Replacing the Television

For years people have predicted that one technology or another would displace the television as the de facto night time activity for millions of Americans.  Time and again these predictions have rung hollow and television viewership continued to rise.

Recently there was an article in Bloomberg Businessweek discussing that more under 30s are now shunning paid TV entirely in leiu of streaming content.  Why is there such a shift in viewership from the traditional cable television subscription model among the youth?  I believe there are a few simple reasons: 

1)      The majority of cable programming is junk and streaming is easier to find good content

2)      Internet streaming such as Hulu or Netflix is cheaper by several factors compared to cable/dish ($10-15 per month vs. $40+)

3)      Streaming is vastly more portable than cable television

Let’s face it – anyone who pays for 70+ channels knows that most of the content is terrible.  Between Jersey Shore and the 12 incantations of “crazy guy pokes wild animals,” there just aren’t a lot of shows worth watching.  Couple that with the annoyance of programming a TV (if you have a DVR) instead of on demand programming plus the cost and you get some solid reasons to ditch the cable box.

I believe that there is an upcoming paradigm shift as it becomes easier to hook up a laptop or tablet to a TV where traditional cable will have to either adapt or be left behind.  Content is getting better daily for the streaming services and there will be consolidation in the industry which will allow for larger collections of programming in one place. 

Ultimately, I do think that this will kill television as we know it, but I’m not sure it will be a “fast kill.”  Demographics will continue to play a part as baby boomers will be slow to adopt and most seniors will not adopt at all.  Furthermore as this younger generation of early adopters begins to have children, chances are that they will keep around the cable box just so the kids have cartoons to watch – I know this is the main reason I have cable.  Finally, adoption will languish as long as live sporting events are difficult to access legally without a paid television subscription.  Iron out these bugs and wait another 5 years or so, and you really will see the demise of the television as we know it.

Online Privacy - Concerned Yet?

I thought in my article today, it would be interesting to discuss online privacy.  It seems that there are a lot of articles out there about the kind of information that companies have on people - the real question in my mind is what kind of information is it and how is it being used?

Let's start with a basic example: Facebook.  On top of the typical stuff (that is used in many security questions) such as birthday, where you went to school, etc, Facebook also collects all the other information that you share.  This includes everything you "like" from Coca-Cola to your friend's comments on last nights Breaking Bad episode.  If you ever wondered how all that data is used, go into the Facebook advertising tool.  It is absolutely absurd how deep you can target with Facebook advertising - age, sex, region of the country, job description, music tastes, salary info in some cases and a lot more.  This is why Facebook is worth so much - it is an advertisers dream to be able to target so precisely.

Funny thing is, Facebook is child's play to some other companies when it comes to pushing privacy concerns.  Take any variety of behavior targeting advertisements and scrutinize them to understand why.  Behavior targeted ads are essentially ads online that glean information based on your past search history and then try and predict relevant advertising content for you on future pages that you browse.  Have you ever wondered why when you are doing research on what new TV to buy or what stereo is the best that suddenly your banner and side bar advertisements start showing "the best deal ever" on that sweet Samsung 32' flat screen?  That is behavior based advertising in a nutshell. 

Why worry about behavior based ads?  Well the fact most likely is that you never opted-in to allow these companies to pull data from your internet browser that enables them to "cater" these ads to you.  Furthermore it is a complete breach of privacy because these ads are set up as algorithms that don't really have much (if any) human touch - imagine how embarrassing it would be if you found out you have irritable bowel syndrome and were browsing online for information on it when later on you are showing a colleague something on your web-browser and all it is showing is IBS drug ads stating that you have IBS and need to take this drug.  Maybe not the worst thing in the world, but the same thing could apply if you are pregnant and the company is downsizing (that might make you first on the chopping block) or if you have a mental problem that you don't want your boss or colleagues to know about (could make it hard or impossible to move up in the organization if they find out by looking at your browser ads).  Essentially, no user really gains much from these behavior based ads in exchange for giving up a huge chunk of their privacy.

Another example that I think is really becoming egregious is location based tracking mechanisms.   There have been stories written about people that check-in on Foursquare only to come home and find their house robbed.  Turns out criminals have access to enough data to find out who you are, where you live, then wait for you to not be home and rob you.  What about a more futuristic example where someone is tagged at a party then is pulled over on the way home and immediately accused of DUI - there is evidence they were at a party with alcohol and driving... clear cut case right (except maybe they didn't drink at all or had 1 drink in 2 hours)? 

Apple was in the news a few months ago for "inadvertently" tracking where every owner of an iPhone was for something like a year (assuming they brought their phone with them).  Why should you be concerned about that?  Well, first of all, if I'm giving that kind of info to Apple, I damn well better get a discount.  Back to the point though, Apple can sell that data to any of their app providers to make more targeted ads.  If it shows you live in Phoenix, but fly to San Diego every week viola you have airline offers and hotel companies breathing down your neck.  Again, not the biggest deal maybe, but I'm no hacker or crook either - I'm sure there are a myriad of ways to use this data to hurt someone too if it was ever accidentally leaked. 

Am I too paranoid about my privacy?  Probably yes.  I'll tell you right now though that it is worth it - I can sleep easy at night knowing that I'm not going to get robbed because I'm disclosing I'm away from home or that I lost out on a good job because my friend tagged me on Facebook with a embarrassing picture.  The bottom line for me is, if I'm giving up all this control and risking identity theft or worse, I better be getting something awesome in return.   Let me know your thoughts down below and subscribe if you haven't already!

See you next time.

Flat Tax Will Never Be Implemented

There has been a lot of discussion on both sides in Washington these days about how to reduce the size of the US deficit.  One way of doing so is "increasing revenue" or basically bringing in more taxes.  One of the more left-leaning policy ideas is to tax the rich more.  I'm not going to get into my feelings on the subject other than to say that an alternative theory is to implement a "flat tax" or "consumption tax." 

A flat tax for those of you who don't know is basically a tax system in which there is one rate that everyone pays.  Many advocates for a flat tax would like to see it implemented in a manner that basically abolishes a person's income tax and instead raises the tax everyone pays on consumption.  The theory goes that everyone will pay the same rate on the stuff they buy in essence meaning that everyone pays the same amount.  Rich people will naturally spend more and therefore pay more tax, but it will be "fair" because they pay the same tax rate on purchasing an item than anyone else would.

Personally, I believe the flat tax as I described about would be a good idea, but the reality of it is that a consumption tax will never get implemented.  There are too many political landmines and economic traps to scrapping the system we have now and implementing a flat tax.

First, many good jobs would become obsolete if a flat tax was implemented.  The IRS would not be shut down, but they would have a lot less work to do and a big chunk of the agency would have to be let go.  Additionally, any income tax accountant would be out of a job creating a glut of well trained CPAs and tax preparers that would be out of a job.  This would negatively impact the economy terribly as perhaps as many as a few hundred thousand good jobs would be gone.

Second, for all the big talk, Washington has no spine.  This can be seen almost weekly it seems these days.  The amount of fortitude it would take to get legislation passed that would completely scrap the current income tax code would be monumental as well as nigh impossible.

Thirds, there would be a major problem in terms of 401k and other retirement accounts.  There is $13.3T invested into various types of retirement accounts as of 2004 according to this report.  While not all of this money is in a individual retirement account such as a IRA or 401k, there is definitely trillions of dollars invested into these vehicles.  Perhaps the only reason someone invests into an account they can't access until they "retire" (usually about 65) without a penalty is that they get some type of preferential tax treatment.  If income tax were to be abolished, these accounts would suddenly lose a huge portion of their relative worth. 

Additionally, anyone who invested into a retirement account where they paid tax on the money going in (such as a Roth IRA) are much worse off than someone that invested in a regular IRA with pre tax dollars because not only did they pay tax and the regular IRA person didn't, but the base of their entire investment was lower as well causing less growth and less compounding returns.  There is no way for anyone to figure out a "fair" way to handle these issues if income tax were to be abolished.

Lastly, a flat tax will never be implemented because it actually discourages consumption (i.e. people spending money).  The hit that the economy would take as a result of people saving more of their money and spending less on non-essential goods would be potentially massive.  No politician or ordinary American would volunteer to push down economic growth of the country and risk a recession or even a depression caused by a significant drop in consumer spending. 

Overall, I do believe a flat tax is a "fairer" way of taxation, but the reality is that it is something that will never be implemented in reality mainly due to the severe short-term to medium-term economic harm it would cause upon implementation.  Let me know if you think I'm wrong! 

As always, follow me on twitter @mdperovich and I look forward to reading and responding to your comments (sorry Edwin from a  few weeks ago!).

Miles

Carpal Tunnel - A Generation Killer?

Hey - It's been a while since I've posted something on here.  Tough balancing work, family, friends, leisure, trying to learn new things, and this blog.  Anyhow, thanks to my international and domestic readership - I've had a fair amount of people read here including people from 3 different continents.

I wanted to post a bit about something that I think will be more and more important as my generation (25-35 year olds) gets older.  It is carpal tunnel.  With everything becoming more electronic and more online from e-readers to mobile phones that can potentially replace a computer, people are using their hands in many different awkward positions for extended periods of time.  Not sure about the rest of you, but I use a computer on average probably at least 8 hours a day plus about 1-2 hours a day browsing information on my phone.

Without proper ergonomics, our entire generation is going to have crumpled hands that will debilitate us in terms of workplace productivity as well as every day tasks such as bathing and cooking.  To put it in perspective, this 2002 report from the Bureau of Labor Statistics says that the median days from work for repetitive motion problems is 23 days (see here).  I can only imagine what a similar study has now with people typing on their laptops on the couch like me, or fingering through their iPhone for hours on end. 

For me, I have been acutely aware of this issue since feeling a bit of tenderness and sometimes pain in my hands after a few years working as a "spreadsheet jockey" and using my computer for probably 12 hours a day.  Things I have done to help fix this problem will I hope help me in the long run to avoid repetitive motion problems.  These include always (or almost always) using a external mouse, taking micro-breaks to stretch my hands and arms every ~hour, and trying to work out more where my hands and arms are stressed in different ways to keep them strong.  I would also highly suggest getting a good desk set up wherever you use your computer as that can make a drastic improvement in the reduction of carpal tunnel type issues.

Hopefully I have opened your eyes a bit on this problem even if it is kind of a "silly" issue.  Repetitive motion can cause major arthritis, problems opening and closing your hands, and potentially even issues where you can't grip something so it is important to take it seriously.  Happy ergo and thanks for reading!

Workplace Productivity

How many of you have a workplace that completely bans many websites such as Facebook, Twitter, forums, etc as a way to "boost" your productivity?

Hopefully not many... many recent studies have shown that just working non-stop from 8-5 without a brain break can reduce your productivity or, having a few minutes here and there to do something else besides work can actually increase your productivity.

Take this study (commissioned by Popcap games, so take that as you will...): http://tinyurl.com/445uwgu.  According to this study, the UK is losing over $4B pounds a year in productivity because people lose productivity if they don't take a break.  That is definitely not chump change. 

A similar study found here shows that taking breaks about every hour improves focus and productivity (the study's results were inconclusive as to whether or not taking a gaming break was better though...).  The study references other research that indicates that taking a gaming break does increase productivity further reinforcing the fact that productivity is not necessarily based on who works the hardest.

While I could cite several other examples of how checking in on your social media once in a while improves productivity like this study, the point I want to make is why do some companies still refuse to let their employees have free reign?  As long as someone isn't looking at porn or some type of hate group (or something as bad), then why are some employers cutting off their employee's access to benign sites such as Facebook?  Hopefully someone will do a study to see if a company's internet policy can actually improve or reduce their profitability, productivity and turnover.  Until then (and even after most likely), some employers refuse to update archaic policies...

Hopefully you aren't trapped in a job where they won't let you have 5 or 10 minutes of down time to surf the web, but if they do, have you noticed a drop in your desire to work hard?

What Happens August 3rd?

With all the talk about raising the debt ceiling going on right now, I thought it would be funny to pontificate a bit about what I would do if suddenly I had to cut a bunch of spending so as not to default on interest payments (i.e. if I were the government, what would I cut).

Before getting into that, I wanted to just point out one hilarious thing that happened today in light of my post on social security last week.  Obama said that he couldn't guarantee that social security recipients would get their checks if the debt ceiling wasn't raised.  To that I say "yeah right."  First off, social security still brings in more than it pays out, so the debt ceiling should have nothing to do with that.  Second, if Obama is that dumb to not pay social security to a huge part of the voting block, the elderly, then he will lose every state in the next election.


Ok, that off my chest, here is what I would do to not default on interest payments to China et all:

1) Suspend foreign aid except third world nations.  Sorry, but can't afford that at the moment!

2) Increase amount of collections agents at the IRS - that's right, this should be a money maker and I would pay on commission so that they would only get paid if they bring in checks

3) Suspend all tax subsidies for ethanol biofuels.  These are a joke anyways and need to be done away with

4) Pull out of Libya and force the UN actually do something for once in a military engagement without the US

5) Suspend the pay of every politician in congress, the senate, and the oval office.  This would force them all to get real and cut a deal to get this stuff done.  I would also suspend all their benefits including use of private government jets, healthcare, etc.  Pressure is on now :).

6) This would all hopefully stem the tide, but wherever I needed to make up money, I would just mandate a X% cut across the board to make up for the remaining deficit and force everyone in the government to actually get efficient.  Necessity is the mother of invention.

Here is what I would do to tame the deficit:

1) Have social security tied to average life expectancy and make it so everyone gets on average 5 years of social security.  That would cut about 10ish years off of payments to social security recipients after it it phases in.  Not sure how to phase in exactly, but would probably be over about 10 years.


2) Put in a cap on the amount of money paid out by the government for medicare per year probably at about 80% of what is paid out currently on average.  Also add in a 10% coinsurance payment requirement for all non-essential procedures and doctors visits (i.e. exclude yearly physicals, mamograms, etc).  Coinsurance can be reduced to 5% if it can be proven the person is in "excellent" physical condition.

3) Have a 10% coinsurance payment for all medicaid non-essential procedures (similar to my medicare part). This can be reduced if it can be proven that the person is in "excellent" physical condition as well.

4) 5% cut to every government department if needed.  If the government can't find a way to cut 5% of the waste including ridiculous contractor payouts, bloated benefits, unproductive workers, expensive software suites, etc, then Comcast is the best company on Earth.

5) Reform the tax code to make it simpler and hire more collectors for the IRS to get the government the money it is owed.  Again pay them on commission and make them go after tax evaders and non-filers hard - it is ridiculous how hard it is to navigate tax law and equally ridiculous that only the very rich are every even targeted for evasion.

Let me know if you agree!  Follow me on twitter @mdperovich if you don't already. 

Social Security - The Truth

In the wake of the #AskObama twitter thing today, I thought I would write an article about some facts about Social Security to better educate both myself and everyone reading.  I'll quote all my sources at the bottom.  I am going to break this out into two sections:  facts and opinion.  The facts are meant to be as non-biased as possible, and the opinion is all me :).

FACTS:

Now for the straight dope:  Social Security is the largest government program in the world.  That's right - the entire world.  It is larger than defense spending and medicare/medicaid. 

Backing up a bit, Social Security was started in 1935 as part of the New Deal.  It is currently used as a social insurance program where every senior (person over 65) receives a monthly check.  The amount varies depending on how much a person makes in their lifetime and pays into the Social Security pot.   Social Security is also used for disability insurance with over 10 million people currently receiving benefits.

When SS was initially set up, it encompassed the "retirement" piece that we currently know now as well as poverty, unemployment, maternal and child welfare, services for the blind, and public health services.  There were many people that were not covered for various benefits when the program was first started including women and minorities for unemployment insurance, and many predominantly women oriented jobs were ineligible for retirement benefits (teachers, nurses, social workers, etc).  The system was so biased towards white families that one study estimated that 14% of eligible white families received benefits while only 1.5% of eligible black families received benefits.

Over time, Social Security was reformed several times to include all forms of labor, part time work, etc as well as reducing the coverage area to what we now currently know. 

In 2010, there were 54 million people receiving benefits for retirement and/or disability with only 157 million people paying into the system.  That is roughly a 3:1 ratio for those keeping track.  To contrast this there were only 15 million people receiving benefits in 1960 and there was a 5.1:1 ratio of payees to benefit receivers. 

There is currently $2.6 trillion worth of assets in the trust fund that was set up to hold excess SS payments until a person retires.  It is estimated the trust fund will no longer be sustainable by 2023 and that the entire system will collapse in 2036 if no changes are made to the system.

OPINION:

Now that you have a bit more background on the subject if you have never had the chance or inclination to read up on it, let me give you my thoughts on the whole matter.

First of all, the fact that the retirement age has been 65 since inception is foolish to say the least.  Over the last 76 years, humans have had a much higher life expectancy (as one would expect even in 1935).  Why the government didn't put in a provision between '35 and 2011 to automatically adjust for life expectancy is beyond me.  The most humorous part of this is that the average life expectancy in 1935 was 61.7 years old.  That means that the government set up the retirement program part assuming that either A) almost nobody collected, or B) that they expected people would live longer in the future and could actually collect on some benefits.  Government is never very prescient if you ask me, so I'll go with A) on that...

The second thing about SS that frustrates me to no end is that the current government is still afraid to touch it.  The closest anyone has ever come in my short lifetime to a legitimate discussion on the matter is when talking about privatization.  These clowns in Washington need to get their act together and start trying to fix this stuff.  We spend >20% of our budget on SS every year and yet it isn't even in any earnest conversation right now despite all the hemming and hawing over reducing spending.  I already plan on never receiving a dime of my SS checks, but I'll be damned if my son is still paying into this broken system when he is old enough to work.

Lastly, the good news - there is time to actually fix this thing before it is too broken to repair.  In 2010, the SS fund actually added about $68B (it paid out less than it took in).  Who is to say if that entire fund actually exists, or if the government is raiding it as has been reported, but if congress and the President really get their act together now, they can turn the ship around and make it so every generation is able to receive some benefits.  I do think it has a place in society and it is good that older folks get a bit of income to "retire" on (i.e. scrape by eating spam if all they get is SS), but it isn't going to be around for the next generations at the current burn rate we are on.

I'll keep my next post shorter I promise! :)  Have a good one all.

You can follow me on twitter @mdperovich if you want to get more insight into what I'm thinking or want links to interesting reads.

Sources:
http://en.wikipedia.org/wiki/Social_Security_%28United_States%29
http://www.ssa.gov/history/briefhistory3.html
http://en.wikipedia.org/wiki/United_States_federal_budget
http://www.infoplease.com/ipa/A0005148.html