Ned Anderson, UC Berkeley 1971

Robbie plays junior varsity rugby. Rugby is by some measures the fastest growing youth sport in the United States, fueled in part by growing concerns about the long term costs of its distant relative, gridiron football. US football branched off of rugby a century ago (the games were once so similar that in 1924 a US football team won the Olympic gold medal in rugby — something that is inconceivable today). The sport originated at the Rugby School in England and remains popular throughout the British Commonwealth. The movie Invictus, drew a famous contrast with soccer, which it termed ”a gentleman’s sport played by hooligans” whereas rugby is “a hooligan’s sport played by gentlemen”. When you see a large, aggressive guy covered in mud refer to the referee as “sir”, you grasp the point.

Coaches have made Northern California the center of youth rugby in the United States. Rugby is the oldest sport on the University of California Berkeley campus where, starting in the 1970s, three coaches began producing world-class rugby teams (without ever resorting to recruiting scholarships). Doc Hudson was the first Cal rugby coach to take the game to a new level by building a globally competitive Cal side. Hudson recruited and coached a team that in 1967 and again in 1971 toured Australia and New Zealand and won more games than they lost (roughly the equivalent of a New Zealand baseball team doing that in the US today). The captain of the team was a tall kid named Ned Anderson, a lineman who played lock for Cal. Anderson also represented Cal on the all-University of California side that achieved a winning record on a similar international tour during the summer of 1970.

In 1975, at the age of 29, Anderson succeeded Doc Hudson as the fifth head rugby coach in Cal history. Anderson’s teams continued Cal’s winning rugby tradition through the ’70s and, in 1980, won the first official national collegiate championship, beating Air Force, 15-9. Under his leadership, the Bears also won the four titles from 1981-83. In 1982, Anderson hired Jack Clark, one of his former players, as an assistant coach and in 1984, swapped jobs with him. Clark became the head coach and Anderson his assistant until 1985 and again from 2003-2008. Clark won an astonishing 22 more national titles, for a lifetime coaching record of 523-68-5  – an 88% win rate. For more than three decades, Cal has dominated rugby more than any team has ever dominated a US collegiate men’s sport, as the graph below illustrates.

Because many Cal alumni settle in Northern California and because rugby players are especially passionate about their sport, Northern California is blessed with outstanding rugby coaches. Ned Anderson is now in his sixties and walks with a slight stoop. When he sauntered onto the rugby pitch and quietly began coaching kids earlier this year, parent’s had no idea that the soft spoken gentleman in charge of our kids was a legendary coach and a member of the Cal Rugby Hall of Fame.

But the players figured it out immediately. Robbie would get in the car after practice and shake his head, saying “this new coach totally knows what he is doing. I don’t know who he is, but he is really good.” Anderson is not only coaching 16 year olds, but doing it so modestly that we had to Google him to learn anything about his past.

The results have been impressive. Robbie’s team was undefeated going into the Northern California playoffs this weekend in Sacramento. It takes nothing away from the players to note that they give Anderson a lot of credit for their success.

On Saturday, they played a very tough quarterfinal game. It was breezy but hot on the pitch and the opposing team was good. They scored first by crossing the goal line and touching the ball down (no longer required in football, but the origin of  ”touchdown”). Robbie’s team recovered and decisively won a hard-fought game. Unfortunately, Ned Anderson missed the victory due to an unmovable scheduling conflict. He would have been proud to see his boys come back to win and disappointed to see them lose the championship match the next day to a very athletic (and well-coached) team from Sierra Foothill. It was the team’s only loss the entire season. Had he been there, Anderson would likely have congratulated his boys on being the #2 team in Northern California and begun work right away to improve their record.

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As a Colonel, John Boyd developed a framework to help train combat fighter pilots that became known as the OODA Loop (for observe, orient, decide, and act). He argued that the key to tactical success in combat is to obscure your intentions from your opponent while you simultaneously clarify and anticipate his intentions. By operating at a faster tempo in rapidly changing conditions, you both inhibit your opponent from adapting or reacting to changes and suppress his awareness of your actions. You cause an opponent to over- or under-react to uncertainty, ambiguity, or confusion. In military parlance, adopted by many technology strategists, you get inside their OODA Loop.

As an example, Barack Obama has been well inside Mitt Romney’s OODA Loop for the past month on issues of gender equality. His statements have frequently caused Romney to react in ways that Obama has clearly anticipated and exploited. But that’s another post. Today’s question is, has Amazon penetrated Apple’s OODA Loop with respect to eBooks? It sure looks like it.

The story begins in 2001, when Amazon observes Apple’s iTunes business model. Amazon CEO Jeff Bezos must have been awed watching Steve Jobs turn digital music, which was free and widely pirated, into a money machine. Jobs integrated a device (iPods), a store (iTunes), and a wholesale deal with music labels for content under which they agreed to let him set the retail price of tracks (it would be $.99). Within a few years, Apple was the world’s largest music retailer and record stores were a distant memory (although a very fond one). Steve Jobs had figured out how to compete with free — the first but not last technology leader to perform this trick.

Amazon copied Apple in building its book market. It built a device (Kindles), tied to its store and it bargained with book publishers for a wholesale deal for content. Like Jobs, Bezos insisted that publishers let him set the retail price, which he targeted at $9.99 per book. It is likely that publishers in some cases set wholesale prices higher than that and Bezos lost money on early book sales, but as the market grew, his pricing power grew with it and the full cost of each eBook declined as well. Bezos knew that when Apple entered the book market late, they would be forced to either a) stick to their traditional wholesale model, where he had a significant first mover advantage, knew more about online retailing, and held a brand advantage (do you really think “book” when you think iTunes?) or b) try to compete by attracting publishers and letting them control the product price. Bezos knew he would win either way.

Bezos also knew that “talent copies, genius steals” did not apply to Steve Jobs, who never copied anybody. He had a pretty good idea that Apple would try to convince publishers to adopt “agency pricing“, which, in contrast to wholesale pricing, gives the publisher the right to set the retail price and pays the retailer a commission. Jobs knew that agency pricing would attract publishers who resented price pressure from Amazon and that publishers backed by Apple would force Amazon to raise ebook prices. But only the largest publishers were strong enough to threaten to withdraw content from Amazon — most stuck with their wholesale pricing deals. Bezos raised prices reluctantly and selectively to keep large publishers from defecting. That’s why some ebooks now cost $14.99 on Amazon, while most cost $9.99.

Better yet, Bezos also knew that the manner of Apple’s entry into the book market looked a lot like price-fixing. Price fixing rarely gets you into trouble when, as in Apple’s music or Amazon’s book terms, you force retail prices lower, but collaborative arrangements that lead to higher prices to consumers frequently incur the wrath of the Department of Justice Antitrust Division. Bezos also understood that Apple could fall afoul of laws against price-fixing, even though Amazon, not Apple, has an effective eBook monopoly. A monopoly is generally not illegal unless you use it to jack up prices.

So what does Amazon do the day the Department of Justice discloses its investigation into Apple’s alleged price fixing? It lowers eBook prices. Apple has an estimated 15% share of the eBook market (courtesy, one suspects, of simple iPad users who don’t know any better). That share is heading nowhere but down under the agency model, which is why Apple should give it up as part of a quick settlement with the DOJ. I would not want to be eBook strategist Eddy Cue at Apple this week.

But Apple’s is not the only OODA loop in Bezos’ crosshairs. He is also deeply inside the heads of publishers, whose cockpits are blaring with enemy radar lock-in sirens — the last sound many fighter pilots ever hear. As he often does, Clay Shirky said it best:

Publishing is not evolving. Publishing is going away. Because the word “publishing” means a cadre of professionals who are taking on the incredible difficulty and complexity and expense of making something public. That’s not a job anymore. That’s a button. There’s a button that says “publish,” and when you press it, it’s done.

Amazon has demonstrated a much greater ability than Apple to observe, orient, decide, and act to dominate the eBook market. This is the second sign of peak Apple in as many weeks and another indication that Jeff Bezos has taken over from Steve Jobs as the reigning strategist of the technology world. That said, eBooks is not the most important market where these two companies will go head to head. That would be payments, because nobody else has 100 million credit cards on file. Bezos should think very hard about this one. Apple owns a big piece of mobile and can be on his tail payments in about 40 seconds.

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As an earlier post detailed, universities rarely go out of business. This is thanks to the magic of a three part lock that secures their position and protects them from institutional challenge. For centuries, universities have enjoyed the exclusive right to allocate valuable social capital.

• Select talent. There is no evidence at all that Stanford, Harvard, or Berkeley do a better job of training undergraduates than Ohio State, Texas A&M, or the University of Florida. But they select far stronger students. If colleges were assigned students randomly, the value of “elite” degrees would plummet overnight. Harvard delivers 90% of its value the day it admits a student, although the market recognizes the value only when the student graduates. In a previous post, I described an experiment I once proposed to compare students admitted to Harvard Business School who attended with those admitted who did not attend. Others have since confirmed what we all know: Berkeley selects strong students, it does not create them. You aren’t smart because you went to Berkeley; you went to Berkeley because you were a certain kind of smart.

• Credential talent. College degrees confer professional access and mobility. Since mobility is “path dependent” (your current options are constrained by past decisions, even if past circumstances are no longer relevant), it matters enormously what choices a credential opens up for you. Take it from a factory worker who went to Harvard Business School.

• Signal social standing. Signaling is a cousin of credentialing. A credential is a specific signal to the labor market that a person completed a course of study and mastered a body of knowledge. But it is relevant mainly early in a career. The broader social and economic signal conferred by a university degree extends well beyond the time when the details of the course work are forgotten. An honors degree from the University of Maryland confers standing, especially in Baltimore, that extends well beyond the knowledge gained from a degree in European History. There are very few signals of social standing as powerful as a college degree, even though very little evidence suggests that this should be the case. Powerful alumni affiliations reinforce this effect.

It takes decades for universities to establish these privileged positions, which is why, with rare exception, the top decile universities of fifty years ago are the top decile universities today. This is partly due to the place university degrees have come to hold in our culture. It is an unquestioned (but economically threatened) article of faith among middle class families, including mine, that providing children access to higher education is an essential to giving them a full range of life choices. Most people are disinclined to risk their kid’s future on education institutions with highly plausible training programs but unproven power to select, credential, and signal. (Yeah, I’m looking at you Minerva Project).

The paradox is that universities clearly add value (after all, college degree holders earn a million dollars more over their lifetimes than non degree holders and many economists declare it our single most competitive industry) but much of this “value” has nothing to do with learning, which is what employers presumably value. And if the credential cannot communicate what you know, then its signaling effects diminish. More accurate and effective approaches to credentialing and signaling become plausible. As detailed earlier, there are dozens of startups ramping up high quality educational programs that are either free or very low cost. But without credentials accepted by employers, all of the free online courses in the world will not translate into increased economic opportunity for graduates. To make these programs viable, they need a portable credential that is widely accepted by employers but not controlled by universities. Who would devise such a thing?

Universities, of course. As Kevin Carey describes in the current Journal of Higher Education, the future is full of badges, not unlike the ones you earned as a scout. UC Davis, together with The Mozilla Foundation and the MacArthur Foundation is prototyping the development of digital “open badges” that validate “skill, quality, or interest”. Badges would be online and would allow a potential employer to access details of a student’s written work, test results, videos, etc. Open badges would communicate a great deal more than “BA in Economics from Sonoma State”, which is what employers get today. The article failed to record any sense of irony among the rope makers at the University of California.

Under the Mozilla Open Badge framework, a badge “is a symbol or indicator of an accomplishment, skill, quality or interest” used to represent skill or achievement. Badges support a wide variety of learning beyond traditional classrooms including online courses, after-school programs, as well as work and life experiences. Badges not only signal achievement to peers, potential employers, educational institutions and others, but they are a way to recognize and document informal learning as well. Fully developed, badges should help people transfer learning across jobs, industries, and places and portray a richer, more complete profile of an individual’s professionals strengths.

Mozilla expects there to be many types of badges. Some capture specific skills, something traditional degrees do quite poorly. Badges can support specialized and emerging fields that do not yet credential learners. They can document a much larger diversity of skills, social habits, motivations, etc. Badges potentially represent an alternative to traditional degrees as a way to enhance identity and reputation among peers, find peers and mentors with similar interest, formalize camaraderie, teams, and communities of practice that today often form around universities or professional associations.

Open digital badges, unlike the scouting ones, are valuable because of their metadata. They link to videos, documents, or testimonials demonstrating the work that lead to earning the badge. They link to the issuing authority, which can be a school, a professional body, an international credentialing agency, a community of professional practice, a course, or a company. The supporting metadata reduces the risk of gaming and builds in a system of formal or implicit validation. In this system, a digital badge is backed by metadata that explain the badge, the issuer, the issue date, criteria for earning the badge, the earner’s work or evidence behind the badge, and the current validity of the badge, which, unlike a college degree, can be set to expire.

Mozilla is creating an Open Badge Infrastructure to serve as the core technical scaffolding for a badge ecosystem that supports a multitude of issuers, badge earners, and badge displayers. This infrastructure includes the core repositories and management interfaces (each user’s Badge Backpack), as well as specifications required to issue or display badges. Users can build a “Badge Backpack”, which serves as a repository for their digital badge data, accessible only to them, where they can view badges, set privacy controls, create groups, and share badges. Startups like BadgeStack, which gamifies badges, can build OBI compliant sites and award apps.

Open badges are a promising idea and one deserving of investigation by companies, entrepreneurs, universities, and investors. They threaten traditional university credentials because they are:

• Granular. Employers care what you can do; they care relatively little about what you study, except as an indicator of what you can probably do. Badges are likely to reflect specific skills (“architecting social media databases” or “PHP”). Some may complement licensure (“palliative care nursing”) others may document skills in areas where little certification is available today (“Thai cooking” or “cloud-based SQL database administration”).

• Open. To work, badges need an approval process and an ontology that reflects a hierarchy of skills. An licensed vocational nurse may be able to earn a badge in discontinuing intravenous drips, but I’d prefer that the Thai cook obtain his or her LVN certification before tackling this skill. Once these structures and privacy controls are established, the technology for making badges machine readable, searchable, embeddable, and portable is relatively trivial.

• Able to evolve. The structure of badges itself needs to be open. Today “Thai Cooking” may be a sensible badge. Tomorrow it may be “Kitchen safety and peppers” (I worked with a cook who accidentally sent 50 diners choking and gasping out the door, hospitalizing two of them for lack of this knowledge). Badges that are ten years old will frequently fade in value as others rise. Badges create a market in skill certification — precisely what should replace university degrees.

• Cumulative. A single badge may or may not signal a great deal, but a sash full of badges accumulated over many years of effort makes you an Eagle Scout. Employers are very likely to value particular combinations of badges for specific jobs. Today, resumes or transcripts do a notoriously poor job of communicating these capabilities.

• Essential to reputation markets. Badges form core elements of emerging reputation marketplaces, where professionals collect, curate, and disseminate information that reflects their professional skills and achievements much as Fair-Isaac today distributes information about your credit history. For some positions (VP Marketing for a startup, for example), leadership history may matter more than a documented set of specific skills, but badges will still contribute to the overall picture.

Badges are not a sure thing. At first they will complement university degrees, not substitute for them. Badges face nontrivial privacy and trust issues — many which Mozilla is addressing quite well. They are an essential foundation for a portfolio that documents a range of professional skills, achievements, experiences, and relationships.

One of the largest challenges facing open badges are cold start problems: early adopters will not have very few badges and employers will be unfamiliar with them. These are the sort of market development problems that entrepreneurs are good at conquering, although this makes them no less formidable. Mozilla may crack this market wide open.

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Blodget now leads Business Insider and last night presented a very good piece of research on the growth of mobile to a conference in San Francisco. Towards the end, he describes Draw Something, a game app that has created a buzz around here. Blodget argued that Draw Something, by a startup called OMGPOP, reveals just how explosive the combination of mobile, social, and games can be. He reminded us that Draw Something launched just six weeks ago.

• It has since been downloaded 20 million+ times. It is the #1 app in 79 countries. It has 12m daily users and generates $100,000 of revenue daily for a small team in New York.

• Users are highly engaged. They drew 3 drawings per second on Feb 12. Two weeks later, they drew 100 times that: 333 drawings per second. 10 days later, it was up to 3,000 drawings per second. Users bring in other users, who bring in even more users. This is what viral growth now looks like on global, Internet scale — and stories like this are about to become fairly common.

• The resulting growth rate is unhinged. It tool AOL nine years to acquire 1 million users. It took Facebook nine months to earn its first million users. Draw Something did it in nine days.

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A series of well-researched articles by Charles Duhigg in the New York Times that included a long article on sweatshop subcontractors put Apple on the defensive. It appears that hard working people risk their lives to make sure that our iPads are shiny. Apple responded by asking the Fair Labor Association to investigate working conditions at its Chinese suppliers. Back home, Mike Daisey’s professional self-immolation magnified the controversy by forcing NPR to retract a series of assertions about Apple’s Chinese suppliers. This week, Apple CEO Tim Cook visited a huge Foxconn assembly plant in China as the FLA issued its report. Cook knows a lot about manufacturing both as a global supply chain expert and as a former factory worker.

Cook played the event perfectly. When the FLA reported that, shockingly, Chinese factory workers endure long hours for low pay, he promptly gave workers a raise by pledging to cut hours without cutting pay. The audience applauded, the curtain dropped, and the world returned to its apps.

The story displays a confidence and an ability to turn crisis into yet another advantage that makes me wonder whether we are approaching peak Apple. Apple raised Chinese wages not simply because it cares so much, but because it can afford to care so little. They know that their move causes bigger problems for their competitors than it does for them. Apple cares less about Chinese labor costs than Dell, HP, Google, and many others who produce lower margin products that use more Chinese labor. Apple spends about $8.25 per iPhone on Chinese labor – a completely irrelevant number in the lifetime economics of an iPhone. Had Chinese workers targeted Apple for a campaign to increase their wages, they would have chosen well.

Is Apple’s move good for Chinese workers? Sure — for some of them anyway. Apple’s decision does not mean that Chinese workers will necessarily take home more money — just that they will work fewer hours. This may not sit well with workers at Foxconn and other subcontractors, most of whom move from the countryside, live in company housing at the factory, and want to maximize their earnings, not minimize their working hours. Duhigg’s excellent reporting cited a factory where workers rioted when hours were reduced under pressure from a western customer, acknowledging:

The other (workers) we talked to all seemed to regard it as a plus that the factory allowed them to work long hours. Indeed, some had sought out this factory precisely because it offered them the chance to work more.”

Does China benefit from this decision? Not necessarily. Manufacturing jobs are declining China in favor of Vietnam and Cambodia (the great promise of the campaign this week by Nobel Peace Prize winner Aung San Suu Kyi is that Burma will attract urban factories to relieve the punishing life of rural peasants). It surprises many Americans to learn that manufacturing employment in China is actually declining. With the Apple settlement raising labor costs, peasants in adjacent countries can cheer: soon they too can trade in their hoes and hats for a white coats and the opportunity to polish iPads. Nobody said economic progress was beautiful.

Apple’s decision to polish its “Think Different” brand built on images of Ghandi and Cesar Chavez is tribute to both the company’s high moral tone and to it’s willingness to indulge the low economic literacy of its Western customers. Apple sells products to people who prefer a world in which every kid can go to college and work eight hour days. Apple customers hate sweatshops, even those that are demonstrable vehicles of economic progress. We have a hard time acknowledging that countries in South Asia, sub-Saharan Africa, or Haiti demonstrably need more sweatshops. We commit what economist Harold Demsetz memorably called the Nirvana Fallacy: we compare the choices facing overseas workers to the alternatives we have, instead of to the alternatives they have.

As economist Eric Crampton notes:

Harold Demsetz warned in a beautiful piece of economic writing back in 1969 against what he called Nirvana Theorizing. He said there that we can’t say markets fail just because they deliver outcomes that we don’t like; rather, we have to compare the outcomes of markets to real-world achievable alternatives. We can’t just assume Nirvana on the other side of the scale. And, most of the arguments against sweatshops effectively assume Nirvana on the other side: if only we were to ban sweatshops or, more realistically, impose bans on the import of products produced by sweatshop labour, the employees would suddenly be freed to pursue fulfilling careers or to go and get that Bachelor’s in Cultural Studies that they’ve always wanted….. It’s only the evil sweatshops that are keeping them from achieving their dreams.

If only it were that easy. For proper comparative institutional analysis, we really have to look at how working in a sweatshop compares with what else these workers could be doing.

Inconveniently for the Nirvana view, thousands of people voluntarily line up outside of Foxconn’s gates when factory jobs open up. Those clamoring to work at Foxconn know that factory work is tough and sometimes dangerous. But, like factory workers everywhere, they know that farm work is worse. The Times documented a horrific aluminum dust explosion in a Foxconn plant. This is not something to take lightly (my grandfather, uncle, and kid brother all died on the job or from occupational illness; occupational safety has never been an abstract problem to me), but the risks of factory work are nothing compared to the risk of illness (especially malaria), injury, or poisoning faced by Chinese peasants. Just about everyone who has tried both farm and factory prefers the latter. I worked in several factories; most of the jobs were boring and some were wildly unsafe (I thought for awhile that Westinghouse had a “hire the handicapped” policy because so many of my co-workers were missing fingers or limbs. D’oh). But two days spent harvesting hay under idyllic conditions hurt me worse than any factory job I ever did. Former paper and aluminum mill worker Tim Cook also understands this extremely well.

Crampton cites recent work by Benjamin Powell on standards of living associated with sweatshop work showing that in most of the countries he studied, the average wages were equal to or better than the national average. In poor countries like Cambodia, Haiti, Nicaragua and Honduras, sweatshops paid twice the national average. This is why countries like Bangladesh, where 80% of the population lives on less than $2 per day, need more sweatshops, not fewer. Crampton reminds us of Nick Kristof’s reporting on workers in a garbage dump in Phnom Penh. Kristof gets it:

Another woman, Vath Sam Oeun, hopes her 10-year-old boy, scavenging beside her, grows up to get a factory job, partly because she has seen other children run over by garbage trucks. Her boy has never been to a doctor or a dentist, and last bathed when he was 2, so a sweatshop job by comparison would be far more pleasant and less dangerous.

I’m glad that many Americans are repulsed by the idea of importing products made by barely paid, barely legal workers in dangerous factories. Yet sweatshops are only a symptom of poverty, not a cause, and banning them closes off one route out of poverty. At a time of tremendous economic distress and protectionist pressures, there’s a special danger that tighter labor standards will be used as an excuse to curb trade.

When I defend sweatshops, people always ask me: But would you want to work in a sweatshop? No, of course not. But I would want even less to pull a rickshaw. In the hierarchy of jobs in poor countries, sweltering at a sewing machine isn’t the bottom.”

Tom Harkin, a progressive, pro-labor Senator from Iowa, introduced a law in Congress in 1992 that understandably prohibited the import of products made by children under age 15. In 1997, UNICEF investigated the effects of the Harkin Bill and found that even though the legislation had not taken effect, the mere threat had

“…panicked the garment industry of Bangladesh, 60 per cent of whose products — some $900 million in value — were exported to the US in 1994. Child workers, most of them girls, were summarily dismissed from the garment factories. A study sponsored by international organizations took the unusual step of tracing some of these children to see what happened to them after their dismissal. Some were found working in more hazardous situations, in unsafe workshops where they were paid less, or in prostitution.”

Once again, sweatshops are hardly the bottom of the heap — indeed the export shops targeted by Harkin are on average the better places to work. Most child labor is local production or rag picking, so if you ban exports, you may push some of the world’s most vulnerable children into the garbage dump, begging, child prostitution and starvation. This is not an argument for unfettered child labor or dangerous factories — just a note that exploitation is relative not absolute, protection is never free, and economic progress proceeds in steps not leaps.

Apple understands that paying slightly higher wages simultaneously pressures their competitors, appeals to western decency, and exploits economically ill-considered aversion to sweatshop labor. But in technology, companies with more competitive advantages than they can possibly exploit should worry about hitting their peak. Having watched first Microsoft and now Google decline after amassing what once seemed to be insurmountable advantages, it is time to ask whether peak Apple is now in sight?

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Welcome to American colleges and universities, which are both the envy of the world and ripe for disruption. It’s a big business (about $350 billion in the US alone) and a really soft target. It is, after all, run by tenured scholars whose idea of competition is a snarky jibe in the faculty lounge. The dons have allowed their costs to not only rise faster than family incomes, but faster than health care costs, which ain’t easy. That they have lasted this long is due to the monopoly they enjoy on certifying talent. As Kevin Carey noted in a recent New Republic article,

The historic stability of higher education is remarkable. As former University of California President Clark Kerr once observed, the 85 human institutions that have survived in recognizable form for the last 500 years include the Catholic Church, a few Swiss cantons, the Parliaments of Iceland and the Isle of Man, and about 70 universities. The occasional small liberal arts school goes under, and many public universities are suffering budget cuts, but as a rule, colleges are forever.

Small wonder that thousands of startups are now focusing on the market for higher education. Even the guy who discovered disruption, Clayton Christensen, has declared that online technologies will thoroughly disrupt education at all levels, predicting that half of all K-12 classes will be taught online by 2019.

During the past five years, online higher education has gone mainstream. The Sloan Foundation estimates that more 30% of all enrolled college students, some six million people, participated in on-line learning at accredited U.S. colleges and universities in 2011 and that the U.S. market for online higher education grew 12-14 percent annually between 2004-2009.

Many educators are realizing that the explosion of online education not simply due to its lower cost; it is often higher quality as well. Sometimes this is because of dramatically higher investment in course and instructor development. Christensen notes that the largely online University of Phoenix spends about $200 million each year developing online teachers and highlights a key difference with traditional universities: “..Harvard defines research as creating new knowledge, while The University of Phoenix defines it as finding new ways to provide knowledge. It blows the socks off of us in their ability to teach so well.”

Online education is quickly killing the in-class lecture, since recorded lectures have obvious advantages. Students can watch them when they are ready — after they are off work or when the kids are asleep. They can replay the confusing bits or skip the obvious parts. Most important however, is that the lectures themselves are more likely to delivered by world class teachers like Norman Nemrow, whose online accounting course has been taken by several hundred thousand students or by Walter Lewin, the MIT physicist whose lectures are shown on television. Supposedly over five million people have taken his intro to physics course (watch his promo reel below to see why. What? Your professor did not have a promo reel?)

It is not only lectures that fare better online. Instructors in online classes can measure outcomes and tailor the course to the needs of each student. Modern learning management systems provide live seminars with multi-location live video, backchat, social media, and many other capabilities not available in a classroom. Quizzes can be graded instantly so that both faculty and students get feedback fast enough to change course. Algorithms distill questions from thousands of students so that they can be answered either live or off-line. Students can undertake projects online with “classmates” who have never been on the same campus — or even the same country.

This is a time of vast experimentation with online education technologies. Two years ago, the Kahn Academy began to attract huge notice as a self-tutoring tool based on the brief lectures of one talented teacher. A year ago, 2Tor closed a large Series C and got very serious about providing major universities with technology, marketing, and course development assistance. A month ago, Google’s self-driving car maven Sebastian Thrun gave the talk at BLD in Munich that launched Udacity after 160,000 students from around the world completed his Stanford-based online computer science course (268 students achieved perfect scores on all the quizzes). In October, Knewton, an education technology startup, raised $33 million in its 4th round of funding to roll out its adaptive online learning platform. Earlier this year, Apple launched a suite of authoring and course scheduling tools to allow universities to move content to iTunes University. Only yesterday ShowMe launched its 2.0 platform that takes the Kahn Academy model and makes it social — anyone can use the platform to teach anything.

Universities are developing their own online education initiatives, often plagued by a terrifying thought: what if online education is just another form of digital media? They know full well that that as books, movies, and music, moved online, few incumbents survived. In each case:

• Content was disaggregated and mashed. Just as record albums were broken into songs, ringtones, and clips, educational content is unlikely to remain entirely within current disciplines or courses. Literature will not remain separated from history, nor calculus from chemistry. As technology makes it easier to recombine and repurpose courseware, it may become possible for two students to complete the same course without confronting the same content in the same sequence or manner. New forms of learning will produce certifications not limited to degrees, concentrations, or even courses.

• Engagement became social.  Digital movies benefitted Hollywood much less than YouTube and Netflix. It should not surprise us to see more learning become self-paced, socially certified, and delivered outside of colleges and universities. Startups may increase the demand for formal education, but they could also substitute for it just as many of the needs once filled by campus fraternities or alumni associations are now met by online social networks.

• Value shifted from content creators to aggregators. Book publishers and music labels learned that aggregators of content (Amazon and iTunes) hold a lot of cards. Will universities aggregate and distribute high quality educational content regardless of its origin? Or will universities, like film studios, attempt to remain relevant by offering exclusive, premium-priced, high-quality, proprietary content protected through careful online distribution and syndication? Top universities are betting on the Hollywood model, which is not only under sustained attack, but presumes producers who control their IP. Universities, in contrast, rarely limit the ability of their faculty to sell lectures and other courseware to the highest bidder, even though the university paid the professor to produce the content. In no other industry is such theft conceivable — a fact that Udacity will not be the last to exploit.

• The product went global. Books, movies, and music are licensed or sold in tightly controlled, nationally bounded markets, but digital media is naturally global because there are far fewer natural distribution barriers. This means more customers, which is why universities are now lusting after talented and wealthy Indian and Chinese students who are (at the moment anyway) willing to pay US-type tuition for a degree from a globally prestigious institution.

• Prices fell as comparison shopping became easier. It appears that the revenue optimal price for eBooks is between $2 and $5, depending on the author and in some cases the publisher. For songs it is between $1-$2, forcing record labels and publishers to seek entirely different business models to monetize their content. As a result, many of media markets actually shrank as they went online (if you only measure product sales. In music, for example, the market is about the same size, because concerts and merchandise make up for losses in record sales). Once

The response of universities to the rise of online education is like the response of Barnes and Noble to online bookselling. Faced with the rise of Amazon.com in the 1990s, the chain store simply created barnesandnoble.com. When Amazon launched the Kindle, they launched the Nook and merchandised it in their increasingly irrelevant bookstores. But the winner of this contest will of course be the company that is not forced to carry the cost of several hundred bookstores. Open Yale, MIT’s Open Courseware and MITx courses, Stanford’s Massively Open Online Courses including Corsera, and many others like it all share the Barnes and Noble problem: they need to price their offering to pay for extraordinarily high fixed cost institutions. Their disruptors do not.

Barnes and Noble charges customers for a wide range of activities unrelated to book purchases. It designed many of its stores as community centers where authors and  could meet readers. It built fun sections for kids to discover books. It integrated Starbucks in many locations. But books are simply not going to be sold in stores much longer, so these activities added more cost than value and ended up making the problem worse. Likewise, many institutions of higher education support multiple activities with tuition: research, sport, socialization, teaching, and credentialing. Online education exposes the fault lines between these different businesses, just as Amazon did with Barnes and Noble.

• Research. Top schools recruit faculty based on their ability to contribute new knowledge to their field not on their ability to teach. This is terrific for graduate students, who apprentice and occasionally indenture themselves to senior faculty, but suboptimal for undergraduates because the correlation between insightful research and capable undergraduate teaching is somewhere between weak and negative. Once undergraduates can receive a higher quality education at a lower cost by studying online, many will do so. Once Amazon made books cheaper, nobody wanted to pay for those kids play areas — not even people who liked them.

• Sports. That giant sucking sound is money draining from university budgets to support massively wasteful professional sports programs — while managing to abuse college athletes in the process. Intercollegiate sports are fine. Division 1 football and basketball is a scandal — and both universities and the NCAA know it.

• Teaching. Teaching and learning are rapidly becoming another online interactive social media. Some online learning will doubtless be indistinguishable from games. This part of what a university does will be rapidly mashed, commodified, and redistributed, just as books and movies have been. Universities often claim that they make use of these online technologies in “hybrid” classrooms. This is like selling Nooks in bookstores: the customers who buy will never come back.

• Socialization. Residential undergraduate programs deliver to young people a group of peers and the experience of learning independently with them. Some of what the university provides is in loco parentis — a structured environment for 18-22 year olds to transition to self-sufficiency as they learn. The question is how much families will pay for this service. As high quality online education becomes universally available, middle class families will be very tempted to forgo residential colleges for their kids. Now that families cannot enhance their incomes by working longer hours, sending a second adult to work, or borrowing easy money against overvalued homes, families will be willing to cut back on college expenses if it does not compromise the quality of their children’s education.

• Credentialing. Credentials are necessary for employers and future education institutions to distinguish between similar candidates. Many markets with this problem rely on brands or other signaling effects (watch how you select wine next time you are confronted with dozens of plausible choices). University degrees emerged long ago as a critical signal of professional capability independent of what the degree holder knows. Part of this is because of selection effects, as Malcom Gladwell explained some years ago:

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Any group wishing to challenge cuts in public spending that benefit them directly has a political problem if taxpayers see costs without benefits. So the group wishing to protect themselves from the cuts needs to answer two questions: Who else benefits from the spending? and How can we increase our public contributions? If the marchers trying to channel their inner Cesar Chavez had taken the first question seriously, they would have built a coalition. Had they been courageous in their answer to the second, they would have built a movement. Chavez, not incidentally, understood this and knew that those who ask only what their country can do for them produce the political equivalent of a large yawn.

• The California Community Colleges is the largest higher education system in the nation.  Its 112 colleges provide more than 2.9 million students with basic skills education, workforce training, preparation for four-year universities. They attract working student and ambitious immigrants in very large numbers. I used my local community college to learn blueprint reading and geometric dimensioning and tolerances to become a machinist; I also took classes in physics because they were exceptionally good.  Almost 60% of CSU graduates and 30% of UC graduates originally transferred from a California community college.

• California State University has 23 campuses, some 427,000 students, and 44,000 faculty and staff. It is the largest, most diverse, and one of the most affordable university systems in the country. CSU graduates 44% of the life sciences college graduates California, more than 60% of all of the state’s teachers, including 9 out of 10 of California’s public school educators, and 45% of the state’s computer and electronic engineers. CSU is an outstanding resource for underserved populations, awarding more than half of the bachelor degrees earned by African American, Latino, and Native American students in California.

• The University of California is a top-tier research university and an economic catalyst for the state. UC’s ten campuses enroll more than 220,000 students and employ more than 170,000 faculty and staff. Its three national labs manage hundreds of millions of dollars of state and federal research. A recent study estimated that UC generates $46.3 billion in annual economic activity for California, not counting benefits such as technology startups that grow directly out of university research.

Berkeley remains the premier UC campus and an amazing public institution, despite its bottomless capacity for self-parody (disclosure: my wife is a dean at Cal).

• A National Research Council analysis of U.S. universities concluded that UC Berkeley has the largest number of highly ranked graduate programs in the country. The analysis ranked doctoral programs within a range (such as between 1st and 5th), and found that 48 out of the 52 Berkeley programs assessed ranked within the top 10 nationally.

• Over the past decade (2000-2009), the National Science Foundation awarded more Graduate Research Fellowships to UC Berkeley students than to those of any other university (MIT was 2nd; Stanford 3rd; Harvard 4th).

• 135 Berkeley faculty are members of the prestigious National Academy of Sciences, exceeded only by Harvard with 150.  91 are members of the National Academy of Engineering, exceeded only by MIT with 105. Membership in the American Philosophical Society, the American Academy of Arts and Sciences, or winners of National Medal of Science teach overwhelmingly at three schools — Berkeley, Harvard and Stanford. Only one of these is a public institution.

• Berkeley’s single proudest claim however, ahead even of its 24 national rugby championships, is that it enrolls more students on Pell Grants than all of the Ivy League schools put together. A Pell Grant is a scholarship based on financial need. By serving academically qualified students on Pell Grants, Berkeley ensures that smart, hard-working kids from low income families can get a top-flight education.

The combined effects of this system on the California economy are astonishing. Community college students who earned a vocational degree or certificate in 2003-2004 saw their wages jump from $25,856  to $57,594 three years after earning their degree , an increase of over 100 percent. Census data indicate that an average college graduate earns a million dollars more during their working lifetime than a high school graduate. A masters degree adds another $400,000 and a doctorate another million on top of that. A professional degree adds another million on top of that (average lifetime earnings are $1.2 for those with only a high school diploma, $2.1, $2.5, $3.4, and $4.4 for BA, Masters, PhD, and professional degrees, respectively). Depending on what you count and how you count it, a dollar invested in California higher education returns $3, $5, or $14 but it doesn’t really matter — it’s a great public investment. And because many of the benefits accrue to individuals, not all of the investment needs to be public;  students can and should bear some of the cost, so long as financing is available with repayment schemes adjusted for students that pursue lower paying occupations.

This system of higher education is the goose whose eggs make California the Golden State. And playing the part of Aesop’s short-sighted fool who wishes to slaughter the creature for short term gain, is California’s legendary and dysfunctional state legislature. This august body last year, cut $500 million from UC, $500 million from CSU, and $400 million from the California Community Colleges to close a state budget deficit in 2011-12. California is not alone in this trend: between 2002 and 2010, states have cut funds for public research universities by 20 percent in constant dollars according to a report issued by the National Science Foundation.

Every Californian should be alarmed at the proposed “trigger cuts”, which would slash another $300 million, unless taxpayers pass a special ballot initiative to increase state taxes — which are already the nation’s highest. Where does all the money go? Pension spending aside (and it cannot be put aside for long), it goes to health care and to prisons. California is the only state that spends more on prisons ($10.7 billion in the current budget) than on higher education ($9.8 billion). Both are dwarfed by the state’s $42 billion Health and Human Services budget.

How Can We Contribute?
On these facts alone, students and faculty should be able to rally public support, not just each other.  Serious and sustained public support however, requires more. What, precisely, are students and faculty offering to contribute to make increased public investment even more compelling? Two ideas could completely change the conversation.

1. Use campuses year round.
The University of California and CSU teach either three ten week quarters or two fifteen week semesters each year, meaning that 33 large and expensive campuses are fully utilized less than 60% of the time. Adding a fourth quarter or a third semester would produce revenue that would go a very long ways to paying for fixed assets, including facilities, administration, admissions, counseling, health care, technology, and similar services that are staffed year round, even though paying students attend only part of the year.

Even if campuses completely eliminated so called “Summer Session” revenue and did not alter faculty teaching loads and research expectations (meaning that new faculty would be hired or current ones paid more in order to meet increased teaching demand), year round operations would generate hundreds of millions of dollars for the system as a whole (and based on limited public data on UC, it would more than makes up for the loss of state funding). Without reducing degree requirements or creating a cut-rate three-year undergraduate degrees, this approach would enable a student who undertook full time studies to complete the work for an undergraduate degree in three years or less and would substantially relieve pressure for additional tuition increases.

Faculty should embrace year round operations, which would not need to reduce time for research at UC but would offer the option for all faculty to earn additional teaching income. They should rally in support of an approach that would enable most departments to add new faculty positions, which will simply not happen otherwise. Year round campus operations would be very quickly copied by other top flight universities if UC and Cal State take the lead. As financial stewards of state educational resources, university leaders should admit that operating campuses 30 weeks per year (a schedule designed originally to make sure students made it home to help with the harvest) is economically wasteful, socially indulgent, and politically untenable.

2. Repay a public investment with public service.
As a candidate, Barrack Obama proposed a national service program that would serve as “a central cause of my presidency”. It hasn’t, but it should. He proposed to spend $3.5 billion to expand AmeriCorps to 250,000 volunteers and to double the size of the Peace Corps. He envisioned tuition tax credits for college students who performed community service while in school. His plan supported promising nonprofit community startups, expanded the GI Bill, and created a Classroom Corps to help teachers and students in high-need and underserved schools. Obama proposed a Health Corps to improve public health information and outreach to areas with inadequate health systems such as rural areas and inner cities and a Clean Energy Corps to promote weatherization, renewable energy projects, pollution clean up, trea planting, and park maintenance. Other volunteers would serve veterans or help communities with disaster preparation.

Not only is national service a good idea, but the politics of enacting it are not nearly as awful as they are on many other issues (recall that the GI Bill, one of the most popular and successful social programs in US history, was initiated by the American Legion together with FDR). In this spirit, the federal government could, for a modest amount of money, guarantee loans and offer tuition tax credits proportional to the public service performed. By accepting only freshman applicants who have performed at least one year of community service, California could set an example for the rest of the country and begin the long overdue process of rebuilding public support for its activities.

One of the faculty spokespersons for the current band of protesters is a leftist professor, a tenured friend who for decades has rarely missed a good demonstration. Not long ago, I asked him what he believed today that he did not believe in 1968, when his political habits were formed. He thought for a moment before declaring that ”1968 was a very good year”.  But he and his campus comrades appear to have forgotten the lessons of ’68: that lasting political change requires public education, coalition building, and a commitment to public service. Why do I suspect that the last people to figure this out will be those closest to the problem?

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He was right.

Bardacke, a respected labor activist and educator based in Watsonville California, was first mentioned in this blog six years ago in connection with his research on Cesar Chavez. Like Bill Gates and Mark Zuckerberg, he dropped out of Harvard after his freshman year and moved west to change the world. Unlike them, he joined the Berkeley Free Speech Movement and has had an abiding interest in radical politics ever since. In the early 70s, I traveled to China with Bardacke to get a first hand look at Mao’s proletarian dictatorship. Frank admired all things proletarian; I feared the dictators. Bardacke often views the world through a different template than I do, but I have learned a lot from him and continue to have enormous respect for his views.

Bardacke became a farmworker – one of a handful of Anglos and surely the only former Harvard student to work the celery fields. He became fluent in Spanish and formed friendships with many of the union staff and farmworkers who appear in his book. He spent more than a decade interviewing every major participant in the drama, reading every known book on the farmworkers and scouring every archive. He received help in managing this massive project from faculty in history and politics at nearby UC Santa Cruz.

The result, Trampling Out the Vintage: Cesar Chavez and the Two Souls of the United Farmworkers, is the most complete account yet of the rise and fall of the UFW. It is also an epic, Shakespearean drama with all of the elements of a Hollywood blockbuster. The pitch meeting would be surreal:

OK, picture this: we have a conservative Catholic who fasts and marches like he’s Ghandi. He courts progressive clerics and hires liberal Jews and alienated Anglos to mobilize immigrant Mexicans and Philipinos to fight Slavic and Italian growers. At first David slays Goliath, but then he morphs into King Lear and destroys his newly built kingdom amidst slaughter and recrimination. We’ve got side plot romances between devotees who work for $5/week and bad food trying to raise farmworker pay. We’ve got violent Teamster, UFW, and grower thugs straight out of the Sopranos. We’ve got a certifiably batshit human potential guru who wreaks havoc getting everyone to criticize everyone else. And under the carpet here somewhere, we may even have communists trying to advance a proletarian revolution without a proletariat. How can we miss?”

Astonishingly, it is a true story and Bardacke delivers it with intelligence and compassion. Unique among labor historians, he grounds his analysis in “the work itself”, with brilliant, memorable descriptions of how different stages of production for different crops in different regions of California all affect the ability and willingness of different crews to self organize. He describes clearly why organizing was often sustained by the tight-knit, highly skilled lechugeuros or the celery cutters, not the garlic or asparagus workers or those in ladder crops. He describes the skill and endurance that the work requires, introduces leaders that arise from various crews, and captures in fine detail how they interact with a union that was built on a very different set of principles from farm work. In a decade spent organizing waiters, housekeepers, nurses, bartenders, machinists, cannery workers, and assembly workers, I observed precisely these differences. The work itself shapes our propensity to organize. Bardacke is the first writer to apply this principle to the fields and he does so with a deep understanding and compassion for the work.

Bringing an existing union into a workplace is an act of industrial combat not for the faint of heart — but starting a new union from scratch is a herculean task that almost always fails.  I started a company that has lasted more than a decade, a public agency that lasted three years, and a union (United Espresso Workers – I was a bit early) that lasted all of three weeks. With the proud exception of the United Farmworkers, I cannot think of a single independent union formed in the United States in the past 50 years that was not sponsored and controlled by an incumbent union (I can think of several that tried and died – but none who made it).

This was not always true — new unions once spawned regularly in the US. There are many reasons for the change, but the lack of competition between unions has positioned them nicely for extinction. Organizations evolve through the mutation, variation, and selection that is always produced by competition. The labor movement stopped growing the instant the AFL joined with the CIO and prohibited unions from competing with each other. When two teachers unions competed, both grew. The instant the Teamsters stopped raiding the UFW, growth stopped. I hated the Teamsters (who were kicked out of the AFL-CIO for corruption and are not subject to the noncompete provisions) and I took a nasty beating from them once, but like sharks or wolves, they have their place in the ecosystem. (I am aware of no union leader who agrees with this view, by the way. Most feel that they have all the competition they can handle from employers).

But for a brief moment following the civil rights movement in the 1960s, a new labor union arose in the United States and in the least likely place. If you had asked in 1960 where in the economy a new union might appear, you would never have selected the farmworkers of California. Organizers prefer workers who are tied to one place and to one employer, not workers who are seasonal and often itinerant. Probably wrongly, organizers prefer workers who are covered by labor laws, which had always exempted farmworkers. Organizers like English-speaking Americans, not Tagalog or Spanish-speaking immigrants or Braceros who are tolerated for a season then ushered back to Mexico. A dozen or so failed efforts by farmworkers to form agricultural unions seemed to validate Marx and Lenin’s belief that workers would organize once they were forced into factories and worked for a single employer.

Bardacke demonstrates that Cesar Chavez succeeded in organizing farmworkers because he was, at heart, a brilliant and hard-working Alinksy-trained community organizer. As a community organizer, Chavez pioneered an enormous innovation that had the potential to transform labor organizing: he mastered the secondary boycott (illegal for most workers under the federal labor law, which thoughtfully excludes farmworkers). Chavez tirelessly organized enormous boycott operations in grapes, lettuce, and against major retailers including Safeway.

Farmworker boycotts were the Occupy movement of the 70s and 80s – a way for college students, community activists, and middle class young people to participate directly in the tough work of social change. And credit Chavez’s brilliant leadership, it worked magnificently: faced with effective boycotts, growers raised wages and improved working conditions and politicians begged the army of grass-roots Chavistas to help register voters and turn them out on election day. The UFW became a powerful force for social change.

But the UFW was only briefly a powerful labor union. Bardacke correctly diagnoses the boycott as creating a formidable tension within the UFW. He frames the tension between labor and boycott organizing as a struggle between the “two souls” of the UFW. The metaphor is fraught. As Bardacke demonstrates, the UFW collapses not because it has two souls, but because none of its activities were organized, financed, or led in a manner that enable them to grow. The problem is not that community organizing is a distraction – most American labor unions lack a community service organization and are much the weaker for it. This is tragic: having discovered and refined one of the few recent innovations in union organizing, Chavez cannot let it grow. Instead, he strangles his own child.

One of the heros of Bardacke’s book is Marshall Ganz, one of America’s most innovative labor organizers. Ganz also dropped out of Harvard, but moved south to organize for civil rights before heading west. After his exile from the UFW, Ganz helped the Silicon Valley Central Labor Council build a powerful neighborhood-based political organization for the 1984 elections. He was terrific at posing fundamental questions – and at directing me and others to writers and thinkers who helped answer them. In 1984 he urged me to read, of all things, a business book, In Search of Excellence. I quickly developed an appetite for business writing. decided to get trained in it, and ended up working with the book’s authors. Marshall returned to Harvard, got his degree after a 28 year hiatus, and now teaches at the Kennedy School. (His version of the UFW story, told in Why David Sometimes Wins, is a fine companion volume. It suffers for being his PhD dissertation and dwells more deeply on theories of organizing and less on the dynamics of local struggles).

So let’s ask a Marshall Ganz-like question: what does it take for an organization to grow successfully? Venture capitalists, a group not deeply concerned with the welfare of those who produce their salads, obsess about this question. There are at least as many answers as there are VCs, but common elements include:

• A big market. If there is not substantial demand for the product or service an organization produces, the organization cannot get very big.

• Positive unit economics. If serving one more person imposes more cost on the organization than it generates in revenue, then growth makes no economic sense and the organization will depend for growth on funding from charity or government. Anyone can sell a dime for a nickel; selling a nickel for a dime means that an organization has to add at least a nickel’s worth of value if it wants to grow.

• Customer or member acquisition costs that scale. Every organization has a cost of acquiring a customer that must be repaid over the lifetime of that customer or member. Smart organizations exhibit declining COA: the cost of acquiring each incremental customer declines with scale. Very smart organizations (and effective social movements) are viral: COA approaches zero as current participants recruit new ones. See Facebook, Google, or Arab Spring.

• Leadership. Growth is very, very demanding on an organization. Everyone in a fast-growing organization has to grow with it: jobs change radically every few months. Not everyone grows at the same pace, so leaders must recruit furiously, communicate direction and values continually, promote and replace people regularly, and test what works all the time. It is stressful and a lot of fun – ask anyone who has been involved in a fast-growing company, boycott, strike, or organizing campaign.

Back to the fields. Boycotts have completely different economics than labor organizations. Boycotts have huge markets: liberals eager to shop their conscience. Churches and colleges do the recruiting at very low cost to the boycott sponsors. Every convert adds more value (the grapes they don’t buy) than cost (the very low cost of volunteers leafleting).

Unions are different. The market for a membership organization of farmworkers is not small, but it is small enough that the UFW needed to capture almost all of it because, as Bardacke notes, organizing half an industry penalizes the organized growers. A union has a responsibility to organize the remaining growers and will frequently be cheered on quietly by those who have signed. More fundamentally, unions need to grow big enough to achieve minimum economic scale: they cannot fund the fixed cost of their operations if they are too small. Unions with fewer than a half a million members are nearly always too small to operate efficiently across the US (meaning that most unions in the United States waste money because they are too small). The UFW never had 100,000 members — although its field operations were mostly in California. Bardacke would counter that the democratic character of the union matters more than its size, which is true, but creating organizations that are not economically sustainable is a bad idea. Unions do this all the time.

Unions have a second problem, to which Chavez developed a unique but ultimately unworkable solution: the economics of labor organizing are often unattractive. Campaigns, negotiations, and strikes are expensive and uncertain of success. If unions file for elections on half of the campaigns they run, win half of the elections they file on, and negotiate contracts successfully 80 percent of the time, then every successful contract has to finance four unsuccessful campaigns and potentially a strike. If the campaigns and the negotiations are labor intensive and the union bears all of those costs, then the economics of organizing turn heavily on the cost and productivity of staff and on the cost and duration of strikes.

The Chavez solution to this dilemma was simple but utterly unsustainable: pump talented people through the organization. Those of us who worked boycott operations worked 14-16 hour days, often 7 days a week. We were paid $5/week and had to beg for donated food to eat. Once we were burned out, the UFW happily replaced us in a process Chavez once compared with pumping water. At any given time during large boycots, hundreds of young people slaved on the campaigns for months and sometimes years. Staff at headquarters (located in the small misnamed town of La Paz), were likewise furnished with living quarters, food, and a miniscule stipend. Chavez personally approved all expenses. From here, it looks like a cult – although from inside the cult, it looked like La Causa and stands today as some of the best work many of us ever did. Regardless of how it feels or looks however, and regardless of the ethics of exploiting volunteers on behalf of underpaid farmworkers, an organization without a core of talented, motivated leaders simply does not scale. Volunteers are not enough — and finding people like Marshall Ganz and Eliseo Medina to fight year after year for farmworkers without paying them even farmworker wages is simply unrealistic.

Bardacke does not go deeply into union economics in part because there is a much bigger tension restricting growth: a command and control organization. Chavez not only micromanages, but much worse, he prohibits local labor or boycott operations. Centrally led boycott operations could work: boycotts demand a consistent message and negotiations with a single adversary and since allied organizations delivered most of the volunteers with help from a skeletal UFW staff, there were relatively few local issues to resolve. But labor organizations are built in hundreds of unique workplaces. This is in part due to the work itself: the problems of lechugueros are simply not the same as tomato workers or lemon pickers. More important however, is that without elected reps, stewards, and ranch committee members, contract negotiations suffer because strike threats lose credibility. Without a credible strike threat, backed in this case by a credible boycott threat, growers rationally refuse to negotiate. Chavez tried to run the union from the top, like he built and ran the boycott. When George Meany and others derided the UFW as “not a real union”, they were wrong at the level of the fields. But in their description of La Paz, they were right.

Bardacke reveals Cesar Chavez to be a brilliant community organizer who campaigned for farmworkers but did not empower them. Bardacke plots the tragic trajectory of the UFW from an authentic movement led by a charismatic leader to one paralyzed by demoralized staff that could see no way to grow a union beyond the constraints imposed by its increasingly unstable founder. Chavez died afraid of his own organization, which he had shriveled into a family business devoted to nonprofit services, La Raza not La Causa, and promoting the Chavez legacy. The union was all but gone.

Bardacke masters an enormous amount of material to relate these events skillfully. He salts his prose with stories and characters straight out of Steinbeck. He rarely leaves the reader guessing about his point of view: Walter Reuther, the brilliant activist who built the United Auto Workers (and marched with Cesar in Delano) is a worthless hack because he voted against seating the Mississippi Freedom Delegation in 1964 and drove communists from the union. Those who cross the US border illegally are noble immigrants deserving of union embrace; those who cross picket lines legally are scabs deserving of UFW tire-slashing and intimidation (but not of UFW efforts to call La Migra and send the illegals among them home). Teamster and grower goons are thugs; Manual Chavez, designated hitter for his nonviolent cousin and other UFW punks are charming rogues who firebomb field sheds and beat their opponents. Those who seek to impose Synanon’s destructive ideology on the UFW are obviously crazy and should be driven from the union; those who seek to advance various communist or nationalist ideologies within the organization are dedicated activists who should be protected. Trampling Out the Vintage is a beautiful work despite these caricatures; it would be even stronger without them. It is a book that deserves a wider distribution and better copy editing than Verso, a niche left publisher, can provide. It would also be nice had Verso published the book electronically (then again, Frank confesses in the postscript that he composed the early chapters of the book on a typewriter!)

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George Whitman, 1913-2011

I have known hundreds of booksellers; the most memorable by far was George Whitman, proprietor of Shakespeare and Company, across from Notre Dame at point zero in Paris.

His store, like its namesake run by Sylvia Beach during the 1930s, became point zero for two generations of writers and wanderers. I am one of tens of thousands of people who was taken in by George, absorbed into his literary world, made part of his little “Rag and Bone shop of the heart”. George never cared about money, food, or finery — he cared about people, literature, and travelers. He was especially drawn to young people, to whom his generosity was legendary.

I last saw George four years ago. My tribute to him at the time reads nicely today. I recalled my days living in Shakespeare in January of 1976, decades after Jackie Onassis had come through as a student and around the time that a young Greek immigrant named George Soros hung his hat at Shakespeare & Co. for several days.

The New York Times ran a wonderful obituary about George, who had written his own eulogy years earlier. Inscribed over a doorway that led to the upstairs of Shakespeare was a motto: “Be not inhospitable to strangers,” it counseled, “for they may be angels in disguise”. George did not, in fact, treat every visitor like an angel in disguise. But he gave visitors a place to discover their literary angels, and more than a few rose to the challenge.

Christopher Hitchens, 1949-2011

A life that partakes even a little of friendship, love, irony, humor, parenthood, literature, and music, and the chance to take part in battles for the liberation of others cannot be called ‘meaningless’ except if the person living it is also an existentialist and elects to call it so.”

and

Beware the irrational, however seductive. Shun the ‘transcendent’ and all who invite you to subordinate or annihilate yourself. Distrust compassion; prefer dignity for yourself and others. Don’t be afraid to be thought arrogant or selfish. Picture all experts as if they were mammals. Never be a spectator of unfairness or stupidity. Seek out argument and disputation for their own sake; the grave will supply plenty of time for silence. Suspect your own motives, and all excuses. Do not live for others any more than you would expect others to live for you.”

Hitchens was always provocative, occasionally irritating, and frequently funny. I will miss his voice enormously.

Vaclav Havel, 1936-2011

Imagine a political upheaval so profound as to be accurately called a revolution, so bloodless and smooth as to be called velvet, and so artistic that its leader was a playwright who conducted the insurrection from, and I am not making this up, the Magic Lantern Theatre, in Prague. Vaclav Havel is the Nelson Mandela of Eastern Europe, and his personal role as catalyst of the communist collapse his hard to overstate. From the Times:

In 1977, Havel was one of three leading organizers of Charter 77, a group of 242 artists and activists who called for basic human rights in Czechoslovakia. Havel was arrested and imprisoned. He spent five years in and out of Communist prisons, lived for decades under daily police surveillance and suffered the suppression of his literary works.

Later he served 14 years as president, resigning rather than see his country separated. He is author of  19 plays and dozens of essays, including “The Power of the Powerless”, which influenced a generation of activists much as King’s “Letter from a Birmingham Jail” had done in the United States. By the time he became President of Czechoslovakia, Havel had written more serious fiction than most heads of state had read.

Timothy Garten Ash, then a British graduate student, witnessed the remarkable Havel in action during the Velvet Revolution. Havel’s moral standing, his poetic use of language, and his patience made him as the dominant figure in resistance politics in Prague in 1989. Garten Ash reports in his indispensable first hand account of events that year in Prague, Budapest, and Berlin that Havel served as the chief behind-the-scenes negotiator who brought about the end of more than 40 years of Communist rule and the peaceful transfer of power. The revolt was so smooth that it took just weeks to complete and not a single shot was fired.

Warren Hellman 1934-2011

In business school, I became friends with Marco, the kid in the next seat everyone called Mick. I recall the day when a classmate told me “his father is Hurricane Hellman — the youngest partner in the history of Lehman Brothers. He ran the place before he turned 40″. Although I only met Warren Hellman a handful of times, I came to respect him as an icon of a group of prominent postwar Bay Area business Republicans who were deeply civic, secular Jews whose contribution to life in these parts is rarely noted. Architect Art Gensler and Gap Founder Don Fischer are others, as, excepting the Republican bit, are banker Bill Hambrecht and Levis heir Robert Haas.

If you live in the Bay Area, it is hard to overstate the impact of Warren Hellman. He saved San Francisco over a billion dollars by financing a ballot measure to reform the city’s tottering pension system. He built the parking garage beneath teh DeYoung Museum in Golden Gate Park. He chaired the Board of Trustees at Mills College and reversed the decision to admit men (still a very popular decision, although I have argued a dubious one). He funded the San Francisco Free Clinic and endowed aquatic sports at UC Berkeley, where he had played water polo as a student. And in 2001, Hellman launched the Hardly Strictly Bluegrass festival, an annual three day event in Golden Gate park that draws more than 300,000 people and is put on for free. Hellman paid the musicians, usually including EmmyLou Harris and the late Hazel Dickens. Hellman himself was a serious amateur banjo player and toured with his group, the Wronglers, until quite recently.

Hellman was not only born into a remarkable family, but he created one as well. He was the great grandson of Isaias Hellman, California’s first banker, who created what became Wells Fargo Bank and built the University of Southern California. His kids are high achievers who share his passion for athletics. Warren competed in extreme sports, once finishing a 100-mile high altitude race in the Sierra after falling and breaking a rib at mile 25. His kids have won championships in m mountain bike racing, skiing, and other sports.

Hellman was the sort of one percenter that the Bay Area loves: a guy who took much more pleasure from giving his money away than he did from making it; who walked away from Wall Street to build an investment firm as “the opposite of Lehman Brothers”, who rarely wore a tie and never seemed to take himself terribly seriously, and who was disarmingly candid about his many failures. He has much to teach the pashas of Silicon Valley; I sincerely hope that they are up to the task.

Kim Jong Il, ??-2011

Those looking for evidence that God has a sense of humor had a fine week. Not only did the Iraq war and the life of Christopher Hitchens end on the same day, but the loss of four of our finest was followed by the unmourned death of perhaps the worst human alive.

History will struggle to find a single kind word to say about Kim Jong Il. He built a hermetic garrison state, imprisoned and starved millions of his people, sponsored untold terrorist activities including the downing of a civilian airliner, and undertook military provocations and kidnappings against Japan and South Korea. He developed and tested thermonuclear weapons and sold them to some of the most unstable governments in the world, including Pakistan. He refined his doctrine of Juchu into a personality cult that represents the precise opposite of everything George Whitman, Christopher Hitchens, Vaclav Havel, or Warren Hellman stood for. 

As Shakespeare predicted, the evil that Kim did will survive him. Kim’s sudden death is problem for South Korea but an even larger problem for China. China has tended to treat North Korea as their pain-in-the-ass psychotic kid brother who refuses his meds but performs a useful service by keeping the neighbors on their guard. But an unstable North Korea is not a good thing for China. There is a strong argument that China will need to take over North Korea as a client state — effectively a new province. In a generation or two, Korea would either unify in a Chinese economic sphere or the North would be forcibly absorbed, Tibet-like, into Han culture. It ain’t Jeffersonian democracy, but it is hard to argue that this would be a worse outcome for the people of North Korea than the continued demented rule of the last standing communist dynasty.

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Journalist Chris McDougall wondered why he was getting hurt when humans have been running for two million years. His best-selling book, Born to Run, is a well-told tale of people who run barefoot without getting hurt and of researchers who discover a paradox: support can make you weaker, not stronger. The more support a running shoe gives you, the more it weakens your foot, ankle, and calf muscles and the more prone you become to injury.

McDougall presents the stories that led to the science and the science that has led to a resurgence of barefoot or minimal shoe running. He visits the Tarahumara, an impoverished clan of long distance runners living in the very remote Copper Canyons of Mexico. McDougall romanticizes their lives, describing men and women of all ages routinely running for dozens of miles in sandals over hot, steep mountains.

Scientists have studied the Tarahumara for years because their isolation makes them good subjects. As roads arrive, the Tarahumara embrace modernity: their diet goes from corn meal and long runs to pickup trucks and Hohos. Epidemiologists have documented the diabetes, cancer, and heart disease that result. McDougall looks past this, focusing instead on the propensity of the canyon-dwelling Tarahumara and some of their more crazed gringo brethren to race ridiculous distances wearing heuraches cut from old tires.

Back home, McDougall consults a Stanford track coach who refuses to let his athletes wear expensive running shoes and discovers data suggesting that both the extent and severity of injuries go up with the price of shoes. He interviews Daniel Lieberman, a Harvard biomechanics professor, who explains precisely how the support a of a running shoe makes most runners over stride and heel strike, which delivers a much sharper blow than a barefoot runner who lands mid foot. A good video of Lieberman explaining his research is below. The peer reviewed work is here in Nature.

Lots of testing and learning is still being done both by individuals and by researchers, but nobody these days takes for granted that running shoes are always helpful. Shoe companies are trying to shift their designs and their message to promote “minimalist” shoes, some of which are now best-sellers.

Is this just a fad? Of course any shoe can become a fad if well marketed. On the other hand, humans have run barefoot for two million years but have worn running shoes for only about 30. I would not bet against barefoot running, given the injury rates that shod runners experience.

Protection turns out to be deceptive. It seems completely normal to me that as a runner, I would prefer a protective shoe. I want lots of cushioning. I want to avoid pronation, which must be awful because it sounds so bad. It would be simple to sell me orthotics — hey, my knees hurt sometimes. Although some people surely do fine in running shoes, for many people, highly protective shoes are like a cast. They reduce your mobility and your foot gets continually weaker as a result.

Economists, of course, know that protection often makes competitors weaker. They believe instinctively that competition strengthens counterparties, be they muscles, individuals, teams, companies, or regions. I have even argued that those who want stronger labor unions need to force unions to compete. Economists left and right can show that trade protection weakens both parties, although this knowledge never stops companies, communities, or workers who are hurt by trade from seeking it. Doubtless some similar principal applies to parenting: too much protection weakens your kids. Fine, now buckle your damned seat belt.

To evaluate social programs or parenting, we need the equivalent of the Tarahumara — a group isolated from extraneous influences that can test whether social protections produce more benefits than costs. Fortunately, an impressive young economist has shown that many of our protective programs are testable. Esther Duflo is an MIT professor, a MacArthur genius grant winner, and the winner of the  2010 John Bates Clark Medal for the best economist under the age of forty. Watch her fascinating TED talk on how she tests programs to fight malaria, educate kids, and immunize children. This is barefoot economics at its best.

Testing of this sort requires an appetite for failure. Politicians, business people, and scientists each approach tests differently, depending on how failure affects them.

• Politicians pay a huge price for failure. This forces them to simplify problems and promise sound bite solutions. If they do not do this, they won’t be elected and they won’t be politicians. Politicians cannot say “wow, this is a tough problem. Let’s try a bunch of things, fail at most of them, and learn what works.” Most politicians suffer from what Tim Hartford calls the “God Complex”. Hartford writes the Undercover Economist column for the Financial Times. He has published a terrific book called Adapt: Why Success Always Starts with Failure. You can get a flavor of his thinking at his fantastic TED talk. The God Complex is the equivalent of intelligent design: certainty that complex systems can best be managed centrally and that complex questions can be answered without the painful process of trial and error. Parents, CEOs, physicians, gods, and anyone else who pays a high price for failure are especially vulnerable.

• Business people embrace trial and error mainly because markets force them to. Hartford notes that ten percent of all businesses fail every year.  A market economy can be looked at as a huge, ongoing experiment that evolves, like every complex system, because of variation and selection. The best leaders of complex systems acknowledge that leading edge problems don’t have obvious solutions and encourage a structured process of trial and error. Hartford’s book discusses the value of lots of small, low cost trials that are decoupled so that they don’t spill over and of carefully documenting and interpreting results. An important and highly recommended read.

• Scientists love failure. It’s how they learn. They understand that humans have evolved as complex systems through millions of years of variation and selection. They reason either deductively from data or inductively to ask have we evolved to run? Evolutionary biologists have long noted that the unique way we sweat for thermoregulation, our hairlessness, our odd bipedal design (more energy efficient than any quadruped), our unusual ability to breath multiple times per step, and our highly engineered feet, ankles, and hips all suggest anatomy designed to run.

But until the 1980s, researchers were stymied by one big problem: we are slow. Why on earth would running matter, when every mammal worth eating can outrun us? 

It fell to David Carrier, a graduate student at the University of Utah, to notice something that had escaped other scientists: we are built for endurance, not for speed. The case for humans designed for endurance running is now widely accepted. This is partly because we have discovered a story that backs the data. Hunter-gatherers in the central Kalahari Desert in Southern Africa still practice persistence hunting: they run their prey to death (there is one other group that practices persistence hunting — or at least remembers it. Our pals the Tarahumara). Running down a large mammal takes as little as an hour or as long as 8 hours, but if a human can keep a mammal galloping so that it cannot catch its breath, cool down, or rejoin its herd, it will collapse of exhaustion before the human does. It appears that before we invented spears, humans survived by high-endurance, persistence hunting. Barefoot.

The BBC managed to film a group of men in the Kalahari hunting a kudu this way. Despite the drums and the breathless narration, it is a stunning film. Notice that the runners are shod in cheap shoes that do not let them heel strike. They look a lot like the sneakers we all wore as kids.

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