Monday, August 13, 2012

Never took economics - And - Products of Our Environment

I consider myself unusually fortunate for oh so many reasons. Not the least of which being that I never took a college course in economics. My many articles on the economy are therefore seat-of-my-pants, unqualified, essays (at best). I'm thinking that's a good thing.

As I pondered how I'd articulate today's message, I was reminded of when my father talked me into trying out the life insurance business at the tender (impressionable) age of 22 (1984). My introduction to "financial planning" was with a company then called The Bankers Life of Iowa, now called The Principal Financial Group. As the name-change implies, the life insurance agent of the mid-80s, assuming he's not now recruiting new "agents"—or selling medical equipment—is a "financial planner", "financial consultant", "financial services professional", "retirement planning specialist", "risk management specialist", "investment planner" or any of at least a dozen other smart-sounding monikers I've heard over the years. I often find myself hesitating when someone asks me what I do. Partly because I tire of impromptu market predictions (you'd think they'd ask me), but mostly because I have to think for a second or two to come up with a title. No kidding. I have two designations; one says I'm a financial planner, the other says I'm a financial consultant. For some reason I never want to say "planner", I do sometimes say "consultant", but that begs a second question - "what kind?" Usually I say investment advisor (makes sense, since give investment advice is what I do), then endure the soothsaying. Strangers who've stumbled onto a blogpost or two might think me an economist. One thing I don't do is sell life insurance.

If you're considering becoming a financial 'whatever', step one is to get yourself hired by a sponsoring company. Your company will house you, train you, and compensate you for your sales successes. Sales generally involve products - and, as you might imagine, different products come wrapped in different sales incentives. With regard to life insurance, the size of the premium (obviously) determines the size of the commission. I found it quite convenient how expensive permanent (or some hybrid of permanent and term) insurance was forever better for the customer than cheap term insurance. They even had these software "planning" programs designed to help the adviser help the client meet his or her financial goals. Funny how those programs virtually always concluded that, to meet their long-term financial objectives, 30 year-olds John and Mary needed to buy say half-a-million each of Superduper Protector Retire-in-Style Plus for $400 per month - when they could have purchased 20 year term policies for $40.

(note: I know some of my regular readers sell insurance and will have legitimate gripes with what I just wrote. I understand that today's policies have substantially more to offer (legitimately so) than the fare offered 28 years ago. And that different problems call for different solutions. So chill!)

Back to economics: Had I taken such college courses, my then moldable brain might have fallen into the sculpting hands of Keynesian-ideologue professors - and I might thus be coming at you with chapter and verse as to why government intervention will ultimately save our day. Had I been tutored by free-enterprise fanatics (one of which I've become), I might be wondering if I'm true in my assertions or just asserting some bloated-egoed academic's assertions. Not that I'm not, nevertheless, a creature of the ideological climate from whence I came, but I can say (thank God) that much of what I espouse comes from my own personal private sector experience. That said, my initiation into the financial planning business subjected me to the intense tutelage of passionate proponents of [panacea] permanent insurance, of the very high-priced variety - but, inspite of that formal indoctrination, I didn't join their ranks (and yes—my insurance-selling friends—there are legitimate uses for such coverage [often in estate planning and deferred-comp cases]).

My point, which I make more precisely in the following essay, is this; a little formal education [in economics] can, and too often does, go a long way in the wrong direction. Of course I'm asserting that big government is a bad thing.


The above was inspired by the following essay. I came across this yesterday evening while putting the final touches on my latest project. I wrote it two and a half years ago, yet the message remains timeless:

Products of Our Environment

The measure of one’s intellect is no match for one’s predisposition. 

With bent brow he peers above wire-rimmed spectacles resting near the tip of his nose, his gaze descending upon three dozen young under-frontal lobe-developed college freshmen. With blatant contempt for the values that built a great nation and provided him a platform to stand above the impressionable, the pretentious PhD addresses his barely post-adolescent pupils. With incomparable eloquence he marvels the lower-classmen. His charge is to teach, his objective to impeach. To impeach a commoner’s allegiance to his country, to a flag dressed in stars and stripes. He exposes capitalism for how he sees it – a system of selfishness, of ruthless abandon, of obscene opulence—there are no subtleties in his reproach.

He offers up the life of one William Gates, the near-wealthiest man on earth and the product of the dark-sided capitalism. He implores his students to consider his rhetorical query; “how can we allow a single human being to earn literally hundreds of millions of dollars in a single calendar year while others toil for a workman’s wage?” Lacking sufficient knowledge, or courage, not a student would challenge the pompous professor.

Later that evening, as my then eighteen year-old son shared his story, I was utterly amazed to find that I could actually feel my pulse pounding from within my eyeballs. While I was fully aware that my offspring would encounter ideologies that wouldn't always jibe with the teachings of his old man, I was nonetheless taken aback (to put it mildly) that this econ professor would dare exploit his position to promote his warped ideology. I then proceeded to equip my son with the obvious retorts, such as; “how can we allow a college professor to knock down six figures when we have kindergarten teachers working their bottoms off for less than half that amount?”

I was considering how I might personally lambast the conceited collectivist for imposing his personal agenda onto my young son and his classmates when the obvious occurred to me; there was no way I nor anyone else would change this sadly misguided individual’s mind or how he addresses his students. And besides, he’s just an unfortunate product of his environment—perhaps a disciple of one of his own college instructors. Challenging him directly or petitioning for his dismissal for pushing his politics (of course politics does impact the economy—therefore the gent, since he’s paid to teach economics, should explore history’s related record—but then of course he’d have no support for his position) would be a profound waste of time and energy. In fact, in a way, I’m kind of glad he’s there. In the case of my son, he’s learning that ignorance is ignorance, even when it’s well-credentialed and dressed in fine eloquence.

Of course I’ve nothing to worry about; Nick is an independent-thinking, proud-to-be-a-capitalist young man. Or he’s, in the for-sure opinion of any passionate socialist, a product of his environment—a disciple of a delusional free-market-capitalist father. And I’m okay with that.

So I, the capitalist whacko, think the socialist professor is nothing more than an extension of his ideological upbringing, and he would think the same of me. And you know, maybe we’re both right—perhaps we are each, when it comes to our politics, largely products of our environment. And to be perfectly (intellectually) honest, while I’m no psychologist, I do believe that to be the case. In fact I’m reasonably certain this condition afflicts virtually all walks of people—and trust me; the measure of one’s intellect is no match for one’s predisposition. Years spent at our nation’s greatest universities can be practically wasted, for, when the academic emerges, his insight into the world at large is first and foremost filtered through the political veil that has been engrained into his very being. Therefore, in the case of my son’s teacher, again, there’s absolutely no changing his mind. And the same goes for me. There’s absolutely nothing that will change my belief in free-market capitalism. 

1 comment:

  1. The title of this reply is "The Other 1%". The economics professor that you refer to in your essay rails against the "1%" who have more than they should have, needs, and deserves. It doesn't matter what they started with, how they got it, or what they plan to do with it. The fact is...others don't have it, particularly the professor. Envy (identified as one of the seven deadly sins, I believe) clouds thinking and judgement. After all, it's not fair that the professor spent the first 18 years of his life attending mandatory school, then spent the next 10 years of his life attending universities, culminating in a Ph.D.

    Poor professor, he worked hard in school, for 28 years. In fact, only 1% (the other 1%) of the U.S. population has a doctoral degree. You would think that the intellectual elite would be compensated better than they are? The top 1% in business are compensated with millions! Professors may make $100, 000. (FYI, CSU Fresno professors make between $65,000 - $95,000; a very few do make more). The poor professor says, "it's not fair!" (Envy again).

    The professor says, "I went to Columbia School of Business to earn my B.A.!" (established in 1916 by the trustees of Columbia University with a generous supporting gift from Emerson McMillin, founder of E. McMillin & Company, a New York bank).

    The professor shouts, "I attended the Wharton School of Business to earn my M.B.A.!" (In 1881, American entrepreneur and industrialist Joseph Wharton, founder of Bethlehem Steel Corp., provided the money to establish the world