A Fence, A Brew, A DIY Economy Story

Yeay!!! I’m done with fencing! Over the weekend, finished the fences. On one side, the neighbor wanted to just spend money, so we both tossed 1/2 at a contractor. that was $3200 (my share $1600 ). On the other side only 1/2 the fence needed replacing (trees had lifted then broken it, then got removed… after the neighbor gave up on his attempt with the Redwood Commission and hired a guy to do it. He had utility surveys done to show the trees were planted on top of the gas lines and painted a scare picture of a gas fire under large trees… POOF! Approval!)

So for that second bit, we bought a few $Hundred of supplies and used DIY labor (Do It Yourself). Now from my perspective, it’s about $1400 that did NOT enter the formal economy. ($1600 minus materials costs) That $1400 would have required $2800 worth of wages to pay the $1400 of Tax (combined State, Local, Federal, SSI, etc. etc. here in Kalifornia) to have that $1400 net. So between us, we avoided about $700 of taxes each along with the $600 or so of Tax implicit in the bill from a contractor (who must pay SSI, income tax, etc. etc.)

So, Gov’t got about $2000 less taxes from both levels of the transaction (buying fence, earning money to pay), we had to work $2800 less in the formal economy, and did about $700 of labor. That means we could make 1/4 as much “hourly rate” to DIY compared to formal wage jobs. Even at the, what is it now?, $10? $12? / hour minimum ‘living wage’ here, that works out to about $40 to $48 / hour.

Factor in the added costs of commuting to work, buying lunch out, nice clothes to wear, etc. etc. It was highly profitable to DIY on the fence. Even compared to “Minimum wage Mexicans” (who were the guys working on the other fence on the other side. Not a pejorative, I talked with them, mostly in Spanish, and helped out with things like power outlets, water supplies, etc. One was from further south, the others, Mexico. One had decent if accented English, he was the foreman / owner of the company.)

Now, as a side benefit, I got some decent exercise. No need for jogging or weights when lugging around 2″ x 6″ x 8′ foot pressure treated wood! (the “kickboard” part at the bottom. Rails of 2″x 4″ x 8′ P.T. Infill boards redwood.) So a bit sore, but more fit, and back at the keyboard ;-)

It’s an interesting calculation to do. Figure out how many hours it takes to earn enough money (net of the SSI, Income TaxeS, etc. etc.) to pay for labor, then how much the relative wage rates really need to be to make it a net profit to pay someone else.

Over the process of the fence building, post daily work, I’d have some home brew hard cider. The Mr. Beer makes 2 1/2 gallons at a shot, and bottling it in Grolsch or similar old style ‘stopper top’ bottles has zero materials costs. At the moment, the Grolsch link shows one of the bottle in question. You will need to drink a supply of Grolsch to get the bottles, though ;-) It’s about $8 for the apple juice and negligible for the sugar to raise the strength a bit. The Mr. Beer cans of hopped malt are much more pricey, but make an OK beer. If you ‘get into it’, it is more profitable to buy bulk malt and / or get a 5 gallon fermenter. I actually have a 5 gallon carboy in the garage, but the Mr. Beer makes more, faster, than I typically drink. I also have a bottle capper and caps, but try to use the stopper top bottles first just to be cheaper.

Labor to dump juice and yeast into the tank is about 10 minutes (mostly spent on a dilute bleach wash and hot rinse). Then you wait about a week and bottle. Bottling is about 2 minutes / bottle, again mostly spent washing / rinsing hot. There is some ‘loss’ along the way. Bits left in the bottom, a glass during the bottling to assess quality and sugar level low enough (8-‘) so figure it’s “only” about 2 Gallons makes it to the bottles. 256 ounces. Now I use larger 16 oz or 24 oz bottles, but the ‘standard’ is 12 ounce in the store. So you get between 22 and 26 bottles at 12 ounces per batch (depending on how high you fill it, neatness in bottling, using a hydrometer instead of a test glass, ‘fill’ on each bottle, etc.). Call it 24 bottles (yes, I know that’s slightly over the 2 gallon number, but like I said, it holds 2.5 gallons)

The ‘typical’ drinkable not great beer in the local grocery stores runs over $1 / bottle. Some of it is $9 / 6-pack, so $1.50 each. I’m going to use the $1 value as I’m sure my brew is not in the class with the fancy beers (yet I find it quite nice and in some ways a lighter more refreshing drink, even if I do “juice” the alcohol up a bit to about 5% ). Now at $1 / each 12 ouncer, I get about $24 of market price value out of one Mr. Beer run. Minus the 8$ is $16 net. Time required is about an hour, all told (really less than that as it’s about 1/2 minute / bottle for the actual fill and if you are fast it’s a minute to wash/rinse, but figure 48 minutes if you were using small bottles + 10 for the set up to ferment). So that’s $16 / hour net-net. Except to BUY those 24 bottles of commercial beer, I’d need to work to earn $48 pre-all-the-Taxes (SSI, Income TaxeS, Sales at 9.5%, etc.). So really I need to subtract the $8 of costs from $48 in wages, and then it’s $40 net to me compared to actual wage-slave hours. Hmmm…. $40 / hour ain’t bad… AND there’s no paperwork to fill out ;-)

The interesting thing for me is just how rapidly you can reach a decent comparative effective labor wage rate in DIY. Sometimes you need to learn a new trick or craft. Occasionally there’s a new tool. (I bought an air stapler / nailer from Harbor Freight for $24 for the fences – but now can use it for all sorts of other projects.) Overall, I find most things ending up in the $36 to $48 / hour band. As my billing rate on computer geek jobs ran from $50/hour to $100 / hour, in theory I’m not making as much. In reality, most of the jobs recently have been between $50 and $80 and that doesn’t allow for all the time spent “selling” to get the contract, travel if far away, housing in Florida on remote contracts, commuting costs, etc. etc. So for most of the jobs I’d book, the “DIY” wage rate is “close enough” to make the comfort of not being in the “money chase” worth it.

So, essentially, the combined Fed, State, Local tax burden makes it attractive for me to just do things myself whenever I can figure out how. Turns out I can figure out how for a lot of things… Next up is roofing. About 25 years ago I built a little shed and shingled it. Roof on it is still just fine. I already own the shingle hammer (fixed some spots on the house too) and there’s not a lot more gear to roofing. I do need to learn what kind of air-nailer is best for roofing, as it does speed things up a great deal, and Harbor Freight has very low prices ;-) So in the next month or so before the rains get here in force, I’m going “Up on the rooftop!”… and doing the ‘assess, patch, replace’ as needed. This will also be when I “do something” about the TV antenna. I’ll likely take it down for installation on a stand alone pole with much shorter wires. Net signal will be about the same (loss from lower height = gain from shorter wires).

So roofing and TV Repair / Installation comparative DIY Wage Rates up next ;-)

Now, were I a person who actually was PAID Minimum Wage, my value proposition for DIY would be even higher. There would be a big incentive to “swap labor” with friends. You see this broadly in the Hispanic population on the East San Jose side (housing is pricier the closer to the ocean and up the hills… so cheapest East side flats). Lots of “friends helping friends”. A ‘few neighbors back’ a Hispanic guy moved in next door. His ‘family and friends’ showed up to put in new windows, remodel the living room, etc. All non-taxed labor. He helped them with their gigs too. Now that’s spreading to the rest of us “Professionals”. My most recent fence building labor was shared with a guy who manages others for a living…

That’s the kind of thing that starts to become dominant when total taxation is 50% or higher. It becomes ever harder for companies to find the productivity leverage to make your paid product costs lower than the DIY costs when balanced for comparative effective wage rates including tax effects. That is the fallacy of “income redistribution” and “income flattening” efforts. IF everyone is paid nearly the same, you must have near zero tax burden to make the value proposition work. Only folks making a LOT of money, can pay a LOT of taxes and still have a value proposition that makes it worth while to hire someone else. At a 50% taxation total rate, the ratio is about 4:1 minimum. So boost your “living wage” to $15 / hour and we’re talking a $60 / hour cutoff. There’s not a lot of people making $60 / hour in the general economy, so ALL the folks below that level are being “priced out” of the marketplace for goods and services and “priced in” to the DIY world.

Yes, there will always be folks who just are not able to DIY on some thing or other. My spouse is NOT going “up on the rooftop” even when I’m gone. Nor will my neighbor be doing his own landscaping (despite having the tools and truck for it) as he has a significant day job and just want’s it done faster than one guy can do it part time. BUT, you don’t need 100% “participation” in this economic process for it to have impact. Folks will push it a little longer on things like repairs and upgrades. They will “settle” for a lower cost yard landscaping. The local Summer Winds garden shop has gone out of business… A combination of watering restrictions and folks just saying “screw it, I’ll put in rocks and cement” that don’t take water costs nor gardener costs. Cost Avoidance can do as much as DIY Displacement.

So “my car”, for example. The first 1/2 of the year I filled the tank two times. Why? Not commuting anywhere. So 400 miles / tank is a lot of 2 mile runs to the grocery store… More taxes not paid on repair costs, tires, brakes, gas taxes, etc. It needs paint, and I’ve pretty much decided since I already have the air compressor, I’m going to try some DIY car painting. It’s an old car that’s not collectable, so if I mess it up, worst case is I apply some stripper and then pay a shop to paint it. I’ve done paint before ( couple of houses, some car touch-ups) and anything would look better than it does now. Besides, this will let me try out “Camo” and other looks ;-) I’ve always thought painting the Mercedes in W.W.II Camo Pattern might be interesting ;-) Yet more $Thousands not in the formal economy. I’ve done tire rotations and brakes myself before, and I will again now. But rarely… it takes a long time to wear out brakes at 5000 miles / year (long trips included).

The spouse and I have decided going out to movies isn’t worth it. Aside from the overly loud sound settings, and the crowd issues, it’s just too expensive for value. Hotdog (a lousy one at that) and a Soda runs out about $10 and the ticket is at least $10, sometimes more. So we’re up to $40 for ONE movie out for 2. I’ve hit $60 some times. Instead I bought a Big Screen High Def TV and it will amortize easily over a few years. $40 buys 4 months of NETFLIX. So now we’re watching far more movies together. We can pause them at any time for a run to the bathroom or “snack bar”. MY meals are much much better than those in the theatre, and costs are way way lower. I can make a heck of a good hotdog, chips, and drinks for $10, and several of them! (REAL Polish dogs ;-)

As a side effect, we no longer need DirecTV either. That’s about $100 / month gone from the budget as soon as the contract expires. That will pay for the TVs in about 5 months. Figure next September we are in high net profit land for “movies in” and DIY Theatre System.

So this is how an economy slows, shudders, and eventually halts. Once taxes are too high, profit leaves for the vendor and manufacturing companies, and the value proposition compared to DIY leaves for the buyer. Sales slow, tax take falls despite rate hikes, and the more you hike taxes, the faster it falls as ever more value propositions fall from positive to negative.

Want to juice up formal economic activity? Cut taxes to about 15% TOTAL combined tax take. Suddenly all sorts of folks are saying “My God, I can just pay someone to do that!” and getting out of the DIY process. Extra money in hand and less taxes creates more demand for buying those value propositions and getting more time for yourself. This generally raises economic activity AND wage rates (as they are now unburdened of the tax bite) leading to ever more money in more hands buying more Value Propositions. Income Disparity means MORE money spent on positive value propositions and MORE net total tax from smaller bites out of many many more pies. Had my fence cost $1000 to build and I only had to work 15 hours to make that $1000 net, no way I’d spend my weekend building a fence!

In Conclusion

So there’s some real life examples of how “fighting income disparity” and pushing for a “living wage” and higher taxes to pay for the income redistributors fundamentally shifts the marketplace value proposition and leads to economic stagnation and decline.

These are NOT hypotheticals. They are my life experience. I’m a “highly skilled professional” and really ought to be sitting in an office working on computers. Instead, it is “worth it to me” to avoid the rat race and money chase, and build DIY fences, roofing, and car repairs; while drinking home brew suds. Now just think what the value proposition is for a 30-something making $20 / hour faced with trying to buy services or products made by $15 / hour “living wage” folks. He’s looking at a $60 / hour cost and a $20 / hour wage. So NOT buying “fast food”, going to movies, paying a gardener, etc. etc. and not being very happy about it either. This puts many more of those minimum wage folks out of the job market, and nothing in the way of training or general economic “stimulus” can fix that.

IMHO, this is the root of much of the mire in the EU and USA economies today. Despite very loose (free… ZIRP) money and lots of “stimulus”, the economy doesn’t get moving. Why? Well think maybe, just maybe, part of it could be that it’s not a very good economic value proposition to buy things with a 2x or 4x cost mountain in front of you compared to wages paid to you (and taxes taken)? Or maybe, just maybe, making a “Fast Food Meal” cost $10 due to the “living wage” and tax policies in California means it’s $20 of my earnings to pay for it, so NOT a decent value proposition compared to DIY meals? I can make a great Deli Style Sandwich with chips for about $3, and a good enough ham sandwich for about 50 ¢ so just why oh why will I pay $10 and need to earn $20 to get it?

So things don’t “pick up”.

And they will not pick up as long as taxes are too high and the ‘wage disparity’ is too low. You must have a value proposition that makes sense for folks to engage and buy it.

FWIW, I first started watching “lunch costs” about 1975. It was about $3 to $4 for a “decent fast food lunch”. I’ve been using the same places and the same meals the whole time. In the late ’80s to ’90s, the Burger King and Taco Bell lunches started bumping up against the $5 lid. That held for a while (as it was a price folks were sensitive about). Jack In The Box had a sub-$1 “breakfast jack”. They held it at 99 ¢ for several years longer than all their other prices, using it as a loss leader. Recently they had to let that rise. It’s now about $2 last time I looked (but that was a while ago as now I just make my own sandwiches instead…). On those few occasions when the spouse and I were out and about and not prepared, we’ve stopped in for a meal on the road. Post the “living wage” moves here in California, it’s about $10 / meal / person. So we’ve both agreed it’s not worth it and basically stopped. Similarly, where we used to go out for the occasional evening dinner out, that’s run up to well over $25/head even at places like Red Lobster and Chili’s. So those are no longer. I make ceramic “lunch tubs” for the spouse to take to work. Just the things I cook for dinner, made into a frozen meal. That’s nearly $50 / week of avoided costs, at the price of some leftovers creatively packaged.

Essentially, I’ve watched the “Dinner Out” middle scale dining become unaffordable (and not that interesting) while even the fast food places have become “not worth it” (or perhaps more accurately: Worth a DIY alternative). On contracts, 30 years ago, meals were all taken at restaurants when “on the road”. In about 1995 I started packing a ‘travel kitchen’ and making some meals in the hotel. Last run was all DIY meals.

Fast Food and Middle Class Dining are great places to check the pulse of the economy generally. It is a stereotype, but a valid one, that when money is tight, the first things that happen are cancelling “Dinner and a Movie” out and packing a sack lunch for work.

IMHO, lack of attention to the effect of high tax rates and high minimum wages on “comparative value proposition” is a significant part of what has caused so many “advanced” economies to get stuck in the muck. The folks pushing for both just don’t “Do the Math” on what it costs in terms of wages earned to pay for that “no longer valuable proposition”… The rest of us, either formally for folks like me, or just by looking at the price and saying “I can’t afford that” are forced into seeing the relative value proposition of wages-payment vs DIY.

You just can’t escape reality. No matter how much you dress it up in high sounding arguments.

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About E.M.Smith

A technical managerial sort interested in things from Stonehenge to computer science. My present "hot buttons' are the mythology of Climate Change and ancient metrology; but things change...
This entry was posted in Economics - Trading - and Money, Human Interest and tagged , , , , . Bookmark the permalink.

33 Responses to A Fence, A Brew, A DIY Economy Story

  1. Lionell Griffith says:

    Practical examples of stopping feeding them. Them being those who think substituting coercive control of the producer for self responsibility is a wise idea. It also demonstrates that the eventual consequence of their actions is they will become irrelevant. It is the producer who makes things happen. The power and control types can only keep things from happening.

    Who has the real power here?

  2. cdquarles says:

    Exactly. In all of my life, never has it been the case that the arbitrary minimum wage ever helped me. What helped me was trading value for value. I’ve been on both sides of the labor equation. What will open people’s eyes is being on the buyer side on both sides. Yes, when you are buying labor, you want value for it. Just like you do when you are buying food, gas or some other good. People who have never had to make a payroll while being the last one to get paid, don’t have a clue.

    Who is John Galt? ;)

  3. Larry Ledwick says:

    About the only restaurant food I eat now is an occasional pizza when all I want is something to eat delivered to the door. Other wise I cook from scratch at home.

    After my normal go to work car was totaled by a driver who was texting rather than driving last December I shopped around and ended up buying a 1999 Subaru Outback wagon from a co worker for $1750. It had the engine replaced about 50k miles ago, and he did regular maintenance. New front half shaft brake job etc recently. Dirt cheap to license and to insure, I will drive it until pieces start falling off or another idiot wrecks it.

    I do all my own routine maintenance if I can, so things like replacing an old car battery is a an hour long project on some weekend rather than a trip to repair shop.

    A few years ago when I was unemployed following the 2008 crash I started actually figuring out the cost of things like driving down to the store. When you figure the real costs of things like tire wear, gasoline opportunity cost of your time to run down to the store, direct delivery like Amazon actually works out to be cheaper in many cases even with shipping.

    Some odd item I might have to drive to 5 different stores to find it on the shelf (if I could find it at all) but through online ordering from Amazon, Harbor Freight etc. I can have it delivered to my door if I am willing to wait a couple days for it to arrive.

    I now buy groceries in modest bulk. If I need something I buy at least two the item, so on average that cuts my trips to the store in half. Most of my store purchases are from stores I almost drive by on my way to and from work so separate shopping trips are relatively rare, and like back in the gas rationing days of the 1970’s I try to always combine two or more errands into one trip if I can, preferably in the process of going someplace I must go like to work.

    It all adds up if you do a lot of those efforts.

  4. Alexander k says:

    Hi, em.
    Your question re winter effects on crops around the globe.
    Here in new Zealand, our annual crop of potatoes has been hit by unusually high winter and spring rainfall. We now have a national shortage of potato chips and chipping potatoes. Other varieties of spud have not been affected as much.
    Our country is in the temperate. Subtropical zone, which translates into very good conditions for grassland farming and our farmers have no need to resort to barns to house livestock.

  5. E.M.Smith says:

    @Alexander k:

    Ah, I loved my time in New Zealand. As a native of California who sent many many summers and trips in winters to Oregon, my impression of things “down under” was that Australia was like California, but on a continental scale, and New Zealand was like Oregon, but on a California size and with lots more coastline ;-)

    Both mild and pleasant, but N.Z. with real mountains and snow in winter, while Australia is more desert and beaches (though they have warm water so maybe Florida on a continental scale is more accurate…)

    Interesting to hear that spuds had a problem… they are one of the “go to in bad weather” crops… Must have been a LOT of rain!

  6. Power Grab says:

    I wonder if excessive rainfall was what caused the Irish potato famine?

  7. Serioso says:

    I wonder whether you would care to comment on how your economic argument applies to the EU, where much of the tax collected comes from sales (value added tax or VAT) rather than income. I gather that hiring a skilled craftsman (plumber, electrician, gardener) is cheaper (on a per hour basis) in the EU than in the US (assuming you aren’t paying under the table and that the person you hire is legal.) Friends in Europe are shocked when I tell them I pay $50/hr for a (skilled & speedy) window cleaner.

  8. Larry Ledwick says:

    In a way yes the famine was caused by a fungus like organizm that has only recently been actually positively identified.

    https://www.smithsonianmag.com/science-nature/scientists-finally-pinpoint-the-pathogen-that-caused-the-irish-potato-famine-71084770/

    https://www.theguardian.com/news/2011/sep/22/weatherwatch-irish-potato-famine

    Another crop agent that has caused huge problems is ergot on grains, also promoted by cool wet weather as I understand it.

    http://ianchadwick.com/blog/bread-madness-and-christianity/

  9. E.M.Smith says:

    @Serioso:

    I don’t know much about the finer points of VAT. Here, the sales tax has various exemptions (food in stores, but not restaurants, for example) that can make for quirky bits. So, for example, I have no idea if a private party hires a window washer if they must also pony up an 18% VAT payment to anyone.

    So I can’t directly speak to VAT in the EU.

    What I can say is that to the extent ANY tax gets glued onto the basic production cost, then you start down this road of lesser Value Proposition on offer.

    Now to the extent if I’m working for a window washing company and they pay me € 30 / hour, then if I have zero income tax, that part of the equation drops out.

    To the extent my € 30 gets taxed down to € 15 / hour, then I have a 2 X multiplier on actual earnings to get the money to buy at a posted sales price.

    The existence of a VAT on the beer I want to by is irrelevant AS VAT, only the final total cost really matters. I don’t really care if my €6 pint of beer is 1/3 corp income tax, 1/3 VAT, and 1/3 actual cost to produce, or 2/3 VAT and 1/3 cost to produce, or any other combo. What matters is that some total tax is part of that €6 and I’m paying it, but I pay no tax on the DIY version.

    Then that I’m paying some other overlay via income tax on earning the €6 to buy it. So, for example, a 50% Corp tax from incomes passed on in the €6 is the same as a 50% VAT stuck into the price. Both are a €3 load and a double of real costs.

    The basic equation of DIY Labor untaxed and DIY Product untaxed vs. taxed product and taxed wages remains the same. The particular form of the embedded tax increasing costs doesn’t really matter.

    Note: None of this says anything about the desirability of any given tax nor the benefits of it. For example, dodging SSI means Social Security is not going to pay you as much if you live long enough to collect it. Dodging sales tax or corporate income tax (via not buying a product) means some number of folks working for the State will have less money for whatever they do (be it good or bad). It is quite reasonable to ignore this as the consumer is ignoring it when they make a “make vs buy” decision.

    Linear Programming in economics is the specialty that deals with this kind of analysis and one of the more frequent problem classes for companies is the “Make vs Buy Decision”. It is extremely common and just about every biz major out there has been exposed to it. In fact, the VAT is particularly structured to avoid taxing simple “sales” at each transaction between companies, but the actual “value added”. Similarly, for US Sales Taxes, they are typically not charged to other companies on goods used for production. Otherwise, you have a strong incentive for vertical integration as the “sale” is eliminated and it becomes an internal (untaxed) transfer. This distorts the pure efficiency issue of the “make vs buy” decision as it confounds taxes with actual economic advantage. This distortion is NOT removed for the DIY home gamer as they must pay sales tax on everything and pay income tax on all money earned. Vertical integration via DIY rewards that integration for tax removal, so is favored more.

    Basically, even though Busch has gigantic physical and financial economies of scale and ought to be able to make beer for 1/10 the real cost of my home made beer, the various other physical inefficiencies (shipping, dealer markup, advertising, A&O) along with the tax burden bite mean I can still make a similar product for significantly less in real terms, including tax effects, as I can avoid those tax costs & overhead costs via vertical integration and local production. VAT vs Corp. Income Tax doesn’t change that.

  10. Another Ian says:

    E.M.

    One of the ironies of legalities and home brewing in Oz is that the makings are untaxed to keep selling your DIY illegal.

  11. Another Ian says:

    This sounds like how a lot of us are getting by at ranching here

  12. philjourdan says:

    Before JFK (and Reagan), no one “earned” taxable (federal) wages that were taxed at 70 & 90%. They earned less, but got other forms of compensation (many now taxed since the top rates did come down). Basic economics (that still escape the left). When I calculate my hourly worth, I do not take my gross and divide by 2040. I take my NET to decide what my hourly rate is worth. And that decides if I hire someone. Or do it myself.

    And more often than not, I do it myself. Electrical? I had the great fortune to have taken an electronics class in HS (we were offered the option of that or Biology – so I saved a frog). I learned enough to know I do NOT do electrical! But the Army taught my cousin. So he does it for me. And I delouse his computers. :-)

    I have many cousins. And we never all went into the same business.

    But yes, there are times that I like to DIY, just to prove I can. And the tools for that job? That is MY bonus! (he who has the most tools at the end is the winner!).

    Trump understands this. Liberals never will.

  13. Since it costs me 4-6 times more to pay someone else than I used to get per hour when I was employed, it’s pretty obvious that doing it myself is much better value. If I need to get some new tools to do so, then they are normally easily justified even for occasional use. If I have to learn new stuff, then I have the time to do that too. Now, of course, I’m not paid for my time but simply to exist (pension) so the cost/benefit analysis is even more skewed towards doing the job myself.

    Luckily, my daughter seems to have the same attitude, and leaves a trail of fixed stuff behind when she visits people. In these days when it seems most things have warnings on them about taking them to bits and most kids don’t know what’s inside or how it works, it seems she’s in a minority. It’s hard to RTFM when it’s written in Chinglish.

    The government response is to make it illegal to do certain things. There’s often an excuse for that, in that getting things wrong can sometimes be dangerous for either yourself or others. Any gas-pipe work needs to be done by a registered plumber (but it may be done by the apprentice and simply inspected by the qualified person), and of course a cock-up on the brakes of your car can be scary. Distilling alcohol can be lethal if badly done, which is one of the reasons for making it illegal. The other reasons have to do with tax-take, of course, since otherwise it would be way too cheap and that can’t be allowed.

    Given that I won’t be as good at something as someone who does the job as a profession, since it takes time to get proficient and fast, the cut-off for me is somewhere around twice my income per hour. Less than that I’d pay someone to do the job, but more than that I’d learn the job and get the tools. The high tax-rates mean that even a burger-flipper falls outside the range of “it’s worth it to pay someone else” unless I really can’t carry a cooking kit with me. Or sandwiches and a few bottles of whatever.

    The tax has to pay for the number of people employed by the government in any capacity. When that number (police, army, legal, school, unemployed etc.) is the same as the number of people in private industry, then the producers will obviously need to be taxed at 50% just to break even. The same amount of production has to carry twice as many people. If the “government” people are paid more than the average person, then of course the tax take has to be higher.

    What’s nice to find is that someone else can do the job better and cheaper than I can. I’d then stick to my specialised niche and pay them instead. That isn’t the way the system is heading.

  14. Gary says:

    E.M., the late Jude Wanniski was an advisor to President Reagan who along with Art Laffer convinced him about the effects lowering the tax rate would have. Before his death over a decade ago, Wanniski published a lot of his analysis which still is preserved on a website. You might take a look at http://polyconomics.com/main.html. What makes a system disfunctional is known, yet the people in control never seem to understand it.

  15. cdquarles says:

    The thing is, and it should be obvious, is that there is always a maximum effective tax rate and that said rate is a lot lower than some want it to be.

  16. Larry Ledwick says:

    The thing I find hard to understand is the blatantly obvious fact that if you propose high taxes to reduce a certain behavior ( sugar tax, cigarette tax etc.) you are prima facie admitting that taxes impact buyers and negatively influence their decisions about the activity.

    If that is true, increasing taxes reduces activity and reducing taxes increases that same activity.

    It is in principle exactly the same as pricing a commodity. If you price it too low everyone buys it but you cannot afford to make and ship it.

    If you price it too high you make great profits on the few you sell but go broke because you cannot cover your fixed costs.

    In between those two extremes is some price point that maximizes total revenue and sales. The same applies to taxes.

    If you charge little or no tax, people ignore the taxes when making decisions, if you put very high taxes on an activity you eventually reach a point where you simply price that activity out of consideration. Somewhere in between those two points is a tax rate that has little punitive effect on the activity but produces the maximum revenue from that activity.

    This is not rocket science it something that any 11 year old running a lemonade stand can understand.

    Pick the highest price point that the most people are willing to pay.

    The problem is if you are a multi-millionaire legislator who gets $400,000 for a 20 minute speech your concept of “price too high” is very very different from the single mom trying to figure out if she can buy diapers or food. The only way to fix that problem is for the legislators to live hand to mouth for a while until they remember what it was like when they were living on macaroni and cheese in college.

    Pass a law that congress critters cannot make more than $12.50 cents an hour for speaking fees and have to pay their own travel costs out of pocket and see how many speeches they give.

  17. E.M.Smith says:

    @Larry:

    I’d be in favor of a system that said “Once elected, your income will be a fixed check for the Average National Hourly Wage (excluding non-wage earnings and the salaried classifications) minus Taxes. You can spend NO money beyond that, even if you have it, as all prior assets will be in a blind trust administered by a person on Welfare, but qualified via a government training program. Spousal wages will also be put into the Trust. All ‘contributions’ can only be spent on campaign expenses – not to include your meals or travel – and only during an 8 week campaign period just prior to the election. Let us know if you ever think of running for a second term…”

    I suspect things would change “right quick like”… ;-)

    @Gary:

    Looks interesting, thanks!

    @CDQuarles:

    It’s the Laffer Curve and it shows that at about 18% Federal Taxes, you max out the tax rake. Raise rates to 75%, you still take in 18%, but a lot more dubious tax avoidance schemes get funded…

    @Another Ian:

    Yeah, maybe it’s having grown up in farm country… Lots of folks DIY on everything from tractor repair to welding to fence mending to roofing to raising and slaughtering meat to… I’ve done all of those and I was just a kid in town! But Dad was from an Iowa farm and wanted me to know how…

    @PhilJourdan:

    Dad was an electrician after W.W.II, so I helped him put romex wiring into our house when I was 7. It was ceramic knob & tube when we moved in (with bare wires!). I was “wiring hot” by the time I was 8. It isn’t that hard… just make sure you learn well what not to do. (Rubber shoes, gloves. NEVER grab a support with one hand when working on wires with the other, ALWAYS assume any wire you are working on is “live” and you are sitting in a puddle, use pliers with insulated grips,…)

    @Simon:

    My new 18 gauge Brad Nailer came with a very nice manual. Full of all sorts of warnings and legal disclaimers. Even a parts list with a blown up image showing the parts. Not one word about how to operate it, or even load the sucker. I had to figure that out myself…

    I usually allow “one of something” as the learning one, then the rest are pretty much right. So “one fence panel” will be a bit less than perfect and take twice as long as the rest; then it goes fast and better from then on. On rare occasions the first one is a tosser or needs to be redone.

    I told my kid he could have a motorcycle if he built one… so we ended up spending a summer tearing down and overhauling a Honda 360 given to him by a neighbor who was being “helpful” ;-) I ended up spending $600 on parts and a parts bike, but hey, he was a year more mature before his first ride AND know how to fix / build motorcycles.

    Now he and I both tend to fix things if something is broken and we are there. It isn’t a dead art yet! Just like if I’m visiting someone I tend to do up the dishes after a meal… and help with the cooking if they let me… Just neighborly, that’s all.

    Come to think of it, other than a recliner, a couch, dining table and some chairs; I’ve built most of the furniture in the house. (Dining table and chairs / couch inherited via marriage…) Kids loft bed from Ikea. Desks. Bookcases. Installed the replacement oven and fridge.

    So it goes.

  18. Another Ian says:

    E.M.

    I was told the high voltage electrician’s stance was “spare hand in hip pocket”.

    And the observation of a diy house builder that “You should start at the back of the house so your mistakes are less obvious”

  19. philjourdan says:

    @Larry – I have noticed of late that taxes are never sold as “deterrents” for buying products. Only as a CONSTANT stream of revenue (that never works out that way). When they heavily taxed yachts, they expected to get a lot more revenue. What they got was a lot more unemployment as people stopped buying them (and put the employees out of work).

    The same as tobacco and alcohol. They assume buying will continue at the level it was before the tax. Yet it never does. So they refuse to acknowledge that taxes (i.e. price) influences spending.

    As they say, it takes a special kind of stupid to deny reality time after time.

  20. Steve says:

    Wow….the power is still on in glorious Socialist republick of Kalifonia? Hasnt Jerry outlawed electricity by now?

  21. Steve says:

    Sorry, in terms of DIY, a lot of people here in Oz are now buying generators for thier homes, as the “gummint” here ( if you can call the latest batch of liberal/left-wing globalist bootlickers that ) are doing their very best to destroy Oz by destroying its electicity infrastructure. Soon DIY may be the only option, as the economy collpases. If that happens, apparently rope sales may go up…

  22. Steven Fraser says:

    @Another Ian: ‘spare hand in hip pocket’ is profoundly wise.

    @philjourdan: Ah, yes, the price/volume curve intersect!

  23. Larry Ledwick says:

    When they heavily taxed yachts, they expected to get a lot more revenue. What they got was a lot more unemployment as people stopped buying them (and put the employees out of work).

    Yep the luxury tax was a huge bust, it became cheaper for a rich fellow to travel to Europe, buy a yacht from some boat builder in France, take a weeks vacation in the Mediterranean, then fly home and have some rent-a-crew to bring the boat over to the US.

    Put a lot of small boat builders in the US out of business, lost revenue and jobs, plus boosted US boat builders primary competition over seas. Hard to beat a clean sweep of all possible negative outcomes but some how they managed to hit just about every possible bad deal available.

  24. p.g.sharrow says:

    Another Ian; the mark of a true professional is to make your mistakes look like they were done on purpose ;-)…pg

  25. Serioso says:

    Part of the equation has to be the expertise ratio: My window washers do the job in far less time than I could, assuming I still could. My wife and I spent >18 hours assembling a snorkel stove hot tub; the manual said 6 hours for a team of two. That’s an expertise ratio of three. And I still trim a portion of my hemlock hedges, leaving the rest to the experts. Why? Because I do a better job. Why not all? Because it’s too much work; I do just the easy parts. Don’t leave out the expertise ratio and don’t leave out the easy ratio.

  26. Robby says:

    EM and commentators – thank you for enhancing my knowledge of a subject I thought I knew about. Despite all my years as an economist, the potential DIY impact of taxes and regulation never occurred to me.

  27. Larry Geiger says:

    I do most everything here. Two things I don’t do is the pool and major electrical. SunKraft electric replaced my panel, breakers, and service entrance. I didn’t want anything to do with that. I could learn how to test the pool and transport the chemicals but I don’t want to. Just don’t. Plumbing I do. Some A/C. Appliances, etc. Change oi and filters most of the time. I let the tire place put tires on. Never did any analysis on the costs, however. I’ve put on a couple of roofs but the hurricanes haven’t blown the roof off of the current house yet. That’s good.

  28. E.M.Smith says:

    @Larry:

    Pools are pretty easy. I understand if it just isn’t interesting to you though. Cousin in Texas did the salt conversion and swears by it. I liked the pool too :-) If not doing salt, it is mostly just a pH test and then add acid or base to be in range (almost always acid) the adjust chlorine level. Two paper test strips or two dropper test vials. Often you can just put chlorine tablets in a floater and it self tends for weeks, only minor adjustments infrequently. It is about a 10 minute job that you learn in about 20 minutes.

    @Robby:

    Glad to be of help. Now that you’ve seen it, it is hard to unsee it…

    Make VS Buy is a big formal area of Econ and Biz education, but they rarely connect it with DIY folks at home…

    @Serioso:

    That is the technical advantage that allows some level of taxation. I dont do DIY Steel as the foundry size for efficient production is a city hlock… my granddad could make steel at the forge, but the cost in time was horrific. (Thus ancient smiths making lots of wrought iron stuff but only a few steel swords…)

    On the fence, my first panel took about twice as long as all the others (in the far back ;-), but that was only one hour extra for learning. The marginsl capital stock needed was $24 for a nail gun and $12 for nails materials cost uplift. There isn’t a lot of technical barriers nor economies of scale barriers in fencing.

    When the technical or scale barriers are high, you will often see folks do substitution or just not buying; instead of DIY. For example, I will never buy another new car. Just not worth it as cost is about double what is reasonable. I buy used and fix up instead. Similarly, movies are too pricy so I substituted a bigger TV.

    Per pockets:

    Dad also taught me that rule. If you are not using a hand, holster it in a pocket…Don’t grab anything nor lean or brace on anything. FWIW, I’ve done a service entry. Not all that hard, but worth it to have someone else on the hook for code and utility turn on (unless it is 100 A or less)

    My nemisis is plumbing. I do it, but hate it. Everything is heavy, stuck, and stinks… though plastic pipe has made it much easier for new things.

  29. E.M.Smith says:

    @Steve:

    The last time power was unreliable, we dumped Gov. Grey (out) Davis and elected a Republican. So now I think even the Democrats are afraid of power outages. Instead, they are just pushing prices crazy high.

    FWIW, I already have the gear for DIY power thanks to that Gov. Grey (out) Davis time of troubles…
    https://chiefio.wordpress.com/2011/02/17/minimalist-emergency-power/
    https://chiefio.wordpress.com/2013/04/16/diy-power-and-load-leveling/

  30. Another Ian says:

    E.M.

    From my pool experience – when you get one read the materials list carefully and see if it has the pool slave, not just a space where your name gets written in.

    That was with bore (tube well) water and an environment that could turn a pool green overnight.

  31. David A says:

    One thing fighting the DIY decision is legality, or codes. There is ever more effort to make it harder to sale if it was not permitted. For most projects it is worth, at a minimum, building to code even if not permitted.

    Serioso, although I am 75 % retired from the trade show industry, I formerly set up thousands of exhibitor booths, with and without instructions and with and without exhibitor supervision, wood framed to metal to plastics, engineered countless different ways. This helped me to learn some basics in set up projects, such as your spa, building an above ground pool, etc.

    Guideline one, unpack and separate all components first, looking for minor differences, looking for labels- A. B. C. etc…
    Put all hardware together on a table, also separated and left in bag if hardware is labeled. Understand your goal and avoid the sequence violation, where one must take apart to do a missed step.
    Doing this allows me to speed read instructions ( how much reading is required is determined by how long it takes the brain to reach the “ah ha, gotcha” moment) and usually my first go around hits the time of assembly estimate, and as E.M. estimates, the second time around is still cut in 1/2.

    Regarding pools, it is not difficult as long as one stays on top of it. There appears to be momentum in chemistry.

  32. David A says:

    Regarding plumbing, well new plumbing is kind of fun, old plumbing definitely stinks literally and figuratively.

  33. David A says:

    Oh, and for DIY projects you tube is your friend if you are not familiar with a build or repair. Often the exact repair for your make, model and need is well done. I have done repairs on washing machines and big screen TV’s that I never would have formerly attempted, sometimes saving myself buying new as the professional repair cost was near replacement value. I very much appreciate the u-tube folk sharing their knowledge!

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