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Month: October 2016

Review – The Party (#China, #communism, #politics, #books, #review)

Review – The Party (#China, #communism, #politics, #books, #review)

The Party: The Secret World of China’s Communist Rulers

by Richard McGregor, published 2010

Thus it is obvious that the only visible, tangible government we have is made up of these professed agents or representatives of a secret band of robbers and murderers, who, to cover up, or gloss over, their robberies and murders, have taken to themselves the title of “the people of the United States”; and who, on the pretense of being “the people of the United States,” assert their right to subject to their dominion, and to control and dispose of at their pleasure, all property and persons found in the United States.

~Lysander Spooner, “No Treason, no. 6, The Constitution of No Authority“, 1867

The “secret” at the heart of this book is that the nation of China has been ruled, since 1949, by an unelected confederacy of gangsters calling themselves “The Communist Party of China”, who wield extra-judicial power over Chinese society up to and including superiority over the so-called sovereign government of China. In other words, the Chinese government does not discipline members of the Party, but rather members of the Party discipline members of the Party, and everyone else.

I see three interesting questions raised by this fact, none of which appear to be addressed by the text:

  1. How is it that a private “political” organization (ie, mafia) came to control an entire country like China, including its government?
  2. If members of the Party are not answerable to the Chinese government or the Chinese people, who are they answerable to (what restraints, if any, are there on their power and why)?
  3. If the Party controls everything and is the real source of opportunity in Chinese society, why wouldn’t a rational, ambitious person make it their goal to enter the Party and thus enjoy their rewards?

The first question is not addressed because this is not a work of history as much as it is an exploration of the mechanical functioning of Chinese politics. But the question should interest us nonetheless, because if it has happened in China, it’s possible it could happen somewhere else, or more cynically, that it has happened somewhere else (I’m not talking about the USSR, or Cuba, or North Korea here…) and may be it is happening somewhere else right this moment. If murderous gangs can get control of extremely populous, ancient and fairly homogenous societies as a kind of accident of history, there is nothing to be done about it. But if there is some kind of predictable pattern to this kind of exploitation, there may be a similarly predictable pattern for defending civilization against it or unwinding such a menace once installed.

The second question is not addressed because the book’s focus is really about China narrowly, not China in the context of international political structures. Within the domestic domain, the author suggests that the Party’s control is essentially ironclad. If you can murder tens of millions of people by starvation or as collateral in a kind of cultural war, and continue on in power, you don’t seem to have many internal threats to your power. What is it that seems to get the Party’s panties in a bunch? The risk of failing to impress the outside world with a spectacular 2008 Beijing Olympic Games when revelations about a mass infant poisoning via tainted baby formula come to light. Why doesn’t a market for political control exist within China, but it does seem to exist outside of China? Who is a realistic potential hegemonic external ruler of China in the post-colonial era?

The third question is not addressed because it is taken as given by the author that the Party is an immoral institution and thus no reasonable person would want to participate in it. The people who stand outside the Party, or who are demonstrated as being victims of it, are painted as the good guys, just trying to get by, while the Party members highlighted are discussed in menacing terms, from afar, almost like a kind of wild animal whose motivations do not merit spending time trying to understand. But if your society has been co-opted by a secret band of murderers and thieves, isn’t joining forces with them your best and most rational chance for survival, at least while a domestic market for political control seems non-existent?

And what of our own society, in the West generally and in the United States specifically? It seems like choosing not to be political, to not only avoid participating in politics but to avoid membership in political parties and ambition within their institutional frameworks, seems to be a choice to cede social and even a measure of individual control to those who choose otherwise. Why play the victim? What good is morality when it is a tool of your own undoing?

Of course, a party that everyone is invited to join has no advantage in exploitation, so it must have some meaningful criteria for excluding people and thus ensuring a supply of victims from which it can extract its privileges.

3/5

Review – The Millionaire Next Door (#books, #review, #wealth, #millionaires)

Review – The Millionaire Next Door (#books, #review, #wealth, #millionaires)

The Millionaire Next Door

by Thomas Stanley, PhD and William Danko, PhD, published 1996, 2010

One out of ten Americans has a net worth of $1,000,000 or more, but how did they get that way (and more puzzling, what is going on with the one in ten Americans who have a negative net worth)? According to Stanley and Danko, accumulating a million dollar net worth has less to do with luck and inheritance and more to do with simple behavioral habits. The wealthy tend to be good at generating income, sure, but they’re even better at saving it, that is, spending far less than what they take in over any given period of time. As they put it, it’s no use having a good financial offense if you don’t know how to play defense and thus give up too many financial goals.

The authors recommend running your household like a small business– creating budgets, tracking expenses, reviewing your actual versus expected financial results, etc. They focus on the spending habits of the affluent decile to illustrate the surprising (for some) fact that those who have accumulated a million dollars or more in net worth typically don’t spend as if they have done so, highlighting tastes in clothing and automobiles (“purchasing vehicles by the pound”) amongst a few others. I expected the book to highlight more domestic life decisions, such as millionaire households doing home cooking versus eating out, and I was also expecting to see a lengthier investigation into housing accommodations and finance given that 97% of millionaires own their own homes or carry a mortgage rather than rent, an impactful statistic.

Thankfully, the authors spent a significant amount of time discussing the intergenerational wealth dynamic amongst the affluent which is a particular interest of mine. Highly affluent individuals tend to be less-educated than their children and are typically self-employed business owners, whereas their children tend to be more-educated (masters and even doctoral degrees) and employed as professionals (doctors, lawyers, engineers, accountants, etc.) It seems affluent people attribute a lot of their success to non-repeatable luck, and/or believe it’s possible to insulate their children from the volatility and vicissitudes of a more competitive life by encouraging them to obtain more education to enter cartelized industries with licensing or other legal obstacles to entry. The expectation (in terms of probability) is that these people will obtain less total wealth than their parents, but also experience greater security in their incomes and more stability in their long-term earnings path. As they say,

the relationship between education and wealth accumulation is negative… the longer one stays in school, the longer one postpones producing an income and building wealth

It would seem that regardless of the level of education our professional status of an affluent person’s children, the most important thing they need to learn is the same expense-control habits as their parents. Can that be taught in higher education? What happens if you become a stable doctor with a local practice and a strong propensity to consume all you earn? This isn’t exactly a profound point, but I was a bit astonished to see how little emphasis appears to be given amongst affluent families to instructing their children about how to manage accumulated wealth. One noted habit of the affluent is to avoid talking about receiving money that hasn’t been individually earned with their young children, the goal appears to be to avoid a sense of entitlement and get them to think about establishing their own financial position. But if they’re eventually due an inheritance (or manage to accumulate their own stack), why reinvent the wealth management wheel intergenerationally? Why aren’t more affluent people or families talking about how to responsibly manage, ie, grow, a starting base of capital accumulated in prior generations?

The book doesn’t explore the differences in behaviors between the merely wealthy ($1M+ net worth) and the significantly wealthy (say, $10M+) or the incredibly wealthy ($100M+), and while there are undoubtedly exceptions to the rule, my hunch is that any family that manages to sustain a fortune over subsequent generations ($100M+>$100M+) or grow it ($100M+>$200M+) is spending a lot of time talking with their children about how to handle this responsibility. The decision to have these conversations or avoid them is likely the tipping point between clearly defined social classes. Some people can’t imagine being anything but comfortably upper middle-class and glory in such identity, while others can’t imagine being anything but the cream of the crop.

Here are some other interesting ideas from the book:

  • Self-employment is a major positive correlate of wealth
  • “Employment-postponing” via higher levels of education has a meaningful impact on lifetime wealth accumulation
  • Is your spouse more frugal than you are? Millionaire households would answer “yes”
  • Most wealthy people feel that you get what you pay for in the realm of financial advice
  • Millionaires know how to play both sides of the wonder of interest– small expenses become big expenses over time; small amounts invested become big investments over time
  • The higher one’s net worth, the better off they are at minimizing realized income
  • Begin earning and investing early in your adult life; the longer your runway, the higher chance you have of becoming a millionaire
  • Under-Accumulators of Wealth (UAWs) usually think they have more wealth than their neighbors
  • The more dollars adult children receive, the fewer they accumulate
  • Good gifts for affluent parents to give their children:
    • subsidizing education
    • earmarking gifts so they can start or enhance a business
    • prefer to give their offspring private stock
    • Ask permission when contemplating giving significant gifts to your children
    • cash gifts are the single most significant factor for explaining the lack of productivity of adult children of the affluent
  • A typical behavioral mistake of affluent parents is to “strengthen the strong child, weaken the weak child”
  • Discipline and initiative can’t be purchased like automobiles or clothing off the rack
  • Courage can be developed, but it can not be nurtured in an environment that eliminates all risks, all difficulty, all dangers.
  • The sales profession is good exposure for the children of affluent; retail sales jobs provide children with objective third parties to evaluate their behavior
  • One of the proven ways that domineering parents control their children is by living close to them
  • Most spouses feel that charity begins at home
  • At least one outsider should be co-executor of an estate

4/5

Review – Crazy Rich Asians (#books, #Asia, #wealth, #family)

Review – Crazy Rich Asians (#books, #Asia, #wealth, #family)

Crazy Rich Asians

by Kevin Kwan, published 2014

On its surface, Crazy Rich Asians is a sordid story of dysfunction and social positioning within mega-wealthy sorta-nobility Chinese families originating in Singapore. It’s full of flashy outfits and the shocking shopping trips that put them in the characters wardrobes; over-the-top square footage and fully-furnished living arrangements in a part of the world known for nearly inhumane density and some of the highest real estate prices in the world; petty gossip like only those with too much time and money on their hands can engage in; oh, and wonderful, wonderful sounding food. For those reasons, it’s an entertaining read.

But just below the surface (not too far, mind you… these issues are philosophically auxiliary as far as I can tell, not intentionally contemplative like a work of classic literature) lie a series of family-planning and wealth-planning puzzles for the observant reader to consider. In no particular order, and with very minor spoilers, these puzzles are explored more below.

The first puzzle has to do with identity. When one of the main characters finds out that the early story of their family’s history is a fabrication, they are thrown into psychological turmoil and shock, their sense of self seemingly obliterated in a moments revelation. It begs the question “Who are you?” One answer is, you are your history, a series of factual contexts and accumulated decisions made up to any point in time at which you exist. Another answer is, you are whatever you believe you are– if you can convince yourself you are, than you are. This question is important for a few reasons. The first is that the way our brains function on a psychological level may require us to have certain beliefs about ourselves to maintain psychological integrity and thus enable us for other modes of action in the external world. We may be able to “constantly reinvent ourselves”, but only within a narrow band of experience or possibility, beyond that we are driven at a hardware level into anxiety and distress. Another reason this question is important is because it sheds light on how arbitrary our identities can be. If we can operate quite competently and confidently with a certain view of ourselves and our role in the world, even if this viewpoint is built on falsehoods, it suggests that what is important in terms of forming an identity is consistency of story, not accuracy. If someone can convince you you are the rightful king, maybe you are. If you come from a noble family but you’re told you’re a lout, maybe you will be. Where does one find “self” in all of this?

Related to this puzzle is parental relationships and the question, “Do you really want to know everything about your parents?” Each one of us is born into a world our parents have already been living for some time. We don’t know all the choices and ideas they had prior to our arrival and often we receive a filtered list of such information sporadically throughout our lives. We don’t have the ability to query our parents’ true thinking at any given moment and without becoming paranoid and running background checks or doing some sleuthing on them, we’re mostly in a position to accept what they tell us about themselves unless we receive some kind of alarmingly contradictory information that would lead us to question it. Similar to finding out your life might have been a lie, do we want to know who our parents really are? We presume they share the good about themselves with us, do we really want to hear about more of their foibles?

The second puzzle is about intergenerational wealth building. The narrative focuses on Singaporean Chinese families of stupendous wealth. Most of this wealth seems to be owned and controlled by surviving matriarchs whose heyday was the 1930s and 1940s (Gen1). The descendants (Gen2) and their children (Gen 3) appear to be idlers. Sure, some of them have “jobs” and other preoccupations, but none of them have to work and none seem to be contributing anything productive to the family wealth, which appears to be managed professionally by outsiders.

Why don’t rich families prepare future generations to manage their wealth responsibly? When the matriarch dies, what will keep the professional managers loyal, and what will give the surviving descendants the ability to manage these obligations without undue risk? Money is clearly important to these families, as they could give it away or have less of it but they don’t. But there doesn’t appear to be a meaningful attempt to teach the succeeding generations how to contribute to its growth and management.

Related to this is the question of what is the value of fantastic wealth? Although they think of themselves quite highly, the families depicted don’t seem to be better at much of anything that doesn’t involve buying things. In terms of character they have the same flaws and struggles as everyone else. If this wealth can’t make you a better person, or, put another way, you don’t use it to enable greater self-actualization, of what use is it? Ironically, wealth in this story is depicted as not creating conditions by which those who possess it can elevate themselves, but simultaneously it explores the ways wealth changes a person in terms of tastes and behaviors. Here we see not how a person’s values change, but the ways in which their ability to express those values do. If you don’t use it to become a better version of yourself, and you don’t learn how to manage and control it, what logical benefits does wealth offer you?

The final puzzle of the story is the puzzle of permanent capital. As none of the major characters and their families seem to contribute to the generation of their wealth, and none seem capable of doing so, where the wealth comes from and how it manages to persist, especially as it is being consumed at such enormous rates, is a bit of a mystery. Of course, in this story we can only see the families whose wealth has persisted across multiple generations despite all of the above-mentioned conditions and despite the changes in social and economic circumstances over decades. What we can not see are the families whose wealth ran aground over this period, because they won’t factor into a narrative about those who have great wealth except as a tale of warning which never seems to be told. It is amateurish and perhaps speaks to the intelligence or values of the intended reader but the author never provides even a small hint as to where the wealth comes from (oh sure, some new money families introduced here and there are the Such and Suchs of plastics, or the So and Sos of tech).

Though friends with government officials and even extant royalty, the primary families are disclaimed as not being of purely aristrocratic extraction or otherwise connected directly to a government-based wealth extraction mechanism. But from where else could such voluminous and seemingly interminable wealth emanate from, especially without influence or concern of the family? If such a source exists in the market (a contradiction in terms at the very least), how is it undiscovered by other market participants and thus immune to competitive factors? How is it financed?

In studying great exceptions there is an honest temptation to find some kind of exploitable rule. But I think it’s ultimately a fool’s errand, because you’re essentially looking at a highly improbable stack of luck and trying to figure out how to emulate something that is amazing that it even exists at all.

 

3/5

Pictures From Buenos Aires (#travel, #BuenosAires, #Argentina)

Pictures From Buenos Aires (#travel, #BuenosAires, #Argentina)

Somehow we never got to blog anything about the last part of our trip to South America in 2013, which ended in Buenos Aires. Here are some pictures from the visit:

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The public buses look like NASCAR-racers.

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Residential architecture example.

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This was a multi-course steak dinner at one of the finest waterside restaurants in the city near the financial district that cost us about $40/pp (USD) including wine and appetizers. Good exchange rate dynamics!

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I remember taking this shot in the “plastic surgery” neighborhood, just as an example of what a nice area feels like on the street. BA has higher-than-average rates of plastic surgery amongst women, much like Seoul, South Kora.

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An example of the European-influenced architectural styles prevalent in the city. I was told by a tour guide that building materials from Europe were used as ballast on ships making the transoceanic commute, so in a sense BA has literally transported European materials and style to the city which is why it’s easy to think you’re in Paris or Rome or some other European capital when walking around town.

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Equine statute of a martial hero in the park.

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I liked the way the trees made a “tunnel” on this street in the Palermo district.

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The Capitoline Wolf! In a park in Buenos Aires.

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I believe this is the central bank building.

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An old church.

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More architectural examples.

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This was an old school pizzeria we visited, where many BAers like to come for a pizza, a beer and a futbol game on TV.

 

Why Are Journalists Considered Credible And Authoritative Sources Of Information? (#news, #journalism, #politics)

Why Are Journalists Considered Credible And Authoritative Sources Of Information? (#news, #journalism, #politics)

From the blog of Mencius Moldbug, Is journalism official?:

When I think back to when I thought I was getting an accurate history of reality from the Times, I am full of amazement. I mean, when you read the Times, you are reading stories that were written by people. Their names are right there. “Steven Erlanger.” “Don Van Natta.” “Andrew Revkin.”

Do I know these people? Do I trust them? Do I have any reason to believe they are doing anything but feeding me a mile-long crap sausage? Why should I? Is it because they work for an organization called “The New York Times”? What do I know about this organization? How does it select its employees? How and why does it punish or reward them? Do I have any damned idea? If not, why do I trust its correct views on everything? Why not trust the Catholic Church instead? At least its officials make up cool names for themselves, like “Benedict XVI.” Imagine if all Times reporters had to choose a Pope name. Would this make them more, or less, credible?

You can see this quite clearly today when you look at journalists’ Twitter feeds. It is amazing what they put on these for the public to consume. More amazing still that they have any credibility left. Just try it yourself sometime. Read or watch something in the news, then look up the journalist’s Twitter feed and see if you consider what you just read/heard differently after the fact.