Marojejian

Ok,  We’re always hearing about how we are cutting eduction spending, and how bad the US education system is… 

And yeah, education is so important, that it’s one area I’m happy to see the gov’t overspend a little on…just to be safe.   And I just voted in that vein. 

But then I see charts like the below (thanks, Mish), and I get really confused: 

This appears to show a very constant increase in real spending per pupil since 1950! Must be false, was my thought.  Yet I looked back at the data, but  I couldn’t find a hole in them…   

So what’s going on here?  I’d love you to tell me.  

Here are some theses:

1. Our education system is actually great! ( really?)
2. This aggregate increase is misleading.  Since we fund most education through a property tax system, rich districts are doing great, while poor districts are in trouble.
3. Most of the extra spending is being wasted (administrative overhead, pensions,  overpayment for stuff, consultants,  extracurriculars etc….)
4. Extra spending is being wasted due to poor incentives in the school system.   
5. Education is just way more complex now…and we need to pay more for it.

My favorite of these is #2.  It seems crazy that we seek to give equality of opportunity, but then fund schools based on how rich your district is…

But I would bet on #3 & #4 being right enough that they merit attention. Especially the pensions. 

#5 just doesn’t ring true - previous generations did just fine inventing & producing without the added $$.  And at this level… we could buy kids a few new computers each year!   

From looking at where all our gov’t spending goes,  I remember that state & local education spending is one of the biggest areas.  So if it’s being wasted… this is a big deal.  

Either way,  next time we are told we don’t spend enough on education, maybe we should bring this chart up and figure it out before we drop some more money bombs on the problem?

Great video on the research of Dan Ariely.  The Cliff Notes? We are motivated to work by: 

1)  Purpose: when the fruits of our labor persist and are useful

2) Recognition: When others see and value our work. 

3) Ownership:  When we have built a whole ‘thing’  we value it more than others do.  the harder it was, the more we value it. 

(This last one is the great Ikea Effect - we value the furniture we assembled more than than others do, because our sweat went into it). 

Another great podcast from Russ Roberts of EconTalk. If you want to understand how our banks work (and why they don’t work well), then take a listen.

Also some pretty simple solutions:

• Require dramatically more equity in banks (the money the owners put up) 
• Break up the biggest banks
• Make sure the banks are not too connected to each other

No one is doing any of this yet…so you should be upset.

How much of the housing bubble was due to poor incentives?  That is, did people involved with securitization know the system was going to collapse, but not believe it would affect them?  

An ingenious paper provides some evidence.  

This suggests that mid-level securitization managers believed in housing.   This was a real bubble, and even the pro’s didn’t see that the music was about to stop.   Very consistent with what I’ve seen.  Though I don’t think we should discount the impact that better incentives could have…   they may not have known the market was turning because their jobs gave them no real reason to look for that…

New research cited in this podcast suggests that the best way to get your kids to like eating their vegetables is:  spraying them with sugar!

This is less of a cop out than it sounds.  The amount needed is so tiny it doesn’t change the calorie profile.  But it does make the tast great.  

Anyone want to go in with me on a sugar spray biz?

The answer from analyzing corporate networks:  too few entities.  And they are too interconnected.  Forget social justice,  ecosystems like this are not healthy.  They are prone to huge shocks, because if one entity fails, all fail.   Nice to see complexity research applied in this interesting way.  

Sound familiar?

So let’s transalate this back into something you’ve heard before: 

Break Up The Banks. 

Watch the Vid from TED:

In this post, Cathy O’Neil does a great job highlighting what’s wrong in our: a) capitalism, b) healthcare, and c) politics.  And at the same time she take Nate Silver down a notch.  He’s no doubt a smart guy, but I agree with her that his celebrity has gone a bit far.  

Anyhoo,  the issue is that it seems like the ultra-smart foxes running our henhouse have made some mistakes.  Their financial models are wrong, their drug trials ignore negative results, and (shocker) their fiscal management of our budget ends up leaving us with huge debts!

We clearly need some smarter foxes, right?

Wrong.  The (larger) problem is that these foxes are incentivized to help themselves to the henhouse, and the side effect is they don’t care about ‘carrying the one’ or ‘managing the rail risk.’  

On Nate Silver:

He spends very little time on the question of how people act inside larger systems, where a given modeler might be more interested in keeping their job or getting a big bonus than in making their model as accurate as possible.

In other words, Silver crafts an argument which ignores politics. This is Silver’s blind spot: in the real world politics often trump accuracy, and accurate mathematical models don’t matter as much as he hopes they would.

So yeah,  let’s think less about getting smarter foxes, or having the larger fox of the government watch them.   Let’s work on the rules of the game so that the incentives are better.  Let’s take responsibility for hashing out the truth ourselves - and most importantly let’s distrust the foxes when they have their eye on a chicken. 

Good podcast from the Economist covering the book  How Children Succeed.   In a few minutes they’ve sold me that our educational system is focused on the wrong stuff.  Much more important than learning math is developing confidence, optimism, grit, and entrepreneurship.  

We shouldn’t just put kids through a gauntlet and see who makes it… we should make sure they have the mentors & experiences to learn how to succeed despite adversity.  

Just nice to know that it’s (slowly) happening.   

Gene therapy increases lifespan in mice

Sure there’s lots of hype, setbacks, and dead ends (sirtuins?).   But…

1. Our current lifespan is probably set by our genes far more than by the power of entropy.    
2. And there are probably some some simple ways to tune that set point ( telomeres?).  
3. And we’re going to get the hang of gene therapy eventually.  
4. But overall,  the human body is not getting any more complex, but we are learning more, and become more powerful. 

But oh, so slowly.  I wish I could help more.  

And of course extending lifespan may not be the best gift to humanity… but I’ll challenge you to be the one to return that gift. 

We have a lot to learn from Nature. One of the biggest structural problems in the economy today is that we have many institutions that we think are too big to fail, whether they be banks (Citi), companies (AIG, GM) or governments (Spain, California).   

Too many people think the answer is to make sure these institutions never fail.  Big Mistake - that’s impossible.  A King has his reign, and then he dies.   How does Nature solve this problem?  Watch the video below of what happens to a real whale when it fails.  

A huge part of the ecosystem is occupied with breaking down failing orgnanisms: Scavengers. Decomposers.   They do it quickly.  they make sure nothing goes to waste. That energy is pumped back into something living. And healthy.  

We need the same thing.   Let’s think ahead about how we can quickly decompose the next whale to fail,  not prop it up on life support and as a consequence gumming up the whole system.   Maybe special bankruptcy provisions, in which state resources go towards facilitating a very swift resolution process, not to “saving” the company.    

And let’s not deride the decomposers in our ecosystem.  There’s nothing wrong with being a “vulture capitalist”, just like there’s nothing wrong with being a vulture.  We need more of these, not less. 

The research is clear - You can buy happiness by giving to others (below).

So this holiday season treat yourself! 

Join Courtney and I (it was her idea) in fulfilling the wish-list of a family. Click below to join us and get others involved! 

https://www.crowdtilt.com/campaigns/adopt-a-family-for-the-holidays-with-compass

Interesting research suggests that our brains process information about social rank in a different place/way than other information.    Basically, we add in the ‘old’, ‘fear’ area of the brain:

Their findings reveal a striking dissociation between the neural circuits used to learn social and non-social hierarchies. They observed increased neural activity in both the amygdala and the hippocampus when participants were learning about the hierarchy of executives within the fictitious space mining company. In contrast, when learning about the non-social hierarchy, relating to which galaxies had more mineral, only the hippocampus was recruited.

OK here’s my speculative take on this speculative study:  We process information about Dominance (read also:  Social Class, Popularity, etc.), by including a different, older cognitive system… that probably also includes a heavy dose of emotion.  

While there are good reasons this happened (evolutionary-wise),  I bet this is one reason our social relations are often less than logical.  When it comes to people who may be though cool, classy or just intimidating, we pay attention to what others think… and our emotional, reptilian brain is forcing us to. 

Humans probably make worse decisions as a result.  Following Fads and cults?  Not questioning authority?  Taking part in financial bubbles?  Who knows.    I’m listening to the history of the Roman Empire now, and I keep thinking, why do people submit to being led by all these assholes?

This is of course utter speculation… but that’s where a good theory can be born. 

Great podcast here from C-span with David Cay Johnston, author of: “The Fine Print: How Big Companies Use ‘Plain English’ to Rob You Blind.”

He reveals the surprisingly numerous ways in which corporations  exploit us by creating complexity in regulations, and legalese.  

The Cliff Notes for you:

This is a great example of kleptoplexity & why we need The Razors.  Our world is only going to get more complex.  If we don’t reduce un-needed complexity, and get a better hold on it,  then these oragnizations will steal our money from us, and literally inslave us through corporate plutocracy. This will take a while… but take a listen, it’s already worse than you’d think.  

This is something libertarians and liberals can both get behind…. but that both political parties (and corporations) will fight bitterly against. 

Please help me get the word out.