TBT: Cass on Our Diminished Income

The other day my students and I were talking about the Model T Ford, which in the 1920s ran around $6000 in today’s money for a new car.  It is impossible to find a brand-new vehicle of any make for $6000 today.  Granted, a Ford Focus, for example, is packed with way more technology and safety features than a Model T from 100 years ago, and that technological advancement gets factored into the price.

But consider that in the 1990s, when Kia hit the American market, they advertised a new sedan for around $6999 (in 1990s’ dollars).  What would that be twenty-five years late—maybe $9000 or $10,000?  That price point, too, is virtually impossible.

I managed to purchase my current vehicle—a 2017 Nissan Versa Note SV—for right around $9100.  It has around 45,000 miles on it when I bought it, and had been a rental vehicle before I purchased it.  I got a steal on that car—the closest comparable I’ve found since then was a list price of around $8900 (the list for my car was $8000 even).  That’s for a four-year old subcompact hatchback.

I got lucky when I found that car.  I figured it would be easy enough to find a decent car for under $10,000 when I began vehicle shopping in late 2019.  Boy, was I wrong.  Vehicles last longer than ever before, and maintain their value a very long time.  They’re also, as mentioned, packed full of technology and safety features that weren’t present even twenty years ago.  Trucks in particular hold their value extremely well; to find a truck in my price range, I’d have had to purchase a Ford F-150 from 1994 with half-a-million miles on it.

It’s great that cars last longer and are safer.  But those features—many of which drivers will never need or use—drive up the costs substantially.  Such was the point of an illuminating Twitter thread by Oren Cass, which demonstrates that, despite earning more money, Americans’ expenses for basic goods are substantially higher, requiring a whopping fifty-three weeks of pay to cover now versus a mere thirty weeks in 1985.  Naturally, given that there are only fifty-two weeks in a year, that presents a problem.

I don’t know the solution, but as I wrote a year ago, “Something’s gotta give.”

Indeed.  Here is 28 April 2020’s “Cass on Our Diminished Income“:

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The Virus Kabuki

A big hat-tip (H/T in blogger parlance) to Mogadishu Matt for reblogging this New York Times piece about masks and The Virus.  I tend to view mask mandates as a form of petty tyranny—a way of signalling virtue on the cheap while inconveniencing otherwise law-abiding citizens who don’t want to muzzle themselves every time they want to buy cereal.

As such, I was surprised to see the dubious wisdom of mask mandates questioned in the pages of the progressive Left’s favorite “mainstream” rag, The New York Times.

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Dentists

Today is the first day of my cushy Thanksgiving Break.  After a long Tuesday of teaching, playing piano, and driving, I made it to my hometown to head to the dentist.  The dentist is my cousin, so I get a marginal discount.

As a child and teenager, I had extensive dental work performed.  I had a gnarly tooth, which I dubbed “The Monster Tooth,” that grew in the wrong way.  My orthodontist spent years slowly dragging the tooth into place, only to have the enamel completely absorb the root, making the tooth nonviable.  At that point, bone from my wisdom teeth was used to create a foundation in which a metal implant—a small screw, of sorts—was installed into my mouth.  I walked around with a small metal rod in place of a tooth for some months, and then a crown was placed atop the implant.

Needless to say, I’ve become accustomed to dental work, but that doesn’t mean I enjoy going.

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Trump’s Pages of Accomplishments

Looking at national polls and predictions, it’s easy to get discouraged about President Trump’s reelection prospects.  Even with Joe Biden losing his mind, and the pick of a radical, authoritarian Kamala Harris as his running mate, “Sleepy Joe” is managing to stay up by hunkering down.

On our side there’s grumbling that Trump hasn’t done enough—on immigration, on law and order—and those aren’t entirely warrantless grumbles.  Republicans squandered—perhaps intentionally—an opportunity to fund the construction of the border wall while they controlled both chambers of Congress.  John McCain pompously and vindictively voted to keep the odious Affordable Care Act in place, a clear parting shot at Trump.  Trump did not seem to offer a robust response to the CHAZ/CHOP fiasco, but is now belatedly defending federal property in Portland, Oregon.

Those critiques aside, it’s worth remembering what Trump has accomplished—and he wants you to be reminded.  That’s why he gave Breitbart a six-page document of his achievements.  They are substantial—and make him one of the greatest presidents of the last fifty years.

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Cass on Our Diminished Income

Way back in The Before Times, in the Long, Long Ago, before The Age of The Virus, Oren Cass presented a series of sixteen tweets, asking this question:  “How is that our economic statistics suggest workers have been making slow but steady progress in recent decades, while popular perception is that their family finances are coming under increasingly untenable pressure?”

Cass also wrote about the issue in greater detail in American Affairs and in a lengthy paper for the Manhattan Institute.  That question—why does it feel like it’s harder to make ends meet now, even though inflation is low and we’re wealthier?—is one of the gnawing concerns of modern-day America.

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The Tyranny of Experts

A couple of years ago, the bees were dying.  Readers may recall the alarmist news coverage:  soon, we were told, the mass extinction of our buzzy little pollinators would destroy agriculture globally, resulting in widespread famines.  We must save the bees!

Meanwhile, I can’t walk to my car without fat, furry bees hovering around, ensuring the giant Sasquatch before them is just getting into his sensible subcompact hatchback, and not coming for their precious hive.  My yard is a dream for bees (especially before I got the winter weeds mowed up)—they particularly love the azalea bushes—and they seem to be doing fine.

The point is, had you listened to the expert apiarists, you’d think that civilization itself rested on the gossamer wings of black-and-yellow insects.  Sure, there probably is a problem with bee populations declining due to exposure to advance insecticides.  But the intense focus of apiarists in their field blinded them to other considerations.  They saw bee populations declining, and nothing else.

Experts know their fields so well, at times they can’t see the hive for the bees.  The dire prophecies of global bee deaths and the resulting famines never came, and we didn’t declare a national emergency over the decline in bee populations because there are a million other priorities.  We didn’t shut down industrial-scale agriculture to save the bees from insecticide, because to do so would result in millions of lost human lives.  The bees would have to figure it out on their own (indeed, as bee populations fell, beekeepers turned a tidy profit renting their hives to farmers, and that incentive encouraged the cultivation of more bees).

You can see where I’m going with this extended bee metaphor.  In the current coronavirus pandemic, we’ve leaned so heavily on the advice of medical professionals, we’re not considering the broader trade-offs.  The old expression “the cure is worse than the disease” is particularly apt here:  while social distancing and government-sanctioned “shelter-in-place” orders will surely slow the spread of infection and save lives, they will also result in massive economic destruction.

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Lazy Sunday LIV: Coronavirus

It was inevitable—a Lazy Sunday dedicated to the coronavirus.  This may end up being a “Part I,” depending on what happens over the next few weeks, but I’m planning on shifting away from corona talk for awhile.  There are bigger and better things in life than a Chinese biological weapon and/or Chinese culinary disaster-turned-virus.

I’ve been trying to make the most of a generally bad situation.  It’s springtime in South Carolina, so for about two weeks, we’ll enjoy pleasantly mild weather before the oppressive heat of summer hits.  Z Man has an excellent, optimistic post up today about “Springtime In The Pandemic“; it’s a must-read, and follows some of my own ideas about the possible cultural consequences of everyone being at home and resuming more traditional roles.

So this Lazy Sunday, it’s time to look back at my various posts on the dreaded virus:

  • Phone it in Friday VIII: Coronavirus Conundrum” & “Phone it in Friday IX: Coronavirus Conundrum, Part II: Attack of the Virus” – What a difference a week makes!  Between these two posts, I went from writing off the coronavirus as a bad strain of flu to being much more concerned.  Even since the second installment here, though, I’ve come to reassess the situation again. How much of this shutdown is necessary to stem the spread of the virus, and how much of it is the result of panicked media reporting?  I think it’s possible it’s a threat and the threat is overblown.  We’ll see next week, when this fifteen-day experiment in social isolation has run its course—or gets renewed.
  • SubscribeStar Saturday: Coronavirus Prepping” – When I wrote this post on 7 March 2020, I still thought the coronavirus’s threat was remote, but I was concerned about the disruption to supply chains.  I detailed my steps for preparing for the possibility of quarantines and/or shortages.  Fortunately, it seems that now grocers are catching up, and unless you’re looking for toilet paper, you can largely find what you need.
  • High-Tech Agrarianism” – This essay explored an idea I’ve been kicking around for awhile, but that takes on new urgency in the Age of Corona:  what if we combined small-scale agriculture with high technology?  Using our lawns to grow grass seems like a waste of the land and of the effort to maintain it.  What if we applied the effort of mowing and weeding to growing easy-to-maintain crops?  In our normal lives, people don’t have the time, but as we’re shifting more to telecommuting and distance learning, it seems like we’d all be able to spend a bit more time in the garden.
  • The Revival of Traditionalism?” – In line with the previous post, this piece explored the social and cultural impact of the coronavirus on gender roles.  It was vindicating to see one of the greats write on a similar topic this morning.  The upshot to this whole forced shutdown is that we’re really reevaluating what truly matters in life, as I opined about at length above.

Well, that does it for now.  Stay safe, wash your hands, and God Bless!

—TPP

Other Lazy Sunday Installments:

Phone it in Friday VIII: Coronavirus Conundrum

It’s been another crazy week here in the world of yours portly.  The quarter is coming to a close, and I’ve got a mountain of ungraded quizzes and tests to slog through to appease the gods of higher education admittance.

Ergo, it’s time for a very special coronavirus (or “COVID19,” for your cool kids) edition of Phone it in Friday!

  • Tomorrow’s SubscribeStar Saturday will be a detailed rundown of what I’ve been doing to prepare for the extremely remote possibility that we all get quarantined in our homes and have to practice social distancing to avoid spreading the bug any further.  Here’s the short preview:  I bought a bunch of rice, beans, and spaghetti.
    • On that note, I’m yet again flummoxed by fears of everyday hunger in America.  Ten pounds of rice came to about $7; same with the spaghetti.  Twenty cans of beans cost around $12.  You can eat—maybe not well, but enough to survive and function—for a month for extremely cheaply.  Whining about “hunger” in the United States is a farcical outlier.
    • I am thankful to live in the United States, a country with the best medical system in the world, and the means to treat most diseases.  I’m optimistic that the virus will pass through quickly
  • Was it bat soup, or a Wuhan biological weapon?  Either way, I think we’ve seen the wisdom of the trade war with China, even though we weren’t anticipating something like a Chinese-created pandemic.  The coronavirus exposes the weaknesses and contradictions at the heart of China, and puts lie to the notion that this is a “Chinese century.”  I’ll be glad to be done with such rubbish.  The Chinese have come far, yes, but it turns out a totalitarian regime built on a culture of death and lying (“saving face”) can only snooker people for so long.
    • That doesn’t mean that China will no longer pose a threat.  Indeed, I believe China to be our biggest geopolitical competitor.  All the more reason to relocate industries back to the United States, or at least to friendlier countries like Vietnam, rather than deal with the Chinese.
    • For the best treatment of this subject, read blogger Didact’s essay “Corona-chan Comes for You.”  He spells out the economic threat of the coronavirus, and how the whole thing is likely the result of Chinese incompetence and the insane cultural concept of “face,” in which it’s better to lie (in the Chinese mind) than to risk bringing shame to your family.  Concepts like that make me glad to live in the United States.

My hope is that after all is done, China will be a pariah, no longer vaunted as a power on the rise, but maligned as a malicious, mendacious regime.

That’s it for this brief Phone it in Friday.  Wash your hands, stock up on dry goods, and stay healthy!

—TPP

HSAs are A-Okay

My Congressman, Tom Rice, sends out little e-mail updates on a regular basis.  In his latest newsletter, the South Carolina US-7 representative included a link to a video (below) of his statements before Congress about expanding Health Savings Accounts, or HSAs.

The gist of the proposal is to expand health-savings accounts to allow account holders to contribute more to them.  The current legal annual contribution (in FY2018) for a single individual is $3450, up from $3400 last year and $3350 the year before.  That comes out to $287.50 a month, which can be contributed pre-tax directly from an account holder’s paycheck.

The way the law is currently written, HSAs are excellent both to cover medical expenses before reaching your deductible (and, naturally, most HSA-compliant plans are high deductible ones) and to save and invest for retirement.  You can accrue a qualified medical expense today—say, a visit to the emergency room—and you can submit that receipt in a decade (or longer—there’s no apparent time-limit) to take out that amount.

To give a hypothetical:  let’s say you have a medical bill for $3000.  Yes, your annual contribution to your HSA could cover that.  But, let’s say you’ve built up a good emergency fund, and elect to pay the bill out-of-pocket through that fund.  In, say, five years, you need to tap your HSA funds for some reason.  If you’ve kept the receipt (and credit card statements help, too), you can file that with your HSA and withdraw the $3000.

Why go through the trouble?  Because many HSA administrators—including my own, HealthSavings Administrators—allow you to invest in mutual funds with your HSA contributions.  If you’re making an 8% annual return on those contributions, that $3000 today will be worth around $4100 in five years (investment math folks, please check my numbers; regardless, you get the point—money grows).

Alternatively, if you don’t tap that money for decades—and keep contributing—you’ll have a very nice retirement account growing tax-free for all those years.

My current health insurance carries a $6550 deductible—which I didn’t even come close to hitting in 2017 when I broke my left wrist, although it was still expensive—but I’ve accrued enough of an emergency fund that I could meet that expense should the need arise (I pray it doesn’t).  If my emergency fund were sunk into something else—say, a new car, or a less flood-prone house—then I could tap into my HSA contributions from the past few years.

And here is the other benefit of HSAs, the one that I’m sure Congressman Rice as in mind:  they help you reach your deductible, and bring some market forces to bear on healthcare costs.

I suspect that one of the culprits of high healthcare costs is the lack of transparency—no one knows how much anything costs, and everything is fungible.  When I broke my wrist, I received a hefty ER bill (about $3000) about four months after the fall (I don’t understand the delay on that; it seems like they could just tally it all up and print it out at the time of the accident).  I called the hospital, and they told they were “running a special”—if I paid in full that day, they’d knock HALF of the cost off the bill.  Because I’m an extreme budgeter and have an emergency fund, I could do it, and leaped at the “special.”

Most people don’t have enough money saved up to even meet a $500 emergency, but an HSA makes it more doable.  Even without an emergency fund, if an account holder were making monthly contributions, he’d be able to take advantage of such price reductions.

HSAs aren’t a magic bullet to bringing down healthcare costs, but they would go a long way to addressing the problem.  If we lived in a pre-Obamacare age, you’d be able to get a high-deductible, HSA-compliant plan for probably $50-100 a month, depending on age and health.  Even if you didn’t want to manage the money in various investments, the incentives to save—namely, the pre-tax benefit—are enough that many Americans would likely take contribute to their HSA.

When Secretary of Housing and Urban Development Ben Carson was running for president in 2015-2016, he proposed transferable, minimally-funded ($5000 at birth, I believe) HSAs be issued for all Americans.  The ability to transfer funds between family members and to grow that wealth over time would be huge.

Similarly, President George W. Bush proposed giving Americans the option to contribute their Social Security contributions into personally-managed investment accounts.  That would reduce the astronomical costs of that federal boondoggle and give Americans much greater returns on their investments.  Naturally, Democrats rejected that plan out of hand, and accused Bush of hating old people.  Yeesh.

The takeaway is this:  whether it’s in healthcare or retirement savings, the American people know best.  Yes, we’d need some additional financial education—which we desperately need anyway—but, c’mon, are you going to continue running the same inefficient, wasteful systems just because a small percentage of people won’t adequately manage their money?

Liberty works in nearly every arena, and it would work in healthcare and health insurance, too.  HSAs are the wave of the future, and I’m glad to see Tom Rice is championing them.