Saturday, February 27, 2016

The Sad State of American Politics

Discussion of policy points puts the audience to sleep.  But they hoot and hollar when the cat-fight starts.

In the recent Republican debate, Donald Trump said something rational.  Yes, I know, it sounds surreal.  But in the debate over Obamacare, Trump made two rational points, and Rubio made one as well.  It was almost an intellectual discussion.

First, Trump pointed out that the "pre-existing condition" part of Obamacare should be preserved.  This makes sense, as no one can "shop their plan" if they have a pre-existing condition.   It is also the humanitarian thing to do.  Wow, this coming from Donald Trump?  Who knew?

Second, he pointed out that there is little competition in many States for health insurance, and as a result, prices in some places (like Georgia) are really high, as people really don't have much of a choice.   Here, we have Blue Cross and Humana and their prices seem to track each other.   He proposed allowing insurers to insure nationwide (why not?) and thus provide more competition and bring down prices.   Makes sense, too.   This is Donald Trump?

He sort of got off the rails bashing the insurance companies, claiming they are making huge profits off of Obamacare.   This seems a little off as if Blue Cross (Anthem) was making so much money, why is their stock price in the toilet?   Also, as I noted in an earlier posting, my agent, who is on the Board of Humana told me they had to seek bailout money as part of Obamacare as well as a 20% rate increase.

Rubio pointed this out, although I doubt I know the audience didn't understood the nuances of this.   If the health care companies were making so much money, why are they asking for bailout money?

So score, Trump: 2 (making two actual policy points) and Rubio: 1 (pointing out a fault in Trump's logic, but failing to advance his own plan).

The audience was snoozing.

Then it happened.   The two started talking over each other and arguing like a reality teevee show which Americans love because they are blithering idiots and then Rubio got in a "zinger!" by saying "Look who's repeating himself now!"

The audience went wild.   Policy Wonkism they don't get.  But fake reality show teevee fights, well they get that.

How fucking sad for America. 

Sad, because a middle-class family of four here in Georgia could expect to be paying close to $20,000 a year for healthcare and not receive a penny in tax credit subsidies.   The issues with Obamacare are real and they do need to be addressed.   And no, throwing out the entire thing is not the answer - fixing it is.   You can call it Trumpcare or Rubiocare or whatever, we don't care.   The point is, we need some new ideas, not name-calling.

The media, which is populated by "journalism" students from the Newhouse School (idiots, basically) called the "fight" for Rubio because he got in the zinger and that's what really matters in politics.

In a way, perhaps this is poetic justice.   Trump made his mark by insulting people and calling them "losers" and generally avoiding concrete policy issues.   He starts articulating actual policy and he gets zinged.   Hoisted by his own petard.  He who lives by the sword, dies by the sword.

So what does this mean for future debates?   I am sure Trump learned his lesson here.  Don't try to sound smart or articulate.  Don't try to set out policies - they can be attacked with insults.   Just aggressively insult you opponent and don't let up.   Talk over each other and shout and slur like you are on reality television.

And when it comes to reality television, this is what Americans like (because they are idiots) and this is what Trump shines at (because he actually had his own show).   Rubio will get creamed at that level of "discourse" - if you can call it that.  Even his ham-handed attempt at it in the video above came across as amateurish.

But the audience ate it up.

People are idiots.  Is there another planet where people are not so dumb?

Friday, February 26, 2016

Living Life is More Interesting Than Television

Which is better, watching someone else's life or living your own?

Two fairly recent articles generated similar responses from Internet drones.  In the first, a fellow in Canada buckled down and worked three jobs and paid off his mortgage in three years.  In a second, a fellow describes how he slowly built up his own company after years of hard work - failing several times before succeeding.  He worked long hours and had to sacrifice much of what most "employees" think is normal - watching television for four hours a day, hanging out with friends and whatnot.

In both cases, the "comments" section of each article were full of comments along the lines of, "Well, you missed out on a great social life!  You gave up all your favorite television shows!   Sure, you have a lot of money and success, but at what cost?"

It is an interesting comment on a number of levels.  First of all, it is sour grapes of the first order.   People console themselves that while they are not millionaires, at least they've watched the latest episode of Downton Abbey and have their Facebook page up to date.  They've traded real life for an ersatz one and console themselves that what they've traded away wasn't worth much.

Second, it illustrates how there are really two kinds of people in the world, real people and replicants.   Actors and an audience.   Leaders and followers.   Doers and the done to.  The vast majority of people in the world are really, really worried everyday about what their friends think of them and moreover what people they don't even know think of them which is why Facebook is so popular - no matter how dreary and drab your life is, Facebook makes it look fabulous.

These are the folks who had a ball in High School because to them, the "learning" and classwork part was secondary to the annual sock hop and homecoming ball.  The social aspect of life was super-important, and the reason for being there was tertiary.  These same people are the "drones" you see at work who spend all day gossiping and backbiting and doing everything except working.

Now, granted, for entertainment they love to watch the movers and shakers of the world.  On television, the drones are rarely portrayed (except as crime victims or as clowns).  What people want to watch is folks who actually are living life and doing things whether it is the latest American Idol or Tony Soprano.

So the irony here is that the guy who is running his own business likely missed every episode of Celebrity Apprentice because he was too busy living that life.  Except of course, on television, "reality" shows are all fake.  His real life is far more interesting as he has real money - his money - on the line, and not only is he not "apprentice" to some blowhard like Donald Trump, he's the boss.

Get, I dunno.  What a drab and boring life he must lead.   I think he'd be better off at a 9-5 government job and watch 4.6 hours of television a night (the national average).   Yes, I am being sarcastic.

To some people, the idea of working two or three jobs at a time while going to night school seems like "hard work" or an onerous task.   The idea of starting your own business seems too risky and too much labor.   The idea of re-habbing a house and renting it out is too time-consuming.

But having done all these things I can say with authority that they were the most invigorating times of my life.   Risk-taking (and in retrospect, they were small risks) stimulates the brain.  Hard work - and reaping the rewards of it - is one of the most satisfying things your brain can do. 

The most depressing things I have done in life?  Loafing around, watching television, spending too much time on the Internet.   These are things that don't make you feel good about yourself, but rather worse.  When you lay in bed until 10:00 AM, it may seem "relaxing" at first, but in reality it just makes you feel bloated and groggy.   Accomplishing things is so much more satisfying.   

Or at least to some of us.   Perhaps the replicants obtain satisfaction from sloth.   But I doubt it.   Because I think when you get down to it, the drones of life are just depressed people and they turn to things like television or "socializing" to drown out the deafening silence in their lives.  Or they go on spending orgies in order to feel better about themselves (but it rarely works).

Of course, not all of us can be business owners or rock stars - or can do it forever.   Running my own business was fun, for a while, but I eventually tired of it.   Being an employer is no Swiss picnic, I can tell you that.  And as for being a landlord, I was smart enough to get out of that deal when I did (before the market crash).

So if you don't have a "real life" to keep you stimulated, what do you do - besides watch television?  Some folks have hobbies.  Restoring an old car or throwing a clay pot can give you a sense of satisfaction that comes with creating something.  Whether it is knitting a sweater or painting your house, taking action in your life and letting your brain see that it can alter its environment is important in fighting depression and having a sense of self-worth.

So who are these people who shout down success?  Depressed people.  And while it is unfortunate that people get depressed, bear in mind that depressed people - like other mentally ill people - can be very annoying and in fact, very, very evil.   Misery loves company as they say, and depressed people often want to shout down anyone who is happy and well-adjusted.  Don't listen to them.

The "social life" thing is also interesting to parse.  What exactly is a "social life" anyway?  Going out to restaurants and bars or having back-yard beer parties with your friends?   This is what the television tells us to do - and not surprisingly, these messages come from their advertisers.   There are some folks who like to "hang out" nearly every day with a group of friends, which was what I did in High School and College.   I am no longer in High School or College.

If you live a fulfilling life - are busy with your work or other pursuits, you don't have time to "hang out" every day with people.  Sure, you may socialize on occasion - which makes those occasions all that much more special.  But doing the same thing over and over again doesn't make it better or more interesting.  And socializing is one of those things that is actually better in moderation.

I guess for some people, a "social life" is a way of dealing with loneliness and again, shouting down the deafening silence.  If you are insecure in life, it is better to be insecure in a group, as they provide reinforcement and a sense of self-esteem.   This is why a group of teenagers will giggle and snort and make fun of you at the shopping mall but an individual teenager is scared to death of you.  Safety in numbers.

And I say this from experience on both sides of the equation.   We all do these behaviors - I am not castigating anyone, but everyone, including myself.    Understanding this, however, is key to personal happiness and success - I believe.

If you find yourself constantly shouting down more successful people in life, ask yourself why.   Maybe what is really bugging you isn't them, but your own life.

Is Welfare Hard to Get? Should it Be?

If you want to go on public assistance, it should be difficult to do.
This Kelly cartoon from The Onion illustrates the stereotypes people have about welfare recipients.

A reader writes that obtaining food stamps and other forms of public assistance is hard to do, and that many people have to resort to hiring lawyers to do so.   I beg to differ.   The number of people on food stamps has expanded rapidly in the last few years, effectively subsidizing low-wage jobs.  It isn't all that hard to obtain various forms of public assistance, and once you do, well, they are a "gateway" to other forms of public assistance.

If you want to apply for food stamps, the website is right here.  Many States allow you to apply online.  Since the qualifications are based on your income and number of people in your family, all you really need is a tax return to qualify. This is not really that hard to do, and like I said, a record number of people have applied for and gotten food stamps.  I really don't think you need a lawyer for this.

A friend of mine suggested to a grand-daughter that she apply for food stamps, as she was an adult student and didn't make a lot of money.   She went down to the office and spend the day there filling out forms and learned she would only get a minimal amount (like $16 a month, which is better than nothing) as she was single (the amount you get depends on how far below the poverty line you are and how many people there are in the household).  She decided not to apply.

That's too bad, because once you qualify for food stamps, you automatically get a free Obamaphone.  Yes, I know, it wasn't a program started by President Obama.  But you get a nicer phone with more minutes in four months than I get in a year - all free of charge and paid for by that "Universal Access Fee" that other people pay as part of their cell phones.

Since the phone companies (and not the government) run this program, they pretty aggressivly market it, and the website to apply online can be found here.  If you are on food stamps (SNAP) you get a phone.  You can also apply based on your income.  Again, if you meet the criteria, you get a phone, period.  This is not hard to do.

Other programs are a little harder.   "Welfare" as we know it is gone, replaced by "Temporary Assistance to Needy Families" which has a lifetime limit of five years.  This is a little harder to get, as you may have to actually show up in person and plead your case.  And again, this is just for five years, so it is a way to tide you over until you get a job, not a lifestyle choice.   However, this hasn't prevented the GOP from talking about "Welfare Queens" living off your tax dollars for generations - even if such Queens no longer exist.

Social Security is not really welfare as you have "paid into the system" - unless you want to believe otherwise (both views have some mathematical merit).   Again, qualifying for Social Security requires two things - a Social Security card and proof you are at least 63.   Once you've done that, the checks start coming in.

Now, Social Security Disability is a little harder to get, as you have to be disabled.   And a lot of folks with some pretty flimsy-appearing disabilities have applied for and gotten Social Security Disability, which has caused a bit of a drag on the system.   When people start collecting for life starting at age 30 or 40, it is far more costly to the system than a person who paid in for 45 years who starts collecting at age 65.

It is harder to get Social Security Disability and it should be.  You have to prove you are disabled and not able to work.  It is not as easy as, for example, getting a script for a Medical Marijuana prescription.   In both cases, you need a cooperating doctor, but in one it is no questions asked.  The Social Security administration scrutinizes applications more closely.

Now, if you really are disabled, it isn't that hard to get the benefits.   Nevertheless, some lawyers out there play a game where they claim you need a lawyer to get benefits.   And if you have a sketchy claim, maybe this is true.   The way the lawyers work is that they take 50% of past benefits owed as their fee.   So they drag out the proceedings for a couple of years by intentionally submitting poorly prepared documents, all the while arguing they are "fighting the bureaucrats for you!"  After racking up tens of thousands of dollars in back benefits, they finally submit the correct papers and then take half of what you are owed.

If you have a legitimate disability claim, it may be quicker and less expensive to just deal with the Social Security office directly.   Lawyers do not work for free.

Other programs can be harder to get into and stay in, because there is a waiting list.  Public housing and Section-8 housing usually has a waiting list of years.   But once you are in the system, well, you are in for life, basically.   And it can be a pretty sweet deal.   With section-8, the government (Federal, State, and Local) can pay up to 75% of your rent, and the landlord may over-charge the government figuring that you won't pay the other 25% anyway.   You get a free house, essentially.

But again, this is not easy to get.  You need to prove income levels and whatnot (that is the east part) and then just wait for your name to reach the top of the list.

With regard to medical care, you can qualify for Medicaid if you live below the poverty level.  It does not cover everything, of course, but most hospitals realize you can't pay the difference so they generally don't come after you.   If you work out a nominal payment plan (a few dollars a month) on a medical bill, they will leave you alone.  If you are over the poverty line, you qualify for (and are required to get) Obamacare.   But at very low income levels, the cost is subsidized almost entirely, and the subsidy increases until about $63000 a year income level where it inexplicably drops off to nothing.  Note also that many pharmaceutical companies have programs to help low-income people afford expensive medicines - worthwhile looking into before you pay retail price for drug.

SSI - or Social Security Supplemental Income is another form of welfare for the elderly.  If you are old and poor, you automatically qualify.  Our cleaning lady got this, once she was over 65 or so.   Problem was, I am certain that most of her income was in cash and thus "under the table".   As a result, her tax return reflected only part of her income (I believe) and her qualification for SSI maybe was overstated.

That is a real issue with all of these programs.  People living the cash lifestyle can qualify for assistance based on their declared income.   If they have a lot of undeclared income, well, they can cheat the system pretty well.   And the government really has no way of checking up on this.  It is ripe for fraud.

There are other subsidies and giveaways depending on where you live.  Some municipalities have free or subsidized subway or bus fare for the poor, the elderly, or the handicapped.   Once you hit age 65, you may get property tax relief.   Admission to State or Federal Parks may be reduced or free once you hit age 65 (regardless of income!).  The list goes on and on.   And of course, there are charities, food banks, free meals, and whatnot, if you bother to look.   And if you are unemployed, you have a lot of time to look.

Is this an unfair system?   Does it provide a luxurious level of living for the poor?   Well, it is not exactly the level of social services they have in some European countries.   You have to hump a bit to get public benefits.   And if you get them, you certainly aren't living the life of Riley.   But should living off the government be a good thing and should it be easy to do?   The answer to both questions is NO.

Why?  Once it is easy to get government assistance, and if government assistance is "comfortable" then there is less incentive to work.   Indeed, many people already today find working a minimum-wage job to be almost a break-even proposition, once the costs of commuting and the like are factored in.   If you can make good money by not working then there is less incentive to work.

Most of the people collecting public assistance today, however are the working poor. Some folks think this is disgraceful, but public assistance to the working poor does act as a wage subsidy and thus makes American businesses more competitive.   Food stamps help Wal-Mart as well as the person collecting them.

Some folks think we should raise the minimum wage from about $8 an hour to $15 an hour - and some places have done this.   The problem with that idea is that many people lose their government assistance if their wages go up.   A raise to $30,000 a year might mean losing food stamps and section-8 housing.  It might also mean people having to pay income taxes for the first time in their lives.   They might then turn Republican if you aren't careful!

It is not easy to get some forms of public assistance.   It is easy to get others, such as SNAP - and the number of people on that program has ballooned in recent years as a result.   Social Security disability isn't easy to get, but if you can get on that, it is like winning the jackpot - guaranteed income for life.  As a result, it is a lot harder to get, but some are saying that an awful lot of people on Social Security disability are really able to do some form of work.   And I've met people who claim to be "disabled" but seem to live very active lives nevertheless.

The number of people on various forms of welfare have been exaggerated somewhat by the far-right.  On the flip side of the coin, if you have a minimum-wage job and qualify for some forms of public assistance, you may be living quite a comfortable lifestyle, if you are careful with money.  The idea that the poor in America are "starving" or "suffering" is a meme that some journalists milk for click-bait headlines, and some of our adversaries (and allies) like to tout to show their supposed superiority.   But the reality is, we have quite a safety net here in the USA.

Your typical "poor" person in America has a place to live, central air conditioning, a car, a television, a microwave, stove, and refrigerator, and is at least 20 pounds overweight.   Obesity is the most common ailment among the poor - not malnutrition.   A "poor" person in Africa has nothing and hasn't eaten in three days.  We need to put these thing in perspective.

Thursday, February 25, 2016

$70,000 Pickup Trucks

In 1995, this was a pretty "fully loaded" Ford F-150 with nearly every option.  It sold for $22,000.  Today, you can buy pickup trucks for two to three times this amount.  What is going on?

The price of gasoline is down to less than $2 a gallon, so obviously the gas shortage is permanently over and gas will never go up in price again.   So time to break out the champagne and buy the largest vehicle you can.

And people are.  Americans are spending money - lots of it - on very expensive cars and trucks.  And the car makers are banking the money while they can - knowing full well that it might all go away in a real hurry, as it did in 2008 when gas briefly hit $5 in a gallon.

So they are offering fully loaded crew-cab dually diesel pickups with leather interiors, sunroofs, and other "luxury" features with price tags that are creeping up toward the six digits.   What the heck is going on here and who can possibly afford this?

It is always surprising to many folks how middle-class and lower-middle-class blue-collar workers can afford to buy so many motorized toys - expensive ones at that - when they appear to be dirt poor.   But make no mistake, rednecks love to spend money, particularly borrowed money, on things like penis boats, luxury motorcoaches, expensive pickup trucks, pricey motorcycles, and the like.

As I noted in my Mullethead on the Beach posting, it ain't hard to do.   First of all, you need to break free of the myth that just because someone is a redneck or a "tradesman" they don't make a lot of money.  During boom times, even unskilled laborers can make a ton of dough.

For example, as I related before, I met a man in North Dakota who was proud that his son, at age 22, was making well over six figures in the oil fields - what with overtime and all.   Problem is, the kid was spending the money faster than he was making it.  Dad related how Junior had bought a new Dodge truck for over $63,000 - as well as a Harley, a new mobile home, a set of jet skis, and so forth.   And instead of paying cash, he sign loan documents on it all.

Then the price of oil went below $30 and the fracking business went South.   No one likes to talk about this, but really bad things are about to happen in North Dakota and Alberta.   Canada is facing huge deficits and poor Justin Trudeau took the helm just as the economy started to implode.  Campaign promises of reducing deficits and borrowing are out the door now, as Canada's economy prepares to crater in a big way.   Borrowing money and priming the pump of the economy is probably the right thing to do - and hope that oil prices go up again to pay it all off, down the road.

Anyway, getting back to Junior, he lost all that overtime rather quickly and his income dropped below $100,000 - quite below.  The company then (illegally) asked him to work five days a week, while being paid for four, so they could claim he was "part time".   With jobs evaporating quickly, they get away with this, as young men heavily in debt are desperate for any work.  From boom to bust in just a few short years, you could see this coming a mile away.  Well, I did, anyway.

Others are more fortunate, at least for a while.   When we lived on the lake in New York, there was an obnoxious guy with an off-shore powerboat who would race up and down the lake.  This is a boat with three 1,000 HP racing engines, that easily cost close to $200,000 to buy.   And he blew up engines pretty regularly.   How does a redneck afford such a thing?

Well, it ain't hard to figure out.  His lake lot was nothing but a boat hoist and a clapped out travel trailer.   Rather than invest in a nice house on the lake, he spent it all on the boat and dock.   He had a good construction business going, with a few guys working for him.  He was making well into the six figures, so he figured, "why not spend it?" - thinking that if business is this good, it can only get better, right? 

That was in 2005.  Things changed a few years later.

Rednecks do make good money at jobs like that or by running businesses.  And a lot of them spend it even faster on depreciating assets.   When it all goes bust, they declare bankruptcy and start over again.   And along the way they don't bother funding an IRA or 401(k) or indeed, even pay for their own health insurance.   They have a great time and then let tomorrow worry about the bills.

One redneck even tried to explain to me that his way of living was actually better.   While he might not have a fully-funded retirement, he will have a good time along the way, and when he is old and grey, he will re-live "all those great memories" of zooming around on his speedboat.

I suppose there is a perverse logic to this, if you are content with memories later in life.   However, when you see older impoverished people (who tell you about how "back in the day" they were players) it is very sad, and no, they don't seem to be content with just memories of how good things used to be.

I personally don't buy the argument.   Having material things is hardly satisfying or enriching of your life - particularly if it means hardship later in life.   And having material things while not responsibly supporting yourself seems to me to be socially irresponsible.

The truck pictured above was my 1995 Ford F-150 Supercab Lariat XLT - a name nearly as long as the truck.  Back then, it was about as fully loaded as you could get, without getting the ugly "Eddie Baur" package (whose two-tone paint and tan trim pieces faded to pink within a few years) or something called an "electrochromic rear-view mirror."

Speaking of which, what is the point of those?  I own two vehicles with them, and they suck.  They are supposed to automatically dim when headlights hit them from behind, but they don't seem to do much of anything - not like the little lever we used to push to switch from "day" to "night" back in older cars.   You end up just moving the mirror, which seems a waste, as the whole deal was this "electrochromic" thing was going to save us from the "hassle" of moving the day/night lever (which was so onerous!).  But I digress.

The point is, you couldn't option a truck much more than that.  Power windows and locks and cruise control were seen, back then, as sissy accessories that no "real man" would have on a truck.  Today they are standard, and leather interiors, expensive sound systems, and power moonroofs are all popular options.   The pickup has become the new Cadillac as one reader has noted.

The problem is, of course, can we afford this?    As middle-class people, owning cars that cost nearly a year's pay seems somewhat problematic.   But again, we see this all the time with the lower classes.   A tiny "modular" crackerbox house near Auburn, New York, barely worth $100,000 has a $60,000 BMW X5 parked in front of it - along with three other cars.   A $150,000 tract home near here has two BMWs, a Mercedes and a pickup truck in the driveway - guess which is the most expensive vehicle?   In both cases, what is parked in the driveway exceeds the value of the home.

And this is nothing new - it just reflects the different value systems of the "upper class" and the lower classes - and how each ends up where it does.   When I was growing up, my parents lived in a $100,000 house, which doesn't sound like much, but they bought it in 1968, so that would be like a million-dollar home today.   My Dad had a company car, and my Mom drove a series of inexpensive shit cars - a Fiat, a Vega, and a Dodge Aspen.

My parents chose to spend on the house instead of what was in the garage.   They invested in their children's college education (which didn't really pan out for three of them.  I largely paid for my own, and well, it turned out to be a better investment).   My parents were incredibly cheap when it came to consumer goods - my Dad refused to pay more than $99 for a television in his life, until we all left home and he splurged on a new RCA Colortrak.

Meanwhile, my poorer friends who lived "in town" in houses costing $20,000 or less all had new color televisions and the kids even had an extension phone in their bedroom!   Dad had a new Mopar - a Fury II or whatnot, as did Mom.   And when the kids got their driver's licenses, they all got a hand-me-down car from Dad.     The Blue-Collar mentality back then was not much different that it is today - enjoy your money while you can and fuck the future.  Of course, back then, many blue-collar people had pensions.  Such is no longer the case.

Here on our island, a lot of relocated Yankees from "up north" are concerned that the remodeling of the island will make it "unaffordable for the average Georgian".   They have this naive and condescending idea that the "average Georgian" lives in a shotgun shack, drives a jalopy, and has three teeth in his skull.  The reality is, your "average Georgian" loves to spend money.  In terms of States with the most luxury car registrations, Georgia comes in sixth - with other Southern States (such as Florida and Texas) also making the top 10.

While these carpetbaggers wring their hands and fret about how their perceived stereotype of the "average Georgian" is going to get by, the actual "average Georgian" is down at the bar buying the house a round of drinks.  Rednecks have more money than you think - they just aren't very smart about what they do with it.

And that gets right back to the roots of poverty.  As I have noted in the past, poor people are not penniless and in fact an awful lot of money passes through their hands.  The key word is "passing through."   If you are not astute about money, you might think that spending is wealth and that a fancy new truck means you are rich.   If you feel sorry for such folks, that's up to you.  Myself, I see it mostly as a matter of poor lifestyle choices and not some great economic injustice.

Hard to feel sorry for anyone driving a $70,000 pickup truck.

Wednesday, February 24, 2016

Millions and Billions

A lot of people think a Million Dollars is a lot of money.  A lot more think a Billion is a lot more than it is!

In the 1960's, the term "Millionaire" was viewed with awe.  In "The Beverly Hillbillies" Jed Clampett had "millions" of dollars and we all thought that was more money than you could spend in a lifetime.   Back then, it was.  Average family income back then (with single-earner families!) was about $5000 to $7000 depending on which website you consult.   Today, the median income or average income in the US varies from about $50,000 to $70,000 again depending on which website you consult.

We've slipped a digit here, and no one seems to notice.   A million today is about $100,000 back then.   And $100,000 back then, while a nice pile of money for a middle-class person to have, was hardly enough to say they were "rich".

So "Millionaire" really doesn't mean much today, other than "comfortably middle class".   Indeed, in many parts of the country, a house costing a half-million is deemed to be a spec-built suburban middle-class tract home and not some exclusive gated-compound enclave for rich folks.

A million is ten piles of $100,000 each.   Sounds like a lot, but again, median income in the USA today is about $50,000.  So a million bucks, without interest, is enough to live on for about 20 years, maybe 30 with interest - at a fairly middle-class non-extravagant lifestyle.  It is enough to retire on, basically.

Yet we still use the term "millionaire" to describe a rich person and it really isn't correct.

Now the term "Billion" has its own problems, starting with not many people know what it even means.  A lot of clueless rednecks think a billion dollars is a million-million dollars.  And this was indeed true in British English - many years back.  However, the modern definition is one-thousand million, which sounds like a lot of money because it is a lot of money.  Yes, if you have a Billion dollars, you have an awful lot of money to spend - more than you can spend in one lifetime, even if you go out and buy personal jets and private castles.

Although, if you are not clever, you can burn through a Billion in short order, simply by spending too carelessly and not thinking through some white elephant investments.

On Facebook and other social media, the confusion over Billion is often used to create phony "Memes" that sound scary but make no sense.  For example, the idiotic meme above that came out when the Powerball jackpot went over a Billion dollars. 

If ever there was a poster-boy for "You don't need to know math in real life" it is Philipe Andolini.   What a maroon, as Bugs Bunny would say.   Not only is his math "a little off" it is a lot off.   Not only would everyone not receive $4.33 million, but they would instead get $4.33.  Ouch.

The problem is, a lot of people believe his math - or have no idea how math works or really believe that there is enough money in the United States of America to hand out over four million dollars to each man, woman and child in the country.  People really believe this - or they really don't understand even the most basics of how money works or how to add, subtract, and divide.

Even if you don't have a handle on basic math, one would think that you could latch on to the improbability of it all - that the suggestion itself is preposterous.  One would think anyway.  If something sounds too good to be true.... it probably is.   But I guess you don't need to know even that in "real life."

(The National "net worth" which by the way, hit an all time high in 2015, is $84.9 Trillion.  A trillion IS a million-millions.  So in a country of 330 million people, our average net worth would be $257,272.   If your net worth is a quarter-million dollars, you are "average".   So no, even the entire wealth of the United States is not enough to give everyone four-million bucks!  It also puts the national debt, of about $60,000 per person, in perspective).

If you crunch the numbers on this, based on population, it illustrates the point.  There are a lot of millionaires in this country, about 3.4 million to be exact, or more than 1% of the population.  The number is growing rapidly simply because being a millionaire ain't what it used to be.   As I noted, it is basically enough to retire on, these days, and not a lot more.   Yet "millionaires" are demonized by the likes of Bernie Sanders as some sort of greedy people out to rape the poor - rather than someone with a net worth merely four times the national average.

Funny thing, though.  Sanders has spent his whole life in government service (and did little else) and suckled on the teat of Uncle Sugar (and the State of Vermont) for decades.  When he retires, he will have a fully-vested pension (if not two) and fully paid-for health care.   For each $50,000 a year he gets, that represents a million bucks in the bank you and I would have to save up to retire at that level.   So Sanders, even if he only has a purported net worth of "only" $300,000, is in reality a Millionaire many times over.   Maybe we should tax him, first.

And this is not to say the remaining 99% are destitute - many make good salaries and indeed, more money than some Millionaires.   But some have little or no savings - again, the dichotomy between income and wealth that eludes so many.   Wage-earners tend to look at "wealth" in terms of annual salary, not how much is saved.   And that is one reason they remain poor even with a good paycheck.

Still others are in the process of saving up for retirement but have yet to hit that seven-figure mark.   But they likely will, before they retire in 10-30 years.   Yet others may have reached that mark (or come close) but once retired, started spending their cash and are now working their way back down to zero - as we all will eventually do.   There are a lot of future and former Millionaires in this country, particularly as the 401(k) generation reaches retirement age.

On the Billionaire side, there are only about 530 in the United States - a big drop from 3.4 million!  Your odds of making Billionaire are pretty slim - about 1 in 600,000 (which surely beats the lottery odds!).   Meanwhile, the odds of you being a Millionaire are presently about 1 in 100, which is almost a sure thing in comparison.   In 50 years, the odds will be even better, as a Million dollars means so much less, due to inflation.  Andn as I noted, many of you are well on your way to getting there, while a number of others are unwinding their life savings as we speak.  Thus, the odds of being a Millionaire in your lifetime are probably much greater than 1 in 100.

If we throw in pensioners, the odds drop even further.   As I noted, a million dollars represents a pension income of about $50,000 a year for 30 years.  If you are retired and receiving a pension of $50,000 a year, congratulations, you are a Millionaire as well.  Maybe you don't have a pile of money invested in the stock market, but you may have something better.  Particularly a government pension - they are pretty much guaranteed for life.   If only I had stayed at the Patent Office!   I would be on easy street by now!

Once you add up these numbers, you realize that the 1% is more like the 10% - perhaps even more.   The middle-class is a huge part of this country despite the slightly exaggerated claims of its demise.  Are these the "evil people" that Bernie Sanders wants to demonize and tax to death?   It is an interesting question.

Class warfare is never the answer.   When someone talks about "taxing the rich people" you should be careful that they are not talking about you.

Why Immigrants Rock (And Native-Born Americans Suck)

People say we should curtail immigration.  If we do this, be prepared for a lifetime of shitty service.
Pictured above:  Redneck turn signal.

My Father's grandparents came over from Switzerland to work as servants on the Steinway estate.   They met there and got married and moved to New Jersey.  The Steinway's gave them a piano as a wedding present.  Nice folks.

Back then, working "in service" was not considered degrading but a career that was respectable.  Even today, in Europe, being a waiter isn't something you do in college, but a respected position.

In America, it is different - at least for native-born Americans.  They view any job as a hardship and beneath them.  They put as little effort into their jobs as possible, and not surprisingly, they tend to lose jobs on a regular basis.  They have a sense of entitlement as if the world owed them a living.

And I have seen this as long as I have been alive.   On the assembly line at GM, workers sabotaged the cars as they went down the line - not bothering to think about the poor sap who ends up with the resultant "lemon" that cannot be fixed properly.   On the way out to the parking lot at the end of the shift, they would take turns beating some poor old Datsun (bought in by union lackys) to death with a sledgehammer - as if this somehow proved our superiority over those "Japs".

The plants closed, the jobs went away, and it was someone else's fault.

Today, not much has changed.   The big-3 recovered from yet another near-death experience and yet they still cannot compete with the foreign (non-union) factories here in the States or with imported cars.  They offer up one lame excuse after another - that people just don't understand how superior US cars are, and are being bamboozled into buying inferior stuff.   The idea that a foreign car could be better made is, of course, not even on the table.

In terms of service, you see this all the time.  On our island, we have a lot of imported labor, mostly from Eastern Europe, who work at the hotel.   If you are lucky, you get one as as server.  They know how to hustle, how to treat customers, how to get good tips (which they get).

If you get a "local" (native-born American) as a server, you may wait a half-hour for a beer, if you don't leave before then.   One of the restaurants on this island has gone bust three times in the last five years, all because the waitstaff didn't think that serving people was an important part of their job.   They didn't "get" that tips could double or triple their income, if they were attentive and flipped tables quickly.   Instead, they would sit in the kitchen and tap on their smart phones.   Others merely stole from the business.

We're talking local rednecks.   And you know the type - people who use their cigarettes as turn signals.  Local Baptists who are bigots and homophobes.  People who watch a lot of television, drink a lot of Mountain Dew and likely have a meth or Oxycontin habit.

We are supposed to "feel sorry" for these sort of folks because they are disadvantaged.  But should we?   The immigrant, placed in the same job, outshines them by a factor of 10.   Why is this?   Well, the immigrant doesn't have the option of failing.  Moreover, they don't believe the country owes them a living

The far-right likes to posit that Mexicans are "lazy" and all involved in gangs, drugs, and crime.   And yes, in any population, there are criminal elements.   But ask yourself this, the Mexican who came here with nothing and worked all day in the hot sun and now has his own landscaping business - is he really "lazy" or a criminal?  No, he isn't.   Most are not.  Most work their ass off. 

The "American" on the other hand, refuses to even take on such work, or if he stoops to it, will demand an outrageous wage, do a shitty job, and complain about what a rotten deal he got out of life.  These are the Trump supporters - convinced they would all be Billionaires if not for some crummy immigrant "taking away their jobs"

No, we don't need more of that.   We need less of it.   We don't need to deport immigrants but deport native-born Americans instead - particularly the kind who complain about what a shitty deal they got out of life here.   Let them live in Mexico or Africa for a few years and see how the rest of the world has to live.   Maybe then, we could allow them to apply for a green card - conditional, of course.

In the meantime, bring on the immigrants - they are the lifeblood of this country and they know a good thing when they see it.

We don't need more shitty cars, shitty service, and bankrupt American companies.  And that is all you will get if you follow this self-pitying line put forth by lazy people who think their "birthright" entitles them to money without labor.

Sorry, but I have no sympathy whatsoever for rebel-flag waving bigoted Klansman who think the country owes them a living.

Deport them all.

Is Income Inequality a Bad Thing?

This corrected protest sign illustrates how the average person doesn't really understand statistics - but understands sloganeering.

The far Left has used "income inequality" as an issue in recent years, with the supposition that income inequality is a bad thing.  Is it?

In any debate, challenge the premise of the argument being raised.   Oftentimes, people will slip one past you by making an argument that is little more than a conclusory statement and if you accept this, you have lost the debate.

In recent years, people have been posting alarming graphs and statistics that show that "income inequality" is on the rise.   We are told this is a horrific thing and needs to be changed.   But what is assumed in the argument is that income inequality is bad and moreover needs to be changed.

Now to some, this seems rather foolish.  "Well, of course it's bad!  There should not be such a great disparity in wealth in the world!  1% of the people shouldn't control all the wealth!  This is a bad thing!  Everyone knows that!"

The problem is, these arguments are made on a lot of assumptions, poor definition of terms, and often loose statistics.   For example, as we have harped upon a lot here in this blog, there is a huge difference between income and wealth.   By world standards, I am a "wealthy" person as I have saved up enough money to retire on (as the law now requires me to do, basically).  But in terms of annual income, I likely make less than you.  I make less than the mean household income in the USA, which is about $50,000.  Does that mean I am "rich" or "poor"?  In terms of wealth, I am rich.   In terms of income, I am not far above the "poverty line".

It is a valid question, because on the other side of the spectrum, there are a lot of people making $100,000 a year, or even $250,000 a year who are flat fucking broke and I almost became one of them before I sobered up.   There are a lot of people in the USA who make a lot of money - and spend even more, and thus have a net worth of zero or even negative.   During the recession, a lot of these high-rollers ended up destitute overnight once they lost their high-paying jobs and could no longer afford to make payments on all their debts.

So we should, when discussing this issue, make it clear what we are talking about - wealth or income.  Because people confuse the two, often in the same sentence, such as "the top 1% of income control half the world's wealth!"   The actual statistic, of course, is that the top 1% of wealth in the world control half the world's wealth.
"Worldwide, there are 34 million people who have a U.S. dollar net worth of at least $1 million, or 0.7% of the global adult population, and they account for 45% of global wealth."
OMG!  That's horrible!  We need to change that!   Or, maybe not.  You see, by the definition of "wealth" I am one of those top 1% - anyone who has saved up a million bucks.   That sounds like a lot of money until you realize it barely covers your retirement these days.  A million dollars generates only about $50,000 a year in income in retirement for 30 years or so, before it peters out - as we have gone over in the past in this blog, in excruciating detail.

Many of these Wall-street protesters and young people graduating from college today with their staggering car-sized loan debts (another issue in which the premise goes unchallenged) will, in a few decades, have well more than a million dollars in their 401(k) plan.  It isn't hard to do, over a 45-year working life - provided you are willing to sacrifice things like cable TV, your daily Starbucks, and that smart phone you are reading this on.

In other words, these "1%'ers" are likely your Mom and Dad.  Do you hate them as well?  Moreover, if you are a middle-class person in the United States, odds are, you will become a 1%'er in short order.  Do you hate yourself, too?   It sounds fun to protest when you are 25 and broke (as I was when I was 25), but 20 years later, when you are on the other side of the fence (after two decades of hard work) do you want someone else taking away what took you so long to scrape together?  Think about it.

The fundamental problem with this "income inequality" or "wealth inequality" argument is that it assumes that everything is worse when incomes are more unequal.   This may seem like a given, but like anything else, it bears investigating.

As I noted before in this blog, comparing yourself to others is a dead-end game.  You will never win that game, as there is always someone else making more money that you, having more sex, or happier or whatever.   You have to look internally and see whether you are content with your own life.

And in that regard, the real test of whether our economy is in trouble or the 1%'ers are bad is whether the standard of living of people today is better or worse than in the past.

I mean that really is the big deal, ain't it?   It is not whether Joe Gotrocks has a 100-foot yacht, but whether Jerry Plebe has a nicer hovel than he had ten years ago.   And if the Plebes of the world are doing better because the Gotrocks got more maybe this is not such a bad thing.   I am not saying this is necessarily the case, only that it is a possible outcome that is overlooked by the bold assumption that income inequality is "bad".

This chart looks alarming until you realize that the Y-axis has been stretched quite a bit and the X-axis ends in 2011.

By some measures, median household income has dropped in recent years.   Granted, this trend started in 2008 during the recession.   But the Y-axis of this graph is really stretched, and the real variation is only +/- 5% overall since 1989.   Of course, statistics can be misleading in a number of ways.   First, numbers like this, which measure only dollar amounts, fail to take into account standard of living compared to earlier generations.  And our standard of living is one of the highest in the world:
"The homeownership rate is relatively high compared to other post-industrial nations. In 2005, 69% of Americans resided in their own homes, roughly the same percentage as in the United Kingdom, Belgium, Israel and Canada.  Residents of the United States also enjoy a high access to consumer goods. Americans enjoy more cars and radios per capita than any other nation. and more televisions and personal computers per capita than any other nation with more than 200 million people."
And I have noted this before.  Comparing a dollar today with a dollar of 1970, even accounting for inflation, fails to take into account other factors.   A television in 1970 was a piece of shit that cost over $500 and got three channels.  Today, $500 buys you a flat-screen that is 50" wide and gets 500 channels.  The quality of life we have today is far greater than in the past.  Statistics based on money alone fail to account for this.

Sure, cars today are more expensive than in the past - but accounting for inflation, not that much more.   But comparing the empty steel box that is a 1970 Chevy with the electronics laden safety-mobiles of today is apples to oranges.  Moreover, cars today get better mileage and last longer.  Has life really gotten worse?

Moreover, is dollars in income really a way of measuring wealth?   If you are "poor" in America, you can qualify for food stamps, subsidized housing, subsidized transit fare, free cell phones, free medical care - and a host of other "freebies" that really raise your standard of living up to a middle-class or near-middle-class standard.   If you are working a low-wage job, odds are, you also qualify for a host of Federal and State subsidies.  Are we counting these when we talk about income disparity?

The other side of the coin is this - is income equality some sort of desirable goal?   Is a perfect world one in which everyone makes the same amount of money?   Should a day-laborer make as much as a bum who sleeps under a bridge all day?   Should a car salesman make as much as a Doctor?   Should a CEO make as much as the man on the assembly line?   Believe it or not, some people on the Left really think so.

This also begs the question:  Who gets to decide who makes how much?  Do we set up government agencies that dictate salaries or wealth?  You laugh, but it has been tried - and failed - in every Communist country out there.   While Capitalism is far from perfect, it does assign wealth largely based on the worth of the person to the economy.   You and I might not think a baseball player deserves millions of dollars a year, but the team that hires him (and the fans that pay for ticket) seem to think so.   Should we disrupt this market assertion of value?  Perhaps.  To even ask the question is deemed to be a heartless bastard, however.

Moreover, is such a scheme even possible?   Imagine a world where everyone paid the same.  How long would that last?   The smarter and cleverer of folks would find ways to make money out of the less clever, and before long, income disparity would occur.    Philip José Farmer sort of addressed this concept in his Riverworld novels - which describe a planet where the entire population of Earth (from all time) is plunked down and each given identical "incomes" in the form of food and supplies.   Within a few years, of course, some end up Kings, and others end up slaves.   Farmer had a keen eye for the human condition.

There is another aspect, and that is means and averages can be misleading, as they can represent a few people who make a lot of money and a lot of people who make no money.   And a dichotomy in incomes is occurring in the United States to be sure.  People with no skill sets are finding work hard to come by and pay very meager.   Unskilled labor in this country has found its paychecks getting smaller and smaller in recent years - or at least not getting larger.

But by no skill sets, I don't mean "lack of a college degree" but rather no usable job skills.  People who know how to wire or plumb a house or weld a beam or repair an airplane are finding plenty of good-paying jobs (and indeed, starting their own businesses) without much trouble.   The people protesting "income inequality" are largely college graduates who wasted a lot of money on useless degrees.   Do they deserve automatic pay raises for making bad life choices?

Moreover, does it make sense to pay unskilled laborers as much as skilled labor?  As I noted in earlier postings, the workers at GM back in 1978 when I worked there were making about $15 an hour.  Today, the Nissan plant in Mississippi pays about as much to part-time workers who have no benefits.   Wages have not only stagnated, they have fallen behind.

On the flip side, though, in 1978, $15 an hour was $2.65 an hour, so the wages the union workers were getting were almost five times that.  Today, it is only double.   This doesn't mean workers today are underpaid, only that unskilled union workers in 1978 were vastly overpaid.  Back then, about 1/3 of the blue collar workforce was unionized, and unions used the blackmail of strikes to demand (and get) higher wages.   Were shitty UAW workers who destroyed the US auto industry worth even 50 cents?  If you owned a car from that era, you might not think so.

Higher wages meant, of course, higher prices for consumer goods, which is why we had much less back then (one television, maybe two dial phones, two cars).  It also lead to an era of "stag-flation" where prices kept going up, productivity kept going down, and the economy stalled.   This started in the Nixon era.  Nixon enacted wage and price freezes which is a radical concept for Republicans today and illustrates how bad things were.  When a Republican turns to the command economy, things are bad.   Of course, Nixon had his hands full the next few years, and when Jerry Ford became President, he was ridiculed for his "Whip Inflation Now" (WIN) buttons - as if inflation could be willed away.    Jimmy Carter didn't have much better luck with the economy, as oil prices spiked again, and wages kept spiraling up to keep up with consumer prices, which went up with the price of labor.

Some have argued that we should just have the government raise everyone's wages and that would fix the problem.  The problem is, as the experience of the 1970's shows, when you raise wages, you raise costs of retail products, so the increased wages have less purchasing power, which leads to demands for higher wages.   If you make the minimum wage $15 an hour, then $15 is worth eight bucks.

The flip side is in taxation.   The GOP has done a good job over the last two decades of bringing down tax rates for the wealthy and upper classes.  The Bush-era tax cuts have finally expired, but we still have far less progressive tax rates than in the past.   The Gifts and Estate tax ("death tax") is still in place but has an exemption of about $5M which is helpful to the upper middle class.   The very rich, of course, pay themselves in Capital Gains (the "Romney Rate" of 15% or so) and avoid paying any Social Security or Medicare taxes.

Bernie Sanders says he wants to tax "Millionaires" but he isn't quite clear on what this means.   Does that mean he wants to tax me or just tax people making a million dollars a year?   It appears to be the latter, and Bernie is proposing we go back to the 1950's and 90% plus marginal rates.  The problem with his proposal, of course is twofold.  First of all, no one will pay the taxes.    When you make that much money, you can afford tax shelters and tax dodges.   You pay yourself in dividends.  You move to a friendlier country.   Even left-wing artists and rock stars will dodge taxes this way.  They will do a "We are the World" promotional song for income inequality and then move to France to not pay taxes.  Irony alert.

That right there is the problem - we all want to tax "the other guy" to pay for our swag, but when it comes down to us paying taxes we shy away from the deal. And that's the second part of the problem.   It all sounds like fun to beat up on the "very wealthy" until you realize that the people Bernie is talking about might include you.

The sign above claims we are 93rd in "income inequality" (or equality, she doesn't seem too sure) and that this, on its face, is a bad thing.   But comparing yourself to others, whether it is on an individual basis or a country basis, can be misleading and miss the point.   Yes, people in Zimbabwe all make the same amount of income - one pile of cow dung per month.   There is arguably less "inequality" there than in other countries.   In the former Soviet Union, everyone was "equal" in pay (except a few wealthy party members) but everyone was paid shit.   Do we really want to go there?

Perhaps our tax system could be tweaked a bit to be a little more progressive.   But if people are resorting to tax dodges at the 39.5% marginal rate, raising that rate probably won't collect much more in taxes (particularly if the capital gains rates are not raised).   And maybe the minimum wage could be raised a little bit to account for inflation and rising rent costs.

But doubling the minimum wage?  90% marginal rates?   This is akin to locking on the brakes or putting the pedal to the floorboard.   It is overkill for a "problem" that really is more of a meaningless statistic than any indicia of how wealthy or well-off we are as a country.

We should think about this more carefully than Bernie Sanders has.

Tuesday, February 23, 2016

Bureau of Specious Statistics - Automotive Division

There is a difference between reliability and popularity.

Two articles recently, one in Popular Mechanics and one in Road and Track (sister publications) list the "top ten vehicles" and "top ten cars" which go over 200,000 miles.  Both stories are utter bullshit.

Why?  Our friends at the bureau of specious statistics are up to no good again!

To determine the "top ten" rankings, they counted which vehicles were most commonly cited as going over 200,000 miles.   This was not done on a per capita basis - based on the number of vehicles sold - so all you Subaru fans are left out in the dust, as Subies are not as high-volume as other cars.

Not surprisingly, the "top ten" over 200,000 miles are also the "top ten vehicles sold in America" with America's most popular vehicle, the Ford F-150, leading the list.

The list reads like a list of the most popular selling vehicles in America because it largely is.  Most cars today can go over 200,000 miles, provided they don't get into a wreck.  So it is not surprising that the most popular vehicles sold in America (Pickup trucks and SUVs) round out the list.

The only anomoly is the Toyota Avalon.  The Avalon is a larger version of the Camry, which is on their secondary list (and is the most popular or second most popular car sold in America).   The Avalon isn't sold in large numbers (not as large as the Camry) so its presence is a bit puzzling.  But Avalons tend to be purchased by older people (a demographic Toyota is desperately trying to change with the new model) and you'll see them tooling around The Villages a lot.  It is the new Mercury Marquis, basically.   So they get driven carefully and held onto for a long period of time, and show up on the list despite their relative rarity.

In the car list, the same pattern repeats - the list mirrors the list of most popular cars sold in America - including the inevitable Honda Accord and Toyota Camry.   Don't get me wrong, both cars are well-made, but the reason they appear on this list has more to do with the fact they are the first and second most popular cars sold in America, and the methodology of the survey is flawed.

In other words, it is basically a "top ten vehicles sold in America" list and not any indicia of quality or longevity.  There maybe many other cars which are far more reliable, but don't appear on the list simply because they don't sell in large numbers.

A better methodology would be to look at percentage of cars made that are still on the road after 10, 15, 20 years and also percentage of cars made that reach 100k, 200k, and even 300k miles.   I suspect the list might be a bit different, although the Hondas and Toyotas will still appear on the list as before.

But a method that merely measures percentage of cars that are over 200,000 miles?   That merely reflects which cars are sold in the largest volumes.   It is bogus statistics and shit science - and crappy journalism.

And yet, people would read this article and go out and buy a car based on it.

People are idiots.

Dealing With Protesters

The best way to deal with protesters is to appear to cave into them, while getting what you really want.

In the 1960's people started protesting more and the "establishment" got kind of worried about this.   And it doesn't matter what it was they were protesting about - people protested about everything.   The powers-that-be freaked out and tried using riot police, the National Guard, and tear gas.   This only made things worse, of course, as it made the power elite look like even more ruthless bastards and gave the protesters yet more to protest about (and in some instances, something real to protest about for the first time!).

A lot has changed since then, and today, governments, businessmen, and colleges are better prepared for Protesters and better able to handle them.  As a result, while protests still occur, it is a lot easier to defuse them, often by pretending to cave in to demands.

A developer keyed me into this many years ago, in law school, where he taught a course on how to build office complexes and strip malls.   To some Lefties the word "developer" is itself a dirty word - the sort of people who do nothing but build strip-malls and parking lots and uglify the nation.  Of course, even the Lefties patronize the resulting businesses so I am not sure what the point is.

But back in the 1960's and 1970's, some developers got into hot water by proposing developments, only to be shot down when protesters showed up at zoning meetings or garnered free publicity on the evening news by having a "protest" outside the construction site - often only a dozen people or so, with picket signs.  The protesters became adept (and still are) in creating eye-candy for the newspapers and evening news, who are usually desperate on a slow news day to have something to report other than a car accident.

So, if you can have three minutes of footage of people with signs and some long-hair decrying the fate of the baby penguins (whose breeding ground is on the site of your proposed shopping mall) it is "in the can" for the local Eyewitness News Team.   Local politicians know the drill on this.  Whenever you see a movement like this, you jump out in front of it and then claim to be leading the parade.   So the local city council gets up in arms and you don't get your building permits, easements, and eminent domain takeover of the local youth camp.

Developers got wise to this, though, pretty quickly.   The key, as it turns out, happened by accident - sort of like that New Coke deal.   A developer wanted to build 500 new homes.  The protesters showed up and claimed it would ruin wetlands and so forth.   So a city councilman got into the act and "made peace" by downsizing the development to 250 units and gave the developer a tax break to make up the difference. The protesters are satisfied.  The politician is made to look good.  And the developer realizes that he still comes out ahead in the deal.

So, next time around, when he wants to build a 500 home development, he applies for a permit for 1000 homes.  Hey, if he gets it, so much the better.  But his real intention is 500 homes.  The protesters show up, the news covers it, angry words are said in zoning board meetings, politicians make sage pronouncements - and the developer gets what he wanted all along - a permit to build 500 homes.  The protesters can claim they "won" and the politicians can claim they are "doing their job" and the developer totes his money to the bank in a wheelbarrow.  Everyone is happy.

The next time you see one of these deals go down, where the developer agrees to "only" build a 20-story building instead of a 40-story one, think about what is really happening and whether your "community activists" are in fact being bamboozled.  Or maybe they know they are, but won't admit it.

With colleges, the same is true.  As one Dean of Students explained to me, the most obvious thing that they figured out is that students graduate every four years and it is a lot easier to wait them out than to worry much about their list of demands.   Some schools - even very liberal ones - simply threaten to withhold diplomas or transcripts if students don't fall into line.

Cornell University, in ultra-left-wing Ithaca, New York, wanted to cut down a "woods" that was popular with the students as a place to "hang out" (read: smoke dope).   They literally wanted to "pave paradise and put up a parking lot" on campus.  To any veteran of the 1960's this is a no-brainer.  Tress versus cars.  Grass versus asphalt.   I mean, shutting this puppy down shouldn't be too hard, right?

So the protests started and some students chained themselves to trees and one even climbed a tree and lived in it for a week.  It all went well until the University said to the students that diplomas would not be forthcoming unless they vacated the area and moreover that transcripts would be withheld for any student who did not leave peaceably.  The bolt-cutters came out and the chainsaws were started.  Every student left in short order.   With so much in student loans to repay, they did the math on this and simply gave up.

Now bear in mind this is an ultra-left-wing campus, and you can see it ain't hard to placate demonstrators.

But there are other, less draconian ways of dealing with demonstrators, and one is to simply appear to give in.  You promise to set up a committee to study their grievances, and appoint a few of the more loudmouthed of the protesters as well as some of your more inept faculty members to the committee.   Nothing can stifle progress more than a committee meeting.  After a few of these snooze-fests, even the most boisterous protester is struggling to stay awake.   But everyone can say they "won" and then go home.  And eventually, the protester graduates, and your problems are solved.

Strategic retreat is nothing new.  Russia has used its vast territories to thwart the greatest armies ever assembled.  Napoleon and Hitler both broke their back on the steppes of Russia - as they ventured far beyond the distance their supply lines would take them.   Appear to cave in, and when they are over-extended and fatigued, then you strike back.

So what's the point in all of this?   Well, before you get caught up in someone else's protest, think about what is really going on.  Odds are, it is far more Machiavellian than you think, on both sides of the equation.  Often the professional protesters are out for their own fame and fortune (usually trying to get street cred to become politicos later on).  The politicians are out to save their hides.  The developers are out to make money.  If you get involved, you may be little more than a pawn in someone else's game.  Being "outraged" is what they want you to do.  But in the end analysis, it is often just a waste of your precious emotional energy.

They Throw Pennies At Us, Hoping We Spend Dollars

Is getting involved in "rewards" programs a worthwhile endeavor, or it is just smarter to shop around on price?

A reader recently sent me a link about how Starbucks customers are "furious" about changes to the rewards program.   In a way, this is nothing new - the airlines do this all the time.   Rewards points on airlines used to be based on miles traveled - regardless of how much you paid for a ticket.   They changed that, basing them on how much you spent.   And the rewards miles used to last forever, so they changed that, making them expire so fast that only the most frequent of frequent flyers could use the miles.   Rewards points used to allow you to book a flight for the whole family to fly to Hawaii on vacation.  They changed that - at best you might be able to get one seat on one flight - if that.   And along the way, they added "fees" for using miles, offered to sell you miles, or offered to keep miles active if you paid another fee.  Today, airline miles are pretty worthless, unless you fly an awful lot, and even then, the best thing you can do with them is upgrade to business class.

The entire idea behind rewards is to encourage brand loyalty and repeat business.  For airlines in the 1960's, frequent flyer miles were a way of getting business travelers to use ONE airline, as opposed to shopping around on price.  Since your company was paying the ticket price anyway (and basic airline tickets cost more than a good used car back then) no one bothered to shop on price.  So you stuck with Pan Am, for example, racked up a lot of miles, and then used those personally to fly the family on vacation.

Of course, it was a kick-back - a bribe - and some companies caught on that employees were not shopping air fares on price but on kick-backs.  Even the government tried to stop this - requiring frequent flyer miles be handed over.   But it didn't last long.   Flyer miles were deemed the perk you got for having to endure flying.

But over the years, the industry changed.  With deregulation, the cost of airfare became competitive and more and more people flew.  There were no longer empty seats in an airplane to sell.  Overbooking became the norm.   Flyer miles became harder to use.  And in an era of airline bankruptcy and thinner and thinner margins, the idea of letting people fly for free became less attractive to the accountants.  So the rules were changed for a new era, and today, flyer miles are pretty bogus if you fly only once a year or so.  You are better off shopping on price than on brand.

For restaurants, rewards programs can do two things.  First, they encourage brand loyalty.  If you are a Starbucks fiend and have a "rewards" card, you will tend to go to a Starbucks, over some local Mom & Pop coffee shop, as you will want the "rewards" points.   This of course means you are missing out on some really good coffee or something unique, from a place that doesn't roast its beans in a blast furnace.

Second, rewards encourage consumption.   You might not otherwise be going to Starbucks today, but you think, "Hey, I'll get more rewards points, or maybe cash some in on a free cookie!" so you go when maybe you wouldn't have gone, before, and in addition to the cookie, you buy another "coffee drink" because, hey, the points, right?

There is a third aspect, for the consumer, and that is status.  We are all status beasts, and what these "frequent flyers" at Starbucks really love is having that coveted gold card which means you are in their exclusive (not exclusive) club and you and look down your nose at those "amateurs" who don't know to ask for half-caf, half-decaf latte with a half 2% half skim foam.  People really think this way, but of course, none of us will every admit it out loud!  We all want to think we are better than everyone else, it is human nature.

Rewards points are what I call the secondary deal and in marketing, secondary deals abound.  Back in the day, if you opened a new checking account at the bank, they would give you a free toaster.   Why banks are selling toasters (and they are selling them, even if the price appears to be "free") is a good question.  But it became a "thing" in the 1960's and 1970's.   Grocery stores and gas stations gave away plates with each bag of groceries or each fill-up of the tank.  Over time, you could accumulate a whole set of dishes!  Everyone's Mom did, back then - or got S&H Greenstamps, which you could save up to get small appliances.

Secondary deals are distractors.  They distract you from the primary transaction and get you thinking about the "free bargain" instead.  And while your head is turned, they raise prices a penny or two and you don't notice it, because you are fixated on the free toasters.   Magicians know this trick all too well - it is called sleight of hand.  They distract you with the right hand, so you don't see the left hand up to no good.

Secondary deals get you to thinking you are making out like a bandit, when in fact you are falling into a carefully laid trap.  It doesn't matter if the trap is over-consumption, credit card debt, or what, the secondary deal is the "bait" to get you to fall into the trap.

Sadly, Mark still falls for these secondary deals even as I try to gently persuade him otherwise.   He finally figured out that frequent flyer miles are kind of pointless, particularly if you don't fly a lot (flying is no longer viewed as some special treat, except by the very poor.  For the rest of us, it is something we endure for business or to cross an ocean).  But he still loves his Hilton Honors points, which can provide an upgrade or even a free room once in a while.   But a better deal, I think, is to find the best hotel room price, whether that means using an online price shopping site or staying in some Mom & Pop hotel or bed and breakfast.   $250 a night for a hotel room is no "bargain" even if they give you a "free" breakfast.

I am presently experimenting with a "rewards" credit card.   One reader has exhorted me to "steal the cheese" with these kinds of cards, and I will write a review of it in a month or two.   So far, the cash "rewards" are less than $100 a month on average (even with my platinum bonus!  Take that, gold card Starbucks members, I got platinum, bitch! - you see how status works).   The problem is, if I ever carry a balance, even for a month or so, it will wipe out most of those rewards points in short order.  If I carried a balance for several months, well, an entire year's worth of rewards points could be more than wiped out by interest payments.   It is like carrying around a loaded handgun pointed at your head.   They throw pennies at us, hoping we spend dollars.

The Starbucks customers who are "furious" over the changes to the rewards program may be furious, but I suspect less than 1/10th of 1% will stop going to Starbucks as a result of these changes.   And I oftentimes see this in online discussions.  People are furious that a bank, a car company, an airline, a ticket agency, a cable company, a cell phone company, or a coffee company has treated them poorly, overcharged, or changed their terms of service.  What they want is justice and they want it now!

But what they don't realize is that the only way things will change is if people stop patronizing the business in question and as a result, lose customers.   If you keep patronizing a business and expect it to sua sponte change its business terms in your favor, you are kind of living in a dream world.  The one choice you always have is to not consume or to not consume their product.  Usually the former is the better option.

You really don't need Starbucks to live.  You could always just not go or bring a teabag to work with you and bank that Starbucks money (which could add up to over $100,000 by retirement, easily).   You could try a different coffee shop maybe with different coffee (yea, I know that is scary!!).   But that is the beauty of Starbucks - they aren't selling coffee at all, just the idea of it.  "Going to Starbucks" is more of an experience than mere drinking of coffee.  It is all wound up in status, from the moment you step in.  From the first time they humiliate you for calling a "tall" a "regular" to the snide comments the "barista" makes while taking a half-hour to make a Latte, to the little leaf in the foam - it is all about status and posturing and less about coffee.   It is Portlandia in a cup.

But Starbucks people are Starbucks people, and that is to say, sheep.  The idea of not going will never occur to them unless for some reason it became unfashionable to be seen in such a place.  And that isn't going to happen anytime soon.  I am not sure even a Chipolte-like disease outbreak could shut them down for long.

And so on down the line.  The guy who "has to have" the "full ticket" sports package on cable or satellite isn't going to stop watching television.  He is just going to burn off steam about the latest rate increase or the latest incident of shitty customer service.   He isn't going to stop consuming and indeed, doesn't even see this as an option.   The concert-goer will bitch and whine about Ticketmaster, but doesn't think for a moment that not going to see the heavy metal band is even a viable option.   What would his fellow head-bangers think if he didn't covet the tickets as they did?

So the airlines, the banks, the restaurant chain, the hotel chain, the credit card company and now Starbucks can change the terms of their secondary deals and people will bitch and moan and complain and then go about their business and latch onto the new deal.

Of course, there is yet one more way to manipulate the customers in this kind of situation, and I give it a 50/50 chance this will occur here.   What you do is say you are changing your deal and make the terms far more onerous than you really wanted.   People are "outraged" (if they are not, your shills in marketing generate some outrage via Twitter or Facebook) and a week or two later, you "cave in" by changing the deal yet again to make it what you wanted in the first place.   Your customers are satisfied that "their voices were heard" and you get free publicity, increased consumption, and the deal you wanted in the first place.

Hey, it worked with the New Coke, right?   Or don't you remember that whole scam?