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Friday, June 29, 2012

Should you go to college, young person?

This article is going to be controversial, because nowadays it's an article of faith that if you go to college you will be much better off financially than if you don't.

I don't think that everyone benefits by going to college, and I don't believe the statistics that claim to show that going to college makes you earn more money.  It's true that the large group of people who went to college are making more money (per person) than the large group who did not go to college.  But could that be because the people are different?   Could it be that the people who went to college tend to be more willing to study and persevere in a regulated environment than those who did not go?  Could it be that those who went to college had more aptitude for white collar careers than those who did not go? Could it be that many of those who did not go to college would have done poorly in college if they had gone?  Could it be that many of those who went to college would have done well even if they had not gone? All of those things seem likely to me, so my hypothesis is that the difference between those two groups of people is mainly due to differences in their personal characteristics, and not because one group went to college.  Of course I'm speaking statistically, not for every single individual.

So I'm advising you to go to college if you want to train for a white collar career, or because you seek knowledge for it's own sake.  If you were thinking of going to college because your friends are going, or because your parents want you to, think twice.  Do you have any other good options?  Are you prepared to attend classes and do lots of homework for several years?

Now to be better off financially as a result of college, it's not enough that you simply get a higher paying job than you would have otherwise. You will have to earn enough extra money to make up for the 4 to 6 years that you spent in college, the experience or training that you will miss by being in college, and the money that you will have borrowed. For example, if instead of going to college you learn a skilled trade that is in demand, you are likely to be earning good money and be better off than many of your high school friends that went to college.  Of course that's not necessarily true for those that have the dedication and talent necessary to become an engineer, attorney, physician, accountant, or other well-paid white collar careers.  If one of those careers is right for you, then by all means, go for it!

Saturday, June 16, 2012

Iran, Israel, and Nuclear Weapons

As a news junkie, I have formed some educated guesses as to what is going on over there.  The following is merely speculation based only on what I hear on the public airwaves:

I think Iran is working on developing nukes.  They have plenty of motivation.  The U.S. government frequently make hostile statements about Iran.  Of course Bush famously named them as part of an "Axis of Evil".  The present U.S. government continues to speak in ways that are not reassuring to the Iranians.  Furthermore, they notice that North Korea seems safe from attack.  Iran has never fully cooperated with the U.N. Atomic energy people.  If they had nothing to hide you would expect them to cooperate.

About Israel, I believe they will do whatever they think necessary to prevent Iran having a nuke.  I think they have an active spy network within Iran.  I think their present tactic is to disrupt progress, both by cyber attacks, and by assinations of key scientist and administrators. But if their spies tell them that Iran has the materials and is actually building a nuke, then they will launch an air attack.  The goal would be to set Iran's progress back by several years.  They would achieve this by massive damage to much of the infrastructure necessary to support Iran's nuclear development efforts.

My best guess about the U.S. government is that they are cooperating with Israel on the spying and cyber attacks.  If Israel launches an air attack they won't object, and may even participate.  They will try to delay such an attack as long as possible, for fear of the many unknown consequences and complications.  

Thursday, June 14, 2012

What do Henry Ford & Joseph Stiglitz have in common?

Henry Ford was a leading industrialist, perhaps THE leading industrialist, of the early 20th century.

Joseph Stiglitz is a current leading economist, and a winner of the Nobel Prize in economics.

Here's what they have in common:  They both recognized that, in order for the society as a whole to be a prosperous one, the common person needs to have much more than a subsistence income.  It's pretty simple, really.  If most people are broke, who's gonna buy the products of industry?  In order to sell lots of cars & washing machines & insurance policies, lots of people need to have money to spend.  If only the rich have extra money, well, there are not very many of them, so you can sell only a much smaller number of these items.

Ford came upon this principle early in the rise of the Ford Motor Company.  Through innovations in assembly line production of automobiles, the company rapidly increased the number of cars they were able to produce each week.  When this number was small, Ford had no trouble selling all of them, because his car was very practical, and his prices were lower than his competitors.  But as his output rose, eventually there came a time when there just weren't enough buyers that could afford a car.  This was at a time when most people earned just enough money for the basic necessities, which did not include a car.  Ford then began to pay his employees a lot more than the prevailing wage at the time.  This had multiple effects.  It got him the most qualified employees available, and an endless supply of them, so that he was able to continue to expand his factories and his production.  It also caused an economic boom in the Detroit area because of all of the money that Ford's employees were spending in all of the common types of businesses.  The well-know multiplier effect was in operation here; most of the businesses in the Detroit area prospered, and this caused even more spending.  Furthermore, other employers were forced to raise wages in order to prevent losing their employees to Ford.  Detroit became a boom town, with new residents flocking there, lots of cash being spent, and plenty of that going to buy new Ford cars.

This principle, of prosperity resulting from good wages for the common worker, has been known to economists ever since that time. The reason that Joseph Stiglitz is invoked here is because he recently wrote a book about it.  His book is entitled: "The Price of Inequality: How Today's Divided Society Endangers Our Future."  It seems that in recent decades America has drifted away from this prosperity principle, as the common worker has been losing spending power, while the rich are getting richer.