What’s
Wrong Today:

According to the Center on Budget and Policy Priorities (CBPP), the federal government is projected
to spend less money in the next decade on non-defense discretionary programs
than at any point since 1962.

What is non-defense discretionary spending? The Center for American Progress (CAP) defines it this way:

This is an outcome of
the Budget Control Act of 2011 (BCA).
The Budget Control Act
was enacted in August 2011. It sets a
cap on the total amount of funding (budget authority) that may be
provided each year for discretionary programs, as well as separate “sub-caps”
for defense and non-defense discretionary programs.  The resulting levels
of discretionary funding, as projected by the Congressional Budget Office (CBO)
for the ten fiscal years from 2013 through 2022, are $1.5 trillion below the CBO baseline that was in place when the
112th Congress took office.  

That baseline
reflected the final fiscal year 2010 funding levels for discretionary programs
and is adjusted for inflation in subsequent years.

See the CBPP chart
below:

The CBPP goes on to
say that 40% of the $1.5 trillion in savings comes from defense, while the
other 60% comes from reductions in domestic and international programs. The
$1.5 trillion in reductions will produce lower interest payments on the debt. The interest savings amount to about $250
billion, bringing the total deficit reduction achieved to date to more than
$1.7 trillion.

The $1.5
trillion in budget reductions discussed here do not include the additional budget
cuts that will be made if sequestration takes place. Under the BCA caps, non-defense
discretionary funding will be 15% below the 2010 level by 2022.  Defense
funding will also be about 10.5% below that level.

Still think we have a
spending problem? Specifically, what more should we cut? Medicare? Medicaid?
Social Security? Defense?

We actually have three problems to solve: Our revenue problem, our social spending cost inflation
problem, and our defense spending problem. Let’s unpack them:

Our
Revenue Problem:

We need to consider
taxes and revenue along with spending. It is not true that only CEO’s and
hedge-fund managers are paying the lowest
effective tax rates
since the 1950’s, (a period before Medicare and Medicaid); but it’s
true about the rest of us too.
Check out this chart that graphs Federal Government expenditures and Current
Receipts as a percentage of GDP. Grey areas are periods of recession:

We have a revenue
problem to go along with our spending problems, despite what our Republican
friends tell us, a clear-cut and inarguable revenue problem.

As a percentage of
GDP, only South Korea, Turkey, Chile, and Mexico raise less revenue than the
United States. Simply put, we are taxing at a historically low level.

Our
Social Spending Cost Problem:

If you ask Americans what
spending they want to cut, they do not say that we ought to ravage people’s
retirement security. According to CBPP,
91% of entitlement spending goes to the elderly, the disabled, or people who
worked at least 1,000 hours in the last year. Much of the rest goes to people
who worked enough to be receiving unemployment benefits.

As the Wrongologist wrote
last week:

There is no denying
that inflation in medical spending is a major problem that, unchecked, will continue to crowd out spending for all
other purposes. But, these people are not “takers” in the
Mitt Romney/Paul Ryan sense.

So, should we start
slashing the earned benefits people have paid into in Medicare and Social
Security? Should we stockpile surplus cat food for our elderly?

We ought to raise our
taxes before we even think about doing that.

Our
Defense Spending Problem:

The CBPP points out that because of the
wind down of the Bush Wars, projected defense spending is already down by $500
billion. The BCA shaved another $487 billion off projected
Pentagon spending. Adjusted for inflation, we are still spending a tremendous
amount on the military, but it isn’t rising. If the Sequester goes into effect,
that takes another $500 billion away from the Pentagon. But, we will still spend more in 2013 than we
did in 2006, during the height of the Iraq War.  

Despite the fact that
there is room for it to go down further, the Defense Department thinks the cuts
in the sequester go too far.

The
question is: How much should we be spending on Defense? Would Conservatives say
less? Doubtful. In order to bring down military spending as much as it needs to
come down, first, we need to change our national defense strategy: We need the
Secretary of Defense and the Chairman of the Joint Chiefs to be able to go to
Congress and answer “Yes,” when they are asked: “Does this
reduced budget provide you with the resources you need to accomplish the mission
you’ve been given?”

Therefore,
the Politicians must first adjust the military’s mission.  

And
in conclusion:

Overall, it’s misleading to argue that our budget woes are just a result of too much spending.
And, to the degree that it has some truth, Americans don’t agree with the
Republicans’ solutions.

Under Mr. Obama we
have seen:

• The
  lowest effective tax rate on the middle class since the 1950s

• The
  lowest non-defense discretionary spending on record

• A
  big shift away from government jobs on the local, state, and federal level to
  private sector employment 

Ask
Republicans if that is what they expected from a free-spending liberal
socialist.

This
is the Obama administration’s record. The Obamanauts also know that they must
make compromises to get Republican votes on deficit cutting.

That
is why Mr. Obama wants to take a balanced approach to dealing with our deficit.

That’s what the American
people voted for in November and what they continue to support today.  

 

The Hill has reported that President
Obama is about to sign off on a new review of US nuclear weapons strategy that will reduce our nuke arsenal by
one-third, resulting in billions in savings to the Pentagon and Energy
Department.

The
recommended reductions were included in a classified directive compiled by defense
and national security officials inside the White House, according to a report
by the Center for Public Integrity issued Friday. 

The
agreement opens the door to billions in military savings that could help ease
the federal deficit and possibly improve prospects for an additional arms deal with
Russia. The position is supported by the State Department, the Defense
Department, the National Security Council, and the intelligence community, the
US Strategic Command, the Joint Chiefs of Staff and Vice President Joseph
Biden.

The
smaller ballistic missile arsenal will also be targeted at a limited number of
emergent threats, including North Korea and Iran. 

Russia remains
the sole US target that still requires potential use of a large number of
nuclear warheads to achieve damage that military planners deem adequate. The
Pentagon says all of this can be accomplished by 1000-1100 warheads, instead of
the 1,550 allowed under the New START treaty that was ratified in December, 2010.

From a declassified
version of a Secret report
to Congress in December:

Why? Because
it cannot destroy US missile-carrying Ohio-class submarines at sea.

According
to Hans Kristensen, a nuclear arms expert at The Federation of American Scientists (FAS), Russian
arms reductions make US targeting revisions feasible now. A decade ago, the US military was targeting 660 Russian
missile silos with multiple warheads. Now, the number of such silos is
less than half that, and in a decade, it is unlikely to exceed 230.

The New
START Treaty

The New START
treaty divides nuclear weapons into “strategic”
and “tactical”. It limits each side to deploying no more than 1,550 strategic
nuclear weapons by 2018, but uses a counting rule that pretends strategic
bombers carry only a single warhead, instead of up to 20. So the actual
arsenals after the treaty takes effect are likely to be closer to 1,900, a
number that Obama’s advisers now think is too high.

Below is a
good summary of the New START Treaty:

New START
imposes no limits on “tactical” nuclear weapons in each country, those that are
held in storage or considered for short-range use, a number estimated by
independent experts as roughly 2,500 in the United States and 3,500 in Russia.

Under a new nuke deal envisioned by the
administration,
Russia and the United States would agree not only to cut deployed strategic warhead
levels below 1,550 to around 1,100 or fewer, but also, for the first time, begin
to reduce the size of the tactical inventories.

New
Obama Team buys the Strategy:

Key
members of Obama’s new national security team are on board with the reduction
strategy. John Kerry on Jan. 24th at his confirmation hearing:

Secretary
of Defense Nominee Chuck Hagel drew fire from Republicans at his Jan. 31 confirmation
hearing for signing the Global
Zero
report that said current stockpiles:

The report
indicates that an appropriately sized force would consist of just 900 total
strategic weapons on each side, not 5,000.  But Hagel told the hearing that the report
simply provided illustrative scenarios, not recommendations. He affirmed the
report’s conclusion that “we have to look at” the value and cost of continuing
to keep land-based missiles and he made no promise to build all 12 new
missile-carrying submarines sought by the Navy.

When Hagel
is confirmed, the White House will sign the directive and send it to the
Pentagon for action. It will give the department the green light to begin
cutting down the nuclear force. 

Additional cuts will save
billions of dollars

The
financial savings from reduction could be substantial. To comply with New START,
the Pentagon has been pulling warheads from land-based missiles and making
plans to decommission some of the missiles themselves; it is also planning to
reduce the number of missile tubes aboard its Trident submarines.

By pushing
the arsenal size even lower, it could close perhaps two of its three land-based
missile wings and cut at least two of the 12 new strategic submarines it now
plans to build, saving up to $8 billion for each one. Eliminating a single wing
of 150 missiles would save roughly $360 million a year, or more than $3 billion
over a decade.

And the cuts are on
the military side of the budget, contributing to a partial fulfillment of that
part of the Sequester.

Good
News or Bad News?

This
proposed change will draw fire from congressional Republicans. They oppose
cutting the US arsenal out of concern that it could diminish America’s standing
in the world. 

Last year,
House Republicans wanted more nukes: They added a measure to the 2013 Defense
Authorization Act calling for a new
ballistic missile shield for the Eastern Seaboard. House members
argued the shield was necessary to deter potential nuclear attacks from North
Korea and Iran. 

Republican
concern is understandable.
We’re only spending about $600 billion a year on defense, roughly 6 times what
the Chinese plan to spend next year.

It’s
clear we’re on the verge of collapse.

But reduction is the
right thing to do, practically and strategically. If Mr. Putin reciprocates
with Mr. Obama, they can walk down arms reductions to the point at which they
can involve China, UK, and France and possibly, India and Pakistan.  

Israel and North
Korea would remain special and difficult cases.

The reduction could make
negotiation with Iran slightly easier and might, if US domestic politics concurs,
allow Mr. Obama to walk back the Iranian nuclear crisis. The chart below is
from the Ploughshares Fund:

An FAS
report, Trimming Nuclear Excess: Options for Further Reductions of U.S. and
Russian Nuclear Forces, says that even with these reductions over the next
decade, the United States and Russia
will continue to possess nuclear stockpiles that are many times greater than
the rest of the world’s nuclear forces combined.

There is no way to make sure
nuclear weapons are never used. Hoping, praying, and trusting human nature is
insufficient.

We need to
make sure there is no way for anyone else to win. This is the doctrine of Mutually
Assured Destruction (MAD). Even with reduced warheads, MAD would still be in place with:

• China
• Russia
• North
  Korea
• Iran
• Pakistan

Which
enemy have we forgotten? For all of our chicken Hawk friends out there: What is
the problem with implementing this directive?

No more Saturday junk mail for us…

What’s
Wrong Today:

Yesterday, the Wrongologist tackled
Social Security and the myth that it is causing our deficit. He called out Pete
Peterson, the “Fix The Debt” coalition, Erskine Bowles and Alan Simpson as among
the principals gearing up their fog machines.

We know that part of the effort to
weaken Social Security is to scare millennials into thinking that Social
Security will not be there when they retire. Usually, the right says we need to
“strengthen” Social Security, but the details are always vague.

So along comes The Can Kicks Back, an
effort backed by Messrs. Peterson, Simpson and Bowles (Bowles and Simpson are
on the Advisory Board) to gin up a
generational war in the cause of deficit reduction. Their website says:

Wait, there is more:

Here is what Dean
Baker said in 2009 about Pete
Peterson: (emphasis by the Wrongologist)

The Wrongologist prefers calling them “Deficit
Scolds”. By any name, they are not interested in fixing the health care system.
That would involve confronting powerful interest groups like the insurance and
pharmaceutical industries and the doctors’ lobby. They are not particularly
interested in generational equity either.

This is just an excuse for their real
agenda: Mobilizing support for cutting Social Security and Medicare.

No doubt younger
Americans are nervous. They
are in debt; many are out of work and on their parents’ couches. People in
their 30s and 40s can’t afford to buy homes nor have children. So, it should be
easy to set 100,000 members of one generation off against another.

The real downside for the younger
generations could be competing with older Americans who are forced to work longer
than they originally planned because their retirement income from pensions,
401Ks and real estate holdings were depleted during the Great Recession. There
could be fewer jobs available since normal age attrition will be less than in
previous decades.

Some
studies show that the collapse of the housing market and the resulting stock
market plunge reduced the wealth of older workers and retirees by close to $15
trillion. Most of those who will wind up depending
on Social Security are hard-working people who tried to do everything right.

While
there has been a stock market recovery, there
could be a wealth transfer to the young through lower cost housing, since
they will be able to buy housing stock for a far lower price than they would
have expected to pay 5 years ago.

But let’s not let that get in the way
of the narrative which holds that the baby boomers are the richest generation
in history. That they are working as hard as they can to screw over the young for
their own benefit.

These
“Fix The Debt” millionaires are con artists. They are trying to preserve
America for the young. However, that would be for their heirs.

That’s
how the moneyed elites turn their families into Plutocrats.

 

From an IMF
Working Paper released this January: (emphasis by the
Wrongologist)

What
is the Lewis Turning Point? Sir
Arthur Lewis, a Nobel economist, found in 1954 that industrial wages rise very quickly once the supply of
excess rural labor is exhausted. The Lewis Turning Point is when the supply
of workers dries up and city wages soar. It is when labor turns the tables on
capital, and profits crash.

Crossing the Lewis Point would have far-reaching
implications for China, most
notably, inflation. Without the
flow of excess rural labor, wages are going to go up in China, causing chronic
inflation. When wages go up, productivity levels fall.   

The corollaries to increased
wages and lower productivity are slower GDP growth, higher consumption, lower
savings and a deteriorating current account surplus. In fact, the world
economy is rebalancing before our eyes: China’s
current account surplus has fallen from 10% of GDP to just 2.5%, although still
a large number.

The IMF paper concludes that the transition to a labor
shortage economy will occur between 2020 and 2025. At that point, China’s demographic
dividend will be exhausted. The IMF report says the reserve army of peasants
looking for work peaked in 2010 at around 150 million. The numbers are now declining.
The surplus will disappear soon after 2020. A decade after that, China will face
a labor shortage of almost 140m workers, surely the biggest jobs crunch the
world has ever seen.

Combine
this problem with the statistics for China’s elderly: They will number 200
million in just three years and top 300 million by 2025. By 2042, more than 30%
of China’s total population will be over 60. The implications for China’s social
policy and the growing need for safety net spending are obvious.

Ambrose
Evans-Pritchard of the Telegraph writes: (emphasis by the
Wrongologist)

The process
is under way. It may explain why Chinese equities are trading at a third of
their 2007 peak in real terms. Manufacturing pay has risen 16% a year over the
last decade in the East Coast hubs of Shenzhen, Beijing, Shanghai and Tianjin, although
it slowed in 2012.

Boston Consulting
Group says that “productivity-adjusted wages” were just 22% of US levels as
recently as 2005. They are forecasted to be 43% by 2015.   

As the
Wrongologist reported
in December, labor cost is a key reason why General Electric, Ford, Caterpillar
and others are “re-shoring” to the US some manufacturing from China,
though cheap shale gas, a weaker dollar, and lower shipping costs also play a
part.

Remember, this is still just a thesis, not
a fact.
But, the numbers do seem to confirm that labor shortage and wage pressures are
having an impact on China’s macro economy. Japan hit this inflection point
fourteen years ago, but by then it was already rich, with $3 trillion of net
savings overseas. China has hit the wall a quarter century earlier in its
development path.

Of course, this is the Chinese dilemma: If they hadn’t practiced
population control, it would have been standing room only in the country by
now.  

This is a
dangerous moment for Beijing. The Lewis Point tests catch-up economies like
China: What happens when they can no longer rely on cheap labor, copied
technology, and export-led growth to keep the game going?

Success on
the global level depends more on technology, the rule of law and the free flow
of ideas. Failing to add these attributes to China’s portfolio will cause a slide
into a middle income trap, where others have gone. The Soviet Union failed. The
Philippines, which was richer than Korea in the 1950s, failed. Most of Latin
America failed in the 1960s and 1970s, although it seems that Argentina and
Brazil are succeeding this time.

However, there is no global labor shortage. The Wrongologist wrote in October, 2011,
citing the book, The Coming Jobs War:

• Of the 7 Billion people on earth,
  5 Billion are aged 15 and older
• Of that 5 billion, 3 billion say
  they work, or want to work
• Today, there are only 1.2 billion
  full-time, formal jobs in the world
• This is an 1.8 billion job
  shortfall compared with the 1.2 billion who are working

Of
the 3 billion who work or want to work, 50% are currently seeking a formal job,
while another 10% are looking for part-time work.

So,
China could quite
easily import cheap labor from anywhere, if they wish to remain on the cheap
labor, export-led growth path. However, their culture is a barrier to
succeeding with immigrant labor.

Alternatively,
they could outsource. Again, outsourcing is not in their current management bag
of tricks.

One thing
is for sure: China, with a shrinking work force, the threat of both inflation
and lower GDP growth, is not likely to displace the United States as the globally indispensable leader.

We are
certain to see at least one last cycle of high Chinese growth before their aging
crunch, inflation and the coming credit hangover combine with toxic and
possibly, permanent effect.

Food for
thought. Make mine moo-shu.

 

Next, we will
examine China’s need for coal, their coming water shortage, and how those forces will
act as yet another brake on China’s GDP growth.

What’s
Wrong Today:

Last Thursday, the Pew
Research Center for the People & the Press reported on a survey that finds that a majority of the public says that the federal
government threatens their personal rights and freedoms. Pew found that
53% think that the federal government threatens their own personal rights and
freedoms while 43% disagree. The telephone survey was conducted between Jan.
9-13 among 1,502 adults and has a 95% confidence limit.

From the survey:

The belief that the
federal government is a threat grew by 6 percentage points, increasing from 47%
to 53% since Pew conducted the survey in 2010. In earlier surveys between 1995
and 2003, (see below) the majority of those surveyed rejected the idea that the
government threatened people’s rights and freedoms.

The increased view that the
federal government threatens personal rights and freedoms was driven by conservative
Republicans. Currently, 76% of
conservative Republicans say that the federal government threatens their
personal rights and freedoms and 54% describe the government as a “major”
threat, this is up by
14%, from 62%
of conservative Republicans saying
the
government was a threat to their freedom 3 years ago. Today, 54% of Republicans
are in the “major threat” category vs. 47% in 2010 and they represent by far
the highest percentage with this view in any ideological group surveyed.

By comparison, there
was little change in opinions among Democrats; 38% say the government poses a
threat to personal rights and freedoms, up from 34%, while 16% view government as a
major threat.

Among
moderate and liberal Republicans surveyed by Pew, 57% view the federal
government as a threat to personal rights and freedoms and 32% say it is a
major threat.

Their
opinions, like those among Democrats and independents, are little changed from
March 2010.

62% of gun-owning
households see the government as a threat, compared with 45% of those without
guns; the belief that the government
is a “major threat” is unchanged in both groups since 2010, despite the debate
about increased gun control. The view that the government is a threat
has increased in both gun-owning and non-owning homes in the last three years,
however.

So,
why has this happened?

Pew went deeper into
the forces driving us crazy:  Their
survey finds continuing widespread distrust in government. Only 26% trust the
government in Washington to do the right thing just about always or most of the
time; 73% say they can trust the government only some of the time or volunteer
that they can never trust the government. 

Only 20% of Americans
say they are basically content with the federal government; another 58% say
they are frustrated while 19% say they are angry.

This reflects a long
term decline in America’s trust in government. View Pew’s timeline at Public Trust in Government: 1958-2013.

Pew didn’t report on the corrosive,
cumulative efforts by some in the media to undermine trust in government. They didn’t define “freedom”. Some think Obamacare is a government
threat to freedom, others might think it is the Patriot Act. You might think
it’s Citizen’s United, another may say it is intrusive gun regulations.

Although three
out of four may think the government is a threat, most will not agree on precisely
what constitutes the threat. The daily rant by Fox News, Rush, Beck and Hannity;
warning us that government is stomping on our rights and taking away our
freedoms helps explain why conservative Republicans mistrust our government.

Here are the top 10 threats
to our freedoms according to the
Wrongologist:

• An
  obstructionist congress

• Citizen’s United

• Our state of continuous war for the last decade

• Warrantless
  wiretapping and indefinite detentions, assassinating American citizens without
  due process

• State
  governments purposely trying to suppress voting

• The
  NDAA and the Patriot Act, Homeland Security

• Whistleblowers
  being prosecuted, banks and other financial institutions not being prosecuted

• The
  assault by states on women’s rights and sexual orientation

• The
  ubiquitous data collection on all aspects of American life by the federal
  government

• A
  mainstream media that never challenges a talking head

Your list is probably different.
None of us likes all of what the government does, nor should we.

Government
by definition is a threat to individual liberty. So are local police forces, city
councils and state governments. Wherever there is power, there is limitation of
personal freedom.

The
forfeiture of individual sovereignty is the price of admission to society. That does not mean necessarily that we
must weaken the federal government. We have a system of checks and
balances and despite what the Tea Party and Rush would have you believe, they
can and do work most of the time.

We have
the ability to decide how much our government interference we want in our
lives. This should never be a settled question. Of necessity, it must be
debated ad infinitum.

This is at the heart of American
governance.

What’s Wrong Today:

From Techpresident.com:

The result
is that organizingforaction.net,
organizingforaction.com and organizingforaction.org have all been
registered to enterprising individuals who snapped up the domains on January
18, the
day the news broke about the new Obama group.

What
happened? The group plans to utilize the power and sophistication of the
Obama For America (OFA) data warehouses to build support for a variety of issues,
including gun control and immigration. They
liked calling the new effort Organizing for Action because it kept a linkage to
the old OFA.

But they
hadn’t purchased the domains prior to their launch.

And it
gets better: Clicking on organizingforaction.net
takes you to: The National Rifle
Association homepage!

The LA
Times identified Derek Bovard, a 40-year-old in Castle Rock, Colo. as the
registrant for Organizingforaction.net.
The Times reports that Bovard was watching
Fox News on the
morning of Jan. 18 when he saw the news that President Obama’s advisors were launching a new advocacy group called Organizing for Action.
Bovard snapped up the domain name. He then proceeded to configure the site so
all hits are directed to the website for the National Rifle
Assn.

The Times
quoted Bovard:

Other
websites with the OFA domain are already taken. OFA.org belongs to the Assn. of Horticulture Professionals,
“the leading horticulture educational association in the United States.” OFA.net is the home of the
Orthopedic Foundation for Animals. And OFA.com belongs to a Dutch electronics company.

Organizingforaction.com
and Organizingforaction.org
were acquired on Jan. 18 by Michael Deutsch, a registered Republican who lives
in Wellington, Fla. Both currently direct to a blank page with an email
contact.

Bovard
said he was surprised that OFA had not secured its domain name ahead of time: “Organizing
for Action is not that organized, I guess”.

Hilarious.
One of the smartest teams on the planet didn’t even get its new domain
registered. 

Rookie
fail by the Obamanauts.

Yesterday,
both the Wall
Street Journal and NBC
reported  that the sale of Hostess
was imminent: The indestructible Twinkie appears to be one step closer to a
comeback. You remember the Twinkie: It is a soft, sweet yellow cake with
methamphetamine in the center.

NBC also
reported that on Monday that Hostess chose McKee Foods Corp, maker of Little Debbie
snack cakes, as the initial bidder for its Drake’s cakes business, which
includes Ring Dings, Yodels and Devil Dogs.

It also
chose United States Bakery as the lead bidder for four of its smaller bread
brands plus bakeries, equipment and depots. 

There goes
America’s new retirement plan. People have been hoarding cases of Twinkies ever
since they heard about the possible bankruptcy. Their evil plan was to auction
them off just before retirement…

The
Wrongologist has previously discussed the Hostess financial situation here.

One small
step in the courts, one giant leap for America’s waistlines.

Although
the name may remind you of an outfielder for the 1986 New York Mets, MOOC is an
acronym for Massive
Open Online Courses. Depending on your point of view, they are the future of
higher education, the end of higher education as we know it, both, or neither.

MOOCs are aimed at
large-scale student participation and open access via the web.

Usually, a MOOC course is a series of
video lectures with associated written materials and self-scoring tests that
are open to anyone. That makes them just OOCs. The M part comes from many people all
over the world taking the course simultaneously.

As we saw
in the success of Wikipedia, demand for knowledge is so enormous that good,
free online materials can attract
extraordinary numbers of people from all over the world.

A recent
commentary from NYU’s Clay Shirky, “Napster, Udacity, and the Academy,” compared MOOCs’
ability to disrupt higher education to what the music industry faced in the
advent of file-sharing networks.

The parallel to the
music industry is apt: When MP3 compression was developed; the recording
industry concluded it would be no threat, because sound quality mattered most.
Who would listen to an MP3 when they could buy a better-sounding CD at the
record store?

Then
Napster happened. It became the fastest-growing piece of software in history.
The industry sued Napster and won, and it collapsed overnight. If Napster had been
only about free access, control of distribution of music would then have
returned the record company. But that’s not what happened.

Instead,
Pandora happened. Rhapsody happened. Spotify happened. ITunes happened. Amazon
sold MP3 songs. Because people
realized you could buy the killer song without paying for the mediocre filler
on the rest of the CD.

The
recording industry crushed Napster, but they couldn’t kill the niche that Napster
filled. Since 2000, revenues for the sale of recorded music have fallen
dramatically. According to the RIAA, recorded music sales dropped from $13
billion in 2000 to approximately $7 billion in 2011. The dollar value of the recorded
music market is now half what it was a decade ago.

The thought of Academia’s
revenues from tuition falling by 50% has to be a source of night terrors for
university leaders everywhere. It may explain any and all of the formal efforts
and informal experiments with MOOC education that have emerged in the past
year.

If we
continue the analogy, university education is now facing similar disruption; with
its MP3 being the MOOC, while it’s Napster is Udacity, an education start up
with links to Stanford University.

Last year,
Introduction to Artificial Intelligence,
an online course at Stanford taught by Peter Norvig and Sebastian Thrun, attracted
160,000 potential students and 23,000 completed it, a scale that dwarfs
anything possible on a physical campus. As
Thrun put it, “Peter and I taught more students AI, than all AI professors
in the world combined.” Seeing this, Thrun founded Udacity, an educational
institution designed to offer MOOCs.

Last March, Tamar
Lewin stated in The New
York Times:

This has many
academics worried about how MOOCs will affect higher education (and their jobs!).

As they
should. In 21st century America, where many new college students reach
graduation with a mountain of personal debt, MOOCs may be regarded as a cost
efficient alternative. Colleges are aware that tuition, once a number that was
never really questioned, is becoming a
value decision by prospective students.

The American public views
most of higher education (through master’s level) as a “commodity,” that
should be sold primarily on the basis of price and convenience, subject to
meeting a minimum standard of quality.

Many university
administrators have already adopted elements of this view, using terms such as
“customer,” and “stake holder,” to describe how the school relates to students,
their parents, and others in their orbit.

Universities
have certain advantages over the recording industry. They are mostly non-profit.
They employ lots of smart people. They are decentralized and their core
competencies are research and learning from the past.

Armed with
these advantages, will it screw up as badly as the music people did? Possibly.

Consider the economic
environment: The
number of highly respected colleges is finite and demand for college is growing,
so institutions have been able to raise tuition faster than CPI for the past 3
decades. Consequently, we face the spectacle of students graduating with hundreds
of thousands of dollars of debt or worse, not finishing due to high costs.

But the cracks are
starting to show:

• Colleges
  are finally feeling some price pressure

• Computer-savvy
  teens and 20-somethings forgoing college to join start-ups in Silicon Valleys
  all across America

• The
  explosion of online degree-granting offerings have already coalesced into
  serious alternatives to traditional, brick-and-mortar colleges

Students and parents
who want the 4-year country club experience will always attend them. But for students
who just want to learn the material and get a job, there will be options, and
the MOOCs could become a successful element in the mix.

Universities
are learning a great deal from their experiments with MOOCs.  Armed with
massive amounts of data about the “classroom” performance of students, they can
adjust lectures, course material, and examinations to improve comprehension,
both online and on campus.

MOOCs also
have promotional value for participating colleges and universities.  It’s
one thing to brag on the website about brilliant faculty.  It’s more impressive when tens of
thousands of people experience their brilliance firsthand, with the college’s
name attached.

The huge enrollments
that provide these benefits, the sharing of knowledge and feedback from huge
numbers of students, the widespread publicity, also create problems: While
professors have found ways to promote discussions and collaborative learning
among students, they have not yet
figured out how to completely protect against cheating, how to answer students’
questions in anything like real time, or how to identify and assist those who are struggling.

Almost inevitably, if
the large-enrollment, on-line college course models are successful, they will put many colleges and
universities out of business, and dramatically reduce the size of many others.

No
university has developed a viable business model for MOOCs.  Udacity gets
some revenue from corporations, including Google, for developing
high-level, specialized courses.  For a fee Coursera provides potential
employers with the names of high-achieving students.  In both cases some
of the money is returned to participating institutions, but, at present, it is
insufficient to cover the costs of course development.

And the
costs are considerable. A good MOOC requires technology and people, including
blogs, online discussion boards, Twitter, tagging, document sharing and many
teaching assistants.  

When done
well, the production is complicated, time-consuming, and expensive. When done
poorly, it is unwatchable and no one will complete the course.

In this new
environment, there will also be opportunities for some educational institutions
to offer new, valuable niche components
to college education.

But that won’t happen
without serious, realistic thought and planning, of a qualitatively different
nature than has ever been needed before in Academia.

 

 

What’s
Wrong Today:

There is
much comment in the media and blogosphere about the Republican plan to change
how votes in the Electoral College are apportioned to presidential candidates,
from winner take all, to being largely apportioned to the winner of each
congressional district. Republicans in Virginia and other battleground states
are pushing for this change, in order to prevent future Democratic national electoral success like President Obama’s winning of a 2nd term.

How
does the system work today?

In
most states, (Maine and Nebraska excepted) the presidential candidate who wins the
popular vote in their state receives all of that state’s electoral votes. A
state’s number of electors equals its number of US Representatives and Senators.

Although
ballots list the names of the presidential candidates, voters within the 50
states and Washington, DC actually
choose electors for their state when they vote for President and Vice
President. These presidential electors in turn cast electoral votes for those
two offices, so the national popular vote is not the basis for electing a
President or Vice President.

Despite
what you might think, the Constitution reserves this power to the states. Here
is Article 2,
Section 1; Clause 2:

“Each
state shall appoint, in such manner as the Legislature thereof may direct, a
number of electors, equal to the whole number of Senators and Representatives
to which the State may be entitled in the Congress: but no Senator or
Representative, or person holding an office of trust or profit under the United
States, shall be appointed an elector.”

So it is clear that each state has the exclusive right to
determine how their state electors are selected.

What is the proposed Republican “Fix”?         

The proposed Republican “Fix” would apportion electoral votes to the presidential candidate
that wins each congressional district, plus 2 electors that would go to
whomever won the statewide total. Since
each congressional district is worth one elector, under this approach
in Virginia in 2012, President Obama would have claimed 4 of the state’s 13
electoral votes, despite winning the state by 150,000 votes.

Other
states considering moving from a winner-take-all system to allocating electoral
votes to the candidate winning in each congressional district include Michigan,
Ohio and Pennsylvania, all of which, like Virginia, went for Obama in the past
two elections, but are controlled by Republicans at the state level.

This change
would heavily favor Republican presidential candidates in these states, tilting
the voting power away from cities and toward rural areas, making it more likely
that a candidate with fewer votes over all could win a larger share of
electoral votes. Thanks in part to recent gerrymandering, 27 States have Republican-controlled
legislatures.

Peter
Lund, a Republican state representative in Michigan, plans to reintroduce legislation
that would award all but two of Michigan’s 16 Electoral College votes according
to congressional district results, while the remaining two would go to the
candidate winning the statewide majority, says an article in The Detroit
News.

Mr. Obama
beat Mr. Romney in Michigan by a margin of nearly 450,000 votes. With an
allocation of electoral votes by congressional district as described in Peter
Lund’s proposal, the Detroit News reported that Romney would have gotten 9 of
Michigan’s electoral votes and Obama would have received 7 in 2012. Instead,
Obama garnered all 16 Michigan electoral votes.  

Is the
proposed “Fix” Fair?

Should we
be talking about this in 2013? Debating whether to pass bills to reduce urban
voters to a fraction of the value of other voters while hoping that someone else
will step forward to stop it?

An advantage of the Electoral
College is that it tends to inflate the mandate and give us a leader who has a
leg to stand on, at least at the beginning of his/her term of office. Also, it ensures
that candidates will actually campaign in more places rather than in fewer. Why
would anyone campaign in NH when they can garner five or ten times as many
popular votes in a couple of counties in California? Now they do because the
four electoral votes can make a difference.

Jonathan Bernstein had an important observation in the Washington
Monthly:
(emphasis by the Wrongologist)

The fact is that the Republicans
have the ability to make this happen, even though some Republican are downplaying the plan. California’s redistricting model, using
an independent commission may prove effective, since politics-based redistricting
is at the root of this evil.

Statehouses deciding elections can have severe consequences.

We need a strategy
to prevent this from happening, or to reverse it once it does happen. Removing
politicians from the redistricting process is crucial.

Spread
the word:

To:     Reince
Priebus – Chairman of the RNC

From:
The American Voter


Let’s recap the your party’s ideas to win more national elections:

• Promote
  the fiction of “widespread voter fraud” with new voter ID laws that
  adversely impact the poor and people of color.

• Shut
  down early voting hours in key states and districts where the early vote tends to
  favor Democrats.

• Move
  the goalposts in the Electoral College to a proportional allocation instead of
  winner take all system for electors – potentially distorting the majority will
  of the people.

Mr.
Priebus, here is another strategy to consider: How about taking reasonable
positions on major issues and creating balanced public policy proposals to gain
greater voter support?


How about being a party of better ideas and sounder leadership rather than a
party of subterfuge?

You
will attract more support that way.