Philip Greenspun’s Weblog

Thoughtful tutorial on the art of sincere apology from New Yorker magazine: http://www.newyorker.com/humor/2011/09/05/110905sh_shouts_rudnick

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Today is the tenth anniversary of the attacks of September 11, 2001.

The most remarkable thing to me is that the U.S. has not recovered from 9/11 either psychologically or economically. We are investing trillions of dollars in security (when does the quest for security become “paranoia”?) and occupations of two hand-picked enemy countries. The occupations are conducted in such an expensive manner that we are actually funding our own enemies (see this 2009 posting) and therefore can continue indefinitely.

Bad things happen to people and countries. Parents die or divorce and children recover. Beloved girlfriends or boyfriends abandon their lovers and yet still most of them graduate from college or medical school. Cities are destroyed by natural disasters or war and people rebuild.

The U.S. has not suffered anywhere near the damage of a defeated or occupied country during World War II. Nor have we experienced anything like the violence that overwhelmed Rwanda in 1994. Yet somehow we do not seem to be able to move on. Even the rebuilding of the World Trade Center can serve as a symbol of our sluggishness. One World Trade Center is scheduled for completion in 2013, twelve years following 9/11. Twelve years is enough time for a mid-sized Chinese city to build a network of highways, a subway system, an airport from scratch, and a healthy fraction of a Manhattan worth of office and residential space (admittedly not always wisely).

So here’s hoping that the next ten post-9/11 years will be ones of true recovery.

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I went to dinner at a friend’s house and was forced to watch Barack Obama speak. Here’s what I noticed…

“These men and women grew up with faith in an America where hard work and responsibility paid off. They believed in a country where everyone gets a fair shake and does their fair share — where if you stepped up, did your job, and were loyal to your company, that loyalty would be rewarded with a decent salary and good benefits; maybe a raise once in a while. If you did the right thing, you could make it. Anybody could make it in America.”

Given the cheers that greeted this speech, it would seem that our politicians do not believe that there was ever any kind of market for labor in the U.S. Companies paid more than a market-clearing wage in the past because workers were “loyal” or “did the right thing” or because of a notion of “fair shake”. Wages for American workers have therefore not come under pressure due to the availability of educated workers in China and India because that would be a market effect and in fact wages were based on sentiment.

“Building a world-class transportation system is part of what made us a economic superpower. And now we’re going to sit back and watch China build newer airports and faster railroads? At a time when millions of unemployed construction workers could build them right here in America? “

According to Obama, China builds new airports because they are in some sort of race with the U.S. and they are winning. The possibility that China builds airports because they have some cities with more than 5 million population and no airport at all is not considered. The return on investment to building new infrastructure in the U.S. wouldn’t be nearly as high as building it in a fast-growing underdeveloped economy such as Brazil, India, or China. It would be nice if we had congestion pricing on our roads so that transportation times were predictable (the San Francisco and Los Angeles metro areas have traffic jams uncertainty levels equal to any Third World capital), but Obama did not propose anything like that.

“And there are schools throughout this country that desperately need renovating. How can we expect our kids to do their best in places that are literally falling apart? This is America. Every child deserves a great school — and we can give it to them, if we act now. The American Jobs Act will repair and modernize at least 35,000 schools. It will put people to work right now fixing roofs and windows, installing science labs and high-speed Internet in classrooms all across this country.”

Obama wants to spend billions of tax dollars running wires for Internet right at the same time that mobile carriers are putting the finishing touches on their 4G LTE wireless networks and right at the same time that school kids are acquiring smartphones and tablets. “Every child deserves a great school” so we’ll build palaces around the same teachers and curriculum that have produced inferior results to so many other countries?

“The plan also extends unemployment insurance for another year.”

Does that mean 99 weeks of Xbox is now 151 weeks?

“Or should we put teachers back to work so our kids can graduate ready for college and good jobs?”

The same teachers who currently are able to prepare only about 50 percent of their students adequately for college or a job are going to “go back to work” and suddenly they will do a lot better? I guess this is the one part of the speech where Obama has already delivered. As it is September, many more teachers are working this month than were working in July.

“If we provide the right incentives, the right support — and if we make sure our trading partners play by the rules — we can be the ones to build everything from fuel-efficient cars to advanced biofuels to semiconductors that we sell all around the world. That’s how America can be number one again.”

No mention of the $535 million in taxpayer money flushed down the toilet in the Solyndra bankruptcy last week (U.S. Department of Energy put the money in during 2009; Obama visited in May 2010).

“What kind of country would this be if this chamber had voted down Social Security or Medicare just because it violated some rigid idea about what government could or could not do?”

Hmmm… “solvent”?

“Let’s get to work, and let’s show the world once again why the United States of America remains the greatest nation on Earth.”

Why do we have to show the world that we’re the greatest? Are we in fact the greatest? What if China’s GDP surpasses ours, as it is forecast to? Will we then no longer be the greatest?

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Seemingly every day politicians propose massive changes to U.S. taxes, laws, and budgets in order to “create jobs” (the politician will take the credit, presumably, if a small business owner decides to take the risk (and endure the paperwork) of hiring an additional worker; yet another cruel irony of doing business in the U.S.).

I’m wondering if a big impediment to job creation is in fact all of the talk about grand job creation schemes. Suppose that you own a business and you’re told that within a few months there will be some dramatic change in payroll tax rates, tax credits available for hiring new workers, etc. Would you hire people right now or wait until the dust settles and you know what the tax and regulatory environment will look like? (Debating tax credits for new workers seems like a particularly destructive activity; why hire a new worker today when, if you wait a month, the government might pick up most of the cost?)

A politician who proposes a 10-point “job creation” plan may be ensuring that few jobs will be created until all 10 points have been debated by Congress, passed into law or not, etc.

[Separately, this weekend I stayed with friends in California. I asked how one of their sons was doing. “He’s doing great,” they said, “with lots of work helping U.S. companies expand their business in China.” I replied that this was great news and that he should be congratulated for helping to pay for Social Security, Medicare, our various wars, etc. “Actually he’s not going to be contributing much because he renounced his U.S. citizenship and is now a citizen of Taiwan.”]

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The Faculty Lounges: And Other Reasons Why You Won’t Get The College Education You Pay For is a book by a Wall Street Journal editor vaguely along the same lines as Academically Adrift and Higher Education?. Unlike Academically Adrift, however, the book does not have research data to relate. Unlike with Higher Education?, the author, Naomi Riley, did not spend time in classrooms.

In the first chapters of The Faculty Lounges, we learn that professors get tenure by conforming to established patterns of thought and then colleges pay tenured faculty long after they stop being effective. This is not news and the author explains that tenure in the old (pre-1994) days, when there was a mandatory retirement age of 60 or 65, was rather different from today’s tenure. Riley is a good journalist and digs up the most embarrassing episodes of tenured professors behaving badly, e.g., Northwestern’s Arthur Butz, an EE teacher, venturing into Holocaust denial.

Riley asserts that colleges today are handing out a lot more vocational degrees and professors of “security and protective services” shouldn’t need tenure protection for controversial ideas compared to traditional liberal arts faculty. I’m not sure that this is true. A professor of criminology might opine that the War on Drugs could not be won and should be abandoned, thus attracting the wrath of politicians who continue to appropriate funds to fight the War. By contrast, what would a professor of Ancient Greek be likely to say that would offend today’s powerful elite?

Riley decries the valorization of progress and novelty. She introduces the subject of debasement of standards by noting that Thomas Friedman addressed a group of 4000 university administrators by telling them to ignore “concrete outcomes like grades and test scores”. Teachers should instead try to install passion and curiosity in students because “the job students will hold probably doesn’t even exist today”. How a student was supposed to learn passion from someone who devoted the first half of his adult life to getting lifetime job security is a question Friedman did not address. Nor did Friedman address how a student was supposed to learn curiosity from someone who stayed in the same narrow research area for his or her entire career. Since it isn’t clear what colleges are supposed to teach it is therefore excusable that they don’t bother to measure quality of teaching or outcomes.

The miserable lives of adjunct faculty are covered in this book. It is not clear why a Wall Street Journal alumna has a problem with universities paying minimal dollars to adjuncts and working them like slaves. There is a market for PhD college teachers and presumably the adjuncts are paid a market-clearing wage. Riley does note that students don’t learn as much from these fatigued part-timers and that the rise of the adjuncts corresponded to a big rise in grade inflation. Adjuncts get re-hired based on previous semesters’ student evaluations and the best way to get high marks with students is to give out As.

The book contains a long chapter on unions. It isn’t clear why this is relevant. Colleges are terribly inefficient at helping students learn. Does it really matter whether or not the ineffective teachers are union members or not? Unions seem to be a factor in ensuring mediocrity, but plenty of non-union tenured faculty are mediocre as well.

Riley includes a chapter on politics and the tendency of university teachers to adopt liberal political views in order to fit in with their community. Once again, it is unclear how this is relevant given the terrible job that teachers do. Would you rather pay $50,000 for a bad education from a Republican or a Democrat? Riley cites no evidence that students are looking to their professors for guidance in how to vote. Perhaps the political views of the faculty are not interesting to students.

Riley makes an effort to figure out why costs are so high. She pinpoints the bloat in administration that has occurred at most schools: “As of 2007, private colleges employed one senior administrator for every thirty-five students.” But then she circles back to the faculty as being the main source of the problem, e.g., because professors get to decide when to offer classes at their own convenience rather than at convenient hours for students trying to fit in enough requirements to graduate.

The final chapter is devoted to Olin College of Engineering, perhaps the best undergrad engineering program in the U.S. Professors are on five-year contracts and everyone seems to be happy while the students learn far more than at traditional schools.

Riley doesn’t address the tough questions. Olin and some other schools have shown that they can hugely improve the quality and consistency of undergraduate education. Yet demand for a high priced low quality education delivered by adjuncts and elderly tenured professors remains very strong. Given that there is a more or less free market in higher education, why doesn’t the market self-correct?

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I’m visiting my cousin Doug in San Francisco right now. Walking near the foot of the Golden Gate Bridge, Doug’s wife wondered out loud if the pavement-melting Volvo SUV, packed with all of the detritus of a suburban family with two children, was locked. Her 7-year-old daughter noted that “they can’t steal it without the key”. Mom responded that they can steal what’s inside. The little girl said “at least that would clean it out.”

After enjoying a Vietnamese meal in the Richmond, rebuilding our energy after a visit to the House of Air trampoline park, we all went to the de Young Museum for the Picasso show. Mom and her daughters went off independently while Doug and I concentrated on a couple of paintings. I had my arm around Doug’s shoulders for a while before thinking “When these other folks see two guys in the art museum arm-in-arm, their first thought is probably not ‘cousins'”.

[A separate interesting observation occurred while driving to lunch in Berkeley. A friend looked at a Berkeley student wearing a nose ring and asked “Why would anyone want to turn herself into an ox?”]

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A typical line of reasoning on display in newspaper opinion sections is “It is unfair to criticize Barack Obama for doing X because King Bush II did X” (example from Paul Krugman today regarding borrowing more money to rebuild from Hurricane Irene: “After all, [Eric Cantor] and his Republican colleagues showed no comparable interest in paying for the Bush administration’s huge unfunded initiatives.” (link)).

I’m wondering why people accept this line of reasoning. First, considering the state of the U.S. economy, it is not obvious that King Bush II did a good job. Why would anyone want a politician to behave as he or she did during Bush II years? Second, King Bush II and Congress at the time were operating from a very different set of assumptions. People believed that the U.S. economy, and therefore the tax base, would grow 2-4% per year. People believed that returns on investment, including for public employee pension funds, were likely to be 8%/year. Currently the growth forecasts for the U.S. economy are maybe 0-1% per year and for investment yields perhaps 2-4%/year. It seems natural that thoughtful people would act differently given different assumptions.

Should it really be to a politician’s discredit to say “He advocated X in 2005 when the economy was forecast to continue booming for decades and now, with the outlook more or less dismal, advocates Y”?

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I keep seeing news articles about unemployment percentages. I’m surprised that so few people look at the actual employment numbers rather than unemployment. As I’ve written here before, I think total employment is a much more interesting number because it predicts demand for housing (generally you need a job in order to pay rent or a mortgage) as well as the overall strength of the economy.

According to the U.S. Bureau of Labor Statistics, in 2000 the U.S. had 131,785,000 nonfarm jobs, of which 20,780,000 were in government. In 2011, the corresponding numbers were 131,190,000 (slightly less) and 22,034,000 (about 6 percent more).

So to my mind there should be demand for approximately 350,000 fewer houses and apartments (budgeting in some two-career households) and the overall economic strength of the U.S. should be lower because we have fewer private-sector jobs supporting more government jobs.

The raw data on employment don’t seem that hard to interpret. Why do they so rarely appear in the news?

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… but they would have declined (or at least slowed in growth) anyway.

A lot of the value in Apple has come from the ineptitude of other companies and the passion and willingness of early adopters to spend huge money. There are inherent limits to growth fueled by those two factors. For example, the early adopters with the greatest willingness to pay for smartphones (and associated service) have already purchased smartphones. Now the big market is from people in emerging countries, such as China, and the average consumer in developed countries. The record companies were so poorly managed that they gave up 30 percent of their digital music revenue because they were too lazy to run their own Web site. What other industry is going to give Apple 30 percent of its revenue in exchange for Apple running a server?

So let’s not be too hard on the new Apple CEO (Tim Cook, who seems to be more experienced with logistics than product design). If revenue and profit growth flattens it might well have done the same under Steve Jobs. For Apple to justify a comparable market cap to Exxon’s (which owns oil wells, after all) would require a lot of things to go right over the next decade. The current P/E ratio of 15 doesn’t look that high, but since Apple is a tech company that issues a lot of stock options they may end up diluting current investors so much that a public holder of a share of Apple stock may never receive his or her full $383 worth in dividends and capital gains.

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One of the things that I did not like about King Bush II was his publicly personal involvement in the Iraq war. Here’s something that I wrote during a 2002 trip to Alaska:

From June through October 2002, every time we emerged from the wilderness we’d find George W. Bush complaining about Saddam and Iraq and every time we felt diminished. Iraq is a country that, before the Gulf War, had a GDP comparable to that of West Virginia. George W. Bush represented the entire American public. Was it possible that we the American People had nothing better to think about than a tiny country on the other side of the globe? It occurred to us that, as a matter of protocol, Queen Victoria would not have dealt directly with the potentate of an insignificant foreign land. It would have diminished the citizens of England to see their leader treating one-on-one with the leader of an inferior nation. A problem like Saddam would have been delegated to a 3rd undersecretary in the Foreign Office. When asked about Iraq, we kept expecting to hear George W. say “I’m not sure. I delegated that problem to Colonel Smith and he is going to report back to me in three months. Can we move on to questions that more directly concern our society?” But of course it never happened.

I’m therefore thrilled that the Libyan war is coming to an end while President Obama is on the golf course on Martha’s Vineyard. As U.S. military power fades (due to our fading economic power), this is how I’d like us to be remembered, i.e., our hero president casually squashing a Third World dictator while sitting on the beach with the family.

[I myself would be on the Vineyard as well right now, visiting a close friend who is getting on in years, but it is not practical for peasants to fly personal airplanes there during Obama’s visit. I was there the day before the lockdown began and the airport was crammed with cargo planes, vehicles that had been flown in, etc. Before my departure, my friend and I shared the pilot’s lounge with some of the Secret Service employees. We were amazed that the country could afford to take so many young intelligent people out of the productive workforce, put them on taxpayer-funded salaries, rent them cars with tax dollars (or fly SUVs in on C17 cargo planes), and rent them beach houses on Martha’s Vineyard for two weeks.]

[Note that even had we stayed we would not have been able to see Air Force One land. The main runway at MVY is just over a mile long and when your personal airplane is a Boeing 747 it means you need to fly to Otis Air National Guard base to meet one of the helicopters that has been previously flown up there to greet you. Then you transfer from the B747 to the helicopter for the flight back south to the MVY airport, then shut down Vineyard traffic for the motorcade trip to the $50,000/week estate (it is unclear why he couldn’t take a helicopter directly to Blue Heron Farm, but maybe his Marine One helicopters are simply too big to land on the small private golf course associated with the house (aerial photo inside this article)). Michelle Obama and her daughters arrived four hours earlier via a similar collection of taxpayer-funded jet-powered aircraft (an extra $500,000 cost to taxpayers, considering operating costs and the Secret Service details required?).]

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