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For nonprofits, government money is appealing, but might not help the bottom line: Turns out that taking government money is inefficient for a non-profit.

For every $1,000 given through a government grant, nonprofits reduced their investment in other forms of fundraising by an average of $137. That, in turn, meant an average drop of $772 in gifts from private donors. In other words, that $1,000 check from the government netted only $410, on average, because grant recipients reduced how much they tried to raise money through other means.

What’s interesting is how efficient their fundraising is normally.  Look at those numbers again – a $137 investment in fundraising was responsible for $772 in donated dollars.  That’s an ROI of 463%.  Wow.

I just finished Ron Paul’s book Liberty Defined.  It’s a collection of essays on “50 essential issues that affect our freedom.”  There’s everything from Abortion to Zionism (yes, it’s in alphabetical order), with all sorts of other stuff in between – the CIA, torture, moral hazard, envy, unions, etc.

It was…okay.  I agree with him on some stuff, and think he’s hopelessly naïve on others.  (Also, he’s not a very good writer – a lot of it was very scattered and meandearing; I defy anyone to make heads or tails of his chapter on slavery.)  I think Paul is as libertarian as we’ve ever seen in a maintream-ish political candidate, which means he doesn’t have a snowball’s chance in hell of being elected.

However, there’s one sentence in the afterword that I though rang extremely true, and is worth quoting:

We need to become tolerant of the imperfections that come with freedom, and we need to give up the illusion that somehow putting government in charge of anything is going to improve its workings, much less bring on utopia.

I’ve come to appreciate this sentiment.  There are so many things that sound great in theory, but just never work in practice.  Freedom is a dirty business sometimes.  It’s not perfect, and never will be.  We can strive to make it equitable, but there will always be winners and losers.

This is what I found so humorous about the Occupy protests.  They started off with lofty goals, and then realized some very sad truths – a lot of people in their encampments were freeloading, theft was a problem, drug use was a problem, and their meetings were descending into chaos because no one was in charge and there was no – gasp! – hierarchical power structure.

Democracy works, and so does capitalism most of the time. They were created to solve very real problems.  I’m not saying that some people don’t get treated unfairly, and some other people don’t get to be greedy bastards at the expense of others, but that’s how freedom works.

It’s not perfect, but it’s the best we have.

5% of Americans Made Up 50% of U.S. Health Care Spending: Super-interesting statistics:

When it comes to America’s spiraling health care costs, the country’s problems begin with the 5%. In 2008 and 2009, 5% of Americans were responsible for nearly half of the country’s medical spending.

Of course, health care has its own 1% crisis. In 2009, the top 1% of patients accounted for 21.8% of expenditures.

They do some analysis on age, and, not surprisingly, older people account for more health care spending.  I would have like to see some analysis on obesity levels too – that would probably be extremely enlightening.

Marlborough (ship): On the heels of the Mary Celeste, we have the story of the sailing ship Marlborough, which left New Zealand in 1890, never to be heard from again.  However, a Glasgow newspaper account in 1919 has a chilling discovery – the Marlborough floating near Cape Horn with a skeleton for a crew:

We were off the rocky coves near Punta Arenas, keeping near the land for shelter.[…] Before us, a mile or more across the water, stood a vessel, with the barest shreds of canvas fluttering in the breeze. […]

There was no sign of life on board. After an interval our first mate, with a number of the crew, boarded her. The sight that met their gaze was thrilling. Below the wheel lay the skeleton of a man. Treading warily on the rotten decks, which cracked and broke in places as they walked, they encountered three skeletons in the hatchway. In the mess-room were the remains of ten bodies, and six others were found, one alone, possibly the captain, on the bridge.

Is it the truth?  No one knows because no one can source this excerpt back to an actual newspaper.

Still, great story.

California and Bust: This is a long article by Michael Lewis about the financial disaster that is California.  At this point, that state could break off into the Pacific and face a better future than it does on its present course.

In the middle of the article is an extended passage that I just think is brilliant and that sums up the larger narrative of the general problem our country finds itself in now.

This is long, but worth reading:

It’s a problem of people taking what they can, just because they can, without regard to the larger social consequences. It’s not just a coincidence that the debts of cities and states spun out of control at the same time as the debts of individual Americans. Alone in a dark room with a pile of money, Americans knew exactly what they wanted to do, from the top of the society to the bottom. They’d been conditioned to grab as much as they could, without thinking about the long-term consequences. Afterward, the people on Wall Street would privately bemoan the low morals of the American people who walked away from their subprime loans, and the American people would express outrage at the Wall Street people who paid themselves a fortune to design the bad loans.

[…]  A color-coded map of American personal indebtedness could be laid on top of the Centers for Disease Control’s color-coded map that illustrates the fantastic rise in rates of obesity across the United States since 1985 without disturbing the general pattern. The boom in trading activity in individual stock portfolios; the spread of legalized gambling; the rise of drug and alcohol addiction—it is all of a piece. Everywhere you turn you see Americans sacrifice their long-term interests for short-term rewards.

What happens when a society loses its ability to self-regulate, and insists on sacrificing its long-term interest for short-term rewards? How does the story end?

Beyond this, the crux of this particular article is that California got ransacked by public sector unions.  One section states that if you started a career as a firefighter after age 40, you would retire five years later on almost as much as your salary.  Another explains that California spent $6 billion on their prison system in the same year it spent only $4.7 billion on the largest university system in the country.  And then there’s the sad story of the City of Vallejo, which, by my reading of it, is down to just one administrative employee.

The larger point that the article means to demonstrate, however, is that the United States is about the fracture down state lines.  Some states will thrive, and others will dwindle, essentially becoming massive ghettos. Businesses will move with the economic fortune, as will the people.  Those who can pick up and follow the work, will.  Those who can’t more will stay and face the same sad fate as the state they live in.

60 Minutes did a profile last week on House Majority Leader Eric Cantor.  Some interesting points:

• He’s Jewish.  The only Jewish Republican in Congress, in fact.  Not only that, but he grew up in Virginia, not known as a hotbed of Jewish culture.  He told Lesley Stahl about his experiences as a kid, playing in Christmas pageants and singing Christmas carols.
• His wife and mother-in-law were both liberal Democrats.  His wife stated on-camera that she’s still pro-choice and pro-gay rights, in opposition to her husband.
• He has one son still living at home, who gleefully told 60 Minutes that his dad likes rap music.  Cantor then rattled off the names of the some of the artists he likes – Wiz Khalifa, Jay Z, Little Wayne, among them.
• He expressed fondness for Obama, personally.  He maintained that he “likes” the President, and he was deferential to the Office of the President, which I appreciated.  There were a few clips of him interacting with Obama quite amicably, and even one of them almost joking about their differences together.

But, of course, the moment everyone is talking about is when Stahl pushed him on the idea of compromise, and he maintained that his hero, Ronald Reagan, “didn’t compromise his principles.”  Stahl countered that Reagan raised taxes several times in compromise with his opponents.  Cantor seemed to falter a bit at this point, then his press secretary jumped in from off-camera to defend him.  Stahl seemed quite irritated by this. (Video link.)

The segment then cut to footage of Reagan making a televised address defending a tax increase and actually using the word “compromise.”  They never went back to Cantor on the subject.

I’ve maintained before that the image of Reagan as a conservative warrior is not quite accurate.  Reagan’s legend in this regard is greater than his record.

That said, I enjoyed the segment.  Other than the awkward bit about Reagan, Cantor came off as quite human, and not nearly the monster he’s often portrayed to be.

Mary Celeste: Super spooky.

The Mary Celeste was an American brigantine merchant ship famous for having been discovered on 4 December 1872, in the Atlantic Ocean unmanned and apparently abandoned (one lifeboat was missing), despite the fact that the weather was fine and her crew had been experienced and able seamen. The Mary Celeste was in seaworthy condition and still under sail heading toward the Strait of Gibraltar. She had been at sea for a month and had over six months’ worth of food and water on board. Her cargo was virtually untouched and the personal belongings of passengers and crew were still in place, including valuables. The crew was never seen or heard from again. Their disappearance is often cited as the greatest maritime mystery of all time.

The Overjustification Effect: This is a good distillation of what motivates us, and why money isn’t always a good motivator.

According to the research, in modern America the average income required to be happy day-to-day, to experience “emotional well being” is about $75,000 a year. According to the researchers, past that point adding more to your income “does nothing for happiness, enjoyment, sadness, or stress.” A person who makes, on average, $250,000 a year has no greater emotional well-being, no extra day-to-day happiness, than a person making $75,000 a year.

It goes on to mention several experiments that have proven that getting paid for something often makes us enjoy that thing less.  When we do something for free, we often do it for the love, without any thought to compensation.  But as soon as we get compensated, everything suddenly becomes related to that and we evaluate our work in light of that compensation.

Consider if you helped your buddy move into a new apartment.  He’s your friend, so you offer to help him out, and you spend a day doing it.  It’s a lot of work, but that’s what friendship is about.  However, he ends the day by offering $5 for your time.  Now, five dollars is more than nothing, right?  But the problem is now your motivation is no longer altruistic, it’s now cast in the light of compensation, and five dollars is insulting for a day of back-breaking labor.

I read this same thing in a good book called “Drive: The Surprising Truth About What Motivates Us.”  It’s worth reading.

I’m learning the difference between the statutory tax rate and the effective tax rate.  It’s an important distinction.

The statutory tax rate is the tax imposed by law (by “statute,” hence the name).  This is expressed as some percentage.  The effective tax rate is what percentage of our income we actually pay in taxes.

The effective tax rate will always be lower than the statutory rate.  Why?  All sorts of reasons, but suffice it to say that there a number of ways – most of them perfectly legal – to reduce your income so that the statutory tax rate is applied to a lower number than what you actually earned. At the end of the day, the statutory tax rate is just a starting point; a baseline; a pipe dream, even.

So, an example –

If the statutory tax rate is 25% and I made $100,000, then you’d expect me to pay $25,000 in taxes.  However, due to various deductions and credits, I only paid $15,000 in taxes.  This means my effective tax rate is just 15%.

Out of curiosity, I looked up my 2010 tax return and found that Turbo Tax has a nice summary on the cover page.  My effective federal income tax rate in 2010?  17.74%

So, does the statutory tax rate really matter?  It depends who you ask, but I don’t think so.  I think the only number that matters is the actual percentage of your income you pay in taxes – this is the only number that you can honestly claim is your tax burden.

The problem is, a lot of people point to the statutory number to claim that federal income taxes in the U.S. are high, when they’re not, historically speaking.  Read this article in the New York Times, and you’ll see the actual numbers:

The broadest measure of the tax rate is total federal revenues divided by the gross domestic product.

By this measure, federal taxes are at their lowest level in more than 60 years. The Congressional Budget Office estimated that federal taxes would consume just 14.8 percent of G.D.P. this year. The last year in which revenues were lower was 1950, according to the Office of Management and Budget.

The postwar annual average is about 18.5 percent of G.D.P. Revenues averaged 18.2 percent of G.D.P. during Ronald Reagan’s administration; the lowest percentage during that administration was 17.3 percent of G.D.P. in 1984.

In short, by the broadest measure of the tax rate, the current level is unusually low and has been for some time. Revenues were 14.9 percent of G.D.P. in both 2009 and 2010.

So, that’s the effective tax rate for the country in aggregate for the last two years: 14.9% (note too that the rate averaged 18.2% during the Reagan administration).

The problem is, no one talks about this number:

[…] one almost never hears that total revenues are at their lowest level in two or three generations as a share of G.D.P. or that corporate tax revenues as a share of G.D.P. are the lowest among all major countries. One hears only that the statutory corporate tax rate in the United States is high compared with other countries, which is true but not necessarily relevant.

“True but not necessarily relevant” – that’s the key phrase.  If you’re going to complain about taxes in this country, do us all a favor and don’t complain about the statutory rate – talk only in terms of the effective rate, the true tax burden.  If everyone did that, I think we’d have a much more accurate picture of where we stand historically and in comparison with other countries.

(Of course, this is just federal taxes.  It doesn’t include state taxes, municipals fees, sales taxes, etc.  Two researchers tried to calculate the effective tax rate when everything was included, and came up at about 40%.  Do you think that’s a lot?  Okay, fine – but talk about this number, not some hypothetical percentage that only exists on paper.)

The Fat Trap: Here’s a well-written, but depressing, article about how hard it is to lose weight and keep it off.

The gist is that if you weight 230 pounds and lost 30, so you weigh 200 pounds, you are in way more trouble than someone who always weighed 200 pounds.  Researchers have proven that the body “defends its mass,” and will actively try very hard to get you to put that 30 pounds back on.

While researchers have known for decades that the body undergoes various metabolic and hormonal changes while it’s losing weight, the Australian team detected something new. A full year after significant weight loss, these men and women remained in what could be described as a biologically altered state. Their still-plump bodies were acting as if they were starving and were working overtime to regain the pounds they lost. […] It was almost as if weight loss had put their bodies into a unique metabolic state, a sort of post-dieting syndrome that set them apart from people who hadn’t tried to lose weight in the first place.

Lots of science there – they’ve detected elevated hormone levels in people who has lost weight that indicate their bodies are pissed off about it, and trying to make them fat again. In some cases, these metabolic changes have been detected six years after weight loss.

There’s an aside in the article about a woman who lost weight and who is determined to keep it off.  Her attempts are heroic, and she seems to be succeeding for now, but the story is a raw illustration of how phenomenally difficult it is to do and why so many people fail.