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Gaming the Education Proposal

Tuesday, August 27, 2013

A few days ago I suggested that one should ask the following question when considering Obama’s proposals to make college more affordable:

How would I subvert this system had I a mind to do so?

I suggested one way in which the proposal was bound to founder: the institutionalized revolving door that guarantees that the person rating colleges this year will be running one the next year and the near certainty that those regulators will act in the interest of the regulated rather than the consumer.

Here’s a more drawn out analysis, gaming the proposal and delivering a verdict similar to mine. Read the full article for the entire indictment, but as a person who believes that people should be taught to think in addition to being taught to make money, I want to emphasize this:

How well graduates do in the workforce

Putting this into your model is toxic, and measures a given field directly in terms of market forces. Economics, Computer Science, and Business majors will be the kings of the hill. We might as well never produce writers, thinkers, or anything else creative again.

Note this pressure already exists today: many of our college presidents are becoming more and more corporate minded and less interested in education itself, mostly as a means to feed their endowments. As an example, I don’t need to look further than across my street to Barnard, where president Debora Spar somehow decided to celebrate Ina Drew as an example of success in front of a bunch of young Barnard students. I can’t help but think that was related to a hoped-for gift.

Obama needs to think this one through. Do we really want to build the college system in this country in the image of Wall Street and Silicon Valley? Do we want to intentionally skew the balance towards those industries even further?

(via Cathy O’Neil: College Ranking Models « naked capitalism)

The thrust of the article is to the effect that it will merely give colleges additional incentive to prioritize money over education.

Patting myself on the back here: O’Neil suggests the same common sense, simple solution that I did:

If you really wanted to make costs low, then fund state universities and make them really good, and make them basically free. That would actually make private colleges try to compete on cost.

Too simple, too effective, and therefore too much out of the question.

Obama’s “solutions” always seem to benefit the people who caused the problems in the first place.

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Today’s media just can’t stand programs that help people

Sunday, August 25, 2013

Anytime, anywhere.

This morning I read this article in the Times about France’s “slow decline”, caused, of course, not by robber barons but by a generous welfare state. It seems the Times, like the Post, just can’t stand the thought of ordinary people not ending their lives in utter poverty.

So when I read it, I said to myself “this is bullshit, and I hope Dean Baker tells us why”. A few minutes ago I checked my RSS feeds, when what to my wondering eyes should appear, but Dean Baker telling us why the Times is full of it.

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Friday Night Music Returns

Friday, August 23, 2013

After a vacation sabbatical, during which I was just too lazy to search around. Today’s choice breaks a rule. One I’ve broken before, for this is the second time Kermit the Frog has made an appearance on this feature (last time singing the Talking Head’s Once in a Lifetime) and it’s a sad fact that Kermit simply has to lip sync.

The song was chosen by my son, who is serving time at our home between jobs and apartments. I figured I would put give him a chore, given that I’ve just about exhausted the supply of 60s bands. As a now former New Yorker he picked this one, in which Kermit fronts for LCD Soundsystem, singing New York I Love You, but You’re Bringing Me down.

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Constitutional Law 101

Friday, August 23, 2013

Some good, if basic, discussion here about the right’s abuse of the 10th Amendment. The bigger problem, which author Robert Parry notes, is the refusal of the press to provide basic information to readers, many of whom will therefore come to the natural conclusion that there must be some validity to these specious arguments. The press fails if it refuses to educate.

Repeat this stuff long enough, and it actually does become true. Consider the fact that we are now saddled with an interpretation of the Second Amendment that insults the memory of its author and ignores the introductory phrase of the Amendment. Years of groundwork were required to achieve that victory for insanity. Twenty five years from now the Tenthers may get their way. The South may win the Civil War yet. (Yet one more reason to re-open negotiations and let them leave peacably – or throw them out.

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Sometimes simple is best

Thursday, August 22, 2013

Obama is proposing a plan to help students pay for college. What could go wrong?

A draft of the proposal, obtained by The New York Times and likely to cause some consternation among colleges, shows a plan to rate colleges before the 2015 school year based on measures like tuition, graduation rates, debt and earnings of graduates, and the percentage of lower-income students who attend. The ratings would compare colleges against their peer institutions. If the plan can win Congressional approval, the idea is to base federal financial aid to students attending the colleges partly on those rankings.

(via Obama’s Plan Aims to Lower Cost of College – NYTimes.com)

It might be a good idea if, before this sort of thing is proposed, the proposers ask themselves the following question:

How would I subvert this system had I a mind to do so?

Some observations off the top of my head: There will be regulators determining the details of the ranking system and scoring the schools. Like many regulators nowadays they are quite likely to come from the industry they are regulating and will fully intend to return. Nowadays even some purportedly non-profit universities (think NYU) are more interested in the bottom line than education. Enough said on that score. That’s just the first objection that occurs.

I’ve seen some proposals to fix the system lately, and the one that strikes me as the most efficacious and least likely to be open to abuse is quite simple: make attendance at state universities free for anyone who can gain admittance. The estimate of the cost that I saw was $30 billion a year; chickenfeed compared to the size of our economy. This is hardly a radical idea; there was a time when higher ed was free in California and practically free everywhere else. It even went beyond the college level. When I went to UConn law school in-state tuition was, if memory serves, $300.00 per semester. It may have been $600. Either way, a bargain. Now it’s $20,500.00 per year in-state and $42,500.00 out of state. Inflation doesn’t come near to explaining the increase.

Free tuition at public universities would keep down costs at private universities and colleges as well, else the laws of economics have been repealed. It’s basically the equivalent of the public option in health care that Obama dismissed early on in order to enrich the insurance companies, except in the case of education, we know it works, because it worked until the states withdrew money from their university systems, which essentially destroyed the public option in university education.

It is widely acknowledged that a college degree is a prerequisite for almost any job in the national economy, except maybe flipping burgers. There was a time when a high school degree would suffice, and, at least until recently, it was universally accepted that everyone was entitled to a free high school education. We should pat ourselves on the back for the fact that we have now developed an economy that demands even more education, and fork over the pittance required to provide that education. Simple solutions are often the best.

But, you might say, it’s highly unlikely that the Republican Congress would agree to this very obvious and salutary solution to this national problem. That is absolutely true, just as it is true that the Republican Congress will never pass Obama’s proposal, for the simple reason that it is Obama’s proposal. At this point the most Obama can hope to do is shape the debate, and the approach he’s taken is one that casts the debate in what, until recently, would have been considered a Republican mold. If the president were to advocate for free college, the idea would be validated, it would have to be discussed, and it’s obviously quite attractive for debt saddled students and their parents. It might not happen now, but it might just happen later. If the idea is never broached, it will never happen. Conservatives have gotten their way by playing the long game, and it’s time for us to take the same approach.

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Temporary birther

Wednesday, August 21, 2013

Seems that Ted Cruz has a bit of a problem. He wants to be president, but according to many of the people to whom he’s catered for the last several years, he’s not eligible. He was born in the People’s Republic of Canada, and if the birthers are consistent, they will have no choice but to conclude that he is ineligible to be president-as ineligible as Obama would have been had he in fact been born in a foreign land, as the birthers claim.

For Cruz really was born in Canada, meaning his fact pattern is identical to the phony fact pattern upon which the birthers based their arguments. How delicious it would be if his candidacy was torpedoed by consistency on the part of his base. But that appears too much too ask, although- who knows, Orly Taitz and Ann Coulter have both weighed in against him, and there’s no reason to think that his primary opponents won’t go full on if it helps to whip up the crazies.

For myself, I’m beginning to see the logic in their position. I’m a proud American, and it pains me to think that a person as hypocritical and mendacious as Cruz could possibly be a red-blooded American. Unfortunately, I find it even harder to believe that someone like him could be a product of Canada, but out of national pride I’m ready to swallow that improbability. So, my position is as follows: for the year 2016, and only for the year 2016, a person born in a foreign country to an American mother is not a natural born American, and is ineligible for the presidency. After 2016 we can go back to a rational interpretation of the Constitution, though the way things are going, by that time it might be that the “natural born citizen” clause will be the only provision of the Constitution getting that sort of treatment.

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You reap what you sow

Tuesday, August 20, 2013

To the surprise of absolutely no one, it turns out that the CIA did indeed depose democratically elected Iranian Prime Minister Mohammad Mosaddeq back in 1953. The proximate cause of this action was Mossaddeq’s nationalization of the country’s oil assets, which infuriated the U.S. and Britain. For a few years it worked. Our puppet Shah served our interests well, until he was taken out be the Ayatollah and Iran lurched back into the 13th century. Is it too long a stretch to believe that things might have worked out a tad different, and in our own long term best interests, had we left the Iranians to decide their own fate at that time? It may be hard to believe, but there was a time when Middle Eastern Countries had a pretty favorable impression of this country. It is no coincidence that that time coincided with a period in which we made no attempt to impose our will on them.

You would think that after a while, we might learn a little lesson from our multiple failed attempts to intervene in other country’s affairs. We really don’t do imperialism very well. The Romans and the British were each so much better in their own peculiar ways.

Credit where it’s due, Obama is earning a solid B, perhaps even a B+, on issues like this. It’s not good that he’s still feeding the Egyptian generals, but that’s merely a preservation of the status quo. It is good that he appears to be reluctant to intervene overtly or covertly in Egypt or in Syria. Syria, especially, is a place we should avoid. When the rebels win, we will likely see the present secular tyranny be replaced by one of the religious variety. There can be no dispute about which is worse, and there’s no reason in the world we should facilitate the transition.

I suppose there is a counterexample somewhere, a place where American Imperialism actually planted the seeds of blissful democracy, but none occur to me offhand. In fact, we appear to have done best where we have lost outright. Vietnam isn’t perfect, but it’s no threat to us

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Institutional Investors Declaring Independence

Monday, August 19, 2013

So, it is with tear stained eyes that I note that I am back in Connecticut, and back at work. One advantage, if advantage you can call it, is that I will be blogging more frequently. It may sound surprising, but I found better things to do while I was in Vermont.

So, I start the new week by noting yet another piece of good news, relatively speaking.

Investors responsible for more than $2 trillion recently gathered at a resort in the Canadian Rockies, far from the news media and, more important, far from Wall Street.

Those in attendance, including leaders of Abu Dhabi’s sovereign wealth fund and France’s pension system, were there to consider ways to put their money to work together without paying fees to private equity firms and hedge funds. Over that weekend, three of the attendees completed the details of a $300 million investment in a clean-energy company.

The group holding the gathering, the Institutional Investors Roundtable, has kept a low public profile since it began in 2011, but it attracted 27 funds managing public money to its latest meeting and is spinning off concrete investments. The group is part of a much broader push by the world’s biggest pension and sovereign wealth funds to reduce their reliance on the Wall Street firms that used to manage almost all their money.

The efforts to change the way public money is managed are motivated, in no small part, by the big fees and lackluster performance that many hedge funds and private equity firms have delivered to their biggest clients in recent years. Investment managers like Leo de Bever, at the Canadian province of Alberta’s $70 billion fund, have found they can often manage their own money at a lower cost without losing out on returns.

(via NYTimes.com)

There are some impediments. In order to get experienced fund managers, you have to pay through the nose, and in many states you are not allowed to pay through the nose. But the expense of one or two out-sized salaries, as offensive as that is, pales in comparison to the cost of the bankers and hedge fund managers, and at least such a person would have undivided loyalty, and would be less likely to let their clients buy into the type of derivative time bombs that hurt Detroit so much.

The article reminded me of Louis Brandeis’s book, Other People’s Money and the Bankers Who Use It, that I mentioned in a previous post. He was mainly concerned with the tax that the bankers levied to float bonds for perfectly solvent municipalities (such as Detroit back then). He pointed out that those municipalities could easily float the bonds themselves, and spare themselves the outsize fees so common then and now.

So, this is good news. And speaking of good news, I have my own personal bit of good news to impart. About a year and a half ago, I was approached by a group called Newstex that wanted to distribute my ravings across the internet-for money. After deciding they weren’t certifiably crazy, and after perusing the contract to make sure there wasn’t a hitch, I agreed.

Well, yesterday, I got my reward. $26.08 which is maybe ten to twenty cents for every post I’ve written since I signed up. What more can you ask?

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Book Review

Thursday, August 15, 2013

A few weeks ago I read a blog post (can’t remember where anymore) in which the author mentioned Louis Brandeis’s book Other People’s Money and How the Bankers Use It. The book was written in about 1913 and was originally serialized in Harper’s Weekly, and the blogger, whoever he or she might have been, said that the book might just as well have been written today. I downloaded a copy (it’s quite cheap) and just finished reading it, and I’m writing this to recommend it. It’s like reading today’s papers, except the large numbers he throws around, (figures in the millions or single billions) seem ludicrously small today. The games the same, and if you knew nothing about Franklin Roosevelt, you’d think nothing had changed since 1913.

Brandeis points out that the “dominant element in our financial oligarchy is the investment banker”; that the investment banker’s stock in trade was financial manipulation that often left the companies they controlled bankrupt; and that they benefitted from assisting those companies as they engaged in illegal activity by getting commissions for the sale of securities designed to violate anti-trust laws and then got commissions for the sale of securities that the same companies were forced to issue when they got caught and had to pay the piper. The bankers of course, like today, were never punished. He even points out that like today, the bankers warned that putting the brakes on the oligarchs would “affect every wage earner from the Atlantic to the Pacific” and goes on to demonstrate that there wasn’t (and isn’t) an ounce of truth in the claim.

I am not an economist by trade, and I haven’t read a lot of economic history, so it may very well be that some of the ills Brandeis diagnosed are not being repeated today. We don’t have blatant trust building anymore, but on the other hand, we still have problems with interlocking directorates and bankers who operate with inherent conflict of interests as a matter of course. In fact, even Brandeis would probably be surprised at a state of affairs in which it is not per se illegal to design an investment vehicle to fail, whether or not it can be proven that the bank doing the designing actively misled investors. Brandeis would surely conclude that nothing has changed were he to read this oh-too-true summary by Pam Martens at Wall Street on Parade.

The Wall Street cartel now controls everything from interest rates set by a rigged Libor benchmark to the price of aluminum going into the price of a can of Coca-Cola, to the cost of crude oil and the fleecing of your wallet at the gas pump, to the shrinking budgets of cities and towns paying out to Wall Street on rigged interest-rate swaps. Why wouldn’t Wall Street expect to continuously control the White House and the Fed?

Brandeis points out as well that the bankers were in many instances little more than taxing authorities that returned nothing in services for the fees that they charged. Like today, they commanded outsize fees for performing services that added little or nothing to the financial products they were peddling.

What’s deeply depressing is the fact that we did, in fact, take steps to halt or curb most of the excesses Brandeis identified. Starting in the 80s, and accelerating in the 90s, the political parties entered into a contest to see who could dismantle the laws that had kept bankers in their place, and the economy fairly stable, for almost half a century. We are now reaping the fruits of that insanity, and the most depressing aspect of it is that the people who brought us this depression have suffered no consequences. The criminal bankers go free and Larry Summers, an architect of deregulation, may soon be heading the fed.

Anyway, download the book. It’s a quick and educational read.

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Cynicism 101

Friday, August 9, 2013

It’s raining here in Vermont, else I’d be doing something other than ranting, but when life deals you lemons…

Okay, so I’ve done my feel good post for the week, meaning I can go back to cynicism and decrying the death of the American Republic.

But speaking of cynicism:

President Barack Obama met with Apple CEO Tim Cook and a number of other technology executives yesterday to discuss government surveillance, according to Politico. Thursday’s meeting was one of “a number of discussions” the Obama administration is holding on surveillance, which an aide said is part of the president’s “national dialogue about how to best protect privacy in a digital era, including how to respect privacy while defending our national security.” Cook had no comment on the report. The issue of government surveillance has been in the spotlight since a June report on PRISM, the code name of the extensive government data mining program. Apple denied knowledge of the program, and denied its servers were being accessed by government agencies.

(via iLounge News)

You really can’t top this. With whom better to start a dialog about interference with privacy than with your partners in surveillance, the ones who readily and without protest co-operated with what was perhaps the most massive invasion of privacy in the history of the world? But what can you expect from a guy who is making Russia look good in the Snowden affair and who has consistently shown that he is in thrall to the “national security” interests that insist that we common folk have no rights to privacy that the security state is bound to respect.

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