Living on Planet Money

OK, I admit it. I’ve become addicted to Planet Money on NPR, and it has started to teach me about economics.

I was thinking about this while reading the news over dinner. For example, could we make it so that what the government invested in were purely public goods? You know, like lighthouses. In particular, I’m thinking about using the government to invest in things that provide public services and public benefits: highways, transit, science, research. Things that bring long term benefits to the country but don’t make sense for private enterprise. Further, let’s get the government out of those areas where private enterprise is doing just fine. All those tax benefits for private companies: why is the government supporting them? If we’re going to give money to industries, let it be industries that will ultimately improve the economic growth of this country in the long term. In other words: let’s invest in education, science, and energy research. Look at the economic engine that DARPA’s investment in the Internet proved to be?

I was also thinking about health insurance. Planet Money has had some good pieces on this, pointing out that one of our biggest problems today is employer-funded health insurance. It came about in the 1940s when employers could not raise wages, so they competed by adding perks. But employer-funded health insurance makes us not realize the cost of our health services. They like to use the thought experiment of employer-provided food insurance. You could go to approved grocers and buy all the food you want for a $40 co-pay. Would you make good economic decisions? Would you buy the expensive imported beer or the Budweiser? But by now, this form of health insurance is so tied up in our benefits package, it is suicide to propose getting rid of it. Still, I was trying to think what the alternative might be? Giving larger salaries and letting employee’s pick their plans and pay 100% of the cost? Would people pick the insurance companies that got the best deals on costs and negotiated the rates the best?

Planet Money has gotten me thinking about the interconnectedness of our economic actions. It has also made me realize that most of our elected officials don’t understand economics. I mentioned this last night: if you’re having financial trouble at home, you don’t just cut expenses: you work to bring in more income, and you make sure that everyone in the family is equally sacrificing and giving their fair share. We’re not doing that. We’re like the family with the spare bedroom and the rich uncle loafing on the couch, who we feed and cloth but doesn’t contribute to the house. We need to make the rich uncle contribute if he’s going to live in the house, and we need to rent out Wyoming.

In past economic downturns, there have been two traditional solutions. A good war and war spending. That won’t work here: we can’t afford the deficit war spending. The only other solution has been a government funding stimulus — not in the forms of checks to families, which are never large enough, or tax cuts to families, which work to pennies in the scheme of things, but in the forms of government programs that create jobs. We can’t do deficit spending to create these, so we need to cut our spending that is not creating jobs (again, some of those subsidies to profitable companies come to mind, as well as programs we can privatize), and start spending on research and education that enables people to work, and to work innovating the next idea that will make this country great.

If you haven’t figured it out by now, I strongly recommend people listen to the Planet Money Podcast.


Paying It Forward

Somedays, a theme just emerges from the news chum. Today’s theme is how we are all paying for the state and federal gridlock over debt and how to deal with it:

  • Getting It One Way or Another. Last Saturday, the provision of the law that required excise taxes on airline tickets expired. So what does this mean? Technically, it means that airlines shouldn’t be collecting that tax for tickets starting last Saturday; if you bought your ticket earlier, you should be refunded the collected tax. What really happened? Most airlines have raised their fares to keep the same price, pocketing the tax as profit. As for that tax they collected? They are keeping it as profit and insisting that the IRS refund the money, even though the IRS has asked them to refund it (as an aside: Erin is flying to Portland on Monday for college visits—do you think Southwest will refund the tax… I’ve asked, but so far no response).

    By the way, 4.3c of the gasoline tax expires on September 30 (and we already don’t collect enough funds to keep the Highway Fund solvent). If it actually happens (which it could, given the way congress has been of late regarding income), do you think we’ll actually see gas prices go down?

  • Picking Student Pockets. We’ve all seen the continual increase in tuition at state colleges, especially here in California. But they aren’t just increasing tuition. Some colleges are constantly increasing fees to cover declining state support. Fee increases are worse, becaue financial aid often doesn’t cover fees. Perhaps private universities are the right idea.
  • Paying for the Privilege. In Illinois, tolls are going up… so that the state can pay for more highway projects. This actually isn’t a surprise. As people drive less and cars become more fuel efficient, the amount collected for highway funding in gas taxes decreases… yet the roads get older and the cars do the same amount of wear and tear on the roads… and repairs get more expensive. Somethings gonna have to give….
  • Red Light District. In what is big news here in LA, the city has admitted that the tickets you get from red-light cameras do not have to be paid. In fact, that’s one reason they are stopping the program. So what if the ticket put the fear of God into you and you paid it? Thanks for the contribution. Unsaid in these reports is the ticket status of the LA Metro Red Light cameras on the Orange and Blue lines. My wife got an Orange Line ticket…. that puppy with traffic school was over $600!
  • Getting Out of the Business. One way to not have to pay to it is to move the service to a private operator. That’s just what LA City is talking about doing with the LA Zoo. One operator would be GLAZA (the current non-profit that sells food at the zoo). They would likely be OK. The other is a theme park operator. The city would retain ownership of the animals and the land. I’m not sure this is a great idea.

P.S.: I’m sure many have noticed that Livejournal is having trouble this week. The Distributed Denial of Service Attack behind the problems even made Time magazine. The Moscow Times reports that the scale of the attack costs about $15,000 to organize. The DDOS attack targeted the company’s Internet service providers in the United States, Qwest and Verizon, taking them down for about five hours on Monday, with even stronger attacks on Wednesday. One article gave more specifics: “Even reserve console was out of order, that would help us understand what is going wrong with the network equipment, therefore the only source of information for us and other clients were providers. Later on DDoS Mitigation Protocol was set and launched, by results of which we saw that incoming traffic amounted to 6 Gb with 8 Gb peaks, which is, obviously, the upper limit for Qwest and Verizon.”. LiveJournal, which was big in the US in the mid-2000s, is still the largest blogging/social media site in Russia, and has been under attack because it provides a needed outlet for free speech for that community. The US operations appear to be collateral damage.


Humpday News Chum: Making Money, Spending Money, Rocketdyne, South California, and Soda Jerks!

Today was the first day in a while where I had some lunch time to look over the news, and thus I present a slightly larger-than-usual humpday late lunch news chum:


Figuring Out a Credit Card Compromise

Over the past three weeks, we’ve had three credit card compromised… all luckily detected quickly by the fraud department at the respective companies. The first was an Amex about 3 weeks ago, which was detected when it was used at a transit ticket machine in New Jersey, at the same time the card was used in Los Angeles. The second was a Visa; it was detected last week when it was used at a gas station—as a physical card, mind you—in Italy. The third on a different Visa occured Wednesday, when the card was used multiple times at a Victoria Secret and a JC Pennys in Westminster and a Target in Upland… while the card was in my possession in El Segundo.

We’ve done all the correct things: those cards have been cancelled and replacements ordered, and an annual credit report pulled (it was clean). But I’m worried about how the numbers got compromised in the first place. Operating on the theory that once is chance, twice is coincidence, but three times is enemy action, I rounded up the suspects.

The first was that a keylogger somehow got on my new laptop. There are numerous ways that could have happened: Best Buy could have installed it before purchase, or when it went to Geek Squad for service. Other installations might have prompted me, or might have piggy-backed on an infected installation. But there are two things working against that theory. The first is that the compromised Amex card is not normally used online—and may not have been even entered on the laptop (its only entry was when it was validated). The second is that the computer is scanning clean by multiple applications: Avira Free has found nothing; Windows Defender has done both deep and quick scans, and only found a low-risk adware (win32/OpenCandy); and Malwarebytes has consistently scanned clean. I added Spybot Search and Destroy to the mix last night, and it only found tracking cookies. (I would have tried Lavasoft Ad-aware as well, but although it installed, it hung on retrieving updates). Given all the clean scans, I think the odds of a keylogger is low; if there is one, it is a very stealthy one. I’m still open to additional scanner suggestions, though.

(Note: Before you ask: Yes, we do have wireless, but it is set up with WPA2 encryption, and I tend to check certificates of sites before entering credit card numbers. Hey, I don’t look as stupid as I am. No, that’s not right.)

The second notion was that some database had been stolen; after all, it pretty clearly looks like someone has been selling these card numbers. But looking at the transactions on these cards in the last four months, the only common usage is Trader Joes and Whole Foods, and those tend not to store numbers. There is also Borders use of all three, although one usage is a bit older. Still, Borders is in bankruptcy.

The third possibility would be physical theft of the numbers by someone in our house, but we just don’t have that many visitors, so that’s very low possibility.

So I’m left thinking this is coincidence, or perhaps a chance and a coincidence. Once the numbers get changed and the cards reissued, the problem should go away. If it reappears with the new cards, I’ll have to keep exploring the keylogger theory. I’m open to any other ideas, though…


Hump Day News Chum

I’ve been busy the last few days, and so haven’t had the opportunity to do my normal lunchtime news chum. That doesn’t mean I haven’t been collecting stuff, so here’s something to chew on…


Be Careful What You Wish For

An article in today’s NY Times expresses a fear that has been bothering me for a while: That if Fannie Mae and Freddie MAC go away, so may the 30-year fixed rate mortgage. I’ve been worried about it since I heard a Planet Money podcast on how a 30 year fixed rate mortgage is a Frankenstein Mortgage that no private banker in their right mind would want in their portfolio, for there is too much risk over 30 years. They want variable rate mortgage, which are much less risky, and much shorter terms. The same conclusions are in the NY Times article:

The 30-year fixed-rate mortgage loan, the steady favorite of American borrowers since the 1950s, could become a luxury product, housing experts on both sides of the political aisle say.

Interest rates would rise for most borrowers, but urban and rural residents could see sharper increases than the coveted customers in the suburbs.

Lenders could charge fees for popular features now taken for granted, like the ability to “lock in” an interest rate weeks or months before taking out a loan.

The net effect of this would likely be to make homeownership much harder to achieve for those not already in the market. In other words, those that have are screwing the have-not again. This seems to be a general attitude I’ve been seeing in America of late (which I don’t like): I’ve got mine, screw you. We want to attack someone else’s pension, someone else’s bargaining rights, someone else’s ability to get married, someone else’s ability to do things with their body. But when it comes to our precious entitlements, no, no, don’t touch them. We’ll play with someone else’s pension, but not my social security. We’ll play with someone else’s health care, but don’t touch my medicare.

I’m really worried I’ll end up in a society with everything that everyone else has wished for.