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Saturday, July 31, 2004
Contrast: A Public School Ponzi Scheme and the Emperor's New Math

I've noted the recent publicity about the National School Fitness Foundation in American Fork (Utah) and School Fitness Systems. The latter's owner and president just pled guilty to several flavors of fraud in connection with a sort of Ponzi scheme. (A Ponzi scheme is a type of fraud in which returns to investors are paid not from actual growth but from money raised from subsequent investors - like Social Security, as a matter of fact.)

It seems that a number of school districts paid for a lot of fitness equipment, with the understanding that NSFF would reimburse them for the costs, with interest, over a three-year period, with funds from government and corporate grants and private donations. These reimbursements were to be "voluntary contributions" from NSFF. But it turns out to have been a Ponzi scheme, and the man in charge is going to sell his million-dollar home and other assets to make restitution. No doubt the restitution will be mere pennies on the dollar.

Question: Reportedly, 600 schools bought into the scam. Doesn't anyone in those schools know the dictum, "If it's too good to be true, it probably isn't"? Or perhaps the basic truth of economics, "There's no such thing as a free lunch"?

For all of that, the thought strikes that buying some fitness equipment under false pretenses is small potatoes. The real damage is done when schools buy false philosophies, which they seem very prone to do. I don't recall ever seeing anyone plead guilty or even apologize, let alone make restitution, over that.

For example, the latest gimmick math program in the Alpine School District is producing students with high self-esteem, who are not very good at doing actual math, particularly when it comes to problem-solving and the necessary calculations themselves. The teachers know this, but they seem afraid to say a word against it in any voice louder than a whisper. Meanwhile, some who feel the need to help their students have to teach the multiplication tables on the sly, because they are now taboo. Perhaps now even arithmetic is too absolute for the extreme relativism of our mixed-up age.

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