College and Youth Sports Done The Right Way ... Where The Phrase "Student-Athlete" Is Not a Joke

Occasionally a story comes along that is so different and so hopeful that it makes me smile. It also reinforces my optimism about what a great country we live in and how many unsung heroes we have.

First, a little background. Back in the dark ages, I attended the University of Nebraska on a basketball scholarship. Although a pretty good student, I quickly learned that we weren't there to get an education, at least as far as the athletic department was concerned.

Of course, we weren't prohibited from getting one, but it just wasn't a priority of the school or the coaches.

Hence, I quickly learned, as did the other "student-athletes," that the moniker "student-athlete" was an insincere marketing phrase used by universities, fund raisers, TV advertisers and the NCAA to promote the big business of college sports. It's still that way today, except now it even permeates smaller programs who get most of their money for sports programs by charging "student fees" to non-athletes who attend those colleges and universities.

However, one top notch program has turned the normal way of conducting big time college athletics on its head.

Cal Men's Golf Team Plays and Pays Own Way to Top is a great story about the difference a committed coach can make:

Under Coach Steve Desimone (holding trophy), who inherited a nonvarsity program in 1979, California won the 2004 N.C.A.A. title.

"The spring semester started at the University of California the week before the Arizona Intercollegiate, which presented a problem for two of the top players on the Bears’ No. 1-ranked men’s golf team.

Brandon Hagy and Joël Stalter wanted to take an improvisation and leadership course, offered through the Haas School of Business. They attended the first week of the classes but couldn’t make the first class of the second week because they were at The Golf Club of Vistoso in Tucson, trying to help the Bears to their sixth team victory in six starts.

Students who miss any of the improvisation and leadership classes in the first three weeks of the semester are automatically dropped. The Cal coach, Steve Desimone, whose career has been a case study in improvisation and leadership, sent an e-mail appeal to the professor to make an exception for Hagy and Stalter, to no avail.

For the better part of four decades, Desimone has been devoted to putting the student back in student-athlete. He has succeeded at Cal despite receiving no direct funding from the university, turning the lack of financial support into a golden opportunity to fix a college model he considered broken.

The team’s budget for coaching salaries, scholarships, recruiting and travel comes entirely through charity events and fund-raising and endowment drives. As Desimone darted from hole to hole in a golf cart last week, monitoring his players’ progress and delivering sandwiches, snacks and suggestions on club selection during the final round, he kept returning to this classroom defeat.    

“Isn’t the essence of teaching finding a way to help the best students?” Desimone said. “When you have special kids like these, it kills you when they can’t find a way to make this work.”. . .      

       

Desimone, a 64-year-old married father of two, was on the Cal basketball team in the late 1960s, an experience that afforded him a window into the murkier side of college athletics. He said some of the best and brightest football and basketball stars were either unprepared or unmotivated to carry their academic weight.

“I swore I’d never get involved in intercollegiate athletics, that it was the dirtiest thing going,” said Desimone, whose disillusionment with the political and social unrest at Berkeley in the late 1960s led him to drop out of college and enroll in the Navy.

Desimone returned to Cal in 1972 and completed his double major in physical education and history, then earned his master’s degree in physical education. He accepted a job as the athletic director and basketball coach at the College Preparatory School in Oakland, an institution geared toward high-achieving students.

In November 1979, Desimone was approached to coach the Cal golf team. It was a club sport after having been dropped as an intercollegiate program the previous spring by Dave Maggard, the athletic director at the time.

The pitch to Desimone revolved around returning the sport to varsity status. He said he was inclined to reject the offer, but in the week he was given to mull the decision, a vision took root in his mind.

What if he were able to bring the College Preparatory School’s focus on academics and embrace of athletics to Cal?

“That became the challenge, to be the beacon on the hill,” Desimone said. “I wanted to build a program based on honesty and integrity and academic excellence.”

He started as a volunteer coach with a $2,500 budget, which he quickly managed to double not long after joining forces with Frank Brunk, a well-connected former Cal football player.

In a telephone interview, Brunk recalled their initial meeting in February 1980. He knew very little about Desimone beyond that he had played basketball at Cal.

"“I told him I’d like to see the sport get back in the athletic department, but I don’t want to participate in a pre-professional golf program,” Brunk said. Shortly thereafter, Brunk held a fund-raising tournament at his home course, Orinda Country Club, which featured about four dozen golfers and raised more than $5,000. The success of the event, now in its 33rd year, led Brunk and Desimone to form the Cal Golf Committee, a group of roughly two dozen volunteers that raises money for the program.       

In 1982, men’s golf was reinstated as an intercollegiate sport after demonstrating it could be self-sufficient. Desimone kept his job at the College Preparatory School until 1988, when he became Cal’s full-time coach at $35,000 a year (his salary has since tripled).

Under Desimone, the team now has a budget of $525,000, culled in part from the interest from a $3.75 million endowment raised by Desimone and company and managed by university regents. They have enough money to finance three scholarships (the maximum allowed under N.C.A.A. rules is four and a half).

Cal has produced 13 all-Americans and 17 all-American scholars, capturing the N.C.A.A. team title in 2004 and coming tantalizingly close last year, advancing to the team semifinals.

Reached by telephone, Maggard said: “I think it’s great what he’s done. That was the intent all along, for the so-called Olympic sports to become endowed. Were all the golf people happy about it? No.

But now you see where they are.”

Four golfers on this year’s team, including Hagy and the United States Amateur finalist Michael Weaver, are on the watch list for the Ben Hogan Award, given to the nation’s top male college golfer.

What makes Desimone prouder is that three of his players are in the prestigious Haas business school, and that his team’s cumulative grade-point average is above 3.1."

Summing Up 

Doing the right thing right is not always easy. But when it happens, it's noteworthy.

It's mere existence often becomes a great role model for others to follow. Such is the Cal golf program.

Throughout my adult life, I've witnessed far too much wasted time and foregone opportunities for talented and intelligent young people as the youngsters strive during their youth to win athletic scholarships to college and then fail to have a quality educational experience while attending college.

Unfortunately, and all too often, those adults (parents, coaches, teachers and academic counselors) surrounding and "supporting" our enthusiastic and hard working teenage athletes frequently don't encourage them to work hard in their academic endeavors along the way to sports stardom. The two need not be mutually exclusive and should in fact be mutually supportive.

If our talented young athletes were motivated and encouraged to work as hard in the classroom as they do in the sports they pursue, their futures would be so much brighter when their playing days are over.

And it wouldn't cost a thing other than a little more sweat, dedicated effort and hard work. And adult encouragement, of course.

When that becomes the norm, then we can all smile. Until then, however, let's all reflect on what's seriously wrong with youth and college sports.

That's my take.

Thanks. Bob.

Baby Boomers ... Biggest Victims of the Recession and Its Aftermath

Everybody has sufferd through the recent worldwide recession and its aftermath. That's for sure.

But according to In Hard Economy for All Ages, Older Isn't Better ... It's Brutal, the nation's baby boomers have suffered the most:

"Young graduates are in debt, out of work and on their parents’ couches. People in their 30s and 40s can’t afford to buy homes or have children. Retirees are earning near-zero interest on their savings.

In the current listless economy, every generation has a claim to having been most injured. But the Labor Department’s latest jobs snapshot and other recent data reports present a strong case for crowning baby boomers as the greatest victims of the recession and its grim aftermath.

These Americans in their 50s and early 60s — those near retirement age who do not yet have access to Medicare and Social Security — have lost the most earnings power of any age group, with their household incomes 10 percent below what they made when the recovery began three years ago, according to Sentier Research, a data analysis company.

Their retirement savings and home values fell sharply at the worst possible time: just before they needed to cash out. They are supporting both aged parents and unemployed young-adult children, earning them the inauspicious nickname “Generation Squeeze.”

New research suggests that they may die sooner, because their health, income security and mental well-being were battered by recession at a crucial time in their lives. A recent study by economists at Wellesley College found that people who lost their jobs in the few years before becoming eligible for Social Security lost up to three years from their life expectancy, largely because they no longer had access to affordable health care. . . .   

Unemployment rates for Americans nearing retirement are far lower than those for young people, who are recently out of school, with fewer skills and a shorter work history. But once out of a job, older workers have a much harder time finding another one. Over the last year, the average duration of unemployment for older people was 53 weeks, compared with 19 weeks for teenagers, according to the Labor Department’s jobs report released on Friday.

The lengthy process is partly because older workers are more likely to have been laid off from industries that are downsizing, like manufacturing. Compared with the rest of the population, older people are also more likely to own their own homes and be less mobile than renters, who can move to new job markets. . . . 

Displaced boomers also believe they are victims of age discrimination, because employers can easily find a young, energetic worker who will accept lower pay and who can potentially stick around for decades rather than a few years. . . . 

When older workers do find re-employment, the compensation is usually not up to the level of their previous jobs, according to data from the Heldrich Center for Workforce Development at Rutgers University.

In a survey by the center of older workers who were laid off during the recession, just one in six had found another job, and half of that group had accepted pay cuts. Fourteen percent of the re-employed said the pay in their new job was less than half what they earned in their previous job. . . .

“It just doesn’t make sense to offer retraining for people 55 and older,” said Daniel Hamermesh, an economics professor at the University of Texas in Austin. “Discrimination by age, long-term unemployment, the fact that they’re now at the end of the hiring queue, the lack of time horizon just does not make it sensible to invest in them.”

Many displaced older workers are taking this message to heart and leaving the labor force entirely.

The share of older people applying for Social Security early spiked during the recession as people sought whatever income they could find. The penalty they will pay is permanent, as retirees who take benefits at age 62 . . . will receive 30 percent less in each month’s check for the rest of their lives than they would if they had waited until full retirement age (66 for those born after 1942)."

Summing Up

The baby boomers are struggling today in a major way. That's sad to see.

That said, it's a teachable moment and a worthwhile lesson for everybody about debt and money management that all adults and even teenagers definitely need to heed.

So the advice to the young is simple --- work hard to get a good debt free or debt minimal education, start saving early and invest continuously during your working career, and do everything reasonable to prepare yourself well for the oldster years.

Because getting old happens sooner than you think.

Time flies.

Thanks. Bob.

Teachers' Unions, Right-to-Work and Educating Our Kids

Teachers' union leaders represent teachers. Not kids.

Right-to-Work laws protect the rights of teachers who choose not to join teachers' unions and not to pay dues to those unions.

Teachers' unions don't like freedom of choice when it comes to teachers. They very much prefer coercion instead.

That point is made perfectly clear in Michigan Union Tell-All which is subtitled 'A memo shows how unions hope to keep coercing worker dues:'

"When Michigan became the 24th right-to-work state late last year, everyone knew unions would try to overturn or otherwise neuter the law. Less expected was that they would do so at the expense of their own members.

That's the message from a December 27-28 memo to local union presidents and board members from Michigan Education Association President Steven Cook, which recommends tactics that unions can use to dilute the impact of the right-to-work law. One bright idea is to renegotiate contracts now to lock teachers into paying union dues after the right-to-work law goes into effect in March. Another is to sue their own members who try to leave.

"Members who indicate they wish to resign membership in March, or whenever, will be told they can only do so in August," Mr. Cook writes in the three-page memo obtained by the West Michigan Policy Forum. "We will use any legal means at our disposal to collect the dues owed under signed membership forms from any members who withhold dues prior to terminating their membership in August for the following fiscal year." Got that, comrade?

Also watch for contract negotiations in which union reps sign up members for smaller pay raises and benefits in exchange for a long-term contract. "We've looked carefully at this and believe the impact of RTW [right to work] can be blunted through bargaining strategies," Mr. Cook writes.

The union filed its inevitable lawsuit against the law last week. But in his memo, Mr. Cook admits this is a long shot, as is a challenge based on technicalities like the law's carve-out for police and fire fighters. "Because of wording contained in the Act," Mr. Cook writes, "challenging the carve out might not strike down the Act but could merely put police and fire into the same RTW pit the rest of us are in."

Unions may have learned from last year's meltdown in Wisconsin over Governor Scott Walker's reforms. While Big Labor waged an unrelenting campaign to overturn the law in court and to recall Mr. Walker and Wisconsin legislators, there has been little serious discussion of a similar effort against Governor Rick Snyder in Michigan. "If the goal is to undo RTW, this is the least appealing of the options," Mr. Cook writes of potential recalls.

The pattern in new right-to-work states is that union membership plunges when it is voluntary. That's what happened in Wisconsin and Indiana, and it will probably happen in Michigan too.

Yet the most revealing news in the Cook memo is how little the union discusses assisting workers so more will voluntarily join unions. Instead the focus is how to continue coercing workers to keep paying dues. No wonder that the percentage of government workers who belong to unions fell last year. The Cook memo is damning proof that the main goal of union leaders is to enhance the power of union leaders, not of workers."

Summing Up

The letter from the teachers' union president speaks for itself better than anything I could add.

At least he was honest.

Thanks. Bob.

Boys and Education ... We Need to Do Something and Without Further Delay

President Obama says he'd have to think long and hard about whether to allow his son to play football, assuming he had a son. I'd like to ask him how he'd like to require his son to attend public school in Chicago, Detroit, Washington, or Atlanta, among other big cities, assuming he had a son.

And if the answer was no, I'd ask why he doesn't embrace vouchers and school choice for all children. And why kids and their parents can't just take the money spent on them in public schools and spend it as they choose on their sons' education. Doesn't he believe in the powerful beneficial effects of competitive free markets and individual free choice?

My guess is he won't be addressing those questions anytime soon. So let's move on and discuss the importance of concentrating on improving the educational outcomes of our boys.

Boys don't do as well in school as girls. The gap begins as early as age five and continues through graduate school.

But it's not because girls are smarter than boys. In fact, on standardized tests their respective scroes are comparable.

Perhaps none is this is news to you, but the punch line is this. Unless we get boys doing better in education, our nation has lots of unnecessarily tough times ahead -- even tougher than those we're enduring currently.

The Boys at the Back has the story:

"Boys score as well as or better than girls on most standardized tests, yet they are far less likely to get good grades, take advanced classes or attend college. Why? . . . Teachers of classes as early as kindergarten factor good behavior into grades — and girls, as a rule, comport themselves far better than boys.

. . . data from more than 5,800 students from kindergarten through fifth grade . . . found that boys across all racial groups and in all major subject areas received lower grades than their test scores would have predicted.

. . . attributed this “misalignment” to differences in “noncognitive skills”: attentiveness, persistence, eagerness to learn, the ability to sit still and work independently. As most parents know, girls tend to develop these skills earlier and more naturally than boys.

. . . teachers rated boys as less proficient even when the boys did just as well as the girls on tests of reading, math and science. (The teachers did not know the test scores in advance.) If the teachers had not accounted for classroom behavior, the boys’ grades, like the girls’, would have matched their test scores. . . .

Over all, it’s likely that girls have long behaved better than boys at school (and earned better grades as a result), but their early academic success was not enough to overcome significant subsequent disadvantages: families’ favoring sons over daughters in allocating scarce resources for schooling; cultural norms that de-emphasized girls’ education, particularly past high school; an industrial economy that did not require a college degree to earn a living wage; and persistent discrimination toward women in the workplace.

Those disadvantages have lessened since about the 1970s. Parents, especially those of education and means, began to value their daughters’ human capital as much as their sons’. Universities that had been dominated by affluent white men embraced meritocratic values and diversity of gender, race and class. The shift from a labor-intensive, manufacturing-reliant economy to a knowledge-based service economy significantly increased the relative value of college and postgraduate degrees. And while workplace inequities persisted, changing attitudes, legislation and litigation began to level the occupational playing field. . . .

Women now account for roughly 60 percent of associate’s, bachelor’s and master’s degrees and have begun to outpace men in obtaining Ph.D.’s.

There are some who say, well, too bad for the boys. If they are inattentive, obstreperous and distracting to their teachers and peers, that’s their problem. After all, the ability to regulate one’s impulses, delay gratification, sit still and pay close attention are the cornerstones of success in school and in the work force. It’s long past time for women to claim their rightful share of the economic rewards that redound to those who do well in school.

As one critic told me recently, the classroom is no more rigged against boys than workplaces are rigged against lazy and unfocused workers. But unproductive workers are adults — not 5-year-olds.

If boys are restless and unfocused, why not look for ways to help them do better? As a nation, can we afford not to? . . .

One (reason to help boys) is the heightened attention to school achievement as the cornerstone of lifelong success. Grades determine entry into advanced classes, enrichment programs and honor societies. They open — or close — doors to higher education. . . .

A second reason is globalization. Richard Whitmire, an education writer, and William Brozo, a literacy expert, write that “the global economic race we read so much about — the marathon to produce the most educated work force, and therefore the most prosperous nation — really comes down to a calculation: whichever nation solves these ‘boy troubles’ wins the race.”. . .

A third reason: improving the performance of black, Latino and lower-income kids requires particular attention to boys. Black women are nearly twice as likely to earn a college degree as black men. At some historically black colleges, the gap is astounding: Fisk is now 64 female; Howard, 67 percent; Clark Atlanta, 75 percent. The economist Andrew M. Sum and his colleagues at the Center for Labor Market Studies at Northeastern University examined the Boston Public Schools and found that for the graduating class of 2007, there were 191 black girls for every 100 boys going on to attend a four-year college or university. Among Hispanics, the ratio was 175 girls for every 100 boys; among whites, 153 for every 100.

Young men from middle-class or more comfortable backgrounds aren’t lagging quite as far behind, but the gender gap exists there, too. Judith Kleinfeld, a psychology professor at the University of Alaska, Fairbanks, analyzed the reading skills of white males from college-educated families. She showed that at the end of high school, 23 percent of the these boys scored “below basic,” compared with 7 percent of their female counterparts. “This means that almost one in four boys who have college-educated parents cannot read a newspaper with understanding,” she wrote.

WHAT might we do to help boys improve? For one thing, we can follow the example of the British, the Canadians and the Australians. They have openly addressed the problem of male underachievement. They are not indulging boys’ tendency to be inattentive. Instead, they are experimenting with programs to help them become more organized, focused and engaged. These include more boy-friendly reading assignments (science fiction, fantasy, sports, espionage, battles); more recess (where boys can engage in rough-and-tumble as a respite from classroom routine); campaigns to encourage male literacy; more single-sex classes; and more male teachers (and female teachers interested in the pedagogical challenges boys pose).

These efforts should start early, but even high school isn’t too late. . . .

And fairness today requires us to address the serious educational deficits of boys and young men. The rise of women, however long overdue, does not require the fall of men."

Summing Up

Boys must be encouraged to improve their academic performance in order for our nation to continue to lead the world economically and educationally as well.

Our ever increasingly diverse nation can afford to do no less than raise the educational and knowledge bar for boys and then do whatever we can to help them jump over it.

It's not a matter of brainpower but rather of willpower.

We simply cannot afford as a society to have 50% of our children being undereducated underachievers due to a lack of establishing good learning habits and goals at an early age.

It's not fair to the boys or the girls, and certainly not in the best interests of the country as a whole.

Globalization is real and competition is severe. The necessity of a well informed and highly educated U.S. citizenry will only increase in the future.

Thanks. Bob.

Too Much Debt Early In Life Means Too Few Choices Later In Life ... That's No Fun

We know more about life as we get older. Of course, when we were younger, we didn't believe that.

That's the difference between youth and experience. It has nothing to do with intellect or common sense. It's all about persepctive gained from personal experience.

When we become indebted unnecessarily early in life, it has the tendency to make us less financially secure as we approach and enter retirement.

Similarly, we don't value education as much early in life as we do when we later look back to many of those decisions made and actions taken during our youth.

So where is this trip down nostalgia lane leading? Simply to ask my fellow oldsters to offer to help our youth learn the things that perhaps we didn't learn but now wish that we had much earlier in life. And by the way, to also acknowledge and accept the fact that the youth you're trying to help very well may elect not to take the opportunity to benefit "vicariously" from the lessons offered by us oldsters. But to my fellow oldsters, I believe that we should try anyway. We'll feel better for having done so.

Americans Rip Up Retirement Plans describes what happens when not enough savings and too much spending early in life affects our later in life choices:

"The American workplace is about to get grayer.

Nearly two-thirds of Americans between the ages of 45 and 60 say they plan to delay retirement, according to a report to be released Friday by the Conference Board. That was a steep jump from just two years earlier, when the group found that 42% of respondents expected to put off retirement.

The increase was driven by the financial losses, layoffs and income stagnation sustained during the last few years of recession and recovery . . . .




The labor force has been getting older for decades for reasons that range from longer life spans and better health to companies' replacement of defined-benefit pensions with higher-risk 401(k) plans.

But the stark increase in workers expecting to stay on the job—now 62%—was a surprise. . . . After all, the stock market has largely earned back its losses, home prices are rising, and the unemployment rate is creeping down, all of which suggests workers should be feeling more secure.

Many middle-aged Americans, though, drew down their savings during those lean years and now find that leaving the work force on their original timeline is no longer viable . . . .

 

They are also facing low interest rates, an uncertain future for Social Security, and a lower likelihood of receiving employer health insurance after retirement....

However, senior employees can be expensive for companies, both in salary and health-care costs.

In addition, amid anemic economic growth, these workers may block the pipeline for younger employees trying to advance their careers.

In the long run, that concern is misplaced, said Kevin Cahill, an economist at the Sloan Center on Aging and Work at Boston College.

"Keeping older Americans in the work force is a good thing," he said. "Those workers have more financial security, employers have a larger labor pool to draw from, and we have more people to produce goods and services. There may be bumps like the recent contraction in the labor market, but we need to look beyond the short term."

Ultimately, many workers will still retire on schedule, Mr. Levanon added. Research shows that intentions don't necessarily align with reality, and people often end up retiring as they had expected because of health reasons, job losses or simply a miscalculation of their own desires."

Summing Up

There are many good reasons to work later if life if that's our choice. But we should take steps during our working years to make the decision to work beyond our normal retirement date just that --- our choice.

In other words, having the option of not working because we have saved and invested continuously throughout our working career is always a good idea. Thus, it's up to us.

If we've saved and invested properly, upon becoming an oldster we can either work or not work and enjoy doing whatever we choose to do with our 'oldster' time.

Simply stated, the best plan is to give ourselves lots of choices at retirement time.

So save and invest early and continuously, and then feel free to do whatever you choose to do when finishing up the 4th quarter in the game of life.

Because the first three quarters will end much quicker than you think they will.

Thanks. Bob.

Drill, Baby, Drill

Throughout our own nation's relatively short history, Europe has served as a great example of WHAT NOT TO DO. Whether it's learning the lessons from monarchies, dictatorships, aristocracies, socialistic governments, welfare states, unions, economic freedom, free enterprise, national security or its current Articles of Confederation type experiment today with the Euro currency, simply by following the simple rule of just doing the opposite of what they do, we can be pretty sure that things will work out for the better. Accordingly, Europe is a great role model for what We the People of the U.S. shouldn't do.

So let's concentrate on the energy story today.

EUROPE

U.S. Shale Gas Revolution Throws Down the Gauntlet to Europe captures the energy story well:

"The United States is enjoying an energy bonanza thanks to shale gas, making it a magnet for industry, reducing import dependence and challenging Europe as it battles to dig itself out of recession, energy officials say.

Panelists at a weekend security conference in Munich warned Europe must develop a strategy on how to tap its own resources in order to keep energy costs competitive, or risk seeing power-intensive industries locate elsewhere.

"The shale gas and oil boom is already underway. As Europe continues to debate it, North America is reaping the advantages," said Jorma Ollila, Chairman of Royal Dutch Shell. . . .

(France's) reserves are . . . estimated to be Europe's largest at 180 trillion cubic feet.

France has banned . . . fracking which is used to extract shale gas and which involves pumping vast quantities of water and chemicals at high pressure through drill holes to prop open shale rocks.

Environmentalists fear it could increase seismic risks and pollute drinking water. U.S. officials question this and say that thanks to the higher proportion of gas use the United States has had its lowest carbon dioxide emissions in 20 years.

"Observing this from across the Atlantic it is really quite remarkable that there should be a ban or a go-slow on this development in Europe, really without any facts," said Daniel Yergin, Vice-Chairman of IHS Cambridge Energy Research.

Fracking is used to produce a third of U.S. natural gas he said, showing the environmental impact can be managed.

SHALE SCRAMBLE

World energy market flows already reflect North America's scramble to exploit shale oil and gas and highlight the potential prize Europe is ignoring.

"The U.S. internal energy revolution and the radical increases in production of oil and gas have boosted gas production by 25 percent and seen oil import dependence drop from 60 percent to 40 percent, and expected to decline further to 30 percent," said Carlos Pascual, the U.S. special envoy for energy affairs.

While Europe retains deep environmental concerns it also acknowledges that with the price of gas in the United States just a third of that in Germany, its industry is already suffering the effects.

German Economy Minister Philipp Roesler said: "Many German firms have opted for (relocation to) the United States, saying energy prices were the decisive factor...We are already seeing that we are suffering with our higher energy prices…it affects our own competiveness."

Addressing the panel in Munich European Union Commissioner Guenther Oettinger said Europe should be in a position to produce enough shale gas to replace its depleting conventional gas reserves, so as not to become more dependent on imports. . . . 

A recent confidential study by the German intelligence agency (BND) suggested the United States could turn from being the world's greatest energy importer into an oil and gas exporter by 2020, reducing its dependence on the Middle East and thereby giving it much more freedom in policy making.

China by contrast would become much more dependent on Middle East oil to fuel its rapid expansion."

U.S.      

The U.S. is drilling lots of oil and gas these days. While we're not in any way approaching the "maxed out" stage, we are developing much more than we ever have in our history.

And it will only get better from this point forward. And that will in turn augur well for our national security, manufacturing industries (including chemical and energy industries), our nation's domestic competitive cost of doing business and lower consumer costs. Of course, all of this will result in higher overall U.S. economic and job growth as well. There is definitely lots to like, including the favorable impact all this will have on our nation's deficits, debts and the ability to fund much needed educational opportunities and improvements as well.

U.S. Oil-Production Rise Is Fastest Ever has the good news story:

"U.S. oil production grew more in 2012 than in any year in the history of the domestic industry, which began in 1859, and is set to surge even more in 2013.

Daily crude output averaged 6.4 million barrels a day last year, up a record 779,000 barrels a day from 2011 and hitting a 15-year high, according to the American Petroleum Institute, a trade group.

It is the biggest annual jump in production since Edwin Drake drilled the first commercial oil well in Titusville, Pa., two years before the Civil War began.

The U.S. Energy Information Administration predicts 2013 will be an even bigger year, with average daily production expected to jump by 900,000 barrels a day.

The surge comes thanks to a relatively recent combination of technologies—horizontal drilling and hydraulic fracturing, or fracking, which involves pumping water, chemicals and sand at high pressures to break apart underground rock formations.

Together, they have unlocked deposits of oil and gas trapped in formations previously thought to be unreachable.

 

The 2012 rise in crude output was the largest since U.S. oil production began in 1859 at a well owned by Edwin Drake (right) in Titusville, Pa.

That has meant a resurgence of activity in well-established oil regions, such as West Texas's Permian basin, as well as huge expansions in areas that had been lightly tapped in the past, such as North Dakota's Bakken shale region.

................................................................................

{NOTE: A great but lengthy magazine article about the Bakken story is North Dakota Went Boom. I recommend that you take the time to read it. Here's an excerpt:

"Just how much oil is in the Bakken is still unknown. Estimates have been continuously revised upward since a 1974 figure of 10 billion barrels. Leigh Price, a United States Geological Survey geochemist, was initially greeted with skepticism when, about 13 years ago, he came to the conclusion that the Bakken might hold as much as 503 billion barrels of oil. Now people don’t think that number is as crazy as it seemed.

“Right now our best guess is there are 169 billion barrels of oil in the Bakken, and that’s undoubtedly wrong,” says Ed Murphy, state geologist at the North Dakota Geological Survey. “There’s no way to be right. It’s like guessing how many jelly beans are in a jar.”

The current recovery rates for Bakken reserves typically range from 1 to 6 percent, but recovery rates are a function of both technology and market prices. “With the best technology, we can recover 4 to 8 out of every 100 barrels of oil in the Bakken,” says Ron Ness, president of the North Dakota Petroleum Council. “Every 1 percent increase in the rate of recovery means another billion barrels.”

As long as prices stay above $60 a barrel or so, oil will be a mainstay of the North Dakota economy for a generation or more. After drilling companies finish securing leased acreage, it will take 20 years to develop the 35,000 to 40,000 production wells needed to fully exploit the “thermally mature” part of the Bakken shale, an area about the size of West Virginia. Production from a typical Bakken well declines rapidly but on average produces modest amounts of oil for 45 years and earns a profit of $20 million. But as the volume of oil in the Bakken shale is still a moving target, and recovery techniques are increasingly sophisticated, some estimates put the life of the Bakken play, and the attendant upheaval it is causing in North Dakota, at upward of a hundred years." 

Now we'll turn our focus back to the article "U.S. Oil-Production Rise Is Fastest Ever."}

...................................................................................... 

The Bakken has gone from producing just 125,000 barrels of oil a day five years ago to nearly 750,000 barrels a day today.

The benefits of the surge in domestic energy production include improving employment in some regions and a rebound in U.S.-based manufacturing.

"At a very basic level this surge is creating jobs and wealth that didn't exist before," said Michael Levi, a senior fellow for energy and the environment at the Council on Foreign Relations.

It has also provided the country with greater defense against overseas turmoil that can disrupt energy supplies. . . .

Amid a sluggish economic recovery and tightening fuel-economy standards for U.S. cars and trucks, oil demand fell to a 16-year low in 2012, according to the trade group. Total oil imports for the year fell by 6.9%, to a 15-year low, API said.

Refiners that spent billions of dollars upgrading and expanding facilities last decade now find themselves with excess capacity, leading them to target consumers in South America and elsewhere for their surplus diesel and gasoline production.

Exxon Mobil Corp. predicts in its annual energy outlook that North America will become a net exporter of all energy by 2025, through continued growth of crude from Canada's oil-sands region as well as growing exports of gasoline and diesel.

Continuation of the production trend isn't a given, experts say, noting that the industry must continue to improve on its exploration-and-production technology, particularly as it continues to move into areas that are more heavily populated, or else it could face greater regulatory resistance. Environmental concerns remain a significant issue as the technology expands.

U.S. crude production won't necessarily mean significantly lower gasoline prices, which will still be influenced by global markets.

But the domestic-production surge is already having a dramatic impact on the refining business, which in the past had been focused on handling hard-to-refine crude imported from overseas.

Earlier this month, San Antonio-based refiner Valero Energy Corp. said it will add new equipment to a Houston-area plant to handle a very easy-to-refine type of oil from South Texas' Eagle Ford shale oil fields.

"No one has installed that equipment on a U.S. refinery in years," said Philip Verleger, an energy economist."

Summing Up

While it's always a good idea to keep things in perspective and not become irrationally exuberant, especially when "progressive green" politics is involved, good news is good news.

And our ability to achieve energy independence and all that entails for our national security, economic growth, jobs, fiscal deficits and national debt are wonderful things to look forward to soon becoming reality. Who'd a thunk it possible a short ten years ago?

So let's get ready for an energy independent and economically revived North America by urging our "public servants" to allow the private sector to hasten that 21st century U.S. Independence Day's arrival.

Thanks. Bob.

The History of the Federal Income Tax ... Happy 100th Anniversary of the Ratification of the 16th Amendment to the U.S. Constitution

Exactly 100 years ago today the 16th amendment to the U.S. Constitution was ratified.

With its adoption, any lingering doubt about the federal government's authority to tax individual incomes was eliminated. During the Civil War, an income tax had been levied and was in effect until its repeal in 1872, because its revenues were no longer needed. Another similar tax was legislated thereafter, but in 1895 the U.S. Supreme Court ruled in Pollock v. Farmers' Loan that such a direct tax was improper since it was not apportioned among the states and their citizens and was therefore unconstitutional.

Does this leave you confused about the authority of Congress of levy taxes on income? If so, the 16th Amendment to the U.S. Constitution, which took effect on February 3, 1913, supersedes the prior ruling of the Supreme Court. And now we pay income taxes.

In fact, the clear and unambiguous language of the 16th Amendment states the present day power of the Congress succinctly:

"The Congress shall have the power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."

Case closed.

So now each year millions of U.S. citizens file income tax returns and pay lots of taxes. Millions more Americans must file returns but need to pay very little in income taxes. And finally, millions of other Americans are required to file income tax returns but pay nothing.

Many Unhappy Returns --- Millions of Them is a great summary of how and why the 16th Amendment to the Constitution was enacted. Here's a brief excerpt:

"A century ago, on Feb. 3, 1913, the 16th Amendment to the Constitution authorizing a federal income tax was ratified. But the amendment's adoption was more an accident than an act of political will, and tinkering with the Constitution was not even required for the federal government to tax Americans' earnings.

The country's first income tax was implemented to raise money during the Civil War. The tax was repealed in 1872 because the revenues were no longer needed. . . .

 

Before World War II, only one-third of the population earned enough to be subject to the income tax. After the war, the tax still affected only half the population. As late as 1947, farmers paid little or no income tax even when crops were good—it was generally accepted that they kept no books and were not expected to do much paperwork.

Over the years, the personal exemption and standard deduction have not kept pace with inflation, so today 70% of the population is subject to income taxes. Almost 60 million returns, mostly under $20,000 in gross income, pay no income tax, largely the result of the earned-income and child tax credits. The individual income tax today raises $950 billion annually through 144 million tax returns. Of this, the top 40 million returns pay about $856 billion and the bottom 104 million returns only about $94 billion.

The U.S. could easily reduce the tax-filing population to pre-World War II levels by dropping two-thirds of taxpayers from the drudgery of filing annual returns. . . .

Summing Up

Happy 100th anniversary to my 40 million fellow taxpayers who pay by far the lion's share of  personal income taxes collected by the federal government knows best gang. Aren't we lucky to be celebrating such a joyous occasion today?

And Happy 100th anniversary as well to those other 104 million filers of income tax returns, regardless of whether you have to pay a little or nothing at all.

Knowing that our money is being well spent and redistributed on our behalf by our duly elected "public servants" is such a comfort. Or is it?

So instead of celebrating today, maybe we should all just sit down and cry like the little boy shown in the picture above.

Thanks. Bob.

Tough Times For GM's European Operations ... No End In Sight

Now that We the People have "saved" GM in the U.S., how about some more taxpayer money to save their European operations, too?

Of course, the taxpayer money used to save GM wasn't restricted to North American operations. In fact, it appears that much of it will be needed eventually in Europe. Hopefully, that will be enough to do the trick, although GM's losses just keep piling up in Europe with no end in sight. In fact, the situation is deteriorating each year.

So just how bad are things for GM in Europe and, how long will the bad times last?

GM Names New Opel Chief has the updated story, and it's not a happy one:

"General Motors appointed former Volkswagen executive Karl-Thomas Neumann to lead its troubled Adam Opel AG operations on Thursday, the latest in a succession of managers GM has drafted to reverse its mounting losses in Europe. . . .

As Opel chief executive, Mr. Neumann—a well-regarded German auto industry veteran—will take one of the industry's toughest challenges: reversing nearly $15 billion in cumulative losses that GM's European operations have racked up since 1999 amid the deepening gloom in the region's auto market.

Much of Europe's auto industry is hemorrhaging from a chronic glut of factory capacity that is expected to worsen as it faces a sixth straight year of shrinking car sales.

But Opel has suffered more than most. Along with too many plants in Western Europe, its sales are largely shackled to the region and its image has been battered by more than a decade of failed turnaround attempts. GM CEO Dan Akerson has ousted two Opel chiefs in less than two years in frustration with the pace of restructuring.

Mr. Neumann's first job will be ensuring Opel, the heart of GM's European operations, reaches its aim of breaking even by mid-decade—though Europe's declining car market still shows no sign of bottoming out. . . .

 

GM warned in October that it could post losses in Europe of between $1.5 billion and $1.8 billion for 2012, depending on the level of restructuring costs in the fourth quarter. It reports fourth-quarter results on Feb. 14. In 2011, GM lost $747 million in Europe.

In a sign of GM's impatience, Vice Chairman Stephen Girsky said earlier this month that he is weighing closing Opel's Bochum, Germany, plant by 2015, nearly two years earlier than planned, unless Opel bosses and unions can wring out more costs. . . .

"All of the bad news and upheavals over the past year have certainly hurt the brand in the eyes of the customers," said Thomas Bieling, chairman of Opel and Chevrolet's German dealer association. . . .

Mr. Neumann's predecessor, GM engineering veteran Karl-Friedrich Stracke, replaced Opel Chief Nick Reilly in April 2011, only to be ousted 15 months later."

Summing Up

I wonder how many of our fellow long suffering U.S. taxpayers have any idea just how much of our GM bailout supplied money has been, is being, and will go on for at least several more years being lost in GM's European operations.

But I don't wonder at all about one thing. The U.S. aristocratic government knows best gang won't be making sure that we taxpayers are properly informed about the continuing impact of any of this 'global bailout money' on "We the People's GM investment."

As far as the re-elected politiicans are concerned, the happy story of GM's salvation ended when last November's U. S. elections were concluded. Besides, their partners in the UAW leadership are unaffected by the billions of dollars in losses in Europe.  Mission accomplished.

As for us taxpayers, our role remains to be seen and not heard, and to continue to fork over the money to subsidize the politicians and their staunch political allies and partners ---- the unions, both private and public sector alike.

That's my take. And to my fellow taxpayers, I say this. It's our money, or at least it once was.

Thanks. Bob.

College Costs and Fertility Rates ... Our Aging and Shrinking Population and What It All Means ... Nothing Good

America's Baby Bust is subtitled 'The nation's falling fertility rate is the root cause of many of our problems. And it's only getting worse.'

To put it bluntly, the essay is an eye opener and I recommend taking the time to read and reflect on what it has to say. It surprised and even shocked me at times. My guess is that it will "educate" you as well.

Here are a few excerpts:

"College. Higher education dampens fertility in all sorts of ways. It delays marriage, incurs debt, increases the opportunity costs of childbearing and significantly increases the expense of raising a child. If you doubt that the economics of the university system are broken, consider this: Since 1960, the real cost of goods in nearly every other sector of American life has dropped. Meanwhile, the real cost of college has increased by more than 1,000%.

If college were another industry, everyone would be campaigning for reform. Instead, politicians are trying to push every kid in America into the current exorbitantly expensive system. How could we get college costs under control? For one, we could begin to eliminate college's role as a credentialing machine by allowing employers to give their own tests to prospective workers. Alternately, we could encourage the university system to be more responsive to market forces by creating a no-frills, federal degree-granting body that awards certificates to students who pass exams in a given subject."...

(FERTILITY) "For more than three decades, Chinese women have been subjected to their country's brutal one-child policy. Those who try to have more children have been subjected to fines and forced abortions. Their houses have been razed and their husbands fired from their jobs. As a result, Chinese women have a fertility rate of 1.54. Here in America, white, college-educated women—a good proxy for the middle class—have a fertility rate of 1.6. America has its very own one-child policy. And we have chosen it for ourselves.

Forget the debt ceiling. Forget the fiscal cliff, the sequestration cliff and the entitlement cliff. Those are all just symptoms. What America really faces is a demographic cliff: The root cause of most of our problems is our declining fertility rate.

The fertility rate is the number of children an average woman bears over the course of her life. The replacement rate is 2.1. If the average woman has more children than that, population grows. Fewer, and it contracts. Today, America's total fertility rate is 1.93, according to the latest figures from the Centers for Disease Control and Prevention; it hasn't been above the replacement rate in a sustained way since the early 1970s.

The nation's falling fertility rate underlies many of our most difficult problems. Once a country's fertility rate falls consistently below replacement, its age profile begins to shift. You get more old people than young people. And eventually, as the bloated cohort of old people dies off, population begins to contract. This dual problem—a population that is disproportionately old and shrinking overall—has enormous economic, political and cultural consequences.

For two generations we've been lectured about the dangers of overpopulation. But the conventional wisdom on this issue is wrong, twice. First, global population growth is slowing to a halt and will begin to shrink within 60 years. Second, as the work of economists Esther Boserups and Julian Simon demonstrated, growing populations lead to increased innovation and conservation. Think about it: Since 1970, commodity prices have continued to fall and America's environment has become much cleaner and more sustainable—even though our population has increased by more than 50%. Human ingenuity, it turns out, is the most precious resource.

Low-fertility societies don't innovate because their incentives for consumption tilt overwhelmingly toward health care. They don't invest aggressively because, with the average age skewing higher, capital shifts to preserving and extending life and then begins drawing down. They cannot sustain social-security programs because they don't have enough workers to pay for the retirees. They cannot project power because they lack the money to pay for defense and the military-age manpower to serve in their armed forces. . . .

America's fertility rate began falling almost as soon as the nation was founded. In 1800, the average white American woman had seven children. (The first reliable data on black fertility begin in the 1850s.) Since then, our fertility rate has floated consistently downward, with only one major moment of increase—the baby boom. In 1940, America's fertility rate was already skirting the replacement level, but after the war it jumped and remained elevated for a generation. Then, beginning in 1970, it began to sink like a stone.

There's a constellation of reasons for this decline: Middle-class wages began a long period of stagnation. College became a universal experience for most Americans, which not only pushed people into marrying later but made having children more expensive. Women began attending college in equal (and then greater) numbers than men. More important, women began branching out into careers beyond teaching and nursing. And the combination of the birth-control pill and the rise of cohabitation broke the iron triangle linking sex, marriage and childbearing. . . .

By 1973, the U.S. was below the replacement rate, as was nearly every other Western country. Since then, the phenomenon of fertility collapse has spread around the globe: 97% of the world's population now lives in countries where the fertility rate is falling."

Summing Up

Taking the time to read the essay in its entirety is my recommendation.

And if reflecting on its contents don't seriously impact the way you think about things, I'll be shocked.

It's already causing me to think about things differently. That's for sure.

But what to do? I have no clue.

Thanks. Bob.

 

Public Sector Unions, Politicians and Taxpayers

The close and partnership like relationship between public sector unions and Democratic politicians is weakening.

The joined at the hip alliance between public sector unions and the Democratic party is being threatened by what could easily become a throw the bums out citizen taxpayer revolt if the policies, pay levels and benefits of public sector union represented employees don't begin to more closely resemble those of private sector workers and taxpayers.

Over the past few decades, public sector unions have become prominent players in our society, essentially displacing their private sector counterparts in influence.

Private sector union influence has weakened dramatically due to the fact that companies employing members of the private sector unions have been faced with global competition. The UAW and the  auto industry are the prime examples of this result. Non-union transplant factories owned by Toyota, Honda and Volkswagen have established themselves in right-to-work southern states while their northern U.S. competition of GM, Ford and Chrysler have struggled to survive.

Union dominance in America's private sector is a thing of the past because of globalization. Globalization in the U.S. monopolistic public sector is by definition a non-starter. There is no competition.

But the union's impact isn't a non-starter in the public sector. It's very real and having a huge influence on jobs, income, competitiveness and therefore the taxes available to the various state and local governments. It's all about global competition and public sector unions are clueless and counterproductive about the impact of globalization on their public sector jobs, pay and benefits. At least that's the way they act. Until now, that is.

So now 'What's the future going to be for unions in the public sector?' becomes the relevant question for America and many of its individual states.

Illinois is an interesting case as the state can't pay its bills, has almost $100 billion in unfunded public sector pension liabilities for its public employees, and the state has long been run by Democrats. And that very much includes Chicago, too.

Some questions that need answering are the following.

Will the longstanding and counterproductive relationship between the pols and the unions remain intact and continue to be harmful to the financial well being of Illinois and its taxpayers? Of course, it will. But that's not the important question. How harmful is the question.

But will things begin to change for the better in Illinois? Of course, they will because they must. Illinois is broke.

Will Illinois become a right-to-work state and attract industry? That's highly doubtful.

Will the citizens cause the state to change its constitution guaranteeing payments of benefits to its public employees even though all the money to pay those promised benefits hasn't and in all likelihood can't be raised from taxpayers? That's highly doubtful as well.

And if faced with the question, how will the Illinois courts interpret those state constitutional guarantees? Who knows?

Or will the unions and the politicians compromise before betting the taxpayer owned ranch on winning the constitutional court fight and risking incurring the wrath of those same owner taxpayers, regardless of which side "wins" the case? That's my bet.

Springfield Crackup provides the details of the developing tension between the unions and the Democratic politicians:

"Illinois Democratic Party chairman Michael Madigan, who's served as House Speaker for 15 years, may be the most powerful pol in Springfield. However, even he must answer to the bond vigilantes. Or at least that's the subtext of his snappy reply to a letter from state AFL-CIO President Michael Carrigan asking to meet with legislative leaders to negotiate pension reforms.

"A summit on this topic could have been called several years ago when we first started to grapple with this complex and controversial topic," Mr. Madigan writes. "Your letter implies pension reforms faltered because the concerns of labor were not considered. . . .[but] I recall no fewer than eight high-level meetings that took place with labor, legislative leaders and the governor. At that time, I felt there was little willingness from representatives of labor to draft a comprehensive, common-sense solution."

"The residents of Illinois have been asked to shoulder a higher tax burden in recent years," he adds. "To date, we have received no cooperation from the labor unions representing state employees on addressing these challenges. In fact, these unions often have been strongly opposed to any attempt to solve the problem."

It's important to note that this letter comes on the heels of last week's credit downgrade by Standard & Poor's for the state's failure to pass pension reforms. Retirement benefits consume nearly a quarter of the state's general fund budget and have forced the state to delay $8 billion in payments to vendors.

Another word for delay—which the state is loath to use but investors understand all too well—is default. As Mr. Madigan notes in his letter, the state has already slashed education and Medicaid and raised taxes by the revenue equivalent of 25%. It may only be a matter of time before lawmakers seek to force a haircut on investors as well.

Meanwhile, the state this week cancelled a $500 million bond sale after investors got cold feet. The premium that investors will soon charge could severely hamper the state's ability to borrow. Then again, maybe Illinois needs a mini-bond crisis to force reform."

Summing Up

Could it be that the the interests of the taxpayers are finally going to be given due consideration by the Illinois politicians? Absolutely, at least to the extent taxpayers wish to be heard.

The fact is that Illinois either has to seriously address its enormous fiscal problems or face certain financial catastrophe.

If the Democratic politicians choose to fix the state's financial problems by tax increases, the union approach, the vast majority of Illinois taxpayers will revolt, including both individuals and corporations.

On the other hand, if they choose to try to solve the state's problems by introducing common sense productivity and cost reducing measures into the way public employee staffing, salaries and health and retirement benefits are granted, the unions may not declare themselves to be in open revolt, but they sure won't like it very much. That said, what choice do they have?

So my bet is that's what is going to happen. Although public sector union officials will hate it, things are going to change for the better for the citizens and taxpayers of Illinois and other states as well. America as a whole, too. How much better is the only question.

So watch the "spin" as the circus begins, my fellow taxpayers.

It will be both entertaining and illuminating. And beneficial to our future well being and prosperity as the political power of public sector unions dwindles and Democratic politicians begin to consider the interests of taxpayers when making decisions concerning their union partners.

That's my take.

Thanks. Bob.

College Education for $10,000 in Total

By know we all know that the more education and knowledge we acquire, the odds for material success increase.

We also know that taking on excessive debt in buying homes and such will often result in an unhappy ending. Now student loans are presenting themselves as another "learning opportunity."

We also know that the cost of getting a formal education is increasing at a rate faster than inflation and even health care costs and that student loans outstanding have surpassed $1 trillion, many of which are delinquent already.

And we've perhaps heard about online education and distance learning opportunities, some worthwhile and some probably not much more than a sham.

My Valuable, Cheap College Degree is an editorial worth reading in its entirety:

"MUCH is being written about the preposterously high cost of college. The median inflation-adjusted household income fell by 7 percent between 2006 and 2011, while the average real tuition at public four-year colleges increased over that period by over 18 percent. Meanwhile, the average tuition for just one year at a four-year private university in 2011 was almost $33,000, according to the National Center for Education Statistics. College tuition has increased at twice the rate of health care costs over the past 25 years.

Ballooning student loan debt, an impending college bubble, and a return on the bachelor’s degree that is flat or falling: all these things scream out for entrepreneurial solutions.

One idea gaining currency is the $10,000 college degree — the so-called 10K-B.A. — which apparently was inspired by a challenge to educators from Bill Gates, and has recently led to efforts to make it a reality by governors in Texas, Florida and Wisconsin, as well as by a state assemblyman in California.

Most 10K-B.A. proposals rethink the costliest part of higher education — the traditional classroom teaching. Predictably, this means a reliance on online and distance-learning alternatives. And just as predictably, this has stimulated antibodies to unconventional modes of learning. Some critics see it as an invitation to charlatans and diploma mills. Even supporters often suggest that this is just an idea to give poor people marginally better life opportunities.

As Darryl Tippens, the provost of Pepperdine University, recently put it, “No PowerPoint presentation or elegant online lecture can make up for the surprise, the frisson, the spontaneous give-and-take of a spirited, open-ended dialogue with another person.” And what happens when you excise those frissons? In the words of the president of one university faculty association, “You’re going to be awarding degrees that are worthless to people.”

I disagree. I possess a 10K-B.A., which I got way back in 1994. And it was the most important intellectual and career move I ever made.

After high school, I spent an unedifying year in college. The year culminated in money problems, considerably less than a year of credits, and a joint decision with the school that I should pursue my happiness elsewhere. Next came what my parents affectionately called my “gap decade,” during which time I made my living as a musician. By my late 20s I was ready to return to school. But I was living in Spain, had a thin bank account, and no desire to start my family with a mountain of student loans.

Fortunately, there was a solution — an institution called Thomas Edison State College in Trenton, N.J. This is a virtual college with no residence requirements. It banks credits acquired through inexpensive correspondence courses from any accredited college or university in America.

I took classes by mail from the University of Washington, the University of Wyoming, and other schools with the lowest-priced correspondence courses I could find. My degree required the same number of credits and type of classes that any student at a traditional university would take. I took the same exams (proctored at local libraries and graded by graduate students) as in-person students. But I never met a teacher, never sat in a classroom, and to this day have never laid eyes on my beloved alma mater.

And the whole degree, including the third-hand books and a sticker for the car, cost me about $10,000 in today’s dollars.

Now living back in the United States, I followed the 10K-B.A. with a 5K-M.A. at a local university while working full time, and then endured the standard penury of being a full-time doctoral fellow in a residential Ph.D. program. The final tally for a guy in his 30s supporting a family: three degrees, zero debt.

Did I earn a worthless degree? Hardly. My undergraduate years may have been bereft of frissons, but I wound up with a career as a tenured professor at Syracuse University, a traditional university. I am now the president of a Washington research organization.

Not surprisingly, my college experience has occasionally been the target of ridicule. It is true that I am no Harvard Man. But I can say with full confidence that my 10K-B.A. is what made higher education possible for me, and it changed the course of my life. More people should have this opportunity, in a society that is suffering from falling economic and social mobility.

The 10K-B.A. is exactly the kind of innovation we would expect in an industry that is showing every indication of a bubble that is about to burst, as Thomas K. Lindsay of the Texas Public Policy Foundation shows in a new report titled, “Anatomy of a Revolution? The Rise of the $10,000 Bachelor’s Degree.” When tuition skyrockets and returns on education stagnate, we can expect a flight to value, especially by people who can least afford to ride the bubble, and who have no choice but to make a cost-effective college investment.

In the end, however, the case for the 10K-B.A. is primarily moral, not financial. The entrepreneurs who see a way for millions to go to college affordably are the ones who understand the American dream. That dream is the opportunity to build a life through earned success. That starts with education."

Summing Up 

The education "establishment" is against lower cost education because its growth will mean loss of jobs --- for the education establishment, of course. And less dues for the unions that represent that establishment, too.

That includes teachers unions and many others employed in the massive and increasingly unaffordable "education" industry.

From K-12 through graduate schools.

But if something can't go on forever, it won't.

So the cost of getting a credentialed education will come down. People will find ways to get a great education and not go deeply into debt while so doing.

It's simply inevitable as our broader self governing freedom based society becomes more "knowledgeable" about the perils of excessive debt and the questionable value of a far too costly sheepskin from the "right" school.

Unnecessary debt is not a good thing. More education and knowledge are good things.

That's my take, even if it goes against the grain of those defending the status quo.

Maybe even precisely because it goes against that "establishment" grain.

Thanks. Bob.

In Illinois The "Chickens" Are Indeed Coming Home To Roost ... And Elsewhere Too

Reverend Jeremiah Wright of Chicago, among other things, liked to talk about the "chickens coming home to roost."

Could he have been forewarning Illinois citizens of the fact that its creditworthiness was rapidly becoming a thing of the past? Undoubtedly not but sombody should have been. An already seriously  bad situation is getting worse by the day.

And since the Democratically dominated state won't come to grips with its public sector pension problems and its other financial recklessness, relative to other states the interest rates on its borrowings will be going up considerably, putting even more pressure on its deficits each year. It's a vicious circle.

And what's going on in Illinois may be predictive of our nation's future creditworthiness as well, assuming we don't get our combined political and We the People act together and begin to make common sense decisions about spending, taxing, economic growth and the irresponsible behaviors of our big and ever growing government knows best gang of aristocrats.

Illinois Yanks Bond Amid Pension Woes reports the latest on the continuing political debacle in the "progressively" financed Land of Lincoln:

"Illinois took the rare step Wednesday of postponing a bond auction just hours before it was expected to launch, as concerns grew among investors over the state's deep pension hole.

While Illinois still has ready access to capital markets, state officials feared a jump in interest costs to attract buyers if they went forward with plans to sell $500 million in bonds for school and transportation projects. Bond investors have become increasingly leery of the state because of a deadlock in the Illinois Legislature over how to fill a $96.8 billion pension shortfall, considered by researchers as the worst among U.S. states.

"It's the first real market indication that, because of our fiscal condition, we couldn't sell bonds," said Brian Battle, director of trading at Performance Trust Capital Partners in Chicago, referring to his home state. His firm had no role in the Illinois bond sale.

The potential jump in borrowing costs is the latest sign of growing fiscal challenges in Illinois. The state already is paying the highest interest rates—at about 3.2% on its 10-year bonds, according to Thomson Reuters Municipal Market Data—among U.S. states, and the Illinois government is behind on its bills to hospitals, doctors and pharmacies by an estimated $8.4 billion, according to the state comptroller's office.

Standard & Poor's Ratings Services on Friday downgraded the state's debt, aligning Illinois and California as the lowest-rated states. But while California's rate outlook is positive, the credit-rating firm warned of further downgrades of Illinois if the pension issue isn't addressed....

The decision by Gov. Pat Quinn, a Democrat, to delay Wednesday's bond sale sparked renewed calls for immediate action among lawmakers who have been debating potential fixes for more than two years. "The governor's delayed bond sale should direct our attention to the indisputable truth about pensions," said Illinois Senate President John Cullerton, a Democrat.

Still, no timeline exists for when pension legislation will be voted on, with the next likely deadline coming at the end of May when the legislature is scheduled to adjourn. Any plans to address the shortfall are expected to require cutting benefits for state workers and retirees, raising new revenue or a combination of the two. A plan that would have put on hold a cost-of-living increase for retirees and increase pension contributions by current employees didn't even get voted on earlier this month in the so-called lame-duck session, which took place before new legislators were sworn in.

The pension issue is further complicated by a state constitutional protection of promised pension benefits for current and former government workers, with labor unions planning a court challenge if lawmakers approve cuts. In its downgrade of Illinois, Standard & Poor's cited the likelihood of years of litigation and its potential drag on state finances.

State budget officials said they are still planning to go through with the bond sale, but haven't set a new date. States tend to postpone bond offerings only when circumstances change, roiling interest rates. For now, the projects the bonds were being sold to fund aren't expected to be delayed."

Summing Up

Ignoring problems won't make them go away.

And when unions insist on not finding solutions, the problems get worse.

And when the problems get worse, new loans are harder to get and the interest rates on those loans will be high.

And that will make the financial problems more acute.

The state constitutional protection, behind which the unions are trying to hide, won't provide money to pay the bills.

Only taxpayers can do that. Soon it will get down to tough decisions about how much of the limited taxpayers funds to spend on such things as public safety and security, infrastructure needs, and public services relative to the number of and salaries paid to current public sector employees compared to the cost of benefits for retired public sector employees who are no longer working.

The problem in Ilinois is analogous to trying to put ten pounds of s_ _t in a five pound bag. It can't be done.

In simple language, the same dollar can't be spent twice, and when borrowing those dollars becomes more expensive than it already is, the chickens will definitely be hurrying home to hear the fat lady sing.

That's my take.

Thanks. Bob.

California, Illinois and the Cubs

My Dad used to joke that his favorite baseball team, the Chicago Cubs, was the strongest team in the league.

He concluded that this must be so, because always being at the bottom of the National League standings meant they had to hold all the other teams up. And then he'd laugh.

According to that reasoning, Illinois is currently the strongest state in the nation. And now even California is distancing itself from them.

Here's the breaking news in California Basks in S&P Rating Upgrade:

"Standard & Poor’s hadn’t even sent out word yet that it had upgraded California’s credit rating (to A from A-) before California State Treasurer Bill Lockyer released a statement Thursday praising the rating action. Quoth Lockyer:

It’s been a tough climb out of the hole. But the Governor and Legislature have provided strong leadership…. And the people, in approving the majority-vote budget and temporary tax increases, have shown wisdom and sacrificed. With this united effort, California has emerged with sounder financial management and structurally sturdier budgets and placed itself on a more sustainable fiscal path. S&P’s action recognizes this progress.

For its part, here’s part of what S&P had to say:

The upgrades reflect our view of California’s improved fiscal condition and cash position, and the state’s projections of a structurally balanced budget through at least the next several years. As part of Governor Jerry Brown’s recent budget proposal and multiple-year plan, the state would also largely retire its backlog of payment deferrals and internal loans. We view the alignment between revenues and expenditures as much improved and largely a result of policymakers’ heightened emphasis on fixing the state’s fiscal structure in the past two budgets. This has primarily consisted of programmatic reductions and reforms designed to generate budget savings because, until recently, strongly rebounding tax collections have not accompanied the economic recovery. Now the economic expansion is gaining positive momentum, however. In addition, the voters’ approval in November of temporarily higher statewide sales and personal income tax (PIT) rates positions the state to capitalize on burgeoning economic activity and income gains. We believe these factors have worked in concert to help the state reverse fiscal course.

California appears to be moving in the opposite direction of Illinois, its longstanding rival for the worst-rated state in the U.S. Illinois just yesterday took the rare step of postponing a planned $500 million general obligation bond sale, citing market conditions after a pair of recent negative rating actions."

Summing Up

It looks Illinois won't have California to kick around any more.

Maybe being the "strongest" team in the league isn't such a good idea after all.

The clock is ticking in the Land of Linclon and the Democratic majority will have an interesting time dealing with the state's financial problems in the face of strong opposition from its previously staunch political allies, the leadership of the state's public sector unions.

Let the fireworks begin.

Thanks. Bob.