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I wrote a “nice but not $100,000+ nice” review of the Tesla X. Back in 2003 I wondered why cars weren’t smart enough to prevent the death of a child or dog locked in on a hot day:

In an age where we spend infinite money and effort on high-tech cures that save a few lives it is a shame to see kids dying for want of a few lines of software and a $50 802.11 base station.

It seems that, 13 years later, Tesla has written the software. “Tesla cars have a new feature that could save your dog’s life” says

With it’s just-released 8.0 software update, Tesla has brought an innovation to the auto industry that enables just that. It’s called “Cabin Overheat Protection.” … “In an industry-first safety measure, we’re also introducing Cabin Overheat Protect, focused on child (and pet) safety,” Tesla said in a statement. “This feature keeps the car at a safe temperature for hours, even when the car is off. This feature is only made possible by an electric vehicle with Tesla’s uniquely large battery packs.”

I guess it is easy to be “industry-first” when your peers can’t or won’t write the most obvious computer programs. So maybe by the time the rest of the automakers pile into the all-electric market it will in fact be too late.

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“Inside corporate America’s stand against transgender discrimination” (Guardian) says that the one thing nearly all American companies can agree on, aside from wishing that they’d chosen Ireland, Estonia, or Singapore as a corporate home, is that it makes sense to take a break from manufacturing widgets to talk about bathroom and locker room choice in North Carolina.

Politically incorrect commenters (a.k.a. “haters”) sometimes complain that, given the small percentage of the population that is transgender, too much attention is devoted to this topic. I’m wondering if they’ve got this exactly backwards. Perhaps the vogue for transgender rights advocacy can be directly attributed to the small percentage of transgender individuals.

Suppose that a company loudly advocates for the rights of black Americans to earn, on average, the same pay as white Americans. Now all of a sudden people can ask “well, what percentage of your own employees are black and how much do they earn?” (or write articles such as “Guy with a “Whites Only” sign in his conference room tells others not to discriminate“) People can go to Wikipedia and learn that roughly 13 percent of Americans are identified as black by the U.S. Census Bureau. Conveniently “the United States Census Bureau and other keepers of official records do not ask about gender identity” (nytimes). So a company can’t be attacked for not having a representative population of employees with respect to transgenderism.

This may be true for individuals. A Massachusetts resident who claims to love and advocate for black Americans could be asked “Census data show that 8.4 percent of your neighbors are black; are 8.4 percent of your friends black?” (Aviation community member response: “Some of my best friends are extremely rich black people.”) Yet a person who signals virtue by claiming to care about the transgendered need not try to find a specific number of transgender friends.

Readers: What do you think? Will it be simpler, especially for a company, to advocate for the rights of a group for which no data exist?

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One thing that investors could agree on back in the 1990s was that grocery shopping would be mostly online by now. Who would want to go to the effort of driving to the store and lugging bags into the house if it could all be done in a browser? (And that was before they charged you 5 or 10 cents for each bag!)

Except for perhaps Donald Trump’s hypothetical 400 lb. computer expert, online grocery shopping turned out not to be a lifestyle-changer (two percent U.S. market share in 2016). I’m wondering if this is because it is actually easier to browse amongst the shelves of a physical store than to choose via menus. If you don’t know exactly what you want for dinner it turns out to be easier to go to the store.

Could practical virtual reality systems change this? Run through the aisles virtually. Grab virtual stuff off the shelves effortlessly. Have the physical counterparts show up a few hours later.

Readers: What do you think?

[Separately, a shift to online grocery shopping would add some challenge to what lawyers told us was a standard procedure used by child support plaintiffs in Massachusetts. To bolster an argument for above-guidelines child support profits, a plaintiff will get either a gift card (to be stockpiled for post-trial use) or cashback during every visit to a physical grocery store. The bank statements then show an extra $100 or $200 per week in spending. This can be helpful when trying to obtain more than $40,000 per year (the post-tax guideline amount corresponding to a pre-tax income of $250,000) and/or when trying to get a judge to use discretion to award a larger-than-guideline fraction of a defendant’s income.]

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My friends on Facebook are pointing to Warren Buffett’s release of his tax returns (nytimes) as (1) proof that Donald Trump was lying when he said that Buffett avoids taxes, and (2) proof that Buffett, a Hillary Clinton supporter, is doing his fair share to keep the government’s cash bonfire going. Buffett reported an income of $11.6 million and taxes paid of $1.85 million. None of my friends, in celebrating this data release, questioned how the world’s third-richest person had the same income as a successful dermatologist (e.g., one who owns a laser hair removal clinic).

Let’s put this tax payment into context. Forbes says Buffett has $65 billion. Thus $1.85 million is 1/35135th of his total wealth. That’s equivalent to a millionaire paying $28 in tax, e.g., a portion of the sales tax on a new iPhone, as her entire tax for the year.

Perhaps you are thinking that Berkshire Hathaway pays corporate taxes on its income and therefore that Buffett pays additional federal taxes indirectly? Barron’s says no:

HOW MUCH TAX is Warren Buffett able to avoid by fixing Berkshire’s dividend at zero? The dividend yield of the Standard & Poor’s 500 is about 2%. The price/earnings ratio of the S&P 500 is about 18. Thus, for the S&P 500, approximately 30% of earnings are paid out to shareholders. These dividends are taxable at a current maximum rate of 23.8%.

If Berkshire followed the average of the S&P 500, it would have paid out about $6 billion in dividends in 2014, and Buffett’s share would have been about $1.2 billion.

FOR 2014, BERKSHIRE ITSELF recorded a provision for $7.9 billion in taxes, most of which was “deferred.” In fact Berkshire, like many other companies, is able to defer much of its taxes, in its case $61 billion. This is money it acknowledges it owes the government but has yet to pay.

Deferred tax liabilities are the difference between taxes that will come due in the future and what the company owes today. Accounting rules require this difference to be recognized as a liability, but it ultimately acts as a sort of “float” that the government allows companies in the midst of an acquisition—which Berkshire almost always is.

In 2012, the year before it was acquired for $28 billion by Berkshire (and a Brazilian partner), H.J. Heinz paid more than $600 million in dividends. Those dividends were taxed and provided revenue to the U.S. Treasury. After the acquisition, the dividends stopped. Tax revenue from those dividends stopped.

In 2010, the year before it was acquired by Berkshire for $9 billion, Lubrizol paid $90 million in dividends. After the acquisition, the dividends stopped, as did tax revenue on the dividends.

In 2009, the year before it was acquired by Berkshire for $44 billion, Burlington Northern Santa Fe paid $546 million in dividends. After the acquisition, the dividends stopped, as did tax revenue on the dividends.

LAST YEAR, Berkshire entered into what became known as a “cash-rich split-off” that, according to the New York Times, might have allowed it to avoid $1 billion in taxes. Berkshire traded its stock in Procter & Gamble, which carried a low cost basis of $336 million, for P&G’s Duracell unit plus $1.7 billion in cash, a total value of $4.7 billion. The point was to reduce capital-gains taxes that would have been due on a sale of Berkshire’s P&G stock.

It seems that Buffett and his businesses are serial deprivers of tax revenue to the U.S. Treasury. Yet that does not deter him from loudly advocating higher income tax rates for others.

Could Buffett be required to pay more?

Now consider Section 531 of the Internal Revenue Code, which imposes a 20% tax on the accumulated but undistributed income of a corporation. And Section 532 of the Code states that the tax shall apply to “every corporation…availed of for the purpose of avoiding of the income tax with respect to its shareholders…by permitting earnings and profits to accumulate instead of being divided or distributed.”

The Buffett Loophole and the Berkshire Model provide clear examples of the purpose of Sections 531 and 532. Buffett and Berkshire are accomplishing precisely what the code is trying to prevent: shareholders getting away without paying taxes.

Enforcement of these two sections has been sporadic, subject to the judgment of the Internal Revenue Service. An official commentary on the code, Federal Tax Coordinator 2d, D-3003, states that, for enforcement of the accumulated-earnings tax, “Congress did not want the taxing authorities second-guessing the responsible managers of corporations as to whether and to what extent profits should be distributed or retained, unless the taxing authorities were in a position to prove their position was correct.”

CAN THE IRS CONTEND that Berkshire’s purchase of Duracell was not essential for its Heinz holding, for its Burlington Northern Santa Fe railroad, or for its core insurance businesses? Of course.

Can the IRS see that by looking the other way it has unreasonably feathered Buffett’s nest, allowing him to avoid paying reasonable taxes? Of course it can. It chooses not to see anything.

Apparently he could, but not if he has good friends in Washington, D.C.

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From our anonymous insider…

Two weeks before exams and the small library is packed in the evening. We have to review every topic since August while simultaneously being introduced to the complex biochemistry of the urea cycle, the process our body uses to eliminate ammonia freed from normal recycling and breakdown of protein and DNA. Free ammonia is normally turned into urea by the liver for excretion in urine.

Our patient this week was a 20-year-old woman suffering from a Urea Cycle Disorder (UCD) since birth. She had the cognitive function of a toddler. A few of my classmates were left speechless after seeing the patient and hearing from the mother about her round-the-clock caregiver role. She described struggling against the adult strength of her daughter during basic tasks such as bathing and feeding. UCDs are typically caused by a genetic mutation to an enzyme that catalyzes an intermediate product in the conversion from ammonia to urea. If not detected early, excess blood ammonia (hyperammonemia) can alter blood pH enough to cause irreversible effect on the nervous system or death. Most states’ newborn screening programs now test for several UCDs. Treatment typically is a combination of strict dietary restrictions and nitrogen scavenger drugs.

We heard from a hospital Institutional Review Board (IRB) administrator in charge of approving clinical trial requests and access to patient data. The IRB does not evaluate the value of the proposed research; instead, the IRB evaluates if the project can be conducted in a reasonable manner to benefit and to protect the research participants. This process is historically a huge pain for physicians who want to conduct research. The board can take months to review a simple clinical trial proposal or data analysis project of patient data. She did not deny that the IRB process is cumbersome, but used the 1999 example of Jesse Gelsinger to explain why these protocols are followed. Gelsinger was a functioning teenager with a UCD that was so mild he should not have qualified for the trial to begin with. Scientists attempted to use adenovirus (influenza) modified with a functioning form of the mutated urea cycle enzyme to cure the patient. Potential dangers of the trial were not disclosed to the patient and his family. A principal investigator for this NIH trial had relationships with the pharmaceutical company providing the adenovirus vector. Gelsinger died from a massive immune response and liver failure. This tragedy triggered review of clinical trial procedures and halted many ongoing and future gene therapy trials.

After the 1.5-hour IRB presentation, an Emergency Room Physician talked about his experience with the IRB for a pain medication clinical trial. He clearly was frustrated with the IRB, but diplomatically limited his criticisms to “there is plenty of room for improvement.”

Anatomy lab continued with the previous week’s dissection of the shoulder joint from the anterior side. We saw the actions of the four rotator cuff muscles and observed the massive vessels and nerves near the clavicle. Between the clavicle and the joint capsule lies a fascinating mesh of nerve fibers called the brachial plexus, by far the most complex nervous feature we’ve seen so far. We learned how upper extremity range of motion is a function of three joints: sternoclavicular (SC), acromioclavicular (AC) and glenohumeral (shoulder blade-humerus). I never realized we have movement in the SC, the single point of contact between our upper extremity and our axial skeleton, when we raise or rotate an arm. When orthopedic surgeons came in to demonstrate shoulder exam techniques, nearly 20 percent of our young class had bad enough shoulders to line up for a free exam.

Statistics for the week… Study: 16 hours; Sleep: 6 hours/night; Fun: 2 nights out. Example Fun: Friday after-class soccer tradition followed by bowling night, in which we learned that one of our classmates is a former competitive bowler.

The Whole Book: http://tinyurl.com/MedicalSchool2020

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I would have thought that scanning a basic gel pen drawing would be something that any modern device could handle. Yet look at the difference in color here.

• from a fast document scanner (Canon DR-C240)
• from a slow graphic arts scanner (Epson 11000XL)

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From “Columbus Day now Indigenous Peoples’ Day in Cambridge” (Boston Globe):

The Cambridge City Council has voted unanimously to change Christopher Columbus Day to Indigenous Peoples’ Day.

Councilor Nadeem Mazen, who proposed the idea, said it is important to reclaim the day for Native Americans, thousands of whom were killed under Columbus’s leadership when he came to the New World.

…

At the end of the discussion and vote Monday night, Mayor E. Denise Simmons had a simple message for the council: “This is a very important day in Cambridge.”

The official city notice says

In June 2016, the Cambridge City Council adopted Policy Order #164 noting that the Council go on the record to state that the second Monday of October henceforth be commemorated as Indigenous Peoples’ Day in Cambridge, in recognition of the indigenous people of America’s position as native to these lands, and the suffering they faced following European conquest of their land.

It doesn’t seem that anyone proposed building houses or apartments in Cambridge in which Native Americans might live. Census Data show that, as of 2010, there were at most 0.2 percent “American Indians” among the city’s population (the Census Bureau is apparently lagging in the political correctness department).

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Folks:

I was staying in the Trump Hotel in Chicago (magnificent) during the last presidential debate so I felt compelled to watch at least some (see Presidential Debate Thoughts: Did Trump miss some simple answers?). However, tonight I am home and reverting to my usual practice of not spending time watching or listening to politicians.

The transcript seems to indicate a collapse of American decorum, e.g., “Moderator: For the record, are you saying what you said on the bus 11 years ago that you did not kiss women without consent or grope women without consent.”

A few more things that have jumped out at me so far…

Hillary Clinton cites Michelle Obama, the spouse of a politician. This underlines the difference between the U.S. and parliamentary democracies (in which nobody is interested in what the spouse of the Prime Minister might have to say about politics; Germans aren’t listening to speeches by Angela Merkel’s husband and Margaret Thatcher’s husband was not cited by British politicians).

More discussion of Barack Obama’s birthplace. Can that be relevant to the challenge of growing our economy faster than our population, something that we’ve failed to do recently?

Finally a question that might matter: “The Affordable Care Act known as Obamacare, it is not affordable. Premiums have gone up. Deductibles have gone up. Copays have gone up. Prescriptions have gone up and the coverage has gone down. What will you do to bring the cost down, and make coverage better?”

Hillary says that she is happy that there are no limits to how much can be wasted on medical care for any given person (presumably most of what is spent is waste). Her idea for controlling the cost is to raise participation in this system from 90 percent of the U.S. population to 100 percent. Essentially she has no answer to the biggest economic problem facing the U.S. (i.e., that we spend 2-4X as much on health care as the high-growth and high-wealth economies, with no better results).

Donald Trump points out that “Obamacare will never work. It’s very bad. Very bad health insurance. Far too expensive. And not only expensive for the person that has it, unbelievably expensive for our country. One of the biggest line items very shortly. We have to repeal it. And replace it. With something absolutely much less expensive.” Absent spectacular economic growth, this is unarguably true.

Specific remedies? Donald Trump starts by suggesting repealing Obamacare, which leaves us with the old oligopolistic system. He then talks about giving block grants to states for Medicaid, which doesn’t address the bigger expense of Medicare.

On Muslim immigration: Hillary points out that Muhammad Ali was a successful citizen. Donald Trump says build a “safe zone” somewhere other than the U.S. for Muslims fleeing their civil wars and have the gulf Arabs pay for the zones. Trump says “hundreds of thousands of people coming in from Syria when we know nothing about them. We know nothing about their values and we know nothing about their love for our country.” Hillary responds that she has seen pictures of “children suffering in this catastrophic war.” She blames the Russians. [But isn’t the U.S. to blame as well? If we weren’t propping up various factions in Syria, mightn’t the government there, with Russian assistance, be able to win the civil war and restore order, if not democracy? Wars never lasted this long in the old days because someone would lose.]

Folks who watched instead of simply read the transcript: Is this debate going to change anything?

 

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Some Facebook friends were having a discussion of a recording of Donald Trump’s private conversation in 2005. A Texas resident (and Hillary supporter, as it happens) opened with “The only thing I find remarkable about the debate about Mr. Trump’s audio and video recordings from the last few years is that so many men claim to be surprised about it.” A liberal New Yorker male feminist immediately attacked her with “Wow, L. That’s really sexist.” The funniest part of the discussion was a link to this Bill Burr video about old people out of sync with modern political views.

Most of the comments were actually by men saying that they would never do or say anything bad. Or maybe they did a few decades ago, before they became enlightened by Obama and Hillary, but nowhere near as bad as stuff that Donald Trump does and says. None of these guys judging the Donald had stacks of cash, private jets, two Sikorsky S-76 helicopters, celebrity, rich friends, or a circle of attractive young women anxious to join that party, but they were confident that they would behave well if they did. It was sort of an inverse Ring of Gyges fable.

In response to “Private guy talk. Pretty tame stuff. Of course, I lived in a fraternity house at a major university for two years,” here’s one salaryman’s condemnation of the billionaire:

The fact that it doesn’t bother you is a significant part of the problem. Sounds like you’ve been enculturated, perhaps through your fraternity experience or elsewhere, that this sort of thing is okay in a fraternity or anywhere else, for that matter. I reject that notion wholesale. I support your freedom of speech to say this sort of thing, but I am also free to observe that it is clearly demeaning to women and wouldn’t want my daughters exposed to it in any context, particularly in a business setting where it undermines their rights and opportunities. In shorthand, a clear indicator of what many describe as ‘Rape Culture.’

I would also add that what might seem okay in an all teen male fraternity environment is hopefully something that adult men can grow beyond as they mature and are socialized to interact with women on a more equal socio-economic basis. To see it in a middle age adult in a business setting is, candidly, disgusting, and would be grounds for immediate dismissal from any company I would respect.

Thankfully, none of my friends or the groups I’ve had the good fortune to frequent over the last thirty plus years are even a tiny fraction so crass or insensitive to women. Though I think this presidential race is certainly demonstrating that many seem to think as you do, but clearly, even more are as opposed to such behavior as I am. Maybe you could look beyond your current haunts for better, more forward looking role models? Come visit!

I think the way all of this is playing out is an illustration of the genius of Max Weber, who wouldn’t have been at all surprised to see how people whose paychecks depending on keeping a position within a bureaucracy will adjust their speech and, eventually, their thought processes.

Related:

• Bill Burr on ordinary people judging celebrities (about halfway through)
• Prince and Donald Trump

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Transcript of a recent conversation…

• Young MBA: “I can’t stand repeating myself”
• Experienced business person: “I don’t see a future for you as the manager of an American workforce.”

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