Thursday, May 31, 2012

To My High School Classmates

To my classmates:

Four years ago we agreed not to use our class mailing list for political discussions. Now we seem to have forgotten that agreement. Rather than wearing out my welcome on that list I have posted my response to the recent chain letter about the Buffett Amendment here.

I recommend you see Snopes.com article on the Buffett Amendment which says
 
"Origins:   In July 2011, discussion about raising the debt ceiling heated up as the August 2nd deadline for resolving the issue and avoiding a shutdown of the federal government loomed. (Had the matter not been resolved, as of that date the U.S. would have been unable to fund its various programs and other expenditures.)

"Opinions about what should be done were sought from various quarters as news organizations struggled to keep up with the battle waging in Congress and behind closed doors. Business magnate Warren Buffett waded in with his opinion on the matter in an early-morning 7 July 2011 CNBC interviewconducted by Becky Quick. It was during that exchange that the Oracle of Omaha made his now famous statement about rendering ineligible for re-election all sitting members of Congress whenever the deficit exceeded 3% of gross domestic product.

"So yes, it's true that one of the most respected businessmen of modern times did indeed voice the quote now widely ascribed to him in various e-mailed forwards, although his remark was more in the nature of a wry commentary on the workings of Congress than a serious proposal for tackling the budget deficit.  (my emphasis)

"The rest of the lengthier e-mail in circulation has nothing to do with Warren Buffett. (my emphasis again) What is presented as the "Congressional Reform Act of 2011" began circulating on the Internet in October 2009 as the "Congressional Reform Act of 2009." In a nutshell, what is presented as a proposed 28th amendment to the U.S. Constitution isn't something that has been put forward by any member of Congress and thus is nothing more than a bit of Internet-based politicking."

I disagree with the way that Obama has handled the budget deficit/debt problems. He should have crusaded for adoption of the Simpson-Bowles (National Commission on Fiscal Responsibility and Reform) plan even though it did not get the super majority needed to present it to Congress on an up or down vote. Instead he shrugged it off. An enormous failure of leadership!

The various Republican plans that aim to fix the federal government's financial problems with only spending cuts and tax cuts are: (A) voodoo, (B) require a suspension of the laws of mathematics, (C) a pack of lies, or (D) all of the above. (Apologies for the nonparallel construction.) There will have to be some painful and unpopular spending cuts including in the sacred-cow programs of social security benefits and medicare BUT there also have to be tax increases (not just on those making more than $250k/yr) to close the gap. Returning to the tax rates of the Clinton years would go a long way to solving the problem and could be done easily by letting the Bush tax cuts expire. But a far better solution would involved broader tax reform to eliminate the loopholes and simplify the IRS code.

Neither party has had the courage to speak the truth to the public, but the Republicans have been far worse. Don't take my word for it: read this article or the book It's Even Worse Than It Looks: How the American Constitutional System Collided With the New Politics of ExtremismAlso highly recommended: White House Burning: The Founding Fathers, Our National Debt, and Why It Matters to You.

Thursday, May 10, 2012

Wednesday, May 9, 2012

The Coming Tsunami of Innovation in Higher Education

In my April 21 post "Hard times for Higher Ed" I wrote about the problems of Assessment and Accountability, i.e. the lack of data about whether students learn anything in college or which types of institutions (if any) are more effective at producing learning gains. I also mentioned a second issue that has troubled me for many years: the lack of innovation in educational delivery systems. I am optimistic that things are about to change on that front. In the last six months there has been an explosion of experimentation and entrepreneurship focused on providing rigorous college or graduate school courses available in non-traditional ways to non-traditional students.


Perhaps we should start the clock in 2004 when Salman Khan (born and raised in  New Orleans) began to tutor a cousin who was a middle school student in math using the Yahoo Doodle instant messaging service. It didn't hurt that Khan had three degrees from MIT and one from Harvard. Khan's home brew tutorials were so effective that other students wanted to join in.  A colleague suggested he put them on You Tube. In 2006 he went live and the Khan Academy now offers over 3200 videos on line as well as numerous other teaching, learning and assessment aids.  Hundreds of thousands of students have viewed Khan's tutorials and they are integrated in the instructional strategies of a growing number of schools.  Khan has won the backing of some of the biggest names in information technology and venture capital.  Earlier this year he was included in Time Magazine's list of the 100 most influential people in the world and the accompanying profile of him was written by Bill Gates.

One of the people who was inspired by Sal Khan's experiment was Sebastian Thrun, a professor of computer science and electrical engineering at Stanford. Thrun taught a very popular artificial intelligence course and posted videos of his lectures and other learning aids on the class web site.  He was encouraged to offer an on-line version of the course to anyone in the world who could access it via the internet.  In October of last year an astonishing 160,000 students from almost 200 countries registered for the course (which did not carry any Stanford credit) and about 23,000 completed the course passing the same exam that was taken by the Stanford students taking the course for credit.  Thrun quickly resigned his tenured position at Stanford and with a few collaborators formed Udacity to offer more such courses.

Thrun's stunning achievement has been a dope slap to the pointy heads that run America's most prestigious universities. Talking about the effect higher education of such technology based distribution, Stanford's president John Hennesy says "There's a tsunami coming." (from this New Yorker article)

Stanford has quickly formed a partnership with Princeton, the University of Pennsylvania and the University of Michigan to offer a wide range of on-line courses through a new company Coursera. Now Harvard and MIT have rushed into battle with edX--a venture that might have spent a bit more time in the incubator before its clumsy public launch on May 2nd. Perhaps the most elaborate implementation of this tsunami model is the Minerva Project, headed by Ben Nelson, a Silicon Valley entrepreneur who founded Snapfish, the on-line photo printing service.  Minerva aims to create budget priced campus based education with Ivy League standards.  World class faculty would pipe in their courses to classrooms around the world.  Local faculty and tutors would lead discussions, organize group work and presumably have a role in assessment and policing cheating.  Nelson's model is appealing because it offers the advantages of the residential experience that a totally internet based system lacks.  And Nelson has recruited a posse of big names for his advisory board including Larry Summers, former president of Harvard and Secretary of the Treasury.  Although Nelson has plausible responses to most all questions about his plan and has pledges of significant funding, to me he projects a note of arrogance and hype in his promotion of Minerva.  I hope that I am wrong.

I don't think that any of these innovations will put conventional higher education out of business but they will certainly force traditional institutions to raise their game.  And they will make elite level instruction accessible to anyone who has an internet connection.  For me the one important element that is missing from the discussion is the absence of defined curricula.  Most younger students (age 17-21) benefit from preset degree programs rather than the chaotic cafeteria plans offered by many universities. Most such students would also benefit from more discipline and more civic and physical education than they experience in universities today.  For many years I have imagined that such a place would look much like the military academies.  Ben Nelson may have something like that in mind for Minerva.  In a recent article on The Atlantic web site he said "We are creating a civilian West Point. The people who will get into and graduate from Minerva will be, bar none, the best students on the planet."  What he doesn't understand is that West Point does not have the best students in the world.  The students at Stanford would eat them up. (If you have any doubts go here.)  But that is not the point.  What we need are institutions that retain and develop all of their students to the greatest extent possible in mind and body and spirit.

See Charlie Rose interview Salman Khan here.  See him interview Sebastian Thrun here.

See Ben Nelson promote the Minerva Project here.

Wednesday, May 2, 2012

Bursting Bubble or Tsunami? Part 2

The second and final installment from Education News and covered by their Creative Commons License BY-NC-NC. Education New

Friday, April 27, 2012

Bursting Bubble or Tsunami? Part 1

Last week I ranted about universities failure to measure and disclose whether they actually contribute to their abilities to think critically, reason analytically, solve problems and communicate clearly and cogently.  Here is a graphic presentation from Education News about another troubling aspect of higher ed.  Please note that this excerpt is reproduced in accordance with the terms of Creative Commons License CC By-NC-ND granted by Education News.Education News

Saturday, April 21, 2012

Hard Times for Higher Ed

American education has been a favorite whipping boy for politicians, journalists and pundits at least since the 1983 publication of A Nation at Risk: The Imperative For Educational Reform. Recently times have been especially tough as the economic crisis has reduced institutional revenues forcing faculty layoffs and concomitant shrinkage in course offerings. At the same time many people who cannot find work have decided to go back to school, placing greater demands on the stressed colleges and universities. In the last year or so and particularly in the last six months two threads of criticism of higher education have echoed concerns that drove me for the fifteen years when I headed first the Exxon Education Foundation and then the ExxonMobil Foundation.

Assessment and Accountability: the lack of data about whether students learned anything in college or which types of institutions (if any) are more effective at producing learning gains. Sure everyone knew that the graduates of Yale and Stanford were smarter that those of North South State University (NSSU) in Nowhere, Oklahamshire. But of course, those students were much smarter and better prepared when they entered Yale and Stanford. Perhaps they would have done as well at NSSU. In fact, insiders knew quite a bit. They knew that certain small and relatively unknown schools such as Hope College in Holland, Michigan and St. Edward's University in Austin, Texas consistently outperformed much more renowned and better endowed and larger schools, but the data was mostly anecdotal and insufficient to sway either policy makers or high school counselors. Furthermore, universities consistently blocked research that might disclose unpleasant findings about how much their students learned. I recall a massive study of student learning of science and math funded by both the National Science Foundation and the Exxon Education Foundation and conducted by Prof. Alexander Astin at Higher Education Research Institute at UCLA. Before the colleges and universities agreed to take part they demanded that the data would be disguised so that no one other than the researchers could see the results of any specific school. The study produced some powerful conclusions that were included in Astin's important book What Matters in College? Four Critical Years Revisited (1993). However, many other potentially game-changing findings were submerged due to the stonewalling of the participants.

This intentional lack of transparency is still a huge problem but things are beginning, very slowly, to change for the better. As the cost of higher education has continued to grow faster than inflation parents, taxpayers and state legislators are demanding that the curtain be lifted. In 2000 the Council for Aid to Education (CAE) launched the Collegiate Learning Assessment (CLA) which presents realistic problems that require students to analyze complex materials and determine the relevance to the task and credibility. Students' written responses to the tasks are evaluated to assess their abilities to think critically, reason analytically, solve problems and communicate clearly and cogently. Scores are aggregated to the institutional level to inform the institution about how their students as a whole are performing. By 2010, over 200,000 U.S. students had tested with the CLA in over 450 institutions. In January 2010 the Organisation for Economic Co-operation and Development (OECD) asked the CAE to create an international version of the CLA for the Assessment of Higher Education Learning Outcomes project covering its 31 member countries.

January 2011 saw the publication of Academically Adrift: Limited Learning on College Campuses by Richard Arum and Josipa Roska. The study using data from the CLA showed that a large fraction of undergraduates register hardly any gains in critical thinking, analytical reasoning, problem solving or communication skills in their first two years of college. Educational journals and blogs immediately filled with articles trying to refute Arum and Roska's findings. While some of the criticism is warranted, most is simply an attempt to deflect attention and has been unsuccessful.

Although Arum and Roska's work is ground breaking, the data is still disguised. Universities that administer the CLA still do not release data that would allow a prospective student to compare School A with School X.

Additional research research is underway and will certainly be helpful, but I say it's time to stop studying the problem and start solving it. Billions of dollars are being spent each year on largely worthless coursework. Students and their families take on crushing debt, often for no gain. These stakeholders have a right to know which institutions measure up and which are failing.

Yesterday New York Times columnist David Brooks took the issue to a wider audience in his article "Testing the Teachers."

Oh, I almost forgot that there were two threads of criticism of higher education that have caught my interest. The other is the lack of innovation in educational delivery systems and how that is about to change.

In the interests of full disclosure:
  1. I was on the Board of Trustees of the Council for Aid to Education in the late 1990s and early 2000s when the CLA was being launched.
  2. The ExxonMobil Foundation made the first grant to support the planning for the CLA.
  3. Richard H. Hersh is a former president of Hobart and William Smith Colleges and Trinity College is one of the founders of the CLA. He has a new book on related topics, We're Losing our Minds: Rethinking American Higher Education. For a humorous introduction to the book watch Hersh on The Colbert Report.

Tuesday, April 17, 2012

Some Colorful Facts about the US Federal Tax Situation

I highly recommend this colorful set of charts about the Federal tax system. The collection was compiled by Derek Thompson, a senior editor at The Atlantic.

Neither the Democrats nor the Republicans make any sense when it comes to tax reform, which in my view is absolutely essential.  Just letting the Bush tax cuts expire would help a lot with the deficit but we would still have a nightmare of a tax code.  Some thoughtful ideas about how to untangle the mess are set out in Simon Johnson and James Kwak's new book White House Burning: The Founding Fathers, Our National Debt, and Why It Matters to You.

I have to sign off now and get to the post office with my love letter to the IRS.

Sunday, April 8, 2012

Visit to Xiamen and Yun Shui Yao, Fujian, China

March 30 through April 3 we traveled to Xiamen,  an island city in Fujian Province and to Yun Shui Yao, a rural village also in Fujian.

Click here for photo album.

Saturday, March 31, 2012

Three Cheers for Good Government: Not Small Government

All the Republican Candidates rail against BIG government.  Obama and company blast away at Big business.  There is a grain of truth in both arguments. However, the claim of neither side is credible in part because neither party admits any merit to the other's charge.  Furthermore, neither party has a record of following up on its promises.

Is big government the problem or is it inefficient government? Government that has been captured by interest groups, lobbyists and big business?  The founding fathers were alert to the dangers of tyranny and invented the system of checks and balances at the heart of the Constitution.  But they could not have imagined the huge limited liability corporations that arose in the 19th century and have continued to expand their global reach.  Although they do not have the power to imprison or tax, these companies have the potential to cause suffering as surely as despotic governments.  If Republicans are so concerned about abuse of power by big government, why aren't they also concerned about abuses by the business sector?  Instead they propose to massively roll back regulation.  They, with help from their masters in the finance industry, have successfully fought implementation of Public Law 111-203 Dodd-Frank Wall Street Reform and Consumer Protection Act.

Of course, the biggest threat to the social order comes when government acts in collusion with big business to promote crony capitalism rather than free market capitalism.  On January 17, 1961 in his Farewell Address to the Nation President Eisenhower warned of the threat to liberty from the "military industrial complex."  Today he might opt for the "financial, prison, military industrial, legislative complex."

Tuesday, March 27, 2012

Writers' Week


In the last week I have had three different and interesting encounters with writers.

On Tuesday March 20 Hong Kong International School, a K-12 institution where my wife is an administrator, hosted the novelist Chang-Rae Lee for a day or two as a visiting artist.  I was lucky to be able to attend a talk he gave to a group of parents, faculty and high school students.  Lee came to the USA from Korea in 1968 at age 3.  He has published four award-winning novels and directs the creative writing program at Princeton.

As one might expect from such a thoroughbred author, he spoke from a finely prepared script talking about his family life, his education, his decision to abandon a nascent career in finance for his real love, writing.  His talk included a recitation of a long, vivid and moving passage from his first novel Native Speaker.  Lee acquitted himself well in a long Q&A session but it is clear that he is most comfortable with the well polished written form rather than improv.  He had lots of helpful remarks for the aspiring writers in the audience, but is was clear that by writer he mean one composing fiction.  His response to my question about whether he had anything to offer writers of non-fiction was superficial.  You can learn more about Chang-Rae Lee here and here.

The day after meeting Lee I caught up with the ghost of John Updike in the form of a rebroadcast of two interviews by Terry Gross on her NPR Fresh Air program.  Updike died in 2009.  The program was to mark his 80th birthday on March 18.  Listening to this grandmaster in the last years of his life reflect on such a long career was a bright counterpoint to the rising star.  You can listen to the Fresh Air interviews here

Finally, on Sunday the New York Times Magazine carried "Why Talk Therapy Is on the Wane and Writing Workshops Are on the Rise". I have had a few friends who worked through their mid-life crises by taking sabbaticals from mainstream careers to enroll in creative writing programs. So far all who have taken this cure have eventually returned to the dark side. However, one of them is still undergoing treatment. I'm rooting for him to stay the course.

(ps-For readers who think I was either an engineering or accounting major: Nope--English and my second choice was physics.)

Monday, March 12, 2012

Sunday (Tuesday) in the Park (at Home) with George (Russ)



Every Tuesday for the last fours years or so I have downloaded Russ Roberts's EconTalk podcast and spent an entertaining hour or more listening to his interview of an interesting character--often, but not always, a fellow economist. Last week (March 6) was typical: an 87 minute talk with Columbia University Professor Charles Calomiris about banks' capital structures, the effect of leverage on risk and the role of financial regulation. While the audio was downloading I made a quick detour to Cafe Hayek, the blog that Roberts shares with his colleague Don Boudreaux. There I stumbled across a video of Russ giving a talk at Southern Methodist University's (SMU) Cox School of Business in Dallas. Since I was the executive-in-residence at Cox 2005-2007 I couldn't resist watching his performance. Between the SMU video and the EconTalk podcast I spent a good part of Tuesday with Roberts.

The video was enlightening as it was the first time I had seen the professor in action and the first time I had encountered him as a soloist rather than in a duet. Roberts teaches economics with stories rather than using arcane mathematics and charts. That makes him much more engaging than the average econ prof. As I watched him pace the stage I thought how much his approach was similar to the ministers that preach in the churches surrounding the SMU campus. Roberts's sermon was about the superiority of the emergent order of a free market economy compared to one where decisions are made by committees or regulatory agencies. He ridiculed the 40 members of L'Académie française who are charged with protecting the purity of the French language. But his real target was politicians. In his talk he derided politicos from both parties although on the podcasts he leans more heavily on Democrats. It was all very entertaining.

But worrisome, too. There was absolutely no hint that emergent free market economies might fail to efficiently deliver certain kinds of goods and services (e.g. public goods, natural monopolies, externalities). There was no consideration that free people might intentionally trade off some of the efficiency of a free market in favor of other values. Although there was brief mention of regulatory capture, there was really no worry about the power that huge global corporations now exercise both directly and through business associations and front organizations. There was prolonged derision for politicians but no serious suggestions as to how the nation's governance could be reformed.

In other forums Roberts has admitted that he does not consider economics a social science. For him libertarian economics is an ideology--one that he promotes with the skill and enthusiasm of an accomplished preacher-man.  Like most good preachers he has some large blind spots and he is very selective about the evidence he brings to his arguments.  Knowing that, I continue to listen to him because one can learn from great preachers even if not subscribing to their creed. But I worry about our college freshman and sophomores who get their first taste of economics from such a smooth talker.  And I worry about the mostly gray heads in the SMU audience who left with all of their preexisting assumptions confirmed.

Friday, January 13, 2012

Abolish the Corporate Income Tax--what do you think??

I have heard a lot of pleas to abolish the corporate income tax over the last forty years. Most of them are premised on the burden of double taxation of corporate earnings: once when earned by the business and a second time when they are distributed as dividends to shareholders.  Supposedly this double whammy reduces investment and ...(you can fill in the blank). That argument has never carried much weight with me because many companies don't pay much or any dividends.  Furthermore, much of the dividend stream is paid to pension funds and other recipients that further defer or entirely avoid the second round of tax.


My problem with the corporate income tax is the strong incentive it gives to debt finance rather than shareholder equity.  What would happen if we abolish the 35% Federal tax on company profit but tax dividend income and capital gains on shares sales as regular income in the hands of the recipients?  Dividends paid to foreigners would be subject to a withholding tax. This change would put a lot of corporate treasurers, accountants and attorneys out of work.  Ditto for auditors, bankers and financial advisers.  In the short term there would be a spike in the unemployment rate.  But all of those people are very clever and would quickly find jobs during real work.


WHAT DO YOU THINK?


PLEASE SHARE YOUR THOUGHTS BY POSTING A COMMENT BELOW.


Highly recommended film: Margin Call starring Zachary Quinto, Stanley Tucci and Kevin Spacey--a fictionalized account of the fall of Lehman Brothers.

Wednesday, January 11, 2012

Crash Course in Monetary Policy: You will be tested

OK, I'm weird.  I think this discussion between Scott Sumner of Bentley University and Russ Roberts of George Mason University is fascinating.  To quote the blurb on the web site "Sumner argues that monetary policy has been too tight and helped create the [current economic] crisis. He disputes the relevance of the so-called liquidity trap and argues that aggressive monetary policy is both possible and desirable. The conversation closes with a discussion of what we have learned and failed to learn during the crisis."


If you are a glutton for punishment you can take a look at Sumner's blog The Money Illusion.

Monday, January 9, 2012

Straight Talk--Passionate but Grounded

The quality of public discourse in this political season is shocking--but you knew that already.  The Rs are speeding toward the right edge of the flat earth they believe in.  The two Republican candidates that have the most well thought out and consistent platforms, Ron Paul and Rick Santorum, are also the most extreme.  At least you know where they stand and they have spent some time doing their homework.  Some of Santorum's ideas about social programs to strengthen the family are down right progressive.

The Democrats are laying low and enjoying the artillery duel among the Republicans but haven't brought anything new or interesting to the discussion.  The conservative wing of the Republican Party has successfully shifted the location of the whole political discussion so far that even Democratic policy positions fall to the right of 1970s Ripon Society Republicans.

So it was truly refreshing to discover a December 5 lecture by Jeff Sachs on the London School of Economics web site.  Sachs summarizes the ideas in his most recent book The Price of Civilization: Reawakening American Virtue and Prosperity.  In his long and very high-profile career in economics and public policy Sachs has had little to say about US domestic affairs until now.  Even if you are not a fan of Sach's earlier proposals about economic development and foreign aid you will find this talk well done and thought provoking.