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    For the future of Hawaii, learn more about the Jones Act

    Grassroot Institute
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    For the future of Hawaii, learn more about the Jones Act

    Joe Kent, left, posed a question to Colin Grabow about the Jones Act during a forum last week on Maui. Photo by Sean Mitsui.

    By Keli‘i Akina

    As you might have heard, the Grassroot Institute of Hawaii hosted two forums on the Jones Act last week on how we can make the Jones Act work for everyone.

    The featured speaker was Colin Grabow, a trade policy analyst at the Cato Institute, a Grassroot Scholar and co-editor of the book “The Case Against the Jones Act” — which includes an essay by me, by the way.

    Many of you have heard me talk about the Jones Act before. In a nutshell, the 1920 law limits shipping competition between U.S. ports by requiring all goods moved between U.S. ports to be on ships that are built and flagged in the U.S., and mostly owned and crewed by Americans.

    Keli‘i Akina

    It’s a law that works great for the few U.S. shipyards, ocean carrier companies and mariners involved in domestic oceangoing shipping. But for the rest of us, especially those of us who live in places like Hawaii and Puerto Rico, it means higher prices during normal times and life-threatening product shortages during times of emergency.

    Grabow gave two talks about the law, one on Oahu and the other on Maui. The Oahu talk, which I moderated, is already posted on the Grassroot Institute of Hawaii website, and what a great talk it was. 

    The format was for Colin to answer questions throughout, initially from me and then from the audience. The purpose was to make it clear how the law actually works compared with its alleged goals — and also how it might be changed for the benefit of the greater good while giving its protected beneficiaries a graceful way to eventually stand on their own two feet. 

    It was a tall order, but Colin did great, and so did the audience.

    On Maui, my Institute colleague Joe Kent moderated the event, which also turned out great. A video of that gathering will be posted to the Institute’s website within the next few days. Both videos also will be accompanied by full transcripts.

    As on Oahu, the attendees had some terrific questions for Colin. 

    For example, one voiced a very common concern, namely that changing the Jones Act could possibly hurt Hawaii by leaving us dependent on new competitors that would come into the market when it’s profitable, then abandon us in a time of crisis.

    Colin responded that this is a hypothetical situation that doesn’t reflect economic reality. He used the example of the two grocery stores he uses on the mainland, pointing out that if one were to go out of business, someone would come along to replace it. Similarly, shipping is very competitive, where not restricted by law, so if Matson or another company were to go out of business, others would definitely fill the gap. 

    It’s good to remember, he said, that American Samoa and the U.S. Virgin Islands are both exempt from the Jones Act — and they like it that way. Both have resisted being included in the Jones Act, because neither has had problems with shipping reliability.

    Asked if Hawaii has enough warehouse space to accommodate foreign shipping lines with longer trade routes, Colin responded that the answer should always return to competition and cost.

    Trying to excuse higher costs of the Jones Act based on warehouse availability, he said, ignores the fact that the free market can decide what method has the best value. Why prevent that competition when local merchants and consumers are the ones who stand to gain the most?

    Some audience members worried about the quality of ships built in other countries. But Colin explained that the designs being used in U.S. shipyards are already mostly foreign and that all ships are built to the same standards. Moreover, because of the way that shipbuilding works these days, components are often made in other countries and assembled here. 

    One Maui attendee asked about the number of jobs that would be affected if the U.S.-build requirement were eliminated. But again, the answer wasn’t the nightmare scenario so often presented by Jones Act proponents. 

    As Colin explained, most U.S. shipbuilding jobs revolve around building ships for the military, so freeing up the civilian shipbuilding market would have little effect. What’s more, studies have suggested that efficiency gains could actually lead to more maritime industry jobs.

    There was so much more about the Jones Act that Colin was able to explain in a relaxed and easily comprehensible manner. If you were unable to attend either of the events yourself, I hope you will take the time to view the videos on the Institute website, since greater knowledge about the Jones Act is key to updating this failed law for the 21st century. 

    In fact, surveys show that the more people know about the Jones Act, the more likely they are to support its reform. For the future of Hawaii, consider spending some time to learn more about the Jones Act. Again, you can watch Colin’s Oahu presentation here. The Maui event will be posted shortly.
    _____________

    Keli‘i Akina is president and CEO of Grassroot Institute of Hawaii.

    New Administration’s Tax Priorities

    Tom Yamachika
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    New Administration’s Tax Priorities

    In a recent interview with Hawaii News Now, Governor-elect Josh Green outlined the top priorities he has for his first 100 days in office, presumably including the start of this year’s legislative session.

    He said that he would focus on (1) taking immediate steps to address the housing crisis, such as by using emergency powers to cut permitting delays; (2) getting homeless people into kauhale, which are villages of tiny homes; (3) restoring trust in government especially with the native Hawaiian community, such as by distributing lands for homesteads; (4) launching a concrete climate plan, including establishing a “climate czar” within the governors office; and (5) addressing our cost of living by exempting food and medical care from the general excise tax, which, although it would have a substantial cost, could be absorbed by the surplus we now have.

    Fortunately, this version of Governor Green‘s top priorities does not include the “tourist green fee,” which we have previously expressed concerns about because it may well be unconstitutional to levy a tax on those who enter or depart from our state.

    When it comes to calculating the cost for an exemption for food and medical care, we previously observed that there were lots of devils in the details. For example, there already is a general excise tax exemption for food paid for under the WIC program, and there are myriad credits in the income tax system, from the Earned Income Tax Credit to the Food/Excise Tax Credit, all of which are supposed to give tax relief to those less fortunate.  This can be good or bad, depending on your viewpoint.  If you like the exemptions, the existing exemptions and credits can allow you to argue that adopting a broader exemption for food and health care isn’t going to cost the State as much as feared.  If you don’t like the exemptions, you can argue that because of the existing exemptions and credits, exempting food and health care is going to benefit the rich much more than the poor, making the exemptions look like a giveaway to the rich. 

    When the question of a food and drug exemption from the general excise tax came up years ago, at the turn of the millennium, my predecessor Lowell Kalapa wrote against the proposed exemptions.  Why?  To him, the question was of fundamental fairness, and the issue concerned exemptions and tax incentives generally.  Any incentive or exemption creates winners and losers.  The winners are those who receive the incentive or exemption.  The losers are everyone else, because the cost of government still needs to be paid.  If the recipients of the exemptions or incentives pay nothing or pay less, more needs to be paid by the rest of us mere mortals.  Lowell’s point was that the creation of winners and losers is the creation of unfairness.

    With any modern or ancient tax code forged by political processes, however, exemptions, credits, and incentives are not only common, but are recognized tools of social policy.  We now tax fossil fuels more heavily, for example, because burning them causes more damage to our planet than burning other kinds of fuels.  We tax tobacco and alcohol, for example, because they are connected with “sins” in our society as well as health hazards.  The question is whether there is some social benefit outweighing the unfairness created by the incentive or exemption.  The answer to this question will of course be different for each exemption or incentive, and it may change over time to reflect the changing needs of society.

    So, where does that leave us with our Green Administration’s agenda?  We certainly have a pressing societal need to alleviate the cost of living that is making us all suffer.  Taxpayers and doctors are fleeing our borders, as we have written about often before; our state is like a patient on the operating table losing blood fast.  We need to try something bold and different to give the patient a fighting chance.

    Good Bread is Good Medicine

    Robert Kay
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    Good Bread is Good Medicine

    My neighbor and longevity guru, Bradley Willcox, knows a thing or two about healthy aging. As a Professor and Director of Research at the Department of Geriatric Medicine, John A. Burns School of Medicine he is fond of saying, “the intersection of healthy aging and technology is in the kitchen.” In other words, good bread is good medicine.

    So, what does this have to do with a bread making machine?

    “Healthy aging”, says Dr. Willcox means “aging with minimal chronic diseases and high physical and cognitive function.”

    What about the ‘kitchen’ part of the equation?

    “Food is medicine”, he told me. “It’s an Okinawan expression and it’s true.”

    Looks as good as it tastes
    Oh yeah, good bread is good medicine…

    Does nourishing bread count as medicine?

    “You bet,” he replied. “Americans eat a lot of bread and a lot of it is no good. Eating healthy bread made with whole grains is fiber rich and associated with a lower risk of diabetes, heart disease, various cancers, and better gut health.”

    It was time, with technology, to make my own bread.

    Why go to all this trouble? I’m a healthy-food fanatic and the bread available commercially is generally not all that good. Yes, there are some exceptions. For example the Breadshop on Waialae avenue does a remarkable job of producing healthful, delicious bread. At around $10 a loaf or more, it better be. But as they say, you get what you pay for.

    So what about the part about making your own? Well it’s a helluva lot of work, unless of course, you have one of those new fangled bread making machines.

    That brings us to the subject of this article.

    My choice of bread maker, a Panasonic SDR2550, was hardly scientific. My neighbor, Ray Madigan, a yoga teacher, and retired nurse has owned a Panasonic bread maker for over 10 years and has been bragging about his bread for years. I finally tried a toasted slice.

    That was all the empirical evidence I needed.

    It's as easy as hit the button and walk away...
    Simply add the ingredients to the bucket in the proper order, hit the button and walk away. (The bucket is removable).

    Panasonic’s latest model, the SDR2550 in my kitchen, is a high-tech device with 20 pre-set programs which offers options to bake everything from French bread, brioche, sourdough to dense German style rye bread. It will also make gluten-free bread, cake, pizza dough and pasta dough.

    I was primed. I purchased yeast, whole wheat flour, rye, etc.  I got most of the ingredients on Amazon. You can presumably find it in town but as we all know, it’s easier to do things online, and despite the shipping, cheaper than a place like Whole Foods.

    I preppred by reading through the manual and watched YouTube videos. The main thing they drum into your head is to use precise measurements and follow the recipes to the letter. They also insist that you add the ingredients in the proper sequence, i.e. yeast first, then flour, salt, water, butter, etc. 

    Everything is added to a little bucket type container with a paddle on the bottom that mixes and kneads the dough. There’s a tiny dispenser if you want to add nuts or raisons. Of course, this device also bakes the bread. There are heating elements, like in your oven. 

    Each recipe also has a corresponding menu setting on the LED control panel. You set the size of the loaf, crust shade and if needed, you can program when to begin the process.  

    This sandwich looks as good as it tastes
    You can even make great sandwiches with your homemade bread.

    I tried my first loaf and of course, broke a couple of rules.

    My old-fashioned scale wasn’t exactly an atomic clock when it came to precision but evidently it was close enough. Panasonic prefers that you weigh the most of ingredients, but I found as long as the proportions were accurate, i.e. three cups of flour, the bread came out fine. (Erring on the side of caution, I later bought a digital scale. That said, I’ve had pretty good luck with recipes that offer the volume of the ingredients, ie one cup, one teaspoon, etc. rather than the precise weight in grams).

    All the ingredients were added in the proscribed order, but I decided to add some buckwheat (not in the recipe) because I had some in the pantry, so I substituted some wheat flour for buckwheat.  

    I pushed the button, expecting the machine to start mixing things but nothing happened. I checked the manual again and was reminded that the device has a double sensor that adjusts for room and internal temperature to calculate how much time the dough needs to rise and rest. 

    It must warm up for about 30 minutes and the computer program takes it from there. (Someone had to write a lot of code for this item).

    The whole grains provide fiber. Good stuff for the microbiome
    The bread is dense and the whole grains provide fiber. Good stuff for the microbiome.

    I experimented with another half dozen or so recipes. I even made whole wheat pizza dough.

    Once you get used to this machine, all you do is add the ingredients and walk away.

    How cool is that? It comes with recipes but there are also some available online. You can tweak the “formula” a bit but don’t be surprised if it doesn’t aways work (i.e., the bread doesn’t rise). If you stick to the recipe, chances are you’ll have good results.

    Experimentation is laudable but just beware. What does this tell you? Baking bread is just as much an art as a science.

    The downside? It’s about 16 x 8 x 12 so it will take up some room on your counter.

    At $278 on Amazon, it isn’t cheap, but boy does it make good bread.

    If you’re thinking of getting something healthy for your family this holiday season, you won’t go wrong with this appliance.

    Editor’s note: A version of the story previously appeared in the Honolulu Star Advertiser.

    Licensing laws limit jobs, opportunity

    Grassroot Institute
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    Licensing laws limit jobs, opportunity

    By Keli‘i Akina

    Braiding someone’s hair shouldn’t make you an outlaw. But that’s exactly what can happen under Hawaii’s restrictive licensing laws.

    I bring this up because I noticed the Institute for Justice, based in Arlington, Virginia, just released the third edition of its “License to Work” study, which looked at state regulations nationwide and concluded that occupational licensing laws are a barrier to entry, so to speak, for many people trying to find work, especially lower-income workers.

    The new edition identified more than 2,700 different occupational licenses across the country and found that the average license requires a year of experience, $295 in fees and an exam — on top of hidden costs such as tuition fees for schooling.

    Hawaii performed especially poorly in the nationwide comparison, with licenses being required in 64 of 102 lower-income occupations, versus the national average of about 53. It also had the highest level of qualifying burdens, leaving the state ranked fourth-worst overall for its occupational licensing scheme. 

    For example, to qualify for a license in Hawaii, the average number of days lost to someone trying to obtain the required education and experience is a whopping 972, compared to the national average of 350. The average fees associated with Hawaii licensing total $506, versus the national average of $284.

    Knowing these facts, we can understand why occupational licensing disproportionately affects lower-income workers and small businesses — because it requires them to jump through numerous regulatory hoops before being able to practice their trade.

    For people who are barely making ends meet, the prospect of spending hundreds of dollars and a year or more just to get permission to work can be an insurmountable hurdle.

    Which brings us back to hair braiders, for which there is a niche market in Hawaii.

    The usual rationale for onerous licensing restrictions is that they are necessary to protect public health and safety. That seems reasonable for occupations such as physicians and nurses. It becomes less convincing when the license involves applying makeup or shampooing hair.

    When it comes to natural hair braiding — a skill that can be self-taught, is often passed down as part of a cultural tradition and is given little attention in traditional cosmetology schools — the state’s requirement that braiders spend 1,250 hours in school (at their own cost) seems absurd.

    The punishment for not having a license seems equally absurd: An unlicensed hair braider, makeup artist or shampooer in Hawaii could be fined up to $100 a day or even jailed. 

    In Thursday’s Honolulu Star-Advertiser, attorney Jessica Poitras and writer Daryl James of the Institute for Justice explained that there is no data or experience showing that the licensing of niche beauty services protects public health or safety.

    Hawaii’s state auditor has studied beauty industry licensing five times since 1980, each time concluding that the license is unnecessary. California and Texas have licensing exemptions for hair braiders, and there has been a nationwide trend toward delicensing shampooers and makeup artists. 

    “Overall, braiders may practice without a license in 32 states, makeup artists in 14 states, and shampooers in 18 states,” wrote Poitras and James. “Salon visitors remain safe in all of these jurisdictions. During the first 10 years after Mississippi delicensed braiders, for example, the state received zero complaints related to health or safety.”

    Over and over, we hear Hawaii policymakers talk about the need to grow the economy and encourage small businesses. Yet, regulations such as occupational licensing only make it harder to succeed. 

    Instead, our lawmakers should look for ways to reduce barriers to employment and entrepreneurship. They could start by getting rid of license requirements for beauty services such as hair braiding, makeup application and shampooing.

    For some occupations, a less restrictive form of oversight than a license — a simple exam or certification, for example — could be sufficient to ensure public safety.

    In general, if we really want to help people get back to work, we need to reduce the time and money it takes to enter a profession. Or, to put it more simply, we need to just get out of the way. 
    _____________

    Keli‘i Akina is president and CEO of Grassroot Institute of Hawaii.

    How To Make Truth Last Longer

    Sydney Ross Singer
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    How To Make Truth Last Longer

    Few things are as annoying and inconvenient as discovering you are wrong. Most people hate that, and feel being wrong is a type of failure. They get that from school and true or false questions, where answers were judged by experts who knew. 

    But over the years, those experts were proven wrong, time and time again. Evolution experts kept unearthing new, old bones, which buried old, fossilized theories. Astronomers discovered some new black hole that swallowed up some old truths about the stars.  Medical researchers discovered some treatments were worse than the disease. Historians are now re-writing the facts of history, while psychologists are re-writing the facts of human sexuality. Meanwhile, social media is challenging all truths, leading to fact-checking by a shifty mainstream media and vested experts.

    Establishing and maintaining the status of truth is big business. There is a truth industry, which includes media, public relations firms, academia, religious groups, the government, and more. Truth is power and a valuable commodity, and when you possess it you want to keep it and make sure nobody sullies it with some opposing truth. 

    The public, of course, wants truth, and is willing to pay for it. There is no end to experts who will take your money to sell you truth. They will tell you the truth about dieting, or vitamins, or exercising, or how to bake a perfect pie. Conspiracy experts will tell you that only they know the truth, and that makes them sound very much like doctors and lawyers, so you trust them. 

    This means all of us must fight Big Truth. It’s the belief that we finally have it all figured out. 

    Every generation wants to be smarter than the past. The problem is that babies continue to be born stupid, so we need to fill their heads with stuff we call truth. They will use truth as they go through life, trying to understand and manage the world they experience. Truth provides the assumptions about life and the world, and form the structural girders which support our understanding. Shake that, and there’s money to be made by new truth-tellers.

    People want the mental security of a world defined by truths. They want to feel that the sun exists and will rise tomorrow, or they will not be able to sleep in the darkness. We all need to feel that the universe is real, that we can objectively understand it, and that truth is the product of reason. The problem is that we are flawed creatures with limited senses, possessing defective reasoning skills which are clouded by emotion, are easily distracted and fooled, are born without any knowledge of anything but how to suck, and are driven by savage instincts we share with other animals. This makes truth is as elusive as a unicorn. 

    The way we learn things is really by trial and error, with lots of errors. We humans are in the dark, stumbling around looking for something we can identify and hold onto. We try until we succeed, and then share the news with others, passing the information down to the next, ignorant generation. Humanity thereby constructs a sense of truth. But it is always a work in progress.  We chronically suffer from truth decay.

    We are currently living in a time when truth is on trial, being challenged by other truths. We are the jury, needing to listen to the arguments and decide. However, in our technical world, many truths are outside most peoples’ scope of education or understanding, so they take the word of experts. And since experts never like to be proven wrong, this enshrines the current truths for the term of the lives of the experts. New experts will dethrone and bury the old ones, and have to fight off the next generation of experts. 

    This all means that truth is fragile, much more than you would imagine. Our sense of certainty is a ploy to convince ourselves. But more people are opening their eyes to the truth that truth is not necessarily true. And this can be disturbing to the psyche, and make you have to rethink everything you thought was true, which can be a bother.

    For those who want to hold onto their truths, here are 10 tips.  

    1. Stop thinking. You already know everything you need to know.
    2. Close your mind to new ideas. An open mind can let the Devil in. 
    3. Keep in mind that ideas are really unimportant. You can live without them. Many people do.
    4. Never question experts. They speak truth. 
    5. Only read things which agree with you. Everything else is false.
    6. Avoid truth decay by daily brushing off people who don’t agree with you.
    7. Burn books that push the anti-truth.
    8. Remember that truth is something you must fight for. Some people just need a slap in the head to see it.
    9. If someone discovers a new truth, it doesn’t mean you are wrong. It means they are conspiracy theorists. 
    10. Bug other people into agreeing with you. The best way to keep your truth is to make sure everyone else believes it, too. 

    In summary, truth can be as fleeting as a thought, or as stable as a dogma. It can be a guess we all came to believe, or it can even be a lie. Whatever truth is, it’s becoming more fragile. All we know for sure is that tomorrow’s truths will be different than today’s. That’s the truth about truth. 

    Want to Fight Corruption?  Follow the Money

    Tom Yamachika
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    Want to Fight Corruption?  Follow the Money

    In a recent op-ed in Civil Beat, Robert Harris, who recently became the executive director of the Hawaii State Ethics Commission, mused about his role in the grand scheme of things. His first reaction was to describe his job as just enforcing the State Ethics Code and the Lobbying Law, but then saw a broader role for his agency as helping to restore public trust in government.

    In his essay, he points to a couple of legislative proposals that, if enacted, would increase trust in government: clearer anti-nepotism rules, and increased financial transparency requirements in transactions involving legislators and lobbyists.

    My answer to the same question would be simpler in theory but harder to put into practice. We need financial transparency in state government, period. We, as taxpayers who are supplying the money, have the right to see where it goes. In real time, not several years later as seen in one nonprofit’s recent fight with the Department of Education.

    To get at corruption, you follow the money.

    We’re not asking government to follow the money. We’re asking them to post their checkbooks online so interested people can do the work for them. If there are questionable findings, then maybe it’s worth government resources to figure out what happened so remedial action can be taken. This is what happened at OHA. Despite an initial reaction of wanting to shoot the messenger, cooler heads prevailed and OHA has made changes toward making sure that the same irregularities don’t happen again.

    Is it feasible, or even possible, for a state to post its checkbooks?  The national website Ballotpedia notes that a few states have already done it and has listed some of the issues that have come up in the process.

    For example, there are privacy concerns. If Individual teachers are submitting expenses for reimbursement, for example, we don’t necessarily want their home addresses to become public fodder. The same is true for individuals receiving, for example, mental health services.  We do have a constitutional right of privacy in this state, and we certainly don’t want to trample on that.

    But the solution to the privacy issues is not to publish no data at all.

    If, for example, an agency publishes name, zip code, amount, and some accounting code listing the purpose for the expense, maybe that’s enough for us to go on initially.  Then we can do what CliftonLarsonAllen did for OHA, we see if there are any red flags. Is there a big wad of money being spent for  “consulting“ or “miscellaneous“? then let’s see the work product that was bought by that expense. Are there multiple payments to someone known to be a relative of the agency heads, or to the agency heads themselves? Then let’s see further details.

    These are not insurmountable problems.

    Want to restore trust in government?  Want to make it difficult for corruption to happen?  We need to follow the money.

    Let’s make it happen.

    Why It’s GOOD to Worry

    Sydney Ross Singer
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    Why It’s GOOD to Worry

    Let’s be honest. Everyone worries. You could be rich or poor, sick or healthy. If you’re a human, then you worry. 

    We worry about things happening that we don’t want to happen, such as losing a job, or your kid getting sick, or your spouse cheating. There is no end to things we don’t want happening, so there is no end to worrying, if you want to. People also worry about things not happening that they want to happen, such as winning a bet, or getting a date, or recovering from an illness. So people can worry about not getting what they want, or worry about getting what they don’t want, and the list is as endless as our imagination and wants. 

    Given all the energy spent worrying, you would think it payed lots of dividends. However, popular belief is that worrying doesn’t do any good. People will say those exact words to you when they see you worrying. They say that the outcomes you worry about are in your imagination only, and never come to fruition. And when everything turns out fine, despite your worries, they say, “I told you, you had nothing to worry about. It was all a waste of energy.”

    That’s the myth about worrying. It’s that worrying never helps. The things you worry about never seem to happen. So stop worrying. 

    But what if things turned out fine simply because you were worrying? What if worry works?

    Think about it. Whatever you worry about never seems to happens. This means that, if you don’t want something to happen, then simply worry about it, and it won’t!

    The answer was right before our eyes. Worrying about something almost invariably insures that it won’t happen.  In fact, worrying is a kind of insurance to make sure that whatever you are worrying about doesn’t happen. 

    If your kid is late from a date and you’re worried that they had an accident, then worry about it. Most likely, your child will come home fine. That doesn’t mean the worrying was needless. It means it worked!  

    Sometimes, of course, worrying about something can make you take precautions that can prevent a problem, which is another way worry works. For example, if you’re worried about finances, then you may go and change your job or lifestyle. Worry makes you focus on a problem and deal with it, as opposed to ignoring it. 

    Clearly, we all need to worry more. Here are some tips to make worry work for you.

    1. Worrying takes lots of energy, so make sure you eat a balanced diet, drink plenty of water, and get adequate amounts of sleep. When you worry you want to be able to obsess for hours, if not days, without having to take a rest. Keep in good shape to be prepared to worry at a moment’s notice.
    2. Pick something to worry about that is completely out of your control, like the weather, natural disasters, and Elon Musk. That way, you don’t have to actually do anything, besides worry. 
    3. Try worrying with others. People like to hear others obsess and repeatedly worry out loud. When they hear you worry, it makes them feel better about their lives. So spread the cheer and share your worries with friends and family.
    4. Worry as much as possible. The power of the worrying increases with its intensity. Deep problems require deep worry.
    5. Worrying is hard to maintain for the average person beyond a few hours or days. If you feel overwhelmed by a problem, try to develop a back pain, headache, chest pain, skin rash, or amnesia as a conversion reaction. This gives you something else to worry about for a while, giving your other worries a rest. But don’t rest worries for too long, or their prevention powers might stop. 
    6. The biggest worry, of course, is about death. If this is your worry, realize that so long as you are worrying about death, you’re still alive. So keep worrying and you shouldn’t die.

    So the next time you face a potential problem, worry about it. Worry a lot, and imagine how bad it could get. It’s the only way to make sure that it never happens.

    Savings Bond Buyers Beware!

    John Robinson
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    Savings Bond Buyers Beware!

    Last month, the TreasuryDirect.gov website crashed as investors scrambled to lock in the historic 9.62% rate for the next six months on Series I savings bonds ahead of the Friday October 28deadline.   Despite the $10,000 per person limit, nearly $ 1 billion in purchase orders and more than 70,000 new Treasury Direct accounts were established on October 28th alone.  More than $30 billion in I-bonds have been purchased in the past 12 months.  The Siren’s song of irresistibly high government-guaranteed, state tax-free interest is difficult to resist.  Like many financial planners, I have been urging consumers to hop on the I-bond bandwagon.

    However, the purchasing process has its pitfalls.  Many personal finance articles have highlighted the fact that the Treasury Direct website is dated and difficult to navigate.  Many have also cautioned consumers about potential delays resulting from issues with the identity verification system for establishing new accounts.  Further, overwhelming demand has caused the Treasury to eliminate email support while the phone queue to speak with a live customer support representative is typically many hours long.

    Byzantine Website and Understaffing Confound Savings Bond Buyers

    While these issues have all made headlines, there is an even darker threat to consumers that has received surprisingly little media attention – the very real possibility that the Treasury will accept your money and never pay you back.  This is not hyperbole.  Consumers who may not have understood the rules for how to fund I-bond purchases and have over-contributed to their Treasury Direct accounts face the possibility that they may not ever get their money back. Unfortunately, I can illustrate the overcontribution example from personal experience.

    On April 21, 2022, I established a Treasury Direct account with the intention of purchasing $10,000 for myself and $10,000 each for my two minor children.  My plan was to transfer in $30,000 from my bank account and to then gift $10,000 to each child.  However, when I processed the transfer, I immediately received a notice that I had exceeded the $10,000 annual contribution limit and that I could expect a refund of my $20,000 over-contribution in 8-10 weeks.

    The message also stated that I will receive an email notification when the check has been issued.  I then figured out that I needed to purchase the I-bonds one at a time for each child in my Treasury Direct account instead of purchasing first and then gifting.  I followed the procedure, and transferred in an additional $10,000 for each child for a total of $50,000 transferred to purchase $30,000 of Series I savings bonds.  

    Red Flags that Your Money May Be Gone – No Records/Reporting, No Support

    The first red flag that I might not get my $20,000 back was raised when I logged into my Treasury Direct account and discovered that there is absolutely no record of my over-contribution.  The $20,000 overcontribution does not appear in the account activity or in the account. The only documentation I have is the lone email I received on April 21.

    The second red flag went up when, after four months, my money had not yet been returned.  On August 31, after weeks of recorded voice messages telling me that I will not be able to get through to customer support because the estimate hold times exceed the eastern standard time business hours for Treasury Direct employees, I got up at 6 AM in Hawaii and waited on hold for more than two hours before I eventually got through to a support representative.  The woman who took my call was friendly and seemed knowledgeable.

    She advised that Treasury Direct staff have been overwhelmed.  However, she reassured me that overcontributions were being processed and that they were currently working on refunds to people who made the overcontributions in April.  She went on to advise that because it had been longer than 3 months, I would earn interest on the over-contribution amount and that I should expect my refund check imminently.  I was relieved.

    It is now November 30th.  It has been more six months since my over-contribution, and I have not received my refund.  Earlier this month, I sent a summary of my experience along with documentation of my funds transfers and the original overcontribution email I received from the treasury. The communication was sent via certified mail.   On November 10th, I received an automated email telling me to expect a response with 13 weeks. 

    The Treasury Direct Website is Eerily Similar to a Ponzi Scheme

    I have not received any subsequent communication from Treasury Direct. While I have copies of my bank records showing the $50,000 transfer for the $30,000 purchases, I have zero confidence that the Treasury will ever give me my money back. Were a bank or brokerage firm to provide no reporting and/or prohibit consumers from accessing their funds, the institution would be put into receivership and the executives at the firm would likely be facing jail time.  This is decidedly not the case with the Treasury Department.    

    What if I had needed that money to pay tuition or to make payments on debt?  The notion that the Treasury can simply keep consumers’ money indefinitely with no reporting and no communication is unfathomable, but it is very real.  I am sure there are myriad consumers in exactly the same boat.  I-bond buyers beware!

    ********************

    John H. (J.R.) Robinson, Personal Finance Editor at Hawaii Reporter, is the owner/founder of Financial Planning Hawaii, Fee-Only Planning Hawaii, and Paraplanning Hawaii.  He is also a co-founder retirement saving and retirement spending software-maker Nest Egg Guru.

    No, Boosting the Affordable Housing Fund Isn’t the Answer

    Tom Yamachika
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    No, Boosting the Affordable Housing Fund Isn’t the Answer

    Many financial and political experts (or people who say they are) are trying to make sense of the defeat of Honolulu’s Charter Question No. 1 in the general election earlier this month. 

    The charter question put before Oahu voters was whether the percentage of real property tax money that the city would deposit into the city’s Affordable Housing Fund should be increased from 0.5% of total property tax collections to 1%.  The difference was estimated to be $8 million a year.  The amendment failed, 129,097 against versus 120,770 for.

    Some proponents of the measure, as reported by Civil Beat, noted that taxpayers wouldn’t have to pay more in taxes under the amendment.  They were wondering why taxpayers didn’t “get it.”

    Well, sure, that particular measure by itself doesn’t affect how much property taxes people need to pay.  Nor does it affect how much money is going to be spent on affordable housing.  Rather, it is essentially a budgeting gimmick.

    The Affordable Housing Fund is a special fund.  We’ve spoken at length about special funds several times before.  Basically, such a fund sidesteps the normal budgeting process because money in the fund is spent on the fund’s purpose without regard to anything else in the budget.

    So, what happens if $8 million in property tax collections is diverted to the Affordable Housing Fund?  There is a range of possibilities.  On one end, suppose $8 million in general fund resources had been budgeted to affordable housing.  With the diversion, the Council would be free to reallocate the $8 million from the general fund to other priorities, meaning that there would be no change in the amount of money going toward affordable housing – so the ballot measure accomplished nothing.

    On the other end of the spectrum is that $8 million more is going to be spent on affordable housing, which is what the proponents of the measure presumably want.  If there is no change in city revenues, then, there will be $8 million less to pay everything else that the City & County of Honolulu is responsible for.  Given that the City’s operating budget totals $2.91 billion, $8 million, although not mere chump change, might be a small enough dent to be absorbed.  Thus, the folks who are saying that this measure won’t raise taxes, or inevitably lead to raising taxes, do have a point.

    But there is another point to be considered.  We elect our City Council members to make sound budgeting decisions.  Many different causes and programs compete for the tax dollars that you and I pay the government.  Special funds, like the Affordable Housing Fund, take the decision out of the hands of the Council, giving it less flexibility to adapt to changing needs and conditions.  Maybe one or a few special funds might not be hard to work around, but when you get to hundreds or thousands, as we already see at the state government level, putting together a budget can be a very complicated exercise.

    And if one special interest group or constituency succeeds at establishing a dedicated pot of money or expanding the amount of resources that are fed to it, then what is to stop other special interest groups or constituencies from ramming through their own special funds to feed their pet projects?  Again, we already see this happening now at the state level, so this possibility can’t be easily shrugged off.

    Rather than contributing to a vicious cycle of enacting more and more special funds to sap our Council’s budgeting flexibility, we should just recognize, as the voters apparently did, that special funds are not the answer.

    Free-Fall – A series of postings offering perspective and commentary on art and global environmental issues from Joe Carlisi

    Robert Kay
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    Free-Fall – A series of postings offering perspective and commentary on art and global environmental issues from Joe Carlisi

    At COP27, a REUTERS story from William James, Valerie Volcovici and Simon Jessop framed climate change as battle for survival:

    “Humanity has a choice: cooperate or perish,” U.N. Secretary General Antonio Guterres told delegates, urging them to accelerate the transition from fossil fuels and speed funding to poorer countries struggling under climate impacts that have already occurred. . .

    Despite decades of climate talks so far, countries have failed to reduce global greenhouse gas emissions, and their pledges to do so in the future are insufficient to keep the climate from warming to a level scientists say will be catastrophic. . .

    Land war in Europe, deteriorating diplomatic ties between top emitters the United States and China, rampant inflation, and tight energy supplies threaten to distract countries further away from combating climate change, Guterres said, threatening to derail the transition to clean energy. . .

    Greenhouse gas emissions keep growing. Global temperatures keep rising. And our planet is fast approaching tipping points that will make climate chaos irreversible,” he said. “We are on a highway to climate hell with our foot on the accelerator.”

    Climate change has been finally acknowledged as, perhaps the greatest threat confronting the sustainability of life on earth.   

    Wether or not the window for corrective change by human activity is still open is unclear. The environment is in free – fall. Critical patterns of elemental natural factors have been destabilized and the behavior driving these changes has stepped up rather than diminished.

    The “leaders” whom we have entrusted to manage our welfare  clearly . . . stunningly . . . operate on the mandates of their own egos, self interest and the profit driven industrial entities that put them in power and float them as stewards of their activities. Activities which are shaped exclusively by profitability and untempered by collateral damage to the host environment . . . the platform upon which all life takes place.

    Right / wrong, good / bad are misplaced sentiments that play into the situation with absolutely no power. This is simply the way it is.

    The only “success” in nature is the ability to adapt and survive against a background of ever changing conditions, i.e. to evolve. In this, the arena of true success or failure, we are clearly on our own, as individuals, with the ability to take responsibility for our own lives and actions. 

    The search for answers, leads only to choices. The only instrument that we have to guide us in making successful choices appears to lie within us . . . our connection to nature . . . to the unfolding totality.

    This connection is basic . . . energetic and manifests, not intellectually but as feelings.

    We are on our own.The environmental collapse that we have set in motion is no longer merely sending a signal. The wake-up call has escalated to a blaring, continuous alarm that mandates choices. Our actions are our choices. They are irrevocable and final.  It’s up to you.

    It has become difficult to continue upholding the view that the world is our gift to use as we please and that we are the ordained wardens and managers of the planet . . .  monopolizing and consuming everything, reflexively exterminating anything else that we see as competition for what we are deluded into believing has been placed on the table solely for us.

    Again, not a matter of right or wrong, good or bad . . .  

    It is simply a perspective that does not work and results in the path to extinction that we find ourselves on now.

    It’s up to you.

    Venus

    Everything is connected in the living connective tissue of nature.

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