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| I just returned 24 hours ago from 1 month in Asia. I spent 2 weeks in Thailand split between Bangkok and Koh Samui followed by 2 weeks traveling around Taiwan: Taipei, Hualien, Taroko Gorge Natl Park, Alishan, and Gaoxiong. The trip was awesome, but it's time for me to get back to my "real" life. I've been blessed to have been able to take so many trips and experience so much of the planet and its peoples. | | |
| This isn't a full entry, but I just wanted to jot it down here to remind myself to develop the line of thinking more fully later.
Perhaps it comes from living in the Socialist People's Republic of Berkeley, but lately a lot of the news and ideas that have filtered through the din to me seem to have a distinctly socialist bent to them. For example, we got a letter in the mail the other day informing us that the Berkeley Rent Stabilization Board (rent control bureaucrats) rejected our landlord's request to raise our rent by about $15 per month. I didn't even realize he had to petition them first for an increase to go through. Usually you find out about this stuff because your landlord will tell you about it before your renew your learse.
For me, this raised interesting issues. Having been on the ownership side, I wondered to myself, "Is this what government is for, to tell property owners how much they can or cannot charge for the use of property they own?" Much of the answer lies, I think, in where you see yourself situated along tenant/rentier spectrum. No, rentier is NOT a typo.
I guess if I saw myself as a perpetual non-property owner, I would like rent control and the government to "protect" me from others. But if I took the idea that I would one day, by hardwork, discipline, thrift, and risk-taking become an owner myself, then I wouldn't be so thrilled about the government butting its nose into business.
So I think the heart of the matter, when people want all these laws passed to protect us from ourselves and especially when we want government to give us something means that we are passing from a truly freedom-based capitalist society to, well, a socialist country. And over time, we can gauge where a society at large feels it is on this continuum by where it goes with its laws. Keep in mind that where you feel you are on this continuum need not be represented by your actual circumstances. I think your future dreams and aspiration count just as much in formulating your support/rejection of such government programs.
I am amazed that people settled this country 400 years ago, and established a Constitution guaranteeing liberty, and now we've come to this. | | |
| I ~just~ realized that the largest problem facing the white collar financial services industry is a lack of trustworthiness. Apart from the usual anti-capitalism screeds which declare that all business is basically organized thievery, I am starting to see that in the past decade, certain institutions and organizations have very, very severely failed the public's trust.
The first involves the lack of standards and accountability by the white-shoe accounting firms. Remember Arthur Andersen? This would later lead to scandals like Enron and Worldcom. Essentially, the very people who MUST be trusted for business to function normally, the accountants, turned out to be liars and scammers. Without accurate financial numbers, it proved impossible for investors and shareholders to know the true operation condition of those companies.
Enter 2002-2007. Ratings agencies like Standard & Poors, Moodys, etc., have the public's trust and are imbued with the social responsibility of rating debt. Without accurate assessments of the credit quality of debt instruments, how could investors possibly have an accurate idea of the likelihood of being paid regular interest payments and furthermore, the safety of their invested capital?
But as we continue to watch the US mortgage industry's subprime mortgage debacle unwind, I'm left with the conclusion that these ratings agencies failed spectacularly in their responsibilities to accurately assess the quality of the debts they rated.
Of course, there are many many reasons for the credit ratings agencies to have loosened their standards and to have become complicit in the easy-money housing boom of the last five years. It takes real guts to stand up and say that something isn't right, when the whole world wants you to stand down and "just go with the flow." Money was so cheap then because interest rates were so low, and mortgage companies just wanted to be able to continue to crank out mortgages, no matter if the borrowers were qualified or not. Wall Street had an insatiable appetite for the mortgage-backed securities produced by the mortgage originating companies...it just went around and around. No one in these companies ever stood up and said, "Enough is enough. What we're rating as investment quality is really crap, and everyone knows it."
Perhaps the added incentive is that they knew their ultimate customers were foreigners. Foreign banks, foreign hedge funds (BNP Paribas, anyone?), and foreign governments were the ultimate buyers of the very worst of US mortgage-backed securities. I think by the time this all unwinds and those holders finally take their losses it will be a very long time before anyone trusts the US enough to purchase our debt instruments. Which to me, is another reason that interest rates will HAVE to rise in the future.
Coincidentally, I think what also angers me is the exalted and culture-leading status that we have accorded to these types of professionals. With the perks and status they have, they are our business culture's "elite" and should be setting the standards to which business aspires. Instead, they've succumbed to the same postmodern nihilism that has destroyed the idea of a cultural elite which LEADS its culture. No better poster child for the destruction of the cultural elite could be found than...Paris Hilton.
I don't know the business term for what they do, but in my mind, what they do could be considered "off the front lines" or perhaps "second-order" business. You see, they don't actually generate products, sales or services that consumers find of DIRECT use. Instead, they are only necessary when the size and complexity of an economy grows to such proportions that "second-order" business services are necessary, possible, and needed. Accountants, lawyers, investment bankers, credit ratings, business brokers and the like are what I mean by these jobs.
Because I've worked in retail since graduation, I know what it's like to be directly on the "front lines" of commerce. That is, I deal DIRECTLY with customers and hear all manner of the good, bad, and ugly they find with our business. I hold myself to high standards and I generally like to believe that those "above" me would do the same. So it's disheartening to see that those of us in the business trenches have been employing higher standards than our business "betters" in the gleaming towers and offices above. | | |
| What kinds of things can you "break into?" Apart from criminal breaking and entering, most things that one "breaks into" have to do with thorough preparation, strenuous effort and luck in making one's start in business or another enterprise. But buying a house?
I was recently working up in the Hills when I was introduced to a longtime store customer who inquired about my background. Once I explain that I graduated from Ohio State's pharmacy school, the questioner naturally wants to know if I'm from California and attended school out-of-state, or if I'm an emigrant. I truthfully answer that I came here 3 years ago. That usually leads to questions about my family's whereabouts, do I enjoy living here, and have I bought a house yet?
This customer, as he wrapped up our encounter, good-naturedly wished me, "Good luck in breaking in." I didn't think much about it until later, when I realized that that's a strange thing to say where I came from. In Ohio, it would be silly to refer to "breaking in," as someone was about to embark upon buying a house. If you want one, you just go out and buy one.
But's it so different out here that it require the level of effort, planning, and concentrated focus that more typically accompanies an attempt to begin a new career or launch a business.
Oh well, I still have time before I earnestly need to consider these things. I think the subprime illness in the mortgage industry has a long way to go before things start recovering again, at least until 2009. Then again, the slack will be so taken out of the system again that interest rates could be who knows where in 2 more years? | | |
| I spoke to my friend yesterday and he provided an update on what eventually happened with the under-reimbursed generic cream prescription: the customer voluntarily paid a $25 copay ($20 over the contracted copay, yielding $15 profit.) This is extraordinary; I've never heard of this happening before. It turns out the customer is a retired PHARMACIST who decided to get out 25 years ago and become a LAWYER. He's now a retired lawyer also, which explains the extra cheese he can spread around.
We don't always get so lucky in our lives, because he understands COMPLETELY where we were coming from in terms of the negative reimbursements, and he also had the means and will to do something about it. Thank goodness for people with a conscience.
But I still feel troubled by even the positive ending of this story. I have a useful working life of approximately 30 more years. How can I remain in a business that has to rely upon the goodwill and charitable motives of my customers in order to remain solvent? Any business always has to rely upon its customers desiring to transact business with it. But this is something entirely different. While our customers may desire to fully engage our business, by structure and organization, the large third-party payers are not making it possible for us to remain solvent. In other words, the independent pharmacy business is no longer characterizable as a viable segment of the economy. We have business, but we can't seem to make it PAY us.
What really burns me about the whole affair is that I believe that we deliver tangible and intangible value to our communities; yet we're struggling all the time to remain afloat. As a general sign of our desirability: you never hear about zoning boards or ballot initiatives attempting to prevent pharmacies from opening. However, if you consider the situation with "tribal gaming" (Indian gambling casinos), it seems that out West at least, a casino opens every month. Most rational people intuitively understand these to be of dubious ancillary worth and are growingly aware of the detractions these bring.
In fact, I might add that more generally speaking, the health and robustness of any industry may be gauged by how many new entrants are attracted. A great number of new entrants indicates to my uneconomically trained mind that there exists a large business "space" which grants opportunity to many new competitors. In other words, a lot of new people can join the business because there's plenty of demand and market share to go around. Looking around, I've identified only three such businesses in this decade: Indian gambling, Internet porn, and law.
I think the first two speak for themselves, but what is up with everyone wanting to go or currently attending law school? I mean it's fine if someone wants to productively work in society, but after these guys graduate they go about spending 80 hours a week creating headaches for somebody else. Oh well, I will say this positively about lawyers: at least after doing all that work, when they bill $400/hr for their services (their product) at least they don't have some damned third-party say, "Well, we'll pay you $85/hr, take it or leave it."
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