Encouragement for 2010

I wanted to highlight several trends that emerged in the education market in 2009 under a new Education Secretary and Administration. Some very positive developments and a few quite alarming issues. Then I received a newsletter from America's 27th wealthiest person and decided to post it rather - with full credit to Bill Bartmann - as a note of encouragement for 2010. Happy New Year!

"I think we would all agree that 2009 will not be the good old days we will yearn for in 20 years.

Whole governments are failing because of the financial crisis. Iceland has collapsed completely. Ireland is close to collapse. Dubai has effectively defaulted on more than $100 billion of what was considered sovereign debt and that is probably only the tip of the iceberg (or sand dune, if you will). Dubai's bigger brother neighbor and largest creditor, Abu Dhabi, had to arrange a loan of $30 billion to stave off even a greater catastrophe.

This past Monday morning Abu Dhabi announced the construction of four nuclear power plants "in order to preserve their oil for export" and awarded a $20 billion construction contract to a South Korean consortium - beating out an American team led by General Electric. How odd that this Middle Eastern nation, with relatively modest exports, is using our petrodollars to pay for an infrastructure that will allow them to have more of our petrodollars in the future. The circle goes round and round and we remain the world's suckers.

The national unemployment rate remains at double digits. Despite Washington's bizarre euphoria about unemployment rates last month being better (they edged down in November to 10 percent from 10.2 percent in October), the number of Americans filing for initial unemployment insurance rose during the second week of December. After all the temporary holiday hires, that number will probably increase again. Plus, unemployment rates in 372 metropolitan areas are higher than they were last year. In November, employers took 1,797 mass layoff actions involving 165,346 workers. Mass layoff events and associated initial claims both decreased to their lowest levels since July 2008. OK, so the number of mass layoff actions is slowing. Big whoop.

Bankers have not learned the art of restraint. On Wall Street, the top six banks are getting set to pay out $150 billion in bonuses ($10 billion more than in 2008). Goldman is leading the pack in terms of bonus increases; it will dole out a projected $22 billion in extra compensation in 2009. JPMorgan put aside $29.1 billion. Wells Fargo is spending $26.3 billion this year. All to keep their petulant star employees happy at bonus time.

On the other hand, bank execs promised to do better on regulation matters, citing a "disconnect" between their steadfast support for regulation and the fact that their lobbyists were pushing for as little new regulation as possible. Really? Because this disconnect cost the financial sector $334 million so far this year to pay for the 2,560 lobbyists they hired to fight against any and every form of regulation; a pittance compared to bonuses, but still, hard-taken cash. I'm sure another $334 million is coming to fight for stricter regulation in the New Year. Not.

Bankers still struggle with being honest with the public and their stockholders. Ken Lewis (Bank of America) and John Thain (Merrill Lynch) may be lucky if they stay out of prison. The least convincing mea culpa of the year was Lloyd Blankfein (Goldman) who said he was sorry about his firm's role in the financial crisis. "We participated in things that were clearly wrong and have reason to regret, we apologize." He didn't say he was sorry the firm is still floated on $43 billion of total subsidies including FDIC guarantees for debt it raised, that were logically supposed to aid consumer oriented banks, and the $12.9 billion it got through the AIG bailout. And as noted before, Goldman leads the bonus sweepstakes for 2009. The firm is probably not very sorry about that.
In spite of all that, I am optimistic. Yes, I choose champagne and leave the hemlock for others.

I am optimistic by nature. It's that bit of hoped-for future that is in our minds, that drives some of us, inflicted with the entrepreneurial gene, to do the next deal, make the next big plan, dream yet another dream. It has not yet become real, yet we live and act as if it is almost real. We can feel it getting ready to happen. It is still in our heads. Yet it is real for us.
For some, I should note, it is not just about money. It may be about the next deal or the next big idea. It is simply what drives us.

But it's not just me; it is millions of entrepreneurs that have the same ambitions and drive. Every night we go to sleep with these thoughts, and every day we get up and try to figure out how to turn it into reality. And some of us are talented or lucky enough to make it happen.
Yes, the next decade is likely to produce less than average growth because of structural problems and the bad choices we have made with personal and government debt. I am perfectly aware that unemployment will be over 10% for a protracted time. That is tragic for those unemployed and underemployed. I realize the entire developed world has huge and seemingly insurmountable pension and medical obligations over the next few decades, which we cannot possibly hope to meet. The level of stress that we will live through as we adjust will not be fun.

But the point is, that is just what we do - we live through it. In spite of the problems, we get up every day and figure out how to make it. Would it be easier if we could get our act together and not be forced to adjust? Yes, but that is not the way of the world. Of course we will have some very challenging times ahead of us.
So what? The future is never easy for most of us. But we figure it out. And that is why in 20 years we will be better off than we are today. Each of us, all over the world, by working out our own visions of what might be possible, will make the world a better place.

Think about some changes we are likely to see over the next few decades.

Within ten years, most of the world will be able to access cheap (I mean really cheap) high-speed wireless broadband at connection rates that dwarf what we now have. That is going to unleash a wave of creativity and new business that will be staggering.

Ever-faster change is what will happen in medicine. New drugs. Gene therapies. Growing organs for transplant. None of us in 2030 will want to go back to 2010, which will then seem as barbaric and antiquated as, say, 1960.

Energy problems? Are we running out of oil? My bet is that in less than 20 years we won't care. We will be driving electric cars that are far superior to what we have today in every way, from power sources that are not oil-based.

What about nanotech? Robotics? Artificial intelligence? There are whole new industries that are waiting to be born. In 1980 there were few who saw the rise of personal computers, and even fewer who envisioned the Internet. There are thousands and thousands of new businesses that couldn't even exist just 20 years ago.

I am not sure where the new jobs will come from, but they will. Just as they did in the 60s, 70s, 80s and 90s.

There is, however, one more reason I am optimistic. Sitting around the dinner table, I looked at my kids and I thought about them and their friends. Are they struggling? Sure. They now have kids and mortgages of their own. And dreams. Lots of dreams. That is cause for great optimism. It is when the dreams die that it is time to turn pessimistic.

I believe the world of my kids is going to be a far better world in 20 years. Will China and the emerging world be relatively better off? Probably, but who cares? Do I really begrudge the fact that someone is making their part of the world better? In absolute terms, neither of my kids will want to come back to 2009, and neither will I. Most of the doom and gloom types (and they seem to be legion) project a straight-line linear future. They see no progress beyond that in their own small worlds.

We live in a world of accelerating change. The world is not linear, it is curved.

In the end, life is what you make of it. With all our struggles, as we sat around the table, our family was content, just like 100 million families around the country. Are there those who are in dire distress? Homeless? Sick? Of course, and that is tragic for each of them. And those of us who are fortunate need to help those who are not.

We live in the most exciting times in human history. We are on the verge of remarkable changes in so many areas of our world. Yes, some of them are not going to be fun but I know I am up for the challenge. And I think each of you are up for the challenge.

I hope to never reach the time when there is no dream I am working on that will change the world, no dramatic visions of grandeur.

I love the future. It is going to be the best thing ever. I wish for each of you a wonderful new year full of health, happiness and good fortune.

Aspera ad astra. Through challenge we reach for the stars." Bill Bartmann

Cart before the Horse?

The Washington Post reported that federal funding for performance pay in public schools would quadruple, to $400 million a year, under a bill moving through Congress. This reflects a growing political momentum behind an education reform once resisted by labor leaders and teacher unions.

Finally, one can argue, accountability is a priority in the education system. Or is it? If you had an untrained dog and bought all the dog training videos and books on the market, will the dog be trained? We are asking teachers in effect to increase performance drastically with the same student problems, same socio-economic issues, and same educational approaches that have in fact led to the problems in the first place.

Case in point: The same paper reported that there is still a gap in achievement between black and white students nationally although academic gains have been made overall as a result of the No Child Left Behind efforts from the previous administration - without pay incentives.

The Ledger in Lakeland, FL reports that teachers aim to boost student's interest in reading to improve reading scores. Despite millions of dollars spent to improve reading over the past 8 years with no significant improvement, it is more of the same.

In Las Cruses, NM students are exposed to 'Math Snacks' - a series of short animations and games that help middle school students better understand math. The program can be used as homework or in class. What's next on the gimmick list?

In Portland, Or parents are up in arms about a proposal to move back to large neighborhood schools rather than smaller (and costlier) schools. The argument is that current schools are segregated by race and income, yet there is no evidence that changes will improve student achievement.

These examples are mentioned as a small glimpse of the wide range of issues that need to be solved irrespective of pay for performance. In a severe recession, throwing almost a half billion dollars of tax money to teachers with a very fuzzy assessment component, just does not make sense.

In Florida, a decision has been made to link its $700 million in Federal education grant money to the adoption of local merit pay plans. This award program is based 60% on improvement of standardized test scores and 40% on evaluations by principals. The FCAT exam has been widely criticized for years now but it is what it is. But what happens if the principal does not like me as a teacher? Down goes my potential bonus income!

It is not about withholding money from good teachers. It is about putting more pressure on them to perform in an imperfect environment where the playing is anything but level. Cart before the horse?

Walking to School

I tell our daughter how I walked barefoot in the winter through frost-covered grass to school - a mile-and-a-half away. Truth was that it was only three blocks and Mom bundled us pretty good! The morale of the story is that WE WALKED TO SCHOOL. And and back. Uphill and down hill. Rain, sunshine, cold, and brutal heat. I can count on two hands the amount of times that we were taken to school by car.

Seems like old ideas might become new again. The Washing Post reports that grim budget cuts are rekindling the idea of kids walking to school. In Fairfax County, VA, the Board of Supervisors are entertaining the idea of moving back school bus boundaries for bus-riding eligibility.

A few factors are driving this novel idea:

1. Limited transportation budgets
2. Increasing childhood obesity
3. Potential higher costs of diesel fuel
4. Reduction in air pollution
5. Decrease of traffic congestion

Linda Farbry, director of transportation for Fairfax County reports that the cost of putting one bus on the road is equal to the salary of one teacher on staff. Which expense carries the highest priority?

The Department of Transportation has advocated walking to school for years. So has the CDC and almost every organization fighting diseases of every nature. Yet the campaigns are not very successful because city planning is around cars, not pedestrians. So half-empty school buses continues to cruise around neighborhoods.

Students eligible for busing typically lives 1.5 miles or more from school. Those inside the boundary becomes eligible if they face particular safety hazards, have disabilities, or belong to special programs. Beyond a mile to 1.5 miles busing make sense. Depending on the age of a student and weather conditions, common sense must prevail. But for a large group of students living within those boundaries it comes down to the issue of safety.

A few simple approaches will need parent support or it will not happen:

• Coordinate neighborhood routes to school
• Be visible (www.myfitlight.com)
• Be appropriately dressed
• Reward walkers

Perhaps we can return to the time in 1969 when 41% of students walked or cycled to school. By 2001 it was 13% and a good guess is that it is currently below 10%.

Michael Cordier