Matt Metzgar

Toxic Schools

Last year, USA Today published a series of articles looking at the air quality around public schools.  It appears that the EPA had dropped the ball, because toxic levels were found near a number of schools.

Now this week, a toxic level of the chemical manganese was found outside a school in East Liverpool, Ohio.  I've been through East Liverpool a number of times, and this doesn't surprise me.  It is an old manufacturing town that has been on the decline for decades.

Long-term exposure to manganese can cause damage to the brain.  This begs the question: why has no one looked into this until now?  I think a lot of skeptics try to downplay the potential risk from exposure to toxic chemicals.  Usually, this is because local businesses are the ones doing the polluting, and no one wants to hamper them.  But what if the children at this school end up with permanent damage because of this chemcial exposure?  Are the local businesses going to pay for their medical care?  I don't think so.  The goverment should have acted on this issue a long time ago.

False Hope

I saw this article about Buffalo in USA Today this week.  It says that city leaders are trying to leverage the city's historic architecture to draw in visitors.  Buffalo does have some interesting buildings, including a Frank Lloyd Wright house.

However, the article points out the city's real problems - 15,000 empty houses and 15,000 vacant lots.  A population that is half the size it was 50 years ago.  So how is refurbishing some old buildings going to change all that?

The answer: it isn't.  Sometimes I think the people running cities are either completely incompetent or they just know nothing about economics.  People get feel-good ideas and think it will solve their economic problems.  If you really want to grow a city, you need experts in economic development - not politicians.

Bogus Bailouts II

It seems the bogus bailouts have set the U.S. government down the wrong path.  The correct response would have been to let the firms who made terrible decisions go out of business.  Instead, they were bailed out, which really will set up only more irresponsible risk-taking in the future.  Now, the government is attempting to mitigate this risk by micromanaging firms and executive pay.

This article reports on how the Treasury is attempting to regulate executive pay at banks.  On one hand, this seems reasonable because the government loaned out billions of dollars, and they should be allowed to attach whatever strings they like.  But this misses the whole point.  If you allow the market system to function like it can, then companies that take excessive risk will suffer the ultimate penalty: they will go out of business.  If you keep bailing them out, they have no incentive to change their behavior.

This bailout will probably lead to an even bigger financial crisis 20 years down the road.  Companies will find a way around these regulations and engage in excessive risk one way or another.  By declaring that some banks are "too big to fail", you are guaranteeing the presence of large, inept banks that will continue to drain taxpayers for decades.

I wish more people understood economics.  

Book Review: Unconditional Parenting

I don't know why I do this to myself.  Every few years I pick up a book by Alfie Kohn, even though whatever previous book I read by him was sub-par.  This time I picked up his book, "Unconditional Parenting".

I agree with the general theme of the book, and that is children shouldn't be treated like lab rats.  For example, I learned that the phrase "time-out" for children is actually short for "time-out from positive reinforcement".  It comes from Skinner and his work on rewards and punishment.

In the short-term, you can manipulate a child's behavior with rewards and punishments, but is that really effective in the long run?  Kohn says no, and I agree.  There are better approaches.  This is not to say that there shouldn't be consequences for actions, but that discipline should be applied from an environment of love and reason.

At any rate, the book deteriorated quickly as I read it.  He made so many logical errors I could hardly keep up.  His work could be massively improved if he looked at child development from an evolutionary perspective.  Nothing about evolution or natural environments was ever mentioned in the book.

Overall, this book gets a thumbs down.

Investing and the Recession

It has now been about a year since the stock market plunged.  During this time, many people have lost wealth.  This trend has probably been accelerated by the financial "croupiers", as John Bogle from Vanguard calls them.  These are the money managers who give advice to buy and sell mostly in an effort to line their own pockets.

I remember when the stock market started to drop last September.  People were panicking, and many investors let their emotions take over.  From a rational point of view, it is better to just leave your money in the market long-term and ride out the turbulence.  I wrote about this strategy last year.  You put your money in index funds and cut out the croupiers and their fees.

Let's say my own IRA last September was at 100%.  When the market dropped, I didn't do anything.  By around February or so, it was at 65% of the original amount.  Again, I just let it be.  I checked the other day and now it is back to 95%.  Give it a few months and it will be back to 100%, and then keep on growing from there.

In essence, the stock market is just investing in business.  Historically, business gives an average return on investment of about 10% a year.  If you put your money in an index fund, you are investing in all businesses, and this diversity protects you from the specific risk of one company.

The croupiers make investing out to be harder than it really is.  This artificial confusion pads the pockets of money managers and drains the returns of the average investor.  The non-professional investor (which is about 99% of the population) would be better served by an index fund and not the advice of a money manager.

Bogus Bailouts

I read this great article the other day on the government bailouts.  It shows the history of government bailouts for banks and investment firms.  It should have occured to someone that if the bailouts didn't work before, then they won't work now.

In economics, this is a problem called "moral hazard".  By bailing out firms and insulating them from risk, you change their behavior.  It was summarized in the article by this great quote, "The ultimate result of shielding men from the effects of folly is to fill the world with fools."

You can't let firms make enormous profits during good times, and then use taxpayer money to bail them out during bad times.  That's not supposed to be how the game works. 

Dumb Growth

I was shocked by this article in USA Today yesterday.  It's more nonsense from those who support building denser housing developments or "smart growth".  Now they are saying that building denser communities will cut auto emissions.  To do this, they want to keep building more houses per acre, so that people will be closer to schools and shops and therefore drive less.

All this is entirely misguided.  If someone lives closer to school or shopping, they may, and I repeat may, drive less.  However, cutting out any short trips would be just a small reduction in the amount of driving.  Most people do the largest amount of driving to and from work.  Also, many people live in a different town than where they work due to the school system.  Building denser developments won't change this.

Here's a simple idea: if you want to cut auto emissions, then why don't you target autos instead of housing density?  You could do this by simply subsidizing the use and development of low-emission vehicles.  And when people get home from work in their low-emission car, they will actually have a house that's not pressed up against the neighbor's.

What bothers me the most about all this is how it is value-driven.  I don't think the smart growth folks value personal space.  If they like living in dense developments, then go for it.  But they are trying to mandate their preferences on the rest of society.  I like space.  The bigger the yard the better.  It gives you room to move around, and it gives children room to play.

Somewhere along the line academics got in their head that denser development is a good thing.  In general, it isn't.  What ends up happening is that people try to apply this idea everywhere.  As the saying goes, when your only tool is a hammer then every problem looks like a nail.  Communities should have a variety of housing options, so that people can choose what level of density they want to live in.  

John Hughes 1950 - 2009

  

I read the sad news that John Hughes had passed away yesterday.  Hughes was the writer and director of some of my all-time favorite movies, such as "Ferris Bueller's Day Off", "The Breakfast Club", and many others. 

It's hard to put into words the impact his movies had on me.  I think your teen years are an incredibly impressionable time, and his movies had a permanent impact on my life.  To a large degree, I feel your life philosophy is shaped during your teens, and I was fortunate enough to have his films during those years.

Movies are serious business when you are young.  They give you hope, they show you different paths, and they expose you to larger-than-life characters.  Hughes' movies were fantastic because they focused on issues important to teens - issues that might be quickly dismissed by adults.

There is a documentary about John Hughes and his films coming out soon.  I have been following the the progress at the film's website.  This movie will be even more meaningful with Hughes passing.  Even though he hadn't done any film work in many years, I had always hoped that Hughes would come back and make more films. 

His passing is another reminder that you only have one shot in life, and that the years go by quickly.  I still remember staying up late and watching "Ferris Bueller's Day Off" with a friend in high school.  It doesn't seem that long ago, even though that was over 20 years ago.  The feelings I had then about the movie are still the same feelings I have today.

Hughes' movies almost always ended on an optimistic note, and that part of his legacy will always be with me.  They showed that if you're willing to go your own way and stick it out, life can be wonderful.  Thank you John Hughes, for showing the way.

Twitter Resistant

It looks like Twitter is gaining in popularity by the day.  Now you have football coaches, U.S. Senators, and millions of others using Twitter.  I remember seeing Twitter way back, a year or two ago and not really getting it.

Currently, I don't have any plans to use the service.  Something about it just doesn't jive with me.  I think the problem is that it would force me to make my ideas concrete on a more regular basis.  I feel a lot of ideas need time to simmer.  Sometimes you get an idea but it's only part way developed, and so you put it on the shelf and come back to it later.  The brain may even be working on it "in the background" during this time, so to speak.  Other times, you realize the idea wasn't so great and then you ditch it.  Either way, I like to work through good ideas and then put them on the blog rather than twitter a bunch of half-ideas.

This blog software has a feature that can create a Twitter update any time a new post is published.  That's probably as far as I want to go with it. 

Teens and Technology

I read this interesting article yesterday.  It shows that teens with late bedtimes (who don't get enough sleep) are much more likely to get depressed and even have suicidal thoughts.  The article points out that the growing reach of technology (Facebook, texting, etc.) may lead to teens staying up too late.

This is just another example of what happens when people try to go against natural patterns.  Daytime is for activity, nighttime is for sleep.  This has been the way for millions of years.  If you try to go against these natural circadian rhythms, you pay the price in one way or another.