AskDong

It looks almost assured that Obama’s stimulus package will be passed.   While I’m happy to debate the finer points of the stimulus.  Is fiscal spending more effective than tax cuts?  Is there too much pork in the bill?

I won’t discuss any of those issues today.  I ask a more fundamental question.  Is the stimulus really necessary?  I ask this even in more fundamental way.   I’m not asking if the Economy needs a stimulus package to continue chugging along.   I’m asking the question behind the question, “Does the economy need to chug along?”

The conventional thinking is that economy has to grow.  We have to be more productive.  We have to be competitive with the rest of the world.  We have to have more things.  Do we really?  Slate published an article late last year asking, “Why not start the weekend on wednesday?“  Despite whatever economic hit we might be taking right now, Americans are still far more productive than they were a generation ago.  The Slate articles asks why have people not made the choice to work less and yet still have the same lifestyle their parents may have had 40 years ago?

The problem is that not the pie isn’t big enough.   It is.  We still live in a country of plenty.   The “problem” is that we want more, and wanting more isn’t about wanting absolutely more but just more than the next guy.   Slate cites the oft cited study that shows that most individuals prefer not so much making more money, but making more than their peers even if that is less money overall.   This in itself is not a bad thing.  This very human characteristic is what encourages us to always want to better ourselves.   Otherwise, society would stagnate.  Now when the tide rises, we set new goals.   My question is, have we pegged our goals to the wrong stakes?

Obama is hopeful that his stimulus package will pass.  I am as well.  I think the economy needs some kind package to light a fire under its ass.   Is this the perfect package?  Doubtful.  Even if there was a perfect package, few people would recognize it as such.  Economist from the left, and the right have already attacked early sketches of the plan.

Both sides have valid points.   Personally, I favor of tax cuts and appropriate fiscal spending.  This is not surprising given my very centrist economic leanings.  On the tax cut side, I’m particularly supportive of cuts directed at businesses.   I find the knee jerk reaction by many on the left that corporations (small and large) need to pay more taxes often misplaced.   I could care less if corporations pay nothing in taxes because they pay their employees well, and make solid investments in research and development to grow the business.   If huge profits are being earned by a corporation, I think it better for the shareholders to pay those taxes in either the form of capital gains or dividend taxes.  

As for fiscal spending, I believe the Government has a particular role in industrial economic policy that it especially well suited to fulfill.  The obvious areas are natural monopolies such as transportation infrastructure.  However, beyond highways and bridges, the Government can play an effective role setting and nurturing new industries.  The Government just as easily has the ability to hinder and fetter growth via bad policy and initiatives.  How the Government chooses to spend the taxpayer money is important.   The federal government already has large role in funding research and development that often become the growth industries of the next century.   Just as the government via DARPA began the Internet Revolution, it may be that the government has a role in sparking a new green revolution. 

Another factor economists often lose sight of is the psychological nature of the economy, something Franklin Delano Roosevelt was acutely acknowledged when he famously said, “we have nothing to fear but fear itself” in his first inaugural address.  The economy is as much about the psychology of the nation (and now the world) as it is about the leverage ratio of the banks.   Effective government policy can be greater than the sum of it’s part if it gives hope when there may have been none before.

Noah, an avid read, pointed me to this rather interesting graph.

So the question is, “am I to blame to for the current Market downturn?”  While I like to believe that my blog is both widely read and immensely influential, the reality does not support this hypothesis.

So is there any relationship between my blog and the market?  The obvious answer and the one supported by Occam’s razor - is not at all.  It’s just a coincidence.   However, if we statistically look at the relationship of my blog posts and the Dow between July 2007 and now, there actually is quite a bit of correlation.  The correlation of my monthly posts to the monthly Dow close is a remarkable .85.

This is statistical correlation.   However as we should all know, taking statistics and graphs at face value is almost a guaranteed way to be misled.   It’s almost always possible to selectively pick numbers, and graphs only prove the point that one wants to prove.  So while there may be statistical correlation between the number of posts and the Dow, there’s unlikely any “real” correlation.

Actual correlation would imply a predictive relationship between the Dow and my postings.  For example one would be able to predict the level of Dow by knowing how many posts I will write next week.  Sadly this is not the case.  There’s no correlation, and certainly no causal relationship between the Dow and the count of my posts.  This is not to say there couldn’t be any correlation.  It’s possible that I write less because of work related stress which in turn could be related the overall financial markets.  If that were the case, I would expect how much I write on this blog to be correlated with the Dow.  The Dow and volume of my writing while not having a direct causal relationship would have relationship to an underlying variable, the economy.  That’s a conjecture.  What I am sure of though, is that how much I write has no impact on how the Dow closes.

I made a bit of boo boo on my trip to Europe with respect to my phone usage.  A mistake that might cost me as much as $24.95.   Before I left for Europe, I signed for AT&T Global Traveler Add On for my iPhone.  Data roaming internationally can be ridiculously expensive.   It’s not unheard of someone racking up a couple thousand dollars in charges because he or she doesn’t know better or isn’t careful.

AT&T normally charges  0.0195 $/kb for international data, while the data add on includes a base level of Megabytes (1024 kb to a megabyte), and lower overage rate of .005 $/kb.  Unless one uses less than 1281 kilobytes, an add on package will be markedly cheaper.  Below is comparison of the available data plans, and how the pricing works out.

On the chart, I’ve cut off the Y Axis at $2000, as seen on the table the charges for data can well exceed a couple thousand dollars.  I used about 10 MBs in the course of 9 days abroad.  Without the data plan, it would’ve cost me around $200.  Instead I paid $24.95.  It’s almost a no-brainer to get the data add on if one’s going to use data while traveling internationally.  Having used my iPhone in Europe, I cannot rave enough about how great it is to be able to access google and google maps abroad.  My phone got me out of jam more than once.

Sounds good so far.  I signed up for the data plan before leaving.  I picked the right plan, the smallest data package as I easily stayed under the data limit or so I thought.  The problems?  My billing cycle ended on January 2nd.  I left Europe the morning of January 4th, and I used my phone on January 3rd.  Nor is 20 MBs  always 20 MBs.

AT&T has a particular ways of charging it’s customers.   AT&T bills based on what packages are active at the time of producing the bill, not what packages may or may not be active at the time of the use.  While I believe I can cancel my add on package, the information I’ve found so far is vague enough to warrant some caution.  For travelers who traverse to more exotic locales, it’s a greater risk as it’s possible charges do not make it to AT&T until months later (as much as 3 months according to AT&T).  In addition to having crossed over into another billing cycle, I failed to sign up for the plan early enough.  AT&T prorates the megabytes in a plan according to the date that one signed up.  I signed up on 24th out 30 days in the billing cycle, and as a result I only got 6/30 or 1/5 of the total 20 MBs (4 MBs) free.  This last item, I didn’t realize until I did some research previous to writing this post.  In actuality, I was able to knock off those excess charges because I called customer service earlier today because I didn’t understand why I was getting charged.  The woman I spoke to was kind enough to make an adjustment to my bill.

I’m hardly the only one to be trapped in the quagmire of of AT&T billing, some have ended up with bills in the 5 figures.  International roaming is a cash cow for AT&T.  Individuals at least make an attempt to be careful (which I wasn’t careful enough), and call customer service after the fact if there is a problem.  Many users are corporate users who never ever see a bill.  These are the users that AT&T is likely making a killing off of.

I’ve been a long term user of TurboTax.   I filed last year using it, and have done so for the last 9 years.  I’m a captive market.  Turbotax imports all my information from last year, and makes my filing a relatively quick matter.  I pay $60-$70 every year for this convenience.

I thought I would get a head start on my taxes this year by purchasing TurboTax right now.   I also figured that the best way for me to purchase it would be to download the software.  Intuit sells the product online as a download.  I brought the premiere version last year, and plan on doing so again. It’s $89.95, and includes 5 free federal filings.   Intuit still charges $19.95 for each state filing which I believe is increase from last year’s $14.95

As I said before the TurboTax is a cash cow for intuit even with the slightly lower total filing charges.   However what bothers me is that currently it costs me more to download the product than to buy a physical copy from Costco.  Costco sells the product for $62.95 online for the physical copy.  The best download price I can find is from the Amazon store which sells it for $66.49 versus $68.99.  Apparently according to the 1 review on Amazon, Amazon too was selling the physical copy for less money.  It’s not anymore.   I’m astounded that the download copy is not at a more significant discount.  What’s worse for me and many other users is the face that Amazon only sells Windows version for download.  I cannot download the Mac version anywhere but from the Intuit site.  At Intuit the download version sells for the same price as the physical version, $89.95.  This is substantially more expensive than the physical copy I can buy at either Costco or Amazon.

Companies should be incentivizing consumers toward choices that are better for their bottom line, and the environment.  Downloaded software is winner on both these counts.  Maintaining inventory, and shipping a physical product is more expensive than allocating hard drive space towards serving copies of software.  Right now, I’m confronted with a decision of spending $20 extra for a product I prefer (less trash and packaging) or putting my wallet ahead of my green credentials (which aren’t too great as is).  I don’t mind paying extra for products that I believe are more environmentally friendly.  What I mind is paying more for environmentally friendly and costs less for the manufacturer.