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I Advice - Social Security Bullshit: A Socratic Discussion with a Texas Cowboy at McDonald's
Are you advertising your vacancies online?According to statistics published by the Interactive Advertising Bureau (the trade association for internet marketing industry), searching for jobs is the fastest growing activity on the internet - and the fifth most popular search after travel and holidays.Online advertising offers your business a fast and efficient way to recruit – you can post an advert right now and have applications coming through within minutes.Compared to using recruitment agencies, it also offers a much cheaper way to hire (online adverts range from ?100 - ?200 for 28 days). But there are also websites offering free advertising such as UK Recruiter Reed (reed.co.uk).But there are some key points to observe in order to ensure you get the best out of online advertising:1. Select The Right Job Site For Your Business/MarketWhether it’s a broad ‘horizontal site’ that advertises jobs across all sectors (e.g. Monster, Total Jobs, Seek) or a specialist ‘vertical site’ focussed on particular industries – or indeed both. Do your research and choose the right site for you.2. Always Quote A Salary RangeAvoid writing lines like “competitive salary” Most people will search jobs by salary range, so if your vacancy does not have a salary, their search won’t pick it up.3. Be Very ClearTo ensure you avoid CVs from irrelevant candidates, be very clear about the 3 to 4 key skills or areas of expertise you are looking for.4. No Agencies PleaseIt is typical practice for recruitment agencies to ‘ad chase’ as part of their marketing. So, unless you want to be deluged with a series of calls from recruitment consultants offering their services, I suggest you write clearly and boldly “No agencies please” at the bottom of the advert.5. Dare To Be DifferentLook at the adverts from a candidate’s point of view and think about how you can make yours stand out from the hundreds of others. You need to do more than just quote salary and regular benefits. Can you promote career prospects, flexible work patterns, your unique culture or other perks of the job to make it stand out?6. Keep Testing & LearningThe beauty of online advertising is that you can change or
Cowboy: I don’t care that much about retirees in 2150. How can I get out of paying double?
Economist: Most privatization plans will borrow trillions for the transition to avoid paying double.
Cowboy: But won’t I end up paying interest on the money?
Economist: Yes, if you don’t pay double immediately, you, society can pay the interest and pay it off slowly. Either way, there are transition costs if you switch systems.
Economist: But if we continue with a pay-as-you go system, we never have to pay it off completely. In effect, we will continue to owe every 65-year-old. They eventually pass away but are replaced by new retirees.
Cowboy: But if we switch to a private system?
Economist: If we switch to a private system, we have to pay off all the current people who have contributed to the old system and save for our own retirement.
Cowboy: Let me get this right, if we continue with the pay-as-you-go system we never have to pay the transition cost?
Economist: In effect we roll over the obligation from one generation to the next.
4. The cost of risk
Economist: There is another cost – which could informally be called the cost of risk – which privateers have largely ignored, but the risk is the most vocally
Generally, real estate provides capital appreciation and depreciation. Yet, certain real estate investments such as commercial property generate annual income. In order to provide tax deductions in the form of depreciation expense, interest expense and property taxes, the real estate income property has to be directly managed.Commercial real estate refers to the particular class of real estate. It is also referred to as investment or income. Some popular examples of commercial real estate properties are office buildings, restaurants or retail, to name a few. Commercial property, unlike residential real estate, is evaluated, bought and sold based purely on numbers. That is a set of factors that describe what type of return in investment you can expect with the property. Subsequently, most commercial real estate is expected to make a return for you on an ongoing (monthly) basis.Ideally, commercial real estate yield long term income, but it also demonstrates stability. However the investment funds stability is dependent upon the type of property that you invest in. Because there is a high turn over rate, most funds of the commercial investment property tend to constantly change. This change does not have a constant percentage. It manifests itself into a wide range of property.The empowerment that commercial property has is directly related to the outstanding returns provided by the commercial property. The commercial real estate also renders opportunities to obtain equities and bonds. More over, property investment has vast characteristics and qualities. It is a prosperous tool, and it should be utilized properly to receive the inevitable high return. Again, commercial real estate investment is a considerable source for long term income, yet factors may influence your decision to invest directly or indirectly into a property.To recollect, the commercial property investment has advantages such as those previously discussed; long term cash flow (fund) with principle and interest, high rate turnover, positive performance which increases stability as well as transference of maintenance fees. However, there are also commercial real estate risks. One of the major risks for commercial real estate investment is that i
Economist: This McDonald’s sure seems busy for being in the middle of nowhere.
Cowboy: President Bush is having a town meeting on Social Security privatization. Supporters and some demonstrators are here.
Economist: They handed me some brochures on privatization when I walked in. Unfortunately, it’s mostly sound bites and, while not outright lies, bullshit.
Cowboy: They handed me some brochures also. Some of it is obviously bullshit, wrapping oneself in the flag, family values and call the other side names, but I can’t tell if the economics is bullshit or not.
Economist: Look at this nice picture of a happy, smiling family in this privatization brochure – parents, children, and grandma – all happy to have their Social Security privatized.
Cowboy: They look like they just received huge checks from their private accounts.
Economist: But people investing in private accounts will not receive Social Security checks for decades.
Cowboy: In Texas, being so happy about money that one might earn in 2040 is counting your eggs before they hatch, but they are probably just models in the photograph.
Economist: If Social Security is privatized, some people will profit immediately.
Cowboy: Let me guess, one is Wall Street.
Economist: Wall Street will earn money from handling everyone’s retirement money. But to be fair, most supporters of privatization, privateers as I like to call them, realize this and include these brokerage costs in their estimates.
Cowboy: Who else will immediately profit from privatization?
Economist: If people start investing Social Security money in stocks, such as Hilton Hotel stock, what do you think will happen to the price of Hilton Hotel stock?
Cowboy: The price of Hilton Hotel stock will rise.
Economist: And who owns Hilton Hotel stock?
Cowboy: Paris Hilton, the Hilton Family, corporate executives, and other investors.
Economist: As the price of stock rises, Paris Hilton and other millionaires will benefit immediately. They should put a picture of Paris Hilton on their privatization brochures.
Cowboy: Will Paris Hilton buy our stock back at a higher price in 20 years when we retire?
Economist: It’s highly unlikely that millionaires will fund Social Security by selling stock low and buying stock high. But it’s a rather long and complex question.
Cowboy: But if millionaires and Wall Street are going to profit immediately, aren’t the rest of us going to have less?
Economist: It definitely means less for the rest of us – unless the economic pie grows. But there are also more costs of a privatized Social Security.
2. Free money for families and claim the moral high ground of family values.
Economist: This looks interesting for its audacity. This foundation says that it’s a “violation of family values” if you can die at 64 and your family gets nothing from all the Social Security payments you made all your life.
Cowboy: Well, if I die at 64, my family gets my land. I would guess that most people would leave their house and other assets to their family if they die at 64. Those without assets or those with young children should buy life insurance.
Economist: But wouldn’t it be nice if you could give all your Social Security to your family if you died at 64?
Cowboy: Yes, it would be nice if my family got an extra few hundred thousand dollars if I died before my 65th birthday. But wait, who is going to pay the extra hundreds of thousands of dollars to my family – the hundred thousand dollars that would go to other beneficiaries? It sounds like the foundation is trying to sell me a free lunch. Aren’t conservatives usually against free handouts?
Economist: I think the foundation would argue that it’s not a government handout, since it would be a return of your Social Security money – but that still leaves less money in the system for others.
Economist: If you die at 65, aside from being dead, you are also out of luck in that you paid Social Security all your life. But what if we live to 95?
Cowboy: We are here eating lunch at McDonalds so I don’t know if we will live to 95, but if we do, we will get years of Social Security checks.
Economist: The goal of Social Security is not to provide inheritances to younger generations.
Economist: But this added inheritance “life insurance” plan is not even a good life insurance plan, since a family with a younger father, say 30 years old, needs more to get his children through school, and there is unlikely to be much money saved while working in his twenties. While if a person dies at 64, he has probably already supported his family.
Cowboy: Doesn’t the private market already sell life insurance?
Economist: Yes, the private, free market does have a competitive life insurance market – but that is not stopping privateers from offering free insurance.
Economist: Introducing phrases like “violation of family values” is logical fallacy known as appeals to emotion.
Cowboy: Let me get this straight, Wall Street gets money for stock brokering, the Paris Hiltons of the world are going to get money from the increase in stock prices, and the families of everyone who dies before 65 will inherit money. Where is this money going to come from?
Economist: It’s going to come from the “magic” of compound interest, and we are all going to get rich in the stock market. (Laughing) But, seriously, I am getting there.
3. Transition Costs – Paying Double
Economist: In addition to Paris Hilton, other millionaires, Wall Street, and families that inherit, there are also the transition costs of paying today’s retirees, in addition to saving for your own retirement.
Cowboy: But here it says that the transition costs are offset but the reduction in future obligations.
Economist: Technically it’s true that if you and our generation pay double, the government will no longer have to pay the next generation – but you still have to pay double. Doesn’t that make you happy, that you can pay double, and the government will thank you for lowering the government’s future obligation to retirees in 2150?
Cowboy: I don’t care that much about retirees in 2150. How can I get out of paying double?
Economist: Most privatization plans will borrow trillions for the transition to avoid paying double.
Cowboy: But won’t I end up paying interest on the money?
Economist: Yes, if you don’t pay double immediately, you, society can pay the interest and pay it off slowly. Either way, there are transition costs if you switch systems.
Economist: But if we continue with a pay-as-you go system, we never have to pay it off completely. In effect, we will continue to owe every 65-year-old. They eventually pass away but are replaced by new retirees.
Cowboy: But if we switch to a private system?
Economist: If we switch to a private system, we have to pay off all the current people who have contributed to the old system and save for our own retirement.
Cowboy: Let me get this right, if we continue with the pay-as-you-go system we never have to pay the transition cost?
Economist: In effect we roll over the obligation from one generation to the next.
4. The cost of risk
Economist: There is another cost – which could informally be called the cost of risk – which privateers have largely ignored, but the risk is the most vocally
It's so tempting isn't it? Work is not going well. Or you have a deadline looming. Or you've got to update your accounts. Much easier to make endless trips to the fridge to fill up on snacks!But when you start working at home, it can be alarming how quickly the pounds creep up, just because food is so available. And you bitterly regret all those snacks next time you get on the scales or try to do up something you haven't worn for a while.Now, a normal office is not always the easiest place to control overeating either - everyone brings cakes and candy to share for the most minor celebration, and you have more opportunity for social type eating and drinking at lunch and after work. But a full fridge is a bigger threat - after all no one is watching you like they would be if you had three pieces of the cake at work!Keeping out of the kitchen altogether would be one solution. You could pack your lunch and healthy snacks before you start the day, have a supply of cool drinks and set up tea and coffee making facilities in your home office - pretend you don't have a kitchen. But most of us won't do that. We like being at home because we have access to all the facilities that home offers. Sometimes it's great to be able to start dinner early or do a couple of chores while we take a breather from our other tasks.But there are a few things you CAN do without making the kitchen and the fridge a "no-go" area.Make your lunch before you begin work - or at least know exactly what you are going to have. This way you are less likely to dive for the nearest fattening snack because you suddenly noticed you worked way past the point when you should have eaten and you are ravenous.Also prepare some healthy snacks so that you can grab them from the fridge and go. Sticks of carrot, cucumber, celery and the like make great nibbles when you haven't time to stop for a full meal. Put a tablespoonful of low-calorie dip into a small bowl if you don't like them just as they are.If you know you are going to be grazing all day - plan for 5 or 6 mini-meals throughout the day, rather than grazing AND eating a whole lunch. While this might be impractical in an office, at home you can do exactly as you like - make the mo
Cowboy: Who else will immediately profit from privatization?
Economist: If people start investing Social Security money in stocks, such as Hilton Hotel stock, what do you think will happen to the price of Hilton Hotel stock?
Cowboy: The price of Hilton Hotel stock will rise.
Economist: And who owns Hilton Hotel stock?
Cowboy: Paris Hilton, the Hilton Family, corporate executives, and other investors.
Economist: As the price of stock rises, Paris Hilton and other millionaires will benefit immediately. They should put a picture of Paris Hilton on their privatization brochures.
Cowboy: Will Paris Hilton buy our stock back at a higher price in 20 years when we retire?
Economist: It’s highly unlikely that millionaires will fund Social Security by selling stock low and buying stock high. But it’s a rather long and complex question.
Cowboy: But if millionaires and Wall Street are going to profit immediately, aren’t the rest of us going to have less?
Economist: It definitely means less for the rest of us – unless the economic pie grows. But there are also more costs of a privatized Social Security.
2. Free money for families and claim the moral high ground of family values.
Economist: This looks interesting for its audacity. This foundation says that it’s a “violation of family values” if you can die at 64 and your family gets nothing from all the Social Security payments you made all your life.
Cowboy: Well, if I die at 64, my family gets my land. I would guess that most people would leave their house and other assets to their family if they die at 64. Those without assets or those with young children should buy life insurance.
Economist: But wouldn’t it be nice if you could give all your Social Security to your family if you died at 64?
Cowboy: Yes, it would be nice if my family got an extra few hundred thousand dollars if I died before my 65th birthday. But wait, who is going to pay the extra hundreds of thousands of dollars to my family – the hundred thousand dollars that would go to other beneficiaries? It sounds like the foundation is trying to sell me a free lunch. Aren’t conservatives usually against free handouts?
Economist: I think the foundation would argue that it’s not a government handout, since it would be a return of your Social Security money – but that still leaves less money in the system for others.
Economist: If you die at 65, aside from being dead, you are also out of luck in that you paid Social Security all your life. But what if we live to 95?
Cowboy: We are here eating lunch at McDonalds so I don’t know if we will live to 95, but if we do, we will get years of Social Security checks.
Economist: The goal of Social Security is not to provide inheritances to younger generations.
Economist: But this added inheritance “life insurance” plan is not even a good life insurance plan, since a family with a younger father, say 30 years old, needs more to get his children through school, and there is unlikely to be much money saved while working in his twenties. While if a person dies at 64, he has probably already supported his family.
Cowboy: Doesn’t the private market already sell life insurance?
Economist: Yes, the private, free market does have a competitive life insurance market – but that is not stopping privateers from offering free insurance.
Economist: Introducing phrases like “violation of family values” is logical fallacy known as appeals to emotion.
Cowboy: Let me get this straight, Wall Street gets money for stock brokering, the Paris Hiltons of the world are going to get money from the increase in stock prices, and the families of everyone who dies before 65 will inherit money. Where is this money going to come from?
Economist: It’s going to come from the “magic” of compound interest, and we are all going to get rich in the stock market. (Laughing) But, seriously, I am getting there.
3. Transition Costs – Paying Double
Economist: In addition to Paris Hilton, other millionaires, Wall Street, and families that inherit, there are also the transition costs of paying today’s retirees, in addition to saving for your own retirement.
Cowboy: But here it says that the transition costs are offset but the reduction in future obligations.
Economist: Technically it’s true that if you and our generation pay double, the government will no longer have to pay the next generation – but you still have to pay double. Doesn’t that make you happy, that you can pay double, and the government will thank you for lowering the government’s future obligation to retirees in 2150?
Cowboy: I don’t care that much about retirees in 2150. How can I get out of paying double?
Economist: Most privatization plans will borrow trillions for the transition to avoid paying double.
Cowboy: But won’t I end up paying interest on the money?
Economist: Yes, if you don’t pay double immediately, you, society can pay the interest and pay it off slowly. Either way, there are transition costs if you switch systems.
Economist: But if we continue with a pay-as-you go system, we never have to pay it off completely. In effect, we will continue to owe every 65-year-old. They eventually pass away but are replaced by new retirees.
Cowboy: But if we switch to a private system?
Economist: If we switch to a private system, we have to pay off all the current people who have contributed to the old system and save for our own retirement.
Cowboy: Let me get this right, if we continue with the pay-as-you-go system we never have to pay the transition cost?
Economist: In effect we roll over the obligation from one generation to the next.
4. The cost of risk
Economist: There is another cost – which could informally be called the cost of risk – which privateers have largely ignored, but the risk is the most vocally
Today's Myatt on Mondays question comes from a CEO who asks: How can I get more leverage out of our meetings? While this might seem like a strange question to be posed by a CEO, I'm afraid it is all too common that most meetings are not nearly as productive as they could be. I chose this question to answer out of more than 150 questions submitted this week primarily because non-productive meetings are a huge pet-peeve of mine. Whether meetings are held at the board, executive, management or staff levels, or whether they are small project related meetings or large company wide meetings the same basic principles apply to making meetings effective. In this blog post I'll provide you with some basic do's and don'ts that will help you get more out of your meetings.Early in my career I worked for a company where the CEO loved to have meetings. Meetings were held ad-nauseum about virtually every topic under the sun. While these meetings were well intentioned as the CEO truly valued the input of others, regrettably these meetings rarely resulted in anything being accomplished, and in fact, because the meetings were poorly conceived and poorly facilitated it turned out that most meetings just ended-up being rehashing sessions for the subjects of prior meetings that were never resolved. Meetings that are not productive not only serve no purpose but they waste one of the most precious resources that a company has...time. One of the great cardinal sins a corporation can make is to take its top talent away from productive activities and sequester them away for a mind-numbing babble session. Bad meetings are not only a productivity drain, but they also can cause a decline in moral and a lack of confidence in leadership.The reality is that there is no excuse to hold a non-productive meeting. I won't attend a meeting unless it is a good use of my time. You won't see my smiling face in attendance at a meeting unless I know why the meeting is being called, who's going to be in attendance, what the objectives (preferably hard deliverables) are for the meeting and unless an agenda has been circulated in advance of the meeting allowing for proper preparation. Following is a more detailed breakdown of Myatt's 10 rules for productive meetings:1. Cultu
Cowboy: Well, if I die at 64, my family gets my land. I would guess that most people would leave their house and other assets to their family if they die at 64. Those without assets or those with young children should buy life insurance.
Economist: But wouldn’t it be nice if you could give all your Social Security to your family if you died at 64?
Cowboy: Yes, it would be nice if my family got an extra few hundred thousand dollars if I died before my 65th birthday. But wait, who is going to pay the extra hundreds of thousands of dollars to my family – the hundred thousand dollars that would go to other beneficiaries? It sounds like the foundation is trying to sell me a free lunch. Aren’t conservatives usually against free handouts?
Economist: I think the foundation would argue that it’s not a government handout, since it would be a return of your Social Security money – but that still leaves less money in the system for others.
Economist: If you die at 65, aside from being dead, you are also out of luck in that you paid Social Security all your life. But what if we live to 95?
Cowboy: We are here eating lunch at McDonalds so I don’t know if we will live to 95, but if we do, we will get years of Social Security checks.
Economist: The goal of Social Security is not to provide inheritances to younger generations.
Economist: But this added inheritance “life insurance” plan is not even a good life insurance plan, since a family with a younger father, say 30 years old, needs more to get his children through school, and there is unlikely to be much money saved while working in his twenties. While if a person dies at 64, he has probably already supported his family.
Cowboy: Doesn’t the private market already sell life insurance?
Economist: Yes, the private, free market does have a competitive life insurance market – but that is not stopping privateers from offering free insurance.
Economist: Introducing phrases like “violation of family values” is logical fallacy known as appeals to emotion.
Cowboy: Let me get this straight, Wall Street gets money for stock brokering, the Paris Hiltons of the world are going to get money from the increase in stock prices, and the families of everyone who dies before 65 will inherit money. Where is this money going to come from?
Economist: It’s going to come from the “magic” of compound interest, and we are all going to get rich in the stock market. (Laughing) But, seriously, I am getting there.
3. Transition Costs – Paying Double
Economist: In addition to Paris Hilton, other millionaires, Wall Street, and families that inherit, there are also the transition costs of paying today’s retirees, in addition to saving for your own retirement.
Cowboy: But here it says that the transition costs are offset but the reduction in future obligations.
Economist: Technically it’s true that if you and our generation pay double, the government will no longer have to pay the next generation – but you still have to pay double. Doesn’t that make you happy, that you can pay double, and the government will thank you for lowering the government’s future obligation to retirees in 2150?
Cowboy: I don’t care that much about retirees in 2150. How can I get out of paying double?
Economist: Most privatization plans will borrow trillions for the transition to avoid paying double.
Cowboy: But won’t I end up paying interest on the money?
Economist: Yes, if you don’t pay double immediately, you, society can pay the interest and pay it off slowly. Either way, there are transition costs if you switch systems.
Economist: But if we continue with a pay-as-you go system, we never have to pay it off completely. In effect, we will continue to owe every 65-year-old. They eventually pass away but are replaced by new retirees.
Cowboy: But if we switch to a private system?
Economist: If we switch to a private system, we have to pay off all the current people who have contributed to the old system and save for our own retirement.
Cowboy: Let me get this right, if we continue with the pay-as-you-go system we never have to pay the transition cost?
Economist: In effect we roll over the obligation from one generation to the next.
4. The cost of risk
Economist: There is another cost – which could informally be called the cost of risk – which privateers have largely ignored, but the risk is the most vocally
Thinking of the bigger picture, of the success of the organization, this has the potential of being the most important and the most dangerous attribute in this series of Managing Your Team.Perhaps it's human nature, maybe it's all to do with power and influence - there can be a tendency to accept, without question, statements made by those in a position of power or those we regard as experts in their field.Within your organization, you'll know 'the rules'. You'll know what can be said, what can be questioned and who can be questioned. I've been there and have to say that I didn't always get it right.I can only hope that your organization believes in the real practical value of empowering individuals to develop and add value in an open and structured environment.Even if it's not, the purpose of this article is to...Ask you, as team leader, to create and maintain the team environment within which openness is encouraged, and all team members feel enabled and safe to question statements made and conclusions reached. Allow them to take a riskWhy is this important?From the day we discovered the world was round to landing on the moon, from the quill to the laptop - where would be today if nobody questioned, if nobody challenged, if nobody felt enabled to take a risk?I am not suggesting we create a free for all. The emphasis still needs to be on adhering to the agreed ground rules and following a structured, systematic approach. Having said that, as leaders of our team, we can lead by example - we can get into the habit of presenting facts and supporting data not opinions. We can remind the team how successful we / they have been by following a behaviour of fact driven, data supported problem solving/decision making.Give real examples to support argument, especially if you have examples of disastrous outcomes when decisions were based solely on opinion. This behaviour sets clear expectations in the minds of our team members.Everyone benefits, you, the team, the organization, the customer.Why should this behaviour be encouraged?It's likely some team members will be reluctant to question other team members or authority figures with a younger father, say 30 years old, needs more to get his children through school, and there is unlikely to be much money saved while working in his twenties. While if a person dies at 64, he has probably already supported his family.
Cowboy: Doesn’t the private market already sell life insurance?
Economist: Yes, the private, free market does have a competitive life insurance market – but that is not stopping privateers from offering free insurance.
Economist: Introducing phrases like “violation of family values” is logical fallacy known as appeals to emotion.
Cowboy: Let me get this straight, Wall Street gets money for stock brokering, the Paris Hiltons of the world are going to get money from the increase in stock prices, and the families of everyone who dies before 65 will inherit money. Where is this money going to come from?
Economist: It’s going to come from the “magic” of compound interest, and we are all going to get rich in the stock market. (Laughing) But, seriously, I am getting there.
3. Transition Costs – Paying Double
Economist: In addition to Paris Hilton, other millionaires, Wall Street, and families that inherit, there are also the transition costs of paying today’s retirees, in addition to saving for your own retirement.
Cowboy: But here it says that the transition costs are offset but the reduction in future obligations.
Economist: Technically it’s true that if you and our generation pay double, the government will no longer have to pay the next generation – but you still have to pay double. Doesn’t that make you happy, that you can pay double, and the government will thank you for lowering the government’s future obligation to retirees in 2150?
Cowboy: I don’t care that much about retirees in 2150. How can I get out of paying double?
Economist: Most privatization plans will borrow trillions for the transition to avoid paying double.
Cowboy: But won’t I end up paying interest on the money?
Economist: Yes, if you don’t pay double immediately, you, society can pay the interest and pay it off slowly. Either way, there are transition costs if you switch systems.
Economist: But if we continue with a pay-as-you go system, we never have to pay it off completely. In effect, we will continue to owe every 65-year-old. They eventually pass away but are replaced by new retirees.
Cowboy: But if we switch to a private system?
Economist: If we switch to a private system, we have to pay off all the current people who have contributed to the old system and save for our own retirement.
Cowboy: Let me get this right, if we continue with the pay-as-you-go system we never have to pay the transition cost?
Economist: In effect we roll over the obligation from one generation to the next.
4. The cost of risk
Economist: There is another cost – which could informally be called the cost of risk – which privateers have largely ignored, but the risk is the most vocally
Let's play a little fun experiment. Get a friend to stand next to you and without warning, begin pushing against her. What do you expect her reaction to be? Of course! To maintain balance, she'll heave back.But don't stop there. Push harder, even harder. Observe how she returns exactly the same force (maybe she'll even throw in a slap if you push in the wrong place).What's the moral of the story? Every push merits a counter shove. Newton's third law of thermodynamics eloquently states the principle, "For every force is an equal and opposite force."In real life negotiations, this simple fact is often overlooked to the detriment of both parties. Someone would raise a controversial point to which the rival party disagrees. The opposing team then launches a vigorous contradiction. In response, the proponent staunchly defends his position. Voices rise and tempers flare. Productivity spirals. If no one has the sense to realize the futility of direct argumentation, the negotiation ends in a deadlock.In my seven years of spearheading real estate negotiations for the family company, I've learned one valuable lesson: when presented with a viewpoint opposite to yours, NEVER argue right away. You simply invite retaliation. The harder you disagree, the deeper your opponent digs in. This is a battle of egos-- no one desires to be proven wrong!Fortunately, there is a powerful technique that savvy negotiators deploy in order to defuse tension and quickly channel support to their side. Already eager to unleash it? Here's your simple three step plan: 1) acknowledge the other party, 2) show partial agreement with their stance, 3) then suavely insert your views. This formidable method allows to to avoid presenting an "opposing force" which invites retaliation. Master negotiators call this the FEEL, FELT, FOUND Technique. Commit this to memory and you can easily and naturally recover from any objection or argument!Let's see how this technique allows you to defuse any tension:CASE ONE:Buyer: I don't think I'll take your product. Your price is too highYou: I can understand exactly how you FEEL because others have FELT exactly the same way. But you know what they've FOUND? We offer the widest array of free
Cowboy: I don’t care that much about retirees in 2150. How can I get out of paying double?
Economist: Most privatization plans will borrow trillions for the transition to avoid paying double.
Cowboy: But won’t I end up paying interest on the money?
Economist: Yes, if you don’t pay double immediately, you, society can pay the interest and pay it off slowly. Either way, there are transition costs if you switch systems.
Economist: But if we continue with a pay-as-you go system, we never have to pay it off completely. In effect, we will continue to owe every 65-year-old. They eventually pass away but are replaced by new retirees.
Cowboy: But if we switch to a private system?
Economist: If we switch to a private system, we have to pay off all the current people who have contributed to the old system and save for our own retirement.
Cowboy: Let me get this right, if we continue with the pay-as-you-go system we never have to pay the transition cost?
Economist: In effect we roll over the obligation from one generation to the next.
4. The cost of risk
Economist: There is another cost – which could informally be called the cost of risk – which privateers have largely ignored, but the risk is the most vocally expressed complaint about privatization.
Cowboy: I don’t like risk, but what does risk cost me?
Economist: You don’t get a bill in the mail for risk, but people are willing to pay to avoid risk. Suppose there were two possible retirement plans:
Plan A: $1000 per month guaranteed.
Plan B: $800 per month if the stock market is low when you retire (50% of time) or $1200 per month if the stock market is high when you retire (other 50% of time).
Cowboy: I would take the guaranteed $1000 per month. Living with $200 less, only $800 per month, would be a lot harder and not compensated by the chance of $200 extra.
Economist: The economic reason for taking the less risky option is being “risk adverse” because of the “law of decreasing marginal utility of income.”
Cowboy: OK, if you say so, but it’s been a few years since I was in college.
Economist: Suppose I changed the plans to:
Plan A: $1000 per month guaranteed.
Plan B: $800 per month if the stock market is low when you retire (50% of time) or $1300 per month if the stock market is high when you retire (other 50% of time).
which is the same as before except $1,300 per month is the good result.
Cowboy: I might take the gamble for $1300, but it would be a close, hard decision. I would definitely take it for $1400.
Economist: Lets say it’s $1300. You get $800 if the market is low and $1300 if the market is high, an expected value of $1050, but you would be just as happy with $1,000 for sure.
Cowboy: They sound the same but someone is paying $50 more. Somebody must be paying $50?
Economist: In order to make you as happy as you would be with a sure $1,000, you need an expected risky return of $1050 – which the market would have to pay you just to put you back to your original utility or happiness.
5. African-Americans and the cost of annuities – The insurance company’s cut.
Cowboy: Here it says that African Americans are cheated by the Social Security.
Economist: It’s true that African Americans die sooner after retirement and receive less money after retirement than a similar white person who made the same Social Security contributions while working. But African Americans benefit from the slight progressiveness of Social Security and benefit from disability and survivorship benefits. I haven’t looked at the studies in detail, but others have argued that African Americans receive a better deal overall.
Cowboy: Shouldn’t we try to equalize healthcare so African Americans live longer?
Economist: Yes, I am not a medical doctor, but there could be genetic differences, which we can’t change. For example, women live longer than men.
Cowboy: Should African Americans get more every month when they retire because they are likely to die sooner?
Economist: Private insurance companies will provide African Americans with larger monthly payments, since on average African Americans will collect fewer payments by dieing faster, which brings up a good point: When people retire at age 65, they have to buy an annuity to receive monthly payments the rest of their lives.
Cowboy: Isn’t an insurance company going to take its cut?
Economist: An insurance company is going to take its cut, and there are expenses in selling the annuities. I have seen figures that it costs private insurance companies 15% to 20%, but with a larger government program – it may be possible to get this down to 12%. Twelve percent is what Cato uses for their estimates.
Cowboy: Twelve percent is a huge cut of my retirement! Twelve percent is a huge cut of anyone’s retirement!
Economist: An insurance or other company selling annuities has to invest in bonds, do the actuary work, and take the risk that people live longer than expected. There are real costs.
Economist: This is why white males often earn low returns with Social Security: males don’t live as long as females.
Cowboy: Aren’t private insurance companies going to give less per month to women since women live longer?
Economist: In a free market actuarial system, white women will receive less per month. Did you every see the number of women compared to men in a retirement home?
Cowboy: I don’t see privateers emphasizing that women will receive less in these brochures.
6. What if we don’t require people to buy annuities?
Economist: If we don’t require people to buy annuities when they reach 65 and retire, many people will outlive their savings – and public welfare will end up paying.
Cowboy: But what if some people have enough money, say $2,000,000 in the bank and won’t be a burden to the rest of us?
Economist: A person with $2,000,000 in the bank should not become a burden to us – assuming they don’t gamble it away in Vegas or on risky stocks, but there are other reasons for making everyone buy an annuity.
Economist: Suppose you were sick when you retire at 65, and the doctor told you five years was the most you had to live. Would you buy an annuity?
Cowboy: No, I would live off my savings for five years and leave the rest to my family.
Economist: Right, you would do this avoid leaving your money to an insurance company. But if everyone who was likely to die soon did this?
Cowboy: Only the very healthy people would buy annuities.
Economist: In economics, this is known as “adverse selection.”
Economist: But what if you were sick and the government made you buy an annuity?
Cowboy: I would go to the insurance company, bring my medical reports, and say, I am sick and going to die. You will have to pay me less, so I want to pay you less.
Economist: Exactly, insurance companies will start screening people and profiling people. Health insurance companies want healthy clients who have lower medical bills. In contrast, annuity companies want unhealthy clients because they can stop making the monthly payments when the client dies.
Cowboy: It sounds a bit macabre to me.
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