Dec 182017
 

One of the criticisms of the currently proposed GOP Tax Cut bill is that it will reduce tax revenue and so increase the national debt. As a friend put it recently, “I’m against this bill because it will place an unfair burden on my grandchildren.”

(Let’s put side the observation that, if anyone was really worried about the national debt they should have said something nine years –and 10 trillion dollars in debt– ago.)

But the fact is that debt arising from tax cuts is very different from debt arising from government spending. And a close observation shows that the proposed tax bill will not increase the burden on future generations.

Tax Cuts and Debt: It’s a Wash

While the actual increase in debt resulting from the tax bill a matter of debate, let’s for the sake of argument use the often-bandied figure of a $1.5 trillion increase in debt. While this certainly seems like a substantial number, keep in mind that the $1.5 trillion will not just disappear – it will remain in the pockets of US taxpayers, who will be paying lower taxes, and will increase their wealth accordingly. So any increase in the national debt will, by definition, be offset by an equal increase in private wealth created by the tax cuts themselves.

To get back to my friend’s argument, the taxpayer will not be burdening his grandchildren, because the $1.5 trillion government debt burden will be offset by $1.5 trillion in increased private savings and wealth. It’s a wash.

But Debt from Government Deficits is Different

So while any deficit from the tax cut will be offset by tax savings to citizens, the deficits arising from excess government spending are very different. The Obama era saw a huge increase in government spending that added an incremental $10 trillion in government debt. That $10 trillion in debt truly is a burden to future generations, as there is no offsetting wealth granted to the taxpayers.

Who is the best fiduciary?

Now to be fair one might argue that deficit spending can provide a benefit – after all, government spending is not necessarily 100% wasteful. That $10 trillion might have gone into infrastructure, or defense, or other needed allocations that could benefit future generations. However it’s also very possible that much of this was wasted, spent on needless regulations, or salary increases for government workers who turn around and plow it back into blowing up the Washington DC housing bubble.

But the $10 trillion is definitely a burden to future taxpayers, and there is no offsetting increase in personal wealth accruing to citizens. So the only benefit is the residual value of that $10 trillion in government spending – if you can figure out where it went.

So perhaps the real question should be: Who is the best fiduciary for that $1.5 trillion? The Federal Government? Or your own bank account? I’ll leave you to decide…

 Posted by at 1:49 pm
Apr 122016
 

My wife and I were in Japan Town in LA and decided to buy one of those waving cats that the Japanese put in their stores for good luck (sales in my online store were down a bit, and my Chinese wife can be a bit superstitious). We bought a plastic one from China that is battery operated and has a waving hand. It was so cheaply made that there’s no on-off switch, you have to pull out the batteries to stop it.

I set it up in my study and started it waving. It made a little clicking noise, which my wife addressed by putting a paper under it. It might have been my imagination, or coincidence, but sales did start to improve when it was on, and especially when I was sitting in the study with the cat waving. The days after I set it up sales tripled from their previous low.

I occasionally heard my wife yelling or making banging noises during this time, which she sometimes does to scare away crows. After a few days she came in and took away the cat, apologizing and saying that ever since we got it there had been strange noises in the house, which never happened before. She was afraid the cat might be haunted.

She put it back in its box and left the room. We went out later that night and returned to find the cat lying on the front steps of our house – apparently she threw it out the front door to get it out of the house. She picked it up and put it in the garbage can.

Garbage pickup is today, so that’s the end of the cat. I assume there have been no more noises, I’m almost afraid to ask…

 Posted by at 10:59 am
Mar 162016
 

Jeffrey Goldberg was on Charlie Rose talking about his exhaustive interview with Obama for the Atlantic regarding the “Obama Doctrine”, Obama’s foreign policy legacy. Goldberg started by staring that Obama has had a recent “string of successes” and citing the Iran deal, the Paris Climate Change pact, the opening of Cuba and TPP as his notable accomplishments. He seemed unaware that others are citing these same deals as failures.

The discussion was typically Charlie Rose wonkish stuff, going into arcane detail and name-dropping in various corners of the world, mostly the Middle East. Goldberg was deeply convinced that Obama is a very smart guy with a real command of the details.

However, Foreign Policy has two aspects: (1) Expertise and (2) Presence. Expertise is the ability to grasp the facts and implications of a given situation, and to use those facts to come to a logical conclusion of action. The problem with this approach is that people do not always act logically, nor do they respond properly to reasoned arguments.

Presence is the ability of a foreign policy actor, and particularly a powerful one like a US President, to act in such a way that generates a desired result. Depending on the situation, a POTUS could be conciliatory, aggressive, logical, friendly, or unpredictable. In fact, acting in an unpredictable manner (such as Putin does) can be a very effective strategy to achieve one’s goals. The main objective in using Presence is that the other party respects you – he may not like you, or even think you’re stupid, but if he respects or fears your power enough he will defer to your position.

If Obama thinks he’s the master of Expertise, Trump has grabbed the mantle of Presence. Trump doesn’t sweat the details or care to engage in policy discussions, he’s all swagger and gamesmanship. Want a better deal from Iran? Send me in, I’ll take care of it!

So how are they alike? Each is, in his own way, surprisingly immature. Obama desperately wants to be seen as a smart guy. And not just smart, but smarter than everyone else, on whatever side of the table. Goldberg states that Obama thinks he knows better then other world leaders what is good for their own countries. He uses Clinton and Kerry for their “transactional abilities” and not for their expertise. He even famously ticked off Britain by criticizing PM Cameron’s actions on Libya, which is an extraordinary thing for a sitting US President to do.

Obama’s need to appear intelligent is immature, and a sign of weakness. He puts his desire to appear smart before the priorities of his country. Similarly, Trump wants to be the king of Presence. That desire has made him continually overreach himself, overstepping boundaries and alienating large swaths of the population. It may be a good thing to have people fear you, but not if you’re running for President and need their votes.

So would an Obama / Trump team be an ideal combination of Policy and Presence? And how would they do on foreign policy? Probably very badly, they are both just too immature – more interested in making themselves look good than creating an effective policy.

Jun 082014
 

Here’s an attempt at a non-partisan examination of the US debt problem. Do younger voters really understand just how big a burden is being placed on them by government obligations? I’m not completely happy with the comic – the dialogue and timing are a bit clunky – but it gets the point across.

You are welcome to post this wherever you like, but please add a link back to this site.  You can download the comic in PDF form here.

 Posted by at 6:04 pm
Mar 132014
 

Amazon is making it really hard for me to hate the oft-demonized, Mom-and Pop-store-crushing behemoth:

I accidentally ordered two copies of the same book (“Aztec, Ixtec and Zapotec Armies”). It’s an easy thing to do, if you click the add to cart button twice and don’t notice that the quantity tab is 2 instead of 1. I went to their website and started the process of returning the extra copy, not looking forward to filling out forms, getting a box, and schlepping to the local UPS store. However when I clicked the “Return” button I got a message telling me that “We are giving you a full refund. You do not have to return the item.”

This is kind of incredible – they are willing to eat the loss on the full price of the book, to save me the trouble of returning it. Now it may very well be that someone analyzed the cost of processing the return and decided that it met or exceeded the cover price of $14.19. Or maybe someone at Amazon ran the following equation:

Cost of processing return + Enhanced Customer experience (and loyalty) > $14.19

A week later I made another simple mistake. I bought a Kindle Paperwhite on sale and had it sent using their free 5 day shipping. After the estimated delivery day came and went, I checked the order online and realized that I had sent it to my old address, a UPS mailbox on the other side of the US. My heart sank at the thought of calling the UPS store,  having the manager find the box, then paying them to resend it from the East to West coast.

And then I called Amazon. I told them that I sent it the wrong address. What could they do for me? The woman on the phone said she would ship out a new one to my new address, at no charge. Don’t worry about the other Kindle. They would even use express 2 day shipping.

In both cases this was an unexpectedly great response that solved a problem that was completely my fault. It’s hard not to admire that kind of service!

 Posted by at 10:11 am
Dec 172012
 

I was disappointed to see a post by a Duke University professor that tried to conflate economic growth with lowered enforcement of intellectual property rights.

Speaking as someone who deals in selling digital content, and who does business in China (as well as a Duke alum), I feel this is a seriously misguided idea.

I can’t believe anyone would actually recommend that the US adopt IP policies like those in Russia or China. If  you have any experience in dealing with content sales in those countries, you know it’s a joke. The fact that anyone can and does steal digital content in China has destroyed countless content providers in that country. It’s the very opposite of what he describes – far from encouraging creativity, it destroys it.

Any economist will tell you that the reason why the BRIC countries have high growth and low IP protection is because their economies are starting at a very low level of GDP and tend to deal in low value added goods such as agriculture or basic manufacturing. They have no content industry to protect. Those high-tech Apple factories in China would not exist without strong IP protection, which was won only after decades of hard-fought lobbying by US corporations.

Pundits extolling the virtues of limiting copyright invariably ignore the plight of content providers like myself and focus only on patent trolls or Steamboat Willie. It would be nice to see the discussion of copyright move away from simplistic analysis like this and take a hard look at what actual content creators have to deal with.

 

 Posted by at 3:42 pm
Nov 022012
 

I’ve been looking at the San Francisco real estate market listings – an activity guaranteed to bring on depression – and came across this: “Fabulous convenient and prime Location (SP) near San Francis Wood (SP). Specious and nature (SP) light.”

First, it’s amazing that a $1MM+ listing could include 4 typos in the first dozen words. But the choice of the word “specious” is a lovely Freudian slip:

Specious: 1. apparently good or right though lacking real merit; superficially pleasing or plausible 2. pleasing to the eye but deceptive. 3. Obsolete.

A glimmer of truthiness in real estate listings?

 Posted by at 10:23 am