A Bull?s Outlook (Jeff Hankins commentary)

Little Rock had an enthusiastic bull in town last week for Junior Achievement of Arkansas’ annual Business Luncheon.

It was a refreshing outlook for the stock market. I think we should take whatever bone we can get at this point.

Kenneth Chiang, senior portfolio manager of Merrill Lynch’s Global SmallCap Fund, said the three-year bear market is unprecedented and he expects a solid turnaround in 2003. Investors with cash can get ready to capitalize on cheap prices for solid companies, and that was nice to hear coming from one of the market’s sharper fund managers.

Chiang also said he thinks the accounting scandal issue is history because CEOs who now have to sign affidavits on financial reports won’t risk prison time. The economy overall is in solid shape, he said, but he blames the media for hyping doom and gloom to boost ratings and sell newspapers just like they overplayed the success of Internet companies in the ’90s.

That’s when I was ready to step up and interrupt. Seems to me it was his brethren throughout the brokerage firm industry — from analysts to fund managers to investment bankers — that worked overtime building the technology bubble by using the media. I do agree the media overplay bad economic news like job layoffs and make little effort to give context.

A good example is the news that Tyson Foods Inc. of Springdale will eliminate 560 positions companywide during the next year. This had to be expected after the acquisition of IBP, and, with 2 percent unemployment, Northwest Arkansas is certainly able to absorb whatever jobs losses are incurred locally.

Chiang said stocks that pay regular dividends will fare well in the low-interest-rate environment. We need look no further than Alltel Corp. of Little Rock, whose stock value has jumped about 25 percent to about $50 amid the telecommunications shambles with its solid cash flow. Its annual dividend payout in the range of 2.5 percent-3 percent sure beats money market rates right now.

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Somehow, the crossroads we face with the public education system in Arkansas doesn’t seem overly complex.

The key issues of money and change just make our predicament difficult. It’s more about stubbornness and social science than rocket science — which is a good thing since only 16 percent of Arkansas adults are college educated.

Public education needs more money because teachers are terribly underpaid and fewer bright college students are considering a teaching career because they can make a better living in many other fields. People who say more teacher pay doesn’t translate to better teaching have two problems with the theory: They themselves didn’t choose a teaching career at least in part due to low pay, and comparisons with previous pay raise efforts are moot because the resulting salaries were still too low to make a significant impact.

But taxpayers who are willing to invest more money in teachers also demand more accountability and standards for performance, and teachers tend to resist this.

Most marginal supporters of higher taxes for education also want to see far-reaching structural changes statewide to improve operations efficiency, benefit from economies of scale and ultimately produce better-equipped facilities that would contribute to better student and teacher performance. Consolidation of school districts would certainly be one of the first steps but not the only one.

We didn’t need the Lake View School District case or the Arkansas Supreme Court to tell us that our system is unfair and inadequate. We apparently just needed them to make us act on what we knew to be true.

We’re going to fail miserably if the Arkansas General Assembly throws money at education without stepping up to make meaningful change in the system. Rest assured this would be the easiest yet least productive route. It’s anybody’s guess how this very different group of legislators will respond, but we shouldn’t expect radical changes.

Gov. Mike Huckabee is taking grief for his 5/8-cent sales tax proposal, but in light of the Lake View ruling and the slowdown in tax revenue growth no one should be surprised. Huckabee reportedly hinted at some kind of state government restructuring last week, but I can’t imagine it would lead to substantial savings.

I want to repeat what I said several months ago: If Huckabee plans to wrap up his political career with the next four years as governor, he’s in the single best position to lead this state progressively without election worries.