How to Not Worry about Parking or Speeding Fines

Today I received a parking fine of $66, but I am not worried. I walked back to my car to find a parking inspector standing there. I was with my grandmother, and she apologised to the man The parking inspector seemed apologetic and told me that he felt bad that he had to fine me but that he was only doing his job. I told him not to worry and to give me the fine.

I do not worry too much about parking fines or speeding fines. I believe that most fines are tools by government to raise revenue and that--especially with speeding--it is dangerous for drivers to obey the speed limit. There was a moment in my life when I was very cautious about obeying speed limits and I found that most of the time on the road I kept my eyes on the speedometer and not on the road. This resulted in some very near misses. I almost ran over a pedestrian I also didn't see because I was too busy looking at my speedometer. (For your information, the pedestrian was jaywalking anyway.)

Although I may have received a $66 fine, I will recover this simply by salary sacrificing more money into my superannuation fund. Under Australian income tax law, every dollar you earn above A$37,000 is taxed at 30 per cent. However, if at work I were to instruct HR to salary sacrifice a portion of my income into my superannuation fund, the amount that goes into my super fund will be taxed concessionally at 15 per cent. Therefore, for every dollar that I salary sacrifice into my super fund, I will save 15 cents. In order to recover $66, I would need to salary sacrifice $440 (66*100/15). Suppose I wanted to pay this all off within a year, then because I get paid fortnightly and because there are 26 fortnights in a year, then I would need to salary sacrifice $16.92 (440/26) or around $17 per fortnight in order to recover my fine in a year. Of course, we need to account for inflation and opportunity cost. If I were to take $66 and invest it in the stock market, I would optimistically say I'd get a return of 10 per cent per annum, and so because I am fined $66 then within a year I have actually lost $72.60 (66*1.1). If we do all these calculations again with the adjusted fine of $72.60, I would need to salary sacrifice $18.62 (72.60*100/15/26) or $19 per fortnight in order to recover my losses.

I have explained this concept to some people who are very sceptical. The most common counterargument people give is as follows: "If you can just print money out of nowhere by salary sacrificing into your super fund, why don't you just salary sacrifice everything?" The answer to this is simple: there is a $25,000 limit on how much you can salary sacrifice into your super. If this is the case, why don't I simply salary sacrifice to the limit? The answer is because that would have a massive impact on cash flow and current spending. Although money you put into your super fund is taxed concessionally, the downside is that you have to wait until you are around 65 years old to take it out. For me that means waiting over thirty years to access the money. If I salary sacrificed to the max, my present income would drop considerably and although my retirement thirty years from now would be brilliant if I salary sacrificed to the max, it would come at the severe detriment of my youth. Therefore, I make it a policy to sacrifice a token amount of $100 per fortnight into my super fund and increase it bit by bit as I receive parking or speeding fines. If I were to increase the amount I salary sacrifice by only $20 in order to recover the costs of a parking fine, this would have a negligible impact on current cash flow and current spending. I would barely notice it. It follows then that this system of getting a reimbursement on your parking fines by salary sacrificing only works if you don't get fined every day. If this happens, your current income would decrease sharply and you will definitely feel it.

The parking fine I received today was from a private operator, but most fines are from the state government. If you salary sacrifice into your super fund, the tax concession you get is your gain at the expense of the commonwealth government. Effectively you have transferred money from the commonwealth government to the state government. However, much of state government revenue (around 50 per cent) is in the form of commonwealth government grants. By taking away money from the commonwealth, there is a good chance the commonwealth will cut back on the amount they give to state governments. Therefore, if you are fined by the state government and recover your money by salary sacrificing into your super fund, you recover your money from the commonwealth government who in turn recover their money from the state government. Therefore, when the state government fines you and you salary sacrifice, you hand over your money to the state government who then gives it back to you. There is no net effect.

Do Not Escalate a Debate

There is a Jehovas Witness woman named Kristie who keeps visiting me, oftentimes with her children. She came over yesterday with her daughter. I am happy to discuss religion with her, but the reality is that I had my whole family, including my wife, all in the house with me, and all of them I know are against Jehovas Witnesses, so I didn’t want to be seen as associating with the enemy by talking with a Jehovas Witness. 

I tried to tell the Jehovas Witness this, saying that my family is against the religion and therefore I am not too comfortable exploring the faith. I said this mainly because I wanted them to go away. Kristie then sort of accused me of being passive and subservient, that I did not consider all the facts before making a decision on what faith to follow, instead just following whatever relgion I was told to follow. I could have escalated this and told her that my family don’t actually coerce me, that I just want to fit in or assimilate into the culture that I am in. But I decided against it. Instead I nodded my head and stayed silent. The silence became a little awkward, so Kristie changed the subject. 

My wife then confronted me, telling me that Jehovas Witnesses were crazy people. I made the mistake of engaging in an argument with her about whether religion was good or bad for a society. That went on forever, like an arms war. I should have followed the principle I followed when I spoke with the Jehovas Witnesses and ceased the arms war before it escalated. For the sake of peace, do not escalate a debate.

Baillieu Government Cuts 3600 Public Service Jobs

"In the midst of negotiations over an industrial agreement, the Victorian government of Premier Ted Baillieu announced on December 15 that it will eliminate 3,600 public sector jobs over the next two years. This amounts to a 10 percent reduction in the public service."

Source: http://www.wsws.org/articles/2011/dec2011/vicp-d28.shtml

I am very happy with Ted for cutting 3600 jobs (about 10 per cent) from the Victorian public service. The job cuts will be achieved through voluntary redundancy packages that will effective dangle money in front of public servants, which they can take on the condition that they leave the public service. Some argue that this will remove all the high quality public servants, but I believe this will filter out the greedy public servants who are only in there for the money and power. The public servants who are passionate about their jobs will stay, the ones who are willing to keep working as public servants even though it pays less than an equivalent role in the private sector.

There are some who argue that a desire by the Baillieu government to maintain a surplus is silly given that debt can be good and that most households in Australia have a lot of debt. But this is a poor argument. Just because most households have significant debt it doesn't mean the State of Victoria should have debt. Households have high debt mainly because they need to buy houses to live in. Does the State of Victoria need a house to live in? The State and the individual are completely different. You cannot take the situations of personal finance and apply it to public finance.

In the realms of public finance, the ongoing problems in Europe show that governments should not go into too much debt. The problem with debt is that it creates an additional expense, namely interest expense. Money that could have gone to building hospitals or building roads or funding education is instead wasted because it is channeled instead to paying interest expenses, which doesn't benefit the people.

The Benefits of Putting Everything on the Internet

My desktop computer is ruined. It started to play up a few days ago but now it doesn’t even boot up. Whenever I turn it on it just has a black screen. Luckily I was able to backup everything while it was playing up, and most of my important files are either on my external hard drive or on the internet. I think at the end of the day it is much better to have stuff on the internet because then you don’t have to worry about your computer stuffing up and having your files lost. It is always possible for e.g. Google or Facebook to fail one day and all your files stored with these companies will be lost, but I would imagine that the likelihood of Google or Facebook failing is much lower than the likelihood of my own desktop computer failing. I can rely on my desktop computer failing every few years, based on history. Furthermore, if there are really important files that you want to preserve, simply make copies of it and upload it to multiple websites. Even though my desktop computer is stuffed, I am able to write this because I am using my laptop.

Superficiality is Happiness

Being superficial is essential for happiness. The moment you penetrate the surface of superficiality, you plunge into areas of corruption, selfishness, pain, and violence. You don't want to be there, and if you are already there, keep it to yourself. That you have witnessed the worst of humanity should be concealed from the innocent, so as not to drag them down with you and pollute their virgin minds.

Live in the moment. Seek happiness in the present; be superficial and optimistic. When you turn your thoughts to your past, selectively dwell upon happy moments, and suppress traumatic memories. When you plan for the future, be risk-averse, so as to ensure that your future self does not stumble into grief while having fun.

Live on the surface, and try to rescue those who are up to their necks. Be wary of those who live within the depths, for they, like predators of the sea, will grab on to you, and you will drown in realism.

If the Rich Steal, We Should Too

I spoke to an Occupy Wall Street protester in the city yesterday, who told me the following:

"If we don't steal from the rich, they will use government to steal from us just because they can. Who wouldn't steal a million dollars if he could get away with it?"

When I thought about his comment, it made sense. In America, the bailout of the banking sector shows how the rich steal from the poor due to their influence on government. The problem with capitalism is that once it is implemented, capitalists become socialists and use government to steal from taxpayers. Hence capitalism simply doesn't work in practice as it assumes that the capitalist class have the altruism and self-control to not loot the public purse when it would be so easy for them to do so (because they are by definition rich and powerful).

Macrolending - An Alternative to Microlending

Above is a trailer for a documentary titled The Micro Debt, which seems to criticize microlending as a tool for alleviating poverty.

I've had a Kiva account for a while. Kiva allows any of us to lend money to entrepreneurs in developing countries. But I've always been unsure about how effective this is because when the money is lent to the entrepreneur in developing countries, it is at extremely high interest rates (around 30 to 40 per cent). Most businesses in developed countries struggle to even produce 10 per cent, so to expect people in the developing world to earn 30 or 40 per cent is highly optimistic.

The answer to poverty, in my opinion, can be found in Asia, especially in China. Institutions need to be in place to create labor-intensive low-skilled jobs. The products are then normally exported to developed countries.

Kiva must change. Instead of lending money to microfinance institutes at zero per cent interest who then relend that money to poor entrepreneur for 40 per cent interest, Kiva should take lenders' money and instead lend it at zero interest rate to large labor-intensive companies like Nike, Adidas, Foxxcon, or HTC on the condition that in return for receiving zero interest loans, these companies must hire people from poor countries. Kiva can then pay auditors like Ernst and Young or PricewaterhouseCoopers to audit these firms to provide to Kiva and microlenders assurance that a certain number of workers are being hired and paid a certain amount and that basic labor rights are maintained, e.g. the right for workers to go to the toilet.

If the venture does not work, the lenders lose money. If the venture works and profits are made, it can be split in half between Kiva and e.g. Nike (or any other proportion the two organizations negotiated). Either way, for labor-intensive companies there is a no-risk venture as all the risk is absorbed by the lenders and all the gains are for the company.