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Saturday, September 6, 2014

The 1% and the former "trickle down" pyramid

Once upon a time, when there was a lot less disparity between the rich and the poor in the US, an idea was proposed to justify giving more tax breaks to the rich. This idea was called the "trickle down" theory. Note that this blog concentrates on income inequality -- wealth inequality has parallel workings.

At heart, the trickle down theory was an economic pyramid and is the basis of the concept of regulated capitalism. However, the main word in that sentence is regulated. The idea is that the people with the most money generate more money which is distributed (in lesser amounts per person) to a larger set of people, who then generate more money which is distributed (in lesser amounts than the people of the second level) to an even larger set of people. At the bottom of the pyramid are the people who are unemployed or are working for whatever they can get paid and not die.

The original pyramid for the "trickle down" idea worked rather like this (note that these numbers are all just examples):

1 person earns $1,000,000/year
3 people each earn   $500,000/year
6 people each earn   $300,000/year
10 people each earn $200,000/year
25 people each earn $100,000/year
55 people each earn $40,000/year

This forms a pool of 100 people. In total, they earn $11,000,000/year. The top earner gets 25 times as much as the lowest paid earner. and the top 20 people (20%) make 57% of the total money (leaving 43% to the lower 80 people (80%). The top earner gets about 9% of the total.

However, in order for this distribution to hold, it is necessary to have laws and regulations that keep redistributing money to the rest of the people according to their wealth. In the 1980s, it became politically popular in the US to think that if the rich were allowed to accumulate more money then there would be more money to distribute -- or "trickle down" -- to the rest of the population. That started a process of steadily increasing tax loopholes and favored treatments, lower (if paid) tax rates, substantially lower wages (based on pre-inflation 1985 dollars), and concentration of wealth which led to a new structure such as the following (once again, these are made up numbers -- the real ones are different but not better):

1 person earns $5,000,000/year
3 people each earn $300,000/year
6 people each earn $200,000/year
10 people each earn $125,000/year
25 people each earn $60,000/year
55 people each earn $22,000/year

Once again, this is a pool of 100 people and, together, they earn $11,000,000/year.

However, this time the top accumulator (no longer calling them an earner) gets 227 times as much as the lowest paid earner. The top 20 people (20%) have increased their total to 76% of the $11,000,000 but look carefully (this type of statistical use is often in political advertisements) -- the 19% below the top 1% are actually earning LESS than they used to. The top accumulator now controls 45% of the total money pool.

This is a situation where the top accumulators redistribute the earnings of the lower rich, middle class, and working poor to give to themselves. I call this distribution the "splash over" economic theory -- or a vivid, real, example of unregulated capitalism. You fill up the top and some of the excess splashes over to the bottom.

This was the situation in the "Gilded Age" in the 1800s. It was shifted, for individuals, with reforms such as the creation of income tax toward the turn of the century -- and it was shifted, for businesses, with "New Deal" reforms that came out of recovery from the Great Depression.

And, at the root of it all, the voters carry the responsibility.

Sunday, August 31, 2014

The economics of supersizing

I have to be careful when I talk about economics as it is such an all-pervasive subject that it is easy for me to lose focus. I consider it to be "applied sociology" -- or a measured way of evaluating how people interact and value each other within society.

Once upon a time, during a telephone interview with Google, I talked with them about how I thought Google was in a fantastic position to create an interlinked database of products, employment, and salaries. As only one example, such a database, and associated tools, could be of enormous help in figuring out how to migrate from a fossil fuel economy to a renewable fuel economy while minimizing the effects on the economy and individual workers. (Later, with 35 years of software architecture, programming, and managerial experience, Google called me in to interview for a marketing position -- they definitely have a sense of humor.)

See how easy it is for me to lose focus!

In the area of focus for this blog, supersizing involves a combination of total profits and perceived value. Perceived value is a subjective matter -- it depends on the individual and their history. In the US, it is considered to be of greater value to get more food for less money per amount -- in spite of the fact that the greater amount is unneeded and ends up being waisted (misspelling intentional). In most European countries, quantity does not enter into the equation for value as much as quality. In some other countries, it is a sufficient struggle to just get enough to eat.

When a product is sold, it is sold at a specific price. This price can be determined in one of two general ways. These are basically "cost plus" or "demand pricing". With "cost plus", the price is determined by a specific amount added to the cost of producing the item (including all overhead such as building costs, utility costs, storage, labor, and inventory loss). So, if a thingamabob costs $1 to make, store, sell, and so forth and the company wants to make 20% profit on selling thingamabobs, the price will be set at $1.20. With "demand pricing", the price is set to the highest amount that will lead to the greatest total profit. This is a bit more complicated.

"Net profit" is the difference between all the costs associated with making and selling something and the amount for which it is sold. In the "cost plus" example, there is a net profit of $0.20 or 16 2/3% (20 divided by 120). In "demand pricing", net profit is determined in a similar fashion except that the goal is to maximize the total profit.

In order to maximize total profit, the goal is sell the MOST possible at a specific net profit such that the total amount is the greatest. For example, selling 1000 of something that has a net profit of $0.20 will give a total profit of $200. Selling 500 of something that has a net profit of $0.50 will give a total profit of $250. So, even though you are selling less, you end up with a greater amount of total profit. But, if you get especially greedy and start selling something a a net profit of $1 and only sell 100, you will end up with only $100 profit.

The practice of pricing for "demand pricing" is an art and involves marketing (convincing you it is something you want), branding (letting you recognize the product and make positive associations that increases its perceived value),  and competition.

If you have a product that is desired by people and you are the only one who makes the product then you can demand the greatest amount. If you have a product that is made by many different companies and there is little perceived difference of value, then you enter what is called "commodity pricing" which usually has small net profits per item and requires mass production and sales to be profitable.

So, we come down to the area of supersizing (finally, you say). Supersizing (in the US) does two things -- it increases the perceived value and it increases the net profit (it MAY also increase total sales because of the increase in perceived value ). Let's say that you sell a tidbit that has $0.50 costs associated with what goes into it (raw, or pre-processed, food ingredients), $0.30 labor, $0.50 overhead (such as building, heating, lighting, franchise fees, etc.), and $0.30 for sales (marketing, "free" toys, posters, advertising, etc.). You then sell the tidbit for $2, giving a net profit of $0.40/item (or 20%).

If you can convert that sale into buying something bigger -- let's say twice as big. then the only thing that you have increased is the costs of what goes into it. [There is, admittedly, a little more overhead concerning storage of more stuff but that is often balanced with a reduction in cost of buying raw materials.] So, rather than $0.50 of stuff going into it, there is $1 associated with the costs. You then sell the item for $3 and you make a net profit of $0.90/item (or 30%). If you make it three times as large and sell it for $4, you would make a net profit of $1.40/item (or 35%). This is how supersizing translates into FAT profits (OK, I admit it, I like puns).

In summary, as long as people see greater value in buying more food for less per amount, it will be difficult to persuade companies to not supersize as this is an easy way for them to achieve greater profits. The only route is to change mindset to demand greater quality rather than greater quantity.

Saturday, August 16, 2014

Why be healthy?

We've all read articles, or watched programs, where someone who was in a healthy "lifestyle" keels over and dies in the midst of jogging. The publisher of Prevention, a health-oriented magazine, died during a taping of a television show. A man smokes three packs of cigarettes a day and lives to 95 while someone who has exercised, eaten well, and never smoked dies of lung cancer at age 40.

Why be healthy? This is a serious question. There is very little correlation between specific lifestyle changes and length of life. (Mental serenity and positive attitudes do seem to promote a longer lifespan.)

Each study that emerges seems to indicate something different -- butter is bad, butter is good. Don't eat fats, eat only this kind of fat. Eat more carbohydrates, don't eat any carbs. Weight training is a solution to being healthy, aerobic exercise is the only thing that is important. If you try to follow along with the latest directions indicated, your body will seem to be at the end of a yo-yo. I loved the line in the movie "Sleeper" where they told Woody Allen to smoke a cigarette because it was one of the healthiest things for his body. I doubt that's true but the movie does point out that "knowledge" isn't static.

So, why be healthy? I would categorize these reasons into three categories -- triggers, quality, options.

  • Triggers. As discussed in the previous blog, many of the health-oriented studies are NOT describing "causative" situations. Having a high-fat diet will not clog your arteries. Salt does not make your blood pressure rise. Smoking does not cause lung cancer (if so, then every person who ever smoked (tobacco or other substances) would get lung cancer).

    However, if your genes say "I have a tendency towards high blood pressure and I cannot process excess salt" then a high salt diet may TRIGGER health problems. Since, for people with these genetic tendencies, it is possible to reduce the chance to get diseases which can decrease lifespan -- these are active measures one can take to live longer.

    If you do NOT have these genetic tendencies then change of behavior may not make any difference at all. As mentioned above, however, this year's orange may be last year's black. Your best reference as to what is likely to make a difference to your body is your family health history.

  • Quality. There isn't a chart or a set of numbers that says whether or not you are healthy. However, you can listen to your body. If you break out in a sweat every time you raise your hands above your head to put a dish away into a cupboard -- that is not a good sign. If you are out of breath after you have walked from the store to your car holding a bag of groceries -- that is not a good sign. If you have indigestion after most meals and are taking half a bottle of antacid to calm it down -- that's not a good sign.

    You very likely know what you should do to make it better -- it's just not easy with bombardments of advertisements for excessive, low nutrition food or a multitude of ways to be entertained with only a finger or two moving. Reading a book is passive but it means that you are controlling your own stimulus rather than being controlled from the outside. Make conscious choices.

    Just ask yourself -- was the sixth slice of pizza worth the pain of your stomach afterwards?

  • Options. What do you like to do? What do you WANT to do? Are you able to do it (or learn to do it)? Working towards a healthy lifestyle expands your options. If you are badly overweight, there are many things you cannot do. If you cannot breathe, it affects your stamina and limits the length of activities. If you are physically weak, additional limits exist.


It is easy to be a slug on the couch. You might even live a long life doing such. Is it what you want?

What makes it harder for you to do the things you feel are healthy for yourself?

Saturday, June 28, 2014

How long will I live: life span and life expectancy

There is no consistency in estimates of how long people have lived throughout history. This is largely because, prior to around 1500 Common Era, birth and death records were rare -- usually only available for royalty or others who had influence and power. The everyday person's birth and death were remarked upon only by friends and family.

In general, however, it is considered that the overall life expectancy has increased over the years. One set of estimates indicates around 25 to 30 years old in BCE, rising to 30 to 40 years old in the 1500 to 1800 and then ballooning up past the 1800s to current world expectancy of 65 to 75.

Life expectancy is a statistical measurement as to the AVERAGE life span for a larger population. This number can vary between regions of the world, countries, or even counties. In the previous paragraph, I was talking about global numbers. An individual's life span is dependent on different factors. Some of these factors are not under anyone's control, some are "per chance", and some are voluntary risks.

The primary factor for life span is how long your ancestors lived -- your genetic heritage. Robert A. Heinlein did a great job going into this in his book Methuselah's Children. This is the baseline -- something that we presently cannot change and which gives the maximum time our bodies have to be around without becoming zombies. Some people believe that this can be extended by various means but, in my opinion, it is really a matter of eliminating the many factors that can shorten this period -- the maximum has not truly changed.

We have succeeded in helping to prevent some events that shorten life -- which is why our global life expectancy has increased. One of the biggest boosts in overall global life expectancy has been from medical advances that have decreased infant and mother mortality. If a quarter of all children die before they are two years old, it decreases average life span (and population life expectancy) considerably. This is also a large part of why the life expectancy of women is now higher than that of men and why it used to be the other way around. Other medical advances and general sanitation have been the other primary method to avoid life shortening events.

So what are the common life shortening effects? War (and murder) is a huge one and one which historically has taken a greater direct toll on the expectancy of men. Drought and famine change localized life expectancy. Lack of nutritious food early in life can also affect health later in life even if food is then available. Death by disease has been reduced by immunizations, treatments, sanitation, and recognition and isolation. Finally, death by accident is with us and seems to be impossible to totally avoid.

Voluntary risks do not really add to the life shortening lists -- they just make them more likely to occur. Smoking, for example, can increase the chance for disease if one is genetically likely to get the disease -- a trigger effect rather than a causal one. Enjoying a dangerous hobby -- parachuting, mountain climbing, car racing -- can increase the chance for accidents.

Note that deliberately avoiding risks can sometimes actually increase shortening effects. For example, the overuse of antibiotics is increasing the likelihood of disease by making the diseases stronger as well as decreasing our immune systems' ability to fight disease. Living "in a bubble" (isolated) may decrease the chance of accidents and disease while one is "in the bubble" but it makes us even more vulnerable when we are no longer isolated.

So, aside from choosing our parents (which isn't possible), we can best increase life expectancy by having cooperative societies (lack of war and murder), producing and distributing nutritious food and healthy water, building up strong immune systems, and making reasonable choices to avoid preventable accidents and diseases. We still won't live forever but do we want to?

The next blog will address the downside of living a long life.

Sunday, June 8, 2014

Race: The Invented Divider

The definition of race is primarily that of running as the word comes from the Middle English word ras meaning "to rush". However, although it may be one of the lesser definitions of the word, if one talks about "race" -- without article or pronoun -- the definition that comes to mind is often that of a division of humanity into different groups.

This idea first came into being to separate groups based on observable physical traits in the 1600s and continued in increasing use, and refined definition, through the early 1800s. Although some of the scientists had neutral goals for the use of the division, it was primarily used as a method of justifying colonization and subjugation of one group over another. It is largely discredited as a useful methodology within science at the present time.

In the elementary school that my children attended, there were about 850 children. If you lined up the children according to skin pigmentation, you would have a long continually varying set of shades and colors from near alabaster to ebony. If you lined them up on a summer day, you would get a different ordering of people from that on a winter day. The same thing holds true for color of eyes, or hair, or width of nose. Each physical characteristic varies on a continuous stream -- although there are certainly areas of the world that are more homogenous (similar between individuals) than others. This is why it has been abandoned by science -- it makes no sense to have discrete classifications.

Just because race has no reasonable definition does not mean there is not racism -- bias and prejudice based on observable (or known familial) physical traits. Racism, sexism, religionism, and other bias/prejudice are forms of xenophobia (fear of "the other"). It has existed since the beginning of recorded history and most likely since the rise of consciousness. The only cure for the syndrome is knowledge -- understanding of "the other" such that the similarities become more obvious than the differences. During periods of antagonism and preparation for war, differences are accentuated (made to seem greater) by governments in order to inflame xenophobia and the inclination to distrust and fear.

Some people say that an ism can only take place by the group in greater power toward the group having less power. Thus, there can be no sexism by women having bias or prejudice about men and there can be no bias or prejudice by pigmentally enhanced people towards those who are pigmentally challenged. This makes as much sense as the original xenophobic reaction. If there exists bias or prejudice based on an observable (or known association with a group who DOES have such observable) physical traits then the relation of power makes no difference.

In summary, the best way to work with, and reduce, xenophobia in all of its forms is knowledge and understanding.

Sunday, April 13, 2014

"Real" or "Artificial"

    First, I apologize for not getting back to my blog for a while. I have moved cross the U.S. and taken a new job that is quite a bit different from my previous job -- so it's been easy to get distracted. I'll try to post more regularly again.
    There is a tendency for people to talk about food items in terms of "real" or "natural" versus "artificial". In reality, there isn't such a dramatic division between the two. Sucrose is "natural" in that it occurs, without chemical manipulation, in nature and in food items. But, table sugar is far from "natural" as it is necessary to do a lot of refining to have it available in the form that we use it. However, although it is not "natural" nor is it "artificial" as the chemical substance is not different from that found in life.
    From the other direction, a chemist can duplicate a chemical compound found in nature. There is no difference between it (which is "artificial") and that which was "natural". Many flavorings, used in food, are of this nature. But there is actually a difference -- the one found in nature is mixed with many other flavors, textures, and other compounds (including inorganic fibers). Nature is rarely "pure". Sometimes this means the laboratory-created ingredient is "better" and sometimes it is not.
    From the previous blogs, we have tried to decide what is the reality behind the names used in marketing of sweeteners. Once again, we find that it is a "gray" area -- some "natural" sweeteners are rarely used as found in nature. Other "artificial" sweeteners may be present in inert (does not interact with other substances) forms -- or they may be metabolized (broken down into building blocks by the body).
    So, which is better? In answering that question, I will first say that I am not a food chemist, researcher, or any person who has a degree in a related area. I am a generalist.
    My general feeling of analysis is based on experiential analysis -- what happens, what can be observed, how is it used? In other words, if it walks like a duck, quacks like a duck, and lays eggs like a duck then it might just very well be a duck or, at least, something you can call a duck.
    When the body tastes something sweet, there are a number of reactions that the body undergoes. This is as a reaction to the quality "sweet". The body will react to this "sweetness" regardless of the source of the quality. Sucrose, Fructose, Sucralose, Stevia, and so forth will all make the body react because it is reacting to the defining quality of "sweetness". We can observe the body salivating. We can observe the swallowing reflex.
    We can not easily observe the internal reactions -- and this is where it is difficult to compare and "prove" results. Although it makes sense that the body will react internally to "sweetness" the same independent of the source -- I cannot prove it. Let's say that it is true -- what does that mean? Mostly, it means the body's metabolism will start trying to process the substances with which it associates sweetness. Insulin will be produced and gastric juices will be increased to break it into smaller building blocks and to store energy.
    So, the body does all these things based on "sweetness". What happens when it is NOT the substance for which the body has developed these reactions? What happens when insulin is released and there is nothing for it to react against? What happens when the metabolism tries to break down an inert substance? What happens when the body says "absorb" and the substance cannot be absorbed?
    I don't know the answers. I can make guesses but I do not know the answers. But I am rather certain that I do not want my body to be used as a test bed to determine the long-term reactions and effects. I know that there are various undesirable effects from refined table sugar -- but I know them and (although not in the refined version which has only been easily available for a century or two) it has been in use by people for a long time.
   "Natural" is not always good. "Artificial" is not always bad. But, in the area of food items, one can also look at it as "what is the body used to", 'how was it designed".
    That's my two cents on the subject. I'll stick to regular sugar. What do you think?


Saturday, December 21, 2013

What's in a name: sugar and marketing

   When it comes down to looking at the way that words are used in marketing, the use of sugar is a prime candidate as an example. Have you heard of these terms? Unsweetened, no sugar added, sugar-free, naturally sweetened all seem to suggest a healthy drink or food but you had best examine the ingredient list carefully. What do these terms (and others) really mean? This is a situation where sometimes the literal meaning is usually the one that is "true" but most of us hear what we think it implies rather than what the word says.
   Let's start with the word unsweetened. It is not used consistently even in the market. Sometimes it is used to mean "without sweetness" -- such as unsweetened tea or coffee. However, it is also used for situations where added ingredients include sugar but no separate refined sugar or sweetener is added. For example, tea with cream is a sweetened drink because cream includes various sugars (primarily lactose). Unsweetened cereal means no refined sugar was added to the mix but almost all grains include sugars (maltose, fructose, and sucrose).
   I used to buy a slice of "no sugar added" apple pie at a local restaurant. I love to cook and bake (it's really an at-home chemical laboratory) and know that it is possible to make an apple pie without any added sugar (one does have to do something to "draw out" the moisture from the apples, however, or it will be quite dry) because the apples have enough sugar within. But, it turns out that, at this restaurant, they actually make use of Splenda (sucralose-based) which is an "artificial sugar substitute". So, their definition of "no sugar added" really means "no caloric natural sweeteners added". I guess that it doesn't have the same ring to it -- but it is a lot more direct.
  "Sugar free" is one of my least favorite marketing phrases. Unlike "unsweetened" which, at least sometimes, means no sweeteners are added -- it almost always means artificially sweetened. I guess that "chemically sweetened" doesn't have the same marketing pizazz as "sugar free". I keep hunting for a real sugar-free drink but water seems to be the only one that can be really trusted.
   Finally, there is the term "naturally sweetened". Generally, this does have a meaning -- no refined sugars are added and no artificial sweeteners are included. This does not often mean without considerable sweetness as it usually means that extracted fruit juices are used in combination with the "primary" flavors. For solid foods, it means the same but the added sweetness comes from the other ingredients (like the tea with cream) in the mix.
   So, how do we determine what is actually in the drink or food. Like most foods, one has to learn to read the labels (in countries where nutritional labels are required). First, read the list of ingredients. Ingredients that end with "alose" (NOT "ose" which is at the end of most natural sugars) or "itol" are likely to be artificial sweeteners. Natural sugars end with "ose" or are described with everyday words (sugar (sucrose), corn syrup (maple syrup is the only other included syrup of which I am aware is used). Check the order and frequency. The highest percentage come first but if the list includes sugar AND corn syrup AND fructose then the total might very well be first or second highest amount -- another marketing trick to shift the order of ingredients and help you to think it has less sugar.
   After checking the list of ingredients, one has to look at the nutritional label. In the "carbohydrates" section, it will be broken down into dietary fiber and sugar. The sugar should correspond to the natural sugars in the ingredient list. When you add up the amount of sugar and dietary fiber, it will usually be less than the total amount of carbohydrates. The difference between these two amounts indicates the amount of more "complex" carbohydrates.
   Carbohydrates are a classification of food elements that combine carbon and Hydrogen-Oxygen (think "hydration" -- or water added -- although hydrates are not quite the same as adding water). As from the previous blog on sugars, dietary carbohydrates can also be grouped into saccharides. The simple monosaccharides and bisaccharides are given the name of "sugar" while the polysaccharides are sometimes called "starches". Starches require the body to break them down into simpler molecules before using (as sugars). At any rate, the difference between the total of sugars and dietary fiber and total carbohydrates indicates the amount of "starch". As you can read from my earlier blogs on nutrition, the healthiness of starch depends on the mixture -- the ratio of dietary fiber versus sugar and simple starches should be kept high.
  So, let the "buyer beware" -- the names used (and with many other aspects of life) have multiple meanings and uses. Marketing terms are used to make the consumer interested in the product -- not to inform. I really will talk about differences between "natural" and "artificial" sweeteners in my next blog but I thought that the use of marketing terms and sugar was important to understand first.