Saturday, June 30, 2012

Early Bird Specials!

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Restaurant Pricing is very elastic, and early bird specials are proof of this.

When we lived in Pompano Beach, we used to make fun of the old people, lining up at 4:30 for their "Early Bird Specials!" at the local restaurants.  But of course, as retirees on a fixed income (who were basically passed out by 8:30) such specials made a lot of sense to them.

And you can find some great restaurant deals, if you are willing to look for them.  And no, I don't mean on Groupon or some other stupid bullshit.

I just had a nice lunch at the Grand Dining Room and the Jekyll Island Club - the same dining room J.P. Morgan (of Match Game fame, not) once dined at.


Not too shabby, for $12.50

The club offers special discounts on occasion, including a lunch special for $12.50 which includes soup or a salad and a predetermined entree.  We had a lovely salmon, which was broiled until it was crisp on the outside, and tender and flavorful on the inside, topping a small bed of rice.   Wash it all down with their House Label Demi-Sec Champagne (one must always have Champagne, or at least a good Cava) and lunch for two is about $50, plus tip - about 35% off what we would have ordinarily paid.

Usually, we consider it a good sign if the liquor bill exceeds the food bill, which it almost was, here.  We also used one of our huge stacks of 10% off coupons (no expiration date, including liquor, thank you Dodi) which allowed us key lime pie for dessert, for free.

Of course, this pales in comparison to the manager's reception at the lobby bar, where drinks are $1.25 twice a month this year, to celebrate the 125th anniversary of the club.  Free Hors d'Ouvres as well.  You can bet we are not missing that!

But other restaurants have "specials" that are really good deals, and you don't need Groupons to get them.

La Grotta is a very upscale Italian Restaurant in the Buckhead section of Greater Atlanta.   It is fine dining at its best, and a three or four-course meal there, with wine, can run into the hundreds of dollars (oh, but it is so worth it!).   We can't afford to eat like that every day.  But on the other hand, they offer a "stimulus package" prix fixe dinner for $24.95 which is one heck of a bargain.  And that includes a glass of wine!

Even your neighborhood restaurant (and by that, I don't mean some faceless tasteless corporate chain) has good deals.   Catch 228, a local bar and seafood restaurant has an "Oyster Happy Hour" from four to six PM where raw or steamed Oysters are 50 cents apiece and beers are as little as a buck.   Wild Georgia Shrimp are enormous, and served with a Buffalo-like sauce.  You really can't beat that - and it isn't expensive.

And of course, we have the Driftwood Bistro, which serves "down home" Southern Georgia cooking, with wine priced at $10 a bottle, with entree.   You really can't go wrong with stuffed collards or shrimp n' grits, washed down with a serviceable bottle of Pinot Noir.   At $10 a bottle, why bother ordering cocktails?

The point is, you can eat out, responsibly.  And by that, I don't mean eating out five nights a week (and ordering pizza the other two nights) and using restaurants as your kitchen.  You do have options.

This is not to say it is a bad thing to splurge once in a while.   But the key words are "once in a while".  Restaurant eating should be a very special and unique experience.   Sadly, for most Americans, it is a refueling stop at a forgettable chain restaurant, and another $49.95 slapped into their credit card, and another Styrofoam container of pasta rotting in the trunk.

It needn't be that way.
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How to End Up Living In Your Parent's Basement.

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While owning your own home is not the "American Dream" neither is living here.


A young man sent me a rather snotty comment the other day, to the effect that he was really rich, and his Dad made lots of money, so why not have Dad co-sign a loan for him?  After all, his Dad told him it was time he had a new car!

Very hard to parse - but if you are really rich, they you don't need someone to co-sign a loan - you could just pay cash.  If not, you are not really rich.   Being reliant on your parents for money and loans, well into your 20's is never a good idea.   They will continue to treat you as a child, and you will never grow up.  The sooner you can break free of this mentality, the better.

Why?  Because this is how kids end up living in their parent's basement, literally or figuratively speaking (attics and bedrooms count, too!  As does that apartment over the garage).  And I see this kid headed towards his parents' basement in short order, unless he takes another tack.

I have known a number of friends of mine who end up living with their parents, well into their 30's, 40's , and even 50's.   And I know a lot of parents who have "boomerang kids" living in their basements as well.   So I have seen, firsthand, this happen to maybe a couple of dozen people.   And there is a pattern that emerges.

How does this happen?   There are a number of factors at work:


1.  Parents enjoy controlling their children's lives:  I wrote about this before in the Parent Trap, how parents will bitch and moan about their boomerang kids, but secretly enjoy the continual control and manipulation and lording over their children's ruined lives.   So long as their children never grow up, the parents can kid themselves that they are not getting old and going to die.

And let's face it, it is fun to be a parent - to be an absolute dictator in your home and have people to control and manipulate.  And a boomerang kid fits the bill, perfectly.

The young commenter tells me that his Dad decided it was time that the son got a new car.  While that might be appropriate at age 16 or 18, when you are first learning to drive, when you are graduating from college, it really isn't Dad's decision to make - when you are paying for it with your own money.  Hey, if Dad is that rich, it should be a graduation gift, right?

But the idea of a Dad saying, "Gee, son, I've decided that you need to go into debt to buy a car" is idiotic.  And it is controlling to the Nth degree.

Make your own decision - and pay for it with your own money, not borrowed money.


2. Parent who like having kids around:  One Father explained to me that he didn't mind having his son live in the basement, as they liked to spend their Summers in Florida, and their son would watch the house and walk the dog for them, and do odd chores.

It is like having your own live-in handyman and butler - or Concierge.  He will pick up your dry cleaning, be there when the cable man or the appliance repair man comes, sign for those FedEx packages, and just generally be a warm body on site, so you don't have to worry about the house being broken into.

Plus, as they age, many parents find comfort in having an adult child around, as they will take care of them, and call 911 when they have the inevitable stroke.   And I suppose this is not a bad arrangement, but it does mean that the child is sacrificing their own lives for the parents, in a creepy Grey Gardens kind of way.

And what about the child's life and ambitions?   Well, in many cases, they didn't have many to begin with - or they are sacrificed on the altar of drugs, as we shall see.


3.  Children enjoy being pampered and fed:  I worked for a man once who had three dependent children, all well into their 30's.   We were talking about a case once, and the phone rang.   It was his daughter, who lived in an Apartment that he paid the rent on, and drove a car he had paid for.   Her complaint was that the car he had bought was now two years old and he needed to buy her a new one!  He said, "Maybe next year, dear!"

This flabbergasted me.  As a young lawyer, trying to make the payments on a car was staggeringly difficult, and here was this adult child being handed one new one after another - never realizing how difficult it would be for them to buy one on their own (and this is why giving away cars to kids is a bad idea, even if you can "afford" it - they don't appreciate it).

But of course, his kids, well-pampered, would never cut the umbilical from Dad and set out on their own.  And as you might expect, they were all "problem kids" who had one reason or another why they could not get ahead in life - and be perpetually reliant on Dad.   They did it because they could.

On a smaller scale, many middle-class kids like the basement-bong-lair lifestyle, as they get to drive Mom's car (but never put gas in it or change the oil) and get all the free food they can eat.  They pay no rent, pay no utility bills, and pay no property taxes.

It is a pretty sweet deal.   You can work at a "Slacker" job for a half-a-day and spend your entire paycheck on concert tickets, beer, and pot.   Why bother even trying harder that that?

Of course, for some of us, this was a phase we went through at age 16, back when the drinking age was lower.  But by age 18, I realized that working slacker jobs, living at home with Mom and Dad, and driving Mom's car was kind of lame.  Others have fewer qualms about it.


4.  Marijuana:   Drugs of all kinds play into this, from beer to methamphetamine.  But Marijuana fosters the kind of insular nesting that causes a young person (particularly young men) to want to nurse at Mother's teat for just a few more decades.

Marijuana makes you want to stay at home, hunker down, and spend countless hours watching television or listening to music.  It is a comfort drug, even if the place it takes you to is ultimately uncomfortable.

Many, if not all the "kids" I know living in Mother's basement are using pot.  And most of them are Men.


5. Mental Illness:  This is another aspect of the scenario, and folks who suffer from this often are not "at fault" for the situation.    If you cannot survive out on your own, due to debilitating mental illness, living with your parents might be one solution.   But of course, it may be unfair to the parents, who may have thought about retiring and traveling, and now realize they have to care for their child perpetually.

I know two people who are in this situation - with serious mental illnesses, and it seems to be working out well for all parties, at least for the time being.  What will happen when the parents pass on, is a good question.

But on the other hand, mild mental illnesses - mostly depression - combined with drug use, is often a factor in many of these stay-at-home kids.



6. Economic Adversity:  Very few cases are due to true economic adversity.  Often the kid says he can't afford to move out - but then again, he really isn't applying himself or trying to get ahead.   In many cases, the kid's real plan is to wait for Mom and Dad to die, inherit the house (and a small amount of money) and then try to live off of this.

On the other hand, in some instances, newlyweds (including my own parents) or kids right out of college, are forced to live with their parents, until they can land a job and afford to move out.  Usually, this is a transitory situation that lasts a few months or years only - not a long-term situation.

Today, many are bouncing-back to Mom and Dad's basement because of student loans or, in one case I know of, mortgage debt.   While you can't get out from under student loans though bankruptcy, you can duck mortgage debt more readily.  So I don't understand the latter.

Of course, the student loan thing can be avoided as well, as I have written about in the past.  Today on NPR is another weepy piece about a young woman who decided to become a nurse.  To do this, she went to an Ivy League school, then to nursing school, and rang up $140,000 in debt.   Talk about not doing the math on the payback!

They claim she has monthly payments of close to $1200 on these loans, but fortunately for her, she can move to an apartment of her own and has a good-paying job.  And of course NPR says she will never realize "the American Dream of Home Ownership".  For the record, granite counter-tops and stainless steel appliances were never the American dream.   The American dream is to be able to pull yourself up by your bootstraps and make something of yourself, regardless of your economic background, ethnicity, or whatever.

The American Dream, however, does require that you make wise choices.  And spending $140,000 to get a nursing degree is not a wise choice.   An Ivy League school is not necessary for such a career.  She would have been better off at a cheaper State School - and borrowing a lot less money.

So no, I do not "feel sorry" for her - she made bad choices.  And she is able to pay back the loans over time.  And you'd be surprised how little $140,000 seems in about 10 years or so.  Hell, I never thought I'd pay back $38,000.  But today, it seems a laughable amount.

 Others choose to move back in with Mom and Dad, particularly if they can't find a job right away.  Some never find a job in their chosen field, and end up with this perpetual mortgage to pay, for four years of good times at Party-U.  It is sad.

But if you do get a job, and your plan is to take that rent money you would have been paying and aggressively pay down your loans, living a few years with your parents is not such a bad thing.

And in some cultures, this is expected.  A young man lives with his parents, works for a living, banks his paycheck until he has enough saved to go out on his own.   This is not a bad plan.  Unfortunately, today, this is not the plan many are following.   They move back home with Mom and Dad and never save a dime and never leave.

When I say they are living with their parents into their 50's, I am not kidding.  I know several this age.  So a word of caution to you parents out there.  If your kid moves into the basement, ask yourself where this is going.  They may be there a very, very long time - perhaps the rest of your life.

And it is sad when I meet people for cocktails and they tell me about their kid living in the basement, and I ask them how old the kids is, and they tell me "52" and I have to say, "Gee, that's my age."   That makes me very sad.

If your kid does move back in, make sure it is part of an economic plan not just an open-ended commitment.  Charge them rent, if necessary, if they won't save money on their own.  Put that money in a savings account, and maybe it could be a nest egg for them when they leave - and give them an incentive to leave.  Just a thought.

And for God's sake, make sure they are not smoking pot.


* * * 


So what is the harm in living with your parents?  Perhaps in a few select cases, none.  But for most young people, living with your parents places you in stasis and prevents you from getting ahead in your own career or in forming your own family.  It is hard to land a mate when you live with your folks.  Women in particular are not going to be impressed that you are living in your parent's basement.  It marks you as a loser, economically, and in most cases, they are right.

It becomes a trap.  You end up hanging out with your slacker friends - also living in their parent's basement, complaining about your slacker job, and that "bitch" of a girlfriend "who only cares about money".   And you say this to each other in-between bong hits.

And ten years goes by - maybe 20 or 30, and you realize that you have really never lived your own life.   You've never done anything with your education, never realized the joy of doing a job that you are good at and paid well for.   Hell, you've never even been on vacation.   You have, however, smoked an impressive amount of pot.

And your declining years may turn into a horrific nightmare.  Once the parents die, you may end up with an inheritance - or maybe not.   The parental home, even if you inherit it, will cost thousands of dollars a year to maintain and pay taxes on.  Unless they left you enough money to live on, you will have to sell it.

And not surprisingly, a lot of basement-dweller troglodytes end up squandering such inheritances in short order.   And since they worked odd jobs or under-the-table, their Social Security may be small or non-existent.  I know one bounce-back kid in his 50's (a kid, right?) who is looking at retiring on SSI, which is basically welfare.

It is, in short, a one-way trip to homelessness.

Even if your parents leave you a ton of dough and you can live off it the rest of your life, what does this say about you as a person?   That you never even tried?   Inherited wealth is always suspect and problematic.  Not many people today are impressed by it.

Just South of us is Cumberland Island, which the relatives of Andrew Carnegie settled many years ago.  They built impressive mansions, to be sure.  But the money they were spending wasn't theirs, it came from Brother Andrew, who made the family fortune.   Not surprisingly, many of those mansions lie in ruins today, and the family wealth has basically dissipated.  It takes no talent to spend money, and only a fool is impressed by inherited wealth.   It speaks nothing of the character of the person - and if the person accomplished nothing on their own in life, they really have no character.

And that is the interesting thing about boomerang kids - they often come from "good homes" - wealthy or at least middle-class homes.  They often have had great educational opportunities, and everything they could basically ask for.  And maybe that is the problem - they are not challenged.

Or maybe it is all the pot they smoke.  I think the latter.
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Peel-Off Plastic Protective Shipping Covers

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Most electronics, appliances, and even cars, come today with plastic protective shipping covers, to keep parts from getting scratched.   Remove these before putting the product into service.

A reader asks, in response to my posting on membrane switch appliances:

"How can I fix bubbly plastic control panel on my microwave?  It looks like the clear plastic outer layer is peeling off!"

Answer:  Remove it.  It is a plastic shipping cover, not intended to be used when the product is in service.

This may sound stupid to many of you, but I see this all the time, particularly with older people.

I was at my Dad's house once, and his remote control had all this scotch tape on it.  "What is this?" I asked.  And he replied, "The damn remote control is falling apart, the plastic is peeling off and I put Scotch tape on it it to fix it!"

With one swipe, I peeled the entire cover off, at which point he gasped, "You've broken it!"

I sighed, "No Dad, that is the protective shipping cover, to keep it from getting scratched.  You are supposed to remove it when you took the TV out of the box, just as you take the Styrofoam packing off the television as well."

He still didn't believe me.

The point of this film is to keep plastic parts from scratching, so people don't return things under warranty, due to scratches from handling and shipping.  You could leave it on, I suppose, but it is not a part of the equipment, just packing material, and eventually, it will peel off by itself, as happened to my Dad, and the reader.

Some manufacturers tried making this film blue, so that people might recognize that it is indeed a shipping material, not part of the product.  Yes, believe it or not, they were getting returns and warranty calls when people complained that "the clear plastic is peeling off my microwave!"

This blue film is commonly used on stainless steel sheets and appliances, to protect the surface from scratches and fingerprint etching during assembly, handling, and shipping.  It is meant to be removed before use, hence the blue color.

But the blue color backfired, as people would see it in the showroom and say, "I don't want a blue microwave!  That would clash with my kitchen!"  Or they would get the microwave home and complain that it was not the white model they ordered, but blue.

You can't win. 

Other manufacturers have put little peel tabs on one side, with the notation, "Peel Off".   And of course, usually, the instruction book has these instructions as well, but not always.

It is kind of sad, really, that people are so technically illiterate in a technological world.  We live in a Cargo Cult society, really, where a bunch of primitive apes run around examining the technological relics handed down to them by the Gods.

So, to answer the question posed by the reader, if the plastic film is falling off, chances are, it was a shipping film, and you were supposed to remove it when the microwave was unpacked.

Like, duh.
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Laws and Rules

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Most folks talk about the Law, without really knowing what it means.


In the debate over the new health care law, people complain that there is "uncertainty" in the new law.  This is not really true - the law has been enacted and anyone can read and interpret it, and smarter minds than you and I have done just that.  The notion that because it is more than 1,000 pages long that "no one has read the whole thing" is nonsense.   Washington Lawyers can read that while they sit on the can.

What creates "uncertainty" is that the law stipulates that appropriate government agencies will implement RULES to implement the law, and right now, we are not sure what some of these rules will be.

What is the difference between a Law and a Rule?  A lot.  And this is why when people say, "The Rule of Law" many Lawyers laugh.   They are two vastly different things.

Well to begin with, our government is administered through a layer-cake - a wedding cake, if you will - of the Constitution, our Laws, Rules, Procedures, and case law.  Each has a different role to play and is played out by a different branch of government.

The Constitution sits atop this wedding cake, providing general guidelines as to the structure of  our government.   A lot of people like to say "Well, the Constitution says this, so we can't do that!" or some such nonsense.  But in reality, the Constitution is not a ten commandments or a Bible - it has only broad outlines of governmental powers and how they interact.  It is up to US (the citizenry, through its elected representatives)  to implement our own laws for our own era - and the founding Fathers realized this.  They did not intend us to stay locked into one mode of operation which was appropriate for the 18th Century.   And this is why the Constitution grants Congress the powers to pass laws - and even allows itself to be amended, if necessary.

By the way, most people have never actually read the Constitution, and claim it says all sorts of things it doesn't. The louder someone screams "unconstitutional" the more likely they are to never have actually read it.  Read it sometime.

Our Laws are the next layer of this wedding cake, and are set forth in the United States Code (USC) which has many sections dealing with different areas of law.  For a Patent Attorney, 35 USC is where we practice, as this portion of the Code deals with Patent Law - in very general terms.

Note that bills are not laws - you will get e-mails from your friends who watch Fox News about how "H.R. 154 is going to take away our guns!" when in fact, it is just a bill proposed by one Congressman, that has never gotten out of Committee.  When someone LIES TO YOU like that, you need to stop listening to them.
While Laws are enacted by Congress, it is up the Executive Branch to enact the Rules to enforce and implement the laws.   These Rules are set forth in the Code of Federal Regulations (CFR) and often interpret the Laws, set forth procedures and standards, and, well, create Rules by which to enforce the Laws.   A Rule cannot negate a law - at least in theory - but only interpret and enforce it.

For us Patent Attorneys, 37 CFR is our Rules Bible - and it sets forth in more excruciating detail, how various matters are to be handled - matters that Congress did not anticipate in great detail.

How are Rules created?  Not by Executive Fiat (and no, I don't mean the new owners of Chrysler).  Rules are Promulgated through one of a number of procedures.  For example, if an agency is contemplating a new Rule, they may ask for suggestions from interested parties, usually by publishing the proposed Rule Change in the Federal Register (always a good read!).   Interested parties can submit their comments, and these, too, are published.  Hearings may be held as well.   Final Rules are then published and implemented.

In other instances, Rules may be promulgated through case law - cases decided by Administrative Law Judges working for the agency.  Weird situations not covered by the Rules or explicitly by the Law are decided, and over time, a body of case law evolves how Rules are enforced.

We used to have a saying at the Patent Office - "You can bend the Rules, but you can't break the Law!"  Simply stated, it meant, that as an agency, we could make Rules - and make exceptions to them - but these Rules could not violate the underlying Law.  So if a Law says that thoughts are unpatentable, we cannot create a Rule that says they are.   However, we can create a Rule stating whether data stored in an electronic memory is a "thought" or not.

Agencies also have Procedures as well as Rules, and these procedures set forth the day to day minutiae of how to run the agency.  For Patent Lawyers, these procedures are set forth in the Manual of Patent Examination and Procedure (MPEP), which really is our "Bible" of operations for both Examiners and the Patent Bar.  If you want to know how to prepare a Petition to Revive, don't look to the Law or the Rules, look to the MPEP.  They will tell you what form to use and where to file it.  That sort of thing.

It may sound somewhat arbitrary and capricious.  After all, Congress can enact a Law, and a hostile Executive Branch can somewhat nullify that Law through Rules changes.   And a President can even attenuate a law by dictating priorities for enforcement (i.e., Procedures).  So, for example, Obama promises to leave medical marijuana alone, if it is legalized at the State level, and the DEA backs off.  Later on, he changes his mind, and the DEA starts shutting down medical marijuana dispensaries.   This shows the folly of relying on the Executive branch - what they giveth, they taketh away.

However, if Congress is really pissed about this, they can pass a new law, explicitly revoking the Rule.  On the other hand, if Congress really don't give a shit about trivial details, they will let it slide.  This prevents Congress from micro-managing the various government agencies.

And of course, if a Presidential Administration creates a lot of unpopular Rules and Procedures, they may be voted out of Office.  This also acts as a "check and balance" on Executive power.  And therein lies the irony - many Presidents run for office, arguing they are going to "pass a Law!" when in fact, they can only create Rules and Procedures.   Only Congress can pass laws, and if your Congress is not on your side, they are not going to pass the laws you want.

But there is a huge amount of power in the Executive, in terms of Rules and Procedures, than can, in some instances, effectively negate a law.  It sounds unfair, but it happens all the time.   And this is why it pays to understand, when you vote for a President, where the real power is - not in creating new laws, but in determining how existing ones are enforced.  Rick Santorum vowed, for example, to start a "War on Porn" as Edwin Meese did under Reagan (sending some porno shop owners off to Federal jail and taking all their assets).   He didn't need to change the law to do this, only bring cases in court - and win them, under the vague standard of "indecency" of the time.

Of course, challenges to Rules can also be made in Court, and CASE LAW is another way laws are created.   Courts decide how Rules and Laws are to be interpreted, whether a Rule violates the Law, or whether either violates the Constitution.  Over a period of time (200 years) a body of Case Law develops that defines yet another set of "rules" or "law" that we live under.  For example, when a Cop reads you your Miranda rights, it is not because Congress passed a law saying he had to, or that any Federal Rule says so.  It was a case, brought all the way to the Supreme Court, which decided this.

And Case Law changes over time, despite a nice fiction they use at the Supreme Court, that they never reverse themselves (they do it all the time).  Bowers v. Hardwick ruled that there was no Constitutional right to sodomy.  A few years later, in Lawrence v. Texas, the Supreme Court held that, well, there is.  So much for our right-wing Supreme Court.  (I hear Justice Clarence Thomas was the "swing vote" in more ways than one!  Just kidding).

Now some folks get all pissed off by this, too, claiming the Court is "Legislating from the Bench" - but in fact, it has been doing so for over 200 years, and this is nothing new.  While a Court is not supposed to create new law, by interpreting the Constitutionality of an existing law, it often ends up doing just that by default.   You could argue that Chief Justice Roberts has created "new law" by stating that a "fine" is a "tax".   And this is a Justice who decries Judicial Activism.

Judicial Activism, by the way, is just a code word for "they decided something against us".   So when the court in Roe v. Wade makes up a rule about trimesters, that is "judicial activism" to those on the right.  When it says "Corporations are people, too!" that is not judicial activism to those on the right, just sound jurisprudence.   When someone starts harping on "judicial activism" your bullshit meter should be pegged.  If not, get it recalibrated.

So what is the point of all this?  Well, first of all, that you should understand how your own government works before spouting off on something.   People who send alarmist e-mails about how a proposed Bill in the House or Senate is going to take away our right to free speech are missing the point.  Bills are not laws.

And with regard to the health care debate, it illustrates how much of the new Law is based on Rules that have yet to be made - and that is where there is some uncertainty in some people's minds.   But Rules are rarely onerous or unreasonable.  Why?  Because if they are, Presidents get voted out of office, people go to court to get them overturned, or Congress passes laws negating these Rules.

So again, being afraid of the new Health Care law is a little premature, until we see how the Rules pan out.   It seems ridiculous to me that any government agency would promulgate immensely unpopular Rules, as they would raise the ire of the citizenry and Congress.

But again, FEAR sells.   And many people are using FEAR to sell things to you - even their own candidacy.

And instead of trying to work within the framework of the new law - pass new laws improving it or amending it - their only response is to junk it entirely, which would set us back to ground zero and accomplish nothing.

This new law has a lot of features that people already like.  Throwing out the whole thing sounds to me like an extremist solution, particularly when the proposed replacement is just a vague set of promises to "fix things".

Sort of like the proposed all-sweeping GOP immigration reform.  "Trust us, we'll fix everything.  How?  We don't want to give that away just yet!"

Sorry, but to me that is being asked to buy a pig-in-a-poke.   No sale!
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Friday, June 29, 2012

Should You Be AFRAID of the New Healthcare Law?

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Lions and Tiger and Bears!  Oh, My!

As I have noted consistently, FEAR is one of the least trustworthy emotions.   While it may protect you from danger on occasion, in most cases, it simply makes things worse, or prevents you from taking action.

A better approach is to rationally analyze the danger and then take a logical course of action - as opposed to, say, running around in circles with your hands in the air, screaming.

Or, for example, wearing a tri-corn hat and holding a sign showing Obama as Hitler.

Many people are opposed to the new health care law, and when you ask them specifically why, they get amazingly vague.  Initially, it was the "mandate" provision, that we were told was unconstitutional and moreover a "fine" that would throw people in jail.

At least that was an articulation - and a fair one - of a specific part of the act.

But on Thursday, the hand-picked appointee of George Bush - our Chief Justice - who in anyone's book is not a "Liberal" said what in retrospect, appears to be obvious:  This "fine" is a tax by any other name, and Congress can tax anyone it wants to.

So, the act remains.

And today, the fear-mongers are at it again, telling you how horrible this will be for you, without specifically saying why, exactly it is so bad.

And speaking of vague - the GOP has promised to replace this act, with something else that will "fix everything" but when pressed for details, they evade.

It is like Romney's Immigration Reform plan.  He will revoke the Presidential Order signed by Obama and replace it with a comprehensive immigration reform package.  What is in that package?  Wait and See, we are told.  It will fix everything.

But getting back to Health Care, should you be afraid of this act?   Well, no, again, FEAR is just idiotic.

And FEAR is what is being touted.  We are told this will kill off small businesses - and destroy the economy!  How?  Well, vagueness, again.  In the Law, we call these "conclusory statements" - they state a conclusion without making a real argument.  And no, they don't carry the day in Court.  But in the court of public opinion, you can get away with saying just about anything,

We are told that small businesses will go under, forced to buy expensive health care.  But many small businesses employ part-time help, and may be exempt from providing health care for those employees.
For many businesses that employ younger workers, these costs may be trivial.  When I was 40, my health insurance cost $99 a month through Blue Cross.   This is what is going to break the back of small businesses?

But of course, small businesses are not going to be buying plans "a la carte" as I do, as the new health care pools established by the States will allow small businesses and individuals to buy group coverage.

And while this may increase their labor costs, it is hardly a logical conclusion that every small business in America will just close shop.  After all, if it is a cost increase, it is one their competitors are facing as well.  If you have a solid business plan, with a product people want to buy, a slight increase in labor costs is not going to put you under.  It may raise prices, but that's about it.

We are also told that the self-employed will get screwed, and a fake "Association of Self-Employed Persons" is coming out against this.  They claim that someone starting their own company should have the right to be uninsured, so they can plow that $99 a month into their business. 

Huh?  Well, this "Self-Employed" group doesn't represent ME, let me tell you.   Health Insurance for the self-employed is a small nightmare, and this act, if anything, will either (a) not change much for me, or (b) make it marginally easier to shop for plans, and also eliminate that pesky "per-existing condition" problem.

So why is this health care plan a bad thing?  How is it different from what he have today?  While the plan may "force" people to buy health coverage - for themselves and their employees, and may incentivize States to provide more lower income health coverage via medicaid - is this really going to "increase costs" or merely rationalize them?

Today, uninsured people end up bankrupt, if they have staggering medical bills.  And hospitals are stuck with these bills, which in turn are passed on to YOU and your insurance company, which in turn passes them back to YOU in the form of increase health care premiums.

There is no free lunch here, unless we pass a law allowing those who don't pay to DIE on the hospital steps.  And that ain't about to happen.

So the uninsured and under-insured stiff us with their bills.  They clog emergency rooms, which they use as a doctor.  And they refuse to get health insurance, because that $99 a month can buy Cable TV or a Jet Ski or a Harley.  And yes, I know a lot of people who make that decision - that a $10,000 deductible plan is not worthwhile because "It don't pay for nuthin'!" but a recreational vehicle is a better purchase.

This plan would force people to realize that (a) they have to pay for their own health care, and (b) that they are not as wealthy as they thought they were.  In other words, this plan prevents a lot of people from foisting off THEIR health care costs on the rest of us, while they blow by us in their straight-pipe Harley, and right into that left-turning car (and on to the emergency room).

It also funds care for those who really can't afford it - taking them OUT of the emergency room and into an inexpensive medical clinic.  My neighbor was on the board of the local Hospital near Mount Vernon,  He helped establish a medical clinic for the very poor and it worked well.  Preventative medicine is so much cheaper than emergency care.  It cleared the ER of patients looking for doctor care, not emergency care.  And it meant the very poor had real preventive medicine.

The hospital faced an economic crises - they were being overwhelmed by gunshot patients from drive-by shootings and drug deals gone wrong.  These patients - very expensive patients - had no insurance and never paid their bills.  The hospital's solution to "cut the budget" was to eliminate the clinic for the indigent.  The ER was once again flooded and things went from bad to worse.

It is a pattern repeated over and over again in the US.

While there are a lot of things that "could be better" in this law, the GOP fails to put forth anything concrete in response.  And Presidential Candidate Mitt Romney signed into law, a very similar plan, when he was Governor of Massachusetts.

So what is going on here?  Vague threats of disaster.  Cranking up the FEAR.  No concrete counter-proposals.

What did I say about FEAR before?  That marketers use it to get you to buy things you otherwise would not ordinarily buy - guns, alarm systems, whatever.   They want you to be depressed and afraid and SCARED above all.  Because scared people can be stampeded into doing anything - like the way the Indians stampeded Buffalo off a cliff.

In other words, it is all a big LIE - designed to get you all riled up about, well about what, they won't say, exactly,

Sorry, but no sale.  Until they can articulate with specificity what the problem is, it is just a smokescreen.

Of course, they play this angle as the problem.  Senator Rubio, who is allegedly a VP candidate for Romney, has said that the "uncertainty" of the law is suppression economic recovery.  Throwing his hands up and running in circles, while screaming like a little schoolgirl, Rubio says that since everything is in such a state of flux, small businesses just don't know what to do and are not hiring or expanding or hiring as a result.

"All that paperwork!" he cries.

Bullshit.  The law will not be that big of a change as people made it out to be.  The same arguments were made about Social Security when it was first enacted.  The Republicans decried it as the end of the USA as we know it.  50 years later, the GOP has embraced Social Security, as they know that their elderly demographic will vote them down, if they try to cut it.

I suspect the same will happen here.  If this law is given a chance to go into effect, people will find out there is really nothing to be scared about.  When 1/3 of the population actually BUYS an insurance policy, instead of using the emergency room, costs for the rest of us will go down.  Yes, this means Cletus has to pay his own way now, instead of buying yet another Camaro to park in his yard.  I am all broken up about that.

But in terms of a radical overhaul of our country? I don't see that happening.  But then again, you don't get elected to office, by saying everything is hunky-dory.

And that, in a nutshell, is what this is all about - power and politics, and a party out of power willing to say or do anything to get into power.
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Thursday, June 28, 2012

Vanity Tags? Uh, No.

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What sort of slave polishes their shackles and is proud of them?


Vanity tags were a real novelty in 1970 - very few States offered them, and few folks bothered to get them.  However, in the last two or three decades, the use of vanity tags has taken off, as even ordinary middle-class people have started to order them.

States love them, because they generate a lot of revenue for the State.   And in addition to vanity tags, you can get promotional tags promoting everything from the pledge of allegiance, to your college football team, to "right to life", or save the dolphins.

And the cost?  Usually just a low, low $50 to $100 or so.   It sounds appealing - an amount small enough to put on a credit card, but not enough to worry about.   Except, of course, that every $100 you add to your credit card is $100 less you own - and $100 more you owe.

And every year, when you renew the tag, an additional $25 to $50 is added to your registration fee.  So, like any other recurring subscription expense over time it adds up to a lot of money. Cutting recurring expenses in your life is utterly important - they seem trivial and small, but added up, over time, they compound into a ton of dough that is subtracted from your net worth.  Taken alone, they seem small, so why not indulge?  But that is just the point - a small expense, repeated and compounded over time, adds up to a lot.

For example, if you decide that you just have to have a "DUM ASS" on your license plate, and pay $100 for the plate and an extra $50 a year, over a 45-year working life, that would compound, at 7% to $17,387.83

Is it really worth it?   And let me guess, you have these on two cars, right?  That's enough money, over time, to buy a nice car.

But what about saving the whales?  What about these great programs my license plate "sponsors"?  What about it?   Of the money donated through the plate, the DMV usually gets a cut.  And let's face it, if you want to give the endangered whales $50 every year, why not just cut them a check?

Oh, right, you want everyone to know how concerned you are about the whales.  In other words, it is a classic "I'm better than you!" status-seeking behavior.   Those other people out there, probably whale-haters, right?  They aren't as sophisticated and caring as you are - particularly that asshole tailgating you in that SUV with the vanity tags labeled "ISHMAEL".   Arrrrrrg!

So to me, vanity tags are a stupid waste of money.  They are just pure status-seeking behavior, and since everyone has them, they don't convey much status anymore.

And they don't exactly make you anonymous, either, do they?  Not that you are planning on robbing a bank or anything.  But the same people who whine and moan about "privacy rights" on the Internet, or how Google Street View caught a pix of them entering the porno, are the same ones who basically label their cars with a giant "LOOK AT ME!" sign.  You either want privacy or you don't.  Vanity tags is one way of don't.

Cutting expenses in life isn't easy.   And you have to examine each expense - no matter how trivial - and see how they add up.  There is no simple or easy way to economize - despite what politicians want to tell you.  Rather, you have to make many small painful cuts in your budget, that overall, add up to huge reductions, particularly, over time.

Unnecessary expenses are the easiest to cut - no matter how small.   Vanity tags are unnecessary.



Note:  The above image is courtesy of Acme License Plate Maker - go online and create your own vanity tags!
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The Waiting Game - Please Wait!

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Making you wait is often a means of establishing power in a relationship.


I have noted before that in many transactions, making the customer wait is part of the strategy used by the salesperson to establish power in the relationship and also get a client to "invest" time in the process, so they are less and less likely to walk away from a deal.

For example, the car dealership can take hours to sell you a car - five or more.   Many folks report leaving the dealership at nearly midnight, long after it was closed.   My neighbor went to the car dealer, young children in tow (big mistake) to buy a convertible.  Eight hours later, they come home with a station wagon, two cranky children, and two clearly upset, low-blood-sugar parents.

"The thing about car dealers is they seem to like to keep you waiting. Later, I would find out how important it is for the salespeople to feel they are controlling the customer. If you are waiting for them they must be controlling you. This obsession with control extended to job applicants too. "  -- Confessions of a Car Salesman

And that is part and parcel of the game.   The average persons blood sugar levels will plummet within an hour or two of eating - which is why a small between-meal snack of about 100 calories is a good idea, at about 10:00 in the morning and 3:00 in the afternoon.   (In the old days, they said to lose weight to "cut out the in-between meal snacks" - this was really bad advice, as by the time mealtime rolled around, you would be starving, and over-eat).   Salesmen know this, and know that if your blood sugar is low and you are dehydrated, you are more pliable and easier to "sell" on a new car or hot tub.

In a personal experience, a car dealer tried to play this game on me, dragging out the process until everyone had gone home, and then tried jacking the price on the car.  When I asked for my "good faith money" check back, they claimed it was locked in the safe and the office manager had gone home, but that they would not cash it.  Guess what they did?

Making you wait has so many advantages for the salesman, and none for the customer.   And pretty much, the more odious a deal, the longer they are going to make you wait.

I recounted in Buying Eyeglasses, how a chain store made us wait nearly three hours, before pitching us on spending $2400 on glasses - four hundred dollars apiece, for three pairs each!  We ended up buying two pairs each, at BJ's Wholesale, no waiting, four four hundred dollars total.  The waiting is essential for the salesman to make the closing work.  When people "invest" time in a deal, they get impatient and say, "Yea, whatever, make it happen!" and sign whatever you put in front of them.

And while we were waiting, what were the salespeople doing?   Talking on their cell phones, talking to each other, going to the restroom, tidying up displays - basically just killing time so we would have to wait.  And that pretty much is the plan.   When the car salesman says, "Well, I'll have to check with my boss on this!" and leaves for a half-hour, you know they are just shooting the shit in there, and not discussing your car deal.

I recounted in Problem Clients how I had a client who always demanded to speak to me immediately, whereas when I called him, he was never available, but his secretary would take a message (he was too important for voicemail!)  And when he called me, his secretary would call, get me on the line and say "Hold for Mr. Smith, please!"

It was all posturing, all a smokescreen, and guess what?  He turned out to be a con artist.   I walked away from that client - and he gave me full warning, with his games, what he was up to.

Waiting is power.  When you wait for someone else, the normative cue is, they are important and their time is important.  You, on the other hand, are unimportant, and your time is worthless.   Before you even shake hands with the salesman, this normative cue has been established, and it is very, very hard to unwind this, once it has occurred.   You have basically surrendered before the battle has even started!

Now granted, there are times in life you have to wait for things.  You have to wait for a bus, or wait for a cab.  You have to wait your turn.   And for some busy professionals, like Doctors, whose time really is valuable (and no one wants to pay for) it makes more sense to have a "buffer" of patients, so the doctor has no downtime between appointments.  After all, we all want medical care to be as efficient as possible, right?

A doctor, yes.  I can see that.   A car salesman?   A eyeglass salesperson?  Uh, no.

Being made to wait is not just annoying.   In fact, if you are getting annoyed, you are falling into the trap.   Because once you get annoyed, you stop thinking rationally and start thinking emotionally.   And they can use this against you to sell you crap.

No, waiting is more than just annoying, it is a sign that maybe something it up.   So, the next time someone trying to sell you something makes you wait for long periods of time (more than 15 minutes) then ask yourself why.   After all, it is you who has the pile of money that they want, not the other way around.   Unnecessary waiting is like police tape around a bad deal, just as loud ads are (and guess what?  The people with the loud ads are the ones who will make you wait!).

Just quietly get up and leave - and don't let them persuade you to come back - because if you do, you've surrendered twice.  Chances are, if you think about it, whatever it is they are trying to sell you, you don't really need or want.  And maybe the time you spend waiting is a good time to think about maybe just walking away from the whole idea.

And you'd think that this waiting game would backfire in a big way - after all, if you make people wait long enough, they would eventually get fed up and leave.   You'd think that - but you would be wrong.

Say that Joe and Harriet Homeowner go to the car dealer to buy a new Camry.   They are shuffled around and made to wait hours, at each step of the process.  Just when they think the deal is finalized, there is some other manager who has to "sign off" on the deal, and each time, the price goes slightly higher.

Disgusted, Joe and Harriet leave - after all, it has been nearly four hours, already!   But the salesman intercepts them in the parking lot before they get into their car.   He is so sorry for all the delays, and offers to give them free floor mats as a consolation!  (the floor mats, of course, come with the car).  Joe says "no dice" but then realizes his car is missing and he can't leave.

The salesman explains that his "trade" has been taken over to their trade-in lot, an off-site location that is now locked up and the only person with a key has gone home.  Harriet says, "why not give this young man a chance, honey?  After all - free floormats!"

And they drag them back in, and give them the bad news - the deal can't be made to "work" and the cost goes up another $500, or their "credit score" is too low and they don't qualify for 2.9% financing.  But they can get them financing at 12.5% for sure!

Utterly worn down and beaten, Joe and Harriet sign whatever is put in front of them.

So the secret to winning The Waiting Game is to get out early - or not play at all.   Almost everything sold this way is a rip-off anyway.  Joe and Harriet would be better off buying their neighbor's used Camry for thousands less - and financing it through their Credit Union - or better yet, paying cash.

And if you absolutely must buy a brand new car (I do not recommend this) you can price these things online and even buy online, in may cases.   However, don't act shocked when you get there and find that the internet price has changed for some reason, and you are still made to wait for three hours.

Yea, you really can't win The Waiting Game so don't play is my only advice.   When you are made to wait for something you don't really need in life then just walk away.
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The End of Outsourcing?

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Folks in India are making so much money in the outsourcing business that today, this is what a "starter home" looks like in India!

I get phone calls, e-mails and even letters from India, asking me to outsource my work there.   And until fairly recently, I have been doing this, for simple things like Patent Drawings and Searches.

I had U.S. contractors who did this work for me in the past, but they started to get so much work, their prices shot way up, the quality went way down, and the turnaround time went from days to weeks, sometimes even a month.  It simply wasn't affordable.

Like many professionals, I end up getting caught in the squeeze these days - people insisting on lower prices (and getting them, due to competition in the field) while costs remain flat, if not increase.    If a client asks for a simple Prior Art search, they might be willing to pay $500 or so for it.

I can hire a searcher to find the references, and then I have to go through them, analyze them, and prepare a search report.   When the searcher charges costs $150, I have plenty of time and headroom to charge for my time.   When they charge $300, it becomes a marginal business, if not a loss-leader.   When they want $350 and up, well, I might as well do it myself and pocket the entire $500.

And increasingly, I am finding this is what I am doing, particularly in simpler cases.   There is really nothing to be gained by farming out such searches.

And recently, my searcher has been bumping his prices from $300 a search to $325.   The numerous people who contact me want $350 or more - sometimes far more.   The quality of the work has started to falter as well.   As they get more and more cases, sometimes they overlook some points in the search - or search the wrong invention.

And in the past, my Indian friends would perform a search in a day or two.  Today, it is taking them a week or two.

This does not bode well - for them.   But it illustrates how Boyle's Law works, with regard to outsourcing.   Just as gas expands to fill an empty space, money does as well.   Starting in the 1980s and accelerating through the 1990's, companies started outsourcing work to India, China, and other overseas companies.   Like gas expanding from a deflating balloon, these jobs hissed out across the ocean to eager and underpaid overseas workers.   It seemed, according to some folks, that there would be no jobs left in the USA within a few years.

But funny things started to happen.  Well, not funny - predictable.   The high cost structure of Union Labor started to unravel, as more and more union shops went bankrupt, or the unions accepted cut after cut in pay, benefits, and work rules.   People out of work finally buckled down and went back to work - at lower wages - after each successive recession, when they realized that the high-paying factory jobs weren't coming back.

But another predictable thing happened - prosperity came to two of the most un-prosperous countries in the world - India and China (and Vietnam, etc. etc.).   Suddenly in China, we are seeing a car buying boom that is like nothing else on the planet.  A new middle-class is emerging in China, and they are spending all the money they are making.   The standard of living is going up.   And people are demanding more in terms of wages, as they end up with multiple job offers.

And the same is true in India.  Tata motors has actually introduced a car with four wheels on it.   Well, actually they have always offered four-wheel cars.   But they have a new car, the nano which is designed for the entry-level motor-scooter buyer, with that all important fourth wheel.   People can afford more in India, and increasingly, they are charging more as well.

As a result, you are starting to read stories in the paper about "in-sourcing" of work.  Companies are bringing jobs back to America, because wages are finally more rational (for basic labor and unskilled workers, in particular).   While wages in India and China remain dirt cheap, the inherent costs in running an operation overseas, the travel, the shipping, and the difficulty of management and control mean that there is a huge cost delta when you outsource.

When labor is $10 a day, that cost delta is wiped out.  When overseas labor wants a raise, suddenly, paying $10 an hour in the USA makes more sense.   But still not $20, or $30, or $50.   Not for unskilled labor, anyway.

My Indian friends are offering to do things like write Patents and responses to Office Actions.  I have never taken them up on this, as this is my bread and butter.  Moreover, it is the skill part of my job - it would be like farming out a portrait and then claiming you painted it.   There is no "one way" of doing these things, and what people are paying me for is my special insight and talent, not to merely review someone else's work.

Does this mean outsourcing is dead?  Hardly.   But it would appear we are reaching an equilibrium point, where the gas is escaping from our balloon more slowly.   While this recession has been harsh for many people, it has been akin to pruning a bush or shrub - it may be painful for the plant, but it will grow back, stronger than before.

People may have to accept lower-paying jobs, but at least there will be jobs to accept.  And once this trend starts, and more people go back to work, the economy will improve, and our workers will realize they have options and are in demand, and they in turn will demand higher wages, and.....

....and the whole damn thing starts over again.

It is an organic process.
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Wednesday, June 27, 2012

50 Million Americans on Welfare? Not Really...

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Note: This is a re-posting from January 9, 2012

Kelly's satiric take on the traditional view of Welfare Queens, from The Onion.


One number bandied about by conservatives is that "50 Million Americans are on Welfare!" which is an alarming statistic, because if true, means that 1 in 6 Americans isn't working, but instead staying home and watching TeeVee all day long.

But like so much else, it isn't really true.  And when you have to resort to lying and deception to make your point, what exactly was your point again?  And that is sad, too, as getting people "off the dole" is a good idea.  But your good idea loses currency when it is clearly based on distortions.

What is "Welfare" anyway?  That is the first problem to address, and if you include everyone who gets a check from Uncle Sam, then the number may be far higher than 50 Million.  Of course, all those conservative retirees collecting Social Security can't be counted as being "on Welfare" because they paid into the system, right?  And their Medicare was all paid for too, right?

Well, not exactly.   Most retirees end up taking out more than they put in, and the system is funded by current income, not money squirreled away in the Scrooge McDuck Money Vault by the Social Security Administration.


Exhibit A:  The Scrooge McDuck Money Vault.  Most people believe that 'their' Social Security money is being kept for them, here.  No really, they believe that.

So, right off the bat, we don't count the millions of Social Security recipients because if we did, that would add another 50 million to the count.  And the voter demographic we want to get at in order to cut off all those "Welfare Queens" is that 50 million older people on Social Security.   We want them, who are receiving a government check, to cut off the government checks of others - so the taxes of the very rich can be kept low.

Makes sense, in a sick sort of way.  But how many people really are on "Welfare" as we know it?  50 million like the conservatives say?

Try 4.4 million.

Whoa!  How did 50 million shrink to 4.4 million?  Well the conservatives have a very inclusive definition of "Welfare" as being any sort of government check you may receive other than Social Security of course!

They count medicaid, which is a program, like medicare, but which provides medical assistance for the very poor - and middle class people who make themselves "look poor" to qualify for nursing home care with medicaid.    Yes, those very same right-wing conservatives will deed their house to their kids, so they look "poor" to the government and can get a free ticket to the nursing home, all paid for by Uncle Sugar.
 
50 Million people are on medicaid, and that is a scary number.  And it is costing us hundreds of Billions a year.  But of course, this is much better than "Socialized Medicine" or "Obamacare" and donchuforgetit!

50 Million Americans on Welfare?  Try 4.4 Million instead.  Counting the working poor who receive food stamps and Medicaid as being "on welfare" is more than a little disingenuous.  It is an outright lie.

But these 50 million in medicaid are not all on "Welfare" but may in fact be working or retired as well or receiving Social Security Supplemental Income (SSI - the Welfare for the elderly, about 5 Million people).  So of these 50 Million, clearly some of them are the working poor, not "Welfare Queens".

Similarly, there are 40 million people on food stamps, which again is not "Welfare" in the sense of a check you get for not working but an assistance, again mostly to the working poor or elderly.  These are people trying to get by on $20,000 a year or less - often far less.  But they are earning income and they are working - not lazing about waiting for their gub-ment cheese.

And the average Food Stamp allotment?  $150.  No one is getting rich or buying Caviar on food stamps - but the GOP has lots of "friend of a friend heard it straight from the source" saying that folks are.   But that is not hard data, just made-up stories.  And unfortunately, made-up stories don't help us analyze this in a rational manner.

So, what does this all mean?  Well, the idea that 1 in 6 Americans is "living off" the hard work of the other 5 is sort of silly.   More like 1 in 75 Americans is on what we traditionally call "Welfare".  And, oddly enough, this number has not risen much in the last few years.  The number of welfare recipients has stuck pretty much at around 4 million.

This is a far cry from 50 Million and not nearly as alarming.  But that is the point, isn't it?  To get people all riled up about "50 Million on Welfare!!"  They are baiting you.

The number of people collecting Unemployment Insurance, on the other hand, has recently risen pretty dramatically to 10 million and above, which is not too surprising, considering how the economy has been.   However, unemployment benefits are temporary in nature (unless Congress keeps opting to extend them, again and again) and thus not part of a long-term "Welfare State" trend.  This does not keep conservatives from throwing their numbers in the mix, however.  And of course, letting unemployment benefits expire - as they were designed to do - is one way to get this number down, and get people back to work.

So, why do Conservatives lie about these Welfare numbers?  The real numbers are alarming enough - 50 million people on Medicaid, 40 million on food stamps.  But those are the working poor, and you can't get the 50 million people collecting Social Security all riled up about welfare if you set them against the working poor - or use the real number of 4.4 million who are actually on what we traditionally call "Welfare" (e.g., being paid not to work at all).   But if you can convince them that "Welfare Queens" are all buying Cadillacs - well, you've got 'em.  You've got 'em to vote for you.

And like I said, this is a shame, as it prevents a real discussion from taking place.  If all you have to offer is lies and deception, then what else ya got?  Not much, as it turns out.  And one lie invalidates all of your other arguments.

So, the next time Newt Gingrich tells you that 50 million people are on Welfare, call him out on it - and ask him why he isn't counting Social Security recipients in this math.

Let's work to reduce the number of people on Welfare and other assistance programs.  But let's do it HONESTLY, not by setting one group of people against another or by making up alarming and untrue statistics. 
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The Salaryman Trap

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A salary job can be a real trap - in more ways than other jobs!


I wrote before, in the Job Trap, how having a "job" to earn a living can be a dead-end, in that it encourages you to view money in terms of monthly cash-flow instead of real wealth you can own.

Salary jobs are even worse.   Back in the day, I used to fly out to Silicon Valley once a month, having a standing reservation on United Airlines, Business Class.  Oh, the frequent flyer miles!  Oh the credit card debt!  It was fun while it lasted - I only wished I saved more of that money!

But what was interesting, visiting these companies (Cirrus Logic, Sun Microsystems, Samsung)  was the people I would meet.   Most were young Engineers, a few years out of school, working in a cubicle on a SPARC workstation (remember those?) using matlab to design integrated circuits, or perhaps writing code.

There were a smaller number of middle-aged people in management - the department heads, legal, human resources, and the like.   At at the very top, there were a few silver-back gorillas, with white hair on the temples, running the whole show - the CEO, the CFO, the COO, and the like.

It was, in a way, a pyramid scheme.  If you looked at the age distribution and the number of years of service, some things became abundantly clear.  Like with a law firm, there was room for a very few at the top, more in the middle, and at the bottom, a large number of young folks, in constant churn.

And the promise - not explicitly made, but implied - was that somehow, over time, if you stayed with the company, you would work your way up this ladder and make more and more money.

And as Lawyers, or young Engineers, we never thought too much about the details of that implied promise - or whether or not in fact, it was practical.   Not everyone could just continue to advance and make more money.  In fact, due to the pyramidal nature of these types of organizations, few would.

What happens to the rest?

What happens to a 40-year-old C programmer or circuit designer?  What happens to the Associate at the law firm if he doesn't "make partner".   What happens to the vast majority of people who work at these places?

Well, they go off and do other things, often for a lot less money.   And we don't like to talk about it, because, hey, we're young hot-shots, making the "good money" with promises of more, and we're not going to be "that loser" who we see going down the elevator with the picture of his wife and kids and his coffee mug in a cardboard copy-paper box.

Right?

Wrong.

The image above is of an Acura coupe - an overpriced Honda that appeals to young people who just "got a good job" and want to show off.  I met a young Engineer once, and we went out to the obligatory Chinese Lunch Buffet in Fremont in his new Acura.  He had traded his BMW in on it, and he was excited as to what a nice car it was.

Some of his older cohorts were smiling and nodding.   They knew the score - a young turk going out and immediately getting himself into debt up to his eyeballs, taking his bi-weekly paycheck and chopping it up into tiny little payments, until pretty soon, he was "living paycheck to paycheck".

And of course, the inevitable happened - the company downsized, and he found himself out of a job.   Of course, he is young and in demand, right?  So he can find a new job, in a matter of months.   And in the meantime, he can cash in part of his 401(k) to make the payments on the house and cars and credit cards.  Right?

After all, he is making good money!  And the future is so bright, he has to wear shades.  From here on out, it is nothing but prosperity and good times!

That was 15 years ago.  I wonder where he is today.  I suspect the Acura is in a salvage yard somewhere near the bay.

Salaries for Engineers and programmers are still doing OK, but in some markets have stalled, as many companies have cut back or gone under, and thus put a lot of people on the street.

And while you might make "good money" at such a job, it never will be really good money unless you decide to accumulate some of it.

Going into debt for consumer goods, cell phones, cable TV, cars, jet skis, fancy houses, and all that crap means that when adversity strikes, you will lose it all and end up broke.

It also means missed opportunities.   When your friends tell you they want to start a new company making an exciting new product - and need a good circuit designer, but can pay you only in stock - what are you going to do?  "I need to make $100,000 a year to service my debts!" you say.   So you let opportunity go by, because you traded it for a jet-ski.

And opportunity does knock in your life.   A friend of mine decided to start a bank.  Yes, give me all that bullshit whiny American crap about how bank stocks are a bad bet.   You might think that, listening to the media.   I was able to only scrape up $10,000 to invest in the bank.   That has since morphed into more than $50,000, in only a few short years.   Imagine if I had been able to invest $100,000.   Yea.

I was able to invest in Real Estate, though, and cash-out when the music stopped, with a seven-figure number.   But, the only reason I was able to do that was because I had a modest house and not a huge debt-load, thus qualifying me to buy those investment properties.

It is temping, as a salaryman, to think, "I am making so much money, my time is worth a lot to me!" - so you buy convenience foods, take-out designer coffees, eat in restaurants, and hire a lawn service.   After all, if you are making $100,000 a year, that is like $50 an hour, right?  So why bother doing it yourself?

But a salary job, as the name implies, does not pay you more money to work more.  So it is not like mowing your own lawn is taking away an hour of work, and thus $50 out of your pocket.   On the other hand, if you do this instead of watching "Jersey Shore" - you will definitely profit and be in better health.

But the second problem for the salaryman is normative cues - and salary jobs are chock full of them.   As I noted in cubicle survival tips, salary jobs are horrific as they place you in contact with a lot of other brain-dead salary people all day long.   And most of them on well entrenched on the consumerist bandwagon, buying crap on time and trying to outdo one another with their status.   And that is where one hears arguments like, "Well, my time is worth a lot, so I hire someone to breast-feed my children" and that sort of crap.

And of course, in the parking garage is the inevitable escalating war of cars - who has the fancier ride and who spent more in an apparent display of wealth.   And when lunchtime rolls around, these same brain-dead drones will encourage you to go out lunch, spend $20 of your hard earned money (even at $100,000 a year, this represents nearly an hour  of your after-tax income) on Chinese or Indian buffet.   And don't forget a designer coffee from the Starbucks in the lobby!  It's only five bucks and you can afford it because you're well off, right?

Right?  And if you say you can't afford it, well, then they will think you are poor or something - even though you both make basically the same salary.

Salary jobs are a trap, as while you may have a good income you may not be getting ahead in terms of increasing your net worth over time.   In the past, most salary people anesthetized themselves by looking to their rapidly appreciating homes as an indicia of their increasing wealth.   Today, that phoney wealth-on-paper has evaporated.   As a result, our nation's savings rate has actually gone up, as people are starting to catch on that we are not as wealthy as we thought we were.

So how do you avoid this trap?  It ain't easy, as the pressures from your peers and the media will be intense.  Your own spouse may be against you - in a big way - over this.   He or She will want - no, demand - that you keep up with the neighbors, in terms of spending.  Suddenly, you have to buy luxury cars and put the kids in private pre-school, and do all sorts of silly shit, financing most of it on time.

The secret, of course, is no secret.  Spend less than you make, max out that 401(k) plan, stop borrowing money for things, pay cash for cars, pay down debt, live within your means, and save up your money for the very real possibility that the "dream job" will go away long before you want it to.

And when that happens, well, you will be prepared.   And if it doesn't?  Well, you will be fantastically rich, then.   And if opportunity comes along, you will be able to jump on it, instead of saying, "No, I'll sit this one out, I have credit card debt and car payments to make."
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Tuesday, June 26, 2012

Sad Sack

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There are a lot of Sad Sacks in the world.  Are they depressed, or evil, or what?


On some news sites, you see interesting comments, some of which are clearly trolls.   No matter what the topic of the story is (e.g., fuzzy kittens) some folks jump in and tie it to Obama or Romney ("these kittens would be fuzzier if not for OBUMA!" one says, while another whines, "If Romney is elected, those kittens would starve to death!").

It is, of course, ridiculous.

But with financial news stories, a number of comments are sure to appear, like clockwork, from the Sad Sacks of the world.   And these may be trolls, too, I don't know.   It could be some subtle campaign to get us all depressed and thinking the economy is worse than it is.  I dunno.

But the comments run along a number of lines:

1.  "Saving money?  Who can afford to save money in this economy?  Only rich people can afford to save money!"

2. "My wife and I are living paycheck-to-paycheck every since I lost my job at the old mill.  My car just broke down and my dog died.   Oh woe is me!"

3.  "Saving or investing is just for chumps, anyway.  The whole game is rigged.  You might as well just SPEND IT ALL, because inflation will eat up your savings anyway!  Might as well enjoy your money!"

4.  "Finding a Job?  Make me laugh!  I've been laid off for three years now and I haven't found anything even close to what I used to make.  Yea, sure, there are lots of low-paying jobs out there, but I'm worth more than that!  I'd rather stay home than take a pay cut!"

It is hard to parse these comments.   Are these people depressed?  Poor?  Stupid?  All three?  Probably.  The mentality expressed is somewhat alarming - alarming in the sense that we enacted these 401(k) and IRA plans on the premise that people will make rational choices in retirement.   But given these sorts of attitudes, one wonders if the whole concept is sort of flawed - at least with regard to a lot of folks.

The common denominator is this:  life is too hard, so why bother even trying.  Just go out and spend it all now, and forget about tomorrow.

This is sad - and a sad outlook on life.   And why it is sad is that these folks will end up on a bad place, sure as the sun rises.  They are wallowing in self-pity and engaging in weak thinking, which, when you think about it, are really the same thing.

Whoa.  Wait a minute.   Now you see why we are called the Prozac generation.   The media, the corporate advertisers, the corporations - they all want you to be depressed.  They want you to adopt learned helplessness and just be a quiet and good little consumer.  Watch TeeVee, order that delivery pizza, think about which shitbox econo-car you are going to buy, or worse yet, lease, brand-friggin'-new, so you will be perpetually in debt, powerless, and weak.

Wow.  Pretty slick system for enslaving the masses.

Of course, in order for it to work, you have to get them to watch about five hours of TeeVee a day, eat all that horribly bad chain-restaurant food, and get 100 lbs overweight with a blood-sugar problem.

Um, I guess that describes about half the United States.

You do have choices in life.   You can choose to be a Sad Sack of Shit - wallowing in your own self-pity and anesthetizing your self-inflicted pain with consumer purchases and a lot of unhealthy and shitty food.

Or, you can choose to do otherwise.   Cutting out that five hours of television a day, is a good first start.   Call the cable company and disconnect.

Or maybe you like being a Sad Sack?
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When "What If" Becomes "What Is"

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Shit happens, as they say - and often unexpectedly.  Are your finances prepared for unforeseen events - or even foreseen ones?  Think about this before buying some new toy like a car or a cell phone.


In a recent "Oh Woe is Us!" piece on MSNBC, they report gleefully that about 1/4 of Americans have no rainy day savings.  And while they tried to couch this in terms of the "current recession" (which technically is over) the reality of the matter is, in the last 20-30 years, this has pretty much been the case with Americans - a large percentage of us are living hand-to-mouth, not because we have to, but often because we choose to.

And I can say this with authority as I was this way once - spending every dime that came on on payments and bills of one sort or another.   I had little saved for a "rainy day" - but then again, most people in their 20's don't have much saved - they haven't had time to.

And of course, a certain percentage of the population is being rained on, at any given time, and thus might have depleted these savings - and is trying to rebuild them.   So it is not hard to come up with a 25% number at all.   And as the MSNBC article noted, these days, people are saving more than they were five years ago.   Recent events have a lot of people spooked, and rightfully so.   And more and more folks are thinking it is a good idea to own money rather than be constantly renting it.

But of course, this does not bode well for "the economy".   When you stop buying Jet Skis and other stupid purchases, the guy selling Jet Skis lays off a salesman, and maybe a mechanic.   And the guy selling ice and cold beer down by the dock maybe goes out of business.   Saving money, we are told by some folks, is a bad idea - for the economy.

But the economy is not a thing, and moreover, it is not your patriotic duty to spend money, when it is not in your best interests.   You have to look out for your own interests, and in most cases, this means being fiscally responsible.  Let the other fellow buy Jet Skis.

The problem with hollowing out your own finances - levering yourself into debt for houses, cars, credit cards, and whatnot, is that if something bad ever happens, well, you are totally screwed.

What bad things could happen?  Ask around, a few folks could tell you.    You could lose your job, have a medical issue, have a child having a medical issue, wreck your car, whatever.  Shit happens, as they say, and if you life is so leveraged that every penny you make goes to pay off loans, well, then what do you do when either (a) the income dries up, or (b) sudden unexpected expenses crop up?

And I say "foreseen events" in the caption above, as many of these events can be foreseen, either as probabilistic likelihoods, or as inevitable consequences.   It is likely you will have a health crises at some time or another in your life.   It is predictable that you will DIE eventually, and should plan on this.

But beyond hospitals and mortuaries, there are other likely or foreseen events that people should plan on, but fail to do so.    One reader recently asked me if he should cash in his 401(k) or borrow money in a home equity loan to put a new roof on his house.

In his world, I guess, a roof leaking is some wildcard, unforeseen event, like the comet that took out the Dinosaurs.  One minute you have a roof, and then the next, BAM!  Meteorite.

But in reality, a asphalt shingle roof on a home has a design life of about 15-20 years, depending on the quality of the shingles used and the quality of installation.  Many contractors use "15-year" shingles, which rarely last that long, while others may use 30-year shingles - but don't count on them being around over 20.

Ditto for home appliances - which last 10-15 years at best.   If you are out shopping for new cars and have 12-year-old appliances in your kitchen, ask yourself if you've set aside enough money to replace them, down the road.

Most people don't think like this - and thus just borrow more and more money and spend it.  When an appliance breaks or their roof leaks, they just borrow more money to cover the contingency.

If you look at your life in terms of these predictable, foreseeable events, as well as the likely probable events, you realize you are not as wealthy as you thought you were.   The cost of a new stove is hanging out there over your head just as sure as a car payment, even if the current one is "only" ten years old.  If you save up and set aside money, then when the control panel finally blows out, you can go out and buy a new one, instead of just scrambling to see which appliance company will finance you on onerous terms.

Rainy days are not something that happens to other people - it is something that happens to you and will happen with regularity.   If you don't put aside money for a rainy day, you always end up chasing your tail, feeling put-upon, and complain about "living paycheck to paycheck".

Sorry, but poor financial planning is not something I feel sorry for.   These same people who complain about living 'paycheck to paycheck' often have smart phones, cable TV, and a new car in the driveway.  And I know this, because some of them are friends of mine...
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OPM - Other People's Money and Why It Doesn't Apply to You....

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Many consumers banter about financial terms like "Opportunity Cost" without knowing what they mean.  The phrase "Other People's Money" is another phrase that likely doesn't apply to you.


In my posting Opportunity Cost, I pointed out how that phrase (and concept) has no application to the average consumer.  People like to think they sound smart when they say, "Well, I could have paid cash for this car, but what with the opportunity cost and all, it was better to finance."

It is an argument that makes no sense, as the guaranteed savings of not paying 5% or more interest is far greater than what you would get on a CD in the bank - and those are the comparable "investments", not stocks or some other speculative investment.

Opportunity Cost really only makes sense for businesses - where for them, borrowing money means freeing up more capital to pursue a business project that will generate income for them.  Buying cars and other consumer goods, on the other hand, is just spending money and there is no "opportunity" that you are taking advantage of by financing a car, other than an opportunity lost.

As one helpful reader noted, when you spend $25,000 on a brand new car, and then pay interest financing it (and please, don't tell me about "0% financing" - you really aren't that stupid are you?  The 0% financing gag means you forgo a $2000 rebate - there's your interest right there) the real opportunity you are losing is the chance to invest $27,000 and get some rate of return, and keep your old clunker in the driveway.

Not Spending provides the opportunity.  Spending and financing is not creating opportunity.  But car salesmen (and all salesmen) will throw out phrases like "opportunity cost" to confuse you and to get you to think that an odious new car purchase and loan agreement is not a stupid idea, but in fact a smart one.  It is not.

The same is true with the phrase "Other People's Money" - which was bandied about a lot in the late 1990's and early 2000's, as we all, well, spent other people's money.

The phrase is similar to opportunity cost and makes sense in a business context only.  The complete phrase was something along the lines of, "Always use other peoples money, instead of your own!" and what this meant was, when you are starting or running a business, you can leverage yourself and hedge risk by borrowing money ("OPM") and thus risk less of your own capital.

For example, you start a restaurant.  You borrow money from investors or a bank to pay for renovations and start-up expenses, and to cover the overhead for the first few months (to a year) until the business is solvent and profitable.   If you are successful, you pay back the investors their money, plus interest.  If you are not, you declare bankruptcy, walk away, and leave the lenders holding the short end of the stick.

Since it is a business bankruptcy, and not a personal one, you lose little in the aftermath, unless you did something really stupid like personally guaranteeing the notes.

For a businessman, who does not have emotional panic when the word "bankruptcy" is bandied about, this makes sense.  And it is how businesses work and how business is conducted.  And lenders know this, which is why interest rates on business loans are so high.

But OPM doesn't make any sense for you, as a consumer buying consumer goods or a personal residence with OPM.   All you are doing is borrowing and paying back, with interest, and there is little or no chance of making a "profit" on a Jet Ski or even your personal home.  As I noted, over time, you get back what you pay in to your personal residence, with the cost of insurance, taxes, repairs, and interest.  This is not to say that buying a home is a bad deal - far from it.   But the reason why home sales are tax-free is mostly because you really aren't making money on your home (But you do get that money back, at least).

On the other hand, if you can buy an investment property using borrowed money, and then pay back the loan from the rental proceeds and leave yourself a hundred bucks at the end of the month, you can use "OPM" to leverage a business proposition that you could not otherwise pay cash for.   Over time, as rents increase, you will make more and more money, and eventually, you pay off the loan and own the property free and clear, without having paid a nickel of your own money for it (and yes, I did this).   And presumably, it has appreciated in value by then.  You can make a lot of money this way, but of course it requires that you own and know how to use, a calculator.

So why do people in the cul-de-sac of Foreclosure Mews Estates all like to banter about terms like "Opportunity Cost" and "OPM" and the weekly cocktail parties and Barbecues?   Well, for starters, it is a way of trying to look sophisticated and worldly, and financially astute.   But moreover, it is a way that the suburban middle-class poor reinforce each other's normative cues.   Joe and Suzie homeowner might feel rightfully nervous about doing a cash-out re-fi on their split level, so they can pay off their credit cards.  But when their neighbor, after a few drinks, makes a joke about "OPM" they feel better - and even feel they have made a smart move and are now part of the smart set.   Hey, maybe now they can buy that Acura like their neighbor has, using their home equity line of credit.

But no, it is not a "smart" idea.   Using Other People's Money to just buy rapidly depreciating consumer goods is never a good idea.   And using the OPM mentality to bootstrap bad decisions is even worse.
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