Brian Gongol Show on WHO Radio - January 12, 2014

Brian Gongol

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A syllabus for America

Everyone should go through a financial education course in order to complete high school. The course should cover three main areas: The reasons for a course in personal finance should be obvious: The case for a course in economics (not consumer economics, but legitimate, honest-to-Milton-Friedman economics) isn't much harder to make: The case for the third leg of this stool may not be quite so obvious. But there's a very compelling argument for making everyone learn about family business: Ultimately, we all need to know a little finance, a little accounting, a little economics, and a little business law. These all go straight into ordinary daily decisions about contracts (mortgages, credit-card applications, service agreements), taxes, retirement savings, rainy-day savings, and everything else we do

There's an incredible amount of gum-flapping going on about "inequality" right now. It's all lip service. Maybe well-intentioned lip-service, but it's absolutely useless. Equality of opportunity is the only way to get anything close to a positive outcome. Trying to equalize distribution (ie., change income inequality or tax wealth) just creates disincentives for the really smart, innovative people to go about doing the things we need for a growing economy.

Suppose you were to try to solve just one tiny piece of inequality: Give everybody the same car. Make it a really nice car, even -- a BMW or a Lexus, for example. It is absolutely indisputable that different people will care for those cars differently. Some will maintain the value for a decade or more. Some will crash the car before they get out of the shadow of the dealership lot. Some will perform regular maintenance, some won't be bothered to change the oil or inflate the tires. People will behave differently as stewards of the resources they have, and that determines whether those resources retain their value. Equalizing what everone receives is a patently silly way to ensure that everyone ends up with the same thing in the end. And whether it's a car, or a house, or a salary, you can equalize the inputs as much as you want, but people naturally transform the assets they have over time, and to think otherwise is like thinking we can wish the tides away.

But...while it's almost criminally insane to try to equalize things like income or wealth, it's a very American thing to want everyone to have a chance to show what they're made of. Equality of income or equality of wealth? Those are mirages. But equality of opportunity is the kind of thing we can at least try to create -- even if we know that, in practice, we'll never quite get there.

The only way to really get anywhere close to that equality of opportunity, then, is to equip everyone with the right set of tools to take advantage of what they have inside them. That tool set comes straight from how we're educated, and in particular, from how we educate them in using and creating resources.

In the news this week:

Computers and the Internet AT&T is expanding 4G service in Iowa
Data service is clearly racing far ahead of voice quality in the list of attributes demanded by customers

Business and Finance Reminder: Social Security and Medicare cost 15.3% of your salary/wage income
Yet they're still badly underfunded. Something's being done very badly.

Other news we would have talked about (if only we'd had enough time):

Iowa The Iowa State Fair won't end up being cashless after all
If people knew how dirty their cash really is, they'd welcome a change to clean, unused tickets with open arms.

News Democracy or stability in Egypt: The pro-democracy case

Business and Finance Generally: The fewer words in your title, the more impressive it is

Business and Finance Quantitative analysis won't solve everything
It's really only of late that we as a species have figured out how to crunch numbers in a really big way, and that's causing quantitative analysis to come into its own as a tool for decision-making. Just like anything involving humans, maturity with this tool involves synthesis and well-roundedness. Know your weaknesses and compensate for them. Understand how quantitative analysis can help, and know the boundaries of its usefulness. Know your own strengths and enhance them, using quantitative analysis as an aid, not a substitute.

Threats and Hazards Now you know the playbook for goverment's efforts to hide information from the public
Either our government agencies and departments are (and should be) transparent, or they are not. And if they should be, then manipulative and sneaky behavior by bureaucrats should not be tolerated. The taxpayers, after all, should be the boss.

Business and Finance When innocuous comments on Twitter evolve into advertising

Business and Finance Why investors should be taking action over executive compensation
CEO pay is going up, and it's completely uncoupled from performance for investors

Agriculture Farmers plan a big shift from corn to soybeans this year
The invisible hand is making the push: Corn prices are way down, but beans haven't fallen as much

Threats and Hazards Target says it wasn't just credit-card numbers that got stolen

Computers and the Internet If your carmaker (or the car itself) collects data on your driving habits, who can have it?

Science and Technology Ford exec suggests that the automakers track your driving
Then he tried to take it back

Weather and Disasters Should rain storms have something like a Richter scale?
It's a compelling idea. Saying that something is a "once-in-100-year" storm doesn't really tell us how severe the impact will really be. It just makes it sound like a rarity, and one for which preparation is not really necessary. Converting to a report on the severity of the storm would actually offer useful information.