texas Archives - Page 4 of 8 - Bankers Anonymous

May 9, 2017

The Border Wall Nonsense

Invasive vines creep over the hedge separating my house from my next-door neighbor’s house. Sometimes those vines even touch trees in my yard. That’s why every night I stand on the top of a giant ladder, shouting into a megaphone, straight into their yard. “You’re going to cut those weeds right now! And then you’ll pay for a gardener to get rid of the roots! You’ll see! I’ll make you pay!”

In a related story, I called up US Representative Will Hurd, (R-TX) whose Congressional district shares the nation’s longest border with Mexico – from El Paso to San Antonio – to ask him about who is going to pay for our promised “Border Wall” with Mexico. Unlike the interaction with my neighbors, this call actually happened.

Hurd stands by his earlier statement that the Trump-promised border wall is a “3^rd Century solution to a 21^st Century problem.”

“I still believe that building a wall from sea to sea isn’t the most effective way to do border security,” Hurd told me.

I asked about funding the wall, something that ultimately falls to Congress.

The Trump administration managed to secure $20 million in a budgetary move called “re-programming,” to allow the Department of Homeland Security to study different potential wall designs. One prototype under study is a 30-foot tall structure, which Hurd says would take someone around 4 hours to breach.

The real wall, however, would cost a lot more than the $20 million in starter funds.

While Trump has consistently promised a $10 to $12 billion price tag, independent estimates range from $25 billion to $67 billion, with an article in the MIT Tech Review settling on $40 billion.

That kind of money can’t be gotten through budgetary shuffling known as ‘reprogramming,’ but rather requires Congressional support. At the end of April Trump threatened to hold up a 2017 appropriations bill – needed to keep the federal government from an imminent shut-down – if Congress did not set aside $1.4 billion to begin constructing the wall. The Republican Congress called his bluff, and the wall-funding request dropped for 2017. Maybe it will be back for negotiation in 2018?

Trump says it will. “Eventually, but at a later date so we can get started early, Mexico will be paying, in some form, for the badly needed border wall.” He tweeted. And then, “Don’t let the fake media tell you that I have changed my position on the WALL. It will get built and help stop drugs, human trafficking etc.”

In the meantime, spending billions this way makes no sense to Representative Hurd. As a former undercover CIA officer deployed to Iraq and Afghanistan, he’d advocate a smarter combination of technology, human intelligence, and cooperation with our Mexican counterparts.

“There’s 19 criminal organizations that we’ve identified. Let’s improve our intelligence on those groups and stop them before they get to the border. Ultimately, border security is important, and we need to do a better job.” See, that’s a reasonable, informed, approach.

Who would pay for this wall? We already know Trump’s repeated claim that Mexico will pay.

Former Mexican President Vicente Fox has a colorful way of expressing his country’s attitude. “We’re not building your fucking wall!” he has repeatedly stated to every media outlet on the planet. Unlike statements made by my own president, I believe him. Every Mexican schoolchild remembers 1848, even if most US residents do not know what happened that year. Mexico will no more pay for Trump’s border wall then the US will pay reparations to the Queen of England for territorial and property losses incurred between 1776 and 1783.

Realistically speaking, either US taxpayers pay directly for the wall, or US consumers pay for this indirectly through higher taxes on imports from Mexico. To do that, of course, we’re talking about big changes in the North American Free Trade Agreement (NAFTA), something President Trump also advocates.

Hurd disagrees with that approach as well. “NAFTA is important, end of story. The US, Mexico, and Canada, we build things together. We should be thinking about how we achieve more of this. There are ways to improve it…Updating NAFTA could be a model for free trade agreements around the world. We should be talking about how to strengthen NAFTA, not pull out of it.”

As for me, I’ve driven hundreds of miles through Hurd’s district, from Big Bend to San Antonio on I-90, noting the small towns that have already suffered as a result of stricter border controls. On that long, lonesome highway you see a preview of the economic devastation a border wall – or pulling out of NAFTA – would cause in Texas.

I have tried hard to find serious analysis of the cost of the border wall, serious methods of paying for it, and serious economic impacts of the wall. It cannot be done. The subject resists serious thought. It’s a deeply unserious promise made by a deeply unserious person. But here’s the serious problem for Trump with all his “border wall” talk. When you expose yourself as a bully and a liar on your single most important campaign promise, people remember. Mexico is on to Trump and is calling his bluff. Congress is on to Trump and is calling his bluff.

In the meantime, picture me on my big step ladder every night, megaphone in hand, shaking my fist at my neighbors’ weeds. “You’re gonna pay!” After the first few months, the neighbors stopped paying attention. But I know my starting position is a strong negotiating stance. I’m good at making deals. And people like me.

Please see related posts:

Trump – Sovereign Debt Genius

Trump – Threats to Financial and Economic Security

Trump – We need principled Republican leadership

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May 5, 2017

TX Rainy Day Fund Proposal

Texas Comptroller Glenn Hegar proposed last month significant shifts in management of Texas’ Rainy Day Fund, and it’s all shockingly sensible.

I say shockingly not as a diss against Hegar, but rather because my usual stance with respect to fiscal prudence among government leaders is an exasperated shrug. It’s usually “Oh, they went and did THAT again?” Pffft!! Gah!

For Hegar, however, all I can offer is a congratulatory fistbump and an ‘attaboy.’ He’s applying prudent principles of financial management. It’s almost enough to make a financial cynic believe in, like, good fiscal leadership.

Three simple financial rules – as true for individuals as they are for governments – come into play with the Economic Stabilization Fund (ESF) in Texas, the so-called Rainy Day Fund.

First, automated savings plans are the best savings plans. Second, long-term money should earn a higher rate of return than cash, through riskier investments. Finally, setting aside money during surplus times can make an extraordinary difference in the future, when the lean times inevitably come.

Following these principles – setting aside money automatically, investing for a higher return, and delaying spending until its needed – is notoriously difficult for both individuals and governments to do. I’d say especially governments, because competing financial needs – right now – always seem so compelling. And in a democratically elected system, being responsive to citizens is sometimes hard to square with fiscal prudence.

Legislators created the ESF in 1988 to be automatically funded mostly by excess oil and gas extraction-tax revenue. The fund didn’t amount to much throughout the 1990s, until the revival of the industry after 2006 – via fracking – began to fill up the ESF’s bucket. The neat thing about the ESF, from my perspective, is the automatic nature of the savings. With a savings plan you should try to make a rule and then try not to think about savings as they build up. That benign neglect is the key to success.

A rule written long-ago, automating savings for the state, suddenly brought in a kind of savings windfall. Ten years into the fracking revolution, Texas has the high-class problem of about $10 billion in the ESF. That’s quite a nice “set it and forget it” savings plan.

Regarding investments in higher-risk, higher-yielding opportunities, the ESF has until now always erred on the side of caution and low returns. Historically, the vast majority of ESF funds have earned little more than cash, not even keeping pace with inflation. With a balance above $10 billion, however, Hegar’s proposal sensibly calls for dedicating a portion of the ESF to higher-return investing. Every billion in the ESF that could earn an extra, say, 4 percent annually, would mean $40 million in additional government revenue. The state’s legislative budget board estimates a net gain for the state of more than $82 million by August 2019 if this bill passes

Earning an extra $40 million per year by following a prudent reallocation seems like a good plan to me.

Regarding spending the gains from investment, Hegar proposes a Texas Legacy Fund from which future legislatures could vote specifically for long-term, fiscally prudent, projects. If big public pensions suffer a short-fall in the future, something he and I both worry about, funds from the Legacy Fund could plug the hole. Relatively small amounts now, applied steadily to public pensions, could stave off big problems in the future.

So given how sensible this is, will it actually pass this legislative session?
Ah, representative democracy. So much potential, and yet, so frustrating!

rainy_day_fund_texas — Ready for a rainy day

Hegar’s proposed changes to the ESF came relatively late in the Texas legislative session, through HB 855. The enemy of the bill may not be any particular opponent, but rather the limited time remaining in the legislative session. Changes to the ESF cannot be made without a vote in the Texas House and Senate.

As of this writing, HB 855 had passed out of the House committee, but the state Senate still needed to hear and opine on the proposal.

Setting fiscal prudence aside and thinking more about my needs, I mentioned to Hegar last week that Alaska has a similar ESF fund, but that Alaska makes an annual distribution of close to $1,000 per year to every resident. I think of that money as hardship pay for living through those winter months up North.

I’m originally from Massachusetts and I feel like living in Texas in July and August is worth at least $1,000 per citizen. So I tried on the phone to goad Hegar into agreeing to simply distribute ESF funds to all citizens of Texas every year in the form of a hardship dividend, given our summer heat.

Hegar countered that the good people of Houston might have a stronger claim to summer hardship payments because of humidity rather than the ‘dry heat’ of San Antonio. Dry heat? I thought to myself. I have three words for Hegar: What. Ev. Er.

My proposal is that we get a distribution chart from the Comptroller for every city in

Texas determining which people in the state get the best ‘dividend.’ Can we settle who has the worst summer heat? I feel like my city deserves it the most and there’s potentially a lot of money at stake.

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April 11, 2017April 11, 2017

TRS – A Texas Pension Too Big To Fail

Texas State Senator Paul Bettencourt, (R-Houston) poked the bear when he filed Senate Bills 1750 and 1751, which would allow the Teachers Retirement System of Texas (TRS) and Employee Retirement System of Texas (ERS) to study, and possibly implement, changes in their public pensions. Change would mean moving – in an as-yet unspecified way – from a traditional “defined benefit” to a more 401K-style “defined contribution” plan. The effect would be to shift the burden of paying for retirement, somewhat, from taxpayers to employees. The bills as written specifically would only affect newly hired employees, not existing employees or retirees.

The bear he poked, of course, is public school teachers.

Public school teachers in Texas face steeper challenges planning their retirement than other professionals, in part because the vast majority cannot participate in Social Security, in part because of modest pay increases throughout a full career of service, and in part due to barriers to good retirement advice.

I don’t blame teachers, their union, and groups like the Texas Public Employees Association and Texas Retired Teachers Association (TRTA) that have come out in opposition to the bills. Tim Lee, Executive Director of TRTA, told me that an estimated 120 thousand text messages had been sent to legislators regarding changes toward a hybrid plan, such as suggested in SB 1751. Lee regards a shift to a hybrid system – even for only new hires – as undermining the strength of the entire TRS. A change caused by these bills would cause his organization to rethink their strategic approach to everything, including whether to advocate for joining the Social Security system. They don’t currently, but might in the future if they thought a hybrid system weakened TRS.

And yet, (and here’s where I become a target for the next 10,000 angry text messages from teachers) Bettencourt has an important point to make, by filing these bills. “Long term, what I hope to do is start a discussion about the real cost of pensions,” Bettencourt told me.

As a finance guy, I want my public officials staying up late worried about public pensions, seeking ways to reduce their systemic risks. TRS has more than 1.5 million members, more than $130 billion in net assets, and represents the ultimate “Too Big To Fail” public pension in Texas.

Reasonable people can disagree on the following, but on the four biggest measurements of a pension plan’s health, the TRS according to its 2016 audit is worse off than we’d wish for, although maybe still within acceptable bounds.

We want at least an 80 percent “Funded Ratio” – the percent of money owed to pensioners that’s covered by money already in the investment portfolio. TRS is now at 79.7 percent. Too low.
We want less than 30 years to “amortize” or pay down, pension debts, and would prefer 15 to 20 years. TRS is at 33 years. Too long.
We would prefer a low, or conservative, annual return assumption, compared to a national average of 7.47 percent annual return assumption in pension plans. The TRS assumes an optimistic 8 percent return. Too high.
Finally, the unfunded liability part of the pension – money owed to retirees but not yet paid for – has grown from zero in the year 2000 to approximately $35 billion this year. Too big.

None is this spells catastrophe today, in my view. It just means the TRS is not, currently, building in room for error. As a teacher, if TRS is my main safety net, these numbers do not make me comfortable.

Actually, let me restate: Were I a young teacher, or a prospective teacher facing a new career, I would be livid about those TRS numbers. Older teachers – those close to retirement or already retired – are probably fine, and realistically won’t get benefits chopped to make up any future shortfalls. Rule changes in pensions always hurt the young ones.

In fact, one of the main flaws of the TRS design is this “generational inequity” in favor of older teachers rather than younger teachers, according to Josh McGee, who is both a pension-plan economist for the John Arnold Foundation and the Chairman of the Texas Pension Review Board. McGee has written extensively about how traditional pensions like TRS strongly favor veterans over younger teachers, especially those who change jobs or leave the system at any point in their career.

Defined benefit plans are most generous to veterans of over 20 years, but McGee cites figures that only 28 percent of teachers nationwide stay for that long. The early-departing teachers lose many of their hard-earned retirement rewards.

A defined contribution plan or hybrid plan theoretically could allow teachers the chance to self-fund part of their retirement, which could accompany them to another career or another location.

Then there’s the issue of pension plan solvency.

“When you look around the state, the Dallas [Police and Fire] Pension is a smoking crater at this point in time. Houston is not far behind,” Senator Bettencourt notes, referencing existing problems in public employee pensions in the state’s largest municipalities.

The following are my words, not Sen. Bettencourt’s, but I regard public pension plans as ticking time bombs. Not because the managers of TRS are bad, or because anyone is doing anything particularly wrong. It’s just that small decisions to underfund a public pension can, over decades, compound into giant problems. Make a few wrong assumptions – the 8 percent return assumption seems way high to me for example – and you end up with a big fiscal hole in the state.

A safer approach for teachers and taxpayers might in fact be to shift, over time, some of the risks away from taxpayers. Currently 13 states have a version of a hybrid system of the type that Bettencourt’s bill would allow, while 38 states continue with a “defined benefit” plan like Texas’ current TRS.

It’s a debate worth having now, before anything bad happens.

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

Please see related post:

Teachers and the struggle to get good financial advice

I Finally Say How To Invest

Interview with Mint: I give ALL the answers

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April 3, 2017October 4, 2018

Teachers and Their Retirement Problems

teachers_financial_advice — Public School Teachers are the Glengarry Leads

A majority of people struggle to prepare financially for their retirement, but public school teachers and employees face a particularly difficult set of circumstances.

I’m enough of a fiscally hard-assed finance guy to think that every public school teacher should self-fund his or her retirement to supplement their pension plan, which for people in my state is the Teachers Retirement System of Texas (TRS). Unfortunately, there’s the grim reality facing many teachers about how hard this is to actually do. I learned a lot recently from my teacher friends about why that’s so.

My friend Dina Toland has worked as a public school teacher in Texas for 23 years and described the typical way she and her colleagues obtain their “retirement advice.”

First, a representative salesperson for an insurance or investment management company gets invited, for some unclear reason, to a faculty and staff meeting, where they have a captive audience from which they can collect email sales leads by offering raffles or some other minor incentive.

The salespeople then attempt to schedule one-on-one teacher meetings using these leads, at which the pitch usually involves scaring teachers about their insecure retirement and the need for certain specific investment products. Thus made anxious, teachers are often urged to invest in variable annuities, which I consider one of the four horsemen of your personal financial apocalypse because of their high fees, illiquidity, low returns, and generous sales commissions for these same salespeople.

Dina was convinced to buy into this mess when she was a young teacher just starting out. Ironically, the salesperson herself was so inexperienced that she convinced Dina and her cohort of similarly clueless young teachers to take out too much money from their paychecks, such that they all had trouble paying their bills in subsequent months. Besides taking too much money, they all bought into these terrible variable annuities. As Dina says, how would they have known any better?

This problem afflicting teacher retirement planning isn’t limited to Texas. The New York Times ran an excellent 6-part series last year with provocative and true headlines like “Think Your Retirement Plan is Bad? Talk To A Teacher” and “An Annuity for the Teacher – And the Broker” about precisely these difficulties, featuring public school teachers in Connecticut who were sold products with this combination of high fees, low returns, illiquidity, and hefty commissions for insurance salespeople.

My friend David Nungaray, in his 6^th year of teaching and administration in public schools in Texas, has a similarly discouraging story.

Early in his career, a representative salesperson of an insurance company was invited to speak to new teachers like him, at which he was of course urged to purchase an annuity. He did, to my chagrin when I later learned what had happened. This year he resolved to open up his 403(b) employee-sponsored retirement account, the next big option for self-funding one’s retirement.

Helping my friend David set up his 403b account was anything but easy and straightforward. David is himself extremely competent. But we agree this would never have gotten done without both of us working hard to do it. As a first step, David asked six of his colleagues in the public school system – chosen by David for their seeming prudence and likelihood to have a 403(b) account – if they had any advice for him. Only one of the six had ever signed up for a 403b account. Not an auspicious start. David then contacted his school district to look for help. Could David get any investment advice from his school district? No. The human resources department at his school district referred David to TCG Group, which administers all employees’ 403b plans for his school district, as well as many others in the state. The TCG Group website provides a list of 51 approved annuity and investment firms, with links to contact them.

David had no idea which investment firm to pick. Could TCG Group help? No, that’s not their job. They are 403(b) plan administrators only.

As a side note, I tried for three days to have a substantive conversation with folks at TCG Group, for the purposes of this post. Let’s just say they were as helpful and open with me as they were with David.

The next step was to pick an investment firm and to open an account. I helped him do that. Having done that, he returned to TCG Group to give them instructions to have 403b contributions deducted from his paycheck. Of course, then he needed to select an investment, or series of investments, at his chosen investment firm. That’s easy for me to help him with, so I did. But this hand-holding happened over the course of four weeks, with many barriers along the way. The barriers would have deterred a less determined employee, especially one without a friend willing to do it, in a non-conflicted way, for free.

Of course any of the investment firms could have “helped” him too, but he might have ended up with terrible annuity-like products totally inappropriate for the retirement account of a teacher still in his twenties. I’m all for self-funding and self-reliance as a theory, but I’ve become concerned about the reality of doing this well, for most teachers.

The stakes are high because most public school teachers in Texas – like those in many other states – can not count on Social Security in retirement, as 95 percent of school districts opt out of the federal system. So teachers fall back on the TRS and do little else.

If you are one of the over 1.5 million Texans who are members of the TRS, you should ask at least two big questions about your retirement. First, as my main safety net, is TRS financially strong? Second, will payments from TRS be enough to cover my needs in retirement, personally?

If you are not a member of the TRS, then as a citizen and taxpayer you should hope that state leadership is also asking important questions and having a good dialogue around these challenges and solutions. In a subsequent post I’ll talk about the finances of TRS, and that dialogue.

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

Please see related post:

Public Policy Debate on Teachers Retirement in Texas

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February 13, 2017

Organic Waste – My Kind of Green

When I think about environmental action, my mind goes to the words we commonly use – particularly “sustainable” and “green.” And like the Princess Bride’s Inigo Montoya, I do not think these words mean what traditional environmentalists think they mean.

Because of my particular definitions, I am oddly excited about my city’s organic compost plan. I’ll explain why in a moment, but first, those words.

To me, an environmental plan is “green” when we make money or save money – cool, paper, greenbacks. A “sustainable” environmental plan is one that continues because everyone sees it as in his or her own personal financial self-interest. A “sustainable” environmental action, therefore, is one not easy stopped by a political change or a slight shift in market prices. If people want to do the right thing environmentally and it’s also in their interest financially, then that action will sustainably continue.

Ok, so why do I get all tingly about my city’s green organic composting barrel that showed up at the end of my driveway a few months ago?

After a little bit of research I found out that a business managing organic waste can make money – in a green, sustainable way. As it turns out, my city, and indirectly taxpayers, can save money from organic composting. The final piece – the specific financial benefit for households – is only weakly established, in my opinion. San Antonio is working on this as well, but that’s probably the part that needs the most strengthening in the years to come.

Figuring out how a private business makes money is why I visited the headquarters of New Earth, the company that has the contract with the City of San Antonio to collect organic household waste.

In theory, I’m enamored of their business model. They get paid to take in raw waste, and they get paid to sell compost. Getting paid both coming and going!

Organic waste dumpers – like landscapers, tree-clearing developers, and now the City of San Antonio – pay New Earth for the privilege of dropping off organic trash, the first source of the company’s revenue. New Earth then applies its processes – the art and science of industrial-scale composting – to that waste over 1 to 3 months. At the end, they produce ground cover, mulch, and compost bags for sale to landscapers, developers, and gardeners.

Of course, I’ve simplified the attractiveness of New Earth’s business model.

Like any real business, profit is not as easy as it at first seems. New Earth takes considerable financial risks.

Here’s just a sample of why it’s risky: Handling trees and brush cleared from a new construction site is relatively easy – you run the trees through a chipper and you have a relatively uniform product at the end. However, properly filtering household organic waste – produced from hundreds of thousands of sometimes careless trash-tossers like you and me – is a far more risky and manual-labor intensive process. Clayton Leonard – until recently the President of New Earth – explained to me that New Earth had to double their workforce to handle the city contract. They also had to invest in a multi-million dollar piece of equipment to sort through the waste. Leonard climbed up with me onto one of their giant sorting machines.

We watched the household waste pass through a conveyer belt while guys with rakes – some of their new hires – separated the non organic waste from the pile. Pro-tip: Neither your old iPhone case nor your plastic bags should go into organic waste. Not all households, I saw from the conveyer belt process, have gotten that memo.

I mention all this to say that it takes significant capital and labor costs to try to make money on a citywide organic waste contract. The key point for me, however, is that New Earth is being run in my version of a green, sustainable way – to make a profit.

At the same time, the City of San Antonio has their own green, sustainable, reasons – saving money. Here’s how.

When the city hauls and dumps regular trash, it pays an average of $24 per ton to local landfills for that privilege.

When the city hauls and dumps organic waste over to New Earth it pays $16.50 per ton. The city is incentivized therefore to redirect as much volume of trash as it can to organic waste. As New Earth’s Leonard told me, “In order for us to survive, we have to be cheaper than a landfill.”

As the city fully rolls out the green barrel program – scheduled for completion in April 2017 – it hopes to get a lot of residents dumping their compostable waste into those barrels. The goal for the household organic waste program is 60,000 tons per year, according to Nick Galus, Assistant Director for the Solid Waste Management Department. At current prices, that would save an estimated $450,000 per year.

As a public entity, Galus notes, their goals are a combination of financial gains and sustainability, traditionally understood.

“Our goal is to capture the greatest amount of the waste. The cost isn’t the driving force. We’re trying to get to our goal in the most cost-conscious way,” he said.

Interestingly, San Antonio is the first major Texas city to roll out an organic recycling program city-wide. The fact that other Texas cities haven’t done the same – despite some financial incentive to do so – indicates that there are risks for a city as well. Any city, including San Antonio, has costs for rollout and household education. Other Texas cities have pursued strategies focused on yard waste, according to Galus, making it costly to switch over to a plan that also accommodates food waste.

The San Antonio goal is to have 60 percent of all waste hauled by the city be recycled, composted, or repurposed in some way by 2025. They’re at 33 percent as of 2016.

If San Antonio can show cost savings, the case becomes more compelling for other cities. If they can even figure out the household financial incentives, the whole process becomes my kind of green and sustainable.

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

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November 15, 2016

In Praise Of Dirty Jobs

If you have a fancy educational background, the tempting thing is to go into a glamorous field, full of smart people with equally good educations. Maybe investment banking, consulting, or a stint with a hedge fund? I tried all that. Because I’m a slow learner, I realized late that there’s got to be a better way. It took me a while to figure out the following: Dirty jobs might be a smarter bet for making money.

What I really wish I could do is invest in my friend Bryant’s business, but I’ll tell you his story as maybe it helps you make money starting or investing in your own business.

Bryant’s Ivy League education initially took him to book publishing in Brooklyn, which – while not as lucrative as other high-status jobs – is definitely full of bright shiny minds. Then a buddy lured him down to the Eagle Ford shale in South Texas in 2007, and he’s been knee deep in the oil field services business ever since.

I took a field trip 30 minutes south of my house where Bryant is currently building a new oil-field services business, called CRU Railcar services.

Railcar cleaning

He and his boss got inspired because they move sand into the oil field in South Texas via rail, and they found existing services to periodically clean their train cars expensive, slow, and unreliable.

Here’s some background on cleaning railcars: Railcars that move the products of the oil and gas business have to be cleaned before being used for carrying anything else and/or before being put into storage. If the railcar previously hauled diesel but will convert to move heavy sour crude in the future, then a professional cleaner has to completely scour the inside of the car. If the car moved propane before but will be retired into a rail yard for storage, the whole thing has to be cleaned as well.

This is a dirty job. It’s also dangerous, scary, and complicated.

During our visit, Bryant and his team of five other roughnecks all wear the company uniform: The left-pocket nametags stitched on nylon with reflective safety stripes give them a look somewhere between an Astros throwback jerseys and a bowling team. It’s the kind of thing his book-publishing hipsters buddies might wear in Williamsburg, Brooklyn, but for them in a totally ironic way. There’s no irony to Bryant’s pret-a-porter style. This job kills.

Two cleaners in Illinois died after succumbing to fumes in 2014, while another two in Nebraska were blown up in 2015. Materials left inside the cars are highly explosive. Two brothers in San Antonio died in June this past year after inhaling fumes inside a tank car they were cleaning.

A Houston Chronicle investigative report in 2014 found the tank cleaning business highly risky, with the main regulatory agency OSHA unable to keep track of cleaning companies or their safety standards.

In reading reports of accidents on the job, a haphazard approach to risk appears common.

Bryant’s attention to detail when it comes to risk, by contrast, impressed the heck out of me.

Bryant walked me through the process he’s created for cleaning fuel cars.

First, they assume the air inside a fuel car is totally incompatible with human life. All cleaners breathe only from oxygen tanks, like scuba divers under water. As a backup, they carry 5-minute emergency tanks in the event of a failure. A spotter stands over a hole in the top of the train car at all times, watching for any signs of trouble. The spotter stands next to a crane for lifting an unconscious body, while an electronic monitor for air toxicity runs at all times. In addition to the spotter, a rescue person stands by, with his own oxygen supply at the ready, in case of trouble. That covers the air problem.

Then there’s the explosion problem. To hack at dried petroleum that might cake the fuel tank floor, the cleaners use a spark-proof shovel. Shovels are just one method.

Train cars arrive in a wide variety of dirty states, having carried any number of oil and gas products. In tests, Bryant’s team has found that only trial-and-error can determine what cleans the cars best. Sometimes a splash of diesel loosens up the gunk. Sometimes a high-pressure water hose that would cut your limbs off works best. Sometimes, he reports, the simple household cleaner Dawn is magically effective.

Seek dirty jobs

Thomas Stanley, author of bestselling personal-finance book The Millionaire Next Door urged “dirty jobs” for successful entrepreneurs. Stanley tells the story of junk-yard owner Richard with his $700,000 annual income and $10 million net worth as the quintessential model to follow. Seek businesses with that might have little to no competition, Stanley urges, because they lack the prestige that attracts the brightest minds.

Many things will determine the success of failure of your new business venture: The cost of materials, your ability to make the big sale at the right time, the difficulty of finding investment capital, your skill in hiring and retaining key people, and of course the sign of the zodiac under which you were born.

But one of the things that could save you – as you screw up everything early in your business venture – is the quality of your competition. In a sense this is just another restatement of the old “bear and the two hunters” joke. You don’t necessarily have to outrun the bear, you just have to outrun your competition. If you can choose a field where the competition is thin, you’ve got a good chance of thriving.

Bryant’s railcar cleaning business is dirty, dangerous, claustrophobic, and complicated. I would not do it for anything in the world. I also have a hunch they’re going to clean up on the competition and make a lot of money.

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

Please see related posts:

Audio interview – My buddy Bryant on fracking jobs, plentiful and rough

Book Review The Millionaire Next Door by Thomas J. Stanley

Book Review The Millionaire Mind by Thomas J. Stanley

Audio interview – Gary Sernovitz on Fracking

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