Last Wednesday, President Barack Obama addressed a group of supporters in a back yard town meeting in Toledo, Ohio. During his prepared remarks, he repeated all of the obvious highlights of his administration, but then took questions from the audience.
One question was from a young man who noted that he had been raised in a blue collar home and was now helping run to the pension fund of a labor union. He asked the president if he thought the economy would improve enough to help his fellow laborers enjoy a satisfying retirement.
The president replied by lamenting that "a decade ago, the United States had the highest percentage of college graduates in the world. Now we are 12th." He went on to say that companies are making plenty of money with "an Internet line a businesses can locate anywhere in the world... and they are." He acknowledged that "we (Americans) have competition for both manufacturing jobs and white collar jobs that didn't exist a few years ago."
That same morning, a front page article in The Wall Street Journal screamed "Scores Stagnate At High Schools." The article began by stating that "fewer than 25 percent of the high school graduates who took the ACT college entrance exam possessed the academic skills necessary to pass entry level college courses despite modest gains in college readiness among U.S. high school students in the last few years."
Presumably, President Obama had read the day's headlines and has already been quite proactive in proposing education reform, particularly at the high school level. To his credit, President Obama has pledged to return the USA to its former No, 1 spot.
Nothing could be more helpful to our economy, especially to our children, than to have U.S. high schools turn out graduates who can compete with those in other countries. But sadly, he has a major challenge in that endeavor from the ever powerful teachers unions and local school boards, who all have their own ideas on the subject.
For most of the first two centuries, our country's schools were run by towns, cities and religious orders. Because of the inherent differences in quality from one town to another, busing was mandated in the 1960s to help bridge the vast gaps between public school systems.
I always wondered why students were bussed instead of the teachers, but here we are today with a failed system at the high school level. We even created a Department of Education at the federal level, and have precious little to show for it. Students from Canada are 38 percent more likely to have at least an associate degree than are our U.S. citizens.
Some of the reasons are economic, no doubt, with a private college degree costing well over $200,000 today. But most of the fault lies with parents' expectations and lackluster public high schools. It's little wonder that companies are hiring outside of the United States and deploying their capital in places where employees' energy levels are much higher.
I wish President Obama success in his endeavor. He didn't create this problem, but he can help solve it. Meanwhile, don't expect any vast improvement in hiring in the near future. The President has tacitly said so.
On another but not unrelated front, Professor Jeremy Siegel of The Wharton School at The University of Pennsylvania was recently asked if the mad rush out of stocks and into U.S. Treasury Securities was predictive of another depression. He referred to this bond bubble as more of a reaction rather than a predictor.
"Investors are simply afraid of the stock markets and are purely interested in safety, even if it means getting a zero return on those monies," he said. He went on to say that at extreme moments in economic history, markets tend to reverse themselves very rapidly and can catch people off guard. He noted that "in 1996 and '97, investors thought that tech stocks had the potential to keep going forever. Yes, they did go up for a short while longer, but we all remember what happened next."
He said that this point in time reminds him of only one other period in economic history — 1932 to 1933 — the BOTTOM of the depression. He finished by saying that he sees no evidence of the bad news continuing.
If the good professor is right, and he usually has been, we may soon see markets see the proverbial glass as half full. The mood of the nation couldn't be any surlier, and yet corporations are minting money. Something has to give. We'll see.
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William T. Ryan is president of Ryan Financial Advisors in Andover. His column appears each week in the Sunday Eagle-Tribune. Reach him at 978-475-1500 or by e-mail at wtryan@ryanfinancial.com.
