For People Who Live Their Work

Scientists at MIT are close to perfecting the hydrogen-powered house. Since I have no real talent for science I am incapable of giving you the technical overview, but here is the layman’s explanation. They have developed a mini-hydrogen power station that would replace your current household power supply. It would utilize some solar power to produce the small amount of electricity needed to combine with water to create a hydrogen power plant. No more fossil fuels needed. No more pumping pollutants into the atmosphere. The only output is water. And this hydrogen power plant  in your house could also be used to fill up your hydrogen-powered car someday, eliminating our other nagging fossil fuel drain, and the need to  build a huge hydrogen punping station infrastructure.

According to MIT, the technology works now, and would be practical and cost-efficient for wide distribution within ten years. Honda is currently testing hydrogen-powered cars on a relatively large scale in California, so the automotive technology should exist within that time frame.

This means that in a decade or so you could be living in a home that has no power bills and creates no pollution, and driving a car that doesn’t require stopping at gas stations, and instead of exhaust emits water from its tailpipe.

Terrorists seek to disrupt through fear. And the more afraid they make us the more apt we are to act emotionally and irrationally because of this fear. Since 9/11 we have acted irrationally when it comes to air travel, and the failed Christmas plot has really driven us into frenzy that is causing us to take ridiculous actions. If next time terrorists threaten a shopping mall, then I assume we would develop irrational fears and actions to protect malls. And soon the terrorists are essentially in control, as fear has driven us to change our lifestyles. There is a big difference between taking reasonable methods to protect our security, and completely altering our lifestyles because of fear.

I would argue that there is a more subtle, but perhaps even more dangerous kind of terrorism going on courtesy of the American media. Unfortunately fear drives viewership, and the media thrives on any story that makes us afraid. Consequently most of our legitimate journalists have been replaced by these new media “terrorists” that seek ratings by filling us with fear, anger, and distrust. They operate from both the left and the right, spewing rumors and innuendo that keep people glued to the screen. When much of the population is convinced that our President is actually a socialist foreign-born Muslim that favors killing off the elderly, people naturally get afraid. It also spreads panic when people are convinced that the world will end in the next few months due to global warming, that Pakistan and North Korea are preparing nuclear strikes, and that the flu vaccine is deadly. Certainly global warming, nuclear weapons, and public health are important issues that need to be discussed, but the terrorists in the media are less interested in public discourse than they are sensationalism.

I think it is quite possible that the ranting and fear mongering that now typifies mass media is having an incredibly negative long-term impact on society. The truth is that for most of the world, this is the best possible time to be alive. While the human race is far from perfect and we face many massive problems, the large majority of mankind lives happier, healthier lives than those that came before us. But that doesn’t make good news. Nor does all the incredible work that is going on around the world that will solve these big problems.

These media terrorists might not blow up airplanes or plant roadside bombs, but I suspect they are even more effective than Arab terrorists at destroying optimism and people’s spirits. Luckily these kinds of terrorists are easier to identify, and easier to eliminate than the ones that live in caves in Pakistan. We need to eliminate them by turning the dial, refusing to buy their ridiculous books, complaining to the companies that support them with advertising, and flatly rejecting their terrorist messages designed to crush our spirits.

Every now and then I will be interviewing a young prospective employee, and when I ask what is really important to them, they reply “I want to be really successful, but I also want work  life balance”.

“I don’t want my entire life to be defined by what I do”, they often comment. “It’s important that I spend time with my family…. doing the things outside of work will fulfill me”.

“Mmmm, yes”, I smile. “Work life balance. I’ve heard of that. But boy did you apply for the wrong job”.

Certainly I don’t discount the importance of a life outside of your job.  And there are many professions that offer a balanced existance.  But if I query my friends and business associates that have had really successful careers, the will almost without exception say that the concept of work life balance did not occur to them for at least the first twenty years of their work life.   I’ve been working hard for the last thirty years, and am now just seriously considering the concept.

There are no free rides to success.  There is a direct correlation between how hard you work and how successful you become.  That’s why it is so important to find work you love, as unfortunately successful people tend to spend more time working than with the people they love. A career is often like a savings account.  If you put maximum effort into the crucial first part of your career, you are often lucky enough at the end to actually enjoy some work  life balance.

After wiping out most of their retail competitors, Walmart has been steadily moving towards controlling the brands they sell. Last week they eliminated the Glad and Hefty brands from their food storage shelves, consolidating to their fast-growing private label brand, Great Value, and the Ziplock brand.

Many anticipate that this will be a sign of things to come across many product catagories, with Walmart consolidating to fewer brands and really promoting their own more profitable private label brands.

Walmart is such a Goliath that these kind of moves could have tremendous consequences for many manufacturers.  This could mean the decline of many major American companies, but you can’t really blame Walmart for the move.  Consumers probably don’t need  – or want to choose from dozens of plastic bag options. Slimming SKUs in favor of more profitable and desireable products seems to make sense in many product catagories for retailers.

But this also points to the need for manufacturers to come up with design and marketing efforts that allow them to control their own destinies, as opposed to just being a low-cost house manufacturer for major retailers. Walmart’s mantra of the lowest price certainly resonates with a huge group of consumers, but a manufacturer that sells on price alone remains continually vunerable.  They also need to sell innovation – features and benefits that imbed their product in consumers’ minds and make them a destination brand, with advertising and marketing that reflects this differentiation.

Imagine you make $50,000 a year, but your expenses are $55,000 a year. To make matters worse, you are hopelessly in debt, and the bills just keep piling up (hopefully you just need to imagine this and it’s not reality). What would you do? Well, most of us would immediately take action to cut expenses and/or make more money. But of course the government is not like most of us.

As I look out my office window I can see a beautiful three story stone building that fills the square block across the street.  Despite the fact that it is a historically-significant building that sits on one of the most valuable locations in Portland, and borders some of the highest priced developments in the history of the city, it has been vacant for almost ten years since the federal offices moved out.

A couple years ago I attempted to buy the building, but the Federal Government that owns it was not interested in talking. I know of at least three other major developers that also tried to buy the building, but due to government bureacracy they were unable to make any headway.  So it sits unoccupied, and instead of the government realizing several million dollars by selling the building, or even attempting to lease it out, they pay maintenance fees for a big empty building, while creating a bit of a blight in the neigborhood.  Even if the government was not open to selling or leasing the building at this point, the site is surrounded by a couple dozen open parking spots that would be in high demand in this neighborhood.

OK, I know that collecting $20,000 a year for parking, or even the millions of dollars the government could reap by selling the building certainly would not cure our budget crisis, but I can’t help but wonder how many other government buildings are sitting empty across the country.  Hundreds?  Maybe even thousands?

When an individual or a business is in financial trouble they initially look at their assets to see what they can sell to raise cash. Maybe they have a little garage sale. Of course, I don’t want the government to sell our National Parks or sell and lease back the White House, but I am willing to bet that a little ”garage sale” could raise a significant amount of cash and lower expenditures.

This year our governmental deficit is projected to be $1.56 trillion dollars – or perhaps more accurately stated with all the zeros in place – $1,560,000,000,000.  The deficit alone is almost 11% of our GDP.

A trillion is a pretty daunting number to comprehend, but here  is one way to put it into perspective.

A million seconds = 12 days.

A billion seconds = 31 years.

A trillion seconds = 31,688 years.

Several states are currently debating the legalization of marijuana, and given the current fiscal issues and relaxation of policies pertaining to medical marijuana use it looks quite feasible that we will see legal pot use in the next few years.

The Federal Government and almost every state in the union are frantically searching for new revenue sources, and as is always the case, the pros and cons of any new tax are heavily debated.  In Oregon there is a move to tax the rich and add corporate taxes.  Of course, corporations and the rich argue this will hurt business, and ultimately result in less tax revenue.  I suspect the truth is somewhere in the middle.  But all this makes the legalization and taxation of marijuana particularly appealing right now.  After all, it is already being sold, just not taxed, and most users would have no objection to a better distribution system that in all liklihood lowers prices and guarantees quality while feeding the economy.  Certainly anti-drug activists would have legitimate arguments against society essentially endorsing more drug use, but the numbers and the argument that “people would do it anyway” are too compelling to ignore, and there is certainly enough societal experience with marijuana to refute some of the “gateway drug” and the other “reefer madness” arguements.  Unlike most potential tax sources, there are few that would argue against taxing it, the issue is simply the legalization.

I was suprised to learn that there is a major effort by otherwise staid and conservative economists to legalize pot based purely on economic impact.  According to a study conducted by Professor Jeffrey Miron, legalizing marijuana would save $7.7 billion per year in state expenditures on prohibition, and if pot was taxed similar to tobacco it would generate $6.2 billion dollars in tax revenue.  We would also free up enormous space in prisons, and arguably free people that don’t really belong behind bars. Another possible positive impact pertains to the costs and hassles protecting our borders. Huge amounts of time and money are spent trying to stop pot smugglers on the Mexican border, and it is a constant source of crime.

The move to legalize is even endorsed by dozens of economists, including three Nobel Laureates; the late Milton Friedman, George Akerlof, and Vernon Smith.  I used to think that conventions for economists must be among the most boring gatherings imaginable, but now I must rethink that position.  Perhaps they have Cheech And Chong perform at the cocktail party?

In any case, a $13 billion dollar plus savings warrants some serious discussion.

The Dark Lord of the religious right, Pat Robertson, sunk to new lows this week,  and also gave us a glimpse into his evil black heart, when he self-rightously claimed the devastating earthquake in Haiti was a result of the country’s ”pact with Satan”.

Though I am certainly no expert on Christianity, I seriously doubt that Jesus would look at a disaster that left tens of thousands dead and in misery and happily proclaim “you guys had it coming”.

But isn’t that the problem with any kind of religious fundamentalism.  Finding a purpose and spirituality in life is a good thing.  But any group that feels they are God’s chosen ones and everyone else should go straight to hell is really an enemy of spirituality.   I much prefer the people from any religious persuasion the believe “God is Love”, as opposed to those that think religious affiliation is some kind of path to moral superiority.

In the midst of all the debate over taxes, healthcare, Kanye West, national security, and Tiger Woods’ career, I somehow lost track of how our legislators are handling the estate tax.  Luckily a few days ago I received a bulletin from the estate planning experts at uber law firm Davis Wright Tremaine, which left me a little surprised.  Rather than me explain (and if you are like me you will get a little lost in the woods reading this), here is the email:

From Davis Wright Tremaine

Congress failed to address pressing estate and generation-skipping transfer tax matters before it adjourned in December. Consequently, as of Jan. 1, 2010, the provisions of 2001 federal tax legislation (the “2001 Act”) will cause the federal estate and federal generation-skipping transfer (GST) taxes to be repealed for one year, starting on Jan. 1, 2010.

For 2009, there was a $3.5 million exemption for each tax and a 45 percent top tax rate for each tax. Under the 2001 Act, the federal estate and GST taxes will come back into effect on Jan. 1, 2011, but with only a $1 million exemption for estate tax, a $1.1 million exemption for GST tax (indexed for inflation), and a top rate of (generally) 55 percent for each tax.

Although the U.S. House of Representatives passed a bill in December to extend the 2009 federal estate and GST tax rates and exemptions, the U.S. Senate did not act to provide any similar extension. A number of Senators have made statements regarding their intent to address this issue early in 2010.

There is no way to predict when, or if, the House and Senate will act in 2010. It is not clear whether any action by Congress during 2010 would or could be retroactive to Jan. 1, 2010. We will continue to monitor developments as the tax picture evolves.

Gift tax

The repeal of the federal estate and GST taxes does not repeal the federal gift tax, which will continue in 2010 with a $1 million exemption, but will have a top rate of 35 percent, rather than the 45 percent top rate that existed in 2009.

Current action

Meanwhile, depending on the action taken by Congress and whether such action is retroactive (and, if retroactive, whether it will be constitutional), there may be opportunities in early 2010 to make gifts at a lower gift tax rate, and to make GST tax-free transfers to grandchildren that would otherwise be subject to GST tax.

Moreover, it is important to be aware that the repeal (and assumed reinstatement in 2011) of the federal estate and GST taxes will affect many estate plans now in place. This is so because many wills (and living trusts) describe gifts in terms of estate and GST tax “exemption” amounts or other formulas tied to federal estate tax terms. Elimination of the taxes (and hence the exemptions) and the reinstatement of the taxes, but with smaller exemptions, could affect the operation of a will (or living trust) in ways that were not intended.

This would be a good time to review and adjust estate plans to be sure the one-year repeal of the taxes and its (assumed) reinstatement will not adversely impact the intended plan. There may also be non-tax related reasons to review your estate plan.

“Carryover basis” for income tax purposes

As part of the 2010 repeal of the federal estate and GST taxes pursuant to the 2001 Act, the income tax basis for property acquired from a decedent will be the lesser of the decedent’s adjusted basis or the fair market value of the property at the decedent’s death. This “carryover basis” is a significant change from the “step-up” in basis that has historically occurred at the decedent’s death.

There are two exceptions to the carryover basis provisions that allow an executor (i) to allocate up to $1.3 million to increase the basis of assets and (ii) to allocate an additional $3 million to increase the basis of assets passing to a surviving spouse or to a qualified trust for the benefit of the surviving spouse. The carryover basis law is scheduled to be in effect only for 2010.

Further changes in January 2011

As noted above, under the 2001 Act, the federal estate and GST taxes come back into effect in 2011 with a $1 million exemption for estate tax, a $1.1 million exemption for GST tax (indexed for inflation), and a 55 percent top rate. (There is also an additional 5 percent surtax for certain large estates.) The federal gift tax exemption of $1 million will continue in 2011, but with a 55 percent top rate. The carryover basis described above would not apply with regard to estates of decedents dying after Dec. 31, 2010.

As we prepare to move into a new decade. I found the following comparison between today and ten years ago quite interesting:

• The Dow was 1000 points higher ten years ago.
• There was a 34% decline in home sales last year versus ten years ago.
• There are three times as many people unemployed today versus ten years ago.

Ah, but the consistent lesson of history is that in the end it always gets better for mankind – even though there might be bumps in the road.