Private Public Infrastructrure Boondoggle

I am also mystified by these "banks" but I'm even more perplexed by the entire notion of private investment in infrastructure. 

When the government builds infrastructure that is an investment because that infrastructure will contribute to higher GDP (increased/improved traffic or information tech leads to increased commerce and higher sales/incomes/business revenues) which results in greater tax revenues.  Private industry doesn't tax, however, so for them to build infrastructure as an investment they need to find some other way to extract money.  And because most private industry operates on much shorter time scales than the government, they need to do that fast, which generally means much larger rents than the market would support.

Imagine a road if it is funded by tax revenue then it is "free" to drive on, which means any business that wants to start up there has an advantage in that its employees and customers don't need to pay to get to them.  That is good, and it means that business is more likely to start there.  It may be 5 years before that business turns a profit and pays taxes (though it will likely pay employees which means some payroll/income taxes, but those may just be displaced from elsewhere).

Now imagine that same road funded by a company that wants to profit.  Either they are going to make it a toll road or there will be lots of parking fees, or they will charge any business/resident some fee for access points.  Any of those things will make starting a business (or building houses, or anything) on that road less desirable than the above, and so the build up would be even slower.  Slower buildup means that the company will need to charge more to see any return on its investment and we have a downward spiral.

This is a bad idea in every way imaginable, and yet it is one that is increasingly common as stupid, short sighted, or just rotten politicians try and make a quick buck at the expense of future revenues. 

That's Not Reflective of Bad Management

I guess it's read Matt Yglesias evening.  This post of his is mostly throw-away, but there is something very perplexing in it.  He says:

But laws like this that give local capital an advantage versus remote capital are probably bad for wage earners. What you're essentially doing is creating a protected class of capitalists who are immunized against being put out of business by a more effective owner and manager. That has negative consequences for customers but also for workers—you're essentially stuck working for a less-competent boss in a lower-productivity role than you would be in a more competitive market.

The problem is that that doesn't follow.  It's not every one, but one of the defining aspects of chain establishments is that they treat workers like crap.  Pay minimum wage, grant few benefits, cut back hours...

And that makes good sense.  "Good" managment/ownership is most often perceived as minimizing costs, and one of the easiest ways to do that is to spend as little as possible on workers.  Chain restaurants, whether of a fast food variety or not, get over untrained, low motivation workers by making it so that anyone can do the job.  Some "less-competent" boss may have to hire someone who knows what they are doing to get the same results, and that person will likely be paid more because they have some necessary skill (even if it is just operating a meat slicer, or working a grill).

Marriage makes you less poor?

I understand the numbers and they are real, but something that should be pointed out in MattY's example is that his theoretical couple would likely be better off cohabiting while unmarried. Two impoverished cohabiting "single" parents would likely qualify for more benefits and breaks than one not-impoverished married couple with two children. 

It's not universal, but the way that we treat income with respect to marriage means that it is often better financially for dual income households to not marry than it is to marry (there are other benefits to marriage, mind you).  I think the simplest solution is to drop the entire section of the tax code.  Everyone who files is the same (so no single/married/married filing jointly/head of household crap).  Pick numbers in the middle and leave it at that.

Now that does seem to penalize single income families, but in reality it doesn't: you can have the traditionally working spouse pay the not-traditionally-working spouse half the income, and so split the pie lowering taxes all around...yes, I know that can be complicated, but since my fantasy tax filing would also drop lots of other crap, this would actually be pretty easy.

Libertarians and "Freedom"

They keep using that word.  I do not think it means what they think it means.  (Apologies and respect to Inigo Montoya.)

Libertarians love them some legal marijuana and prostitution (and low taxes, natch), but equality for minorities and immigrants and liberties for women?  That shit don't matter at all.

Rich Moochers

I think this point needs to be made more often and forcefully: a large swath of the wealthy in this country (particularly the anti-tax assholes) are, in reality, our Moocher Class.  Working poor who pay lots of taxes in the form of sales, payroll, state and local contribute a larger share of their income to government than do people like Mitt Romney.

Weird Question

I should certainly watch/listen to what Sarah and Suzie have to say here first, but the very question is weird to put it nicely. Even with the very dramatic change in public opinion on gay marriage, abortion is still more popular (and depending on how the question is phrased, it is much more popular).  On top of that, there are some pretty good reasons why opinion on abortion wouldn't change much over time: while there really isn't any coherent reason to be opposed to gay marriage, there is to abortion (I may disagree with it, but the reasoning is sound).

The better question is that why, with abortion being more popular with the public, are politicians so hesitant to get behind it?  And why, in particular, do nominally pro-choice Democrats keep giving in to the Neanderthal position on the issue? (That is probably not fair, I would guess that Neanderthals would be far more sympathetic to women's authority over their own bodies than are most Republicans.)

Buffett Repeating Himself

The only issue I want to raise with this is where Warren says: "However, I prefer a cutoff point somewhat above $250,000 — maybe $500,000 or so."  There was something in the Fiscal Times furthering this by pointing out that $250k in 1993 is about the same as $400k today. 

Here's the thing: $250k is a crap-load of money.  It is infuriating each and every time anyone (though particularly very rich people) try and argue that it isn't.  The median income in this country is one fifth of that, and well over 90% of families must make do on less than half.  Even very wealthy Manhattan's median income is less than $100k.  People (individuals and families) just don't make nearly as much money as [rich] people think we make, and it makes a huge difference in terms of how we discuss things, like, say retirement.

If we think that lots of families are pulling in $200k/year then it's pretty easy to say that people are irresponsible who don't save enough for retirement, and it's therefore easy to argue that making SS less generous is not that bad: people just need to save a little more.  But families are not pulling in that kind of money.  Most families are living on $66k/year, and after taxes and necessities there isn't a whole lot left over.  If they are forced to save more, then it means a real drop in their standard of living.

Any family getting $250k/year is very well off, at the very least.

This is Going to be Bad

As much as it may be really bad for the large majority of people, some people will be fine and they don't give a shit about the rest of the planet.  If we lived in a decent country, anyone who espoused views that boiled down to: poor elderly should suffer if they weren't as smart/lucky/capable as me would be forced to be poor.

Also, the "10 steps to getting your retirement back on track" slideshow that was on the bottom of that page was full of mostly banal statements/advice that you see everywhere, but I was more than a touch surprised by one: that people should be putting away 30% of gross income each month.  30% is a huge chunk of income...and from gross not net (30% of gross is 38-50% of net).  Most people having trouble saving don't have anywhere near that leftover after regular bills are paid.  Maybe if that figure is meant to include the principle on a mortgage and payments on other debt (paying off credit cards and student loans) people would have some shot at it, but I would have a hell of a hard time doing that, and I've got decent income and am not exactly a spendthrift.

Still about the only people who have a real shot at putting away that much are DINK's with a total income in the near $200k+ range.  Kids and life costs money, and whatever you save has to come out of your excess.  It takes a pretty large income before 30% or more of gross is excess.

Retirement Savings Accounts

I'm not linking to it, but in a discussion regarding whether to pay into a 401k or an IRA one of the comments includes the line:

I have considered investing in both the 401(k) and IRA… but I fear that splitting my money amongst the two retirement accounts will hamper the compounding effect I would realize. Any thoughts?

I am constantly surprised by people who think they know what they are talking about making such obvious mistakes.  Maybe the person is a novice, and trying to figure things out, but why would anyone think that splitting funds would hamper the compounding effects?  The commenter isn't saying that one returns better than another (which does make a difference, but then it would be a return vs. safety question).

If you take 1000 dollars a month and invest it all into an account that pays out 5% you will end up in exactly the same place as if you split it into two different accounts that each pay out 5%. There may be some differences in the accounts due to fees/taxes/other, but if an all inclusive ROI for each account is the same then splitting the money makes exactly 0 difference.  The reason to pick one over another, or to split has to do with limits, company matches and investment opportunities.

Also, as Atrois keeps saying: our current retirement scheme is very broken.  We need to make SS more generous so that our citizens don't have to rely on things like 401k's to survive retirement. That sentence above is evidence that even people who do try, and who think they understand this, are often quite lost.

To add to his reasons, though: if we made SS more generous, then that would provide a huge boost to the economy.  I'm saving far more than I would because a) currently SS doesn't provide much, and b) all the political discussion is around how to make it worse.  Make SS more generous and there are things I would be looking at buying, also I wouldn't be wasting my evenings trying to figure out how much and where to invest for retirement.

Banks are for Suckers

Credit Unions vs. Banks is a lot like Exchange Traded vs. Mutual Funds.  All the advantages/benefits are on one side, yet most of the money is on the other. 

Related: I looked at Vanguard's compare/contrast between ETFs and mutuals...it seems that the "difference" is mostly the name (and which one your plan lets you get).

Finance is weird.  There is no reason for most fees/costs other than scamming/siphoning and other fraud, yet the vast majority of people (really, money) who participate do so via the worse options.  I don't get it.  Why would any sane person keep their paycheck at Chase when some local credit union is going to give them better rates and service?

Money

Voices in the Family (which I generally don't listen to) on NPR was talking about money and our relationship to it.  I only heard a bit but it was is an interesting topic.  I'm a bit of a geek and one of my personal infatuations relating to money has to do with numbers and math. 

I tend to assume there are three basic personality types: spenders, savers, and planners.  The type doesn't relate to whether someone is responsible.  Spenders can stay within their means, while savers can fail to take care of necessary expenses, and planners...well, they plan, which in and of itself is a dangerous activity.

A spender is someone who sees the value of money as being the things they can get for it, often right away.  Maybe they like clothing, maybe it's going out, maybe it is motorcycles or outdoor activities.  Whatever it is, money in the bank doesn't provide it, only money spent does.

A saver sees the value of money in more security terms: something they can keep for a rainy day, but needn't spend much of otherwise.  Savers may or may not be overly frugal.

Planners look a lot like savers at first blush, but they can blow through their entire account and then some once the time is right. 

Most people have a little of everything in them.  We have fun.  We save for a rainy day.  And we plan for large expenses like houses/vacations/cars.  Most people are also, however a bit more drawn to one of these things over the other.  People who fear using their savings account for anything.  People who spend hours or days deliberating a purchase, but then make it very quickly, surprising others.  People who will buy something spur of the moment, and then later scramble to get money in an account or pay a larger than expected credit card bill.

Again, it is possible to be either responsible or irresponsible and to also be any of these three, but it is good to know which of the three someone is before trying to set goals, or plan for them.  A spender will always have a harder time saving than a saver.

True That

I do blame Obama for the sequester, but for the reasons Dean Baker runs through here.  The short of it is that the Obama administration has been an utter failure at understanding and dealing with Republicans. He has given in and given up so much that we are now living in a bizarro US where a president who is about as liberal as Ronald Regan is considered by most to be a liberal, and by many (on the right) to be the most liberal president evah!  

Guns are Irrational

I've been shooting (range, skeet, backyard...that last not a good idea) and it is fun.  I can see why people would want to own a gun, whether for hobby shooting or for hunting.  I can even understand the desire to own several including the mostly ridiculous assault rifle. 

On one level guns are not that different from any item.  Compare to a cookie jar.  No one needs a cookie jar, but having one gives you a place to keep cookies that is a little nicer than the original package or a random piece of tupperware.  So one can be functional, even if not necessary.  But some people may have several cookie jars.  This isn't because people need 2 dozen containers for cookies, but because they are collecting them.  Perhaps he/she appreciates the different styles, or because they have some special meaning (or perhaps the person is a little crazy, but that's ok too). 

At this level guns are not much different.  One can actually be useful: if your hobby is shooting at a range or hunting, then owning one-three guns--rifle, shotgun, maybe 1 range gun (typically handgun)--makes some sense.  Owning more than 1-3 guns is the same as owning more than 1 cookie jar: either you are a collector or insane (if you want to know the difference: collectors have no reason to get angry about things like waiting periods or background checks or magazine size...they could be angry about assault weapons bans, but only if it is a ban on appearance and not function). 

The difference between guns and cookie jars is that one can easily kill a person, accidentally or deliberately.  That is a meaningful difference, and that is why guns become irrational.  Even the most insane cookie jar hoarder is mostly harmless.  A crazy person with lots of killing machines is a threat. 

People who own lots of guns are not people you want to live next door to.  They aren't people you want your children to visit.  If you own a lot of guns: your neighbors don't feel safe, they feel threatened.

If you own even one gun, you have dramatically increased the odds that you or someone in your family will be shot.  This is true even if it is that one useful gun.  Owning a gun makes your household less safe.  Owning guns is irrational.

I Hate Being Sick

Vague flu-like/cold-like symptoms that could be sinus infection or allergy or... and is probably viral, but maybe not (definitely not bacterial).  I get antsy sitting around doing nothing, but if I do/try to do something I feel like crap afterward and for a day or two beyond. 

I have had the flu in the past and have been sick, but it seems like this year has been really bad for reasons I unknown.  Grr...

Great, Let's Do It

Naturally, I agree strongly with Martin Wolf here.  Commenters there don't seem to agree as much, but it always strikes me whenever I read an article in a financial section/magazine/paper that the comments are overwhelmingly right wing (and generally hacks at that: "Fiat currency is a fraud!"). 

I'm not sure why this is exactly, but I suspect that most of the people who read such articles are the same as the people who blew up the economy for everyone, but that are doing quite well now (while others continue to suffer).  It's kind of a shame, because most people do not and will not understand economics well enough to figure out that we are being screwed over for no good reason.  The things that will fix the economy sound outrageous to most people, but that's only because our economic system itself sounds (or would sound) outrageous to most people.

Can't Stand HOA's

The idea behind a home owners' association is really good.  For a lot less than it would normally cost an entire neighborhood can get things like lawn care and snow removal and other benefits.  But the rules that most HOA's add-on to that sensible base arrangement are nothing short of tyrannical. 

I can not begin to comprehend people who defend such antics.  Yea, the couple were maybe jerks in how they handled things, but $900 for a sign 4" too big?  That would piss me off too, and so I don't see their response as particularly untoward, but rather a clever protest (definitely passive aggressive...at least until the lawsuits). 

When I went looking for houses I very deliberately avoided HOA neighborhoods.  I don't want someone telling me acceptable grass height or whether I can make certain changes to the house/property (I already don't like the township rules for those things).  It seems to me the couple in that article would have been better served by doing likewise. 

Definitely a Problem

I don't know that the housing bubble is the correct analogy for the student loan clusterfuck, but I suppose it references something people have some sense of scale of.

There are some fixes that would be hugely beneficial: the ability to have student loan debt written off in bankruptcy, no federal backing for private loans, caps on annual loan amounts for federal backed loans (maybe $10k/year for tuition plus some sliding scale for living expenses of up to maybe $15k/year, with most places being limited to $5k or so), probably a few other things.

That doesn't really deal with the problem of existing/outstanding student loan debt.  I like the idea of a structured, massive, one-time forgiveness plan.  It could be something like the stimulus idea(s) I've put up here before, or just a dramatically enhanced version of the slightly-better-than-it-used-to-be student loan debt changes Obama put through (pay a max of a certain percentage of your income, and all outstanding debt forgiven after, I think, 20 years).  Making student loan payments fully deductible rather than just interest (yes, I know, I hate deductions, but it's how we roll)--also maybe raising the income limit at which you can no longer deduct--and lessening the payment forgiveness term to 15 years would be a start, reducing the max payment amount to 10% of income, or at least by a point or two would also be nice. 

Another Vampire Squid Article

I know people complain about epistemic closure (living in the bubble) on the right, but I often wonder if there is a similar but opposite phenomenon on the left.  Basically, if Obama and/or his people were to read this piece would they instantly discount it as valid because it is "left-wing"?  My feeling is that they do.  Just think: despite being correct always and forever Paul Krugman's ideas are not even brought up by the president...not even as a what if, as in what we should be doing if congress wasn't dysfunctional.

Well, yea, but...

I am far more libertarian when it comes to zoning laws than most people, so I too think that adding an in-law suite to a house should be perfectly fine, though I do understand why it mostly isn't.  That said, if you want to have them you can't say this:

Cherry Hill ordinances lump "mother-in-law suites" with auto-salvage businesses, junkyards, and heliports as impermissible in residential areas. The township wants to prevent single-family homes from conversion into duplexes or rental apartments, which makes sense. [emphasis added]

Um, no, it doesn't make sense. A house with an in-law suite is a duplex/house with apartment.  If one family owns a house, adds an in-law suite and then sells that house, the new owners can easily rent out the in-law suite as an apartment.  You cannot both want to have in-law suites and not have apartments.  The closest you can come is to limit them somehow (no more than 1 suite, and the size of the suite must account for less than 40% of the total square footage of livable space). 

Also, what about someone who wants to add an in-law suite for down the road, and is hoping that a few years of renters could help to offset the cost before mom/dad move in?

Particularly in more dense areas (cities and close in suburbs) adding an apartment/flat/in-law suite is an excellent idea, but even if it is only serving as the in-law suite for the original owner, it must be available as an apartment for that value to be realized.

Deductions are Insane

Yes, I will take advantage of as many deductions as I can (easily) manage.  No, that is not hypocritical. 

Our tax code is artificially complex and inordinately stupid.  Deductions are very, very unfair for multiple reasons, but the biggest are that wealthy people get more breaks, and they encourage bad behavior (e.g. bigger houses with little down).

The regressive side probably bothers me most.  Someone with $27k in income (MAGI minus standard deduction) only gets $0.15 back for every extra dollar of deductions.  Someone with $102k in income gets $0.28 back for each extra dollar.  On top of that, higher income individuals can afford more house and more children (and pay more in state/local taxes), which means the size of their deductions are often much larger.

If we want people with kids to get something from the government, we should do that: pay everyone $2500/year/kid.  That way income doesn't matter, and we now have a big spending program that Republicans can go after.  Same with housing.  If we want people to buy a house, rather than rent (for whatever reason) we should just have the government send every homeowner a $4k check each year and lose the mortgage, PMI, and real estate tax credits.

I'm actually kind of surprised that the state/local income tax thing doesn't come under more fire from red state (Republican) politicians.  Basically if you live in a low tax state you are subsidizing people in CA and NJ.  Why is that remotely fair?  (Yes, I know, red states tend to get far more back in federal outlays than they put in, unlike high tax blue states, but this still seems like an easy break for them to target, especially since the entire GOP tax ideology is illogical.)