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A retired hedge fund manager sent me this 7-minute pitch (plus questions) for divorce insurance.

At 1:26:

• half of marriages fail, most within the first 8 years (one third of people will reach a 25th anniversary)
• Divorce reduces the average person’s wealth by 77% (why not only 50%? see “Litigation, Alimony, and Child Support in the U.S. Economy” for transaction costs and how people change their behavior in response to family law)
• Taxpayers end up on the hook for $112 billion (Parent A sues Parent B and prevails in winning custody, but due to choosing a non-wealthy sex partner, child support revenue does not increase total income enough to disqualify for subsidized housing, health care, food, smartphone, etc.)

At 3:08:

• Insurance policy will pay $10,000 to $2 million in the event of divorce (can rise with time)

I don’t see how this can work. “America, Home of the Transactional Marriage” (Atlantic) says that Americans tend to follow the money. Every U.S. state offers an inexpensive divorce procedure for parties who can agree on terms (in our survey of a Massachusetts courthouse, 17 percent of filings were “joint petitions”). What would stop two people from divorcing, splitting the insurance policy’s cash, and then getting back together? The Social Security system already provides a $128,000 cash bonus for people who divorce at 65 and remarry at 70 (see “Social Security and our world of no-fault divorce“). Why not spend $1,000 on an amicable divorce, pocket $128,000 from Social Security, pocket $2 million from this startup insurance company, and then remarry if it turns out that remarriage transaction is financially beneficial?

The Q&A session is interesting for what it reveals about America’s venture capitalists. None of them ask the above question, i.e., “If we live in a world of no-fault, no-social-consequence divorce, why wouldn’t a huge percentage of policyholders take the cash?” So the loss rate would go from the budgeted 50 percent to 90 percent, at which point the “insurance” ends up being simply a “savings account” with high fees and about 10 percent of customers who abandon their property.

Related:

• Wikipedia page on Moral Hazard

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The latest iPhones were announced today. It is tough to find the most critical information about the cameras, e.g., the sensor size. But from what has been announced it seems to me that Apple is using essentially the same sensors as in previous phones (i.e., smaller ones that what Sony and Samsung give consumers) but with increased downstream processing capabilities (i.e., trying to cheat physics, which even Elon Musk has trouble doing).

I still don’t get why an Android vendor doesn’t walk away with the 5 percent (?) slice of the market that is passionate about photography. Put in a 2/3″ or 1″ Fuji, Sony, or Toshiba sensor and crush all of the competition, albeit at the cost of some extra thickness (though maybe not thicker than an iPhone in a typical case).

Readers: What’s interesting about these new Apple phones, if anything?

Related:

• Sony’s curved 2/3″ sensor from 2014, designed for saving space (did it go into production?)
• As in the good old days, Microsoft invents the idea three years after Sony (press release on a 2017 “breakthrough”)

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Today is the primary election in Rhode Island. Matt Brown, a white male, is trying to put Gina Raimondo, who identifies as a woman, out of her job as governor. They’re both Democrats. Restoring white patriarchy is supported, according to Mr. Brown’s site, by Gloria Steinem (“feminist organizer”) because “Matt Brown will be a Governor who will take on the Trump-Pence administration’s anti-woman, anti-choice attacks and fight not just to protect reproductive freedom in Rhode Island,but to expand it.” Also by Kate Michelman, “former president of NARAL Pro-Choice America,” because “Matt Brown is unequivocally dedicated to the rights, health and lives of women…”

“In governor’s race, abortion dispute flares among Democrats” (Providence Journal):

Hoping to unseat Raimondo in the September Democratic primary, Brown released a letter endorsing him and criticizing Raimondo signed by more than 40 reproductive health-care advocates, including Steinem; Kate Michelman, former president of NARAL, and Barbara Roberts, a professor at Brown University’s Warren Alpert Medical School and former staff physician at Planned Parenthood of Rhode Island.

“Alarmingly, Rhode Island’s Democratic Governor has joined the attack on reproductive freedom,” the Brown endorsement letter said. “The Affordable Care Act requires each state exchange to include at least one plan that doesn’t cover abortion. Governor Raimondo forced insurers in Rhode Island to offer nine plans that restricted abortion coverage.”

“Feminism is not about electing one woman, but making life more fair for all women, so it’s important to say that the restrictions she signed deny reproductive choice to thousands of women in Rhode Island,” Gloria Steinem wrote the Journal in an email from her office.

“HealthSource RI offers 18 plans in the individual market, 12 of which cover abortion services and six of which do not except in very limited circumstances,” wrote HealthSource spokeswoman Kyrie Perry in an email about the current breakdown of plans on the exchange. “According to the Kaiser Family Foundation in 2016, 31 states have no plans that cover abortion on their marketplaces. Rhode Island is one of 19 states plus [Washington, D.C.] that offer at least one marketplace plan that includes coverage for abortion.”

Asked to clarify what Brown, if elected, would do differently than Raimondo, Brown campaign spokesman Ron Knox said he would push for legislation to scale back anti-abortion plans to the single plan required by federal law.

(Regardless of whether insurance pays, abortion is currently legal up to 24 weeks of pregnancy in Rhode Island, the same as in Massachusetts (nytimes), though profits from selling an abortion are lower in Rhode Island due to a less lucrative child support formula.)

Matt Brown’s supporters were out in force last Saturday evening during Water Fire ($15 and 15-minute Uber ride from KSFZ; similar distance from KPVD), which is how I became aware of this seemingly paradoxical situation.

Readers: Will it be fair to call this a victory for women if a white male endorsed by “progressive feminists” usurps the female governor’s place?

[Update: Despite the endorsement of feminists, Mr. Brown failed to prevail over Ms. Raimondo. The woman whom he sought to stuff back under the glass ceiling prevailed 56/34. Spencer Dickinson won only 10 percent of the vote and failed to win the endorsement of feminists despite promising “Women’s Rights: During my recent years in the legislature, I developed a personal approach which helped me to confront a difficult question. As a legislator, I resolved that I would advocate for a policy by which men would defer to a majority of women legislators on matters which pertain to women’s reproductive rights or other related rights. If I am elected Governor, I will take this advocacy one step further. As Governor, I will pledge to promote policies that have a clear majority support of women legislators, and I will veto any law that passes in opposition to a majority of women legislators.”]

Related:

• Newsweek piece from 2015 on how “a significant number of babies who were born at 22 weeks, just over five months of gestation, survived after being medically treated in a hospital” (i.e., we demand that insurance companies pay for an abortion at 22 or 23 weeks and we also demand that insurance companies pay out $millions, if necessary, to ensure the survival of a 22- or 23-week baby)

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CBS has been in the news lately. The all-male corporate executive team is now trying to find sort out ways to “donate $20 million to women’s groups following the Sunday resignation of CEO Leslie Moonves after sexual-harassment allegations by several women.” (Chronicle of Philanthropy; maybe this is better in their view than hiring a woman to join their team?)

“Les Moonves, one of the highest-paid CEOs in the US, leaves CBS with a net worth of $700 million” (Business Insider) is something that seems more interesting for shareholders. The company’s market cap is $21 billion. Thus roughly 3 percent of the total enterprise value has been extracted by this one employee (he also made some money before joining CBS). Was he working 24/7 at this job? From a 2005 NY Times article: “Moonves, although a lifelong Democrat and a friend of Bill Clinton’s, is something of a throwback. In his shows, he likes the men alpha and handsome and the women smart and beautiful, and he wants little personal complexity: happy endings are imperative.”

How does it benefit shareholders to have an employee who is so rich that he is hanging out with former Presidents? And did CBS need to pay someone $50+ million every year to tell them that the American public likes a happy ending?

Related:

• Harry Potter and the $100 million/year manager (from 2003: “Yesterday’s posting raises the question “if an executive can’t do a good job for $2 million/year, will he do a good job when paid $20 million/year?” The moribund U.S. economy seems to suggest that paying out huge sums to managers is not effective. … think about how focussed on work you’d be if someone handed you a $75 million check tomorrow. You’d probably move into a bigger apartment and redecorate. And wouldn’t it be nice to have a few vacation houses? You know that you’ll be traveling by private jet from now on, but to which of the 50 fractional jet ownership plans should you subscribe? You’re going to get invited to a lot of fun charity events so you’ll need a new wardrobe. In short, living like a rich person is very time-consuming.”)
• Gawker on the lawsuit filed by Moonves’s first wife (2004; being a defendant under California family law was a further distraction from the job; the litigation lasted for two years prior to what was expected to be “a lengthy trial”; every extra dollar paid by CBS to Moonves would have prolonged the litigation (when more is at stake, people fight more intensively))
• The Journal of Popular Studies on how the current wife supports and defends the man (July 2018)

[Buried in the middle bullet is something interesting. The journalist for “legalzoom” says that “But appearing in court wasn’t Moonves’ only speedy option. He could have rushed the process earlier by divorcing outside of California. While most states have residency requirements or long cooling-off periods, a few states offer a quick out. Nevada isn’t just the home of the drive-through wedding chapel. It’s also the best state for a quickie divorce.” The lawsuit was filed by his wife in California under California law. At that point, Moonves had no choice but to defend the suit (under the “no-fault” system, the wife was guaranteed to win a divorce, but there was an open question of how profitable it would be). The “no-fault” system is referred to by researchers as unilateral. Yet the American media portrays the defendant as having a world of options (which would be the case only under a bilateral system) and/or the decision to engage in a divorce lawsuit as an entirely voluntary process, agreed upon by both spouses.]

Readers: What organization should get the $20 million? There are roughly 75 million women in the U.S. labor force (U.S. Department of Labor, Women’s Bureau). Should each of these women get 27 cents (minus admin costs) for what they’ve suffered at the hands (etc.) of guys such as Moonves?

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It has been 17 years since the events of 9/11 transformed the United States. Despite fears of domestic jihad, we have preserved some of our traditional liberties, including the freedom to fly (well, except in the Washington, D.C., area, any time the President is visiting, any time there is a major league sports event, etc.). From the 1920s through the mid-1980s, the idea was that a middle-class American could purchase an airplane and fly almost anywhere within the U.S. without filing a flight plan, talking to Air Traffic Control, or otherwise becoming tangled up in a bureaucratic process. Due to skyrocketing (so to speak) costs, this had to be backed out to rent an airplane rather than purchase, at least for the middle-class earner. But we still have most of the freedom of avigation that we had back in the 1920s.

Could it be that we’ll get closer to mid-1980s prices for aircraft? Read on…

I met a young pilot recently and we discussed the possibility of him buying an airplane. Here’s part of an email from him:

My game plan is to keep adding certifications and experience then buy an aircraft in 7-12 years or so. I’m a long term thinker to a fault. The market should be flooded with many small aircraft in the future. Below, per FAA data, you can see from the 2012 and 2017 charts of the private pilots they are fewer and older as time progresses.

(Complete data: faa.gov)

Certainly it does seem as though potential light aircraft owners were concentrated at 55-59 in 2012 and are now concentrated at 60-64. The composite airplanes, such as Cirrus and Diamond, that have been built over the last 20 years, are mostly immune to corrosion.

It seems as though history is on his side. The pilot-owners who knew how to fly piston twins have aged out of being able to handle these high(ish)-performance aircraft and they are now selling for under $100,000, oftentimes for less than a same-era single-engine plane.

So perhaps in 7-12 years we will still have the freedom to fly and a Cirrus SR22 will be almost free (at least to acquire, if not to maintain)?

On the third hand, what about China? They have a rapidly developing general aviation culture. They are the owners of Cirrus and Continental, the manufacturer of the engines inside nearly all Cirruses. As Americans hang up their wings, why wouldn’t there be thousands of Chinese folks interested in exploring their new freedoms?

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At a recent family event I asked a young cousin what he was doing for a job. “Working on the Senate race in Tennessee,” he responded. He describes himself as a passionate liberal so I was later surprised to look up the race on Wikipedia and see that that the liberal New Yorker is doing his best to ensure that a female-identifying candidate (Marsha Blackburn) is defeated by a white male (Phil Bredesen, a former advocate of amending the state constitution to ban same-sex marriage).

How does it work with voters when they find out that out-of-state consultants are employed to persuade them? Can a “bring in the (Scarsdale) New York Democrats” approach succeed?

[Separately, if the Democratic Party tells voters that American women are victims and only the Democrats can help them, how can they spin their attempt to defeat a woman trying to bust through the glass ceiling and instead place a 74-year-old white male in a position of power?]

Related:

• “Should Republicans run only black women for Congress and Senate?“

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Boston peeps: You’re invited to MIT Room 35-225 at 6:30 pm on Wednesday, September 12. Oxana and I will talk about Oshkosh as a Safe Space (photos) based on our 2018 trip. Sponsor: MIT Flying Club.

(It might be safer to show up closer to 7 pm. The first 30 minutes of the block may be devoted to MIT Flying Club administration because it is the first meeting of the semester.)

Related:

• Oshkosh Reflections and Tips for Next Time
• Realistic Aerobatic Excitement at Oshkosh (GB1 GameBird and L-39X)
• Shaesta Waiz at Oshkosh
• What I learned about aircraft paint at Oshkosh
• Transitioning to electric flight (lectures at Oshkosh)
• Icon Aircraft at Oshkosh 2018
• Folks I want to meet at Oshkosh

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My Facebook friends are outraged because umpire Carlos Ramos penalized Serena Williams at the U.S. Open. This was a textbook example of female victimization in their view. Given that Ramos is Portuguese, however, would it make more sense for them to be outraged at Mr. Ramos being called a “thief”? That is an example of a Hispanic being victimized, no?

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Our local supermarket used to have at least one brand of packaged coffee on sale every week. It would rotate among Starbucks, Peet’s, and Dunkin’ Donuts. Discounts were typically 30 percent, e.g., from a regular price of $10 down to $7.

In May of this year, however, Nestle acquired the Starbucks supermarket coffee operation. Shortly after the deal closed, the sales stopped on all of the brands. What formerly cost $7 is now $10.

Readers: Have you noticed anything similar in your region?

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“Harvard Is Vaulting Workers Into the Middle Class With High Pay. Can Anyone Else Follow Its Lead?” (nytimes) is a feel-good story for readers about an enterprise so stuffed full of cash that it claims to pay workers wages based on something other than the market (left out of this is that, with higher pay, the contractors may just hire fewer and more-productive workers; see “MIT professor studies high-wage retailers” for how high wages may actually cut the percentage of an enterprise’s revenue that flows out to labor due to “Costcoization” (hiring only the most productive and energetic folks)).

From the Times:

Martha Bonilla is not your typical middle-class worker. And it’s not just that she was born in a backwater of El Salvador and crossed Mexico hidden among a pile of bananas in the back of a truck to make her way illegally into the United States at age 20.

Like millions of Americans lacking a college degree…

“Coming to the United States was the best decision I ever made,” Ms. Bonilla said.

For Ms. Bonilla, the result is an hourly wage of more than $25. Adding the money from a part-time job cooking at a student dorm, most weeks she clears more than $1,500.

So the good news for an American with minimal education is that it is possible to earn nearly $80,000 per year (in a town where a 3BR house costs $2 million!). On the other hand, the actual job described has been taken by an illegal immigrant.

The folks at the New York Times can’t imagine that an expanding supply of low-skill workers due to low-skill immigration has anything to do with the challenge of finding a high-paying job:

As the wages of American workers without a college education languish below where they were 40 years ago, Harvard’s experiment has led some economists and union organizers to think about similar arrangements to broadly benefit low-pay service workers, who form the biggest and fastest-growing part of the job market.

Recent research by economists at four top universities and the Social Security Administration concluded that the parceling out of less-skilled work to low-wage contractors — Goldman Sachs outsourcing its janitorial services, say, or Apple contracting out the assembly of its iPhones to Foxconn — could account for around one-third of the increase of wage inequality in the United States since 1980.

It is shuffling an employee from one enterprise to a different one that accounts for the huge wage cut. Nothing to do with supply and demand. Thus, if you’re a hospital and tired of paying surgeons $600,000 per year you can contract with Surgco and get surgeons for $400,000 per year plus a 5 percent fee for Surgco.

Larry Summers still remembers some economics (see “Women in Science” for how he never considered an economic explanation when he pondered a phenomenon and got fired):

But as Mr. Summers pointed out, across the economy, better jobs may mean fewer jobs. If, say, Massachusetts were to introduce a similar policy for public services, it would need to find the money. Taxpayers could provide it — or the state could scale back services and cut jobs. And employers forced to pay more may attract better-trained workers, displacing less-educated ones.

(i.e., Summers could manage a Costco if he gets forced out completely the next time he says something about women)

Readers: Is the nytimes trying to get low-skill Americans to vote for Trump? If not, how can we explain this article highlighting the fantastic low-skill job that has been snagged by an illegal immigrant?

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