Wednesday, March 3, 2010

$77 Billion to End Prohibition

A recently published study by Harvard Economics Professor Jeffery Miron claims that the legalization of marijuana, and subsequent taxing of it, could lead to $77 Billion in revenue for the government alone. Miron breaks it down by saying $44 billion will be saved by not spending the money on police for arrests, judges and prosecutors for all the trials and prisons and prison guards for the incarceration. Another $33 billion would be obtained by tax revenue of legal drugs, like how cigarettes and alcohol are regulated. Miron even says that legalizing and ending the prohibition will reduce the violence crossing the border from Mexico.

Cannabis has been shown to be a relatively safer drug then its legal counterparts, alcohol and tobacco. According to a study published by Oxford University in 2000, a 155 pound human would have to consume about 70 grams to overdose and die, or the equivalent of smoking 140 average joints simultaneously. A little more than 40% of America has used Marijuana before, and 10% claim to have smoked within the last year, indicating that prohibition is not actually preventing use of the drug.

Though I could launch into a diatribe on why the drug should be legalized for political and social reasons, I’ll leave that for other bloggers. Even though $77 billion might not sound like a lot today in the wake of the financial crisis, it is still a lot of money, and right now the government needs all it can get.

Besides the government, the American public could use the jobs as well. According to Time, marijuana has grown to a $14 billion industry in California alone. Imagine the effect it would have on the rest of the country.

Refraining from moral objections, do you think there is any reason why the US should not legalize cannabis? Please share in the comment section.

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Tuesday, March 2, 2010

From The Diners’ Club to Amex Black

clip_image001According to, the average American has 4 credit cards, with instant access to about $19,000 of credit. From 1996 to 2005, the number of bank credit cards increased 46%.

A provision of the CARD Act of 2009, stating that anyone under the age of 21 must have a  co-signer to open a credit account, just came into effect on February 22. This will be a huge change for college freshman, who are typically bombarded with credit card offers upon their entry to school, and can sometimes get themselves into big debt trouble. Who can blame them, really? I mean, $19,000 is 316 kegs of Keystone! Or, um, like, a lot of books.

On a more serious note, the new age restriction does have some real implications. The government has always been a little sketchy on what it considers to be the age of an “adult.” Though legally the age is 18, the driving age ranges from 15 to 18, and the drinking age is 21. For those falling in between these ages, things can get confusing. Some adult privileges are afforded to you, while others are deemed too dangerous seemingly arbitrarily.

Being an adult, according to, “implies being able to make mature decisions, participate in civic matters, have self-control, and be responsible.” Have 18 year-olds demonstrated that they are not adults by getting into debt trouble?

Maybe we are missing the bigger picture here. According to the Labor Research Association, real weekly wages have fallen from a high of $331 in 1972 to $277 in 2004, and no doubt have worsened further during the recession. Average credit card debt for 18- to 24-year-olds is 11 percent higher than for the same age bracket in 1989. For the next age range, credit card debt for 25- to 34-year-olds was 47 percent higher than in 1989.


Graph courtesy of Tommy Buller

Perhaps the financial failings for 18 year-olds have little to do with lack of responsibility, but rather an increase in the demand for credit due to falling wages. Though a lot of kids can get parents to sign for them if they really need the money, consider the options faced by a foster child. At the age of 18, now legally an adult, they are forced out of the foster system and often end up living on their own. Who could co-sign for these kids? If this theory is correct even somewhat, the government has done much more harm then good.

Well, that was depressing. On a much lighter, but still relevant note, credit cards have a fascinating history. The marketing behind them is some of the most creative and innovative of any product in the world.  Take a look at this slideshow by The Big Money to get the full low down. Also, watch Jon Stewarts’ comments on the CARD Bill. Tags: ,,,
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Monday, March 1, 2010

The Handwriting Apocalypse


With every major technological innovation comes the death of what it replaces. The telephone killed the telegraph, the email killed the letter, and video killed the radio star. So why does the nearly 7000 year old practice of writing things by hand remain? Will the latest in tech innovation finally cause its imminent demise? The decline of handwriting has long been predicted, but the pencil’s rapture has yet to come.

In a great article in The Guardian published in 2006, Stuart Jefferies argues that handwriting is here to stay and poignantly notes several reasons why he thinks so. Writing is one of the best ways to cultivate young minds, he reasons, as it helps with motor-skill development. It is also, after all, the most reliable form of documentation. If your computer were to fail, you wouldn’t want to hire a scribe just to write a grocery list.

Imagine the power is out. Your Blackberry is blinking out of battery, and your chances of finding a solar or wind unit to charge your electronics are nil. Your friends can’t lend you a computer, either. Wouldn’t handwriting be helpful here? Well, just imagine a little further. Our world is increasingly reliant on energy and computers. We use them for everything important in our lives, from managing our money to our health records. If no power is available, the least of your worries will be scrawling a note to your roommate telling them not to eat your Hot Pockets.

Should handwriting be taught to kids for its developmental value? Handwriting is shown to improve muscle control, hand eye coordination, and balance in young children. But it is not the only way to develop these skills, and emphasis of teaching proper handwriting techniques at a young age, I think, could be better spent teaching children how to type efficiently, because, simply put, typing is more efficient. The average American handwrites 31 words per minute and types 40. A professional typist typically has a WPM score of around 70. You can test your own score here for free.

clip_image001Even the use of handwritten Post-it notes is on the decline. I keep track of everything on my computer and Blackberry. My schedule is done through Microsoft Outlook and linked to my phone’s calendar; my homework assignments are all posted online. If I want to tell my friend something and he isn't around, I don’t leave him a note but rather send him a text message. Instead of leaving a note on my door telling visitors where I went, I could just update my Facebook status or Tweet it. It is not the invention of a single new technology that will lead to writing's demise, but rather a host of more efficient writing substitutes.

I do not think we should stop teaching handwriting, nor do I discount the value of a hand-signed note. But I do believe that the pencil will fade away to obscurity as technology advances and we become more adept at using it.

Do you think handwriting is an important skill? Will it ever go extinct? Share your opinion in the comments section below.

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Sunday, February 28, 2010

“Warren Buffett: Quips and Zingers”

In his annual letter to shareholders, Warren Buffett let his signature sense of humor shine through. Here is are a few of the highlights, borrowed from an article from the WSJ blog by Matt Phillips.


On Country Music:

Sing a country song in reverse, and you will quickly recover your car, house and wife.

On the fact that Berkshire issued stock as part of its BNSF acquisition:

Charlie and I enjoy issuing Berkshire stock about as much as we relish prepping for a colonoscopy.

On the upside potential for its longtime holding Geico:

An old Wall Street joke gets close to our experience:

Customer: Thanks for putting me in XYZ stock at 5. I hear it’s up to 18.

Broker: Yes, and that’s just the beginning. In fact, the company is doing so well now,
that it’s an even better buy at 18 than it was when you made your purchase.

Customer: Damn, I knew I should have waited.

A story on how a once-staid bank Berkshire owned stock in got an acute of deal fever:

Its managers – fine people and able bankers – not unexpectedly began to behave like teenage boys who had just discovered girls.

The small-bank owner was being wooed by other large banks in the state and was holding out for a price close to three times book value. Moreover, he wanted stock, not cash. Naturally, our fellows caved in and agreed to this value-destroying deal. “We need to show that we are in the hunt. Besides, it’s only a small deal,” they said, as if only major harm to shareholders would have been a legitimate reason for holding back. Charlie’s reaction at the time: “Are we supposed to applaud because the dog that fouls our lawn is a Chihuahua rather than a Saint Bernard?”

The seller of the smaller bank – no fool – then delivered one final demand in his negotiations. “After the merger,” he in effect said, perhaps using words that were phrased more diplomatically than these, “I’m going to be a large shareholder of your bank, and it will represent a huge portion of my net worth. You have to promise me, therefore, that you’ll never again do a deal this dumb.”

A closing nod to its massive acquisition of BNSF, in the section on preparations for Berkshire’s annual shareholder meeting:

P.S. Come by rail. Tags: ,
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