Archive for October, 2009
Become an Organ Donor
Posted by: Todd Metheny in Healthy Living on October 29th, 2009
My father died when I was sixteen years old. It’s a topic I try to be careful about how I approach. As a kid, people would treat me a little different if they knew that about me, for whatever reason. Maybe because they felt sorry for me. I knew other kids that had experienced tragedy as well, and I honestly think how you carry it says something about you. Some people will constantly bring up their tragedy. Maybe they’re trying to use it for some kind of personal gain. Maybe they want people to feel sorry for them. Maybe they just need to talk about it. I’m really not trying to be judgmental. It did always sort of annoyed me when I felt like people were bringing things like that up out of place, so I try not to do that with my dad. In any case, that windy preface has little to do with what this post is about.
When people die, there’s a tendency to set them on a pedestal. It’s tempting to act like they were perfect people. When I look back honestly, I know my dad had his flaws. He was exceptional in ways, though, too. He was always known as being a generous person, with his time, effort and money. My dad stayed consistent with this perception that I had of him in his death. His final act of generosity was to people he’d never meet, who would never thank him or know exactly who helped them or why. My dad, like many people before him, was an organ donor.
That sounds like such a small, easy, almost trivial thing. And I’ll concede that it’s easy to become an organ donor. I’ll concede that it’s a small requirement for the donor (as far as we know, you’re not going to need those organs after you die). For the person on the receiving end of that donation, I assure you that there’s nothing trivial about being an organ donor.
I have a friend whose father is waiting on a kidney. You probably know someone, too. As of 2002, there were over 50,000 people in the United States on the waiting list for a kidney. So this post, inspired by my father and his, is a call to action. If it’s not against your personal religous beliefs, there’s really not a reason for you not to become an organ donor. It’s very easy to do. It’s also an opportunity to disprove, on some very small level, all those economists and social scientists that say there’s no such thing as altruism.
No one is going to pat you on the back for being an organ donor. No one is going to pay you anything (though I just read a chapter in SuperFreakonomics about how they allow you to sell your organs in India). On the other hand, it’s a chance to do something that helps other people. I don’t claim to know what the point of life is, but I wouldn’t be surprised if that had something to do with it. Thanks for reading.
10 Tips for a Healthy Life
Posted by: Rachel in Healthy Living on October 27th, 2009
I don't know if it works...but I LOVE APPLES!!!
This is my wife, Rachel’s first post. She’s got one in the back of her mind about what every kid should have in terms of shots, etc., too. I don’t know when we’ll see that one, but I sure appreciate her writing this one. It’s everything I always want my posts to be (but sometimes aren’t!): informative, interesting and pertinent (and well researched!). Hopefully you’ll find it helpful. She’d love it if you left a comment, too!
Hi, my name is Rachel. If you are a frequent reader of this blog, then I’m sure you have heard of me. (In case you don’t know, I’m Todd’s wonderful, smart, beautiful wife;) That’s what he told you, right? Anyway, I am really proud of Todd for keeping up with the blog and so I wanted to write an entry to give him a break for a night. As a physician, I thought that I would make a list of things that the average person could their doctor on their toes about. I know that there is a lot to keep up with in life and thinking about your health maintenance is not always at the top of the list (but it should be!). Here are ten tips to help you live a healthy life!
Okay so as an adult, do I still need to get shots? Yes! What and When?
1. Immunizations
a. Tetanus Vaccine: Every 10 years
b. Measles Vaccine: Booster for 1 dose if born after 1956
c. Rubella Vaccine: All fertile woman without proof of immunity, should receive the vaccination
d. Influenza Vaccine (Flu): Yearly, especially for older people!
More than 90 percent of influenza-related deaths occur among people ≥60 years of age, and these people experience significantly increased morbidity with this.
e. Pneumococcus (Pneumonia) Vaccine: One dose over age 65 years or if you have had your spleen removed.
The vaccination is also recommended for any age if you have one of the following diseases: Diabetes, heart disease, cancer, lung disease,or immunosuppression. You guys should receive one vaccine with a repeat immunization within five years.
Pneumonia is a significant cause of morbidity and mortality in the elderly…Get your shot!
f. Hepatitis B Screening and Immunization: Once in your life.
g. Herpes Zoster Vaccine: Once in healthy adults over 60.
Herpes zoster (shingles), is from reactivation of your past infection with chicken pox. It causes a painful localized rash and can affects about 30% of people over their lifetime, with an increase in risk (8 to 10 fold) in late life.
2. Cancer Screening
a. Colorectal Cancer: If you’re 50 or older you should be getting a colonoscopy every 10 years until age 75. Fun, Fun! But it is better than getting cancer! Flexible sigmoidoscope every five years with stool testing every three years or stool testing every year can be done instead.
The evidence supporting occult blood screening is associated with a 15 to 20 percent decrease in cancer specific mortality, however current recommendation favor colonoscopy.
b. Cervical Cancer: Pap/HPV from age 21-65 years or within three years of sexual activity. Those of you aged 11-26, should also recieve your HPVimmunization to prevent HPV and thus significantly reduce your risk of getting cervical cancer.
Most recommendations now indicate that screening may be discontinued for women who have had at least three normal Pap smears over the preceding 10 years and/or are older than 65 to 70 years. Screening may also be stopped among those who have had a hysterectomy for a benign indication.
c. Breast Cancer: We all recognize the pink ribbon, but do we all follow the preventative recommendations? Self breasts exams are still recommended starting at age 20. Mammogram and physician breast exams should be performed yearly after age 40. It really is worth it…screening mammography for breast cancer shows an approximate 30% reduction in breast cancer mortality among screened versus unscreened women.
d. Prostate Cancer Screening: Prostate Specific Antigen (PSA) and Direct rectal exams are recommended yearly after age 50 or after age 40 for African Americans.
3. Hypertension (High Blood Pressure)
Regardless of age, everyone should be screened every one to two years.
Hypertension is highly prevalent among older adults (60 to 80 percent) and remains the leading risk factor for ischemic heart disease and stroke! There are medications and diet regimens that can dramatically improve your outcomes. It’s so easy to fix!
4. Hyperlipidemia (High Cholesterol)
Starting at age 20, everyone should get their blood levels checked.
There is good evidence that lipid lowering drug therapy decreases the incidence of coronary heart disease in people with abnormal lipids and causes few major harms. Why not find out if you need treatment. Eating a low fat, low cholesterol diet and exercising routinely also never hurt anyone!
5. Osteoporosis/Osteopenia
Women aged 65 and older should be screened routinely for osteoporosis using bone densitometry. Women at increased risk for osteoporotic fractures (caucasian females, smokers, alcoholics, women with early menopause and those with low body weight), should get screened starting at age 60. Osteopenia is found in 37 percent of post-menopausal women, and osteoporosis is found in 7 percent of these women. If you are in the older age group and have had recent fractures you may need vitamin D and Calcium replacement or possible other medications. Talk to your doctor about testing and treatment.
6. Abdominal aortic aneurysm (AAA)
One-time ultrasonography screening for abdominal aortic aneurysm (AAA) is recommended by several organizations for men ages 65 to 75 who have ever smoked. These aneurysms can be very deadly and surgery can be performed to correct these and thus save your life.
7. Diabetes
Fasting glucose levels should be measured every three years starting at age 45. If you are diabetic and do not know it, you could be causing severe damage to your kidneys, eyes, and other organs.
Glaucoma screening yearly for those over the age of 40 is recommended. Glaucoma is increase pressure behind the eye and can lead to blindness. You know that you do not want to miss any sunsets, or beautiful people watching…do you?
9. Lung Cancer Prevention
One of the best things that you can do if you smoke is to…QUIT TODAY. Since 1965, more than 49 percent of all adults who have ever smoked have quit. If they can do it, can’t you? Tobacco smoking remains the number one cause of preventable death. Start preventing it!
- After quitting for one year, the excess risk of coronary heart disease caused by smoking is reduced by half. After 15 years of abstinence, the risk is similar to that for people who’ve never smoked.
- In 5 to 15 years, the risk of stroke for ex-smokers returns to the level of those who’ve never smoked.
- Male smokers who quit between ages 35 to 39 add an average of 5 years to their lives. Females who quit in this age group add 3 years. Men and women who quit at ages 65 to 69 increase their life expectancy by 1 year.
10. Oral Supplementation
Should you take vitamins to supplement your health? Well, the daily intake of vitamin D in older adults should be at least 800 IU (IU is the unit that Vitamin D is measured by, this is usually two tablets). Elemental calcium is also important and often needs to be supplemented. Every adult should take in about 1.2 grams of elemental calcium. No data supports the effect of multivitamins on morbidity or mortality. However, supplementation with multivitamins is associated with a reduced risk for several chronic illnesses. Why not at least chew a Flinstone’s today!
Many medical illnesses can be avoided or minimized by preventive medicine. The earlier you start taking care of yourself, the better you’ll feel when you get older. Make yourself focus on at least a couple of these things this year. If you can get yourself to quit smoking or start exercising, you’ll feel much better about yourself. I promise;) Let me know if you have any questions or thoughts. Thanks for reading! (That was for Todd)
There Have to Be Some Sticks, Too
Posted by: Todd Metheny in Uncategorized on October 22nd, 2009
“What you have to change in Wall Street is you have to make sure that in addition to carrots, there are sticks. And it can’t be a one‑way street where they are making ungodly amounts of money when things are good and then they move on to someplace else for a while when things are bad. You have to create a downside. I hope there are some practices put into place – and I’ll have a few thoughts on them myself – but Congress undoubtedly will have a few thoughts too. You have to put in something where there is downside to people who really mess up large institutions and we need some new help in that. Too many people have walked away from the troubles they have created for society, not just for their own institution, and they have walked away rich. They may not be as rich as they were before, but they have walked away better than they should have. There have to be incentives – not only to get rich, but to behave well.” – Warren Buffett (in the interview above)
If you’re able to watch the video, please disregard all the promotion for PYMNTS.com. I don’t know anything about the company and I’m not trying to endorse them, here. This is just the only context that I could find this video in. Also ignore the interviewer reading the questions off of an 8×11 piece of paper;)
I personally think the government should stay out of the executive compensation question as much as they’re able to. For them to be able to do that, though, the companies need to step in and examine the incentives they’re creating.
Stock options, for example, often create the wrong incentives. Because they expire at some predetermined date in the future, executives have an incentive to try to drive the stock to the highest possible price in the shortest amount of time. This incentive isn’t in line with the interests of the long term shareholder, which is to increase value – but with sustainability over time. Executive incentives are geared toward the short term.
Studies have shown that companies whose management has an ownership interest tends to be a better investment than companies in which ownership has little interest. Stock options are poor on this front as well, because stock options are rarely used as part of a buy and hold strategy. Instead, the stock options are almost always exercised and sold all at once. Executives take profits while shareholders remain fully invested in the fate of the company. It doesn’t seem right does it?
“Too many people have walked away from the troubles they have created for society, not just for their own institution, and they have walked away rich.”
A couple of quick examples (there are far too many to choose from): Ken Lewis, a key destroyer of shareholder value in this whole deal (see the Merrill Lynch deal), recently “retired,” and walked away with a retirement package of over $100 million.
Or how about the people at Long Term Capital Management, the people behind the hedge fund who almost crashed the entire market before this meltdown happened. They almost crashed the entire market (I highly recommend Roger Lowenstein’s book on the topic). Then they liquidated their fund, walked away, and promptly set up another one with many of the same principals and a fresh $250 million in funding (though rumor has it that the newer fund, JWM, is on the way down as well, though not as dramatically).
Re-aligning incentives needs to be a top priority of management in this country, especially on Wall Street. Shareholders need to assert their voices when there’s an opportunity. That’s a problem, too, though, because the largest shareholders tend to be institutions (such as pension funds and endowments), led by Wall Street alumni. They aren’t exactly the people most likely to stand up and call out their buddies for making too much money under the current system.
The small, individual shareholder remains at almost an insurmountable disadvantage in this regard. There’s very little incentive to try to make your voice heard as a shareholder, too, because there’s an easier way to show your disdain for management than a proxy fight – simply sell your stock and move on to your next project. It’s a quick way to wash your hands of a situation, but it’s not going to inspire a lot of change.
Sorry if I sound like a bit of a downer. The good news is that Buffett is still the smartest guy in the room, and, as usual, he’s optimistic about the future. I’ll try to be the same. He does make an odd comment about black and white TVs, but we’ll forgive him that in exchange for the benefit of all his folksy wisdom;) Thanks for reading.
3 Random Things You May Have Missed
Posted by: Todd Metheny in Frugal Living, Green Living, Managing Finances, Reviews on October 21st, 2009
In case you missed it...
I’ve been working on a pretty interesting appellate brief at work. It’s interesting, challenging, and mentally stimulating. It’s the kind of work we always say we want. It’s also hard. Seth Godin refers to the time when things get hard as “The Dip” (and wrote a book by the same name). It’s a phrase I’ve liked since I first heard it, and I find myself trying to push through things sometimes by telling myself, “you’re just in the dip right now, Todd, push through this.” So I’m pushing through it.
The three things I decided to pimp in this post are all things that should make your life easier, in some small regard, either by organizing data for you (see number 3), saving you a couple bucks (see number 2), or by making it easier for you to make sure your stuff is put to good use when you’re done with it (see number 1). I’m calling it the 3 things you may have missed, because if you’re the kind of person that reads a lot of blogs (and maybe even if you aren’t), you’ve probably either used or heard of these tools. Or maybe I’m just suffering from the curse of knowledge, and assuming, as people subject to the curse do, that anything I’ve heard about you’ve heard about. Obviously that’s not always the case. Without further ado:
1. Freecylce.org – I’m including Freecycle because I just think it’s a pretty cool idea. That’s why I wrote about Pimp this Bum. The concept is simple, people form local groups in their area. When you have something you don’t want anymore, you post the group and let them know what you have to offer. If you see something posted that you’re interested in, you can let them know that you’d like to have it. ”It’s the whole, one man’s trash…” philosophy. It’s green, too. They don’t want you to throw your old stuff away, because someone else might still be able to get some use out of it. Of course, you could give your stuff away (or sell it) on Craigslist or a like site as well, but Freecycle seems to be more of a community thing. If you’ve ever used it, I’d love to hear about your experience with it. My community here in St. Louis has over 6000 members. I’m thinking about checking it out. I’ll have a better read on how much value it adds after I do.
2. Restaurant.com – I’ve written about this little number before, and I tell people about it every chance I get. So does my wife. Between the two of us, I think Restaurant.com owes us for all the word of mouth promotion we’ve offered to help tip their site. If you’re not familiar with it, Restaurant.com typically offers you the opportunity to buy a $25 gift card for just $10. There’s a caveat and a bonus. The caveat is, you’ve got to spend $35 at the restaurant. Some other restrictions may apply. I’ve seen some that can only be used during the week. Some restaurants won’t allow you to use the certificates on alcohol. For the most part, though, you can use them as you please. The other thing to keep in mind is that these are usually newer restaurants or places trying to get noticed. Your favorite place probably won’t be on there (but hey, try something new). Those are the caveats.
The bonus is, if you sign up for email updates from Restaurant.com, you never have to pay $10 for the $25 gift card. Every week, you’ll get a coupon code by email that gives you at least 50% off. About once every two months, the discount code will give you 80% off (just $2 for a $25 gift card!). The week of 9/9/09 it was 90% off, but that’s the only time I’ve seen that after using Restaurant.com for about 2 years. For what it’s worth, this week’s discount is 70% and the password this week is “pumpkin.”
3. Mint.com – The other day I was talking to a mother of four, and she said something to me to the effect of, “I don’t know where all the money goes. We live frugally. We drive old cars. My kids wear second hand clothes. We don’t do anything extravagant. And yet the money is never where we need it to be.”
Keeping and maintaining a budget is hard to do. I admire people that can do it. Mint.com isn’t necessarily a budget substitute, but it sure can help. It can definitely help you answer the question – “where does the money go?” Mint tracks your purchases and spending, and categorizes it for you and attempts to develop a budget. It will also send you alerts when your bills are due, and has several other handy tools.
The annoying thing about Mint is that at first you spend a lot of time re-categorizing expenses that were they haven’t categorized properly. Mint does get smarter if you stick with it. It ends up being something that requires almost no effort on your part. The best thing about Mint is that it’s free. So if you don’t like it, nothing has been lost.
Hopefully one, some or all of these things offered value to some of you. Thanks for reading.
People Respond to Incentives
Posted by: Todd Metheny in Economics on October 19th, 2009
Are deductions for these guys a good idea?
The title of my post is one of my favorite economic maxims. People aren’t always rationale. People don’t always do a cost benefit analysis before making a particular decision. We don’t always make a decision that will optimize our benefit. As a general rule of thumb, though, I think it’s safe to say that people usually respond to incentives.
We’ve seen people respond to incentives created by the government lately, with the $8000 first time homebuyers credit and the Cash for Clunkers program. People are more likely to borrow money when interest rates are low. The Federal Reserve attempts to lower interest rates to give people (and businesses) this incentive. The tax code is littered with incentives, all created to encourage people to respond with some sort of behavior that legislators feel will be favorable for the economy or for the country in some non-economic way.
Companies create incentives for their employees to try to optimize productivity. All kinds of incentive based programs exist. Salespeople earn commissions. Executives have special compensation programs that are tied to their stock prices (people differ as to whether this is an effective incentive – it encourages risk taking for short term gain).
The question becomes who should decide what behavior we’re trying to encourage. Policy makers can be wrong, can’t they? I saw an interesting tax deduction on the table to be added in the near future the other day. It appears that U.S. Representative Thaddeus McCotter (R-MI) has introduced a bill that would create a tax break for pet owners.
Before I go any further, I’d like to openly proclaim that I love animals. And I’d like to go ahead and concede that owning a pet is extremely expensive. The question I have, that I’d like to raise with this particular piece of legislation is, what incentive are you trying to create? It appears to me that this piece of legislation would create and incentive to own a pet. What government purpose would this serve? Will this create more tax revenue in some way? What is the opportunity cost?
Josh, a new contributor to the site (his first post likely coming in early November), astutely pointed out to me that pet services create jobs. If more people owned pets, then they would buy more pet food, buy more chew toys and spend more money on veterinary services and services such as kenneling. He was saying this somewhat tongue in cheek – but he’s right. All of those things would be stimulated.
In a situation like this, I would think that it would be necessary to look at the opportunity costs. Will this create more tax revenue than you lose? Is there another place we could use this deduction that’s more productive? What about another $3500 for people that start manufacturing businesses? Or another $3500 dollars worth of deductions for people who put solar panels on their homes (something that would pay for itself in saved energy costs very quickly), or another $3500 for people who get engineering or hard science degrees? Those are just examples, but legislators need to be thinking about what kind of behavior we’re trying to encourage on a daily basis. If you’re in a position where you have the responsibility of shaping policy, you owe it to us to try to maximize your ability to do so. As nice as it would be to save money for having pets, I’m not sure I agree with this – though I love the novelty of it (that’s why I’m writing about it). What do you think about tax deductions for pets? What am I missing? Thanks for reading.
Remember When Greed Was Good? Me Neither.
Posted by: Todd Metheny in Uncategorized on October 16th, 2009
I love old video footage. I found this gem on YouTube. I was actually looking for footage of Ivan Boesky’s “greed speech.” If you’re not familiar with it, Boesky was speaking at Berkeley, and said, “I think greed is healthy. You can be greedy and still feel good about yourself.” This is reportedly the origin of Gordon Gekko’s “greed is good” speech in the movie Wall Street (#3 on our Best Business Movies list). Gekko was inspired by pieces of Boesky, Michael Milken and Carl Icahn.
If you don’t know the story above already, Michael Milken didn’t invent junk bonds, but he made them popular as a method of financing. His firm, Drexel Burnham Lambert, was pretty much the only firm dealing in junk bonds in the 1980s. The emergence of the leveraged buy-out made him and his firm incredibly important of this era of business.
If you don’t know what a leveraged buyout, it’s essentially using financing to make a tender offer for a company. That financing occurs with the use of junk bonds (very high risk, high yield bonds). People would come to Milken and get a letter saying Drexel would finance the acquisition they were interested in. The buyers would then take that letter to the Board of Directors of the company they were interested in buying. Such a purchase would typically eject the officers and directors from their cushy jobs at the top of the company. To avoid this, the board would often offer to pay the acquirer not to acquire them. This was cleverly called green mail. (If you don’t think it still happens, check out what Carl Icahn did recently with Yahoo).
Boesky was arrested for trading on insider information. He then cooperated with authorities to bring down Milken. Interestingly, the video above predicts that Milken and Co. could serve up to 755 years in prison. In reality, he spent less than two years in prison. According to Forbes, he’s worth over $2.5 billion. Just like in the fairy tales, I guess. Just thought I’d share the video. Thanks for reading.
5 Ways to Make Your Kids Wealthy
Posted by: Todd Metheny in Uncategorized on October 14th, 2009
The nice thing about real life is you can choose whether you pay rent.
My wife and I talk about what we’ll do when we have kids a lot. We talk about how much it will change our lives, and what we’re afraid of about having them. I think I’m most afraid of giving up my time, energy and money. I know how selfish this sounds, but I think I’m most afraid of totally changing my life. That being said, I do want kids. I’m not sure it’s ever the right time or the right way. I think it ends up being one of those things you can’t truly plan for, and I like to have a plan for everything (ask my wife about my all my plans if you know her;)).
When I do have kids, I’m going to try to give them the best possible shot at being successful. Here are some of my ideas:
(1) Start saving for their education the day they’re born. The current college savings tool of choice is a 529 account. There’s more than one type of 529 out there, but instead of telling you all about them in this post, I’ll link to the Wikipedia page. In any case, your contributions grow tax free, and if you start the day they’re born and make monthly contributions, you’ll save a bundle in the long run when you factor in the 18 years of growth in the long run. This way, you get the pleasure of paying for your child’s education, should they choose to pursue one. And what do they get? They get to potentially graduate college debt free, something increasingly rare for Gen Yers. Maybe reform will make things cheaper for future generations, but I wouldn’t count on it – I would count on your ability to make a monthly contribution to a 529. Make it automatic. Do it. When the legislature creates something different or better, I’ll tell you about it on this blog;)
(2) Offer them a retirement match. This one’s from my dad, with a little twist of my own. My dad understood Steven Levitt’s main principle of economics, “People respond to incentives.” (Kids don’t necessarily respond to the same incentives as adults, but my dad tried to teach me adult lessons, anyway) The deal my dad always offered me was this, anytime I chose to put money of any sort in my savings account, he would match. I think this is a great incentive to offer kids to save. It would be even better if that savings account was a Roth IRA invested in several key index funds. Kids have a great advantage when it comes to investing – they have incredibly long time horizons. If a 14 year old starts with $2k and invests $100 a year for 50 years (a total investment of just $7k), he or she will end up over $100k at the end of the road, assuming a very reasonable 7% annual interest rate. Tweak the return to 8% annually and the number balloons to over $150k. If you also factor in the 100% their making from your match, they’ll never again see these kinds of returns on invested capital in their lifetimes. You’re going to give your kids money for all kinds of useless stupid stuff, why not put some of it in a place where it can make a big difference?
(3) Set an example. Statistically, according to the work of the authors of The Millionaire Next Door, most of the people that are wealthy in terms of net worth live frugally. So show your kids how to live frugally by doing it yourself. Spend less than you earn. Explain what you’re doing to them, emphasize why, and take pride in it. Being frugal is something to be proud of. It’s not something to put your nose up about any more than buying a Rolex is, it’s simply a lifestyle choice. Teach them why you’re making it. Don’t pass up opportunities to teach them how money works.
(4) Give gifts that teach. She’s not always going to love dolls, and he’s not always going to love the latest video game. However, you could give them a book that teaches them something that they never forget. Or you could buy them a share of a company they have a reason to be interested in (Make Disney, DIS), and follow the company together. Use an example like that to teach them about things like income and dividends. Get them some fun stuff, too, but kids get a lot of fun gifts. By the way, I got a book about investing for my younger brother (who’s 12 years my junior) last year. I have no idea what effect it has had or will have. He did tell me he read it. I’m not sure whether that’s the case. That’s as far as he would go. I guess we’ll see how it turns out.
(5) Don’t give them everything they want. I was reading some comments on another blog (with a much bigger following than this one – but that doesn’t make it better) a while back, and one of the commenters mentioned that their parents made them write business plans when they wanted something. I assume they had to describe how they were going to use it, why they wanted it, how long it would last, how much it would cost, and how much a comparable item would cost. Set whatever parameters you like. I personally love that idea. Kids shouldn’t get everything they want. A business plan might be the sort of thing you could use to demonstrate to them exactly how they could make the money themselves. If they understand how difficult it would be to make the money, they might not want it as badly. In my experience, kids are a lot more reluctant to part with their money than they are yours.
Have any other ideas? Suggestions? I’d love to hear them by email or in the comments. Thanks for reading.
Google is Making More Things Free
Posted by: Todd Metheny in Frugal Living on October 13th, 2009
I have always been impressed with Google as a company. Their mottos, “don’t be evil,” and “information should be free” are two things that are easy to believe in. Google is doing their best to make as many types of information free as possible. They’re constantly working on improving the world we live in. Of course, they’re still a business, and they work to make profits. I honestly believe that they think about improvements first and profits second, though. They invest in ideas first, and figure out how to make money off of those ideas later.
That’s why they bought a company like YouTube. It didn’t make money for a long time, but they’re starting to monetize it with ads now. It still comprises an extremely small part of their revenue, but they keep investing money in it…I assume that’s because it’s something they think is cool, something that makes sense.
With that in mind, I’m not surprised at all that Google came up with a version of 411 that’s free. Instead of spending between $1 and $4 for something as simple as a phone number when you’re in a bind, Google is making it free. I’m sure this isn’t a development that phone companies are thrilled with, as it can only hurt their revenue, but it sure is nice for consumers like you and I. Thanks for reading.
Capitalism, A Love Story – Response
Posted by: Todd Metheny in Reviews on October 12th, 2009
I almost hate to post this, because I want to avoid making this blog political. Political issues are polarizing, and my site is about personal finance, investing and careers. It’s not about how you should think or vote. Economics, unfortunately, leaks over considerably into the political realm (though it’s ignored by politicians more than it should be). Anyway, I saw the movie and here are some of my thoughts. Take it for what it’s worth.
I saw Michael Moore’s new “documentary” this weekend. I put documentary in quotation marks because it’s not what I think of when I think documentary. It’s not even handed. It doesn’t purport to be or attempt to be. It’s the equivalent of an op-ed piece from a man whose views most people are already pretty familiar with.
I personally disagreed with most of the movie. After watching the film, I wasn’t convinced that Moore has even a basic understanding of economics. I think this is frustrating. Anyone considering making a movie about capitalism should, in my opinion, become well versed in Friedman, Keynes, Smith and Ricardo. Todd Buchholz’s book, New Ideas from Dead Economists would have been an excellent place to start.
I think documentary film making is a pretty interesting form of education. The opportunity to interview experts in the subject matter, on camera, gives the viewer a unique insight into the subject matter, pulled together by the film maker. Unfortunately, very few experts were utilized to make the movie.
To prove capitalism was evil, he asked 2 priests and a bishop. They told us that capitalism was, in fact, evil, and that Jesus would reject capitalism. To further prove that it was evil, he showed factory workers that had lost their jobs. He showed people that had been evicted from their homes. He showed a wide variety of pain and suffering. And it was sad. It really was. Moore just chose the wrong enemy.
It’s not the first time he’s chosen the wrong enemy. I agree with Moore that healthcare is possibly the biggest problem in this country. I agree with him about several things, I suppose. I actually enjoyed Bowling for Columbine, but I think he chose the wrong enemy there, too. He went to Target and asked for a refund on the bullets used in the shooting. He framed Target as being partially at fault for the shooting. It was another demonstration of how he feels about capitalism. There’s only one reason that Target sells bullets in its stores – people want to buy them. (See another basic tenet: supply and demand).
Moore went so far as to argue the merits of socialism. I have no doubt in my mind that Michael Moore honestly believes that this would be better. Once again, he fails to show even a rudimentary understanding of economic systems. He’s a passionate guy. He’s a bold filmmaker. I’m not convinced he’s a very educated guy.
In one portion of the film, he shows a factory. In the factory, he explains, every worker is an owner of the company. Not because of stock options – each worker owns an equal portion of the business. He seems to be making the same argument that Karl Marx did, long before him – that profits are made based on the exploitation of the worker. He fails to account for one of the most basic tenets of economics – taking on larger amounts of risk allows you the potential for a larger return (or loss). Business owners do this. Entrepreneurs do this. Michael Moore sees the situation as very black and white. Those that succeed under a capitalistic system, in Moore’s eyes, are evil. Those who do not excel are good. Unions are good. Others are bad. People who wear suits to work are bad people.
Moore also frames foreclosures as the fault of capitalism. Neither Moore or any of the people being foreclosed acknowledge that they didn’t pay their bills, or that they borrowed more than they could afford to repay. When people lost their jobs, Moore contends that the company owed them jobs. Clearly, that’s not how capitalism works.
Milton Friedman would say that economic freedom is a pre-requisite to political freedom. Moore doesn’t see it this way. He thinks that socialism is freedom. I disagree.
The movie wasn’t without it’s interesting parts. I enjoyed Moore’s conspiracy theories about Goldman Sachs and the roles in government of Goldman Sachs alumni. I think this was one of the best parts of the movie.
There were parts of the movie agreed with, as well. Not everything can be properly handled in the private sector. For one, we probably shouldn’t privatize juvenile incarceration. Doing so ignored another basic tenet of economics, people respond to incentives. Juvenile incarceration were sure to go up when someone stood to profit from it. This is the same tenet that Moore ignores when he argues the evils of capitalism and apologizes for socialism.
Overall, most of the people that see the movie will probably agree with it, because most of the people agree with Michael Moore. I don’t think anyone who studied economics will agree with it. Maybe I’m wrong. Moore has the courage to ask people tough questions. I admire that. I think I would have enjoyed the movie more if Moore had asked some questions of some people that didn’t agree with him. I think he’s become what Rush Limbaugh (or Glenn Beck) is to the right. For me, they’ve both become caricatures that I can’t take seriously. They’re two uneducated, extreme personalities that are good at gathering sheep to follow them. Whatever your politics are, think for yourself. If you end up seeing this movie, I’d love to hear what you think in the comments. If you both see this movie and studied economics, I’d really love to hear what you think. Thanks for reading.
Tradeking Promotion
Posted by: Todd Metheny in Value Investing on October 9th, 2009
Click on the banner at the bottom this post and you can get $50 free from Tradeking. In order to get the $50, you need to open an account, fund it with $2,500, and make one trade. After you make the first trade, you’ll get the $50 deposited in your account.
It only works when you click on one of these approved banners or links (you’ll see them around the blogging circuit). I have one in the sidebar that will remain there for the remainder of the promotion. The promotion runs through October 31st. If you have some extra cash, take advantage of the free $50.
I actually personally use Tradeking. It’s one of the cheapest discount brokers at $4.95 per trade, and it has pretty good tools and support. I can’t say whether it’s the best. For a rundown of all the cheapest discount brokers, check out this post. Thanks for reading.
