Kunowledge

A guy named Luke Riddle wrote an article entitled “Capitalistic Socialism” in which he states that, “Capitalism, no matter how you slice it sets money up as an idol.” This article is a response on “Capitalistic Socialism” as I disagree with the ideas Riddle lays forth.

Though his idea that money is Capitalism’s idol appears to be the case based on our current model of American Capitalism, I would argue that if you slice capitalism into its purest form, it sets production, not money up as its idol. What I mean by production is simply the creation of goods, services, or anything of value.

When a person creates something of value, he is contributing to the betterment of society. If it is of no value, inherently, it will not be a contribution to society, and thus, be worthless. If it is truly worthless, its monetary value will be zero. Capitalism appears to set money up as its idol solely on the fact that money has distortedly become the representation of value in our society. I argue that if the mindset of people were to adjust slightly to recognize production (adding value) as the ideal of Capitalism (and existence) instead of money (the tool and representation of value), then the world would be a better place. Read the rest of this entry »

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I first heard Charles Handy on NPR’s Marketplace: Taking stock. He was interviewed by Kai Ryssdal on the current economic situation (crisis) and how we ended up in such a mess. His eloquence and straight-forward answers caught my attention and before I exited my car, I made a point to remember his name. After a quick Google search I learned more of what I hoped: Charles Handy is a modern day John Galt. This is an excerpt from a well-written article about him in the online magazine strategy+business.

“A company ought to be a community, a community that you belong to, like a village,” Mr. Handy says. “Nobody owns a village. You are a member and you have rights. Shareholders will become financiers, and they will get rewarded according to the risk they assume, but they’re not to be called owners. And workers won’t be workers, they’ll be citizens, and they will have rights. And those rights will include a share in the profits that they have created.”

In The Age of Unreason, Mr. Handy describes a community-oriented, front-line-led “federal organization,” in which power and responsibility devolve from a small corporate center to business units and, ultimately, to those closest to the action. In federal organizations, he writes, “the initiative, the drive, and the energy come mostly from the parts, with the center an influencing force, relatively low in profile.” Still, the center “holds some decisions very tight to itself — usually and crucially, the choice of how to spend new money and where and when to place people.”

Furthermore, people have lived and worked in villages since the dawn of civilization. The corporation, notes Mr. Handy, is a young concept, little more than a century old. One could argue, too, that the notion of a lively village — with its unabashed humanity — is a more appropriate way to look at what the corporation should be in the 21st century than the constrained and impersonal entity it has been. As the author wrote in Gods of Management: The Changing Work of Organizations: “Villages are small and personal, and their inhabitants have names, characters, and personalities. What more appropriate concept on which to base our institutions of the future than the ancient organic social unit whose flexibility and strength sustained human society through millennia?”

I highly recommend taking the time to read the entire article. In the meantime, I plan to learn more about the guy, and use his words to solidify my evolving view of the world.

Also, I randomly stumbled upon a new book that I’m currently reading, and so far, I would recommend it to those who think they might be interested after hearing the title. It’s called “The Black Swan: The Impact of the Highly Improbable” by Nassim Nicholas Taleb. An excerpt from the jacket cover reads:

A black swan is a highly improbable event with three principal characteristics: It is unpredictable; it carries a massive impact; and, after the fact, we concoct an explanation that makes it appear less random, and more predictable, than it was. The astonishing success of Google was a black swan; so was 9/11. For Nassim Nicholas Taleb, black swans underlie almost everything about our world, from the rise of religions to events in our own personal lives.

If that alone doesn’t pique your interest, don’t read the book. Currently, I’m about 100 pages in and am not disappointed. I’ll give you my final review when I’m finished. Until then… do us all a favor: increase your Kunowledge!

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Quick video explanation of why Keynesian economic policy fails, by Dan Mitchell from www.freedomandprosperity.org

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This is in response to Matt Veckman’s Google Reader (gR) post, “Currency crisis is gathering storm” from the Naked Capitalism Blog. The basics of the article sets a doom and gloom stage for the currency market which may not seem like it means anything to the Average Joe (who’s less a plumber than I). I’m going to describe how this looming “storm” is already affecting people.

From Oct 2006 to Oct of 2007, I taught English in Korea at a private English school. During this time I was paid in the South Korean won (South Korea’s currency). This means that I was paid in the local currency and could spend the local currency at restaurants, shops, subway station, etc. Makes sense right? Well, we were paid extremely well and were able to save over 1 million won each month. That’s 1,000,000 won each month! Whoa! Well, of course, most of you reading this live in America, or think in US Dollars, so how much is 1 mil won anyway? For that you need the exchange rate.

When I first began living and working in Korea, the exchange rate was 952 KRW for every 1 USD. That means, I should take the amount in Korean Won (KRW) and divide it by 952. So, if I saved 1 mil KRW the first month, that was equivalent to $1,050.42. Sweet! So what I would do,was send that KRW back to the US to deposit in my online savings account (HSBCdirect.com). My interest at that time was 5.05%, which means that $1,050.42 would earn me $53.05 if I left it in the savings account for one full year.

Now, By the time I left Korea one year later, in October of 2007, the exchange rate had dropped (or increased in terms of USD) to 914 KRW per 1 USD. Now, the 1 mil KRW that I saved in the last month was equivalent to $1,094.09. Theoretically, spending exactly the same amount of KRW each month, thus saving the exact same amount (1 mil KRW), I had earned exactly $43.67 extra in terms of USD in one month! That money would now earn me $55.05 if I left it in my online savings account for one year. I had basically received a raise in USD by doing nothing. Pretty awesome, huh?

Now, for the storm. So, my brother came to Korea two months after me, and chose to stay on an extra year (he was having that much fun). We know how much the 1 mil KRW saved each month was worth when I left in Oct of 2007. What we didn’t know at the time, was that Oct 2007 would be the best exchange rate since Sept of 1997, right before the Asian Financial crisis. With this new currency situation, the exchange rate is 1440 KRW for 1 USD, which means that my brother’s savings this month of 1 mil KRW is worth $694.44!

Being paid the same money, saving the exact same amount of 1 mil KRW each month, his US Dollar equivalent is almost $400 less than my 1 mil KRW a year ago. That’s the truth, and that’s the real-life effect of this currency storm. My brother has had a massive pay-cut despite the fact that he was promoted to Head Teacher not long before I left. Marinate on that for a second.

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