Friday, May 31, 2019
A property management company may make managing your rental properties "less hassle" but it does come at a steep cost.
A reader writes that he is having difficulty with a tenant. He bought a rental unit and it came with a tenant already in the property. I smell trouble from the get-go. Whenever we bought a property, we always took it "vacant" of tenants. Holdover tenants can be trouble, and often landlords will sell a property just to be rid of a problem tenant.
When we bought the office building on Duke Street, there was a tenant of sorts in there. He made a list of demands on repairs and renovations he wanted, and told us how lucky we were to have him as a tenant. I didn't like the guy - he was too slick. Plus, he could not explain what his business was in ten words or less. In fact, after he went on for a half-hour about his business, I still could not figure out what it was. When I came by the property to inspect it, I saw a lot of mail piled up in the foyer, with his name on it - and several different business names - from the bankruptcy courts of three different States, as well as a litany of "past due" notices from creditors.
So we took the property vacant and forced the owner to evict him. The owner took him into his own office, subletting him space. I later found out the guy was a con artist and never paid the former owner a dime in rent - likely he never would have paid me, either.
When we bought our condos in Florida, the same deal went down. Sketchy tenants were renting and they wanted to "stay on" as full-time tenants. But we had plans to rent the place seasonally as a vacation rental (complete with dock slips) and move away from where it had devolved into a full-time rental to "Florida Man". So we took the property vacant, the tenants moved out, and only later on did I find out they were six months' arrears on the rent as it was - and had left a trail of destruction in their wake. There are people like that, who go from landlord to landlord - usually seeking out amateur landlords who don't do background checks or can be sweet-talked into taking them on as tenants. They never pay rent, and leave the day before the Sheriff shows up, usually taking the appliances with them, if not the copper plumbing. I wrote about them before - modern-day gypsies.
Holdover tenants can be just plain trouble. If you do decide to take on one, treat them as you would a new tenant - with a credit check, background check, and proof from the previous owner of regular payment of rent. But ask yourself why a landlord would sell a property with a tenant in it, when properties are much easier to sell vacant, show better vacant, and are easier to show vacant. With a tenant in place, it is hard to sell a property, so there must be a good reason the landlord is selling with a holdover tenant.
The same reader opined that maybe down the road someday they would use a property management company to manage their rental properties. This seems attractive at first, but my experience has been that these companies basically siphon off all of the profits from owning real estate. When we were in the business of renting properties, like our reader we kept everything nearby. If something broke or a property needed to be repainted to lease it, we could manage these things ourselves, either by doing the repairs ourselves (usually for a fraction of the cost of hiring someone) or if we needed to hire someone, we could manage this directly and get someone reliable at a reasonable cost. Being local to the properties and managing them ourselves meant the difference between positive and negative cash-flow. Many folks think landlords are "making out like a bandit" when in fact they would be lucky to make a hundred or two a month on a property - at considerable risk to themselves and not without effort. Oh, and the money you have to invest - that.
We still have one condo in Alexandria, Virginia. The entire 22-acre complex, adjacent the yellow line train station in Huntington, is slated to be demolished and replaced with medium-rise condos and apartments. It has taken years, but we voted to abolish the condominium, petition to re-zone the property, have a traffic study done, and then offer the property to developers. The buildings are over 50 years old and ready to fall down. The land is worth more than the buildings, much as my personal residence was (being on two deeded lots, five minutes from Old Town). So it is time for renewal.
We can sell the property now, or hang on to the end. Since we have no plans on what to do with the proceeds of the sale, it made sense to hang on to it, at least for now. If we sold the property and pocketed the proceeds, we would have a huge tax bill. We "fully depreciated" the property over the years, so our basis is zero, and thus the sales price - all of it - represents 100% capital gains. This would knock us into a higher tax bracket, present us with a huge tax bill, and also mean we would lose our Obamacare subsidy, costing an additional $17,000 or so as well.
When the time is right, we will sell the unit and do a Starker Deferred Exchange and buy a rental property somewhere else. We could then sell our current house (which would be tax-free) and then move to the rental property, eventually. And yes, this is all perfectly legal.
Anyway, since we are no longer in Alexandria, we hired a property management company to manage the place. And they do a good job, collecting rent, getting leases signed, dealing with tenant issues, and whatnot. But their fee is one month's rent every time a new lease is signed as well as a small fee ($93) for every rent check collected. In a unit with a $1300-a-month rent, this amounts to about two months' rent overall, in fees, every year.
Compounding this is vacancy. We've had three tenants under this management company, and many months of vacancy. The rental company doesn't see the urgency in getting the place rented. The also keep suggesting we raise the rent, which causes tenants to move out. I think we finally have a stable tenant - and elderly woman - who seems to like the place. Of course, she causes problems with the condo association, as she tries to feed the birds and trim the hedges.
She also smokes in the unit, which is a violation of the lease. Our property manager went berserk when he found out (or at least suspected it, from the smells). He said we should begin eviction proceedings right away! I calmed him down and pointed out that it would take months to do this, and that the tenant's daughter, who co-signed the lease, was a lawyer. So we would spend months and months in court with no rental payments, and probably lose. Oh, and the legal expenses would run into the thousands of dollars. After all, unless you have a photo of the tenant smoking, how do you prove this?
I felt this was a great way to keep the tenant - after all, not many other landlords would tolerate this, so she is comfortable there. And besides she pays the rent on time and renewed the lease. That's a good tenant. And since the place is going to be torn down eventually anyway, why worry about damages from smoking?
The property manager also suggested, after we lost our second tenant, that we repaint the condo. He hired someone and it cost a staggering $1800 or so. We had a maintenance guy who worked for cheap, but our property manager hires "name brand" plumbers and whatnot, who charge a lot more. So, for example, a simple faucet repair (that did NOT involve a new faucet) costs $300 when our handyman would have done it for $150.
As a result, we have had more tenant churn since we hired the property manager (our previous tenant, under our own management, was there 18 years) and higher maintenance costs, more vacancy, and a net loss for two of the four years he has managed the place.
Bear in mind that the only expenses we have, in addition to the property management fees, are the condo fee (which includes utilities), property taxes, and insurance. We own this property outright, and still managed to lose money in two years out of four. And by lose money, I am talking well over $1000 in a single year. On a property that is paid for.
Am I unhappy with the property management company? No. They did exactly what they said they would, and other property managers would no doubt do about the same in terms of prices and action. You can't blame them for using "name brand" maintenance staff (plumbers, electricians, painters, etc.) when they have a duty to their client (a low-cost provider might be cheaper, but if something goes wrong, the property management company is responsible, as they chose them!). And trying to get the highest possible rents - again, something in the client interest.
In retrospect, I should have fought harder to keep the rent more reasonable, so we would not have as much tenant churn. But overall, I would not recommend trying to manage remote properties at all, even with a property management company. In this situation, it is a special case, as we are "parking" this property until we decide where to transfer the basis (or until the place is torn down). Otherwise, we would have sold it long ago.
There is no such thing as free money. And easy money is darn hard to come by as well. Being a landlord is no swiss picnic. As a tenant, one might believe it is all just fun - cashing those fat rent checks and then goofing off full-time. But the reality is, you constantly have to be watching the bottom line, dealing with repairs, dealing with tenants, dealing with vacancy - and risking your credit rating, your capital, and your liability in owning properties with people living in them.
And of course, the real fun part is that the media and the politicians have painted a big target on your back - you are the mean, evil, money-grubbing landlord, worthy only of taxation and approbation. When the revolution comes, and AOC is President, you'll be the first one she lines up against the wall!
Wednesday, May 29, 2019
Towards the end of the service life of any mechanical system, repairs are only temporary in nature.
I wrote before about the Weibull curve and how every piece of equipment has a design service life. Some people find this appalling, thinking that equipment should last forever and that but-for "planned obsolescence" it would. But the reality is, everything breaks down over time, and by break down I mean revert to its original components. Steel turns back into iron oxide from which it came. Even plastics, once touted as the miracle material of the future, will become brittle, crack and turn into powder and dust over time.
We learned the latter with our microwave - now 14 years old and near the end of its design life. I was chagrined to pull the handle on the door and have it come off in my hand. Turns out the handle is mounted only to the ornamental trim plate on the front of the door. I found a video on YouTube on how to remove this piece, and using Marty's Matchbox Makeover technique of superglue and baking soda, was able to patch the plastic together. I put painter's tape on the outside of the door panel, so the superglue would not seep through. The crack has largely disappeared and the handle is now firmly in place. It works for now, but eventually - and soon - we will have to buy a new microwave, along with a new stove, dishwasher, refrigerator, and so on and so forth. If you have a microwave, be gentle to the handle - judging by the number of YouTube videos on this topic, these things breaking is quite common.
In addition to parts wanting to revert to their component chemicals, there are other forms of failure, which, over time, are inevitable. Mechanical parts will wear against each other. Electrical components will degrade. Eventually everything falls apart. As an engineer, you can try to make things last forever, but they will end up costing so much money that no one can afford them. A better approach is to make something affordable and design for a certain design life. For components that won't last that design life, you design them to be accessible and readily replaced.
For example, back in the day, a car was expected to last less than 100,000 miles. And during that time, it might need its spark plugs changed several times, the points and condenser changed almost annually, the oil change several times a year, the tires changed every 20 to 30,000 miles and so on and so forth. Going back even further in time, many cars would have a valve job done every 30,000 to 40,000 miles if not more often. Cars of that era were designed to be worked on constantly, which is why cars had a hood over the engine that could be easily opened.
I said before jokingly, but it probably will be true someday, that in the near future you'll buy a car and there won't be a hood release. Rather, the hood will be bolted in place with a sticker saying "no user serviceable parts inside!" And you won't really need to open the hood for any reason because the car engine will last for the life of the car. And if it does need service, there's nothing you could do, as the owner, to work on it.
Indeed, today, things that were replaced periodically now last the life of the car. Spark plugs can last a hundred thousand miles or more. Ignition systems are solid-state and last equally as long. Even car batteries, which once had to be replaced every two years, sometimes last as long as a decade.
And although we have made progress, cars don't last forever. In fact, they still are designed for design life of about a hundred fifty thousand miles or 15 years. If you get service life beyond that it's a bonus. But don't count on it, despite how many advertising campaigns Subaru runs.
As I noted in the Weibull Curve posting, there are two modes of failure for equipment systems. Early on in the life of an apparatus, there will be failures (so-called "infant mortality) due to errors in construction or faults in component parts. This is why we have warranties. Then, during the middle portion of the life of the apparatus, it'll be at its most reliable, as the teething pains have been sorted out and nothing is yet to wear out. That's why extended warranties are often no bargain. Then, toward the end of the life of the system, parts will start to fail, one after another, until the cost of repair exceeds the cost of a new system or item.
It's at this end of life part where people end up throwing money at equipment and end up unhappy. It first, it seems appealing - you can fix something for not a lot of money compared to the cost of replacement. And sometimes, it is worthwhile to do some repairs, but don't fall into the trap of paying money for repair after repair, when the end is near.
(Oddly enough, humans are the same way. More than half the cost of our health care system is spent on end-of-life care, spending hundreds of thousands of dollars prolonging life by mere days or weeks, often at great inconvenience and discomfort to the person involved. Odd how we use the terms "infant mortality" and "end-of-life" in both Engineering and Medicine!).
It is easy to believe that anything can be fixed, and indeed, anything can be fixed, if you throw enough money at it. People "restore" old cars, and they seem like new, but you notice those folks rarely drive them - or rarely use them as daily drivers. While a lot of things may have been rebuilt or repaired, a lot of other things are ready to fail - and parts might not be readily available. The antique car may still "work" but it is as fragile as glass at this point. It is more of a talisman of a car than a car. It is a 4,000 lb paperweight.
The other pitfall many folks fall victim to, is the "fix it for good!" mentality. A part fails on a ten-year-old 100,000-mile car. They go to the parts store or go online and find the replacement OEM part for cheap. But someone online (a shill) or a salesman at the store, offers to sell them an enhanced part for twice as much money. "This super-duper coil is made of unobtainium! You'll never have to replace it again!" they chirp. But the reality is, the cheap OEM part lasted 100,000 miles, and its replacement will last as long, or in other words, longer than the remaining life of the car. Throwing parts at an near-end-of-life car is dumb. Throwing fancy parts at such a car even dumber.
What got me started on this was that we had the HVAC guy come by to check out our system as part of the service contract. As I suspected, the system was low on charge, as it wasn't cooling as well as it used to. He added three pounds of refrigerant and the house is like a meat locker now. He pulled the access panel off the air handler (the inside part) and using an electronic leak detector, spotted a leak in the "A" coil (evaporator coil). It was the beginning of the end for this HVAC system.
A new "A" coil, on eBay is over $1200, and that doesn't include installation. From the service tech's point of view, it is a lot easier to install a whole new air handler, rather than take one apart and put the new coil in. Replacing the coil myself is a little beyond my skill and tool capability, although I now have a vacuum pump and manifold gauge set after I installed the split system in the garage.
Not only that, when you add up the cost of the coil and the labor, it is darn close to the cost of replacing the entire air handler, if in fact, a lot cheaper. Now, if you have the time, tools, and skills, it is possible to do many repairs yourself. For example, when I was at Carrier, one of the techs told me how he replaced the heat exchanger in his furnace, after it had cracked. In a gas furnace, there is a heat exchanger - basically a big metal box - that the flames shoot into. The exhaust gases go up the chimney while the air on the other side goes into your house. If the exchanger rusts out or cracks, the exhaust gases can go into your house and kill you as you sleep. Sort of like old VW Beetle heaters - which used exhaust heat to heat the car.
Anyway, he found a replacement heat exchanger and tore down the furnace and installed it himself. Since it is the heart of the furnace, he basically had to take apart the entire thing. Not a problem for a guy who is an HVAC tech with all the right tools. A little overkill for us ordinary folks. Compounding this problem is that by the time the heat exchanger wears out, it is over a decade old and odds are, no one carries the part anymore. My friend lucked out in finding one for cheap in the back room of a local HVAC distributor, who just wanted to be rid of it (because no one replaces these!).
The other problem is the rest of the furnace is 10-15 years old, and likely will fail soon. That blower fan has been running for over a decade now, how much longer will it last? In our home in Virginia, we had a Chrysler "Air Temp" furnace that the previous owner had added a heat pump to. The furnace was streamlined with a hammertone paint finish - no doubt designed by Raymond Loewy. It may have been original to the house, or replaced long, long ago. Anyway, after living there a few years, the blower fan stopped working. I took off the access panel and removed the blower (turning off the power first!) and found it filled with dust (dead human skin), cat hair, and whatnot. I cleaned it off and found it was hard to turn. But being "old school" the motor had oil caps on each end, and I dripped some 3-in-1 oil into them and rotated the fan until it turned freely.
I had some experience with this, with the enormous rooftop unit at my office, which had a similar problem. I also replaced the run-start capacitor, which gives an AC motor a little jolt to get it started (most AC motors will not start turning under their own power, when turned on, without this capacitor). I put the blower motor back in and voila, it worked. I also vacuumed a pile of rust out of the heat exchanger and realized this was an old, old furnace near the end of its design life. I went out and bought a carbon monoxide detector.
I was able to nurse that furnace along for a few more years, but I realized I was playing with fire (quite literally) in that if the heat exchanger cracked, we would all die of CO poisoning. Why are my fingertips turning blue? I finally broke down and bought a new furnace, which cost the princely sum of $1800 back then. Fortunately, the heat pump never needed much other than occasional top-off in charge.
For my rental properties, I didn't mess around - I put in a new furnace in the duplex once I realized the old one had a rusty heat exchanger. Wrongful death suits get expensive. And we eventually replaced the rooftop unit at the office, too. I had stopped using the furnace feature for some time (using the heat pump instead) as the heat exchanger was quite old.
A reader writes that his A/C unit stopped working and he went out to look at the condenser unit and realized the fan blades had rusted off. He spent $350 buying a new motor and fan, and put the thing back together. Probably worthwhile to fix, at that price, but I advised him to start saving his pennies for a new system, as eventually something else would wear out. If the fan is rusting off its mountings, one can only wonder how the coil is holding up.
Replacing parts piecemeal costs more than replacing entire systems. If you have separate service calls for the condenser fan, condenser coil, compressor, the A-coil, the blower motor, etc, it could easily add up to well over ten thousand dollars - and the resulting system, being worked on so much, would be less reliable. You could install a whole new system for less than half the amount, in many cases - the labor is far less and the parts cost, overall, is far less. And the result would be a more reliable system (assuming you get past the warranty/teething pain period).
Sadly, a lot of people don't get this. I wrote before how the guy I bought my Fiat from got frustrated by repairs. Trying to be "cheap" he paid only for what broke each time he took it in. So the left front lower ball joint was bad - he replaced that. The next year it was the right front upper ball joint. And so on and so forth. He ended up paying two or three times as much as it would have cost to just replace all the ball joints at once. And it goes without saying that people with no mechanical skills have no business owning a 20-year old Fiat.
The air conditioner is working for now. I am going to get quotes for replacement, and probably will replace the entire system. Replacing only piecemeal parts (the air handler, for example) might be short-sighted, as eventually the compressor will fail and the condenser coil will leak. Also, if I had to sell the house, it would be easier to sell with a whole new system, instead of some piecemeal replacement. And I likely would replace the refrigeration lines at the same time, even though the tech claims they are "just fine the way they are."
But depending on how slow the leak is, I may not replace it right away. And I may look into my idea of replacing the system with split systems, although I suspect that will be more costly, even if I install these myself. In addition, it might make the house seem quirky. There are some folks here on the island, who, as they got older, ran out of money. When the HVAC system crapped out, they could not afford to replace it, so they put window units in a number of rooms (which are only a few hundred dollars apiece). While this worked fine for them (and since they left the island feet-first, and didn't give a rat's ass about resale value) it doesn't help the resale price of your house.
Of course, it may be possible to just keep putting refrigerant into this system, and then getting naming rights for part of the ozone hole above the Antarctic. A friend of mine is facing a similar problem, and since he lives "paycheck to paycheck" he cannot afford a new system. "I can put a lot of refrigerant into it, $300 at a time" he says (and that is what the techs are charging these days, with labor), "until I can afford to pay for a whole new system!" It is like the lady we met who paid $6 a day for the parking permit, for over a week, because she could not "afford" a $45 yearly pass.
R-22 refrigerant, which our current system uses, is going to be phased out. But you can still buy a 10-pound can of it on eBay for under $200. I suppose I could buy some, and with my manifold gauge, keep topping off this system for another year or so. But it is just delaying the inevitable.
Owning a house is so much fun! Now you can see why I like the idea of living in a Park Model. When the A/C craps out, you just go to WalMart and buy a new window unit for a few hundred bucks.
Tuesday, May 28, 2019
Nationalism and Conservationism are not just phenomenons in the United States, but worldwide.
In a recent Op-ed article in the Washington Post, a writer opines that if things get much worse in America, he is going to move overseas. He is tired, he says of the xenophobia and saber-rattling in the United States. But the punchline is the place he wants to move to is the United Kingdom. Good thing there's not a lot of xenophobia in that country! Oh, wait... Brexit.
There is a mythology on the left that the election of President Trump is some sort of American aberration. But if you look at what's going on worldwide, you see that this move to the right is not limited to the United States, but is in fact prevalent worldwide. Nationalism has taken hold in many countries across the Western world - and some of the Eastern as well.
This is not to say that conservatives and nationalists are in the majority, only that they are on the ascendancy. Recent elections in the European Union have shown gains for nationalist parties. And of course, in the United Kingdom, the Brexit movement is an ultimate expression of nationalism - rejecting the internationalism of the European Union in favor of God, Country, and the Queen.
Similarly, many people on the left argue that the issue with migrant caravans on our Southern border is somehow unique to the United States. But yet this migrant issue is one that is occurring worldwide. People are fleeing war-torn and impoverished 3rd world countries for a better life in Western countries. Not only are migrants coming to America, but also to Europe and even Australia.
It seems that every Western country is having to deal with this migrant influx problem, migrant detention camps, and treatment of migrants. And it is a tricky question. Do you send these people back to where they came from, do you grant them asylum and citizenship - or at least a green card? Do you provide them with food, shelter, and clothing? It seems like the humanitarian thing to do - or by doing so, do you attract more migrants?
Western democracies have historically been very generous in trying to help out displaced peoples. Of course, there are exceptions to the rule, such as back in 1942 when America sent back a shipload of Jews after refusing them entry into the United States. They all ended up dying in the concentration camp. We're not very proud of that moment.
But of course, back then we were not alone in this migration problem. Many other countries also refused refuge to Jews, or were actively involved in persecuting them. It seems that these waves of liberalism and conservatism follow one another throughout history. People and societies go off in one direction until they go too far, and then the swing occurs in the other direction.
And like with a rubber band, The more you pull back in one direction, the more it's going to hurt when you let go. If a pendulum swings wildly one way, it will swing wildly the other. And today it seems that people want this swing effect. Ultra left-wing liberals who are advocating things like slave reparations, guaranteed annual income, debt forgiveness, free college, and whatnot are hoping that right-wing leaders will be elected and enact extremist policies so that their liberal solutions will appear rational in comparison. They secretly hope that the economy will melt down so that people will grasp for any lifeline.
Sadly, the swinging pendulum effect means that nothing actually gets accomplished. On the far right, whether it's in America or in Europe or Australia, people argue that migrants should be shut out of their country. Countries that were formerly considered liberal such as the Nordic countries are finding out, with alarm, that they are no longer monocultural.
It always cracks me up when someone from a monocultural country criticizes the United States. My friends in Sweden in Japan will tisk-tisk while they muse about the racial problems in the United States. But until recently, Sweden was 100% blond-haired and blue-eyed and Japan was 100% Japanese. You don't have many racial relations problems in countries that are all of one race.
It's also a lot easier to get everyone to pull in the same direction when they have the same cultural and social values. Thus, a lot of far left-wing social programs will work in countries where everyone is alike and thinking on the same page. You can provide cradle-to-grave socialism in a country like that, because people are motivated to work by cultural values. If you have a diverse culture, and have segments of society that don't have those values - people who feel perfectly acceptable living off society - the entire thing falls apart in short order.
In that, in a nutshell, is why America doesn't have generous social welfare policies and programs as many of our European neighbors do. We are a multicultural society and an immigrant society, and not everyone believes in traditional American cultural values of hard work and perseverance. If we created a European-style welfare state here, half the country would go on the dole.
With migrants, the problem is even worse. Many don't speak the language or have any job skills that a modern industrial Western country can use. Somebody walks all the way from Somalia and then swims across the Mediterranean and arrives in Europe - then what are they going to do? They can do little more than go on the dole and live in an apartment and watch television all day long.
With no technical skills, they only qualify for the most menial jobs. They see others around them with apparent wealth and become incensed. As a result, they turn toward radicalism such as radical Islam. And this is what we've seen in France, where are legions of unemployed Algerians have settled in that country and some have turned to radicalism as a means of salving their discontent.
While the right-wing has made advances in Europe and America and other Western countries, they still don't represent the majority of opinion. But then again, conservatives rarely do. And in particular, the far-right never represents popular opinion. The Nazis came to power not with a majority, but with by force. And many people are willing to go along with this because the alternative - Communism - was considered far worse.
Across the Western world, people are embracing right-wing politics not necessarily because they believe in fascism, but that they see that liberal democracies have failed them. When liberals promote ideas like open borders and free asylum for everyone, many people get nervous. When liberals promote ideas like free money for everyone, many more people get nervous, particularly those who are paying taxes.
And that is the conundrum right there. In an era where far-right politics are in the ascendancy, far-left politics are also finding great currency. All of the ideas pushed by Bernie Sanders are not novel, but are similar things that are being discussed in Europe. Many countries are "experimenting" with guaranteed annual income, which is to say they are taking people's money away from them and giving it to randomly selected people as an experiment.
If you were to go back in time to the 1950s and tell people this is what would happen in the next century they wouldn't believe you. "What do you mean you're just randomly giving money away to people?" they would say, "That makes absolutely no freaking sense whatsoever!" What would make even less sense to them was the idea of giving everybody free money.
So, in the same pattern as we saw in the past, I think the conservatives will achieve gains in the near future not because people find their programs have great currency, but rather that the alternative is so outrageously liberal that they are at least willing to go along with a more conservative government to avoid the liberal alternative.
And this is true not just the United States but in Europe, Australia and elsewhere. This is not a national, but a worldwide trend.
Thus, the idea that you can move away from the United States and get away from these trends is somewhat laughable. It's also very childish, this sort of temper-tantrum politics, where the author is threatening to leave the United States unless people elect a candidate to his liking. Many people have threatened this in the past, claiming they will move to Canada if Bush was elected or Trump was elected or fill-in-the-blank was elected.
But when push comes to shove, most remain in the United States, or the ones that move to Canada find it's not all that much different. In fact, it seems that most of Canada lives in the United States half the year, or at least that seems to be the case, judging for the number of Canadian license plates we see driving by our house on I-95.
And then there is the other irony. If this young man decides to move to the United Kingdom to escape America, not only will he find the same politics going on there, but he'll find himself another unwelcome refugee in that country. While most Britons are very courteous and welcoming people, there is a loud minority of xenophobes that will undoubtedly make him feel uncomfortable on more than one occasion.
Maybe - just maybe - the solution isn't to leave your country or to vote for extremist politics of one kind or another. Perhaps maybe a more centrist moderate government that embraces realistic solutions instead of right-wing or left-wing jingoism is the answer.
Sadly it seems that's an answer nobody wants to hear.
Monday, May 27, 2019
Polls and surveys are a waste of time.
As I noted in a recent posting, companies are using something called "net promoter score" to justify raises for executives. We are exhorted to take surveys and let them know what our feelings are. The reality is, they really don't care about our feelings, so much as they want a high score so they can get a big bonus. Sadly, this high score doesn't necessarily mean they want to provide better customer service. Rather, the sales people exhort us to give them "all tens" on the survey, pleading with us not to take the food out of the mouths of their children. Guilt, what's not to like?
There are plenty of other types of bogus surveys as well. Push-polls are classic example of this. They came into being in the 1980's or so and are still popular today. Political types call up and ask you for your opinion on things, but they really aren't so much interested in gauging your opinion as in influencing it. So instead of asking your opinion on Hillary Clinton, for example, they will say "Would you still vote for Hillary Clinton knowing that she's organizing a pedophile ring in a pizza store in Washington DC?"
It's a variation of the classic loaded question, "Are you still beating your wife?" You can't answer the question without admitting to being a wife beater. Some of these push poll questions put presuppositions into the questions, which are assumed to be true and not up for discussion. You're not asked to answer whether or not these allegations are true, but whether or not you support the candidate based on these "facts." It makes it impossible for the responded to say, "Hey wait a minute Hillary isn't running a pedophile ring out of a pizza shop!" - because that's not one of the answers you're allowed to give, on a scale of one to ten.
Others use these sort of push-polls to advance an agenda or "prove" things they set out to prove. As I noted before, a lady sent out a survey here on our island asking us about how we felt about turtles and trees - with five pages of questions (they often ask the same question in different ways, to try to tell whether we are lying or not). I suspect the "conclusion" of the study was determined in advance, and no matter what the result of the survey, anything we said could be used against us in the court of public opinion.
Recently, I received two survey requests via email which were not push-polls or attempts to raise some executive's net promoter score. Rather, they were just bald-faced marketing attempts, disguised as surveys. And this is not the first time this has happened to me.
The first one was from the Wall Street Journal. The Wall Street Journal is now a Rupert Murdoch publication. I'm just guessing, but their circulation is probably down since Murdoch took over, as the paper has taken on a decidedly right-wing slant. There is a mythology in the news business that there is a huge appetite for right-wing news in this country. But I think Fox News has that sort of thing cornered already. When it comes to financial news, I think people in the money business want impartial perspectives, not cheerleading for one political opinion or another. If your raw data is skewed, you can't make rational market decisions. Act rationally in an irrational world. If you invest based on data from a Murdoch publication, well, you likely will go broke.
The other problem for newspapers is that so much of the content is freely available online, why would you bother to pay to access articles or to get a print subscription? That was the point of the survey - to try to get me to pay for online access and a print subscription.
I kind of figured it was a bogus survey, but I thought I'd take it just to see where it went. I took it several times, giving different answers to see where the responses went. It starts off innocuously enough asking what year I was born, what my profession was, the first three digits of my ZIP code, and so forth.
The first time I ran he survey, there was a question early on asking whether or not I would subscribe to the Wall Street Journal. When I said "No" to this question, the survey bombed out, telling me that I wasn't "eligible" to take the survey. I found this rather humorous as the premise of the email they sent me was that I would be entered into a contest to win $500 if I took the survey, but that no purchase was necessary. But apparently a purchase is necessary in order qualify for the drawing. I think the Wall Street Journal is breaking some sort of law here.
The next time I took the survey, I answered "Yes" to the question that caused it to bomb out the last time, when I had said "No." It then went on to ask me about various publications such as the New York Times, The Washington Post, The Economist, and of course the Wall Street Journal. They wanted to know whether I've heard of these, whether we subscribed to them, or had subscribed to them, or whether I buy them at the newsstand, or read them online, or whatever. Again this seemed pretty straightforward stuff.
But then the survey took a bizarre turn, asking me how much I'd be willing to pay for a subscription to the Wall Street Journal and then offering several packages of combinations of print and online access at various prices. The funny thing was, the range I gave that I would pay for a subscription was from $4.99 to $5.99. The cheapest subscription package they offered started at 32 bucks and went all the way up to $65.
The survey then got stuck in an iterative loop where it kept asking me to rank the different subscription packages. No matter what I answered, it kept asking me again and again to rank different subscription packages and whether or not I would subscribe to them. As long as I hit the button saying, "I'm not going to subscribe" it kept in this loop. Finally, I indicated I would subscribe, and then it went to a page asking me if I would like to subscribe today. When I said no, the survey bombed-out and said I wasn't eligible to take the survey.
But of course, I had an inkling going in, that this was exactly what they were going to do - try to sell me something. It wasn't a legitimate survey, and you can sort of tell by the smarmy way they presented it in the email. The only reason I answered the survey was as an experiment for this blog. And no, I'm not interested in getting more right-wing news from The Wall Street Journal.
A second survey request arrived via email from Credit Karma. I had signed up for Credit Karma a long time ago as part of another experiment for this blog. Back then, there were very few sites that would give you a credit score. Credit Karma, according to some sources, doesn't actually do this, but infers the credit score from your credit report. However, in the days since Credit Karma started, more and more companies are offering credit scores for free. Most credit card companies offer to give you your credit score several times a year, and most banks do this as well as part of a package of benefits for better customers.
It's sort of funny, only a few years ago, the credit reporting agencies acted like your credit score was some sort of deep, dark secret that only they could know. But today, the data is blasted all over the place, and has little or no value. Soooze Orman's FICO kit is now utterly worthless.
I didn't bother taking the Credit Karma survey, as they tipped their hand in the emails as to what it was about. They want to know why I wasn't using Credit Karma to do my taxes. Apparently, doing taxes electronically is a pretty lucrative business. The folks at TurboTax have been quite happy I used their service for many years, but the prices have escalated, it seems, with each passing year. When my father passed away, I used his accountant to file a tax return for his estate. I asked her how much she would charge to do my personal taxes, and it turned out she was cheaper than TurboTax. Since then, I've been using her services as it seems like it's a lot easier to just hand somebody all of your 1099s rather than enter all this data by hand on a computer.
But again, what was interesting was that they were trying to sell me their tax service, disguising the sales pitch in the form of a survey. Apparently people like to take surveys, and the internet certainly is abound with all sorts of pitches for surveys. I noted early on in this blog that surveys are a waste of time and no, you can't make money taking surveys. A plethora of websites are out there claiming you can actually earn a living taking surveys, because companies are so direly interested in what our opinions are, that they will pay us for this information.
But nothing could be further from the truth. First of all, surveys are wholly unreliable way of acquiring data. Second of all, companies have much better ways of acquiring data than using surveys, particularly today. People lie like a rug on surveys, but actual sales data and preferences tell the real story. As I noted before, when surveyed, 70% of Americans claim they pay off their credit card every month, but the credit card industry data shows that 70% carry a balance. Clearly survey data is inaccurate almost half the time. Why bother taking a "survey" when you can acquire the real data for free, with the click of a mouse?
People vote with their pocketbooks, it is said. And when people buy things, that says more about their actual preferences than what they claim in a survey. We all lie to ourselves as to how much we spend on things that we shouldn't be spending money on. Or we claim to be spending money on things that are good for us, when in reality we don't use those things as much. We will claim that we're not wolfing down french fries, but instead eating spinach. Our credit card receipts tell a different story.
With the advent of social media and online buying, this actual purchase data has become even more profound. Twenty or thirty years ago, a large portion of our purchases were made with cash. It was a lot harder to tell what people were buying, other than by gross sales amounts. We could figure out how much of the product was selling, but not who the customers were, or why they bought.
Credit card data tells us general information as to what categories of shopping people are buying in. But online purchases tell us exactly what individuals are buying, and this data is very valuable. When you buy something on Amazon, Amazon not only knows what you bought, but who you are. And this information is stuff that can be sold to third parties at a profit. Not only that, they can figure out what triggered you to buy by knowing your browsing history. Did you buy that new widget after seeing a YouTube video about it, reading about it in the news, after hearing about it in an online discussion, or on Facebook? Once you know these triggers, you can manipulate more people into buying. Or so goes the theory, anyway.
Despite all this, America has almost a religious-like belief in surveys. Even after the election of 2016, when polls and surveys show that Hillary Clinton is now our President, people still look to surveys for salvation. Democrats pull up survey after survey showing how unpopular President Trump is, or how we don't like him, and how he can't possibly win the next election. They also pull up surveys saying that the vast majority of Americans want socialism, if not outright communism - and that we all support things like free college, debt forgiveness, slave reparations, and guaranteed annual income.
I think once again, Americans going to a rude awakening as to the reliability of survey data.
There is little point in taking a survey or responding to a poll. Often, the people making the surveys or polls have an agenda and want to use your data to advance their own agenda. In commercial applications, surveys and polls are little more than means of trying to sell you products or for trying to aggrandize some executive with a net promotion score. No matter how you slice it, there's very little benefit to you, the consumer, in taking a survey. And in fact, there's a net negative benefit in that you're wasting your time and handing out your demographic data to God only knows who.
Sunday, May 26, 2019
Someone craps on your lawn, leaves dirty needles on the sidewalk, and then breaks into your car. Are they the victim or the perpetrator?
A recent article online tells of a Target store in San Francisco locking up the tents behind glass cases, because they were being shoplifted by homeless people. What is interesting about this story is that people take away two lessons from it. The first group - the self-righteous shamers - posit this as a "mean" act by Target. After all, the homeless have to have somewhere to live, right? And shouldn't Target provide free tents?
The rest of us, who are more rational, realize that a computer program at the Target main office detected abnormal "shrinkage" in the camping department and issued an order to lock up these high-theft items. In different stores, different items are locked up, depending on shoplifting trends. You can't blame a business for trying to prevent theft. Or can you? Some folks would argue otherwise.
The article goes on to state:
In San Francisco, an estimated 7,499 people were homeless in 2017, according to a point-in-time count. The city has long run out of shelter beds to keep them. Tent cities are forming in alarming numbers, spreading from parks and underpasses to tourist-magnet neighborhoods.
The Target Metreon store is located in a neighborhood that's close to the Civic Center and the Tenderloin — where needles, garbage, and feces are found in concentrations comparable to some of the world's poorest slums, according to a report from NBC Bay Area.
In December, the San Francisco SPCA, an animal welfare group, put a security robot to work outside its facilities in order to prevent homeless people from setting up camps along the sidewalks. The group said the number of camps dwindled and there were fewer car break-ins.
But the move drew sharp criticism from people who said the SF SPCA showed a shocking lack of compassion for its homeless neighbors. The group quickly pulled the robot from the streets.
We are seeing a rise in diseases like cholera and dysentery in the United States because drug addicts are living under bridges and shitting on the ground. And we are told there is "nothing we can do about it" because anything other than sending a firehose of money to some non-profit group is just plain "cruelty."
According to one recent story, San Francisco is proposing hiring people to go around and clean up shit left by the homeless. And by shit, I don't mean their garbage, but fecal matter. Sounds like a fun job - and a neat way to make $184,000 a year. And people say there are no opportunities left in America today.
According to one recent story, San Francisco is proposing hiring people to go around and clean up shit left by the homeless. And by shit, I don't mean their garbage, but fecal matter. Sounds like a fun job - and a neat way to make $184,000 a year. And people say there are no opportunities left in America today.
But what about the homeowner who is struggling to pay a mortgage and raise a family? The guy who goes to work every day and doesn't do drugs, whose kids are finding needles on the lawn? Well, fuck him, the bourgeoisie middle-class schmuck! That's what you get for playing the game by the rules.
The population of San Francisco proper is over 800,000 people, meaning that the "homeless" account for less than 1% of the population. This is not to say we should shit all over them (they do a good job of that, themselves) because they are a minority, but rather we should not let the actions of a disturbed minority dictate the actions of 99% of the population. It also puts the homelessness "problem" in perspective. Quite frankly, given the alarmist articles on the Left, I thought the population would be much larger than a few thousand.
I mentioned before in my posting about Cats and Dogs - as well as squirrels - that people are like animals, and will revert to a feral state when offered the opportunity to do so. We all will wallow in our own crapulence if allowed to. It is the need to make a living, pay our bills, and conform to "society" that force us to get up every morning, shower and shave and get dressed and act like normal human beings.
But some folks, either due to mental illness or mental weakness, just say "fuck it, I'm going to live under a bridge, steal shit, and do drugs all day long!" And you can feel sorry for them, but to some extent, they are making choices - or at least some of them are. I think for too long, we have used this canard of "addiction" to give a pass to people and let them do just whatever the hell they want.
And 12-step programs are not much help. Even the "success" story from the 12-step program emerges as a crippled adult, complete with an excuse for his behavior, the moment he decides to "fall off the wagon" and basically annoy the shit out of everyone else. Yes, kicking a drug habit can be hard - but not impossible. People do it all the time - often without expensive "treatment centers" which cater to the need for attention.
As with mental illness, often the "cure" for addiction is to throw gasoline on the fire. As I noted in another posting, mentally ill people are often very selfish - viewing the rest of us as wallpaper. The "cure" of psychotherapy is to have the patient sit down with a doctor and talk about himself for an hour - more introspective thinking, rather than external thinking. I've known several "crazy" people in therapy, and it always seemed to me that the therapy made things worse - it fanned the flames of narcissism even further.
"Re-hab" works the same way. Who doesn't want to go away for a three-week spa vacation? You get all this attention, special treatment, and you are the victim here. When you get out, well, boredom. No one pays attention to you, now that you are "cured". So you re-lapse, and maybe this time, some friends and family members will stage an intervention! Some fun!
I don't think it is a bad idea to be strict with people and to set rules and boundaries - people actually crave boundaries. It is OK to tell people the can't live under a bridge and shit on the sidewalk. Our rights as citizens trump their rights to be drug addicts. And if this means institutionalizing them or jailing them, so be it. If you can't take care of yourself, then the State should take care of you.
Or, we can let a tiny minority of people just do whatever the fuck they want to do, and the rest of us have to pay the price in terms of disease, crime, lower property values, and unsafe streets.
I think there are other choices.
It's that time of year. Is your air conditioner ready?
In more and more parts of the country, air conditioning is becoming a necessity for modern living. May be part of this is due to global warming, I'm not sure. All I know is when we lived in central New York in the 1970's we didn't have air conditioning and it very rarely was hot. There might have been two or three days in the summer where it was hot during the day but it was always cool in the evening.
When we moved back to Central New York and bought our lake house near Ithaca, it was very warm and the house had only one split system in the kitchen area. We quickly added three more split systems plus two portable air conditioners to keep the house cool.
The original owner who built the house didn't even plan for air conditioning, thinking incorrectly that air conditioning wasn't needed in central New York. Well, that was then, this is now. And it gets hot even up North.
In the South, it's not even an option. Temperatures can rise into the 90's and even over a hundred and you need to have A/C in order to just be comfortable. For some folks, it could be a matter of life and death.
This time of year, they turn on the Georgia furnace, as I call it. The pretty green "realtor grass" that I plant during the winter dies almost overnight and turns into a crunchy mass under foot. When the first 90 degree day comes, the grass all dies in unison.
Central air conditioners have a design life of about 15 years or so. You can get more life out of them, and sometimes less, depending on how well they're made and how well they're treated. It's not a bad idea to have a service contract with your local HVAC contractor. They'll come out twice a year usually and check the system to make sure it's working properly before heating season and before cooling season begins.
They will check the functionality of the unit, either by checking the charge level with a manifold gauge or, increasingly, by using a temperature sensor in the discharge of one of the air ducts. Both techniques can tell you the level of charge and how well the machine is functioning. Generally speaking, the discharge temperature of the ductwork should be 16-22 degrees less than the return air temperature.
Generally too, they will check to make sure the condensate line is draining properly and if you have a condensate pump that it's functioning properly. And usually they change the air filter as well.
Some of these things you can do yourself, and you should do them in addition to having the service contractor do it. We generally change our air filter about once a month or so if we've been using the air conditioning or heat. Sometimes we leave the fan in the "on" position to circulate the air more evenly throughout the house. Also, during pollen season this tends to draw the pollen out of the house and into the air filter.
We purchased HEPA type filters online and buy them by the box load. Thus, its inexpensive to change out the filters once a month and throw the old ones away. And the old ones definitely turn gray and collect a lot of dust and pollen. If you don't change these filters frequently, they can get clogged and restrict the airflow to the air conditioner.
Some air conditioners or furnaces come with fiberglass filters and these filters are also sold in retail stores. These don't perform as well in filtering out dust but they do have less resistance to airflow. One problem with the HEPA type filters is they can restrict airflow to the air conditioner, which is why they should be changed frequently as they can clog more easily.
It is tempting to buy a super HEPA filter with a very high filtration rate, but these usually create more restriction to air flow. If the air flow is restricted across air conditioning coil, the system might not cool your house as well, and it might short cycle on and off which might not be good for the air conditioner.
In humid climates such as on the East Coast, when air flows across the evaporator coil in the air handler inside the house, it goes below the dew point and water condenses on the coil. This water drips down into a pan and drains out through a condensate drain. In some applications this drains to the outside of your house using gravity flow. In other applications, a condensate pump is used to pump water out of the drip pan.
If the condensate drain backs up or the condensate pump fails, water may accumulate. If this water overflows the pan, it may spill out and ruin your carpet or flooring. It is a good idea to make sure the drain is flowing properly and/or the condensate pump is working properly.
In our house, we have a condensate drain which uses gravity flow. There is a removable section of pipe that can be pulled out so that warm water or soap or other materials can be poured in to clean out the condensate drain. Over time, the slow drip of condensate water can cause an accumulation of mold, mildew, and bacteria which sometimes clogs this pipe.
We pour hot water down the pipe using an electric kettle and sometimes soap to clean out the bacteria, mold, and mildew. One reader suggested pouring a small amount of mineral oil down this pipe as it lubricates the pipe and prevents the formation of mold and mildew.
A washing machine lint trap on the outside is a good way of keeping bugs and snakes out of your condensate line.
If you have a condensate pump, I would be careful with trying these techniques as hot water or aggressive cleaning agents could damage the pump. Talk with your HVAC contractor and ask him the best way to clean the condensate line. as well as the pump itself.
If you have a thermometer or temperature sensor, you can monitor the output temperature of your air conditioner and get a rough idea as to the charge level and performance of the machine. Again, the discharge temperature should be in the range of 16-22 degrees less than the return air temperature, when it is functioning properly.
We've noticed on very hot days, our attic gets very warm and the ductwork passing through the attic tends to heat up the air from the air conditioner. Thus, on a very hot day sometimes the air conditioning system doesn't work very efficiently. Attic fans are one way of cooling down your attic, but they can either start fires in your attic, or of one starts, fuel the flames by drawing more oxygen into the fire. There are no easy solutions, it seems.
One of our goals is to replace the ductwork in the attic, which is eight inch round ductwork covered with fiberglass insulation that was installed in 1969. No doubt this ductwork is also filled with dust and God knows what else. There are companies that, for a fee, will clean out your ductwork by removing the registers and running various sorts of vacuums and cleaning devices through the ducts. It is possible to clean these ducts yourself if you have a long vacuum hose and a lot of patience. I was able to clean the ducts in our house on Washington Road by attaching a piece of sump pump hose to the vacuum cleaner and slowly feeding it down through the ducts, after removing the registers. The house was built in 1949 and you can only imagine what I vacuumed out of there. Disgusting!
After 30 or 40 years though, you might want to think about replacing some of these ducts if they are readily accessible. More modern ductwork might be better insulated than the stuff that was installed in 1969. I plan on looking into this shortly. We might take this opportunity to add a register in the kitchen area, as it gets warm there.
Most air conditioning systems have two components. There's an indoor component which comprises an air handler with an "A" coil, known as the evaporator coil. The compressed refrigerant evaporates in this coil (after going through an expansion valve) and cools down the air which is circulated by the blower fan. The cooled air then passes through the ductwork throughout your home. The outside portion contains the compressor, which receives the expanded gas from the evaporator and compressors it back to liquid, which heats up the refrigerant. The hot refrigerant is then cooled off, using an outdoor coil and fan to remove the excess heat. The net effect is to pump heat from your house to the outside.
Many air conditioners are indifferently installed. Our air conditioner was placed on a plastic pad which itself was placed on top of a concrete pad, which had supported the air conditioner that was installed when the house was built. Over the years, this concrete pad had sunk to more than six inches below ground level and also took on a tilt. As a result, dirt was getting into the air conditioner and causing problems. It also made it a pain in the ass to work on the unit, as it was "down in the dirt" quite literally. I managed to jack the pad up using hydraulic bottle jacks that I found in a dumpster at the campground. I used concrete pavers wedged underneath the pad to hold it in place and back filled with soil. The air conditioner is now above ground level and level as well. I put some pavers around it, as well, so I no longer need to mow so close to the machine (which causes it to suck in grass clippings). I also added a piece of lawn edging on one side to try to divert at least some of the water and pine needles away from the unit.
The inside of the air conditioner was filled with pine needles which I vacuumed out. This is probably a job for professionals as it involves shutting off the power and removing at least a portion of the casing, in this case the fan housing, to access the interior. It's very easy to damage the equipment if you're not careful. If you break the refrigerant lines or cause a leak, it means an expensive service call or even damage to the compressor. So while I do this sort of thing myself, I don't recommend it to others.
For me, it was just embarrassing, as a former HVAC technician, to have a condenser unit sunk into the mud looking like trash. I took this opportunity to paint the service disconnect box (which was getting faded and rusty) and replace the pipe insulation on the suction line (which had rotted off) and paint the "filter/dryer" whose paint rusted off long ago. The main power conduit was also sad looking, so I split a section of sump pump hose lengthwise to cover that. And yes, I even waxed the cabinet with some car wax. It looks neat and clean now, and maybe the HVAC tech will do more than merely glance at it, when the service call us due.
One problem I still have is that the refrigerant lines (and condensate line) are below grade. The house has settled over 50 years, as most houses do, and these lines exit right at ground level. If I had it to do over again, I would have mounted the unit on a platform off the ground, which would protect it from flooding (should that ever occur) and install new refrigerant and condensate lines (perhaps with a condensate pump) well above ground level.
Another issue is that our air conditioner was placed under the eaves of the house and the rain was flying off the roof and into the air conditioner, bringing with it pine needles from a neighboring tree. One of the HVAC techs recommended placing a "C" channel underneath the edge of the shingles on the roof to divert this stream of water as well as the stream of pine needles. This has cut down on the amount of pine needles entering the air conditioner.
All that being said, these things only last so long, as they are usually designed for 15-year design life. Some of the older units were more robustly made. We had a York air conditioner Virginia which had solid copper coils and fins and lasted well over 20 years. Our current unit has aluminum tubing with what's called a "spiny fin" coil which looks like Christmas tinsel. The spiny fin coils are very delicate and you can literally blast the fins right off with high pressure hose . However the spiny fins are very efficient when they're new, but as they clog with dirt over time they lose efficiency. They can be cleaned - carefully - with special cleaning solutions.
The big problem is corrosion. Particularly in saltwater environments, the salt attacks the aluminum and eats through it, which causes refrigerant to leak out. Trying to repair or patch these things is problematic. Usually it's a good idea to just replace the entire unit at this point.
And in that regard, it pays to shop around. Several contractors have quoted outrageous prices for replacing air conditioners. Down here in the South they tend to look at Yankees as being clueless ignorant fools. I think also there is a mindset that they need to get revenge for the loss of the Civil War, and taking money from Yankees as one way of doing this.
So it pays to shop around and think carefully before you jump. When your air conditioner breaks during the middle of a heatwave, it may seem like a panic mode situation - that you have to immediately replace it. However, being in a panic situation is never advantageous to the consumer. It might be worth your while to purchase a small window unit to keep your bedroom cool while you think about what your options are replacing the main HVAC unit.
Hopefully, we don't have to do this for many years. But given that our unit is 13 years old, it probably will be need to be replaced in the next 5 to 10 years at the latest. And we have budgeted for this eventuality, along with the eventual replacement of other appliances in our house, as well as the roof and driveway, floor coverings and paint.
I have thought about perhaps replacing the unit with a series of split-system units, as I could install these myself and they would provide zoned cooling to each room in the house. They are also quieter and more efficient. Since the air doesn't go though the hot attic, they tend to be a little more efficient. But the overall cost of such an installation would be daunting, and having a half-dozen condensate lines to check and clean would be quite tiresome as well.
Owning a home is so much fun!
Friday, May 24, 2019
Are Millennials the most put-upon generation of all time? Hardly.
I was watching a YouTube video and made the sad mistake of reading the comments section. Like clockwork was a comment supposedly from a "Millennial" claiming that their generation had it worse than any previous generation before them. This may come as a surprise to people who lived through the Civil War, the Great Depression, World War II, or Vietnam. Lucky Bastards! Even the "malaise" and "stagflation" of the 1970's and early 1980's presented worse economic conditions than we see today.
The Millennial complaint? Student loans that they signed up for voluntarily are hard to pay back! And often those loans are for amounts less than the 38 grand that I paid back, which today would be over 50 grand. Of course, others signed up for even more debt - sometimes over $100,000. But again, this is a choice, not a mandate. I worked my way through college and law school - all 14 years of it. You don't see me bitching about what a raw deal I got.
But I suspect that most of the "Millennials" don't feel so put-upon. First of all, categorizing an entire generation or group of people and slapping a label on them and claiming they are all alike is just idiotic. In a recent article in the Washington Post, the author claims that Millennials are destroying venerated San Francisco, what with their newfangled technology companies and high salaries.
So, depending on what day it is, or what new trend you want to blame on Millennials, they are either layabout slackers who are living in their parents' basement, or high-salary tech geeks who are systematically destroying "real" America through hyper-gentrification. Drug-addicted homeless people are forced to shoot up in the streets - it has gotten that bad! Bottom line, Millennials are responsible for everything bad - they probably started this whole global warming thing, too (they seem to harp about it enough, right? Maybe if they shut up, it would go away!).
But like so much else, all of this is a lot of hooey. People like to paint groups with a broad brush to make political points. And others want to divide us from one another in order to achieve their own nefarious ends. Much of the below-the-radar commentary on social media is generated by people with political ends. Russia has a whole industry designed to spread false stories or just negative comments designed to get people depressed and angry. And telling people they are put-upon is the easiest game in the book - even people living in the wealthiest country in the world.
Getting back to student loans, recently, the commencement speaker at Morehouse College promised to pay off every graduate's student loans. While this seemed like a nice gesture, it raises a lot of thorny questions. To the student who borrowed $200,000 to get a graduate degree (as profiled in one article) this is a huge payday, and a corresponding huge tax bill - probably around $60,000 or so, with State and Federal Taxes. Yes, debt forgiveness is taxable - as I noted before, if it weren't we'd all pay each other by giving each other loans and then forgiving the debt, and the IRS would be sucking air. So, odds are, the fellow with the huge debt will have to borrow money to pay the IRS - or be in default on his taxes. Some fun.
To the guy who borrowed "only" 50 grand, he's probably thinking that maybe he should have borrowed more money instead of working nights and weekends to help pay his college costs. The guy who worked full time and went to night school probably feels totally ripped off, as he could have racked up huge debts and gotten them paid for, instead of working his ass off and getting lower grades as a result.
There are other conundrums as well. What about the guy who has no debt, but only because his parents mortgaged their house to pay his tuition? Or the parents who borrowed money through other means? Does this get-out-of-jail-free deal cover government student loans or also private ones? How about the people who graduated last year or next? Or the guy who dropped out because he couldn't afford college? They just get a fuck-you-on-a-stick?
And does this guy really have the money to back this promise up? Because if he makes this promise and then fails to deliver on it, that is even more cruel. But we'll have to wait and see.
Seems like a nice thing, giving away money. But it creates a lot of problems as much as it solves them. When you selectively give away money to random people, (such as these "experiments" in guaranteed income, where random people are handed cash - other people's cash) it creates an awful lot of issues. Not only that, but when you make things free, it discourages people from working hard to obtain things. Scarcity is necessary, in any economy, in order to make it work.
But are Millennials really put-upon? Does each generation have it worse than the one before? By some yardsticks yes, but by most, no. As the population of America increases, land becomes more scarce and valuable. I cannot afford to live in the house my parents owned, to be sure. Of course, it was a house they bought at the height of my Father's career, after working 30 years or more. And in retrospect, I realize they were stressed financially to own it. The folks they sold it to perhaps even moreso, as the taxes have skyrocketed. Do I feel cheated that I cannot afford a house as nice as my parents? Not really - my life is much better than theirs in a number of ways. And the haunted house wasn't really all that great. I would have been happier in a happier household in a cheaper home.
A recent article - and yes, it is a listical - argues that in most ways, people are better off today than they were 100 years ago. By almost every metric, how far a paycheck will go today is better than in 1919. The one exception is housing, and as I have noted time and time again, the main reason why housing is so expensive today is that we have 30-year mortgages and mortgage interest tax deductions. The same reason why college got so crazy expensive (the free availability of student loans) is the same reason why houses got expensive.
As the author notes, back in 1919, you needed a 50% down payment to buy a house, and mortgages rarely lasted more than a few years. As a result, few could afford to buy, and houses were thus a lot cheaper - supply and demand kicks in. When people have more money and more "funny money" loans are available, prices skyrocket. The Millennials working in tech companies in the Bay area are the ones driving up home prices, as they have fat salaries and access to loan cash. Damn Millennials! Always mucking things up!
Which is funny, because the "complaint" by other Millennials is that Baby Boomers have somehow "taken all their money away" (which is hard to do, when you have none to begin with). But as the Washington Post article notes, Baby Boomers are rarely seen on The Streets of San Francisco anymore - no one wants us old fucks working at these tech companies, they want young people who can code.
Of course, that is the conundrum. Back in the day, maybe San Francisco was more "charming" and less gentrified. But it was also a crime-ridden city with extensive ghettos. Today, tech companies are erecting office towers in the Tenderloin - once a haven for homeless addicts and runaway teens. Folks back in the 1960's would wonder at all the improvements in the city and wonder why anyone would be against them. But it seems we are so well off in this country that we can afford to complain, even about progress. Or maybe our Russian friends are at work here again, trying to sow dissent.
The listical hints at, but doesn't really get into other aspects that make comparing today's wealth with that of the past a difficult task. For example, in 1919 women rarely worked outside of the home. Minorities had few opportunities outside of manual labor. If you think you have it bad today, think about how things were for a young black man in Mississippi in 1950. The listical does point out that in the past, people were crammed into housing - often entire families in one apartment or home. The idea of having your own place to live was somewhat alien. College students and newlyweds often lived at home, not in dorms or apartments of their own.
And while housing is much more expensive today (adjusted for inflation) than in the past, home ownership approaches 60% in the US today, whereas in 1919 it was about 25%.
And then there are other aspects to consider. A car in 1919 cost more than one does today - but it didn't have airbags, disc brakes, cruise control, air conditioning, and a radio. In fact, no one had air conditioning, anywhere. And while today people choose not to be inoculated against disease, 100 years ago, dying infancy was a real possibility. Getting polio and being crippled for life was no laughing matter.
So no, I don't think Millennials have it worse off than previous generations. Yes, it is true we do ask young people today to make very serious life choices before their brains are fully developed. Recent studies suggest that the human brain isn't fully developed until age 25 - particularly the parts of the brain dealing with reasoning. Which makes sense - age 25 is when I stopped smoking dope and started taking my own life seriously (and enjoying it). Asking a teenager to sign student loan documents into the six figures is sort of scandalous.
But on the other hand, no one is putting a gun to their head and forcing them to do this. Cheaper colleges - or no college at all - are available. I know one young person who turned down a full scholarship at a prestigious university to go to a school closer to where her boyfriend lived (they later broke up). She is now paying off student loans in the six figures and working in "public service" and hoping after a decade to have the loans "forgiven". I only hope it works out for her, as very few people have qualified for this forgiveness deal - although many have applied. If you don't follow the process to the letter, you get tossed out and have to start over again.
I hope it works out for her. But on the other hand, it sort of irks me that she is asking the taxpayer to bail her out when she had other opportunities (and in retrospect, better opportunities) and just made a poor choice. And I am not so sure we should be rewarding poor choices.
All that being said, I doubt this trope of "Millennials have it so bad" is going to go away anytime soon, as it sells so well. Politicians, particularly the "progressive" type, use this mythology to sell themselves to voters - trying to get young people to feel sorry for themselves and to compare their circumstances to folks who have been working for 40 years or more. Hey, you should be as wealthy as your parents, the moment you graduate from high school, right? That seems to be the message they are pushing - anything less than that standard of living means someone "took away" the wealth you are due.
And that simply isn't true.