Friday, October 17, 2008

You Think I’m Rich, Don’t You?

(I'll update with a link to the author as soon as I can find one - but this article makes so much sense to me, hopefully it will to you as well)
You Think I’m Rich, Don’t You?
By David Glenn Cox

Poor Joe the plumber, plucked from obscurity and thrust into the national limelight, his life has now become an open book. After all, all he did was ask a question about tax policy. Little did he know the McCain campaign and Fox News would seize upon him and try to make him an icon.

I wondered about Joe even before the stories started to come out about the tax lien against him or his lack of plumbing license. For years I worked for a man that made well over $250,000 a year and he was a heck of a lot sharper than Joe the Plumber.

Mr. Ben had started in the 1940’s with one auto parts house and by the late 1970’s Mr. Ben owned over 120 auto parts stores with three auto parts warehouses located across three states. When I was promoted to manager I began to have meetings with Mr. Ben once a week. Right after Ronald Reagan was elected I asked Mr. Ben, “Is Ronny going to cut your taxes?”

“Probably” he answered, “but I voted for Carter. You can’t build a business on tax cuts. The Democrats build roads and bridges and every mile of highway is money in my pocket. I don’t want to pay one nickel more than I have to, but taxes are just the cost of doing business. Our vendors raise prices and no one cries 'you’re going to bankrupt us!' The city passes a sales tax and you just pay it and go on; it’s the same for everyone. I wouldn’t own all these stores if the state and federal government hadn’t built all those roads, and taxes paid for every foot of them."

Mr. Ben once explained, “It's not about who has the best hand, it's about how you play it.” He also owned a realty company and when he planned to open a new parts store they would build a strip shopping center. The parts store would be the anchor store and the other businesses would subsidize the rent. If the parts store did well Mr. Ben raised the rent until they just barely made money. That way the construction loan could be paid off faster while paying fewer taxes in the parts business. If the store did poorly he would lower the rent, but either way he made money.

Mr. Ben traveled the highways extensively to keep an eye on his holdings. He had been pricing a new Buick Roadmaster, finally telling a local dealer, “I’m going to send a man over there with a cashier’s check for $30,000 and you either give him the car or turn him around.”

I shook my head at his directness and tenacity when Mr. Ben asked, “You think I’m rich, don’t you?”

I answered, “I think you’re doing all right, a lot better than I am at least.”

“I’m not rich,” he said smiling. “I’m almost seventy years old and I don’t even own a car. The company owns that car,” he said with a wink. “The company owns my wife’s Cadillac, too. The company pays for the gas and the insurance and for the tires and the oil. You see, it’s not what the company pays you, it’s what the company gives you. The company pays for our health insurance and the Realty Company pays for our vacation home down on Alligator Point in Florida. You see, we don’t own it, we lease it. I don’t have to make much money; my needs are meet and my nest egg is in this business.”

He was sharp, the company owned his 72-foot yacht as well. It was for entertaining customers, of course. The wholesale parts warehouses would cut us deals and pass along savings to us in the retail parts stores. For three years the parts houses did very well and the warehouses lost money. Then the tide was reversed; the warehouses were charging company stores higher prices than our competitors. The warehouses made huge profits and the retail stores lost money, all because Mr. Ben was playing out his tax hand. Two of his three businesses were making money and one was always losing money.

The money, of course, all belonged to the same person, Mr. Ben. Because of this I always had to check with Mr. Ben on my purchases. “If you can sell it,” he said, “then put it on the shelf. I make 3% on my money in the bank and I make 20% on the money on the shelf.” Mr. Ben used to insist that we take advantage of the discounts offered for prompt payment. “If they’ll give you a 2% discount for paying in ten days, what’s that equal in a year?”

I think Ben liked to share his knowledge with us because it was rejected by his idiot son, Ben Jr., who went by the name Bubba. Bubba had the title of manager in the smallest of Ben’s three warehouses. Bubba’s office had golf clubs in one corner and fishing tackle in the other. The walls were decorated with football memorabilia from Auburn University where Bubba once attended for one semester before flunking out. On his desk was a model of the Coast Guard cutter Bubba had served on after leaving school. Mr. Ben had pulled some strings to get Bubba into the Coast Guard and out of Vietnam.

Bubba was a rabid Republican and a strong believer in tax cuts. During the presidential campaign Bubba bought tickets to meet Bush 41 and was very impressed. Mr. Ben explained “that the boy didn’t know which side his bread was buttered on. I make my own tax cuts! I don’t need politicians to do that for me.”

Mr. Ben always read the "Dodge Reports," a trade paper that tracks construction and road projects and one day I asked, “Do you read that for your realty company?”

“I go where the roads go,” he answered. “Where the roads go, growth goes. Where growth goes, prosperity goes. Years ago in Dothan the city leaders and business merchants had a bitter fight over traffic congestion in downtown. The answer was a by-pass, and by the time it was finished most of the downtown merchants were broke. The traffic followed the road and took the money with it. The by-pass brought new jobs and industry and new cars lots sprang up. That’s what I like to see is new car lots, because every new car sold is a new customer for us.”

He explained that they were trying to find a site for a new store and it had come down to a location in a major shopping center or another location on a newly-widened highway. Mr. Ben said, “The choice is clear, the shopping center is at its peak today! The widened highway will see growing traffic for years; it’s the chicken and the egg. The chicken is all it can ever be but the egg is just beginning.”

When Mr. Ben reached 60 he announced that he was no longer coming in on Fridays. When he turned 65 that he would no longer come in on Mondays, then Tuesdays, then Thursdays. He worked only one day a week and spent the rest of his time on his boat in Florida. He attended a meeting that we had arranged to discuss the changing model in the auto parts business. The Auto Zones and Advance Auto Parts were moving in and the old model didn’t work anymore. The general manager laid out an intricate plan to build our own super stores to compete with them, heads up. Mr. Ben congratulated him on a wise strategy but added, “I’m done, at my age a lifetime book club membership isn’t a very good deal. It’s up to Bubba.”

Well, the stores are all gone now, as are all three warehouses. Only the Realty Company survives, selling off the strip centers that Mr. Ben had built during his lifetime. The warehouse where we held that meeting is a parking lot now, only identified by a sign for the long-term parking contact. Poor Joe the plumber is more like Bubba than like Mr. Ben. Worried about his taxes even before he makes the money, he can’t wait to put that money in his pocket. Trying to be rich without building a business instead of building a business that will make him rich. A business that can only thrive in a prosperous economy and Mr. Ben knew that. We will always pay taxes so the argument is who will benefit from them, the few or the many?

Monday, October 13, 2008

Cannibalizing ourselves

Truthdig - Reports - America’s Political Cannibalism
Karl Polanyi in his book “The Great Transformation,” written in 1944, laid out the devastating consequences—the depressions, wars and totalitarianism—that grow out of a so-called self-regulated free market. He grasped that “fascism, like socialism, was rooted in a market society that refused to function.” He warned that a financial system always devolved, without heavy government control, into a Mafia capitalism—and a Mafia political system—which is a good description of the American government under George W. Bush. Polanyi wrote that a self-regulating market, the kind bequeathed to us since Ronald Reagan, turned human beings and the natural environment into commodities, a situation that ensures the destruction of both society and the natural environment. He decried the free market’s belief that nature and human beings are objects whose worth is determined by the market. He reminded us that a society that no longer recognizes that nature and human life have a sacred dimension, an intrinsic worth beyond monetary value, ultimately commits collective suicide. Such societies cannibalize themselves until they die. Speculative excesses and growing inequality, he wrote, always destroy the foundation for a continued prosperity.

We face an environmental meltdown as well as an economic meltdown. This would not have surprised Polanyi, who fled fascist Europe in 1933 and eventually taught at Columbia University. Russia’s northern coastline has begun producing huge qualities of toxic methane gas. Scientists with the International Siberian Shelf Study 2008 describe what they saw along the coastline recently as “methane chimneys” reaching from the sea floor to the ocean’s surface. Methane, locked in the permafrost of Arctic landmasses, is being released at an alarming rate as average Arctic temperatures rise. Methane is a greenhouse gas 25 times more powerful than carbon dioxide. The release of millions of tons of it will dramatically accelerate the rate of global warming.

Sunday, October 12, 2008

Quote of the Day: Barry Lehrman on A Green Lining to Our Financial Cloud

Barry Lehrman, Architect and editor of the website Archinect writes an editorial that starts with a hilarious typo about how we cannot "maintain the Gordon Gecko greed and wonton consumption of the last 30 years."- but I love wonton! However he recovers to note:

"If we can rebuild our financial institutions and economy to care about the triple bottom line and the well-being of our world - the $700b will have been well spent.

If we can rebuild our government to serve the people and not wealth - the $700b will have been well spent.

If we can spark innovation and pay for basic science research to create a new green economy - the $700b will have been well spent.

If we can replace and repair our neglected infrastructure with state-of-the-art green pipes and systems - the $700b will have been well spent.

If we can teach our children, parents, and peers that the conservation of energy and resources is the simplest step to pulling ourselves up by our bootstraps - then the $700b will have been well spent.

If we take this moment to do right, to care about those without, to share our love and happiness, to appreciate life a little more – then there is hope." ::Archinect

Sunday, October 5, 2008

How would you spend the last 6 months of your life?

I've been thinking lately, after a few interactions with those sort of self absorbed guests who go through life miserable and generally trying to make everyone else around them just as unhappy - What would I do if I went to the Dr today and got told that:

I had six months to live
that it was incurable, so no time needs to be spent on medical issues
that I would remain in otherwise perfect health right up until the end

How would I spend that time?  Who would I spend it with?   What would I do and what priorities would I set?  Where would I be totally selfish and where would I choose to try to make a difference?  What would I want to remain behind?

So how would things be different if we all acted as though we only had a few months left here.....?