Brain fitting…
Monthly Archives: October 2021
Money makes money for a few
Photo by Daniel Barnes on Unsplash
How does wealth concentrate?
Alloporus has discussed whether or not it’s fair to give a 10% pay rise to every employee in a business.
It sounds dutiful and egalitarian, and it also suggests the company must be doing well to make such an intelligent investment in its workforce.
Breaking the numbers down, it is clear that 10% to the lowest-paid workers in the company and even those on the average salary in the company results in far fewer extra dollars in the paycheck received by the CEO; let’s call him Jerry, for his 10%.
The average worker gets, say, $200 extra a fortnight after tax. On his $750k a year, Jerry is looking at an additional $1,700 despite his heavier instalment to the tax office.
Justifications abound because the CEO is the boss and must make the decisions and wear the risk. He is worth the extra pay and has considerably more buying power in raw dollars from his 10% pay rise.
Jerry is an intelligent fellow — not a given — so he chose to put the money from his pay into a unit trust, nothing too fancy, just a rainy day option. He did this each month.
The shop floor worker, Tom, was in debt, and he decided to put the extra money into credit card repayments to bring his balance down. His kids wanted presents for Christmas, which took care of December’s extra pay. His eldest daughter was about to go to college, and Tom wanted to send her off with a small sum to get her through the first semester away from home and used January’s extra pay.
Tom consumed the extra money, and Jerry put it away in a modest investment.
After ten years, Jerry’s investment of $3,600 each month was worth $577,971, of which $132,328 was the result of compound interest at 5%.
He decided to cash out his units and made a hefty downpayment on a property south of Brisbane that he immediately rented to increase his net returns to 7.5% and convert his principle into a more stable asset class. The property doubled in value over the next decade, giving Jerry another $1.5 million property in his portfolio.
Now, you could say that Tom could have done the same thing and matured his salary increase by investing it. His $433 per month in the same unit trust would be worth $67,950 after a decade, including $15,500 of interest.
Making an investment choice might have been a clever play. Tom may have saved just enough through the investment to offer his daughter a deposit on a flat or maybe pay for her wedding that came ten years down the road.
But his material wealth would never reach the same levels as Jerry in his working lifetime.
As they say, money makes money.
But the point here is that wealth also concentrates.
The company has one CEO and a handful of executives with salaries large enough to easily invest their 10% but lots of workers, many struggling to make ends meet. The opportunity to make real money falls to a few.
Of course, the owners were happy too. The major shareholder in the business, Mr Hannah, also enjoyed a 5% share dividend each year. His 2.5 million shares were worth $5 million when the first instalment arrived, a handy $125,000.
Similar dividends were paid annually for a decade, with the money moved into various assets that yielded 5% interest. That initial $125,000 plus the annual instalments grew to $1.8 million in a decade, $400,000 of that in interest. Naturally, the shares rose on a buoyant market to be worth $10 million.
The owner’s wealth accumulated too.
Then there are the super owners. Here is one chosen at random. In June 2021, Bloomberg Billionaires Index listed Dieter Schwarz, a german businessman who built his fortune owning supermarket chains, as the 61st richest person globally with an estimated net worth of US$27.3 billion.
Should Mr Schwarz earn 5% interest on his assets, he receives $3.7 million a day before tax.
It is hard to figure out how to spend that kind of money.
Of course, most of the time, these people do not. They invest it after paying clever accountants to minimise their tax. Then, on occasion, they give some of it away.
| Dieter Schwarz. | $13,500,000,000 |
| Mr Hannah. | $1,800,000 |
| Jerry. | $578,000 |
| Tom. | $67,000 |
The pattern is clear — capitalism creates wealth that concentrates into a few individuals or entities. Over time this opens a wide gap between those who have and those who do not.
None of this is new nor much of a revelation. Accumulation and concentration are how capitalism works. The reason for revisiting the basics is that there is a lot at stake should this pattern continue.
Poverty and excess make each other very uncomfortable, and history tells us that resolving such disparity is ugly for everyone.
Better not to let it get out of hand.
Thank you for supporting Alloporus with your time. Please pass on the ideas to your peeps.
We love what we feel…
Trump lost but have the democrats won?
Photo by Ehimetalor Akhere Unuabona on Unsplash
Trump lost.
He will contest and whine, but for now, the American people are more concerned about their democracy than his tantrums.
This is an encouraging sign.
The country pulled itself back from the brink and gained some time to reflect. It’s what happens next that matters.
People may remember a frustrated President Obama, particularly in his second term of office. A recalcitrant and regressive Republican majority in the senate scuppered most of his key initiatives.
President Biden is familiar with that scenario, viewing from the Veeps chair throughout that painful process. Republican’s majority in the senate has gone, but they have not gone away, nor has their mischief.
A debate must happen within the democratic party.
They united to get rid of Trump, fair enough. But a firm, adult conversation must happen between the old school and the new youngsters who have a very different take.
Alexandria Ocasio-Cortez, serving as the U.S. Representative for New York’s 14th congressional district since 2019, for example, is asking the party to look very closely at how it got itself in the mess that resulted in Trump in the first place.
It is time for an alternative.
The old school must realise that moving to the centre is no longer the answer. At least not the established centre that pampers to donors and the corporate world.
If that happens again, it matters very little really which colour is in power because each offers the private sector the same easy ride.
A centrist policy that bails everybody out using debt which simply funnels itself into a tiny number of people with stock options is not the future; it can’t be.
Now is the time for dramatic rethinking and risk-taking.
The Biden presidency won’t be able to do that. There have been enough old white men in the oval office for us to know how that goes. Admittedly this one has a woman of colour as vice president. But still, too much of the old school lingers.
Back in the election, the progressive left had an old candidate too, considered way too risky at the time. The gamble to dump Saunders and go with the convention only just paid off. And it was a high-risk game to play in the first place.
What must happen now is that the youngsters must come through. Their energy, positivity, and passion must fuel a progressive cause focusing on the well-being of people and the planet. They will usher in a different economic model because the last one is not working.
The problem that faces them is scary. The planet cannot support three cars per household, and by 2030 just sourcing food for 11 billion people will be hard enough.
Recall the late, great Hans Rosling’s explanation of the demographic transition.
He said that the 2 billion poorest aspire to a pair of shoes, another 3 billion to a bicycle, 2 billion more to a car and a billion or so in the rich countries who, pre-COVID, aspired to fly to a remote destination on holidays.
Progression means an economic approach that meets those aspirations, noting that a bicycle is not enough and, perhaps, three cars is not possible.
If you want to ‘reimagine the shape of progress’ as Kate Raworth puts it check out her TEDx talk on Doughnut economics.
Thankfully Trump lost and the Democrats under Biden will calm the waters somewhat.
Relative peace will buy time for the new generation of ideas to thrive. Only then will they have won.
Thanks for reading this blog post. There are plenty more to read and share.
Crystal clear thinking…
Is dog poo on the sidewalk a resource?
Photo by Victor Grabarczyk on Unsplash
Animal Medicine Australia estimates there are 5.1 million dogs in Australia. Most of these will be family pets and companion animals that make a difference to wellbeing.
What does it cost to keep all these pouches?
Dog ownership costs roughly $1,500 a year and perhaps $25,000 in the lifetime of the cuddly family member. All up Australians fork out $7.6 billion a year on their dogs. Just for perspective, NSW, where 8 million Australians live, spends roughly $4 billion on its police force each year and $24 billion on public education.
It seems that the dogs are up there with the essential things in people’s lives.
What about the hidden costs?
A single dog produces approximately 340 grams of waste per day. That means Australian dogs drop a mind-boggling 1,734 tonnes of turds a day.
That is as heavy as 137 double-decker buses or the take-off weight of three Airbus A380 aircraft with 1,500 people on board.
This weight of organic smelliness dropped on Australian sidewalks and parks is small compared to global output.
The data here are rubbery as the actual numbers are hard to find, not all countries keep records, and many dogs are strays, but there are probably around 470 million dogs worldwide.
A380 commercial flights pre-COVID were around 300 per day. This is just about enough take-off weight to airlift a day’s worth of dog poop.
This mass of manure is clearly significant given we need every ton of organic matter to keep soils productive.
Is dog poo a resource?
Dog faeces (and those of cats) contains about 0.7% nitrogen, 0.25% phosphate and 0.02% potassium.. This chemistry means dog faeces are poor plant fertilizer, plus they often smell, stick to shoes, and contain pathogens. In its unweathered state, dog faeces are not useful, let alone fertilizer.
Most dog waste breaks down naturally in the environment where the dog left it. Some cities collect and incinerate waste with composting avoided.
So maybe the excreta of our omnivorous poodles is not such a resource after all.
An idea for the poop mountains
Perhaps the modest plant nutrients, the challenge in collecting it all, and the considerable smelliness take all the fun out of composting.
What about converting the raw material?
One company in the UK that makes small-scale incinerators for medical waste recognises the possibilities for dog poo in the waste to energy market.
Rather than just energy, what if the incinerators burnt the poop in low oxygen (pyrolysis) to create biochar such as these Mobile Pyrolysis Plants in Australia.
Biochar is a wonder product that increases carbon levels and helps retain moisture and improves nutrient exchange when applied as a soil amendment.
A conversion of poop to biochar would get around all the problems of composting pet waste for use in agriculture.
Dog poo on the paddock. Now that is an excellent idea.
Please share this idea with your next pet post
Loneliness…
Yippee! There are 500 posts on Alloporus
Photo by Kimberly Farmer on Unsplash
Well, who would have thought that after 13 years and a handful of readers that this blog would reach 500 posts?
Not me, certainly.
I am amazed and a little proud of myself for keeping it going all this time.
When I started, the blogosphere was the online space. There were prospects for a wide readership and perhaps even a side hustle from the proliferation of traffic. Then Facebook, Twitter, Instagram, TikTok, YouTube and a host of other online distractions hogged the breeze, and what was left was quickly mopped up by aggregators like Medium. Bloggers do it now for personal satisfaction, with only a handful of the early adopters maintaining their readership.
I can’t complain because I write rather than read blog posts, and it seems unfair to lament a lack of traffic. So the blog ticks along with 50 to 100 visitors a month.
Anyway, low traffic volume just needs a few viral outbreaks to explode. We live in hope.
A huge thank you to those kind folk who stumbled onto this blog over the years and read a post or two. And especially the few regulars who clicked the RSS.
It is nice to know that there are real people in the ether.
What did I blog about?
Not surprisingly, for an ecologist, the environment was the most popular category (142 posts), chased by awareness (135) and the Big Picture (127).
I did not expect to write about leadership (88 posts) as much as I did. But the political debacle that Australians have lived through in the last decade meant that laments on the absence of leadership were inevitable.
If any of these whinges offended, then good. It is beyond time that we woke each other up with a cattle prod and did something about the ugly, shameful behaviour that passes for political leadership in this country.
This week, I watched Strong Female Lead, a documentary film billed as “an exploration of gender politics during Julia Gillard’s term as Australia’s first female prime minister”.
It was harrowing to see grown adults dispense abuse to a colleague without the slightest remorse. I might have looked for the nearest bus if it wasn’t for this documentary’s hopeful ending. Let’s just say those 88 posts came about because the nation’s moral compass is buried six feet under.
No doubt there is more to say about our vacuous leaders.
I have always believed that awareness is essential to human wellbeing. No surprise that several posts were tagged thus. Our personal and social lives are better if we pay attention to each other.
Knowledge and perception of the bigger picture are more tricky.
Dissonance, denial and disbelief are much more accessible than confronting the truth of a finite planet with close to 8 billion eager people. Ostrich behaviour makes it hard to raise awareness without sounding pessimistic or preachy. But we all must confront fears, or our grandchildren will have a terrible and short time on earth.
I am working on some practical tools to help with awareness. It is a little early to announce what they are, but the intro has begun over at our new website sustainably FED.
What happens next for Alloporus?
A blog with 230,000+ words of depressing content should have run its course.
After a break from posting through 2010, I tried to reset Alloporus onto a more positive path, and it lasted for a month or two before returning to the usual laments. It seems I am stuck with the frustration of the information age being full of worthless detail.
Why can’t we see that food security is critical to the future of humanity, not climate change or koalas?
Humanity needs 23 trillion kilocalories per day, for goodness sake, just to keep the people alive, let alone the pets — by 2030, it will be 32 trillion.
There is a therapeutic effect of writing about the world in this way. It makes for depressing reading, but it helps to get it off my chest.
I am semi-retired now, too — phew, that was an admission I have been avoiding — so there should be more time to craft more engaging pieces.
So I will continue to post once a week in the hope of seeding some healthy thinking.
Thanks again for reading,
it means a lot to me.
Alloporus
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