Defenestrating Thoughts from the Bivouac

In addition to teaching journalists some science and common sense, it seems like they should really teach some history in journalism school.

Let’s take this op-ed from Pulitzer Prize winning columnist Dan Neil titled, “Let’s Nationalize GM.” Basically Neil says that we should do a complete nationalization of the American auto industry.

History clearly tells us that this in a bad idea. Central planning is notoriously inefficient for many reasons; one reason is that you have a handful of out of touch bureaucrats sitting in their ivory tower and unilaterally deciding how to allocate the resources and efforts of hundreds of millions of people.

And that’s an impossible task for someone to do: no one is smart enough to run an entire industry. Central planning caused the collapse of the Soviet Union. The Soviets were unable to figure out seemingly simple things like the how much bread to bake. Why would cars be any easier?

And for fun, let’s go through Neil’s op-ed:

Detroit makes some amazing cars. The Ford F-150 pickup I drove recently flat-out humbles rivals from Toyota or Nissan. Considering that the domestic carmakers are shouldering titanic “legacy” costs, just being competitive in any segment is a signal achievement.

Um… the Big 3 are going out of business from inability to create products people want to buy. Neil may think Detroit makes “amazing cars”, but the market says otherwise.

If you feel the gall of free-market ideology rising, consider that the measures being bruited about as preconditions for a bailout – firing GM’s top management; forcing a bankruptcy-like renegotiation of [labor] contracts with the United Auto Workers, … creating a czar of product development … – are nationalization in all but name.

Sorry, that’s a classic false-dilemma. What about the option of “let them go into bankruptcy“? Neil just provides a few bad options and says, “See mine is better!”.

GM is full of talent and potential. The company spent $8.1 billion on research and development last year, second only to Toyota.

Spending money doesn’t equal talent and potential. More importantly, if the companies fold, the talent doesn’t disappear. Other companies would snatch that talent up quickly. The companies’ designs and intellectual property can be sold on the open market; again, it wouldn’t disappear.

[T]he federal government can sell the company – at a profit – once it’s righted and sailing forward again.

Forget measuring the relative density of cars in the parking lots of Walmart versus Whole Foods, now you can measure how severe the recession is from the comfort of your home: Whole Foods is sending out coupons!

Late last week, I got my “Clipper Magazine” and on the cover there’s a full page ad from Whole Foods with two coupons: a $5 of a purchase of $25 and a $10 of a purchase of $50. That’s an effective savings of 20%!

For now, let’s just ignore the fact that Whole Foods has more than a 100% mark up and you still would be paying way too much.

You know times are tough when Whole Foods is offering coupons. It makes sense though. I mean, if you can no longer afford your trophy wife, you probably can’t afford to pick up your organic, natural, cage free, free range, fair trade, local, dolphin safe, shade grown, carbon neutral, omega-3 hummus without a coupon. :-)

In related news, the Clipper Magazine also has two coupons for Great Clips and I’m WAY overdue for a haircut. It’s nice when things work out like that.

This morning while getting ready for work, I was watching the Big 3′s CEOs talk to Congress about getting free money from the taxpayers. Most of the questions from our representatives were useless and stupid, but one of them took the cake: “Why don’t you [the Big 3] lobby to get Universal Healthcare passed so it will save you and your employees money?” (This is a rough approximation of the question.)

Um… money doesn’t grow on trees.

If “government” provides the healthcare, it’s not free; someone has to pay for it. No one will “save money” from it.

There are a couple of ways that you could fund Universal Health Care:

• More individual taxes – so instead of writing checks to “Blue Cross” for health care, you would just write “U.S. Dept of Treasury”
• More corporate taxes – if an employer has to pay X dollars per employee more in taxes to cover Universal Healthcare, then your salary is going to drop X dollars

Either way it seems like it’s a wash.

One thing I’ve heard is that the overall cost of healthcare will go down because we won’t have bureaucracy of insurance companies and there will be economies of scale.

Perhaps, in theory.

In reality, not a chance. You really think that the government will reduce bureaucracy? If so, I have a bridge I’d like to sell you.

And economies of scale? The aggregate demand for healthcare won’t change depending on who’s providing it. The aggregate demand is based on the number of customers.

But really, here’s the question that I ask every time Universal Healthcare comes up: “Do you really want the same folks that run the DMV, Post Office, TSA and the IRS to run your hospital?”

New job numbers are out (yesterday’s post was referring to Oct Job Data) and the new official unemployment rate is 6.7%

The more accurate rate is 12.5%, which includes (1) people who want full time jobs but can only find part time jobs, (2) people who want a job but can’t find one and gave up, and (3) people who aren’t counted because their unemployment benefits ran out.

While listening to the news this morning, I heard that the “average work week” dropped to 33.5 hours. I never understood why this was important until I realized that “official unemployment” numbers don’t include people who work but want to work more.

Because there aren’t enough votes in Congress to pass the auto bailout, “Senate Majority Leader Harry Reid, D-Nev., said it was up to the Bush administration to unilaterally rescue the Big Three.” (Source)

If Mr. Reid had actually read the Constitution, specifically the parts that explain what the President does and what Congress does, he would know that the President cannot legally “unilaterally” fund a bailout. Congress is in charge of spending.

What Reid is saying is, “Congress can’t do it’s job, can the President do it?” Now, if you went to your boss and said, “I can’t do my job, can you find something else to do it?”, I think you’d be fired fairly quickly.

Well, maybe we should fire Mr. Reid. Or better yet, if he’s the “leader”, maybe we should fire all of Congress.

Anytime that I see a chart with numbers and statistics, my mind immediately goes to the great quote,

There are three kinds of lies: lies, damned lies, and statistics. — Benjamin Disraeli (popularized by Mark Twain)

This is especially the case when we’re talking about government statistics. Recently, the Bureau of Labor Statistics announced that unemployment is officially 6.5%. But if you read their full report, you see some different numbers. Specifically in Table A-12:

Line U-6 is most interesting. If you take the “official” rate and add in (1) people who want full time jobs but can only find part time jobs, (2) people who want a job but can’t find up and gave up, and (3) people who aren’t counted because their unemployment benefits ran out, you get 11.8%.

That’s a very different number than the official 6.5%. Makes you wonder what other nuggets we can find if we read the fine print. :-)

(Source: Mish)

If I had a dollar for every poorly written news article I find, I would be a very wealthy man. I’ve already complained about journalists’ inability to separate correlation and causation, but now I realize that journalists also need to learn some common sense.

Of course, I’m generalizing a bit. There are some good journalists, but the majority seem pretty bad.

Take this article about some stem cells that needed to be transported from Bristol to Barcelona. The researcher in the article claimed to have made arrangements with the airline so that he could carry the cells aboard the flight. On the day of the flight, since the airline had no record of the arrangements, they wouldn’t let the scientist board the plane with the stem cells, because they were more than 3 ounces of liquid.

Since the stem cells have a limited “shelf life” the scientists ended up having to use a private jet to transport the cells.

The article talks about the surgery, scientists, and the airline, but neglects one “small” thing: the “3 ounce” law that caused this mess in the first place!

That seems like a necessary fact in order to relate the full story.

I would also award bonus points for if the journalist mentioned the strange fact of how you can’t take stem cells on a commercial flight, but you can take anything you want on a private jet.

Another example of lack of common sense is from TV news. The other day a TV anchor said (roughly), “The auto industry is seeing a huge downturn, but surprisingly one part is seeing business boom.” The anchor went on to say (roughly), “No one is buying cars, but car repair shops are seeing a lot more business.”

Why is there a “but” in either of those sentences? There’s no contradiction or surprise in this; it’s predictable and obvious:

1. Old cars need more repairs then new ones.
2. If people aren’t buying new cars, then they are keeping their old cars.
3. If there are more old cars “out there”, then there are, in aggregate, more repairs needed.
4. If there are more repairs needed, then repair shops will see more business.

Is there any wonder why the Mainstream Media is a dying medium?

I’ve been thinking a lot more about education, and reading a bunch of papers and books on the topic. And it occurred to me that there is a simple metric we could use to see if an “educational system” is useful or harmful: how many “aha!” moments do the kids have?

I think that everyone will agree with the goal of instilling children with a “desire for learning” so that they go through life actively and continually learning.

On that metric, we’re failing as a nation. One third of the adult population in American is functionally illiterate. Over 40% of college graduates never read a book after school. And 80% of American families didn’t buy a book last year (the source doesn’t attribute their sources, but, from my experience and observation, these numbers seem to be in the ballpark).

So we’re obviously not instilling a desire for learning in our country.

Now everyone says, “we have to make learning fun.” While true, this statement is misleading. Learning is fun, the creative insight from a “Aha!” moment is a very positive experience. The problem is that our education system is built on memorization, not on learning. And memorization is boring.

Let’s take simple geometry as an example. What’s the area of a rectangle? That’s easy, it’s the base times the height (or, if you prefer, “length times width”).

Now, what’s the area of a triangle? Most people know that it’s “one half of base times height”. But, here’s the better question, why is that the area of a triangle?

Most people will say “It just is.” Well, if you say that, it means you memorized what the area of a triangle is, you never learned it. If you want to learn it, you should draw a triangle and then draw a rectangular box around it. Do a few of those and you’ll say “Aha!” as you learn why the area of the triangle is one half of base times height.

Now take this example and apply it to all the curriculum in math, physics, chemistry, biology, history, economics, and everything. As you think about it, you start to wonder, what exactly are we teaching kids? Are they memorizing facts or learning concepts?

What’s the derivative of “x^2″? Why?

Oil and water don’t mix. Why?

The sky is blue. Why?

Trivia is trivial.

When we add in standardized testing, we make the problem with education even worse:

• We now teach “to the test”. Since the test only tests basic understanding, all we teach is basic understanding. Advanced material isn’t on the test, so we don’t bother teaching it.
• Since the test just measures whether the answer is right or wrong, we just teach the minimum and make the kid memorize how to figure the area of the triangle. Once the test is over, the kid forgets it.
• The school is measured on how many kids pass. So as long as the kid doesn’t fail, it’s a “success”. There’s no incentive for the kids to achieve, rather they just need to do the bare minimum.

We need to teach things as an art, not as a system of rules that you just blindly follow. Math and science are really amazing. Once you get down to it, learning and experiencing these subjects require as much creativity as painting or music does.

In the end, when we look at curriculum and teaching we need to think about whether kids are learning or memorizing? If they are learning, they are constantly having the creative insights and “Aha!” moments that make learning fun and rewarding.

On the other hand, if they are saying “school is stupid and boring”, they are probably just memorizing stuff.

It is really stupid and really boring to memorize stuff without ever discussing the why.

Well, that title isn’t really true. But it sort of is. Read on for details. :-)

I found a hilarious article on The Onion titled “American Airlines Now Charging Fees To Non-Passengers” (this is a satirical newspaper):

Cash-strapped American Airlines announced a new series of fees this week that will apply to all customers not currently flying, scheduled to fly, or even thinking about flying aboard the commercial carrier.

The fees, the latest introduced by American Airlines in a continuing effort to combat its financial woes, will take effect on Monday. According to company officials, these charges will include a $25 tax on citizens traveling with any other airline, as well as a mandatory $30 surcharge for passengers who decide to just stay home for the holidays instead.

…

Arpey said that non-passengers of American Airlines should expect to pay a small fee when making Greyhound bus reservations, choosing to drive to their final destination, or simply being a citizen of the United States with a valid Social Security number.

Obviously this couldn’t happen; companies can’t randomly charge non-customers. The whole idea is silly.

Or is it?

Sadly, this happened already. Back in 2002, airlines were hurting and every American paid a $50 fee through a $15 billion bailout package. Didn’t matter if you were a customer or a non-customer, you had to pay the fee.

And, of course, since it was the government managing the money, the whole thing was pork filled:

$20 million was shoveled to three bankrupt airlines like Vanguard, Midway, and Reliant. Nearly $165 million went to package-delivery companies. Another $5 million went to helicopter companies that, among other things, ferry workers to oilrigs and run tours to the Grand Canyon. Even three companies that arrange travel from the U.S. to Cuba cashed in.

So from now on, instead of calling it a “automaker bailout”, I’m going to call it, “letting Ford charge non-customers”. :-P