A Tip to the Sacramento County Assessor

My wife and I own two properties in Sacramento County.   When property taxes come due we send them to be received on the 10th of December which is when the first installment is due.   This year for some strange reason I mixed the parcel numbers so that the first property had the second parcel number on it and vice versa.    This morning, as I was beginning some year end activity I noticed my mistake and checked to see if either check had cleared.   They did indeed.   And, wonder of wonders, the Tax Unit figured out which parcel to apply the tax to so that both properties paid their taxes on time.  Figuring out how to match these took a bit of effort - we hold both properties in a trust so the staffer who opened the check needed to find the appropriate property possibly by matching that the properties are held in the same name.   I realize that the tax unit gets a lot of checks in December; I am not sure how the match was made but I am appreciative.  

The Iron Lady

The new movie the Iron Lady is horrible.  I got a chance to see it last night.   The subject matter, Lady Margaret Thatcher, should be a good subject for a movie.   She was a transformative figure in British politics.  She was able to get into and lead a "boys club" as the Prime Minister for eleven years.   Yet she was unceremoniously dumped by the same "boys club."  She seemed passionate about recovering a nondescript set of islands that no one else seemed to care about.   She was a good friend and ally of Ronald Reagan.  She was a leading figure in keeping Britain out of the Euro - a move that looks better and better but which she was criticized for at the time.  She took on the labor unions in Britain and substantially won her fights.  She did some transformative changes in local finances in her country.   But this picture dwells on her after she had left office and attempts some surrealistic lapses into the beginnings of dementia.   What comes off is a disappointing confused and non-informative movie that simply drags out.

Meryl Streep gives, at least, a good portrait of Lady Thatcher at her best, unfortunately, those performances are interspersed so haphazardly that one almost has to dig for the effort.   I will admit that for part of the performance I kept thinking about Julia Child (Julie and Julia) but her bio part of the role looked like it could have been pretty convincing.

Lady Thatcher was often a divisive leader.  How  could she gain and maintain her position in power, what drove her to take positions that she did and what were the consequences of those positions could be the interesting stuff of celluloid.   But what we were left with was a muddled haze of nonsense.  Avoid this like the plague.

Distribution of Profits - ideas come first

One key concept in the new globalized world is how important ideas have become.   These two charts demonstrate that fact clearly.   The first is for the iPhone.  It divides all of the inputs into the creation of the iPad and iPhone among all the people in the chain that makes the product - from idea to manufacture and distribution.

In products like these the design takes place among Apple employees in California.  For the phone the device is then manufactured in Asia and then distributed throughout the world.   The carriers that provide the phone service derive some of the profits, so do the retailers.   But in the end the largest share of profits come from the ideas.

For the iPad the distribution is a bit different and the parts are a bit more expensive.  So the distribution of profits are a bit more distributed.

Politicians in Washington keep yammering about keeping production in the US and the supposed loss of our manufacturing base (although there is plenty of evidence that the US manufacturing base is beginning to come back as the value added of US manufacturing becomes more apparent).   What they should be concentrating on is assuring that we have the educated workforce that can continue to provide these benefits to our society - that takes a first class educational system - and at least in the K-12 arena - there is plenty of evidence that we are failing to provide that critical need.   The original graphs for this come from a paper by three economists at UC Irvine, Berkeley and Syracuse that was originally published in July of this year.

Hyperventilation then damage....

The agreement that Congress came to before they snuck out of town was absurd on its face.   It continues the extension of unemployment benefits and the 2% reduction in Social Security taxes for two months. In his victory statement the President claimed that the average worker would save $1000 as a result of the agreement but that is a gross misrepresentation.  The real savings, based on average wages, will be about $20 per week or the price of five lattes in a week.  For the eight weeks of the extension that amounts to about $160, not the $1000 claimed by the President.

Besides politics what are the possible benefits of the temporary bill (or even the permanent one)?

An aggregate increase in demand - If the first version of this actually had a positive effect economic activity would have been  increasing proportionally - but it has not.   In many key areas of the economy growth is stagnant.  The stimulus bill has been a drag on economic growth.  Adding to that has been the uncertainty about tax policy - as John Taylor argued earlier in the week, the best tax policy is a stable one.  Like the original Bush Tax Cuts which the President likes to defame - uncertain tax policy tends to diminish the real incentive effects of any change.   This sixty day extension is a fantasy in terms of stimulative effect.

Employment growth - Labor force participation continues to trend down.  That has been caused in part by extended unemployment benefits - what seems like a humane policy is actually holding many people in dependency.   Were labor force participation at levels before this recession - the unemployment rate would be over 11%.

But as any good pitchman from TV would say - there is even more - The best description of the American political class on its response to issues in the Social Security System has been derelict at best.  This solution makes the long term viability even less certain - at the same time it increases the notion that Americans are entitled to something without contributing to it.  Neither is a consequence that is good for the long term.

The GOP should have stuck to its guns and tied the real growth in employment that would have resulted from the pipeline with a year long extension of the rate for FICA taxes.  This was not a proud moment for the American political system.

Sherlock Holmes/Again

I was a fan of Basil Rathbone as Sherlock Holmes.   In the 1950s he and Nigel Bruce defined the Conan Doyle characters in a number of black and white movies.  A couple of years ago, Robert Downey and Jude Law tried to redefine the characters into a more modern version (interestingly by going back in time from the period that the Rathbone/Bruce versions used - contemporary to when the stories were written.)  From my view, they did a marvelous job by not trying to recreate the prior performance.  The first movie (Sherlock Holmes, 2009) was great fun.

I looked forward to the sequel.  And again I was delighted with the results.  Many of the first themes are readopted and the rhythms of the first movie are recreated without trying to extend the first movie.  The plot is fun and engaging.  I cannot wait for the third version.

A Wise Man and a Fool in Public

This morning when I read about the death of Vaclev Havel I returned to a copy of his 1990 speech to Congress.  At the time I thought Havel had done a marvelous job of summarizing a very vibrant period in history.  The speech combined some inspiring rhetoric with a couple of superb references to US history (always a good way to put some ideas in context when speaking to an American audience like the Congress) with some very specific ideas about history was evolving.  As I re-read his words I found them to be both gracious and thoughtful.


But as inevitably happens I also found other references to the speech. One was from Noam Chomsky.  In my mind Chomsky is a small minded public scold (I would hesitate to call him an intellectual) whose early writing is revered by linguists but whose contributions to intelligent public dialogue have been non-existent for the last several decades.  Chomsky, in a letter to Alexander Cockburn, called the speech an "embarrassingly silly and morally repugnant Sunday School sermon"  The easiest way to understand the value of Havel's speech more than 20 years after it was delivered is to re-read it (or for the first time if you missed it then) - I have posted a hot link in the reference above.


NPR commented that he struggled with "reconciling his moral principles with the pragmatic requirements of governing."   Not a bad place to be for a leader.  The LA Times in their article quoted his motto "May truth and love triumph over lies and hatred."  I tired long ago of Chomsky's rants, reading his sophomoric comments on Havel this morning only reinforced that fatigue.

The Descendants

Last night we went to the new George Clooney movie which is listed as a comedy-drama.   I am not sure that is an accurate description.  But the movie is an interesting mix of pathos and some humor.   Clooney's character is from an old established Hawaiian family that has the largest remaining tract of land in the state. The land is in a trust and they need to make a decision about how to handle it.  (Trusts cannot last forever.)  At the same time Clooney's wife was injured in a boating accident and is comatose.  At some point he finds that his wife was engaged in an affair.   To compound the plot, her doctor says she is brain dead and so has to be pulled of the machines.   If all that sounds like a bunch of maudlin sentimental junk - don't get fooled.   As the plot evolves, it is an engaging story with interesting characters.   The supporting cast is superb but Clooney carries the story with grace and subtlety.

Reflections on Medicare

Today I signed up for Part B of Medicare - which is where many of the costs of the system come from.  I also signed up for all the other coverages which will make my medical bills, when I fully retire, for my wife and I, about $1000 per month (including a part b,d and f policy).   I wondered what kind of a deal I was getting.  Coincidentally it was also a day when Congressman Paul Ryan and Senator Ron Wyden announced a pretty good plan for reducing the costs curves on Medicare - it correctly in my opinion begins to add some consumer discipline to senior health care without pulling the rug out from the social equity parts of the current Medicare system.

First, I should say something about Social Security offices.  I've had three encounters with Social Security offices - two yesterday and one about six months ago when I turned 65(which was handled on the net and with one phone call).  While there were some annoyances in the processing of forms (minor) I can say that the people I have encountered have been uniformly helpful and well informed.

But here is the question I began to think about when I filled out all my forms.  The company I retired from was charged about $1500 a month for our medical insurance. I required my employees, last year, to make both a $40 co-pay and a cost sharing of 10% of the premium.  Undoubtedly costs would have gone up had I continued to work for them.   But is the $1000 per month (for all of the coverages for both of us) actually worth it?  That depends.   I keep very detailed records on taxes paid and so I can go back and calculate the money that I have paid into the system over my working life.   The total amounts to a bit more than $48,000 in current dollars or something north of $70,000 in present value (that is a conservative estimate).   In any event the sum total of current payments (which continue to be made) and a conservative flow of the value of an annuity which could be used to fund part of our health care costs would produce a negative or severely negative investment.   Since the additions beyond Part A are significantly skewed for higher income payments - if our income drops significantly in the next couple of years, the net negativity will diminish by some.

I found today that at the end of my COBRA period I will also have to self insure for dental and vision coverage which would add to the negative investment over time.   The major difference however is that the government programs plus the supplement have purchased a set of benefits that are richer than I had when I was employed full time and ones that I would not likely choose for myself.

Government is too large - another example

The National Transportation Safety Board has proposed to ban the use of cellphones in cars to combat something called "distracted driving." In their press release they say this evil caused 3000 deaths last year on our highways. That number sounds small to me, compared to the total number of auto related deaths, but take it as a real issue.(For background the DOT says there are about 30,000 auto deaths a year or about 1.14 deaths per 100 million miles driven.  For another perspective the number of alcohol related deaths is in the range of 10,000 per year.)

The buffoons at the NTSB have cobbled together a classic bureaucratic response.  But even if you buy the premise that there is something called distracted driving that a change in policy can improve, there are several problems with the NTSB assault here.  First, is their evidence - if this were a significant problem one would expect a lot of recent data. In the Press Release the NTSB cited five cases  only one of which involves the allegation of involvement of a hands free device. (Which happened in 2004.).   If the problem is static why the push now?  If it is not why not present some relevant evidence?   Texting is already banned in many states.  The other four examples are all about texting and driving.  There is no mention of accidents caused by other forms of distraction - in the insurance data things like applying make-up and changing a radio station are cited as causes of accidents.

The public scolds who want to ban the use of cellphones continue to cite the statistic that using a cellphone is akin to being legally drunk.  That is nonsensical on its face.  Is that for hands free?  If it is then is a conversation with someone else in the car equally dangerous?  What bunk!

Second, is their sloppy use of definitions. A serious definition of distracted driving would establish some parameters. But the supporters of restricting freedom are not really interested in solving a problem. Were they interested they would attack areas where they are likely to have a significant effect - which in my opinion many states already have - prohibit non-hands free calling, texting and even the application of makeup - any action which disengages the drivers attention from the steering wheel and the road.

In the insurance company board that I serve on, we've had a couple of discussions about whether it would be a good idea to do a simple key combination for phones to prevent texting while driving.  A combination like #25 might issue a statement to a phone users who try to text a driver who has sent the sequence - "I am sorry but I am driving now and cannot receive your text when I arrive I will receive the text and respond."

Ultimately safer driving will happen with the right combinations of incentives and technologies which will allow people to make the right choices.   Restricting a useful tool at the whim of bureaucrats is unlikely to improve the situation.

Keynesian Theory (Bunk)

We've been told that increasing government spending will have a "countercyclical" effect on unemployment.

Here's a chart (from Mark Perry) that shows what nonsense that idea is.

Next time one of your lefty friends claims that government spending has a positive effect on unemployment - whip out the chart - it won't convince them - but it will at least show up the folly of their "thinking."

This generation's Jack Kemp

During the time that I worked in Congress, I got to know Jack Kemp quite well.  He was an engaging fellow; smart, witty and well read.   But as I watched him I became convinced that he should not be president.   The qualities that the best presidents have are a strange mix - they need to have charisma but they also need perspective.  In one sense a person who is driven to be president, probably will not make a good president.  (Although it is hard to think of a successful president in my lifetime who was not driven to be president - perhaps Ike.)

In this election cycle Newt Gingrich seems to fit the mold of Jack Kemp.   I do not know Gingrich but have encountered him in a number of forums.  He is an engaging speaker.  He too is well read and smart. But like Kemp he seems to lack a sense of proportion.   I first noticed it when he was Speaker and he threw a hissy fit for not being included on the President's plane when coming back from Europe.  Everyone should have the ability to have one gaffe but Gingrich has had several.

Witness the following:
1) He called the Ryan health plan "right wing social engineering."  Paul Ryan is one of the few people in Congress who is thinking carefully about how to balance the budget.  There are elements of his budget plan that are not popular - but the low cut on a fellow member of his party and a leader in Congress is bad taste and bad policy.
2) Gingrich worked for one of the two Government Sponsored Enterprises (Freddie Mac) that helped us get into the housing mess.  He claims he was only a "historian" - a claim that is so spurious it is laughable.   In the most recent debate, Gov. Romney criticized Gingrich's post House employment - which involves a lot of work in and around government.  Gingrich shot back that Governor Romney should return the fees he earned with Bain and Co.    Bain's work was in restructuring American companies.  Gingrich seemed to have argued that all of that work was somehow negative - yet the economic growth in the 1990s came in part from the redeployment of capital.  Which is better experience - working for a company like Bain or lobbying?   In my mind that is an easy choice - even if Bain made mistakes. (which they certainly did)
3) Gingrich's personal life has not been a shining light.  He divorced his first wife when she had cancer.  His second marriage was rocky at best.

The current president is such a disaster that we cannot stand four more years.   I'm also not much attracted to any of the other candidates. Perry seems all hat and no horse.   Romney reminds me a lot of his father - a decent man but unable to generate enthusiasm.   The rest of the also rans are just that.   So we may be left with an uneasy choice.  So regardless of who the GOP nominates, I will end up voting for the person just to take us away from the current disaster.

Boys will be....

This afternoon my 9 year old grandson celebrated his football season.  Wasn't much of a season for him - he broke his arm early in the season and so missed most of his games.  He played in the championship round and was voted MVP for the tournament.

We went to a pizza joint near Roseville (very good pizza - Touch of Tuscany) but where was my grandson? He and a couple of his team mates went outside and engaged in what 9 year olds do - playing for the shear joy of it.

There are many things about youth sports today that I appreciate. Kids can get involved at a very early age.   But in playing many parents do not get that at his age and for a bit longer - the game should be fun.  Some parents - including a moron from last season - thought their kids should be playing at the highest level.

There is another thing about the current range of kids sports that I abhor - trophies.  There is a subtle line between encouraging achievement and forgetting that this level of sports should be fun.  Now every kid - regardless of commitment - gets a memento of the season which is a trophy.  That cheapens real achievement.

The kids outside today understood that they could enjoy the sheer experience of running and catching balls without wondering what the score is.   My grandson came in and got his trophy - but his real interest was in playing with his buddies.  That is as it should be.

Was Bob Cratchit a B level worker?

One of my traditions at this time of year is to see both versions of the Miracle on 34th Street (interestingly George Seaton is given credit in both movies for writing the screenplay although he died more than fifteen years before the second movie) and then a series of versions of a Christmas Carol.

This afternoon I saw the later version of Miracle and then in my afternoon  workout saw the Alistair Sim version (Scrooge) and began the Bill Murray version (Scrooged).  But as I watched the Sim version I was struck with a question - was Ebeneezer's clerk a B guy - using the definition that Steve Jobs used in evaluating people (he only wanted to work with A people).   I've worked for people like that (former Treasury Secretary Bill Simon was like that) and if you come up on their wrong side you may not be able to correct the problem.  One commentator said about the current business environment "Today, the bottom line is more important than the people who are out there in the stores making the money for the faceless money-mongers who dictate the policies.
"  From my point of view this moving characters ahead by a century and a half is just plain silly.

There has been a lot of writing about the inadequacies of Cratchit.   At the beginning of the story - Cratchit is a feckless person working for someone with a singleminded approach to business. (Scrooge)  Scrooge could either be an A or a B masquerading as an A.  But based on Dickens' description he seems to have been an A.

Cratchit seems to be a bit more laid back.  He wants to get off "the whole day" to be with his family.  He accepts Scrooge's miserly wages.   And he seems committed to his family.   But we really do not have a good impression of what kinds of skills Scrooge's clerk actually has.

In my mind Type A people in business have a single minded determination to succeed but they may also have human characteristics.  I've certainly found a lot of entrepreneurs who want to succeed but also have balance in their lives.

But the simple answer is we do not have enough information to decide.  Cratchit may or may not be a Type B - but regardless, A Christmas Carol is a type A story.

The Steve Jobs Book

While I was in San Miguel I read the Walter Isaascon biography of Steve Jobs.   As biographies go it is interesting in many ways.   But here are three thoughts about the book.


#1 - I have not read the other biographies by Isaascon but if this one is any indication he could have used a good editor.  I got it in the first hundred pages that Jobs was prone to treat people badly.  But how many ways can you tell a reader that he was temperamental?  


#2 - There is a lot of good detail in the book even with the redundancies.  My history with computers, in many ways, parallels a lot of the story that Isaascon tries to tell.  I bought my first computer (an Osborne) at the Byte Shop in Palo Alto.   I was involved with an Osborne users group but soon found out I was more of a user than a geek.   As technologies grew and elaborated, I moved from one to another.  I bought the first 128 K Macintosh and have remained a loyal Mac user since then.   His discussions of the development of the various products of Apple and Jobs' role in those developments; the period between Sculley and Amelio; his explanation of Jobs' control of infinite detail on product launches - and a lot more - were fascinating.   I learned a lot.   


About a two weeks before Adam Osborne went bankrupt, I had the opportunity with a small group from the Osborne users group to have dinner with him.  Isaascon has a great quote from Osborne - Adequate is sufficient, the rest is superfluous - which sets up a division between people like him and Steve Jobs.   Isaascon's description of Bill Gates also seems to ring true.   


#3 - The author comes back to a dichotomy in the book between open (Microsoft) and closed (Apple) computer architectures in computers.  From that perspective, it is not clear to me how much Isaascon knows about computers.   Indeed, Gates was willing to allow his operating system to be run on many kinds of computers and Jobs was not.   But that does not make Microsoft any more open than Apple.   Their legendary ponderous nature of many Microsoft products is not an example of open versus closed.   Many of the mis-steps by Microsoft in both hardware and software are not the result of being open but if not demanding the same kind of attention to detail that Jobs obsessed on.


The differences between the two companies is not open or closed but one of integration of hardware and software.    Jobs saw the problems for a computer company as figuring out how to make the best experience for the user - Microsoft seems to be solving to create software only.


I enjoyed the book, even with the repetition and with the metaphor (closed versus open) which I thought was inapt. What worked best for me, is that Isaascon was able to gather a lot of information about one of the most interesting people in our lifetimes and present it in an organized fashion.