Saturday, July 11, 2015
Saturday, July 04, 2015
July 4th, 2015: 2 Steps Forward, 1 Step Back
Thursday, June 04, 2015
There's a great illustration of this in Martin Gardner's book, The Magic and Mystery of Numbers.
Consider a lattice, which will look like a Cartesian plane from middle school math:
Sunday, May 31, 2015
Let's see how we might deal with these from the point of view of an analytics job.
1. What's your favorite restaurant?
2. What's your spirit animal?
3. So, (insert name here,) what's your story?
4. Tell me a joke.
5. What would you do if you woke up and found an elephant in your backyard?
6. Have you ever played a sport? If so, which one and what position?
7. If you opened your own business, what type of company would it be and why?
8. "I'm sorry, but I just don't think this is the right fit for you."
Saturday, May 16, 2015
So, I went through the alphabet to see what sites came up, and what they might say about me.
I've listed them below, so you can pay psychologist:
Wednesday, May 13, 2015
Saturday, May 09, 2015
So what was accomplished?
On the pension front, there's been negative progress. Illinois public pensions have had two more years to get deeper in the hole.
On the political front, the pension reform bill has to be considered pretty much a success. During the November, 2014 elections, the pension mess wasn't much of a topic. Democrats kept control of both houses, with Madigan and Cullerton still in control. Pat Quinn, a nice man but an accidental and somewhat inefffective governor, almost got re-elected.
It was all pretty much theatre, designed to kick the can down the road yet one more time, after the next election.
It's hard to see what will happen in the next act. Rauner's making noises about forcing things that, again, probably aren't constitutional. Governor Rauner has suggested that Chicago might look into declaring bankruptcy. Nobody seems to be thinking the obvious: if the phrasing in the constitution is the problem, maybe we should amend the constitution.
We might suggest a amendment along these lines: figure out what pension a patrolman with 30 years would get -- a job where you can be shot and killed. Set that at the maximum, with no double dipping. That maximum would apply backward in time as well, and the maximum would be adjusted for inflation.
For the legislature, we have something special. It's tempting to eliminate legislative pensions entirely. After all, generations of legislators created this mess. But let's be a bit kinder. They would have the additional maximum limit of only getting back out what they put in, plus inflation.
I note that the pensions for some newly hired Illinois workers -- teachers being one example -- don't meet even this criterion.
Tier 2 workers' benefits cost about 7 percent of their pay, but they contribute 9.4 percent toward their retirement. Veteran workers, on the other hand, also contribute 9.4 percent of their pay, but their benefits tend to cost more than 14 percent, teachers retirement fund analysts said.So, it's hard to feel much sympathy for the legislators.
"Right now, a Tier 2 member pays for more than the cost of their benefit," Ingram said. "We're subsidizing the state's pay down of the unfunded liability."
Illinois could also eliminate the tax break -- the pensions are exempt from Illinois income tax.
This probably isn't enough, given the size of the hole. I lack the numbers to figure out how much this helps. Tax increases may still be needed. Maybe future pension contributions should all be 401k based, as most now are in private industry (including my own). But it would at least indicate some of the rampant abuse present in the system, and give more pain at the high end of the pension benefit ladder, where the pain can be more easily borne.
Thursday, February 26, 2015
Saturday, February 14, 2015
Friday, February 13, 2015
Now there's an alternative, analyzed at Health Care Reform Blog, by Bob Laszewski
There are some good points in this proposal -- the elimination of employer mandates for one. This is a well-intentioned part of Obamacare that has the unfortunate side effect of leading employers to figure out how to structure their employees' lives to avoid the mandate.
Still, one of the key issues is a lack of trust [in Republicans, Democrats, and basically politicians in general] highlighted by the difficulty in making direct comparisons:
Different ages, family composition, income levels, and location will produce different outcomes that I am sure advocates and critics will use to come up with one study and example after another to make their arguments further complicating the Republican's ability to make voters comfortable with their plan.Furthermore, there's the general issue about any plan, in terms of what the actual finances will be in, say, 2025. That's a mystery with Obamacare, once the subsidies settle in and there's actual costs and the subsidies to insurers go away. Is the Obamacare structure financially viable, or just some financial house of cards overall?
And, politically, this is A Republican plan, not THE Republican plan -- could the Republicans even pass their own plan? Is this a serious proposal, or just something to point at to say they do have an alternative?
There's a nice set of them in the WSJ article (free) by Brett Arends.
These are great; I'm only going to comment on a couple.
Keep it simple. Complicated financial strategies and investments are mostly designed to enrich managers and salesmen. A simple, diversified portfolio of low-cost index funds, rebalanced yearly, will do just fine—if not better.If you don't understand it, don't buy it.
Never buy a lottery ticket. The lottery runs a profit, which means the players run a loss. And a study once found that the people who won ended up no happier than those who lost.What never?
Well, hardly ever. (to paraphrase Gilbert and Sullivan).
The occasional bit of fun is OK, but the lottery is basically a tax on those who don't understand math. Unfortunately, it's a voluntary regressive tax, primarily on those who can least afford it.
Monday, January 26, 2015
Actually, both of these are questions on the Alzheimer’s ‘quick screen’.
I watched this with my father in 2007:
“Who is the president of the United States now?”
(long pause) “That clown”
(me) “Dad, he wants the name of the clown.”
(long pause) “Truman.”
Nice try Dad, especially with George W. Bush as president.
Cartoon citation: Barney & Clyde by Gene Weingarten, Dan Weingarten & David Clark, January 26, 2015
Wednesday, January 21, 2015
I'll let economists debate the effects of increasing the capital gains rate, and let them not come to a conclusion.
Instead, I want to consider the generational loophole -- the fact that, at death, the basis for the heirs becomes the death date, NOT when the asset was originally purchased.
Of the three ways of which capital gains are given favored tax status, this one is the least defensible.
The others are (1) the lower rate for capital gains, which has some defense on economic grounds, (2) the fact that taxes aren't paid until the asset is sold, and so the taxes are deferred -- which avoids the need to inventory the value of your assets each year before you do your 1040, which would be a nightmare for hard to value assets and exaggerate the effect of the business cycle on tax collections.
A simple example. When my father died in 2011, the five of us kids each inherited 20% of his Chevron stock. The basis for the capital gains wasn't when the stock was purchased, but when he died. The tax on any capital gains just disappeared.
Now, there are some practical reasons for this, which would demand a phase in. My father didn't actually buy that Chevron stock. My grandparents owned it at least as far back as the 1950s, because I remember them mentioning the dividend (because, as a kid, I had to ask what a dividend was). My father inherited 20% of that stock, along with his four siblings.
But did my grandparents buy it, or did they also inherit it? That's quite likely, since they were truck farmers, not financial wizards.
Truth is, it would be difficult if not impossible to find out who originally purchased how much Standard Oil of Kentucky stock (which was acquired by Standard Oil of California, which eventually became Chevron). But that doesn't mean that in this modern era of record keeping we couldn't require records to start being kept, and set some arbitrary current start date for older assets, and phase out this loophole.
On a pure fairness basis (always a tough argument with the tax code) it's hard to defend this disappearance of capital gains the living have to pay, and this should go.
By the way, it would be lovely to report this Chevron stock had made me fabulously wealthy, but if you did the math above you can see that this was 1/25th of the amount of stock my grandparents owned. They weren't dirt poor, but they didn't get indoor plumbing until 1953.
Wednesday, December 31, 2014
I was one of those retirees who stayed somewhat busier than they anticipated. I anticipated being able to do more cycling, but that turned out not to be the case. It was wonderful to see my grandson grow during the year right in front of my eyes as we took care of him about 3 days a week.
Teaching 3 college courses this fall proved to be more than I really want to do, so I'm cutting back next year, maybe entirely. I knew it was going to be a busy fall, but due to unforeseen circumstances it turned out to be a lot busier than anticipated.
What's up for 2015?
The key thing to get done this year is to move to more suitable housing for the long term. We've been in this house since 1981, and moving will not be easy or straightforward.
My grandson will be walking within days, and this spring can be put in the bike trailer, so I see a lot of trips to playgrounds and the Botanic Gardens in my future, and I'm looking forward to that a lot.
Saturday, December 27, 2014
But back to the show. Let's once again look at web advice and see if we agree with it. This one is from the Hufffington Post, http://www.huffingtonpost.com/elyse-gorman/15-damaging-myths-about-l_b_6324636.html , titled 15 Damaging Myths About Life We Should All Stop Believing, by Elyse Gorman. And who is Miss Gorman? "
1. There is a single definition of success.
Yes, that's a myth. There are lots of ways to succeed. But Gorman undercuts her own argument by ending with "Live, work, date, play, create, travel, eat, drink, move, laugh and sing in ways that feel right with your soul. That is true success." No, Elyse, you were right the first time.
2. Life is meant to be hard work.
Not a myth. Actually, I don't claim to know the meaning of life, so I can't say what life is meant to be. But I do know that there's a lot of hard work involved.
3. Life happens to us.
Partly a myth. Lots of things we can control. Lots of things we can't. Niebuhr's Serenity Prayer sums it up well:
- God, grant me the serenity to accept the things I cannot change,
- The courage to change the things I can,
- And the wisdom to know the difference.
4. There is such a thing as normal, and we should measure ourselves against it.
A myth. There are lots of normals, just as there are lots of definitions of success. We should measure ourselves against our standards. Am I being a good enough parent? How could I improve as a spouse?
5. There is an "us" and a "them."
A myth. There are just varying degrees of "us".
6. We have to compete for limited resources.
Gorman writes, "Life is meant to be abundant and limitless. We create scarcity by believing in it". No. It's an economic world.
7. Happiness comes from external things.
A myth if you are middle income or better, but not in general. Studies show that up to a point, money does buy happiness -- principally because it can buy food and shelter. But fairly rapidly the connection between income/wealth and happiness becomes unimportant. But there are a lot of people at the low end of the income/wealth scale, and they would be happier if they were more secure.
8. Holding grudges is a natural part of life.
I agree with Gorman here, who writes:
The Buddha once said, "Holding on to anger is like grasping a hot coal with the intent of throwing it at someone else; you are the one who gets burned."
Make forgiveness your new motto and see how much freer and lighter your soul feels.
9. There is something wrong with us.
Not a myth. Of course there's something wrong with each of us. But let's not forget that there is also the spark of the divine in us, and each of us has worth.
10. It matters what other people think of us.
Not a myth. We shouldn't obsess about it, but it does matter to us.
11. We see things how they really are.
A myth. As Paul notes: "For now we see in a mirror dimly, but then face to face; now I know in part, but then I will know fully just as I also have been fully known." (1 Cor 13:12)
12. Meditation is something people do on a cushion at sunrise.
Yes, a myth. But Gorman says it's a myth because you can meditate anywhere, anytime. I think it's a myth because most people don't meditate at all.
13. When we give something, we lose something.
A myth. Most of the time we gain.
14. We have to logically figure everything out.
Not a myth. We can't logically figure everything out, because we don't have the information, we don't have the time and we're not that logical. Still, we might as well try to do the best we can.
15. We need to be more realistic.
Not a myth. Illusion is the enemy of self-knowledge.
Score: of Gorman's 15 myths, I agree that 7 are myths. I disagree that 8 are myths. So we're about halfway in agreement.
Monday, June 30, 2014
I see this listing on the Big Ten network. They are showing classic basketball games, which itself is a sign that I don't want to stay on target and do something useful. But look at the listing:
They identify the game (which is helpful). From the fact that it's "classic basketball" it seems likely that this is a competitive game. But then they tell you the score.
What's the point to that? If I wanted to watch the game 9 years later, I either
(a) remember who won because I'm a rabid fan of Illinois, or
(b) don't want to know who won because I'd like to watch the game as it develops with a sense of suspense.
So for all of us in group (b), we've just been talked out of watching the game.
Monday, June 09, 2014
Typically, one might see a positive pattern, a negative pattern, or no pattern at all. A well behaved scatterplot of each type might look like this:
Of course, not all data follow such a simple pattern. But I don't think I've seen any scatterplot quite as odd as this one. The x axis is the monthly unemployment rate. The y axis is the monthly Case-Schiller index of housing prices. The data are from the Chicago market, from January 1990 to October, 2013.
This looks more like a ninja throwing star than a data pattern.
If we do a time series graph of these series, we can get a bit more insight. The unemployment rate is following the business cycle (some would argue it IS the business cycle, particularly if you are unemployed).
from 1990 to mid-2007 the housing price index isn't following the business cycle; it's just going up into a bubble. Even now, it's at a considerably higher level than it was in 1990.
In the early months, there seems to be the expected negative correlaiton. Then the correlation is positive for a while (when unemployment is rising, but so is the price index). Finally, we return to the negative relationship, but at a higher price level than before (110-170 rather than the earlier 70-100).
Naively, we would expect a stronger negative correlation, but perhaps this mainly illustrates that bubble psychology overrides normal economic connections ... for a while.
Monday, May 12, 2014
What's known is that it has to clear constitutional hurdles. I don't think it will, but I could be wrong.
What's not really known because the details of the bill, and a detailed actuarial study, were not done before the bill was passed -- yep, that's right -- is that the bill itself it a bit of a sham.
These details come from David McSweeney at Reboot Illinois.He's channeling a report by the Commission on Government Forecasting and Accountability (COGFA), which is a state agency.
The savings aren't $160 billion, but only $137 billion.
The savings are backloaded -- only 6% occur in the first 10 years. There are no savings at all until 2016. 82% of the savings occur from 2035 to 2045. That's partly due to compounding effects, but also partly because these legislators will no longer be around by then. Because the savings are small in the next few years, this won't help Illinois' short term fiscal situation much.
Because those savings are backloaded, the present value of those savings isn't $160 billion, or $137 billion, but $23.8 billion. This isn't chicken feed, but not quite what we were led to believe, either -- particularly since the legislature has a long history of not living up to its pension funding promises, and this is yet another promise.
Monday, March 31, 2014
Hobby Lobby is arguing that the Affordable Care Act should not require the company to cover birth-control in its employer-provided health insurance because it conflicts with the Christian owners' religious beliefs.
Most of the coverage has looked at this as a religious rights issue, or treated it as an opportunity for satire (the Daily Show being a prime example).
I seems to me that the real issue is a lot different. Why are corporate employers involved with health care in the first place? And what’s the path to getting them out.
How they go there is no mystery. During the post-WWII labor shortages, health insurance got added as an employee benefit by large corporations in order to compete. Medical costs were a lot lower, and group coverage was cheaper (because of the low sales costs), so this seemed like a win-win-win for the corporation, the health insurer, and the employee. The amount of coverage varied widely from employer to employer. For example, some covered maternity and some didn’t.
As health care costs rose all out of proportion to the rest of the economy, these costs became a burden to everyone (except the insurance industry and the health care corporations themselves). But due to the tax laws it didn’t make sense for the employer to just give the money to the employee and let them buy health care on their own.
The Affordable Care Act then took this relationship farther – legislating what employees needed to be covered and legislating a high set of minimum benefit. Now, with all that governmental intervention, health care doesn’t look so much like a fringe benefit being provided by an employer and more like any other tax – money that goes out, where the government determines how it will be spent on what (Consider: would I have wanted to pay for the second Gulf War or the war in Afghanistan with MY tax money?)
And the group rates issue can be handled by the ACA exchange function (OK, pause for laughter here. But they are supposed to serve this function for those who aren’t covered by an employer.)
So, given this, why do we need to have the employers involved at all?
Should we not, instead, just change the tax status of health care so an employer could just provide money toward health care, but let the employee make the decision on how to be covered? If they want a policy that covers acupuncture, let them buy it. If they don’t, let them buy a policy without it. If the government (unwisely) decides acupuncture must be covered, at least the employer isn’t involved.
This, of course, avoids the whole Hobby Lobby can of worms with employers’ beliefs and attitudes. It’s easy to make fun of the particular beliefs of the owners of Hobby Lobby because I don’t agree with them (and, in fact, wonder if they are sincere or just agreeing to serve as a test case). But no matter, let’s avoid the whole issue and get my employer out of my health care.
Sunday, March 23, 2014
I’ve blogged several times on the financial crisis around the state of Illinois’s long-term tendency to promise pension benefits but not fund them.
So, a few months ago, they passed a pension reform bill. Shouldn’t I be happy now?
No. I think there’s a good chance this is just more theatre.
1. I haven’t seen an actuarial study that indicates this reform will actually solve the problem. The reform was pushed through in almost a star-chamber manner with little information about it ahead of the vote – even for legislators – and certainly not enough time for careful study. So they didn’t know it would work when then voted for it.
2. After several months, I haven’t seen such an actuarial study.
3. There are, of course, lawsuits filed by interested parties. The reform bill seems unconstitutional on its face, since the Illinois constitution states:
SECTION 5. PENSION AND RETIREMENT RIGHTS
Membership in any pension or retirement system of the
State, any unit of local government or school district, or
any agency or instrumentality thereof, shall be an
enforceable contractual relationship, the benefits of which
shall not be diminished or impaired.
4. About the only thing working in favor of the judges ignoring the clear language of the constitution is (1) as Madigan noted, many of the judges are his political allies, and (2) the pension reform deliberately does not cut the benefits of judges.
Madigan … believes "at least four members of the Illinois Supreme Court that will approve the bill." Snickering, arrogant Madigan said this about not including judges in the bill: "That's a practical judgment that was made. No further comment."
5. The court does not have to rule with any particular timing; the law is scheduled to take effect in June, 2014, but they could easily defer that until the case is settled. So they can wait until after the November elections to rule, and probably would want to avoid such a hot button issue in what will probably be a very dirty campaign for governor.
6. So, my prediction is that they will rule against the pension reform bill after the November, 2014 gubernatorial election – putting us back where we were years ago, but with the financing problem having compounded since then.
I’ve been watching “Cosmos”, and so the idea of life on other world is something I’ve been thinking about.
Titan, for example, might have methane-based life, rather than water-based life. And that life might look very different. Most “life” on earth is pretty similar – e.g. the DNA for handling the digestion of sugars is evidently the same in oak trees as in humans.
Raising the interesting question: if we found “life”, would it be “life”, or something so different than “life” wouldn’t make sense?
For example, we aren’t that far from having machines that can replicate themselves (e.g. print new copies of themselves, and have robots assemble the parts. So it’s possible to imagine a community of machines self-sustaining community of machines without human intervention. (I know, we still have to mine, refine, etc.) Would we consider this community of machines “living” in any sense resembling our own?
And how about self-replicating molecules, such as proteins outside of living cells?
It is likely that when we find something, it will be stranger than we can now imagine.
Plasma as an example
When I was in school – and even when They Might be Giants did that science song – there were three states of matter: solid, liquid, and gas. Surprise, there are four – we need to add plasma to that list. And there’s a lot of plasma. The sun is plasma, and it’s larger than all the planets put together. The sun isn’t a ball of hot gasses, but a ball of plasma.
We could not even has imagined plasma until the 20th century. We needed to understand ionization and to be able to technologically produce plasma in the lab for study.
Friday, February 28, 2014
The results aren't surprising. What is surprising is that the Planet Money team investigated 74,476 pizzas from 3,678 pizza places around the country. That sounds like overkill. Maybe I'm giving too much my public ratio station.