Thoughts about politics, economics, societal trends in our lives and anything else that tickles my fancy. In the Spring and Summer the Sacramento Rivercats become part of this rant.
We flew all day to get here and then after finding our B&B (where we will stay for the night) found the location of our house (which is about a block away) and then went out for dinner. We ended up at a place about a block away from the Centro which was fine. We sat next to a couple (a retired clinical psychologist and a painter) - we found out a lot about the city. They came here eight years ago for two weeks and bought a house before they left.
The picture is of the Cathedral on the Centro - which is decorated for Dia de los muertos. When I first started to come to Mexico - Halloween was unknown. But now before the two days of the celebration we call All Saints in the US - kids dress up in costume.
There is a large Expat community here - so there is even a US Counsel's office. We found out about a Gym and the location of two markets, a panaderia (essential for the morning), and a couple of restaurants. We also got the name of a guide who could take us to some of the sites near here that I would like to show my wife. I will try to post shots over the month with commentary here and will add some shots to my Flickr site. The first shot is from my iPhone (and it would have been better with one of my other cameras.
I must say I was conflicted a bit about the game last night. As a Trojan was I disappointed in the loss? Of course. But like Thursday's World Series game, it was an exciting match. (Coincidentally, in both games the Cardinal(s) won.) After the game Coach Kiffin expressed disappointment that SC was not granted a timeout with one second left on the clock. One could make the case but I thought Kiffin's beef was bad form.
Here are three thoughts on the game. #1 - SC played Stanford well - going to TRIPLE OVERTIME is no small feat. It was a memorable game, in spite of the loss.
#2 - For this season, the game really counted for Stanford (who remains undefeated) and not so much for SC because of the sanctions they are still living under. This game was the closest to post season play for the Trojans and they played exceptionally well.
#3 - The forced error in the final play where Stanford recovered a fumble in the end zone, decided the game. Curtis McNeal, SC's linebacker simply concluded "No excuses, I just fumbled." This rivalry has a history of close games (2007, 2010 are two examples)
The B Street Theater is a real community resource for the Sacramento area. It has two smallish stages and a good repertoire company. The season tickets a reasonably priced and for that price once or twice a season you find an unexpected delight.
The current piece in the large stage was a Tony award winning play. The Bee's review of the play was very positive "French playwright Yasmina Reza's special talent lies in exposing our coarse and, ironically, often poetic inner lives." For my taste, on this production, I regretted that there was not an intermission so I could have bolted for the door.
The play has four characters (two sets of parents) who meet to discuss a problem between their two sons. It starts pleasantly enough and then devolves into a series of screeching ensembles between the characters. The two males are a dealer in "fixtures" and a high powered lawyer. The wives are a writer and a wealth management advisor. Each has some eccentricities. The characters and the jokes are cliched.
I enjoy theater for a couple from a couple of premises. First, I look for one or more characters that I would like to find out more about - either in drama or comedy. Second, I want to hear some elegant turns of phrase - many authors have a superb way of presenting language with verve. I do not have to like the characters, but I would like them to be more than cardboard stand ups. What bothered me about this play is that once you get the premise, that is all there is. None of the characters develops in a surprising way. The dialogue is stylized at best.
Our normal night is earlier in the run of a play. The Mainstage fare is normally light comedy. There have been a couple of plays this season where I wanted to come back again simply because the theater was so compelling. One play last season took the Hitchcock movie The 39 Steps and made it into a farce. Although I know the movie well, the play kept me laughing the entire production. For this one, I pulled out my cellphone and did email. (Not unlike the jerk attorney in the play.)
A few years ago I switched from Vonage to Comcast for our home phone line. You might wonder why anyone would want a home phone line - and I would reply that for things like security systems on your house it is always easier to have a home phone. (Notice I did not say land line because Vonage and Comcast and even a good bit of AT&T is done using Voice Over Internet Protocol or VOIP.)
I switched because Vonage service, at the time, was horrible. The router they gave me was klutzy. Their customer service was not English enabled. Comcast was better but expensive. (about $20 per month and their international rates are not great) But Comcast also did not do well in my house. I called their service a couple of times and they argued that my crackly voice problems were based on "herz interference" which meant that their router was picking up the frequencies on my cordless phone system.
Then I discovered a new device called an Ooma. I read the reviews - they are uniformly wonderful. I spoke to their customer service people - they are communicative. I found out that they included in the device a signal processor which improves voice quality. So I bought one (about $200). I also signed up for the Premium Service which costs $120 per year but allows you to port your existing number. When I called to register the device I spoke with an agent who said, you need to be near your device when we set it up - I said when can we do that and she said pick a time - I picked one eight hours hence and she said fine. At the appointed time, she called me, we went through the steps to set it up and in five minutes, I had my new phone system.
There are all sorts of options on the device like a bluetooth converted to allow you to use your bluetooth device on the network(so your cellular phone can be used at home); a WIFI converter which allows you to connect the device outside of an ethernet connection to your router. They also offer handsets for about $50 per unit.
What is more they offer a iPhone (or Android) APP which can allow you to be a part of the network anywhere in the world where you have WIFI. That reduces your expense when you are in a foreign country.
From my initial impressions - this is an intelligently designed device that has a lot of features but with one caution. VOIP systems work when your network does - so if your internet goes down so does your phone. In the early days of VOIP that was a problem. In the last couple of years with Comcast that has not been a problem and I do not expect it to be going forward.
A lot of people on the left have begun to argue that the key intent of the GOP at this point is to defeat Obama rather than advance the country out of its current mess. That is nonsense on a couple of levels.
First, while the ultimate objective for any political person is to replace their opponents, the GOP has not been without proposals that are alternatives to the President's plans. When the "Jobs" plan that the president advanced came up for a vote in the Senate a number of democrat members voted for the GOP alternative. But not all dems voted for the President's plan. That would suggest that his approach is not one which is popular.
Second, the President's record on two areas gives little support for the idea that he is trying to compromise on any issue - his speech proposing his most recent plan for improving the economy was not well received but he still said only "pass it now." Legislative process involves give and take but so far his approach has been more my way or the highway. If, as many conservatives believe, the President's proposals will continue to harm the economy, why should they support extensions of ideas that have thus far proven to be not helpful and even harmful to recovery. The first stimulus package did almost nothing to improve employment in the country and indeed actually made state and local government more dependent on federal funds. But the President presses on.
These guys are amateurs. Obama's total experience in DC and in Illinois is limited. His record as a legislator was to be a backbencher. So one would not expect that he is very skilled at working in a divided political environment. But does that mean the mean old GOP has as its first goal to defeat him? NO - the GOP in the House passed a budget proposal which the President has not countered to any serious degree. They passed a "jobs" proposal - while he has proposed something it looks more like campaign rhetoric than serious policy. A president has many jobs but as Bill Clinton recognized in 1994, one of his jobs when he has strong opposition in the Congress is to figure out a way to make policy not speeches.
On Wednesday night the organization that I have worked for - for a very long time gave me a retirement dinner. It was the fourth such event commemorating my work with this group. (Each one offered by a different but associated group.)
Over the course of these events I have received some interesting things. Two songs were written about me - one in English and one in Spanish. Someone made me an honorary Kentucky Colonel and gave me an engraved Louisville Slugger. I got a vintage SC jacket. But the most intriguing was offered from a friend at Stanford.
In 2007 USC was on a roll and played Stanford. The Cardinal's regular QB was out so a second stringer came in. SC was favored by a lot. SC had a good year - beating Notre Dame by 38-0 and UCLA by 24-7. They went on to win the Rose Bowl against Wisconsin by 49-17. But they lost to Stanford 24-23. And that back up QB scored the winning TD with less than a minute to go.
A friend from Stanford got that QB to autograph a game ball with the score on it. Some gifts you appreciate - others you treasure.
On Saturday we went to the birthday party of two nephews of an old friend from Mexico. She has a niece that she is very close to with the same name and the niece and her husband are living in the LA area while he works on a project. They held a birthday party for the two kids (which coincidentally was also the couple's anniversary). Also present was the dad of the niece and the mother of my friend (not pictured).
The kids are three and five and fans of Mario Brothers - and so the party was themed about those characters - everyone in the family dressed the part.
I am always struck by the graciousness of these events. Everyone was made to feel welcome. And the real focus was on the kids (who are 3 and 5). Of course, there was lots of food and the kids seemed to have a great time. So did we.
My friend and I met when she worked at a university in Mexico City. But she has always been a good friend. Her mom is also a kick and it was good to see her again.
On Saturday we took our first trip through the new part of the Sacramento airport. At the beginning of the week, on a trip to New York, I went through the United terminal which is now in Terminal A. But on the weekend was our first try through the new space. The photo is of the old Terminal B - which will be torn down soon. For most of my career this was the key terminal that I flew out of on United flights - at this point I have more than 2 million miles with United - so this was a place that I spent a lot of time - often arriving before 5 AM and coming in after 10 PM.
I am not nostalgic about it - an airport terminal is an airport terminal. But it certainly marks a change.
In the last few weeks GOP candidate Herman Cain has generated a lot of attention to his plan for reforming the tax system. It would eliminate the current income and corporate tax systems in favor of a greatly simplified system which assessed personal and corporate income taxes on the basis of 9% and would simultaneously create a new tax on consumption of 9%. A couple of caveats to the plan. First, the income tax for individuals exempts investment income. Second, the new income tax would be greatly simplified. All income (except investment income) taxed at 9%. Cain is not clear as to whether there would be a zero bracket amount (a level of income which is not taxed to help protect equity in the system).
The left has begun to go ballistic on the plan. They claim that because of the way the corporate tax is implemented that the poor will have an effective rate of 27% (they will pay on all three). Interesting that I have never heard of the left arguing that all corporate taxes get shifted forward to the consumer. They also claim that the tax would only raise about 14% of GDP (when the historic rate of tax revenue is about four points higher). Not sure how they can be confident of those numbers.
But as a conservative I also have some concerns about the proposed plan. First, the record of adding one tax to substitute for another is not very promising. The new consumption tax (and actually the income tax would function a bit like a consumption tax) would be added to the state levies so many consumers might end of paying up to 20% for purchases. It is not clear from the plan whether services would be included in the plan. That might well reduce the costs of compliance for taxes but the combined rate would put a significant damper on consumer expenditures. My best guess, based on the make-up of the Congress (present or future) is that the consumption tax would have some exemptions to improve equity - so the rate might be pushed up to 10-12%. Second, while the income tax looks an awful lot like a consumption tax, my suspicion is that at least a couple of the current parts of the tax code would survive. High on my list would be some recognition of the charitable impulse (either as a deduction or a credit). The realtors and construction industry would push for the mortgage interest deduction (which does not make a lot of economic sense but has a lot of political force around it).
So two questions - how do you play this against the President's Buffett rule? And, what should be the alternative? The President is clearly trying to suggest that his alternative, to raise rates, is the best alternative. Anyone with half a brain can figure out that the tax code is as popular as a skunk at a picnic. So the best response for any other GOP candidate is to recognize that Cain's simplification of the tax system is a good first step. As to the alternative, we need to begin to think about the outlines of the 1986 Tax Act - broaden the base and lower the rates. In this year, where big government and big corporations are unpopular from all fronts that would seem like a winner.
There are figures and then there are figures. The President has been trying to make a case that the richest Americans pay less than the average joe. Based on the data of averages by decile the American tax system, even when you include payroll taxes is progressive. Rich people actually do pay more as a percentage of income than poor people do. There are all sorts of charts that prove that. But recently, among some of the writers on the left a new argument has emerged. Indeed, these people say that the variability of tax rates among the highest income taxpayers is higher than for people in lower brackets. (That is undoubtedly true because of the sources of income.) AND, these same people argue that some middle income taxpayers may actually pay more than some very high income taxpayers. (That may also be true.)
But there are some serious caveats to the analysis. First, averages are exactly what they are purported to be - averages. And so there is some variation. Second, part of the variation on tax rates, especially for the middle income taxpayers may be as a result of the alternative minimum tax (AMT) which affects people in the upper reaches of middle income hood or in the lower reaches of upper income hood. For those taxpayers so affected their average rates rise. A major difference between the two groups is the involuntary nature of the AMT. Buffett argues that people in his lofty place on the income totem use the preferences for capital which can lower effective rates. That is discretionary, the AMT is mostly not.
A final comment should be added about Buffett's fairy tale. It is almost impossible to get to the percentages that Buffett claims for his employees. Effective rates of 33-41% do not occur for people who are firmly in the middle class. Either his co-workers were in a strange tax year (possible) or Buffett was merely creating the data (probable).
Ultimately, the best tax system is one which intrudes little in the lives of citizens - that would mean lower rates and a broader base. But then that is not the point that the President or his tax raiser lapdog is trying to make.
This evening I came back from a trip to New York at about 8:30 PM. As I walked out of terminal A I noticed that there were no less than 10 Transportation Security Administration blue shirts standing around. That seemed odd. I checked the departure monitors and indeed there are several flights that depart after 9 PM - unfortunately all of them leave from the new terminal.
I sure am glad that the boobs who run the TSA understand that it is an efficient way to run our airport security by having a group of employees cover the entrances well after the last flight is scheduled to depart. Just who are they checking? The TSA was a vast over-reach during the Bush Administration which cost us a lot more than it is worth.
In my last post I suggested that the almost universal pan that the "techno-pundits" offered might have been a bit off. IN the first 12 hours for pre-ordering the 4S phone - they had more than 200,000. That is a record. Evidently the consumer saw something the pundits did not. No figures yet on the uptick for the now free 3G phone purchases.
One more comment - based on the response on Friday - the delay for late orders is 1-2 weeks. The 16 seems to be selling best.
One more comment on Monday - the first 24 hours saw orders for 1 million phones - again a new record. Looks like 3 million units for the weekend.
As stories about the succession at Apple have begun to build we have gotten a new line of discussion by "experts" who argue that Tim Cook is not Steve Jobs. Well, duh. At Tuesday's event he did not try to become Jobs. (Although they both wear black shirts.)
One pundit on CNBC this morning droned on about the "pipeline" which would sustain Apple for a while and another yammered that the pipeline was short. Most viewers of the announcement event earlier in the week where the 4S phone was announced panned it.
Let me explain why I would not be so quick to judge. Apple did a couple of major things this week. First, they did not announce a radical restructuring of the iPhone - although there are some very nice upgrades. Second, they did some interesting strategic repricing. Get a phone with monster memory for a smartphone and it costs you $400. But get a phone two generations out with 8 GIGs of memory for free. That sounds to me like the company gets where the market is moving. And all of the current product line gets the upgrade of the operating system.
More importantly are the two products which I believe will be game changers. First is reminders and Siri. I have used the standalone SIRI app since it came out. With the new features I think this will make my phone even more indispensable. It is rarely away from me and now that will be even less. Second, the camera - it looks like a major upgrade to the capabilities both in terms of resolution and other features. Ditto for the stickiness of those changes.
Obviously, Tim Cook has his own style. And we surely did not hear the "one thing more" riff that you expected from Steve Jobs' performances. But what Tim Cook did was present, in my mind, a very credible case that Apple will continue to lead on portable devices. When the first iPhone was about to come out some numbskull marketing expert from Wharton said the phone was "too expensive" and that it would never sell. Let's wait and see how the first couple of days of pent up demand works out. I will buy one tomorrow morning because those features and the extra memory seem well worth the price.
The co-founder of Macintosh died this afternoon. I was an original MacEvangelista. When I finally met Guy Kawasaki last year, I asked him why I was one of the originals in the group - and he could not offer a good answer.
During my career I have developed the reputation as a constant Mac Supporter. For the last decade or so I have probably bought most of the new versions of the newest Apple product. Every iPhone - sure - on the first day. Every iPad - yes - all three versions (WIFI and 3g and iPad 2).
Keeping to my tradition, when the new CEO of Apple did his presentation on the iPhone I watched the presentation on the new IOS.
What has disappointed me about this important event in humanity has been the mundane nature of the coverage. Two posts on Facebook caught my eye. My Daughter In Law copied an Ad from Apple that said - Here's to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes... the ones who see things differently -- they're not fond of rules... You can quote them, disagree with them, glorify or vilify them, but the only thing you can't do is ignore them because they change things... they push the human race forward, and while some may see them as the crazy ones, we see genius, because the ones who are crazy enough to think that they can change the world, are the ones who do. My son, quoting another post simply said iSad.
But as I thought about what was most important to me about this major figure in American enterprise, was a You Tube Video that I have on my iPhone. It is Steve Jobs commencement address at Stanford in 2005. Jobs was the modern embodiment of the "bull headed brewer" that Smith celebrated in the Wealth of Nations.
In my opinion Jobs was a contradiction in progress. He supported those in the political culture that would destroy the very qualities that he celebrated in his 2005 address. He had a clear idea of what would come next which he could not be persuaded to modify. For the contributions of new technologies and his unwillingness to compromise, we should thank him.
As the Solyndra scandal continues to unfold the democrats on the appropriate House committee released a series of emails that purport to show there was no "payoff" and there was dissent within the White House and Obama supporters who were advising the White House.
What is revealing in the emails is their arrogance. Larry Summers started an exchange between him and Brad Jones of Redpoint Ventures.
Summers (this is the same arrogant SOB who lasted a short time as president of Harvard who declared himself to be "The Paul Revere of the Global Economy") said in December 2009, that he was “interested in left coast perspectives on economy markets and econ policy and especially advice.”
Jones replied: “The allocation of spending to clean energy is haphazard; the government isjust not well equippedto decide which companies should get the money and how much. . . . One of our solar companies with revenues of less than $100 million (and not yet profitable) received a government loan of $580 million; while that is good for us, I can’t imagine it’s a good way for the government to use taxpayer money.”
Summers responded: “I relate well to your view that gov is a crappy vc [venture capitalist] and if u were closer to it you’d feel more strongly. ” (Emphasis added)
So one of the President's chief academic advisors realizes that the government is lousy at making capital allocation decisions and one of the Administration's chief financial advisors agrees and they still made the "investment" of more than half a billion dollars of taxpayer money.
I don't care if there was a payoff - this is like the rest of the President's "shovel ready" investments - Ron Johnson's comment comes back again - My neighbor's dog has created more shovel ready projects than Barrack Obama.
Last night as I was returning from some meeting in Louisville I found a reference to the United Airlines iPhone APP. I downloaded it. In one place you can do all the things you might want to do with an airline - from finding a flight, to getting boarding passes, to checking upgrades, to finding out about miles and it even has a Sudoku game on it.
The application is simple and useful. It should be a big hit. And compared to the hassle that one has to go through on other airlines in accessing all these services - it could be an advantage for the company I have now flown 2 million miles with. Well done, United!
I am a fan of Apple so when I saw a stock analyst suggest that both Apple and Amazon would crash (he suggests that Apple would drop to $100) I read it with interest. His suggestion is that a lot of Apple's business is in Europe and that is a basket case and therefore even though 10% of the company is in cash - a significant decline is coming. He also makes the claim that Apple and Amazon will beat each other's brains in on content.
He makes the case the Amazon will have problems because they are expected to lose money on their new Kindle Fire. But he also argues that with the imposition of sales tax across the country that its narrow margin of less than 3% will disappear.
The post was intriguing but the premises are wrong. A lot of the future of both companies depends on the market they are serving. The picture at the left is a graph offered recently by Jeff Bezos comparing E-book sales to traditional sales. Note that the sales figures converged about a year ago. I have not bought a hard bound book for more than five years. Sure, Amazon will have to deal with sales taxes. But their business seems to be well positioned to meet coming demands regardless of that change. Book buyers are not going to go back to Borders and all of Amazon's other content providers are racing to get the marketing model that Amazon has pretty well down. For me Amazon is one of the first places I look when I want to buy something.
Now to Apple. There is a lot of chatter about the declining percentage market share that Apple will have with the Tablet market- while true all of the unbiased projections suggest that Apple will continue to be the dominant maker of tablet devices for several years - in a market that is evolving. A lot of their future depends on the success of iCloud and of IOS5 but based on the last couple of revisions of Mobile Me and the earlier IOS versions - they will appeal to a large installed base. We will see in the release of the new IOS and phone but both seem to be offering some real improvements.
Now to the coming war between Apple and Amazon. Both offer content in terms of music, video and books. (Indeed, I use both for different types of content.) Both offer a Cloud service, although the Amazon cloud looks a bit clunky for what you get. Both offer hardware - although Amazon seems to be using the Gillette model of marketing (give away the razor and sell the blades). My impression however is that while they offer similar product lines their direct competition is not yet destructive. Indeed, what their competition may be producing is a higher buy in for those companies that want to disrupt the marketplace.
This is a fascinating time for technology. Increasingly everything from airline boarding passes to music and books to restaurant reservations are going to the net. That iPhone is more useful than when version one came out. (I spoke with one young associate who said he no longer uses a camera because his iPhone does everything he wants in a camera). Both companies have a lot of stickiness - things that get me to come back again and again. From my perspective that looks like a pretty bright future.
Nick Kasprak at the Tax Foundation has constructed a superb calculator to estimate maximum tax liability based on income and Social Security taxes. He even includes the employer side of employment taxes. It shows Buffett's claims to be totally bogus. But then we already knew that.
The Calculator can be found by clicking on the word CALCULATOR.
If Mr. Buffett really feels he is under taxed he could always choose to send a voluntary payment to the feds. A lot of his income, as others have shown, comes from special preferences in the tax code including capital gains and before it was reduced helping families to avoid the disastrous effects of estate taxes - but then he did not bother to explain how his taxes are well below what most people in his income bracket pay. Why ruin a good yarn?
In an interview for Bloomberg Buffett argued that raising rates is better than simplifying the tax code.
It is odd that he would not consider the alternative of simplification.
I spent 40 years working at the intersection of higher education and public policy. I earned a doctorate from USC focused on tax policy and finance. Since 2011 I have had a consulting practice called Buffalo Consulting and have split my time between California and San Miguel de Allende.
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