Home Grown Terror, Dumb Teachers and Market Caps

Home Grown Terror, Dumb Teachers, Market Caps

In the aftermath of the horrible terrorist attack in New Orleans, Trump immediately tweeted “When I said that the criminals coming in are far worse than the criminals we have in our country, that statement was constantly refuted by Democrats and the Fake News Media, but it turned out to be true.” Oops. The terrorist was Shamsud-Din Jabbar, 42, a native born U.S. citizen from Houston and U.S. Army veteran who rented an F-150 Lightning truck in Mexico and crossed the border at Eagle Pass, TX (the site of my annual deer hunt). Personally, I wonder why he rented in Mexico and why the electric Ford pickup? But Trump should at least wait a bit before blabbing off at the mouth.

Then there was the Tesla exploding before Trump Tower in Las Vegas. The news media which now hates Elon Musk had the headline that the Tesla cybertruck exploded giving the impression that something was wrong with the vehicle. In actuality, the truck was fitted with a detonation system made up of fireworks, gas tanks and camping fuel. The person killed was the driver who authorities said died from a gunshot wound rather than due to the explosion. Musk remarked that the construction of the cybertruck actually contained the explosion which resulted in no other deaths. No apologies forthcoming from the media though.

New Jersey is the latest state to eliminate the requirement that a teacher must pass a basic reading, writing and math skills test for certification. New York got rid of their tests in 2017. The reason given was this was part of an effort to address a teacher shortage! So let me get this straight, New Jersey wants to hire teachers who themselves cannot read, write or do math in order to teach kids to read, write and do math. The New Jersey Education Association, the teachers’ union, advocated passage saying that the testing requirements were “an unnecessary barrier to entering the profession.” I am certain that the teachers in New Jersey are well compensated – average salary is $81,000 – but a market solution would be to offer higher salaries for new teachers. Why can’t Johnny read is being replaced by why can’t Johnny’s teacher read.

But I am an empiricist. The reason for scrapping the basic tests for certification is that the failure rates for minorities are much higher than that for whites. For example, one state reported first time pass rates of 38% for blacks, 49% for Latinos, 53% for Asians and 80% for whites. Leaving aside why Latinos score significantly higher than blacks and Asians score lower than whites, cursory observation would suggest some biases in the tests with the caveat that the test taker had similar training and education (a large assumption). An important consideration is whether the tests are relevant to the profession. For example, the classic example was a test used to screen plumbing apprentices that had little to do with plumbing but effectively screened out minority applicants. Also are the tests predictive of teacher effectiveness? There is a study that finds that in one state the tests predict the effectiveness of white teachers but underpredict the effectiveness of black teachers – a sign of biasness in the tests.

Some have argued that a bachelor’s degree in education should be sufficient for certification. I think that would be the worst reason for certification. I believe that there should be no undergraduate major in education. Rather education should be a graduate level degree that would carry with it certification. Currently most undergraduate colleges of education do not contain curricula that provide grounding in the subjects of the skills tests: math. English, social studies and science. Rather the curriculum is on the methods of teaching a subject rather than knowledge of the subject itself. This is why I favor teachers having to having an undergraduate major in something other than education. Then in order to be certified, aspiring teachers would have to go to graduate school. There in addition to methods, the program would first test for basic skills. If the student failed the tests, they would have to take courses in the failed areas before being instructed in methods.

Did you know that there are no trillion dollar firms in Europe. Why is that? Nine of the eleven are in the US. By market capitalization they are Apple ($3.75 trillion), Microsoft ($3.33 trillion), Nvidia ($3.29 trillion), Amazon ($2.39 trillion), Alphabet ($2.33 trillion), Meta ($1.57 trillion), Tesla ($1.4 trillion), Broadcom ($1.05 trillion), and Berkshire-Hathaway ($1.0 trillion). The other two are Saudi Aramco ($2.45 trillion) and Taiwan Semiconductor ($1.04 trillion).

But why no European companies? It has been pointed out that their top eleven market caps total only $2.2 trillion which would rank behind Apple, Microsoft, Nvidia, Amazon and Alphabet! Some might say that it is because there are 44 different countries with a combined population of 745 million and they are too small to generate such a large market cap. But that ignores Taiwan which only has 24 million people. Tesla is a relative newcomer is a producer of cars – albeit electric – while there are such venerable European brands as Volkswagen, BMW and Mercedes. Is it taxes? Is it wages? Is it the ability and freedom to start a business? Is it pursuit of the American dream? Is it freedom? Is it the ability of Americans to freely innovate? Is it the relative lack (compared to Europe) of regulation? Is it our financial system and ability to easily raise capital? Is it the low capital gains taxes? Maybe just like in teacher certification, there is an inherent bias preventing Europeans from having a trillion dollar market cap.