Do you believe in fate and destiny? Some believe fate is pre-determined, hence logical determinism will run its course, and we just have to live along. Some believe spontaneity plays a part in the course of determination, that one’s decision over time will pre-dominantly determine eventual outcome.
It is very tempting for one to delve into such philosophical a topic and find the answer. More often than not, however, one gets lost along the way, leaving oneself worse off than before one began. Moreover, it might be that one need not understand such a topic to live a good life.
Some thoughts have led me to the latter conclusion. Many people figured correctly that I like to get philosophical. However the truth is that I am not good at philosophy. My reasoning ability, contrary to public opinion, is basic at best. Conviction, rather than strict reasoning, drives me more often than not. Whether by course of nature or deliberate action, my efficiency in learning has been slowly declining.
However, I have no fear to reading. I do know that I can always better myself, albeit slowly over time.
Now, compare the down factors and the up factors. It is immediately obvious that, if length counts, odds are against my favor. I have no luck.
But reading can do many good things. First of all, by reading others’ works, I can let others think for me. I do not have to go through the same painful process of expending much energy to get the same conclusion and corollary. Secondly, reading begets reading. Reading a material, one inevitably comes across pointers that say “there is such and such a work worth exploring further.” Going after that work, one will find pointers again. And so forth.
Of course going after the pointers requires effort. Sprints won’t do. Marathon is the key. It is easy to exhibit interest in reading, but hard to maintain. Being slow is not an impediment in reading. Knowledge compounds. One maintains his pace, and invariably he will understand more and more over time. The process is geometrical, not linear. And that is a big plus.
And so is accumulating capital. Knowledge is but one form of capital. In a monetized economy, one needs a commodity known as money to purchase material needs, so money is important. However money is not everything. Many people had basic understanding concerning this tenet, but not profound understanding.
The best way to achieve such profound understanding is reading and thought. There is no substitute I can think of.
But are reading and thinking substitutes? To some extent I think so. Reading reduces one’s need to think intensely. However, “annealing” is always up to oneself.
On another note, I can’t help but be skeptical about my ability to predict the future. How I would thought such and such things happened within the span of a year? In this respect, I must demonstrate no symphathy for extensive forecasting.
However, comparing present situations of different parties is useful. One needs only existing information, not conjectures. Discrepancy between the situations signals the need for action or inaction, depending on the case.
One very good application of this technique is Ben Graham’s “margin of safety” principle. One needs to ascertain not future performance but present states. Note though, that the current situation incorporates conjecture. Again applying the principle, the key is conservatism. Conservatism is the “discrepancy” concerned. Generally, the greater the discrepancy the better.
Which brings us back to the question whether to delve into “philosophy”. Though not exceptionally good at reasoning, basic logic applied well goes a long way. Reading helps, so does compounding. These are excellent leverage, and one can use those to his advantage.
You might wonder why I painted such a gloomy picture. The truth is (now I’m speaking about the truth, hmm) it is always a good policy to know one’s limit and stay within the boundary. Pushing one’s limit is good, but going over it is not. Confusion of the two brings disaster most of the time. I can’t help but be wary of preachers that declare there is no limit to what one can do.
Warning: You don’t seriously believe this, do you?
Prologue
There is almost unanimous agreement that we live in an era of innovation, fast change and considerable volatility. This is true in the field of romance, marriage and family. New forms of romantic relationship are emerging. Divorce rate has increased. Financial aspects of life has taken on greater significance.
Despite such trends, financial innovations failed to cater to this area. It is with considerable vision and courage that a group of people, armed with degrees in financial engineering, political engineering and social engineering, decide to enter this field, and revolutionize romantic and domestic relationship through technology and finance.
Marriage Insurance
The idea of marriage insurance is not new; its history traces back to Elizabethan England, but had not been underwritten since. Capitalizing on the improved technology, actuarial techniques and ready availability of statistics, XYZ’s insurance division offers a range of marriage insurance for a wide range of clientele, from the orthodox to the flamboyant. There are two types of marriage insurances: straight policy and reverse policy.
Straight policy is targeted at married couples, and in the event of their divorce, the company will pay the charges and alimony, in return of premium prior to the breakup. Its operation is similar to other insurance operations. However, a major difference is that governments will comprise the majority of customers. Not that governments will engage in marriage, but that countries with low marriage rates can engage the company to offer nationwide coverage and a reasonable per-couple premium rate. This could provide greater incentives for people in such countries to marry.
Reverse policy is targeted at parents and children. The insurance company will offer reduced premium for children’s life insurance in return for children’s promise not to enter marriage and conceive children; failure to do so will result in substantial liquidated damages and a loss of reduced rates. The parents would act as trustees, which is believed to provide strong incentives to prevent their children from engaging in undesirable behavior. In addition to profit-generating activities, the company enhances social welfare.
Securitization of Marrying Agents
Marriage is currently a protracted and time-consuming process, not to say expensive. Business dealings have to be interrupted. Significant value of dowries change hand. Families literally engage in barter. In other words, marriage carries significant transaction cost.
Securitization of marrying agent – the bride and the bridegroom – substantially eliminates transaction cost. A special type of legal person would be created on behalf of the client and be listed in the primary market; in addition to the client, the legal person could incorporate such dowries as shares, houses or cash. Such arrangements could be made well in advance, even before the client’s birth (but after conception). The asset management company also offers various funds instruments for parents to save and invest dowries for their child, and to engage in advertising campaigns.
The legal person could be reconciliated with the marrying agent upon marriage; the dowries would be accordingly transferred and other pre-arranged transactions made. The client could also retain the legal person shall he or she find marriage a convenient but temporary arrangement, for such purposes as tax minimization or other governmental benefits. A secondary market of legal persons is expected to be lively considering such activities. When the client no longer desire to remain associated with his or her existing spouse, he or she could list the legal person on the secondary market.
Relationship Futures and Other Derivatives
Well wishes are well intentioned, but are nothing more than intangibles. So does jealousy arising out of romantic rivalry. With such advanced instruments as marriage swaps and other derivativeinstruments, such wishes, well or ill alike, could be reduced to material form, to the benefit of couples, well-wishers and ill-wishers.
The XYZ marriage instruments division will underwrite derivative contracts for such wide range of clients. The most basic form of derivatives use married state of a couple as underlying asset. The contract could originate from either the well-wishers or the ill-wishers. It is cash-settlement only, and has no notional value. More sophisticated contracts have such features as pricing points. The wishers could then actually engage materially in backing their wishes through purchase of such instruments. It is the most visible way of supporting or threatening the couple, in line with capitalistic concepts of profit and loss.
A Basket of Spouse(s)
Some people would not want to get married for various reasons: inexperienced and too shy; unwilling to remain committed for a long time; afraid of being cheated; in perpetual search for strategic marriage; and so on. The gospel of diversification will cater to these people well. Although they had no chance of “beating the neighbors“, risk and statistically-significant unhappiness will be eliminated.
The marriage with a basket of spouse(s) serves such diversification effort well. It is not as simple as purchasing a mutual fund, but nevertheless still simple relative to the process of orthodox marriage. An entity call “Special Relationship Vehicle” will be incorporated for the client in need of diversified marriage. The client could choose from a wide variety of baskets, ranging from an all-encompassing basket, in which every kind of people is represented, to the more exotic kinds of profile, such as spendthrifts or even non-humans.
The purchase entitles the client to a timeshare of certain services, such as childbirth and romantic undertakings. However, the client would have to have at least 1.0 unit of the former, or 0.5 hours of the latter, before he or she could redeem the actual commodity. Nevertheless, clients who have preference for such activities could still utilize this instrument as an attractive short-term arrangement while looking for longer-term ones.
Prospects for XYZ
The company faces a very bright future. There is presently no operator in the field in which XYZ desires to operate, nor it anticipates in the immediate future. Liberation and liberalization of mindsets will substantially aid the company’s undertakings. Conservatism of most businesses will afford the company a significant and sustainable competitive advantage. Therefore and in addition to its strong financial capability, the company does not intend to invite external investors, although is willing to engage in join ventures, both with private and public sector operators.
It’s available here. Anyway, I’ll reproduce it in full below. Haven’t done a critique for a long time!
THE POOR do not need perpetual handouts that make us feel good about ourselves, but which do nothing for their next generation, and the generation after them. We need policies that work for them.
No comments about that. Just a remark: “Policy” is just another word for “government intervention”.
One such policy, which I believe is long overdue, is a minimum wage framework. Because when we allow companies to pay pittance, we demean the work of another’s hands.
Who allows companies to pay pittance? Which company? If you do know which companies pay pittance, you have the right (and perhaps self-imposed duty) to boycott their products.
It’s worth repeating the last section here in order to see more clearly what the author has “argued”. Let’s see:
One such policy, which I believe is long overdue, is a minimum wage framework. Because when we allow companies to pay pittance, we demean the work of another’s hands. By allowing it to go on for as long as it has, we have inevitably demeaned their personhood. And we continue to scorn their dignity by saying that they are not worth that much. We say to them that they are negligible. That they are of little, or no value at all.
In the first place, the author originally wants to demonstrate why a minimum wage policy works for the betterment of the poor. Towards the end, however, the author “concludes” that “We say to them that they are negligible. That they are of little, or no value at all.” I think that’s a very far cry from what the author originally wants to argue.
Secondly, let’s analyze the author’s argument structure. “When we allow companies to pay pittance”, it does not follow that “we demean the work of another’s hands” – there is no proximity between the two events. Following that, the author introduces a new premise on our behalf – that we are “saying that they are not worth that much”, so on and so forth. In the end, the author concludes that “They are of little, or no value at all”.
In short, the passage is not admissible as a piece of argument. It is a piece of rhetoric.
Minimum wage is not an “ideal policy”. It is a necessary policy that must be put in place to act as a check and balance on capitalism, which left unregulated will and has manifested in uncontrolled greed, where the poor cannot afford a RM3.50 meal, and the rich pay RM200,000 for a two-seater sofa set.
What does “ideal” mean? I’m not trying to unduly criticize the author, but to point out to you that “ideal” is a slippery concept. In economics, when one speaks of an “ideal” policy, he normally means one which does not distort people’s behavior. The most quoted example is a lump-sum tax.
Secondly, the notion of a “necessary policy”. The author claims that minimum wage is a necessary policy, but does not proceed to justify that claim. I’ll do some homework for the author. Consider the statement “If minimum wage is not implemented, some undesirable outcomes will result.” I take this to be the author’s position. In order to demonstrate that minimum wage is “necessary” to prevent undesirable outcomes, the author must proceed prove the above statement. Unfortunately, the author did not do this in the article. As of the above, the author too did not demonstrate convincingly that a minimum wage policy works for the betterment of the poor.
So, I say to this government and to the Human Resources Ministry: For goodness sake, if you want to regulate something, regulate the right things. Impose a minimum wage now, because relying on the conscience of big business isn’t going to take the thousands of lowly paid workers out there very far.
Again, “right” and “conscience” are very slippery concepts. Again, the last statement is not an argument, but a piece of rhetoric, because the author does not demonstrate sufficiently the causality that “Impose a minimum wage now” follows from “relying on the conscience of big business isn’t going to take the thousands of lowly paid workers out there very far”. If you are unsure why this is so, apply the analysis above in this case without loss of generality.
And please, stop mouthing ridiculous statements like “Implementing minimum wages is not feasible.” Not feasible for whom? The Federation of Malaysian Manufacturers? The Malaysian Employers Federation?
Is there an argument, anyone?
Jerit, an NGO that has been petitioning for a minimum wage since the 90s, recently launched a cycling campaign starting from Alor Star on Dec 3, culminating in the handover of a memorandum to the prime minister on Dec 18. Their goal is to raise awareness on the need for a minimum wage policy along the way. If you can’t cycle, go adopt a cyclist now at www.jerit.org .
It’s time to empower the poor, and to restore their dignity by affirming the worth of their labour.
That wraps up the article. Now it’s time to have a little bit of economic lesson! Is it true that minimum wage will “empower” the poor by raising their wages?
What is true is that, when minimum wage is first imposed, the poor who are working will see their wages rise. The poor who do not work do not see wage increase (in fact, some in the group might have no income at all!).
What will happen after some time? Most people think that minimum wage will cause the poor to become richer, and that’s all. If you’re business-minded, or have done managerial accounting, you should know that cost will rise as long as the minimum wage is above the prevailing wage. Will you do nothing if you run a business? That’s hardly sensible; you will start to look for ways to reduce cost – hire better educated and more productive workers, substitute machines for labor, or worse, go underground – hire illegal immigrants. Or perhaps move overseas; after all, China and Vietnam are nearby and their markets are far larger than Malaysia’s.
To put this in a graph of labor supply and demand, here it is (click to read the Wikipedia article):
The prevailing wage is the point marked “equilibrium”, where supply and demand curves for labor intersect. If a minimum wage is set, demand for labor will drop, supply of labor would be greater as a result of higher wage, and unemployment would result.
Who will be left behind, in the end? The poor, who minimum wage is suppose to help! You might want to see this sad story in real action in the United States. It’s nice (though unpleasant in reverberation) to wrap up with a video:
Well, forget about definitions as offered in journals or textbooks,
He’s just institutionalized…The man’s been in here fifty years, Heywood, fifty years. This is all he knows. In here, he’s an important man, he’s an educated man. Outside he’s nothin’ – just a used-up con with arthritis in both hands. Probably couldn’t get a library card if he tried…these walls are funny. First you hate ‘em, then you get used to ‘em. Enough time passes, it gets so you depend on ‘em. That’s ‘institutionalized’…They send you here for life and that’s exactly what they take, the part that counts anyway.
