Wednesday, August 31, 2011

Low-cost, stupendous options for college education

I subscribed on Sunday to an email service called Sovereign Man Notes from the Field. I was astonished, yesterday, to receive the following note:
It's no secret that the cost of university education, especially in the United States, is staggering. Tuition at private schools in the US averages $30,000 annually, and students often graduate over $50,000 in debt.

This leads to a fancy form of indentured servitude; students with this kind of debt load are forced to take the first paid work they can find, and they'll work for the next 14-years of their life just to start back at zero. For parents footing the bill, the prospect of huge tuition fees can keep people up at night for years fretting about the payments.

Graduate schooling can be even more painful. Top MBA programs can charge $50,000 per year or more, and for those who still cling to the idea of working their way up the corporate ladder, this has become a necessary step.

Especially now in the midst of a severe recession, it has become a new trend for people to head back to school, firm up their credentials, and wait out the economic downturn.

I have a better solution for you to consider: head overseas.

Going to a school overseas ticks a lot of boxes-- for one, it's a hell of a lot cheaper, and you don't emerge deep in debt like you would back home.

Second, the quality of the education is as good if not better than what you would otherwise receive.

Third, and most importantly, it's just more interesting. The experience abroad will be much more fulfilling, and it will distinguish you from the pool of other candidates who all have generic resumes.

Let's say you're an Ivy League type. Why pay Harvard $52,000 per year when you can go to the University of Cambridge in England for around $19,000 per year? Cambridge is consistently rated as one of the top universities in the world: same quality education, a fraction of the price.

If that sounds like too much, consider a place like Hong Kong University. Tuition at Asia's top school is around $15,000 per year, and there are plenty of scholarships and financial aid packages available. Not to mention you'd be networking with future movers and shakers in the region.

Still too much? Look at Erasmus University in the Netherlands, whose Rotterdam School of Management is one of the top business schools in Europe. Tuition in the all-English program is around $11,500 per year, 73% less than Notre Dame's Mendoza School, and 26% less than Michigan's Ross School of Business.

Still too much? Try Qatar University, where there are numerous English-language programs in disciplines such as business and engineering. Tuition for foreign undergraduates is just $4,000 annually, and you'd be spending formative years in one of the world's most thriving, opportunity-rich economies.

Still too much? Try Albert Einstein's Alma Mater, the Swiss Federal Institute of Technology (ETH) in Zurich. If you make the cut, ETH's tuition fee is a whopping $750 per semester for both undergraduate and graduate programs, and the school is typically ranked among Europe's top 5 universities.

Here's the bottom line-- if you're facing an uphill battle for prospects and opportunities, get creative; don't simply follow the same path that everyone else is taking. The world is a big place-- stop limiting yourself by geography and start looking overseas for solutions.
I wish someone had suggested some of these options to me when I was in high school! Not so much for the cost savings. (I did just fine. Despite having to pay 100% of my tuition, room, board and all expenses for the last three years of college, I graduated with less than $150 of debt.)

No. I just imagine how great it would be to have the kind of international perspective that anyone with such an education might enjoy!

I'll tell you: I look forward to reading more from Mr. Black, the guy who writes this newsletter.

Sign up here. He'll definitely give you a different perspective on the world!

(Check out, for example, his The price of a Big Mac meal is now $17.19 in Zurich.

In a much longer piece, he notes,
One of the things that people pick up on very quickly as they travel are how different price levels are around the world. I’ve been to roughly 100 countries, and I still find it amazing how much variance there is among things like food, property, and entertainment prices.

There are certain places– Cambodia, Ecuador, Tanzania– that are so jaw-droppingly cheap that it almost seems unreal. And you wonder how these people could possibly ever survive if they came to your country.

Well, the United States has just joined this proud cadre banana republics… at least if you’re from Switzerland.
I have to agree with that last statement. It was Sarita's and my experience, too, in Norway earlier this summer, where a trip to a public restroom would set you back a good NOK20 or NOK25 (USD3.72-USD4.65), minimum. Yep. Just to go to the bathroom. Indeed, there was hardly anything in Norway that cost less than NOK20. I came to the conclusion that NOK20 was, pretty much, their mental equivalent of a quarter.


Enjoy the eye-opening experience!

Saturday, August 27, 2011

Rick Perry for president?

I just wrote an article about Rick Perry's Gardasil problem. I don't want to reproduce that here, though I think it is extremely important to consider as Perry seems to be acquiring the gleeful support of too many supposedly "conservative" political commentators.

In that article, I attempted to stick strictly to the issue of Perry's too-quick willingness to take the word of lobbyists over the concerns of the broader populace whose interests you would hope he was concerned to protect.

But for more about Perry and why, I believe, we ought to be skeptical, at least, of his legitimacy as a candidate for president, I recommend the article from, 14 Reasons Why Rick Perry Would Be A Really, Really Bad President.

Thursday, August 25, 2011

Oh. Wow. (Follow up to fake Paul Krugman post.)

I posted earlier this morning about the fake Paul Krugman post.

Now I found "the rest of the story" from the person who faked it.

Interesting and disturbing analysis!

Elsewhere, someone wrote,
I don't know whether the imposter intended this, but his joke has a stroke of brilliance.

By making the outrageous comment, he indirectly compels Krugman to respond to it, and say for the record whether or not he accepts it. The beauty is that no matter what Krugman says, it will make him look like an idiot.

If he says he does not accept it, then he contradicts his own worldview, because the comment is exactly in line with Krugman's orthodoxy. It wasn't an advocacy, it was simply an argument of economics.

If he says he does accept it, then he will just reconfirm what everyone already knows. That he's crazy.

If he fails to say he rejects or accepts it, then that will insinuate that he has something to hide, which conveys the impression that he secretly accepts it and is too embarrassed to explicitly admit it.

Since Krugman seems to imply in the NYT blog that the fake comment is "really stupid [and] outrageous," (although we can't be sure, and I bet Krugman carefully worded his column so that he doesn't explicitly say the comment is really stupid and outrageous, but at the same time denying he said it), then the imposter has succeeded in getting Krugman to contradict himself.

"Bring on more and stronger earthquakes! It would be good for the economy!"

Nobel Prize-winning economist Paul Krugman was recently spoofed as having made such a suggestion:
People on twitter might be joking, but in all seriousness, we would see a bigger boost in spending and hence economic growth if the earthquake had done more damage.
It turns out those words were definitely not written by Paul Krugman.

However, Krugman has made several comments virtually identical to them.

"Ghastly as it may seem to say this, the (9/11 Twin Towers) terror attack -- like the original day of infamy, which brought an end to the Great Depression -- could even do some economic good. . . . Now, all of a sudden, we need some new office buildings. . . ." (New York Times, 14 September 2001)

"Think about World War II, right? That was actually negative social product spending, and yet it brought us out [of the Depression]." (CNN Global Public Square, 12 August 2011)

"If we discovered that space aliens were planning to attack and we needed a massive buildup to counter the space alien threat and really inflation and budget deficits took secondary place to that, this slump would be over in 18 months. And then if we discovered, oops, we made a mistake, there aren't any aliens, we'd be better [off]." (Same CNN article/broadcast; note that the actual video where these comments appear begins at about 13:35 into the video in the article.)

If a Nobel Prize-winning economist can make these kinds of comments with a straight face, it should not surprise us when "regular" citizens suggest "solutions" to our economic difficulties similar to those Krugman dishes out on a regular basis. (In the referenced New York Times column, for example, Krugman wrote, "[T]he attack opens the door to some sensible recession-fighting measures. For the last few weeks there has been a heated debate among liberals over whether to advocate the classic Keynesian response to economic slowdown, a temporary burst of public spending. . . . Now it seems that we will indeed get a quick burst of public spending, however tragic the reasons.")

Check out this brief, well-done video about The Broken Window Fallacy--a fallacy first noted by Frédéric Bastiat in 1850:

For a further nuanced discussion of the limitations of The Broken Window Fallacy (because there is a point at which one does want to see some broken windows!), please read the Wikipedia article on the subject, and especially Section 2.2, Limitations. . . . But keep reading through 2.3, The opportunity cost of war and 2.4, The cost of special interests and government.

Kind of mind-blowing!

Monday, August 22, 2011

40th Anniversary "Celebration"

I didn't pay attention one week ago today on the actual anniversary.

So let us "celebrate," today, only one in several US government failures to demonstrate good "full faith" on its promises with respect to its financial obligations. (The government speaks of its "full faith and credit.")

Few besides supposed nut-cases like Ron Paul will use the word "default" when it comes to US policies with respect to the dollar. But what do you call it when the US government refuses to honor its promises to pay? Was this historical event not a default?

Nixon Ends Bretton Woods International Monetary Accord

The Bretton Woods system was created towards the end of World War II and involved fixed exchange rates with the U.S. dollar as the key currency - but also a role for gold linked to the dollar at $35/ounce. The system began to falter in the 1960s because of an excess of dollars flowing out of the U.S. which foreign central banks had to absorb. A run on gold in 1968 was stemmed by a patch on Bretton Woods known as the two-tier gold system. All of this was ended unilaterally on August 15, 1971, when President Nixon announced on TV three dramatic changes in economic policy.
  • He imposed a wage-price freeze.
  • He ended the Bretton Woods international monetary system.
  • He imposed a temporary surcharge (tariff) on all imports.
It's worth listening to what he said back then . . . and then compare his statements to what has occurred during the intervening 40 years.

. . . A single crisis a year was "big news" back then? --Where are we today?

. . . Is the U.S. dollar stronger than it was back then? More stable? . . .

Sunday, August 21, 2011

A little smile . . .

I was reading the comics this morning and came across "One Big Happy." Ruthie is telling her grandfather about how wonderful bugs are:
  • Lightning bugs flick on their night light to help kids catch them.
  • Butterflies are so beautiful that high-class fashion designers copy their designs.
  • Bees make honey and everybody like a little honey!
  • Praying mantises are very religious and will pray for you if they like you.
  • Spiders make beautiful webs and decorate haunted houses for free!
  • Moths make Mexican jumping beans dance around.
  • And crickets let blind people know when it's nighttime.
--I burst out laughing with that one.

Rick Detorie, the artist, illustrated the truism with a blind woman cupping her hand to her ear and sighing with satisfaction: "Ah!" --Now she knew it was time for bed, I guess.

But "what about mosquitoes?" asks Grandpa.

"Let's not get all ridiculous about this, okay?" says Ruthie.


It did get me thinking: What is the positive purpose or function of mosquitoes? I'm sure they fulfill some positive ecological function. I just can't think what it may be.

Any ideas?

By the way, the original cartoon is here.

Sunday, August 07, 2011

Brilliant suggestion to balance the budget . . .

Received this from my dad's wife. I tracked it down to's PunditKitchen.

Apparently, Warren Buffett was on CNBC back on July 8th when he said he could end the federal government deficit in five minutes. I'm afraid even he didn't quite get it right, but he definitely suggested the way. His brilliant idea:
You just pass a law that says that anytime there is a deficit of more than 3% of GDP all sitting members of congress are ineligible for reelection.
Good luck getting Congresspeople to agree to such a law! But, hey!

But how did he go wrong? you ask.

Three percent of GDP is still a deficit. Indeed, it is a rather severe deficit. In a $15 trillion economy, that's a $450 billion deficit. And, as one of my previous posts noted, it's not even touching the larger problem of debt. The size of the debt itself--on which interest must be paid--is continuing to rise.

Still, as I say, I think Buffett has pointed the way: There must be significant negative (painful) consequences for those "public servants" who are unwilling to do their duty to ensure fiscal responsibility.

While I'm at it, I thought I would offer an update on my July 30 post about The difference between debt and deficit. At the time I said that Senator Mark Udall of Colorado either didn't understand the difference between a deficit and a debt, or he was cynically playing upon the lazy thinking of his constituents when he suggested that "The President's National Commission on Fiscal Responsibility and Reform, chaired by Erskine Bowles and Alan Simpson, came up with a set of recommendations that would reduce the debt by over $4 trillion over the next decade."

Well, he wants credit for coming back with a proposal for a balanced budget constitutional amendment, "the first Democratic senator in many years to introduce [a] balanced budget amendment."

Key components:
  • Requires that the federal budget be balanced each year unless 3/5ths of each House (60 votes in the Senate) vote to waive.
  • Requires the President to submit a budget each year that is balanced.
  • The provision would be waived when the U.S. is in a declared time of war.
  • It would create a Social Security lockbox that protects the revenue and outlays of Social Security from any balanced budget requirement.
  • It would prohibit Congress from providing income tax breaks for people earning over $1,000,000 a year, unless we are running surpluses (those surpluses must also not be eliminated if such a tax break were enacted).
My comments:

The first three points make eminently good sense.

The last one, too, seems reasonable. I'm not sure how it can possibly go into effect without massive court battles. For instance, what is an "income tax break"? If Congress at some point decides to raise taxes on those earning over $1,000,000 a year so that they must pay, say, 70% of their marginal dollars in income tax (while persons whose income is $999,999 must pay, say, "only" 50% of their marginal dollars in income tax), if someone subsequently suggests the top marginal rate should be reduced to 60%, is that an income tax break?

What if someone who makes more than $1 million wants to take advantage of a tax write-off, say, available to those who invest in green energy. Will such a write-off be disallowed because it would "provide an income tax break" to that wealthy individual?

But the one proposal that really bothers me is the fourth one: to "create a Social Security lockbox that protects the revenue and outlays of Social Security from any balanced budget requirement."

What is that supposed to mean?

It is the case, already, that Social Security is "off-budget" and treated separately in certain ways from other Federal spending, and other trust funds of the Federal Government.
Pub. L. 101-508, title XIII, Sec. 13301(a), Nov. 5, 1990, 104
Stat. 1388-623, provided that: "Notwithstanding any other provision
of law, the receipts and disbursements of the Federal Old-Age and
Survivors Insurance Trust Fund and the Federal Disability Insurance
Trust Fund shall not be counted as new budget authority, outlays,
receipts, or deficit or surplus for purposes of -
"(1) the budget of the United States Government as submitted by
the President,
"(2) the congressional budget, or
"(3) the Balanced Budget and Emergency Deficit Control Act of
1985 [see Short Title note set out under section 900 of this
Congress has been raiding Social Security for just about "forever"--using all funds brought into the Social Security system to fund current government expenses. I.e., the approximately $2.6 trillion Social Security trust fund consists solely of federal government IOUs--sorry: debt.

So the only way any Social Security obligations will be paid is by taxing current and future taxpayers to cover the outstanding obligations. Same kind of thing with Medicaid and Medicare. They are not pre-funded. There are no assets sitting around waiting to be utilized to cover future expenses. Same thing with all the mandatory spending programs of the federal government (expenditures in the U.S. budget that are mandated by programs outside of the budgetary process, including Social Security, Medicare, Medicaid as well as Food Stamps, Unemployment Compensation, Child Nutrition and Tax Credits, Supplemental Security for the Disabled, Student Loans, and Veterans Retirement programs.)

According to Kimberly Amadeo of, mandatory spending is slated to total $2.109 trillion in FY 2012--in other words, very nearly 100% of real income of the federal government.

Forget defense. Forget Health, Education and Welfare. Forget EPA, OSHA, FAA, FDA, USDA, and so on and so forth. You could cut out 100% of all the "optional" programs of the federal government, and you still couldn't balance the budget . . . unless you make massive changes in the enabling laws--the basic rules--surrounding all of these social programs.

It can't be done.

Well, finally, this.

My sister sent me a summary of something Dave Ramsey said:
If the US Government was a family, they would be making $58,000 a year, they spend $75,000 a year, and are $327,000 in credit card debt. They are currently proposing big spending cuts to reduce their spending to $72,000 a year. These are the actual proportions of the federal budget and debt, reduced to a level that we can understand.
I replied:
That was interesting, Miriam. I really appreciate your sharing that. It puts things into a more manageable perspective.

But something didn't seem right about the numbers. The spending seemed too low. So I did a little checking.

Based on what I can find—from the 2010 federal budget (see charts on the right hand side of the page; data from the Congressional Budget Office Historical Tables) . . .

If we start with a family income of $58,000 and multiply by the proportion of spending as compared to income of the federal government (divide by 2,162, then multiply by 3,456): you've got a proportional annual spend of $92,714!

Oh. And when it comes to “cuts”? Supposing Congress actually follows up on them all, we're looking at a reduction in annual spend from approximately $93,000 to $82,000 ($93,000 * (3,056/3,456)). So that’s nice. The family is proposing “only” to go into further debt at a rate of $24,000 a year instead of its former $35,000 a year!

Finally. It’s probably unfair to call it “credit card debt,” since credit cards are generally considered short-term debt and are charged at a much higher rate than the federal government. But that’s a relatively minor quibble. With an acknowledged debt of about $15 trillion and an income of $2.2 trillion (approximately), we find ourselves with a debt multiple of 6.8 [15/2.2]). Multiply $58,000 by 6.8 and you come up with the proportional total debt of this family: about $395,000.

Families with annual incomes of $58,000 generally aren't permitted to purchase $395,000 homes . . . or to wrack up $395,000 debts. Not normally, anyway! They can't pay their debts back. Especially not when their standard and expected annual expenditure--for years and years--is and has been significantly more than their income. (Even--to use Buffett's example--a "modest" 3% deficit for a family with annual income of $58,000 is $1,740. But when the family is borrowing--and seems intent on continuing to borrow $24,000 more every year for the next 10 years, at least?)
And Steve Forbes, Larry Summers and others see the S&P downgrade of American credit worthiness as an "outrage"?!? Would you want to lend to a family with this kind of credit profile?