It’s Time to Replace Our Universities with…

The Madison Convention Center

Would you send your kid to a university that looks like this?  To be clear, you are looking at a picture of the convention center in Madison, WI.

Before you answer, I ask you to consider a few macroeconomic and social factors. 

A colleague in the educational publishing field recently told me that “point-in-time” certification is “dead”.  That’s the word he used – dead!  Education and the certifications or degrees that go along with it will be a lifelong endeavor, he contends.  Here’s an easy example.

How valuable is your four-year degree in computer science if you earned it in 1975?  How about 1985?  Or 1995?

2005? 

A technical degree whether in computer science, medicine or metallurgy requires constant updating to be relevant in the modern workplace.  So, what is the value of a four-year degree?

I have written about the near obsolescence of a four-year degree before.  In “Don’t Send Your Kid to College”, I advocated that parents and matriculating students demand they get an education that provides them with the skills that are essential to today’s job market. 

Of course, there is a broader perspective.  My four-year degree in Naval Engineering was quite relevant when I served as Chief Engineer of a US Navy ship.  Since then?  Not so much.

Is your education relevant to your work?

Does it need to be?

Wisconsin governor Scott Walker placed this issue front and center a few weeks ago when he proposed a $300 Million cut to the budget of the University of Wisconsin system.  Not satisfied to leave it at that, he also proposed (and later withdrew) a change to the 110 year-old mission statement, replacing a phrase about the “search for truth” with language requiring that the system meet the “state’s workforce needs”.  The governor is something of a lightening rod. So, I would ask you to set your political views aside for the moment and consider…

The college experience is more than a job-training program.  When I studied engineering, I was also required to take courses in political science, history and literature.  In those days, the ideal was expressed as producing a “well-rounded individual”. 

Following Gov. Walker’s pronouncements, Christine Evans, a history professor at University of Wisconsin-Milwaukee, wrote passionately about the “Wisconsin Idea” in the New York Times.  “As my students understand,” she wrote, “the humanities train critical thinkers and citizens. That may be inconvenient for politicians who see their constituents as merely a ‘work force,’ but it is definitely good for our democracy…”

In my private correspondence with Professor Evans, she expresses concern that “Faculty control of universities has also increasingly given way to [a] ‘CEO’ model for higher education that means VERY highly paid administrators make decisions without concern for universities' core missions or much of a sense of what we do or why.”  She goes on to bemoan “our legislature now demands vast reams of new paperwork so they can be sure we are ‘accountable.’” 

These criticisms ring true to me.  CEO’s drive revenue.  Their training is well suited to improve the bottom line but not necessarily the best educational outcomes.  And, I can’t see how the legislature adds any value by requiring more red tape. 

In a larger context, however, I wonder how we as a society can sustain the system. Universities raise large endowments to build gyms, libraries and dormitories, the better to attract new students. And so the cost of a college education has increased by nearly 500% since 1985. And, we all know what student loan debt is doing to young graduates. 

Meanwhile, kids who go away to college can attend courses online from their dorm rooms, all of the books in those expensive libraries are available online and 70% of classes are taught by adjunct professors, most of whom earn less than $50K per year. In other words, we are paying to maintain overhead -- facilities and faculty -- designed for a bygone era.  Why not use a smaller platform like a convention center where students attend classes online and take turns being on campus for one or two weeks per semester?

There’s more to the college experience than classes, libraries and professors, of course.  Many in my generation wax poetic when talking about their college years – the lasting relationships, the broadening of their perspectives, the chance to break away from Mom and Dad.

So, I’ll ask my opening question again, only slightly differently.  Do we, as a society, need to maintain a system that is now so expensive that fewer middle class families can afford it?  Or, can we gain the same advantage by replacing the high overhead infrastructure of our universities with a new model?

WHO WILL LEAD?

Robert Reich, the corporate income tax and the middle class

Robert Reich

I enjoy the writings of Robert Reich despite his liberal leanings.  He is intelligent and articulate and, most importantly, not dogmatic.  On his Facebook page last week he voiced his support for President Obama’s one time tax on the overseas profits of American corporations to rebuild America’s infrastructure.  In a 2 minute video he laid out his case that American corporations enjoy the protections of American trade policies without the penalty of being taxed. 

I immediately thought this was at odds with his prescription for corporate taxes in his 2009 book, Supercapitalism and the Transformation of Business, Democracyand Everyday Life.  But is it?

Then he argued that corporations should not be treated as people and that such treatment distorts their effect on government policy.  This is from page 218…

“The result of this anthropomorphic [treatment of corporations] is to give companies duties and rights that properly belong to people instead. This blurs the boundary between capitalism and democracy, and leads to a host of bad public policies. Consider, for example, the corporate income tax. The public has the false impression that corporations pay it, and therefore they should be entitled to participate in the democratic process under the old adage “no taxation without representation.” But only people pay taxes. In reality, the corporate income tax is paid—indirectly—by the company’s consumers, shareholders, and employees. Studies have attempted to determine exactly how the tax is allocated among these three groups, but the distribution remains unclear. What is clear is the corporate income tax is inefficient and inequitable.

“It’s inefficient because interest payments made by corporations on their debt are deductible from their corporate income tax while dividend payments are not. This creates an incentive for companies to over rely on debt financing relative to shareholder equity, and to retain earnings rather than distribute them as dividends. The result, in recent years, has been for many corporations to accumulate large amounts of money that the company then uses to purchase other companies or to buy back its shares of stock. Capital markets would be more efficient if these accumulated profits were redistributed to shareholders as dividends. “Decisions by millions of shareholders about how and when to reinvest these funds are likely to be, as a whole, wiser than decisions made by a relatively small number of corporate executives. Abolishing the corporate income tax would thus help capital markets work better.

“The corporate income tax is inequitable in that retained earnings representing the portion held by lower-income investors are taxed at a corporate rate that’s often higher than the rate they pay on their other income, while earnings representing the holdings of higher income shareholders are taxed at a corporate rate often lower than they pay on the rest of their income. As we have seen, under Supercapitalism, investors have far more power than they did decades ago. Their decisions about where to put their money to maximize their returns are similar to any other decisions they make about how to increase their earnings. Logically, there is no reason why their ‘corporate’ earnings should be taxed differently than their other earnings. Abolishing the corporate income tax and treating all corporate income as the personal income of shareholders would rectify this anomaly.”

To be fair, the two comments are taken out of context and provide Dr. Reich’s answer to two different questions.  In his book, he is advocating a policy that would favor the middle class by lowering the tax burden of owning corporate stock and mutual funds, cause corporations to be smarter about how they invest their capital, reduce corporate lobbying in Congress and create jobs in America rather than overseas.  His Facebook comments are made in the narrower context of the budget proposal submitted by the President to Congress earlier this month. 

His argument that American corporations enjoy the benefits of US trade policies is somewhat suspect, however.  Those policies are more favorable to our trading partners than to American corporations. 

Enacted in 1994, the World Trade Organization (WTO) has enabled emerging economies to participate in free trade with the industrialized world and has helped to alleviate poverty in those countries.  The rapid expansion of the global economy is among its myriad benefits.

However, the WTO puts every nation and every corporation on an equal footing and precludes the US from taking direct action to pressure trading partners to eliminate barriers to US exports and other unfair practices. Under this regime, American corporations do well to invest overseas.

If we want to help the middle class, lets address the underlying causes of their distress.  Overhaul of tax and trade policies is a good place to start.

WHO WILL LEAD?

F.I.C.A., Inflation and the Middle Class Squeeze

“What’s this F.I.C.A.?” said my son.  He was home from college (in 1992) and was deconstructing his first pay stub from his summer work at a local nursery.  F.I.C.A., which everyone knows is the payroll tax that feeds the Social Security and Medicare trust funds, was larger than any deduction on the stub.  Such are the travails of a 19-year-old working for minimum wage.

The tax is very regressive.  It penalizes low wage earners more than high wage earners as it takes 7.5% of every dollar earned up to $117,000 each year.   It’s only one of the ways in which middle class taxpayers are hurt more than those at the top and bottom.

The poor receive government benefits in the form of the Earned Income Tax Credit, Medicaid, Section 8 housing and food stamps to keep them afloat.  By the time your earnings get to around $35,000 annually, most of that is phased out.

At the top, the wealthy can lower their tax bill though a variety of credits and deductions associated with owning assets, like stocks and real estate.  Those factors typically don’t help the middle class as much.

The middle class squeeze is about more than just taxes though.  It’s about inflation.

We keep hearing that inflation is under control.  And, the numbers don’t lie.  Overall inflation has been running well below the Federal Reserve’s target of 2% for years now.  However, as the cost of manufactured goods has been going down, the cost of essential services has gone up a lot!  Here’s a chart from the liberal think tank Center for American Progress (CAP) that illustrates the problem very well:

Which of these services can you forgo?

Meanwhile incomes are dropping in real terms.  This chart compiled by Mother Jones using data from the US Census Bureau shows the trend going back to 1967 and indicates that 2012 median income is about the same as it was in 1989.

Politicians on the left and right are now talking about the middle class and I suppose that’s good. But, what are the solutions they propose?  It may be too soon to tell how the President and his Republican opponents in Congress will define the battleground.  However, it’s easy to predict that it will be more of the same standoff.

CAP proposes a long list of solutions reminiscent of the 1960’s before globalization and automation stripped good paying factory jobs out of the US economy. These include raising the minimum wage, strengthening unions, improving education, reforming healthcare and realigning factors leading to more equitable home ownership.  

Will a return to the policies of the Great Society work in the 21^st Century?

For their part, Republicans haven’t come up with a viable alternative – or any alternative other than lowering taxes and reducing the deficit.  Both are attractive but unlikely to trickle down to the middle class. 

But, if these policies won’ t work, what will?

It’s hard to know for sure.  However, I would favor those that provide opportunity through programs that would likely defy the dogma of both the left and the right. We can encourage the growth of high paying, blue-collar jobs in industries like energy and manufacturing through deregulation and subsidies. We can reform the tax code so that the burden falls less on employers and employees than on those who profit from asset appreciation.  And, rather than imposing huge tuition costs on those who might graduate without needed skills, we could provide support for technical skills demanded by the market. 

Moreover, capitalists – those who believe in a society built on opportunity rather than welfare – must find a way to ensure that the middle class can share in the benefits of our system.

WHO WILL LEAD?

Kurt Vonnegut, Enrico Fermi and Climate Change

In college, I read lots of books by Kurt Vonnegut.  He had a unique ability to paint a surreal picture in novels like Slaughterhouse Five, Cat’s Cradle and Breakfast of Champions.  His capacity to turn logic and our belief systems on their heads is evident in this quote (speaking of the human race):

"We're terrible animals. I think that the Earth's immune system is trying to get rid of us, as well it should."

As surreal as that might be, its sentiment echoes Enrico Fermi.  The brilliant Italian physicist once asked a casual question that has led to a half century of metaphysical inquiry about the nature of civilizations on this and other planets.  Known as the Fermi Paradox, it is a question with no answer.

Every star in the Milky Way has planets.  With over 300 Million stars, Fermi speculates that there must be some other civilizations out there.  In the absence of evidence of their existence, should we assume that they never existed or that they have existed but become extinct?  I might put it another way.  Are civilizations sustainable?

Have we Earthlings, like others before us, hit the sustainability wall?

As we know, burning fossil fuels creates toxic by-products.  And, what of the alternatives?

Scientists at the Max Planck Institute have determined that deploying wind turbines on a massive scale would have environmental consequences…. 

Producing bio-fuels on a large scale requires vast plots of land and quantities of water…. 

Extracting hydrogen from natural gas emits green house gases (carbon dioxide)…

And so it goes….

John Englander, author of “High Tide on Main Street: RisingSea Level and the Coming Coastal Crisis”, doesn’t trouble himself with metaphysical questions. A former CEO of the Cousteau Society, John believes that we have passed the tipping point ofglobal climate change.  There is no looking back.  We must focus on how to adapt to Sea Level Rise (SLR).

John tracked me down to make sure I got the message.  In my last post, I expressed some doubt about the conclusions of the IPCC report.  “My reading of the definitive report by the UN sponsored International Panel on Climate Change (IPCC) lends some doubt on those projections as the IPCC uses the adjective “likely” or “very likely” when describing their projections.  Science is never certain,” I said.

John doesn’t dispute my reading comprehension.  He simply points out the IPCC drew conclusions least subject to attack by political factions inimical to their findings.  So, their findings present the most optimistic case.  The range ofpossibilities is much worse than the IPCC lets on.

John eschews the politics of climate change.  “Ice turns to water at 32°,” he says.  “It doesn’t care if you’re a Democrat or a Republican.”

He makes a compelling case.  Sea level has been rising and falling hundreds of feet for each ice age cycle of 100,000 years.  The one and a half degree change in ocean temperatures over the last 100 years guarantees that the ice will melt for centuries, raising sea levels.  Done deal.

Speaking at the TEDx Conference in Boca Raton, Florida last year, he advocated that we stop debating where we are and how we got here.  Let’s focus on what to do next.

In his book, Englander lays out the options for several cities.  Solutions vary depending upon the geology of each city.  New York, for example, sits on granite.  So, the system of dykes planned by the Bloomberg administration may work to counter the impact.

Miami, sitting on a bed of limestone, may not survive.

The effects can already be seen in Miami Beach where the city has begun a $15 Million project to install pumps to keep the streets dry during regular high tides that flood them.  Counter-intuitively, the city has also approved construction ofmulti-million dollar condos so they can raise enough real estate taxes to pay for the project. 

Are they just whistling in the dark?  Englander might say so.

 

High tide comes up through storm drains in Miami Beach

A foot of SLR will move the shoreline inland 300 feet, globally averaged. In low-lying coastal areas, like Miami Beach, the average will be exceeded. The IPCC estimate of minimum SLR this Century is 2 feet.  You do the math!

As for the predictability of the study, John points out that the Antarctic ice ledge poised to break off into the ocean will add 10 feet to SLR in a very short timeframe.  We don’t know if that will happen this Century or next.  But, it will happen.

There are no answers to Fermi’s Paradox because there is no time limit to the question.  It’s possible that civilizations throughout the Universe have always hit the wall of sustainability.  We may be next.

Perhaps we should just leave an epitaph, again quoting the quotable Mr. Vonnegut: 

“We could have saved the Earth but we were too damned cheap.”

WHO WILL LEAD?