Author: philg

One of my wealthiest friends on Facebook has, over the past few weeks, posted more than 50 items about Bernie Sanders and/or her passion for Bernie Sanders. A recent example was a photo of a Bernie Sanders bumper sticker affixed to her shiny new BMW (BMW badge also in photo). She’s a stay-at-home wife to a partner at a law firm with annual profits per partner of roughly $3.5 million (i.e., her husband very likely earns in that neighborhood). As far as I know she spends almost all of her husband’s income. They live in one of the most expensive neighborhoods in the United States and recently expanded their already sizable house despite the fact that their children have departed for (expensive private) colleges. With Sanders promoting ideas such as a 90-percent federal tax rate on income over $1 million (with state tax that would be nearly 100 percent), her Facebook postings are tantamount to her saying “I want the government to cut my spending power roughly in half.” But she could already cut her spending power in half by donating the majority of her husband’s income to charity and this she does not do.

Readers: What’s going on here? I can understand why people with low incomes would support Sanders but why a rich person whose lifestyle he is supposedly targeting for reduction?

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I attended a wedding this weekend in Massachusetts (a healthy percentage of the upper-income attendees had been defendants in custody, child support, and alimony lawsuits so people were a little less sentimental than in other states (Best Man: “[the groom] said that if I did a good job today that I could be best man at the next one.”)). As it happened I was seated next to a retired U.S. military officer who had been “inspector general” for eight years on a base with about 1200 members of the military.

What were his office’s responsibilities? “The majority of the work was handling complaints about discrimination or harassment,” he responded. “Mostly women complaining about sex discrimination but also some race discrimination complaints.” What percentage had merit? “About one percent,” he said. “If these people had put half of the effort that they put into pursuing complaints into working the base would have been about twice as productive.”

I thought of that conversation today while watching television in our local airport lounge. The man who murdered Alison Parker and Adam Ward in Roanoke, Virginia (Wikipedia) was a frequent flyer in the American grievance system, having sued one employer for race discrimination and threatened a second employer with an Equal Employment Opportunity Commission complaint.

Related:

• March 2015 posting trying to calculate the total legal fees run up by Ellen Pao and Buddy Fletcher (the Roanoke murderer, like Buddy Fletcher at the time of his profitable discrimination lawsuit, identified as “a homosexual black man” (Wikipedia))
• The lion-killing dentist and his receptionist

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Nightmare for flight instructors: Nasa drop-tests a Cessna 172 from 100 feet: on YouTube. Maybe a good reminder to students to maintain airspeed and keep a touch of power in for normal approaches and landings…

(The goal was to test emergency locator transmitters (a selection) that are supposed to start transmitting in response to high G forces.)

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A friend arrived in Manhattan with his three children just in time for the press to erupt with stories about topless women in Times Square (e.g., nytimes, Daily News). His response to the complaints that this kind of, um, exposure would be bad for children: “It is not even in the top 100 things in NY that can harm children.”

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“Petco Files IPO, Plans Return to Public Markets” is a Wall Street Journal story about Petco, which keeps going back and forth between private and public. The private equity guys last purchased the company from public shareholders in 2006 for $1.7 billion. Now they will sell it back to the public for $4 billion. So a starting theory could be that they collected $2.3 billion from the public shareholders. “8 Takeaways from Petco’s IPO Filing” is a follow-up WSJ piece noting that “Since TPG and Leonard Green took Petco private, they’ve received two dividends. The first one came in 2010, when Petco made a cash payment to its PE owners of roughly $700 million. Moody’s estimates this payment returned over 85% of the equity invested in the company by its owners. In 2012, the company made another dividend payment of roughly $589 million.” In other words, whatever the private equity guys put at risk has been completely paid back. The money that comes from this IPO and the value of their remaining holdings will be gravy.

Presumably it is successes like this that keep people excited about private equity.

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Here’s an interesting use of video for education: a Burning Man airspace movie. It shows simulated airplanes arriving, departing, and in scenic traffic around the event.

[Non-pilots: I think this video still might be worth watching to see how three-dimensional information is presented.]

Readers: Have you seen similar videos? e.g., for Oshkosh?

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“How Etsy Crafted a Tax Strategy in Ireland” is a Wall Street Journal article about the arts and crafts marketplace working to escape U.S., New York State, and New York City tax rates on its $200 million/year in revenue:

In Etsy’s case, it set up a subsidiary in Ireland, the location of its European headquarters, then lent the unit money to be used to buy intellectual property from the U.S. company, according to a person familiar with the situation. The details of how Etsy set up the Irish subsidiary and how it plans to use it to reduce taxes hadn’t previously been known.

Etsy’s U.S. tax bill will increase initially, because the U.S. company made money on the sale of the intellectual property. But the structure is expected to eventually reduce Etsy’s U.S. tax bill because the income associated with the intellectual property held in Dublin will be taxed at the Irish rate of 12.5%, much lower than the U.S. rate.

It turns out that the company is going to pay at least $15 million in additional taxes in the short term, but these could have been avoided if the Irish subsidiary had been set up earlier and the intellectual property transferred when it wasn’t worth so much.

Related:

• What if you are already Irish and want to escape taxes there? Move everything to the Netherlands: 2007 posting on the U2 band’s tax avoidance

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Folks:

In an effort to win a prize for highest ratio of technology to subject matter interest, I have directed and co-starred in a 4K video. Location: our kitchen. Camera: Sony RX100 IV. Tripod: none. Lighting: Overhead track with LED bulbs from Costco. Then I uploaded two copies to YouTube:

• a version compressed by Adobe Premiere to about 10 Mbps (147 MB file size)
• a version compressed by Adobe Premiere using the “YouTube 4K setting” (491 MB file size; about 40 Mbps supposedly)

This raises a few questions…

1. why doesn’t YouTube just refuse to let people upload stuff like this? Or limit them to 720p?
2. can you see a difference between the versions? Or does YouTube compression render the differences in the original file quality irrelevant?
3. can you get smooth playback at true 4K? (for me the answer is “yes” with Windows Media Player locally on this Windows 10 desktop, “no” with VLC locally, “yes” with streaming YouTube on Verizon FiOS, “no” with streaming YouTube on Comcast)

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An article on a child support lawsuit in Canada may be worth watching. The plaintiff is “Alana Jung, a 25-year-old college student studying early childhood education.” She had sex with a basketball player and now, under the Canadian child support formula, a nationwide system unlike our state-by-state patchwork, she is entitled to a tax-free $1.355 million per year. As there is no fixed age for the termination of child support in Canada (see the Canada chapter of Real World Divorce), she is potentially looking at 25 years of revenue or $33.9 million total. An early childhood educator in Alberta earns about $14.50 per hour (source) pre-tax. Ignoring the tax differential and assuming 1800 hours of work per year, the plaintiff would there collect 1300 years of income under the formula.

The defendant has offered to give her $180,000 per year, which would work out to perhaps $4.5 million until the child ages out of the system. The plaintiff seeks somewhere between $600,000 per year and $1 million per year (up to $25 million in revenue). Supposedly in mid-October a judge will decide what level of profitability is appropriate.

Canadians sometimes express resentment that ownership of a child is more profitable than going to college and working, but in fact children in Canada are less lucrative than children in some U.S. states.

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A lot of what I’ve written over the years here concerns the tension between the research economists and psychologists, who say that human behavior is pretty easy to change with incentives, and politicians who say that human behavior won’t be affected by incentives (e.g., Book Review: The Redistribution Recession looks at what happened when politicians offered to give Americans free houses, food, and health care on condition that they not take a W-2 job; Real World Divorce looks at the extent to which Americans will fight for custody of children who yield more cash than going to college and working).

“A Simple Fix for Drunken Driving” is a WSJ article on the same general theme. Psychologists who get paid to treat alcoholics believe that straightforward incentives (not involving paychecks to therapists) won’t affect their behavior:

Among the most enduring of these myths is the idea that no one can recover from a drinking problem without our help. Treatment professionals save many lives that would otherwise be lost to addiction, but we are not the sole pathway to recovery. National research surveys have shown repeatedly that most people who resolve a drinking problem never work with a professional.

Some members of the addiction field can also be faulted for spreading an extreme version of the theory that addiction is a “brain disease,” which rules out the possibility that rewards and penalties can change drinking behavior. Addiction is a legitimate disorder, in which the brain is centrally involved, but as Dr. Higgins notes, “it is not akin to a reflex or rigidity in a Parkinson’s patient.”

In their haste to ensure that people who suffer from substance-abuse disorders are not stigmatized, some well-meaning addiction professionals insist that their patients have no capacity for self-control. Most people with alcohol problems do indeed struggle to make good choices, but that just means they need an environment that more strongly reinforces a standard of abstinence.

This belief has persisted for roughly 25 years after a 1991 paper showing that cocaine users could be “induced to refrain from it when promised a small reward, like $10 for a negative urine test.”

Related:

• American Economic Association Meeting in Boston (summarizes all kinds of papers regarding incentives)

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