Academia

Quote of the Day

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… as it has been my lot in the peculiar position which I have occupied for more than half a century as counsel and adviser for a great corporation and its creators and the many successful men of business who have surrounded them, I have learned to know how men who have been denied in their youth the opportunities for education feel when they are in possession of fortunes, and the world seems at their feet. Then they painfully recognize their limitations, then they know their weakness, then they understand that there are things which money cannot buy, and that there are gratifications and triumphs which no fortune can secure. The one lament of all those men has been: “Oh, if I had been educated I would sacrifice all that I have to obtain the opportunities of the college, to be able to sustain not only conversation and discussion with the educated men with whom I come in contact, but competent also to enjoy what I see is a delight to them beyond anything which I know.”

My Memories of Eighty Years by Chauncey M. Depew (1921)

Who We Are

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We aren’t always – perhaps seldom – the best we can be. Fortunately, we have our moments. And, well, generally, we aren’t racists, bigots, sexists; we aren’t roaring masses lynching, beheading, stoning. We feel jealousy but aren’t driven by ravenous coveting; we can be irrational but save such excesses for football.

Obama has demonstrated in the last couple of weeks who he thinks we are. But he doesn’t know us.

“But President Barack Obama wasn’t in a mood to hear them out. He stopped the conversation and offered a blunt reminder of the public’s reaction to such explanations. “Be careful how you make those statements, gentlemen. The public isn’t buying that.”
 
“My administration,” the president added, “is the only thing between you and the pitchforks.” (Politico)

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Negative Net Worth

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The Chicago Tribune business section has a series where readers write in with their financial issues and the columnists seek professional help and recommendations and publish the results. This column is titled “Law Degree on Her Side” and shows the plight of a woman under 30 who is a lawyer but is struggling under a mound of student debt and is considering bankruptcy.

BALANCE SHEET VS. INCOME STATEMENT

A big element in our economy’s struggle is the fact that the analysts and “experts” were focused on the income statement and not the balance sheet. An income statement view focuses on profits, or the difference between earnings (in her case, salaries) and expenses (rent, living expenses, etc…) and what remains each year. Companies often report earnings EBITA which stands for “Earnings Before Interest, Taxes and (depreciation) and Amortization”. In this model, you become a lawyer because you can make a lot of money (top line revenue) and use it to support the rest of your living expenses.

However, this “income statement” model ignores the debt needed to finance education and expenses related to education. This debt keeps piling up and is a negative item on your balance sheet, which is the long term debt that you owe others, along with the annual interest that you need to pay to service this debt. In an analogy to the stock market, it is the debt payments, along with the fact that companies can’t come up with the cash to pay off principal (or roll-over debt) that is causing the liquidation of companies like Circuit City, Linens & Things, Mervyns, and soon to be many others.

In this lawyer’s case, her balance sheet is “negative” meaning that she is insolvent or has a negative net worth. She has a tiny amount of assets (a bit of retirement savings, some cash on hand, and maybe equity in a car or something) which is all she can show to offset a mountain of debt.

I don’t have exact statistics but I would venture that most Americans have a negative net worth nowadays. By this I mean that the value of their debts exceeds the value of their assets. I also run a site called “trust funds for kids” and I often tell my nephews and nieces that even the relatively small amounts that we put aside ($10,000 or so), as long as they don’t accrue debt, will make them better off than most Americans who have worked their entire lives, since they will have a positive net worth. Obviously some of this is tongue-in-cheek since you need a steady stream of income to pay minimal living expenses but there is much fundamental truth in that analysis in that if you pile up debt you will never accrue enough assets to offset this debt. And if you have a negative net worth, you can never stop working (retire) unless you have a guaranteed string of income high enough to offset your living expenses, interest costs and principal repayments.

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Junk Science Warning Signs: Part III

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You keep citing that paper. I don’t think it means what you think it means.

Another trap that laymen fall into when evaluating competing scientific claims is to uncritically accept scientific citations. When I first stumbled across Walter Wagner, I found in various places on the Internet the claim that he had discovered a magnetic monopole, and a citation on his website to this article. The citation was not in the normal format for scientific cites, and upon finding the publication, I figured out why. Wally was not even an author on that paper, he was the lab tech who looked at the stack of lexan sheets under a microscope for particle tracks that met the criteria outlined by the principal investigators – some of the lowest grunt work available in a physics lab. Wagner was, indeed listed in the acknowledgments of that paper, and has used that brief brush with fame to create a highly colorful, and highly fictional, scientific background for himself.

There is another object lesson in scientific citation for the layman here, as well. Science moves. It advances. The date on a cite is important. If someone is citing only older papers (and “old” in science means about 5 years), the layman needs to check for him or herself (or check with a trusted expert) that the argument presented has not been made obsolete by new evidence. Let’s look a little closer at the magnetic monopole, shall we?

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Junk Science Warning Signs: Part II

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Another aspect of being a discerning customer of scientific information is that the careful consumer looks at the source of the information. Not as an ad hominem on any particular researcher, but with an eye to how much quality control went into the peer review, as I mentioned in my last post.

This is directly related to an old post of mine: “Why There?“, and that is a question that you should ask yourself every time a new publication hits the lay press:

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