Just Like That

And just like that, August this year draws to an end. It is not quite the drawing-down of blinds that Owen wrote about. But it certainly feels that a drawing-down of funds, a slowly grimacing end to the high days of summer, is not far away.

August marks the end of my financial year, and its beginning. Yes, it's an unusual time to be doing such things, but if you think about it, why should you operate to the convenience of others when you don't have any dealings with them anyway?

So I watch the unusually early cold chills in a month predicted to be the hottest on record, and I think about the global future. This is the Indian Winter, before Surtur wins in the end.

Poor

For a while now, I've known that my personal income is below the national median income. That is, more than half the population that is earning anything is getting more than I am. But I have also realised something else. I'm comfortable with it.

By comfortable, I don't mean that I have a sort of 'poverty = piety' thing. I mean that I don't envy people with more, and I always have money I can afford to give away. I still wear shirts I bought ten years ago (and am glad I still fit comfortably in them) and many of my other clothes date back just as much.

I eat sparingly. The other day, I calculated that I could live on an average of $20 a day if I wanted 'luxury'. However, my typical daily expenditure, were I to purchase everything I ate myself, would come to about $3.00 for breakfast, $0.50 for lunch, $3.00 for dinner, and $3.00 for 'luxuries' such as extra coffee, a piece of dark chocolate, and suchlike. Call it $10. The most 'expensive' items in the menu would be fish and fortified cereal.

By far my greatest day-to-day expenditure, unfortunately, is reading material. I am quite sure this comes to $20 a day as well. I can afford to cut down, I guess.

The greatest financial burden I have is the regular outlay on things like insurance premiums, taxes, fees. I find that the comforts of living in a reasonably civilised environment result in general taxation which does make a fair dent.

I have no right to be so blessed with what I have. I sometimes remind myself I have no right to have so much to be happy about. And I laugh, and dispose of more income. No, I'm not poor at all.

Monetization

There's this little tab on my dashboard that says [MONETIZE]. It's one of those things that reminds me about the pattern of the world. If you do anything, it's an economic activity. If you cash it in, it's called 'monetization', which means making money out of something (no, it doesn't mean forging French impressionist paintings).

The other word I've had to become familiar with is 'marketization'. My supervisor has spent many years investigating the marketization of Atlantean (and Lemurian) education. Essentially, education is no longer a public good provided from a common fund, but something to be hawked about, like bolts of cloth or whores at a brothel. You have to advertise. You have to promise all kinds of nebulous and enticing services. You have a stake in the marketplace of ideas, and ripping off other people's ideas is just one possible strategy.

In Atlantis, everything is monetized and marketized. The latest thing is kidneys. You can now legally accept inducements and bribes to sell a kidney.

I have no fears that this is a slippery slope though. It is more like a steep staircase down which somebody will likely fall and break his neck, thus at one fell stroke donating all his organs and miscellaneous body parts to the common good. It isn't a slippery slope because a live patient can only donate so many parts before ceasing to live. Skin and blood can be donated and they will regenerate, but until you develop a regen-drug for kidneys and livers and spleens and suchlike, similar organ harvesting will not happen — and if such a regen-drug is available, why should it happen?

What I fear (well not really, since I fear very little) is that people will note that you can now legally get lots of loot for selling a kidney, and that there probably isn't much percentage in allowing your parts (post-mortem) to go to the common pool. You might as well tell your family to keep your organs for the highest bidder, thus voiding your need for life insurance. Now, when Papa passes, you can sell all his parts and get far richer than by claiming his piddling little insurance — especially in these days when insurance companies seem to be decaying faster than such body parts.

Such is the pattern of the world. Wait for it. It will come to pass.

Cashing In

Today marks the 25th day of my new financial policy. Since St David's Day, I've decided to spend only as much money as finds its way into my wallet by direct physical transfer. If I need to use a Mammon Machine (also known as an Altar Teller), I restrict myself to using it only on the day after I have banked in a cheque that will more than cover the amount I'm withdrawing.

So far, I'm still at a nett positive income. And I have not touched the principal sum that I set aside since 2007. At current expense rates, this is likely to last me for the rest of my life. Hopefully, insurance will cover the healthcare that I'll need as I grow older.

But it's the little things that I realise are beginning to build up. When I go into a shop and pay for goods worth $27.64, for example, they charge me $27.60 in cash. If I had paid by electronic means, that would have been four cents more. Exact sums can be transacted by electronic means; but ever since they got rid of pennies, they have had to round down in favour of the customer.

Slowly, I am finding myself richer than I was before, even in these distressing times. I am beginning to set aside a sum for the education of future generations not my own. This was the habit of my ancestors, and I have resolved to make it mine as well. Education is important; in every school ever built to house wyverns, my family has planted at least one classroom and one teacher. It is too bad that the traditions of the School are fading and the flagship is at half-mast.

But the best is yet to be; and the prudent amongst us should endeavour that this best can be paid for in the end.

Survival

How do people survive in these dark Financial Times?

Here's one of many suggestions. Give tuition. And I don't mean just taking students through the homework they ought to be doing whether you are there or not.

I mean, take on students with the intention of providing value-added education. Get to know them well. Give them good advice and be generous with your time and attention. Nurture them.

Remember, you are doing 1-on-1 education, and you can provide what the 1-on-30 (or 1-on-40) public education sector can't provide. Even if it claims to be 1-on-25-with-smaller-groups-possible. It's just not likely that there are enough good teachers to go around.

If you are good at providing the extras that cost you nothing financially (attention, encouragement, patient understanding, a sound basis for future learning) then people will pay you enough per hour to make it worthwhile.

The general principles are the same. Whether you're an undertaker or a tutor or a lawyer, you can be a better service provider and earn more per hour or per case, even in these hard times. More importantly, you are helping to build a better world and a brighter future.

Accountability

Sometimes theology, sociology and economics make strange bedfellows. We've seen this in the ideas and ideals of 'liberation theology' and of the 'prosperity gospel' – the former more about liberation than theology, the latter more about prosperity than the gospel.

I was struck by the image of ultimate accountability presented to us in the Bible. "As the eyes of servants look to the hands of their masters... so too do we look to the Lord our God," the psalmist says. It is the accountability of the master to the hireling, the slave and the servant that we find in stark words throughout the entire Mosaic code. It extends to lines like, "Do not muzzle the ox when he treads out the corn" – an injunction to allow labourers a cut of the proceeds and a reward for their toil.

In the Book of Job, we further learn that a man whom God considers upright has this to say about what comes from God: "Shall we not receive good at hands of God, and shall we not (also) receive evil?" It is clear that the argument, as it develops through the book, lays the responsibility for ultimate events in the hands of ultimate authority. What seems to be good or ill to us, the ultimate authority has chosen to be accountable for, and faith is a matter of accepting that.

What gets to me sometimes is the cavalier fashion in which the instinctively authoritarian react to good and bad news. I've seen in government officials and educational administrators the attitude that good comes from their actions and responses to the world, while bad comes from the people they are supposedly serving or responsible for. It is only too common to see a school laud the top scorers and claim their excellence as a sign of school prowess, while blaming the tail end on parents, society and computer games. It is also common to see government officials ask for huge personal salaries because the economy is booming while blaming investor panic and events beyond their control when the economy tanks.

I think that what's right is that those who claim authority must also claim responsibility, for both good and bad. In my tenure, I took my departments results out of a level below national average and fixed it firmly ahead of the national average. At the same time, I was also pretty much an irritant and rather tactless in dealing with colleagues. It was perhaps divisive, and rightly seen to be in some quarters. I was young then, but to this day, I will take responsibility for both things. But I do not think that I have met many authorities who would publicly admit their flaws and failings. I have shirked that responsibility myself in some areas, to my shame; I am not so sure that those authorities would feel any shame at all.

The city-state in which I work has one of the highest government salary scales in the world. The rationale for that is that the local system, in many ways, has displayed great success even when measured against far larger powers.

But in education, for example, there is a problem: we give the same kind of homework as educational superpowers like Thailand, Rumania, Hungary and Iran, as well as like Hong Kong, Cyprus and the Russian Federation. Officially, only 9% of the homework given was ever used to grade students. These are the findings of the Third International Maths and Science Survey. Yet, we rank far higher than any of the other nations using similar systems of classroom pedagogy. One interesting difference is that we pay our private tutors a lot more than we pay our teachers; the average tutor at high school level possibly earns about US$1.20 per minute while the average teacher at high school earns about US$0.35 per minute of work.

There is nothing wrong with having a large tuition industry; Japan, South Korea and Hong Kong all have that too. But surely there must be some contribution to results from the shadow sector, and we would be terribly dishonest not to admit it.

Similarly, when the economy booms, ministers get huge salaries; when it tanks, the cost of electricity goes up 20% and employer contributions to employees' retirement funds are reduced. I've seen ministers' pay frozen but not reduced in line with the economic performance of the nation as a whole. But haven't they accepted blame for both good and bad by claiming such high salaries in the first place? Is there no two-way moral hazard thing? I don't see it.

All this leads me to one main conclusion: if good things happen, I'm not responsible; the authorities are — and if bad things happen, the authorities aren't responsible; I am. That happens whether it is in school or in the financial sector. I don't believe it's true, but the people in power do, and that's what counts.

I could be wrong; I would really love to be wrong about all this. But I don't see much evidence against my hypothesis. I have so much evidence for my hypothesis that I might as well write a book, except that I'm not so minded.

So how do I feel? Actually I feel very happy. It brings home one main point to me about the conclusion I have come to in the previous paragraph. Whoever the authorities are, they are nothing like the God I believe in. And that is why I rejoice all the time in whatever I have received.

Finance: The Great Crash Of August 2007

Haha, yes, the markets are crashing. It is the harbinger of what might be a great depression, a hole in the ground that will suck people in if they haven't the leverage to get out. I'm OK, though. Still got enough in hard assets, cash, gold, stamps, offshore stuff etc to survive and prosper. Yes, this isn't my usual serving of philosophy and/or poetry, but it is certainly educational. For you armchair economists out there, expert opinion can be found here. It's been a very interesting couple of weeks. My profits have halved. Haha!

I think there are a very simple few rules that should govern our financial behaviour:

• do not borrow what you cannot pay back without having to guess about when you can pay it back
• do not put money into anything, or lend money, that you cannot afford to throw away
• if you must be generous, be genuinely so
• do nothing out of greed or just for the sake of having more money

There's very little spiritual material here, but a close look at the material facts of the case is very educational: a lot of silly people and greedy people got burnt. If you were not being silly or greedy, you made a profit. And quite often, it was the people looking straight into God's face who forgot to be silly or greedy.

The 2007 A.sian Financial Crisis

At the current moment, it is clear that property, production and capital investment are all on the upswing. Share prices appear to be rising (as usual) towards record-breaking levels. It is clear that no serious crash will come to those who hang on to their investments for the long term. Growth looks like a given, and in some areas, this growth has exceeded 67%.

However, it is equally clear that some of this local growth is based on heavy capital investment with no gain in total factor productivity. It is possible to keep building plant and so on without actually making significant value-added progress. This is akin to taking all your available land, hiring extra workers and planting it with crops, thus stopping crop rotation policies and using up all available nutrients for the next cycle. You will have a nett increase in production in the short term, and starvation in the long term.

When the land is exhausted and no new techniques or technologies intervene, a rapid downturn in effectiveness is inevitable. Where procrastination in acting suddenly seems like a good idea, we know that the situation is a bad one. It is far better to examine sub-sectors for areas which can be qualitatively improved, letting some other areas which are approaching minimal gain lie fallow.

Increased research expenditure can be a good idea, provided that the start-up cost is not prohibitive. In some extreme cases, however, institutions seeking to maximise control and standardisation at the expense of innovation have slashed R&D budgets, retrenched R&D personnel (or even outsourced R&D), and directed corporate policy away from both basic and applied research. This augurs badly for the long term.

The most important determinant of success is open education and relevant training, sprinkled with some dashes of structured memetic randomness (e.g. research programmes with broad mandates). The reason for this is that just as genetic diversity protects a species from dying out, so too does memetic diversity protect a society. It is possible to have a highly-educated population which is just undergoing repeated iterations of the same upgrade. This will eventually lead to minimal gains. What is needed is investment in structures that will research and implement new upgrades in many different directions, or make the possibility of such upgrades an acceptable option.

Frankly, institutions which have supported large capital investment should look carefully at how diversified their outputs, portfolios, and processes are. If there is no diversity, a sudden collapse of key markets can lead to total failure; if the market is guaranteed, it still means that profits may not be optimised. If there is diversity, but the diversity is artificially maintained and not synergistic, then whatever investment is being made is wasteful and suboptimal. The best case is diversity which produces synergistic effects frequently because of well-chosen overlaps, nexi, and key personnel.

This kind of diversity, with strong fundamentals and awareness of markets, technological and memetic horizons, and emergency outlets/alternatives, will produce superior performance even against strong competition. It is strongly advised that cash-rich investors seek out institutions capable of such diversification and shun their less-astute rivals.