January 2014

The Leyendecker View

Disrupting Education to Save It

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"Do not train children to learning by force and harshness, but direct them to it by what amuses their minds, so that you may be better able to discover with accuracy the peculiar bent of the genius of each."

- Plato

Publisher: Doug Leyendecker
Managing Editor: Kelly Griego

Welcome to the Leyendecker View
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"Education may be the only thing people still believe in in the United States. To question education is really dangerous. It is the absolute taboo. It's like telling the world there's no Santa Claus."

- Peter Thiel


  • In the UK, France, Germany and Japan, nearly all four-year-olds attend pre-school. In the U.S., only about 70%of our four-year-olds are enrolled in pre-school.
  • No Child Left Behind and Common Core have forced testing to take center stage in our approach to education. Teachers, in turn, must devote more time to training students to take specific tests, rather than learn. As command and control requirements continue to dominate our education system, we're seeing bi-partisan backlash to it.
  • As of 2010, the U.S. ranked 21st globally in high school graduation rates. One in five of our ninth-graders will drop out of high school. From there, 70% of high school grads go onto two- or four-year college. College enrollment has increased slightly in recent years, but college graduation rates are on the decline. Forty percent of the freshman class of 2002 still hadn't received a degree 6 years later.
  • And what of those who do graduate? As of 2012, about 44% of recent college grads (those 27 years or younger) were underemployed, meaning working at a job that didn't require a college degree - a particularly brutal fact in light of how expensive college has become. Tuition (excluding room and board) at four-year public colleges has increased 72% in 10 years.
  • Outstanding student loan debt today amounts to around $1 trillion; about 86% of it is federal debt. From the 2010 - 2011 school year, nearly 60% of graduates had debt. Those who graduated in 2011 with debt owed on average $26,600, a 5% increase from average student debt in 2010.
  • A University of Washington PhD candidate recently wrote an essay called "Thanks academia, soon I will join a generation of jobless PhDs." In it, she points out that because many PhD professors view academia jobs, which are shrinking, as the only respectable PhD career track, the average PhD education leaves no room to prepare students for the real-world jobs most will have to try to land. It underscores the concern that those in the Ivory Tower are cut off from economic realities.

Clearly, in a general sense, the state of education in the U.S. looks distressed and outdated, from pre-school all the way through PhD programs. Ask one hundred people why they think our education system is flailing, and you'll get one hundred different answers. And education involves our children and the future of our country, so it has become a very sensitive subject.


The good news about anything that's gotten too convoluted, unwieldy, bureaucratic and outmoded is that more and more people are motivated to innovate. And, importantly, people are more receptive to experimental risks and avant-garde ideas in the name of finding a better way.


While people point fingers about how our education system got here and debate the merits and faults of different fixes, the entrepreneurial-spirited among us are setting out to invent a new system that matches our modern economy and world. 


In researching the state of education, we read a lot of articles, scoured a lot of statistics and watched a lot of videos. A few themes began to emerge that seem critical to improving our country's approach to education and updating it for the modern day, and they are:

  • Affordability: finding creative ways to bring down the costs of education 
  • Applicability: building a curriculum that prepares students for the working world by providing real-world applications of otherwise abstract lessons
  • Individualization: creating room in the day for teachers to spend one-on-one time with students to guide them through challenges and find ways to link learning to each student's particular interests     
  • Relationships: recognizing that behind every successful student is an adult who believes in them relentlessly

And behind every trailblazing school are parents willing to go against the grain in the name of evolution. Thirteen-year-old Logan LaPlante's parents did just that, pulling him from traditional school in exchange for a bold program that will change the way you think about education. In this, again, thirteen-year-old's TEDx talk, Logan explains what school looks like for him. Among other hands-on activities, he spends one day per week outdoors and has an internship at a ski clothing factory, where he's directly applying what he's learning in math (and being inspired to start his own company one day). Logan calls how he's learning  "hackschooling" - challenging the system to make it better. 


In the section below about the state of education, we'll explore some of the issues putting pressure on our school system, and the innovative ways people are working to make a measurable difference in our children's lives and futures.


"Every student can learn, just not on the same day, or the same way."

- George Evans

General Economic Perspectices
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"The dollar is our currency but your problem."

- John Connally, Secretary of the Treasury, 1971


One can always count on a bright Texan to tell it like it is. At the time, Connally was responding to European concerns about exchange rate fluctuations that were, of course, negatively affecting their economic position. Well, it's déjà vu all over again. 


America's energy boom is rapidly reducing our trade surplus. That means we are exporting fewer and fewer dollars into the global economy. Since the dollar is the world's reserve (trading) currency, this is tantamount to contracting the money supply for global commerce. Contract the money supply and you contract economic activity. Turkey, South Africa and Argentina have become the new problem children. Let's not forget that Europe is still teetering. Will incoming Fed Chairman, Janet Yellen, come to the rescue?


The economic roller coaster of the last six or so years, if not since 2000, reveals how interconnected, and thus interdependent the global economy has become. With the dollar as reserve currency, the Fed's activity now ripples around the world. In addition to the contracting American trade deficit, reducing QE will limit the dollars lubricating the global economy. 


A reduction in dollar-based trade seems a logical way to mitigate this ripple effect and reduce risk for global trading participants. It seems the world is moving in that direction, with China trying to turn the RMB into a trading currency. But this kind of transition may not be so easy to execute.  


Growth in RMB-based trade may not be dependent solely on a more liquid RMB market, something the Chinese are actively creating. Trade participants will need to have faith in China's economic stability, as well as its empathy towards the trade system and participants. Until this confidence is there, the RMB cannot measurably replace the dollar. Are Russians buying apartments in Shanghai and Indians storing their gold in Beijing? If not, then the dollar would seem to have some staying power. 


Living in a world where sovereign monetary manipulation runs rampant, it is hard to see confidence growing in any sovereign currency. This may be why we're seeing such interest, if even just curiosity, in Bitcoin, a "currency" lacking sovereign control. Is the world starting to look for a new monetary system that's less influenced by sovereign self-interests?

The Hiring Market
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Slowly we turn, step by step, inch by inch, one more contraction in the labor force participation rate after another. For those unfamiliar, when the Bureau of Labor Statistics determines our unemployment rate, part of the calculation includes the number of people actively looking for a job...those "participating" in the job search process. When people stop looking for a job, stop participating in the process, then they are no longer counted as unemployed. Those people not looking for a job are no longer unemployed, they are just not looking anymore.


Today, our participation rate of people actively looking for a job is about where it was in the late 1970s, before an enormous number of women entered the labor force. And for the last four years, our participation rate has been contracting. The lower the participation rate, the lower our unemployment numbers will be. That's some fancy accounting, eh? Well, it's a big reason our unemployment rate has now fallen from almost 10% four years ago to around 6.7% today. 


In December 2012, Fed Chairman Bernanke pledged to keep interest rates low to stimulate our economy "at least as long as the unemployment rate remains above 6.5." Then in July 2013, Bernanke eased off 6.5%, suggesting this was just a "threshold, not a trigger," as other factors would influence the Fed's reduction in monetary stimulus. Then in December 2013, Bernanke back peddled even more, suggesting "it likely will be appropriate to maintain the current target range for federal funds (interest rates) well past the time that the unemployment rate declines below 6.5%."


What did Bernanke not know in December 2012 that he learned by December 2013? It seems he did not yet understand that all jobs are not created equal. When job growth is being dominated by low paying and temporary jobs, it does not suggest we are in a robust economy no matter what the unemployment rate is. 


No matter what we have seen happen recently in the stock market, the labor market still appears significantly dysfunctional.

Managing the Modern Day
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What you own today matters less than what you earn tomorrow.
BLS Corner
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Highlights from the 2013 Union Members Survey:

  • In 2013, the union membership rate - the percent of wage and salary workers who were members of unions - was 11.3%, the same as it was in 2012. The number of wage and salary workers belonging to unions, at 14.5 million, was little different from 2012. In 1983, the first year for which comparable union data are available, the union membership rate was 20.1%, and there were 17.7 million union workers.
  • Public-sector workers had a 2013 union membership rate (35.3%) more than five times higher than that of private-sector workers (6.7%).
  • Workers in education, training, and library occupations and in protective service occupations had the highest unionization rate, at 35.3% for each occupation group.
Chart of the Month: Pre-school Enrollment, 1980 - 2012
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Pre-school Enrollment: 1980 - 2012 


Upon learning that 70% of our 4-year-olds, and fewer of our 3-year-olds, are enrolled in pre-school, we were curious about context. Below is a chart with school enrollment rates for 3- and 4-year-olds combined, and rates for white, black, Hispanic and Asian* students from 1980 to 2012. Enrollment includes both private and public programs. We were heartened to see that rates are trending up.

For greater insight into these numbers, click here for a report from The National Institute for Early Education Research, which set out to understand who is and is not attending pre-school in the U.S. and why.


Source: Bureau of Economic Analysis

* Please note: Data for Asian students was unavailable before 1993

Disrupting Education to Save It
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"Education is not the filling of a pail, but the lighting of a fire."

- William Butler Yeats


Sir Ken Robinson: How to escape education's death valley

Since 2006, Sir Ken Robinson has held the impressive title of giving the most-watched TED talk ever ("How Schools Kill Creativity"). He recently made a return to the TED stage in a PBS-sponsored series on education. With his trademark wit, he directly takes on how American schools fail to speak to three fundamental facts of humans, which are: 


1) We are by nature diverse 

2) We are curious

3) We are inherently creative 


According to Robinson, education systems that let these principles drive learning will be successful. Robinson has also studied the world's highest performing schools and found three common themes. These schools: 


1) Individualize teaching and learning 

2) Attribute a very high status to the teaching profession

3) Devolve responsibility from the state to the school level for getting the job done


Every kid needs a champion

For all the education reform Rita Pierson has seen in her forty-year career as a teacher, she's never seen reform that incorporates the value and importance of human connection. Pierson challenges us to imagine a world where every student knows a teacher who takes time to cultivate a relationship and encourage them through setbacks, particularly in the inner city school systems. She shares a story of a student who missed 18 out of 20 questions on a quiz. She marked his grade as "+2" and put a smiley face next to it, then coached him through his errors to improvement. "Minus 18 sucks the life out of you," she says. "Plus two says I ain't all bad."


To view all nine talks from the PBS-sponsored TED series, click here or see the list below for the other seven talks. 

A new university in San Francisco plans to merge the best of traditional and online college

Minerva Schools KGI is a "radically experimental" online, four-year college whose founding dean is a former Harvard social sciences dean. Unlike other online programs, first-year students are required to live in a San Francisco-based residence hall and take classes together in real time. Minerva is attempting to take the best of online education - lower costs and capital investment, global teachers - and merge it with the best of traditional college - community and accountability. The education is also meant to be "experiential," which means students will learn practical skills like negotiation and communication. Students are also required to spend each of the four years in a different city (where Minerva has residence facilities) to preclude the trappings of the university bubble and get more prepared for life after college.


The "flipped classroom": Lectures at home, homework in class

The U.S. has one of the lowest student-teacher ratios in the world, and the flipped classroom seems to be unlocking its untapped potential. In the flipped classroom, students watch pre-recorded lectures at home. "Homework" is then done in the classroom. The teacher can guide individual students through challenges, while also getting a clearer sense of a student's passions. The teacher can then find ways to draw learning back to individual student interests, making learning more relevant and memorable. This approach has reduced course failure rates and discipline cases. Click here or below for the full graphic.

Will technology finally disrupt, rather than just enhance, education?

Most classrooms use computers and iPads, but how teachers teach looks nearly identical to how it did fifty years ago. Some cutting edge schools are beginning to use technology to change instruction fundamentally, like the "flipped classroom." Other schools are embracing social networks to create community learning and collaboration opportunities outside of school. Read on for other ways schools are using technology to bring the classroom into the 21st century.  


Two giants of online learning discuss the future of education

Salman Khan - founder of not-for-profit Khan Academy, an education website whose mission is to provide "a free world-class education to anyone anywhere," and Sebastian Thrun - founder of Udacity, a for-profit digital education platform that aspires to bridge the gap between real-world skills, education and employment - are big names in the world of massive open online courses, or MOOCs, as they're called. Both founders want you to think "quality" when you hear "online education," and both schools use technology to broaden access, scale learning and lower costs. MOOCs are not without controversy. There's plenty of press about high course enrollment rates, and nearly as high incompletion rates, or about how they're failing to reach the underserved and are instead appealing to the socioeconomically advantaged. But they are also doing downright clever things, like partnering with Georgia Tech and AT&T to offer a computer science masters program that costs $7,000 - much gentler than Georgia Tech's regular $45,000 tuition. The two sat down with TED's blogger to spar about business models, if they would hire someone whose education came solely from online, and the visionary places they hope to take online education.


General Assembly gives colleges and graduate schools a run for their money

General Assembly (GA) is a Jeff Bezos and venture-backed education start-up that offers hundreds of classes in the technology space. The company is democratizing education: Anyone with the means to pay (single-session to multi-week courses range from $25 to $5,000) can attend their a la carte courses at one of their 12 global locations or take some online. Subjects range from digital marketing, to pitching your tech venture to investors, to how to code. One of us on the Leyendecker team has taken a few GA courses and reports: There are certain topics - like understanding and building financial models - that remain a better fit in a semester-long program. But subjects like marketing, which has been totally disrupted by technology and is in constant flux, are arguably better learned in an agile setting like GA. Since industry professionals teach the courses, shifts in trends and changes in technologies and practices can be applied to curriculum in real-time. We're convinced that GA and imitators are ones to watch as the value of college and graduate school debate rages on.


"It is the supreme art of the teacher to awaken joy in creative expression and knowledge."

- Albert Einstein

News You Can Use
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The Economy

The history of quantitative easing in one chart

The following chart shows the history of the Fed's quantitative easing program, as well as Goldman Sachs' forecast for how they expect "QE3" will be wound down.  

Vanguard's global debt heat map

In their 2014 outlook report, Vanguard included a debt heat map of consequential global economies, which shows four categories of debt as a percentage of GDP.

Leadership & Management 


24 charts depicting leadership styles around the world

The author of the book When Cultures Collide created charts portraying general management and leadership styles in 24 countries. The breadth and variations of styles is rather fascinating. American managers are summarized as: "Assertive, aggressive, goal and action oriented, confident, vigorous, optimistic, and ready for change. They are capable of teamwork and corporate spirit, but they value individual freedom and their first interest is furthering their own career." Follow the link to see all 24 charts.


Using a smart phone after 9pm leaves workers disengaged

New research shows that using a smartphone to cram work in late in the evening results in less effective engagement at the office the next day. Working late in the evening keeps the brain activated and, often, stressed. But the real culprit is the "blue light" that radiates from the phone's screen. It inhibits the production of sleep-inducing melatonin. Consequently, more companies are implementing policies against checking email late in the evening to encourage more restful sleep.


The New America


Highly educated, highly indebted: Today's 27-year-olds in charts

In spring 2002, government researchers began following about 15,000 high school sophomores and tracked them through early adulthood. The data and findings about how their young adult lives have taken shape were recently released. The college graduates among them (33.3%) graduated during or near the crash of 2008, making the progress of this particular group interesting. Some highlights below, and follow the link for all 12 charts. 

10 states that make the most money exporting goods to China

In 2012, China was the U.S.'s third largest export market. Chinese consumers bought $108.6 billion worth of goods from us. China was within the top three export markets for 34 states, and 30 states sold more than $1 billion of goods to them. Follow the link for the ten states exporting the most to China, with Texas coming in at number 2.

A Final Thought on Education
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Why is the best microbiology professor in the country teaching 30 students a semester and not 300...or 3,000?


Information today is basically free and instantaneously available. If you don't have an Internet connection, just go to the public library. But if information today is free and readily available, why do we need to spend more money on education?

Thanks for reading The Leyendecker View. We hope you find these perspectives unique, insightful and valuable.

We at Leyendecker & Associates are committed to the highest standards of value creation. 
Doug Leyendecker Jim Ford David Prodoehl Kelly Griego