Friday Five November 24

At one time or another, every leader will need to apologize. Whether it is a sin of commission or omission, every leader will need to apologize. HBR has four ways not to apologize in their article The 4 Types of Ineffective Apologies. In essence, what people are looking for is genuine remorse and a sincere “I’m sorry”. Take a read and keep this in mind the next time you need to apologize.

From the Department of Labor, we find that college tuition and fees have increased 63% since January of 2006 compared with an increase of 21% for all items. During this same period, prices for textbooks increased 88% and housing at school increased 51%. In their book, Why Does College Cost So Much?, David Feldman and Robert Archibald argue that the increase over inflation is mainly due to economic growth factors – which would be somewhat plausible if, during this period of 2006 – 2016, we had experienced significant economic growth. But we haven’t. For the most part, our growth has been insipid at best. Other articles point to increased regulations from the Department of Education, causing colleges to hire an increased number of administrators. My theory boils down to a principle I hold to be true: If you want to increase the use of something, just have the government subsidize it. If you want to discourage the use of something, have the government tax it. Since the government is subsidizing higher education more and more, we’re seeing its costs go through the roof. Perhaps not a cause-effect analysis, but I’m happy with the corollary.

Vice Chairman Stanley Fischer

Finally, someone is admitting what I’ve been suspecting for some time: We don’t have the tools necessary to combat the next recession. Not that the Fed’s efforts didn’t help the last recession – they did – but they also painted themselves into a corner that I’m not sure they can get out of. This was touched on by Vice Chairman Stanley Fischer who is a member of the Board of Governors for the Federal Reserve System. In his speech on November 21st, he said this: “Such low interest rates, together with only tepid growth, suggest that the equilibrium interest rate–that is, the rate that neither boosts nor slows the economy–has fallen. Why does this matter? Importantly, low interest rates make the economy more vulnerable to adverse shocks by constraining the ability of monetary policy to combat recessions using conventional interest rate policy–because the effective lower bound on the interest rate means that monetary policy has less room to reduce the interest rate when that becomes necessary.” So there you have it. What this means, from where I sit, is that we’ll have to let the next recession hit our economy because we’re out of money and out of interest rate wiggle room.

Fidel Castro is dead today at age 90. As he looks back on his life, I wonder what he’s thinking now? Was it all worth it, Castro?

There are those who workout regularly. I’m not one of them, but I admire their persistence. Thing is, when they stop exercising, the chances are good that they will have increased physical problems. I know I need to do more to take care of myself, but this article doesn’t inspire me at all – it discourages me. Why get going on exercising if, someday, I can’t do it anymore and it causes me additional problems?

Bill English