The COVID Revolution

With the great economic freight train of spring 2020 brought to a screeching halt by COVID-19, our usual supply chains buckled, broke, and then fell off the tracks. 

Our normal ways of satisfying our needs disappeared. In the midst of a scramble over the past month, in some ways we went back in time. In other ways, we went forward in time. 

I reacted to shortages at the grocery store by getting in the habit of ordering a dozen eggs weekly through my gym, which has a connection to a local farm. The eggs are very delicious, and very expensive, compared to grocery store-bought eggs. I feel very close to the land!

I admire on social media my friends and relatives home-sewing their custom face masks from old scarves and bandannas. Stylish! Unique! Hand-crafted! It’s all very Etsy.com.

I bought a 5-gallon bucket of hand sanitizer from a friend who converted his whiskey distillery to the task.1

So the question becomes, will the legacy of COVID-19 be a return to a slower pace of economic life, recognizable from a century ago? A life full of locally-sourced eggs, hand-sewn clothing, customized distillery products and of course quality time with a small family unit? Seen from a certain angle, it’s all very Little House on the Prairie. Is that our post-COVID future?

No, that fantasy is silly. That train left the station long ago.

What’s happening instead, and what will remain after, is a jump-start to new ways of doing things. 

In The Structure of Scientific Revolutions philosopher Thomas Kuhn argues that big change comes not as a slow evolutionary process, but rather in sudden paradigm shifts. What we’ve all experienced and observed in the last month of social distancing is a massive jump forward – maybe by many years – into the future of certain economic processes. Below are just a few trends that COVID-19 will rapidly accelerate. COVID-19 causes this paradigm shift, rather than evolutionary change.

The revolution in education

Online learning this month has offered an insight into the future of school and learning. For the first three week of school shutdown, the public elementary school where my fourth grader attends has worked on providing technology to all of her classmates. That technology procurement was necessary because it’s impossible to start online work if kids in the class can’t get connected. So administrators have rushed to acquire and distribute iPads, hotspots, and internet access for families for whom that was previously out of reach financially. 

Before COVID-19, they could never do much with online learning, because too many families would be left outside the digital divide.

Having solved that tech problem over the past three weeks, however, new online learning methods, assignments become both possible and necessary.

With the education world forced to adapt so quickly and so universally, will education ever be the same again? Will universities, for that matter, ever be the same? It feels like COVID-19 has forced a paradigm shift in what’s expected of teachers, schools, and kids. 

The revolution in payments

Apple_1984
From Apple, in 1984

I already used the touchless Apple Pay service before now. But I’ve noticed, to my frustration, that a huge number of retail establishments – like my local grocery store chain – never have the right kiosks to accept payment this way. If we understand that bills and coins are a germ-filled disease vector, and even that exchanging credit cards with a cashier is too much contact, then the contactless Apple Pay represents the future. COVID-19 may mark a sudden paradigm shift away from cash.

Apple, as always, sees the future before the rest of us do.

The revolution in retail.

Did we think Amazon’s deliver-to-the-door business model already threatened brick-and-mortar retail before 2020?

Of course. But the only reasonable observation to make now is that Amazon has accelerated its take-over of retail businesses in America. Much more brick-and-mortar retail will now die, much more quickly, in a step-change paradigm-shift way, not in an evolutionary way.

From the distance of time, let’s say two decades from now, my freight train economy analogy that I began this column with will seem even more quaint, and even more apt. We will look back at spring 2020 – before the COVID-19 transformation – and see the way we did things in 2020 as impossibly inefficient. Impossibly brutal, dumb, loud, linear, and tracked. Like a freight train that can only go from one point to another. So limited.
Our sleek, smart, creative, rocket ship economy of 2040 will have blasted off from 2020, no longer held back, no longer limited, by the rails of a freight-train economy.

Note: This post ran in the San Antonio Express News in April 2020…I’ve just been remiss in posting my stuff on Bankers Anonymous! Forgive me.

Please see related posts

The coming death of brick and mortar (2016 edition)

The War On Cash

A small whiskey distillery near The Alamo that is also a family legacy

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  1. Next request to the distillery: Please hook me up with a 5-gallon bucket of moonshine to tide me over during this period of isolation, as I spend large amounts of indoor quality time with my family.

Who Protects Teachers’ 403(b) Plans? Nobody!

Insurance_wolf

Insurance_wolf

I argued in recent posts here and here that public school employee 403(b) retirement plans are confusing to enroll in and full of extremely expensive options, and that the bad program design seems to be on purpose, as it serves one particular industry1, at the expense of retirees.

The situation is so obviously bad that I figured surely public school employee advocates would be working hard to correct this problem. I reached out to public school advocates, as well as to the Teachers Retirement System (TRS) and legislators, hoping to find some good news. 

I have no good news to report. 

But first, I want to clarify a point that may have gotten lost in my attack on the status quo of 403(b) plans. I do not want to leave anyone with the impression that 403(b) plans should be ignored as a retirement tool by school district employees. Nothing could be further from my beliefs.

trs

Between the automatic payroll deduction and tax advantages of 403(b)s, combined with the fact that TRS pensions won’t cover enough costs in retirement and the lack of Social Security for 95 percent of school districts in Texas, these defined contribution plans ought to be a key tool for retiring comfortably. 

The fact that the status quo design of these programs is objectively terrible shouldn’t dissuade you from participating in them, or in an Individual IRA, if you know how to do that, and properly navigate your way to good products. Some how, some way, you need to put some retirement money away in addition to your TRS pension, which will prove insufficient, unless you put in a full 43 years to qualify for 100 percent of your last five years’ salary. Got it? Good.

Now, I have my hair on fire about 403(b) program design, so I began calling around to public school employee advocates. We need some allies here.

I called the Texas State Teachers Association (TSTA), with a statewide membership of 65,000 and an affiliation with the National Education Association (with 3 million members). Spokesman Clay Robison told me, “Generally, we’re in favor of defined benefits,” by which he means the guaranteed TRS pension that employees qualify for over time. When I tried to shift the conversation toward 403(b) plans, he wanted to emphasize that their organization believes defined contributions are “obviously riskier,” and that recent studies show retirees benefit more from defined benefits (like TRS) rather than defined contributions like 403(b)s. Robison continued, “Our focus is keeping the teacher’s retirement program sound, and keeping the system from moving from a defined contribution to a defined benefit plan. If teachers want to invest in a defined contribution plan, that’s entirely up to them.”

To my pressing that fixing 403(b) plan design doesn’t take away from the TRS pension, he replied, “We’re focused on the defined benefits plan, because we’re convinced it’s the best option and it’s less risky. The TRS is a sound pension plan. Managed by professionals. For those that can afford extra, that’s their business.” Ok, then. 

I spoke with Bobbye Patton, past President (2012-2014) of the Association of Texas Public Educators, a non-union organization representing 80,000 members statewide. She said the issue of 403(b) plan reform has simply never come up within her organization. “I cannot remember that our association has talked about the 403(b). It’s always been focused on the retirement system itself.

“We have our TRS (pension). As far as I know, nobody pushes ideas about the 403(b). As teachers, we don’t understand it. We don’t fully understand what it would do for us.” Alrighty then.

Calls to the San Antonio Teachers Alliance, a local affiliate of the Texas AFT, and itself a state member of the national AFLC-CIO, did not get returned as of this writing.

I spoke to Rebecca Merrill, Chief Strategist at TRS itself, which is legislatively charged with administering and executing 403(b) rules statewide.

I wanted to know whether they are aware of the problems of 403(b) plan design, specifically forbidding school districts from designing a better system through a bidding process and negotiation. She assured me they understand the issues well.

“I don’t think its any secret that we’ve said ‘if it’s the legislature’s will for teachers to pay as low fees as possible, they should empower district to issue RFPs (Requests for Proposals) and negotiate lower costs.’” I asked if TRS itself could negotiate better terms for school district employees at the state level. 

Merrill responded, “We feel like we can’t. The legislation provides for an open access system. The industry pushed back and said the legislature wants choice.”

To be fair, Merrill points that certain very heavy sales load charges on funds were dropped in the 2017 reform, and I agree that’s good. Merrill also pointed out that allowable fee caps on products were lowered, although I still believe the move to be very incremental only.

In reviewing the results of 2017 reform of fees within the 403(b) plan, I expressed to Merrill that this was “reform” that only an insurance company could love. 

Merrill responded, “We made some recommendations for the (TRS) Board to go in a different direction. The Board did adopt some rule changes, including the fee caps. The Board heard from industry, and they heard from staff. We had a big dialogue with the industry. The industry wanted to make sure that advisors could be compensated. We worked through it the best we could.” At the end of the day, however, Merrill believes TRS cannot make the rules around 403(b) plans, nor can it interpret policy. “We are mindful that how 403(b) is implemented is a legislative question.”

Emailed questions and call to the office Representative Diego Bernal, San Antonio Democrat and Vice Chair of the House Education Committee went unanswered. Emailed questions and a call to the office of Senator Paul Bettencourt, Houston Republican and member of the Senate Education Committee as well as an advocate for shifting away from defined benefits and toward defined contribution plans, went unanswered.

And that, folks, is the depressing state of the world, with respect to the perfectly legal highway robbery going on with school district employees’ defined contribution plans. 

Don’t look to teachers lobbies, the legislature, or TRS itself to fix this anytime soon.

A version of this post previously ran in the Houston Chronicle and the San Antonio Express News.

Please see related posts:

The problem of choice in Texas teacher 403(b) plans

Teacher Retirement “Reform” Only An Insurance Company Could Love

Variable Annuities, aka Shit Sandwich

Variable Annuity Salespeople: Just because you’re paranoid doesn’t mean I’m not out to get you

trs

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  1. The insurance industry, duh

Education for Entrepreneurship

testing

testingI wonder about the following question: are entrepreneurship and traditional education totally at odds? Can practical business skills only be learned on the job? Or can we teach this at school? And if at a school, how do we teach the key skills of launching, running and succeeding in business in a school setting?

In early March, I attended my first Pitch-A-Kid competition, which struck me as a highly plausible learning tool for school age students to gain insight into startups.

Equally important to this plausible experiment in business skills-building was the setting, the open presentation space within CAST Tech, a project-based learning school founded in 2017 to address precisely my questions above.

Amir Samandi, Mentor Coordinator and Partnerships Director for CAST Tech, the in-district charter school in San Antonio ISD focused on business, tech, and design, invited me to this Pitch-A-Kid competition.

pitch-a-kidI sat directly behind Timiera Jackson and MaryJo Armas, aged 15 and sophomores at CAST Tech. They, along with four others from their tenth grade class in Entrepreneurship, formed the judges for Pitch-A-Kid.

Pitch-A-Kid takes the traditional venture capital model – young startup founders pitching to older capitalists – and flips it on its head.

Instead, seven startup founders – adult entrepreneurs in their first few years of business – compete to win over the high-school age judges. Like most startups, these seven businesses still seek the right mix of concise pitch, customer experience, staffing, and of course capital and a steady path to profitability. These startup founders don’t have it all figured out yet. But that’s ok. They are pitching to the high school kids – the judges in the contest – to develop their own skills.

We heard pitches from:

Some pitches I understood the unique value proposition and potential path to profitability. Some pitches I just couldn’t see it. I was just happy none mentioned Cannabis or the Blockchain, the buzziest buzzwords of the 2018 startup scene. Thank goodness for 2019. I guess AI is still the third buzziest word.

The high school sophomore judges made their own evaluations and scored the pitches themselves, to determine the contest winner. Ideally, as well, they absorbed the importance of public speaking, organizing complex ideas while sticking to plain language, and the startup problem of metaphorically flying the plane while simultaneously building it at 30,000 feet.

Cast_TechThe questions and comments from high school judges echoed my own thoughts.

“Have you considered outsourcing, to bring costs down?” one judge asked the meditation-cushion manufacturer.

“What are your profits?” another judge asked the customer-service app founder. Great question.

“I don’t understand your business,” I heard one of the sophomores query the AI-driven lead-generation company. I had to agree with her.

Mike Millard, the founder of Pitch-A-Kid, kept the presenters to their strictly enforced 5-minute pitch, followed by another time-limited Q&A session afterwards.

Perhaps true to his mission and style, Millard’s chief timekeeper for the event was his primary-school age daughter Audrey, who he credits with inspiring the idea for Pitch-A-Kid through her own inquisitiveness around one of Millard’s own startup plans.

The benefits flow in both directions from Pitch-A-Kid. Startup founders get a chance to hone their pitch for a critical audience. They get to learn, directly through questions from teens, which part of their story is the weakest, and which part resonates.

CAST Tech

The fact CAST Tech brought in Pitch-A-Kid is no accident. Samandi described the challenge traditional schools face in teaching business and entrepreneurship. His mission, and that of his entire school, directly addresses that.

Says Samandi: “In my experience, I was in a classroom for 6 years.

testingThe public school environment can be a bit bureaucratic. For example, if a kid wants to sell a candy bar, that breaks the rules. That stifles creativity and entrepreneurship. It makes it hard in that environment for entrepreneurial thinking to thrive. The environment really promotes conformity.”

Samandi mentioned that many of the sophomores in the Entrepreneurship class judging at Pitch-A-Kid had participated in Startup Week in October, themselves pitching adults in the local tech scene. But as Samandi says, much of CAST Tech’s approach by necessity is to “flip the script” on traditional learning, to foster entrepreneurship.

Samandi told me: “CAST Tech reimagines school from the bottom up. We are asking – how do we make school an entrepreneurial environment? If we’re going to make business, tech, and design the focus, you’re really going to have to open up.”

It’s a cliché – that probably has some truth to it – that the traditional school process discourages entrepreneurship. Breaking the rules? Thinking outside the standardized test? Trying something that very likely will fail the first few times? Specifically disregarding received wisdom and undermining the old way? These are all keys to succeeding in entrepreneurship and fast-moving businesses, but these behaviors are total transcript-crushers in a traditional educational setting.

On the other hand, traditional schooling rewards skills that would be career-destroying in many businesses: Stay in neat rows, stick to your own lane. Remain silent. Work alone for long periods of time, quietly producing long-form texts based on classic ideas from 20, 50, or 150 years ago. What are doing – training kids for a monastic life?

You won’t learn the “move fast and break things” mantra of Silicon Valley in a traditional school.

A project-based learning school like CAST Tech trying to “flip the script” strikes me as a difficult and worthwhile, project.

A version of this post ran in the San Antonio Express-News and Houston Chronicle.

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College Finance – A Response

Middlebury_vtEditor’s Note: The History Teacher sent his eldest daughter off to a private four-year college this Fall, so read my posts on college finance with particular interest, and decided to respond. As you can read, his views on their choices are also influenced by the recent election.

Dear Michael:

These thoughts were prompted by your recent blog post on College Finance Prep.  I have been thinking about it ever since, because I did not take your mother’s advice for my daughter. It was a hard decision, as her advice is usually the kind I (as a former teacher and advisor) would give to parents and students: save your money, go to a Community College, then a public college.

Indeed, that is exactly what I did and it turned out just fine. However, recent studies of the impact of globalization and technology on future employment trends have given me cause for concern about the benefits of an education similar to mine. To be honest, I don’t think I would be particularly employable in this new environment. I had always hoped that my daughters would be prepared, but a video on Artificial Intelligence and an article on college education caused me to change my mind about how best ready my daughters for the future. The video predicts the growing importance of Artificial Intelligence and explains how we are close to having AIs do many of the jobs that professionals do today in journalism, law, and medicine. Those with typical college degrees, like mine, would not be employable or particularly valued in such an AI dominated world.

The second is a newspaper report on a study of critical thinking and university education that found:

“Forty-five percent of students made no significant improvement in their critical thinking, reasoning or writing skills during the first two years of college, according to the study. After four years, 36 percent showed no significant gains in these so-called “higher order” thinking skills.”

I vividly recall an HR executive at a tech company, lamenting to me the lack of critical thinking ability of many of her recent hires – from the local public university – who only knew how to solve problems by going through check lists. If the solution was not on the list, they could not solve the problem.

Without developing critical thinking skills, I fear that my daughter would lead an unreflective and unfulfilling life. In addition, she would not be able to compete with AIs and she would fall through the social and economic cracks of the AI-dominated future. Thus, after much consideration with my wife, we decided to sacrifice a great deal to financially support our daughter through a very expensive, private liberal arts college.

We had three reasons for doing so and one of them already seems to be paying off in her freshman year. The most important is the quality of the teaching she is receiving. She is taking interesting classes (not your usual Introductory courses), working really hard, and stretching her knowledge, her critical thinking skills and exercising her creativity. There is a great deal of interaction with the professors and other students as the classes are small.  I am most pleased that she is developing skills of social and human collaboration. She is learning and maturing considerably. This compares favorably to her former high school classmates who are in freshman classes of 500 or more at a nearby public university.

The second is her ability to make useful connections with her professors (who can recommend her to grad schools) and her upwardly mobile classmates (who might help her in the future with employment). We shall have to wait and see if this has any long term benefit.

Finally, there exists a cachet of being at a top ranked college which might help her with both grad school applications and with employment. Am I wrong here? From your personal experience, has your Harvard education helped you in this regard?[1] I think it is probably the least important reason, but it is still a factor.

I do not mean to argue that all public institutions do not provide critical thinking skills or that only private liberal arts institutions do, but that students need to select their college choices with this in mind. Thus, if they can find a public university with an honors program and/or whose classes emphasize reading and writing critical essays and research papers, they should take up the opportunity and challenge. According to Dr. Aram: “Students who took courses heavy on both reading (more than 40 pages a week) and writing (more than 20 pages in a semester) showed higher rates of learning.” This should be a minimum standard for an expensive private university. The key is for students and parents to be informed consumers.

Editor: And now, some further thoughts from The History Teacher, prompted by the election results:

I am writing this sitting in front of my computer still stunned at the election results and listening to Gregorian Chants (they suit the raining weather and my mood). Indeed, I woke up this morning dreaming about a war with Iran.

I feel like one of the “good Germans” who were Social Democrats or Volks Partie and voted against but then could only just watch in horror. Well, as Marx wrote about Napoleon III, to paraphrase, everything in history happens twice, the first time it is a tragedy, the second it is a farce. I tried to escape by reading PG Wodehouse and delving into the past (those sensible Plantagenets.)

middlebury_collegeI feel too drained to have any emotion at this stage. This feeling is family wide, except for the dog: Mary and my daughters are very depressed. We are all in mourning.  Anna cried and Cecilia[2] said that she and her friends at Middlebury are walking around with vacant expressions on their faces. I have stopped watching the TV and reading the papers for the nonce: just too masochistic.

Forced to my own resources, I am trying to make sense of it all. To me, it boils down to education or the lack thereof (surprise, me being a teacher). Trump supporters with their racism, misogyny, and grievances are the product of a refusal to recognize reality (France constructing the Maginot Line—remember?) and a lack of critical thinking skills. They have learned how to memorize and use check lists to solve problems, but not to analyze. As a consequence, the modern economy with its emphasis on technology, globalization, and the absolute requirement of the ability to work with diverse teams are leaving them behind. Trump might as well try to stop the tide as to stop this process.

It is going to get worse as Artificial Intelligence becomes more and more utilized. The latter will threaten the livelihoods of the college educated, particularly those who did not develop critical thinking skills.

[1] Banker’s Response: I didn’t enjoy Harvard at all but I’ll admit it’s been totally useful as a door-opening brand.

[2] We made up these names to maintain the fun of anonymity!

 

 

Please see related posts:

529 Accounts are for Grandparents

College Finance Prep

Want to See Something Really Scary? College Tuition

 

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What Is The Value of A Skills Upgrade?

A version of this post ran in The Rivard Report.

What is the value of an education?

codeupLike many, I see education from a combination of angles. Unquestionably, education makes us broader thinkers and more sparkling conversationalists. Education makes us more actualized humans. But as a finance guy, a small evil part of me always applies the $64,000 Wall Street question to every activity – from brushing my teeth to tossing a ball with a (in my case, non-existent) dog. 1

It’s the bottom-line question: “How is this making me money, like, right now?” 2
One of the problems of education, generally, is that we have a hard time proving or quantifying its value. What is the value of holding your shoulders back and head high when you walk into a job interview, knowing you’re the best they’re going to interview that week? Or the value of the feeling, when given a work assignment, of “Boom! I got this!”

Philosophically, how can you put a value on just knowing more stuff?

Codeup
The weird thing about my friend Michael Girdley – who started the computer coding school Codeup – is that he’s ambitious enough to say that the education community tradition of waving a hand at hard-to-measure fuzzy feelings is not good enough. Just because the education community finds it difficult to measure value doesn’t mean business people shouldn’t try to.

delorean_codeup
My friend also weirdly decided to buy a DeLorean as his signature marketing prop.

In less than two years he’s established a pattern of tracking the data on the most important finance question of education.
By that, I mean the bottom-line question: How is this making me money, like, right now?

Girdley shared with me the pre-Codeup and post-Codeup earnings of his students, along with some useful stats on entry-level and mid-career web developer salaries. Using a couple of his statistics I want to take a stab at figuring out the total value, right now, of a student’s investment in Codeup.

Statistic #1: The average Codeup graduate saw her annual salary jump $13,035 in the year after graduation from the program.
What does that really mean? What can you do with that number if you plan, say, 30 working years at this higher salary?
It would be great to say that a Codeup education is worth 30 times $13,035, or $391,050. However, money in the future is not as valuable to me as money today, so that calculation is not quite accurate.

I mean, you could say it, but finance guys will give you that speech about the time value of money that you don’t want to hear again.

With a salary jumped up by just $13,035, we can figure out what that amount is worth today by using a discounted cashflow formula. So let’s be sophisticated and apply our discounted cashflow formula to 30 years’ earnings, elevated by $13,035.
I have to assume a ‘discount rate’ which is some combination of taking into account inflation and future investment risks. I’m going to assume a 5% discount rate. 3

Using my 5% discount rate, I estimate the value today of my elevated salary to be $200,379.90. That’s the sum of 30 years’ worth of $13,035, but ‘discounted,’ or translated back, into today’s dollars.

That discounting allows us to more accurately compare the $16,000 tuition for Codeup with the total financial value, today, of that education.

money_booksBy that measure, you pay Codeup $16K today for something worth on average, $200K, today. 4  Another way of saying that is that you are buying something today worth 12.5X that amount. Stated that way, Codeup sounds like pretty good deal.

Statistic #2 – The average web developer, nationally, earns $91,750. That’s $61,525 more than the average pre-Codeup salary of surveyed Codeup students

So that’s interesting.

We can imagine a number of reasons for that difference that don’t have to do with the value of Codeup. Maybe the average web developer is older and more experienced on the job than the average pre-Codeup student. Maybe national salaries are higher than San Antonio salaries, on average. I mean, I’m sure they are.

But still. If one of your goals is to swim in a higher-paid talent pool, it might pay to learn the butterfly stroke.

How much would 15 peak years of earning $61,525 more than you earn now be worth, like, right now?

Again, I don’t think it’s as high as 15 times $61,525, or $922,875, because of the whole discounted cashflow thing about money in the future not being worth as much as money today. Also, to be fair, you probably won’t earn the average national salary until you had a few years to ramp up your career.

But what about discounting 15 years of an additional $61,525 per year, at a 5% rate, starting 5 years from now, using the exact same formula that we used before? 5

Discounting those 15 years of earning the average industry salary gives me a value, today, of $500,366.44. Which, to state the obvious, is 31X the price of tuition. With those kind of numbers I start to feel like that salesguy from Entourage: “What if I was to tell you that you’d pay $16,000 tuition to Codeup for something worth $500K today. Is that something you might be interested in?”


Look, seriously, there’s a lot of assumptions embedded in my statement that you could pay $16K in tuition today for future salary jumps worth $500K, today. Most important of these is the assumption that by training as a programmer you can earn the national average salary for programming jobs. And we all know there’s no guarantee that happens.

But – and this is a big but 6 – it’s not a crazy assumption.

Because, really, it’s an assumption that the average happens. It’s an assumption that you could be paid what other people in your industry are generally paid. It’s an assumption that markets are somewhat efficient. It’s an assumption that if you have valuable skills you can find employers and work situations just like other people.

All of which makes me pretty confident that the financial return on a skills upgrade like Codeup can be somewhere between 12 and 31 times the upfront tuition cost.

Back to the value of an education

As I said before, education leads to more sparkling conversations as well as to living a more fully actualized life. Of that, I have no doubt. But I appreciate my friend Girdley’s business-like approach to showing that the value of his program can be somewhere between a 12 and 31 times multiple of your investment.

Just thinking like a finance guy, is that something you might be interested in?

Shut_up_beevis

 

 

 

 

 

 

 

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  1.  Notice I haven’t gotten a dog because – I ask you – where’s the profit in that?
  2.  I’m still working on monetizing my teeth-brushing. Actually, a friend of mine recently posted that in today’s ‘sharing economy’ of AirBnB and Uber he wants to make his toothbrush available, when he’s not using it. Like, $5 for every two uses, for example. He’s quickly on his way to a Billion dollar valuation, Unicorn-style.
  3. How did I come up with 5%? Sorta kinda I used art in addition to science. You could call inflation 2%, so that’s a baseline for discounting the value of money in the future. Then there’s the future risk of actually earning the elevated salary, which after all is a big assumption, and also an average, and as we always say in finance ‘results may vary, past performance is no predictor of future results, etc,’ so there’s a few % points added to the inflation rate to account for that kind of risk. If you don’t like my 5% assumption, make your own, I can’t promise you I’m “right” about a 5% discount rate. You might be just as right with a different assumption. Also, remember the faux philosopher and native San Antonian Jack Handey is a good guide to these disagreements: “Instead of having ‘answers’ on a math test, they should just call them ‘impressions,’ and if you got a different ‘impression,’ so what, can’t we all be brothers?”
  4.  In addition to the $16K tuition of course you have to do a lot of work to not only learn to code, but also, you know, earn a salary in the future. So there’s still that whole ‘work’ problem. But if you have to work, it’s nice for the finance part to at least make sense, no?
  5.  Why did I choose 15 years and not 30 this time? Mostly because I don’t think it’s fair to assume a Codeup graduate’s salary jumps immediately to the average national salary. You work up to that. For that same reason, I calculated the value with a 5 year delay, to account for a slow ramp up. Again, Jack Handey comes to mind: “If you ever teach a yodeling class, probably the hardest thing is to keep the students from just trying to yodel right off. You see, we build to that.”
  6.  Hhhnn-huh. Heh. (Shut up, Beevis.)

Inequality in America – The Map

The Washington Post published this last month and I missed it, but there’s no time like today for good graphical representations of inequality.  The Washington Post  ranks zip codes from the 1st to 99th percentile based on the average income and college education of residents, relative to all other US zip codes.

A few fascinating points, at least for me.

I agree that the combination of income and education level matter when comparing the geographic distribution of inequality.

Zip code is a crude measure compared to street-level granularity.  Some consider my immediate neighborhood relatively affluent, but my zip code ranks a 9 on the map, the bottom decile in the country.

Many affluent people, in addition, would not choose to live in my neighborhood because it is relatively heterogeneous.  Which is a fancy word for rich people don’t want to live near poor people, so they avoid my neighborhood.  My neighborhood also borders and is very close to poverty-stricken areas on the map, zip codes that rank a 1 nationally.

See the Washington Post Graphic, you will be fascinated, I promise.

Inequality_in_a_map

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