We saw our Con­gress­man, Jason Alt­mire, on Fox News this morn­ing, and he stated he was unde­cided whether he would vote for or against a fur­ther gov­ern­ment takeover of the nation’s health-​care econ­omy; “health-​care sys­tem” doesn’t seem to be the cor­rect phrase since it is cur­rently not a monolith.

Mr. Alt­mire doesn’t seem to be a bad chap. As we men­tioned in Decem­ber, 2008 when we pro­posed a dras­tic solu­tion to end the fed­eral bureacracy, we saw him at a non-​partisan, char­ity fundraiser in August of that year. He he was actu­ally very funny – who would have thunk it – and far, far wit­tier than his oppo­nent at the time, Melissa Hart, who was dread­fully, painfully, abjectly lame, and, unfor­tu­nately, a very poor can­di­date to boot.

He rep­re­sents a rather con­ser­v­a­tive dis­trict where many of us are bit­ter (or at least grumpy), have guns, and believe in God. He’s often por­trayed by those on the right as Speaker Pelosi’s lap dog, and we’ll see if that is true; how­ever, we’re sure he is fac­ing tremen­dous pres­sure from House lead­ers and the White House to be a good fol­lower and do what he’s told.

We have only a few small obser­va­tions today, but we think they are worth mak­ing. We sus­pect that Mr. Alt­mire wishes the vote were a bit later in the spring. If that were the case, he could bet­ter pre­dict (or know for cer­tain) his Repub­li­can oppo­nent in this fall’s cam­paign, and base his vote on the like­li­hood of beat­ing that person.

That being said, if he fol­lows Ms. Pelosi’s orders and votes for the take-​over, there is one rea­son­able infer­ence to draw. He has con­cluded that he could beat any of the announced Repub­li­can can­di­dates, includ­ing or espe­cially, the most famous – or infa­mous – name of the list: Mary Beth Buchanan.

He has to know that a “yes” vote on health-​care would make him extremely vul­ner­a­ble to a strong can­di­date, or even an unknown one, but might not be suf­fi­ciently dam­ag­ing to pre­clude a vic­tory against some­one with high neg­a­tives like Ms. Buchanan.

We think that’s where the Tea-​Party and con­ser­v­a­tive activists can make a dif­fer­ence, and see no rea­son a third-​party can­di­date could not win the dis­trict. Many of the district’s con­ser­v­a­tive Democ­rats would never vote for a Repub­li­can, but could be con­vinced to vote for a non-​Democrat.

Now, we base this con­jec­ture on absolutely no evi­dence, but we could imag­ine Mr. Alt­mire get­ting 30% of the vote from folks who will never, ever would vote for any­one who is not a Demo­c­rat; Ms. Buchanan get­ting 20% from similarly-​devout Repub­li­cans; and a con­ser­v­a­tive, inde­pen­dent can­di­date get­ting 50% from inde­pen­dents, con­ser­v­a­tives, and con­ser­v­a­tive Democ­rats. In other words, those folks who com­prise and are rep­re­sented by the Tea Party movement.

We’re not sure if he is con­sid­er­ing that sce­nario or if he has over­looked the pos­si­bil­ity of a sec­ond oppo­nent in the fall, but a “yes” vote would make him very vul­ner­a­ble to just such a campaign.

If he votes “no,” we would bet that he is almost cer­tain to win re-​election, and while we would pre­fer some­one sub­stan­tially more con­ser­v­a­tive, that’s a bet­ter out­come both our dis­trict and coun­try than foist­ing more gov­ern­ment mis­man­age­ment into our lives.

So, we have only this to say: we sus­pect that if he votes with Ms. Pelosi for the take-​over of health-​care, Ms. Buchanan will not be his biggest con­cern, and we hope that’s enough to scare him to doing the right thing this week.

Oth­er­wise, while he may be able to defeat Ms. Buchanan in a one-​to-​one race, he could be unknow­ingly sac­ri­fic­ing his Con­gres­sional career to be an soon-​to-​be-​forgotten under-​secretary in the Depart­ment of HHS.

While it’s a lit­tle dif­fer­ent, it might not be that dif­fer­ent than many Mass­a­chu­setts Democ­rats ask­ing “Scott who?” at last season’s hol­i­day parties.

A Busi­ness Man­age­ment Tool

Busi­nesses Are Miss­ing a lot of Opportunities

Because of the per­ceived costs of devel­op­ing and the per­ceived dif­fi­cul­ties of man­ag­ing a full-​featured web site, many own­ers and man­agers at small– and medium-​sized firms want only a sim­ple ‘web presence.’

Often that ‘pres­ence’ con­sists of a sin­gle page that announces, “we exist, here is our tele­phone num­ber,” or it con­sists of a few pages with not much more information.

Clearly, such sites are very cheap to develop and main­tain although per­haps ‘not main­tain’ is a more apt descrip­tion. How­ever, such sites do lit­tle or noth­ing to gen­er­ate rev­enue or cre­ate long-​term value.

In this post, we dis­pel a few of the myths regard­ing pre­sumed high costs and explain a few of the ben­e­fits of a full-​featured site.

Web Sites Shouldn’t Be Yel­low Page Ads

There’s a good chance that if your busi­ness isn’t web, infor­ma­tion, or technology-​related, then you are not famil­iar with the ease-​of-​use and capa­bil­i­ties of mod­ern, infor­ma­tive, well-​managed web sites. In fact, if all you know is “it’s some­thing with com­put­ers,” then you may believe that main­tain­ing a site is much more dif­fi­cult than it really is — or than it could be with a well-​designed site.¹

If the para­graph describes you, then you may think that some­thing that is the equiv­a­lent of a Yel­low Page adver­tise­ment is a suf­fi­cient web presence.

It’s not.

If your fam­ily is like ours, the Yel­low Page book never makes it into the house. It goes straight from the curb or the front porch into the recy­cling cart.

That’s not very dif­fer­ent than how web vis­i­tors, who don’t already know you, treat your min­i­mal web presence.

Now, we don’t fault site own­ers for believ­ing that a sin­gle page or a bare bones site is suf­fi­cient to gen­er­ate rev­enue. They may not know any better.

Out-​of-​sight, Out-​of-​mind or Out-​of-​site, Out-​of-​mind

In fact, on occa­sion their prospects and cus­tomers may have men­tioned, “we found you from your web site.” How­ever, those own­ers have no idea of ongo­ing lost profit oppor­tu­ni­ties because unseen, poten­tial cus­tomers can’t find the infor­ma­tion they seek (and so, never call).

Those missed oppor­tu­ni­ties arise because most own­ers and oper­a­tors of small– and medium-​sized busi­nesses don’t spend their days surf­ing the web; so, they may not real­ize that many cus­tomers and prospects find web sites to be vital and inex­pen­sive (and in some case, irre­place­able) sources of infor­ma­tion (about prod­ucts, ser­vices, and orga­ni­za­tions). So, those own­ers and man­agers may be unaware of the lost oppor­tu­ni­ties to con­vert web vis­i­tors into actual, pay­ing customers.

For­tu­nately, we think that lack of that aware­ness can be over­come by ask­ing those indi­vid­u­als a few questions:

1. When you, your­self, are look­ing for infor­ma­tion about a prod­uct, ser­vice or orga­ni­za­tion and you find a site that con­sists of a sin­gle sta­tic page, how often do you con­tact the site’s owner?
2. How does your sin­gle page dif­fer­en­ti­ate your firm or orga­ni­za­tion for your com­peti­tors, whether they are local, national, inter­na­tional, or on-​line?

While it is pos­si­ble to (psy­cho­log­i­cally) ratio­nal­ize a jus­ti­fi­ca­tion to the first ques­tion, that’s much more dif­fi­cult to do with the sec­ond. If your sin­gle page or unin­for­ma­tive site doesn’t seem to hurt you now, then you bet­ter hope that your com­peti­tors don’t start lever­ag­ing the web to their advan­tage. (Of course, we would argue that an unin­for­ma­tive site is already hurt­ing sales more than you know.)

Also, note the homo­graph in the above sub­ti­tle, because that’s often what hap­pens when cus­tomers leave an unre­mark­able ‘web pres­ence.’ They for­get that you exist.

“We Can’t Afford it.”

Oh really?

When we hear that sen­tence, we won­der: how can you not? Espe­cially for firms where a sin­gle addi­tional sale (gen­er­ated) from an enhanced pres­ence would pay for the entire site.

For many firms, such myopic per­cep­tions per­sist far beyond web site and mar­ket­ing deci­sions; so, it’s worth empha­siz­ing that cost min­i­miza­tion does not imply profit max­i­miza­tion. In other words, min­i­miz­ing expen­di­tures doesn’t max­i­mize prof­its when the mar­ginal amount spent would gen­er­ate greater mar­ginal ben­e­fits. It’s the very def­i­n­i­tion of being penny-​wise and pound foolish.

We under­stand that for projects like web sites, the mar­ginal costs are incurred imme­di­ately, and they are more pre­cisely known than the ben­e­fits, which seem to be less cer­tain and amor­phous, but still it is 2010, after all, and there are sev­eral hun­dred mil­lion PCs in the USA and (we’re guess­ing) tens of mil­lions of cell phones with web brows­ing capabilities.

For rel­a­tively expen­sive goods or ser­vices a sin­gle addi­tional order can recover all upfront design and devel­op­ment costs, and that is true for indus­trial firms, swim­ming pool builders, and many other types of prod­ucts and services.

That’s a sin­gle new order over the life of the site that could eas­ily, eas­ily last for five-​to-​ten years.

Now, we could cre­ate a full-​fledged, cost-​volume-​profit analy­sis and assume cer­tain con­tri­bu­tion mar­gins (roughly, rev­enue — vari­able costs) and cal­cu­late break-​even points and prob­a­bil­i­ties of achiev­ing those points, but if your busi­ness needs only one or two addi­tional (i.e., mar­ginal) sales over five-​to-​ten years then it seems rather obvi­ous. (For lower priced items, the break-​even num­ber of mar­ginal orders increases but then the upside poten­tial is much greater, too.)

More­over, in cer­tain cases, our argu­ment becomes sub­stan­tially more persuasive:

1. Rep­u­ta­tional effects & (what we would call) high ser­ial cor­re­la­tion): If your busi­ness or orga­ni­za­tion serves a mar­ket where rep­u­ta­tion mat­ters – where a sat­is­fied cus­tomer is likely to rec­om­mend you to a friend, neigh­bor, or col­league – then one addi­tional web-​generated sale could eas­ily lead to many addi­tional ones. So, given that you pro­vide excel­lent ser­vice, one new cus­tomer who found your firm via the web could eas­ily turn into a neigh­bor­hood or com­mu­nity of non-​web-​based customers.
2. Avail­abil­ity of a New Mar­ket­ing Ini­tia­tive: many suc­cess­ful and long-​standing firms with­out sig­nif­i­cant web pres­ences often ignore this oppor­tu­nity, espe­cially indus­trial firms. Sup­pose your orga­ni­za­tion has a rel­a­tively con­stant cus­tomer base, and those cus­tomers are well-​served by the usual, per­sonal sales tech­niques. Often sales man­agers and own­ers or mar­ket­ing man­agers ignore the oppor­tu­nity to sell to a new mar­ket seg­ment, and an inex­pen­sive but effec­tive way to test new mar­kets is via a web-​based campaign.

For exam­ple, due to recent high energy prices and to gov­ern­men­tal reg­u­la­tions, many man­u­fac­tur­ers have had to make their prod­ucts more effi­cient (con­sider just about any­thing that con­sumes power in an office or fac­tory). Exist­ing cus­tomers may or may not be con­cerned with such advances or changes, but poten­tial new cus­tomers that have new sus­tain­abil­ity or green ini­tia­tives might be. So, a web site, which doesn’t alien­ate exist­ing cus­tomers, but addresses the needs of green and sus­tain­able firms offers a huge oppor­tu­nity to cap­ture sales and reach (or cre­ate) new mar­ket segments.

We can imag­ine a reader protest­ing that our analy­sis con­sid­ers upfront costs but ignores recur­ring costs. For a nor­mal small or medium-​sized busi­nesses, a well-​designed, self-​managed site can have recur­ring costs as low as $150 PER YEAR. (With a full-​fledged web store that processes trans­ac­tions on-​site – rather than, say, at Pay­Pal – recur­ring annual cost increases to between $500 — $750.) Yeah, it’s that cheap.

Ancil­lary & Oper­at­ing Benefits

A well-​designed site offers more than mar­ket­ing ben­e­fits. It can pro­vide bet­ter ways to con­duct busi­ness, and those meth­ods can lead to improved effi­cien­cies and more real­is­tic cus­tomer expectations.

With easy-​to-​create password-​protected pages, one can show actual cus­tomers more infor­ma­tion than generic, web-​site vis­i­tors. So, cus­tomers can receive answers to frequently-​ask ques­tions or have access to ref­er­ence mate­ri­als with­out inter­rupt­ing your day or one of your employ­ees. (Or, with­out requir­ing you to answer the same ques­tion for the 1,400^th time.)

For long-​term projects, a site that explains the process – the num­ber of steps, the time-​frame, and the usual rea­sons for delay – cre­ates more real­is­tic cus­tomer expec­ta­tions and per­mits them to find answers to their ques­tions. We think that it is often lost on small-​business own­ers that dur­ing, day, a con­struc­tion process, cus­tomers have almost as much aver­sion to mak­ing calls as you do to answer­ing them. So, why not try to elim­i­nate those calls by pro­vid­ing an alter­na­tive source of information.

Forms: a site with well-​designed con­tact forms per­mits you to know some­thing about your prospects before the first tele­phone call, includ­ing: who they are, where they are from, what they seek, and which pages they have vis­ited. Such forms can be very short, like our con­tact page or a sim­ple request for infor­ma­tion or they can be long and multi-​paged, like a sports reg­is­tra­tion form. Regardless of their size and scope, there is only one answer to the (lead­ing) ques­tion: isn’t it bet­ter to know some­thing about prospects before mak­ing that call?

Upon sub­mis­sion, good form soft­ware for­wards web vis­i­tors to rel­e­vant web pages, and it also per­mits cus­tomized, auto­matic e-​mail replies. Almost all form soft­ware will send an e-​mail to some­one within the firm when­ever there is a new sub­mis­sion, and that recip­i­ent can depend upon the data that were col­lected. (By the way, many of the form gen­er­a­tors that we use are free. The most expen­sive one is $125.)

Cal­en­dars: for busi­nesses that require appoint­ments, why waste your’s staff time sched­ul­ing ses­sions when many cus­tomers are will­ing to make their own reser­va­tions on-​line. (So, let’s get this straight: you can buy an air­line ticket or a hotel reser­va­tion on-​line, but you can’t make a hair-​cut appoint­ment with­out call­ing someone?)

With full-​featured cal­en­dars, it is quite easy to show avail­abil­ity and per­mit web vis­i­tors to make requests. That’s a con­ve­nience for your cus­tomers who desire it, and it let’s staff mem­bers focus on value-​added ser­vices. For other types of firms, shared resources can be more effi­ciently used with pri­vate ver­sions of the same cal­en­dars. In fact, one cal­en­dar instal­la­tion can pro­vide both types of sched­ules: pub­lic or pri­vate, password-​protected or not.

On-​line Trans­ac­tions: mod­ern web stores are secure, rather inex­pen­sive, and very easy to main­tain; so, it is sur­pris­ingly sim­ple to sell goods and ser­vice on the web; how­ever, your orga­ni­za­tion does not need a store to pro­vide and ben­e­fit from on-​line trans­ac­tions. With Pay­Pal, it is quite easy to send e-​mail invoices and per­mit cus­tomers to pay on-​line. As we fre­quently say, 97% of some­thing is bet­ter than 100% of nothing.

Caveat Emp­tor

Of course, not all web sites are cre­ated equal. So, when choos­ing a site designer or builder or devel­oper, be sure that you are get­ting the ease-​of-​maintenance of a well-​designed con­tent man­age­ment sys­tem. Oth­er­wise, you’ll get a web pres­ence, which may or may be inex­pen­sive to main­tain, but you will not get an effec­tive, ada­p­at­able busi­ness man­age­ment tool. To see what it avail­able, visit our web design cen­ter at Design​.Spe​r​o​Con​sult​ing​.com.

As always with our longer posts, we’ll likely update and edit this dur­ing the next few days.

In E-​mails & on Web Sites

As Dreaded E-​mail Attachments

Each week the ele­men­tary school sends at least one e-​mail with a vari­ety of PDF files attached. Those files remind us of noth­ing more than elec­tronic bar­na­cles that cre­ate fric­tion on the inter­net and waste space on hard dri­ves. (It’s not the only vio­la­tor, just the most recent.)

Usu­ally those sep­a­rate files – which must be saved and opened, or at least opened – are sim­ple announce­ments from the school or from one of the par­ents’ asso­ci­a­tions. There is no com­pelling rea­son why those sim­ple, text announce­ments could be eas­ily incor­po­rated into the e-​mail mes­sage. That action would save each of the 300-​or-​so fam­i­lies at the school a decent amount of time every week.

Now, such a change might seem triv­ial – if you are not the one open­ing the PDFs. In addi­tion, such a change might be inef­fi­cient if it overly-​burdened the sender, but elim­i­nat­ing most or all of the PDFs requires noth­ing more that one per­son open­ing the file and copying-​and-​pasting the text into the mes­sage. In this case, the process is so easy that for each attached file, the cost:benefit ratio is about 1:300, and that is a nice effi­ciency gain.

Actu­ally, that minor cost could be com­pletely elim­i­nated if the e-​mail sender requested that the announce­ment be sent to them as e-​mail mes­sages, rather than as PDFs.

Of course, if such files are more than infor­ma­tional, if they are elec­tronic ver­sions of paper forms, then it may be incon­ve­nient to incor­po­rate those forms into the message’s body. BUT, if those forms are rou­tine, then rather than hav­ing each recip­i­ent open, print, and fill-​in the paper form, the sender could direct the reader to an on-​line form to complete.

In this case, forc­ing 300 fam­i­lies to print a page isn’t par­tic­u­larly green, cheap or con­ve­nient. It is not green because it wastes paper and ink. It is not cheap because it wastes paper and ink. It is not con­ve­nient because it requires print­ing, walk­ing to the printer, retriev­ing the form, com­plet­ing it, and, in this case, ensur­ing that the child returns it to the school. (In other cases, a stamp and enve­lope are required.)

On a well-​designed web-​site, such forms can be eas­ily replaced with their elec­tronic equiv­a­lents: sim­ple; easy-​to-​use; click, click, click, and you’re done. They sur­pris­ingly afford­able to gen­er­ate and edit.

When we have men­tioned sim­i­lar phe­nom­e­non to other orga­ni­za­tions and clients, we usu­ally get a response, like, “you don’t under­stand, we have 30 dif­fer­ent forms.”

Not-​so-​close inspec­tion usu­ally reveals thirty sheets of paper in dif­fer­ent fonts and lay-​outs col­lect­ing about 95% of the same infor­ma­tion. Often, all of those forms can be com­pressed into one or two on-​line ver­sions with dif­fer­ent drop-​down sub­jects, etc. Of course, like just about any other com­puter file, once an on-​line form is cre­ated, it can be copied and edited to cre­ate a sim­i­lar, deriv­a­tive form.

At one orga­ni­za­tion we were able to nearly elim­i­nate the need to print paper ver­sions of reg­is­tra­tion forms. Besides improv­ing the cus­tomer expe­ri­ence, that change has sub­stan­tially improved the effi­ciency of col­lect­ing and aggre­gat­ing data. No need to retype the data into an Excel spread­sheet when it can be down­loaded from an on-​line data­base or can be auto­mat­i­cally sent (via email) to rel­e­vant parties.

By the way, in Decem­ber we wrote about the prob­lems with using e-​mail as the firm’s or organization’s cen­tral infor­ma­tion sys­tem. You can read about it here: Inex­pen­sive but Valu­able Web-​base MIS.

On Web Sites

There are times when only the PDF ver­sion of a file will do. How­ever, being forced to click a link on a web site to read text through a PDF viewer or browser add-​in or to down­load a form is very inef­fi­cient for web site vis­i­tors and nei­ther effec­tive nor effi­cient for the site’s owner.

It’s cheap, it looks that way, and, most impor­tantly, it turns away vis­i­tors. That’s because many vis­i­tors won’t down­load or open such files so, they never see what you have to say. More­over, for those per­form­ing web searches, many poten­tial vis­i­tors don’t become actual vis­i­tors because as soon as they see “PDF” in the search result, they start scan­ning down­ward for the next result.

Except for cer­tain spe­cial mate­ri­als, like, say, mate­r­ial that you are only allowed to dis­sem­i­nate as a PDF file – e.g., some aca­d­e­mic jour­nal arti­cles or legal doc­u­ments – any­thing that can be com­mu­ni­cated within a PDF file can also be com­mu­ni­cated in a web page, and no knowl­edge of html or any other com­puter lan­guage is required.

If you can do it in MS Word, you can do it with a good con­tent man­age­ment sys­tem. Not only are you likely to get more hits from within search results, but you are also likely to have an increased poten­tial for hits because it is much eas­ier to search-​engine-​optimize con­tent on web pages rather than in PDFs.

Of course, if PDF file con­tent is con­verted into web page con­tent, there is no rule that pro­hibits post­ing the PDF file, too. (In addi­tion, there are a num­ber of free web plu­g­ins that allow vis­i­tors to con­vert web pages into PDF files – if you like that kind of thing.)

While some (obsti­nate) read­ers, may not con­sider this to be the most press­ing of causes, it is one that is sim­ple to imple­ment and ben­e­fi­cial to all par­ties involved.

If you would like exam­ples or demon­stra­tions of on-​line forms, please down­load this PDF form, com­plete it, and mail it to us. Just kid­ding, please con­tact us, instead.

We have suc­cess­fully com­pleted the redesign and devel­op­ment of Rasp­berry Photo’s improved and expanded web site.

Rasp­berry Photo is a por­trait pho­tog­ra­phy firm located near Pitts­burgh that spe­cial­izes in pho­tographs of chil­dren and families. It is owned and oper­ated by Bon­nie DeMat­teo.

Bon­nie wanted her new site to:

1. Show­case many beau­ti­ful por­traits in her grow­ing portfolio;
2. Allow clients to view, com­pare, and pur­chase portraits;
3. Be easy to self-​manage; and
4. Be search-​engine optimized.

We were able to meet her requests while seam­lessly inte­grat­ing the appear­ance across the site’s dif­fer­ent pur­poses and functions.

The main site pro­vides the ease-​of-​use, search-​engine opti­miza­tion, and dash­board infor­ma­tion of a well-​buit con­tent man­age­ment system.

The slide shows that appear (on the home page and under the gal­leries links) are easy to man­age and can be cre­ated from within Adobe Light­room, a pop­u­lar batch-​image pro­cess­ing pro­gram among pho­tog­ra­phers, or they can be cre­ated and edited from within the con­tent man­age­ment sys­tem. They’re very cool and sur­pris­ingly sim­ple to manage.

The client proof­ing area is a full-​featured, Flash-​based store that can be eas­ily self-​managed and adapted for other types of prod­ucts and ser­vices. For a busi­ness like Rasp­berry Photo, the actual prod­ucts are pri­vate pho­tographs that appear in password-​protected gal­leries, but is a sim­ple set­ting, and depend­ing upon your busi­ness, all prod­ucts could be made pub­lic and avail­able for sale to any­one on the web.

To keep costs low, the proof­ing shop­ping cart directs clients to Pay­Pal to com­plete their trans­ac­tions. It is seam­less and auto­matic and clients don’t need a Pay­Pal account: credit or debit cards work just fine. (To host actual trans­ac­tions costs about $500/​year, and in this case, offers no real benefit.)

Visit and let us know what you think. Visit our design cen­ter for more infor­ma­tion on our web-​related services.

We think that the new site is wor­thy of her por­traits, and we’re glad that she does, too.

Our web design site, Design​.Spe​r​o​Con​sult​ing​.com, is now open to the public.

Pre­vi­ously, to pro­tect pro­pri­etary infor­ma­tion, we had password-​protected much of it. Now, it’s avail­able for the world to see.

Cre­den­tials are still needed to explore the back office; so, con­tact us if you would like to see how easy it is to man­age your own site.

Or, The High Cost of Subsidies

A few weeks ago there was an arti­cle in The Wall Street Jour­nal, What’s a Degree Really Worth. In it the reporter Mary Pilon dis­cussed the esti­mated dif­fer­ence in the aver­age life­time earn­ings between indi­vid­u­als with and with­out the col­lege diplo­mas, and she men­tioned a few prob­lems – but only a few of the prob­lems – with some of those calculations.

We don’t have much to say about those bad cal­cu­la­tions other than the esti­ma­tion meth­ods aren’t very sophis­ti­cated. The one method involved mul­ti­ply­ing some over­all dif­fer­ence in aver­age annual earn­ings by 40 years – the pre­sumed length of one’s work career. Among other things, that sim­ple prod­uct doesn’t include oppor­tu­nity costs – e.g., wages lost while not work­ing dur­ing time in col­lege – or dif­fer­ences in growth rates of com­pen­sa­tion through time or time-​value-​of-​money considerations.

So, while we don’t have much to say about the cen­tral idea in the arti­cle, we do have (1) a com­ment about tuition infla­tion and (2) a related cri­tique about col­lege as white-​collar, vo-​tech train­ing (and the impli­ca­tions of that).

1. All things equal, gov­ern­ment sub­si­dies to con­sumers increase prices – in this case tuition – which can then spi­ral upwards.
2. All things equal, higher tuition costs induce stu­dents to become more professionally-​oriented, and that has sev­eral impli­ca­tions, includ­ing a de-​emphasis of the lib­eral arts, and that per­mits anti-​social and silly behav­ior and the­o­ries to per­sist in what has become the fig­u­ra­tive back­wa­ter of the academy.

(1) Gov­ern­ment Sub­si­dies & Tuition Increases

In the arti­cle, Ms. Pilon briefly men­tioned that aver­age, annual, under­grad­u­ate tuition and fees at pri­vate col­leges increased from $15,518 to $26,273 dur­ing the past ten years.

That 70% increase is twice as great as the change in con­sumer prices– of about 35% – and that’s noth­ing new. This table at http://​www​.finaid​.org/​s​a​v​i​n​g​s​/​t​u​i​t​i​o​n​-​i​n​f​l​a​t​i​o​n​.​p​h​tml shows that tuition infla­tion has been greater than gen­eral infla­tion for at least the past 50 years.

Hmm, now what other indus­try has shown per­cent­age price increases greater than the rate of infla­tion for a long period of time? You know, that indus­try that com­prises about 16% of GDP? Could it be health-​care? Why, yes, it could – although to be pre­cise, health-​care infla­tion has been sub­stan­tially less than tuition inflation.

So, is it a mere coin­ci­dence that two of the indus­tries that have his­tor­i­cally been the most-​subsidized in the U.S.A. are also two indus­tries with very large and sus­tained price increases over a long period of time? We don’t think so.

Here is an exam­ple of how sub­si­dies increase prices.

We recently had a con­ver­sa­tion with the par­ent of a high school senior. He told us that he had bud­geted a cer­tain amount for his child’s tuition next year; let’s say it was $7,500.

Any tuition cost above that amount would have to be funded with grants, loans, work-​study pro­grams, and scholarships.

By the way, the reader should think of schol­ar­ships from col­leges as noth­ing more than dis­counts from list prices. Often, they are awarded based upon merit and are called aca­d­e­mic schol­ar­ships, but that’s not always the case. Col­leges have much more pric­ing flex­i­bil­ity than most par­ents know, and for what­ever arbi­trary rea­son, col­lege recruiters can con­sider some stu­dents more desir­able than oth­ers and offer those prospects price con­ces­sions.¹

Any­way, con­sider some­one like our acquain­tance who has $7,500 per year to spend on col­lege. To keep it sim­ple, assume no other sources of funds – no sub­si­dized loans – except a pos­si­ble fed­eral grant of, say, $2,500.

With­out the grant, the max­i­mum that any col­lege could get from the fam­ily is $7,500 per year. With the grant, the max­i­mum is $10,000.

With­out the Grant

Let’s con­sider our acquain­tance as an aver­age par­ent. If on aver­age, fam­i­lies have up to $7,500 to pay for col­lege expenses, then on aver­age, col­leges have to find ways to oper­ate (as going con­cerns) with $7,500 per stu­dent. Actu­ally, due to their abil­ity to price dis­crim­i­nate, col­lege would charge more and then have to offer schol­ar­ships to more stu­dents. That’s because stated tuition rates are noth­ing more than list prices, and one would expect the list price to be greater than $7,500. In that way, the col­leges can find ways to charge higher prices to wealth­ier fam­i­lies with above-​average bud­gets and offer dis­counts – err, we mean schol­ar­ships – to every­one else.

Regard­less, col­leges wouldn’t be able to get more than $7,500 from our aver­age parent.

With the Grant

Now, it’s quite pos­si­ble that an aver­age par­ent could say to his college-​bound child, “we had $7,500 to spend for col­lege but luck­ily you have a grant for $2,500; so, we’ll only spend $5,000 of our own money, and your tuition bud­get remains the same: $7,500.” It’s pos­si­ble, but it seems unlikely. Unless tuition is less than $10,000, we’d expect that fam­i­lies who com­mit $7,500 would be will­ing to spend that amount under many circumstances.

So, if the fam­ily spends any­thing above $5,000, then the col­lege gets more than with­out grants. If par­ents com­mit their entire $7,500, then the col­lege gets $10,000. That increases the incen­tive for the col­lege to raise tuition to extract the entire amount avail­able from the fam­ily. So, it seems rea­son­able to con­clude that the tuition rates would be higher than they would be with­out sub­si­dies. Clearly, the col­lege would still try to get as much as pos­si­ble from wealth­ier fam­i­lies (and from every­one else, too).

In those instances, where the fam­ily com­mits the entire $7,500, it is no bet­ter off, but the col­lege cer­tainly is.

How­ever, it’s worse than that when the gov­ern­ment “attempts to help make col­lege afford­able” over time. Imag­ine the first year after the gov­ern­ment begins offer­ing grants, if our think­ing is cor­rect, then one would expect col­leges to increase tuitions. That means that the dif­fer­ence between tuition rates and parental bud­gets – say, a con­stant $7,500 – would grow. If that dif­fer­ence causes Con­gress and the Pres­i­dent to offer larger grants, then we have the begin­ning of an infla­tion spi­ral. The fam­i­lies that con­tinue to spend $7, 500 are no bet­ter off than with­out sub­si­dies. The fam­i­lies that spend less ben­e­fit some­what, but we’d expect that they would be in the minor­ity. The col­leges are def­i­nitely better-​off (and fat­ter) and tax-​payers are strictly worse-​off (as usual).

From each family’s per­spec­tive, given that grant pro­grams exist, then receiv­ing a grant is obvi­ously ben­e­fi­cial because it pro­vides more flex­i­bil­ity and capac­ity to meet high tuition pay­ments. How­ever, col­lec­tively, if every­one – or enough stu­dents – receive grants, than no one is better-​off because tuition demanded by the col­lege is higher only because those grants are avail­able, and the col­leges get fatter.

(2) Spec­u­la­tion on High Tuition Costs, Career Train­ing & their Unin­tended Implications

Or, Does Out­ra­geously High Tuition Doom the Lib­eral Arts to a Ghetto of Anti-​social Silliness?

Note up-​front that like much of what we write this cri­tique is rather spec­u­la­tive and requires sev­eral assump­tions. Admit­tedly, we ignor­ing many impor­tant gen­eral eco­nomic and demo­graphic fac­tors, and we make sev­eral, very gross gen­er­al­iza­tions, but (obvi­ously) we think our analy­sis is com­pelling nonetheless.

Note also that:

• From this site, one can see that government-​provided finan­cial aid began in the 1940s for vet­er­ans and was revised in the 1950s. It then expanded to seg­ments of the gen­eral pop­u­la­tion in the 1960s and ‘70s and expanded beyond grants to include sub­si­dized and guar­an­teed loans.
• From the link near the top of this post, the reader can notice that tuition infla­tion has out­paced gen­eral infla­tion for at least fifty years.

As we explained above, we think that the sec­ond point is an impli­ca­tion of the first. So, we’ll assume that such sub­si­dies increase the cost of higher edu­ca­tion. (It would be truly remark­able, would it not, if sub­si­dies to fam­i­lies reduced tuition rates and made col­leges more effi­cient than they oth­er­wise would be – whether that sub­sidy is via a grant or a cheap, guar­an­teed loan. In many ways, the long-​term phe­nom­e­non is no dif­fer­ent than the early 21^st cen­tury hous­ing price bub­ble cre­ated by Fan­nie Mae and Fred­die Mac’s loose and sub­si­dized credit standards.)

So, what could be the unin­tended con­se­quences of very high tuition costs? We have two in mind, though the sec­ond one depends upon the first one.

Col­lege as White-​Collar, Vo-​tech Training

We think that it is pos­si­ble to argue that higher col­lege costs, along with the asso­ci­ated large sac­ri­fices and bor­row­ings by house­holds and stu­dents, have induced many of them to take myopic, careerist approaches to higher edu­ca­tion, e.g., “we’re spend­ing a lot of money and bor­row­ing a lot of money, so you bet­ter get a good job when you’re done.”

If that per­spec­tive is ram­pant and con­sumers of edu­ca­tion over-​emphasize career train­ing, then col­lege is not a place – or is less-​of-​a-​place – where one can gain gen­eral knowl­edge and the abil­ity to think clearly about a vari­ety of prob­lems and pos­si­bly – just pos­si­bly – a bit of wis­dom. In fact, if that is the case, then col­lege becomes lit­tle more than white-​collar, voca­tional train­ing that requires a few other required courses and elec­tives.²

That’s not a new com­plaint and per­haps we’re just pro­ject­ing our own youth­ful moti­va­tions and expe­ri­ences as an under­grad and MBA stu­dent – so we imag­ine that every­one is as money-​hungry as we were – but there does seem to be a ter­ri­ble empha­sis on how “use­ful” a course will be, where “use­ful” is usu­ally defined as some­thing related to some task that one hopes to per­form for some prospec­tive employer.

Unfor­tu­nately, (1) the une­d­u­cated – i.e., stu­dents – by the nature of their igno­rance are usu­ally not in good posi­tions to deter­mine what’s use­ful or not (or what should be taught or not), and (2) “rel­e­vant” or “prac­ti­cal” white-​collar voca­tional train­ing often reverts to a kind of monkey-​see, monkey-​do mimicry.

Such thought­less mim­icry isn’t nec­es­sar­ily opti­mal for stu­dents, their prospec­tive employ­ers, or soci­ety. For exam­ple, con­sider the very bad finan­cial mod­el­ing that helped cause the world­wide finan­cial cri­sis in 2008. Many col­leges taught – and con­tinue to teach – tech­niques and algo­rithms that were in use, but weren’t/aren’t par­tic­u­larly use­ful (or appro­pri­ate). So, rather than empha­size strengths and weak­nesses of dif­fer­ent tech­niques and abstrac­tions, the empha­sis was on teach­ing tech­niques because that’s what stu­dents and employ­ers wanted – but not nec­es­sar­ily what soci­ety needed (or needs): yet another form of myopia.

So, read­ers sym­pa­thetic to our posi­tion may read­ily accept our sup­po­si­tion. For those unper­suaded we have a ques­tion: of every for­mer, cur­rent, and prospec­tive col­lege stu­dent (and their fam­ily) that you know, how many have men­tioned a rea­son other than salaries or careers as their rea­son to attend­ing col­lege? Be hon­est and con­sider the percentages.

Note that all things equal, given the fixed num­ber of cred­its that need to be earned to grad­u­ate, an over-​emphasis on sup­pos­edly “prac­ti­cal” career train­ing almost always means an under-​emphasis on other courses that could increase gen­eral knowl­edge and help develop think­ing skills as well as (per­haps) help stu­dents acquire a bit of wis­dom.³

And what are the costs of that careerist, vo-​tech approach to col­lege study? Many are well-​known and frequently-​made com­plaints about MBAs and engi­neers and other pro­fes­sion­als: short-​sighted, lack the abil­ity to learn and adapt and syn­the­size, etc., but we don’t want to focus our atten­tion on stu­dents who become employ­ees. Instead, let’s con­sider what that careerist per­spec­tive does within col­leges and universities.

First, we’ve already men­tioned – or at least insin­u­ated – it “dumbs-​down” stud­ies within par­tic­u­lar fields, par­tic­u­larly in pro­fes­sional schools and for pro­fes­sional degrees where the focus is often on what’s done (or what’s to be done) rather than what is known (and unknown) about the world or a phenomenon.

The Irrel­e­vancy of Lib­eral Arts

Sec­ond, the enhanced inter­est in sup­posed prac­ti­cal, job-​oriented train­ing has led to an under-​emphasis on non-​professional courses and areas of study. (You know, those required courses that enter­pris­ing stu­dents view as the col­le­giate chaff of the pro­fes­sional , vo-​tech wheat that they seek.)

To us, that lack of inter­est and the view that such course­work is a “nec­es­sary evil” of get­ting a degree (and a job) means that (many) stu­dents take those courses less seri­ously and view par­tic­i­pa­tion as a cost min­i­miza­tion prob­lem to solve, rather than as a value max­i­miza­tion prob­lem. In oth­ers words, they pre­sume such courses are worth­less and attempt to find the eas­i­est ways to sat­isfy require­ments and other con­straints (while attempt­ing to main­tain a high GPA, because, you know, “that’s what employ­ers like to see”).

That has a num­ber of impli­ca­tions, includ­ing a desire by pro­fes­sors to pan­der to stu­dents via the offer­ing of silly and worth­less courses, which, of course, turns the stu­dents’ ini­tial per­cep­tions into self-​fulfilling prophe­cies and per­mits the such profs to (cor­rectly) view most stu­dents as short-​sighted, money-​grubbers with no intel­lec­tual curiosity.

But those oppos­ing neg­a­tive opin­ions are not the only con­se­quences of the bad equi­lib­rium. Worse is that such indif­fer­ence (by stu­dents and oth­ers, includ­ing employ­ers) per­mits rad­i­cal­ized and poorly-​trained fac­ulty to flour­ish and hire oth­ers with sim­i­lar tastes and predilec­tions. They’re not chal­lenged within the acad­emy, because, frankly, other than a few crit­ics on the right, nobody cares. (Did you hear JP Mor­gan is on cam­pus today?) That’s true of admin­is­tra­tions that empha­size careers, stu­dent ameni­ties, and NCAA Divi­sion I sports teams.

In our mind, that’s why so much thought­less, knee-​jerk rad­i­cal­ism has thrived within (that por­tion) of acad­e­mia since World War II.

Such rad­i­cal­ism and silly inquiries and teach­ings are come at quite a cost to soci­ety; how­ever, we think that their effects are over­stated, and, again, that’s because the vast major­ity of stu­dents are too busy seek­ing career train­ing and sum­mer intern­ships. (Did you hear GE is on cam­pus today?)

And, that’s the true tragedy. The high cost of col­lege – par­tially to due gov­ern­ment involve­ment – induces stu­dents to obsess about career fac­tors, so they don’t get the edu­ca­tion that they deserve. Well, they don’t get the edu­ca­tion they could have received in a dif­fer­ent real­iza­tion of the world, and that edu­ca­tion would include, well, an edu­ca­tion, includ­ing exten­sive expo­sure to the clas­si­cal, lib­eral arts.

P.S. Like many of our longer posts, we’ll likely edit the errors and typos and pos­si­bly expand our analy­sis as we think more about the issues.

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Foot­notes:

…In the World

The new Nation­wide com­mer­cial that has run ad nau­seum dur­ing the first week­end of the Olympics is the winner.

By the way, accord­ing to a few other com­mer­cials, the old guy, who seems to be the boss, has both P.A.D. (periph­eral artery dis­ease) and erec­tile dysfunction.

What the hell does the psy­cho in the woods with the ax say at the end of the ad: “a blue phone,” “a blue bone,” “a blue Ford?” Both stu­pid and unin­tel­li­gi­ble: what a coup.

*Well, it’s in a tie with the new 2010 cen­sus com­mer­cials. Your tax dol­lars at “work.”

Update: yes, dear reader, you and many, many other folks agree with us. If there is a dif­fer­ence, it’s because we chose “dumb­est” but many of you used the word “stu­pid” in your web searches. What were they think­ing? Oh that’s right, they weren’t. More­over, it seems that no one at the firm is mon­i­tor­ing web searches to see how their asi­nine com­mer­cial is being received by the view­ing audience.

Ear­lier in the week, it was announced that First Lady, Michelle Obama, plans to fight child­hood obe­sity. See, for exam­ple, First Lady Girds to Fight Fat.

It seems like a wor­thy cause, but we’re not sure what she can do from the White House. If she isn’t home with the over-​weight kids, nag­ging them to go out­side and play or prac­tice their sports or walk the dog(s) or ride their bikes or not to eat too much junk food or not drink too much soda, then we doubt that her cam­paign will be very suc­cess­ful. (Yeah, being a scold, we think nag­ging and over­sight are crucial.)

Look at the table of state-​by-​state obe­sity rates that accom­pa­nied the above-​referenced arti­cle. There are a cou­ple of pat­terns worth mentioning.

First, notice the his­tor­i­cal trend across the table. In thir­teen years the national obe­sity rate – the per­cent­age of indi­vid­u­als with” too much” mass for their respec­tive heights has increased about 60%. That’s a huge increase in the num­ber of peo­ple who are huge: an increase of about 30 mil­lion peo­ple in a lit­tle more than a decade. (The table notes that about two-​thirds of the pop­u­la­tion is over­weight, and a trip to just about any shop­ping mall pro­vides all-​too ample empir­i­cal evi­dence of that fact.)

Sec­ond, sort the above-​mentioned table by any year, say, 2008, and com­pare that col­umn to this per-​capita income by state table from Wikipedia. (That one is sortable by columns, too.) Notice that the most obese states – the ones with the high­est per­cent­age of obese cit­i­zens – tend to have the low­est per-​capita income, and vice versa. We haven’t run any sta­tis­ti­cal tests, but our casual obser­va­tion, alone, seems suf­fi­cient to notice a rather strong inverse rela­tion­ship between per-​capita income and the obe­sity rate.

We wrote about some­thing sim­i­lar last Sep­tem­ber in No Fat Kids, which could have been more descrip­tively enti­tled, The Absence of Fat Kids, and in that respect, there are a cou­ple of facts worth mentioning.

There’s no obvi­ous rea­son why poorer chil­dren should be fat­ter than wealth­ier chil­dren. In the his­tory of the world, we’d argue that is a very, very recent phe­nom­e­non. It is evi­dence of a very, very finely-​meshed social ser­vice net that pro­vides almost every­one with (at least) what they need, but it goes beyond that.

We hypoth­e­size that, all things equal, the rela­tion­ship between income and body mass index is an arti­fact of some­thing else, and among other things that some­thing else involves parental super­vi­sion and time, espe­cially in single-​parent fam­i­lies – par­tic­u­larly fam­i­lies headed by sin­gle mothers.

Fam­i­lies headed by sin­gle moth­ers tend to have sub­stan­tially less income than fam­i­lies with two par­ents. So, we won­der whether the like­li­hood of child­hood obe­sity is related to the parental sta­tus of the house­hold. In other words, sin­gle par­ents imply lower income and sin­gle par­ents imply more child­hood obe­sity; so, at least for those chil­dren in single-​parent house­holds, lower income means more obesity.

Now, we are not say­ing that sin­gle par­ents are bad par­ents. Not at all. Instead, we are say­ing that keep­ing kids thin may be a task that’s too dif­fi­cult for one par­ent to man­age. We are say­ing that being a good, nag­ging, atten­tive, avail­able par­ent takes a lot of time, energy, and dis­ci­pline. With­out suf­fi­cient sup­port from a spouse or other fam­ily mem­bers or friends, try­ing to keep chil­dren active and healthy, is very difficult.

Look at the types of nag­ging we men­tion in the sec­ond para­graph, con­sider the amount of energy required, and real­ize the amount of time required to trans­port kids to phys­i­cal activ­i­ties (and to attend those activities.) Of course, we’re ignor­ing a host of hered­i­tary or genetic fac­tors, e.g., slow metab­o­lisms, etc., but is there a more par­si­mo­nious expla­na­tion than it seems to require at least two adults to mon­i­tor diets and get the kids away from tele­vi­sions, com­put­ers, cell phones, PS2s, Xboxes, etc.?

Finally, and we men­tioned this above, is it not truly remark­able that obe­sity is more preva­lent among the poor than among the middle-​class or the wealthy in the United States? (So much for Obama’s “fat cat bankers.”)

Regard­less of how much or how lit­tle, you, dear reader, know about world his­tory, con­sider that fact. Can you name any other era or place in his­tory when or where that has occurred? Where the poor have been heav­ier than the wealthy? It’s not just the near-​elimination of star­va­tion and hunger in the U.S., but an over-​abundance, an excess, of calo­ries that per­mits many of the poor to be obese (to the point where their health suf­fers). Think of the equal­ity of power – through the Rule of Law – and the advanced tech­nol­ogy in agri­cul­ture, trans­porta­tion, stor­age, refrig­er­a­tor, hygiene, food safety, etc. and con­sider the innate gen­eros­ity of the cit­i­zen­ship that per­mits such con­sump­tion – to the point of dys­func­tion­al­ity. That’s one of the rea­sons we con­sider the fol­low­ing ques­tion to be noth­ing more than a rhetor­i­cal one: despite all the trou­bles and prob­lems and con­flicts, has there ever been a bet­ter time (for so many peo­ple) to be alive, espe­cially the poor?

We really dis­like the sleazy GoDaddy com­mer­cials fea­tur­ing Dan­ica Patrick, the race car driver.

We had planned to crit­i­cize the ads ear­lier in the week (after the Super Bowl) but never got around to it.

Our sloth, how­ever, was rewarded, and our effort and time were saved because we found this arti­cle by S. E. Cupp at the New York Daily News: Wipe Dan­ica Patrick’s sleaze off NASCAR’s track: GoDaddy com­mer­cials are insult to fans. (Actu­ally, we didn’t find it, but we heard about it on Red­eye, where Ms. Cupp is a fre­quent guest.)

Except for the part about lik­ing NASCAR, Ms. Cupp writes much of what we would have writ­ten, and that leaves us with only a few short com­ments and ques­tion. Ms. Patrick is obvi­ously a beau­ti­ful woman and seems to make a lot of money off of her appearance.

How­ever we don’t fol­low any kind of rac­ing; so, we must ask: does she win or is Dan­ica Patrick the Anna Kournikova of racing?

Mere Spec­u­la­tion

We’re read­ing a new book about the finan­cial cri­sis that is very thought-provoking. We’ll write more about the book in the com­ing days and weeks, but while read­ing it, a rather depress­ing thought kept pop­ping into our head.

If after Scott Brown’s elec­tion vic­tory – and as some pun­dits pre­dict – the Obama admin­is­tra­tion plans to veer towards more pop­ulist posi­tions and actions, we wouldn’t be sur­prised to see more indict­ments of investors and traders who were respon­si­ble for large losses at both large banks and at hedge funds dur­ing the finan­cial crisis.

The Pres­i­dent and his staff already demo­nize Wall Street, and while some of the rhetoric is jus­ti­fied as it per­tains to moral and eth­i­cal fail­ings, crim­i­nal­iz­ing poor judg­ment and greed and hon­est error is an entirely dif­fer­ent issue. (We wrote about that before, but can’t find the link today.)

Nonethe­less, we could imag­ine such tri­als as showy diver­sions away from the administration’s prob­lems with health care, ter­ror­ist tri­als, bud­get deficits, job­less­ness, etc. (Other than get­ting out-​of-​the-​way, we don’t think the admin­is­tra­tion can do much about job­less­ness, the prob­lem is that they think they can and when they can’t, they may try to divert fur­ther atten­tion away from their self-​perceived fail­ings onto oth­ers, includ­ing “greedy fat cats.”)

More­over, at firms that sur­vived the cri­sis we could see cyn­i­cal man­age­ments – in par­tic­u­lar, cyn­i­cal new man­age­ments – act with the gov­ern­ment against indi­vid­u­als, pri­mar­ily for­mer traders and struc­tur­ers, and pos­si­bly risk man­agers, as ways to (1) per­son­al­ize (rather than insti­tu­tion­al­ize) the losses, and (2) sep­a­rate them­selves from the old guard, i.e., attempt put the behav­ior of the past behind them.

Indeed, we see it is as a threat espe­cially if the admin­is­tra­tion can’t pass new leg­is­la­tion and pro­posed finan­cial reg­u­la­tions through Congress.

Per­haps we are overly-​influenced from watch­ing Dr. Zhivago the other night, but as we said, it’s a rather depress­ing thought.

Actu­ally, a New Idea to Mit­i­gate the Problem

Update: after pub­lish­ing this post very late Sun­day (or very early) Mon­day, we noticed the col­umn, Toward a Dif­fer­ent Fis­cal Future, by Glen Hub­bard. His essay is sub-​titled, tax increases can’t plau­si­bly address the com­ing enti­tle­ment cri­sis, and that fits very nicely with our pro­posed mitigation.

We admit that the title is a bit over­stated, because we don’t know if any sin­gle and fea­si­ble idea can solve the bank­ruptcy prob­lem; so, we’ll look to mit­i­gate it a bit with a few long-​term recommendations.

We’ve heard for years that Social Secu­rity and Medicare will go bank­rupt within the next sev­eral decades. To the best of our mem­ory – i.e., with­out search­ing the web – we recall read­ing that with­out fur­ther changes in laws, Social Secu­rity will become insol­vent some­time between 2020 and 2040, or maybe it was a few years later.

Let’s take those pro­jec­tions as given because the exact year is far enough away that it doesn’t affect our pro­posed mitigation.

So, we ask: besides rais­ing pay­roll taxes, which are already out­ra­geously high, what other solu­tions exist?

Well, ben­e­fits could be cut, but any bill propos­ing such cuts would be unlikely to pass Congress.

That means that get­ting the great­est num­ber of cit­i­zens work­ing (and not col­lect­ing ben­e­fits) is the best way to stave-​off bank­ruptcy. You may have already heard how when the pro­gram began in the 1930’s there were more than ten work­ers for every recip­i­ent and now that ratio has dras­ti­cally shrunk (to some­thing like four:one or three:one today).

Already, the age to col­lect full ben­e­fits has been pushed back from age 65 to 67 for those of us born after 1960. (Actu­ally, it’s a grad­u­ated scale that you can see here.) All else equal, that forces older folks to con­tinue work­ing (and pay­ing taxes) while delay­ing receipt of their checks.

We sus­pect that laws will be passed to fur­ther delay full-​retirement age – for us and for those born after us. (We can’t imag­ine retir­ing any­way; so, those changes won’t affect us.) How­ever, unless the full-​retirement age is increased to 80-​or-​so (a com­pletely wild-​a** guess on our part) that exten­sion alone won’t elim­i­nate the problem.

So then the ques­tion becomes: once full-​retirement age is max­i­mized at an age greater than 67, say, at age 70, what other solu­tions exist?

Some folks call for more immi­gra­tion as a way to increase the ratio of workers-​to-​recipients, but there are other ways to increase the size of the work­force with­out per­mit­ting an influx of new­com­ers. (By the way, our solu­tion to ille­gal immi­gra­tion–well, actu­ally to what to do with ille­gal immi­grants – would help with the social secu­rity prob­lem, too.)

Now, the gov­ern­ment could imple­ment pro-​family poli­cies that, at the mar­gin, would induce par­ents to have more chil­dren. (That can’t hurt, and we see no rea­son to wait until the USA is fac­ing neg­a­tive pop­u­la­tion growth – like Japan and cer­tain coun­tries in Europe now face – before imple­ment­ing such policies.)

With­out any cal­cu­lat­ing any­thing, we doubt that pro-​baby poli­cies would be suf­fi­cient to grow the nation out of the Social Secu­rity prob­lem. (How­ever, we do have a quick ques­tion: if the esti­mated 30 mil­lion or so aborted babies had been born since the early 1970’s, how many more work­ers would be avail­able to sup­port those cur­rently receiv­ing ben­e­fits and how much further-​off could insol­vency be put?)

So, what else can our soci­ety do?

If the sup­ply of poten­tial work­ers is fixed (or already max­i­mized) and it’s not fea­si­ble to get them to work to an older age, then the only option left is to get them to…start work­ing earlier.

We don’t mean per­mit­ting child labor as some other nations do. We do mean: (1) motivating par­ents to have their child(ren) start kinder­garten at a younger age so that they can grad­u­ate from high school a year ear­lier. That would move the aver­age start­ing age back closer to five than six, and means that many stu­dents would grad­u­ate an entire year ear­lier than they oth­er­wise would have. That pol­icy can be eas­ily imple­mented by chang­ing state laws, which can be “influ­enced” by fed­eral laws and grants.

We also mean pro­vid­ing incen­tives to induce those in col­lege (and grad­u­ate school) to begin their careers – or at least begin work­ing full-​time – at a younger age. There are sev­eral ways to do that. We’ll men­tion a few and prob­a­bly add more through time.

One way would be to limit under­grad­u­ate loans and grants from the gov­ern­ment to four con­sec­u­tive years begin­ning the year of high school grad­u­a­tion (with sim­i­lar types of restric­tions for grad­u­ate schools).

Another would be to (a) induce more stu­dents to attend col­lege part-​time, espe­cially for grad­u­ate school, and (b) simul­ta­ne­ously induce grad­u­ate schools to offer more degrees on a part-​time basis. One way to do that would be to make tuition ben­e­fits for col­lege and grad-​school com­pletely tax-​free when paid by employ­ers or com­pletely tax-​deductible when paid by work­ers (with earned income).

A third way to reduce the aver­age time spent in col­lege would be to pro­vide more rig­or­ous ele­men­tary and sec­ondary edu­ca­tions so that stu­dents are better-​prepared for col­lege, and one way the fed­eral gov­ern­ment can (indi­rectly) do that is to make fed­eral grants and loans for col­lege – like aca­d­e­mic schol­ar­ships – con­di­tional upon test scores and/​or grades.

A fourth way would be to pro­vide a tax credit (or a per­ma­nent reduc­tion in pay­roll tax rates) for cit­i­zens who enter the full-​time work­force at a younger age.

The gen­eral idea is to get twenty-​somethings in col­lege to grad­u­ate and mature ear­lier than they do now so that they seek gain­ful employ­ment at an ear­lier age and, there­fore, begin pay­ing taxes sooner. We don’t see how that is harm­ful to any­one. In fact, hav­ing them grow-​up sooner seems ben­e­fi­cial to everyone.

P.S. Like many other top­ics that we write about for the first time, we’ll likely revise this post as we think more about it.

After shov­el­ing sev­eral hun­dred cubic feet of snow for the Basen­jis this late night/​early morn­ing, we didn’t attempt to go to sleep.

Instead, we did what we often do when work­ing on a project late into the night; we turned on Red­eye on Fox News.

If you haven’t heard of it, it’s on at 3:00 AM Mon­day — Fri­day (actu­ally Tues­day through Sat­ur­day) and hosted by blog­ger Greg Gut­feld, of TheDai​lyGut​.com.

It is by far the fun­ni­est show on tele­vi­sion: top­i­cal, irrev­er­ent, acer­bic, teas­ing, and some­times mean-​spirited.

Besides Greg, there are two other reg­u­lars, pan­elist, Bill Schulz, and ombuds­man, Andy Levy.

Each night, at least two other panelists-​guests appear, and most of those guests are reg­u­lars – appear­ing every week or every cou­ple of weeks. A few of those guests are Fox News anchors and reporters and a few are come­di­ans and a few are from other pro­fes­sions, e.g. a priest, a coro­ner, a Con­gress­man, etc.

We’d describe the show anal­o­gously in two dif­fer­ent ways. Nei­ther which may make sense to oth­ers, but then it’s our little-​read blog; so, we don’t care.

First, if tele­vi­sions shows were like peo­ple, it’s what the early, ado­les­cent Sat­ur­day Night Live would grown into had it matured and stayed funny. Note that we use the word ‘matured’ very pre­cisely. We mean had the show’s for­mat matured from skit-​based to news pan­elly, and had it’s world-​viewed matured, from some­thing for teens and twenty-​somethings to some­thing for forty-​somethings who have been mugged a bit by reality.

We cer­tainly don’t mean mature with respect to the behav­ior or demeanor of the hosts and many of their guests. That gen­er­ally remains ado­les­cent and juve­nile but in a good way, and that’s the sec­ond way we think about it. If you, dear reader, hung-​out with smart, witty, funny, and occa­sion­ally mean kids in high school – you know, before those kids became self-​conscious or seri­ous or moody or thought that oth­ers cared about what they thought – then you may like it for the same rea­son. It’s what hang­ing out with those kids would be like if those kids grew up, became edu­cated, learned a bit about the world, and (gen­er­ally) had some­thing worth say­ing, but didn’t lose their sense-​of-​humor or rudeness.

So, if you hated those kids in high school, you’ll hate the show; how­ever, if you were one of those kids in high school, you’ll likely love the show. If you won­dered where some of those kids went, well it seems that few are on tele­vi­sion at 3:00 AM and haven’t changed very much. If your sched­ule isn’t as flex­i­ble as ours, you prob­a­bly won’t want to stay awake for it, but it is def­i­nitely worth record­ing and then watch­ing the next night when the sup­posed come­di­ans are on television.

Check out var­i­ous seg­ments on the show’s web site. The robots are con­sis­tently hilar­i­ous, and the priest, Father Mor­ris, gives amaz­ing answers to very dif­fi­cult and per­ni­cious the­o­log­i­cal ques­tions. Lately, those ques­tions have been posed by the robots. (Don’t ask.)

Today is the show’s third anniver­sary, so to Greg, Bill and Andy, con­grat­u­la­tions on your suc­cess and on your new table and keep up the good work.

P.S. The Daily Gut web site really sucks. We could do much better.

The Bane of Basenjis

We usu­ally work late into the night, but rarely shovel snow at 3:00 AM.

This morn­ing is an exception.

The snow has been accu­mu­lat­ing for the past eleven hours, and we’re not sure of the offi­cial mea­sure­ment – we’d guess at least a foot so far – but when we threw our Basenji bitch into the night, she splayed her legs and her paws didn’t hit the ground. (Don’t worry, other dog lovers, we quickly retrieved her and found our boots and coat and began shov­el­ing. Also, being West­ern Penn­syl­va­nia, noth­ing is flat, and there is imme­di­ately two steps down so the depth was dif­fi­cult to estimate.)

Our other Boots, Our Poster Boy for the Credit Cri­sis, didn’t make it out­side the first time. When we opened the door, they both stood there star­ing at the vast, cold white­ness, and when we grabbed her, he made a run for it – in the oppo­site direction.

They (and we) hadn’t been out­side since the snow began to accu­mu­late, and we fig­ured that there would be about six inches on the ground – not easy for a Basenji, but not worth shov­el­ing until the morning.

Boy, were we wrong!

So, while every­one slept, we shov­eled the walk­way from their exit door to their entrance door and a bit of the patio. With drift­ing, it is already 18 — 24 inches in places, and accord­ing to the weather radar there is no let up in sight.

For­tu­nately, we live on the top of a hill and even when the tem­per­a­ture is in the high twen­ties, the snow is light and fluffy – well, as light as two feet of show can be. (For some rea­son, a few hun­dred feet of ele­va­tion makes a HUGE dif­fer­ence in the con­sis­tency of it.)

If you live near the East Coast, good luck and be care­ful on Saturday.

And So Is ‘Gay’

In fact, stu­dents of his­tor­i­cal lin­guis­tics could tell you that many other words are homo­graphs, too, and those stu­dents could also explain seman­tic change, includ­ing the pejo­ra­tion and recla­ma­tion of words. (Don’t be a fool, you know where this is head­ing.)

We doubt that we have much in com­mon with Pres­i­dent Obama’s Chief of Staff, Rahm Emanuel, but we do sym­pa­thize with him for the grief he is tak­ing for using ‘retarded’ as a pejorative.

Was it poor judg­ment? Sure. Should he have known bet­ter? Of course. Are we ital­i­ciz­ing homo­graphs? You know it. (Actu­ally, because we are lazy and didn’t major in lin­guis­tics, only the homo­graphs that are easy to iden­tify and only the first time, but we’ll stop now.)

So, while polit­i­cally we tend to agree with his crit­ics like Sarah Palin, in this case we think that she and all the other cyn­i­cal or pious grievance-​mongers should grow-​up, shut-​up and go away.

If you are aggrieved by some­thing that a stranger said about some­one else in a place where you weren’t approx­i­mately six months ago, then you, dear reader, are either a cyn­i­cal, politically-​motivated d.b. or you are a humor­less scold – pos­si­bly a bit too sen­si­tive and pos­si­bly with deep emo­tional problems.

In fact, it would do every­one – indi­vid­u­ally and col­lec­tively – much good to remem­ber that on occa­sion, every­one behaves like a butthead, but there is a huge dif­fer­ence between mali­cious behav­ior and sim­ply mak­ing a mis­take in the heat of the moment.

In our mind, that dif­fer­ence is nearly anal­o­gous to Saint Fran­cis de Sales’ dis­tinc­tion between sin and imper­fec­tion; how­ever, in this case we have a dif­fer­ent ‘Fran­cis’ quote in mind. That would be one spo­ken by Sargeant Hulka in the 1981 movie, Stripes. When one of the recruits states, “… Any of you guys call me Fran­cis, and I’ll kill you,” the good sergeant replies, Lighten Up, Francis.”

So, lighten up, Sarah and posse. There are too many impor­tant issues where he is on the wrong side to worry about a silly one like this one.

Inno­v­a­tive Man­age­ment Solu­tions ~ Cre­ative Web Design

We have changed our site’s and the firm’s motto to bet­ter reflect our broad busi­ness mix. We have dropped the nar­rower “Thought before Cal­cu­la­tion” for the more gen­eral “Inno­v­a­tive Man­age­ment Solu­tions.” Inno­va­tion isn’t always thought­ful, but in our case it is.

Plus, we have added “Cre­ative Web Design” to rec­og­nize a large part of our prac­tice. Through sheer serendip­ity, we design and develop the kind of web sites that “every­body wants.” Our sites are good-​looking, orga­nized, easily-​self-​managed, and search-​engine opti­mized. What’s not to like?

We men­tioned the answer to our ques­tion in Sunday’s post, Bernanke: No, but it is worth repeat­ing as a stand-​alone post.

Many sup­port­ers of Ben Bernanke (and other politi­cians) cite last year’s increase in the stock mar­ket as evi­dence that the he or they “saved the econ­omy” and/​or “pre­vented a depression.”

For those read­ers who don’t have the per­cent­ages mem­o­rized, the Dow Jones Indus­trial Aver­age increased about 20% in 2009. From its nadir early last March, it increased about 61% by year-​end. (Yeah, Jan­u­ary and Feb­ru­ary ’09 were par­tic­u­larly cruel.)

That seems impres­sive, right?

Well, in 1932, the Dow Jones Indus­trial Aver­age increased about 64%.

Recall that the Great Depres­sion is sup­posed to have started with the stock mar­ket crash in Octo­ber, 1929, and ended around 1940 or so. (Among econ­o­mists who care about such things, there isn’t as much con­sen­sus about its end­ing as its beginning.)

Now, whether one takes the absolute peak or some other smoother mea­sure of the index’s lev­els, it took until 1954 or 1955 to approach the highs of 1929 & 30.

So, while it’s very nice when­ever equity mar­kets increase, note that the extra­or­di­nary stock per­for­mance in 1932 did not sig­nal an end to the depression.

Also, note that it took another 22 years (or so) to attain new equity index highs, and those lat­ter highs were not adjusted down­ward (for the infla­tion) dur­ing the inter­ven­ing 22 years.

So, while every rea­son­able and sane per­son hopes that the worst of the eco­nomic cri­sis is over, note that it need not be for many, many peo­ple or for the econ­omy as a whole.

Now, per­haps we are inat­ten­tive, but we haven’t heard Mr. Bernanke take any credit for last year’s per­for­mance. We would attribute that to the fact that he knows more about the Great Depres­sion than many of his sup­port­ers do.