Month: January 2013

Posted on

Should Higher Ed Be Left to the Private Sector Instead of the Public Sector?

Higher education is a mess.  Disproportionate rising costs, slashed public education budgets and arguments over what to afford in the face of out-of-control public spending merge with falling incomes and inadequate job growth to create huge angst and debate over where we go from here.  The present model appears to be broken.  Is it fixable and if so, how do we fix it?  Or do we chuck it completely and simply adopt another model?  With the present distrust of government, perhaps we should just leave higher education to the private sector? 

Youngest and I sat watching The Big Bang Theory the other evening when The University of Phoenix, a for-profit university, ran a commercial.  In the ad, a contented looking African-American woman was driving through a homogeneously corporate parking lot in search of a space.  As she drove, the voice-over announced that the University of Phoenix was working in conjunction with other major American corporations to provide the skills needed by Americans to earn a good and productive living.  The list of corporations was impressive – Microsoft, Avis, Google, McDonalds, Cisco, Adobe – and one that most would associate with the upscale white-collar jobs desired by most.  It was a provocative message that resonated to the higher ed themes that concern us most:  what jobs are out there to provide for me and a family and how can I make a decent-enough wage to repay the debt that I’m going to incur?  This would presumably be what Secretary of Education Arne Duncan referred to as a "…very good debt to have" in April, 2012.

Before we start to entertain the notion that the private sector is the best provider of higher education, let’s consider some statistics thus far:

Let’s shift outwards, from the private-sector education system to the private sector in general.  The private sector is entirely that – private – and exists to enrich the owners and members of the private sector.  The private sector generally consists of any for-profit business and can range from Joe’s Shoe Repair to Exxon.  In the case of for-profit universities however, the private sector consists of large corporations, capital holding companies and some exceptionally wealthy individuals.  So who owns the for-profits?  There are hundreds of actual for-profit institutions, but we’ll look at four for our purposes:  University of Phoenix; Kaplan University; DeVry University; and ECPI.

  • University of Phoenix is owned by the Apollo Group (NYSE), and the principal shareholder is John Sperling, now a billionaire. 
  • Kaplan University is a subsidiary of the Washington Post (NYSE), among whose principal shareholders are Aberdeen Asset Management, Berkshire Hathaway and ING Investment Management.
  • DeVry University is part of Bell & Howell, a wholly owned company of Versa Capital Management in Philadelphia.
  • ECPI is a smaller, regional for-profit operating in the southeast US, principally in the Tidewater region of Virginia and the Carolinas; it is owned by the Dreyfus family and the founder’s son, Mark, is currently the President.

Most of these entities exist to maximize Return on Investment and Equity, nothing more and nothing less.  While I can’t speak for the family-owned institution, there’s no effective oversight of the entity that might be provided by a Board of Directors that’s tasked with specific responsibilities and is able to help parse out those instances when profit might compete with the original charges of the founding charter.  Frankly, for the great majority of for-profits, there is no other original charge in any founding charter. 

If you follow, many of the actionable complaints about the for-profits are in the area of admissions.  Fines have been levied and paid by multiple for-profits because of deceptive advertising; pertinent rates – graduation, employment – were falsified and loan programs misrepresented in order to gain enrollees.  The intent of the actions has been to gain access to the loans that were easily available via lax standards, and you don’t blow a trillion dollar loan bubble by upholding underwriting standards.  There are existent study programs in the for-profits and there are certainly graduates, but the reality is that many marginally qualified students were enrolled without the infrastructure in place to assist them once they were there.  But even after the student left, the school was able to keep the money and the responsibility for that money was still left to the student.

Does that also happen at the public sector and non-profit sector?  Sure.  But the difference is that the institutions in the public and non-profit sectors are subject to a more rigorous accreditation standard than are the for-profits.  There are also public and not-for-profit charters that provide some measure of guidance beyond the simple profit motive and Boards that are both composed of a more diverse group of people, as well as being closer to an effective oversight level than the Board of a major corporation that owns a for-profit institution as a division. Given these aspects, the moral hazard promoted by a monetary policy of easy availability and low interest rates is lesser than for that of an entity for whom profit is the principal and overwhelming measure. 

There is a niche for institutions that cater to non-traditional students and entities like the University of Phoenix grew out of an effort to fill that niche and do so profitably.  Profit by itself isn’t a bad thing, either.  But the absence of any effective oversight and more importantly, an exceptionally easy monetary policy that invites moral hazard, led to a morphing of a niche into something that has saddled the nation and its citizens with inexcusable results.  The private sector should stick with the niche, but the bulk of the education of our young people should be left with the public and non-profit arenas.

 

 

 

Posted on

What’s the Role for Government in Higher Education:  Fiscal or Monetary?

The kids know from listening to me – typically in a shoe-propelled rant at the University of Phoenix television commercial – that their enrollment in a for-profit institution is unlikely.  We live in a corporate age and this is just another attempt by the corporations to milk us for increasingly scarce dimes.  But if there’s strength in numbers and we hold that education truly is critical in this post-manufacturing "knowledge-based" economy, there is a crucial role for the government to be involved.  There are three policy legs – tax, fiscal and monetary – and both state and federal governments are involved in the tax policy with tax-advantaged savings programs to help with tuition.  But in a time of rapidly increasing tuitions, tax policy is the least important.  What’s the value of a tax savings if you can’t afford the education in the first place?  That leaves fiscal and monetary policy, and which is the true place for the government?

For the greater part of our nation’s first century, government had no role in education whatever; any schools formed were solely at the local level to provide the rudiments of reading, writing and arithmetic.  Higher education was available via private institutions and was the province of the affluent or the exceptional, who worked assiduously to finance their studies.  The federal government’s initial foray came – incredibly enough – during the Civil War when the urgings of an idealist Congressman led to the passage of the Morrill Act of 1862 and the creation of the Land Grant universities.  Even here, the national government didn’t provide money, but simply free land – and boy howdy, did we have it then – with the caveat that the subscribing states sell part of the land for seed money for an institution, to be built on a portion of that free land.  The congressman’s efforts were the fusion of two elements:  one that he believed and another that he understood.  The belief was that a person would both prosper and become a more enlightened citizen if they had access to an education that provided the skills and tools to better their circumstances.  The understanding was that the nation required a skilled, educated populace for it’s growing and changing needs.  One fed the other in a virtuous circle. 

The Morrill Act also laid out the premise that meeting the educational needs of the population were best left at the state level; different regional needs could be best managed at the lower level, which had greater familiarity with its needs and circumstances.  So apart from creating a framework within which the states could establish their systems – building the sandbox – the federal government stepped aside and left the growing fiscal needs of higher education to the various states.  It was throughout the growing industrialization and prosperity of the next century that the states, with the footing provided by the Morrill Act, created an infrastructure of institutions to provide an reasonably affordable higher education to the young.  The apogee of this educational availability occurred in the years after the Second World War, when the nation entered an era of affluence that had never before been seen in history.

But this availability was funded directly – via fiscal spending – by the states.  Times were flush and the resources existed to fund higher education, and the states put up the funding to make education affordable for the masses.  Labs were funded, buildings built and faculty salaries paid by purposeful state funding.  But the world changes before we’re aware of it and as funding continued, additional demands were made upon resources by others and state funding for social needs rose.  The states also felt the impact of the "Reagan Revolution’s" mantra that government isn’t the solution, it’s the problem.  Spending was questioned and the line items that could actually be managed were slowly pared away; but spending on social needs programs continued and the emphasis in state government spending went from preparation to caretaking.  By the first decade of the 21st century, per capital spending by state governments – the fiscal policy – was in decline.  State colleges and universities were seeing that the average family incomes of their students was rising; it’s counter-intuitive since you’d think that was a good thing.  But what it means is that the students from the higher income families themselves were being squeezed out of the private and into the public institutions, while the students from the lowest income families were squeezed out of the public institutions entirely.  It’s now where we’re at, with purposeful fiscal spending in decline by the states.

While there was an apogee and subsequent decline in fiscal spending and policy for higher education, there was also movement in the monetary policy towards higher education.  While fiscal policy pertains to actual spending – putting your money where your mouth is – monetary policy is about simply making the money available, in volume and at low cost.  The crunch and upwards in student debt occurred in the first decade of the century, propelled by twin engines.  The first engine was the real need for borrowed money as the tuition finally outpaced the ability of the average family’s falling incomes, forcing many families and students to truly borrow large sums.  The other engine was the glut of easy money made available as the Federal Reserve truly opened up the money supply after the dotcom and housing bubble collapses.  Families were now forced to let the students take on the debt themselves as their own circumstances worsened, and the Fed’s easy money policy made it available in spades.  As states scaled back their per-capital student spending and costs rose, the federal government stepped in with easy money.

Here’s the thing about monetary policy and higher education however:  it’s a chicken-or-the-egg proposition.  Escalating tuition and decreasing government support made an easy monetary policy seem beneficial since abundant money made the college education work.  Yet part of the tuition problem was due to the existence of an easy money policy.  On one hand, institutions had no impetus to control their spending since the money was available, even if it was funneled through the students from the lenders.  As competition raged amongst the institutions, they began to market the experience as well as the education and money was frankly spent on sheer frivolities; if your college markets a climbing wall and Mongolian grill, then it’s frivolous.  On the other hand, the easy money availability led to predatory recruitment practices by for-profit institutions; the present default rate at for-profit institutions is double that at public and triple that at non-profit institutions.  The money created an impetus to defraud the students.

There is a distinct difference between the effects of fiscal and monetary policy on higher education.  But the effect of easy monetary policy is largely the same in higher ed as in the other arenas:  it breeds laziness and radically increases the prospect of moral hazard.  The laziness is on the part of the public, who simply look at the low cost loans and the advertising and don’t consider other aspects until it’s too late; the institutions are equally lazy as the stream of funding lulls them into thinking that choices don’t have to be made and decisions can be deferred.  The stream of funding propels the amoral into acts of immorality as the rewards far outweigh the cost of the penalty.  If you doubt this, ask yourself whether the penalties meted out to institutions even meet – let alone exceed – the profits garnered. 

Fiscal policy however, literally means that you’re putting the money where your mouth is.  It means that there’s an actual debate – contentious, perhaps – about not only how society perceives the value of higher education but also how funding is apportioned to support that value.  If the nation truly believes that education matters for the good of the person and the nation, then funding should be allocated to support it accordingly.  As the phrase goes, money talks and bullshit walks. 

We’ve now boxed ourselves in.  We’ve confused money with the real and productive assets that support the debt that’s been incurred.  The costs of an education have far outstripped the debt-servicing ability of the average American family’s declining income, yet we’ve restructured ourselves as both a service and knowledge-based economy that notionally requires a college degree for any real financial success.  Student debt is now a bubble and the smell of the easy money has led to poor personal decisions and corrupt business decisions that taint monetary policy.  Even if tuition at an increasing number of institutions is cut, the college cost/family income ratio is so disproportionate – and the job market so bleak – that it would take decades for any proportionality to be restored.  If we truly value education at both the personal and national level, then there’s no other choice but to provide fiscal policy support to the public institutions.  The eras of easy money and unfettered prosperity are over.  Dead.  Gone.  There is a time coming, and soon, when we’ll have to make conscious choices first about what we truly value and then about how we’ll allocate the remaining resources amongst those values. Our mettle is going to be tested and it will be truly unpleasant.  If there’s a bright side, it’s the realization that the value question isn’t new ground but has already been addressed.  At least we don’t have to revisit in the midst of a civil war. 

 

Posted on

Memento

Most movie fans know Christopher Nolan as the renovator and director of the recent Batman movie trilogy.  But many may not be aware that one of his early films, Memento, is considered by some critics to be one of the best suspense films of the century’s first decade.  In the film, the protagonist is searching for the killer of his wife, yet suffers from a form of amnesia in which he’s incapable of maintaining short-term memories.  What’s notable about the film is that he works through the problem with the aid of polaroid photos, which he posts to a board and then strings together in an effort to create linkages that make sense to him, a sense of context.  This metaphor stays with me because as a parent – whose principal job is to raise the children to take their place in the great, wide world – I’m helping the kids string together their mass of experiences and memories into a recognizable form that gives rich context to the world in which they live.

Ask kids who are home from school what they did that day and you’re liable to get an i dunno or perhaps one or two snippets of something.  Many won’t take the time to process unless they’re prompted to do so and those experiences will most likely remain isolated photos on the memory board unless something happens – by chance or purpose – to pull them together.  This isn’t about speaking to them as soon as they walk in the door or you pick them up, but it’s about making the time and effort to talk with them, to draw them out and learn the experiences so that any conversation can lead to the possibility of making the connections.  The conversation can lead to any number of potential topics:  how do you complain to the bus driver – or any adult – if you feel you’re being unfairly singled out (without sounding like you’re whining?); what is the point of reading "The Great Gatsby", or any older novel?; why can’t you punch a girl back, and what does it mean if she’s smacking you in the arm?  

Conversation might not flow the way that you’d like, and it sometimes doesn’t even flow at all.  Well…how ’bout those Mets?  The unfortunate reality however, is that there is an ongoing conversation with your kids and it’s coming from the entertainment/media complex.  For decades now, the complex has offered up examples with lousy messages, going back to Fast Times at Ridgemont High’s Spiccoli, through Beavis and Butthead, South Park’s Cartman and all of the gangsta culture thrown about via multiple media.  Violence is endemic, women are demeaned – it might not matter now, but it will when you have a daughter – and poor behaviors such as drinking, drugs and gratuitous sex are celebrated.  I’m not Amish and our kids have access to the electronic media, but the point is that unless you’re willing to fully disconnect their media access, you have to be prepared to engage them whenever possible so that they begin to make the connections that you know truly need to be made.

Helping them make these connections, helping them build a coherent framework through which to interpret the world and interact with it, is not a one-off process.  This is a life-long endeavor and commences from the day of their birth; if we handle it properly, it will continue until the day of our death.  But the connections that are made will take these seemingly isolated instances and not only link them, but transform them from a two-dimensional board into a three-dimensional structure that helps them navigate their own lives and sustains them in those truly dark places that can exist in adulthood.  This is our purpose as parents, to raise them to make their way.  Leaving the conversations to the media complex is ultimately as harmful as starving them.  

They do want to eat.  And while they can’t or don’t always want to show it, they do want your attention and conversation.

 

Posted on

Teaching Kids About Money

There was an article in MSN Money over the Christmas holiday – Why Teens Fail at Managing Money – with the premise that teens are ill-prepared to survive in the modern financial world.  Several individuals quoted in the article believe that all high schools should be mandated to teach a personal finance course; thirteen states presently require that high schoolers receive such a course.  But there’s significant blowback from educators who cite the cost involved and also the simple fact that they believe themselves ill-prepared to adequately teach the material.  The truth is that personal finance isn’t just a series of techniques about cash flow management and financing calculations; how someone handles money is ultimately a function of not only what they know about money, but their values.  Values aren’t derived from discrete lessons at specific points in time, but from immersion.  The academic view is that money serves both as a medium of exchange – thereby eliminating the need for barter – and a store of value.  In a sense though, how we use money is a store of our values and that comes from immersion within the family.

Both money and debt are tools, as much in their way as a screwdriver or hammer.  But if you give a child a hammer or screwdriver, you see that things don’t go the way that the kid expects.  Nails are bent to hell and back and learning how to drive a nail straight requires a degree of practice that only comes with time.  Kids also tire of the repetitive nature of constantly turning a screwdriver and after some turns, will usually look at you with an okay, can you finish this and we’ll move onwards expression.  The upshot is that any skill, let alone mastery, will only come with time.  It’s a bit absurd to think that giving a kid a course in personal finance in high school will provide them with the requisite skills to successfully manage their finances.  Knowing how to budget is only a fraction of the battle if the discipline to maintain it isn’t there, and the constant effort to blur need and want makes it problematic.  One of my taglines when I hear the kids mention wanting something is yep…need, want.  That ability to discriminate can only come with constant reminders and conversation and those won’t come in schools.

It’s also important to know when to use the specific tools and that comes with experience as well.  There’s a telling quote from a father within the article, telling in that it gives a glimpse of present attitudes about spending and debt.  The father comments that his teen wouldn’t know about how to finance the purchase of a computer.  My first thought was to wonder why he wasn’t sitting down with the kid to examine how to finance a computer purchase.  But the next thought was to wonder why a computer would have to be purchased with credit anyways.  Kids are deeply susceptible to the advertising-sown want/need confusion, and what a kid actually needs in a computer might be very different from what’s really wanted; that confusion can amount to hundreds of dollars.  Help the kid work out what’s truly best and then explain the cost differential between using money that’s been saved and money that’s borrowed.  Then put that difference in terms of opportunity cost of the next alternative, such as dinner and a movie with friends.  Perhaps the device has to be purchased now, in which case financing might have to be an option.  But if the kid can wait, then it might make more sense to wait and save the money instead.  The unasked question is whether the father could wait for such a purchase.

Truly learning something and taking it to heart occurs over time, with lessons and comments delivered persistently and consistently.  Once you’ve gone over something several times – and going over it doesn’t mean that it has to be an hour long talk – then develop simple taglines that you can use when the situation comes up again.  If I’m paying a repair bill with cash or check, I’ll comment …and this is why we save.  If the kid is yakking on about buying something, I’ll simply glance and say yep…want, need.  When we were saving for a trip to Europe, a process that lasted about two years, any of the kids would come up with the suggestion to buy something or do something that required money and my response would be a curt Europe.  There reached a point at which one of the kids started speaking and then cut herself off, saying oh yeah, Europe.  The tagline with which I was raised was my mother’s we gotta pay the mortgage.  It didn’t go into the specifics of which mortgage product is best or how to calculate what we could afford, but it constantly reinforced the lesson of putting the need ahead of the want. 

The article is correct in the view that many parents do a poor job of teaching about money because we ourselves are poor with money.  Since the end of the Second World War – three full generations – the push has been for consumer spending to drive the economy.  This consumption approach is spurred by sophisticated and persistent advertising, and many of today’s parents and grandparents have been fully caught up in it, rendering us both poor examples and teachers for the kids. The impact has been such that many baby-boomers are unable to retire because they simply haven’t saved and the knock-on effect is that the young adults are now having to compete with the boomers for jobs.  (Hmmm, there’s a question, what do we owe our elders?)  If we want our own kids to avoid that same trap, then we’re obligated to do a better job of financial management so that they can learn from us.

Apart from the issue of financing a purchase instead of saving for it, there are two other aspects that highlight how truly out of touch today’s financial management principles are with reality.  The first was a teen’s comment that his family did discuss the stock market at the dinner table and how it was doing; my own conversations with the kids are about how the stock market is the last place that a simple individual investor like me should be.  The market is presently a rigged casino.  High Frequency Trading with programmable algorithms make crooked practices like front-running and quote-stuffing make classic investing impossible; likewise the presence of overwhelming liquidity courtesy of the Federal Reserve via the major financial institutions proprietary trading desks utterly divorces the market from the reality of economic life around us.  When I know families in middle-class Brady Bunch neighborhoods raising chickens for food, the market is simply not realistic.  The second is one contributors comments about the value of learning the principle and value of compound interest saving.  In a world in which the savings account rate for kids is .1% and a good CD might be in the area of 1.5%, there’s no effective value at all in compounding.  The words promote savings but the actions promote spending at the punishment of savers. 

Children can learn with lesson plans, but what sticks best are the small repeated doses of a consistent set of messages, the so-called teachable moments.  Determine what you want to teach and use pay attention to what’s going on around you and those moments will present themselves.  If there’s a moment that you can have a short conversation, grab it.  If not, make it a point to revisit it when the opportunity to talk does present itself.  These repeated lessons over the course of time will do far more to teach the kids about money and personal finance than they’ll ever get in a classroom.

Posted on

Traveling with Aging Kids

It used to all be on the mothers, but even involved fathers are now used to all of the work – preparatory and otherwise – that comes with traveling with kids.  What isn’t always obvious is how things change as the kids age and the awareness can creep up on you, smacking you in the head with the figurative lead pipe.  This was the occurrence on a recent Christmas holiday trip to Washington, DC.

Some things are the same and I’ve adapted them over the years.  First is the purely preparatory logistical work that the little kids will never notice and about which they’ll absolutely never care.  But as the kids grow over the years, the preparations are adapted by first involving them – flush all of the toilets and lock all of the windows, empty all of the trash and get it to the garbage cans, find the cats before short trips so that they’re not locked in a room for three days – and then asking to be responsible for certain jobs.  It doesn’t relieve me of the responsibility to oversee their own tasks, but it does make things easier.  By the afternoon of our departure over the holiday, I made it a point to stand there amidst the kids and orally recite the list of items.  It didn’t mean that they’d automatically remember it, but it was one of those osmotic processes that the kids should take in through repetition over the years.  Mail stopped.  Windows locked.  Dog kenneled and cats accounted for.  Trash emptied…and so on.  It’s a process that helps me and hopefully teaches the kids that these good things only come with preparation.

Second is the status of the family vehicle.  Are the tires alright and headlights okay, or are we driving a padiddle? It’s not something that I generally do with the kids, but the obvious one is whether the gas tank is full.  The working definition of stupid in my wife’s family is to run out of gas, especially because there’s a gauge to tell you the status.  The kids are involved in cleaning out the vehicle of old debris and stuff so that it’s neat, clean and ready for a fully new load of debris and stuff. 

Whether traveling overseas or not, safety issues matter although the presence of cell phones makes things easier.  What’s the rally point in the event that everybody’s separated?  Have the kids without – and even with – cellphones learned the phone numbers by heart?  Do they remember the name of where we’re staying and the area in which it’s located?  It matters if you’re staying at a hotel chain and there are multiple hotels in the area.  Are you wearing something that’s easily identifiable to them, such as a colored cap?  They’ll willingly wear identically colored clothing when younger but you’re liable to catch some blowback as they age and balk at bilious pink sweatshirts carrying the family reunion announcement. 

What did bother me was that we had to negotiate wake-up times with the teens, whose body clocks are apparently set to Manila time.  We could certainly say that we’d be moving at a particular early time – say 9 AM for them – but the reality is that it’s difficult for kids and teens to simply shift their bedtime and rising routines without some consequence; our response is to simply accept that we’ll be moving a little later than the earlybirds.  Other parents are free to disagree accordingly.  What wasn’t negotiable however, was that once they were moving, they weren’t to spend their time tethered to Facebook or the cellphone; if they just want to dither electronically, they can do it at home for free.  The additional factor was that Youngest is still years away from the teen years and still arises earlier.  He consequently got to stroll downtown DC with me and see things that his slumbering siblings missed, such as the construction of Presidential Inaugural Viewing Stand and the National Christmas Tree, albeit in the early morning. 

There’s an explicit understanding in our household that traveling means that you’re going to not only see the local sites, but also eat the local food.  It seems odd, but America is now so culturally homogenous that many kids think of vacation as an opportunity to eat at Applebees or go to the resident mall to shop and these prospects are everywhere.  My job in preparing for the trip was to handle the itinerary – my wife handled the accomodations – in such a way that everybody got something of value.  The planning was open with the kids and the thought process involved was open as well.  It’s Christmas in DC and while we’re staying in a hotel, the Smithsonian is a superb range of museums and it’s free, so like it.  If you want to go the National Zoo, what’s the weather forecast and on what day does that make sense?  What food is endemic to the DC vicinity?  Surprisingly, I opted for Thai on one evening and the next was a visit to Ben’s Chili Bowl.  Part of the thought process was to also have some conversation with them about history and culture, and how something as simple as a restaurant could reflect the personality of an area. 

Change happens and I like it, it keeps me fresh.  But change is best when some thought is given to it in advance so that it can be managed.  Things will always go wrong, but you’re not as likely to have a tripbuster if you think things through first, and that’s the big lesson for the kids as they age. 

Posted on

The Pinewood Derby…Again

That time of year is here again, the mid-winter companion of NFL playoff games and college hoops and the bane of fathers everywhere, the Pinewood Derby.  The time when fathers with a clue have to fight to not overtake the project – or not so much – and fathers without a clue roll their eyes and prepare for a long, l-o-o-o-n-g weekend.  But this year’s different since it’s Youngest’s last Pinewood and it will be the last of ten consecutive years for which the PracticalDad household has had an entry.  It’s also the last for me since I’ve been overseeing the efforts of multiple fathers to set up the track – replete with laser-tripped starter and finish lines and dedicated PC with racing software.

The same question exists this year as before, whether Youngest can win the prize for slowest car and it simply reinforces the surreality of the situation: has he won if he loses or will he fail if he wins?  I’m fortunate though, in that he’s not thinking now in terms of sheer losing but producing a car that reflects his slightly goofy sense of humor.  With luck, there’ll be a universe of two different trophies that he can win, Most Fuel Efficient or Funniest Car.  

So the next week is going to be consumed with preparations for the race day – assuring that the software works and that the equipment is up to snuff, that the process is in place for the weigh-in of the cars and that we have enough volunteers in place to manage the process, and that the trophies are completed in a timely and good-looking fashion.  The food will be left up to someone else entirely.  But the hardest work will be with Youngest, helping him through the process of creating a decent car without actually taking over the hands-on aspects themselves and that will be more mental, ascertaining in advance what questions have to be asked that can lead him to decisions on how to proceed. 

Some months ago, I chatted with a mother at the store; this woman had also spent ten years as a cub scout leader for her two sons.  I asked whether she missed it, the meeting preparations and all of the background work that came with being a volunteer for a kid’s organization.  She responded that yes, I actually do miss it.  In the aftermath, you forget the headaches and time spent, the misbehavior and the sheer lunacy that can result from children gathering together for events.  When the next weekend’s Derby is finished, I suppose that I’ll also miss it and everything that it entails.

But not quite yet.

Posted on

Kids and the Corporate World

Years ago, I taught Sunday School in suburban DC and was fascinated by the conversations with the then-teens, kids who are now in their early 30s and possibly with children of their own.  The one conversation that sticks with me pertains to fashion and choice of clothing brand; two teens were slamming someone viciously – in absentia, naturally – and when I asked why she so upset them, the first response was that she was a Hollister kid.  They saw my confusion and patiently explained, to the retarded adult, that they simply didn’t like anybody who was Hollister and that they spent all of their own time with Polo kids.  It was a slap-in-the-face event that drove home how badly we’d become branded.  But does there reach a point at which the kids revolt at the branding and begin to draw their own conclusions on the values that come with branding?

I grew up in a corporate household with corporate values and my last paying gig before opting to stay with the kids was in a corporate headquarters.  I’m no fan of corporations and their exponentially greater political and economic power and one of my great concerns with the kids is how they’ll manage to maintain their individuality and integrity in a corporatist society.  So I was taken aback when Youngest, the elementary school kid, came home from school and began bemoaning that Disney was thinking of buying DC Comics.  He knew of Stan Lee’s legacy and that he’d already sold Marvel Comics to Disney, likewise with George Lucas’ Lucasfilm sale to the Mouse.  That particular news item truly brought a surreal conversation about populating the Star Wars stories with Disney characters. This proposed sale was news to me and as we talked, I asked what it was that bothered him the most.  Youngest explained that he was afraid that Disney would dumb down the story lines and characters; and being a boy, he was bothered that the level of violence in the story lines would decrease.  We’re all concerned today about the propensity of violence but the simple fact is that the typical boy has a natural affinity for agression and making things go boom and comic books are an old-fashioned way of honoring that.

What Youngest was saying, in an elementary level fashion, was his concern that yet another corporate takeover would again take something away from our culture – yes, comic books can be considered cultural – in the quest for profit and earnings per share.  Marvel and Lucasfilm are now iconic, but they each sprouted from the fertile imaginations of Lee and Lucas and did so in humble environments.  When everything is controlled by the corporations – financial and otherwise – then we’ve lost something of ourselves and our national character.  We’re already at a point where strip shopping centers, office complexes and malls litter enough of the countryside that regional architectural differences are being lost; Topeka is some ways is no different from Savannah, which is no different from Bangor.  Couple that with the fact that much of the investing capital is controlled by a small cadre of financial types and we’re at risk for not just cultural homogeneity, but also cultural and technological stagnation.  Could George Lucas get the backing necessary for his idea?  Could Stan Lee manage to obtain the capital to start Marvel today?  At least not without having to give up the special something that made these things so distinctive?  It’s telling that an elementary school kid could at least sense the blandness of a corporate world, controlled by a small cadre of individuals who decide what has merit and how the advertising dollars go to support the brands that they deem of value.

Life is ironic.  At the time of this long-ago Hollister kid conversation, my wife was pregnant with Eldest, our first-born child.  Eldest’s first job in high school was at Hollister and she worked there through this past Christmas season.  Corporate policy dictated that all employees wear brand apparel for their shifts and I understand that.  But I take comfort in the fact that when she has a preference for shopping, it’s at Goodwill.  Maybe Eldest also understands what Youngest understands as well.

Posted on

Young People and Harder Choices

Our kids are now facing a new world that’s different from the one in which they were raised, having been sheltered from reality by parents who in many cases took on debt to maintain a lifestyle that they could no longer afford.  The "new" changes in the tax code – the increase in the social security payroll deduction being only the first – are leading to yet another decline in take-home pay and are eye-opening for recent college graduates.  A 21 year-old woman was correct in her assessment that this would lead to longer term effects harmful to the economy, such as retarding the growth of new households for the future.  But these are only the earliest and easiest of the choices that they will face. 

The simple reality which we face is that there are too many fiscal promises piled upon too small a base of productive assets to adequately cover them.  We’re looking at years of federal deficits in excess of a trillion dollars annually as the government becomes the pump which pushes money through the economy via defense spending, Social Security and Social Security Disability Income benefits, the SNAP program.  The young college graduate mentioned in the article states that the money now leaving her paycheck to the government via the increased payroll tax will mean less for entertainment.  But the cascade of spending and the coming increase in taxes – because meaningfully cutting spending will alienate a good portion of the almost half of the citizenry receiving some government benefit – will mean that more than entertainment is going to go away.  The youngsters of Southern Europe – Spain, Greece, Italy – are seeing their prospects disappear and if this country can’t get a handle on the spending, then our young adults will follow in their track in several years.

Because the difference between the United States and Southern Europe is no more than a few years.

Posted on

The Trillion Dollar Scumbaggery

If you want to strip all of the speciousness away from an issue and understand it’s true meaning, try to explain it to a teenager.  When they get it, they typically ignore the niceties and go directly to the meat, often with refreshing candor.  So it was that after Middle and a buddy came in from school, I posed them a question in order to see what they’d both understand and say, specifically about the Trillion Dollar Coin.

As we stood in the kitchen, I told Middle that I had some outstanding debts and couldn’t pay him his overdue allowance but I could give him a Toonie – a Canadian two dollar coin – that I’d had sitting in my jewelry box.  Middle and his buddy stood there looking first at me and then at the Toonie sitting on the island, then back at me as if I’d lost my mind.  To him, this was simply a Toonie, worth about $2.02 at present exchange and nothing I said otherwise made a difference.  He pressed my seriousness again and I dropped the charade; I explained the concept of the Trillion Dollar Coin and its proposed use to circumvent the newly breached debt ceiling and then asked them what they thought.

That is such scumbaggery was his single comment.

When I pressed the two of them as to their thoughts on the issue, they came up with the following. 

  • First, nobody in their right mind in our town would accept a Toonie, and especially if it they represented it at the convenience store for an arbitrary value that I’d assigned to it.  If they wanted to buy Red Bulls, three bags of Doritos and a gallon of ice cream, the clerk would never accept something that I’d given to them with an arbitrary value attached.  Assuming that the guy even took the Toonie, it was still only worth $2.02 American dollars and not the value of the overdue allowance. 
  • Second, nobody in their right mind in the real world will see this as anything other than complete nonsense.  The debt will still be incurred and the interest will still have to be paid in the real world.  The Federal Reserve might go along with the fiction, but the other buyers of government debt still look at such issues as the ability to carry the interest payments and the solvency of the issuer.  D’ya think that the Chinese are gonna go along for this?

Let’s consider the boys’ first comment.  A quarter is a quarter because there’s common acceptance that it’s worth that amount.  The US government says that the quarter is worth 25 cents and the market accepts that; the quarter will purchase 25 cents worth of a good or service, no more and no less.  But when the market no longer believes that a good or service is worth 25 cents, then the market demands another value – usually higher.  It doesn’t mean that the quarter is worth less than 25 cents, but that it will purchase less than what it purchased before.  Said another way, the cost of the good/service has increased because the quarter will purchase less than it did.  A candy bar once sold for a quarter – and a guy with a kid in elementary school can remember those days – but today, it sells for more than four quarters; the quarter is still worth 25 cents, but the market has decided that all things considered, the item now takes four times the money as before.  The convenience store clerk might not accept my claim that a Toonie is worth all of the junk food bought by the boys since I’m just me and don’t have access to intercontinental missiles, carrier battle groups and all of the hookers and blow that Congressional privilege can obtain.  In the micro world of the local convenience store, the market has decided that I’m just full of crap.  There can also come a point where the market – the many members of the world economy – decides that the US government is likewise full of crap for arbitrarily assigning a large value to a single coin as an accounting dodge.

Now for the boys’ second comment.  They themselves realize that this is solely an accounting gimmick and that the Federal Reserve is a willing accomplice to our collective failure to stem spending.  But the rest of the world, for whom wealth is a bit more precious and hard-earned, isn’t going to look googly-eyed at our grand achievement.  They will continue to assess the nation’s ability to service and stand good for the debt and will act accordingly and if they see that our national accounting standards have devolved to the level of I still have checks so I can’t be out of money, then they’ll simply leave our debt issuance alone entirely. : The result would be that real interest rates would spike – a painful thing – or the Federal Reserve would have to become the sole buyer of government issuance – overt monetization of the debt.  So many dollars will be willingly issued with no concern for value that it will be rendered worthless.

The boys’ had no idea about the constitutional issue regarding this act and I wouldn’t expect them to.  But they were smart enough to appreciate the role of the market in this, which is frankly surprising since those who uphold the market are derided by the economist apologists as out of touch; the government can say and do anything because they’re the government and their decree is what matters.  But Don Quixote believed in his imaginary world, where a windmill is a dragon and a whore a damsel.  If the United States Government plays the Don Quixote, abetted by the Federal Reserve’s Sancho Panza, then the world will soon treat them – and us – with the same disregard. 

I’m now wondering whether the money spent on college and economics courses will actually ruin the boys’ ability to think.

Posted on

The Post-Mortem

All kids have their stories to tell and it’s important to listen.  But if my job is to teach, then it’s also important to dig further and help them ascertain what really happened and that can be unpleasant for both kid and father.  That’s why post-mortems are difficult, because they expose the sometimes gruesome unpleasantness of why something occurred; but the post-mortem can also serve to explain how to avoid having it happen all over again.

It was another of those playground incidents in which a kid loses his cool and in the heat of the moment, makes threats and then finally chucks an inflatable rubber ball into the face of another kid in a pique of anger.  Such was the story from one of my own kids, who was the recipient of the ball in the face and on telling the story, becoming rightly angry again.  The unfortunate problem was that I didn’t just nod my head and sympathize out of blind loyalty, but began to ask questions about the incident; this was especially the case since the ball thrower had a reputation for becoming upset, but never before with Youngest.  After hearing the initial report, I asked him to begin again and as he progressed, I would stop him and ask for more detail.  What came through was that Youngest wasn’t the cause of the initial situation and subsequent anger – spilling the gas, so to speak – but he did make a subsequent comment that lit the match, pushing the other kid over the edge.  His remark was under his breath, sotto voce, but it was overheard and that was the spark for the rubber ball explosion.  The quiet comment wasn’t remotely helpful to the circumstance at hand. 

When I understood what happened, I asked what he’d learned from the situation and when there was no response, I commented that he’d figuratively lit a match and tossed it onto spilled gas; this wasn’t an errant ball, but one that he did cause to be chucked at him.  The first lesson was that if he was going to make remarks, he had to be ready to stand by them.  The second lesson was that if there was situation between others, his best course of action was to keep his mouth shut and not make himself a target instead of others.

His response was one of anger and confusion, questioning why I’d take the other child’s side instead of his.  I had to explain that I wasn’t and that the other child was clearly wrong for pegging him with the ball.  But there were lessons to be learned from the situation and my job was to help him learn those lessons so that this didn’t happen again, getting hurt for no other reason than opening his mouth when it should have stayed shut.  It wasn’t what a child would want to hear from Dad, but there it was in all of it’s painful reality.

Everyone has a tendency to embellish their own story one way or another.  We make ourselves the heroes in good circumstances and frequently the victims when things don’t go our way.  This is usually accentuated in children but I have seen a few adults who give the kids a run for their money.  What’s important for me, as a father, is to slow the process down and help my child figure out exactly what happened.  What the progression of events and at what point did things go off the rails?  It’s not easy and sometimes impossible since kids are neither the most reliable nor objective storytellers in the known universe.  But it has to be attempted and if unsuccessful…well, at least you tried.  The only sure thing is that your child will be angry with you for not reflexively taking his side in the situation; but that’s part and parcel of being the parent, because it has to happen.