It is natural and healthy to pay a lower price for goods and services - especially when quality and time preference are not impaired. Not only does a lower price allow for other spending and savings that can improve your life, but it is also possible to improve those features at a lower price. With that, there is also the emotional payoff for earning a greater value.
Broadly speaking, that is The Moneyball Method. Not only is objective investing about the achievement of your important goals, but the method also does this at lower price points and with greater efficiency. For my purposes here, efficiency is a goal achieved with minimal costs of time, money, risk, and complexity.
So, how does Moneyball apply to myriad other goods and services that affect my life? In major league baseball, it began with the profit motive. A small market team with a low budget for baseball talent needed to sell tickets to generate revenue by winning games. And to earn a profit, teams on a low payroll diet need cheap baseball talent.
In other words, a quality product to meet high consumer time preferences at a low cost. And to achieve that, the early adopters had to reject the traditional bureaucracy of scouting departments and baseball media. Why? Because those institutions were dependent on the common wisdom of baseball jargon and unreliable statistics.
But more importantly, they needed a reliable method for finding cheap talent, winning games, and selling tickets for the lowest cost per win.
Affordability
Then there is the so-called affordability crisis. Can Moneyball be applied to other goods and services like housing, education, pharmaceuticals and childcare? What about groceries, energy, medical services and transportation? And what business models are useful prototypes for the efficient delivery of those needs and desires?
Regarding the first group - housing, medical, and childcare are so heavily regulated that finding high-quality talent at significantly lower prices is far more difficult. That’s where the black market comes in - as it must. The second group is also heavily subsidized - some more than others- which also makes it challenging to find great values, but nothing is impossible.
However, baseball and capital markets have something in common that is critical - a large database of statistics that reveal probabilities. But for goods and services that do not lend themselves to quantitative analysis, the first step is to find ways to reject the established bureaucracy. Second is to acquire competitive intelligence, find cheap and reliable talent, and save money. And third is to take back ownership of our lives from the “well-intentioned” bureaucrats lining their own pockets.
Child Care
A good place to start is the service that is least friendly to mass market evaluation; the one that is most local and most personal - child care. And to reject its established bureaucracy in America is to avoid licensed daycare businesses and reject government facilities.
While the majority of private providers may have well-trained and responsible caregivers that do a fine job, they are forced to comply with regulations that price them higher than many people can afford. Today, their average national cost is almost $350 per week. That works out to about $18,000 per year - and your child will get their one-size-fits-all level of attention.
Regarding competitive intelligence, today’s top alternatives are nanny shares, parent-shares, and in-home unlicensed providers. However, nanny-share may be more expensive but much higher quality; in-home providers may be the same price point as licensed facilities with wide-ranging quality experiences, and parent co-ops may be the best possible - if possible. And because of the success of technology-assisted remote work, flexibility with one or more of these solutions may be the best option for many working parents.
But do they avoid the claws of the State regulators or its tax collectors? In most cases, emphatically, no. Nanny-share arrangements are subject to the complexity of income tax withholding, payroll tax returns and remittances, and Form W-2 reporting. Lastly, parent co-ops may be best for ease of compliance, but if there are any financial exchanges, state licensing regulations can be triggered.
Certainly, quality caregivers deserve quality compensation, and child care is not a right, but with the magic of technology, online networks are available to help parents find the best possible price and service. In summary, local parent and nanny websites, social media parenting groups, care.com, and the subscription service nannylane.com may be the closest thing to the reliable, objective data that defines The Moneyball Method.
Education
On the other end of the spectrum is a service we associate with child care, but is widely dispersed and universally available to people of majority age. Knowledge and understanding also appreciate in value with continued use, but there are two conditions - your effort and your judgment. And with gratitude to Renaissance intellects, manufacturers, bankers, and artists, easy and free access to knowledge was not the case before the mass distribution of books.
At the same time, and as human nature dictates, young children do not have the liberty and judgment to free themselves from government-monopoly public schools. In addition, those school systems likely trained their parents. As a result, rational judgment remains elusive for generations of Americans. Supernatural faith may have lost much of its influence since the Renaissance, but the cognitive real estate has been ceded to faith in the State.
Setting aside irrational beliefs, it requires little effort and money for adults to reject the established bureaucracy, find reliable educational services, and learn for free or at discounted prices at alternative schools. In fact, the world’s library of literature, science, mathematics, economics, history, and philosophy is at nearly everyone’s fingertips - starting with The Moneyball Method!
But for parents of young children with the desire and determination to rid their families of the power and influence of teachers’ unions, state-funded teachers’ colleges, and the state education departments, there are some great alternatives:
The best physical schools, but in limited supply because they are funded by the State and tuition-free, are the Classical and STEM (science, technology, engineering, math) charter schools. A closer alternative to values-driven investing is self-directed homeschools that bootstrap Classical, STEM, and other free curriculum from producers such as amblesideonline.org and Hillsdale 1776.
The Moneyball Method
This is where Moneyball Method’s lowest cost per win concept may be viable. Although the cognitive development and character of your children are difficult to quantify, it is possible to calculate a high confidence level with the least risk. Naturally, that begins with the objectivity of your goals combined with objective market data.
For market data on registered securities, I begin with the Center for Research in Securities Prices (CRSP) affiliated with the University of Chicago. For large-scale research on charter school performance, a reliable source is the Center for Research on Education Outcomes (CREDO) affiliated with Stanford University.
Of course, capital markets have a century of price data; charter school information is limited, and cognitive tests do not have the same efficacy as prices. Accordingly, it is best to look at multiple sources, including CREDO, niche.com, GreatSchools.org, or the school report card from your state. And when dealing with probabilities, levels of precision must be reasonable.
However, school reputations are what the scouting department used to do. Instead, for both childcare and education, declare independence, define the goals that will profit your children, discover reliable information, calculate your spending capacity, and be flexible with strategy.
Thanks Mark for that insightful information and analysis.
It's should be obvious to Rennaissance mentalities that turning one's children minds over to the social apparatus of coercion and compulsion –– the gov't –– is the worst decision a free people could participate in. So I really appreciate your insights on the alternatives to education by coercion and compulsion and velvet glove state brutality.