1. If the South had a way to make money without needing to enslave Africans, would we have had a Civil War?
2. The surest path to tyranny is hyperinflation.
3. Public sector compensation and private sector compensation are completely different. Unlike the private sector, public sector compensation usually includes unpredictable long-term structural debt, such as pensions and medical costs. The costs of pensions and medical treatment depend on a person's age and health. If it was so easy to analyze costs relating to a person's age and health, we could all run insurance companies. Moreover, when governments make long term compensation promises, they are using taxpayer money (OPM) and have little incentive to get the numbers right. More here, from a letter to The Atlantic (Nov 2010):
In the final analysis, it doesn’t matter whether you work for GM or N.Y. or U.S.A.; it doesn’t matter if you are in a defined-benefit or defined-contribution plan--your retirement is dependent upon the earnings and productivity of your grandchildren and their friends. All of the pieces of paper in these plans are just proxies: claims on a portion of the labor of future generations. All of these retirement schemes seemed affordable when they were new. We didn’t see why they were inexpensive: because they were built on leverage. They depended upon borrowing against the future growth of the three unsustainable pyramids: economic, population, and credit. None of those can continue forever, and as one fades, the others must take up the slack. But once all three pyramids are played out, the plans face a few stark choices: substantially raise contributions, substantially lower payouts, or go bankrupt.
Steven Flint Manasquan, N.J.
4. People's voting preferences are probably based in large part on whether they have children. Most parents probably favor the status quo. Why? The more society changes, the less knowledge they can pass along to their kids. The parents' economic skills may also decline in value if society changes too much. In contrast, people without kids have more time to adapt to changes and also have a higher incentive to change society to suit their own needs and wants. In conclusion, I bet parents tend to be more "conservative" while childless adults tend to be more "liberal."
5. The S&P 500 is about 1180. The Dow is about 11,142. Perhaps the market is a bit frothy. Markets may be anticipating an extension of the Bush-era tax cuts, which means an assumption of a more politically balanced federal government. But elections can be unpredictable...
"And if an epitaph be my story, I'd have a short one ready for my own: I had a lover's quarrel with the world." -- Robert Frost
Thursday, October 21, 2010
Wednesday, October 20, 2010
Questions re: Charter Schools
1. If charter schools don't have the burden of paying billions of their dollars to retired/non-working school personnel, can't they use more of their dollars to pay newer teachers more and to limit class sizes?
2. If charter schools must compete for students and overcome parental inertia (i.e., most parents will move their kids along in the same school system unless they have a good reason to change), don't charter schools have a greater incentive to provide better services and to be more transparent?
3. Do you believe competition usually leads to better service and products?
4. Do you believe that monopolies usually lead to good service, superior efforts, and superior results for consumers? If not, do you realize that by opposing charter schools, you are supporting the status quo, which is a monopolistic public education system?
5. Most people agree that parental involvement, the level of parental education, and good parenting skills are the primary factors in determining a child's academic success. How does paying teachers more or opposing charter schools solve the problem of uninvolved parents, uneducated parents, or a lack of parenting?
Random thoughts of the day:
1. Competition lowers prices for consumers; monopolies, on the other hand, usually allow entities, whether government or corporate, to increase prices. Right now, public schools have a virtual monopoly on education because most students must attend a school based on where they live rather than other standards, such as test scores, better facilities, better teachers, etc. The more schools must compete for government money (which is related to the number of students attending a school), the more all schools are incentivized to improve services.
2. Re: why privatization will decrease education costs. Again, when you break a monopoly, costs usually go down. Some people appear to be assuming that charter schools will incur the same expenses as public schools, and therefore it will all be a wash. This is incorrect. We know California's public schools are inefficient. They use about 85% of their funding to pay employees and contractors, which means they spend only about 15% of their money on children.
For example, in some California public schools, a gardener, after just 5 years of work, is eligible for a pension of around $1,000/month. It is unclear how paying a gardener a pension after five years of work helps children, but let's set that issue aside. If a charter school hires a gardener but without the burden of a pension, it has more options. It can increase a teacher's salary by $1,000/month, buy laptops for students, or add courses. To make a long story short, the opportunities to game our current education system are enormous. Charter schools, if run properly, can set up systems that are harder to game and that lack long-term structural deficits such as pensions.
Over time, as more students attend charter schools, the state may eventually be able to force teacher unions and public schools to eliminate their own long term structural deficits and to adopt student-centric teaching and evaluation methods. In time, we may even be able to amend the state Constitution to divert education-earmarked money to services that benefit all state residents. Even if we fail to divert money to non-education services, competition alone and the battle for students/state money will improve education for all students, which is the ultimate goal.
2. If charter schools must compete for students and overcome parental inertia (i.e., most parents will move their kids along in the same school system unless they have a good reason to change), don't charter schools have a greater incentive to provide better services and to be more transparent?
3. Do you believe competition usually leads to better service and products?
4. Do you believe that monopolies usually lead to good service, superior efforts, and superior results for consumers? If not, do you realize that by opposing charter schools, you are supporting the status quo, which is a monopolistic public education system?
5. Most people agree that parental involvement, the level of parental education, and good parenting skills are the primary factors in determining a child's academic success. How does paying teachers more or opposing charter schools solve the problem of uninvolved parents, uneducated parents, or a lack of parenting?
Random thoughts of the day:
1. Competition lowers prices for consumers; monopolies, on the other hand, usually allow entities, whether government or corporate, to increase prices. Right now, public schools have a virtual monopoly on education because most students must attend a school based on where they live rather than other standards, such as test scores, better facilities, better teachers, etc. The more schools must compete for government money (which is related to the number of students attending a school), the more all schools are incentivized to improve services.
2. Re: why privatization will decrease education costs. Again, when you break a monopoly, costs usually go down. Some people appear to be assuming that charter schools will incur the same expenses as public schools, and therefore it will all be a wash. This is incorrect. We know California's public schools are inefficient. They use about 85% of their funding to pay employees and contractors, which means they spend only about 15% of their money on children.
For example, in some California public schools, a gardener, after just 5 years of work, is eligible for a pension of around $1,000/month. It is unclear how paying a gardener a pension after five years of work helps children, but let's set that issue aside. If a charter school hires a gardener but without the burden of a pension, it has more options. It can increase a teacher's salary by $1,000/month, buy laptops for students, or add courses. To make a long story short, the opportunities to game our current education system are enormous. Charter schools, if run properly, can set up systems that are harder to game and that lack long-term structural deficits such as pensions.
Over time, as more students attend charter schools, the state may eventually be able to force teacher unions and public schools to eliminate their own long term structural deficits and to adopt student-centric teaching and evaluation methods. In time, we may even be able to amend the state Constitution to divert education-earmarked money to services that benefit all state residents. Even if we fail to divert money to non-education services, competition alone and the battle for students/state money will improve education for all students, which is the ultimate goal.
Tuesday, October 19, 2010
Are State Pensions Sustainable?
"There seems to be a high likelihood that future generations will have to bear the substantial burden of making up pension benefits for previous generations of state employees. While citizens of states that are particularly hard-hit by the pension crisis may be able to escape to other states, an acceleration of this demographic phenomenon would leave a dwindling taxpayer base behind in the states facing the largest liabilities. This would increase the likelihood of a federal taxpayer bailout in which taxpayers in all states would bear the burden of the states in default. The problem of state and local pension liabilities is therefore a problem for all U.S. taxpayers, not just those in the states with the largest deficits." -- Joshua Rauh
More here. Scroll all the way to the bottom to see your state's ranking. The lower your state's ranking, the better.
It's not pretty if you live in Illinois, Connecticut, Indiana, or New Jersey.
It's much better if you live in North Carolina, New York, or Nevada.
More here. Scroll all the way to the bottom to see your state's ranking. The lower your state's ranking, the better.
It's not pretty if you live in Illinois, Connecticut, Indiana, or New Jersey.
It's much better if you live in North Carolina, New York, or Nevada.
Monday, October 18, 2010
How to Help Poor People
The best thing anyone can do is make a poor person self-sufficient and/or independent.
Welfare and charity do not make a poor person self-sufficient because they regard the poor person as a passive recipient of benefits rather than someone with under-utilized skills.
A job allows a person to become self-sufficient.
To give someone a job, corporations and small businesses must grow and make higher profits so they can afford to expand.
For businesses to grow and make higher profits, they must sell more products.
Therefore, the goals of any fiscal policy ought to be 1) increase public demand for products by ensuring a fluid money supply; and 2) maintain the purchasing power of the currency.
The Federal Reserve's monetary policy seeks to promote "maximum" sustainable output and employment and to promote "stable" prices. More here.
Welfare and charity do not make a poor person self-sufficient because they regard the poor person as a passive recipient of benefits rather than someone with under-utilized skills.
A job allows a person to become self-sufficient.
To give someone a job, corporations and small businesses must grow and make higher profits so they can afford to expand.
For businesses to grow and make higher profits, they must sell more products.
Therefore, the goals of any fiscal policy ought to be 1) increase public demand for products by ensuring a fluid money supply; and 2) maintain the purchasing power of the currency.
The Federal Reserve's monetary policy seeks to promote "maximum" sustainable output and employment and to promote "stable" prices. More here.
Friday, October 15, 2010
Thought of the Day
California's public K-12 schools: billion dollar babysitting boondoggles?
Sounds like a harsh question until you realize we currently have no objective way of measuring teacher performance. Consider this paragraph--about another topic but also relevant here--from David Walker's book, Comeback America (hardcover, page 164):
Without any standards of measurement, all definitions of "success" and "failure" devolve to the political arena. If your party enacted the new housing stimulus program, then you can make a dozen claims to support its success. But your opponents, at the same time, can point out as many claims of its failure. We ordinary taxpayers who footed the bill can only hope something good came out of the exercise--but we can't tell either. This is simply unacceptable and must change.
Our schools have no real standards to measure the effectiveness of teachers. Unions resist testing and making teacher evaluations public. Meanwhile, kids move along within the system, and it's hard to tell whether they succeed based primarily on the school they attend or their parents' involvement.
Sounds like a harsh question until you realize we currently have no objective way of measuring teacher performance. Consider this paragraph--about another topic but also relevant here--from David Walker's book, Comeback America (hardcover, page 164):
Without any standards of measurement, all definitions of "success" and "failure" devolve to the political arena. If your party enacted the new housing stimulus program, then you can make a dozen claims to support its success. But your opponents, at the same time, can point out as many claims of its failure. We ordinary taxpayers who footed the bill can only hope something good came out of the exercise--but we can't tell either. This is simply unacceptable and must change.
Our schools have no real standards to measure the effectiveness of teachers. Unions resist testing and making teacher evaluations public. Meanwhile, kids move along within the system, and it's hard to tell whether they succeed based primarily on the school they attend or their parents' involvement.
Thursday, October 14, 2010
On California Education
Three must-read links on education:
Grand Theft Education [Warning: PDF] (Hat tip to Jon.)
Reason.com: "The two largest teachers unions, The American Federation of Teachers and the National Education Association, overwhelmingly supported Obama with their votes and their contributions. Some 95 percent of the groups' campaign contributions go to Democratic candidates and the NEA, spends more money on elections that Microsoft, ExxonMobil, Walmart, and the AFL-CIO combined. No wonder Obama's big talking point is that he wants to add 10,000 more teachers to public payrolls despite the fact that there are already more teachers per student than ever.
Reforming education may not be politically easy, but the solution is pretty simple: Give parents and students more ability to choose - and exit - schools. This works for every other sort of business and it works for higher education, too. There's no reason to think it wouldn't work for K-12 education."
Economist blog: "America's public-sector unions...have an extraordinary power to force the state to dance to their tune, squashing innovation, reducing productivity and undermining competitiveness."
"With poor prospects in the ultra-competitive private sector, government work is increasingly desirable for those with limited skills; at the opposite end of the spectrum, the wage compression imposed by unions and civil-service rules makes government employment less attractive to those whose abilities are in high demand..."
Bonus: more facts here.
Grand Theft Education [Warning: PDF] (Hat tip to Jon.)
Reason.com: "The two largest teachers unions, The American Federation of Teachers and the National Education Association, overwhelmingly supported Obama with their votes and their contributions. Some 95 percent of the groups' campaign contributions go to Democratic candidates and the NEA, spends more money on elections that Microsoft, ExxonMobil, Walmart, and the AFL-CIO combined. No wonder Obama's big talking point is that he wants to add 10,000 more teachers to public payrolls despite the fact that there are already more teachers per student than ever.
Reforming education may not be politically easy, but the solution is pretty simple: Give parents and students more ability to choose - and exit - schools. This works for every other sort of business and it works for higher education, too. There's no reason to think it wouldn't work for K-12 education."
Economist blog: "America's public-sector unions...have an extraordinary power to force the state to dance to their tune, squashing innovation, reducing productivity and undermining competitiveness."
"With poor prospects in the ultra-competitive private sector, government work is increasingly desirable for those with limited skills; at the opposite end of the spectrum, the wage compression imposed by unions and civil-service rules makes government employment less attractive to those whose abilities are in high demand..."
Bonus: more facts here.
Wednesday, October 13, 2010
Leon Panetta Speaks at SCU
Leon Panetta, Director of the CIA, spoke at Santa Clara University last week (October 8, 2010). He was entertaining and clearly proud of his Italian heritage. In one of his best moments of the night, he told a story about the necessity of fighting for your beliefs:
A priest and a rabbi want to learn more about each other's beliefs, so they attend a boxing match. One of the boxers goes to the corner and makes the sign of the cross. The rabbi sees this and asks the priest, “What does that mean?” The priest responds, “Not a damn thing, if he can’t fight.” (It’s much funnier when spoken.)
Overall, Panetta said all the right things. He is against “enhanced interrogation techniques” aka torture (he said the CIA uses the Army Field Manual on interrogations). He thinks the media is doing Americans a disservice through its soundbite-style reporting (and even took a jab at Fox news, saying that the media panders to the lowest common denominator because they don’t want to be “outfoxed.”) In any case, here are the highlights of Panetta's speech as I saw them:
In D.C., “gridlock is the order of the day.”
Panetta singled out Yemen, Somalia, Afghanistan, Iraq, and Pakistan as hotbeds of terrorism. He said that Pakistan had nuclear weapons and Al-Qaeda leaders.
He said India was an emerging power but will have to deal with its poverty problem [which may limit its ascendancy].
He said, “My job is to tell the truth,” whether they [the White House and Congress] like to hear it or not.
The CIA has four basic missions: counter-terrorism (CT); counter-proliferation; cyber-security; and minimizing the risk of surprise.
One interesting quote: “We are conducting a war within Pakistan.”
“Security and stability are our top priorities.”
On nuclear proliferation, “all we need is a nuclear arms race in the Middle East,” he said with an exasperated tone.
He singled out North Korea as an active proliferator that shares nuclear technology with other countries. He also mentioned Iran's nuclear program, but didn't provide much detail other than mentioning it as a potential catalyst for a nuclear arms race.
On cyber-security, Panetta singled out China and Russia as potential threats. He said the “next Pearl Harbor could be a cyberattack” that shuts down our power grid or financial system. He said we experience hundreds of thousands of cyberattacks each year.
Panetta also went on several tangents, mentioning the Mexican drug cartels, which have killed 15,000 people, and the rising power of Brazil and India.
He told us that “we do not have to choose between law and security,” but “at the same time, we cannot be free unless we are secure.”
Panetta said the CIA’s budget has “tripled” since 9/11, which was cause for concern. He said such growth and unchecked expenditures “frankly scared the hell out of” him. (Prior to becoming Director, Panetta spent years on the House Budget Committee trying to balance the federal budget.)
Panetta has reduced the CIA’s reliance on outside contractors (I believe he said the CIA has reduced its reliance on contractors by around "20%," but I couldn't quite make out the specific context, and I'm sure there are many different kinds of contractors, so the 20% number may not be very helpful to anyone).
Panetta has made knowledge of a foreign language a requirement to advance within the CIA. His goal is to “be diverse,” and he wants to increase the CIA’s overall diversity from 23% overall to 30%.
Panetta said the CIA’s basic goal is “convincing people to risk their lives to give us information–that is what it is all about.” If we can’t protect them [the assets], he said, no one will want to work with us (later, he criticized WikiLeaks because some of the documents released contained names).
Panetta also said the President of the United States signs off on all covert operations, and the CIA's decisions are also reviewed by the Attorney General as well as overseen by Congress [see Senate Select Committee on Intelligence and the House Permanent Select Committee on Intelligence]. He went out of his way to say that the CIA keeps the President and Congress apprised of all operations.
He said that over half of the CIA’s workforce was hired post-9/11.
During the short Q&A session, Panetta criticized the media, saying its quality has declined because of soundbites and increased competition (this is where he made the comment about the general media not wanting to be “outfoxed”).
Panetta said the CIA had no excuse for not having oversight over [outside] contractors. He also said that certain security details were outsourced because certain agencies don't have designated security personnel. (I think he mentioned protection for certain Afghan politicians and State Department personnel, but don't quote me on this.)
Panetta lamented the state of modern politics, indicating that the goal ought to be consensus, but now politicians care more about surviving in office. Panetta said we can “govern by leadership or [by] crisis,” and right now, we are governing by crisis.
As I left the speech, I realized I had listened to a series of bromides. For example, Panetta left out the CIA’s role in extraordinary renditions. While Panetta said we should not look backwards to the Bush administration’s mistakes, he also didn’t say anything about how the CIA sought to avoid similar debacles. My own personal experience regarding FOIA requests was markedly different with the CIA than it was with the FBI–even though both were providing me information pursuant to the exact same federal law.
At the end of the day, Mr. Panetta is just one individual, just like President Obama is just one individual. My feeling is that Americans keep looking for one person to change things, but our form of government is anti-royalty and therefore one person’s power–though vast–is still limited. We need to move away from a "single individual" mentality and try to elect people who are comfortable delegating power and who will create changes from the bottom up. If this decade is any indication, it appears that one person can make a difference on the negative side, but not so much on the positive side.
A priest and a rabbi want to learn more about each other's beliefs, so they attend a boxing match. One of the boxers goes to the corner and makes the sign of the cross. The rabbi sees this and asks the priest, “What does that mean?” The priest responds, “Not a damn thing, if he can’t fight.” (It’s much funnier when spoken.)
Overall, Panetta said all the right things. He is against “enhanced interrogation techniques” aka torture (he said the CIA uses the Army Field Manual on interrogations). He thinks the media is doing Americans a disservice through its soundbite-style reporting (and even took a jab at Fox news, saying that the media panders to the lowest common denominator because they don’t want to be “outfoxed.”) In any case, here are the highlights of Panetta's speech as I saw them:
In D.C., “gridlock is the order of the day.”
Panetta singled out Yemen, Somalia, Afghanistan, Iraq, and Pakistan as hotbeds of terrorism. He said that Pakistan had nuclear weapons and Al-Qaeda leaders.
He said India was an emerging power but will have to deal with its poverty problem [which may limit its ascendancy].
He said, “My job is to tell the truth,” whether they [the White House and Congress] like to hear it or not.
The CIA has four basic missions: counter-terrorism (CT); counter-proliferation; cyber-security; and minimizing the risk of surprise.
One interesting quote: “We are conducting a war within Pakistan.”
“Security and stability are our top priorities.”
On nuclear proliferation, “all we need is a nuclear arms race in the Middle East,” he said with an exasperated tone.
He singled out North Korea as an active proliferator that shares nuclear technology with other countries. He also mentioned Iran's nuclear program, but didn't provide much detail other than mentioning it as a potential catalyst for a nuclear arms race.
On cyber-security, Panetta singled out China and Russia as potential threats. He said the “next Pearl Harbor could be a cyberattack” that shuts down our power grid or financial system. He said we experience hundreds of thousands of cyberattacks each year.
Panetta also went on several tangents, mentioning the Mexican drug cartels, which have killed 15,000 people, and the rising power of Brazil and India.
He told us that “we do not have to choose between law and security,” but “at the same time, we cannot be free unless we are secure.”
Panetta said the CIA’s budget has “tripled” since 9/11, which was cause for concern. He said such growth and unchecked expenditures “frankly scared the hell out of” him. (Prior to becoming Director, Panetta spent years on the House Budget Committee trying to balance the federal budget.)
Panetta has reduced the CIA’s reliance on outside contractors (I believe he said the CIA has reduced its reliance on contractors by around "20%," but I couldn't quite make out the specific context, and I'm sure there are many different kinds of contractors, so the 20% number may not be very helpful to anyone).
Panetta has made knowledge of a foreign language a requirement to advance within the CIA. His goal is to “be diverse,” and he wants to increase the CIA’s overall diversity from 23% overall to 30%.
Panetta said the CIA’s basic goal is “convincing people to risk their lives to give us information–that is what it is all about.” If we can’t protect them [the assets], he said, no one will want to work with us (later, he criticized WikiLeaks because some of the documents released contained names).
Panetta also said the President of the United States signs off on all covert operations, and the CIA's decisions are also reviewed by the Attorney General as well as overseen by Congress [see Senate Select Committee on Intelligence and the House Permanent Select Committee on Intelligence]. He went out of his way to say that the CIA keeps the President and Congress apprised of all operations.
He said that over half of the CIA’s workforce was hired post-9/11.
During the short Q&A session, Panetta criticized the media, saying its quality has declined because of soundbites and increased competition (this is where he made the comment about the general media not wanting to be “outfoxed”).
Panetta said the CIA had no excuse for not having oversight over [outside] contractors. He also said that certain security details were outsourced because certain agencies don't have designated security personnel. (I think he mentioned protection for certain Afghan politicians and State Department personnel, but don't quote me on this.)
Panetta lamented the state of modern politics, indicating that the goal ought to be consensus, but now politicians care more about surviving in office. Panetta said we can “govern by leadership or [by] crisis,” and right now, we are governing by crisis.
As I left the speech, I realized I had listened to a series of bromides. For example, Panetta left out the CIA’s role in extraordinary renditions. While Panetta said we should not look backwards to the Bush administration’s mistakes, he also didn’t say anything about how the CIA sought to avoid similar debacles. My own personal experience regarding FOIA requests was markedly different with the CIA than it was with the FBI–even though both were providing me information pursuant to the exact same federal law.
At the end of the day, Mr. Panetta is just one individual, just like President Obama is just one individual. My feeling is that Americans keep looking for one person to change things, but our form of government is anti-royalty and therefore one person’s power–though vast–is still limited. We need to move away from a "single individual" mentality and try to elect people who are comfortable delegating power and who will create changes from the bottom up. If this decade is any indication, it appears that one person can make a difference on the negative side, but not so much on the positive side.
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