I'm not a technology guru like some of my friends but I do know a great piece of technology when I see it.
I've been using Dropbox for a few months now. It works as a file backup program and a file sharing program. Another cool thing you can do is get a link to a file, email that link to your friend who can then just click on the link and download the file directly from the cloud which solves the problem of emailing large files. You can see how this works by downloading my insurance analysis from a previous post.
Dropbox installs a folder on your computer that automatically syncs the contents of that folder with the same folder you install on another computer so you always have the same version of your files in both places. This is very helpful if you use multiple computers. You can also go online and download any of your files from a browser on any computer.
I've tried other online backup solutions like mozy, syncplicity, and ZumoDrive but this is by far the best of its kind and it doesn't slow down my computer like some of the other similar programs.
Anyway, just thought I'd get the word out about this because I think they have a great product and I want to see them around for a very long time. If you want to try it out use this link so I'll be rewarded with a little bit of extra free storage space. They offer 2 Gig free.
https://www.dropbox.com/referrals/NTI1MDczMzc5
Monday, January 18, 2010
Wednesday, November 11, 2009
The Essence of Freedom is the Proper Limitation of Government
Is it just me or does it seem like we're getting further away from a Republic all the time?
Sunday, November 08, 2009
Whole Life or Buy Term and Invest the Difference?
It seems as though I have an unusually high number of friends who are life insurance salesmen. I love my friends but it can get annoying when they're constantly trying to try to sell me insurance and sometimes it seems as though the only way to remain friends with them is to buy their products.
Two of them constantly try to sell me whole life, life insurance. Now, I have to admit they make these products sound quite appealing at first. They tell me that instead of having nothing to show for my insurance payments in 30 years, I'll have a large amount of money in cash value and that the cash value is a safe bet. They say how I can borrow against my policy while keeping my policy in place along with many other appealing benefits.
Well, I finally put one of their policies to the test. I ran an analysis showing the value of his New York Life policy vs. a plan to buy term and invest the difference. My analysis shows that buying term and investing the difference leads to much better results. It can be downloaded by clicking on the link below.
The analysis is still in draft form and I am certainly open to suggestions as to how to make it better or more accurate as I am definitely not an expert on taxation or personal finance. You can change any of the assumptions in blue and yellow to see how they affect the results. The Whole Life piece is an actual illustration from my friend who is a New York Life agent.
Click Here to pull up a copy of my analysis
Two of them constantly try to sell me whole life, life insurance. Now, I have to admit they make these products sound quite appealing at first. They tell me that instead of having nothing to show for my insurance payments in 30 years, I'll have a large amount of money in cash value and that the cash value is a safe bet. They say how I can borrow against my policy while keeping my policy in place along with many other appealing benefits.
Well, I finally put one of their policies to the test. I ran an analysis showing the value of his New York Life policy vs. a plan to buy term and invest the difference. My analysis shows that buying term and investing the difference leads to much better results. It can be downloaded by clicking on the link below.
The analysis is still in draft form and I am certainly open to suggestions as to how to make it better or more accurate as I am definitely not an expert on taxation or personal finance. You can change any of the assumptions in blue and yellow to see how they affect the results. The Whole Life piece is an actual illustration from my friend who is a New York Life agent.
Click Here to pull up a copy of my analysis
Tuesday, May 26, 2009
No Wonder Liberals are Pro Choice
I came across this article today in the Wall Street Journal about how all these billionaires are all concerned about population control. Now, I have a lot of respect for Warren but this is ridiculous. Population control, really? What are they worried about, too many people that there won't be enough food, clothing, or shelter for everyone?
According to the article these guys are followers of Malthus who said, "The power of population is indefinitely greater than the power in the earth to produce subsistence for man".
I could be wrong but as I understand in a free market economy supply will always equal demand, the variable being price. So providing these liberals don't screw up the economy with all their plans for government intervention and social welfare programs then yes, there will always be enough "substance" (land, food, shelter, etc.) for everyone as price provides an incentive for producers while at the same time curbs demand.
Think of it this way, as the population grows, the demand for goods will increase and will drive up prices to levels where additional supply will be stimulated. As prices increase people will have fewer children because it will be costlier to raise their children and provide for their children. Now, if the government keeps providing handouts to everyone then there is no disincentive to have children.
In a free market economy the laws of supply and demand provide its own population control.
According to the article these guys are followers of Malthus who said, "The power of population is indefinitely greater than the power in the earth to produce subsistence for man".
I could be wrong but as I understand in a free market economy supply will always equal demand, the variable being price. So providing these liberals don't screw up the economy with all their plans for government intervention and social welfare programs then yes, there will always be enough "substance" (land, food, shelter, etc.) for everyone as price provides an incentive for producers while at the same time curbs demand.
Think of it this way, as the population grows, the demand for goods will increase and will drive up prices to levels where additional supply will be stimulated. As prices increase people will have fewer children because it will be costlier to raise their children and provide for their children. Now, if the government keeps providing handouts to everyone then there is no disincentive to have children.
In a free market economy the laws of supply and demand provide its own population control.
Wednesday, May 20, 2009
Minimum Wage, Minimum Employment, and Minimum Profitability
Ok, let's see if I can simply explain why minimum wage laws are so bad for the economy. The reason for this post is because in July minimum wage is set to jump almost 11% to $7.25 an hour.
Minimum wage laws are detrimental because in effect they work like price controls. In the free market a good or service is worth whatever a buyer and seller agree to or in other words, wherever supply meets demand. If the government sets a minimum price for a good that does not necessarily mean the good is worth that price. If the good is not worth that price to a buyer then the good will not be purchased.
Here's an example. Let's say in order to help out the auto companies the government enacts a price floor of $7K on automobiles so no buyer can purchase an automobile for less than $7K. Well, there are many cars out there that are worth less than $7K (like my 1974 Pinto). Will those less valuable cars be sold? The answer is no because they are not worth $7K. So in effect the government has forced many automobiles out of the market. So even though the government enacted the price floor in order to help the auto companies, what the government has in fact done is hurt them, because now fewer cars will be sold.
To make my point more clear here is a more simple example. Let's say you want to buy a Coke. A Coke in the free market would sell for $.75 but because Coca Cola is struggling and they employ many Americans the government puts a price floor on a can of Coke for $1.00. There is a Pepsi right next to the Coke priced at $.75. Are you going to spend the extra $.25 to buy the Coke? You might but my guess would be that the vast majority of people wouldn't therefore fewer Coke products are sold and the government has just ended up hurting Coca Cola rather than helping. Just because the government says something is worth a certain price doesn't mean that it is.
You see, each person in the work force has a price, a value to a buyer (employer) and a seller (employee). Some people are worth hundreds of dollars an hour while others are worth minimum wage and others are worth even less. So when the government dictates the minimum wage they are essentially making everyone in the workforce who is worth less than minimum wage unemployable. Why would you pay someone minimum wage if they were worth less than minimum wage.
Let's say a company employs a large number of low paying employees. These employees currently make less than $7.25/hr and will make $7.25/hr starting in July. So the company has a bunch of employees who are worth less than $7.25 an hour (because the company the "buyer" and they "the employees" agreed to their wage in the free market) who will be paid more than they're worth in a few months. How long do you think the company will keep them all employed if they're not worth what they're being paid? Well, if they don't perform to their new standard then chances are they will be let go and the company will go find employees who are worth the $7.25 an hour that they are forced to pay. Furthermore, the company's total labor costs will increase. Is it likely that the company will be able to raise prices enough to offset the increase in wages in this economy? Probably not. Therefore, the company will have to find some way to cut costs and the first place they'll likely look is payroll.
Minimum wage laws are one of the greatest causes of unemployment. There are many people out looking for a job and can't find one because they are not worth the minimum wage. David Neumark, a professor at the University of California at Irvine, estimates the July rise will destroy some 300,000 jobs among teens and young adults. So these people continue to live off of our tax dollars and become very expensive to society. Why not let them enter the workforce at whatever wage they agree to work for? Our company would definitely hire more people if we were allowed to pay them less than minimum wage and I guarantee there are people out there willing to work for less than minimum wage instead of be homeless and living off of the government.
Politicians love to appear sympathetic to the poor by advocating that a "living wage" be paid. They tell us what that wage is and then force businesses to pay it. They are taking on a central planning roll by telling us what is good for us and what is not. Why not allow workers to decide how much they're willing to work for? If they do not want to work for $7.00 an hour then they don't have to but why not at least give them the option rather than force them to live off of the taxpayers and remain unemployed?
Minimum wage laws are detrimental because in effect they work like price controls. In the free market a good or service is worth whatever a buyer and seller agree to or in other words, wherever supply meets demand. If the government sets a minimum price for a good that does not necessarily mean the good is worth that price. If the good is not worth that price to a buyer then the good will not be purchased.
Here's an example. Let's say in order to help out the auto companies the government enacts a price floor of $7K on automobiles so no buyer can purchase an automobile for less than $7K. Well, there are many cars out there that are worth less than $7K (like my 1974 Pinto). Will those less valuable cars be sold? The answer is no because they are not worth $7K. So in effect the government has forced many automobiles out of the market. So even though the government enacted the price floor in order to help the auto companies, what the government has in fact done is hurt them, because now fewer cars will be sold.
To make my point more clear here is a more simple example. Let's say you want to buy a Coke. A Coke in the free market would sell for $.75 but because Coca Cola is struggling and they employ many Americans the government puts a price floor on a can of Coke for $1.00. There is a Pepsi right next to the Coke priced at $.75. Are you going to spend the extra $.25 to buy the Coke? You might but my guess would be that the vast majority of people wouldn't therefore fewer Coke products are sold and the government has just ended up hurting Coca Cola rather than helping. Just because the government says something is worth a certain price doesn't mean that it is.
You see, each person in the work force has a price, a value to a buyer (employer) and a seller (employee). Some people are worth hundreds of dollars an hour while others are worth minimum wage and others are worth even less. So when the government dictates the minimum wage they are essentially making everyone in the workforce who is worth less than minimum wage unemployable. Why would you pay someone minimum wage if they were worth less than minimum wage.
Let's say a company employs a large number of low paying employees. These employees currently make less than $7.25/hr and will make $7.25/hr starting in July. So the company has a bunch of employees who are worth less than $7.25 an hour (because the company the "buyer" and they "the employees" agreed to their wage in the free market) who will be paid more than they're worth in a few months. How long do you think the company will keep them all employed if they're not worth what they're being paid? Well, if they don't perform to their new standard then chances are they will be let go and the company will go find employees who are worth the $7.25 an hour that they are forced to pay. Furthermore, the company's total labor costs will increase. Is it likely that the company will be able to raise prices enough to offset the increase in wages in this economy? Probably not. Therefore, the company will have to find some way to cut costs and the first place they'll likely look is payroll.
Minimum wage laws are one of the greatest causes of unemployment. There are many people out looking for a job and can't find one because they are not worth the minimum wage. David Neumark, a professor at the University of California at Irvine, estimates the July rise will destroy some 300,000 jobs among teens and young adults. So these people continue to live off of our tax dollars and become very expensive to society. Why not let them enter the workforce at whatever wage they agree to work for? Our company would definitely hire more people if we were allowed to pay them less than minimum wage and I guarantee there are people out there willing to work for less than minimum wage instead of be homeless and living off of the government.
Politicians love to appear sympathetic to the poor by advocating that a "living wage" be paid. They tell us what that wage is and then force businesses to pay it. They are taking on a central planning roll by telling us what is good for us and what is not. Why not allow workers to decide how much they're willing to work for? If they do not want to work for $7.00 an hour then they don't have to but why not at least give them the option rather than force them to live off of the taxpayers and remain unemployed?
City Council Inadvertently Helping Payday Loan Businesses
I came across an article on KSL today about how the Logan City Council put a cap on payday loan businesses to one per 10,000 people and I couldn't help but think to myself, "man, these politicians really don't have a clue, do they?".
So, here's what's going to happen. Yes, there will be fewer payday loan businesses but what the city council has done is create an even larger barrier to entry in that market. The harder it is for new competitors to enter the market and the fewer competitors there are, the more pricing power the existing competitors will have. Perfect competition will drive profitability down so that returns are perfectly risk adjusted but if you have strong barriers to entry such as the one the city council just put into place then current business owners will be able to achieve higher than the risk adjusted returns.
We can assume that because there is currently more than one payday loan business per every 10,000 people in the area that the market can bare more than one payday loan business for every 10,000 people and that the owners of these businesses are receiving at least the risk adjusted rate of return. So now that there will be fewer payday loan businesses per 10,000 people, each owner should be able to achieve greater returns and they will do this by raising prices (interest rates and fees).
In deciding which payday loan business to go to, the consumer will factor in the costs to travel to that business. The more of these businesses there are in a market the less it will cost the consumer to use one over the other. But what the city council has done is in effect make it more expensive for the consumer to use one business over the other as the consumer now has to travel a greater distance to the nearest competitor. Logan is a small town so for anyone with a car this won't be much of an issue but for someone using public transportation, a bicycle, or just their feet, this may be a huge factor. With fewer payday loan businesses in the market you can see how it would be easy for each business to raise their prices if the Switching Costs are high.
So basically the city council did a huge favor to the existing payday loan businesses (those at least who will be able to stay) and did a huge disservice to their constituents.
So, here's what's going to happen. Yes, there will be fewer payday loan businesses but what the city council has done is create an even larger barrier to entry in that market. The harder it is for new competitors to enter the market and the fewer competitors there are, the more pricing power the existing competitors will have. Perfect competition will drive profitability down so that returns are perfectly risk adjusted but if you have strong barriers to entry such as the one the city council just put into place then current business owners will be able to achieve higher than the risk adjusted returns.
We can assume that because there is currently more than one payday loan business per every 10,000 people in the area that the market can bare more than one payday loan business for every 10,000 people and that the owners of these businesses are receiving at least the risk adjusted rate of return. So now that there will be fewer payday loan businesses per 10,000 people, each owner should be able to achieve greater returns and they will do this by raising prices (interest rates and fees).
In deciding which payday loan business to go to, the consumer will factor in the costs to travel to that business. The more of these businesses there are in a market the less it will cost the consumer to use one over the other. But what the city council has done is in effect make it more expensive for the consumer to use one business over the other as the consumer now has to travel a greater distance to the nearest competitor. Logan is a small town so for anyone with a car this won't be much of an issue but for someone using public transportation, a bicycle, or just their feet, this may be a huge factor. With fewer payday loan businesses in the market you can see how it would be easy for each business to raise their prices if the Switching Costs are high.
So basically the city council did a huge favor to the existing payday loan businesses (those at least who will be able to stay) and did a huge disservice to their constituents.
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