How To Get Hired

“He strikes me as a serious guy.  He called me back immediately.  He knew what he was talking about.  I think you’re fine.”

This is what a friend told me about a service provider in his industry when I asked him to do some double checking.

This is what I think is missing from much of the discussion around success these days.   

It’s not sexy.   

It’s not about networking.  

It’s about doing a good job.  The old-fashioned way.  

Be serious about the job you are entrusted with.  

Be responsive.  

Know what you are talking about (and own it when you don’t or can’t due to time constraints, but do the research to follow-up in either case).

Do this enough, and you will build a solid reputation that you can leverage into whatever version of success you want for yourself.

Broken Incentives


If you want to talk about the power of incentives and the power of rationalized, terrible behavior: after the Defense Department had had enough experience with cost-plus percentage of cost contracts, the reaction of our republic was to make it a crime for the federal government to write o­ne, and not o­nly a crime, but a felony.

And by the way, the government's right, but a lot of the way the world is run, including most law firms and a lot of other places, they've still got a cost-plus percentage of cost system.


-Charlie Munger The Psychology of Human Misjudgment

Frustrating Data Points

I'm making my way through the very informative whitepaper from Illuminate Ventures: High Performance Entrepreneurs: Women in High Tech.

In general, it's full of all sorts of positive information and trends in directions that should make people in favor of gender equality happy. The comparison of the Indian entrepreneur experience in Silicon Valley to the female entrepreneur experience is interesting, in particular.

However, the report acknowledges that the picture is as rosey as it is because it's focused in the U.S. Outside the U.S., the picture is very different. Including in the UK, which surprised me:


In the United Kingdom, for example, majority female-owned businesses pay significantly higher margins on loan terms than male-owned businesses (2.9 percentage points versus 1.9 percentage points)

And, one data point I found interesting, regardless of gender, was on the overhead associated with seeking venture capital versus debt:

Women who succeeded in gaining equity funding reported contacting 25 to 30 potential equity investors, roughly five times the level of contacts required for women to gain debt financing.

It's a good read, if you like this sort of thing.

Round-up

That was always the yuppie dream: an aristocratic life achieved meritocratically.

True dat. For more on this topic, and the current state of the economy, see Time's amazing article titled, The End of Excess: Is Crisis Good For America. Regardless of whether you agree, the thesis is thought-provoking.

For example:


[N]o other nation assimilates immigrants as successfully as the U.S. The sooner we can agree on a coherent national policy to encourage as many as possible of the world's smartest and most ambitious people to become Americans, the better our chances of forestalling national decline. The waves of exotic foreigners who arrived in the 19th and early 20th centuries were unsettling, but previous generations got over it, luckily, since those newcomers were instrumental in forging the American Century.


This is thought provoking for what it means for the locals, and for those who came earlier and may be out-competed by more recently-arrived immigrants.

May you live in interesting times.

Indeed.

Equal Pay

I've read several articles on how the oft-cited women make 77 cents for every dollar a man makes statement is extremely misleading.

Last night, in an attempt to clarify why, I found the Bureau of Labor Statistics Highlights of Women's Earnings 2007. If this sort of thing interests you, the report is fascinating -- so much data.

The numbers definitely help support the idea that the pay gap is at least partially explained by lifestyle and career choices, and is not necessarily entirely gender-based pay discrimination. One thing the data cannot address, however, is time off. Women who take time out of the workforce to have children re-enter this data solely based on their age, and, from this data, there is no way to know just how many years of experience they have at that age.

What the numbers can tell us, however, is that unmarried women without children earn almost as much, on average, as unmarried men without children (96%) (table 8), and the median hourly wage for women with more than a bachelors degree is 95% of the median hourly wage for men with more than a bachelors degree (table 9).

The hours worked is a big factor -- for full-time positions requiring between 35-39 hours per week of work, women make 103.3% of the average male weekly wage (Table 5). For positions requiring over 40 or more hours per week, however, women's average weekly wage compared to men working similar hours hovers around 88%. (Table 5)

Interesting as well is part-time work, which no one ever talks about in terms of pay discrimination, despite the fact that women earn 108.3% of the average male weekly wage for part-time work (Table 5).

I suspect that if you accounted for the type of jobs selected, experience, and education, these disparities would start to make some sense. Of the full-time workers women hold 69% of the jobs requiring between 35-39 hours per week, 46% of the jobs requiring 40 hours per week, 30% of the jobs that require more than 40 hours of work per week, and only 22% of jobs that require more than 60 hours of work per week (Table 5). It seems appropriate to me, then, that when the numbers are averaged solely against age, women are earning less than men -- at least part of the pay gap can be (and should be, in my opinion) attributed to the fact that, as a group, women are working less hours.

The largest disparity in pay for full-time workers between genders occurs in two groups:

1. Between men and women with school age children, whether married or single. There's no getting around it, these women make *much* less than their male counterparts (table 8). In our society, more women play the caretaker roll than men -- that is another fascinating conversation, but I don't believe it belongs in the mathematical discussion of whether women are actually paid less for the same work (with the same level of experience) done by their male counterparts. Instead, I think we need to look at the reality that much of the pay disparity occurs when women are most likely to be making decisions to focus on children instead of career.

2. Married women working full-time make significantly less than married men working full-time. I've blogged about this topic in the past. Certainly, it doesn't explain all of the pay gaps in this group, but I do believe it is important to consider the reality that many married women opt not to be the primary bread-winner so that they will have the flexibility to be the primary supportive spouse, home-labor-specialist, and/or caregiver to children. Yes, we are moving to a model where some men are opting to do this as well, but I do not believe the decision to be a supportive spouse with a flexible career is evenly distributed across gender lines today.

Basically, I am troubled by reference to data and facts on gender that makes the situation appear to be much worse than it likely is. It is hard to have an intelligent conversation on a sensitive issue if the position you start from is slanted. I am not saying that pay discrimination on gender lines does not exist -- I am certain it does. But what I am saying is that it is much less pervasive than a quick look at the average earnings for all full-time workers would indicate, and it's not fair to ourselves as a society to ignore that reality.

Okay, now I can actually go get some work done.

Update: I started down the rat-hole above because I recalled but could not find the Study that found that young educated women in metropolitan areas actually earn more than men in their same demographic. But, I finally found it, so you can click the link too, if you like.

The Long Weekend

MLK day! How can you not love yet another holiday this close to the winter holidays? E and I are spending the long weekend doing chores and catching up around the house. With every item crossed off the todo list, I'm feeling less and less stressed.

Joint Asset-Liability sheet for 2008? Done. The best way to look at it, our net worth decreased a little over 6% between January of 2007 and January of 2008. The worst way, it decreased 47%. Or, if you look at the columns independently, our assets decreased about 6.06% and our liabilities increased about 3.64%. Clearly, this is not the direction you want either of these categories to be trending...

2008 Taxes? Estimation is done. For the first time in a long time, we're actually getting a refund! Yay! Better hurry up and send off our request for a refund check before the government runs out of money.

Garden? The winter garden has been such fun and very delicious, but it needed a little love after our 2 week hiatus in the South. It's been reasonably productive and has supplemented our kitchen each week with one or more harvests of leafy greens, broccoli, cauliflower, beets, radishes, or snow peas, but it was time to pull out some of the plants.

So, yesterday, we weeded, harvested, and planted new stuff and now we are growing the following (fingers crossed):

-Secondary shoots of florets on two of the broccoli plants
-Cabbages
-snow peas
-new mixed greens (mustard greens, red romaine, green romaine, frisée, something that looks like bok choy, and two I can't name)
-4 brussel sprout plants
-onions galore
-garlic galore
-radishes & beets (planted new seeds yesterday, so we'll see...)
-carrots
-3 artichoke plants
-arugula
-parsely
-italian parsely
-spearmint
-dill
-chives (planted seeds to replace the dead chive plant)
-cilantro (planted seeds for the 3rd attempt -- we have not managed to succeed with this seed packet)

Lemon Saffron Risotto with Baby Brussel Sprouts

As a treat (and a break from the taxes), after harvesting 2 plants of baby brussel sprouts, I made the following recipe for dinner. It was very healthy AND very delicious.

-3 T butter
-2 T olive oil
-1 C rice
-2 cans chicken broth
-pinch saffron
-1 ziplock frozen basil from the summer's garden output
-1 meyer lemon from sister's tree
-baby brussel sprouts from 2 stalks from the garden, removed from stalk and washed
-1 small-medium yellow onion, diced
-3 cloves garlic, minced

1. Sautée onion and garlic in olive oil until clear on medium heat. Add rice and stir until rice is evenly coated.

2. Add saffron and 1 can of broth, and stir intermittently.

3. Juice the lemon, and zest the majority of the yellow off. Chop basil & mix with lemon juice and zest (or just throw the juice, zest, and basil in the cuisinart).

4. Turn up the heat to high. Add the second can of broth, lemon-basil mixture, and brussel sprouts. Stir continuously and quickly evaporate all of the liquid off.

5. Remove from heat. Stir in the butter and cover. Allow to sit for 10-15 minutes to set the risotto and to finish steaming the brussel sprouts.

6. Serve immediately and enjoy!

Mmmm...Math is Tasty

I know the current wisdom is that the mortgage markets are in crisis, the housing market sucks, and the fed funds rate is at its lowest point in history -- and that, given all of the foreclosures and the popping of the housing bubble, we are fucked when it comes to the housing credit market.

I also know that the although the fed funds rate has declined significantly over the last year (to almost zero!), 30-yr fixed mortgage rates for folks with almost perfect credit have not decreased below the 5% mark.

So, I started asking some questions about the history of the fed funds rate, the history of the average 30-yr fixed mortgage rate, and, well... you know me, I love data.

Next thing you know, I've got an excel spreadsheet that is teaching me all sorts of interesting things (click the chart and select "all sizes" to see the whole graph):



For example, while the spread between the fed funds rate and the average 30-yr fixed mortgage is currently 5.17%, it is definitely not at its highest, which was 6.15 in August of 1982.

In fact, the spread, while averaging 2.67% since 1971 (when the Fed started reporting average 30-yr mortgage rates), has been larger than its current value on several occasions in the past.

What's more impressive is that the difference between the two has ranged from 6.15% to -4.18%! Yes, that's right. There have been periods of time when it was much cheaper for a homeowner to get a 30-yr fixed home mortgage than for a member of the Federal Reserve to borrow money from other members of the Federal Reserve.

This graph shows that the fed funds rate and mortgage rates have been in periods of much larger turmoil and helps to put our current situation into perspective. The most mathematically interesting thing about our current situation is the depths to which the fed is trying to push the fed funds rate (approaching zero), and not the reaction of the market to that action, which looks pretty normal when compared against history.

And yet, the current talk is all about how the banking credit crisis and failure to lend between banks is fueling the lack of mortgages being offered to qualified homeowners. Clearly, this is not the whole picture.

The entire spreadsheet is available to the first ten takers here: http://rapidshare.com/files/181802534/Book1.xls.html

Why it's always hard for me to vote

I think tax policy is one of the most important issues that politicians address. Unfortunately, I'm more or less alone. Tax is boring. It's not sensational enough to be interesting to the entertain-me-or-at-least-shock-me mindset of the majority of the voting public unless you can point to the rich getting much, much richer or the poor getting much, much poorer. However, boring as it is, the positions we, as a society, take on the types of economic activity that we reward really do shape not just the economy but also the types of activity that will occur within that economy.

First of all, the current U.S. tax system is very convoluted and stupid in many places.

One example is the marriage penalty (and the most recent fixes that reward low-income married couples). The country should not provide economic penalties or rewards to people who decide to enter into a legal union, and certainly not both at the same time depending on the tax bracket they are in. Right now, financially, lower-income couples are incented to be married to save taxes and higher income couples are incented not to be married to save taxes. This will revert to penalizing everyone who is married in 2011 unless it is changed. Of course, this is a long-standing problem and not too many people are fired up about it -- very few people decide not to get married for tax reasons, so neither of the candidates address it in depth (e.g. Obama tweaks with it, but neither has come out and admitted that it is stupid and married folks should pay the exact same as they would pay if they were single).

The AMT is stupid, too. It was passed in 1969 to target high earners with too many deductions, but wasn't pegged to inflation. The politicians have to pretend that they are going to apply it to all who would be hit to make the budget look better, but then, every year around December 31, they get together and admit that, oh shit, what was a high-earner in 1969 is actually middle class now. We probably shouldn't tax them all under the AMT 'cause then they may not vote for us, how 'bout just some of 'em? A few more than last year, but not all of 'em. So, you never know how badly you will be hit with the AMT 'til the last second. Ridiculous! How 'bout picking a number and sticking with it? How 'bout pegging it to inflation to adjust annually? It's not rocket science.

Regardless of the current mess of the U.S. tax system, I think it is important to consider how it may change with the new president, and whether, we as a country want to be encouraging and discouraging the types of behaviors that their tax plans will incentivize.

I've read enough about Obama's tax policy to know that I do not agree with several of his plans and think they will be bad for the economy. First, and foremost, I think increasing capital gains tax to 25 percent (from its current max level of 15) is likely to freeze up capital and decrease liquidity in the markets. And given the lack of debt that is currently being made available as the banks and lenders sort through the subprime mortgage mess, we really need liquidity.

It is harder for companies to get the debt they need to do deals these days, which means it is more likely that good companies in a strategically disadvantaged positions will lay people off or shut down rather than getting acquired. It is harder for individuals to get the debt they need to buy homes right now, which means the housing slump will continue because people who would be good buyers and pay their bills are unable to buy homes that are sitting on the market (often in the hands of folks who couldn't afford their mortgages in the first place and now find their home-values plummeting). Anecdotally, I have even heard that it is even harder for individuals to get consumer credit these days. All of these changes mean less money flowing through the economy, which, of course, contributes to a recession. I think a low tax rate that rewards capital investment by taxing it at a lower rate than other forms of income makes sense -- it encourages the exact type of behavior that we, as an economy, need to be encouraging. Now, and, in general.

McCain plans to leave capital gains rates at the current levels. But his plan isn't exactly my favorite either. He wants to cap the estate tax with a $5 Million exemption and a max rate of 15. Obama wants to cap it with a $3.5 Million exemption and a max rate of 45. Here, I think Obama's policy makes more sense, although 45 may be a bit too high. Regardless, from a policy perspective, wealth transfer by inheritance is not the type of economic transactions we should treat favorably (and thus, encourage). Inheritance requires no innovation, labor, creation of efficiency, or any of the things that are good for our economy. In what world does it make sense to say that people who invest wisely, save, and then sell their investments to either make other investments or spend it in the economy should pay the same tax rate on the wealth they generated by making wise and disciplined investments as those who happen to win the sperm lottery?

In my opinion, the biggest difference between the two plans lies with McCain's proposal to decrease the corporate tax rate to 25%. I know, I know, it looks like I'm taking the side of big corporations here. But, what I'm really doing is looking at the international world and acknowledging that we are out of sync. Microsoft now runs the majority of its revenue through its Ireland headquarters, as opposed to running it through Redmond. Why? The same reason many major companies have relocated fiscal operations there -- its very favorable corporate tax rate of 12.5%. Ireland moved from one of the worst economies in Europe (18% unemployment, close-to-third-world-country infrastructure) to one of the best, and most experts largely credit these changes to their change in corporate tax rate.

In fact, when you include the double taxation regime of state corporate tax on top of federal corporate tax, in many states, the combined US corporate tax rate is higher than Japan, the country with the supposed *highest* corporate tax rate.

What types of companies leave high-corporate-tax ratet countries in search of better corporate tax rates? Profitable ones. The types of companies that have many employees. The types of companies creating innovative products that sell well.

In short, I agree with McCain's policy on this issue and think that targeting a level of 25% is reasonable, pragmatic, and necessary to be somewhat competitive in the world economy. I think a federal level of 25% addresses the reality of the issue, but still leaves the U.S. in the high end of the tax rates paid across the world. In fact, France, currently #5 in the world at 34.4% is discussing lowering its rate to 20%, which, if it went through and McCain's suggestion went through would leave the US comfortably in 4th-20th place worldwide, depending on the state.

Finally, as for the only tax issue that most people care about -- personal income tax and its effects on those in various brackets -- the Candidates' plans follow the party lines. Obama is a democrat. He's for more government-sponsored social services, decreasing taxes on those in lower income tax brackets and increasing taxes on those in higher income tax brackets. Predictably, his plans target the top 1% of earners very heavily and the top 0.1% of earners the most. McCain is a republican. He's for decreasing taxes overall, decreasing government sponsored social services, and, of course, his plan results in tax decreases that are higher for the highest income tax brackets and lower, proportionately, on the lower income tax brackets.

Neither of the candidates' plans in this area will really affect my life. The Tax Policy Center at the Brookings Institute estimates that we'd pay approximately 2% more of our earnings in federal taxes than we currently do under Obama's plan and approximately 3% less under McCain's plan. Those variations are too minor to matter when compared to the uncertainty in the economy (and thus our earnings in general) and the uncertainty in our current tax regime (all of the Bush tax cuts are scheduled to expire in 2011 -- no one even knows what we'd pay after that, the AMT is retroactively patched every year, but if they decided not to do that we'd be hit with way more than a 2% increase, etc.).

So, the personal income tax issues, while complicated, often stupid, and not well thought out, are not a hot-button issue for me. Neither of the candidates are addressing the personal income tax system as a whole. Neither of them are addressing the issue of the budget deficit.

And, on the issues I really care about, each of them has taken at least one position I support and at least one position I oppose. On balance, I think McCain's plan makes more sense for the economy, but I'm not in love with it. I fear Obama's combination of capital gains increases with a refusal to lower the corporate income tax rate could have very negative effects on the economy.

Of course, U.S. presidents do all sorts of important things in addition to approving tax plans, not the least of which is appointing Supreme Court Justices, so I'll have to balance those issues against the economic issues as well. Seeing as how I'm a mixture of a libertarian, a social progressive, a believer in meritocracy and a fiscal conservative, you can imagine how difficult it always is for me to vote...

One Percent?

Even though everyone said the Feds would do it. I'm shocked.