Apt. 11D

Total Government Spending on Schools

I have mixed feelings about local control over education in this country. On the one hand, it leads to resentment about tax money going to those kids in Newark. On the other hand, local control means that people actually have debates about these matters at backyard barbecues. Anything that gets people to fill the halls of town council meetings is a good thing in my book.

Anyway, at one of these barbecues last weekend, someone wanted to know how much of his taxes went toward schools. I could give him percentiles at the federal level and at the local level, but I couldn't remember how much tax money went to schools when you combined all tax revenues. So, I just did a little googling to find a good chart. 

So, education is a nice sized slice of the pie, but there are bigger slices in there. Income security means pensions, welfare, and social security -- pensions are huge. Health is medicare and medicaid. So, we spend much, much more for older people than we do for schools.

Here's a good FAQ about funding for K-12 education by the Department of Education.

A Financial Equivalent of Drivers’ Ed

After discussing the problem of finance illiteracy, James Surowieki of the New Yorker proposes creating high school classes to teach kids about interest rates and mortgage plans.

The government’s new consumer-protection agency has the authority to “review and streamline” financial literacy programs, but that’s not enough. We really need something more like a financial equivalent of drivers’ ed. There’s evidence that just improving basic calculation skills and inculcating a few key concepts could make a significant difference. One study of the few states that have mandated financial education in schools found that it had a surprisingly large impact on savings rates. And the Center for American Progress has found that, across the country, education and counselling by nonprofit organizations, like the Massachusetts Affordable Housing Alliance, have helped low-income families buy and hold onto homes, even during the housing bubble. The point isn’t to turn the average American into Warren Buffett but to help people avoid disasters and day-to-day choices that eat away at their bank accounts. The difference between knowing a little about your finances and knowing nothing can amount to hundreds of thousands of dollars over a lifetime. And, as the past ten years have shown us, the cost to society can be far greater than that. 

I have to admit that my finance IQ has dropped over the years. Because Steve is so good at the money stuff, I've let him take over. He also has a really good sense of direction, so he drives most places on the weekends and I've forgotten how to get places that are farther than the local mall. I had to pick him up at the airport last weekend, and lacking the GPS and Steve, I got lost on the way to the New Jersey Turnpike. But I suppose if one of us is good at finding the Turnpike and at knowing when the CDs mature, that's okay.

The Future of Content

Last week, Yahoo bought Associated Content, a five year old company, for $90 million. There's a rising demand for content on business websites to help build a company's image and to increase the Google rank of the company. AC provides the content, but without having any writers or editors on staff. What?

You're the owner of a small chain of pool filter shops and you need to punch up your website. It doesn't make sense for you to waste time writing information yourself. You're too busy, and you aren't that great of a writer. So, you go to Associated Content or to one of its copycat competitions, search for content by a keyword, find the best article for you, and purchase it.

These companies have hundreds of pre-written articles and blog posts that writers have submitted with the hopes of getting published. While there is a huge demand online content, there is a bigger supply of unemployed writers who are desperate to put publications on their resume and are willing to give away their words.

I spent some time looking at these businesses and geeking out over how smart they are. These businesses are simply a big database. They don't need to employ writers; the writers come to them and lend them their words on consignment. They don't employ editors; the clients do the quality control themselves by looking through the articles. They don't interact with the client at all; the database and the tags do all the work. They really act as brokers and take a percentage from both writer and business owner. The only employees have to be computer geeks who designed the database.

I am partly in awe of the genius of these content databases. It's pure profit. I'm partly horrified by them. They take advantage of that huge pool of unemployed literature majors. They provide content for companies that don't care too much about quality. There's a cynicism underlying this business model that's a little disturbing.

Photographers complain that digital cameras, Flicker, and stock photographer companies have reduced the cost of a photograph so much that they can't earn a living. Amateur photographers are producing professional level photographs and are selling them cheaply. These new content companies are going to have the same impact on professional writers.

Aspergers and the Stock Market

Steve and I laugh that now that we understand autism, we see it everywhere. We're like Haley Joel Osmond of autism. I see autistic people.

Steve works in the same row with the guys who come up with the quantitative formulas for the traders. The stock market is run by computer algorithms, which is a whole different topic to generate paranoia and panic. Steve's quite sure that all the quant dudes are on the autistic spectrum. They talk to themselves behind their computers. They take math textbooks with them to the bathroom for a little reading, while doing their business.

Andrew Sullivan pulls a quote from a Michael Lewis profile of Michael Burry, a hedge-fund manager. Burry has Aspergers and said that the market is perfectly suited to his mind.

When he thought of it that way, he realized that complex modern financial markets were as good as designed to reward a person with Asperger's who took an interest in them. "Only someone who has Asperger's would read a subprime-mortgage-bond prospectus," he said.

Read the whole Lewis article. Really amazing writing.

The Turds at Goldman Sachs

For the past week, I've been watching the Senate grill Goldman Sachs execs with loathing. Where's the Tea Party rally? I'm a gonna burn some executives in effigy.

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
These F@#king Guys - Goldman Sachs
www.thedailyshow.com
Daily Show Full Episodes Political Humor Tea Party

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Who Wants to Beat a Millionaire
www.thedailyshow.com
Daily Show Full Episodes Political Humor Tea Party

Animal Rubber Bracelets

Jonah and his buddies are completely obsessed with Silly Bandz, which are rubber bracelets that spring into animal shapes. They get them from the video game store and from 7-11 for a few bucks and stack them up their wrists. They trade them after school. Jonah and other tweens around the country are completely obsessed, until the next dumb craze starts up next month.

There are a couple different companies that sell them, but as Steve learned from the clerk in the video game store, both companies are owned by some dude in Oklahoma who punches them out of rubber that gets from China. He's made millions.

Why can't I think of something like this?

Making Money with New Media

How about that schmuck who left the prototype of the new iPhone in a bar? Was it a cool marketing ploy or was the guy loaded?

Have the bad jokes started yet? A rabbi, a priest and a drunk Apple engineer walk into a bar and....

And how about the Nick Denton who bought the iPhone and put it up on his Gizmodo website? He says that he didn't end up making money from the huge traffic upsurge that day. The advertising space was pre-paid. But a fraction of those new visitors will show up again. He's just permanently increased his traffic numbers and he can raise advertising rates for the future.

UPDATE: Police seize computer of Gizmodo editor.

Anxiety and Transitions

For the past few weeks, there has been an undercurrent in the comment section that we are entering a period of transition in the economy and society. The economy is moving in a new direction. Professions that were long considered secured and respected may not exist much longer. This anxiety is playing out in many ways. Parents are more worried than ever that their children won't have the requisite skills to find work. They question the education that they're getting in high schools and colleges. Also, adults are struggling to redefine their professional lives.

I was struck by a statistic in a recent article about colleges and the humanities. It said that the University of Phoenix, the online college, has the largest enrollment of any American university: over 400,000 undergrads and 78,000 grad student. The author concluded with deep pessimism about the employment prospects of newly minted PhDs. I suspect the move to online education and the decline of traditional liberal arts colleges has larger implications. 

Tim Burke writes about that a new style of parenting is arising out of our insecurities.

The Unpaid Internships Blues

A friend of mine has been looking for freelance writing jobs, but has been coming up empty. The only available positions involve hours of copyediting work and no salary. That's right. You work a lot of hours and don't get paid for it. People sign up for these jobs, because they can put the job on their resume and perhaps get a reference when a real job opens up.

The equivalent in academia is adjunct teaching. Excuse me, while I hack up a goober of bile.

Apparently, these unpaid jobs are increasing and may even be illegal. 

Rob Farley writes that these unpaid jobs benefit rich, trust fund kids.

Let’s be clear; the unpaid internship effectively excludes a wide socioeconomic swath from gaining useful experience and making effective connections in business, government, and NGOs. For example, it was utterly impossible for me to even consider an unpaid internship as an undergraduate; paying the bills was difficult even with loans and full time work. Lots of young people lack significant parental support, and require minimum payment to have any hope of making ends meet. Moreover, even for those with support the “payment” for unpaid internships (connections, experience, and recommendations) often has no lasting effect on the intern’s job prospects. If you’ve ever wondered why DC NGOs and journalistic organizations are dominated by Ivy Leaguers, it ain’t just because they’re smart.

The Tax Advantage of Babies

Nancy Folbre discusses the findings of a recent paper on the economics of taxes and babies:

Over all, parents pay less in net taxes than nonparents do — until the future net tax contributions of their children are taken into account.  These more than offset the difference, leading the authors to conclude that the average parent contributes far more than the average nonparent to net taxes — a difference of more than $200,000 in 2009 dollars (discounting future contributions at an annual rate of 3 percent).