Indeed June 14, 2002February 21, 2017 Paul Langley: ‘So, is the picture of Charles for the IBM ad that ran in Wednesday’s Wall Street Journal anywhere on the web? There’s a picture of a guy at this link and he appears to be surrounded by clothing. [As the ad explains, Charles designs the Anne Klein line.] So is this perchance he?’ ☞ Indeed it is. Russell Ackerman: ‘Actually, as this article from Slate explains, the estate tax is *NOT* double taxation. ☞ Indeed it’s not. (At least largely not. I wasn’t thinking. Thanks to you and several others for pointing this out.) Gordon: ‘Ironically, the very same Bible that many Republicans love to brandish lays down the law: ‘It is easier for a camel to pass through the eye of a needle than for a rich man enter the kingdom of heaven.’ If Uncle Sam doesn’t get ’em, St. Peter will.’ ☞ Indeed he will. But that won’t solve our budget problems. Juanita Albro: ‘I just had a comment about the estate tax. The person being taxed is dead, so really, why would they care about the tax? It’s just the people left behind, anxiously wringing their hands over it, who are worried about the estate tax. I think it was Less Antman who said, Give your kids money while you’re alive, leave it to charity in your will, and give them a good reason to keep you around. Seems like good advice to me.’ ☞ Indeed.
The Estate of French Nurses June 13, 2002February 21, 2017 FRANCE Don’t you love one-syllable countries? There aren’t many of them. (Guam is not a country, and Chad barely is.) It’s such a confident, definitive statement: France. No ifs, ands, or buts. (Some troubling anti-Semitism, but that’s a separate issue.) Spain and Greece are countries, certainly – I think they are the only two others out of 191 – but I don’t hear quite the same majestic finality in their names as I do in . . . France. Charles is there as we speak. CHARLES This web site does not do family photos. But for those of you who have wondered whether this ‘Charles’ I refer to from time to time really exists, I point you to the color centerfold (no less) of the front section of yesterday’s Wall Street Journal. And if you miss it there, it will be repeated shortly in Time, Newsweek, Business Week, and all the rest of them. It’s an ad for IBM laptops, whose main element is a giant photo of Charles. I used to think of myself as his boyfriend; now I think of myself as tech support. ESTATE TAX Nicoletta Skarlatos: ‘I am curious about the estate tax. Isn’t it double taxation?’ ☞ Yes, it is. So are the capital gains tax and the tax on dividend. And so, for that matter, is sales tax. You pay tax on your income, and then you pay tax on what’s left when you go to spend it. (In the old days, sales tax could be deducted from income before figuring your income tax. Not any more.) And sales tax applies to a lot more Americans than the estate tax. A guy enters this world with nothing, is incredibly fortunate to be born in America, has a great life, makes a fortune, and at the end has to either give some of his chips to charity or else throw half back into the pot. What’s so awful about that? Actually, the estate does pass with zero tax to the spouse (unless, of course, the spouse is gay; that’s not perceived by Republican lawmakers as unfair) . . . so to that extent, there already is no estate tax. But eventually, yes, the estate is taxed. ‘My dad worked hard for that money, and I deserve all of it, untaxed,’ the counter-argument might run. And maybe his dad did. And maybe his dad didn’t. (Not everyone who makes a lot of money works harder than the rest of us.) Life is tough all over, I would respectfully reply. Your country needs the revenue. You will only inherit $20 million instead of $40 million. Try to be a good sport about it. NURSE! I watched Lesley Stahl’s terrific ’60 Minutes’ piece on the nurse shortage tonight (thank you, TiVo). It seems we will be 400,000 nurses shy in a decade or two, and that when you or I ring for the nurse because we are having trouble breathing (or are merely in pain), it could take even substantially longer than it already does for someone to come. Already, emergency rooms are being closed in some places because of the nursing shortage. One thing we’re doing to alleviate the crisis is lure the most experienced nurses from poorer English-speaking countries, like South Africa, to come care for us instead. These nurses are desperately needed in South Africa, but South Africa cannot afford to pay them what we can. You might think we’d be exporting skilled medical care to the rest of the world – who trains medical personnel better than we do? – but, in fact, the rest of the world, despite its own even more severe nursing shortage, is exporting skilled medical care to us. You might think that we would be providing massive aid and incentives to young Americans to become nurses, and providing sharply higher Medicare and Medicaid payments to allow hospitals to pay nurses a more competitive wage – not out of charity, but simply to assure our own comfort and care as the years go by. But we can’t afford it. We’ve decided it’s more important to cut the tax on our wealthiest citizens and to abolish the estate tax on centi-millionaires. The truth is, no matter how severe the nursing shortage in the US is, those centi-millionaires and their heirs – with or without the estate tax – will always be able to afford round the clock private nursing. But for the other 99% of us, who lie helplessly in pain, ringing the button, it’s just too bad. Abolishing the estate tax on even the most gargantuan estates is a higher priority. I’m not saying the Republicans (and a few misguided Democrats) are wrong about this, although I think they are. Just pointing out the contrast so you can decide for yourself. It is a grand time to be rich and powerful in America. I’m not sure how things are going in France.
Should the Estate Tax Apply to Index Funds? June 12, 2002February 21, 2017 MORE ON THE ESTATE TAX Joe Devney: ‘Your reader Robert Johnson apparently sees the estate tax as a burden on people like him, who worked hard for his fortune and helped others in the process by creating jobs. I admire Mr. Johnson’s success, but I want to point out that the estate tax doesn’t affect him or anybody else who earned their money on their own, either by hard work or by savvy investing. A repeal of the estate tax is a gift to the children of the wealthy, who by definition did not work for their inheritance. And even with the estate tax in its present form, the heirs still receive large fortunes after taxes.’ Stephen Mason: ‘Instead of worrying about what the estate tax rate and exemption amount should be, why don’t we just treat inheritance as what it really is, INCOME for those who receive it. Tax the recipients, not the estate itself. If a millionaire wants his fortune divided among 100 or so needy families, than those families will pay little or no tax on the windfall, since their marginal rates are low. If a millionaire wants his estate given in whole to a wealthy nephew, so be it, but the nephew will have to pay a higher tax rate on his inheritance.’ INDEX FUNDS Duncan Smith: ‘You write: ‘Or stick with a few funds that specifically aim for ‘value’ situations – but really great values are not so easy for them to find, either.’ Vanguard has index funds that contain just large– or small-cap growth or just large– or small-cap value stocks. So that would be one way to avoid high-priced growth stocks while sticking with indexing (assuming that their formulas for what is ‘value’ are accurate).’ Eric Batson: ‘Of course, you could try Vanguard’s Value Index Fund, but even this has a P/E of 26.3 (yuck).’ Steve: ‘You recently quoted Dick Davis saying: ‘If the big gains of the ’90s are not going to be repeated anytime soon and if Warren Buffet is right in his forecast of modest 7 to 8% gains, on average, over the next decade, then the attempt to do better than the over-all market via actively managed money may make more sense.’ Then in a follow-up, you said you disagreed – but didn’t explain why.’ ☞ If actively-managed funds have the skill to beat the market (and by more than enough to offset their higher costs and tax consequences) – and if you have the skill to foretell which ones will and won’t – then why wouldn’t you always want to beat the market, in good times and bad? The truth is that very few actively-managed funds are able to overcome the drag of their higher costs – and very few of us can figure out in advance which those few will be. Diane Anderson: ‘I disagree with your advice that everyone should continue to invest in index funds. Go back and re-read Bogle’s February 14 speech that you told us about earlier this year because he’s absolutely right. The only way for the stock market to go up is if P/Es go higher or earnings improve. But if an index fund has a P/E of 30, how much higher can it go? Earnings could increase, but are they real or just pro forma? Companies don’t pay dividends anymore, which used to be an indicator that the earnings were really there.’ ☞ Good point. What I’ve tried to say is that for that portion of your money you’ve decided to put in the stock market, index funds generally make the best sense, because the ‘jockeys’ are so light. ‘I’m planning on sitting out the stock market for the next 10 years [Diane continues]. Most of my money is in TIPS. For excitement, I watch the yield curve and prices at bloomberg.com‘s U.S. Treasuries page. I’m a tax lawyer and CPA, but I trust the government’s CPI calculations more than I trust corporate financial statements. ‘Barron’s recently had a cover story that P/Es are high for the market as a whole. Why take a chance on the stock market, when you can get 3% + inflation and know the government will pay you back? You might even get a capital gain if TIPS become more popular and the ‘real interest’ percentage goes down.’ ☞’ I, too, am a fan of TIPS. Maybe the biggest problem with trying to time the market, getting out here and then back in when even more air has gone out of it – apart, of course, from the problem that this is just so hard to do – is that you will forget to get back in, and perhaps get out of the habit of investing in stocks at all. For some people, especially young people, it may be better just to keep investing that $100 a month or $1,000 a month or whatever, knowing that if the Dow hits 4,000, say, as it certainly, conceivably, could, they’ll be adding lots of new shares on the way down, and lots more on the way – almost inevitably, eventually – back up. Even collecting a few dividends along the way! I think the market is in for continued rough sledding. But (leaving aside the fact that I am usually wrong in such predictions) with any luck, many years from now, it will barely make a difference.
The Estate Tax Bite on Some Who Oppose It June 11, 2002February 21, 2017 Robert Johnson, reacting to yesterday’s column, with perhaps just a trace of sarcasm: ‘Let’s raise the tax on those damn wealthy people (by your definition it includes me) to 100% or even better – let’s eliminate private property altogether and then those infinitely wise folks in D.C. can allocate all the goods and services ‘fairly.’ I would like to point out I made mine in a ‘dirty fingernail’ industry – not shuffling paper – and created a lot of jobs in the process. Get back to Dick Davis – PLEASE.’ ☞ I sense your annoyance and will be doling out more Dick Davis this week, never fear. But I am one of ‘those damn wealthy people,’ too, and I am not proposing raising your taxes, or mine, by a dime. We did OK the last 10 years or so, didn’t we, you and I? It wasn’t hell on earth, or even communism, was it? I’m just suggesting that we should more or less freeze the tax rates for you and me where they are now, until we can afford to cut them further. (The tax cuts for the 98% or 99% of Americans less fortunate than we would proceed as planned.) I can understand your wanting more, at the expense of other (also hard-working) folks who would have less. (It’s not completely a zero-sum game, but largely so. Money you don’t pay in taxes has to be paid by someone else . . . or added to the debt for our children to pay . . . or cut from your mother’s Medicare benefits or from the military budget or from someplace.) You have every right to feel that the current economic balance in America is weighted too heavily in favor of the middle class and/or the poor. But I don’t think those of us who disagree hate the wealthy or fail to appreciate the importance of private property. And speaking of the estate tax, Ralph Sierra sent me an excerpt from last Thursday’s Washington Post: Rep. Henry A. Waxman (D-Calif.) asked his staff to assemble a chart estimating just how much money the heirs of Bush, Vice President Cheney and members of the Cabinet would get if the estate tax were permanently eliminated. Waxman’s aides also applied their calculators on the balance sheets of former Enron executives and the executives of other companies in the news. The winners? Defense Secretary Donald H. Rumsfeld’s heirs could gain as much as $120 million from the repeal, with heirs of Treasury Secretary Paul H. O’Neill getting as much as $51 million more and heirs of Cheney getting up to $40 million more. Heirs of Enron’s Kenneth L. Lay would get $59 million more. Bush, a relative pauper, would leave behind an extra sum of no more than $10 million if the tax were eliminated. The White House said Waxman’s analysis was beside the point. A sensible estate tax reform would raise the exemption to $3 million or so, indexed to inflation (which becomes for many people, effectively, $6 million with a ‘by-pass trust’), right now – why wait til 2010 – and perhaps lower the top 55% rate to 45% until you pass, say, $100 million. And adjust all this to inflation. CREDIT CARD SHOPPING Donna Bell: ‘I am shopping very carefully for a new credit card, and found this web-site. I found it to be very helpful to rule out a card I thought I might want.’ WISE ASS PS Michael LeBoeuf (and others): ‘You left off the postscript to the story! The donkey later came back and bit the farmer that tried to bury him. MORAL: When you try to cover your ass, it always comes back to bite you!’ (Document shredding at Arthur Andersen comes to mind.)
Borrowing from Your Kids June 10, 2002February 21, 2017 Let’s see. Last week the administration said they had decided global warming likely is real, after all, and that human activity may be screwing up the environment, but that – unlike Europe and Japan – we aren’t going to do anything about it. We’ll just gamble on its turning out OK. Worst case, I guess the thinking goes, how fast could the climate spin out of control? By then it will be the next generation’s problem – they can bear the cost. We’ll just borrow from them. And then, last week also, there was the Republican vote in the House (along with 41 misguided Democrats) to repeal the estate tax in 2010 rather than merely raise the exemption – now – from $1 million to $3 million or so, as suggested by various Democrats. (That would entirely exempt something like 99.7% of all estates.) Charities hate the estate tax repeal, which will pinch their bequests; as do some very smart billionaires like Warren Buffett and George Soros, who know it’s bad social policy. I assume Tom Daschle and the Democratic Senate will manage to halt this one, but it’s the thought that counts. The thought behind the effort to repeal the estate tax on even the very wealthiest families is: there are a lot of problems in the world, but the plight of the rich comes first. And if massively cutting taxes on America’s very best off means widening the gap between rich and poor, or turning surpluses into deficits – maybe adding another $3 trillion to the national debt over the next 12 years as Reagan/Bush did from 1980-1992 – so be it. This is an imperative of the Bush administration and the Republican Party. It was the plan before the election and after the election, the plan before 9/11 and after 9/11, the plan before the recession, the plan before the recovery, the plan when it appeared there might be a huge surplus, and the plan when it quickly became evident the surplus would be a deficit. If cutting taxes for the top 1% means borrowing from the Social Security ‘lock box’ in order to spend hundreds of billions of dollars extra on a massive military buildup (see below), well, say the borrow-and-spend Republicans – first things first. We’ll keep Social Security afloat some other way, like borrowing massively to fund those liabilities when they come due. ‘George W. Bush, compassionate conservative, plans to raise the national debt by $1 trillion in the next three years. That’s not a typo. Nor is it compassionate or conservative. It’s a dirty trick on future generations,’ begins an op-ed by Douglas Pike that ran in last Tuesday’s Philadelphia Inquirer. Pike wants to re-start the National Debt clock in Times Square, among other things, to dramatize the problem. What Pike doesn’t understand is that cutting taxes for the top 1%, and abolishing the estate tax altogether, are urgent priorities. Assuring a solid Social Security safety net for the average citizen’s old age is a priority, too; just not as urgent. And the environment? Yes, it’s nice to watch The Discovery Channel. But ozone layer, no ozone layer, glaciers, no glaciers – worst case, we just drill more offshore oil wells to power the extra air conditioning global warming will require. And buy stock in United Van Lines as we evacuate the blue coastal cities and move people inward, to the red states (the moral high ground). Finally, if you’re still with me, here was Matthew Miller’s column last week on the massive military spending the Republicans propose we borrow to fund: For release 06/05/02 By Matthew Miller Tribune Media Services Richard Gephardt entered the gravitas derby this week with a major foreign policy speech that was perfectly terrific – until it gave away the store. Under the president’s plan, Gephardt explained, ‘we will be spending $470 billion a year on defense by 2007 (up from the $300 billion Bush inherited) … even at that huge amount, we will need to spend wisely.’ Note that Gephardt didn’t challenge that ‘huge amount.’ Instead he conceded, as all ambitious Democrats have, that they can’t be for ‘less’ defense than Bush and be viable. If this premise goes unquestioned, Bush will have reached $400 billion with Democratic assent by 2004. As Lawrence Korb of the Council on Foreign Relations points out, $400 billion will be more than the next 15 nations in the world spend combined, and 15 percent higher in inflation-adjusted terms than we spent on average during the entire Cold War. If Democrats don’t challenge Bush’s defense plans (and his tax cut), they’ll have no money to do anything real for health, education and the other domestic causes they claim to champion even if they gain power. Is it really impossible to challenge Bush on defense spending? Here’s a start on what it might sound like: ‘Make no mistake,’ my dream leader says. ‘National security is job one. And to make sure that no power can threaten us, I believe we must spend far more than any conceivable rival. Insuring that margin of safety won’t come cheap. Under my America First plan, America will spend seven times more on our military than China, six times more than Russia, and 14 times more than Iran, Iraq, North Korea, and Syria combined. ‘But here’s where I differ with my opponent, and lock arms with President Eisenhower, who knew something about saying ‘no’ to military profiteers who exploit public fear to line their pockets. It was Ike, after all, who put the importance of being a smart hawk into perspective. ‘Listen to Ike: ‘Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.’ ‘Well, I like Ike. And I believe, in the Eisenhower tradition, that being ‘strong’ doesn’t mean winking at corporate blackmail just because it waves a flag, or kowtowing to contractors peddling yesterday’s arms for tomorrow’s threats. That’s why I insist we spend seven times more than China – but not 8 times more, as my opponent wants; six times more than Russia, but not seven times more; and 14 times more than Iran, Iraq, North Korea and Syria combined – but not 17 times more. (The rough result: a military at $325 billion in 2004, not $400 billion.) ‘My advisers tell me I’m crazy to talk this way. They say you’re too tuned out to process this kind of common sense. They say that so long as my opponent calls for more spending than I do, you’ll believe he’s ‘tougher’ on defense. They tell me the only way I could even begin to make this case is if I left a leg in Vietnam, or had a chest full of medals that did the talking for me. ‘I don’t doubt it would be easier to make the case that way. But we’re in a crucial decade now, in which politicians are going to have to take a chance on your attention span if we’re going to do right by our country. In less than 10 years 76 million baby boomers start to retire – a tidal wave that will drain away all the cash and political energy for us to do much but cope with their colossal health and pension costs. ‘That means we have a decade to get ready – and hear me well: America has unfinished business to attend to. ‘So yes, I put our security first – but I’m going to ask you in this campaign to do more than simply stay alive. The stakes are so high, I’m going to do what the other side is betting you’ll never go for – I’m asking you to stay alive, and I’m asking you to think– about how we move forward together on the other challenges we face. ‘Does anyone here feel capable of both staying alive and thinking? Good – now here’s what I want you to start thinking about …’ Democrats, I know it’s hard. But I’m doing this for your own good. If you don’t try to win on terms that let you actually accomplish something, believe me, you’ll be sorry. [Columnist Matt Miller is a senior fellow at Occidental College in Los Angeles.] © 2002 MATTHEW MILLER DISTRIBUTED BY TRIBUNE MEDIA SERVICES, INC.
Wise Ass June 7, 2002February 21, 2017 But first . . . Robert Verzi: ‘I agree with Dick Davis about index funds and I feel that index funds have run their course for a while. The problem I have with them is that they are severely burdened with over-priced growth stocks. I think the Wilshire 5000 has a PE ratio of over 30. I think that is too expensive for my tastes. I think there is still a bubble to be burst. I hate to buy more index funds that I feel are too expensive.’ ☞ But that just means the whole market is overvalued – including, therefore, most of the holdings of the actively managed mutual funds as well. But they have the heavier jockeys, and so will do even more poorly than the index funds, if you’re right. So . . . if you are right, you either try to pick undervalued stocks, here or abroad, yourself – which is tough. Or you stick with a few funds that specifically aim for ‘value’ situations – but really great values are not so easy for them to find, either. Or you sit on the sidelines (in TIPS? in money market funds?) for a while longer, hoping that through luck or good judgment, this proves to be one time that you can successfully time the market. Net net: if you’re young or youngish, and have been steadily investing your long-term money in stocks via broad index funds, I would just keep on doing it, even though I think we have some tough years to get through. And now . . . WISE ASS Patrick asks, ‘Have you seen this one?’ One day a farmer’s donkey fell into a well. The animal cried piteously for hours as the farmer tried to figure out what to do. Finally he decided the animal was old and the well needed to be covered up anyway. It just wasn’t worth it to retrieve the donkey. He invited all his neighbors to come over and help him. They all grabbed a shovel and began to shovel dirt into the well. At first, the donkey realized what was happening and cried horribly. Then, to everyone’s amazement, he quieted down. A few shovel loads later, the farmer finally looked down the well and was astonished at what he saw. With every shovel of dirt that hit his back, the donkey was doing something amazing. He would shake it off and take a step up. As the farmer’s neighbors continued to shovel dirt on top of the animal, he would shake it off and take a step up. Pretty soon, everyone was amazed as the donkey stepped up over the edge of the well and trotted off! Life is going to shovel dirt on you, all kinds of dirt. The trick to getting out of the well is to shake it off and take a step up. Each of our troubles is a stepping stone. We can get out of the deepest wells just by not stopping, never giving up. Shake it off and take a step up. Remember the five simple rules to be happy: 1. Free your heart from hatred. 2. Free your mind from worries. 3. Live simply. 4. Give more. 5. Expect less. Easier said than done . . . but nicely said.
Dick Davis on Index Funds June 6, 2002February 21, 2017 Many of you have suggested I just go away entirely and get Dick to write this column. He liked this idea until I told him about the pay. ‘What would I do with that much money?’ he asked. ‘Put it in index funds?’ I asked back.Which brings us to #19 of his 35 . . . Item 19: Index Funds Statistics show that generally speaking, it is difficult to pick a stock or a fund that will do better than the over-all market year after year. Some do it sometimes, but few do it all the time. The odds are against it. The most popular proxy for the over-all market are funds that track the S&P 500 Index. Vanguard, the largest such fund, has outperformed the average general equity fund by an average of 14% over the past 25 years. This furnishes ironclad evidence that it is better to own the broad market than to pick an active manager at random. And if you check out track records and do your homework, you still probably need some luck to select a market-beating stock or stock fund. Why rely on luck when there is a sure fire alternative? True, you give up all chance of beating the market, but you will fare better than most investors. In any given year, of course, an actively managed fund may do far better than the market, but the question is will the winning fund keep on winning? Most revert to mediocrity. Meanwhile, index funds plod along, out-performing actively managed funds in most years. That consistently good performance eventually leads to excellent long-run results, due, in part, to their low expenses and tax efficiency. In addition to index funds that track the over-all-market, there are those that track the Dow, the Nasdaq 100, and individual industries. There are also ETFs or electronically traded funds that trade like stocks on the American Stock Exchange. Most popular are ticker symbols ‘SPY’, known as ‘spiders’ which give you in one stock the entire S&P 500 Index; ticker symbol ‘QQQ’ or Qubes, which give you all 100 companies in the Nasdaq 100 Index, and ‘DIA’ known as diamonds, with each share giving you ownership in all 30 blue-chip stocks of the Dow Jones Industrial Average. On the American Exchange you can also buy a stock that represents an entire industry. ‘IYH’, for example, represents the health care sector. One of the knocks against index funds is this: If the big gains of the ’90s are not going to be repeated anytime soon and if Warren Buffet is right in his forecast of modest 7 to 8% gains, on average, over the next decade, then the attempt to do better than the over-all market via actively managed money may make more sense. There will always be a place for index funds but, at least for a while, they may have peaked in popularity. ☞ They may have peaked in popularity – I won’t attempt to predict that – but they certainly will not have come to the end of their winning streak relative to the competition. There’s just no way that all but a tiny fraction of actively managed funds will beat broad index funds – and that sought-after elite fraction is readily identifiable only with hindsight. The index funds have 20-pound jockeys (or should: if you have a domestic US index fund charging more than 20 hundredths of one-percent in annual expenses, it is charging too much). The actively managed funds, by contrast, typically have 100- or 200-pound jockeys, when you add up their annual expenses and factor in their sales fees and the drag of the transaction costs they must overcome (namely, the costs of buying and selling individual stocks rather than just buying and holding). Add in the effect of taxes, if your mutual fund shares are to be held outside the shelter of a retirement plan, and the actively managed fund becomes a horse straining under the weight of two or three men. How fast could you run under those conditions?
A Billion Here and A Billion There and . . . June 5, 2002February 21, 2017 Well, you know the old Everett Dirksen line: ‘ . . . and pretty soon it begins to mount up.’ A billion is a lot. Jack Tribet: ‘I haven’t checked if this is right. And it would matter how fast you counted. But I was told if you were to sit and count to 1 billion it would take you OVER 30 YEARS.’ ☞ Well, it’s not that hard to check. I called Arthur Kribble, who began counting on January 1, 1999, and our conversation went like this: ‘Thirteen million six hundred twenty-one thousand five hundred sixty-seven,’ ‘Mr. Kribble?’ ‘Thirteen million six hundred twenty-one thousand five hundred sixty-eight,’ ‘I’m sorry to bother you but – ‘ ‘Can’t talk. Thirteen million six hundred twenty-one thousand five hundred sixty-nine,’ ‘Well, thank you for your time.’ The thing is, your figure of ‘over 30 years’ is based on one number per second – 31.675 years to be exact. At first you could count much faster – onetwothreefourfivesixseveneightnineten! But if you had to say each number out loud, it would get much, much slower. And this is, in any event, 31.675 years without sleep or food. I think it simply could not be done in a human lifetime. Kribble has taken three and a half years just to get to thirteen million, and even from our brief conversation, and the tone of his voice, I thought I sensed desperation, as in, ‘I wonder if this was really such a good idea to start this in the first place, but I’ve got too much invested in it to stop now, but at this rate what kind of life is this?’ That’s what I thought I heard. And what must it be like for Mrs. Kribble? YESTERDAY’S COLUMN Gil Walker: ‘Amen! I was stationed on Adak in 1957 and saw posted regularly the accuracy in percentage of the military meteorologists. (Weather was vitally important to flying in the Aleutian, it goes without saying!) Their predictions of the weather for the next 24 hours was in the 85% range. I believe they used slide-rules and mechanical calculators. Maybe they had access to a crude weather computer by then, but I doubt it. At any rate, we aren’t doing a lot better today, despite the availability of tools they probably didn’t even dream of! We make weather information much more available to the public, and I suppose we have saved a few lives by broadcasting warnings about tornado and hurricane paths, but technology hasn’t lived up to the predictions I have read over the last fifty years or so. It takes more than tools to solve the problems of this world. I agree that whom we vote for is vitally important.’ Dana D. Dlott: ‘How do you suppose IBM knows how many calculations a person could do in 80 million years? How much time do they figure he would eat and sleep and take vacations? Wouldn’t it be about the same number he could do in 80 years – or maybe 100 years – then he’d be dead.’ Coming Soon: More Dick Davis
And What If You Were Using Your Fingers Instead of a Calculator? June 4, 2002February 21, 2017 THE END OF THE WORLD OR THE BEGINNING My overall operating thesis, as you many of you know, is that this century – indeed, this decade, if we’re not careful – is either pretty much the end of civilization or its new beginning . . . the suspenseful climax to a five-billion-year evolutionary story. I am reminded of this constantly, in ways little and big – just now with the announcement of IBM’s contract to produce a 100 teraflop supercomputer for the National Weather Service. According to IBM (as reported by Reuters), ‘A 100 teraflop machine can do more calculations in one second than a person with a calculator could make in more than 80 million years.’ And yet we still haven’t learned to feed and educate all our children or to live with each other in peace. This is why I think politics is so important, especially in America, and why I think supporting the right leaders has even more impact than supporting the right charity (even though that’s important, too). Politics in no small measure writes the story of America and America in no small measure writes the story of the world. It matters who’s holding the pen.
It Depends on What Your Definition of “Obscene” Is Also: MYM and Windows XP June 3, 2002February 21, 2017 ‘This is an administration that has methodically exalted corporate power and fortified the obscene gap between America’s rich and poor.’ – Bill Keller, in Saturday’s New York Times Well, that’s one point of view. I have friends at the rich end of the gap who don’t think it’s obscene at all. Sure, they’d like to see the poor do better – but not at the expense of the $700 billion tax cut for the top 1%. First things first. A couple of days earlier, Paul Krugman was writing in the same paper on much the same topic. Both he and Keller had become fascinated by the African tour of rock star Bono and Treasury Secretary O’Neill. Krugman points out that we devote one a third as much of our GDP to foreign aid as Canada and much of Europe do – little more than one-tenth of one percent. Should they feel foolish for helping so much? Should we feel smart for helping so little?. And he drew this interesting contrast: ‘Faced with a proposal that would save the lives of eight million people every year, many of them children,’ Krugman writes, ‘we balk at the cost. But when asked to give up revenue equal to twice that cost, in order to allow each of 3,300 lucky families to collect its full $16 million inheritance rather than a mere $10 million, we don’t hesitate.’ NATHAN MAKES AN INTERESTING POINT Nathan Schwartz: ‘You write . . . ‘So, as the Journal noted, even though the top 1% reported adjusted gross income (AGI) equal to only 19.5% of the total income pie, they paid 36.2% of the total income tax pie.’ . . . This statistic is frequently used show that the richest 1% are paying a disproportionate share of taxes. Yet ‘adjusted gross income’ is not the same thing as wealth – it is not even the same thing as income. The wealthiest 1% have the greatest ability to shelter income in ways so that it never becomes AGI. It is entirely possible (but I have no idea how likely) that the richest 1% have 40% of the total income, and yet pay only 36% of the taxes (less if you include FICA). I don’t even know if there are any statistics compiled anywhere that try to estimate the effective tax rate on comprehensive income for various levels of income or wealth.’ ☞ Interesting. I hadn’t thought of it this way. If you own nothing but $20 million in municipal bonds, your adjusted gross income might be zero, despite your $900,000 tax-free annual income. You thus not be counted in the top 1%. Yet you certainly would be an example of a high-income person not paying a disproportionate share of the total income tax pie – even allowing for the fact that tax-free bonds yield perhaps 20% less than Treasuries (and thus you are, in a sense, ‘paying’ 20% in a different sort of tax). Anybody out there able to shed some statistical insight? [FOR MYM V12 USERS ONLY:] Peter Kronenberg: ‘I’ve been using MYM12 and Windows XP Home edition since October. Works like a champ. The only problem I had was with my internal modem, which I use to call Checkfree. MYM only supports standard DOS modem configurations. There’s some tweaking you can do, but not much. Previous versions of Windows were a little more flexible in letting you change the I/O address and IRQ of a modem so you could force it to a ‘standard’ position. I couldn’t get this to work with Windows XP. I had the same problem with Tapcis, which is the only other DOS program I use regularly. So, I got a cheap external modem, which I just hooked up to my COM1 port, which, by definition, is in a standard DOS location. Works fine now. It also means I can keep my high-speed internal modem always connected to the internet and transmit my Checkfree transactions without disconnecting from the Internet, which is what I used to have to do.’ ☞ Another of you reported that it won’t print. But if that’s the case, it seems to me you could always ‘print to disk,’ except perhaps for checks, and then open that file with your word processor and print from there. Coming Soon: More Dick Davis