It's more possible than you would think in certain small cities. Drive through a few residential areas in midtown Columbia, SC and you'll see exactly that.
I was all set to agree with you until I got to the end of your post. How is equating "Tesla is a success" with "Obama's energy policy is a success" any more valid than equating "Solyndra was a failure" with "Obama's energy policy is a failure?"
Sure, I've seen the media try to make both of those connections. I, wrongly, assumed Slashdotters wouldn't be stupid enough to fall for either one.
Multitnationals refuse to do business is screwed up countries all the time. How much of a presence does Microsoft or Apple have in Zimbabwe?
If you want a concrete example, one incident that's actually pretty well known is Coca-Cola refusing to do business in India from 1977 to 1993 after the Janta government tried to extort the formula for Coke and tried to partially nationalize the company's Indian operations.
No. No I didn't. I knew of a quite a few incidents where classmates did things that were dangerous to themselves, or unintentionally caused damage. I can even think of a couple of times when classmates did some vandalism to someone they knew personally. But I can only think of one occasion when my classmates deliberately did some noticeable damage to strangers' property, and they got arrested for it.
Admittedly, my high school experience may not have been typical, since I went to a private school in a fairly high income area. But still, teenagers don't have to be hooligans.
That may be true, but what exactly is "treating depression?" My understanding (and I may be wrong) is that depression treatment is not really even intended to cure the patient's condition. Rather, treatment is intended to improve the condition to the point that the patient can at least function normally, even while they're still sad/stressed/whatever. The question is, are psychiatric professionals successful at that goal? The few people I have known that have suffered from depression say that treatment was able to do that, but I certainly don't know if that's true in general.
Because, as it stands now, you control the killswitch on your iPhone, and Apple, your carrier, and the government, don't, at least in theory. Is this a trick question?
It says that the phone owners themselves spend $580 million - it does not say how much Asurion (by far the largest handset insurer in the U.S.) pays. Asurion's website says they handle 30 million claims per year, though they don't say how many dollars they pay out, to give you an idea of the scale. Of course, you are still correct that the insurance is "overpriced" in the sense that the expected present value of the premiums is greater than the expected payment on claims; that's true of any insurance policy, which is why you shouldn't buy insurance for things you can pay for out of pocket. But I would guess, based on what I know about similar industries, that the markup more in the neighborhood of 30% + 10% kickback to the carrier, not 8x.
I don't know about Vimeo, but it's been my experience that a several of these competing video sites actually have more annoying and intrusive ads, though no Google+, thank God. Maybe I've just been unlucky.
I assume that ColdWetDog was talking about American or western European engineers. Considering that, depending on which source you believe, there's roughly one fatal car crash in the U.S. per 100 million miles driven, I'd agree that fatal crashes are indeed unusual. And that figure includes a number of older, less safe cars that are still on the road; brand new cars will make the number of fatalities even more rare.
It's easy to make ratios look big when you only quote the numerator. There are 320 million people in the U.S. If we assume your estimate is correct, then that's less than one hundredth of one percent dying in a car crash. Again, I would say that percentage is small enough to qualify as "unusual."
You appear to be drawing your numbers from this Wikipedia article. If you had paid attention, you'd realize
a) that the UK numbers are from 2012 whereas the U.S. numbers are from 2009 - this is important because death rates per kilometer driven are falling pretty rapidly every year as older, unsafe cars are retired, b) that the U.S. statistics are an estimate from OECD IRTAD, rather than using the actual, official statistics published by NHSTA (NHSTA reports a noticeably lower fatality rate than Wikipedia's source), c) and that comparing traffic deaths among populations with dissimilar driving patterns to score nationalistic points is stupid.
Sorry to rain on your jingoism parade, but the difference in traffic safety among the U.S. and the other English speaking countries isn't really significant. If you want to pick on a country that deserves it, I recommend the UAE or Brazil.
And that's fine. I'm happy to purchase a game that is in the first category.
Unfortunately, the instant I hear the phrase "free-to-play," I assume that I'm dealing with the second category. I doubt I would have purchased an Ouya anyway, but the animadversion triggered by the phrase "free-to-play" kept me from even considering it.
You can buy insurance directly from insurers' websites. My small office lost coverage when the ACA kicked in, and several of us signed up for individual plans through the Blue Cross website. It was quick and easy - maybe five minutes. The exchange website, on the other hand, just shat itself halfway through the application process every time I tried it. The only reason to use the government website is to get the subsidy, which I wouldn't have qualified for. Plans are priced identically on both sites, down to the penny.
While you are absolutely correct that none of these types of losses are covered by FDIC insurance, they are all covered by some kind of insurance. Your own post mentions that losses from fraud and theft are covered by special private liability insurance. Treasury bonds are backed by the full faith and credit of the U.S. government. Insurance and annuities are almost always insured by the state that the bank is operating in, usually up to somewhere between $250k and $500k. So his point is still valid - pretty much any financial product* that you can get from a regulated bank is insured on your behalf by someone up to at least 250k.
*Excluding of course products that are deliberately risky, such as if they offer a brokerage service to invest in the stock market.
You may be thinking of income - the cutoff to enter the top 1% of annual household income is indeed about $700,000. But the discussion is about household net worth. It's frustratingly hard to find exact numbers, but as far as I can tell, somewhere around 8% of American households have a net worth above $1M, not counting primary residence (9.6 million households according to CNN out of ~120 million households according to the Census Bureau). It takes about $5M in non-house wealth to make the 1%. Including home equity, between 15% to 20% of households are millionaire households, as far as I can tell.
Having said that, I agree with you that very few Americans have to worry about the estate tax. The first $5.4 million of an estate is exempt from taxation, and two spouses can join their exemptions onto a single estate if they want, for a total exemption of $10.8 million. I'm no real fan of the inheritance tax, but even I'll admit that the tax in its current form only affects those who are truly loaded. I think that the law we have now (40% tax on anything over 10.8 million) is a vaguely reasonable compromise between the soak-the-rich folks and the no-taxes-ever folks. However, for many years prior to 2011, the exclusion was much lower, and the inheritance tax and really did impact a number of people who had relatively large amounts of money tied into illiquid assets like the proverbial family farm. Many of the "save the family business" arguments actually did make sense prior to the law change in 2011.
Hopefully I can address a few of your misconceptions:
-Insurance companies (in the U.S., I can't speak for other countries) do not make high-return investments with their insurance reserves. Insurance regulators in the U.S. will not permit the risk involved. The only exception that I can think of is Berkshire Hathaway, which mainly gets away with it because it's run by Warren Buffett. To quote AFLAC, an insurer I picked at random: "Our overall portfolio is dominated by fixed-maturity securities. The majority of our total investments fall into the senior debt category. The percentage of our senior debt holdings increased from 86.2% at the end of 2011 to 91.9% at the end of 2012. At year-end 2011, 94.4% of our portfolio was investment grade [meaning low-risk and low-interest], and that increased to 95.3% at the end of 2012." When insurance companies like AIG get into trouble with risky investments, it's usually through a branch of the company that doesn't sell insurance.
-Loss ratios (the proportion of premiums that are paid back out to claimants) for most insurance companies are much higher than you think. Again, to pick an insurer at random, Cigna had $29.0 billion in premium revenue last year according to their financial statements. Of those premiums, they paid back out 84% directly to claimants, used 9% for the expenses of running the company, paid about 2.5% in taxes, with about 4.5% of their premiums left over as a profit. They're still getting rich, true, but it's because they're writing a mind-bogglingly large number of policies, not because they're charging a large markup. Those percentages are pretty typical AFAIK for life and medical insurers; property & casualty insurers tend to have a bit higher profit margin.
-Just like any insurance, this policy reduces risk. Sure, whoever this is could just save the money himself - but then again, he could be hit by a car tomorrow. That's basically the point of any life insurance. On average, this guy would be better off without insurance, but the whole point of insurance is that individuals aren't average, so they transfer their risk to a company that can afford to take the average view.
-There are certain tax benefits, as other posters mention. They're not just loopholes for the rich - anyone with a substantial portion of their wealth in illiquid assets can and often should get a life insurance policy like the one mentioned in the article.
-I hate to be an asshole, but it's "for a rich person."
You don't need to get a massive loan in the U.S. In most places in the U.S., tuition at public universities in you home state is relatively cheap. In my state, for instance, tuition at public universities (including textbooks and all mandatory fees) is $9,000 - $10,000 per year for students from this state. Any in-state student with sufficiently high marks (a 3.0 GPA if you're familiar with the American grading system) is given a $6,000 scholarship by the state government, leaving an out of pocket cost of $3000 - $4,000 per year. If you took out an unsubsidized federal student loan to pay all the out of pocket cost, you'd be looking at a $150 per month repayment over the 10 years after you leave university. It's not free, but it's certainly not "massive debt" either. This description may not be valid everywhere in the U.S., but every state I've lived in has had a similar setup.
The problem is that an awful lot of 18-year-olds are bad at math, and really want to go to a private or out-of-state university for some reason. That's when students start facing $30,000 - $40,000 in tuition and no guaranteed state aid. Every state that I can think of has a flagship university with a reasonably good reputation, usually called "University of *State's Name*"; there's no actual need to go to a private or out-of-state university except in a few special cases.
Unfortunately, that might make things worse for families with children. There are a surprising (to me) number of people who, for religious or political or whatever reasons, do not wish to participate in modern medicine. Most of these people are, however, forced to provide medical care for their children - in most parts of the US you'll be prosecuted or have your child taken away if you are recklessly negligent of their health. If objectors could escape such "government coercion" as easily as not taking the kids in for a vaccine, it might actually incentivize these parents to provide less medical care.
That only applies to children who are too young to decide for themselves, of course. I'm much less opposed to your "take-it-or-leave-it" approach when dealing strictly with adults who should know better.
Even in the U.S. it is possible to find place names (nearly) that old. American Indian names that are still in use are not hard to find, although the pronunciation tends to be corrupted.
I think your post makes good points mostly, but I have to ask, since when did the phrase "actuary" fall in to disfavor, and when was anyone going to tell me?
That's forensic accountants, dammit. Actuaries aren't going to help you unless you need a quote on some liability insurance - and you'll be wanting to get that before you lose all your Bitcoins.
Everything you say is completely correct. However, I'd point out that it can actually be a bad thing for the property owners when this type of political maneuvering makes flood prone homeowners ineligible for federal flood insurance because they lie outside of the federally defined flood zones entirely. When Nashville, TN was flooded in 2010, it came out that some of the flooded homeowners had attempted to purchase flood insurance beforehand, but had been told that they couldn't purchase or didn't need insurance. The property developers had made sure that the houses were in a no-risk zone.
I don't know how widespread of a problem that kind of thing is, but it has definitely happened.
According to this article, there are plenty of reasons to doubt these rankings, even if press freedom in the U.S. is worrying. And ranking changes like these are not new. Here are the U.S.' rankings over the last 10 years (there's a typo in their own press release, the U.S. actually fell 14 slots):
That seems...a bit inconsistent. Again, that's not to say there isn't plenty to worry about in the U.S., but I'd still take these rankings with a grain of salt.
It's also worth noting that that's 50% of marriages ending in divorce. Only around one third of the (married) U.S. population will have a divorce, but some of them will have 2, 3, or more divorces, which drives up the average. For an extreme illustration, a population consisting of Elizabeth Taylor and my wife would have had 88.9% of their marriages end in divorce, but only 50% of that population would have ever had a divorce.
Slashdot Mirror
It's more possible than you would think in certain small cities. Drive through a few residential areas in midtown Columbia, SC and you'll see exactly that.
I was all set to agree with you until I got to the end of your post. How is equating "Tesla is a success" with "Obama's energy policy is a success" any more valid than equating "Solyndra was a failure" with "Obama's energy policy is a failure?"
Sure, I've seen the media try to make both of those connections. I, wrongly, assumed Slashdotters wouldn't be stupid enough to fall for either one.
Multitnationals refuse to do business is screwed up countries all the time. How much of a presence does Microsoft or Apple have in Zimbabwe?
If you want a concrete example, one incident that's actually pretty well known is Coca-Cola refusing to do business in India from 1977 to 1993 after the Janta government tried to extort the formula for Coke and tried to partially nationalize the company's Indian operations.
No. No I didn't. I knew of a quite a few incidents where classmates did things that were dangerous to themselves, or unintentionally caused damage. I can even think of a couple of times when classmates did some vandalism to someone they knew personally. But I can only think of one occasion when my classmates deliberately did some noticeable damage to strangers' property, and they got arrested for it.
Admittedly, my high school experience may not have been typical, since I went to a private school in a fairly high income area. But still, teenagers don't have to be hooligans.
That may be true, but what exactly is "treating depression?" My understanding (and I may be wrong) is that depression treatment is not really even intended to cure the patient's condition. Rather, treatment is intended to improve the condition to the point that the patient can at least function normally, even while they're still sad/stressed/whatever. The question is, are psychiatric professionals successful at that goal? The few people I have known that have suffered from depression say that treatment was able to do that, but I certainly don't know if that's true in general.
So...Norman French? Because that's the language they were speaking after 1066...
Because, as it stands now, you control the killswitch on your iPhone, and Apple, your carrier, and the government, don't, at least in theory. Is this a trick question?
It says that the phone owners themselves spend $580 million - it does not say how much Asurion (by far the largest handset insurer in the U.S.) pays. Asurion's website says they handle 30 million claims per year, though they don't say how many dollars they pay out, to give you an idea of the scale. Of course, you are still correct that the insurance is "overpriced" in the sense that the expected present value of the premiums is greater than the expected payment on claims; that's true of any insurance policy, which is why you shouldn't buy insurance for things you can pay for out of pocket. But I would guess, based on what I know about similar industries, that the markup more in the neighborhood of 30% + 10% kickback to the carrier, not 8x.
I don't know about Vimeo, but it's been my experience that a several of these competing video sites actually have more annoying and intrusive ads, though no Google+, thank God. Maybe I've just been unlucky.
I assume that ColdWetDog was talking about American or western European engineers. Considering that, depending on which source you believe, there's roughly one fatal car crash in the U.S. per 100 million miles driven, I'd agree that fatal crashes are indeed unusual. And that figure includes a number of older, less safe cars that are still on the road; brand new cars will make the number of fatalities even more rare.
It's easy to make ratios look big when you only quote the numerator. There are 320 million people in the U.S. If we assume your estimate is correct, then that's less than one hundredth of one percent dying in a car crash. Again, I would say that percentage is small enough to qualify as "unusual."
You appear to be drawing your numbers from this Wikipedia article. If you had paid attention, you'd realize
a) that the UK numbers are from 2012 whereas the U.S. numbers are from 2009 - this is important because death rates per kilometer driven are falling pretty rapidly every year as older, unsafe cars are retired,
b) that the U.S. statistics are an estimate from OECD IRTAD, rather than using the actual, official statistics published by NHSTA (NHSTA reports a noticeably lower fatality rate than Wikipedia's source),
c) and that comparing traffic deaths among populations with dissimilar driving patterns to score nationalistic points is stupid.
Sorry to rain on your jingoism parade, but the difference in traffic safety among the U.S. and the other English speaking countries isn't really significant. If you want to pick on a country that deserves it, I recommend the UAE or Brazil.
And that's fine. I'm happy to purchase a game that is in the first category.
Unfortunately, the instant I hear the phrase "free-to-play," I assume that I'm dealing with the second category. I doubt I would have purchased an Ouya anyway, but the animadversion triggered by the phrase "free-to-play" kept me from even considering it.
You can buy insurance directly from insurers' websites. My small office lost coverage when the ACA kicked in, and several of us signed up for individual plans through the Blue Cross website. It was quick and easy - maybe five minutes. The exchange website, on the other hand, just shat itself halfway through the application process every time I tried it. The only reason to use the government website is to get the subsidy, which I wouldn't have qualified for. Plans are priced identically on both sites, down to the penny.
While you are absolutely correct that none of these types of losses are covered by FDIC insurance, they are all covered by some kind of insurance. Your own post mentions that losses from fraud and theft are covered by special private liability insurance. Treasury bonds are backed by the full faith and credit of the U.S. government. Insurance and annuities are almost always insured by the state that the bank is operating in, usually up to somewhere between $250k and $500k. So his point is still valid - pretty much any financial product* that you can get from a regulated bank is insured on your behalf by someone up to at least 250k.
*Excluding of course products that are deliberately risky, such as if they offer a brokerage service to invest in the stock market.
You may be thinking of income - the cutoff to enter the top 1% of annual household income is indeed about $700,000. But the discussion is about household net worth. It's frustratingly hard to find exact numbers, but as far as I can tell, somewhere around 8% of American households have a net worth above $1M, not counting primary residence (9.6 million households according to CNN out of ~120 million households according to the Census Bureau). It takes about $5M in non-house wealth to make the 1%. Including home equity, between 15% to 20% of households are millionaire households, as far as I can tell.
Having said that, I agree with you that very few Americans have to worry about the estate tax. The first $5.4 million of an estate is exempt from taxation, and two spouses can join their exemptions onto a single estate if they want, for a total exemption of $10.8 million. I'm no real fan of the inheritance tax, but even I'll admit that the tax in its current form only affects those who are truly loaded. I think that the law we have now (40% tax on anything over 10.8 million) is a vaguely reasonable compromise between the soak-the-rich folks and the no-taxes-ever folks. However, for many years prior to 2011, the exclusion was much lower, and the inheritance tax and really did impact a number of people who had relatively large amounts of money tied into illiquid assets like the proverbial family farm. Many of the "save the family business" arguments actually did make sense prior to the law change in 2011.
Hopefully I can address a few of your misconceptions:
-Insurance companies (in the U.S., I can't speak for other countries) do not make high-return investments with their insurance reserves. Insurance regulators in the U.S. will not permit the risk involved. The only exception that I can think of is Berkshire Hathaway, which mainly gets away with it because it's run by Warren Buffett. To quote AFLAC, an insurer I picked at random: "Our overall portfolio is dominated by fixed-maturity securities. The majority of our total investments fall into the senior debt category. The percentage of our senior debt holdings increased from 86.2% at the end of 2011 to 91.9% at the end of 2012. At year-end 2011, 94.4% of our portfolio was investment grade [meaning low-risk and low-interest], and that increased to 95.3% at the end of 2012." When insurance companies like AIG get into trouble with risky investments, it's usually through a branch of the company that doesn't sell insurance.
-Loss ratios (the proportion of premiums that are paid back out to claimants) for most insurance companies are much higher than you think. Again, to pick an insurer at random, Cigna had $29.0 billion in premium revenue last year according to their financial statements. Of those premiums, they paid back out 84% directly to claimants, used 9% for the expenses of running the company, paid about 2.5% in taxes, with about 4.5% of their premiums left over as a profit. They're still getting rich, true, but it's because they're writing a mind-bogglingly large number of policies, not because they're charging a large markup. Those percentages are pretty typical AFAIK for life and medical insurers; property & casualty insurers tend to have a bit higher profit margin.
-Just like any insurance, this policy reduces risk. Sure, whoever this is could just save the money himself - but then again, he could be hit by a car tomorrow. That's basically the point of any life insurance. On average, this guy would be better off without insurance, but the whole point of insurance is that individuals aren't average, so they transfer their risk to a company that can afford to take the average view.
-There are certain tax benefits, as other posters mention. They're not just loopholes for the rich - anyone with a substantial portion of their wealth in illiquid assets can and often should get a life insurance policy like the one mentioned in the article.
-I hate to be an asshole, but it's "for a rich person."
You don't need to get a massive loan in the U.S. In most places in the U.S., tuition at public universities in you home state is relatively cheap. In my state, for instance, tuition at public universities (including textbooks and all mandatory fees) is $9,000 - $10,000 per year for students from this state. Any in-state student with sufficiently high marks (a 3.0 GPA if you're familiar with the American grading system) is given a $6,000 scholarship by the state government, leaving an out of pocket cost of $3000 - $4,000 per year. If you took out an unsubsidized federal student loan to pay all the out of pocket cost, you'd be looking at a $150 per month repayment over the 10 years after you leave university. It's not free, but it's certainly not "massive debt" either. This description may not be valid everywhere in the U.S., but every state I've lived in has had a similar setup.
The problem is that an awful lot of 18-year-olds are bad at math, and really want to go to a private or out-of-state university for some reason. That's when students start facing $30,000 - $40,000 in tuition and no guaranteed state aid. Every state that I can think of has a flagship university with a reasonably good reputation, usually called "University of *State's Name*"; there's no actual need to go to a private or out-of-state university except in a few special cases.
Unfortunately, that might make things worse for families with children. There are a surprising (to me) number of people who, for religious or political or whatever reasons, do not wish to participate in modern medicine. Most of these people are, however, forced to provide medical care for their children - in most parts of the US you'll be prosecuted or have your child taken away if you are recklessly negligent of their health. If objectors could escape such "government coercion" as easily as not taking the kids in for a vaccine, it might actually incentivize these parents to provide less medical care.
That only applies to children who are too young to decide for themselves, of course. I'm much less opposed to your "take-it-or-leave-it" approach when dealing strictly with adults who should know better.
Even in the U.S. it is possible to find place names (nearly) that old. American Indian names that are still in use are not hard to find, although the pronunciation tends to be corrupted.
I think your post makes good points mostly, but I have to ask, since when did the phrase "actuary" fall in to disfavor, and when was anyone going to tell me?
Signed,
A P&C actuary
That's forensic accountants, dammit. Actuaries aren't going to help you unless you need a quote on some liability insurance - and you'll be wanting to get that before you lose all your Bitcoins.
While I mostly agree with you on your last sentence, can you imagine the uproar if Microsoft made an analogous decision about Windows?
Everything you say is completely correct. However, I'd point out that it can actually be a bad thing for the property owners when this type of political maneuvering makes flood prone homeowners ineligible for federal flood insurance because they lie outside of the federally defined flood zones entirely. When Nashville, TN was flooded in 2010, it came out that some of the flooded homeowners had attempted to purchase flood insurance beforehand, but had been told that they couldn't purchase or didn't need insurance. The property developers had made sure that the houses were in a no-risk zone.
I don't know how widespread of a problem that kind of thing is, but it has definitely happened.
According to this article, there are plenty of reasons to doubt these rankings, even if press freedom in the U.S. is worrying. And ranking changes like these are not new. Here are the U.S.' rankings over the last 10 years (there's a typo in their own press release, the U.S. actually fell 14 slots):
2004: 22
2005: 44
2006: 53
2007: 48
2008: 36
2009: 20
2010: 20
2011: 47
2012: 27
2013: 32
2014: 46
That seems...a bit inconsistent. Again, that's not to say there isn't plenty to worry about in the U.S., but I'd still take these rankings with a grain of salt.
It's also worth noting that that's 50% of marriages ending in divorce. Only around one third of the (married) U.S. population will have a divorce, but some of them will have 2, 3, or more divorces, which drives up the average. For an extreme illustration, a population consisting of Elizabeth Taylor and my wife would have had 88.9% of their marriages end in divorce, but only 50% of that population would have ever had a divorce.