An IP post for the Fourth of July

As mentioned earlier, I've been planning to write some posts about the legal battle Jack Kirby's heirs have been trying to wage against Marvel/Disney in an effort to get a share of the billions of dollars their father's creations and co-creations have brought into the company.

I'd meant to get back to this sooner, but the ed reform beat has been  taking most of my time and I kept putting off the Kirby thread until recently when I found myself looking for a topic for the Fourth, and I realized that I couldn't do much better than the character Kirby created in 1940 with partner Joe Simon, Captain America.

The legal wrangling over Captain America was a bit of a departure from the conflict over the Avengers, the Fantastic Four, the X-Men, etc. The villain here appears to be Kirby's partner Joe Simon but, Kirby's standpoint, it's still a very familiar story/ From a well researched post by comics historian Daniel Best:

Joe Simon often wondered why Kirby sided with Marvel in 1966 and later.  At the time Kirby was working for Marvel and earning a decent living, Simon was freelancing and not offering Kirby any work.  Simon later stated that Goodman had approached Kirby and told him that he, Simon, was claiming Captain America as his own, which, in effect he was indeed doing.  Simon later said that nobody told Kirby that, as the co-author of the first books, Kirby would be entitled to half of the copyright and profits.  Tellingly Simon never explains if he attempted to contact Kirby directly to inform him of this fact or was relying on either Marvel or a third party to get the news over.  Marvel wasn’t about to hand Captain America over to anyone, let alone Joe Simon, so they wouldn’t be too keen to tell Kirby that it would benefit him if Simon won.  It’s hard to understand why Simon would make such a statement and be puzzling over it decades later.  A good guess would be that Goodman approached Kirby and showed him the court statements in which Joe Simon was claiming that he alone created Captain America.  From there it’d have not been that much trouble to ask Kirby to file his affidavit as to his involvement in the creation of the character.  It also helps explain why Kirby was reluctant to work with Simon when the pair were both at DC in the early 1970s, refusing to work with him after the one Sandman issue.  The Jack Kirby that Joe Simon knew in the 1940s and 1950s wasn’t the same Jack Kirby in the 1970s.  Still, now that Martin Goodman and Jack Kirby are gone, Joe Simon’s account of the creation of Captain America goes relatively unchallenged.

After everything was said and done it comes as no great surprise that Kirby was angry as he was towards the end.  Stan Lee, Martin Goodman, Joe Simon…they all took credit for his work.  Still, one character that Stan never took credit for, although the Marvel propaganda machine would try and attribute it to him, more than once (to the frustration and anger of Kirby) was Captain America.  In his 2010 deposition, as part of the Marvel vs Kirby court case Stan was asked about Captain America.  His response; “Captain America, for God's sake. He (Jack Kirby) and Joe Simon had created Captain America.”  Say what you want about Stan Lee, but Captain America was one character he was more than happy to state, for the official record, that Jack Kirby co-created and that he, Stan Lee, had no involvement with.

Tenure and watchdogs

[We've already discussed Belleville, NJ as an example of corruption among the educational entrepreneurs, here's the aftermath]

One very important aspect of tenure that doesn't get much attention is the way tenured faculty can provide checks on and oversight of administrators. Longtime teachers tend to feel pride and a strong sense of stewardship toward their schools. If you combine that reasonable protections against reprisals, you get a strong opposition to administrative abuses.

With that in mind, take a look at this post from popular education blogger, Jersey Jazzman and ask yourself how this would have played out without tenure.

To put it charitably, Belleville's schools have been very poorly managed. The district's budget is so bad that the state appointed a fiscal monitor this year to try to restore some financial sanity. Teachers and parents both told me that the schools lack contemporary textbooks, modern computers, and even the infrastructure necessary to administer the Common Core-aligned PARCC tests mandated by the state for next year.


Perhaps the worst decision the district made over the last few years was to install a state-of-the-art surveillance system in all of its buildings; yes, a "surveillance" system, not a security system. Every classroom in every building is wired for both video and sound -- including the teachers lounges!


That's right, my fellow teachers: in Belleville, a camera and microphone monitor every word uttered in the teachers break room!


But that's not all: all Belleville faculty, high school students, and middle school students must have special ID cards with them at all times. These ID's include "RF-tags," which are radio frequency devices similar to what you'd find in an EZ-Pass. They were originally used to track cattle: now, they track the positions of all staff and all students at all times.


That's right, my fellow teachers and parents: in Belleville, the movements of students and faculty are tracked at all times! Big Brother better not find out if you snuck off to the bathroom before the bell...


I asked several parents at the rally whether they were ever asked for their permission to require their children to have an RF-tag on them at all times; every one told me they were never asked. The teachers, it goes without saying, find the entire system insulting and degrading, to both themselves and their students. According to a union survey, more than half of the members of the BEA feel intimidated in the workplace, and three-quarters felt their participation in union activities would result in negative consequences.


Regular readers of this blog will not be surprised when I tell them about the resume of Belleville's superintendent, Helene Feldman: she cut her teeth -- surprise! -- at the NYCDOE, under reformy Joel Klein and reformy Chris Cerf (and those are a couple of guys who really know how to get teachers and parents on their side...). NYC is, of course, the training ground for the increasingly unpopular Paymon Rouhanifard in Camden and the spectacularly unpopular Cami Anderson in Newark.


Only a superintendent who served under Klein and Cerf would ever think teachers would take kindly to having their classrooms and lunch breaks and bathroom trips monitored.


The real kicker here, however, was the price: $2 million dollars. Just tonight, the state-appointed accountant who looked at Belleville's budget told the crowd at the board meeting that the district was $3.6 million in the red for next year -- and that's after having used up all of its budget surplus. How in the world does the Belleville BOE justify spending all that money on this obnoxious surveillance system when they can't even afford textbooks and computers for the schools?


When the system was booted up this past fall, the teachers union decided they'd had enough. It was bad enough the board wasted this money on invasive technology that wouldn't do anything to stop a Sandy Hook-like attacker. It was bad enough that teachers were now being watched constantly, as if they worked in a Soviet reeducation camp. But all of this had been implemented without the benefit of any negotiation, a clear violation of the collective bargaining rights of the BEA.


Mike Mignone, as president of the union, started speaking out. A 13-year veteran math teacher with a spotless record, beloved by his students and fellow teachers, Mignone wasn't going to just sit by and watch his members continue to be harassed and intimidated. He demanded that the board and the superintendent explain themselves: where did they get the funds for the surveillance system? Why was the time between the advertisement of the bid and the final decision less than two weeks? Why did the entire bidding process stink of nepotism?

After it obtained the job, Clarity also hired relatives of two key people at the school district, the brother of school board attorney Alfonse DeMeo, who approved the contract and first introduced Clarity to board members; and the son of Board of Education Trustee Joe Longo, who spearheaded the security upgrade. Longo insists he never asked for special treatment for his son and Kreeger denies that politics were involved in either hire. Kreeger also says he eventually terminated Longo's son because of public criticism, even though he was a model employee.

Mignone was making things very uncomfortable for the board and the superintendent by speaking out. He was putting a lot of people in difficult positions by calling for transparency and demanding that taxpayers get clear answers about how their money was being spent.


Guess what happened next?


As Mignone's lawyer puts it: in October, he found out; in November, he spoke out; in December, tenure charges were filed against him. Mignone, who had always had excellent reviews, suddenly found out he would be up on charges that included (get ready for this one) answering students' questions about the surveillance system. According to Mignone, his students asked him questions about whether they were being monitored; he took a few minutes out of class and gave them some honest answers. That, in this board's and this superintendent's minds, counts as a fireable offense.

If you don't believe me, ask Dilbert

[OK, technically it should be "go ask Alice" but I'm trying to cut back on obscure allusions.]

A while back, we had a popular post (thanks, Mike) on the business model of consulting firms like McKinsey.

This is, by no means, a matter of luck. Rather it reflects just how good McKinsey is at their core mission: winning over high-level executives and spinning compelling narratives for the press. As long as the C level executives like the consultants and the consultants make them look good, the executives will happily hand out shocking sums of money.

One of the challenges that management consultants often face is trying to sell a very expensive product or service to a company that is capable of providing something similar internally at a much lower cost. For this reason, firms like McKinsey are very good at driving a wedge between top level management and the rest of the company. If you can convince high level executives that the people two or three tiers below them are incompetent and/or untrustworthy, you can justify charging exorbitant fees for things could that which can be done cheaply and quickly in-house.

My explanation relied heavily on the consultants' ability to charm top-level executives. Scott Adams has another theory.

I cover some related points here. It's arguably a weaker post but I really like the title.

"How naïve I was."

If you follow the Common Core story closely, two disturbing conclusions keep coming to mind. One is that the whole process was rushed through without sufficient time for reflection or vetting. The other is that the people involved in the process who were actually qualified are realizing that their input wasn't that important.

Sue Pimentel is a lawyer and a lobbyist whose career has been largely funded by the Walton family and whose only relevant research qualification seems to be a forty-year-old B.S. in early childhood education. David Coleman, as mentioned many times before, is a former management consultant with no relevant qualifications at all.

Of course, a lack of degrees does not imply bad ideas any more than a strong resume implies good ones, but qualifications do imply a kind of vetting. If someone with no background is able to win people over with the quality of his or her ideas, that is a sign of a healthy system. If someone with no background forces his or her ideas through opaquely with the support of a handful of very rich supporters, that is a sign of a dysfunctional system.

From an interview in Psychology Today:

Dr. Louisa Moats, the nationally-renowned teacher, psychologist, researcher and author, [If you'd like more details on Moats' impressive resume click here -- MP] was one of the contributing writers of the Common Core State Standards (CCSS). The CCSS initiative is an attempt to deal with inconsistent academic expectations from state-to-state and an increasing number of inadequately prepared high school graduates by setting high, consistent standards for grades K-12 in English language arts and math. To date, forty-five states have adopted the standards. I recently had the opportunity to discuss the implementation of the CCSS with Dr. Moats.

Dr. Bertin:   What was your involvement in the development of the Common Core State Standards (CCSS)?

Dr. Moats:   Marilyn Adams and I were the team of writers, recruited in 2009 by David Coleman and Sue Pimentel, who drafted the Foundational Reading Skills section of the CCSS and closely reviewed the whole ELA (English Language Arts) section for K-5. We drafted sections on Language and Writing Foundations that were not incorporated into the document as originally drafted. I am the author of the Reading Foundational Skills section of Appendix A.

Dr. Bertin:   What did you see as potential benefits of establishing the CCSS when you first became involved?

Dr. Moats:  I saw the confusing inconsistencies among states’ standards, the lowering of standards overall, and the poor results for our high school kids in international comparisons. I also believed that the solid consensus in reading intervention research could be reflected in standards and that we could use the CCSS to promote better instruction for kids at risk.

Dr. Bertin:  What has actually happened in its implementation?

Dr. Moats:  I never imagined when we were drafting standards in 2010 that major financial support would be funneled immediately into the development of standards-related tests. How naïve I was. The CCSS represent lofty aspirational goals for students aiming for four year, highly selective colleges. Realistically, at least half, if not the majority, of students are not going to meet those standards as written, although the students deserve to be well prepared for career and work through meaningful and rigorous education.

Our lofty standards are appropriate for the most academically able, but what are we going to do for the huge numbers of kids that are going to “fail” the PARCC (Partnership for Assessment of Readiness for College and Careers) test?  We need to create a wide range of educational choices and pathways to high school graduation, employment, and citizenship. The Europeans got this right a long time ago.

If I could take all the money going to the testing companies and reinvest it, I’d focus on the teaching profession – recruitment, pay, work conditions, rigorous and on-going training. Many of our teachers are not qualified or prepared to teach the standards we have written. It doesn’t make sense to ask kids to achieve standards that their teachers have not achieved!


Dr. Bertin:   What differences might there be for younger students versus older students encountering it for the first time?

Dr. Moats:   What is good for older students (e.g., the emphasis on text complexity, comprehension of difficult text, written composition, use of internet resources) is not necessarily good for younger students who need to acquire the basic skills of reading, writing, listening, and speaking. Novice readers (typically through grade 3) need a stronger emphasis on the foundational skills of reading, language, and writing than on the “higher level” academic activities that depend on those foundations, until they are fluent readers.

Our CCSS guidelines, conferences, publishers’ materials, and books have turned away from critical, research-based methodologies on how to develop the basic underlying skills of literacy. Systematic, cumulative skill development and code-emphasis instruction is getting short shrift all around, even though we have consensus reports from the 1920’s onward that show it is more effective than comprehension-focused instruction.

I’m listening, but I don’t hear the words “research based” as often as I did a decade ago – and when CCSS proponents use the words, they’re usually referring to the research showing that high school kids who can’t read complex text don’t do as well in college. Basic findings of reading and literacy research, information about individual differences in reading and language ability, and explicit teaching procedures are really being lost in this shuffle.

Dr. Bertin:  What benefits have you seen or heard about so far as the CCSS has been put in place, and what difficulties?

Dr. Moats:   The standards may drive the adoption or use of more challenging and complex texts for kids to read and a wider sampling of genres. If handled right, there could be a resurgence of meaty curriculum of the “core knowledge” variety. There may be more emphasis on purposeful, teacher-directed writing. But we were making great inroads into beginning reading assessment and instruction practices between 2000-2008 that now are being cast aside in favor of “reading aloud from complex text” – which is not the same as teaching kids how to read on their own, accurately and fluently.

Dr.  Bertin:  What has the impact been on classroom teachers?

Dr. Moats:  Classroom teachers are confused, lacking in training and skills to implement the standards, overstressed, and the victims of misinformed directives from administrators who are not well grounded in reading research.  I’m beginning to get messages from very frustrated educators who threw out what was working in favor of a new “CCSS aligned” program, and now find that they don’t have the tools to teach kids how to read and write. Teachers are told to use “grade level” texts, for example; if half the kids are below grade level by definition, what does the teacher do? She has to decide whether to teach “the standard” or teach the kids.

Dr. Bertin:  You’ve raised concerns elsewhere that CCSS represents a compromise that does not emphasize educational research.  How do the CCSS reflect, or fail to reflect, research in reading instruction?

Dr.  Moats:   The standards obscure the critical causal relationships among components, chiefly the foundational skills and the higher level skills of comprehension that depend on fluent, accurate reading.  Foundations should be first!  The categories of the standards obscure the interdependence of decoding, spelling, and knowledge of language. The standards contain no explicit information about foundational writing skills, which are hidden in sections other than “writing”, but which are critical for competence in composition.


The standards treat the foundational language, reading, and writing skills as if they should take minimal time to teach and as if they are relatively easy to teach and to learn. They are not. The standards call for raising the difficulty of text, but many students cannot read at or above grade level, and therefore may not receive enough practice at levels that will build their fluency gradually over time.

Dr. Bertin:  How about recommendations for writing?

Dr. Moats:   We need a foundational writing skills section in the CCSS, with a much more detailed progression. We should not be requiring 3rd graders to compose on the computer. Writing in response to reading is a valuable activity, but teachers need a lot of assistance knowing what to assign, how to support writing, and how to give corrective feedback that is constructive.  Very few know how to teach kids to write a sentence, for example.

Dr. Bertin:   In an article for the International Dyslexia Association, you wrote “raising standards and expectations, without sufficient attention to known cause and remedies for reading and academic failure, and without a substantial influx of new resources to educate and support teachers, is not likely to benefit students with mild, moderate, or severe learning difficulties.”   You also mention that 34% of the population as a whole is behind academically in fourth grade, and in high poverty areas 70-80% of students are at risk for reading failure.

How does the CCSS impact children who turn out to need additional academic supports for learning disabilities, ADHD or other educational concerns?

Dr. Moats:   I have not yet seen a well-informed policy directive that addresses the needs of these populations. There are absurd directives about “universal design for learning” and endless accommodations, like reading a test aloud, to kids with learning disabilities. Why would we want to do that? The test itself is inappropriate for many kids.

Dr. Bertin:   How does it relate to concerns you have about teacher training in general?


Dr. Moats:   What little time there is for professional development is being taken up by poorly designed workshops on teaching comprehension of difficult text or getting kids to compose arguments and essays. This will not be good for the kids who need a systematic, explicit form of instruction to reach basic levels of academic competence.

I’ve been around a long time, and this feels like 1987 all over again, with different words attached to the same problems. When will we ever learn?

Yes, this is work related...

I'm working on a post about the role of branding in public policy, specifically the Carmaggedon campaign (more on that soon) and a researcher I had contacted mentioned this clip from the Colbert Report. As expected, the satirist provided probably the best summary of the coverage.

The Colbert Report
Get More: Daily Show Full Episodes,Indecision Political Humor,The Colbert Report on Facebook

Gee, I wonder which views she wasn't showing sufficient respect for?

The following comes from the blog of education historian and reform gadfly Diane Ravitch.

Regular readers of this blog are familiar with the work of Amy Prime. (See here and here.)For the past ten years, she has taught second grade at Berg Elementary School in Newton, Iowa. she has written several articles about the problems and challenges of protecting children from the negative effects of test-centric reforms, some of which have been published in the local newspapers and reposted on this blog.

Last month she was called to a meeting with her principal, a human resources employee and the curriculum director. The meeting lasted about one minute. She was told that, although she is a highly proficient teacher with great grasp of content knowledge, she had not shown proper respect of others’ views. To “solve” this problem, they had decided to transfer her to a different school to teach 5th grade.

Understand that she is an early childhood educator who has taught either 1st or 2nd grade since 1998. Her masters is in Literacy Education and she is a reading specialist. Now she will be a 5th grade social studies teacher.

The official letter of transfer says that she was “chosen” for this position because of her command of the content knowledge and her demonstrated instructional competency. Her unusual strengths prepare her to be a successful fifth grade teacher of social studies.

Some of her colleagues have expressed their regret. They see this as a punitive transfer, intended to rebuke her for speaking out while others remained silent because they were afraid of the consequences.

Amy has been candid. she blogs for the state’s newspaper. She expresses her views at faculty meetings about developmentally inappropriate instruction and assessments. She has defended the freedom of teachers to voice their views and do their jobs professionally. She opted her own children out of state testing. She told her son’s kindergarten teacher that she didn’t want him taking part in weekly spelling tests.

In the wake of Vergara, the natural tendency is to think of this as a tenure story, both in the sense that it makes us wonder what would have happened without tenure and it reminds that there are a lot of ways an employer can punish people without actually firing them.

But, there's different, though related, side of the story. Prime has long been a sharp and effective critic of the education reform movement (click here to see her disembowel a badly written reading test). Movement reformers have an exceptionally intolerant attitude toward critics and skeptics. Much of the antagonism toward teachers can be traced back to professional educators' natural (and I would say healthy) skepticism toward pedagogical fads. This attitude has also made the movement vulnerable to charlatans and scam-artists (for example).

Perhaps the historians in the audience might have some examples, but I can't think of another case where a movement has risen so quickly and fallen so fast. The inability to address valid criticism undoubtedly help grease the skids.

On the bright side, they are supporting the press

The Detroit Free Press has been running an exceptional series on the corruption and mismanagement of Michigan's charter schools. The coverage should be read in full and discussed at length, but for now I want to high light one darkly amusing detail.

Take a look at this list of abuses:

The Free Press found that questionable decisions, excessive spending and misuse of taxpayer dollars run the gamut:

■ A Sault Ste. Marie charter school board gave its administrator a severance package worth $520,000 in taxpayer money.

■ A Bedford Township charter school spent more than $1 million on swampland.

■ A mostly online charter school in Charlotte spent $263,000 on a Dale Carnegie confidence-building class, $100,000 more than it spent on laptops and iPads.

■ Two board members who challenged their Romulus school’s management company over finances and transparency were ousted when the length of their terms was summarily reduced by Grand Valley State University.

■ National Heritage Academies, the state’s largest for-profit school management company, charges 14 of its Michigan schools $1 million or more in rent — which many real estate experts say is excessive.

■ A charter school in Pittsfield Township gave jobs and millions of dollars in business to multiple members of the founder’s family.

■ Charter authorizers have allowed management companies to open multiple schools without a proven track record of success.

Here's how National Heritage Academies responded.

The trick here is numbingly familiar to anyone who has followed the debate closely. These corrupt schools wrap themselves with heart-warming images of school children the way scandal-ridden politicians wrap themselves in the flag. The hope, of course, is that people will form such a strong association that they won't notice that these schools are looting money that was supposed to go to these very kids.

For a closer look at National Heritage Academies, check here.

There's a Belleville/Bellevue joke here somewhere

[As a side note. It is surprising how often I find solid reporting on neglected stories coming out of local TV news rooms. I know we're all supposed to make fun of these guys just as we're supposed to respect the New York Times, but I think there may be a lesson here about conventional wisdom.]

The following is a prologue to an upcoming post in the tenure (here's a spoiler), but it can also stand alone as a depressing but illustrative example. One of the explicit assumptions of the education reform movement is that teachers should have less authority and fewer job protections. The implicit corollary to that is that administrators should have more authority and fewer checks.

If you add to that large amounts of money and a culture that tends to turn a blind eye to corruption, then you're asking for trouble.

And in Belleville, NJ, trouble is exactly what they're getting.

The Belleville School District has a budget deficit, classroom computers that are nearly 15 years old, and textbooks in such short supply that high school students say they are often asked to share.

"Our science books are outdated and our history books don't have 9/11 in them," says Michael Mignone, of the Belleville Education Association.

But last spring, the Belleville Board of Education spent $2 million on a brand new security system so advanced that no other school district in America can even come close to it, according to Clarity Technologies, the company that installed it. "Was it suspicious? Yeah, yes it was," says Jeff Mattingly, a Belleville resident and member of a concerned citizens group.


...

Clarity Technologies, based in Mine Hill, was the only bidder for the $2 million security upgrade, which includes more than 700 cameras and ID swipe cards with radio frequency chips that allow students and faculty to be tracked. "We were the only bidder because we were the only ones with an understanding of that particular project," says Bruce Kreeger, Clarity's president. "That's not negating the competition, but nobody else chose to compete."

But Kane In Your Corner's investigation reveals Clarity's competitors would have found it extremely difficult to compete, given the way the Belleville School District handled the bidding process. Four months before the project was sent out for bids in May 2013, the Board of Education hired Clarity to evaluate security districtwide, which means its competitors would essentially have been bidding against Clarity on its own plan. They were also given very little time in which to do that. Public records show that while Clarity took approximately six weeks to deliver its initial security recommendations, the timeframe for competitive bidding, from the day bids were advertised until the day the Board of Education awarded the winning bid, was just 12 business days.

"When you see something moving at that rate of speed, it tells you one of two things," Mattingly says. "Either your bid is just being used for ballast or it's already a done deal."

After it obtained the job, Clarity also hired relatives of two key people at the school district, the brother of school board attorney Alfonse DeMeo, who approved the contract and first introduced Clarity to board members; and the son of Board of Education Trustee Joe Longo, who spearheaded the security upgrade. Longo insists he never asked for special treatment for his son and Kreeger denies that politics were involved in either hire. Kreeger also says he eventually terminated Longo's son because of public criticism, even though he was a model employee.

Great Moments in management consulting

I know I blow through a lot of pixels on this topic but I don't think most people who haven't navigated a large corporation realize just how much of a drain charlatans and trendsters put on American business. The best analogy I can come up with is with corruption. Like the brothers-in-law of some Third World cabinet official, these con artists use an association with power ("the CEO is following this very closely.") to ask for money, make demands and generally be a nuisance to the productive.

As with corruption, the damage done by charlatans can occasionally rise to the level of existential threat (Barry Ritholtz has some examples we've discussed previously). Most of the time, though, they are just an irritant, a drag on the people who are actually trying to satisfy customers and make money for stockholders.

To get a feeling for just how far back this goes, check out this exceptional piece from the New Yorker's Jill Lepore (from which I've quoted before and will, undoubtedly, quote again):

Taylor is the mortar, and the Gilbreths the bricks, of every American business school. But it was Brandeis who brought Taylor national and international acclaim. He could not, for all that, have saved the railroads a million dollars a day—the number was, as a canny reporter noted, the “merest moonshine”—because, despite the parade of experts and algorithms, the figure was based on little more than a ballpark estimate that the railroads were about five per cent inefficient. That’s the way Taylorism usually worked. How did Taylor arrive at forty-seven and a half tons for Bethlehem Steel? He chose twelve “large, powerful Hungarians,” observed them for an hour, and calculated that, at the rate they were working, they were loading twenty-four tons of pig iron per man per day. Then he handpicked ten men and dared them to load sixteen and a half tons as fast as they could. They managed to do it in fourteen minutes; this yields a rate of seventy-one tons per man per ten-hour day. Taylor inexplicably rounded up the number to seventy-five. To get to forty-seven and a half, he reduced seventy-five by about forty per cent, claiming that this represented a work-to-rest ratio of the “law of heavy laboring.” Workers who protested the new standards were fired. Only one—the best approximation of an actual Schmidt was a man named Henry Noll—loaded anything close to forty-seven and a half tons in a single day, a rate that was, in any case, not sustainable. After providing two years of consulting services, Taylor billed the company a hundred thousand dollars (which works out to something like two and a half million dollars today), and then he was fired.

Warren Buffet and “the institutional imperative.”

"Sometimes. it's a bad thing for a company not to be able to lose money."

For years, Joseph and I tried to give each other credit for that line until we finally realized it came from a mutual friend. Regardless of the source, it's an important concept. More often than you might think, companies will find themselves, at least for a while, with relatively idiot-proof business models (usually involving underserved markets or niches with IP walls or other high barriers to entry). This can be a problem, particularly if the models were stumbled on or the people who developed them have left the company (both of which also happen more often than you might think).

These companies are especially vulnerable to what Warren Buffett calls “the institutional imperative.” You should read the whole essay but I found this passage particularly sharp (via DeLong).

My most surprising discovery: the overwhelming importance in business of an unseen force that we might call “the institutional imperative.” In business school, I was given no hint of the imperative’s existence and I did not intuitively understand it when I entered the business world. I thought then that decent, intelligent, and experienced managers would automatically make rational business decisions. But I learned over time that isn’t so. Instead, rationality frequently wilts when the institutional imperative comes into play.

For example: (1) As if governed by Newton’s First Law of Motion, an institution will resist any change in its current direction; (2) Just as work expands to fill available time, corporate projects or acquisitions will materialize to soak up available funds; (3) Any business craving of the leader, however foolish, will be quickly supported by detailed rate-of-return and strategic studies prepared by his troops; and (4) The behavior of peer companies, whether they are expanding, acquiring, setting executive compensation or whatever, will be mindlessly imitated.

Institutional dynamics, not venality or stupidity, set businesses on these courses, which are too often misguided. After making some expensive mistakes because I ignored the power of the imperative, I have tried to organize and manage Berkshire in ways that minimize its influence. Furthermore, Charlie and I have attempted to concentrate our investments in companies that appear alert to the problem.

Autism and pesticides

Back when I was teaching in the Mississippi Delta, I would often see crop dusters during my morning 

drive. They would make slow, sweeping turns then dive down low for their passes then pull up just in time to clear the trees at the ends of the fields. I always enjoyed the show, but even at the time I wondered what those chemicals were doing to the people who lived next to those fields.

From Reuters:

NEW YORK (Reuters Health) - In a new study from California, children with an autism spectrum disorder were more likely to have mothers who lived close to fields treated with certain pesticides during pregnancy.

Proximity to agricultural pesticides in pregnancy was also linked to other types of developmental delay among children.

“Ours is the third study to specifically link autism spectrum disorders to pesticide exposure, whereas more papers have demonstrated links with developmental delay,” said lead author Janie F. Shelton, from the University of California, Davis.

There needs to be more research before scientists can say that pesticides cause autism, she told Reuters Health in an email. But pesticides all affect signaling between cells in the nervous system, she added, so a direct link is plausible.

Warning: our IP thread is about to include some very geeky strands

The impetus is this lawsuit by the children of Jack Kirby who are trying to get a share of some of the revenue generated by the characters he helped create or created outright for Marvel/Disney (two companies that both built their early business models on public domain and, in some cases, not-so-public but poorly guarded intellectual properties). It's another telling if depressing story of just how far the regulatory capture of copyrights has gone.

To kick off the strand, those of you reading this in NYC might want to check out this new play about Kirby. The New York Times is impressed:

Crystal Skillman and Fred Van Lente, the husband-and-wife playwrights behind “King Kirby,” know the score. She wrote the smart Off Off Broadway shows “Cut” and the fangirl-friendly “Geek”; he was a co-author of the graphic novel “Cowboys & Aliens,” later adapted for a Hollywood sci-fi western. With this supple, informative and poignant portrait, they offer penetrating insight into the tirelessly prolific Kirby (1917-94), whose brawny and dynamic yet nuanced style dominated comics for more than 40 years. Their play (Kirby was known as the king) documents a creator who attained immortality even as his life ended amid a morass of corporate exploitation.
...
At a lean hour and a half, this production hits nary a speed bump, thanks to its fluid script and the director John Hurley’s assured pacing. Janie Bullard’s sound design and Olivia Harris’s set and lighting are unobtrusively effective, while Holly Rihn’s costumes nicely evoke changing times. The cast is uniformly on target, with Steven Rattazzi’s Kirby a sympathetic blend of street smarts, boyish creativity and a hard-working, over-trusting disposition.

"We somehow took the education system that produced the individuals who put a man on the moon with technology less powerful than the phone in my pocket and characterized that education system as a failure using the word 'accountability.'"

I recently had a post on New Math up at the Monkey Cage. One of the comments was simply a link to a Youtube video. I watched with some trepidation (it was, after all, a TED talk), but, though I didn't agree with all the points, a lot of them were quite valid and all were stated with considerable eloquence.

Toxic culture of education: Joshua Katz at TEDxUniversityofAkron

New slogan: "Don't be evil... That's what we have subsidiaries for"

Between abuse of monopoly/monopsony* power, media consolidation and beating up on the little guy, there's a lot of evil to go around here.

From NPR's All Things Considered:

Stuart Johnson, president of the Canadian Independent Music Association, says YouTube has put the independents on notice.

"What we're seeing is YouTube dictating terms to the independent music community with the proviso that if those terms are not agreed to or met, then the repertoire of that label will be removed from YouTube," Johnson says.

Johnson says YouTube has already negotiated with the three major labels: Universal, Sony and Warner. Neither the site nor the labels will reveal the specifics of the deal, but Rich Bengloff of A2IM — the American trade group for independent labels — says YouTube paid more to the majors than it wants to pay independents, despite the fact that independents account for more than a third of music revenues.

...
James McQuivey is an analyst at Forrester Research. He says there are parallels between this fight and the current dispute between Amazon and the publisher Hachette over the cost of print and eBooks. Amazon is delaying delivery of some Hachette titles and has eliminated pre-orders for others. [a pretty appalling story in its own right -- MP] McQuivey says it signals a shift in the Internet economy, which is now centered on the small number of players that get the most eyeballs.

"Digital aggregation creates power, and now these companies — after years of talking about a big, open Internet future — are finally starting to show when it comes to be tough in negotiations," McQuivey says. "They're willing to use their access point as a source of power."

Representatives at YouTube would not talk to NPR for this report, but McQuivey says it's clear that its planned subscription service will somehow incorporate music video and audio streaming. Since the site is a place where fans are already able to hear and watch videos for free, it may be hard to get them to pay. Meanwhile, McQuivey says YouTube, while profitable, has never made the kind of money its owner, Google, would like to see.

[Don't you just love the phrase "would like to see"?]

Not to put too fine of a point on it, but this is why we don't like to see high concentrations of money and power combined with and almost complete lack of competition. Google effectively holds monopoly and or monopsony power in a number of markets. It even has a ruling from a federal judge saying that Google has a first amendment right to use that power to destroy other companies.

This kind of power is always worrisome, but combined with a willingness to bully small players in the pursuit of rent seeking, it makes you wonder if we shouldn't consider dusting off the concept of anti-trust.

P.S. I spotted this relevant Business Week article just before I was about to post this.


* Unrelated to this story but the spellchecker on Blogger sucks.

Framing of discussions is key

I think that there are good reasons that this is not the debate we are having:

But thus far to an amazing extent we haven't been having that debate. Instead we've been having a debate over whether Obamacare works, over death panels, over enrollment numbers, over income verification procedures, and over the minutia of premiums and payments. It's time to put that debate behind us. It's clear — as it always should have been — that if you offer people large subsidies to go buy health insurance, lots of people will happily take the money and go buy some health insurance.

It's time to start debating the real issue: should we do that, or is it more important to keep taxes on high-earners low than to give low-earners comprehensive health insurance?

There are extremely good reasons that people attacking programs like the Affordable Care Act or public school funding focus on efficiency or effectiveness and not on first principles.  Because the argument that money should be used to improve health care for 50% of the population is extremely hard to refute in a world where effective tax rates can be extremely low (see the carried interest exemption). 

Instead, the line of attack seems to be that these are poor uses of cash -- that the programs so funded will be filled with rent-seeking, waste, and so forth.  That makes the idea of rich people simply keeping their money seem like a pretty decent idea, as nobody wants to contribute to bloated and inefficient systems. 

So I am skeptical that we'll be able to reframe the argument this way.  It's rather like Singapore -- people focus on the pieces that are the most useful for their argument.