Business Model? We Don't Need No Business Model!

Few things raise my hackles more than irrational or illogical behavior. And, in this collection I also include my own behavior. Take for example the recent news of a student, Timothy Arnold, a University of Central Florida student, who developed an application. His application, UCouldFinish, helped students find courses with open seats. Armed with this knowledge, over 500 students found acceptable courses in which to enroll. In higher education, 500 students x 3 credit hours equals 1,500 credit hours. Now UCF charges $208 per credit hour (site). Doing some simple math...1,500 x $208 equals (make this easy: 15 x2 x1000) about $300,000 dollars. Hypothetically, Mr. Arnold helped UCF bring in $300,000 with his application.

Consulting the UCouldFinish web site, Timothy has been subjected to punishment for being so bold as to help his university improve the conditions of his fellow students and also helping improve the financial environment of his university. Mr. Arnold's application earned him 3 semesters of academic probation, a research paper on the management of MyUCF, and counseling on how to make good choices.

To throw some positive vibes on this debacle, the 3 semesters of probation is not a big deal. Timothy sounds like a smart guy. He will either make those semesters pass easily, or he will bid UCF adieu and find a more suitable uni to finish his education. My sense is a company, like Google, or Facebook, or Twitter will offer him a job. Writing a research paper on the IT on the UCF ERP system will undoubtedly require some research. He should need to speak with many IT folks, network analysts, programmers, and system admins to get a sense of the breadth and depth of the inner workings of the ERP system in order to understand the impact his application had upon UCF IT. All of his research will undoubtedly result in more experience dealing with systems, programming, and the entire ecosystem of higher ed IT, giving him even more insight into the trials and tribulations of systems administration. Thus, in writing the research paper, he could end up with even greater knowledge of how to exploit...er, augment educational IT systems.

In a broader sense, Timothy Arnold v. UCF illustrates a much more important and sobering issue in Higher Education. Traditional higher education, public & private colleges and universities, are being assaulted on numerous fronts. Set aside for a moment the Conservation/Right-wing/GOP gutting of education, in general. The literal attacks committed against Education by Republicans is well-documented and is a true source of concern. However, critical thinking requires us to ask, Why? Why is their such animosity against Education, especially Higher Education?

I submit one essential reason: Higher Education has become sclerotic, hard, calcified, resist to change and adapt, entrenched in a management mindset at least a century old. For traditional colleges and universities to not only remain relevant but to serve current and future educational needs, the Higher Education business model needs to evolve from the 19th century academic mindset into a a mindset capable of being nimble and adaptive to 21st century educational needs. If Higher Education had been more vigilant in adapting and evolving new business and academic models, these specious attacks would have no merit

A propose a number of remedies to address the improvement of our College and University business models. First, classes need to be able to be added & dropped as needed. Doing such will require some transcript flexibility. Department chairs and deans are best able to support student advising and transcript adjustment. ERP systems need to be able be adaptive enough to manage student academic records, as well.

Colleges and Universities must be allowed to leverage faculty, staff, and student expertise. Unquestionably and undeniably, colleges and universities must be open and receptive to using on-site knowledge, experience, and expertise to address the daily and long-term mission of the institution. As Timothy Arnold attempted, when a need is identified, such as the notification system Timothy developed, those needs should be immediately addressed. Students should be allowed to help design and implement CMS and help manage institutional web sites. Students should be allowed to help develop institutional applications which help the overall function of the institution. One of the greatest complaints new graduates have, and have always had, is that of experience, having none. Students assisting with all aspects of institutional management, planning, and IT will have experience upon graduation. Perhaps experience with Drupal, Joomla!, PHP, Python, WordPress, Javascript, HTML5, SQL and SQL Server, or Oracle. Graduating student would have experience in application development, design, implementation, and enhancement. A phenomenal example of such a team is the InfoGraphics Lab in the Department of Geography at the University of Oregon.

Online courses, for-private schools, and now the growing presence of massively open online courses (MOOC), with the movement of so much content into "the cloud" is going to push universities to evolve into something new. Those who do not evolve, who do not revolutionize their educational business model are going to slide away into obscurity.

Current business models and the closely related academic models will need to evolve into something else. Global economic forces change faster than seasons or global climate change predictions. Business, industry, and global commercial sectors need employees who can adapt to change and work within fluid environments. Industry needs nimble thinkers who can address current business trends yet also be able to act quickly and foresee changes in technology, consumer tastes, trends in raw materials and labor markets which are embedded in Globalization.

Of current concern is unemployment. As of this writing, 12.8 million people were unemployed. The national unemployment rate is 8.3%. Again, doing some quick math, 12.8 / 0.083 and we arrive at a labor force size of about 156 million Americans, which is about 50% of our population, and that is my "rule of thumb" for determining the size of any country's labor force (about 50% of population, give or take) (Source: BLS).

Also, of this writing there are about 3.8million open job postings. We can debate the accuracy of the number, I will grant that. But, hypothetically, let's say ...entertain me here... 3 million of those open jobs were filled by people from the 12.8 million group. Then, we would have only 9.8 million unemployed. Simple math gives us 9.8 / 156 which equals 6.3% unemployment (Source: BLS)

Now, 6.3% is not bad. Not great, but certainly better than +8%. The question then becomes, "Why are those jobs not being filled by people in the 12.8million group?"

I don't have an answer to that question. I know some factors include unwillingness to move to where the jobs are, the pay of those open jobs, and the experience gap between the unemployed group the experience those open jobs require.

Retraining & re-education can help fill some of those jobs. Re-education requires colleges and universities to be open, fair, and honest with themselves, and be open to new ideas, fail fast, fail often, and learn and grow from those experiences, and be ever-evolving. Self-assessment mandates interaction with business and industry to make sure graduates have both the education and experience necessary for those graduates to succeed.

Higher Education cannot be a stove-pipe themselves, or become educational "silos" immune to local, state, national, or international influences and catalysts. Those institutions who pay attention will succeed by their graduates. Those institutions who fail to adapt to 21st century educational changes and evolving business needs will falter and suffer under constant mis-identification of goals and mis-aligned "mission statements" and find themselves under-going continual identity crises which will do nothing but undermine institutional confidence at all levels.

Institutions of Higher Learning represent a bizarre dichotomy of work environments. On one hand, some of the most brilliant people on the planet are employed by them, and some of the most pedantic, too. Even the educated folks are routinely bound by limited vision and are what I might label as "novice learners" being unable to see past their own discipline, specialty area, or responsibility. Thus, the very institutions which were created to promote critical thinking and openness are just as poisoned as any other institution or corporation.

So, yes, my hackles get up when these institutions victimize innovation, stifle advancement, creativity, and stymy new ideas and concepts, and squash young, middle-aged, an older minds in favor of "tradition" and "that just not the way its done" mentalities.

I invite all rational and reasonable comments :)

PAX

If All Else Fails, Blame China

I’ve spent the last year educating myself about economics. Why economics? Simply put, government bureaucrats use the Ignorance of the Masses to push through economic policies which superficially sound well-grounded yet have dangerous and harmful downstream effects. Being ignorant myself of economics, I did recognize many U.S. foreign and economic policies were damaging in the long run, I couldn’t find the words to express my concern, nor explain why the policies were damaging. Saying “something is this way,” is not as powerful as saying “something is wrong due to these 5 factors.”

On Tuesday, October 4th, U.S. and global media outlets (Reuters) announced plans by the U.S Congress for the design of a bill to pressure China to modify the value of the Yuan, the Chinese currency.

According to Reuters, the U.S. Senate voted to open debate on a bill allowing for the imposition of tariffs on consumer products entering the United States from countries deliberately undervaluing currencies.

People may read right past that comment; I own bias is people do read right past “tariff” comments, not understanding the implications.

A tariff is a tax placed on a good entering a country. The country making the good does not pay the tax. We do; American consumers pay the tax. When we decide to buy a Blu-Ray player, LCD or Plasma TV, the price we pay includes the tariff. The cost is passed to us. Essentially, as we notice prices increasing, we decide not to buy, or we decide to buy a cheaper competing product. But, we pay the price, using more of our income to buy consumer goods.

“What is wrong with that?” You ask. “Maybe if tariffs were high enough, jobs would reappear in the United States!”

Maybe. Just remember the tariff is a social tax, a form of Socialism, designed to ‘level out the labor market’.

“How can you say that? That sounds like crazy-talk!”

A tariff is a method governments have of manipulating the price of consumer products ABOVE the fair market value. For example, say Taiwan produces a Blu-Ray player and your price at Wal-mart is $128. Now, say, Taiwan also undervalues it’s currency. According the U.S. Congress, the Blu-Ray player will have a tax added to the price. Now that Blu-Ray player will cost you $140. You’ve just been removed of $12 of your disposable income because the Congress does not like the way Taiwan manages its money. And, more importantly, the fair market value of that device has now been manipulated. You might be cool with that; I just want you to know you are out $12.

The Better Question: Why Does China Undervalue Its Own Currency?

This is the question I wish someone would ask, simply because I want a public figure to validate my own knowledge.

OK, so the controversy is this: China keeps the Yuan cheap relative to other currencies so products made in China are less expensive and people around the world buy more stuff. Right? People in Germany, and France, and Sweden, and Canada buy stuff made in China because the stuff is cheap. Buying inexpensive stuff means you have more utility with your money, you can do more things with your money.

Somebody has to make the stuff we buy. Enter the Chinese worker. China has an enormous labor market. China has a population of about 1,300,000,000 people. About 50% of those are workers, or about 650,000,000.

In other words, the Chinese labor force is more than 2x’s as large as the entire population of the United States, and larger than the entire population of Europe.

Most of these workers are barely literate, illiterate, or working their way through school to become fully educated. But to find work for over 1/2 a billion people is an amazingly complex task.

An easy way to provide employment is to undervalue your currency. If products made in your country are cheap compared to elsewhere, you can sell more, which means making more, which means employing more people.

From the Chinese perspective, an undervalued currency makes sense because keeping workers employed and working is essential.

I envision if China decided to allow their currency to “float” and operate against global financial markets as other currencies, Chinese economic growth would drop from the 9-10% range experienced now, to 4-5%. The U.S. Congress would say 4-5% is acceptable. The Chinese workers would riot in the streets from being unemployed. I’m not sure I want 650,000,000 people pissed off at me.

What About the United States Currency?

The U.S. Congress telling China to revalue the Yuan comes off as disingenuous. The U.S. dollar is slightly undervalued against the European Union’s Euro. The European Union has voiced displeasure over the value of the U.S. Dollar as a low dollar against the Euro makes U.S. goods cheaper in Europe. On the other hand, European goods are more expensive in the U.S., thus we don’t buy as much.

But This Controversy Is About Job Creation!

In part, no doubt there is some truth to the Job Creation argument.

Even the Job Creation Argument needs examination, though.

Do this: visit the web site Learner.org, and watch the video, Guangdong: Globalization in the Pearl River Delta. Fast-forward to about the 7:00 minute mark. Those workers in the video are making shoes for Nike. Sitting at a shoe press for 8-10 hours per day.

That is the job the U.S. Congress wants you to have, sitting at a shoe press, the vertebrae in your back calcifying from hours of hunched-back sitting.

Really? That is the job Congress wants to bring back to the United States?

My point is this:

For the United States to maintain a technological advantage, to maintain a standard of living our parents have worked hard to achieve, we cannot cling to labor market philosophies and policies better suited for the 1950s. Our U.S. labor market needs to adapt to for the 2050s, and beyond. Those brute-force manufacturing jobs are better suited for countries with necessary manpower and wage flexibility. The United States should leave those jobs behind and focus on the future, not the past. We seem to be riding a horse into the future, seated backwards in the saddle, lamenting what has come before.

Manufacturing jobs will always be present in the United States. Making cars, trucks, washing machines, dryers, heavy equipment, items both large and small, simply makes economic sense.

However, some jobs really can go somewhere else, and I argue, the U.S. benefits by having those jobs leave.

Technorati Tags: education,labor,globalization,congress,currency,employment,jobs,unemployment

Education Is Not Simply About What One Knows

Whether one is a welder, a foreign diplomat, or a genetic engineer, being educated about the world makes a society better.

The Chronicle of Higher Education ran a front-page piece detailing the educational efforts of our state legislators, “How Educated Are Our State Legislators?” Definitely some surprises.

Arkansas, for example, ranks higher than Maine. I never would have guessed that. Also lower is Delaware; never would have guess that either. New Hampshire comes in 50th; the study really should have excluded New Hampshire, though. The NH houses meet infrequently, do not have full-time legislators, and few of the legislators posted their educational background. With better data, New Hampshire might rank higher.

California is at the head of the class, with 90% of legislators having at least a Bachelor’s Degree. In fact, if I were to include “Some College,” that percent would rise to 93%. Not bad, for a broke state.

My adopted state of Kentucky fairs pretty well, too. 77% of our state legislators have a Bachelor’s Degree. Toss in another 9% for those who have had “Some College,” and that percent pops to 86%. Pretty amazing.

Some legislators created profiles for themselves on their state-supported web sites. Sometimes, educational information was listed, such as school attended, what he/she studied, and what degree was attained, if any. A few even posted a GPA. Good for them.

Some posted as education the “School of Life,” or “Self-Educated.” One legislator stated she went to “gun school.” One legislator is 19 years old. Kyle Jones (NH) works the night shift at Burger King and goes to school part-time. That is awesome!

Adam Brown, Brigham Young University, makes some good comments about politics and education. “Legislators aren’t only supposed to represent the white-collar workers of the world. They need represent everybody.” Brown then goes on to say something that somewhat boggles me. When asked if he learned anything about public higher education, or about education in California, he is quoted as saying, “No, of course not. I was just a student.”

I hope this not quoted properly. How can a person not learn something about higher education while being a Ph.D student? Hell, as a graduate student at a small regional university, I learned about grants, state funding for capital projects, state funding for educational programs, salaries, allocation of degree programs throughout the state. I find this statement almost to incredible to believe, actually. I can see that comment coming from a BA/BS student; frankly, most of them have no idea what goes on in higher education. Nothing against them, they simply do not work behind the scenes. Just because I watch the Space Shuttle launch doesn’t mean I know all the details behind the planning of a launch.

I am really bothered by a couple notions.

First, people misinterpret the word, “liberal,” when used with education. Or, rather they choose to identify with only 1 or 2 of the word’s 15 potential meanings. When used with “education,” “liberal” does not mean “socialist,” or “communist,” or “left-leaning,” or “to advocate for political reform as defined by progressive social Democrats.”

Liberal Education simply means “generous” or “abundant.” We could extend that to include “tolerant of others,” or “to encourage the pursuit of intellectual thought and discourse in an academic manner.”

To receive a liberal education, simply puts, means a student has been exposed to a number of different influences, local, regional, national, and global in reach and depth. Nothing is wrong with this, and a lot of things are right about it.

Which brings me to my second notion.

Daniel Thatcher illustrates my problems with the anti-intellectualism that is rearing its ugly and ignorant head in the U.S. Definitely a dragon that St. George needs to behead.

Daniel Thatcher is a self-taught electrician in Utah and is a freshman senator. College drop-out. To be clear, I have no issues with college drop-outs. People who are uniquely motivated and have skill, drive, desire to do something with their lives – more power to them, I say. Bill Gates dropped out of Harvard to begin Microsoft, probably the most famous example. Dave Thomas, founder of Wendy’s, same thing. Drive, desire, and determination are powerful influences in a person’s life.

But, remember this, they did not sit on their asses, watching TV, and wondering what they were going to do for the day. They did something. They taught themselves, and surrounded themselves with smart people, many of whom were/are highly educated people.

Here is what Daniel Thatcher is quoted as saying,

“You go to college, you take a foreign language, and all these ridiculous diversity requirements-how does that help you become a better welder? Why is it that we’re telling kids, ‘You can get any degree you want, and you’ll make all of this money,’ when they won’t?”

And, in a nutshell, this is what is wrong with America.

Let me deal with the only thing he said correctly first. How does learning Spanish make you a better welder? Technically, being versed in Spanish will not help you make a better weld, that is true. You win, Mr. Thatcher, on that point. On that point alone, you win.

Having learned Spanish might make you a much more marketable welder, though. Being able to speak Spanish might make you a crew chief, team leader, foreman. One day, you might be a consultant on a job where the ability to speak a foreign language comes in handy. Perhaps the language is Russian instead of Spanish.

Perhaps your jobs become fewer and fewer because clients are taking work to other facilities because they not only work on domestic contracts but are able to work on multi-national contracts, too.

Go ahead, Mr. Thatcher, weld yourself into a corner.

Who cares about globalization, global labor markets, the global movement of labor, the movement of production and products, and the growing interconnectedness of the world? Not the United States, right?

Ignorance is bliss, right? Americans should be down-right jolly with more of your ilk in state legislatures.

I ask, how can Americans understand how labor works, or how the economics of Nike, or of Dell, or of Toyota work, if all we do is learn just the modicum that we need in order to weld?

We can’t.

How can the United States prepare our current population, and our future workforce, and continue to evolve our society, with such ass-backwards, 1950s, riding forward into the future sitting backward in our saddle, thinking?

Our ignorance will be our undoing.

And, you Mr. Thatcher, are guilty of the irresponsible argument that education is completely and totally useless for most professions.

U.S. citizens need to be educated. I am not advocating formal education, compulsory education. The growing anti-intellectualism in the U.S. must end, though. Americans need to be aware of their communities, their state, their nation, their national neighbors, and understand the dynamics involved in even the simple economies that make our world what it is today.

Technorati Tags: higher education,education,senators,representatives,legislators,university,college

Can the U.S. Ego Handle Being #3?

Willem Buiter, chief economist at Citigroup, says that the United States needs to get ready to be Number 3 in the world, economically speaking.

Don't come after me, email him.

It is inevitable, though. Let's run some numbers.

Population of the United States: .... 310,000,000 people
Population of China: ..................1,400,000,000 people
Population of India: ...................1,100,000,000 people

A Rule of Thumb that I use is that 50% of a country's population is essentially the Labor Force.

Labor Force of The United States: ... 150,000,000 (Actual = 153 million; CIA World Factbook; 2010)
Labor Force of China: ......................700,000,000 (Actual = 819.5 million; CIA World Factbook; 2010)
Labor Force of India ........................650,000,000 (Actual = 478.3 million; CIA World Factbook; 2010)

Now, let's look at a measure of Economic Productivity, the GDP (Gross Domestic Product).

GDP of The United States: .... $14,700,000,000,000 (in PPP; CIA World Factbook; 2010 )
GDP of China: .......................  $9,872,000,000,000 (in PPP; CIA World Factbook; 2010)
GDP of India: ........................  $4,046,000,000,000 (in PPP; CIA World Factbook; 2010)

From: TradingEconomics.com

Judging from these numbers, The United State's economy is about equal to the combined economies of China and India.

However, economic growth for the last 5 years or so has not been promising. The U.S. has been hindered economically by two wars, stagnating domestic economic policy.

Economic growth in China and India is promising. For the last 10 years, China has experienced economic growth of at least 9% annual growth. In the years between 2003 - 2008, economic growth was in excess of 10%.

For India, the story is more measured, by the trend is mostly the same, expansive economic growth. Outside of a few quarters between 2004 - 2010, economic growth in India has been in excess of 7%.

In comparison, the best year between 2001 - 2010 for the United States occurred in 2004. After growing from about 0.5% in the first quarter of January 2002, the economy improved to an annual growth rate of 4% in the first quarter of 2004.

Not that I want to portray a bleak picture; the numbers essentially speak for themselves.

China and India both have much larger populations, individually, than does the United States. Both China and India have much economic growth left; in fact, many would argue that the true economic potential of both countries is 20 - 40 years away, given that China / U.S. relations remain congenial, and that Pakistan / India relations do not run the world to the brink of annihilation (again). Likewise that China / India relations remain congenial, and that India does not find China's attempt to become the de facto leader in Asia a threat.

We've had a good run at being the world leader.

As our educational systems falter, as American continue to be distracted from STEM education, as parents and educators argue about how to manage classrooms, as children lose discipline, as entitlement programs create in-fighting and bickering among political rivals and as Americans, born into entitlements, fight to keep them, and as the United States presses "democracy" within the Middle East and Central Asia, our economic competitors will continue to mature and evolve. China and India, seeking to make theirs lives better, will look at consumer markets domestically and abroad, and build new relationships. Chinese and India will (and do) focus on training, education, science, and math.

That the United States will lose its economic position and status is not really a knock against us, but merely an illustration of how far behind us, economically, both India and China are. Each has come along way in educating populations, and bringing citizens out of poverty.

Each has a long way to go, however, and as India and China cover that distance, the United States will have to evaluate, and continue to re-evaluate its global role.

Technorati Tags: news,china,india,economic growth,willem buiter,citibank

Four Tiers of Growth and Prosperity

Former World Bank President James Wolfensohn makes a good pitch in this recent article. Within, he describes the transition from our traditional First World, Second World, Third World mentality - which within the last decade or so has migrated towards High Income, Middle Income, Low Income nomenclature - to a new paradigm.

The world now consists, or will soon consist of, a different structure. First Tier is used to describe Western and Northern Europe, the United States and Canada, and Japan.

The second tier, comprised of former middle- and low-income nations, is represented by countries like India and China.

The third tier are represented by countries in the Middle East and South America. These countries have significant economies yet do not have the influence within the world economy to either require significant help or have the ability to significantly influence world economic policy. At least according Wolfensohn. I would suggest that while, overall, this may be true, certain economic sectors are certainly influenced by countries in these regions. The Middle East is a significant player in petroleum, which influences energy prices. Brazil and Argentina are significant players in agriculture, which carries over to subsidies, food costs, and perhaps energy (think ethanol).

The last tier of countries are chiefly found within Subsaharan Africa. There are a few other countries that fit into this are found outside the region, such as Haiti.. These countries have extreme human poverty, benefit little from the forces of globalization, and unless there is outside intervention (which may have been the initial catalyst for their problems), will probably continue to lag behind the rest of the world - at best.

The article is very detail-rich and Wolfensohn does offer some advice to counteract some of the forces currently at work that undermine potentials across the globe that seek to elevate countries to higher tiers. Finally, being European, I would guess, he challenges Europe to rise up and take a leadership role in eradicating the extreme differences in growth and wealth around the world.

A certain amount of income-disparity is important to have, I believe. In fact, in a free-market world, there will certainly be a stratification of wealth and income. Not everyone is predisposed to risk, entrepreneurial attitudes, climbing the corporation ladder, or the means-justifies-the-end type mentality. Thusly, there will also be disparity in wealth. One cannot eliminate the ability to achieve a better standard of living, however. Maybe it could be likened to a football game (American), where one team gets down so far, becomes demoralized, and loses. There are examples of comebacks, however.

The Houston Oilers and the Buffalo Bills game comes to mind.