An issue that won't go away

Yesterday, New Orleans Saints running back Reggie Bush--in one of the greatest you-can't-fire-me-I-quit moments in recent memory--forfeited the 2005 Heisman Trophy that he earned while playing for the USC Trojans. He becomes the first player in history to forfeit his award or have it stripped by the Heisman Trust, which has presented the award to the top collegiate football player since 1935.

Bush forfeited the trophy under extreme pressure from the Trust, which--despite its denials--was clearly on the verge of stripping the award due to Bush's improper receipt of gifts from an agent while he was at USC. There is further speculation that USC will also be forced to vacate its 2004 national title as the NCAA continues its investigation into the matter.

This is only the latest in a long line of recent news items focusing on "improper contact" between players and agents. Alabama coach Nick Saban famously referred to agents as "pimps" in the wake of his program's agent-related controversy this summer, saying:

"I don't think it's anything but greed that's creating it right now on behalf of the agents," Saban said in a rant at the SEC media days. "The agents that do this – and I hate to say this, but how are they any better than a pimp?

"I have no respect for people who do that to young people. None. How would you feel if they did it to your child?"

This, from a man who is scheduled to be paid $4 million per year through 2017 for coaching these same kids. Look in the mirror, Nick.

Former USC coach Pete Carroll, for his part, escaped from USC before it could be sanctioned, in order to sign a 5-year, $33 million contract with the NFL's Seattle Seahawks. He will face no punishment for what happened at USC under his watch, in the same way that Kentucky basketball coach John Calipari has twice escaped programs (UMass and Memphis) immediately before they were sanctioned. Coaches, athletic directors, and NCAA officials continue to be all too quick to blame individual agents and players for illicit behavior, without even addressing the possibility that their own policies and conduct may be to blame.

From their actions, the NCAA (and auxiliary organizations, like the Heisman Trust) continue to make it clear that the single worst violation a player can commit is to try to get a piece of collegiate athletics' ever-growing revenue pie. For comparison, recall that another Heisman-winning USC running back is currently serving time in prison for multiple felonies (murder not one of them), but has never been asked to return his award. In the eyes of the NCAA and Heisman Trust, armed robbery is apparently of less concern than gifts from agents.

I think about this issue in much the same way that I think about underage drinking. A rule is put in place that is somewhat arbitrary by its nature, but that engenders strong feelings among certain special interest groups. While nobody actually believes that the rules are particularly effective at preventing the targeted behavior, the rules' existence nevertheless creates a moral battleground that defines the public discourse. This is not healthy, and in fact prevents any informed discussion on the topic.

Player-agent contact, like underage drinking, continues to rage on college campuses across the country. Instead of trying to have an honest conversation as to why, we simply shun Reggie Bush for breaking the rules--and punish current USC players who had nothing to do with the situation--without considering if the rule was just to begin with.

This is just one more example of a reactionary policy creating more problems than it solves. By creating rules and heavily punishing athletes for breaking them, we are not actually doing anything to address the underlying inequities that create the behavior in the first place. All we have accomplished is to delay the broader conversation, which will only become that much more difficult once we are finally forced to have it. In my opinion, it will come sooner rather than later.

[Huffington Post]

Introducing "Quote of the Week"

I've decided to introduce a few weekly features to the blog, starting with my "Quote of the Week", which I'll post on the site every Tuesday. Sometimes it will come from a previous blog post, sometimes it will be unrelated; sometimes it will be amusing, sometimes it will be infuriating. Hopefully, you'll find them as interesting as I do. Stay tuned for more weekly features...

This week's QUOTE OF THE WEEK

"Nothing is in a bubble when people want to buy it." -Joseph Balestrino, Federated Investors

CNBC anchor Erin Burnett received a lot of attention for her "you are so rude" outburst, directed at Delta Advisors' Michael Pento in this video:



But my favorite part of the video came after Mr. Pento's dismissal, when Joe Balestrino let loose with an absolute gem (beginning around 4:25 in the video). Balestrino could not be more wrong. If nothing is in a bubble when people want to buy it, then there is no such thing as a bubble. Period.

People bought houses in 2006-2007, when they were most assuredly in a bubble. People bought crude oil when its price exceeded $145 per barrel, before it collapsed by more than 50%. This is how bubbles are created in the first place. What Joe Balestrino is suggesting is that a bubble doesn't exist until it has popped. In a word, wow.

The fact that this type of lunacy qualifies as "expert analysis" is beyond absurd. I would rather stuff my money in a mattress or burn it as fuel than hand it over to someone who can make such a bold-faced ridiculous statement. For his complete ignorance of market reality, Joe Balestrino has earned the distinction of my inaugural "Quote of the Week".

[YouTube]

Are the days of the liberal arts education numbered?

It would be easy for me to bury my head in the sand and ignore this item from the Boston Globe yesterday, which cited a Wall Street Journal survey that found that employment recruiters are ignoring the Ivies and instead favoring large public universities in deciding where to do their undergraduate hiring.

Employment recruiters say that public universities are producing the most prepared and well-rounded prospects for entry-level jobs, with better life skills to fit in to their corporate cultures and prosper...

While critical thinking and the intellect of Ivy Leaguers are appreciated, recruiters are looking for practical skills for new product developers, operations managers, engineers, and business analysts.

The Journal article notes that budgetary concerns--especially since the economic downturn--also play a role. For larger companies with broad-based hiring needs, it is simply more economically efficient to visit fewer schools and develop deeper relationships than to attempt to cherry-pick students from top schools around the country. According to the Journal,

The impact on students is significant. Steve Canale, head of General Electric Co.'s recruiting efforts, said it is critical for prospective students to ask which companies recruit on campus before deciding where to matriculate. GE, for example, focuses on about 40 key schools—many of them state schools—to hire 2,200 summer interns; upwards of 80% of its new-graduate hires come from its internship pool, said Mr. Canale.

The implication for smaller liberal arts colleges--and the students who choose them--is fairly clear. I personally remain a strong believer in the liberal arts approach, but I recognize that it puts graduates at an initial disadvantage in the workplace. Companies know this, and respond accordingly in their entry-level hiring practices. Liberal arts students will often need to make up for their lack of vocational training somewhere, and relatively few companies are willing to provide that service for them. As a result, more liberal arts graduates choose (or are forced) to go to graduate school to round out their skill sets.

Claudia Goldin, a Harvard economics professor and lead researcher on a study tracking Harvard graduates' career paths, said, "We have none of the basic bread-and-butter courses that serve you well in much of industry." What's more, Ms. Goldin said, at Harvard, more than 55% of graduates went on to a doctorate degree, according to a recent survey, so they tend to stay in a first job for a short period of time—often a year or less.

As corporate recruiters have wielded ever more influence at our nation's universities, I wonder whether Ivies like Harvard and Yale and smaller liberal arts schools like Williams and Amherst will be forced to reconsider their traditional rejection of vocational training. With the job market remaining challenging for college graduates, it will be increasingly difficult for students to choose a school at which fewer employers recruit. Though the liberal arts focus does indeed pay dividends over the long run, as liberal arts graduates typically perform very well over their entire careers, the entry-level hurdle is a large one for students to overcome.

Of course, the alternative is for graduates of liberal arts colleges to simply eschew the traditional large-company career paths and strike off to start their own businesses. But without the vocational training necessary to succeed on one's own, it is a risk that few of today's graduates are likely to take. It will be interesting to see who blinks first in the coming years.


[Boston Globe]
[Wall Street Journal]

Who is Mr. Baker?

This weekend, I stopped into my local CVS to pick up some NyQuil and cough drops for my wife, who had been diagnosed with strep throat (she also wanted to know if she could take NyQuil, Aleve, and penicillin all at the same time...goes along nicely with my posts on prescription drugs, but I digress).

When I got to the checkout counter, the clerk asked me if I had a CVS card. I don't, but my wife does, so he said he could look it up by phone number. I gave him my home phone number, he punched it in, and we were good to go. Then after I'd paid for my things, he gave me my receipt and said "have a nice day, Mr. Baker".

I laughed it off, considered whether the clerk had lost his mind, and got in my car to drive home. Then I thought about it some more and began to wonder. Who the hell is Mr. Baker, anyway? My wife and I purchased our home 3 years ago from its original owners, the Millers. I'm not certain if the Millers had our same home phone number, but we've had the number since at least June of 2007. So either there's a Mr. Baker out there somewhere making CVS purchases of Lord-knows-what using my phone number with malicious intent...or Mr. Baker sincerely needs to update his phone number.

Either way, the incident got me to thinking about privacy and fun with databases. My wife and many of my friends have recently become very concerned about protecting their personal information (with good reason), de-tagging photos of themselves on Facebook and taking care not to provide merchants with personal information unless completely necessary. But how many databases do we exist in that we don't even realize? And how many people could be using our information without us possibly knowing about it?

The Baker/Powers mismatch at my CVS could be an isolated incident, and probably doesn't matter much anyway. But as someone who recently changed his cell phone number, I do have to wonder how many databases the new Mr. 781-367-XXXX is now listed in under my name. What other information might he be able to learn about me, simply by having my old phone number? If I had asked the CVS clerk, what would he have been willing (and able) to tell me about Mr. Baker? I worry that in this new era of identity theft and privacy concerns, there might be more to protect than we could possibly manage. But if you do happen to come across Mr. Baker in your travels, please tell him to call CVS and change his number.

L.A. Unified School District joins the wasteful hall of fame

Today marks the opening of the controversial $578 million Robert F. Kennedy Community Schools complex in Los Angeles, the most expensive public school in American history. The school has been a lightning rod for controversy, with many of the more profligate features in the complex standing in stark contrast to the city and state's otherwise precarious budget situation.

In a Wall Street Journal op-ed, Allysia Finley summarizes some of the more offensive aspects of the project.

The school boasts an auditorium whose starry ceiling and garish entrance are modeled after the old Cocoanut Grove nightclub and a library whose round, vaulted ceilings and cavernous center resemble the ballroom where Kennedy made his last speech. It also includes the original Cocoanut Grove canopy around which the rest of the school was built. "It wasn't cheap, but it was saved," says Thomas Rubin, a consultant for the district's bond oversight committee, which oversees the $20 billion of bonds that taxpayers approved for school construction in recent years...

Talking benches—$54,000—play a three-hour audio of the site's history. Murals and other public art cost $1.3 million. A minipark facing a bustling Wilshire Boulevard? $4.9 million.

When Ms. Finley asked Mr. Rubin if he thought many of these features--such as the gigantic marble slab engraved with quotations from Cesar Chavez, Maya Angelou, and Ted Kennedy--were worth the cost, he responded, ""Did we have to do that? Hell no. But there's no accounting for taste."

 

With all due respect to Mr. Rubin, when it comes to spending taxpayer dollars, there sure as hell is. These expenditures might be a mere footnote if they existed in a different context, but the current economic environment makes them glaring. In discussing the opening of the school, the Los Angeles Times notes that:

The campus, which comprises six independent schools, will unlock its doors to about 3,700 students as a maelstrom of issues buffets the Los Angeles Unified School District, the nation's second-largest school system. The school's delayed Sept. 13 opening is the consequence of budget cuts that shortened the school year, while classes here and in other school systems will be larger because of teacher layoffs.

The school district is, in fact, running a $640 million deficit and has had to lay off a total of 3,000 teachers over the last two years. The contradictions here should be clear. To spend millions on art and parks that serve little or no educational purpose--while simultaneously laying off teachers and shortening the school year--represents the epitome of self-defeating behavior. With decisions like this, it is no small wonder that the district's graduation rates and college matriculation rates are among the lowest in the country--reportedly around 50% and 11%, respectively.

Controversies like this are, however, hardly unique to Los Angeles. In Massachusetts, debate continues to rage regarding the recently-opened Newton North High School ($197 million, nearly 100% above its original budget) and a $159 million high school project in neighboring Wellesley (my alma mater). In response to these projects, Massachusetts state treasurer Timothy Cahill issued a stern warning.

Cahill...said that school communities should not be making decisions for a community. He argued that even the wealthiest towns have residents who cannot afford the tax increases needed to fund such projects...

Cahill said the tax override that Newton voters rejected [in May 2008] was a case in point. The $12 million override was not related to the costs of the new school, which jumped $56 million in just over a year. Still, he said, the rejection was a sign of voter frustration with the city's fiscal management.

Now, the city could face the prospect of laying off teachers.

"The teachers are far more important than bricks and mortar," Cahill said.

In fairness to Wellesley, with enrollment nearly doubling over the past 10 years due to a conflation of factors, something needed to be done to the original 1938 building, which was stressed beyond capacity. Projects which expanded the original structure were considered, but proved to be more expensive and more time-consuming than a new structure--and much more disruptive to the students during the process. Furthermore, WHS is consistently rated among the best public high schools in America, and has earned the benefit of the doubt from me, a distinction which the Los Angeles Unified School District certainly has not.

This is ultimately part of a greater gripe of mine against many government responses to crises. Faced with low graduation rates and public pressure, Los Angeles simply threw money at the problem, rather than addressing the root causes. Not only will it not work, but it actually proved to be self-defeating, wasting money that could have otherwise been spent retaining the teachers that it was forced to lay off.

Just as Cash for Clunkers didn't save the car market (this August's sales rate represented the weakest August since 1983, further indicating that the demand pull-forward was a short-lived boon to the industry), and the Obama tax credits did not save the housing market (sales rates for both new and existing homes experienced a similarly devastating snap-back after the credits expired), the RFK school complex will not save Los Angeles' graduation rates or send more students to college (to be saddled with non-forgiveable loan debt). It will simply leave Los Angeles in an ever more precarious financial situation, forcing it to make difficult decisions that never would have had to be made absent this wasteful spending.

Bad government policies are worse than no government policies; they not only do not solve problems, they also create new problems in their wake. When Los Angeles finds itself in 2020 wondering why graduation rates are still languishing and their budget simply can't be balanced, they will have to look no farther than the inspirational marble slab at the RFK school complex. Hopefully, it will provide some helpful words of wisdom.

[Wall Street Journal]
[Los Angeles Times]
[Boston Globe]

Prescription drugs, revisited (or, what cancer and the Patriot Act have in common)

While watching last night's multi-network "Stand Up To Cancer" telecast, I found my mind drifting back to yesterday's post on prescription drugs. As celebrity after celebrity paraded out onto the stage to tell personal stories of how their lives had been affected by cancer, I couldn't help but feel a sense of déjà vu.

For as long as I can remember (really, since the National Cancer Act of 1971 signed by President Nixon), we have spent incredible amounts of effort and untold millions (Newsweek's Sharon Begley estimates it at $200 billion) trying to find the ever-elusive "cure for cancer". While progress has been made on some fronts (death rates from breast cancer and colorectal cancer have fallen precipitously since 1975), success has been uneven and we are far from finding the silver bullet cure (death rates for melanoma, lung, liver, and pancreatic cancer have increased significantly, in some cases almost doubled). As Begley writes (emphasis mine),

In 1975, the first year for which the National Cancer Institute has solid age-adjusted data, 199 of every 100,000 Americans died of cancer. That rate, mercifully, topped out at 215 in 1991. In 2005 the mortality rate fell to 184 per 100,000, seemingly a real improvement over 1975.

But history provides some perspective. Between 1950 and 1967, age-adjusted death rates from cancer in women also fell, from 120 to 109 per 100,000... In percentage terms, the nation made more progress in keeping women, at least, from dying of cancer in those 17 years, when cancer research was little more than a cottage industry propelled by hunches and trial-and-error treatment, as it did in the 30 years starting in 1975, an era of phenomenal advances in molecular biology and genetics.

Unfortunately, any successes have been fleeting, as new carcinogens are introduced into our environment daily, and preventive behavior in general has made little progress. You can spend as many millions as you want trying to find a cure, but if the root of the problem is unchanged (or getting worse), you'll make little real progress. It's a harsh Sisyphean reality that any weed-picking gardener knows well.

One need only look to cardiovascular disease to find the proper analogy. Thanks mostly to a significant decline in smoking, its mortality rate has decreased 70 percent since 1975 (credit goes again to Ms. Begley for the statistics). By targeting the cause, we were able to solve (or at least make significant progress toward solving) the problem. I can't possibly know what all the causes of cancer are, but I do know that we are much better served searching for and targeting them, rather than continuing to try to find a "cure".

This is where I come back to my prescription drugs post. In general, I believe that we have become a nation that is incredibly good at treating symptoms, but woefully inadequate at solving underlying problems. Not feeling too happy today? Don't bother asking why, just pop some prozac. Short attention span? Here's some ritalin. Cholesterol hitting the roof? Don't pass on the steak and eggs just yet, just take some lipitor and don't look back. (Yes, I'm getting a little rant-y here, but I think it's justified).

I've long complained that the problem with most government policy is that it is too reactionary, rather than pro-active. Affirmative action and the Patriot Act are frequent targets of my ire, for exactly that reason. We declared war on drugs without bothering to ask what made drug use so prevalent (could it be that recreational drugs and prescription drugs go hand-in-hand?). We fought a war on terror--and sacrificed personal freedoms--without wondering why we were the target of a terrorist act in the first place (it's best that I not go down that road).

When our banking system collapsed, we never really got to the root causes of why. We all pointed fingers at each other, then threw billions of dollars at the problem in an attempt to treat the symptoms (and get our banks right back up lending again). Nobody bothered to ask if we'd simply become overindebted as a society, addicted to credit. We just wanted to make sure we could get our credit system "fixed".

I now believe that this reactionary dynamic, which I'd previously ascribed to bad government and flawed politics, is more pervasive than I'd originally appreciated. Our nation is very poor at asking the tough questions and looking at itself in the mirror. We would rather throw money at trying to treat a symptom than actually try to change the behavior that led to the disease in the first place.

I was refreshed, then, to see one portion of the Stand Up To Cancer telecast featuring NYC Mayor Michael Bloomberg, touting the benefits of anti-smoking education and legislation. For one part of the night, at least, we were focusing on preventing cancer, not on treating it. Now if we can only focus on preventing ourselves from lapsing into reactionary policies, maybe we won't have to deal with the symptoms of our problems in the following decades.


[Newsweek]

The explosion of the prescription drug industry

I've been meaning to post on the issue of prescription drugs, especially since reading Mish Shedlock's blog post this weekend. Citing a 2008 study (released last week) by the Center for Disease Control & Prevention (CDC), Shedlock notes that:

Almost half of Americans took at least one prescription drug per month in 2008, an increase of 10 percent over the past decade, a U.S. study found.

One of every five children ages 11 or younger took at least one medication each month in 2008, led by asthma and allergy treatments, according to the survey released today by the U.S. Centers for Disease Control and Prevention. Among those ages 60 or older, 37 percent used five or more prescriptions per month.

The numbers, especially among the older individuals, are stunning. Each age group has its own favorite medications--Attention Deficit Disorder (ADD) drugs among the adolescents, antidepressants for the middle-aged folks, and cholesterol-lowering pills for the 60-and-over crew. A full 45% of Americans over 60 are on a cholesterol drug of some sort.

I'm (for once) not honestly sure what I think the implications of this are. Are we really getting sicker (or more unhappy) on a broad basis? If so, why? Or, as Mish Shedlock opines, are the changing patterns of drug advertising--from a doctor-driven model to a demand-driven model focused on TV advertising--more behind the increase? For me at least, I find the demand-driven model unsettling at best. But maybe it's a symptom rather than the true disease.

No matter what, with debate over health care costs here to stay (especially as the baby boomers enter retirement age), I expect the debate over prescription drugs to heat up as well.

[Bloomberg]