Category: Wealth

Death, Taxes, Ancient History, and Bad Advice

“I have to do it alone.  Don’t you get it?  Everybody dies here.  It’s just a rule.  Death, taxes, more death, and I don’t pay taxes.  So all I know is death.” – Ash vs. The Evil Dead

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Don’t delay on filing your taxes . . . any longer than me.

If I could write a book about taxes, it would be a very short book:

“Avoid paying taxes if you can and do in such a way as to not be thrown into jail.”

That would be the title.  That would also be Chapter One.  There would be no Chapter Two.

“Tis impossible to be sure of any thing but Death and Taxes,” wrote Christopher Bullock in The Cobler of Preston in 1716.  There is, however, biblical evidence that Bullock was only partially correct:  in the New Testament, Jesus was hanging with Peter and they were talking about taxes.  Jesus tells Peter to go down and catch a fish, and money would be inside the fish, and Peter could go pay taxes for both of them.  Peter did, and they even have the picture to prove it since they didn’t have receipts back then:

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Is that Jesus or John Lennon behind Peter?

So, even though Jesus could both return from the dead as well as make dead people live again, he still paid taxes.  This therefore means that the only real certainty in life is . . . taxes.  If you’re an atheist, however, it’s okay to plan for both.

The biggest tax (for me) is income tax.  But the list of common taxes is mindboggling:

  • Federal Income Tax
  • State Income Tax
  • Sales Tax
  • Social Security Tax
  • Medicare Tax
  • Property Tax
  • Liquor Tax
  • Gasoline Tax
  • Tobacco Tax

I was going to make up some joke taxes for the list above, but throughout history, I believe that government has taxed . . . everything.  New York City has a tax on food, but if the restaurant slices your bagel that means it’s prepared food, so thus you get to pay yet another tax for the privilege of living in New York.  But taxes aren’t new – taxation spans recorded history – the earliest documents relating to accounting go back to at least 5,000 B.C.  I suspect taxation goes back even deeper into the past – there are tally sticks that go back at least 40,000 years, and I imagine that they were counting out taxes on profits from sales of knickers made out of baboon fur even then.

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Is it just me or does it look like the Egyptian accountants have huge Egyptian bongs?  Talk about creative accounting . . . 

As tribes wandered around in the distant past, the idea of supporting others within your tribe was probably pretty natural – these were your people, after all.  But as tribes grew bigger, and connections more tenuous, taxation started.  I think the idea of taxation came as soon as one man could count and see that another man had a little more than he did, was a little bit better of a hunter, a little bit better at fishing.

That man (or maybe his wife) then got other men and planted the idea of envy.  “Why Oog need three bearskins?  Me have only one, so Oog one percenter.  He am greedy for having thing Thag want.”  Thag went on to write the first tax regulation.  Humanity, I guess, has evil people who are filled with hatred that show up all throughout our history – we call them the IRS® now.

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Okay, sometimes I use colored pencils and also write quotations from Moby Dick. 

For all of that time, governments have taken taxation seriously.  Murder?  Arson?  Burning an elementary school?  Overthrowing the government of a small (really small) country for fun and profit?  All petty crimes when compared to cheating on taxes.  I think the current punishment for tax evasion includes snakes and having to share a cell with a Hollywood® C- list actress-mother who bought her kid into USC®, so I certainly don’t advocate that – I mean, snakes are not so bad, but Hollywood™ mothers?

So what can you do?

First, file your taxes.  TurboTax® makes it easy, sadly.  I wish that taxes were difficult to pay.  I wish that every person got paid weekly, in cash, and had to count off actual cash payments to an IRS© agent.  Or that there was no withholding so that people HAD to write a check every year for the full amount of taxes due and didn’t live with a fictitious “I got a refund – the government paid me” mindset.

Second, max out any things you can do that lower your tax burden.  401K’s are nice for that – they allow you to invest money (often in the stock market) before taxes are taken out so you make stock gains on the pre-tax dollars.  This puts your tax burden out into the future when you will need Depends® and a walker and worthless paper dollars will be used by barbarians for heat due to the new ice age due in 2028.  But at least you avoided taxes now.

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Actually the records are in an envelope under my camping gear in the basement in that back room.  I think.

Third, set yourself up as a corporation and have your employer hire the corporation to do your job and pay yourself minimum wage.  The rest of your salary can then be paid out in dividends to you, which are taxed at a lower amount and you can be just like Warren Buffet.  Really, Warren does just that, and then he complains that he pays a lower tax rate than his secretary, although there’s really nothing that would stop him from paying your taxes, or mine.  But he won’t because he’s busy having cheeseburgers in Margaritaville.  Oh.  Wrong Buffet.

Fourth, don’t make up your own currency to pay your taxes.  As cool as “Bi$onBuck$” sounds, unless you want three free meals a day for the next 33 to 60 months, you should probably not use ‘em to pay your taxes.

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Yes, I know they’re Euros, but don’t they look like Christmas wrapping paper?  Besides, all you can do with Euros is buy baguettes, bassinettes, marionettes and cigarettes in France.

Fifth, put off doing your taxes to the last minute.  It lowers your risk of audit, and, if you’re like me and have to send off a check most years, you can keep your money for just a few more weeks so you can roll on your bed in it.  Unfortunately the pennies stick to my butt, so be careful if I give you change.

Sixth, remember that John Wilder (me) is an Internet humorist and is not licensed to be a financial advisor or tax consultant or provide legal advice, because what would the fun be in that?

At Our Wits’ End Review Part The First:  Increasing Intelligence and Civilization

“Give the likes of Baldrick the vote and we’ll be back to cavorting druids, death by stoning and dung for dinner.” – Blackadder

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I love accurate historical dramas.

What happens when you find a set of ideas that might explain the world as we see it, that ties together dozens of topics you’ve written extensively about over the course of years?

You smile, even if it means civilization might be ending.  Heck, if civilization ends, no more mortgage!

Let me go back to the start.

I was listening to YouTube® on my way to work.  YouTube™ has some interesting algorithms that select your next video.  From time to time the videos presented have been horrific, but on this particular occasion, a gentleman was interviewing Dr. Edward Dutton about his new book At Our Wits’ End.  I enjoyed the interview so much I ordered the book that night, and have watched many of Dr. Dutton’s YouTube© videos as well since then – he’s named himself quite appropriately the “Jolly Heretic.”

I was not disappointed when At Our Wits’ End arrived and, in my first spoiler alert for the review, I heartily recommend the book without reservation.  Dr. Dutton wrote the book along with his colleague, Dr. Michael Woodley, and together they have put together an interesting and compelling scientific narrative.  I research many of my posts, and some research takes hours and has dozens of notecards of notes.  In this case, I typed my notes about the book – the notes alone are sitting right now at 1725 words.  We’ll see how many posts that ends up being:  I’m betting it will be two, and I’m certain that not all of my notes will be used.  I may end up posting the combined review when it’s complete as a separate page on the blog, along with the interview of Dr. Dutton that he was gracious enough to agree to.  I’ll be posting that interview after the review is complete – I think it will form an excellent post script.

Last week’s Monday post (I.Q. – uh- What is it good for? Absolutely Everything. Say it again.) was a warm up – it dealt with how I.Q. shapes the present.  In it, the relationship between I.Q. and national wealth is fairly obvious.  This week’s post deals with (to me) the more crucial and compelling question – what will the future of Western Civilization and humanity be?  This is the core of At Our Wits’ End.

But first, from page 108 of At Our Wits’ End:

One problem with science which many people find difficult to get their heads around, is that the aim of science is to understand the nature of the world and to present the simplest explanation, based on the evidence, for what is going on.  Science is not there to be reassuring, to make people feel good, or to help bond society together . . . . Those who call for suppression are, in effect, arguing that scientific pursuit is fine until it forces them to question the worldview that they hold for emotional reasons.  Once it does this it is ‘bad science’ or ‘a higher standard of proof should be demanded’ or ‘it is immoral’.

This is perhaps the quote that impacted me the most strongly from the book.  We live in a world filled with truths – and the most uncomfortable questions are perhaps the most important to ask.  We may not like the answers, but when dealing with reality we cannot make rational decisions without that knowledge.  In my personal life, the questions that I hate to ask myself are nearly always the most important ones.  Strangely, I also seem to know immediately the answers to those questions, at least when I have the courage to ask them.

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The first question posed by the book is a simple one:

What is intelligence?

As discussed previously in this blog, intelligence is the ability to solve complicated problems, generally with some speed.  For this review, I’ll use I.Q.  and intelligence as well as ‘g’ – the general intelligence factor – interchangeably.  Although these are all very different terms for a scientist studying the subject, for the purposes of this review I’ll mangle the language and call them all the same thing and use them more or less similarly.  It’s like calling a zebra a horse, but hopefully it excludes centaurs and giraffes and makes for clear reading for the lay reader.  Also, keep in mind that these are group numbers – we all know and can cite examples of individuals who don’t follow the group correlations we’ll discuss – the genius level smart dude who has bad body odor and lives in his parent’s basement.  The sort-of dim kid who developed a business and makes $350,000 a year.  They exist.  But they’re the exceptions, not the rule.

Intelligence has a most interesting property:  it’s inheritable – with a correlation of about 0.8, which is pretty high.  1.0 is perfect correlation, -1.0 is perfect negative correlation.  Educational attainment and economic status correlate with intelligence, as does salary – at about 0.3.  Other things that are correlated with intelligence include impulse control.  People with higher IQ are also more trusting.  On an individual level to predict a person’s performance you also have to have information about their personality, but on a group level I.Q. has significant predictive power.

It’s generally the dream of every first grade teacher that all of her students are equal.  But she knows that’s a lie.  Every student isn’t equal – some are much better at some tasks than others.  Some are much better at every task, and people who do well on one task generally do well on other tasks – intelligent brains just seem to have more bandwidth in general – it’s like they have an overclocked nervous system.  Again, this doesn’t mean that they’re more virtuous, simply that they have greater capabilities.

The average IQ also determines interests to some extent – the average IQ of someone who studies anthropology is lower than someone who studies physics.

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What are the properties of IQ?

  • IQ test scores fall out on a bell curve.
  • ~70% of the population has an IQ between 85 and 115.
  • 95% between of the population is between 70 and 130.
  • Intelligence is “polygenic” – lots of genes are involved in making a smart kid.

But certainly, John Wilder, intelligence means different things to different cultures?  In the very succinct commentary of Dutton and Woodley, “No it doesn’t.”  I realize that’s not an argument, it’s a refutation – I’ll let you read the book for details.  Scientifically it appears that IQ is a valid concept across cultures.  It’s valid if the culture is literate.  It’s valid if the culture is non-Western.  IQ (or intelligence, or “g”) is potentially one of the most predictive and studied properties in social sciences, which tend to be a bit squishier and less science-y than, say, physics or chemistry, so give the social science folks a break that they found this gem.

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So can a civilization get smarter?

Yes.  If a trait can be passed on via sexual selection (like my butt), then it will be selected for.  But in, say, the year 1400 a great butt wasn’t as important as regular food.  If you look at the data as generated in the study Survival of the Richest (Gregory Clark) – as quoted by Dutton and Woodley, between 1400 A.D. and the mid-19th century, the top 50% had more surviving children than the poor 50% – nearly twice as many.  Since economic status is strongly correlated with I.Q., society became smarter each generation.

Brutal?  Yes.

Concerned with sexy butts?  Not at all.

Why would smarter people have more surviving children?  Less intelligent means less money.  That means less food, less heat.  That means the poor children are all weaker when the ice weasels (extinct since 1745) came.  There’s plenty of evidence for this, as Dutton and Woodley note:  the average height on the ship Mary Rose was 5’7” around the time Henry VIII lived.  Henry VIII was 6’3”.  Henry got better food.  He got better genes.

tudor

No, it was the genes, silly.

Henry wasn’t especially good at having children, but most of the nobles around that time were good at it – with or without their wives.  There is evidence that as many illegitimate children of nobles survived as legitimate children.  Most people have to work their whole lives to become a bastard, but like me, those lucky kids were born that way.  And some of them did okay – William the Conqueror was illegitimate and managed to invent the paperclip (I made that up) and invade England at the head of the Norman Conquest (I didn’t make that up).

According to the genealogical records I’ve seen, I’m related to William the Conqueror.  This would be an amazing story.  Except . . . I won’t polish my claim to the crown just yet and become known as John Wilder the Usurper©, Eater of PEZ® and Defender of the Remote Control™ anytime soon:  European society became one of constant trickle down – sons of nobility would have sons that were merchants who would have sons that were farmers who would have sons that worked on farms.  The poor fraction was replaced by the rich fraction over time.  The children of the wealthy replaced the poor in a silent way.

I don’t know the percentage, but I’ll bet a sizable chunk of England is, like me, related to William.

Genes for being wealthy, which is correlated with intelligence, spread throughout society.  This still doesn’t explain my sexy, sexy butt.  But there were further selection pressures in place:  2% of males were either executed or died in prison.  Presumably these were the worst 2%, so society was pruning itself.  But mobility worked both ways – people could move up the social strata as well based on their (generally I.Q. related) merits.

Also pruned were the children of unmarried women who didn’t have the position of mistress to someone higher up the social strata.  Unmarried mothers have an average I.Q. of 92 in the United States.  Childless or married women have an average I.Q. of 105.  Today children live via welfare, but back in 1741 (when one study in particular was done) moms would have abandoned them.   71% of these abandoned children in 1741 were dead by the age of 15 versus 40% in the population as a whole.  Presumably there would be even less child mortality in the upper incomes.

These selection pressures led to the gradual increase in intellect, culminating in what Dr. Dutton mentioned in one of his YouTube® videos as his estimated date for the smartest generation in recorded history – those born in and around 1750.

So, all is well, and humanity keeps going on an ever-smarter upward march of intelligence?

Spoiler alert!

No.  And Soylent Green® is people.

We’ll discuss that (the intelligence piece) in Part II of this here:  At Our Wits’ End Review Part II: I.Q. and the Fate of Civilization (Hint, It’s Idiocracy).

Meanwhile, go out and buy the book.  It’s good.

The Pros and Cons of Working for a Corporation (As Written on a REALLY Cynical Day)

“Could you tell me something about the Corporate Wars?” – Rollerball (1975)

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My CEO says this is the wave of the future for corporations, or at least he does when we go visit him at San Quentin.

“Dad, where should I go to work to make a fortune before I win a Nobel Prize®?”  The Boy actually said this to me when he was in fifth grade one day while just he and I were out driving.  I think that his expectations might be more in line with reality right now.  In his defense, by that time he had already made the equivalent of $2,500 by trading in Bitcoin and other crypto currency in his bedroom on the computer he had built when he was in fourth grade.  I had no idea that he’d set up a trading shop in his bedroom until Wired® showed up to do a profile on him.  Needless to say, his computer moved to the front room the next day.

Today, The Boy’s expectations are a bit more in keeping with what most adults consider reality.  He’s thinking about college and career.  The Boy is now contemplating a life of drudgery where he spends his time at a dull, faceless gray job working long hours so he can fulfill his obligations by existing only to pay bills until he dies.  Oh, wait.  I guess I misspelled, “looking to go out and conquer the world!”

revenues down

Seriously, who touches people at work besides strippers and Joe Biden?

The sad fact is, however, that most Americans nowadays work for mid or large-sized organizations of more than 100 employees.  What’s the definition of most?

70%+.

I guess that makes sense.  We live in an age that celebrates the collective, the large, the behemoth, and that’s just our sodas and underpants.  And working for a corporation/large organization has to be nice, right?  Of course it is.  Otherwise, just like vaping, all the cool kids wouldn’t be doing it.

Well, there are upsides:

  • Steady Paycheck: Large organizations have figured out how to get money.  Notice I didn’t say make money.  Some borrow it.  Some get suckers  A friend of mine once did a calculation on a large corporation – I think it was GM©.  At the point of his calculation, if you took all of the money invested in the company, and all of the profits the company had ever seen and subtracted the investments from the profit, GMâ„¢ had lost money over its 100 year plus history.  But the check cashes every payday, so what is there to complain about?
  • Benefits: In theory, a large organization can negotiate discounts that save the organization money while providing valuable health care to employees, but in practice it’s a choice between selling the kidney the didn’t operate on to pay the bill or Fred’s Medical School Discount Surgery®.
  • Relative Disconnect Between Pay and Performance: So, why is this listed as an upside?  You have bad days.  Bad weeks.  Bad months.  So blame it on the business cycle.  Or on some competitor.  Or on someone.  Certainly it wasn’t you.  Mostly, a boss will buy this as long as you didn’t take a pellet gun and shot customers/other employees in the butt as they walked by while spraying mosquito repellent in their eyes.  Heck, even if you did do that, blame it on Phil from Marketing.  Everybody knows Phil is crazy.
  • Autocratic Governance: Your boss may be horrific, but can you imagine how bad they would be if you had to elect them?  Can you imagine the campaigns?  Then Phil from Marketing would start a Political Action Committee . . . .
  • Specialization: This is a true upside.  It’s nice that large organizations offer positions where you can study and become a true expert on a narrow slice of the business to improve results through superior knowledge.  Thankfully, after you’ve done this you can train your replacements from India who work for wages paid in cardboard, broken furniture, and used dental floss.

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“I wonder if McDonald’s® is hiring,” wondered wonderful Karen wonderingly.

  • Increasing Rewards: The farther up the organizational ladder, a strange thing happens.  It’s mentioned above that pay gets decoupled from performance, but the higher you go, the more likely you get raises and huge bonuses if the business performs poorly.  You’d think that this would require more work, but it really doesn’t.  Please tell me the last time you took off in the middle of the day to smoke weed while you were on a podcast?  Yeah, looking at you, Elon.
  • Occasionally, Working With Great Teams For A Great Boss: By accident, you are occasionally thrown together with a likeable group of competent people with good hygiene who share common interests.  These people are dedicated to producing good results and in helping each other for both individual success and group success.  Please notify HR if this happens so the team can be broken up and reallocated through the business.

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Apple’s® 2024 business strategy.

But it’s not all wine and PEZ® coffee and bagels.  There are downsides to large organizations, too:

  • Politics/Egos: This is the biggest one.  You might be humming along, doing great work, and achieving great results.  Then your boss gets promoted and you get his replacement:  Politics Manâ„¢.  Politics Man© doesn’t care about what you do or how you do it or the results you get.  Politics Man®, in fact, won’t pay any attention at all, since his superpower has replaced normal logic with a finely tuned sense of how he looks that day to his boss and/or the CEO, along with his other power, to turn Perception to Reality.
  • Perception is Reality: I had one job where my boss may have been a biker who indicated that he paid a witness in a felony trial to “be out of state” on the court date.  I have no idea if he was telling the truth, but he was weird enough that we all thought that he actually lived in his office.  His particular brand of Business Fu (ancient New York martial art) was to convince everyone that he was blameless.  In one particular instance he decided to blame me.  Thankfully, I had a friend who heard about this and tipped me off.  I walked into his office and used Wilder Fu:  “You know, I’m glad you’re my boss, since if I look bad, you look bad and perception is reality.  I know you’ll take care of me.”  He switched from blaming me to blaming Phil from Marketing.

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That’s what we do at work, just draw random words and circle them.  It’s motivating.

  • Random Compensation: One year I saved the company $800,000 dollars – and not made up dollars, actual dollars.  Result?  A 2.13% raise.  One year I didn’t contribute a whole lot at all but looked great doing it.  20% bonus.
  • Increasing Rewards: If you’re getting the increasing rewards, they’re awesome.  If you’re working and read in the paper how the CEO is off to Monaco after buying a New York penthouse, maybe not so much.
  • Most Decisions Don’t Matter (Pareto): As I’ve discussed before (Pareto and the 80/20 Rule Explain Wealth) a small number of decisions you make are the most important ones.  It’s the same for a company.  Most decisions simply don’t matter if you get them right.  I’ve noticed that if I want to keep management busy, I’ll ask them what color they want something to be.  They’ll spend (nearly up to the CEO Level) hours and hours with meeting after meeting just to pick carpet color.  One time the president of a multi-billion dollar corporation had to pick who got what office at a facility located somewhere in BFE.  As an aside – The Boy heard me say “BFE” the other day and was greatly amused when he found out the definition.  You can Google it® (not safe for work).  I’ll wait.
  • No One Knows Which Decisions Matter: Which decisions are important?  You can’t really be 100% sure – the chain of events started by a typographical error on a McDonald’s® menu that led to Joseph Stalin’s clone destroying Europe in 1978 and the rest of humanity having to escape to another dimension where they never invented the virus that wiped the memory of everyone that with an IQ of less than 160 . . . oh, I’ve said too much.  Never mind.

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It was even sadder when they started fighting about who got to keep the trophy for “Nearly On Time To Work This Week, Tied For Sixth Place.”

  • Rules: Big organizations have rules.  Silly ones like having to show up on time.  Showering at least weekly.  Not flirting with the waitress.  Oh, wait, that’s not work, that’s home.  But big organizations do have rules, too, and they have to.  Why?  Because somebody always has to push the limits.  Every single rule in every company’s HR policy manual has a story behind it.  And every story has Phil from Marketing behind it.  Stupid Phil.
  • Weird Bosses That Got Promoted Beyond The Level of Sanity: See above.  This has happened often enough that I think that being a psychopath is a predictor of business success.  Oh, wait, it is? (LINK) That explains everything.

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My bad.

  • Depersonalizing: You can be replaced.  That’s really part of the strength of a corporation – everyone from the CEO to the accountants to Phil from Marketing can be replaced.  In most cases, unless the CEO is visionary (and most aren’t) you’ll never notice the difference.  Who else is part of this faceless collective?    And the system will put you into a gray box with gray computer and gray walls and a gray chair.  Why gray?  Because it goes with everything.
  • Nobody Really Cares: I’ve worked with hundreds of people during my career.  Outside of a few coworkers from decades past, I’ve lost touch with most of them.  It’s not just that I’m a jerk (I am) but also that people are busy with their jobs, their lives and the only intersection they have with you revolves around that 8AM to 5PM time slot.  They’re like people your mom paid to have come to your birthday party when you were five.  Or that porkchop she put around your neck so the dog would play with you.

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This wasn’t on my physics final.

  • Large Organization Jobs Only Prepare You To Work For Large Organizations: Let’s say you hit mid-career and decide you want to open up your own Sushi-Pizza chain called Samurai Luigi’s – it’s okay, I won’t tell anyone that your secret is serving the pizza raw, too.  Chances are you haven’t learned anything about business that’s useful beyond a small narrow window of “capital tax law related to manufacturing investment for Spork® production in Toledo, Ohio.”  See, corporations want you to be good at that.  But it won’t help with your garlic-salmon-tiramisu or knowing who to bribe to get the local building permit.

So, chances are you’ll be working for a large corporation, but that’s okay.  And to all of you soon-to-be graduates out there, look forward to a life of drudgery where you spends your time at a dull, faceless gray job working long hours so you can fulfill your obligations by existing only to pay bills until you die go out and conquer the world!”

Want Some Short Term Gain and Long Term Pain? Also, Malta.

“In 1539, the Knight Templars of Malta paid tribute to Charles V of Spain by sending him a Golden Falcon encrusted from beak to claw with rarest jewels.  But pirates seized the galley carrying this priceless token and the fate of the Maltese Falcon remains a mystery . . .” – The Maltese Falcon

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In Malta they don’t check your bags for guns, they check them with guns.

Sometimes advice that is good for a country is really bad for an individual.  I tried building my own navy once, and it was an abysmal failure, since I’ve never lived near water all the ships just sat on the gravel.  Thankfully it was still enough of a navy that France surrendered anyway.  So, memo to self:  don’t build a navy 1000 miles away from water unless you want to take Paris.

But why beat on France?  I’ve discovered that on this blog, it’s really okay to trash-talk the French because in the last year I’ve gotten more traffic from Malta than I have from France on an absolute basis.  On a per capita basis, Malta is ahead on visitor count of any place in the world.  The United States is second, but it’s gaining ground.  Malta, spread the word!

I digress because it’s late and I’m a bit punchy – so I’ll get back to the point.  One place where the advice for a country and the advice for an individual both make sense is when it comes to know-how.  Where does know-how come from?  Sweat.

I had a boss fairly early in my career (technically a grand-boss, i.e., my boss’s boss) who was fairly fond of saying, especially when assigning a task that would entail huge hours of overtime and personal sacrifice, “Think of it as short-term pain for long-term gain.”  He’d smile when he said it, but that didn’t make it better.

Being young and stupid, we grumbled about what he was saying:  “What does he know?  It’s always short-term pain.  We’ll never get to the long-term gain.”  This was exactly the type of short-sightedness you’d expect out of a kid.  And we were kids, really.  We also worked our butts off while we were in our twenties, and most people who started in that group did okay.  The short-term pain translated (finally) into long-term gain.

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Please donate to Malta so they can end this horrible poverty.

It’s that way for individuals.  Is it that way for countries, too?

Yes, absolutely.

When you do something productive, anything productive, you learn.  You learn as an individual.  You learn as a company.  You learn as a country.  If you do it right, it’s painful.  It’s hard.  It’s work.  It’s frustrating.  And when you finally win?  It’s exhilarating.

If you do a really, really, really good job?  You get rewarded, by trying to do it again.

And those results are consistent between an individual, a company, and a country.

Imagine a kid who was born wealthy.  Given tutors.  Given “help” getting into a good college.  Coasted in college.  Coasted in Daddy’s company.  Unless Daddy was very, very wealthy, the kid will ruin the company as he runs the company.  Why?  The kid never had to work, never had to learn.

The entire life of the child was built around pain-avoidance.

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Okay, I’ll admit, that water looks the complete opposite of painful.  I guess I wouldn’t learn anything there.

I’m not going to blame wealth – wealth is neither moral nor immoral.  I’ve known wealthy kids who were better people than I’ll ever be.  I’ve known wealthy kids who weren’t worth gum on the bottom of my sneaker.  But poverty is no virtue, either.  I’ve met horrible people who had no money.  And, again, I’ve met people who were dead broke that could qualify for sainthood.

Morality aside (for the moment) the one thing I know about effective people is that they know how to work hard.  They are driven.  Most of them, wealthy or not, were not spoiled.

Pain and sweat is good for companies, too.  It makes them shed employees, it makes them focus on the things they do that actually provide value to the customer.  Or they die.  And the death of inefficient companies is good – those resources can go to companies that can be efficient, can meet the needs of their customers, like PEZ®.

But the critical step is playing the game.  If iPhones® aren’t made in the United States, we simply won’t know how to make them.  Certainly someone knows how to make them, but it’s not Apple™.  I won’t argue that Apple© designed the phone, but there is a world of difference between designing a complex integrated electronic component and building it.  In building iPhones™, the Chinese have solved the technical details on how to implement that design and how to stack all the apps behind that sheet of glass so they don’t fall out.  I’m relatively certain (though I’m not in those meetings) that Chinese teams from the manufacturer meet regularly with the Apple™ teams on design.  The Chinese teams tell Apple® most of what Apple© wants to know, but the Chinese teams learn:

  • Global logistics
  • Effective employee training
  • What stock options are
  • Management of complex system integration
  • Where the best restaurants are in Palo Alto
  • Quality control

All of that’s pretty good, but they also develop the teams on ground – the engineering know-how to solve the production problems that invariably start.  You might have a complete set of drawings of a baby, but you certainly don’t know how to build one from start to finish.  Nobody does.

Oh, wait.  You probably do.  Okay, pretend the baby is a 1966 Mustang™.  That you don’t know how to build from start to finish.  You have to go all the way from smelting iron to figuring out how to put numbers on the AM radio dial.

That’s (one of) the problems that we have getting into space nowadays.  We forgot how to build the Apollo stuff.  Certainly we know, for instance, what chemicals went into the heat shield on the Apollo command module, but we had to figure out how to build one in 2018 – the engineers who did it in the first place are all retired.  My bet is that they didn’t figure out how to build it the way they did in the 1960’s – they probably figured out a new solution.

M4

More fun facts:  If you stacked all of the current residents of Rome in the Pantheon, someone would arrest you, unless they were at the bottom of the stack.

This isn’t the first time we’ve lost technology.  The Romans used concrete to build many structures, including the largest un-reinforced concrete dome ever – at 142 feet in diameter.  How do we know this?  The dome still exists today – it’s in Rome, and it’s called the Pantheon, and like your mother, it’s almost 2,000 years old.  Yes it’s made of concrete, as in concrete just like your garage floor is made of.  But after the Goths came over for an extended visit, the Romans . . . forgot how to make it.  Consequently, concrete wasn’t “invented” again until 1824, and we weren’t that great with it until 1900 or so.  The Romans had a quality of concrete that was so good, it wasn’t until the last few decades that we were able to match it, and some of the properties we still can’t figure out.

We don’t have records on all the failures and sweat that the Romans had as they perfected their concrete, but they were good at it.

M5

This floor could break a LOT of plates.

But as the Romans learned, if you don’t make stuff anymore, you forget how to do it.  You specialize it, you ship it abroad.  The Romans didn’t have time for nasty old industries like making dinner plates, so they shipped it off to a lower labor cost area in what’s now France.  Archaeologists know this because when they sifted through the trash, they found these really nice plates.  But after Rome fell, trade fell off with France, and the factories closed because they didn’t have customers.  Archaeologists love plates because people break them on a periodic basis, and even more often if there are teenage boys in the house.  Thus, they go into the trash at a regular rate, and you can date the trash by the style of plate.

In the trash 100 years after the fall of the Empire (in the west), the plates were rough.  Even the most wealthy people ate off of plates that were inferior in every way to the plates common people had easy access to in the past.  The future didn’t get better, because the Romans forgot.

I worry sometimes that we’re the wealthy spoiled kid, shipping off our work to other people so that they learn how to do it while we ship them money that we’ve printed out of nothing, short-term gain for long-term pain.  But that’s okay.

Based on the recent protests in France, I think the French are planning something.  Maybe they’ll surrender to Malta?

Nah.  The Maltese are too good for the French.

Pantheon photo:  By Mohammad Reza Domiri Ganji – Own work, CC BY-SA 4.0, via wikimedia

Malta floor photo:  By Sudika [CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0)] via wikimedia

Pareto and the 80/20 Rule Explain Wealth

“Well, you know, 80% of all homeless rickshaw businesses fail within the first six months.” -Seinfeld

pareto

Pareto:  He was into economics before anyone else was, but it was only because it was ironic.

Vilfredo Pareto was born in France in 1848.  At birth he was given the name Fritz Wilfried but his parents changed it to Vilfredo after the realization that they weren’t German (really – this sounds like a goofy fact I would make up because it might be true, like Lutherans being secret space-vampires, but Vilfredo/Wilfried’s parents actually were kinda nuts).  Vilfredo died in Switzerland.  The logical conclusion?  He must have been Italian.  And he was.

Outside of his extensive collection of Abraham Lincoln-themed women’s undergarments, Pareto is best known to us for the Pareto Principle.  As the story goes, Pareto was in the midst of trying to figure out what laws governed the distribution of wealth, and had pulled together historical economic records from all around Italy.  Now, modern Italian record-keeping is on a par with modern Italian engineering – I mean, has anyone ever been able to keep the oil on the inside of an Italian engine?  But the story goes that while working on this economic problem, Pareto was messing around with the peas in his garden and noticed that 20% of the pea plants produced 80% of the peas.

I don’t believe that story for a second.  It’s a well-known fact that Italians explode like watermelons dropped from the Empire State Building if they are in the same room with a pea.  Don’t ask me about how I know what a watermelon dropped from the Empire State Building looks like – Homeland Security® still hasn’t figured out how the watermelons were smuggled up there.  I’m just saying, never go to Olive Garden™ on Fresh Green Pea Night.  It takes them a week to clean the place up from all of the exploding Italians.

olivegarden

The pea proportions that Pareto allegedly observed, that 80% of peas came from 20% of the plants, seemed to match up with his data in economics.  80% of the land in Italy was owned by 20% of the people.

Looking further, 80% of a business’s profit comes from 20% of its customers.  20% of the words in a language account for 80% of the words used.  80% of crime is caused by 20% of criminals.  80% of car accidents are caused by my Mother-In-Law.  Seriously, do NOT be around the woman when she puts the car into reverse.

The numbers aren’t exactly the same in every example but 70/25 or even 75/30 is close enough to prove the point.  80/20 is nice because the math is simple.  It also adds up to be 100, which is nice and makes the number taste better on the tongue, just like watermelon that has been pulverized by being dropped from a great height, even though there is absolutely no reason for the numbers to add up to 100.

To me, however, this proves the idea that the universe isn’t fair.  Talent isn’t equally distributed, and, when you toss in the idea of chance, the result is inequality.  And it’s a vast inequality:  the 80/20 rule holds for wealth.  But you have to dig deeper:  the top 20% that owns 80%?  The top 20% of the top 20% (that’s the top 4%) owns 80% of the 80% (that’s 64%).  So, the top 4% owns 64% of the wealth.  Going one more time:  the top 1% owns roughly 50%.  The real number for the amount of wealth owned by the top 1% is around 38%, so it’s pretty close for an approximation and the missing 12% is probably under a mattress at the Elon Musk’s house.  Pareto’s rule is alive and well in 2019.

math2

It also tells me that even though intelligence and other human attributes follow a bell curve, wealth does not – it grows geometrically.  An old story I use to illustrate this is:  If you have fifty people in a room and bring in the tallest person in the world, well, the average height in the room goes from 5’ 9” (16 meters) to 5’ 10” (30 centimeters).  But if you add Bill Gates to the room, the average person in the room is a billionaire, though your credit rating might not improve as much as you are expecting.  Our brains are used to dealing with that normal distribution, but are inadequate when dealing with these quantities that grow geometrically.  And I think the thing that fosters that geometric growth in today’s society is increasing returns.

When I was just starting at work after college I knew a little more about computers than the folks I was working with.  Just a little.  But because I knew just a little more, my coworkers would ask me questions if their computer broke or wasn’t working right.  I didn’t necessarily know the answers, but I was able to learn more because I (and another coworker) kept getting all the questions.  Pretty soon I knew lots of arcane stuff about how the computers worked and how the network worked.

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The point isn’t that I’m a computer wizard, or even an apprentice magician anymore.  I got better at computers because I had a tiny advantage over my coworkers.  Magnified by a couple of years?  Expertise.  But expertise has to be used to be kept, and I didn’t keep my computer mojo.  The Boy and Pugsley have me beaten (by far) at this point.  The point is clear, however:  increasing returns is the rule, rather than decreasing returns.  You get better the more you do, and those slight advantages, that slight edge in competence adds up.  You get better by solving those problems that exist around you – much better.  And you don’t have to be perfect – you just have to be a little better than anyone else.

That was the story of manufacturing in the United States.  There is a ton of knowledge in books about how to make things, but what’s not in the books is the everyday know-how that’s required to actually make the machines run.  The more manufacturing we did as a country, the better we were at it, and the more know-how we had accumulated.  In one story that amazes me still – the SR-71 Blackbird, the fastest manned, air-breathing aircraft that officially exists, was built from contract to flight in just over two years in the early 1960’s.  The X-15 was faster, and also built in the 1960’s but it’s not a fair comparison, since it’s essentially the same as flying a rocket.

sr71

Now?  Fighter development takes decades.  Sure, they’re more complicated, but it took eight years from contract to prototype, and a further fifteen years to be put into service.  I doubt we could make the SR-71 today in less than a decade, if even then.

I think that one of three things is happening:  the first possibility is that we’ve forgotten how to make great stuff quickly, which Pareto can easily explain.  The second possibility is that we’re stupider, which I’ll cover in a post within the next month.  The third is we’ve forgotten how to make stuff AND we’re stupider.  It’s like we’re sitting drooling drinking warm Coca-Cola® because we forgot the recipe to make ice.

You can wipe away the drool because the bright side is this:  most of the decisions that you make don’t impact you all that much.  Pareto is at work here, too.  20% of your decisions, actions, and habits account for 80% of where you are in wealth, health, and wisdom.  The nice thing is that you already know what habits are good or bad, which ones take you away from your goals, and which ones help you.

The best part?  You don’t have crazy Italian parents who can’t decide what your name should be.

Kardashians, Hairy Bikinis, Elvis, Wealth, and Virtue

“Kim Kardashian is so sexy, her butt is like a big mountain of pudding.” – South Park

kardwolf

I hear the only way they can be avoided is if you don’t have any money.

This is the last of the series of three posts about virtue, at least for now.  The other two are linked near the bottom.

If you look at rich people, you can see fairly rapidly that being wealthy isn’t a sign of a virtuous life.  There are no shortages of bimbos in Hollywood® who get famous by “leaking” a sex tape to get famous, in fact it’s odd now to have a famous person who doesn’t have a series of sex tapes, although if you take my advice you’ll skip the Ruth Bader Ginsburg tape.

This unearned fame is perplexing to me.  It seems to be that to progress as a celebrity you should have done as little as possible to help mankind.  The entire idea that people willingly give money to the Kardashian family makes me vaguely ill, or maybe that’s just thinking of the Kardashians in general.  The Kardashians look like a species that’s closely related to humanity, but just far enough apart from us that mating with them would be illegal in almost every state, except maybe California.

Come to think of it, they do live in California.  Hmmm.

naturalkardashian

A Kardashian in its natural state.  I believe they have insurance against Velcro.

As I’ve mentioned before, Epictetus (a dead Stoic Greek philosopher dude) felt that wealth was neither virtue nor vice in and of itself.  The Stoics certainly thought that preferring wealth was okay, but getting all bent out of shape about it (or about anything) wasn’t.  But, Kardashians aside, are there virtues that are associated with getting wealthy?

I looked and found (LINK) a study of traits were found to be present more in high earners than “average” earners.  They were:

  • High earning people don’t hate or worship money – they don’t avoid wealth nor place too much importance on money. Of course, when you’re pulling down $400,000 a year, a few extra bucks for a giant-sized plutonium-plated Elvis™ PEZ® dispenser doesn’t even get your attention.  However, if you’re making $14,000 a year, counting the grains of rice in a box of Rice-a-Roni® (The San Francisco Treat™!) makes sense to make sure that the Dollar Store© isn’t cheating you again.

elpezvis

All hail Elpezvis!  And thanks to Karl for this wonderful photo!

  • Not fans of luck. The psychological name for this was “internal locus of control.”  Yeah, sounds like part of the navigation system on the U.S.S. Enterprise.  In human-speak, it means whether or not they felt they were lucky (or unlucky) or their situation in life was due to their hard work and effort.  My bet is if you ask any really successful person this question that they’ll give that answer – but I’m also aware that MANY people work even harder than the average CEO, putting in more hours doing harder, messier, more thankless work.
  • Rich people wanted to be wealthy and put more value on it than average income people. Part of this might have been related to average income people rationalizing – I know that I put less importance on hair now that it’s left my scalp like Guatemalans leaving Guatemala because it’s Guatemala.  I wonder what my hair had against my scalp?  Could I build a wall to keep it from migrating down my back?
  • Had more “financial knowledge” – this was self-reported – they didn’t give them a test.
  • Workaholics had more wealth, which doesn’t surprise me, and high-earners were “enablers” – loaning money to deadbeat relatives. I’m guessing this is a function of “not trying to borrow money from people who don’t have it.”

The only virtuous bit I could find in all of that (and I had to stretch to do it) was that the rich seem to develop an indifference to money when they have some.  It’s like an indifference to pizza after you’ve had enough lasagna to stuff Sardinia, however.  Sure, it’s virtuous, but only just barely.

What I didn’t see on the list was conscientiousness, or faithfulness, or discipline or even self-control.  True virtues seemed to be missing.  I guess I have to deal with facts:  jerks get rich.  Unscrupulous people get rich, nepotists get rich (a lot!).  CEOs trade in wives like used Yugos®, and CEOs move from company to company the way I move from room to room in my house.

yugocap

Ahhh, all the luxury of communist Eastern Europe combined with the reliability of an Italian car.  How could it lose?

Do I hate wealth?  I absolutely do not.  Do I hate the wealthy?  Not a chance, some of them are awesome.  Do I think that churches preaching “prosperity gospel” are helping Christianity?  Probably not.  I’m pretty sure that God wants your faith more than he wants you to have a Mercedes-Benz®, even if all your friends do drive Porsches©.

But wealth is fleeting.  Companies fail over time.  Sears™ used to dominate multiple fields – appliances, tools, insurance, even their own credit card.  Now they’re tottering on the edge of bankruptcy.  And that serves a purpose, just like the death of an individual.  The economy must be cleansed over time, or else it becomes, well, sick.

Stealing from Eaton Rapids Joe (LINK) where he compares the economy to a salmon stream:

At one time it was commonly believed that dams would benefit salmon spawning.  It was believed that regulating the flow so that it was constant would be most beneficial.

The unintended consequence was that the constant stream cut a deep and narrow channel, just like a band saw.

The narrow channels intercepted very little sunlight…the driver of nearly all life on the planet.  The channel was devoid of pools and riffles, gravel beds of various coarseness, rocks to break the current and beds of seaweed.  They were a desert for salmon fry.

His blog is excellent, and you should visit it daily (LINK).

But like that salmon stream, when we seek to get wealth without virtue, have a country without virtue (Roman Virtues and Western Civilization, Complete with Monty Python) or even attempt to become immortal (Books, Stoics, Immortality (Now Available on Stick)) we condemn ourselves to a world where hairy near-human Kardashians are free to wander without fear of a razor.

And that is a world no man wants to live in.

bradgelina

It’s . . . spreading!

Limits to Growth and Exponential Feminists

“Look, man, do I look like an ichthyologist to you?  Big damn bugs, all right?  The size of my fist.  The size of a peanut butter and banana sandwich.  What do I know?  I got a growth. . . .” – Bubba Ho Tep

growth2

Zombies or Mad Max®. 

When my older brother, also (really) named John Wilder, (my parents didn’t want to have to call two names when they called us for dinner) came back from college one year, he brought back a large number of textbooks.  Most of the books were exceedingly dull, written by exceedingly dull college professors about business.  I’m not sure what a college professor would know about business, since if they were any good at business they’d have one, not teach it.  Honestly, I have no idea why you’d want to get a college degree in “business” at all, unless it was because you like spending $20,000 a year to drink beer and go rock climbing with college girls wearing skimpy outfits . . .

Oh, that’s why you get a degree in business and take six years to get it.  Never mind.

But one of my brother’s textbooks caught my eye, a copy of Limits to Growth.  It was a dog-eared paperback with a bright yellow sticker on matte black background proclaiming it, “USED.”  Knowing my brother’s interest in subjects like economics and the fate of society, the only way that particular textbook was USED was as a doorstop or beer coaster.  I’m surprised that Limits to Growth was being used as a textbook, since my brother was going to school at a community college on a competitive mixed doubles checkers scholarship, and actually teaching something to a student athlete at a community college can cause the college to lose its accreditation, I’ve been told.

Limits to Growth was a book based on a computer model back when a 2006 Blackberry® had ten times as much computing power as a the computer they used.  The study came out in 1972, when, for whatever reason, the entire world mood started to get gloomy.  Here is a book cover from a novel published that same year:

cover

Yes, Ma Wilder bought this for me (at my insistence) when I was about 12.  It was a little gloomier than Harry Potter® or Captain Underpants™.

This particular computer model used by the authors was one that purported to take a bunch of inputs and determine future economic growth and population.  Because computers are magic, I guess.

Spoiler alert!  The results were not good.

graph1

Well, this is one solution for overpopulation . . .

You can fiddle with the model yourself over here (LINK).  I played with it a few times and, like an amateur knitter gladiating against Spartacus at the Coliseum™ on Ladies Night (two for one Buffalo wings!) I kept losing.  I guess my inability to make the computer model turn out well means billions of you are going to have to die and civilization will collapse.  Sorry.  Bright side?  Buffalo wings.

The one fault I have with the model is that most of the “solutions” that drive longer human civilization timelines or stability involve state control and a general shared misery of technological standstill.  Oh, and almost all of the solutions had to be implemented back in 1972 for them to be useful.

The cure was to stop economic progress, to live in a world that’s much like Cuba – stuck in the 1950’s with oppressive government limiting actions of individuals, up to and including mandatory beards and licensing of new children.  I say “was” because, in the terms of the authors of the original study, it’s too late now to avoid a population growing beyond the capacity of the Earth to provide for it (overshoot) which inevitably leads to a collapse in population.

Normally I am skeptical of model runs.  Reality has a way of pointing out all of the things we really don’t know when we place too much faith in models.  And yet . . . exponential growth is, well, exponential.  Let me illustrate with a story you’ve probably heard before:

sjw

You can smell the cats through the computer monitor.

If your town has angry feminists with unnaturally-colored hair in it, and they double in number every day, and you know on day 30 that the town will be overrun with feminists, how many much of the town will be overrun on day 29?

Half.  I won’t mansplain that.  But on day 28, only a quarter of the town will smell like cat-loving harpy.  On day 27, only 12.5%.

Oops.  I guess I mansplained that.  But the human brain is not wired out of the box to understand exponentials.  Thousands of years have taught us that people don’t double in height during a day, that the number of villagers don’t double in a month.  But after we study it long enough, we realize the power of exponential growth.  If the number of pageviews on this blog increased like they did on a consistent basis, by the year 2026 I’ll have almost 22 billion pageviews a day.  Heck, some blogs go a whole year and don’t get that many pageviews.

Okay, that really won’t happen.  I’d be lucky to have everyone on Earth visit just once a day.

We’ve been stuck with the exponential growth of humanity.  Al Bartlett (R.I.P.) was a professor of physics at the University of Colorado who lectured a lot about exponential growth.  His website remains up here (LINK).  His conclusion is that, given finite resources, infinite growth isn’t possible.  A guy named Thomas Malthus came to that same conclusion in 1798, but his website was on Myspace® and is down now.

Malthus has been for now, wrong, with respect to Western Civilization.  Technological progress has increased the carrying capacity of Earth and (generally) increased the standard of living of the vast majority when compared to 1798.  At least for now.  As we look at civilizations in the past, from the Romans to the Mayans to Easter Island (and others), all collapsed due to unchecked growth.

So, maybe Bartlett, Malthus, and the Club of Rome will win in the end.  But until then, I guess 20 year olds will spend six years getting business degrees for the beer and the babes.  Might as well enjoy the decline . . . .

What Hockey Taught Me About My Life and My Career (Bonus: Broadswords)

“This is hockey, OK? It’s not rocket surgery.” – Mystery, Alaska

goal

“You da goalie, not Yoda® goalie.”  I have to get my hearing checked.

When I was in middle school, one week we played hockey for P.E.  Where I grew up it was certainly cold enough for water to freeze – but we didn’t have any water, it being nearly a desert and all.  A typical backyard mud puddle in Midwestia is bigger than things we called “lakes” growing up, and you could wade across the local river at flood stage and not get your pants wet.  We did, however, have a gym and roller skates.

A group of uncoordinated seventh graders attempting to roller skate on a gym floor for the first time probably looked like a gaggle of hippos juggling wet sheepdogs.  I wouldn’t know exactly what we looked like, I was busy studying the wood grain of the floor by repeatedly falling onto the free throw line as my skates stubbornly refused to stay underneath me.  The nearly frictionless wheels kept twisting my legs at angles only experienced by crash test dummies, Thanksgiving turkeys, and a stoned Elon Musk.

Why were we so pathetic?

The nearest roller rink was 30 miles away, and what passed for concrete in town was concrete in concept only, with the newest patches of sidewalk having been put down personally by President Roosevelt as he raced Hitler in a sidewalk building contest to determine who had to have Italy on their side.  Anyway, what concrete existed in town was broken, jagged, and was used by NASA to simulate walking on the Moon because it was so rough and powdery.  If we wanted to skate that left skating in actual dirt, because skating on the highway was illegal in every state in the nation until Virginia just recently legalized 30th trimester abortions.

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I got to be team captain, and no one really argued when I picked goalie as my position.  In two teams of horrible skaters, I was the worst.  Being goalie didn’t require much skating, just being quick and a lot of intentional falling.  As I could fall unintentionally, intentional falling was even easier.  The puck was a hollow plastic disk that weighed next to nothing, and I was quick enough to stop nearly every shot.

It didn’t hurt my goal-tending streak that this was the first time that any of us had ever played hockey and everyone was a horrible shot. I’m pretty sure that our P.E. instructor had only the vaguest idea of what the rules were since he informed us that in order to start the game we had to sacrifice the smallest and weakest player in the middle of the gym for the strength of the tribe while drinking Moosehead® beer.  Since we were underage, he drank all our beers for us.

We’ll all miss Benji.

As I grew older, there was a period of a few years where I watched actual NHL® professional hockey, until they just stopped showing it on any network I could find.  But watching hockey was different than watching other sports – in an average game the players are (at times) going 25-27 miles per hour, and the puck itself is often moving in excess of 100 miles per hour.  In the NFL®, the top receivers run about 20 miles per hour for short bursts, but average much less.

Because of the increased speed in hockey, minor differences in starting position resulted in big separations between players as they accelerated across the ice.  The importance of that separation is the same in all sports, but I really was able to see it when it came to hockey due to the faster speeds.  What’s really important is time and space.  With enough time and space, a hockey player can break away from the crowd and attack the goalie one on one.  With enough time and space, players can be where the action will be five seconds from now.

The same principle holds in football.  With enough time and space, a wide receiver can break away from the defense and score.  I think it holds true in soccer as well, but too often the players are just sitting on the field knitting and drinking brightly colored cocktails with whimsical umbrellas and chunks of fruit before they go shoe shopping.  I think soccer would be much more interesting if they gave the players broadswords with no real rules or guidance on how they are to be used in the game.

soccer

Now, imagine with swords.  See?  Better already.

But what happens in sports also happens in real life, minus my really cool broadsword idea.  The analogy of time and space is incredibly important to people who are trapped on mountains as the storm comes in, or the logistics in supporting an army in the field, or even the position of the individual units in a battle.  Put 5,000 men in the right place and the right time and almost any battle in history swaps winners.  Heck, 300 Spartans (plus 700 Thespians) changed the course of history and saved Western Civilization.  Tell me that Xerxes wouldn’t love to have that one back – lose to the Greeks just the one time and you never hear the end of it.

leonidas

If only they had compromised, imagine how we’d remember them.

To “maximize” your financial potential, you should use your time and space to be where the action is.  Sadly, for my career the right place is bigger cities – huge cities, with populations of millions of people.  A bigger city would be okay, but from what I’ve seen of cities, most of those millions of people I won’t like.  They just seem to be in the way when I try to drive on the congested roads.  Broadswords would be helpful here, too.  The city is filled with activities, though.  Activities that I really don’t want to do – except for nice restaurants and museums, and getting to a big city four or five times a year is necessary, mainly to remind me of all the reasons why I don’t want to move back to a big city.

Thankfully, though, I don’t need to maximize my financial potential – the mortgage that I pay here in Modern Mayberry is less than 27% of the cost for an apartment in San Francisco, and on a per square foot basis?  My cost is 5% (that’s not a misprint) of what I’d pay per square foot in ‘Frisco (the locals love it when you call it that, I hear).  That 5% number just includes house square footage, and doesn’t include the 10 acres the house is on.

With life, time is still time, and space is still space.  And during a career, money is space AND time.  If you only have enough money for this month, you have that much time.  If you have years of money saved up, you have that much time (and more).  Savings is opportunity.  Savings provides options – and those options expand your opportunities.  Enough money gives you time and space – time and space to try things, risky things that have higher rewards.  Or?  Give you time and space to just do what you want.

Which for me is not hockey.  I’ve seen enough gym floors, thank you.

But . . . hear me out . . . how about hockey with broadswords??

hockey

How I Got Into Debt, Trench Warfare, and an End of the World Cult You Can Believe In

“Well, if you don’t like that, try some Archduke Chocula.” – Futurama

franzmeme

After World War One, the phrase, “Happy as a Hapsburg in Serbia” fell out of favor, as did the “Hair Smile” style of mustache.

I’ve already told the story about digging out of debt.  In retrospect, it seems to me that all of those stories end up sounding the same:  “I weighed six hundred pounds, my kitchen floor was covered in dirty dishes and cat food, and I had $3.7 million in debt until I found Wildernetics© and the First Church of PEZology™.  Look at me now!”

flammen

Proof that I am a reincarnated World War One soldier (Part One).  These are from a soldier’s joke newspaper, The Wiper’s (a mangling of Ypres) Times, produced for soldiers by soldiers that found an abandoned printing press.

I know my methods can solve everything, but today I had a crazy idea.  How about spending some time talking about how I got into debt in the first place?  I know that might cut into the revenue of the Wildernetics© End of the World Cult and Take-Out BarBeQue Restaurant®, but I figure you might come back for the brisket.  It’s very tender.

I’ll quit teasing.  How did I get into debt?  First a little.  Then all at once.

Let me rewind a whole marriage.  As regular readers will know, The Mrs. was not the first, but she is the final spouse.  My first marriage was an example of a series of escalating poor mutual decisions where each side seemed to lack a brief moment of sanity to back out before anyone got hurt, sort of like the run up to World War I.  Even before Archduke Franz Ferdinand proved that .380 ACP was a useful round against Hapsburgs and their notably gelatinous bones, World War I was inevitable.  Before I said “I do” everything was in place for the trench warfare of future divorce.

ditch

Okay, I apologize for this joke.  I think it violated the Geneva Convention.

But, rewinding.  After graduating college I got married and got a starter job, which is to say I had a job that just barely paid the bills.  Nearly exactly.  In fact, after working at the job for a few months, we were exactly (most months) at zero.  We weren’t saving any money yet, but we also weren’t in the red.  Success.  My credit card limit was 10,000 . . . Siberian Lira.   This was equivalent to a whole bright and shiny quarter.  This helped me stay debt free.

Then came the table.

optimism

Proof that I am a reincarnated World War One soldier (Part Two), this one is for James.

We had a dining room table.  It wasn’t great, and the chairs that came with it were a bit ratty – the vinyl arms had been slammed into the table often enough that it looked like a pack of rabid Chihuahuas had spent their lives sitting on the chair seats and gnawing on the arms.  I imagine them growling and chewing in unison as they sat around the table, like Viking Chihuahua rowers.  Most all of our furniture was second hand or gifted, but the table really was the biggest eyesore.

unread

Okay, this one isn’t mine, but I couldn’t resist.

At some point discipline broke.  I know how silly it sounds to say that now, but back then, month after month of not buying anything but actual necessities takes more discipline than Elizabeth Warren around a tribal gathering.  Eventually I gave in.  We bought the table.  Using debt.  Back then, individual stores would give you amazing credit limits just to buy their crap.  They gave us more than enough credit to buy that table, and with the money I saved from shipping the Chihuahuas back to Denmark, I figured we’d be money ahead.

fireworks

Proof that I am a reincarnated World War One soldier (Part Three).

The table was only $500, but the difference between having no debt (outside of a mortgage) and having debt, even a small one, was a huge psychological hurdle for me.  It’s like having a doughnut when you’re doing low carb.  “I got weak had one doughnut, so I might as well have, say, 36.  And do you have any whipped cream I could just guzzle straight from the can?  I broke my diet, and don’t want to waste it.”  Pretty soon other nice to have things showed up, very few of which I still own today.  But I had crossed that mental barrier from peace (debt free) to war (spend away!).  Suddenly, the credit card companies realized I had debt, and immediately wanted to lend me more money.  My credit limits tripled.

I hope that this doesn’t sound like I’m blaming The Ex.  Like Adam in the Garden of Eden, I was fully complicit.  Ultimately the debt grew faster than my wages.  This led to the idea of grad school:  I could get free tuition plus be a paid graduate assistant.  Would it work?

Sure.  There were also student loans.  Free money!  Oops.

bellgas

Okay, let’s all admit that Nachos Bellgrande® is NOT a war crime.

gas

Proof that I am a reincarnated World War One soldier (Part Four).

There were some places along the way that I could have gotten off the merry-go-round.  When I sold that first house to move for a new, post-grad school job, we’d made a stunning 40% profit in three years.  It would have more than paid off a good chunk of my student loans.  Nope, that would have made too much sense.  We did pay down a little debt and bought a new house, putting down the minimum down payment.

But most of the money was just spent.  About this time I also had one of the worst ideas I’d ever had in my life.  The Ex and I were always arguing about money, and about the thermostat – I knew that 50°F in winter and 90°F in summer were reasonable temperatures, but The Ex disagreed.  Well, if she had to pay the bills, she would certainly understand how tight money was.  Right?

No.

We had a different view of not only household temperature, but the idea that one should pay monthly bills, well, monthly.  I didn’t figure this out for three years, by which time I owed enough money to qualify as a third world country, but one of the nice, mainly atrocity-free ones.  Mainly.

mgmeme

Taco Bell® inspired outfits?

Debt is like George Washington’s description of fire, it’s an amazing tool, but a fearful master.  My advice is to pay all of your bills in full, monthly.  I know that the people who own your debt disagree.  Why?  They want you to have debt, as much as you can pay.

I had a friend (since passed away in an accident) who I called Batman© on this blog (“I’m Batman,” – Batman, in Batman).  He had one particular investment that was worth about $12 million – a series of apartments.  He had paid the apartments off before they were even built by selling future property tax credits to other businesses.  Yeah, that kind of friend.

But he viewed his tenants as slaves (his term), who went to work daily so they could send him money every week.  I heard him use exactly that phrase to describe them.  He liked his tenants, and was a good landlord.  However, he knew the score:  when they went to work each day, they went to work so they could pay him.

And Batman was a good guy and he taught kids that debt was a form of slavery of ordinary people to wealthy guys just like him, not that they always listened.

My marriage to The Ex?  That particular marriage is proof of the old Henny Youngman joke:

“Why are divorces expensive?”

“They’re worth it.”

peaceinourmeme

Yeah, divorce just STARTS the argument.

The day she moved out was one of the happiest days for both of us.

I was still digging myself out of debt when I met The Mrs.  As our relationship blossomed, I thought it was only fair to tell her of the debt that I had.

“The Soon To Be The Mrs., I have something to tell you.  You might want to sit down.”

The Soon To Be The Mrs. looked shaken.  She sat.  I told her about my debt.  She laughed.

“Is that all?  I thought you were going to tell me you’d been in prison.”

No, not prison.  But I still owe reparations payments to France.

Economics, Thermodynamics, A Bikini, and the Future

“It’s a little known law of thermodynamics:  the conservation of optimism – there’s only so much to go around.” – Andromeda

energykelvin

Okay, zero Kelvin is absolute zero.  Thus, Kelvin is really the coolest name ever.

Economics is often called the dismal science.  I’m sure that’s because economists look in a mirror, and are upset to see that the supply of economists is greatly in excess of the demand for them as dating partners.  Thus, economists have their Saturday night open for Hot Pockets®, box wine and the Internet.  See?  Dismal.  But if economics is dismal, thermodynamics will make you want to cut your wrists.  Yeah.  It’s worse than Hot Pockets™.

We know economics is defined as lying about the economy.  But I hear you asking:  “What the heck is thermodynamics and why are you ruining a perfectly good Wednesday morning by bringing this up?”

Let me explain.

Much like a three year old with a metal fork and an outlet, thermodynamics is the study of how energy flows.  The father of thermodynamics was a Scot named William Thomson, or Lord Kelvin if you’re nasty.  Proving once again that the British Empire was awesome for smart people, Lord Kelvin got rich and famous by being a total stud at physics and engineering.  He even had a yacht that he tooled around the Mediterranean on and held massive seagoing parties – sort of like Mark Cuban, but smart and with a Scottish accent.  Think Bill Gates with an artificial personality implant.  Lord Kelvin even had unit of temperature, the kelvin, named after him.  Top that, Elon Musk.

Lord Kelvin was the first to understand the fundamental and disturbing implications of the physics he was discovering.  Energy moves from a highly organized state to a poorly organized state.  A piece of firewood or a gallon of gas or a PEZ® is concentrated energy.  Once it is combusted and the energy extracted, what’s left becomes diffuse, the molecules mostly turned into CO2 and H20 that are mixed into the rest of the atmosphere.  You can never form that firewood or gasoline or PEZ© again – it’s a one way trip.

This is significant.  Kelvin discovered that the Universe as a whole is like a pizza after delivery:  it moves from a hot, high energy state on Saturday night towards a chaotic, cold, low energy state on Sunday morning.

But wait, what about oil the gasoline was made from?  Doesn’t the formation of oil violate this?  It went from icky goo and dinosaur bones into energy dense crude oil, right?  That’s energy from nothing!

No.

Every drop of oil, every piece of firewood, and all the sweet PEZ© on this planet came from the input of thermonuclear energy – the Sun.  Every time you use a gallon of gasoline in your car or a cubic foot of natural gas in your home heater, you’re burning millions of years of concentrated sunlight, which really ought to be a lyric in a pop song.  Our Earth isn’t a closed system – it is bathed in the life-giving thermonuclear radiation every day from the Sun.

energybikini

Tans are so sexy when I put it that way.

Outside of suntans for girls wearing bikinis, sunlight is a very weak energy source.  It took millions of years to make your gasoline.  Gasoline burns in a car engine at 500°F, and gallon of gasoline can move a modern car for 40 or 50 miles.  It would take (at minimum, under the best conditions) a one square yard solar panel 60 days to produce the equivalent amount of energy as one gallon of gasoline.  Add in storage losses and real weather conditions?  It might take a year.  Solar energy is weak and diffuse or else bikini girls would turn into piles of ash after a day lounging in the Sun.  Gasoline is awesome and full of energy and great for your skin.  I soak my hands in it while I drive, you know, for the ladies.

bikiniafter

Okay, this is a picture of a really hot girl.

I thought you mentioned economists?

Oh, yeah.  People confuse economic viability with thermodynamic viability.  In economics, the idea is that you can’t continually produce something that’s worthless, unless you’re the government.  If you’re the government, producing worthless things is your whole plan.  But any business that did this would be bankrupt faster than a whimsical elf buying reefer.  Economists have even developed a worse idea than that:  Modern Monetary Theory (The Worst Economic Idea Since Socialism, Explained Using Bikini Girl Graphs).  Modern Monetary Theory is the equivalent of the government burning your country’s factories for lighting so you can make more fidget spinners at night, so of course certain people in Congress love Modern Monetary Theory.  It’s making infinite money from nothing!

Even without dim Congressmen, economics still fails when it comes to energy, because economics neglects the physics of energy.  An economist would say that if oil were $200 a barrel, why, there wouldn’t be a problem because while we’re running out of barrels of oil we can make at $10, there are LOTS of barrels of oil that we can pump if oil costs $200.

Sure.  If only everything about oil was measured in the price of a barrel of oil.  What economists miss is that producing energy takes energy.  In 1920, each barrel of oil produced between 20 and 50 barrels of oil.  We found and used the easiest oil first – we didn’t start off drilling in three miles of ocean.  No.  We went to Texas where oil was 10’ underground and you could pull it out in seemingly limitless quantities because it would jump into your truck like an obedient basset hound if you left the doors open.  We didn’t frack horizontal wells with thousands of pounds of pressure and special chemicals.  Why would we?  In Pennsylvania and California it was seeping into the rivers.  Natural gas?  What a nuisance.  Burn it at the well to get rid of it.  They originally tried to smoke the natural gas in California, but they couldn’t figure out how to get it in a bong.

Fracking has been one of the bright spots in oil production – millions of barrels of fracked oil are produced daily in the United States, so it’s good?  Well, maybe not.  Each barrel of oil invested in fracking produces, at most, five barrels of oil.

Five to one, that’s awesome, right?

Well, no.  That fracked oil is from the best portions of the shale.  Just like we didn’t start off drilling in the frozen tundra of the Arctic Circle in 1850, we didn’t start off with the hardest fracked oil.  It won’t get too much better, and if recovery technology improves, maybe we can stay the same.  Rune Likvern was the first (that I can find) to use the analogy of the Red Queen from Alice in Wonderland as applied to the energy problems we face (LINK).

“Well, in our country,” said Alice, still panting a little, “you’d generally get to somewhere else—if you run very fast for a long time, as we’ve been doing.”

“A slow sort of country!” said the Queen. “Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!”

I’ll note that Likvern was quite wrong in that he felt the Bakken wouldn’t produce more than about 0.7 million barrels per day.  It’s producing in excess of 1.2 million barrels a day now, and I don’t doubt that it will produce even more.  Pipelines from the area clearly lower the cost of energy production, so the Bakken will continue to produce, at least for now.

energyjet

But at least you can make cool jet noises and pretend, right?

Our civilization is built on energy, and the more energy it takes to produce energy, the more of our economy that will be devoted to it, we’ll be like the Red Queen and Alice, running faster and faster just to keep in place.  Sooner or later you end up with the absurd situation where everybody has to be working to get the energy, all the time, and then who would give out free samples of aerosol “cheeze” at Costco™?  Don’t kid yourself – energy is that important to the society we currently have structured.  We don’t get fresh fruit in winter, daily commuting to the ‘burbs, climbing walls at colleges, pensions, Brady Bunch© re-runs, and all that health care without consuming a LOT of energy.

“But John,” you say, “certainly biofuels like ethanol and biodiesel and hemp-powered hippy busses will save us.”

It looks like (according to a lot of data) that corn ethanol and biodiesel actually consume more energy to make and transport than they provide.  These fuels have a return of less than one.  Why on Earth would we do that?  It’s like eating your own foot because you’re looking for a snack, which is actually a quote by The Mrs. when I was explaining this topic in the hot tub.  Well, farmers vote.  And why would The Mrs. suggest that we start with a foot?  I bet feet are all stringy, and not nearly as good as spleen.

If ethanol is so bad for the economy why would people make it, I mean, besides for drinking?  Because it’s mandated to use a certain quantity of ethanol each year in gasoline because farmers who vote like to sell corn.  That’s it.  And if it’s mandated, you can make a profit at it, even as you waste energy that could be used to make PEZ® instead.

Thermodynamics is a tough master – you can’t win, and you can’t even break even.  But at least there are Hot Pockets© and box wine . . . .

This is the first post in an occasional series about energy.