Searching for What Ails Us

Al Jacobs

Why aren’t we well-educated?

If you listen to the professional educators, you’ll understand the importance of quality schooling. If students are to succeed, the educational system assures us it must concern itself with such factors as class size, quality of textbooks, physical condition of school facilities, testing techniques and particularly the credentials of the teachers. But most important of all, they say, are the funds devoted to education, for only with increased monetary contributions can America achieve the scholastic superiority it deserves. Whatever else varies, an incessant call for ever more revenue is the common thread in the scholastic fabric – and indeed, the money continues to flow.

Despite the every increasing professionalism of the schools, there seems to be a profound disconnect. The U.S. Department of Education reports four out of five students graduate high school within four years. By contrast, the National Assessment of Educational Progress (NAEP), the largest standardized test administered in the United States, released a study showing fewer than 40 percent of graduating seniors mastered reading and math. Nonetheless, students unable to complete grade-level work and keep up with their classmates are pushed onward and upward and eventually given diplomas.

There’s a fundamental flaw in the American public school system which the professional educator dare not acknowledge. Irrespective of the enactment of such idealistic laws as George Bush’s No Child Left Behind in 2001 and Barack Obama’s Race to the Top in 2009, both decreeing all students will excel – which, by necessity, ignores intellectual limitations and academic ineptitude – there are millions of youngsters impressed into the system who have no legitimate reason to be there. Legions of youths will grace the seats of countless classrooms and never learn much of anything.

Why aren’t we prosperous?

 There’s no shortage of available investments for the citizens of this monetarily abundant nation. Neither is there a shortage of investment advisors. And most importantly, according to the latest available data by the U.S. Census Department’s American Community Service bureau, U.S. 2015 median annual household income stood at $55,775. If for these reasons alone, most Americans should be reasonably well-heeled. But in case you not aware, a recent article titled “The Secret Shame of Middle-Class Americans” in The Atlantic reveals an astonishing 47 percent of Americans unable to come up with $400 to pay for an emergency without borrowing or selling something. Perhaps even more disconcerting, a poll by The Associated Press NORC Center for Public Affairs Research discloses two-thirds of those making between $50,000 and $100,000 experience difficulty coming up with $1,000 to cover an unexpected bill. How can it be citizens of as prosperous a country as ours possess so few resources?

To answer this question, we’ll take a look to see how the average citizen handles financial matters. There’s no doubt it’s how our spare cash is put to work earning more cash which determines whether we thrive. And the conclusion, unhappily, is most Americans practice investment by default. What’s this, you ask? Let me explain. It’s a practice requiring nothing of the investor but delivery of money to a chosen financial advisor who, by prearrangement, places the funds into a variety of mutual and/or exchange traded funds. The result is an industry devoted to continuity, where the fees siphoned off by the fund hierarchy, together with the financial planners and other assorted professionals, never end. And for this you’re assured of future security, predicated by a fixation upon the rear view mirror of time ... while cautioned “Past performance is not an indication of future returns.”

As these fund investments normally generate no cash flow, is it any wonder most Americans cannot come up with emergency sums when required? In addition, as the investor’s involvement in the program is essentially one of an outsider, is it not clear why badly chosen funds, specifically selected to maximize the advisor’s fees, are a distinct possibility?

Why aren’t we healthy?

Things are not looking good. A recent survey reveals an estimated 160 million Americans are either obese or overweight, with nearly three-quarters of men and more than 60% of women in this category. On the tobacco front, the American Lung Association reports each year more than 480,000 people die from its use, making it the leading cause of preventable death in the country. And while we’re browsing through the numbers, consider that 24.6 million of us, aged 12 or older – 9.4 percent of the population – used an illicit drug in the past month.

Fortunately our governmental agencies are not taking these matters lying down. One approach to fighting obesity is the sugary-drink taxes. Although a soda tax in New York City championed by Mayor Michael R. Bloomberg was struck down in the courts. Both Philadelphia and Berkeley, California, successfully carried out such a policy. I can visualize the residents of those cities getting slimmer by the day. Also, we mustn’t ignore the recent victory for smokers in my state of California where, through an initiative measure, the tax on a package of cigarettes will be increased by two dollars. No doubt this will put an end to lung cancer and emphysema. And finally, the illicit drug industry has been dealt a blow, also in my home state, by an initiative measure legalizing recreational marijuana. As the substance now complies with the law, we may boast we’ve done away with its illicit use. Indeed, another great step toward a healthier society.

On the matter of education, the basic fallacy of the public school system is a prevailing attitude which declares learning is something to be imposed, involuntarily or otherwise, on the recipient, rather than an activity self-imposed by the student. It’s from this misconceived approach that never ending educational programs repeatedly fail.
f I’m now accused of providing a less than flattering image of life in these United States, I plead guilty to the charge. However, far less credible are the various actions undertaken by the authorities to correct the imperfections. The point I’m striving to make is that of the many approaches taken to cure the ailments afflicting society, not a single reference relates to the personal responsibility of the afflicted. I’ll provide a few examples.

Concerning an individual’s prosperity, I question the concept wherein we must all join together and share in a broadly diversified portfolio of corporate securities, based on the expectation a rising tide raises all ships. This seems to be a formula for mediocrity, at best. For the past half century I’ve personally analyzed each investment I’ve ever entered into. Not everything panned out quite right, but generally things worked well.

As for good health, no cigarette tax caused me, at age 19, to swear off the two packs a day I then smoked. I simply figured it was stupid – so I quit. If I hadn’t, I’d now be long dead, and deservedly so.

A final word: On such matters as education, personal prosperity and health, I’m convinced of a fundamental principal: Success is not a matter of collective endeavor, but rather the result of singular achievement.

Al Jacobs, a professional investor for nearly a half-century, distributes a monthly newsletter in which he shares his financial knowledge and experience.You may view it on



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