Sad but useful lessons from the FEGS Implosion

Capital New York has a very interesting story about the collapse of FEGS -

The story describes several critical issues, including:

• A large number of for-profit efforts that FEGS propped up with cash infusions:

It is unclear whether FEGS’ for-profit firms ever made any money. And disclosure documents show the reverse—that the charity has for years been propping up the for-profit subsidiaries with a steady stream of funding.

Last week, the Forward reported that the charity began transferring millions of dollars to the for-profit subsidiaries by 2011. Returns reviewed by Capital show FEGS moving $8.6 million from the nonprofit side to one for-profit information technology company, AllSector, in 2011. In 2012, the charity transferred even more: $9.1 million.

•  Loans:

To build up its housing portfolio, FEGS routinely had gone to a variety of city and state funding sources over the past decade, seeking millions of dollars’ worth of advances on construction and capital costs for their new facilities, taking out low-interest loans that it didn’t have the means to pay back.

From the federal Department of Housing and Urban Development, the charity received $800,000 in advances for housing developments and S.R.O.s. From the state’s Office of Mental Health, more than $3.4 million for facilities in East New York and the Bronx. And for more than a decade, FEGS, like many other nonprofit institutions around the state, had been financing new projects with money from bond proceeds through the Dormitory Authority of the State of New York, a state public authority.

But read the full article and decide for yourself: could board oversight have been stronger? 

Schools can learn from data

Let's face it: schools use data all the time. That's what grades are - grades on tests, quizzes, papers, finals. They all roll up into a final grade, and the grade tells the student - and a bunch of other people, including other teachers, parents, and admissions officers, whether a student is 'good' at something.

So why backtrack from the work that the Department of Education began under the Bloomberg administration? That's exactly what Chancellor Carmen Farina appears to be doing, according to yesterday's New York Times.

Notwithstanding Farina's statement "I know a good quality school when I'm in the building," schools should look at comprehensive data. They can learn from it. We may not yet have had all the conversations about what are the right data, and about how to interpret it, but ignoring it? Not a good way to improve schools.

For a more detailed view of Chancellor Farina's attitude toward data, see Robert Pondiscio's article "Because Carmen Farina Says So" in City Journal, here.

The Cost Disease, Part 2

In an earlier post, I reviewed "The Cost Disease: Why Computers Get Cheaper and Health Care Doesn't" by William J. Baumol and others. I highly recommend the book, for reasons I set out in the in the review.

Those reasons mostly did not have to do with health care. So I wanted to point out a few of the suggestions Baumol makes in the chapter "Yes, We can Cut Health Care Costs Even if we Cannot  Control Their Growth Rate." The cost disease, as Baumol and company define it, relates to the rate of growth of costs. But we can still limit some costs - which will reduce the cost level. How do we do so? Here are Baumol's suggestions:

1. Use statistical methods to improve the evaluation of medical treatments (Baumol offers several cautions, including ones I've discussed before - be aware of sampling errors, don't confuse correlation and causation).
2. Avoid harmful or unnecessary treatments and procedures - he cites the rising C-section rate as one example.
3. Increase the use of genetic information to guide medication and treatment.
4. Identify less expensive treatments, new and old.
5. Practice preventive medicine
6. Make lifestyle changes - more exercise, consume fewer fats
7. Reform the medical liability system.
8. Make changes in medical education, and changes in health insurance practices.

Google's Tubes in pictures.

The Internet may be a series of tubes - and wires and pipes that hold them. They are big. And, at the moment, colorful, as you can see in this series of pictures of Google's data centers from Forbes Magazine. Here's one more, of cooling pipes:

 

The series as a whole is spectacular. Take a look.

Is wine tasting reliable and consistent? Study says no

Think you can tell good wine from less good wine in a blind tasting? Think again. Robert Hodgson, a professor turned vintner, has published a study analyzing the performance of expert judges in the California State Fair wine competition for the years 2005-2008. His conclusion? In about half the cases the wine, and only the wine was the deciding factor.

How could he tell? Judges try wine in flights of about 30 wines each. The researchers included three different pours of four wines in one of the flights, so each judge tried four wines three times. The wine was poured from the same bottle each time. You can read the full article here. Interestingly, the article suggests that judges were more consistent at judging wine they thought was of very low quality.

But wait, there's more. Hodgson was able to compare judge performance from year to year. According to this article in the Guardian:

"The results are disturbing," says Hodgson from the Fieldbrook Winery in Humboldt County, described by its owner as a rural paradise. "Only about 10% of judges are consistent and those judges who were consistent one year were ordinary the next year.

 Wine is complex, and a lot goes into tasting it, including the wine's temperature and what the taster ate earlier that day. So if you pick wine by the medals it has won, well, maybe you'll like it but maybe you won't.

According to the Guardian there does appear to be a scientific basis for the practice of drinking white wines while eating fish.

Researchers from Japanese drinks firm Mercian tested 64 varieties of wine with scallops, and concluded that the iron content of red wine speeded up the decay of fish, resulting in an overly ‘fishy’ taste.

How do you pick wine?

Thanks to Eli Molin for the article in the Guardian. Image via Clown Fish Wines.

Last week, Eduardo Porter of the New York Times wrote this column about how hard it is to become - or remain - middle class in this country. The article is illustrated by those graphs in the screenshot. One statistic Porter calls staggering is that "the typical household made $51,017, roughly the same as the typical household made a quarter of a century ago." Sure, according to the graph, the median household income had ticked up above that during the late 1990s and early 2000s, but the trend has been down again since the 2008 financial crisis. Equally, shocking, we still have approximately 15% of our population living below the poverty line, a number that has been increasing over the last five years.

The surface explanation is also in those charts: the richest quintile has increased its share of income to 49.9 percent of total income, from 42.1 percent starting back in 1967. According to this article, in terms of net worth, the top one percent owns 34.6% of the wealth, and the next 19% owns 50.5%. The bottom 80% owns 15% of the wealth. That makes the middle mighty small.

And that fact has had some repercussions. In 2012 Porter gathered some statistics about social well-being here.

It is not just that income inequality is the most acute of any industrialized country. More American children die before reaching age 19 than in any other rich country in the O.E.C.D. More live in poverty. Many more are obese. When they reach their teenage years, American girls are much more likely to become pregnant and have babies than teenagers anywhere else in the industrial world.

We understand the importance of early childhood development. Yet our public spending on early childhood is the most meager among advanced nations. We value education. Yet our rate of enrolling 3- to 5-year-olds in preschool programs is among the lowest among advanced nations. Our 15-year-olds place 26th out of 38 countries on international tests of mathematical literacy, according to the O.E.C.D. The first nation to understand the value of widespread college education, the United States has dropped from the top to the middle of the pack of our economically advanced peers in terms of college graduation rates.  

Porter has also gathered statistics about economic inequality here. We pay lower taxes than other industrialized nations, and we seem not to mind giving up government services as a result. 

The big exception has been the United States. In 1965, taxes collected by federal, state and municipal governments amounted to 24.7 percent of the nation’s output. In 2010, they amounted to 24.8 percent. Excluding Chile and Mexico, the United States raises less tax revenue, as a share of the economy, than every other industrial country.

Biblical Floods in Colorado

You've probably been hearing about the epic-Biblical-thousand year floods that Boulder, Colorado is experiencing. The cause is record rainfall - as you can see from the chart, above, developed by Climate Central. In fact, according to Weather Underground and Climate Central, Boulder, which normally gets 1.7 inches of rain in September and 20.68 for the year, got half a year's rain in less than half the month of September. (The forecast has a small chance of rain today, and then sunshine for the next few days.)

What might be causing all the rain? The Pacific. According to Climate Central:

During the past couple of weeks, the weather across the West has featured both an active Southwest Monsoon and a broad area of low pressure at upper levels of the atmosphere, which has been pinned by other weather systems and prevented from moving out of the region. It was this persistent low pressure area that helped pull the moisture out of the tropics and into Colorado. Signs point to the tropical Pacific being the source of the abundant moisture according to the University of Wisconsin’s Cooperative Institute for Meteorological Satellite Studies. From there, the moisture plume was transported northeastward, over Mexico and into Texas, and then northward by upper level winds.

This tropical air mass, which is more typical of the Gulf Coast than the Rocky Mountains, has been forced to move slowly up and over the Front Range by light southeasterly winds. This lifting process, known as orographic lift, allowed the atmosphere to wring out this unusually bountiful stream of moist air, dumping torrents of rain on the Boulder area for days on end.

That's a screen shot of the satellite images loop CIMSS released showing the tropical air mass. (I couldn't find it to embed it, but click on the link to Climate Central - you can see it moving there.)

Is climate change involved? No one weather event can be traced back easily to climate change, but there is at least one suggestive factor: the magnitude of the change from past events. And, of course, temperatures are rising around the globe. Generally, warmer temperatures mean more water vapor in the air, which means more extreme rain or snowfall. Stay tuned.