Sunday, March 26, 2017

The Future of Learning

Column 2017-10 (3/27/17)

      New ideas don't instantly catch on. Many people reject new ideas without even considering their merit. New equals bad is an old formula. Some of the most vocal opponent's of the new are individuals who have a vested interest in the old.

       The opponents of twenty-first century learning do have vested interests in our antiquated school system. Many of them are living well off the old system. They fear that a real step forward for learning would leave them behind. They are willing to sacrifice the children to sustain the obsolete district schools.

      This was on full display in Detroit last year as the Luddites of our times fought to force escaped students back into the failed district schools. More than half of the students living in Detroit have left the district schools.

     Schools should serve the students, not consume them to sustain the failed schools a bit longer. I doubt that "sacrifice the children to save the district schools" will ever be a popular rallying cry.

       Defenders of district schools whine that charter schools aren't accountable. This is a garbage claim. The accountability of charter schools could be improved. Still, they are far more accountable than district schools.

      The real complaint on behalf of district schools is that charter schools provide another choice. That choice makes district schools more accountable to those whom they serve.

      All service providers should be accountable to those they serve. Then they must serve their customers well, or close up shop. Being ruled by unaccountable bureaucrats, who often don't know or care what consumers want, is fake accountability.

      It takes extra effort for parents to have their children in charter schools. If the charter school doesn't deliver, it will lose its customers. That is real accountability. No bureaucrats needed. Of course bureaucrats hate it.

     Our present school system has its roots in the nineteenth century. It was embellished a bit during the twentieth century. Now Common Core seeks to preserve the fossil forever. The system is based on dividing students in to herds by age. Those herds are then driven through the system for 13 years. It is all about the herd, not the individual.

     Inevitably the system aims for mediocrity, and usually falls short. One size fits all doesn't fit anybody. The faster students are held back and bored. Commonly the lack of any challenge leads to bad study habits.

      The slower students are trampled by the herd and left behind. Not everyone has the same ability in all subjects. They may be bored in some classes while being left behind in others. Not all students need the same body of knowledge as others. The system doesn't care. In fifth grade, learn fifth grade stuff because you are in fifth grade.

      It is long past time to lay grade numbers to rest and build curriculum to fit students. Forget about forcing students to march through a curriculum that probably doesn't fit anyone. Cyber learning can liberate students from slavery to the rigidity of grade numbers and one size fits all lesson plans. All we need do is let it happen.

      Computers can continuously measure where the student is at and lead him to the next step. When the student masters a segment he can move on to the next one, instead of marking time with busy work. It won't matter that others are progressing at different paces. What matters is that all will be progressing. What the student learns is far more important than how fast he learns it.

        Not all students will be suited to full scale cyber learning. Most will benefit greatly from it. Next time I will endeavor to provide a thumbnail sketch of of some of the advantages of cyber learning.

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Copyright 2017
Albert D. McCallum

Saturday, March 18, 2017

Why Bureaucracy?

Column 2017-9 (3/20/17)

     Most people are familiar with the word ”bureaucracy.”  
What is a bureaucracy?  Why do we have bureaucracies?  What are
bureaucracies intended to accomplish?  What do bureaucracies actually
accomplish?
 
    People free to choose work together to form many enterprises. 
These enterprises produce many things.  The consumers choose which
things they want and decide how much they are willing to pay.  To
succeed, an enterprise must be able to sell its products for more than it
costs to make them.

     To do this the enterprise must please customers.  The enterprises
that well serve their customers prosper.  Those that fail to please
customers perish.  Nothing more is needed to achieve accountability.

     Some enterprises don't sell their products to customers who are
free to buy or reject the products.  Such enterprises aren't accountable to
those they are supposed to serve.  Most such enterprises get their
income from appropriations.  The value of the product is never tested in
the marketplace.

     Most government products never face the marketplace test of
value.  Many departments in businesses share the same lack of
accountability to those they are supposed to serve.  How can
management know if the payroll or purchasing department is operating
effectively and efficiently?  Such departments don't compete for
customers.

     Businesses and some government enterprises commonly out
source services such as cleaning and payroll.  The providers of those
services then have customers to please.  This increases accountability.

     In free markets a business's final product is always subject to the
marketplace test when offered for sale.  In government the opposite is
true.  Some of government's suppliers compete in the marketplace.  The
final product is usually given away or sold to customers who have little
or no freedom to choose, such as those coerced to buy city water.

     Bureaucracy is an attempt to bring some accountability to
enterprises that escape real accountability to customers in the
marketplace.  Those who are accountable directly to their customers
don't need books full of rules about do and don't.  If they don't discover
and heed the right dos and don'ts their enterprise perishes.  That is real
and inescapable accountability..

     This accountability comes from the bottom up.  Bureaucratic
accountability is based on rules  from the top.  Bureaucrats, who at best
have some foggy idea what consumers want, make and attempt, or at
least pretend, to enforce the rules.

     Often the bureaucrats care little about what consumers want. 
Bureaucrats try to enforce the rules with slaps on the wrist and giving
more money to the worst performers.  Rules that started out as means to
an end become ends in themselves.

     Enforce the rule because it's the rule.  Never mind that the rule
frustrates the purpose for which the rule was made.  Soon the
bureaucrats and their minions lose sight of any purpose other than
survival and growth of the bureaucracy.  This process can continue for
so long as money can be squeezed from the taxpayers to pay for it.

     Attempts to reform bureaucracy will fail because human nature
and the bureaucratic environment dictate what any bureaucracy will do. 
With all its faults bureaucracy is still the best way to run an enterprise
that isn't accountable to consumers in the marketplace.  The only real
solution to the problems of bureaucracies is to replace them with
enterprises that are directly accountable to consumers in the
marketplace.

     Those who still complain that charter schools are less
accountable than district schools should read this column again.  
Charter schools may, or may not, have less pseudo accountability to the
bureaucracy.   They have far more real accountability to the consumers
they serve.  Charter schools must please those they serve.

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 Copyright 2017
Albert D. McCallum

Saturday, March 11, 2017

What Is Important About Sovereign States?

Column 2017-8 (3/13/17)
 
       When the Revolutionary War ended, the colonies didn't
automatically become one nation.  Each colony became an independent,
sovereign nation.  The leaders of the new nations realized that alone in
the world each would have a difficult time.

     The new nations banded together under The Articles of
Confederation.  Each nation retained its sovereignty, except for a few
matters delegated to the government of the federation.  The present US
Constitution was born when the convention called to propose
amendments to the Articles of Confederation instead drafted the
Constitution.

     The Constitution didn't end the sovereignty of the member
nations.  The Bill of Rights was added to make it clear that the states
and their citizens weren't to be ruled by the federal government but to
be served by it.  Over time, particularly at the time of the Civil War,
the federal government has morphed into a national government seeking
to rule rather than serve the states.

     In large part the states have surrendered their sovereignty in
exchange for return of some of the wealth taxed away from them by the
federal government.  There is nothing like being bought into servitude
with your own money.  That is worse than making Mexico pay for
Trump's wall.

     Many today want the states to be little more than administrative
districts of a national government.  Should all laws be uniform across
the entire country?

     If someone devises perfect laws that are best for  everyone, it
might make sense to apply them to everyone.  So far I'm waiting to see
the first such law.  Someone may say, What about a law against
murder?  My response is, when someone comes up with a definition of
murder that is agreeable to everyone, let me know.

     Not everyone wants the same lifestyle.  What gives one the right
to impose his lifestyle on another?  With different laws in different
states, we can vote with our feet for the ones we prefer. Individuals
have been voting in this election for all of history.  The colonists who
settled in the new world voted against the old world.

     Some people want to stop the voting with our feet by imposing
the same destructive laws on everyone.  Interestingly, when their
favorite laws don't win, they don't smile and accept someone else's
favorite laws.  We need no further proof of this than to observe how the
so-called progressives are melting down over Trump's election.
 
      I'm not all that pleased with some of Trump's ideas.  So far I have
avoided having a temper tantrum and beating my head on the floor.

     Success is the product of experimentation.  Many experiments,
probably most, don't yield good results.  Those failures are the price we
pay for progress.  The fewer people harmed by failed experiments, the
better.   That experiment called Obamacare should not have been
inflicted on the entire nation.  For one thing, it denied us the
opportunity of seeing 49 alternatives, one or two of which might
actually have worked.

     The attempt to impose one size fits all education on the all 50
states is another on going disaster.  Let 50 flowers bloom and then pull
up the ones that turn out to be weeds.

     Let state sovereignty and diversity flourish.  Then pick the
winners after they actually win.  Quit relying on politicians and
bureaucrats to pick winners from untried rookies at the beginning of
spring training.

     I'm not suggesting that more government at the state level is a
good thing.  We can at least hope that one state will give freedom a
chance.  Faced with success from freedom the other states will be
forced to get on board the freedom train, or be left behind.

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Copyright 2017
Albert D. McCallum

Saturday, March 4, 2017

How Dumb Is It?

Column 2017-7 (3/6/17)
 
   The year is still young.  It's not too young though for making
my first nomination for "dumb idea of the year."  I hope the idea wins
the award.  I shudder to imagine someone coming up with a dumber
idea.

     This idea makes Mr. Trump at his worst seem good.  And, that
is no small accomplishment.  At least Trump appears to have a few
good ideas to balance his ledger.

     Interestingly, the supper dumb idea is attributed to the man
alleged to be the world's richest human.  Bill Gates supposedly wants to
tax robots that take jobs from humans.  Maybe this will turn out to be
fake news, or an early April Fool's Day prank.  I certainly hope so.

     The sophomoric logic behind the proposal is that humans are
taxed on the income they produce; therefore, robots should be taxed
too.  Would the robot hire another robot to file the tax forms?  Of
course, business owners are already taxed on income produced by their
robots.

     Robots increase productivity of workers so that each produces
more.  Thus, fewer workers are needed to make the same amount of
products.  Of course, the increased productivity will lower the price of
the product creating demand for more of the product.  Will the robot get
a tax credit for the new jobs it created?

     The function of invention and innovation is to increase the
productivity of workers.  Increased productivity is the only way to
increase our standard of living.  Gates is proposing to tax away part of
the increase in our standard of living.

     Every innovation that increases productivity takes away jobs. 
Why single out robots for special treatment?  How many scribes have
lost their jobs to printing presses?  How many telephone operators have
been replaced by computers?  How many diggers lost their jobs because
of the invention of shovels?

     One of the greatest job destroyers of all times is the farm tractor. 
It has wiped out millions of jobs driving and caring for horses and
mules.  What would be a fair tax to impose on tractor owners for this
dirty deed?

     A robot is just a fancy piece of equipment.  Equipment doesn't
pay taxes.  Equipment owners will have to come up with the money
to pay the robot tax.  Businesses don't pay taxes either.

     Businesses merely collect taxes for government.  The tax money
must come from customers or employees, or else the business goes
bankrupt.  Instead of cutting prices or increasing wages, the business
will send the robot tax money to government.

     There is a third option.  Government could use the robot tax to
subsidize the businesses harmed by the robot tax.  I hope this option
doesn't make sense to anyone.

     Without the robot tax, consumers will pay lower prices for the
goods produced by robots.   This will leave consumers with money to
spend on things they couldn't buy before.  Someone will have to make
those things.  That means new jobs.

     If government levies the robot tax, then government gets to
spend the increased productivity.  Of course, if government taxes away
all the benefits from using robots, there won't be any robots to tax, or
any increased productivity to spend.

     It appears that Gates believes government will spend wealth
more wisely than will those who produce it.  That is unless the producer
is Bill Gates.  If Gates really believed in the wisdom of government, he
would donate his billions to the cause.

     The robot tax is just one more lame scheme to increase taxes on
everyone.  Government thrives on fooling people into believing
someone else is paying the taxes.

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Copyright 2017
Albert D. McCallum

Saturday, February 25, 2017

Why Fear a Trade Deficit?

Column 2017-6  (2/27/17)
 
 With foreign trade now a front burner political issue we are
likely to hear more about that thing called a trade deficit.  Many people
claim a trade deficit is a bad thing.  How could anything named
"deficit" be good?

     Shakespeare asked, What's in a name?  Let's consider, What is
in the name "trade deficit?"  If a nation imports more than it exports it
is said to have a trade deficit  If your bank account imports more
money than it exports, Would you call the results a deficit?

     Things we import are useful to us.  Things we make and export
are a waste.  Someone else gets to use them.  If we could import all the
stuff we now make we could live the same way we do now.  If we
could get the imports without making anything to export, we would gain
a whole bunch of leisure time.

     If we imported nothing and exported everything we made,
everyone would soon starve.  It seems foolish to brand imports as bad
while praising exports.  It is like calling work good and the things work
produces bad.  Exports can have value to us only in one way.  We can
use the exports to pay others for stuff they make for us.  Without
payment the making is likely to stop.

     How can we import more than we export?  Does it mean we
aren't paying for all of our imports?  One economist pointed out that we
don't have a trade deficit, instead we have a transportation deficit.  A
simple example will explain why.

     Imagine Toyota shipping $100 million worth of vehicles to the
US and selling them.   Then Toyota buys $100 million worth of
assembly line equipment in the US.   Now consider two options.

     In the first option Toyota ships the equipment to Japan and
builds an assembly plant.  When the purchase is transported across the
magic line it cancels the $100 million trade deficit.  Without the
transportation the trade deficit would live on.

     In option two Toyota builds the assembly plant in the US.  As a
result the US increases its trade deficit by $100 million.  Which benefits
the US more, an assembly plant in the US or one in Japan?

     Such foreign investments in the US are the main cause of the US
trade deficit.  Foreign investors create the trade deficit because they find
the US a better place to invest than their own, or any other, country.

     Some Canadians seem proud that Canada usually has a trade
surplus with the US.  Why are they proud that their fellow Canadians
find investing in Canada inferior to investing in the US?

     The saving and investment rate for people in the US is very low. 
Without investment prosperity is impossible.  The US economy would
be in far worse shape than it is if foreigners hadn't made the
investments that created the US trade deficit.  We should say thank you
rather than complain about the trade deficit.

     There is another small contributor to the trade deficit.  Some
money we spend on imports never comes back to buy anything in the
US.  The local currency in some countries is so bad that people prefer
to use US dollars.

     We shouldn't feel badly about the loss of that money.  Taking
money out of circulation in the US increases the value of the money we
still have.  Without having to increase our spending, we get to buy the
things those foreigners didn't buy.  Again, we should just say thank you.

     The trade deficit isn't a debt.  It never has to be paid off.  If
foreign investors want to take their investments home, they are free to
do it.  No one has any obligation to pay them for their investments.

     President Trump wants increased foreign investment in the US. 
He also wants to reduce the trade deficit.  The one thing certain is he
has to fail to achieve one of those goals.

aldmccallum@gmail.com
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Copyright 2017
Albert D. McCallum

Sunday, February 19, 2017

To Trade or Not to Trade


Column 2017-5 (2/20/17)                                   

     Since long before my time a battle has raged over whether to
trade or not to trade with people who live in other nations.  A quarter
century ago Ross Perot proclaimed that the sucking sound was our jobs
going to Mexico.  Others were of the mind that the sucking sound was
Ross Perot sucking all of the intelligence out of the room.

     Donald Trump now waves the banner passed down by Perot. 
Now the main villain is China.  Mexico still has a supporting role. 
What is the truth about foreign trade?  Does anyone care?

     Trade is a two-way street.  That is what "trade" means.  Each
party gets something from the other.  When the wealth moves only in
one direction it isn't trade.  It is either a gift, robbery or extortion.   
Believe it or not the Chinese and Mexicans are so selfish neither will
send us an endless stream of gifts.  Even if they would, Why should we
complain?

     We aren't losing jobs to China or Mexico.  When we trade
goods we also trade jobs.  When shirt makers lose their jobs because we
import shirts from China, other jobs are created in the US making
something to pay the Chinese for the shirts.  Those new jobs usually
aren't as obvious as the ones lost.  Sometimes those new jobs do show
up on our radar.  Boeing recently announced that a sale of airplanes to
China would create 50,000 jobs in the US.

     Trade does mean some workers have to find new jobs.  There is
nothing unusual about that.  In Michigan every year 700,000 or so jobs
are lost and replaced with new jobs.  The only way we can increase our
standard of living is to replace low productivity jobs with more
productive jobs.

     Trump claims he will bring our manufacturing jobs back from
China.  That would be a neat trick considering that those jobs didn't go
to China.  So where did the manufacturing jobs go?  They went the
same place the farm jobs went.

     In colonial times about 90 percent of workers were farming. 
Now only about 1 percent are farmers.  We didn't lose those jobs by
importing our food from China.  Farmers now produce more than ever
before.  Mechanization makes it possible for one farmer to grow as
much as many used to.

     Manufacturing jobs are now going the way of farm jobs.  And,
we will be better off because of it.  Imagine what life would like today
if 90 percent of workers were still farming.  Those displaced farmers
make most of the stuff we have today.

     In colonial times no one could have imagined all the non farm
jobs we have today.  Likewise, no one today can imagine all the non
manufacturing jobs that will fill the future.  As long as people have
unsatisfied wants, there will be work to be done.  All we need to do is
give entrepreneurs the freedom to dream and create.  They will find
ways to employ available labor to produce the goods and services
people want.

     Some may ask, What about the money China lends to the US
government instead of spending?  Be assured, the government spends
that money.  The jobs the spending creates may not be very productive. 
They will be as productive as they would be if government borrowed
the money from people in the US.  And, the borrowing from China
won't drain investment capital from the US economy.  Please don't
interpret this as suggesting government borrowing is a good thing.

     The reason people trade is that they find it easier to make
something to trade for what they want than to make what they want. 
Trade benefits both parties, even when they live on opposite sides of the
world.

     Blocking trade may benefit some politically connected special
interests.   The price we pay is that we all have to work harder for what
we want.  Blocking free trade always increases the price of something
people buy.

aldmccallum@gmail.com
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Copyright 2017
Albert D. McCallum

Sunday, February 12, 2017

More About Obamacare?


Column 2017-4 (2/13/17)                              

     In a recent column I considered the nature of insurance
along with what insurance can and cannot do.  Insurance doesn't
reduce losses.  It only provides a means of sharing the losses so
none of the insured individuals have to take a big hit.

     If everyone in the insurance pool doesn't face about the
same risk, those who face greater risks must pay higher
premiums.   Otherwise the low risk individuals will bailout
unless coerced to stay.  It won't work to charge 25 years old
individuals and 85 years old individuals the same premiums for
life insurance.

     Obamacare was designed to defy the basic principles of
insurance.  That is why many people believed Obamacare was
designed to fail.  It was believed to be nothing more than a
stalking horse for the complete government takeover of medical
services.

     The foundation of Obamacare was to force some people
to pay the medical expenses of others.  The prime target was
healthy young people who were to be forced into a herd with
high risk individuals.

     Everyone was to be forced to help pay for preexisting
conditions.  Preexisting conditions can't be covered by real
insurance.  There is no unknown risk to share,  Try buying
tornado insurance after your house is blown away.  See how
many insurers are eager to cover your house's existing condition.

     Preexisting conditions are problems.  Those problems
can't be solved with insurance.  There are only two solutions,
rely on voluntary help or resort to extortion.  Obamacare chose
extortion by requiring everyone to pay or else go without
insurance.

     Many people seem to be pleased when insurance
companies are forced to provide additional coverage.  Politicians
spin it as something they are doing to the "evil" insurance
companies.  In reality those "evil" insurance companies must
raise premiums to pay the added cost.  Mandated coverage is
extortion as far as those who don't need or want the mandated
coverage are concerned.

     Together the federal and state governments mandate 100
or so coverages, all of which make insurance cost more.   All
mandates of coverage should be abolished.   Let individuals
choose the coverage they pay for.

     Employer paid medical coverage is a substantial cause of
high costs.  One size fits all coverage prevents individuals from
having the coverage that fits them best.  Also, not even seeing
the bill for their coverage encourages waste.  Some go to the
emergency room for hangnails and colds.  Services that seem to
be free encourage unnecessary tests and all sorts of waste.

     Instead of trying to get rid of employer provided
coverage, Obamacare tried to force its expansion.  To get rid of
the wasteful employer provided coverage we must level the
playing field tax wise.

     Employer provided coverage is exempt from income and
Social Security taxes.  Pay the same money to the employees so
they can buy insurance and it is subject to both taxes.  To
correct this problem all medical expenses, including insurance,
should be exempt from both taxes.  What employer wouldn't
gladly give his employees raises equal to the cost for medical
coverage, in exchange for being relieved from providing the
coverage?

     I haven't come close to even touching everything that
needs to be done to unravel what government has done to make
medical insurance and services far more costly than need be. 
Until we have individuals price shopping for medical services
and insurance, the problems will live on.

     The cost for most medical services have been rising
toward the stratosphere.  Meanwhile, the cost for plastic surgery,
which usually isn't covered by insurance, has been going down. 
With proper incentives all medical costs can be reduced.  More
freedom and choice, not more government intervention, is the
solution.

aldmccallum@gmail.com
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Copyright 2017
Albert D. McCallum