The Cynical Economist

Education Vs. Bureaucracy -

How can a 375% education spending increase over four decades result in flat-lined reading, math and science scores? Because all that largesse feeds a bureaucratic monster sheltered from competition.

OBAMA URGES HIRING MORE TEACHERS AS SOLUTION TO UNEMPLOYMENT –

Video…

Hire more teachers so our kids be more competitive? The rest of the worlds is more competitive, because their kids actually learn from the teachers math and science. Pupils here learn how to put condoms on cucumbers and the money really goes to the bureaucrats.

The other problem – The TV has become a parent of today’s kids. The cable is the one that is taking the imagination and logical thinking of Americans from very young age…

Parents Urged Again to Limit TV for Youngest –

The new report strongly warns parents against putting a TV in a very young child’s room and advises them to be mindful of how much their own use of media is distracting from playtime. In some surveys between 40 and 60 percent of households report having a TV on for much of the day — which distracts both children and adults, research suggests.

What are one of the smartest parents in the world that live in The Silicon Valley doing? Putting their children in schools where there are no TV’s, computers or phones, but only plain paper and pencils…

A Silicon Valley School That Doesn’t Compute –

The chief technology officer of eBay sends his children to a nine-classroom school here. So do employees of Silicon Valley giants like Google, Apple, Yahoo and Hewlett-Packard.

But the school’s chief teaching tools are anything but high-tech: pens and paper, knitting needles and, occasionally, mud. Not a computer to be found. No screens at all. They are not allowed in the classroom, and the school even frowns on their use at home.

Schools nationwide have rushed to supply their classrooms with computers, and many policy makers say it is foolish to do otherwise. But the contrarian point of view can be found at the epicenter of the tech economy, where some parents and educators have a message: computers and schools don’t mix.

End here it is Dr. Michio Kaku summarize in what trouble America is in, if we continue to graduate people with diplomas, but with no education comparable to the world standards. It is a must watch video from the begging to the very end…

At the end his opponent Michael Schrage then says how colleges in the U.S. are using science classes as “flunk out operations”. He states that in the way the educational system is set up now, we have a distorted incentives that undermine the ability of America to have home grown science and technology centers…which results ultimately in lesser economic growth and less jobs.

And why do you think an overpaid teacher will care for your kid education?

Public-School Teachers are Overpaid, Heritage/AEI Study Finds –

A new study conducted by the Heritage Foundation and the American Enterprise Institute (AEI) finds that, contrary to popular belief, public-school teachers receive total compensation more than 50 percent greater than that of private sector employees – if you take into account benefits, job security, summer vacations and other factors.

Study Concludes Public School Teacher Salaries $120 Billion Over Market Value –

Teacher pay nationally is about $120 billion over market value, and teachers who switch to teaching from other jobs get a 9 percent pay rise, while people who leave teaching typically take a 3 percent pay cut.

From NYT

Michael Ellsberg is the author of “The Education of Millionaires: It’s Not What You Think and It’s Not Too Late.”

I TYPED these words on a computer designed by Apple, co-founded by the college dropout Steve Jobs. The program I used to write it was created by Microsoft, started by the college dropouts Bill Gates and Paul Allen.

And as soon as it is published, I will share it with my friends via Twitter, co-founded by the college dropouts Jack Dorsey and Evan Williams and Biz Stone, and Facebook — invented, among others, by the college dropouts Mark Zuckerberg and Dustin Moskovitz, and nurtured by the degreeless Sean Parker.

American academia is good at producing writers, literary critics and historians. It is also good at producing professionals with degrees. But we don’t have a shortage of lawyers and professors. America has a shortage of job creators. And the people who create jobs aren’t traditional professionals, but start-up entrepreneurs.

Read the rest here…

From Reuters
By Alina Selyukh

In college, Matthew Bergh was ahead of the curve, working part-time at a local Starbucks and setting aside a few thousand dollars a year to do what his parents taught him to do — invest.

n 2008 the markets crashed and the recession interrupted his financial dreams. “As of right now, I can’t invest,” Bergh said. “I’m saving.”

Eighteen- to 30-year olds, known as “Generation Y,” have taken a more conservative approach to managing their money — stashing it in a savings account or under the proverbial mattress.

This generation of investors came of age during a succession of economic earthquakes. They witnessed the dot-com implosion of 2000 and the more recent onslaught of plunging housing prices, the credit crisis, recession, double-digit unemployment and an annihilation of investor wealth.

“The younger generation has not seen a good stock market over their adulthood,” said Gordon Fowler, chief executive of Glenmede, a Philadelphia-based wealth manager for rich people. “That had to have some impact on the psychology of younger investors.”

Bergh, 22, started looking for a job in January, and sent out more than 200 applications. After graduating in May, he did what thousands of young Americans have been forced to do: he moved back in with his parents and took an internship with Microsoft Corp. His job search continues.

Among his other ways to conserve cash, he has postponed his investments.

Leslie Barrie, a 26-year-old journalist in New York, followed a similar path. After graduating from college in California, she moved in with her parents and pursued low-paying internships before she went to graduate school.

“I try to save as much as possible,” Barrie said. She wants to invest for her retirement, but the markets have discouraged her from doing anything other than keeping a savings account.

Even those who work in capital markets are leery.

One 28-year-old man who declined to be named because he is a hedge fund vice president said five years ago he kept about 10 percent of his finances in cash. Now, he keeps 70 percent.

LEARNING GRANDPARENTS’ LESSONS

Generation Y’s views on money echo that of another generation — their grandparents. Many of those people learned the value of saving and frugality because they grew up in the wake of the 1929 market crash and the Great Depression.

By contrast, their parents — the Baby Boomers — were buoyed by several major bull markets, soaring home values and the proliferation of easy consumer credit.

“Our parents lived it up on debt and then many of them saw their houses get foreclosed, and that was kind of a shock to us,” said Robert Eubank, a 20-year-old senior finance major and equity portfolio manager at a student-run investment group at Towson University in Maryland.

read the rest here

When University of Central Florida professor Richard Quinn suspected that some students had cheated on his exam, he gave a lecture on ethics to his class that he then put on YouTube.

In the lecture, Prof Quinn told the class he had enough evidence from statistical analysis and other investigatory techniques to identify most cheats, but instead of handing the list over to the university authorities for discipling, he proposed a deal. He said: “I don’t want to have to explain to your parents why you didn’t graduate, so I went to the Dean and I made a deal. The deal is you can either wait it out and hope that we don’t identify you, or you can identify yourself to your lab instructor and you can complete the rest of the course and the grade you get in the course is the grade you earned in the course.” Prof Quinn also added a requirement for those who came forward complete a four hour course in ethics. In return there would be no permanent record of the cheating.

He ended up uncovering over 200 students that had cheated on the exam out of about 700.

From SLATE
By Annie Lowrey

Law schools are manufacturing more lawyers than America needs, and law students aren’t happy about it.

During the recession, the logic was ubiquitous:The economy is terrible—better to wait it out! It is a three-year fast track to a remunerative, respectable career! It’s not just learning a subject—it’s learning how to think! Law school, always the safe choice, became a more popular choice. Between 2007 and 2009, the number of LSAT takers climbed 20.5 percent. Law school applications increased in turn.

But now a number of recent or current law students are saying—or screaming—that they made a mistake. They went to law school, they say, and now they’re underemployed or jobless, in debt, and three years older. And statistics show that the evidence is more than anecdotal.

One Boston College Law School third-year—miraculously, still anonymous—begged for his tuition back in exchange for a promise to drop out without a degree, in an open letter to his dean published earlier this month. “This will benefit both of us,” he argues. “On the one hand, I will be free to return to the teaching career I left to come here. I’ll be able to provide for my family without the crushing weight of my law school loans. On the other hand, this will help BC Law go up in the rankings, since you will not have to report my unemployment at graduation to US News. This will present no loss to me, only gain: in today’s job market, a J.D. seems to be more of a liability than an asset.”

He is one of dozens of law students who have gone public, very public, to chastise the schools they elected to attend for leaving them older and poorer. One popular medium is the “scam blog,” where indebted,unemployed attorneys accuse law schools of being little better than tuition-sucking diploma mills. (Sample blog title: Shilling Me Softly.) The author of one popular, if histrionic, such blog describes his law school as a Ponzi scheme.

Others have taken, perhaps inevitably, to the courts. Kenneth Desornes, for instance, named his law school in his bankruptcy filing. He asks the school to “[a]dmit that your business knew or should have known that Plaintiff would be in no position to repay those loans.”

The students might be litigious—no surprise there—and overwrought. But they’ve got a point. The demand for lawyers has fallen off a cliff, both due to the short-term crisis of the recession and long-term changes to the industry, and is only starting to rebound. The lawyers that do have jobs are making less than they used to. At the same time, universities seeking revenue have tacked on law schools, minting more lawyers every year.

read the rest here

From The Chronicle of Higher Education
By Richard Vedder

October 20, 2010, 9:53 am

Two sets of information were presented to me in the last 24 hours that have dramatically reinforced my feeling that diminishing returns have set in to investments in higher education, with increasing evidence suggesting that we are in one respect “overinvesting” in the field. First, following up on information provided by former student Douglas Himes at the Bureau of Labor Statistics (BLS), my sidekick Chris Matgouranis showed me the table reproduced below (And for more see this).

Over 317,000 waiters and waitresses have college degrees (over 8,000 of them have doctoral or professional degrees), along with over 80,000 bartenders, and over 18,000parking lot attendants. All told, some 17,000,000 Americans with college degrees are doing jobs that the BLS says require less than the skill levels associated with a bachelor’s degree.

I have long been a proponent of Charles Murray’s thesis that an increasing number of people attending college do not have the cognitive abilities or other attributes usually necessary for success at higher levels of learning. As more and more try to attend colleges, either college degrees will be watered down (something already happening I suspect) or drop-out rates will rise.

The relentless claims of the Obama administration and others that having more college graduates is necessary for continued economic leadership is incompatible with this view. Putting issues of student abilities aside, the growing disconnect between labor market realities and the propaganda of higher-education apologists is causing more and more people to graduate and take menial jobs or no job at all. This is even true at the doctoral and professional level—there are 5,057 janitors in the U.S. with Ph.D.’s, other doctorates, or professional degrees.

This week an extraordinarily interesting new study was posted on the Web site of America’s most prestigious economic-research organization, the National Bureau of Economic Research. Three highly regarded economists (one of whom has won the Nobel Prize in Economic Science) have produced “Estimating Marginal Returns to Education,” Working Paper 16474 of the NBER. After very sophisticated and elaborate analysis, the authors conclude “In general, marginal and average returns to college are not the same.” (p. 28)

In other words, even if on average, an investment in higher education yields a good, say 10 percent, rate of return, it does not follow that adding to existing investments will yield that return, partly for reasons outlined above. The authors (Pedro Carneiro, James Heckman, and Edward Vytlacil) make that point explicitly, stating “Some marginal expansions of schooling produce gains that are well below average returns, in general agreement with the analysis of Charles Murray.”  (p.29)

Now it is true that college has a consumption as well as investment function. People often enjoy going to classes, just as they enjoy watching movies or taking trips. They love the socialization dimensions of schooling—particularly in this age of the country-clubization of American universities. They may improve their self-esteem by earning a college degree. Yet, at a time when resources are scarce, when American governments are running $1.3-trillion deficits, when we face huge unfunded liabilities associated with commitments made to our growing elderly population, should we be subsidizing increasingly problematic educational programs for students whose prior academic record would suggest little likelihood of academic, much less vocational, success?

I think the American people understand, albeit dimly, the logic above. Increasingly, state governments are cutting back  higher-education funding, thinking it is an activity that largely confers private benefits. The pleas of university leaders and governmental officials for more and more college attendance appear to be increasingly costly and unproductive forms of special pleading by a sector that abhors transparency and performance measures.

Higher education is on the brink of big change, like it or not.

Christopher Matgouranis helped enormously in preparing this posting.

I have missed this article when it was originally published, but I think it is a must read piece, so here it is, sharing it with you…

From Cnet
by Declan McCullagh

August 24, 2010 10:59 AM PDT

ASPEN, Colo.–Intel Chief Executive Officer Paul Otellini offered a depressing set of observations about the economy and the Obama administration Monday evening, coupled with a dark commentary on the future of the technology industry if nothing changes.

Otellini’s remarks during dinner at the Technology Policy Institute’s Aspen Forum here amounted to a warning to the administration officials and assorted Capitol Hill aides in the audience: unless government policies are altered, he predicted, “the next big thing will not be invented here. Jobs will not be created here.”

The U.S. legal environment has become so hostile to business, Otellini said, that there is likely to be “an inevitable erosion and shift of wealth, much like we’re seeing today in Europe–this is the bitter truth.”

Not long ago, Otellini said, “our research centers were without peer. No country was more attractive for start-up capital…We seemed a generation ahead of the rest of the world in information technology. That simply is no longer the case.”

The phenomenon of technology executives advancing dismal predictions and offering pointed critiques of Washington politicking isn’t new, of course.

For instance: In 2005, midway through the Bush administration, Microsoft’s Bill Gates told a Washington audience that curbs on immigration and guest workers would provide a boost to research institutions in China and India. A year earlier, then-Intel CEO Craig Barrett warned that the U.S. must dramatically improve its education system.

That never happened. Nor did politicians follow Gates’ advice to rethink laws that led to foreign engineers being kicked out of the country as soon as they finish their degrees.

And now, six years later with no significant reforms, it should come as no surprise that the predictions have become more dire.

Deep in a ‘Do’ loop

Otellini singled out the political state of affairs in Democrat-dominated Washington, saying: “I think this group does not understand what it takes to create jobs. And I think they’re flummoxed by their experiment in Keynesian economics not working.”

Since an unusually sharp downturn accelerated in late 2008, the Obama administration and its allies in the U.S. Congress have enacted trillions in deficit spending they say will create an economic stimulus but have not extended the Bush tax cuts and have pushed to levy extensive new health care and carbon regulations on businesses.

“They’re in a ‘Do’ loop right now trying to figure out what the answer is,” Otellini said.

As a result, he said, “every business in America has a list of more variables than I’ve ever seen in my career.” If variables like capital gains taxes and the R&D tax credit are resolved correctly, jobs will stay here, but if politicians make decisions “the wrong way, people will not invest in the United States. They’ll invest elsewhere.”

Take factories. “I can tell you definitively that it costs $1 billion more per factory for me to build, equip, and operate a semiconductor manufacturing facility in the United States,” Otellini said.

The rub: Ninety percent of that additional cost of a $4 billion factory is not labor but the cost to comply with taxes and regulations that other nations don’t impose. (Cypress Semiconductor CEO T.J. Rodgers elaborated on this in an interview with CNET, saying the problem is not higher U.S. wages but antibusiness laws: “The killer factor in California for a manufacturer to create, say, a thousand blue-collar jobs is a hostile government that doesn’t want you there and demonstrates it in thousands of ways.”)

“If our tax rate approached that of the rest of the world, corporations would have an incentive to invest here,” Otellini said. But instead, it’s the second highest in the industrialized world, making the United States a less attractive place to invest–and create jobs–than places in Europe and Asia that are “clamoring” for Intel’s business.

The comments from Intel’s chief executive echoed statements made a day earlier by Carly Fiorina, the former HP CEO turned Republican Senate candidate.

America’s skilled-worker visa system is so badly broken and anti-immigration that “we have to start from scratch,” Fiorina said, adding that too many government policies push jobs overseas instead of making U.S. companies competitive against international rivals.

“Our corporate tax rates are the second highest in the world,” and Congress has repeatedly failed to make an R&D tax credit permanent, Fiorina told the Aspen audience. It’s time to start “acknowledging the reality that companies go where they’re welcome,” she said. (The effective U.S. corporate income tax is 35 percent, far over the industrialized-nation average of 18.2 percent.)

Chris Marangi, associate portfolio manager at Gamco Investors in Rye, N.Y., said Tuesday: “Capital is agnostic. It doesn’t have a religion. It doesn’t have a philosophy. It goes where it finds the highest returns.” The problem, Marangi said, is that many other “countries have a more friendly regulatory regime than we do.”