A LACK OF TIME

If you don't have time to do it right, when will you have time to do it over? ~ John Wooden

Last week, Isaac forced the Repubs to reschedule their quadrennial Meeting on the Mount into one fewer day than planned, becoming the first time I ever judged a hurricane as having a positive outcome (for the nation anyway, not Louisiana). But the Repubs lost more than a day of conventioning; they forgot their calendars, lacked a sense of time and were fundamentally time-challenged.

They rewrote history so many times I couldn't keep track – between their misdating the beginning of the recession, misdating the closure of the now-famous Janesville GM plant, forgetting whose administration first contributed to the US deficit expansion, as well as other time lapses. In large part, their non-factual history "lessons" were a result of their need to expunge the years 2001 through 2008 from Repubs' chronometers and consider W, the last Repub president, as he-who-must-not-be-named. In Tampa, the Repubs continued to not recall inconvenient historical facts. More cynically and more realistically, they know the facts but misstate them anyway; don't bother me with facts. They deny their unrelenting opposition to any policy proposed over the past 3 years by President Obama to improve the economic prospects for 99% of folks in the US economy.

These historical distortions allowed the Repubs to paint a simplistic future of disproportionate individualism (and withered government) that wasn't ideal in the 1950s, from which it may have been cast. This future will be as empty as Clint Eastwood's chair. This future certainly will be dystopian, except for the 1%ers whose interests drive current Repub policy. Narrow nostalgia ruled. I wondered why the Repubs hadn't invited Christopher Lloyd as their policy navigator; or maybe they did. Through these tactics they appeared to assume the rest of us were either cheeseheads with nothing but gouda between our ears or simpletons who would unquestionably accept their words as gospel without any thought or perspective.

With the convention's unsurprising emphasis on Family (that's with a capital "F"), the two stalwart main men, Romney and Ryan (R&R), were portrayed as worthy candidates (even if one of them left the dog on the car roof) simply because they are members of telegenic families – remember the videos and TV shots focusing on their wives. From the convention it seems current Repubs abhor the idea that women can have meaningful roles beyond being stay-at-home Moms.[1] A singular role that remains a vital and necessary responsibility for the future of the human race – see Ann Romney – but not what most modern women now face. Among other points, the Repubs forget that women now account for the majority (53.6%) of the US labor force. A Sept 2^nd New York Times story, "Who wears the pants in this economy? Welcome to the new middle-class matriarchy," illustrates the changed economic reality that many women and men are facing. This reality is most definitely not the Repubs' desired "Ozzie and Harriet" one. In many ways the Repubs deny the current socio-economic reality facing us.

Why the denial? The Repubs' principal appeal to their base – uneasy white, middle-class males (UWMCMs) – is that they can achieve the "American Dream." This is the Repubs' Grand Deception. R&R's and the Repubs' policy prescriptions of drastically reducing the government's non-military support programs (e.g., Medicaid, Medicare, Education, R&D and Social Security) under the commandment of "reducing the deficit" and providing substantial tax cuts for the already-wealthy will offer UWMCMs an eventual economic nightmare not a dream. Why UWMCMs don't get that voting for most Repubs is not in their economic self-interest remains a fundamental puzzle. From my admittedly non-Repub perspective, I can only surmise that such folks are too myopic, too optimistic about their attaining exalted 1% status or too mistaken about the importance of "social issues" vs. economic ones to logically justify their political choice. Ah, democracy.

Given who will most prominently benefit from the economic policies that R&R have mentioned so far (and they're doing all they can to avoid mentioning any specifics), I think their campaign logo should be the one on the left. This logo should offer some clarity in an otherwise very cloudy, obscure campaign. If you're puzzled by the logo, go here.

It's relevant to note the Dems are not without their own Grand Deception; that our economy can progress without further changing entitlements for the aged and poor and increasing taxes only on the rich will be sufficient to reduce the Federal deficit and spur stronger economic growth. President Obama's Patient Protection and Affordable Care Act is a historically important achievement in the right direction, but by itself will neither resolve the nation's structural deficit nor broaden and increase the nation's economic growth. So I will be interested to watch the Dems as they pontificate in Charlotte. Nevertheless, I remain doubtful about their offering any more than their version of the bromides Repubs did; appeals to every American about the bright future the Dems will offer, with a generous discounting of our current economic plight.

Happy Labor Day. Onward to Nov 6^th.

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[1] An exception was the decent speech (within the context of other, more flamingly neo-conservative utterances) Condi Rice gave that was at odds with the nativistic thrust of the convention by momentarily mentioning foreign policy as a relevant topic and several of the 194 other nations of the earth beyond the US – even if she conveniently forgot that she and W, not President Obama, got us into Iran and Afghanistan.

TO BIG DATA AND BEYOND: BIG PRICING & BIG CHILL?

The more machinery man gets, the more machined he is. ~ J. Frank Dobie

This piece examines the intersection of technology and economics, an intersection that has regularly occurred in myriads of ways. My own career as an economics student in graduate school included several inquiries into the economics of technological change, including my 1973 dissertation that built a model explaining the process of technological innovation in post-WWII electric power generation. [Pretty exciting, yes?] This topic turned out to be fortuitous once OPEC initiated its thoroughly-disruptive "Arab oil embargo" on the US in October 1973 and caused anyone who already had some knowledge of the suddenly-important energy sector to be in great demand. Lucky me.

Enough history. Technological change and advancement always have economic consequences, some immediate, some longer-term. We are still experiencing long-lasting consequences of the 19^th century Industrial Revolution. There are winners and losers as well as transformations in economic relationships due to technological change. Like virtually all economic actions, many of the consequences will be unforeseen and unintended. This blog considers the technological emergence of BIG Data.

Over the past year or so the phrase BIG Data has been popularized and discussed in many forums, including Dilbert. BIG Data refers to the collection and analysis of increasingly vast amounts of

data, much of it highly personalized, by private and public organizations (from the ATF to Wal-Mart). BIG Data[1] is yet another consequent technological amendment emanating from the ever-increasing capabilities of digital hardware and software systems. BIG Data is growing rapidly. The emerging arena of BIG Data is creating consequences, some potentially useful, some perhaps concerning.

Six months ago, the New York Times published an article, "The Age of Big Data," by Steve Lohr, a technology reporter for the Times who has followed BIG Data. Mr. Lohr talked about the impressive growth of BIG Data and the resulting additional need for analysts, programmers and managers who are conversant with data-driven, "deep analysis" methods in fields spanning artificial intelligence, communications, manufacturing, sports (e.g., Moneyball), law enforcement, shipping and retail sales. Estimates of such staffing needs run as high as one million persons. As a long-confirmed empiricist, I am mostly heartened that data, and analysis of it, are now gaining access to the drivers-seat.

Everyone, including you and me, who is connected to and/or communicates via digital devices, who has a FaceBook, LinkedIn and Twitter account has made contributions to BIG Data. And it's not just by using your mobile phone or computer. Every time you swipe your Safeway, CVS or Target card, you have volunteered more information into BIG Data. Do you benefit from providing this information? It seems like it; the last time I went to the grocery store, I was notified on the receipt that I saved $7.19 by being a member of the store's customer "club." In addition, I also benefit by having some reassurance that the store will continue to stock the items I keep purchasing. [Unfortunately, there is no such thing as 100% reassurance. One grocery store we shop at seems not to get our purchasing messages. It has repeatedly stopped carrying unique items I considered essential – like the store's 5-star worthy brand of corn chips. So it goes with my continuing commercial inputs to BIG Data.]

Establishments that collect BIG Data don't solely examine what goods their customers buy in their stores or websites; they often connect these purchases to far broader and more detailed information about these customers, so they can improve their marketing, sales and operational efficiencies. These inter-connected, multi-faceted data illustrate the potential power and concerns of unleashed BIG Data covering the countryside – and us.

So far, the big winners in BIG Data are the companies who have the fiscal and staff resources to supply and use it to their corporate advantage. Other beneficiaries include consumers who are resourceful and advantaged enough to use what BIG Data is directly offering customers – discounted prices. So far, this is folks who are card-carrying, digitally connected consumers.

Here are two (2) examples of how BIG Data is allowing retailers to micro-personalize their marketing and sales to selected customers (often, but not always, those who are enrolled in their loyalty card programs). I've labeled these marketing and sales strategies BIG pricing, which is most definitely not like goods' pricing described in economics textbooks.

1.  By linking purchasing information to socio-demographic and economic data retailers like Target can make offers to customers that are specifically tailored to their current or expected situations. Large retailers have been using BIG Data processes like predictive analytics for quite some time. It may look simple when you review what coupon offers you receive right after you've bought some items at a retail store like a grocery or clothing store, but predictive analytics is anything but simple. This article, "How companies learn your secrets," describes how Target and other retailers provide purchase suggestions to certain customers in their marketing materials (often coupons), based on their recent purchases and supplementary characteristics, for items a customer wants before they even know they want them.

Supplementary data that can be linked to your purchase history include the location of your home (and when you bought it), age, ethnicity, income level, where you went to college, what kinds of topics you talk about online, brand preferences for certain retail goods, your political leanings, reading habits, charitable giving and the number of cars you own.

Not surprisingly, some customers have taken offense; like the father of a high-school girl who received coupons for baby clothes. He complained to the manager of his local Target store about the coupons, saying, "Are you trying to encourage her to get pregnant?” Later he called back to apologize, telling Target that he had just been told by his daughter that she was pregnant. In other words, Target knew before her father that she was pregnant because of its BIG Data-based predictive analytics. Talk about chilling and creepy. There is nothing random about the sales offers customers receive. Offering lower prices (through customized coupons) for specific items to specific customers based on the seller's BIG Data analyses now happens   all   the   time.

Here's another example of BIG pricing.

2.  Safeway and Kroger have inaugurated personalized pricing in some of their stores. Hoping to improve traditionally-thin profit margins, they are creating customer-specific offers and prices, based on shoppers’ behavior. These offers could encourage them to spend more, say buy a bigger box of detergent or bologna if the retailer’s data suggests a shopper has a large family (and more expensive bologna if the data indicate the shopper is not greatly price-conscious). In other words, the price for bottled water that you pay may be lower than the price the shopper right behind you in the check-out line pays – because the retailer knows from your and the other person's shopping habits and history that that unlike you he/she already buys that brand of water (and doesn't need that discount nudge). Personalized pricing is bound to spread.

As I mentioned before, BIG pricing has very little in common with market pricing as described in microeconomics texts. The (singular) "equilibrium price" is determined at the intersection of the market supply and demand curves. (Remember the traditional market supply-demand graph from Econ 101? No? Click here.) This market equilibrium price is not what Safeway, Target, Amazon, Kroger or other BIG Data users are now offering. No, although BIG pricing certainly remains founded on the retailer's supply-side cost attributes, the demand-side aspect of BIG pricing becomes atomized to an individual purchaser's features, not collective qualities of all (or major groupings of) purchasers. As one BIG data analyst said, "It comes down to understanding elasticity at the household level." [Emphasis added.] Demand elasticity is economics jargon for measurement of how sensitive change in the quantity demanded of a good by consumers is to changes in the good's price, the purchasers' income or prices of substitute and complementary goods. Heretofore, it has been rare for economists to consider elasticity at such a fine level as individual households; elasticities were (and are still) calculated for broad markets (like the price elasticity of demand for gasoline) or market segments. There simply wasn't rich-enough data to support estimation at such a disaggregated level as the household. That's no longer true. BIG Data users like Target, Safeway and others have added statisticians and other technical staff to make such calculations so their personalized coupon discounts will be used, not discarded by the intended households.

BIG Data retailers are using smart smartphone apps that allow customers to scan the product barcode in the store and learn the price of that product. What the customer might not know is that in real-time such apps link the customer's potential purchase, socio-economic characteristics and exactly where in the store the customer is, to determine what e-coupon is displayed on the phone – this e-coupon price won't necessarily be the same for every customer. An executive at a company that provides such shopping apps illustrates their sophistication when he states, “If someone is in the baby aisle and they just purchased diapers, we might present to them at that point a [coupon for] baby formula or baby food that might be based on the age of their baby and what food the baby might be ready for.”

Like any rationale consumer, I'm in favor of receiving price discounts to entice me into purchasing another product and/or more of it. Many retailers like Safeway and Amazon have long-standing preferential pricing schemes for certain groups of customers – like their loyalty card customers, or for customers of a certain age (AARP members) or profession (teachers and students). But the new world (brave or not) of personalized BIG pricing and predictive coupons could cast a big chill with respect to issues of transparency and equity.

Carried to its logical end, such tactics might wind up euthanizing the single, listed price for a product. The price of a 6-pack of Bud Light at Safeway wouldn't be $6.49 for anyone/everyone; the price would depend on your individual purchase history and socio-economic characteristics. There would be even less transparency of product prices, making it even more difficult for shoppers to find "the best price" for a given product among stores they shop at. This is, of course, an objective of BIG Pricing – to engender further loyalty of the customer to that retailer.

This growing opaqueness of pricing isn't confined to groceries and books; it includes well-noted changes in fare structures for airlines. With the advent of added special fees for everything from checked baggage and carry-ons to aisle seats, the listed base airfare can end up being as little as 60% of the final total cost, after fees, surcharges and taxes are added in.

Another concern of BIG Data is that it further separates the few, really large national retailers that can afford to take advantage of BIG Data from the multitude of smaller, local/regional retailers who cannot.

Are customers benefited? Probably, at least for groceries and other ground-based retail items. As one customer mentioned, she's now figured out how to game one retailer's BIG pricing system. By alternating her purchases between several different brands of a particular product, she's been offered cheaper prices for the product. I wonder how long it will take this retailer to notice this and change the rules for her personalized coupons.

Answers to questions of fairness and equity that surround personalized BIG pricing are less evident and perhaps chilling. Should those affluent and knowledgeable enough to have certain smartphone apps be the only ones to receive specific price discounts on baby food? Should the price you pay for frozen pizza be determined in some way by when you bought (or lost) your home, your income level and/or the number of cars you own? Some observers are uneasy with this. Professor Joseph Turow from the University of Pennsylvania believes the advent of BIG Pricing by retailers should cause shoppers to be cautious because it may limit their choices and power. He says, “There’s a sense of fairness that’s derailed here.”

Maybe John Donne wasn't correct if you're interested in avoiding BIG data. How could you avoid it?  At this point, it would probably mean adopting a much different lifestyle and/or location. I think there are two inter-related options. First, become card-less and cash-full; don't use plastic to pay for anything. Entering the barter economy might be an alternative as well. Second, head for the hills, far away from modern, computer-based commerce. Deal with local, cash-only commercial establishments. This means becoming un-connected to modern communications and commercial systems. Maybe Survivalist Magazine could offer some suggestions. I hear the rural parts of the Cape Verde Islands can be quite nice.

So, welcome to the wide, wide world of BIG Data and BIG Pricing – happy shopping.

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[1] I emphasize the bigness of BIG data because of the unimaginably large scale of data sets that proliferate in the Big Data universe. Not so long ago, the upper limit of these data sets could be measured in petabytes (10¹⁵ bytes – a million gigabytes). Now the outer reaches of such data are edging towards yottabytes (10²⁴ bytes); that's a yotta data.

THE POWER OF DEMAND, OR HOW WE CAN SAVE OURSELVES

Any sufficiently advanced technology is indistinguishable from magic. ~ Arthur C. Clarke

This week I received the alumni magazine from my undergraduate alma mater – Denison University, located in the village of Granville, Ohio. It had an interesting article about why energy policy is so complex. Because I've spent most of my professional career examining the intricacies of the energy sector I was drawn to the article and in particular the 3^rd part of it. This part posed the following statement, "The sun can save us," that readers are asked to vote whether it's true or false. The statement and the answer are provided by Joe Reczek, a chemistry professor at Denison. Here it is.

Unequivocally true says Joe Reczek, a self-proclaimed idealist whose research focuses on harnessing solar energy. Many energy sources can be billed as "clean" – wind, water, geothermal power – but the answer to our prayers, says Reczek, is the sun. "All other things are a distraction," he says. Of course, we'll use energy to produce the materials needed to harness the sun's energy, but hat energy is paid back in a real hurry. "The energy used to make solar panels is recouped in two to three years," says Reczek, "and then all the energy gained is truly "green.'" And the technology keeps getting better. Right now, most solar panels are based on inorganic silicone technologies, but innovations like organic thin film and nanostructure metal oxides are up-and-coming in the world or solar energy and won't require the purity and high heat that silicone requires to make it function properly for solar cells. "The bottom line," says Reczek, "is that the amount of sunlight that strikes the earth in one hour could provide all the energy for the world's population for a year." The power is there; we just have to perfect the science that will make it accessible.

Mr. Reczek raises several interesting points about how we humans can  progress without decimating the planet by our continued use of fossil fuels. Although I agree that using more renewable energy sources is essential, I take exception to some of Mr. Reczek's discussion about "how the sun can save us."

I think the more important, broader question is, "How can we save ourselves?" As you'll see below, I firmly believe we can, principally by modifying our behavior, without having to rely solely on future solar energy technologies. Energy technologies alone are not sufficient to "save" us.

First, ALL energy sources that humans have ever used here on Earth are ultimately sun-based. Even the nasty petroleum-, natural gas- and coal-based forms that we have increasingly relied on since the Industrial Revolution, as well as biomass (e.g., wood) sources that have been a far more important source of energy for far longer in human history, start from sun-powered photosynthetic processes. In other words, the sun has been forever "saving us."

Mr. Reczek's statement that after recouping the energy used to make solar panels in 2 to 3 years, the panel-generated energy becomes "truly 'green'" represents a narrow, net-energy based assessment of solar photovoltaic (PV) and thermal power systems. It may be true; but practically speaking, it's not really relevant. Despite what Mr. Reczek states, there are a few "distractions" beyond the sun's rays that must be considered.

Few, if any, solar power system investor/operators (including folks like us who have installed PV and thermal panels on their homes) make their purchase decisions based on net-energy considerations. Most of us take into account the "payback period" (or similar means such as net present value) as the crucial fiscal criterion for deciding whether or not to install solar systems. Like most energy production systems, solar systems require significant up-front investments that provide operating savings over a fairly long period of time. For our home's modest 3kW system, this payback period was about 10 years. In deciding to install solar at our home, people like us are the exception. Based on dated but realistic information, 90% of purchasers of energy systems balk at facing payback periods longer than 3 years, hence the near universal use of fiscal incentives to reduce payback. This payback issue remains a significant problem for any renewable technology-based energy policy that seeks to achieve wide-spread adoption, such as those suggested by Mr. Reczek and other technologists.

So, although I agree that the sun can and has been saving us, I believe we will benefit more cost-effectively by changing our energy-using behavior without needing to place our bets for a greener future solely on new and likely more expensive energy supply technologies.

More advanced solar technologies at some point will hopefully provide increased energy efficiencies for PV and thermal cells. However, the benefits of such technologies must be weighed against broader market realities. These realities encompass far more than the technological developments Mr. Reczek imagines for the future. They include a host of behavioral, economic and financial challenges, as mentioned above, that renewable energy systems have long faced. These challenges are why the market share of renewable energy technologies remains so disappointingly small, despite significant government support. [Although if the myopic Republicans have their way, federal funding of non-fossil energy research is headed for sizeable reductions.] According to a recent National Resources Defense Council study, renewable energy accounts for just 2.7% of US electricity production (solar represents less than 0.1%).

Should we continue to invest in new solar (and other renewable) technologies such as those that Mr. Reczek mentions? Sure. But we don't have to wait to "perfect the science" in order to realize significant green energy savings.

We can save ourselves right away by using existing energy-efficiency (EE) actions to reduce residential energy consumption by nearly 30%, representing up to 11% of total US energy consumption, without waiting for more advanced technologies to enter the market. [See this article for more detailed analysis.] In effect, EE actions produce negative generation – what Amory Lovins has called negawatts. They cut the need for power generation requirements by changing how we demand energy. So-called demand-side management activities that rely on using more energy-efficient appliances and equipment have been successfully saving energy for residential, commercial and industrial customers for decades. These substantial energy savings result from altering our selection and use of contemporary home and business energy equipment and motor vehicle technologies including, upgrading home insulation, using compact fluorescent bulbs, and buying and using more efficient space conditioners, motors, pumps and vehicles.

 How large are the green energy savings from EE programs? They can be sizeable. Look at California, a state that has pioneered and promoted the use of EE actions since 1980. The EE programs of the state's 4 largest privately-owned electric and gas utilities produced nearly 6,500 GWh, over 1,100 MW and 84 million therms of annual gross savings from 2006-08. These savings represent 10 times the amount of electricity that was generated in California from solar in 2008. Demand-side EE programs deliver.

Thus, we would do well to expand and strengthen our nation's support for, and participation in, demand-side EE programs. Such savings can be realized today in Granville and everywhere else the sun shines.

HERE'S A CHANGE, SOME GOOD NEWS

Everyone has inside of him a piece of good news. The good news is that you don't know how great you can be! ~ Anne Frank

Quite honestly, the news I've been reading and seeing for quite a while has been pretty dark. Our economic doldrums continue; I've heard continuing, tragic stories about families suffering from long-term unemployment and lack of adequate access to affordable healthcare. Meanwhile the media gives excessive attention to the farcical, misguided and upsetting activities of certain political candidates – and their super-PACS – in the name of "balanced" political reporting. [As an aside, how can these candidates be so impervious to the reality we are now living?] Is there nothing decent and/or encouraging going on? Springtime isn't supposed to be this gloomy.

 I'm pleased to report some glimmers of light, in the form of good and hopeful news.

First, my interactions with students at the high school I work at several days a week are certainly up-lifting. Witnessing their energetic enthusiasm definitely brightens me up. Unfortunately, as I walk home, reality begins to dim the brightness a bit– mostly due to the clouded prognosis now being faced by all too many of their fellow Millennials as I discussed recently. But I remain hopeful that these young people can weather this storm with help from the rest of us.

Next, beyond the SF East Bay some significant positive news has managed to surface among the all too dark flotsam of conflicts and fiscal disasters. Given the media's proclivities for screaming "wolf" at every opportunity, it has been too easy to miss these additional positive pronouncements.

The good news deals with a distant slice of our world that has been in desperate need of it for a long time – the so-called "bottom billion" – the poorest, least-developed folks of the 7 billion now on the planet. The news relates to health advancements for people living in many developing nations. Two inter-related, basic measures of human health – average expected lifetime and child mortality – have improved in the recent past. This is very good news for everyone.

The average lifespan has improved significantly in many developing nations across the globe. These nations can gain from their citizens' increased productive availability. Libya's average lifespan increased to 77 years, just one year behind the US (not accounting for the probable detrimental effects of its "Arab Spring" events). The gains in life expectancy since 1980 have been highest in the Middle East and North Africa (12.2 years), South Asia had the second largest gain (9.6 years) and Latin America is third (8.1 years). According to Wikipedia, the world average life expectancy is 66.57 years. As a point of reference, estimated life expectancy at birth during the Upper Paleolithic age (roughly 40,000 years ago) was 33 years, about the same as life expectancy in 17^th century England. [It's a mystery to me how archaeologists can determine life expectancy in ancient times, but then they probably wonder how we economists calculate purchasing power parity and the velocity of money. So it goes.] These advances have occurred in spite of the modern-day scourge in Africa of HIV/AIDS that many people believe is akin to the 14^th century Plague that killed 30-60% of Europe's population.

There also have been impressive reductions in child mortality since 2005 across a number of African countries. This remarkable accomplishment was highlighted by the Economist in an article entitled, "The best story in development." Three nations – Senegal, Rwanda and Kenya – have reduced their rates of child mortality by more than 8% a year. These drops are the fastest seen anywhere over the past three decades, including China and India. A dozen other countries had declines greater than 4.4% per year. An important contributor to this good news is the growth of using insecticide-treated bed nets that cuts malaria infections. However, it's more than bed nets, according to the article; it's the combination of better health-related policies, better governance and new technology that are together improving (and lengthening) children's lives.

So, even though we live in unsettling times (when aren't they?), these positive advancements brighten my perspective. By remembering them, I can get back to being more optimistic and seeing the glass of present-day life as at least half-full. Hopefully, you might be able to as well.

LOST IN PLACE

Learning without thought is labor lost; thought without learning is perilous. ~ Confucius

Perhaps it is the perfect economic storm with winds blowing hard from at least three directions. First, strong flurries have been born from extended high unemployment and prolonged economic stasis. Second, gales have hollowed out Federal, state and local budgets requiring government expenditures to be cut – despite the continuing need – because, in the main, citizens don't want to provide sufficient tax revenues to pay for the programs they expect and demand (e.g., Medicare, Social Security, public parks, inexpensive energy, cheap food, and first-rate public education). Last, fierce gusts have swept in from the "corporatization of education," as Thomas Frank puts it, fortified by the ever-growing demand for quality post-high school education on top of phenomenal increases in the cost of attending college.

This ominous storm has affected us all, but our 60-million strong Millennial Generation (aka, Gen Y - folks born between 1982 and 2001) has been especially exposed to its devastating forces. If this storm continues to blow across the US, the Millennials could become the first generation in a long, long time to be less well off than their parents – in essence, lost from their expected place as vital contributors to the economy's future growth. They represent both the most strategically important citizens for our future, and those have been significantly suffering through the past several years.

Should we all be concerned? Absolutely. Are we doing anything to reduce the force and breadth of this storm? Beyond complaining, no. Are we continuing to pursue policies that will place more barriers in front of progress for vast numbers of Millennials? Yes.

As such, more and more Millennials are discouraged, more are unemployed, more are dispirited, more are under-employed, more are dropping out, more are moving back to their parents' homes, more are despondent about ever achieving (and affording) their dreams, and more believe their chances of success are unattainable. Here are seven sobering facts that back up this dour description of our Millennials – a generation who's ever-closer to being lost in place.

A) $1 Trillion: Total student loan debt (more than all credit card debt).	B) 58%: Percent of surveyed recent college grads who believe their generation will have less success than the generation before. Only 16% believe they will have more success.
C) 167,000: Estimated number of Americans carrying student-loan debt in excess of $200,000.	D) 559%: Increase in college tuition and fees compared to what they were in 1985. In contrast, the cost of all consumer items has roughly doubled during this period.
E) $16.81/hr: The average hourly wage of last year's college graduates (~$35,000/yr). The typical wage of young college graduates dropped 4.6% between 2007 and 2011, adjusted for inflation.	F) 24.9%: Teenage unemployment rate in April; more than 3 times larger than the overall US unemployment rate (8.1%).
G) –68%: The reduction in net worth of Americans aged 35 years and younger over the past 25 years; the net worth of Americans 65 years and over has increased 45% during the past 25 years.

Can we as a nation head off this generational calamity? In theory, yes. Along with others, I've previously noted [my Nov 11, 2011 "Getting to Balance" blog], a set of Federal policies that can eventually mitigate against casting our children's (and our own) future in ever-darker tones. Principal among these are: (1) reducing the Defense Department's budget – that would restore a bit of needed balance in Federal government expenditures and would make it less likely that the DOD/CIA will continue its increasingly desperate "Game of Drones" war in Pakistan/Afghanistan. (2) Ending the Bush income tax cuts on Dec 31,^, 2012 for folks making more than $200,000, together with applying the social security tax to all earned income. And (3) modifying Federal social security and Medicare benefits so they are means-dependent; or, as Ezekiel Emanuel suggests, create graduated-eligibility for such benefits based on lifetime wealth.

Finally, I am sick of hearing that unthinking public decision-makers have turned their backs on solving these vital issues while they argue ideological demagoguery and campaign for re-election. The media gives these misaligned decision-makers the "it's an election year" cop-out for doing nothing. But really, given our mutant, other-worldly political system, it's always an election year, isn't it. Aren't our elected representatives supposed to be serving us all the time? In this Olympic summer, I award the gold medal for institutional dysfunction and ineffectiveness to the US Congress. While Congress, the White House, Governors and State legislatures twiddle their thumbs, our children's futures continue to crumble before their unseeing eyes.

RATING TEACHERS; IS THERE A BETTER WAY?

If you don't know where you're going, any road will do. ~ Lewis Carroll

Except for folks who have been happily residing inside caves in the middle of nowhere or who had school-age children a long, long time ago, the issue of K-12 teacher evaluations or ratings has been an involving and vociferous one. Nearly everyone has an opinion about if and/or how teacher ratings should be performed. Googling "teacher rating system" produces over 17 million results. Now it's my turn.

Evaluating teacher and student performance has a long history; as lengthy as there's been formal schools, and that covers the last 3000 years (from the Zhou Dynasty in China according to Wikipedia). Until 2001, when Congress passed the "No Child Left Behind" Act (NCLB) with President George W. Bush's enthusiastic support, virtually all formal K-12 evaluation was done by teachers of students – through the awarding of course grades. The NCLB fundamentally changed that by requiring any primary and secondary (K-12) school receiving federal funds to administer annual, state-wide standardized tests to all students in grades 3 through 8 and high-school. The federal Education Department would use these test results to assess whether the school has taught its students sufficiently well. The Act also required that schools provide "highly-qualified" teachers for all students. Information about the schools' and teachers' performance would be made available to parents and other interested parties.

The NCLB essentially altered educational accountability. Henceforth, states have instituted a variety of methods to measure teachers' performance, almost always based on student scores from the NCLB-required standardized tests. Needless-to-say, this has been controversial. The major stakeholders in the K-12 public school system – teachers, school administrators, students, parents, school boards and politicians – have very different perspectives about these changes and what to do about them.

My perspective as an outsider – for the first time in over three decades, no child of mine attends a K-12 public school – is influenced by my professional experience. This experience includes significant involvement evaluating energy efficiency (EE) programs designed to reduce usage of electricity and/or natural gas. Sure, there are huge differences in assessing EE programs' performance as compared to K-12 teachers (and students), but there's also some similarities.

In every type of evaluation, whether looking at education or energy, the effectiveness and suitability of specific types of evaluation depend on first answering several important questions:

1.      What is the objective of the rating/evaluation?

2.      Who/What is to be evaluated?

3.      How are the results going to be used and by whom?

The objective of the evaluation process needs to be clearly stated. For education evaluation there are several possible objectives including: to identify and reward the "best" teachers; to get rid of "poor" teachers; to provide information that allows teachers to improve their effectiveness; to meet some Federal, State or local standard or requirement; and/or to improve students' educational experience. These objectives are related, but distinct. Closely linked is the second question, who or what is being evaluated; is it all teachers, just new teachers, administrators, and/or students. Finally and closely associated with the first two questions, how are the evaluation results to be used, and who is going to use them. Teacher evaluation done to determine if a teacher will become tenured is predominantly a local district matter. Teacher evaluation for NCLB is a combination of district, state and ultimately federal matter. Unless the answers to these questions are understood, accepted and affirmed, any evaluation method will do.

I believe there are four options for rating high-school teachers, as shown below. The first option, doing no evaluation, is not acceptable for several reasons, thus I rank it as NC-5

High-School Teacher Rating Method	My Ranking (based on Movie Ratings)
1.      No rating	NC-5
2.      Rating based on Customer (student) observation & review	G-15
3.      Administration (e.g., Principal) observation & review	PG
4.      Professional (third-party) observation & review	R-$$

(No child over 5 allowed to attend a school where there is no teacher evaluation). A principal reason it isn't acceptable is NCLB mandates such assessment. This mandate is indirect – teachers' performance is derived from the classroom performance of their students, as represented by the students' scores on standardized tests. Teachers whose students perform better on tests are viewed as more qualified.

I am sympathetic with criticisms of this basis (standardized test scores) for teacher evaluation. Teachers certainly hold a key influence on students' performance, but there are other factors that have at least as significant an influence as teachers. These other, inter-related factors include parent-guardian involvement, student socioeconomic status, school attendance, school resource availability and student peer-group characteristics. Such crucial factors are rarely accounted for directly in teacher evaluations. This is a mistake.

But even if NCLB wasn't the educational law of the land, evaluation is still important and vital. Teacher evaluations, at their best, would utilize an agreed-upon framework to provide useful information to teachers, parents and schools about their competence as well as a guide for future improvement.

In order to be worthwhile and useful, the teacher evaluation review process must be based on a series of direct observations by knowledgeable observers, not just test scores. Perhaps the largest question about teacher evaluation is who should conduct the observations? There are 3 choices: school administrators (e.g., principals or vice-principals), professionals not affiliated with the school or district, and education's primary consumers, the students.

Of these choices, I believe the best evaluation process should use students as the source of teacher assessments. Students have the broadest, most exacting experiences with their teachers. Of all the education market's stakeholders, students have more information, more practice with, more knowledge of and more at stake with teachers. This conclusion is ultimately based on common sense; no other group spends as much time with teachers as their students. The students are the customers of the teachers, have daily experience with the teachers, and share the most time and effort with a teacher than anyone else. School administrators can observe a teacher's classroom activities once or twice a semester, given their other responsibilities while students do this every class day, offering an unmatched perspective on their teachers' capabilities and knowledge.

I'm not alone in believing that students are best equipped to evaluate teachers.

“We’ve spent $300 million in this country on teacher-effectiveness research, and what turns out to be the best predictor?” asks Timothy Knowles, who leads the Urban Education Institute at the University of Chicago. Knowles answers, “It’s students.” Their evaluations of teacher quality are surprisingly accurate when correlated with other measurements. Standardized tests, he says, “have been gamed so mercilessly by many states that they’re of limited use.”

For these reasons, I rank student evaluation of teachers' performance a G, generally acceptable, and most preferred.

A second option is having school administrators observe teachers in their classrooms and, based on this observation, rating the teachers. This might work – and has been the most-used means of evaluation – except that most administrators have little time to do such observations since they already have at least 100% of their time committed to a myriad of other tasks. Sure, school administrators can observe a teacher's classroom activities once in a great while; but students do this every class day, offering an unmatched perspective on their teachers. Also, since teacher evaluations serve as a basis for judging the school's overall performance, administrators' assessments could have an unavoidable potential conflict. My sense is administrator evaluations are likely to be well-meaning and genuinely offered, but because of time limitations, would be perfunctory at best; and not as representative of a teacher's performance as the students' ratings. For these reasons, I rank administrator evaluations a PG; parental guidance strongly advised.

A last option would be to have third-party professionals observe and review the teachers. These third-party evaluators could provide quite insightful and valuable assessments. If we lived in a different educational world, one without funding constraints that virtually all school districts now face, I would favor either this option or a hybrid that involves both third-party evaluators and students. Unlike students, the advantage of such specialists – perhaps former teachers or administrators or professors of education – would come from their broader and deeper experience beyond a single school environment. Such professional evaluators would expect to be paid. And, given the severe fiscal challenges that every level of education now deals with, securing additional funding to pay third-party evaluators is now extremely unlikely. This is why I've ranked this option R-$$, restricted due to funding constraints.

There are clear limitations to evaluation of teachers by students. Fundamentally, the students need to be mature enough and aware enough to actually perform a meaningful evaluation, whether it is a survey or a conversation. At the extreme, it's hard to imagine most third-graders performing a detailed evaluation of their teacher. Thus, despite being over-committed, school administrators are the only practical source of primary school teacher evaluations. And not every high-school student has the perspective and acuity to offer an insightful evaluation of her/his teachers. But, there are plenty of adults that lack perception as well. So, like Mr Knowles, I have no doubt that overall, high-school students can produce substantive evaluations of their teachers effectively and appropriately.

Has student-based teacher evaluation worked? Yes. Every teacher at every school has always been informally rated by students. Remember when you were in school and asked your friends, "Who's the best teacher in US History (or Spanish or any other class)?" You always got an answer, and sometimes you could act on it.

Student-based ratings of teachers have been formalized, beyond the ubiquitous word-of-mouth tradition, at several websites. You need only go to www.ratemyprofessors.com to see student evaluation in action for college professors. This popular service states that it contains over 13 million ratings for over 1.5 million professors at more than 7,500 schools in the US, Canada and the United Kingdom. A similar website, www.ratemyteachers.com , contains reviews/ratings for K-12 school teachers across the US and other English-speaking nations.

So, I believe parents, administrators and teachers should cast aside their qualms about having students assess teachers' skills. High-school students are the best qualified to perform teacher evaluation. The NCLB process should be amended to mandate student-based evaluation as a more effective complement to standardized testing. We need not wait for Washington DC to require this student-based process. We would likely be taking AP shuffleboard classes at the senior center by that time. With enough effort, local school boards and/or state-level educators can initiate such a valuable process.

I remain amazed that in my experience as a parent of several K-12 students, there has never been a school-wide mechanism for students to anonymously tell their principals how they rate each of their teachers at the end of every semester. Any feedback from students regarding their teachers was initiated by individual teachers. While useful, this is ad hoc not systematic, and thus not really actionable except for the teacher. In many other work places, periodic performance reviews are completely systematic (and required) for every employee and supervisor – and their compensation usually depends on these reviews. Every K-12 school should welcome knowing how students evaluate their teachers, and how students' performance varies by individual teacher so teachers can improve their skills. With such feedback, the education process can be made more successful; and that's something that will benefit everyone.