Archive for the 'economics' Category

Bad Krozingen Mafia

Thursday, September 4th, 2008

The London weather apparently tracked me down and we had a solid 24 hours of rain, which I spent as follows:

  • sleeping
  • visiting Freiburg’s museum of early- and pre-history in the Colombischlössle
  • eating at Lorenz Straußi in Kirchhofen

A Straußi is a kind of restaurant that produces everything it serves itself or sources it from the neighborhood. They get a tax break through not having to purchase the standard restaurant license. The portions were huge, I could only eat half of what I ordered, and since pumpkins are in season there were a lot of pumpkin dishes on the specials board, including a delicious pumpkin soup.

On the way out we saw some little kids who had set up a stand to sell grapes, one kilo for 1.80 euros, but they only had one kilo. I thought it would be a good idea to encourage these miniature entrepreneurs, so I handed over a two-euro coin.

The kids were clearly running a just-in-time operation. As soon as the coin changed hands, four kids took off in different directions, one returning shortly with a new plastic bucket, and two returning with a new bunch of grapes (from where? the neighboring vineyard?). The coin went into their piggy bank, which differs from a cash register in that it’s built not to give anything back until you smash it open. I was shortchanged by an eight-year-old.

True change comes from within

Monday, August 25th, 2008

I’ve been keeping track of my expenses (i.e., recording everything I spend) so I can produce an accurate account at the end of my trip. I’m planning to spend money as I normally would for the first month, then categorize my expenditures and see what I can reduce (taxi fares!) and what I should increase (books, excursions).

Two things are becoming clear: I spend a lot of money on sweets, and I get shortchanged a lot. When I say I’m being shortchanged, I mean I’m getting the wrong change from purchases, and that it’s never in my favor. When I say “a lot”, I meant it has happened three times in the past week (I just started keeping track this month).

Yesterday I didn’t get shortchanged, but I got an incorrect bill. I went to the fish and chips shop around the corner on Endell Street and had cod and chips and a coke. The bill came back as £25 ($50). I asked if it was correct, the server said Yes. I asked him to check again, he said, Oh, I’m sorry, crossed out £25 and wrote £21. I said, What’s 11+3. He said Sorry again and gave me the revised bill for £14 (the correct amount). I think it was a genuine mistake, but I never would have noticed if I hadn’t been writing my expenses down in my notebook.

Unforeseen incidents, meetings, and material assistance

Friday, August 22nd, 2008

I expect to add to this list as time goes on.

  • Andrew called the day after I resigned and told me he had quit and was moving to Shanghai to study Chinese (strange coincidence!).
  • My landlord asked to break my lease early, letting me start traveling earlier. He also purchased the furniture I wanted to leave behind.
  • Manny put me up at his place for most of August while I was homeless (see above).
  • Manny gave me the new Nokia phone he got as a “loaner” when his iPhone was stolen.
  • Imme hosted me in Freiburg and Meli took me around.
  • Stefan gave me his lanyard to carry my flash drive.
  • A stranger wrote me out of the blue wanting to buy a domain I wasn’t using. The price he paid covered the cost of all 12 of my other domains three times over.
  • The IRS decided to refund over $12,000 of tax I had already paid.
  • My sister, brother-in-law, niece, and nephew took care of me for a month over Christmas.
  • Andrew helped me find a great apartment the first week I was in Shanghai.

Why I quit

Friday, August 15th, 2008

I’ve been off work for the past two weeks, but today is officially my last day. Not going into the office was surprisingly easy to get used to, but not getting paid is probably going to take more adjustment.

I decided to take a sabbatical to do some traveling before moving to Shanghai to study Mandarin. Since I announced my decision, I’ve received a lot of kind notes and encouragement from friends and even relative strangers. Many of them say that it is a brave thing to do. Is that code for “foolhardy”?

Signals

However much I love this company, the signals all point in the same direction:

  • I have been here for over seven years (in three different offices, sure, but that’s a long time relative both to my working life and to my age).
  • I have just wrapped up the current project I moved from Tokyo to accomplish.
  • The person I hired and trained as my successor is more than ready for the role.
  • I had a number in mind when I started this job, and I hit it last November.
  • I want to take a year off to travel at some point in my life.
  • The opportunity cost is relatively low: my salary is only going to get higher (making a year off in the future more expensive), and the credit crunch is likely to affect our bonuses (making this year the best one to miss a bonus, if I have to pick one).
  • The business team I work with is essentially the same as when I started — a change will be refreshing.
  • Moving to a new internal role would mean a 2-3 year commitment in order to make a real difference, which is a long time to wait if I do want to take a sabbatical.
  • I’m more likely to get my next big increase in responsibility by moving externally than by moving internally.
  • I’ve got a big birthday in November, and would rather mark this year than subsequent ones.
  • I am ready for a new adventure.

Charts

There is yet another good reason to move. I don’t think folks in technology give this much thought, but their trajectory is different from that of the business team (this applies mainly to the “partnerships” we develop in finance — if I were working for a technology firm, the following wouldn’t be as relevant). The IT “earning curve” starts off much higher than that of the typical business team member, but is flatter, which means that at some point, after more or less time being more valuable (as measured by compensation), technology is left in the dust. Here’s the chart:

This graph is based on real data, but I obscured the actual numbers. The first jump in the business line is moving from graduate to FTE. The jump in both lines between -3 and -2 is promotion to principal/vice president. The last data point for both series is just a continuation of the previous year’s progression to make the trend more visible. The red dot marks now, where the difference in values is currently just 2.3%.

What this chart shows is that I have exactly this year captured the last of the alpha to be gained from opting for a career in technology. In the next year or so my business counterparts will outpace me significantly and continue to accelerate. There are two possible responses if I want to avoid this:

  • Stay on the same curve but increase my y-coordinate (e.g. by changing firms, which usually entails an increase in responsibility and compensation).
  • Look for a new curve (e.g., by moving to a business team or joining a technology company where I can contribute directly to the bottom line).

What is consistent in both alternatives is the need for a move.

Signs

Finally, there’s the omen. The day after I handed in my resignation, I talked to a friend of mine on the trading desk in Tokyo. He said, “You’ll never guess what I did. I resigned! And you’ll NEVER guess what I’m GOING to do. I’m moving to Shanghai to study Chinese!”

My signals, my charts, and my friends all indicated it was time to take a risk!

36 Views of Hackney: Broadway Market

Saturday, August 9th, 2008

I’m saying goodbye to various parts of London, including these cupcakes from Broadway Market that I buy most Saturdays. Four cost £7.70, or around $15.00. I never thought about it until I had to write it down in my notebook, but these are expensive little cakes. They are made by a fellow California transplant to the UK.

How much does it cost to take a year off?

Tuesday, August 5th, 2008

I have friends who have taken the following long trips:

  1. Three years in Thailand
  2. One year traveling in South America
  3. One year surfing in Costa Rica
  4. Seven months in Africa
The minimum for a year off seems to be $10,000. That’s what the Thailand trip cost per year. I also read in a travel article on “gap years” that the average student year off costs just under $10,000. The maximum of $36,000 was for the Africa trip (the shortest one!), but that was someone who wanted to get the most out of his relatively limited travel time (and was well beyond living as a student).

People have very vague memories of what their trips cost, even though that’s the subject that other people planning such a trip are most keenly interested in. When I move to a new country, I try to write down every expense for the first six months I am there to teach my subconscious how to estimate cash flow in the new location. I’ve decided to do the same thing for this trip, and my spreadsheet tells me that I’ve managed to break the minimum budget before even leaving my apartment, as follows:

  1. One around-the-world ticket with nine stops: $4,065 (a good deal, I thought).
  2. Relocation expenses to ship my stuff to the US: $3,370 (estimated — might be more or less, but I won’t know until Monday).
  3. Passport renewal fee, postage, etc.: $152
  4. New camera: $560 (ridiculously overpriced because I bought it (a) in the UK, and (b) on the high street)
  5. Health insurance (one year in advance): $3,675 (not too high, but not a fun thing to have to pay for)
  6. Private Chinese lessons at SOAS: $1,155
I’m not sure I really had to buy any of those things except the passport renewal and maybe the health insurance. I don’t expect to have any further large expenses, so have segregated these “preliminary” expenses.

In the interest of science, I’ve also netted my assets and liabilities to arrive at a net worth figure, x. At the end of the year, I’ll recalculate it, and be able to give an exact accounting (in the literal sense) of my time off.

My get-poor-quick scheme

Saturday, August 2nd, 2008

As part of the wealth reduction plan I began by quitting my job, I spent the day giving things away: A futon from Isetan Tokyo; a magnetic whiteboard I had custom-made according to the golden ratio; a new leather Tumi computer briefcase; five large bookcases; cookbooks, a double boiler, an ice cream scoop, and other kitchen equipment; several “50 best” editions of Time Out I had collected (best websites, best breakfasts, best pubs and clubs, etc.). I decided to get rid of anything I could easily replace.

Homo economicus would reason that it’s cheaper to replace commodity items than to ship and store them. But the main motivation was irrational: I’ve had some of this stuff since university, and much of it since I moved to Tokyo over eight years ago. I believe (am hoping) that after this time off I’ll have a different perspective on the world, and perhaps even different ideals and goals. Do I want to come back to the same furniture?

I may have less cruft than some people since I’ve moved long distances often and have had correspondingly many opportunities to purge my possessions. But most of those moves were made quickly, and I never considered giving away items that still had substantial utility. Now that I have a few weeks to go through everything carefully, I’m testing things not according to their usefulness, but their replaceability.

Why give things away? I was not really tempted to sell my stuff on eBay largely because I don’t want to spend the last two weeks here taking and uploading photos and arranging to meet sometimes flaky potential buyers. But I am tempted to haul everything down to Brick Lane or Old Bethnal Green Road where my neighbors sell each other stolen bikes, used combs, half-complete Hogwarts Express train sets, and other inconsequential things from blankets on the sidewalk. The pre-internet eBay. I probably don’t really want to spend a day doing that either, though, so giving things away is a good option. My friends (or the local charity shops) benefit, and it turns out that I benefit too: Manny traded me a new backpack just the right size (and color!) for my trip.