Kevin L, Author at Kevin Low

Lord of Finance

After leaving it on my bookshelf for a while I eventually took out Lord of Finance to resume reading books on my journeys. Written by Liaquat Ahamed, I bought it at one of Harris’ 20% storewide sales during a period when I was thinking about reading up more about Finance after the recent crisis. I thought it was good to beef up my knowledge of American finance since Age of Turbulence was the closest I got to reading about the financial sector of America.

The book turns out to be more than what I was expecting. Written in the style that feels very similar to Doris Kearns Goodwin’s Team of Rivals, Lord of Finance traces the little stories that demonstrated the personalities of the four most important central bankers prior to 1929. They had exerted huge influence on the economies of Europe and United States, and unintentionally engineered in the Great Depression with their policies and beliefs. It was interesting to get a peek at a world still obsessed with the almost divine quality of gold as a storekeeper of value and with poor understanding of monetary economics.

Even more intriguing is that monetary policies and innovations are being created by these people who has a nuanced view of monetary economics and poor understanding of the workings of the economy. The stories and opinions of civil servants, politicians and aristocrats in those years demonstrates the experimentation humans had gone through in order to figure out how this gigantic machinery works. Of course, this study and experimentation carries on today.

Liaquat Ahamed got really good reviews (here and here) from New York Times for this book, especially for the fact that the contents of the book chillingly echos the stories of Wall Street in the past couple of years, involving banking heros and monetary policies, speculative bubbles and a huge crash. The description of the mania and the built up to the eventual crash sounds rather familiar to me given that I just finished John Cassidy’s Dot.con a while back. Men’s penchant for not learning from History seems particularly pronounced in bouts of ‘Irrational Exuberance’.

For that, Liquat gives a brilliant analogy for the role of Central Bankers or the policies makers trying to stabilize the economy and also pushing for growth. He sees them much like Sisyphus in the Myth of Sisyphus, condemned the work hard to create the conditions fertile for economic growth only to have speculation and irrational exuberance extinguish the fruits of their labour – much like Sisyphus who have to push a boulder up a mountain knowing that when the deed is done, it’ll roll back to its original position for him to do it again. Perhaps Albert Camus is right, for the struggle probably do fill the central bankers’ hearts and the belief of their heroism keeps them happy.

Lord of Finance simply surprises me with the rich collection of anecdotes about the main characters of the story Liquat tries to tell and the manner it imparts knowledge on finance and the workings of money in the economy to the readers – subtly and not too overwhelmingly technical. As a result the book caters to a wide range of audience; students interested in economics, history, finance and perhaps just stories about great men’s mistakes.

Those interested in getting a preview before making a purchase of the book or going on a trip to the library to borrow it might like to check out New York Times.

Coercion of Free Markets

Inequality is a market failure. We do pick this up in A Levels but then there’s little discourse on that. Not only do we dwell little on the solutions – which ranges from progressive taxation to welfare handouts – we ultimately ignore how inequality undermines the ultimate roles of markets, which is the efficient allocation of resources. I’ve always grasp the idea rather intuitively but then fail to deliver it in a philosophical and economics framework. I’ve pointed out the lack of philosophical musings in today’s study of Economics when I introduced Michael Sandel’s lecture on Markets and Morals.

I’ve always pose the question to my Economics student, if a person earns $1000 a month and another who earns $1 a month both needs a glass of water. The rich guy is willing to pay $10 for the water while the poor one is willing to pay $1. The market thus allocates the water to the rich man. We all know that this allocation is problematic and it doesn’t seem efficient; how is it that, in terms of willingness to pay, a person who is only willing to part with 1% of his monthly income gets the good when another is willing to part with 100% of his monthly income for it? So what exactly is the problem of inequality?

Once again, Michael Sandel points this out in the second lecture presented in this video. You don’t exactly have to watch the lecture in order to grasp the point but the idea is that when inequality (in terms of unequal distribution of income) exists, effective demand cannot properly reflect the ideal sort of demand signal transmission that would allow the market to allocate resources efficiently. In extreme cases, free markets becomes not entirely free. In other words, people are not transacting out of their free will but coerced by their own economic circumstances. We see this very often in the case of poor people in developing countries who are forced to sell organs, resort to prostitution, act as surrogate mothers, become a runner for crack.

Gary Becker is not wrong about the rationality of these people. They’re making rational choices but it is often that their choices is very much limited. That unfeeling market processes coerce us into certain decisions is something close to the hearts of all of us. Often, however, we can’t quite work out what is so unjust about that because we believe that to a large extent, we determine our riches. Somehow, deep in our hearts we know that some other decisions that we made caused us to be in the state we are in such that we are coerced into making that next decision. The fact that this argument comes back to us shows how each and every decision made in the marketplace by us are not independent. This makes for a determinism argument in a market setting where free will is supposed to reign.

There are much wider implications of all these arguments and I shall explore them if I get the chance.

Governing Economics

Many have attributed the housing bubble that eventually resulted in the Subprime Mortgage Crisis to the previous, one of the longest serving Federal Reserve Chairman, Alan Greenspan. We are pretty familiar with Greenspan, who have written Age of Turbulence. In his book, he highlighted his general argument against anyone who would finger-point him as allowing a bubble to inflate. He pronounce that it is impossible for anyone, whether the regulatory body or not, to accurately identify a bubble.

As for the Subprime Mortgage Crisis, politicians in the United States still blames it somewhat on Alan Greenspan and now that everything is cooling down, Greenspan offers his own defence. Although Greenspan was nicknamed ‘the Maestro’, he subtly attributes the period of great prosperity and low inflation to the globalization forces and technological advancement more than his skills at handling the monetary policy of US. In any case, he outlines his job at the Federal Reserve as an observer trying his best to keep to fundamentals of the economy and the crisis therefore comes as a surprise both because of how the economic agents have basically defied market assumptions namely on the issue of counter-party surveillance. Essentially the government cannot possibly provide the ‘self-interest’ that is supposed to drive the free market.

No one says that managing the economy is an easy job. Sound economics decisions by governments often turns out to be political disasters anyways so sometimes politicians stop heeding economists altogether. The recent issues that confront Tim Geithner is essentially similar; the economy is picking up thanks to his plans but people are unhappy with him. Figures on employment are not helping him anyways since the recovery is ‘jobless’ so to speak. Management of the economy is a huge balancing act for the government.

The idea of government has gone really far since the days of Locke’s conception of the social contract. The philosophy of governance in the modern world is just getting more complicated.

Ditch Digging Passion

I once read a book of letters and speeches written by Richard Feynman, compiled by his daughter, Michelle Feynman. In a letter he wrote to a college freshman, he shares some invaluable advice:

“Work hard to find something that fascinates you. When you find it, you will know your lifework, A man may be digging a ditch for someone else, or because he is forced to, or is stupid – such a man is ‘toolish’ -while another working even harder may not be recognized by the bystanders – but he may be digging for treasure. So dig for treasure and when you find it, you will know what to do. In the meantime, you don’t need to make the decision – steer your practical affairs so the alternatives remain open to you…. The man happy in his work is not the narrow specialist, nor the well-rounded man, but a man who is doing what he loves.”

– Richard P. Feynman

I came across this quote in my own blog, while trying to recycle some ideas for a university program application essay. I think it is natural for people to pursue the things they are interested or passionate about. Some may be naturally good at it, while others may not be as adept as others at it in the beginning; it is inevitable that sometimes our vision gets obstructed by the smoke and haze ahead.

Let Feynman’s words serve as a reminder for all of us.

Morality of Markets

I’ve previously introduced Michael Sandel’s lectures on Justice in Harvard. I haven’t finished the series despite great interest in it but I recently watched another of his lectures, one at Chautauqua where he talks about the Morality of Markets. In some sense, I was particularly interested in this issue and believe that all those trained in Economics should be made to study it. After all, Adam Smith was a Moral Philosopher. The philosophical element of Economics is becoming lost in our study of it today.

Markets Corrupts?

That is what makes this particular Michael Sandel lecture extremely insightful. He starts with the idea that we’re now plagued by market triumphalism and he tries to question what is wrong with that. As often in his lectures, he poses a scenario either hypothetical or based on actual proposals in the real world and then solicits opinions from the audience. He eventually surfaces his points and ideas from the responses of the audience and does a brilliant summary of the issue.

He gives a good and important point in his conclusion of this lecture that explains why we should not allow markets to expand indefinitely in our lives. In other words, there are areas where markets can, indeed serve the best interests of the societies especially when we all can agree that the market system gives an accurate and fair valuation of the good or service involved. Unfortunately there are values out of the consideration of the market that we might cherish and therefore we should not allow particular goods or services to become commodities to be traded and transacted. The danger of the markets is that it leaves its mark on the commodities that are traded; the values that we cherish becomes diluted, corrupted by the market system.

The example of paying a child to read is important in illustrating this. We should cherish reading not because of the monetary gains but the intrinsic value derived from joy of reading and learning. Therefore when we start paying children to read, it sends out the wrong messages and distorts the valuation of reading. The trick then, perhaps is a solution around this limitation of the market, to be able to remove that mark that market leaves on the thing traded. Unfortunately there’s no easy solution and possibly none. This is a strong argument against markets and while it is applied to a small group of tricky issues, they are worth pondering over.

Michael Sandel makes Political Philosophy and Moral Philosophy not only accessible to the public and ordinary, non-philosophy students but also makes extremely relevant connections between traditional Western Philosophy and the issues plaguing us in the modern world. It’s really fortunate that we are able to access his lectures even though we are not studying in Harvard or in America. There are other videos of his public lectures available on FORA.tv.

Impersonal travel

I write this time on something less relevant to my usual muses about politics, the environment, geography or economics, as I leave for India tomorrow and wont be writing until April. I was trying very hard to find inspiration to write something different or something I’d feel passion for, but I did not find any in The Straits Times or this week’s The Economist. Instead, I found an article about travel on Financial Times. In their Travel column, Sophy Roberts writes about how tourism and travel nowadays is all about the crowds: plenty of people thronging the same sights as you, making the place feel very impersonal and leaving you with a bad impression and aftertaste.

Roberts writes about her own experiences in Venice and somewhere closer to home: Angkor Wat. All these tourist hotspots are becoming too popular and visited by too many people that many times when you visit a place what you see there most of the time is people and not so much the real place of interest. Tourism is pretty much a commercial concept, of course, but it seems to have become too commercial and too popular. The clamour towards the middle class has also unleashed this attitude or desire to see the world and experience what it’s like outside, which is not bad unless thousands of others think like you and wish to do the same.

Even I am guilty of having this desire to see the world and travel to everywhere and anywhere I can. My passion as a geographer developed very much as a result of and with the desire to see the world beyond Singapore. And it is important to travel outside of your home country to experience the diversity of cultures. It’s just sad that many of these tourist places have now become too saturated with unfettered tourists, especially during peak season, that it just taints your experience or could even destroy the whole beauty of travelling around.

I wonder if I were in the writer’s shoes, would I have done what she did, to fork out that kind of money to get exclusive access to less-crowded places. Personally, I have visited places that I felt would have been beautiful were it not for the huge crowds, especially in China. When I visited Hainan Island twice in 2006, the beaches that I visited were actually really beautiful places, but the whole picture was tainted by the tremendous numbers of tourists like myself who wanted a piece of the place. And in my plans for future travel, I keep thinking about visiting places that are not saturated with tourists, but then I would not be able to keep within my tight budgets if I were to really backpack across Malaysia.

Then again, for some tourist attractions, it is the tremendous number of people there that gives you the vibe and excitement. Kuta Beach in Bali, when I visited in 2008, was not that crowded but I think I might have felt the holiday mood more if there were more beachgoers and more surfers around. I sure hope that when I visit the Taj Mahal in India, I will not have to fight with the crowds to take a photo of this Wonder of the World.

The writer ends by saying that “cliche… has long been an intrinsic part of tourism”. Maybe.

Interesting ideas for green transportation

Well, I dont intend to touch on or cover the conventional ideas people have about green transportation, but I was quite intrigued by two innovations that The Economist introduced in their Technology Quarterly this week. These are places you normally wont hunt when thinking about cost-savings and environmental-friendliness, but it reminds you that there are actually many areas to work on to do your part for the environment, not necessarily on the biggest or most radical of ideas like, say, using electric cars.

The first innovation is a collapsible shipping container. If this catches on, it could overhaul the way ports work, as well as alter how our port at Tanjong Pagar and West Coast look like. Made from “a fibreglass composite”, it is cheaper to produce than the normal steel containers. The weight and space / volume savings would significantly reduce transportation costs (such as the number of ships used to transport the crates, the amount of fossil fuels used for the ships) which would then help reduce the environmental impact of shipping and trade. Treehugger has more details regarding this innovation.

The second innovation focuses on the wheels of vehicles and how they can be made more in more environmentally-friendly means as well as make driving more environmentally-friendly. The material used to make the tyres are now being modified to either increase fuel economy of the vehicles they are mounted on or to make the production of tyres greener.

Small improvements and advancements in terms of technology, but we need all these little contributions to “business as usual” by the private sector if governments are unwilling or unable to carry out the sweeping reforms necessary.

Stealth Marketing

I frequently go on to Apple Trailers to look out for interesting movies that are upcoming or that I’ve been missing out. They offer a good mix of films from Hollywood as well as some independent film makers. Recently, The Joneses caught my attention. Their own movie site is not exactly ready yet but here’s the synopsis from IMDb:

“The Joneses”, a social commentary on our consumerist society. Perfect couple Steve and Kate Jones, and their gorgeous teen-aged children Jenn and Mick, are the envy of their posh, suburban neighborhood filled with McMansions and all the trappings of the upper middle class. Kate is the ultimate trend setter – beautiful, sexy, dressed head-to-toe in designer labels. Steve is the admired successful businessman who has it all: a gorgeous wife, big house and an endless supply of high-tech toys. Jenn and Mick rule their new school as they embody all that is hip and trendy – cool clothes, fast cars and the latest gadgets. But as the neighbors try to keep up with the Joneses, none are prepared for the truth about this all- too perfect family.

Obviously, the title comes from the English catchphrase, Keeping up with the Joneses but the idea is interesting. The Joneses is a perfect family made up to market goods to the upscale gated community by a stealth marketing organization. I do suspect that big companies does this sort of things at times but probably more through viral marketing than to consciously employ people to befriend potential customers and introduce goods to them. Whether this is considered ethical, is perhaps what the movie is exploring.

In a sense, the movie calls for a reflection on how social forces are increasingly shaping our economic lives, and at the same time questioning the value of relationships.

The Personal Statement

Your Singapore-Cambridge A Levels Results is just released, you scored pretty decent grades, enough to get you the course you want in University, so now what? The thing that stands between you and the offer to the course you want from the University is an application form (besides the tuition fees of course). And unfortunately the application form is not just about filling up your details and your results, it requires some information of your personality, aspirations and such. And they do this through a Personal Statement (or whatever they call it).

Usually a personal statement doesn’t offer any questions; at least UCAS works that way but they do give some sort of guidelines as to what to include in it. You should generally talk about your academic interest, the motivating factor behind your choice of course and some activities or achievements that is in line with that. Or if appropriate, you could talk about the kind of books you read. After which you can include some of your other interests and the reason for your choice of study setting. And depending on your preferences, you could end with an appeal for an offer.

Unfortunately, not all applications are that liberal with the stuff you can write. Some would restrict you with a question, which students might prefer at times. The most popular question that have been asked is ‘What are some values or beliefs do you hold on most strongly? Give evidence of how you demonstrated them.’ And to tackle this question, you basically have to choose some of these values and beliefs. They come across as pretty generic and the content would depend really on the story you have to tell about yourself. A good story is rare but would come strong; that doesn’t mean that ordinary tales about your life won’t stand out. You’ll never know. Here are some values that you might use and also guidelines as to what life story you can pick.

Discipline – How you managed to keep yourself away from temptations/distractions and pursue your goals (in studies and other endeavors of life)

Integrity – How you have been consistent in your thought, words and deeds (Maybe during leadership stints in CCAs, or what you’ve promised your teachers and friends)

Teamwork – How you might have dropped your own idea in support of a team activity and gone along with everyone (maybe in Project Work)

Compassion – How you’ve gone all out to reduce pain and sufferings of others (perhaps community work and such)

Hard Work – How you worked hard and it paid off (very cliche and overused value so I’m suggesting you don’t use it unless you’ve a unique experience to share)

Balance – How you’ve managed to juggle commitments and the lighter bits of life (once again, drawn from work and life)

Excellence – How you’ve insisted on the best from yourself and the people around you (probably in Project Work or your CCAs again)

There’s also questions that ask for an event or a person that has influenced your life; these usually end up being very cliche sort of writings but then if you know how to package it, even cliche writings can appear impressive. It is important that the influence is positive and powerful if not significant to your current attitudes towards life. This is especially true when your content has something original to offer within the cliche framework in the first place. I’ve seen the essay of a successful Havard Applicant about his mother’s influence in his life; he started out about how a cliche is one because it is often true and then about his mother who is a NASA engineer.

Other questions could simply ask for what you’ve done in your last summer vacation or what you will be doing before entering the university. These are easy for those with exciting experiences like touring around the world or working at an interesting job. For those involved in mundane jobs and boring work, try your best to extract lessons learnt from your workplaces and experience that could be applied to university life or the course of your interest. It could range from making calls and interacting with customers to researching on the Internet for some information your employer have asked you to put together.

Some other general pointers about this writing is to stay humble (humility, incidentally, could be used as one of the values) and to keep description of your experiences simple and free from unrealistic adjectives. Use plain English with more sophisticated sentence structures rather than bombastic words to impress readers. That way, you exhibit maturity of thought rather than a childish urge to flaunt your vocabulary. Finally, paragraph your writing properly and it would be best to get a tutor or teacher to go through it for you. They are experienced and have seen the statements by many other students so would be in a good position to offer advice for improvement.