#328 Public or For-Profit Educational Institution. Which More Cost Effective for Specialized Training?

Readers: this blog is set in the future (sometime after the year 2020). Each entry assumes there has been a 5th revolution in the US — the Revenge Revolution. More about the Revenge Revolution and author, How the 5th US Revolution Begins and About the AuthorOccasionally I do a “sense check” about the likelihood of a Revenge Revolution.  Entry #318 is the most recent “sense check.”  One more note — sometimes I write about another topic that does not quite fit the theme of the blog.  Those comments are available on the page titled “JRD Thoughts and Comments.” 

In the entry describing the coming technology tsunami (#319), I suggested a way to help mitigate the impact of the inevitable tsunami was increasing support for public education. Here’s another aspect of public education that needs more discussion.

Entry # 327 outlined arguments why society would be better off banning for-profit universities, or FPU’s, from charging students for class material that should have been taught as part of their secondary, and in some cases, primary education. Why should students who learn at a different rate, or learn in ways outside the standard teaching method, be penalized and required to “pay twice” for the same classroom material?

But what about course material not taught in public schools? Or course material taught in technical schools? Why burden the taxpayers with such cost? Why not use for-profit universities for such training?

If someone wants to become a licensed cosmetologist, why should the public have to subsidize such training? Same with say someone who wants to become a licensed auto mechanic. Why should the public support such training?

Such an argument is a valid one. At the same time, society needs to consider the role of public education beyond high school. If North Carolina’s Central Piedmont Community College (CPCC) is representative, there are numerous classes and training programs aimed at some very narrow occupational fields. In some cases at CPCC, classes are designed specifically for types of companies. Based on a cursory review of CPCC website, students have an opportunity to prepare for licenses, earn certificates, or an Associate degrees in a wide range of occupations. Yet all these classes, including those for the companies, are subsidized by the public.

Some key benefits to having such specialized classes taught using the public education system include:

  1. Control over quality of the course material. There is more oversight over relevancy and quality of course material at accredited universities than at for-profit universities.
  2. Ability to integrate other learning material into the course. For example, courses could include basic class material as well as additional information about how to integrate emerging advanced technology such as artificial intelligence. Having this opportunity to broaden the student’s perspective, would help the student understand how to use emerging technologies.
  3. Using a community college for specialized training is less costly to the student and to the public. Because the infrastructure and administrative overhead are already in place, the incremental cost to add specialized classes is less at a public university than the cost at a standalone for-profit education institution. As a result of using public-education facilities, the student can be trained and begin working with fewer outstanding loans and ideally no loans. The reduced financial burden increases the likelihood the student will quickly migrate to becoming a full-time worker and taxpayer.

Some will ask, “Is subsidizing the cost of specialized training yet another aspect of more socialism? Another harebrained giveaway by liberal Democrats?”

Clearly, or maybe not so clearly, there is a point beyond which the public should not pay for specialized education. Such training should be the responsibility of the individual or the company where the individual is employed.

The beginning of the “no-more-subsidized-training” line will vary by geographic area. Community colleges in urban areas will have a different course mix than community colleges in rural areas. I think most everyone can agree that local communities should make that choice of what courses should be subsidized rather than letting the federal or even state government do so.

“Isn’t subsidizing specialized education a slippery slope? I mean, should the public be subsidizing someone who wants to learn basket weaving or how to make greeting cards? C’mon. What about those situations? We know someone will push for such classes and then claim discrimination if the classes aren’t offered. Why create all the hassle. Let them all go to the for-profit teaching institutions.”

The “slippery slope” argument is often cited…and probably occasionally valid. But always justifying not doing something because of a slippery slope would negate most societal norms and laws we have today. Laws and behavioral norms are based on actions of a “reasonable man” (or woman). In many cases there is no clear line between reasonable and unreasonable. Focusing on how the extremes, or outliers, might be affected is a path to stagnation and not a path to progress and Improvement. For those classes or technical programs that fall outside the norm and could be considered unusual or extreme, then maybe a for-profit university or a collection of private tutors is a better choice for such training.

The default, seems to me, whether for general education content or for specialized content, should be through a public institution. If the public education path cannot work, then consider a for-profit institution. Public institutions afford greater opportunity to control content quality and greater opportunity to control cost for the student…and public.


#327 Do For-Profit Universities Help Prepare for Coming Technology Tsunami – Yes, No?

Readers: this blog is set in the future (sometime after the year 2020). Each entry assumes there has been a 5th revolution in the US — the Revenge Revolution. More about the Revenge Revolution and author, How the 5th US Revolution Begins and About the AuthorOccasionally I do a “sense check” about the likelihood of a Revenge Revolution.  Entry #318 is the most recent “sense check.”  One more note — sometimes I write about another topic that does not quite fit the theme of the blog.  Those comments are available on the page titled “JRD Thoughts and Comments.” 

In the entry describing the coming technology tsunami (#319), I suggested a way to help mitigate the impact of the inevitable tsunami was increasing support for public education. Here’s another aspect of public education that needs more discussion.

Do for-profit universities help prepare students for the coming technology tsunami? My view? No. First, let’s define for-profit universities, or FPU`s. These are institutions with a primary purpose of making a profit for investors. In an FPU, education happens to be the product. The product to generate a profit could just as easily be processing waste – e.g., Waste Management Incorporated – or selling coffee – e.g., Starbucks.

While doubtlessly some FPU’s are well-intentioned and focus on educating students, let’s not forget the primary purpose of any for-profit company. Duh, sell a product/service, make a profit and return money to investors.

But you ask, “What about private colleges and universities? Aren’t they in business to make a profit? I mean, Harvard has a huge endowment — maybe $10 billion or something?”

Harvard’s endowment is more like $35-40 billion.

“Alright, lots more endowment than I thought. I’m confused. What’s really the difference between Harvard or MIT and say Trump University? Maybe Trump University is a bad example, but what about say University of Phoenix? It’s for profit and from what I can tell, University of Phoenix does more public good for lower-income people than either Harvard or MIT. University of Phoenix educates a lot of people who otherwise could not attend college. Your argument against for-profit universities sounds elitist.”

Agreed that University of Phoenix seems a lot more affordable than many private education institutions. But such an argument creates a false equivalency. Realistically, 99.9% of the students attending University of Phoenix could not qualify academically to attend the top-end academic institutions in the US. Not being qualified academically does not mean these students are dumb; they lack demonstrated skills in key areas.

Maybe the better question about public good is, “When all the costs are taken into account, is there a less costly and more effective alternative to teach basic skills than such places as University of Phoenix?” Let’s also be honest about education and skills. Not everyone has the same skills or can even acquire the same skills. My crayon jungle drawing from grammar school might have won 2nd place prize at the county fair, but no amount of training is going to make me a successful professional artist.

From a public good perspective, how can we… the proverbial societal “we”…make sure all students have an opportunity to learn basic skills that will enable them to secure and retain a reasonably well-paying job? While everyone in the US is supposed to have access to free public education through high school, a remarkable percentage of students do not complete high school.

As of 2016, the high school drop-out rate was 25% or more in some states. (When reviewing the data by state, reported graduation rates in some states seems highly inflated…or the standards to graduate in those states are exceedingly low.) Lots of reasons for not finishing, including recognizing that not all students learn at the same rate or the same way. In addition, some families have such limited income that children must work to help support the family as soon as possible, even if it means dropping out of high school.

While the reasons may vary for dropping out, should society ask these students to pay to finish their education, especially through for-profit institutions? Asking them to pay a very high price just to finish their high-school education is a disincentive to complete the degree. Plus the cost of attending remedial classes at a for-profit institution creates an excessive financial burden on someone who’s likely to be earning low wages and have little or no savings.

Wouldn’t society be better off to pay for their education? Paying to complete high school would provide those who didn’t finish a better opportunity to secure higher-paying jobs and, with those jobs, pay more taxes for their entire life. Providing an opportunity to complete high school and maybe two years additional education at no cost could likely help reduce crime and the cost of incarceration.

As noted in Entry #326, the estimated cost of incarceration per prisoner per year ranges from roughly $30,000 to $60,000. Based on the analysis described in Entry #326, paying for prisoners to secure a technical degree or college degree while incarcerated resulted in a return on investment to taxpayers of 400-700%, and possibly higher.

“OK, I’ll buy your logic but what’s wrong with using for-profit universities to offer such some education? Besides, the private sector is always more cost-effective than government.”

Why use public education rather than private for-profit institutions?

  1. No additional facilities required to host classes. The remedial, technical and early college classes could be held in the evening and/or weekends using existing high school, junior college or some government buildings. Virtually all of these buildings are used more during the day and have surplus capacity in the evening and on weekends.
  2. Alternative teaching methods in place. Virtually all public school systems have implemented alternative teaching methods, which could be adopted for older students who learn differently.
  3. Public education does not add additional financial burden on the student. University of Phoenix, for example, charges about $1,200 per course. For student needing say ten classes to complete high school (equivalent about one year), the cost using the University of Phoenix rate would be at least $12,000. What may be even more of a problem for these students is the course material for what is usually a semester course – say 3-4 months – is crammed into five (5) weeks. Cramming material into five weeks leaves virtually no time for course material to “sink in.” Think of drinking out of a fire house. If a student does not fully grasp the idea when presented, the student is immediately behind. For institution like Phoenix, this approach can lead to the same person attending yet again…and another tuition payment.
  4. Class content can be tailored to help prepare students to continue their education in community college programs, whether technical training or prep for college.

The question posed in the title of this Entry, “Do for-profit universities help prepare for the coming technology tsunami?” I continue to say, “No, these institutions do not.” As frustrated as we sometimes are with the public education system, the system is designed for the public good…and not to generate a profit and provide (some believe maximize) a return to investors.

The US needs to prepare for the oncoming technology tsunami. One key component of preparation is to increase the number of qualified workers. Much like educating prisoners, providing classes/remedial training to those who have not completed high school is in the public interest by increasing at very low-cost, the pool of skilled workers. A larger pool of skilled workers is essential for the US to maintain production of goods and services and remain competitive worldwide.

What about for-profit institutions designed to train people to become technicians, designers, hairdressers and a host of other occupations? Don’t these for profits offer a benefit to the public? Possibly but maybe a more cost-effective approach is to the scope of public education to include such training. (The question is a bit off-line from the more serious issue of preparing for the technology tsunami. I might offer a few thoughts in one of the next couple of entries.)


#326 Changing Prisoners from Tax Users to Tax Payers

Readers: this blog is set in the future (sometime after the year 2020). Each entry assumes there has been a 5th revolution in the US — the Revenge Revolution. More about the Revenge Revolution and author, How the 5th US Revolution Begins and About the AuthorOccasionally I do a “sense check” about the likelihood of a Revenge Revolution.  Entry #318 is the most recent “sense check.”  One more note — sometimes I write about another topic that does not quite fit the theme of the blog.  Those comments are available on the page titled “JRD Thoughts and Comments.” 

In the entry describing the coming technology tsunami (#319), I suggested a way to help mitigate the impact of the inevitable tsunami was increasing support for public education. Here’s another aspect of public education that needs more discussion.

Educating people in prison? Why? “Those people” don’t deserve it. Just another cockamamie socialist idea. Plus, there are lots of people more deserving than criminals.

All those arguments are true until one looks at the picture another way. Ask yourself these questions:

  • As a taxpayer, would you rather have someone else pay taxes or would you rather pay more taxes?
  • Would you rather have less crime or pay more taxes for prisons and law enforcement?
  • If you want more manufacturing jobs in the US, would you like to have a large pool of skilled workers?

Yes, yes, yes! But I still don’t understand why taxpayers should provide a free education to those incarcerated. Just doesn’t seem fair.

OK, some aspects might not seem fair. But how many people want to be incarcerated just to get a free education? Maybe, just maybe we…societal we…should also rethink why getting advanced technical training or a college degree is so expensive. (Let’s save that discussion for another entry.)

Why educate prisoners? Put societal benefits side and take a hard look at the financial side – return on investment, ROI. For taxpayers, it is cheaper over time to provide a college education than to incarcerate most prisoners. Keep reading. You’ll be shocked at the ROI.

What is the incremental cost to educate prisoners with a technical or college degree?

  1. Room and board? No, it’s already being paid for.
  2. Most support costs are already paid
  3. No incremental funds for sports teams, recruiting students, and the like

What remains are incremental costs for: (i) instructors who meet standards of an accredited college or university; (ii) remedial training instructors for those prisoners requiring such training; (iii) coursework material; (iv) classroom hardware, much of which could be used for other activities; (v) other miscellaneous expenses, although likely not significant.

As a gauge for comparing cost, let’s take the cost of tuition only per year at three state universities: (i) Michigan State, $14,460; (ii) NC State, $6,535: (iii) UC-Davis, $14,463. The average in-state tuition for the three is $11,819.

Now, let’s assume that 50% of the tuition is allocated to incremental costs outlined previously, On that basis, someone in prison earning a degree in say five (5) years would cost the taxpayer an additional roughly $30,000. (Annual tuition x 50% x 5)

What’s the ROI for taxpayers? That depends on several factors, including time to be served in prison. Time to be served…and therefore expense to taxpayers for each prisoner…has been increasing. While the average time varies by state, the trend is for longer sentences, with the average sentence having increased roughly five (5) years from 2000 to 2014. (Source) Five years is a reasonable estimate for a prisoner to secure additional technical training or undergraduate degree. Time required could be less since prisoners can likely devote more time to studying.  I mean, how much party time is there in prison?

By earning a degree, a prisoner could earn an early release – say one for one. And why not? Staying in prison after having acquired marketable tech skills or an undergraduate degree is not productive for the prisoner or beneficial to society. Plus, an early release avoids taxpayers footing the bill to house prisoners — national average of $30,000 per year. In some states the cost for housing prisoners exceeds $60,000 per year.

What’s the estimated ROI to taxpayers for an education program? For prisoners in their 20’s and even up to age 30, what’s the ROI for taxpayers…without any recognition of reduced cost of law enforcement, reduced court support costs, safer neighborhoods, etc.? The ROI to taxpayers is 700%. For prisoners say age 35-40, the ROI is 400%.

(I realize there are many variables and one must make numerous assumptions but the results are so striking that the idea seems worth analyzing in more detail. The ROI calculation for this entry is available on an Excel worksheet. (19 03 03 #326 Cost Avoided Educating Prisoners) Feel free to analyze the assumptions and calculations. Keep in mind, as with other entries, the purpose of this blog is to stimulate conversation and more analysis, not create another master’s thesis.)

Will some former prisoners commit crimes and return to prison? Of course. But it is hard to argue that society is worse off with fewer prisoners and lower costs for operating prisons. Plus, there would be more people paying taxes.

Will some people commit crimes just to secure a free education? Yes, but so what? This concern indicates why the US needs to restructure its education system to allow all residents an opportunity to have an affordable advanced education.

While educating prisoners might seem more like socialism to many, look at the problem of incarceration from a different angle:

  1. US has the highest incarceration rate and cost of incarceration of any developed country. Reducing incarceration rates will reduce taxpayer cost…and crime.  Some classes will need to address anger management and why the individual committed the crime(s);
  2. In order to maintain competitiveness worldwide, the US needs more skilled workers. The prison system offers a substantial pool of potential skilled workers. For technical skills, the incremental cost of training prisoners is probably less than training workers from the general populace. Prisoners can also produce products while learning. In my undergrad days, virtually all the furniture in the fraternity house was made by prisoners. The furniture wouldn’t have won any design awards but it was high quality and withstood severe use;
  3. Educating prisoners eliminates the need to build new prisons. By educating prisoners, say 30-35%, and possibly up to 50%, of the existing prisons could be eliminated. The highest cost to taxpayers is not the cost of building the prison facility. The highest cost is compensation for staff to operate the prison. Most of an organization’s overhead cost walks in every day on two feet.
  4. The net cost of educating prisoners is not really a net cost to taxpayers. Educating prisoners is really a net savings to taxpayers. With a properly structured education program, including managing the underlying cause for incarceration, a substantial portion of prisoners could become taxpayers instead of tax users.

Why don’t more members of Congress, especially Republicans, support the idea of educating people in prison? Why do many representatives in legislatures continue to believe putting more people in prison and leaving them uneducated is smart policy?

Beats me. Like many policies from trickle-down economics to denial of climate change, the idea of not supporting education for those incarcerated, especially among Republicans, seems to have no facts to support. Rather the policies seem based more “gut feel” and what plays well with hard-core supporters rather than what’s right for the country.

#325 Charter Schools Destroy the Fabric that Made America Great. Ban Charter Schools. (2of2)

Readers: this blog is set in the future (sometime after the year 2020). Each entry assumes there has been a 5th revolution in the US — the Revenge Revolution. More about the Revenge Revolution and author, How the 5th US Revolution Begins and About the Author.  Many entries are formatted as conversations. Occasionally I do a “sense check” about the likelihood of a Revenge Revolution.  Entry #318 is the most recent “sense check.”  One more note — sometimes I write about another topic that does not quite fit the theme of the blog.  Those comments are available on the page titled “JRD Thoughts and Comments.” 

In the entry describing the coming technology tsunami (#319), I suggested a way to help mitigate the impact of the inevitable tsunami was increasing support for public education.  The first entry about schools described some reasons why I believe charter schools should be banned.

Two key points were: (i) charter schools erode trust in public education, which has been the cornerstone to America’s innovation and economic prosperity. If you want to make America great again, then why destroy the foundation that helped make it great; (ii) additional cost to taxpayers for charter schools. Much of the cost is due to a parallel system of overhead required to support the charter-school system. As noted in the entry, costs for education are not directly linked to the number of students. Major costs continue even if enrollment declines.

A third item referenced, but not addressed in detail, was the effectiveness of charter schools in having students achieve certain performance standards. Based on a number of studies, the efficacy of charter schools is mixed. Students at some charter schools perform better than when in public schools, some about the same and a surprisingly high percentage of students do not perform as well. (There are numerous studies comparing student performance. Results vary widely by locations.)

With such mixed results, why should there be charter schools? Why should taxpayers allow funds to be diverted from public schools to privately run schools where student performance is more often than not no better than public schools? And why divert taxpayer funds to charter schools where oversight of the organization and how taxpayer dollars are spent is less than for funds spent in public schools? Would you let someone manage your 401k whose investment performance was iffy at best and over whom you had little control over investment decisions? If you answered yes…i.e., support lack of accountability of charter schools…then I’ve got a bridge looking for a buyer.

So the question, “Why not take all the time and energy devoted to diverting funds to charter schools and instead, work on improving public schools? We know one reason for charter schools is the obvious effort by the political far right to privatize as many government functions as possible. More importantly, in my view, charter schools are the lazy-man’s solution to educating the populace. Educating people with different skills and different levels of motivation is a difficult task. Charter schools supporters are saying, in effect, “Send students to our schools who meet a certain criteria because we, as charter schools, are for profit, and don’t want anyone to negatively impact our profit.”

Charter schools, however, legitimately appeal to certain parents and/or students. Some reasons cited by parents and/or students for wanting to attend charter schools:

  • Affordable option to private schools
  • Option to enroll outside one’s district
  • Children of all backgrounds eligible
  • Teaching approach innovative
  • Find school to cater to child’s needs
  • Schools managed by organizations or groups of people

Satisfying these and other reasons can be accomplished in the public school system. OK, let’s agree that certain basics need to be in place for all schools – building in good repair, up-to-date textbooks, easy access to the internet; adequate number of teachers and support staff. Within a community all the essentials should be in place for all schools. If not, then the deficiencies need to be addressed…and addressed before any charter schools are discussed or provided additional payments.

Then what are the underlying reasons for the variation in performance scores among the schools? I believe the first reason is lack of commitment within the community for adequate public education for all students. I understand you cannot mandate commitment, much like you can’t lead a horse to water and make it drink. However, as a society we have to provide emotional and financial support for the education of students of the entire community.

Charter schools address some symptoms of what needs to be fixed in the community and the public school system. While charter schools address the symptoms, charter schools are also destroying the very fabric of public education. Charter schools are making the ability of a community to offer effective public education worse, not better. Charter schools are like turning up the sound on your car radio to drown out a bad noise coming from the engine. Duh, turning up the radio does not solve the problem. You’ve got to fix the problem in the engine.

By allowing students to opt out of the public-school system, we…societal we…are actually making the problem worse for students who remain in the public-school system. Many remaining students are likely to have less support at home. As more students leave the public-school system, the performance of remaining students will continue to deteriorate. As a result, then what have charter schools done to help improve the overall education level of society? The answer is nothing.

Here’s a non-school example to illustrate the point. Think of a container of mixed nuts – walnuts, almonds, cashews, etc. If you grab a handful of nuts, usually you end up with most, if not all, the different type of nuts. When you take a bit you get an interesting mix of flavors. Then, someone goes through the container and eats all of a certain type of nut – say cashews. What’s left is a different mix. The next time you grab a handful, all the cashews are missing and the flavor has changed.

Think of your own example – there are many. The point is the character of the container of nuts is different without the cashews, just as the character of the school is different when a certain type of student transfers to a charter school.

The change in the mix of students is not merely a “so what?” We…again societal we…are creating two classes of students and therefore two classes of citizens – those who seem to learn within a structured system and those who are not inspired or motivated by a more structured education system.

Why should we hold back students who want to learn more? That idea seems incredibly stupid. Therefore we need charter schools!!

The idea of throttling back students who want to learn is incredibly stupid. But there is nothing about the public-school system that prevents students from learning more. Public schools can accommodate those students who want to learn more as well as provide a positive and encouraging environment for those student who are not as inspired.

Assuming that all students learn the same way and at the same pace is foolhardy. That kind of thinking is about as foolhardy as assuming all who play golf are capable of shooting par over 18 holes. What is not foolhardy is ensuring that students are reminded constantly of the opportunity to learn…and encouraged constantly to try to learn.

When the discussion turns to how students learn at different rates, I am reminded of my freshman year in college. My first test of any kind was in accounting. After handing in the exam, I was confident of a very good score. The grade? A solid “D”. Oops. Maybe I wasn’t so smart after all.

Sometime between the first and second test, I had an “ah ha” moment and began to understand the principles of accounting. On the next test and on the final, grades were solid “A’s”.

Not everyone is lucky enough to have their “ah ha” moment so early in the semester…or even so early in life. Because some “ah ha” moments are later, we need to provide an education environment where everyone is exposed to an opportunity to learn and encouraged to learn.

Charter schools, and magnet schools to an extent, take away from the public schools a substantial portion of the inspiration to learn and the encouragement to learn – not from the students attending the charter schools but from the students not attending. Put someone else’s shoes on your feet. After higher-performing students leave for charter schools, who’s left in your public school to inspire you to learn?

Teachers are facilitators and ideally mentors. What if you’re a student who is more comfortable seeking help from peers before seeking help from teachers? Now, with many student-helpers gone, where do you turn? Or, do you just get discouraged and eventually give up?

The reasons parents and students give for wanting to attend charter schools make perfect sense. What doesn’t make sense is why society needs to “destroy” the public school system in order to achieve what the students and parents want. The public school system helped make America the innovation and manufacturing marvel of the world for the last 150 years.

If a portion of society wants to spend more taxpayer dollars and have charter schools, why not leverage the dollars and educate even more students? Inspiration for education is not driven by new buildings, good sports teams and the like. Inspiration for education is driven by desire.

Charter schools create a death spiral for public education, which in turn, leads to increased inequities in society and makes it more difficult for people to move up the economic ladder. And, ignore the rubbish that more public education is some kind of socialism. If you want the democracy to survive, you best have an educated public with a wide-spread belief of reasonable economic opportunity.

The community needs to work together to help create a desire for all students to learn, to explore, to try something new…and even to fail. Yes, failing can be a great lesson as long as failing is framed as a learning experience. Not all students learn at the same pace or learn the same way. But all students can learn. We…societal we…have an obligation to encourage students of all ages to learn more and provide those students a fair venue in which to learn.

(Next entry: why not more education in prisons?)

#324 Why Charter Schools Should Be Eliminated: Extra Cost to Taxpayers and More (1of2)

Readers: this blog is set in the future (sometime after the year 2020). Each entry assumes there has been a 5th revolution in the US — the Revenge Revolution. More about the Revenge Revolution and author, How the 5th US Revolution Begins and About the Author.  Many entries are formatted as conversations. Occasionally I do a “sense check” about the likelihood of a Revenge Revolution.  Entry #318 is the most recent “sense check.”  One more note — sometimes I write about another topic that does not quite fit the theme of the blog.  Those comments are available on the page titled “JRD Thoughts and Comments.” 

In the entry describing the coming technology tsunami (#319), I suggested a way to help mitigate the impact of the inevitable tsunami was increasing support for public education. A major step toward achieving that goal would be prohibiting publicly funded charter schools…and publicly funded vouchers for private schools.

So what’s the problem with charter schools?  Why insist on publicly run schools? The private sector always accomplishes a task more efficiently and effectively than the public sector. Besides public education is broken and needs to be fixed. More support for public schools sounds like more socialism. Well, supporters of charter schools, if public education is socialism, then what would you call public support of private institutions through tax breaks and lower tax rates…try calling it by its real name, “welfare for the wealthy.”

First, most everyone agrees certain aspects of public education need to be fixed. But maybe what needs to be fixed is not what advocates of more publicly funded charter schools claim needs to be fixed.

Public education per se is not the problem. What makes any school a good educational institution, whether public or private, is not the source of funding, not the school building, not how much money is spent on fancy support materials, not how good the sports team are…and a host of often discussed other “nice-to-have” items. What makes a good educational institution is commitment by all involved – students, faculty, parents and community. Education truly requires a community effort.

Look at schools where students get a great education and you will find a community supporting that educational institution. I agree that families which opt for charter schools may be more committed to education than other families. But why do we…again the proverbial ‘societal we’…allow communities to “evolve” – maybe “dissolve” is more appropriate characterization – to a point where there is a lack of commitment to public education?

Charter schools do not help a community rebuild its commitment to quality education for all students. In fact, charter schools do just the opposite. Charter schools further erode a community’s commitment to quality education for all by diverting mental support and tax-dollar support to privately run schools.

The idea of having a “specialized school” or certain education track is a good one. Both can be accomplished within the public school system. While the term might not be politically correct today, I was part of a group that for four years of high school had all “accelerated classes,” other than physical education.   As far as I know, the “accelerated” classes were based strictly on merit and anyone meeting the academic requirements was eligible.

New York City and other urban areas have long had schools specializing in certain academic fields. These schools have been open to all students in the system who met certain criteria.  Thus, if a community wanted a more-specialized “charter-like” school, there’s no reason why such a school could not be created within the exiting school system – many systems have “magnet” schools that operate within the larger public system.

A key aspect of charter schools not often discussed is the lack of scrutiny. Charter schools receive public funds, yet are not subject to the same oversight as public schools. Why? The answer is simple…but the answer should not be accepted by taxpayers. The lack of scrutiny is by the design of ownership groups of charter schools. The lack of scrutiny allows charter-school owners to avoid many of the rules required of public schools.

The theme of the charter-school owners? Just give us public money but don’t ask how we spend it. Stating the incredibly obvious, charter schools are another version of efforts by the political far right to privatize major portions of the government and with privatization, minimize, if not eliminate public scrutiny.

A second key aspect of charter schools not often discussed is the true cost. Proponents of charter schools may claim the cost for operating a charter school is the same or less than a public school. The “proof” of the same-as or lower-cost claim is that charter schools receive only a certain amount from the state and do not charge tuition. But do charter schools really cost less?

Let’s look at some costs. A very high percentage of the cost of education is fixed, or semi-fixed. Fixed/semi-fixed costs do not vary with changes in volume. As an example, think of your own house. Fixed costs for the house are the mortgage payment, taxes, maintenance, utilities and similar expenses.

Say there are two parents and three children living in the house. Then one child heads off to college. Now there’s an extra bedroom not being used. So does the family just pack up and move to a smaller house?

No, the family stays in the house. And the mortgage payment is the same; the major maintenance expenses are the same; the cost for heat, electricity, water, internet is the just about the same whether five people or four people live in the house. If you were calculating the cost per person to live in the house, the cost per person would be lower for five people compared to four people. While some other costs do vary with the number of people – food, e.g., — the overall cost per person in higher for four people than for five.

The same cost structure applies in education. What are primary fixed costs in education – teachers’ salaries, administrative overhead, building maintenance, utilities, much of the food-service staff and some other items. Thus, if say 20-25% of the students of a public school transfer to a charter school (think of the one child going off to college), most of the expenses for the public school remain the same.

But how are public schools funded? While the formula can vary by state or locale, many public schools are funded based on a payment per student. So if students leave for charter schools, the payment to the public school is reduced because of fewer students. The money follows the students so money that was formerly paid to public school is diverted to a charter school.  While the number of students in the public school has declined, the costs for educating students did not decline as much as the loss of funding to the charter school.

So how is the loss of funding made up? Where does the extra money come from? Two sources: (i) taxpayers, state and/or local, who end up having to increase the amount of funding per student for public schools…and by default also charter schools; (ii) cutbacks of expenses at the school level. Students end up getting short-changed as less money is available to spend for supplies, extracurricular activities, teachers’ aides, and maintenance. As maintenance is deferred over time, the building and infrastructure deteriorate. Eventually repairs and/or building a new facility end up costing even more than the deferred maintenance…another hit to taxpayers.

I did a rough calculation about the increased cost to taxpayers of charter schools. The estimates need to be refined with more analysis. Say 25% of the students transferred from public schools to publicly funded charter schools.  Under this scenario, the cost per student for taxpayers would not go down, as some proponents of charter schools claim; the cost per student would not remain the same as other proponents claim; the cost per student would increase 20-25%.

Where is the added cost coming from? With the creation of charter schools, a parallel overhead cost system is also created. Rather than one “superintendent”, there are now two – one for public schools and one for charter schools. Rather than one principal for a given school, there are now two because a second school was added. Rather than one building, there are now two. In addition, there are more teachers.

How does the public school manage with lower funding? The number of teachers for core topics remains about the same. What the public schools end up eliminating are teachers for what some people label as “non-essential” topics – art, music, Phys Ed…and oh, yes, those nurses and other health-care workers in the school system.

What is the motive behind charter schools? Why support a system that costs taxpayers more when there are no demonstrable benefits? Yes, some charter schools are more successful at increasing graduation rates.  But many…and possibly more…are not.

With these uneven statistics, why not tweak the public school system to provide more specialized schools as many urban areas have for decades? The underlying reasons why charter schools are supported? (Stay tuned. More to come.)

#323 Turning Point and a Really Bad-Hair Week for the Donald

Readers: this blog is set in the future (sometime after the year 2020). Each entry assumes there has been a 5th revolution in the US — the Revenge Revolution. More about the Revenge Revolution and author, How the 5th US Revolution Begins and About the Author.  Many entries are formatted as conversations. Occasionally I do a “sense check” about the likelihood of a Revenge Revolution.  Entry #318 is the most recent “sense check.”  One more note — sometimes I write about another topic that does not quite fit the theme of the blog.  Those comments are available on the page titled “JRD Thoughts and Comments.” 

Regular readers know I try to avoid getting hung up on daily/weekly events. The purpose of this blog is to analyze if and how long-term patterns might contribute to a post-2020 revolution in the US, aka the Revenge Revolution. However, events this past week seem to be beyond the usual “Beltway noise.” The week’s events could help change the trajectory of politics in Washington. “C’mon,” you say. “A heady week but not that heady.” I think that heady. Read on.

Key events during the week: (i) Michael Cohen, Trump’s long-time lawyer and now convicted felon, proposed delaying his volunteer testimony before the House Oversight Committee. One day after the announced delay, the House Intelligence Committee issued a summons for Cohen to appear; (ii) Roger Stone, long-time associate of Trump’s and known dirty trickster for approaching 50 years, was arrested on a number of charges related to the 2016 presidential campaign. More charges are expected; (iii) Trump and Senate Majority Leader Mitch McConnell caved and agreed to end the government shutdown of more than 35 days; (iv) Rudy Giuliani’s continued to disclose suspicious events previously denied. In addition to Rudy’s babbling, an article in the New York Times indicated one or more members of the Trump campaign met with the Russians at least 100 times before inauguration.

A fifth, less publicized event, was the appearance of Paul Manafort, Trump’s 2016 campaign chair, at a hearing to determine if an additional 10 years should be added to Manafort’ s existing prison sentence. The prosecution charged that Manafort intentionally withheld relevant information about sharing data with the Russians. The judge delayed the decision.

The events, if considered individually are interesting, but not necessarily significant. When combined the events, at least in my view, represent a major shift in power in Washington. The federal government is no longer controlled by the Bully-in-the-Oval-Office as Republicans in the House and Senate cowered. Power in Washington took a turn back toward the people.

As a result of pressure from constituents and some Republican senators, Mitch McConnell came out of hiding and convinced Trump that he should agree to reopen the government. The House and Senate then passed bills and Trump signed…with no guarantee there would be a wall at the southern border. While the agreement to open is limited to three weeks…and despite Trump’s huffing and puffing and threats to blow the house down if he doesn’t get his wall…pressure from constituents likely will prevent another shutdown

How do these events tie together? The key seems to be Republicans in the Senate are starting to show some backbone. Until a few weeks ago, Trump had free reign to do whatever he wanted. He felt immune from impeachment because of a Republican controlled House and Senate. Well, no more and no doubt this week Trump felt the noose tighten around his neck.

Start with Cohen. When testifying Cohen has nothing to lose and everything to gain by telling all. There’s a chance Mueller et al will again recommend a shorter sentence. Based on comments from several members of the committee, as much of Cohen’s testimony as possible will be made public.

Next we have Roger Stone. While defiant after his arrest and claiming loyalty to Trump, Stone may end up behaving like many of Trump associates already indicted as a result of the Muller probe – and flip. When the reality of a likely long prison sentence sets in – and for Stone it effectively could be a life sentence according to several former Federal prosecutors – Stone may drop the “never-tell-on-Trump” boast and decide saving the Donald is less important than trying to save his personal life.

The arrest of Stone leaves but a few people in Trump’s inner-circle not indicted. Steve Bannon may be next on Mueller’s list. Bannon will be quickly discredited by Trump, providing incentive for Bannon to flip – if he hasn’t already. The group remaining to be indicted is all in Trump’s family. Junior and Jared look like shoe-in’s for an indictment. And the odds for Ivana are better than 50:50.

So, who in the family might flip? If you’re a Trump family member, covering up for the Donald is high risk. When all the dust settles, especially after investigations and prosecutions by the Southern District of NY, the State of NY, and the IRS…along with a likely plethora of civil suits by condo owners, contractors, etc…there likely won’t be any money left in the Trump piggy bank.

So, if I’m a family member, let me consider my alternatives. If I refuse to cooperate with Muller, I go to jail and when a get out, I’ll probably get little or no money. Or, I can cooperate with Mueller et al and maybe avoid jail time. Mmm, which one should I choose?

As far as Trump, he’s acting like most bullies. When confronted with a tough opponent, the bluster goes away and the bully caves. And for Trump-the-Bully, his nemesis is not some physical tough guy. His nemesis is an older woman (by a few years) who’s raised five (5) kids. The past few weeks Nancy Pelosi treated Trump the same way she probably treated one of her kids, when a two-year old and throwing a tantrum. She hung tough and the kid folded.

What may be the final mental straw for Trump, however, the adoring, brain-washed base of supporters is shrinking. The 35-day government shutdown started shedding light on how Trump was willing to screw over the working class to save face over a physical wall. Many people now understand a Trump-style wall would do significant harm to the environment and offer little protection against illegal immigration and shipments of illegal drugs. Based on reports I’ve read, 85-90% of the illicit drugs enter the US through monitored ports of entry.

While the information from Mueller probe could…and probably should…lead to impeachment proceedings, Trump also faces another hurdle that seems to trump (pun intended) most presidents seeking re-election – “It’s the economy, stupid.”

The US has experienced an exceptionally long period of economic growth. The growth started under president Obama following efforts through the Federal Reserve to kick-start the economy following the financial crisis at the end of the Bush Administration. While the current economy appears strong based on certain indicators – unemployment rate and some increases in wages, e.g. – there are many soft spots.

The problem facing the Trump Administration is how to counter an economic downturn. Normally, monetary policy is the first step – the Federal Reserve lowers interest rates to stimulate borrowing and investment. This option is almost off the table since interest rates remain near historic lows. Fiscal policy follows with an increase in government spending (and the deficit) for such high-employment projects as road building/repairs. Oops, the deficit is climbing while the economy is strong so this is a limited option. Why is the deficit climbing? Because of the Trump tax cut. (I’ll save a longer discussion on the economy for another entry.)

There is a solution. While the solution is an enigma to current Trump Republicans, I have a feeling that over the next few years many of these Republicans will support the solution. What can be done? Raise taxes and redistribute income through a number of different means. And no, the approach isn’t classic socialism. The approach is called Keynesian economics. If you don’t think it works and is necessary for a stable society, then ask your parents or grandparents to tell family stories about what life was like during the Great Depression. If no one in the family has stories, then there are lots of books and movies. I’m not suggesting we’re headed for another Great Depression but there are few options left for countering a recession. (And, FYI, higher taxes did not slow growth in the 1990’s under president Clinton or in the 1950’s under Eisenhower.)

So, what does the Donald do? In the face of all the problems, he resigns to avoid being indicted. Remember, the Donald is a bully. Bullies cut and run when faced with a difficult situation. Even if he doesn’t resign, he doesn’t seek reelection…maybe because his bone spurs start to act up.

What about the Revenge Revolution? Still going to happen or will these events prevent it? Still going to happen. There’s a group that supported Trump that still feels screwed. First they felt screwed by the establishment and now screwed by Trump. If the Democrats in the House can begin to pass legislation that will help mitigate some of the inequities, real and perceived, then there will be significant pressure on the Senate to support the legislation. Such legislation will help mitigate the intensity of the Revenge Revolution.

The Revenge Revolution will be more cultural, although expect some bloodshed. For reference think of the cultural changes in the 1960’s and early 1970’s. We’re going to see another sea-change in society. Lots of issues to address – managing contributions to climate change, reducing income inequity, improving public education for all ages, implementing universal medical care, and more. To get an idea of the changes ahead, all we have to do is look at the mix of incoming members of the House. That group is more like America’s future and that group is going to force the 5th US revolution and societal changes.

#322 Artificial Intelligence Applied at the Micro Level – Personality Profiles

Readers: this blog is set in the future (sometime after the year 2020). Each entry assumes there has been a 5th revolution in the US — the Revenge Revolution. More about the Revenge Revolution and author, How the 5th US Revolution Begins and About the Author.  Many entries are formatted as conversations. Characters appear in a number of entries, with many entries building on previous conversations.  

Occasionally I do a “sense check” about the likelihood of a Revenge Revolution.  Entry #318 is the most recent “sense check.”  One more note — sometimes I write about another topic that does not quite fit the theme of the blog.  Those comments are available on the page titled “JRD Thoughts and Comments.” 

This entry is part of a series is about the coming “Technology Tsunami.”  The series addresses what might be involved and some suggestions for mitigating and even capitalizing on the opportunity.  Entries #321 and #322 are intended to describe AI in more understandable terms, using personal experiences as examples.  

The examples in Entries #321 and #322 are “early stage” uses of AI and selected to demonstrate: (i) applications that are easy to understand: (ii) AI-based applications have been around for a number of years; (iii) how AI can be used to increase the effectiveness of “gut-feel” profiling.

Entry #321 addresses how artificial intelligence (AI) could be helpful in certain business decisions – e.g., introducing new products and setting production schedules. Much of Entry #321 discusses an AI application to create clusters of people with certain tendencies — i.e., “birds of a feather flock together.” A cluster includes people more likely to buy a specific type or brand of product. The entry also discusses how over the years the size of clusters has shrunk from zip codes to neighborhoods to households.

Yet, even as the size of clusters has decreased over time, the focus has been on behavior of the group without regard to say behavior of person X or person Y. For reference, think of ads in Facebook or Google…or efforts to sway voters. All those efforts focus on behavior of groups, not individuals. In the bluntness of terms, the advertisers do not care about you as a person as long as their message persuades a certain percentage of the group.

Even though social media platforms and on-line retailers have lots of data about your purchases, the ads are still a game of percentages. Think of these efforts as macro-economics – focus on the behavior of groups and not individuals.

What about behavior of individuals? What about micro-group behavior. When focusing on the behavior of a specifically identified individual, can AI programs be useful…or harmful? The short answer is “Yes” to both.

As I noted a few entries ago and as a reminder, these write-ups are designed for general discussion and not an academic journal or graduate thesis at a university. So please read the entries accordingly. If you cannot let go of your academic bent, then stop reading and go do something else. You can rest assured the data are credible and the approach sound.

Stating the obvious – to have a successful relationship in business or personal life, the relationship must be positive. A positive personal relationship in business does not need to extend to personal life.   In fact, one can argue that it is better to keep business and personal relationships separate.

So how does one develop a positive relationship? A simple first step is trying to understand what makes the other person tick. How does he or she approach issues? How does he or she interact with other people? How does he or she determine what’s important?

At the end of Entry #321, there was a lead-in to this entry. In the lead-in I noted that, in general, women seemed much better than men at understanding what’s important/unimportant to another person. With age, many men begin to realize they’ve been “manipulated” by women for many years. If you’re a man…and don’t believe women have “manipulated” you…at some point you will probably realize what’s been happening for many years. Just accept the fact and move on. Just so there is no misunderstanding, most of the “manipulation” I’ve experienced has been positive.

So how do we better understand someone else? Can AI-based programs help?

An AI-based program that I’ve found extremely useful in helping me understand others is Myers-Briggs. A person’s Myers-Briggs personality profile is developed by the respondent answering a number of seemingly simple, but quite insightful questions. Based on my understanding, the answers are then subjected to a series of regressions, which create a personality profile consisting of four (4) categories, or general attributes. The degree or amount of a category trait is noted on a continuum.

For example, one category describes an individual’s preference to be around other people. At one end of the continuum is someone who absolutely loves to be around others (and dislikes being alone) – an “Extrovert.” At the other end of the continuum is someone who strongly prefers being alone and finds being around others discomforting at best – “Introvert.”

The continuum has a mid-point. Those on the say left side of the mid-point are labeled “E” for extrovert. Those on the right side of the mid-point are labeled “I” for introvert. The scale is not binary but relative so some people are more introverted/extroverted than others. While all category scales are relative, in some categories people tend to fall toward one of the extremes. General categories are:

  • How people interact with others – Extrovert: Introvert
  • How people gather information – Sensing (more analytical approach); Intuitive (more abstract approach)
  • How people make decisions – Thinking (fact-based, analytical): Feeling (more emotion based decisions)
  • How people tend to deal with the outside world — Judging (prefer structure and firm decisions); Perceiving (more open and flexible environment)

An individual’s profile is described by using one of the pair of underlined letters noted above. For example, one person’s profile might be INTP; another’s profile might be ESFJ. (If you want to learn more about Myers-Briggs and/or see what your profile is, lots of information on the web. Good start is https://www.verywellmind.com/the-myers-briggs-type-indicator-2795583. More on the history at the Myers-Briggs Foundation.)

If my experience is representative, one’s profile can change a bit over time or in different situations. For example, in assignments where I’ve been responsible for “blank-sheet-of-paper” kind of projects, I’ve tended to view topics/problems as a set of possibilities. In assignments where I’ve been trying to provide more structure and discipline to organizations, my profile leaned more toward yes/no decisions.

How does one use Myers-Briggs profiles in real-world? A couple of examples.

#1. 1980’s, Buick Motor Division, GM. Soon after being introduced to Myers-Briggs, another manager left and I inherited his department. While I was familiar with most of the members of the staff, I had never been responsible for direct assignments to those staff members.

One staff member had undergraduate and graduate degrees from Ivy League schools. After completing an assignment the person presented a report with recommendations that were about 180o from what I expected.

My first thought was how someone that well educated could have missed the mark so much. While going through the recommendations we were trying to figure out what went wrong. Rather than pointing fingers, the other person asked, “By the way, what’s your (Myers-Briggs) profile?”

When we compared profiles the answer to what went wrong became clearer. In that job, I was prone to paint the general picture for an assignment and not provide much detail. I was especially careful with this person given the educational background. Too much detail, or so I thought, would be an insult to the person’s intelligence.

When I conveyed my concern about too much detail as an insult, the response was, “Oh, no, I like detail.” Then the person proposed the following solution. When discussing an assignment, I would continue to provide detail until she (which you probably guessed by now) raised her hand, which meant, “I’ve got it. Stop.” We implemented the hand-raising system and it worked wonderfully.

#2. 2015, Energy company based in Houston. In the intervening 25+ years from Example #1, I’d been involved with a range of differing and challenging assignments – large companies, research organizations and start-ups. The Houston assignment was in an industry where I was familiar with the end product but not the production process.

The management team had extensive experience on the field-operations side but needed someone to help set up the financial structure and reporting systems to help the business operate without a large overhead staff. After a few weeks of learning the very basics, I suggested everyone on the management team complete a Myers-Briggs profile. To give you an idea of what I didn’t know about the industry, have you ever known a petrophysicist, let alone know what one does? Well, neither did I. But check YouTube. There’s a video titled “Petrophysics for Dummies”…and it’s very informative.

As usual, some members of the group supported the idea of comparing personality profiles, others grumbled but went along and a few refused. The CEO was probably the most supportive.

As a reminder, we you start comparing personality profiles with others, remember a different profile does not make one person superior to the other. The profile points out differences in the categories described earlier, not skill levels.

When the CEO and I compared profiles, there were marked differences in a couple of key areas. Understanding those differences helped me frame and propose solutions in a way consistent with his profile. While I continued to approach and solve problems in a way I was most comfortable, I understood that to be more effective when presenting to him, I needed to frame the recommendations in a way consistent with his profile. It worked.

These are but two examples of using Myers-Briggs. I have many others. Why Myers Briggs? Aren’t there other approaches to creating a personality profile? Yes. I used Myers-Briggs because it was the first approach I learned and one with the widest range of personal examples.

Is there a downside of knowing an individual’s profile? Yes. “Manipulation” can be either positive or negative. A widely discussed example how profiling a specific individual might be used negatively is Donald Trump. The question raised by many, “Has Donald Trump been manipulated by the Russians as well as some conservative media talking heads?” Whether one leans left or right politically, president Trump’s favorable behavior toward the Russians seems at odds with 70+ years of the post-WWII relationship between Washington and Moscow. Let’s hope the Mueller investigation makes the issue more clear.

But we should not think that Trump is the only person subject to manipulation. Over time, all of us may be targeted individually. As AI programs become more sophisticated and as people convey more answers to personality-profile like questions on their social media posts and/or continue to buy more goods on-line through say Amazon, it will become easier for AI-programs to migrate from targeting a certain percentage of a group to targeting specific individuals.

Minimizing the influence of such targeting will require considerable diligence on everyone’s part. More ideas developing such an approach in an upcoming entry.

Back to personality profiles. If you’ve never completed a Myers-Briggs (or similar) personality profile…or if it’s been a few years…I suggest you get on the web and complete one (see links earlier in this entry). If nothing else, comparing profiles is great cocktail conversation. But I think you’ll find your profile far more useful.

As far as the next AI-related blog entry? Not sure. I need to do some research before deciding. Thanks for your time.

#321 Using AI for Profiling – Birds of a Feather Flock Together

Readers: this blog is set in the future (sometime after the year 2020). Each entry assumes there has been a 5th revolution in the US — the Revenge Revolution. More about the Revenge Revolution and author, How the 5th US Revolution Begins and About the Author.  Many entries are formatted as conversations. Characters appear in a number of entries, with many entries building on previous conversations.  

Occasionally I do a “sense check” about the likelihood of a Revenge Revolution.  Entry #318 is the most recent “sense check.”  One more note — sometimes I write about another topic that does not quite fit the theme of the blog.  Those comments are available on the page titled “JRD Thoughts and Comments.” 

This series is about the coming “Technology Tsunami.”  The series addresses what might be involved and some suggestions for mitigating and even capitalizing on the opportunity.  Entries #321 and #322 are intended to describe AI in more understandable terms, using personal experiences as examples.  

A widespread use of AI today is what is called “profiling.” Ever notice after you’ve searched something on Google, an ad appears for the product? How does the computer know?

This entry discusses how AI was used to create “profiles” and how those profiles were used in a commercial application. The examples in this entry and the next (Entry #322) are “early stage” and intentionally selected to demonstrate: (i) applications that are easy to understand: (ii) AI-based applications have been around for a number of years; (iii) how AI can be used to increase the effectiveness of “gut-feel” profiling.

The concept of profiling is simple. Profiles are based on the assumption that “birds of a feather flock together.” That is, people with similar profiles have similar behavior.

Of course, not everyone in the flock, or profile group, behaves the same way.   But to the user, profiling is not about individuals but about probabilities of member in the group. What percentage of the people in the profile group will behave a certain way? The goal is to create a group, or profile, where there is a high likelihood that members will have a specific desired behavior.

Profiling is not a new idea. Profiles existed for eons before being formalized with computer programs. Further, virtually everyone creates profiles. Most all of us put strangers into categories based on such factors as geographic location, appearance – skin color, hair color, hair style, clothing, etc. – age, education and a host of other criteria. Think back to someone you met, then after you got to know the person much better, said to yourself, “Gee, that person is a lot different from I first imagined.”

As for this entry, the first example seems rather crude by today’s standards. At the time the profiling technique described was considered “state-of-the-art.” Remember an abacus was considered state-of-the-art when introduced.

The time period for this entry is the mid-1980’s, at Buick Motor Division of General Motors, where I’m director of marketing. As described previously, Buick has used AI-programs to improve the accuracy of its sales forecast and to start allowing dealers more discretion when ordering cars. (Reading Entry #320 will provide more context.)

The next logical step to try to continue building market share was helping dealers refine how to order the appropriate number and mix/models of cars. For example, dealers in the Northeast knew smaller cars were preferred, but which ones were likely to sell more rapidly in a dealer’s particular sales area? Same problem with dealers throughout the country.

I do not remember who or how the introduction was made – could have been one of the “crazy phone calls” the staff often accused me of taking – but Buick was introduced to a company called Claritas. At the time Claritas had combined zip code and general demographic data. The results were “clustered” into 40 groups, or profiles. Each profile had general buying information for products ranging from food to wine to vehicles to many other items. Claritas also assigned a descriptive and memorable to each group. Some examples of names of group – “Pools & Patios,” “Furs & Station Wagons,” “Hard Scrabble,” “Down-Home Gentry,” “Blue Blood Estates,” etc.

As I recall Buick was the first auto company to use the Claritas profiling. We introduced the concept at the annual dealer announcement meeting. And then not much happened for several months. Finally I got a call from a dealer who purchased a store in Florida that had gone bankrupt and was in the process of converting to a Buick store.

The call went something like this, “You remember that program you told us about at the announcement meeting? I’ve forgotten the name of the program but do you think it might help me order the cars more effectively for this new store?” We asked for the zip codes he thought most likely to consider shopping buy at his store. Based on the zip codes we suggested a mix of cars he should consider ordering.

About six months later, my wife and I were hosts on an incentive trip for dealers. During cocktail hour one night, the dealer said, “I owe you a drink. You’ve made me a ton of money.” As he told the story, the profiling program had been a major contributor to helping him turn what had been an unprofitable dealership into one that was very profitable. And, yes, I let him buy me a drink…even though drinks were already paid for.

He told his success story to many other Buick dealers and the use of the program became more widespread. What seems like standard marketing procedure now was anything but standard then.

Within a couple of years starting to work with Claritas, Buick developed a variation of an existing car that designed to appeal to a very small audience. Because introducing such a “niche” car in the traditional way would be too expensive – major national tv and print campaign that could eat all the potential profits – we decided on a targeted campaign using the information from Claritas. What was the result of promoting the niche car to selected profiles – “Pools & Patios,” “Blue Blood Estates” and a few others? A very successful, and profitable, introduction.

What’s the status of profiling today? Profiling has migrated from projecting buying patterns based on zip code (5 digit) to neighborhood profiles (9-digit zip codes) to profiles by families to profiles for individuals within the same household. The same philosophy applies – birds of a feather flock together. However, the flock is no longer defined by geography but by attitudes and behavior gathered from information on search engines, websites, on-line purchases and social media platforms. Profiling is still about probabilities – and not individuals – even though the clusters can include specific information about individuals within the group.

What does this migration portend for the future? One of the unintended consequences of profiling seems to be the diminished value of small geographic social groups. When one had more face-to-face interaction with neighbors, it was difficult to simply walk away from people with different opinions. While you might not always agree with your neighbor, one at least tried to be civil because that neighbor would be there the next morning and you might need to rely on him or her for something.   Amazon, on-line buying, delivery services, etc. have reduced the reliance for many activities. No longer does longer does one even need to talk face-to-face with neighbors. One can replace face-to-face chats by going on-line and finding a chat room of like-minded people, thereby avoiding having to listen to the neighbor with whom one might disagree.

In the future are we going to continue only to seek others in our profile and therefore become more isolated? Maybe for a few more years…then I’m hopeful the tide will turn. The underlying premise of my blog (www.usrevolution5.com): the US is headed for a 5th revolution sometime after 2020. I’ve labeled revolution as the Revenge Revolution. One societal change that I think will result is a return to neighborhoods. Some groups and communities have maintained active neighborhoods, but far too few. What I’m hoping evolves from the Revenge Revolution is a sense of cohesion among neighbors.

Yes, post Revenge Revolution you’ll still be able to use your smart phone and order on-line. At the same time, people will become more aware of and concerned about others, especially those in their neighborhoods. Maybe naively, this awareness will help neighborhoods begin to have the feel more like the 1950’s – not quite like Wally and the Beaver but a lot closer than today. And, no, in my view fences do not make good neighbors.

(In the next entry, a discussion about how AI-developed personality profiles can be extremely useful in dealing with others. Of course, women have used this approach for centuries. Men are still in the learning phase.)

#320 Personal Experience Developing AI and Implications for Skills and Employment

Readers: this blog is set in the future (sometime after the year 2020). Each entry assumes there has been a 5th revolution in the US — the Revenge Revolution. More about the Revenge Revolution and author, How the 5th US Revolution Begins and About the Author.  Many entries are formatted as conversations. Characters appear in a number of entries, with many entries building on previous conversations.  

Occasionally I do a “sense check” about the likelihood of a Revenge Revolution.  Entry #318 is the most recent “sense check.”  One more note — sometimes I write about another topic that does not quite fit the theme of the blog.  Those comments are available on the page titled “JRD Thoughts and Comments” as well as “Tech Tsunami”, which has more articles about how technology might affect US…and add a dimension to the Revenge Revolution.

Background to Technology Tsunami series focuses on how implementation of technology may change the family earnings structure in the US.

In “Technology Tsunami” (Entry #319) I noted that with the increased use of artificial intelligence, many current workers will need to increase skills in order to remain employed. But just what is artificial intelligence? And how can it be used? To make AI more concrete and less abstract, thought it might be interesting to allocate the next couple of entries to describing some personal experience developing AI and what happened as a result.today

First, let’s go back to define just what constitutes artificial intelligence, or AI? (Readers, please keep in mind this is not an article for an academic journal. The article is aimed at trying to help the general populace understand more about what AI is and how it might affect the workforce.)

The term “artificial intelligence,” which was first used in the 1950’s, seems to be applied to an ever-increasing range of computer-based applications.  Much of AI we hear about today has been developed by applying to very large data bases sophisticated multiple regressions (regressions look for an association between one action/word and another). The algorithms that result become the foundation for software to support an AI application. What has expanded the use of AI is the availability of very large databases and much more computing power.  However, as demonstrated by this example, a useful and effective AI program can be developed without an overly large database and/or staff.

A question associated with AI, “When AI is implemented, will people be replaced?” Yes, but people have always been replaced with the introduction of new technology. Farm hands were replaced by tractors and mechanical harvesting equipment. The printing press replaced scribes. The telegraph replaced the Pony Express. Trains replaced stage coaches. Cars replaced buggies…and endless other examples.

In the current wave of AI, the jobs that seem most vulnerable in the near-term are ones that involve repetition. Jobs where running a software program or using robot could perform most or all of the task. Such jobs might be assembling parts, loading/unloading shelves, providing certain types of information (clerks, including law clerks could be replaced by a more sophisticated Siri, for example), completing forms or completing some basic analysis (proof reading, financial analysis, etc.), steering vehicles and similar jobs.

The list of vulnerable jobs is quite lengthy and includes a considerable number of white-collar positions. For example, when General Motors announced in fall 2018 the intent to close five plants in the US/Canada, more white-collar workers were affected than assembly workers.

OK, how about a real-world example. In 1980…yes, that was many moons ago…I transferred to headquarters of Buick Division of General Motors. One of the staffs I managed was responsible for forecasting sales – short and long-term. The short-term forecast – 180 days – was used to set production schedules at assembly plants and suppliers.

When I arrived, the accuracy of the forecast was abysmal. Even though Buick had been in business about 75 years, it was not uncommon for forecast sales for the current month to miss actual sales by 30-40%…sometimes 50%. Such a variance made it extremely difficult to manage inventory. The forecast/actual discrepancies also caused frustrations with Buick dealers because arrival dates for cars ordered varied widely from the original schedule, which in turn frustrated customers.

To increase the accuracy of the forecast, we developed an application of AI. The AI-based forecast consisted of three key estimates: (i) industry sales; (ii) mix of sales by category – % small cars, % mid-size cars, % full-size, % SUV’s, etc. – within the industry; (iii) Buick % share within the general categories.

Unlike today, at the time most assembly plants were limited to a few models with little variation in size. Further, changing the production mix at an assembly plant could be time consuming and costly.

Buick’s solution to this dilemma (and common in the industry) was to “force” the dealers to take the mix of cars produced. Further, there was little recognition of differences in consumer preference by region of the country. Dealers in New England, where smaller cars were preferred, would end up with mix of small/large cars very similar to the dealers in say Texas, where larger cars were preferred. “Encouraging” dealers to take the production mix required the field staff to spend considerable time with the dealer and often involved some type of costly incentive – free financing, extra cash per car, etc. Dealers would then have to try to steer customers to these “unwanted” cars.

The solution to fixing the problem was conceptually simple: (i) a more accurate forecast; (ii) allowing dealers to order what cars they wanted. Improving the accuracy of the forecast was the critical first step. Doing so required building a math model that would predict more accurately upcoming changes in demand.

Previous sales forecasts had been based on changes in the rate of actual sales. Basing the forecast on “lagging indicators” – sales the past few months – is akin to trying to drive a car by looking only in the rearview mirror. Doing so reduces one’s speed and increases the chance of making a serious error. The previous method of forecasting was always “catching up” to changes in demand rather than being ahead of the curve.

Developing the AI model was remarkably easy – or so it seems now. We ran regressions of historical sales data for the industry as well as Buick. Fortunately, the auto companies had been reporting monthly sales for many years, so the data base was credible. The results of the regressions yielded useful, seasonal patterns. We also analyzed the shift in mix of sales over time. This helped determine if sales of smaller cars were increasing faster or slower than say mid-size or luxury cars. Another task was estimating how many people were switching from cars to what were then early-version SUV’s.

Finally, we had to determine Buick’s likely share of each category. At the time the overall car market was shifting to smaller cars. While Buick had competitive smaller car entries, it was more successful in larger cars. The effect of the shift in consumer preference was profound. Even though in a given month Buick could gain in market share in every major industry category compared to the previous year, that same month could show Buick’s overall share had declined compared to a year ago.   That phenomenon was always fun to try to explain. “Yes, we gained market share in every category…but, no we lost market share overall.”

Within about one year of starting the AI model, the US industry experienced a major economic downturn and vehicle sales took a nosedive. The AI model helped Buick management begin to make more informed decisions about setting production schedules and marketing plans. With the implementation of the AI-model, the accuracy of the forecast improved markedly. Rather than a variance of 30-40% between actual and forecast for a given month, the variance fell to less than 5%. The improvement helped smooth production schedules, reduce short-term layoffs and/or overtime at Buick and suppliers and made lead-times for deliveries to dealers much more accurate.

The increased forecast accuracy allowed Buick to migrate to what is called a “free-expression” forecast and production schedule. Dealers were allowed much more freedom to order the number and model of cars they wanted.

The decision to migrate to “free-expression” forecast/production caused great angst among staff members tied to the old “dealers-will-order-what-we-tell-them” system. In the end, however, most everyone became a convert because the overall production volume and mix were about what the dealers wanted.

Other benefits of the AI forecast model? The field staff was able to spend more time helping dealers with marketing programs, working on customer satisfaction and finding ways to improve profitability. The dealers then started to order more cars from Buick because the turnover rate improved. In the three-year period following implementation of the AI model, Buick increased market share more than any other manufacturer, domestic or foreign. While not all the gain in market share can be attributed to the AI model, the number of new products Buick introduced during the same period was limited, so most of the gain in market share came from “non-product” activities.

What happened to employment? Buick reduced the number of field offices from 26 to 20. Buick also started a call center to increase contact with dealers located outside urban areas. The non-urban dealers still received some personal visits, but less frequently.

Use of AI also changed the skills required of the office staff. To be effective in the new environment, staff members needed more skills in math, statistics, economics and marketing. If today’s computing power were available then, we could have cut the staff in half, possibly more. Even skills of and the number of senior managers would have been affected. At the retirement party of a key sales executive, who’d grown up in the days of gut-feel and seat-of-the-pants forecasts, the retiring executive told me – after several drinks – “I never understood what you were talking about, but I trusted you.” I appreciated the compliment but was a bit taken aback by the admission.

Does this example help us look ahead for what might happen when more AI is implemented? I think so. What did this rather simple application of artificial intelligence help Buick accomplish?

  • + Increased sales
  • + Increased market share
  • + Increased profits
  • + Increased customer satisfaction (dealer and buyer)
  • – Reduced employment
  • – Higher skills required of employees

If you’re a shareholder and/or your compensation is tied to profits, you will view the results of implementing the AI program as positive. If you’re an employee whose job was eliminated and/or you were unable to learn the additional skills required, you will view the AI program as negative.  The inherent conflict between perspectives, unless we quickly start to manage more effectively, will likely be another contributing factor to the Revenge Revolution.

(In the next entry, another real-world example of using AI – an early application of consumer profiling. While the profiling was not as sophisticated as done today by Google, Facebook, Amazon and many others, the effort allowed Buick to spend marketing dollars more effectively.  We’ll also address why it is important that the output of AI programs is understood and trusted. )

#319 Technology Tsunami Headed toward US Shores

Readers: this blog is set in the future (sometime after the year 2020). Each entry assumes there has been a 5th revolution in the US — the Revenge Revolution. More about the Revenge Revolution and author, How the 5th US Revolution Begins and About the Author.  Many entries are formatted as conversations. Characters appear in a number of entries, with many entries building on previous conversations.  

Occasionally I do a “sense check” about the likelihood of a Revenge Revolution.  Entry #318 is the most recent “sense check.”  One more note — sometimes I write about another topic that does not quite fit the theme of the blog.  Those comments are available on the page titled “JRD Thoughts and Comments” as well as “Tech Tsunami”, which has more articles about how technology might affect US…and add a dimension to the Revenge Revolution.

Background to Technology Tsunami Series. Thought it might be worthwhile to take a break from all the craziness in Washington and discuss other issues that likely will contribute to the Revenge Revolution. A key issue that seems to be getting less attention than it deserves….maybe because of all the noise emanating from the Trump White House…is how the implementation of technology will change the family earnings structure in the US.

We’ve seen some of the changes already, with the reduction in manufacturing jobs and the stagnation of wages for a large segment of the population. In my view the changes so far are just a small taste of what is to come. The next several blog entries…and I don’t know how many at this point…will focus on what I’m labeling the coming “technology tsunami.” The first of the entries, which follows, is a bit long but tries to set the stage.

There are already numerous early warning signs of the tsunami. An example – the announcement by General Motors in November 2018 of its intent to close five (5) plants in North America. Another warning sign is a story in the New York Times about a robotic arm playing the piano. While a robot playing a piano may seem like a bit of a novelty, think about the implications. The more dexterous robots become, the more robots can perform tasks of people who are highly skilled. Robots in warehouses and welding or painting in cars/trucks are commonplace. Those tasks are fairly straight forward compared to cooking or performing surgery or a host of other tasks.

As noted in this entry, over the centuries societies have coped with implementation of new technologies. Some societies have adopted new technologies and succeeded; others did not adopt new technologies and fell behind.  An example — in 1910, GDP per capita in Argentina was about 80% of US GDP per capita.  By 2010, 100 years later, GDP per capita in Argentina had fallen to about 30% of US GDP per capita.

Adopting successfully is very difficult. There are a couple of interesting books about adopting new technologies that we’ll discuss in a later entry. For now let’s get started. As you read, keep in mind how the disruption caused by adopting new technologies might compound societal problems currently facing the US. Numerous factors point to another revolution in the US – the technology tsunami could accelerate the Revenge Revolution and make it worse. And, yes, Mrs. Lincoln, enjoy the play.

Entry Begins

After General Motors announced plans to close five (5) plants in North America (November 2018), I was asked by several friends and colleagues for my opinion of the merits of the decision. While I had no inside information, based on my experience at GM and additional analysis, I concluded GM made the correct decision and should be congratulated.

To explain my logic in more detail, I wrote a couple of informal articles and published links on Facebook. The articles included the term “technology tsunami,” which I thought might help explain some of GM’s rationale for closing the plants…and why GM’s decision might portend what’s ahead for other companies. (GM had additional reasons for the closings. Links to articles on Tech Tsunami page.)

Reaction to the term “technology tsunami” seemed to beg for more explanation. So, here goes. I selected the term “technology tsunami” because the characteristics of a tsunami seemed to be a good proxy for how the wave of artificial intelligence (AI), increased use of robots, implementation of the blockchain, and other technologies will affect employment in the US. The effect will not be limited to the manufacturing and some service sectors but include many white-collar professionals (GM, for example, laid off more salaried  white-collar staff, than hourly manufacturing workers.)

First let’s look at the sequence of a tsunami. The start is often an earthquake or volcanic eruption deep in the ocean. The energy from that quake is transferred in the form of a series of powerful ocean waves. In the open ocean, the change in the wave pattern caused by the earthquake is not necessarily apparent. To the naked eye, tsunami waves appear relatively normal.

The strength of the waves becomes more apparent as waves move closer to shore. As the waves start to come ashore, the waves are compressed. The more gradual the slope of the shoreline, the more compression.

And there is not just one wave that is compressed and hits the shore, but a series of waves. The waves are powerful and of such height that virtually everything at or near the shoreline is completely destroyed. The waves continue inland, causing significant damage. A tsunami usually is more powerful and destructive than the surge associated with a hurricane.

An usual characteristic of a tsunami is how it affects the waterline preceding its arrival. As the tsunami gets closer to shore, the water at shore’s edge recedes. The shoreline looks as if there is an exaggerated low tide. This phenomenon might last several minutes. Then, the waterline changes quickly and drastically as repeated high and powerful waves come ashore, destroying virtually everything.

With that picture in mind, let’s examine how a technology tsunami might affect employment in the US. In my view, the earthquake has already occurred that will cause the technology tsunami. The energy from that quake has been transferred to form of a series of large and destructive waves. And those waves are headed toward the US shore. Warning signs of the tsunami are becoming more evident at the shoreline as the waterline has begun receding.

The US shoreline is filled with people. Many at the shore still work in manufacturing and service industries. However, few at the shore seem to understand the implication of the receding water line and even fewer take action to avoid the pending disaster. As the waves roll closer to shore, the beach remains filled with people.

In the next few moments – for this analysis consider next “few moments” as next “few years” – the pending disaster becomes apparent. The waterline begins moving ashore rapidly as the first of a series of giant waves becomes visible. The people at the shore – those with limited education and skills – try to escape, but it is too late and waves overwhelm them.

The powerful waves continue inland, destroying many long-standing structures, once thought invincible. Much is lost and chaos ensues for those who survive.

Am I overreacting to the potential impact of a technology tsunami? Is a technology tsunami even possible? Or, as a couple of people have suggested, am I being like “Chicken Little”?

My concern about a technology tsunami has less to do with whether AI will become smarter than humans and more to do with the potential impact on the stability of society. How many lower-skilled, semi-skilled and even skilled blue and white-collar jobs will technology replace?

Trying to stop implementation of technology is foolhardy. Depending on when such a stop-technology approach was implemented, today we might be travelling by horse and buggy and living without electricity, telephones, tv/radio, computers, internet, etc.

And yes, I agree that societies have survived major technology disruptions in the past. But transitions to new technologies have rarely, if ever, been smooth. Even worse, countries that did not transition to new technologies became also-rans.

During the technology tsunami, what is likely to happen to societal stability in the US? How will people react who are replaced by technology? As middle-class jobs continue to be eliminated…and many new jobs are at lower pay, if available at all…will people sit idly by? (When formulating your answer don’t be misled by the unemployment rates in recent months. Look at constant-dollar median incomes over time compared to GDP per capital. Income has not kept up with productivity. Also significant wealth has transferred toward the very top. The longer-term trend is a much smaller middle class with less wealth accumulation.)

If a technology tsunami seems possible, then what are we…societal we…doing to prevent a likely social upheaval that follows the tsunami? As best I can tell, we are doing nothing of substance. Policies of the Trump Administration seem to be focused on preventing adoption and even overturning technology rather than planning how to manage the transition.

In a way, the logic for why we should prepare for a technology tsunami is similar to the logic of why we should make efforts to prevent further global warming. Who’s right about the cause of accelerated global warming does not matter. If global-warming deniers are correct and man has contributed virtually nothing to global warming, the consequences are the same…and the consequences are not good. By doing something, then there’s a chance to reduce the negative effects.

Since we have a good idea of the effect of a technology tsunami, how do we start preparing? Maybe the first step should be to look at the 1930’s. In response to widespread unemployment (at least 25%), reduced net worth among most families, and no clear prospect for an economic turnaround, FDR and Congress implemented programs to create jobs. Creating jobs had a twofold effect: (i) putting money into people’s pockets so they could begin buying again; (ii) allowing families to regain self-respect.

One can argue about the efficacy of specific New Deal programs. However, there should be little argument that these programs helped bring stability back to US society.

Part of the New Deal not often discussed is the effort to increase participation in public education. During the 1930’s, many grammar and high schools were built and students encouraged to complete high school.

The efforts resulted in a sharp increase in the percentage of the population graduating from high school. The increase in percent graduating from high school continued until the 1970’s when the rates plateaued.[1]

Emphasis on education continued after WWII with the GI Bill of Rights and then with availability of low-cost loans encouraging more students from lower- and middle-income families to attend college.

The lesson of these programs for today? Existing and emerging technologies require more math/analytical skills to utilize capabilities of the technologies. With the need for more math/analytic skills…and the risk of becoming an also-ran country by not adopting the technologies…what actions do we take? How does US society get more people educated, especially those on the shore unaware of the pending technology tsunami?

Following are some ideas. You’ll likely look at the list and say, “What’s so innovative about the list? I’ve heard these ideas before.” And, you’re right. The ideas are not new…but you know what? We’re not implementing them, and in some cases we seem to be regressing.

The list is intended to start the discussion:

  1. Help society understand that expenses for public education are investments, not merely costs. Investments may take time to payback but result in a benefit that spans generations.
  2. Increase pay for…and respect for teachers. Make the qualifications and salaries for teachers competitive with, and possibly slightly above, the private sector.
  3. Reinstitute more technical training in high schools. Almost everyone agrees not everyone is suited for college. Not attending college does not mean one does not have valuable skills. Far from it. The public schools should provide everyone an opportunity for training in how to use, leverage and maintain technology skills. At one time “technical training” was common in high schools. Time for it to return.
  4. Make loans for college affordable with a provision to “earn-out” the loan over a reasonable period. Unlike today, make compliance for the earn-out provision easy to understand and execute. Provide assistance to the participant – not everyone is an expert at filling out government paperwork. Encourage people to become teachers. Don’t discourage them with onerous penalties for slight mistakes in completing paperwork.
  5. Cut back, or eliminate private charter schools. Yes, all organizations need fixing over time. Public education is no exception. But charter schools are not necessary to fix problems in public education. Charter schools destroy the very foundation of public education…and operate with far less accountability. The trend toward charters needs to stop and charters eliminated.
  6. Create meaningful education programs for older workers. The claim by some that “I’m too old to learn” is an excuse, not a reason. My experience has been many older people are embarrassed to ask for help. When assistance is framed the right way, it is rare that someone turns down the opportunity to learn. We…again societal we…need to be flexible in how we approach teaching students, whether the student prospect is in grammar school or a grandparent.
  7. Implement meaningful education programs and works-skills programs in prisons. Incarceration is incredibly expensive. While different studies include different amounts for overhead and other costs, the least amount of cost per year to incarcerate someone is roughly the same as tuition, room and board at a state university. In many studies, the cost is multiples higher than tuition, room and board. Incarceration without rehabilitation is wasted money. Educating prisoners and having prisoners do meaningful work while incarcerated seems to be “common sense.”

How do we implement some of these ideas? More in the next article. Stay tuned.

[1] 120 Years of American Education: a Statistical Portrait, US Department of Education, 1993.

Links to articles re GM Plant Closings