May 042013

“It’s a sad dog that won’t wag its own tail.”
—Southern Aphorism

In this spirit, I must share an anecdote that provides very strong support for my long-standing admonition to learn how to write software and program yourself out of a job, rather than wait until someone else does it for you, because if it can be automated, then it will be automated.

I began developing the practice utilities at in response to students’ requests for practice tests in the Managerial Finance courses that I teach. Previously, I distributed paper copies of sample numerical questions from old exams, and every time typos snuck in when I was not looking. No matter how careful I thought I was, I inevitably grabbed a version that had errors in it that were different from the version that I had distributed in the immediately preceding semester, and the cycle of duelling typos never resolved.

Over the years, the typos reproduced and mutated in a manner that had me afraid that I might wake one morning to find that they had evolved into something particularly virulent and maybe even achieve self-awareness.

Finally, a couple years ago, after having told nearly two thousand students over the better part of a decade that they should learn how to write software and program themselves out of jobs, rather than wait until someone else to did it for them, I decided to program myself out of a job. I’m not there yet, but I learned recently that I am closer than I had suspected, and that doing so has improved my teaching performance dramatically.

In a fit of frustration and in a mood to show off a bit, I followed my own advice to solve whatever problem annoys you the most, and converted those contemptible paper printouts into the first version of the online practice utilities linked to above.

During the first semester, students and I identified errors and omissions that, once corrected stayed corrected, and the flood of emailed pleas for help just prior to exams fell from a firehose to a trickle. This is in large measure, I since have learned, because I took the time to incorporate randomly generated values into the problems. In essence, anyone, anywhere in the world can create seemingly infinite variations on the questions posted, just by clicking the Reload button.

In response to the few cries for help that I do receive, I tend to post my replies in this Blog area, and respond more often than not with the URL of the post that addresses the question, along with exhortations to practice, practice, PRACTICE. When a student asks for further clarification, I edit my follow-up response into the existing post.

Shortly after I integrated those sets into my classes, I noticed a dramatic improvement in my students’ test scores and subsequently cranked up the pressure by asking more realistic (read ‘harder’) questions. For the Advanced Managerial Finance class, which we hold in computer labs, I have my students build spreadsheets that replicate each of the practice utilities and use those to answer some sample questions.

The first time that I was asked to teach Principles of Managerial Finance—one of the handful of dreaded required courses that all students in the College of Business must pass—online, I cringed at the thought of my students suffering in solitude, armed with only a textbook and the accompanying publisher-produced practice questions that are more about solving dense and clever puzzles than about preparing for a career of drafting business plans, seeking investment, and managing working capital accounts.

I envisioned each of them cowering in the dark by the light of a kerosene lantern, in a dank and fetid shack with the wind howling, panthers screaming into the night, and alligators banging their massive tails on the kitchen door—we’re in South Florida; that kind of thing can happen from time to time—as they tried to make sense of some of concepts that run exactly counter to virtually everything that their high school teachers and most politicians have told them most of their lives, like the promise of a benefit in the future is worth less than an actual benefit now, you will not necessarily be rewarded for bearing risk, there is a cost for every benefit, and the future is unknowable although it is not unimaginable. That, and we say it with algebra.

Thus were born the videos on the page that links to the utilities above. As I type this, that page is still as ugly as someone else’s baby pictures, and in one of them I had a cold when I recorded the voiceover. And, you know what? The kids love it.

I know this, because I just received my student survey results from the online section that just ended a couple days ago, and my scores are a thing to be envied. This is not because of any special treats that I hand out, as—and I hesitate to post this—I was horribly distracted this semester, and I had thought that I was largely AWOL. I half-expected them to burn me in effigy and call for my public humiliation. (I exaggerate, but only for effect.)

Granted, I make it a point to respond to email within 24-48 hours, but sometimes a four-day weekend turns into a one-week turnaround time (yes, inexcusable!). However, when I was remiss, students turned in their frustration to each other for help, and the vast majority of the time, a classmate directed the questioner to one of my videos or blog posts.

I am fast becoming the Andy Warhol of Business education, whose art is streamlining the creative process to the point where my own hand never touches the end product. And, with Direct Deposit, I don’t even have to endorse and cash the checks. (Again, I exaggerate, but not all that much.)

Here’s the kicker: I use the same exams, albeit with different numbers, in the classroom and online, and my mean scores and distributions are insignificantly different from each other! I very nearly have achieved the Holy Grail of ensuring that my online and face-to-face sections are as closely aligned as is possible.

So, to repeat, if you teach Business, especially Accounting, Economics, or Finance, learn how to write software and program yourself out of a job. Alternatively, contact me and have me do it for you. Seriously.

Invest accordingly.

Prof. Evans

Nov 152012

3 November 2012, Clayton Christensen, whose earlier works I have found inspirational and illuminating, published an article in the New York Times—”A Capitalist’s Dilemma, Whoever Wins on Tuesday“—that starts with a reasonable premise, and veers hopelessly off course.

To Wit: “Whatever happens on Election Day, Americans will keep asking the same question: When will this economy get better?”

Fair enough. That is a very reasonable question, and it is a very reasonable expectation that Americans will keep asking it.

So far, so good.

Then, we get this:

“The Fed has been injecting more and more capital into the economy…”


The Fed has been pumping more and more money into the economy. The value of money is measured by the ratio of units in circulation to the value of stuff. If the number of units in circulation increases faster than the quantity, value, or both of stuff, then prices rise.

Capital is the long-term means of production: drill presses, trucks, robots, etc.. The Fed doesn’t have any of that, and Fed governors are not in a position to command others to make such things available.

The Fed lends money to the US Treasury, buys toxic assets from commercial banks, and regulates banks. It isn’t a hardware store.

Now, if one is sitting on a lot of money that one can convert into capital assets, then one might adopt the financier’s habit of referring to that money as capital, but one should avoid conflating fiat inflation with the means of production.

“And yet cash hoards in the billions are sitting unused on the pristine balance sheets of Fortune 500 corporations.”

Firms are supposed to keep pools of cash as a kind of self-insurance policy against slow economic times. We call this ‘working capital’. When the future is even scarier than normal, the prudent thing to do is to hold more cash. The ‘Fiscal Cliff’, Pres. Obama’s political rhetoric expressing open disdain for those who are wealthier than he, the unknowable effects of Obamacare, the ongoing transition away from a capital/labor economy toward a service/knowledge economy, and the specter of another decade of ‘Bush’s war’ are enough to render all expectations of the future little more than random bets and wild guesses.

And, no one gets fired for playing it safe. So, until things settle down, executives play it safe.

“Billions in capital is also sitting inert and uninvested at private equity funds.”

Does Prof. Christensen believe that fund managers have piles of big, canvas sacks with dollar signs on them, filled with cash… like Scrooge McDuck or the dapper little fellow from the Monopoly™ game?!?

The money is invested somewhere, most likely US Treasury debt, because the US Treasury has a reputation of always paying its debts… even if it has to print more money to do so. In these highly uncertain times, the safest bet is the safest bet.

“Empowering innovations create jobs, because they require more and more people who can build, distribute, sell[,] and service these products.”

Sadly… no, no, no, and no.

Build: Factories are increasingly automated, and when meat-that-talks is needed, one hires labor where it is cheap; i.e. Latin America, Southeast Asia, and increasingly Sub-Saharan Africa.

Distribute: DHL, FedEx, UPS, already have that pretty well covered.


Service: What is that? Throw it away and buy a new one.

“[T]he Toyota Prius hybrid is a marvelous product.”

Except that [o]nly 35 percent of hybrid car owners bought a hybrid again when they purchased a new vehicle in 2011.

“‘[E]fficiency’ innovations… almost always reduce the net number of jobs…”

This one is spot-on. It is unfortunate that Christensen did not make it the centerpiece of his analysis.

“The economic machine is out of balance and losing its horsepower. But why?”

Peter Drucker answered this question in Post-Capitalist Society, which was written nearly twenty years ago, and reads today like a play-by-play account of what happened in the 1990s and 2000s.

[Reread the sentence above, click on the link, and buy the book. You can thank me later.]

Also, the total value of goods manufactured in the USA continues to exceed the value of goods manufactured in China.

The scorpion’s sting is in the tail. Toward the end of the article, Christensen states, “We can use capital with abandon now, because it’s abundant and cheap. But we can no longer waste education, subsidizing it in fields that offer few jobs.”

No one knows where the ‘jobs’ of the future will be. Social engineering always fails. In the 1960s, it was plastics; in the 1980s, software development; in the 1990s, Dot.Com… No one knows what it will be next decade.

“[T]he [capital gains tax] rate should be reduced the longer the investment is held — so that, for example, tax rates on investments held for five years might be zero — and rates on investments held for eight years might be negative.”

It might have made sense a century ago, when technology changed slowly, to make it costly to change plans quickly in response to new information, but Christensen’s advice in a highly dynamic—even chaotic—integrated global economy would create an incentive to keep sub-optimal plans running beyond their use-by dates.

“Federal tax receipts from capital gains comprise only a tiny percentage of all United States tax revenue.”

This suffers from two fatal flaws. 1) The universe does not end at the US border. 2) If capital gains represent a trivial portion of the federal budget, then eliminate the cost of collecting and enforcing them and call for their repeal. Leave the money in the owners’ hands, rather than seize it at gunpoint, if it is hardly worth collecting.

“It’s true that some of the richest Americans have been making money with money — investing in efficiency innovations rather than investing to create jobs. They are doing what their professors taught them to do, but times have changed.”

Indeed, times have changed, but that does not mean that this time is different, as Christensen seems to assume. We are in the latter stages of a transition as profound as the 18th Century Industrial Revolution, from a capital/labor division—in which semi-literate proletarians drive industrial machines—to a knowledge/service division, in which skilled workers are the ‘capital’ and are not interchangeable.

However, the wealthy will invest where they expect the greatest opportunities are, as has been the case since the Renaissance a half millennium ago. When princes, presidents, and parliamentarians create uncertainty, the wealthy will hunker down and wait until circumstances stabilize.

Christensen started with the premise that the president and the Fed do not have the power to fix things, and then concluded that the IRS does have such power.

This conclusion is counterintuitive. An alternative would be for presidents, princes, and parliamentarians to enforce transparency, and otherwise to mind their knitting, rather than concern themselves with affairs that are beyond their abilities.

Invest accordingly.

Prof. Evans

Dec 022011

MSNBC is running an article entitled “Nine Jobs That Humans May Lose to Robots” that lists nine professions that are becoming increasingly automated:

  • Astronauts
  • Babysitters
  • Drivers
  • Journalists
  • Lawyers and Paralegals
  • Pharmacists
  • Rescuers
  • Soldiers
  • Store Clerks

We can expect to see more articles like this as we continue the transition that began in the final decades of the 20th Century, from an economic order driven by capital and labor to one that is driven by knowledge and service, in which the capitalist no longer can be caricatured by a Dickensian factory owner, but instead by Scott Adams’s Dilbert, a highly talented employee with specialized skills, as Peter Drucker explains in his 1993 Post-Capitalist Society.

Today, nearly a quarter-century on, we can look back to see how accurate Drucker’s predictions were, as Massachusetts Institute of Technology economists, Erik Brynjolfsson and Andrew McAfee, do in their 2011 Race against the Machine, and except for the specific technologies that Drucker cites, he was spot-on.

If you can do your job from your sofa, then that sofa can be within walking distance of your employer’s headquarters, across town, or in Jakarta. If a robot, a piece of software, or someone in Jakarta can do your job, and you are in the Global North/West, then this would be a very good time to start thinking about a career change.

In general, you have two options:

Innovation and Entrepreneurship

There is no silver bullet here. All you can do is follow your heart and heed no one’s counsel but your own. The first few times out, you probably will fall flat on your face, but console yourself with the knowledge that 95% of science is wrong, meaning that most hypotheses are rejected during the experimentation phase. However, that 5% that works is where the frontiers of knowledge and experience are expanded.

Some platitudes might be useful, but feel free to replace them with your own:

  • Follow your heart, and the money will take care of itself.
  • Set aside 20% of what you spend on equipment, and six months’ rent, so that you can cover your bills during slow periods.
  • If you create texts, music, videos, software, etc., give your work away for free.
  • Network as if your life depended on it, and remember that it is a sad dog that wag its own tail.
  • Always be learning, and be prepared to change product lines or career tracks about once every five years.

If you won the lottery, what would you do with your day? You undoubtedly are not the only human alive who is driven by whatever your answer is. There is your business plan. Don’t draft revenue projections until you’ve made several sales; you cannot predict your cash flows, if you’ve never had any. And remember that innovation is what has not been done before. If the people around you think that your idea is ludicrous, then you’re probably onto something good; if others think that your plan makes sense, then the idea is already past its expiration date, and it is already part of the background noise.

You will make mistakes and have regrets. You’ll get knocked down; get up again, and don’t let anything keep you down.


By ‘crafts’ I mean anything that must be done locally, including landscaping, plumbing, home repair, nursing, firefighting, automotive maintenance, etc. If the idea of an activity’s being outsourced overseas is absurd, then it is a craft.

You don’t have to be a hairdresser or manicurist; you can own the shop and hire hairdressers and manicurists. John D. Rockefeller famously said that he would prefer to have 1% of the money earned by 100 others than 100% that he had to earn himself.

Whichever route you choose, do not let yourself get lulled into the false security of a ‘job’. No such thing as a job exists, as is easy to see, if one considers that, if one normally works 40 hours per week, and then starts pulling ten hours of overtime per week, one does not report that one has 1.25 jobs; similarly, if one’s schedule were cut from 40 to 30 hours per week, one would not complain that one had 3/4ths of a job.

If you measure the value of your time in dollars per hour (or euros, or pesos, or yen, or yuan, or shekels, or lira, or dinar, or whatever), then you are saying that each hour of your time is as valuable as every other hour, which means that whatever you do to earn that money is ripe for automation.

If you earn $10 or $20 per hour driving a cash register, keep an eye open for self-checkout stations to be installed where you work. Ditto paralegals and bookkeepers, secretaries and executive assistants, etc.

The global economy is increasingly integrated, and borders are fading fictions. There is a cost for every benefit, and an opportunity hiding within every cost.

And… the machines are lurking… watching… biding their time… Make your peace with them.

Invest accordingly.

Prof. Evans

Oct 112011

Hogwarts in the 'Hood

BBC News has a wonderful article on a charter school in one of Chicago’s roughest neighborhoods that is modeled on an English private school (referred to as ‘public schools’ in British English, oddly enough), and billed by its operators as “Hogwarts in the ‘Hood“.

This reminds me of a John Stossel 20/20 special report from some years back called, provocatively, Stupid in America.

I see reports and articles like these from time to time, and I want to invest accordingly!

One part of me – the part that lives in South Florida – wants to start a school that caters to local high school pupils who would prefer to start their own businesses rather than seek employment in others’ businesses upon graduation.

Another part of me – the part that teaches Finance and Economics – recognizes that schools require physical facilities (expensive), insurance (expensive), and admissions/recruitment (expensive), and that can provide the online component of a hybrid program that focuses on business education at an established charter school anywhere in the world (time consuming, but not expensive). has academically qualified instructors in Accounting, Economics, Finance, Information Technology, and Management, all of whom have many years of online teaching experience, and all of whom have experience with multi-ethnic and at-risk student populations.

We’re here.

Invest accordingly.

Prof. Evans