Red Pill or Blue Pill

This is your last chance. After this, there is no turning back.

You take the blue pill—the story ends, you wake up in your bed and believe whatever you want to believe.

You take the red pill—you stay in Wonderland, and I show you how deep the rabbit hole goes.

Remember: all I'm offering is the truth. Nothing more.

Morpheus to Neo from “The Matrix”

Hello Bloggers some bits and tidbits

I wanted to do a QUICK interim blog entry on a few issues.

First Issue administrative:

I checked out blog alternatives, some like Tumbler I understand may lead strangers to wander in from Porn sites.

Virtually all of you responded in one way or another to my last post.  Many “shared” email responses with me alone, others responded by email and copying all followers.  So I guess my sending an email to all worked.

A few have tried posting replies but have been unable to get a post to stick.  Others seem to have less in the way of problems. Since I alone know who these people are trust me it may not be a systems issue.I have for the time being decided to “stick” with blogger. 

However I am going to try to make things smoother by:

Each new post link will be emailed to all followers I will mark header as such.  So if Google also sends you a post as a follower you can choose who to read and or which one to delete.

I encourage you to “post” responses on the blog but it seems that so many are having problems with that it may stifle interaction n.  So if you want to respond you can reply all BUT I know for many that becomes an email nightmare.  I encourage you as a courtesy not to do that.  Just respond to me if you would like and I will share it with all on a blog post UNLESS you tell me not to, I will leave it anonymous unless you tell me it is OK to share your name.     

Second Issue Quick note on Taxes:

My “Poll” attempt met with dismal failure, likely a tree falling that nobody heard!  It expired in 7 days and was only available on the blog itself.  However, to those who commented the consensus that the 15% number for my imaginary couple with no dependents seems to be close enough.  My son James indicates that he and his wife and three kids would be happy with 15%.....that alone says a lot.  You may have noticed from my follow-up comments that I find our tax burden being lower than my Mother’s whose income is like $17,000 per year is outright ridiculous.

Most of you also indicated that any attempt at meaningful change to the present system is likely doomed to failure.  While that is probably true, to quote the Beach Boys “Wouldn’t it be Nice”.

Third Issue my blog and its relationship to “The Righteous Mind”

My first blog entry promised to try to keep the over-riding theme to my blog centered on the principle that all of us read, hear and categorize virtually any topic according to some pre-set overriding principles based on our own moral code. I gave you all a link to take the Haidt quiz.  I do remember hat several of you took the quiz even before my blog.   So far beyond my “Karmic” comments I have not delved into this theme –yet.  However, I do hope to circle back in this direction in the not too distant future. 

For those of you who have asked me when I am going to start blogging on Trump and his “deplorables”,  or the liberal crazies trying to overturn an election I am not going there.  We all have PLENTY of places where we can get that.  As a generally conservative guy (as I indicated on my first post from my “Haidt Test”) my politics lean that way.  However, I want to try focus on “ideas” and “concepts” not personalities and media hype.  I hope you all get that!  By acknowledging where my moral compass leans I also hope that recognizing how since we all view things as a tribe we can figure out a way to get along in these divisive times.  Yes that may be as likely as changing the tax code but well I will not quote the Beach Boys again. 

In that spirit I offer you a few “pieces” on Haidt.  To keep it down the middle I include links to the Washington Times review and interview (certainly a “conservative publication”) a piece from Scientific American as well as an 18 minute video of a lecture he gave to what I perceive to be a generally left leaning group (note “Ted” indicates it is non-partisan think tank but when I watched it made me to think otherwise).  No matter the presentation is Haidt’s and it is an easy way to get a quick feel (well 18 minutes anyway) on what he has to say about the concept of a different moral compass for liberal’s and conservatives. Worth a look especially if the Super Bowl ends up a blowout for the Pats (oops is that to controversial?).

http://www.washingtontimes.com/news/2012/jun/26/righteous-mind-author-haidt-conservatives-have-bro/

https://blogs.scientificamerican.com/guest-blog/jonathan-haidt-the-moral-matrix-breaking-out-of-our-righteous-minds/

https://www.ted.com/talks/jonathan_haidt_on_the_moral_mind

So until about Tuesday or Wednesday…Adieu.

Taxes and Karma "Come Together"

See the stone set in your eyes
See the thorn twist in your side
I'll wait for you

Slight of hand and twist of fate
On a bed of nails she makes me wait
And I wait without you

With or without you
With or without you

Taxes (Continued) Oh No Not That Karma Stuff Again

OK bloggers, I first want to report a couple of administrative issues.

I realize most of you have lives and my blog is likely a very low priority  but all 11 followers “choose to follow” and through various emails (by all of you) expressed at least an interest.  Yet as a follower Steve  tells me Debbie his wife gets updates but he does not.  My sister tells me the same.  I stuck a poll on the blog to vote on one of my questions yet only Barbara and I voted on the blog.  John tells me he gets feeds inconsistently.  A few of you have responded by email to posts and I am totally OK with that (I enjoy it actually) but others have posted comments for all to see (which I also like).  Several College friends Les and Whitey have never said a word or responded to a blog notice so I am not sure they are even on this earth anymore!  I must tell you all that I am perplexed at how on earth Google is managing this whole blasted thing. 

Anyway I will start researching alternative blog sites to see if something might work better.  Meanwhile I enjoy writing this…….”with or without you”.  Hence this week’s music opening!

Now on to the Topic and some answers to the Tax Credit I get such a fantastic benefit from.  But first a few comments from those who wrote to me directly.   One did not post a public comment (maybe due to the issues I noted above) so I will leave them “anonymous”.

“So how much should a couple pay? Good question - I said 20% but upon reflection - I prefer 15% whereby I would contribute the 5% difference to a charity of my choice....rather than the government making that choice for me.”

I assume the rest of my college friends are paying no Taxes and therefore have no opinion!

One of my Stowe friends sent a lengthy reply which I enjoyed very much.  He made a number of great comments but I will only provide a few specific highlights:

“Really liked your subject although I am no where as erudite as you and Barb.”……. 

“So my answer on 1 would be 15% ought to do it. On two I guess I answered it above. We can take care of those who are down an out but I am quite comfortable taking all that is legal.”

 “That said why does the code have to be so complex that I need a person with a masters in tax science?”

And his BEST

“I think you should take all you can get because the gov't (last eight years) is quite callous about what they believe is owed them. On five, you sound like me. If you have the time fight them but $17 aint' great ROI.”

My only disagreement with him on the last item is his last 8 year comment.  Not so much because we disagree politically but because I believe this specific problem tax complexity and fairness is as much a Republican Creation as a Democratic one.

In addition the worst specific experience Barbara and I ever had was on a Tax Audit by the IRS under a Republican Administration.  The IRS is a thing of its’ own seemingly benign to most ordinary taxpayers but potentially dangerous as evidenced by the scandal of politically discriminating on Tax Exempt organizations under Obama, going after political enemies under Nixon, and on selective and abusive enforcement of ordinary citizens.   

 If you saw Barbara’s Blog comment to my last post you will note she says abolish the Income Tax.  I tend to agree with here but not exactly for the same reasons.  She has brought me along on thinking of a consumption tax though, long before this blog.

Ok so about Tax Complexity.  Most of you are aware that the tax code is complex.  Our filings include, or have included in the past, energy credits and this TAA credit, Deferred Compensation plans, Municipal Bond Fund exemptions, Personal Business fillings from my consulting business, and most recently Real Estate Income from our Stowe Home.  Oh the wonder of it all.  All of them especially the basic deductions like mortgage deductions, charity deductions, dependent deductions etc. have their origin in “good intentioned” public policy.  To promote families, promote home ownership, promote charity, promote energy saving, promote health care, promote investment, to promote many noble things.  As my father preached to me the road to hell is paved with good intentions.  I think we are in a tax “hell”.

OK so back to the case in point.

First to those of you looking for “Tax Savings” forget about this one.  This credit has benefited about 30,000 taxpayers (I looked up on internet so who knows that may be fake news) who meet a narrow selection process.  I think it was like hitting the lottery for $45,000 and I did not have to buy a ticket!

 So how did Barb and I  win this “lottery”?  In one word I will say “Karma”.

Remember that job at Reliance Insurance Company that I quit back in 1987?

Remember that they went Bankrupt, helping my Division turn a profit and grow in 2000?  Basically growing my own income in the process?

Remember I retired early?

Well when I retired I claimed my Reliance Pension from the US Government’s Pension Benefit Guarantee Program which took over the defunct company’s pension plan. My ten years of service pays me $148 per month.  I started claiming in 2010.  Shortly thereafter they advised me that I was eligible under an act passed by congress in 2002 for the vaunted TAA Health Care Tax Credit!.  The 2002 Congress and George Bush added those who collect a pension from them the PBGA are all eligible for a health care Tax Credit regardless of TAA eligibility. Wala no other strings attached.  Now I had already obtained coverage for my own health care (I voluntarily left AIG’s retiree plan as it was too expensive) and had purchased an individual Blue Cross plan from Vermont Blue Cross.  Checked it out and  the plan qualified, furthermore, if I wanted they would front me the 70% of the premium for my plan every month! Wow, nice! I said no just send me at year end when I take the credit in a lump sum via my tax return process.  There is no income cap, just a lot of paperwork!

When Obamacare was enacted the credit ended in 2014 and I actually was happy with that.  I mean they finally were going to give credits to all citizens based on income (we can blog later on that subject).  It was the only piece of Obamacare I felt made sense I mean if I do not need help from the government for my Obamacare Policy (even though the same coverage now cost 20% more then and lots more than that now!) so why would anyone need help under that “old program” I assumed our congress and President could figure that out!  OK you might ask what happened?  In the fall of 2016 I got my regular quarterly PBGA newsletter (I so look forward to it!).  See what it said!

Here is the first Paragraph of the  Pension Benefit Guarantee Corporation’s Fall Newsletter.  I also provide a link to those who want to read the entire actual PDF.

“Health Care Tax Credit Makes a Comeback President Obama signed legislation June 29 to extend the Health Coverage Tax Credit through Dec. 31, 2019. Congress originally established the tax credit in 2002 to help displaced workers, including retirees receiving a benefit from PBGC, but it expired at the end of 2013. The Internal Revenue Service will manage the program again with partners including PBGC. Implementation details are being worked out. When new IRS guidelines are ready, PBGC will let participants know how to apply for the tax credit. You’ll find the information on the Retirement Matters blog on PBGC.gov. Sign up today for email alerts on PBGC.gov to make sure you receive all blog entries and important tax credit updates.”

http://www.pbgc.gov/Documents/fall2015.pdf

So now I was eligible to get money for even more expensive Health Care Coverage and thus a BIGGER credit.  How did this whole thing start you may ask?

Now for all you Republicans (and Democrats) please note when the Tax Credit for ALL persons receiving a pension from PBGA was originally passed in 2002 we had a nice cooperating congress and a Republican President.

            We all know GW Bush a Republican was President

The senate was split exactly 50/50 (That was because one senator switched parties from Republican to Democrat)

The House was almost evenly split fluctuating between about 208 Democrats and 223 Republicans.

Here a thought that flashes into my mind that maybe when parties are evenly split horse trading (The you give me this, I will give you that) becomes even more prevalent as a way “get things done”.  Note that Fast Track Free Trade was a major initiative of that congress and I would not be surprised if this was not involved in “tweaking” the TAA to include helping all those pensioners from all those bankrupt companies pay for healthcare.   No need to make it income dependent, just get it done and let the PBA handle.  I do not know for sure that is what happened but that is what I think!

So readers I for one am convinced that our entire huge and complicated tax system is filled with deals like this negotiated piece by piece for 50 or more years.  It has created a bloated powerful bureaucracy.  It serves special interests, lobbyists, unions, businesses etc.  Collecting funds to support our Federal Governments needs with tax revenues is almost now just secondary by product.

It has made people like me cynical and frankly “tax evaders”. 

This brings me to my final conclusion for this entry.   We really need to scrape it.  Why? First, because I feel every adult citizen needs to pay something to support the government we all need and to feel that they contribute.  Yes every citizen not “just” the 52% wealthiest. The main reason being disconnected from supporting our country only widens the divide we have.   I also understand that we need to raise revenue based on ability to pay, and that tax rates need to be simple, clear and “fair”. I also think it is smart policy that they need to not stifle investment, or suppress incentives to work. 

I will talk about the other part of my tax thinking with a different example next blog.  Why one of the biggest reasons I retired was that paying almost half my income in taxes for several years was not worth my time and effort, it is not good for our system either.

Until then adieu.

PS as to the morality of our own tax filing I sleep just fine.  I am a rule follower and believe that in the end one's path is best served in following societies rules unless it conflicts with REALLY DEEP moral values.  To me the tax code gets what it deserves.

Taxbusters

“‘Tis impossible to be sure of any thing but Death and Taxes,” from Christopher Bullock, The Cobler of Preston (1716).

 Ted! Annette! I'm glad you could come, how you doin', give me your coats. Everybody, this is Ted and Annette Fleming! Ted has a small carpet cleaning business in receivership; Annette's drawing a salary from a deferred bonus from two years ago! They got fifteen thousand left on the house at eight percent. 

Louis Tully-Ghostbusters

Our Blog gets off the Karma stuff (well mostly)and moves on to a discussion on taxes, specifically the US Federal Income tax “system”.  Subsequent posts may get into other federal payroll taxes like Social Security, and Medicare. I may also touch on other taxes like State Taxes, sales taxes and property taxes.  Since so much of the Federal Tax system funds entitlements, and since parts of the Federal Income Tax system are actual entitlements in the form of tax credits I will touch on these as well (from personal experience).  This all may become a hodgepodge but then so is our tax system.

Why am I sharing my first “opinion” piece with taxes?  I profess no special expertise on our tax code.  Like Ted and Annette in Ghostbusters we have utilized a Tax Accountant since about 1998 (a small one person shop in Berwyn PA, we even share Personal Christmas Cards now!)  I will tell you that he is the most honest person you could find.  We have always played tax filings right down the middle, utilizing each deduction available but never doing anything not supported by hard facts and backup and obviously legal.  So why should my opinion on Income Taxes Matter? Well in an attempt to keep this introduction brief let me tell you very quickly that Barbara and I are now inadvertent experts at the whole tax income system in fact for the last few years are Tax Burden has been incredibly low in our opinion.  The last several years (say since 2011) it has been running between 5% or 10% of our income. Now before raising your eye brows between 2001 and 2009 it was incredibly high in my opinion running between 30% and 35% of our income and almost 50% when state taxes, city taxes and payroll taxes are included, I promise more on my feelings on that on a future post. However, I have become incensed by our tax system this year so much so it was the impetus to doing this blog.  Why? Well we recently refiled our 2014 Tax return and here is a quick 5,000 Foot Summary. 

  

Our original 2014 filing had a Tax Liability of $2,680.  When we refiled our tax liability for 2014 was $4,323.  Sounds like my complaint is a little off base,  OK it gets better.  How many of you have heard of TAA? (from Wikipedia please go on and read more about it if you would like!)

Trade Adjustment Assistance (TAA) is a federal program of the United States government to act as a way to reduce the damaging impact of imports felt by certain sectors of the U.S. economy. The current structure features four components of Trade Adjustment Assistance: for workers, firms, farmers, and communities. Each cabinet-level department was tasked with a different sector of the overall Trade Adjustment Assistance program. The program for workers is the largest, and administered by the U.S. Department of Labor. The program for farmers is administered by the U.S. Department of Agriculture, and the firms and communities programs are administered by the U.S. Department of Commerce.

As I read this I am reminded of Miracle on 34^th Street again when John Payne started reading off facts about the US Postal Service to the judge.

Ah but your question might well be, “Jim how has the damaging impact of Trade Imports hit you and Barbara? Did the price of an imported ACURA go up??? What “damages” did you suffer up in Vermont?”  More importantly what on earth does this have to do with your taxes??

Well according to the IRS “damages” to us were $10,140 in 2014 alone.  By Tax Code this was to be given to us as a Tax Credit on my 2014 taxes (oh and guess what I got it with interest because our Republican Congress and Democratic President did not “reapprove” and fund the details until June 2016!)

So readers, the Bottom Line you US Taxpayers gave us a tax credit of: $10,140 on a Tax Liability of $4,323.  So while my “Taxes Paid” ended up to be $4,323, and when the IRS reports to congress etc. my taxes paid would be a debit of $4,32, on a different report my credits from all other taxpayers was $10,140.  I will let you do the math but suffice to say for year 2014 we joined the 47% “takers” that Mitt Romney referenced in his little talk in 2012. I must say it was very helpful to get a check to cover our taxes and put over $5,000 in our pocket this year. Our move to Utah came with a bunch of unexpected costs so maybe this is just Karmic Justice.  However since 2011 we have gotten credits totaling over $45,000 by our Federal Government but 2014 was the first year we got credits exceeding Tax Liability.  While I had been getting this “benefit” for several years this last filing really incensed me about our tax system.  It is a bloated hodgepodge of incentives and disincentives cobbled together in back room meetings for the last 100 years.      

I have decided to try to get some more “suspense” and ongoing interest to my Blog so I am going to make this an ongoing commentary for the next week or so.  My next Blog Post will explain how a poor retiree and his wife in Stowe gets a check for a program originally designed to help workers displaced by foreign competition,  A couple of you already have heard from me verbally on this TAA thing back as early as 2013.  A few of you asked “how can you do that”?  My good friend, Steve Clark (that guy from Liberty} probably already smells some nefarious AIG Link (he actually has more details because I told him about this program a few years ago).  His Blog comment hinted he is looking for some Tax Credits and my guess is he knew this was coming.

I will end here then with a few questions for all readers- a little poll if you will.  I hope at least some of you will share honest thoughts on this specifically no matter your political stripe.  Question number 1 is also framed out in a simple “click” gadget your answer there is anonymous (unless the Russians hacked us!).

1.      Just to use nice even numbers what do you think a married Couple, no dependents, with income of say 100,000 per year should contribute as a % of their income supporting our country?  Forget for a moment the ins and outs of the Tax code and for forget where and how it ends up being spent.  Just assume you had a competent government providing the services and protection we need as a country.   I believe that our tax code is so screwed up that it is “unfixable”. Just tell me what you think a reasonable amount would be?

2.     If you “think” you are paying less than your fair share, is there a moral responsibility not to follow the Tax Code?  For example if I think 15% is the right number for number 1 should Barbara and I stop taking mortgage interest deductions, energy tax credits, charitable deductions, state tax deductions etc. (or any combination of these things) until we hit the “moral” high ground (if there is one).  I think you can see where I am going with that question.  We think that getting TAA assistance is stupid in our case but as I will discuss next time we are following clear and simple guidelines that we have been advised by a government agency to follow.

3.     Should I not have refiled my taxes to get this benefit?  Should I not have taken this same credit that I have been taking (different dollar amounts) since 2011?

4.     The credit ends for us in 2016 and in my next post I will point out how that is evidence of how crazy tax legislation is.  Of course we thought it ended in 2014 until I was notified by a government agency that the bill was re upped in June of 2016 retroactive to its discontinuance at the end of 2013, but who knows??

5.     Finally should I continue to fight Vermont over a $17.00 penalty for not filing 2014 correctly the first time (since I had to refile the Fed Tax due to a retroactive law and Vermont then requires me to refile theirs!).  I have paid them ADDITIONAL Vermont taxes and about $70 dollars in interest already since my refiled return lowered my deductions and raised my taxable income, mull that over!) but disagreed with the penalty.  They have not yet ruled and advised me for third time that this matter still hangs over our head.  I look at this as a matter of principle!  After all Bernie, Leahy etc. all were parties to this delay.

I would hope to get some feedback from at least a few of you before I continue.  This just might lead us down some very interesting discussions on any number of issues.

Until next time adieu!

Jim

Full Circle Karma

"Karma, karma, karma, karma, karma, chameleon

You come and go, you come and go"

              Boy George

Instant Karma Continued

·       Event  Number 3-Will the Circle Ever Be Broken?

I started my career at AIG traveling 85 miles to New York City from Limerick Pa. in a snowstorm (maybe that sparked my love of skiing?) on January 2^nd 1988.  When I arrived my new boss told me the office was closed due to weather.  It was an interesting start to an interesting “new” career.  One that was highlighted by that upward rise of income I mentioned in my last post.

 I had some very challenging assignments in my first year most of which gave me a sense that I was in way over my head.   After some very rocky run ins with several senior executives I got tossed into a job many at AIG saw as a dead end but in the coming years ended (for me anyway) very well. I was now involved with the business of Workers Compensation something very new and very unfamiliar to me.  After helping to “clean up” the administrative mess mentioned in my Instant Karma post I was offered a chance to form a small operation to administer our Workers Compensation Assigned Risk business.   By 1995 I was running a small, insignificant blip within AIG that most felt would be out of business within a year or two (In fact when we set it up there was only 1 unused Divisional number in the AIG system, 013, our controller at the time actually told me it was looked upon as the “Kiss of Death”.  I told him just give it to me instead of trying to figure out a workaround). We did almost shut down as market conditions in our business changed but we “reinvented” ourselves and sold some crazy ideas to AIG’s senior management team that maybe we could enter the regular Workers Compensation Market handling a business segment (small businesses) that AIG never touched. We stayed small for our first few years and AIG was patient.  I felt in the one or two meetings I had with our Chairmen during this time he felt what we were doing made a lot of sense.

Patience paid off and by 2005 this once tiny blip was by itself the 4^th largest property/casualty insurance company in the United States (After AIG as a whole, Liberty Mutual and Hartford). This growth was the result of many incredibly “timely” events but a few highlights for you Karmic freaks:

1.        In 2000 Reliance and Royal Insurance, those companies I quit or turned down in 1987, went bankrupt (in the case of Reliance something I thought would eventually happen) their failure resulted in a growth spurt for our business while increasing prices. Karmic justice for sure.

2.        The tragic events of 9/11/01 became a pivotal point in my business, mainly because it was an opportunity to think against the grain and against conventional thinking.  There may even be a future blog post about that and how it has influenced my feelings on bucking conventional thinking and the opinion of experts at some future date.

3.       In 2005 Elliott Spitzer’s  (The New York Attorney General) investigation of several insurance companies’ business practices turned up allegations about AIG that  included issues I worked to correct in that early assignment at AIG. As a bonus bit of Karma unknown to me one of my own senior staff members who I had worked with in those early AIG years was a key player in Spitzer’s investigation.   So as my new business blossomed I ended up spending my last years at AIG working to settle these allegations (because these allegations were about a Line of Business I was now responsible for.  There was never a question about my having any involvement in the events leading to the allegations) It was an exhausting exercise that eventually led to my decision to retire, as soon as we had “successfully” dealt with them.  My “leverage” of knowledge of the past and good relationships I had with regulators etc. enabled me to get the company to agree to my doing this from my planned retirement home in Stowe until we were done. (An aside, some believe that Hank Greenberg’s forced resignation over these these events indirectly contributed to the financial collapse of AIG in 2007 I am not so sure about that but throw it in as trivia and thoughts about Karmic justice!).

4.       I retired in 2009 as we settled with every regulator and insurance company involved except 1 and what happens?  I become a close friend and golfing buddy (and incidentally a follower of this blog by the way) with a guy who I had never previously met and who was helping to lead the charge in suing AIG because of the issues Spitzer raised.  He worked for that one company (Liberty Mutual) who refused to settle with AIG and was a big part of their team “fighting us”.  Interesting that he and his wife also had a long time connection to Stowe Vermont and we met through our wives golfing together one day.  He had negotiated a similar deal to work out of Stowe as I did.  Maybe our Karma’s are running on parallel tracks?

So who knows what would have happened if I had not got that tardy slip?  Or I had not just walked in and quit my job at Reliance one day?   What if I had taken that job in Chicago?  No matter speculating further I guess and most of the events from this post and last could probably be attributed by you readers as “chance” or coincidence. 

One of Barbara’s favorite scenes from one of her favorite movies, Miracle on 34^th Street, is at the end when you are left with “Santa’s cane” sitting in the corner of a suburban house in Connecticut.  As John Payne says, “Maybe I am not such a good lawyer after all”.

So I will end this topic with a final “grand Karmic” thought that will always make me wonder about my own path at AIG.  Back in February 1976 Barbara asked me where I was taking her on a honeymoon. OOPS that was my job? In desperation I went through a Yankee Magazine, randomly (literally closed my eyes and stuck my finger on a page full of resorts) and landed on Stowe Vermont.  I had no idea that resort we skied at in March of 76 was owned by an insurance company I never heard of until 1987 named …you got it AIG.  It was on that Honeymoon we feel in love with that magical place. This love was rekindled years later by my association with AIG and became the place where I ended my career.  I look at it as kind of “Full Circle Karma”.  

I welcome anyone’s thoughts, observations or experiences related to the idea of karma, particularly in relation to the routine decisions we make every day of our life that end up shaping our lives in ways we cannot fathom.

Next Blog or two- taxes!!

Instant Karma Number 1

Instant Karma's gonna get you

Gonna knock you right on the head

You better get yourself together

Pretty soon you're gonna be dead

              John Lennon

I had originally planned to start off Observations from 5,000 feet with a few blog posts on taxes.  But as I tossed and turned last night I decided to kick off my blog with a divergent little stroll down memory lane.  I just thought this would be a better way to introduce my “Blog” and what it hopes to convey.

I believe that our lives are uniquely molded by the decisions that we as individuals make every day.  Those decisions add up and that when combined with circumstances that are often well beyond our control we likely end up in places that just may surprise us.  One way to explore this view is to look back at your “economic life” and ponder the events and decisions that brought you to where you are today.  One can easily speculate various “what ifs” as you do this exercise.  I hope that by sharing my own stroll down memory lane that it may help to explain (in later posts) how my life experiences have likely influenced my own thinking.  It also sets up nicely with some of Haidt’s ideas (remember him?). 

To that end before the “stroll” I will share a piece of the Time article on Jonathan Haidt that kind of frames what I just said. Lifted directly from the Time piece:

“What’s going on here? A useful way to summarize today’s left-right economic divide is that it’s a battle between the law of karma and the principle of compassion.  Conservatives generally want to live in a world governed by karma—the ancient Hindu idea that people reap the fruits of their actions, both good and bad.” Karma was usually thought of as a law of the universe, like the law of gravity. Part of the reason conservatives have historically opposed the growth of the welfare state is the belief that it grants people a sort of karmic exemption, allowing those who are lazy or irresponsible to draw resources from those who are more industrious (see Mitt Romney’s “47%” comment). Hence conservatives agree that the world would be a better place if we “let unsuccessful people fail.” That also includes unsuccessful countries (like Greece) and companies (like the GM of 2009).

Liberals, by contrast, would prefer to live in a world governed by compassion. They are more likely to give people second and third chances.  For example, they are more likely to endorse this statement: “It is generally better to show mercy than to take revenge.”

Now I can think of many ways that I “disagree” with how Time summarized Haidt, it was after all a look at Haidt with a “liberal bent” and it was way too simplistic.  He actually finds much good in both world views.  In my first post I acknowledged my generally conservative thinking.  Not surprisingly then I find much of this “Karmic” principle has merit.  So let me give you some examples from my own life.  (I must admit that I have some apprehensions about sharing some of this personal data and I hope you all read this in the spirit intended)

I imagine all of you have seen (at one time or another) you’re annual Statement from Social Security.  Heck several of my readers are likely collecting Social Security.  I was looking at mine the other day as I started some financial planning for the next several years.

I found it fascinating to trace my earnings history through time and I even went so far as to download the information and graph it (I promised that bits of personal information will likely be the inspiration for my posts.  It might also give you all some great ideas of things to do when you retire, or have time on your hands).  I then started down a personal “economic memory” lane by reflecting on a three specific years that stood out (there were other years to reflect on, perhaps in  some later post).  The first two were “drops in annual income” a relatively small one of about 12% in 1975 and a second, much more significant drop of 40% which happened in 1987.  The third event was a steeply upward curve in income for 10 years from 1998 through 2007 (my 2007 income was about 350% higher than it was in 1998).

A “probably not brief enough” summary of Events 1 and 2 (3 will be next post):

·       Event Number 1-Playing Poker with one’s life

The first example of a “Karmic” event took place in the summer of 1974 at my first job out of college.  I was a junior Life Insurance Underwriter at Prudential, having completed a one year “training program”. The night before this “specific event” I had been up late drinking and playing poker with friends.  Upon arriving back at our apartment (no not with Barbara, but with my college friend “Whitey” with who I shared a basement 1 bedroom apartment) I neglected to set my alarm that night and as a result for the first time in my professional career I was late getting into work (about a half an hour).  To my surprise and chagrin I was immediately given a “tardy” slip to complete documenting the reason for my lateness. I said to my supervisor “you are kidding, right?” My supervisor said “no I must provide an explanation for being late”.  While I did refrain from profanity I simply wrote “failed to set my alarm”.  I figured telling him I was hungover from a late night of poker was probably not a good idea. However, I was really pissed off.  You see for 13 months I got into work early every day and now one just one late morning “tarnished” my record.   At that moment I decided that  this organization was not a place for me!   By October I landed a job at the Life Assurance Company of Pennsylvania as a Life Underwriter.  Unfortunately they went bankrupt 12/31/74 (interesting I never researched the companies solvency who thinks of insurance companies going broke?  We shall see.).  Anyway my resulting unemployment reduced my 1975 earnings by about a month and a half, until I found a job with Reliance Insurance Company as a life underwriter.  This caused that first “Blip” on my earnings record.  Two years later I posted for a job in the Reliance Property Casualty Division, a change that rippled all the way to my retirement. 

Was all this due to forgetting to set my alarm or the late poker game?  Who knows?  I do know that I discovered in all this that a job is not the only thing in life, and that working in a place where your work is not recognized and appreciated is not worth it. I also learned that unexpectedly losing a job is not something to live in fear of.

·       Event Number 2 “The Great Gamble with my families Life” 

      During my career at Reliance Barbara and I moved to Florida, Michigan and back

      to Pennsylvania.  She was always (and still is) up for a new adventure.  I was promoted to several increasingly responsible middle management positions as an Operations Manager.  In 1983 we moved back to Pennsylvania where I was selected to build a “model” operations center in a major cost cutting move ordered by our owner and infamous financier Saul Steinberg.  The goal was to reduce operating expenses by consolidating operations into 3 or 4 regional mega centers.  In other words it was my job to eliminate about 1/3 of our backroom staff.  Being a good soldier in Steinberg’s army off I went, traveling around the Northeast US, laying people off (we tried to ease our conscience by offering all these people jobs in our consolidated center and we would give them a thousand dollars for moving).  Not many accepted and it was one of the most depressing things I ever did (nor did I ever forget) because I personally wanted to offer each of about 400 people in 7 different offices this “opportunity”.  I felt obligated not to just fly in and blow up jobs without facing each person one by one.  After a depressing 6 months we started operations using a Staff that was inexperienced (as suspected very few people took our offer), technology that was  not ready and a senior management staff sympathetic to our plight but in mortal fear of the Steinberg’s.  I believed the company was heading towards bankruptcy ( who would think an insurance company could go bankrupt?).  I felt the owner was unethically and untrustworthy. Either way I felt my time there was limited one way or the other. However I also felt so dedicated to my “job” that I never took time to look for another. I saw no end in sight to daily crises, poor moral and frustration. These were all affecting not only me but my family.  One early May day in 1987 I Went in to work and just quit (finally remembering a lesson from event 1!) and did not look back. 

Did I do the conventional thinking and follow the conventional advice I got having two young kids and a wife to support, no job and about $15,000 in savings? Did I start desperately to seek another job?    Well not exactly.

First we took our kids to spend a few weeks visiting my Sister and her family in Belgium no doubt spending money we shouldn’t.  When we came back from that trip Barbara and I spent time nurturing our marriage. We even went golfing a few days a week.  After an additional month or so of this I decided to” look “for a new career but after a couple of futile months of chasing some crazy dreams I realized my chances of meaningful employment outside of my industry experience was slim.

In September of 1987 I started interviewing (using old contacts and my social network) with various Property Casualty Companies.  I was offered an opportunity in Charlotte NC with Royal Insurance, and turned it down.  Barbara, previously a willing mover, indicated she did not want to move our kids away from their extended family at this stage of life.  I then interviewed with CNA hoping to get a position in Reading Pa.  Instead I was offered a job at their Chicago Headquarters.  They scheduled a house hunting trip for Barbara and I over Thanksgiving of 1987.  I thought I should take the job as we were down to our last $3,000 in savings.

While this was going on I was invited back for a second interview with a company called “AIG” that was scheduled for the week after Thanksgiving.  Barbara said “Jim, I have a feeling about this and I do not want to go to Chicago I just do not want to move again”.  I called CNA and thanked them but said do not waste your money to fly us to Chicago.  The guy thought I was nuts!  One thing for sure my income for 1987 was looking pretty grim!  Fortunately, the following week I was offered a job starting 1/1 with AIG and the beginning of a very interesting career.

My first year or so at AIG started with a “promotion” (after 6 weeks) to my boss’s job, yes he got fired.  AIG was already the world’s most complicated organization and 6 weeks in I was managing a group of young (right out of school) MBA’s “consulting” worldwide on best organizational practices, most of them made as much or more than me.  Needless to say after 6 months and a few botched assignments our group began to lose its’ luster.  I was given the “opportunity” to help “fix” a data reporting problem we had with our Worker’s Compensation business.  This ended up having ripples up to and including an investigation 15 years later by the New York Attorney General and a most interesting Karmic event in my retirement…a teaser for my next Blog Post)

I am going to end this post here after these two specific “Karmic Events”.  Event Three is a direct sequence to Events One and Two (and hopefully show the crazy “karmic connection of all three) but I fear I have gone on too long already so let me leave you with a couple of my takeaways about Karmic Event 2.

Barbara’s insistence that we should not move away from our family (and her confidence that we would make it through all this) is directly responsible for launching my career at AIG.   It certainly made me realize that choosing a spouse is likely the most critical decision one can make in life (and that was likely my truly first Karmic Event!). So much of society now thinks of marriage in purely romantic terms, important yes but it must be much more than that. 

Second, Families are much more important than careers.  Yes having a great vocation is fulfilling, but as a society (granted maybe not as single “non-childbearing” individuals) all of us making decisions based on just economics is not a great long term strategy for success.  Having family support and love is much more important (for more than just economic reasons obviously)  than how much income you make, and knowing that actually frees you up to take more risks, make better decisions, and be truer to your other values in your economic “life”.

Frankly these are things that I believe No Government Program Can Provide.  However isn’t it ironic that this whole reflection was stimulated by that greatest Government Program, Social Security!

Hope to see you soon!