Wednesday, January 4, 2012

Too Big to Fail, To Little to Save


CNBC reported this morning that Kodak had been given notice that it wasn’t in compliance with the stock price rules of the New York Stock Exchange.  Kodak is currently selling for less than $1 per share.  This is continuing evidence of a long slide for Kodak as digital technology has replaced its film-centric technology.  Yes, Kodak has participated in digital products but was ill prepared by its focus on film technology to switch horses effectively.  Basically, entities have great difficulty dealing with change.  The only thing that “helps” them do it is competition.  Thus, a former strong company that was part of the Dow Jones Industrial Average years ago is trundling slowly toward oblivion already achieving insignificant status in today’s economy.   Should we be sad?  No, the meritocratic system that is Capitalism weeds out the uncompetitive to make room for the competitive.  Consumers benefit because they have a better technology at their disposal at a much cheaper price point.  More jobs are created in the new technology.
 
To reference the title of this piece, Too Big to Fail, Too Little to Save, Kodak has withered away to a point where it is too little to save and so the government did not intervene to keep an unproductive entity alive.  If they had done so as they have in other areas recently they would have added to the cost but not the benefit to society as a whole.  Letting uncompetitive entities fail and perhaps rise from the ashes recast for success is a natural and positive development.  Sure, there is short term pain involved but it is far, far less than the total pain and cost to society when government steps in and creates a “walking dead” situation that wanders zombie-like forever, as a net drag on our economy when we can ill afford it.

The biggest failed enterprise being propped up by the government is our education system.  It is less competitive by far than Kodak yet is still consuming huge resources.  It does not educate our children well enough to compete in the global marketplace for high paying jobs.  While there is some domestic competition for education; private and charter schools and even home schooling, the education establishment has been very successful in limiting school choice for the majority of the children nationally.  Thus, with no competition, our century old “Model T” education system continues to be “improved” but the underlying chassis is still the same uncompetitive Model T.  Also, in truth, what domestic competition exists is basically using the same failed education philosophies as used in the mainline schools.  There are exceptions but far too few.  When compared to the more modern and perfected education processes of the countries beating us so badly on international achievement testing our system should have been killed and replaced decades ago.

Treating our education system as too big to fail is damaging our society as a whole.  It does reduce the short term pain for education fiefdom members and suppliers but can’t be justified because it harms our kids and nation far more than the reduced pain to our coddled educators is worth.  Let educators compete by accessing government money only tied to real performance improvement.  This must be results based not activity based.  Educators have shown great mastery of “looking like they are doing positive things” while continuing the same old harmful processes. 

The education emperor has no clothes.  Someone who is as delusional as that deserves to fail and be replaced.  But we should give them a chance to change but it must be on a short leash, i.e. tied to specific and immediate improvement.  It is commonly said by educators that change is hard and takes a long time.  That is not at all true.  If your feet are in the fire you move, you don’t let them roast.
 
A good example of what is possible is what happened after Pearl Harbor.  A highly bureaucratized military suddenly threw the “book” out the window making greater progress in months than had been made in decades before that.  It became a truly merit-based system overnight.  There was no tolerance for the old ways of patronage and who someone knew.  When survival is at stake positive action happens naturally.  We need to threaten the survival of the current failed education system if we expect positive change.

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