The Smiling Retiree, Part Four: Getting to the Smile

Many of you might have felt Part Three sounded pretty good, so what are we doing in Part Four? I’m going to argue that Parts One through Three are necessary but insufficient for Smiling Retirement. Part One is essential, because if you don’t understand the concept, you’ll get it wrong for sure. Part Two removes the greatest friction: resources. Part Three puts you in the right position, but just. By Part Three, you’re existing (as a retiree), but you’re not living. You can’t get to the smile until you’re living.

So what’s the next step? It’s the hardest one, I’m sorry to say.

Many people go through their whole lives just existing, not living. They work to provide shelter, food, and some degree of comfort. They rest to recharge and resume work. They recreate for the same reason. They procreate (or not) because, well, that’s what we do. This is consistent with all animal life on the planet. Whether you think what differentiates us from other animals is a soul or higher intellect (or both), there is a difference. What’s the purpose of the difference? It gives us the opportunity to consider the big questions that the higher intellect inevitably raises.

Who are you in particular? We often answer that question in terms of relationships (“I’m a father, a husband, a son”) or associations (“. . . a former official, a Catholic, a fan of . . . “). But who are you essentially?

Why are you? Not in contingent terms of “when your dad met your mother” but why you, why now? For what purpose?

These are tough questions, easily avoided while working to live (i.e., existing). But you understand the concept of retirement. You have prepared financially. You have vacay-ed and experimented to a place of comfort. You can ask those questions, and better yet, you can start to find answers!

What are those answers? Yours might be different from the ones I would share. Mine are based–as you no doubt have guessed–in the Gospels and my Catholic Faith. I believe in Truth (the capitalization is important here), and truths. The latter is contingent and personal, but must in the end lead to the former, if they are indeed “true.” So there is no reason to fear them. The search itself is satisfying.

Is it possible to just continue existing, and never address the hard questions? Sure. Birds do it, bees do it, even dogs do it. And billions of people do it too. Retirement as I have described it is a rare blessing, an opportunity not to be missed. And what an opportunity! Because seeking those answers (whether you find them or not) leads to a certain satisfaction. And that satisfaction generates a smile.

What’s with the emphasis on the smile? It’s a simple gesture, universally recognized. It’s a moderate emotion, not a belly-laugh. It’s pleasant. There is a degree of amiability, knowledge, and just plain old friendliness in a smile. And it’s genuine. It makes life easier, for the one smiling and for everyone who sees it.

Here’s hoping you not only retire, but you get to be a smiling retiree!

The Smiling Retiree, Part Three: Retiring

You “get” the concept that retirement means not working, and you’ve arranged a pension or nest egg which should cover your costs till you head for the great beyond. So now you just retire and start smiling, right? Wrong. The transition may be jarring, and if not done well, can lead to many outcomes other than Smiling Retirement.

That video I mentioned in Part One talked about the Vacation Phase of retirement: the few weeks or months where the lack of structure provided by work gives the new retiree the sensation of being on vacation. Days become irrelevant, or as retirees joke, a week consists of “six Saturdays and a Sunday.” Things like school calendars, holidays, and long weekends can creep up on you since they no longer seem relevant. Most everybody enjoys this at first, but eventually the sameness of the lack of structure begins to grind on you. We generally limit our tours and cruises to ten-to-twelve days for the same reason; otherwise, it all begins to blend together.

Turns out, humans need routines. If work doesn’t provide one, you have to come up with your own. The beauty of retirement is you’re free to develop your own. Perhaps you’re a night owl who had a career which required an early morning start; now your day can start at 10:00 am and end at 3:00 am, if you like. Never had time to fit in exercise? You do now. When do you eat, and what’s your big meal? All up to you. And you can change it, to see what works.

I started eating a huge breakfast (bacon or sausage, eggs, avocados, tomatoes, hash browns or a bagel) every morning, after a career of having only a banana and a cup of coffee. It was heaven, and I didn’t need to eat again until dinner. But while I enjoyed this schedule, my digestive tract didn’t, and it made its objections known. I switched to some fruit or yogurt and coffee in the morning, and a large lunch in the mid afternoon, which my body ratified. I moved exercise to the late morning after only exercising after lunch for decades. I found starting my day with prayers meant I didn’t skip them later, and I was in a better mood regardless of how I slept. You get to experiment with things you always did one way, because now you can.

Bill Murray Ice Sculpture GIF by Groundhog Day

If you don’t establish a routine, you’ll get bored. Then you’ll feel a powerful pull to go back to work, if only for the routine. Or you might substitute some other thing (volunteering, for example) for work to provide your routine. But that is putting the cart before the horse, so to speak. Find the routine that works for you, makes you comfortable, then fill in your hobbies and activities around it.

Experimentation is just as important when developing your new (or rediscovering your old) interests. Take up the guitar? Why not! Learn to cook Welsh Rarebit? Sure! Join a charity or service organization? Of course. But whatever you do, never, never, never impose a “success” filter on it. It’s ok to consider whether you can afford a hobby (financially or in terms of time), but don’t start evaluating “am I any good at this?” or “is this doing any good for that?” Those are business/work concepts, and you don’t do that anymore, right? If you like it and can afford it, keep doing it. If not, don’t.

It is easy to fall back into workday notions of success, competition, and merit. But you’re living, not working. Perhaps we can learn something from the way children behave. When a child finds something they really enjoy, they’ll get lost in it. They don’t start asking “how good am I?” “or “what’s the purpose of this?”, they just enjoy themselves. They haven’t met the work world yet, but they have mastered one key to retirement!

The vacation and experimentation periods of retirement are incredibly rewarding. Getting to try out new things without any pressure to “do well” or “succeed” is liberating, once you understand it. How long do they last? How long do you last? To some extent, the two timelines are the same. As time goes by, you’ll find a daily routine that fits. You’ll find hobbies and interests that fit, and people who also fit. But all that may change. Friends asked me why I stopped attending a group, and I said (truthfully) “it seemed too much like work.” You may get too tired for pickleball, or too old for globetrotting, too bored for politics. It happens.

Perhaps the most important thing to remember is that this phase is just a transition. You may enjoy the transition, but you haven’t reached Smiling Retirement yet!

The Smiling Retiree, Part Two: Finances, or “it’s always about the money”

St. Paul’s first letter to Timothy (chapter six, verse ten) tells us “the love of money is the root of all evil.” Hard to improve on that. Mark Twain allegedly did so, quipping “the lack of money is the root of all evil.” When it comes to retirement, both maxims apply. As with working life, more money means more opportunities. Worker or retiree, you can be a happy, poor person, or a miserable rich person. The differences appear in the many ways you get there.

The key point is this: since you’re not working (remember our definition from Part One), your ability to generate resources may become limited. If you have a pension indexed to inflation, consider yourself greatly blessed. If not, there’s social security as a safety net (if you’re an American). If you have invested in a retirement account, it may continue growing, but you’ll be tapping it as you go, which limits the overall growth and total available. The inputs side of the equation, less a winning lottery ticket or a rich uncle’s will, is a fairly constant constraint.

Meanwhile, you do have great control over your expenses. Your spending for commuting, maintaining a wardrobe, and business expenses all drop dramatically. You can live where you want, which could be much less expensive. You can take time to comparison shop, and seize opportunities for deals and discounts which were out of reach during the workday. But you’ll also want to do things previously postponed (like travel or a hobby) which might be expensive. And you’ve got to place a bet which most of us avoid: how long am I going to be doing this? Most importantly, you control this variable (expenses, not when you check-out).

Since financing retirement is mostly a math problem, it is actually the easiest part to master. When should you start saving for retirement? Yesterday. Money set aside early compounds (remember the magic of compound interest?), turning the few dollars you saved in 1978 into thousands today. The amount is much less important than the fact of investing and not tapping it early. By the way, this is my biggest complaint with Millennials and Zoomers today who are living the digital nomad lifestyle, in effect moving retirement forward so they can enjoy it while they’re young. Your traditional work years (ages 20-50) are your peak earning years. By reducing your income in this period, you reduce what you can invest, and thus surrender significant compounding of your investments. I hope they are doing the math, too, while trekking across the globe!

How about those other young folk buying into the FIRE (Financial Independence, Retire Early) concept. Basically, the idea here is to restrict your spending while young, invest wisely, then retire very early and live off the wealth you created. Some challenges here are: (1) actually restraining your spending while young (hard, not impossible), (2) investing smartly to maximize your wealth (hard, not impossible), (3) guessing how long you’re going to be retired if you do so very early (damn near impossible, but essential to solving the FIRE calculation). It’s a simple math problem for a 65 year-old retiree to project they’ll live approximately fifteen more years, and a small error is easily covered. But a 40 year-old retiree planning to live another forty years? This is double jeopardy, where the “scores can really change!”

Would you like to go for "Double Jeopardy" where the scores can really change?
Great Christmas Movie!

What if you don’t have a pension, didn’t save much (or anything) for retirement? Well, you have a lot of company: 45% of baby boomers in the US have zero retirement savings. If you’re planning on retiring under these conditions, you’ll need to seriously consider how to drive your cost-of-living down to meet your social security level means. Folks who through no fault of their own found themselves retirement age but with no other resources were a major source of expats in Mexico once upon a time. That is becoming more difficult to pull off, as the Mexican government keeps raising the income requirements for residency (temporary or permanent) while tightening up enforcement of tourist visa overstays.

I’m not going to get into all the ways one can amass wealth, as that is a path well-trod by many financial planning experts (which reminds me, retaining one of these experts, especially one who gets paid by the size of your holdings and not by the amount of trading, is a great idea!). Suffice it to say: live within your means, invest and diversify, avoid keeping up with the Joneses, and don’t get divorced. Maybe I will write a blog on how to amass wealth.

Just a fly in the ointment, Hans. A monkey in the wrench.
more life lessons from Die Hard

To finish with one more Die Hard reference, the “fly in the ointment, the monkey in the wrench” of retiree financing is your health. Health care costs, whether routine or traumatic, can bankrupt even the frugal, life-long saver. Having good health insurance is critical, but hard to do. You can’t really save your way past the risk of long-term care expenses. You will get old, you will get sick. Maybe you’ve won the genetic lottery. Maybe you exercise and eat a healthy diet. We all do what we can. I prefer to think of it this way: if you face life-or-death health issues, retirement financing is the least of your worries.

In Part Three, we’ll consider how to transition to retiree, smiling or not.

The Smiling Retiree, Part One: Definitions, or “I don’t think that word means what you think it means.”

I recently saw a Tedx talk (link) which did a good job of discussing the phases of retirement. Still, some things bothered me, since some of the language (e.g., “squeezing all the juice out of retirement”) seemed to convey the exactly wrong sentiment in my opinion. So I decided to gather my own thoughts and write about it, as that’s what bloggers do. I’m not exactly an expert on retirement, but I do have some credentials, which I’ll cover as we go. So far we (important change of subject pronoun there!) have faced none of the financial or existential challenges which are so common among retirees. So we got that going for us. . . which is nice.

Before we dig in, may I take a moment to point out just how weird the concept of retirement is? For all of human history, people worked and raised families until they were too old or infirm to do so, then they died. The rich never needed to work, so they found ways to spend their leisure, and eventually they died, too. But nobody “retired.” Rome gave its soldiers a pension, but that was because having poor-men-with-combat-experience-lying-about is bad public policy. Otto von Bismark introduced the modern concept of retirement in the 19th century by forcing Germans over the age of seventy to quit and accept a government payment. Even as late as FDR’s successful enactment of social security in the States, many people of retirement age were opposed to the idea of having to stop working! Population growth, the industrial revolution, and the rise of the middle class all combined to popularize what we now call retirement. So it’s fairly recent and not at all surprising humanity hasn’t quite mastered the concept!

So what is retirement? In its simplest form, it is a period of life in the absence of work. To differentiate it from other times without work (i.e., unemployment), I would add “the need to” before work. Pretty simple, but you would be amazed at the number of people who fail to get this definition. I think here of friends who talk about their “retirement job,” “part-time retirement,” “semi-retired,” or “retired except for. . .”. Nope, not retired, that’s all. Not that there’s anything wrong with continuing to work, or working less hours, or working with less stress: all great concepts, and rightly to be praised. Just not retirement.

Notice that in the definition I have proposed (a period of life in the absence of the need to work) need does not necessarily denote resources. Need can be financial (e.g., I have to keep working to pay off my mortgage) but it can also be purposeful (I have to keep working because I’m the boss, that’s who I am), or evasive (I have to keep working because I don’t know what I would do with myself), or well anything. Need just represents the “what” which comes after “I have to keep working because . . .”

So the person who takes on huge responsibilities in volunteer positions during their retirement? Are they truly retired? Perhaps, since only they can answer “why?” they do so. The point here is not to judge what options anyone chooses, but rather to clearly identify what we are talking about when we say “retirement” so we can then move on to how to be a smiling retiree.

Next up, Finances, or the way we go about retiring!

What Just Happened: The Balloon Threat

It’s rare that a so-called national security event provides so much grist for humor. From beginning to end, the Chinese Spy Balloon Saga has been on a steady trajectory from the sublime to the ridiculous, with politicians and news media playing a leading role. I can’t wait to see what Dave Barry does with it next January!

This crisis, if one wants to call it that, launched with bureaucratic stupidity. It climbed with partisan hype and bald-faced diplomatic lies. It escalated further with the media seeking headlines but failing to ascertain facts. It reached a crescendo with a military over-reaction of stunning proportions. It finally came crashing down with a series of inane government comments and a Presidential non-address. During all of this, I experienced some grins, a few chortles, a belly-laugh or two, and of course near-continuous ROTFLMAO.

Let me share!

So What did Just Happen? The Chinese launched a balloon from Hainan island, from where they previously launched balloons to float over the Pacific to places like Guam and Pearl Harbor, Hawaii, where the US Navy likes to port. Except this balloon caught some waves from a Polar Vortex (hey, wait, can we blame climate change for bringing us to the edge of World War III?) and swept north to the Aleutians, then down across Canada, Montana, Kansas, and eventually North Carolina. Where the US military shot it down. Oh, and it was a spy balloon.

Blinding Flash of the Obvious (BFO #1): China spies on the United States, every day, every way it can. As we do against China. There are very few exceptions to who-spies-on-whom rule, but suffice it to say China in the skies with balloons is not one of them. China has satellites over the US continuously. They mine things like TikTok for data. They task Chinese students and academics to find specific information. They ask Chinese visitors to gather information. They establish Chinese “police” stations in the US (and other countries) which keep track of Chinese expats and no doubt facilitate intelligence collection. Heck, they even stole the entire human resources holdings of the US Office or Personnel Management a few years back (Note to China: update your records, I’m in Mexico now!).

This balloon does not represent a significant escalation in spying, or any kind of breakthrough. You don’t send a new or novel collection platform gently floating, attached to a giant balloon, over your opponent. What it does represent is Chinese bureaucratic incompetence. They have sent these balloons before. They know Chinese-American relations are tense these days. Yet some fool in charge of the balloon program launched one a week or so before the US Secretary of State was due to visit and patch things up. Nobody in his chain-of-command thought to say “wait.” Nobody in the balloon operations team asked, “Hey, where’s the jet-stream taking our balloons now?” That’s some prime bureaucratic incompetence there. I wonder if the guy in charge is making iPhones in Xinjiang now. And we’re off!

How many days til Christmas?

So the balloon drifts off course, and what? It’s too high to affect commercial air traffic. Who cares? Nobody. We’re tracking it, but only because it’s huge. BFO#2, the North American Aerospace Defense Command (NORAD, a joint US- Canadian military structure) constantly watches the skies for large, fast-moving objects like missiles (which are bad) and planes (which might be bad). They are most famous for their annual tracking of Santa Claus, who apparently is large and fast-moving enough for them to identify. They generally don’t look for small or slow things, of which there are many. How many? Nobody knows, since nobody cares. One estimate is almost a thousand on any given day. They can be weather balloons (the National Weather Service launches 180 high altitude balloons every day!), model rockets, high school science projects, or a guy in a lawn chair. But in this case, the balloon is so large it gets spotted from the ground by regular people. Well, not really regular people, because who sits around all day staring at the sky? And even if you did, who makes a big deal if they see a balloon? But somebody did, and away we go!

Now it’s a public issue, so the Chinese Foreign Ministry bureaucrat opened the file labelled “what to say in case our spy balloon is noticed over the US.” and read it out, including the part that says “start lying here” and “stop lying here.” Of course it’s a weather balloon, he reassures us. Which only confirms the fact that (1) it is not a weather balloon, (2) the Chinese are lying, and (3) somebody in the US must take the political blame. Some Conservatives and Progressives in the US are outraged, OUTRAGED, about Chinese spying (see BFO #1), and why are we permitting it to continue?

Which leads to the utterly ridiculous government response that we can’t shoot it down over Montana because it might fall and hit someone. Now space junk (man-made and natural) falls to earth every day, and when some piece becomes famous because it is large–or radioactive–the government reassures us that the chance of it hitting anyone are infinitesimally low. Nothing to worry about. The government can’t even tell what hemisphere is going to be hit until the day before it enters the atmosphere. But a big balloon with a multi bus-sized object attached, which we can exactly determine its location, can’t be shot down because it represents a threat? Pull-eaze. My guess is we waited for the ocean because the balloon payload would better withstand crashing in water than the ground. As it stands, that explanation was nonsense.

But it gets better. We send an F22 Raptor up and shoot the balloon down with a Sidewinder air-to-air missile. That’s about $400,000 of hardware we spent. Why didn’t the F22 just use its gun, which would ably destroy a balloon? The Sidewinder explodes near the target, shredding it with shrapnel. I hope they didn’t destroy the parts we intended to salvage and exploit. Please someone tell me the Air Force had a good reason for using a missile rather than a few cheap bullets.

And thus Our Democracy was saved. Except now partisans were asking why the President let the Chinese fly their balloon over our sensitive sites and collect against them. The balloon mostly uses the wind patterns to navigate, although it appeared to have some type of motor and a rudder to make small path adjustments. Here’s a map of sensitive US intelligence sites, from the Washington Post circa 2002:

BFO #3, there’s a lot of them, everywhere. That map doesn’t include some military facilities and critical national infrastructure. I think a great new virtual reality game would involve flying a spy balloon over the United States and NOT flying over sensitive sites! Probably can’t be done.

Faced by the inquisitive press, a public demanding answers, and partisans complaining, the government issued a strong statement defusing the burgeoning crisis. Of course they didn’t; instead they clammed up. Meanwhile, NORAD “opened the aperture on their radars” to catch slow and small things, quickly demonstrating why this was a bad idea. The Air Force began a live-fire game of Space Invaders. Over the course of a few days, NORAD sighted new “objects” over Alaska, the Yukon, and Michigan. Off went the jets, away went the missiles, and down went the objects.

Wait, wasn’t it dangerous shooting things down over. . . . nevermind. The Air Force managed to use up more expensive missiles, and an Air National Guard pilot even managed to miss a balloon with a missile. We all felt better immediately, until White House Spokesperson Karine Jean-Pierre helpfully explained that (1) we don’t know what the objects were, but (2) they pose no threat, and (3) they certainly weren’t from outer space. There used to be a simple rule for government officials appearing before the public: under no circumstances are you to refer to extra-terrestrials, space aliens, or UFOs, because (BFO#4) every time the government mentions them, more people believe in them. I don’t know what was more terrifying: the fact no one in the White House noticed that statements (1), (2), and (3) are logically inconsistent, or the fact the US government was announcing it was shooting off missiles at anything moving in the sky, for no apparent reason.

“Wait!” you say, “aren’t balloons a threat to civil aviation?” Well, they’re more of a risk than a threat. Over the decades since thousands of weather balloons and aircraft have taken flight, there does not exist a single documented case of one hitting the other. There are some, rare plane-strikes of other balloons, which result in a destroyed balloon and a pilot making a routine report upon landing. See, civil aviation is a little more resilient than it appears. That extra large Chinese Spy Balloon actually could have damaged a plane, but, you know, we can’t shoot things down over land, until we can.

Suddenly, somebody in the US National Security leadership sobered up. NORAD must have re-tuned their radars, since they stopped reporting on every piece of floating mylar, the Air Force put away its missiles, and calm returned. The President went before the Press to say, “Get a Grip, man” which may have been his best moment at the podium, ever. He said all the right things about China, danced around the unidentified aerial object phenomenon, and walked off when the press went ballistic.

Hardly a “day which will live in infamy” Presidential moment. What might a competent response looked like? For starters, China needs to get its act together, since it all began with them, accidentally or not. First Covid, now balloons; what next? Next, the American government had a choice. Option one was to ignore the balloon, as it had in the past. When it became public knowledge, they could have asked China for an explanation, and when China provided the lame weather balloon excuse, the White House could have publicly offered President Xi an account with the National Weather Service and a streaming subscription to the Weather Channel. Privately, they should have called the Chinese explanation BS and told them to knock it off. I would call this the “Mature Superpower Response Option.” Now if the partisan political heat got too much for the White House, they could have chosen option two: publicly denounce the balloon as an unacceptable breech of sovereignty unfit for a nation which constantly harps on it. Shoot it down immediately, then offer to return it after processing for the illegal importation of items into the United States. Take the damn thing apart down to the last nut and bolt, exploit it, then send the box of trash to the Chinese embassy in DC, along with two more things: a bill for the cost of importing and analyzing the illegal product, and a live carrier pigeon in a box with a note saying (in Mandarin) “try this next time, pendejos.” That’s the “Welcome to the big leagues” approach. The Biden administration seemed confused or frozen, depending on the moment.

What did we learn? Well, if you were unaware of BFOs 1-4, maybe that was educational. Otherwise, not much. I do think that someday the balloon (eventually) shot down over Lake Huron will wash ashore. It will be an exceedingly large piece of brightly colored mylar still bearing traces of helium. And on its side will be the words “Welcome to Chuck E. Cheese’s, Kalamazoo!”

Larry Walters was ahead of his time

Who is afraid of the Big Bad Debt?

The impending United States Government Debt Ceiling Default Crisis raises an interesting question: is this more like the Y2K crisis or like the bank run leading to the Great Depression. It all depends upon who you think Uncle Sam is.

Let me explain, first off: the debt ceiling is a legislative fiction; it is not real. It is imposed by the government on itself, and so the government can just as easily undo it. For example, the Congress can pass and the President can sign an increase in the authorized debt, or even a law that simply suspends enforcement. The Treasury can finagle revenues coming in and payments going out to extend when the debt ceiling is exceeded. Some have even suggested the Treasury could mint a so-called trillion dollar coin, in effect a non-negotiable trick to say, “here’s the money, so we don’t have any debt.” That last one is arguable, but serves to make the point how artificial this crisis is.

Second, the Democrats and Republicans have driven wildly toward the debt ceiling cliff many times, and always find a way to swerve or hit the breaks in the end. One time it may be different, but there is much history supporting more of the same.

No one knows exactly what the consequences of a debt limit default would be. The real inability to pay off debt–for a country or a person–is a serious thing. But the debt ceiling is not that. Most agree the stock markets would drop, as they fear uncertainty, and just the fact that the political parties didn’t avoid a technical default is a higher degree of uncertainty. But the markets are a difficult sign to read. Some investors believe the government will service their bonds first, so they will continue to get paid (as revenues come in). Others are short-selling, predicting a big market correction from which they would make millions.

But none of that is permanent. Would it send the economy into a recession, since all the other fundamentals don’t change? Would it change the willingness of Saudi Arabia, Japan, and China to buy US government debt? Remember, it’s a technical default: the US government and the Gross Domestic Product remain the same, and the US dollar is still the world’s reserve currency. So no one knows how it will play out. Am I worried? No, but I am prepared. Why? If a technical default occurs, I am sure things like federal pay and pensions will be among the first things that don’t get paid; social security, medicare, and military pay will all come first, although even those will be at risk. There simply isn’t enough revenue coming in monthly to pay the bonds and the entitlements and everything else.

Let’s use a personal metaphor. Imagine Elon Musk, he of an enormous fortune, is sailing on his yacht in the remote South Pacific when he hits a perfect storm, his boat sinks, and he washes ashore on a remote island as the sole survivor. Being incredibly lucky, this island has a small, non-cannibalistic population, and the first thing Elon sees is a small palapa with a “restaurant” sign! He wanders in, sits down, and waves to the waiter. The waiter, a vaguely Samoan-looking character who appears as if he could play nose tackle for the Cincinnati Bengals, takes one look at the soaking-wet, disheveled man and thinks “not another drunk tourist!?!?” but hands him a menu. Elon slams down several glasses of water, then some fresh fish, all the while amazed at his good luck. The waiter brings the check, and Elon realizes his wallet and his credit card holder are gone. He finds his iPhone in a special secured pocket, but it’s a sodden paperweight. He starts to explain about who he is, why he is there, but the waiter, certain it’s time to launch another drunk, is having none of it: he doesn’t know an “Elon Musk” from a “Musk Ox.” As he drags Mr. Musk by the collar towards the door (the palapa may have no walls, but it does have a door!), a woman, the restaurant owner, walks in and does a double take. “Elon Musk? Really?” she stammers. It seems Mr. Musk’s good luck has returned. The waiter re-deposits him at his table, and Elon recounts his story to the owner. He offers to invest in her restaurant, gives her an IOU for $50,000 dollars, and agrees to do a selfie for her to post on social media.

Fun story, what? But what does this have to do with the debt ceiling crisis? Elon Musk is Uncle Sam: fabulously wealthy, but out of available cash at the moment. The waiter is the market, which isn’t sure about anyone or anything, hates uncertainty, looks at the immediate situation and starts to react. The restaurant owner is the rest of the investing world. They see the situation in front of them, but they also recognize the larger implications, and they react differently. Which is why you shouldn’t worry (too much) about the debt ceiling crisis.

Imagine our shipwreck scenario again, only the survivor is Donald Trump. He of at least four bankruptcies, a tendency to overstate his wealth and litigate any debt. If you’re the restaurant owner, do you give him a pass? That’s the US if it ignores the debt (not debt ceiling) problem. Maybe they all decide enough is enough, and the global economy crashes. We don’t know whether we’re Elon Musk or Donald Trump in the eyes of the world’s investors. Which is a reason to worry.

The real problem is not the debt ceiling, but rather the debt itself. The US government owes tons of money. . . literally. It owes $31T as in Trillion dollars: 31,000,000,000,000. That’s over 34,ooo tons of dollar bills. Is that a lot? Well, just like for a person, it only matters if they can’t pay it.

The Edmund Fitzgerald only had 26,000 extra tons, and you know what happened to her!

The US Gross Domestic Product (GDP, a measure of the total resources available to the country) is over $25T, so we’re a little over-leveraged. Of course the all the debt never comes due at once, but the government can’t access all the GDP, either.

Add in to that the credit history of the United States: from the original debt of the 13 colonies, through the Union (not Confederate) Civil War debt and the enormous federal expansion during World War II, then the Cold War and creation of the New Deal social welfare state, the US Government has always, ALWAYS, paid off its debt on time and in full. And as any creditor will tell you, that counts for a lot.

Finally, in addition to its tangible assets, like the ability to raise revenue and print money, the US government has intangible but important assets, like the world’s greatest military. What’s it worth? When you need it, priceless!

When your bomb absolutely, positively has to be there overnight!

So far the debt monster is undeniably large, but seems manageable. Now let’s look at how the US Government finances that debt. The US can run large annual deficits (the difference between revenues coming in and payments going out) because it issues bonds: federal IOUs that pay interest, which are bought by investors. These IOUs are highly sought after, because of America’s stability (we don’t devalue our currency, we don’t nationalize other people’s assets) and payment history. When you have cash and you want to it to grow while being protected, nothing works like US bonds. Which is why China, and Japan, and Saudi Arabia hold so much of this debt. It’s not necessarily a bad thing being “in hock” to foreign governments. We took their dollars and gave them paper, which is only worth something as long as the US is around. Yes, they could try selling it all at once to harm the US, but that would involve destroying all their investments at the same time. It’s mutually beneficial, so it works. Banks, investment firms, insurance companies, pension plans and private investors all buy US debt, too, for all the same reasons.

Another big holder of US debt is (wait for it) the US government. What? The two largest government holders of government debt are the Federal Reserve (aka the Fed) and the Social Security Trust Fund. The Fed started large-scale buying of debt during the 2008 financial crisis. It didn’t have to, but it bought up federal debt from banks and others to keep the markets liquid (flowing) and prevent a depression. In effect, it “created money” just like the Treasury does, except the Treasury prints it while the Fed just creates it digitally. The Fed can decide when to sell those bonds and is starting to do so gradually, so as not to upset the markets.

All that money they take out of your paycheck under the heading OASDI (Old Age, Survivors, and Disability Insurance)? That’s your input into Social Security. The Social Security Trust Fund takes the extra left-over after paying out benefits and buys US government bonds. So the Trust Fund is full of IOUs, not dollars. But that’s not a problem, because the US government always pays off its IOUs on time. Right now, the amount the Trust fund pays out is about the same as it takes in, but as the baby boomers continue to retire, and there are fewer workers out there paying OASDI, the Trust Fund will need to cash in its IOUs. Current estimates (and they change annually) say that the IOUs will be all used up by 2034. At that point, most of the Social Security payments will have to be appropriated, since the Trust Fund can’t send you (as a social security recipient) a government IOU, what you want is a dollar.

Which is not to say Social Security is the problem. There are other entitlements (which for God’s sake, don’t ever complain about this word, as it means it is a legally required payment, not optional, and it has nothing to do with being “entitled” in popular usage) like Medicare and Medicaid which have similar issues, not to mention our federal tax code which is larded with tax breaks for corporations, wealthy investors, and homeowners. It is never one thing, it is always every thing, together.

By Wikideas1 – Own work https://www.fiscal.treasury.gov/files/reports-statements/mts/mts0922.pdf, CC0, https://commons.wikimedia.org/w/index.php?curid=124463747

As you already know, the larger circle is expenditures, the smaller is revenues, meaning the US once again ran a deficit. The administration points out the deficit was reduced last year, and I guess in these extraordinary times, that’s something. But it’s like a drunk telling you he only drinks half-a-bottle-of-whisky-a-day now: relevant, but not addressing the fundamental problem. Look again at Social Security, Medicare, Income Security, and Net Interest; these are mandatory budget items, requiring no Congressional approval. Most of these programs increase every year. For example, we still have ten more years of ten-thousand baby-boomers retiring every day, and as they apply for Social Security, that expenditure will steadily increase. Only about a third of the federal budget is discretionary spending, and it includes things like defense and education spending. Eventually (like in a decade or two), the entire federal revenue stream will be eaten up by mandatory spending if nothing changes.

What does it matter if institutional investors (countries and firms and people) will keep buying US issued debt? It doesn’t. The US can keep going on running an annual deficit, selling bonds to finance the debt, and nothing changes. But that willingness to buy US debt is built on a fragile, psychological base: the US is a stable, growing, responsible payer of debt. As we get to the point where we can’t pass a budget without huge increases in taxes or drastic reductions in spending (including benefits), who will continue to believe that? And once that trust is gone, it’s very difficult to reacquire.

The thing is, a series of small changes could place the US federal budget on a firmer path for many decades. Simply removing the cap on Social Security taxes (they stop collecting the tax above $160,000 income), means-testing payments for the very wealthy, and delaying the retirement age to 70 help a great deal. Creating a sovereign wealth fund to invest in market securities and help pay for entitlements is another great idea, or allowing the Social Security Trust Fund greater leeway in investments is another. A national sales tax is another good idea. And before you clutch your pearls (I’m thinking of the White House here), if it’s so regressive how come nearly all the progressive social democracies use it? Plus, the government could exempt groceries, for example (under a certain limit; we don’t need to have tax-free foie gras, as much as I like it!). Perhaps a separate value-added tax on items costing over $100k and a small financial transactions tax on securities would be nice additions. I’m open to any suggestions on consolidating (not cutting) federal welfare programs, where any savings would come from eliminating bureaucracies, not reducing benefits.

As things stand now, Republicans are for cutting entitlements and taxes, while Democrats appear to want to raise both. Neither approach will resolve our growing debt problem. When the two sides do compromise, like during a recent debt ceiling crisis in the Obama administration, they mostly compromise on revenue-neutral provisions, which don’t add to the deficit, but don’t reduce it either. That also fails the test, because soon we still run out of discretionary spending.

If you would like to play around with fixing the deficit/debt yourself, check out this website where you can tweak the variables and see how you do. I got within $50B (chump change with respect to the federal budget) of stabilizing the debt at 90% of GDP. It’s actually not that hard, if you try. The larger point is we don’t need to produce a balanced budget (which is practically impossible at this point), we only need to show we’re willing to reduce spending and raise revenue.

In the meantime, our political leaders (both sides) seem content to posture and pretend there is no problem, other than the opposing party. One side or the other will claim to “win” the debt ceiling default crisis. If the President agrees to cuts, the GOP will crow; if the Speaker agrees to raise or suspend the ceiling without cuts, the Democrats will do so. But nobody wins here, because the day after this ends, the debt still looms. It won’t really be a problem until it is, and then it will be too late.

Ernest Hemingway, when asked “how did you go bankrupt?” said, “gradually, then suddenly.”

SECRETS for Dummies

The partisan hype machine geared up after the Trump, then Biden, now Pence “Oops I forgot I had classified documents” scandals. I fully expected some partisans to get whiplash as they excused, then excoriated, then well, what do you do after you’ve already taken every contradictory position on an issue? Stay quiet? Never!

But the steady drip of revelations also brought out another tired old set of talking heads: the “there’s too much classified information” group. Some of these are so-called democracy promoters who claim secrets are antithetical to democratic government, or we should spend much more de-classifying than we do now. Some are journalists who crave access and hate the fact they can’t have it, or small-government advocates who see an easy target in the always-growing national security establishment, one which often does not respond publicly to criticism. Some are politicians who are looking for a scapegoat. Let’s tackle these objections, shall we?

First, all forms of government have secrets, and even Western democracies (and I hate that term, but permit me) all have intelligence organizations. George Washington personally ran spies as a General. Benjamin Franklin, as Post-Master General, oversaw secret communications and intercepted enemy ones. Part of the consent of the governed is to accept that there are reasons to withhold information. Why? To protect lives and avoid wasting resources. Classified information sometimes contains names of people (“sources”) who provided it, and should they become public, bad things would ensue. Wonder why some government files about the Kennedy assassination are still redacted or classified? In it are names or descriptions of people who provided information, and those people or their immediate families are still alive. What do you think happens in Cuba when somebody’s family name appears in a CIA file? You think Havana forgets or forgives what granddad did?

Likewise, classified information may include clues as to the technical way it was collected (“methods”). Let’s say there is a super-secret satellite which can detect and analyze someone’s breath, allowing us to track individuals and determine their health and activities. Even a document which simply states “Kim Jong-Il is out drinking again” as its bottom line would reveal we have a real-time ability to monitor this situation. If released, the other side can begin researching how we do it, and ways to defeat our capability. And billions of dollars in research, production, and operations would go down the drain, not to mention we’d be totally surprised the next time Kim showed up drunk!

This “sources and methods” problem is like a web, where every document must be scrutinized for how its release could jeopardize national security. The original decision to classify something is easy (more on this later): there are rules any analyst, collector, or official can consult and apply. When agencies are asked to de-classify something, it’s much harder. How does one determine whether all of a source’s relatives are dead or safe? How much of a give-away about the technical method is too much? What if the document has multiple references from multiple agencies? Each must consider and rule on it.

Most agencies treat de-classification as an additional duty for employees, and it is one widely hated by the workforce. Why? It’s hard, time-consuming and nobody gets a bonus for a record number of de-classifications, but woe-be-it to you if you release something that should not have been released. Like being a gate-guard, there is no upside for being lenient. So we’ll never spend much on de-classifying, plus, what’s the relative benefit to the American public? Documents which have high classifications based on sources and methods often have an analytic line that is simple or even obvious. De-classification results in a “so-what?”

The second complaint comes from journalists, and you can see a prime example here from Fareed Zakaria, who should know better. He cites the amount of classified, when he knows this is a canard, and even throws out the old ‘information classified because it is embarrassing’ idea which is specifically prohibited under Executive Order 12356. Let’s focus on the amount of classified. 99.9% of classified information exists not as documents or photos, but as digits in a secure classified computer system. It is physically inside vaults and SCIFs (Sensitive Compartmented Information Facilities) which are monitored and secured. The computer systems themselves are encrypted and monitored both by systems and people. How much classified is there? Nobody knows, any more than you can say how much info is in your cloud storage right now. The government generates enormous amounts every day. Take the breath-sensing satellite I made up: it circles the globe, taking sensings, and every unique sense of a location is classified, because if you had it, you might be able to figure out what the capability was. So the sensing over your favorite bar is just as classified as the one over the Kremlin, not because of the target, but because of the capability. And the gigabytes of sensings are stored in the classified system. How much are they and is it too much?

It’s only count-able when you produce it as a document, photo or other “thing.” 99.9% of such classified “things” are produced and kept in those same vaults and SCIFs, and only leave them when people properly trained and authorized to do so take them out to show them to whomever needs to see them (sometimes senior officials), but more often that not other intelligence personnel. So the overwhelming majority of classified info exists and is secure, regardless of how much there is. The problem is not the amount, it’s that people get involved.

So does the US government keep spending more all the time for this classified information? Yes. We get better at collecting and using it, and we acquire more. Does it cost a lot? Depends. As any info tech geek will tell you, storage is the cheap part. The government even eventually realized that and outsourced some of its classified holdings to cloud-storage firms like Amazon and Google, because they can operate at extreme orders of magnitude. The expensive part is acquiring the data, and do you want the national security system working with more and better, or less and worse, data?

The third complaint comes from those looking for a scapegoat: someone else to blame. Politicians have a love-hate relationship with classified information. They love it when a secret gives them an advantage in a negotiation, or prevents a crisis, or helps win a war. They hate it when they are told what they can and cannot say in public, for obvious reasons, or when they have to turn in their classified documents before leaving for the day. They also dislike being subjected to background investigations (as do we all). A security clearance is not a right, it is a privilege, so one can be denied for a host of reasons for which a politician might not feel they should be penalized: extramarital affairs, suspicious foreign links (business or family), past drug use, lewd and lascivious conduct, lying (this one scares them the most), bankruptcy. The standard is not a legal one; it’s whether you have weaknesses or vulnerabilities which would make you an opportune target or desperate enough to trade classified info.

Things get especially sticky when it comes to Congress. Remember that most classification comes from Executive branch guidelines, so it does not apply to the co-equal Legislative branch. Congress Members (both House and Senate) have security clearances by virtue of being elected! Their staff must submit to background checks. Furthermore, Members like to go before the cameras and opine, but if you access classified info, there may be things you can’t say publicly. In general, Congress Members and staffs are more rigorous about handling classified, since they in effect must police themselves. Watch carefully the reactions of Democratic Senators to news that classified documents (more than 14 years old) from Senator Biden’s service were found in his home. The degree of shock and concern was much greater than the original case.

Congress created two committees (the Senate Select Committee on Intelligence, SSCI or “Sissy”, and the House Permanent Select Committee on Intelligence, HPSCI or “Hipsy”). Both were originally quite bipartisan and worked primarily to provide oversight on secret matters, especially as intelligence budgets climbed during the Cold War. Afterwards, the HPSCI became very partisan and worse so over time. The most important role these committees have (in my opinion) was to control the flow of classified info in the Congress. There was no need for every Member to see everything; the rest of the Members in effect gave the committees a proxy to tell them “it’s ok.” Which the committees did. Everything revealed by now-Russian citizen Snowden was briefed to and authorized by the committees. It pains me (and many others) when they ran from responsibility with a “What? Gambling in this establishment? I’m shocked!” response.

(brief aside: I had to chuckle when someone was defending Rep. Swalwell–and whether he should be on the HPSCI–by saying “he hasn’t been charged with anything!” Gosh, that’s a great thing. No, he just exhibited horrendously bad judgment by having a relationship with a woman who turned out to be a Chinese agent. Who knows what she has about him? He should have been turned out of the HPSCI by Speaker Pelosi. In the good ol’ days, both parties policed their own when it came to the intelligence committees.)

As to the current cases, Trump can’t really use a scapegoat defense, since he claimed the documents are his and he de-classfied them. No one saw President Biden with the documents, so it’s possible an assistant put the documents where they didn’t belong. But that means it was multiple assistants putting multiple things in multiple wrong places over a decade and a half. Or just Joe. Apply Occam’s Razor here. Finally, Pence has the strongest scapegoat argument, as he denied having documents, he probably did not box them up himself and send them to his home, and they were unopened. But we’ll see. Every politician wants a scapegoat; it’s their favorite pet.

There is no dichotomy between secrets and accountable government of the democratic or other sort. There are more secrets than ever, because there is more information available than ever. No, you and I can’t see them, and there are good reasons for that. Yes, the Congress can see them, and does with great regularity. Yes, senior government officials of both the executive and legislative branches misbehave and mishandle classified information. And everybody should own a scapegoat.

Who, me? What did I do?

Everything You Know is Wrong (XI): the Internet

Here’s a series of things you might have heard of as true, but aren’t, since everything you see on the internet is not true (shocking, I know):

  • Ever see a FaceBook post that instructs you to click on the white space, copy & paste something, rub your head and pat your tummy (I made that last part up), and then “Prest-o! Change-o!,” you’ll see more posts from more of your friends. No, just no. Their algorithm is a mysterious thing, but you can’t hack it. In fact, it hacks you. FaceBook (and all social media sites) measure everything you do on their site: how long you linger on a post, what/who you respond to, what groups you join, what ads you remove, every single thing. The algorithm is designed to maximize the amount of time you spend on FaceBook. Yes, it wants you addicted to FaceBook. So it tries different approaches: if you argue with someone, it starts showing you more of their posts, to get you to argue more. If you share something, same. But the algorithm is clever, too. It will adjust some things, “starving” you from one friend’s posts or some site you like and only giving you a “hit” once in a while. So the only way you could “hack” it was to do random things, which would confuse it as to what you like/dislike. And who has time for that? Not only that, but you’d still be spending time on FaceBook, which means they would still be getting paid. So don’t try to hack it; you can’t. Go with the flow and use it if you like, but always remember, it’s using you, too!
  • Speaking of hacking, you (probably) haven’t been hacked. Especially on social media, people receive “friend” requests from folks with whom they already are “friends” and they let their friends know, saying “you’ve been hacked.” Hacking involves assuming the identity and account access of a person. The hacker is you and you are not you, any longer. Instead, what I have described is called cloning. Clones are a ruse wherein the cloner starts another page with your name, perhaps image, maybe some info, and then starts sending out friends requests. Your page is still there, but now there is another one. While a hacker can do some damage by posting things you would never say, the cloner is less dangerous. They can ask your friends for help/money, but that’s about all the damage you can do. If you’re the type of person who gives out money to social media “friends” then perhaps the clone trick will work. By the way, if you are that type, send some my way, too! Cloners mostly exist to gin up more eyeballs looking at sites/posts by sharing them with their even-less-real internet friends.
  • Ever see an extra long video with a title like “unique way to clean X” or “hack your Y.” So you watch it and it seems crazier as it goes. There’s one on cleaning your toilet–which I won’t link to, because I don’t want you to watch it–that goes on and on, with the cleaning person putting ever more odd stuff in the toilet. So you get done and you think, “that was a waste of time.” Except it was only a waste of your time: what the creator got was your eyeballs on their video, which is worth real money to advertisers. So beware such videos, and who knows if the special technique even works?
  • Which recalls the internet maxim “if you’re not paying for it, YOU are the product.” Which is not to say paying for things is always better, or always results in better service. But paid exchanges have a predictable nature: I send money and I receive a thing. When someone provides a free object or service to me, they probably are relying on my reaction as a tangible thing to market to someone else. So they might be trying to manipulate me in the process. Just a caution.
  • That image somebody shares of an otherworldly view of a tornado, or lightning, or a cliff-side village, or, well you get the point. If you use the Chrome browser, you can right-click and choose “search image with Google” then “find image source” to see if somewhere out there on the internet there is an original, that may be very different. If you don’t use Chrome, try “Google reverse image search” and you’ll see how to be your own fact-checker with pics on the internet. While this is mostly innocuous now, you need to get into the habit of being skeptical. PhotoShop and Artificial Intelligence (AI) have gotten pretty good, so there’s a lot of digital imagery nonsense out there. Eventually you’ll see fakes of political leaders, friends, family, etc.
  • Speaking of Chrome, some really like a feature therein called incognito mode. They think that when they use this mode, they are invisible while out surfing the ‘net, so they perhaps can go to naughty sites to which they would rather not admit. Incognito mode doesn’t hide you browser history, nor does it prevent cookies. It simply masks who you are to the site you’re visiting. This is useful when reading an article from a news site that only allows three free articles, for example. But don’t think you’re invisible. Anyone with access to your computer can see where you’ve been. Oh, and if incognito doesn’t work to avoid access limits (perhaps for paid subscriptions), you can always try the WayBack Machine or the Internet archive. Sometimes brand new articles take a day or two to get archived.
  • Ever get one of those “I truly believe X is a cause worth supporting, and I want # of my REAL friends to share/post this”? Another version asks you to read all the way to the end of a long post. These do not support any cause. They are simply the internet’s version of chain letters. I may be going out on a limb here, but they mostly annoy everybody who sees them. If you really care about something, write (that is, in your own words) what you really feel about it and share it.
  • Pfishing is the fine art of getting someone to release important financial or personal details through an online interaction. You undoubtedly have received the infamous “Nigerian Prince” e-mail offering you a great cash windfall if you provide the sender with your bank information. Right. But it takes many other forms of which you may be less aware. A list of places you have visited, which “the average American has visited only 10.” A challenge to come up with your Hollywood name, wherein your first name is the name of your favorite pet growing up and your surname is the name of the street where you lived? Favorite foods, things you would give up forever, places you would never go, life experiences. It all seems so innocuous. But if you respond (as millions do), you add to the publicly available data about you. Hackers can send bots through the internet looking for “your name” and “whatever you post publicly.” So? What’s a common security question for websites: How about your favorite pet’s name? Your address growing up? Favorite food? Ooops. But it’s not like they have your birthday, since only all those “friends” on the internet who send you congratulations every year know that. Let’s not become paranoid, now! None of these things means you’ll be hacked. What they do is make you easier to hack. Remember the old joke about the two men going walking in the woods? The first one is wearing hiking boots, and says to the second one, “why are you wearing running shoes? Are you planning to outrun a bear?” The second one says “I don’t have to outrun the bear, I just have to outrun you.” Don’t be the person online wearing hiking boots.
  • What about password security? First, why are we even using passwords? Passwords started because networked computers were for businesses and organizations, who needed a simple security procedure they could mandate to employees. As online interactions and commerce took off, it seemed like an easy transition to keep using them. Except I don’t work for Amazon, and having a different password for everything I do online is unworkable. Not to mention passwords are eminently hack-able. The good news is passwords are dying, being replaced by other security measures like texts, biometrics, and tokens. So this is a problem being solved. In the meantime, using a simple generic password phrase is fine for all your unimportant sites. But remember, it’s only an unimportant site if it has NO IMPORTANT INFORMATION. If you let the unimportant site keep your credit card on file, or it has security questions or other data, it’s not unimportant. For important sites (think banking), use a password phrase with both upper and lower cases, a number and a symbol. Surely there is an old song lyric you will never forget: “ONCE th3r3 w@s” a way… is an example. If you have multiple important sites and know all the lyrics to a favorite song, using different lines of lyrics from the same song also works well.
Note as computers get faster, these periods will shrink!
  • Did you notice that many sites now ask you to register, usually using your name and e-mail address. Why not? Well, that’s another useful piece of information about you. Which means it can be shared, sold, or hacked away from you, and combined with all the other info about you out there. Solution? Get a second, free e-mail account for everything other than important business and friends. When anybody else asks for an e-mail, give them the alternative. You can check on it once a week in case something interesting shows up, but otherwise just let it sit there and fill up. If anybody tries to tie you to that e-mail, they don’t get anything useful!
  • Back during the pandemic, my family started doing monthly Zoom calls just to keep up to date and in touch. Some won’t participate because of the much-publicized “zoom-bombing” which coincided with greater Zoom use. Zoom-bombing is when someone unauthorized enters your Zoom call and generally makes a nuisance of themselves (or worse. Some folks share pornography!). That was a problem, especially for people who post Zoom sessions on public websites (like social media). But Zoom fixed that: when you enter a zoom call now, the call moderator has to “authorize” you to join the call. If they don’t recognize you/your number, they can chat with you to confirm or simply leave you in the “waiting room.” So Zoom to your heart’s content (which may be short).
  • Last, a tip I haven’t been able to confirm, but seems to work. If you access a site with many ads, and that takes a long time to load, try increasing the size of the displayed text or portion (usually <ctrl> and <+> at the same time) so only that text/portion is visible. The computer doesn’t always load things which don’t fit the screen. I noticed on my old MS Outlook Mail this hack works well, speeding up my reading and eliminating the flashing annoyances of paid adverts. If anyone can confirm or refute this, please do in the comments!

Secrets, Laws, and Norms

Bear with me if I meander a little today.

I have watched with some amusement the recent accusations of mishandling classified documents leveled against the sitting and former Presidents. My amusement stems not from the possible charges themselves: classified information is a serious thing, and anyone mishandling it should be dealt with accordingly. No, my amusement comes from the way the incidents are portrayed by partisans on both sides and the media (both sides). These people are digging deep into law and regulation to either confirm the similarities or deny the differences. What’s really quite clear to me is the cost not to national security, but to our national sanity.

Classified information, even of the highest nomenclature, is mishandled every day. That is not because, as some suggest, too much is classified. It is because there are very strict rules for who can see what, where they can see or keep it, how it can be transmitted or carried, how it is to be referenced, maintained, and stored. I’ve heard there are a million people with security clearances, and probably a terabyte (1012) of classified information: you do the math, it means somebody is breaking the rules every day.

When that happens, there is an investigation, determining “was it espionage?”, then “was it intentional?”, “was it repeated?”, “who might have accessed it?” and finally “what is the effect of a possible compromise?” In the classic case of someone accidentally leaving a briefcase of classified material in their car parked on a secure compound for a few hours, the answers are all “no/none” and the culprit gets a harsh tongue-lashing. Any answers of “yes” incur ever-increasing punishment, up to and including prison.

Depending, of course, on who the culprit is. See a Marine Lieutenant who leaves a classified document in his car at the Base Exchange is probably looking at a career-ending Article 15 or worse. A CIA Director who releases reams of classified info to his paramour might see a $100k fine, probation, and resign. A Secretary of State who directs her staff to pass classified info over an unsecured server gets a stern rebuke in the middle of a Presidential campaign. And a President? Well, the President is the ultimate classification authority, the “god” of classification, so one can hardly charge a sitting President with misuse of that which he alone controls.

Why the disparate treatment? The punishments are harsher for the more junior personnel because they are designed to keep the legions of lower ranking security clearance holders from making ANY mistakes. When someone junior starts thinking classified material is no big deal, or worse yet someone like Reality Winner or Edward Snowden starts thinking it’s their job to correct US national security policy, very bad things happen. But for very senior people in each administration, it IS their job to do so, so they are handled differently. Frankly, if we treated everyone the same, we would run out of senior personnel pretty fast. No, it’s not fair, but it is the system as it exists, and everybody who is “in” the system knows it.

So former President Trump either took (or directed to be taken) many classified documents which were then stored at Mar-a-lago. He has claimed he declassified them, which is possible, but for which he has produced no proof. What if, as he claims, he could just “think” to make them declassified? Perhaps, but why not follow up and complete the process? And they were still Presidential Records, and thus would still be a violation of the Presidential Records Act. Note that there is no criminal penalty for violating same. So what do we have here, in light of my earlier questions to be answered when there is a mishandling of classified info? There is no public evidence he was trying to sell or give the documents away (we await the FBI report). He seems to have admitted it was intentional, since his “declassified” argument suggests so. It was one, albeit very large, incident. While his storage area at Mar-a-lago was not appropriate for classified documents, it was not generally open to the public and there is little chance anyone accessed them (again, we’ll wait for the FBI report). What this demonstrates is former President Trump’s legendary disdain for the rules, an intentional, highly inappropriate, and casual handling of serious material.

As for the sitting President, much less can be authoritatively said. His personal lawyers found classified documents (from his time as Vice President) when clearing his office at the Penn-Biden Center, a think tank. This raises three questions: Why were his lawyers (lawyers, not gophers) clearing his office six years after he left it, why were there classified documents there at all, and who had access to the empty office? The additional classified material (also allegedly from his time as Vice President) at his home in Delaware presents the same last two questions (the first being answered by the point the FBI agreed to have the President’s lawyers conduct that search). No one knows if then-Mr. Biden brought the documents to either location, or ever had them in his possession. The President has expressed only surprise at the fact of, and the discovery of, the classified information. There is little chance the information was accessed by anyone. What this case demonstrates is classified information was left unsecured at two locations for six years, which is negligence, gross or otherwise. We don’t know who committed it, yet.

Trump-partisans are braying at the hypocrisy of treating the cases differently, but there are differences, most notably, the intentionality of Trump’s case and the willingness to cooperate of Biden’s case. But the very nature of the comparison is what I want to highlight (I know, you’re thinking “Pat, you took me through all that, and NOW you’re getting to your point? Who do you think you are, Arlo Guthrie?”).

+1 if you saw that coming!

I read the Washington Post and the New York Times daily. I watch ABC Nightly News and FoxNews with Bret Baier. I get feeds from the Economist, the Atlantic, the New Republic, the Federalist, the Guardian, and the Wall Street Journal. It is rare to read a report about the recently-discovered Biden case that does not give equal time to the Trump case. Oftentimes, more on Trump and the differences than on the news about Biden itself.

Why? Why compare them? If there is a grizzly murder, does the judge compare it to yesterday’s murders? “My bank robbery netted much less than the one last week, your honor” will never be heard in a courtroom. The events stand on their own, and should be judged that way. In my mind, and with only the facts on hand, Mr. Trump deserves a stiff fine and a public admonishment. Somebody (still to be determined) but possibly President Biden, deserves the same. Why? They both sat atop the classification hierarchy and did not respect it. In neither case is there likely to be damage to national security. One case is short, intentional and adversarial, the other accidental and cooperative but negligently long.

Of course the MAGA hat-wearers are claiming “foul.” Why give them their due? Why diminish in any way the seriousness of the latter Biden case, if it proves to be serious, because Trump is so much more offensive? This has been the case from the beginning with the Trump candidacy, then presidency, and even now once again as a candidate. The investigations, the impeachments, the need to respond to every Trump tweet. At one point in the campaign, I recall candidate Kamala Harris saying “if Donald Trump says to take (the vaccine), I’m not taking it.” Hyperbole, yes, but since it’s Trump, well, ok. Apologies to my MAGA friends and Trump haters everywhere, but everything does not need to be about, or compared to, Trump.

President Biden even set himself up, taking the bait in a 60 Minutes interview when asked what he thought about former President Trump’s stash of secret documents at Mar-a-lago:

“How can anyone be that irresponsible?”

This aired in September, but why would the President say such a thing? Why even comment on an open DOJ investigation? Because it’s Trump. So one just has to notice it, be offended by it, comment on it, and denounce it.

Trump is famous for breaking not only the rules, but also the norms of civilized behavior. But here’s a little secret: the first person to ignore a norm does not destroy it. The norm only falls when everyone else says “well he did it, so now . . . “. The reflexive need to put everything into a Trump context ratifies his behavior as the new norm. Which means our norms (like a President taking care of classified material even if he can’t be charged with anything) get replaced with “was it fewer documents than Trump had?”, “were they less classified?”, “did we cooperate more?”, and “were we antagonistic?” Which are lousy norms. Think I’m exagerating? Yesterday, the President of the United States said he has “no regrets” about the classified documents found after being unsecured for six years. None. Zero. Nada. That’s a breathtaking assertion, but hey, it’s not as bad as Trump, right?

Neither of these cases look good for the alleged offenders. Both are serious, but neither (probably) resulted in any damage to national security. Trump is attacking the investigation, belittling the process, and making outlandish claims: par for the course. It appears to me that President Biden will employ a version of the “doddering grandfather” defense (“what? documents? where? huh!”), which would be dismissed as typecasting in Hollywood. We should treat them separately, based on how a former President or Vice President should act with respect to classified information. That is all. Our norms need a rest.

Book Report: Can Legal Weed Win?

This book was written by two University of California economists (Robin Goldstein and Daniel Sumner) who make no secret they see the legalization of “weed” (their preferred term for marijuana) as a positive step toward a more logical, more just society. They take no position about the moral implications of drug use, but rather focus on the economics. and more specifically the claims that legalization would have several positive results: ending the illegal drug trade (at least in weed), eliminating the unnecessary incarceration of those involved in the trade, redirecting law enforcement resources, and generating large and growing revenues for federal, state, and local governments. They conclude that– unsurprisingly for anyone familiar with supply and demand–none of these projections proved to be true.

“Blunt” Get it?

When California led the way by decriminalizing weed in the form of medical marijuana, the path seemed clear: safer weed to smoke (or eat), easily available via a doctor’s note at local dispensaries, less expensive, and without the baggage of any connection to the illegal drug trade. The alleged medicinal properties of weed, which to date remain under study but not proven, were the ostensible reason to legalize weed. Yet medicinal weed was never the intended endpoint, but rather a useful start toward full legalization. Dispensaries and the fiction of a “doctor’s note” only salved some consciences, but did not satisfy the final goal of legitimizing recreational weed use. And that is where things became interesting.

What went wrong? Let us count the ways:

The move to full legalization almost always involved government regulation, taxing, safety and quality restrictions. Which increased the cost of doing business. So the price of legal weed went up, while illegal weed remained available from all the same suppliers at a discount. Would consumers pay extra for the government assurances and regulation? No, since most weed users had been buying for years from suppliers they considered safe, and the connection to the illegal drug trade seemed tenuous, even though it was real (“I don’t deal with a cartel; I buy from Joe down the street.”)

Meanwhile, decriminalization/legalization made retailing weed a crime, but not possessing small amounts. So there was no longer a strong reason for police to “police” the illegal weed marketplace, except as a matter of violation of commercial regulations. And the move toward legitimate recreational weed use eliminated the need for the “medicinal marijuana” ruse: in states which legalized weed, the dispensary weed business largely evaporated. Meanwhile, Oklahoma, a relative newcomer, has stayed at the medicinal weed way point, and has a medicinal weed dispensary for every 3,000 residents (the greatest density of medicinal weed suppliers in the nation, despite no strong medical evidence)!

Specifically in California, legalization included giving local officials the right to regulate where and how weed was bought, sold, and consumed, a compromise necessary to ensure legislative support for legalization. And in the land where NIMBY (Not In My Back Yard) rules supreme, public use of weed in most of the state, which was unregulated under medicinal weed rules, became outlawed under legal recreational weed laws. It seems that most Californians didn’t want a weed shop on their street, people smoking a joint in their public parks, or even a weed field next door to their homeowners association (marijuana fields are well-known for a distinctive, unpleasant odor).

Of course, the wild card in legalization was how would organized crime respond. The optimistic forecast was that drug-dealers would simply accept the inevitable and either go legit by becoming regulated weed retailers, or leave the weed business for other, more lucrative drugs. As the authors point out, people who thrived selling weed when it was illegal were those adept at avoiding government regulation and maneuvering among violent competitors: not skills which translate well into a legal marketplace. So local drug dealers simply went on selling weed more cheaply and without government interference (remember, the police don’t care as much about economic regulations), undercutting the legal business. And cartels have taken to offering legitimate weed retailers the classic Mexican dilemma: “plato or plomo,” meaning work with the cartels (accept their silver, plato) or get killed (received their lead, plomo). So illegal weed also continues to leak into the legal business. The biggest change in the illegal weed market has been to move weed growth from Mexico to the US, to avoid the problem of federal restrictions on its importation. Cartels don’t need to smuggle weed across the border anymore, when they only need to hide it as it grows in the States (where law enforcement is less interested in finding it).

Which points toward the long-term outlook. Of course federal law which still treats weed as a Schedule 1 substance (serious drug) acts as a restraint, but only just. The drug war was always fought primarily at the state and local level, and there it is ending with a whimper, not a bang. Eventually the federal government will give up also, but of course local drug-dealers and cartels will not. Meanwhile, numerous investing firms, tycoons, and get-rich quick investors have gone literally bankrupt betting on the profitability of legal weed.

What happens next? The authors point to several scenarios, but none of them are particularly positive for the weed business. They posit four changes they see as relatively certain in the long term (2050): (1) national legalization of weed, (2) legal interstate weed commerce, (3) more efficient weed farming production, and (4) agribusiness involvement in the weed market. Legal weed loses its counterculture cachet and a national market reduces profit differentials. Weed grown in greenhouses needs cheap labor and cheap power, making a place like Oklahoma incredibly competitive with California. Current demand is met by small, distributed producers, and while some weed aficionados claim market use will soar, that is unlikely. Just as weed may prove to have health benefits for some, long-term weed use is likely to pose health challenges. More efficient farming techniques will produce stronger, safer, and cheaper weed. All of which is to say the legal weed business will resemble farming more than prospecting: a highly competitive market with some product customization (read craft weed), low prices and profit margins, and relatively static demand.

Hardly the profitable, smokey nirvana the weed industry projected. If you like supply and demand charts and lots of data, read the book. The authors have a wicked sense of humor and make the economics discussions about as lively as the dismal science can be. Otherwise, you received the gist of their analysis here. And it is a cautionary tale: legal weed will be neither a golden goose for government revenue, nor a rainmaker for investors. Legal weed will not affect the illegal drug business, nor will it reduce crime. Legal weed does not cause mass addiction, but it also (probably) is not a wonder drug. What legal weed does do is add one more legal way to get high. That’s the blunt truth.