texas Archives - Page 2 of 8 - Bankers Anonymous

November 6, 2022June 13, 2023

DeLorean’s Legacy

August was a big month for the DeLorean car company’s legacy. In fact, August 18 was a particularly big day on both coasts. On the west coast, San Antonio-based DeLorean Motors Reimagined hosted a public launch of its “Alpha5” concept car at the 70th Annual 2022 Pebble Beach Concours d’Elegance auto show.

Meanwhile on August 18 in New Hampshire, an alternate claim to the DeLorean legacy was announced as well. Kathryn DeLorean, original founder John Z. DeLorean’s daughter, launched the DeLorean Legacy Project, an educational engineering center with plans to build a signature tribute car, the Model JZD, first designed by Angel Guerra in 2020.

One of these is a for-profit business and the other is a historical tribute and non-profit educational project. Both are attempts to grapple with what this car brand meant in the past and what it will mean in the future. What is DeLorean’s true legacy?

Ever since its star turn in the famous Michael J. Fox movie, the DeLorean brand has operated in the boundary space between the past and the future. Any DeLorean project wrestles with this fact. A DeLorean-branded car is by definition a 40-year-old throwback while simultaneously marketing itself as a blast into the future.

The DeLorean of our imagination embodies this paradox. A retro-futuristic relic of discontinuous-time and liminal space.

The DeLorean Motors Reimagined folks know this. The name “Alpha5” – the prototype they debuted last week at Pebble Beach – uses “5” in the name because the company claims to have imagined 1990, 2000, 2010 DeLoreans (the Alphas 2, 3 and 4) that never were. That’s a cool made-up retconned legacy idea, actually.

Their signature tagline, “The Future Was Never Promised” to me sounds somewhat apologetic, as if anticipating and then responding to a disappointed fan who objects to their vision of the future for DeLorean.

Unfortunately, or maybe inevitably, it’s proving hard to satisfy the hardcore fandom that wants both retro and futuristic styling. So far it’s gone over about as well as did Hayden Christiansen’s Anakin Skywalker in the Star Wars prequels, as compared to the original Darth Vader narratives, another retconned remake that enraged original superfans.

The Delorean Motors Reimagined Instagram page hosts a relentless series of complaints about the Alpha5: that it’s not a real DeLorean, that it very clearly reused a 2019 design for a concept car called the DaVinci, that it looks like a Tesla, and that they didn’t honor the DeLorean design legacy. To satisfy your own schadenfreude, I invite you to visit their social media.

The most immediate challenge to their future business hit the company a week before Pebble Beach. Electric car company Karma Motors sued DeLorean Motors Reimagined and its top executives for stealing intellectual property and breaching the non-disclosure agreements they signed as Karma employees in 2021. For them to have a future, they will need to go back to address this past, in court.

Other fights over intellectual property

As one dives deeper into the obsessions of the DeLorean fandom online, the questions of intellectual property rights and legitimacy get even more convoluted. By the time it publicly launched in 2022, the San Antonio-based DeLorean Motors Reimagined had already teamed up in a joint venture with Delorean Motor Company of Texas, based in Humble. That company, led by Stephen Wynne, had long ago established itself as the successor to John Z. DeLorean’s bankrupted firm by buying up DeLorean parts and then over time acquiring lapsed trademark rights to the name, logo and design.

Sally Baldwin DeLorean, the administrator for John Z. DeLorean’s estate and his fourth wife at the time of his death in 2005, however, sued DeLorean Motor Company of Texas for improper use of intellectual property in 2014 and again in 2018. That case was settled in 2018 for an undisclosed amount, leaving DeLorean Motor Company of Texas in a strong position to claim intellectual property rights to the DeLorean name, brand, imagery and logo. Rights which it has now shared in a joint venture with DeLorean Motors Reimagined.

John DeLorean’s daughter Kathryn and a fan-favorite design

Kathryn DeLorean, JZD’s daughter, believes that Sally cheated on her father and also cheated her out of proceeds of her late father’s estate. Meanwhile, she has embarked on her own attempt to establish a DeLorean legacy, by working with a fan-friendly designer.

In November and December 2020, freelance automobile designer Angel Guerra of Spain launched a COVID-era fantasy idea: A 2021 DeLorean tribute to the 40th anniversary of the car.

In the online super fandom of DeLorean, Angel Guerra’s designs caught spontaneous fire. In Guerra’s telling, he reached out to Delorean Motor Company of Texas and shared his vision and even business plans for building a prototype within a year. When DeLorean Motor Company of Texas declined to pursue the idea, Guerra returned to his regular day job, working on European hyper-car auto designs.

Guerra was then surprised to hear a few months later that in fact DeLorean Motor Company of Texas was pursuing a new futuristic electric car joint venture. This turned out to be a group from Karma Motors that formed the executive team of DeLorean Motors Reimagined in San Antonio. Guerra’s comment to me on the formation of that venture, just a few months after he pitched Stephen Wynne of DeLorean Motor Company of Texas, was “what a coincidence.”

Guerra subsequently joined forces with Kathryn DeLorean to offer another kind of legacy. They hope students of design and engineering will learn from building his concept car, the “Model JZD.”

Angel Guerra and Kathryn DeLorean are careful in their public communications to disclose that the DeLorean Legacy Project is not affiliated with DeLorean Motors Reimagined (of San Antonio) or DeLorean Motor Company, Texas (of Humble).

They are not competing in any commercial sense. They represent a different claim, however, to the fandom of the DeLorean. In launching her legacy project, Kathryn says “There is no competition, I am a DeLorean, I’m making engineers, not engines.”

Now then, let’s go back to the future. Ten years from now, Whose legacy will we remember? Obviously, I don’t know.

But there’s a recurring pattern with this company. Kathryn DeLorean claims she was cheated out of her estate by her step-mother Sally Baldwin DeLorean. Sally Baldwin DeLorean claimed she was cheated out of intellectual property and royalties by Stephen Wynne’s company. Karma Motors feels cheated out of intellectual property by the executive team of DeLorean Motors Reimagined. Guerra feels cheated out of credit and inspiration by Wynne. Online superfans feel cheated out of DeLorean’s legacy by the new designs. And I’m worried about the public being cheated out of up-to-$1 million in city and county subsidies offered to DeLorean Motors Reimagined, a pure startup with no track record, entering an extremely difficult industry.

A version of this post ran in the San Antonio Express News and Houston Chronicle.

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August 25, 2022June 14, 2023

Social Security – The 50 Year View

In the beginning of June, Social Security issued its annual Summary Report noting that the primary trust fund for paying reserves will run out in 2034. Twelve years.

Also, I was reading this past week a book by Peter Ferrera published in 1980 called Social Security: The Inherent Contradiction.

In 1980, Ferrera forecast the trust fund would run out in 2030, to which I have two reactions. First – that’s some amazingly accurate forecasting of a complex actuarial system over the span of 50 years! Well done, actuaries. Second – you Boomers have had at least 42 years to fix this. Like, what the heck? I am first eligible for Social Security retirement payments in that same year, 2034. Coincidence? I’m a Gen X kid, I’m used to this kind of treatment by now. It’s fine. Really. I’m fine.

More seriously, the real thing we should understand about the trust fund is this: It’s a useful fiction.

The trust fund isn’t particularly important.

Benefits get paid from current Social Security payroll taxes. The government is not actually investing our dollars. Technically, yes, a partial and temporary surplus of payroll taxes gets parked in low-interest Treasurys, but by no means is this the real source of our Social Security payments. It’s a pay-as-you-go system. Current workers pay for past workers.

In fact, understanding this is a fiction is the key to remaining calm about Social Security. Rather than panic, we should take comfort. The trust fund has never particularly mattered.

As Ferrera wrote in 1980, the idea itself of a trust fund is “a carefully contrived deception meant to mislead the public.”

Ferrera continued, “the entire purpose of this deception is to hide the welfare elements in the social security system and attempt to create the impression that social security is simply insurance without any welfare elements.” I agree.

Whenever I write about Social Security I receive panicked (or conversely, overly certain) emails asking – or informing – me about the Ponzi scheme underlying our biggest government program. This is neither true nor helpful. Ponzi schemes are not backed by mandatory payroll taxes. Social Security is.

I 100 percent do not worry about Social Security running out of money. It’s never been a true trust fund. Rather, it has always been primarily “pay as you go,” transferring tax dollars from current workers to current retirees.

Ferrara’s big idea from 1980 was that Social Security has two functions, insurance and welfare. Most Americans focus on the insurance aspect, in which they think they pay into the system during their working years and they think they get a return on investment back in retirement years. That insurance function is the fakery, and the trust fund a symbolic misdirection to assist in the legerdemain. The true function of Social Security is a welfare transfer.

Although I haven’t spoken with Ferrera, I’m certain we disagree on whether the welfare element is good. I think it is. He thinks it is not.

A not-sufficiently-understood aspect of Social Security benefits is that it deeply favors modest lifetime incomes over higher incomes, when it comes to benefits. This is partly accomplished through “bend points,” which mean Social Security pays based on 90 percent of an extremely modest lifetime salary, 32 percent of a medium lifetime salary, and only 15 percent of higher earnings. I’m simplifying the language around these “bend points,” but the idea is that the welfare benefit of Social Security favors the neediest. To match this focus on welfare, annual income above a certain amount ($147K in 2022) is not taxed for Social Security.

I am confident that in my own life, under reasonable assumptions, I would have achieved a greater net worth if I had never been taxed for Social Security and instead had invested those funds myself. The “welfare” part of Social Security will turn out to be a net loss for me, personally.

For most of my fellow citizens however, the welfare benefit of Social Security is a net gain. And that’s fine by me. This is socialism and should be understood as such.

I say that not as a diss of Social Security. In fact, ninety-six percent of adults polled consider Social Security an important government program. I mean to point out to a Texas readership with all of its preconceptions that a little bit of socialism can be pretty comfortable. Very popular and indeed, necessary. Not having elderly people die of starvation for example is a win in my book.

As for Social Security staying solvent, the real key is in understanding that this is solved with just a series of technocratic tax rule adjustments. The issue is not running out of money in the trust fund (again, the trust fund is largely irrelevant) but rather what small adjustments to delay and diminish benefits or boost taxes will be made to render the entire system solvent.

That was addressed in another 1980s throwback way this past week by former Senator Rudy Boschwitz (R-MN).

While serving in the Senate (1978 to 1990), Boschwitz had written a key memo in 1982 with proposals for shoring up the program. Yes, it is clear folks were worried back in the 80s about the issue.

Last week, in the Wall Street Journal, he listed the various ways to do it again.

Raise the “full” retirement age to beyond 67.

Raise the “early” retirement age to beyond 62.

Fiddle with the “bend points” so that payments are even less generous to higher earners.

Slow the rise in benefits by linking to a different, probably better, inflation index.

Slow the rise in benefits for higher earners.

Make inflation adjustments less frequently.

Tax Social Security income more heavily for higher earners.

Raise the payroll tax slightly to bring in more revenue.

This can all be phased in with many years’ lead time, in a boring, technocratic way. No need to panic. Which again is why I don’t worry about the so-called trust fund running out of money in 2034.

Big thanks to reader Steven Alexander who contributed data and analysis to Ferrera’s 1980 book, crunching numbers on computers back in the 1970s that accurately modeled things like return on investment and the end of the trust fund in the 2030s. I was reading his copy signed by the author.

A version of this ran in the San Antonio Express News and Houston Chronicle.

Please see related posts

My nerdy Social Security Spreadsheet, Part I

My nerdy Social Security Spreadsheet, Part 2

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December 23, 2021December 23, 2021

TPR Podcast Episode 2: Building a Better Pipeline

I have a conversation with Paula Harris, a woman who through the course of her career just absolutely upended expectations.

You can listen for free on the Texas Public Radio website. But also, as they say, you can and should subscribe on Apple podcasts or Spotify or wherever.

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December 15, 2021December 15, 2021

TPR Podcast Episode #1: I Had No Idea How Hard It Would Be

After years of trying to launch a proper podcast with proper professional help…a milestone unlocked for me! The first episode is titled “I Had No Idea How Hard It Would Be” and I think that is also a good description of me, over the past few years, trying to make this happen.

I am super pleased this show with Texas Public Radio has finally launched.

You can listen (you should listen!) here.

But also, you know, subscribe on Apple Podcast or Spotify or wherever, so you won’t miss an episode.

If you’d like to see a quick YouTube preview of the episode, check that out here:

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October 30, 2019October 30, 2019

Broken Recycling Markets Part IV – Best Household Practices

As recycling commodity markets have swooned the past few years and this former source of city revenue has now become a costs item, what’s a responsible household to do?

The first response is that households can’t do this alone. Recycling involves a complex interconnected chain between raw material producer, manufacturer, transporter, retailer, consumer, and waste processor. Household consumer behavior is only one link in the chain. I’m addressing the household link in the chain here mostly because I figure I have more household consumers reading this column than I have of managers of packaging manufacturers and managers of retail operations.

So, what’s a guy and his big household recycling bin supposed to do?

Until recycling processors change their engineering methods for efficiently separating materials, “less is (probably) more” when it comes to what we put in the recycling bin. Like, if you’re not sure, probably just leave it out. Even if you are sure, try to make sure you are sure, you know? We tend to suffer from a classic behavioral finance error, when it comes to our bins. That error is overconfidence, and putting things in “just in case” they can be recycled. That’s costly.

Republic Services, the nation’s second-largest waste management company reports that 41 percent of households received a “failing grade” on knowing what is, or is not, recyclable.

Josephine Valencia, recycling manager at San Antonio’s Solid Waste Department, explained to me that when the city has surveyed people about what they think goes into the recycling bin, they find that people are vastly overly confident about the wrong things. We think we know what we can recycle, but we are frequently wrong.

Metal

With clean metal soup cans and aluminum beverage cans – these are unreservedly still good for the bin. More than that, they represent the single highest value commodity that you can put into your municipal bin. So, you’re making money for your city when you put those in there.

But what about other metals? Tin foil? Small metal pieces? Metal mixed with plastic packaging? Chances are these aren’t at all recoverable by recycling processors. You’re just raising the cost of processing when you include these in your bin.

Plastic

Plastic single-use water bottles? Those actually are fine and have a market value. Milk jugs too, and even heavier plastic bottles. Practically all other plastics though are headed for the landfill.

About two years ago San Antonio said we could gather our single-use plastic bags into bundles of 30-40 bags, in the shape of a soccer ball. I learned those are headed to the landfill as well, with plastic prices where they are now. That made me sad. Many large retailers will take back the plastic bags, but that extra layer of effort is, well, not something I currently do. I liked making the soccer balls, darnit!

Paper

Paper is more fraught than I expected. It turns out most recycling processors were not built for the volume of small Amazon-style cardboard boxes we produce in 2019. Until that gets fixed at the processing plant, most of these are not getting efficiently recycled, to my chagrin.

Mixed paper is hardly worth anything these days, and cities are currently paying processors to take it off their hands.

Glass

And then there’s glass. This is a money loser for cities. It’s mentally difficult to landfill glass because it’s quite recyclable. And yet, the finance guy in me knows I’m just raising costs when I put glass in the bin. I’m torn.

Mixed Packaging

Most all mixed-packaging, which increasingly fills our shopping carts, is not recyclable. Your favorite thin salty chips come in in that cylindrical can made up of paper but with a metal lining inside? Totally not recyclable.

The metal trays from your favorite fast food barbecue place are not recyclable.

Plastic toys are generally not recyclable.

Plasticware from your take-out restaurant is not recyclable.

Generally plastics that aren’t a water bottle, milk jug or cleaned plastic can’t be recycled.

Clothing is not recyclable. Bring it to Goodwill.

And for goodness’ sakes, diapers are not recyclable. That’s for the trash bin only.

“When in doubt, leave it out” is what the experts keep telling me. By putting iffy items into the recycling bin you are simply raising the cost of processing, which gets passed on to municipalities one way or another, which we ultimately cover in our taxes.

I’m a markets guy, so I tend to think that recycling doesn’t have a chance unless we align dollars and self-interest with best waste management practices. I’ve come to appreciate that this is

1. Super-duper complicated and

2. Sustainable financially and environmentally only if everyone in the waste production and management chain is working together. It’s so complicated that it’s far easier to come up with questions rather than solutions or answers.

Big Questions for the Future

A few fundamental questions that learning about this raised for me:

Can households be trained better to recycle only the limited number of financially viable commodities like cans, tins, water bottles, and clean plastic jugs?

Can households some day be trained to actually separate their commodities into more valuable sorted bins, as is done in Europe and Japan?

Will consumers prioritize buying recyclable packaging materials in a way that will force manufacturers and retailers to respond to market demand?

Can manufacturers be incentivized to create more recycled and recyclable packaging, rather than mixing paper, plastic and metal in a way that can’t conceivably be recovered from household waste?

Can retailers be incentivized to serve as the feedback mechanism for channeling consumer preferences to food manufacturers?

Can recycling processers adjust their collecting and sorting processes in a cost-effective way to constantly-changing packaging?

Will municipal, state, and national government policies nudge – in a sustainable way – for more efficient recovery and reuse of materials?

The recycling market is in a period of transition caused by a market slump.

An optimistic view would be that technological and engineering changes, combined with household changes, can mitigate and even solve our problems in the future.

Energy and environment expert Rachel Meidl of Rice University’s Baker Institute says she doesn’t see the China ban or current commodity slumps “as a crippling force. I see it as an opportunity to prepare and strategize for the next generation of recycling and innovation. A long-term sustainable solution would be investing in R&D and scaling up infrastructure to recycle or recover” more commodities.

That, combined with household behavior, would help over the medium and long run. I don’t know enough whether to be optimistic or pessimistic about the current crisis. I’m going to try to do better with my bin though, and leave the rest to the experts.

A version of this post ran in the San Antonio Express News and Houston Chronicle.

Please see related posts

Broken Recylcing Markets Part I – China Ban, market swoon

Broken Recycling Markets Part II – Commodity Markets slump

Broken Recycling Markets Part III – Hit on City Budgets

Organic Recycling – Green in Being Green

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August 2, 2019August 4, 2019

Book Review: Fifty Inventions That Shaped The Modern Economy, by Tim Harford

barbed_wire — Barbed wire…so simple, so consequential

Modern Texas owes everything to the innovation and marketing genius of John Warnes Gates. Don’t worry, I hadn’t heard of him either, until this week.

In 1876 he presented a technological marvel that would revolutionize the state, in a promotional display in Military Plaza, in the heart of downtown San Antonio. Exactly where City Hall would later be built, just 15 years later.

Gates described his innovation as “lighter than air, stronger than whiskey, cheaper than dust.” A print advertisement from the year before had dubbed it “The Greatest Discovery of the Age.”

Gates’ marketing stunt: He bet all comers that their wildest longhorns, whipped into a frenzy by his sidekick with a burning brand, couldn’t break through a flimsy-looking little wire pen he’d built in Military Plaza.

His innovation: barbed wire. It worked.

The anecdote comes from some enjoyable summer reading, Tim Harford’s 2017 book: Fifty Inventions That Shaped The Modern Economy.

In a series of 50 essays of 3-4 pages each, Harford describes the surprising results of many seemingly humble innovations.

So what revolution did barbed wire launch? Before barbed wire, the vast prairielands of Texas couldn’t be divvied up effectively into private parcels. Before barbed wire, the American prairie was effectively unbounded. Native tribes, as well as cowboy teams heading up cattle drives, thrived in this fence-less free range. Like an untame-able ocean.

Despite President Lincoln’s 1862 promise of 160 acres through the Homestead Act to anyone who could settle it and work it for 5 years – privately-held land in the state just didn’t work economically. In vast swathes of Texas it was nearly impossible to keep free-roaming cattle in – and out – of people’s property. Property lines, without an effective means of enforcement, weren’t respected.

But now with barbed wire, cheap and easy enforcement changed everything. The native tribes were doomed. The traditional cowboy-led cattle drive was doomed. Without unfenced prairie to roam – forever altering the previous regime of “the open range,” their livelihood was gone. “The devil’s rope” tamed wild Texas. Private property owners now had the cheap and effective means to invest in and develop their land.

What gives Harford’s book extra philosophical texture is his eagerness to consider technological innovations for all their consequences – for both better and worse. With new products or methods we enhance our lives in many ways, but we also suffer as well. We expand the scale at which humans can live, but we completely upend traditional ways of life. He explores who lives and who dies, who reaps astonishing benefits and who loses their livelihood.

Harford’s book is mind-expanding, easy to digest, and if you like business stories – fun. Harford raises many issues of our day that underlie conflict in our politics and society. One is the unintended consequence of disruptive technological change. From trade disputes to privacy invasions to relentless market pressure to rising inequality – it seems like every big issue of the day hinges on these unintended effects.

The invention of baby formula maybe saved millions of lives, but led us on a 100+ year detour away from the original best nutrition for babies. Birth control pills launched an education and economic revolution as a result of the first effective contraceptive that women themselves could control. The technology of music recording, and revenues from copyright, created a winner-take-all star system in entertainment, previously unimaginable just two generations ago.

Texas_prairie — Taming the Texas prairie required one simple, cheap invention

In essay after essay Harford shows how a smallish change in material conditions alters the entire way our society works.

The barbed wire example highlights our still unsettled attitudes towards private property. The transformation of Texas into an economic powerhouse required enforceable private real estate property rights. But clearly we are not all in agreement that this is a good thing. And depending on who we are or were – the native, the cowboy, the homesteader – a little innovation changed absolutely everything. At the core of some of our biggest political fights today – on taxation, student loan debt, health-care costs, to name a few – is a disagreement over the relative cost and benefit of private property rights enforcement. Should education be free? Should health care be affordable for all? Should we have to pay for music we download from the internet?

Harford explicitly makes the connection between barbed wire and musical copyrights. The technology needed to protect the private copyrights of music recordings is similar to the ‘stronger than whiskey, cheaper than dirt” barbed wire.

In a post-Napster world of illegal downloading and streaming, music copyrights nearly became completely unenforceable. The music industry went into an industry-long slump from about 2005 to 2015. One of the main things Disney and Netflix and YouTube do today is erect and maintain digital barbed wire around their private properties. Their effective digital barbed wire creates massive differences between winners and losers in music royalty payments. Is this a good thing?

By the way, as a recent amateur investor in music royalties myself, I newly applaud strict enforcement of these private property rights. It suddenly seems fair to me.

No doubt, however, effective private property enforcement renders many people worse off.

A few other notes on barbed-wire promoter John Warne Gates. Gates went on to build a fortune in steel production, his company eventually purchased by the early 20^thCentury mega-company US Steel. He was also an early major investor and then President of a business born from the original Spindletop gusher, The Texas Company – begun in Beaumont in 1902, moved to Houston in 1903, and later renamed Texaco.

A version of this post ran in the Houston Chronicle and San Antonio Express News.

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