Is A College Education Worth $800,000?

The number, 800,000 dollars, has been used often to describe the advantage of a college education over a high school diploma. However according to new data, the actual value is $450,000 dollars. If that isn’t bad enough, according to the American Institutes for Research, it’s only worth $279,893.

Let’s figure it up. The number of working years used is forty. So if we divide 800,000 by forty, we get 20,000 dollars a year in advantage over someone with a high school diploma. Now let’s look at the revised figures. At 450,000 dollars, a college degree adds 11,250 dollars, which is much less impressive than 20,000 dollars. But if the American Institutes for Research is correct, it is only worth about 7,000 dollars.

Now, none of this takes into consideration, the costs of college itself, in particular the burden of paying off students loans which can easily get into the tens of thousands.

Am I discouraging you from pursuing a higher education? Certainly not, there are many advantages, intellectual and otherwise for going to college. I do want you to be aware that we might want to contemplate some kind of structural change in how we pay for education and how education is rewarded in the job market.

And be cautious about these kinds of statistics. The first decade of the twenty first century was cruel to the middle and lower classes. They lost a lot of economic ground. One of the things that was hit hard was earning power. Whole classes of jobs disappeared. The very, very few new jobs carried much lower salaries and reduced benefits.

Take a look at this film on college costs:

James Pilant

No More Text Books?

A Georgia Legislator has introduced a bill to allow school districts the choice of buying electronic media instead of text books. (from the article) -  …the state Board of Education would have to sign off on the change to give local school boards the option of buying Kindles, iPads and other next-generation devices in lieu of bound books.

My question is not whether or not that this is the way children communicate now but whether or not it cuts cost. My principle concern is to cut the costs my students pay for textbooks. In Community College with relatively inexpensive tuition, textbook can account for more than a fourth of student costs. This is not fair.

I would like for the State of Arkansas to consider allowing the replacement of textbooks with electronic media with just such a measure but not just for school districts but for public colleges across the state.

Look at this news article:

James Pilant

Coal, Oil and Gas Companies Need Your TAX Dollars

It seems that Kentucky lawmakers are upset with the President’s new budget. It seems that every year, the government of the United States has brought Kentucky a pretty pony, 230 million dollars subsidizing the coal industry! Wow, can we in Arkansas get a pretty pony like that one?  I’m sure we produce something that destroys the environment, we claim is a competitive industry and is in reality dependent on taking public money and converting it to private use.

Oh, but let’s not forget the oil and gas industry. They stand to lose 3.6 billion a year in subsidies. That’s right. When you go to the gas pump, think favorably of the federal government because they use your money to help that industry. Thus, when you buy gas you save money because the pass the money back to you. Wait a minute! Good Lord!! They don’t have to give the money back. They can keep it. Well, then what are we getting here? A single oil company, Exxon Mobil, made only 19.3 billion dollars last year. So we know as Americans we need to stand up and be counted to keep that company from going under. Nineteen point three billion dollars is chicken feed. So, we need to keep that money rolling in. We must not let the charitable institutions represented by the American oil and gas industry suffer economic loss (or a cut in profits!). Think of their children!

Bad Times

It seems that both major political parties are unable to cope with any form of reality. Both cannot solve the nation’s problems or in fact make any kind of intelligent decisions. These are bad times. People are short of jobs, money and hope. I share this malaise. I’ve thought about this and I have come to a decision. For thousands of years, people have lived through terrible times, many have died but the rest persevered and through luck or work or intelligence, we go on. Whatever is going on in the larger society, I still have my duty to my students and my duty to myself and my country.

James Pilant

Is China The Next Global Superpower? NO

Over and over again, I hear people say with complete confidence, “China will be the next world power.” Occasionally the will express sadness at the decline of the United States but continue to express confidence that soon we here in this country will be the second greatest economic power on the planet.

No, it’s not going to happen. The United States will remain the world powerhouse economic center for probably at least the next fifty years.

Why do I think this? First, the Chinese have been claiming a growth rate of 10 percent a year for the last thirty years. Very funny. I am being told that communist totalitarian state has a growth rate roughly six percent higher per year than the United States for the last forty years. The Soviet Union made similar claims. So, did the nations of Eastern Europe. How did that work out?

Since we can be totally confident that the Chinese government is cooking the books, how can we gain insight into the Chinese economy? Well, we have to use anecdotal information.

Guess what? A nineteen year old sticks a knife into the heart of a party official and becomes a local hero. The locals contend that the party official used his position for personal enrichment, stealing land and other economic possessions while having his opponents (the victims of his thefts) beaten up.

Of course, there really wasn’t any large number of sympathizers, just 20,000 or so. These people petitioned the court for leniency. The youth was sentenced to death anyway. It would set a bad precedent if you could wack a party official for corruption. Other anecdotal evidence as well as various studies says the same thing. There is an incredible amount of corruption ongoing in the “People’s” Republic of China.
But don’t just take my word for it. Take a look at this news report from AlJazeera.

Let’s be a little more skeptical about Chinese economic growth. I hear the praises of free enterprise and democracy rising to high heaven all over this country. How come we don’t apply our principles to the Chinese Communists? How come free enterprise is the best economic system in the world but they have a yearly growth rate of 10percent in a government controlled economy? Someone is lying. What’s your call?

James Pilant

I Cheer for Conan O’Brien

I try to focus on Business Ethics here and you wouldn’t think that Conan O’Brien would be a legitimate topic. But he is. His treatment by NBC has been brutal. The networks favoritism toward a washed up maudlin hack fully transparent.

I hope Conan finds a spot on another network. I could hope that NBC learns from its mistakes but that would be irrational. They don’t do things like that.

James Pilant

Jane Jacobs

Author of seven books, Jane Jacobs was not just an urban activist but a visionary. Here is David Owen’s take on her writings.

Morality and ethics are not trip wires. We must not wait until a moral dilemma strikes to act. We can act ethically and morally in an affirmative manner. We can seek to curb evil and its influence. It’s important to react to evil but it may well be more important to work against evil with persistence and commitment all our lives.Jane Jacobs when confronted with the taking of homes and businesses for development acted to stop it. She is an example of what can be done by a willingness to confront and oppose evil in an affirmative manner and not a passive one.

The Consumer Protection Agency

Currently in congress there is a bill passed by the House and now before the Senate that would create a U.S. Consumer Financial Protection Agency. The Senate at the behest of the financial institutions who have looted our treasury and destroyed the jobs and futures of millions of Americans is considering not having such an agency.

You see, there are wolves in the forest and the rabbits sometimes escape. Fortunately for the wolves they have powerful friends who continually corral and group the rabbits to make the hunting easier. For the rabbits to have a friend in the government would upset the rules of nature.

Let’s hear about the financial institutions from Elizabeth Warren, a defender of the rabbits.

I’m one of the rabbits and I resent that my Senators are unable to defend my interests.

James Pilant

Risky Lending and Lobbying – Connection?

An International Monetary Fund report entitled: A Fistful of Dollars, Lobbying and the Financial Crisis, reports that those lenders pursuing high risk lending practices did the most lobbying.

The actual report is found here: http://www.dnb.nl/binaries/Deniz%20Igan_tcm46-223260.pdf

Perhaps we should think of the risky lenders on Wall Street less like ivy league educated scum individuals and more like bold Western heroes. Here let me provide some music.

However, some of you may not feel that the mantle of Western hero does not fit them well. How about this one?

Well, now that I’ve got that off my chest. Let’s discuss the issue. First a quote from the actual study:

We find that, after controlling for unobserved lender and area characteristics as well as changes over time in the macroeconomic and local conditions, lenders that lobby more intensively (i) originate mortgages with higher loan-to-income ratios, especially after 2004; (ii) securitize a faster growing proportion of loans originated; and (iii) have faster growing mortgage loan portfolios.

This is research language, an arcane format similar in many ways to spell casting in Lord of the Rings. Let me translate: We worked hard to do a fair study and we discovered that lenders who did a lot of lobbying made stupid decisions.

So, here we come to the meat of the matter. The more lobbyists you hire, the more money you spend on influencing the government; the more likely you are to take risks.

Of course, you could turn it around. The more money and lobbyists financial institutions send to Washington, the more Washington protects them from laws and regulations while simultaneously shielding them from the effects of their ridiculous decisions.

We all learned in civics class that bankers and financiers are careful to protect their investors from loss while our Senators, Representatives and President would never fail to protect us from financial sector decisions that could destroy millions of jobs and damage the economic fabric of the planet.

We all know that a new Democratic President wouldn’t appoint all of his economic advisors from the very firms receiving bailout money. We all know that no Congress would give hundreds of billions of dollars of loans to private companies without setting up a mechanism to get the money back. We all know that should by some mischance all our protections fail and our financial system comes within a matter of minutes of total collapse that new rules and regulations would be put in place to stop that from happening again.

I guess I’m just cranky. I am getting older. Of course, I do teach Business Ethics and watching these event unfold hits me in the gut. It’s like teaching medicince in a place where they just kill the patients to save money.

But I’m probably just cranky.

James Pilant

President John Kennedy – Ask Not

What would Kennedy say about the greed and shorsightedness on Wall Street? I don’t know. But his repeated calls to national service still resonate (Peace Corps).

More importantly, do you think a financier from one of the “great” investment banks ever thinks of the interests of this county when making any kind of decision. Let’s remember for a moment a President who called on the best of our nature and judgment, not our greed and self interest.

Watch the video