Vacation Insurance? Are You Kidding Me?

Insuring your vacation?  What's next, insuring the toothpaste in your medicine cabinet?

I recently received a plea from a credit card company to sell me vacation insurance.  These people must coordinate with our media overlords, as NBC news recently ran a piece on this as well.

Does travel insurance make any sense?   As this CNN piece notes, if you are planning a "trip of a lifetime" and spending tens of thousands of dollars, then maybe yes.   However, I would argue that even then, travel insurance may be a waste of money.

If you have to pay to insure something, then it had better be something dear to you.   And you have to ask yourself, for your income and wealth status, does owning such an expensive thing make sense?

If you worry about losing a $500 iPhone, then maybe you shouldn't own one.   If you worry about a dent in your fender, maybe you should own less car.   If some physical possession is so expensive, relative to your income or wealth, that you live in paranoid fear of losing it, then maybe you shouldn't own something so expensive.

I have mentioned this before with regard to collision insurance, extended warranties, and the like.   People pay hundreds, if not thousands of dollars a year to insure trivial risks, while ignoring their real liabilities.

A vacation should be a time to relax and have fun.   Yet, for some reason, there are a lot of people in America who believe that you cannot have a good time on vacation unless you are burning through a boatload of money.   Many feel they have to jet off to Bora-Bora and stay in a "resort" with white sandy beaches and have gourmet food and those tropical drinks with little umbrellas.   And they are willing to pay thousands and thousands of dollars to do this.

Why is this?   Well, our old friend status rears its ugly head.   Did you ever notice that the folks who go on vacations like this are sure to mention it to you - and show you photos of how great it all was?

When we went on our ill-fated cruise, I was amazed at how many people lined up to have their picture taken.  Some even had photographers do "photo shoots" of the happy couple, suitable for framing.   I wonder if they really had fun on the cruise, or were just acting out some fantasy to regale their friends with later on when they got home.

What is more disturbing is how many people spend the whole year saving up money to pay for such a trip - or spend the rest of the year paying the credit card debt from such a trip.   Folks think that in order to have fun, you have to be burning through money - just as Rednecks thing that in order to have fun, an internal combustion engine has to be running somewhere, even if it is just a generator or a chainsaw.

I think otherwise.

The expensive vacation is problematic on a number of levels.

First, it is stressful.   If you are spending a thousand dollars a day on vacation (it has been done!) then you feel that you need to be "getting your money's worth" every minute.   Sadly, life does not often cooperate.  You can end up having a headache or being sick, or just not feeling well.   It can rain or be cloudy or cold.   Things can go wrong.   And then you get angry, having spend all this money.   Blowing through money on a vacation is not a relaxing vacation.

Second, it is not real.   Most of these expensive vacations are artificial experiences, where you jet off to an exotic vacation, are picked up by limo, and then taken to a gated exclusive resort, where you never experience anything "real" with regard to the country you are in.   You might as well just go to the Marriott in Ft. Lauderdale and save a lot of money.

Third, you can't afford it.   Yes, you can make the payments on your "vacation loan" and all, but chances are, the money you are blowing through for these vacations is money that should be going into your IRA - or money you should not be taking out so quickly.   Like a leased car, you might think you can afford the monthly payments.  But the overall cost to your net worth can be staggering.   And if you feel that this vacation is so costly that it needs to be insured, then maybe that is saying right there that you can't afford it.

Fourth, very little can really cancel a vacation.   Sure, sometimes things might be delayed a day or two, or you have to change travel plans and do something different that what you planned.   We rented a boat in France, and a storm came through and closed part of the canal.   We chose a different route instead.  Problem Solved.  If disruption of your plans freaks you out that much, maybe you have some sort of mental disorder that needs to be looked into.

We take a lot of vacations - perhaps four months of each year.  It isn't cheap, but then again, it isn't expensive either, as we use our cheap RV travel trailer, or rent a house or a boat with others.   We book cheap flights, and our schedule is such that if something happens, we can roll with the punches, rather than freak out because we "have to be back at work" on Monday.

Since we don't spend a lot on vacation, we can afford to take more of it - and relax more, as we don't feel we are "burning through cash" all the time.

One reason we have shied away from cruises is that they cost about $1000 a day, when you factor in all the costs (flying down there, hotel, taxi, parking, port fees and taxes, liquor bills, entertainment, shore trips, etc.).   It wasn't that fun, in part because it was so expensive.   For the money spent, we felt we should be experiencing a continuous orgasm.   It was not to be - and the staggering cost made it an unpleasant experience.  It seemed that every time you turned around, there was a charge, a fee, or someone with their hand out.   No thanks!

Sadly, this is most people's idea of a vacation - going somewhere and spending money.   If you ain't spending money, you ain't having fun - so they think.   And this is why, in tourist towns, you can make a boatload of money selling crap, as tourists think "this is what we are supposed to do" and that fun begins when you take out your wallet.

How sad.   And what a sad way to live.

Vacation insurance?   I would say no.   And if you are contemplating vacation insurance, then maybe you are spending too much on your vacation!

Relentless

No matter how poorly you are doing - or how well - you can't let up.

Another horrible month for the economy.   Oh, no, wait - another record-breaking month.   Things are so awful now that the stock market is at new highs, unemployment at new lows, and housing prices are up, all while inflation and interest rates are at record low levels.   Everything is doing pretty well.

What's that you say?  Oh, right, Benghazi.  I forgot.  Everything is rotten.  I'll stick to the program from now on.

But seriously, it is hard to keep at it - keeping your expenses in check and keeping your savings on track, particularly when things are doing well.   Granted, it is hard when things are crappy, too.   When the economy is down and you've lost your job, well, you have to tighten your belt and tap into savings, perhaps.

But when you are making money and the market is up, the temptation is to think you've made it, and can start spending money like a drunken sailor.

It is hard to break from this temptation.   And in short, that is the temptation that lead to the 2009 meltdown.   America's savings rate went negative in the late 2000's, as everyone cashed out phantom equity from their over-mortgaged houses and spent it.  The "logic" - and I heard this from more than one person - was that you might as well "enjoy" some of your new-found riches, even if they were not actual riches, but just numbers on paper.

The same is true today.  You get a little money and your investments are doing well, and it is tempting to think that, "Gee, I can afford $150 a month for a smart phone!" or "$5 for a cup of coffee is not excessive!" or some other nonsense.

In other words, we let up on the reins a bit, and end up losing site of what got us in trouble in the first place.

I find this temptation strong today, as thing are going, well, WELL.   And it is tempting to think, "My ship has come in, and I don't have to balance my checkbook anymore!"

But even for lottery winners, careful monitoring of expenditures is necessary - or they end up broke (as they usually do).

I recently switched my phone service to netTalk, to save about $300 a year.  That is not a lot of money, to be sure, and in a way, it is chasing diminishing returns.  But to walk away from $300, even if it is a bit of a "hassle" to go after it, is just foolish thinking.  Over-paying for services is overpaying.

And I recently listed some items on eBay that might net me $25 on a good day.   A waste of time?   Well, it is $25 I didn't have before, and the alternatives were to clutter my garage with these things, or throw them away.

You have to be relentless and you can't let up.   You have to keep at it, even when it seems that everything is going to plan.

Especially when everything appears to be going to plan!

The Robot Revolution (Lithium Ion Batteries)

In the future, few real robots will look like this.   But robots will become a part of everyday life - and already are.

Robots are here, it seems, or just around the corner.    The original Roomba, little more than a toy, has given way to more serious models that may outmode the vacuum cleaner, over time.   Unmanned aerial vehicles promise to do everything from patrolling parks and highways, to detecting crop problems and forest fires.   Autonomous cars that drive themselves, which seemed like a far distant dream in 1990 (when I wrote my first Patent on one) are now a real-world item.

What happened and why did robots become practical so suddenly?

In the distant past, science fiction authors described robots as humanoid, like the ASIMO robot shown above.   While there may be a place for humanoid robots, I suspect they will make up a small minority of robots of the future.   Why?   Simply because humanoid robots are impractical.   If you want a robot to do a certain task, it is far more efficient to design one to do that task.   Science fiction writers would posit that a humanoid robot would vacuum the rugs by working a standard vacuum cleaner.   However, it is far easier and more efficient (and less costly) that to make a robotic vacuum cleaner.

So I think you will see more and more specialty robots like that, rather than general-purpose humanoid robots.

By why are they more practical now?   The long answer is that improvements in energy density, in terms of power storage, have occurred.   The short answer is Lithium-Ion Batteries.

Driven by the laptop and cell phone industries, and now applied to everything from hybrid and electric cars, to airplanes and even helicopters, these batteries have made modern robotics possible.

In the past, presuming you could even design the mechanical joints and actuators to make a robot do whatever it is you wanted it to do, the big problem was energy storage.   Lead-acid batteries would power a robot for only a few minutes.   Long extension cords would be impractical.   Gasoline engines would be loud, smelly, and a fume and fire hazard.   There was no practical way to provide the power to a robot - to store large amounts of energy in a small space.

Lithium-Ion batteries solved this problem, by providing a lot of energy storage in a relatively small space, in a battery than can last a decade or more - and not be subject to the charging issues of NiCad and other battery types.

So today, you can buy an airplane - a real airplane - that runs on battery power.  This would have been though impossible just a few years ago, as batteries could not provide the energy nor the range necessary to drive a car, much less fly a plane.

As with any invention, however, there are drawbacks.   Lithium-Ion batteries store a lot of energy.  And if that energy is discharged suddenly, it can cause problems.   Battery fires have been noted in laptops, cellphones, and even on Boeing's Dreamliner.   Usually, defects in the battery construction cause such fires.

By the way, almost any battery can cause problems, due to the energy stored.  9V batteries have been known to start fires, if left in a pocket or handbag with a loose paper clip.   Once the terminals are shorted out, they can turn that paperclip red hot and cause a fire to occur.

Will we see home robots in our lifetime?   Yes, and we already are - with small autonomous robots like the Roomba.  And most, I suspect, will be like that - specialized machines for performing specific tasks.   I doubt many people will have humanoid robots to answer the door and mix Martinis, as in the science fiction books.

Well, maybe there will be a demand for humanoid robots, that is to say, sexbots.   Yes, robotics, like any technology, will bring with it a host of messy social issues.

Fear and Paranoia on the Internet, Chapter XXXIV

Is using a WiFi Hotspot in an Internet Cafe risky?   Not Really.

The media loves to bombard us with scare stories about how all your data and precious collectibles are going to be stolen over the Internet.  Fear sells - news stories, burglar alarms, guns, whatever.   You never make money telling people "Everything is OK, folks!"

Everything is OK, folks!

I was in a cafe today with a friend and noted they had a WiFi hotspot.  My friend said, "Oh, my buddy says never to use these WiFi Hotspots!   You could get your identity stolen!"

Ahhh... Internet folklore!   Like the legends about identity theft if you don't blur our your license plate number on online photos.   Our cargo cult culture at work!

But a funny thing, I have never heard of any case, ever, ever, EVER, of someone having anything stolen from them at an Internet cafe, other than their purse or smart phone.   The idea that people are going to "hack" into your computer and "steal all your passwords" is sort of nonsense.

Think about it.   Yea, I know it is hard thinking.  Put down your stupid smart phone for a minute and think.

Thinking is hard, but it is good for you.

Now think.   If you had my all my online passwords, banking information, retirement accounts, etc., what could you do with that information?  Steal all my money?   How?

For example, you went to an Internet Cafe, and somehow logged onto their router, and you somehow hacked into my computer (if I was dumb enough to list the network as "home" rather than "public") or were somehow able to intercept all those packets of data as I log into Citibank or whatever.

So, now you have my bank information, username, and password.   What do you do?

Well, you can log into the account and see that I have $1425.67 in the account.   But how to steal it?   You could go to "bill pay" and have the system cut a check, with your name and address on it.

Well, there's a problem.   You now have left a paper trail right to your home, quite literally.

Not only that, but the system will e-mail me saying a new payee has been created.  It will then sent a second e-mail saying a payment (check) has been made.  So I call the bank and alert them to the fraud, and freeze the account.

OK, so you go to "account settings" and change the password and change the account e-mail address.   Doing this may lock the account, in terms of online withdrawals, for several days, on many financial computers.  They know when user addresses, e-mails, or other critical data is changed, it may be a prelude to fraud.

It also means that an e-mail will be sent to my old e-mail address, notifying me of these changes - giving me plenty of time, again, to call the bank and freeze the account.

And, if you change these parameters and try to take money out of the account, it may just lock the account anyway, as the bank has an anal-retentive fraud prevention department.

So bill pay is out.  What does that leave?

Well, you could try a bank-to-bank transfer, I suppose.   But again, you'd have to enter your routing number and account number, and your name.   You'd be leaving a paper trail again, so to speak (an electronic trail, I guess).   And the bank would again notify me by e-mail that such a transfer is being attempted.   It takes two days to set up the bank-to-bank transfers, and three days to process the transfer.   The odds of getting caught are pretty high.

And the same is true with other types of accounts.   We are trying to settle a relative's estate, and the executor was chagrined that the folks at Vanguard wanted all sorts of documentation to close the account and cut a check.  I told him, "Well, if it was my account, I would want them to demand proof of who you are, why you are entitled to the money, and the fact that I am dead."

That just seems like simple logic.   And not surprisingly, they wanted to see his driver's license and passport, a copy of the trust document, and a sealed copy of the death certificate.   Even then, it will take weeks for them to process the transaction - and the check cut will go to a physical address with a name associated with it.  You'd be better off just forging a check than trying to go this route.

No matter how you slice it, stealing someone's data through a WiFi hotspot is just not that easy.   Now granted, if you could scour their hard drive and somehow find their social security number and other identifying information, you might be able to open a credit card in their name.  But that rarely happens - and most of the time it does, it is a relative, not a stranger who does this.

Yes, "identity theft" is rampant - particularly now that the Credit Card companies report any kind of credit card fraud as "identity theft."  But real identity theft?  Just not that common - simply because it is pretty hard to do.

Yes, I have had credit and debit card data stolen from me in the past.   From some high-tech hacking?  WiFi monitoring?   Someone going through my garbage for old statements?   Hacking into Target's computer system?   Hell, No.   I ordered some car parts from a company and they printed out, on a piece of paper my name and card number and other information.   The thief then used a high-tech machine known as a "photocopier" to make copies of this data (and that of many others) as he worked in the warehouse, and the company foolishly gave him all this data, just to fulfill the order.   He sold the data to someone who then used it online.   The first time, this cost the bank $1.11 for an attempt to buy at iTunes (to test the card).  The second time (with a debit card) they charged $400 for online ads, which I immediately noticed (being notified online) and had the card shut down, right before they attempted a $1,000 charge (which did not go through).

I should note, however, that in both cases, I was liable for nothing.   The credit card company had to pay the fraudulent charges (or seek refunds) and mail me out new cards.   So even in instances where I was "hacked" (using that high-tech "photocopy machine") I was not even liable for the damages.

So you see, this "identity theft" thing, which is just credit card fraud, is not some high-tech deal.  Your waitress copies down your card information when she takes it to the back of the restaurant, and then sells this data for a vial of crack.   It is not some "hacker" in a darkened basement stealing your data, in most cases.   There are easier ways to steal!

You just don't hear about identity theft from WiFi hotspots, simply because it is just not that prevalent - if it exists at all.  It is really hard to steal anything, even if you have someone's username and password for all their bank accounts.  You'd be wasting your time, loitering at an Internet cafe, trying to steal passwords.

Now, if you had their ATM card account number (and could encode a magnetic card) AND their PIN number, you might be able to clean out a bank account, $600 at a time, at multiple ATM machines.  Wear a hat and dark glasses, though.   

But you ain't gonna get that information over a WiFi connection, and bank websites don't ask for it.

So why are these rumors spread that WiFi is unsafe?

Well, think about it - again.   Thinking is hard.

Who profits from such a rumor?  Think hard.

Just as the Coal industry profits from scare stories about "Fracking" (and makes sure that these stories are spread and that "grass roots" anti-fracking groups are well-funded), the wireless companies make money from scare stories about WiFi.

If you use your laptop, pad device, or even smart phone, at an internet cafe, and use the WiFi to connect to the Internet, make a phone call, or whatever, you are charged nothing for the bandwidth you use.  It is free, and the telco gets no money from this.

In fact, some of my readers report that this is exactly how they use their smart phones and pad devices.  The buy a used "last year's model" and sign up for a "bare bones" plan, and then using WiFi for most of their data and voice requirements - thus sticking it to the wireless company.  For a pad device, you might not even have a wireless plan, but use WiFi for all your data needs.

If you run a wireless company, this is no fun!   You want to charge them $650 for a new phone (amortized over a two-year contract) and have them pay by the Megabyte, or by the minute, or a boatload of money for an "unlimited" or "family" plan.

In other words, you want them to use your network, not some free WiFi at the coffee shop.

What better way to herd the cattle toward your pricey network than to spread (or just allow to fester) rumors that "WiFi is unsafe."

Of course, we all know that communications companies (telcos, wireless, and cable) are the height of propriety and their staff and founders are people whose honesty is above reproach.  So, obviously my analysis here is just paranoia.

Fear sells, all sorts of bad ideas.   And my friend was convinced that it was "safer" to spend $160 a month on a wireless plan, than to use some questionable, free, WiFi network.

I'll bet they pay $29.95 a month for "credit protector" as well!

Everything is Someone Else's Fault!

No matter what happens in your life, it has to be someone else's fault!

(Note:  This is an older posting (draft) I wrote quite a while ago, but have just recently revised and posted.  Apparently I was angry at the time... but maybe you'd be too, after you read the story.  People gamble away their life's savings - and they say it is someone else's fault!   No one ever learns from this.)

Americans suck.  I love my country, but frankly, my countrymen make me want to puke.  Perhaps 90% of them should be sent overseas, in an exchange program with some third world country, so they would stop whining about "how bad we have it" here.

Here in America, everyone is a victim of some sort or another.  Whatever it is they did in life, someone else has to be blamed for it, if it didn't come out perfectly.

People buy homes, hoping to "buy and flip" them and make millions of dollars.  The market has other ideas - that perhaps just owning a home for three months doesn't make it worth $500,000 more just because you will it to be so.   So they lose their shirt.  And it is tragic to see the outcome - lives shattered, people broke, seniors living with mortgages and debt.

In some cases, it makes you want to cry.  A lady I met who is working at age 70 at a low-wage job.  Her husband left her destitute, after he tried to "buy and flip" a McMansion in Florida and wiped our their life savings.  He's dead now, and she's having health problems and trying to scrape by on Social Security and what little she makes, working as an infirm senior at age 70.

You want to weep and cry.  You want to slap her dead husband.  You want to shout to the world, "This is the sort of really bad shit that can happen to you!  Sober the fuck up! Stop squandering all your money, assholes!"

But people don't listen.  "I sold all my mutual funds and bought gold!  I'm going to be rich and you're an idiot!" they tell you to your face, cheerfully.  20 years from now, that fellow will be the one facing leg amputation while working as a greeter at Wal Mart.  Should I feel sorry for him then?  After all, he did just call me an idiot to my face.

Or take these Yuppies.  They buy expensive cars and then whine when, 10 years and 150,000 miles later, they break down.  Oh, the humanity of it all!  And old car breaks down!  Who could have forseen that! We should sue the manufacturer!  We should file a class-action suit!  Decade-old clapped-out luxury cars should last forever without ever having to break!

Or, maybe not.  Maybe if you want to keep a 10-year-old car, you need to be one of those "handymen" who knows how to fix things, or buy something newer.  And maybe you need to look deep inside and realize that what is really irking you is that you spent too much money on a car you could not afford, and are channeling your anger about that into the car itself.

Nah!  Just kidding!  The manufacturer is an asshole and you did nothing wrong.  How could you?  You are an American and by the very dint of being born here makes you fucking perfect in every way.  And the reason the rest of the world hates you is not that you are some spoiled rotten little child who doesn't appreciate how good you got it.  No, they just hate your freedom.

And so on down the line.  Increasingly, we are less and less a nation of risk-takers and more and more a nation of the risk-averse.  We all want to take those risky bets and reap huge rewards.  But when it all goes horribly bad (as risky bets often do) we want a government bailout, we want to blame Wall Street, Blame Republicans, Blame Democrats, Blame the Rich, Blame the Poor, Blame Everyone - but ourselves.

We can't be at fault - we're perfect!

So what is the danger in all of this?  It is this:  When people do not take risks - calculated risks - and then reap the rewards of success or the penalties of failure, the we devolve as a society into one of lowered expectations for everyone.  When everything is someone else's fault, then no one wins at all.

And on a personal level, this is dangerous thinking as well.  When you do not LEARN from your MISTAKES, you make them over and over again.  When that payday loan doesn't work out, going to a company who promises to "help you out of your payday loan problem" isn't going to make things better, but rather, worse.

When you buy a car you cannot afford, and then later on complain about it breaking down, you are avoiding the nasty lesson that maybe you overspent for your income.  No one wants to think this.  We'd all rather say the car was a "Lemon".

I've bought cars that were, in hindsight, a mistake.  It is not that the cars were bad - they were what they were for the price I paid.  It is just that they were bad bargains.  I should have kept my money and the car I had, rather than buying a new car.  It is easy to say, "That car was a piece of crap" - but harder to say, "Why did I buy it in the first place?"

You learn nothing from the former, and a lot from the latter.  And what I have learned from the latter is that people buy cars for emotional reasons, not fiscal ones.  People think they need newer, faster, better, fancier, more status, and then they sell or trade-in a perfectly good car, because the ash tray is full.

And when the new car just turns out to be an expensive nightmare, well, it is easy to blame the manufacturer, and not yourself, for the problem.

Demanding Equality

These people are protesting the fact that tech companies are hiring people and paying them good money.    Funny thing, most of the people protesting in this photo appear to be white!

On National People's Radio this morning, more breathless coverage of how awful things are in the Bay Area, with regard to inequality in the tech sector.

In case you've missed the insanity, the story goes like this:

Tech companies are hiring people for tech jobs.   These are people with Engineering or Computer Science degrees, and they are paid a lot of money.

These folks are buying houses and condos (or renting) in the Bay Area, which means demand for housing is up, and according to the law of supply and demand (which cannot be repealed by a legislature) the price of housing is going up (the same thing is happening, ironically, in Detroit these days!).

All of this is outrageous, of course, as the "poor" people living on welfare are being "priced out of the area."   The Humanity!

Oh, but it gets worse.  These evil tech companies who hire people and pay them money (the horror!) decided to institute bus service for their employees, so they don't have to drive to work.  The idea was to be progressive by eliminating all that traffic produced by commuters as well as help clean the air.

People are protesting against this as well, often laying down in front of the buses, as shown above.

What is going on here?   Companies are hiring and providing good-paying sustainable jobs, trying to act in a responsible manner, and yet they are criticized for "gentrifying" neighborhoods (i.e., causing urban blight to be cleaned up) and for trying to alleviate traffic congestion and pollution.

There was a time, in this country, that these were deemed to be social goods.  Today, they are deemed the height of evil.

And you wonder why our country has lost its way.  Employers are bad.  Good jobs are bad.  Having a good job makes you a bad person.  Cleaning up a neighborhood is an awful thing.  Rising property values and prosperity are horrific.   How crazy do you have to be to believe any of this?

These protesters seem to be arguing that low-rent, rundown ghettos are preferable to fixed-up neighborhoods with increasing property values.  They are arguing that low-wage menial jobs are better than high-wage professional jobs.  They are arguing that air pollution and traffic congestion are preferable to mass transit!

This is, in a word, insanity.

Our country has gone off the rails, in some places, particularly California.    The new American hero today is not the Horatio Alger story of rags-to-riches, but the noble poor, who are somehow better than us, by dint of being poor.

Now, I know what some of you are going to say.  "You heartless bastard!   I'll bet you've never been priced out of your home and forced to move, have you?"

Au contraire.

We sold our house in New York when the property taxes skyrocketed to $8,000 a year.  Why did they go so high?   Well, in that Welfare Blue-State, they jacked the property taxes to help pay for welfare programs in the county - to help those noble poor get subsidized housing.   We literally had to sell our house and move away, as we could not afford the taxes.  The poor, on the other hand, got free houses, free food, and free money.   And as more and more working people move out, this burden of the poor is forced upon fewer and fewer working people, until it simply becomes unaffordable - if you have a job - to live there.

Talk about "unaffordable housing!"

And our bill was cheap.   Others had to give up homes that had been in their families for generations, due to tax increases - well into the five digits.  A friend in Maine, who lives in a small cabin on property that has been in his family for a century may have to move, as his taxes are expected to triple, after re-assessment, due to the fact he has a lot of waterfront.

Many working "Watermen" (fishermen) have the same problem.   Tax rates go up, and they have to sell out and move to inland, land-locked properties.

But for some reason, no one feels sorry for you when you have a job.   It is only those poor folks on welfare that need our sympathy!

It reminds me of a conversation I had with a fellow in Key West, about a decade ago.   He lived in a million-dollar home on the island, and was decrying the lack of "affordable housing" for the poor.  In his mind, what was needed were more public housing complexes so that the poor could afford to live on a resort island and collect welfare in the sunshine.

I pointed out to him that middle-class people also couldn't "afford" to live there, even if they had jobs.  You had to be very rich - like he was - or destitute.   And the idea that welfare recipients should have their choice of the prime Real Estate was just insanity.   You can collect welfare anywhere  - and no one has a "right" to live in an expensive neighborhood they cannot afford.

That pissed him off really good.  He called me a heartless cruel bastard who didn't care about the plight of the poor.  And the irony of his living in a million-dollar home just didn't register with him.

We are told, in America, how rotten we are to our poor people, and what heartless capitalistic bastards we are because on any given night, there are about 650,000 homeless people (out of a nation of 330 million, or about 0.2% of the population).   We need to treat the poor better!   We need to cater to their every need!  We need to build them free houses!  They have a right to live wherever they want!

Funny thing, though.  If you actually have a job and work for a living - even a fairly menial job - you have fewer rights than the poor.  You have to live in a neighborhood you can "afford" and often that costs you half your take-home pay - or more.

Are we going crazy or what?  Why are the needs of the poor and destitute suddenly the greatest concern of our country?   It is not like you are going to starve to death in the USA.  Far from it.   The greatest health problem for the poor in this country is obesity, not malnutrition.

So people in San Francisco - wealthy people - are falling all over themselves to support getting rid of these buses for the tech companies.  And fighting to preserve run-down housing and ghettos.  And chastising tech companies for hiring people and paying them good salaries.

And their latest gag is this - the tech companies, like Google, are not hiring enough minorities.    They argue that most of the people working in these tech companies are white.  As this report noted:

"That seemed to be the conclusion when the Silicon Valley giant this week issued a gender and ethnic breakdown of its workforce that showed that of its 26,600 U.S. employees, 61 percent are white, 30 percent Asian, 3 percent Hispanic and 2 percent black. Thirty percent of its employees are women."

But 63% of the population of the USA is white (no really, white folks are not a minority by a long shot - although many people report that as true today).    If anything, white folks are under-represented at Google!

The nation's overall population is about 63% white, 17% Hispanic, 13% African American and 5% Asian, according the Census Bureau.  The fact that a company might hire mostly white folks is hardly surprising, as they make up most of the population.   The fact that few blacks are Engineers is hardly surprising, either, given the dearth of qualified graduates in this field.   Tech companies can't manufacture graduates to fill vacancies.

The problem isn't "white people taking all the jobs" but rather an over-representation of Asians and an under-representation of Blacks (and whites!).  Those Asians are "taking away our jobs!"

Just kidding.  They aren't.  No one is.   Google, like anyone else, hires the best people it can find.  And not many blacks are graduating with Computer Science degrees.   Certainly not enough to make up 13% of the workforce in that field.  Ditto for Hispanics.

And the real problem is, people on welfare and working minimum-wage jobs don't have Computer Science degrees and thus cannot apply for jobs at Google.  And the kids growing up in the ghetto don't value education, but instead beat the shit out of the one kid who actually tries to succeed in school.

Asians, on the other hand, value education and are more likely to pursue technical careers.  And overall, men are more likely than women to get into Engineering.   What these slacker protesters are saying is that we should somehow manufacture more minority Engineers?   How do you go about doing that?  And whose responsibility is that?

Until these protesters start instilling educational values into their kids, not much is going to change. And by educational values, I don't mean going to Protest University, doing bong hits, and majoring in bullshit degrees.  Yea, Engineering is hard, but if you want a high-paying Google job, you have to do hard things.  

Oh, but it's our fault, right?   You evil employed people making money and spending it.   You are ruining the lives of the very poor!

It is hard to even begin to understand this insanity and where and how it got started.  And trying to dissect or analyze it is next to impossible.  No matter what you say, you are accused of being a "heartless bastard" who wants to "stomp on the poor."  And our poor are hardly poor, in this country.

The odd thing about the photo above is that most of the protesters are white, and I think a lot of this nonsense is not coming from minorities themselves, but rather from liberal whites who have nothing better to do. They attack Google and other tech companies, because the cost of living in San Francisco is going up and it is they who are being priced out of their homes, not the minorities living across the bay in Oakland.

The sad thing about all of this is that many companies are being chased out of California as a result. The Governor of Texas recently made an offer to the Sriracha company to relocate to his State, after they were harassed by a local city council.   Governor Jerry Brown (remember him?) finally stepped in to put an end to the madness - California already has a bad enough reputation as a business-hating State.

And when businesses leave, it places the tax burdens on fewer and fewer remaining businesses (and taxpaying employees) which can cause a spiraling effect.

In the 1990's, I used to go out to "Silicon Valley" to get cases from semiconductor companies.  During the tech bust of the late 1990's, it became apparent that hardware was becoming a commodity item.  And the high costs of doing business in the Bay area made companies uncompetitive.   Many of my clients moved to Austin Texas, Boulder Colorado, or other, less costly States to do business.

Employees enjoyed the better lifestyles afforded in such places - at lower costs.  Which means employees could be paid less, but effectively make more.

Google and other tech companies have branches all over the United States and even the world.  Maybe some, like Apple (which just built a Billion-dollar flying saucer) might be stuck in California.  But others, particularly software and social media companies, can pull up roots and relocate, very rapidly.  More and more of this kind of work is done by telecommuting, anyway.

And if that happens, well, these same protesters will be decrying the "loss of jobs" and petitioning Governor Jerry Brown to "create new jobs" as if he could pull them out of a hat.

Jerry Brown, at least, has wised up over the years.  These protesters didn't get the memo.

Hillshire Farms

What's up with the sausage-fest?

Hillshire farms now has two rival bidders for the company.  The stock is now trading at at over $52 a share, which is pretty nice, as I bought it last week for $35.11

Yes, I know, buying trendy stocks is just gambling.  But I didn't intend to buy this stock as a buy-and-dump deal, it just worked out that way.

I bought the stock for three reasons.

First, I had a couple thousand sitting in my trading accounts, earning no interest.  I wanted to buy something that would make a little money and pay a little dividend.  Non-interest bearing accounts do neither.   Time to take a risk with the money.

Second, food companies are doing well, and I think with the so-called "food shortage" they will continue to do well (I bought Kraft before the spin-off and everyone said it would tank.  It hasn't, nor has the spin-off Mondelez Foods, which I now also own stock in, as a result of the spin-off).  I wanted to invest in another food company, one that had a reasonable dividend yield (which was about 2.8% when I bought the stock).  The P/E ratio seemed pretty reasonable (around 20, last week when I bought).  It's at 28 today, due to the rapid rise of the stock.

Third, when researching the company, I had read a small article that there were rumors of a takeover bid for the company.   This was before the huge gains of the last week, when suddenly Hillshire Farms was the talk of the media.  Funny how that works - once a stock price has already gone up, people hype it in the media.  Before then, it is barely mentioned.

The third reason was the least reason to buy it, however.   I would have been happy with a stable stock price and quarterly dividends, thank you.   But in researching these food companies, a tiny article surfaced about the possible merger.  Clearly, someone thought the company was undervalued.  Somebody likely smarter than me.

And just now, I sold my Hillshire Farms stock.  Why?  Because Tyson's foods just offered $50 a share for the company.   That's two dollars less than the current share price.  Selling now nets me a nice $927.28 in capital gains within one week of holding the stock.

Could I make more?  Perhaps a few percentage points.   Right now, I am looking at a 50% gain in just a week or so.   Take the money and run!

Will there be a bidding war for the company?  Perhaps.   Perhaps not.  It may turn out that both suitors decide to back away.  But I doubt they are going to bid this up another 50% anytime soon.

And there is the risk that the entire thing could unwind, as Hillshire is bidding to buy Birdseye, and that may fall through if the Pilgrim's pride or Tyson deal goes through.   All three companies could end up worse off than before.

In any event, buying the stock now, after the huge gains have already occurred is just silly.  But some folks are apparently doing that, even, bidding the stock up to over the purchase price offered by the highest bidder.

They pay you $50 a share.  You paid $52.74   How do you make money this way?

The answer is, of course, than you can't.   But the plebes, hearing the analysts on CNN hype this takeover, think, "Gee, I should get in on this good deal before it's too late!"

So they buy a stock they know nothing about, and don't even look at the price.  And they wonder why they lose money.

In the Winn-Dixie buyout, no one was foolish enough to bid the share price over the asking price of the stock, at least.     They bought for about $12 a share, and the share price never went over that in the weeks before the buying.   Some common sense, at least.

Even if the bidding war continues, those who paid $52.74 a share would be hard pressed to see more than $55 a share in this deal.

We'll see.  The share price could collapse tomorrow.  It certainly looks like it needs a correction to me.

Sad that the media hypes these deals.

I got lucky on this investment, which I thought would be a long-term, slow payoff, and instead shot up dramatically the next week.   And that is why I am selling it.    When you can make a profit like that, take it.   Don't assume that something going up in value will continue to do so, indefinitely.

And never confuse getting lucky with being brilliant.

Fathers and Daughters

Fathers love their daughters, but also view them as damaged goods.

In the book The Millionaire Next Door, the author posits several characteristics about many of the small-time Millionaires in this country.  One of these characteristics is how these Millionaires treat their daughters:

"As a group, we feel that our daughters are financially handicapped in comparison to our sons.  Men seem to make much more money even within the same occupational categories. That is why most of us would not hesitate to share some of our wealth with our daughters. Our sons, and men in general, have the deck of economic cards stacked in their favor. They should not need subsidies from their parents"

Is this a self-fulfilling prophesy?  Or just outdated misogyny? 

In days gone by, daughters were seen as a burden to a family - dead weight that was to be foisted off on the first man that came along by paying that man a dowry to take this load off their hands.   The idea that women had value in and of themselves was alien in many cultures back then - and even today (many parents still pay tens of thousands of dollars for their daughter's wedding).

When I grew up, few women were in the professions or in business.   If a woman tried to succeed on her own merits, she was remarked upon and perhaps ridiculed.

Today, things have changed, and law schools are graduating more women than men, and medical schools are not far behind.   Barriers still exist, of course, and we still talk about a "glass ceiling".   However, today, the "glass ceiling" is no longer in the secretarial pool, but in the executive suite and in the board room.  It is still remarked upon that the new CEO of General Motors is a woman.   Maybe in another decade, that won't seem like such a big deal.

But the question remains, why do parents, particularly Fathers, feel that their daughters are damaged goods?   I know firsthand a number of families where the daughters are subsidized throughout life by regular checks and handouts from Dad (and sometimes Mom).  We're talking the usual $500-a-month deal that family members seem to solicit from parents or siblings.   Sometimes it goes beyond this - to gifts of cars, furniture, houses, or whatever.

And the question is, does making such gifts help the daughter, or just feed the low-self-esteem engine and create perpetual dependency?   My late sister is a sad example.  She spent her short life trying to defy my Father, but at the same time calling him whenever she needed money.  I related this story before, but perhaps it bears repeating.

When I hung out my own shingle (after 14 years of night school), I bought a small office building in Old Town, Alexandria, for my law practice.   It was, to me, a pretty amazing transformation, as only a few years before, I had moved to the area with nothing to my name but an aging and rusting old Chevrolet, and a job offer from the Patent Office for the princely sum of $22,000 a year.    At the time, the idea of buying properties in tony Old Town seemed impossible.   But here I was, seven years later, a Lawyer with my own practice - and my own office building!   Hard work and the American Dream and all of that - it paid off.

Anyway, we went to visit my parents, and I gave them the good news.   I thought they would be pleased.  Such was not the case.   My Dad ridiculed the idea, telling me I was foolish for getting in "over my head" in Real Estate, and said, "And don't think you're going to borrow the money from me, because we don't loan money to our children!"

That hurt pretty bad, because I was not making a pitch for money.  Burke & Herbert Bank had already approved the loan and I bought the place with my own money and credit.    Rather than saying, "Congratulations, Son! We're proud of you!" they merely viewed the news with suspicion and criticism.

Which is why, by the way, you should never seek acceptance from your parents - you will likely never get it.  Many parents are even more immature than you are, and become petulant and jealous if their children achieve more success than they do - or any success at all.   Many parents love to lord over the ruined lives of their children - doing their best to sabotage their children's lives so they can have the final, "I told you so!" over their kids.   Yes, it is sick and scary - and very true.   It is rare to have a parent who really is your life coach.   If you do, consider yourself among the lucky minority.

But perhaps my Dad's skepticism was warranted.   As just then, the phone rang.  Being nearest the phone, I answered it, and it was my sister.   Now, I know my sister loathed my parents - constantly struggling to "understand" Mother and staying married to a man she despised in order to "prove my Father wrong!"   So I found it odd she was calling Mom and Dad.   I knew about the $500 checks (sometimes $1000 checks) that were going her way with regularity, as Mom would spill the beans after a few drinks - never missing a chance to run down one of her kids, particularly in front of one of the other ones.

So I asked sis, "So, what do you want from Mom and Dad this time?" which was kind of cruel.   And she got all huffy and said, "How could you possibly say that?"

But in the next breath, she mentioned that she was looking to buy a new Honda, and could she please talk to Dad?

So I handed over the phone and listened to one side of the conversation, Bob Newhart style.  My Dad said, "How are you doing?" etc. and then went "Uh-huh, Uh-huh" for a few minutes.

And then the punchline came:  "Who do I make the check out to?  Denver Honda?   OK!"

This was the Dad who minutes ago said, "We never loan money to our children" which I guess was true, because here he was just handing out thousands of dollars as a gift.

And it really didn't bother me that much, as my sister had a pretty crummy short life, married to an alcoholic, working at low-wage menial jobs, and having children that gave her fits (running away from home, stealing her Oxycontin when she was dying of cancer - nice kids).

But I thought it was interesting that my Dad viewed my sister as damaged goods and that she needed financial help all her life, even though my parents were hardly rich enough to be doling out money.

The only thing that bugged me was the hypocrisy factor.  My Mother made a big deal about how "fair" she was with all her kids - and that everything was "even-Steven" and that in her will, we were all treated equally.   That is fine and all, if it were true.  But as I pointed out to her, by giving all the money to my sister as inter-vivos transfers, things were hardly "even-Steven".   Worse yet, when I asked them what they planned to do if they ran out of money, she joked that "Her successful son, the Lawyer" would bail them out.  Think again, Ma.

So my Mother started sending us all checks.  When my sister would ask for $500, she would send each of us $500, whether we wanted it or not.   But that idea quickly fell by the wayside after only a check or two, as my parents quickly realized that they could not afford to squander cash so rapidly.   They went back to sending one check - to my Sister.

The funny thing, too, was that my Sister had a whole rationale why she "deserved" this money.  "After all," she said to me, "Mom and Dad paid your way through Law School!"    I pointed out to her that I had to work several jobs to pay my own way through undergraduate and Law School - and had the student loans to prove it.   My parents helped a bit along the way, but the lion's share of tuition was paid from my own checkbook - or that of my employers.  But in her mind, I was getting a "free ride" and she wasn't getting bubkis.   Her college education, of course, was paid for entirely by my parents.   She never worked nights delivering pizzas to pay for textbooks and tuition.

It is funny how people perceive things to their own advantage.  Even after I explained things to her, she simply refused to believe it. 

And it is funny how people, when handed things on a platter, never really succeed in life.  My sister took every handout my parents gave her - and as a result never really succeeded in her own life, financially.

My parents were similarly concerned about one of my under-performing brothers.  "We'll pay for law school!" my Dad pleaded with him, "If you'll just go!"   And I felt it was pretty funny, hearing this conversation at the time, as I was working 50-60 hours a week as a law clerk so I could go to night school.   And here was my brother being offered a free ride and he turned it down.

When I pointed out to them (facetiously) that I was already in law school and I would be happy to have them pay "the full ride" for me, they looked at me funny and muttered, "Well, you know how to take care of yourself."

And that was probably the most profound thing they said, although they missed the point.   The other kids they coddled and tried to "help" and the net result was that my siblings learned that if you called Mom and Dad long distance (often collect) you'd get a check for $500 and perhaps a small lecture.   The net result was that they became used to the parental ATM machine.

And many parents do this all the time - identifying one or more children as "damaged goods" that need "special help" in terms of money and instruction in life.    Other kids are left on their own, and for some reason, succeed on their own merits.    Actually not "some reason" - the reason is, they were left alone.

And daughters are often the ones identified as having "special needs" - and it is not always just parents, either.   Brothers will feel they need to "look out" for their sisters and send them money - much to the chagrin of their wives.   Perhaps it is a male thing - wanting to be the protector of the fragile female or something like that.  Sort of Tarzan thinking.

But I think if women really are to succeed in our society and truly live as equals to men in terms of opportunities and treatment, that these retrograde attitudes need to change.    When you train women to be hothouse flowers and delicate roses, they will never learn to be assertive and stand up for themselves.  When you cover a woman with a burka and say she needs a man in order to be worthwhile, you are saying she has no inherent worth in and of herself.

In other words, the problem isn't the mean old misogynist men in the Board Room or the Executive Suite who are putting up "glass ceilings" preventing women from achieving, but rather the attitudes of all of us in perceiving women as damaged goods that require special handling and care.

And sadly, this extends to many in the "Woman's Movement" who mistakenly believe that in order to achieve equality, special treatment is necessary.   But special treatment, by definition, is not equality at all, but inequality by definition.

Sadly, these attitudes may never change.   How Fathers perceive daughters is probably something deeply rooted in our psyche and driven by hormones and such.  Men may continue to view daughters as damaged goods who need special treatment in order to make up for the inequalities of life.   So long as that goes on, so will the inequalities, I'm afraid.

Pie in the Sky

What does the phrase "pie-in-the-sky" mean and where did it come from?

You've probably heard the phrase before, usually in reference to wacky ideas or improbable rewards.  If an idea or plan is pie in the sky, it seems good but is not likely to be achieved, as in "Those plans of his to set up his own business are just pie-in-the-sky!"

But the real source of the phrase was Joe Hill in 1911.  He was one the "Wobblies" - an early form of unionism more closely linked to Communism.  He wrote a song, called "The Preacher and the Slave" as a parody of some of the hymns of the time.

It is a pretty funny song, and illustrates how religion has been used through the ages to get people work against their own best interests.   Work hard, be religious, and your rewards will come in the next life.   Never mind the fact that the priests of the temple seem to be getting their rewards in the here and now.

But of course, the "Wobblies" (IWW members) were not exactly above using the same tactic.   "Join the Union!" they would say, "And everything will get better!"   In other words, they promised a pie-in-the-sky of their own.

And while working conditions have improved a lot since the days of the Pressed-Steel Car Company strike, unions (and in particular, the IWW) were not always the cause of these changes or even on the forefront of such changes.   Henry Ford doubled wages of his workers and instituted the 40-hour workweek, simply because his employees kept quitting.    Walking away from a job is the ultimate "strike" if you think about it.  And if enough people quit, eventually conditions have to change.

But a funny thing, the unions now take credit for this.   A bumper sticker seen recently said, "Enjoying your weekend?  Thank the Unions!" or some such nonsense.   The upshot was that "but for" the union movement, we'd all be working seven days a week, 12 hours a day.   Maybe there is a nugget of truth in that, but there is also the truth that people like Henry Ford brought in high wages and the 40-hour week, long before the unions were around.

The Wobblies are no more (although technically, their organization still exists).   They were more of a far-left neo-Communist group than a proper union, anyway.  They never succeeded, even as a union, as, well, they had too many pie-in-the-sky ideas.  That, and they kept splintering into different groups, arguing about power and philosophy.   Groups like that rarely succeed in the world, which is probably a good thing, anyway.

Work and pray, live on hay, There will be Pie in the Sky when you die - that's a lie!

Long-haired preachers come out every night 
Try to tell you what's wrong and what's right
But when asked how 'bout something to eat 
They will answer in voices so sweet

Chorus:

You will eat, bye and bye
In that glorious land above the sky 
Work and pray, live on hay 
You'll get pie in the sky when you die (That's a lie!)

And the Starvation Army, they play 
And they sing and they clap and they pray 
Till they get all your coin on the drum 
Then they tell you when you're on the bum 

(Chorus)

Holy Rollers and Jumpers come out 
And they holler, they jump and they shout 
Give your money to Jesus, they say 
He will cure all diseases today 

(Chorus) 

If you fight hard for children and wife
Try to get something good in this life 
You're a sinner and bad man, they tell 
When you die you will sure go to hell. 

(Chorus) 

Workingmen of all countries, unite 
Side by side we for freedom will fight 
When the world and its wealth we have gained 
To the grafters we'll sing this refrain 

You will eat, bye and bye 
When you've learned how to cook and how to fry 
Chop some wood, 'twill do you good 
Then you'll eat in the sweet bye and bye (That's no lie!)

GS-2

A lot of poor people make a lot of money, but make different decisions with what to do with it, and hence they are poor.

When I worked at the Patent Office, on Uncle Sam's little Plantation on the Potomac, it was a very racially segregated place.

Not intentionally, of course, but back in the 1980's, there were not many minorities in the Engineering field, and to work as an Examiner or above, you had to have an Engineering degree.

I joked with one worker that you could pretty much tell what people did for a living at the USPTO by their race.   At that time, if they were white (or Asian), they were probably Examiners or management.  If Black, clerical staff.  If Hispanic, then maintenance.   It was a pretty accurate picture of the racial divide at the time.

Today, of course, things have improved, as more minorities have gotten into the Engineering field, and are better represented in the ranks of the Examining staff and Management.

And today, many of the clerical jobs have been "farmed out" to contractors, for better or worse.

But back then, a young black person growing up in Southeast Washington, DC, with just a high-school diploma, could get a job at the Patent Office with the clerical staff, and while they would not make a lot of money, they would get raises over time, have excellent health insurance, and a guaranteed retirement.

Most of these clerks were at the GS-2 to GS-5 level, some starting out even as GS-1.   The pay was not great (click the link to see what I mean) but the benefits were pretty good.

The interesting thing - to me, anyway - was how these clerks spent their money.   They often had a better lifestyle than I did, as a GS-11 Examiner. 

For example, I was at the Credit Union one day and saw a clerk I worked with, and she had a fabulous new Coach handbag.   She was meticulously dressed, had amazing hair and nails, and was reading a brochure for a new "Coach Edition" Toyota Camry.   I asked her about that, and she said her old car was a few years old, and she was going to buy this new leather-lined Camry to replace it.

I was pretty flabbergasted, as it was a car I certainly could not afford (brand new, anyway) and I was making probably more than twice her salary.

But, as she explained it, she lived with her Mother and several relatives in Anacostia, and the cost of rent was negligible - if indeed her Mother charged her anything.  So her entire income was, in effect, disposable income to be spend on trinkets, toys, clothing, hair, nails, and of course, a new car.

Now before you go calling me a racist, this same effect has been seen in other cultural groups and countries.   In the 1990's in Japan, the cost of housing was so high that many young Japanese people lived with their parents, well into their 20's and 30's.   Since they paid no rent, they spent all of their income on clothing and accessories, and even cars - convinced that saving for a house was just not an option.

In some European cultures, a young man is expected to live with his parents until he marries, and provide for the household.   One can see how parents might like this sort of deal, particularly if the son is buying Mom a new television set and paying the utility bill.

And even today in America, a legion of slacker bounce-back kids live in Mom and Dad's basement and work at slacker jobs, blowing all their money on beer and pot - having no real other responsibilities or bills to pay.

It made economic "sense" in a weird way, for my GS-2 clerk friend to live as she did.   Her retirement with the government was fully funded, as was her health insurance.   Her room and board were free.   Why not just spend the rest on bling?  She had a better "lifestyle" as a result - right?

Of course, this assumes you don't mind living with your parents and other relatives (brothers, sisters, and cousins) crowded into one house, as she did, with seven cars parked out front (which sadly, get stolen or vandalized, being in a bad neighborhood.  Such was the fate of the Coach Edition Camry, I later discovered).

Others might have different cultural values - and value freedom and independence, even if it is costly to obtain.   Renting your own apartment can take up half your income, when you are a young person.   Saving up to buy a home takes an heroic amount of self-control and willpower - particularly when it seems that all your friends have really cool bling and brand-new cars.

And some folks might value the idea of having their own wealth rather than relying on a government pension to fund their retirement.   Having money means you can be more independent, make better purchases and investments, and take advantage of opportunities to become more wealthy.  When you spend it all, you are just a modern-day wage slave.

In addition, having some money set aside can be helpful in case of contingencies - life plans not working out the way you expected them to do.

And such was the fate of my GS-2 clerk friend.   While the clerical staff at the Patent Office worked hard and did a good job (well, I thought so, anyway) in the 1990's they laid off a lot of the staff and farmed out their jobs to outside contractors as part of Bill Clinton's "reinventing government."   He got the head count down this way, so he could say that the government was "the smallest it had been since the Kennedy Administration."

But what really happened is that jobs went off the Federal payroll and were farmed out at a lower cost to a contractor, who in turn hired people at wages even lower than GS-2, with few if any benefits and no retirement plan.  My friend's assured future ended up not being so assured. 

And all that money spent on clothes and cars and other "stuff?" - gone forever.   Enough money to provide a nest egg for her own home, or to start a retirement account - or to tide her over until she found a new job.

But her experience illustrates how the poor get poorer by making poor choices.   If you are living at home and have zero living expenses, you could live frugally and bank your salary - saving up a staggering amount of money in just a few short years.   This in turn could be leveraged by investing in stocks or a rental property or some other money-making venture.   It represents the opportunity to become independent.  It also would have meant that when the job goes bye-bye, they would have other options than just being destitute.

At the time, I was living pretty frugally myself, mostly because I had to pay rent on an apartment, which took up about half my after-tax income.   And a lot of the rest was invested in my education, as I was still going to night school.  Why I did this instead of just spend it all on bling is an interesting question.  Was it cultural values?  Or just the burning desire to be financially independent?

I think a little of both, perhaps more of the latter.   I realized early in life that I did not want to be financially dependent on my parents.   And in our family (and cultural values) living with your parents after college was seen as a shameful thing.   My Mother would regale me (after a few drinks) about how, after they were married, they were forced to live with her in-laws as my Dad hadn't yet found a job.   Of course her Mother used this to justify her opinion that my Dad was just trash from New Jersey, which was not too far off the mark.   That story made an impression on me and my siblings.  Moving back in with Mom and Dad just wasn't done and was a shameful thing that marked you as a failure in life.

But more than that, I wanted to be financially independent - and perhaps psychologically independent as well.   I could have stayed at the Patent Office as an Examiner, and perhaps be promoted to GS-15 by now (with step increases) and have six to eight weeks of paid vacation a year.  I might even be a supervisor and be on the GM scale.   I would have paid-for health care and a pretty cushy retirement which could kick in as early as, well, as early as right now.   And like many government drones, I could be leasing new cars every three years and spending every penny I made, as I really would not need to "save" for the future.

However, working at any "job" means sacrificing some of your independence.   If your boss is a jerk, then you have to deal with his antics all day long.   Pretty soon, it wears down your soul, and you loathe going to work and "live for the weekend" and look at life as snippets of happiness drowned in a sea of misery.   While I liked the job and was consistently rated high in all categories, my boss got promoted and my new boss decided that none of my work was any good (he did not remain a boss for very long, as his assessment of everyone's work was that it was not as good as his!).   So I left for the law firm life, and eventually, my own practice.

And to some extent, I have traded "bling" for freedom.   I have shattered the jewel-encrusted "DKNY" shackles for something plainer and cheaper - but free from obligation.

And many people choose to do this as well.   Folks who save their money and invest it or start a business.   They are not free from worry, but they don't have to cower to a boss or to their parents.   And down the road, well, they might end up pretty well off.

A lot of others decide that success will always elude them, and choose instead to anesthetize themselves with bling and toys to try to drown out the deafening silence in their lives.