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“Capitalists, Arise: We Need to Deal With Income Inequality” is a nytimes piece by an old rich guy who immigrated here from Romania in 1954 and ultimately became head of a big ad agency. Readers comment that they want inequality cured with 1954 income tax rates, e.g,. 94%. They want this to kick in for incomes above about $1 million (not sure that their favored presidential candidate will go along with this; as noted in this May 2015 post, the Clintons have been earning about $22 million per year).

The old rich guy writes about how he got into elite schools: “I was invited by the headmaster of Phillips Exeter Academy to attend his school. From there I went to Princeton and the Stanford Business School.”

Nobody seems interested in the fact that the U.S. population in 1954 was 163 million, half of the present number. Thus there was a lot less competition for getting into elite schools (this was prior to the Jet Age that opened up these schools to foreign students as well).

There was a lot less country to country competition. Romania would not have been a viable location for a new business in 1954. Today it is part of the EU and ranks higher than average on economic freedom (Heritage Foundation). Romania has a lower tax burden as a percentage of GDP than does the U.S. For at least some companies or individuals it might well be a reasonable place to do business.

What do readers think? Is this screed against income inequality really a nostalgic desire to go back to the good old days when the U.S. was more favorably situated compared to other countries and before immigrants forced native-born Americans to work for stuff that had previously been theirs by right?

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An Iran armed with ballistic missiles and atomic bombs didn’t bother anyone enough to block a recent international agreement. What could be more frightening than that? North American consumers paying market prices for trucks and cheese. From “Trans-Pacific Partnership Session Ends With Heels Dug In” (nytimes):

Tokyo was ready to extend major concessions on American truck tariffs but was blocked by Mexico, which wanted less competition for its own trucks in the United States market.

Canada held firm on protecting its politically sensitive dairy market ahead of elections in October, but for New Zealand, a tiny country with huge dairy exports, that was unacceptable.

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Can you think of anyone with top academic credentials who got fired from a job for underperformance, sued to get paid for having XX chromosomes, and who was tied to the world of nonstandard sexuality?

No, not Ellen Pao of Princeton and Harvard, Kleiner Perkins/Reddit, and (at least formerly) gay men.

Gretchen Kalonji, a 1980 graduate from the MIT materials science department, eventually became a professor at MIT. She was denied tenure in 1988, analogous to Ellen Pao’s failure to be promoted to senior partner at Kleiner. Kalonji sued MIT, eventually settling in 1995 for “an undisclosed amount” plus “MIT also agreed to spend at least $50,000 a year for 5 years on a national program encouraging women and minority grad students and postdocs to move onto university faculties.” (sciencemag.org)

Kalonji moved west and ended up in a same-sex relationship with Denice Denton, the chancellor of University of California Santa Cruz. Denton was described as “admired for overcoming gender and sexual-orientation biases and for taking a practical approach to social justice issues” and “ensnared in an investigation into unreported pay and perks in the UC system and was criticized after $600,000 in renovations were made to her university home.”

Denton arranged a $192,000/year job for Kalonji as the University of California’s “director of international strategy development” (sfgate; WSJ) . Denton subsequently committed suicide, leaving an estate worth perhaps $2 million. Kalonji then sued the estate for more than 100 percent of this value (argument: (1) if it had been legal for two women to be married then Denton would have married her; (2) had they in fact been married, Denton would have updated her will and left everything to Kalonji instead of to Denton’s blood relatives). (Santa Cruz Sentinel) Kalonji ultimately settled this lawsuit in exchange for roughly $750,000 in real estate (Santa Cruz Sentinel).

What do readers think? The New York Times gives all credit to Ellen Pao and, implicitly, Princeton and Harvard. But it would seem that an MIT graduate blazed the trail…

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Who has tried out the latest electric bikes?

A few questions:

• Does the overall concept make sense if what you like is bicycling? Most of the bikes seem to weigh about 50 lbs., which I guess makes them super light compared to a scooter or motorcycle, but very heavy if you want to pedal them uphill.
• Are they more or less fun on a 2-hour road ride than a standard road bike?
• Do you actually get any exercise when using one of these?
• Are they way better for mountain biking because you can maintain momentum even uphill?
• Why do a lot of them cost more than a used Toyota Prius? (maybe that is an unfair question since there are non-electric bikes that cost more than a new Toyota Prius) If this were a mass-market product would they need to cost much more than the $600 that you’d pay for a good hybrid/city bike?
• Why aren’t the big bike companies, such as Giant, Trek, and Specialized, leaders in this area?
• Are they amazingly great for keeping up with a friend who is in killer shape and is on a non-electric bike?
• pedal-linked or throttle control for the electric motor?
• is there any point in having more than three gears once the electric assist is available? Why not ditch the low gears in favor of software that automatically adds electric power if the cadence falls while the rider is putting a lot of torque in? (maybe they are already doing this)
• shouldn’t tandem bikes all have electric boost? Tandems are already crazy heavy and expensive.

It is sad that, at least for the weather-wimpy, we don’t have a long biking season here in Massachusetts (not long enough to justify a $3000 electric bike anyway!).

Related:

• gallium nitride (GaN) power electronics to lower the weight and/or extend the range

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In 2012 I wrote Christmas gift for someone you hate: Windows 8. Today I allowed Microsoft to upgrade my desktop computer to Windows 10, which took about 10 minutes (presumably the 1 TB SSD C: drive helped). Everything seems to work, including the Dropbox and Crashplan background processes. The Windows 8 tablet interface seems to be gone and I’m back to “just a desktop” (conspiracy theory: Microsoft secretly replaced Windows 8 with Windows 7 plus a light re-skin and just told everyone that it was a new operating system).

How are readers doing with Windows 10? What new and useful features are there? Is there anything substantially better about it than Windows XP? Google Chrome was crashing pretty frequently for me before the upgrade. Is it time to move to the new Microsoft Edge browser?

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Netflix now offers a year of paid parental leave to both mothers and fathers (Washington Post). Readers would not forgive me if I didn’t try to explore the economics of this.

Suppose that Jack and Jill are expecting their first baby and are hoping to have a family of four children as well as own their own business. Both are skilled software engineers. They both take jobs at Netflix, earning a combined $300,000 per year. The are just finding their way around the class libraries a month later, without much working code expected of either of them. Jill gives birth to Child #1. Jack and Jill then sell their expensive Silicon Valley house and move to Lake Tahoe, Nevada where they write code for their future startup company while also enjoying skiing and hiking. Child care is cheap up there so they can park the baby any time that they want (or most of the time) for minimal dollars (see the California and Nevada chapters of Real World Divorce, State Background sections, for the statewide averages).

When Child #1 is a year old, they return to work, renting a short-term stay apartment. A month into the job, however, Jill gives birth to Child #2. Back to Lake Tahoe for another year of work on the startup while collecting $300,000 per year. When they go back of course their employer needs to send them to some training programs to brush up their knowledge of the latest Java framework. (Because of course they are all so much better than straight JSP that you need to throw out your framework every year and start with a different one.) A month after they return to Netflix the second time, having done nothing but learn a new framework, Jill gives birth to Child #3, continuing the 13-month spacing. Back to Lake Tahoe for another year. They do this again with Child #4, return to work for two months and then quit to run their own company, whose product is now basically ready (about four years of development effort by two skilled programmers has gone into it). Netflix has paid them for 4.5 years, a total of $1.35 million plus benefits worth another $300,000? Netflix has received nothing in exchange for this cash. Jack and Jill have four healthy children, all of the intellectual capital investment that they needed for their startup, and perhaps $400,000 saved because they were being paid at Silicon Valley rates but spending at rural Nevada rates. Their stock option grants from 4.5 years earlier are now fully vested so, if the asset bubble continued to inflate, they might have another $1 million in stock option value.

Do readers see any reason why this wouldn’t work? I don’t see how Netflix could justify firing either Jack or Jill at any point. What kind of performance expectations could be imposed on workers who show up for just one month at a time? And how would the usual sluggish big company firing process work when people go out on parental leave before the company has time to put their on a performance improvement plan? If the goal of people who work for big Silicon Valley companies is to found or join a startup, why not let Netflix parental leave finance that goal?

Related:

• nytimes article on the idealist who established a minimum wage of $70,000 per year at his company (turns out that being an idealist in a world of realists can be challenging)

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“Credit Supply and the Rise in College Tuition: Evidence from the Expansion in Federal Student Aid Programs” is a study by economists at the New York Fed on what percentage of tax dollars that were supposed to subsidize students actually ended up subsidizing colleges instead (because they could raise their tuition by more than 100% of the subsidy). They don’t look at the other folks who get rich off Federal student aid: lenders who provide student loans are fairly high interest rates yet in fact incur no risk because they can get more tax dollars if the students don’t pay.

For those interested in just how paralyzed and ineffective Americans can be when it comes to clear thinking about public policy, the study references a 1987 New York Times article by the Secretary of Education at the time (William Bennett). More than 30 years ago Bennett figured out that the subsidies helped colleges, not students, and that even if they were redesigned to help students it didn’t make sense to provide unlimited federal funds: “the chief beneficiaries of a college education are the students. On average, college graduates earn $640,000 more over their lifetimes than nongraduates do. It is simply not fair to ask taxpayers, many of whom do not go to college, to pay more than their fair share of the tuition burden.”

Related:

• Maybe Obama was right for trying to kill 529 Plans?
• government subsidies for flight schools
• survey of the latest economics papers on what kind of higher education does yield a good return on investment
• Missoula (what do students do once they get to college)

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It is almost time for Burning Man. Two years in a row is more burning than a Bostonian probably needs, but a friend pressed me into it.

We have the opportunity to load up part of a container here in Boston with whatever heavy non-perishable items that we want to have with us (but not liquids unless in cans, I think). So that leads to the question… what to bring?

We’ll be camping with the Pongo Lounge folks, which means that we will have a field kitchen and water supply, but I don’t imagine that it will be easy or simple to cook or clean up. It will be fairly easy to heat stuff up to lukewarm at least by leaving it out in the sun but tough to cool anything except perhaps by consuming it in the morning after a cold night.

If you had to live on canned and/or dry food for a week, what would you choose?

[Of course we will try to bring in some fresh food and keep it on ice but I have a feeling that after a couple of days we will be reduced to canned items.]

Related:

• Best way to visit Burning Man: work for the government (I want their menu!)

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“Pilot Shortage Halves Republic Airways Stock” is a Wall Street Journal article about how Republic, a regional jet operator, can’t find enough pilots to keep the planes going. In theory they could just offer a $20,000 signing bonus and have all the pilots that they needed, but presumably their union contract with pilots would prohibit that (since the more senior pilots would say “We should get the $20,000 instead”; see “Unions and Airlines” for my article on this toxic combination for shareholders).

I’m also wondering where these low-level pilot jobs will end up after the latest rounds of employment market intervention by the government. The union contract may say $19 per flight hour, for example, roughly $19,000 per year given the typical 1000-hour schedule. But due to the abysmal schedules assigned to new pilots in the U.S. (so that senior pilots can work minimal numbers of days), it might take 22 days per month at 14 hours per day to get in the full amount of flying. That’s about 3700 hours per year of deadheading, waiting around airports, and doing other stuff for the employer’s convenience. At the new $15/hour minimum wage, that’s $55,440 in straight time plus required overtime pay for a lot of those hours? Thus I am wondering if the argument over the typical low wages for entry-level airline jobs is moot. It may soon be illegal to pay anywhere close to those wages.

Labor is at least 20 percent of a U.S. airline’s cost (WSJ 2012; probably more right now due to the collapse of fuel prices). So it seems reasonable to expect ticket prices to go up.

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“Putting a Price on a Human Egg” is a Wall Street Journal story about collusion by fertility clinics to limit payments to human egg donors to $10,000 per cycle. There is a discussion that at least in some cases the process may simply transfer infertility from one woman to another: “Leah Campbell, a 32-year-old writer in Anchorage, Alaska, suffered complications following two donor-egg cycles while in her 20s and said she became infertile as a result.” A quick Google search revealed that nobody seems to know the correlation between egg donation and subsequent infertility.

As noted in Real World Divorce, it is straightforward to sell an abortion for $250,000 in lieu of expected child support payments and the link between abortion and subsequent infertility is well-studied (example paper).

The marketing for egg donation seems to be mostly directed at college students. What if, instead of selling eggs, they were to have sex with the men most conveniently available? http://www.masslive.com/database/umasspayroll/ shows that, in 2007, a full professor of Biology at the University of Massachusetts earned about $130,000 per year. Adding 3% annual increases since then gets us to a current salary of $165,000 per year. That’s $3173 in weekly pre-tax income. Feeding that into the Massachusetts Child Support Worksheet yields annual tax-free revenue of $30,368 or $698,464 over a 23-year period plus likely college tuition, day care, and other expenses of roughly $400,000. Thus the professor’s non-abortion cash payments are likely to be $1.1 million.

[Note that, if the professor is married, and his wife chooses to sue him for divorce after finding out about the dalliance with the student, if the student can get her lawsuit filed first and a child support order established, the claims of the wife and children of the marriage will be inferior to the claims of the owner of the out-of-wedlock child. The professor’s income for child support purposes when the wife sues will be figured by subtracting the existing child support order from the “gross weekly income” (fans of arithmetic/accounting will note that the “Other Support Obligations paid” field is an after-tax number being subtracted from a pre-tax gross number, so it is quite possible that the professor’s true after-tax and after-paying child support income is $0 and yet he would be subject to an additional order to pay more child support to a new plaintiff.]

So it would seem that without leaving the campus a student could easily sell an abortion for 25X what she can sell an egg for.

What do readers think? Should the fertility clinics be prohibited from fixing prices? If the answer is “no” and the clinics can fix prices, is $10,000 an acceptable number given the profits available to abortion retailers?

Related:

• Payment for surrogate mothers

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