Money Musing

You may have noticed that the media is making a big deal about the economy. If so, you are probably aware that, as usual, the guys on TV are not well educated about how the economy works. I guess High School for the Visual Arts and Morally Impaired never got around to adding Economics to the curriculum. But the economy is not really that hard to understand, provided you have the right foundation of knowledge. And when you understand the economy in context, all the whining and moaning becomes not merely annoying, but the signature of the idiot.

Let’s start with Free Trade. The middle class American lives pretty darn well, all things considered. In fact, no one on the planet a century ago had it as good as ordinary folks do today. The reason, putting it bluntly, is free trade. You see, ever since the first merchant figured that it was ridiculous to expect every single person to individually provide everything he needed for himself, and that with a little organization and a decent chance to let folks make their own deals, everyone could benefit and live better. Shoes, for example. Ever try to make your own shoes? I remember we did something like that in Indian Guides, making our own moccasins which hurt our feet because they were too loose and gave no support or traction. Turns out training a person to make and repair shoes for everyone else worked out much better. Same thing for iron smithing; not everyone is able to make their own nails and horseshoes and so on, so it makes sense for one or two guys to do it for the whole village. And so on, everyone learning to do what they were the best at, for which service and product they were rewarded in trade. Yeah, that’s where money comes in, because when everyone already has enough chickens and cheese, barter doesn’t work out. Anyway, the word “trade” comes from that, people learning to do specialized work. And that, folks, is all Free Trade is trying to do – carry on that same very good idea to its natural extension. Different parts of the world have different resources of material and labor, and everyone benefits by producing what gives them the best advantages. Everyone knew that a while back, and it was kind of obvious – during Reagan’s years, Free Trade was West Germany and no Free Trade was East Germany, but we can still see it today, this time South Korea is Free Trade and North Korea is no Free Trade. Simple when you pay attention.

I sense the Free Trade haters are not done, though. One imagines the harangue that we are sending all our jobs away. Bollocks, that. For as long as I can remember, the classic definition of Full Employment has been an Unemployment rate of 5% or less. This is because there is always a certain amount or churn going on, the dynamics of technological development, new businesses coming in while other businesses close. And we have essentially enjoyed full employment conditions for more than a decade now. I’m not praising either President Bush or President Clinton too much on that count, because while I commend them for basically letting business work, they really did not do much else that made a difference in growth. I do think the tax cuts helped us recover more quickly from the 2001 recession, but in the main the principle for solving Unemployment is don’t do anything to impede companies creating jobs. Of course, the haters will return with the claim that the ‘new’ jobs are all lousy ones. That brings up an interesting thing a lot of workers would do well to consider; just as businesses have to review their parctices and the products they offer every so often, to make sure they are relevant and providing what the market wants, so too do workers need to watch what happens in the working world. The guys who made horse and buggy equipment had to adapt to a changing world, same for retail distribution, manufacturing, you name it. Today’s business environment is faster, far more efficient, yet also safer and cleaner ecologically than ever before. One reason why the ecology special interest groups go on about carbon dioxide so much, is because for the most part American businesses have addressed every serious contaminant and pollutant; while individual companies break the law, it is hardly the pervasive industry problem it was 50 years ago. So yes, the modern worker not only has to have a college degree where half a century ago a high school diploma was acceptable, he had also plan on continuing his education throughout his career, with industry-specific certification and effectiveness programs. But if he does that, he will continue to see his life grow in comfort and security. The middle class world I knew as a kid was one where most folks had black-and-white TVs, one car, and no real luxuries. Today, even people we call “poor” live better than that. I don’t pretend it’s easy, but the business world rewards people who improve themselves, and not those who make excuses.

No matter what anyone tells you, there is no sure way to get rich quick. There is, however, a pretty fool-proof way to get rich over time. Do the best job you can for your employer, because even if your boss is a jerk, people tend to be aware of how someone works. Always keep an eye out for how you can improve your position, but only within ethical bounds and with respect for the company (it’s a small world, and people who step on others to get ahead are more and more getting caught). Enjoy your wages, but save at least 15% of it, more if you can. Stocks pay a higher return than CDs or bonds, but if you go that way you have to accept some risk, which is not dangerous as long as you always do your homework and know the company in which you invest. Buy what you need, not all of what you want, and plan financial goals.

People with common sense have probably shrugged by now – all of this should be obvious. I am writing partly just to vent, but also because somehow obvious truths get drowned out by Gorish malcontents, so repeating the obvious seems to be a necessary civic duty.

Writing Your Ticket

The Houston Chronicle had an article yesterday about an area high school student who was suing the University of Texas because they use race as a factor in their admissions processes.

The case may not be that strong, since the girl’s SAT scores were not particularly impressive. But what struck me as interesting, was that the story noted that she had been accepted at Baylor and Lousiana State Universities, both of them fine institutions with very good reputations. More than a few of readers commenting on the story, asked why the girl did not simply go where she had already been accepted? That question spurred this article.

Those who know me, know that I am pursuing my Master of Business Administration at the University of Houston at Victoria. I chose UHV for a number of reasons, including its AACSB accreditation, its low tuition, and the availability of online classes. I chose UHV over many other schools, schools which are worth consideration in their own right but who could not meet my needs the way UHV serves. I wonder how many people are aware of the significance of their school choice?

We live in an amazing age, not least because many of the old assumptions and stereotypes have been lifted from hindering individuals. So it is, that a 47-year-old like myself with a Bachelor’s degree in English Literature can rebuild himself as an accountant, on the strength of his resume and the acquired academic credentials. OK, sure, so I spent two decades doing accounting work so my resume wil lactually be applicable, but my point is that in the modern age, I can correct the mistake of a liberal arts degree by earning my MBA with a concentration in Accounting.

What I am saying by that, is that information is more important than ever, and we have actually passed from the Information Age to the age of Knowledge Management. Someone with the right education can effectively write their own ticket, certainly in comparison to folks who just ride along and hope things will bounce their way. But there’s more to it, than just getting a college education, or even an advanced degree. My wife’s sister earned a Master’s degree, but beyond hanging the diploma she has done nothing with it. The short answer there, is that she never considered why she was earning that Master’s degree, and so she had no plan for how it would help her achieve anything of substance. This happens a lot, though – a lot of students seem to just go from high school to college as if it were just grades 13 through 16, with everything planned out and the same for everyone. As a result, there is no greater plan in place, no strategy to use the degree as a tool for personal and career advancement. It does not help that we live in a world where success in business is wrongly considered a moral failing, that a man or woman who is financially successful must somehow be a bad person, unless of course they demonstrate the appropriate political opinions. The thing is, the old maxim started with the Bible verse that the love of money was evil, not the money itself. Many people who do not have money, are every bit as greedy and selfish as any miser from fairy tales and novels.

Anyway, if a person knows what they want to do, the proper degree from the right school can make a real difference in their chance at success. And by ‘the right school’, I actually do not mean those schools with huge reputations and equally huge tuitions. While some schools can help a student get an interview with a large corporation, and maybe a tiebreaker in some early hiring decisions, what I am talking about are the skills and tools a student can use to make their career something special, and the selection of the school which best suits the student’s needs and opportunities. In my case, for example, I am 47 years old, with 24 years of work experience. That means that a big-name school will do less for me than it will for some 22-year-old with no work experience; my resume works both for and against me. Also, with my work well-documented, I do not need a school name so much as I just need to certify my credentials. An MBA from UHV is as useful to me as one from UT or HBU. The AACSB accreditation, along with my learned skills, means that I will be significantly more formidable in my next career move, even if it is to remain with my present employer. The Accounting concentration matters because of my work experience, my personality, and the type of work I am most likely to find available. That’s not going to be the case for everyone, but it amazes me to see how – even among my UHV classmates – how few of them are aware of their own skill set and career preferences, and so how few of them are really ready for what they will do once they have their MBA in hand.

Doctor Kissinger Is Wrong Again

When I was growing up, I was taught to respect the assumed intellect and genius of Henry Kissinger. It was only later that I began to see his limits and failings as a strategist. Granted, all humans make mistakes and we all have limits, and frankly the difference between a wise man and a foolish one, often comes down to the wise man knowing his limits. Which reminds me, I don’t see any evidence that Dr. Kissinger ever admitted making mistakes or failing as a strategist.

So anyway, time passes and Dr. Kissinger has decided to opine again on National Security. Considering his record on Vietnam and Détente, I am hardly surprised that he chose to lay low for so long, but here he is again, with a short article on what Dr. Kissinger calls “the three revolutions”. As always, Dr. Kissinger’s work reflects a sharp mind but also poor assumptions. He starts his article by claiming there are three simultaneous “revolutions” going on; Europe’s transformation into a single continental union, the Islamist international Jihad, and the “drift of the center of international affairs from the Atlantic to the Pacific and Indian Oceans”. Ahem. The British have an apt phrasing for such hyperbole. The inane notion is dismissed as ‘balderdash’ and the person selling it is a ‘wanker’. While Dr. Kissinger may be offended by being dismissed in such a vulgar fashion, to my mind it is difficult enough getting folks to understand what is going on, without playing up the muddle of pretentious rhetoric and pompous egotism in its analysis. That is, these are not ‘revolutions’ at all, they are not even new in the way things go, and Dr. Kissinger’s assumptions are once again wrong and dangerous.

Before I go into those false assumptions, I would also like to comment on Dr. Kissinger’s observation that Americans are much more willing to sacrifice for a cause than Western Europeans. While this is true, Dr. Kissinger seems to believe this is something new, an error my father and grandfather could have corrected immediately. My father understood before the United States entered World War 2, that we would have to go in and win the damn thing, because while Europeans could be counted on to look after their own self-interests, only the British had a history of taking on the tough fights when it was someone else in danger. My grandfather would have said the same thing, noting that in World War 1 a major part of the conflict was both sides hoping to sway the United States. Even 90 years ago, the world knew that whatever side the United States was on, would win, and that the United States was the one nation which would help someone else for no reason beyond their conviction that it was right and necessary. Dr. Kissinger’s belief that this is some new trait, is well off the mark.

These sorts of errors also show in the “revolutions” Dr. Kissinger wants to sell in his article. You see, a revolution is not just some new event or behavior, but a substantial and radical shift in beliefs and culture. The American Revolution changed the world from monarchy to representative government, beginning in the American colonies. The Industrial Revolution changed how we live, work, and dream. While the conflicts are important, the changes in Europe are not revolutionary, but evolving commercial agreements. The Islamic Jihad is simply a new cycle of the same cult which provoked the Crusades and inspired piracy in the Mediterranean Sea for centuries. And the interest in the Pacific region is not new at all; trade with Asia was a priority at least as far back as Marco Polo, and the importance of democratizing the region goes at least as far back as the Spanish-American War. The situation is simply not what Dr. Kissinger claims.

Why is this important, and why is it relevant to the present condition? Because most people have a poor grasp of History these days, not only in the United States but around the globe. Europe has forgotten why Pontiers matters. They have forgotten why the Congress of Vienna was important. They have forgotten why the Council of Europe was formed after World War Two. So, the lessons will come slower and harder for Europe than they need to be, but History reminds us that Europe will learn what it knew before.

As for the Islamists, the threat is very real, but events do not occur in a vacuum. The modern Islamists lack the military power of the first Jihads, and they lack the moral force needed to sway opinion. It may be too much to hope for a Muslim version of the Reformation, but the movement can be stopped by a determined opposition, even in a unilateral action such as Dr. Kissinger disdains, should that defense be by a competent and motivated alliance or nation, such as already fight in Iraq and Afghanistan. Dr. Kissinger himself admitted that no serious President of the United States would even contemplate abandoning Iraq or Afghanistan to the whims of the region’s aggressive powers. But he failed to properly count the historical record in addressing how the present Jihad’s mistakes and limits make it a serious threat, but not an unstoppable one.

As for the Pacific and Indian oceans and their influence, Dr. Kissinger seems unaware that population and GDP growth in the Asian continent and Indian subcontinent are by no means new, much less revolutionary, nor does simple catch-up through industrial progress mean that either region is poised to claim economic dominance, much less secure ownership of global influence beyond the scale of existing powers. Part of this is the continual liberal blunder of discounting military power (just as conservatives tend to overstate military power as an influence-builder), and the rather foolish presumption that recent history is the best indicator of long-range future developments. I do not mean to pretend that China, India, and the Pacific Rim will not play important roles in the 21st Century, but it seems strange to me how little Dr. Kissinger seems to have thought of their 20th Century history. To put it another way, China had a revolution which changed its government, but it is not a world revolution, nor should any one of the considered nations be judged without consideration of relevant events and actions with and by other nations, and of the known historical progression up to this point.

Dr. Kissinger asks what sort of goals can America “realistically” set for itself in the century to come, demonstrating his greatest failure. After all these years, Dr. Kissinger still does not understand that the United States does not set just ‘realistic’ goals, but unrealistic goals. Like a world where kings do not own serfs, a world where all people are free to live and work with the same rights as other people, a world where tyranny is disarmed and toppled from power, and one nation will change the world to establish Justice, even if it starts on its own to do so. After all these years, Dr. Kissinger still does not understand America, or her people.