Philip Greenspun’s Weblog

The Japanese are an organized, skilled, reasonably rich, and generous people, so I don’t think that they need more in the way of donations to recover from the tsunami. What can we do for the Japanese then? Buy their exports. Over the next year or so, I’m going to suggest some things that we might ordinarily buy from other sources that we can instead buy from Japanese companies. (I already bought a Honda Odyssey, which contains a lot of Japanese-made parts, but I’m going to concentrate on the less obvious stuff.)

The big idea for today is a kitchen knife:

• Global Knives
• Shun DM0702 Classic 7-Inch Santoku Knife (this is the one that I will buy unless readers suggest otherwise)
• Korin.com has a bunch of $300-3000 hand-crafted knives suitable for the top managers of the non-profit organizations currently soliciting our donations (I’ll buy one if NPR offers me a $1.2 million/year job!)

Reader comments with experience regarding Japanese-made knives and suggestions for alternatives would be welcome.

[Update: I bought the Shun Santoku knife, which happens also to be the choice of a friend who is the most skilled cook that I know. How does the Shun knife compare to my Wusthof chef’s knife? The best comparison is like a surgeon’s scalpel to a stage sword used in a 6th-grade production of Hamlet. The weight of the Shun is enough to push the blade through a strawberry. It is a scary tool in the hands of the incompetent (i.e., me).]

[Update #2: Grapefruit can also be cut, I’ve discovered, with barely more than the weight of the Shun Santoku knife. I was also inspired to slice up some parsnips from a local farm.]

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As promised in “Stupid white man criticizes smart Chinese woman”, I have now read Battle Hymn of the Tiger Mother and drafted a review. Comments/corrections would be appreciated.

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What’s the best way to manage the finances for a small business that is not a separate corporation or LLC (i.e., the income will be reported on Schedule C)?

Currently, I have some income from my writing, photography, and consulting work (e.g., as a software expert witness; litigation turns out to be a growth industry in the U.S.). I deposit this into my personal checking account. I pay for expenses with my personal Visa card or by writing checks from the personal checking account.

I am also renting out an apartment that I own and the money flows in the same manner, deposited into my personal checking account with expenses being written from the personal account.

Running a small business plus the apartment means that I get to assist the U.S. Congress in its efforts to make the United States the world’s best country in which to be a lawyer or an accountant. The tax forms filed in 2009 occupied 119 pages. Paying the accountant for all of this labor was somewhat painful, but not nearly as painful as the bookkeeping task of having to go through an entire year of checking account statements and credit card bills to figure out which expenditures were business expenses and, if so, how each should be categorized (“insurance” or “postage and shipping”, etc.).

The advantage of my current system is simplicity during the year. I carry just one credit card in my wallet. I keep track of just one checkbook. I log into a single online banking site when I want to pay bills, both personal and business. All of the bookkeeping is pushed into a single day of pain in March of every year.

I’m wondering if it wouldn’t make sense to set up a dedicated account, with associated credit card, and try to do the bookkeeping on a more standard continuous basis. Here then are the questions…

1. can one checking account and/or credit card suffice for both the Schedule C business and the Schedule E (rental apartment) business?
2. is there good software for separating business expenses into two schedule Cs (in case I decide to separate some of the different kinds of work)?
3. is there a system that is smart about categorizing expenses, e.g., if it sees a credit card charge from Delta Airlines will automatically put that into “travel”

Requirements:

• should be Web-based, ideally, though I am back at my desk pretty frequently so a Windows-based application would be acceptable if much better than Web-based systems
• should not make it much harder/more tedious to pay a bill then currently
• should include the capability to mail checks to vendors (I do this currently with online bill paying from the bank; it would be nice if I could transfer the vendors and their street addresses but I doubt that will be possible)

Ideas and experience?

[Separately, how come small business accounting and bookkeeping hasn’t been offshored to India or China? I do like my accountant, but I would think that someone in China could learn U.S. regulations and provide the same service.]

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When people ask about my favorite tourist destination, I almost always say “Japan, because although it isn’t poor, everything is different from the U.S.” (my photos). Japan was Albert Einstein’s favorite country to visit (pre-WWII) and he admired the people and appreciated their hospitality. My last visit to Sendai was August 2004 (snapshots), part of a road trip from Narita airport to Hokkaido (Weblog entries: driving; trip report).

I’ve been saddened by the news about the earthquake in Japan, but I have no doubt that the world’s most competent people will recover quickly. There is such a depth of skill among the Japanese people that we should continue to expect great things from them.

I’ve spent the last couple of months complaining about the weather here in Massachusetts, with snow hanging around like an unwanted in-law and making it impossible to walk the dog without donning snowshoes. Now that Nature’s power has been made evident in Japan, I feel ashamed for having whined.

One thing that does concern me, however, is Japan’s indebtedness. The government borrowed so much money (up to more than 200 percent of GDP) dealing with a minor problem (economic growth not as strong as politicians would have liked) and engaging in “stimulus” spending that failed to stimulate (though it did cover the landscape with concrete). I wonder if they now have the capacity to borrow whatever it will take to dig the country out of a serious problem. I find it hard to believe that an incompetent government and crony capitalism can permanently hold back the world’s most skilled people, but this belief is based on faith rather than data.

[And perhaps there is a cautionary tale in here for the U.S. Don’t spend all of your capital trying to fight a man-made problem, e.g., the subprime and asset-bubble collapse, because you might need it to fight a much larger problem.]

[Separately, does anyone have good ideas for how to contribute to disaster relief in Japan? I can’t donate to the Red Cross because I have an agreement not to donate money to organizations whose employees make more than I do (the Form 990 for the American Red Cross (available from guidestar.org) reveals that James Hrouda collected $648,000 in 2009; Mary Elcano took $538,000 off the top; Brian Rhoa raked off $400,000; Mary-Alice Frank took home $541,000; Theresa Bischoff, Elizabeth O’Neill, Gail McGovern, and William Moore all earned $400,000 or more).]

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The iPad 2 WiFi looks like a nice machine for $499. The iPad 2s with a mobile data connection don’t seem like a good deal at all. You pay $629 to $829 for the device plus $420/year for 2 GB of data access per month (fairly skimpy for anyone working with video; they might have to budget for some heavy overage fees). If you can get 4G on a small lightweight device such as the Samsung Epic phone, why not on a large heavy mobile device such as the iPad? If Samsung and HTC could give people 4G nine months ago, why can’t Apple give consumers 4G today? If people are going to pay $420 per year for a data connection to their iPad, why can’t it be a fast one?

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Paul Krugman has a column in yesterday’s NY Times “Dumbing Deficits Down” in which he says that the government can save money by preventing disease:

“Limiting health costs, therefore, requires a smarter approach. We need to work harder on prevention, which can be much cheaper than a cure.”

I can understand how this would work for a private insurer. If a person can be prevented from getting any disease until age 65, for example, the insurance company saves a lot of money. Or if a group of employees can be prevented from getting any disease until they quit their job and transfer to some other insurance program, that’s great. If these folks develop expensive problems on their 65th birthdays, the insurance companies have done everything perfectly. They’ve spent exactly the minimum necessary on prevention and all the costs of treatment will be dumped onto the taxpayer through Medicare.

How does Krugman’s idea work financially for the federal government, though? Barack Hussein Obama may live like a king, but there is no evidence that he is a god. Neither he nor the bureaucracy has been able to keep humans alive and healthy forever. The American whose heart disease was prevented at age 70 may simply die of cancer at age 80. Whatever Medicare would have paid to treat the heart disease they spent on treating the cancer. Meanwhile, Social Security sent out an additional 10 years of benefit checks.

At the end of the article, Krugman complains that “[the Republican] side sneers at knowledge and exalts ignorance”, implying that people (like Krugman?) with a head full of knowledge would be able to cut Medicare costs through prevention. But how exactly would it work?

[Obviously one could make a moral or ethical argument that we should try to help prevent other people from getting diseases (though no doubt many Illinois taxpayers will be sorely tempted to send cartons of cigarettes to retired public employees), but Krugman was writing as an economist, not a moral philosopher, and he was explicitly talking about cutting costs to the taxpayer.]

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Last week I donated a helicopter intro lesson to a suburban daycare center’s benefit auction. The retail value of this lesson is $199, but the auctioneer did not mention any price. He stressed what an amazing achievement it would be to take the controls of a real helicopter. The high bid was $750. I was in the room and said I’d be willing to donate a second lesson. The auctioneer persuaded the underbidder to come up to $750 as well. So we got $1500 for two lessons in three minutes. Neither of the bidders had any flying experience.

East Coast Aero Club was a co-sponsor of a standing-room only aviation safety presentation this evening here in Bedford, Massachusetts. The hotel conference room must have held at least 600 people and perhaps closer to 1000. Nearly all were certificated airplane pilots. We had our brochures for helicopter training and a sign advertising a “$99 helicopter intro” special. The people in the room would have known that this is an amazingly good deal for a brand-new Robinson R44. They pay more than that per hour to fly a 30-year-old Cessna or Piper airplane.

How many pilots leaped at the chance to try out the helicopter for less than the cost of a dinner for two? Zero. How many expressed any interest in helicopter lessons? Zero. Of the folks who were passionate enough about aviation to earn a certificate and spend an evening at the Doubletree, how many were willing to pay 1/7th the price offered by a suburban mom? Zero. Almost universally they said “It is too expensive”. These are folks who fly for pleasure. They don’t have a second home on an island or a job in the Adirondacks to which they must commute. They rent little planes to fly up to southern Maine for breakfast and fly back. I began to wonder “If saving money is so important to these guys, why do they fly at all? A 10-year-old Honda Accord would get them anywhere they need to go at a much lower cost.”

[Speaking of flying and cost… http://www.airnav.com/airport/kteb shows that Jet Aviation at Teterboro is charging $9.02 per gallon for 100LL aviation gasoline. That’s the highest that I’ve ever seen, despite the fact that oil is not at an all-time high. It may be the case that taxes and fees collected by the airport have gone up, so I’m not sure that Jet is to blame. I would find this alarming except that the federal government assures me that we do not have inflation in the U.S.]

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Folks: Those of you who live in Boston might be interested in attending a free 6-9 pm flying safety seminar this evening at the Doubletree Hotel in Bedford. These are usually well-attended, with at least a few hundred pilots and students, and the stories are interesting. The first portion is more of a social hour (assuming your idea of “social” is “a bunch of old white guys standing around drinking”), with the real talk starting at 6:50 pm.

East Coast Aero Club will have a booth at the event and a bunch of us instructors, including me, will be there to answer questions about flying helicopters or airplanes.

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One of the services that the USPS offers is that I get to read most of my neighbor’s magazines, placed in my mailbox, before passing them on to him. His April 2011 Consumer Reports arrived today and they’ve aggregated test results and reliability data by automaker. The top tier is Honda (#1 overall), Suburu and Toyota. Their cars test out well and are reliable. The next tier is Ford, Hyundai, Mazda, Nissan, and Volvo (pretty good cars with pretty good reliability). The German companies have their own tier of high test scores but poor reliability and BMW, Mercedes, and Volkswagen ended up with similar overall scores (VW had substantially better reliability than BMW or Mercedes, though).

How did your $100 billion in tax dollar contributions work out? GM was near the bottom, with crummy cars that have average reliability. Chrysler was an outlier at the bottom, with off-the-chart bad test results and worse-than-average reliability.

This could also serve as a scorecard for government industrial policy. The U.S. government has gone to extraordinary lengths to prop up GM and Chrysler, but their products remain uncompetitive. The Japanese government tried to discourage Honda, then making motorcycles, from entering the automobile market, but Honda ignored the bureaucrats.

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The latest article by Paul Krugman says that it is hopeless for Americans to try to educate themselves into higher-paying jobs. White collar work will be outsourced to Watson or India/China. The exciting action in the U.S. job market will be for truck drivers and janitors. In a globalized economy, how is the U.S. janitor to continue to out-earn his counterpart in India or Cambodia? Unions: “We need to restore the bargaining power that labor has lost over the last 30 years, so that ordinary workers as well as superstars have the power to bargain for good wages.”

Part of me wants to agree with Krugman. As I’ve already noted, investing in America’s children may be a waste of money; we’re so bad at education that we would be better off investing in other stuff. On the other hand, his argument seems to be “a stupid society, given enough labor unions, can sustainably earn more money than a smart society”. That doesn’t strike me as intuitively reasonable.

If Krugman were correct, wouldn’t the countries with the highest middle-class standard of living have been the Central and Eastern European nations under socialism? They had a high level of education and a good infrastructure and all of the means of production were controlled by workers or the state. There were no hedge fund managers or investment bankers skimming off the cream, and consequently wealth was distributed fairly equally, yet somehow the total prosperity was not sufficient to make the average worker better off than in neighboring West Germany or France.

What do folks think? Are you convinced by Krugman’s argument?

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