Quotulatiousness

April 15, 2014

Are breast implants tax-deductable? Only if they’re “extraordinarily large”

Filed under: Business, Law, USA — Tags: — Nicholas Russon @ 07:10

For some reason, the following report at the Tax Foundation website does not have any images to accompany the story:

In filing one’s taxes, it may be necessary to distinguish between breast implants that are merely “large,” and breast implants that are “extraordinarily large.”

The relevant ruling on this subject came in 1994 in a case known as Hess v. Commissioner. The plaintiff, a self-employed exotic dancer, had implants that expanded her bust size to the size 56FF. For tax purposes, she treated these as a deductible business expense on her schedule C. The IRS contested her deduction.

[...]

The relevant issue in Hess was whether breast implants – traditionally thought of as a luxury good bought for personal benefit – could be considered a legitimate business expense. Given that the plaintiff was an exotic dancer, she had a fair argument. But in general, taxpayers aren’t allowed to treat personal appearance expenditures as business expenses unless they aren’t suitable for personal use. Hess, arguing pro se, convincingly established that her implants were inconvenient in everyday life due to the sheer enormity of her breasts. The courts ruled in her favor:

    Because petitioner’s implants were so extraordinarily large, we find that they were useful only in her business. Accordingly, we hold that the cost of petitioner’s implant surgery is depreciable.

H/T to Walter Olson, who assures us that this inquiry is strictly business.

April 14, 2014

In defence of limited corporate liability

Filed under: Business, Law, Liberty, USA — Tags: , , — Nicholas Russon @ 10:47

The RSS feed that used to track Megan McArdle’s posts at Bloomberg View has been on the fritz for a couple of weeks, so I missed this article when it was posted earlier this month:

The argument for unlimited liability isn’t just a libertarian evergreen; it’s also something you occasionally hear from the far left, because it would basically make the corporate form untenable. Imagine, if you would, that by buying and holding the share of a firm for 10 minutes, you thereby subjected yourself to seizure of all your goods to satisfy potential lawsuit judgments — even if those judgments involved behavior that involved no legal liability at the time of the acts.

Not possible? That’s basically what happened with asbestos liability. Firms that had had no legal liability under the doctrines of the times in which the asbestos was sold or used suddenly found themselves driven into bankruptcy by massive settlements. Moreover, after the first wave of lawsuits exhausted the funds available to pay asbestos claims, plaintiffs’ lawyers started pushing to expand the number of pockets that could be dipped into.

A company that had never manufactured asbestos could be sued and have to spend hundreds of millions of dollars on lawsuits and settlements because it had once bought a company with an insulation division that had formerly manufactured asbestos — even though it had immediately sold off that division in the process of completing the merger. Insurers could be forced to pay out for the whole of a company’s liability if they had sold a company insurance for even a year between the time a company started making or using asbestos and the time that the plaintiff discovered the harm. And “harm” wasn’t limited to getting sick; you could sue for the emotional distress of worrying that you might get sick.

Kind of hard to imagine becoming a shareholder under those circumstances, isn’t it? Maybe you’d better put your money in the bank — a small, privately held bank, of course. Commerce would look something like it did in medieval Italy, where all economic activity was basically organized by the family or the partnership.

Growth would have to be financed by debt or by retained earnings. That’s how British firms financed expansion in the early days of the Industrial Revolution. It’s how small businesses tend to finance expansion now.

The traditional libertarian answer is “insurance”, but that’s a non-starter as well.

To which I answer: What insurance company?

Insurers are also corporations, and their owners get the same valuable shield from liability that everyone else gets from the corporate form. They may have shareholders, or they may be mutually held by their policy holders, but either way, someone is getting protection from lawsuit by the same laws that protect General Motors Co. This sort of liability shield is vital for any large aggregation of capital requiring lots of contributors — which is basically the definition of an insurance company.

April 13, 2014

Ephemeral apps and the NSA

Filed under: Business, Media, Technology — Tags: , , — Nicholas Russon @ 11:21

Bruce Schneier on the rising popularity of apps that only leave your content visible briefly and then automatically removes it:

Ephemeral messaging apps such as Snapchat, Wickr and Frankly, all of which advertise that your photo, message or update will only be accessible for a short period, are on the rise. Snapchat and Frankly, for example, claim they permanently delete messages, photos and videos after 10 seconds. After that, there’s no record.

This notion is especially popular with young people, and these apps are an antidote to sites such as Facebook where everything you post lasts forever unless you take it down—and taking it down is no guarantee that it isn’t still available.

These ephemeral apps are the first concerted push against the permanence of Internet conversation. We started losing ephemeral conversation when computers began to mediate our communications. Computers naturally produce conversation records, and that data was often saved and archived.

[...]

At best, the data is recorded, used, saved and then deliberately deleted. At worst, the ephemeral nature is faked. While the apps make the posts, texts or messages unavailable to users quickly, they probably don’t erase them off their systems immediately. They certainly don’t erase them from their backup tapes, if they end up there.

The companies offering these apps might very well analyze their content and make that information available to advertisers. We don’t know how much metadata is saved. In SnapChat, users can see the metadata even though they can’t see the content and what it’s used for. And if the government demanded copies of those conversations — either through a secret NSA demand or a more normal legal process involving an employer or school — the companies would have no choice but to hand them over.

Even worse, if the FBI or NSA demanded that American companies secretly store those conversations and not tell their users, breaking their promise of deletion, the companies would have no choice but to comply.

That last bit isn’t just paranoia.

April 9, 2014

Being “pro-business” does not mean the same as being “pro-market”

Filed under: Business, Economics, Politics, USA — Tags: , , , , — Nicholas Russon @ 07:32

It’s a common misunderstanding (especially with people who don’t know what laissez faire actually means):

For years, Republicans benefited from economic growth. So did pretty much everyone else, of course. But I have something specific in mind. Politically, when the economy is booming — or merely improving at a satisfactory clip — the distinction between being pro-business and pro-market is blurry. The distinction is also fuzzy when the economy is shrinking or imploding.

But when the economy is simply limping along — not good, not disastrous — like it is now, the line is easier to see. And GOP politicians typically don’t want to admit they see it.

Just to clarify, the difference between being pro-business and pro-market is categorical. A politician who is a “friend of business” is exactly that, a guy who does favors for his friends. A politician who is pro-market is a referee who will refuse to help protect his friends (or anyone else) from competition unless the competitors have broken the rules. The friend of business supports industry-specific or even business-specific loans, grants, tariffs, or tax breaks. The pro-market referee opposes special treatment for anyone.

[...]

GOP politicians can’t have it both ways anymore. An economic system that simply doles out favors to established stakeholders becomes less dynamic and makes job growth less likely. (Most jobs are created by new businesses.) Politically, the longer we’re in a “new normal” of lousy growth, the more the focus of politics turns to wealth redistribution. That’s bad for the country and just awful politics for Republicans. In that environment, being the party of less — less entitlement spending, less redistribution — is a losing proposition.

Also, for the first time in years, there’s an organized — or mostly organized — grassroots constituency for the market. Historically, the advantage of the pro-business crowd is that its members pick up the phone and call when politicians shaft them. The market, meanwhile, was like a bad Jewish son; it never called and never wrote. Now, there’s an infrastructure of tea-party-affiliated and other free-market groups forcing Republicans to stop fudging.

A big test will be on the Export-Import Bank, which is up for reauthorization this year. A bank in name only, the taxpayer-backed agency rewards big businesses in the name of maximizing exports that often don’t need the help (hence its nickname, “Boeing’s Bank”). In 2008, even then-senator Barack Obama said it was “little more than a fund for corporate welfare.” The bank, however, has thrived on Obama’s watch. It’s even subsidizing the sale of private jets. Remember when Obama hated tax breaks for corporate jets?

April 5, 2014

Grade inflation at US universities

Filed under: Business, USA — Tags: , , — Nicholas Russon @ 10:42

Stu Burguiere looks at the remarkable increase in higher grades handed out at US universities:

I never went to college so I missed out on all the keg parties and, apparently, a surplus of good grades.

Contrary to the concept of school as you knew it growing up, A’s are pretty easy to come by these days. In fact the only thing you have to work really hard to get are D’s and F’s. In college today, an A is over four times as common as a D or an F combined.

It’s a drastic change from the 15% of students who received A’s in 1960.

The pool is a little higher today. Ok, it’s a lot higher. If you look at this chart you’ll see that 43% of all letter grades given today are A’s.

US university grades 1960-2008

And this sort of makes sense if you think about it. No one wants to pay $40,000 a year to hear that they’re dumb.

College is one of the rare businesses in which you pay them and at the end of the experience they tell you how well they did. If you’re a parent and you send your kids to school and they get A’s you feel good about the purchase. But if your kids get F’s you feel like they wasted your money.

And amazingly these institutions of higher learning, that do little other than indoctrinate kids against the evils of capitalism, sure do understand incentives.

Tired of wine snobbery? Now trending – beer snobbery

Filed under: Business, USA — Tags: — Nicholas Russon @ 00:01

In the Wall Street Journal, William Bostwick looks at a new aspect of the craft beer world — age-worthy beers and ales:

Still, you can’t buy just anything and lay it down to age. Not all beers get better with time. Hop-driven IPAs lose their kick quickly as light, heat and oxygen degrade the flavorful flowers’ acids and oils. Stone Brewing Co.’s Enjoy By IPA touts its bottled-on date as a badge, and the brewery’s cicerone [the beer version of a sommelier], Bill Sysak, recommends immediate consumption. Instead, Mr. Sysak stocks his personal cellar — 2,800 bottles and counting — with strong, dark and bottle-conditioned beers. The sometimes overpowering fusel alcohol notes of stronger beers, 8% ABV (alcohol by volume) and up, mellow over time; living yeast in bottle-conditioned beers adds character as it continues to ferment residual sugars.

Aging beers truly is an adventure. Sweet, bottle-conditioned Belgians dry out; fiery barley wines turn smooth and caramelly. Stone’s Imperial Russian Stout, Mr. Sysak said, “might be astringent, fresh, like espresso. But aged, it’s a delicious chocolate-coffee dessert.” One of the oldest he’s tried, a 1968 Thomas Hardy’s Ale, “was like an Oloroso Sherry: nuts, toffee, leather and smoke.”

The beers may be strong, but they must be aged gently. Aim for 54 degrees Fahrenheit — a mini-fridge with a temperature control is nice, but a dark interior closet works too. Mr. Sysak found a sweet spot in his guest bathroom. “People would open the cupboard and find all these rare bottles,” he said. Above all, you want consistency. Temperature fluctuations will age beer prematurely and might throw its proteins out of solution, turning the brew hazy.

He also provides a short list of age-worthy beers to start with, but (of course) none of them are generally available in Ontario.

April 4, 2014

“Why do these bigots still have jobs? Let’s go get them”

Filed under: Business, Media, Politics, USA — Tags: , , , — Nicholas Russon @ 08:45

In Slate, Will Saletan digs through the data to find the next set of targets:

Some of my colleagues are celebrating. They call Eich a bigot who got what he deserved. I agree. But let’s not stop here. If we’re serious about enforcing the new standard, thousands of other employees who donated to the same anti-gay ballot measure must be punished.

More than 35,000 people gave money to the campaign for Proposition 8, the 2008 ballot measure that declared, “Only marriage between a man and a woman is valid or recognized in California.” You can download the entire list, via the Los Angeles Times, as a compressed spreadsheet. (Click the link that says, “Download CSV.”) Each row lists the donor’s employer. If you organize the data by company, you can add up the total number of donors and dollars that came from people associated with that company.

The first thing you’ll notice, if you search for Eich, is that he’s the only Mozilla employee who gave to the campaign for Prop 8. His $1,000 was more than canceled out by three Mozilla employees who donated to the other side.

The next thing you’ll notice is that other companies, including other tech firms, substantially outscored Mozilla in pro-Prop 8 contributions attributed to their employees. That includes Adobe, Apple, Google, Microsoft, Oracle, Sun Microsystems, and Yahoo, as well as Disney, DreamWorks, Gap, and Warner Bros.

Thirty-seven companies in the database are linked to more than 1,300 employees who gave nearly $1 million in combined contributions to the campaign for Prop 8. Twenty-five tech companies are linked to 435 employees who gave more than $300,000. Many of these employees gave $1,000 apiece, if not more. Some, like Eich, are probably senior executives.

Why do these bigots still have jobs? Let’s go get them.

April 2, 2014

People are less inclined to shop or bank online after NSA surveillance reports

Filed under: Business, Government, Technology — Tags: , , , , , — Nicholas Russon @ 08:46

Among the side-effects of government surveillance revelations, ordinary people are deciding to be a bit less involved in online activities, according to a new Harris Poll:

Online banking and shopping in America are being negatively impacted by ongoing revelations about the National Security Agency’s digital surveillance activities. That is the clear implication of a recent ESET-commissioned Harris poll which asked more than 2,000 U.S. adults ages 18 and older whether or not, given the news about the NSA’s activities, they have changed their approach to online activity.

Almost half of respondents (47%) said that they have changed their online behavior and think more carefully about where they go, what they say, and what they do online.

When it comes to specific Internet activities, such as email or online banking, this change in behavior translates into a worrying trend for the online economy: over one quarter of respondents (26%) said that, based on what they have learned about secret government surveillance, they are now doing less banking online and less online shopping. This shift in behavior is not good news for companies that rely on sustained or increased use of the Internet for their business model.

[...]

Whether or not we have seen the full extent of the public’s reaction to state-sponsored mass surveillance is hard to predict, but based on this survey and the one we did last year, I would say that, if the NSA revelations continue – and I am sure they will – and if government reassurances fail to impress the public, then it is possible that the trends in behavior we are seeing right now will continue. For example, I do not see many people finding reassurance in President Obama’s recently announced plan to transfer the storage of millions of telephone records from the government to private phone companies. As we will document in our next installment of survey findings, data gathering by companies is even more of a privacy concern for some Americans than government surveillance.

And in case anyone is tempted to think that this is a narrow issue of concern only to news junkies and security geeks, let me be clear: according to this latest survey, 85% of adult Americans are now at least somewhat familiar with the news about secret government surveillance of private citizens’ phone calls, emails, online activity, and so on.

Comparing scandals – Toyota’s phantom acceleration and GM’s ignition switches

Filed under: Business, Government, USA — Tags: , , , , — Nicholas Russon @ 08:10

David Harsanyi offers this comparison and says it’s another reason governments shouldn’t own businesses:

In February 2010, the Obama Administration’s Transportation Secretary Ray LaHood told America, without a shred of evidence, that Toyota automobiles were dangerous to drive. LaHood offered the remarks in front of the House Appropriations subcommittee that was investigating reports of unintended-acceleration crashes. “My advice is, if anybody owns one of these vehicles, stop driving it,” he said, sending the company’s stock into a nosedive.

Even at the time, LaHood’s comments were reckless at best. Assailing the competition reeks of political opportunism and cronyism. It also illustrates one of the unavoidable predicaments of the state owning a corporation in a competitive marketplace. And when we put LaHood’s comment into perspective today, it’s actually a lot worse. Not only did the Obama administration have the power and ideological motive to damage the largely non-unionized competition, it was busy propping up a company that was causing preventable deaths.

[...]

The National Highway Traffic Safety Administration’s acting chief David Friedman testified that GM never told them that faulty switches were at the root of the airbag problem. Fine. Before plowing billions of tax dollars into saving the United Automobile Workers, did the Car Czar or any other Obama officials take extra care to review DOT records to insure that taxpayers would not be funding the preventable deaths of American citizens? Would DOT or Holder exhibit the same zealousness for safety when it came to GM as they did when it came to Toyota? In the midst of the bailout debate and subsequent “turnaround,” news of a coverup and major recall would have been a political disaster.

So it’s difficult to understand why this isn’t a huge scandal. If every obtuse utterance by an obscure Republican congressman gets the media juices flowing, surely the possibility of this kind of negligence is worth a look. Can anyone with access to the administration ask some of these questions? Because if you take credit for “saving” a company (actually, an “industry,” as no one would ever driven again if Obama hadn’t saved the day) you also get credit for “saving” the real-life unscrupulous version of the company. “I placed my bet on American workers,” Obama told union workers in 2012. “And I’d make that same bet again any day of the week. And now, three years later that bet is paying off.” Betting $80 billion of someone else’s money to prop up sympathetic labor unions isn’t exactly fraught with political risk. Unless it turns out that your administration was less concerned about the safety defects of the company you owned than the company you disliked. That would be corruption.

April 1, 2014

Innovative new bench design for woodworkers

Filed under: Business, Cancon, Humour — Tags: , — Nicholas Russon @ 09:13

The deep thinkers at Lee Valley Tools have come up with a brilliant solution to a perennial woodworking problem:

Lee Valley VOUBO bench 2014-04-01

H/T to Jon, my former virtual landlord, who said “I’d like to see someone do a legitimate motion study on this and prove that it would actually work”.

WestJet goes metric

Filed under: Business, Cancon, Humour — Tags: , — Nicholas Russon @ 07:38

Published on 1 Apr 2014

Effective today, WestJet is changing the way we display our flight schedules, switching from our current system of “a.m.” and “p.m.” to metric time. For more information visit http://fly.ws/Metric-time.

From the official website:

WestJet converts to metric time.
Concerned about guest confusion, airline changes schedule display system.

WestJet announced it is changing the way it displays its flight schedule, switching from its current system of “a.m.” and “p.m.” to metric time effective immediately.

“We hope that by converting our flight schedule to metric time, it will simplify things for our guests and ensure they arrive for their flights with lots of time to spare,” said Richard Bartrem.

How to calculate your flight’s departure in metric time:

  1. Take your departure time in 24-hour time. Represented as HR:MIN.
  2. Multiply the HR by 60.
  3. Add the MIN.
  4. Take the total and divide by 1.44.

(HR x 60) + MIN = X / 1.44 = New metric flight time (in milliminutes)

Sample calculation:

5:42 pm = 17:42

(17 x 60) + 42 = 1062 / 1.44 = 737 milliminutes

March 31, 2014

Market research, disguised as crowdfunding

Filed under: Business, Economics, Media — Tags: , , , — Nicholas Russon @ 11:01

Virginia Postrel has an interesting take on the current brouhaha over Facebook’s acquistion of formerly crowdfunded Oculus:

Crowdfunding sites such as Kickstarter and Indiegogo represent a classic entrepreneurial phenomenon: Once you roll out your great idea, customers use it in ways you didn’t imagine, and you wind up in a different business than you expected.

Kickstarter’s founders wanted to help artists raise money. Indiegogo co-founder Danae Ringelmann pictured aiding capital-strapped small-businesses owners like her parents. Neither intended their site to act as a test market. But, as the rags-to-riches story of virtual-reality firm Oculus shows, that’s what they have become.

“It’s a way to access capital, but what it’s also become is a market-testing and validation platform,” Ringelmann told the Dent the Future conference on Tuesday. “What we’re doing is creating pre-markets for ideas,” she said.

[...]

Now that Facebook is buying Oculus for $2 billion, critics are reverting to the original assumption that crowdfunding is primarily about raising money. “Talking people out of $2.4 million in exchange for zero percent equity is a perfectly legal scam,” wrote my colleague Barry Ritholtz.

But it’s not a scam at all. It’s market research. In effect, customers placed pre-orders and received early products; why are they griping that they don’t own a part of the business?

The backlash is largely Kickstarter’s fault. It may not be running a scam, but it definitely sends mixed messages. Unlike Indiegogo, which prides itself on operating a neutral platform giving anybody’s idea a market test, Kickstarter hasn’t embraced its de facto transformation. It strictly curates the campaigns it hosts and, although it makes its biggest profits on technology products, it still exudes an artistic sensibility that isn’t entirely comfortable with disruptive technology or large enterprises. It still talks as though it’s PBS. “Kickstarter is not a store,” it declares.

March 30, 2014

In which Tim Worstall admits that Karl Marx was right

Filed under: Business, Economics, Law — Tags: , , , , — Nicholas Russon @ 10:37

Well, right in this particular analysis, anyway:

Which is where we can bring Karl Marx into the discussion. Wrong as he was on many points he was at times a perceptive analyst. And he noted that what determined the wages of the workers wasn’t some calculation of a “fair wage”, nor some true value of their production (although he had much to say on both points), but in a market economy the wages that were paid were a reflection of what other people were willing to pay for access to that labour.

If, for example, there were a large number of unemployed (that “reserve army of the unemployed”) then a capitalist didn’t have to raise the wages of his workers however far productivity grew. If anyone tried to capture a bit more of the value being created, say through a strike or other activity, then the capitalist could simply fire them and bring in some of those unemployed. No profits needed to be shared with the workers. However, when we get to a situation of full employment then the dynamic changes. It’s not possible to simply hire and fire to keep wages low. For the other capitalists are competing for access to that labour that makes those profits. The higher profits go the higher all capitalists will be willing to bid up wages to continue making some profit at all.

The obverse of this is if the employers collude in order to artificially suppress the wages of the workers which is why that case involving Apple, Google and so on is going to trial. That’s monopoly capitalism that is and we really don’t like it at all.

But in this case with Yahoo trying to challenge Google’s YouTube, it will be the workers who benefit. For the two companies are vying with each other for access to the content being made and thus the profits that can be made. Of whatever revenue can be made a larger portion will go to the producers of the content and a smaller one to the owners of the platforms. Which is excellent, this is exactly what we want to happen.

State occupational licensing is out of control

Filed under: Bureaucracy, Business, Politics, USA — Tags: , , , — Nicholas Russon @ 08:58

Ramesh Ponnuru discusses some examples of ridiculous state occupational license requirements:

Melanie Armstrong wanted to be an African hair braider, practicing a skill passed down from generation to generation. In Tupelo, Mississippi, where she lived, government licensing rules meant she had to take 300 hours of course work to start her salon: 300 hours, she notes, “none of which covered hair braiding.”

In testimony before a U.S. House subcommittee on Wednesday, Armstrong explained that her “ultimate goal” was to teach others how to braid. Getting the needed licenses to do that would have taken 3,200 hours. None of them taught students how to braid hair, either. That’s more hours than it would have taken her to get licenses to become a firefighter, emergency medical technician, hunting instructor, ambulance driver or real estate appraiser. It’s longer than it would have taken her to get licenses for all those things combined.

The subcommittee — led by New Yorkers Richard Hanna, a Republican, and Grace Meng, a Democrat — was considering the excesses of state occupational licensing. More and more jobs fall under these regulations. In the 1950s, according to one study, only about one in 20 jobs required a license. By 2006, about 29 percent did.

While Armstrong helped get her state to scale back the requirements for hair braiders, the trend is toward more stringent regulation. Patti Morrow, who runs an organization fighting licensing for interior designers, says, “These bills come back year after year like zombies.”

March 29, 2014

The “Lehman Sisters” wouldn’t have been more risk-averse, actually

Filed under: Business, Economics, USA — Tags: , , , — Nicholas Russon @ 10:56

Tim Worstall looks at the occasional claim that if Lehman Brothers had actually been “Lehman Sisters” (that is, an organization with much higher female participation), then they would have taken on less financial risk and therefore not have been the trigger to the financial meltdown:

… there’s very definitely an element of truth to this: but the final story is rather different from what is commonly assumed. It’s only if financial organisations are completely female, or completely male, that risk is reduced. Adding more of either gender to an organisation actually increases risk.

[...]

Mixed gender environments increase risk tolerance in both men and women. So adding women to an all male institution increases, likely, the risk that organisation will tolerate. And so does adding men to an all female one. Not just because the men sway the average but because both men and women become more risk tolerant in the presence of the other sex.

Thus it would be correct to say that Lehman Sisters would have been less risk tolerant than Lehman Brothers. But the reality of what there actually was at the firm was that it was a mixed gender environment and so more risk tolerant than either of the single gender hypotheticals would have been. It is gender diversity itself that increases risk tolerance, reduces risk aversion.

Which leads to an interesting thought. Everyone generally agrees that banking as a whole has become more risk tolerant, and thus more fragile, in recent decades. These are also the decades when women have made significant inroads into that area of professional life. Which leaves us with something of a conundrum. We generally believe that fragility in the banking system is a bad idea. We also all generally believe that gender equality is a good idea. But that gender equality of women going into finance and banking seems to increase the fragility of the system given that rise in risk tolerance from a mixed gender environment.

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