Legends & Lies: The Patriots
We’re working on some commentary about the dramatic vote
results in the UK “Brexit” vote about membership in the EU.
Meantime, especially as July 4 approaches, we want to call
your attention to a very interesting TV show on Sunday nights. Legends & Lies: The Patriots
showing on Fox News at 8:00PM. While
this is a Bill O’Reilly production, it has absolutely nothing to do with contemporary
politics. It is indeed about the
American Revolution. The first two
episodes dealt with the Boston Massacre, the Boston Tea Party and Paul Revere’s
ride. This week we’ll have stories about
Ben Franklin and the battle of Bunker Hill.
The material includes some dramatized scenes interspersed with
commentary by O’Reilly and by university history professors who are experts in
Our regular readers know that we are fascinated by the
Revolution and that we talk about it every year at this time. So this TV program obviously fits in to Ways
of the World
themes. The series
will run all summer on Sundays at 8:00PM.
Again, it’s on the Fox News cable network. Check it out; we think you’ll enjoy it.
Labels: American Society
Jo Cox and the EU
Most of what you’ve
been hearing about since June 12 pertains to the mass shooting in
Orlando. Clearly we are upset about that
horrible tragedy. But we want also to
give attention to a not-totally-unrelated event in northern England on June 16.
This Thursday, June 23, people in the U.K. will vote on whether
to remain in the EU or leave. The EU is
an association of 28 European nations enjoying free trade among each other and
whose citizens can move freely among the countries, living anywhere they choose
at any time. Nineteen of these
countries, obviously not including the U.K., also use a common currency, the
There is dissatisfaction among some U.K. citizens over
belonging to the EU, such that when he ran for re-election to Parliament in
2013, the current Prime Minister David Cameron promised that Parliament would
authorize a public election over whether to stay in it.
This hardly sounds like an issue that should spawn
violence. But as the voting date has
approached, two vociferous camps have emerged and campaigning has been raucous
Still, the nation – and many others – was shocked last
Thursday, when Jo Cox, a Member of Parliament supporting the Remain camp, was
shot and stabbed in front of the public library in her town of Birstall.
Violence. What is it
about these days that political disagreements seem to be spurring such deadly
violence? The gentleman who murdered Jo
Cox on Thursday was known to have mental problems, but still, outright killing
is extreme. Tommie Mair even used a
sawed-off shotgun to do this in a country where almost all guns are outlawed,
and most police don’t even carry them.
We have to talk first about Jo Cox herself.
An extraordinary person.
She is from Birstall in Northern England, just north of Leicester and
south of Nottingham. The region is a
factory community; it includes a large Muslim population, apparently mainly
from India, as workers were needed for factories. Jo Cox’s father worked in a factory. She apparently always presumed she would do the same. But she had the opportunity to attend
Cambridge and she was the first member of her family to attend university. She spent 10 years as an aid worker,
affiliated with Oxfam, the Gates Foundation and the Freedom Fund, this last an
organization that fights modern slavery.
The Wall Street Journal explains that in Parliament “she pushed
for international action to help Syrians who had been caught up in fighting
there .” She was also a vocal proponent of the UK staying in the EU.
She lived simply, with her husband and two children on a
houseboat, and, according to The Economist
magazine, she commuted
to Parliament on a bicycle. Ms. Cox was
on her way to conduct constituent appointments at the local library in Birstall
when she was attacked. A witness reported
that the attacker shouted “Britain first” as he struck her. In Mr. Mair’s court appearance, the
prosecutor stated that he had said, “Britain first,
keep Britain independent, Britain always comes first.”
Perhaps coincidentally, “Britain First” is actually
an organization committed to banning Islam in the U.K. The group denied responsibility, however,
although they are concerned that immigration is the root of many of the U.K.’s
current problems. When asked to state
his name during his court appearance Saturday, June 18, he replied, “Death to traitors, freedom for Britain.”
Thus, we seem to face three forces here. First, the awful killing of a highly regarded
public servant, popular in her community and respected in Parliament. A bright, relatively young woman, age 41, who
obviously had much to say and do toward the benefit of the people she
represents. Second, a raucous, divisive
campaign about whether the U.K. should Remain in the EU or Leave it; indeed the
groups in support of each side are “Remain” and “Vote Leave”. Polls show sentiment is almost evenly divided
and oscillates from one preference to the other, so it is not at all clear
which will come out ahead in the vote.
Campaigning was suspended altogether from Thursday after Jo Cox’s death
through Saturday. Third, there is the
immigration issue. Being part of the EU
means that immigration into the U.K. from Europe is relatively easy.
This last issue, immigration, even strikes us as bearing
some resemblance to at least one of the factors in the Donald Trump campaign in
the U.S. Trump’s supporters tend to
blame immigrants for some of our problems, similar to the U.K. citizens who
blame immigrants for whatever distress they are feeling.
While we have no answers to any of this, we can offer you a
prayer concerning the U.K. vote, published by the Church of England back in
April. It is obviously directed at
this specific issue, but its themes can apply to many topics of public debate:
God of truth, give us grace to debate the issues in this
referendum with honesty and openness. Give generosity to those who seek to form
opinion and discernment to those who vote, that our nation may prosper and that
with all the peoples of Europe we may work for peace and the common good; for
the sake of Jesus Christ our Lord. Amen.
And among the myriad
tributes to Jo Cox, here is one offered at a prayer service at a church in
Birstall last Thursday and published on the website of the Diocese of West
Yorkshire and the Dales:
Labels: People, World
Why Workers Might Favor a Businessman for U.S. President
Back at the beginning of the Presidential primary elections,
a friend sidled up to me and growled, “Can you explain Donald Trump to
me?” The gentleman thought that I, as a
political conservative, might have some insight into this unusual candidate for
high public office.
I think I might have some modest insight about this, but
it’s my penchant for economic data, not my political views that might help us
out. Indeed, there's nothing politically motivated in what follows.
Many voters are frustrated in the lack of economic progress
in recent years. We hear all the time
that incomes have stagnated and inequality has worsened. Our latest wanderings around the website of
the Bureau of Labor Statistics (BLS) yield some interesting information on how
pervasive these conditions are. We can
thus understand better Trump’s appeal to working-class people who think this
outspoken businessman might have some ideas for helping these conditions, for
“making America great again.”
Many comments about income inequality refer to total income,
which, of course, includes dividends and investment capital gains, flows that
favor the high-end. Or comments about
wages just talk about CEOs’ oversized compensation as a huge multiple of
average workers’ wages. There’s little
mystery in these as causes of frustration among hard-working laborers.
Wage Stagnation and Inequality Pervade Labor Market
But what we found goes deeper. First, workers’ compensation has indeed been
stagnant overall. Average wages and
benefits were $21.50 an hour in 2014, down from $21.91 in 2007, just before the
Great Recession started. This overall
result comes from an annual survey of companies’ pay in some 800 different
occupations, summarized in 19 “groups”, from management at the top ($59.93/hour
in 2014) to food preparers and servers at the bottom ($8.88/hour). Some groups near the middle include
construction workers at $24.67/hour, production workers at $21.31 and office
and administrative at $20.53. Over the
last seven years, averages increased for nine of the 19 groups, but they
declined in ten of them. Among the
declines are ones you’d think: office workers, transportation workers and
installation and repair people. But
hourly compensation also declined for higher-skilled occupations, including
computer scientists, scientists and even a bit for healthcare professionals –
really. So it’s hard to generalize,
to make a simple statement about wage stagnation.
Further, and in some ways more irritating, inequality
measures increased, even within these narrow pay categories. While the overall 50% median compensation
number went down 41 cents an hour over the seven-year period, the 90% level
increased; so the top 10% of workers made $56.73 in 2014, up from $54.31 in
2007. And seeming to add insult to
injury, the degree of inequality went up within individual occupational groups:
in eight occupations where the average went down, an inequality measure went
up. Thus, high-end positions in those
eight occupations, including computer techs, healthcare professionals, social service workers, installers & repairers and transport workers continued to rise even as middle and low-end salaries struggled. Workers may not see our data, of course, but
they surely have a sense of the awkward pay relationships among their own colleagues.
Workers in all kinds of jobs have reason to feel exasperated.
Possible Remedies: Reorient Education, Encourage Business
I don’t know a simple answer to these compensation
issues. The economist in me says, let’s
encourage business investment and better skill-training so workers can do their jobs more easily. As you can see from the
variety of occupations we’ve mentioned, “skill training” is probably a better
term than “education”. Kids can learn
coding for computer apps or they can become truck mechanics rather than heading
for college to get a broader, but possibly less practical cultural
background. In fact, one brand-new book,
, by sociologists Katherine Newman and Hella Winston, argues
for renewed emphasis on vocational education over the recent “college for
everyone” approach that often leaves graduates without a well-defined, real-world
expertise, but plenty of debt.
Some of you might think greater government regulation is
necessary to realign workers’ pay. But
that may well have the opposite effect of diluting business’ incentives to do
better, thus worsening productivity, to say nothing of the cost of designing
jobs to match government specifications.
It’s a very important economy question of the 2010’s. In fact, the National Federation of
Independent Business, a trade association representing small businesses, says
that government regulation already adds to the cost of hiring workers, such
that businesses are tending to favor temporary employees now rather than
This adds emphasis to our
main immediate point about how frustrated workers might indeed want a new kind
of leader in Washington who better understands the business world.
Further, the Dean of the Harvard Business School says in a
recent Wall Street Journal
, “solutions to problems like inequality
and the lack of employment opportunities or wage growth aren’t going to come
from government alone. They’re also going to require imaginative businesses
that find new ways to employ people and create real value.”
Other Economic Policy Questions Add to the Quandary
We see that what we have here is a can of worms. And this is just one issue, frustration over
inadequate pay and lack of progress. We
have to mix this with all the other issues of the day. An important Trump theme is immigration, for
instance. We thought to discuss this
here, but it’s really a whole separate article on some recent information about
the motivations of immigrants; these facts differ markedly from Mr. Trump’s usual
arguments. But it’s still an issue that
middle-class workers of today care about.
Other issues that might give them headaches include national security
and the protracted wars in the Middle East.
And while gasoline prices have at least come off their highest levels
with the drop in oil prices, workers in North and South Dakota and Texas are
being laid off as some oil production becomes unprofitable at the lower
prices. Apparently, we also have figure
out how to deal with coal miners; coal is clearly an important climate-change
issue, but the economies of West Virginia and other Appalachian regions depend
on it. We can’t just leave all those
people out in cold – so to speak. And on
Note that while average pay for healthcare professionals decreased
somewhat, the number of those workers, including doctors and nurses, rose
markedly. We still were startled that
median pay and benefits in that profession did not go up.
3. Katherine S.
Newman and Hella Winston. Reskilling
America: Learning to Labor in the Twenty-First Century. New York:
Metropolitan Books (Henry Holt and Company). 2016.
Labels: American Society, Economy, Government Policies
Signs of Progress in Reducing Carbon Emissions
On Earth Day, the anti-climate change agreement that had
been hammered out in Paris back in December was officially signed by
representatives of 175 countries.
There’s no doubt about the importance of the Paris Agreement
priorities. We keep hearing about
climate change and its dramatic consequences.
On the face of it, this seems to be an overwhelming situation and is
full of challenges and bad press. For
instance, we hear that car companies in Germany – no less – have cheated in
their reports of gas mileage. We hear
horror stories about the poor people in China who go around the streets of
Beijing wearing face masks to filter out the extreme air pollution. We hear that the Arctic ice cap is melting
Thus, on the face of it, it seems that nothing good is
happening. Clearly there is lots to do
to rectify these conditions. But
indicators we consulted from the International Energy Agency show that
some trends are headed in the right direction.
Yes, there’s a long way to go in counteracting climate change, but there
is progress. 
Lower Emissions in Several Parts of the World
Carbon dioxide emissions are already drifting lower in
industrialized regions. For the 34 major
industrialized countries belonging to the Organization for Economic Cooperation
and Development (OECD), total emissions peaked in 2005 and by 2013, the latest
available, they had fallen 6.1%, overall.
In the U.S., emissions are down 10.2% in that timeframe, and in Europe,
11.7%. Granted, there is more to do toward
achieving the Paris Climate Change agreement goals. But this is certainly a start. We’ll come back with a couple of examples
Emissions are, though, still rising in many of the world’s
regions. China and India are two obvious
examples, with CO2
output up 67.5% in China from 2005 to 2013, and
72% in India. Emissions in Africa are up
Even in these places, there are some signs of
improvement. In both China and India,
the increase in emissions is evidently tied to economic growth, which has been
quite rapid. But notably, emissions have
increased by less than GDP. In China,
GDP was up at a 10% average pace from 2005 to 2013, while emissions increased
at “only” a 6.7% rate. Two positive
developments are producing the slower rise in emissions: energy usage is also expanding less than GDP
and the energy that’s being used produces somewhat less emissions over
time. In India, GDP grew at a 7.5% rate,
while emissions rose at 7.0% pace. There,
energy use is also growing more slowly than GDP, although the specific kinds of
energy used there are still producing increasing amounts of CO2
By contrast in Europe and the U.S., the decline in emissions
is resulting from declines in energy use and declines in the CO2
content of the energy used. So there’s a
shift toward “cleaner” energy. Here is a
little bit about the efforts of two major U.S. companies to reduce their own
Specific Companies Take Specific Actions
General Electric reduced its energy use by almost 19% from
2004 to 2014. For carbon emissions, companies’ carbon footprints are often
characterized as emissions per dollar of revenue, and over that ten-year
period, GE cut down that measure from 59 metric tons per million dollars of
revenue to 33.9 metric tons. Among other
projects, it has redesigned the engines it makes for Boeing aircraft, and it has
restructured operations at a power plant in Greenville, South Carolina, by
simply installing real-time sensors and instituting a measuring system. Its plans going forward are directly tied to
the 2-degree-Celsius formula emphasized in the Paris agreement
American Airlines has found several interesting ways of
reducing fuel consumption, obviously the main source of any airline’s carbon
emissions. They’ve learned they can
taxi around airports using just one engine.
They’ve learned they can reduce the weight of a flight meaningfully by
switching from paper flight plans to using iPads and also having flight
attendants use small Samsung tablets instead of a 5-pound paper instruction
manual on the planes. Finally, they
attached “winglets” to the tips of the wings of 240 of American’s planes,
improving the planes’ “lift”; this change alone saves 700,000 metric tons of
carbon emissions a year.
Low-Carbon Investment Strategies
In addition, from a different perspective, we note with
considerable interest that companies with low carbon emissions or small carbon
footprints constitute a growing theme for investors. Standard & Poor’s has even devised indexes
of stocks for low-carbon-emissions companies and fossil-fuel-free companies. The “S&P 500 Carbon Efficient Index” has been
marginally stronger than the full S&P 500 index over most time periods in
the last several years. Since the
beginning of 2012, an index of fossil-fuel-free companies has outrun the
overall market by 5%. While that’s not a
huge difference, it does suggest that investors view lower-energy or
clean-energy companies in a favorable light.
Here are two examples of that investment strategy. At that Paris Climate Change conference, the
New York State Comptroller, Thomas DiNapoli, announced that the New York State
Common Retirement Fund would invest $2 billion in a fund created by Goldman
Sachs which emphasizes companies with small carbon footprints. The Common Retirement Fund is the pension
fund for New York State employees and is said to be the country’s third largest
pension fund. Similarly, the
non-profit McKnight Foundation, with a total of $2.1 billion in assets, can
perhaps be identified as a pioneer here; back in 2014, it invested $100 million
in a broad-based carbon-efficient fund managed by Mellon Capital.
The distinction for these two investment initiatives is that
they are active in-vestment strategies.
Previously, funds that wanted to emphasize climate and environment
concerns generally used a di-vestment strategy, eliminating coal and possibly
oil companies from their portfolios. But
selling these shares has had little impact because those companies are so large
that having a few shareholders sell out doesn’t mean much. Instead, enlisting fund managers to devise investment
strategies for companies that operate using desirable practices makes a more
positive, constructive statement.
Thus, there are tangible efforts at individual investor and
company levels that encourage and support the implementation of carbon
reduction actions. Environmental issues
have the advantage that they are clearly measurable, so we can see
progress. As we said at the outset,
there is a lot to do, but there is progress.
 Tina Rosenberg. Op. cit.
Labels: Economy, Environment, Financial Markets, World
The FBI versus Apple: A Catch-22
We knew this would probably happen sometime – a court fight
over smartphone security issues. Sure
enough, the FBI is hard at it with Apple.
The terrorists in San Bernardino, California, back in December were
using an iPhone. The FBI wants Apple to
hack the phone and Apple is saying no.
That would compromise one of the main features of those phones and set a
most unfortunate precedent. However, law
enforcement officials of all kinds are anxious for resolution because all kinds
of criminals use smartphones, which at present can be “tapped” only with great
legal and technical difficulty.
We do think this issue is worthy of discussion. It’s obviously controversial for Apple to
even have objected at this point in time, since the immediate cause is a
domestic terrorist attack in which 14 people were killed. And it’s easy to say, “but of course Apple
should provide the mechanism for opening the phone’s contents.” But Tim Cook, the CEO of Apple, does have a
point that this is precedent-setting and the way to deal with it should be
6 Weeks' Worth of Data Locked in the Phone
This San Bernardino event is a great test-case. iPhones are secure to the owner/user. They can be backed up to a storage area on a
“cloud”. Data that are transferred to
the cloud can be obtained by investigators, and indeed, the FBI has already
obtained those data from terrorist Syed Rizwan Farook’s account. However, the attack took place on December 2,
and Farook had not backed up the phone since October 19. So plenty of fresh and helpful information
was likely recorded on the phone during the last six weeks just before the
attack: who Farook’s associates and ISIS connections might be, whether other
projects similar to his are being planned, and so on. The phone itself is owned by San Bernardino
County, which employed Farook; those officials, the owners, think it’s fine for
the FBI to inspect the phone’s contents.
But Apple Worries about Construction of a "Backdoor"
Apple, through a public statement by its Chairman Tim Cook
and also in an official court filing, is objecting to unlocking the phone. The company argues that the work it would do
to enable decryption of the contents of an iPhone could be applied to any
iPhone, thereby potentially eroding the extraordinary security provisions on
all iPhones. As it stands, the data on
any given iPhone are associated with the owner’s “Unique ID”. The FBI is wanting Apple to devise a
workaround to get to the data without the ID.
This is known in the jargon as a “backdoor”. Apple is, quite logically, very concerned
about creating such a backdoor technology.
Conceivably, then, any iPhone a thief or other criminal got hold of
could be hacked.
We were watching a Fox News program late last week in which
a retired Army colonel was being interviewed on this issue. The colonel said something like, “this is a
national security issue and of course Apple needs to develop this decryption
software!” The news anchor conducting
the interview instantly blurted out, “but that’s why I have an iPhone –
precisely because it can’t
decrypted by anyone else.”
FBI Does See the Importance of the Phone's Security
FBI Director James Comey initially sounded impatient with Apple,
claiming that Apple’s defense, spontaneously described by the anchor in that
newscast, is based on marketing and reputation, not on the technology. Apple and many of its customers would not
agree; the security of the phone is a basic characteristic of the product. Given that there are in fact some 825 million iPhones around the world, their interests would seem a worthy consideration. And evidently, Mr. Comey himself
has come to a deeper understanding of what he was asking of Apple. Later, on February 25, he testified before
the House Intelligence Committee that this encryption issue is “the hardest
question I’ve seen in government.”
Addressing the Law Enforcement Need Now
There is legal precedent, of course, for telecommunications
companies to provide call data to law enforcement agencies. In 1994, Congress passed the Communications
Assistance for Law Enforcement Act which requires carriers to build
surveillance capability into their networks.
So AT&T and Verizon automatically provide whatever such “wiretap”
access is called for in court orders; in the last half of 2015, there were more
than a quarter million such requests from all kinds of law enforcement agencies
in both criminal and civil proceedings.
In the first half of last year, 998 requests came specifically for
national security purposes. Sprint also
has had many thousands of such data requests.
Apple in fact does address these requests too. It reports that it had 971 law enforcement
requests for “account data” stored on iCloud or iTunes accounts in the first
half of last year, and it responded to 81% of them. In addition, it had 499 requests based on
national security needs.
The difference is evidently that the information the
carriers provide is only phone numbers and text message connections. According to The Wall Street Journal
“can’t provide access to . . . message content or calls made over mobile apps
such as WhatsApp, Skype or the blue iMessages sent between two iPhones.
Formal Legislation Likely Needed
Regardless of the specific outcome of the San Bernardino
case itself, it is likely to add to already building momentum for formal
legislation on this situation; that is, there should be some general rules so
people who own phones can know what to expect, and representatives of the
people should make those rules. Indeed,
the Chairman of AT&T Randall Stephenson this week noted, “The rapid pace of
technological innovation is challenging laws crafted in a very different era
for totally different, and much less complex situations. Recent developments, in particular, bring
home the need for legal clarity.” And
the Chair of the Senate Intelligence Committee is working on a bill that would
create criminal penalties for companies that don’t comply with court orders to
decipher encrypted communications. It
remains to be seen what the specific language of such a law might require.
So, most immediately, the dilemma remains. More, in the San Bernardino situation, there
is considerable irony. We noted that the
county government owns the phone; Farook was only the user of that phone. That government is in possession of software called
“mobile device management” that would have enabled the county to make provision
for the FBI to open the phone. But Farook’s
department did not sign up for it to be installed on their inspectors’ phones. Another irony is that, even as the federal
government is fighting for the right to get Farook’s phone decrypted, the
federal government provides grants to tech developers to create more encryption
A clear summation of this Catch-22 was given last spring by
a former CEO of Sprint at a cybersecurity conference: “Which CEO is more
patriotic, the one who provides all the information the government requests to
help catch a criminal or prevent a terrorist attack? Or the CEO whose company creates tools that
make it difficult for law enforcement . . .
to acquire a customer’s information, believing that protecting civil
liberties is a higher calling?”
+ + + + + +
We don’t cite all the general
sources about this story, which are plentiful; most of our material is from
various articles in The Wall Street Journal, beginning right after the federal
court order to Apple was made public on February 16. We also sourced The Economist magazine and www.foxnews.com
, as well as Apple CEO Chairman Tim Cook's "A Message to Our Customers", a letter dated February 16 and found on Apple's homepage at www.apple.com.
The footnotes cover specific
aspects and quotes.
 Ryan Knutson. Op. cit.
Labels: American Society, Government Policies, Science and Evolution
A Lenten Task: Write Your Will
Many people give up something for Lent. Others might approach the season differently:
they take on some special task or duty during this time of penance and
meditation. What we present here takes
the latter tack; our idea is hardly original, but it’s still important and
bears repeating. We propose that, if you
do not have a Will and/or a Health Care Proxy, you take on the crucial lifetime
duty of composing these documents. That
surely contributes to a worthy observance of Lent
We’re currently involved as the proposed executor of an
estate and we’re learning a great deal almost every day about how the process
works in New York State. Our commentary
here is not meant to outline this but to highlight for you a few things that
have struck us as surprising. We also
include a few resources that may help.
In addition, some churches and other community groups offer classes in
this project, and we urge you to take advantage of these whenever they might
Resources for Writing a Will
Obviously, you can enlist a lawyer to help you write a
will. But for some simple wills, there
are other ways. Some time ago, Debbie
Loeb of the Farm’s Hodgepodge
page gave some relevant references. You can see them here: http://geraniumfarmhodgepodge.blogspot.com/2007_12_01_archive.html
. In particular, she mentions a book published
by Nolo; that book is now (2014 edition) titled Quick & Legal Will Book
($24.99). It includes links to downloadable forms for
making a will. Among Debbie’s other
sources, the forms on the BuildaWill.com
site cost $29.95, and the widely advertised LegalZoom.com
services appear to begin at $69. Clearly
there are other books and websites, including Wills and Trusts Kit for Dummies
Complete Idiot’s Guide to Wills and Estates
. While each of those is part of a popular
series, they were published in 2008 and 2009, respectively, and with law
changes, newer books might be better choices.
Look on Amazon.com
for their full
inventories. While we have a lawyer, we’re
also into the Quick & Legal Will Book
for ourselves; it – and others, we
presume – are careful to explain the conditions under which one should actually
consult a lawyer rather than using books or on-line forms.
Even if you already have a will, it perhaps is years old and
may well need to be updated. Indeed,
this last point, an old will, is where we started in our current estate venture,
with a 35-year-old instrument.
Fortunately, most of it still applies.
But it is the case that the decedent’s father is named as a substitute
or “successor” executor, and he passed away 20 years ago. In addition, the age of this will means that
in our local Surrogate’s Court, extra documentation is necessary for
authentication. Witnesses to the will may need to give sworn statements that they know the decedent; in one case, it is
the secretary to the lawyer who drew up the will who is furnishing some of this
back-up material the Court is requiring. This court filing process itself could thus be much easier
if the will had been kept up to date. A
word to the wise here.
Be sure to keep a
will in an accessible place that someone knows about
. While it might sound logical to put it in a
safe deposit box, it could then become tricky to get access to it. We did find out, though, that in New York
State, we could get a court order to open a box and inventory the contents; in
fact, our laws enable a survivor to do that to look right away for a will, a
life insurance policy and a cemetery deed.
And the court order we used was obtained within hours of our requesting
it, so if it is needed immediately on someone’s passing, that might be manageable. In a different example, a friend we knew some
years ago simply stashed some of these kinds of papers in a box on the floor of
her bedroom closet; the box was labeled “for Ruth”, her niece who would manage
affairs upon her passing. That worked
fine in the otherwise tense days right after that woman’s death.
Beneficiaries on Bank Accounts? In fact . . .
We lately also learned another fact about managing assets
and leaving them to people. Bank
accounts and some securities accounts, especially IRA’s, can have
beneficiaries. In this case, the assets
go immediately to the beneficiary upon the person’s death. They do not become part of the estate, so the
beneficiary gets use of them right away.
We had long known this about insurance policies, but it’s true for other
assets, and in fact in some cases, it is legally required to name a
beneficiary. This is a similar notion to
owning real estate “with rights of survivorship”, so the property immediately
becomes fully owned by the relevant joint owner. So visit your bank or securities account
manager and arrange for this. It greatly
simplifies the transfer process, and that may help a lot if your survivors need
funds before an estate can be settled.
Another document that’s vital is a Health Care Proxy/Living
Will. In New York State, these are now
combined into a single document. Perhaps
they are in your state as well. The need
for this is clear. If you can’t speak
for yourself, how do you let people know if and when it’s all right with you to
let you go? Here’s a Hodgepodge
commentary about this issue, actually written by a hospice chaplain: http://geraniumfarmhodgepodge.blogspot.com/2005_05_01_archive.html
. It’s especially hard to think about these
things, particularly in the prime of life. But doing so can help a lot. This document, too, needs to be in an
accessible place; our own lawyer advised giving copies to, obviously, the proxy
person themselves and to the alternate and also to our primary care
physician. Carry a copy in your purse –
maybe a man could have one on a flash drive he carries in a pocket? – and tack
a copy to your refrigerator door, a place where, we understand, emergency
personnel often look.
So, yes, all this is hard to think about. But you do everyone a favor and give yourself
peace of mind if you have an updated will.
And you help everyone around you by outlining your own preferences in
case there is a bad time in your life when discussions of life and death are
required, and when, by definition, everyone is terribly upset. Important Lenten observances, these are,
indeed. Good luck with them.
Labels: Health Care and Pensions, Personal Finance
Consumers' Sense of Inflation
Some weeks ago, at lunch with some friends, one of them was
complaining about the absence this year of a cost-of-living increase in Social
Security benefits. Indeed, that feels
irritating, and, more, for people who have their Medicare Part D premiums
deducted from their checks, their net benefit will actually go down a little.
The complainer at our lunch table further asserted that the
government “manages” the consumer price index so it can avoid the benefit
increase. Fortunately, the meal-time conversation then
shifted to more pleasant topics, but her comments registered with me as
something to talk about here. This is
especially the case because it seems people also have a sense that there’s more
inflation in general than the official numbers seem to show, making them
believe that the purchasing power of whatever their income, whether retirement
benefits or actual earnings from jobs, is being squeezed. Maybe it is . . . .
In the 12-months through November, the consumer price index
(CPI) was up a mere 0.5%. And in the
period ended in September, which determines the following January’s Social
Security “cost of living” increase, the CPI was flat: it did not increase. And as our accompanying graph shows, that had
been true in most months of 2015. Thus,
according to this measure, there was no inflation.
The CPI Comes from Thousands of Items and Thousands of
Stores and Service Providers
It's important to know that the government does not, in
fact, “manage” these consumer price index data.
They are collected in great detail, according to huge surveys that ask
about what people buy and where they buy it.
Then, every month, employees of
the Bureau of Labor Statistics (BLS) visit thousands of stores, service
businesses, apartment management offices, doctors offices and hospitals, among
other outlets, to collect price information on carefully specified items; these
items currently number some 80,000 every month.
The businesses they visit are selected from among those
specified in an occasional “Point of Purchase” survey also conducted by the BLS
from about 14,500 families. The items themselves
come from the “Consumer Expenditure Survey”, which collects information on what
people buy; if you happen to be a participant in these surveys or you know someone
who is, thank them for their help. Some
of them, 7,000 of them, have kept a diary of every single purchase they have
made over a two-week period, and another 7,000 have answered detailed questions
in a quarterly interview. Altogether, in
a recent two-year period, 28,000 diaries were consulted, along with 60,000
Finally, when the current prices are collected, they are
examined by BLS specialists who check to make sure the specifications for an
item have been followed as closely as possible so quality changes are not
factored in – for instance, the “car” is the same make and model with the same
features as the one last month. All
these BLS survey-takers and fact-checkers are civil servants, not political
If the CPI Is Flat, Why Might People Think There’s Inflation?
If you think, contrary to these carefully compiled
government data, that there is in fact “inflation”, you are hardly alone. A couple of private surveys agree: the
Conference Board’s monthly Consumer Confidence Survey shows that its 5,000
participants estimate that the CPI is running up at about a 5% rate and has
been for some time. A smaller poll of
1,200 nationwide taken for the New York Federal Reserve Bank indicates that
people think the CPI will go up 2.6% in the next year. Both of these exceed the growth in weekly
earnings also compiled by the BLS. From
December 2014 to December 2015, these wages for non-management workers were up
2.1%, less than either private survey inflation estimate. So workers’ pay as well as Social Security
benefits can seem inadequate to keep up.
We tried to figure out how this discrepancy might have developed;
how might people feel there is more inflation than there really is? We identified two factors.
One is that people’s inflationary expectations vary by age
and income. In the New York Fed’s
survey, participants over age 60 see a 3% advance in the CPI over the next
year, while those between 40 and 60 look for 2.4% and those under 40, 2%. Big difference. Income matters, too: people with incomes over $50,000 expect about
2.4%, while those whose incomes are under $50,000 believe inflation will be
2.9%. So if someone is better able to
absorb price increases, they are less worried about higher inflation. While there are just 2-1/2 years’ worth of
responses in this survey, this relationship has pretty much held throughout.
The other factor that stood out concerns energy prices. We all know that gasoline has been much cheaper
throughout the last year than it was through 2014. That and other energy items, such as
electricity, turn out to be the main force slowing the overall CPI. Excluding energy, the CPI was up 1.9% in
November from a year ago, compared with the mere 0.5% rise in the total
index. So clearly, there were a bunch of
items whose prices rose noticeably.
The most visible of these include rents and homeownership
costs, up 3.6% and 3.1% in November from November 2014. The demon health insurance rose 3.6%,
medicines were up 2.7% and dentists – which
many people pay out-of-pocket – 2.8%. Local public transit fares were up 2.5%, boys’
clothes 3.6%, infants and toddlers’ clothes 4.9%, certain fresh vegetables 4.1%
and restaurant meals 2.5%.
Clearly many other items either fell or rose much more
moderately, for instance, prices of women’s clothes fell 2.7% and shoes and
boots fell 0.5%. But the increases in such
basic items as rent, transit fares and medicines can give the subjective
impression of more general upward price pressures. And people can easily extrapolate this
impression into a forecast that more widespread inflation will return,
rendering their limited earnings even less adequate.
An Inflation Outlook for the Year Ahead
We checked out some economists’ forecasts of inflation for
2016. Their projections are not as high
as the consumer surveys, but they do look for some inflation. The National Association for Business
Economics survey published in early December shows the CPI up 2.0%. Another composite, the Survey of Professional
Forecasters, compiled by the Philadelphia Federal Reserve Bank, also has 2.0%,
while the Federal Reserve Board’s compilation of its officials’ forecasts shows
a slightly different inflation measure at 1.6%.
These numbers are close to the recent pace that excludes the drop in
energy prices. What this suggests is that if people’s
earnings are up 2.0% next year, they can “keep up” with inflation, and maybe
after a few more months, they will feel better about the adequacy of their
paychecks. But Social Security
beneficiaries – and government workers whose pay is also tied to the CPI – are
still stuck until early 2017. Just know
that the price index data are carefully and objectively collected and
combined. The government did not push
the numbers down deliberately to try to save itself money.
The Conference Board is a nonprofit organization that
studies and advises businesses in leadership issues, the economic and
regulatory environment and human capital topics. It conducts conferences and publishes articles
on these topics. Its consumer confidence
survey dates from 1967. https://www.conference-board.org/data/consumerconfidence.cfm
The Survey of Consumer Expectations from the New York
Federal Reserve Bank is new, just from June 2013. It is conducted by The Demand Institute, an
organization operated by The Conference Board and Nielsen. One of the New York Fed’s motivations,
besides compiling the basic information, is to provide additional background
information for monetary policy decision-making. https://www.newyorkfed.org/microeconomics/sceIndex/index.html