Political Ambition

•January 31, 2017 • Leave a Comment

Upon reading about a lady who wrote a note to Paul Ryan while on a flight, urging him to be on the “right side of history”, I remember when the day after John Boehner, the previous Speaker of the House, after meeting with the new Pope Francis, resigned from office. It occurs to me that John Boehner is much older, 67, than Paul Ryan, 47.

There has been a gradual but noticeable shift in the age which people begin to enter public offices. The barriers of entry have been reduced, organizations how encourage young leaders to throw away with the conventional wisdom that they should “wait their turn.” And as people begin to skip the traditional path toward public service, generally starting with school board or community organizations, they become further removed from the communities and people whom they are expected to represent.

Once in office, and lacking in career experience and community awareness, government becomes their new and only world they know. The world of seasoned career lobbyist, older colleagues whom appear to be irrational decisions yet are reelected engulf newly minted members of Congress with decisions where the motivation to serve community and country are now bumped against the intense desire to maintain one’s way of life – driven by the fundamental human desires to gain money, power, and respective – thus begins the long path down the path of immorality which we see so often at smaller scale in the work force and our everyday lives.

I’m not necessarily arguing that the path of “career politician” right after school is a bad one. As the world gets increasingly more complex, we need people with intense expertise in navigating the large bureaucracies of government in order to implement effective legislation and change. Whereas the current system’s democratic method has allowed people of all backgrounds to find their ways to government, whereby I assume that those whom make it to the finish line of their pre-public service careers have the financial means and life experiences to begin the long process of governance, now we have Super PACs, dark money, leadership institutes, and other agents whom are funding and encouraging young, in experienced, but passionate youth into government – but we don’t necessarily have consistent systems for instilling virtues.

Trump is America

•January 31, 2017 • Leave a Comment

When I hear the words “America first, America first…” and transpose the meaning, “Trump first”, the world suddenly makes a lot more sense. Rewind a few weeks to the day when Trump announced his controversial plan to retain full ownership of his businesses whereby he only receives a consolidated profit and loss statement each year – and that the trump organization will only invest in domestic deals – I wonder, what if this is the vehicle by which trump the business man is using to comprehend the American economy and inform his world perspective? In a truthiness world where government statistics, mathematical truths and monetary policy are looked upon with suspicion, what is more reassuring than the dollars in ones bank account?

Is the trump organization a proxy for the forgotten American man who has suffered under globalization? Could this explain the insistent denial to reveal the trump tax returns because the numbers reflect not an embarrassing web of conflicts of interests, but a portrait of the average debt ridden and struggle American household’s financial distress and decline over the decades. Does trump seek to restore America to a time when America’s P&L was greatest – and when was that?

We know that trumps small multi million dollar loan was grown to over a billion, though it may now be substantially less (measured by nebulous “brand value”). Could this reflect trumps view of the American image across the international community? What factors may have created the false correlations that the last 8 years have been a disaster?  Our pattern seeking irrational minds illicit and connect what we experience with the information present in our every day lives. For the demographic which watches conservative media such as Fox News there has been one consistent theme – “ObamaCare is the cause of declining America” though ignoring the trends that existed long before it’s existence. Trumps first executive order to start the slow process of weakening the ACA blindly accepts this belief.

However, the contradiction that trump is both a savvy intelligent business man and a bigoted, baseless, ignorant man child are too divergent to explain a man that successfully, though perhaps accidentally, won the electorate to become the president of the United States. All the analysis about his rhetoric and campaign platform being only that is proving to be false as trump’s actions suggest that he very much intends to see through his campaign promises – which also appears to be the case with May’s latest reiteration for a hard Brexit – because democracy must acknowledge the will of its people, even if voter turnout was manipulated or skewed against normal expected non-demagogue informed models and our ideals for a global United Federation.

As a wonder if Trump is a proxy for the American experience, I begin to better understand why there was such massive backlash against the perception of a lobbyist funded liberal establishment. Democracy certainly isn’t near perfect and it seems only logical that a capitalist based society would gravitate toward a paradigm where Citizens United became a mechanism to voice business interests. In a world of amazing complexity, we are still governed by laws of finite time and limited capacity to do everything we want. In such a world corporations are most proficient at optimizing decisions to maximize ROI, and evidence has shown that a dollar spent on lobbying can yield much greater returns than a dollar chasing margins.

Corporations, of course, aren’t perfect as they are made up of people thrown together in an evolutionary unfamiliar environment where our basic instincts for self preservation, greed, and power play out at the micro level resulting in office politics, backstabbing, corporate espionage and worst – but somehow in aggregate corporations manage to eek our value for society and propel humanity forward, sometimes for better, sometimes worst, but generally positively.

To what extent the trump corporation of America advances good or bad, and that the zero-sum game isn’t being played as trump corporation vs America, history will tell.

Wage disparities

•June 28, 2014 • Leave a Comment

I often wonder why some people make more money and hold higher positions than others for the same work. Some popular arguments propose discrimination, sexism, “glass ceilings”, “bamboo ceilings”, ___ ceilings, while other more methodical regression analysis based research factors in time, hours worked (sweat equity), family, etc. The statistics are all across the board from “women make 70 cent on every dollar” to “only 12 out of  the fortune 500 CEOs are women, or 20 of the 500 asian CEOs.” I won’t touch further on these contentious arguments, but I would like to share an observation from a behavioral psychology view.

I think society places an extremely large premium for experience – or more specifically in my definition, the ability to quickly execute heuristics developed through years of pattern recognition from similar situations. What I mean by pattern recognition is that our brains are wired to recognize patterns, learn from pain and mistakes to avoid them, and do it quickly to maximize survival. This ability has translated to modern society through the process to wage earning. But, given that we all have finite and identical hours in the day, how can someone command a 10x premium?

Some people invest more hours to work, but that’s a linear return, or zero in some cases. Others learn and gain experience faster; a multiples modifier. One can also manage others, a geometric return depending on the quantity and quality of those employed. Exponential return can be gained via technology. But, how should one invest their time and on which strategies to maximize returns? It’s conceivable that those who manage more people and layers of people are thus more productive. Similarly, smarter people accomplish more. Add these effects up and one may get 10x.

However, the system, in my experience, seems quite crude. My best example is of a senior level financial analyst who did not know Microsoft Excel basics; unfathomable. We rely on simple market signals such as education level, prior roles, years of experience, etc as shorthands to measure the above. If a job requires longer hours, the wage may increase proportionally. We assume that a university degree screens for an avg IQ of 115 (with some stratification based on school). Years work qualifies candidates to apply for certain titles and job bands. In reality, there are way too many variables and motivations behind our actions to assume compliance with the rational correlation of ability and ultimately, income.

It’s really quite a shame that we don’t have more efficient labor markets.


Roth vs Traditional

•June 28, 2014 • Leave a Comment

The difference between a Roth and a Traditional financial instrument lies in the tax treatment. The Roth and Traditional designations apply to a few investment vehicles (i.e. accounts such as 401k, and IRA), but the concept extends much more broadly to any type of investment activity.

In the context of 401K’s, IRA’s and other retirement accounts, Roth accounts pay taxes up front and then pay no additional taxes on earnings from the already taxed money, while taxes are levied on traditional accounts upon future withdrawals. The timing of the tax payment in theory should not matter if tax rates are the same when the money is deposited vs when the money is withdrawn because if you pay taxes now (Roth), you will have less money to earn returns. Conversely, if you defer the tax (traditional), you will have more money now to earn returns, but you will pay more taxes later, leaving you with the same as the Roth approach. A simple example:

Tax 20%, Income $1,000
Roth: Invest $800 (20% income was taxed already). 25% return = $1000 total (no more taxes owed)
Traditional: Invest $1000 (defer taxes). 25% return = $1250, but 20% taxes ($250) = $1000 after taxes.

If both situations are the same, then why bother picking one over the other? They key lies in the tax rate and your expectations of whether your future tax rate will be higher or lower than taxes now. I’m not a tax professional and everyone comes from different financial backgrounds with potentially vastly complex tax structures, but I follow a few basic rules, which should apply to most people:

– Pick the Roth when you’re young and starting out because your income will be low, so you will pay at lower tax rates, and thus less in taxes.
– Start putting into traditional type accounts as your marginal tax rate starts to hit higher levels because you will save on the high taxes. Later in retirement, you can withdraw a combination of Roth and Traditional money, but because the Roth money won’t be taxed, it also doesn’t count as income, thus the Traditional withdrawals apply to lower marginal tax rates.

This two step strategy is effectively a tax arbitrage, which should help increase your assets and income 30-50 years from now in retirement, hopefully as you remember this fp tip.



•June 28, 2014 • Leave a Comment

“Three” has been my favorite number since early childhood. I sometimes wonder why I chose 3; doesn’t it represent a bronze medal, or some inconsequential count? Triangles have 3 sides. Silverware comes in 3’s (fork, knife, spoon). Optimal teams are 3-5, but they are usually more like 4-5 (the military revolves around 4’s [i.e. squads are broken up into 4-man fire teams, 4 squads make up a platoon, etc). As you can tell, I’m struggling a bit to think of good justification for my infatuation with 3. I certainly didn’t pick 3 because it was the closest number to Pi (though that would have been awesome), so why 3?

I’ve found myself often categorizing life into 3 segments or engaged in 3 things at a time. This does not mean that I engage in 3 tasks simultaneously; I don’t believe in multitasking (and research shows that multitasking is quite inefficient), but it is possible to work toward 3 things, have 3 goals or sort the world in 3’s. This might have to do with our memory capacity. On average our working memory can hold about 5 bits of information at a time, but it ranges from 3-7. Perhaps 3 is easy on the mind.

An application of the 3’s mindset emerged in school where I tripled majored. I also managed life in 3 main activities – academics, service, and work. After graduating from undergrad, I continued the trend by continuing my education. Now I am between school and have replaced the academic component with reading. I also completed my military service and replaced it with non-profit volunteerism, while maintaining steady employment. Again, 3 components to my life.

Of course my life involves many more activities and priorities than these; I am simply illustrating that thinking in 3’s allows one to improve productivity by avoiding the sense of overwhelming that sometimes accompanies monumental tasks. Aside from activities, one can group anything into 3’s. Some have the luxury of an evenly distributed day consisting of a third sleep, another work, and the remainder, life. In such a case, one could look at the waking day in 3’s by dividing it into work, self, and hobby/goal. Here are other groupings:

Decisions can be grouped as: pro, con, neutral
Basic Venn diagrams intrinsically are: group 1, group 2, intersection
Balanced international, domestic, and local travel experiences
Friends, family, colleagues
Finance, Spirituality, Community

Instead of writing an endless list of non mutually exclusive, non exhaustive, groupings of 3, I’m curious how would you group your life, duties, ambitions, etc into 3’s. Or better yet, what other heuristics do you use to organize your life, ambitions, mundane daily tasks, learning methods, etc.


Minimum Wage

•February 14, 2013 • 1 Comment

President Obama’s 2013 State of the Union speech included an interesting idea to raise the federal minimum wage to $9.00 and indexed to cost of living and inflation. Although he stated that this was an idea he shared with presidential candidate Mitt Romney in the 2012 election cycle, the Republicans frowned upon the overly progressive indexed minimum wage suggestion. In cinematic fashion, the Wall Street Journal video I watched focused on Paul Ryan, Ayn Rand (Objectivism ideology) admirer and Mitt Romney’s vice presidential candidate. Ryan reflected the view of his party with a stern face. The Republican party remained seated.

I can understand why the more conservative party would perceive a minimum wage raise as overreach in regulation and a “slippery slope” to a nanny state where government crowds out efficient free market forces. However, a developed society does not endorse slave labor, indentured servitude, nor outrageously low wages where its citizens cannot afford the most basic of essential needs. Much as water is a basic global human right, health care in some societies, and high speed internet according to some, the ability to pursue happiness is an innate American constitutional right – income is needed.

I propose another perspective on mandatory minimum wage increases as an efficient, regulation and government minimizing policy. Why do I think this? Increasing the minimum wage to cost of living sustainable levels would reduce government welfare obligations because it ensures that those who show personal responsibility (a cornerstone of conservative ideology) won’t need government assistance. If you reduce the total number of people who qualify for welfare, that naturally leads to a smaller and hopefully more efficient government. Although we will have less people who will need assistance, they will need much more per person because higher minimum wages will lead to market inefficiencies, such that there will be less jobs available at a higher price point (at least in the short run).

Usually, larger organizations find many economies of scale, but at some point, bureaucratic systems take hold, which perpetuates further bureaucracy. A leaner system that isn’t inundated with millions of people on the edge of poverty who need a special customized cocktail of welfare benefits may reduce redundancies and reduce the size of government.

It is argued by many economists that a higher price point for wages (a price floor) creates dead weight loss and thus higher unemployment because employers cannot raise prices fast enough or cut costs to offset these price changes. In the long run, as the economy structurally adjusts to this new setup, we may find that prices rise to cover the increased labor costs, so we’re back to square one, however purchasing power will have shifted. Even if prices increase, they will not increase proportionally to negate wages because more efficient industries will drive prices lower, relative to the overall increase in prices (inflation adjusted). At the end of the day, purchasing power will keep up with reasonable living standards to avoid welfare while those who are unemployed will get targeted assistance because unemployment works better as a signal than a poverty line.

Obviously, there are flaws and loopholes in this approach. Everyone could claim to be unemployed and some people may be completely neglected, but no system is perfect. What matters is that we consider and discuss idea and try our best to improve our world.



Advertisement Freedom

•February 9, 2013 • Leave a Comment

Twitters new 6 second video concept, named “Vines,” may be a boom for advertisers and users, but who’s likely to come out the true winners? Six seconds really isn’t much, but it sure can convey a message. Much like twitters 160 character limit, which initially got similar criticism as Vine, I am sure people will find ways to optimize 6 seconds. Aside from the 6 seconds of porn littering the service, I am sure there are more creative uses. I want to break down what may make this 6 second envelope work and for whom.

6 seconds is better than an image. We evolved as visual animals with automatic motion detector algorithms. Whereas an image or a logo utilizes pattern recognition, it still requires effort to gain that attention (some research and advertisers believe that you need to expose someone to a brand at least 7 times before the target gains conscious recognition of the brand’s existence). Imagine having an animated 6 second logo engineered to capture your attention just long enough for you to internalize the brand quicker. Might be very effective in a world where time and attention is becoming a rarer commodity for some target audiences.

I feel that 6 seconds falls within our working memory’s ability to absorb and analyze data in chunks. We’re capable of remembering from 3-7 items effectively, 5 being the average. Interestingly, “items” may be very particular such as a 7 digit phone number, or very broad such as 7 names of books (clearly each book name contains more raw info than 7 digits, but keep in mind that our brains are able to still remember 7 items, not 7 specific types of data). Within this context, 6 seconds may work.

Aside from corporate interests, people will likely benefit. To be honest, I rarely expose myself to advertising. I’ve constructed my life around adblock, no script, Ghostery, do not track, etc. type addons when surfing the net, commercial free entertainment, advertising free books, and streaming tv, so my assumptions may be incorrect. The only ads I see are from the Super Bowl (and they were disappointingly transparent and unmemorable this year). However, I have observed a few sites which very effectively force you to watch ads otherwise you cannot continue onto the main content. Hulu being one major innovator in this domain. Some less sophisticated sites just force you to stare at a blank screen for a few minutes because they believe an ad is running while in fact an ad block service is blocking the content. Knowing that advertising will become more effective at forcing content in our lives, if I have to see an ad, I’d prefer to watch a few 6 second ads than a couple of 30+ second ads, which I have learned to tune out, even at the risk of missing a few seconds to a minute of the show.

Not that I look forward to the day when I get highly personalized ads and tailored political messages 24/7, but hopefully with the move toward 6 second ads, they will improve in quality. Hopefully, they don’t degrade into a quantity over quality zeitgeist.