Got the Blue Book Blues

They’re 12 pages (6 sheets) of lined 8.5″ by 11″ paper. If you asked me what I thought they cost I probably would have said 10 cents each. I use somewhere between 300 and 500 of these for each examination (big one at least) I given in my larger classes. In other words, I am spending well over $300 just for the paper to write the exams on.

Never was this information given to me. Never was there any indication that I am using up lots of valuable resources. And certainly I receive no benefit from trying to figure out a way to reduce these costs. If this is right, then our department is easily spending something near $5,000 per year to pay for blue books. Surely there is a way to reduce our costs – I may decide to hand out colored paper and have a stapler at each exam – after all, 500 sheets of purple paper costs $8.49 – I’d need about 4 reams for each test, for a total cost of less than $35.00. I suppose I could also save the department money by offering multiple guess tests, or offering fewer exams – after all, I have been criticized elsewhere with the claim, “if economists ran the U of R, all the paths would be dirt and we’d teach the classes in tents.”

I’ll stop there. It’s the weekend.

In any case, it is becoming increasingly difficult to find places to sled in Monroe County anymore. This is rather startling since the county is brimming with terrific public parks and its geology is perfect for the kinds of sledding that folks love to do. Almost every country park here has wide and vast slopes that just scream out for kids to spend entire days there sledding and tubing and messing around.

Until now of course. We were hiking at Mendon last week, and at Ellison park a few weeks ago and also walking around some of the local high schools that also have great sledding hills on them, and posted on hills in every location for all to see is, “Warning: Absolutely No Sledding is Permitted Here.” And the notice is from Monroe County Parks. I don’t have pictures but I’ll take my camera the next time I go out there and post the images for your enjoyment.

That’s simply incredible, it really is. Of all of the things Monroe County is spending its time on, telling us not to sled on spectacularly great hills is, needless to say, totally absurd. It’s at this point that I’d normally launch into a tirade on the ridiculous nanny-state paternalists all around us and perhaps bring up points like this. Not today. Today, I want to go on a tirade on you. That’s right. You. Not the government.

You are the reason for this suckage. Now, I imagine I can find a way to tie this all into government somehow, but that is not the point. Why are you the reason for this suckage? Because too many people can’t handle individual responsibility. Too many people cannot handle their own freedom. And you suck because of that.

Here we are, after two feet of fresh snow has blanketed the pastoral landscape of western, NY. Snow boots on, hats and gloves on snug, a clean hill of pure joy laid out before us for hundreds of yards in all directions, sled underfoot – and the Monroe County sheriff comes by to relocate us. And it’s all because you suck. I am sure someone in the past few years bumped their head while sledding. I am sure that some people crashed into one another while sledding at some point in the past few years. After all, on the best snow days dozens and dozens of families get the same excited feeling we do and head for the same hills. Indeed, part of the ritual of sledding that is important is learning how to respect the actions of others – not wallowing on the ground at the bottom, dragging your sled up along the side of the path, not aiming for people with your sled, and having a good laugh when you wipe out. And I am sure someone had the brilliant idea of suing the county or suing another sledder for some accident that may have occurred in the past.

So Monroe County (in my charitable interpretation) is not necessarily telling me what’s good for me, and telling me that I cannot make decisions about risk, thrill and safety for myself and my children – what they are telling me is that few of my neighbors are capable of making those decisions without imposing massive costs on the county and indeed me. This is perhaps a liability issue.

And you know what? That sucks. If I were running Monroe County, I could see why I too might want to make the same rules (they do allow sledding now only in a few designated areas), but where is real leadership when we need it? Where are citizens of influence and policymakers leading the charge to remind people that individual responsibility is important, is to be cherished, and is a valued part of living in a decent society? Where are the policymakers to put an end to the litigousness that perhaps has led to this outcome? Why can’t Monroe County make it clear (pass a law?) that “buyer beware” when people are out on a sledding hill on public property? Are people really too stupid to handle that?

So sure, we have this asinine park paternalism to deal with, but I offer up the very likely possibility that the park planners are not the asinine ones – we all are, and that sucks. And it sucks living among folks who are like that.

OK, rant over, back to our regularly scheduled programming.

No one uses sink #1 despite it working fine. It sits just below the paper towel dispenser and the trash can sits very close to it – you are crammed in a corner if you want to use it. Very few people use sinks #3 or #4. Why? The soap dispenser has not worked since the day I started. It is a simple machine, and I am sure would cost a few dollars to replace outright, or a few minutes to repair. I actually fiddled around with it once last year and managed to get it to work – only to see it stop working a week later.

The printer, computer, heater, mini-fridge, coffee-maker, clock and fan in my office all work perfectly.

When a company called Ausra filed plans for a big solar power plant in California, it was deluged with demands from a union group that it study the effect on creatures like the short-nosed kangaroo rat and the ferruginous hawk.

By contrast, when a competitor, BrightSource Energy, filed plans for an even bigger solar plant that would affect the imperiled desert tortoise, the same union group, California Unions for Reliable Energy, raised no complaint. Instead, it urged regulators to approve the project as quickly as possible.

One big difference between the projects? Ausra had rejected demands that it use only union workers to build its solar farm, while BrightSource pledged to hire labor-friendly contractors.

Insert your preferred snarky comment here.

I would not claim that private, voluntary, mutual aid would be able to provide relief to 100% of people in need today, but I would strongly argue it would provide a safety net nearly as wide as today’s public one, and with far better incentives for good behavior by the recipients and far lesser chance for them to be abused and taken advantage of by the providers (imagine the political backlash of closing down all of the government welfare offices). One thing mutual aid societies generally did was require the aid to be formally requested from the organization, rather than handed out as a rule-based entitlement. While some people view that as humiliating, I view it as humanizing. I’d sure support that reform of our current entitlement programs – even for the rich. Imagine a rich homeowner having to publicly declare to his neighbors why he “needs” the mortgage interest deducation.

We’ll save for another day an analysis of  the arguments within the school districts about the proposed cuts – needless to say they will make your hair stand on end. I’d simply like to point out the following – the budget situation the local school districts find themselves in is exactly the budget situation that blew up  Wall Street firms during the financial crisis. However in the case of the schools I am talking about cash flows and in the case of Wall Street I’d need to be talking about stock measures.

Consider a simple investment opportunity. You are interested in buying an asset that costs $100. If you use $100 of your own money, you are said to be “unleveraged.” In this case, if the value of the asset increases by, say, 10%, then your $100 investment would grow to $110, leaving you with a 10% return. If the asset decreases in value by 10%, then you lose $10, or 10% of your investment.

Consider how your personal situation would change  if instead of buying the asset with your own money you used other people’s money. In this case, assume that you finance 40% of the asset purchase by borrowing money from your rich uncle. In this case, you use $60 of your own funds and $40 of your uncle’s funds to buy the $100 asset. Next year, your only obligation to your uncle is to return the $40. Now what happens to your financial position as the value of the asset changes? If the price of the asset rises 10% to $110, you have made $10. Remember now that you only had $60 of your own money, so rather than a 10% return on your investment, you now have earned 16.7% – a very fine return indeed. However, if the asset price falls to $90, you still need to pay your uncle back his entire $40. This leaves you with a net of $50 on your $60 investment. What earlier, when you used your own money, was a 10% loss, now has grown to a 16.7% loss. These potential gains and losses are magnified the larger the share of the purchase you fund with your uncle’s money. In the above example, the leverage ratio is actually rather small – 1.5 to 1 (the share of non-borrowed funds to borrowed funds).

Some Wall Street firms were doing this to an extraordinary degree – using leverage ratios as high as 30 to 1 and even as high as 50 to 1 (it wasn’t only them, some Federal agencies were doing the same thing). In a sense, this is exactly what the local school districts in New York have been doing. It used to be the case that for both fiscal reasons and management reasons local public schools were funded almost solely with property taxes from people within the community. Over time, this has eroded and now 53% of the spending in New York’s schools comes from their “rich uncles” while only 47% of the spending comes from the people in the local school district. Just so you remember, New York State spends more money per student, $17,173, than any other state in the nation, spending a total of $54.4 billion.

Consider what this does to the incentives of schools to spend money when times are flush, and consider the pressure it puts on schools when times are not. In good times, when tax revenues are robust and states are more “generous” school spending can escalate far beyond what the local districts would be able to do on their own. Indeed, this is the story of the last decade – with little regard for long-term stability. However, the piper now needs to be paid. Suppose the state faces a funding crisis, and needs to cut school spending by 10%, this would amount to a cut of $2.9 billion. If public schools wish to maintain their current levels of spending, then their taxes will have to be increased at far greater rates than they would have if there were no state funding. Or, if localities are unable to increase tax revenues (I live in the highest property tax county in the country already) then they are going to face spending and programming cuts that they would not have been susceptible to had they been prudently spending and raising local revenues in the first place.

I find it more than mildly ironic that many public school supporters correctly condemn Wall Street for gambling with other people’s money, leaving the rest of the taxpayers holding the bag when things blow up, and are completely blind to the fact that they are doing exactly the same thing. Only difference of course is that when Wall Street blew up, stockholders were totally wiped out, some investors were wiped out and tens of thousands of people lost their job – even as the taxpayers got hosed to protect the favored creditors of these firms.