Tuesday, April 01, 2008

Feces Wrapped Up As Wisdom

My step-daughter was gushing about a book when I last spoke with her. We were discussing her upcoming graduation from the University of Houston with a degree in Marketing. Because she was unsure about what she wanted to do next, I suggested some books that ideally she ought to have read before choosing her major, but she came back with two books she was very impressed with, books she said had opened her eyes on how to arrange venture capital for her business ideas. The one she gushed on the most about, was “Rich Dad, Poor Dad” by Richard Kiyosaki and Sharon Lechter. The book boasts of it’s time as a “#1 Best Seller”, which apparently is the closest it ever came to establishing any sort of credentials. The cover reminded me of one of those vapid romance novels, and I was right – once I started reading the thing, it became very obvious that Mr. Kiyosaki is very enamoured of himself. The book is a poor primer on finance, but it does produce a strong chronicle of mercenary narcissism. I have since come to understand that Mr. Kiyosaki, hmm, embellished his biographical accounts with “fictionalized” citations in order to “educate” his readers. Kind of like Hillary’s mythical account of her trip to Bosnia, a lie and a stupid one. In Kiyosaki’s case, however, it seems there were many lies, repeated and underscored, and the man seems to care nothing for the truth – not a good quality at all in a financial advisor. It seems that writing a series of books (18 so far) for gullible readers who don’t think things through to any degree, is the path Mr. Kiyosaki chose for his financial success. Caveat Emptor and so on.

The reason I wrote about Mr. Kiyosaki’s Lies-For-Luxury, is because there is a lot of that out there. I mentioned Hillary’s pack-o-fibs from her failed attempt at establishing foreign policy credentials, there’s Obama’s ‘nothing unusual’ association for more than two decades with an anti-American racist, and of course there’s McCain’s war record, both for his steadfast love of his country and comrades in Vietnam, and his stubborn determination to cut off Free Speech in McCain-Feingold, and his expeditious attack against letting Judicial nominees be guaranteed an up-or-down vote on the Senate floor. But what’s worse, is these largely self-infatuated politicians running for President are largely representative of the government we have today. You see, pretty much all of the problems Americans are worried about come into three classes:

1. Things the Government can address effectively
2. Things the Government cannot address, but individuals can
3. Things beyond human control

I won’t go into an exhaustive review here, but it should be obvious that the first class is the smallest group. And what’s strange, of those things that the government can address, very very few of them are the duty or within the scope of the President of the United States. Yet all the speeches from the candidates promise things that either would be addressed by Congress, or by the state or local governments, or else cannot be fixed by government at all. And speaking of non-federal government, don’t be too sure that your local government is going to be a big help. Here in Houston, for example, the District Attorney had to resign, in short because he was exposed as a conniving racist who saw nothing wrong with abusing his department’s budget and authority limits. The new candidates to replace him are all talking the shiny new ideal of accountability, none of them noting that such precautions were supposedly already in place. On a different level and in another place, it is both ironic and troubling that not even a week after the Governor of New York resigns because of in appropriate conduct, his replacement also admits that he had an extramarital affair, as well. Perhaps the most significant message from such stories, is that no one is really surprised anymore by them.

I have seen this all before, and I guess the bad news is that corruption and unaccountable government is common, indeed endemic throughout the world, even here in the United States. There is some good news, in the fact that for all its flaws the United States has a better system of government (even at the federal level) than most countries, and that government in the United States is more responsive now than it used to be, especially in the age of blogs and YouTube. But mostly, the good news is that for all its power and noise, the government is no substitute for the invidual’s ability to take care of his own affairs. Most Americans seem unaware that the Great Depression of the 1930s was not the first one in our history – the others were weathered largely through the strength and perseverence of ordinary people. That is not to say that government should not consider acting when and how it is able, but it is to say that a lot of the credit government takes for fixing a situation is actually due the individuals who put things back together on their own. In that light, recovery from Hurricane Katrina should be credited to the hard-working people along the Gulf Coast who rebuilt their lives on their own efforts, for example., rather than the self-praising mandarins of either FEMA or the local and state governments. And in that light, recovery from the sub-prime mortgage will basically happen because regular people work to fix the problem, from the market correcting rates and prices, to banks and financial firms taking steps to protect against unexpected volatility and debt. I am not na├»ve about human nature and the desire for people to hide risky ventures inside double-talk and new hybrid financial instruments – it really should have been obvious early on, that ‘Collateralized Debt Obligation’ was a sneak phrase for ‘Junk Bond with Makeup’. But the inevitable lawsuits over this problem will likely once again teach banks and finance companies that judges and juries are not impressed with anything that won’t pass the smell test. So on this point I disagree with President Bush; a radical overhaul of the Federal Reserve and the Securities and Exchange Commission will not improve consumer confidence or make the system run any better; when the problem is due to monkeys in the works, the answer is not to add more monkeys.

In conclusion, to all those people looking for a simple eay to get rich I will admit that there is one solid way to make money. There are many formulas and practices which can help build wealth, and there are any number of tactics applicable to help set financial goals, but the core principle is really very simple:

Spend less than you earn. Repeat until you are satisfied with the amount of money you have saved.

Sadly, that is a lesson no government ever seems willing to learn.

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