Death Taxes, voodoo science, other matters Mail 683 20110717

Mail 683 Sunday, July 17, 2011

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MIleage — a derivative wolf in sheep’s clothing

As we argue about choices government will make in the management of energy and the generation of CO2, the question of US policy towards vehicle fuel mileage is instructive of the gap between social and hard science. We always focus on “improvements” in the mileage of the vehicle fleet as a way to measure our progress and to direct the R&D and capital investments that car buyers will eventually pay for.

But car mileage is itself a derivative measurement. And we have the same dangers here about derivatives that we have had over and over again with financial derivatives. Do policymakers understand that improving the SUV fleet’s mileage by 5 miles per gallon, or even 2, is FAR MORE IMPORTANT TO REDUCE ENERGY CONSUMPTION than improving the mileage of our small car fleet by 10 miles per gallon?

We are misled into thinking that every mile per gallon saved is the same. And that getting the highest mileage numbers to rise from one one ridiculous level to the next is better than small mileage gains at the lower levels.

When the exact opposite is true.

Driving 14,400 miles per year:

Current mileage Increased mileage Fuel Saved annually

Large SUV 15 20 240 gallons

Medium SUV 20 25 144

Subcompact 35 45 91

Hybrid Car 45 55 58

What is important about this is that we have many ways to resize and re-equip SUV’s to achieve 5 mpg gains — today, right now and in affordable ways. But achieving 10 mpg gains in our most fuel-efficient cars is going to be much tougher.

Yet we are considering passing laws to improve the fuel economy of our fleet based on linear changes in a derivative measure; one that delivers ever-diminishing underlying value as it increases.

John MacGregor

It is also an exceedingly unpopular move. The only way to make people buy these cars is to use government force; the market hasn’t been successful in selling them. Now of course if the future of the human race is at stake it’s one thing: but this pretty well affects only the United States, and doesn’t have that much impact here. It will have even less effect on China and India and the developing world. If eliminating CO2 is vital for the future, then it is probably imperative not to destroy the US economy, because the US is the most likely place to develop CO2 extraction technologies: probably biological. Big lakes of Green Slime. Bubble machines. Seeding the desert parts of the oceans. Something large and probably expensive. We can’t do that if we’re broke – which the greens may achieve. See Fallen Angels.

WHAT IS THE "CORRECT" AVERAGE TEMPERATURE? Don’t we need to know this first before we can determine what deviance is detrimental?

This is a question that used to have been answered. There is a period known as the "Climate Optimum" http://en.wikipedia.org/wiki/Holocene_climatic_optimum around 9,000 – 5,000 years ago. The temperature was up to 4 C warmer than now and the Sahara was fertile, supporting, if cave paintings in the central Sahara are to be believed, all sorts of animals including hippopotamus.

This answer is no longer acceptable but no other has been substituted.

Neil C

An interesting observation. When did the Holocene Optimum lose its favor?

Tax Burdens on Individuals

Some time back my son, who has degrees in accounting and finance and works in the field at FedEx, calculated his total tax burden – including the "company" share of FICA/Medicare. About 46% – and there is no individual tax in Tennessee on earned income. I feel confident that his family income at that time was well below the Obama-defined "rich" level of $250,000 per year.

I am widowed, and also well below the $250,000 level. Since I am over 65, I have Medicare. Because my income is "too high", my monthly withholding from Social Security for Part B Medicare is about twice the "official" price for this coverage – yet one more example of a federal income tax under another name.

As you have experienced, for two (or three?) years Social Security payments have not been increased to partially offset inflation; yet the tax base has been increased due to inflation. Moreover, federal workers have received cost of living adjustments. For Social Security recipients, this is a blatant example of inflation as a tax.

Charles Brumbelow

Death Taxes

Jerry,

While on the subject of taxes, I would like to cite an example of how the Estate Tax has negative effects on the Consumer and the Economy.

Once upon a time there were many Supermarket chains in Southern California and Competition was intense. Consumers benefitted from this competition and the many choices that they had. But this short message is not abount the evils of unrestricted mergers.

There once was an Independent Privately owned Supermarket chain in Southern California named Hughes Markets after its Founder Joe Hughes. There were about 40 Stores, less than half the size of the major competitors. This smaller size had advantages. It was possible to get higher quality meats and produce.

In 1997 Hughes Markets sold themselves to QFC a Pacific Northwest publically traded Supermarket chain. This sale was made for Estate Planning purposes only. With the Joe Hughes Estate holding publically traded stock there would be no litigation with the IRS over mythical evaluations of a privately held corporation and any Estate Tax Liabilities could be paid by selling QFC stock. (The agreement in the sale to QFC was for the Current Management of Hughes Markets to continue without interference from QFC.)

In 1997 Fred Meyer merged with Ralphs, another Southern California Chain.

In 1998 QFC merged with Fred Meyer.

Later in 1998 Fred Meyer merged with Kroger and the Hughes Market chain disappeared under red Ralphs signs.

This is but one example of how the Estate Tax Screws the Citizens of the USA. Both the Consumers of Southern California and the Former Owners and Employees of Hughes Markets are the poorer for it.

Parenthetically, most mergers and acquisitions above a certain size threshold should probably be banned. Let the larger businesses that are in trouble fall into Bankruptcy and then be purchased if a reorganization cannot be accomplished.

Bob Holmes

I have long been in opposition to large mergers. Competition is important. David McCord Wright held that anti-trust activity was necessary to prevent the great concentrations of wealth predicted by Marx. I have always believed that. Any enterprise that is too big to fail should be too big to be allowed to exist. Death taxes should be written with that in mind.

Random Thoughts

Your psychology degree. My daughter just graduated with a BA in Psychology from our state university. It took her a long time to decide and declare a major and that turned out to be the easiest path to graduation with what she’d already taken. She wanted to get a BS because she’d worked in a several neuroscience and behavior labs and was taking organic chemistry in preparation for medical school applications, but the "science" folks in the department required that she sit through "science and society" BS courses . So she asked about a BA. Their only additional requirement was a foreign language. It took some effort, but she finally convinced them that two years of classwork and then a practicum in Albania (courtesy, we believe, of funding from State or military or ..) should qualify. Bottom line? Yes, the stereotypic Bachelor in Psychology is blond and ignorant but you are proof that the otherwise worthless piece of paper is a visa to chances to prove one’s ability.

Mathematics. You describe calculus as "low cunning." As with algebra, a grasp of the basic rules allows one to do much practical work without any need to understand the theoretical underpinnings of the rules. Statistics, on the other hand, has rules founded on so many assumptions and approximations that trying to apply them without understanding their limitations can lead to absurd conclusions. Meanwhile our educational system goes to great effort to teach the mathematics of calculus (thus alienating many who could profitably use the more practical skills) while generally teaching statistics as a bunch of unproven formulae. The result is a large number of folks who think they know statistics and can’t do calculus. I’m not clear about the best solution..

Maybe you or your readers would find this interesting material for rumination.

Tim Herbst

I can think of very little I learned in undergraduate psychology that has been all that useful to me in later life. Some was necessary for graduate work in the psychology department and fortunately I was sent by Paul Horst to the mathematics department to learn the real thing, not the cookbook statistical math taught in the psychology department. That led me to operations research, albeit my first aerospace job was as an aviation psychologist. I can think of nothing taught in undergraduate sociology that is of much use in later life. There are many voodoo sciences adding greatly to the costs of modern universities.

Teacher firings!

Jerry,

Well Satan is surely playing ice hockey since Hell HAS to have frozen over! http://www.washingtonpost.com/local/education/206-low-performing-dc-teachers-fired/2011/07/15/gIQANEj5GI_story.html

Who would have thunk it could happen in DC? Mebbe in a year or so, after new student test results, this could be the wedge to actually begin making use of the wonderful teacher performance data that has been collected in LA!

Unrelated, I recently purchased a smart phone…one of the strongest incentives was to be able to listen to books from Audible.com. This is very addictive. But….a suggestion to your readers who have not yet tried audio books: LISTEN FIRST, then read. I have found that when I have first read a title, I have developed a voice/accent for each of the characters. Since that never matches the narrator’s voice, I find it a bit distracting when I listen to an audio book. So read, THEN listen!

Warm regards,

Larry Cunningham

The Los Angeles School District, second largest in the nation with tens of thousands of teachers, has in the last ten years fired seven for incompetence. The Gates Foundation has found that you can double the efficiency of most school districts by firing the worst 10% of teachers. We know how to bring back decent education, but that means putting the students’ needs ahead of teacher interests. That does not appear to be happening. The districts would rather keep all the incompetent teachers than fire 10% and double education efficiency. I don’t really foresee changes, but Godspeed to places that can do it.

How the Internet has changed what we remember

http://blogs.wsj.com/speakeasy/2011/07/15/google-on-the-brain-how-the-internet-has-changed-what-we-remember/

http://m.sciencemag.org/content/early/2011/07/13/science.1207745

Charles Brumbelow

That has been in our local papers as well. Sherlock Holmes had the theory that after a while memory became a zero sum game: in order to remember something you had to forget something else. He told Watson that he tried to forget extraneous facts as quickly as possible in order to leave room for learning the essential. One doubts that Holmes really believed that, but he said it, I believe in A Study in Scarlet.

The problem is that to understand the world one needs a basic set of facts. To understand history you need a framework to put new ideas in. I was fortunate to get mine from, first, Hillyer’s Child’s History of the World, later Van Loon’s Story of Mankind, all before third grade. Jacques Barzun has some discussion of the minimum framework needed to have a sense of history in his Teacher in America.

Regarding a gov’t off switch

Having a gov’t department dedicated to turning off parts of the gov’t appeals to my Libertarian side (ok, honestly, I don’t have another side) greatly. I am reminded of the theoretical Vulcan government of the original Star Trek that had an "Expunging" arm whose job was to remove laws. That would be the civilized way.

A slightly less-civilized way, but possibly more probable, would be Heinlein’s Bureau of Sabotage from Whipping Star and the Dosadi Experiment. I think you’d make a great Director for such a Bureau.

Brent Bowmaster

Libertarian, techno-geek and teacher

Actually, that was Frank Herbert’s Bureau of Sabotage. Thank you for the compliment.