Sunday, June 28, 2020

A Parable On Perspective

"I saw a terrible, just tragic sight, last night at Chez Paul. A couple couldn't afford the wine pairing with the chef's tasting menu. I heard him lament something about his job at DrillRock. You know they've been one of the worst hit by the industry downturn. I can only imagine their worries... 'Do we sell the lake house--it was just in Architectural Digest!?! Will the kids have to go to public schools? At what point do I downgrade to a social membership at Bushwood?...' It all makes me question my own good fortune and if I am blissfully ignorant of how precariously close I actually am to a dramatic scaling back in my life."

"Oh! And while the valet was getting the car we saw paramedics assisting a homeless man ... heard a bystander say something about him passing out and hitting his head. He looked downright skeletal. That was sad too."

Well, We're Movin' On Up

What’s great about this country is that America started the tradition where the richest consumers buy essentially the same things as the poorest. You can be watching TV and see Coca Cola, and you know that the President drinks Coca Cola, Liz Taylor drinks Coca Cola, and just think, you can drink Coca Cola, too. A coke is a coke and no amount of money can get you a better coke than the one the bum on the corner is drinking. All the cokes are the same and all the cokes are good. Liz Taylor knows it, the President knows it, the bum knows it, and you know it.  Andy Warhol
Queen Elizabeth owned silk stockings. The capitalist achievement does not typically consist in providing more silk stockings for queens but in bringing them within the reach of factory girls in return for steadily decreasing amounts of effort. [...] [T]he capitalist process, not by coincidence but by virtue of its mechanism, progressively raises the standard of life of the masses.  –Joseph Schumpeter*
Partial list of goods and services that the Forbes 400 cannot have a better version of today than can the middle class in the U.S.—measured by quality, effectiveness, or status:
  • Mobile phones
  • Umbrellas
  • Personal computers
  • Toilet paper (notice how it required a pandemic and government intervention to make this temporarily drop off the list)
  • Cloud storage
  • Fast food and fast casual
  • Casual clothing
  • Payment processing
  • Individual consumer-level tools (but not tool collections)
  • Basic plumbing
  • Video and music entertainment content
  • Online shopping (especially important in quarantines)
  • Corrective eye surgery such as LASIK
  • Small package shipping speed
  • Email
  • All but the most exotic of beverages from bottled water to soft drinks to tea to coffee to beer to wine to liquor
  • ... I could go on and on, but Qwern already has done so for me...
This shouldn't be surprising given that I am, as most of us so fortunately are, richer than Rockefeller

Related question: As a proportion of all goods and services available, are there more or fewer things like this today than there were 50, 100, 500, 1000, etc. years ago? I would submit that there are considerably more even with all the abundance and variety that we enjoy today. In the past the inequality separation between the super rich and the middle class (or closest approximation) was vastly larger. Add to that the fact that movement between classes was virtually impossible. It is telling that only in a modern fairy tale are lyrics like this conceivable. Today we enjoy the hockey stick of human progress.

Understanding what is going on here takes more nuance than the typical person allows. Russ Roberts has a good, short video series that explores this nuance. 

*The paper at this link, Manifesto for a Humane True Libertarianism by Deirdre McCloskey, is well worth reading. It is where I most recently read the Schumpeter quote.

Tuesday, June 23, 2020

The Future of Education Post COVID-19

Tyler Cowen pointed to this “debate”, which I was a bit disappointed in for being too much an untethered discussion. Tyler’s portion I found more meaningful, but still it didn’t do much to advance my thinking.

Since they didn’t really have an objective topic, I guess I shouldn’t be too critical. But I find that a lot of the recent thinking on how things will change in the age of COVID-19 to be like this—not very deep, a combination of wish list and fear. My own view is an attempt at nuance between "most things will change very little" (we will snap back to prior norms) and "this epoch event has accelerated by multiple years that which was already underway" (e.g., teleworking just leapt forward at least 5 years along the prior trendline). To be clear I think holding both views is the best prediction--that is the nuance. Not a lot will change, but that which was already changing has been accelerated. 

Here are some of my thoughts regarding changes in education (both what was already happening and how they have accelerated) as well as the obstacles faced (incumbents and traditionalists don’t go down without a fight).

Elementary and High School

  • The major role of babysitting that school plays for many families has been shown to be replaceable. Schools aren’t as essential as previously imagined.
  • While the pandemic-induced schooling-from-home experience was miserable for most of us forced into it, schooling from home was already widely assumed to be awful. Now many are probably seeing arrangements other than traditional school as decent substitutes.
  • Much of what kids do in elementary school has little to no benefit for them. This is likely much more widely realized or at least considered as parents got a more up-close look at their kids “learning”.
  • For the kids trapped in poor schools, online and other arrangements now look like realistic improvements.
  • Teachers and schools that cannot provide good online options and flexibility have been considerably exposed.
  • For students old enough to not need babysitting and for those capable of learning outside of the regimented classroom (perhaps a large majority of students are in this latter category), questioning the necessity of a 7 to 8-hour daily routine is rising.
  • Unions and bureaucracies will be as formidable obstacles to change. However, they have a conundrum: teachers, administrators, and parents are afraid of the risk of infection. All of this pushes for alternative options to be explored, which drive experimentation toward alternatives that threaten the existing power structure.
  • Status quo bias/inertia are also obstacles. People tend to be very traditional when it comes to choices for their children. It is hard for them to wrap their heads around questioning the conventional wisdom narrative of school as we know it--especially government school.
Higher Education

For higher education I think we should solve for the equilibrium and use a typical university, the University of Oklahoma, as an example.

  • Although non-profits are insulated from market forces, they are still subject to the strength of the underlying economy on which they draw resources as well as the philosophical support of those in power. For universities those in power includes donors, alumni, legislators, employers of graduates, purchasers of research, and the public zeitgeist. So where are these headed? Saying that expectations will be to do more with less is a considerable understatement. Donor money and state funding will be much lower for a long time. However, desires/demands of universities will continue with smaller changes in overall goals. We will continue to virtue-signal about college-education being great hope for the future. So….
  • How does OU do more with less? By outsourcing what is not in their core competency. Why would we have students show up in a gigantic auditorium to watch a professor repeat a lecture he has given every semester for a decade plus? What is the value in having everyone in that room squinting at the board from the back rows and trying to avoid the inherent, multiple distractions? Can’t that be done online without the risk of infection? And once you realize that it can, it is just one more step to realize not each and every university need duplicate the tasks. Rather have grad students available to perform office hours and optional workshops. What is the point in offering the ~100th best programs in this, that, and the other? Partner with other universities for those services especially the undergrad basics. Specialize in only that where there is comparative advantage. For OU that might be areas like petroleum engineering, social networking, and football.
  • Social networking? Yes, with one of the biggest/best Greek life systems in all of higher ed, OU is among those that offer this feature. Even if the benefit is only perceived rather than real, perception matters to consumers. Drinking Gatorade doesn’t make you a better athlete.
  • And football? Yes, the football team is a source of revenue and marketing for the university. OU is great at it. And OU is in a much better position than most now that paying football players for their value contribution is rightfully (finally) trending to be the reality.
  • Thinking more of the general case, these trends lead to barbell effects: niche schools (elite quality where average is very much over) and enormous diploma-producing machines (economies of scale). While this is probably a trend within the realms of both undergraduate and advanced degree programs, it is more so a trend between these levels because . . .
  • The line between high school and undergraduate college will blur greatly while the line between undergraduate and graduate work will likely sharpen. This latter division will resemble the distinction that once existed between high school and major university such that grad school becomes the new, true higher education. 
  • Universities need to maintain their status (true in either the human capital model or the signaling model). To do so will require some exclusivity, which I think comes mostly at the entrance process to grad school--getting accepted to graduate programs becomes much more difficult. 
  • What happens to research? More rent-a-lab, rent-a-brain with corporate interests outsourcing to universities more than ever and universities renting away these resources. 
  • Obstacles? The same forces as above are at work against change here, and they are probably more powerful. But the stakes are higher and the willingness to experiment is probably higher too.
  • The major universities aren't going away, but they may be transforming so much that what emerges over the next ten years is vastly different from what we've known for so long. Imagine "going to" a major university, but not directly taking but a few classes there until upper-division-level work.
P.S., John Cochrane had two great posts recently on this topic (here and here).

Sunday, June 21, 2020

Partial List of Wisdom From Classic TV

"Just the facts ma’am" - Removing emotions and focusing on facts is critical when gathering initial information; like in researching this to relearn that he never actually said it.

"What'chu talkin' 'bout, Willis?" - Question authority, question received wisdom, question those who would sell you a bill of goods.

Father Knows Best - There is wisdom to be learned from one's elders, but also (as the show's ironic title continually demonstrated) the elders are always learning too as they very often do not have all the answers (especially in this case the father who didn't always know best).

"Nip it in the bud!" - Overzealous policing is best controlled by judicious, thoughtful leadership and a soft touch.

"Kiss my grits!" - Stand up for your rights and your point of view.

"Hey, Alex" - Wisdom and beauty come in surprising packages.

"Heyyyy" - Sometimes it is best to say little, be cool, and walk away. Also, it is both desirable to be able to and to avoid jumping the shark.

Saturday, June 20, 2020

What I Got Wrong

And what I got right... an analysis of my Trump predictions. 

I made a list of predictions at the very beginning of the Trump presidency. One year later I did an early analysis of them. Now that we are nearing the end of the first (only?) term, I thought I'd look back to see how my predictions fared. 

I was optimistic in three areas: taxes, regulation, and presidential power & authority

On taxes I was doubly right on the surface--the Congress was the key and they have gotten better. Specifically, we got the corporate tax reductions/improvements that Obama wanted but couldn't negotiate along with improvements for deductions (standard deduction increased making future itemized deduction eliminations more likely and SALT was limited making state and local taxes more burdensome thus more resented). Now, one could very correctly counter that the HUGE increases in fiscal spending fully supported by Trump during and especially before the pandemic are simply future tax burdens. This mitigates strongly against my prediction. 

On regulation I was mostly right if not a bit underestimating of the chances of progress

On presidential power & authority I was mostly wrong so far, but that prediction is a long-game idea that remains to be seen. Perhaps we have indeed grown and are continuing to grow more skeptical and reluctant on this front. Still, I see a conservative base that believes ever more in the legitimacy of strong central power and the left is still AWOL on the issue. I get the strong impression that the left still clings to the nonsensical unicorn theory of "if we just get the right person in charge, all will be well . . ."

The recent pandemic and subsequent police abuse protests stand as testament as the left criticized Trump for not being enough of a strongman and then the right rallied around the police state. And consider the reverse of the optimistic take. What if in 50 or so years people look back at things Trump said and somewhat of how he acted and take it way too seriously--like serious at all? For instance when he says I have absolute power, what if people in the future look back to that as a serious proclamation that a president claimed and wasn’t completely challenged on? 

On the initially overlooked judicial and U.S. attorney appointments I was right one-year in to be optimistic overall. Many have been very good to great like the high-profile case of Gorsuch. 

I was pessimistic in ten areas: tradeimmigrationnationalismwardrug policygovernment meddlingfree speechinternet freedomsurveillance state, and gender issues/tolerance

On trade (it took a while) and immigration I was very pessimistic and right on the mark. Being right about these and others is so very depressing.

On nationalism, gender issues/tolerance, and add to that the missing elements of social division and discord (especially the racial element) I was unfortunately wrongly not pessimistic enough--to be clear I would ideally have been wrong for being too pessimistic. He is a mass polluter in this realm. I fear this has knock-on effects for future "outsider" presidential candidates in that we will overvalue pleasantry over policy by mislabeling those who question the establishment as yet another divisive person.

On wardrug policy, and government meddling my initial (one-year in) analysis was that I had been not pessimistic enough. I think the following years have proved me more correct originally as the wrong positions of the Trump administration softened. 

On free speech, internet freedom, and surveillance state we have the reverse case where matters over gotten worse as of late. My predictions are moving from appropriately pessimistic to another unfortunate case of not pessimistic enough. We'll see...

I'll leave it to the reader to assess how my initial overall prediction has held up:
The Trump years (and they will be years despite the hope of so many for impeachment or that he would divorce America to be president of some younger Eastern European country) might be an odd combination of dramatic progress and colossal retreat. I think the eventual decisive factor will be how strong and righteous Congress is. I believe the case for optimism has a greater magnitude than the case for pessimism, but the negative sensitivity is high--meaning prospects are skewed with more downside risk than upside potential while the balance is still to the upside. 
For my grade on the last part (the balance or risk being to the upside), stay tuned for a provocative post comparing our presidential candidates. 

Sunday, June 14, 2020

Things That Can Both Be True - Mind-Blowing Partial List

Beware of false contradictions. It can be the case that:
  • One is against the drug war (wants to completely legalize all drugs) and is against the use of most currently illicit drugs.
  • One believes that prostitution should be legalized and that prostitution is morally wrong and culturally damaging.
  • One finds many of the actions and policies of the Trump administration have been bad and many of the actions and policies of the Obama administration ON THE SAME ISSUES were bad. 
  • One wants the best for low-wage workers and one is against the minimum wage. 
  • One desires a strong, vibrant job market and one views jobs as an economic cost rather than a benefit. 
  • One believes the government-commanded lockdowns were absolutely bad policies and voluntary social distancing is absolutely good behavior in light of the COVID-19 pandemic. 
  • One thinks the United States of America is a great country and the U.S. government with the support of the people of the United States has done many very wrong things. 
  • One believes a highly successful person worked very hard while being very smart and they benefited greatly from luck. 
  • One sees college education is very valuable to college graduates and it is not the best option for a very large percentage of college attendees.
  • One thinks college education is valuable to society and society would be better off with a lot less college education.
  • One strongly supports freedom of speech and strongly disagrees with the specific speech that freedom of speech is protecting.
Updated to add:

  • One believes that the use of fossil fuels meaningfully contributes to a negative effect on climate change and that the use of fossil fuels has been a wonderfully positive thing for humanity and the Earth.

Friday, June 5, 2020

Bargains Not Available

Just a little exercise in futile thinking (aren’t we all doing a bit of that nowadays?). I would swap these if I could

My rough rules on these were that they have to be relatively equal in stature and be games that I experienced—either agony of defeat or thrill of victory. 

I would lose this . . .                                                        To win this . . .
OU vs KU 1995                                                                  OU vs KU 1988
OU vs OSU 1988                                                                OU vs Boise State 2007
OU vs Texas 2018                                                              OU vs Georgia 2017
OU vs Texas 1996                                                              OU vs Texas 1984
OU vs Nebraska 2010 & OU vs Alabama 2014                      OU vs Florida 2009*
OU vs Auburn 2017 & OU vs Texas 1993                              OU vs LSU 2003*

*As they all could be argued, I would admit these are the most arguable as unfair trades.