WalMart - Evil Incarnate! Or Maybe Just a Really Good Company - Part 3

Part 1 and Part 2 began my rebuttal of the "facts" that the Wake-Up Walmart (WUW) website presents. I continue:

24. Walmart cares little for the safety of its workers. The cites given start to bring out an important point. Walmart (or any corporation or organization for that matter) is not a living breathing entity. It is a piece of paper that allows a group of people to work together and be taxed as a separate entity. So, Walmart doesn't care. Period. Now, if we want to talk about people caring, that is a different story. Two of the cites given are about the doors being locked (at night) or emergency exits blocked. These are at a minimum fire code violations. However, if the standard for caring about safety is a single (or multiple) fire code violations, then few large companies care about worker safety. Why would managers lock workers inside at night. Well, 1) they have a job to do and the manager may have had trouble with people taking breaks when they weren't supposed to. 2) That Walmart happens to have a large amount of inventory (read money) in the story and may have had problems with thiefs coming in at night. 3) The manager may have been boneheaded. If you want to convince a reasonable person that Walmart doesn't care about their workers, then show that they have a significantly higher number of "unsafe" practices than a comparable retailer. Their third cite tries to do that by pointing out that they are in an "adverse risk" pool for workmen's comp in WV. Being in an adverse risk pool means that employees have high accident rates. This could be caused by 1) Walmart not caring, 2) Low skilled employees doing stupid things or 3) Employees lying about their accidents (I know, its hard to believe that anyone would lie to get money). Frankly, Walmart not caring is the least likely since being in an adverse risk category means their insurance rates go up (and that negatively affects Rule #1 - see, safety is all about money).

25. Walmart takes a combative approach to workers' compensation claims. And most businesses do. Somebody has to be the most aggressive, and in this case it is Walmart. Perhaps the type of people that Walmart hires (because of their low skill level) has a disproportionate number of loafs, cheaters, and hooligans. Notice I didn't say the majority of them are, just a disproportionate number in comparison to the entire population. If you did a study, I bet you would find that the higher someone is paid (i.e. the more skills they have) the less likelyhood of claiming workmen's comp for jobsite injuries. Why? Because workmen's comp doesn't replace all of one's income, and there is no possibility for bonuses/pay increases on workman's comp. So, for low wage workers, workman's comp is a pretty good deal - 50-80% of the pay for 0% of the work. And if your caught, since the actual money amounts aren't much, you'll probably just get a slap on the wrist. Besides, more workmen's comp claims mean insurance rates go up (or in the case of self insured - more money out of the pot), which negatively affects Rule #1.

26. Walmart gives its managers and other non-hourly associates a disproportionate amount of its profit sharing, stock incentives, and other benefits. Yeah, as does every other company that has these programs. First, 401K, stock incentives, and profit sharing programs are usually based on how much an employee is willing to contribute and/or their position in the company. Since we have already established that most Walmart associates are making "poverty" level wages for a family of 4, do we really expect them to sock away some money in a 401K or profit sharing plan? Certainly not when that new LCD TV at Walmart is on sale for $600! (And don't try to tell me that "poor" people can't afford $600 TVs). The fact is salaried people are usually working full time. Plus, they more than likely have a higher wage (hence more "extra" money to contribute) and they are more likely in positions of responsibility (hence a higher payout rate of incentives).

27. What Walmart gave to hourly associates pales in comparison to what Walmart gave to its top five executives. The lesson learned then is if you want to be paid millions of dollars, work your butt off and become the CEO. They aren't going to give you the position just because you think you deserve it, but you also won't be breaking new ground. Many CEOs started at the bottom and worked their way up. If you want to just be a greedy jealous person, continue on with your life the way it is.

28. Walmart's statement on profit sharing highlights Walmart's low pay. Does anyone thing that they are going to get rich being an hourly associate at Walmart? How about K-Mart? Or McDonald's? You aren't even going to get rich working for the socially conscious Ben & Jerry's! 2% being contributed to both profit sharing and 401K is probably about average for a company. That is about what the company I work for contributes. In fact, that is about what the last three companies that I worked for contributed.

29. The average profit sharing/401K contribution for all Walmart employees was $517 dollars per worker in 2007. The cites talk about how little hourly associates make (which is fair since their work is low skilled and in high supply), and breaks it down to as little as $1.42 per day for retirement. If Walmart matches just 50% (since they are so cheap elsewhere, why expect more?), then that means the workers are also contributing $2.84 a day to their retirement. Doesn't sound like much, right? WRONG!!! The beauty of compound interest is that a little amount becomes humongous! An hourly associate who started working at Walmart at age 18 and kept working in the same position, never getting a single raise, but contributing $2.84/day with Walmart adding $1.42/per day would have more than $800,000 if the market grew at only 8% per year (which historically it has, even with all of the recessions and depressions). He or she would then be able to convert this to tax free municipal bonds at 3%, and take out $36000 of the balance each year to live on, and be able to live until age 100. So in retirement they would have twice as much income as while working, and that isn't even counting Social Security. I take back what I said before about an hourly associate at Walmart not being able to get rich.

30. Walmart closes down stores and departments that unionize. Walmart closed a store in Quebec after they unionized. Of course, the store might not have been profitable before. Or Walmart might not have wanted to run a unionized store. Guess what? That is OK. Some businesses have found ways to work with the unions and still operate a profitable business. Some have not. Some don't want to try. Just like the government says you have the right to unionize, Walmart has the right to close down stores. Even if the Labour Board of Quebec fines them. As for the unionization of a small meatcutting department causing Walmart to phase out its in store meatcutting company wide, I would guess it is more coincidence. Meatcutting is a service oriented business (because the meat is the same price whether it is whole or cut at most stores I have gone to). Some stores provide better service and try to sell themselves on that (and may have higher prices to compensate). Frankly, if you are trying to be the low price leader (which Walmart is), then there isn't much room for extra service. No one has accused Walmart of great service. Besides, are we really to believe that the unionization of 5-10 workers in Podunkville, TX caused the corporate big wigs to have an emergency meeting in Bentonville, AR and decide to cut out meatcutting all across the country? Isn't it more likely that data from 6-12 months of operations with and without meatcutting was looked at and found that meatcutting wasn't helping the bottom line (and when your profit margin is only 3-4% you need all the help you can get)? The Texas unionization might have sped up of the process (so there weren't more grievances to deal with from more unionized labor).

31. Walmart has issued "A Manager's Toolbox to Remaining Union Free." Yep, let's be open about it. Walmart doesn't want to pay the increased costs of dealing with a unionized workforce. That is their perogative. They are fully within the law to try to forgo unionization.

32. Walmart is committed to an anti-union policy. Cites from all sorts of unfair labor practices. Heck, Walmart has 1.4 million employees in the US. For comparison sake, why not show how they are so much worse than other similar non-unionized retailers rather than just trying to scare me with "100 charges" or "60 complaints." Oh yeah, and lets be sure to compare actual violations not just charges or complaints. Why not do that if the "evidence" is so damning? Maybe because it is not. As before, many companies (most in the US) don't want to deal with unions. Unions haven't exactly been the choirboys in labor/management relations in the past (and present).

WalMart - Evil Incarnate! Or Maybe Just a Really Good Company - Part 2

In part 1, I started my completely unresearched rebuttal of Wake-Up Walmart's (WUW) website. Let me emphasize that I spent no time actually reasearching any of the claims they made (so they may be wrong), all I am doing is applying logic and reasoning to the statements they make to support their cause. So I'll continue on in the Community Impact section:

14. Walmart drives down wages and increases poverty in communities. To begin, they cite some statistics of retail, general merchandising, and grocery wages going down by as much as 10% in counties that built Walmart's. Well, to understand this we would need more information. If you read part 1, then you know that I have no problem with Walmart paying 16% less than the average of other retailers. I will state that it makes perfect sense (using supply and demand) for the wages to go down. Workers are subject to supply and demand just like products are. And the two can move in opposite directions (if lots of people demand Walmart products, the pressure is for upward price if supply remains constant, if lots of people want to work at Walmart, the demand for higher wages goes down since there is someone else who will do the job cheaper). Let's say your county only has a couple of big box stores and 500 people employed in the retail/general merchandise field. If Walmart comes in, and builds a new store with 300 employees, then there has been a net increase in the number of low skill jobs, but a decrease in the number of available people for those jobs (unless Walmart displaces 300 or more of the existing jobs). The previous positions were already filled with the most highly skilled of the available low skilled labor force, so Walmart (offering lower wages) is forced to higher even lower skilled workers. Therefore, the overall average skillset of the employed labor force goes down. More people may be employed, but it includes more of the bottom rungs than before. This provides downward pressure on wages. This is still a good thing because more people are employed and the county probably has a net economic benefit from more people being employed.
The other fact that they mention is that counties with the most Walmarts experienced greater increases in family-poverty rates. Well, that doesn't mean they are cause and effect. It could be that Walmart purposely targets new stores to middle and lower class areas exactly because that is who their customers are, I just can't see them opening a store on 5th Avenue.

15. Money spent at Walmart does not stay in the community. I was rather surprised that it took them so long to get back to the Mom and Pop argument. Their argument is that in Virginia 60 percent of money spent downtown, stays downtown, whereas just 6 percent of money at big box stores (glad it's not all Walmart's fault this time) stays in the community. I don't know about you but the types of businesses that you can spend money on downtown are not the types of businesses that Walmart competes with. The businesses in my city's downtown area are bars, corner cafe's, bail bonds, attorneys, accountants, etc. So let's look at a hypothetical of Mom & Pop retailers and see how much money stays "in the community." First, right off of the bat, Mom and Pop need to procure their merchandise from somewhere, unless they make it themselves (highly unlikely since they are running their store). That could be anywhere between 40 and 80% (40% if it is just raw materials that are going to be finished, 80% if it is complete products that are just going to be marked up) off the top that is going to somewhere besides the community. Then there is the tax man to pay, which is probably going to take 20-50% depending on where they are located, the local government would be taking the least portion of this. We have utilities (electricity, gas, water) which most likely is being produced outside the community, say 5%. And any host of a number of other expenses that are spent outside of "the community." What you find is that 5-10% of the money that is spent at a Mom & Pop store actually stays in the community. Why? What some people fail to realize is that we no longer live in an era of self-sufficient cities. That era died with the invention of the railroad (or ocean going freight) about 200 years ago.

16. Walmart negatively impacts the environment, traffic, and sprawl. And to support this they prove that Walmart has violated the Clean Water Act. No mention of how Walmart has "forced" suppliers to use less packaging (which has significantly decreased the amount of waste going to landfills). Yes, they violated the Clean Water Act, and if you actually read the government regulations you would find that it is relatively easy to violate most all of them. Have you ever wondered why you have to put up with ridiculous rules at work like not putting light bulbs in the trash? It is because it would be a violation of some regulation that private citizens in their own home are exempt from. I asked the company I worked for if they could pay me to take their "hazardous waste" (lightbulbs, batteries, etc) and dump it in my trash at home (which is perfectly legal). Unfortunately, they didn't go for it (it would probably violate some regulation). Also San Fransisco found increased costs of $256 million for road repair and "environmental degradation." I would say that number is dubios at best. I wonder what the cost impact of having the Grand Canyon or Yellowstone is due to the road repair and environmental degradation caused by the increased number of people who flock to those areas?

17. Walmart forced small businesses to close. Studies in Iowa show some towns lost 47% of their retail trade after 10 years of a Walmart store being built nearby. Once again, one would have to look at the overall health of the business in general. With reports that 80% of small businesses don't last five years (for various reasons), only losing 47% doesn't sound so bad. Besides, why are small town Mom & Pop stores better than Walmart? Walmart offers more choices and cheaper prices, plus I can do my grocery shopping and pick up an exercise ball all while shopping for clothes. Plus, many Mom & Pop's don't take credit cards (because they cost money to accept) and only take local checks. In this case, Walmart is cheaper and more convenient for me to use while traveling (plus the increased revenue contributes to the dividends they pay me!) Small businesses closed because it was no longer profitable to compete with Walmart. We don't live on the playground, Rule #1 says that if we make money we stay in business. If we don't make money we change something or get out of business. Some small businesses have actually thrived by going after niche markets. Walmart does a horrible job at niche markets, but then again, they aren't trying to get the niche markets. If you like cheap clothes made in China that will last 2-5 years before falling apart, shop at Walmart. If the extra quality and clean conscience of buying from Mom & Pop for 2 to 3 times as much appeals to you, then go for it. Based on the market, most people agree with me. Smile!

18. Walmart doesn't care what your community thinks. With a quote, lacking context, from Walmart real estate manager saying that they wouldn't build anywhere if residents didn't want it. For some reason, I believe that if taken in context you would find that he was talking about residents directly around the proposed building. In which case, you could probably say that about any business. Unfortunately, you can't have everything. If Walmart (or any other business) only built out in the middle of nowhere than the cry of "environmental degradation" as in San Fransisco above would be even greater. Walmart isn't going to build anywhere that they can't make money, that would violate Rule #1.

19. Walmart and imports. Basically, Walmart is bad because 70% of their non-grocery merchandise comes from China. If this really is that important to you, start living your meager existence with your own sheep and cotton fields. Nearly everything low cost product is made in India, China, or Bangledesh because those three countries constitute more than half of the world's population and for the vast majority low wage (compared to America), manual labor is a far cry better than living on the streets or working in the fields or coal mines for 12 hours a day. Oh, yeah, and they fail to track where their products that they buy from non-Chinese companies are manufactured. Except that Walmart doesn't try to pretend that its products are manufactured in America, so why track it. If your company professes to be 100% made in the USA, then you better have some program in place to track where your products were made. Walmart has no need to. Besides, I support providing jobs for the third world. It wasn't too many decades ago that all of the cheap stuff was made in Japan, Korea, Hong Kong and Taiwan. Now those countries have graduated on as their workforce has increased its quality and skill level. Why do people not support economic improvement for people actually in poverty (as opposed to the US version "poverty in name only")?

20. Walmart buys most of its merchandise from China. And this is a bad thing? WUW has all sorts of statistics (entirely true) which are presented to make the reader believe that the world is coming to an end because of the amount of stuff we buy from China.

21. Many of Walmart's "American Suppliers" actually manufacture most or all of their products in China. Once again, SO WHAT? Their products are manufactured in China because it is cheaper to pay Chinese kids $5 a day (which is better than the $0 a day they were getting working in the rice paddies for 12 hours) to produce products which are designed to be sold for $2-3. Is everything about China evil?! Because we don't like their government, we should avoid doing business with the country? How does that help their government change?

22. Walmart's Chinese factory workers are treated poorly. First, let's get something out in the open. Walmart doesn't have factories in China (or if they do, it is only a few). Walmart is in the business of selling stuff, not making stuff. All of those "Walmart" Chinese factories are actually their own independent companies, in many cases run by enterprising entrepreneurs (who are Chinese). Walmart only has as much sway as they do business with those companies. If Walmart has a significant share of one's business, then they can make a lot of changes. If not, they can't. I may spend thousands of dollars a year at Walmart, but if I went in and said I wanted change, the manager would laugh at me (maybe not out loud, but he would certainly be in his head and I would be the talk of the water cooler for a day). So any violations by a company are that company's responsibility (and China likes to lop people's heads off for screwing up). Chinese factory workers are treated much better than the other options they have. It may not be ideal, but that is part of living in a growing economy.

23. Workers face appalling work conditions, despite Walmart's factory inspection program. No proof is given of the working conditions, just a statement that only 26% of inspections are unannounced. This is something that I have a bit of expertise in. Auditing operations. Announced and unnanounced audits/inspections have their advantages and disadvantages. I have done both. I happen to believe that an effective auditing program has to use both. So, I have no problem with Walmart "only" doing 26% unnannounced. Besides, every company (including the great Mom & Pop's) coaches their workers if they know an audit/inspection is happening. It isn't just a Chinese thing. It is a good business practice. Besides, any competent auditor/inspector knows the workers have been coached and still knows how to get the information that they want. If Walmart has incompetent inspectors, then say that with the evidence to back it up. As to hiding violations, well, WUW doesn't directly say they are, they just insinuate that it is happening.

WalMart - Evil Incarnate! Or Maybe Just a Really Good Company - Part 1

Walmart has been the whipping boy for a while now. I'll admit, I had never been in a Walmart until I was 15. I now do the majority (by total dollars) of my shopping at Walmart and own stock in the company. So I am hardly an unbiased defender of the Great Smiley Face. But I'll do it anyway. When I lived in New York, there was a town near where we lived that was possibly going to get a Walmart. The people were divided and post smiley faces or frowny faces on their lawn based on how they stood on the issue. Recently, I ran across the Wake-Up Walmart (WUW)website. They have a page of "facts" that I would like to present with my refutation.

1. A Substantial Number of Wal-Mart Associates earn below the federal poverty line - This could be said of any retailer. The retail business requires a large amount of unskilled labor. Someone can be taught how to stock shelves, sweep floors, operate a cash register in about an hour. More over, just about anyone can be taught these skills. To support this statement, WUW cites that the average pay of an associate is $19K per year which is $2K below the poverty line for a family of 4. Well, OK, except that they don't say that the average Walmart associate is supporting a family of 4. Since I frequent Walmart, I have spoken with many associates there. If my Walmart is indicative of others, then probably 80-90% of Walmart associates are made up of the following types of people: high school students, college students (usually single or married with both working), mothers with kids in school (husband works so Walmart is 2nd income), retired or near retired persons (hardly supporting a family of 4 and usually with other income from SS or pensions). Are there thousands of Walmart associates who are supporting families of 4? Probably, but this is more a result of the magnitude of numbers. Walmart employees more than 2 million people. If only 1 percent are supporting a family of 4 than that is 20,000. It is still the exception. WUW also says that the CEO makes 1551 times what the average associate makes. So? There are 2 million associates and 1 CEO, maybe they should be paying him more. This type of argument exists solely for the jealous and greedy who believe they are in someway entitled to a larger portion of other people's possessions and earnings. If you are one of these. You're not entitled. You're just a greedy jealous person.

2. Walmart Associates don't earn enough to support a family. OK, this is completely up to interpretation. I supported a family on less than $20,000. Sure, you don't get all the bells and whistles in life on that amount, but it is certainly doable. WUW cites that the average family budget is $39K while the average associate makes only $19K. I say, if you are in this situation cut out some of your expense, and have the other spouse go to work. Maybe Walmart Associates who are supporting families of 4 should quit trying to live like Boeing engineers who are supporting families of 4. Walmart does not, and never has marketed the average associate as being able to support a family of 4. This is an Associate's problem, not Walmart's.

3. Walmart wages are not designed to support a family. Guess what, they don't and Walmart fully admits it! What's even funnier is they cite Walmart as saying that 2/3 of associates are not trying to support a family (i.e. not primary breadwinner). So, if Walmart says their wages are not designed to support a family, and people are not forced to work for Walmart, why are people complaining about exactly what they knew before getting into the situation?

4. Walmart can afford wage increases. Yeah, and they could "afford" to buy a nuclear submarine. That has nothing to do with it. WUW shows by some irrelevant math that if prices only went up 0.5% then everyone could get an $1800 raise. First, based on what is above, why stop at 0.5%. If the goal is to raise the average wage to support an average family, then why not increase prices by 6%? That would at least keep the page consistent. But then, people start to get funny about increases of more than 1%. Case in point, see the uproar of the public about increases in the sales tax. Wages are not set by the cost of products. Wages are set by what the market demands. If Walmart needs 100 workers and there are 5000 workers willing to work for $8/hour, why should Walmart raise wages? The fact is, the skill set needed to work at Walmart is very low and generally held by everyone in the population, hence, there is no demand to drive wages up.

5. Walmart wages are lower than other retail wages. This may be true. However, just because competitors offer to pay more is no reason for Walmart to. Wages are based on supply on demand. If Walmart has 100 positions at $8 per hour and competitor X has 100 positions at $10 per hour and there are 200 potential workers, then competitor X will probably get the most talented and motivated of the 200, and Walmart will get the leftovers. That is how a free market is suppost to work. WUW cites one stat that Walmart associates make 16% less than the average retail employee. Yeah, so what. A significant portion of retail employees make less than the average, a significant portion make more than the average. When Walmart opens a new store, I have never heard of them having trouble finding employees. Just because you think you should make more money doesn't mean you should.

6. Walmart's health care plan fails to cover 700,000 employees. Maybe because 700,000 of their employees don't work enough hours to qualify for it or choose not to participate (for any number of valid reasons). The fact that 700,000 employees are not covered by Walmart's plan in no way means 700,000 are not covered by health insurance.

7. Walmart's health care plan is too costly. This is completely subjective. WUW cites a some worst case statistics of what an employee would have to pay in costs even with the health plan. The fact is, whether you make $19K a year or $500K a year, going to the doctor costs the same amount. Most companies actually do subsidize their lower paid workers (through charging higher premiums to higher paid workers) even though study after study have shown that lower paid workers are more likely to make lifestyle choices (alcohol and tobacco use) which increase their health care costs. Frankly, I would say, if you are young and healthy, don't get health insurance and pay as you go. Even looking at my family situation right now, if we knew we weren't having any more children, then buying health insurance (besides catestrophic) would be a waste. Health insurance costs money (and roughly the same amount) regardless of how much money one makes.

8. Walmart's health insurance falls far short of the industry average. And then WUW makes the bait and switch. After talking about the retail industry, they now start talking about large firms (more than 1000 workers). So we go from comparing Walmart with other low skill, primarily part time, retail companies, to companies including Boeing and Ford whose workers are highly skilled, almost exclusively full time, and in most cases a significant portion are unionized. Why would they do this? Oh yeah, because if they kept with the retail comparison, Walmart looks like roses. Walmart covers a larger percentage of their employees than most all other retailers. This is one of the reasons Walmart decided to get behind the Universal Health Care plans in Congress. Because it would cause a larger increase in costs to their competitors. Hey, if you are going to get screwed, make sure your competitors are getting screwed more.

9. Walmart forces employees to rely on public assistance to cover health care costs. No, Walmart doesn't force anyone to do anything. Walmart doesn't have the power to force people. The government has the power to force people. Criminals (temporarily) can force you to do something. Walmart can ask, encourage, or cajole people into doing things. They do say that in 21 of 23 states "Walmart forces more employees to rely on taxpayer funded health care than any other employer." That is probably true as well (except for the "forcing" part). What is also true is that in all 23 of those states, Walmart is the largest employer of low-skill (hence low wage), part time employees by a large margin. So from a strickly absolute numbers point Walmart is the "most" in all sorts of areas (Walmart employs more red heads than any other retailer - true, but it has absolutely nothing to do with anything).

10. Walmart admits public assistance is a better value. And from the mouth of Walmart CEO himself. I agree with this statement completely, if it is qualified as being for the individual. Gosh, isn't it great when you have a leviathan government that can arbitrarily set prices (because the actual costs are subsidized with taxpayer dollars). Is it any surprise that when said government "competes" with a publicly held corporation (such as in providing health insurance), the cost to the individual is less using the government option? Why not just let the government provide everything then?

11. Your tax dollars pay for Walmart's greed. Actually it is those who believe Walmart has ill gotten gains that are greedy, but I digress. Supposedly, $2.5 billion in public assistance programs are because of Walmarts low wages and such. Good thing Walmart pays $7 billion in income taxes. I guess the government is still $4.5 billion ahead. So let's pretend that Walmart ceased to exist tomorrow. The government would lose $7 billion a year and public assistance programs would now be supporting an additional 1.4 million workers (I know, that is an exaggeration and completely not realistic, but if it is good for the goose ...). Much better situation.

12. Your local Walmart costs your community up to $420,000 per year. Uh-huh. (This is a re-hash of #11, just on the community level).

13. Your tax dollars subsidize Walmart's growth. Well, my tax dollars subsidize pretty much all businesses in the form of tax subsidies. WUW says that Walmart has received up to $1.2 billion in tax subsidies. That's great, care to say how many billions in sales tax, income tax, wage taxes, and other taxes are generated each year by Walmart (hint: it is many multiples of $1.2 billion). Most new businesses request tax subsidies when they move into an area. The larger the business (like Walmart), the more they ask for and get. This is because of the increased economic activity more than offsets any subsidy the locality approves. Oh yeah, and they used a "loophole" to get out of paying some taxes. Frankly there is no such thing as a loophole. Every entities' goal (from business on down to individual) is to legally minimize the amount of taxes paid to the government. When you deal with tax codes from hundreds of jurisdictions, there are bound to be "loopholes." The question should be, while they avoided $2.3 billion, could they have avoided $2.5 billion? If so, then their accountants need to be fired. BTW, I avoided thousands of dollars in taxes the last few years by using one of those nefarious "loopholes." Its called the Child Tax Credit! I keep having children (OK, so my wife actually does), and my taxes keep getting lower!

The Land of Outrageous Profits! - Part 2

Walmart is a different story. Where oil companies that are involved in exploration, production and refining can move some operations around (i.e. only explore and produce in certain regions of the world, refine in others), retailers have to do business in the country they sell stuff in. Looking at Walmart's numbers $255 billion of revenue is US producing $18.5 billion in earnings (7.2%), while their overseas operations have $98.6 billion in revenue and $4.9 billion in earnings (5%); or operations in the US are almost 50% more profitable than overseas. This may be partly due to the newness of the overseas markets, but if you delved into the numbers I think you would find that the majority is due to the US having the largest population of middle class with income to spend at Walmart. Furthermore, as long as market saturation hasn't occurred (yet another discussion), Walmart would be wise to continue expansion on the more profitable US market.

The bottom line is that the DOW stocks had earnings of $373 billion in 2008 and paid 31% of that in income taxes. So, that $373 billion for the companies to "give back" to the people is now $257 billion. It turns out that $111 billion is "given back" in the form of dividends. Of course these are the wrong people receiving the money according to some. Dividends go to shareholders. Not only that, within a class of stock, shareholders all get the same amount. So Sam Walton's heirs get paid the exact same amount as I do. They just own a larger percent of the company than I do. And the shareholders do deserve that $111 billion. In many cases that is the reason they bought the stock. Remember Rule #1! The business is in it to make money. Turns out, the investor is in it to make money as well. When investors buy stock, all of their money is at risk. If Walmart went bankrupt, I would lose all of my money invested in it. There is no protection. As such, investors expect to get a return, either in the form of increased stock value or dividends (or both).

So, governments got 31% of the earnings of the DOW, investors got 30% of the earnings, that leaves 39% of earnings to figure out where they are and if the providing higher wages or health care would have been better. There are three major categories that this money can be spent on. First, operations. Paying off loans on equipment and buying more inventory. Both of these can be good things. Paying off loans can reduce the financing expense which will increase profits later. Increasing inventory in a growing business is important to stay ahead of orders (having more orders than one can fill is a bad thing, because customers don't like having to wait to get what they ordered). Second, investing. This can be capital expenditures (new equipment) or investments (stocks, bonds, real estate, etc.). Both of these are good things too. Capital expenditures are used to increase productivity and generate more earnings (plus, that equipment is bought from another company which affects their bottom line). Investments provide capital to other companies such that they can spend it on one of the three categories. Third, financing activities. Dividends actually fall into this category. As does buying stock. All of the stock that a company gives to its employees has to be bought from the market (so, yes, many companies own a portion of themselves). A company cannot just snap its fingers and make new shares of stock. It has to tell the market it is going to make new stock and how much (which usually results in a decrease in the current price of the stock such that the market capitalization remains roughly constant. Additionally, if a company doesn't have earnings or left over money from previous years, then it can borrow money. Borrowing can be a good thing as long as the return on that money exceeds the finance costs.

So, in a nutshell, the left over earnings are used to expand the company (i.e. generate more earnings the next year). This is exactly in line with Rule #1. A company does not exist to provide jobs or health insurance. They exist to make money. If it is necessary to provide jobs or health insurance in order to make money, then the company will do it.

So what would be wrong with raising wages or providing more health care with the extra earnings? Well, to begin with, you would need to take that money from one of the other two uses: dividends to shareholders or re-investing in the company. Let's look at these two options.

Let's use Walmart as an example. Walmart had after tax income of $13.4 billion. Roughly $3.75 billion was paid out in dividends and $10 billion was reinvested in the company. Walmart has 2.1 million employees. We could probably assume that 2 million of these are the stockboys, cashiers, etc, that are usually championed as the poor who Walmart is walking all over. $13.4 billion divided evenly among these 2 million would be $6700 more for wages or benefits (which includes the necessary taxes that have to be paid - sorry you can't short change Uncle Sam). Since Walmart is usually chastised since it doesn't pay a wage that will support a family of 4 (that the positions it has were never intended to support a family of 4 is irrelevant), lets look at what benefit an employee would get.

For a moment let us pretend that Walmart is going to give everyone a $3000 raise and provide health insurance for the other 50%. Assuming that all 50% are providing for a family of 4. Health insurance from employers for a family costs on average $13000 a year. There is only $3700 per person left over after the raise so, the employee would have to pay $9300 - $5000 more than the raise that Walmart gave them! Even if the employee is single, the cost is $7200, requiring him to fork out $3500 almost as much as his raise. If you are relatively healthy and you got to choose whether you had health insurance (which you may not use) or $3500, which would you choose? I actually had the opportunity to make this choice. I chose the cash.

In the end, whether the employees would "benefit" from having these profits is meaningless. They have no claim on them. Employees have essentially made a contract with the company for X wages and Y benefits in exchange for Z work. Regardless of how profitable (or unprofitable) a company is, all that is owed employees is X +Y as long as they provide Z. The investors on the other hand, have complete claim on the earnings of the company. They own those earnings. The shareholders elect the board of directors which ultimately decide how that money is reinvested. So, if you are an employee and believe you are being unjustly treated you have a couple of options:
1) Quit. Why are you working for a company that treats you like garbage? (Oh, maybe they really don't your just jealous and greedy and want something that you don't deserve).
2) Buy stock. Now you own the company. At the next meeting, put forward a proposal to distribute earnings to the employees rather than the shareholders. I'm sure that will be well received.
3) Continue to whine. This is usually the option that is chosen.

The Land of Outrageous Profits! - Part 1

Welcome to America! The Land of Outrageous Profits! Our companies are so rich that people have time to complain about how rich they are. Michael Moore, after making millions through the quasi capitalist system, has made a recent movie about how horrible capitalism is. Protesters at the G-20 conference complain about the horrible things a capitalism has done. And my personal favorite is when people complain about the evils of WalMart or Exxon or any other Big Bad Company. The reason it is my favorite is because most of what they say is wrong, meaningless, or both. And they don't even have a clue that they are wrong, meaningless, or both.

So, to begin let me give some disclosure about myself. I have never taken an economics class in my life, neither high school nor college. I have not read an economics textbook, ever. The same with Finance. In fact the only business classes that I had was a Management for Non-Business majors in college. So who am I to talk about business, finance, and investing? Well, I started seriously learning about investing in 4th grade and have closely followed the US stock markets since then. Pictures of myself in my early years show that I understood money was important as early as 2 years old. My parents can testify that I started analyzing complex money issues (with my allowance) and was much better at saving during my teen years than my bothers. In high school, I started to learn and follow the commodity markets.

In college I started investing the money I had. Since that time I have invested in a variety of things. I have made money investing in stocks, bonds, and real estate. I have also owned and operated an S corporation with some college friends. Each of my investing endeavors has contributed to my education about money and finances. Do I consider myself an expert? Not by a long shot, but I feel confident in explaining the basics.

Before I get too far, let's go over Rule #1 of business: The primary goal of all businesses is to make money for the owners. This rule is what distinguishes businesses from charities. While all businesses play a political/social game of saying that safety or the customer or employees or something else is most important, they are not. All of these other factors are weighed against making money. For instance, safety may be important. If a company has a dangerous job to do, it has several options:
1) Allow the company to do the job without mitigation of the danger.
2) Provide extra safety equipment or training to the employee.
3) Compensate the employee at a higher rate for taking the risk.
4) Decide not to do the job.
In each case, the company has weighed the cost of injury (medical, bad publicity, wages, etc.) to the benefit of the job being completed (increased efficiency, prestige, etc.). For businesses, all decisions are financial. Some people aren't comfortable with that concept. (Even the most "socially conscious" businesses make their decisions based on money.) Now that we have Rule #1 out of the way, let's get on with it.

First, let's look at how big some of these companies are, after all, we are told that Big "Insert BoogeyMan Here" are the cause of our problems. I'll use the Dow Jones Industrial Index as an example. Thirty large cap stocks make up this index. While the overall diversity is lacking (it has improved in the last decade), the index has been a very close approximation of the market as a whole (the market being made up of 5000+ publically traded stocks).

Three ways of looking at the size of company give different results. First, revenue. This is the total amount of sales of goods and services that a company has. The top five in the DOW are Exxon ($477 billion - a perennial favorite bad guy), Walmart ($405 billion -another favorite), Chevron ($273 billion - part of the Big Oil Cartel), GE ($182 billion - usually you don't hear too much bad about them because everyone thinks they are an manufacturing company - actually, almost half of their business is in the financial services sector), and finally Bank of America ($124 billion - does anyone not think this company is the embodiment of Satan by now). So clearly, those companies who bring in a lot of money are evil, evil, EVIL!!!!

Oh, wait, I am suppose to be for capitalism. So, let me say, none of these companies are evil. In an effort of full disclosure, I own a large amount of Walmart stock. I also own all five of these companies through various retirement funds and ETFs. The major reason why these five large companies bring in so much money (notice I said bring in, not make) is because they sell products or services that millions use. Oil and gas are the fuel of our economy. Walmart is the middle & low class shopping haven, GE has their hands in so many things you can't not buy GE products, and we all like to keep our money safe in a bank.

Second, market capitalization. This is the value of the stock that has been issued. The top five are: Exxon ($319 billion), Microsoft ($222 billion), Walmart ($189 billion), Proctor & Gamble ($165 billion), and JP Morgan Chase ($164 billion). Two are the same but three are different although all have been villified to some degree or another. Another way of describing market capitalization is the perceived value of the company by investors. This perceived value includes the sum of assets and liabilities, as well as the future earnings potential based on past experience, market conditions, and personnel the company has. Market capitalization is the most fluid of the three valuation types because it flucuates whenever the stock is being traded.

Third, earnings. This is the actual money that is earned (and thereby taxed) by the company. The top five are: Exxon ($82 billion), Chevron ($43 billion), Walmart ($21 billion), AT&T ($20 billion), Microsoft ($20 billion). A lot of the same characters, now we have AT&T (communications giant). Earnings are a sign of how companies have used resources, labor, technology, and capital to accomplish Rule #1.

All of these lists are in absolute numbers. The 30 DOW stocks combined had a market capitalization of $3.2 trillion, revenue of $2.8 trillion, and earnings of $374 billion. Now a lot of the criticism that companies get is due to people not understanding how financials work together. Some are focused on only a small component (Walmart's low wages or lack of health insurance, Exxon's "largest profits in history", Microsoft's monopolistic practices, even AT&T not limiting use of its phone lines). The common theme is that these companies are making billions in earnings and should be using them for something else.

The earnings that I mentioned above are before taxes. A large chunk of this is used to pay taxes. The corporate tax rate in the US is 35% . Now because of different tax laws and where the companies "earned" the money, they may be paying more or less than this. The top five earners of the DOW paid the following amounts in income taxes in 2008: Exxon - $36.53 billion, Chevron - $19.03 billion, Walmart - $7.15 billion, AT&T - $7.04 billion, Microsoft - $5.25 billion.

For those of you who are math challenged, even though the corporate tax rate in the US is 35%, Exxon and Chevron (those oil companies who do nothing for us) are paying out 45% of their taxable earnings in income taxes. (Most of this is due to the number of other governments that they paid income taxes to and the various tax liability in those locations). Take Exxon for a moment, $36.53 billion in income taxes. $3.8 billion of that went to the US or state governments. The rest went to governments of other countries. Before anyone cries foul, only $10 billion of the $82 billion in earnings was related to operations in the US. So, $3.8 billion is rather fair. What it more interesting is that of the $477 billion in revenue, $121 billion was from US operations. Basically, what this tells me is that operations outside the US are far more efficient at generating earnings (10/121 = 8.2% for US vs 72/356= 20% for international). So, even though there is effectively a higher tax on the earnings outside of the US (3.8/10=38% vs. 32.73/72=45%), because of the increased efficiency in generating earnings, the majority of operations occur outside of the US. Furthermore, any expansion of operations would make more sense to be outside the US since that maximizes income. In other words, if the US wanted to lure more of the operating dollars to the US (thereby being able to tax them), they would have need to lower the corporate income tax rate (I'll have to write another post on that one!).

WISQARS Suicide Statistics - Part II

In Part I I started to explore who was committing suicide and why gun control efforts to use this issue to support their cause were worthless. One of the major themes I mentioned is that men and women are different. This should come as no suprise to anyone. Even a five year old from the movie "Kindergarten Cop" knows this. So let me look more at how people choose to commit suicide and what it might tell us. Some things to remember from last time, men commit suicide more than women. Older men commit suicide at a much higher rate than any other group. My goal here is to show that suicide is a much larger issue than gun control groups make it out to be and simple "solutions" like limiting access to guns are not going to affect it.

Some have argued that guns mixed in with suicide result in more deaths. Somehow, guns are more lethal than other methods of suicide. I introduced my lethality ratio in the last part. This shows which methods of suicide end up being the most lethal.
Clearly, drowning and suffocation are far more effective methods than firearms. Even fire is more effective in the later years, the group that has the highest suicide rate. Are women any different?
Similar but not the same. drowning and suffocation are almost univerally lethal across all groups. In later years, fires and falls become more lethal. Firearms are as lethal for some age groups, but by and large other groups have less lethality than males.

Overall, what this is telling me is that there are already plenty of other methods that people use to commit suicide that are are just as lethal or more lethal than firearms. Removing them will not decrease the suicide rate.

What are the major methods people use to attempt suicide? Poisoning and Cut/pierce. This is telling because if we are going to propose "limiting access" to some object as a means to decrease suicides, then limiting access to poisons and sharp objects is an impossible task. They are literally everywhere and completely unregulated. While poisoning may have a relatively low lethality rate, the fact that orders of magnitude of people attempt to use it results in a significant number of suicides. For women, more suicides occur from poisoning (1.69 per 100000) than firearms (1.43 per 100000). The vast majority of attempted suicides are by poisoning for men (63.01) and women (96.32). The number two method, cut/pierce, is a distant second (23.71 men, 25.29 women). Firearms is an even more distant 3rd. So any attempt to limit the methods of suicide is going to be fruitless. We live in a world that is full of things that are dangerous. The average household has enough chemicals that if distributed appropriately could kill 10,000 people.

Serious researchers of suicide know all of this. Limiting access to methods of suicide are only effective if someone is with the suicidal person - it is a full time job. That is why they advocate not leaving someone alone who has expressed suicidal tendencies. Stay with them constantly, and get professional help. In that order. If you believe that "limiting access" to objects through legislation is effective, continue living in your fantasy world. Just don't be surprised when people like me call you out for the waste of resources you have perpetrated and let you know that you haven't saved a single life.

WISQARS Suicide Statistics - Part I

Suicide is an issue that ends up being marginalized by those who are in support of gun control. It is a fact that about half of successful suicides in the US use a firearm (16,800 out of 33,200). Those in favor of gun control like to lump these in as part of gun violence since it helps to inflate their numbers (especially since there are only 13000 gun homicides and 700 accidental deaths each year). In previous posts I have said and in some cases shown data to identify that the underlying causes of these three problems (crime, suicide, and accidents) are not related. Therefore, effective solutions to them will be different. So let me examine suicide for a bit.

The source of my information is the WISQARS database (both death and injury) for the years 2001-2006. The first problem that gun control groups run into is combining age groups. Here is an example from the Brady Campaign:
"In 2006,16,883 U.S. residents killed themselves with a firearm, including over 2,000 young people (ages 10-24) (National Center for Injury Prevention and Control (NCIPC))."
Their definition of young people (not the NCIPC's where they get their information) is ages 10-24. I can't argue that the age range is considered young, but if that is the case, then why not include 0-24? To me, 0-19 might seem more appropriate. In any case, let's apply some critical thinking to the numbers. 2000 out of 16883 is roughly 12% of all suicides. If we assumed an even distribution of ages between 0 and 75, then the group in question (10-24, 15 years) is 20% of the age distribution. So, on the surface, it would about that this portion of the population (10-24 year olds) is less likely to commit suicide with a firearm than the population as a whole.

Now lets take it a step further, we know that people are not evenly distributed by ages, there are less 65-80 year olds than there are 0-15 year olds. So if the 15 year span, had significantly fewer (i.e. lower percent) of people than other 15 year spans. Except it doesn't. Demographic data for the US, confirms that there are about 60 million people in each 15 year age span up to about age 60. After age sixty, the number decreases by about 20-30% for every 5 years. In other words, the 10-24 age range actually represents more than 20% of the population, so they are even less likely to commit suicide (in spite of the horrific teen years) than the rest of the population.

Let's look at it another way, why not include all young people, everyone from 0-24. Does anyone think that 0-9 year olds will add a significant amount of suicides to the 2000 there are already for 10-24 year olds? I didn't think so. I would add 50 just to be fair. So 2050/16,883 , still 12% are now committed by something north of 33% of the population. That would mean young people are still even less likely to commit suicide. In case you haven't noticed, it is looking like suicide is not primarily a young person problem. Whereas the majority of gun crimes are committed (and perpetrated against) 15-24 year olds, not even a significant portion of suicides (only about 12%) occur to people in the "young person" category. This tells me that this argument is primarily a sympathy plea. We all look at children as innocent.

At least the Brady Campaign doesn't say that 24 year olds are children, but I wonder what the stats would look like if say the 20-24 year olds were removed. Good thing they included the statistics here. So, almost 1300 of the 2000 firearm suicides are from the 20-24 year old age group. Knowing this, it really puts a much different spin on suicides. 0-19 year olds ("children") make up more than 25% of the population as a whole. However, they are only responsible for 4.5% of firearm suicides. Or they are 5 times less likely to commit suicide with a firearm than the population as a whole. To me, that sounds like this age group is emminently trustworthy with firearm (but that would be committing a logical error by not accounting for the availability of firearms to this group of people, so I won't conclude that). What it does tell me is that compared with the rest of the population children committing suicide by firearms (and committing suicide in general) is not a major problem. Tragic? Absolutely. But do we need to take drastic measures for every tragic incident? If so, then life will come to a standstill as we try to "prevent" tragic incidents.

The next major problem that gun control groups make is trying to simplify a complex issue and apply a "solution" that won't fix anything. One of the solutions to "children" committing suicide with firearms is safe storage laws. In a nutshell, safe storage laws require some method of securing firearms such that "children" wouldn't be able to get to them. In some states with these laws, parents can be held criminally responsible for crimes (including suicide) that are committed with firearms they didn't "properly" secure. As we have seen above, less than 5% of firearm suicides are committed by children. Since the age range of 0-19 has an overall suicide rate per 100,000 of 2.26 and a firearm suicide rate of 1.02, someone in the 0-19 category is more likely to choose a method other than firearms to commit suicide. So, will "safe storage laws" prevent suicides? Most likely not, other means are available, and just as effective. They definitely have the potential to ruin a family more by charging the parents with criminal negligence when they are already dealing with the suicide of a child.

So, if suicide is not a "youth" problem, where should our efforts be focused? One of the things that the quest for "equality" has done is blur and in some cases erased the idea that there are differences in people. Men and women are not alike. Blacks and whites are susceptible to different genetic diseases. Old and young act differently based on any number of factors. Part of coming up with solutions to problems is to realize that we are not all the same. The second is that government is rarely the solution to any problem. You can't legislate solutions. Government "solutions" could be described as a band aid, and more likely as a butterfly band aid. It may hold the wound shut, but it won't stop the bleeding, and it definitely doesn't fix broken bones.

Here is a simple chart of who is committing suicide and who is attempting to commit suicide broken out by gender and age. Solid lines use the left axis, dashed lines use the right axis.
Some things to take away from this graph. First, males are more likely to attempt suicide and commit suicide. The greatest disparity is in committing suicide though. Besides a narrow time period (15-19) males and females attempt suicide at the same rate. However, males are far more likely to commit suicide than females, 5 to 10 times more likely. Second, young adults (15-24) attempt suicide more often than the general population, however, it also results in injury rather than death at a higher rate. This would seem then to be a plea for attention or help rather than being serious about ending one's life. Third, there is a disconnect between the stable rate of attempted suicides (25-44) and the stable rate of suicides (20-65). As a part of this it should also be noted that there appears to be a peak in suicides around age 45-49 (mid-life crises?) for both men and women. Fourth, after age 44, men and women are nearly identical for attempted suicides. However, fifth, after age 65 men and women vary greatly in committing suicide: women have a stable to decreasing rate, men on the other hand have a steadily increasing rate.

Suicide as a method of death, isn't even an issue until someone is into their 20's. That doesn't mean we should ignore it, but compared to the rest of the population, our focus should be elsewhere. Let me end this part with one more graph. The Lethality Ratio. The lethality ratio is the rate of suicide (death) divided by the rate of attempted suicide (injury) to determine what group is more likely to die.
Clearly, older males are far more adept at killing themselves. This is one reason why whenever someone brings up suicide as a reason for more gun control, especially targeted at "children", I know they are disingenuous. They are only trying to pull at heart strings to get their power trip. All the gun control in the world is not going to lower the suicide rate. Japan and Europe are, unfortunately, perfect examples.

Does Violent Crime Disproportionately Affect Women?

"a violent world that disproportionately targets women" - Weer'd Beard said this on a comment on another blogger's website and I had to ask myself: "Is violence disproportionately skewed towards women?" Seems like a rather easy question to answer so I went searching.

The Bureau of Justice Statistics compiles this type of information from their crime victimization surveys. On the most basic level, one could say no based on this graph:

Violent crime (murder, rape, robbery, assault) has been committed against males at a higher rate since at least 1973. However, looking at the graph and examining the underlying data, one can see that males have experienced a sharper decline (63%) than females (52%). Reviewing data from the 2006 and 2007 Crime Victimization surveys one finds that the rate between males (22.5) and females (18.9) has narrowed further. So, in the next 5 years we might see that violent crimes are committed against females at a greater rate than males.

So initially, I'll say that I disagree with Weerd, with some stipulations. 1) I'm looking at data from the US. 2) The trend indicates that Weerd will be right in a few years (so he may just be ahead of his time). If I stopped there, this would be an uncharacteristically short blog. So I won't. Perhaps my initial disagreement is wrong.

Based on the violent crime rates, about 2.7 million are committed against men and 2.4 million are committed against women. While not identical, it should be close enough to find any disproportionate amounts. The two impacts that I want to look at are deaths and injuries. So, let me change my original question to "Does violent crime cause a disproportionate number of deaths and injuries to females?" I'll use WISQARS as my source data for the years 2001 - 2006 (reason being that they have deaths recorded through 2006 and their comparable injury information only goes back to 2001). It should be noted that the death information will be more accurate since it is gathered by counting the total number of deaths. Injuries is done using a survey method and extrapolating to the entire population. As usual, my conclusions will come at the end (hence the word conclusion), and I'll be more than happy to tell you if I am wrong. So, in summary to start, based on the BJS chart, for the present time, I think Weer'd is wrong. Let's see who is right?

Violent crime as defined by the government consists of murder, rape, robbery and assault. WISQARS has a dataset for fatal injuries that has a subcategory of homicide. As part of the non-injury dataset, it has subcategories for sexual assault and other assault. I'll use the sexual assault as a rough approximation of rape injuries. The other assault I will use for the robbery and assault category. These categorizations are not perfect, but we rarely get to do a lab experiment when it comes to crime (those pesky criminals don't always cooperate and it is hard to get volunteers to be the victims). I'll then see how the comparative WISQARS rates match up to the BJS rates. A couple of things that I won't be looking at is the psychological cost of these crimes and the monetary cost of these crimes.

To begin I used the homicide and assault categories to gather information on cut/pierce, drowning, fall, fire/burn, firearm, poisoning, struck by/against, suffocation, and motor vehicle. Then I calculated the comparative rate between the two as a percentage (female rate/male rate * 100). If the percentage is greater than 100% than it disproportionately affects females.

To begin here is the graph of homicides:

The first thing that caught my eye was that only suffocation and drowning had any values above 100%. From a logical standpoint this makes sense. Murder by suffocation and drowning are brute force methods. There are no force multipliers. A rope may be used around someone's neck but this does not necessarily multiply the force. Given the fact that the average male has more upper body strength than the average female and that predators (criminals) tend to target the weak, it makes sense that brute force methods would disproportionately affect women. However, as can be seen from the total, homicide statistics are driven by firearm homicides which disproportionately affect men (five times the rate as women). Looking at the BJS rate comparison from 2005 the comparative rate is 26%. This is very similar to what I found from WISQARS.

Now for the assaults (which would be robbery and assault):

Again, the overall shape is similar to the homicide chart (minus drownings, it is hard to get injured from drowning). Vehicular injuries has a couple of years where women are about equally affected (100%) which is curious to see since, there wasn't the a similar comparative rate for homicides. The total is driven by the Struck By/Against category since they account for nearly 10 times the injuries as the next closest (Cut/Pierce). What these two graphs combined tell me is that Weer'd intention with his comment may be the force disparity that women have in unarmed combat. Suffocation is an indicator of this. Going up to my two assumptions in the preceding paragraph, an average male preying on an average female is going to have a strength advantage. A female preying on another female is going to select her prey so that she has a strength advantage. So if this was Weer'd intention, I would have to agree, however the way he worded it originally doesn't easily lend itself to that conclusion. Looking at the BJS comparative value for 2005 it is 62% when combining robbery and assault numbers. Once again this is similar to the numbers I calculated from WISQARS.

And the last graph Sexual Assualt or Rapes:

The first thing that should be obvious is the scale. Rape and sexual assault disproportionately affect women in a big way. That isn't news to anyone I hope. Further, injuries primarily occur in the struck by/against category. This also shouldn't be a suprise. The BJS found that only about 7% of rapists use weapons during their crime. The vast majority are just predators seeking out easy prey that they can use their strength disparity. Looking at the comparative rate for the BJS it is 1400%. This is higher than the values I calculated, but then again, they are surveying all rapes and sexual assaults while WISQARS is only looking at injuries. Still, as far as the order of magnitude goes, they are very similar.

Overall, violent crime rates are driven by assaults. There are 10 times as many assaults as robberies, 4 times as many robberies as rapes and 20 times as many rapes as murders or 800 times as many assaults as murders. Of the four categories of violent crime, women are disproportionately affected by rape. However, the trend of violent crime victims by gender appears to indicate that we may be seeing more of the violent crime targeted to women in the near future. So in conclusion, I still think Weer'd is wrong, for now.

That all being said, I don't think women (or men for that matter) should sit back and pretend crime doesn't happen. On the reverse side, don't paralyze your life because of what is going on in New Orleans or Chicago. Looking at the Crime Victimization reports can tell you a lot of things.

1) Women are 50% more likely than men to be victims to someone they know (family or friend). Lesson: Know your friends and family.

2) 25-34 year olds are half as likely to be victims of violent crime as 12-24 year olds. The rate drops an additional 25% for 35-49 year olds, an additional 33% for 50-64 year olds and finally an additional 80% for those over 65. In other words, a 65 year old has only 5% of the risk of being victim of a violent crime as a 20 year old. Lesson: Relax as you get older.

3) Never married and divorced people are 3 times as likely to be victims of violent crime as married or widowed people. Lesson: Get married and stay married.

4) Urban residents are 50% more likely to experience violent crime than suburban or rural. Lesson: If you can, get out of the city.

Bottom line. Choose first to not be a victim. Take the necessary steps to not make yourself an easy prey.

The Latest Wacky Idea from American Protectionists

American Protectionists have come up with another of their wacky ideas. Putting "Buy American" provisions in the stimulus bill wasn't enough. They forgot to add those provisions to the "Cash for Clunkers" and we find that foreign automakers made off like bandits! (Naturally, I don't care about the foreign automakers making off like bandits, I encourage all companies, foreign and domestic, to make off like bandits if by that we mean selling products to people that they want). Now Gen. Wesley Clark and his cadre are trying to get country of origin labeling on oil.

I first heard of this coming into work today. And I laughed out loud, I thought it was a joke. So searching the news, I find that it isn't a joke, these people are serious. And they don't know what they are talking about either. Having worked in the oil industry I know a thing or two about it.

So let's start with the whole country of origin labeling thing anyway. What does "Made in the USA" mean? Well, it can mean any number of things. It could mean that the final product was assembled in the US (with 100% foreign parts), it could mean that some amount of parts were manufactured in the US, it could mean that the raw materials were from the US, it could mean that the whole shebang was begun and developed in the US (with 100% foreign labor), it could mean that it was actually built in Japan in the city of Usa. Basically, whatever you want it to mean.

Let me say that I am not worried that terrorists are profiting from the gasoline I use, nor do I care that some 10 year old in Vietnam works 12 hours a day at a factory to make my clothes, and I am not worried about the illegal immigrants that pick the vegetables I eat for $10 a day. I only have so much time in my life, I can't save the whole world. So I focus on my family and improving those around me within my means. Maybe when I am independently wealthy I can start to worry about the personal problems of people halfway around the world, but at that time I will try to actually do something about it, not just talk about it and protest in the comfort of my hometown. I wouldn't mind retiring, living in Africa and helping develop village water systems so that people can have clean drinking water. (If I do, you can bet there will be a lot of gasoline or diesel generators spewing out gobs of CO2).

If you are not like me and want to try to save the world, be prepared to have to deal with being a hypocrite. Extreme positions rarely have any wiggle room. Just accept the fact that the coffee you drink is harvested with slave labor, tyrannical dictators skim the money from oil companies for their personal use, and money spent on foreign (and domestic products) is going to go buy drugs, booze, women, and guns for some less than savory people.

So now that you know I have no problem with foreign products, let me talk about labeling the country of origin of oil. What exactly are we labeling? Are we labeling the gasoline itself? Well, gasoline isn't exactly a single product. Besides being a liquid, it is a blend of several liquids. And once those liquids are dumped in a tank or piped through a pipeline, it all gets mixed together.

A Primer on Gasoline

Let's look at the service station where you get your gas. A typical small service station may have three or four 2,000 - 5,000 gallon underground tanks (one for each grade). These probably get filled up once a week when the tank is 1/3 - 1/2 full. They buy their gasoline from a wholesaler. The wholesaler has the gasoline at a transfer station. There are several 250,000 gallon tanks. Several gas companies (BP, Shell, Conoco, etc) may use the same transfer station (it is more cost effective than having everyone build their own - so yes, the transfer station may be run by Shell, but you will see BP tankers pulling up to get their gas). Pipelines run to the transfer stations carrying gasoline from whatever refinery it was made in, or port where it was imported. The gasoline is stored in the big containers. It is all mixed together, because it is all the same thing. The basic content of gasoline is regulated by the government (how much ethanol, how many octane, etc).

So why all the commercials about one companies gas being better than the other? Well, that all has to do with additives. Besides the big tanks with straight gasoline, there are also a bunch of little tanks with each gas companies proprietary additives. So when a truck pulls up to load up 2,000 gallons of Super X gasoline, 1999 gallons of gasoline are pumped in and 1 gallon of Super X additives are mixed with it. This is actually a very efficient process, and allows companies who don't refine gasoline, to still market their own special blend!

So, let's take a step backwards to the refinery. Oil refining is a process where a relatively useless raw material (crude oil) is turned into useful end products. Here is a graphic of what comes from a barrel of oil:

More than 3/4 of each barrel of oil gets turned into fuel of some sort. In the US, we have built our transportation fleet around gasoline (primarily because our initial supply of oil in the US from Texas and Oklahoma was well suited to the chemical process that produces lots of gasoline). Our refining capacity is not enough to supply our demand for gasoline so we import a lot from Europe. Import gasoline. Europe has built their transportation fleet around diesel fuel (primarily because their initial supply of oil from the North Sea was well suited to a chemical process that made equal amounts of diesel and gasoline - they sell the gasoline to the US).

The major factor in the flow of oil is proximity (it costs money to move oil long distances). So at times, we export oil (yes, I said export - the US produces about 5 million barrels a day and export about 1.5 million barrels of it, almost 1/3 of the oil the US produces is EXPORTED - and I am perfectly fine with that) from Alaska to Japan or Korea, because it is more cost efficient to do that and import oil from Mexico or Venezuela (corrupt dictators notwithstanding). when it gets to the refinery, it goes into a big tank (sort of like a transfer station). And it all gets mixed together (Louisiana crude, California crude, Texas crude, North Sea, Saudi, etc.) if it is roughly the same type of oil (light, heavy, sweet, sour, etc. - crude oil is just like cream in some respects). The refinery draws from these feedstocks as they work their magic and presto out comes gasoline and other products.

So we all know that oil comes from evil countries that have no rights, right? Yeah, the top 15 countries that we import oil from include Mexico (backwards I'll give you, but not evil), Columbia (see Mexico), Brazil, United Kingdom, Norway, and Ecuador. If we include all Petroleum imports the Virgin Islands makes the top 15 list as well. Oh, wait, I forgot the number one country that we import from, the evil terrorist hording giant of ... Canada. Wait a minute, Canada? The ones that end their sentences with "eh" and play hockey year round. That Canada? Well, we must barely import more oil from them than the 2nd place evil country Venezuela right? Wrong. We import about 2 million barrels a day from Canada. Venezuela only sells us 1 million barrels a day. In fact of the non-evil countries I mentioned above they account for 40% of our oil imports.

So what about the evil countries? Well, I didn't make a judgement on Nigeria, Algeria, Kuwait, and Angola. They account for another 16% of our imports. Then there is Iraq (which I think is our friend), 4% and Saudi Arabia (just because terrorists come from the country does not mean the country is bad), 9%. Of the top 15 importers, only Venezuela (whose leader actually has spoken about the evil Americans) at 10% and Russia (who keeps on flipping as to whether they want to be our friend) at 3%. So this whole labeling thing boils down to 13% of the oil we import (which is only about 8-9% of the actual oil we use). Got that, 8-9%.

Now that we have a general idea of how everything gets mixed together in one great big soup, how are we to accomplish labeling. I can think of a few ways:

1) We have separate supply streams for foreign and domestic oil. This would necessitate a large expenditure of capital for new tanks, refineries, pipelines, etc. After all we don't want to soil our oil with any of that foreign stuff.

2) We have signs at the pump that change on a regular basis based on the most recent shipment of fuel. The sign would list where the gasoline came from, what feedstocks were used, etc. etc. etc. When you realize that there is no gas in your town that you can buy in good conscience, maybe you will come to your senses and continue to support terrorists and tin pot dictators.

3) Just have a general sign on each pump of where the gasoline came from on average, updated on a yearly basis. This is a scaled down version of #2, hopefully it would assauge the guilt of most of the people that are worried about buying foreign oil. They would be able to buy gas at one gas station in their state.

Now, lets look at some of the logistical problems that might pop up. I mentioned before about the "Made in the USA" label. If the gas is refined in the US, is it "Made in the USA"? If it is refined in Europe with US oil and re-imported is it "Made in the USA"? If foreign gasoline is blended with US gasoline is it "Made in the USA"? What percentage is needed? 50%? 30%? 10%? Does the ethanol or other fuel additives count towards this percentage? What about oil from Saudi Arabia that is pumped with American Made machinery, onloaded to an American flagged ship and transported to the USA?

How about this dilemma, what if for some reason we decided to buy oil only from friendly countries. This would mean that our supply of oil was limited. Best case moneywise for us is that friendly countries stopped selling oil to others and only sold to the USA. In which case those other countries would be faced with the decision to a) buy oil from the "evil" countries or b) have their economy do a nose dive which has always worked out for people's well being. Right.

Or on the other hand, since we have artificially limited our supply (by not buying from whoever has oil to sell), the price of oil to us will go up (since now the people supplying our oil know there is no where else for us to turn). That $140 oil did a good job in 2008 of keeping the economy and jobs roaring, didn't it. So in a way, we are captives to the "evil" countries. But then again, they are captives to us. Who else is going to buy the 10 million barrels we import? There isn't the demand for it. Which means, while they hold our gas spigot, we hold their purse strings. So it is in both of our best interests to just play nice.

I will tell you a solution that I can get behind. Have the US government copyright/patent/trademark the "Made in the USA" label. Then rather than worry about where a product was made, just charge a royalty for each product that contains the label. Those who are socially conscious to the point of wanting to engage in isolationism, can buy their Coca Cola with the "Made in the USA" label for $2.50. I'll pick up the case right next to it that doesn't have the label for $2.25. The fact that they were bottled in the same place less than 20 minutes apart is irrelevant. The "Made in the USA" label already is just a salve to help some not feel guilty about supporting "evil". The US government isn't making any money on it though, and I could get behind that proposal that would change that.

And to top it all off, if you believe we are so righteous because we don't import oil from super "evil" Iran or Libya, try this out. Europe does, a lot of it. And remember what I mentioned about them exporting the gasoline that they don't need because they rely on diesel? That's right it comes in to the good ol' USA and you pump it into your Toyota hybrid every time you go to the pump. Even when we embargo countries we still end up using their products.

Not to beat a dead horse, but look at that graphic again. A little more than 7% of the oil we use goes to "Other Uses." What are those? Things like plastics, petroleum jelly, and tar. So while you may be buying your organically raised milk that is certified from Vermont, it is coming to you in packaging that was made from "evil" oil. Every time you put some lotion on, you are donating a few tenths of a cent to the terrorists. Simply driving your car (even if it is all electric or runs on 100% ethanol) helps support Hugo Chavez because the heavy oil they have in Venezuela results in a higher amount of tar than light oil from Texas or Saudi Arabia. All asphalt is is tar and gravel. I can see the signs now, "This road was paved courtesy of the communist Hugo Chavez, by driving on it you are directly supporting his regime."

Grilling: Gas vs. Charcoal

No, I am not writing this to further the debate of which is better (Clearly charcoal is). Sorry, this has to do with the general population not understanding how to use basic statistics, and going ahead anyway to use them to try to prove their point.

At work, our monthly safety bulletin was about grilling. Rather appropriate for the summer. The first error made was in the title "The Backyard BBQ." BBQ is a style of cooking and using an outdoor grill does not make it BBQ. It's called grilling - and can be just as tasty as BBQ I might add. But I digress, the title had nothing to do with the statistics. The following phrase however did:

"81% of the grills were fueled by propane/gas and 16% used charcoal or other solid fuel. Although gas grills are only used roughly 1.5 times as often as charcoal grills, they were involved in five times as many fires."

The emphasis was in the handout, I didn't add it. When this was read, I did a double take and had to look at the sheet to see if it really said that. It did. The point they are trying to get across is that even though gas grills are more popular, they are the cause of a disporportionate number of the fires. So let's look at the statements.

First, 81% of grills are fueled by propane/gas and 16% used charcoal or other solid fuel. I am assuming that the remaining 3% or grills are liquid fuels (although, I have never actually seen one of those, unless you consider a Coleman stove a grill). I have no objection to this, it makes perfect sense. Go down to the hardware store and the vast majority of grills are gas.

Next, gas grills are used 1.5 times as often as charcoal grills. OK, this can be taken one of two ways. A) (an absolute view) For every 2 uses of any charcoal grill, any gas grill is used 3 times or B) (a relative view) For every two times the average charcoal grill owner grills, the average gas griller grills three times. They may seem the same, and if there were equal numbers of gas and charcoal grills then they would be. But there are not.

So, let us do a little math. Assume for a moment there are 81 gas grills in the US and 16 charcoal grills in the US. We know how many grills there are so we want to calculate total uses. Using the absolute view (A) above, if every charcoal grill is used twice in one year, they account for 32 total uses. This would mean the gas grills account for 48 total uses (1.5 time 32). In other words, at least 33 of the gas grills were never fired up even once. Another way of looking at it, is that 16% of the grills (charcoal) accounted for 40% (32) of the total uses (32+48=80). Does that make sense?

No, it is like saying that people with charcoal grills are 3.8 times ((32/16)/(48/81)=3.78) as likely to grill as people with gas grills. Having owned both gas grills and charcoal grills, I know this can't be true. While I love the taste of charcoal flavored burgers, nothing beats the ease and convenience of turning the knob, pushing the button, and pop you have your flame. I grill more often with gas than I do with charcoal, because of the ease of use.

So let us look at the relative case (B) to see if it makes sense. Since each of these is an average griller, the percent ownership is irrelavant. So it is simply stating that if you own a gas grill you are 1.5 times as likely as a charcoal griller to use your grill. This is the point of what is being said. I hope you are still following along.

Now the last part, gas grills are responsible for five times the number of fires. This is said as the ominous warning. But is it really? Let us look at our first set of numbers, 81% vs 16%. Turns out there are approximately 5 times as many gas grills as charcoal grills. This statement can also be taken in an absolute or relative manner so let us examine both for the common sense test.

Absolute. Of the total number of fires, five times as many are caused by the gas grills. We can assume that a fire isn't going to happen unless the grill is used, so each use should count as a potential. We already know from above that 81 grills x 3 uses + 16 grills x 2 uses = 275 total uses. If we assume that 13.3% result in fires (no where near this high in real life but this is just for comparison purposes) then the 275 uses will result in 36 fires. Of that 36, 6 were from charcoal grills and 30 (5*6) were from gas grills. Or a rate of 0.1875 per use for charcoal and .1234 per use for gas. This would indicate that while gas is 5x more prevalent than charcoal, it is actually 51% less likely (.1875/.1234-1=0.51) to cause a fire than charcoal. Hence, no need for the ominous warning.

Relative. If 3% of charcoal uses cause a fire, then 15% (3%*5) of gas uses cause a fire. So, for 32 uses of charcoal grills, there would be 1 fire. For the 243 uses of gas grills there would be 36 fires. Now does this make sense, no not really. There isn't a mechanism that would make gas grills more fire prone than charcoal grills. Granted, if you leave the gas on for a while before lighting it, you could have a nice fireball. However, this pales in comparison to the safety hazard of squirting lighter fluid on your already lit coals. I'll admit, I like to do this! So the relative case to me seems like bunk.

Turns out, the NFPA has these statistics on their website. Of the 7900 fires, 6400 are from gas grills (so I assume that 1500 are from charcoal grills). This confirms my analysis that the relative case is not correct. However, there are still some problems with these numbers. 6400/1500 = 4.3 not 5 times. So this makes the absolute case even more peachy. Even though 4.3 times as many fires occur from gas grills as charcoal grills, since gas grills are 5 times as prevalent as charcoal grills and used 1.5 times as often, they are actually 57% (4.3/5/1.5=0.57) less likely to cause a fire (hence they are much safer).

So really, what the NFPA (and my work) should be saying is that charcoal grills are fire magnets! And without changing any other practice (like not grilling indoors), if we switched the 16% of charcoal grills to gas grills, we would decrease the number of fires by 11% (57%*1500/7900=0.108).

Now, if this doesn't bore you, I don't know what will. I find it rather exciting!