the Air Vent

Because the world needs another opinion

Archive for March, 2015

97%…87%…57%…27%….. aw who knows.

Posted by Jeff Id on March 29, 2015

Richard Tol has a very nice summary of the 97% consensus f@#$ published by Cook.  It is worth your time.

Summary is here.

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An Entrepreneur’s Experience

Posted by Jeff Id on March 27, 2015

So I was invited to talk to a bunch of college students about my experiences in being an entrepreneur.  I’ve not really worked for anyone for almost a couple of decades although I did accept a VP position as a shareholder once for a few years.  I’m quite lucky to hang around with a bunch of smart people, kind of like this blog, functional minds tend to gather I think.  Five separate times in two different companies and in very different situations, our group has been recognized as the top growing private companies in the US, so we must be doing something right.    We have been around the block as they say, plenty of mistakes, plenty of good advice and plenty of wins.  We make the single most efficient LED lighting products in the world in several categories — have for years.  How cool is that!   Climate skeptics all too.  We’ve saved more energy than the RC geniuses ever will, but we do it for cost rather than lies about saving the planet.

I had fun talking to the students about our experiences.  Some questions were interesting although others, not so much.   You would have been proud of me for not venting too strongly, although I did happen to say -we’re probably the brownest green company on the planet!   That didn’t go over terribly well in a left-wing university, but you have to have a little fun.  I believe the kids need to understand that business is about money, nothing else, and the reason we are ‘green’ is to save our customers money.  You save fuel, you save money and there is nothing whatsoever wrong with that.

There were four presenters in the panel, one group of them had just stared a small business 4 months ago and consisted of exactly two employees.  The guys were well spoken and seemed to have all of the answers.   Someone asked the question of how to motivate employees and they answered for quite a long time quoting things about the 8 ways to motivate and such.   I found it interesting and informative because despite having not read the same book, the answers were not far off from my own and unlike them, we actually have employees.  I wonder if I should have gone to school for management, then I remember that I went to school to design planes, not lights.

I am doomed to learn everything the hard way I think.

One of my favorites on the panel was a lady who started her own bakery business in her basement.  From Ireland, she trained with top notch people from around the world.   She had no money and no bank to loan her money, so she put a used oven downstairs (which her husband installed) and started cooking.   Awesome I say!  Tough, hard work and no nonsense results.   She delivered product and avoided taking on big debts.  She felt overwhelmed by the other stories around her but she shouldn’t have.  Smart business decisions and no nonsense action.

One of my favorite sayings came from a business partner, “A bank is someone who will loan you an umbrella as long as it is not raining.”  He follows it up with, “And they will want it back if it starts raining.”

So when people asked about why we moved to Michigan, the others gave a bunch of fluffy happy answers about the quality of people and businesses and such.  As by far the largest company  represented on the panel, I answered — taxes.   Illinois extremist left-wing governor increased their taxes by 60% in a single year, although I left the adjectives to myself.  Of course the large companies in Chicago protested and made public proclamations of leaving the state.   This led to a series of negotiations, likely political contributions, and the decision by the governor to give those particular companies a pass on the tax hike.  Of course we were a little company with only 24 people back then so nobody cared about us.  Michigan’s conservative governor simultaneously lowered the Michigan rates and cleaned up the code so we took our business there.  Illinois had no care or idea we did it but the state numbers showed that we were not alone.

What I didn’t get into was taxes, and it is probably better that way because those kids don’t want to know what it really means to own a successful business.

Nobody really understands tax law and that is the way the government wants it.  Obama campaigned on raising taxes on the wealthy, voters accepted him and the hike finally became reality this year.  A five percent increase on the top earners.   What people don’t know is that the majority of the top earners are businesses.  S type corporations in the US report their percentage of the company income on their personal returns.  The company does NOT pay income taxes.  So this increase was primarily an increase in business tax

The other thing Americans don’t know is that in manufacturing in particular, when you become moderately successful, nothing is a (non-taxable) expense.  I mean nothing significant can be expensed even though you are writing checks for it.  Taxation hits so much harder in growing manufacturing companies than service type companies, the difference is truly shocking.  When a manufacturing company grows, inventory increases, tooling increases, equipment increases, accounts receivable increases, and payroll increases.  When a service company grows, you have payroll, accounts receivable and minor equipment costs.  In a growing service company, payroll is a non tax expense, however equipment and AR are not an expense.

The result of these pressures is that the US is full of marketing, banking and software ‘service’ firms, yet produces less and less product every year.

The net result of the US taxation system on a company like ours is a taxation rate in the 80% range in comparison to the cash which hits our pockets – because our company is growing and EVERYTHING is NOT an expense.  By everything, I mean even state taxes paid are still considered federally taxable income. Home interest, child care, tooling and equipment costs need to be depreciated over years, inventory increases, accounts receivable  -all taxable.  Every dollar we spend requires us to pay the federal and state governments nearly 45% tax for the privilege.  AND I’m just talking about INCOME tax.  Not import tax, VAT tax, fuel tax, export tax, real estate property tax, sales tax, personal property tax …..on and on and on.

People don’t know jack about taxes in this country.  They think they are paying, but in reality, the companies are paying huge portions of the taxes and their own incomes suffer for it.   They simply don’t see what is going on on their own checks.   How would anyone expect people to know that corporations are paying the majority of income taxes when articles continually come out explaining that individuals are actually the ones paying the most?

Tax law is more convoluted than that, and those who hate capitalism are motivated deniers of that simple fact.  There is a reason for the complexity of US tax law.

So while I am curious what your thoughts are on taxes, kids and entrepreneurship, please don’t assume that we don’t know what we are doing.   You don’t build a successful company multiple times on accident.  People often assume there is some trick which is going to save you from taxation, or it is all about loopholes.  Here’s news folks — real loopholes do NOT exist, although some leftist communists call certain minimally tax limiting rules loopholes.  If you still think we don’t know taxes, please tell us which of our four accountants, CFO or business tax lawyer we should replace and I will personally send you 50% of the savings.

Why the vent — because it is needed.   We compete with foreign companies which have far less difficulty complying with their own communist governments.  Hanging a lead weight around our neck is an apt description of government help.

So at the end of the meeting, the professor, who did a truly excellent job, mentioned that kids these days aren’t jumping in to their own businesses at the rate they used to.   I went away with a good feeling about how smart they were, and a bad feeling that they were probably smarter than me.

 

 

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Loserblogs

Posted by Jeff Id on March 13, 2015

There is a certain psychological aspect to blogging which I find interesting.   It would be quite easy to write in a reporter style or as an unengaged author.   A take it or leave it approach.   A blogger loses credibility when engaging people like Cotton, Tamino or other trolls.   It is a no win situation for them.   Even when the blogger is right, all it does is drag down the anonymity of the personality.   I never cared either way — still don’t.

Imagine though what sort of internet personality you could build, if you had the intent.   What if you were trying to build a bigger than real life personality on line and your own opinions were subservient to that goal.   It has an appeal from a narcissistic aspect, and it really could do a lot of good for your ’cause’.  Done right, a large slice of the population would buy in.

A balance of push and pull with a definite edge toward anarchy.  Credibility maintained through lack of engagement and a bit of scorn.   How easy would it be?  I fully believe I could make it work —— were I of the mind to.   Easy as pie.

What if you were paid to do it?  Would you?  Would anyone?  What if the income were six figures?

Romm?

 

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Something New Under the Sun

Posted by Jeff Id on March 9, 2015

Michael Mann and Jeff Id agree on something.   No really, we do.   I’m rather surprised as you can imagine.  I haven’t changed a bit but methinks Micheal Mann is a budding skeptic.  here.

Our conclusion that natural cooling in the Pacific is a principal contributor to the recent slowdown in large-scale warming is consistent with some other recent studies, including a study I commented on previously showing that stronger-than-normal winds in the tropical Pacific during the past decade have lead to increased upwelling of cold deep water in the eastern equatorial Pacific. –– Real Climate
Below is a comment right from my blog.  This bit was written in a response to Glenn Tamblyn from SKS with regards to the oceans.

Two hundred fifty trillion is 2.5 x10^14 J/second.  If we have a heat capacity of 5.6×10^24 J/K  we get 2.24×10^11 10 seconds until the ocean were warmed one degree.  That corresponds to 710 years of heating to increase the ocean volumetric temperature by one degree which is still somewhere around zero C average temperature.   In other words, climate progresses unrealistic worst possible case doom scenario’s are not sufficient to significantly affect oceanic heat content. — Jeff Id

Oddly enough, in recognizing the mixing of oceans, Real Climate may have just acknowledged that we can actually stuff 100% of global warming energy into the ocean for a millennia with literally zero consequence.  Of course the same peak-oil folks can’t imagine how we would have carbon for even another 200 years but that is another story.    By the second law of thermodynamics, when the heat is mixed into a 2C-ish body of water, it cannot be released in a manner which warms the greater temperature atmosphere of the Earth.   The heat is functionally lost in terms of global warming.  It literally cannot come back in droves or we need to rewrite physics. 

Summary for reporters, all of physics — big redo. 

In the linked Air Vent post, the main point is below (my bold for emphasis):

The sensitivity atmospheric temperature to CO2 from measured data, is therefore much lower than was predicted and that includes the argo data.  Alternatively rather than a CO2 sensitivity misjudgement, all that heat that Dr. Trenberth is famously looking for, very well could be sitting in the deep ocean making too little impact over 100 years to actually measure and all it would take is a tiny bit more (or less) oceanic intermixing than models predict for that huge heatsink to be the true source of measured climate change.   It could potentially have overwhelmed the CO2 effect without our knowing. 

In their new paper, Mann claims that the globally powerful IPCC climate model trends were inverted from a tiny change in wind mixing in the pacific.  Sounds like a pretty good copy of me!

Now make no mistake, this is heat mixed into the much colder ocean water AGAINST climate model prediction.  Shockingly, even after this situation, Real Climate STILL doesn’t feel any pressure from simple things like the “laws of physics” or “Basic Thermodynamics”.   With the quote below as the final straw, I have no idea how a scientist would wish to be associated with the Real Climate site.  Anyway, the last word should go to them and speaks for itself I think.

Given the pattern of past historical variation, this trend will likely reverse with internal variability, instead adding to anthropogenic warming in the coming decades.

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