UNO Protects Students from Cupcakes (Whether They Want to Be Protected, or Not)

 

Many years ago, I went along with a group of Exec MBA students to Germany.  Among them was Bill Swanson.  Bill had a sense of humor.

At some point in the trip, I spilled ketchup on my tie.  Bill’s response was that normally a ruined tie would be sad, but given my tie, the ketchup was an improvement.

Yes, Bill has a sense of humor; so I’m hoping the story below is a joke.

That’s what I hope, but what I fear is that the story below is one more example of the inefficient, sometimes painful (like when an 8th grader can’t take aspirin to middle school), and sometimes funny, things that we are driven to do to protect ourselves from being sued, in an economy where congress has empowered personal injury lawyers to frequently sue for huge and unpredictable compensatory and punitive damages.  (When Joe Ricketts, Ameritrade founder, spoke to my Exec MBA class a few years ago, he said that the biggest threat facing the U.S. economy was the proliferation of tort law suits.)

So it’s either a bad joke; or (most likely) it’s UNO protecting itself against every potential law suit; or it’s a third, and worse, alternative—which would be if the story below is to be taken at face value. 

In that case we would have to conclude that some UNO staff have nothing better to do with their time than to paternalistically ‘protect’ young adults from a minuscule risk of illness from freely choosing to purchase and eat cupcakes being sold by fellow students to raise money for good causes.

 

Here is an excerpt from the page one, lead story, of the Sat., Oct. 6, 2007, Omaha World-Herald:

 

(p. 1A)  Guns. Drugs. Bake sales.

What do these things have in common?

All have been banned at the University of Nebraska at Omaha campus.

Citing safety and health concerns, UNO last week prohibited selling homemade food items at campus fundraisers.

Officials said the prevalence of serious food allergies and the potential for contaminated food — either by accident or deliberately — led UNO to adopt the policy, which then drew complaints from student groups.

"The primary issue is the health of the students and the safety of the students," said Bill Swanson, assistant to the vice chancellor in the Career Exploration and Outreach Office.

No one on the UNO campus has reported problems with contaminated food purchased at a bake sale, Swanson said.

But there have been incidents around the country, he said, and those were enough to prompt a discussion among officials.

The decision has come under fire from students who say the restriction cuts off small student (p. 2A) groups from their primary fundraising source.

The Public Relations Student Society of America traditionally held bake sales once a month to raise money for national conferences, local business luncheons and volunteer work, said the group’s president, Katie Dowd.

The group raised about $1,500 a year hawking homemade baked goods donated by members.

"It’s a big blow to us," said Dowd, who called the potential for food contamination from her group’s offerings "very unlikely."

 

For the full story, see: 

ELIZABETH AHLIN.  "Goodies ban half-baked, UNO students say." Omaha World-Herald  (Saturday, October 6, 2007):  1A & 2A.

 

“A Payment System that Rewards Everybody for Staying Busy”

 

  Source of map:  online version of the NYT article cited below. 

 

(p. H6) WHY does health care for the average Medicare patient cost nearly twice as much a year in New Jersey, at $8,076, as it does in Hawaii, at $4,529?

The differences are one example of perplexing geographic variations in medical expenses and quality. And in a study that has important implications for the nation’s $2 trillion health care tab, researchers have found that more intensive and expensive care does not necessarily mean better outcomes. In fact, the opposite may be true.

The Dartmouth Atlas of Health Care, a research group that studies variations and costs in medical care, sums it up like this: Geography is destiny. It means that your chances of undergoing certain surgical procedures, visiting the doctor often or even dying in a hospital or at home are related to where you live.

For example, Medicare patients living in Rhode Island undergo knee replacements at a rate of 5 in 1,000 people. In Nebraska, the number rises to 10 in 1,000. Female Medicare enrollees who receive a diagnosis of breast cancer have nearly seven times the chance of having a mastectomy in South Dakota, where the rate is 2 in 1,000, as they do in Vermont, where the rate is .3 in 1,000.

. . .

In communities with surplus hospital beds, research shows, patients do not necessarily get more elective surgery, but they have more hospital stays, more frequent doctor’s visits and are more likely to be referred to specialists.

Dr. Elliott S. Fisher, who studies health care economics and is a member of the Dartmouth research group, said that part of the problem was the way doctors and hospitals were paid.

“In a payment system that rewards everybody for staying busy, every bit of capacity you have, whether it’s the number of specialists or the number of intensive care beds or the M.R.I. scanner, has to stay fully occupied because they bought them already and they have to keep paying for them,” Dr. Fisher said in a telephone interview.

. . .

Paradoxically, the Dartmouth research, which confirms some similar studies, shows that patients in high-cost areas are not necessarily getting better care. Dr. Fisher said that he and his colleagues found higher mortality rates in higher-spending regions.

. . .

Extra care without better outcomes translates into waste in the health care system. Some experts say that waste accounts for as much as if not more than 30 percent of the national spending on health care. Such spending now totals 16 percent of the gross domestic product.  

 

For full story, see: 

STEPHANIE SAUL.  "TREATMENTS; Need a Knee Replaced? Check Your ZIP Code."  The New York Times  (Mon., June 11, 2007):  H6.

(Note:  ellipses added.)

 

     Source of map:  online version of the NYT article cited above.

 

When You Need to Know the Difference Between Glacier Creek and Big Thompson River

 

  Is it Glacier Creek, or Big Thompson River?  Source of photo:  me. 

 

On May 17, 2007, in Estes Park, Colorado, I was the co-leader of a "two hour" hike with 15 Montessori middle-schoolers from Omaha, Nebraska.  At some point what we were seeing didn’t seem to correspond with what our roughly drawn YMCA map told us we should be seeing–we worried that we had taken a wrong turn and were lost.

II we were on course, then the water beside us should be Glacier Creek.  If we were lost, then it was probably Big Thompson River.  (It’s appearance didn’t help–it looked a bit larger than a creek, but a lot smaller than a ‘big river.’)

The first person I found to ask was a tourist who admitted upfront that she was extremely uncertain about where we were.  She pulled out a modest map, and pointed to where she thought we might be, which was along the Big Thompson River.

Seeking confirmation, I apologetically interrupted a fellow teaching his girl-friend how to fly fish.  This fellow was dressed as an outdoors-man, and exuded confidence.  He talked about hiking on a glacier the day before.  He helpfully strode back to his SUV with me and pulled a detailed, authoritative-looking map.  With no doubt, he pointed on the map to where we were, on Glacier Creek, as I had hoped.  As we walked back to where he had been fishing, he pointed in the direction that we had been hiking, and said that without question, we should continue to hike in that direction.

The scenery was fantastic, but Cindy began to worry whether we were going in the right direction, pointing out that there didn’t seem to be any opening in the mountains in the direction in which we were supposing the YMCA camp should be.  I agreed with her observation, but said that there must be some non-obvious route, because the fellow who pointed us in this direction had exuded credibility.

We finally got to a small museum.  There, an old park service employee asked where we were from.  When I said "Omaha" he jokingly asked if knew his old friend Warren Buffet?  He told us that he had lived in this area all his life, and that we were definitely walking along Big Thompson River.  Then he tried to draw a map to show us how to get back.  He scratched his head, discarded his first attempt, and started trying again.  Then he asked us (again) where we were from?  At this point, I was really worried.

But his second attempt at a map was a good one–it got us back to the YMCA camp.

Maybe we should look for advice from those who are self-critical, as the old man was, rather than from those who exude undoubting self-confidence, as the fly fisherman did?  (Or maybe the key was local credentials?)

Maybe, I made a mistake that Christensen and Raynor warn against in their The Innovator’s Solution:  looking at charisma and confidence as signs of who to follow.  (In fairness to myself, at the time, I didn’t have much else to go on.)

 

“Just Because George Bush Said It Doesn’t Mean It’s Wrong”

 

KerreyBobSenator.jpg   Former Nebraska Senator and Governor Bob Kerrey.  Source of photo:  online version of the Omaha World-Herald article cited below.

 

WASHINGTON – Raising a lonely voice in the Democratic Party, former Sen. Bob Kerrey of Nebraska says he strongly opposes any dramatic U.S. troop withdrawal from Iraq.

Such a retreat, Kerrey says, would hand radical Islamic terrorists a substantial victory and enable them to destroy the fledgling democracy in Iraq.

In an article published Tuesday and in an interview, Kerrey said terrorists would gain safe haven from which to launch further attacks on American citizens like those of Sept. 11, 2001.

Kerrey said that if the United States shows weakness in Iraq, it will "pay a terrible price."

"The forces of al-Qaida have demonstrated a tremendous capacity, and they’ll use that capacity if we withdraw from the playing field," said Kerrey, a former two-term U.S. senator.

In the interview, Kerrey also had a message for fellow Democrats: "Just because George Bush said it doesn’t mean it’s wrong."

 

For the full story, see:

JAKE THOMPSON.  "Kerrey says U.S. mustn’t look weak in Iraq."  Omaha World-Herald  (Wednesday, May 23, 2007):  1A & 2A.

 

The link to Kerrey’s opinion piece in the Wall Street Journal is:

BOB KERREY.  "The Left’s Iraq Muddle."  The Wall Street Journal  (Tues., May 22, 2007):  A15. 

 

The Mexicans Are Not What Is Wrong with Mexico

Gerardo on the left; me in the middle; and Jenny in the right lower corner.  Photo by Jeanette (who you can just barely see in the mirror over Gerardo’s shoulder).

 

In downtown Cancun we dined at a wonderful restaurant called Labná.  The food was authentic, varied, and delicious.  The service, from Gerardo (above) was attentive and replete with gracious good-will. 

The restaurant itself was an oasis of order in a milieu of disorder and decay.

As one tours Mexico, one has the sense of an enormous waste of human time and talent.  The incentive to act and the ability to get things done, is sucked away by an enormous cadre of parasitical rent-seeking hangers-on, who are either part of the government or who are privileged by government rules and regulations.

When the roof of our home in Nebraska was damaged by hail several years ago, it was replaced by a crew of Mexican workers. 

Our retired neighbor Howard had the habit of carefully monitoring all of our outdoor contractors.  Old, reliable, helpful, curmudgeony Howard (may he rest in peace) was much more likely to offer complaint than praise.  But Howard told me, with genuine respect and admiration in his voice, how impressed he was with how hard the Mexican crew had worked, especially through the oppressive heat of the summer days. 

The Mexicans are not what is wrong with Mexico.  What is wrong with Mexico is the Mexican government. 

In most areas of government activity, the Mexicans would benefit from a lot more of what Edmund Burke called "salutary neglect."

 

(Note:  Leonard Liggio reminded me of the wonderful phrase "salutary neglect" at the April 2007 meetings of the Association of Private Enterprise Education in Cancun.)

(Another note: The address of the Labná restaurant is Margaritas 29.  It is near a run-down park, where I purchased an OK cup of flan from a vendor for 10 pesos–the best flan I ever had for less than a dollar!)


UNO Economics RA Talks Personal Finance

McGrathMollyPersonalFinance.jpg   Molly McGrath.  Soure of photo:  online version of the Omaha World-Herald article cited below.

 

Molly was one of our Research Assistants last year in the UNO economics department: 

 

(p. 1D)  Miss Nebraska Molly McGrath has driven more than 25,000 miles since being crowned in June, mostly to schools as she talks about personal finance issues like avoiding debt and using money as a tool to realize dreams.

"There is a drastic need for economic and financial education with all people, but especially in low-income communities and especially among our youth," McGrath told about a dozen people at a recent meeting of the Rotary Club of Omaha-North.

McGrath knows about making ends meet. Her parents could not help her pay for college, so she has used more than $20,000 in scholarships won through the Miss America program. She also cleaned toilets, dorm rooms and apartments as she earned her undergraduate degree at New York University in New York.

"I was known right away at NYU as the girl from Nebraska," McGrath said. "And after I started this cleaning business I was known as the girl from Nebraska who cleans toilets."

 

For the full story, see: 

JOE RUFF.  "Miss Nebraska teaches dollars and sense."  Omaha World-Herald  (Monday, February 26, 2007):  1D & 2D.

 

Omaha Public Schools’ Attack on Other Districts Costs $12 Million in Lawyer Fees

Source of graphic:  online version of the Omaha World-Herald article cited below.

 

(p. 1A)  Who’s winning in the Omaha-area disputes about school finances and boundaries?.

So far, it looks like the lawyers.

Taxpayers have shelled out $12 million to private lawyers hired to handle those matters for Omaha-area school districts and the State of Nebraska, a World-Herald study found.

Nearly all of that has been paid during the past 31/2 years to two Omaha firms: Baird Holm, hired by the Omaha Public Schools, and Fraser Stryker, which was hired by the state and separately by the suburban districts.

The money has been spent on three interconnected items:

• The OPS lawsuit against the state’s school funding system, which accounts for most of the $12 million.

• The Omaha district’s effort, now on hold, to take over its suburban neighbors.

• And fallout from the Legislature’s 2006 law that would break apart OPS and create a two-county "learning community" for the Omaha metro area.

The $12 million doesn’t include lobbying costs or staff time for the three matters. And it doesn’t include millions of dollars the districts paid lawyers during the same period for routine legal work.

The three items have fueled a stunning increase in OPS payments to lawyers. The district now pays about $400,000 a month in legal fees – four times what it (p. 2A) paid five years ago.

"This seems to me to be crazy," said State Sen. Ron Raikes of Lincoln, who introduced a bill this year aimed at curbing school districts’ spending on legal fees.

"These are legal fees, paid pretty much by taxpayers, for a school district to conduct a legal war against another school district or against the state," said Raikes, who heads the Legislature’s education committee.

 

For the full story, see:

PAUL GOODSELL.  "Lawyers reap OPS windfall; District, state actions cost taxpayers $12 million, so far."   OMAHA WORLD-HERALD  (Sunday, March 4, 2007):  1A & 2A.

(Note:  the online version had the somewhat different title:  "OPS legal fees cost taxpayers $12 million, so far.")

 

Fed Chairman Bernanke’s Omaha Speech

     Bernanke in Omaha addressing the Chamber of Commerce (left) and after receiving a plaque officially appointing him as an "admiral" of the Nebraska Navy (right, ha, ha).  Source of the left photo:   http://www.omaha.com/neo-images/photos/large/ap-nenh10102061909.jpg   Source of the right photo:  online version of the NYT article cited below.

 

Last week, on 2/6/07, I attended a large Chamber of Commerce luncheon at which Federal Reserve Chair Ben Bernanke was the featured speaker.  The talk was subtle and restrained, but interesting.  Apparently it was one of the first speeches by Bernanke, since becoming chair, to address an economic issue broader than the macro policy issues that the fed usually addresses.  The headlines in the Omaha World-Herald and the Wall Street Journal missed the main point, I think.

The main point was not to criticize the inequality of the United States economy, but to praise its dynamism.  He pointed out the extent to which living standards have improved as a result of that dynamism.  And he wanted mainly to suggest that when we adopt policies aimed at reducing inequality, we be careful to be sure that the policies do not have the unintended consequence of reducing the dynamism. 

In particular, he suggested that much of the inequality was driven by an increasing skill premium, and that the most constructive way to reduce inequality would be to reduce the skill premium by increasing the supply of skilled labor.  This implies that individuals, and government, invest in increasing skills through increased access to community colleges, universities, online education, and the like.

 

For the full NYT article, see:

"Bernanke Suggests How to Narrow Wage Gap."  The New York Times   (Weds., February 7, 2007):  C13.

For the full WSJ article, see:

DAVID WESSEL.  "Fed Chief Warns of Widening Inequality; Bernanke Urges Steps That Avoid Harm to Economy."  The Wall Street Journal  (Weds., February 7, 2007):  A6.

For the full Omaha World-Herald article, see: 

STEVE JORDON.  "Fed chief says income gap poses problems."  Omaha World-Herald (Wednesday, February 7, 2007):   1D & 2D.

(Note:  the online version of the article had the slightly different title "Growing income gap poses problems, Fed chief says" and is dated 2/6/07.  The article may have first appeared in the paper’s evening edition on 2/6/07.  My copy was the morning edition of 2/7/07.)

For the text of Bernanke’s "The Level and Distrubution of Economic Well-Being" presentation, see:  http://www.federalreserve.gov/boarddocs/Speeches/2007/20070206/default.htm

   Source of graphic:  online version of the WSJ article cited above.

 

 

 

Plastic Pipes Need Less Labor, So Unions Oppose

PipeResidentialPlastic.jpg Residential plastic pipe. Source of photo: http://www.omaha.com/index.php?u_pg=46

 

(p. D1)  The City of Omaha is considering allowing an alternative to copper pipes in residential plumbing, a move the local builders association says could keep new home prices from rising so fast.

. . .

(p.  D2)  "Omaha is kind of unique in not allowing plastic. It’s kind of an isolated pocket," said Blas Hernandez, Papillion’s chief building official, who also has worked in the Kansas City, Denver, upstate New York and central Nebraska areas.

Mike Lipke, western regional manager for FlowGuard Gold CPVC pipes, agreed. He said Omaha and Chicago stand out among Midwestern cities for not allowing plastic water pipes.

Several people with long tenure in the building industry said they believe Omaha has lagged in adoption of plastics because the material is less labor-intensive to install and organized labor has fought to protect work for its members.

Stephen Andersen, business manager for the 470-member Omaha Plumbers Local 16, said he doesn’t think it’s necessarily faster to install plastic pipes, and he personally favors copper "because it’s such a good product, a proven product."

. . .

With the housing market slowed and copper prices still high, now may be the time to make affordability the most important consideration, said Paul Frazier, president of the Frazier Co. and a member of the Metro Omaha Builders Association’s board.

"MOBA is fully behind" the proposed change, President Rocky Goodwin said. Frazier represented MOBA in discussions with the Omaha Plumbing Board.

"We’re long overdue for this," Frazier said. "Anything that holds costs down while doing as good or better job is a good thing.

. . .

Lipke, who sells CPVC, said all the model codes and all 50 states approve the use of plastic and plastic has captured two-thirds of the market.

. . .

"People might try it because it’s less money, but they won’t keep using it if it doesn’t work," Lipke said. "It’s a good product, and it certainly shouldn’t be banned the way it is in Omaha."

 

For the full story, see: 

DEBORAH SHANAHAN.  "Omaha may lift ban on residential plastic pipe."  Omaha World-Herald (Wednesday, January 24, 2007):  D1 & D2. 

(Note:  ellipses added.)

 

[Joseph Schumpeter was born on February 8, 1883.]

 

Level 3 Hangs On

   The fiber optic network of Level 3, originally founded in Omaha, Nebraska.  Source of map:  online version of the WSJ article cited below.

 

Ex ante, Level 3 seemed to have a plausible business model.  When they laid fiber optics, they left room to install more, when demand, or a change in technology, made that profitable.  But demand did not rise as expected; and technologists elsewhere found clever ways to cram more bandwidth into existing fiber optics.  So, alas for many in Omaha, ex post, the results are in the graph below.

 

Fiber-optic network operator Level 3 Communications Inc., a high-flyer during the telecommunications bubble, almost went bankrupt after the sector burst in 2000.

Now, it is back, with a stock price that has almost doubled in the past year and bond prices that have risen about 20%.

Behind the gains: Explosive growth in video viewing over the Internet, which requires high-speed networks of the sort Level 3 offers. At the same time, a hearty appetite by investors for risky debt has enabled the company to put itself on firmer footing by refinancing its debt at lower rates. There also are good reasons to believe that Level 3 might be an acquisition candidate, though many feel such speculation is overblown.

But there are reasons to be wary: The company remains saddled with debt, it is in a business that still has excess capacity, and it has reported a quarterly profit just once in its more than 20-year history. With the stock and bonds at lofty levels, it could be that any future possible good news already is priced in.

 

For the full story, see: 

LI YUAN and GREGORY ZUCKERMAN.  "HEARD ON THE STREET; Level 3 Regains Luster Amid Web-Video Boom."  The Wall Street Journal   (Thurs., December 21, 2006):  C1 & C4.

(Note:  the above version is the online version, and differs some from the print version, though not in substance, as far as I noticed.) 

 

 Level3StockPrices.gif   Level 3 stock prices.  Source of graphic:   online version of the WSJ article cited below.