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21 December 2009 @ 10:32 am
Film at 11: Upper Mismanagement  

Upper Mismanagement

Quick Summary: American manufacturing is in trouble in part because American business schools focus almost exclusively on finance, rather than production.

-- found via Boing Boing.

This thesis jibes with my impressions -- or perhaps it just plays into my prejudices.

You see, I've never really believed in money. I never have. I know it only has meaning and value because everyone agrees that it has meaning and value, and I've always found it difficult to buy into the consensual hallucination.

I design games for fun. I model real systems for a vocation. When I look at the financial world and derivative markets and all the rest, it all looks a lot more like the former than the latter. It's made up. It's arbitrary. And it bugs the hell out of me that, over the course of my lifetime, the people playing these made-up number games have managed to arrange the world so that their Game is somehow the Only Important Thing. no matter what else you do, no matter what else you know, you have to play their Game to have any measure of stability or security in your life.

And yet, they have no reciprocal obligation. If you have solid, useful, tangible knowledge, you also have to know their rules at the most basic level, and the more you pick up, the better off you are -- but if you focus on nothing but the Game, you have distinct advantages, economically, socially, and politically.

And, adding insult to very real injury, they constantly pat themselves on the back for being "hard-nosed" and "practical" and "only looking at the bottom line".

In short, they're Munchkins.

And yeah, the idea that their inbred, detached-from-reality number games have eviscerated the economy, leaving nothing but a hollow shell, a junk-bond paper tiger, a ghost made of numbers -- that makes perfect sense to Your Obedient Serpent.

On the other claw, as valid as these points may be, at this juncture in my life, I am forced to ask: Hey, Athe, how's that workin' for you?

I need to reassess my own attitude toward their razzin' frazzin' Game, and my own participation in it. Right now, when someone says "investment" and "mutual funds" to me, what I hear is "gambling" and "scam" -- and that's not useful.

Shadow Dragonshdragon on December 21st, 2009 06:37 pm (UTC)
Yeah, I worked IT at a major investment firm (that has since been bought out) and it's quite interesting to see the financial 'industry' from the inside. or at least partially inside.

It's quite a crazy world where you can make more money just by virtue of having money to start with.

But it's also a very beneficial world, because once you have some money, you can make your money go make more money, if you know how.
Your Obedient Serpent: doomsday clockathelind on December 21st, 2009 06:41 pm (UTC)
Until you run out of suckers, like the real estate sector did last year.

Finance is a house of cards where they try to build higher by taking cards off the bottom.
Shadow Dragonshdragon on December 21st, 2009 07:01 pm (UTC)
Not -entirely-. There are certainly lots and lots of shady areas, but mostly it's passing money around and profiting off someone else making money the "normal" way.

The super simplified way that it works is that you're running a business, and I buy stocks in your company. This gives you money, but gives me a small slice of "the company". You use that money to buy supplies/advertising/etc, improving your business, and making more of a profit by selling an actual product to actual consumers.

Some of that profit you made comes back to me as a shareholder, since I "own" a percentage of the company. I make money by helping you make money.

Granted there's lots and lots of more.. ethereal ways that the finance world works that only makes the money itself seem even more like just fake numbers meaning nothing in a computer somewhere. And the complications that the finance "gurus" have built into the system only make it worse. But at it's heart, it's "I'll help you make more money with your business, if you cut me some of the profits later"

The "good" part about it is that you don't have to be an expert at The Game to not get pantsed by it. And you don't have to play at the prestige levels to 'win' either.
Richardf8richardf8 on December 21st, 2009 10:52 pm (UTC)
But at it's heart, it's "I'll help you make more money with your business, if you cut me some of the profits later"

This is the theory. It is tied to the real value of the investment. Part of the problem is that these shares themselves become objects of speculation with a market value of their own that is detached from their real value. Buzz on the street may make it appear that the stock is worth more than it actually is, investors snap it up at prices exceeding the real value, and in the end, there's a CEO in the dock, and a lot of people with a let less in their mutual funds than before.

Or the opposite can happen - a good company with solid performance can wind up undercapitaliized because of rumours that keep anyone from touching its stock with a ten foot pole.

The gap between perceived and real value is where the stockmarket functions like a large induction coil, siphoning power out of the real economy while producing nothing of value.

Christopher Bradleycpxbrex on December 21st, 2009 07:00 pm (UTC)
I think when you hear gambling and scam in relationship to financial investments, it is very helpful. Because the giant Ponzi scheme of finance does hurt a whole lot of people. Like all Ponzi schemes, it sucks up the wealth of the people at the bottom. In this case through shenanigans like opium wars (in the previous century) and oil wars (in this one). By redistributing global wealth upwards, it keeps the vast majority of humans incredibly poor, with all the bad food, bad health care and bad sanitation that implies. So . . . I think it's good that you think the money system is a badly put together scam. ;)
Your Obedient Serpent: fascismathelind on December 22nd, 2009 01:45 am (UTC)
The difference between gambling and banking lies only in the odds -- but whatever happens, the odds always favor the house.
Tombfyretombfyre on December 21st, 2009 07:27 pm (UTC)
I have to agree with most o' this, and especially that quote up top. I just recently finished a business degree, and more than half of the course were all about finance. It was just money, money, money, money, and more money.

Money can be a good thing, but it isn't the only reason for doing anything in the world. ^^() At least one of the classes was quite informative about practical investments and mutual funds, and all that. But it was less about corporate funds, and how to make your personal funds work FOR you in the long term, etc.
Your Obedient Serpent: causticathelind on December 22nd, 2009 01:46 am (UTC)
Mutual fund: trusting someone else to pull the levers on a bank of slot machines.
Tombfyretombfyre on December 22nd, 2009 01:58 am (UTC)
Depending on the fund, yes. ^^() There are quite a lot I wouldn't trust, and others I just wouldn't bother with. You might as well go buy a bunch of lottery tickets. :3

Fortunately there are more practical investments. Like T-bills, or government bonds.
silmaril on December 22nd, 2009 01:09 am (UTC)
This... actually clarifies a lot of things for me. Things that I had been thinking about without realizing I was thinking about them.

Thank you.
Geemswingywoof on December 22nd, 2009 03:35 am (UTC)
I couldn't help but nod while reading this article last night.
rodant_kapoor: I Can Has Foxrodant_kapoor on December 22nd, 2009 04:31 pm (UTC)
For excessive detail on the role of finance and empire, I recommend Kevin Phillips' Wealth and Democracy, Bad Money, and American Theocracy. Phillips outlines how each of the great empires of the modern era created their wealth and power through manufacturing, then went into decline when using money to make money replaced actually making things. He also shows how the high salaries offered in the finance industry draw away talented people from productive professions. While there's always a need for money management, venture capital, and the like, it's clear that when a nation is wealthy only on paper, it isn't really wealthy at all.