With the new academic year well underway across the nation, the thing to watch is "grade inflation." It's alive and well across the landscape of U.S. higher education.

A report published by the Texas Public Policy Foundation puts on display the indisuptable facts:
  • Between 1960 and 1964, 15% of grades assigned to undergraduates were A's. But, in 2014, 43% of all undergraduate grades assigned were A's.
  • The modal grade (the most frequent grade) assigned in colleges across the United States was an A.
  • 73% of all college grades assigned in 2014 were A's or B's.

In which courses were the most A's assigned?
  • Education -- 71% of the grades assigned are A's.
  • Music -- 67% of the grades are A's
  • Math -- 29% of the grades assigned are A's.

That pretty much says it all, doesn't it?

Almost...because there's a little more. Whether it's a public or private college matters not:
  • The average GPA at private colleges rose from 3.09 in 1991 to 3.30 in 2006. At public colleges, the increase was from 2.85 in 1991 to 3.01 in 2006.
  • In 2006, highly selective private colleges had average GPA of 3.43, while the highly selective public colleges had an average GPA of 3.22
  • Among public colleges, major state universities in the South demonstrated the highest grade inflation between 1990 to 2006.

In the "make believe" world of contemporary U.S. higher education--characterized by a culture of cooperation, compassion, and caring--every student must be a winner! So, the grades assigned by professors tell many undergraduates that they're "excellent" and most that they're "very good."

Grade inflation isn't the problem in the nation's colleges and universities. It's phoney baloney grading for which the students are very grateful. Where are the adults?

Let the discussion begin...

To read the Texas Public Policy Foundation report, click on the following link:
"Combating the 'Other' Inflation: Arresting the Cancer of College Grade Inflation."

Three-plus decades back, The Motley Monk took a course on entrepreneurship with Dr. Robert Hisrich, then of the University of Tulsa and most recently of Case Westen Reserve University. Hisrich was a consummate business professor, professing all areas of his subject with an Irish twinkle in his eye and gentle smile across his lips. Dr. Hisrich's entrepreneurship course was worth taking. More importantly, he was a good man, devoted husband, and wonderful father of three daughters.

The National Bureau for Economic Research (NBER) has published a study that verifies much of what Dr. Hisrich taught way back then and reiterates one particular idea that surprised The Motley Monk: Most entrepreneurs fail on their first and second and, perhaps, third tries. But, they learn from those lessons and, if they don't give up, when they finally are successful, they are wildly successful. (One caveat: Along the road, many entrepreneurs risk and lose everything, including their marriages, families, and everything they own.)

With that as background, here's what the NBER study found about entrepreneurs in Texas who started businesses anytime between 1990 and 2011 (analyzing 2.3M new establishments run by 1.7M different retail and small service busines owners) and the duration of the business as a measure of success:
  • of 2M business owners, 25% started more than one retail establishment;
  • once an individaul becomes an entrepreneur for a second time, that person is  more likely to become an entrepreneur for a third time, and so on;
  • serial entrepreneurs are more successful than one-time entrepreneurs; the probability of exiting a business is 7% lower for entrepreneurs with prior businesses; and,
  • a serial entrepreneur's second business is also more likely to survive if his previous business has closed. 

"Serial entrepreneurs"? That's a term The Motley Monk hasn't heard. Brings to mind "serial murderers."

Why is serial entrepreneurship associated with success? The study offers two explanations:
  1. Serial entrepreneurship may increase the likelihood of success because of the transfer of skills from the first business to the next. (That's what used to be called the "Hisrichian Theory.")
  2. The serial entrepreneur has the skills that make a business successful and when the right opportunity comes along at the right time, the entrepreneur succeeds. (If true, the study notes, entrepreneurship is a learned skill. That would explain why Dr. Hisrich taught a course in entrepreneurship.)

No matter what the explanation, it seems that entrepreneurs are highly-motivated risk takers who have passion (some might say, "obsession") to succeed (some might say, "prove themselves" for whatever the psychological reason may be).

Who's to know? But the study did bring back to mind an excellent professor and course the content of which continues to be relevant 30+ years later.

Let the discussion begin...

To read the NBER study click on the following link:
"Serial Entrepreneurship: Learning by Doing?"

The promise was that Obamacare would “bend the healthcare cost curve down.”

Really? Try this one on for size:

According to the American Action Forum, Medicare currently lists 1.7k procedures that are required to be performed in a hospital in order to qualify for Medicare reimbursement. Yet, many of these procedures are regularly performed in Ambulatory Surgical Centers (ASCs) for significantly less $$$s than those performed in hospitals.

Better yet, ASCs--which are identical to hospitals in terms of available equipment and staff—demonstrate similar patient outcomes with fewer infections. They afe also on average ~75% cheaper than hospitals.

No problem, if the patient is privately insured or pays for the procedure out of pocket. But, if the patient is on Medicare, forget the ACS. Just go straight to the hospital and let the "government" pay full freight.

How so? For the ASC procedures that Medicare reimburses, it's at lower rates than those for hospitals. To wit:
  • ASCs receive 56% of what hospitals receive for performing an identical procedure.
  • Medicare uses different measures to calculate inflation when looking at hospitals and ASCs. Hospitals receive inflation increases that are 300% higher than ASCs.

The Motley Monk reported previously on one ACS--The Surgery Center of Oklahoma--which is transparent in its pricing. For example, a $40k hip replacement (the average price charged at most American hospitals) is $19.4k at the Surgery Center of Oklahoma.

It really is too bad that the 48% of Americans who pay taxes and foot the bill for everyone else don’t “get it.” The government is wasting their money, all the while trumpeting how it's helping poor and middle class workers with waste-riddled entitlements. Obamacare was sold as the entitlement program that would reverse this long history of wasteful spending by bending down the healthcare cost curve.

Evidently, President Obama is too busy golfing to check out the facts. After alll, his advisors have had them in their possession for quite a while. Or, is it that he really does detest free market capitalism?

Let the discussion begin…

To read the American Action Forum report, click on the following link:
"Ambulatory Surgical Centers and Medicare."

To read The Motley Monk’s previous post about ASCs, click on the following link:

The Motley Monk has posted a commentary over at The American Catholic titled "Parents and praying for their children in school."

In that post, The Motley Monk relates a prayer of St. Thomas Aquinas posted by Dr. Edward Mulholland of Benedictine College in Atchison, Kansas. As the prayer reminds us, education and the virtue of humility are inextricably related. It's a fine prayer for students, but of those Catholic parents who report they do pray, how many pray for their children?

Check it out...

To access The Motley Monk's post at The American Catholic, click on the following link:
The narrative trumpeted by those who want to "reform" public education in the United States promotes the idea that lousy teachers are being paid big $$$s with the result being that students are not achieving.

While there's truth to that narrative, there's another narrative concerning the cost of public education that's not being told. The subject of this narrative is the cost that federal regulations have tacked onto the cost of public education when, constitutionally speaking, public education is a right reserved to the states.

FACT25% of education expenditures are directed to non-teacher salaries and benefits.

A report published by the Thomas B. Fordham Institute higlights how school staffing changed since the 1970s:
  • Since 1970, staffing in general has increased 84%, that is from 3.4M to 6.2M.
  • Much of that growth since 1970 is attributable to the expansion of non-teaching positions (1.8M in additional non-teaching staff). Concurrently, 1.1M new teachers were added.
  • During the past four decades, the ratio of students to staff dropped to 8:1. In 1970, it was 14:1.

The additional 1.8M non-teaching staff include: librarians, janitors, superintendents, and guidance counselors. But, the lion's share are "instructional aides." In 1970, these comprised 1.7% of all staff. In 2013, they constituted 12% of all public school staff. Moreover, in the 1980s, the share of teachers as a percentage of public school staff dropped from 60% to 52.4% while the percentage of instructional aides grew to 7.8% of all staff.  

The report attributes this change to the federal regulations of the 1970s and early 1980s which added new responsibilities for schools. For example:

  • A 1968 law aimed at creating English programs for bilingual students.
  • The 1975 mandate requiring education for children with handicaps and learning disorders.
  • Additional new obligations to provide services for students with drug problems.

While the United States spends a much larger portion of education budgets on non-teachers than all member nations of the Organization for Economic Cooperation and Development (with the exception of Denmark), the report's conclusion--that school boards evaluate their staffs and determine whether positions are necessary or whether certain services could be provided more efficiently--is off the mark.

Necessary as that is, there's a more important, a priori constitutional issue. The federal government has extended its tentacles around what's reserved to the states to decide for themselves--in this case, public education. Issuing regulations that the states must pay to implement "puts the cart before the horse." What's happened since 1970 is that the federal government is not supporting states but dictating to states how the are to educate young people.

This encroachment upon states rights by the federal government is the issue that needs to be addressed by those who care about public education in the United States.

Let the discussion begin...

To read the Thomas B. Fordham Institute report, click on the following link:
"The Hidden Half: School Employees Who Don't Teach."
In the liberal fantasyland, increasingly confiscatory taxes provide govenrment an excellent tool to aid and abet the furtherance of the liberal social agenda.

Take cigarette taxes, for example.

Liberals have successfully raised taxes on tobacco products to the highest point they have ever been. Today, the federal tax rate on cigarettes is $1.0066/pack. However, state and local taxes tack several more $$$s onto the price of a pack of cigarettes. Today, one package of cigarettes costs $6.16 in Chicago.

The liberals' logic was simple: Tax cigarettes. End smoking. Use the tax revenues generated by the taxes to fund additional entitlements (aka, "investments").

In the real world where fantasy meets the road, what liberals "promise" never is the outcome because they don't consider the consequences of their policies. They seem always to forget the faulty middle element of their three-step logical progression.

Courtesy of the Tax Foundation, consider the transcript of a U.S. Senate Finance Committee hearing concerning the consequences of those Draconian taxes on cigarettes. For example, for the State of New York:

  • Since 2006, the tobacco tax rate in New York has risen 190% to $4.35/pack in 2014.
  • Concurrently, the smuggling rate has risen 59 percent. Today, 56.9% of cigarettes consumed in the state are smuggled in from other jurisdictions.

And it's not just New York. Arizona, New Mexico, Washington, and Wisconsin also have high rates of cigarette smuggling which involves:
  • counterfeit versions of brand-name cigarettes,
  • counterfeit tax stamps; and,
  • hijacked trucks.

Also note: China produces a lot of counterfeit cigarettes, to the tune of an estimated 400B cigarettes/year.

With what outcomes? Consumption decreases. Many of those
who do somke cigarettes purchase counterfeit versions.
The promised tax revenues aren't generated. Social programs--like universal Pre-K in the chart--aren't funded. Budget deficits soar. State have to raise taxes on the general population, all because liberals don't want their social programs cut. No, the stormy petrils cry out, "That would hurt the children!"

That's how liberal taxation policy works in the real world. In the end, they always stick it to the taxpayers which currently is only 48% of Americans.

Let the discussion begin...

To read the Tax Foundation transcript, click on the following link:
"Tobacco Taxation and Unintended Consequences: U.S. Senate Hearing on Tobacco Taxes Owed, Avoided, and Evaded."
Those evil, tax-evading corporations! If only the federal government would tax them more, the average taxpayer would be paying less in federal taxes.

That's what liberal economists teach, their lemmings expound in the mainstream media, and legislators actually do by rasing the federal corporate income tax.

Let's peel away the hyperbole and look at three facts, courtesy of the National Center for Policy Analysis:
  • Relatively little revenue is generated by the corporate income tax. In 2013, it took in $288B (just 1.8% of the nation's GDP). If the tax was sunsetted, it wouldn't be hard to find waste in Medicare/Medicaid fraud or the bloated Pentagon budget to cover the loss.
  • The tax is onerous, one that encourages corporations to relocate and operate overseas, keeping their profits abroad rather than reinvesting them back into the United States. All of this due to a confiscatory corporate tax rate (ahem, the highest in the developed world). Why give those foreign nations the jobs and tax benefits that belong at home?
  • Most Americans view the corporate income tax as affecting only corporations. Ultimately, however, American workers and consumers are the ones paying the tax.The former bear their burden as jobs are shipped across seas. The latter bear their burden when they pay higher prices for goods and services.

Using a dynamic economic model for analysis, eliminating the corporate income tax would produce three important benefits:
  • Capital stock would increase 23%-37%.
  • Real wages would increase 12%-13%.
  • The United States' GDP would increase 8%-10%.

Using the same model, reducing the corporate income tax from its current rate of 35% to 9% while eliminating loopholes and imposing a wage tax would also produce a number of benefits:
  • Low- and high- skilled workers' wages would increase 6% in the short term and 9% over the long term.
  • GDP would increase by 6% immediately and permanently.
  • Capital stock would increase 17% in the short term reaching 30% by 2040.

This sensible reform of the U.S. tax code--eliminating the federal corporate income tax--would provide a boon to the nation's economy as well as to taxpayers who bear the brunt of current confiscatory rate of 35%.

The bottom line is that liberals are responsible for driving tax-paying corporations abroad to lower their expenses. If they could, liberals would keep increasing the federal corporate income tax rate, crying "foul" even louder when it is they who are responsible for driving more American corporations overseas, creating the loss of jobs at home, and indirectly taxing Americans when they make purchases. All the while, those same liberal legislators say they haven't voted to raise taxes on the most vulnerable lower- and middle- income Americans.

They know better. It's really too  bad those lower- and middle- income Americans don't. If they did, they'd "throw the bums outta office."

Let the discussion begin...

To read the National Center for Policy Analysis study, click on the following link:
"Abolishing the Corporate Income Tax Could Be Good for Everyone."

Two court decisions may serve notice to union bosses that they can no longer require members to pay dues--to extract confiscatory taxes--that are then used to advance the unions' political agenda.

Case #1: Harris v. Quinn.

In a narrow decision, the U.S. Supreme Court (SCOTUS) ruled in Harris v. Quinn that home health care workers in Illinois cannot be compelled to join a union. An Illinois statute that requires home health care workers to support a union to lobby for its interests with state legislators and regulators

SCOTUS precedent (Abood v. Detroit Board of Education, 1977) upheld the requirement that members of public (not private) employee unions must pay dues. However, in Knox v. SEIU (2010), Justice Alito wrote for the majority and questioned Abood, noting that collective bargaining in the public sector is "inherently political":

     Because a public-sector union takes many positions during collective

     bargaining that have powerful political and civic consequences...
     compulsory fees constitute a form of compelled speech and association
     that imposes a significant impingement on First Amendment rights.
Harris v. Quinn is important in that the Service Employee International Unions (SEIU) has been mustering all of its considerable but weakening might to unionize all sorts of service businesses across the globe. The goal: To increase membership and, of course, to extract those confiscatory taxes--aka, "dues"--from members to provide financial the support required to further the SEIU's political agenda.

So does or does not Abood require members of public employee unions to pay dues? Justice Alito has opened the door for a direct challenge to Abood, namely, that members of public employee unions do not have to pay dues to support the unions' political agenda.

Case #2Friedrichs v. CTA. 

Out in the "Eureka State," a lawsuit directly challenges Abood. Sounding similar to Justice Alito in Harris v. Quinn, the plaintiffs in Friedrichs v. CTA (the California Teachers Union) are challenging the State's requirement that teachers must pay dues for collective bargaining activities. The plantiff's'claim that all union dues should be voluntary, not mandatory.

The lawsuit alleges that state "agency shop" laws--which require public employees to pay union dues as a condition of employment--violate well-settled principles of freedom of speech and association. Thus, even though the majority of teachers may support the union, the minority does not and, the plaintiffs argue, the State of California cannot constitutionally compel individuals (in this instance, the minority) to join and financially support organizations with which those individuals disagree. Additionally, the plantiffs again sound similar to Justice Alito in Harris v. Quinn as they argue collective bargaining in the public sphere is necessarily political.

When Friedrichs v. CTA is decided, any appeal would likely be fast-tracked to SCOTUS, given the number of similar pending cases in states including Wisconsin, Michigan, and Indiana.

The unions bosses appear to be getting worried and well they should.  For decades, they've been able tend the bar which, in turn, has allowed them extract confiscatory taxes--in the form of "dues"--from members to advance the unions' political agenda...and it might be added, laden the union bosses' wallets with mighty fine salaries.

But, "the times they are a' changing." Perhaps in two years, the bar's owners will be replacing those unionized bartenders with scabs in a free labor market.

Let the discussion begin...

To read about the Harris v. Quinn decision, click on the following link:

To read about the Friedrichs v. CTA lawsuit, click on the following link:
Try this business proposition on for size:
  • To deal with the fact that 25% of the households in the area don't own/lease cars, a light rail mass transportation system estimated to cost $137M is proposed.
  • The area measures 139 square miles but the proposed system will cover only 3.3 miles. (That's a cost of ~$41.51M/mile.)
  • The entire area is currently served by a metropolitan bus service.
  • Buses are cheaper to operate and maintain than railroads.
  • Buses can maneuver in and around service areas. Railroads can't.

Oh, and then there's these other items:
  • The metropolitan area is currently bankrupt.
  • Even if the proposed light rail cars end up being jam-packed with riders, the proposed fare of $1.50 won't cover the system's operating expenses.

Should investors pour their money into light rail line or into more buses?

Before answering that question, consider this: An article in Reason Magazine reports the metropolitan area is Detroit and it's not investors who are making the decision. It's the federal government which is using the people's tax dollars to fund the project. To this point, the feds have already allocated $41M to the project.

But, as with all government boondoggles, that's not enough. Those pushing the project already are asking an additional $12M (or 29.2% more).

Do the math. That's a total of $53M for a project estimated to cost $137M (or 38.7%). Don't be surprised if, by the time the project is completed, cost overruns will raise the price to $250M.

And it's not just Detroit. Other metropolitan areas--Seattle, Honolulu, and Salt Lake City, among them--areas are doing the same.

Gotta love how projects like these fuel the nation's deficit and benefit the politicians profiting from it! Talk about crony socialism!

Let the discussion begin...

To read the Reason Magazine article, click on the following link:
"Is Detroit's New Light Rail Line America's Greatest Boondoggle?"

The Motley Monk has posted a commentary over at The American Catholic titled "Removing the Bible and prayer from public schools has caused student behavior to decline?"

In that post, The Motley Monk challenges an education “expert”--a professor at California State College in Long Beach and a senior fellow at the Witherspoon Institute in Princeton, NJ, William Jeynes--who attributes the decades' long decline in public education has to removing the Bible and prayer from them. Implying causation may play well with the ignorant (that is, those who do not know better for a variety of reasons), but it doesn’t with liberals who know better and will use such to make conservatives look stupid (that is, those who should have known better). It also besmirches the stellar reputation of conservative organizations, like the Heritage Foundation.

Check it out...

To access The Motley Monk's post at The American Catholic, click on the following link: