Money Is an Illusion

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Daniel Suelo is a guy in Utah who gave up money in 2000 and started living in caves, eating roadkill, dumpster diving and living off the generosity of friends and strangers. Some would classify him as homeless, but are you truly homeless if you call your home a cave and live there on purpose? In watching the video below I was struck, as I always am by stories like this, that people who document these stories often fail to point out that although their subjects are living off the grid they are still dependant on the grid. Where did the dumpster come from that he's diving into? Some person or company who's living on the grid of course.

That nitpick aside I found one concept from the video to be thought provoking: when Suelo gave up money he declared that money was an illusion and the writer of his story asks, "When your house is worth $500,000 one day and $300,000 the next day where did that $200,000 go?" Indeed it seems like an illusion. 

They may be on to something. Watching PBS' excellent Frontline four-part series Money, Power and Wall Street it's hard not to think of money as an illusion when you hear about the creation of financial vehicles out of thin air. Rather than confuse ourselves trying to understand crazy things like synthetic collateralized debt obligations let's think of something as simple as our houses. We each believe our house is worth a certain amount of money; our local government believes it's worth a certain amount of money based on the (hopefully informed) opinion of a professional assessor; if we have a mortgage the bank believes it's worth a certain amount of money based on the opinon of its appraiser; rarely do these three values match, and so the true value of our house is merely an illusion.

But a house isn't money, it's an asset that is bought, sold and valued using money as a measurement. How could money, an actual dollar, be an illusion? Obviously that piece of fine paper it's printed on is not an illusion, but you could argue that what that piece of paper is worth is an illusion. Sure, we know that a dollar is worth 1/150,000 of a certain house (according to the appraiser), or that it's worth one candy bar, but that's today and that's because we think that our dollar will be worth roughly the same amount tomorrow as it is today. We trust that our government will not print one quadrillion dollars overnight and thus make that dollar in our pocket worth a penny tomorrow. That's a trust shared by all of us and all it takes is one violation of that trust for the perceived value to evaporate. So really a dollar is merely a token representing our collective opinion of the trustworthiness of our financial system – if that's not illusory I'm not sure what is.

Having Their Cake and Eating It Too

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According to an article in today's Winston-Salem Journal the Triad affiliate of Susan G. Komen for the Cure is experiencing a deep decline in its fundraising after the Planned Parenthood controversy the national organization created last year. That's not terribly surprising, but a quote from the president of the Triad affiliate is a bit befuddling:

Natasha Gore, president of the Triad affiliate, acknowledged the challenges that the local group faces, stressing that most of the money raised here stays in the region. She also expressed frustration that some would-be donors do not differentiate between the local affiliate and the national organization.

"A lot of the time, people think we are one and the same," Gore said. "If they're boycotting us because of something happening with the national organization, it does not really fit with what's going on."

The quote is befuddling because it's amazingly naive, if not downright disingenuous. Of course people are going to confuse the organizations because in the grand scheme of things they are the same organization. Sure the local affiliate has it's own board, staff, volunteers, grants, etc. but it has affiliated itself with the national organization, which means it benefits or suffers from the national organization's activities. The Triad affiliate certainly benefited from the national organization's advertising and branding activities and I don't recall hearing any concerns about brand confusion from the local affiliate before the controversy.

So the donors aren't confused, rather they're saying loudly and clearly that they've lost faith in the organization and it is up to organization on both the national and local level to win back that faith. If the local affiliate thinks the brand is too damaged to repair then they might want to consider:

  • Disassociation from the national organization
  • A name change (would likely be required by the national group anyway)
  • A clear articulation of the local group's principles/standards and how they're different from the national group's
  • An ad/branding campaign to introduce the "new" organization to the Triad, and to highlight all of the organizations that benefit from its grants

In the end an affiliation is like a marriage: you're stuck with it in good times and bad, and if the bad gets horrific then your only choice might be a divorce.

Apparently Women Like to Highlight More Than Men

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Amazon has a list of the most highlighted passages on Kindles and all you have to do is look at the list and you realize that highlighting seems to be dominated by women. I know, I know, that's a terribly sexist statement, but I'm going to go out on a limb and say that Suzanne Collins and Jane Austen appeal much more to women than to men. On a separate note who knew Suzanne Collins was so deep?

Dunning the Sick

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Whenever I hear people debating health care reform or talk about "Obamacare" I almost invariably hear the statement, "Well, even with the system today everyone is able to get medical care – hospitals aren't allowed to deny anyone care." I've always thought that to be a dumb argument because it seems like it's an incredibly inefficient and expensive way to provide health care to those who can't afford it, and reading this article on collection agencies working in hospitals seems to support the argument that it is indeed supremely stupid and expensive:

Still, hospitals are in a bind. The more than 5,000 community hospitals in the United States provided $39.3 billion in uncompensated care — predominately unpaid patient debts or charity care — in 2010, up 16 percent from 2007, the hospital association estimated.

So it's no surprise that hospitals would try to recoup some of their money through collection agencies. Unfortunately, the tactics at least one of these agencies is using seem to be encroaching on the health care delivered by the hospitals:

Collection activities extended from obstetrics to the emergency room. In July 2010, an Accretive manager told staff members at Fairview that they should “get cracking on labor and delivery,” since there is a “good chunk to be collected there,” according to company e-mails.

Employees were told to stall patients entering the emergency room until they had agreed to pay a previous balance, according to the documents. Employees in the emergency room, for example, were told to ask incoming patients first for a credit card payment. If that failed, employees were told to say, “If you have your checkbook in your car I will be happy to wait for you,” internal documents show…

Patients with outstanding balances were closely tracked by Accretive staff members, who listed them on “stop lists,” internal documents show. In March 2011, doctors at Fairview complained that such strong-arm tactics were discouraging patients from seeking lifesaving treatments, but Accretive officials dismissed the complaints as “country club talk,” the documents show.

Nah, we don't need no stinking health care reform.

A Different Look at Amendment One

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Greensboro blogger David Wharton, a Catholic, has decided to defy his bishop's endorsement of Amendment One for a very specific reason – he feels that endorsing the amendment is a violation of the Second Vatican Council's Declaration on Religious Freedom Dignitatis Humanae:

After due consideration, I've come to the conclusion that Bishop Jugis is wrong to support the amendment.

The Church holds that marriage is a sacramental, lifelong union between one man and one woman, founded in the love between the partners and for the procreation of children; however, it blesses sacramental marriages between infertile and post-fertile opposite sex couples. Thus its position is prima facie contradictory, but let that lie for now.

Even granting the Church's definition of marriage, I believe Bishop Jugis's endorsement of Amendment One violates the Second Vatican Council's Declaration on Religious Freedom Dignitatis Humanae. Here are some excerpts from that document, with the most relevant language highlighted by me. Pardon the length.

Despite the length of the post it's worth reading.

Debtors’ Prison

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This is kind of scary, especially when you consider how often folks get billed erroneously and then have to struggle to get it cleared up:

How did breast cancer survivor Lisa Lindsay end up behind bars? She didn't pay a medical bill — one the Herrin, Ill., teaching assistant was told she didn't owe. "She got a $280 medical bill in error and was told she didn't have to pay it," The Associated Press reports. "But the bill was turned over to a collection agency, and eventually state troopers showed up at her home and took her to jail in handcuffs."

Although the U.S. abolished debtors' prisons in the 1830s, more than a third of U.S. states allow the police to haul people in who don't pay all manner of debts, from bills for health care services to credit card and auto loans. In parts of Illinois, debt collectors commonly use publicly funded courts, sheriff's deputies, and country jails to pressure people who owe even small amounts to pay up, according to the AP.

Will Winston-Salem, Greensboro and High Point Punch Above Their Weight?

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An interesting piece in Foreign Policy makes the case that "middleweight" cities, those with populations between 150,000 and 10 million people, will drive the economic recovery in the U.S.:

It is America's large cities, and particularly the broad swath of middleweights, that will be the key to the U.S. recovery and a key contributor to global growth in the next 15 years. Large cities in the United States will contribute more to global growth than the large cities of all other developed countries combined. We expect the collective GDP of these large U.S. cities to rise by almost $5.7 trillion — generating more than 10 percent of global GDP growth — by 2025. While New York and Los Angeles together are expected to grow at a compound annual rate of 2.1 percent between 2010 and 2025, the top 30 middleweights (measured by GDP) are expected to outpace them with a growth rate of 2.6 percent.

What is behind the clout of middleweights in the United States? For a start, there are simply more of them than in other developed regions. Of more than 600 middleweight cities around the developed world, the United States is home to 257 of them…

For cities like our three here in the Triad, there's no magic formula for reinvention or reinvigoration:

While slowing population growth and mobility will make it harder for U.S. cities to sustain rapid population growth rates, cities that want to grow their GDP will need to pay attention to attracting and supporting expanding populations. Many observers argue that it is the mix of local industries in a city that determines its ability to grow. This is true — but to a much lesser extent than often assumed. Our analysis suggests that the mix of sectors explains only about one-third of the above-average growth of America's most rapidly growing cities. (Emphasis mine).

Even when narrowing our focus to the strongest performing cities, again there is no single path to success — no unique blueprint that all urban leaders should pursue. The cities that outperform their peers simply find ways to make the most of the economic opportunities they face, get lucky, or both. Some cities have been able to reinvent themselves; many others make the most of their endowments or their location.

This is sobering news for those folks working in economic development. The Triad's cities have been forced to reinvent themselves thanks to the rapid decline of their traditional industries – tobacco, textiles and furniture – and they seem to have started to find their footing with industries like biotech, nanotech, logistics, etc. That's the good news, but this study makes the point that the effect of the growth in these sectors will be muted if they aren't accompanied by an influx of people. It seems like a bit of a "chicken and egg" thing to me – you need good jobs to attract people, and you need good people to attract good jobs – but as the authors point out there's also a need for a bit of good luck to be in the mix and maybe that's what turns the egg into a chicken.

The Triad's good fortune might be found at the end of the article:

But the landscape is moving. For example, the shift in the global economic balance to rising emerging nations favors urban centers that are well connected to global growth hubs. Cities with airport hubs and ports, business connections (such as electronics value chains), or personal connections (with universities that attract foreign students) will be in a better position to take advantage of the growing emerging market opportunity.

Granted PTI is not an airport hub, but we're right next door to one and our other transportation infrastructure is critical to the east coast. We're also home to lots of universities and large corporations that draw people from around the world. All things considered I like the Triad's chances.

When the Poop Really Flies in Washington

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This story of exploding toilets that injured two GSA employees in Washington is perfect on so many metaphorical levels that I just can't think of anything to add:

As Supervisory Property Manager Chris Litsey tells it, he responded to an emergency call from a restroom to find a nurse on the scene treating someone injured “by the fragment of a broken toilet bowl.”

“People on site told us that the toilet ‘exploded,’” the manager wrote. “We found at the time that the waterlines to toilets in that restroom were dry and flushing the toilets created a loud and startling sound, and also ejected the remaining water from the bowl.”

As the manager finished surveying the scene, another call came in for a person injured by a toilet on a separate floor. Litsey put out an announcement that the restrooms had closed and purged the system of compressed air that had been flowing into the building’s water tank.

Several other toilets were found damaged while Litsey and staff corrected the issues. The next day, as news reports circulated, Litsey’s theory was that someone had turned the compressor on manually and “left it unattended.”

Tax Expenditures – A Celebratory Post for CPA Liberation Day

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In celebration of CPA Liberation Day I bring you a link to a column by two professors at the University of Pennsylvania's Wharton School about how we might think differently about tax deductions if we (properly) identified them as government spending:

Here’s a way to see through the fog. Instead of looking at all the breaks for mortgage interest, health care, retirement savings and so on as deductions, picture the government writing you a check for each item. This equivalence between tax deductions and government spending leads economists to call them “tax expenditures.” Reformers have hit on an even more pointed description: spending through the tax code.

The tax system is also equivalent to a collection of individual mandates, like the one in the Obama health-care law, with penalties for Americans who fail to buy insurance. For many people, that’s how our system works. You and your neighbor might have the same income, but if, unlike your neighbor, you fail to have a mortgage or buy as much health insurance, then you have to pay higher taxes…

Here’s our proposal: Let’s replace all tax expenditures with explicit subsidies — that is, with actual federal payments — so we can really see the costs and debate all spending programs on an equal footing. Doing so would help us answer crucial questions, such as whether we get more bang for our buck by subsidizing homeownership or by spending more on schools.

There’s one more payoff to getting rid of the myriad breaks hidden in our byzantine tax code: It will be a lot easier to get your taxes done before midnight.