Thursday, April 2, 2015

Can we save America's small colleges by sharing some administration?

At many of our institutions of Higher Education, undergraduate tuition has inflated significantly faster than the Consumer Price Index (CPI). This inflation has multiple sources; e.g. administration and administrative redundancy; facilities management; expenditures to accommodate increasing enrollment; and a broad reduction in research investments.

It is important to note that teacher compensation has not exceeded CPI, and tend to lag behind. Yet, many current strategies to reduce the overall cost of college currently focus on reducing instructional cost or reducing the number of classes that students take at college. These strategies will fail to reduce tuition and may, in fact, increase it… as schools seek additional financial input to preserve core functions.

Sharing certain administrative services between several institutions may be an effective way to tackle administrative cost. This approach might benefit smaller public schools, in particular. (Larger universities may find more benefit by implementing a shared service approach within their school, i.e. sharing services between departments and schools in order to tackle administrative redundancy.)

Many administrative functions served at our colleges and universities are quite similar to analogous functions elsewhere and do not require full-time, local personnel. For example, routine procurement and financial functions; grant pre-award reviews; routine accreditation reviews; certain HR functions; and perhaps even initial admissions reviews might be effectively pooled.

Moreover, there exists a need for highly specialized expertise that may be difficult for smaller schools to source; for example, specialized financial, legal, and intellectual property consultation.

It is very important to note that this “shared services” approach is not intended to eliminate core functions. Nor can this approach be implemented in a manner that makes services less accessible to faculty, staff and students. On the contrary, the objective is to find more resources for those core functions that truly require customization due to the particular needs of a school, whilst reducing cost for other functions.

As an initial step toward implementing this approach, I suggest that schools begin to distinguish, within their own administrative structures, those functions that require high levels of customization and local service, etc. in order to serve the core mission of their school. These core administrative services must be preserved and should indeed be enhanced. Next, functions that could be perform equally -or perhaps even better- with a shared service strategy can be identified, and those items can be considered for pooling with similar schools.

If this can strategy can be implemented without adversely affecting their core mission, several of America’s smaller institutions of Higher Education that currently struggle with escalating administrative cost may soon find incentive to unite and conquer.

Monday, March 30, 2015

Depression is *not* Psychosis

After the horrible #Germanwings tragedy, the media is aggressively pushing depression as the cause, and the word "suicide" appears in almost all related headlines. A few quick points:

(1) One of the very first things that mental health professionals ascertain, when confronted with a troubled person, is whether that person is (a) a potential harm to themselves, or (b) a potential harm to others. That's one of the first steps in assessment because those are two very different branches of behavior, requiring very different treatments;

(2) Depression and suicide are very different from the kind of psychotic behavior apparently exhibited by this pilot. It is wildly unfair to the many people who occasionally struggle with anxiety / depression to confuse them with psychosis;

(3) Partly because of (2), many who could/should get treatment for depression will be disinclined to do so, and that is a real shame. Stigma kills. It really does;

(4) Depression is treated in very different ways than psychosis and other issues tending to lead to harm of others. In fact, medications used for one may even worsen the presentation of the other, in some cases;

(5) Some of the SSRI medications widely used to treat depression can [rarely] induce psychosis, and for that reason, the SSRI industry (yes it has become an industry) really needs to insist that these are used in combination with person-to-person therapy;

(5b) I find it outrageous how casually certain medications are prescribed, typically by doctors with little mental health experience and usually without any regard to patients' access to supportive counseling, socialization and exercise habits;

(6) Many, many young people have depressive or even suicidal thoughts from time to time. It's really not that uncommon in our hyper-anxious, fast-paced world... and we shouldn't treat anxiety / depression like some taboo topic. My experience is that those young people who disclose and verbalize their thoughts and anxieties are far more likely to recover (although this is, to some extent, a tautology);

(7) In this case, it seems that this pilot faced the loss of his job if his condition(s) were revealed to his employer. Cosistent with (6), this tends to correlate with a poor outcome. Also, if he were perchance experiencing depersonalization as a [fairly common] side effect of his treatment, this might well have exacerbated or promoted the behavior. I.e. incomplete treatment might even be the cause of the tragic behavior. That is scary to me, given how widely and casually these medications are now prescribed.

Thursday, March 26, 2015

Advice to Young Bigots

Having the freedom to say what you mean and mean what you say, without having to hide anything of shade the meaning, is very liberating. I suspect that a lot of people with hidden biases feel those issues eating away at them, all the time. Everyone is at their best when they are their whole self, openly being whoever they are; becoming who they want to be.

One of the common things that young people experience on their way to adulthood is a "club" or "tribe" or "frat" effect in which they are expected to adapt their behavior, appearance, words, and even thinking just to fit in.

I suppose everybody tries this at some point in their lives. It's a natural and powerful feeling to want to be part of a tribe. But if that tribe causes them to say or do things in order to belong, and those things feel uncomfortable at an unconscious level, then it will progress like a cancer to their conscience. They can deny it, they can hide it... but it's still there and it wants to spread and consume the whole self.

Based on this observation, my advice to the chanting Ohio State SAE boys, Levi Pettit and Parker Rice, and their colleagues, is as follows:

Find how to be thankful that your behavior was caught on video. Only when you are able to do that, only then will you know why it caused so much hurt.

"Then you will know the truth, and the truth will set you free."

Friday, March 6, 2015

Federal Spending vs. Federal Investing, and the #DebtCeiling Debate

Treasury Secretary Jack Lew just announced that the Federal Government will again reach its debt ceiling around 3/18.

There will be predictable nonsense about how much debt we have taken on as a nation, and how this is around 100% of GDP, and how the Chinese can manipulate us, if they want. I'll attempt a few words of clarity....


* The Chinese can't manipulate us. We could, in fact, unilaterally cancel all debt payment obligations, which would simply whack our credit ratings for a while. This really isn't about China or any foreign debt holders; this is about the status of our national debt as the absolute safest security, the so-called zero-risk asset.

* That US debt is in such high demand is a good thing and a bad thing. It allows us to, in essence, spend more in the near term, but....

* ...There is Federal spending and then there is Federal investing. Which are we doing? I am not convinced that the current leadership in either major party knows the difference. We need clarity, more than ever before.

* The Tea Party fringe that adamantly opposes any debt ceiling increases is not proposing any workable solutions. They really do believe that shutting the machine down is a solution- it's not.

* Shutting down the government or forcing 'extraordinary measures' is expensive. It does not save money, in fact it costs us a lot more. A protracted shutdown would do a lot more damage than just the direct costs, it'd raise the long-term cost of our debt payments. Imagine you tell your bank you're just join to skip some payments... what happens to your interest rate? Any sensible person knows that you have much more bargaining leverage after you rein in your debt!

* In a functional government, the debate would be about how to bend down spending and increase investing. The US is in a fantastic position to invest very strategically, in ways that would put our kids and grandkids in a position of leadership for the next century. Will we do it? Well...

* ...the big problem here is that our leaders think in terms of short-term election cycles, not longer term investment. It's all about attempting to whack the other side right before the election, and playing to the base before the primaries. This mentality is the polar(ized) opposite of what we need to set up long-term investments.

I could go on and on but will refrain. Just... please don't vote for someone whose entire political vision is to shut the thing down. It benefits no one but a few politicians in districts where financial education is lacking. (Politically incorrect, but sorry, it's true)

Why we don't bring back "civics" and infuse real financial education? It's urgent that our kids understand the basics, because clearly a lot of adults do not. On both sides.

Thursday, January 22, 2015

On those negative Swiss yields and what they don't mean

Some odd explanations are being offered for the negative yields seen recently in several countries' debt markets. Today, Swiss bond yields went negative right out to 15 years, quite an historic anomaly. Why?

Contrary to what I've seen and read through several outlets, negative bond yield does not mean that individual investors knew, a priori, that this would happen. It does not mean that they are cheerfully willing to accept losses over the term of a bond, just to put their money somewhere.

We have to remember that a lot of capital is moving simultaneously but also independently from many different directions, into the rather small Swiss debt market. Certainly, Switzerland is a magnet for safe-haven investing, particularly after they unpegged from the Euro a few days ago. Now there are many large investors moving their capital, and they are all doing so very quickly because of a variety of factors: oil price collapse, eurozone deflation, currency collapse...many separate reasons. There is a widespread sentiment that something really big might go down e.g. Greece could move to sever itself from the Eurozone, or Russia could realize they are going to default and start behaving even more belligerently, to (so to speak) get it over with in Ukraine. China could confess that their GDP numbers are twice cooked. A lot of things could happen.

Now, if many investors, working independently, spooked by their own economy, decide that a low-yield Swiss bond is the safest and most convenient place to put their money for now, and if Switzerland isn't offering much new debt to match the demand, then that collective behavior can force the yields negative.

How much debt can the Swiss offer? Well their entire national debt is only about $127B...yes billion, which is tiny, and it's only ~35% of Swiss GDP. By comparison, US debt is above 100% of GDP, at ~$17T, currently. So it's very easy to distort Switzerland's yields, and much harder to distort ours.

All of this doesn't mean the magnetic poles have flipped or Draghi has released antigravity or whatever. It means that a teeny tiny debt market in a small economy has been distorted by a lot of capital rising in from many different directions.

Monday, January 19, 2015

The State of our Union's Tax Code - #SOTU #SOTU2015

I am amused and cautiously joyed to hear that President Obama will propose to simplify the US Federal Internal Revenue Code in his State of the Union address tomorrow. The jumbled tax tome is so complex that it has spawned a whole industry of tax preparers who rake in billions every year. The Code is an annual gift to lawyers and 'tax professionals,' and generates all manner of lawsuits that go on for years.

You just about need Alan Turing to figure out what you owe, or what the IRS owes you. The Code is so ridiculously complex that most Americans (not just Mitt Romney!) truly don't know how what percentage they pay. Debates swirl over how regressive our Code is, but we can all agree that it is oppressive.

There have been a few stabs at our beastly Code over the years. Perhaps out of sheer desperation, a number of people have proposed replacing it completely with a flat tax. The latest proposals call for something "flatter," whatever that means.

Our lawyerly Congresses have been hell-bent on making the Code even more complex. Democrats want more Federal tax revenue, and they'll grub for it anywhere they can. Republicans work tirelessly to append corporate loopholes or to get little favors for certain constituents.

Obamacare has significantly complicated the Code; you'll hear more about that over the coming months. Democrats have advocated a whole new class of complex taxation -financial transaction taxes- (FTTs) to try to skim revenue off each and every stock trade. Meanwhile, entire corporations migrate abroad just to get out from under the Code. Don't try that trick as an individual, though: the US expects tax revenue from you even if you live and work abroad; yes, even if you don't earn one penny in the US. Only one other country pursues your income to the ends of the Earth: Eritrea. Yeah. Hmm, maybe if we all become individual multinational corporations and use bitcoin...

Our Code is in imminent danger of collapsing under its own weight. The IRS has a fraction of the Code-trained personnel required to thoroughly and fairly inspect all of our tax documents. The Democrats' solution? Add more bureaucrats. The Republicans' solution? Lower taxes. And so ordinary Americans are stuck with poor service from an IRS that is hamstrung with the worst Code in the world. And so, as many Americans know, filing taxes has become a game of chance.

So...call me amused that President Obama will call for a simpler Code in his State of the Union address tomorrow. Good luck, Mr. President. No, I really mean it, good luck...you'll need it. The Code is an enduring gift to the legal profession in America, and ~40% of Congress is composed of lawyers.

Most Lethal Terrorists in the US? The #KKK

I asked myself: what is the most lethal terrorist group in the history of the US? I poked around for some numbers and facts. Here's my verdict:

The Ku Klux Klan and affiliates are known to have lynched thousands of African Americans since their founding in 1865. The numbers I found: ~3500 total black lynchings to date directly attributable to the Klan, or ~120 per year, although the Klan has had several periods of growth and then collapse. Note that a large number of whites were also lynched. There are, of course, various Klan side organizations and freelance racists, so it's hard to get firm numbers.

The Klan ran local politics in several States for many decades and directly intimidated an uncountable number of people across the country...for generations. Most young Americans don't realize just how openly the KKK used to weigh on American politics. This should give you an idea:

https://www.youtube.com/watch?v=UomPUYgxSTY

Yes, they marched that openly in Washington D.C. in 1928, and have held many large, public gatherings since.

Of course, the Klan is best known for advocating segregation and fighting against equality, whilst packaging their very anti-Christian arguments in faux Christian symbology e.g. crosses. Through their actions, the Klan also spawned hateful counter-groups which in turn also committed hateful acts; hatred, of course, begets hatred.

Let's remember, as we speak about terrorism from abroad, that the single worst terrorist group in the history of our nation was born and bred right here, and still exists openly in many States. And whether that terrorizes you probably has a lot to do with your skin color.