Thursday, April 12, 2018

Reading New Thoughts: Grinspoon’s Earth in Human Hands and Facing the Climate-Change-Driven Anthropocene Bottleneck

Disclaimer:  I am now retired, and am therefore no longer an expert on anything.  This blog post presents only my opinions, and anything in it should not be relied on.

In my mind, David Grinspoon’s “Earth In Human Hands” raises two issues of import as we try to take a long-term view of what to do about climate change:

1.        How best do we approach making the necessary political and cultural changes to tackle mitigation – what mix of business/market, national/international governmental, and individual strategies?

2.       For the even longer term, how do we tackle a “sustainable” economy and human-designed set of ecosystems?  Grinspoon claims that there are two opposing views on this – that of “eco-modernists” who say that we should design ecosystems based on our present setup, ameliorated to achieve sustainability, and those of “environmental purists” who advocate removal of humans from ecosystems completely.

First, a bit of context.  Grinspoon’s book is a broad summary of what “planetary science” (how planets work and evolve on a basic level, with our example leavened by those of Venus and Mars) has to say about Earth’s history and future.  His summary, more or less, is this:  (a) For the first time in Earth’s history, the whole planet is being altered consciously – by us – and therefore we have in the last few hundred years entered a whole new geological era called the Anthropocene; (b) That new era brings with it human-caused global warming and climate change, which form a threat to human existence, and therefore to the existence of Anthropocene-type “self-conscious” life forms on this planet, a threat that he calls the “Anthropocene bottleneck”; (c) it is likely that any other such planets with self-conscious life forms in the universe face the same Anthropocene bottleneck, and other possible threats to us pale in comparison, so that surviving the Anthropocene bottleneck is a good sign that humanity will survive for quite a while.

Tackling Mitigation

Grinspoon is very forceful in arguing that probably the only way to survive the Anthropocene bottleneck is through coordinated, pervasive global efforts:  in particular, new global institutions.  Translated, that means not “loose cannon” business/market nor individual nor even conflicting national efforts, but science-driven global governance, plus changes in cultural norms towards international cooperation.  Implicitly, I think, his model is that of the physics community he is familiar with:  one where key information, shared and tested by scientific means, informs strategies and reins in individual and institutional conflicts. 

If there is anything that history teaches us, it is that there is enormous resistance to the idea of global enforcement of anything.  I myself tend to believe that it represents one side of a two-sided conflict that plays out in any society – between those more inclined toward “hope” and those inclined toward “fear”, which in ordinary times plays out as battles between “liberals” and “conservatives.” 

Be that as it may, Grinspoon does not say there is not resistance to global enforcement.  He says, however, that global coordination, including global enforcement, is a prerequisite for surviving the Anthropocene bottleneck.  We cooperate and thereby effectively mitigate climate change, or we die.  And the rest of this century will likely be the acid test.

I don’t disagree with Grinspoon;  I just don’t think we know what degree of cooperation will be needed to deal with climate change in order to avoid facing the ultimate in global warming.   What he describes would be ideal; but we are very far from it now, as anyone watching CO2 rise over at Mauna Loa is well aware.   Rather, I think we can take his idea of scientifically-driven global mitigation as a metric and an “ideal” model, to identify key areas where we are falling down now by failing to react quickly, globally, and as part of a coherent strategy to scientific findings on the state of climate change and means of mitigation. 

Designing Sustainability

Sustainability and fighting climate change are not identical.  One of the concerns about fighting climate change is that while most steps toward sustainability are in line with the quickest path to the greatest mitigation, practically, some are not.  This is because, for example, farming almonds in California with less water than typical almond farming does indeed reduce the impact of climate-change-related water shortages, but also encourages consumption of water-greedy almonds.  I would argue, in that case, that the more direct path towards climate-change mitigation (discouraging almond growing while reducing water consumption in general) is better than the quicker path towards sustainability (focus on the water shortage).

This may seem arcane; but Grinspoon’s account of the fight between environmental traditionalists and eco-modernists suggests that the difference between climate-change-mitigation-first and sustainability-first is at least a major part of the disagreement between the two sides.  To put it another way, the traditionalists according to Grinspoon are advocating “no more people” ecosystems which effectively minimize carbon pollution, while the eco-modernists are advocating tinkering incrementally with the human-driven ecosystems that exist in order, apparently, to achieve long-term sustainability – thereby effectively putting sustainability at a higher priority than mitigation.

It may sound as if I am on the side of the traditionalists.  However, I am in fact on the side of whatever gets us to mitigation fastest – and here there is a glaring lack of mention in Grinspoon of a third alternative:  reverting to ecosystems with low-footprint human societies.  That can mean Native American, Lapp, Mongolian, or aborigine cultures, for example.  But it also means removing as far as possible the human impact exclusive of these cultures.

Let’s take a recent example:  the acquisition of Native Americans with conservationist aid of land around the Columbia River to enable restoration and sustainability (as far as can be managed with increasing temperatures) of salmon spawning.  This is a tradeoff:  In return for removal of almost all things exacerbating climate change, possibly including dams, the Native Americans get to restore their traditional culture as far as possible in toto.  They will be, as in their conceptions of themselves, stewards of the land. 

And this is not an isolated example (again, a recent book limns efforts all over the world to take the same strategy).  An examination of case studies shows that even in an impure form, it provides clear evidence of OVERALL negative impact on carbon pollution, while still providing “good enough” sustainability.  Nor do I see reflexive opposition from traditionalists on this one.

The real problem is that this approach is only going to be applicable to a minority of human habitats.  However, it does provide a track record, a constituency, and innovations useful for a far more aggressive approach towards mitigation than the one the eco-modernists appear to be reflexively taking.  In other words, it offers hope for an approach that uses human technology to design sustainable ecosystems, even in the face of climate changes, with the focus on the ecosystem first and the humans second.  The human technology can make the humans fit the ecosystem with accommodation for human present practice, not the other way around.

In summary, I would say that Grinspoon’s idea of casting how to deal with mitigation and sustainability as a debate between traditionalists and modernists misses the point.   With all the cooperation in the world, we still must push the envelope of mitigation now in order to have a better chance for sustainability in the long term.  The strategy should be pushed as far as possible toward mitigation-driven changes of today’s human ecosystems, but can be pushed toward what worked with humans in the past rather than positing an either/or humans/no-humans choice.

Monday, March 5, 2018

Reading New Thoughts: Harper’s Fate of Rome and Climate Change’s Effect On Empires

Disclaimer:  I am now retired, and am therefore no longer an expert on anything.  This blog post presents only my opinions, and anything in it should not be relied on.
Note:  My focus in these “reading new thoughts” posts is on new ways of thinking about a topic, not on a review of the books themselves.
Kyle Harper’s “The Fate of Rome” provides new climate-change/disease take on that perennial hot topic “reasons for the fall of Rome.”  Its implications for our day seem to me not a reason to assume inevitable catastrophe, but a caution that today’s seemingly resilient global economic structures are not infinitely flexible.  I believe that the fate of Rome does indeed raise further questions about our ability to cope with climate change. 
Climate Change’s Effect on the Roman Empire
As I understand it, “Fate of Rome” is presented as a drama in 5 acts:
1.      A “Roman Climatic Optimum” or “Goldilocks” climate in the Mediterrean allows the development of a state and economic system, centered on Rome and supporting a strong defensive military, that pushes Malthusian boundaries in the period up to about 150 AD.
2.      A transitional climatic period arrives, and runs for 200 years.  For several decades, the Plague of Cyprian (smallpox) rages and some regions tip into drought, leading to 10-20% population losses, and massive invasion against a weakened military.  Order is then restored at a slightly lower population level from that in 150 AD.
3.      At about 240 AD, another plague (probably viral hemorrhagic fever) arrives, accompanied by widespread drought in most key food-supplying regions (Levant, north Africa, and above all Egypt).  Northern and eastern borders collapse as the supply of soldiers and supplies dries up.  Again, recovery takes decades, and a new political order is built up, breaking the power of Roman senators and creating a new city “center” at Constantinople.
4.      At around 350 AD, a Little Ice Age arrives.  Climate change on the steppe, stretching from Manchuria to southern Russia, drives the Hsiungnu or Huns westward, pushing the existing Goth society on Rome’s northern border into Roman territory.  Rome’s western empire collapses as this pressure plus localized droughts leads to Gothic conquests of Gaul, Spain, North Africa, and Italy.  Rome itself collapses in population without grain shipments from abroad, but the economic and cultural structure of the western Roman state is preserved by the Goths.  In the early 500s, as the Eastern Empire recovers much of its population and economic strength, Justinian reconquers North Africa and much of Italy, again briefly and partially reconstituting the old Roman Empire.
5.      At 540 AD or thereabouts, bubonic plague driven by changes in climate for its animal hosts in central Asia arrives from the East.  The details of the illness are horrific and it is every bit as devastating as the Black (also bubonic) Plague in medieval times – 50-60 % of the population dead, affecting rich and poor, city and rural equally, with recurrence over many decades.  Only Gaul and the north, now oriented to a different economic and social network, are spared.  Villas, forums, and Roman roads vanish.  The Eastern frontier collapses, again due to military recruit and supply decimation, and a prolonged deathbed struggle with Persia ends in the conquest of most of both by Islam in the early 600s.  The only thing remaining of the old Roman state and its artifacts is a “rump” state in Anatolia and Greece. 
Implications for Today
As Harper appears to view it, the Roman Empire was a construct in some ways surprisingly modern, and in some ways very dissimilar to our own “tribe”-spanning clusters of nation-states.  It is similar to today in that it was a well-knit economic and cultural system that involved an effective central military and tax collection, and could effectively strengthen itself by trade in an intercontinental network.  It is dissimilar in that the economic system (until near the end) funneled most trade and government through a single massive city (Rome) that required huge food supplies from all over the Mediterranean; in that for most of its existence, the entire system rested on the ability of the center to satisfy the demands of regional “elites”, thus impoverishing the non-elite; and in that they had none of our modern knowledge of public health and medicine, and thus were not able to combat disease effectively. 
What does this mean for climate change affecting today’s global society?  There is a tendency to assume, as I have noted, that it is infinitely resilient:  Once disaster takes a rest in a particular area, outside trade and assistance complement remaining internal structures in recovering completely, and then resuming an upward economic path.  Moreover, internal public health, medicine, and disaster relief plus better advance warnings typically minimize the extent of the disaster.  The recovery of utterly devastated Japan after WW II is an example.
However, the climate-change story of Rome suggests that one of these two “pillars of resilience” is not as sturdy as we think.  Each time climate-change-driven disasters occurred, the Roman Empire had to “rob Peter to pay Paul”, outside military pressures being what they were and trade networks being insufficient for disaster recovery.  This, in turn, made recovery from disaster far more difficult, and eventually impossible. 
Thus, recovery from an ongoing string of future climate-change-driven disasters may not be sufficiently able to be internally driven – and then the question comes down to whether all regional systems face ongoing disasters unable to be handled internally, simultaneously.  Granted, the fact that our system does not depend on regional elites or fund a single central city are signs of internal resilience beyond that of Rome.  But is the amount of additional internal resilience significant?  This does not seem clear to me.
What remains in my mind is the picture of climate-change-driven bubonic plague in Rome’s interconnected world. People die in agony, in wracking fevers or with bloody eyeballs and bloody spit, or they simply drop dead where they are, in twos and threes.  Death is already almost inevitable, when the first symptoms show, and there is no obvious escape.  If by some miracle you live through the first bout, you walk in a world of the stench of unburied bodies, alone where two weeks ago you walked with family, with friends, with communities.  All over your world, this is happening.  And then, a few years later, when you have begun to pick up the pieces and move back into a world of many people, it happens again.  And again.
If something like that happens today, our world is not infinitely resilient.  Not at all.   

Friday, March 2, 2018

The Transition From Agile Development to the Agile Organization Is Beginning to Happen

Disclaimer:  I am now retired, and am therefore no longer an expert on anything.  This blog post presents only my opinions, and anything in it should not be relied on.
Recently, new publications from CA Technologies via Techtarget arrived in my in-box.  The surveys mentioned in them confirmed to me that the agile organization or agile business is beginning to be a Real Thing, not just vendor hype. 
Five years ago, I wrote but did not publish a book on the evidence of agile development’s benefits and implications for creation of a truly agile business or other organization.  Now, it appears not only that the theoretical foundation has been laid for implementation at least of agile processes in every major department of the typical business, but also that a significant subset of businesses now think that they have at implemented agile according to that foundation across pretty much all of the enterprise – yes, apparently in a few cases including legal (what does legal-department agility mean?  I have no idea, yet).
So what are the details of this evidence?  And what benefits of an agile organization seem to be proving themselves?

The Solid Foundation of Agile-Development Benefits

It is now approaching a truism that agile development delivers benefits compared to traditional software-development approaches.  My own survey during my brief re-up at Aberdeen Group 9 years ago suggested improvements in the 20-30 % range for project cost and speed, product quality, and customer satisfaction (with the obvious implication that it also decreased product-development risk by around that amount, as Standish Group studies also showed).  One striking fact was that it was achieving comparable results when compared to traditional approaches focused on cost and/or quality.
One CA pub (“Discover the Benefits of Agile:  The Business Case for a New Way to Work) extends these findings to agile development plus agile project management.  It says that a “summary of research” finds that agile delivered 29 % improvements in cost, 50 % in quality, 97 % in “productivity” (something like my “speed”), 400 % (!) in customer satisfaction, 470 (!!) in ROI (a proxy for revenue and profit), compared to the “least effective” traditional approaches. 
While this may sound like cherry-picking, my research showed that the most effective traditional approaches were not that much better than the least effective ones.  So I view this CA-cited result as the “practice effect”:  experience with agile development has actually increased its advantage over all traditional approaches – in the case of customer satisfaction and profitability, by really large amounts.

The Theoretical Case For Business Agility

Note, as I did back when I did my survey, that agile development often delivers benefits that show up in the top and bottom line of the success-critical-software-developing business, even before the rest of the organization attempts to go agile.  So why would it be important to go the rest of the way and make most or all of the organization agile?
The CA pub “The State of Business Agility 2017” plus my own work suggest that potential benefits of “agile beyond software development” fall into three areas: 
1.      Hard-nosed top and bottom line benefits:  That is, effects on revenue, cost, and margin (profit).  For example, better “innovation management” via agile project management goes to the top line and eventually to the bottom line, and in some cases can be measured.
2.      “Fuzzy” corporate benefits, including competitive advantage, quality, customer satisfaction, speed to act and change strategies, and reduction in negative risks (e.g., project or IT-infrastructure failures) and “fire drills”.
3.      “Synergy” benefits stemming from most of the corporation being on the same “agile page” with coordinated and communicating agile processes, including better collaboration, better/faster employee strategy buy-in, better employee satisfaction through better corporate information, and better “alignment between strategy and execution.”
The results of the CA business-agility pub survey suggest that most respondents understand many but not all of these potential benefits before they take the first step towards the agile business.  I would guess, in particular, that they don’t realize the possible positive effects on combating “existential risks”, such as security breaches or physical IT-infrastructure destruction, as well as the effects on employee satisfaction and better strategy-execution alignment.

The Extent of Agile Organizations and Their Realized Benefits

Before I begin, I should note two caveats about the CA-reported results.  The first is that respondents are in effect self-selected to be farther along in agile-organization implementation and more positive about it.  These are, if you will, among the “best and the brightest.”  So actual agile-organization implementations “on the ground” are certainly far less than the survey suggests.
Second, CA’s definition of “agile” leaves out an important component.  CA’s project-management focus makes part of its definition of agility to be holding time and cost in a project constant while varying project scope.  What that really means is that CA de-emphasizes the ability to make major changes in project aims at any point in the project.  In the agile-organization survey, this means an entire lack of focus on the ability to incrementally (and bottom-up!) change a strategy rather than just roll out a whole new one every few years.  And yet, “more agile” strategy change is at the heart of agility’s meaning and is business agility’s largest long-term potential benefit.
How far are we towards the agile organization?  By some CA-cited estimates, 83% of all businesses have the first agile-development step at least in their plans, and a majority of IT projects are now “agile-centric.”  Bearing in mind caveat (1) above, I note that 22% of CA-survey respondents say they are just focused on extending “agile” to IT as a whole, 17% are also working on a plan for full business agility, 19% have gotten as far as organizational meetings to determine agility-implementation goals, and 39% are “well underway” with rollout.  Ignoring the question about “momentum” in partial departmental implementations for a moment, I also note that 47 % say IT is agile, 36% that Project Management is, and marketing, R&D, operations/manufacturing (are they counting lean methodologies as agile?), and sales (!) are a few percentage points lower. 
Getting back to partial implementation, service/support seems to be the “new frontier.”  Surprisingly, corporate communications/PR is among the laggards even in implementation, along with accounting/finance, HR, and legal.  What I find interesting about this list is that accounting and legal are even in the conversation, indicating that people really are planning for some degree of “agile” in them.  And, of course, the CEO’s agility isn’t even in the survey – as I said 9 years ago, the CEO is likely to be the last person in the organization to “go agile.”  Long discussion, not relevant here.
How about benefits?  In the hard-nosed category, agile organizations increase revenue 37% faster and deliver 30% greater profit (an outside survey).  For the rest of benefits, there is far less concrete evidence – the CA business-agility survey apparently did not ask what business benefits respondents had already seen from their efforts.  What we can deduce is that most of the 39% of respondents who said they were “well underway” believe that they are already achieving the benefits they already understand, including most of the “fuzzy” and “synergy” benefits cited above.

Implications:  The Cat Is In The Details

At this point, I would ordinarily say to you the reader that you should move towards implementing an agile business/organization, bearing in mind that “the devil is in the details.”  Specifically, the CA surveys note that the complexity of the business and cultural/political opposition are key (and the usual) problems in implementation.  And, indeed, this would be a useful thing to know.
However, I also want to emphasize that there is a “cat” in the details of implementation:  a kind of Schrodinger’s Cat.  In quantum physics, as I understand it, different states of basic particles (e.g., exists, doesn’t exist) are entangled until we disentangle them (e.g., by “opening the box” and measuring them).  Schrodinger imagined entangled states of “cat inside the box/no cat inside the box”, so that we wouldn’t know whether Schrodinger’s Cat existed until we opened the box.  In the same way, we not only don’t know what and how much in the way of benefits we get until we examine the implementation details, we won’t know just how really agile we are until we “open the box.”
Why does that matter?  Because, as I have noted above, the really big long-term potential benefit of business agility, is, well, agility:  The ability to turn strategically, instantly, on a dime and ensure the business’ long-term existence, as well as comparative success, much more effectively.  Just because some departments seem to be delivering greater benefits right now, that doesn’t mean you have built the basic infrastructure to turn on a dime.
And so, the cat is in the details.  Please open the box by testing whether your implementation details allow you to change overall business strategies fast, and then, if there is no cat there, what should you do?
Why, change your agile-implementation strategy, of course.  Preferably fast.

Wednesday, February 28, 2018

Reading New Thoughts: Lifton’s Climate Swerve and the Proper Attitude Toward Climate Change

Disclaimer:  I am now retired, and am therefore no longer an expert on anything.  This blog post presents only my opinions, and anything in it should not be relied on.

One of the major issues among the “good guys” in climate change is, what attitude should we take towards the future in our political maneuverings?  Should we focus on the bright spots, the signs of hope, such as solar technology, knowing that we may be accused later of deception because these do not meet the needs of mitigating carbon pollution effectively?  Should we be brutally realistic, at the risk of persuading people that nothing effective can be done?

I find that Robert Jay Lifton’s “The Climate Swerve” provides a boost, more or less, to my own view of what we should do.  Based on his experience as a psychiatrist and physician fighting against nuclear war, he identifies 3 “psychologies” that dominate discussion of an oncoming catastrophe:

1.       Denial.  We are all familiar with climate deniers.

2.       Psychic numbness”.  In this case, we “numb” the idea of nuclear war or climate change so that we can function in daily life without extreme anxiety.  The result of psychic numbness is that we feel that there is nothing we can do about the situation, and so we do very little.

3.       Facing the truth head-on.  The point here is that because we no longer self-deceive, this does not necessarily lead to extreme anxiety that makes one unable to function.  Instead, says Lifton, it leads to “realistic hope.”  That is, in terms of anxiety, in the long run some hope is better than none.  

Thus, Lifton’s “climate swerve” is a global “swerve” – a global change of direction in thinking, towards psychology (3) as discussed above.

Note that this analysis is not the usual glib, other-oriented, sickness-focused psychoanalysis.  Rather, Lifton is talking about a global set of non-patients and personal experience.  Also, he is talking about the long term:   While climate denial is usually evidence of the usual psychological problems right now, psychic numbness is akin to what most of us do often in our lives, and its costs often outweigh its benefits only in the long run.

Facing What Truth?

Climate change differs from nuclear war in one key way:  In nuclear war, the catastrophe is immediate and total, while in climate change, the largest effects in the catastrophe are always in the future.  That means that in facing the truth, we need to face two things:  (1) What is the sequence of catastrophe in “business as usual” climate change, and (2) What are the effects of our efforts to mitigate and adapt instead of “business as usual”?

I find that the best analogy I can come up with for climate change’s sequence of catastrophe is an image of an enormous rock rolling down hill, picking up speed and momentum (I wrote a “children’s tale” short story about this once).  At first, it only kills a few shepherds high on the hill; but next it will kill the poor folk partway up the hill that cannot afford the housing of the well-off and rich; and then, finally, it will roll over us, the relatively well-off and rich.  Crucially, however, the earlier we push back against the rock (mitigate, slow the rate of carbon emissions), the easier it is to stop it, and the higher on the hill it stops.  In other words, no matter whether we’re talking now or 50 years from now:

·         Some of the disaster to come is has already happened and will continue to happen; but,

·         A far greater amount is already built into the system; BUT,

·         A far greater amount than that is not yet built into the system; AND,

·         The more we mitigate now, the less of that not-built-into-the-system “business as usual” catastrophe will happen.

The details of the sequence of the “business as usual” catastrophe are still far from completely clear.  The best analysis I can find is a 2007 book called “Six Degrees.” I hope to write about that book at some point, but the main point to bear in mind is that the sequence of events still seems to be following that book’s horrifying projections, although each step they lay out may require more than 1 degree C warming over the long term. 

What about how we are doing?  What constitutes facing the facts about our efforts to mitigate?

Right now, I have argued in blog posts, CO2 readings at Mauna Loa tell us that all our previous efforts, if they have had an impact on carbon emissions, have had an insignificant one.  I ascribe part of this to a well-known IT law:  the actual implementation of a new technology or approach is actually far slower than what we perceive superficially from the outside.  Even with the best will in the world, the details of implementation slow us down drastically.  The other reason, of course, is the extensive denial and psychic numbness out there that lead to pushback and lack of implementation.

The other important point about our efforts to mitigate is that they are hindered by our institutions and our attitudes towards them.  History shows that looking for a purely market-based solution is not only far from optimal but a fantasy about a “free market” that never existed.  Governments and the global society are hindered by past assumptions, and especially in the legal system, about what can be done in a democratic government to face climate change.  A “face the facts” view of what is going on says that institutional efforts to combat climate change have an orders-of-magnitude greater impact on mitigation than individual efforts, and that these institutional efforts have barely begun. 

What hope are we left with?  This one:  that eventually our best institutional efforts will kick into overdrive and actually mitigate climate change significantly. 

Solar Vs. Fossil: One Step Forward, Two Half-Steps Back

I find that one way to summarize this view to myself is to put it in terms of the computer industry’s Agile Manifesto, where saying one thing should be put before another is saying not that the latter should not be done, but rather that I value the former more highly:

·         Realistic facing of present and future facts of climate change catastrophe before blind hope.

·         Institutional change before individual change.

·         Mitigation before adaptation.

·         Agility before flexibility (I’m not sure whether this should be included, but it would be a good way to improve our institutions to fight against climate change better).

How to end this?  Well, there’s always T.S. Eliot’s “As Wednesday” on psychic numbness:

“Because I do not hope to turn
Because I do not hope …”

First, face the facts of turning.  Then, understand the small hope in those facts.  Then you can hope to turn.

Saturday, February 24, 2018

Reading New Thoughts: Struzik’s Firestorm and How Climate-Change-Driven Wildfires Affect Us All

Disclaimer: I am now retired, and am therefore no longer an expert on anything. This blog post presents only my opinions, and anything in it should not be relied on.

Note: My focus in these “reading new thoughts” posts is on new ways of thinking about a topic, not on a review of the books themselves.

Edward Struzik’s “Firestorm: How Wildfires Will Shape Our Future” adds, it seems to me, three important points to my understanding of climate change:

1. We are on the verge of an era in which wildfires more massive than we have ever seen produce harmful effects of which we have seen only glimpses: shattering of ecosystems, traveling of mercury pollution around the world, blackening of ice that hastens melting and sea level rise, and of course death and destruction.

2. Understanding of climate change’s reality “on the ground” is no longer limited to scientists and environmentalists, but is a fundamental reality of firefighters who must anticipate each season’s worsening challenges.

3. We are near a breaking point in terms of our overall societal response to wildfires, as evidenced by the fact that the majority share of US and Canadian budgets for forestry management is now being devoted to firefighting rather than planning, researching, and holistic approaches to forest management that would mitigate the upcoming effects cited in (1).

Upcoming Global Harmful Consequences of Wildfires

One virtue of Struzik’s Firestorm is that it goes into extensive detail about the actual effects of wildfires, on the forests, on neighboring humans and ecosystems, on human-generated toxins such as mercury which past resource extraction has left in the forests, and (via airborne carriage of wildfire byproducts) on geographies as far removed as British Columbia from New York and Alaska from Greenland. He tells us also of efforts to contain these harmful consequences, including pre-emptive “back-burning”, forecasting and planning to fight fires in locations such as Banff, and strengthening building codes and evacuation procedures in places such as Alberta near the oil sands.

The overall picture is of an entire region – the forests of western Canada and the US, certainly echoed in Australia and northern Russia, and probably echoed in areas such as Indonesia – increasingly subjected to wildfires whose massive intensity and destructiveness is hard to express. Two key factors drive this future of massive wildfires: the legacy of forest management that for a century did not burn these forests and thus increased the power and ecosystem destruction of these burnings, and climate change that is bringing increasing drought, greater energy for the wildfires, and new invasive species that combine with wildfires to exacerbate the resulting damage.

What harmful effects should we really be concerned about above all? As I understand it, deaths from being trapped in a wildfire, horrible as they are, are the least damaging of these. The following seem of greater import:

· Death from ingesting or breathing the byproducts of wildfires, at a distance from the fire itself. Struzik cites the French fires that caused the deaths of thousands of Parisians in the early 2000s. Upcoming wildfires are likely to produce more intense and therefore more deadly byproducts, and to affect regions much further away than the distance between two regions in France.

· The destruction of northern ecosystems (e.g., trees, caribou, polar bear) and replacement by impoverished more southerly ecosystems prone to erosion and collapse (tundra). In other words, the new ecosystems not only decimate existing northern species but replace them with more temperate ecosystems that are far less functional (and therefore less arable) than the temperate ecosystems we have now. To put it bluntly, if humanity looks to survive in the future on the bounty of Canada and Siberia, wildfires are going to make that far more difficult.

· There is a strong danger of increased carriage of black soot (black carbon) to areas of existing land and sea ice in the Arctic (apparently, not in the Antarctic). This may well speed up Greenland land ice melt and Arctic sea ice seasonal melting significantly, thus turbocharging that part of sea level rise. So far, this seems less of a factor, but with the increasing power of wildfires, all bets are off.

People Start Seeing Climate Change In Their Jobs

To me, one of the striking things in Struzik’s book is the extent to which western firefighters are having their noses rubbed into the fact of climate change. Granted, this awareness is centered in those firefighting coordinators who must plan for each season’s likely wildfires. However, Struzik suggests that any experienced wildfire fighter recognizes the differences from 20-30 years ago – and certainly some awareness should be rubbing off on newbies.

To me, this puts the debate about climate change on a whole different level. Generally, firefighters are part and parcel of communities; they can’t be written off as “outside” environmentalists and scientists. And climate change is not something they can face or not face as part of being a well-rounded person outside of their jobs – handling climate change is now an integral part of their jobs. At the very least, this ought to change somewhat the conversation from caricatures of “us vs. them” or “effete soft-hearted eggheads” vs “hard-headed real-world types.”

The Wildfire Breaking Point

If there is a sense of urgency in Struzik’s Firestorm, it lies primarily in his worries about our responses to the increasing threat over the last 30 or so years. He documents how very recent fires such as the one near Fort McMurray came very close to being far, far worse in terms of lives lost and destruction of valuable property. He suggests that although there has been a massive increase in the knowledge of how to manage wildfires for the best combination of destruction followed by ecosystem repair, minimal long-term impact on human and plant/animal environment, and long-term solutions to the increasing pressure of humans on forest environments, these have been far from widely applied in the field. Instead, asserts Struzik, lack of government and other funding means that, more and more, long-term strategy is coming in a poor second to simply managing to contain the next season’s fires.

Inevitably, then, unless things change, the system will reach a point where each season, the costs of wildfires will mount catastrophically, because not only do budgets not cover all the firefighting needed but the accumulated “debt” of things undone in previous seasons will add to the destruction. In other words, to get back to anything approximating today’s halcyon days will require far more planning, back-burning, and ecosystem repair than is required now – if it can be done at all.

The answer, I think, is that, like Struzik, we need to see our efforts with regard to wildfires as an integral and inevitable part of our climate-change spending. There is far less argument about adaptation than mitigation, and, unfortunately, probably far more spending on adaptation than mitigation. Wildfire strategy is primarily an adaptation strategy – it affects carbon pollution, but much less than fossil-fuel combustion. Therefore, there should be much less resistance to this type of approach and spending. One hopes.

Wednesday, February 21, 2018

Climate Change 2018: That Was The Year That Wasn't

Disclaimer:  I am now retired, and am therefore no longer an expert on anything.  This blog post presents only my opinions, and anything in it should not be relied on.
We begin our experience of climate change in 2018 with the legacy of 2017, a year that was in many ways the worst so far.  It began with a new US President committed to reversing the minor gains against carbon emissions that the “lead dog” US had already achieved, and with unprecedented off-season Arctic sea ice melting.  It ended with massive out-of-season climate-change-driven wildfires in California, four hurricanes together packing unprecedented force and causing thousands of deaths (Puerto Rico) and close-to-unprecedented physical damage (in dollars), apparent increases in US carbon emissions after 2 years of declines, and unprecedented Arctic warmth in December.  And those are just the lowlights.
In the year since I retired, I have had the chance to read extensively if capriciously in climate change literature, and I hope to share some of those books’ insights with readers in later posts.  Here, I want to briefly note some of the key initial climate change trends of 2018:
·         Atmospheric CO2 continues its relatively rapid pace of increase

·         Arctic sea ice is at a historic low for this time of year, and global sea ice at an all-time low

·         Solar energy cost gains are counteracted by inadequate country emissions pledges and US backsliding

CO2 Increases:  The Broken Record

The important thing to remember about atmospheric CO2 measurements is that they tell us how we are really doing.  You will see all sorts of encouraging (and discouraging) developments that should affect carbon emissions over the course of the year, especially the ones that claim to measure whether global emissions are up or down.  However, global emission measures are flawed by self-reporting and incomplete data, which may increasingly underestimate the emissions.  Atmospheric CO2, measured since 1959 at Mauna Loa in Hawaii, provides not only a measure of overall emissions but also a reality check as to whether our efforts at curbing human and human-related emissions are bearing fruit.
In February 2018, as it seems I have said many times before – so many times that I sound like a broken record – atmospheric CO2 continues to increase at an unprecedented pace, all things considered.  Initial indications are that 2017 CO2 increased by 2.11 ppm, less that the 3 ppm the previous two years.  However, this is a drop of about 0.9 ppm from 2 El Nino years, while the only comparable El Nino year in the past, 1998, saw a drop of about 2 ppm the next year.  Meanwhile, with February ¾ done, the increase for this month appears to be about 2.4 ppm.
The result is that it is almost certain that atmospheric CO2 is about 408 ppm, up 8-9 ppm since 2015.  While this is less than I feared 1 ½ years ago, it still suggests that we will reach 410 ppm some time around the end of this year and 420 ppm in 2022 – and we have already seen the drastic effects of breaching 400 ppm.

Arctic Sea Ice:  What Does Not Stay in the Arctic

For this, the best I can do is quote Joe Romm and Michael Mann (  “2018 has already set a string of records for lowest Arctic sea ice … [but] what happens in the Arctic doesn’t usually stay in the Arctic”  because this low Arctic sea ice weakens and moves the polar vertex (wintertime circular winds around the North Pole), driving relatively cold air south where it impacts both northern America as far south as Florida and northern Eurasia.  So what we are seeing is both extreme cold from this disruption, and extreme warmth when the disruption is not operating (as now, when I am seeing temperatures almost 40 degrees F above normal near Boston).
This is part of a year-round disruption of once-normal Arctic wind patterns leading to “acceleration” of “slowing down of ocean currents, … weather extremes like droughts, wildfires, floods, and superstorms …  [and] faster melting of the land-based Greenland ice sheet, which in turn drives the speed up in sea level rise that scientists reported last week.” 
Nor should we be complacent about Antarctic ice melting.  As noted, Antarctic land ice melt is the key to huge world sea level rise, and melting of Antarctic sea ice that plugs the glaciers conveying land ice to the sea for melting is therefore a prerequisite for huge world sea level rise.  The fact that global (Arctic plus Antarctic) sea ice has reached a record low in the last few weeks indicates that Antarctic sea ice is also at a low point, and last year’s Antarctic sea ice data backs that up.

Solar Vs. Fossil: One Step Forward, Two Half-Steps Back

There is no doubt in my mind that the major encouraging news of the past year has been the driving down of the cost of solar-power generation and installation, to a point well below that of oil, natural gas, and coal.  Moreover, increasingly, despite the lack of adequate solar-battery technology to guarantee no-blackout solar plus wind, the increased production of solar batteries and their lowered cost does make regional almost-no-blackout solar-plus-wind cost-effective for the majority of power in most world regions.  These technological improvements should continue unabated in 2018, and they are now empowered by NGOs, some governments, and entrepreneurs to a surprising extent.
However, a new UN publication assesses the emissions pledges of governments at or since the 2016 Paris conference, and finds that 2030 fossil-fuel emissions will be up in 2030 compared with 1990 if these pledges are fulfilled, while 2050 fossil-fuel emissions will be up in 2050 compared with 2030.   Combined with projected rising population until about 2050 that leads to rising non-fossil-fuel emissions (e.g., cows with methane, deforestation), this pattern of pledges may lock countries more firmly into efforts that are inadequate for a 2 degrees Centigrade goal.  Therefore, like Alice Through the Looking-Glass, we are failing to run fast enough to stay where we are, and have effectively taken a half-step back.
Another half-step, I believe, comes from the extensive efforts of the Trump administration to undo Obama-era (and previous) regulations, incentives, enforcement, and measurement related to climate change.  Over the past year, for example, enforcement actions have apparently gone down 44 %, solar incentives are rapidly moving from positive to negative, regulations on things like LED lightbulbs and Energy Star labelling are undercut, and satellites key to measurement of things like Arctic sea ice are under threat or under repair from underfunding, while communication of the data suffers from extreme removal of climate change considerations.  No wonder the US appears to have seen a rise in emissions in 2017 compared to a decline in the previous two years.  And this Trump-administration effort continues to grow in scope in 2018.

Conclusion:  That Was the Year That Wasn’t

Way back when (1962-1963), a TV show took a satirical look at the news of the week with the title, “That Was the Week That Was.”  It seems to me, taking a cynical look at 2017 and our efforts to deal with climate change, that that was the Year That Wasn’t – wasn’t in net terms a real break from the “business as usual” of 2010 and before – while at least 2016 saw a major shift in reporting on climate change, some people’s and governments’ attitudes, and at least somewhat of a shift in emissions themselves. 
Will 2018 be another Year That Wasn’t?  Too early to tell.  But we couldn’t afford 2017.  And, to a greater extent, we can’t afford another year like it.

Sunday, November 12, 2017

How the Rich Can Pay Only 3 % of Their Actual Income in Taxes – Without Tricks

Disclaimer:  I am now retired, and am therefore no longer an expert on anything.  This blog post presents only my opinions, and anything in it should not be relied on.
No, it’s not from hiding the money overseas, or tax-saving tricks that skirt the outer edges of US legality.  It’s from the peculiarities of the way the tax code handles capital gains taxes.  And a recent change to the estate laws to allow a “step-up in basis” is a big part of it.  Can you, the average reader, take full advantage of it?  Only if (a) much of your net worth is in stocks (preferably low-expense index funds), and (b) 9% times your total stock value is much greater than your yearly expenses.

What follows is an explanation using a “typical case” approximating the real-world experience of someone I know.

The Idle Rich

Let us suppose that you have net worth of $10 million, entirely invested in a Vanguard or Fidelity S & P 500 index fund (expense ratio 0.1 %), with little or no work income and expenses of about $250,000 per year.  You reinvest dividends immediately back into the index fund.  Studies suggest that over the long term such an investment increases by 10.85 % per year.  If we subtract the expense ratio from that, you may expect actual income from this investment to increase by 10.75 % every year, or $1,075,000.  Presto, you are a millionaire this year, without working a day for it.

Now you need to pay income taxes – and here’s where things get complicated.   The money comes to you in two forms:  (1) dividends, which you reinvest, and (2) “capital gains” (all the rest).  My comparison of the S & P 500 total return index (which includes dividend reinvestment) to the S & P 500 index we all see on the financial pages suggests that in the long run, dividends increase your investment by 2.25 % per year ($225,000), leaving 8.5 % ($850,000) from capital gains.  The tax code handles these two cases differently.


Your Federal tax bite from dividends is pretty straightforward:  15 % (let’s assume you live in a state without dividend and capital gains taxes of its own; note also that at about $25 million in investment wealth it kicks up to 20%).  So on the order of 2.25 % of your income tax for this year is at this 15 % rate, or about 2.25 % of your actual income (about $27,000).

Capital Gains

Capital gains are defined as the amount your stocks in that index fund have appreciated since you first bought them.  To maximize the yearly gain in net worth (for reasons too complicated to explain here), you are going to pay your expenses of $250,000 by selling stocks from your index fund. 

Let’s assume, for the sake of simplicity, that all your stocks are effectively just over 1 year old – as in the case where this is a new inheritance (explained later).  You typically have three choices of what you’re going to tell your index manager to sell: “first in, first out [FIFO]”, “average cost [basis]”, or “modified last in, first out [LIFO]” (you won’t necessarily see FIFO and LIFO presented that way).  FIFO, which really means “first bought, first sold”, is a no-brainer:  that means the oldest stocks with the biggest capital gains get sold first, so you typically don’t want to do that.  Average cost” is, as it seems, halfway between worst and best in most cases.  LIFO means “first bought, first sold”, and modified LIFO means that you actively go in when you sell from your portfolio of stocks or index fund and arrange to not sell stocks bought less than a year ago – because otherwise your capital gains tax just about doubles.  In our simple case, all three selling approaches get the same result.

Your capital gain on your $250,000 of yearly expenses is about 9 % (0.1075/1.1075).  A Federal tax rate of 15 % therefore leaves you taxed about an additional 0.14%, on top of the 2.25 % from dividend income.

Finally, index funds steadily buy and sell stocks throughout the years on their own hook, in order to reflect stocks entering and leaving the index.  In the case of the S & P 500, a typical year might see 10 stocks “turn over” like this, usually the ones least capitalized, for a rough guesstimate of 1 % of the index’s total value.  That’s a straightforward additional 0.15 %.


Your total tax bite from your actual total income, therefore, is about 2.55 % of $1,075,000, or about $27,400.  However, this now flows into gross income, which is then “adjusted” for various tax breaks and then converted to “taxable income” via the usual standard or itemized deductions.  The typical rich household (married filing jointly) has at least $12,700 from these sources – so the net is at or below $14,700 (more like 1.45 of actual income %!).  Over the long term, this will creep up as the average stock gets “older”, but I will anticipate that discussion below and state that it effectively stays below 5 % for quite a long time.

[Note:  Here I don’t discuss the recently-added Net Investment Income Tax of 3.8 %, which appears to apply only to much richer individuals]

Thomas Piketty in his book Capitalism in the Twenty-First Century points out that the top 0.1 % of the US income distribution (which roughly corresponds, I believe, to $10 million and up in net worth) has the bulk of their net worth not in land or other assets, but in investments, mainly in stocks.  I conclude that, therefore, we may expect the savvy rich person to pay perhaps 4 % of his or her actual income – not the income declared in tax returns, but with the additional income from untaxed capital gains added back in – in income taxes this year.

In the Long Run, The Rich Are Dead, But They Still Don’t Pay Much Income Tax

There are two caveats that do apply to my scenario, which indeed drive the income tax rate of the rich higher.  However, on closer examination, they don’t really increase the tax rates of the rich that much.  These two caveats are:
1.       The rich don’t really behave like that; and
2.       In the long run, capital gains should approach 100 % of the stock’s value.

The Rich Don’t Really Behave Like That

 The first objection to my scenario under this heading is that the rich don’t invest the way I’ve described:   they invest more in (corporate and state) bonds.  One may also include property, but, again, Piketty notes that this is typically less than 10 % of the holdings of the rich and particularly the very rich.

The answer to this objection is that bonds simply don’t provide anywhere near the long-term return of stocks (more like 1-3 % percent after inflation), so that a 60-40 stock/bond split works out in practice to more like an 83-17 income split, and an 80-20 stock/bond split works out to more like a 92/8 income split, for a likely maximum of 1.6 % in additional taxes (on much less income!).  Moreover, most investors tend to prefer “tax-free” bonds, which pay no Federal tax at all – if the investor does this exclusively, the overall tax rate actually decreases, so a better guess of the effect is more like a 0.5 % tax rate increase.

Next up is the idea that the rich typically don’t instruct their funds to do modified LIFO (“last bought, first sold”), for other reasons that may or may not be valid (e.g., complicating tax preparation, tax consequences when the market is going steadily down).  In fact, the real-world case I draw on uses “average cost basis” for precisely those reasons. 

When most stocks in the portfolio of the rich person are pretty new, say, in their first two years of ownership (the “short run”), the answer to this objection is that the tax effect of average costing is pretty minimal:  about 1.6 average years of total increase works out to about a 17 % average increase in stock value and a 15/85 gains/no gains split.  With adjustments for the fact that some of these stocks would be sold anyway by the index fund, it works out to about a 40 % increase in capital gains taxes, from about a 0.30 % tax bite to a 0.42 % one – significant, but still leaving us well below 3 %.  Over the long run, this case involves capital gains approaching 100 % of the stock’s value, so I’ll discuss that part of the answer to this particular objection below.

The third objection to my scenario is that most rich people spend more per year on expenses than $250,000.  This is true; and yet the key figure here is actually the ratio of expenses to income.  As long as the ratio of expenses to income (about 0.2) in my scenario is the same as that of the average rich person, our analysis doesn’t alter in the slightest.

And the evidence appears to be, if anything, that as you consider richer and richer people, the ratio of expenses to income goes down.  By the time you reach $100 million, it would take buying a $10-million-dollar house every five years to approximate an 80/20 split.  By the time you reach $1 billion, nothing short of a $50-million political investment every two years would do.  And as that ratio dips, the percentage of income that must be paid in capital gains taxes goes downwards.  Assuming, for example, a $100 million fortune and $1.25 million per year in expenses, we are talking about capital gains taxes cut in half compared to our scenario.  Of course, at that point the deductions have much less effect, but the net effect is still to cut our “real-world” tax bite so far to well below 2 %.

In the Long Run, Capital Gains Should Approach the Stock’s Value

It would seem reasonable, given my scenario, that as the average stock in the rich person’s portfolio far surpasses its original value, the average ratio of original value to value now would approach zero.  Certainly, I have heard of cases in estates where “generation pass-through trust” stocks when sold had a cost basis of 1 or 2 % of the total, and therefore 98 or 99 % of the value of the stock was taxable as capital gains.

Let’s be more concrete.  To a first approximation, the person newly coming into a $10 million fortune in investment stocks is in his or her mid-40s, and has maybe 30 years to live.  What does the capital gains situation look like in the tax returns for his or her 75th and last year, and what therefore is the tax rate?

Under average costing, if we assumed no stocks have been sold in the meantime, the average stock has been in the portfolio for 30 years, with an average gain of about 1327 % (1.09 to the 30th power).  So 93 % of the portfolio would seem now to be capital gains. 

But, in fact, we know that stocks have been sold in the meantime, for expenses and (by the index fund manager) to keep up with the underlying index – about 21-22 % of income, meaning about 3.5 % of total stocks, year after year.  So, after 30 years, every stock in the portfolio has been sold an average of 1.17 times, and the actual age is more like 12.8 years, with an average gain of 300 %, so the actual percentage of the portfolio which is capital gains is now 75 %.  In turn, that means that the tax bite for capital gains is about 11% of total income and therefore the overall total tax rate has now climbed to 13.25 %.  

But wait, there’s more.  Our rich person is paying this rate in year 30.  Remember, his or her underlying goal is not to minimize tax rates at one period in time, but overall taxes throughout the 30-year time period.  And that means that we should consider the fact that in the 30th year, he is paying taxes on his capital gains an average of 15 years late.  To put it in terms of purchasing power, if we assume inflation of 1.5 % per year over that time period (typical of the last 10 years), he or she may be paying 11% of capital gains in tomorrow’s dollars, but that’s the same thing as paying less than 9 % in today’s dollars.  If we assume a more historical 3 % rate of inflation, it’s more like 6.5 % (although, for the rich person, the higher inflation is, the less the “real” income both before and after taxes).  And thus, the “real” overall tax rate is back down to about 8.75 %!    

What About When You Die?

Now, it would seem that when the rich person in my scenario died, the chickens come home to roost, or, to put it another way, most of the capital gains of the rich person are finally paid out in taxes, one way or another.  After 30 years, the final estate has grown to around $133 million (1.09 to the 30th power).  40 % of $122 million of that ($48.8 million), where a husband and wife are involved, would need to be sold to pay those taxes, plus enough to cover the 11 % capital gains tax rate on the sold stocks (about $5 million) and miscellaneous fees ($0.5 to 1 million).  So we have net taxes of about $54.5 million, or 41 % of the estate.  Add to this the previous 30 years of average 6% tax rates for stock income averaging about $6 million (0.3 times 30 times 6, or $5.4 million), and the total tax on capital gains would seem to be more like 45%.

Except for two things:  Factor 1, the “step-up in basis”, and Factor 2, the effects of inflation.

Factor 1:  Because of the recent law allowing stocks to be reset to show zero capital gains at the point of our rich person’s death, their heir(s) no longer need to pay that extra $5 million in taxes to cover capital gains taxes from selling stocks.  So now we’re back down to about 41 %. 

Factor 2:  We are paying that $55 million in tomorrow’s dollars – dollars 30 years on, to be precise.  Assuming a historical inflation of 3 % per year, those dollars are worth 41 cents in today’s terms.  And that, in turn, means that we are really down to an annual capital gains rate on actual income of 16.9 %.

In other words, after these two considerations, the rich person has really paid the government only 12 % more than the Federal capital gains tax rate.  And the clock is now reset to our original scenario, as the heirs pay less than 3 % of actual income on their next income tax bill on the remaining stocks. 

Contrast this, by the way, to the schmoes who earn between the median wage of about $60,000 and $200,000 per year.  Yes, they don’t have estate taxes, but indications are that they pay more than 20 % of real total income in income taxes – and then, if they save a fair amount for their old age, get taxed another few percentage points on their savings from any stock investments they have, which typically yield much less than 9 % per year anyway!

Advice and Horror

To close out, let’s return to the question of whether the average reader can approximate this.  As I see it, to pull this off a reader should do three things:
1.       Start off with sufficient net worth in investments in diversified and low-expense-ratio stocks (at a guesstimate, a minimum of $3-5 million) so that your yearly expenses can be about 2.5 % of that net worth.
2.       If you want to milk the last drop of profit from this scheme, arrange it, if possible, so that modified LIFO is your strategy for all stocks sold.
3.       Make sure that between 1 % and 4 % of your stocks are “churned” – sold and bought – each year while preserving diversification and a low expense ratio.  An index fund like a good S & P 500 one plus paying most of your expenses out of stocks are excellent ways to accomplish this.
At this point, I should remind the reader that the most important thing for him or her is not minimizing taxes, but maximizing net worth after taxes.  Things like low-cost index funds and reinvesting dividends are valuable because they help maximize net worth before taxes, and hence (because they have few or no tax effects per se) net worth after taxes.  As I said in my unpublished book on personal finance, the strategy that aims to maximize income is almost always better than the alternative strategy that tries to minimize taxes.

And finally, I just want to express my personal feeling of horror at the implications of this analysis.  It should take no reminding for readers to contrast this situation with income from wage work, which can be taxed at a typical rate of 5 to 10 times the rate for investments when your wage is between the median of $60,000 a year and, say, $200,000 a year.   And for what?  The rich don’t work harder on average, they spend much less of their income to contribute to an economy, thereby lowering the income of the rest of us, and if they’re top-level managers they also excessively squeeze wage income for the rest of us, as Piketty documents extensively. And in the long run, as Piketty also notes, by using some of their spare money to change politically the rules of the economic game in their favor, they raise the likelihood of serious recessions and depressions that harm all of us.

And there’s another apparent effect that really bothers me.  In my scenario, the government sees most capital gains income for the first time, not when the income is gained, but in the reporting for the estate, 30 years from now.  That means that, on average, in real terms, we see the real investment income of the rich 15 years after it occurs, when it has perhaps two-thirds of its actual value.  If this is so, we are seriously, seriously underestimating today’s income of the rich, the degree of income and wealth inequality in this society, and the degree to which this tax code is causing that inequality.

Caveat homo medianus!  Let the average person beware!