Charter school movement reaches the every faction for itself phase

Jennifer Berkshire  points us to this article from Chalkbeat:

Has the charter school movement gone awry? A new book says yes, and it’s causing a stir
By Matt Barnum

It's an interesting discussion, but one that arguably tells us more about the debaters than about the nominal topic. Until recently one of the fundamental characteristics of the education reform movement was the way various factions saw it as the coming fulfillment of their often very different and sometimes mutually exclusive desires. It would close the achievement gap, bring back old-fashioned rigor, fix the economy, remove the yoke of excessive government. The optimistic assumption of each group was that, if everything changed, it might just change in their favor.

There were always two dominant factions. The first was technocrats. These were scientific management types whose specific ideas and general worldview owed everything to MBA programs and corporate culture (with a dollop of freshwater economics added.) It was no coincidence that the man who was arguably the founding father of the movement, David Coleman, came from a background not of education but of management consulting.

The second group was antigovernment, anti-regulation, antiunion (in many cases, socially reactionary). A nontrivial segment of this faction had started out in the pro-voucher movement until that had crashed and burned years earlier.

In many ways, the goals of the two factions were diametrically opposed. One was economically focused and socially progressive, looking not just to close the achievement gap but to end poverty through innovation and technology. The other was focused on tradition conservative goals. Fortunately (or unfortunately, depending on your perspective), the two groups shared a libertarian tilt and a great faith in market-based solutions. Perhaps more importantly, though, both saw the tremendous buzz and bipartisan support for education reform as the best chance they had to advance their objectives.

Along with entitlement reform and balancing the budget, education reform was the sacred cow of public policy initiatives, one of the very few issues that respectable publications like the New York Times could and would present only the pro side for.

Of course, that was then. Topics like charter school initiatives, standardized testing, and common core have become highly controversial, and the result has been a fraying of alliances within the movement.

Which brings us to this

The book, a collection of essays edited by the Center for Education Reform’s Jeanne Allen and Cara Candal and the Manhattan Institute’s Max Eden, makes the case that the charter school movement has gone awry: it’s over-regulated, hyper-focused on tests, and dismissive of families.

They appear to have an ally in U.S. Education Secretary Betsy DeVos. In a recent speech to charter school leaders, DeVos criticized lengthy charter applications, warning that “many who call themselves ‘reformers’ have instead become just another breed of bureaucrats.”

What’s needed now, the book’s authors say, is more innovation and less of a focus on test results. That argument prompted Checker Finn, the former president of the Fordham Institute, a right-of-center education think tank, to call the book “idiocy.” In an email exchange among a number of well-known education reformers, Allen shot back, saying Finn was “catching the same disease that befell Diane Ravitch,” the school choice advocate-turned-reform-critic.
…

Allen and Eden say charter school advocates can be divided into two camps.

In one corner are “system-centered reformers,” who, in the authors’ telling, trust tests to measure school performance and trust themselves to oversee those schools.

In the other are “parent-centered reformers.” They want to see a system “where educational entrepreneurs are freer to open new schools and parents decide which schools should close and which should expand based on whether they want to send their children there.” DeVos — who appeared at a private reception held by Allen’s Center for Education Reform in June — has described her vision in similar terms.
...

Eden and Allen close the book with recommendations that include expanding the number and type of charter authorizers, ensuring charters are not bound by teacher certification rules, and reducing charter school regulations.

One interesting point here is that neither side is taking a particularly popular stance. Rather they are dividing up the unpopular parts of their once shared platform.

The excessive amount of time spent both directly and indirectly on standardized testing has become highly controversial, as has the use of test scores for the promotion or firing of teachers, the allocating resources, and the closing of schools. The backlash has led to, among the things, an opt-out movement that threatens the entire system. Likewise, the technocrats other favorite policy, Common Core, has reached punchline status.

But the positions on the other side have no great popular support either. The term "deregulation" scores high with fellows at the Cato Institute, but it doesn't have much resonance with the public. What's worse, when you dive down into the specifics, you quickly get to things like the mistreatment of the disabled, corruption/self-dealing and excessive compensation for founders and executives. There is no powerful grassroots movement pushing for kicking LD kids to the curb or giving million-dollar bonuses to the CEOs of charter schools. And, contrary to what the authors may think, it is remarkably difficult to find a parent who wants to see fewer certified teachers in his or her child's school.

Eventually you get to Elon Musk...

Brian Merchant  makes a really important point here, but he glosses over a fundamental distinction. Putting aside for the moment the equating of the two men's impact (with all due respect to Jobs, it isn't even close), it is valid to point out that both are often credited with the work of the teams under them, Edison was able to set up his research lab (itself a tremendous innovation) because of the money he made as an inventor. It's true that most of the patents he held were primarily or entirely the work of others, but he remained an engineer supervising engineers. Jobs was a genius when it came to design, consumer psychology and the future of personal technology, but he was not an engineer.

We've gone from crediting the engineer/manager (Edison) to the marketing/design guy (Jobs) to the promotions/financing guys (take your pick). This trend will not end well.

“The thing that concerns me about the Steve Jobs and Edison complex,” Bill Buxton, who helped pioneer multitouch in the 1980s (Jobs said Apple invented it in 2007), told me, “is that young people who are being trained as innovators or designers are being sold the Edison myth, the genius designer, the great innovator, the Steve Jobs, the Bill Gates, or whatever,” Buxton says. See: The current myth of the founder-hero, that is partly to blame for steering companies like Uber into peril. “They’re never being taught the notion of the collective, the team, the history.”

Which is why it pains me a bit to see the story of the iPhone reduced to Jobs, brilliant as he may have been. The true version is more intense, messy, convoluted—and human. And it’s not just a matter of doling out credit, either; it’s a matter of understanding how innovation actually happens, so we might facilitate it better in the future. There are lessons here for anyone who might try to build a product, advance a technology, stir progress—or understand how innovation really unfurls. The iPhone is the product of a collaboration carried out on a scale that’s so massive it can seem almost incomprehensible—but it makes more sense than the lone inventor myth. And we can learn more about where we're headed if we look into the iPhone's black mirror and try to see the huge host of faces reflected back—not just Steve Jobs'.

It turns out that the key to bipartisanship is pseudoscience and bone broth

We've been spending a lot of time recently here at the blog on health-related pseudoscience, particularly the kind espoused by Gwyneth Paltrow and all too often non-critically covered by New York Magazine. We even got a little into the demographics which tend to match places like Santa Monica, white, upper and upper-middle class, and generally limousine liberal. We have previously noted that far left is even more susceptible to medical quackery than are the normal goop subscribers.

This characteristically sharp and funny segment from John Oliver on Alex Jones reveals an interesting parallel. Jones's audience virtually defines the alt-right, but when you scrape away the xenophobic and homophobic claims about immigrant-borne diseases and the feminization of the American man, you get down to pitches for products that are virtually identical to what you might see at a Gwyneth Paltrow wellness seminar, the same ingredients promising to cure the same ailments based on the same questionable medical arguments.

The Enron, charter schools and related-party transactions

I meant to post this analysis by Preston Green III when it first came out. Then I saw something shiny and got distracted.

Enron’s downfall was caused largely by something called “related-party transactions.” Understanding this concept is crucial for grasping how charter schools may also be in danger.

Related-party transactions are business arrangements between companies with close associations: It could be between two companies owned or managed by the same group or it could be between one large company and a smaller company that it owns. Although related-party transactions are legal, they can create severe conflicts of interest, allowing those in power to profit from employees, investors and even taxpayers
...

Without strict regulation, some bad actors have been able to take advantage of charter schools as an opportunity for private investment. In the worst cases, individuals have been able to use related-party transactions to fraudulently funnel public money intended for charter schools into other business ventures that they control.

Such was the case with Ivy Academia, a Los Angeles-area charter school. The co-founders, Yevgeny Selivanov and Tatayana Berkovich, also owned a private preschool that shared facilities with the charter school. The preschool entered into a sublease for the facilities at a monthly rent of $18,390 – the fair-market value. The preschool then assigned the sublease to the charter school at a monthly rent of $43,870.

The Los Angeles district attorney’s office charged the husband-and-wife team with multiple counts of fraud. Selivanov was sentenced to nearly five years in jail in 2013.

Fraudulent related-party transactions can also occur between education management organizations (EMOs) and their affiliates. EMOs are for-profit or nonprofit entities that sometimes manage charter schools, and might also own smaller companies that could provide services to those schools.

For example, Imagine Schools is a nonprofit EMO that runs 63 charter schools enrolling 33,000 students across the country. It also owns SchoolHouse Finance, a for-profit company that, among other things, handles real estate for many of Imagine’s charter schools. Though charter schools typically spend around 14 percent of their funding on rent, some of the Imagine Schools were paying SchoolHouse Finance up to 40 percent of their funding for rent.

A few points to keep in mind when reading any upcoming story about the Hyperloop (first off, it's not a Hyperloop)

{UPDATED -- now with handy video example.}
[Last time we tried this it went really well, so...]

1. Here was Elon Musk's initial description of the Hyperloop:

"[A] cross between a Concorde and a railgun and an air hockey table"

or more prosaically

“[R]educed-pressure tubes in which pressurized capsules ride on an air bearings driven by linear induction motors and air compressors."

The idea of air bearings has been around for a long time and has proven useful for a number of applications, but, after a great deal of effort, researchers concluded sometime around the 1970s that it was not workable for high-speed rail. When companies started trying to build even small, very limited working models of the Hyperloop, the first thing that most, possibly all, did was to scrap the one aspect that set Musk's concept apart from more conventional maglev vactrains. This is a small detail but it is enormously telling. They dropped much of the actual idea, but they kept the name and the associated buzz.


2. Neither the Hyperlop or the “Hyperloop” offers much new.

At least in the broad strokes, there's is little new in any of the recent proposals. Musk's original presentation relied mainly on Disco-era technology. I believe most of the current efforts have updated that with passive levitation systems developed in the late 90s. Either way, the systems that are now promised as just around the corner are not that different from proposals from twenty years ago which begs an obvious question: why weren't these trains built a long time ago. The answer is…


3. You didn't see supersonic trains twenty years ago for the same reason you aren't likely to see them in the near future.

      Money.

Whenever people looked seriously at these projects, they concluded that the cost was prohibitive. And no, this didn't have anything to do with land rights or onerous regulations.


4.  A question of tolerance and other things

Even under the best of circumstances, big projects cost a great deal of money, and with maglev vactrains, the conditions are about the worst imaginable. This is supposed to be a brief overview, so I'm not going to make a deep dive here, but I will mention three factors: reliability, safety, and most of all tolerance.

You've got people traveling hundreds of miles an hour in a near vacuum. Just to get the damn thing to work, every part has to be manufactured to the tightest possible tolerances, every piece of work has to be done perfectly. But just working is much too low a bar here. With a Hyperloop, even a fairly minor failure can turn catastrophic, causing tens of billions of dollars of infrastructure damage, not to mention loss of life. Those standards of construction and maintenance are tremendously expensive, particularly for a piece of infrastructure that will stretch hundreds of miles.


5. Beware science-fair level demonstrations

When trying to follow the Hyperloop discussion, it is absolutely essential to distinguish between the easy parts and the hard parts. Many elements of the proposed system are well understood and in some cases widely used already. If you went through the Birmingham Airport in the late 80s or early 90s, you've probably already traveled on a maglev train propelled by linear induction.

Other elements are extraordinarily difficult to pull off. For instance, radical new construction techniques will need to be developed to make the system commercially viable. As mentioned before, the combination of extremely high speeds with the need to maintain a near vacuum over hundreds of miles requires a stunning degree of reliability and adherence to incredibly tight tolerances. Every seam has to be literally airtight.

You will notice that the "test runs" we have seen from various Hyperloop companies have focused almost entirely on the aspects that don't need testing.

[Ran across this shortly after posting.]



6. So what would a real Hyperloop test look like?

We will know that the Hyperloop is actually getting closer when we start seeing demonstrations that address concerns of civil engineers and transportation researchers (specifically those not in the employ of Musk or companies like Hyperloop One). For example, a process or manufacturing tube segments of sufficient quality cheaply or a system for joining these segments quickly and requiring few if any skilled workers.


7. And no, this is not just like SpaceX and Tesla.

The long-popular "we should take Musk seriously because he has done impossible things" genre has recently spawned the subgenre "we should take Musk seriously because he's doing the same thing with [Hyperloops/brain chips/giant subterranean slot car tracks] that he did with SpaceX and Tesla" This is simply not true. The approach is almost exactly the opposite. With the latter, Musk proposed plans carefully grounded in sophisticated but entirely conventional technology. With the former, he made vague, underdeveloped suggestions that left experts in the respective fields pulling out their hair.

To be clear, Tesla and particularly SpaceX certainly had their doubters, but the skepticism was focused on the business and finance side. Elon Musk unquestionably accomplished some extraordinary things, but he did so by the deviating from conventional wisdom in terms of how you set up companies while staying safely in the mainstream when it came to technology.

A tale of three talks

This is Joseph

Apologies for the simplifications of the descriptions of the talk, but I am going for the main themes and not necessarily all of the nuances of the authors.  All three talks are worth watching.

Here is a TED talk on reversing diabetes by restricting carbohydrates and adding fat

Here is a TED talk about reversing diabetes by becoming a vegetarian

And here is a third TED talk, not on diabetes but improving hunger issues by eating unprocessed foods (third strategy)

Are you confused yet?

I think that there are two major points here that form an underlying theme that links all of these approaches together.

One, humans are remarkably plastic in our ability to adapt to different diets.  The low carbohydrate crowd have long brought up the Inuit, who eat an inherently low carbohydrate diet due to food source availability.  But there are cultures (in which many people live to very old ages) that eat relatively high carbohydrate (Japanese culture comes to mind).  So it would be very surprising if there were not a multiplicity of effective diets, and it is possible, if not likely, that there is more than one way to improve diets to stop diabetes and manage weight.  The best diet is one that the patient can actually follow and succeed with.

Two, and the reason for the third video, is that both of the strategies that appear in the first one naturally shift people towards more complex foods, the point of the strategy in the third one.  Generally speaking, that seems to be a common theme in the actual recipes given.  For example, the Zone Diet could use a chocolate bar to make up the carbohydrate portion of the diet.  But they then immediately bring up glycemic index, which pushes you towards fruits and vegetables.  The second video uses examples of carrots and vegetarian chili as food, not a 2 liter bottle of coke (which is a vegan according to the company).  The first speaker uses the example of sauteing mushrooms, again the use of a vegetable product.

So I suspect (I don;t know for sure) that these three approaches are a lot more compatible than it first appears.  It is hard to overdose on sugar as a vegetarian if I am getting my carbohydrates from apples and broccoli.

Now, I do want to point out that this is a very complicated topic and the research into it is ongoing and challenging.  Food is the classic example of something hard to remember: how many bananas did you eat last year?  But the search for common themes may yet be very useful in puzzling out what might actually be effective.  

Bring red flags, lots of red flags – Part VI: Campbell's Law et al.

The familiar concerns with factors that undermine and distort educational metrics appear to have crossed the ocean.

I asked two experts in statistics — Nat Malkus, from the American Enterprise Institute, and Bryan Graham, from the University of California, Berkeley — to help me evaluate the findings. “This is good evidence of positive effects,” says Malkus. Both pointed out that the study’s results are complicated by Bridge’s high dropout rate: While a third of public-school students dropped out, nearly half of Bridge students left during the study and were unable to take the final assessment. ‘‘The high attrition rate should give one pause,’’ Malkus says, ‘‘when considering the full effect of the program.’’ Graham, co-editor of The Review of Economics and Statistics, says that ‘‘organizations are under a lot of pressure to do these studies and ‘prove’ their program works. Reasonable and informed people could look at the information in that report and come to widely different conclusions about the effect of Bridge on academic achievement as they measure it. It’s information, just not especially actionable information.”

Another area of achievement that Bridge trumpets is the success of its students on the eighth-grade K.C.P.E. test. In 2015, according to Bridge, 63 percent of Bridge students who had been there for at least two years passed, compared with 49 percent of Kenyan students nationwide. But it’s unclear whether Bridge’s approach will be sustainable as the company grows. Former Bridge employees told me that in preparation for the 2015 exam, those on track to get a lower score were asked to repeat a year. The rest were taken to a residential cram school and prepped for the test by teachers who flew in from the United States.

The nuclear moose option

[UPDATE: The conversation continues with The Republicans' 3 x 3 existential threat.]

[Just to be clear, I am not claiming that any of the following is inevitable or even likely, but I do think it falls in the category of things to consider.]

We've been arguing for quite a while now that the conservative movement's social engineering experiment has achieved its considerable success over the past few decades at the cost of exposing the party to genuinely existential threats. I had meant to precede this post with a bit more foundation, but events seem to be accelerating and I need to get this down.

Political parties have survived major rifts before. We could find numerous notable examples for both Democrats and Republicans, and, in all of those cases, the wounds were real but temporary. However, these divisions, though bitter, took place in broad-based relatively healthy political parties, I would argue that the Republican Party of 2017, though nominally controlling most of the government, is perhaps uniquely fragile and cannot survive a nasty internal conflict.

Here is a scenario of how such a conflict can arise and grow into an existential threat. I won't say that it is probable, but I think each link in the chain is definitely plausible. This is certainly true for the first link since between the time I outlined the concatenation of events and the time I sat down to write this, the first one had already happened. (That's why this is something of a rush job.)

First, a bit of background from our game theory post back in February  (Charles Schumer predicted a break between Trump and the party in three or four months. I said a year of two. Perhaps we should have split the difference):

The relationship between the Trump/Bannon White House and the GOP legislature is perhaps uniquely suited for a textbook game theory analysis. In pretty much all previous cases,  relationships between presidents and Congress have been complicated by numerous factors other than naked self-interest--ideological, partisan, personal, cultural--but this time it's different. With a few isolated exceptions, there is no deeply held common ground between the White House and Capitol Hill. The current arrangement is strictly based on people getting things they care about in exchange for things they don't.

However, while the relationship is simple in those terms, it is dauntingly complex in terms of the pros and cons of staying versus going. If the Republicans stand with Trump, he will probably sign any piece of legislation that comes across his desk (with this White House, "probably" is always a necessary qualifier). This comes at the cost of losing their ability to distance themselves from and increasingly unpopular and scandal-ridden administration.

Some of that distance might be clawed back by public criticism of the president and by high-profile hearings, but those steps bring even greater risks. Trump has no interest in the GOP's legislative agenda, no loyalty to the party, and no particular affection for its leaders. Worse still, as Josh Marshall has frequently noted, Trump has the bully's instinctive tendency to go after the vulnerable. There is a limit to the damage he can inflict on the Democrats, but he is in a position to literally destroy the Republican Party.

We often hear this framed in terms of Trump supporters making trouble in the primaries, but that's pre-2016 thinking. This goes far deeper. In addition to a seemingly total lack of interpersonal, temperamental, and rhetorical constraints, Trump is highly popular with a large segment of the base. In the event of an intra-party war, some of this support would undoubtedly peel away, but a substantial portion would stay.

Keep in mind, all of this takes place in the context of a troubling demographic tide for the Republicans. Their strategic response to this has been to maximize turnout within the party while suppressing the vote on the other side. It has been a shrewd strategy but it leaves little margin for error.  Trump has the ability to drive a wedge between a significant chunk of the base and the GOP for at least the next few cycles, possibly enough to threaten the viability of the party.

With that in mind, consider the following possible developments:

1. Trump fires Reince Priebus. Keep in mind, the choice of Priebus was (probably accurately) seen as an early indicator that, for all of his outsider talk, Trump intended to run a partisan administration with close ties to the Republican establishment. The firing has to be seen as a weakening of that relationship;

2. After ever increasing harassment, Jeff Sessions jumps or is pushed out of the administration;

3. This, along with other transgressions, prompts Graham and a few other Republican senators to start actively pushing for investigations into and greater accountability from the White House;

4. The strongest remaining link between the administration and the GOP establishment, vice president Mike Pence, is finding it increasingly difficult to keep his skirts clean from the Russia scandals. He does his best to distance himself and, as a result, further marginalizes his role;

5. Further developments in the Russia scandal exacerbate existing tensions;

6. While Trump does have his loyalists and the number of Republicans willing to publicly attack him remains fairly small, the majority of the party starts to see the president as a dangerous liability and attempts to distance itself from him, whenever possible refusing to take sides;

7. Angry at the lack of loyalty and feeling pressure from the investigations, Trump escalates his attacks on the GOP;

8. (Any of the following)
a. Trump fires Mueller
b. Mueller or some other investigator uncovers a major criminal conspiracy involving Trump, his family, or his business
c. Polls start showing serious erosion in support for Trump and the GOP in the conservative base
d. Things just keep getting ugly

9. At some major events such as a large rally or even the state of the union address, Donald Trump announces that, in the tradition of Teddy Roosevelt, he has realized that both parties are hopelessly corrupt and the only way to drain the swamp is by starting a third-party. So it is his intention to run in 2020 as the candidate for the MAGA Party and to field candidates in every major statewide contest.


Now, I want to be careful about how we frame this. Trump forming a third party remains unlikely, but it would not that unlikely if we hit events 1 through 8 and, taken individually, none of these events seem all that improbable.

I should probably polish this post a bit more, but given the pace of things these days, you have to make your predictions as quickly as possible.

Health care reform can have consequences

This is Joseph

Steven Attewell

When I heard Republican Congressmen talking about how only people who’ve led “good lives” deserved coverage for pre-existing conditions, I would scream at the monitor that the idea that health is tied to moral virtue is a medieval fantasy, that illnesses like mine could strike anyone at any time for no reason at all. My cancer hadn’t been the result of smoking or poor diet or environmental factors or genetic predispositions; it was just two genes in one cell mis-transcribing themselves next to one another randomly. So for the next sixth months I walked around in a daze knowing that if the Republican plan became law, I would be a health care pariah, forever marked as a cancer survivor.

I want to say more about this line of argument at some point.  But I think that the big issue here is that, at the costs we currently have, it's basically impossible to self insure against this type of cancer.

These decisions have real consequences for real people.  Let's try and get them right.  

The Trump-anchor paradox

The more that congressional Republicans believe that Trump is dragging them down and threatening their majorities in 2020 and perhaps even 2018, the greater their incentive to stick with him if they want to get any legislation through in the next decade. This effect is exacerbated by demographic trends and a remarkably unpopular agenda. They had hoped to minimize the negative impact of the latter by slipping a misrepresented version past an unengaged electorate. Unfortunately for the GOP, that particular ship has sailed.

Now, their last and perhaps only hope of achieving long cherished goals such as dismantling the Great Society and possibly even the New Deal depend on getting legislation through under the current configuration. When Trump threatens that configuration, he only makes himself more essential. I doubt very much that he thought this through and made a deliberate decision, but the end result is much the same.

There are, of course, limits to how far this can go. This administration has already managed unprecedented levels of scandal and incompetence six months in. While there is no telling where they will be another year from now, it is probably safe to say that the chances of things getting better are far less than the chances of them getting much, much worse. We have already seen the mechanisms that have kept the conservative movement viable for decades starting to break down. If things start to spiral in a really ugly way, the leaders of the GOP and of the movement will need to worry less about their agenda, and more about their jobs their institutions and possibly even the continued existence of their party.

I want to point out a Vox article on self-driving cars

This is Joseph

Mark and I have been discussing this point so I was pleased to see a recent Vox article.  David Roberts makes the increasingly obvious point that self-driving cars really aren't going to be a game changer in terms of congestion.  After all:

All things being equal, if AEVs get comfortable and affordable, people will want to own one. The more affordable they get, the more tempting individual ownership will be.

So how do we solve this?  Apparently this is the proposal:

The only way to counteract that is through policy to “discourage or restrict private ownership of AVs,” like it says on the list — or to develop shared alternatives that are so convenient and attractive that private ownership declines naturally.

The whole list is worth reading.

But the politics of this move to restrict self-driving cars are no different than a major push in this direction now to restrict normal cars.  I could use a combination of buses and taxis [Ubers/Lyfts] all of the time, if owning a car was prohibited.  But, this could make roads less safe, as people might retain traditional cars if it is illegal to own a private self-driving car.  Safety has typically been the most successful argument in passing transit rules and a move that makes the roads less safe seems counter-intuitive.

But if the technology is cheap (certainly plausible at scale) and successful (not sure how likely but let's assume this for a moment) then, if anything, it will make car ownership cheaper due to lower accident insurance costs.

As for banning or restricting private cars, I see two obstacles that seem fundamentally insurmountable.

1) You make a great deal of suburbia a lot less livable.  Even a transit co-op will run into issues with everyone wanting to use the self-driving minibus at the same time (work, soccer practice, Jim is late so everyone is late for work).  This will create a great number of losers and, at best, would require the will to spend huge amounts of money easing this dislocation

2) Regulating cars is very, very tough politics.

Consider Washington state where an anti-tax activist is trying to undermine public transit by ballot initiative.  The catch is that he wants to undermine Seattle public transit by appealing to voters who live in other parts of the state:

Eyman said that the size of ST3 affects voters statewide even though it is paid for by voters within the district.
“When you’re dealing with $54 billion being spent on any one thing, that is having an impact on everyone in the state,” he said. “There’s only so much money available.”

Now this ballot initiative might fail.  But look at the political risk that it creates for any public organization devoted to transit.  Do we really think that private companies will be able to fill this void effectively and to solve the sorts of issues that might crop up (nobody likes Jim and so nobody wants him part of their bus pool).

This does not mean that we should give up on improving transit.  But that the main issues that are blocking these reforms are political and not regulatory.  We could make car ownership expensive and restricted, like in Singapore.  Look at the cost of 10 year license to buy a car -- which is about $55-60,000 in US dollars.  This is nearly double the cost of a new car in the US.  They also have congestion pricing on roads.  We could certainly adopt these policies for traditional cars now.  But, like with medical care, people seem to look at only part of how Singapore makes things work.

We don't because the politics are really, really hard. But we live in a country where people lead tax revolts over tens of dollars per year in vehicle fees.  Self-driving cars don't really change that calculation without a parallel change in politics.

Go and read the whole article.  

Shame he didn't think of this before they did all those artist's renderings of elevated hyperloops

I thought about adding this to the previous Elon Musk post (which actually hasn’t run yet in my timeline {sorry, been watching Dr. Who}), but the focus here is less on who said the quote and more on the people who wrote it down. Besides, this makes a really nice follow-up to yesterday's "undertakings of great advantage" post.

The following was from a pretty good Wired article on Musk’s “proposal” to build multiple layers of tunnels under Los Angeles.

“We’re just going to figure out what it takes to improve tunneling speed by, I think, somewhere between 500 and 1,000 percent,” he said Sunday during a hyperloop design competition at SpaceX. “We have no idea what we’re doing—I want to be clear about that.”

As I just mentioned, the Wired piece was pretty good and is not included in the following criticisms, but there were plenty of entirely credulous outlets that reported on his story. Presumably, all of them at least saw the 500 to 1,000 percent claim. This should have been one of those points where the credibility of the subject goes to zero. You don’t just decide that you are going to improve a process by a factor of five or ten. This is especially true when we are talking about widely used technology which a large number of the world’s most gifted engineers are constantly trying to improve. If Musk had said he was planning on going to the track every day next week and just picking winners, the statement would have been more believable.

Barring a belief in magic (which, I’d argue, is disturbingly common in 21st-century journalism. That is, however, a topic I need to address when I have more time), there is simply no way that a responsible and competent reporter can cover a planned project where one of the fundamental elements is this implausible without explicitly and emphatically dismissing the whole thing.

[At this point, I am supposed to acknowledge that this or that is possible. The problem with that particular journalistic convention is that possibility is such a broad standard as to be useless. Outside of axiomatic systems, it can be genuinely difficult to come up with a non-trivial example of an impossibility.]

Of course, claims of huge improvements don’t have to be improbable or implausible, but in order to be credible they must be grounded in some way. You need to specify some technological advance or infrastructure upgrade or radically different approach. Such claims might still be improbable, but at least there is what you might call a path to plausibility.

When someone says “I’m going to take a look at [some complex problem that smart, serious people have been struggling with for a long time] and come up with some amazing solution,” reporters and editors have a professional obligation to call the bullshit bullshit. Doing otherwise leads to bad investments, bad public policy decisions, and bad presidential elections.

"A company for carrying on an undertaking of great advantage, but nobody to know what it is."

Another excerpt from Charles Mackay's  Extraordinary Popular Delusions and the Madness of Crowds. I believe "a company for carrying on an undertaking of great advantage, but nobody to know what it is" was an initial business plan for Groupon.

Some of these schemes were plausible enough, and, had they been undertaken at a time when the public mind was unexcited, might have been pursued with advantage to all concerned. But they were established merely with the view of raising the shares in the market. The projectors took the first opportunity of a rise to sell out, and next morning the scheme was at an end. Maitland, in his History of London, gravely informs us, that one of the projects which received great encouragement, was for the establishment of a company "to make deal-boards out of saw-dust." This is, no doubt, intended as a joke; but there is abundance of evidence to show that dozens of schemes hardly a whir more reasonable, lived their little day, ruining hundreds ere they fell. One of them was for a wheel for perpetual motion—capital, one million; another was "for encouraging the breed of horses in England, and improving of glebe and church lands, and repairing and rebuilding parsonage and vicarage houses." Why the clergy, who were so mainly interested in the latter clause, should have taken so much interest in the first, is only to be explained on the supposition that the scheme was projected by a knot of the foxhunting parsons, once so common in England. The shares of this company were rapidly subscribed for. But the most absurd and preposterous of all, and which showed, more completely than any other, the utter madness of the people, was one, started by an unknown adventurer, entitled "company for carrying on an undertaking of great advantage, but nobody to know what it is." Were not the fact stated by scores of credible witnesses, it would be impossible to believe that any person could have been duped by such a project. The man of genius who essayed this bold and successful inroad upon public credulity, merely stated in his prospectus that the required capital was half a million, in five thousand shares of 100 pounds each, deposit 2 pounds per share. Each subscriber, paying his deposit, would be entitled to 100 pounds per annum per share. How this immense profit was to be obtained, he did not condescend to inform them at that time, but promised, that in a month full particulars should be duly announced, and a call made for the remaining 98 pounds of the subscription. Next morning, at nine o'clock, this great man opened an office in Cornhill. Crowds of people beset his door, and when he shut up at three o'clock, he found that no less than one thousand shares had been subscribed for, and the deposits paid. He was thus, in five hours, the winner of 2,000 pounds. He was philosopher enough to be contented with his venture, and set off the same evening for the Continent. He was never heard of again

A few points to keep in mind when reading any upcoming story about Elon Musk

First, a quick update from the good people at Gizmodo, specifically Ryan Felton:

Elon Musk awoke on Thursday with the intention of sending Twitter into a frenzy by declaring that he received “verbal govt approval” to build a Hyperloop in the densest part of the United States, between New York City, Philadelphia, Baltimore, and Washington D.C. This is dumb, it’s not how things work, and requires, uh, actual government approval.

Felton goes on to contact the government agencies that would absolutely have to sign on to such a project. Where he was able to get comments, they generally boiled down to "this is the first we're hearing of it." The closest he came to an exception was the federal Department of Transportation, which replied

We have had promising conversations to date, are committed to transformative infrastructure projects, and believe our greatest solutions have often come from the ingenuity and drive of the private sector.

This is a good time to reiterate a few basic points to keep in mind when covering Elon Musk:

1.    Other than the ability to make a large sum of money through some good investments, Elon Musk has demonstrated exceptional talent in three (and only three) areas: raising capital for enterprises; creating effective, fast-moving, true-believer corporate cultures; generating hype.

2.    Though SpaceX appears to be doing all right, Musk does not overall have a good track record running profitable businesses. Furthermore, his companies (and this will come as a big slap in the face of conventional wisdom) have never been associated with big radical technological advances. SpaceX is doing impressive work, but it is fundamentally conventional impressive work. Before the company was founded, had you spoken with people in the aerospace community and asked them "what is closest to being Mars ready, who has it, and who are the top people in the field?", the answers would have been the type of engine SpaceX currently uses, TRW (which sued SpaceX for stealing their intellectual property), and the chief rocket scientist SpaceX lured away from TRW. By the same token, Tesla is pretty much doing what all of the other major players in the auto industry are doing in terms of technology.

3.    From the beginning, Musk has always had a tendency to exaggerate and overpromise. Smart, skeptical journalist like Michael Hiltzik and the reporters at the Gawker remnants have taken any claim from Elon Musk with a grain or two (or 20) of salt.

4.    That said, in recent years things have gotten much, much worse. Musk has gone from overselling feasible technology and possibly viable business plans to pitching proposals that are incredibly unlikely then supporting them with absurdly unrealistic estimates and sometimes mere handwaving.

5.    The downward spiral here seems to have started with the Hyperloop. This also seems to be the point where Musk started trying to do his own engineering rather than simply taking credit for the work of those under him. On a related note, it is becoming increasingly obvious that Elon Musk has no talent for engineering.

6.    Musk’s increasingly incredible claims have started to strain the credulity of most of the mainstream press, but the consequences have been too inconsistent and too slow-coming to have had much of a restraining influence on him. Even with this latest story, you can find news accounts breathlessly announcing that supersonic travel between New York and DC is just around the corner.

7.    Finally, it is essential to remember that maintaining this “real-life Tony Stark” persona is tremendously valuable to Musk. In addition to the ego gratification (and we have every reason to believe that Musk has a huge ego), this persona is worth hundreds of millions of dollars to Musk. More than any other factor, Musk’s mystique and his ability to generate hype have pumped the valuation of Tesla to its current stratospheric levels. Bloomberg put his total compensation from Tesla at just under $100 million a year. When Musk gets tons of coverage for claiming he's about to develop telepathy chips for your brain or build a giant subterranean slot car race track under Los Angeles, he keeps that mystique going. Eventually groundless proposals and questionable-to-false boasts will wear away at his reputation, but unless the vast majority of journalists become less credulous and more professional in the very near future, that damage won’t come soon enough to prevent Musk from earning another billion dollars or so from the hype.

The Disruption Fetish

This analysis by Brent Goldfarb is the best thing you'll read about Tesla this year, but the most important part may be his dismantling of the cult of the disruptor. Pay particularly close attention to the ways the fetishists ascribe nearly magical powers to disruption. This is about to be a major theme in the blog (and possibly in an upcoming book).

By conventional measures, Tesla is a small concern, but investors are placing their bets that it is a disruptor, a concept that has near-magical qualities in some business circles. The term comes from the work of the Harvard Business School professor Clay Christensen’s Innovators’ Dilemma.

While the term is often used loosely to describe any exciting new company, disruption is actually defined fairly precisely in Christensen’s work (if with plenty of wiggle room). In theory, an existing firm can be disrupted if it complacently ignores the needs of its customers — or at least technological trends that threaten to make its market and technology positions obsolete.

A disruption theorist would explain Kodak’s downfall by arguing that Kodak ignored the threat posed by digital photography because it was too focused on the seemingly steady and solid profits produced by selling film. Likewise, Blockbuster ignored Netflix’s DVD-by-mail model and later streaming, leading to its bankruptcy. [As previously mentioned, I have a quibble with the omission of Redbox here, but it in no way undercuts Goldfarb's point. – MP]

Ignoring these innovations may have seemed sensible at first: Low-resolution digital photography did not appeal to Kodak’s customers, and Netflix started out by offering odd and old movies, i.e., not blockbusters. Why would Blockbuster bother to compete with that?

Slowly the quality of these offerings improved and neither Kodak nor Blockbuster were able to catch up. A textbook disruptive strategy targets the low end of the existing market. But sometimes disruption can come from above! Nokia as well as RIM (maker of the Blackberry) were unable to respond to the iPhone and Android one-two-punch. A disruption theory purist would insist that Kodak, Blockbuster, Nokia, or RIM might have navigated the technological transition — and thrived — if only they’d paid attention to the changing markets.

But a more plausible, if conventional, argument might be that transitions in those instances were not only improbable, but not even advisable. It would have been a herculean task to transform a chemical company specializing in the production of silver oxide film to a consumer electronics firm, fighting for attention in a low-margin industry.

Sometimes firms weather disruptive threats with little trouble. New biotechnologies that allow us to modify DNA led to a completely different drug discovery technology, eroding the drug discovery capabilities of large pharmaceuticals. However, the list of top pharma companies has barely changed in the past century. Their capabilities in shepherding drugs through the FDA process, as well as selling and marketing drugs — none of which biotech startups have easily replicated (Genentech notwithstanding).

The biotech startups still make money, but they typically end up licensing their technologies to, or are purchased outright by, big pharma. In 2000, online grocer Webvan set out to disrupt the bricks-and-mortar grocery business with a model that may have worked — if only 25 percent to 40 percent of groceries were purchased online. Sadly, that wasn’t the case then and still isn’t the case. As of 2016, about 5 percent of groceries were purchased online.

Nevertheless, the story soaked up $1 billion from public and private investors before failing. On-line ordering and delivery survivor Peapod eventually purchase by Giant, has taught us that online ordering complements bricks-and-mortar grocery stores, rather than substitutes for them. Most shoppers like to see, touch and feel their fruits and vegetables before purchasing them. Amazon deemed it wise to buy Whole Foods, as opposed to building an on-line fresh foods department independently.
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The disruption fetish

A Google search for “disruption theory” produces almost the same amount of google hits as “competitive advantage.” Impressive for a theory that suffers from vagueness and has a poor record in explaining outcomes. My objection is not that incumbents never fail — that would be absurd. My point is that this rarely happens because managers are not paying attention to the competition.

Incumbents fail when their resources and capabilities become obsolete and they are unable to develop new capabilities themselves at a reasonable cost, or to buy these capabilities. That is, to believe in the disruptive potential of a company, it is necessary to also explain not only why the firm’s technology will be successful, but also why the incumbents cannot compete. Not superficially, but through careful consideration of these capabilities for both potential disruptors and incumbents.