More Proof Charters Work August 31, 2015August 30, 2015 Not all of them, certainly, but the Success Academy public school network in New York I’ve been writing about . . . and now, apparently, the charter schools of New Orleans . . . as reported here. . . . The charters, which have open admission and public accountability, have produced spectacular results. Before the reforms, New Orleans students — like overwhelmingly poor students in most places — lagged far behind more affluent students. Since the reforms, the achievement gap has nearly closed. . . . This is a big deal. Not just better for the kids themselves, but better for us all: breaking the cycle of poverty, teenage pregnancy, dependency and crime; boosting the ratio of citizens who grow up to be productive, responsible, contributing citizens. I keep coming back to this because imagine how amazing our country would be if almost all our kids succeeded.
What REALLY Causes Climate Change August 28, 2015August 28, 2015 Volcanos? Our planet’s wobble? Deforestation? Nope! Here, very well presented, from Bloomberg News. (Thanks, Bryan!) AMAZON From Business Insider: 14 Quirky Things You Didn’t Know About Amazon. My favorite: An obscure book about lichens saved Amazon from going bankrupt. Book distributors required retailers to order ten books at a time, and Amazon didn’t need that much inventory yet (or have that much money). So, the team discovered a loophole. Although the distributors required that Amazon ordered ten books, the company didn’t need to receive that many. So, they would order one book they needed, and nine copies of an obscure lichen book, which was always out of stock. And today, twenty years later, the company is valued at $234 billion. NOT THE COUNTRY I GREW UP IN There’s a lot wrong with it, as many will attest (if for different reasons on Fox than on MSNBC). “The USA is not the country I grew up in and certainly not the country I came of age in,” writes a deeply critical, all-but-despairing contemporary of mine — a leftie, like me. To which, having been blessed with the happy gene, I felt compelled to reply: “True! We have a black President and Attorney General, women are accorded far more respect (20 in the Senate, up from zero; 3 on the Court, up from zero), life is immeasurably better for LGBT Americans, most of the country is at least somewhat environmentally aware, our cars are safer and get triple the mileage, our air and water is cleaner, defense spending is down from 10% to 4% of GDP, we’re not being drafted to fight a pointless war, far fewer people smoke, life expectancy is up from 70 to 79, hips are easily replaced, our entertainment and communication choices are vastly greater, “boredom” is not possible for anyone with an Internet connection, and — perhaps most astonishing — watermelon is seedless. I share your enthusiasm.” Have a great weekend.
Moringa And The “H—– Speeches” August 27, 2015August 26, 2015 MEET MORINGA . . . “The African superfood that’s healthier than kale” — 25 times the iron of spinach, 15 times the potassium of bananas, 9 times the protein of yogurt, vitamins, antioxidants, an appetite suppressor — grows like crazy, requires little water, good for the African women and others beginning to grow and harvest it . . . well, read up. I already have the tea; planning to make some salad. And now . . . POLITICS Here’s a little more about the Donald’s possible reading habits, including the excerpt from Marie Brenner’s 1990 piece in Vanity Fair: Last April, perhaps in a surge of Czech nationalism, Ivana Trump told her lawyer Michael Kennedy that from time to time her husband reads a book of Hitler’s collected speeches, My New Order, which he keeps in a cabinet by his bed. Kennedy now guards a copy of My New Order in a closet at his office, as if it were a grenade. Hitler’s speeches, from his earliest days up through the Phony War of 1939, reveal his extraordinary ability as a master propagandist. “Did your cousin John give you the Hitler speeches?” I asked Trump. Trump hesitated. “Who told you that?” “I don’t remember,” I said. “Actually, it was my friend Marty Davis from Paramount who gave me a copy of Mein Kampf, and he’s a Jew.” (“I did give him a book about Hitler,” Marty Davis said. “But it was My New Order, Hitler’s speeches, not Mein Kampf. I thought he would find it interesting. I am his friend, but I’m not Jewish.”) Later, Trump returned to this subject. “If I had these speeches, and I am not saying that I do, I would never read them.” This is not, of course, how the Donald — or anyone running for president– should be judged. I own not one but two sets of Henry Ford’s The International Jew: The World’s Foremost Problem, one of them signed. (I collect so-called historic documents.) The criteria upon which we choose the world’s next leader, it seems to me, should be mainly policy-based, competence-based, and temperament-based. But given the Donald’s extraordinary ability to excite crowds . . . to intimidate and belittle people . . . to portray America as the victim abused by Mexico and China who will make our nation great again . . . all that . . . you do wonder whether he ever became curious enough to see how Hitler was democratically elected to have . . . say . . . cracked open Marty Davis’s gift, as his ex-wife claimed. Here is RNC Chair Reince Priebus on the Donald in 30 seconds: “a net positive for everybody.” And here’s a minute on Jeb. Partisan though I am — and it’s really important to be partisan these days, given how different the visions of the two parties are — I cringe along with most of you at the tone of the discourse. Political ads make zero attempt to be fair or balanced. (E.g., this archive of presidential campaign commercials, 1952-2008.) But I guess that, to a certain extent, that’s just the way it works. Mitch McConnell says that “By any standard, Barack Obama has been a disaster for our country,” Thomas Jefferson’s people accused President Adams of having a “hideous hermaphroditical character, which has neither the force and firmness of a man, nor the gentleness and sensibility of a woman,” Martha Washington told a clergyman that Jefferson was “one of the most detestable of mankind.” I don’t like it, or all the money in politics (what a nightmare that is, in no small part thanks to the Justices the two Bushes appointed who gave us Citizens United and McCutcheon), but I’d like a President Trump or a President Bush even less.
Why The Iran Deal Is A Defeat For The Supreme Leader August 26, 2015 Most who oppose the deal don’t know this background. (Which leads the author to conclude: “A defeat for Khamenei and Iran’s hardliners is good for the Middle East and ultimately for Israel and the United States. The invasion of Iraq in 2003 consolidated the hardliners’ power in Iran. Congress should not give Khamenei a big victory just when he is in the jaws of defeat.”) And don’t know that we were offered a good deal in 2003 but rejected it. (” . . . a proposal from Iran for a broad dialogue with the United States, [that] suggested everything was on the table — including full cooperation on nuclear programs, acceptance of Israel and the termination of Iranian support for Palestinian militant groups. But top Bush administration officials, convinced the Iranian government was on the verge of collapse, belittled the initiative.”) If you have doubts about the Iran deal, please click both links. I mentioned the 340 rabbis in a previous post — they support the deal. And a whole lot of others. Here are 29 prominent scienctists, like the former head of Los Alamos, some Nobel laureates, and a physicist who helped develop our hydrogen bomb, concluding that before we made this deal, Iran was just “a few weeks” from having the nuclear material required for a bomb and praising the deal in a two-page letter. And here is Congressman Jerry Nadler, whose analysis makes so much more sense to me than Chuck Schumer’s. Please make the three phone calls.
Why The Iran Deal Is A Defeat For The Supreme Leader August 26, 2015August 25, 2015 One gets the feeling most who oppose the deal don’t know this background. (Which leads the author to conclude: “A defeat for Khamenei and Iran’s hardliners is good for the Middle East and ultimately for Israel and the United States. The invasion of Iraq in 2003 consolidated the hardliners’ power in Iran. Congress should not give Khamenei a big victory just when he is in the jaws of defeat.”) And don’t know that we were offered a good deal in 2003 but rejected it. (It seems we received ” . . . a proposal from Iran for a broad dialogue with the United States, [that] suggested everything was on the table — including full cooperation on nuclear programs, acceptance of Israel and the termination of Iranian support for Palestinian militant groups. But top Bush administration officials, convinced the Iranian government was on the verge of collapse, belittled the initiative.”) If you have doubts about the Iran deal, please click both links.
DinkyTown August 25, 2015August 24, 2015 I notice that the market has dropped smartly this past several days. The short answer is: “I don’t know.” But, as any of the stocks you own because of me were bought with money you can truly afford to lose — and because they are speculations just as interesting (or daft) today as they were a week ago — I hope you can be philosophical about it. After years without a correction — or even, perhaps, a bear market — these things happen. And even offer potential opportunities. Stocks are on sale. They could get a lot cheaper — or snap back. But a decade or two from now they are likely to be a lot higher. To calculate just how badly you did yesterday — or anything else you’re in the mood to calculate — dinkytown.net offers a complete suite of personal finance calculators, free. Lots to play around with. Have fun.
QLACs August 24, 2015August 24, 2015 Les Rosenbaum: “I know, from your book, that you don’t think very highly of annuities. What about the Qualifying Longevity Annuity Contracts? Any thoughts?” ☞ These are annuities you buy in your IRA now — at age 60 or 70 — in a lump sum — $100,000 or $1 million — that will pay you a monthly income for the rest of your life . . . but not beginning until you turn 80, say, or 85. Your protection in case you live to 90 or 100 or even 116. I don’t know much about QLACs, except that you’d presumably want to pay more to buy one that includes a cost-of-living adjustment (lest inflation render the whole point of the thing moot) . . . although, because Social Security DOES have a COLA built-in, maybe if it’s cheap enough, in buying your QLAC, you’d be willing to bet on decades of very LOW inflation. The main thing is: this is a very hard item to “shop for” – and if I were the insurance company I would price my QLACs to cover not just the actuarial cost of the product, but also the sales cost, legal cost, administrative cost, the cost of whatever hedges I’d be buying to cover my risk, and a nice fat profit. All fair – how could they not? – but all eating into the value of the deal for you. So basically, from a math point of view it likely wouldn’t be a great deal unless you lived a really, really long time – as I hope you will. But from a peace-of-mind point of view, especially if you get one with a COLA (and from an insurance company you expect not to outlive, which is also an issue), I can see how it could have strong appeal . . . which is what the annuity salesman is counting on. I concluded my email to Les by “blind-copying someone smarter than me on this just in case he wants to offer more – or Less.” Less Antman, that is, the financial planner next to whose name at the right of this page an asterisk has been discreetly blinking 60 times a minute for 5 million minutes now (give or take). Happily, he chose to offer more: While Andy has already offered good reasons to be leery of QLACs, I’d like to add a couple more: (1) The irrevocable loss of flexibility on the committed funds – In the hypothetical world of projections, nobody has unexpected expenses, needs lump sums, or has a future opportunity to gain a tax advantage from another strategy rendered impossible by the purchase of the annuity. Real life isn’t so clean. (2) The selection of a non-growth asset in a growth-oriented situation – Assuming someone is thinking of buying one of these at age 70 to reduce RMDs until the mandatory start of payments on the QLAC at age 85, we’re talking about 15 years of potential equity growth sacrificed for a non-growth investment. Sure, there are no market guarantees, but a globally diversified equity portfolio that hadn’t risen significantly after 15 years would be unprecedented (while the failure of an insurer promising the payments would not be, and would be even more likely in an environment in which equities didn’t rise significantly over a 15-year period). Fixed income investments should be thought of as ways of addressing the short-term uncertainty of equity investments, which means having liquidity to get through the next bear market. The promise of cash 15 years out and beyond provides no such liquidity. Longevity annuities have been around for over a decade. The only thing new with the QLAC is it being permitted for retirement assets that otherwise were subject to Required Minimum Distribution rules. Since this is only a deferral and packs added RMDs into fewer later years, potentially INCREASING taxes by pushing the older retiree into higher brackets, I don’t personally think this changes the equation. Let me say, though, that there is one situation in which I might be inclined to use retirement annuities, including QLACs. I’ve known a few retirees who were incapable of saying “no” to their children and who allowed their retirement assets to be drained by requests for money by their offspring. The loss of flexibility in such circumstances might even be a positive. Even there, though, I’d be inclined to use an immediate variable annuity such as the Vanguard Lifetime Income Program, which allows the use of growth investments, rather than giving up on growth. [I should also mention that a retiree who has done a poor job of saving and investing and who will need every dollar they can get during their lifetime might find an annuity is the best strategy. Again, though, I’d likely be recommending an immediate variable annuity such as the VLIP rather than a longevity annuity.] If someone were to use a QLAC in spite of my reservations, I’d emphasize, as Andy did, the need for the payments to be indexed to inflation. Note that the COLA offered by many insurers often isn’t true protection against unexpected inflation, but is merely an arbitrary percentage change in the payments each year that starts the payments smaller and goes up by a fixed percentage regardless of the actual inflation rate. Only indexing to the CPI-U or an equivalent is true inflation protection. In my view, Social Security alone is a sufficient guaranteed income to allow the remainder of a retiree’s portfolio to be invested for growth. To the extent liquidity is needed for unexpected lump sums or to avoid withdrawals from the market during deep bears, it should be in the form of cash equivalents, short-term high quality bonds, or TIPS. Warren Buffett’s directions to the trustee of his wife to keep 90% in diversified equities and 10% in short-term government securities seems like a good approach. Annuities don’t provide emergency cash.
Hillary In Private August 21, 2015August 20, 2015 I am enthusiastically neutral among all our fine Democratic candidates — knowing that whichever one gets the nomination will be miles ahead (in my view) of the Republican. As noted a couple of weeks ago, that’s not blind partisanship; it’s recognition that their nominee would appoint Supreme Court justices like Bush 41 / 43 appointees Thomas, Roberts, and Alito; where ours would appoint justices like Clinton / Obama appointees Ginsburg, Breyer, Kagan, and Sotomayor. And that their nominee would favor the powerful and wealthy at a time when the pendulum has already swung too far their way. It’s also a recognition that the stock market and the economy do better under Democrats than Republicans. During the 12 Bush years, net private-sector job creation totaled just 747,000 — versus 19.6 million during the Clinton years and 8.5 million so far under Obama — or 12.8 million if you don’t count the first few horrific months he inherited. So that’s: 747,000 jobs under the 12 most recent years of Republican leadership, as deficits ballooned*; 30 million under the 14.5 most recent years of Democratic leadership, as deficits were brought back under control.** Invested in the S&P 500 only during Republican administrations since 1929, and excluding dividends, $10,000 would have grown to only about $12,000 — versus about $600,000 if invested only during Democratic administrations. So if any of our candidates is unfairly characterized in one way or another (as I think Kerry was, when he was swift-boated or Gore was on multiple fronts), I’ll be eager to offer my two cents — or, in this case, yours: Tom: “I worked for many years at Reader’s Digest, on the business side. In 2005, the CEO, who was my boss, decided to re-institute a longstanding tradition of inviting politicians to a lunch at our ‘guest house’ on the campus. And thus he invited Hillary Clinton, our senator at the time (and neighbor just down the road in Chappaqua). As I recall there were only eight of us including Hillary and one of her aides. She spent three full hours with us and was amazingly impressive. Her grasp of policy down to the detail (she had a better handle on New Orleans geography, in this post-Katrina time, than my boss, who was from Louisiana), her openness, her passion, her wisdom, were all on display as we moved from topic to topic, driven solely by our questions. And beyond that, she was very gracious, easy to share a laugh, relaxed, the whole bit. Of the six of us Readers Digest-types on the management team who were there, I believe four were Democrats and two Republicans. I’m not sure who was more impressed among us, but the GOP guys were raving about her after the lunch. Whenever I read stories about how Hillary’s closest friends ‘wish everyone knew Hillary as they did,’ I think of that lunch. Perhaps the punchline is, I wasn’t gaga from then on. I voted for Obama ultimately. I thought he was the more inspiring leader of the two. But I still think that Hillary has what it takes to be a great President, easily.” Bernie anecdotes, plugs for O’Malley, Webb, or Chafee welcome as well. As much as it matters which of our folks gets the nod, it matters 100 times more which party’s candidate wins the general election. That didn’t used to be the case. But with the Republican Party now devoid of moderates — 17 candidates and not one moderate — it is now. Have a great week-end! *Including the $1.5 trillion “2009” deficit for the fiscal year that began four months before Obama even took office. **Clinton left Bush a surplus. And under Obama the deficit has been cut more than two-thirds, such that the National Debt is back to shrinking relative to GDP.
More Success! August 20, 2015August 19, 2015 If you missed yesterday’s column, here‘s the New York Post’s take on the same great news: The Empire State’s top public-school system is no longer in Scarsdale or any other suburb; it’s right here in New York City — the Success Academy Charter Schools network. With 11,000 students in schools across four boroughs, Success is a system in its own right. And it romped in the latest state exams: 93 percent of Success scholars passed the math test, against 35 percent for the city as a whole and 75 percent for Scarsdale. In English, 68 percent of Success kids passed, vs. 30 percent citywide and 64 percent for Scarsdale. The Success test-takers couldn’t get more inner-city: 65 percent African-American; 27 percent Hispanic. Yet they did better than white and Asian kids in the city’s regular public schools. [And students with disabilities were twice as likely to pass math as New York City’s students without disabilities (72% vs 35%)!] These scholars didn’t start off as the cream of the crop: The only thing that set them apart from any other child in the city public schools is that their families applied and won the lottery to enter Success. The different results come because these children benefit from good-to-great teachers, a sound curriculum and a genuinely supportive school staff in every class and extracurricular, year after year. “English-language learners” in the regular public schools tend to stay that way. At Success, they become “former ELLs” — because they actually learn English. What Success doesn’t have is the “benefit” of the phone-book-thick teachers-union contract, or the deals that give other unions so much control of the city’s regular public schools — all at the kids’ expense. That’s why the unions and their ally, Mayor de Blasio, are at war with the charter network. Funny, that: For all the mayor’s talk of inequality, Success Academy is doing more to raise up the city’s disadvantaged than the entire de Blasio administration. It’s so encouraging! A roadmap to eliminate “the underclass,” or most of it anyway, over the next few decades, and make our society ever so much more . . . successful. As noted yesterday, if this interests you, you can “visit” one of the schools and take a virtual tour. And/or see more detail on the Success Academy results here.
Success! And Virtual Success!! August 19, 2015August 18, 2015 SUCCESS Some charter schools are scams or flops that should be defunded; many are well-intentioned but nothing to write home about; but some — like the Success Academy schools that friends of mine have donated millions of dollars to launch and grow — should be replicated as far and wide and as fast as possible. What they’re accomplishing is enormously important because they help not just each student that succeeds — which is to say, almost all of them — but thereby, for all the generations that will follow them, break the cycle of poverty and despair, of teenage pregnancy and crime, that so drag our society down. Imagine if almost all America’s kids succeeded? Long-time readers know I’ve been doing my best to boost Success Academy — and help clarify some misunderstandings — for some time now. (Use the search box at right to Google “Success Academy” if you oppose charter schools but are open to considering a different point of view.) Their latest report: Last week, New York State test results were released, and Success Academy scholars performed exceptionally well. I am proud to share the remarkable achievements of our scholars, teachers and leaders. These results are important, but they are not the only measure of a child’s success—or our schools’ achievements. We celebrate these results as we celebrate spelling bee winners or chess tournaments or art shows. These are accomplishments that make our entire school community proud. (More details on the test results here.) A few highlights: 93% of our scholars passed math, compared to 35% of students citywide, and 68% scored at Level 4 (advanced). 68% of our scholars passed ELA, compared to 30% of students citywide. Success Academy scholars scored in the Top 1% in math and the Top 3% in English among all 3,560 schools in New York State. If the network were a single school, it would rank 11th in math and 90th in English. Students with disabilities at Success Academy were twice as likely to pass math as New York City’s students without disabilities (72% vs 35%). In math, 5 of the top 10 schools across New York State are Success Academy schools: SA Bed-Stuy 1, SA Williamsburg, SA Upper West, SA Harlem 4/SA Harlem Central, and SA Bronx 2/SA Bronx 2 Middle School. In ELA, 3 of the top 20 schools across New York are Success Academy schools: SA Upper West, SA Cobble Hill, and SA Bed-Stuy 1. Success Academy Bed-Stuy 1 was #2 in math in the state, with 99.3% of scholars passing and 97% achieving a level 4. Success Academy African American scholars outperformed NYC white students by 35 percentage points in math and by 14 percentage points in English. We are very proud of our leaders, teachers, parents and scholars for their hard work and strong performance. Thank you for your support and encouragement and all that you do to give our scholars the opportunity to achieve!!! Bear in mind, these scholars reside in New York’s most difficult neighborhoods, chosen at random from near unanimity of inner-city parents who enter the lotteries for their children’s admission to charter schools. Yet as noted above, the schools, taken as one, rank #11 out out of 3,560 in math and #90 out of 3,560 in English. (And if you don’t like testing, don’t blame Success Academy: they didn’t design the tests or have any special advantage in taking them — they’re just stuck with them like everybody else.) TAKE THE VIRTUAL TOUR . . . . . . and share it with any local educators, parents, PTA members, and politicians — or social media groups — whom you think it might interest. Here’s the link! It takes you on . . . . . . an immersive, multimedia journey through all aspects of our school design, from math, literacy, and science to parent investment and pedagogy. In a series of never-before-seen videos and interviews, you’ll hear from leaders, teachers, and scholars as you experience an interactive tour through classrooms, science lab, art studio, the main office, and much, much more! Success hopes people from around the country will borrow as many of the ideas here as could prove helpful. Writes founder and CEO Eva Moskowitz: “This week, Success Academy opens its doors to 11,000 scholars in 34 schools across New York City. Our schools are transforming what is possible for children, regardless of their zip code or skin color. Yet so many other children are being denied their basic right to an education that should prepare them for college and career. In NYC, only one in five African American students is reading at grade level, and 70% of all students failed to pass the state’s recent proficiency exams. Unless we act, our education crisis will continue to deny our most vulnerable children the hope and opportunity to escape poverty. I believe that the Virtual Tour will be a powerful example and resource for educators, parents and others, demonstrating that a new education model can make a difference.” This is a big deal.