Showing posts with label government. Show all posts
Showing posts with label government. Show all posts

Thursday, February 2, 2012

CERPP Conference Remarks: 2012



21st Century Knowledge and Skills:
The New High School Curriculum and the Future of Assessment
Perspectives: Media, Politics, and the
Responsibility of Higher Education


Roderick G. W. Chu
Chancellor Emeritus, Ohio Board of Regents


January 13, 2012


I delivered the following presentation and remarks in Los Angeles at the USC CERPP 2012 Conference.


1. The Case for Change from Within

As Chancellor of the Ohio Board of Regents (the state coordinating board for Ohio’s public and private colleges and universities), I lived at the interface among the worlds of K-12, higher education, and politics, so I’m delighted to reiterate some of what I learned from our conference speakers and participants, to offer a few observations of my own, and to hear those my fellow panelist, Scott Jaschik, representing the Fourth Estate of the press and media.
Before getting into the topic, however, I need to ask: Why change? Harry Brighouse kicked off this conference with his though-provoking challenge regarding the purpose of education. Yet mine is a serious question, because in many ways, the school curriculum fundamentally hasn’t changed for about 100 years.
Indeed, our agrarian school calendar hasn’t changed for over 200 years, despite the fact that less than 2% of our population – and virtually no kids – work on farms and many students lose 70% of what they’ve learned in the school year during their summer breaks.
Despite the local control authority of over 10,000 school districts, our industrial one-size-fits-all model of education has persisted, in the face of students who learn different subjects better at different times and in different ways – the age-graded instead of ability-graded system that Morgan Polikoff mentioned yesterday – and of cognitive research that has found that our model successfully educates mainly the 25% of students who are abstract learners but not the 75% who are contextual learners.
Why do we continue to educate kids for our past, instead of for their future?
NY Times columnist Thomas Friedman wrote so persuasively on the impact of globalization and the Internet in The World is Flat – now almost 7 years ago. He brought popular attention to the fundamental sea changes that have occurred in the past decade.
At this conference 2 years ago, I noted forces driving change because of state policies. Since then, the impact of the Great Recession has settled in.
Per capita state funding in constant dollars for public colleges and universities has shrunk to its lowest point in 25 years and hefty increases in tuition has barely kept resources level, in the face of the highest enrollments in history. [SHEEO SHEF 2010]
Yet things continue not to change much, driving higher education further down the death spiral I described then of inadequate higher education funding resulting in graduates without the requisite capabilities to produce growth, leading to economic and social decline, producing further shortages in funding for education.
As one who has been tweeting the pearls of wisdom I’ve picked up during this conference, I am hopeful that a tipping point of public understanding on the critical need for dramatically improved educational outcomes may come about through the social media.
For example: this excerpt from the viral YouTube video, Shift Happens.
It has become clear to most Americans that the objective of making students college-ready is critically important economically – since an educated populace is the key to winning in a world of global competition, and a knowledge and creative economy – and continues to be the main defender of a free and democratic society. But it’s also becoming clear that we need to re-ignite the American Dream that Jaime Aquino spoke of so passionately last night – of enabling future generations to do better than the current one, socio-economically.
On the political scene, I see a continuing building of the Perfect Storm. Because of a muddling economy in most states and communities, there will be a continued inability and political unwillingness to invest what’s needed to dramatically improve educational attainment with 100-old strategies, techniques, and attitudes. Further, increased public demand will pressure politicians to transfer the heat they’re feeling, resulting in their demanding better performance and greater accountability for results, while at the same time, they continue not to invest more in the education of our children and adults.
The educational establishment will continue to do what it’s proven itself best at doing: resisting change. Millions of the K-12 teachers and college and university professors who will be retiring in the next several years will deny there’s a need to change, hoping to ride out this perfect storm until they retire.
Tristian Stobie’s graph yesterday Accelerating Change Demands Different Skills reminded me of Al Gore’s graphs in An Inconvenient Truth. Yet educators seem to be very much like those who deny global warming and their need to do something to contribute to a solution. Where is our Union of Concerned Educators, crying for action by our own colleagues to rescue our future?
So what hope is there for change? Will the Academy recognize higher education’s responsibility for school reform?

(continued ➛)

2. Higher Education's Responsibility for School Reform

Despite my gloomy introduction, I’ve always been tremendously optimistic about the ability of our higher education institutions to change the future.

After all, we in higher education have the privilege of working with the single biggest concentration of intelligence our country has!

If we adopt 7 Habits of Highly Effective People Stephen Covey’s habit of focusing on our circle of influence (what we can do), rather than our circle of concern (what we need to rely on others to do), we can reignite the American Dream for vast numbers of Americans!

Of course, changes to the Ivory Tower will be required. Higher education needs to take some responsibility to instigate and facilitate change. The Academy needs to become the change it wants to see in others.

For the first time in 900 years, the Academy no longer has oligopolistic control over the transmission of knowledge, as demonstrated by the Khan Academy and Sal Khan’s thousands of video instruction clips on YouTube, and MIT’s Open Courseware initiative.

For the Academy to remain relevant, it must become more than transmitters of knowledge. It must generate graduates who are critical thinkers and synthesizers, who can and do – as Trevor Packer stated – employ their thinking skills to translate knowledge into action.

But even if the Academy is willing to accept its responsibility as a collaborative partner in K12 curriculum reform, the challenge will be enormous.

We need to bridge the K-12/higher education divide.

  • The K-12 world has mainly been about authority and control, not results.
  • Our education colleges are now seen as our institutions’ cash cows rather than creators of colleague educators.
  • Higher education faculty disdain what’s being taught in their disciplines in K-12 schools, yet do little to change this sad state of affairs.

An example: Prof. James Loewen’s revealing picture of the sad inadequacy of K12 history texts and instruction in his book Lies My Teacher Told Me. Yet, as Trevor Packer noted, until faculty are recognized for helping their K12 colleagues, most won’t invest their time doing so.

In general, most colleges and universities don’t work effectively with elementary and secondary schools, despite their inability to successfully remediate the academic preparation of entering students in most disciplines, let alone the needed non-cognitive skills we don’t try to remediate.



Perhaps one reason for this failure of engagement is that we have competing objectives:

  • Some seek authority and control;
  • Others focus on job protection and salary increases;
  • Most faculty are concerned with professional regard,
  • research and publication, and
  • creating the next generation of professors.

Will the enlightened self-interest that David Conley mentioned – or public or political suasion – convince K12 and higher education that we must work together and agree on the primacy of one objective: Educational Equity, Excellence, and Success for All?

As Jaime Acquino challenged last night, America’s colleges and universities educate our nation's educators and we are somewhat culpable for their shortcomings. We also educate many of our local, state, and federal policy makers, and, I shudder to think, we are somewhat responsible for their shortcomings as well.

Higher education has claimed to be about developing critical thinking and synthesis abilities in our students. As we’ve heard throughout this conference, we need to be about more – about nurturing dispositions and the ability to act effectively on the knowledge we have imparted.

As Allison Jones and Christyan Mitchell noted, we need to define what students need to be life-ready and help them acquire these skills. We also need to help politicians, as Doug Christiansen mentioned, by declaring the achievement level required – cut scores on assessments – to do college-level work.

If “it takes a village,” we need to get out of our ivory towers and work with others in our villages to define and develop the needed knowledge and skills, attitudes and beliefs, motivation and behavior for many, many more to succeed.

We need to get beyond eduspeak and express cognitive and non-cognitive standards in terms students and their families can understand. If we want them to take responsibility for their own education, standards need to pass the “refrigerator test”: be in language and succinct enough to put up on the refrigerator door, so students and their families can work on and monitor their attainment progress.

As a former businessman, I was heartened by Carolyn Adams’ observation: Educators need to work with the employers of our villages. For when we do, we’ll find their standards for career-ready employees are the same, academically, as those for college entry. Actually, as Patrick Killonen just reported, recognized workforce needs are greater than those for college entry, since workers must have non-cognitive skills and dispositions not required to enter college:

  • Interpersonal skills such as teamwork – which, as I noted yesterday, schools call “cheating” – and
  • Intrapersonal characteristics, like integrity – in an era in which 70% of high school graduates admit to have cheated in school.

Getting American education out of our death spiral will take far greater wake-up calls than a former chancellor can muster. Perhaps the cries of public opinion and a greater exposure to the new realities from respected members of the media can help.

With that hope, I’ll turn the session over to Scott. Thank you.

Thursday, January 14, 2010

CERPP Conference Remarks: 2010


What Matters Now: College Access and Success 
in the Age of Obama

In Sync: Linking State Higher Education Imperatives 
to the New Federal Agenda

Roderick G. W. Chu
Chancellor Emeritus, Ohio Board of Regents

January 14, 2010


I delivered the following presentation and remarks in Los Angeles at the USC CERPP Conference on College Access and Success.


1. A Big, Hairy, Audacious Goal

Faced with the greatest recession since the Great Depression, President Obama has offered not just an "audacious goal," as others have referred to it earlier in this conference, but a BHAG – a Big, Hairy, Audacious Goal

– that "by 2020, America will once again have the highest proportion of college graduates in the world." We all welcome the President's recognition of importance of higher education in meeting the challenges of a 21st century world.

The State Higher Education Executive Officers - SHEEOs - have been carrying this message for years and provided important input to President-elect Obama's transition team as they formulated their agenda, and are delighted that they listened.

I'm honored that I was elected by my fellow coordinating and governing state system heads to chair SHEEO during one of my years as Ohio's Chancellor and am especially proud of the outstanding work that SHEEO's president, Paul Lingenfelter, has done in leading the organization's work –

so proud that I'm happy to borrow some of his slides to help inform my remarks today.

If you'd like more information on state higher education policy thoughts, please go to the SHEEO website where you'll find some of Paul's and others' presentations and white papers.

(continued ➛)

2. The Sad Reality

Although higher education is the only investment that government makes that actually pays back (with an annual return of 15-20% on investment), our governments – especially state governments, for that's where bulk of operating assistance to colleges and universities comes from – haven't been making much of those investments.


During the past 25 years, state funding per student in constant dollars – the blue bars on this chart – has risen and fallen, pretty much in line with state economic conditions, but over time has basically been flat and slightly declining. Total state expenditures have increased in constant dollars during this time, since enrollments have risen – the purple line.

Per student tuitions have doubled, though, after adjusting for inflation – the top gray-green bars.

Our elected officials, good at "heat transfer," have pointed their fingers at America's campuses, blamed them for being profligate, and demanded they increase their productivity.

Institutions have responded by saying our elected policy makers simply need to understand the importance of higher education and provide adequate funding.

These arguments have been going back and forth for at least 40 years, but things haven't changed: Funding continues to be inadequate and campuses continue to do what they've always done.

However, the fact is that the U.S. does spend twice what the rest of the developed world does on educating each college student … and our higher education results haven't changed, while the rest of the world has been catching up and surpassing our college attainment rates.


(continued ➛)

3. The Problem

Why? We've all grown up very proud of America's colleges and universities – for generations, regarded the best in the world. Almost all of us here are the proud products of that system – one in


which my friend, Frank Rhodes, now president emeritus of Cornell University, once quipped, provides the "finest hand-crafted education that money can buy," carrying on a 900-year-old tradition of university education.


Looking back, many politicians admit that they should have invested more in higher education when the economy was good and they had the opportunity, but the economy is now bad and they don't have the money.

But the blame doesn't fall solely on shortsighted politicians. The hard reality is that as other sectors have reengineered and reinvented their operations (wringing out costs while still maintaining and improving the quality of their products and services), the education sector hasn't fundamentally changed its teaching model of students learning at the foot of the master.

Colleges and universities have been among the most staunchly change-resistant institutions on earth. Change and innovation are simply not part of the Academy's DNA.


Or as my colleague Steve Portch from the University of Georgia has observed: "We have found it easier to change the course of history … than to change a history course."

I fear another cycle of inaction.

States, faced with a continued jobless recovery won't be providing needed funding for higher education. Worse, next year they'll have to make up for the lack of one-shot federal stimulus money.

Higher education, buoyed by finally having a president "who gets it," will continue to hold steadfast, hoping for more funding.

As a result, the recovery will be slow, not providing enough revenues to governments to make needed investments to better educate more Americans.


This vicious cycle will continue …
but in the 21st century knowledge and innovation economy …
and the harshly polarized politics we see today …
the undereducated will not have the needed critical thinking ability to
stem social as well as economic decline …
and the result will degrade from vicious cycle to death spiral.


I know this is as "downer" of a message – and I like to think of myself as an optimist – but this death spiral scenario raises thoughts of one of the Academy's own: Albert Einstein. In my decades of working with faculty, I have found that academicians love to sit and "admire" a problem, wallowing in a certain learned helplessness.

(continued ➛)

4. A Way Out



So what's the alternative?
 
As a product of the activist campuses of the late 1960s, I say that higher education can take action and answer the call for increased productivity!

This isn't a cry for professors to teach more courses or to blindly exploit technology.

There are other routes to increasing productivity. But we need to get out of our centuries-old mental models of education.

Here are some possibilities – off-ramps from the death spiral.


The first opportunity: Change from a sole focus on access, to embrace completion.

The basic economics of higher education is that costs of higher education vary with enrollment, but payoffs from higher education vary not with credit hours earned, but with completion of academic objectives – typically degrees or certificates.

So colleges and universities can change by embracing the importance of completion, instead of merely access.

A new objective should be to help ensure that the students our campuses admit complete their educational objectives. Let's get out of the old role of being gatekeepers – ensuring "only the very best make it through," and recognize that everyone on campus has an opportunity and responsibility to help students get out, not just in.

The challenge, though, is not becoming K-12-like, cheapening standards or cut scores in order to increase completion rates, for that will do nothing to help the economy.


A second opportunity: Change from an academic model based on Carnegie units, to the holistic development and mastery of needed knowledge, skills, and dispositions.

Tackle the question: "What education is required for our graduates to participate successfully in the 21st century economy and contribute to a free and democratic society?"

We need to change from teaching only the things I'm good at as an educator or institution, to the effective education of the whole person; from a focus on the teaching process, to a commitment to the learning outcome.

The productivity of the participants in and graduates of America's colleges and universities is measured by their contributions to the economy and society – and these contributions are a product of their competencies.

How effectively are our campuses adding value to our students: identifying and helping develop not only what their graduates know and can do, but also what they actually will do.


A third opportunity: Shifting from once-in-a-lifetime education to continuous education – what Jim Duderstadt, President Emeritus of the University of Michigan has called moving from "just-in-case" education (where we open up students' heads and pour all we can into them by the time they're 20-something, "just in case" they need it sometime in the future), to just-in-time, and just-for-you education.

Help define and then provide what it takes to be an effectively educated person so graduates can begin working and then come back for additional education, as they need it.

With the continuingly rapid increase in knowledge, our graduates will need to continue to learn more throughout their lives, not only to get a new job, but indeed, even to keep their current jobs. We will need to invent new ways they can get this general and specialized education where and when they need it.


To achieve some of these opportunities, there will be a fundamental need: To define new concepts of compensation.

Our 900-year-old model of higher education is one in which we measure learning by credit hours accumulated at the foot of the master.

To tackle the question of developing and certifying competencies, we must change old mental and business models of seat time paid for to provide remuneration of educators.

We need to address the challenge set down over a decade ago by the then-president of the National Education Association, Bob Chase, who called for a new unionism in education – to move away from his union's singular focus on job protection and salary increases – a focus shared by their brothers and sisters in the United Autoworkers Union that had nearly killed the U.S. auto industry.

(continued ➛)

5. Transformational Leadership

These may sound like impossible changes for the Academy undertake.

Yet there are leaders committing to transforming higher education:


Leaders like Michael Crow, President of Arizona State University, who has led his university colleagues in developing The New American University.

And lest you think that adopting such a shamefully "vocational" view of higher education is something that only public campuses might consider, let me refer you to Liz Coleman, President of Bennington College, who has called for a Reinvention of Liberal Arts Education.


In her 18-minute TED talk, she throws down a dramatic indictment of the failure of liberal arts education, and makes a compelling case for the change her college is undertaking. (Who here has seen that talk? For the rest of you, if there is one thing I hope you takeaway from my presentation, it is to go to TED.com, search for Liz Coleman, and listen to her talk!)

While I'm convinced of the need to change and am staggered by the challenges ahead, I'm buoyed by President Coleman's closing words in her talk.

I share her hope that America's educators – the single biggest concentration of intelligence this country has – will change their historical practices and start creating the future we all need.

I look forward to working with you to be part of that change. Thank you.

(return to start of my remarks ➛)

Saturday, June 27, 2009

My $863 Refrigerator Repair


Four weeks ago, I found that the ice dispenser of my refrigerator had run out of ice. Here's my long story, but you can cut to the end for my conclusions from this experience.

My ice maker had stopped making ice once last year, so I went through my records and recalled the answer the helpful Kitchen Aid customer service people gave me. I tried the old solution to no avail - still no ice. Then I realized that though the refrigerator side was okay, my freezer had warmed up from its normal -5° to +30°!

I called the Kitchen Aid 800 number and was quickly told I needed a service call. They said Capital City Appliance Service in Columbus was my locally authorized service provider. I called them and they arranged a service visit for the next day. My service guy, Mike, told me I had a slow leak somewhere in the system. He recharged the freon, saying that would get my freezer cooling normally again, and said he'd need to return with a dye injector which would show where in the hundreds of feet of cooling system piping the leak was. He said that since my refrigerator (a 36" side-by-side built-in) was 11 years old, parts were still covered by Kitchen Aid's 12-year warranty, but I'd have to pay for labor (confirming what Kitchen Aid customer service told me over the phone). I paid $177 for that first visit for his hour's time plus the freon.

The next day, I got a call from Mike's office. A woman there told me it would cost me $800 for my refrigerator repair. I asked how much time it would take and she said it would be about 3 hours. Well, since parts were covered, I asked if that meant I would be paying almost $200 per hour for labor (given the charge for freon). After getting inadequate explanations to my questions about the seemingly unreasonable charge, I asked her to schedule the next service, but told her that I'd shop for a new refrigerator to consider replacing rather than repairing it and would call her back the next day.

I went to my local Home Depot and Lowe's hardware stores and saw regular refrigerators that might fit in my space, but no built-ins. (I was also surprised in this economy how hard it was to find anyone to ask for help on such a high-priced item!) I realized that with regular refrigerators, I would't be able to have custom cabinet panels on the doors, so it would't look good in my kitchen. I then went to the Great Indoors store and there found built-ins and sales help. Instead of the $1500-2500 for regular side-by-side refrigerators, a new Kitchen Aid built-in would cost over $5000 (confirming my recollection of what I paid for it when I bought it for my new house 11 years ago). In the context of $5000, an $800 repair didn't seem too bad.

I called Capital City back and after getting the same woman who couldn't explain why I was paying so much for labor, I asked to speak with a service manager. He explained they were required to charge according to a schedule of national standard service charges for types of repair. Further, I'd have to pay for a 2nd entire recharge of freon since federal regulations didn't permit them to reuse the freon they just put into my refrigerator until it had been cleaned. Before calling Capital City back, I had checked Angie's List and called Kitchen Aid again to see what alternatives I had, but found that although Capital City had many customers who were unhappy with their service, the alternative service company's ratings were even worse. So, I was stuck.

The service manager told me he advises customers to consider repair vs. replacement cost and expected refrigerator life. If the repair is more than 1/2 the replacement cost, he suggests buying a new one. He also told me that the expected life of a regular refrigerator is 10-12 years, but that of a built-in is 20 years, so my 11-year old unit still had plenty of life left. He said the work had a 90 day warranty and the parts warranty would run out with the 12-year warranty of my unit. When I expressed concern that inadequate repair of a slow leak may not show up until after the 90 day warranty had expired, he assured me that they would consider such instances on a case-by-case basis. I thanked him for his patience and explanations and told him to go ahead with the repair.

From there, things went smoothly. Mike came back to put in the dye injector (with a service charge of $77.55), and 3 weeks later, after the parts came in and my schedule permitted, found the expected slow leak. He replaced the parts, taking the predicted 3 hours. Mike had originally told me to empty my freezer, since everything would thaw during the repair. So in the intervening weeks, I've been trying to eat up my frozen foods (they had survived the few days of warming from -5° to +30°). I hadn't thought that all I needed to do was to put the frozen food into cooler chests during the repair, but I realized this once Mike came for the final repair.

So that's the story. My freezer's running fine again (so far) - I have ice! Mike confirmed that the leak wasn't anything I had caused; it was in a sealed part of the freezer. I was charged $785 for the final repair, less $122.60 I paid for the initial visit, so my total cost was $862.55 for 5 hours of labor and freon.

CONCLUSIONS

Most significantly, I've learned that I really don't need to keep much in my freezer. Fortunately, my side-by-size refrigerator doesn't hold all that much as it is, and one freezer bin is filled with coffee beans (since I've stopped drinking coffee, drinking tea instead). So I'll continue to eat up my frozen food and be more aware of what I put in there (which should be mainly for last-minute entertaining). I should also invite more friends over for coffee!

I'm concerned that the federal government and industry have created a situation where customers are stuck with unreasonable charges. I can understand regulators wanting to ensure that freon is properly recycled for reuse. But why can't we have our own freon put back into our own refrigerators? Also, while diagnostic-based charges may help prevent unscrupulous overcharging for repairs, what assurance do customers have against unreasonable "standard" charges? These may be examples of unintended consequences of government policies (far preferable to being examples of government-industry collusion to bilk customers); I'll have more to say about unintended consequences in a future blog.

Still, I'm happy that here in Columbus, I continue to be able to find service people who can help promptly and courteously (and, hopefully, competently).

Saturday, April 18, 2009

Why Study History?

In this time of concern for getting a good job after graduation, can there be any less useful college major than history? (Alas, "this time" has been around for generations.) My exposure to history majors at Cornell profoundly disavowed me of this opinion decades ago.

One of my good friends in my Cornell MBA program, Bill, had been a history major at Cornell College ("the other Cornell," as he was proud to say.) We had very good times together in our two years in Ithaca and I wasn't surprised that Bill did well after graduation, ending up working for a Chicago bank. He moved into managing bonds, and has been responsible for investing bond funds worth billions of dollars. "What did history have to do with the bond market?" I wondered. At reunions, I discussed this question with Bill and learned that in studying history, Bill had developed the ability and skill of reading voraciously, analyzing masses of data, and projecting likely outcomes, given past experiences. Bill's success in business demonstrates the wisdom of the George Santayana aphorism "Those who cannot remember the past are condemned to repeat it."

Indeed, in this troubling time of dealing with the excesses of the sub-prime mortgage debacle, some of us ask how this is any different from the past debacles of derivatives, savings and loan deregulation, and junk bonds. Perhaps those who studied history concluded they could repeat the financial killings some had made in those markets by just changing the details of the type of investment, hoping that government regulators hadn't studied enough history to see parallels and the inevitable consequences.

Another revelation on what the study of history really is about came during the inauguration activities for Cornell University's then-new president, Hunter Rawlings, who is a classicist. One of the inaugural sessions I attended was entitled "What is a Classicist?" In that session classicists were described as scholars specializing in ancient Greek and Roman history. But contrary to my impression that historians merely memorized dates and facts about past eras, I learned that the study of history is about discovering what actually happened in the past. The session painted a picture for me of historians being Sherlock Holmes-type characters, piecing together disparate hints and clues to form hypotheses to fill in the blanks. As a Sherlock Holmes fan - and today, loving the TV series House, MD for his ability to do the same in the medical field - had I been taught history beyond the boring rote memorization of dates and facts, I may have become fascinated by history and pursued its study. [On making this observation at the Rawlings inaugural, someone recommended a little novel to me: Josephine Tey's The Daughter of Time. It's a wonderful history mystery!]

Of course, history courses in our school curriculum are there to develop memorization abilities in students. But just as the purpose of math courses go beyond enabling students merely to "do math" (see my blog "Why Study Algebra"), history courses go further to teach students about relationships and consequences - what happened because a combination of events, decisions, or circumstances occurred. Ultimately, history teaches its students about beliefs of people in their age and environment.

Having been such a poor student of history, I can now relate to the importance that we all develop the skills related to the higher order study of history. There are other ways to develop these skills. But it's important that we recognize that because of our own lack of success in studying certain subjects in our typical education curricula, we may keep setting ourselves up for the recurrence of major problems in our own history.

Saturday, February 28, 2009

Wisdom & Morals

Synchronocity continues to occur! The latest TED video I just watched directly reflects on my yesterday's blog on "Regulate or De-regulate" plus a number of other sympathetic thoughts we share. Barry Schwartz's 20 minute talk covers a range of important observations and principles that I've been working on and concerned about for years:

  • practical wisdom, that can't be prescribed by job descriptions (reminding me of Total Quality Management and the Ritz-Carlton's example of quality service by all their associates);
  • bureaucratic rules and incentives vs. moral skill (expanding on my regulate/de-regulate quandry);
  • rigid rules (like school curricula), that prevent disaster, but ensure mediocracy;
  • community responsibilities vs. individual interests.
His answer is to re-moralize work, not through more ethics courses, but by identifying and celebrating moral heroes, being the examples of the ordinary heroes we need, and embodying the character and virtues we want our kids to develop.

It's certainly heartening to hear such views after working with some state education leaders, at least one of whom said she couldn't even mention the words "character education" lest she be accused of being a communist!


Friday, February 27, 2009

Regulate or de-regulate?


Regulation vs. deregulation. Alas, it's a false black/white, either/or choice. And a dangerous one.

Our current economic crisis is an example of what has occurred many times in past, given slavish adherence to deregulation dogma. In an almost religious quest for deregulation, we've suffered a repeat of the kind of impact we saw with the savings and loan crisis, derivatives debacle, junk bonds, etc. (yet with each occurrence, we've seen an increased magnitude of impact). In fact, the over-leverage by financial institutions in their investment in mortgages is reminiscent of the over-leverage by investors in the stock market of 1929.

Deregulation shouldn't be a religious quest by believers in a free market. The New York Stock Exchange - a global exemplar of a free market - depends on a high degree of regulation to ensure its reliable, efficient operation.

Now, with the problems caused by decades of over-deregulation, we can expect government regulators to step in and close the barn door after they've let the horses out. I'm not arguing that we don't need additional regulation. Re-regulation is needed to attempt to prevent similar bad things from recurring in the future. Such regulation may be appropriate, but trying to preventing unwanted outcomes is not the only approach that should be considered.

My first job was in management consulting within a public accounting firm. As a young associate, I was taught lessons in basic controls. Such controls are of two types: prevention controls and detection controls. Prevention controls keep bad things from happening (for example, preventing employees from stealing money from their company). Detection controls don't directly keep bad things from happening, but detect bad things after they happen (finding out that an employee stole money from the company). Well, what good is that? In the theft example, if the company had something of the employee's, it could claim restitution of the stolen funds - from the employee's next paycheck or pension funds. 

Given all the focus on and resistance to regulation, it appears that few lawmakers, government regulators, or bureaucrats know of these 2 types of controls. They focus solely on prevention controls. What's wrong with that? Prevention controls are very expensive. And they're often viewed to be oppressive. In fact, they are sometimes inappropriate, given the level of risk and the potential of detecting the problem and possibility of gaining restitution. 

So let's hope this time, policy makers, regulators, and bureaucrats consider such detection controls instead of relying solely on prevention controls. If they don't, they'll inevitably over-regulate, putting us into yet another round of ping-ponging to over-regulation begetting frustration then under-regulation again. And each time, it will cost us each more.