Wilder, Wealthy, and Wise

“Now can you believe it?  After only five years of playing football, I got a college degree.  Mama was so proud.” – Forrest Gump

This bridge is based on one I sketched one day.  Oh, wait, it was built before I ever sketched it.  Nevermind.

The easiest way to determine a lie is to see what everyone believes in.

Almost always they’re wrong.

The delusions of crowds are nearly legendary.  Teenage girls are suddenly transformed into witches in colonial Salem, rather than in Middle School, like normally happens.  Stock prices always go up.  Until they collapse in a pile of hope-flavored rubble.  Housing prices always go up, until they don’t and cause the government to throw piles of money into the air hoping that it will hit someone on the way down.

“Everybody should go to college” is another one of those things that “everybody knows”.  And it’s just as wrong as the examples listed above, and a lot more damaging.  And I firmly used to believe this, as well – I was a part of “everyone believes”.  The idea that everyone (well, most people) should go to college was just ingrained.

Why would I believe that?

Well, in my mind, college was a useful experience that helped people to be prepared to be of value to society (and themselves!) through education and progressive exposure to responsibility.

To a certain extent, that was true.  But most people I know and work with have at least a bachelor’s degree.  And most of my friends from high school have at least one if not multiple degrees from college.  And I have a masters.  And The Mrs. has a masters.  The odds of that randomly happening?  1 in 17,232,000.  Okay.  I made that number up.  But the odds are pretty low, given random selection.  In reality?  It happens a lot.

Before 1980, about half of the guys who graduated from high school (which is not everyone – only 70% or so people graduate) went to college.

So, if you simplify a bit – 50% of 70% is 35%.  The top third (or so) of your group went to college.  Historically, about a third would drop out.  That left 20% or so of the population with college degrees, which made them relatively more valuable.  It meant that you could work at a goal for four or five years and accomplish it.

Now, however, about 70% of high school graduates go to college, and women outnumber men (which we may or may not get into on this post).  Now, 70% of people (still) graduate from high school.  So, roughly 50% go to college.  That’s a huge increase (40%+!) in just a few decades!

And the college graduation rate is going up – now about 35% (total) of the younger generation has a college degree.  That’s a whopping 75% increase in the number of people with degrees.

Great news, right?

Oh, heavens, no.

Part of the problem is that the population isn’t really getting smarter.

If you look at the average SAT verbal score, it’s going downhill.  I would guess that at least part of that is there are more people taking the SAT than before – it’s not just the top 35%, it’s now the top 50%, so the data implies that we’re regressing to the mean with people going to college.  There is even evidence that the population is getting (overall) dumber on a worldwide basis.

SAT scores peaked about the time that Nacho Cheese Doritos™ were introduced.  Coincidence?  I think not.  Graph via Zero Hedge

I’d suggest that most college degrees today are . . . not particularly worthwhile.

Previously, even a degree in a subject without a lot of economic demand, say, Anthropology, would indicate that you were in the top fifth of the population as far as the ability to commit to a goal for four years or more.  Now it’s more than a third of the population that has a degree.  For your degree to mean something today in 2018, the degree has to be in something useful.  Medieval French Art History Studies won’t really cut it for, well, almost any job outside of a museum where Ben Stiller works as a plucky night watchman.

I could keep going, but if your degree ends in the word “studies” then you don’t have a real degree.  You just spent five years and either family money or college debt (which is the worst possible debt) getting a degree that qualifies you for exactly the same number and type of job that you could have gotten without that degree, namely positions in the food services or housekeeping industries.

And that’s why this is a Wealthy Wednesday post – you want your degree to be of value to you.  Of course you want to go to college to have fun.  But the purpose of college isn’t to have fun – it’s to get a credential that allows you to 1. get a job where you can be of value to mankind, and 2. to make connections with people that can help your career down the line so you can be of value to mankind.  Since I was too dumb and not enough of a weasel to try to be friends with someone just to create an advantage for me, if you’re my friend and you’re reading this . . . it’s because you’re my friend.  I really suck at Machiavelli.

But if your goal is to find a job where you can be of value to mankind (and using the scorekeeper as dollars, which is a pretty relevant scorekeeper) – people are generally (though not always) paid more when they impact more human lives.  If, as an engineer, you can help everyone in the world save a nickel a day?  Wow.  You’ve managed to change the world – and you get more money.  Hence the people (like Bill Gates) who have saved literally billions of hours of mankind’s time?  Yeah, he’s got the cash from that, plus the khakis.  And a manservant who can kill you in 347 different ways with a hotel coffee machine.

The current list of top college majors to make good money (LINK from salary.com – it’s a slow-loading slideshow, so I don’t recommend it) is:

1. IT – yes, they are the wizards that support our FaceBorg® addiction. Thankfully, they have no idea of the power they wield – the power of the Search History.  Yikes!
2. Economics – this was a bit skewed – all the job titles were successful economists, managers and stuff, not the economics majors you see working at Starbucks® or playing no holds barred ping pong in Ding Dang with their lives on the line.
3. Engineer – Also skewed, but downward. They picked next to entry level positions.  The average is much higher, and this should be number one or two.  Why?  You can live without aluminum, baby, but not without engineers.
4. Math – I met a math graduate when I was in college. He was working at a bookstore.  Selling me books.  Call me dubious.
5. Marketing – Again, skewed – these were all “Marketing Director” type positions, of which there might be one in a company, and not all the marketing drones that end up giving free shots of Jägermeister® to drunken college girls on spring break in Florida.   Maybe they figured in the perks.
6. HR – It’s always good to be the group that figures out what everyone in the company should be paid. And to know where all the bodies are buried.  In some cases literally.  Career tip:  remember HR works for the company, and NOT the employees.  They will bury your career for another 0.1% annual raise.
7. English – I call bogus. I speak English.  They don’t give a degree in the language that you speak.
8. Biology – Seems legit. But they have squishy things that are made of slime in their labs.  No thanks.

And that’s the job market today.

That’s the rub – the job market today doesn’t look like the job market from forty years ago, and none of it resembles the job market from 100 years ago.  Forty years ago, to put up a bridge a group of engineers would spend thousands of hours working calculate the forces, stresses and angles required for the bridge to be safe.  And a good bridge can last thousands of years – Roman bridges are still in use today.

Now?  A software program analyzes the forces and stresses and optimizes the sizes of beams and trusses to make the bridge as safe an economical as possible.  The thousands of hours of engineering time that previously went into the bridge is now compressed into a (complex) software package that designs and specifies all the components of the bridge.  Now when the engineers using the software don’t know how to build a bridge, well, that bridge won’t last 1,000 years.

The point, however, is that engineering hours are being replaced by programs.  This is new.  What else is being changed in our job market?

• Attorneys: Legal research is farmed out to places like India, which sleep during the day and only come out at night to do legal research.  This research is done at a fraction of the cost of the average new law school graduate.  What will the new law school grads do?  I vote that they move to Iran and mess that place up with lawsuits.  You can’t even find a place to put nukes if they have an environmental review.
• Teachers: Why do we need one per classroom?  Why not have a group of lectures by the Tiger Woods® of lecturers supplemented by people who can answer student questions?  Also, we would give the classroom people Tasers®, because, as noted above, we ain’t getting any smarter.
• Accounting: This could be done by people in foreign countries if we trusted them with our bank account numbers.  Yeah, that always ends well.  Regardless, we can assume that this will be increasingly automated and globalized, like your mother.  (That’s not a great “your momma” joke, but I have a quota to fill, and I’m behind.)
• IT: Eventually the systems we use will be self-healing.  And we will need to bring them fresh electricity or whatever they need.  Since they’ll be self-sufficient, and also have our credit card numbers.  Expect random deliveries from Amazon to self-assemble a replacement for that bearded guy who fixes your hard drive.  He’ll still make the same jokes that involve Japanese anime that you haven’t seen.  Anime:  proving the Japanese are way more twisted than the Germans about sex things.
• HR: Will be replaced after at with HR-Bot 2000™.  Because HR still thinks “2000” sounds really cool and futuristic.  Actually, I’ve seen several HR software platforms that make it so HR can be eliminated.  Guess that will decrease the load on the company Internet.

Anime isn’t this disturbing.  It’s this disturbing times 186,000.  Just say no to Anime!

Automation will go after the higher (and lower) salaries first.  Burger floppers and attorneys and engineers.  Computers can do most of what you do already, except for the coffee drinking and peeing.  But they suck at welding.  Oh, wait!  They’re better at that than people.

I kid.  A little.

If you’re going to college and not majoring in Science, Technology, Engineering, or Math?  You’re just burning your dollars.  Or your Dad’s dollars.  And if your dad has that much money to burn, I’d like to do some networking with him on selling Amway®.  Or just writing me a check if he’s that gullible.

Hey, maybe I could turn your school into an unpaid internship.  Yeah.  Your dad only has to kick in half as much.

That will teach you two a lesson.

Because degrees are always worth it, right?  Even your degree in Sociology?  I hate to burst your bubble, but a really good STEM person will make what you make in your career in five years.  Maybe two if those stock options take off.

Wow.  I still have about five things to talk about relating to college and wealth, and I can see that maybe I’ll have to wait until next week.

Don’t worry – I can bully you then, too.

“For those regarded as warriors, when engaged in combat the vanquishing of thine enemy can be the warrior’s only concern. Suppress all human emotion and compassion.  Kill whoever stands in thy way, even if that be Lord God, or Buddha himself.  This truth lies at the heart of the art of combat.” – Kill Bill (Vol. 1)

Yeah, a great movie.  Also describes my freshman year at high school.  If you replace samurai swords with fish sticks.

I was playing a game the other day – a silly app that The Mrs. had downloaded onto a tablet.  It has (I kid you not) small children driving tanks and planes and what not while you attempt to destroy them with poison gas and bombs.  I’m not sure what the name of the game is, but I think it really should be called “War Criminal®.”  Anyway, there are several modes you can play it on, and one of them is “single life.”  Rather than “single life” being a video game about an old, sad, single bachelor eating over a sink, it refers to the number of lives the game gives you before it’s over.  Generally you start with the dozen or so lives like we humans all have, by switching to this mode the game makes you live just in a single life.  And when you’re done?  You’re done.

What I noticed when I played the game in “single life” mode was that I died much earlier than I normally lost the first of my dozen or so lives.  By playing conservatively to try to save that single life, I had actually played much worse than I normally do.  Maybe there’s a lesson in there?

Yeah, there is.

A colleague at work recently purchased a new car – the car of his dreams.  A car he keeps . . . in his garage.  He won’t take it out to drive.  Don’t get me wrong – I understand the idea of engaging in things you enjoy only sparingly to keep them special, but in this case – he just likes the car so much that he doesn’t want to risk anything happening to it.

Tracy Goss wrote a book called “The Last Word on Power.”  When I first saw the book, the title put me off.  I thought it was a book about how to get power – sort of like Machiavelli for the modern cubicle-dweller set.   But then a boss took me aside, “No, John, the book is about getting power over yourself.”  He’d actually gone to one of Ms. Goss’ training courses.  Said it was pretty powerful – powerful enough that an executive there had broken down realizing what a mess he’d made of his life.  Yikes!

He took me through the book.  It’s good – maybe I’ll review this 25 year old book sometime in the near future, but right now you can buy it at the link above.  I get no compensation if you do (or don’t) as of the time of writing this post – but that may change.  And it’s not likely that you’ll break down into a puddle reading it.

Anyhow.

Goss writes about samurai – and why they were awesome.  The swords, right?  Or the hair?  Or the armor?  Or the ability to turn into smoke and fly like a bat?  No, that’s ninja-vampires, not samurai.  I always get them confused.  Ninja-vampires are the ones that look like raccoons, right?  Maybe not . . . .

The real samurai (not my ninja-vampire-raccoon thing) were especially effective as fighters simply because they didn’t care if they lived or died.  They would prefer to live, but if they could die a really glorious and Tarantino-esque death, that might even be better and more honorable than living.  When the samurai went into battle, they were awesome precisely because they didn’t care.  Oh, and the swords, and the years and years of arduous and intense physical training.  But without the attitude, they would have just been a group of robed acrobats with cool swords who ran like sissies anytime they cut their own finger and saw blood.

From the time when the French Foreign Legion showed up on your newsstand every week, between manning remote outposts facing sudden death . . . .

Goss continues with her military metaphors – bringing up the French Foreign Legion.  For those of you unfamiliar with the Foreign Legion, it is open to foreign soldiers joining – even today, 75% of the soldiers in the Foreign Legion are not French (all officers are French).  The Foreign Legion is world renowned for its bravery.  One reason?  Traditionally the men who have joined the Foreign Legion have given up their home nationality, their history, and, in some cases, even abandoned their name as they joined to avoid angry fathers, husbands, or juries.

Here’s Frank Sinatra in his Foreign Legion outfit, along with his son, future president Bill Clinton.

How amazing was the Foreign Legion?  In Mexico in 1863, the Foreign Legion became legends (from Wikipedia® – edited to remove parts of the autism):

A company led by Captain Jean Danjou, numbering 62 Legionnaires and 3 Legion officers, was escorting a convoy to the besieged city of Puebla when it was attacked and besieged by three thousand Mexican loyalists.  The Legion detachment made a stand in the Hacienda de la Trinidad – a farm near the village of Camarón (JOHN WILDER NOTE:  I THINK THIS MEANS SHRIMP).  When only six survivors remained, out of ammunition, a bayonet assault was launched in which three of the six were killed. The remaining three wounded men were brought before the Mexican commander Colonel Milan, who allowed them to return to the French lines as an honor guard for the body of Captain Danjou. The captain had a wooden hand, which was later returned to the Legion and is now kept in a case in the Legion Museum, and paraded annually. It is the Foreign Legion’s most precious relic.

So, 90% of your men – dead.  Surrounded by 3,000 Mexicans.  What do you do?  Fix bayonets and charge.  All six of you.

When I was a freshman in college, Caller ID hadn’t been invented.  We called the local bowling alley:

Juvenile Us:  “Do you have 12 pound balls?”

Bowling Alley Dude:  “Yes.”

Juvenile Us:  “Then how do you walk.”

Bowling Alley Dude:  “I don’t.  I strut.”

Yes.  This really happened.

This is his hand, along with some drawings of the event.  Totally tough dudes, and they still have the hand – it’s not lost in a desk drawer or a moving box like it would be if it were in my house.

And even though the six Foreign Legion guys didn’t work in a bowling alley, they could certainly strut – they had displayed amazing, bowling-ball-sized bravery.  How?

Surrounded by 3,000 Mexicans – they attacked.  They knew that they were dead.  They were living on borrowed time.  So they did the only thing they could – they made the most out of every last second.

We tossed it out.  As soon as it started the blackmail notes.  Which were not written in English, but were written in mouse blood.

We have an awful, awful cat.  It started out as an inside cat, but was such a mess (evil in more than the usual cat way) that it became an outside cat.  One night The Mrs. and I pulled up in the Wildermobile®.  We saw our awful, awful cat outside.  It had a mouse.  The mouse was totally alive.  The cat was torturing it – allowing it to think that maybe, just maybe, it would live.

The cat had the mouse between both of its front paws – the mouse was on its back.  Evil Cat moved its paws away.  Rather than run, this mouse jumped up and bit the cat on the nose – hanging on until the cat managed to shake it off.  I hate most mice, but I really love that one mouse.

The mouse didn’t get away.

But you’re not a samurai facing other samurai.  Or a member of the French Foreign Legion facing insurmountable odds at an isolated desert outpost.  Or my friend at work who won’t take his dream car out on the road (and, I’ve given him crap about that, so I’m not tattling on him on the internet).

Yup, best decision ever.

I’ve tried to make this point before – and I’ll keep doing it – we don’t have much time on Earth, but we act like we have forever if we’re only careful enough.  And being too careful . . . it ensures that we achieve far less than we are capable of.  Yes, charging 3,000 Mexicans with your five best friends is a sure way to die.

But half of those Legionnaires did live.  And they lived a life of glory – they ran at the guns and lived.  They didn’t shy away from destiny – and an entire nation – not their nation – reveres them to this day.

I often make this point, and during future posts will probably make it again:  We are all living on borrowed time.  Each second on this planet is one less second we’ll have in the future.  Don’t wish your life away.  Don’t settle for spending time with your nose in an iPhone® MyFace© feed.  When we amuse ourselves with our media, we are using time we could have been achieving . . . amusing ourselves.

Thankfully, we all have kitties so we don’t have to worry about our impending doom or the lack of achievement in our lives (warning – has one use of the “f” word):

“Alright you Primitive Screwheads, listen up! You see this?  This is my boomstick!  The twelve-gauge double-barreled Remington.  S-Mart’s top of the line.  You can find this in the sporting goods department.  That’s right, this sweet baby was made in Grand Rapids, Michigan.  Retails for about a hundred and nine, ninety five.  It’s got a walnut stock, cobalt blue steel, and a hair trigger.  That’s right.  Shop smart.  Shop S-Mart.  You got that?” – Army of Darkness

Yes, these are the grooviest underwear in the world.  And yes, I wear them all the time.

The world truly is a web – it’s very interconnected in ways that are obvious (snowy airports slow down planes and mess up your travel plans due to Cleveland.  Cleveland!) to less obvious (gold drops in price during a stock market crash because all asset classes are impacted) to obscure and sometimes counterintuitive ways (a drop in men’s underwear sales indicates a huge drop in discretionary spending and a commensurate rise in skidmarks).

When I was younger, it seemed like the economy was tied to regions – the south might be doing well while the west was in an economic slump.  One time we had a family stop in our driveway to ask for a cup of flour so they could make gravy at a campfire as they drove from some backwater southern state to California.  Pa Wilder got them a cup of flour and some other things, canned goods and such – the little girls in the back of that beat-up car looked very small as their parents struggled to find an opportunity that would give them a future.  (Yes, that image has always haunted me – I’ll never know how that story turned out.)

More recently, the national economy of the US has acted more like a single unit and less like a group of regions.  Part of the explanation for “why” is banking.  The world we live in now of large banks crossing state borders is relatively new.  Banks, previously, had been firewalled and your account wasn’t with CitiFargo®, it was with a specific bank building in a specific town.  One time I had to cash a check in a major metropolitan area (I was quite young).  I tried to cash it at a bank with the same “name” – but it turned out that unless I went to the “main” bank the check was written to, I could not cash the check (for whatever reason I needed cash, not a check).

So, instead of hundreds of banks acting independently, we’ve created a small number of ever larger banks (the top three banks in the United States have over $6.5 trillion in capital – more capital than the next twelve in size have, and almost as much money as the US government spends on cream cheese each year) and these very large banks operate nationwide.  So, rather than having your loan denied by the local banker, an algorithm in a computer in a databank in New York denies your loan.  I’m kidding.  If you’re breathing, you can get a loan.  Take as much as you want.  We’ve got your children, too, right?

Now the economy, and the loans, move more as a unit.  Other pressures creating the web include the increasing specialization and centralization of manufacturing across the globe.  Today, more goods are manufactured farther away from their final use point than at any point in history, increasing the economic connections across the world – over 50,000 (not a typo) factories closed in the first decade of this century in the United States.

Those global trade connections create immense wealth as trade flows across the world, but they also create a significant risk that’s never existed before – the idea that economic activity in China could devastate the United States, or vice versa.  It may sound far-fetched, but the Federal Reserve’s monetary policy coupled with food aid programs plus ethanol’s mandated use as a gasoline additive led to the Arab Spring and the current civil war in Syria.

Huh?

Yeah.

The Federal Reserve, in order to stimulate the economy of the United States, dumped massive amounts of money from helicopters.  Just kidding.  They gave it to their friends.  Anyway, this massive dump, known as Quantitative Easing, caused the prices of food to go up everywhere in the world, especially in the Middle East.  And food aid programs (along with geography) actually lower the number of people engaged in farming.  How is that?  Well, if you farm and do really well in Egypt, you have to compete with free grain dumped in Africa.  How do you compete against free?  You don’t.  But since the United States started mandating that ethanol be added to gasoline, it’s lowered the amount of food available.  Why?  Because the only way to make ethanol is to use stuff we could either eat or feed to some nice fat cow to make steaks.

It sucks to be Egyptian.  It sucks more to be Egyptian when the prices of food go out of sight.  The result of hungry, angry people?  Rebellion, revolution.  It’s ongoing in Syria.  And it’s certain that over 500,000 people have died in the various conflicts after the “Arab Spring,” which was brought about . . . due to economic policy, “free” food, and food turned into car fuel.

Pulling at one bit of yarn in the sweater will end up unravelling the whole sweater – it’s all made of the same yarn.  The global economy is similarly connected.  And in order to make it more profitable, we’ve made it more efficient.  Efficiency is good, right?  Sure!  The factory goes from one shift to three, and produces almost three times as much stuff if it goes 24 hours per day.  But by doing that, if we lose that factory, we’ve lost three times as much production as if we’d done it inefficiently.  A natural consequence of efficiency is higher profits.  A side effect of efficiency is higher overall risk – the system is working at nearly full capacity, so the loss of any significant component places the system in deficit.  There’s a shortage somewhere if the system runs into trouble.

That explains why the two Gulf Wars brought about huge price increases in oil – the system had to raise prices to allocate the oil to the most important (or richest) users and the world oil production system simply does not have “instant” capacity that can be added – the lag between supply and demand is measured in years.  The price of oil acted as a retardant on the rest of the economy – a friction.  Like a tax, it raised the price of everything that required energy to produce and ship – in short, all material goods were impacted, but nice sunsets were still free.  Businesses that lived at the margin of profitability disappeared.  Men’s underwear sales went down – yes, this is literally the last thing that gets purchased in tough times – no matter how bad, you can always wear the underwear another week (skidmarks and all).

But failed businesses don’t pay a paycheck.  And newly unemployed people don’t eat out (or buy underwear) – even McDonalds® sales plummeted during the last big recession.  And so McDonalds© doesn’t hire people.  Those people don’t go to eat out, either.  It’s failure.  But it’s a failure that leads from one failure to the next, like dominos knocking each other over – something nerds call “cascading failure.”

How bad was the last recession?  Certain sales in basic chemical precursors . . . stopped.  Credit dried up – why would you lend to someone who might be going bankrupt?

Here are some actual examples that I was aware of during the 2008-2011 collapse . . .

• At some point – sulfuric acid production in the United States . . . stopped. Sulfuric acid is known as the “king of chemicals” because so many, many things depend upon it, like The Mrs.’ glass eye or her prosthetic leg.  I know one producer of sulfur stopped producing for over a month.  Why?  No one would buy sulfur – at any price.
• Rail cars stopped being useful. On my 18 mile drive to work, I passed by (mainly) open line railroad.  There were a few miles of siding (siding is the place where they switch cars).  I noticed that the siding began to fill up.  And it filled up further.  Pretty soon there were miles (literally miles) of railroad cars sitting – not moving.  Not moving any product.

What happened?  We ended up putting 480 volts through the heart of the American economy with borrowed money and jumpstarting Frankenstein back to life.  I’m not sure that we can do that again.  The debts are higher.  The excesses are greater.  The PEZ™ supply is at a 20 year low.

Thankfully, they still ship ammo by mail.  And I’ve got some really great underwear that will probably last for a long time.  Does your underwear have chainsaws, shotguns, skulls and “groovy” on it?

Yeah, I didn’t think so.