Energy Savings versus Money Savings

Do energy-saving appliances save money?   Let's crank some numbers and find out.

(annual electric cost, in dollars)

We just got done replacing the last incandescent light bulbs in our house.  These were ceiling cans that the previous owner installed in the trayed ceilings.  They were 75 watt bulbs - six in the living room, four in the bedroom, plus one over the tub, and one over the bar.   They didn't get used a lot in the last decade - nary a one burned out as a result.   But they did let a lot of heat escape into the attic, and when they were on, they got hot. 

The bathroom fixture had a glass cover on it, and this filled up with insects on a regular basis.  Where they come from, I don't know, but they are attracted to the light, and they go in there and die.

We bought replacement retrofit LED lights at Home Depot.  These came with two brackets, one the wire bail type, and another a friction fit.  We used the latter, as we have "naked" cans.  We paid a little more as a result, but they were adjustable from daylight (5000K) to warm white (2700K).   Unless you are running an operating theater, odds are, you'd rather have 2700K lights.  But that is part of the learning curve of all of this, and I am sure kids today are conversant in these color charts and degrees kelvin.   A 100-watt incandescent would mystify them.

We started the move to LED lights not because of energy savings, but because of heat.  In the kitchen, we have a track lighting system with 11 heads that had halogen bulbs.   It was like working under a heat lamp.  Switching to LEDs not only saved energy, but it cut the heat load in the kitchen dramatically.  So there is a double-savings here - you use less electricity to light your home, and you don't need to turn down the AC to keep the house as cool.

Calculating the savings - in theory - isn't hard to do.  A 60watt incandescent bulb can be replaced with an 8watt LED bulb which generates the same amount of light.   Maybe down the road there will be additional savings, as well, as LEDs go mainstream.   In the old days, we used to have 10 Amp wiring for lighting circuits - today the minimum is about 15 Amps.   It may be possible in the future that lighting-only wiring circuits go to lower amperage and thus use thinner copper wires - saving a lot of money on construction costs.  Maybe as little as five amps.  But that's far in the future.

If we assume the average home is illuminated for eight hours a day (morning and evening) and on average has ten lamps lit during this time of 60 watts each, we're talking about 4800 watt-hours a day or 4.8 KW-Hrs of electricity consumed.  In a year, that works out to 1752 KW-Hr of power.  Using the average cost of 13.19 cents per KW-Hr in the USA, this comes to $231 a year for lighting uses, or about 63 cents a day.

For the same scenario, using 8W LED bulbs, the cost drops to $30.81 a year, a savings of about $200 a year, or $2000 over a decade.  I recently bought two standard LED bulbs at Home Depot for $4 apiece.  You can get them cheaper online, and Dollar Tree even had some for $1 for a while.   I found the cheaper kind don't necessarily last as long - the vaunted 10 or 20-year lifespan may be overstated (how can you claim a 20-year design life on a product on the market only a few years?).

The price of incandescents has risen in recent years, while LEDs have dropped in price.  Not long ago, a single LED bulb would run $20 - then they dropped to $10.  Today they are two for $8 and even less online.   No doubt the prices will level off, eventually.  As production of incandescent bulbs dries up, the cost will go up - and has already.   They used to sell for under a dollar, but today they can be a few bucks.

Of course, an incandescent only lasts about 1000 hours, whereas an LED can last ten times a long.  In our scenario, we're burning the bulbs about 3000 hours a year, which may not be realistic.  Like I said, the incandescent ceiling lights in our house were never replaced until today - well over a decade after they were installed.  But then again, they don't get used much.

How long an incandescent bulb lasts depends on a number of factors.  How often it is turned on and off is a big factor.  When you apply power to an incandescent bulb, it is basically a dead-short and there is a huge inrush current.  Once the "filament" heats up, this current drops off.   But it is the on/off switching that blows out incandescent light bulbs, which is why they often were seen to "blow" when switched on.  It is also why those Guinness-Book-Of-World-Records light bulbs that have burned for decades were never switched off and usually installed in public buildings like fire houses and the like.

But assuming normal usage, the cost of incandescent bulbs will pay for themselves handily in lifetime alone.  The $4 bulb I bought today would replace ten incandescent bulbs, and that means an equivalent cost of 40 cents per incandescent bulb - a price I haven't seen since I was in grade school. Assuming an average cost of 80 cents per incandescent (per the USA today article from 2013) and ten bulbs replaced three times a year (per our scenario) we are talking about $8 a year in bulb cost, which means a savings of $4 a year by going to LED.

But the real savings is in the electricity. Now granted, maybe my lighting scenario is a bit overblown.  You can always save energy by turning lights off and maybe in the past a lot of people did this (I know we did).  Now that lighting is cheap, maybe people will be less inclined to turn lights off when they leave a room - that is the problem with efficiency - it defeats itself.

But the bottom line is, based on these simple calculations, we could be saving over $200 a year by switching to LED bulbs. Perhaps. Again, maybe my assumptions about light usage are over-the-top. For a family of four, maybe less so - everyone wakes up in the morning, turns on a light bulb, goes to the bathroom, turns on another light bulb, while Mom is in the kitchen turning on several light bulbs.  Then in the evening, the process repeats - only for yet more hours.  Ten bulbs, eight hours a day?  Not far-fetched.

And of course, to a lot of people, long-term savings that are not readily apparent in real-time are hard to fathom.  I recounted before the not-too-bright waitress at a local restaurant, lamenting that the toll to get on our island was $6 (now $8) and that she would have to wait until payday (seven days away!) to buy a $45 annual pass.  How broke do you have to be not to have $45 for a parking pass?   She certainly could afford the numerous tattoos and piercings she had.  And as we left the restaurant, we saw her smoking out by the dumpster.  But it illustrates how people look only to the immediate and not the long-term, even when the long-term is a week away.

But it begs the question - has switching to LED bulbs actually saved us energy?  This is harder to quantify, as the big energy hogs in any home are the air conditioning or heat pump, hot water heater, refrigerator, and other "major appliances".   Sure, you can switch to gas heat, but that is just replacing one form of energy with another.

The big savings for us has been installing double-pane vinyl replacement windows, to replace our single-pane wood-framed windows that came with the house circa 1969.   It is hard to point to a particular utility bill as going down, but we notice less heat coming off the glass in the summer, and fewer drafts and cold in the winter.

I recently plotted our energy usage for the last decade.  This isn't easy to do, as all I have are utility bills, which don't indicate the KW-Hr used - only the dollars consumed.  And Georgia Power only logs my energy usage for the last three years.  I have dollar amounts logged on quickbooks, but that doesn't tell me how much energy was used.  And the cost of energy has changed over time.  It is hard to find actual utility rates for all of 2009-2019.   Most give rates from earlier years, some from later.  Others are nationwide averages, others state-by-state.   Taking the KW-Hr and dividing by bill amount gives one number, but might not be the actual KW-Hr rating (taxes and fees might be added).

Overall, it seems that the cost of electricity is pretty consistent, around 10 cents a KW-Hr, closer to 11 or 12 these days.   Looking at some of the charts, I can see it fluctuates over time.   So we'll just use dollar amounts to save time.  The difference in calculation isn't too significant, compared to other things, like the weather.

With the change of the seasons, utility bills fluctuate.  So you have to look at annual cost to get an idea of year-to-year changes.  In fact, I can look at our utility bill and plot out our life experiences. For example, two years ago, we spent a few months travelling to Alaska and back.  Our home was unoccupied for nearly four months - during the most expensive part of the year, cooling season.   The house cools down at night, and takes a long time to heat up during the day.  Some months, our utility bill was under $50 - which alarmed me, as I thought the power had been shut off (a neighbor checked for me, and everything was fine).

When we first sold the New York house, we took a long trip to Newfoundland (I suggest strongly you go - allot at least a month, if not more).   We hope to go again maybe next year.  This year, it is the Isles de la Madeleine.  I becha didn't know they even existed!  I didn't, until I looked at a map and said, "hey, let's go there!"   So we're going.

Anyway, this makes it hard to look at the raw data and say, "look, here's where there is big savings when we installed the new windows" or "here's where the big savings kick in from the LED lights!" because they were installed over a period of several years.  The first two years in the chart, this was a vacation home, and we spent far more time away than in later years.   That means no hot water heater running, the HVAC set at 85 degrees, few lights on, and so on and so forth.

This last year, we replaced the HVAC system, and before the old one died, it was running 24/7 with a low charge, for nearly a month, just trying to keep up with the cooling load.   So for one month (July) we had the highest electric bill of all time - over $450.   This sort of skews the average a bit and illustrates why it is hard to look at actual bills to see savings.

If you filter out some anomalies, it does look like our electric bills have gone down.

Again, the first two years in this chart, we spent a lot more time in New York - leaving in May sometimes.  We also built the new Studio in 2011, which added quite a lot of electrical load (70A service) including an electric kiln that costs several dollars per firing.  In 2018, we left early for a trip to Alaska, which reduced our electric bill considerably.   But looking at the monthly bills over a decade, I see that weather is a big factor - cold winters generate big bills, as do hot summers.

Putting in the insulated windows helped a lot, and the LED bulbs contributed a small amount - probably along the lines I calculated above - maybe $200 a year.   Not a lot of money, but something, anyway.  Of course, over time, these cost savings will level out, as the efficiency will not continue to improve.   And as electric rates go up (thanks in part to an unfinished nuclear power plant that we are still paying for - that bankrupted both Toshiba and Westinghouse!) over time, costs will go up, of course - but not as much as they would have, if we had the old incandescent bulbs, old HVAC system, and single-pane windows.

There are two other factors to consider with LED lighting.   The first is lighting creep.   When we remodeled the garage, we added a lot more lights (like a LOT more lights - three times as many) and it is super-bright out there.  With LED lighting, you can add lights to a circuit without worrying about over-amping it.  When we relamped the kitchen track lighting, we added some additional "heads" to the circuit.  When we relamped the studio, we added several more.   I suspect we are not the only ones to be subject to lighting creep, at least for work areas.   Why live in the dark, when LED lights are so cheap and use so little electricity?

But a far bigger savings will occur for commercial users, not residential ones.  When I was at GM, we had a pair of guys who did nothing but replace fluorescent bulbs throughout the factory -  22 acres under one roof.  They started in one corner of the factory with a scissors lift, replacing bulbs, and worked their way across to the other corner - it took a couple of years to do.  Sort of like how the Golden Gate Bridge is perpetually being painted.  When they were done, they started over again.  You could not wait for a bulb to "burn out" as they would burn out randomly all at once all over the plant.  Besides, fluorescent bulbs loose a lot of their lighting power over time, so you have to "throw away" a "perfectly good bulb" long before it flickers out.

Now consider the same scenario with LED lights.  The pair of guys might be replaced with no one, other than the plant electrician who might replace the few lights that fail due to infant mortality, and then, 20 years down the road, they start replacing them all, probably hiring an outside contractor for that purpose, as it is only a one-time job.   More "jobs lost" - not to "automation" or "robots" or "AI" but to technology in general.  It is no different than the many gas stations converting their service bays - with a "mechanic on duty" to replace fan belts, batteries, and blown tires (which were quite common back then) and do annual "tune-ups"- to convenience stores selling lottery tickets, 20-ounce beers, and potato chips.

Again, jobs lost not to "robotics" or "automation" but just to better technology.   We've had the hamster now for nearly five years, and it has no need of a "tuneup" or will need one for maybe another five years - maybe more.  Simple fluid changes (and even those mostly limited to oil) are all that is needed.  Spark plugs?   They last over 100,000 miles.  Some cars likely go to their graves today with the original plugs in them.   Times have changed.

You could say the same for so many other things as well.  Appliance repair man?  Maybe for factory warranty service.  But the Maytag repair man is doubly lonely today, as no one bothers to pay $100 for a service call on a $400 appliance.  It is just easier and cheaper to buy a new one, particularly if your old appliance is more than eight to ten years old.   A sad reality, perhaps, but reality nevertheless.

Or take house painters.  How many were put out of a job by vinyl siding?   A good housepaint job might last five years, vinyl siding might last ten or twenty.  And even newer paints last longer than the old lead-based paints of yore, that peeled and cracked with the seasons.   Yet we don't hear Bill Gates warning of us of the evils of vinyl siding.   I don't put much stock in his warnings about "AI" which isn't all that intelligent, quite frankly, artificial or not.  And besides, he isn't even a programmer, just a guy who got lucky.

But once again, I digress.   But maybe not by too much.  LED lamps are just an example of new technologies that last forever (or at least a lot longer than older ones) and create all sorts of ancially issues, such as plastics do.  Plastic - the modern wonder material!  It never rusts, never degrades, never comes apart (well, it does, actually, but that is the subject for another posting).   The problem with plastic?   It never rusts, never degrades, never comes apart.

Technology changes the world, and we have to change with it.  And Trump is tapping into this fear of change, with his unhinged rants about light bulbs and toilets.   The bottom line is, of course, that LEDs are here to stay - they've won the technology war.  No one is going back to incandescents, unless they really are unhinged, just as no one is going back to carburetors and points ignition.

It is a rant that resonates with some, but perhaps not many - for very long.   It has been my experience that rednecks might resist change and new technologies, but often end up embracing them wholeheartedly over time.  Go to a tractor pull sometime and ask yourself how these folks figured out how to harness five supercharged big-block chevies into one transmission  - without the R&D resources of a major corporation behind them.   And they rarely break, too - under full load!

When I bought my 1948 Willys Jeep from some "mudders" in rural Illinois, they had put a 350 cid engine from a junked 1970 Chevy in it.  It was a masterpiece of redneck engineering, to be sure.   But they weren't so dumb as to stick with the stock breaker-point ignition.   It had an electronic ignition distributor out of a later-model car.  They ain't stupid.

I suspect the same will be true of these other modern technologies. Often the poorest and least educated are the most enthralled by the latest smart phone or jumbo-sized television.  Trump may make inroads with some government conspiracy theorists (who believe the CIA is monitoring their brainwaves through their water-saving toilets), but in the long run, it will be viewed as the ravings of an old man whose time has come and gone, much as John McCain, with his "hey you kids! off my lawn!" or Joe Biden with turn-of-the century terms like "Malarky".

Like I said, maybe that sort of rant had currency a decade ago, when LEDs were $20 apiece and people felt they were being "forced" to convert to the new technology.   Today, LEDs are on a par with incandescents (and actually cheaper to buy, by half, as I illustrated above).   Trump's rant is sadly out of date, as is the rest of his thinking.

Light bulbs are dead.  Long live the LED!

Communism Sounds Great, Except...

Things would be great, some argue if we only converted to Communism and Socialism.  They always say that - things would be great.  No one talks about actual results.

A reader argues that socialism and communism are a better deal than capitalism, because if we had these authoritarian top-down forms of government, life would be better for the average American.  Would be.  If only.

The problem with that argument, is that if you look at the record of Communism and Socialism in the world, it often doesn't quite work out that way.  In fact, it never works out that way, and why it doesn't is an interesting question.

The purists would argue that the reason why is that Communism hasn't been given a fair chance.  Whatever it is they were doing in the Soviet Union or in China, it wasn't "pure" Communism, so that doesn't count.  If only it could be done the right way, we would all be living in paradise on earth!

Think about it - free health care, free money, free college.  Everyone would be paid the same, and we would all be "comrades".   No more chasing status or individualism!   Everything would belong to the State and we would all share in the wealth of the nation.

Nice fantasy, until you realize that the "everything" that belongs to the State includes you - quite literally.   Your very body would belong to the government.   You would give up freedom of choice, freedom to make bad choices, in favor of the government making choices for you.   And we know the government always makes wise choices, particularly for the individual.

No, no, the problem with Communism isn't that it was never worked out properly, but that it always degrades into what it has become worldwide, in countries that practice it. The Soviet Union, Cambodia, Venezuela, North Korea, Vietnam, Cuba, or China are not aberrations, but how Communism works in real-life. People amass power - the power of the State - and often create a personality cult - Mao, Pol Pot, Castro, Stalin, Moros, Ceaușescu - these are not aberrations, these are the norm.

It is only when these countries adopt "capitalist" policies that any relief occurs for the masses.  China went from a backward third-world country to the second-largest economy in the world, in matter of a decade or so, once they allowed people to keep the money they earned.  Once people are allowed to keep the fruits of their labor, they tend to labor harder.   Funny thing, though, the idea of not being able to profit from the fruits of your own labor, is, according to most people (including Abraham Lincoln) the definition of slavery.  And that is why I have a problem with Communism - I'd rather not be a slave to the State, thank you very much.

Funny thing, too - China is cracking down on their own people, limiting how much money can be removed from the country, and promoting "State" industries over private ones.   And guess how their economy has reacted to this?   All I can say is, the "China miracle" may turn into the "China nightmare" in a real hurry - and the cause of this can be tied directly to State control of the economy.

Of course, the raging true believers will argue that the reason why Communism failed is that America and other Capitalist countries are constantly sabotaging it.  The embargo of Cuba is why the Cuban economy is in the toilet - and has been for decades.   A neat argument, but it fails to address all the other countries that haven't embargoed Cuba.  It is perfectly legal for Canadians and Europeans to go visit Cuba - and many do.  But once you get beyond the crumbling buildings and patched-together old American cars, many realize there isn't a lot of "there" there - and there are better, less depressing places to visit.   The Soviet Union propped up the Cuban economy for decades, as a strategic interest, until they, too, ran out of money.

"But what about the excesses of Capitalism?" the reader cries.  "People are enslaved to the banks, the credit cards, the merchants - they can never get ahead!"  And indeed, there is a nugget of truth to this argument.   People are free, in a capitalist society, to make choices, including horrifically bad ones. For example, in the "Moneyist" column this month, a lady writes in that she co-signed student loans for her boyfriend who then dumped her.  The only real advice the "Moneyist" can give her is to pay them back.   Yea, that is a shitty deal.  She should have left her pen at home.

You could make the same argument about Capitalism that Communists make about Communism - that there has never been a "pure" form of Capitalism practiced.  You see, in the "ideal world" of Capitalism, Adam Smith's "invisible hand" guides the marketplace, and each player in economic transactions makes rational choices based on their needs, wants, and ability to pay.   Nice theory, but it blows up in the face of human psychology, much as Communism does.

People make irrational choices.   A young man wants a flashy car that he can't afford, so he signs up for loan payments and insurance payments that will eventually bankrupt him.  An elderly lady wires off tens of thousands of dollars to a Lothario she met online - and never in person - who claims to want to marry her.  People do things for emotional reasons which end up causing them a world of woe.   But of course, you can choose not to think emotionally, particularly about something as deadly serious as money.

Yes, both systems are flawed, but one seems to work much better than the other in "the real world".  One system tends to provide a better standard of living for a larger number of people, and it more stable and less restrictive in terms of freedom provided to the masses.   And the reason why this is, is that one system is the default way we operate as human beings and the other is an artificial construct which governments try to impose on human behavior.

Capitalism isn't something invented, but how we operate.  You create something with the sweat of your labor - another fellow cave-man offers to trade it for a piece of mastodon meat he hunted.   You work out the relative value of each item to the other - it is inherent in our being.   And yes, so is the idea of sharing - he offers you some of his mastodon meat, even if you have nothing to offer in return.  But likely he does this because, down the road, he expects a favor in return, or expects you to contribute to the prosperity of the tribe in one form or another.   It is human behavior - survivalist behavior - in its most basic form.

Communism, on the other hand, is an economic theory that is imposed by governments, from the top-down.  It is an artificial construct that goes against basic human nature.   The famous saying in the Soviet Union, among "comrades" was, "The State pretends to pay us, and we pretend to work!" - which illustrates neatly how the disconnect from labor and wealth works out.

But we saw the same thing here in the United States during the worst excesses of Unionism.   When all workers are paid the same, there is no incentive to work harder.  In fact, when you see one worker slacking off, you feel "cheated" if you work harder than him.   So it becomes a race to the bottom, and everyone tries to be the guy who works the least.   Management is unable to "motivate" workers, as they complain, file grievances, and strike if any sort of coercion - no matter how gentle - is used to try to get workers to actually work.  People start working "to the contract" and do the absolute minimum required by it.   It ends up being a shitty place to work, with no joy in labor - or any profit it in, for working any harder.

Yea, Capitalism sucks, too.   People make poor choices and end up poor.  But the "poor" in America are far wealthier than the middle-class in Communist countries.  And to me, that is the real deal - not how bad "income inequality" is, but how much higher our overall incomes are - compared to the Communist result.   Overall, every single one of us is better off under our present system - as badly flawed as it is - than they would be under some Bernie Sanders wet dream.

Does the system need fixing?  Maintenance and adjustment?   Well, of course, and our "Capitalist" system is anything but purely capitalist, just as our Democracy is not wholly Democratic (and would be a nightmare if it was).  Our system has a safety net to insure that people don't die of starvation in the streets.  We are quasi-socialist as it is.   But to argue that we need to throw out the existing system because it isn't "perfect" is just ridiculous.

To argue that we should replace it with a system that has a track record of abysmal failure is utterly ludicrous.

Forever Home? If Forever is 13 Years, Maybe!

Houses are just things.  A home is where your life happens.

It's interesting how certain terms become popular almost overnight. With the internet, this is probably even more so.  I noted before how today's young people don't drive the SUV that their parents had or the station wagon their grandparents had. but instead have "adventure-mobiles" which are basically just their hand-me-down parents' SUV, with a roof rack attached.

What is interesting to me is not the pretentiousness of this. but the fact of the term pops up all at once all over the internet.  A decade ago, "Adventuremobile" would not have produced a Google hit.  Today, there are websites and blogsites and discussion groups and whatnot devoted to this "trend" of going camping in your SUV.   I'm not sure if this appeared on some reality show or someone's orchestrating this or what. but it became a "thing" there for a while.  Myself I'd be embarrassed to call my car an "adventure-mobile" - but that's just me.

Again, the newest generation has to claim to have invented everything.  While Grandma and Grandpa might retire to a "Park Model" home in Florida, their grandchildren are building "tiny houses" and that's an entirely different thing and donchuforgetit!  It is like each successive generation believing they invented sex.   It's just a thing people do - they want to be original - like everyone else.

These slang terms illustrate a certain mindset and a way of thinking.  If you can control the terms of a debate, you control the debate, which is why political correctness is so powerful - and so reviled at the same time, even by those practicing it.   Language is the business of symbology - you create words and terms and they have an accepted meaning.  When you create a word - or destroy one - you change the way people think, quite literally.   No pun intended.

Another term that has come to the forefront recently is "forever home."  I've seen this on a number of sites or news articles or discussion groups, where people (usually young people) talk about buying their "forever home" as if they were going to live in it perpetually.   I'm not sure where this is coming from - again probably one of those stupid reality shows on television, which I never get to see, which is probably a good thing.

Again, control the language of the debate, you control the debate.  And who would benefit from the concept of "forever home"?   Well, the national association of Realtors(R) is one, of course.   Home builders are another.   Heck, even the term "home" is freighted with emotional weight.  They are houses, of course - buildings, shacks, shelter, whatever.  But the term "house" sounds cold and impersonal, while "home" has all the baggage of Mom and Apple Pie - I'll bet she has one in the oven, right now!  Let's go!

But "forever home"?   Are homes really forever?  The sad reality is, people move an awful lot during their lifetime. The average length of stay for typical homeowner is about 11 years for their first home and maybe 13 to 14 years if it's their second or subsequent home.  (In places like Washington, DC, this can be as little as 5 years, which coincides with the election cycle).  This means you may own number of homes in your lifetime, and the odds of you staying one of them perpetually or until you're dead at least, is very slim.

As I mentioned before, we've owned nine properties in our lifetime so far.  Granted, one of these was an office building (now a residence, oddly enough), and three of them were investment properties.  But five of them were properties that we lived in as owner-occupiers. The longest we spent in a home was about 17 years in Virginia, the shortest, about three years in our condominium in Florida.  We owned our home in New York for about eight years and presently have been in our house in Georgia for about 13.  So the statistics quoted above are about right.

And none of these will ever be a forever home. The only forever home you might ever occupy is a casket.

What I find interesting about this terminology is that it illustrates a certain mindset among young people, that once they buy their dream home they will live in it for the rest of their lives.   You don't hear old people talking about "forever homes" as they already know the score on how short forever is.  It's the sort of immature thinking that I used to engage in as a young man.  I thought that once I bought a nice car, I would be set for life, as I could keep that car forever and never have to buy another one or make car payments or anything!  Well, that was about 30 cars ago*.  Granted, many of those were junkers, and some were hobby cars.  Other cars I bought that turned out to be mistakes and I quickly sold. But even the cars I kept for a very long period of time eventually wore out. Cars are not forever.

And neither are houses, although if they're well-built they should last a lot longer than a car - 50 to 100 years or more.  Although, as I've noted before, about ever 15 years, every single damn thing on your house wears out and needs to be replaced.  A  house is a continuing series of expenses that have to be paid in order to keep it up.  If you don't, the place falls down, literally, over time.

We are seeing this right here on our island where an older couple let their house decay to the point where there's a hole in the roof about two-and-a-half feet across. They stapled a tarp across it for the time being and for the life of me I can't understand why they aren't fixing the roof. It's such a valuable investment - it seems a shame to let it go to waste.

The real danger of this "forever house" thinking is that it imparts a lot of emotional freight into what is in fact just a material thing.  The material is mortal error.  A house can be a trap if you let it be one. People like to think about the old family homestead where they raise their children and add measurements of the door jamb illustrating the growth of each one of the children as they grew up.  A nice fantasy, to be sure, but fantasies can sometimes obscure reality.

You read all the time in the paper about people whose homes are atop a toxic waste dump or located in placed like Flint, Michigan (I am being redundant, here).  "I can't move to where there are jobs, opportunities, and a decent Wal-Mart!" they cry, "this is my home!"

Home is where you hang your hat, and that can be anywhere.   A house is just a structure that you can make into a home, but the wall studs and sheetrock are not your "home" but just the structure you live in.   This emotional baggage clouds reality and clouds the debate.   During the real estate meltdown ten years ago (when I started this blog - it has been that long?) people whined about "losing their home" when in fact, the mini-mansion they mortgaged to the hilt was something they bought only a few short years ago, not some inherited manor handed down since the time of Moses.   It was just a thing, but many folks cashed in their 401(k) and IRA money to hang on to these "things" -  which was utterly idiotic and self-destructive.

There is a danger in this "home" thing, and doubly so with this "forever home" nonsense.

As I expounded on in the myth of the family homestead, very few of us live on Walton Mountain, on land handed down for our great-grand-pappy, in the house that we built with our own two hands.  We don't have the warm homecoming or people arrive by horse-drawn sleigh to have a Norman Rockwell turkey dinner with all the relatives around the table.

Sure, some of these things can take place at some point in your life, and of course these are wonderful things.  I still remember going for a winter sleigh ride in Madison County back when I was 12 (it was more of a sledge, but let's not get technical).   Few can say that, today.  And I remember family gatherings at our home on the lake - and yes, even pencil marks on the door jam annotating our growth (quickly painted over before the house was sold, of course!)  But staying in a house for emotional reasons can be a real trap. Particularly as you get older, my house can be harder and harder to keep up.

And houses can be haunted, too - even when people are living in them!  Especially when people are living in them.

So what's the harm in all of this "forever home" nonsense?   Well, to begin with, it can blind people to the fundamental economics of this transaction.   It is like selling sports cars to divorced men - you sell the sizzle, the emotion, the image - and people pay through the nose for that.   The same is true for the young newlyweds - they get it in their head that life would be "perfect" if only they owned this expensive thing - a status symbol in part, to be sure.  An emotional anchor, perhaps.   Maybe this will save the marriage?

But as an investment, well, not so much.  In a normal market, it takes five years just to recoup the transaction costs. And if you move every 11-13 years, you are not "cleaning up" on home ownership. Throw in maintenance, repairs, insurance, property taxes (thousands a month in some places!) and renting starts to look pretty competitive.   All practical things to consider - all blown out of the water by "forever home" talk.

So why buy a home?  Why did I buy nine?   Well, if you do stay somewhere for a few years, it may be cheaper than renting.   And over time - a long, long time, you may build equity.   Like I said, in a "normal market" (do those exist anymore?) you may recoup your transaction costs in about five years or so.  After another five, you may have some positive equity.  Don't add up all those receipts from Home Depot, though - you may end up weeping!

And of course, today, we have "abnormal markets" which means not only will houses not necessarily appreciate linearly over time, but they may skyrocket in value - or plummet.  We've been fairly lucky, riding the skyrocket a couple of times (and getting off before it blew up) and not getting too badly hurt on other occasions when we sold at a loss (hey, what's $100,000, right?  If that sounds like a lot of money to lose, maybe you should re-think home ownership!).   Our current house is, after more than a decade, worth maybe 10% more than we paid for it.  Don't ask about those Home Depot receipts.  I may weep.

But getting back to our subject, does any of this really matter?  Yes, and let me explain why.  When I was growing up, young people talked about getting a "starter home" or their "first home" with the understanding that a house is just a thing and not a lifetime commitment.   Today, it seems just the opposite - young people are talking about "forever homes" at a point in their life where nothing - their jobs, their marriages, their careers, are forever.   It is selling a dream, and dreams turn into nightmares when you wake up to harsh reality.

You want to buy a house?   Great.  Go for it.  Provided you are in a stable market and not one of these balloons that is about to burst.  Provided you plan on staying "forever" for at least five years or so to recoup the transaction costs.  Provided you budget for new appliances ever 15 years or so, new furnace and A/C, hot water heater, roof, driveway, and so on and so forth.   You'd be surprised how fast 15 years go by and how things wear out.  By the way, that microwave door handle repair is holding up - but the lights under the microwave are getting flaky.  Nothing lasts forever.  It ain't broke yet, but you can see the end signs - once you've been through this a few times.

But getting caught up in emotional arguments about "forever homes" and whatnot - well that is how the salesmen get to you.  And that's all real estate agents are - salesmen, selling a product.  If it is a product you need, want, and can afford, then great.  But don't let emotions dictate your financial life - it will surely lead to woe.

A "forever home" is just a place to park your "adventure-mobile"!

* 30 cars - subject for my next posting.

The Phony Market?

Because we already counted it as sold!

When your next raise is predicated on the stock price going up, you'll do anything to make the stock price go up.

A small footnote in the news, BMW is under investigation for registering "loaner" cars and calling them "sales" in order to gin-up the sales numbers to make the company appear to be more profitable.   Perhaps it is a small thing, but  a telling one.

It seems every day we are treated to another story about how such-and-such a company (usually one of these tech-that-are-not-tech companies) is "restating earnings" or that people are fired for publishing misleading annual reports.

"Fake it 'til you make it" was the mantra in Silicon Valley, but it seems that many of these companies are running out of fake.   Some have tried to invent new metrics, as I noted before, going beyond even the specious "EBITDA" (or "Earnings if we didn't have to pay anybody what we owed them!").

It seems like a small thing - a trivial thing - at first.  But then you realize that this is a sign of the end times - a sign of a market that is cooling off.   When things are going gangbusters, no one needs to "tweak" the numbers to show a profit.   No one has to count cars as "sold" that are still on dealer lots.  No one has to invent new metrics or make up fake numbers out of thin air.

But in a rising market, it is harder and harder to show increasing profits over time.  Eventually, something has to give, if not in fact just level off.   But when your whole business model - particularly your personal financial life - is predicated on ever-increasing profits over time, then you are backed into a corner.

Perhaps it is a small thing.   But it seems like a data point in a line.   I drive by the "sales bank" lot here in Brunswick, GA, overflowing with Dodge Ram trucks and Jeeps - and nary a one seems to have moved off the lot.  Meanwhile, FCA is reporting that they have worked down their excess inventory by forcing cars on dealers and not allowing the dealers to order cars they actually want.

It is funny, but in the past, there have been click-bait "sponsored content" links on pages that claim that cars remain "unsold" for months and are sold for pennies-on-the-dollar.   Worse yet, some conspiracy-theory websites shows pictures of auto marshaling yards (such as we have here in spades) with thousands of cars in them, claiming that these are "unsold cars" that manufacturers build and then crush for no particular reason (because, you know, that's how you make a profit, by crushing brand-new cars!).

These are idiotic conspiracy theories and click-bait articles.  Yet, a young man at a campground asked me about this, in all seriousness, convinced that he could buy a leviathan SUV that "was going to be crushed anyway" if only he had the secret in-the-know information on how to obtain it (and I am sure someone is selling this online, too).  There are cars and trucks that are destroyed intentionally, of course - test mules, flood-damaged cars, and whatnot.   Right now, we have several hundred sitting in a half-sunken car carrier that will be cut up and destroyed.   They've been sitting immersed in salt water for a couple of months, now, what could possibly be wrong with them?

These surplus Dodges ("Rams") and Jeeps will, of course, be sold.   No one gives away cars or crushes them for no reason.   When Audi had the TT disaster (one of the early cars went airborne and killed a famous rally driver, due to its abysmal aerodynamics) sales plummeted.   Audi gave dealers cash and told them to move the unsold cars to the used car lot, and cut the prices.  Brand-new cars, with ten miles on the odometer, sold as used - so as not to depress prices of the new cars coming off the line.   It does happen, but it doesn't mean the cars were free.

I suspect the same will happen with Fiat Chrysler.   But whether their sales figures are really accurate remains to be seen.  Yes, these "sales bank" cars will be sold, but at a steep discount.   Already other car makers are following FCA's "employee pricing" move, which means thinner margins and smaller profits.   What does this say about the health of the auto industry or sales in 2020?

It seems there are two markets out there - the real one and the phony one.  The real market is based on income of ordinary people, the money they can borrow, and how much they can afford to spend.  These are real-world purchases that drive the real economy.   The phony market is driven by "news" - the stock market going up or down in response to the latest announcement about "trade deals" or profit statements "beating" expectations, even if the numbers themselves are somewhat suspect.

I guess we'll see how far apart these two markets can spread before some sort of reconciliation occurs.

A Tale of Two Brothers

My relationship with my brother mirrors the relationship between our political parties - and changes in politics, worldwide.

Back in 1980, I went to visit my hippie brother.  It did not go well.   While we were only seven years apart in age, we were never close.  I suspect he was none-too-pleased to go from being the "only son" to one-of-three, and seeing what bloody murder we younger boys got away with as kids - things he would have been beaten for when he was growing up.  I guess I can't blame him for that.   But by the time I was of a cognizant age, he had gone off to school, so we were never very close.

In a reaction to my Dad's values (and the values of my Dad's generation) my brother decided to "reject materialism" and go live on a commune in an unheated barn in Vermont, following the dictates of a cult-like leader.   I went to work for General Motors.   Perhaps both are cults, but one has a better retirement plan and health insurance.   While he was carrying around Chairman Mao's "little red book", I was reading John Delorean's On a Clear Day You can See General Motors.

He would rail about how awful America was - how we were doing awful things in the world (which of course, no other country, particularly the Soviet Union, was doing).   He blathered on about the rights of the "workers" and whatnot.  I explained to him that if he came down to the factory and started spouting that commie crapola to "the workers" that they would stomp his hippie ass to the floor.  And they would have, too.   I understood this, having worked on the factory floor, sweating and laboring (and drinking) with the fellows in the forge plant in the searing heat.  Yes, a few might be Democrats, but most were pretty conservative in their values, particularly social values.

You see, "the workers" are really quite conservative.  They don't want to overthrow the system, but rather profit from it.   At least back then, not rocking the boat was name of the game.   And many, if not most, voted for Nixon, and in 1980, would vote for Reagan.

This schism in politics goes back to the Civil War, reconstruction, and the reform and progressive movements in the early part of the 20th Century.   The Republican party was not only the party of big business, but the party of the North - and the party in favor of the abolition of slavery.   Teddy Roosevelt, who many compare to Trump (a poor comparison, IMHO) was a progressive and reformer, even if his party (and his anointed successor, Taft) were in the pockets of big business.

In terms of politics, they would be considered "liberal" back then, and indeed, even into the late 20th century, there was a "liberal" wing of the Republican party, which believed in big, efficient government, run along the lines of modern management principles. Governor George Romney of Massachusetts and Governor Nelson Rockefeller of New York embodied this Republican-lead liberal thinking - an example of the corporate socialism of the era.  Benevolent Billionaires would lead us all to salvation.

A lot has changed since then, hasn't it?   In the early part of the 20th century, the Democratic party started to align with the labor movement in the North - creating a schism with the more conservative "Dixiecrats" of the South.   Hard to believe, but "The Solid South" in the 1950's and 1960's meant solid Democrat with nary a Republican elected to office. Today, it has switched entirely as the parties, to some extent, have switched policies.

The Democrats have moved further and further to the left, alienating many of their former labor supporters.   Blue-collar workers might strike for more pay, but they are less interested in transgender rights and cradle-to-grave socialism, particularly when it is paid for in taxes taken out of their fat union-wage paychecks.   Worse yet, the Democrats' embracing "free trade" and internationalism, as well as multiculturalism alienated this working class demographic not only in terms of economic matters, but social ones.

This did not go unnoticed by the Republicans.   Nor is it a scenario limited to just the United States, but as I noted, a trend going on worldwide.   Worldwide, we are seeing the rise of nationalism in many countries - Johnson in the UK, Putin in Russia, Modi in India, Duterte in the Phillipines.   People are craving right-wing strongmen who will put their country first.   And parallel to this is a worldwide trend in migration, as people from third-world countries flock to the West, as conditions in their home countries deteriorate.

In a recent article online, two authors point out that the election of Boris Johnson in the UK was based on these trends.   The traditional "labor" voters in the midlands were not enthused by promises of a socialist utopia.   Turns out they were more concerned about immigration and the fast pace of change.   They didn't like seeing foreign faces in their hometowns, or radical changes in government or social values.   Stop me if any of this sounds familiar.   It is part and parcel of this yearning for "the good old days" that is popular over here as well.

Change is a good thing, but rapid changes to society can cause people to feel disoriented and detached.   And in the last decade or so, we've seen dramatic changes in our social values and patterns of behavior.  And we've seen dramatic changes in our country.   To someone living in the "heartland" of America, this is all mystifying.

This is why Trump goes on these rambling rants against windmills, toilets, and light bulbs.   He doesn't give a rat's ass about these things, but the "working class" Joe doesn't like the idea of government-mandated regulations and energy-saving products, even if they save money in the long run.   LED light bulbs cost a lot of money to buy (although you can buy them at Dollar Tree - guess how much?) but over time, they last longer and are less hassle to deal with - and they produce a lot less heat as well, saving energy in terms of air conditioning costs.   But the average Joe only sees that the 50 cent lightbulb is now $7 thanks to the "gubment" who is systematically outlawing his way of life.   At least that is the perception - and in politics, perception is everything.

I noted before that I was not in favor of gay marriage because I felt that this sort of backlash would occur.   There were a lot of people who felt very neutral or accepting of gays, but when pushed into a corner, would feel threatened and lash out.   Today we are going to ridiculous extremes to be sensitive to the needs of smaller and more obscure minorities.   A teacher is fired for calling a transgender student by the wrong pronoun, and the school principle says he can't imagine a worse thing happening to a person - not the teacher, the student.   Myself, coming from the era where gays were beaten up with regularity, can think of far worse things than being called by the wrong pronoun.

The ridiculousness goes on.  A contract employee for Nike sues the company for $1.1 million because they called him/her by the wrong pronoun.   Is it any wonder that people think things are spinning out of control?

We see this in the incidents reported in the press.  People lash out at anything perceived as "different" or alien to their experience.   A columnist in Italy complains that the Catholic church bells in her home town have been replaced by amplified Islamic calls-to-prayer several times a day.   She is castigated as "Islamophobic" - but no one bothers to ask how many Cathedrals there are in Tehran, or indeed any Islamic country.  People are frightened of change, and that is to be expected.

But we suppress this fright, and it goes underground, to the Internet and other odious places.   Incidents of racial and religious violence result.   People are attacking or vandalizing mosques and temples.  A woman runs over a 14-year-old student because "she looked Mexican" and the response is muted.   We are getting used to reactionary violence at this point.   We hope it will get better, but it probably won't.

What is the answer to all of this?   I am not sure anyone really knows.  But I think somewhere along the line we stopped listening to people who disagree with us and instead posited that massive social change was the only solution to what were, in retrospect, pretty trivial social problems.   Democrats talk at people, not to them.  And they stopped listening, long, long ago.

It is not much different than back in 1980, when folks like my brother - who never worked in a factory or joined a union (as I did) - decided they knew what was best for "the workers" by dint of their college education and sophistication.   If the workers didn't appreciate socialism, it was only because they were too dumb to understand it.   This sort of condescending attitude only insured more lost votes.

Some have argued that the political divide in this country isn't between Left and Right, Democrats and Republicans, but the educated "elite" and the impoverished working class.   Leftists protest buses in San Francisco, which is ironic, as they otherwise would support public transportation. But the buses in question aren't for the general public, but are restricted for upper-class educated Google and Apple workers.   It smacks of elitism, and that is what is sticking in their craw.

The Democrats argue that if we make college free, everyone will go to college and thus make more money and become part of the elite themselves.  But this argument fails to address the basic fact that not all college degrees are alike and if everyone went to college, then college means much less.  You can't make everyone richer simply by sending them to school.

Others have pointed out that we still have a huge need for skilled workers in manufacturing and the service sector.   Someone has to install and maintain your HVAC unit.  Someone has to build your house, drive a truck, cook your meals, and so on and so forth.   Not all of this work, particularly in the service sector, can be automated.   And someone with a degree in philosophy isn't qualified to do this work, unless they are repairing old Italian cars.

This lie - and it is a lie - that anyone can join the elite simply by going to college, has cost a lot of young people an awful lot of money in student loan debt that cannot be paid back on low-wage jobs (or is difficult to pay back, anyway).   Many of these kids would have been better off becoming an ASE certified mechanic, a welder, an HVAC tech or some other job for which there is high demand (read the classifieds sometime, it is illuminating).  These are jobs that pay well, and can lead to owning your own business, down the road.

But not only that, the idea of "free college" and student loan forgiveness sort of tilts in favor of the very rich.  The kid from a middle-class family gets a free ride through college - or his loans forgiven after four years of partying.  You might understand why the guy who spent four years in the military serving multiple tours in Afghanistan or Iraq might not think this is a swell idea or a good use of his tax dollars.

The left is pandering to the left - to the college educated, the wealthy, the urban, the elite.  They are not listening to "the workers" anymore than my brother did, waving around his little red book of communist ideals.

It was no accident that Hillary lost Michigan, Indiana, Ohio, Wisconsin, and Pennsylvania.    She didn't even campaign in these States, but assumed they would vote for her, "because they had to."  They assumed unionism would carry the day, even as unions (and high-paying union jobs) disappeared from these States. People were losing their standard of living, and the Democrats' pressing issue was transgender bathroom rights.

People were seeing foreign faces in their hometowns, speaking foreign tongues. Change is hard to deal with, and dramatic change even moreso. People are flocking to the border in "caravans" - something not seen ever before.  And yet, anyone who sounds the alarm is dismissed as a racist buffoon.  The Democrats' solution?   Abolish ICE.  Open borders.  Let 'em all in!

It is no wonder Trump won. And the way things are going, it looks like Trump will win again.   I ran into someone the other day who confidently predicted that when the smoke clears, Biden will get the nod and win in November.  I am not so sure.  The Democrats will beat the crap out of each other between now and then.  Much time and money will be wasted on an inexperienced Pete Buttigieg, before people come to their senses and realize that America isn't ready for a gay President, no matter how many big-money donors he has, or how "centrist" his politics are.   Mayor of South Bend isn't a sufficient credential.

And while I am sure Joe Biden is a nice and honorable guy, let's face it - he isn't the most telegenic person around, and an easy punching-bag for Trump, who will convince the vast majority of Americas than there was some sort of "there" there in the Ukraine.  Trump is master at turning the tables on other people.  You call him a crook, and by the end of the day, he has crowds chanting "Lock Him Up!" - talking about you.   You call him out on "fake news" coming from Russia and spread on Facebook, and he twists the term around to mean anything from the mainstream media.

Come to think of it, exactly what were Hunter Biden's credentials in joining the board of an energy company?  It is akin to Chelsea Clinton being offered six-figure jobs right out of college.   It is the sort of rank corruption we expect from Trump, but not from Democrats.  Well, Democrats other than Hillary, anyway.  It is an example of this elitism that Trump and his ilk tap into.  Never mind that Trump does it himself on a grander scale.   Like I said, he is master at painting others with their own brush.

Maybe I am wrong - let's hope so, anyway.   But either way, I think the election will be very close, if it is a Biden-Trump match.   If any of the other candidates are nominated, I believe Trump will win in a landslide.  Bernie Sanders is the Corbyn of the Democratic Party.  Well, at least he isn't antisemitic.  There's that, I guess.

It's been 40 years, but my brother and I still are far apart - not that we were ever that close.  He's a big Sanders fan, and convinced that only extreme radical change to the very fabric of our society will accomplish anything.   Of course, it has been 40 years, and such radical change hasn't taken place.  What changes have occurred are, in part, one reason why we are so divided today as a country.

Myself, I am not a big fan of radical change, either to the Left or Right.  And sadly, since the left has held out for "my way or the highway" the far-right has succeeded in accomplishing radical change, one incremental step at a time.  It may not be noticeable right now, but Donald Trump has pushed through nominations of Federal district court and appeals judges, as well as two Supreme Court Justices (and a third is likely if he is re-elected).   And we wonder why the religious right likes Trump.   They have their eye on the ball - playing the real game, not the game of protesting and losing elections but being "morally right".

So, in a way, it doesn't matter who wins the next election.  Any push to the left will be met with lawsuits and obstructionism, much as Obamacare is presently being litigated as "unconstitutional" in the courts.  And friendly courts will likely strike down any attempts at a radical leftist overhaul of society, even assuming the Democrats could take both houses of Congress and the Presidency.

The leftist manifesto of the last five decades has failed - the "We smart people know what's best for you little people" doesn't resonate with the very people it was designed to "help".  The fervent Trump supporter isn't interested in electric cars, green lightbulbs, windmills, or transgender bathrooms.  What's more, they distrust people who claim to know what's best for them, particularly if they are not one of them.

This is why they like Trump - and why Trump goes off on these mystifying rants about toilets that the left-leaning media mocks, but does not fully understand.  His followers do.  Toilets and lightbulbs - they are dog-whistles for "too much government regulation."  And the Trump voter who has to flush twice with his newfangled "low water" toilet gets this.  The left does not, and in fact, disdains it.

And maybe that is the difference between me and my brother.  He spent (and is still spending) a lifetime in Academia, getting degree after degree, teaching young students liberal ideas, and holding forth on "the rights of the workers".  Myself, having worked in union plants and being a union member at one time, see things a little differently - or at least, I see how "the workers" actually feel about these things.

So long as the Left is so far removed from the constituency they claim to be helping, they will ultimately fail.  And Lord help us, if they succeed - because like most revolutions, the end result won't help the people they claim to help, very much.