Monday, November 26, 2018

Suze Orman and the FIRE Movement

            I’ve been very interested to see the progress of the FIRE movement. For those not acquainted with the term, it stands for financial independence, retire early. Unlike earlier frugality movements, this one has been getting serious attention from the media. Perhaps that’s because journalists are an endangered species these days and recognize the wisdom of cutting consumption and saving money in an increasing likelihood of unemployment. I’m looking forward to Scott Reickens’ new book, Playing with FIRE, which is due out in January. I’m trying to get a review copy, but you may have to wait for me to get a copy from the library.

            When the frugality movement of the 1990s began, those of us who were part of it were at first covered by serious writers, among them Nick Ravo of the New York Times, who gave Living Cheap News the mention that got it going. Soon, however, we were covered by writers eager to make fun of the movement. Amy Dacyczyn, after she had ceased publishing her wildly successful Tightwad Gazette in 1996 was “encouraged” by a reporter to open up her life. She did, and the reporter wrote a scathing article about Amy’s deprived children and bare bones lifestyle. The same reporter, who was at that time childless, went on to write another article advising women not to leave the workforce when they had children.

            I was encouraged that the coverage of the FIRE movement had been overwhelmingly positive, and every once in a while I check the Mr. Money Moustache website to see what’s going on, which is how I discovered that Suze Orman hates, hates, hates, hates the movement.

            Her interview with Paula Pant, whose podcast is titled “Afford Anything,” is available on YouTube and, I’m sure, elsewhere. It’s cringeworthy and about an hour and ten minutes long. It’s worth listening to if you want to hear something worthy of an overlong Saturday Night Live skit, but there’s no reason to suffer through it, as I did, because I’m going to give you the short version.
            If you’re going to watch it, though, I suggest you first have a glass of wine and watch the Kinsey Sicks version of “Don’t Be Happy. Worry,” which is also on YouTube and sums up Suze’s position on the FIRE movement and pretty much everything else.
            First, Suze says $2 million is not enough to retire on. Especially if you retire at a young age. Suze seems to think FIers retire with their nest egg and start spending it down. She does not have enough grasp of the movement to realize we try not only not to touch our principal, but to add to it. Suze then goes on to say things happen. You could be hit by a car. You could get run over by a bus. You could fall down on the ice. You could get cancer. Further, artificial intelligence is coming. In 2030, unemployment could be 25%. That means those who are working will be taxed at higher rates. Social Security and Medicare will be gone. Your money may not last, and you’re not adding to your retirement accounts.
            Reality check here. Do you suppose anyone who gets hit by a car, run over by a bus, falls on the ice, or gets cancer laments not working while they were healthy enough to enjoy their lives?
            Suze, who once earned and lived on $400 a month, says a safe spending amount per year would be $350,000 after taxes. When pressed, she says $10 million may be enough to retire on. When pressed further about people who spend their whole lives earning $50,000 or less, Suze says they’re more ready for retirement because they’re used to living on less.
            Suze spends a great deal of this interview telling how rich she is. Why, just a few years ago, she sold five of her houses, canceled a bunch of her commitments, and moved to her own private island where she spent time on her yacht learning how to be its captain. But she got bored and was welcomed back by her fans who wondered why she’d ever deserted them—sort of like hearing this story from the Norma Desmond perspective—and she’s flogging a new book.
            In short, Suze says she's smart and rich, so listen to her. People who didn’t have wound up putting a gun to their heads.
            She compares FIers to those who got on the duck boat that sank here in Missouri. Those people, after all, thought they were safe and look what happened, so work as long as you possibly can in an area you love so you don’t feel that it’s work. At this point I couldn’t help but be reminded of Kurt Vonnegut’s Slaughterhouse Five, which is one of the texts for my history class, and I wondered if Suze had been kidnapped by the Tralfadamoreans because she’s certainly not living on planet American middle class.
            Suze’s ideal retirement age is 70 at which time a person can get their maximum Social Security benefit. (Remember Social Security? That program that won’t be around in 2030?) She reminds us once again that $2 million is “nothing,” and that people who retire early “don’t have a passion” and will spend their long retirement “sitting and doing nothing,” which I found funny because it was a great effort on my part to carve out the time to listen to this drivel.

            It is OK with Suze if a new mother stays home to raise her children, but once that kid’s in school, the mother needs to get back in the labor force. She’s even opposed to college students taking a gap year. But two to six weeks is OK if you’ve maxed out your retirement contributions and have eight months of living expenses in the bank.

            I find it amazing that anyone would let this nutcase tell them how to live their lives. As someone who retired early—nearly 25 years ago, I can tell you it was pretty darned easy for me. I had the guidance of Paul Terhorst’s Cashing in on the American Dream to show me what an early retirement could be like and Joe Dominguez’ and Vicki Robin’s Your Money or Your Life to take me through the math to show me it was possible. When I left Company L, I was living on my passive income, so I moved my 401(k) to my IRA. I am extremely lazy about money, and I did not want to have to think about it every day, so I bought zero coupon treasuries. I planned not to have to touch the IRA until I reached age seventy, and I didn’t. In the meantime, I have been able to add to my non-IRA principal by, among other things, finding an enjoyable consulting gig that lasted four years and living on less income than the accounts earn.

            Unlike Suze, I do not have a private island, a private plane, or a yacht. And, I’m extremely happy to report I only have one house. Woe is me.

            But I have had almost a quarter of a century to do pretty much as I pleased.

            Maybe it’s time for another glass of wine and another viewing of “Don’t be Happy. Worry.”

© 2018 Larry Roth

Tuesday, November 20, 2018

Tango War: A Review of the Book by Mary Jo McConahay

            It’s been pointed out to me that I’ve been neglecting my blog lately. I found out the University of Missouri-Kansas City (UMKC) has a program for seniors that lets us take a class for $25. We don’t get credit, and, while we probably don’t have to do the assignments, I’ve been doing them anyway. The class I’m taking is a history class, and the assignments are papers. One reason I was excited to take the class is I wanted to get out of my routine and be around people who are not part of my generation—not that there’s anything wrong with my generation, but variety is the spice of life.
            It shouldn’t be a surprise that classes these days are a lot different than those I took fifty years ago. In the “good old days” lectures were simply that. The teacher would talk, and we’d take notes. Nowadays the lecture is on PowerPoint, and we get to watch the occasional film clip on YouTube. The professor is excellent (and since I can’t flunk, I don’t have to suck up). Alas, he’s retiring after the next semester.
            So that’s what’s been occupying my time.

            Nevertheless, I came across a book I highly recommend, and I’d like to get the word out.
            In August I saw an obituary in The New York Times that caught my eye. Isamu Shibayama, an ethnic Japanese detained after Pearl Harbor died at age 88. During the war, of course, many ethnic Japanese were put in detention centers, so you’re probably wondering what’s so special about Mr. Shibayama. What’s unusual about him is he was detained in Peru, where he and his family lived and where Mr. Shibayama was born in 1930. The family had emigrated to Peru to work in the cotton industry and had become quite wealthy, which is probably the reason they were rounded up and, with 2,000 other ethnic Japanese living in Peru, shipped to the United States and interned in Crystal City, Texas. After the war the U.S. wanted to deport the family to Japan because they had entered the country “illegally.” More on that later. While fighting deportation, Mr. Shibayama, still classified as an illegal immigrant, was drafted in 1952 and served in Germany. After he completed his service, a helpful immigration official recommended he go to Canada and re-enter the U. S. from there after which he’d have to wait five years to apply for citizenship. In 1988 Japanese-Americans who had been interned were awarded $20,000 provided they were still alive to receive the money. That only applied to citizens or permanent residents. In 1999 a coalition of Japanese Latin Americans won reparations of $5,000. Mr. Shabayama and two of his brothers declined the payment and sued. They lost that suit and appealed to the Inter-American Commission on Human rights in 2002. Mr. Shibayama’s brothers are still awaiting a decision.
            It was news to me that the U. S. had citizens from other countries kidnapped and interned here during the war. But wait, there’s more.

            In October I read a review of Mary Jo McConahay’s The Tango War: The Struggle for the Hearts, Minds and Riches of Latin America during World War II and got a copy at the library. The book was an eye-opener for me. Latin America has a great many strategic materials, from oil in Mexico to cotton in Peru to tungsten, necessary for armor-piercing weaponry, in Argentina to rubber (which was a biggie in those days before synthetic rubber) along the Amazon.
In the early days of aviation, Italy and Germany started airlines to serve Latin America, shaving time off land routes that meandered over mountains and often flying where there were no roads at all. Latin America was largely made up of European immigrants, many of whom were from Germany and had constructed villages that looked German and where German was the first language. The Germans, especially the wealthy ones, would, like the Japanese, become targets for deportation and internment in the U. S. Both German and Japanese deportees had their property and businesses confiscated and their assets frozen.
The reason for the U. S. detaining ethnic Japanese and German deportees was to have prisoners to exchange for Americans held in enemy prison camps. While to a degree this may seem justified, many of these detainees, like Mr. Shibayama, knew little about the countries of their ethnicity and did not even speak the language. How many of us can speak the language of our forebears unless that language was English? Another act by the U. S. was to confiscate the passports of people being relocated to the U. S. unwillingly and then arrest them for entering without papers! This was all news to me, and I thought I knew history!

The book discusses American efforts to win the hearts and minds of Latin Americans with the aid of Walt Disney (successful) and Orson Welles (not so much). J. Edgar Hoover makes several appearances, mostly fighting for turf against what would become the CIA. Hoover may well have screwed up what could have been a warning about Pearl Harbor because he personally did not approve of the extracurricular activities of a double agent who was code named “Tricycle” because of his ability to bed two women at once. Ernesto Guevera Lynch, an anti-fascist and father of Che Guevera, reported on suspicious German activity in Argentina. His reports were ignored.
Ms. McConahay discusses the Mexican airmen who ferried aircraft over the Pacific and made bombing runs over Formosa and Luzon and the Brazilian combatants who fought bravely in Italy, where they are remembered, and returned to Brazil, where they were forgotten in no small part because of a government unwilling to share the limelight with heroes.

As interesting as the war coverage is, what Ms. McConahay describes after the war is just as intriguing. In his 1999 Hitler’s Pope: The Secret History of Pius XII, John Cornwell described the wartime activities of Pius XII. Ms. McConahay does as well, but she explains that Pius saw the war as a battle between atheistic communism and fascists who, although they were anti-Semitic murderers, were not anti-church. (The same approach this administration is taking with Saudi Arabia—they may be murderous bastards, but they’re good business partners.) Ms.  McConahay says that Pius XI, Pius XII’s predecessor, condemned Nazi neo-paganism and the “so-called myth of race and blood” shortly before he died. Pius XII, however, took a different route. The church set up “Ratlines” to allow Nazis to escape using its network of monasteries and parishes. Among those who traveled the Ratlines to Latin America were Joseph Mengele, Adolf Eichmann, and Klaus Barbie.
Ms. McConahay follows the activities of former Nazis into the 1960s and 1970s, where they proved helpful to Latin American dictators who set up camps for dissenters, many of whom “disappeared.”

This is a history book that’s long overdue.