Category Archives: Business

Elvis Presley and the opioid epidemic

For those who suspect that the medical profession may bear some responsibility for the opioid epidemic, I present a prescription written for Elvis Presley, August 1977. Like many middle age folks, he suffered from back pain and stress. And like most folks, he trusted the medical professionals to “do no harm” prescribing nothing with serious side effects. Clearly he was wrong.

Elis prescription, August 1977. Opioid city.

Elis prescription, August 1977. Opioid city.

The above prescription is a disaster, but you may think this is just an aberration. A crank doctor who hooked (literally) a celebrity patient, but not as aberrant as one might think. I worked for a pharmacist in the 1970s, and the vast majority of prescriptions we saw were for these sort of mood altering drugs. The pharmacist I worked for refused to service many of these customers, and even phoned the doctor to yell at him for one particular egregious case: a shivering skinny kid with a prescription for diet pills, but my employer was the aberration. All those prescriptions would be filled by someone, and a great number of people walked about in a haze because of it.

The popular Stones song, Mother’s Little Helper, would not have been so popular if it were not true to life. One might ask why it was true to life, as doctors might have prescribed less addicting drugs. I believe the reason is that doctors listened to advertising then, and now. They might have suggested marijuana for pain or depression — there was good evidence it worked — but there were no colorful brochures with smiling actors. The only positive advertising was for opioids, speed, and Valium and that was what was prescribed then and still today.

One of the most common drugs prescribed to kids these days is speed, marketed as “Ritalin.” It prevents daydreaming and motor-mouth behaviors; see my essay is ADHD a real disease?. I’m not saying that ADD kids aren’t annoying, or that folks don’t have back ached, but the current drugs are worse than marijuana as best I can tell. It would be nice to get non-high-inducing pot extract sold in pharmacies, in my opinion, and not in specialty stores (I trust pharmacists). AS things now stand the users have medical prescription cards, but the black sellers end up in jail..

Robert Buxbaum, January 25, 2018. Please excuse the rant. I ran for sewer commissioner, 2016, And as a side issue, I’d like to reduce the harsh “minimum” penalties for crimes of possession with intent to sell, while opening up sale to normal, druggist channels.

Bitcoin risks, uses, and bubble

Bitcoin prices over the last 3 years

Bitcoin prices over the last 3 years

As I write this, the price of a single bitcoin stands are approximately $11,100 yesterday, up some 2000% in the last 6 months suggesting it is a financial bubble. Or maybe it’s not: just a very risky investment suited for inclusion in a regularly balanced portfolio. These are two competing views of bitcoin, and there are two ways to distinguish between them. One is on the basis of technical analysis — does this fast rise look like a bubble (Yes!), and the other is to accept that bitcoin has a fundamental value, one I’ll calculate that below. In either case, the price rise is so fast that it is very difficult to conclude that the rise is not majorly driven by speculation: the belief that someone else will pay more later. The history of many bubbles suggests that all bubbles burst sooner or later, and that everyone holding the item loses when it does. The only winners are the last few who get out just before the burst. The speculator thinks that’s going to be him, while the investor uses rebalancing to get some of benefit and fun, without having to know exactly when to get out.

That bitcoin is a bubble may be seen by comparing the price three years ago. At that point it was $380 and dropping. A year later, it was $360 and rising. One can compare the price rise of the past 2-3 years with that for some famous bubbles and see that bitcoin has risen 30 times approximately, an increase that is on a path to beat them all except, perhaps, the tulip bubble of 1622.

A comparison between Bitcoin prices, and those of tulips, 1929 stocks, and other speculative bubbles; multiple of original price vs year from peak.

A comparison between Bitcoin prices, and those of tulips, 1929 stocks, and other speculative bubbles; multiple of original price vs year from peak.

That its price looks like a bubble is not to deny that bitcoin has a fundamental value. Bitcoin is nearly un-counterfeit-able, and its ownership is nearly untraceable. These are interesting properties that make bitcoin valuable mostly for illegal activity. To calculate the fundamental value of a bitcoin, it is only necessary to know the total value of bitcoin business transactions and the “speed of money.” As a first guess, lets say that all the transactions are illegal and add up to the equivalent of the GDP of Michigan, $400 billion/year. The value of a single bitcoin would be this number divided by the number of bitcoin in circulation, 12,000,000, and by the “speed of money,” the number of business transactions per year per coin. I’ll take this to be 3 per year. It turns out there are 5 bitcoin transactions total per year per coin, but 2/5 of that, I’ll assume, are investment transactions. Based on this, a single bitcoin should be worth about $11,100, exactly its current valuation. The speed number, 3, includes those bitcoins that are held as investments and never traded, and those actively being used in smuggling, drug-deals, etc.

If you assume that the bitcoin trade will grow to $600 billion year in a year or so, the price rise of a single coin will surpass that of Dutch tulip bulbs on fundamentals alone. If you assume it will reach $1,600 billion/year, the GDP of Texas in the semi-near future, before the Feds jump in, the value of a coin could grow to $44,000 or more. There are several problems for bitcoin owners who are betting on this. One is that the Feds are unlikely to tolerate so large an unregulated, illegal economy. Another is that bitcoin are not likely to go legal. It is very hard (near impossible) to connect a bitcoin to its owner. This is great for someone trying to deal in drugs or trying hide profits from the IRS (or his spouse), but a legal merchant will want the protection of courts of law. For this, he or she needs to demonstrate ownership of the item being traded, and that is not available with bitcoin. The lack of good legitimate business suggests to me that the FBI will likely sweep in sooner or later.

Yet another problem is the existence of other cryptocurrencies: Litecoin (LTC), Ethereum (ETH), and Zcash (ZEC) as examples. The existence of these coins increase the divisor I used when calculating bitcoin value above. And even with bitcoins, the total number is not capped at 12,000,000. There are another 12,000,000 coins to be found — or mined, as it were, and these are likely to move faster (assume an average velocity of 4). By my calculations, with 24,000,000 bitcoin and a total use of $1,600 billion/year, the fundamental value of each coin is only $16,000. This is not much higher than its current price. Let the buyer beware.

For an amusing, though not helpful read into the price: here are Bill Gates, Warren Buffet, Charlie Munger, and Noam Chomsky discussing Bitcoin.

Robert Buxbaum, December 3, 2017.

Why Warren Buffett pays 0% social security tax

Social Security is billed along with Medicare (health care for the poor) as an anti-flat tax called FICA where middle class workers pay 7.65 -15.3%, and rich people pay essentially 0%. The reason that Warren Buffet and other rich people pay 0%, on a percentage basis, far less than their secretaries, is that there is a FICA cap of $127,200 currently, and he earns far more than $127,200. Buffett’s secretaries pays 7.65%, or which 6% approximately is social-security payment, and the rest Medicare. Buffett’s company then matches the 7.65% — a situation that applies to virtually every employee in the US.

A self employed person though, a gardener say, pays both the employee and employer portion or 15.3%. The same $127,200 cap applies, but since few gardeners make more than this amount, they are likely to pay 15.3% on all earnings, with no deductions. FICA really socks the poor and middle class, and barely touches a rich man like Buffett. This is the tax-inequality that most needs addressing, in my opinion, and one I have not heard discussed.

A short history of FICA

A visual history of FICA rates (right), and of the salary cap (left). Medicare contributions were added in 1966.

As I write this, there is a debate about tax reform that mostly involves income tax, but not at all FICA. Income tax could be improved, in my opinion, and should be. We could remove some exemptions that are being abused, and we should lower the general rates, especially for foreign-earnings, but the current income tax isn’t that bad, in my opinion. Buffett likes to brag about the high rate he pays, but it’s not a bad rate compared to the rest of the world. And Buffett benefits from a lot of things we don’t. His income is taxed at a lower rate than a worker’s would be since most of it is unearned. And, like most rich folks, he has exemptions and deductions that do not apply to most. He can deduct cars, private airplanes, and interest; most folks don’t deduct these things since they don’t spend enough to exceed the “standard deduction”. I’m happy to say these issues are being addressed in the current tax re-write.

The current, House version of the GOP tax proposal includes a raise in the standard deduction and a cap on interest and other deductions. There is a general decrease in the tax rate for earnings, and a decrease for earnings made abroad and repatriated. I’d like to see tariffs, too but they do not appear in the versions I’ve seen. And I’ve very much like to see a decrease in the FICA rate coupled with a removal of the salary cap. Pick a rate, 4% say, where we collect the same amount, but spread the burden uniformly. Why should 7.65%-15.3% or the workmanship wages got to the window, the orphan, and healthcare of the poor, while 0% of Buffett’s go for this?

Some other tax ideas: I’d like to see shorter criminal sentences, especially for drugs, and I’d like to see healthcare addressed to reduce the administrative burden.

Robert E. Buxbaum, November 17, 2017. In the news today, the senate version puts back the tax exemption on private jets. The opposite of progress, they say, is congress.

The energy cost of airplanes, trains, and buses

I’ve come to conclude that airplane travel makes a lot more sense than high-speed trains. Consider the marginal energy cost of a 90kg (200 lb) person getting on a 737-800, the most commonly flown commercial jet in US service. For this plane, the ratio of lift/drag at cruise speed is 19, suggesting an average value of 15 or so for a 1 hr trip when you include take-off and landing. The energy cost of his trip is related to the cost of jet fuel, about $3.20/gallon, or about $1/kg. The heat energy content of jet fuel is 44 MJ/kg. Assuming an average engine efficiency of 21%, we calculate a motive-energy cost of 1.1 x 10-7 $/J. The amount of energy per mile is just force times distance. Force is the person’s weight in (in Newtons) divided by 15, the lift/drag ratio. The energy use 1609 m (1 mile) is 90*9.8*1609/15 = 94,600 J. Multiplying by the $-per-J we find the marginal cost is 1¢ per mile: virtually nothing compared to driving.

The Wright brothers testing their gliders in 1901 (left) and 1902 (right). The angle of the tether reflects the dramatic improvement in the lift-to-drag ratio.

The Wright brothers testing their gliders in 1901 (left) and 1902 (right). The angle of the tether reflects a dramatic improvement in lift-to-drag ratio; the marginal cost per mile is inversely proportional to the lift-to-drag ratio.

The marginal cost of 1¢/passenger mile explains why airplanes offer crazy-low, fares to fill seats. But this is just the marginal cost. The average energy cost is higher since it includes the weight of the plane. On a reasonably full 737 flight, the passengers and luggage  weigh about 1/4 as much as the plane and its fuel. Effectively, each passenger weighs 800 lbs, suggesting a 4¢/mile energy cost, or $20 of energy per passenger for the 500 mile flight from Detroit to NY. Though the fuel rate of burn is high, about 5000 lbs/hr, the mpg is high because of the high speed and the high number of passengers. The 737 gets somewhat more than 80 passenger miles per gallon, far less than the typical person driving — and the 747 does better yet.

The average passengers must pay more than $20 for a flight to cover wages, capital, interest, profit, taxes, and landing fees. Still, one can see how discount airlines could make money if they have a good deal with a hub airport, one that allows them low landing fees and allows them to buy fuel at near cost.

Compare this to any proposed super-fast or Mag-lev train. Over any significant distance, the plane will be cheaper, faster, and as energy-efficient. Current US passenger trains, when fairly full, boast a fuel economy of 200 passenger miles per gallon, but they are rarely full. Currently, they take some 15 hours to go Detroit to NY, in part because they go slow, and in part because they go via longer routes, visiting Toronto and Montreal in this case, with many stops along the way. With this long route, even if the train got 150 passenger mpg, the 750 mile trip would use 5 gallons per passenger, compared to 6.25 for the flight above. This is a savings of $5, at a cost of 20 hours of a passenger’s life. Even train speeds were doubled, the trip would still take 10 hours including stops, and the energy cost would be higher. As for price, beyond the costs of wages, capital, interest, profit, taxes, and depot fees, trains have to add the cost of new track and track upkeep. Wages too will be higher because the trip takes longer. While I’d be happy to see better train signaling to allow passenger trains to go 100 mph on current, freight-compatible lines, I can’t see the benefit of government-funded super-track for 150+ mph trains that will still take 10 hours and will still be half-full.

Something else removing my enthusiasm for super trains is the appearance of new short take-off and landing jets. Some years ago, I noted that Detroit’s Coleman Young airport no longer has commercial traffic because its runway was too short, 1051m. I’m happy to report that Bombardier’s new CS100s should make small airports like this usable. A CS100 will hold 120 passengers, requires only 1463m of runway, and is quiet enough for city use. The economics are such that it’s hard to imagine mag-lev beating this for the proposed US high-speed train routes: Dallas to Houston; LA to San José to San Francisco; or Chicago-Detroit-Toledo-Cleveland-Pittsburgh. So far US has kept out these planes because Boeing claims unfair competition, but I trust that this is just a delay. For shorter trips, I note that modern busses are as fast and energy efficient as trains, and far cheaper because they share the road costs with cars and trucks.

If the US does want to spend money, I’d suggest improving inner-city airports, and to improve roads for higher speed car and bus traffic. If you want low pollution and high efficiency, how about hydrogen hybrid buses?

Robert Buxbaum, October 30, 2017. I taught engineering for 10 years at Michigan State, and my company, REB Research, makes hydrogen generators and hydrogen purifiers.

Health vs health administration

One of the great patterns of government is that it continually expands adding overseers over overseers to guarantee that those on the bottom do their work honestly. There are overseers who check that folks don’t overcharge, or take bribes, or under-pay. There are overseers to check shirking, and prevent the hiring of friends, to check that paperwork is done, and to come up with the paperwork, and lots of paperwork to assert that no one is wasting money or time in any way at all. There have been repeated calls for regulation reform, but little action. Reform would require agreement from the overseers, and courage from our politicians. Bureaucracy always wins.

The number of health administrators has risen dramatically; doctors, not so much.

By 2009 the number of health administrators was rising dramatically faster than the number of doctors; it’s currently about 20:1.

The call for reform is particularly strong in healthcare and the current, Obamacare rules are again under debate. As of 2009 we’d already reached the stage where there were fourteen healthcare administrators for every doctor (Harvard Business Review), and that was before Obamacare. By 2013, early in the Obamacare era, the healthcare workforce had increased by 75%, but 95 percent of those new hires were administrators: we added 19 administrators per doctor. Some of those administrators were in government oversight, some worked in hospitals filling out forms, some were in doctors offices, and some were in the government, writing the new rules and checking that the rules were followed. A lot of new employment with no new productivity. Even if these fellows were all honest and alert, there are so many of them, that there seems no way they do not absorb more resources than the old group of moderately supervised doctors would by laziness and cheating.

Overseers fill ever-larger buildings, hold ever-more meetings, and create ever-more rules and paperwork. For those paying out of pocket, the average price of healthcare has risen to $25,826 a year for a family of four. That’s nearly half of the typical family income. As a result people rarely buy healthcare insurance (Obamacare) until after they are too sick to work. Administering the system take so much doctor time that a Meritt Hawkins study finds a sharp decline in service. The hope is that Congress will move to reverse this — somehow.

With more administrators than workers, disagreements among management becomes the new normal.

With more administrators than workers, disagreements among management becomes the new normal. Doctors find themselves operating in “The Dilbert Zone”.

Both Democrats and Republicans have complained about Obamacare and campaigned to change or repeal it, but now that they are elected, most in congress seem content to do nothing and blame each other. If they can not come up with any other change, may I suggest a sharp decrease in the requirements for administrative oversight, with a return to colleague oversight, and a sharp decrease in the amount of computerized documentation. The suggestion of colleague oversight also appears here, Harvard Business Review. Colleague oversight with minimal paperwork works fine for plumbers, and electricians; lawyers and auto-mechanics. It should work fine for doctors too.

Robert Buxbaum, September 19, 2017. On a vaguely similar topic, I ask is ADHD is a real disease, or a disease of definition.

Detroit 1967 to 2017: unemployment comes down, murder rate doesn’t.

Almost 50 years ago today, July 23, 1967 white policemen raided an unlicensed, “blind pig” bar in a black neighborhood, the 12th street of Detroit, and the city responded with four days of rioting, 43 killings (33 black, 10 white), 2509 stores looted, and over 1000 fires. In 2017, at last the city is beginning to show signs of recovery. By 2015 the city’s unemployment had gone down from about 20% to 12%, and  in the first six months 2017, the firs six months of the Trump presidency, 2017 it’s gone down again to 7 1/2%. It’s not that 7 1/2% unemployment is good, but it’s better. Per-hour salaries are hardly up, but I take that as better than having a high average salary at very low employment. As a point of reference, the unemployment rate in Detroit in 1967, before the riots was 3.4%. Within weeks, 150,000 jobs were lost, and anyone who could leave the city, did.

Detroit Unemployment rates are way down, but the city still looks like a mess.

Detroit Unemployment rates are way down, but the city still looks like a mess.

Another issue for Detroit is its uncommonly high murder rate. In the mid-80s, Detroit had the highest murder rate in the US, about 55 murders per 100,000 population per year (0.055%/year). As of February 1, 2017, the murder rate was virtually unchanged: 50 per 100,000 or 0.05%/year, but two cities have higher rates yet. At present rates, you have a 3.5% of dying by homicide if you live in Detroit for 70 years — even higher if you’re male. The rate in the rest of the US is about 1/10th this, 0.005%/year, or 5 per 100,000, with a dramatic difference between rural and urban populations.

Murder rate in 50 cities with Detroit highlighted. From The Economist, February 2017.

Murder rate in 50 cities with Detroit highlighted, from The Economist.

One of the causes of the high murder rate in Detroit, and in the US generally, I suspect, is our stiff, minimum-penalties for crime. As sir Thomas Moose pointed out, when crime is punished severely, there is a tendency to murder. If you’re going to spend the next 20 years behind bars, you might as well try any means you can to escape. Another thought — the one favored by social liberals — is that it’s the presence of guns in the US encourages murder. It may, but it also seems to prevent crime by allowing the victim to defend himself or herself. And the effect on murder is not so clear, if you consider suicide as a form of murder. In countries like Canada with few guns, people kill themselves by hanging or by throwing themselves off high buildings. My hope is that Detroit’s murder rate will drop in 2017 to match its improved economic condition, but have no clear reason to think it will.

Robert Buxbaum, July 20, 2017. Here are some suggestions I’ve made over the years.

If the wall with Mexico were covered in solar cells

As a good estimate, it will take about 130,000 acres of solar cells to deliver the power of a typical nuclear facility, 26 TWhr/year. Since Donald Trump has proposed covering his wall with Mexico with solar cells, I came to wonder how much power these cells would produce, and how much this wall might cost. Here goes.

Lets assume that Trump’s building a double wall on a strip of land one chain (66 feet) wide, with a 2 lane road between. Many US roads are designed in chain widths, and a typical, 2 lane road is 1/2 chain wide, 33 feet, including its shoulders. I imagine that each wall is slanted 50° as is typical with solar cells, and that each is 15 to 18 feet high for a good mix of power and security. Since there are 10 square chains to an acre, and 80 chains to a mile we find that it would take 16,250 miles of this to produce 26 TWhr/year. The proposed wall is only about 1/10 this long, 1,600 miles or so, so the output will be only about 1/10 as much, 2.6 TWhr/year, or 600 MW per average daylight hour. That’s not insignificant power — similar to a good-size coal plant. If we aim for an attractive wall, we might come to use Elon Musk’s silica-coated solar cells. These cost $5/Watt or $3 Billion total. Other cells are cheaper, but don’t look as nice or seem as durable. Obama’s, Ivanpah solar farm, a project with durability problems, covers half this area, is rated at 370 MW, and cost $2.2 Billion. It’s thus rated to produce slightly over half the power of the wall, at a somewhat higher price, $5.95/Watt.

Elon Musk with his silica solar panels.

Elon Musk with his, silica-coated, solar wall panels. They don’t look half bad and should be durable.

It’s possible that the space devoted to the wall will be wider than 66 feet, or that the length will be less than 1600 miles, or that we will use different cells that cost more or less, but the above provides a good estimate of design, price, and electric output. I see nothing here to object to, politically or scientifically. And, if we sell Mexico the electricity at 11¢/kWhr, we’ll be repaid $286 M/year, and after 12 years or so, Republicans will be able to say that Mexico paid for the wall. And the wall is likely to look better than the Ivanpah site, or a 20-year-old wind farm.

As a few more design thoughts, I imagine an 8 foot, chain-link fence on the Mexican side of the wall, and imagine that many of the lower solar shingles will be replaced by glass so drivers will be able to see the scenery. I’ve posited that secure borders make a country. Without them, you’re a tribal hoard. I’ve also argued that there is a pollution advantage to controlling imports, and an economic advantage as well, at least for some. For comparison, recent measurement of the Great Wall of China shows it to be 13,170 miles long, 8 times the length of Trump’s wall with China.

Dr. Robert E. Buxbaum, June 14, 2017.

Solving the savings dilemma (how to have savings)

A few days ago, I wrote a post about the lack of savings in America, the social causes for it, and the damage it causes. I had some governmental suggestions, but suspect I didn’t emphasize that the main responsibility is personal: if you want savings, you’ve got to save.

Every rich person spends less than he earns. If you aspire to be rich, spend less on clothes than you can afford.

Every rich person spends less than he earns. If you aspire to be rich, spend less on clothes than you can afford.

If you want to have savings, it is up to you to spend less than you earn. If you don’t, you’ll never be rich, you’ll never have savings or net-economic worth, and you’ll always be strung-out over emergencies. Income and gifts won’t help if spending rises to match. At all incomes, the people who get richer are those who tailor spending to be less than earnings.

There is another personal honesty issue here, and a marriage issue too. If you spend more than you earn, someone will be cheated, and that person (your wife, husband, neighbor, friend) is likely to get mad. Earn $100 and spend $99.99, you can be honest and well liked. if you earn $1000 and spend $1000.01 and you will cheat someone you love sooner or later. Be an honest fellow and spend less. Clothes is a good place to start: say no to the fancy dress and the fancy wedding, and to fancy clothes in general. If you smoke, vaping can be a life and money saver. And try to avoid pot-smoking, at $400/oz that’s got to be a killer. And here are some water savers.

A good way to know if you are doing things right :Start a bank account, and check the balance and resolve to see it $10 higher at the end of the week than before. And that’s my two cents.

Robert Buxbaum, April 26, 2017.

Black folks have no savings (poor whites too)

The wealth of the mean American household has dropped significantly since 2007, a result of the general de-industrialization of America. It’s not that America has gotten poorer, but in the last 8 years we’ve increased the economic divide, enriching the richest few percent while leaving behind the working and bourgeoise classes. We are beginning to come back, but a particularly nasty legacy remains, especially among black families. Some 47% of black families have no liquid savings  — a far greater fraction than in 2007. The lack of savings also appears in white families (19%), and Hispanics (41%), but it’s most desperate among blacks.

College graduation rates have increased among black students, and along with the increase there has been an increase in salaries, but savings have declined. As of 2015, 22.5% of black students and 15.5% of Hispanic students had completed four years of college. This compares to 36.2% of white students, an inequality, but not a horrible one. By 2013, the average salary of a black college grad was somewhat over $1000/week, somewhat less than the average for whites, but enviable compared to the world as whole. The problem is that black workers manage to save very little compared to other ethnic groups, and compared to previous savings rates as shown by the graphic below. By 2013, the net worth of the median black family (savings, plus paid-off part of home and car) was a mere $11,000 (Pew Research Data, below), down from $19,200 six years earlier, and much lower than the net worth of white families (also down since 2007). Liquid savings among blacks are much lower — near zero — and this is just the mean. Half of all black families are doing worse.

Net worth disparity 2007 - 2011. Black folks are doing poorly and it's getting worse.

Net worth disparity 2007 – 2011. Black folks are doing poorly and it’s getting worse.

The combination of low savings and low net worth puts black folks at a distinct disadvantage to their condition six years earlier. Without savings, it is near-impossible to weather the loss of a job, or even to fix a car or pay a ticket, Surviving through a disease is basically a one-way ticket to the welfare office. Six years ago, when people saved more and prices were lower, problems like these were major annoyances. Now, a job loss or a major repair is a family disaster.

The growth of check-cashing services in black neighborhoods is a symptom, I suspect, of the lack of liquidity. A person without savings will not have a checking account. As such, he or she will not have a credit card or check cashing privileges.  The only way to cash a check will be via a for-fee service, and these tend to come at a steep cost (2-5%). People with savings accounts can cash checks essentially for free, and can usually borrow money by way of a credit card. People without savings can’t get approved. Black people and poor whites tend to use debit cards instead. They look and work like credit cards, but they incur fees upon use, and do not provide instant loans. When black folks and poor whites need quick cash, their options are the loan-shark or the pawn shop: high-cost options that take a giant toll on the family.

As mentioned above, black individuals and families have lower incomes than whites at all education levels. While racism, no-doubt plays a role, as best I can tell, the largest single cause seems to be family stability. Employed, college-educated blacks earn, on average, 95% as much as employed, college-educated whites — not great, but not bad. The real problem with black income is that black unemployment rates are higher, black education rates are lower, and single-parent families are significantly more common among blacks than among whites and Orientals. Roughly 40% of black families are single-mother, or mother+grandparent households compared to “only” 26% in the population generally. In both populations, the number of single parent households have increased dramatically in the last few years, a result I suspect of the government’s desire to help. The government gives more aid to a split-up couple than to one that stays together, but the aid brings with it long-term damage to net worth. A family with one parent will naturally have a lower-income and savings rate than a family with two. The lack of stability and savings that comes from having a single parent family, I suspect, has contributed to crime, births out-of-wedlock, and the tendency of blacks to drop out of college.

Black families don't benefit as much from college --in part a result of the choice of courses.

Black families don’t benefit much from college –in part a result of course choices, in part the result of borrowing. (Forbes, 2015).

One finds that do-gooders in the white communities want to eliminate check cashing businesses and pawn shops in a misguided desire to help the low-income neighborhoods, but the success of these companies tell me that they are needed. Though check services and pawn brokers take a nasty bite, urban life would be much worse without them, I suspect.

Another so-called solution of the do-gooders, is to tax savings and transfer the wealth to the poor. This form of wealth redistribution has been a cornerstone of the Democratic party for the last century. The idea of the tax is that it will transfer “idle wealth” from rich savers to poor folks who will spend it immediately. The problem is that great swathes of the nation don’t save at all currently; net worth is down all across the US — among white and black families both. Taxing savings will almost-certainly reduce the savings rate even further. Besides, savings are the stuff of self-determination and dreams — far more than spending, it is savings that allows a person to start a new business. One does not provide for the dreams of one group by taking them from another — particularly another group chosen to be immediate spenders. That is a route to community disaster, is seen by looking at Detroit.

As it is, many poor, inner city children do not see a path out via education. Detroit school attendance hovers around 50%, and business startups are lacking. As best inner city people can tell, the only ways out are sports, music, prostitution, crime, and the church. With higher savings rates and higher family stability, folks could start businesses, and/or take advantage of job opportunities that come along. People seem to think that wealth redistribution should help, but it just seems to reduce savings and family stability. Every effort to increase wealth redistribution only seems to make things worse in Detroit.  It sometimes seems that the only businesses in Detroit are check cashing, pawn brokers, churches, hair-salons, fast food, and medical marijuana — businesses that require little investment, but provide little community return too. Detroit has lost its manufacturing center, and now has more medical marijuana providers than groceries — a sad state of affairs.

The Check cashing services of south-eastern MI are concentrated in poor black and white neighborhoods.

The Check cashing services of south-eastern MI are concentrated in poor black and white neighborhoods.

In 2016, both presidential candidates touted major infrastructure projects, highways and the like, to help the inner city poor. In principle this can help, but I have my doubts. One basis of doubt: inner city youth do not have the training to build roads and bridges — they have barely the training to work at McDonald’s. For another thing, if the project itself isn’t needed, it becomes another form of income redistribution. There tends to be a lack of pride in doing it well, and the benefits are basically nothing. A major war could provide jobs, of course, but most sane people prefer peace. Trump has made the case for tariffs (closing off free trade) as a way to rebuild the industrial center of cities like Detroit. It’s an approach that I think has merit. He’s also suggested closing the border to low-wage, Mexican workers, and recently signed a bill that raised the minimum wage for foreign workers. This is expected to raise the price of California lettuce and NY hotel stays, but is likely to increase employment among low-skill Americans — blacks and poor whites. Small steps, I think, to solving a serious national problem.

Robert E. Buxbaum, April 21, 2017. I ran for water commissioner 2016 (Republican). I lost. I also have some infrastructure suggestions, including daylighting some rivers and adding weirs to improve water quality and stop flooding. If you like my ideas (or don’t) please provide comments.

pee in the shower and other water savers

Do you want to save the planet and save money at the same time? Here are some simple tips:

The first money and planet saver, is to pee in the shower. For those who don’t have a lawn, or who don’t water, your single biggest water cost is likely the toilet. Each person in your household will use it several times per day, at roughly 1.6 gallons per flush. In Oak Park, Michigan the cost of water is 1.5¢/gallon, so each flush costs you, roughly 2.5¢. If you pee in the shower every morning, you’ll save yourself about one flush per day, or 2.5¢. Over the course of a year you’ll have used about 500 gallons less, and will have saved yourself somewhere between $5 and $10. Feel good about yourself every morning; the effort involved is truly minimal.

Related to peeing in the shower, I should mention that many toilets leak. A significant part of your water bill can often be cut by replacing the “flapper valve on the inside of your toilet tank, and/or by cleaning the needle fill valve. To see if you need this sort of help, put a few drops of food dye in the toilet when you leave in the morning. If the color is largely gone by the time you get back, the toilet is leaking the equivalent of a few volumes per day, that is at least as much water as is flushed. If the color goes faster, or you hear the tank refill when no one used it, you’re leaking more. Check the flapper and replace it if it’s worn — it’ll cost about $3 — and check the needle-fill valve. They don’t work forever. Cleanliness is near godliness.

Mulch is good, this is too much concentrated by the tree trunk. Use only 2 inches and spread it out to save water and weeding.

Mulch is good, this is too much concentrated by the tree trunk. Use only 2-3 inches and spread it out from the trunk to save water and weeding without attracting bugs.

If your valve is leaking and you decide to replace it, you may want to replace with a variable flush valve. Typically, there are two options: a big vale for big flush (1.6 gal) and a small valve for small flush (1 gal or less). These are widely used in Europe. You can make up for this cost rather quickly at 1.5¢/gallon.

The next big issue is lawn-care. If you water your lawn and flowers daily, you’ve likely noticed that you pay about $300/month for water in the summer: a lot more than in the winter, or than your lazes-faire neighbor in the summer. Every $150 of summer-excess, water bill you pay represents about 10,000 gallons applied to your lawn. That’s a cubic foot, or 1¢ to 2¢ of water applied per ft2 per month for typical watering. While many sites advise that you can save by adding a rain barrel, I disagree. Rain barrels are costly, ugly, and are a lot of work ago plumb in. And each barrel only holds 55 gallons of water, 82¢ worth when full. You do a lot better, IMHO by putting down an inch or two of mulch around your flowers and vegetables. This mulch requires no work and will keep you from needing to water these areas for the 3-4 days after every rainfall. A layer of 1″ to 2″ will help your soil hold 0.5 to 1 gallon of water per square foot. At typical prices of mulch and water, this will pay for itself in 1-2 years and will help you avoid weeding. Mulch is a far better return than the rain-barrels that are often touted, and there’s far less effort involved. Buy the mulch, not the barrel, but don’t put down too more than 2″ on flowers and vegetable. Trees can take 3 -4″; don’t use more. Avoid a mulch mountain right next to a tree, it causes the roots to grow weird, and provides a home for bugs and undesirable anaerobic molds.

A little more work than the above is to add a complete rain garden or bioswale. Build it at the bottom of any large incline on your property, where the water runs off (It’s likely a soggy swamp already). Dig the area deeper and put, at the bottom of the hole, a several-inch layer of mulch and gravel. Top it off with the soil you just removed, ideally raising the top high enough that, if the rain garden should fill, the water will run off to the street. Plant in the soil at the top long-rooted grasses, or flowers, vegetables, or water-tolerant trees. You may want to direct the water from your home’s sump pump here too (It can help to put a porous pipe at the bottom to distribute this water). If you do this right, you’ll get vegetables or trees and you won’t have to water the garden, ever. Also, you’ll add value to your property by removing the swampy eyesore. You’ll protect your home too, since a major part of home flooding comes from the water surge of sump water to the sanitary sewer.

Robert E. Buxbaum, April 14, 2017. I ran for water commissioner, Oakland County, MI, Nov. 2016. Among my other thoughts: increased retention to avoid flooding, daylighting rivers, and separating the sanitary from the storm sewers. As things stand, the best way to save money on water– get the same deal the state gave to Nestle/ Absopure: they pay only $200/year to pump 200 gal/minute. That is, they pay only 1/3000 of what you and I pay. It helps to have friends in government.