A Nice University Story

We are preparing a post on the problems with universities but first here is one about a successful university program.  Competition among universities in each state means that students have choices and programs can have an identity.  The identity of  the University of Wisconsin-La Crosse (UWL) is about state-wide programs.  The identity of the Department of Accountancy is a 150-hour undergraduate program that emphasizes internships at public accounting firms.  Most of the internships are with firms that are not the Big Four.  All of the internships, with the possible exception of some with the federal government, are well paid.  Internships lead to connections with firms that lead to a variety of positive outcomes including scholarships for students.

Here is the story of McKenzie Hofmann, an accountancy major at the UWL:

So, when Hofmann started college, she heeded her mother’s advice and applied for as many scholarships as she could. Now entering her senior year, Hofmann has earned $13,000 total …

Today Hofmann is glad she switched majors and started on the accountancy path. After a full-time internship at a public accounting firm in the Twin Cities, Redpath and Company, spring semester, Hofmann was offered a full-time career with the firm. She’ll start after her December 2017 graduation.

It is a common success story at the accountancy program at UWL: scholarships, internships, and permanent employment.  So McKenzie made $13,000 from (tax free) scholarships and probably more on the internship but that’s taxable.  The program works for students that make it work.

Good News In Missouri

Dave Jamieson from the Huff Post reports good news from Missouri although he doesn’t think it is good news.  Missouri Republicans have prohibited localities from taking the minimum wage into their own hands.  Dave writes:

For low-wage earners in St. Louis itself, the new law will have a startling consequence: It will actually push the minimum wage back down, from the city-approved $10 per hour to the state-approved $7.70. The downgrade is slated to take effect on Aug. 28.

For someone earning the bare minimum, that’s a potential cut of 23 percent.

Obviously, for somebody earning zero the percentage increase can’t be computed.  It is great to see the GOP helping out the poor and unskilled by giving them the opportunity to create human capital.  Well done!

A conservative issue is whether the action of the Missouri GOP is proper.  What they did was:

[T]he state GOP recently passed what’s known as a statewide “preemption” law, forbidding localities from taking such matters into their own hands.

Much has been written about the relationship between the states and the federal government.  Not much has been written about the relationship between the states and localities.  Can the state of Missouri do this?  Is it wise to do it?  Our initial take is yes and yes but it may need more thinking.  At this point we see the right of the state to limit local actions such as property taxes so the minimum wage is another acceptable limitation.  We welcome more debate on this relationship.  The wisdom of the Missouri GOP in eliminating St. Louis’ increase of the minimum wage is obvious so there is no need to discuss that.

A Trip To The Dentist

The WSJ editorial on apprentices reminded us of last week’s trip to the dentist.  We support all manner of on-the-job training (OJT).  Formal education is an important part of building human capital but OJT is likely more important.  That’s why we were struck by this part of the editorial:

An especially odd objection is that apprenticeship training is a mistake because skills become out of date over time, especially later in one’s work life. But that’s a risk throughout the economy, and all the more reason to get young people skills to enter the job market now and build up savings for the future.

We agree with the first sentence that it is an odd objection but don’t see the second sentence as the answer to why.  Our current trip to the dentist compared to the one some years ago will explain why.

Some years ago our dentist had acquired technology that used a camera and what seemed to be CAD/CAM software (yup) to make a crown in-house.  It took lots of the dentist’s time but it was pretty cool to get the crown in one sitting.  Last week we went and got two crowns at once and the assistant did some of the CAD/CAM work.

Sidebar: We looked at the data on price changes in dental costs and were surprised by the continuing increases.  We wonder about the measurement of quality issues.  Some years ago we would have had four visits to the dentist to get two crowns and would have spent several weeks wearing those awful temporary crowns.  Although the crowns may not have increased in quality the service has.  End Sidebar.

The dentist or the CAD/CAM provider has trained the assistant to do some of the work.  The technology associated with work changes.  OJT is all of your life.  Accounting, dentistry, and welding will all change.  Some might even go away but if you continue to accumulate human capital you will find opportunities.  As the WSJ says in another editorial:

Lowering the cost of goods and services through automation allows capital—financial and human—to attack even harder problems. Wake me up when we run out of problems.

All manner of folks are solving problems.  Our dentist was able to save us three trips and a few weeks of discomfort.  Now the dental assistant is part of that.  Don’t neglect formal education because these things will eventually become part of it but we need to push OJT even more.

How Can This Be Right?

Kevin Williamson is his usual perceptive self at NRO when he says:

The Republican apparatus may be cowardly, craven, and more than a little corrupt, but it is not the main obstacle toward achieving meaningful conservative reform. The main obstacle toward achieving meaningful conservative reform is the same as the main obstacle to the success of the Libertarian party: Americans do not want what they are selling. The tasks of conservatives is to explain to Americans why they should. It will not be easy.

What is amazing is that he is right.  It has not been easy and it seems to get harder.  Kevin covers the the positive side of what Deidre Mccloskey calls the Great Enrichment.  Although he knows it well, in this article he does not bother to take the time to cover the failure of the alternative that we see so starkly in Venezuela.  Here is the December 2016 Venezuela travel warning from the US Government.  Here are some stories on the economic disaster in Venezuela.  Remember that Venezuela has the world’s largest oil reserves.

So we know that capitalism works and socialism doesn’t.  Why were the 2016 presidential nominees from both parties so repulsed by capitalism?  Why is capitalistic success a hard sell and the hope that socialism won’t fail for the umpteenth consecutive time an easy sell?  We try to stick at it but it is a challenge to point out the obvious over and over again.  We give Kevin credit for creating new and pointed ways to make the obvious obvious.

Corbyn Tries Rhyming

UK Labour leader Jeremy Corbyn is looking for ideas.  It looks like Jeremy is going for ideas that have been well tested.  The WSJ reports:

In a throwback to the politics of the early 1980s in Britain, the manifesto listed commitments to nationalize railways and water companies and to increase taxes on corporations and the top 5% of earners.

The 128-page document also promised to raise the minimum wage and to create a National Investment Bank with regional branches to finance small-business lending, policies the party hopes will strike a chord with voters wearied by years of sluggish earnings growth and a long squeeze on public spending.

So Jeremy plans to nationalize, tax, and try and pick winners.  It is about as full blown socialism as it gets.  We know what will happen.  Socialism has destroyed Venezuela.  Do we really need a link for Venezuela?  OK but you really need to read more.  Remember that it has the largest oil reserves in the world.  Maggie saved the UK from socialism a few decades ago:

On moving into 10 Downing Street, Thatcher introduced a series of political and economic initiatives intended to reverse high unemployment and Britain’s struggles in the wake of the Winter of Discontent and an ongoing recession.[nb 1] Her political philosophy and economic policies emphasised deregulation (particularly of the financial sector), flexible labour markets, the privatisation of state-owned companies, and reducing the power and influence of trade unions. Thatcher’s popularity during her first years in office waned amid recession and high unemployment, until victory in the 1982 Falklands War and the recovering economy brought a resurgence of support, resulting in her decisive re-election in 1983.

There seems to be disagreement about who said, “History doesn’t repeat itself but it sometimes rhymes.”  Everyone would want credit for such an insight.  We see the socialist, fascists, Communists, and others trying slightly different versions.  It doesn’t work and it won’t.

The persistence of socialism given its record of failure is amazing.  It is easier to understand the hostility towards capitalism despite its success.  Envy is a powerful force in the world.

What Is A Business?

Kevin Williamson at NRO discusses The Donald’s performance in filling personnel openings in the federal government and find it wanting.  We agree with that but then he goes on to say:

Businesses, nonprofit corporations, and religious congregations are all worthwhile forms of social organization, but they are not interchangeable. There is something poetic about the fact that our contemporary populist conservatives, avowed foes of progressives and progressivism, are in thrall to one of the most ancient and enduring of all progressive errors: the belief that the government (and society) can be run the way a business is run, as though a nation were only “one big factory,” as the socialists used to put it. One of the problems with running the government like a business is that the government is not a business.

He also throws in a comment about Hoover finding out how different government is from business.  We think that Kevin has confused theories of business management with business.  As Wikipedia notes in the first paragraph on Fredrick Taylor, scientific management was in vogue during the progressive era:

Frederick Winslow Taylor (March 20, 1856 – March 21, 1915) was an American mechanical engineer who sought to improve industrial efficiency.[2] He was one of the first management consultants.[3] Taylor was one of the intellectual leaders of the Efficiency Movement and his ideas, broadly conceived, were highly influential in the Progressive Era (1890s-1920s).

Scientific management’s influence waxed in the Progressive Era but has waned since.  Yet lots of folks think of business as scientific management.

Sidebar One: We recently saw the worst Dr. Who episode, Oxygen, in history.  It is quite an accomplishment because the show started in 1963 although there were some years without the series.  We should have checked the credits to see if Jeremy Corbyn was listed as one of the writers.  Folks, especially TV and movie writers, misunderstand business and capitalism.  End Sidebar One.

What is it that makes a business a business and what makes it different from other social organizations?  Secondly, why do folks want the government to be run more like a business?  Obviously, a business is the only one on Kevin’s list with a purpose, in fact, the primary purpose, to make a profit.  Yet businesses make profits in very different ways.  Take our two local successful supermarket chains.  One has service, service, service.  If a pregnant woman wants an chimichanga then you know where to go.  The other has efficiency.  Prices are low and, if it comes frozen or in a can or a bottle then they have it.  Businesses focus on making a profit but they have a culture that helps them focus on how they do it.  Now businesses are not 100 percent successful at creating such a culture but they have periodic reporting that helps evaluate the entity.

Sidebar Two: Yes there are problems with a focus on short-term accounting reports.  Such emphasis can lead to unethical behavior.  We have not yet had time to perfect accounting in our retirement but we still think that periodic reporting helps decision making.  End Sidebar Two.

We see the difference between a business and most government units is that the business is closer in having all employees pulling together towards a common goal than the government units.  Our accounting department in the 1990s was highly successful because all the faculty members agreed on a purpose of focusing our placement efforts on public accounting firms that were not what is now the Big Four.  It set us up well for the 150 hour environment in the next decade too.

A less successful model is the change in focus from teaching to learning at the university.  Not all instructors have adopted the learning model but a substantial percentage have and the percentage is increasing.  Moving from teaching to learning is fraught with challenges but it reflects a business mentality.  We shall see if it really works.

We think that when folks call for the government to be run more like a business that they recognize the different in focus and want government to focus on what it is supposed to do.  There are at least two problems.  First, government is trying to do many things.  As just one example, the FDA tries to protect people from unsafe drugs and support the creation of useful drugs.  The trade-offs are unclear.  Second, leadership is more of a challenge in government because of the political process.  There is real disagreement about what the government should do.

Kevin needs to realize that business has left scientific management behind but the progressives have not.  The government should try to be more like a business but the first order of business is to determine the organization’s mission.  Conservatives and progressives disagree on the government’s mission.  That disagreement puts government employees in a difficult position.  We think moving toward a business model is a good idea but we need to recognize what the value of the business model is.  It starts with understanding the purpose of the organization.