Monthly Archives: May 2020

Refinancing – Crunching the numbers

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Interest rates are really low right now–which is one of the reasons I lost my job at the beginning of the year. But my loss may also be my gain. Mortgage rates are also pretty low right now. I have about 24 years left on a 30 year mortgage, and the fact that I’ll be 74 when that’s paid off doesn’t sit well. Yes, I have other plans to deal with that, but I wouldn’t mind also doing something now. So I set out to find out if rates are low enough that I might actually benefit.

First of all I tried one of those internet loan sites. I didn’t get far before I quit. RocketMortgage wanted every bit of information needed to apply for a loan before I could even find out what terms I could get. I refuse to give out that much information until I know they’re really going to need it. Bye-bye, RocketMortgage. I went back to the brick-n-mortar reliables. Kinda.

My current mortgage servicing company has been after me for a while now to see about refinancing (and adding on a home equity loan if they could talk me into it), so I decided to hear what they had to say. I wasn’t impressed. They could do a 20-year loan that would cost me about $300 more a month.

Then I called the local broker I went with the two previous times. He actually had access to a 20-year loan for a lower rate than most 15-years. The net increase would be about $17 a month. Now THAT could be doable. But…should I? Was I forgetting something? After all, there would be fees, which they would try to get me to build into the loan. Would it be worth it to cut only six years off my loan? Time to crunch the numbers!

Armed with my current rate, number of payments left, and my current principal and interest payments, was able to calculate the total interest over the remaining life of the loan. That came to just under $100,000. I then calculated the total interest I’d pay on the proposed 20-year loan (figuring in financing the refi-fees, which I likely won’t do). That came to just over $56,000. Not a trivial difference! But I’ve heard that it can sometimes work to your advantage to pay extra principal on your loan to get it paid off sooner. I decided to look into that, even though at this point I’m not sure I would really want to take that money from other projects to do so.

I played with several different models. I first tried applying $100 per month toward principal and discarded that option. It barely moved the needle. Increasing the pay-down, I found that if I paid an extra $400 a month toward principal for first 120 months I could get the total outlay on my current loan down to about $23000 more than I’d pay with the 20-year, and pay it off 42 months earlier–in just over 16 years instead of 20. And if I paid $400 a month for 173 months I’d have it paid off entirely–in around 14 years. That would be right before I hit retirement age–good timing!

But wait. Assuming that’s even $400 I have, I’ve also had people tell me it would be better to put that money into an investment that earns higher interest instead, have it build up faster, and use that to pay the mortgage off early. In any case, in my MBA program they taught us that when looking at any project you should compare what they called the “opportunity cost,” or what you might lose with this option over some other bench-mark option, such as a long-term fixed-return investment. You might do well with this option, but what if you did something else with it instead?

My financial advisor usually tosses around 6% as a fairly safe rate of return on long-term investment-i.e. bond funds with little to no risk, so I used that to calculate how much I would have if I invested the same $400 a month for the same length of time. In the 198-month scenario, where I put in $400 a month for 120 months I would have $64,827. In the 173-month scenario, investing $400 a month for 173 months, I’d have $108,648. Compared to my proposed refinance, by paying down my mortgage I’d be losing the additional principle I paid, but also losing the gains I might have realized by investing it. It’s something of a double-whammy.

But wait again. In both those scenarios I would be done making mortgage payments earlier than if I went with the 240-month refinance. Being done sooner would mean I could turn that $1007 monthly payment toward investments. What about the opportunity cost of that money? More quick calculations, and under the 198-month scenario, investing my monthly payments for those 42 fewer months, it would come to $46,943, and in the 173-month scenario, investing for 67 months, it would be $78,527. If we put that back into the picture we end up with a significantly smaller gap from the $241,336 total paid out on the 240-month refinance; about $19,000 to $28,000.

Of course these two scenarios really do depend on the availability of the $400 a month to apply toward principle. The opportunity cost is real, as the only prospect for finding that money would be to take from what I’m currently saving each month to invest. The savings in interest doesn’t keep up with the amount put in to pay down the principle, let alone with the interest earned on investing it.

Bottom line: My 20-year refinance would save me about $40,000 over paying out the rest of my 30-year mortgage, and about $19,000 to $28,000 over money-to-principle scenarios. The value of investing that proposed extra principal payment early on (i.e. over a longer period) is hard to beat, even versus a shorter term but larger amount later. Slow and steady wins the race, but more money up front gets you there even faster.

While the over-all benefits aren’t as high as I had hoped, in this case, the value of refinancing is pretty clear. I save four years and about $40,000, plus I get to take that proposed added principal payment (I still don’t now if I could swing that), and invest it at at least twice the rate of what I pay on my loan. I’d have to say it’s worth it to refinance.

Of course I’m no financial adviser, I haven’t given you all my details here, and I don’t know your circumstances. This isn’t really meant to tell you whether or not you might benefit. This is primarily an exercise to help you evaluate for yourself. Just remember to look at all angles, not just the most immediate. I probably missed something here, too, but I’m going into this much more sure of what I’m doing than if I had simply thought, “Four fewer years is always a good thing, right?”

Take care of your future self

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Ashley over at YouNeedABudget.com brought up an interesting motivational concept in her recent video. Citing someone else’s comic, she talks about doing things for our future self such as, if you know you need to do a video shoot in the morning, making sure your camera batteries are charged and your memory cards are wiped the night before so that’s one less thing to have to deal with in the morning. Take a look (no prior knowledge of YNAB required):

As I watched the video it occurred to me that this idea of taking care of your future self is at the heart of self-reliance. Building up some food storage and your savings is a terrific gift to your future self who is out of work for a few months, or laid up on temporary disability. Taking a few extra online classes in your field or exploring a related field may be just the thing to help future you really nail an opportunity at work. Always taking the time to make sure you keep your car’s tank at least half-filled will be greatly appreciated later when something comes up on the day you usually fill up and you have to go another day or two before you get another chance.

The essence of self-reliance is making sure your future self has very little to worry about. It can even start with the smaller things that Ashley mentions, but dealing with things now instead of later will definitely make future you want to thank you!

Is it worth it?

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Ken Jorgustin at Modern Survival Blog takes up the question of whether it’s worth it to invest in self-reliance. He looks at various types of home production, such as raising your own chickens, growing your own garden, or even switching to solar energy all cost money, and often those same products can be obtained commercially for less.

During the process of building their palace, I’ve thought about the money it took to get this done. As well as the ongoing costs of maintaining the small flock, and feeding them. Let me put it this way. You might get depressed to realize the ultimate cost per dozen eggs output compared to the money input!

Ken Jorgustin

I’ve noticed that with gardening. In both places we’ve lived our irrigation and gardening water comes from the same water as our culinary and hygienic water, and the cost can more than double during the summer months. Whatever money we save by growing our own vegetables is more than eaten up in the water, seeds, tools, and fertilizer needed to grow them. We ultimately decided it simply wasn’t worthwhile to try to grow our own potatoes in Idaho.

We also looked at solar power ourselves a few years ago and realized that in spite of what the salesman told us, the system would never pay for itself, even if the power company paid for any excess electricity we generated–which they stopped doing within a few years. While we would like to have been able to do more to reduce pollution and our own energy dependence we just couldn’t justify the expense.

It can all be enough to make you step back and wonder if it’s really worthwhile to take a different path. But, as Jorgustin explains, the answer will be different for everyone. For some people cost is the only consideration, and they’ll likely not bother with many self-reliance measures. For my wife and I, we find home-grown food is usually healthier and better tasting. What’s more, there may be rough times ahead–times when the stores won’t be able to get the stock they usually get. We may very well need to supplement our food supply from our own yard. In the middle of the crisis is not the time to be learning what grows and what doesn’t, or how to lay out your garden, your watering, etc. And as we’ve seen, the price of things can increase quickly when it’s in short supply.

A considerable part of self-reliance, and especially emergency preparedness, is not just having the things you need when things go wrong, but knowing what to do with them. Maybe not everything we can do we should do, but it is worthwhile to consider what things you want to be able to do. And sometimes it just feels good to do it.

Experiments in document destruction

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I am hard on paper shredders. I’ve destroyed two of them in the past year. I like to think it’s just because those diamond-cut shredders are flimsy, but I suspect it’s really because I push the limits a little too often. In any case, I recently cleaned out the shed and found I had three boxes full of old financial docs, dating back twenty years. That’s way longer than I need, and is perhaps even becoming a liability. But…I don’t have a shredder.

My wife suggested I look up other ways of destroying documents, so I did. I don’t think a burn-barrel would go over too well these days, but a soak barrel sounded interesting. The idea is to get a bucket of water and dump your documents in there, let them soak, then stir them well to break them up and turn them to pulp. Then you pour the pulp out somewhere and let the water drain/soak/evaporate out of it until it hardens up. You can then pick it up and put it in the garbage, and no one will really be able to get any info out of the mess.

So I tried it. I immediately got it wrong. I started by filling two five gallon buckets with papers. Then I filled them with water.

Do you ever cook spaghetti only to have the noodles all clump together tightly and not want to separate? Paper is much, much worse. I should have separated them more, or better yet filled the bucket with water first, then put the documents in, page by page until it was maybe half full. The first time I went to stir them they all stuck together in a single mass that wouldn’t budge, let alone break up. Even my hand tiller tool, used for breaking up garden soil, wouldn’t work.

It became a battle of wills. I’d go outside once or twice every day, replace any evaporated or soaked-in water, and stir/till each bucket, slowly scraping bits and pieces of paper from the clumps. Over about a week it began to look more promising.

Finally I could wait no longer, and dumped out the two buckets on a tarp I set up and spread the pulp out to dry. That didn’t go quickly, either, as we have very few sunny places in our yard. It probably took another week of drying.

Eventually it dried enough to make an interesting piece of art. My wife joked about using them for floor mats, or table placemats, or finding a way to roll it out thinner and making our own recycled paper. Frankly, I don’t think there’s much worth doing with it other than throwing it away.

I really don’t see much to recommend this particular approach to document destruction. At this rate I’ll have my documents destroyed around about….October. It’s cheap, and it may even be less labor-intensive than sitting there for hours feeding a few pages at a time through a shredder. It’s certainly cheaper than a new shredder. What I really ought to do is get a good document scanner and a good shredder, scan the documents as soon as I get them and shred them on the spot. But I’m a cheapskate, so that probably won’t happen. But I also won’t pay to have the local UPS Store dispose of them for me, either, so who knows. Maybe the pulp-pots will remain in business?

I’ll probably try another batch with an entirely different approach and see how that goes, but at least by the time I’ve done that it should be easier to justify shelling out more for a good, industrial-strength shredder.

Take good care of yourself, you belong to…you!

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I went to post a link to yesterday’s column on Facebook and suddenly realized I’d gotten sidetracked when I wrote it. The post title had nothing to do with what I ended up writing about! So here I am, back again, hoping to get it right this time!

As I began yesterday, the article “7 Tips For Increasing Self-Reliance” lists some of the usual things and some less-than-usual. One that perhaps doesn’t get the attention it deserves is their point on looking after your body:

While you shouldn’t expect yourself to be your own doctor and should always seek medical advice if you are concerned about your health, try to look after your body to minimize the need for treatment and medication.

While you shouldn’t expect yourself to be your own doctor and should always seek medical advice if you are concerned about your health, try to look after your body to minimize the need for treatment and medication.

Work out on a regular basis and eat healthy food most of the time. Try to stay informed about specific diseases that you may be at risk of developing (whether genetic or environmental reasons). All of these actions will make you more confident about relying on your body. It will have the side-effect of making you feel more comfortable with the idea of self-reliance in general.

I’ve always taken my health for granted. Somehow I bucked the family genetic trend and was born with a high metabolism, I’ve been on the skinny side most of my life. While never all that physically active, I was certainly more so than most teens today. And in college I was in great shape; slinging a vacuum around a department store for four hours every morning, followed by frequent, high speed walks back and forth from upper campus to lower. I never considered my body; it always did what I needed it to do.

Then I graduated and got a desk job. And I got married. In a short amount of time I put on thirty pounds. My doctor got on my case about that, and with little modification I took those pounds back off. Then I found that fat had been masking something else. I had a heart murmur. We quickly discovered I have two leaky heart valves. Fortunately, it was nothing serious yet, so we continued to monitor it. My lifestyle still didn’t change much.

When we moved to Utah I didn’t even continue monitoring it for a while. And when I finally did, things seemed normal. Then suddenly, one year, they weren’t. My heart is getting worse. Though getting in better shape can’t fix that, the doctor agreed it certainly wouldn’t hurt. So I’ve been making a more concerted effort to get in better shape.

Mind you, I still find exercise an inconvenience. There are other things I’d much rather do than spend an hour a day (on average) exercising. But I will grudgingly admit to noticing a difference when I do. I’m not as tired. I don’t give out as quickly. I can pretty much do whatever I need to do around the house

Part of the trick for me is to either find something I enjoy doing, or find ways to make what I’m doing enjoyable. I ride a stationary bike every morning for 25-30 minutes. I listen to speakers or audio books during that time so that I pay less attention to the clock. Every other day I practice basketball, either playing with my son or working on my shot on my own. Since my objective is completely separate from the exercise I don’t focus on the fact that I’m exercising.

I’ll never been one of those guys who measures his exercise in miles our hours. Spending six hours on a Saturday biking 50 miles just doesn’t sound fun to me. For me the primary motivation comes down to this: I’ve got a heart condition that could significantly limit my life span. My best chance of beating that is by being as healthy as I can. Life is only getting more interesting the older I get. I don’t want to miss anything.

It’s the little things that count

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I always get a little excited when I see the concept of self-reliance brought up in unexpected places or referring to aspects outside the usual “prepper” mindset. After all, my philosophy of self-reliance is much broader, and should be more applicable to everyday life by everyday people. So it caught my attention when I found “7 Tips for Increasing Self-Reliance” on The Law of Attraction.com.

Some of their seven points are somewhat familiar, such as “Accept Responsibility” and “Make Your Own Decisions,” but others are are a little less obvious–or at least less practiced these days.

Take Point #3: Learn More Practical Skills:

The more practical skills you have in your toolkit, the fewer chances there will be for you to feel helpless or need other people to come to your rescue. While you should feel free to call out experts to help you with complicated household problems and mechanical difficulties, it’s great if you can at least do the basics for yourself. Get some books or join some classes.

Try to get a better grasp of everything from plumbing to IT, electronics and cooking.

A few (dozen) years ago I spent two years in Australia as a missionary for my church. Before we travel to our assigned locations we spend anywhere from three to eight weeks learning teaching skills and, where necessary, a new language. From the beginning we are paired up with another missionary, who we will be with 24/7.

My companion was a really pleasant fellow from solid farm stock (Central Utah turkey farmers), but I was soon quite surprised to find he had no idea how to do his own laundry! Nor did he know what to do when he spilled dinner on his tie. Now, I won’t claim to have been anything but a burden on my mother up until that point in time, but she had at least taught me how to do laundry, how to cook, how to sew on buttons and mend pants. I gladly dispensed my wisdom to my companion, and I have definitive proof he was able to survive the entire two years.

A few years later while I was in college I went to an activity with a bunch of other college students. We decided to go get some ice cream or something afterward at a place several blocks away. While I was driving through campus I realized my tire had gone flat. I pulled over into a parking lot and started pulling out my equipment to change it for my spare.

Before long about a handful of young women from our group had pulled over to see if everything was okay. When I explained what the problem was and that I’d be okay, they all insisted on staying to watch. No one had taught them how to change a tire! I was only too happy to demonstrate for them, of course.

Whether it’s hanging a picture, or strengthening a wobbly chair, or reattaching things that come loose, there are a lot of simple tasks in life we can easily take for granted and forget to either learn or pass on. There’s no reason we should be helpless when it comes to using basic tools to perform simple maintenance tasks. Fixing a leaky faucet–or outright replacing one–isn’t difficult, but if you have no idea how to go about it you might be tempted to spend a decent chunk of money on something that shouldn’t take very long.

Learning some basic skills will pay off in spades sooner or later. And it might just help you get the girls! (Okay, not really. They were all impressed, but that’s about as far as it went.)

Who do we trust our lives to?

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I had a brief discussion with a friend on Facebook the other day in which it became apparent we have differing opinions on the role of government. I don’t think either of us will change the other’s mind any time soon, but he said something that stuck with me. It was essentially, “We trust the government with our lives, so why not to distribute wealth?”

I had to stop and think about that. Do we trust the government with our lives? Should we?

Ultimately I suppose we do trust the government with our lives to some extent. I rely on my local city government to provide me safe drinking water–something they failed at not so long ago. I’ve since taken steps to lessen that risk, but truth be told, if there’s something dangerously wrong with my water I may not know it in time unless the government warns me. I have to trust that they’re doing their best.

I also trust the national government to maintain an army sufficient to deter any other country from coming in and killing me. As we’ve seen in recent years they’re not entirely successful in that responsibility, but they’re keeping the risk acceptably low. And they’re also doing a decent job at deterring those who might take shortcuts or act irresponsibly with our food supply. Incidents still happen, but still, the risk is still quite low.

There are, however, many more ways in which to die. In most of those cases the government acts more as a deterrent than a protection. They can’t keep some idiot driver from cutting across four lanes of traffic to make their exit and plowing into me instead. They can’t guarantee my neighbor’s tree isn’t going to fall on my house as I sleep and crush me. They can’t guarantee the airplane I get on isn’t going to crash, nor can they promise me I won’t die during heart surgery at some future point.

All they can do (or perhaps more accurately, are willing to do at present) is tell people what they should or shouldn’t do, and then affix punishments for noncompliance. And for the most part that is enough. Most people don’t act irresponsibly or seek to do deliberate harm, and they wouldn’t, even without those laws. And many more also don’t because they find the potential punishment sufficiently unpleasant.

And yet 90 people per day are killed in car accidents in America. Several million every year are injured, many permanently. Is the government failing or succeeding? If their responsibility is to protect our lives, I’d say they’re failing. We’ve lost over 80,000 Americans to the Coronavirus this year in spite of all the protections government can provide, including some fairly dramatic precautions. At the same time, those measures have cost lives as well, to say nothing of the jobs at least temporarily lost. The long-term impact on lives may not be fully understood for years yet.

So I guess one question to ask ourselves is whether or not any government can guarantee us our lives. Can a government eliminate all risk? And would we like it if they did? What would our lives be like? I see plenty of examples all around right now of people starting to push back against government control over their lives as the governmental restrictions put in place to save lives from COVID-19 continue in effect well into the second or third months. I live in a state that imposed less strict restrictions and perhaps coincidentally, perhaps in correlation with other factors, has the fourth lowest death rate in the country. I’ve pretty much willingly complied with those restrictions.

But when I hear of some of the other states’ more extensive efforts to control the virus by controlling people I am particularly grateful to live where I live. I fully understand why those states are facing popular backlash. Clearly, even if a government could keep us all from dying, most people feel those all-controlling restrictions would make life no longer worth living, especially when there is no end in sight.

In fact, history seems to prove that a restrictive government, even in the name of protecting life, tends to fall sooner or later. Human nature tends to lead governments to go too far, and usually for decreasingly benign reasons. They may start out well-meaning, but soon grab more and more power simply for the sake of hanging onto that power.

But then let’s look at the alternative. A total lack of government tends not to work very well, either. While I don’t entirely subscribe to the “Lord of the Flies” theory of humanity, a complete lack of common law–or the enforcement thereof–tends toward disaster. People will usually work out some sort of pact, a set of rules for maintaining peace, property, and ensuring basic rights. But as demonstrated by certain parts of our current world, the rule of “might makes right” is more common than we’d like to think.

Humanity needs government. It’s even part of my religion’s basic tenets. Governments that ensure basic rights and basic rules governing human interaction are essential to maximize productivity, cooperation, and peace. But in all cases it falls upon the governed to govern themselves to some degree. The value of traffic laws to a victim is not in the enforcement of those laws, but in the threat of enforcement. It does me precious little good if I’m dead knowing the idiot that decided to continue through the red light at 50 miles an hour to broadside my car will be heavily fined and potentially jailed. The hope is that, knowing he could be heavily fined and jailed, the person will choose not to speed and run red lights in the first place.

And yet we still lose around 40,000 Americans to car accidents every year. If we apply the same logic to cars I’ve been hearing about the coronavirus, we should all be voluntarily getting rid of our cars or agreeing to cap our speed at ten miles an hour. We’re not, and we won’t. Deep down even the strongest proponents of government protection in all area of life seem to accept that communal rights must be tempered by individual rights. We’re willing to accept responsibility for protecting ourselves in order to avoid our own inconvenience.

In fact, as a society in America, we still retain far more personal responsibility for our own protection, prosperity, and happiness than we surrender to government. There is constant pressure from some to push more and more of that control to government, but much of it seems to be due to some mistaken belief that such power could never be abused, or that the other party who we distrust/hate so dearly will never actually hold power, giving them the opportunity to abuse the power we want to hand the government when under our side’s control.

That’s why I tend to believe that we need to be self-reliant rather than government-reliant, especially when it comes to protection. The deterrent power of government is important, but they can’t (and probably shouldn’t) be everywhere. As the saying goes, when seconds count, the police are only minutes away. Ultimately we can’t completely avoid all danger in life. But we can take responsibility for our own safety.

Hopefully every one of us who has taken formal drivers education has been taught to be aware of what’s going on around us in order to anticipate threats. Hopefully none of us, seeing that idiot in the far left lane who suddenly realizes they should be in the far right lane, just continues on at the same speed, staring straight ahead, trusting entirely in the law to protect us. We slow down. We start looking for room for evasive action. We do our best to make sure we are not in their path.

Most anyone who is looking after their financial future recognizes the inadequacy in America of the government safety net to support the retired. Even assuming Social Security will survive all the political wrangling around it, most retirement plans include coming up with funds well above and beyond what we can count on from the government. Similarly, during the two years I spent on unemployment, had I needed to rely on that alone my family would have really struggled.

We can’t anticipate everything, but we can take reasonable precautions in much of what we do. We can take steps to reduce negative impacts on those we love. We can act morally and responsibly in our interactions with others. We can think before we act.

I think, whether we like it or not, so long as we choose to live within society, within the bounds of modern infrastructure we’re going to have to trust government at some essential level. If we don’t trust in our social structures to at least some degree we will spend the majority of our time and resources trying to eliminate any and all dependence on government and other people, effectively pushing us to the lowest level of Maslow’s Hierarchy, and that’s not where we should be. We need to be able to trust that a vast majority of the time when we turn on our faucet, when we flip the light switch, when we set out to drive to work we’re going to have a predictable, quality experience.

At the same time, where the absence of that predictable result threatens our lives, we need to be prepared to shoulder that burden ourselves, if only for a short time. I’ll drink tap water, but I’ll make sure I’ve got a reserve supply in case I can no longer trust that water. I’ll enjoy all the daily benefits of electricity, but have other options available in case it fails. I’ll do my best to assume every moment I’m in my car that other drivers may not abide by the law. Government is very good and beneficial for many things. But over-dependence on them can be deadly. Our own safety and happiness must always be our responsibility.

Garden planning from Mother Earth News

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Mother Earth News has an article and a video about planning your garden before the growing year begins. They pack a fair amount information into a 4-minute video, and it’s worth a look. They also plug their garden planning software, which got me all nostalgic for the old Sim Farm game. Supposedly it helps you map out your garden area, plan around shade, ensure proper crop rotation, and helps you know how many plants each area can support. It looks pretty cool, and comes with a 7-day free trial. After that it’s a subscription, cheapest if you sign up for two years.

Have any of you used this or similar software? If so, leave a comment below and let me know what you think of it.

And now, the video:

Work is essential

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Mike Rowe has become something of a hero of mine. The man observes, thinks deeply, and explains himself very well. People try to impose a political agenda on him, but by and large his thoughts don’t lay with any particular ideology.

Recently he was interviewed by Dave Rubin, but don’t let that worry you. Their discussion transcends politics, at least in my view, and explores what I would consider the bedrock of humanity and a major pillar of self-reliance: the value of work.

I agree with Mike. It’s dangerous to our long-term survival as a country and culture, and perhaps even as human beings, to place too high a value on education and too low a value on work. I say this as a person who has an MBA and works a white-collar technology job. I can’t say I’m enamored with physical labor. But I’m not afraid of it. I’ve built a shed from scratch at each of the three houses I’ve owned. I’m used to doing most of the physical labor required for maintaining my property, be it fixing sprinklers, landscaping, laying flooring, or basic plumbing. And I do find shoveling snow to be oddly therapeutic. I only hire others when I need it done quickly, am concerned for my safety, or the skill-set is not something I can acquire quickly (or can afford to do wrong).

And I’ll tell you what, I’ve felt as much satisfaction from the physical things I’ve accomplished as from the “knowledge-worker” jobs from which I support my family. I’ve been involved in projects that save companies millions of dollars. I’ve saved people’s jobs with my recommendations. I’ve uncovered the causes some of the most daunting system errors. I get as much long-term pleasure from a bookshelf I’ve built.

That’s not to say I get no satisfaction from my education. I’ve also been a partner in building up a successful brick-n-mortar business using the tools I acquired in my MBA program, and that little venture has been one of the high points of my life. But this idea of education being the be-all, end-all of existence is ridiculous. My first degree was in Music. I enjoyed every minute of it. But ultimately that degree left me unemployed in Pocatello, Idaho (possibly worse than Greeeeenlaaaaand) and depressed out of my skull. And what got me out of it and into my career wasn’t my education, but my ability to learn. The two are not synonymous.

But whatever we do, I would certainly hope we derive more from it than a paycheck. There ought to be some satisfaction from the work itself. I would hope those who serve me in some capacity derive pleasure and satisfaction from their work. Sooner or later I’m going to need heart surgery, and I would feel much better knowing my surgeon is passionate about heart surgery, and not just viewing it all as just another transaction. I’d want him actively concerned about whether I live or die, and not just whether I’ll be able to pay him or not.

I’m not entirely sure where I’m going with this, except perhaps for this: it is foolish to denigrate physical labor, perhaps even dangerous. The point of our lives should not be avoiding work, or working only so we can play, or even working only so we can retire. Most of us will spend the majority of our adult lives working in some way. Hopefully we can derive a little satisfaction, a little pride in our work, along the way. And hopefully our society will learn to value that work, regardless of what it is.

Is college headed online?

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Scott Galloway, a Silicon Valley prognosticator with a respectable track record is predicting the Cornavirus and resulting stop-gap measures of moving education online is going to become the disruption that changes the university system forever, with tech companies partnering with colleges to become hybrid, virtual campuses. In an interview with James D. Walsh of New York Magazine he had this to say:

Colleges and universities are scrambling to figure out what to do next year if students can’t come back to campus. Half the schools have pushed back their May 1 deadlines for accepting seats. What do you expect to happen over the next month?

There’s a recognition that education — the value, the price, the product — has fundamentally shifted. The value of education has been substantially degraded. There’s the education certification and then there’s the experience part of college. The experience part of it is down to zero, and the education part has been dramatically reduced. You get a degree that, over time, will be reduced in value as we realize it’s not the same to be a graduate of a liberal-arts college if you never went to campus. You can see already how students and their parents are responding.

At universities, we’re having constant meetings, and we’ve all adopted this narrative of “This is unprecedented, and we’re in this together,” which is Latin for “We’re not lowering our prices, bitches.” Universities are still in a period of consensual hallucination with each saying, “We’re going to maintain these prices for what has become, overnight, a dramatically less compelling product offering.”

In fact, the coronavirus is forcing people to take a hard look at that $51,000 tuition they’re spending. Even wealthy people just can’t swallow the jagged pill of tuition if it doesn’t involve getting to send their kids away for four years. It’s like, “Wait, my kid’s going to be home most of the year? Staring at a computer screen?” There’s this horrific awakening being delivered via Zoom of just how substandard and overpriced education is at every level. I can’t tell you the number of people who have asked me, “Should my kid consider taking a gap year?”

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Ultimately, universities are going to partner with companies to help them expand. I think that partnership will look something like MIT and Google partnering. Microsoft and Berkeley. Big-tech companies are about to enter education and health care in a big way, not because they want to but because they have to.

Let’s look at Apple. It does something like $250 billion a year in revenue. Apple has to convince its stockholders that its stock price will double in five years, otherwise its stockholders will go buy Salesforce or Zoom or some other stock. Apple doesn’t need to double revenue to double its stock price, but it needs to increase it by 60 or 80 percent. That means, in the next five years, Apple probably needs to increase its revenue base by $150 billion. To do this, you have to go big-game hunting. You can’t feed a city raising squirrels. Those big-tech companies have to turn their eyes to new prey, the list of which gets pretty short pretty fast if you look at how big these industries need to be in that weight class. Things like automobiles. They’ll be in the brains of automobiles, but they don’t want to be in the business of manufacturing automobiles because it’s a shitty, low-margin business. The rest of the list is government, defense, education, and health care. People ask if big tech wants to get into education and health care, and I say no, they have to get into education and health care. They have no choice.

There’s a certain amount of sense in what he’s telling us. American universities have begun to lose sight of their original purpose: to dispense knowledge. They’ve become factories for wholesale social change, and in the process have added so much overhead to their cost structures that the price of their knowledge-offering has increased exponentially while the actual value grows increasingly questionable. And now the Coronavirus has shown students that not only is the knowledge product not worth the cost, but the online experience has diminished it even further. It seems doubtful that universities will be able to continue charging $50,000+ a year for Zoom classes. Where they once derided online universities such as University of Phoenix (my MBA alma mater) they may find themselves studying their models, perhaps even purchasing them outright.

However, if such a model is to work there will first come a major upheaval. Today’s teachers are ill-prepared for the online classroom. I’ve been watching as my sons have struggled with on-line school from their local high school. The quality and intensity of the assignments have diminished, while the teachers largely have retreated to a consulting role, not even attempting to teach the subject matter in even a virtual classroom setting (with the interesting exception of their release-time religious studies teacher). One son is struggling mightily to complete the two classes most critical to his future career plans because the teacher had largely left them on their own.

I don’t doubt there are teachers who can adapt, improvise and overcome, and perhaps even thrive in this new model, especially at the college level. As I mentioned above, I earned my post-graduate degree in a hybrid setting, long before video conferencing software became cheap and ubiquitous, and we were able to make it work. But we were all working professionals who had outgrown the need for classroom learning. We knew how to learn. This model may not work so well for K-12 education, and I suspect it won’t be applied any time soon.

The university system, however, is ripe for it. The real question is whether universities will be willing to give up their role as engines of social change and retreat back to mere education. Or will the corporate partners assist them in policing the minds of their students more efficiently than ever before? We may be on the verge of a fundamental ground-shift, and only time will tell if it was for better or worse.