The Kids Are Paying Attention

You’re wrong if you think that the kids aren’t paying attention, because they are.  It’s something I’ve realized for a long time and last week was another example as Youngest related what he’d heard standing in line at a used gaming store.  His older siblings have periodically surprised me with what they’ve heard and realized through the years and yesterday was Youngest’s turn.  He was standing in line to purchase a game while I browsed some feet away, and there was a young father and mother with a toddler in a stroller ahead of him.  The parents were purchasing a Destiny PS4 system expansion pack and immediately after he turned from the counter with his box in a bag, the father immediately returned to the cashier and asked if he could get a second bag – preferably gray or dark colored – into which he could put the bagged expansion pack.  The father commented that they were returning home downtown – approximately five miles away – and didn’t want to run the risk of being mugged in their neighborhood.  Youngest watched as the clerk obliged and double-bagged the purchase, then watched further as the young family exited out the door and through the parking lot to the highway, upon which he then moved up for his own purchase.

It was as we were walking to our own vehicle that Youngest mentioned the overheard conversation with the opening statement man, I feel terrible… followed by his description of what he’d witnessed.  From that point onwards for the next ten minutes or so, the conversation ranged over a variety of topics that emanated from his observations.  First, the notion that the family might have actually walked about five miles, carrying a bag and pushing a toddler in a stroller and that if you didn’t have some form of reliable transportation in American society, your options were limited at best.  He’s already witnessed friends of his elder siblings who were occasionally jammed because of this vehicle situation and this instance just served to reinforce that it not only affected individuals but could also affect families with children as well.  Second was the comment about spending priorities; if you couldn’t afford a reliable vehicle, should you really be spending what little disposable income you have on a game expansion pack and especially if it’s obviously for yourself instead of for your toddler?  The third was the simple comment I’d hate to find myself in that situation with my agreement that both Mom and I were working hard to assure both that he wasn’t in that predicament at present and that he had the skills and judgment to assure that he wouldn’t find himself there in the future.

This morning’s conversation in the car to school was another situation that he witnessed and after offering my input, I noted to him that part and parcel of my job as a father was to help him take all of these experiences and knit them together into a recognizable form that provided context for his life.  It is our job as parents to do precisely that and especially if we’re making a purposeful effort to not shield them from the world as some parents do; we must listen to what they say and use that as a departure point for as many permutations as time and attention will allow.  It is this constant effort at conversation and context that will help them establish a sense of not just right and wrong, but also a context of what is appropriate versus simply acceptable versus the worst case, aberrant.  This is not a one-off event but instead a constant, persistent process that will take years and if we handle it properly, will come back to us as we ourselves age and the adult children can help provide context for us in a changing society.

Craigslist Chic

Society changes as the younger generation rises to take its place and begins to supplant the dying-off elders.  It always happens and now is no different from when the Boomers supplanted the Silent Generation.  But we now have a problem since our economy is predicated upon consumption and yet incomes are declining and the demands upon the family budgets are growing. So how is that change occurring?  Watching Eldest and one of her peers, who I’ve had the privilege of knowing since that young woman was in early elementary school, is both educational and reflective of what’s occurring in the broader society.  It can best be described as what I refer to as Craigslist Chic.

With the news that family median income has again dropped to levels not seen since 1989 and poverty rising to new levels, it’s a new world for those who grew up expecting a particular lifestyle and finding that it’s simply unattainable.  There’s been an expectation of a newer house in the suburbs with newer automobiles, late model appliances and in a nod to this new generation, an array of interconnected devices that increasingly make up what is referred to as the sensornet.  And advertising continues to push this drive to have as much as it ever has, promoting the image and the goods with unabashed enthusiasm.  There’s obviously a gap growing here between the desire for the things and the ability to afford said things and the rise of Craigslist is one of that ways that people are managing to bridge that gap.

The site began two decades ago and in its earlier days, had a touch of the wild west aspect to it with news blurbs coming across about the occasional individual who was trying to sell a kidney or engaging in some odd and unsavory transaction.  As full disclosure, I managed to go for years without viewing Craigslist and only began to seriously view it after Eldest began perusing it on a routine basis.  The situation was now reversed because in their much younger years, I routinely monitored electronics and the media ahead of them and when the kids were truly young, I would periodically watch bits and pieces of MTV and BET to see what was happening with the culture.  At twenty years old, Craigslist is now a veritable institution on the web and as I watch, it’s become one of the key ways that the youngsters are bridging that gap so that they can far more affordably attain what’s been trotted out over the years by the consumer machine.

It has been fascinating to watch Eldest, who has the goal of her own place yet has grasped that the old ways of just walking in and furnishing a house or apartment en masse is no longer realistically operative.  She approaches the goal as a puzzle with the parameters of currently available funds, wants and available prospects via Craigslist; she is assured of safe storage because we’re already holding furniture left by other family members for when the kids are on their own.  I’ve watched her spend free time quietly perusing Craigslist with the occasional comment to her mother about how she likes this or that particular item and on a few occasions now, I’ve gotten the word that she’s gone to a particular place in order to look at one thing or another and sure enough, a piece of furniture winds up in my garage for safe disposition until its time is come for use.  In the case of the other young woman, my might-as-well-be niece, she furnished her first apartment via an assortment of means.  Utilitarian furniture came from her parents’ house to supplement what little she’d already accumulated, she purchased from highly discounted furniture stores and found to her surprise that she could purchase a like-new set on Craigslist for a fraction of what she’d seen the same set in a retail furniture store.  The site has become almost ubiquitous and the ability of consumers to connect with one another and transact goods outside of the traditional retail will only place even greater stress upon the traditional bricks-and-mortar economy, already stressed by the rise of online retailing.

The other aspect of Craigslist is its inherent teachable lessons in human nature, and this is where the youngsters might need some input from their elders.  It’s a truism amongst any retailer, either brick/mortar or online, that the customer is always right and almost all businesses at least make an attempt to honor that.  But Craigslist allows the person to interact with any kind of person and that goes partcularly to ethics – moral, immoral or simply amoral.  In my few instances of Craigslist usage, I’ve run into two instances of ethical lapses; the first was a misrepresentation about circumstances as a young adult trying to make a buck as a used car dealer misrepresented himself in a potential car sale while the second jacked the price of an item when he realized that he’d been dealing with my wife and I didn’t have a hard copy of what they’d discussed.  In the first instance, a young adult was with me and we walked on the transaction and in the second, I wound up paying an additional $30 on the deal that I didn’t realize the issue until I was almost home.  This doesn’t mean that all Craigslist sellers are dubious, because they aren’t.  But it does mean that if you know that your youngster is actually thinking of using it, it would be helpful to offer your assistance as they move forward and I suspect in most instances, they’d be willing to accept the input.  At the minimum, talk to them about some simple safety rules:  first and foremost, if you’re going to meet someone, make sure that someone close to you knows the physical details of the meeting – time, location and the identity of the seller, even if just the Craigslist identifier – and more preferable would be having someone come along with you.  Second, meetings when possible should be at public locations and if for any reason your internal alarm system is triggered – y’know, I’m a bit uncomfortable with this – find a reason to simply decline the potential transaction and get out of there.  Third would be to assure that you have a record of all communications – digital or hard-copy – to avoid the prospect of any he said/she said scenarios that might spiral out of control.  Beyond that simple threesome, you can discuss whatever other aspects you wish.

Having been around for two decades – an eon in digital terms – Craigslist and it’s peers aren’t going anywhere.  It serves a purpose and that will only increase as the youngsters use it more and more to help them bridge the gap between economic reality and the images of adulthood that they’ve been sold throughout their youth by the consumption machine.  But if you become aware that the kids are using it, feel free to offer your perspective because you have the experience factor that they haven’t yet acquired.

PracticalDad Price Index – September 2015:  Stabilizing, but…

The data from the September 2015 PracticalDad Price Index is in and the price declines of the past nine months have ceased and stabilized, for now at least.  But I’ve been noticing something and it’s gotten me to thinking about the earliest stages of what’s happening with wealth inequality and how it might be starting to affect the grocery store.

In terms of the actual Index results, both the Total Index (47 total market basket items) and the Food-Only Sub-Index (the 37 foodstuff items in that basket) stabilized with the Total Index rising incrementally to 105.21 (November 2010 = 100) from August’s Total Index reading of 104.96.  The Food-Only Sub-Index likewise rose slightly to 107.12 in September (November 2010 = 100) from August’s result of 106.97. 

But what have I been noticing in the past number of months and what has this to do with income inequality?  Let’s take a quick look at income and wealth inequality first.  The disparity between the highest levels and the remainder of American society have been noted in several ways.  Obviously, the percentage of assets held by the top 3% of families has reached large proportions as the remaining 97% of American families have fewer and fewer assets available to them.  The lack of retirement savings has led to a situation in which middle-aged and older Americans have a lower unemployment rate than other age groups.  As income and wealth have bifurcated – split – this has likewise been noted in the prices of different markets of items.  While the BLS reports that CPI and wholesale prices are largely static, there’s been greater price inflation in products oriented towards wealthy buyers.  The price of truly high-end luxury automobiles has risen as has the price of collectible artwork as the ultra-wealthy look for new assets in which to place their money.  The point to take away from this is that there’s a notable split between the economics for the average American versus the wealthier American.

So how does that impact the daily shopping in the grocery store?  What I’m noticing over the months leads to this question:  is the product mix on the store shelves beginning to disproportionately affect the lower-income level consumers as their best alternatives for products are either removed completely or replaced with lower-quality products as grocers rework their product mix in order to survive?

The key point to remember about grocery retail is that it’s a business with extremely low profit margins and that with a limited amount of shelf and freezer space, products have to have a sufficient amount of profit or they’ll be removed and replaced with an item that’s more profitable.  Grocers do pay attention to this metric and are constantly re-evaluating their product mix in order to maximize their own bottom-line.  What I’ve noticed is that the grocers are slowly – and thus far on a small scale – removing items from the shelves that are better for customers but worse for their bottom line.  It began over a year ago when one of the grocers – an independent – simply removed the two baby-related items (23.4 ounce Enfamil formula and a store-brand case of size 3 diapers) from their shelves entirely.  That formula is no longer sold as the selection was thinned out and the store brand cases of diapers were eliminated.  Parents with children could still purchase the size 3 store brand diapers, but in the smaller packaging with a higher per-diaper cost.  About three months ago, the second of the three retailers likewise removed their case of size 3 store brand diapers from all of their stores – I checked multiple locations in that chain each month – so that that option was no longer available for the family with small children.  Again, the smaller packaging was available, but it’s more expensive on a per-diaper basis.

Another instance pertains to the sale of 80% lean ground beef.  Over the past several months, one of the grocers – which has also removed the case of store-brand diapers from the shelves – has eliminated 80% lean ground beef from its meat case; it still sells the leaner ground beef at various percentages (85 and 93) as well as the less expensive 73% that is sold in a tube.  Please note that this same 73% ground beef tube is sold in all of the stores.  Given that the markup is progressively higher for each lean/fat category as it increases, the grocer is implicitly stating that the low cost mass produced 73% lean container will be available for the low-end market but that the profit mix is best served by eliminating the 80% and pushing the higher end, more profitable ground meats.  We’ve become used to the sales pitch that leaner meat is better and more will hopefully – for the grocer – purchase the less-fat ground beefs; what’s interesting was that in researching this article, I found that the yield of actual cooked meat was most cost-effective for the 73% lean than the higher leans since a pound of 73% lean after cooking left 11 ounces of meat while the far more expensive 93% lean left only 12.75 ounces of meat after cooking.  The lost weight was due to fat that was able to be drained away.  In this particular instance, it might be a mixed blessing for the lower-echelon consumer if he is willing to be serious about draining the fat from the cooking.

There’s early initial evidence that the same issue is occurring with both hot dogs and tuna as well.  One grocer has eliminated the store-brand hot dog in entirety while I’m noticing that another grocer is starting to not carry store-brand tuna; I’ll be checking the various locations for that grocer in the next several months to verify whether that is or isn’t the situation.

This is assuredly a small sample on a local level and I’m not going to fight to show that it may or may not be occurring nationally.  But it is indeed occurring here and my concern is that if it continues, what is starting on a very small scale will accumulate to more and more products that are, on the whole, detrimental to the family trying to make the monthly budget work.

And because a full update hasn’t been shown in several months, here is the listing of Total and Food-Only Index results going back to December 2014.


PracticalDad Price Index – September 2015
Month Total Index Food-Only Index Spread
9/15 105.21 107.12 1.91
8/15 104.96 106.97 2.01
7/15 106.30 107.35 1.05
6/15 107.11 106.46 (.65)
5/15 107.56 107.74 .18
4/15 108.21 110.20 1.99
3/15 107.89 109.50 1.61
2/15 109.42 112.08 2.66
1/15 111.32 114.00 2.68
12/14 111.18 115.13 3.95

College Education and “Skin in the Game”

I think that the kids need to have some skin in the game…

       Tech Guy and Father to the PracticalDad

This comment was made to me several days ago, just a day after both Middle and another posted a video about Bernie Sanders proposing free college tuition for all Americans.  Taped in a conference room at his Burlington, Vermont campaign headquarters, candidate Sanders restates the issue – higher education is unaffordable to hundreds of thousands of young Americans – and follows with both a plan and a plea.  Since I’m unable to find this video outside of Facebook, I’m providing a link to a CNN interview with Wolf Blitzer in which the same proposal is discussed.  Please understand that you have to get through a short segment on Hillary Clinton as a setup for the interview.

As full disclosure, I like Bernie Sanders even though I’m nowhere near a socialist in my leanings.  When he gave a filibuster in late 2010, I made it a point to have the kids watch – even if only for a few minutes – so that they could see a filibuster in action and his name has come up in later discussions with the kids.  The problem is painfully and correctly obvious.  We’ve allowed a system to be created that predicates supposed achievement and financial security upon the acquisition of a degree that can cripple a young adult’s prospects for more than a few years and the cumulative level of student debt now surpasses the national level of credit card debt.  The mantra in the PracticalDad household for the past eight years has been we need to get you through college with as little debt as humanly possible and Eldest is almost at that point now.  So how do we make this happen for the millions of other young Americans?

What Sanders proposes is a popular two-fer, free tuition for all young Americans to be funded by a transaction tax upon each stock trade made on all equity markets across the country.  Get the youngsters excited while simultaneously sticking it to Wall Street.  The transaction tax specifically is a $.50 fee made upon each market transaction by all entities that trade in the exchanges and is what is referred to generically as a Tobin Tax, in honor of the man who first proposed the concept several years ago.  It is partially based upon the number of shares in any particular transaction, so a hedge fund moving 100,000 shares of a company would pay the tax while Joe Six-pack moving 100 shares of the same company in his own transaction would not.  The fees would be aggregated and then used to fund the tuition for any college student in the country, at any public school.

But here’s where the Tobin Tax concept becomes interesting.  The equity markets have reached the point at which more than 2/3 of all transactions are now done via HFT – High Frequency Trading – aka what is now nicknamed Skynet.  In other words, high speed algorhythmic programs running out of the TBTF banks and hedge funds across what is considered Wall Street.  The key idea behind the original concept was to somehow curb the amount of HFT trading so that that small group of investors would no longer have an outsized advantage on the rest of the public; by the time that Joe Six-pack can place a single sell order, an algorhythmic HFT program can execute dozens for a distinct advantage.  HFT wouldn’t be outlawed but it would be curbed.  The potential tax revenue on this would, by estimate of 2008 transactional data for all forms of financial instrument trades – stocks, bonds, swaps, etc – amount to greater than $300 Billion and even if the result of the transaction tax is a 50% reduction in the number of trades, the proceeds would approximate $175 Billion.  And that’s with a five year old report based upon trade data from 2008.  As angry as Main Street has become with Wall Street’s predation and apparent control of the levers of political power via campaign contributions, Sanders’ proposal has the potential for some serious popular legs.

But after thinking about the proposal, I have two issues with it and neither pertains to the Tobin Tax, but instead the notion of free tuition itself.  The first concern is more pragmatic – what’s the point of paying for every young American’s tuition if there’s no real, sustainable-living wage job available for him or her upon completion?  It’s a lovely notion that Junior can achieve a more affordable education but at the end of the day, the point of higher education is ultimately to prepare people to take their places as productive members of society.  It’s hard to be productive if there isn’t enough economic activity to support said jobs and the end result is that the youngsters continually return to gather even more credits because there’s nothing else to do.  Taken to it’s logical conclusion, the program eventually costs even more because the kids just go to school instead of being gainfully employed.  Without sustainable, living-wage jobs for them, this is akin to nothing more than refueling airplanes so that they can maintain holding patterns instead of being able to land and letting the passengers get on with their lives.  Sanders is correct in that he makes this a concrete proposal as part of a larger package of actions that have to occur.

The other issue is more philosophic.  Should we put together and sponsor a package in which something such as the tuition for higher education is free or should we, as a society, make the statement that it has sufficient value that the student and/or family should still put something towards it?  In other words, assure that the student has some skin in the game, as the other father stated to me later.  I believe that it’s human nature that we have more appreciation for that in which we’ve had a personal stake.  How many of us parents have seen kids take greater care of those items where there’s a personal investment?  If you want to make it a sliding scale tuition based upon income, then so be it; but society can still absorb sufficient of the cost that the amount owed isn’t punitive or exhausting to the payer.  Part and parcel of the philosophy piece – dark as it is – is the notion that there is no such thing as a free lunch (TINSTAAFL).  Even if there’s no ticketed monetary cost to be paid, there exists the prospect that the price will be paid in other forms and in this case, the prospect of some form of compulsory national service via a re-institution of the military draft and/or form of civilian service.  It’s an old idea that has been kicked around first by one side and then another but as funds go to one particular group and others believe their ox to be gored, the resultant clamor could result in such a deal being reached.  Hey, the kids are getting free tuition and money’s tight elsewhere…why not let them pay it back another way?  Some can disagree that it might ever happen and some can disagree that it’s a bad thing, but the prospect exists and it needs to be out there before any final decision is reached.

The issue might seem insurmountable given the barrage of commentary from one side and another amidst a 24/7 newscycle.  But it’s good to remember that our country has made such statements about the value of public higher education before and each in times more troubled than these.  The great land-grant universities – Berkeley, Purdue, Penn State and the like – arose out of legislation passed during the Civil War and the GI Bill arose out of the ashes of the Second World War.  And these were far greater fights than what would be faced with the Wall Street crowd.