Sunday, December 20, 2020

Our 2020 Christmas Letter


Merry Christmas!

Alice and I celebrated our 31st Anniversary on August 5 at St. Orres Restaurant, as we've done for most of the years since we moved to Gualala in 1998. However, we dined outside on the deck and my mask strings are dangling from my vest pocket. Not quite Anniversary As Usual. 

Two months later (October 20) we were walking on flat, sandy Cook's Beach with Radar and Alice fell. She said she was sore but OK, so we continued our walk, then Alice drove home, went up the steps to our second floor, sat down, and commenced screaming. She couldn't stand up so I called 911 and the paramedics and firemen came quickly, packed her up in a "burrito wrap", and took her to Santa Rosa Memorial Hospital by ambulance. The next day Alice's left hip was replaced.

Seven weeks later, for the first time since her fall, Alice made the complete one-mile circuit nightly peepee-poopoo walk for Radar. Now we walk it every night.

Above and beyond that, it's been an exciting year. Did I just hear a "Duh"? Some good, some otherwise. Life.

We'll start by counting our blessings.

  • Friends and family either are virus-free or have recovered with no problems. 
  • We live in an almost virus-free area.
  • Our firemen and paramedics are great.
  • Radar plays ball with us on Cook's Beach daily and makes us take long walks.
  • Alice's memoir "The Lady With Balls" keeps her busy with new and interesting activities.
  • Alice held her book club meetings on our deck. 
  • And a whole lot more.
I understand the temptation to try to forget 2020 but we're still enjoying life every day. Alice and I do everything together but this past year we have been in each other's company more than ever, and we love it. We don't watch TV; it's too passive and we nicknamed TV watching "brain poison" many years ago. We both read a lot, exercise, and talk about the many things that interest us, especially in our two daily and one weekly newspapers. 

It's wonderful when your spouse is also your best friend.

The latest Time Magazine had a cover "2020 The Worst Year Ever" that I found appalling. In the  story itself, written by a film critic, she casually acknowledged that there have been many worse things such as World Wars and the 1918 Spanish Flu pandemic - which killed 50 million when the World population was only 1.5 billion - but that now we are suffering the most terrible thing, a feeling of helplessness. 

In some way the author is a fit analyst of our times. She trivializes past tragedies, and exalts the damage that helplessness plays upon our tender psyches. Easily overlooked are the facts that the World has never been a better place for its masses than it is right now. All the needs of humanity are being better satisfied than ever before. Prosperity, health, longevity, creature comforts, democracy, peace - certainly there is ample room for improvement in lives everywhere you look, but now has  to be compared to the past, not to a sought-after but not achievable standard of perfection. 

"Don't let the perfect be the enemy of the good!"

As I step down from my soap box in this best of all possible worlds...

We've also used the telephone more. What about Zoom? We're glad you asked. Alice hates Zoom because she is a perfectionist and feels that she has to achieve the perfect appearance - clothes, makeup, background features, lighting, noise. I think she does, but she's never satisfied and prefers the more casual communication possible over a telephone. Then she is totally relaxed and considers it a short call if she only chats for an hour. My calls now usually last half an hour, which is triple my former average time per call. 

Our travels since March have been twice to Fort Bragg for photos and videos for Alice's website and book promotions, and thrice to Santa Rosa for her hip replacement and follow up medical exams. Over a year ago we had decided to cut back on traveling while Alice concentrated on promoting her memoir. However, we did think that we would travel to interesting places for book presentations, but that couldn't happen. 

Here is Alice's "hero" shot (The shot featured on a website).

However, our time is still very busy and well spent. Alice is always researching and posting to her website, The Lady With Balls

And of course, I keep adding our annual Christmas Letters to my blog.

(please click the full screen icon at the lower right and turn up your volume) 

One of our favorite daily activities is playing ball with Radar on nearby Cook's Beach. Besides beach time, we also take Radar on other daily walks, including a night-time mile walk through our neighborhood. He's a great excuse for staying active. When our beloved dog Buddy died in 2013 we continued the same walks every day and then added Radar to our walks half a year later when we picked him from the Fort Bragg animal shelter.  

Radar discovers Cheetos!
Photo by Cheryl Sidrian-Waters

Lately there always seems to be a lot of people at Cook's Beach at sunset. I've nicknamed them "Sundowners" and this photo helps to explain why they are there.

Merry Christmas to all, and to all a good night!

Friday, October 23, 2020

A Simple Science Quiz

A science quiz. Science’s answer to each of the following questions concerning climate in the past 10,000 years is “yes.” 


Has Earth been significantly warmer?


Sea levels higher?


 Glaciers much smaller?


This is a link to many studies that show that during the past 10,000 years glaciers were predominantly smaller than they are now. 



Below is a US government chart of glacier retreat at Glacier Bay, Alaska, which shows that there was over 60 miles of glacier retreat from 1760 through 1900, and less than six miles of retreat since 1948.



 Was the Little Ice Age (1300-1800 AD) the coldest period?



 Has Earth had a cooling trend for 8,000 years?

See above.


 Were wildfires more frequent and burn far more acreage before 1900 than now?


Fire ecologists say that far more land burned each year during the 1800s and earlier, than in recent years. In the preindustrial era, from 1500 to 1800, an average of 145 million acres burned every year nationwide — about 10 times more than the nation’s recent annual burns. In the West, it was estimated that 18 to 25 million acres burned each year, as recently as the 1800s. 

Click this link to go the study.


Globally, more recently NASA satellite systems have been able to determine a decreasing trend in global burned area.



Source: Nasa Earth Observatory



 Were there megadroughts that lasted over 200 years in North America 1,000 years ago?


This Bjorn Lomborg article succinctly describes the California wildfire problem and why, even if California, even if all the United States were suddenly carbon neutral, the wildfire problem would just get worse. Logic and critical thinking demands that the forests be managed regardless of climate. Just 200 years ago a lot more of California (and the US) burned annually when average temperature was over a degree lower.


 Has the Greenland icecap grown?


These diagrams determined from ice core and satellite studies show it has.




Have temperature increases preceded CO2 increases?


Ice core analysis does reveal that increasing atmospheric carbon dioxide levels did lag behind increasing temperatures at the end recent ice ages. Although there is a certain degree of uncertainty regarding the lag time, it is generally accepted that at the end of an ice age, temperatures began to increase, and then carbon dioxide levels began to increase.”


Of note, during all the times this has happened there has never been a single case of unstoppable global warming. In fact, at each temperature and CO2 maximum, cooling began and the next 100,000-year glacial period was launched.



This chart below shows that for the past 600 million years, CO2 at times was over 15 times the current level and that cooling oceans absorbed CO2 as temperature fell. It also shows that for most of the past 100 million years, temperature was 10C (18F) higher than now, even as vast numbers of photosynthesizing organisms removed CO2 from the atmosphere. 




 Is food production setting record highs?



This article has links to studies showing global record harvests.


Do wind and solar combined only produce three percent of total energy consumption?


Was half of current warming before the rapid increase in CO2 after 1950?


The NOAA chart below shows no temperature trend. The temperature spikes are in El NiƱo years.



The chart below shows that 11 of 12 hottest years were before 1960.

This NOAA chart shows Santa Rosa average annual temperature, a cooling trend, for over 100 years. 


The answer to the following questions is “no.” 


During the Eemian interglacial period 125,000 years ago, when sea levels were up to 30 feet higher and global temperature eight degrees Fahrenheit warmer, was there runaway warming?


Obviously not, or we wouldn’t have had a 100,000-year glacial period following it. 


Is carbon dioxide the most significant greenhouse gas (hint: water vapor at 96-99% is)?


Both water vapor at 0.4% of the atmosphere and CO2 at 0.04% are trace gases. Temperature changes resulting from orbital variations periodically (every 100,000 years) cause temperature to increase with resulting increases in both water vapor and CO2 levels in the atmosphere. The pattern of the past million years show that the Sun – via its position relative to the Earth – drives climate change and that CO2 and water vapor changes are a result, not a cause, of the climate change.


Is a colder Earth more productive?


It wasn’t for the 100,000-year period glacial period that lasted from the end of the Eemian interglacial until the current interglacial began 11,700 years ago. At one point atmospheric CO2 was at 180ppm, barely above the level of plant starvation of 150ppm.


Are storms more frequent and powerful?


From 2006 through 2014 no Category 3 or stronger hurricane struck the continental United States, the longest such period since the Civil War.


The science behind each of these questions is robust and irrefutable. Climate change is natural and unstoppable. 

Tuesday, October 13, 2020

A Natural Climate Change Debate Challenge

Franz Kafka described individuals who were powerless to understand or control what was happening to them. I have the feeling that Kafka is writing today’s headlines about climate change. Authorities accuse sceptics of rejecting science while displaying their own profound science ignorance and proudly parade it before an equally ignorant public. Apocalyptic predictions are breathlessly proclaimed, then studiously ignored when they don’t come to pass.

A case in point is our reaction to recent wildfires. The prescription for solving the problem begins with stopping climate change by reducing California CO2 emissions. Overlooked is that if California totally eliminated CO2 emissions and returned to Horse & Buggy days, over five billion people in the developing world would still be rapidly accelerating their CO2 emissions as they pursue our prosperity. China and India would still be bringing an average of one new coal-burning power plant on line each week for years to come, and China would be assisting African nations to solve their energy poverty. 


Also overlooked are statistics showing that neighboring Canadian wildfires have decreased in number and acreage burned in the past three decades, with the most acreage burned in 1994 and 1995. Acreage burned in 2020 is only at eight percent of the average of the past ten years. 


Fire ecologists say that far more land burned each year during the 1800s and earlier, than in recent years. In the preindustrial era, from 1500 to 1800, an average of 145 million acres burned every year nationwide — about 10 times more than the nation’s recent annual burns. In the West, an estimated 18 to 25 million acres burned each year, as recently as the 1800s.


Our current natural climate change is totally unremarkable in the context of the eight major cycles of the past million years. Exhaustive studies of Earth’s orbital parameters (Milankovitch cycles) during that period determined that they were responsible for alternating 100,000-year glacial periods with short 15,000-year warm periods. It will shock many to learn that Earth’s climate changes have been dramatic; only a bit over 20,000 years ago, all of what is now Canada was covered with ice sheets over a mile thick; Earth’s surface is still rebounding in many places after the ice sheets melted and our current warm period began only 11,700 years ago.


The previous warm period, the Eemian, peaked about 125,000 years ago with temperatures 4 to 7 degrees Fahrenheit warmer and sea level 20 to 30 feet higher than present. This sustained warmth enabled the hippopotamus to range as far north as the rivers Rhine and Thames. The atmospheric level of CO2 reached 280 parts per million (ppm), then fell to 180 ppm (below 150 ppm, plant-life dies on a massive scale) as temperatures dropped and the next glacial period began 115,000 years ago. Both the increased and decreased levels of CO2 followed, not preceded, temperature changes, since cooling water absorbs CO2 and warming expels it.


There have been five warm periods in the past 10,000 years and the first, the Holocene Climatic Optimum (9,000 to 5,000 years ago), was the warmest. Fortunately for skeptics, evidence of its higher temperatures than present left features that are abundant and easily observed. The northern latitudes of Europe, Asia, Alaska, and Canada display tree stumps hundreds of kilometers north of where trees can now grow. Glaciologists have determined that glaciers are now larger than they were then. Studies of features such as coral mounds up to six feet above present sea level are irrefutable evidence of prior warmth because coral cannot grow above water. 


Unlike assurances by Al Gore and his “apocaholics,” current climate change is far from unprecedented. Besides the first and warmest period of the past 10,000 years, there have been four other warm periods including the present. After the Optimum came the Minoan, Roman, Medieval, and Modern, each of which was less warm than its predecessor. For roughly the past 8,000 years, Earth has experienced a cooling trend, and studies such as Greenland ice core samples show that the past 1,000 years are the coldest in 10,000 years. 


Current discussions of climate change lack scientific and historical perspectives. It is irrefutable that past greater warming did not result in runaway temperature increases, even millions of years ago when CO2 levels were ten to twenty times higher than now. Natural catastrophes such as droughts, powerful storms, and wildfires have all been intensively studied and found to have been much worse during earlier periods. 


In California, 1910 to 1940 was much drier than any 30-year period since. However, the past 100 years have been much wetter than the previous 7,000 years, which featured several 200-year mega-droughts. 


Every one of the items I’ve mentioned is easily accessible and clearly demonstrates that our present climate change is a part of natural cycles that have persisted for the past two million years. For over twenty years I have made a debate challenge that hasn’t been accepted: “Proposition: Climate change is natural and always has been.” I’ll take the affirmative. 


I welcome any and all who wish to debate the negative.



Friday, September 18, 2020

My review: Power Hungry: The Myths of "Green" Energy and the Real Fuels of the Future



U 50x66
's review 
 ·  edit

it was amazing

Power, the ability to perform work, not the ability to control others, is directly correlated to prosperity. At the moment and for the foreseeable future, prosperity will be powered by fossil fuels. Electricity is not going to effectively move airplanes, ships, and large vehicles, but electricity is vital for performance of all other productive functions. In that regard, the author illustrates the world-wide innumeracy that results in policies that depend on wind, solar, and biofuels (renewables) to replace fossil fuels and nuclear energy. When the rapidly increasing world need for power is examined in terms of the scope of the need, it is obvious that renewables cannot do the job; "There ain't no way to get there from here." Using wind generation as an example, an enormous area of land and sea is required to generate what is in essence a tiny amount of world energy requirements which requires huge quantities of steel, concrete, fibrous materials, and rare earth resources to erect ecological eyesores that have very short lives. In addition, since wind is erratic and intermittent, it requires fossil fuel backup generation and/or power storage, the methods of which are 1. currently nonexistent and 2. uneconomical if ever developed. I can only highlight the excellent analyses that Robert Bryce develops and communicates clearly and effectively. As applies to many of the books I've reviewed recently, this book should be read by everyone, but especially by those who thing a Green New Deal is possible. Many a foolish thought or decision is a result of the innumeracy that prevents understanding relevant information. 

Tuesday, July 28, 2020

"False Alarm" Should Be Required Reading

     I would not give five stars to a work that contains a fundamental error, but "False Alarm" is so pertinent that everyone on Earth should read this book. Whether climate change skeptic or alarmist, there is much that both sides will find valuable and useful, but before I indulge in fulsome praise Mr. Lomborg does have a fundamental flaw in his presentation: being ignorant of or overlooking thousands of prior periods of natural climate change that warmed Earth far more than even the most unlikely climate model forecast. If while reading "False Alarm" you mentally eliminate all of the scenarios of human actions to causes and combat climate change, the rest of his presentation becomes even stronger and timely. One word it sums up: adaptation. 

     Personally, I would like to take Mr. Lomborg and the rest of the world into the light of reason and science by debating; Proposition: climate change is natural and always has been. The obvious result is triumph for the affirmative and then Mr. Lomborg's positions on economic progress such as improved education, innovation, and health becomes foundations for the rapid and dramatic betterment of humankind. This would place Mr. Lombard in the company of the greatest humanitarian of all, who he mentions, Norman Borlaug. Leadership like theirs validates optimism for us all.

Saturday, July 18, 2020

Before Michael Shellenberger "Saw The Light"

Break Through: Why We Can't Leave Saving the Planet to EnvironmentalistsBreak Through: Why We Can't Leave Saving the Planet to Environmentalists by Ted Nordhaus
My rating: 4 of 5 stars

This is extremely well written and contains a lot of information about climate change that the author now completely repudiates in "Apocalypse Never." I was intrigued by his former position on wind turbines, particularly on the failed Cape Wind project, compared to his present understanding of the waste and futility of wind, solar, and biomass energy generation. Just to say "he saw the light" would be to understate the brilliance of his transformation. Still, this book is so well written and original, and his treatment of limit-constricted environmentalists so accurate, that it should be read after reading "Apocalypse Never" to give the reader an appreciation of the thought that has gone into both endeavors.

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Tuesday, July 07, 2020

Apocalypse Never - Everyone Should Read

Apocalypse Never: Why Environmental Alarmism Hurts Us AllApocalypse Never: Why Environmental Alarmism Hurts Us All by Michael Shellenberger
My rating: 5 of 5 stars

This book is must reading for everyone, but particularly environmentalists. Each concept - energy generation, plastic waste, adaptation, natural disasters, prosperity vs. preservation, and many others - are treated clearly and thoroughly, with copious footnotes. Of particular interest is Shellenberger's treatment of environmentalism as religion substitute, where each can feel that they by doing some small thing are performing heroic service to the world. He contrasts that with the needs of poor people to gain enjoyment and meaning from their lives, not be inhabitants of an elites' back to the-way-it-was vision of earthly paradise. He shows how agricultural modernization using machinery, fertilizers, and GMOs create food surpluses while freeing people to stop being low production farmers and to be city workers and dwellers. The economic clarity of his illustrations are among the most valuable contributions of this book to approaching and solving the environment of panic created and spread by environmental alarmists. Malthus, Ehrlich, McKibbins are all honored by the left and are all monumentally wrong. Shellenberger gives them the attention they deserve.

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Sunday, April 12, 2020

Our Income Taxes Are Not Progressive


The claim we have progressive income taxation has been accepted with no thought given to whether it is true.

It isn’t. Although the wealthy are paying a larger share of total income taxes than ever, they are also wealthier than ever, and Liberals are constantly whining about the growing wealth gap. Far from being progressive, income taxes discourage savings and the accumulation of wealth, and place obstacles in the path to closing the wealth gap. It’s easy to maintain wealth, hard to accumulate it.

To begin, what makes an income tax progressive? The probable answer is that the higher the income, the higher the tax rate. The intent of progressive taxation is to have the wealthy carry the tax load, because: “They should pay their fair share. They need to give back. They receive the greatest benefits. Yada, yada & Etc.”

Because of the “progressive” nature of our income tax system, the wealthy make a lot of tax lawyers and accountants wealthy too by paying them to devise ways to beat high taxes. Even government has leaped into the tax avoidance business, by promoting schemes like tax-free municipal bonds.

Since the top 5% in terms of adjusted gross income pay 60% of income taxes (the top 5% share of the total has increased steadily, up from 37% in 1980 when the top tax brackets were at 70%), and the bottom 50% pay only 3% of the total (less than half of the 7% they paid in 1980).

You can see by the trend, the wealthy need all the help they can buy to avoid fulfilling the Democrat’s dream of wealthy Republicans eventually paying all the income tax. As it is, almost half of our “taxpayers” no longer pay any taxes to the IRS.

Thanks to the Internet, you can also easily find entire nations that provide tax avoidance services, offering off-shore banking in British Virgin Islands, Belize, Dominica, Seychelles, Panama and Gibraltar, and in other less favored states.

As is usual, the unwealthy need not apply.

Can an income tax be regressive? Look no farther than FICA (Social Security) and Medicare payroll taxes for the answer, a resounding “Yes!” The FICA and Medicare rates are the same for all, and FICA is paid equally on the first dollar earned up to the 137,700th dollar, after which the marginal rate is zero. Therefore, the total FICA tax rate for someone earning $275,400 falls to 3.1 percent, exactly half the 6.2 percent rate for anyone earning $137,700 or less.

You do realize your "employer contribution" comes out of your wages too, don't you? It's a sneaky way politicians try to make you think you're only paying 6.2 percent into Social Security. If you were self-employed, you would know you pay 12.4 percent into Social Security, and 2.9 percent into Medicare.

The total FICA tax rate continues to fall once taxable wages pass $137,700  For example, for someone earning $413,100, the tax rate is only 2.07 percent. At $550,800, it falls to 1.55 percent, or approximately the 1.45 percent Medicare tax. Get the picture?

FICA is also regressive because it discourages savings and wealth accumulation. The 12.4 percent of income paid into Social Security earns at about a 2 percent rate, less than the rate of inflation. After a lifetime paying into FICA, mortality tables show that a black male born before 2000 will die just about the time he would collect his first check at about 66 years of age. He will probably be unmarried when he dies, so his Social Security benefits will cease with his last breath. The return on his working lifetime investment is worse than 0.00%, which would be the return if someone was paid what he put in. No, his return on investment is a negative 100 percent (-100%).

Opponents of privatized Social Security accounts don’t spend much time on this feature of the present system, or on the fact it went cash income negative in 2010 and goes bankrupt in 2035.

As added frosting on the wealthy’s tax avoidance cake, a person making a million dollars a year from investments only pays FICA at the 0.00% rate. If, following the example of Ross Perot, the million dollars was all income from tax-free municipal bonds, his federal income tax rate is also 0.00%. Therefore, the wealthy can legally pay FICA and income taxes at the same rate as the drug dealer, who pays none of either unless he is caught, arrested, and convicted, and then only if the government can then find where he stashed his loot (see British Virgin Islands, Belize, Dominica, Seychelles, Panama and Gibraltar), and then find someway to collect from it.

Lots of luck collecting, G-Men.

Not only FICA is regressive, but our “progressive” income tax system is too. It also discourages savings and wealth accumulation, by taking a portion of the income before it can be invested, and then taxing interest and profits which, during inflationary periods (i.e. most of the time), means the IRS is reducing your capital base.

Taxing both interest earned on investments and capital gains are particularly regressive and oppressive forms of taxation. In the first instance, interest usually doesn’t keep up with the rate of inflation, so taxing interest earned just adds to capital shrinkage.

On the other hand, capital investments usually increase with inflation, and often at a faster rate. However, that still means that most of the value of the asset is original cost plus inflation. If the value only goes up by the amount of inflation, and the asset is then sold, the investor has not made a profit, he has just gotten back the value of his original investment.

“Not so,” says the IRS. "You have made a profit, i.e. selling price – original cost = profit, and on that profit you will pay capital gains tax." In other words, your investment not only did not beat inflation, but after paying tax on the “capital gain,” you lost money. Such a deal! Courtesy of your IRS.

I am waiting for a Liberal to explain to me why a system of taxation that discourages savings and investment is considered “progressive.”

The most illogical and regressive part of income taxation is the double taxation of corporate profits. Corporations are taxed at a very high rate (basically 21%, formerly 35%, with possible add-ons) when profits are earned, and then those profits are taxed to individuals when distributed as dividends.

Liberals have justified this double taxation by once again clothing it in the mantel of “fairness,” declaring that corporations must pay their fair share. Either through deceit or ignorance, the Liberals don’t admit that corporations don’t actually pay any income, property, or any other form of taxes; we who buy their products pay their taxes.

That’s right, when you’re calling for corporations to take on more of the tax load, what you are really demanding is government to tax us more. To a corporation, corporate taxes are just another cost of business to be passed on to their customers along with the costs of labor, materials, and overhead.

When the government collects corporate taxes, it reduces the capital the corporation can use for investment. Therefore, instead of funding growth internally through increased retained earnings, the corporation has to replace the funds lost to corporate income taxes by borrowing.

I’ve heard many Liberals dispute this, but without demonstrating to me how corporations could pay their taxes unless they receive money from their customers when they sell them their products. Some have told me that corporations sell a lot to other corporations, and to government, as if that proved a human being was not the ultimate link in the tax paying chain.

For the accounting illiterate among you, I would like to explain that corporations who buy anything from anyone include those costs as material or overhead charges, and recover them through charges such as depreciation, amortization, professional services expenses (such as tax lawyers and accountants), & etc. The only time they “eat” the taxes instead of passing them on is when they are operating at a loss. However, at that point taxpayers subsidize their loss because tax law provides for corporations to carry losses back against prior period taxes paid, and then forward against subsequent year profits.

The bottom line is there is nothing progressive about “progressive” income taxation. It is an artifact created from class envy and taxpayer ignorance by legislators to fool taxpayers. While the taxpayers are gloating and celebrating how politicians have “socked it to” the wealthy and to the evil corporations, the politicians are gloating about how easy it is to fool ignorant and envious citizens and get their votes.

Meanwhile, instead of benefiting from the stronger and healthier economy that sensible taxation would promote, the taxpayer congratulates the politicians for distributing tax misery equitably.

Income taxation problems such as discouraging investment, wealth accumulation and savings, slowing economic growth, and placing American business at a competitive disadvantage in the world marketplace, would be solved by a national sales tax along the lines of the Fair Tax proposal.

Just as regressive income taxation has been called “progressive,” the progressive Fair Tax proposal has been labeled regressive.

Newspeak lives.

Please click on the label below to see all my articles on this topic.

Friday, April 10, 2020

Tax Day Lament

Day after day in years past I have struggled against waves of remorse to sit before my computer and painstakingly compose Alice and my income tax returns. My sole objective every year is to arrive at all ways this side of outlaw to reduce our tax “contribution”. However, I realize that our efforts to minimize our contribution might seem selfish to many: “Where’s your spirit of sharing?”

Oddly though, before I plumb the depths of guilty feelings too deeply, I rationalize that it’s only me and trusty TurboTax against a well-paid IRS army; in years past Democrats like John and Teresa Kerry, John Edwards, and Bill and Hillary Clinton, who were generous to a fault with public funds, were known to sic armies of tax lawyers and accountants onto the IRS to make sure that they too contributed as little as possible. Then, if still burdened by feelings of selfishness, I take solace knowing we donated more to charity in a year than Joe and Jill Biden did in a decade.

At this point waves of smug, self-satisfaction wash over me, until I realize that I live in a community where generosity takes many forms, and is a way of life. Whereas the taxes we pay leave our community to be frittered away, in our communities the Lions, Rotarians, Soroptimists, Gualala Arts volunteers, school boosters, restaurateurs, and donations by generous businesses and individuals do what the bureaucrats won’t and can’t: find our real needs and fill them.

For over twenty years it’s been my privilege to work with many other Lions and Rotarians to round up donations for our fundraiser raffles and auctions, so I am constantly made aware of the generosity of neighbors and business owners.

We render unto Cesar, but our hearts give voluntarily and happily to friends. 

Thursday, April 09, 2020

Social Security Privatization Made Easy

Privatization of Social Security is still a hot topic in the Combs house. I started drawing Social Security at my normal full entitlement age, in my case 65 years and 10 months (I was born in 1942). However, Alice waited  until she was 68 before starting.

Both of us knew that Social Security wouldn’t pay me much, even though I earned above or near the maximum for FICA contributions for almost all of a working life now approaching fifty years.

Over the years Alice and I have heard Democrats putting down Social Security privatization, saying that it wouldn’t pay as much and was too risky. As a test, I thought it would be a good idea to use real income and contribution amounts to get an accurate estimate of how a person would have fared if Social Security had always been privatized. Fortunately for my project, Alice had “Your Social Security Statement” in one of her voluminous files (she never throws anything away) and I copied her Social Security income by year onto an Excel spreadsheet, beginning with the $40 she earned in 1959.

The next part, calculating how much Alice contributed to Social Security each year, took a little research. Happily, such research in the Age of Google is the essence of simplicity, and I immediately found a Social Security page on that provided a table of Social Security tax rates:

Year Social Security Tax Rate
1950 3%
1960 6%
1970 8.4%
1980 10.2%1990 12.4%
2000 12.4%

By multiplying Alice’s Social Security earnings each year by the tax rate for that year I calculated how much Alice contributed each year. Since Alice earned more than the Social Security ceiling since 1977, I projected her income and contributions through the end of 2008 and found she had contributed a total of $220,254.56 from 1958 through 2008.

The next part was simple, but a bit tricky since it required me to select a table of values for stock market investments covering at least a half century. I selected a table of the Compound Annual Growth Rate (CAGR) of the S&P 500 for two reasons. The CAGR gives about a one percent lower rate of return than using simple averages, but avoids the valid criticism that a simple average method mechanically distorts the effects of year-to-year fluctuations. The other reason I chose it was that an index of the S&P 500 reflects a simple, inexpensive mutual fund investment option that has been available for a long time.

I used the date range calculator for each of the fifty years 1958 through 2007 (I valued 2008 FICA contributions at face value). It was laborious work, but now you don’t have to do it, because I’ve done it for you.
(For example, a dollar invested in the S&P 500 in 1958 is worth $32.57 today. Multiply your FICA contribution in 1958 by $32.57, and you would have its value now.)

Year Compound Annual Growth Rate
1958 $32.57
1959 $24.78
1960 $23.22
1961 $24.19
1962 $20.18
1963 $22.88
1964 $19.28
1965 $17.06
1966 $15.65
1967 $17.98
1968 $14.97
1969 $14.05
1970 $15.87
1971 $15.85
1972 $14.37
1973 $12.43
1974 $15.00
1975 $21.29
1976 $16.23
1977 $13.63
1978 $15.37
1979 $15.42
1980 $13.71
1981 $10.90
1982 $12.12
1983 $10.53
1984 $8.98
1985 $8.85
1986 $7.01
1987 $6.07
1988 $5.92
1989 $5.27
1990 $4.14
1991 $4.43
1992 $3.51
1993 $3.36
1994 $3.14
1995 $3.18
1996 $2.37
1997 $1.97
1998 $1.51
1999 $1.19
2000 $1.00
2001 $1.11
2002 $1.27
2003 $1.66
2004 $1.31
2005 $1.21
2006 $1.17
2007 $1.04
2008 $1.00

Now all you have to do is post this to your Excel spreadsheet, and multiply your contribution each year by the CAGR value for that year. When you’re finished, just sum the total and you will find how much your contributions would be worth through 2008 if they had been invested in an S&P 500 index fund. (This fund would be much larger if you assume that dividends are reinvested.)

Alice would have had a fund worth $765,722.90. If she drew on it now, at the rate of the $2,000 per month Social Security would pay if she started now, it would last her 32 years, or until she was 98 years old, even if she never re-invested a penny. That’s a good thing, since Alice, then at age 66, had a life expectancy of another 18 years to the age of 84. If she only made it to 84, by drawing out $2,000 a month she would still have about $333,000 left to pass on in her estate.

(Unfortunately, in our current government-run system, as soon as you die, your Social Security disappears unless you have the unlikely situation of a spouse who does not qualify in their own right, or unmarried minor children.)

Alice, being a very successful businesswoman, would of course re-invest her privatized Social Security funds, and would probably just leave it in an S&P 500 index fund.
The average rate of return for all holding periods beginning in 1926 (the year the S&P 500 was actually founded) is 11.0%. The average rate of return for all holding periods beginning in January 1945 is 11.6%, and since January 1980, the average rate of return for all full-year increment holding periods is 13.9%.

Let’s keep it simple and say that the market can only do 10.0% per year, so in each month of 2009 Alice leaves the principal alone and only takes out as income the average monthly increase of $6,380 ($76,560 per year), which is about 3.2 times larger than she would have been paid under Social Security.

Don’t forget, Alice can keep drawing on her funds at this rate for years and still have over $765,000 untouched to pass on tax-free one day to her heirs (assuming that politicians don’t get greedy, as they usually do, and levy an exorbitant Death Tax on these previously taxed funds).

So why don’t we have privatized Social Security? To answer this question, ask another question. Why aren’t there any funds in the Social Security Trust Fund?

There aren’t any funds in the Social Security Trust Fund because Democrat politicians realized that historical Social Security surpluses could be diverted to finance current spending through the simple device of replacing the Trust Fund surplus dollars with special Treasury Bonds (or government IOUs).

In essence the government said, “I’ll borrow from myself, spend the money, and when Social Security goes into deficit spending in 2010, I’ll increase payroll taxes plus borrow from the General Fund – excuse me, sell back the IOUs, causing the General Fund to borrow and increase taxes to make up the deficit - while pretending the whole time that Social Security is solvent until 2035. By then I’ll be long retired, and some other poor suckers will have to try to clean up the mess.”

Our government has always trusted that we are primarily too stupid, and secondarily too greedy, to privatize Social Security. Too stupid to realize Social Security is a horrible investment for workers, but a great cash cow for politicians to tap for funds to spend to buy our votes. Then we have to be too greedy to stop them from buying our votes and to phase in privatization to pass down a better system to our descendants.

As a final point, and one deserving of a post all its own, if we all had been paying into a privatized account, an S&P 500 index fund (the S&P 500 contains 70% of our stock market capitalization), instead of a government deep in debt, we would have an economy awash in capital. All of our contributions invested in our economy instead of frittered away by politicians would be powering economic growth, and high levels of research, development, and innovation.

As an incidental consequence, the high level of economic activity would also be generating high tax revenues, especially at reduced tax rates.

We would have universal health care through personal Medical Savings Accounts, not a bankrupt Medicare system and Medic-Aid that has been cut so much that doctors are refusing Medic-Aid patients.

We have seen the future, and it works, but only if we can take back control of it from the politicians.