Why Colleges Produce Poor Results

                           

Both college and high school educations are not what they once were. College levels especially. You can call it educational devaluation.

                           

When it becomes too easy to enter college you get a diminution of educational principles. Educators dumb down courses, to appeal to a prospective student’s lowest ability.

                           

Also, affirmative action is generally practiced, and not just for conventional minorities. It’s there for any group not equally represented on attendance roles.

                           

Moreover, schools market themselves by appealing to the baser instincts of students. The idea is to fill the rosters by making it easier to attend.

                           

Students, therefore, wind up in the easiest courses, That’s why so many graduates are unable to find real, practical jobs. Or why we have so many with easy-to-get law degrees and so few who are doctors and scientists.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

           

Importance of Executive Good-Looks?

                           

Selecting executives primarily for their good looks is well-known. It’s an unfortunate fact of business life, as it is in politics.

                           

Top business executives often get where they are. This is particularly so, it appears, when it comes to women.

                           

For men, the taller and handsome they are, the more advancement they achieve. With attractive women, however, being too pretty translates as dumb, especially among blonds.

                           

This is unfortunate but my experience in the business world has taught me that too many recruiters look for shortcuts when evaluating talent among prospects.

                           

All forms of prejudices, including good looks, simplify those shortcuts. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

       

               

Is the Planet Really Warming?

                           

The sun has been its least active in decades. It’s in its dimmest phase in a hundred years.

                           

This is causing scientists to recall the Little Ice Age, an unusual cold spell in Europe and North America, that lasted from about 1300 to 1850. The coldest period of the Little Ice Age was between 1645 and 1715, linked to a deep dip in solar storms, known as the Maunder Minimum.

                           

Access to Greenland, at that time, was largely cut off by ice. Canals in Holland routinely froze solidly. Glaciers in the Alps covered whole villages, and sea ice increased so that no open water flowed around Iceland in 1695.

                           

For hundreds of years scientists used the number of sunspots to trace the sun's roughly 11-year cycles of activity. Sunspots indicate intense magnetic activity on the sun's surface. Solar storms send bursts of charged particles hurtling toward Earth.

                           

Changes in the sun's activity affect earth in other ways. Research has developed a theory that the sun has a bigger influence on earth's climate than others have predicted.

                           

That throws the global warming pessimists who are anti-auto, anti-industry, and anti-industrial development, into their usual dilemma. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

       

       

Poor College Student Performance

                           

A Pew Charitable Trust's investigation just a few years back showed that 50% of college seniors failed this practical test: It had asked them to understand a table about exercise and blood pressure, or understand newspaper editorials, or how to compare credit card offers.

                           

Graduates are probably less adept today, from more recent test scores being reported.

                           

Employers say many college graduates lack basic skills of thinking and writing. This is not surprising.

                                                               

About 20% of college seniors do not have the ability to estimate whether their car had enough fuel to get to a gas station. According to the National Assessment of Adult Literacy, the percentage of college graduates’ ability in literacy had declined from 40% to 31% in the past decade.

                           

Colleges do more for their teachers and staff, than for a large portion of their students.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

               

The Non-Political Small Business Optimism Index

                           

If you want an idea of where the economy is heading and what the chances are for a brightening in the picture for more jobs, you will want to see small business optimism numbers.

                           

The National Federation of Independent Business periodically issues its Small Business Optimism Index. That, better than any political pronouncement from the White House, will tell you how small business folk are prepared to speculate with their hard-earned money, to create needed jobs that the government can only gab about.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

College Grading Cheapening

                           

I’m providing this example of what goes for so-called college grades today.

                           

At the College of the City of New York during World War II, students were admitted only if they had the highest grades in local schools.

                           

If they were getting armed forces draft deferments because they were science and engineering majors, they had many of their classes marked on a “curve.” This was comparable to having to make the cut in professional golf. The lowest 10% to 15% of each class flunked, no matter what mark they got. Classmates competed against each other.

                           

In the toughest college in the city, perhaps the U. S., open only to the top high school graduates, a student with one class “failure” immediately flunked out.

                           

Compare that to the Ivy League college standards of today!

                           

Students go to Ivy League schools because of the aura, and the contacts they afford. The vaunted Ivies are not tough once you are admitted.

If anything, they are overrated. We see their products in Wall Street and government. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Usual Government Anti-Hiring Maneuvers

                           

The administration would love to improve the job picture, but continues to overlook how job creation really works.

                           

It does not work by handing out one-time tax credits or benefits. It does help by improving the psychology for hiring. That means providing a clear understanding of the ground rules for business. And those ground rules must be pro-business.

                           

Enterprise requires less cost of doing business. With no future prospects of a choking increase in taxes. And no higher minimum wages for unskilled labor. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Poor College Standards

                           

College has become a huge growth industry. Over 4,000 colleges and universities enroll over 17 million students.

                                               

The industry has also mutated negatively, with far too little oversight of quality.

                           

As an example: Colleges appear to be primarily in the business of acquiring students, differing to a degree in their approach to marketing.

                           

Some do so as research centers. They may boast professors with science awards and Nobel Prizes which are very appealing marketing devices. Such faculty also attract more grants and endowments.

                           

But few undergraduate students have these celebrity professors. They often are taught by graduate students.

                           

Parents and taxpayers pay billions of dollars to colleges and universities.  Schools make money whether students learn or not, whether students graduate or not, and whether they get good jobs after leaving school, or not.

                           

Colleges and universities thus engage in "bait and switch;" conferring what are actually deficient degrees, and engage in other practices that would bring legal sanctions in any other business. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Heard of Pareto Efficiency?

Pareto efficiency, or Pareto optimality, is a concept in economics. Named after Vilfredo Pareto, the term is used in engineering, game theory, and social sciences.

                           

Pareto used his theory in studies of economic efficiency and income distribution. He claimed that a change from one allocation to another could make one individual better off, without making another worse off. This is referred to as a Pareto improvement. The allocation is called Pareto efficient or Pareto optimal.

                           

The 80/20 Efficiency concept, so often used in management, is his reasoning. For example, 20% of your sales force may contribute 80% of your sales.

                           

I bring it up because the political left would do well to reconsider some of their anti-business tirades when trying to create jobs. Contemplating the Pareto principles would help their efforts. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Effective Tax Cuts Have to be Permanent

                       

Business psychology is not a political liberal’s strong suit. From time to time the Administration, for example, has offered tax cuts but only as temporary measures.

                       

Such temporary, half-hearted tax reductions have little effect because business people plan for years ahead. Temporary cuts are not only meaningless, they are a trap.

                           

For instance, a cut in payroll taxes for a short time is another version of failed Keynesian economics. It adds some money to the economy for a time and sounds good because it appears it will add to consumer spending. But experience shows it has no business multiplier effect for producing jobs. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

College Vs Non-College Earnings

                       

Education marketers compare apples and oranges when making earnings comparisons about the financial advantage of attending formal college. That skews career choices of too many kids.

                       

Numbers thrown out by college administration snake oil salesmen are usually off-the-mark. They often include janitor jobs, in comparison with high tech. Their figures are prejudiced with regard to higher-paying, non-college trades, such as electricians, plumbers, or computer techies.

                       

You are successful because of your skills and enterprise, not a framed piece of paper from a college. Get a marketable ability, whether it comes from a college or a technical school. Many technical school graduates earn far more than college grads. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Franchisers Who Offer Financing

               

I am not an advocate of most franchising, both for a franchiser, and someone seeking to buy a franchise.

               

My comments today are from the perspective of someone selling a franchise. But it ought to be understood by both franchiser and franchisee.

               

The franchisee usually finds it difficult to get financing these days, so any help from a franchiser is welcome. But, I find it dangerous for a franchiser to offer financing to a franchisee unless there is firm collateral. Despite the rosy marketing and promotional material. A franchise is, after all, small business, and that entails risk.

                       

The only type of financing that makes sense is backed by account receivables. It actually ties the franchisee more closely to the franchiser. Construction, real estate and general financing does nothing that applies equally to both parties.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

   

Problems With State and City Pensions

State and city government pension problems are severe enough to affect ratings by credit agencies. The lower the ratings, the higher the cost of running state and local governments.

We know that state and local pensions are underfunded. That is, there are not enough earnings to warrant the amount of pensions and benefits promised.

You cannot assume you will earn 8% or more on pension investments when you can safely get only 3% or 4% from those investments. So politicians will have to learn to promise less and even reduce pensions or invite bankruptcy. The latter will perform the necessary reduction whether the pensioners like it or not, so why not have everyone come to a voluntary decision to get pension matters settled?  (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

   

Heavy Bank Regulations Can be Meaningless

Further to my previous comments about U.S. government regulation of banks with the Dodd-Frank Act, I have an observation that differs a good deal from much of media comments. (I speak as a former senior bank analyst for a major Wall Street firm.)

The banks have added substantially to capital in recent years, as advised by domestic and international banking regulators. All those strengthening actions will mean nothing if banks are forced to mark their assets to  the market on a daily basis, as was the case during the 2008-09 financial debacle. You cannot price illiquid assets during a financial meltdown. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

   

Economic Damage From Environmentalist Meddling

                           

Americans in the past created farmland out of forests, swamp and deserts.They produced the world's most widespread and inexpensive agriculture. They also built dams and canals when needed.

                           

Today, the population is growing by natural and immigration means. Yet many hundreds of thousands of acres of productive land is pushed out of use. At the same time we have chronic water shortages, particularly west of the Mississippi River.

                           

We are also taking too much productive farmland away from food supplies. As well as making food more expensive.

                           

Professional environmentalists stop irrigation wherever they can. Too often it’s to save threatened species of fish and other organisms they view on the same level with human needs. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Conflicting Federal Reserve and Treasury Dept Policies

The role of the Federal Reserve has to do with monetary policy; that of the U.S. Treasury should be fiscal policy. Both are supposed to be independent of each other. However, they work hand-in-glove these days by political design.

Both are making basic errors to suit questionable short-term goals that have certain long-term danger.

One mostly hidden error both are guilty of, has to do with keeping reported governmental deficits artificially lower by stealth. In other words, the deficit picture is actually worse than is being shown. The Fed, by selling short-term bonds to hold longer-term bonds. The Treasury, by offering too large a percentage of short-term bonds to finance its outlays, when the longer-terms are now  so artificially cheap.  

In the future, Treasury costs to manage the deficit will therefore have to be far greater and the present deficit cost will prove even more humongous. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

   

In-the-Dark Bank Regulators

Amidst all the fanfare about bank regulating by government, there is an assumption being made by the unknowing public that the supposed overseers know what to look for. That  the regulators are fully qualified to do their work.

That’s an easy assumption to make with all the noise from government that’s echoed by the media.

As just one example. Government regulators haven’t the foggiest idea of how much volume there exists in the so-called “repos” market which they have erroneously insisted was one of the major causes of the 2008-09 financial meltdown. It might be $10 trillion, or more. It cannot be measured, or the types of participation involved determined, so it certainly cannot be controlled. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

We Can Actually Save Taxpayer Dollars

               

Over-regulation of the U.S. economy is estimated to cost at least $2 trillion in extra costs that taxpayers will pay in one form or another. These costs come in varying disguises: Wind power, solar panels. battery operated cars. All of which are worthy goals, but not yet commercially feasible.

               

They belong in research labs where they can be studied more deeply before being made commercial, and not subsidized by taxpayers as they are today. Any product that is commercially viable will be brought to market by an entrepreneur seeking profit. Only Big Government believes in the principle of losing money with taxpayer assistance.

               

Also, do we need an Energy Department or Education Dept, when their functions are state and local matters? Do we need subsidies for sugar farmers and ethanol production? All are just ruses for more, larger government. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter

Forced Bank-Rating Downgrades

I mentioned in a previous blog the Dodd-Frank Act of 2010, which was supposed to make banks stronger, among its other panacea provisions, and the banking credit-rating downgrades despite the legislation.

There is yet another way to measure the fact that big banks are not deemed as secure by investors as they were before the Dodd-Frank Act. Look at the cost of insuring bank debt.

The cost of insuring $10 million of debt for five years is an excellent indicator that’s available with regard to the credit standing of major banks. And it’s been high, at least as an investors’ perception of that risk. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter

Politics Affecting Bank Credit

Many smaller banks have relatively few sound loans on their books. They are under constant pressure to clean up their financials and/or add to basic capital.

Unfortunately, politicians in their area usually put pressure on bank examiners to allow these banks with questionable standing to make loans which ordinarily should not be made.

Unfortunately, banks are not making sufficient loans to small business even if they have the ability to do so, The truth is, they make more money these days by borrowing cheaply from the Federal Reserve and investing in government bonds.

This unhealthy environment is perfect for the likes of meddling politicians in Washington.

Solution? Supervise banks gingerly but independently of politics. Permit banks to make riskier small business loans and restrict their tendency to borrow cheaply from the Fed, in order to invest in government bonds. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

   

Regulators Stumble Over Banking Regulations

   

The public has no idea how unsure regulators are about the rules they lay down for the banks they regulate. No one has a unqualified standard that makes common sense to all concerned.

What securities, for example, should make up a bank’s net assets? Are a government’s bonds really safe if that government is on the verge of bankruptcy? What should measure a bank’s liquidity during a financial emergency?

My argument with bank regulators: Allowing mark-to-market accounting during the 2008-09 financial meltdown, when daily bank net worth was marked down simply because there was no real market to determine those bank asset values. Securities market short-sellers were therefore able to take advantage of the unreal lower values that resulted. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)