President Sharpton

It has long been clear that Barack Obama is a very bad president with a very harmful set of plans and policies for the country and a dangerous disregard for the rule of law. It has been equally clear that he is an immensely arrogant, petty, power mad, and dishonest human being. However his performance Friday in his comments about the case of Trayvon Martin  and George Zimmerman displayed such a stunning combination of cynicism, blatant dishonesty, rabble rousing,  and a vulgar demeaning of the office he holds as to be in some respects a new personal low for his time in office. He came across less as a president than as just another bitter, bigoted, classless, graceless race hustler. It really does not matter whether he was revealing truly held feelings of resentment and racial hatred or manipulatively trying to stir up black voters and deflect the public’s attention from his administrations failures, crimes, and scandals or both (which seems the most likely to me). He has crossed a line, making a mockery of his position and destroying the last part of any claim he might have had to respect based on it. You can’t claim the respect due to a Dwight Eisenhower or John Kennedy while behaving as an Al Sharpton. 

Race and Guilt

Various thinkers have written about the harm done to people by guilt and its attendant sense of unworthiness. Some have noted particularly the crippling effects of inappropriate and undeserved feelings of guilt on decent people who  haven’t done anything wrong and thus the desirability for would be tyrants of making those they wish to tyrannize feel guilty and sinful.   We can see a mild example of  this in this country with regard to race where a big part of the dishonest game being played by politicians, their allies in the traditional media,  and so called civil rights leaders depends on white people’s being guilt ridden enough to accept their impositions, rules, and demands cravenly and uncritically.

This requires getting  people to accept blame  for something they never did.  Jim Crow segregation laws and government rules were abolished over time in the United States in the two decades following World War II. By 1964 they were gone completely.  The voting age at that time was twenty one. So no one under the age of seventy today voted for segregation laws or the (almost all Democratic) politicians who created and maintained them because none of them could have,  and a majority of the people now over seventy did nothing to support Jim Crow either. They  have nothing to feel guilty or blameworthy about on the issue and should realize it. (In fact the only government imposed racial discrimination in the adult lives of anyone born after World War II  has been the direct, explicit, and systematic discrimination of the last forty years  in favor of blacks and, to some degree,  Hispanics and against whites and others in the form of affirmative action quotas, rules, double standards, and mandates. That this discrimination has been nowhere nearly as damaging or severe as that which black people endured under Jim Crow does not make it right.  It just makes it less bad.)

 Things are even clearer with respect to slavery. The last surviving former slaveholder has been dead a very long time. Most died over a hundred years ago.  No one alive today bears any responsibility for the crimes of slavery. The supporters and defenders of slavery (again almost all Democrats) paid for their crimes with death and destruction in the Civil War.  Much of the wealth stolen by slaveholders from the labor of slaves, which wealth was never spread widely among southern whites, was destroyed in that war. Today’s white Americans  are no more to blame for slavery than today’s Italians are for  Caesar’s conquest of Gaul.

None of this is meant to ignore or diminish the wrongs done to black Americans in the past or to deny that the some of the harm done in the past has had lingering effects.  Rather it is to say only that innocent people should not accept guilt or punishment when they have done nothing wrong. Americans need to reject both the punitive policies of the politicians and bureaucrats and the strictures of hypocritical political correctness. News and events of the last few days illustrate the need to do so.  

Martin, Zimmerman, and Obama

There is not much to think well of in the case of George Zimmerman and Trayvon Martin.  Indeed the affair highlights  things which are seriously wrong with the country – though not in the way the political hacks on television have been saying.  The worst thing this case says  about the state of the country  is that it became a national cause célèbre at all.

It was and should have remained a local police matter of no interest to the public at large. George Zimmerman, a jumpy armed resident of a neighborhood which had been plagued by robberies got into an avoidable confrontation with Trayvon Martin, a young man wandering  through the neighborhood. They fought, and during  the struggle Zimmerman  shot Martin  and killed him. Truthfully or not, Zimmerman  claimed self defense. There were no forensic evidence or witnesses to contradict him decisively. From that point it was the job of the police and local prosecutors to decide if they believed Zimmerman’s story. If they did not believe it, they had to decide if they had evidence to demonstrate its falseness beyond a reasonable doubt. If they thought they had such evidence,  they had to present it in court in such a way as  to convince a jury they were right. That should have been all there was to it. Such cases come up around the country  from time to time, leading to different decisions and verdicts depending on particular circumstances

However, 2012 was an election year, the young man who died was black, and the resident who shot him was not. So things happened differently. A remarkably unscrupulous politician who was up for reelection (one Barack Obama) seized on the case as a political opportunity and made inane and grossly inappropriate and prejudicial comments in order to fire up a block of voters. A perhaps even more unscrupulous  scoundrel Al Sharpton clamped  onto the shooting as a means of getting publicity for himself and fomenting racial discord.  Members of the traditional media obediently jumped in, and the result was to hype  the case into big news with a morality play narrative of an innocent black child gunned down by a vicious white man. (Things were  complicated  a bit when it was discovered  Zimmerman actually was classed  as Hispanic and not white. However clever journalists discovered the new category of “white Hispanic”, one oddly never applied by the same journalists to various pale hued Democratic politicians who label themselves as Hispanics, and blew right past that difficulty.)  From then on the country got months of disgraceful and hypocritical pandering, nonsense, and rabble rousing from journalists and politicians, up to and after the time of the verdict.   It wasn’t worth watching, but it was illuminating.

The point is not to side with Zimmerman or Martin, either of whom could have prevented what happened. The point is the case  should never have been turned into something where the question of members of the public siding with one of the parties arose.  

Ptolemy

I would guess that most people who have heard of the Ptolemaic theory of the planets know it only as the false system preferred by dogmatic churchmen who opposed the progress of science and persecuted Galileo.  While that is true, there is much more  to the story of the theory. It did not begin as a dogma, but more as honest science. Greek astronomers and mathematicians of the Hellenistic period developed the theory  from observations dating from their own time back to the Babylonians. It was a remarkable intellectual accomplishment providing a dauntingly complex and explanatorily weak but descriptively accurate model of the apparent  motion of the sun and the known planets as observed from the earth. The Greek astronomer  Ptolemy presented both the theory and  data and mathematics supporting it in a large and impressive  treatise we call the Almagest which he wrote between 151 and 178 AD.  It is one of the most impressive books of antiquity  and a source for not only Ptolemy’s work but the lost works of his predecessors. It is certainly worth some serious browsing. (An English translation was published in  fairly large quantities as part of the Encyclopedia Britannica’s Great Books  set. A person can probably find a cheap, nearly pristine copy in a volume also containing works of Copernicus and Kepler in a used book store.) It was many centuries later before new observations, new calculations, and above all an approach to the problem from a radically different  and simplifying point of view led to Ptolemy’s theory being supplanted by the Copernican theory and its subsequent modifications.   

The story of how this came about is one of the most interesting in the history of science. It is also one to stimulate fancy and conjecture about our present state of knowledge. There is something of a Ptolemaic feel  to much of modern physics - with its daunting complexity and (sometimes) explanatory weakness but  descriptive accuracy  - that can make  a person wonder whether we might be  in a similar stage  to those Greeks of two thousand years ago and if there are some grand, Copernican simplifications waiting to be discovered.  

Financial Planning for Retirement

Debby and I have been retired for six years. To be accurate we have been semi-retired for six years.  We have both done some part time teaching during that time, she far more than I.  I thought it would be interesting to write about some of the things we did and learned in planning for and then beginning retirement, focusing this  time on the financial considerations.  Of course our experiences form only a single data point, and my comments are only those of an amateur who has participated in planning and executing a retirement exactly once.

The first thing to consider after people decide they want to retire is whether they are able to retire. This reduces to the question of whether they will be able to pay for the life they want to lead for as long as they will be living it once they no longer have paychecks (or have much reduced and sporadic ones). Many of the articles about planning for retirement start with assumptions about the fraction of pre-retirement income people will need in retirement. While these assumptions may be useful in a general way, particularly for people a long way from retirement, I think it is more useful for people near retirement to start with a careful analysis of what their spending in retirement is likely to be. This involves serious thinking about what people want and expect their lifestyles to be after they retire. (Debby and I did this in some detail while deciding whether we really were ready to retire. Our overall estimate has been fairly accurate so far, though our projections were well off base for some categories. In particular we well underestimated the rapaciousness of our local government.)  A careful job of this would include a good estimate of spending needs at the start of retirement, considerations of ways spending needs might change over time including disability or the death of one of the partners (single people can skip the death part), and projections of spending out through very old age unless there is a good reason to assume a person won’t last very long.  It is not necessary to run full scale Monte Carlo simulations, but people should consider at least a few obviously possible scenarios.

The planning for expenses should pay particular attention to costs for health care, both before and after the age for starting Medicare, including an objective review of one’s present state of health.  This one has to be worked on thoroughly and carefully, with individual planning for each partner. It also should  include planning for the costs of possible nursing home care. This is at least somewhat important for everyone, even people who are sure they would rather be dead than confined in one of those places. People change their minds, and events can unfold in ways leaving a person without the wits to remember his decision and desires. It is very important for people who would never consider taking action to shorten their lives.  Nursing home insurance can help provide a solution, but it can be very expensive if bought at or near the age of retirement.

The next step is to consider the assets one will have to meet those spending needs. These are usually mainly annuities, pensions, and savings. Unless there are  very good reasons for doing so, I do not think people should bank on either second careers or part time employment as necessary sources of income in retirement. Second careers may not pan out. (Since retiring Debby and I have begun second careers as authors. While this has been immensely rewarding personally, to date it has not added anything to our top or bottom line.) Employment opportunities may not be there. Despite both the immense  skill and great wisdom we older boomers so obviously bring to the marketplace and regardless of the slothful cretinism of many of the younger members of the working population, lots of employers just are not interested in hiring geezers part time. I think expected future inheritances also should be viewed as possible bonuses rather than essential parts of a plan for retirement, again unless there are strong reasons for doing otherwise. The well to do relative may change his mind or blow through his entire estate, either voluntarily or in a nursing home. Neither, I think, should most people count on projected windfalls from selling their homes and downsizing and/or moving to places with cheaper housing unless they have definite plans to do so fairly soon. Otherwise, when the time comes, people may not want to downsize or move to a new city. Even if they do, transaction and moving costs can eat up lots of the profits.

Almost everyone will have an annuity in the form of social security.  People near retirement can get a good estimate of promised social security benefits from calculators at the Social Security Administration’s website. Younger people can use the same calculators, but their inputs will necessarily contain more years of guesswork. People age sixty and over probably can count on receiving almost the promised payments from social security  - “almost” and not “all” because it is likely the  government will continue to jack up the Medicare B premiums it deducts from social security payments. Younger people need to plan for getting well less than the promised payments, just in case.  I like using a simple calculation in which a person under age 66 adds 34 to his age, divides that sum by 100, and multiplies the result by the promised benefits to get  an estimate of social security payments he will use in his planning.  A good thing about the annuity from social security is that it is indexed to inflation, so that, to the extent the government’s calculations on inflation are fairly accurate, the payments remain constant in real terms for life. Of course the payments stop at death. So a couple planning for retirement should remember that each month a surviving spouse will have only the larger of the two social security checks they received when both were alive, not both of them.

At present people have a choice of when to start receiving payments from social security. They can start as early as age 62, but the longer they wait up until they are 70, the more they will be paid each month after they start. In making this decision people need to consider their health, the age at which they want to retire, their ability to live without social security payments during the years, if any, when they will be retired but not receiving payments from social security, and, for married people,  the various tricks involving spouses starting collecting payment at different ages.  This can get fairly involved and will necessarily include a great deal of guess work. (Debby and I took the easy out of planning based on both of us starting payments at our “official” retirement age of 66. I think this works  fairly well for most healthy couples who are both about the same age, but it certainly does not hurt to run calculations based on different schemes.) Of course  if people want to retire at a certain age and will need payments from social security immediately to do so,  the question becomes moot.

Many people also have pensions and/or private annuities as well. Each pension plan or annuity will have its own rules and options, and people need to see which choices fit best into their plans. In making plans, it is important to remember that most pensions and private annuities are not indexed  to price inflation and thus will likely have less valuable payouts in real terms each year. Many pensions offer couples a choice of a higher payment for the life of one spouse or a lower payment continuing until they are both dead. I think the second option makes sense for most couples, because the surviving spouse probably will still have most of the expenses  the couple had and will necessarily lose the smaller of their two social security payments and be required to file income taxes as a single person.  Another important factor with pensions is the likelihood of the organization committed to making  the pension payments  actually doing so when the time comes. This varies from case to case.  For example  there are a number of states where people expecting pensions from the state’s government may need to be checking their hole cards.

That leaves savings. The best investment advice I ever got came from Harry Browne in one of his books. Browne, who had become famous in the 1970’s by warning people of the dangers of the inflation and monetary troubles of those days and urging investors to buy silver and the Swiss franc, wrote that, while his recommendations paid off and had been based on sound reasoning, he had also been lucky, and that no one, including Harry Browne, can predict where markets will go next with certainty. I  think people should take that observation to heart and  accept the solution of broad diversification of one’s investment portfolio among several  asset classes and a rigorous separation of one’s investment portfolio from one’s gambling and guess-following money.   (The book is Why the Best-Laid Investment Plans Usually Go Wrong. I recommend it highly. It should leave a reader permanently skeptical of market gurus of all flavors. It is also fun to read.)

People should remember the defining financial characteristic of retirement is not having income from working to pay the bills and accordingly act prudently with their savings.  Stocks have seen two really bad bear markets in the last  few years. Prices of gold and silver collapsed in the 1980’s and 1990’s. Bonds were losers in the 1970’s and are looking really dangerous right now.  Cash often loses value to inflation. Real estate prices sometime decline. No class of assets does well all the time.  (Debby and I had the interesting luck to retire right before the financial crisis and the worst bear market for stocks in over thirty years. )

Any plan for retirement which requires a retiree’s being fully invested in  a single class of assets and requires that class of assets always to perform well  is not a safe plan. Diversification is boring and will leave people as only partial participants in every bull market. However it will also make them only partial participants in the bear markets. The objective in retirement is not to get rich but to remain solvent and have enough income to cover expenses.

People should also be aware there are lots of people out there ready, eager, and able to separate retired people from their wealth and plenty of others who might do it by accident. Retirees should be cautious and spread their holdings among several reputable custodians. This sort of diversification is particularly important if one is placing any money for active management and even more important if one is doing so with an individual or a small firm.  People need only to watch the news to see why.