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This is the cover for my latest book.

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America is smothered with personal and private debt, failing to educate students, and losing its once vast wealth and quality of life,  yet our politics are more divisive and our populous more stagnant. It seems that Rome is burning while Americans work harder and longer for less and less in their pockets. Preceding what may be the most important election in a half-century, Ronald Dailey’s new book searches for answers to the issues that matter most.  Theodore Roosevelt once said, “The first duty of an American citizen, then, is that he shall work in politics.” Answer the call. Be a part of the solution.

We Have the Biggest Houses

Here in America bigger is always better, whether it’s cars, waistlines, NFL linemen, or houses. If you don’t have three extra bedrooms filled with crap you’ve collected over the years, you are a failure—and worse yet, you’re hurting the economy. I’m talking stainless steel appliances, granite countertops, and a fenced-in backyard to keep the neighbors from sneaking a peek at your daughter by the pool. How about that new seventy-inch flat-panel TV, surround-sound home theater, and matching La-Z-Boys for you and the missus? No sir, that quality of life ain’t gonna fit into a nine-hundred-square-foot studio on the Upper East Side.

Here in America we go for quantity over quality, and we’re proud of it. Bigger is the American way! When I was a kid being raised by the Sylvania because both parents worked, I decided I would live out my days in space. So much space, in fact, that it would be a burden. I wanted a yard so big I’d need a commercial mower to keep it from turning into an African safari. I wanted a garage massive enough to park two F350s with room for my Harley. I wanted windows so large the electric bill would jump 50 percent when the shades weren’t drawn.

Yes sir, every American wants a castle. Just one drive through any suburb will show you that this dream has become a reality. Our cities sprawl for miles in every direction, with subdivision after subdivision filled with ginormous five-bedroom, three-and-a-half bath, two-car-garage behemoths. My heart swells every time I see one of my people finance his dream for no money down on a two-year, interest-only loan, because I know he has finally reached Nirvana: homeownership. I’m an American, not some fruity apartment-sharing European, and it is our God-given right to own a big freaking home. Jefferson, big freaking home. Washington, big freaking home. G. W. Bush, many big freaking homes. Hell, even Obama got himself a big freaking home.

One interesting aspect of Americana over the past half-century is the change from the house being a place to live to it being a retirement account. Being a homeowner seemed ingrained in the American spirit from the times of homesteaders moving west. Back then a patch of earth was the path to freedom; now lodgings are the path to riches. Everyone knows someone who made a killing in the housing market. We all heard a story about someone who started out with a two-bedroom townhouse and upgraded into a four-thousand-square-foot McMansion in the “right” neighborhood.

When we view our home as an investment, we play a game with divergent ends. On the one hand, we all want a retreat from the world where we can personalize our space and ground ourselves to an address. But when a home is in the same category as our 401(k), every decision must pass mustard with the real estate market. Want flower tiles in the kitchen? Think twice, because granite countertops sell. How about a nautical-themed bathroom that reminds you of your fisherman uncle? Not so fast: industrial styling is the new shag carpet. So what if you’ve been in the same home for the last twenty years and reminisce when you see the wood swing set you built for your first child? That guy on Flip that House said nouveau riche homebuyers are turned off by the trappings of family life, so get out the hammer and start disassembling.

Is it in our best interest to base decor decisions on resale value? Pools are a pain in the butt to maintain, but if your family could spend lazy Sundays swimming, grilling, and getting closer around the Johnson Family Lagoon, should you forgo the joy because pools may deter homebuyers who just want a bed and a roof?

In the past, people like my grandparents built their own houses—or at least knew something about construction, maintenance, and repair. Now the gulf between the people building houses and the people buying houses grows larger every day. Most people couldn’t tell you the difference between a frame, block, or prefab house, let alone the benefits of each, so how can they evaluate what they’re buying? Nowadays, houses are built in every style under the sun. There are subdivisions filled with Italian piazzas and old colonials, yet they’re as fake as the mechanical shark at Universal Studios.

Not understanding the intricacies of interior décor, home building or maintenance isn’t a life-threatening problem. There are many situations in which customers lack field-based knowledge and must rely on experts—doctors, mechanics, and lawyers, to name a few—but this puts consumers at their mercy. In the housing market, these experts are Realtors and mortgage brokers. Most people don’t understand that these are basically sales positions, and the interests of the buyers, sellers, and middlemen aren’t the same.  In various studies, it was shown realtors sell their own houses for 3% higher prices than their client’s houses.[1] This doesn’t mean that Realtors are out to scalp consumers, but it does show that people are more motivated when dealing with their own properties. Mortgage brokers are the same way. Worse yet, during the housing boom that started in 2003, many people with no prior experience were drawn into the housing market. They chased big paydays but were as naïve about the nuances of homeownership as the ill-informed buyers. Anytime there’s a knowledge gap in an industry, one party has a distinct advantage, and some people will be taken for a ride. This is what happened to many unwitting people who bought houses they couldn’t afford during the market peak from 2005–07.

The deregulation of the lending industry wrought a horrible toll on consumers and the world economy, culminating in the current financial crisis. The subprime mortgage boom of the last decade put many folks into houses, and some of these are success stories—people realizing the dream of homeownership despite shoddy credit. Their lives were made better because of financial trickery and the explosion of securitization, which pumped trillions into the home lending market. Unfortunately, many more bought houses they couldn’t afford with no plan B when the market soured.

The subprime mortgage market became a leviathan following the tech-stock crash at the turn of the millennium, during which many investors saw their portfolios halved. With easy credit due to the insanely low interest rates offered by Greenspan’s Fed and the gun-shy public’s aversion to stocks, all that money had to find a home.[2] That home was the American housing market, which touched off the biggest run-up in housing prices in a century.[3] The demand for mortgage-backed securities with the higher yields they offered was insatiable, and investment banks scrambled to meet that need. Thus the sub prime mortgage industry, only 6% of total mortgage origination at the start of the decade exploded to more than 20% by 2006.[4]

A subprime mortgage is a loan to a person who would not qualify for the prime mortgages offered by local credit unions at the rates you see in your local newspaper. Prime mortgages are backed by government agencies, which allows lenders to offer reasonable rates. People who can’t get these mortgages because of bad credit scores, questionable incomes, or a high level of debt have to look elsewhere for financing. Since they don’t qualify for government-backed loans, they pay a higher interest rate to compensate banks for the extra risk they take on. Before the 2000s the subprime industry remained small because few investors were willing to lend to people with poor credit. But a decade ago, this industry took off thanks to the increased securitization of these subprime mortgages, with an assist from the credit rating agencies Moody’s, Standard and Poor’s, and Fitch.

To understand securitization, we need to look at how banks lend money now compared to how banks used to lend money. In the old days, a local bank would take deposits from people in the area and then lend that money back to neighbors in the form of business, personal, and home loans. This system was in place for more fifty years after the banking reforms that followed the Great Depression. In the late 1980s, however, it was upended by the savings and loan crisis, which was caused by small banks not having enough money in the vault because they’d lent all the money to local borrowers. The solution was securitization. Basically, banks sold their loans to investment banks, and those investment banks sold bonds to investors, who then received the interest paid by the original borrower.

For example, imagine Bill wants to buy a car. He borrows $10,000 from his local credit union for sixty months at a 5 percent interest rate. Bill gets his car, and the bank now has a promise from Bill to make payments of $250 a month for the next five years. Over those five years the bank will collect $15,000 in payments—the original $10,000 Bill borrowed plus $5,000 in interest. The bank wants to lend more money, but it only receives $250 per month, so it calls an investment bank on Wall Street. The investment bank offers to buy the loan for $10,500, which would give the bank the original $10,000 it loaned and a $500 profit today instead of a $5,000 profit over the next five years. The local bank gets its money and lends it to Bill’s neighbors, while the investment bank collects $4,500 in profit over the life of the loan. The investment bank buys one thousand of these loans from all across the country and creates a giant pool of loans for similar cars with similar interest rates. Then the investment bank sells shares in this pool to investors. Each investor will receive money each month until all the loans are fully paid off.

When this system works, it’s great for everyone. Bill gets to buy his car, the local bank makes a small profit and has money to lend immediately, the investment bank lines its pockets, and investors across America collect the interest that Bill and thousands of others who bought cars with borrowed money paid.

But then the investment banks ran out of the prime loans to pool and sell to investors. Investors were looking for places to park their money, and investment banks were eager to fill this need. This led to a hunt for people who would borrow money and the subsequent eruption of the subprime market. This insatiable appetite for loans to securitize led to the creation of subprime lenders. With new financing options available to people who previously couldn’t afford a home, Realtors found they had a huge number of potential new customers.

We’re now dealing with the aftermath. During the boom years, people who couldn’t afford homeownership were buying homes with no money down and interest-only loans.[5] They bought homes they couldn’t afford—and people who could afford a modest home bought palatial estates. Hence, we have a glut of people underwater in homes they should never have been financed for.

When you hear stories about migrant workers who make $1,500 a month buying $800,000 homes, it’s clear the bank should retake the home and suffer the loss. Extreme examples are always easily dealt with. But there’s also the much more common case of families who stretched to buy their modest dream house, lost their jobs in the recession, and then saw the value of their home cut in half by the housing crash. What do we do with these folks? Kick them out on the street? Of course we don’t want to reward people for making stupid decisions, but how can you tell the difference between people who made a conscious decision to take a huge financial gamble and those who were misled or misinformed by greedy brokers and Realtors?

More than 30% of American home owners are underwater, which means they owe more on their home then the price for which they could sell the home.[6] They have no equity built into the price of their homes. They don’t have the option of moving to a different city for better employment or schools. They have only two options: stay in the home and hope to one day pay off the loan entirely, or walk away and let the bank deal with it. More and more people are walking away when they realize it will take five to ten years for their home’s sales price to eclipse what they owe on the mortgage. In turn, many Americans are currently bitching about these deadbeat homeowners sinking the economy, but we must first investigate the true cost of a foreclosure before jumping to conclusions.

When your neighbor walks away from his home loan, who bears the burden? First and foremost, your neighbor. In our society, your credit score is your reputation, and everything from credit cards to interest rates to employment is subject to the whims of credit compilers Equifax, Transunion, and Experian.[7] Your neighbor must also live with the stigma and emotional guilt of absconding on a debt.

The next group is the company that owns the mortgage. This may be a bank, or the mortgage could have been bundled with other mortgages and sold as a mortgage-backed security. If the bank holds the mortgage, it will have to maintain the house until it can be sold and will take a loss on the difference between the sales price and the loan value. In good times, a mortgage holder who must foreclose on a property expects to recoup about 70 percent of the loan value, but in the current market, that figure is probably below 50 percent.[8] When a bank loses money, the people hurt are not the CEO, board members, or some cabal in New York, but the bank’s shareholders—usually average folks who invest in mutual funds through their 401(k) accounts or large retirement pension funds that buy these banks’ shares. So, if a bank holds the mortgage when a house goes into foreclosure, the people hurt are the Average Joes who commute two hours to work, work a nine-to-five, and take the kids to Little League on the weekends—Main Street, as the politicians like to say. If your neighbor’s mortgage was bundled with thousands of others and broken down into bonds, these bonds were bought either by overseas foreign investors or American retirement funds, in which case once again soccer moms and NASCAR dads are taking the hit.[9]

The last group affected by the foreclosure, are those who live in the neighborhood. They not only lose a neighbor but also have to deal with the blight caused by a home left unmaintained. Moreover, their home prices will be dragged down by the fire-sale price of the foreclosed home. So, all around, the people who lose are average Americans.

Alternatively, who pays if the government steps in to keep the homeowner in the home he can’t afford? Again, average Americans, as every dollar the federal, state, or local government spends to keep a distressed homeowner afloat is a dollar either added to our national debt, recouped in higher taxes, or taken away from education, infrastructure, security, or other government services. Regardless, we lose.

In coming years these underwater borrowers will be a drag on our society, and until we come up with a solution we’ll see uncertainty in financial markets, government budgets, and home prices. This is just the fiscal cost, but the social costs may be even greater. What psychological issues will persist in the minds of homeowners who lost their homes? How does the surplus of empty homes affect local crime rates? How will the job losses in construction-related industries affect our economy, as many of these jobs may not return for at least five years—if ever?

On top of all this, there is the much more publicized money that has flowed into the coffers of the big banks on Wall Street. During the so-called bank bailout, the Troubled Asset Relief Program, hundreds of billions of dollars were printed at the Federal Reserve and given out to banks to keep them solvent. Banks must maintain a certain ratio of debts to assets. Debts include money received from depositors plus any money they borrowed from other banks or the Fed. Assets include liens on property, cash on hand plus any profits they’ve made and kept. Banks also have income generated from loans not in default, and some banks “trade” with their own money, meaning they make bets in the stock, option, and swap markets. So on one side of the bank’s balance sheet you have liabilities: deposits, money borrowed, and potential losses from loans and trading activities. On the other side are the assets: the bank’s own savings, its income stream from loans, and any trading profits. In the years following the Great Depression, banks that took deposits from customers were banned from trading on Wall Street by the Glass-Steagall Act, which separated investment banks from deposit banks. Investment banks were speculative, meaning they were free to gamble, but the government didn’t guarantee their deposits. Deposit banks, meanwhile, weren’t allowed to do much trading and were required to maintain high ratios of capital to debts, but they had a government guarantee. The Glass-Steagall Act was repealed in 1999, which allowed the deposit banks to enter the casino.[10]

TARP was put in place to help banks make the two sides of their balance sheet equal again. Deposit banks made a lot of terrible subprime loans to people who couldn’t afford their houses. These same banks were buying bonds in the pools of subprime mortgages sold by investment banks. Finally, the prime loans made to folks who could afford their homes began to default because of job losses and plunging home values. All of these problems coalesced at the same time, and many of the large American banks became insolvent. So the federal government pumped money into the largest banks, and we taxpayers got the bill. A lot of that money has been recovered, but much more is still owed.[11]

The real threat from the bank bailout is not the huge sums funneled to the likes of Goldman Sachs or Deutsche Bank (yes, the US government sent money to Deutsche and other European banks when it bailed out AIG), but rather from the moral hazard.[12] We have now bailed out the banking industry three times in the last thirty years: the savings and loan crisis in the late eighties, the long-term capital/Mexican peso crisis in the late nineties, and now TARP in 2008. Since the banks know that they will get a handout from the government if they are large enough to tank the whole economy if they fail, they’re in a no-lose position. If they make risky bets with depositors’ money and they’re right, they make huge profits. If they’re wrong, Uncle Sam will come to the rescue (and pay all the contractual bonuses due to top executives). This is the best business model in America: you win either way!

Banking crises are not new. It seems a huge crisis like the one in 2008 happens at least once a generation—and after every crisis the rules change, things go smoothly for a while, and then the regulations are relaxed. After that, there’s a wild surge in profits and fraud, and finally, another crash. Rinse, repeat.

So, how can we stave off another banking crisis for a generation and get our housing market back on track?

One solution to our foreclosure crisis is to keep most people in their homes and stop banks from repossessing properties. This would obviously make delinquent homeowners happy. Unfortunately, this is tough to do. Who would take the hit on the back payments? The government could step in and buy up all the delinquent mortgages and restructure the loans in such a manner, that homeowners could essentially rent the property back at much lower rates.[13] In this scenario, the tax payers would be on the hook. Another alternative is for banks to repossess the home, but rent the property back to the homeowner at below market rates for a set period.[14]

Both of these options require average Americans to take losses, either as tax payers or shareholders in large banks. Additionally, there will be a large public outcry when stories surface reporting folks who clearly gamed the system during the boom and now get to keep their property. On the other hand, keeping people in homes may stabilize home values and therefore help average Americans, as their home values would stop plummeting and possibly recover.

On the flip side, we could accelerate the foreclosure process and kick out all delinquent homeowners. The immediate impact would be a drastic drop in home values as the foreclosed homes were sold by banks at a steep loss.[15] Rents would probably rise, as the displaced homeowners would be looking for new lodgings. Banks would again take a massive loss, which would be transferred to shareholder and tax payers.

Both of these scenarios would destroy the homebuilding market, as either there would be a flood of used properties on the market at steep discounts, or people would be stuck in their homes and not looking to buy. Neither of these plans are very feasible through lack of political will. The right will be outraged about “deadbeat” bail-outs if we let everyone stay in their home. The left will be outraged if we kick everyone out in the street. It seems we are destined to have a long, slow and painful process of liquidation in the mortgage markets. But, this long restructuring process may just remind us how long it will take to sort out the subprime mess.

To prevent another banking crisis, we could strengthen regulation. Beginning in the 1980s, we have had a constant climate of deregulation, through both republican and democratic administrations. If this process is reversed, many argue we would strengthen our banking sector and prevent future collapses.

From 2008-2010, there were many bills to strengthen regulation and create firewalls between trading banks and FDIC insured institutions. In the end, most of these faltered or were watered down. If stricter regulations are passed, banks argue their profits will dwindle, but from the end of the great depression until the 1980’s, the regulatory climate was much stronger, yet bank survived.

Along with stricter banking regulations, we could implement more consumer protections to prevent predatory lending. Some consumer protections have been reintroduced, but more could be done. We have an extensive and lengthy process to file bankruptcy, but NO consultation before taking an auto or home loan. Maybe we should have financial consultations before making these decisions, as a home purchase is the largest financial decision in a buyer’s life. The same is true in regard to credit cards. Credit cards are pitched to everyone, starting with incoming college freshmen and ending with seniors on social security. Providing consumers with accurate information and financial advice may prevent the overextension which has been common place.

Banking regulation and consumer protections would surely eat in to banking profits. Alternatively, the recent banking crisis destroyed shareholder value, so were the profits generated through subprime lending beneficial for shareholders, or only to the executive office? Plus, consumer protection would surely help some folks avoid being taken for a ride. But, we live in a capitalist free market society, so this would be more “big brother” government interference in our lives.

What makes the situation even scarier is the modern ubiquity of lobbyists and the complexity of financial markets. One of the reasons the executives from Goldman Sachs, Morgan Stanley and the like shuffle between the board room and Whitehouse, is that no one else understands what the hell the big banks are doing! Even if we understood how banks operated, they have an army of lobbyists telling our elected officials they can self-regulate and have everything under control. That is until they come hat-in-hand for more TARP funds.

How we regulate this industry in the future will be critical. We must find a balance between encouraging investors to take risks and protecting not just the savings of average depositors, but also taxpayer dollars.

Whoa, that was intense! How is a normal guy like me supposed to understand all this math and Wall Street mumbo-jumbo? I’m just going to blindly follow the TV pundits. Everyone seems to talk about this Adam Smith guy and some invisible hand that takes care of all our economic problems. North Korea regulates its economy—and look at them, they’re all skinny and hungry! We need less regulation and lower taxes. Regulation kills business and taxes drive American companies overseas! My people don’t need no big brother government looking over their shoulder, treating them like babies. We don’t care about the tougher bankruptcy laws passed under the Bush administration, because bankruptcy is for quitters and these colors don’t run!

All these bank bailouts are hogwash, and I wish they’d all gone under. In the famous words of Andrew Mellon, “Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate!” It worked for Hoover back in the twenties and it would have worked for us in 2008 if only Bush and Obama had learned their lessons from the Great Depression. Government has no place in the affairs of private citizens, and me and my people don’t need no help or protection from TILA, RESPA, or the Consumer Credit Protection Act.

Start a Discussion in America: A Kickstarter Project

Working Title: America, The Most Awesomest Country

In America the average voter turnout for a presidential election is about 50% of the voting age population. It is markedly less for off year elections. Why does this matter? Well, representative democracy isn’t effective when less than half of citizens are represented.

Low voter turnout is due to a variety of issues, but I feel the most crucial are apathy and lack of understanding. The apathy is driven in large part by a general distaste for the particular breed of politics practiced today. It seems the focus is on attacking and beating down the other candidates rather than providing solutions for our troubles. The lack of understanding stems from the way issues are portrayed. Our media pundits focus on gaffes and the conventional misunderstandings of the day, rather than looking holistically at problems and considering wider reaching implications.

My goal is to engage and inform average folks across the country with 12 important issues we face. I do this by benefiting the reader in three ways. First, each reader is engaged by the informal style and humor sprinkled throughout the book. Second, issues are discussed in a holistic view and consider far reaching and often misunderstood consequences of maintaining the status quo. Lastly, we evaluate proposed solutions discussing the consequences and possible implementation. Every word is meant to spur discussion and thought among readers.

Engagement leads to understanding. With understanding, a discussion will ensue. When people start discussions we can have collaboration. In a collaborative environment, more people are represented. A represented nation leads to change which betters the lives of Americans. This book will be successful when more people are engaged, informed and represented through participation in our Democratic process.

Working Title: America, The Most Awesomest

My current project is a book about 12 issues facing America. I have written the book in two voices. The first is a humorous voice which adds some laughs to each chapter. The second is a logical and friendly voice written in a conversational style. The goal is to inform readers and spur discussion among friends, family and society as a whole.

These are my twelve chapters:

1. Obesity Epidemic
2. Education System
3. Wealth Disparity
4. Health Care System
5. Housing Situation
6. Tax System
7. The State of the Economy
8. Unemployment Rate and Jobs
9. Fiscal Policy and National Debt
10. Immigration Policy
11. The Size of America’s Military
12. Environmental Policy

The order of the chapters is not set. Some will be grouped, such as obesity and health care or jobs, economy and wealth disparity. Once the editing is complete, I will finalize the chapter order.

I started this project after visiting America in the early Spring. When home, I was shocked by the political wrestling match in the Republican primaries. Throughout the ordeal candidates were sound bitten and arguments flared up over trivial issues.

I am sure it will only get worse as we approach the November elections. America’s problems can not be solved by one man or one election, and I want to give people a framework for discussing our problems.

We need serious discussion about real problems in America. I explain issues using general terms and work through some possible solutions. I do not make decisions for readers, but hope to stimulate interest for further reading and discussion.

In my time in South Korea, I have been surrounded by people from other countries. Some of these people are Korean, while many others are from other English speaking countries. Having discussions and learning more about how other countries choose to address fundamental issues has given me a new and fresh perspective on my homeland, which I convey in America, The Most Awesomest Country.

]]> http://www.ronaldhuffmandailey.com/my-current-project/feed/ 1 http://www.ronaldhuffmandailey.com/new-photos-from-little-bits-about-teens/ http://www.ronaldhuffmandailey.com/new-photos-from-little-bits-about-teens/#comments Thu, 24 May 2012 03:01:02 +0000 Ron http://www.ronaldhuffmandailey.com/?p=127 I finally added images to Amazon for Little Bits about Teens.

This is the cover:

These are a few sample pages:

Little Bits about Teens

Then follow the link to help me publish my book.

Click here to support Ron’s Book.

What is Kickstarter.com?

Kickstarter.com is a website to connect people who want to support the creative process.

How does it work?

Artists, inventors or companies with an idea for a new project create a special page and ask for a minimum amount to make the project a reality. Next, people from around the world donate money to projects and get “rewards” for giving their support. Many times the rewards are the finished items and people who support the project get the items before the general public. This is like being able to pre-order a new product. Some rewards allow people who support the project to give input or suggestions on the design of the final product, like many of my reward levels.

How do I give money?

First, you need to register with Kickstarter.com. This is simple, secure and will only take a minute. Second, you will send the money with an Amazon.com account using any debit or credit card. Amazon is the world leader in e-commerce, so it is safe and secure.

When do you (the project creator) get the money?

I will only receive the donated amount if my project meets the funding goal ($4000.00). If it is NOT met, your credit or debit card will NOT be charged. If my goal is met, then I will receive the money 14 days after the project end date (June 25^th).

Who can donate?

Anyone in the world with a credit or debit card can donate to projects on Kickstarter.com. So, tell your friends and family. I have to reach as many people as possible to turn my project into a professional published book.

How can I share your project with others?

On my kickstarter.com project page (CLICK HERE), directly beneath the video, there are 4 buttons.

Starting from the left and moving right:

1) This is the “Like” button with Facebook. Click this and sign-in. Now, my video will appear on your Facebook page.

2) This is the “Tweet” button. Click this and you will be asked to sign-in to Twitter. After you sign-in you can Tweet a link to my page with a pre-written message.

3) This is the “Embed” link button. Click this and a box will appear with code. Highlight the code and post it to your blog or website. Then my video will appear on your site.

4) This is a link to my page. If you click the clipboard, it will copy the link. You can then paste the link in an email, on Facebook, blog or website. This is an actual link directly to my Kickstarter project. Please add this, because the video does not link back to my actual page where people can donate.

We’re the Smartest People In the World

Boy are we smart. This is America, Greatest Country in the Universe, and we have the best education system imaginable. We have the best educated citizens in the world, the best universities and the most registered patents. Every time I look around I am blown away by the combined brain power on display each and every Monday Night Raw! Did England invent Harvard? Did China start Yale? Each and every year we pump out hundreds of thousands of trained geniuses ready to conquer the globe and go on to start high quality publications like Guns and Ammo or websites like Perez Hilton. We invented tip calculators to take care of simple math operations. We have our smart phones to look up simple facts like the year of our constitution or why November 11^th is an important date. We can write at the second grade level and get all our news from 15 second sound-bites.

Personally, I’m amazed we can fit all those smarts in our tiny brains. Where does it all go? Maybe our eyes are like that shrink ray from Honey I shrunk the Kids, and all those books just got teleported into some filing cabinet in our noggin! Actually, I think we need to cut school short. What the hell do we need to spend 12 years of our lives sittin’ in some stupid classroom listening to some old codger go on and on about the revolutionary war? That shit was like 70 years ago! And College, don’t get me started on college…

One thing I am pissed off about it is all the money we pay to educate kids in America! Somebody told me the other day we have teachers who teach in Spanish, SPANISH! This is America where we speak English hombre! How about all that money we’re throwing away on teaching Art. What are we turning into Parie where everyone goes around blabbering about a toilet sitting in some stupid art gallery. Back in my Grand pappy’s day kids only went to school for 8 years then they went and got a damn job! I don’t want my damn tax money going to pay for some immigrant’s kids to get an education so he can steal my job at the Rubbermaid factory! I am sick and tired of paying for all these handouts to undeserving kids who are sucking off the American tit and drinking her dry of the sweet sweet milk that brought us Beer Pong and Corn Hole. Why don’t we teach that in school? I’m having a hell of a time finding a partner who can score more 2 points a turn and loser buys, so it sucks, BAD!

In America we’re smart enough and for those people who can’t read or do basic math we have a few smart people who make life simpler for us, like Rush Limbaugh who tells my people the truth or those guys who make cool apps to help us balance our check book. We spend too damn much money on education while the rest of America goes to hell in a handbag. Are we cranking out Jeff Foxworthys or Dale Earnhardt Jr.s? If not, I want my money back Obama.

The education system in America is broken. We hear it from every angle. Failing kids, under performing students. High school graduate who can’t do college level work. Adults who can’t read, write or do basic math. The situation is scary, yet most people are oblivious unless they get outside of their own social circle.

If the goal in America is to go to college, we are failing. Out of every 100 students who enter high school only 18 will graduate with a 4 year degree.¹ This is ridiculous. In the modern world, information and technology are more important than natural resources or the size of a country’s workforce and America is losing our educational edge. We are an innovation economy and without highly educated workers on the cutting edge of the technological world, we will fall behind other countries which do a better job churning out able educated workers. We can’t compete with 3^rd world countries for manufacturing and we can’t go back to 1950′s America where we are the workshop of the world. The America of our grandparent’s age is gone and in this world, education matters. It is America’s competitive edge and a high school education is simply not sufficient to prosper in the modern world.

We have 1700 failure factories across the country.² These are high school which graduate less than 60% of their entering 9^th grade students. That means if you pick 10 of your friends from high school and you all went to one of the failure factories, 4 would drop out and only 6 would get to walk across the stage and get a diploma and handshake from the principal. Out of those 6 friends who actually graduated only 1 would complete a college education. These schools are not acceptable. The difference in lifetime earnings between someone with a 4 year degree and a person who dropped out of high school is staggering and we as a nation can not afford to leave 40% of our students with a future of poverty and hardship.

Even the students who do graduate high school are not prepared for university or the workforce. Our general math scores have been declining compared to the rest of the world for years. You might think that is because the rest of the world is getting better, and you would be right, but America is also getting worse. Our SAT scores have been stagnant for the last 30 years even though we spend an ever increasing amount of money per child for their education. Less than 40% of students are proficient in basic math for their grade levels and it seems to get worse as they get older and farther along in the school system.³ How can we as a country compete at an international level when less than half of our society is proficient in basic math? How can an individual compete against other applicants when they are not proficient in basic math?

Almost a quarter of all adults in America are functional illiterate.⁴ That means if you chose 10 of your friends, 2 couldn’t locate information in a newspaper article. On the other end of the scale, 2 of your friends would read at an advanced level according to the International Adult Literacy Survey. The 6 friends in middle will understand the article to varying degrees. Maybe only 2 of your friends will be able to tell if an opinion is supported by fact or the reasoning given is logical. How will functionally illiterate people understand written tasks at work, advertisements, loan paperwork or live their lives without assistance? Is it acceptable to leave a quarter of our country unable to survive in a modern written world without assistance?

The American higher education system is still the envy of the world and our K-12 public system used to hold the same vaulted status. Many education systems around the world were modeled off ours and we are still a leader in educational research. So, how did we fall from being the best in the world to middle of the pack in the OECD (Organization for Economic Co-operation and Development)?

Basically our high school graduation rates have been falling for the last 40 years.⁵ When we can’t graduate kids from high school, they can’t go to University. Beyond the declining graduation rates, there is good evidence that we are “dumbing-down” our school curriculum given that American students are getting creamed in international competitions for math, science and reading. We have been throwing money at the problem, but we are not seeing any results. Only luxemburg outspends the US per child and we are merely an average performer among developed nations.

One reason we can’t graduate kids is that we can’t get them to focus on school. There was once a time when people like Benjamin Franklin, Martin Luther King and Mother Theresa were revered for the commitment to civic duty, education and moral strength. Once, we had superheroes that fought evil, invented rocket ships and made medical breakthroughs, but in many ways we have replaced all reverence for bettering society as a whole to physical talents. Lebron James is a great example. Here is a man who was 6’7” at 16 and may have grown up with a basketball in his hands. He can dunk. He can Shoot. He can Block. He can Tweet! He gets paid more than our President and all members of Congress combined. From the halls of high school to a multi-million dollar contract in the span of months. Education, who needs it when you become richer than God putting a ball through a hoop.

We have kids all across America spending hours a day working on their jump shot while dust settles on the pre-algebra book. What Nike, Reebok and Adidas fail to convey in their saturating marketing is the inverted pyramid of professional sports. We have camps for the top tier high school players where they are interviewed relentlessly and treated like royalty, but the average 10 year old doesn’t get to see the 10,000 great players who didn’t make the cut and were left with a broken dream, no education and no marketable job skills. The housing projects are filled with “almosts” who had no backup plan. Yet, kids think education is not important when they can “make it pro” and make millions of dollars.

School was never meant to be fun, but in times past it was a forgone conclusion young people would go and try to learn. Now it is uncool to be smart and get good grades. This is especially true among minorities, where a student with good grades will be bullied and accused of “selling-out” for studying and knowing the answers on the test. A great curriculum, good teacher and new school can’t fight the culture and social network of a kid if he will be punished for doing well in school.

Our system is broken and we need to focus on specific areas to look for solutions. The problem needs be attacked on many fronts and there is no silver bullet. The educational culture in America needs to be changed. Not every student will be a university graduate. We used to have a 2 track system in America where some students received university preparatory classes and others received vocational training. In our current system everyone is expected to go to university, but with only 18 out of 100 students graduating with a 4 year degree this ideal is misplaced. Would a two track system of the past benefit students more than the current system where every kid is supposed to go to college?

We have a disturbing lack of parental involvement among lower performing students. The children of high income, high education parents are constantly monitored by their parents. Their parents are able to provide assistance with homework and encouragement when needed. These children will not be allowed to fail. We don’t need to worry about the top 10-30% of our students, because they are the best in the world, but the other 70% are failing and some of that failure rests with a lack of parental involvement. Teachers always point to the home life of a failing student and they have a point. Without parental involvement, students will not be held accountable for their school performance. How is a kid going to succeed when their parents aren’t at home or don’t care about school?

Teachers will assign most blame to the parents, but we also have some bad teachers. The effect a bad teacher has on a student is huge. A bad teacher can ruin a student and push them farther away from graduation. We know we have bad teachers in our schools. That is a fact. Every job in the world will have a certain percentage of people who are not proficient. The problem is first identifying the bad teachers. Once we identify a bad teacher we can try to get them extra training and elevate their ability to teach children. If that doesn’t work, we need to get them out of the classroom. Unfortunately, it is very difficult to remove a teacher after they have tenure, which usually happens after 3 years.

Teacher’s Unions are extremely powerful in the US and they donate large amounts of money to both republican and democratic candidates. They fight pay for performance, meaning they are against incentivisng teachers to produce better results. This is a great idea, but is very hard to implement, but we should be looking for ways to pay great teachers more money so we can reward people who are good at their work. Teacher’s Unions are also against standardized curriculum across the nation. Should we have standardized curriculum for the entire nation? If yes, we would know every kid in every school is getting the same core knowledge. On the other hand, how are we supposed to decide what they need to know. Should we be paying teachers for performance based on standardized tests? Great teachers deserve more money as they can bring an under performing student up to grade level, but using standardized tests has limitations. What other measures could we use to judge bad, proficient, good and great teachers? These are tough questions which need to be discussed, but we definitely can’t afford to continue on the present course.

Failure factories have to be closed. For whatever reason these schools are failing almost half of their students by not getting them to graduation and they have to be closed or completely altered. A school with a drop out rate of 10% is too high and needs modification. A school with a drop out rate of 20% is outrageous and needs serious consideration. A school with a drop out over 30% needs to be changed so that we can reach more of those students and keep them from falling into a life of poverty.

The No Child Left Behind initiative has not done much to improve the situation in our schools. Schools have been closed and scores have marginally increased, but these score increases may be entirely attributed to a nationwide lowering of testing standards. Under the program each state is in charge of deciding what counts as a passing score. Many states simply reduce the requirements to be considered meeting standards, rather than actually increasing test scores. On nationwide tests students are under performing, but magically at the state level students seem to be improving. Many argue the “MBA mindset” is not applicable to a soft science like education anyway. So, if the massive No Child Left Behind initiative is failing, what can we do to return American kids to the top of the educational heap?

Every few years there is a new and improved teaching method which is bandied about as the cure all panacea. Currently small schools are in vogue. Many times a large under performing school is closed and the same building re-opens with 2-3 smaller schools. The thinking is that with smaller schools the teachers can focus on individual students since there will be fewer students in the school. Another idea is more peer-to-peer mentoring or specific computer education which could be altered for each student based on their individual progression. All of these are good ideas and seem logical. If a teacher has 30 students to focus on, they can tailor their lessons to a smaller set of students. The same is true with individual or small group tutoring. There is a big push away from the old style of lecture teaching to 20+ students and towards a more individualized approach with more discussion between the students and teachers.

The biggest drawback to this kind of education is simply cost. America currently spends more money per child than any other country, and to give each child an individualized lesson will cost still more. With smaller schools, the kids get more attention, but they also don’t have the same elective choices as students in larger schools. How can a school with 100 students offer 4 languages, computer, art and photography classes? They can’t unless they get more money, which means partnering with other small schools or charging tuition. Are we willing to spend even more money per child and hope the results are better?

What about changing the entire school structure along with the teaching methods? It is well known Asian students study a lot more than Americans, so some have advocated increasing the studying time. This has been adopted by the KIPP schools. Their students are in school for along hours, sometimes 8am – 8pm, and even go to school on Saturdays. They have had very impressive gains with this model of intense study and having kids do their homework at school. This model keeps kids out of trouble and away from what may be a volatile home situation for as long as possible. The KIPP success is undeniable, but there are not enough seats in the KIPP schools for every student from a low performing school. So, they must accept students by doing a lottery. Students who want to go to a KIPP school put their name in a bucket and then an administrator pulls out a certain number of names who will get to change schools. This is a fair system, but it turns out the students who don’t have their names pulled, also do pretty well in their old under performing school. Maybe the kinds of students and parents who want in to a KIPP school have something other under performing students don’t have, because they perform about the same whether they get into the KIPP school or not. Is the KIPP model successful because of the extra hours, teachers and methods or because the students who go there WANT to be there and learn?

One reason KIPP schools are successful is that they demand a parental commitment. To get into a KIPP school is not good enough, once the student is enrolled, they have to maintain a strict code of conduct and their parents must be active in the learning process. This is something we need to have in all schools. Parents have to be involved in their child’s education if we are going to improve student performance. Maybe teachers should take time off from teaching and get out and meet parents. Maybe we need to create a special staff member who would liaison with ALL parents, not just the ones who get in trouble or perform at high levels. Would it be possible to have special Parent Teacher Association meetings late at night, early in the morning or on the weekends to allow parents with strange work hours to attend? Police departments around the country have done a great job connecting with communities. The police stop crime and protect citizens, schools do the same thing for kids. If a kid gets through school their chance of being unemployed, poor or in jail go way down. Could the schools and police team up for community events and outreach programs to keep parents involved with the students education before the police must become involved in the child’s life? Parents need to understand they are a critical part in the education process and we need to respect and value their input. They must understand and value the education our schools provide.

Making kids and parents understand the value of an education will be tough, but it is necessary if we want to get kids performing at or above grade level. Countries that lead the world in educational standards all have a focus on education from the youngest child to the oldest grandparent. In Asia, kids try to emulate the students who have the highest scores in the class. In America, those kids are bullied. How can we get kids to see education as the key to their future.

One way would be to be vocal about the immense income gaps between those with a high school degree and drop-outs. University educated students earn 300 percent more money over their lives than those who drop out of school. Most kids don’t know this. We idolize people who dropped out of university such as Bill Gates, Michael Dell or Mark Zuckerburg, but kids need to know they are the exception rather than rule. Sports are great. Sports teach teamwork, work ethic and social skills, as well as keeping kids in shape, but they need to be viewed as a backup plan to education, not the other way around. Kids need to understand less than 1 in 10,000 athletes ever makes any money playing sports, whereas 99% of kids with a 4 year degree make more money than those who dropped out of high school. Parents need to get this information too. Parents of immigrants understand the value of an education, which is why many 2^nd generation Asian immigrants get university degrees. How can we get all parents and kids to value education like these recent immigrants? Maybe we should be spending more money selling the idea of an education, rather than simply dumping knowledge on kids.

Who are some good role-models for kids to emulate? If the goal is get kids interested in learning, than successful highly educated people will be key. Educated doesn’t always mean a 4 year degree. Bill Gates is highly educated, but much of his knowledge was gained through self education. That’s OK, as long as we get kids interested in learning, it doesn’t matter if some of that happens outside of the classroom. 50 Cent is a smart guy. If you ever hear him speak, you will see him as more than a rapper. He can speak to fans and emphasize what an education can do for their lives. We need to try to disassociate education with a strict classroom interpretation. If we can make kids view schools as a launching pad to other areas of learning, we will be in business. A guy who knows how to work on a car or fix a pipe is educated, just not in middle ages poetry. Kids need to know school is where they can learn how to learn and then follow their passions where they lead.

In many countries more money is spent on under performing students than those who are performing at grade level. Could we do that here in America? Should we “double-down” on poor performing students and throw more time, energy and money at their education? If we want to keep kids in school and off the street, the ones who are at risk of failing need more attention. We have programs like this in place, such as Big-Brother, Big-Sister and we may be able to expand this model to all kids at risk of failing. The kids in the top 10% of the class already know the material, so the teacher could focus more on the bottom 30%. This may seem unfair to the rest of the class, but if we lose 20-40% of 9^th graders, they will eventually be a drag on our society. When drop-outs can’t get jobs, we pay for them. When drop-outs go to jail, we pay for them. When drop-outs have children we pay for them. Students who drop out have higher rates of incarceration, unemployment, children in the government funded WIC program and enrollment in Medicaid. We can spend the money to keep kids in school, or we can pay 10 fold when they can’t find jobs and make bad decisions later.

Trying to solve our education crisis will cost money, but staying the course will also cost money. First, we already spend more money than other OECD countries per child and we are middle of the pack at best, so we are overpaying for an under delivering system now. We are getting are sub par results and the rest of the world is improving as we flounder. If we can’t improve our education system we could suffer serious economic costs. Already Tech companies are looking outside the US borders for skilled workers. Around the country it is getting more difficult to find a doctor or dentist who was born in America. Kids are shying away from the hard sciences, like math and engineering, but this is where the world is heading. If we can’t do a better job educating our children we will be left behind in the world economy.

Education, Smeducation. All this hot air wasted on extra schooling is just a ploy by the liberals to get my people over to the blue donkeys. They want us to know facts and history and maybe even talk about social issues in school, IN SCHOOL! Every one knows values are taught at home. Why do we need to learn all this useless knowledge like Algebra or Geography? We have smart phones and Wikipedia for that.

First, they will have us spending more money on education. Next, they will want to give away free lunch. Once people get on the dole, they will never get off, so providing kids with free food, books and teaching is leading our children away from a solid American work ethic. No one gets a free ride in America, so we need to get our kids out of the classroom and into a job.

My people don’t need anything more than a minimum wage gig down at the factory or local fast food restaurant, so what good is the history of World War II for putting together a Big Mac or working a plastic tumbler? Not a damn bit of good I say, so all this education is really stealing money out of my people’s pockets. If kids could just skip school and go to work at 10 years old imagine all the extra money they could be raking in. Plus, since we wouldn’t have any schooling, my people wouldn’t have to give up their tax money for this out of date institution, which would allow us to reduce the tax rates on corporations and wealthy folks! Now, that is something we can get behind! We need to fight this spread of government bureaucracy and getting rid of compulsory political indoctrination they call school is the first step!

I wrote Little Bits about Teens to help parents communicate with their children, because communication is the key to parenting. Parents need to have open lines with their children, but it is hard for parents to broach the subjects which matter for teens. Little Bits about Teens bridges that gap and gives parents talking points to start discussions with their children.

You can view a description and order on Amazon here:

Little Bits about Teens

In the near future I am going to update the entire Little Bits series to digital format and also work on setting up print on demand service for new paperback copies. This series has helped thousands of parents, children and educators. It has been adopted by state agencies, university teaching programs and other groups with a focus on helping at-risk children.