Money Train Fatigue

Eventually, people get tired of riding the money train.

In a long-ago post, I mentioned how teenagers get after-school jobs, so they can afford a car.  When you ask them why they need a car, they say, "to get to my after-school job!"   We expect that of teenagers, but many adults live the same way.

One gets tired of riding the money train - having to make money to pay for "things" and then have these things wear out, become obsolete, or just depreciate down to nothing.  (My smartphone broke today, so I am on a tear).

Prior to World War II, if you look at the car brochures of that era, you will notice that the styling of the cars changed very gradually - usually major overhauls were only every three or four years.  And this was at a time when auto technology was rapidly changing - from the Model T with its solid axles and mechanical brakes, to independent front suspensions, enclosed bodies, and hydraulic brakes (on all four wheels, no less!).

But after the war, particularly in the late 1950's, the car makers started changing the styling on a yearly basis, in some instances.  They realized that cars were more than transportation, but a style statement as well - your car said something about who you were.  And back then, even the most plebeian car make showed people in ball gowns and tuxedos lounging in the back seat.  Cars were all about glamour!

Well, at least they convinced people of that - for a while.  Between annual style changes and price wars, the "Big-3" slowly squeezed the independents dry.  But not before Rambler and Studebaker introduced smaller, less expensive, and less complex cars.  Combined with a recession in the late 1950's, sales of small cars took off - and sales of land yachts, such as shown above, tanked (if you'll pardon the pun).

Of course, the "Big-3" followed suit with their own small cars - the Falcon, the Chevy II, the Dart - and eventually Studebaker threw in the towel, and Rambler became AMC and struggled for another two decades before being absorbed by Chrysler (well, almost vice-versa, talk about two drunks holding each other up!).

What happened in the late 1950's was that people got tired of spending enormous amounts of money on cars that only lasted a few years before they looked dented, faded, and rusty.  People don't remember this, but a five-year-old car back then was junk - the seats were shredded (why do you think seat covers were so popular back then?) and the sheetmetal rusted through. Batteries, exhaust systems, brakes - all needed to be replaced by the three year mark.   It was costly to buy and maintain these land barges, and when the economy hiccuped, people moved on to something less costly.

So they bought a VW Beetle - something that, in retrospect, was barely a car.  But you paid nothing for it, drove the wheels off it, and bought another one.  But surprisingly, they lasted just as long, if not longer that the overwrought American cars of the era.  And since the styling never changed, there was no stigma of "driving an old car".  Yes, people are motivated mostly by fear and pride - psychology sells, not logic.

If you had a "good job" back then - or even today - you traded your cars in every three years or so (at least the automakers suggested such a thing) before "something went wrong" - like all the things I mentioned above.   The car dealer would make those repairs and then put your heap on the "OK Used Cars!" lot - and someone else could "buy your troubles".

Today, it is leasing that is sold to the plebes.  Get a new car every three years!  Just pay car payments perpetually!   And the same is true with cell phones.  Buy a new one every three years!  You "plan" gives you "free" upgrades!  Always have the latest and smartest smart phone to impress your brain-dead friends!

It is a good system - for the merchants.  But for the consumer, it means an endless string of payments, for life, to pay for "things" in your life.   Televisions last about three-to-five years these days, and then they go flakey and you have to buy a new one.  Why not?  The new TeeVee is half the cost of your old one, and one the same price is half-again as large.  The only exception to this rule seems to be smart phones, which keep edging up in price.  $500 was the first barrier, then $1000.  Today, $1200 or more is bandied about, if you want the "latest and greatest" phone.   Sadly, since they all look alike, you can't impress your friends, particularly if your case obscures the Apple logo (which is why some cases have an apple-shaped hole for display purposes).

I digress, but I put a vinyl bra on my car once - there are pros and cons about these, which maybe I will address in another posting - they seem to have fallen from fashion, anyway.  But for the BMW, they offered the bra with and without a little hole for the BMW "Roundel" to show through.  What's the point of having a BMW if you can't rub other people's noses in it?  I no longer own any BMWs.  It was fun, but the other owners were a real turn-off.  But I digress. Or did I?

The money train is frustrating - you get tired of spending and spending and spending, just to maintain things you already have.   You just want to buy something and keep it forever, without having to renew or replenish or replace it every so often.   But such is the nature of technology - and life itself.  The only "final" purchase you will ever make is a coffin, and even then, there are maintenance fees on your "plot".

I noted before that appliances have a design life of about 15 years.  Our house was remodeled about 15 years ago, so guess what?  Yea, we are replacing things, one at a time, every year, it seems.   When you buy a "brand new" house or condo, there are few "repairs" to be made for a decade or more, which can lull a homeowner into a false sense of security.  But once that honeymoon period is over, well, welcome to the real world.  Climb aboard the money train!

Of course, the easiest way to avoid the money train - as much as you can - is to live with less and choose simpler alternatives.   I cry because my $99 used smartphone died - after several years.  Imagine the anguish of dropping your $1200 iPhone and cracking the glass!  That's why people actually buy insurance on those things.   Hmmmm...... a good indicator of owning something too expensive for your income level - if you have to insure it.  Phones, cars, etc.  I mean, you should insure your house, of course, but one way to get off the money train is to own a secondhand car worth little and costing little to insure - if you insure it at all.

That is why people didn't buy many 1958 Oldsmobiles - or even Chevies.  They were expensive and overwrought, and people craved something simpler.  Of course, by the mid-1960's, the cycle took off again, this time people wanting "Personal Luxury Cars" or "Muscle Cars" or "Pony Cars" - all of which carried a higher price tag.   The small car craze took off again, with compact cars being supplanted by a new class of "subcompacts".   A crappy economy and high-priced gas, of course, goosed the whole thing.  But I think also, people just wanted basic transportation and not a perpetual drain on their wallets.  My parents could afford a fancy car, but my Mother drove a Vega.   Why give money to a car dealer, when you can put it in the bank instead?

It almost seems that you could make your whole life into a subscription service.  I buy new sneakers every couple of years (the same make and model!).  Why not just have them shipped on schedule, or better yet, lease them?  (of course, there is no residual value).  And the same is true for household appliances and whatnot.  We paid $5000 for a new central air system, which lasts about 15 years.  That works out to about $27 a month, if you look at it in terms of cash-flow.

Of course, some things last longer than others - failure rates follow a bell curve.   And how you use or care for things can help determine how long they last.   So, owning has an advantage over leasing or some subscription.   And in owning, you can decide how complex and how expensive you want to make the technology you use.   You can choose simplicity over complexity, durability over status.

Maybe we can't get 100% off the money train, but at least we can slow it down!

Defying Gravity

How is it possible to defy gravity?  Pretty easy, as it turns out.

A reader writes that they are concerned for me as I am not making enough money.  Perhaps a part-time job?  I might do that, but only to keep amused - and stretch out my retirement dollars further.  If I worked, my income would stay the same - as I would take out less money from my 410(k).

My local bank manager tells me that she is amazed how little some of the retirees on our island make.  "How can you survive and afford a nice house on only $30,000 a year?" she asks, as she is making three times that amount.  To her, this seems like defying gravity!  But I wrote about this before - you need less money in retirement, or can, if you plan things right.

Another reader admits to squandering small amounts of money, but says, "Well, it's OK, because I'm still working!" as it if were possible to just make more money.  But as I learned the hard way, the amount of money you make in your lifetime is a finite amount - and quite easy to calculate or at least estimate pretty accurately.

These comments illustrate the problem with the working mindset - the "Salaryman Trap" as I noted early on in this blog.  You start to make good money and you think the supply will never end.  What's more, you'll make more in the future!  Because you'll get raise after raise and never be laid off, and someday, you'll strike it rich, somehow, through vague modalities.  But someday never comes.  One day you are unceremoniously dumped from your job, and you have to pick up the pieces and put together some sort of half-assed retirement plan.

It happened to my Dad, so I had a good education about these things.  He was fortunate in that my Mother's parents had a modicum of money, and they could sell the family home and build something smaller and pay cash for it. He also had a small pension and Social Security.  They lived a cash lifestyle, and lived pretty large on not a lot of income.  And as such, they paid little income tax - the whole thing snowballs in your favor.

Let's "do the math" and figure out why this works - and whether what works in retirement works for the working person.  In our first example, our Working family has a house worth a half-million dollars, in the suburbs of a major city.  They have a combined income of $100,000 a year, and both commute to work.  To make things simple, we'll assume they are a childless couple (a huge expense that also is not present in retirement - or shouldn't be, anyway!).  In our second example, our retired couple has a house worth a similar amount, in a more distant retirement community, and has a combined income of $30,000 a year from social security and other sources.

Income:  $100,000 (ordinary income)

Mortgage: $2000 a month ($400,000 @4%) or $24,000 per year - $20K interest

401(k): $15,000 per year (15% max)

Adjusted income: $65,000

Taxes, Federal & State:  $13,000

Property Taxes: $5000

Remaining income:  $47,000

I used a number of online calculators to generate these numbers.  You can tweak them if you want to, but the end result is the same - in our earning years, the actual amount of "disposable income" is less than half your actual income.  For example, you could contribute less to your 401(k), but you'd regret that later on.  You could live in a cheaper house, which might be a good idea, provided it is in a nice and safe neighborhood.  But the key thing is, when you earn big bucks and live in an expensive area, well, you spend big bucks, too.

But enough of that.  Let's look at the retired couple's finances.

Income:  $30,000 (ordinary income)

Mortgage: $0

401(k): $0 (actually minus $30K, if no Social Security)

Adjusted income: $30,000

Taxes, Federal & State:  $1000

Property Taxes: $700

Remaining income:  $28,300

Not as big a spread as before, is it?  But to some, that still is half of what you were making while working.   True, but there are other things to consider.

Consider things like cars. The average American drives 15,000 miles a year - multiply that by two if you are both commuting to jobs. When we lived in the DC area, we knew married couples who would drive to work separately, even though both worked at the same "Agency" in McLean. They could cut their commuting costs in half, if they chose to.   I realize now, in retrospect, how much I squandered on cars over the years.  Yea, it was fun, but the cost!

Today, we have a six-year-old Hamster (KIA Soul) with a whopping 24,000 miles on it.  Yea, that's right, about 5K a year.  If we didn't have the camper, we'd only have one car.  We never go places without the other, and we don't leave home for days at a time.  "Going to market, Idella!" is a weekly thing, if that, and carefully planned out in advance - with a shopping list.  Yes, when you are retired, you can plan things like that, as you have more time. Well, you have that time when working but most squander it on television (I know I did) and then say they are "too tired to cook" and send out for a $20 pizza.

So the "working" couple is buying cars (or worse yet, leasing them) at twice the rate, maybe three times, as the retired couple.  And by-the-way, the retired couple has no car payments to make each month.  So subtract another $1000 a month (at least) for the married couple for car payments, and you can see, the "incomes" start to level out.  Factor in the lower cost of eating at home (which I have illustrated is less than one-quarter the cost of eating out) and you can start to see that while these two couples have disparate "incomes" their lifestyles are remarkably similar.

The two keys, of course, are debt and consumption, or spending.  People argue that debt is good, as you can "write off" the interest on your taxes.  And indeed, mortgage interest can lower your tax bill.  But on the other hand, not having to pay two grand a month in mortgage payments is a big plus.  That's like having an additional $24,000 a year of income, right there, guaranteed.  Sure, you could invest in the stock market (your 401(k)) and make more, but it isn't guaranteed.  And when you are retired, you want guaranteed things, not speculative investments.

THIS IS NOT TO SAY that a working couple should live like a retiree.  It isn't possible, in most cases.  If you are still working, you can't pay cash for a house - you don't have the cash, if you are like most people.  So you borrow.  And you don't have cash to pay for a car.  So you borrow.  Some debt is inevitable when you are starting out in life.  The key is, of course, not to take on excessive or frivolous debts.  And the real key is to have a plan to be debt-free by retirement, if you plan on living off your 401(k).

If you "have to make" $100,000 a year in retirement (in today's dollars) to service debts, you will pay a lot in taxes and interest, if you are still in debt when retired.  This means burning through that 401(k) money at a rapid clip and paying a huge chunk of it to banks and the IRS.  Not only that, the whole point of an IRA or 401(k) is to pay taxes at a lower rate when you retire, as your income will be lower and you will be in a lower tax bracket.  Paying taxes at the same rate or higher defeats the whole purpose of the 401(k).

Again, I have friends who have government pensions that combined, are over $100,000 a year. To them, our lifestyle is mystifying.  They have a mortgage and car loans (and a boat loan, and probably credit card debt) as they have this huge income in retirement to service this debt - and pay the onerous taxes.  They have little or no savings.  But they live in a house nearly identical to mine, and drive the same kind of car.  Same shit, different income philosophy - the cash-flow mentality versus the owning money mentality.

Of course, if they were debt-free by the time they reached retirement, they would be far wealthier than I am, as although they would have the tax problem, they wouldn't have debts to service.  But they chose to spend it all while working - and why not, when Uncle Sugar (or the local school board) basically offers to pay you for life.

I digress - but not by much - because something else came to my attention which sort of illustrates the problem.   I call them the "Three Amigos" - three golfing buddies that are retired.  They have started this "breakfast club" thing, where they go out to breakfast one day a week - just the guys, no wives.   Two of the Amigos have pensions in retirement - and debts.  One is debt-free and living on savings, of which he can choose not to take out much money from, and thus limit his tax bill.

Things were fine for a while.  The local golf course had a breakfast buffet which, at $12.95 was kind of pricey (for food I could make at home for $4) but didn't break the bank.  But then one of the Amigos wanted to go to the Swank Hotel which opened up here on the island, where breakfast was $29.95 with beverages and tip.   That's a shitload of money for scrambled eggs, in case you didn't notice.  The Amigo who is living off of savings is less than enthused.

To me, it makes no sense, and Mark and I both despise going out for breakfast.  Getting up, showering, getting dressed and then driving a few miles before you even eat just feels wrong. Paying exorbitant prices for the cheapest meal of the day makes even less sense.  It is like the other couple I wrote about, who drove 20 miles (round-trip) to have breakfast.  Economically, it is nonsense.   Maybe I can see, once in a great while, going to a fancy brunch.  But driving 20 miles to go to the Ihop?   I can make better pancakes with real maple syrup at home.

But the contrasts go beyond that.  The pension Amigo thinks it is scandalous and immoral that someone over 65 in our County doesn't have to pay school tax.  It is scandalous because the exemption applies only to people making under $40,000 a year.  As I noted before, my neighbor behind us was paying under $300 a year in property taxes when she died.  The new owners - who are not resident owners - pay over $3000.  Whether it is scandalous or not depends on whether you make $40,000 a year or less.  On the other hand, it is pretty scandalous to me what some government employees pull in, in terms of retirement pensions - often 75% of their last years' income!  The old model of a modest pension and being debt-free, as you can see, changed, at least for government employees.

But the rest of us - the bulk of the population in the USA - doesn't have such generous pensions.  We have to live on our savings, which can be easily wiped out by inflation.  And indeed, inflation in the price of restaurant meals is one reason our Amigo is no longer enthused about being part of the Breakfast Club.  It is one reason Mark and I don't eat out as often as we used to.  Going to a restaurant that is little more than a refueling station and having mediocre food - and paying top dollar - makes less and less sense to us.  Why send out for a $20 pizza when you can make one at home for a few bucks?  It is not a matter of food snobbery, it is a matter of simple economics.

Well, that's all very well and fine, you say, but who wants to spend retirement sitting at home and making pancakes and watching television all day long?  And people have told me this, thinking I am leading some sort of drab existence, "eating raman noodles" as one put it.   Yet, we spend every summer - and several weeks during the year - exploring the United States in our (nearly) new RV and pickup truck.  Can the salaryman spend four months on the road, every year?  I think not.  And it need not be that expensive, too.  We went on an Alaska cruise (after spending nearly two months in Alaska in the RV) and by booking after labor day, were upgraded from the cheapest room to a veranda suite.  And the weather was fabulous.   

It is not that we are not doing anything, just that we are making different choices.  And the world recognizes this, which is why restaurants offer "early bird specials" and "senior coffee" not because poor old seniors are broke and can't afford to pay more, only that they prefer not to, and if you want to attract that business, you have to offer deals.  It is simple economics - you sell products to people at the highest price they are willing to pay.  And the working person is willing to pay more as they are "too busy" to shop on price and think (erroneously) that they can always make more money.

I wonder if my fat pension Amigo thinks the free donuts at Dunkin' Donuts are immoral as well?  If so, I am going straight to hell.  Just kidding, as we tend to make coffee at home, as paying $2.95 for a cup of Joe just sticks in our craw.  But that free donut - well, that has tempted us into the shop on one occasion.  Maybe just a year in purgatory.

I am not saying I am better than other people - this is based in my experience as a working person.  Back in the day I took perverse pride at never looking at prices in the grocery store - or comparing grocery stores.  Shop at Walmart?  Heck no - all they will have there are dented cans of peas, like the Dollar Tree.   Well, I overcame my prejudices and the Walmart "Ghetto Gourmet" is our go-to place, as is "The Tree" - the latter particularly for things like mouthwash and soaps (but not detergents).

Of course, some political types decry Walmart for being politically incorrect, while shopping at Publix instead - not realizing the Publix heiress paid for the January 6th insurrection.  Yea, fuck Publix - some of the stores in Florida are nice, but you pay through the nose, in terms of prices.  $12 a pound for sliced deli?  Get real.  You spend $10 there, you put a buck in that crazy lady's pocket.  So politically, it is a wash - any company making lots of money tends to vote Republican.  Gee, I wonder why?  But I digress.

The point is, you can live a rich life on a lot less - which was the theme of this blog and indeed the topic of my first posting, over a decade ago.  Since then, I have had a chance to put theories into action - and realize a lot of what I thought early on was wrong, or at least needed tweaking.  If you are facing retirement and your projected income isn't what you thought it would be, relax.  Provided you are debt-free, you can still live a good life - hell, people on Welfare do!

Can any of this be useful to the working person?  Or are we all doomed, during our working lives, to squander cash on ill-conceived things such as credit card debt?   I think there is a nugget there if people are willing to listen to it.  Live like a retiree.  Have a plan to get out of debt, and stay there, eventually.   Stop paying interest to banks - as much as you can.  Stop squandering money on "convenience" items.  Not only will you regret that $20 you blew on delivery pizza, you will struggle the rest of your life to remove that 1" from your waistline.  Yes, bad spending habits and poor health go hand in hand.  That is one reason why America has the world's fattest poor.

It is funny, but as part of the Ambetter Peachtree (Obamacare) health plan, they offer these little "rewards" if you complete little tasks, such as watching a video or downloading a brochure.  Many of them are on topics like good eating, exercise, seeing your doctor, and whatnot.  But a surprising number are about personal economics and spending habits.   It seems that being stressed-out about money all the time isn't good for your health.  Funny thing that - once I retired, my two stress-related illnesses, diverticulitis and gout, mysteriously retreated from my life.  50-something growing pains may be stress-related, it seems.  And money is a number one source of stress - and the number one cause of divorce (which is ironic, because if you were stressed-out about money before your divorce, guess what?).

So no, you can't live like a retiree when you are working.  But someday, and likely at a time and place not of your choosing, you may be forced to retire.  So it might not be a bad idea to plan for this, and think about money and where it is taking you.  Having nice things is indeed fun.  But I can say from experience that having financial security is far nicer than all the fancy cars and toys in the world.

The alternative is rather bleak.

Sloganeering as Public Policy

Chanting slogans might make you feel better, but it isn't really a substitute for nuanced public policy.  Another BLM protest with nary a B in sight.

A reader writes about my previous posting, in which I mentioned that the slogan "Defund the Police" really is a nonsense phrase.  What it means is an Rorschach ink-blot test - different people see different things in it.  To the naive Anarchist (I am being redundant here) it means get rid of the police, who are just "criminalizing the behavior of citizens" which I guess is true if you call murder, robbery, and rape "behaviors" and not just crimes.

Others have long-winded explanations about how police funds should be diverted to "Community Intervention" to defuse situations rather than escalate them.   So, for example, a crazy homeless person (again, I am being redundant) attacks someone, you should send in mental health professionals, rather than armed officers.  Problem is, of course, the homeless person may have a knife or be one of those fun fellows who likes to push women in front of speeding subway trains (it is a thing, google it).  Nice folks, those homeless!

I agree that mental health intervention is key - we need to institutionalize people who can't take care of themselves and are a threat to others, which pretty much describes 90% of the homeless population, which, by the way, makes up a fraction of a percent of the population of the United States.  But of  course, we all saw One Flew Over the Cuckoo's Nest and thought that all mental institutions were evil and all mental health professionals were Nurse Ratched.

Funny thing, though, you watch a lot of these "abandoned urban explorer" videos on YouTube and realize a lot of the abandoned buildings that these youngsters foolishly explore (and deface) are old mental hospitals, which indeed look creepy because they were abandoned about 50 years ago or more.  But what you realize is that we used to have a lot of mental institutions, going back a century or more, because crazy has always been with us, and people have realized - since time began - that crazy folks can be dangerous and often need to be isolated from society for their own good, and the good of society.

But that is just crazy talk, if you'll pardon the pun.   Give them meds and tell them to live under a bridge and shit on the sidewalk and scream at passers-by and beg for money or steal shit, until they get arrested for assaulting or killing someone, in which case, then we can find an institution to house them - a jail cell.  Progress, eh?

And the homeowner who has to live across the street from the homeless camp and see his car broken into every night?  Fuck him, capitalist pig!  Going to "work" and having a "job" and "earning money" - who does he think he is?  Trading a really authentic "life on the streets" for some plastic lifestyle with a roof over your head, three meals a day, and taking care of yourself and your family.  What an asshole - selfish, is what he is!   When the revolution comes, they'll line him up against the wall!

Another example of sloganeering replacing careful thought is this crazy idea about student loan forgiveness, free college, and free money, or "guaranteed income".  All three ideas break down to the same thing - the government should give away money, not just to people in need, but to everyone, regardless of need.   Give money to colleges to make them "free" and of course, colleges will carefully spend this money and cut costs to give the government value for its dollar.  Military contractors have shown us this is indeed possible.  The sarcasm light is brightly lit, in case you didn't get the jape.

Forgive student loan debt.  But for who? Everyone?  Or for people who pass a needs test?  What about people who just made their last payment last year - or ten years ago?  They feel foolish for scrimping and saving to pay off their debts.  And is an average debt of $35,000 really that onerous?  And what about the guy graduating next year?  Five years from now?  A decade?  Does he get forgiveness going forward?  If so, he should borrow as much as he can as it is free money.  And with graduate degrees, they will loan you all you can stand - which you can put in your pocket.  And I am sure banks will be all-too-willing to lend an infinite amount once they realize the government will pay it back, to the penny, upon graduation.

This really hasn't been well thought out, has it?  The various proposals so far are vague.  Ms. AOC wants a blanket $50,000 per person wiped out, regardless of need.  Biden is willing to go to $10,000 but not by Presidential decree, but through Congress, which I presume would insist on conditions.  By the way, a Republican friend of mine who watches too much Fox News (which is to say, watching any of it) told me in all earnestness that Biden has already forgiven student loan debt.  Tucker Carlson is an entertainment figure, not a news source!  (Biden did sign an order making any loan forgiveness tax-free, but has not signed an order mandating loan forgiveness - a big distinction).

The problem with all of these "free money" proposals is that you have to ask where does the money come from?   Some on the far Left argue that if we tax the 1% it would pay for it all.  Some even propose a "wealth tax" on money you own, not earn, which would run smack-dab up against the Constitution, not to mention Congress.

But even assuming the wildly impossible scenario that we could take away all the wealth from the wealthiest 1% in the country, it would amount to about $100,000 per person for everyone in America.  That might sound like a lot of money, but it really only represents two years' income for most people in America, perhaps less.  And once it is spent, well, it ain't coming back.  But of course, we can't take away all the wealth from the top 1% in the country - but we could tax the crap out of the top 10% or top 20% or so. 

The top 1% of course, would use perfectly legal means to avoid such a tax - as I noted before. When you increase tax rates far enough, people spend more time avoiding taxes than they do creating wealth. And we know this because that far-right Republican fascist John F. Kennedy showed us how it worked, with dramatic tax cuts enacted during his Presidency - which helped put an end to the recession of 1958-1961.  Tax policy is not a Republican-versus-Democrat thing, but a matter of mathematics.

This is not to say that recent tax cuts couldn't be abolished - without ruining the economy - but massive tax increases can and will backfire.  And taking away wealth from people just isn't legally possible. The real problem with this "tax the rich" nonsense is that who you think of as "rich" often turns out to be the guy you see in the mirror.  It's all fun and games until they come after you.  And you'd be surprised at how "wealthy" you might actually be.

For example, if you say, "Tax the top 10%!  Make them pay 50% in taxes!" you might be surprised to realize that means someone making $118,000 a year, or about twice the median household income in America.   You have to be careful of what you wish for.   And between Federal, State, Local, and Sales Taxes, you may already be paying 50% of your income in tax.   Do you want to pay more?  So some bum gets free drug money, or so some irresponsible 18-year-old can major in Agitation Studies?

Since there really isn't enough money that could be raised in taxes to pay for these pie-in-the-sky ideas, we would have to resort to Plan B - which we already are - which is to merely print more money.  Printing more money acts as a tax on everyone and also a wealth tax and it has been shown, time and time again, to wreck any economy.  It particularly impacts the poor.  Today, Venezuela, not long ago, Argentina - before that, Wiemar Germany.  Rampant inflation destroys an economy and impoverishes people.

We've never had hyper-inflation in America, but this may be about to change.  When I was coming-of-age, inflation was running over 10% and Americans were learning to live with lowered expectations.  Companies were struggling, gasoline was rationed, and suddenly a tiny car "made sense" as no one could afford the gas-guzzlers of a decade earlier in terms of price or cost of ownership.  It was a bleak time and people voted for Ronald Reagan because they were sick of it.

I digress, but I predicted the Democrats would screw up a wet dream when they won the House, Senate, and Presidency.  Wild-assed proposals like the slogans talked about here, are not going anywhere, but are alarming a lot of people.  "It's the economy, stupid!" Bill Clinton said.  And if inflation tracks upward, it will be the issue the GOP wins on in 2022, provided they can keep Trump under wraps. Republicans seem to have a good track record of screwing up a wet dream, too - that is the Democrat's only hope.  The GOP can only hope that Trump finally has his massive coronary, or that he is finally indicted.  Stay tuned.

But I digress.

If inflation goes back up to 10% or more - which it would likely do, if we continue to print money and then give it away - then the $1200 Andrew Yang check doesn't go as far as it used to.  So after a year, you have to increase it 10% to a $1320 check and then the year after that, a $1452 check, and so on.  Actually, since each increase in "free money" accelerates the printing of money, the increase in free-money checks would have to be exponential just to keep up.

For workers, it means constant pay raises - and strikes to get them - as we saw in the 1970's.  The cost of labor goes up, and the cost of products goes up - fueling inflation further.  Ditto for Social Security recipients - their cost-of-living increases would skyrocket.  At best, you can only hope to keep up with inflation - at worst, you are wiped out.

For people living on their 401(k) or IRA money, finding ultra-high rates of return would be the name of the game.  Otherwise, your retirement funds would be worth less and less every day, until your "life's savings" isn't enough to buy a cup of coffee.

Getting off the inflation merry-go-round isn't easy - it involves pain for everyone involved.  Government spending has to be cut to the bone, and borrowing reduced and money-printing stopped.   Eventually, it is possible to recover the economy, but not without a lot of pain and social disruption.

Slogans are comforting, but hardly well-thought-out plans.  Maybe it is time we stopped sloganeering.

Why Bullying Works on the Internet

All it takes for evil to succeed is for good men to remain silent.

I was looking at comics online, which is a pastime of mine.  Some of these amateur comics are quite good.  Others, less so.  One of the better ones had a gag where two Police officers decided to play "Good Cop, Bad Cop" and the "Good Cop" instantly vanished, because, you know, there are no good cops!  Get it? Ha-ha, funny.   Well, actually kind of a lame gag.

Anyway, in the comments - another reason never to read the comments - someone said they didn't get it, and another person responded with a long-winded diatribe about how there were no "good cops" because the nature of the police state was to criminalize the citizenry and oppress them in order to maintain a power leverage... blah, blah, blah.

Somebody went to Kollege! No doubt this was what they were taught in school or on the Antifart website and now they were barfing this up as though it were gospel.   And of course, everyone chimed in with supporting comments and there was no dissent, whatsoever.

And of course, you know why.  If you tried to write a comment to say, "Well, there are good police officers, you just never hear about them!" you will be shouted down and on many sites, your comment "downvoted" so that it never sees the light of day.  And no doubt, this is by design - brigades of people, perhaps not even from this country, want to spread a narrative that our justice system is "broken" and should be fixed abolished.

Of course, these Internet philosophers are one stolen-bicycle from being law-and-order police supporters.  No, the Police are not perfect - no humans are.  But unlike a lot of jobs, in police work, if you make a mistake, someone could end up killed - maybe even you.  Which is why when I am pulled over, I am very cognizant to follow the officer's commands to the letter and keep my hands in view.

A recent tragedy occurred when a young man with outstanding warrants, decided to drive a friend's car with expired tags, and when pulled over tried to negotiate his arrest.  Sadly, the arresting officer mistook a pistol for her taser and now that young man is dead.   You make a mistake as a cop, people die.  And yet, you don't get paid much more than the guy working on the assembly line at GM.  Jobs that require that level of responsibility should be paid more.

Now some people want to make this out to be a racial thing.  "Well, that's all very easy for you to say, you're white and don't have to worry about being pulled over by the Police."  Well, I also have no outstanding warrants, don't drive friend's cars with expired tags, and I don't try to negotiate my arrest. Funny how that works - I don't end up getting shot.  A young black friend of mine has started acquiring a collection of firearms on the premise that if pulled over by the Police, he will fire first and thus survive.  I tried to explain the madness of this theory to him, but it fell on deaf ears.  The world has gone insane.

Yes, it is true that absolute power corrupts, absolutely.  And when  you are a Police Officer you have awesome police powers, including the power to arrest someone.  Not only that, you have the ability to get away with abusing those powers, as my Crim Law professor explained to us - no jury is going to convict a Police Officer unless the circumstances are particularly outrageous and well-documented.  So yes, there is a temptation to exceed your authority or indeed, common sense, on occasion.  That does not mean all Police Officers do this, however - or that we should abolish or "defund" the Police.

But all of that requires careful thought and analysis, as well as experience.  It is a lot easier to chant slogans and go along with shitty ideas.  And on the internet, the shitty ideas always float to the top of the septic tank.  Today we are having serious discussions about idiotic things like "slave reparations" and "guaranteed annual income" and "student loan forgiveness" as though we can just print more money - than we already are - and then just give it away to people, and the net consequences are, nothing.

Try to point that out to anyone on an online forum, and you will be shouted down.

But of course, it is not just Lefties that are shouting down contrary ideas - the right is just as bad, if not worse.  You try to explain to someone that the Covid virus is not a hoax and that vaccines don't cause autism and again, you are downvoted to oblivion, if not flamed, attacked, and threatened.  It just isn't worth it, to try to have a discussion with irrational people on the Left or Right, so most people remain silent, and as they say at BLM rallies, "silence is assent".  People assume that since there is no opposing view present, there must not be any opposing view.  It is group-think at its worst.  The bullies win.

And maybe that is why we are seeing the emergence of such radical thinking on the Left and Right. Since no one dissents at all (or dares to) the consensus on the Internet forum becomes more and more radical.   A site about conservative values slowly and inevitably veers off into Qanonsense territory. A site about liberal values leans into Socialism, Communism, or even Anarchy.   It is a predictable pattern.

But these radical voices are often tiny minorities, amplified by social media. The vast majority of people are either lurkers or don't visit sites, other than their own Facebook page.  So the vast "silent majority" of people - Conservative Democrats and Liberal Republicans - are never heard from.  We only hear from wacky Liberals and whacked-out Conservatives.  And since these are the only voices we hear, people think this is the majority view on things - or that we, as a nation, are "polarized".

Such is not the case.  I have friends who are dyed-in-the-wool Democrats and others who are staunch Republicans.  Yes, this is possible to do.  They are not Antifarts or Qanonsense followers.   While they disagree on a number of things, they agree on more than they disagree.   I know fairly liberal Democrats who, while sympathizing with the plight of students with loan debts, don't think that blanket forgiveness of indebtedness is the answer to anything. I know Republicans who are turned off by the far-right and Trumpism - and are not against gay-marriage or other "social" issues that many in the leadership of the GOP think resonate with their followers.  The idea that people march in lock-step to their extreme wings of their political parties is nonsense.

But these sort of folks don't have a voice online.  And if they did raise their voice, they would be quickly shouted down.  For some reason, social media and comments sections in particular, tend to favor radical views - again probably because they are so easily hijacked by external forces.  Yes, Russia.  They have a whole institution devoted to spoofing the Internet in the West.  Don't act like it doesn't exist, unless you are a Russian Troll (or a very, very useful idiot).

I am not sure what the answer to this is, as speaking up doesn't really work.  Unpopular ideas are voted down and disappear - so people never hear contrary ideas, other than those allowed by the owners of the platform.   The only "solution" I have, from a personal perspective, is just to avoid social media at all costs, and stop reading the comments section of any site.   I am kind of sorry I read even the two comments that accompanied that lame cartoon.

That might lower my blood pressure a notch, but it doesn't change the narrative online.  Good people remain silent and "don't want to get involved" because there is nothing to be gained by it and everything to be lost.   You can't blame people for looking out for their own best interests.

Maybe if enough people turn away from this nonsense, things would change.  But I highly doubt that will happen, anytime soon, if ever.

Why e-Commerce Is So Different From Brick and Mortar

e-Commerce isn't just putting brick and mortar on the Internet.  It is a whole different beast.

I thought about my next-to-last posting and realized I just scratched the surface on the topic.   Online sales are not just a variation of old-style brick-and-mortar sales, but a whole new beast.  Let me explain.

When I gloriously dropped out of college, I got a job with an Aeroquip distributor in Syracuse, right off Carrier circle.  I was making the amazing sum of $4.75 an hour and happy to have it.  That was enough money to pay the rent on an efficiency apartment and put gas in my van and beer in the fridge.  Oh, the 1980's!

It was good work.  I made hose assemblies for everything from construction equipment, to stock cars, to Harley-Davidsons, to Singer-Link trainers. It was an educational experience but within a year, I was able to land a job at nearby Carrier for almost double the salary - an offer I could not refuse.

As a distributor for Aeroquip (now part of Parker-Hannafin) we stocked a lot of parts. If someone needed a hose, and needed it today, we had the materials in stock and could cut the hose to length and install the necessary fittings on each end.  If you are working construction, you can't afford to wait a few days for Amazon to fulfill your order, can you?   So that is one reason why brick-and-mortar still exists, and indeed, the company I worked for is still around, but under a new name.

We kept parts in stock, and if someone returned a part, unused, we often would take it back, minus a restocking fee.  And in businesses like that, you could send back parts that didn't sell, to the company that made them, for a credit - in most cases.

So you had this distribution chain that started at the manufacturer, and then went down to regional distributors with warehouses, and then to local distributors such as ours, and then even to retail stores, which might sell to the general public.  

Obviously, the further up the chain you went, the lower the price on the item.  We had "price books" which had colored pages, and each item was listed in each section.  For retail customers coming in the door for a shiny stainless-steel brake line for their Harley, the price was on the pink sheets, as I recall - the highest price.  For the local rock quarry, who sent us a lot of broken hoses from big excavators, they got the white sheet, or a much lower price.  For big companies, like GE or Carrier, we gave even bigger discounts.

We also had salesmen.  And I recall driving them all to Albany in a big Chevy wagon one day, to a sales convention.  The salesmen took the purchasing agents at GE and Carrier and whatnot out to lunch, and sold them on our company as a sole supplier for hydraulic and pneumatic hoses and whatnot.

When I was at GM, I shared a house with other GMI students and a purchasing agent from the company.  Every Christmas, we would come back to the house to find a stack of boxes against the front door, each addressed to "Nate" the purchasing agent.  "To Nate, with best regards, Happy Holidays!  Sincerely, ABC Industrial Supply"  And inside would be a new boom box or even a television or something else nice.  Yes, there is bribery involved, and Nate's predecessor was fired for taking cash under-the-table to favor certain suppliers.  Act shocked.

So, brick and mortar might not be totally dead.  There are still situations where you need to have parts NOW and not a week from now, or even overnight - when a plant is down or a machine is out of service, and the costs are measured in hundreds or thousands of dollars an hour.

But for the rest of us, overnight or a week is just fine, so there is little "need" to have an inventory of parts for us.  As I noted in my last posting, I received two items ordered online in less than 24 hours.  Nice, but unnecessary.  I could have waited a week for either - but was not offered a slower shipping option.

But the big thing is, for online sales, you need not have the manufacturer, warehouse, wholesaler, distributor, retailer chain.  You can cut to the chase and sell directly from the manufacturer.  For example, I am a big fan (still!) our our Bissell rechargeable vacuum.  I shopped this around, on eBay, on Amazon, on vacuum cleaner sites, and the best deal was from Bissell itself.  A lot of companies are cutting to the chase and selling directly to customers online - and why not?  It isn't like the distribution chain is adding any value here - allowing people to touch and smell the product or try it out or "have it in stock".   So why not keep all those profits for yourself and sell directly?

Of course, most manufacturers who go this route don't undercut their distributors.  So while the Bissell site was the "best deal" it wasn't really much of a better deal than other online retailers.  In fact, like the shock absorbers  or Merrill sneakers, it is suspicious how every site online has exactly the same price.  With the Merrill sneakers, you might find a pair from the company for $99.99 or maybe a pair on Amazon for $99.49.   Once in a while you find one on "closeout" for $69.99 but that is rare.  It is a bit of price-fixing, I'm afraid.

This does not mean distributors are dead or that salesmen are out of business - only they have morphed to a new mode of operation.  The Willy Loman of today isn't some schmuck in a ill-fitting suit, driving a "business coupe" with "sample cases" in the back.  No, no, he (or she) is an "influencer" on Social Media, hawking products and promoting them - with convenient links and coupon codes to offer small discounts to their "followers".

Salesmen are also the people who cruise the forums and post messages promoting the company's products, but posing as ordinary consumers.   Salesmen today are chameleons - they take all shapes and forms, like shape-shifters.  I suspect it is a hard job, these days, being a salesman - with the ground shifting underneath you all the time.  You go to a company to hawk your wares from a sample case, and the purchasing agent is buying stuff using his cell phone, while he's talking to you.  I suppose he still takes bribes, though.

I think that will be the trend - to see less warehousing and distribution for retail consumers.  Brick-and-mortar will still be around for "need it now" supplies, including industrial supplies - but even then, some things can be ordered in advance, online.  For us consumers, where time is not often of the essence, ordering online is already supplanting brick-and-mortar.  Why would you go to a GameStop store to buy a piece of software that you can sample and then order and download, online?   This week's CEO is pushing a "turnaround plan" but the only turning they are going to do is circling the drain.

As I noted in my earlier posting, much of what people sell online these days isn't stuff they have in stock. At the hydraulics company, we kept a small inventory of the most popular fittings and assemblies.  But if someone wanted something we didn't have in stock, we'd have to order it from the warehouse in Albany, and it would be there the next day, delivered by our own delivery truck.  In an era before overnight delivery became a "thing" this was the best we could do - and people really didn't have much of a choice, either.

Today, a host of "retailers" are just lead aggregators.  They make a "sale" and then enter the data on a computer and the manufacturer or wholesaler "fulfills" the order.  Or even Amazon fulfills this for the salesman.   I don't recall this being the case in "the old days" except for large industrial products.

If we sold a hydraulic fitting back in the day, we sold it.  It literally passed through our hands.  I don't recall having things drop-shipped directly to customers from the manufacturer.  If we did, it was a rare thing.  Today, it is a thing.   A "retailer" is little more than a website and a few people in cubicles answering phones and typing into computers.  No "back room" with inventories of parts.  Or damn few parts, anyway.

Of course, you wonder why companies bother with salesmen anymore - or these "influencers" and the short answer is, salesmen sell products.  You can have the best product in the world at an attractive price, but without salesmen and advertising, it won't sell very well.  So you have to get the word out, buttonhole "prospects" and pitch them the product and then close the sale, or nothing gets sold.  Maybe back in the day, this was the pushy salesman getting a prospect to sign on the dotted line.  Or the salesman offering small gifts and bribes (or hookers and drugs - yes, act shocked) to the purchasing agent at a large company.  You grease the skids, as they say, to make things happen.

So salesmen aren't dead, they've just morphed.  Now, like the products they are pitching, they are on the Internet, doing a YouTube video for some car accessory, with a coupon code for subscribers if they buy now!  It is advertising and sales, rolled into one.  Or the company I bought the shocks from, posting links on a truck forum - but not actually having the parts in stock.  Their job is just to make sure they get credit for the sale.  Interesting, no?