Monthly Archives: September 2012

What’s a Good Education Worth?

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Fred Wilson has an interesting take on the student debt issue:

So we are big believers in the value of a higher education and we have invested in it for ourselves and our children.

I told the University President and the faculty members all that. But I also told them that I am deeply concerned that about the cost of a high quality education and the fact that it is getting out of reach for many. And I told them that I am not sure the return on the investment is as high as it once was for many degrees. And finally, I told them that too many students are walking out of college with a student loan burden that is crushing and that they can't and won't pay back. 

So how you reconcile these two opposing views and what can we do about it?…

But we also need to get more creative about the financing of higher education. We should measure the return on investment students are getting from the institutions they attend and the degrees they obtain and tie the amount of loans they can get to the returns they are likely to achieve. Students that attend institutions that can deliver higher returns should be able to take out larger loans.

Repayment terms need to change as well. Loan repayments should be capped at a percentage of current income. I know a woman who has been out of graduate school for more than a decade who dedicates one of her two paychecks a month to paying back her student loans. She is spending half of her take home income on her student loans. That is nuts.

Bubbles are driven by easy money that drives irrational behavior. Our student loan policies have been doing some of that. We can and should change our policies to force more rational decisions in the purchase of higher education in this country. 

There could be some pretty strong arguments made against tying the amount of a loan to the likely return of a degree. Someone who majors in English Lit with a concentration on 18th century poetry doesn't seem likely to have a high paying job, i.e. a high return, but you never know. There's also a compelling case for allowing kids to go on an intellectual exploration during their undergraduate years, and if you tie their loans to the return on any given degree you're likely to stifle that exploration.

But that's a nit-pick. Fred's core point, that we need to rethink how we structure and pay for higher education, is spot on. With two kids at NC State our family can tell you that the effects of reduced state funding are very real, and they are having a significant impact on students' abilities to fund their educations. Reduced state funding is leading inexorably to higher costs, which means more debt for students and an increasingly urgent need to figure out a way to turn the tide on student debt. 

Tangible Happiness

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Sasha Dichter's blog is fast becoming a favorite. His take on the "intangible dividend" of happiness:

Of course it’s hard to measure, of course it is squishy and self-reported, but if we’re ever going to get anywhere we have to have the comfort and confidence to say out loud that things like human dignity, pride, and yes happiness are the whole point, the only point really, and that everything we’re doing is aimed at loose proxies to those results – what could be more real or concrete than that?

Just think how much we’ve punted on this issue, if we’re really honest with ourselves.  We’ve come to a point where we’re saying with a straight face that if we put a lot of money into the impact investing sector and that money realizes a healthy level of financial return then we’ve had success.  That puts us about seven degrees removed from actually understanding if anyone is better off, happier, freer, more proud or connected or more able to realize their potential, if someone is more likely to realize justice if they’re wronged or less likely to fall back into poverty if they get sick.

Name That President

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If you had to guess the president to whom the following quote belongs, who would it be? Reagan? Kennedy? Roosevelt?

The country needs and, unless I mistake its temper, the country demands bold, persistent experimentation. It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something. The millions who are in want will not stand by silently forever while the things to satisfy their needs are within easy reach. We need enthusiasm, imagination and the ability to face facts, even unpleasant ones, bravely. We need to correct, by drastic means if necessary, the faults in our economic system from which we now suffer. We need the courage of the young. Yours is not the task of making your way in the world, but the task of remaking the world which you will find before you. May every one of us be granted the courage, the faith and the vision to give the best that is in us to that remaking!

If you guessed Roosevelt you'd be right, but which one?

This Ain’t Your Dad’s Wall Street

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Mark Cuban does a great job explaining why Wall Street is no longer the economic engine it once was:

Over just the past 5 years, the market has changed. It is getting increasingly difficult to just invest in companies you believe in. Discussion in the market place is not about the performance of specific companies and their returns. Discussion is about macro issues that impact all stocks. And those macro issues impact automated trading decisions, which impact any and every stock that is part of any and every index or ETF.  Combine that with the leverage of derivatives tracking companies,  indexes and other packages or the leveraged ETFs, and individual stocks become pawns in a much bigger game than I feel increasingly less  comfortable playing. It is a game fraught with ever increasing risk.

So back to the original question. What business is Wall Street in ?

Its primary business is no longer creating capital for business. Creating capital for business has to be less than 1pct of the volume on Wall Street in any given period. (I would be curious if anyone out there knows what percentage of transactions actually return money to a company for any reason). It wouldn’t shock me that even in this environment that more money flows from companies to the market in the form of buybacks (which i think are always a mistake), than flows into companies in the form of equity.

He then offers up some ideas about how to return Wall Street to its original role:

My 2 cents is that it is important for this country to push Wall Street back to the business of creating capital for business.  Whether its through a use of taxes on trades(hit every trade on a stock held less than 1 hour with a 10c tax and all these problems go away), or changing the capital gains tax structure so that there is no capital gains tax on any shares of stock (private or public company) held for 1 year or more, and no tax on dividends paid to shareholders who have held stock in the company for more than 5 years.  However we need to do it, we need to get the smart money on Wall Street back to thinking about ways to use their capital to help start and grow companies. That is what will create jobs. That is where we will find the next big thing that will accelerate the world economy.  It won’t come from traders trying to hack the financial system for a few pennies per trade.

Just Do Your Job

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Greensboro blogger Roch Smith, Jr. has been taking local CBS affiliate WFMY to task for passing off press releases or stories from other outlets as having been written by WFMY staffers. Roch calls it plagiarism, which I don't agree with IF the other parties are in agreement that it's okay for WFMY to do it. On the other hand it's incredibly lazy on the part of WFMY and it likely diminishes their reputation as a news outlet.

There's also a hidden danger to the practice of simply regurgitating press releases with the station's imprimatur: mistakenly giving credence to an organization, or even missing a story, because the station didn't bother to do any background on what it was sent. Today Roch found a perfect example of this at WFMY's website:

Here's why. When WFMY vomits up a glowing press release that touts a local sheriff heading off to some "border training" sponsored by Federation for American Immigration Reform (FAIR) without any of their own investigation, they miss the rather important fact that FAIR is tied to white supremacy and bigotry.


WFMY not only gives their poor audience the impression that everything is just peachy with the sheriff's trip — just as the press release promises and just as they've affirmed by putting a staff person's name to it — but they also fail to see the news right under their nose and ask the obvious question which is why the hell are local sheriffs attending a "training" event sponsored by this group?

So here's a lesson for you kids: laziness in your work almost always comes back to bite you. It will be interesting to see what happens with this.

Don’t Quote Me

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Anyone who has ever been interviewed for a news story has experienced that "Oh God I hope I don't sound like and idiot" feeling and the related "I hope they don't use what I say out of context to make me look like an idiot" feeling. It's terrifying and a primary reason that there's an industry built ar0und media training.

Related to the fear of being misquoted is the desire to control the story and as a result there's a growing trend for people to demand quote approval as a condition for being interviewed. Some traditional news people argue that it's bad for the news reporting business, but Dilbert creator Scott Adams thinks it might actually be a good thing:

I've been interviewed several hundred times in my career. When I see my quotes taken out of context it is often horrifying. Your jaw would drop if you saw how often quotes are literally manufactured by writers to make a point. Some of it is accidental because reporters try to listen and take notes at the same time. But much of it is obviously intentional. So much so that when I see quotes in any news report I discount them entirely. In the best case, quotes are out of context. In the worst case, the quotes are totally manufactured.

I've also been in a number of interviews in which the writer tried to force a quote to fit a narrative that's already been formed. The way that looks is that the writer asks the same question in ten different ways, each time trying to lead the witness to a damning or controversial quote. It's a dangerous situation because humans are wired to want to please, and once you pick up on what a writer wants you to say, it's hard to resist delivering it…

Quote approval is certainly bad for the news industry because it reduces the opportunities for manufacturing news and artificial controversies. But on balance, I'd say quote approval adds more to truth than it subtracts.

Over the past few years I've been interviewed a few times for news stories related to my job, but they were mostly "friendly" stories that didn't carry any "gotcha" risks. Then a few weeks ago I was interviewed for a story and it was apparent throughout the interview that the reporter had a pre-conceived narrative and she was trying mightily to get me to give up a juicy quote to support that narrative. I spent the better part of 20 minutes trying to not give her that quote and then spent eight agonizing hours until the story was aired to see how anything I might have said would be used. I've never been happier to end up edited ott of a story in my life.

Lonely Highways

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My commute from home in Lewisville to work in Greensboro is spent primarily on I-40 and almost every day I pass the spot where a decomposed body was found today. As a pretty avid fan of mysteries (I grew up reading the Hardy Boys, became a fan of the Spenser novels in college, and have long been a devotee of Ross Thomas, Gregory McDonald, Elmore Leonard, etc.) it has occurred to me as I drive the highway that although thousands of people pass by every day, it's rare that anyone walks those grounds and thus the wooded areas between the exits would make a pretty good place to hide a body or many other kinds of wrongdoing. 

Along the same route there are also dozens of bridges and multiple creeks, and in at least a couple of spots it's pretty easy to imagine how someone could run off the road in the middle of the night and, if no one else is in sight when it happens, not be discovered for a very long time. We tend to think of those kinds of stories as happening in the Everglades or in rural, mountainous areas, but the nature of our interstates being what they are it can easily happen just about anywhere.

Food for thought during the drive home, eh?

Remember the Carolina Cougars?

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Folks of a certain age from around these parts (Piedmont Triad of North Carolina) might remember the Carolina Cougars of the old American Basketball Association. The Cougars were based in Greensboro until 1974 when they were purchased by Ozzie and Daniel Silna, moved to St. Louis and renamed the Spirit. That's when this story starts to get really interesting:

Four of the A.B.A.’s seven teams merged with the N.B.A. in 1976, but the Virginia Squires were a financial wreck and the Kentucky Colonels were placated with a $3.3 million payment. But if the Spirits couldn’t join the N.B.A., the Silna brothers wanted to share in what the A.B.A. didn’t have: national TV revenue. They settled with one-seventh of the television money generated annually by each of the four surviving A.B.A. teams — the Nets, the San Antonio Spurs, the Indiana Pacers and the Denver Nuggets…

In 1980-81, the first year the Silnas were eligible to get their share of TV money, they received $521,749, according to court documents filed by the N.B.A. For the 2010-11 season, they received $17,450,000. The N.B.A.’s latest TV deal, with ESPN and TNT, is worth $7.4 billion over eight years. Soon, the Silnas’ total take will hit $300 million.

That's what you might call a heckuva deal, but the brothers are looking to maximize it:

In Manhattan federal court on Thursday, lawyers for the Silna brothers and the league argued over whether the men are owed money beyond what they get from the N.B.A.’s national broadcast and cable television contracts. They want to tap into the money the league gets from international broadcasts, NBA TV, the league’s cable network, and other lucrative deals that could not have been imagined in the three network television universe of 1976.

If Federal District Judge Loretta A. Preska agrees, the Silna brothers — Ozzie, 79, and living in Malibu, Calif., and Daniel, 68, and living in Saddle River, N.J. — stand to receive millions more, all without having assembled a team or used an arena for more than three decades.

As the article pointed out the brothers' original investment in a struggling team in a struggling league was quite risky, but it's hard to imagine that they imagined it would pay off to this extent.