It Can’t Take A Village 30 September 2009
Posted by Lao Tzu in anthropology, economy, law, sociology.Tags: babysitting, stop babysitting
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I love the idea of neighborhood friends taking turns watching each others’ children. Instead of paying high price for low quality day care, everyone who has children and lives near people they know and trust (which is not always the case) simply exchange time with each other in a manner that allows their children to play with their neighbors. That’s how I grew up. In such an environment, the concept of, It takes a village to raise a child, can actually be implemented – people watching over each others’ children, and the children benefiting from multiple adult and peer influences.
However, a recent news item discusses how our degrading level of common sense in this society has finally impacted this ancient concept described above. A woman in MI who watches other neighborhood children for a few hours each morning has been asked to cease citing that she is in violation of day care laws.
I guess if she charged money, no one would have said anything.
Is College a Worthwhile Investment 28 June 2009
Posted by Lao Tzu in business, economy, sociology, technology.add a comment
As I predicted, soon, in the US, college would end up being a bad investment from a business perspective. There is now a recent article echoing these concerns. Of course, the real value of education depends on the individual and what they do with it, but the economic value must be evaluated from the resulting salary (multiplied by the probability of getting such as job and the years in service), vs. the full cost of acquiring the education needed for the position (including all living expenses and missed opportunity income and years of service). Hence, there will be a point, if it has not been realized already, where a good paying job that does not require a degree (and there are still some out there), will be a better investment (ecomomically) than a low paying 4 year degree.
There are many examples or individuals acquiring wealthy salaries without a college education (some actors, athletes, musicians, etc.). A common joke when fellow engineers make a brilliant accomplishment is, “Now if I could just hit a ball with a stick, I would be a millionaire.” However, this phenomenon is tempered by the low probability of scoring such an opportunity, based on the assumption that these positions are destined for the creme de la creme – which may or may not always be the case, but it is a safe assumption.
On the flip side, a weekend with a Java book will give someone all the necessary skills for a high tech position that would otherwise be reserved for someone with a 4 year degree.
Metro Tragedy & Economics 23 June 2009
Posted by Lao Tzu in business, economy, systems engineering.Tags: dc, metro, metro crash, plane crash
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We recently had a tragic train wreck here in the DC area, yesterday, where 2 Metro trains collided. Unfortunately, over the 2 days prior to the accident, I had 2 separate conversations with people explaining how I predicted that there would be more plane crashes due to the economic crisis. Unfortunately, I was correct. I have not checked the stats, but it appears there were more crashes on the news recently, and the reasons are related to economic crisis (for the cases where we have a good estimate of the cause). The rationale is straightforward. Airlines are typically running in the red and sensitive to consumer spending trends. They have little room to cut expenses during economic low points. Hence, critical areas get cut – maintenance labor, part replacements, pilot rest periods, training, and selection criteria are lowered to those with failing test scores. It was reported today that the train that crashed was overdue for brake replacements and that the Metro could not afford to keep up with maintenance. Is the same phenomenon occuring here?
Taxing Health Benefits 15 March 2009
Posted by Lao Tzu in economy, medicine, politics.Tags: taxes, taxing health benefits
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Many in this country have been against the idea of public health care. The idea of our tax money going to provide health care to the population was repugnant to most. As our children attend public schools and we drive on public roads, the idea of ensuring (with an e) that every citizen had access to health care (diagoses, medicine, treatment) was just too much for some. I never understood their rationale, myself.
Interestingly, the white house has recently stated that it would consider the idea of taxing our health benefits (full story) in order to raise money to help pay for the new health care plan. I assume that is because we are broke from bailing out the banks.
For those that don’t see the irony here, let me break it down. Our free enterprise system implies that we pay for our own health care. But it is too expensive, so we get some assistance from insurance companies. But they end up being too expensive, so we get help from our employers where they pay an ever decreasing portion of the cost of the insurance. All of a sudden, someone sees that as an opportunity to extract more taxes from either you or your employer. So this means that instead of you paying taxes to get free health care, you pay for health care, and you pay taxes for any assitance you get to pay for your health care. Just the opposite of socialized medicine.
What’s worse is that our Government is just blatantly making up new taxes without justification in order to pay for the bailout. When I say ‘justification’, I refer to the fact that a tax must serve some purpose against the thing being taxed, not soley for the sake of bringing in revenue. If this is allowed, there is no theoretical end to this scope.
But the funniest part of this story is where it states, “Those who want to tax benefits in whole or in part make two main arguments. They say the tax exclusion is a generous subsidy that insulates employees from the true costs of health care, …”
I thought that was the whole point of insurance.
The Bailout 2.0 (Why it Won’t Work) 11 February 2009
Posted by Lao Tzu in economy, politics, psychology, sociology.Tags: bailout
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Let’s see, it didn’t work the first time (for the reasons I mentioned), so let’s do it a second time. Hmmm, what a strategy… Oh yeah, and the majority of the population was against it the first time, they have not yet benefitted from it, so what are the chances that the majority will be behind it the second time? Oh, and did we forget that the huge sum of $700 Billion did not fix anything – we are still declining!
OK, here are some reason why these bailouts will not fix the economy:
- You are putting money into the wrong end of the pump. Giving money to banks is supposed to unfreeze credit. People don’t need credit to get new homes, they need to pay for the mortgage that increased so they can keep their homes. If you lost your job, no one is going to give you credit. Not to mention, our economic system is not designed to run this way.
- Psychology is not being considered. The executives running the banks are in this business for one reason, they like money, and they use these institutions as their personal investment projects. They have absolutely no desire or even incentive to spend this money in the manner that congress would prefer.
- There is no accountability or enforcement. To simply state that the behaviour (described above) is unethical soungds good, but the situation is actually worse than that. It should be illegal. The Government has given these commercial institutions tax money, and they should be able to enforce how that is used.
There is a much simpler solution that will fix the economy immediately, but no one is talking about it. I will save it for another post.
Credit Score Abuse 16 December 2008
Posted by Lao Tzu in business, customer service, economy, law, psychology, sociology.Tags: credit, credit score, insurance
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For at least 10 years now, businesses have been using credit scores for more than just a determination on whether to lend someone money. They have been used as a metric of “character” for everything from car insurance rates to job qualifications. A Geico agent actually told me that they would pull my credit report to determine my insurance rates because they believed there was a correlation, specifically that individuals with low credit scores are more likely to have an accident. I was able to find an article discussing theories for such a relationship,but the cause and effect relationship has not been established. There are clearly many factors here that could be related at some point.
My point is that this is not what a credit scores measures or was intended to measure. Organizations are using this because it is a conveniently available metric, not because there is any validity to expanding its application beyond granting a loan. In fact, it’s not even good at that. The credit bureau databases are poorly designed and proned to errors in relating information from other people with you (e.g., people with same first and last name). Finally, others are talking about this. See this MSN news article.
The Bailout 30 October 2008
Posted by Lao Tzu in economy, politics.Tags: bailout
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Not only has it been over a month since my last entry, but apparently I have not yet grasped the concept that one of the main reasons for a blog is to write on the day you think of something. I had several opinions about the bailout before it was voted on, but did not post them until now. Here’s my bottom line.
There were many theories about what might happen if the US Government did not bail out the financial institutions, but some of those things are still going to happen.
Regardless, this is the middle class bailing out the rich. You cannot debate that fact. No one said anything about controlling executive salaries or bonuses for the companies being helped. Nothing was done to change their business practices, so don’t be shocked when these guys walk away with billions in their pockets.
The bill changed from a few pages to over 400. No one had time to read it except the press who cited several cases of pork in the bill.
The middle class needs help immediately due to rising interest rates. People are loosing their homes now. Unfreezing credit is not going to help them. No one ever explained how this would help the general public.
Last year, there was so much talk about not helping the poor in this country. “We can’t have a nanny state”, was a common mantra. So how can we justify this.
The fact that both major presidential candidates voted for this, not against it, means that neither one is really for change in Washington, and they are not looking out for the 85% to 95% of the population (dependig on which poll) that was against this.
What this event has taught us is that many decisions like this are not really a debate of Republican vs Democratic viewpoints, but rather rich vs not-rich view points. Sound familiar? Hence, we are clearly on the road to an aristocracy – in the HOT lane!
The Starbucks Experience in Devolution 29 May 2008
Posted by Lao Tzu in customer service, economy.Tags: coffee, mcdonalds, starbucks
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OK, this is a rant.
I must be addicted to Starbucks because I stand in a ridiculous line to pay $4 for a half-full cup of coffee that takes as long to make as a steak. And, here is what I typically go thorugh in that line. Somewhere in the middle of the line, a barista that is trying to be proactive asks me what I want so she can start it, then I get up to the computerized register, and I have to tell that person the same thing I just told the first person, and they punch it in the computer. I must assume that the reason they ask me is because there are specific buttons for different items so that they charge me the correct price for the correct type and correct size. Of course, I can never get the size right, but can you blame me. Why is the smallest one called tall? Where did the execs learn English? Oh wait, they didn’t because medium is in a different language (I won’t steal the term from the commercial). Just imagine for a second trying to explain this to a 5th grader. They would think it was stupid. So (this part’s funny) after I repeat my order to the person who is actually charged with taking orders, he then ASKS if he can call the order back to the baristas. I guess sometimes they get too busy. But they already got my order. But I think if I worked there just one day, I would have caught on somewhere around my lunch break that if I just gave them a copy of the receipt for every order, that would make everyone’s life much easier (let alone actually have the COMPUTER do some work and print the order separatley for them. Then you stand there and wonder if the drink they just put up on the little pickup table is yours because they don’t use numbers or names, they just call the drink, based on the brilliant assumption that they will never have 2 customers in the place at the same time order the same drink. So I look at everyone else that is waiting and they all look at me, and we, the customers, must figure out, through some complicated socio-economic algorithm, whose drink it is. Then we return the next day and do it again, until the cost of gas wakes us up enough to realize that we are paying way too much for coffee.
Hey Starbucks, the McDonald’s brothers revolutionalized fast food about 50 years ago when they realized that if they wanted to serve a lot of customers really fast, they needed more than one shake machine.
Oil and Gold 27 May 2008
Posted by Lao Tzu in economy, politics.Tags: economy, energy, gasoline, gold, oil, real value
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There is no doubt that the current US economy in trouble. This is evident by the rapid increase in gasoline prices to the point where it is having impact on everything (driving to work, shipping products, airlines), and many average income people loosing their homes. What better signs could there be? Many are debating whether this is a recession or not because it has not met the formal definition of a recession. This is just semantics. The point is that yes, of course, the economy is in trouble, and you can call it whatever you want.
Interestingly though, I have been hearing a lot of people talk about gold as the ultimate investment because there is security there based on the premise that gold has always been valuable in this world, and always will.
The truth is that gold does not have any real value. It has been the most common bartering chip over the years, but, by itself, you cannot eat it, drink it, and it will not keep you warm in the winter. If the world’s infrastructure totally collapsed (pick your favorite 80s sci-fi movie, e.g., The Road Warrior), gold would be totally worthless. Food and water have real value, but even more valuable (and with real value) is oil. Oil is the lifeblood of an industrial society. Unless you want to revert to pre-industrial times (which could have its benefits), or until there is something that can replace it, we need it. My only regret is not having bought stock it in before 2000. The problem, of course, is that the world’s supply is not infinite at the rate we are using it, and that rate is increasing exponentially. We need to develop a back-up fast.
