Month: April 2014

As Americans hit that annual April 15 deadline for filing income tax returns, they may wish to contemplate how it\’s done in Denmark. Since 2008, in Denmark the government sends you a tax assessment notice: that is, either the refund you can receive or the amount you owe. It includes an on-line link to a website where you can look to see how the government calculated your taxes. If the underlying information about your financial situation is incorrect, you remain responsible for correcting it. But if you are OK with the calculation, as about 80% of Danish taxpayers are, you send a confirmation note, and either send off a check or wait to receive one.

This is called a \”pre-filled\” tax return. As discussed in OECD report Tax Administration 2013: Comparative Information on OECD and Other Advanced and Emerging Economies: \”One of the more significant developments in tax return process design and the use of technology by revenue bodies over the last decade or so concerns the emergence of systems of pre-filled tax returns for the PIT [personal income tax].\”  After all, most high-income governments already have data from employers on wages paid and taxes withheld, as well as data from financial institutions on interest paid. For a considerable number of taxpayers, that\’s pretty much all the third-party information that\’s needed to calculate their taxes. The OECD reports:

In one of the great ironies, the great economist Milton Friedman–known for his pro-market, limited government views–helped to invent government withholding of income tax. It happened early in his career, when he was working for the U.S. government during World War II. Of course, the IRS opposed the idea at the time as impractical. Friedman summarized the story in a 1995 interview with Brian Doherty published in Reason magazine. Here it is:

\”I was an employee at the Treasury Department. We were in a wartime situation. How do you raise the enormous amount of taxes you need for wartime? We were all in favor of cutting inflation. I wasn\’t as sophisticated about how to do it then as I would be now, but there\’s no doubt that one of the ways to avoid inflation was to finance as large a fraction of current spending with tax money as possible.

In World War I, a very small fraction of the total war expenditure was financed by taxes, so we had a doubling of prices during the war and after the war. At the outbreak of World War II, the Treasury was determined not to make the same mistake again.

You could not do that during wartime or peacetime without withholding. And so people at the Treasury tax research department, where I was working, investigated various methods of withholding. I was one of the small technical group that worked on developing it.

One of the major opponents of the idea was the IRS. Because every organization knows that the only way you can do anything is the way they\’ve always been doing it. This was something new, and they kept telling us how impossible it was. It was a very interesting and very challenging intellectual task. I played a significant role, no question about it, in introducing withholding. I think it\’s a great mistake for peacetime, but in 1941-43, all of us were concentrating on the war.

I have no apologies for it, but I really wish we hadn\’t found it necessary and I wish there were some way of abolishing withholding now.\”

The central function of the Internal Revenue Service is intrinsically difficult. In 2013, the IRS processed  146 million individual income tax returns; 2.2 million corporate income tax forms, and overall about 10.5 million business tax returns (including C corporations, S corporations, and partnerships); nearly 30 million employment tax forms (on which employers, including the self-employed, report the income paid to employees and taxes withheld); 1.2 million excise tax forms from the businesses required to collect federal excise taxes on cigarettes, alcohol, and gasoline; and about 275,000 gift or estate tax forms. All of this needs to happen in a mobile and evolving U.S. economy, against the backdrop of an ever-more globalized world economy, and with a tax code that approaches 74,000 pages in length and changes every year.

Just in case this isn\’t enough, we have been loading up the IRS with additional major tasks, too. For example, a number of major income transfer programs like the Earned Income Tax Credit and the Child Tax Credit are now administered through refundable tax credits–that is, payments from the IRS to eligible families. U.S. policymakers count on the progressivity of the U.S. income tax–higher marginal tax rates on those with higher incomes–as a way to limit the rise in income inequality. The U.S. Department of Education often uses the IRS to withhold tax refunds as a way of repaying out-of-date student loans. The Patient Protection and Affordable Care Act was written to require that those who did not have health insurance would make a payment to the IRS, along with many other provisions affecting various business and investment taxes. The IRS is in the center of campaign financing issues with the decisions it makes (and how it makes those decisions) on what groups are eligible for certain kinds of tax-free status.

And while this is happening, funding and personnel levels at the IRS have been cut in the last few years. This combination of higher responsibilities and lower resources was a main focus of the Nina E. Olson, who holds the position of National Taxpayer Advocate, in the 2013 annual report of her office to Congress. The report goes into detail on many concerns, but for me, the heart of the report is that on one hand the IRS should follow a \”Taxpayer Bill of Rights\” which would enshrine the assumptions under which the tax collectors should operate, and on the other hand, the IRS needs to be funded and supported if it is going to operate to the desired standard.

Here\’s a list of what Olson would propose including in a Taxpayer Bill of Rights. She writes: \”At their core, taxpayer rights are human rights. They are about our inherent humanity. Particularly when an organization is large, as is the IRS, and has power, as does the IRS, these rights serve as a bulwark
against the organization’s tendency to arrange things in ways that are convenient for itself,
but actually dehumanize us. Taxpayer rights, then, help ensure that taxpayers are treated in a humane manner.\”

Olson writes of difficulties the IRS faced in 2013, including the problems arising from the 16-day government shutdown as well as when the IRS found \”itself mired in a scandal relating to tax-exempt organizations, resulting in the resignation or retirement of the acting Commissioner and other members of the IRS senior leadership.\” But she argues: \”[A]ll of these short-term crises mask the major problem facing the IRS today — unstable and chronic underfunding that puts at risk the IRS’s ability to meet its current responsibilities, much less articulate and achieve the necessary transformation to an effective, modern tax agency. … [W]ithout adequate funding, the IRS will fail at its mission.\”

Here are some statistics from inside the IRS to back up Olson\’s judgement. \”Since fiscal year (FY) 2010, the IRS budget has been cut by nearly eight percent. Over the same period, inflation has risen by about six percent, further eroding the IRS’s resources. … The IRS workforce has been reduced from nearly 95,000 full-time equivalent employees in FY 2010 to about 87,000 in FY 2013, a decrease of eight percent.\”

Between the increased in tasks and the drop in resources, standards of service from the IRS are slipping. Here\’s a figure showing the record on phone service. The blue line shows what share of calls reach a Customer Service Representative: it was 87% back in 2004, but now is 61%. For those who get through, the average waiting time is up from about 2 minutes in 2004 to 17 minutes.

What about answering the mail? \”When the IRS sends a taxpayer a notice proposing to increase his or her tax liability, it typically gives the taxpayer an opportunity to present an explanation or documentation supporting the position taken on the return. Each year, the IRS typically receives around ten million taxpayer responses, known collectively as the “adjustments inventory.” The IRS has established timeframes for processing taxpayer correspondence, generally 45 days. During the final week of FY 2004, the IRS failed to process 12 percent of its adjustments correspondence within its timeframes. During the final week of FY 2013, the IRS was unable to process 53 percent of its adjustments correspondence within the timeframes. As a corollary, the number of pending pieces of adjustments correspondence in open inventory increased as well. At the end of FY 2004, open inventory stood at about 348,000 letters. At the end of FY 2013, it consisted of about 1.1 million letters.\”

What about ongoing training for IRS employees so that they can understand all the changes in tax law? As part of the budget cuts, the training budget has been cut, too. \”Per-employee spending dropped from nearly $1,450 per full time equivalent employee in 2009 to less than $250 in 2013. Most of the IRS operating divisions that interact directly with taxpayers fared worse than the agency as a whole.\”

Other issues abound. [T]he IRS has abandoned return preparation in its walk-in sites, which was already limited to the most vulnerable populations of taxpayers — the elderly, the disabled, and the low income. It also has shut down tax law assistance on the phones after April 15, and has significantly limited the scope of questions it is willing to answer during the filing season. Thus, in the United States today, tax preparation and filing assistance is now, for the most part, privatized. That is, for a taxpayer to comply with his or her requirement to file a tax return, the taxpayer generally must pay for assistance, pay for software, and pay for advice. This is an unprecedented change in tax administration and it is not a good one. It is particularly devastating when one considers that over 50 percent of prepared individual returns are completed by unenrolled return preparers— the very preparers the IRS is now hamstrung over regulating because of pending litigation in the federal courts. So while we hash out this issue in the courts, millions of taxpayers are exposed to the risk of incompetent and even fraudulent return preparers.\”

Of course, no one weeps over budget cuts at the IRS. But such cuts are foolish. Those at the IRS point out that if they have more money, they can do more enforcement, and will collect greater tax revenue. While this point is probably true, it requires an extremely stunted sense of public relations to think that the citizenry will make a clarion call for more tax enforcement.

To me, the more central problem is that 98% of the revenue collected by the IRS comes from voluntary efforts by citizens, and only 2% from enforcement actions.  The IRS collected $2.86 trillion in revenue last year. The 98% that is from volnntary compliance would be about $2.8 trillion. If the poor and declining service from the IRS leads to a drop in voluntary compliance of even 1%, that would be a revenue loss of $28 billion–and the total IRS budget is about $11 billion. If the voluntary compliance system were to break down more thoroughly, the costs and difficulties of rebuilding that system would be enormous. Nobody needs to love the IRS, but it only can function if most people who are complying voluntarily believe that it is focused on its job in an even-handed way. Both by becoming enmeshed in politics, and through declining service levels, the IRS is in danger of losing that minimally necessary level of public goodwill.

As a red-blooded economist, I have of course considered how long I am likely to live, with a suitable margin for error on either side, and then thought about best to arrange my lifetime patterns of earning and consuming income. Concerning life expectancy, my rule-of-thumb assumption has been that I won\’t live longer than 100 years. Partly this assumption is just round-number bias on my part. But it also meant that when I saw a just-released report by Brian Kincel of the U.S. Census Bureau on \”The Centenarian Population: 2007–2011,\” my ears perked up.

A Czech playwright named Karel Čapek wrote a play called \”Rossum\’s Universal Robots\” in 1920, which was translated into English and performed in New York by 1922. The new word–\”robot\”–spread quickly into newspapers and public discussion. According to the Oxford English Dictionary, the term was suggested to Čapek  by his brother Josef. It referred back to the robot, which the OED defines as a \”central European system of serfdom, by which a tenant\’s rent was paid in forced labour or service. Now hist. The system was abolished in the Austrian Empire in 1848.\”

Now, countless stories and movies later, there are ongoing predictions that the age of robots may be near. I\’m not talking about automated factory robots, stuck in one place on a factory floor, little more than a swinging arm performing a repetitive function. The current discussion is about robots that are mobile, able to receive a variety of commands, and with the capability to carry them out. For example, the March 29 issue of the Economist has a lengthy cover story on the \”Rise of the Robots.\” But I\’ll focus here on Stuart W. Elliott\’s article, \”Anticipating a Luddite Revival,\” which discusses how robots will affect the future of human work. It appears in the Spring 2014 edition of Issues in Science and Technology.  Elliott did a literature review of the robot capabilities that are cutting edge and now becoming feasible as discussed in AI Magazine and IEEE Robotics & Automation Magazine from 2003 to 2012. Here, I\’ll refer to his discussion of the more recent capabilities of robots in  four areas: language capabilities, reasoning capabilities, vision capabilities, and movement capabilities.

Back around 1983, I remember visiting friends in San Diego and making a day-trip over into Mexico. As we crossed the border, I remember billboards advertising that banks were paying an interest rate of 80% on deposits, which sounds like a good deal, unless you also happened to recognize that the interest rate was being paid in Mexican pesos, and Mexican inflation at that time was spiking over 100%.  The real interest rate–the nominal rate minus inflation–was negative.

The world economy has been going through a period with extremely low real interest rates in the last few years, and the IMF examines the causes and likely future patterns in Chapter 3 of the most recent World Economic Outlook report: \”Perspectives on Global Real Interest Rates.\”

Here\’s a figure to get a sense of real interest rates in the last few decades. The blue line shows the nominal interest rate paid on 10-year government bonds: it\’s an average for the United States, Germany, France, and the United Kingdom. The red line shows average annual inflation across these countries. The spike in global inflation in the 1970s meant that real interest rates were near-zero for a few years. But after inflation dropped in the mid-1980s, real interest rates were positive until the global financial crisis; for example, around 2000 real interest rates were typically in the range of 3-4%. But in the aftermath of the global financial crisis, real interest rates have been near-zero.

What factors explain this change, and are real interest rates likely to bounce back in the near future? As the figure shows (if you squint just a bit), the drop in real interest rates is not purely an effect from the Great Recession. The inflation rate has been more-or-less the same at about 2% per year since the early 1990s, but the nominal interest rate on 10-year government bonds has been in steady decline–which together imply a falling real interest rate over time.

Of course, the real interest rate is just a price. It\’s the price you pay pay for borrowing, or the price you receive for saving. When a price falls, economists look to the basic supply-and-demand model to organize their thinking. Either a rise in the supply of savings going into the low-risk government bonds or a fall in the demand for borrowing, or both, could result in a lower real interest rate. Increases in the supply of saving at the global level can come from higher private saving, higher government saving (that is, lower budget deficits or budget surpluses), or monetary policy. The demand for borrowing can come from private-sector investment demand or from a shift in portfolios in which many investors looking for lower risk decide to shift some of their funds toward government bonds and away from other assets. After looking at the data, the IMF lays out the main patterns over time this way:

On the demand or investment side, global investment relative to GDP has stayed relatively constant over time, but the ratio has risen sharply since 2000 for emerging market economies while falling in advanced economies. Of course, this change has implications for where growth will occur in the future. The IMF suggests that investment levels in advanced economies are not likely to recover to pre-crisis levels for the next five years, so there is unlikely to be a surge of demand for borrowing from this area that would drive up real interest rates.

On the supply side, the global economy has seen more saving along with portfolio shifts that lead more of that saving to be invested in safe assets like government bonds : \”A large increase in the emerging market economy saving rate between 2000 and 2007 more than offset a reduction in advanced economy public saving rates. … Portfolio shifts in the 2000s in favor of bonds were due to higher demand for safe assets, mostly from the official sector in emerging market economies, and to an increase in the riskiness of equity relative to that of bonds. These shifts led to an increase in the real required return on equity and a decline in real rates—that is, an increase in the equity premium.\” Here\’s a figure showing the rise in savings rates relative to GDP in emerging markets.

Finally, monetary policy can of course affect interest rates, inflation, and the gap between them; indeed, the IMF argues that the story of real interest rates in the 1970s and 1980s is largely about monetary policy. But at least in the next few years, it seems unlikely that central banks will seek to push up real interest rates.

Thus, the overall prediction is that investment in advanced economies will rise a bit, and the savings rate in emerging economies will sag a bit, but the rise in real interest rates will be muted for the next few years. As the IMF writes: \”In summary, real [interest] rates are expected to rise. However, there are no compelling reasons to believe in a quick return to the average level observed during the mid- 2000s (that is, about 2 percent).\”

The plague of long-run unemployment is one of the worst consequences of the aftermath of the Great Recession, as I have noted here, here, and here. David Neumark and Patrick Button present evidence that this burden is shouldered primarily by older workers in \”Age Discrimination and the Great Recession,\” discussed in the Economic Letter of the Federal Reserve Bank of San Francisco for April 7, 2014.

One way to measure long-run unemployment is to look at the average length of time that an unemployed worker is out of a job. From 1990 up to the start of the Great Depression, men and women aged 55 and over tended to be out of work longer than unemployed workers in the 25-54 age bracket, but the difference typically wasn\’t very large. But after the Great Recession, the duration of unemployment rose to over 20 weeks for those in the 25-54 age bracket, but to about 35 weeks for the unemployed in the 55 and over age bracket.

Of course, discrimination by age is illegal in the United States under the Age Discrimination
in Employment Act originally passed in 1967 and then amended and strengthened several times since then. However, states are allowed, if they wish, to enact age discrimination rules that are stronger than the federal standard. For example, the federal law only applied to employers with 20 or more employees, but 34 states have set lower size minimums. Similarly, federal age discrimination law only allows for \”liquidated damages,\” which means wage losses that actually occurred, while 29 states also allow for compensatory or punitive damages.

Thus, Neumark and Button can ask the question: Do states with stronger laws against age discrimination see less of a rise in the length of unemployment for workers over age 55? Perhaps surprisingly, they find that in states with the possibility of higher liability, the length of unemployment for men over 55 goes up! They write:

\”Thus, we find no evidence that stronger age discrimination protections helped older male workers weather the Great Recession better than younger male workers. In fact, some evidence indicates that stronger state age discrimination protections may have made things relatively worse for older male workers. For women, the evidence is more mixed. On one hand, some evidence suggests that stronger age discrimination protections were associated with relatively smaller increases in the unemployment durations of older women during the Great Recession. On the other hand, in the period after the Great Recession, states with stronger age discrimination protections had larger declines in the hiring rate of older women.\”

Here the evidence stops, and the attempts at interpretation begin. Here are some \”conjectures\” from Neumark and Button:

• An event like the Great Recession disrupts the labor market so severely that sorting out which effects are due to age discrimination and which to worsening business conditions becomes very difficult. These complications may make it hard to demonstrate age discrimination, reducing the likelihood that the legal system can intervene effectively and fairly. 
• States with stronger age discrimination laws impose constraints on employers. Thus, there could be what might be described as a pent-up demand for age discrimination in these states. A sharp downturn gives employers cover to engage in age discrimination.
• During and after the Great Recession, business conditions and the need for labor may have been so uncertain that employers became especially wary of hiring older workers. They may have feared that if they had to lay off older workers, they would face wrongful termination claims based on age. Such claims could be more likely or more costly in states with stronger age discrimination laws.

It\’s not clear what policies would best address the additional burden of longer-term unemployment on older workers. The situation is a reminder that when laws are passed which make it more costly to fire or to lay off workers, such laws are also by definition a disincentive to hire that category of workers in the first place. It\’s often tricky to prove age discrimination in the case where workers are fired, but it\’s even more difficult to prove such an employment discrimination case related to an unwillingness to hire older workers. After all, if a firm announces that it is hiring lots of entry-level workers, or workers at salaries typically paid to those who are 30 years old, rather than hiring lots of workers at the wages typically paid to those who are 55 or 60 years old, such a policy will make it harder for older workers to get a job but may not fit the legal definition of discrimination.

As an article in the Economist explained a few weeks back, \”In the Middle Ages the Rhine was Europe’s most important commercial waterway. Like many modern highways, it was a toll route. Toll points were meant to be approved by the Holy Roman Emperor, but local landowners often charged river traffic for passing through. These “robber barons”, as they became known, were a serious impediment to trade, and imperial forces had to take costly punitive action to remove them.\”

This reference sent me off, wandering the web, to figure when the \”robber baron\” terminology crossed over to refer to American businessmen who took advantage of their monopoly position to accumulate extraordinary personal wealth. The shift seems to have happened in the 1870s.

The Oxford English Dictionary cites the first usage for this meaning of \”robber baron\” in 1874, in the Congressional testimony of W.C. Flagg, president of the Illinois State Farmers\’ Association, before the Report of the Select Committee on Transportation — Routes to the Seaboard, which is magically available on-line.  Here\’s Flagg, orating on the subject of robber barons who owned railroads:

\”England and America, you see, teach us the same lesson. Combination between rival [railroad] lines has destroyed competition, except that occasional \”cutting of rates\” makes fearful fluctuations, in which a few shippers gain, but for which the general public must sooner or later pay. Our railways, practically, that is, are regulated not by competition, but by combination; by due of the parties in interest, and not by both. There-by you, the citizens of a democratic-republican country, are enabled to know how cruel, relentless, and unscrupulous a thing is arbitrary power in the hands of a few. Regulation by combination means that the railroad managers are feudal lords, and that you are their serfs. It means that every car-load of grain, or other produce of your fields and shops, that passes over the New York Central shall pay heavy toll for right of transit to Vanderbilt, the robber baron of our modern feudalism, who dominates that way. Regulation by combination means that yon, the large manufacturer or shipper or consignee at this point, shall truckle to railway officials for special favors, and skulk and avoid the \” farmers\’ movement,\” when yon believe it to be right, for fear you will compromise your pecuniary interest. It means that you, the farmer, shall be compelled to sell your corn below the cost of production, or that the consumer of the Atlantic seaboard shall pay too much for his bread. It means despotism — paralyzing enterprise, rewarding subservience, suborning legislators, corrupting society, and trampling on the rights of the citizen.\”

However, the Wikipedia entry on \”robber baron\” sent me to a slightly earlier source, an August 1870 article in the Atlantic Monthly titled \”Hardhack on the Sensational in Literature and Life,\” which is also magically available on-line, where the author writes:

\”Now what is one of the most frightful characteristics of our present mode of doing business? Is it not the building up of great fortunes out of colossal robberies? And the thing is done by a series of sensational addresses to the cupidity of the cheated. High interest notoriously goes with low security; but we have, sir, in this country, a class of rogues who may be called the aristocracy of rascaldom, and who get rich by dazzling and astonishing others into the hope of getting rich. They are the contrivers of enterprises which propose to develop the wealth of the country, but which commonly turn out to be little more than schemes to transfer wealth already realized from the pockets of the honest into those of the knavish. They are the financial footpads who lure simple people into stock corners, and then proceed to plunder them. They make money so rapidly, so easily, and in such a splendid sensational way, that they corrupt more persons by their example than they ruin by their knaveries. As compared with common rogues, they appear like Alexander or Caesar as compared with common thieves and cutthroats. As their wealth increases, our moral indignation at their method of acquiring it diminishes, and at last they steal so much that we come to look on their fortunes as conquests rather than burglaries. Indeed, their operations on Change vie
with those of military commanders in the field, and are recorded with similar admiring minuteness of detail. They are the great sensations of the world of trade, and have, therefore, more influence on the imaginations of young men just starting in business than the dull chronicles of the great movements of legitimate commerce. Now, sir, take the universal American desire to get rich, and combine it with the rapid, rascally way of getting rich now in vogue, and you will find you are breeding up a race of trading sharks and wolves, which will eventually devour us all. Honesty will go altogether out of fashion, and respectability be associated with defect of intellect. Why, the old
robber barons of the Middle Ages, who plundered sword in hand and lance in rest, were more honest than this new aristocracy of swindling millionnaires. Do you object that I am getting into a passion? Why, sir, I have purchased dearly enough the right to rail. Didn\’t I put my modest competence into copper? And to recover my losses in copper, didn\’t I go madly into petroleum? And didn\’t the small sum which petroleum was considerate enough to leave me disappear in that last little turn in Erie?\”

What\’s interesting about this earlier quotation is that the reference to robber barons is still referring to the usage in the Middle Ages–and comparing them to \”swindling millionaires\” proffering get-rich schemes. At least judging by this example, the \”robber baron\” terminology was being compared with the businessmen of the time, but it wasn\’t yet being applied to monopolists.

I haven\’t tried to make a study of this, but the terminology of \”The Robber Barons\” was surely well-entrenched by the time Matthew Josephson wrote his 1934 book by that title, looking back at the second half of the 19th century. But the term didn\’t seem equally applicable to, say, Henry Ford or Thomas Watson as it did to Cornelius Vanderbilt and J.P. Morgan. I don\’t think I\’ve ever heard \”robber baron\” serious applied to, say, Bill Gates or Warren Buffett.

When thinking about the national economies of Latin America, I have a tendency to think of past problems and controversies: the hyperinflations and debt defaults of the 1980s; the arguments over whether and how to follow a \”Washington consensus\” of market-oriented reforms in the 1990s; and the history of being the highest-inequality region in the world. But as one looks back over the last 25 years, what stands out is not so much the country-by-country issues and problems, but the economic progress the region has made. Did you know that according to World Bank data, Brazil already ranked in 2012 as the 9th-largest economy in the world and Mexico as 10th, putting those two countries just ahead of Italy, Canada, and South Korea. Some progress is happening with regard to poverty and inequality in the region, too.

The World Bank has published a report called \”Social Gains in the Balance: A Fiscal Policy Challenge for Latin America & the Caribbean.\” To set the stage, here\’s the progress against poverty in the Latin American region in the last decade or so. The share of \”extreme poor,\” classified as those living on less than $2.50 per day, fell by half since 2000. The share of \”moderate poor\” living on $2.50 to $4 per day also fell sharply. The share of those \”vulnerable\” to falling back into poverty at $4 to $10 in consumption per day stayed about the same. But bit increase was the \”middle class,\” which refers to those living on between $10 and $50 per day. Indeed, of these four groups, the \”middle class\” is likely to become the largest in the next few years.

The World Bank has a simple measure of whether economic prosperity is being \”shared.\” It compares the growth rate of income for the bottom 40% of the income distribution to the overall average. That measure helps to explain why inequality in Latin America has declined since 2000–although that reduction in inequality has stagnated in the last few years.

The reduction in inequality and gains in shared opportunity are quite real. For example, here\’s a graph showing various measures of progress in Brazil.

The severe degree of inequality in Latin America over the decades has meant that it was underinvesting in the education and health of a large proportion of its population.

When you look up economic statistics about inequality, you often see it measured with a Gini coefficient. But where does the Gini coefficient come from, how is it calculated, and intuitively what does it mean? Here are some thoughts.