Bizzy’s Biz Links of the Day (070105)

A quick look at items that grabbed my attention today:

Chinese censorship of blogs expands

This follows up on the first item covered at this earlier post on the topic. The evidence that more blogs are being shut out is here and here.

Here is a nearly up-to-date list:
http://egoweblog.com
http://www.blogspirit.com/
http://www.blogsome.com/
http://www.blogeasy.com/
http://www.blogzor.com/
http://www.mazeme.com/
http://www.yesblogger.com/
http://www.tblog.com/
http://weblogs.us

That American technology is enabling this government censorship is a disgrace and should be illegal (perhaps it already is, if someone at DOJ will take the time to dust off the law books and hunt down the “Foreign Relations Authorization Act”).

If they are helping to enable this, which appears to be beyond dispute, what possible defense can Microsoft, whose involvement was previously noted, and Cisco, whose involvement is noted here, have? Cisco even calls the Internet monitoring service it has sold the Chinese “PoliceNet.”

Desperately Seeking Borrowers

Mortgage lenders are desperate to lend, according to Business Week (link probably requires subscription):

Why have lenders been so liberal when they run the risk that many of their marginal customers will go into default? The answer is surprising. Sure, long-term interest rates have at times continued to defy conventional wisdom and decline or hold steady even while the Fed hiked short-term rates. This gives lenders a lot of room to keep their rates to customers as low as possible.

But it turns out that’s just part of the reason lenders are offering such unbelievable deals to their customers. Many lenders are just plain desperate for business, according to some experts. In a bid for market share, mortgage lenders are offering highly favorable terms to borrowers. That’s forcing the rest of the industry to match their terms or lose customers.

The industry’s underlying problem is simple: Overcapacity and a drop in profitability from its all-time high of 2003.

In a nutshell, the lenders don’t want to have to let people go or redeploy them to other financial-service areas at institutions where such moves are possible. And both the quasi-governmental “companies” like Fannie Mae and Freddie Mac, and the private underwriters of mortgage pools, are allowing ever-riskier loans to keep the day of reckoning from arriving. Amazing.

Higher State College Spending Means LOWER Economic Growth?

An Ohio University economics professor calls college a bad investment (link requires subscription; bolds are mine), and in the process documents the absurd level of bloat that has occurred in the past quarter century:

Using data for all 50 states from 1977 and 2002, I compared the 10 states with the highest state funding for universities against the 10 states with the lowest. The result: The low-spending states had far better growth in real income per capita, a median growth of 46% compared with 32% for the states with the highest university spending. In 2000 the median per capita income level for the low-spending states was $32,777, 27% higher than the median for the 10 states where higher education got the most state money.

The results were the same when controlling for a state’s oilfields or other energy sources, the age distribution of its population, the prevalence of labor unions, the tax climate and other factors that could affect growth-even the proportion of college graduates. This despite the fact that the states that were growing most quickly tended to have a high proportion of college graduates.

How could this be? Colleges have devoted relatively little new funding over the past generation to the core mission of instruction (spending only 21 cents of each new inflation-adjusted dollar per student on it), preferring instead to assist research, hire more nonacademic staff, give generous pay increases, support athletics and build luxurious facilities. And while in the private sector companies have learned to get more work out of fewer employees, the opposite appears to have happened in higher education. In 1976 American education employed three nonfaculty professional workers (administrators, counselors, librarians, computer experts) for every 100 students; by 2001 that number had doubled.

….Yet another explanation is one Forbes readers know all too well. Taxes reduce private-sector activity. People who must pay high taxes tend to work and invest less and also tend to migrate to lower-tax areas. In other words, increasing funding to universities means transferring resources from the relatively productive private sector to higher education, which tends to be less productive and efficient.

BizzyBlog has long believed that residential universities are anachronisms that made little sense since the early 1990s, and make absolutely no sense in the 21st century. The OU economist’s work demonstrates that higher spending on higher education only leads to more top-heavy colleges.

I believe that private-sector initiatives will continue to chip away at the walled-university mindset, and that this is a very good thing.