PG&E Project 2105 is a large “project” owned and operated by PG&E that includes several electrical power plants on the North Fork of the Feather River, including Lake Almanor in Plumas County. The project of putting power plants on this portion of the Feather River began in 1910, resulting in the entire stretch of the river and lakes in this region making up a large, highly managed, power generation system. The Upper North Fork Feather River Hydroelectric Project (UNFFR Project) is located on the North Fork Feather River in Plumas County. It consists of three reservoirs with dams: Lake Almanor, Butt Valley reservoir and Belden forebay; five powerhouses; tunnels and penstocks connecting the reservoirs to the powerhouses; and transmission, operation and maintenance, and access facilities. The five powerhouses include eight hydroelectric generating units with a total nameplate capacity of 362.3 megawatts (MW).

This project came up for re-licensing in 2004, but has been stalled since that time because of a new requirement imposed by the State Water Resource Control Board (SWRCB) to draw cold water from Lake Almanor in the hopes of cooling a stretch of the Feather River located about 20 miles downstream that has been deemed to be too warm to support the native rainbow trout population. The average temperature of the river in some locations gets to approximately 23°C during the months of July and August. EPA regulations state that water temperatures above 20°C are dangerous for cold water fish, including rainbow trout.

There are many problems with those regulations, not the least of which is that they don’t actually conform with science. It turns out that for rainbow trout to achieve maximum growth rates they require a varying thermal environment shifting between about 16° C to 24°C on a daily basis. 20°C is NOT an absolute limit as it is treated in the regulations. The conditions in the UNFFR are quite varied, with deep cold pools provided by underground springs, and many small tributaries feeding the river that provide spawning and brood waters at the “nursery” for rainbow trout. The 20°C limit was set decades ago before enough studies were performed to have a good idea of the conditions necessary for a healthy fish population. It was just a guess, that was never intended to be the final answer, it was more or less just a place-holder until better information became available. Better information has become available, but the regulations have not been changed.

It is clear that if there is a problem with the rainbow trout in the river, it is almost certainly not because the average river temperature exceeds 20°C for a couple of months out of the year. The native trout are well suited to the environment in the river and congregate around the cold pools when necessary. The fish spawn and remain in the tributaries, not in the main body of the river. Decreasing the river temperature by dumping more cold water into it from Lake Almanor will have no impact on the critical spawning habitat in the tributaries. In fact, there is no evidence that increasing the water temperature will have any beneficial impact on the cold fish populations, with the available science pointing strongly to the conclusion that water temperatures are not a danger to the fish.

However, drawing cold water from Lake Almanor is a known high risk option. In fact, the SWRCB acknowledges that their plan will result in large scale fish kills to the large and robust native rainbow trout population in the lake. Their solution to these fish kills is to annually plants tens of thousands of hatchery raised trout to maintain a large enough population to satisfy the sport fishermen. They intend to plant “catchable” sized fish since they know that the environment will be unable to support the fish once they draw out the pools of cold water at the bottom of the lake.

In addition to the problem of killing the rainbow trout that current live in the cold pools at the bottom of the lake, they expect the overall water temperature of the lake to increase due to the removal of the cold water. However, they don’t know how much warmer the lake will become because they have not studied that outcome – they are focused on river temperatures, not lake temperatures. There appears to be a real, but unquantified, risk of the lake warming sufficiently to induce algae blooms that could result in a feedback loop of more algae resulting in darker water, resulting in more solar induced warming, creating more algae – etc. That would be a terrible thing to happen to the beautiful, clear waters of the lake.

An additional problem with their proposed cold water withdrawl plan is that it is in addition to the water that is currently needed for hydroelectric production and irrigation. Currently the lake is operated in a way that provides adequate flow for a massive amount of sustainable hydroelectric power production, irrigation needs in the Sacramento Valley, and maintaining a healthy ecosystem in the river – while keeping lake levels relative constant in support of other needs such as recreation and maintaining beach front for the thousands of homes and cottages surrounding the lake. Removing large amounts of additional cold water will probably result in a significant disruption to the lake levels, threatening the human uses, and also the wildlife (such as nesting grebes) that have come to depend upon the current lake levels.

I think this entire thing is a travesty with some people whose job it is to regulate things doing so without stepping back and including the entire system under study. They are focused on a single outdated target number rather than the health of the ecosystem that the number is supposed to represent. I am totally in favor of regulations, and understand that they are necessary in order to make sure that projects “do the right thing.” However, the regulations need to be implemented with a large dollop of sound science. The law being enforced specifies that reasonable measures be taken. To me, that means that the solutions to the problem do not cause more problems. It is not appropriate to move the problem from one place to another, nor is it appropriate to mandate actions just because of the existence of an unsupported number. I think the fact that the risk has been flagged as “at risk” because of water temperatures is a clue that perhaps there might be a problem. That means that it is probably worthwhile to study the problem to see if the fish are actually at risk, or actually being harmed. That study should include the other possible sources of harm that were identified along with water temperatures, include lack of proper gravel in stream beds, lack of adequate access to tributaries, the presence of introduced predatory fish, and others.

In addition to all of these problems, the studies projecting the amount of cooling that could result from these actions were performed in 2000, using engineering models that were based upon past historical data using what are now out-of-date computer models. The newer models, using current projections of water cooling with global warming indicate that the impact of the cold water releases with be on the order of 0.2°C, or less. That means that the water will be drawn from the lake but will have essentially zero impact on the temperatures of the river water. There will be a lot of costs, a lot of risks to the lake, and no resulting positive outcomes. The problem is that once a regulatory “machine” gets started, and regulators have made their pronouncements, it is extremely difficult to stop the train before the train wreck happens. The machine has a lot of momentum and just keeps rolling along.

I want to take a rare moment to brag a little. I live in the HOT part of the Sacramento Valley in California. We are in the middle of the summer heat, varying from about 98°F to 113°F at the hottest part of the day. Not like Phoenix (or Death Valley), but plenty hot enough for me. When my family bought this home in 1991 it came with a swimming pool Not my first choice, but it is here so I am attempting to live with it.

Keeping the pool algae free is a never ending battle during the hot part of the summer when the pool water is about 82°F, which seems to be the preferred temperature for things that grow in the pool water. About six weeks ago the water magically went crystal clear! It was beautiful and so inviting. However, about two days after that it turned bright chartreuse! Not an altogether ugly color, but not one you would want to step foot into. Not only was it that color, but it was so cloudy that you could only see about a foot into the water. More like someone poured paint into the pool than water.

That started my summer “chemistry project”. I checked all of the things chemicals that are normally important and found them all to be way out of wack. Ph was skyhigh, combined chlorine was off the charts, total alkalinity was crazy numbers, and cyanuric acid was through the roof. The problem is that when they are all so far out of control most of the tests are no longer valid. You can’t measure one thing accurately when another thing is crazy, so knowing how much of what to put in when is rather difficult to judge. I chased the chemistry for almost a month, at times wondering how long it would take me to fill up the hole with dirt!

Slowly the wild swings started to get smaller, and I eventually could even see the pool sweep on the bottom of the pool. I could tell that success might finally be in reach. However, success wasn’t quite so easy. I had to endure two or three more wild swings in color until it finally seems to have settled down. For the last few days the pool water has been clear, and the algae has finally gone into hiding (I don’t think it is really “gone” – it is just what might be called under control). Many of the chemicals were still out of “optimal” range, but at least they were close enough to be measurable and adjustments could be made without throwing everything else out of wack.

This morning the pool is clear, and ALL of the chemicals are almost centered in the “optimal” range! Yippy! Perhaps it will stay this way for a couple of days, as long as I fiddle with chlorine levels a couple of times a day. The blazing sun and hot temperatures seem to really chew up chlorine.

So now that it is close to good, my wife is wanting to go spend a week or so in our summer cabin in the Sierra Nevada Mountains. That sounds lovely, but I am more than a little concerned about what will happen to the pool while we are gone and there is nobody to baby it along. I am hoping to figure out how to maintain it with chlorine tablets for that period of time. I normally don’t use them because cause they are “stabilized” to minimize chlorine use (a good thing), but the stabilizer builds up over time until there is so much that the chlorine stops working (not a good thing). I think this is what started my wild chemistry project. I had been using tablets over the winter because they are easy, the water is fairly cold and the algae is easy to control. However, when summer came the stabilizer (cyanuric acid) levels were very high, preventing the chlorine from working now matter how much I used, until all the rest went out of control. I am hesitant to add more stabilizer – but don’t know of another solution. I guess I will just keep my fingers crossed in hopes of only a small disaster, and be prepared for another month or so of chemistry adventures.

Now that California has almost “opened” after the covid restrictions, the health department is once again “strongly” recommending that fully vaccinated oldsters and at risk folks go back to masking indoors. They aren’t exactly clear about the details of why this is so, but my guess is that while the vaccines are very effective, they are not totally effected. They are claiming 95% effective at keeping a person from getting so sick as to go to the hospital, but some much lower effectiveness at keeping people from catching it. So, it sounds like 1 out of 20 (5%) are at risk of getting pretty sick even with vaccines. The State’s population is about 32 million people, so that leaves about 1.5 million vulnerable people assuming everyone is vaccinated. Since there are less than 50% vaccinated, that leaves about 16 million totally vulnerable to the full on illness, and about 3/4 million that are likely to get a mild version. While this is better than a few months ago, it still leaves us with the most “at risk” people in the country.

Since there appears to still be no solid evidence that vaccinations prevent a person from contracting it, and therefore being able to spread it, there is still a huge risk. My assumption remains that if after all of this time, and all of the vaccinations worldwide, they “don’t know” if it protects from spreading – it doesn’t. I suppose I am a skeptic, but I think they would really like to state that it stops spreading – but since they haven’t I think it doesn’t. Perhaps it changes the rate of spreading somewhat, but we haven’t yet heard data on that point either.

The point of all of this isn’t to scare anyone, or to harangue on the topic. The point is to once again try to update people’s perception of where we stand with this pandemic. We are to the point that was considered to be terrible, huge, massive (or whatever terms you like) before it got even worse. Not only that, but there is every suggestion that it will get much worse again as the weather changes and new variants become “popular.”

Another misconception that the general public seems to have is that the CDC’s (and State’s) recommendations are intended to help keep individuals (you and me) healthy. I think that is not what they are worrying about. They don’t care much about you and me as individuals, they care about the health care system and the economy. The recommendations are aimed at keeping the case rate in hospitals as high as they can without overwhelming them. The faster people get sick and then better, the quicker this whole thing will come to an end. Shorting the period of time that the pandemic lasts has many important features – not the least of which is that it allows less time for new variants to emerge. So the goal isn’t to keep us healthy as individuals, it is to moderate the rates in the entire population. So the idea that it is “your choice” whether or not you want to take the risks is totally counter to the important goal of us all working together to get past this whole thing as a large community. It is all about what is good for the Country, it is not about what risks we feel comfortable with as individuals. So when they suggest that it is “safe enough” to go unmasked indoors they don’t mean it is safe enough for you, it means that they think that it won’t overwhelm the health care system. They know that lots of people that follow that recommendation will get sick, but that is sort of the point – since many people refuse to get vaccines then it is important to make sure that many of those people contract the disease. Otherwise we are all stuck with this thing. The way to help the Country (or local community) as a whole is to either get vaccinated, or get infected. Oddly, both of these options lead to the same hoped for ending of the pandemic, but one options has a much larger number of dead people along the way (those that are willing to take the risks of not being vaccinated).

And then there is the little problem of getting the economy restarted. Clearly it is important to get people buying stuff again, and buying stuff in their local communities. This presents an immense pressure on the politicians to convince people to take the riskiest approach by interacting with each other. Not that the politicians want you to get sick, they want you to do things to get the economy rolling (spend money, get jobs, build stuff, sell stuff). If that means recommending less than optional behavior, so be it – as long as the hospitals aren’t overrun in the process. They have a delicate balancing act without having sufficient knowledge or data to know exactly what outcome is most likely. I don’t envy the decision makers who have to make decisions that are balanced on an invisible wire.

So my advice is to not depend upon CDC or government recommendations to decide your personal risk. They are making decisions for the overall group, we have to make decisions for ourselves – knowing that those decisions are important for the overall group as well. I am holding to my position that personally I got vaccinated and I mask and social distance as much as feasible. I am taking more risks now than before because of “social pressures” – but I certainly have not stopped paying attention. Being fully vaccinated I feel pretty safe for myself, but I think I still have a responsibility toward society at large.

So here we are in the middle of yet another recording breaking hot summer following a record breaking lack of winter/spring rain. I live a few miles north of Sacramento, California on the western edge of the Sacramento Valley. My house is about five miles north of the largest town in the area (with a population of less than 20 people). The closest “real” town with a population of around 60,000 is 12 miles to the south. I am surrounded on all sides by tens of thousands of acres of new almond trees. Last week our well stopped producing water, the water table had fallen below the level of the pump.

“Normally” the water table stays at around 90 feet deep. Since my pump is located 150 feet down, there is normally plenty of water above it to provide the water that we need for domestic purposes and to maintain a nice yard and small vegetable garden. However, the water table is now at 150 so our pump was trying to suck air instead of water. Not a good thing! This is the sort of thing that really gets my mind to working, wondering what is going to happen next. Do we drill a new well in the hopes of finding more water, do we try to “fix” the well we have, and if so how long with that last? Do we leave for a few months in the hopes of rains returning next year? Do we order up a big water tank that we can fill by trucking water in? What just happened to the value of our property – did we just lose the investment in our home? Do we stop watering our yard in the hopes that the water table will come up a little?

And then come all of the questions about why is this happening. Clearly the lack of rain has had a major impact. If there is no rain to recharge the aquifer it will drop, whether we use it or not. Maybe the eight nearby houses on 30 acre “subdivision” (I live on a piece of land that was subdivided into 5 acre plots 100 years ago) are using too much water and that is drawing down the water table. Or maybe the 6 new 500 HP pumps within 1/4 miles installed to irrigate the millions of new almond trees are having an impact. Maybe the 3000 HP worth of new irrigation pumps that run 24/7 are taking more water than is available. Our neighbor has stopped watering his lawn because he thinks that might help. I suppose a 2 HP pump running 30 minutes a day might be the problem, but somehow I doubt it when compared to the 3000 HP of pumps running twenty four hours a day. When I consider how much that pump removes as opposed to how much the orchards use, it feels like he is trying to stop a forest fire by peeing into it.

Then the question comes about how can it be legal for the farmers to do such a thing? That is one of the beautiful things about California, while we are drought prone, and we have an extremely limited water supply, there are almost no regulations on water use (except in cities where they limit the times and days that lawns can be watered). For example, if your property happens to border a river (such as the Sacramento River), you get what is called riperian rights – meaning that you can pump as much water out of the river as you like, without any regulations, monitoring, or cost (beyond your pumping costs). The same holds true for the big wells near my house. The assumption is that they “own” all of the water under the property and can use it however they want. There is no monitoring of use, no regulations on its use, and no cost other than pumping expenses. The laws ignore the fact that they are really drinking out of the middle of an underground lake that is shared by all. The implicit assumption is that you can pump a square hole directly below the property lines in the middle of the lake and the rest of the lake water level will remain unchanged.

An interesting feature of our local water situation is that we have two aquifers. One is located at about 100 to 500 feet deep. It is slowly recharged by rain water during wet years. I don’t know if the water flows like a river, or is stationary like a lake. In any case, it is renewable water and if managed properly represents a sustainable resource. The few homes in the area, and the “old” style farming (row crops, alfalfa, dry wheat, small orchards) drew from this water supply. However, there is another deeper aquifer starting at about 1000 feet deep. It has ancient water in it, water that literally came from Montana 12,000 years ago when the glaciers melted. The two water supplies are separated by 500 feet or so of hard rock that prevents them from interacting. There is no recharge into this lower aquifer, and since the ground compresses as the water is removed, it is not possible to recharge it artificially pumping river water into the ground. It is NOT sustainable, and in fact is being mined by the farmers which IS regulated and is illegal, but since there is no monitoring there is no “proof” that is happening (even though the State hydrologists know all about it and are tracking the impacts). The story we were told was that they were only using water out of the “wasted” ancient resource. The well drillers tell a very different story, they are drawing water from wherever they can find it, including both aquifers. It is much less expensive to pump from the shallow aquifer, so they do that as much as possible.

Most of the big new pumps are pumping from that supply, rapidly depleting the ancient supply and dropping the ground level in this area by about a foot a year from what is called “subsidence.” It is expected that the water in this aquifer will be depleted in another six or seven years, at which point the orchards will die and be torn out of the ground, the “backup” supply of deeper water will be depleted, and the ground level will be much lower resulting in increased risks from the periodic floods that visit this location. Caltrans is concerned that the subsidence will damage the freeway and the overpasses, costing hundreds of millions of dollars to repair. How can this be the case you ask? How can farmer afford to plant millions of trees knowing full well that they are going to deplete the water, resulting in their trees all dying. It is easy, all that they want to do is keep them going long enough to make a giant profit by invading a shared but unregulated resource. After that the trees will be gone, the leases will have run out and the investors can move along to a new location. This recently happened in the section of the San Joaquin Valley to the south. About 25 years ago they planted millions of almond and other nut trees. The farmers harvested them to great profit for a few years until the water ran out, then the investors left the area with ruined homes and worthless agricultural land because of the lack of water. Not only that, but they left behind damage to critical infrastructure due to subsidence that will cost the government many billions of dollars to repair, while vastly increasing the risk from floods because of the lowering of the surface of the land.

So goes the water wars in California. The State implemented a need for local communities to develop water regulations. They were given ten years to think about thinking about regulations, and an additional ten years to think about the regulations and a final ten years to write the regulations. The first ten year period is up, now they can start to think about how they might create regulations. I guess this is better than never, but it is also a lot of the reason for the push into put in millions of new trees ASAP. If the farmers wait too long, then the free water will no longer be quite so free. It is important to get ever last drop before regulations are created to manage the water supply.

Oh yes, my situation is temporarily past the critical stage. I call an well company that came out and dropped the pump 84 feet further down the pipe. Luckily my well was drilled 300 feet deep so this is possible. Several of my neighbors aren’t so lucky – they are going to drill new wells. There is a one year backlog before the drilling companies can get to them – they are too busy drilling more very large, deep wells for the new almond orchards that keep getting planted. If the orchards fail it isn’t a problem, the government will help them out with disaster relief to cover their costs.

Yesterday I listened to a really interesting interview on National Public Radio. Here is the link if you would like to dive a bit deeper into it.

https://www.npr.org/2021/06/29/1011415113/awe-appears-to-be-awfully-beneficial

The person being interviewed (Michelle Shiota) is a psychologist at Arizona State University and an expert on emotions. A few months into the isolation of the pandemic she noticed that not only were her activities being limited, but that it felt like her mind was also shutting down – and life was becoming a whole lot less “fun.” Being an expert on such things, she created a plan for herself. The plan was centered upon creating the ability to more easily experience “awe” in her daily life.

She started by taking a walk around the block every morning with the express intent of finding the feeling of awe. It sounds like it was a fun adventure — carefully exploring her environment looking for things that pulled her in that direction. The things that she found were mostly little things, things that would normally go unnoticed such as a child’s chalk drawing on the sidewalk, or the color and beauty of a beetle’s back, or the sparkle of a water-drop hanging in the sunlight.

She found that when she found that experience she felt better. Her emotions lightened up and her interest in life improved. She quickly found herself beginning to notice these things without having to hunt them down, they were just there. Her explanation about this new found ease if in finding awful things (pun intended) is that practicing activities such as this cause the brain to actually re-configure itself, laying down new neural pathways that quickly become the “default” pathways. At first you have to think you way to the experiences, but once your brain is reconfigured they are just there. Sort of like riding a bicycle. At first it is hard because you have to “think” about the details – which overwhelms our brain. But after a bit of practice, and a few night’s sleep, it all just happens. Apparently the same thing applies to finding things that are awe inspiring, and that in turn fires up parts of the brain that include happiness, contentment, and a feeling of being connected to the universe.

I find this to be an extremely hopeful message. Maybe it isn’t so darned hard to become a little bit “enlightened.” Perhaps there are simple exercises that we can all do that help us to not dwell in feeling isolated and on our own. Maybe simple things such as this open our hearts and minds to better things. One thing is for sure, it is easy, inexpensive, and can be done anywhere at any time. It also doesn’t seem like there is much danger to trying. If it works, wonderful. If it doesn’t, at least it was a fun little adventure in searching for beauty in our everyday lives.

The other day I heard that Bidden might be proposing a 15% “flat income tax” as a solution to something. I am not quite sure what that would solve, but it got me to wondering about income taxes in general. We seem to have gotten to a situation where the poor pay 10% in Federal income tax, the “middle” pay something like around 50% and the top pay next to nothing (less than 1%). If you break it at 50% of the population, the top 50% pay 97% and the bottom 50% pay 3%. That sounds pretty dramatic, and it sounds like the “rich” are paying for everyone else – except that isn’t how it works. The top 50% also owns far more than 97% of the wealth, and makes more than 90% of the “income” (discussed below).

These numbers are based upon “taxable” income. Sorting out what should be taxable is the key question. If “income” means an increase in net worth, then the very rich do very will. For example, Warren Buffett (worth about $128B) who is of the richest folks pays about 0.02% of his annual increase in wealth in income taxes. He is one of the generous ones. That compares to something like 10% at the bottom and perhaps 40% in the middle.

The reason that the “income” is so much lower than the increase in worth is that most increases are increases in value, but don’t get turned into money very often. If you own a $500,000 home as you main asset, then you are “worth” $500,000. However, if home prices raise 5% a year, then the value of your assets incomes by $25,000 a year – which is not “realized” so there are no taxes against that “income”. If you are lucky and happen to own that land in a prime location, it is possible for the value to double without creating a tax liability until you sell it. At that point in time, the income will be considered capital gains, not “income” – with a tax rate of around 20%, unless you reinvest that money in a way that it stays “hidden” as an investment and not an income. Then there is no tax.

A thing with “rich” people (those who have more than they spend) is that they can choose what “income” that would like – and therefore they can choose how much tax they want to pay. You can just keep the money invested and it just keeps growing without taxes. However, sometimes the income grows in ways that become taxable income even though it is not turned into cash. An example is with using a house as a rental creating income. The part of the rent that exceeds the expenses becomes “income” and is therefore taxable. However, instead of just owning a house for this purposes you create a business (such as a corporation). In that case the corporation would owe any taxes (at a considerably smaller tax rate), but can also do things such as purchase other rental properties – and the “excess” income goes away in business expense – along with income tax. This is a never ending cycle of needing to keep investing in more and more to keep from having taxable income show up. At a certain point that gets overwhelming so you have to start giving it away, of course giving it away to charitable organizations that generate a tax deduction (“write off”). Sometimes you can even give away stuff (perhaps art to an art museum) where you can take a deduction for the value, rather than the initial cost. If you are careful with your purchases you can buy low, give away high and make enough in the tax benefits to avoid paying any taxes – it is not really a donation, it is just another way to make money.

Considering things closer to home. Perhaps a person decides to buy a restaurant to make a living. They have a lot of business expenses such as rent, or a mortgage on the building, all of the equipment and furniture, utilities, labor, etc. Clearly all of those things are not “income”, in fact they are expenses. This person has a gross income based upon their sales receipts, but their net taxable income has very little to do with that number, the part that they can live off of is the difference. It seems reasonable for that difference to be the taxable part. However, if successful this same business starts to be worth much more than the initial value – but that extra part doesn’t get taxed until it is “realized”. It becomes an interesting exercise to determine which part of the money flow is “business expense” and which part is personal income. There are lots of rules about this, generally the smaller the business the easier it is for the IRS to figure out that you didn’t pay tax on the portion of the company car that you used for personal transportation. However, at a certain point the business expenses so overwhelm the personal spending that the “income tax” becomes negligible. That is what results in folks like Warren Buffet from paying any reasonable amount of income tax, he can only personally consume so much stuff – and that is all that he takes out of the business (which is his choice – it is not some sort of natural thing). So income tax becomes trivial. What about corporate taxes?

Corporate taxes are similar in that they only occur when realized, and there are many, many “incentives” that give huge tax breaks when they do become realized. The only reason that they would become realized is to allow the business to get into an entirely different line of business – in which case the new costs aren’t counted as on-going business expenses. One interesting thing in California is known as the “Prop 13” freeze on property tax. The deal is that property taxes are fixed (almost) at what they were when the property was purchased. That means that it increases to the new value when sold, but remains at the low rate compared to the actual value until that time. This is not a big deal with residential property because that “turns” on average about every 3.5 years – resulting in property taxes lagging inflation slightly, but not significantly. However, at the very last minutes (literally) before being voted into law the wording was changed to include business property. The thing with business property is that it seldom gets sold (because that would cause the value to be realized and therefore taxed). Since the property doesn’t get sold, the property tax remains frozen at very low rates relative to inflation. This in turn results in services, such as schools, that depend upon local property taxes go broke. That keeps teacher’s salaries extremely low, driving teachers out of the field. There are many bad results of this law, which was initially passed because people on fixed incomes were losing their homes because of property taxes that tracked the “appraised” value of their homes. The cure was a sensible one of giving them a break during their lives. But the cure brought a very negative impact by stopping the flow of business money to support local services.

So what it the solution? A flat rate won’t help unless it comes with a change in the definition of “income”. As long as people with a lot of money don’t have any income because it is all either eaten up as business expense, or “hidden” in unrealized gains, then they won’t have to pay a flat tax either. A flat tax will increase the taxes on the low income folks from 10% to 15%, won’t do anything for the upper income folks, but might help the middle income people (with their extra money coming from the low income folks). The solution isn’t in adjusting the nominal tax rates, it is in adjusting what gets taxed. What are normally called “loop holes”. It seems like the solution is in taxing based upon value – but even that is a bit questionable since much of what is owned is not actually “owned” it is borrowed. If I “own” a $500,000 home, the reality is that I probably only own $100,000 and owe $400,000. However, I am getting the use of the other $400,000. Would the bank then have to pay taxes on the part that they own? That would cause mortgage rates to skyrocket – forcing huge numbers of people to lose their homes. How about the increase portion? So if the house increases in value by 5% a year, who pays for the tax on the $25,000? Is that the homeowner who really only owns 20% of the property, or the bank? By the way, allowing taxes to follow property values like that puts us right back into the problems that created Prop 13 in the first place.

I don’t have an answer to this, and it appears that I am not alone. What is value? What is income? How do you pay for unrealized increases in value? For example, lets say that your retirement nest-egg is a $5,000,000 investment in securities (stocks and bonds). This should be able to generate about $125,000 a year in increased value at today’s rates (leaving enough in the fund to increase as inflation increases). After income taxes on the part that distributed results in an after tax income of around $70,000/yr. Enough for a nice retirement for most folks. But it also means that you were leaving $125,000 in the fund to grow – as unrealized income. This means that $125,000 of “income” (increase in worth) was tax free. Actually, even the initial tax was smaller than for someone that works for their money because comes out as capital gains (taxed at 20%) instead of regular income (taxed at 45%). All of a sudden your reasonable retirement nest egg that you saved and fought for during your working life puts you into the category of the “rich that abuse taxes”. You are now only paying 10% on your income – income that you did nothing to earn but buy some paper that you never even get to see. You are now paying less (as a percentage) than the poor kid selling hamburgers down the street.

I am currently reading a book that keeps stopping me in my tracks and causes me to ponder, wonder and imagine another way. The book is called “Braiding Sweetgrass, Indigenous Wisdom, Scientific Knowledge, and the Teachings of Plants” by Robin Wall Kimmerer. I am just beginning what promises to be an interesting adventure in reading and have already found that it is making me want to add some thoughts to my blog.

One of the first chapters is called “The Gift of Strawberries”, it talks about the gift that the wild strawberries in her childhood gave her and her relatives. Actually, it is about the idea of an economy based on the idea/culture of gifting rather than selling and purchasing that is the market economy we all live in these days. An example of how this works is that in the traditional native American ways, sweetgrass braids can’t be bought or sold – they can be gathered, braided and given; and they can be accepted as gifts but not “sold” because they don’t actually “belong” to anyone. Wild strawberries are the same, the earth gives strawberries, people pick them for food and/or gifts but nobody “owns” them. Of course there are some people that sell sweetgrass braids, and many that sell strawberries – but those transactions are examples of the market economy, not the native American ways. As Kimmerer says; “In material fact, Strawberries belong only to themselves. The exchange relationships we choose determine whether we share them as a common gift or sell them as a private commodity.” In other words, they begin in “the commons” but if they are turned into a private commodity there are no longer any effective social restraints upon there use or abuse.

There is an odd thing that happens in a gifting economy. For one, you tend to not accept gifts that are too large – it is unseemly to do so, and the burden of reciprocity becomes too great. Once you accept a gift you are no longer “free and clear” – the act of gifting creates ongoing relationships and responsibilities. Therefore, people tend to just accept what they actually need. Anything beyond that goes to someone else. However, in a market economy there are no such inherent limitations. The concept of “ownership” allows for an unlimited exchange (you are free to purchase as much as you can afford), and no reciprocity or responsibility is created – once the transaction is done the exchange is completed. This is very unlike what happens in a gifting economy.

At first I thought that she was describing some sort of Socialism, but as I think about it that is not the case. Socialism implies an organized government to work out the negotiations and trades – but it is still based upon the idea of ownership and a market. Gifting doesn’t have those ties – they are something much closer to our hearts, and much closer to sharing than buying/selling.

Kimmerer acknowledges that we can no longer survive as hunter-gatherers – but asks a question that stopped me in my tracks. She asks if perhaps, even in a market economy, we can behave “as if” the living world were a gift? She describes the market in a small town in the Andes where she lived for a time doing ecological research. I have seen such markets in many places around the world, markets that are full of vendors, produce, goods of all kinds – they appear to be the paradigm of a market based economy – but it isn’t. The vendors are all friends, neighbors, relatives and while money is exchanged, or goods are bartered, there is something else that is important but that has been lost. There is a balance in the “primitive” markets – everyone understands that what is being shared is of themselves and that the real “gift” of their merchandise is a gift from nature.

I was taken by a her statement that, “When all the world is a commodity, how poor we grow. When all the world is a gift in motion, how wealthy we become.” The question that comes to mind is how can we maintain the connections inherent in gifts, while operating with a market based economy that is necessary for our survival in today’s situation? I am asking myself if I treat my work and my efforts are as “gifts” – or are they commodities to be sold and traded to the highest bidder? I think my work has always had a very strong “gift” aspect to it, which is why I try to provide the very best “product” that I can, while minimizing the resources used to achieve that, and by keeping my prices as low as feasible while supporting my employees and family. I hadn’t really thought about it, but there is something of the feeling of “gifting” when I work for others. I think most of us (at least the lucky ones) have that sort of feeling about their business world. However, clearly there are a great many people that do not based decisions upon such insubstantial considerations.

Today we are in the middle of the first full blown three day weekend of the pandemic. There have been some small scale tests in the past each of which resulted in large spikes of infections. This time we are testing the effectiveness of the vaccination program on a rather large scale. Watching the news showing packed freeways, airplanes and beaches is rather terrorizing for me. Clearly there is a very big urge for a great many people to once again test their idea that we are finally over the danger of the virus. The ideas of masking, social distancing, and sanitation have clearly gone out the window. In fact, it appears as if people are getting much closer and more tightly packed groups than prior to the pandemic. That is a great thing, the test would not be definitive if they sort of half-hardheartedly kept some of the protocols in place – we wouldn’t know if the test was testing those looser protocols, or if we really are getting beyond the danger.

Now that the initial part of the test have been completed with a great deal of across-country mixing, and a lot of up-close and personal social contact among strangers it is now time for the “rise” stage of the fermentation. We have three weeks to watch and see the shape and size of the new spike that is sure to come. If it is just a minor bump that is easily absorbed by the heath care system it might be a good indicator that we are finally past the worst of it. I think we now have as many “high risk” folks vaccinated as are going to be vaccinated. There are still many in that group who have refused, but as long as they don’t overwhelm the health care system they aren’t important. They will either die or not, as they have so clearly expressed – that is their choice. Perhaps the necessary improvements have been made in the health care system to effectively treat the remainder of the population. We’ll find out about this in a month or so.

So I would like to thank those dedicated risk takers who are so willing to participate in this large test. Without you the rest of us would have a difficult time judging where we stand in the pandemic and the risks that we are all still facing. It is interesting that globally there are a few other large scale tests underway that indicate continued high risks. Currently the ones most in the news are Brazil, India and Japan. They are proven that the virus is still widespread and extremely active. Brazil is an example of a country that just didn’t believe the science so pretty much ignored the protocols. India seems to believe in the science but has been economically and politically unable, or unwilling, to put the necessary precautions in place. I find that Japan is an interesting exception because they were so proud that they immediately accepted the problem, took extreme measures at following the initial protocols and had extremely low infection rates for most of the year of the pandemic. Now Japan is spiking and apparently having an extremely difficult time of it. I don’t understand what happened to change their risk profile so profoundly at this late date.

While it is not particularly “fun” to be in the middle of a giant science experiment, such as is happening this weekend, it is certainly interesting from many points of view.

Rags to Riches

Whilst sitting in my hot tub watching the stars early this morning my thoughts turned to multi-billionaires. During the period of covid lockdown my neighbor and I have been trading books about rich, powerful Americans that appear to be doing rather horrible things to our society and often to the economy as well. Examples of folks that have come into our consideration are Richard Sackler of Purdue Pharma that got rich from selling oxycontin and Charles Koch who leveraged a failing oil refinery into a fortune. Other current “rags to riches” stories include Donald Trump, Bill Gates and others. You are free to add your own list of rags to riches examples. People that fit into this mold are a few of the huge farmers in California’s Central Valley and others that how outsized influence due to accumulating vast fortunes from virtual monopolies. There are some interesting things that characterize these folks. All of them started from modest beginnings (some a lot more modest than others), all of them leveraged a good idea (or lucky situation) into something akin to a monopoly, and all of them eventually seem to become convinced that they have “something special” giving them permission to think and act as kings or emperors.

I wonder how this happened. How did these few people acquire such vast fortunes, and the power the power that comes with it? How does that happen? Is it good or bad for the Country, the world or any part of society? If it is a bad thing, can we, or should we, do something to prevent it from occurring? These are the types of questions that come to my mind while “daydreaming” at 4:30am in the rural “wilds” of the Sacramento Valley.

I don’t think that the people who find themselves in the position of being exceedingly rich and powerful have any special “magical” attributes that somehow preordain their rise to wealth and power. I think they are generally just “normal” folks (perhaps very smart normal folks – but more like the top 5% of smart (IQ above 125). The certainly aren’t 170+ IQ super geniuses. There are a LOT of people in their intelligence category – but only a vanishingly small number of us end up being billionaires. In general, it appears that they are pretty “normal” folks that had a good break and then continued to add fuel to the fire, leveraging that good break to finally create situations that are close to being monopolies creating things that people either desperately need, or think they need. Basically, they all create what might be described as an addiction to something that they have a near monopoly on. Oil to fuel motors is one, computers to fuel whatever all of the computers do, social media to fuel our need to be seen and heard, actual narcotics to fuel our addition to narcotics, and “Cuties” to fuel our love for cute little citrus fruits. None of these things were needed before someone “created” a need for them. Someone had an idea that would “stick”, blew fire into the smoldering kindling, and then kept feeding the fire until it turned into a conflagration. They did this in a way that was fast enough, and protected enough by patents, to for them to end up being showered in wealth. These kinds of “beginnings” start all of the time (I would guess many millions of times a year), but only now and then do things come together in ways that allow the fire to explode – I think it is much more a random event than anything else. The very rich people that followed the path from rags to riches found themselves to be riding a perfect wave, they didn’t make the wave but once it was there they got on and held tight.

A little story from my early years might illustrate a bit of this. I was a struggling building contractor, just barely getting along on the meager income I could get from doing one-at-a-time custom jobs for “normal” homeowners, not the rich that can afford to pay for excellent work. In order to make this work I became a part of a small group of like minded friends that shared work and opportunities. This group was made up of a bunch of independent entrepreneurial tradespeople (plumbers, carpenters, painters, drywall folks, dirt movers, roofers, etc). We all belonged to an informal group that shared work because none of us could do everything.

One winter when work was slow because of the weather a bunch of us decided to take an adventure trip to the Mohave Desert in Southern California. I had being going to a very special, very remote, place with my family for many years and I wanted to share the beauty of the desert with my friends from Northwest California that grew up in a world of rain, fog and cold rather than dry, sunny and hot. This turned into far more of an adventure than I had anticipated, but I will leave most of that to another time (perhaps). I want to talk about our first night’s campfire.

I guided our little group to a camping spot that I had used many times in the past. It was located on the edge of some rolling hills to the north, and a vast almost flat alluvial plane stretching off for many miles to the south. This is in the heart of the extremely dry, sparsely vegetated Mohave Desert populated by rattlesnakes, scorpions, desert tortoises, bob cats, coyotes and big horned sheep. (Actually, while it appears almost barren this is a place that is alive with many animals and plants that become very obvious because they stand out in the land of dirt and rocks. When there is an animal there you tend to see it.

As usual, I started to make a little campfire to heat water for coffee and just to create a cheery place for us to gather around and chat about our day and our plans for the next day. However, a friend of mine asked to be the “fire keeper.” He started making a small little fire in the middle of the 2 foot diameter ring of stones my family assembled years ago to contain a small fire and hold a grate to put pots and pans on for cooking. He then went into the desert to gather more firewood for the evening’s fire. As you can probably imagine, that is a bit of a task because there just isn’t much out there in the way of firewood. He brought back some nice, small dead limbs that he found in a nearby dry creek. I settled down to relax, and he went back to get more. He brought another armload and put it on the fire – making the fire too big for the stone ring but still nice and cheery – too big to make s’mores but fine for talking. Then he went to get more firewood, and threw it on the pile. Now the fire was getting pretty big so we all had to move our chairs back to avoid the heat, putting us too far apart to be able to talk easily. Once more my friend vanished and returned with roots of some pretty big plants that he had uprooted to throw onto the fire. By now it had grown from a camp fire to a bonfire. He was unstoppable! Every time the fire got bigger he had an urge to make it even bigger – until he had gathered up all of the loose firewood from a very large area (perhaps a mile in diameter) and had uprooted the bushes and small trees that he could work loose from the ground. By mid-night we were all standing very far back from the roaring fire, and thank God my friend finally wore down (having partaken with a little of the whisky prior to each of his sojourns). By morning the fire had burned down to a pile of smoldering ash, and we no longer had a source of easily obtainable firewood. My guess is that there was no firewood in that area for many years after that – things grow pretty slowly in the desert. We then had to drive to find additional firewood.

He couldn’t seem to help himself. The fire was there, firewood was there, and if you put more on the fire got bigger. It didn’t take very long before he stopped worrying about where the wood was coming from, or what that was doing to the local area then and into the future. Actually, I don’t think he ever bothered with thinking about any of that in the first place. He didn’t even think about what he was setting out to do, which was to make a nice fire to heat coffee and draw in some friendly conversations with his friends. Instead, he went solo into the desert and just kept getting more and more and more until there wasn’t any more to get, and he had run out his ability to continue.

Is this what those ultra-rich “rags to riches” folks do? Is this the same kind of obsession that they get trapped in? And then they get power, get fame, get control. How very “sexy” and thrilling it must be. Unfortunately they also come to believe all of the lies about how wonderful they are, how smart they are, how sexy and viral they are, and they believe that they must have special powers to have succeeded in such a spectacular way. We just have to look at the Sacklers, Kochs, Trumps, and others to see how this infects their minds.

This brings me to the question of: “should we allow this sort of thing to happen?” Perhaps we should find a way for lucky, smart, energetic entrepreneurs to succeed and get very rich – but not “too” rich. Of course I have no idea where the boundary might be between “rich enough” and “too rich”. The idea of tractor pulls comes to mind. For those that are not familiar with this “sport” the game is to pull a heavy sled with some kind of machine (originally a tractor). The sled is rigged up so that it slides easily at first, but the resistance to being pulled by the tractor increases the further it goes, eventually getting so hard to pull that the tractor stops in its tracks. The winner is the one that pulls the sled the furthest. I am thinking of this kind of an idea to allow folks to compete, but not to just run off with the game. Of course, as with most sports of this kind, there is an ever increasing desire to make the tractors even bigger and stronger, requiring bigger and stronger sleds – on into the night. But even with the biggest and the strongest, the sleds are all designed to eventually stop the tractor.

Maybe we need something similar in our economy. Taxes are one way to make the “sled” get harder and harder to pull. Right now we are in a situation where the rich have gotten so much power that they have modified the rules so that the weight of the sled behind their tractors gets smaller as they go along – once you pass a certain threshold taxes decrease rapidly the more their income is. Eventually not only do taxes decrease to zero (or nearly so), but huge “incentives” start going their way so that the government gives them lots of money to make more money. As demonstrated by the Sacklers, it gets to the point that donating money and things to charity, foundations, and museums becomes a very lucrative profit center. All of those great sounding donations aren’t being generous, they are the best way that they have for making high profits (and honor) with that part of their wealth. The fact that those profits come by way of money from the rest of the us taxpayers is not important.