Thursday, September 29, 2016

Financial Repression

Savers aren't investors. Cash isn't an investment. Saving is when you keep your money in cash. Investing is when your money gets a job. Speculating is when you are predicting whether supply and demand will cause something price to go up or down (even though that thing will just keep on doing the same thing). The problem is cash is just an idea. It is stored potential. If money is kept in cash, investors will borrow it and put it to work. 

If interest rates are kept close to zero, it means money is close to free for investors who have access to borrowing it. Savers on the other hand stop getting paid for their money. If inflation is higher than the interest rates, they are in truth paying for the privilege of saving. If interest rates become negative, lenders are paying for the privilege of lending

Because this isn't obvious, it is called 'Financial Repression'. It is a stealth tax on savers. It is a sneaky way of reducing Government Debt and rewarding people who have borrowed to buy things. Most savers don't think in real terms. Inflation slowly eats away at both their savings and at the real value of debt.

I would love to see Governments Experimenting with more direct 'free money' than keeping interests rates low and punishing savers. A Universal Basic Income can release the potential of people trapped from engaging with each other by empty wallets.

Maintaining Relationships

The time you make controls your world. We are very powerful at ignoring things that don't contribute to the things we have prioritised. If something isn't near the top of the list, it might as well not be on the list. This is why I take issue with human specialisation. Specialisation is for machines and production lines. I look forward to the day when machines are better specialists than us. We will smash them at empathy, and that is the heart of what gives the world meaning.


One of the catalysts for me walking away from full time work was that it did become full time. Weekends are barely enough to regather energy, let alone engage with other things that matter in a way that you are fully present. Perhaps the most important thing in business is the relationships you grow. Relationships don't happen by accident. Through emails, phone calls, coffee, dinners, writing and other means business people stay in the thoughts of their clients. There are very well developed software packages to help record meeting notes, remember important dates and consciously build an understanding of a client and their needs.

I realised that I was putting significantly more effort into clients than I was into the relationships that mattered to me. I might be very diligent about calling a client once a quarter, responding to emails, and seeing them once a year while going several years without speaking to a close friend. There is something very backward about that.

Given our increased specialisation, we can have less and less in common with the work our friends and family are doing. At the same time, that work takes up the majority of their head-space. Our ability to ignore things that don't matter then kicks in. If our knowledge of the stuff that matters to our key relationships isn't at the level we think we are making a strong contribution, we can disengage. We are trigger happy. We listen out for things we connect to amongst the noise. When something matters, it triggers action. If we don't maintain those connections, they weaken.

Shivani and I had a discussion on the benefits of going deep vs going wide. It is easy to get lost which ever you choose if you don't maintain the connections to those you care about who have gone another direction. Relationships don't happen naturally. They require work and engagement. Weeds are what happen naturally... when the invasive takes priority.

Wednesday, September 28, 2016

Burkina Faso



After being in power since 1987, Blaise Compaoré was forced to resign in 2014 by an uprising in response to his attempt to change the constitution to extend his 27 year term. Burkina Faso gained independence from France in 1960 after becoming a protectorate in 1896. Before then various British, French & German military forces had in turn fought or made alliances with different local people. It isn't clear when the local people arrived since the (now) land locked country is in an area very much part of the Old World - touched by hunter gatherers, and rising and falling Kingdoms and Empires. Burkina Faso was caught in the Cold War during the period of decolonisation following World War II. Sankara saw the global aid industry and free trade of the World Bank and International Monetary Fund as imperialist. Compaoré came to power through a French sponsored coup.

Tuesday, September 27, 2016

Russia





Russia gets its national identity from the East Slavs. The main population of medieval Kievan Rus - a loose federation of tribes. When Vladimir the Great was baptised as a Christian in 988, he extended the belief, by decree, to the rest of the nation. This formed a link to the neighbouring Byzantine Empire through Orthodox Christianity. The lands of Rus were overrun by the Mongol Golden Horde in the 13th century and became tributaries. Moscow eventually reunified the people and expanded through conquest, annexation and exploration to become the Russian Empire. The third largest in history, and Russia is still the biggest nation in the world stretching across eleven time zones and covering one eighth of the inhabited land.

11th Century


Monday, September 26, 2016

Nationalism v Globalism (Group Discussion)

Other Guest Posts by the Cast of Characters
Shivani - Connecting Deep and Wide
Stu - My Fellow Americans, The Revolution, Admiration and Reward, To Ooze
Phil - To Ooze
Nick - On debut - a friend from Smuts Hall at the University of Cape Town. Now lectures at Wits University.
Brett - NotOnOurWatch, Listening Better, Hearing the Listeners, Finding the Words, Words to Life, Breaking Bread

Trev:
I am very much someone who values cosmopolitanism. I don't much care for trying to protect my identity. I like the idea of breaking it down by adding the best bits of ideas I come across. Jon Haidt, one of my favourite authors, recently wrote an essay looking at some of the recent divisions in politics from the perspective of 'globalism v nationalism'. The idea of protecting identity vs simply being racist/anti-immigrant. It does provide a more empathetic way of looking at some of the views that seem so contrary to the world I would like to work towards.


Shivani:
I feel as if I carry both a globalist and a nationalist inside of me. I'm wildly appreciative of travel, I believe in being open and welcoming and love the rich diversity of being human. But I also value mythology, language, history, community. The idea of the world being one doesn't make sense to me if it means losing the variation in culture. 

Who assimilates and who is assimilated? Do these ideas even make sense if we acknowledge that culture is a living, evolving thing that cannot be controlled? It seems equally problematic to expect those migrating to your country to assimilate as it does to refuse to give up any aspect of the culture you come from. As with most things, the middle way makes more sense. A little give, a little take. 

I am a fourth generation South African, of Indian descent. Indian culture still reverberates through me. A love of the food, the music, the mythology, the clothing, yoga. But there are aspects I've chosen to leave behind: language, religious practice, norms about who I marry. I don't think I could describe myself as a global citizen. I have sunk deep roots in South Africa. Does that make me a nationalist?

Trev:
I think the Nationalists are more those who feel intense discomfort with the pace of change, and don't have a foot in both camps. The issue with open borders is it does shine a big light on just how different some of our cultural and moral responses are to certain issues. Not necessarily in big ideological ways, but ways that make us feel less at home. Language, food, music, and other comfort factors get thrown on their head. 

I remember the clashes at school as we were coming out of Apartheid on issues as simple as noise levels. Natal was quite British. Think someone shouting across the tube in London, and you can see the response to shouting across the playground. Is this potentially just a teething issue that older generations struggle with? Will younger people be more used to variety? Or do we need to start making allowance somehow for more aggressive assimilation in *some* places to allow bubbles of comfort for those who are struggling with the change.

The Economist

Stu:
This is such a big topic there are lots of possible directions to go in. In one sense, my response to tensions between nationalist v globalisation groups is the opposite of a typical left wing response, which I see as being to limit the number of immigrants but then be very supportive to those who do come. I’d like lots of immigration but more assertive about enforcing local norms/laws (until these norms change naturally or via immigrants voting and normal democratic evolution). This doesn’t properly address those who feel threatened by the change, but I think nationalists feel defensive over their own norms and laws and don’t want to apologise for them.


Trev:
In the UK there is a concept of 'Silent Tories'. People who don't say much and then vote Conservative in the poll booth. Quite often the Globalist approach can take the moral high ground and be very loud. To show any form of dissent in public, or to say you feel uncomfortable is seeing as against any number of righteous values. This makes working these things out and gaining comfort with change hard. I regard myself as very liberal, but I come from a socially conservative background. 

One example is homophobia. I 'didn't know' a single homosexual growing up. This is not true, but the environment was so negative that there was no way anyone could come 'out of the closet'. Despite the world moving on dramatically, and a number of people from my neighbourhood now feeling free to be themselves, gender roles are still very clearly defined. Men still don't show affection as naturally and being effeminate is still a problem. People aren't vocal about their discomfort, but still wince at public displays of affection etc. 

It is easier for people to be loud about 'progressive issues'. If there isn't space for people to be vocal about their conservative issues, I am not sure we will work our way out of them.

Phil:
To show any form of dissent in public, or to say you feel uncomfortable is seeing as against any number of righteous values.” I feel like this is quite a detour off Nationalism and Globalism, but perhaps one worth having. I call it “The Great Pscyhological Dilemma” and, at its heart is the question: “What Sort of a World do We Want to Live In?” Take Trev’s example of homophobia. We want to live in a world in which people who identify as homosexual are free to live without fear of discrimination. How do we realise this goal? Do we 

(1) police the uttering of gay-slander? or 
(2) educate and wait for people to realise that sexuality lies on a spectrum, and that homosexuality (like transgender) is completely “normal” in the sense that a bell curve has tails. 

(1) Is external policing. (2) Is internal change (both rational and emotional). 

Ideally we want (2). BUT… human beings enjoy power (superiority) over others, enjoy creating “out-groups”/enemies, like to hate, and mostly hate to think for themselves. To me, one of the greatest challenges of the coming century is how to deal with HUMAN BEINGS… such that they aren’t policed into a Brave New World (or Equilibria), but aren’t left to become Lords of the Flies. Suggestions welcome...


Library of Economics and Liberty

Trev:
Perhaps this is a case of us simply not recognising the forward steps we are making, and getting very upset about the steps away from what we want? If we take a broad historical look, we are getting better at cooperating with each other. We are chipping away at prejudice. Something we are doing must be right even if it occasionally feels like we are being punched in the stomach. 

We are treating each other better

The internal change Phil speaks of can only come from intimate friendship. Those conversations outside of the public realm where you feel confident enough to express your prejudice and work on them. People change from where they are, not from where we want them to be. I don't think Globalisation is about assimilation. It should be as simple and as limited as possible. Like agreeing on the number of keys to put on a piano, but then allowing people to play Jazz, Rock, Classical or improvise. I know Stuart is much more positive on the state of the status quo than most. In a world of free speech, we focus on the bad stuff. Animal Farm in reverse.

ideas.ted.com
Nick
I myself do not think of myself in terms of a national or global identity, or have any desire to reflect any particular identity to anyone else (although a reflection is unavoidable). I don't get excited about which sport team (/person) wins anything anywhere - but I do like watching skilled sportspeople. I find a lot of cultural identity practices abhorrent. We are collectively very happy to give up personal liberty sometimes in the name of common identity which is regrettable. None of it makes much sense to me; I have no idea why people are attached to these identities although if I gave it some thought I am sure there are plenty of candidate explanations I would accept. 

Ignorance drives our lives and this is just one of those areas which I do not get too worked up about not knowing much. The same as notions of cultural appropriation - just not something I am driven to better understand, although some are very passionate and vocal about it at the moment. It is another issue wrapped up in identity politics and in this regard it is not something I have much interest in. 

In the end the us vs them thinking is probably unavoidably human, its suppression undo-able, its glorification universal, but if left unchecked would probably destroy our species, and if it could be expunged, that would probably be a good thing (and to be clear it is not disagreement that is a problem, it's the division of us against them which is the problem)

Brett
This animal is so beautifully complicated that we really could take it to so many deep levels and flesh it out for weeks. I definitely agree with the idea of holding tension lightly and tend to think more and more that we would be a lot more healthy if we leaned towards Both/And belief systems more than Either/Or. Echoing what I’ve heard above, I love some things that are distinctively South African but I love the possibility of eating Indian food at the Eastern Food Bazaar in Cape Town centre. It would be a shame if everyone assimilated and became all the same. So holding on to some things that feel family or culture and embracing some that feel important from the local context. Each person is different and so we would be cultivating a variety of expressions which feel like they would create a richness when experienced alongside each other. The need for community in this scenario becomes so important though, whether at a family or wider level. And the importance of accepting each other and what we bring as well as learning from each other, the things that we don’t understand yet. Umuntu Ngumuntu Ngabantu.

Shivani
Brett, I love the point about Both/And. Recognising where we come from and where we have ended up. If respect flows both towards migrants, as well as towards those who receive migrants, the issues start to dissipate. We forget that there are no pure identities....everything is mutable. Embracing the fluidity is tough. But building in rigidity cannot be the solution. As with most things, it seems to come down to a willingness to connect as human beings and not entrenching in/out groups (so often underpinned with assumptions of better than/less than).

Trev
I get very scared by the idea of laying ownership to cultural ideas. The communities who have been best at avoiding cultural appropriation are the ones who believed their ideas were better than everyone else's. Supremacists. This is normally just a case of historical amnesia. Our language, clothes, songs, food and all we held dear has been built collaboratively. Equally, I understand the desire to build close, exclusive, intimate relationships. A value to uniqueness. The anti-Globalisation forces are not just a basket of deplorables. Some argue that keeping things local and separate is a form of respect. It recognises tacit local knowledge. It prevents sameness. It prevents systemic risk since connections help good ideas and bad ideas spread.

I understand ideas about self-determination, identity building and keeping things holy. Having grown up in Apartheid South Africa, I just get sick at the bottom of my stomach when I see the damage that can be done by living purely in relative terms. Only looking around you and caring solely for those in your immediate community is toxic in its ignorance. We need to find a balance. You can still have a global world full of local flavour.

Mongolia



The Spanish-American war of 1898 ended a long period of Global Spanish dominance. Generación del 98 was a group of novelists, poets and philosophers who tried to deal with the blow to the national psyche. The puff of the chest that comes from being the greatest. Mongolia, now very humble, was once the greatest. The Mongol Empire covered 16% of the world's land area, second only to the British Empire at almost 24%. Mongolia is the most sparsely populated fully sovereign country in the world. The horse culture which helped Genghis Khan build the empire is still a fundamental part of society. Genghis's grandson Kublai founded the Yuan Dynasty in China. When it fell, they retreated to Mongolia and a factional and nomadic life returned. Empires come and go. Their legacies are what our art, relationships and collective memory choose them to be.


Doubling Up

The Rule of 70 is a simple way to figure out roughly how long some money will take to double in value. If you invest $1,000 and receive 5% return, it will double in roughly (70/5) 14 years. It actually would take just over 15 years, but if you are making a quick calculation, you don't have to be exactly right. (Another example at 10%, the Rule of 70 estimates 7 years.) 

In the first year you earn 5% on $1000.  $50. In the second you earn 5% on $1,050. $52.50. So earn money on the growth as well. This is compounding. In the 15th year, just before the 'doubling event', the amount being earned will also have doubled to $94.28.

Long periods of time are very powerful when it comes money. There is a story of a wise man who helped the Chinese Emperor. The Emperor said he could have anything he wanted in return. He asked for a chess board to be laid down. He wanted one grain of rice for the first square. Two grains for the second square. Four for the third. For each of the 64 squares of the chess board, he would like the process to be repeated. The Emperor agreed, bemused that he had requested such a small gift.



On the 33rd square, there would have been over 4 billion (4,294,967,296) grains of rice. That is only the start of the second half the chess board. The Emperor had given the wise man his empire without knowing it.



That is the problem with Debt. It is cunning. The same compounding that works for investing, also works for borrowing. You pay interest on interest. This is where the Biblical seven year forgiveness on debt comes from. In a short period of time, there is some connection between what is being borrowed, and what is being paid. As the repayment period gets longer, what you are really borrowing is money to pay interest on the interest.

Besides the 'Rule of 70', another good rule of thumb is 'Save for what you want, don't borrow and spend'. Good Debt is when the money is put to work, so it makes more than the interest it needs (the money's salary). Bad Debt just digs holes. 

Saturday, September 24, 2016

Inconspicous Wealth

The Rich Now

Mansa Musa - The Richest Ever

One of the key features of Adam Smith's the Wealth of Nations was debunking the idea that to get more, you had to take it from someone. Believing in Mercantilism, Nations competed for wealth through War. Colonialism was a cold(ish) war between Spain and Portugal, then the Netherlands, then France and England as they attempted their own civilising missions, trying to spread faster than the others. Smith argued instead for Free Trade. The movement of people, capital and ideas. 

Before Smith, the wealthy would engage in Conspicuous Consumption. They would invest in big palaces, lavish feasts, fancy clothing and armies. Capitalism manages to abstract wealth, so that a true Capitalist will constantly reinvest rather than spend. To make your 'paper wealth' bigger, you have to invest in something that does something. Spending is like firing your money. Today's wealthiest individuals are likely to be wearing jeans and T-Shirts, the same as most everyday people. Their wealth invested and reinvested in the products everyday people use. If someone is flashing their cash around and buying luxurious stuff, they are living in the world Smith raged against, not for.

Capitalism should reflect a story of custodianship. 'You can sheer a sheep many times, but you can only skin it once'