Wednesday, July 18, 2007

"Depressing" Habbits

Since 1933 (AKA. 'The Great Depression')- 2005 is the first year American's taken together spent more then they made. Not sure what that means, but it is interesting. This according to the WallStreet Journal.

Also note: assuming a person invests merely 100$ per month from age 25 to 65 in a 401k or Roth (no match is assumed, and an average annual interest rate of 11% is assumed) that becomes one million, two hundred thousand dollars. Here is another layer. What did the person actually give up over that persiod of time(40 years)? Easy. 12(months) x 40(years) x 100(dollars). fourty eight thousand dollars, or roughly the amount of money the average person pays for a new car by the time they are done paying for it. I am talking about the actual total principle and interest they paid for the car- not the sticker price which is really not what the person has paid- but the interest on top of it. Fellow Americans- if we consider opportunity cost the car may be reasonably said to have cost us one million dollars.

Thats a pretty good argument to buy a relyable 6 or 7 thousand dollar used car with cash, yes?

Sales people and marketing organisations I listen to daily on radio and TV; from credit card companies, car dealerships and the like want us to miopically look at the "payment" and think as short term as possible, living moment to moment as if something being broken into payments somehow makes it cost less (when infact it costs a lot more that way due to interest payments and financing fees and as we looked at- increased opportunity costs).

I would suggest we think in the long term- think of the end of things in the begining when we make decisions. When a person is disciplined and also smart in the begining, later on it can mean being in a position to be a source of stability and help for others.

(E Gooden):
I agree totally that it is just too easy these days for us to get ourselves into credit trouble. And the mentality to keep up with the Jones' (to have the new car, bigger house) is just nuts.
But I have one thing to say about the 401K stuff. You are right that it's a great (or has been thus far) investment. No argument there. One thing that I don't think people think about (or choose to ignore) is that when investing in a mutual fund you are nearly always investing in many corporations that 1. Do not have the public's best interests at heart 2. Engage in unfair/unethical business tactics 3. Adversely affect the environment 4. Exploit workers (in this country and others) and so on.
Big Pharmaceuticals. Big Tobacco. Fast Food. Heavy industry. Financials. You name it - we hate it. Everyday we complain about companies doing things that we deplore. Then what do we do ? We become a part of this system by investing in these companies - hoping that our investment pays off long term.
I'm not saying to invest or not invest in stocks. I would just like for people to think about this. Think about what we are doing. If we are going to complain about these companies then we should at least realize that we are a part of the problem.
I don't have any answers. And I don't know what good can come from us realizing what hypocritical buttheads we are. But I always think that knowing/realizing is surely better than choosing to ignore.
Eric

(me):

That is a very good and thoughtful point. I admit, I am troubled by that- and thank you for bringing it to my attention.

I do think that in the long term the vehicle called the stock market needs to change fundimentally- that change I beleive is actually inevitable, and is on it's way in fact. What change? Well, a mechanism for conciencious and ethical investment needs to mature. Is the investment green? How green? (environmentally friendly or even beneficial). Is it fair? (does the company treat deflated economies and foreign bodies as equals, and it's peoples with dignity, respect and care) and heres a new one- is the company public? I have come to believe that publicly traded companies are inherently gready in terms of the definition comprising it's legal identity. Actually that isn't so much my belief but arguably just a fact. If the company behave in an un-gready way (say if it has a legal opportunity to exploit a comunity in a harmful manner which clearly will be beneficial to the company and chooses not to) they may actually find themselves in direct violation of their stockholders. In the past company heads have been sued for being generous to employees for example. I think that the fact that this is even possible is reason enouph to avoid publicly traded companies- working for them or investing in them. The leadership is by definition finally headless, and by definition greedy in purpose.

(on that last oppinion concerning publicly traded companies feel free to discard it. I admit it is nothing if not controversial, and until I bear the issue out fully in the essay or what not- it is merely my pet notion)

These things as you will well know- are starting to take shape, but a ready mechanism for investers to easilly make ethical choices is as yet very imature. I look for opportunities and also wait for better opportunities to invest in such vehicles.

--
Well sure- that's why I like playing with the hundred dollar figgure, and assuming no math. That kind of sacrifice is available nomatter what your income. But why I get off on this is because when people start thinking long-term and rearing their children on the good milk of math and reason, I really believe society can change. For example- assuming we all want to ease unspeakable and widespread suffering in the world (that might not be a safe assumption, but for my part I'm obsessed with it. I am never at peace because I am not built to misplace in the back of my mind the knowledge of what the real world doles out to its unfortunate and especially it's poor)- we need the means to do that. I think we do have the opportunity but we lack the means. In this society at any rate, we only lack the means because in our habbits are so self-indulgent and mindless of the long term, and the power of sacrifice (at first in the sense of frugal living) and then generosity (later- as that sacrifice turns pursposeful). Dollars can really do something right here and now- they can buy crap- they can also rescue someone from desease for example, or from the prison of ignorence if they lack the means for an education.

The Grid

I have been hearing about solar roof's in Japan, and now see, we have them coming up in California. I have been thinking about solar roofing for years as the natural evolution of what human beings have been doing with housing as civilisation advances.
click here to see article featuring the 'Governator'.
Think of how much the human home resembles different artifacts of the natural world- on an abstract or unconscious level. Pillars are like the trunks of trees (if you doubt this, consider that trunks in a forest are said to hold up the "canopy" or the "ceiling" of the forest, and in ancient Egypt and Rome, artisans modeled their pillars with leaf and floral molding as a reflection of the functional and aesthetic similarity to their natural antecedent- the trunk). ' Carpets' of grass are like the carpets in our houses (again in terms of their aesthetic form as well as their function). Windows and doorways would be like the breaks and spaces in the forest, and the dappled canopy much like windowing permits a comfortable filtering of illumination. In a way we have been designing less perfect dwellings then the bird have inhabited since time immemorial.

What are leaves but tiny, super efficient solar panels distributing energy perfectly, wasting not a mole of it's inexhaustible resource, but feeding it to the tree, and then when the leaf dies, creating rich soil from it's own body. One of humanity's goals then is to now learn from nature how to conserve.

As a practical matter, it would seem to me that the only way for this to really work well is to get these houses all plugged in to the/an electric grid, along with wind turbine electricity generators. Otherwise, you have a situation in which individuals will have to store their energy in batteries- a bad idea for a lot of reasons- one of which, you are still wasting a lot of energy that way, and you then have to replace the battery periodically and dispose of the old one. Naturally a grid system would require capacitors and batteries but not nearly the agrigate number which would be required by so many disconnected households.

One obstacle to plugging these into the grid so that the solar energy is "communised" (so to speak) is our very economic philosophy. There is a farmer who wanted to plug his turbine into the grid and receive some kind of reimbursement for the negative electric reading on his meter every month and was bared from doing it. He was the first to want to do something like that so there had been no law conceived about it. Mind you- they made a law for the situation quickly enouph. Capitalist notions of competition on one hand, and "greed is good" on another have a usefulness- but I suspect we are reaching the ceiling of their usefulness. (concerning this farmer- I hope I can find the citation later and include it. I heard about it on NPR perhaps in 07 or so)

The exigencies of the age we live in will require a new economy and a more mature and less primitive economic philosophy- at least a less simplistic one. I'm sure that capitalism in some form will and has always existed in most places- and some degree of it is a good and a necessary thing. I just have outgrown the idea that capitalism is as self-maintaining and benign as we have been led to believe. I think like any social order it requires rigor, scrutiny, many eyes, transparency and (most imprtanly) limitations upon it's powers and scope in order to do it's best job.

I frequently hear capitalisms proponents intimating that "the economy" will solve this or that problem on it's own. It seems there is an underlying faith that the less we interfere witht he natural course of capitalism and with it's native gears and cogs of competition and self-interest, the better it works and the more problems it automatically resolves. It would seem capitalism is a vertually maintnenence-free philosophy- an unqualified good for every situation it encounters. Tell me though for example, what is the market 'automatically' doing about world hunger? Um, making it worse infact as far as I am able to tell. What was 'the market' automatically doing about environmental exploitation or species extinction? I would say it's fair to point out that before the EPA came along to limit the powers and scope of capitalism, the market fiddled while Rome burned on that issue as well such that if aligator hand-bags were fashionable, and supply dwindled, the preciousness of aligator skin was increased in tandem with scarcity pooring gasoline on the problems the species faced.

My point is not that capitalism is evil- just that it has limitations and that it also isn't designed to to have an automatically beneficial effect upon everything it touches. It's a good Pavlovian way to motivate a person away from discomfort and towards pleasure. It's needful. We need more than 'greed is good' that however to build a goodly and sustainable society which will shelter, rear and serve our descendents at least as well as it has done for us.

Tuesday, July 17, 2007

Price of Gas

It is my belief that high gas prices are in the long run - good for us, despite the fact that it is painful.
  1. cheap, readily available gas ultimately indicates a healthy and growing fossil fuel industry.
  2. the oil industry carries with it the following results on an ongoing basis:
    1. Incentive for international warfare.
    2. Global warming.
    3. slowness to adopt renewable and sustainable energy models such as hydro, electric, hybrid, bio-diesel, solar and fuel-cell based models.
    4. negative effects upon domestic security insofar as; so long as we are dependent on oil, we will always be considerably dependent on foreign (often hostile) sources of it.
    5. unfortunate decisions have to be made concerning our natural wilderness (the Anuar for example).
    6. The greed precipitated by the inherently limited nature of this sort of fuel spurred great injustice and exploitation in the world such as what is taking place in Nigeria (if you don't know, our oil companies are in there drilling, destroying land, and employing everyone there on a slaves wage creating poverty while we continue to get rich) or the successful Coup d'état of democratically elected Mohammed Mosaddeq (Read up: "Anglo-Iranian" now called BP).
In fairness, lets consider the downside of the death of the oil industry:
  1. In the short term, it is an expensive proposition while Americans transition to renewable sources of energy.
    * But wait- isn't that what the south was saying about Abolition? They complained that it's expensive for them to loose all that free labor. Weren't many of the grievances before the war merely economic? Hmm...

My First Post

I love to talk about money- but my wife dislikes my disclosing stuff. But if I don't disclose stuff- I don't have a valuable tool for taking apart all of the issues surrounding money which I'm passionate about discussing. She insinuates that I am bragging some times but that is not actually her opinion nor her concern. She doesn't want details to be known and she also doesn't want people to form opinions about whether we are cheap for example (we are very frugal, we are not cheap. Is that something a cheap person would say?).

So I am blogging. It's possible that family and friends will find this blog- but it's unlikely. That's good enough. By the way- we are not rich by American standards- though we aren't bad off. Future looks great though and this is because of our relationship with the money we do make. A good snake-charmer will be close enough to profit, and far enough to stay clear of the venom- whose target is the human heart of course. We must then be methodical and excellent in planning our finances- while preserving purity and generosity. We must be like a candle enclosed in glass- bright in the night yet safe in the storm.