[This Thursday re-run first appeared August 14, 2009]
If there is one topic that professional journalists just love to report on and analyze, it is the troubles of traditional newspapers. They’re in very bad shape, we are told, and if something is not done these vital institutions might just go away, obviously taking our civilization along with them. There are even pundits who quietly suggest that government subsidies are in order.
What is most weird about this (spectacularly self-serving) sort of commentary is that it often actually understates the economic problems that newspapers face. Some papers may stagger on for a few more years or even a decade or two, but make no mistake, this patient is terminal.
Imagine, if you will, that newspapers didn’t exist. Now imagine somebody came to you with an exciting new business idea. His plan is to print the news of the day on paper overnight in massive printing plants and distribute copies to driveways in the wee hours throughout the region using a network of motorized vehicles. This operation would be paid for mostly by selling advertizing, but he would also have to charge about a dollar a day to readers.
You would tell this person he was crazy.
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I had not noticed this before, but apparently August is college textbook season. I guess that makes sense. School will start up in a month and college students are widely known for not leaving things to the last minute. Both SmartMoney and The New York Times’ Bucks blog came out with items on how to save on textbooks in the last 48 hours.
My first reaction to the focus on textbook costs is that it is misplaced. College is an expensive endeavor, and the price of textbooks does not help any, but let’s get real. It’s like worrying about the low gas mileage on a Ferrari. Double what you spend on books or eliminate it entirely and you’ll still graduate with essentially the same heap of debt.
Alas, this is yet another triumph of psychology over math. Textbooks, unlike tuition, are usually not financed, so the expenditure is more noticeable. Money not spent of books can be spent on Pizza. Further, my unscientific guess is that texts are more likely to be paid for out of the pocket of students, rather than by mom and dad.
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I seem to be on a niceness streak lately. Yesterday brought another item written by somebody other than me which I nevertheless liked. Try as Investors Might, So Much Depends on 
Chance, from The Wall Street Journal, tells us that a person’s lifetime of investment returns is dependent primarily on accidents of birth rather than skill.
We spend a lot of time wrestling with investment selection angst. This mutual fund or that one, active or passive, 20% in bonds or 50% in bonds, and so on. Those are important and hard questions, but there is a forest-for-the-trees danger here.
The biggest driver of long-term investment returns is not an investor’s skill but the overall market returns over the period. In other words, whether you wind up living large or living modestly at 70 is largely luck.
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On Friday WalletPop broke the news that IRS data shows that some millionaires claimed unemployment benefits in 2008. Using the increasingly rare definition of millionaire as a person or household with more than a million
dollars in income, rather than net worth, it disclosed that according to IRS data (found here on table 1.4) 2,840 returns showing more than a million in adjusted gross income reported some unemployment compensation.
So the secret is out. I certainly did not qualify as a millionaire under the income test in 2008, but, as I have previously confessed, using the commonplace net worth criteria I do clear the (lower) bar. And, if you must know, I drew unemployment benefits for pretty much the whole of 2008. Oh, the shame!
I realize that few of you readers are part of my elite economic strata. So let me share some of my world with you. Not only do we fat cats draw unemployment when unemployed, when old we get Social Security and Medicare. Some of us even send our kids to public school. We drive our luxury automobiles on public roads and when our mansions catch on fire we call the municipal fire department to put it out.
Shocking, I know.
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What is most weird about this (spectacularly self-serving) sort of commentary is that it often actually understates the economic problems that newspapers face. Some papers may stagger on for a few more years or even a decade or two, but make no mistake, this patient is terminal.
Uncategorized | Frank Curmudgeon | 
August 5, 2010 11:59 am | 
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