Saturday, December 31, 2005

A Year to Be Grateful For

This time of the year is conducive to reflection. The gray skies, the sparsely populated office, and the writing of the holiday letter always cause me to take stock. (Speaking of stock, I wish I bought some Google last year, I thought it was too high at $193, and now it’s at $415. I can’t do anything about the past, but do I buy it now? In the Internet search sector,Yahoo appears to be a better value.)

I started writing this post on the Friday morning train, which came to an emergency stop. Earlier, a motorist smashed through a crossing gate in Burlingame. The gate wasn’t working when another car crossed the tracks in front of our train. Thankfully, the engineer braked, avoided an accident, and called a repair crew. The low and high of humanity in this one episode: the first driver who might have caused a tragic accident and the alert engineer who responded quickly and professionally.

As I was saying, I was going to write about the stormy weather and having to go into the office during this semi-holiday week. Until I realized that I wrote about these subjects last year…….and the year before. I’m repeating myself, a sure sign that the whine has peaked.

Our student came home for the holidays and strolled over to the shopping center to apply for a job. At one retail outlet there were three requirements: 1) Complete a test consisting of questions like “What’s the new price if a $13 item has been marked down by 30%?”; 2) Present a U.S. passport; 3) Fill a bottle at a South City lab and wait for the test results. Our student started work two days later. He’s earning close to the minimum wage, but it’s honest work.

Last night hurricane winds battered the Bay Area, but our house fared much better than it did ten years ago when our fence blew down. Reports of flooding and downed power lines are pouring in from neighboring towns, but Foster City has suffered little damage. We have our home, our health, each other, and hope for the future. That’s a lot to be grateful for.

Wednesday, December 28, 2005

The Nativity of Our Lord

….is the canonical name for the feast day popularly known as Christmas. The title of the feast dates from the 1662 edition of the Book of Common Prayer. The word “Christmas”, which can be traced back to the twelfth century, is a contraction of “Christ’s mass” and perhaps more appropriately describes the Last Supper than it does Jesus’ birth. As we battle over whether greeters ought to say “merry Christmas” or “happy holidays”, how about “have a neat Nativity”? Not only does it have the advantages of accuracy and alliteration, voicing that greeting is likely to spawn quizzical looks rather than objections.

On Christmas morning the youngster and I served as the one acolyte and usher, respectively, at the local Episcopal church. The Christmas service is lightly attended, because most parishioners turn out for the children’s pageant the previous afternoon or midnight mass on Christmas Eve. Forty souls were in the pews at 10 a.m., lustily belting out O Come, All Ye Faithful and Hark, the Herald Angels Sing. The minister kept his sermon short, because he knew everyone had places to go, people to see, and presents to open.

After the service I helped the Treasurer count the offering, including the one from the day before. The sums aren’t terribly large, but the procedures are highly involved. We have to run adding machine tapes of the checks, the list of the donors, the object of their donations (2005 pledge, 2006 pledge, Christmas fund, etc.), and make sure the sums all match. Once, I was off by $10 and spent over an hour trying to find the error (no, opening my wallet and throwing a sawbuck into the pile wouldn’t have solved the problem---believe me, I did think of that). And because there is loose cash involved, two people have to conduct independent counts and initial the total. Yes, we’re godly people, but sinners, too.

Andy, who runs a local accounting practice and who sometimes helps out, said that using a spreadsheet would be a lot easier. Fine, I thought, you design a system that will keep track of a check that is split between the regular pledge, the altar flowers, and the non-deductible ski trip the youth group takes every winter. But I don’t blame him for feeling frustrated; the name of the feast day isn’t the only thing about the church that dates back to the seventeenth century.

We went home and opened some of our presents. We take several days to unwrap them all, so that we can savor the experience and appreciate the donor’s consideration more fully. The kids gave me an iPod connection to the car radio and a soft warm sweater; both gifts were put to immediate use. When you receive a thoughtful gift, not only does it reflect the donor’s expenditure of time and treasure in the shopping process, but it also shows that he has been observing you and thinking of your needs. And when the gift-givers are the once-little people whom you never thought would consider anyone’s needs but their own, well, the feelings are hard to describe. It did turn out to be a neat Nativity, and I hope you had one, too. © 2005 Stephen Yuen

Monday, December 26, 2005

Back in the Rain

S. and I had lunch Thursday. Like most of the young and not-so-young professionals whom I encounter, he becomes animated, even agitated, when the subject turns to politics. S. holds views that are nearly the opposite of mine, but he’s got a good heart, and I always enjoy our discussions. Besides, if I refuse to converse with those who believe that conservatives are driving the country over a cliff, I wouldn’t be able to talk to anybody in my office or most of the people at my church or even in my own household.

We met at the Metropol on Sutter. He ordered the salmon and I the meatloaf. We both have to watch our cholesterol, but I needed the comfort food after a six-block walk in the winter storm. S. was my manager when I worked at the San Francisco office of Touche Ross, one of the national CPA firms. He moved on to banking, served on the staff of the FASB, and is now the finance director at a non-profit foundation. Add to that his MBA from the University of Chicago, and it’s hard to win an economic argument with him.

When we sat down, he got right into it: so, do you like the direction we’re going? Over the next hour and a half our discussion flitted from the national debt to tax policy to government spending, from wiretaps to the futility of maintaining privacy in a wired world, from asymptotic curves to the approaching Singularity, from functionalism to predestination, from the isolation he experienced in Colorado Springs to the fish-out-of-water feeling that I get in San Francisco.

In the spirit of the Season, I will only note some fundamentals on which we did agree: 1) the pace of change is so rapid and our legal system is so far behind technological developments that it didn’t matter very much whether our respective views on domestic policy were enacted into law—we are on a runaway train, just trying to hang on. 2) we are worried for our children, not so much for their survival, but whether they have the judgment, the skills, the grounding to navigate the confusing, cacophonous world that they will inherit. Would we rather be us or them? S. and I both picked us.

On that note, I bade S. a Merry Christmas, promised to do this again, and walked back in the rain. © 2005 Stephen Yuen

Tuesday, December 20, 2005


His opponents may cringe at the thought, but George W. Bush is the most consequential president since Ronald Reagan. Actions taken by his Administration will reverberate deep into the first half of the 21st century.

Foreign Policy: the Bush Administration overthrew tyrannical regimes in Iraq and Afghanistan, irrevocably disrupting the status quo in the Middle East. The forcible implantation of democracy in two countries may finally cause Western values to take root in that troubled region, trigger chaos and civil war, and/or lead to the final resolution of the Palestinian-Israeli conflict.

Appointments that should outlive the Bush Administration by many years: at least two Supreme Court justices, including one Chief Justice, and one Federal Reserve Chairman.

Domestic Policy: 1) reduced the income tax and eliminated the estate tax for the vast majority of Americans; 2) added prescription drugs to Medicare benefit coverage; 3) accelerated the unification of police, military, intelligence, and security operations, thereby raising their effectiveness at the cost of citizens’ privacy rights; 4) failed to reform Social Security, even with one party controlling both the Executive and Legislative branches of government.

Disasters: the most costly natural (Hurricane Katrina) and man-made (9/11 terrorist attacks) disasters in American history occurred under Mr. Bush’s watch.

Decades after they left office, the presidencies of Ronald Reagan and Franklin Roosevelt continue to provoke heated arguments. The consequential presidency of George W. Bush promises to do the same.

Sunday, December 18, 2005

Blaming the Customer

The San Francisco Chronicle loses columnist Ken Garcia to the free Examiner:
the Chronicle had lost more circulation than any newspaper in the United States in the last year — by a whopping margin. [The] publisher decreed that the steep circulation decline was actually welcome, because they wanted higher quality readers, not those shabby subscribers who were apparently picking it up on the cheap.
The Chron must be pleased, because I'm one of those lower quality readers who stopped his subscription after 20 years. The paper that I loved to read is no more. The great stable of columnists--Delaplane, Hoppe, McCabe, and the greatest of them all, Herb Caen--is long gone, and the current crop, much like today's football 49ers, has only the uniform in common with the giants who have gone before. Yes, the Chron's problem must be the quality of its readership.

Friday, December 16, 2005

A Trend Continues Until It Stops

In 1798 Thomas Malthus issued his famous prediction that accelerating population growth doomed mankind to a fate of misery and poverty.
The power of population is indefinitely greater than the power in the earth to produce subsistence for man. Population, when unchecked, increases in a geometrical ratio. Subsistence increases only in an arithmetical ratio.
Malthus extended the curves on his graphs and agreed with Hobbes’ assessment of mortal existence, that it was “solitary, poor, nasty, brutish, and short.”

Sodden aside: in the pantheon of dead white males whose ideas form the basis of our society---and its evils---one rarely hears aspersions cast upon Malthus (or Marx or Darwin) outside of conservative circles. I suppose it depends on which white male one agrees with.

Malthus’ ideas were given a modern patina by the Club of Rome, which published The Limits to Growth in 1972:
If the present growth trends in world population, industrialization, pollution, food production, and resource depletion continue unchanged, the limits to growth on this planet will be reached sometime within the next one hundred years. The most probable result will be a rather sudden and uncontrollable decline in both population and industrial capacity.
The Arab Oil embargo of 1973 seemed to confirm the Club of Rome’s thesis. Watergate, the humiliation of Vietnam, and runaway inflation caused 1970’s America to sink into despondency and malaise. Students were instructed to read Gibbon’s History of the Decline and Fall of the Roman Empire not as history but as harbinger. The Malthusian catastrophe had merely been postponed for a couple of centuries but not avoided.

In the 1980’s the slope of the line changed. Population growth slowed, not because of famine and disease, but due to a rise in living standards. Demographers offered a variety of reasons---large families are an economic burden instead of a blessing, offspring are no longer necessary to provide support for the parents in their old age, children are prohibited from working in factories---but while the reasons remain unclear, the latest trendlines are considerably less dire than Malthus and the Club of Rome had predicted. Perhaps we can permit ourselves to be guardedly optimistic.

Futurist Raymond Kurzweil says that we have been looking at the wrong charts and that our optimism should be unbounded. Accelerating returns in technology point to a mind-blowing (pun intended) future that we can barely grasp. Genetics, nanotechnology, and robotics -- scientific fields that barely existed a century ago—will utterly transform civilization.

Kurzweil's graph illustrates the pace of invention.

The merger of man and machine, the indefinite extension of human life, a virtual reality that will permit us to live as other persons in the fullest sense, these are a few of the developments that we will see by 2050. Eventually, our civilization will leap beyond the bounds of our solar system and transform the universe!

Whew. Kurzweil is a smart man, much smarter than this observer, and his insights are probably on target, but what gives me pause is the fact that persuasive-looking graphs, such as the ones produced by Malthus and the Club of Rome, have been wrong before. (If one extrapolated the prices of the Internet stocks that I bought in the 1990’s, I could have retired long ago. Instead, their capital-loss carryforward provides me with a reliable, if modest, tax deduction for years to come.)

Kurzweil advises baby boomers to take care of themselves. These startling advances will be available in a few decades. If we can hang on long enough, we’ll have the choice of extending our lives indefinitely. Advice that it can't hurt to follow, and all the more reason to go to the gym and pass up that second helping. © 2005 Stephen Yuen

Tuesday, December 13, 2005

Cold Comfort

Last week’s cold snap has dissipated; it’s 51 degrees this morning, and 60 indoors. Due to PG&E’s rate hikes, we’ve resisted relighting the pilot and are bundling up each night with sweaters and space heaters. The kids were unmoved when we told them that we’re saving $200 a month on gas; the amount became meaningful when we said that was equivalent to buying an iPod nano every 30 days. Besides, by not turning on the furnace we’re not adding to the amount of carbon in the atmosphere, thereby reducing global warming. With kids I use whatever argument helps me get through the day and hope they don’t make the connection when, say, I want to fire up the barbecue next summer.

Visitors from back East tell us how lucky we are by not having to cope with sub-freezing temperatures. No, I don’t miss snow shovels, salt on the roads, and having to wear hats, gloves, and boots every morning, but snow’s white blanket does confer a calmness that is nearly sacramental, the world’s outward and visible sign of the inward and spiritual grace that is all too lacking in the hurly-burly of December.

The skating rink last Friday night.

Thursday, December 08, 2005

A Memory Evergreen

Last month a couple of guys from the college development office paid a visit. Jim and Pete ticked off all the new and wonderful programs that had been introduced at the old school. You wouldn’t recognize the place, they said. I fleetingly imagined that I was 30 years younger, and that I was a freshman again. The daydream was silly, not only because I couldn’t turn back the clock, but also because I probably wouldn’t meet today’s standards for admission.

The old school’s neighborhood is undergoing a renaissance, said Jim. During the ‘70’s, when the rot of the inner cities seemed irreversible, students didn’t venture out past the rows of shuttered buildings. Tattered posters commemorated the town’s glory days, when the beautiful people would swoop in to watch plays before they debuted on Broadway. The city’s revival is now beginning to make it a destination, rather than a place to crash on the way to Boston or New York.

I hung out at the student cafeteria and mastered a Fireball pinball machine. I learned the special shot that would enable me to play indefinitely on just a quarter, maxing out the credits at 10 games. I also spent many an evening in the dormitory basement, which housed the laundry, card tables, and foosball machines.

The rare books library
My favorite place to read was the library of rare books. Sunlight glowed warmly through the marble walls, and the thick leather couches were comfortable--sometimes too comfortable—for intense studying. Every couple of hours I would get up and gape at the historic works on display.

I now wish that I hadn’t been in such a hurry to graduate. It would have set me back a few thousand dollars—real money in those days—but the experience and memories of another year would have been priceless, which is how I now value the three years that I did spend in college.
When I hear people curse the chance that was wasted I know but too well what they mean. --Cole Porter

Sunday, December 04, 2005

Remaining Useful Lives

My company owns a lot of long-lived assets, such as ships and power plants. The remaining useful life of each piece of equipment affects many of our spending decisions. When an airplane engine needs an overhaul, which can run into many millions of dollars, we will scrap or dump the airplane at a loss if it is long in the tooth, just as you, dear reader, wouldn’t order a $1,000 repair on a jalopy worth $2,000 (unless the old car is a member of the family, in which case rational economic analysis goes out the window).

The remaining useful life represents our best guess about how many more years of service we can get out of the equipment. Despite the higher costs---repair, maintenance, fuel, environmental, labor (e.g., three pilots versus two in planes built after the late 1980’s), most older assets can be kept running long beyond the original design specifications, and their remaining useful lives are constantly being revised upward.

And so it is with human beings. With 70 being the “new 60”, many of us baby boomers will be productive members of society well past the expiration dates of the pre-WWII generation. Our physical stamina and mental acuity may not quite be what it once was, but technology has advanced much faster than our powers have deteriorated. Net-net, as they say, we are better doctors, lawyers, accountants, engineers, and teachers than we were 20 years ago.

Rule of 65
In the financial services industry there’s an old joke about how deals are approved according to the “rule of 65”, that is, whether the deal will reach maturity, or at least not go bad, before the CEO retires at the age of 65. Maybe we’ll have to re-christen it the “rule of 70” or even 75. (At 74, this CEO doesn’t show any signs of stepping down, although it does appear he has enough saved for his retirement.)

Puzzling Behavior
Why is that the younger people drive so fast and risk life and limb to beat the red light? Oldsters are the ones who should be trying to make the most of each moment, while youngsters should act more relaxed with vast expanses of time in front of them. Another sign that our feelings and hormones overwhelm our rationality. Mr. Spock was right.

The vast expanse of Earth at night (hat tip: Jonah Goldberg, NRO)

Thursday, December 01, 2005


I am facing December with a mix of anticipation and anxiety. More business changes are on the way, and managers have to reassure nervous staffs while getting them to shoulder increasing workloads. The best way to do that is to lead by example, which means that I'll be spending more hours at the office.

It’s a good thing that California law requires companies to allow employees to store up to 35 days of vacation; I’ve accumulated 4 weeks in the bank and will be able to snatch at most a couple of days around the holidays. If he drops dead from exhaustion, does accrued vacation become part of the estate, he wondered mordantly.

The holiday cards need to be written and mailed, gifts need to be purchased and wrapped, and checks need to be sent to charities to qualify for the contributions deduction by year-end. Whatever did happen to the New Year’s resolution to be better organized? It’s in the same place as the commitment to exercise every day.

Wait’ll next year. Well, next year did come for the Red Sox and White Sox, so there’s hope.