Measure Q and the Lending Crisis in Education

The city of Los Angeles passed a $7 billion bond measure to refurbish public schools on Election Day. “Measure Q,” the fifth education-related bond measure since 1997, will go towards renovating buildings and creating new preschools and adult education centers.

Figures on LA’s total per pupil revenue from local, state, and federal government’s are difficult to obtain, but they are likely in excess of $10,000 per student. Measure Q will increase that amount considerably.

Supporters argued that the measure is needed because too many of LA Unified’s buildings are in a state of disrepair, and that better facilities with modern equipment will significantly improve student education. Opponents, however, pointed out that the bond places a great burden on taxpayers, who are already on the hook for $19.3 billion in bond money, plus interest, in the last decade alone. Indeed, the Los Angeles Times recently reported that such “…bonds result in property tax increases.”

The fiscal irresponsibility of LA’s school board is even more distressing when one considers that plenty of for-profit schools around the country engage in renovations all the time without pleading taxpayers to foot the bill. One might imagine that this is because private institutions have greater economic resources, but this is very often not the case. Despite usually receiving more revenue than private schools, public schools are still unable to maintain quality facilities. And what is the government’s response to this incompetence? Give them more money. Measure Q and similar measures across the nation, enable the government to solve past mismanagement by simply borrowing more. Must we keep pouring money into a dysfunctional educational system that has shown itself clearly incapable of translating that money into a quality product?

According to the US Census Bureau, the national average per student government spending on education in 2006 (the latest year for which the figures are available) is $9,138. Imagine the quality of education these students would receive if parents had that money to spend on private schools. The public education system is gigantic and as a result benefits from tremendous economies of scale. Yet scores of private schools around the country are able to provide a vastly superior education for a far lower tuition, despite the fact that their operations are much smaller in scale.

For-profit education is making a comeback in America, as parents become increasing fed up with public schools. Rather than perpetuating a system that clearly does not work by borrowing and wastefully spending yet more public money, perhaps LA Unified and school districts across the country should recognize that public education has failed. It’s time to begin the slow process of removing government from the education business, so that those actually capable of providing a quality product to students and parents can do so.

CEO Pay: Money Well Spent

CEOs, some declare, make too much money. The basic premise of this claim is that the ‘excessive’ pay is undeserved–-that executives take home runaway paychecks regardless of performance. Others say that no matter how well a CEO performs, no one is worth millions of dollars. They point to the gulf between what a CEO earns compared to his lowest paid worker-–as if the mere fact of making more money is proof of undeserved income. The government, they believe, should forcibly take away the ‘excess’ money, or else force companies to limit executive compensation.

But this argument leaves out just how valuable a CEO can be. Consider some examples:

Jack Welch took General Electric revenues from $26.8 billion in 1980 to nearly $130 billion in 2000. About 276,000 employees scattered in over 100 countries worked under his command. He simplified the managerial structure and directly interacted with several thousand GE employees every year. Jack Welch’s ability to lead more and manage less–to recognize and reward the most talented managers–is still examined in business classrooms all over the world. Welch’s salary, which grew from $4 million to $16 million, seems paltry when one considers that under his leadership GE grew from a company worth $14 billion to $410 billion.

Or consider Kenny Troutt. With a single-minded focus on succeeding, he worked at construction jobs to pay for college. He founded his own company, Excel Communications, and used multi-level marketing to offer long distance phone service to his customers. From nothing, he created a company worth $3.5 billion when he sold it to become a self-made billionaire.

The legacy left by individuals like Kenny Troutt and Jack Welsh, extraordinary though they are, is that in a land of opportunity, dreams can be realized. It takes a determined focus on acquiring the skills necessary to effectively lead a large organization. The work involved is immense, and it is a rare man who is willing to undertake such an effort. No wonder then that stock holders jump at the opportunity to have such people lead their companies. No wonder that these individuals earn such high salaries.

They’re worth every penny.

The Latest Diplomatic Tactic: Make-Believe

North Korea has a long history of being a malevolent nation. The communist dictatorship was first placed on the State Department’s list of terrorist-supporting nations in 1987, after it bombed a South Korean jetliner– an attack that followed years of North Korean abductions of Japanese citizens.

But now, North Korea has been granted its most recent demand: that the world pretend otherwise. In exchange for an empty promise to relent in its pursuit of nuclear weapons–for the umpteenth time–North Korea has been taken off the list of state sponsors of terrorism. In effect, the facts about its appalling past are now being officially ignored by the U.S. government.

North Koreans have not given up their hostility toward the U.S. and others, nor has the U.S. government said anything to that effect. Indeed, the only thing that has changed is the degree to which our leadership places importance on facts.

This meaningless removal of one terrorist nation from a list of terrorist nations raises the question of why North Korea is even in the news to begin with. If officially ignoring the fact that Kim Jong-Il oversaw the murder of 115 airline passengers can absolve the nation of any wrongdoing, why not also ignore the fact that Kim is trying to build a nuclear arsenal? If evading one part of reality gets you closer to your goal, why not evade another? All Condoleezza Rice would need to do is sign a document officially recognizing North Korea’s universal goodwill. Wouldn’t that solve the issue and bring us that much closer to world peace?

To anyone who takes an honest look at the history of this conflict, the answer is obvious. Disregarding the facts of reality—and substituting empty hopes in their stead—accomplishes nothing. History—including the history of this conflict—is littered with example after example of the futility of such a policy. If Kim Jong-Il has demonstrated anything consistently, it is that he has no intention of honoring his litany of promises or of forgoing his goal of becoming a nuclear threat. Time after time, the efforts to appease North Korea have failed. And time after time, the U.S. has overlooked those failures and hoped that trying the same thing over again would somehow result in success. Those futile years of “diplomacy” yielded a predictable result in 2006, when North Korea detonated its first nuclear bomb.

Being “flexible” with the facts will not prevent a nuclear-armed North Korea. To the contrary, we need to adopt an inflexible, objective approach to the facts–which means recognizing the reality of the situation and acting accordingly. The further we continue down the familiar road of alternating appeasement and angry letters, the worse it will be when we are finally forced to confront reality.

Give Peace a Chance?

The New York Times recently released a video about a group of Jewish and Arab teenagers in Jerusalem who have come together to sing, rather than to fight. Aaron Shneyer, the organizer of this Arab/Jewish band, sombrely explains his assessment of the current situation: “Here’s everyone sharing the city [Jerusalem], but they can’t talk to the other side. They have fear, and they have distrust of the other side.” And then, enthusiastically smiling and laughing, he adds: “It’s pretty amazing. When you a put a bunch of teenagers in a room together with instruments, fear evaporates very quickly.”

The idea is simple enough. No one likes war. No one wants more people to die. So let’s just give each other the benefit of the doubt, put aside our differences, and stop killing one another.

Shneyer’s band is reminiscent of so many other attempts at organizing peaceful meetings between young Jews and Arabs. There have been countless such attempts at summer camps, concerts, and discussions—all hoping to finally bring an end to the violence in Israel—and all premised on John Lennon’s “Give Peace a Chance”.

People like Shneyer appear to genuinely want peace, but despite all their best efforts never seem to achieve it. Why is that?

The answer lies in the fact that the idea that ‘no one likes war’ is actually false. It’s not true that everyone dislikes war and wants to see an end to the fighting. What about the people who see murder as a holy duty and value the afterlife above all else (see Alex Epstein’s Op-Ed “The Terrorists’ Motivation: Islam“)? Do those who shoot rockets into towns want to put aside their differences? Are suicide bombers that blow themselves up, along with buses full of people, really interested in living harmoniously with others? Do the political and spiritual leaders that encourage and organize these attacks want peace?

What pacifists don’t understand is that they’re inviting the wrong people to their bands, concerts, and summer camps, if their aim is to end the violence. It is the Islamic Jihadists that need convincing—not the people who come to their events and already want peace. Osama Bin Laden, Abu Musab al-Zarqawi, and Mahmoud Ahmadinejad do not want peace; deep down they want destruction. Is that any less true of their countless foot soldiers? Such men are driven by blind hatred fuelled by the Koran’s calls for domination—not by a vision of living harmoniously with their neighbours.

If Shneyer and others like him truly want peace, they will have to give up the premise that all human beings desire an end to war. They will have to acknowledge that certain people initiate bloodshed willingly, and must be stopped through force and intimidation. No reasonable person would deny that the police rightly use retaliatory force to stop bank robbers, murderers, and rapists—so why would it be any different with foreign military enemies? Just as a band of teenagers singing songs are no substitute for police action against domestic criminals, they are no substitute for military action against terrorists. We must be prepared to use force to stop Islamic Totalitarians, so that the peace lovers among us—on all sides—can get on with our lives. When others initiate force willingly and self-righteously, willing and self-righteous retaliatory force is the only way to achieve peace.

For an analysis on how to win the war against Islamic totalitarianism, I encourage you to read TU’s article “Evaluating the War Effort” by Eric Peltier.

Bailout Crack

In a knee-jerk reaction to panic and fear over the current financial crisis, the government issued a $700 billion dollar bailout bill last week. Rather than considering the cause of the “toxic loans” at the heart of this crisis, Congress decided that it had to immediately do something—anything.

What politicians fail to realize, however, is that they are the ones that got us into this mess, and this bailout will only further exacerbate the problem. It is government meddling in the economy that caused the mortgage meltdown. Fannie Mae and Freddie Mac, the U.S. Department of Housing and Urban Development, the Community Reinvestment Act, and the Fed’s ability to manipulate interest rates each have contributed handsomely to the disaster. These government policies are the primary cause of the financial crisis, yet our president and both houses of Congress agree that still more government intervention is the only solution.

It is as if a man went to the hospital with low blood pressure and a low heart rate, and the doctor prescribed crack cocaine to treat his symptoms. After all, crack will raise the patient’s heart rate and blood pressure for a while, and even give him a temporary feeling of euphoria. But over the long term, using crack will severely weaken his heart and mind, making him an easy target for any infectious disease that comes along.

This is exactly what the Bailout Bill will do: temporarily treat the symptoms while allowing the disease (government intervention in the economy) to metastasize further. The only way to preserve long-term economic health in America is to attack the disease at its source. End Fannie Mae and Freddie Mac, neuter the U.S. Dept of Housing and Urban Development, repeal the Community Reinvestment Act, and take away the Fed’s power to tamper with naturally functioning markets.

Could I get a hand?

I looked up at the bicycle box, a little perturbed. It sat high above my head on a shelf that I could reach only with my arm completely outstretched. I yanked on the corner; I could tell it weighed about 50 pounds. Had it been a little lower, I could have dragged it out for the customer, but it was not. Frustrated, I looked around. One of my co-workers saw me and quickly looked away. I called him over to retrieve the box I needed. Later, I asked him if he had noticed I needed help and ignored me. He replied he had noticed but didn’t want to offend me by suggesting that because I’m a woman I needed help.

He thought that to state the fact that I am not physically capable of performing a task of strength would offend me. How could the statement of such a fact–a fact that does not reflect any failing on my part–offend? Where would he get the idea that to recognize such a fact could be somehow harmful or offensive to me?

He gets this idea from modern, or “second wave”, feminism. Where first wave feminism sought legal and political equality with men, second wave feminism has sought to eliminate all recognition of the fact that women are different from men. Women or men who seek to rationally recognize such differences are branded sexist and those who seek to evade them are seen as progressive. This leads to the bizarre situation in which a man wouldn’t hesitate to assist another man, but is afraid to help a woman for fear of being labeled sexist.

Clearly, this is absurd. We have to discriminate between men and women, because physiologically they are different. There are tasks requiring physical strength that women simply cannot perform, which is why women and men do not compete against each other in sports. At my job I have to find a male co-worker to bring down bicycles hanging on the ceiling. I am incapable of putting on some tires, pumping 120 pounds per square inch in the tubes, removing some pedals, and carrying boxes of bicycle locks. I recognize my strength is not sufficient to perform these tasks, but theirs is (even the weakest and youngest among them). These are minor tasks in my job, but ones I am unable to carry out.

Fortunately, the amount of physical strength a person possesses is not relevant in most contexts. It certainly does not make a person more or less human, more or less rational. A woman is just as entitled as a man to individual rights–life, liberty, justice, and property–which first wave feminism fought for. But this does not mean that differences between the sexes can simply be ignored.

Differences between the sexes are not superficial and insignificant. Is it “progressive” to make believe physiological differences don’t exist? Am I a sexist for preferring to marry a man to a woman?

The answer is of course no. Being just towards women does not require pretending that women are different than they are, it requires treating them as they are– human beings with specific physical traits that are different from men.

What Laissez-Faire?

In response to the economic crisis now spilling over into the European markets, French President Nicolas Sarkozy called for an end to laissez-faire and an increase of government control over the financial markets.

“Laissez-faire is finished, the all-powerful market that is always right, that’s finished,” Sarkozy said in a widely anticipated speech, his first in France on the economic crisis. As a result, it is “necessary to rebuild the entire global financial and monetary system from the bottom up, the way it was done at Bretton Woods after World War II,” Sarkozy said.

President Sarkozy should brush up on his French. Laissez-faire (strictly, laissez-nous faire) means “let us do” or “leave us be”. The phrase refers to a separation between state and economics. No Federal Reserve or global system of central banking, no quasi-governmental agencies backing mortgages, no securities and exchange legislation, etc. The United States has not had anything approaching a laissez-faire economy for over a century. It is absurd to blame the economic crisis on the “free market”, because no such market exists.

Kohl Mobile: LOL

Did you know that the price of text messaging has increased by an astonishing 100 percent over the last three years? The four major telecommunication companies, Verizon Wireless, AT&T, Sprint and T-Mobile, have all doubled their prices for text messages not included in a calling plan. For a population that sends 2.5 billion messages a day this is a significant increase. Perhaps you should think twice the next time you want to text hubby, ‘When are you coming home for dinner?’

But don’t worry. Senator Herb Kohl, chairman of the Senate Antitrust Subcommittee, has come to the rescue. He is taking steps to force telecoms to keep the price of text messaging low. eFlux Media reports that the good senator has written a letter to them demanding that they justify the rate increases by reference to industry costs. The senator’s assumption, of course, is that the only acceptable justification possible for increasing the price of text messages is a concurrent increase in the cost of providing the service. Apparently businesses should not have the right anymore to determine their own prices for their own reasons. Or should they?

Of course they should. America, after all, is supposed to be a free country. Just as consumers are free to decide whether or not to buy a product, companies are free to set their own prices. The telecoms should not be coerced into justifying their rates to anyone, anymore than you should have to explain to the government how you determined the price of the things you sell on eBay or Amazon. If Senator Kohl feels that the price of text messaging is too high, he should send fewer text messages, wait for a new company to emerge, or start his own cell phone company—not self-righteously threaten the existing telecoms.

American Apathy towards “the New Normal”

Seven years ago, after the terrorist attacks on the World Trade Center and President Bush’s subsequent declaration of war on “terror”, many argued that the world had changed forever. A “new normal” had arrived, in which Americans could no longer live in blithe ignorance to the rest of the world. A violent faction sought their destruction, and the United States had to acknowledge and respond to that fact. The years since have witnessed the creation of the Department of Homeland Security, increased travel and shipping regulations, the Patriot Act and all the civil encroachments it sanctions, and the launching of two wars in the Middle East.

Most of these legal and political developments were supposed to be temporary. Yet seven years later, nobody talks of going back to the way things were. Government infringements on privacy are generally tolerated, as are the heightened security measures that hamper travel, add fees, and up taxes. Opposition to war is light—while many are weary, few are engaging in principled protest. Even the election process has failed to reinvigorate the national security discussion: on the latest Dow Jones Insight Tracker, which ranks the issues of the electoral campaign according to their coverage in the media, Terrorism was 9th, Iraq and Afghanistan respectively 13th and 14th. The “new normal”, it seems, has become commonplace, and the question of whether it is actually achieving the elimination of the threat responsible for 9/11 goes unasked.

What explains this complacency? Why aren’t Americans more opinionated about the war on terror, as they are typically opinionated about other things (and other wars in the past)?

The explanation for the present apathy towards national defense during a period of sustained military action is that Americans have no means of evaluating the war effort. Evaluation presupposes identification, yet for seven years we have been waging a war against “terror” without any clear awareness of our war objectives. We do not know who the enemy is, nor what would constitute victory against that enemy. This is why Americans cannot bring themselves to care about the war, while sensing that they ought to care.

Consider a survey of relevant facts. There have been no further organized terrorist attacks on US soil since 9/11, but major bombings have occurred against other Western nations, such as those in Madrid and London. We have killed many Al Qaeda generals and the organization appears to have weakened, but Osama bin Laden remains at large. Iraq seems to be stabilizing, but 140,000 US troops remain to enforce that stability. Afghanistan seems to have a functional democratic government, but now the Taliban are making a comeback with the citizenry. A seemingly pro-US prime minister has been elected in Pakistan, but the Taliban are gaining in popularity there as well. Iran insists it is developing nuclear technology for peaceful use, but has test-fired new missiles capable of reaching Israel and refuses to cooperate with the International Atomic Energy Agency.

What do these facts mean for America’s security? Are these disparate events, or are they somehow related to the war? Should they be taken as evidence of progress, or of retrogress? It is impossible to answer these questions without a concretely identified enemy and a unambiguous definition of victory.

Just as Americans cannot judge whether we are winning or losing the war without a standard of reference, so we cannot maintain vigor for action without recognizing the existence of an enemy we need to act against. We know implicitly that the threat of future terrorist attacks remains, yet because we have not named our enemies or explicitly evaluated our approach, we are able to embrace ignorance. We evade the deficiencies of our present course, placating fear with the appearance of something being done. The result is the present state of American apathy.

It is time to wake up. America should begin anew with the debate it should have had after 9/11/2001. The debate about who is the enemy, what would constitute victory against that enemy, and what is the best strategy to achieve that victory.

See the companion print edition article, “Evaluating the War Effort”.

If only all the Goldman partners thought this way

Over at the Huffington Post, former Goldman Sachs partner Greg Zehner writes that Ayn Rand foresaw the economic crisis the United States now faces, as well as the disastrous consequences the various proposed bailouts will have.

“Ayn Rand warned us this would happen. In the classic, Atlas Shrugged, she wrote about governmental powers manipulating markets in order to advance political concerns. Like the book, we do not seem to have the political will to take the correct, but painful, road to recovery. By propping up the financial system with the band-aids of trading restrictions and an explosion of the government’s already untenable balance sheet, the necessary adjustments to the financial system are prevented from occurring.”

Though the collapse of the nation’s economy is not central to the theme of Atlas Shrugged (for more on that, see our post “The Value of Atlas Shrugged”), Mr. Zehner is quite correct that the novel demonstrates how all government intervention in the economy is destined for failure. Government’s only means of intervention, in the economy or otherwise, is through the threat of force. Thus any intervention–whether it be bailout, tax break, or welfare program–will ultimately serve to stunt, rather than promote, economic growth. (For more on the consequences of government’s involvement in economics, see Rand’s Capitalism: The Unknown Ideal)

If only Mr. Zehner’s former boss, Treasury Secretary Henry Paulson, was as clear on the pitfalls of government intervention.