “trust fund” like the Social Security Trust Fund which has a big balance consisting only of US Treasury Bonds meaning the tax collected was “loaned” to the government and spent as collected and that the only thing remaining is IOU’s to be paid by today’s tax payers?  I don’t know if that is the situation or not, but am just suspecting that it is.

We may need to raise that tax to a few dollars a barrel and invest it in Swiss bank accounts so it will be there when we need it.  That, by the way, would have been a good strategy for the Social Security "Trust Fund" also.

Suck It Up!

I don’t have any offshore oil well experience, but I do have some experience in the chemical industry which faces similar risks of leaks and spills of hazardous materials. There is one fundamental principle that has apparently not been applied in the case of off-shore oil wells:

Prevention always takes priority over detection, correction, compensation, or cleanup.

The amount of investment justified in prevention is determined by development of worst case scenarios. The worst case scenario in the case of an off shore oil well blowout is uncontrolled discharge, over an extended period of time, of all the oil in that particular deposit. With that kind of worst case scenario, there is almost no practical limit on the investment justified for prevention.  Either guarantee prevention, or don't drill.  If it adds a dollar or two to the price per gallon of gasoline, so be it.

Among the solutions proposed to the current crisis is the installation of a dome of some kind over the leaks. With my engineering background, that seems to be a reasonable and practical approach, but if it is reasonable and practical after catastrophic failure, such a dome should always be installed before drilling begins and all drilling should be done through and under the dome so that any discharge, large or small, is contained and recovered from the inside of the dome. That would qualify as prevention.

An AP story dated April 26 describes the “dome” prospects this way:

BP plans to collect leaking oil on the ocean bottom by lowering a large dome to capture the oil and then pumping it through pipes and hoses into a vessel on the surface, said Doug Suttles, chief operating officer of BP Exploration and Production. It could take up to a month to get the equipment in place. "That system has been deployed in shallower water, but it has never been deployed at 5,000 feet of water, so we have to be careful," he said.

 Here’s what the New York Times had to say about the dome project on April 27:

Plans are moving forward to design a dome that could be submerged over the leaks, which are coming from a 5,000-foot pipe called a riser that ran between the wellhead and the rig. The riser is now snaking along the ocean bottom. The dome would corral the oil and route it up to vessels to be collected. But Doug Suttles, the chief operating officer for exploration and production at BP, which was leasing the rig from Transocean and is required by law to pay for the cleanup, continued to emphasize the engineering challenges of such an operation at a news conference on Monday. “I must stress that this is state of the art,” Mr. Suttles said, adding that the method had never been done at such depths. It would take at least two weeks to put into place, he said. 

And here is the April 27th report from Mail Online:

The oil company said that the dome would be able to trap the escaping oil and it could then be funneled into tanks on the surface. Similar devices have been used when Hurricane Katrina swept through the region in 2005, but not at that depth. Tony Odone, a BP spokesman said, “They contain the oil in that dome and then suck it up. The remotely operative vehicles will continue trying but we are trying to get these other things activated as quickly as possible too.

I read that The Department of Homeland Security has mobilized, nine days after the original explosion, designating the spill to be of National Significance, and establishing two command centers.  If I were running whichever one of those command centers is really in charge, I would be demanding hourly updates on the progress of the dome project since it looks like the solution most likely to stop the problem and suck up the oil at the source. More than a week of that two week estimate has passed already. Where is the dome? What is the status? I want to see it!

And while we are at it, it looks like the next project should be to “suck it up” and go ahead and build domes over the rest of those operating well heads ASAP, just in case.  And we should be happy to pay more at the pump for it.  That should provide a little stimulus for the steel and construction and oil services industries.