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Tomorrow is the anniversary of Benjamin Franklin’s kite-in-a-thunderstorm experiment. Ohio University (the Athens of Ohio, minus the immediate insolvency) has prepared a fancy poster showing the most exciting electrical engineering experiments of all time.

What do readers think? Will this get young Americans excited about EE?

[And, separately, why is Bruce Jenner becoming a woman more newsworthy than Bruce Jenner allegedly causing the death of a woman with his/her (his and hers?) Cadillac Escalade and trailer (helped by another California driver in a Hummer H2)?]

Personally I am excited about EE right now. This weekend a friend criticized my clunky 17″ HP laptop (with 16 GB of RAM!) and asked when I would be buying a sleek $3000 Apple MacBook so that I could have a smaller screen but more street cred. I told him that I would buy a new laptop when there was a gallium nitride-based internal power converter so that I didn’t have to lug around a power brick. (See Cambridge Electronics web site for an explanation of GaN.) And I guess I’ll buy an electric car when GaN components bring the price down and push the range up.

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The accident rate in the U.S. per 100,000 people is pretty high but I had always thought that was due to the fact that we drive so many miles per person per year. However, sorting the table in http://en.wikipedia.org/wiki/List_of_countries_by_traffic-related_death_rate shows that we may simply be incompetent and/or be afflicted with poorly engineered roads. The fatality rate per billion vehicle-kilometers is 7.6 in the U.S., higher than countries that don’t have our divided highways and that have reputations for chaos in the streets. Israel, for example, is at 5.2. France at 6.3. Ireland at 3.4. Why isn’t pushing our fatality rate down to the Irish or Swedish (3.7) level an attainable goal? Is it because Google Cars will save us from ourselves soon enough?

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Folks:

Can someone explain to me why marijuana, in states where it is legal, costs so much? If it is a weed, isn’t it cheap to grow? (Maybe it is labor-intensive? As Jack Handey liked to tell children “You will never know what it’s like to work on a farm until your hands are raw, just so people can have fresh marijuana.”) This Web site says that marijuana costs $100-200 per ounce in Colorado. Why isn’t it closer to the price of spinach? I don’t think the explanation can be taxes because the Tax Foundation says that Colorado marijuana taxes are a percentage of revenue.

Second question: Is it legal for Colorado employers to screen for marijuana use and reject job applicants on that basis? Aside from jobs where federal laws require rejecting marijuana users (see my 2011 posting on FAA drug testing), why does occasional (legal) weekend marijuana use preclude a person from getting a paycheck?

Update: On June 15, 2015 the Colorado state Supreme Court ruled that an employer could fire an employee for off-duty marijuana use (WSJ). So you can enjoy recreational marijuana… as long as you don’t also want to have a paycheck from a private employer:

Colorado’s constitutional amendment that legalized recreational marijuana expressly states that employers wouldn’t be restricted from having policies that ban pot use by workers.

Some 23 states and the District of Columbia have legalized medical marijuana. Colorado and Washington state also permit recreational pot use. Legal experts, however, say it has remained unclear how such laws affect employers and whether they can fire a worker who uses the drug while off the job.

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Back in 2010 I helped get tents for 300 people down to Haiti (see “Personal Haitian Relief Operation”). This was about 10 days after the earthquake hit Port-au-Prince.

At the time I questioned the people running the tent city: “How can you guys possible make a difference when the Red Cross is here in full force?”

“How the Red Cross Raised Half a Billion Dollars for Haiti ­and Built Six Homes” provides an answer.

An interesting angle is the intense publicity around a crisis and the need for donations and then a long delay before anyone can find out how money was spent or what was accomplished.

Related:

• New Yorker piece on post-9/11 dissatisfaction with the Red Cross
• New York Times article on the Red Cross’s release of World War II-era documents (50 years later)

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Over drinks and dessert with some friends we got on the subject of skin color diversity at academic institutions. Universities say that they need to sort applicants by race because having a “diverse” class will lead to a richer educational experience for all.

We started with Stuyvesant high school, to which the only path in is via an impartially graded exam. The school is 78 percent Asian and Asian-American. The principal is named “Jie Zhang” and various other officials and coordinators are Asian as well. “When we get prerecorded phone calls from the school,” one parent said, “they start off in English then repeat the message in Chinese and then repeat it again in Korean.”

The subject of elite American schools filling their dorms with rich American kids of different skin tones came up. “That’s like establishing one’s connection to the underclass by saying ‘some of my best friends are extremely rich black people,'” I pointed out. A half-Haitian-American woman at the table said that even the richest darker-skinned Americans would bring diversity into the classroom due to their experiences of racial prejudice, including “microagression,” at the hands of white Americans. We as white people could never learn how bad this experience was because young black people would never share it with us. Suppose that we accept her account of Americans as everyday racists, how could a group of Americans, mostly with the same family income, constitute true diversity in a global economy? Wouldn’t someone from India, Burma, China, or Japan bring a more dramatically different perspective into the classroom than an American student, whatever his or her skin color happened to be? Isn’t having a 5000-year history of distinct culture more likely to result in a different perspective on the typical humanities class? The woman of partial Haitian heritage disagreed and then pointed out that it wasn’t just a better educational experience that American universities were seeking but rather “remedy” for past injustices to people with different skin colors.

What do readers think? In a world economy where the U.S. is less than 25 percent of GDP, how does it make sense to have a university claiming to be “global” where 90 percent of students are American-born (e.g., Yale)? And if students do actually learn more in the presence of diversity, can we see that in the academic performance of students at some of those schools in Europe where there is a true mixing of languages and cultures?

 

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“Connecticut Tax Boomerang” is a Wall Street Journal article on how General Electric is considering moving to a new state due to a change in the tax law:

making permanent a 20% surtax on a company’s annual tax liability—a tax on a tax—and for the first time taxing Connecticut companies on their world-wide income, rather than what they earn in the state.

Though not as lucrative for child support as Massachusetts, Connecticut is more favorable to a plaintiff than the majority of U.S. states (see the Connecticut chapter of Real World Divorce). Here are some features that other states don’t necessarily have:

• unlimited child support in theory (though in practice total revenue of more than $4 million (tax-free) from obtaining custody of a single child might be challenging)
• lifetime alimony
• an expectation that a divorce plaintiff will stay out of the workforce until the youngest child turns 18

A GE spouse could be giving up a lot of cash if he or she waits for the company to move before filing a divorce lawsuit.

Kimberly Scott v. Stuart Scott is a recent example of Connecticut law in practice. Back in 2007, Kimberly Scott got a divorce judgment against Stuart Scott for $600,000 per year in taxable alimony plus tax-free child support for two children. At roughly the same time the defendant was diagnosed with cancer. Kimberly sued her ex-husband in January 2013 seeking (a) an increase in alimony, (b) to have her legal fees paid for the new lawsuit (Ellen Pao-style), (c) an increase in child support paid to her, and (d) an order that the defendant be held in contempt of court for not paying a therapist bill.

The plaintiff emerged mostly victorious from the second lawsuit, with a March 2014 judgment (full text) by Judge John Carbonneau. She got a bump in alimony to $720,000 per year (taxable) and her remaining minor child will yield $102,000 in tax-free revenue. This latter cash stream is technically referred to as “child support” but the recipient apparently doesn’t have to pay any of the children’s expenses, notes the judgment, because the defendant pays for everything on top of the checks written to the mother. This includes private schools, extracurricular activities, 529 college savings accounts, and college tuition and fees. Dad pays for his ex-wife and her relatives to go on trips:

Plaintiff charges defendant for numerous expenses associated with the girls. Some include transportation, gas, clothing, hotel costs, gifts to teachers and counselors and trips with friends. When her mother or another family member accompanies the girls on a trip, plaintiff has included their costs and expenses for payment or reimbursement by defendant.

Plaintiff Kimberly Scott was 50 years old with a Bachelor’s degree. The defendant tried to suggest that she could earn at least $160 per week, but the judge rejected that assumption: “Neither party ascribes any current earning capacity to plaintiff.” Curiously, given that all of the money seemed to be coming from the father, the judgment reads “The court finds that both girls remain dependent on their parents for financial support even though Taelor is legally an adult.”

Judge Carbonneau noted the defendant’s terminal cancer, but found that it did not affect his ability to pay the plaintiff more money: “Defendant currently faces health challenges, but his income has not yet been significantly affected.” In case the cancer affected the defendant’s check-writing hand, the judge built in the government’s help in securing the plaintiff’s revenue stream: “All of defendant’s payments to plaintiff shall be secured by a contingent wage-withholding” (despite the fact that “There is no evidence that defendant has not paid his current alimony obligation.”).

The defendant died from his cancer (Washington Post), age 49, less than a year after this new revenue level was put in place.

[Note that typically a Connecticut court will order a divorce lawsuit loser to purchase life insurance with the winner as the beneficiary (legislative report) and therefore the defendant’s death may not have resulted in any financial loss to the plaintiff.]

What are the stakes for the spouse of a GE executive earning a multi-million dollar annual salary? The company could move to Germany, taking advantage of its manufacturing tradition and comparatively low corporate tax rates. According to the attorney in Baden-Baden whom we interviewed, the $102,000/year Connecticut child would become a $6,000/year Germany child (top of the “Düsseldorfer Tabelle”). Kimberly Scott’s 14-year marriage in Germany might have yielded a few years of alimony, but not the lifetime award that she obtained in Connecticut. The company could move to Texas, where child support is capped at $20,000 per year and alimony is capped at $60,000 per year.

Related:

• divorce law differences between New Jersey and Georgia (Mercedes move)

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Folks have been marveling at the number of Republican candidates for president. My personal opinion is that none of these people have any chance of being elected (previous posting) unless, perhaps, they simply adopt the same political positions as the Democrats. Let’s assume that there is some chance that a Republican could win. Why are there so many more during this election cycle compared to previous ones?

How about this theory: the Clintons have shown that it is possible to become among the richest people on the planet by using the American Presidency as a springboard. The job is thus perceived to have a higher rate of pay than formerly and therefore there are more people who come forward to apply for the job. No political science degree required; just Econ 101.

What do readers think?

Related:

• May 2015 posting about the Clintons’ $22 million per year in earnings
• Wikipedia page regarding Harry Truman’s post-presidency lifestyle

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“Last Task After Layoff at Disney: Train Foreign Replacements” (NYT, June 3, 2015) is an article about Disney getting rid of a bunch of older unwanted IT workers in favor of young immigrants from India. The journalist, interviewees, and reader comments express shock at Disney’s lack of sensitivity in making the displaced Americans train their Indian replacements:

“I just couldn’t believe they could fly people in to sit at our desks and take over our jobs exactly,” said one former worker, an American in his 40s who remains unemployed since his last day at Disney on Jan. 30. “It was so humiliating to train somebody else to take over your job. I still can’t grasp it.”

One former worker, a 57-year-old man with more than 10 years at Disney, displayed a list of 18 jobs within the company he had applied for. He had not had more than an initial conversation on any one, he said.

“The first 30 days was all capturing what I did,” said the American in his 40s, who worked 10 years in his Disney job. “The next 30 days they worked side by side with me, and the last 30 days they took over my job completely.” To receive his severance bonus, he said, “I had to make sure they were doing my job correctly.”

The former Disney employee who is 57 worked in project management and software development. His résumé lists a top-level skill certification and command of seven operating systems, 15 program languages and more than two dozen other applications and media.

This will perhaps not be one of the references cited next time Barack Obama or another politician advises young Americans to pursue STEM careers.

I’m not shocked at Disney’s quest to cut costs. I am shocked, however, that it was humans who came over here rather than data going over there. If the job was to sit at a computer connected to a network, why wouldn’t Disney let the Indians stay in India and invest in a fat network pipe rather than investing, indirectly through a contractor, in all of the H1-B legal work? Is it concerns over data security?

What about the age discrimination angle? Is it okay to fire all of your workers in their 40s and 50s and replace them with people aged 20-35? If the answer is “no” then is it okay to fire a large group of workers, most of whom happen to be age 45-60 and replace them with a contractor who will supply on-site workers, most of whom happen to be 20-35?

[One of my pet theories is that a lot of the reason it makes sense for an American company to move an operation over to India or China is that the result is a young workforce for that operation.]

Related:

• “MIT alumni in their 50s”

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My latest Facebook posting:

Department of cross-cultural understanding: I have figured out how to make sure that we have enough food for 12 dinner guests… tell [the Russian adults in the household] that 4 people are coming over for snacks.

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A friend in Cambridge shared this article about Bernie Sanders proposing a 90 percent top income tax rate. I tried to figure out how it would work in practice given our not-so-simple tax code.

My friend’s justification for the higher tax rate was “You want to live in a country? With paved roads and safe bridges and lots of customers for your products? Then pay for it!” Some of his other friends observed that the most productive citizens might be motivated to emigrate (e.g., Eduardo Saverin fled to Singapore, where the entire government is run for about 15 percent of GDP (compare to roughly 40 percent here); almost anywhere in the EU or Switzerland would also become a low-tax option were the U.S. to adopt the proposed rate). He responded “If the threat is: rich people will take their money and go live somewhere else, you know what I say to that? Good riddance! You want to be an American and take advantage of the biggest army on the planet defending your shit? Pay for it. You want access to the best consumer market in the solar system? Pay for it. Capitalists: always looking for a handout.” His friend chimed in “Yea I love the anti-government folks. They are the ones who live in this weird world where the government is useless…but take advantage of it the most” and he responded “Exactly: handouts. You don’t get to be rich without taking maximal advantage of the system.”

I then asked “Where do you define rich? Personally I would choose the threshold for high taxation at $1 more than whatever I happen to earn in any given year. And you are making powerful arguments that all wealth properly belongs to the government for enabling it to be created or preserved. Why not a higher tax rate than 90% then?” and that generated a consensus that the threshold for the 90% rate should be $1 million per year (given state and local taxes, therefore, it would become tough to take home more than $500,000 per year).

Given that the same people who support higher taxes on the rich also support higher profits for child support plaintiffs I asked “How would you address the issue of child support in your ‘90% over $1 million’ system? Many states, including Massachusetts, set child support based on pre-tax income. If a woman met a finance industry guy in a bar and got pregnant following their one-night encounter, she might get a $1-1.7 million/year child support revenue stream (depending on the state) based on his $10 million/year income. But under your system the child support (not tax deductible, unlike alimony) would exceed the defendant’s after-tax income.”

The answer to that conundrum was that only a small percentage of child support plaintiffs get more than $500,000 per year in revenue from any one defendant (which still does leave open the problem of what to do with those defendants whose child support obligation exceeds after-tax income).

I then asked “What happens to mid-career people who have already saved a lot? Suppose an entrepreneur has $100 million in savings from a previous company. Why does she keep working if the most she can possibly take home is about $1 million? Do we accept that people like her exit the workforce?”

The response from the the original sharer “People who have $100 mil in the bank should be figuring out how to spend that money in the most productive possible way, not working their butts off trying to make more money from a salary! What the hell is the point of that?!” I pointed out to him that he was a big admirer of Tesla “which was founded by Elon Musk after he already made $165 million from PayPal (and started PayPal after making $22 million from Zip2). Would Musk would have done the same thing with no way to earn more than $500k to $1 million per year? Or would be better for society not to have rich people like Musk at all?”

The answer regarding Musk, who has gone from being worth about $22 million (pre-tax) to $12 billion was that “Elon Musk is trying to save the world. That’s why I admire him. He’s not in it for the money; that’s the last damn thing he needs. He’s way smarter than that. He knows money does him no good on a burning planet [global warming reference]. And he didn’t make $165 mil from PayPal in salary payments smile emoticon He did that by creating massive shareholder value.” [Nobody commented on the irony of a person so uninterested in money earning $12 billion.]

So it turned out that at least this advocate for a 90 percent tax rate wants to distinguish between “unproductive” W2 income and “productive” capital gains income. But how does that work in practice? Couldn’t companies issue employee stock options that would be tax-free at the time of issue (see irs.gov) and then take the money that they would have paid in W2 salary and use it to buy back shares, thus lifting the price of the stock? The formerly high-paid W2 workers would now be high-paid option exercisers. Perhaps this would work out better for public company shareholders because the insiders couldn’t enrich themselves without returning cash to shareholders as well.

And what about people who have a high income because they operate a business as a sole proprietor or partner? Are they also subject to this 90 percent tax? If so, do they cut back to working 15 hours per week and let the business shrink? If they’re not subject to this 90 percent tax does that simply mean that companies bring in their most important/valued people as 1099 consultants on a project-by-project basis? Then the “consultants” can keep more than 10 percent of their income. With a high minimum wage (previous posting) and a high top tax rate, the U.S. becomes a nation of consultants at the top and bottom end of the income scale?

What do readers think? Could the 90 percent tax rate work? If so, how? And let’s say that that it does work but results in the high-income people that make us sick with envy emigrating to Europe and Singapore, is that good or bad? We lose the people who pay about half of current federal income taxes (source) but prices for downtown apartments, fancy suburban mansions, and beach houses will all presumably fall. A variety of European countries had very high tax rates in the 1970s and average citizens didn’t get upset when their most successful peers emigrated to Monaco (or just moved their productive assets offshore, like U2).

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