Sure Beats a Swift Kick in the Pants

Well, this is peculiar.

Idiots' Collective has apparently been nominated for some kind of an award, and suprisingly enough, it's not for the "Most Posts Related to Bodily Fluids and/or Functions" prize. I won that trophy last year.

No, indeed. The crew over at The Hub of Sparkle! have, for some reason, seen fit to put my site into the running for "Best Personal/Diary Blog 2008," which is odd given that 2008 was not a stellar year for this outpost of idiocy where personal/diary blogging was concerned. Oh sure, the year kicked off with some cretin taking a crap on my street - an all-too-personal event for the ol' diary - and made its way through Bumper Nuts, wedding pissers, driving with the wife, the Olympics and, of course, Guro, Guro, Guro, but looking back at the year's output, I'm struck by just how impersonal the posting was. I guess a presidential election, a financial crisis and the prospect of one's government frittering away trillions of dollars rather focuses the mind on matters external. How posting on such matters gains me recognition as a "personal/diary" blogger, however, remains unclear.

But given that a man should never turn down kind words, I choose merely to be content in my good fortune.

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Come Ye Back to the Puckerbrush

There's a reason people move to Seoul, and believe me, it's not for the clean air, the laid-back pace, or the friendly bus drivers. They come for the jobs, for the schools, for the avenues of cultural enrichment - in other words, for opportunity, of which there's precious little out in the countryside wop-wops of, say, the Jeolla or Chungcheong Provinces. But just you wait, the Korean government has a plan up its sleeve:

The Ministry of Agriculture said yesterday that it will foster new development in five cities in North Chungcheong, South Jeolla and North Jeolla provinces as part of a trial project to lure big city younger adults back to their hometowns.

The areas slated for development - including the lovely town of Danyang - are all in farming or fishing areas where employment has been falling for years thanks to modernization and lower prices due to imports (yes, a few get in). Couple that with an advanced Korean economy which demands a highly-educated workforce and most folks don't have to think twice about slipping off the farm and heading for a job in the big city.

The Ministry of Agriculture, however, sees this population shift in purely negative terms:

“Securing a younger workforce [in the rural areas] is needed because the agricultural and fishing industries are currently led by older and poorer folks and few are willing to take over their jobs,” said an Agriculture Ministry official. An aging population and low birth rates in rural areas have emerged as serious social issues in Korea, which still relies heavily on home supplied farm and marine goods. “We will form a successful model through the trial project and expand the beneficiaries starting 2012.”

So, let me get this straight: the government is going to bribe people - well-educated, highly-skilled cityfolk - to go back to the farm and seed rice paddies, even as the country maintains, for example, a 360% import tariff on garlic. Had the country followed the same logic in years past, Koreans would still be stitching cheap-ass sneakers in a firetrap factory in Garibong.

Listen up, then, all you government-types: the goal is - or at least should be - to move people out of jobs like farming and fishing and into more value-added positions that create further wealth for humanity. That's how we humans have come to live in a world of iPods, indoor plumbing and Bumper Nuts.

Goodness, it's nice to know that governments aren't actually in charge of anything.

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The Flatlines of Stimuli

Color me less than surprised. From David Brooks in yesterday's International Herald Tribune:

According to The Washington Post, of the $30 billion devoted to highway spending [in the proposed government stimulus package], only $4 billion will be spent in the next two years. Less than $3 billion of the $18.5 billion for renewable energy and less than half the financing for school construction will be spent by 2011. The Appropriations Committee chairman, Representative David Obey, fulminated against the CBO on Wednesday, and the uselessness of economists in general, but he had no answer to these findings.


Third, the spending measures in this bill have no sunset. In the middle of the appropriations markup, the ranking member, Representative Jerry Lewis asked his chairman the crucial question: What happens when the economy recovers? Does this new spending disappear?


Obey refused to answer, but he didn't have to.

And Brooks is a writer who actually believes in the government's capacity to stimulate wisely. Russell Roberts, writing at Cafe Hayek, is less sanguine:

But maybe, just maybe, there is nothing the government can do in the short run to help the economy improve. What if it's like a cold? There are pretend cures and cures that look like cures because of spurious correlation. But what if there's nothing the government can do other than avoid mistakes?

Admitting that the best thing they can do is nothing, however, doesn't come easily to politicians.

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Bookish Reflections on the Inauguration

"In just a few weeks the young man would become President of the United States, and...there was an air of excitement about every small act, every gesture, every word, every visitor to his temporary headquarters. [The reporters] complained less than usual, the bitter cold notwithstanding; they felt themselves part of history: the old was going out and the new was coming in, and the new seemed exciting, promising."

David Halberstam, The Best and the Brightest
Writing of the inauguration of John F. Kennedy, 1961

Amidst all the pomp, splendor and emotional caterwauling surrounding the inauguration this week, I've had two books in particular on my mind: David Halberstam's The Best and the Brightest and A Conflict of Visions by Thomas Sowell, neither of which, should they prove prophetic, bodes well for the years to come.

Halberstam's book has, quite justifiably, become an indispensible guide to understanding the roots and causes of Vietnam War, and specifically how a crack team of such intellectual heavyweights - including Robert McNamara, the Brothers Bundy, Dean Rusk, etc, et al - could have stumbled into what became a national, and completely unnecessary, catastrophe. How could these guys, who had always been the smartest guys in the room, fail to see the consequences of their decisions? The answer was twofold.

These men, yoked to insecurities from which even today the Democratic Party has yet to free itself, suffered a hangover from the days of Communist witch hunts at the hand of Joseph McCarthy and lived in fear of being painted as weaklings on foreign policy, as they had been when they "lost" China to Mao's Communists in 1949. Damned if Vietnam would fall on their watch, too.

The history, however, served merely as impetus. A more fundamental tripwire within this group was what Sowell calls their vision - the implicit assumptions under which we, as humans, operate and which we often do not even articulate, even to ourselves. In his discussion of the matter, Sowell characterizes people as holding one of two visions - the "unconstrained" or the "constrained." In the unconstrained vision, human nature is seen as malleable: selfish and myopic right now perhaps but capable of great transformation - indeed, transcendence - given the right direction, usually at the hand of "great leaders." Sowell gives as historical examples of this vision Rousseau and Condorcet and, more recently, Barack Obama, more on whom in a minute.

The constrained vision, by contrast, is characterized by a view of human nature as unchanging and instead of trying to lead mankind to salvation, as it were, the constrained vision seeks to steer human action - to constrain it - through the proper incentive structure. Adam Smith, according to Sowell, is perhaps the classic example of this vision, though as Peter Robinson notes in the above discussion with Sowell, the conflict between these two visions extends as far back as Plato and Aristotle.

The men forming Kennedy's - and later, LBJ's - inner circle evinced quite clearly the unconstrained vision, believing, as Halberstam put it, "in the capacity of rational men to control irrational commitments." Winning in Vietnam was, for them, simply a matter of getting the arithmetic right, of convincing the Vietnamese that we Americans knew what was best for them. These men, Halberstam writes, felt that "people who are about to be saved from the Communists should feel some element of gratitude, and at the very least that gratitude should surface in the form of knowing they were being saved, and more important, wanting to be saved."

It's been with no small amount of consternation, then, that I've heard numerous figures in the professional commentariat refer to Barack Obama's cabinet appointments as "the best and the brightest," obviously forgetting that the book of this title does not end well. Such comments betray the prevalence of the unconstrained vision in today's society, a sense that if only we can get the right people into elective office, everything will be rainbows and cinnamon.

David Harsanyi, columnist for the Denver Post, neatly distilled this topic on Wednesday when he wrote:

Yes, two important historical events transpired Tuesday: The first was the peaceful transfer of power from one freely elected politician to another (an uninterrupted streak we often take for granted). Then there was the first presidency of an African-American, which proves we can transcend our unsightly past.

After that, what we had was just another election. We conduct one every four years. For those of you not shouting hosannas, it might have occurred to you that we are suffering from a rampant sickness in American life that casts government as the author of your dreams and an Illinois politician the linchpin of your hopes.

The truth is almost always unsightly and now is no exception, but let's take that truth as it is. Perhaps, and hopefully, Obama will roll the US out of Iraq as soon as possible, but we should remind ourselves that nothing in the Middle East ever ends well and withdrawal may turn out to be almost as disastrous as remaining. So, too, for Afghanistan - nothing has ever ended well there either. And for all the debate over tax cuts, stimulus packages and bailouts, we would do well to consider that perhaps there is nothing the government can do to stem the current financial woes - an admission, however true it may be, we'll almost certainly never hear from the mouths of elected officials, most of whom are wholly unconstrained.

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American Whiner

Perhaps it started with Holden Caulfied, protagonist of The Catcher in the Rye and he of the red hunting cap with the old peak swung round to the back.

"Holden," wrote George Will in a 2001 column, "was a new social type, which subsquently became familiar: the American as whiner."

I've flashed back to Holden Caulfield a couple times over the past year - my viewing of Sam Mendes' Revolutionary Road last night being the most recent occasion - and have come to wonder if there is anything more tedious than watching the lives of uninteresting people who fancy themselves exceptional. The success of the blogosphere proves unambiguously that I am, in this opinion, in a minority and I suppose that the existence of this blog - my blog - probably indicates that I, too, hold myself in higher esteem than I deserve.

But leaving that aside for the moment...

Revolutionary Road is about as dismal as movies come. By that I don't mean that it's a bad film, only that two hours watching the comings and goings of a cast of such vapid people rather saps a person of his own sense of vigor toward the world.

The main characters of the film, Frank and April Wheeler (DiCaprio and Winslett, the reunion tour), have it in their heads that they experience the world more deeply than those around them, that they're somehow above the prosaic suburban world in which they live and that, by moving to Paris, they'll manage to outrun themselves. Spend ten minutes with the Wheelers, though, and you'll quickly realize that they'd never do anything so risky. Heavens, no: moving to Paris might change their lives, open a door toward happiness. The Wheelers, as Will wrote about Holden Caulfied, are clearly "alienated" by the shallowness of American society but, rather than seeking like Huck Finn to liven things up, they mope through life and relish "the pleasure of despair." They're miserable, they love it, and for two hours they made me miserable.

Somewhere amidst the same genus of entertainment sits Six Feet Under, the HBO dramatic series of which I wrote last summer and about which, since watching it, I've had second (and third) thoughts. Although not as guilty as Revolutionary Road on this front, SFU similarly confuses "self-absorption with sensitivity," as Will put it, investing the characters' "banal discomfiture with more meaning than they can bear."

I'm tired of watching well-heeled people complain about the emptiness of their lives. I'm cautious in that statement, however, because I realize that satire and other forms of social commentary are at their best when they irritate us, elbow us, and generally make us uncomfortable. Still, watching Revolutionary Road and Six Feet Under, I couldn't help but think back to a previous Mendes film, American Beauty, a movie that also lays into suburbia and its various insipid qualities. The difference? Lester Burnham (the main character, played by Kevin Spacey) actually does something about his misery and whether or not it ultimately makes him happy is hardly the point because at least he, existentially if not physically, did as John McPhee suggested: he threw a loaf of bread and a pound of tea in an old sack and jumped over the back fence, so to speak. He got out of his own head, and my movie-viewing experience was better for it.

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New Skin for the Old Ceremony

People watch South Korean President Lee Myung-bak on TV, delivering New Year's address to the nation at the Seoul Railway Station in Seoul, South Korea, Friday, Jan. 2, 2009. Lee said Friday he will make it his priority in the new year to pull South Korea out of the global economic crisis as Asia's fourth-largest economy reported a trade deficit for 2008, its first in a decade. (Photo by Ahn Young-Joon)

In his New Year’s address, the president promises to bring the economic crisis under control. He faces an uphill battle, however, given that in 2008 Korea posted its first trade deficit in more than a decade and the KOSPI finished the year down more than 40%. And even Lee admitted that the actions of other countries around the world may do more to help or to hinder Korea’s recovery than the actions taken within the country.

Lee, however, has reaffirmed his vow to focus on deregulation, reform of state-run companies and the public education sector, and what he calls a “Green New Deal” that includes a plan to refurbish the nation’s four major rivers, a project that Lee claims will create 280,000 new jobs. The government is also set to invest trillions of won in “green” research, seeking to make alternative energies the next stage of Korea’s economic growth.

In addition, the government will provide subsidies to companies that offer temporary leave to their employees rather than cutting jobs. Oddly, though, Lee himself last week called on conglomerates to voluntarily downsize their operations and workforces.

Reading the recaps and punditry of Lee's speechifying - filled as it was promises to spend money here and inject liquidity there - put me in mind of Bastiat's notion of what is seen and what is unseen: government projects may appear superficially productive and worthwhile (the seen), but where did the resources/money come from and to what other, perhaps more productive or at least more voluntary, uses might it have been put (the unseen)?

I was reminded, too, of one of the fundamental obstacles to enacting sound economic policy - namely that of information, as the Austrian economist Friedrich Hayek discussed in his classic essay "The Use of Knowledge in Society:" "The economic problem of society is thus not merely a problem of how to allocate "given" resources—if "given" is taken to mean given to a single mind which deliberately solves the problem set by these "data." It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know. Or, to put it briefly, it is a problem of the utilization of knowledge which is not given to anyone in its totality."

Finally, President Lee has recently tried to fashion himself as a crusader against corruption (no small irony for those of us who've watched his political rise). Trouble is, the price of a government throwing piles of money at a problem is waste, fraud and abuse. Absent some great stroke of divine fortune, governments don't spend money both efficiently and quickly, which could pose a problem in Lee's anti-corruption crusade.

But perhaps we needn't worry: Lee has a stack of economy-related bills he'd like for the National Assembly to pass, and at this point, the Assembly members can't even agree on the lunch menu.

Here's to governmental gridlock.

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The KIKO Affair

I guess we shouldn't be surprised.

With emergency loans being extended around the world to failing and failed companies (GM, Chrysler) and busted financial institutions (AIG, Citigroup), why wouldn't the Korean courts step in and protect companies from losing money on contracts to which they themselves agreed?

I ask because the Seoul Central District Court this week ruled that a series of currency option contracts between SC First Bank and two Korean exporters are invalid, saying that the bank did not adequately inform the companies of the risk involved in the contracts.

The contracts in question are what is known as a Knock-in/Knock-out (KIKO) contract. From the Korea Times:

KIKO options allow businesses to sell dollars at a fixed won/dollar rate if the exchange rate stays within the range fixed in the contract. If it soars above the upper limit, however, exporters can sustain huge losses, as they have to pay more for dollars on the currency market to sell them at the fixed rate to the banks. With the won plunging against the dollar in recent months, many local businesses suffered massive losses and are now on the brink of bankruptcy.

As the Korea Times mentions in the same article, this ruling may spawn numerous future lawsuits as companies seek to get out from under hedges that have gone rotten along with the Korean currency.

Pleading ignorance may help these companies in the courtroom but one wonders what the CFOs of said firms were being paid for if not their understanding of these sorts of contracts. Bloomberg, in fact, reported on just this problem back in October:

Cho Moon Hwan, a lawmaker with the ruling Grand National Party, said most contracts were written in English, meaning some buyers couldn't understand them.

"Banks didn't notify companies of potential risks at all,'' he said.

One KIKO buyer, Kim Sang In, chief executive officer of a construction-equipment maker in Hwaseong, 56 kilometers (35 miles) south of Seoul, agreed.

"Banks never, never notified us of these KIKO options' high risks,'' Kim said. "They said they were 99 percent sure the won would continue to rise.''

I would suggest, perhaps naively but nevertheless, that a person ought not sign a contract that he doesn't understand, and that a CFO worth his compensation should know better than to just assume that a currency will rise because a bank says so.

No doubt the banks will take a lesson from rulings such as this, too, and may in the future be far less willing to enter into such contracts, fearing that swings in the market might not only affect their balance sheets but could also land them in a courtroom. Indeed, a recent piece in the Korea Herald reports the emergence of this precise sentiment:

A bank official in charge of derivatives investment said the court's ruling will damage the development of the nation's financial market. "All financial transactions are based on exchange rates and share prices at the point of contract. If all contracts should be nullified because of that condition, how can anyone make financial contracts?" he said.

Another bank official said that banks will avoid dealing with currency-hedging derivatives due to the court's decision and this will backfire on exporting companies.

As above, though, rescuing the ignorant and ill-prepared has become an international pastime of late.

___________________
Further Reading: Of Knock-ins, Knock-outs & KIKOs

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If Borat Was Korean...

...he'd be singing about Dokdo. Priceless:

Everybody wants to be there 'cause of the holy sights
Everybody wants to be there hoping to meet seagulls
Yes, nobody is greedy for them 'cause of the holy sites
But some people covet them that is real nonsense!

Compare with the opening lyrics to Borat's version of the Kazakhstan national anthem, as performed in his film:

Kazakhstan greatest country in the world.
All other countries are run by little girls.
Kazakhstan number one exporter of potassium.
Other countries have inferior potassium.

(h/t: The Marmot's Hole)

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The Return of Reading

"Read not to contradict and confute, nor to believe and take for granted, nor to find talk and discourse, but to weigh and consider."

Sir Francis Bacon

Over the past few years in Korea, I've had the opportunity to work with and get to know a number of corporate executives in a variety of fields. These men - and yes, the executives I've known have all been men - all score high in the generic qualities one typically associates with business success: drive, intelligence, curiosity, political acumen and the like. Often overlooked, however, by younger employees aspiring to such positions of power is another habit of these C-suite occupants: reading. Newspapers and magazines, sure, but almost to a man, I've observed in these fellows an insatiable love of books and a desire to more deeply understand the world in which they live and work. In fact, upon entering their offices, I often have to push stacks of books aside to make room for myself at a table.

There is, of course, the question of why, in this age of the Blackberry and instant information, such busy people trouble themselves with books at all. Couldn't they just learn what they need to know online or, at worst, in the latest issue of Business Week? Unfortunately, for all the information on offer in the modern world, there is amidst it a troubling lack of wisdom on offer and, perhaps even worse, an increasing lack of solitude to the reading experience, leaving little opportunity for thought and reflection. The literary critic Harold Bloom has written, quite correctly, that "reading well is one of the great pleasures that solitude can afford you, because it is the most healing of pleasures." Unless you turn off that Blackberry, though, solitude may be in short supply.

And then there's the matter of what these business leaders read. In this 2007 article in the New York Times, Harriet Rubin quite correctly noted that "serious leaders who are serious readers build personal libraries dedicated to how to think, not how to compete." Quite true: highly-effective people don't spend their time reading about their own seven habits, as related to them by the likes of Steven Covey. Rubin continues:

Forget finding the business best-seller list in these libraries. “I try to vary my reading diet and ensure that I read more fiction than nonfiction,” [Michael Moritz] said. “I rarely read business books, except for Andy Grove’s ‘Swimming Across,’ which has nothing to do with business but describes the emotional foundation of a remarkable man. I re-read from time to time T. E. Lawrence’s ‘Seven Pillars of Wisdom,’ an exquisite lyric of derring-do, the navigation of strange places and the imaginative ruses of a peculiar character. It has to be the best book ever written about leading people from atop a camel.”

I often feel, though, that I, my wife, and a scattered few business executives are the only people who read books anymore. Oh sure, the bookstores in Seoul are always packed full of people browsing the stacks and lining up at the register, but too often I get blank stares when I ask people about the books they've read recently. I suppose that, in addition to those Blackberrys, there are simply too many other ways to a pass one's time these days.

But as Pope said, hope springs eternal, and Peggy Noonan, writing in the Wall Street Journal last week, is optimistic that reading might be posied for comeback.:

I suspect reading is about to make a big comeback in America, that in fact we're going to be reading more books in the future, not fewer. It is a relatively inexpensive (libraries, Kindle, Amazon), peaceful and enriching activity. And we're about to enter an age of greater quiet. More people will be home, not traveling as much to business meetings or rushing out to the new jobsite. A lot of adults are going to be more in search of guidance and inspiration. The past quarter century we've had other diversions, often expensive ones—movies, DVDs, Xboxes. Books will fit the quieter future.

Anything's possible, I guess. We've seen the iPod - and the podcasts it wrought - save the concept of radio, so perhaps the Kindle stands a chance of doing the same for books. Let's hope so, because given the current financial crisis, there's clearly a need for the wisdom contained in those books.

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