The other day I heard that Bidden might be proposing a 15% “flat income tax” as a solution to something. I am not quite sure what that would solve, but it got me to wondering about income taxes in general. We seem to have gotten to a situation where the poor pay 10% in Federal income tax, the “middle” pay something like around 50% and the top pay next to nothing (less than 1%). If you break it at 50% of the population, the top 50% pay 97% and the bottom 50% pay 3%. That sounds pretty dramatic, and it sounds like the “rich” are paying for everyone else – except that isn’t how it works. The top 50% also owns far more than 97% of the wealth, and makes more than 90% of the “income” (discussed below).

These numbers are based upon “taxable” income. Sorting out what should be taxable is the key question. If “income” means an increase in net worth, then the very rich do very will. For example, Warren Buffett (worth about $128B) who is of the richest folks pays about 0.02% of his annual increase in wealth in income taxes. He is one of the generous ones. That compares to something like 10% at the bottom and perhaps 40% in the middle.

The reason that the “income” is so much lower than the increase in worth is that most increases are increases in value, but don’t get turned into money very often. If you own a $500,000 home as you main asset, then you are “worth” $500,000. However, if home prices raise 5% a year, then the value of your assets incomes by $25,000 a year – which is not “realized” so there are no taxes against that “income”. If you are lucky and happen to own that land in a prime location, it is possible for the value to double without creating a tax liability until you sell it. At that point in time, the income will be considered capital gains, not “income” – with a tax rate of around 20%, unless you reinvest that money in a way that it stays “hidden” as an investment and not an income. Then there is no tax.

A thing with “rich” people (those who have more than they spend) is that they can choose what “income” that would like – and therefore they can choose how much tax they want to pay. You can just keep the money invested and it just keeps growing without taxes. However, sometimes the income grows in ways that become taxable income even though it is not turned into cash. An example is with using a house as a rental creating income. The part of the rent that exceeds the expenses becomes “income” and is therefore taxable. However, instead of just owning a house for this purposes you create a business (such as a corporation). In that case the corporation would owe any taxes (at a considerably smaller tax rate), but can also do things such as purchase other rental properties – and the “excess” income goes away in business expense – along with income tax. This is a never ending cycle of needing to keep investing in more and more to keep from having taxable income show up. At a certain point that gets overwhelming so you have to start giving it away, of course giving it away to charitable organizations that generate a tax deduction (“write off”). Sometimes you can even give away stuff (perhaps art to an art museum) where you can take a deduction for the value, rather than the initial cost. If you are careful with your purchases you can buy low, give away high and make enough in the tax benefits to avoid paying any taxes – it is not really a donation, it is just another way to make money.

Considering things closer to home. Perhaps a person decides to buy a restaurant to make a living. They have a lot of business expenses such as rent, or a mortgage on the building, all of the equipment and furniture, utilities, labor, etc. Clearly all of those things are not “income”, in fact they are expenses. This person has a gross income based upon their sales receipts, but their net taxable income has very little to do with that number, the part that they can live off of is the difference. It seems reasonable for that difference to be the taxable part. However, if successful this same business starts to be worth much more than the initial value – but that extra part doesn’t get taxed until it is “realized”. It becomes an interesting exercise to determine which part of the money flow is “business expense” and which part is personal income. There are lots of rules about this, generally the smaller the business the easier it is for the IRS to figure out that you didn’t pay tax on the portion of the company car that you used for personal transportation. However, at a certain point the business expenses so overwhelm the personal spending that the “income tax” becomes negligible. That is what results in folks like Warren Buffet from paying any reasonable amount of income tax, he can only personally consume so much stuff – and that is all that he takes out of the business (which is his choice – it is not some sort of natural thing). So income tax becomes trivial. What about corporate taxes?

Corporate taxes are similar in that they only occur when realized, and there are many, many “incentives” that give huge tax breaks when they do become realized. The only reason that they would become realized is to allow the business to get into an entirely different line of business – in which case the new costs aren’t counted as on-going business expenses. One interesting thing in California is known as the “Prop 13” freeze on property tax. The deal is that property taxes are fixed (almost) at what they were when the property was purchased. That means that it increases to the new value when sold, but remains at the low rate compared to the actual value until that time. This is not a big deal with residential property because that “turns” on average about every 3.5 years – resulting in property taxes lagging inflation slightly, but not significantly. However, at the very last minutes (literally) before being voted into law the wording was changed to include business property. The thing with business property is that it seldom gets sold (because that would cause the value to be realized and therefore taxed). Since the property doesn’t get sold, the property tax remains frozen at very low rates relative to inflation. This in turn results in services, such as schools, that depend upon local property taxes go broke. That keeps teacher’s salaries extremely low, driving teachers out of the field. There are many bad results of this law, which was initially passed because people on fixed incomes were losing their homes because of property taxes that tracked the “appraised” value of their homes. The cure was a sensible one of giving them a break during their lives. But the cure brought a very negative impact by stopping the flow of business money to support local services.

So what it the solution? A flat rate won’t help unless it comes with a change in the definition of “income”. As long as people with a lot of money don’t have any income because it is all either eaten up as business expense, or “hidden” in unrealized gains, then they won’t have to pay a flat tax either. A flat tax will increase the taxes on the low income folks from 10% to 15%, won’t do anything for the upper income folks, but might help the middle income people (with their extra money coming from the low income folks). The solution isn’t in adjusting the nominal tax rates, it is in adjusting what gets taxed. What are normally called “loop holes”. It seems like the solution is in taxing based upon value – but even that is a bit questionable since much of what is owned is not actually “owned” it is borrowed. If I “own” a $500,000 home, the reality is that I probably only own $100,000 and owe $400,000. However, I am getting the use of the other $400,000. Would the bank then have to pay taxes on the part that they own? That would cause mortgage rates to skyrocket – forcing huge numbers of people to lose their homes. How about the increase portion? So if the house increases in value by 5% a year, who pays for the tax on the $25,000? Is that the homeowner who really only owns 20% of the property, or the bank? By the way, allowing taxes to follow property values like that puts us right back into the problems that created Prop 13 in the first place.

I don’t have an answer to this, and it appears that I am not alone. What is value? What is income? How do you pay for unrealized increases in value? For example, lets say that your retirement nest-egg is a $5,000,000 investment in securities (stocks and bonds). This should be able to generate about $125,000 a year in increased value at today’s rates (leaving enough in the fund to increase as inflation increases). After income taxes on the part that distributed results in an after tax income of around $70,000/yr. Enough for a nice retirement for most folks. But it also means that you were leaving $125,000 in the fund to grow – as unrealized income. This means that $125,000 of “income” (increase in worth) was tax free. Actually, even the initial tax was smaller than for someone that works for their money because comes out as capital gains (taxed at 20%) instead of regular income (taxed at 45%). All of a sudden your reasonable retirement nest egg that you saved and fought for during your working life puts you into the category of the “rich that abuse taxes”. You are now only paying 10% on your income – income that you did nothing to earn but buy some paper that you never even get to see. You are now paying less (as a percentage) than the poor kid selling hamburgers down the street.

I am currently reading a book that keeps stopping me in my tracks and causes me to ponder, wonder and imagine another way. The book is called “Braiding Sweetgrass, Indigenous Wisdom, Scientific Knowledge, and the Teachings of Plants” by Robin Wall Kimmerer. I am just beginning what promises to be an interesting adventure in reading and have already found that it is making me want to add some thoughts to my blog.

One of the first chapters is called “The Gift of Strawberries”, it talks about the gift that the wild strawberries in her childhood gave her and her relatives. Actually, it is about the idea of an economy based on the idea/culture of gifting rather than selling and purchasing that is the market economy we all live in these days. An example of how this works is that in the traditional native American ways, sweetgrass braids can’t be bought or sold – they can be gathered, braided and given; and they can be accepted as gifts but not “sold” because they don’t actually “belong” to anyone. Wild strawberries are the same, the earth gives strawberries, people pick them for food and/or gifts but nobody “owns” them. Of course there are some people that sell sweetgrass braids, and many that sell strawberries – but those transactions are examples of the market economy, not the native American ways. As Kimmerer says; “In material fact, Strawberries belong only to themselves. The exchange relationships we choose determine whether we share them as a common gift or sell them as a private commodity.” In other words, they begin in “the commons” but if they are turned into a private commodity there are no longer any effective social restraints upon there use or abuse.

There is an odd thing that happens in a gifting economy. For one, you tend to not accept gifts that are too large – it is unseemly to do so, and the burden of reciprocity becomes too great. Once you accept a gift you are no longer “free and clear” – the act of gifting creates ongoing relationships and responsibilities. Therefore, people tend to just accept what they actually need. Anything beyond that goes to someone else. However, in a market economy there are no such inherent limitations. The concept of “ownership” allows for an unlimited exchange (you are free to purchase as much as you can afford), and no reciprocity or responsibility is created – once the transaction is done the exchange is completed. This is very unlike what happens in a gifting economy.

At first I thought that she was describing some sort of Socialism, but as I think about it that is not the case. Socialism implies an organized government to work out the negotiations and trades – but it is still based upon the idea of ownership and a market. Gifting doesn’t have those ties – they are something much closer to our hearts, and much closer to sharing than buying/selling.

Kimmerer acknowledges that we can no longer survive as hunter-gatherers – but asks a question that stopped me in my tracks. She asks if perhaps, even in a market economy, we can behave “as if” the living world were a gift? She describes the market in a small town in the Andes where she lived for a time doing ecological research. I have seen such markets in many places around the world, markets that are full of vendors, produce, goods of all kinds – they appear to be the paradigm of a market based economy – but it isn’t. The vendors are all friends, neighbors, relatives and while money is exchanged, or goods are bartered, there is something else that is important but that has been lost. There is a balance in the “primitive” markets – everyone understands that what is being shared is of themselves and that the real “gift” of their merchandise is a gift from nature.

I was taken by a her statement that, “When all the world is a commodity, how poor we grow. When all the world is a gift in motion, how wealthy we become.” The question that comes to mind is how can we maintain the connections inherent in gifts, while operating with a market based economy that is necessary for our survival in today’s situation? I am asking myself if I treat my work and my efforts are as “gifts” – or are they commodities to be sold and traded to the highest bidder? I think my work has always had a very strong “gift” aspect to it, which is why I try to provide the very best “product” that I can, while minimizing the resources used to achieve that, and by keeping my prices as low as feasible while supporting my employees and family. I hadn’t really thought about it, but there is something of the feeling of “gifting” when I work for others. I think most of us (at least the lucky ones) have that sort of feeling about their business world. However, clearly there are a great many people that do not based decisions upon such insubstantial considerations.

Today we are in the middle of the first full blown three day weekend of the pandemic. There have been some small scale tests in the past each of which resulted in large spikes of infections. This time we are testing the effectiveness of the vaccination program on a rather large scale. Watching the news showing packed freeways, airplanes and beaches is rather terrorizing for me. Clearly there is a very big urge for a great many people to once again test their idea that we are finally over the danger of the virus. The ideas of masking, social distancing, and sanitation have clearly gone out the window. In fact, it appears as if people are getting much closer and more tightly packed groups than prior to the pandemic. That is a great thing, the test would not be definitive if they sort of half-hardheartedly kept some of the protocols in place – we wouldn’t know if the test was testing those looser protocols, or if we really are getting beyond the danger.

Now that the initial part of the test have been completed with a great deal of across-country mixing, and a lot of up-close and personal social contact among strangers it is now time for the “rise” stage of the fermentation. We have three weeks to watch and see the shape and size of the new spike that is sure to come. If it is just a minor bump that is easily absorbed by the heath care system it might be a good indicator that we are finally past the worst of it. I think we now have as many “high risk” folks vaccinated as are going to be vaccinated. There are still many in that group who have refused, but as long as they don’t overwhelm the health care system they aren’t important. They will either die or not, as they have so clearly expressed – that is their choice. Perhaps the necessary improvements have been made in the health care system to effectively treat the remainder of the population. We’ll find out about this in a month or so.

So I would like to thank those dedicated risk takers who are so willing to participate in this large test. Without you the rest of us would have a difficult time judging where we stand in the pandemic and the risks that we are all still facing. It is interesting that globally there are a few other large scale tests underway that indicate continued high risks. Currently the ones most in the news are Brazil, India and Japan. They are proven that the virus is still widespread and extremely active. Brazil is an example of a country that just didn’t believe the science so pretty much ignored the protocols. India seems to believe in the science but has been economically and politically unable, or unwilling, to put the necessary precautions in place. I find that Japan is an interesting exception because they were so proud that they immediately accepted the problem, took extreme measures at following the initial protocols and had extremely low infection rates for most of the year of the pandemic. Now Japan is spiking and apparently having an extremely difficult time of it. I don’t understand what happened to change their risk profile so profoundly at this late date.

While it is not particularly “fun” to be in the middle of a giant science experiment, such as is happening this weekend, it is certainly interesting from many points of view.

Rags to Riches

Whilst sitting in my hot tub watching the stars early this morning my thoughts turned to multi-billionaires. During the period of covid lockdown my neighbor and I have been trading books about rich, powerful Americans that appear to be doing rather horrible things to our society and often to the economy as well. Examples of folks that have come into our consideration are Richard Sackler of Purdue Pharma that got rich from selling oxycontin and Charles Koch who leveraged a failing oil refinery into a fortune. Other current “rags to riches” stories include Donald Trump, Bill Gates and others. You are free to add your own list of rags to riches examples. People that fit into this mold are a few of the huge farmers in California’s Central Valley and others that how outsized influence due to accumulating vast fortunes from virtual monopolies. There are some interesting things that characterize these folks. All of them started from modest beginnings (some a lot more modest than others), all of them leveraged a good idea (or lucky situation) into something akin to a monopoly, and all of them eventually seem to become convinced that they have “something special” giving them permission to think and act as kings or emperors.

I wonder how this happened. How did these few people acquire such vast fortunes, and the power the power that comes with it? How does that happen? Is it good or bad for the Country, the world or any part of society? If it is a bad thing, can we, or should we, do something to prevent it from occurring? These are the types of questions that come to my mind while “daydreaming” at 4:30am in the rural “wilds” of the Sacramento Valley.

I don’t think that the people who find themselves in the position of being exceedingly rich and powerful have any special “magical” attributes that somehow preordain their rise to wealth and power. I think they are generally just “normal” folks (perhaps very smart normal folks – but more like the top 5% of smart (IQ above 125). The certainly aren’t 170+ IQ super geniuses. There are a LOT of people in their intelligence category – but only a vanishingly small number of us end up being billionaires. In general, it appears that they are pretty “normal” folks that had a good break and then continued to add fuel to the fire, leveraging that good break to finally create situations that are close to being monopolies creating things that people either desperately need, or think they need. Basically, they all create what might be described as an addiction to something that they have a near monopoly on. Oil to fuel motors is one, computers to fuel whatever all of the computers do, social media to fuel our need to be seen and heard, actual narcotics to fuel our addition to narcotics, and “Cuties” to fuel our love for cute little citrus fruits. None of these things were needed before someone “created” a need for them. Someone had an idea that would “stick”, blew fire into the smoldering kindling, and then kept feeding the fire until it turned into a conflagration. They did this in a way that was fast enough, and protected enough by patents, to for them to end up being showered in wealth. These kinds of “beginnings” start all of the time (I would guess many millions of times a year), but only now and then do things come together in ways that allow the fire to explode – I think it is much more a random event than anything else. The very rich people that followed the path from rags to riches found themselves to be riding a perfect wave, they didn’t make the wave but once it was there they got on and held tight.

A little story from my early years might illustrate a bit of this. I was a struggling building contractor, just barely getting along on the meager income I could get from doing one-at-a-time custom jobs for “normal” homeowners, not the rich that can afford to pay for excellent work. In order to make this work I became a part of a small group of like minded friends that shared work and opportunities. This group was made up of a bunch of independent entrepreneurial tradespeople (plumbers, carpenters, painters, drywall folks, dirt movers, roofers, etc). We all belonged to an informal group that shared work because none of us could do everything.

One winter when work was slow because of the weather a bunch of us decided to take an adventure trip to the Mohave Desert in Southern California. I had being going to a very special, very remote, place with my family for many years and I wanted to share the beauty of the desert with my friends from Northwest California that grew up in a world of rain, fog and cold rather than dry, sunny and hot. This turned into far more of an adventure than I had anticipated, but I will leave most of that to another time (perhaps). I want to talk about our first night’s campfire.

I guided our little group to a camping spot that I had used many times in the past. It was located on the edge of some rolling hills to the north, and a vast almost flat alluvial plane stretching off for many miles to the south. This is in the heart of the extremely dry, sparsely vegetated Mohave Desert populated by rattlesnakes, scorpions, desert tortoises, bob cats, coyotes and big horned sheep. (Actually, while it appears almost barren this is a place that is alive with many animals and plants that become very obvious because they stand out in the land of dirt and rocks. When there is an animal there you tend to see it.

As usual, I started to make a little campfire to heat water for coffee and just to create a cheery place for us to gather around and chat about our day and our plans for the next day. However, a friend of mine asked to be the “fire keeper.” He started making a small little fire in the middle of the 2 foot diameter ring of stones my family assembled years ago to contain a small fire and hold a grate to put pots and pans on for cooking. He then went into the desert to gather more firewood for the evening’s fire. As you can probably imagine, that is a bit of a task because there just isn’t much out there in the way of firewood. He brought back some nice, small dead limbs that he found in a nearby dry creek. I settled down to relax, and he went back to get more. He brought another armload and put it on the fire – making the fire too big for the stone ring but still nice and cheery – too big to make s’mores but fine for talking. Then he went to get more firewood, and threw it on the pile. Now the fire was getting pretty big so we all had to move our chairs back to avoid the heat, putting us too far apart to be able to talk easily. Once more my friend vanished and returned with roots of some pretty big plants that he had uprooted to throw onto the fire. By now it had grown from a camp fire to a bonfire. He was unstoppable! Every time the fire got bigger he had an urge to make it even bigger – until he had gathered up all of the loose firewood from a very large area (perhaps a mile in diameter) and had uprooted the bushes and small trees that he could work loose from the ground. By mid-night we were all standing very far back from the roaring fire, and thank God my friend finally wore down (having partaken with a little of the whisky prior to each of his sojourns). By morning the fire had burned down to a pile of smoldering ash, and we no longer had a source of easily obtainable firewood. My guess is that there was no firewood in that area for many years after that – things grow pretty slowly in the desert. We then had to drive to find additional firewood.

He couldn’t seem to help himself. The fire was there, firewood was there, and if you put more on the fire got bigger. It didn’t take very long before he stopped worrying about where the wood was coming from, or what that was doing to the local area then and into the future. Actually, I don’t think he ever bothered with thinking about any of that in the first place. He didn’t even think about what he was setting out to do, which was to make a nice fire to heat coffee and draw in some friendly conversations with his friends. Instead, he went solo into the desert and just kept getting more and more and more until there wasn’t any more to get, and he had run out his ability to continue.

Is this what those ultra-rich “rags to riches” folks do? Is this the same kind of obsession that they get trapped in? And then they get power, get fame, get control. How very “sexy” and thrilling it must be. Unfortunately they also come to believe all of the lies about how wonderful they are, how smart they are, how sexy and viral they are, and they believe that they must have special powers to have succeeded in such a spectacular way. We just have to look at the Sacklers, Kochs, Trumps, and others to see how this infects their minds.

This brings me to the question of: “should we allow this sort of thing to happen?” Perhaps we should find a way for lucky, smart, energetic entrepreneurs to succeed and get very rich – but not “too” rich. Of course I have no idea where the boundary might be between “rich enough” and “too rich”. The idea of tractor pulls comes to mind. For those that are not familiar with this “sport” the game is to pull a heavy sled with some kind of machine (originally a tractor). The sled is rigged up so that it slides easily at first, but the resistance to being pulled by the tractor increases the further it goes, eventually getting so hard to pull that the tractor stops in its tracks. The winner is the one that pulls the sled the furthest. I am thinking of this kind of an idea to allow folks to compete, but not to just run off with the game. Of course, as with most sports of this kind, there is an ever increasing desire to make the tractors even bigger and stronger, requiring bigger and stronger sleds – on into the night. But even with the biggest and the strongest, the sleds are all designed to eventually stop the tractor.

Maybe we need something similar in our economy. Taxes are one way to make the “sled” get harder and harder to pull. Right now we are in a situation where the rich have gotten so much power that they have modified the rules so that the weight of the sled behind their tractors gets smaller as they go along – once you pass a certain threshold taxes decrease rapidly the more their income is. Eventually not only do taxes decrease to zero (or nearly so), but huge “incentives” start going their way so that the government gives them lots of money to make more money. As demonstrated by the Sacklers, it gets to the point that donating money and things to charity, foundations, and museums becomes a very lucrative profit center. All of those great sounding donations aren’t being generous, they are the best way that they have for making high profits (and honor) with that part of their wealth. The fact that those profits come by way of money from the rest of the us taxpayers is not important.

A couple of days ago I received an interesting email from a young (27 years old) woman friend of mine. She mentioned that one of her “projects” during the last year or so was to loosen the bonds of thinking about herself as a young woman, instead learning to think of herself as a human. Her description was, “Recently, I’ve been trying to broaden some of the pre-programmed biases I have about gender roles. Over the last year, I’ve begun slowly to non-identify with my gender. I notice if I just think of myself as “human,” then I have more space in my mind for what kinds of things I allow myself to do, think, how I express myself, etc. I think I’m just trying to not box myself in with labels generally. Just because I’m 27 doesn’t mean I’m “too old” or “too young” for doing certain things. I’m allowed to be a joyous, awe struck playful kid engaged in life when I want to be. I’m also allowed to have a butt-load of wisdom even though I am considered “young.” I don’t need to box myself in to fit a preconceived idea I or others have about what I “should” be doing and behaving. Its a process, of course to slowly question and then unplug from the matrix of my own labels and boxes. But it’s been a fun project.”

Reading her words caused me to stop and think about how I think of myself. Do I mostly identify as “a man?” How much do I adjust myself to align with what a 74 year old man should be like, act like and think like? The gender idea is a bit tricky – it is hard to not box myself in to the role. After all, I am a big, imposing male and have been that way since adolescence. I have a history of doing extremely physical “manly” work, full of strength and vitality. That is not so much what I do now that I am moving into the “golden years” – but it is still how I think of myself. I suppose this is visualizing myself in a masculine wrapper. However, I don’t really think of myself as male or female, I just think of myself as a person. It happens that I am big, strong, with a beard and deep voice – but those aren’t “me”, they are just descriptions of the package. However, as I think back to my 20s I think perhaps I was much more concerned with fitting “the model.” That said, even back at that age I was pretty consistently “marching to my own drummer” – that was something that my family promoted as a good thing. Being a bit eccentric was always acceptable to them (not so much to many of my school mates).

Well, I have now completed my 74th trip around the sun. I find this to be a rather amazing thing. When I was young I was certain that I would die at the age of 50. That might have actually happened if it hadn’t been that modern medicine was there to take care of my failed gall bladder. However, luck was with me and I have been able to enjoy a whole bunch of “bonus” years. Not only that, but I am still doing good – a little stiff and sore, my balance is no longer trustworthy, and my memory seems to do a lot of things on its own. Overall I think I can now be described as “spry” – that terms seems to be reserved for those of a more advanced year (“elderly”). I certainly don’t feel elderly, nor do I feel “spry” – in fact, I feel like I did at 30 (until I actually attempt to do what I am thinking I can do).

Time is really flying by these days. It used to go by pretty fast, but now that they numbers of years left are much less than the number of years before time has definitely compressed. They days don’t seem to go so much faster, or feel much shorter – but the months and the years are certainly compressed. Perhaps this is related to my wandering memory. I find that I am more often wondering just what is going to finally fell me, and when is that going to happen. Not so much worried about when it will happen (curious of course), but worrying about the bigger question of what will lead up to that moment. Will it be quick, or will it be drawn out and painful?

Anyway, here is another year on its way and I am feeling amazingly well. I feel fit (sort of), happy (most of the time), and looking forward to good things to come. Thank you for all of you that have wished me well.

Now that the weather has changed, and the CDC has issued what I consider to be extremely confusing and dangerous changes to the masking and social distancing requirements. It is clear that what was intended to be a rather narrow change has turned into something much larger. I don’t know if it is because of this change in “requirements” or just the time of year, but I have noticed an huge spike in the number of folks that I know who are traveling around the country (and around the world). It seems that almost everyone I talk to is heading off on trip, vacation or retreat – or having friends/family come for an extended visit. They are traveling by plane and automobile, but excited about getting to someplace else.

I assume that my friends are not unusual, I suspect this is happening across the country. It looks to me that we are entering a period of “churning”, traveling and mixing up the population of the country, all at a time when the pandemic is very much alive and well, and people are stopping paying attention to any of the safety protocols from the past year. What could possibly go wrong with a thing like this? It feels like a time of extreme danger to me, but clearly it feels like the danger has passed to most people. I sure hope they are correct.