Intelligent design – the last word

It is a rare day when I find myself in agreement with Charles Krauthammer. But his column today, “Phony Theory, False Conflict” echoes what I have been saying about “intelligent design” — it is bad science and questionable theology. Unlike what its proponents claim, there is nothing in evolution that necessarily denies (or supports) the existence of God — any more than the theory of gravity or the theory of quantum mechanics. As Krauthammer says,

The school board thinks it is indicting evolution by branding it an “unguided process” with no “discernible direction or goal.” This is as ridiculous as indicting Newtonian mechanics for positing an “unguided process” by which Earth is pulled around the sun every year without discernible purpose. What is chemistry if not an “unguided process” of molecular interactions without “purpose”? Or are we to teach children that God is behind every hydrogen atom in electrolysis?
He may be, of course. But that discussion is the province of religion, not science. The relentless attempt to confuse the two by teaching warmed-over creationism as science can only bring ridicule to religion, gratuitously discrediting a great human endeavor and our deepest source of wisdom precisely about those questions — arguably, the most important questions in life — that lie beyond the material.
How ridiculous to make evolution the enemy of God. What could be more elegant, more simple, more brilliant, more economical, more creative, indeed more divine than a planet with millions of life forms, distinct and yet interactive, all ultimately derived from accumulated variations in a single double-stranded molecule, pliable and fecund enough to give us mollusks and mice, Newton and Einstein? Even if it did give us the Kansas State Board of Education, too.

Can we now stop this silly waste of time & energy and get on to the real issue of educating our children for the I-Cubed (Information, Innovation, Intangible) Economy?

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Financial innovation

Not all innovations are technological. An example of a financial innovation comes from David Wessel in today’s Wall Street Journal “Insurance Helps Balance Risk in Retirement”

A band of think-tank economists, who believe many more people should buy annuities and long-term care insurance, argue that consumers and insurers would find such products more attractive if they were bundled together.
“Such a product could offer economic security for retirees by providing a steady steam of income combined with protection in the event of catastrophic costs associated with disability,” Mark Warshawsky, a pension scholar who is now assistant Treasury secretary for economic policy, has said. A couple nearing retirement might, for instance, put a chunk of their savings into an annuity that offers a set monthly sum, adjusted for inflation, and an extra payment if husband or wife needs long-term care.
. . .
One big advantage: Such a product wouldn’t force a couple to buy stand-alone long-term care insurance at retirement, when most are reluctant. But it would make coverage available later when buying it would be prohibitively expensive or impossible. It also might overcome consumers’ widespread reluctance to buy conventional long-term care insurance. “They say: I don’t like that because I’ve got to continue to pay premiums and I have to lose to win, and that doesn’t make sense,” says John Connelly, a marketing executive at Genworth Financial Inc., an insurer recently spun off from General Electric Co.
For insurers, combined products offer another advantage: “We pool populations with two different risks: individuals who are likely to be long-lived and individuals who are in relatively poor health,” Mr. Warshawsky has said. As a result, he and colleagues figure the price of a combined product could be 3% to 5% lower than buying them separately.
Even more important, insurers would sell a combo to people to whom they won’t sell long-term care insurance. Insurers fear folks who buy nursing home coverage are those with reason to believe they are going to need nursing-home care. So they price the policies accordingly or refuse coverage to people with minor health problems.
Insurers do offer life-insurance and long-term-care combos; most allow you to collect your death benefit before death if you end up in a nursing home. But few combine annuities and long-term care. The tax code is one big obstacle; it generally treats annuity payments as taxable and benefits from long-term care policies as non-taxable. A little-noticed provision in a pension bill likely to pass the House soon would remove this obstacle.

Now, combine that with a reverse-mortgage that allows all those seniors to use that equity in their home to buy these combos, and we might go a long way to easing some of the economic anxiety facing us aging baby-boomers.

Training engineers – continually

An interesting juxtaposition of articles today on the training of engineers. In the New York Times is an OpEd piece by Stuart Anderson of the National Foundation for American Policy“America’s Future Is Stuck Overseas” – which summarizes the need for foreign students, especially in science and engineering. He makes an interesting point on the role of foreign students:

without international students, certain science and engineering programs could not be offered at many American universities, because the foreign students populate classes and serve as teaching assistants. They also go on to supply faculty for those programs.

[Note: As a graduate from an engineering school (in my case from the University of Michigan), I can verify that this is not a new phenomena. The same thing was said when I was in school 30 years ago.]
Juxtapose to that argument this story from the front page of today’s Wall Street Journal – Behind ‘Shortage’ of Engineers: Employers Grow More Choosy:

Many companies say they’re facing an increasingly severe shortage of engineers. It’s so bad, some executives say, that Congress must act to boost funding for engineering education.
Yet unemployed engineers say there’s actually a big surplus. “No one I know who has looked at the data with an open mind has been able to find any sign of a current shortage,” says demographer Michael Teitelbaum of the Alfred P. Sloan Foundation.
. . .
In fact, the number of students graduating with a bachelor of science degree in computer science rose 85% from 1998 to 2004, according to figures compiled from universities by the Computing Research Association. The number of bachelor degrees in engineering rose to 72,893 in 2004 from 61,553 in 1999, according to the American Society for Engineering Education.

The Journal article tries to get to the heart of this conundrum: the skills mismatch.

Amid rapidly changing technology, the engineers employers want aren’t necessarily the engineers who are available. And companies often create the very shortages they decry by insisting on applicants who meet every item on a detailed list of qualifications.
. . .
Hiring managers often prefer to wait for the candidate who has the exact combination of attributes they seek, rather than immediately hiring someone who comes close and then giving that person time to get familiar with a new machine or software program.

And with technology changing rapidly, yesterday’s skills are not necessarily in demand today.

Pradeep Khosla, dean of engineering at Carnegie Mellon University in Pittsburgh, says that for older engineers, “there is a problem of technology moving at a very fast rate. When engineers are without jobs, it is usually because they have not kept up.” Mr. Sylvester, the recruiter, puts it more bluntly: “A guy who’s been working on a 15-year-old application is a dinosaur.”
“Getting engineers who have the type of talent you need, quickly — a great background, very well-educated, mobile — has become more important over the last few years,” says Jane Leipold, vice president for human resources at Tyco Electronics, Harrisburg, Pa., a unit of Tyco International Ltd. “The demands are different. The advances in technology mean you need very specific talents.”
One employer demand that flummoxes many engineers is the need for “soft” skills — working in groups, communicating and writing. In August, Cornell University hired a speaker to instruct its engineering students in “etiquette and interpersonal skills.” (Hints: Don’t crumble crackers into your soup or blot your underarms with the dinner napkin.)
“During the dot-com boom demand for electrical and computer engineers was so great it was enough if you could just write code,” says Prof. Khosla. “Things have changed a lot.”

[Ironically, it is claimed that the lack of “yesterday’s skills” is what gave a large boost to offshoring as companies had a hard time finding people in the US who could work on the older Y2K vulnerable systems – and went overseas, specifically to India, to get those skills.]
So – what is to be done?
Both stories contain seeds of a sensible technology policy. Mr. Anderson and others are absolutely right that we need to continue to attract foreign students. The inflow of talent has greatly enriched our economy and to restrict that flow (as we seem to be doing in the name of national security) is the proverbial cutting off our nose to spit our face. As Richard Florida noted at an Athena Alliance event this summer, we are becoming, or appearing to be, more restrictive—both by neglect and by policy. As a result of this and other factors, the US may be losing the competitiveness race to the emerging giants of India and China.
And we need, as a recent National Academy of Sciences report Rising Above the Gathering Storm points out, to dramatically increase our support for R&D and science/engineering education. As I have said before, it is absolutely absurd that we have to defend the bi-partisan technology programs that we put in place in the 1980’s. In this regard, the work of the Alliance for Science & Technology Research in America (ASTRA) is to be commended.
But we just can’t go around yelling “fire”. Nor can we rely on the old solutions (see my piece on the new competitiveness challenge). As the Journal story points out (and again I’m old enough to attest to this) we have been here before:

Many executives who contend there’s an engineer shortage today predict it will get worse over the next decade as baby boomers begin to retire. This summer a report from a business consortium called for doubling the number of science and engineering graduates by 2015 to fill a projected gap. But crystal balls about labor markets tend to be cloudy. In the mid-1980s, the National Science Foundation predicted “looming shortfalls” of some 675,000 scientists and engineers in the following two decades. They never materialized.

We need a new approach – and here is where the Journal story hints at a real possibility. We need to pay more attention to keeping our existing engineering and scientific workforce up to speed! It is not just about training new engineers (that is one way to get the latest skills). It is about making sure that the current workforce never becomes “dinosaurs”.
One idea is a human capital investment tax credit, as suggested by Catherine Mann. This would be available both for new hires (helping offset the cost of acquiring the niche specialized training that employers say they need to spend so much time searching for) and, most importantly, for current workers (to give them the new skills need to continue on the job).
We also need to change our accounting system so that we measure and track those investments in human capital. As the saying goes: what gets measured, gets managed.
Another idea is finding ways to strengthen ongoing “continuing education” programs at universities, colleges and community colleges. We could also increase support for workers who are continuing their education – either part-time or while they are still employed.
We also need to find ways to strengthen the informal mechanisms of knowledge creation and transfer: mentoring, the transfer of tacit knowledge in social settings (social capital), etc. We must not restrict our attention to just the original “formal” classroom education. In the I-Cubed economy, learning can’t stop when a person leaves the building.
Let’s put our attention on the total skill development of the S&T workforce – and everyone else, for that matter. That is how we will strengthen our competitive advantage and avoid the skills-person mismatch that seems to plague our S&T labor market.

US borrowing continues – growing the sharecropper society

This from the Financial Times – “Foreign buying of US assets rises to record”:

Foreign investors poured a record $101.9bn into US assets in September, according to Treasury data which eased market concerns that any fading demand for dollar assets could undermine the US currency’s value.
. . .
The bulk of the $101.9bn flowed into US bond markets, including Treasuries, but economists said a surge in inflows into equities was encouraging since it indicated a possible broadening of investor interest which should support future inflows and leave the dollar less dependant on demand for bonds.

The good news: foreign investors continue to lend the US money to cover our deficits (trade and budget) – meaning the economy won’t immediately crash.
The bad news: foreign investors continue to lend the US money to cover our deficits (trade and budget) – meaning that we owe more and more (principle and interest) to foreign investors and continue our trek to what Warren Buffet calls the “sharecropper society”.

Taxing (and valuing) intangibles

Why does this story remind me of the Beatles song “Taxman”? From yesterday’s Washington Post – “N.H. Puts a Price on Panoramas”:

The view from Brad Wilder’s hillside house is a 270-degree panorama of New England high country: the rugged peak of Mount Ascutney, the reddening leaves and white-painted houses of the Connecticut River valley and — on some lucky fall days — migratory geese cruising by at eye level.
His vista is stunning. But you can’t say it’s priceless.
Wilder’s view has actually been valued right down to the dollar: According to the town of Plainfield, it is worth $237,265. In 2003, town officials deemed it a bonus feature of his home, like a third bathroom or marble countertops, and ordered him to pay about $4,700 in property taxes for it.
Which left Wilder with a lot of questions.
Chief among them: How do you value a view?

Yes, valuation of intangibles is one of the accounting problems of the I-Cubed Economy (see our study Reporting Intangibles).
But valuation of property views is not such a big deal. It has been going on for a long time. For example, the Federal government gives tax breaks to people to protect the view. And various private foundations or local governments have various financial programs to protect the views. They are called a scenic easement or a conservation easement, where the owner is restricted from developing the land. There are even conservation easements for the facades of historic houses. All of these require valuation.
The irony of this story is that someone else may be getting a tax benefit for providing Mr. Wilder his (taxable) view. If he owned the land he was looking at, he might have gotten a tax break or some other financial reward for leaving it as it is.
There is a second irony in this story. The higher property values are forcing some to sell and leave. This is, of course, the same New Hampshire that boosts of no income tax and makes politicians take the no-tax pledge:

The change has been blamed in part on New Hampshire’s lack of a sales tax or personal income tax, which means that property taxes bear much of the revenue burden. In recent years, the state has been pushing towns to keep their property assessments up to date so that none of this crucial revenue is missed.

One way or another, the taxman is going to get you.
Or as Justice Oliver Wendell Holmes, Jr. said, “Taxes are the prices we pay for civilized society.”

The next Chinese challenge

We all know about China as a manufacturing power. What most people don’t realize is that China is moving rapidly up-market to capture not just cheap manufacturing, but high-end design. (Remember the Japanese rise when “Made in Japan” went from meaning cheap to meaning high-tech and quality?) As Business Week reports – “China Design”:

There’s a lot of that going on in China these days. As Chinese companies seek to build global brands and foreigners aim to boost sales in the mainland, they’re transforming the country’s design business. Chinese manufacturers realize they need better products if they want to break out of China and beef up their margins on sales abroad. And foreign companies such as Sony are starting to see that as Chinese consumers get more discriminating, they’re no longer content with the tired, designed-somewhere-else models that many overseas-based marketers once sold in China.
This is powering a boom in design on the mainland. The best Chinese companies are building their design staffs or hiring outsiders to help them make more products of their own. Design is one of the most popular majors at Chinese universities today, and hundreds of design consulting firms have sprung up in Shanghai, Beijing, and Guangzhou. “Large companies [in China] are saying: ‘We can’t catch up fast enough,”‘ says Craig M. Vogel, a professor of design at the University of Cincinnati who has worked as a consultant to several companies in China. Even young designers from abroad are flocking to Beijing and Shanghai to try their luck in the world’s most dynamic consumer market.

Chinese designers are still behind the curve. But they are moving fast:

Since Hunan University opened China’s first school of design in Changsha 23 years ago, the discipline has taken off. Beijing’s Tsinghua University is opening a new 60,000-square-meter design building, and in Guangzhou the Academy of Fine Arts just moved to a new eight-story facility with enough space for 3,000 industrial design students — five times its current capacity. Today, China has some 400 schools offering design classes that together graduate some 10,000 industrial designers annually, up from just 1,500 or so five years ago. “Design schools are popping up like bamboo shoots,” marvels Yan Yang, chairman of Tsinghua’s industrial design department.
Design is even seeping ever deeper into Chinese society. Beijing has introduced into the national curriculum a new course called Technology and Design in which students learn about the history of design and what constitutes good design. “Traditionally, Chinese people are very good at design,” says He Renke, dean of Hunan University’s design school, who helped develop the curriculum. “Now we need a renaissance.”

The numbers don’t yet add up to a comparative advantage in good design – but China is clearly headed in the right direction. While US schools argue about “Intelligent Design,” Chinese schools are studying “Technology and Design”.
Which of these paths do you think will produce the economic superpower of the I-Cubed Economy?

UK gets it – again

This from today’s FT – “Budding entrepreneurs to be sent to US”:

Students with entrepreneurial flair will be sent to the US to learn how to make the most of their business ideas under plans for a scholarship to be unveiled by Gordon Brown later this year.
After introducing a requirement in September that children receive five days a year of education that promotes entrepreneurialism, the chancellor writes in today’s Financial Times that the government wants to add summer schools for budding businesspeople and the US scholarship programme.

Once again, like with the link between manufacturing and design, Gordon Brown and the UK get it. Brown’s FT article – “Britain’s future lies in entrepreneurial talent” clearly links entrepreneurship with education:

If we are to have enterprise in our boardrooms, it must start in our classrooms. A Britain of enterprise needs schools that, like business and society, motivate young people and challenge them to achieve greater heights. In 1997, less than 15 per cent of schools offered enterprise education. Now half of all schools do. By 2006, every school in Britain will offer such education.
This education must be available not just for boys but also for girls. If the UK could achieve the same levels of female entrepreneurship as has the US, Britain would gain three-quarters of a million more businesses.
And enterprise education must extend beyond the normal school term – to provide inspiration and support to those with talent and enthusiasm throughout the year. So later this week, when I visit Manchester to meet young people and entrepreneurs, I will set out plans for new enterprise summer schools to be set up throughout the country next year.

And where are the US scholarships for “budding businesspeople”? The answer lies in what the foundation and higher-education system is doing to promote entrepreneurship. According to the 2003 Global Entrepreneurship Monitor, “the United States continues to be a leader in entrepreneurship education and training at the undergraduate and graduate levels.” That may be why Gordon Brown wants to send UK students here to study.
At the college level, entrepreneurship is a growing area. According to the Kaufman Foundation’s 2004 Survey of Endowed Positions in Entrepreneurship and Related Fields in the United States, “(t)he number of chairs and professorships in entrepreneurship and related fields grew 71 percent, from 237 in 1999 to 406 in 2003.” And there are a great number of individual scholarships (many university-specific) for students wishing to study entrepreneurship. There are also a number of specialty-specific Federal scholarship programs (such as math, science, public heath, etc.) in addition to the general student aid programs.
What we don’t have is a specific Federal entrepreneurship education program or strategy.
I repeat what I just said in today’s earlier posting: maybe we need an National Innovation Foundation charged with educational assistance and promotion of all forms of innovations, including entrepreneurship and S&T.