The Estate Tax

At present, the federal estate tax maxes out at 40% of the amount of an estate over 10 million dollars.  Almost no one pays it, because of the large exemption.

The best argument I’ve heard against the estate tax is that if the bulk of the estate is something that is not liquid, like a farm or a business, there may be no way to raise the money to pay the tax without selling the family farm or the family business.

For those with more liquid assets like stocks and bonds and a dozen houses, well the estate tax isn’t that big a deal.  Heres why.

Estates change hands about every 25 years, which arguably is the length of a generation.

The long term average appreciation in the stock market is around 7%.  In 25 years, a stock market investment might grow by 5x.  If you start with 20 million, in 25 years you will have about 100 million.

With the estate tax, your notional 20 million drops to only 16 millions, because 10 million is exempted and you pay 40% of the rest.

After 25 years, that 16 million would only increase to 86 million.

In this case, the estate tax cost the equivalent of about 4 years of growth.

Even if the exemption were zero, the estate tax would represent about 8 years of growth every 25 years.  The fortune just keeps growing.

Of course this analysis is true only if you just leave the money in the market.  Historically, fortunes last about three generations before being diluted and generally squandered.  However, once you get into serious money, it is kind of hard to spend enough to keep the rest from growing to infinity.

If the policy objective of the estate tax is to prevent self sustaining multigenerational fortunes, it doesn’t accomplish its purpose.  However it does kill those family farms and family businesses.  What might be done?

Idea 1: Make the estate tax payable over a generation, rather than as a lump sum.  In effect, this is a wealth tax, rather than an estate tax.  If my figuring is right, the 40% estate tax applied every 25 years is very close to a 1.3% wealth tax applied annually.  This has the same effect on cash estates, but might be managable for those family farms and businesses. Like the estate tax, this would apply only to wealth over 10 million.

Idea 2: Bump the tax rate on income for the 1% to raise the same amount of money.  Evidently, the estate tax raises about 20 billion per year. In 2014, an income of 465,000 put you in the 1% and the average income of the 1 percenters was 1.2 million, and there were about a million 1% households – that is 1.2 trillion in income, and the income tax surcharge to replace the estate tax would be . . . 1.6%

These two ideas are not that far apart.  On the whole a 1.6% income tax surcharge is easier, because  income is reported, and wealth is (a) not reported and (b) often consists of unrealized gains.

All this leaves unresolved the question about the policy goal.  Is the estate tax or a possible replacement just a way to pay for government? Or is it really intended to reduce income or wealth inequality?  If the latter, we need a much larger discussion about how to accomplish the goal, because the estate tax doesn’t do it.  Repealing the estate tax will surely make inequality worse, but keeping it only slows down increases in inequality, and not by that much.

 

Credit Freezes

It is possible to place a “credit freeze” on one’s account at the credit reporting companies.  The major ones are TransUnion, Equifax, and Experian.

A freeze prevents other companies from doing credit checks on you, which generally prevents them from opening accounts in your name.  This is important because the way that identity thieves monetize their theft is to open credit and bank accounts in your name, that you don’t even know about.

At present, credit freezes are governed by individual state laws, that range all over the map.  In Massachusetts, a victim of identity theft with a police report can get a credit freeze for free, but everyone else must pay $5 to each agency to place a freeze and another $5 to lift it, even temporarily, to apply for credit.

In view of the recent Equifax breach which revealed the private information of millions of Americans, it it clear that the credit reporting industry itself cannot be trusted to keep personal information secure.

I propose that credit freezes and credit monitoring be made free for everyone.  I would go further and suggest that a credit freeze should be the default state, but I suspect that would just destroy the whole industry (is that a bad thing?)

Since companies cannot keep private information secure, the alternative seems to be to devalue the information.  Credit freezes help do that.

This will require state by state or federal legislation.  I have just contacted my state representative and senator here in Massachusetts, as well as my representative in congress and both senators, requesting that they sponsor and support such legislation.

I recommend that you do the same.

Here’s what I sent Representative Clark:

I am Lawrence Stewart, of XXX.

In view of the recent Equifax breach which revealed the private information of millions of Americans, including 3 million Massachusetts residents, it is clear that the credit reporting industry cannot be trusted to keep personal information secure.

At present, the best defense against identity theft is a credit freeze, which prevents companies from doing credit checks without your permission.  This stops identity thieves from opening accounts in your name.

Credit freezes are governed by a conflicting mess of state laws.  Generally someone who has been a victim of identity theft can request a freeze for free, but the rest of us have to pay for the privilege of protecting our credit to the very companies that caused the problem through their negligence.

I urge you to introduce or support legislation to make credit freezes free for everyone. It is the best way to hold industry accountable for their actions and the best way to protect the citizens from identity theft.

Etiquette question

Our town library has a heavy wooden door that opens outward.  When I come up to it from the outside, I pull it open and hold it for anyone about to exit.

My confusion is about what to do when I approach the door from the inside.  Today I could see an older lady approaching from the outside, and my inclination is to open the door for her, but how?  I would either have to try to awkwardly hold the door open from the inside so the lady could pass or awkwardly go out first so I could hold the door from the outside.

Both approaches are, well, awkward.  If I try to hold the door from the inside, I’ll be in the doorway, pretty much blocking it.  If I go through first I force the lady to back up.

I think the best approach may be to pretend I am heading downstairs to the childrens’ room and not trying to leave at all.

 

Email customer service

May I rant?

Many organizations offer email customer service.  The problem is that the service is generally crap. Here’s why.

Slow response.  Most places respond immediately to an email, with “we received it, but we’ll deal with it later.”  For example, Express-scripts says

All inquiries are handled on a first-come,first-served basis and most are responded to within 24 – 72hours.

Useless answers.  Yesterday I tried to use the secure email at UBS.COM.  The service has no way to originate a message and no apparent way to reply to a document.  (I had to print and sign something and send it back.)  The eventual reply was Windows specific and told me to use the new online signing feature of Acrobat, which I don’t have.

The useless answer problem is really a symptom of email being open loop.  With a telephone call or online chat you can have an exchange to zero in on the actual problem and any constraints.  With email this usually doesn’t work.

When offered, I try to use online chat these days.  You don’t have to actively listen to badly designed telephone hold systems, the exchange is interactive, and best of all, you can get a written record of what happened, when any promises are made.

Notifications – unclear on the concept

Tthis is a post about organizations trying communicating with their customers but getting it wrong.

I have signed up for various notifications, typically by text or email.  Tragically, sometimes organizations manage to use these in a way that makes me think they are idiots.

  • I just received a text from my local library that a book I’ve had on hold forever has come in.  The problem is that I picked it up last night.
  • I got an email from my Honda dealer that my minivan is due for service – two days after the service was done, by them.
  • I get both emails and texts from Target that my store credit card payment due date is coming up — even though my balance is zero.

To me these seem like violations of a  simple and obvious design principle:  don’t send a notification that is moot.  All it does it point out to your customer that your systems are broken.  And that means that your organization is clueless and really should not  be trusted with my business.

Delay is also important.  I have my Bank of America profile set so that I get texts notifying me of ATM withdrawls.  I should get them when I do a withdrawl, but never at other times.  Often, these arrive within minutes, but sometimes, they take 6 hours or so to arrive.  The immediate feedback ratchets up my confidence that I would find out immediately if fraudulent activity were to occur.  The delayed feedback?  They are having the opposite effect.  I obviously cannot trust BofA systems to notify me of activity in a timely way.  Should I trust them for anything else?

 

Baking Bread

 

 

Cathy has been experimenting with gluten free bread recipes.  She has all manner of different flours and ingredients now: rice, potato, tapioca, corn, amaranth, sorghum, xanthan gum, etc.

Yesterday the power went off here in Wayland, probably because a tree branch fell on the lines due to the heavy, wet snow.  We got about 8 inches of the stuff, and I broke the drive belt on the snowblower again.

Anyway, the power goes off, and Cathy says “The bread has finished rising. We need to bake it now.”  Well, the oven is not on one of the transfer switch circuits, so we can’t run it off the generator.

Not a problem!  We recently got a new oven at the Boston Building Resource Center, and we saved the old one, because, well, you never know.  I already took the front trim glass off the old one to replace the glass of the new one, which shattered one day.  (The Gaggenau EB984 is an awesome oven, but they don’t make them any more, and parts are getting expensive.)

I wired the old oven onto the generator output and we baked the bread with the oven on the floor of the mudroom.  Yes I know the generator should be more outside than shown below.  I had to move the car first, which I did a few minutes after this photo.

Win says “That’s sort of crazy, you know.”

I will get an extra L14-30 plug so this will be easier next time.
IMG_0616 (2)

IMG_0617 (2)

Old photo comes in handy

 

I took this photo on June 12, 1999 when the house was being built.  This was an HP C40 digital camera, with an awesome 576 × 436 0.3 Megapixels.  It seemed high-tech at the time. Today the insulation people showed up, as followup to an energy survey, to add insulation inside the floor under a luggage storage nook we have.  It is insulated, but unheated, and they recommended adding additional air sealing to keep the cold air from spreading out through the between-floors space.

This photo is looking up from the front porch.  In the lower left, you can see the upstairs radiant heating tubes under the living space, but NOT under the unheated storage area.  In order to add air sealing, the workers were going to drill into the floor from above, and I needed to check whether they would risk drilling into the tubing.  By looking at this old photo, I could tell where it was safe to drill.

You can also see that the floor joists are open trusses, with 2×4 plates and zigzag webs. This mean the entire floor space is open, so it is important to have an air barrier between heated and unheated space.

Unfortunately, this justifies my pack-rat instincts, to save 16 year old photos, but sometimes it is useful.  I took video (analog!), film photos, and digitial photos of walls and ceilings, in case I ever needed to know what was in there and where.

 

Veranda roof outside study

Hotel Internet – Hyatt French Quarter

I write from my room at the Hyatt French Quarter.

Your hotel internet service stinks.

I would rather stay in a Hampton Inn or like that than a Hyatt.  You know why?  The internet service in cheap hotels just works.  Yours does not.

You advertise “free internet”, but it costs rather a lot in the inconvenience and irritation of your customers, who are paying you quite a lot of money for a nice experience.

I have three devices with me.  A laptop, a tablet, and a phone.  On each one, every day of my stay, at (apparently) a random time, each one stops working and I have to connect again.

Here is what that takes:

  • Try to use my email.  Doesn’t work
  • Remember that I have to FIRST use a web browser.
  • Connect to hotel WiFi (ok, this step is expected, once)
  • Get browser intercept screen
  • Type in my name and room number
  • Wait
  • Read offer to pay $5 extra for “good” internet service, rather than crappy. The text says this offer “lasts as long as your current package”  is that per day? Per stay? What?
  • Click “continue with current package”
  • Wait
  • Get connected to FACEBOOK.

Why?  I can’t explain it.  People my age think Facebook is something kids use
to share selfies.  The kids think Facebook is for, I don’t know, old people, they
are all on Twitter.

Then I have to remember what I wanted to do.

Are you serious?  Do you think this process, repeated for my three devices, EVERY DAY, is going to make me recommend your hotel?

Now let us talk about privacy.

It irritates me that you want my name and room number. I do not agree that you can track my activities online.  It is none of your business.  I run an encrypted proxy server back home.  So all your logs will show is that I set up one encrypted connection to the cloud for my web access.  My email connections are all encrypted.  My remote logins to the office are all encrypted.  My IMs are encrypted.
I read the terms and conditions, by the way.  They are linked off the sign on page.   They are poorly written legalese, and there are a number of ways to read them.  One way says that you track all my connections to websites but only link them to my personally identifiable information if you need to “to enforce our terms and conditions”.  They also say that you have no obligation to keep my activities confidential.  And who or what is Roomlynx?

Even if your terms said otherwise, I wouldn’t believe you.  I don’t trust you OR your service providers.

Here’s my suggestion:

I think all this effort you’ve gone to is a waste of time, effort, and money. You do not have the technical means to monitor or control how I use the net anyway, so why make your customers jump through hoops?

If your lawyers tell you these steps are necessary, get different lawyers who have a clue.  If you still think it is necessary, have the terms and conditions be attached to the room contract!

If you seriously have a problem with non-guests soaking up your bandwidth, then by all means add a WiFi password, and hand it out at checkin.

If you seriously have a problem with bandwidth hogs, then slow down the connections of actual offenders.

Basically, try your best to make the Internet work as well as the electricity you supply to my room.  I turn on the switch, the lights go on. Done.

By the way, modern OS’s like Apples MacOS Yosemite, frequently change the MAC address they use. This will likely break your login system, raising the frustration of your guests even more.  They will not blame Apple for trying to protect their privacy.  They will blame you.  I already do.

PS  I don’t like to help you debug a system that is fundamentally broken, but:

  • The hotel website still says Internet costs $9.95 per day.  Update that maybe?
  • There is no way to go back and pay the extra $5 for better service one you’ve found out how crappy the regular stuff is.
  • After you connect, you can no longer find the terms and conditions page
  • I accidently tried to play a video, and your freaking login screen showed up in the video pane.  That just makes you look even sillier.

Random Walks

One blog I follow is GÖDEL’S LOST LETTER

In the post Do Random Walks Help Avoid Fireworks, Pip references George Polya’s proof that on regular lattices in one and two dimensions, a random walk returns to the origin infinitely many times, but in three dimensions, the probability of ever returning to the origin is strictly less than one.

He references a rather approachable paper explaining this by Shrirang Mare: Polya’s Recurrence Theorem which explains a proof of this matter using lattices of reisistors in an electrical circuit analogy.  The key is that there is infinite resistance to infinity in one or two dimensions, but strictly less than infinite resistance to infinity in three dimensions.

This is all fine, but there is another connection in science fiction. In 1959, E.E. “Doc” Smith’s The Galaxy Primes was published in Amazing Stories.

Our Heros have built a teleporting starship, but they can’t control where it goes.  The jumps appear long and random.  Garlock says to Belle:

“You can call that a fact. But I want you and Jim to do some math. We know that we’re making mighty long jumps. Assuming that they’re at perfect random, and of approximately the same length, the probability is greater than one-half that we’re getting farther and farther away from Tellus. Is there a jump number, N, at which the probability is one-half that we land nearer Tellus instead of farther away? My jump-at-conclusions guess is that there isn’t. That the first jump set up a bias.”

“Ouch. That isn’t in any of the books,” James said. “In other words, do we or do we not attain a maximum? You’re making some bum assumptions; among others that space isn’t curved and that the dimensions of the universe are very large compared to the length of our jumps. I’ll see if I can put it into shape to feed to Compy. You’ve always held that these generators work at random—the rest of those assumptions are based on your theory?”

Garlock is right – this is a three dimensional random walk and tends not to return to its starting place, but James is wrong when he says this isn’t in any of the books.  Polya proved it in 1921.

 

How are non-engineers supposed to cope?

The Central Vac

Today the central vacuum system stuck ON.

The hose was not plugged in, and toggling the kick-plate outlet in the kitchen did not fix it.  That accounted for all the external controls.

The way this works is there is a big cylinder in the basement with the dust collection bin and large fan motor to pull air from the outlets, through the bin, and outside the house.  This is a great way to do vacuuming, because all the dusty air gets exhausted outside.

The control for the fan motor is low voltage that comes to two pins at each outlet.  When you plug in the hose, the pins are extended through the hose by spiral wires that then connect to a switch at the handle.  You can also active the fan by shorting the pins in the outlet with a coin.  Each outlet has a cover held closed by a spring.  You open the cover to insert the hose.  The covers generally keep all the outlets sealed except the one with the hose plugged in.

The outlets are all piped together with 1 1/2 inch PVC pipe to the inlet of the  central unit.  The contact pins at all the outlets are connected in parallel, so shorting any of them turns on the motor.

We also have a kickplate outlet in the kitchen – turn it on and sweep stuff into it.  The switch for that is activated by a lever that also uncovers the vacuum pipe.

I ran around the house to make sure nothing was shorting the terminals in the outlets.

Next, I went to the cellar to look at the central unit.  Unplugging it made it stop (good!) but plugging it back it made it start again.   That was not good.

I noticed that the control wires were connected to the unit via quick connects, so I unplugged them.  The unit was still ON, which meant the fault was inside the central unit.

I stood on a chair and (eventually) figured out that the top comes off, it is like a cookie tin lid.  Inside the top was the fan motor (hot!) and some small circuit board with a transformer, some diodes, and a black block with quick connect terminals.  The AC power went to the block and the motor wires went to the block.  I imagine that the transformer and the diodes produce low voltage DC for the control circuit, and the block is a relay activated by the low voltage.

Relays can stick ON if their contacts wear and get pitted, or there could be a short that applied power to the relay coil.

I blew the dust off the circuit board, and gave the block a whack with a stick.

That fixed it.

I just don’t see what a non-engineer would do in this situation, except let the thing run until the thermal overload tripped in the fan motor (I hope it has one!) and call a service person.  Even if the service folk know how to fix it without replacing the whole unit, it is going to cost $80 ro $100 for a service call.

I don’t have any special home-vacuum-system powers, but I have a general idea how it works, and a comfort level with electricity that I don’t mind taking the covers off things.  This time it worked out well.

The Dishwasher

For completeness, I should relate the story of our Kitchenaid dishwasher.  One day something went wrong with the control panel, so I took it apart.  It wasn’t working, and I thought I couldn’t make it much worse.  I was wrong about that.

I didn’t really know the correct disassembly sequence, and I took off one too many screws.  The door was open flat, and taking off the last screw let the control panel fall off, tearing a kapton flex PC board cable in two.  The flex cable connected the panel to some other circuit board.  I spent a couple of days carefully trying to splice the cable by scraping off the insulation and soldering jumpers to the exposed traces, but I couldn’t get the jumpers to stick.  New parts would have cost about $300, and the dishwasher wasn’t that new.  We eventually just bought a new Miele and that was the Right Thing To Do, because the Miele is like a zillion times better. It has built in hard-water softeners, and doesn’t etch the glasses, and doesn’t melt plastic in the lower tray, and is generally awesome.

So OK, sometimes you can fix it yourself, and sometimes you should really just call an expert.  How are you supposed to know which is the case?

The Garage Door Opener

Every few years, the opener stopped working.  It would whirr, but not open the door.  The first time this happened, I took it apart.  Now you should be really careful around garage door openers, because there is quite a lot of energy stored in the springs, but if you don’t mess with the springs, the rest of it is just gears and motors and stuff.

On mine, the cover comes off without disconnecting anything.  Inside there is a motor which turns a worm gear, which turns a regular gear, which turns a spur chain wheel, which engages a chain, which carries a traveller, which attaches to the top of the door.  The door is mostly counterbalanced by the springs.  With the cover off, you could see that the (plastic) worm gear had worn away the plastic main gear, so the motor would just spin.  The worm also drove a screw that carries along some contacts which set the full open and full closed travel, which stops and reverses the motor.  The “travel” adjustments just move the fixed contacts so the moving contacts hit them earlier or later.

An internet search located gear kits for 1/3 or 1/4 the price of a new motor, and I was able to fix it.

Last time the opener stopped working, however, the symptoms were different – no whirring.  The safety sensors appeared to be operational, because their pilot lights would blink when you blocked the light beam.  I suspected the controller circuit board had failed.  A replacement for that would be about 1/2 the cost of a new motor unit and I wan’t positive that was the trouble, so I just replaced the whole thing.  The new one was nicely compatible with the old tracks, springs, and sensors.

A few weeks later, my neighbor’s opener failed in the whirring mode, so we swiped the gears from my old motor unit with the bad circuit board and fixed it for free.

Take aways

Don’t be afraid to take things apart, at least if you have a reasonable expectation that you are not going to make it worse.

Or – Good judgement comes from experience, but experience comes from bad judgement. (Mulla Nasrudin)

… and just maybe, go ahead and get service contracts for complicated things with expensive repair parts, like that Macbook Pro or HE washing machine, particularly when the most-likely-to-fail part is electronic in nature.

So I usually get AppleCare, and we have a service contract for the new Minivan, and for the washing machine, but <not> for the clothes dryer, since it doesn’t appear to have any electronics inside.  I was able to fix that by replacing the clock switch myself.

But how are non-engineers supposed to cope?