Aging: Economics and Investing

Our only hope: retiring later by Jim Jubak

Jim Jubak is definitely worth reading for anyone interested in investing. This column touches on the economic problem of the aging population.

My solution is based on common sense and my observations of what people actually do in retirement: They work. It's based on a belief that we'd fix the so-called crisis if we could just get more productive work out of older workers, by improving their jobs so they'd voluntarily stay on at work, or by giving them resources and support to start post-retirement careers.

That pretty much has to be part of the solution. While the United States is rich even we are not rich enough to have people work for 40 years and not work for 40 years. Retirement at 65 was set when most people died before or soon after that date. It just is not realistic to think we can live at the standards of living we expect and only work from 25-65.

If people want to cut the standard of living during the 80 years they live that would be one tradeoff they could make. I don't believe his contention that savings is not a reasonable significant part of the solution (if that is what he means by "The whole world is getting old pretty much all at once, so saving more and investing at higher returns won't do the trick."

• The Impact of Aging on Financial Markets and the Economy: A Survey by Barry P. Bosworth, Ralph C. Bryant and Gary Burtless. The Brookings Institution, July 2004
• Aging population makes this deficit scarier, Sue Kirchhoff, USA Today.

The issue of how to deal with the economic consequences of aging population is an important issue to consider today. It is something I need to continue to study. But we also need to be taking action now on things like increasing the full retirement age for Social Security, increasing the saving rate, decreasing the current yearly federal deficit (and private pension liabilities), providing ways for those in their 60's and 70's to participate in the economy that work well (probably part time, more flexible work arrangements, etc.).

Mass Affluent and Google Code

Here come the mass affluent: In the 1970's

almost 90 percent of American households made less than $65,000 (inflation adjusted). By 2000, 62 percent made more than $65,000

That hardly seems posible but if it is true is amazing. One point of the article, that there are many people with a great deal of money to spend sure seems true. But still such a large majority making over $65,000 is suprising.

I meant to post this earlier but forgot to do so. Google, summer of code:

This summer, don't let your programming skills lie fallow. Use them for the greater good of open source software and computer science. Google will provide a $4500 award to each student who successfully completes a project by the end of the summer.

Great idea for Google. They seem to be doing so many things right now. Hopefully they can keep it up.

Medicare and Ask Jeeves humor

Bad Practices Net Hospitals More Money

In Medicare's upside-down reimbursement system, hospitals and doctors who order unnecessary tests... often receive higher payments than those who provide efficient, high-quality medicine.
...
Medicare... now about 15 percent of federal spending and projected to grow to nearly a quarter of the budget in a decade.
...
Researchers at Dartmouth Medical School, who have been studying Medicare's performance for three decades, estimate that as much as $1 of every $3 is wasted on unnecessary or inappropriate care. Other analysts put the figure as high as 40 percent.

Interview with Ask Jeeves (from 2000), very funny.

Outsourcing, Government Debt, Where the Wild Things Are

Offshore Outsource Savings Can Be Elusive, Survey Shows:

the Ventoro survey found that savings averaged slightly less than 10 percent for all the offshore outsourcing projects that Ventoro reviewed.
...
The survey found that 28 percent of the offshore outsourcing or offshore development project actually increased costs and 25 percent did not generate any significant savings.

The Debt updated daily from the United States Bureau of Public Debt:

Debt as of 07/18/2005
Owed to the public: $4,552,108,672,703.45
Owed to other parts of the GovernmentL $3,301,481,819,120.60
Total Debt: $7,853,590,491,824.05

These numbers might make United States citizens want to support the Concord Coalition.

Listen to a Conversation with Maurice Sendak (author of Where the Wild Things Are) from NPR.

Flashblock, Outsource Your Job, Privacy Laws

Flashblock is a great plugin for firefox to keep distracting animations from bothering you. If you want to see the flash object you just click on it and you can see it. Well awhile back Firefox started crashing fairly often on my machine.

Finally I decided to see what was going on. It seemed to be related to sites with Flash so I went to look at the Flashblock page and it seems a new version of Firefox has a bug that results in the old version of Flashblock crashing Firefox. I just upgraded Flashblock so hopefully I will now avoid all those crashes. You have to follow the uninstall instructions (default extention upgrade process won't work).

Outsource your job to earn more!
I think this is pretty amusing. I would guess others will get all worked up about it. I wouldn't be amazed if this quote is less than completely true:

Says a programmer on Slashdot.org who outsourced his job: "About a year ago I hired a developer in India to do my job. I pay him $12,000 out of the $67,000 I get. He's happy to have the work. I'm happy that I have to work only 90 minutes a day just supervising the code. My employer thinks I'm telecommuting. Now I'm considering getting a second job and doing the same thing."

I have thought about something similar, but I am too chicken to actually do it.

Lawmakers have proposed several bills that seek to better protect personal data

While I hope they pass some effective laws, I am skeptical. Lawmakers now use so much 1984 Orwellian speak you can't trust what they say (yes I realize some may say that was always true but I don't believe they could so boldly be Orwellian previously). The only effective way to know what the claims they make mean is to have trusted entities that will tell you what it really means (or become an expert yourself). Unfortunately the mainstream media has mainly given up any role they traditionally played and now mainly parrot whatever they are told (this is not something new in the last 2 years it has been growing more and more true for 20 years). So for privacy I would look at what the Electronic Privacy Information Center, EFF, Privacy Rights Clearninghouse and other say to know whether the lawmakers are using English the way the rest of us do in talking about these laws or whether they are Orwellian.

Zork, Google Trick, Hospital Data and Google Maps

Zork "wiki" - my first experience with computers was with a game: "Zork" (I don't think it was named that yet). My father was a professor at the University of Wisconsin and he rented a modem from the university over Christmas break. We then used our rotary dial bell telephone to call up and connect the phone handset to the modem which connected us to a University mainframe that was underutilized during the break and we could use it to play "Zork." The modem also had a heat sensitive printer (that used special paper to print on by heating it up using a dot matrix style printhead). There was no screen - all communication was printed on the paper. This was before a personal computer existed. The Zork wiki link is a great way to remember that time, with a sense of humor.

Search for number range:
You can search for the existence of a number within a range:

I knew it happened in Death Valley, but couldn't remember what it was. I found it by searching for death valley 130..140 degrees.

Data Show Scourge of Hospital Infections by Ceci Connolly, Washington Post

Nearly 12,000 Pennsylvanians contracted infections during a hospital stay in 2004, costing an extra $2 billion in care and at least 1,500 preventable deaths

Google Maps Mania - blog for Google Maps Hacks

Copyright, Joel on Software

Copyright and the Law from the Economist opinion page:

In America, the length of copyright protection has increased enormously over the past century, from around 28 years to as much as 95 years.
...
A first, useful step would be a drastic reduction of copyright back to its original terms—14 years, renewable once. This should provide media firms plenty of chance to earn profits, and consumers plenty of opportunity to rip, mix, burn their back catalogues without breaking the law. The Supreme Court has somewhat reluctantly clipped the wings of copyright pirates; it is time for Congress to do the same to the copyright incumbents.

Joel on Software has some great posts. This one is especially funny:

"Click START"

"What?"

"Start. Click Start. It's in the bottom left."

"I have C - T - R - L in the bottom left."

"The bottom left of your screen."

"Oh. OK, I clicked it."

"OK, now click RUN."

"What?"

"On the menu that came up. Click RUN."

"It's not there."

"What do you mean it's not there?"

"It's not there. I don't have a RUN."

continued

Driving While Impaired

Drivers on Cells More Likely to Crash, cnn.com. In the past driving while drunk was not seen as a big deal. Eventually the society learned having people kill other people when they chose to put others in danger due to their risky chooses should be something that the government prevents. Eventually we will learn to put those in jail that insist on driving while impaired by talking on cell phones. The data is obvious, it is just a matter of how many deaths and serious injuries it will take before society decides to act.

The Cellular Telecommunications & Internet Association, a Washington-based trade group, downplayed the findings, saying the distractions associated with mobile phones are no different from those encountered by drivers who eat or talk with passengers as they drive.

I don't know about you, but this statement leads me to believe the association doesn't care what the consequences for the public is, they just care about their members (why they think it is in the interest of their members to have their product be responsible for so many deaths is beyond me. Some companies seem to understand their products have appropriate and inappropriate uses. Many marketers seem to believe acknowledging any inappropriate uses is bad. This is pretty sad if you ask me, which you didn't, but I get to say what I want here, so I have. Without a public that can understand simple data it is pretty easy for spokespeople to just make unsupported claims and get away with it.

I can understand those who say a company should not be liable (say one that manufactures cell phones or provides cell phone service) if someone using their product kills your child. It isn't the cell phone providers fault that someone drove while talking on their cell phone. But if the cell phone provider gave large sums of money to lobbyists who gave the money to legislators (or the phone company gave it directly to a lawmaker) who decided not to make it illegal to drive while impaired, don't they have some responsibility?

If the cell phone provider said you were not to use their product or service in this dangerous way I wouldn't believe they should be liable. But if they create the product/service and then shape the laws of the society so that it can be used in a dangerous way why are they not responsible for the resulting inevitable deaths caused by their actions? Espeically when on top of shaping the laws they try to make the public believe it is safe basically and just like a whole bunch of other minor distractions... I understand they are not the only responsible party, the person that chose to risk the lives of others for their own selfish reasons should be held accountable for their actions. It just seems the people in the companies making the statements and making the decisions to make the payments to influence laws have moral responsibility. But I guess the legal question will be answered over the next 20 years and the moral implications are for each of us to determine for ourselves.

Yes it is true some cell phone use increase risk only slightly. It is also true someone can have a blood alcohol level that is above the legal limit and they don't endanger people more than another driver who is less capable of driving in general. But we have to set certain limits. If we figure out a way to know when someone's capability to drive at any moment in time drops below the level society wants (due to drug use, lack of sleep, cell phone use, failing physical reflexes...) then we can have a system that more directly ties to what we are trying to legislate which is: drivers do not retain the right to drive if they endanger others too much. I don't see how we can ever do that, but if we can great. Until then, we set laws such as: it is unlawful to drive while intoxicated.

Have you ever noticed that the strategy of delay by asking for more data collection is almost always followed by, boy that data has such and such problem collect more data (actually I think it might be always, not often, it is just that a critical mass of those who no longer accept that delaying tactic final is reached and the request for more delays is finally denied)? I certainly believe data should be collected but you should not let special interests claim some minor issue is not yet 100% clear so allow many more deaths for several more years so we can get data that is a bit more clear on some detail. The delaying strategy is one that can go on for decades if people don't have a basic understanding of the scientific method, statistics and the consequences of inaction as well as action.

You know you are in a pretty weak position when you are not denying the risk but instead claiming but you don't outlaw these other things that endanger people's lives. It is true driving will have risks for the foreseeable future, no matter how many risk we try and reduce. That doesn't mean we hold off banning drunk driving because other risky things have not been banned yet.

Study published in the New England Journal of Medicine in 1997 - Association between Cellular-Telephone Calls and Motor Vehicle Collisions
Cell Phones Are Found to Pose Riskiest Distractions for Drivers - link to article on Yahoo because NHTSA web site doesn't seem to bother to post their own study that the article is based on.

"Acknowledging that cellphone use in a car can be a potential distraction ... we've been very clear on that," said a spokesman for the Cellular Telecommunications and Internet Association, the industry's main trade group. "At the same time, cellphone use is one of what appears to be a number of behaviors in there." He added: "It's certainly not in line with what a number of other studies have found. The fact it is so way out of line would give me some pause."

Cell Phone Use By Drivers -- A Threat To Public Safety?

More on Housing Bubble

Housing may sting more than dot.com bust

The IMF study found that while stock market collapses are more frequent, housing busts do a lot more damage.

"The output loss associated with the typical housing price bust (about 8 percent of GDP) was twice as large as that associated with a typical equity price bust," the study said.

India’s millionaire count surges

India’s millionaire count surges to 69,800

HNWIs, defined as individuals with financial assets of at least $1 million (around Rs 4.4 crore), excluding their primary residence.
...
Global HNWI wealth has grown by 8.2 per cent to a whopping $30.8 trillion in 2004. Moreover, around 8.3 million people globally hold financial assets of $1 million, an increase of 7.3 per cent over 2003.

See also Number of Millionaires Hits Record - 7.5 million households in the United States. I would be willing to wager that the percentage of Indian millionares to United States millionaires will decrease dramatically in the next 10 year.

Traffic Congestion, Silence and Irrigation

More (previous post - Traffic Congestion and a Non-Solution) on Traffic Congestion, U.S. Cities Urged to Adopt 'Congestion Tax':

The mayor of London told dozens of world mayors that they could unclog city streets and fight global warming by charging hefty fees for driving in congested areas of their communities.

Sounds of Silencers, Are Loud and Clear: PCs Are Too Noisy:

Designers say noise is becoming more of an issue as PCs rev up and push their way into the living room to play digital music, video and games. A computer's mechanical parts -- including cooling fans and spinning disk-drives -- generally work harder as a PC takes on more tasks. And noise barely noticed amid the buzz of the workplace can be less welcome at home.

Silent PC Review

Build your own Office Irrigation System:

Thus the idea for an indoor office irrigation system was born. The key factor in getting a starter system was price. So far, I've only found one indoor system, and it's $60USD (w/o shipping). I am sure this would work just as well, but isn't in the DIY spirit, and with shipping, costs almost twice as much as the solution provided here.

Deep Throat Revealed

Washington Post Confirms W. Mark Felt Was 'Deep Throat':

The Washington Post today confirmed that W. Mark Felt, a former number-two official at the FBI, was "Deep Throat," the secretive source who provided information that helped unravel the Watergate scandal in the early 1970s and contributed to the resignation of president Richard M. Nixon.

The confirmation came from Bob Woodward and Carl Bernstein, the two Washington Post reporters who broke the Watergate story, and their former top editor, Benjamin C. Bradlee.

Watergate Timeline

Chinese Textile, Housing Bubble and Farm Subsidies

China Ends Export Tarriffs from the The Economic Times (india):

China said on Monday it will abolish export tariffs on 81 categories of textile products and scrap scheduled tariff increases on 74 types of textiles as trade tensions with the European Union and United States escalated.

Housing Bubbles, the Great Plains and the Coast by Brad Setser:

My Midwestern chauvinist side always thought it was amusing that the
big, sort-of-national daily papers waxed far more eloquent about
eliminating farm subsidies than eliminating suburban housing subsidies.
Everyone has constituents.

In that post Brad Setser also mentioned: "US farm subsidies certainly do need to be reformed, particularly those that have a large impact on poor farmers in the world's poorest countries."

Big Farms Reap 2 Harvests With Aid as Bumper Crop by Timothy Egan:

Despite the fact that farm income has doubled in two years, federal farm subsidies have gone up nearly 40 percent over the same period -- projected at $15.7 billion this year, and $130 billion over the last nine years. And that bounty is drawing fire from people who say that at this moment of farm prosperity, the nation's subsidy system has never made less sense.
...
But because nearly 70 percent of the subsidies go to the top 10 percent of agricultural producers, the recent prosperity is not seen or felt among many small to medium-size growers who keep the struggling counties of the Great Plains alive.

Update: also see our investing and economcs blog

Gravity's Rainbow, Millionaires and Free eBooks

Zak Smith's Illustrations for Each Page of Gravity's Rainbow (Thomas Pynchon's masterpiece):

So I illustrated Gravity's Rainbow-- nobody asked me to, but I did it anyway. Most of the pictures are drawings-- ink on whatever paper was lying around, but there are also paintings (acrylic), photos I took, and experimental photographic processes.

Number of Millionaires Hits Record - CNN 25 May 2005

The number of millionaires in America reached record highs in 2004, hitting 7.5 million, according to a new survey.

That represented a gain of 21 percent, the largest jump in the number of U.S. millionaires since 1998, according to the survey by the Spectrem Group, a Chicago-based research firm.

Spectrem counted Americans with net assets of $1 million or more, excluding primary residences but including second homes and other real estate holdings. There were 6 million millionaires in 2001, when the bursting of the tech-stock bubble pruned more than a million Americans from this status.

Record high Number of Millionaires - CNN 16 Nov 2004:

TNS found that there are now a record 8.2 million U.S. households with a net worth of more than $1 million, excluding primary residences. That's a 33 percent increase over the 6.2 million households that met that criteria in 2003.

Half of those surveyed are retired.

The number of millionaire households represents about 7 percent of all U.S. households.

Planet PDF - free PDF eBooks Archive, books available include:

• Aesop's Fables
  
• Alice's Adventures in Wonderland
  
• Ulysses
  
• Paradise Lost
  
• The Prince
  
• Utopia
  

Google Stock Price Rises 5.7%

The price of a share of Google stock rose 5.7% to $255.45 today. The stand "explanation" "reported" by the media is along the lines of this quote from CNN:

Internet shares rose along with Google (up $13.84 to $255.45, Research), which jumped 5.7 percent on rumors that it could be added to the S&P 500. Should that happen, the stock would benefit from index fund managers having to buy it for their portfolios.

I don't understand how these types of "explanations" are accepted by the media and their customers. If some investor really was surprised that Google was going to be added to the S&P 500 they shouldn't be investing in the market, they should just buy an index fund and leave well enough alone.

If CNN (and the others [MarketWatch Potential index inclusion drives GOOG"], Reuters (via CNBC)... reporting the same story) really believes the increase of 5.7% is due to a rumor that Google could be added to the S&P 500 I don't know what to think of the other reporting they do. Even when much smaller companies are actually announced as new additions to the S&P 500 and that company's addition really was questionable (for say anytime in the next year or two) they don't go up 5% in price. But, if CNN doesn't believe it, wouldn't that be worse? It just seems financial reporting is more concerned with finding some explanation even if that explanation lacks almost any merit.

SmartMoney's "explanation" was much better: "Google (GOOG) shares shot up nearly 6% to the latest all-time high with nary a provocation." But if you don't know anything about investing this seems like SmartMoney don't know what the others are reporting. I don't know whether SmartMoney actually made a good editorial decision or they just wanted to vary the language a bit. I could see one could get tired of repeating the almost daily "rumor" explanation found after whatever stock went up significantly without any rational reason (even if the rumor were true - some rumors would explain price moves, if true, others like the example today have almost no actual chance of having the noted affect even if they were true). In this case you would have to assume that today the chances for Google being added to the S&P 500 greatly increased in liklihood. I would be amazed if the sites using the rumor today have in the past reported Google was to be added to the S&P 500 in 2005 - here is one example.

I have watched this type of "reporting" for years (decades actually) and really don't understand why it is accepted. Why did it go up 5.7% today? I have no idea, but we did include a large stake in Google in our 10 Stocks for 10 Years post a month ago.

It is not all that uncommon that a stock at its all time high price would move dramtically higher ("breakout") but that is not an "explanation" of why Google increased in price today it is just a statement that such an event is not uncommon. Taking advantage of this pattern is part of the investment strategy employed by many successful investors (Livermore, Darvas, O'Neil are examples) and also many investors who fail to achieve great results.

The Patent System Needs to be Significantly Improved

The United States patent system is in need of significant reform. The most serious problems include patents being issued for obvious (and therefore theoretically un-patentable) things, a poor legal system to manage patent claims and organizations and people taking advantage of the first two problems to essentially extort money from others.

From the lessig blog, "The 'Progress' and 'Freedom' Foundation has called (rightly) for Supreme Court review of the 'obviousness' standard in patent law."

Even Microsoft, always a strong proponent for the protection "intellectual capital rights" sees the current system is failing. While not all Microsoft's suggestions make sense to me I do share common ground with them on several points. From a question and answer session with Microsoft General Counsel Brad Smith posted on Microsoft's web site:

Microsoft Calls for Reforms to the U.S. Patent Systemwe need to ensure that interested parties have sufficient opportunities to alert the PTO about questionable patents within the PTO review process itself. Under current law, parties typically can only raise concerns after patent issuance by filing a reexamination request or a lawsuit -- an obvious disincentive, given the costs of patent litigation. One proposal that has been suggested is to allow third parties to submit information regarding "prior art" to patent examiners during the patent examination process itself, rather than only after a patent has been issued. "Prior art" is a legal term used to refer to the processes, devices and modes of achieving the end of an alleged invention that were known before and at the date of the invention.
...
Another proposal is to establish a post-grant patent-opposition procedure, which would allow third parties to challenge patents administratively, rather than through litigation. Such a procedure already exists in the European system and could help weed out questionable patents before they become the subject of costly and time-consuming litigation.

The statement Microsoft makes include some language about "business-process" patents and supporting addressing the problems that exist in that area. Without stating it they seem to support the current award of "business-process" patent and just want some minor adjustments. On the whole these patents seem to be obvious and unworthy of patent protection, in my opinion.

John Hunter

Hug Shirt

Technology is fun.


Hug Shirt

F+R Hugs (hug shirt): is a shirt that allows to exchange the physical sensation of a hug over distance. Embedded in the shirt there are sensors that feel the strength of the touch, the skin warmth and the heartbeat rate of the sender and actuators that recreate the sensation of touch, warmth and emotion of the hug to the shirt of the distant loved one.
...
The F+R Hugs is a Bluetooth accessory for Java enabled mobile phones. Hug shirts don’t have any assigned phone number, all the data goes from the sensors wirelessly to your mobile phone and your mobile phone delivers the data stream to your loved one phone and seamlessly is transmitted Bluetooth to the other person’s shirt

Read more at the Cute Circuit web site. Ok, they seem to be stretching to relate points such as: "An infant may sink into depression and die without the closeness of her mothers body (studies refer of increased sudden infant death syndrome if children are not being hugged during the first 40 days of life)." Still these shirts seem like a fun idea.

Consumers Should Have Far More Control Over Their Information

Privacy experts' wish list from ccn.com:

Consumers should also be allowed to place freezes on their credit reports, they suggest. Currently, consumers are not notified when a creditor views their report. That can facilitate identity theft, since a lender might grant a thief credit in the victim's name without the victim's knowledge.

A freeze would mean a consumer would have to grant permission to any party wishing to view his credit report.

Right now, credit freezes are permitted in only four states -- California, Texas, Vermont and Louisiana.

This seems like a pretty obvious move that should have been made years ago. It seems the money given to legislators that don't want people to have control over private personal information has prevent such moves thusfar. Maybe enough people have had their identities stolen to final get some action. At some point the number of people having their identities stolen will finally overcome the resistance (created largely by donations - no other explanation make much sense) legislative action.

The only argument I have heard from legislators for allowing consumers to control their private information is that the consumers don't understand the harm they would cause themselves if they placed such a freeze on their account - that the consumers don't understand that means they might have to wait days (or even weeks) to get new credit. If the legislators actually believe that the government knows better than the individual the balance what that consumer wants (between having their private information shared and the speed at which the consumer will get credit) it seems their are many other decisions that legislator would support government making for the consumer. That doesn't seem like the real reason most of those who have prevent such legislation. It seems more likely the money given by those that wants to prevent consumers from having the right to protect their private information is having the desired effect and preventing such legislation (and if not completely preventing it, then limiting the effect of any such legislation).

• Full testimony of Marc Rotenberg (adobe acrobat format)
• Electronic Privacy Information Center
• More on the failure of privacy laws
  

Geography, Google and the Dial Tone

• States Web Games - simple and interesting web games to teach geography.
  


• Cracking the Google Code… Under the GoogleScope - an interesting read. I think the author might overstate some claims. The methods Google files in the patent don't necessarily mean those are the methods they are actually using today. It is interesting to see what Google files and see how they are trying to find actual relevant content from all the content created only to get search result listings.
  
  Google has raised the bar against search engine spam and artificial link inflation to unrivaled heights with the filing of a United States Patent Application 20050071741 on March 31, 2005.
  
  
• Dial Comes To Town - a wonderful online video (mpeg) of a public service announcement from the phone company as they switched from operator dialed calls to the dial tone (and calls dialed by customers). Even the reviews of the video are fun to read. A great stress break, take a look to enjoy a few relaxing minutes.
  

Science, Music and the Theory of Knowledge

• We have started a new Curious Cat Science Blog for posts on science and engineering news, breakthroughs, education and research.
  
• thepartyparty.com is a collection of "songs" where samples from President George Bush's speeches are put together to have it appear he is signing such songs as "Sunday Bloody Sunday" and "Imagine."
  
• Beyond Fear, speech by Bruce Schneier from IT Conversations (a great site with excellent and free audio speeches and interviews). In this interview Bruce Schneier talks about the way we evaluate and react to risks:
  
  We're seeing so much nonsense after 9/11, and so many people are saying things about security, about terrorism that just makes no sense.
  
  More people are killed every year by pigs than by sharks, which shows you how good we are at evaluating risk.
  
  Did you ever wonder why tweezers were confiscated at security checkpoints, but matches and cigarette lighters--actual combustible materials--were not?...If the tweezers lobby had more power, I'm sure they would have been allowed on board as well.