Philip Greenspun’s Weblog

Some professional fundraisers who apparently don’t subscribe to the government’s “do not call” registry, called me at home this morning, asking me to help out the American Lung Association. This led to over to guidestar.org to find out how much these particular do-gooders are paid for doing good.

The most recent Form 990 was for the year ended June 30, 2009 and it was a tough year for the enterprise, with revenues down about 10 percent. Fortunately, it wasn’t such a bad year for employees. Bernadette Toomey paid herself $466,000 (a raise of about $75,000 over the previous year; I thought maybe her high salary was because the job required a medical degree (a practicing pulmonologist in NYC would earn about $196,000), but a Google search reveals that Ms. Toomey has a “a Bachelor of Arts in Communications from Marymount Manhattan College and a Masters in Adult Education from American University”). Joseph Bergen clocked in at $357,000 (he left early in the year apparently, and the majority of his cash was $201,000 in severance pay). Charles D. Connor collected $303,000. Kim A. Schwartz raked off $250,000.

I think it would be nice if we could augment the do not call registries with our personal incomes. Then we could check a box “Do not call me if your employees earn more than I do.”

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A friend of mine has been looking to hire smart people from across a range of disciplines. Here are his tales from the trenches:

In theory the economy is horrible and people want jobs. In practice it seems that no one I interview has any real knowledge. I just interviewed a woman getting a PhD in electrical engineering and bioinformatics from [top school, but not quite at the Stanford level] and she couldn’t tell me the probability of flipping heads three times in a row with a fair coin. I just interviewed a 4.0 physics major from [top state school] and he didn’t know how to convert miles to kilometers, and had no idea how to convert cubic kilometers in cubic meters.

For the record this is depressingly common. I’ve probably done ~700 interviews in the last five years of grads from top-notch technical programs. Perhaps ten percent were able to do basic mental math, reason about probability, etc.

Tyler Cowen says that we’ve run out of low-hanging fruit (free land, big technology improvements, uneducated young people). In “Universities and Economic Growth”, I speculated that the lack of improvement in our universities, essentially unchanged since the year 1088, was a drag on economic growth. My friend’s experience with interviewing folks fresh out of 16-22 years of our best schooling, proves, I think, Tyler Cowen wrong on the subject of at least one of his three kinds of fruit tree. It is true that we’ve taken young people and given them high school diplomas and college degrees of various kinds. But that does not mean that we’ve educated them. So there may be room yet for significant economic growth driven by improved education.

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I asked a friend who’d worked in private industry for more than 10 years how her new federal government job was going. “It’s great,” she said. “I’m non-essential, so I’m looking forward to being furloughed in a couple of weeks and having some time off.” Was the job so demanding? “For the six months, I thought that I had to work. Every time a senior person suggested something, I would scurry back to my office and write up a proposal. Then I’d show it to him and he’d say ‘I think we’re going to do something else.’ So now I just smile. I really hardly have to do anything.” How time-consuming is doing hardly anything? “I go in about 9:30 and leave at 4.”

Her salary for doing a couple of hours of real work daily? Nearly $100,000 per year plus fantastic pension and health care benefits.

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In response to repeated questions from friends and family, I’ve drafted “Watson and the Turing Test”. I would appreciate comments and corrections.

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I spoke with a certified financial planner at Vanguard last week. For security in the event of a U.S. stock market meltdown, he recommended holding some bonds via a fund. Which fund? One that invests exclusively in U.S. municipal bonds. That’s right, the folks that have signed up for pension and retiree health care obligations that they can’t even understand, much less pay (the shortfall is supposedly around $3 trillion, but since nobody knows how long people will live or how much health care will cost in the future, it could be much more). Also, in many cases, these are the bonds of sovereign entities that can default without leaving investors any recourse in federal courts (see this Brookings Institution article). Finally, given enough inflation in the U.S., these bonds would be paid back in “mini-dollars”.

The idea of California bonds as a hedge against the risk of a collapse in the price of Intel strikes me as a poor one. Would an investor be better off with a mixture of bonds from different economies worldwide and in different currencies? I’d feel a lot more comfortable holding bonds from Germany than from the city of Chicago. If the U.S. government’s money printing operation generates out of control inflation, it would be much nicer to be paid in Australian dollars (now worth more than the U.S. dollar, for the first time since 1983, when the currency began to trade freely) than in U.S. mini-dollars. And if the world muddles through more or less unchanged… the currency variations should average out to null and the interest rates on those foreign bonds should also be about the same as on dollar bonds.

One potential disadvantage to this plan is that foreign bonds don’t get the tax exemption on interest that U.S. municipal bonds get. Perhaps the sophisticated investor would buy the municipal bonds and insure them against default (and hope that, in the next crisis, whoever succeeds AIG as the biggest bond insurer also gets bailed out with money from the suckers (i.e., taxpayers)).

Another disadvantage seems to be high fees, in the neighborhood of 0.5% per year. The yield on a 10-year German bond is 3.14% (Pi, as far as a computer scientist is concerned), so fully 1/6th of the return goes to a manager. The expense ratio on a typical Vanguard bond fund is around 0.12%.

Does anyone have specific funds to recommend? Or perhaps a strategy of simply buying individual long-term bonds and holding them? (I have to believe that the trading fees for an individual buying a foreign bond are going to be much higher than what a fund would pay.)

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Folks: I have two PCs at home that are both fairly new and running Windows 7. They connect (sometimes) to several shared directories on an HP Mediasmart server. At times the shared directories can be browsed as though they were local; at other, unpredictable, times, an application will hang for 5-10 seconds waiting to get a directory listing. The HP Mediasmart, which is running Windows Home Server, seems to be one of the crummiest IT products ever designed. It can take a minute or two to log in to the admin console (when the computer and server are four feet apart and connected via gigabit Ethernet). Instead of using a standard operating system RAID1 arrangement, the Mediasmart duplicates information from disk to disk on a per-folder basis. When you copy a few GB of new data onto the server, the performance becomes even flakier for a day or so. The only thing that I can say in favor of the Mediasmart is that it has a good backup and restore service.

I didn’t like my previous NAS box, a ReadyNAS (now Linksys), because the admin console (viewed from a Web browser) was very slow to load, but the underlying SMB service was much better (I am pretty sure that it was running Linux and SAMBA), and the mechanical/fan noise from the box was too loud for domestic use.

What are my options? I have a hard time believing that this is the best that Windows can do with a shared drive, since I know that corporate slaves all over the U.S. are working off networked drives all day every day.

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My favorite thing about the protests surrounding state capitols (story) is that, in each state, thousands of unionized government workers are able to spend Monday-Friday, 9-5, demanding that politicians act on their behalf. How come the private-sector workers (e.g., the 67-year-olds working at Walmart who support the $100,000+/year pensions of retired 50-year-old former public workers) aren’t counter-protesting in similar numbers? Probably because they have to work! What better proof could their be of the superior situation of government workers relative to their private counterparts?

[I like the New York Times article because they cite just one example of a retired government worker. He is 50 and, the Times reports, has a pension of just $19,500 per year. The reporter did not seek out the Ohio equivalent of Bruce Malkenhorst, collecting $510,000 annually from the taxpayers of California (see this list of the 9111 California pensioners; see this Forbes magazine article for how Malkenhorst vaulted to the top).]

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The latest New Yorker magazine has a good article on where U.S. tax dollars flow in Afghanistan.

[Note that the writer makes some of the same points that I made 1.5 years ago in http://philip.greenspun.com/blog/2009/11/18/who-finances-the-taliban-and-al-qaeda-we-do/ ]

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Living in the western suburbs of Boston, surrounded by Millionaires for Obama, seemingly every third car is a pavement-melting SUV, purchased by rich parents anxious to protect their precious children. Spending $50,000 for a Volvo XC90 or $70,000 for a BMW X5 and enjoying less interior space than a Hyundai Sonata sedan seems like a great deal to them because Precious Little Johnny’s safety will be guaranteed. What if the parent had cheaped out and bought a $10,000 minivan being discarded by a rental agency instead? Conditional upon an accident actually occurring, the minivan kid would have half the risk of death or injury. That’s right! A child in an SUV accident, even after adjusting for all possible age factors, is twice as likely to be killed or injured compared to the same child with the same driver in a minivan accident. Read the full article from Injury Prevention.

[I learned this while researching a new review of the Honda Odyssey on which comments/corrections would be appreciated. I’ll be adding photos soon.]

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A friend emailed me The Experience Economy, by David Brooks. Brooks is responding to Tyler Cowen’s The Great Stagnation in which, supposedly, Cowen says that the U.S. grew fast until 1974 by doing the easy stuff, e.g., exploiting our cheap land and other natural resources. When the growing got tough, the Americans stopped growing, according to Cowen, at least at the individual income level (the population has ballooned from around 200 million people to over 300 million, so of course the GDP is larger).

Brooks says that young people have become less materialistic. They are seeking “meaning not money” and that’s why they are so likely to be unemployed and poor.

I’m beginning to wonder what the qualifications are to write for the New York Times. Random bloggers don’t have paid research assistants, fact checkers, and all day every day to hunt down sources. So you might expect them to write something like this in 20 minutes and then head off to their day job. But for David Brooks this is his day job and he does have a lot of institutional resources on which to draw.

Why couldn’t he find “Is Materialism Rising in America?” from the September 2000 issue of Society in which Terry Nichols Clark says that most surveys indicate that “private materialism has risen since the 1960s among the young”. Although there is some disagreement among sociologists, there is certainly no convincing evidence that materialism is on the decline. With the cost of a college education having risen so much faster than inflation, it isn’t even clear why one would expect a decrease in materialism. With the increased crowding of the United States has come a huge increase in the real cost of houses in nice neighborhoods that entail short commutes. When a young person learns that a prestigious college degree costs $250,000 and a desirable house less than a one-hour drive from work is $1.5 million, you would have to question his intelligence if he didn’t answer “financial success is very important to me”.

Nor does Brooks address the OECD study that found a 20 percent increase in per-capita hours worked in the U.S. from 1970 through 2002. Without citing any sources, Brooks says “For the past few decades, Americans have devoted more of their energies to postmaterial arenas and less and less, for better and worse, to the sheer production of wealth.” Perhaps he means that Americans are at work but they’re wasting time on Facebook instead of trying to produce wealth?

If this is the best that traditional media can do, I can’t figure out why the New York Times maintains that it is somehow higher quality than the average wordpress.com blog.

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