Category Archives: Economics

Checking that credit score

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Here’s a little bit of consumer info that surprised me.

I got an email reminder that our Costco VISA card issued by Citi Bank includes monthly access to our FICO credit score. I thought it might be interesting to check it out, so I clicked through to see what I could learn.

We have always been financially conservative, and have assumed that if you didn’t carry a lot of debt, and paid off your bills every month on time, you would be considered a fine credit risk.

But now I learn that it might actually hurt our credit score.

It’s not that our credit score was bad, but according to City Bank, it was “impacted”–I presume they mean it was lower than it otherwise would have been–by two factors.

But both of these apparently negative factors are things that seem positive to me in my apparently naive “avoid debt-pay bills” approach to financial life.

First “key factor” reported–They say we don’t have enough “non-mortgage installment” debt, “such as auto or student loans.” Apparently if you don’t have enough consumer debt, they can’t quantify how well you manage your debt.

Well, that’s true. We try to pay our bills off as they are due, rather than accumulating debt. But it seems puzzling that this would result in a lower credit rating.

The second negative factor also caught me by surprise. Our credit cards and other monthly balances, like for broadband, telephone, and similar services, are paid off automatically each month on or before the due dates.

According to the notice, our score “was impacted by having too many accounts with balances,” even though they were all paid off on time, and always have been.

Live and learn, I guess.

Historical statistics of Hawaii

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I have a simple recommendation. If you ever find yourself wondering what Hawaii was like in the “old” days and how it changed over time, an extremely useful reference is Robert Schmidt’s “Historical Statistics of Hawaii.”

Schmidt compiled the book when he was serving at state statistician. The book has 26 chapters covering different aspects of the community and economy, each with an introduction that surveys the history of the collection of data on that particular subject. It’s really a treasure trove of fascinating bits and pieces of history, although you’ll have to get comfortable looking at data presented in table form.

This is a huge printed book, running nearly 700 oversize pages. I once found a used copy in a thrift shop, and used hardcover copies can be found for about $25 from Amazon or the independent bookstores that sell via Alibris.com.

This weekend I was looking for data to illustrate the changes in post-WWII Hawaii. I ended up using data showing how the population shifted from rural to urban areas from the 1800s through to the late 1960s, and showed how the number of private cars doubled between 1945 and 1950, and then doubled again by 1962. Another chart that I used traced the changes in retail sales as both downtown Honolulu and small mom & pop stores were overtaken and overshadowed by Ala Moana Center, Kahala Mall, and other regional malls during the 1950s and 1960s.

In any case, an extremely useful and interesting resources.

But here’s the big hint. It’s also available for free as a 22MB pdf file from the Department of Business, Economic Development, and Tourism.

I’ve downloaded a copy and filed it for quick future reference.

You might want to do the same.

A picture of Inequality

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This was the scene at the end of Kahala Avenue in front of Waialae Beach Park this morning. It was a very typical morning.

The house in the background, which sits on about 1/3-acre of land, sold at the beginning of 2019 for a reported $5,283,000. The buyer is a Japanese company based in Hokkaido, Japan. The company director who signed the deed made the news less than two years earlier by paying $22 million for a condominium in the Park Lane condominium at Ala Moana Center.

The house boasts two floors with total living area of 9,351 square feet. It has 14 rooms, including four bedrooms, five bathrooms, and two half baths, according to real estate records. It seems to be a corporate investment in Hawaii real estate.

Back to the beach park. The small red car has been parked across the street in front of the $5.28 million house for months. It is home to a man who would otherwise be considered homeless. It’s his bedroom, his living room, his storeroom, and his workshop. I’m not at all sure how he survives. I can’t say he has nothing, because his car appears to be stuffed with, well, stuff. But I think it’s fair to say he has very, very little. He moves the car from one parking space to another in the same short block to avoid being ticketed by police. But he is somehow surviving.

The Yin and Yang of our modern life.

Another story to read & weep

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Yes, those GOP tax cuts for the wealthy were bad and continue to shake the U.S. economy, sending the deficit soaring.

But ProPublica, in cooperation with The Atlantic, has exposed another huge gift to the top wealth holders and corporations, the defunding (and defanging) of the Internal Revenue Service.

See:

ProPublica: How the IRS Was Gutted.

Also appearing in the Atlantic.

The Atlantic: The Golden Age of Rich People Not Paying Their Taxes.

The Atlantic calls it “a hundred-billion-dollar heist.” And it does look that way, doesn’t it?
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From the story:

The cuts are depleting the staff members who help ensure that taxpayers pay what they owe. As of last year, the IRS had 9,510 auditors. That’s down a third from 2010. The last time the IRS had fewer than 10,000 revenue agents was 1953, when the economy was a seventh of its current size. And the IRS is still shrinking. Almost a third of its remaining employees will be eligible to retire in the next year, and with morale plummeting, many of them will.

As a result, the amount of unpaid taxes lost each year because the IRS has failed to pursue them within the statutory 10-year period was over $8.3 billion in 2017, 17 times as much as in 2010. The number of audits conducted have dropped dramatically. Perhaps worse, resources have been poured into audits of low income taxpayers claiming the earned income credit.

For the country’s largest corporations, the danger of being hit with a billion-dollar tax bill has greatly diminished. For the rich, who research shows evade taxes the most, the IRS has become less and less of a force to be feared.

The story has been different for poor taxpayers. The IRS oversees one of the government’s largest anti-poverty programs, the earned income tax credit, which provides cash to the working poor. Under continued pressure from Republicans, the IRS has long made a priority of auditing people who receive that money, and as the IRS has shrunk, those audits have consumed even more resources, accounting for 36 percent of audits last year. The credit’s recipients — whose annual income is typically less than $20,000 — are now examined at rates similar to those who make $500,000 to $1 million a year. Only people with incomes above $1 million are examined much more frequently.

I find the whole situation very depressing. But I’m glad ProPublica has brought it to light. That’s why democracy is so dependent on good reporting.