Wednesday, June 26, 2019

Migration - Why?

Image result for migrants

Across the world, people are migrating from South to North, from the third-world to the first-world.  From countries with backward laws, superstitions, and fundamentalist religions, to countries with secular governments and liberal politics.  Why is this?

Every day now, we are treated to another article that slams the United States and Europe for being heartless bastards, because people are dying and being exploited as they try to migrate to these destinations.  But what these articles don't bother to investigate is why now is migration such an issue today?  Why are people flocking in droves from South to North, not just in the Americas but across the planet?  What is going on?

In a way, it is like rats leaving a sinking ship - or people climbing into the fantail of the Titanic.  People do what they have to do, to survive.  And in many places in South and Central America, as well as Africa, survival is getting harder and harder to do.  Countries there are ravaged by war, poverty, crime, and gang violence - as well as corrupt authoritarian governments that jail anyone who dares to question what is going on.   Leaving is the only logical answer - we can't fault refugees for that.

But how did it get this way?  Not overnight, for sure.  And in both America and Europe, there is a lot of guilt going around, as part of the reason for this migration dates back to our colonial ambitions in those Southern countries.   Every country in Europe - or nearly every one - had a doppleganger in Africa, or wanted to.  France had Algeria, Italy invaded Ethiopia, Germany had  German East Africa, West Africa, and South-West Africa (creativity in naming not being a German strong point).   Great Britain had... well, just about everything else.

In the Americas - our territory - we told European powers to butt out, under the Monroe Doctrine.  This didn't stop the Portuguese from colonizing Brazilia, or the British from claiming a number of Caribbean islands.  Spain released its hold on much of Central America, including Mexico, only to see it invaded, albeit briefly, by the French.   And then we stepped in, protecting "American Interests" in the form of the United Fruit Company and the Cavendish banana.  And during the cold war, we didn't think it unwise to depose elected leaders - if they were too cozy with the Russians - and install brutal dictators of our own. Of course, the Russians did the same thing, in Cuba, and today in Venezuela.  International politics is a brutal contact sport, not a polite game of chess.

So there is a lot of hang-wringing in Europe and in the USA that maybe we brought this on ourselves, through our colonial ambitions.  The British brought their efficient bureaucracy to the Caribbean, Africa and India, but left behind a legacy of intolerant laws, including those targeting Gays and Lesbians.  We criticize third-world countries for their intolerant views, but they are only enforcing the laws we left behind as Westerners.  Similarly, in a lot of countries, particularly in Central America, we left behind the legacy of intolerant Western religions, particularly Catholicism.

One of the central tenets of Catholicism is that birth control is a no-no and that you should "go forth and multiply" - with the result being many families having a dozen children or more.  In the era of high childhood mortality and short life expectancy, maybe this wasn't such a problem.  But one of the other legacies we left behind in these former colonies was Western Medicine.  Thanks to advances in modern medicine and the efforts of Jimmy Carter, people in these third-world countries are living longer and reproducing faster and faster - at a rate higher than the food supply and other resources can keep up.

The anti-vaxxer movement has yet to take hold in these countries, it seems.  They aren't that stupid.  And sadly, the people who are behind the anti-vaxxer movement themselves were vaccinated, so Darwin doesn't kick in here.   Their kids, on the other hand, who didn't have a choice in the matter, may find themselves kicking off due to measles or whatever.   But it may take a generation or two for this particular form of idiocy to be bred out of the genetic line.

So you end up with a perfect storm.   In countries like Nicaragua, not only is it a crime to get an abortion, it is even a crime to miscarry!  Countries with backward laws, backward religions (even Catholicism is ingrained with superstition in many of these countries), lack of education, corrupt governments, overpopulation, and dwindling resources.  The result is like an explosion of rats in the New York sewer.   This is not to say people breed like rats (no, you can't say that!  You'd be shamed on the Internets!) but well, we are animals, and yes, given the chance, we too, will overrun our ecosystem until it is utterly depleted.

So people migrate.   And where do you migrate to?   Where there is money, food, shelter, laws, order, and good clean living.   The question is not why anyone would migrate to the USA or Europe, but why they would stay behind?  Only those in power - who have assets or belong to a gang - would bother to stay in such places.

Both the USA and Europe have generous immigration and refugee regulations.  If you can make it to the border and claim refugee status, you are in - at least for a few years.  But in the USA in particular, it is easy to fall off the radar, once you are in.  And living illegally in the US is often better than living legally in your home country (or dying there).

So how do you stop this flow of migrants?   In a way, it is like trying to stop the flow of ants into your home - or any other "invasive species".   Again, you can shame me all you want (I don't give a fuck) but the point is (and you know this, deep down) that human beings are animals and thus behave like animals and are no better or worse than animals. That is, in part, why psychologists study animal behavior for insights into human behavior.  Yes, Skinner put rats and dogs in his Skinner boxes - because their behavior is not much different than ours - we share a LOT of DNA, my friend!

With any infestation, you can try to stamp out the invaders as they come in, or go to the source and stop the flow there.  Usually the latter approach is more effective.   If you see ants in the kitchen, you can try stomping on them or spraying them, but you only stop the ants that are already there.  The hive is still intact and the queen still pumping out baby ants and you've only addressed the symptom, not the problem.  The next day, they are back.

The more effective solution is to attack the hive.  Once the queen ant is gone, no more ants.   You have to attack the problem from the supply-side.

This is not to say we need to annihilate Nicaragua in a nuclear holocaust, although that technically would "solve" the problem (and raise a host of others - sort of like burning down your house to get rids of bugs).  Rather, we need to figure out why people are leaving these countries in the first place, and figure out how to make them more attractive to stay in so people are not incentivized to leave.

This is the humanitarian thing to do, too.  So take your shaming elsewhere.

You can install cots for migrant children and give them toothpaste and happy meals.  This doesn't solve the migration problem.  People will still be exploited and die making the trek, even if the end result is made more comfortable.  Oddly enough, making detention centers more livable would only serve as an attractant to many migrants.   A jail in America or Europe is probably more comfortable than life in Nicaragua or Sudan.  Three hots, a squat, and a cot.

And before you go off on migrant detention conditions, bear in mind that in the countries these folks came from no one is doing investigative reporting on jail conditions in their country.  If you did, you'd be found dead in a ditch by the side of the road.  We are appalled, and rightly so, by the treatment of these migrants, because in our country, this is considered an outrage, and not normal operating procedure.  And as a result, conditions will change and improve over time - that much cannot be said for Mexican jails.

So how do we make South Sudan or Nicaragua attractive places to live, so that people don't want to leave?  Aye, that's the rub.  You'd have to change not just one or two things, but everything.  Fundamentalist Islam or Catholicism, exhorting people to have as many kids as possible and professing intolerance (and inciting violence) needs to go.  And that ain't about to happen, as people's grip on fundamentalist religion gets tighter and tighter, the further they slide down the economic ladder.

Next, you have to get rid of the corrupt governments that steal all the food aid and most of the government budget.  Good luck with that.  In half the cases, these are governments the West had a hand in installing, in the other half, the "revolutionary" government (propped up by the Soviet Union) that overthrew the first half.  While the two-bit dictators we installed were often brutal and used police state tactics to remain in power, most were very Western in their views and very secular.

We decried the likes of Batista or the Shah for the use of secret police to keep the masses in line.  But their successors?  Not much better, it seems.   This is not to say we should get back into the business of overthrowing governments (did we ever get out?) only that a power vacuum now exists that the West has lost the taste for that sort of thing.   Vladimir Putin doesn't seem to have many qualms about it, nor do the Chinese, who are more than willing to offer e-z payment finance terms and payday loans to African and Asian governments.   Just sign here on the dotted line...

So, in a way, migration is our fault, and then again, it isn't.  The legions of people swimming ashore from Cuba aren't fleeing the tyranny of the Batista government (as many of their forebears were) but the tyranny of Communism.  There are no good guys or bad guys in this, just human nature.

What is the solution, then?   There probably isn't one, and that is a tough answer to swallow.  It is like the mess with Israel and the Palestinians.  You can propose as many mid-east peace plans as you want, none of them are likely to work.  The Israelis are not going away - and the Palestinians know this, and vice-versa.  A perpetual low-level conflict and endless suffering seems to be the new status quo.  Maybe eventually, something will snap.  Maybe.

So what's the point of this?  If the answer is "no answer" why bother asking?   Well, I think the wrong question is being asked - or no question is being asked at all.  We seem obsessed with the politics of it all - how migrants are being treated, whether they can be granted refugee status, and whatnot.   But you never see a reporter down in Nicaragua, asking pointed questions as to why people are leaving that country (and others as well) and why the government there isn't doing more to make life better for its inhabitants.  The media doesn't want to ask hard questions, particularly in countries were reporters can go missing.

So they do the easy thing - bring the News at 5 truck to the border for some eye-candy shots of people in ragged clothes clinging to a fence, or appealingly talking to the camera through an interpreter.   This is somehow all our fault, we are told, that these folks are victimized during their thousand-mile journey through Mexico.   It's all our fault, that we don't post lifeguards on the Rio Grande to prevent drownings when people try to swim across.

It is sad.  It is tragic - that is true.  But feeling guilty about it isn't solving any of the problem.  And not shipping beds to a detention center seems like an odd way of protesting, when kids will keep sleeping on the floor, as a result.

Lies, All Lies!


The big rip-offs in the world are predicated on lies.   If you choose to believe these lies, you likely will be ripped-off.   But you have to choose to believe.

A reader writes, asking me the title of a book I mentioned in my posting about gambling.  As I noted in that posting, I was drawn into a "friendly game of poker" which is to say, a "friendly game of playing with our wealth" which really was more of a "scheme to take money from you and give it to me."

One of the players perhaps took pity on me, and loaned me his book about poker playing, as I wasn't quite clear on strategies for obtaining a winning hand (there are few, it is mostly luck).   What was fascinating about the book was that it had only a chapter or two about how to play the cards, but the rest of the book was about how to play your opponent.   They offered strategies on how to get your opponent drunk (or high) while you carefully nursed watered-down drinks.   They offered advice on how to use psychology to keep a loser in the game ("you could win it all back in the next hand!").   They offered advice on how to collect on gambling debts through intimidation - calling your opponent at work, calling his wife, implying you are "connected" and even threatening bodily harm.

Fun stuff!   I quit the "friendly poker night" and found new friends.  I don't recall the title of the book, I'm afraid, as this was in 1982, which seems like yesterday to me, but I guess was 37 years ago (!!).  Time sure does fly.

I have been reading Ian Fleming's James Bond novels, and what struck me, other than the writing was pretty basic, was how Fleming used gambling and casinos in almost every novel.  Fleming himself was a prolific gambler (and apparently womanizer and playboy) which confirms to me that he wasn't all that smart.  He was very taken in by flashy things - cars, women, nightclubs, wealth, casinos, etc.  And his books reflect that, and they reflect a fascination - on both sides of the Atlantic - for this sort of lifestyle.

The gambling industry, or as they like to call themselves, the gaming industry love books and movies like James Bond, which paint gambling as a form of sophistication, with men in white dinner jackets and women in slinky black dresses all having fun gambling and sipping cocktails and champagne.  They also love the mythology of gambling - that somehow it is possible to "win" at gambling through sheer skill and verve and perhaps a little luck.   James Bond, in Casino Royale, takes down the bad guys not by shooting them, but by gambling them to death.  Because, you know, you can do that - if you are good enough, you can out-gamble someone, and it has nothing to do with luck.

But the fact that these poker tournaments are routinely won by unknowns paints a different picture.  And just as Wall Street lauds the latest wunderkind who successfully picked three stocks in a row which went up in value in a bull market, the press interviews the come-from-nowhere poker winner and lauds his "skills" in beating the big-time players.   Of course, we never hear from that fellow again.

These ideas that gambling is somehow glamourous and moreover that you can "beat the odds" if you are sufficiently suave like James Bond are all, of course, base lies.  "The house always wins" is a phrase you hear not from gambling critics, but from gamblers themselves.  I was invited to the Mohegan Sun casino by a "diamond club" member (or whatever they call it) for a free meal he "won" by dint of losing a substantial portion of his wealth at the casino.

"Look around you!" he said to me, "What do you see?"   I mumbled something about flashing lights and security cameras which is all I noticed.

"Losers!" he replied to his own question, "Losers, every damn one of them!  And I'm the biggest loser of them all!"

It was an odd admission for him to make.  And he still goes to that casino and still loses regularly.  I should have bought those bonds!   He would be funding my retirement.

But of course, he was hooked.  And once you are addicted, it is hard to quit.   The opiate addict is drawn into that world by promises that "it's not that addictive" and that he needs "pain management" for his "sports injury" - never mind the fact the "sports injury" was caused when he fell out of his easy chair reaching for the remote while watching football.    Sometimes it is a blessing that I am allergic to pain medication.

These sort of industries use lies to rope you in.  And once you are roped in, you can't get out - or can't get out easily.   Like the bear trap, it sure looks tempting with all that sugary bait, but once you step into it, you'll have to gnaw your leg off to escape - either that or walk around with a bear trap embedded in your leg and tell people, "It isn't so bad, once you lose enough blood to not feel your leg anymore!"

Lies are what is used to rope people into raw deals, usually by appealing to their emotions.  If you can get someone to think emotionally, they will do just about anything you want them to do - strap on a suicide vest, run up credit card debt, lease a new car, buy a timeshare, become an MLM distributor.  The first is the least painful.

This is why I say it isn't hard to spot raw deals - they are predicated on lies.  You can spot them from 100 miles away, once you know what to look for.   Any deal predicated on a lie, no matter how trivial, is sure to be a raw deal for you down the road.  Just now, the phone rings, and a recording tells me that there is a "limited enrollment period!" for a new health care plan!  Press # for more information!

They have lied to me twice already, before I even picked up the phone.  First, they spoofed the caller ID to use the same area code and exchange as my number - to trick me into believing that someone I know is calling, so I'll answer.  Second, they drove a semi-truck right through the tissue-paper-thin protections of the Do-Not-Call registry.  These are people who are quite comfortable with being deceitful and breaking the law - am I going to buy health insurance from them?   Only a fool would - yet there are many fools out there.

But that's just an obvious example.   The loud ads for the car dealer, followed by the tiny fonts (in print or on TeeVee) or compressed audio (on the radio) spooling the "fine print" that basically negates the verbal promises made by Smilin' Sam the used car dealer, pretty much tell you the whole deal - you are not going to come out ahead here.   Yet, every middle-aged heterosexual white male I know tells me that they "pulled a fast one" on the car dealer and somehow scored a deal.   No, they did not get a car for free, of course, and they are still making payments on their Jalopy.  But they told the dealer what they would pay and that was that!  (Since the amount they "demanded" was $100 over book, the dealer readily agreed).

Lies, lies, all damned lies.   These are the things they use to get at us, to get us to spend.   "If you lease the car, it frees up your cash-flow!" the salesman chirps.  So now you can kid yourself that you are not just mortgaging your future so you can have a flashy car today, but are making a smart financial decision.

You can waste your time "cranking the numbers" on raw deals - just be sure you are not distracted by funny accounting, such as "opportunity cost" arguments or "why not invest in your vacation?" kind of deals - because liars know how to use math, to their advantage, by failing to include all the variables.   It's just a lot easier to walk away from these sort of deals, as you can see they are raw deals from 100 yards away.   You can't "win" at the casino, or the credit card company or the car dealer, so just stop trying.

That's all you need to know to get ahead in this world - turn away from lies.   It doesn't take rocket science or "secret inside knowledge" to wealth, insider tips on stocks, or strategies for slot machines. The "secret" is no secret - just turn away from these things - and perhaps instead of gambling at the casino, own one.   Or maybe at least own a slot machine at your place of business, if you are in Reno.

That is, of course, a metaphor.   You can make money by exploiting other peoples' weaknesses and by being willing to lie, yourself.   I could have made millions setting up an "invention broker" house and put ads on the Internet on how you can get rich with your invention - if you first send me some money, of course.   And it's all perfectly legal.  Oh, sure, the FTC may harass you now and again, but that is like brushing off a fly.

And I don't blame you if you go that route.  Of course, you'd understand why I keep one hand on my wallet when I am in your company, of course....

But for the rest of us, there is a middle-course that doesn't require we sell our souls to Satan, or to the finance company (a division of SatanCo, Inc.).  We don't have to become crooks ourselves, or be beholden to crooks.  Just turn away from these sleazy deals and use your logic, not emotions, when investing or spending money.

That's it - the vaunted "insider" secret to everything in life.

Tuesday, June 25, 2019

What's For (Food) Desert?


We live in one of the wealthiest countries in the world, with the fattest poor people.  Our number one health problem in America is obesity.  Yet some folks argue there are not enough food stores!

Narratives.   I have mentioned this before.  People want to sell you a narrative that life is rotten, the country you live in is no-good, and you are put-upon and poor, and that "the other guy" is making out like a bandit, probably at your expense.

It is an odd narrative, but chances are, no matter what country you live in, someone is selling this narrative.   And maybe in South Sudan or Venezuela this narrative has some truth to it.  But folks in both those countries are dying (quite literally) to migrate to the horrible, rotten, impoverished U.S. of A. for some reason.  They must not have gotten the word.  They probably don't have NPR there.

When someone tries to sell you a narrative that your country is no good, the company you work for sucks, and the government is rotten and evil, stop for a moment and ask yourself why they are doing this - and perhaps who may be behind these narratives.   Often the folks who repeat these mantras are depressed people who want to bring you down to their level.  But the folks who create these narratives are either enemies of your country (you know, people named Vladimir, for example) or folks who want to use the everything-is-awful narrative to get elected.  And yes, both Republicans and Democrats play this game, trying to get you all riled up so you will vote - blindly.

One of the latest narratives is the myth of the food desert.   In a land of abundance and plenty (indeed, our largest export is food) we are told that people don't have access to food.  For example, in Washington, DC, there are neighborhoods with no food markets.  If you want to shop at the grocery store (and get the discount prices, as opposed to shopping in a convenience mart) you have to drive to the suburbs.   The "big box" shopping club stores are far in the suburbs as well.  And of course, this just isn't fair.  Damn Walmart!

But of course, the story is more complex than that.  Rents and property values (and taxes and regulations) in the big city are onerous.  Trying to truck produce through downtown streets during rush hour is difficult.  So you can't blame a retailer for moving to where land is cheaper, taxes are lower, and there is enough room for a large parking lot.  Opening a Wal-Mart in downtown Manhattan just isn't feasible - or at least not practical.

Then there are the politics and corruption.  You want to get your building built, you have to give a "taste" to the local mafia - trade unions - and their corresponding corrupt politicians.  This adds considerably to the cost.   Worst yet, when you announce you are going to open a store in an urban area, "Community Activists" will storm the zoning meeting, decrying the low wages that you pay, the low benefits, and how you are stripping the rainforest with non-fair-trade coffee or whatever.   Never mind that it might not be true (ask Amazon about this - and AOC's wild and false allegations), they can stop your plans dead in their tracks.

When Wal-Mart wanted to open a store in DC, they were shouted down by the same "community activists" who later on blamed Wal-Mart for creating a "food desert".   I wonder if these "community activists" were not in fact paid by the Association of Small Korean Grocers.  You laugh, people do shit like this - create "astroturf" campaigns to advance their financial agendas.

In the trendy San Marcos neighborhood of Jacksonville, Publix wanted to put in a store on two vacant lots that spanned a city block.   Given there were no stores in the area, it would have been a convenience for the expanding local market.   But it was shouted down at zoning meetings, and today, those vacant lots are still vacant, and if you want to live in that crime-ridden, overpriced neighborhood, you have to drive several miles to get your groceries.   We get the government we deserve - or at least we should be careful what we ask for or are protesting about.

Then there is crime.  In the city, not only are there greater chances your staff will be held up at gunpoint, but the "shrinkage" (read: shoplifting) in the city is rampant.  Worse yet, big-city politics dictate that the guy stealing from you is the real victim.  I mean, shame on you for locking up the tents and camping gear, just because homeless people shoplift them!  Don't you see they need it?  Don't you understand that your main purpose in running a store is to offer free goods to needy people in the community?  So someone runs out of the store with armloads of goods, and you get bad publicity because your store manager tried to stop them.

In the suburbs, this is less of a problem.  Taxes are lower, property values are lower, there is room to spread out, and you are only a few miles, if that, from an Interstate exit.   State and County Police are less afraid to tackle a shoplifter leaving your store, and because of the "broken window effect" people are less likely to shoplift in better neighborhoods.   Your cost of doing business is less - far less - and you can offer those low, low prices, which you need to do, because in the suburbs, there is more competition for business.

So you decide to put your new super-box-store out in the suburbs.  And the same "Community Activists" who decried you as an evil heartless corporation, are now decrying you as creating a "food desert" by abandoning urban areas (or extreme rural ones).   Again, you are not running a business, right?  You are performing a public service, which you should do for free, because profits are evil, man! (pauses to take bong hit).

But what about the poor person (in both senses of the word) living in the city?   They have to drive to the suburbs to shop, take a bus, subway, or taxi, just to get groceries.  Or, they have to pay exorbitant prices at downtown bodegas - at least the few left that weren't burned down after the last spate of rioting.

Oh, right, that.  One reason why some neighborhoods in Washington DC have no retail stores is that they were burned down in the riots of 1968.  I lived there decades later, and the stores never reopened.  No one wanted to lose their life's savings by starting a store that could be looted on a moment's notice.  And getting insurance was difficult, if not impossible.  People trash their own neighborhoods, burn down the businesses that serve them, and then complain no one wants to open a business in their area.   Go Figure.

Of course, people do have choices.  You can choose to live in a crappy neighborhood with no shopping and no opportunities - and this could be an inner-city ghetto or a rural trailer park - or you could chose to move to where crime is lower, schools are better, and yes, there are stores to shop in.  There is no requirement under the law or in the Constitution that you have a right to live wherever the hell you want to, and what's more the right to have jobs, goods, and services brought to your doorstep.

You are better off living in a tiny apartment in a nice neighborhood than a house in a ghetto.  When I first moved to DC to work for the Patent Office, I looked for places to live, which was hard.  Yes, even back then, most of your paycheck went to rent, once taxes were taken out.  It's not fair!  Well, it is what it is - back then, and today.  Back then, we sucked it up and lived with it - and tried to get a raise or a better job so we could afford a better place to live.  Today, we petition Bernie Sanders for free shit.

I looked in places in DC to live - they were expensive.  And not being from the area, I didn't know the lay of the land.  I was wandering around Capitol Hill and towards Southeast DC, looking at row houses to rent.   I thought the prices were pretty attractive, and I thought I needed the space.  I didn't realize I was looking in what was a notorious drug-infested ghetto (at the time, things have gentrified since then - another "bad thing" we are suppose to hate - better homes, lower crime, cleaner streets, etc.).   The people renting out the house - who were black - kind of looked at me and said, "Do you know what neighborhood you're in?"    I must have looked like a country bumpkin.  Odd thing, they didn't want to rent to a white guy.   Discrimination!   Well, maybe they realized I would not fit in to the neighborhood.

I ended up renting a one-bedroom apartment in Alexandria, right off the beltway.   It was a bit noisy at times, but it was steps from Old Town, Alexandria, and within walking distance of a retail district and more than one grocery store.   Later on, we rented a pretty spacious two-bedroom with a balcony for $900 a month.  Oddly enough, the rent was less than the row house in Southeast DC.   Factoring in inflation over the last 30 years, the rents there are still pretty cheap.   So I had choices, and I chose to live in a neighborhood with lower crime, more retail, and easier parking.   Granted, it wasn't as spacious as the row house, but I made do.   Financially, I came out ahead simply by living in a better neighborhood.   Others make different choices.

Similarly, people choose to live in rural areas - often without jobs - and wait for jobs to come to them, and complain that there aren't enough grocery stores or other resources.   I guess they feel the government should provide these?  Or they could move away from an impoverished area and seek employment in areas where they are hiring.  It is easy to do?  No.  It is hard work, and you will spend a substantial portion of your paycheck on rent.  But you will do better and you get more living in civilization.

It's not just grocery stores, though.   There are shortages of dentists and doctors and other services in rural areas.  This weepy piece from the Washington Post ("Democracy Cries in the Darkness") describes how people in rural West Virginia line up for a free clinic once a month.  Reading the article, all I could think was, "Why don't they sign up for Obamacare?"  Because in the impoverished local town I live near, they have a sign-up table right there in the Wal-Mart.    But of course, you have to live at least somewhere near a town or city large enough to have a doctor, in order to make this work,

We are awash in a sea of dentists in this country - an overpopulation of them.   More and more graduate every year, and yet there are part of the country where there are no dentists, such as rural West Virginia.   Why is this?    Well, as a young dentist, starting out, you could go to West Virginia, and go broke.  You'd get few customers, other than for the occasional extraction when teeth rot out, and likely half of those won't pay.   Or, you could move to the big city, set up shop in a strip mall, an do expensive cosmetic dentistry for people who have jobs and maybe even dental plans.

And the same is true for doctors.  There is little or no profit in setting up shop in some rural area.  And profit is not an evil thing - it is what you need to survive.  The free-market economy has its flaws, and one of them is that people will migrate to places that are profitable, and leave behind places where there is no money to be made.   This does not bode well for those left behind, but it begs the question, why did they decide to stay?

Now, I suppose when Comrade Sanders comes into power and disbands Congress and the Supreme Court (like that would happen) he would assign territories for dentists and doctors based on perceived need, much as National Health does in the UK.  But don't hold your breath waiting for it, because it ain't likely to happen in the USA - and neither will student loan forgiveness and slave reparations.

"Well, Bob, that's easy for you to say, you never had to move to find a job!"   Au Contraire, my friend.  I have moved several times in my life, to find jobs or to find a better job.   I never sat on my ass and assumed that work would come to be because I was entitled to it.   When I realized that opportunities in the rust belt were slowly seeping away, I moved away - and thrived.  Places like New York have negative population growth for a reason.   Find a job somewhere else and then move there (and not vice-versa).  Waiting for the finger-cutting factory to reopen after 20 years simply isn't a good plan.

But getting back to narratives, the other issue that is not addressed in these weepy stories is that the number of folks we are talking about is pretty small.   In a nation of 300+ million people, we are talking about a tiny percentage of the population.    These stories - and other "poverty stories" tend to concentrate on the least fortunate (as they would put it - implying luck is involved) in our country and ignore the vast majority of Americans who live within a 30 minutes of a grocery store and an Indian casino.

It is like these stories about the homeless in San Francisco.   Yes, it is a crises, not because a huge percentage of the population is living on the street, but because the small minority that is, is shitting the sidewalk, doing drugs, and breaking into your car.   "Homeless Advocates" want to make homelessness more comfortable and attractive by spending more money on homeless housing and whatnot.  But maybe we should worry less about the 7,499 homeless people (that few - really?) and more about the millions of tax-paying workers who are busting their ass just trying to get by - and playing by the rules.

These narratives would have you think that the city was awash in homelessness, when in fact, in each district there are only a hundred or so.  And as I noted before, many of these are there by their own volition, as the result of drug use and mental illness.   They stop taking their meds proscribed for them, and take illegal meds instead.   Maybe we need to bring back the old-school mental institutions where such folks could get treatment - but that is shouted down as "heartless".   No, we need to set up a homeless "shelter" which has all the charm of the Bedlam asylum.
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But the main thing is this:  These sort of ain't-it-awful articles are using the circumstances of a tiny minority of people in this country to paint the whole country as some sort of run-down rotten place.  And the folks doing this (like our socialist friends at The Guardian) have an agenda behind this.   It is awfully hard to tear down America, when America is so wealthy and successful.  So you seek out the poorest and most disadvantaged person in the country (who is wealthier than half the folks in Africa) and try to paint a picture that this is what America is like.   And sadly, many Americans get involved in this as well, using these types of stories as a means of getting elected - convincing ordinary Americans that somehow their fortune is ill-gotten and undeserved.

In a way, it is like this narrative about ocean pollution - it is just assumed that the United States is behind this, and the reason why there is a "garbage patch" in the middle of the Pacific is because you threw away a plastic coke bottle.   But the reality is, the largest source of this trash (besides discarded fishing gear) is trash from Asia and India, where things like "recycling" have yet to take hold.  But that doesn't fit the "USA is bad" narrative, and some people flat out refuse to believe it when you tell them.  Note the accompanying graphic in the article cited above, shows the amount of plastic in each ocean, but puts the "North Pacific" numbers over the United States, as if to imply this is the source of the trash.  But such is not the case, as the article points out - 90% of this trash comes from Asia and India.  Sorry, haters, but that's the truth.

So, stop feeling bad about your country.  You are lucky to live here - and if you doubt this, buy a one-way ticket to Sudan (don't bother with a round-trip, you'll be killed within a day of arriving anyway).   People really have it bad in other places, and it is obscene in my opinion to whine about how awful things are in America, when so many others in the world have it far, far worse.    Why do you think we have this migration issue?  Why are people lined up at the border trying to get in?  Yea, that.

Sadly, I doubt this will change anytime soon.   Americans love to feel sorry for themselves, and love to read weepy stories about how hard some folks have it here in the land of milk and honey.

Monday, June 24, 2019

When Downsizing Makes No Sense


The point of downsizing your home is to save money, not to break-even or spend even more.

I made the mistake of clicking on "Sponsored Content" on a news site and went down the rabbit-hole to Realtor.com, which features articles about the "Property Twins" and their sage advice on how to hand over a substantial portion of your wealth to a Real Estate Agent.   I am not kidding about this last part - why do you think realtor.com sponsors these articles?   The whole idea of getting people to obsess about their homes, home values, and to look at the home as some sort of personal goldmine, benefits real estate agents and Realtors(tm).

The article had some good advice on how to stage a home for resale - in terms of using muted colors that are not "dated".   As I noted before, this whole "grey" thing is trendy today, but I suspect in five years or less, it will be "Oh, so 2010's!" and people will turn up their noses at it.  It is hard to stay ahead of this curve.  White walls were popular for a bit, then yellow (the color featured in the article) then sort of an oatmeal color (which we are cursed with) and today grey (which we succumbed to).  Painting a room isn't hard - the hardest part is the prep work, moving furniture, covering up things, cleaning surfaces, cutting in, etc.

Dark red, particularly as a texture paint can be very attractive.  The same property gurus who talk about "angry red walls" no doubt were all ga-ga over "Chinese Red" (as it was called back then) in the late 1990's.   There are no bad colors, really, but styles change.  No doubt people will be painting their houses purple next year, and everyone will be saying, "You still have grey?"   And then purple will seem dated, and flat-black will become a thing.  You know how this game is played - and no doubt Benjamin Moore has their ugly hand in this.

But the practical advice about painting was about all they had.   They suggested an expensive ($85,000) kitchen and bath remodel, which they claimed would bring the sales price up from $600,000 to $800,000 and thus "pay back" the "investment".   But of course, these numbers come from the scientific bureau of pull-it-out-your-ass, not from any real science.  It is all-too-easy to say, in retrospect, that you got "$200,000 more" for the house than you would have, when the house wasn't sold for the lower amount as a real test data point.   The touted "profit" in remodeling was, for the most part, conjecture.

Again, and as I noted in my previous posting, in a rising housing market, it isn't rocket science to buy a house and flip it for more money without doing a damn thing to it.  So these shows that show people buying a house and doing a lot of cosmetic repairs and then making a lot of money in the deal are really kind of specious (and in many cases, the low-ball numbers they show for the remodeling costs seem suspicious to me).   Sure they made a "profit" on the house - but they likely would have made a similar profit simply by reselling it as-is, in markets like Toronto or Vancouver or San Francisco, where real estate prices have gone berserk.

A house in clean condition will sell faster than one that has issues and needs work.  But in spastic markets like the bay area or Vancouver, even a "tear-down" sells overnight for seven figures.  Many people make the mistake (in my opinion) of remodeling their home in order to sell it.  They live in a festering shithole for a decade or more, and then only when they decide to sell, do they improve the house and make it more livable.  They put in new appliances and paint the walls, not for their own enjoyment, but for the next owners.   And the next owners tear it all out and start over anyway.

Just a thought, but if you are going to remodel a house, perhaps you should remodel it during your tenure so you get some enjoyment out of your money.   This is why we are installing the new flooring and painting now, as opposed to later - why not enjoy these things that you paid for, instead of seeing - at the very last moment you live there - how nice your house could have been?  But I digress.

The whole point of these "flipping" and remodeling shows is to sell you on the idea that your house is made of gold, and that you can make money by spending money on your house.  The reality is, of course, that when you do a renovation, even a kitchen or bath, you might get back 50 cents on the dollar, in most cases.  The idea that you can profit from remodeling is basically a lie - and you know how I feel about liars.

A secondary message they are sending with these TeeVee shows is that owning a house is some big complicated deal, and you have to consult with "experts" to understand how to buy and sell a house.  Yet, most of their good advice is just good common sense - stage your house, get rid of half your stuff, get rid of junk and personal items, paint it neutral colors, fix broken things, etc.   The other half of their advice - the bad half - is just shilling for sponsors who sell high-end fixtures and whatnot.  But people like to watch that on TeeVee - the demolition, the e-z installation of new stuff (which is never as easy as the show it) and then finally the ooohs and aaaahs over the "reveal" - it is just click-bait television.

But that's not what really tripped my trigger about this article.  The poor lady who owned this house in Calgary (which is a city I would think hard about moving away from, quite frankly) wanted to downsize after her partner died.  The "Property Twins" helpfully suggested she move to a $600,000 condo which had a staggering $899 a month condo fee, which included two parking spaces and gym fees.   The "twins" helpfully suggested she rent out a parking space for $300 a month to offset the condo fee.

I am not sure this is "downsizing" so much as it is lateral-sizing.  The overall cost of the condo, when you factor in fees, is about the same as the house.  Oh, and yea, she had a mortgage to boot.  She even got into a bidding war over the condo and paid over asking price for it, using the logic that a few thousand dollars more in price meant only a few dollars extra a month in mortgage payments.  Which makes sense, if you use the monthly-payment mentality.  But in terms of net worth, it comes back to bite you on the ass, as if property values decline, you end up in a bit of a pickle.

And of course, property values in Calgary will never go down.  Everyone wants to move there for the balmy weather and the "Stampede" of course.  And I am being sarcastic.  The last time we were there, we got stuck in unfinished townhouse hell, trying to find a campground that used to be on the outskirts of town that had some sort of organic restaurant.  The restaurant was closed, the campground was run down, and the acres and acres of town homes surrounding the place were all empty - bought by speculators who never lived in them.

But fortunately, housing prices in Calgary will never go downNever, ever, ever.  Because it is such an attractive place to live.  Oh, wait.  Whoops.   Quite frankly, I thought Edmonton was nicer.

And the problem for this lady is that when the market contracts, condos decline more rapidly than townhouses, which in turn decline more than free-standing homes.   If you factor in all the transaction fees (Real estate agent fee, document fees, inspections, appraisals, loan origination fees, deed stamps, etc.) she spent at least 10% or more in the transaction - 6% in real estate agent fees alone, for the sale of her house.   So while they tout this as a "win" with the seller taking away over a hundred grand (after remodeling fees are deducted) if you deduct the transaction costs, which could have been as high as $80,000, well, there isn't much take-away from this "downsizing" exercise.   In fact, she may walk away with very little, and have the same or higher monthly cost to boot.

The prices quoted in the article seem somewhat obscene, until you realize they are in Canadian Rubles, and not good-old-USA bucks, which continue to the strongest currency in the world, despite our President's best efforts.  But even then, a median home price of over four-hundred-grand in the middle-of-nowhere Canada seems kind of ridiculous.

If you are going to downsize, that is a good idea - but just selling your house and buying just anything isn't really a smart move.  You have to figure out a move that results in you cashing out a significant sum (to make the transaction costs worthwhile) or, if you are in debt, get out from an onerous mortgage payment.    And hopefully, the monthly carrying costs will be less, not more than your previous house.

For example, where we live, houses sell for a little under a half-million dollars.  You can downsize to a half a duplex for maybe $300,000.   You could downsize further to a condo for under $200,000.   Or you could move off the island and live in a nicer and newer house with a pool, for about half what it costs to live here  And yes, some folks are doing just that.   You can buy a house with a deepwater dock for less than it costs to live on the island.

The point is, there is more to downsizing than having one less bedroom to vacuum.   The whole point should be not only to simplify your life as you get older (with less maintenance chores and expenses) but also to cash-out of this equity in a manner than doesn't waste most of it in interest payments (as a reverse mortgage would).  Finding a place that is smaller and cheaper and less maintenance can be done, but it may require that you move.

Just buying a different house that costs about as much as the one you left behind makes no sense to me.  But to the Real Estate agent collecting 6% on each end of the transaction, I am sure it sounds like a swell idea!

P.S. - After many decades, Real Estate Goddess Edith Lank is retiring.  We will all miss her sage advice and dry wit.   Her advice was common-sense - something that is lacking in this era of Real Estate Reality TeeVee nonsense!

See also:  http://livingstingy.blogspot.com/2010/02/edith-lank-is-god.html

Sunday, June 23, 2019

Flipping Nonsense


Trying to buy and sell Commodities and make a profit in the process is a business of margins.

A reader writes asking me what I think of a YouTube video that talks about buying and flipping cars. If you thought that buying and flipping houses was risky, buying and flipping cars is even more so, and the potential profits are even more infinitesimal.

The home flipping phenomena has always been popular in rising home markets.  When housing prices go berserk and increased by 20 to 30% a year as they did in 1989 and again in 2009 - and again in 2019 in certain markets, it's not hard to buy a house, hold it for a month or two, and then turn around and sell it at a tidy profit, regardless of whether you remodel it or not.

If you can find a distressed property or distressed buyer and purchase the property for cheap, you're all the better off.  And if you can dress up the house on the cheap so that it sells quickly, you can increase your profits even further. However, all of this is predicated on an endless supply of distressed properties, along with low-cost labor and upgrades, and an endless supply of people willing and able to buy the property at an inflated price at the other end of the transaction.

Eventually you run out of chumps.  So then,you sell the "system" on how to flip houses, or star in a reality TeeVee show about it.   That's where the real money is, not in actually buying and selling houses.

Not a day goes by that I don't get a postcard or email from someone who is subscribed to one of these property flipper seminars, who wants to buy my condominium in Virginia and flip it for a quick profit. They're hoping I am fed up with owning the condominium and will sell it to them for $100,000 and they can repaint it and put in a new kitchen countertop, and sell it for a $160,000.

But so far, I've declined their offers, mostly because the building is slated to be torn down in a few years and at that point the Condominium Association will just cut me a check without any Realtors fees involved.  I suppose if I was desperate for cash and needed to sell, I might take them up on their offer. And in any Market there always people in that situation.  On the other hand, I think I would just call one of my Real Estate friends in Virginia and tell them to list it at an attractive price - if I wanted to unload it in a hurry.

I remember going to an estate sale in Virginia down the road for me and seeing a house that was in pretty bad shape.  Both the husband and wife were smokers and where they had removed the paintings from the walls you could see the pattern of nicotine stains.  Not surprisingly they both died of lung cancer.  Their children lived many States away and just wanted to unload the house and sold it very cheaply that weekend. Somebody cleaned up on that deal, but only after they cleaned up all the nicotine stains and made some pretty major repairs to the property.

A neighbor here on the island did the same thing, buying a house from a deceased elderly woman's estate.  Her children came to clean out the house and settle her affairs and since they lived on the other side of the country, they didn't want to mess around with trying to list the property or make improvements on it in order to get it to sell.  He made him a low-ball offer and they took it, thinking correctly that not having to wait months on end for the house to sell and not paying a 6% realtor commission was a pretty fair trade-off for a lower price.

My neighbor was lucky.  The local real estate agents (and there are only two) generally snatch up such bargains.   They are feet-on-the-ground and usually aware when a distressed property is going up for sale.   They tend to snag all the distressed property low-ball deals.  It is rare than an ordinary citizen snatches one, as my friend did.

(One reason we were able to get some low-ball distressed properties was that we had a friend who did foreclosures for Ford Finance, back when they did mortgages.  Mark ended up becoming a real estate agent, and as such, we had access back then to the MLS system (which was not online in those days) as well as a "heads up" to new listings and inside information about quick sales.   When you are on the short list of who to call when you want to unload a property, you can snag deals.   Unfortunately, once we left that area, we were no longer on that list.   Getting on that list isn't easy to do.)

My friend remodeled the house and put on the market for more than a hundred thousand then he paid for it. Of course, he put quite a lot of money into it including a whole new kitchen and bathrooms as well as tearing out walls and doing some pretty major renovations.  But he still made some money at it - although it was a nice capital gains tax problem for him.   Nice work if you can get it.

On the other hand, it is a risk-taking venture, and if housing prices start to collapse, you could be the one holding the bag with all the music stops, as happened to a lot of people I know, back in 2009 or thereabouts. Back then, many people were buying and flipping new construction or mini-mansions , and ended up over-extended with no buyers and mortgage payments due.  So the idea that there is easy money in flipping things is overstated.  As the present real estate market starts to contract, particularly in what were formerly hot markets, you will see less and less house-flipping going on.

Of course the real money to be made - and safe money - is in telling other people how to flip houses. You've no doubt seen the billboards about "Buy Ugly Houses" - these people make a lot of money by selling a course on how to buy houses for cheap and then fix them up and sell them for more money. If you've read the preceding paragraphs I've just saved you $40,000 in tuition fees.  Because it's really not all that difficult or rocket science to buy something distressed and fix it up. The hard part is just finding these distressed properties, particularly when there's a lot of competition for them.

But selling the idea of house-flipping is far more profitable and a lot less risky. You charge people for the seminars and instruction materials and it's all pure profit.  You don't risk any money in the housing market or have to seek out these distressed properties to buy.

"But Bob, you made money buying and selling houses, right?"   Wrong.  We made money buying and renting out houses, taking generous depreciation deductions, and then selling them years later.   We never bought into the idea that you could take a property and make quick profits from it, because it is very hard to do that, and just as easy to make quick losses as well.   There is a differences between investing in real estate and speculating in real estate.  The television and shows like "property twins" promote the latter.  And speculating is not investing.

Getting back to flipping itself, is there money to be made in flipping cars?  Well it is possible to make tens of thousands of dollars and buying and selling a house, simply because they're very expensive items to begin with.  But buying and selling cars is a much more marginal business, unless you are flipping million-dollar exotics, which is a very risky business.  Not only that, you're competing with a legion of new- and used-car dealers who have far more acumen than you do as well as better resources.

This is not to say it can't be done - and the legions of small used car lots across the country are testament to this.  Small used car dealers go to auto auctions and buy the cars that the main dealers don't want.  Often these are cars that have some issues such as higher mileage or excessive wear. They fix them up and buff them, using in-house employees they pay very little.  They then put them on their car lot, which is usually in a bad neighborhood.  The way they're able to sell these cars for so much money as they offer easy-money financing to people with bad credit.  People with bad credit usually don't have much common sense, and they will sign on the dotted line in order to get a shiny car.  It doesn't bother them that the car has 250,000 miles on it, or that they paid over book value for it, because they don't realize these things are important.

But below that level are there real bottom-feeders - the curbstoners.  These are people who often don't have auto dealer licenses and instead buy and sell cars from individuals trying to eke out small profits in the margin.  You can always tell if you're buying from a curbstoner, as when they sign over the title to you, the title is not in their name but in the previous owner's name.  They bought the car from someone else and then sold it to you and didn't bother titling it, because they would have to pay the title tax and fees, which wouldn't have negated most of their profits in the sale.

As I noted before, we used to have an impromptu used car lot at the local grocery store where I lived in Virginia.  People put their cars out on the lot and put a for sale sign on them.  On any given weekend there were three or four cars out there, maybe as many as a half-dozen, for sale.  I've actually bought and sold a couple of cars there.  The local Car Dealers Association threatened the strip mall owner with fines, arguing that they were acting as a car dealer by having more than four cars on their parking lot for sale at one time.  Of course the strip mall owner wasn't selling the cars, it was local people.  And if this is against the law, one wonders whether it's legal to even have a "for sale" sign in your car, because if you park in a parking lot and there's more than three other cars there with similar signs, they can tow your car away.  The car dealers were trying to argue they were protecting the consumer, but what they were really doing is protecting their own interests.

Anyway, one weekend there was a beautiful 1992 BMW 318i for sale. It was a Boston Green (Bonstongrun) two-door coupe with a sunroof and a brand new 4 cylinder engine. BMW had problems with the profile gaskets leaking in the cooling system and the engine had overheated. The lady who owned it was a flight attendant and she paid to have a new motor put in, so the car was in pretty good shape and quite a good deal. She wanted about $3,000 for it as I recall.

Mark and I vacillated on whether we wanted such a car, and we finally called her, she told us she sold it to a gentleman for $2,000 the day before. The gentleman in question was a man I call "Lois Price."  He was an Indian gentleman, and whenever you put your car in the paper or out in the parking lot for sale, he would call you up on the phone and scream, "What is your lowest price! What is your lowest price!"   And if you replied with your asking price, he would scream at you some more.

Apparently his high-pressure buying technique worked with some sellers.  Many people have a lot of anxiety over selling their cars and often let them go for cheap, because they're afraid they're never going to sell ever, ever, ever, forever, amen.  I ran into this when I sold my truck recently, as people would call me and tell me it was overpriced,  I would never get what I was asking for for it, and would I sold to them for $5,000?  However it did sell within a week and I did get my price, which actually was a very fair price, below book value.  No doubt, the people haranguing me on the phone were probably curbstoners.

And yes, in a few instances, I have been able to buy a car and sell it for more than I paid for it. I recounted before how a friend of mine wanted to unload his 1981 Mazda GLC for $500. The car wasn't in bad shape and actually had pretty low miles. The clear coat has started to peel off the paint is it was parked next to an industrial chemical plant. The driver side door handle didn't work and the four way flashers and turn signals were broken. The alternator light was on and he was convinced that it needed an expensive new alternator which the dealer wanted well over $100 for.    He was tired of climbing over the passenger seat and stick shift to get into the car and also worried it would not pass New York state inspection.

I fixed the door handle using some old carburetor linkage off a Chevrolet.  One of the plastic clips on the door handle linkage had broken.  And I found out that the turn signal problem and alternator light problem where result of him trying to use an American flasher module in place of the original Mazda part.  I had to get the original Mazda part from the Mazda dealer, and I recall it cost an astounding $100 at the time.  But once I plugged it in, the car ran perfectly.

By the way, that is the key to "flipping" car, if you can do it at all - you have to be handy and be able to fix minor things like this without having to hire a mechanic.  It is the same as house-flipping - if you have to hire out all the work, well, odds are, you aren't going to make much money.

I drove it for about a year and then sold it for $1,000 to a young couple who are graduate students at Syracuse University. They were happy to get a low mileage used car that was reliable and good on gas. I was happy to make a little money to pay for my last semester's tuition.

But such things are the exception, not the norm. You have to find a buyer who thinks his car is a piece of crap and wants to unload it as quickly as possible.  And then you have to clean it up and fix minor things and then market it.  And even then, all you're going to make us a few hundred dollars, if that.

If you can do this over and over again, over time you might make a few thousand dollars.  Moreover, if you are a very astute, you can buy a used car from a distressed owner, fix it up and drive it for a year and then turn around and sell it for more than you paid for it.  Thus, unlike the vast bulk of humanity who buys cars and sells them for less as they depreciate, you can be the guy coming out ahead of the curve.  Nice work if you can get it.

But of course, this becomes a full-time job. You constantly have to scan the classified ads looking for under appreciated vehicles and know the market very well as to what market values are and what vehicles are popular.   You also have to be comfortable with taking advantage of people as well.  You have to become Lois Price and scream at people on the phone and generally behave like, well, a used car dealer, and we all know what nice people those are.  And not all of us are cut out to be so heartless and calculating.

For example, there was a lady here on the island, as Ireported before, who had her son's Nissan parked in the front yard.  The boy died at a very early age, and the mother was distraught.  Rather than selling the car, she let it sit in the driveway for almost three years until the tires were flat. It wasn't in bad shape, but it wasn't in great shape either.  One fender was badly repainted and it had some pretty bad seat covers on it.

She told me that she liked seeing the car in the driveway because it made her feel like her son was going to come home any day now.  But after several years she realized this was taking an emotional toll on her and wanted to get rid of it in a hurry.  She would have sold it for a pittance at that point.  And if I felt I wanted to take advantage of a grieving mother, I could have bought it for nearly nothing.

With a little R&R I could have sold it doubled my money, but of course that means making $1,000 which isn't really all that much money these days.   At the time, I was leaving for vacation, did you want to buy the car and have it sit in my driveway for several months.  Also I felt kind of uneasy taking advantage of this lady. And moreover there was probably somebody in the surrounding community, which is rather impoverished, who could make better use of the vehicle for their own personal transportation.  So I walked away from the deal.

Deals like that are out there - you want to take advantage of grieving mothers?   Go right ahead.

In the realm of exotic cars, it gets more difficult.   Sure, you can find a "distressed" exotic that maybe was in a wreck or wasn't taken care of.  You can fix the problems with it like Hoovie on YouTube does.  But in the rarefied air of exotic cars, the provenance of the vehicle is all-so-important.  If you don't have complete service records, it is harder to sell the car.  And a high-mileage exotic that has been a major wreck will never be collectible, unless it was driven by Steve McQueen.   In Florida and Las Vegas and other tacky places, you see "exotic car" dealers, who have showrooms full of fancy cars.  Some of them are real gems, some of them are real fright pigs.   None are very attractively priced.   But then again, they only have to sell one or two a month to make a profit - so long as the supply of fools is never-ending, they stay in business.

So could you buy and flip vehicles for Fun and Profit?  Sure, just you can buy and flip any commodity and make money.  But the buying and selling of commodities is a marginal business, mostly because other people are already in the business and therefore there's a race to the bottom in terms of profits.  MLM schemes and schemes about selling things on Amazon and whatnot all fall under the same category.  Yes you can buy things locally and flip them and sell them on eBay and make a small profit. B ut you have to be lucky enough to find things to buy that you know will sell for more money, and even then, it's a lot of work for not a lot of profit.

I recounted before the lady in Maine who went and bought clothing at a local discount store and put it on eBay.  She would mark up everything 20% and if it didn't sell after a few weeks, she would take it back to the store for a full refund.  Yes it was profitable, but yes it was also a lot of work to go to the store and buy these things package them up, list them on eBay, take pictures, sell them, and ship them.  Nobody was handing her free cash - she had to work for it.

Similarly, these systems for selling things on Amazon often fall down because they require the seller to purchase products in advance and front the money.  If the product doesn't sell, you can lose your shirt.  Also, Amazon is cutting back on the number of small retailers that use Amazon as a fulfillment center.  Quite frankly, Amazon's not making money on these transactions and so they're just shutting the whole thing down.

Whenever someone tries to get you into an enterprise that's base d on buying something and turning around and selling it at a higher price, you should be skeptical. Whether it is soaps and lotions in an MLM scheme, or gold or Bitcoin or whatever, you're basically trading commodities. And trading commodities is not only risky, but the margins can be razor-thin.  Sure, every once in a while somebody makes an awful lot of money when some commodity shoots way up in value, but usually that's unexpected.   And those big wins are usually well-publicized, just as the guy who wins big at the casino or the lottery is well-publicized.   The losers are never discussed.

Being a merchant is not an easy business.  Sure, Walmart makes a lot of money at it, but they're the largest retailer in the world, with thousands of stores and the buying power to crush suppliers and lower their purchase prices.  Plus, they have name-brand recognition and exposure to hundreds of millions of customers.  As an individual you have none of that.

Unless you want to make a career out of being a merchant, I would leave the merchandising to the merchants.  Because the profits just aren't there and it is an awful lot of work.  There is no free money.

On the other hand, if you want a sure-fire way to make money, sell the idea of making money, flipping houses, flipping cars, losing weight, or selling soap.  Because that's where the real money is, without all the attendant risk.

Friday, June 21, 2019

Why Democrats Want To Lose in 2020


Sometimes winning is losing and losing is winning....

If you are and old-time Democrat, you've probably been scratching your head for the last few years.  After all, the party had a chance to keep the Presidency with the election of Hillary Clinton in 2016, and despite all the hoopla over stolen elections and Russian interference, the biggest obstacle to her Presidency came not from the Right but from the Left - a certain "Independent" Senator from Vermont, who once again wants the nomination of the party he refuses to join.

Fast forward three years, and the same group of leftists are tearing down the one candidate that has the best chance of beating Donald Trump.   Joe Biden, we are told, is too conservative, too white, too old, too establishment.  Nothing short of overthrowing the country will fix our "problems" (what were those again?  Being the wealthiest country in the world?  Oh, that).

So we are hearing all sorts of far-left nonsense these days.   We need free college, loan forgiveness, guaranteed annual income (free money) and voting for felons - while they are in jail.   The latter troubles me a bit.  If you were a convicted felon, who would you vote for, for Sheriff or District Attorney?  A fellow gang member?  Just saying.

And then hoary old ideas like slave reparations are once again dredged up, as if somehow this was a compelling issue today, when it wasn't eight years ago when we had a black President.   It is nothing short of pandering to the black vote, and I suspect more than one black voter is scratching their head and wondering where this all came from.

For the record, I am in favor of slave reparations.   Anyone who was enslaved in the United States prior to 1865 should be compensated.   However, their children, grand-children, great-great-grandchildren, and so on and so forth - that's another story.   We have something called a "statute of limitations" for a reason.  We can't keep re-litigating old grievances forever.  You could argue that a young black man today doesn't have the advantages of some young white man - and maybe that would be true.  But does that apply to the young black man whose father is a stock broker versus the young white man whose Dad is a broken-down alcoholic?   Do we just hand out money based on race?  People are individuals, not statistics.

It is a relevant question to me.  You see, distant ancestors on my Mother's side of the family owned slaves.  And no doubt they profited from that - although Colonel Thompson did lose most of his wealth due to the Civil War - and left Alabama for Texas to start over again.  His son didn't run a plantation, but rather went to Civil Engineering school and became the road commissioner in Texas, because by then, there was no inheritance to be had.   Between that and the generation today is a pattern of bankruptcy, alcoholism, and suicide.  And my Father's side of the family came over here with nothing and managed the same trick - to gain and lose wealth over the generations.  At more than one point or another in my family tree, there was a time when one generation had to start over with nothing.   So did we really get "money batons" as some would argue?

It is an interesting thing to think about, and of course politics plays a part.  Republicans (who freed the slaves, ironically, but are racist today) are against slave reparations, but in favor of Cuban-Americans getting back property seized more than a half-century ago by Castro.   But on the other hand, they are not in favor of Israel returning lands seized from Arabs in 1949.   It depends on which side of the spectrum you are on, in terms of reparations and refunds - and which voting bloc you represent.

My position?   No one gets their money back, after a certain time period (and I think once you are dead, your kids don't get it back, or after let's say, 50 years).  Israel isn't going away or giving back their lands.  Castro isn't giving back casinos or fincas to Cuban ex-pats.   And no, we aren't giving Manhattan back to the Indians.  It just isn't going to happen, from a practical standpoint, and these sort of issues don't engender progress, but rather retard it.  Once you predicate any negotiations on "I get all Grandpa's stuff back!" nothing will happen.

And again, when do I get all my Grandpa's stuff back?  After all, my ancestors were thrown off their tenant farms a hundred years ago when the English decided to convert all that to sheep farming for the wool business.  "Off my land!" they said, "And here's a free ticket to America - on the Titanic!"  Or maybe I should get back the 100 acres my ancestors farmed in Park Slope, Brooklyn.  After all, it was our ancestral land!   Never mind that we lost it through mental illness, poor business practice, and heavy drinking.   We want everything back the way it was!

It just is a non-starter.  There has to be some sort of time limit on this stuff.   And speaking of non-starters, do you think any of these "progressive" agenda items will ever pass both halls of Congress?   Do you really think AOC's efforts to outlaw garbage disposals as "bougie" will succeed?   That the vast majority of Americans will just lay down and say, "take all my money and give it to convicted felons so they can vote?"

Of course not.  These are just talking points that they know have no chance of ever being enacted into law, but are a way of pandering to the far-left voters who might turn out in a caucus in Iowa.  They are, in a way, trying to buy votes by falling all over each other to give away government money, which is to say someone else's money.   And they know, deep down, that unless they win huge majorities in both houses of Congress and the White House, none of this will ever come into being.  And even then, a new conservative Supreme Court may take issue with some of these items as an "unjust taking".

So why are the Democrats embracing far-left ideologies?  I think in part because they want to lose the next Presidential election.   Losing would be better than winning, in 2020, for a number of reasons:

1.  The Recession:   We are overdue for a recession and the signs one is coming have been unmistakable.   The trucking business, once booming, is now retreating - several companies have gone bankrupt.  Not but a few months ago, there were cries of driver shortgages.  Today, they are laying off drivers because there isn't enough freight to move because people have stopped buying things.   Car sales are off - everyone is so far into debt they can't afford a $75,000 pickup truck.  And the hot housing markets are cooling off, rather suddenly.

All this spells trouble down the road - and the ballooning deficit and national debt aren't helping - and tariff wars will insure that the recession is protracted.   If Trump loses in 2020, it will be as he predicted - a recession will follow.   But of course, if Trump wins in 2020, the same is true.  The difference is, of course, that if Trump loses, he can (and will) blame the Democrats for causing the recession.

Already today, people believe that the market crash that took place during the Bush era somehow took place during Obama's term - or failing that, that Bill Clinton, a decade earlier, plotted and planned the entire thing.   When the stock market crashes, you want Herbert Hoover in the White House, not Roosevelt.

So in terms of "It's the economy, stupid" you want a Republican to take the blame (as they rightly should) when it all goes horribly wrong.

2.  Teach the Left a Lesson:  The leftists are convinced, much as their rightest brethren (and they are more alike than you think) are, that the reason their party is losing elections is that they are not radical enough.  If only Bernie Sanders was at the top of the ticket, Trump would have lost!   In reality, Trump would have won the popular vote - and not just the electoral college -  if Sanders was running against him.  Americans don't want socialism - outside of certain parts of New York and California.

So if they put up some leftist wacko, who promises free shit for everyone, you can bet the middle-of-the-road independent voters - who make up the vast majority of the electorate - will either stay home or hold their nose and vote Trump.   The Left loses, and maybe (just maybe) they learn a lesson that incremental changes are better than no change at all, and perhaps sometimes you have to compromise your principles in order to get anything accomplished (and acknowledge there are others out there whose opinions are different than yours - and for good reason).

3.  Win in 2024:   If Trump is re-elected, we can be sure that things will likely get a lot worse, unless he turns out to be some sort of mad evil genius (I don't bank on that).   So by 2024, the recession kicks in, made worse by tax cuts, deficit spending, and a trade war.   What would have been the mild recession of 2021 turns into the market crash of 2022.  All the lessons of 2008 will have to be learned all over again - that banking regulations were there for a reason, and lending money to insolvent people never works out well.

Funny thing is, we keep having to re-learn these lessons.   Back in the 1980's we had the S&L crises and everyone went ga-ga over "junk bonds" and then acted shocked when they turned out to be.... junk.

And it goes all the way back to the great depression.  My Grandfather, who was head of the banking section of  the New York State Bar, was involved in the financial banking reforms of the 1930's - reforms that were slowly unwound over time, with predictable results.   We keep having to re-learn these same lessons again and again, it seems.

So, by 2024, people will say, "enough is enough!" as they lose their jobs, their houses, their cars, and their life's savings.  And they will turn away from far-right and far-left politics and elect someone who can straighten things out.  And like a drug addict or a drunk, as soon as economic conditions improve, they will say, "You know, having a little debt is OK, now and then - let's just have a tipple!" and the whole damn thing starts over again.

Maybe by 2024 things like "white privilege" and "cultural appropriation" and "micro-aggressions" will be finally put in the dumpster where they belong - because dividing people by race and class and trying to make people feel guilty for working hard and succeeding in life simply isn't a marketable strategy.   People will always vote for the politician who tells them they are great and makes them feel good.   If you doubt this, check out who is in the White House.

But then again, I am not confident that humanity has much common-sense.   And it is one reason why I am not worried too much about it.  Even if they enact all this socialist nonsense, I will be safely in the grave by then.