“WHY CAN’T I PAY MY RENT WITH A CREDIT CARD?”

Every now and then, a tenant will ask me if he can pay his rent with a credit card. My answer is No. All of my leases state that the rent must be paid by check or money order. I don’t accept credit cards. Why? It’s the bank fees. Most of the new apartment houses in Berkeley and San Francisco allow tenants to pay their rent with credit cards, but that’s because credit card fees are an insignificant expense for them. A 2 bedroom apartment in a new building in downtown Berkeley rents for $4,000 to $5,000 a month, but I’ve seen some that are over $6,000 a month. If I was getting that kind of rent, I would accept credit cards too!

BITCOIN.

A growing number of landlords are allowing their tenants to pay their rent with Bitcoin. I really, really don’t understand that. Cryptocurrencies like Bitcoin are not currencies, they are not money, and they are not legal tender. I don’t know what they are, but I do know that I can’t pay my property taxes, garbage bills, fire insurance, etc. with Bitcoin. I can’t buy cocoa beans with Bitcoin either. I think some businessmen accept Bitcoin because they think it’s tax-free income; however, income that you don’t report on your tax return is not tax-free income. That’s called income tax evasion, not tax-free income. You don’t need to be a CPA to know there’s a difference. Supposedly, Bitcoin transactions and transfers are completely secret and untraceable, but I wonder if that’s really true. I suspect that the IRS has figured out how to crack Bitcoin’s computer codes.

Military Grade Encryption. People tell me that there is no way the U.S. government can get into Bitcoin computer records because they use military grade encryption. But what does that mean? Does ‘military grade encryption’ mean ‘unbreakable’? As you know, I teach history, and history tells me to be very suspicious of unbreakable military codes. For over 5,000 years, governments have been trying to create unbreakable military codes, but without much success. During World War 2, the Germans thought they had an unbreakable military code, but Winston Churchill and Franklin Roosevelt got decoded copies of Hitler’s most secret coded messages to his generals before the generals to whom they were addressed got their decoded copies! That went on all through the war too. During World War 2, the U.S. also broke the Soviet diplomatic code and several Japanese codes.

The Battle of Midway. The biggest naval battle of World War 2 was the Battle of Midway. There will never be another naval battle like that again. The Japanese were hoping to win a decisive victory that would knock the U.S. out of the war. The Japanese thought they were going to catch the U.S. fleet by surprise; however, the U.S. Navy had broken the Japanese naval code, so they knew where and when the Japanese were coming. Instead of ambushing the U.S. Navy, it was the Japanese that got ambushed instead. The U.S. Navy sank all the Japanese aircraft carriers at Midway. As a result, Japan also lost hundreds of their best pilots. After all the Japanese aircraft carriers were sunk, Japanese pilots had no place to land. When they ran out of fuel, Japanese pilots crashed their planes into the sea and drowned. Midway was a disastrous defeat for Japan from which they never recovered. Prior to Midway, Japan was always on the attack. After Midway, they were always on the defense. OK you say, that was then, but what about now? Now we have military grade computer encryption. Well Yes, we do have that, but you know, Vladimir Putin didn’t seem to have much difficulty getting past U.S. computer encryption during the 2016 presidential election. I think that people who do business in Bitcoin in the belief that they are fooling the IRS may actually just be fooling themselves instead.

THE WAR ON COLLEGE EDUCATION. PART 2

I was at the Target store in Emeryville today. It”s a fairly large store with 12 checkout lines – but only 1 live cashier was on duty. Customers were encouraged to use the self-checkout registers instead. From a practical standpoint, customers didn’t have much choice. There was a long line of people waiting for the 1 live cashier. The same thing is happening at supermarkets everywhere. Supermarkets and lots of other stores are replacing cashiers with self-checkout registers. Did you read that Amazon just opened its first 100% self-service convenience store in Seattle? It’s like a 7-11, but with no cashiers, none at all. Amazon plans to open these stores all over the country.

According to a new study by the McKinsey Global Institute, robots and automation will eliminate 800 million jobs around the world by 2030. As shocking as this number may sound, it is in line with other studies on the same subject. The jobs most likely to be eliminated by automation are low-skilled, low paying, repetitive jobs. You don’t need a crystal ball to know this is coming. Just look at what’s happening to cashiers. And it isn’t just cashiers. All sorts of jobs are being eliminated by automation and robots.  The jobs of the future will require more education than the jobs that are disappearing. What will happen to the U.S. if our educational system is producing mostly high school graduates who are only qualified to work at the kind of jobs that are disappearing?

WHY DON’T INTERNET RETAILERS MAKE MONEY?

Most people assume that internet retailing is a very profitable industry. Internet sales are growing rapidly, and internet retailers don’t have the enormous expense of operating brick-and-mortar stores, like the ones you see at shopping malls. Because of internet retailing, hundreds of departments stores and shopping malls have closed all over the country. It seems like internet retailing should be a gold mine, but it isn’t. The sad fact is this – most internet retailers lose money, a lot of money. And it doesn’t seem that its a question of size. In most cases, the bigger an internet retailer is, the more money they lose. Even Amazon loses money. Over the past 20 years, Amazon has only made a profit in few quarters but lost money the rest of the time. Amazon makes money on some of their services, especially Amazon Prime, but they lose money selling merchandise, and they always have. Amazon may someday become profitable, but if that happens, it probably won’t come from selling merchandise online. So what’s the problem?

The problem is the cost of shipping and returns – especially returns. About 10% of all the merchandise purchased in brick-and-mortar stores is returned, but 20% to 30% of all goods purchased online is returned. Even worse, 30% to 40% of all the clothes and shoes purchased online are returned. Still worse, most internet retailers pay the shipping both ways. Add to that the labor costs for filling and packing orders and then unpacking and processing all those returns. Then add to that the fact that most returned merchandise cannot be resold for full price. Some cannot be resold at all, like damaged clothes and toys. Some can be resold, but only at a discount, like the ‘out of box’ TVs at Best Buy. However, most returned merchandise is sold to liquidators, and they pay just a fraction of the good’s wholesale cost. So, why don’t internet retailers charge for shipping or adopt less generous return policies? Well, they would if they could, but they can’t. People who buy stuff on the internet have gotten accustomed to free shipping and returns. People take it for granted. Besides, who would buy something like a pair of shoes online if they didn’t know that they could easily return them for a refund if they didn’t fit? But most important, internet retailers know that if they charge customers for shipping or for returns, they will quickly lose those customers to other online retailers that still offer free shipping and no-cost returns. Until internet retailers figure out some way to significantly reduce the cost of shipping and returns, I don’t see how the industry will make money.


Of course, things are very different for retailers that just sell their own brand products, like Ikea, Godiva, and Gap. Because they are just selling their own products, they have pricing power that general merchandise retailers do not. If you are considering a career in internet retailing, think twice about it. Remember that we live in a market economy. Making a profit is not just a desirable objective. A company that fails to make a profit must eventually go out of business.

MARBLE BROWNIES.

 

_Are you going to a Super Bowl party? Would you like to take something that
looks showy but that’s easy to make? Marble brownies are showy and very
easy to make! The finished product looks like a cheesecake brownie._

Ingredients:
1 jar of Berkeley Nut Co. brownie mix
1 8 ounce package of cream cheese (softened to room temperature)
1/3 cup sugar
1 egg

1 teaspoon vanilla

 

Preheat your oven to 350 degrees. Grease a 9″ x 13″ baking pan or spray it with Pam. (I always go with the Pam. Greasing baking pans is messy.) Prepare the brownie mix according to the directions on the jar. Spread the brownie batter into the pan. Beat the cream cheese until creamy. Add the sugar, egg, and vanilla. Mix well. Drop by spoonfuls over the brownie batter and swirl them together with the tip of a knife. Bake for 35 to 40 minutes or until the cream cheese mixture is lightly browned. Cool completely before cutting. This makes 18 good-size brownies. Because these brownies are made with cream cheese, you should store them in the refrigerator.