Thursday, July 31, 2014

Capital in the 21st Century: A Global Tax on Capital (Chapter 15)

Well, this is the meat and bones of the book. This is the chapter everyone is talking about, a tax on wealth. By this point it is not really surprising. Plus, the numbers he suggests are quite small. His numbers can be summed on up page 517, a tax of 0.1% on net wealth up to 200,000 euros, 0.5% between 200,000 and 1 million, 1% on wealth between 1 million and 5 million euros, 2% tax on wealth over 5 million euros, and finally a tax of maybe 5% or 10% on wealth over a billion. These are just numbers, but the idea is that for people who own very large sums, they would pay a larger percentage in tax.

Taxes like this have been implemented over time. In fact, the property tax is a form of wealth tax. Although it is a flat tax and only applies to land, which 200 years ago made up a far greater portion of wealth than exists in the world today. Countries have often tried taxes like this but provide copious exemptions or depend on self reporting of wealth. Cheating on taxes throughout much of Europe is far more common than in the United States. The key to a progressive tax on capital is not allowing exemptions, of any sort. If you have X amount of wealth, it gets taxed. If you are really poor, well you would have no wealth and not pay the tax. To put this in perspective, given the numbers above, I pay more every year in tax on gasoline alone commuting to work than I would pay in a wealth tax. Alternatively, I spend more in one trip to a restaurant than I would in a year of wealth tax. Hopefully that would change as I grow older, but the point is, for the vast majority of people it would be an almost insignificant tax.

A bigger idea than the wealth tax, an idea which I view as even more utopian than a wealth tax, is transparency in banking. Early in the book Piketty mentions that roughly 8% of the world’s wealth is owned by unknown sources, that is to say it exists in tax havens. I’m rewording his words by saying that, but the point is, a lot of money is hidden from various tax authorities. Piketty pleads for global transparency in the flow of money. Given how money is transferred through the Internet and banks are online, this is a trivial issue to implement, but it would result in hundreds of billions of dollars of wealth having to be revealed. At the least this could result in additional income taxes. As an example of how easy this is to implement, I use Mint.com, which tracks all of my transactions through my accounts. It does not track my cash spending, but it does track ATM withdraws, so in short it tracks the vast majority of where my money goes each month. To use some sort of service like this and make the data available to governments would allow a global tax on capital to be possible.

Going back to taxing wealth. We already have a tax on wealth called the estate tax, which I believe taxes wealth over $5.34 million passed on when a person dies and another person inherits it. If this affects any of you, feel free to take me out to dinner and complain about the high taxes you had to pay on that money over $5 million. The issue with a tax like this is trusts and corporations are set up by the wealthy so their money can be passed on in other legal ways to avoid tax. Frankly, I don’t understand the details of trusts. That’s the benefit of a annual progressive tax on wealth, it would ideally affect everyone with a positive wealth, affecting people who have more with a higher bill, and apply across the board whether a person owns 10,000 acres of farmland, 2% of Apple Computer, or a 1991 Toyota Previa van and a Feathered Friends down suit (yeah I can pay $1.35 a year to hold on to that thing). The point of the wealth tax is not to end the progressive income tax, but provide for services, or redistribution of services, that we feel are important in the 21st century, like universal healthcare, low cost university education, or an infrastructure that is not falling apart, like the highway 20 bridge between Dubuque and East Dubuque.

Part of the chapter is devoted to how this might be applied in Europe, how China already has capital movement controls, while Russian oligarchs roam the world, and discussing the business of oil, a trillion dollar industry.

This is probably the chapter that most people are giving press. It's a big deal. Every time there is a new tax, people go crazy. Then we get used to it. Then we grow to like the services the tax provides. I like paved roads. I went to public school. I live clean water out of every faucet. This radical idea now, may in the future become the norm. Probably unlikely, but there is hope.


As I reach the end of this book my outlook grows more negative. Transparency in international banking will not happen because people with lots of money and political influence do not want it to happen. A progressive tax on wealth will not happen, first of all because if 200 countries could even agree to do it, 10 would disagree and suddenly find money flowing in to their secure and discreet banks. Secondly, the people with the largest percentage of their wealth to lose are the ones with the most money, and it is worth their money to lobby against such a tax. In other words, say there exists a bill proposing 5% tax on wealth over $1 billion. For a person like Bill Gates with $50 billion that is nearly a $2.5 billion tax bill just on his wealth, not even his income. It is well worth him giving $1 million to the 535 US representatives and senators (or their super-pacs) and saving nearly $2 billion, every year, to lobby for no such tax. Add in a few hundred other billionaires who don’t want to pay hundreds of millions in taxes, and there is no way that a progressive wealth tax could pass in the current political climate in the USA. Plus, you don't have to donate to every representative and senator, you only have to donate to about 300.

No one ever told me the more educated and well read I became the more jaded I would become, but that seems to be happening. Maybe a more complete view of the world, can also instill in me more hope in things that are truly good and right. I do think that appreciation and search for the good is happening too, it's just much harding to find than learning about injustices and inequalities which abound.

Wednesday, July 30, 2014

Please just let me run.

I am a professional sitter. Many people drive a desk just like I do, and sitting is a struggle for me. Friday I sat all day at work, then I sat for five hours to drive to my grandparents. I did not run Friday. I was in the mood to take a day off, and I really should take one to three days off per month, but I need to get out and run sometimes. It's a challenge. My family after years of me wanting to get out and run understand and are quite accommodating. Yet it's still a tension within me. Last Saturday I did no run because I spent the first 14 hours driving north and then when I had a chance to run I wanted to spend time with my family instead of going for a run. After a day like that I then feel guilty that I didn't do much of anything physical. Okay, I did dance for a half hour at the reception, and this past Friday I took a 90 minute walking tour at work.

I was not meant to sit. I was not meant to be sedentary. It is nothing personal against you. In fact, I want to run, walk, hike, climb, and bicycle with you. I want to spend an hour or two talking with you as our hearts pump and our muscles burn and our skin sweats. I am not trying to get away from socializing. I just need to move. I do not mean to cut this sedentary conversation short, but please just let me run.

Tuesday, July 29, 2014

Capital in the 21st Century: Rethinking the Progressive Income Tax (Chapter 14)

The progressive income tax, or any progressive tax is a relatively new phenomena, beginning in only the last 100 years roughly. Before the early 1900s, and specifically WW1, taxes, of any sort really, never crossed the 10% of income threshold. However, pinging off of the last chapter, admitting we live in a social state, going back to 10% top tax rates on anything really would mean a near impossible ability to fund the things like education, Social Security, healthcare (Medicare) and infrastructure that we like. So let’s just say that eliminating or drastically reducing the progressive income tax is off the table. Although due to international competition (which doesn’t entirely exist because 8% of the world’s wealth is hidden in tax havens anyway) a possible dystopian future scenario exists where nations would revert to very low income taxes to “save jobs”, meaning try hard to keep the billionaires and multimillionaires happy and in their home country.


However, the USA is a remarkable country in the history of the world. In the 1930s through the 1980s we averaged an 81% top marginal income tax rate. That’s astronomical! Yet that was also a time of enormous growth and innovation. The two, in history at least are correlated. Now correlation does not prove causation, but perhaps it is worthy of further inspection as a battle rages for the difference between a top marginal income tax rate of 35% and 39.6%. On the whole, it’s insignificant, because nothing above 50% will likely deter highly paid employees from selling their employers on paying more and more. In other words, at 80% tax, there is no point in arguing for another million dollars, because you can only keep $200,000, but when that tax rate is only 35%, you could keep $650,000 of that million dollar raise. Piketty argues for a return to 80% top marginal tax rates, with a rate below that of 50-60% for incomes in the top 5% of people, that is incomes above above $200,000.

Nothing in this chapter really struck me as crazy. He advocates only for tax rates that have been tried in the last 100 years. The challenge is those with the most to gain from lower top marginal tax rates argue the hardest for low top marginal tax rates. In short, when it comes to the progressive income tax, it's a great invention, but there are too many exemptions (like the long term capital gains tax) and the trend seems to be reducing tax rates instead of increasing tax rates.

Monday, July 28, 2014

I Live in Iowa: Week 162

Another long week. Sunday started in the Wisconsin Dells the day after my cousin was married. (She's married!! I have a male cousin-in-law!!) A drive back to Dubuque, then a run and to bed at 7 PM.

I woke up 11 hours later and started the work week. It was a factory shut down week (although a fair amount of production seemed to be running…) so overall it was somewhat quiet around the office. The geometric dimension and tolerance class was the majority of my week. It brought up a number of questions as I started to review my own previous work, and doubt myself. I will tell you what, quality =  function of (engineering time); or q = f(t). The more time we have to work on projects, and the more people look at them, the more errors we will find. I respect car companies so much more being in the size of group that I am. It must take hundreds of engineers per vehicle. Maybe five engineers just for the doors, maybe ten.

We had a quick grill at a coworker's house Thursday and that was really nice to socialize outside of the office. It was a nice set up, some food, wine, shorts and t-shirts, a few laughs and a nice view. Life is good.

Friday I drove up to the land of 10,000 lakes to see my grandparents. Saturday I ran a local five mile race, and I won it by about 90 seconds with a 28:45 or so. It's always nice to win a race despite not being in shape yet. Then I spent more time with my family up there and a couple friends. It is so nice to spend time in a familiar place with familiar people. Hopefully I can make it back up there again in 2014 to see everyone again. That being said, now that I just drove back to Dubuque. I'm tired. Traveling is exhausting. I'm going to stay in town for a few weeks.

Kansas, Massachusetts, Colorado, Lousiana, Wisconsin, not to mention Nepal, and that's just since May. Maybe I should say, I live in Iowa, but not on the weekends. You know what friends and family, if you want to see me in the near future, you will have to come here. I've traveled to see you, and relationships are a two way street.

Friday, July 25, 2014

Volunteer, Fail, Volunteer Again

This week I spent half of my week in a geometric dimension and tolerance class. It was based on ASTM Y14.5, a 250 page standard. In short, it's not easy to understand GD&T yet it's important that things always fit together the way we intend when they are coming from six different countries and first see each other on the assembly line.

So we were doing a number of examples on the board, and I made the decision a long time ago that I will volunteer, in general for anything. Volunteering gets you farther and into more interesting situations than not volunteering. In the class of about 20 of us, only about three were regularly volunteering. You see, engineers have spent plenty of time in hard classes and we know that it usually takes lots of practice to get things right, and volunteering to demonstrate on the board basically means you are taking a huge chance at getting it wrong in front of everyone. It's embarrasing. I did, at least three times publicly have the wrong answer either on the board or when verbally offering an answer. Near the end of the week the teacher was asking for volunteers and everyone was putting their heads down avoiding eye contact because we didn't want to go up and have the wrong answer in front of everyone. It's painful to sit there in silence. More painful for me than getting it wrong in front of the class. It is ridiculous to be afraid of having the wrong answer because no one cares if I am wrong, each person only cares if he or she can figure it out eventually. Finally I volunteered, again, but the teacher passed me over trying to get another student involved, who did eventually offer an answer, and the correct answer might I add.

This brought to ming a blog post by Seth Godin a few weeks ago titled, "Don't blow it (the secret of b2b)". I work for a very large company. Companies exist so that risks can be taken and the liability taken by the company and not the individuals. I saw in this class of interns and first and second year employees the fear of getting it wrong and blowing it. That, actually worried me. If we aren't brave enough to stand in front of our inexperienced peers in a class, where we are all the student, and take a risk answering a problem, how will we stand in front of our managers, customers, investors, and the world and take a risk presenting an true innovation? 

Thursday, July 24, 2014

It's a Wonderful Life

It really is. The weather here in Iowa is pretty amazing, we are having a cool summer with morning temperatures in the 50s and 60s, which is great for running. I am healthy and alive, without ever being under an avalanche. We have finished so much at work that finally the pressure is not directly on our group like it was in the past.

I am very fortunate, very blessed. Sometimes it can be hard to appreciate the big picture for all of the little inconveniences that keep popping up. The last couple days I mentally stepped back for whatever reason and it's really worth saying, it's a wonderful life.

Wednesday, July 23, 2014

No Materialism in the Mountains

Its true. Stuff gets broken but I can never remember longing for anything, except a water filter, and that's more a story of inexperience that worked out okay anyway. I realized a few days ago that one of the things I like about going into the mountains is that we take everything with us we will need and then shut the door on wanting more. There is no advertising. There are no stores. We only have each other and what we brought at the beginning.

I feel all too often that I am too materialistic and selfish. Yet almost every day I go out on a run and for a brief time enjoy the simplicity of not wanting any given thing. It is interesting how I have been doing these things for years but only realized a few days ago that the material coveting that makes us unhappy in our life situation dissappears when I go into the mountains or go for a run. I am continuously learning.

Tuesday, July 22, 2014

Capital in the 21st Century: A Social State for the Twenty-First Century (Chapter 13)

Thomas Piketty and I would get along famously. I said that in my last Capital chapter review, but it’s worth saying again. What I like so much about this chapter is that he finally tore himself away from history to talk about the present, and future possibilities. Don’t get me wrong, history is critical, and that’s why he spent 470 pages talking about it. Yet talking about the present has an immediacy that the past will never have. I have three chapters to go, I may even finish in July... but probably August. That being said, this has been the best chapter so far. If you only read one of the first 13 chapters, I feel this is the best.

Piketty covers both how higher education affects social and economic mobility, in short it doesn’t in it’s existing form. He also covers how pension systems (Social Security in the USA) are typically pay as you go, not capitalized. That is to say, pay as you go means people are paying into Social Security to money that one month later ends up at our grandparents door. A capitalized system means there is a huge fund that earns interest and people pay into that others take out of. This is what corporations have. I, in fact and surprisingly to me, have a pension through my employer, although it is not vested for another three years. Yet we have billions, roughly $10 billion, in assets in the pension plan to pay out to retirees, to take income from current employees, and to invest and earn interest on. This is far more safe, to have a capitalized plan rather than a pay as you go plan. This is fundamentally how Social Security runs out, the number of retirees grows so high that the active workers just cannot put in enough to pay their “earned” pensions. 

This is the chapter where I first remember Piketty saying “...a progressive global tax on capital” (Piketty page 471). This is the heart of this book, a progressive global tax on capital. This affects so few people, and he doesn’t go into detail on the structure of that tax, yet if you get through the book to this point, and you have a net worth less than tens of millions, you probably agree with him at this point too. I assume he will dive into that in more detail in future chapters so I will skip covering this in more detail for now. 

Now, on the details of the title, a social state, that phrase will rile and repulse most Americans. We defeated communism (well it mostly fell apart from the inside, but we consider that an American victory). Anything implying that the USA might be a social state is communist and ignorant to most Americans. Well, that’s an ignorant last sentence, in the USA roughly 30-35% of national income is taken in taxes. That is to say, for every 10 dollars earned, $3 to $3.50 is paid in various taxes. How we can be anything but a social state when 30+% of our national income is taken in taxes someone will have to educate me. Now, before people go hating on me for pointing out we live in a social state (state = country) remember that money pays for roads, military, free education through high school, healthcare, Social Security is a huge part, and Medicare (healthcare for old people) are all part of our social state. Just ask your grandparents to quit taking Social Security checks and quit using Medicare, and everyone who went through public school to quit going to school, before you or them or anyone else asserts that we need to return to a more capitalist society. You see, more capitalist societies exist in the world, perhaps India, or Kenya where taxes are lower and you can flex your real market value without the government getting in the way. 

I did not realize how much of a social state the USA was, until reading through much of this book. I have known for some time the $1 trillion budget of this country was certainly not that of a purely capitalist state, because I am not sure how a pure capitalist state can take in any income. Maybe that’s my ignorance, but it seems we had a Whiskey Rebellion once upon a time (just after the Revolutionary War ended) over taxes, so in a way, we've always had taxes. The question also remains, do we need to increase taxation to pay for things like college tuition or better healthcare? The details are certainly complex. 


The point being, we, the rich countries, have established that having some form of progressive taxation for a multitude of services from public pensions, healthcare and education, are beneficial services we want as a society to finance. Those things we want to fund aren’t going to go away in the 21st century. That's really the brunt of it, what services do we want? If we decided that healthcare, food, education, a public pension, and defense were all luxuries we were willing to do without, taxes could be much lower. Yet, it is a bit of a hard sell to get rid of all of those. 

Where do we go from here? When first introduced it seems most taxes are heavily contested, yet once we receive the services from those taxes, there is less complaining. What will the 21st century developed country look like? How much education and healthcare and what kind of pension do we want to enjoy in our country? What kind of roads and bridges do we want? Maybe every bridge being a toll bridge at a rate of $1 per mile would be the more appropriate system than free to cross bridges? Whatever the norm for public services develops into it will certainly be interesting. 

Monday, July 21, 2014

I Live in Iowa: Week 161

This was a good week. Not a week I want to repeat everything again anytime soon, but there were a number of things which I definitely would do over again.

Starting with Sunday, I took four teenagers from my church climbing who had never done any climbing at all before. That was a blast! We are already planning to go climbing again. I really enjoy introducing people to new experiences, whether that is rock climbing, backpacking, running the farthest in his or her life or any number of challenging new experiences. I stepped out of my comfort zone a bit by taking four people without any experience climbing, let alone tower trad climbing. But I spent hours thinking about it, and while a couple of my friends could had added to the experience I was a little worried about people being bored or getting in the way. Thus to lead the tower I gave the heaviest of the four a gri-gri to belay me as I led the pitch. Then I belayed everyone from the top, and rappelled and climbed back up every time they changed harnesses because I wanted to make sure they were tied in correctly.

A funny part is the other climbers that were there were apparently making all sorts of comments about how crazy I must have been, or that I didn't know what I was doing, although I was usually up above so I didn't hear, I just saw the looks they gave us. Anyway, on the drive home, as they were telling me this, and how they tried to hint that I was just on Mt. Everest, one of the girls asked, "do most rock climbers have big egos?" and I responded with a huge smile and a laugh, "yes!" I consider myself to be part of the big ego crowd, for taking four total newbies rock climbing without any help, yet it worked out really well and I do have the skills, so maybe it's not ego. I don't know. Regardless, I've introduced hundreds of people to rock climbing and I really enjoy it because it is a big mental challenge.

Monday and Tuesday were usual work days, except that Tuesday we were in the middle of a "cold front" so temperatures were in the 60s and I ended up running 20 miles because it was so nice out.

Wednesday, I woke up at 2:15 AM to pick up a colleague and drive to Moline to catch a flight to Dallas and then a flight to Alexandria, Louisiana for work. I won't go into details about work, but it involved a lot of time driving (690 miles in three days) and time spent around loud machine in the forest. It was a good trip, despite uncovering one potential new issue…

Friday, as we were at the airport trying to catch our flight back to Dallas, first it was delayed over an hour getting in. Then it was delayed for maintenance. Now a maintenance delay at a tiny airport on Friday evening (at least for American Airlines) means they have to call the technician, who takes 45 minutes to get there, before he can start looking at it. I had told my coworkers that I had to be in the Wisconsin Dells at 2 PM Saturday for my cousin's wedding, and one suggested we just rent a car and drive. As we found out more details and I explored other options, like flying to Milwaukee Saturday morning, at 8 PM we finally decided to rent and drive. Had I tried to fly to another city, or had our backup flight plans had any delays, even half an hour, I might miss the wedding entirely. So at 8:35 PM we rolled out of the airport Hertz lot in a 2014 Toyota Camry without cruise control. We stopped for some slow food at Arby's then proceeded to roll north through rural roads and then Interstate 55. It was a remarkably uneventful drive. It can't really even be called a road trip, it was just a long drive. After picking up my van in Moline and then my suit in Dubuque I headed north to the Dells.

At 2:07 PM I walked into the church, on the side aisle of course, before all of the bridesmaids even walked in, so I ultimately had a good five minutes to spare before I missed any of the talking. I don't know why I rushed so hard for 15 hours…

The wedding was great! This is my first cousin to get married, and I only have four cousins, so each one means a lot to me. Although I will say I'm not the best at talking to them very often. It is nice to welcome Rick to our family!

My immediate family went to get coffee then to the wedding reception which was similarly fantastic! My sister and I sat at "that" table which was really fun. It's so strange, my cousin is married. I mean I think of all the times we were little kids running around, given that all my cousins are women, that often meant playing dolls more than I cared to, or going to dance recitals. It's funny to see how we change as we grow up. I mean how we mature to deal with emotions, work on our careers, decide we are going to spend the rest of our life with another person, all of these big hard things, which you just don't even think about when you look at a six year old.

I'm here. I'm alive. I'm healthy. I live in Iowa!?

Friday, July 18, 2014

37.6 Miles Per Gallon!! (Hypermiling)

I'm down here in Louisiana driving to various places around the middle of the state. Given our line of work we always rent vehicles with four wheel drive or all wheel drive. Well, we rented a Nissan Rogue this time around. The car rental company reset the odometer, I think, and we have done a lot of driving, but I didn't have to fill up the tank today until we had covered 433 miles over two days. When I did fill up the tank it only took 11.5 gallons of fuel. That is a whopping 37.6 MPG!

A little background, I've driven maybe 100,000 miles in my life. It's a high estimate, but realistic. Many of those on the highway. Given my van gets like 22-23 miles per gallon and gas has cost $3-4 the last six years, we're looking at a minimum of about $13,000 in gas in my driving life. I like to imagine that I am a somewhat frugal, conservative person and my driving habits reflect my physics knowledge, in other words conservation of momentum and the high cost of acceleration. So I have learned to drive so that I get the best mileage. On this trip I am the only drive due to the insurance policy.

A few simple way to get better mileage:

  • Take weight out of the vehicle, example: most of the time I take the middle seat out of my van.
  • Pump up the tires, just watch out you don't over inflate them too much.
  • Turn down the air conditioning.
  • Accelerate slowly, don't race out of stop lights!
  • Coast instead of breaking, an extra 5 or 10 or 20 seconds per stop light or stop sign coasting will save more fuel.
  • Drive 55 miles per hour, which is really only convenient when the speed limit is 55, and it is in central Louisiana all over the place.
  • Drive on flat roads or downhill, and once again central Louisiana is very flat.
  • Fly around curves, because breaking a whole lot then speeding up again on a curve recommended only 10 mph below the speed limit is a drain on fuel. 
That's about all I can think of. Combined, assuming the trip odometer was at 0 when we started, and there was no way it could have been more than about 25, we still averaged way above the stated 33 mpg for a Nissan Rogue on the highway. I don't track my mileage normally, aside from weekly to know how much I drive per week. So I really have no idea if my hypermiling does much good in my daily life, but the last two days it managed to be incredible. Moral of the story is, I think, I have learned to do hypermiling. Achieving 37 mpg in a crossover, I didn't think I could do that. Of course, a 14% mileage improvement doesn't compare to people getting more than a 100% improvement in mileage

Thursday, July 17, 2014

Capital in the 21st Century: Global Inequality of Wealth in the Twenty-First Century (Chapter 12)

This chapter was about the structure of inequality. Despite being nearly the perfect chapter to attack the wealthiest 1%, he doesn’t do that. Thomas Piketty and I would get along really well. He uses real practical examples, including North Iowa Community College, as well as lots of numbers and often understates the impact of taking things to their logical conclusion. Something I have always felt too scared to even say is that if global inequality goes too far there will be “violent political reaction”. None of you read my book about unemployment, but I alluded to that fact several times. Piketty on the other hand says it more directly and delicately a number of times.

Basically this chapter was about the structure of inequality both within countries, and between countries. In short, while the media loves to cover China owning the US, or compare their GDP growth to our GDP growth, or compare trade surpluses and deficits for any one given quarter, inequality between countries is relatively minor, and in the future will likely be even less than it is today. The reason some countries are “growing” so fast is that they are simply catching up to where the rich countries are now. They don’t have to invent automobiles, computers, smart phones, light bulbs, or assembly lines, they just have to copy what already exists in our rich countries. That’s the short way of saying it. Obviously, “copying” is not the right word, as it must happen differently given different resources, and the catch up process takes decades, if not a century, or even more. So never fear China owning the entire US or all technical jobs being outsourced to Asia. Those poorer countries have a long way to go, and challenges of their own. No one even talks about the economic "threat" of Africa because it has so far to go to catch up. Chances are Africa will still be catching up in 2100.

The real “threat”, to use my own word, is inequality within countries, rather the likelihood of oligarchs taking over. One might already say that Bill Gates, the Koch brothers, or Warren Buffet have already approached the invincible status of oligarch. Within some market each one has some sort of monopoly, and each one has significant political influence, certainly more than I do. As the rate of return on capital is larger for larger fortunes, both family fortunes, and foundation fortunes, like universities, the rich really do get richer. Gates fortune (wealth) grew something like 10% over the last 25 years, compared with 6.8% for the richest 1 person per 100 million people and only 2.1% for the average person (which of course is above the median) (Piketty, Table 12.1, page 435). The reason being a person with $100 million can spend easily $500,000 a year on financial research and advice to discern investments, while a person with only $10,000 might as well spend that same percentage, which is only $50, on subscribing to the Wall Street Journal. For those of you with no wealth, roughly the poorest 50% of the rich countries, ummm I'm sorry I don't have much optimistic to say.

This is the last chapter before part 4, which is the part everyone, most of whom probably haven’t even read it, is raving about. The point being, the first 470 pages of Capital in the 21st Century are about wealth, income, who has it now, what defines “capital”, who has had it in the past, and who is likely to have it in the future. To sum up the book to this point, it would be best for you if you inherited money, especially if you are a young person today. The reason is capital, money, is necessary to eat, for transportation, to start a business, to buy a house, and continue paying expenses. With a certain amount of money, let’s say $1.2 million, and assuming an average rate of return of 4% (which is historically far more likely than the wonderful 8% predictions of the brokerage and financial “advice” websites) you could live on the median salary of a US family. Frankly, it is easiest to simply have that $1.2 million rather than learn a skill, have a trade, and spend most of the waking week working a job. Plus, that initial money may be a gateway to a more prestigious education, business networking, a cushion for unemployment, or simply a supplement to your income. In short, it’s going to make your life easier, or at least more luxurious, to have it rather than not have it.


For a time I admired Warren Buffet. However, as I have become more educated and traveled, my admiration has sunk. You see, he is enormously good at picking out undervalued companies, but let’s be honest, value investing is not even rocket science, it’s easier as long as you know what to look for, and that is beyond the scope of this article because I don’t totally understand it, except to say net-net companies and spinoffs are almost always a win. However, after seeing true poverty in Africa and Asia, my heart goes out to the real poor of the world. I feel guilty for even buying a $4 coffee. Yet the billionaires among us could feed, educate, provide clean water, etc. for the world and they don’t because they continue to build their fortunes. We can say “Bill Gates the philanthropist” but he was the highest paid person (to the tune of $59.7 million in dividends alone) last year by John Deere because he owns 8% of the company (not to mention he bought at $65 and the stock is now at $90). Maybe he is a philanthropist, and he is certainly doing a lot of good with his money, yet he was paid more than three times the CEO, who certainly works more than 40 hours a week and must frequently stress over the many problems of the company, has been with the company for well over 30 years. Yet Gates receives more than three times the CEO pay in dividends alone for doing nothing but owning 8% of the company. That is the world we live in.

To give some background on earlier chapters there is a capital/labor split when it comes to income. Roughly 30% of income goes to capital and 70% goes to labor, although in high capital environments capital's share of the income pile goes down because access to capital is easier. This means that investors who put up the $500,000 to build a new McDonalds are getting maybe a 20-30% cut of the income versus paying 70-80% of the income to employees. On a given yearly basis, income from wages always far outweighs income from capital interest, yet the capital is generally owned by a very small portion of the population and thus far more concentrated.

Another key point, when the rate of return on capital (known as r) is greater than the economic growth (known as g) it will always benefit the owners of capital. In other words, when r>g, which is historically the norm, but was not the norm during most of the 20th century due to explosive economic growth, the rich will become richer faster than economic growth, which is to say economic growth = average person becoming more wealthy. In concrete terms, if the average rate of return on capital (investment return) is 5% and economic growth (roughly or ideally salary growth) is 3%, people who own capital (investments) will be getting 2% farther ahead of people who work every year. 

Okay, mathematically that's one of the least accurate descriptions of the r>g idea in the book, but I feel it is the best way to make sense to most people who aren't reading a 600 page economics book for fun. The major inaccuracy is that 3% economic growth does not directly correspond to 3% salary growth at all, but inflation and the ever changing demand for different skills in the job market, as well as career development, is far to complex to describe in a paragraph.

Wednesday, July 16, 2014

The Haze

I'm sitting in the Dallas Fort Worth airport waiting to take a flight to Louisiana for work. As I look out the window I see the familiar haze in the distance across the runway.

This is the same haze that I see everywhere I go, Denver, New Delhi, Kathmandu, Chicago, Boston. Maybe it is dust, surely some is pollution, maybe it is fog, in fact in China apparently they call smog, fog. Whatever it is, it is pervasive. Things don't seem to ever fade into the distance with the curvature of the earth, but fade into the haze. The part that makes me sad is, I don't think it was always this way. 

Tuesday, July 15, 2014

Capital in the 21st Century: Merit and Inheritance in the Long Run (Chapter 11)

I should have blogged a review after every chapter when I started reading Capital in the 21st Century by Thomas Piketty three months ago, I still have 160 dense pages or so to go. For those that don’t know, which in all honesty is most people, Capital in the 21st Century is the definitive research, and most thorough work, on wealth, income and financial inequality by a French professor who coined the term the 1%. (Whoever coined the term the 99% has really accomplished more in the US I would say, yet the 1% begs the question, ‘what about the 99%?’) In short, it’s the book all the economics geeks have been reading this spring... and summer and maybe fall. 

Chapter 11 was about where inequality comes from. If it comes from true merit, everyone seems to be okay with it. In other words, a doctor is paid more than an engineer for saving lives. An engineer is paid more than the mechanic, for deciding how to connect the parts in the car. A mechanic is paid more than a fast food server because most vehicles are more complex than a hamburger. So to some extent, I think most people can say, yeah, if a doctor gets paid more than me, but has to sleep with a conscious knowing that he prescribed the wrong medication which caused a patient to die, he can have the money. But that’s small potatoes in terms of this chapter. 

What does a person have to do to make 100 times the minimum wage? What about 500 times the minimum wage? For the record, that’s $7.25 million a year. Also, we hear a lot about sports stars but it’s worth ignoring them because first they are a minority in terms of people earning millions of dollars a year and second a large majority of sports stars file bankruptcy within a half decade of retiring. What about 1000 times the minimum wage, $14.5 million? What can one person do, in one year that is worth what 1000 other people could not have done? That’s more of a side topic to the chapter, how to justify these 50x and 100x minimum or average salaries for “talent”, yet he does ask the question.

However, we’re still talking about merit, this chapter covered inheritance too. Reading any of the classic literature books from the early 1800s provide bountiful examples of people who want to marry rich to live a luxurious lifestyle. This chapter changed my views on inheritance. It hasn’t changed my actions. I will still tell my parents and grandparents to spend it all, they don’t owe me anything. Yet this chapter brought two ideas to my mind, one, if you inherit an inheritance, is it a responsibility to pay it forward? Not even necessarily to the next generation, although that would be nice and logical, but I think of all the suffering people in Africa and Asia and how much better spent the money could go toward helping them rise to a higher level, rather then on a sports car for me. Second, the selfish side of me says, wow, wouldn’t it be great to not have student loans? Wouldn’t it be great to have a “free” downpayment on a house? As much as I like my 21 year old minivan, a nicer newer car would be good.

Piketty charts the fall and now the rise of merit, and in more detail, inheritance. We are not living in the world our parents or grandparents lived in. It is in many ways close to the level of inequality in the developed world that my great grandparents lived in. As he repeatedly mentions, with the political competition for capital (money) going global, no country wants to raise taxes on wealth, lest it flees to another country. And taxes, on wealth specifically, which are the main way of reducing inequality (wealth inequality is far greater than income inequality) are often frowned upon and lobbied against by the minority of people most likely to suffer from the effect of such wealth taxes, the 1%. 

Unfortunately, Piketty has a number of U shaped graphs in his book. To the best of my knowledge, no one is disputing them. These graphs represent things like the private wealth of a country owned by the richest 1% or 10%. In short, the last 100 years really, due to the “shocks” of 1914 to 1945 and then the recovery from those shocks, including the baby boom, in the last 70 years contributed to a time of equality and merit based wealth unlike any time in history. We are now finally coming out of that time and returning to an era when inheritance begins to matter more than education and profession. (I added the “finally” in the last sentence both to say that I don’t anticipate the last 100 years of turbulence to repeat in anything like the same way in the next 100 years, and as a joke as if inheritance should matter more than merit.)


The short story being, if you want material wealth, you should go into STEM fields or medicine, but clearly most importantly, marry rich (perhaps the best "investment" you can make) or have rich parents.

Monday, July 14, 2014

I Live in Iowa: Week 160

A good, but very tiring week. I will be honest, work has been stressing me out. I mean to draw a diagram of how work gets done because I have a visual ideal of how to describe the work I do with the other groups I work with. However I am tapping this out with my thumbs on a long drive and I don't have my laptop easily accessible. So making a graphic is not going to happen today. 

Point being, we are feeling pressure from multiple sides to finish projects, make it better quality, easier to assemble, cheaper, and more durable, and of course finish it yesterday. Thus Friday night and Saturday I crawled into a mental hole a somewhat. It's worth telling more about, especially the mental journey I took Friday night after watching Lone Survivor about a Navy Seal team in Afghanistan. Yet, not everything deserves to be told to the world, so I'm keeping that emotional memory to myself. 

Saturday was totally a recovery day. I was fairly antisocial and basically just laid around and went for a single 14.5 mile run. I slept close to 11 hours Friday night. I think all week I was really recovering from my Colorado fast packing adventure. I only ran four times this week because several times I got home from work and was too tired to run. Wednesday I came home, took a 90 minute nap, woke up to eat and read a little, then slept another nine hours. I am definitely not an insomniac!

Friday, July 11, 2014

Fastpacking the Sawatch

It was the goal to run up and over ten of the highest mountains in Colorado this weekend. Well, I failed again. My life, to me, seems defined by dozens of failures and incompetent attempts at everything from playing trumpet to basketball. Yet, I basically drove up to the mountains, ran four 14ers and around 60 miles over two days and drove home in one piece! That's amazing! Did I really do that? I can't be that cool. No really, I know myself, most of my weekends are far more mundane. I'm just a 5'5" 128 pound specimen of average.

Wednesday evening I left Dubuque, and 20 minutes down the road realized I forgot my tights. So I turned around and picked up two pairs. Tights are the seven ounce gift to 30F weather on your legs. Three hours later I realized I forgot a charging cord for my iPhone 4s, so I bought one at Walmart and now I have three charging cables. I slept in the York, Nebraska Walmart Wednesday night. It's a great place to sleep, a block from Starbucks which opens at 5:30 AM, and of course camping is free. 

Thursday I got into Denver around noon and had lunch with a friend. I stopped at REI to buy more food and a couple maps. Worthy of a different post, but the top things by value for their weight to me for backcountry travel (non-technical, that means not mountaineering) 1. Map 2. Water bottle 3. Shoes 4. Headlamp 5. Rain/wind gear
Everything (Well, only 1/3 of the Food) for Two Days of Fastpacking
Supper at Qunincy's in Leadville was great as always, one of the best steakhouses, hands down, in the world. Great prices, almost Texas Roadhouse prices, better quality, and an atmosphere that says, 'this is Leadville, we mine, we work hard, we run 100 miles, and life is beautiful.' Slept at Avalanche Gulch Trailhead, sort of. Pretty ridiculous set up… There is more than an acre of paved parking lot, with no camping allowed, but actually everyone parks across the road in the national forest at one of the  many free "primitive" camping spots, just 50 meters away. 

One of my bicycling friends from Dubuque gave me a ride to the start at the Fish Hatchery Trailhead. I started out well, but was quickly dehydrated on the very easy Mt. Massive. I only drank 40 ounces of water in about four hours going up and over. I drank six liters the day before, and a liter before starting, but in the space of just four hours and only 40 oz. I was dehydrated. I ran with five guys from Boulder for a while which was nice to have company. However, once I crossed Halfmoon creek, I was alone again. That creek crossing by the way is 15 feet wide and around a foot deep of fast moving water, so I crossed wearing my shoes and socks, which never fully dried out for the next two days.

Okay Elbert, mountain number two. This took longer than expected. Let's be honest, the east side of the mountain is steep. It's about the steepest grass you will likely find. If you want to do a steep vertical 3000 feet, this is the place to go. Very consistent, easy, but steep. I arrived at the top dehydrated and tired and unknowingly sunburnt.

This trip was basically an on-sight, to use rock climbing terms. Part of my delay was navigating to exactly where trails started. Golden Fleece Mine is very obvious, but you have to be far enough East to pick it up, and I missed the first vertical 150 meters of easy road running because I was too far to the west when I started down the north face of Bull Hill. Not a problem, I picked up the trail well before tree-line, but probably one more little thing that cost me a few minutes.

When I made it two (and a half) miles up the road (highway 82) to FSR 391, to see the road closed signs, my heart sank.
Closed!
Closed, and No Parking
After an hour of sitting there on a rock under a tree, I decided to head down the road. I wasn't sure if I was going to hitch hike or keep going. Well, I just kept going and decided that I would do a human powered journey and not tell anyone what I was doing. With my inReach SE tracking me, I never really felt off the grid. This is also worthy of another blog post, but there is so little innovation and true unsupported adventures out there in the world of exploring, that not telling anyone what my plan was, felt tame because I was being tracked by GPS.

Around 12,000 feet on the way up Hope Pass I had a sleep, and that I don't have figured out. Sleeping bag? Down jacket? Lower altitudes? I like sleeping at higher altitudes because the Boy Scouts, plus my own experiences, have given me the fear of black bears. Going as light as I went, there are no bear precautions, like a bear bag or a bear canister. I slept in my shorts and tights, two shirts and wind jacket, and in my little bivy sack. It probably was below freezing, based on the very frozen snow fields I crossed at 3:30 AM when I started hiking again. I was not warm enough. I doubt I slept for more than 30 minutes at any point in the five hour "sleep" I had. I spent so much time shivering. I was better prepared for this night out than I was on the Wonderland Trail in 2010, but it was colder too. Fastpacking sleeping is worthy of another blog post too. Do you take a $500 sleeping bag that weighs a pound? What about a better bivy sack that weights half a pound with some weather proofing, but not as warm as a sleeping bag? Maybe combine that with a nine ounce down jacket? Actually, this is something no one was figured out. My running backpack has only room for 11 liters of storage, the smallest sleeping bags still take about 2.5 liters and all come in at a pound or more.

Starting at 3 AM I went on to do two more 14ers, Belford and Oxford, then a rare descent on a poorly marked trail and 25 mile run out on the Colorado Trail. I suffered a terrible ascent up the last pass, but nice descent. This trip was the most in tune with altitude I have ever felt, every 500 vertical feet I could feel the difference between being stronger or weaker. Dehydration, electrolytes (salt), and general fatigue played a role in making the last pass such an arduous ascent, and I certianly have to eat and drink more in the future.

Whatever I say, I am weak. This is my second real 'big' 30+ hour adventure and one night is one thing, but people routinely do 40+ or even 60+ hour continuous endeavors, so 34 hours is nothing, especially since I "slept" in the middle. Point being: my life is amazing, I can hardly believe I just did all this, yet in the world of endurance travel this is like starting on your high school football team, small potatoes. Yeah, the La Plata bridge out on FSR 391 was awfully depressing, but what a weekend?! Honestly, four 14,000 foot peaks and 60 miles on my feet in two days all unsupported?!
My Route (Rectangle Denotes a Tweet)
Delorme, via my inReach SE, said I covered 52.84 miles, but that is one tracking point every 10 minutes, and the average trail does not go in strait lines for 10 minute increments. I'm guess it's more like a round 60 miles, based on another's experience.
Sunburn and Scrapes

31.3 Ounces Carried and NOT Eaten, and 2915 Calories Eaten
Ripped the New Ultimate Direction Backpack Already!
Yes, of course I want to do a proper attempt on Nolan's 14, but it is clearly difficult based on the first 2012 success and second 2012 success and a 2013 attempt among others. Finally, below is my video of the trip.

Thursday, July 10, 2014

Thank You for Reading

I don't say it often enough, but thank you for reading. If no one read my blog, I would not write. For those few that comment, thank you for taking the time to comment. I don't always read the comments because sometimes it's better not to get involved in an argument, but thanks for taking the time to write. I realize you don't have to come here and read my baloney, but you do, so thank you.

Wednesday, July 9, 2014

More Volume!

I'm talking running, bicycling, climbing, aerobic exercise, even going for a walk. The secret is, most success at endurance sports is based largely on total volume of time spent doing aerobic activity over your life. It's not hard and fast, speed wins of course, but the person still standing at the end of the marathon will do better than the one that couldn't take another step at mile 23 because he didn't have a big enough base.

In short, do more volume, your whole life.

Tuesday, July 8, 2014

Continuously Raising the Standard

I like to imagine that I am continuously raising the standard for myself. The challenge is, on some level it becomes harder to achieve what I achieved yesterday. I'm working on a huge blog post about my Colorado weekend and this little post pales in comparison. I didn't even feel like writing anything. That's the challenge, when you have run a 15:something 5k running a 16:something or 17:something 5k is not a positive mental experience. Yet performance, of many kinds, is more like a power law than a bell curve. For a lot of below average, mediocre, performances, sometimes you hit one out of the park. That being said, everyone has an average, a baseline, and that can be higher or lower. The point being, it's not linear. You don't wake up and have a #1 hit. You don't solve the world's problems on the first try, and even if you do solve a problem, you might really struggle to solve the next one. Life is non-linear. 

Monday, July 7, 2014

I Live in Iowa: Week 159

I have such a wonderful life! It's just amazing. It should all be taken from me and gifted to someone who has suffered much more. I don't deserve the many forms of wealth I have. For example, Friday and Saturday I spent most of the daylight hours running and hiking up and down the high mountains in Colorado, doing four of the highest and covering something on the order of 60 miles. And... You know what? I'm a little sore, but I've had worse long runs. All things considered I feel great. On top of all that, I just went and did it. I have a great job, a great career, wonderful friends, I'm still acclimated from Everest, I am physically gifted at running and hiking, and I am not taking any of those forms of wealth for granted right now.

Work was a light week, many people were out of the office. Despite that I managed to get some things closer to completion. My job, and many of yours, is to fix things. To make something better today than it was yesterday. Some days that is hard to remember as I am redoing something for the, no lie, fifth time. Yet, that's why I am there, because someone with my skills has to do it and I am getting paid to make it happen.

Not sure how much I ran or walked, but it is quite likely over 100 miles for the week, even though Thursday I didn't do any mileage. I recovered from the marathon fantastically! I did 8 miles Sunday and 10 on Monday, which is great for the two days after a hard effort like a 2:50 marathon.

I'm tired, that's all you're getting today.

Friday, July 4, 2014

I'm Aiming to "Run" Part of Nolan's 14 Tomorrow and Saturday

Plan is to start up Mt. Massive around 7:30 AM, then do Elbert, and La Plata, then a whole bunch of others, ending late Saturday descending Yale. Drive home Sunday and be at work Monday.

Yes, I plan to run and walk and climb about 70 miles over about 40 hours including something like 30,000 feet of elevation. I will have my inReach from Delorme tracking me the whole way and be Tweeting. I have maps and route descriptions and the skills. My biggest fears:

  1. Hypothermia
  2. Animals (bears mostly…)
  3. Bad Weather
  4. Injury
  5. HAPE/HACE
I could obviously elaborate on all of this. Why am I doing this? Isn't this risky? (I'll answer that now, risky compared to Mount Everest or compared to sitting on my couch for three days? Enough said.) Why didn't I advertise this more? Why not go for the whole Nolan's 14, not just 10 of them? Why am I doing this alone? Honestly, maybe I'll answer these later, but it's about a consolation prize for Everest and if I don't go now, when I am still a little acclimated, when will I go?

Thursday, July 3, 2014

Wednesday, July 2, 2014

I Live in Iowa: Week 158

A busy week. Lots of work, lot of running, not a whole lot of sitting around.

Highlight of the work week was and is one of my coworkers from India being here and having the opportunity to show him around, operate machines, and otherwise do the physical things that he can do here he doesn't have the opportunity to do in India.

I ran the Run4Troops marathon on Saturday coming in second in 2:50, to the guy I beat last year. I'll take it, not a great race, but a really good run considering my fitness. I even will say I worked harder this year than last to put this time down. It became pretty emotional too around the last five miles, no crying, but I wanted to stop and cry and be held. Plus, at that point I was thinking of Everest, and Everest 2014 is certainly something worth crying about. Regardless, it's nice to know I can fake a 2:50 marathon on a few weeks of training and one 20 minute tempo.

Just to show my weekend, after the race I worked a four hour shift bartending at Park Farm Winery, on my feet the whole time. Then in the evening I went to the musical Oliver that a friend was in. That was a long day.

Tuesday, July 1, 2014

Planning the Illogical

How do you go about planning something so out there fewer than ten people have done it? How do you plan to do something the first time? When logic says go right, how do you plan the illogical left turn?

I don't really know, except to say, you are thinking about it. First there is the thought...