I don’t normally suggest a soundtrack for posts, but for this one I recommend that you listen to Da Vinci’s Notebook singing “Kingdom in the Sky.” Open that link in another tab and let it play while you read.

For almost ten years now I’ve been writing about personal finance and frugality for the website Wise Bread. A few months ago, the founders emailed the senior writers to say that to celebrate their 10-year anniversary they were inviting all of us who started in the first year, together with our families, to Disneyland.

What a great gift! Jackie and I flew out last week, spent two nights in the Disneyland hotel, and spent two days in the theme parks.

Even better than the theme parks was the chance to meet the admins, some of the other writers, and the Wise Bread staff! These are people I’ve been working with for 10 years, but had never met except through their posts and email messages.

Nice swag bags were delivered to our room—snacks, Disney name tags and lanyard wallets, big Disney insulated cups, and heavy-weight hoodies with both the Disney and Wise Bread logos. Mine also had a Mophie powerpack! (There’s a local-to-my-hometown connection between Mophie and Kalamazoo which this an especially welcome gift, totally aside from the fact that my old Motorola powerpack had given up the ghost just before this trip, which meant that I really needed one.)

We also got a pair of 2-day hopper passes for visiting the theme parks!

Some of the gifts from the Wise Bread admins

The evening we got there was the staff/editor/writer dinner at the Catal restaurant in downtown Disney. Jackie and I ended up sitting down at the end of the table with the editors Janet and Lars and their spouses, and enjoyed much fascinating conversation all through dinner. (Also a nice—if rather young—pinot noir that Lars somehow managed to end up paying for despite everyone else’s best efforts.)

Around the middle of the evening, Lynn (one of the founders) called me to join her closer to the middle of the table so she could make a little speech thanking all us writers for joining Wise Bread and sticking with it all these years, and giving us each a “gift appropriate for a writer” which turned out to be the Mont Blanc pen in the photo above. What a generous and appropriate gift!

(A photo of that moment was posted to instagram—I tweeted it—but it seems to have vanished. My tweet no longer even has the link to where the photo used to be. What’s up with that? If it resurfaces, I’ll post it here.)

The next morning was breakfast at Goofy’s Kitchen—a breakfast buffet with Disney characters posing for photos and parading through the dining rooms. We sat at the same table as Will, who had some very kind things to say about me to Jackie.

Jackie in Goofy's Kitchen, with Minnie.
Jackie in Goofy’s Kitchen, with Minnie.

We spent the rest of the morning at the Disneyland theme park (having done the California Adventure theme park the previous afternoon).

Me with the Cheshire Cat in Disneyland.
Me in my Wise Bread/Disney hoodie with the Cheshire Cat in Disneyland. Photo by Jackie Brewer.

After various rides and attractions and lunch (and a good bit of walking—important to Jackie and me), we decided that we were about theme-parked out, and decided to spend the warm part of the afternoon walking in the gardens outside the hotel and sitting by the pool. Jackie wrote some postcards.

We took a bunch of pictures, some of which are good enough to share. I gathered those in a Flickr album I called #wisebread10thdisney after the hashtag the admins wanted us to use for our Instagram posts. (Or you can go to that hashtag at Instagram and see everybody else’s photos along with those of mine that ended up on Instagram.)

However, I got one particularly good shot of Jackie and me that I wanted to share:

Selfie with Jackie and bamboo.
Selfie with Jackie and bamboo

How much fun were Jackie and I having at Disneyland? This much fun.

Thanks to the admins at Wise Bread! Hey, shall we do our 20th anniversary celebration at EPCOT?

The Federal Reserve and the “gig” economy

The “gig” economy: all the sorts of work arrangements where you’re not a permanent employee and can’t expect that work one day implies that you’ll have work the next day—freelancing, contracting, temp work, casual labor, and most recently, software-mediated contract work like Uber driver.

These sorts of work have been growing as a fraction of all work. In fact, according to the Bureau of Labor Statistics, in the last ten years contingent workers have gone from being 10% of the workforce to being 16%. In fact,

all of the net growth in aggregate employment in the decade leading up to 2015 can be accounted for by contingent work arrangements, which means there has been no net employment growth in traditional work arrangements.

Source: FRB: Brainard, The “Gig” Economy: Implications of the Growth of Contingent Work

This matters to everyone with an interest in the U.S. economy, but it matters particularly to the Federal Reserve, which is charged by Congress to:

promote effectively the goals of maximum employment, stable prices and moderate long-term interest rates.

Source: The Federal Reserve’s Dual Mandate

So this raises the question: Does strong growth in the number of freelancers, on-call temps, and Uber drivers mean that we’re getting closer to maximum employment? Or, that we’re getting further away?

Second passports for expensive

This sort of thing was a fantasy of mine, back in the 1980s. I could see things getting worse in the US, and the idea that a foreign passport and foreign residency could provide an escape if things got too bad was pretty appealing.

Nowadays not so much. It’s not that things have gotten better in the US; it’s that things have gotten worse other places at least as quickly. More to the point, things getting worse in the US seems to make things worse other places, so the conditions that make the idea appealing are the same conditions that make it pointless.

One book that substantially influenced my thinking in this area is Emergency: This book will save your life by Neil Strauss. I recommend it highly. In entertaining and informative prose, he documents his transformation from just the sort of kook I was in the 1980s into somebody with a much more practical perspective.

Still, an EU passport might have its upsides. Anybody got a spare quarter million euros and an interest in learning Greek? (If money is no object, a half million euros will let you buy in to Ireland, and I expect learning Gaelic is optional.)

Graphic from Citizenship for Sale on the International Monetary Fund’s IMFDirect blog.


The other reason to raise chickens

Backyard Eggs
Backyard Eggs

So, the Champaign City Council legalized backyard chickens a while back. You have to file a form, pay a one-time fee, and get a notarized permission slip from your landlord (if you’re a renter), but it all looks quite doable. As I’d mentioned when I wrote about the issue before, this would have been a determining factor in my willingness to buy a house in Champaign, and now it isn’t. The fee isn’t cheap ($50), but figured into the cost of buying a house, it’s insignificant.

But thinking about the fee got me to thinking about why one raises chickens in the first place.

Probably most of the people in Champaign who want to raise backyard chickens are yuppy locavore types looking to reduce their food-miles to minimize their carbon footprint and know that they’re eating organic and cruelty-free. More power to them. But there’s another category of people who might raise backyard chickens: poor people.

Someone who’s poor—someone whose budget barely stretches to cover their other expenses, someone who’s on food stamps, someone who uses a food pantry—is another person who might find raising backyard chickens very attractive. Eggs don’t cost much, but someone who raised chickens might be able to save a few dollars a week and get some high-quality protein and have a surplus that they could share or trade. But a $50 entry fee just about blocks this reason to raise chickens.

I guess I’m not really surprised. Local politicians in Champaign have a lot of incentive to help upper-middle class people eat local and organic—those people vote. They probably don’t feel the same pressure to help poor people get a little high-quality food as cheaply as possible, because poor people don’t vote as much—and when they do vote, the legality of backyard chickens probably isn’t a top issue.

It does bug me just a little that Champaign (which thinks of itself as conservative place) has created this whole big-government scheme with forms and approvals and fees and regulations on chicken coops, while Urbana (which thinks of itself as a liberal place) doesn’t have any of that stuff, just a general rule against letting your animals become a nuisance. But that’s just me, asking for consistency from politicians.

So, half a cheer for Champaign legalizing backyard chickens, even if they came up with a way to do it that only helps yuppy locavores and not poor folks.

How is 2% inflation different from 3% or 4%?

In his dedication to educating the public about the zero bound, Paul Krugman has asked several times (most recently today):

. . . what calculation leads to the notion that a target of “close to but less than 2%” is appropriate, as opposed to, say, 3 or 4 percent.

I think I know the answer: An inflation rate of 2% is small enough that price changes due to inflation are unnoticeable in the noise of other price changes, even over periods of a few years.

Among the costs of inflation are those that come from uncertainty about not only future prices, but also about current prices.

When inflation is under 2%, the price of a cookie at the local bakery might remain unchanged for years at a time. I can stop by the bakery with exact change, and be reasonably confident that I’ll be able to buy one. The costs of flour, sugar, and chocolate will vary over time—but some will rise and others will fall, and the bakery will be able to hold the line on the price of a cookie. This is a convenience for me. It’s also good for the bakery, because people who are confident that they have enough cash in their pocket to buy a cookie are more likely to stop and get one. If they had to make a stop at the ATM first to get cash—or worse, be sent away to visit an ATM mid-transaction—they might not.

At some point—and I assert that the point turns out to be slightly above a 2% inflation rate—stores find that it’s necessary to raise prices at least annually, just to keep up with inflation.

Even if the inflation rate is known and not a surprise, there’s still the threshold effect of one day the price is $x and the next day it’s $x+3%.

When the inflation rate is below 2%, prices can remain stable for years at a time—long enough for people to learn what they are. And that knowledge can make their day run more smoothly. They can be sure they have appropriate cash on hand. They don’t need to check prices ahead of each transaction.

When the inflation rate is above 3%, stores might need to raise prices twice a year, to avoid falling behind. When the prices of a hundred things are all being raised more often than annually, it becomes impossible to learn what prices are, and impossible for that knowledge to make the day run more smoothly. All of a sudden, you have to pay attention to price changes, because they’re happening all the time. In advance of every transaction, you need to allow for the fact that maybe today is the day that prices went up several percent.

Some prices change all the time anyway, especially where the item being sold is a single commodity, such as milk or gasoline. For exactly this reason, prices of those items are often prominently displayed—to reduce the transaction effort of the consumer who wants to know what the price is going to be.

I think that’s why 2% inflation is different from 3–4% inflation: Because price changes due to inflation begin to stand out from changes in relative prices, adding another whole layer of informational costs on every purchaser, on every purchase.


I was one of the first people to try to sign up for insurance on healthcare.gov. That turns out to have been a mistake. At least, that’s my theory.

With considerable effort, over a period of a couple of days right at the beginning of October, I’d gotten through the first part (where you verify facts about yourself to confirm that you’re you). Then I’d done the part where they ask about your income, etc.

At that point—when I’d entered all the info about my and Jackie’s contact info, race, ethnicity, income, and so on—I clicked the last “submit” button. . . and waited.

After a long time, the submission timed out.

Not wanting to have to go through all that entering again, I just backed up a screen and clicked submit again. . . and waited again. And it timed out again.

I did that over and over again, hoping that eventually I’d get a successful submission. And at some point I did get one. In fact, I got a bunch—many of those failed submissions had apparently gone through before they failed. But (I now believe), something about them had gotten corrupted at some point.

On the first visit after that, I’d gotten through to the point of seeing what policies were available to me and how much they’d cost. I printed the list and reviewed it with Jackie and investigated the networks offered by a few plans and picked a policy (sticking with Health Alliance, but going for one of their new Silver plans). But when I returned, there was a glitch: I could no longer sign up for insurance for Jackie and myself; it offered me a policy only for myself, with no sign as to whether I’d be able to get Jackie signed up after.

Yesterday, I finally gave up on making my way through the signup process, and called the telephone interface.

Turns out, the people on the other end of the phone go through the exact same interface. So, of course, they ran into the exact same problem I did.

After escalating to the senior tech guys, the proposed solution was to reset my account and have me start over. (Something I would have done a long time before, if that interface were available.)

Sadly, I couldn’t make that work either.

Finally, I started over completely. I created a new account (with a new login name, using a new email address), re-verified my identity, and re-entered all the info about me. This time, having already selected a policy, I pressed straight ahead and enrolled.

So, I have successfully signed up for insurance through Obamacare. It took about an hour, once I started over from scratch. I suspect it would have worked pretty smoothly, if I hadn’t tried so persistently to sign up in those first few busy days.

Despite the aggravations of getting signed up, I’m pretty pleased. Obamacare is going to save me hundreds of dollars a month. Our insurance bill had been our largest bill—quite a bit higher than our rent. Now it will be just another monthly expense—bigger than our phone bill, but less than rent or groceries.

And yet, the cost savings is far from the most important thing. Before, I worried constantly that any major medical problem would ruin us—make it impossible to get affordable insurance; trap us in a policy that all the healthy people had fled, with premiums spirally inexorably higher until they consumed all our money. Now, at last, we have some security on that front. Cheap or expensive, at least our insurance is actually insurance. A major medical problem would still be a big deal—one of us would no longer be healthy. But at least it would just be that, and not that and a financial catastrophe too.

What was privacy?

I had the great good fortune to learn early on that anything posted to the internet is there forever. That knowledge has guided my internet activities for twenty-five years now, and keeping it perpetually in mind has stood me good stead so far. My basic rule is simple: I don’t post anything to the internet unless I’m intending to publish it to the world at large.

So, I’m happy to post the articles and stories I write, and happy to post links to them. That information is deliberately made public. I also post about things I do (and share links to things other people write), but only with the knowledge that each such post is part of my permanent public persona.

The exceptions (commercial, banking, credit card, insurance, and medical sites) are carefully considered, minimized as best I can, and monitored so that I have some hope of detecting and limiting the harm from failures. I expect the information that I share with them will remain private—but I use the word “expect” in much the same way an eighth-grade teacher might use it when telling her students “I expect each one of you will be well-behaved during our field trip.”

Because of this perspective, I pay very little attention to the “privacy” settings of social media sites. Whatever I post is intended to be public, so it makes no sense to constrain it. I do try to keep a grip on things that I don’t intend to be public. For example, I only attach location information to my posts on a case-by-case basis.

As I say, this has stood me in good stead up to this point. But, as Bruce Schneier points out, we’re already well past the inflection point between a past when such efforts mattered and a present and future where they do not. I carry my phone with me most of the time, so my location is already known to a third party—which means that, as a practical matter, it can be known to anybody who cares enough to get the information. Cameras are nearly ubiquitous—even before drones make it possible for them to be actually ubiquitous (and social media sites have already gathered ample data to support any facial recognition effort).

Anybody who’s working on the public policy aspects of these issues who’s not familiar with David Brin’s Transparent Society work is making a mistake. Privacy has no future. It hasn’t for a long time. Transparency is our best hope for keeping this fact from making the unequal power relationships in society much worse.

[Update 22 May 2011: I found the post from 2003 where I tell the story of just how I learned this lesson, back in 1990.]

Reducing poverty

I’m big on reducing poverty, both locally and globally. (I do worry that more rich people will use more resources, suggesting that reducing poverty isn’t an unalloyed good thing. On yet another hand, only rich people can afford things like sequestering carbon or preserving habitat. It’s complicated.)

Since I’m interested in reducing poverty, I was interested in Lant Pritchett’s recent talk Everything you think you know about poverty is wrong.

Pritchett and I see pretty much eye-to-eye on how to have a rich country, I think.

These well-off countries have a productive economy, a government that is responsive to the citizens, a capable bureaucracy, and the rule of law.

This has interesting implications for global development, because these are all things where it’s very difficult to improve someone else’s situation. If a country has government by-and-for the elites, or a corrupt bureaucracy, it’s going to be poor—and there’s very little outsiders can do to help. One of Pritchett’s points is that things that seem like they might help, such as improving education, seem to do more harm than good—perhaps because well-educated corrupt bureaucrats are worse than ignorant ones.

His solution is for rich countries to create or expand guest worker programs, which I think is a poor idea.

It’s not that I don’t think it would work. A poor worker who came to a rich country and worked a couple of years could both support relatives back in the poor country and save up enough money to return home and start a business. That would relieve poverty both immediately and going forward. It would also produce another person with first-hand experience of the advantages of a less-corrupt society (as opposed to merely seeing the advantages of getting in on the corruption).

The main reason I think it’s a poor idea is that enforcing a guest worker program eventually requires a police state. Somebody has to check all workers—it’s the only way to identify those who aren’t legally entitled to work. Somebody has to make sure those whose permission to work has expired get fired. Those whose permission to live here has expired, but who don’t go home, become an underclass with all the usual problems of an underclass—crime, violence, oppression, disease. I’ve written about this before (see Missing the point on immigration).

There is also the issue of how guest workers affect salaries, wages, and working conditions of citizen workers (short version: I think it makes them worse).

The ideal solution, of course, would be for every country to be rich enough and free enough that people from all over the world would want to move there. But that just brings us back to where we started.

Interviewed on Navigating Your Money

Mike Tierney of the Navigating Your Money podcast interviewed me last week and has already put the show up. Listen to me natter on about frugal living here:

Episode #19: Live Like You Have More, On Less

I haven’t actually listened to it. I find the idea of doing so fills me with dread. (I’ve heard other people say similar things, but am a little surprised to find myself so strongly affected.)

Wise Bread’s Will Chen has assured me that I sound reasonably articulate:

I especially like the part where you explained that a budget is not a limit but rather a tool for showing you what you CAN have. The part about sharing tools is also a really awesome part. You did great, but the host is also really good. He clearly has read through your material and gets your philosophy.

So there you have it. If you’re interested in what I’ve been saying, but you want to hear it in my voice rather than reading it on the screen, here’s your chance.

Dancing on the edge of the fiscal cliff

The tea-party right was willing to risk the hard stop in spending that would have resulted from running up against the debt limit—a game of chicken that neither the Democrats nor the sane fraction of the Republicans could take the risk of losing.

The fiscal cliff looks a little similar, but it’s much less dangerous. It’s a game that lends itself to playing through to the end, because the risk of losing isn’t nearly so bad.

Suppose we did go over the fiscal cliff. What would happen?

First, tax rates would go up for everybody. That’s bad, but it’s not terrible. Actually, taxes at those rates would produce revenue roughly equal to the amount of government people seem to want.

Second, spending would be cut, with the cuts falling on almost everything except Social Security. A lot of good stuff would be cut, but that might not be such a stiff price to pay, considering that a lot of the things that ought to be cut (such as defense spending far beyond our needs) would otherwise be very hard to cut.

The result would be a rough year or two, hard on everybody from working-class folks to defense contractors, but all those problems would be fixable. In fact, Congress would love to fix those problems! Congress could cut taxes! (Just not as much as Bush did.) Congress could boost spending! (Just not to current levels.) Really, there’s nothing congressmen like better than cutting taxes and spending money on stuff.

The other details are similar. The AMT would strike middle-class folks hard, but that could be fixed, too. In fact, having to fix it would be an opportunity to improve it—turn it back into what it was supposed to be, a minimum tax rate that applies to everyone, no matter how many tax shelters they have or how many special preferences they qualify for. The end of the “doc fix” would hurt health care providers, but that could be pretty easily fixed too. (We’ll no doubt have to make a lot of small changes to healthcare stuff, once health care reform goes into effect and we run into the inevitable glitches.)

It’s always hard to raise taxes and cut spending, so it’s hard to do what needs to be done. But that’s why the fiscal cliff is so perfect. Once we go over the edge, we won’t need to raise taxes and cut spending—we’ll need to cut taxes and raise spending, and that’s dead easy.

Dive over the fiscal cliff, then fix things. It’s not perfect, but it wouldn’t be nearly as bad as what we’ve got now.