But for 2010, we’re throwing out all these crappy summaries and instead getting a little dirtier.

One of my very first posts on Weakonomics (March of 2008; to give you an idea of how long ago that was, unemployment was 5.1%) was about the guy who is now the richest man in the world. Was I foreshadowing? No. His name is Carlos Slim and he’s juggled the richest man in the world title with Buffett and Gates for the last few years. Slim is a telecom mobile in Mexico. That’s right, the richest man in the world is Mexican. Not American, Mexican. And to make matters worse, aside from Gates and Buffett, there’s only one other guy in the top 10 from the US. A total of 4 hail from emerging economies: Mexico, India X2, and Brazil. If there’s ever been a sign of dwindling US economic influence it’s this list.

There are other trends too. Most of the billionaires are old. Of the top 25, only one is below the age of 52, and that’s one of the guys that started Google. He’s 36. What had you accomplished by 26? Probably not amassed $17.5 billion in wealth. This is the perfect tribute to how important Google has become to the economy. The two guys that started Google are together worth $35 billion. Powers combined that puts that at the 4th wealthiest. Google is THAT big. The younglings don’t stop there either. Some of you will have heard of this next guy, most of you won’t. Mark Zuckerberg is the founder of Facebook (I know you’ve heard of that). Mark is 25. Yeah, the guy behind Facebook is TWENTY-FIVE. He’s worth $4 billion.

Facebook has plans to go beyond just their own website. They intend to basically become the internet for certain users. Zuckerberg could sell his stake in the company and retire as the wealthiest 20 something ever. But this guy has ambition. Because Facebook isn’t a publicly held company, its value can’t be certain, but estimates are around $10-$15 billion. The company will go public in the next few years, that’s a fact. But Zucker’s ambition is about legacy. Facebook has the potential to be larger than Google. Zuckerberg could very easily become the first person to break $100 billion and stay there (Gates was first, but it was brief). This is in large part due to the fact that again most of the billionaires are old and the rate their wealth is growing has slowed.

Here’s another interesting note. Aside from Buffett, you have to get to #35 on the list before you find an American that made his billions from finance. If you want to be a billionaire, your best chance to do it is by starting a company. You likely won’t get there investing, and you sure as hell won’t get there by being just a simple fat-cat CEO. They are simpletons in this crowd.

One last observation before my biggest revelation. Let’s go back to Carlos Slim-Shady. His net worth is exactly $500 million more than Gates’. This number is so close that a small change in the peso/dollar exchange rate will change it. Furthermore, like most of the big guys, their wealth is no longer tied up in just the companies that made them. They’ve diversified and invest in tons of things impossible to track. In other words, I’m convinced Forbes, a struggling magazine and dying media brand, “allowed” Slim’s “estimated” net worth to just edge out Gates for the media attention. It worked, bastards.

Finally, I saw in a news story yesterday where I guy interviewed said that after $500 million these people don’t see much of a change in lifestyle. This means that one you crest a half billion then there aren’t many more things that are incrementally more expensive. Said in another way, Bill Gates can’t really live much better than Oprah (worth about $2 billion). I see a business opportunity here. I’ve already got a list of potential clients thanks to Forbes, I just need to figure out how to charge outrageous amounts of money for stuff that still has a perceived value. To date, only one group has figured it out, yachts. There has to be something else, something.

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But most things I cannot do. And most things you cannot do. You probably aren’t going to redo the roof on your house. You don’t have a clue how to knock down a wall to open up the downstairs. If the commode stops working and the plunger and Drano don’t work, you’re calling the plumber. Likewise, you pay someone to work on your car because you either don’t know how to or you’d rather have a professional do it. One of the pillars of frugalism is doing things yourself to save money. Don’t hire a maid, don’t go out to eat, don’t pay someone to do your yard. Do it yourself and save money.

Whatever.

I say outsource everything you can possibly afford to outsource and focus on making your own money. It’s not only good for you, it’s good for the world economy. It’s called “comparative advantage” and it’s why you aren’t a plumber.

Let’s say you’re a blogger and are capable of writing 1 post per hour or answering 10 emails per hour. Your hire an assistant capable of writing 1/2 posts per hour or answering 15 emails per hour. Left to your own devices and splitting your time, the two of you would write 6 posts and answer 100 emails per 8 hour day together. But, if each of you specialize, you can get more done. If you spend your entire day writing and the assistant spends the whole day emailing, you get 8 posts and 120 emails. Specialization allows each of you to be more productive by working on your strengths.

In other words, focus on what you’re good at, and pay people to do what you aren’t good at for you. Comparative advantage goes beyond the basic person to person synergies. It’s the entire nature of our economy today. It’s why every doctor in the world doesn’t dabble in each specialization. It’s why Kobe Bryant probably doesn’t mow his own lawn. It’s why I don’t change my own oil (even though I know how), and it’s why you aren’t a plumber

Economists like to make “assumptions”. In the strictest sense, comparative advantage assumes that you can always go be productive in your specialty. Look back at the blogger example. Maybe you only need to write 4 posts per day. If you do more you receive diminishing returns (in other words it’s not worth your time to do more than 4). So you could spend the rest of your day answering emails and not need the assistant. Said differently, if you have spare time, comparative advantage may not work for you.

Some people have the time or the motivation to do things other people would outsource. I know plenty of guys that just like to change their car’s oil. But I also know people too busy to mow their own grass. So you have to decide what aspects of your life are worth outsourcing in the name of comparative advantage. Personally, I hope make it possible that I’m so productive I have to outsource just about everything. Said differently, I want to just work and blog and pay people to do everything else for me.

If you’re interested in learning more about comparative advantage and its implications/applications on the world stage, check out the hottest economist on the planet and her two-part video on the subject.

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There aren’t many shows I’m addicted to, but 24 is probably one of them. And even though the current season is boring and the show has lost some of its fire, Jack Bauer is the most badass dude on TV. Chuck Norris can sit down, the Jack Bauer jokes are much more hardcore:

• Jack Bauer has been to Mars, That’s why there’s no life on Mars
• When you come face to face with Jack Bauer, you can do things the easy way or the hard way. The easy way is ingesting your cyanide pill.
• Chuck Norris is a Texas Ranger only because Jack Bauer won’t allow him to be a federal agent
• In kindergarten, Jack Bauer killed a terrorist for Show and Tell
• Jack Bauer got Helen Keller to talk
• Jack Bauer played Russian Roulette with a fully loaded gun and won
• If everyone at CTU listened to and did everything Jack Bauer said, the show would be called 12

For those of you that don’t know, 24 is an action TV series on FOX. Jack Bauer is its main character, and he’s kind of like a cross between James Bond and MacGyver. What makes the show unique is that an entire season takes place over a 24 hour period. Each 1 hour show is 1 hour in real time in the story. Needless to say, Jack kills a lot of people in the name of protecting the United States from terrorists and thugs. Some of the most gruesome scenes are when he’s getting tortured or when he tortures someone. The man tortured his own brother for information and regularly breaks laws to achieve the goal of saving the country. A recurring theme within the show is whether or not to do what’s right even if its illegal. Jack does what’s right.

But enough of endorsing my man-crush on Jack. We’re here to do my favorite thing, take pop-culture items and pick them apart until we have six financial lessons. And don’t worry reader, if you don’t watch the show I give plenty of lead in so even you’ll understand the lessons:

1) Sunk Costs
Situation: Jack is regularly put in situations where he suffers in ways we could not possible imagine. For example, in this season alone he was tied to a chair and beaten by a cop, stabbed by his love interest (on accident), and then had live jumper cables attached to his stab wound as he’s tortured. Despite the fact that the rest of us would take the day off after this, Jack gets right back on his feet each time and acts like the situation didn’t happen.
Lesson: This is because Jack understands what a sunk cost is. If you put $1000 into fixing your junker of a car and then it breaks down again, you cannot factor the $1000 already put in into your decision. That $1000 is a sunk cost you will not get back. Focus on the present, forget the past, and make decisions with only current information. Those that focus on sunk costs are always doomed to make bad decisions.

2) Teamwork
Situation: Jack is very much an “in the field” kind of guy. But much of his success comes from the support of the nerds and geeks that feed him information. This is usually CTU (a fake government organization called Counter-Terrorist Unit), but it’s also been the FBI and just someone that managed to hack into government databases. These people send him information to his cell-phone or relay into a headset as he breaks into buildings or infiltrates crime syndicates. He relies on these people to succeed, and with teamwork, they wouldn’t.
Lesson: You can’t achieve financial success on your own. You need the help and the support of others. If you’re married, you and your spouse must work together and set goals. You will rely on financial advisors, friends, and industry knowledge to succeed and make the best decisions. This team is based around you, YOU are Jack Bauer. You have to surround yourself with the right people if you want success.

3) Negotiation
Situation: Many times Jack finds himself in situations in which he must give up something to get what he wants. Many times he must get approval from the president of the United States in order to grant immunity to a criminal. The immunity comes in exchange for information which could lead to saving the country. In another example, he recently bargained to help out CTU (he’s not under their employ) if they would clear a friend of some potential legal issues.
Lesson: Though you don’t have the power of immunity, you do have the power of your wallet. In many situations, this is a very good thing. It’s a buyer’s market out there for homes and cars. If you aren’t negotiating then you’re giving up thousands of dollars. Get the seller to cave on closing costs and a home inspection, get the car salesman to cut the price near invoice or lower. If you’re in a situation where you have leverage, use it.

4) Diversity of Skills
Situation: Jack is a popular guy and he’s always being asked to help out in crisis situations. The reason Jack is in such high demand is because he can do a lot of stuff. He speaks at least German and Russian on top of English, he’s a negotiator, interrogator, pilot, great leader, and master of espionage; all this on top of his military and fighting skills. He never has to worry about finding work, his resume reads like the back of a
Lesson: The more you know the more valuable you are. An investment banker that’s also a master plumber will clearly do better in a recession in a recession than an investment banker and better in good times than a master plumber. Being flexible and able to do any number of jobs helps a lot when money is tight and you have to take what you can get.

5) Take Risks
Situation: On many different occasions, Jack is literally the guy running into a burning building as people are running out. At times, he’s had to jump out of buildings, go undercover with a criminal organization, and hundreds of other scenarios you and I would normally avoid. But he it’s always for the greater good, and he’s willing to do what others are not for success. Make no mistake, he gets scared, but he keeps the faith.
Lesson: Being a young guy, I’d always read that during times of uncertainty in the stock market it’s important to keep you eyes on the future and avoid thinking about the present situation. When everyone else is selling their stocks and mutual funds, you must stay the course. This recent recovery has shown exactly why you must keep the faith. The best returns come after the worst returns. In Jack’s world, running into a burning building is hardly the risk it seems to you and me. In your world, holding your stocks in a down market shouldn’t be scary either.

6) Trust No One
Situation: On average at least once per season Jack is betrayed by someone he trusts. Sometimes he kills them, sometimes they just get themselves killed. But after years of dealing with such traumas he’s learned there are very few people he can trust. Most of the people that know he exists want him dead. He’s always watching his own back, and is prepared to leave an old friend in a ditch with a bullet in their head if they go against him.
Lesson: Bankers, financial advisors, and the like always seem great at first. They’re there to serve you and make your financial life better. But if you don’t watch you back, they will turn on you as soon as they think they can get away with it. Don’t trust anyone any more than you need to. As soon as their behavior gets the least bit sketchy or you don’t think they’re looking out for you best interests, leave them in the ditch (don’t kill them though, that’s Jack’s job).

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Normally, I like to phrase my Weakies with a good backstory and build everything up, but Chuckie has been way too busy to do that. I will tell you he’s an NYU educated man, lawyer, and Korean War vet with a Purple Heart. He’s a hero, and he’s no moron. Which leads me to believe everything I list below was done deliberately.

He used Congressional letterhead to arrange meetings with potential donors to a center named after him at the City College of New-York. An ethics “no-no”.

Rangel rents 4 apartments in Harlem at below market rates. He paid $3894 per month for all 4 in 2007. The going rate was closer to $8125 per month. 3 are used for his “home” in Harlem while the 4th is used as a campaign office. City law requires that apartments of this type be used for living, not business. The building is owned by a company with one of the owners being a regular contributer to Rangel’s campaigns. The savings add up $50,000 a year, which far exceeds the $100 gift limit established by the House. Quid pro quo? Perhaps. Sketchy? You bet.

He owns some vacation property in the Dominican Republic which during the busy season rents for as much as $1100 per night. He bought the place in 1988 but mortgaged part of it. He was one of a few investors that had interest payments forgiven. In 2008, it was discovered that he had failed to report $75,000 worth of income on the property. Either our tax code is too complicated for a Congressman to figure out, or he was hiding it. Either is disgraceful considering he’s the chair of the House Ways and Means Committee, the House comittee that DESIGNS THE TAX CODE. Only last week did he take a temporary leave of absence amid all the scandals.

In January of 2009, another Congressman introduced legislation for the “Rangel Rule” a joke of a bill designed to forgive taxpayers on interest and penalties for unpaid taxes.

Discrepancies were found in the listed value of a property he owns in Florida. Values vary from $50,000 to $500,000. Not sure what this means, but do YOU have this problem?

Chuckie also uses a parking garage just for Congressmen as personal storage for his old Mercedes Benz. House rules forbid the use for any period longer than 45 days. It’s been there so long the plates are gone, at least a few years. The spaces are valued at $290 a month and could be considered income that would need to be taxed. The doesn’t even have the necessary permits to be in the garage.

He’s taken a homestead tax break on his house in DC, despite maintaining a residence in New-York. Again, no expert but it’s said this potentially violates laws in both areas.

There is a tax loophole that has allowed a corporation to save tens of millions of dollars by operating “in Bermuda”. The corporation has donated $1 million to a City College of New-York center, named after Rangel. Rangel promised to oppose closing the loophole after a meeting with the company’s CEO. 5 days earlier the company donated an additional $100,000 to the City College of New-York. This company is one of only 4 that benefits from the tax break.

In 2008, Rangel paid $80k in campaign funds to a company to develop his a website. The company he paid is run by his son. Sites like this are regularly designed for about $100. A representative of the Campaign Legal Center, a non-profit watchdog said “this is probably legal but definitely wrong.”

Rangel again teetered on the edge of ethics by taking trips to the Caribbean funded by a non-profit in NY, funded by a number of large corporations with lots of lobbying interests.

In 2009, Rangel amended his 2007 financial disclosure form to double his reported net worth. This included properties in NJ (again with back taxes), investment, and checking accounts.

Also in 2009, Rangel opposed legislation that would have stopped $2.9 billion (yes billion) in tax money that would go to bailout a rum company in the US Virgin Islands. Naturally, he received campaign monies related to the deal.

And that’s just the stuff we know about. This man is the perfect example of everything that is wrong in Washington. He’s been in office since the 70s, it’s time for him to go.

Wikipedia has more about all his bad deeds.

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It’s time for another roundup of links. My favorite this time goes to Debt Ninja of Punch Debt In The Face because he got raked over the coals by some debt fearing Ramsey worshipers over at Consumerist. He’s in a situation where he has a lot of cash, and a lot of student loan debt, and a $4000 honeymoon to pay for. Basically the commenter think he should give up on the honeymoon stuff and pay off the debt. Whatever.

As a newlywed, and fresh back from a honeymoon from Maui which cost a double digit percentage more than $4000, I have to side with my Ninja buddy. The Sheconomist and I wanted to have a phenomenal and memorable honeymoon in an exotic location. For one thing neither of us had ever done something like that. For another we were about to enter a period of tighter finances. And another we were confident in our ability to meet future obligations.

The main criticism of Ninja was that he has $15k in debt and $22k in cash. Common wisdom is that he should pay off the debt and be happy with the $7k he has left over. For the most part I can’t disagree with common wisdom. Assuming an interest rate of 7% on the debt, he is technically paying the bank 7% each year for the right to have his cash. But from another perspective, he’s paying the bank 7% each year for the right to have liquidity. If he pays off the loan then loses his job, he’s got just 7,000 in savings. But if he doesn’t and then loses his job, he can put the loans on hardship deferral and still have his $22k. What people always miss with debt is there is more than one kind. $15k in credit card debt at 20% is a completely different animal than $15k in student loan debt at 7%. And on top of that interest on student loans is tax deductible. If you’ve got the means and are relatively sure of your ability to meet future obligations, go have some fun.

Here’s the best of the rest I’ve been reading:

• Moolanomy cites an interesting study about people that retire early die younger. Eesh.
• Consumerism Commentary comments on how to handle requests for financial advice. Sometimes you just have to step back and not offer your wisdom.
• Len Penzo does a mostly scientific test of bottled waters vs filtered tap. I drinking unfiltered tap and The Sheconomist drinks filtered tap. Either way we don’t pay for bottled water, which is simply ridiculous.
• Five Cent Nickel dives into what the numbers on your credit card mean. This is great party conversation.
• ManVsDebt talks about the lessons learned in 3 years of marriage. Again, as a newlywed it’s nice to read things like this. Ninja should read it too.

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It’s been a while since I talked about my beloved banking industry.  But we’re back in the news again with a proposed tax from Senator Webb of Virginia on bonuses to TARP banks.

Do you remember like a couple of years ago there was this huge financial crisis?  The Treasury Secretary (Hank Paulson) and Fed Chair (Bernanke) orchestrated this $700 billion bailout program.  They were going to use the money to buy the bad assets off of banks, freeing up capital to get the markets moving again.  Instead they used it to just buy a bunch of stock in the companies, but no matter.

You, me, and of course the media were very much focused on how much money we might lose in this deal.  As it turns out, we actually made a few bucks.  The banks had to pay a little interest on the money we loaned them.  But, billions of dollars were paid out in bonuses, causing a ruckus among the media and DC puppets alike.  Personally, I didn’t care, and no I did not receive a TARP bonus.

But the media and DC were really convinced that this was a problem.  It was a PR nightmare to receive billions of dollars to keep your company alive, only to pay some of those billions to managers that obviously didn’t do their jobs right.

Webb’s proposed tax aims to get some of that money back.  For every dollar in 2009 bonus received over $400,000, the bonus is taxed at 50%.  So if you got a bonus of $600,000, you’d be responsible for a new tax of 50% on that $200,000 extra.  This tax revenue will be used to pay down the deficit.  Yes, that’s what I said, he actually wants to use this to pay down the deficit.  He might as well give up because even if Washington passes this bill, that money is going somewhere else.

I could love or hate this idea.  On the surface it sounds alright.  We essentially gave low interest loans to high risk borrowers, we should be compensated for taking on that risk.  Despite being a politician, I watched Webb get raped by Maria Bartiromo on CNBC yesterday.  He’s not good with words, but he meant to tell the people this is why he wants the tax.

After much internal debate, and a trip to the grocery store for Malt-o-Meal cocoa pebbles, I decided I love this idea.  Go ahead and tax the TARP bonuses.  I’m no socialist and I’m not interested in redistributing wealth, but Webb is trying to put an end to the whole Wall Street bonus crap.  By introducing this bill we get one of two outcomes.  Either we do this tax (which is a token tax if anything), or we don’t.  Either way, the conversation about Wall Street bonuses will be over for the next half-decade.

Webb’s cronies estimate that this tax could bring in as much as $10 billion.  I’d be surprised if it even brought in $1 billion towards paying down the deficit.  Which leads me to assume that Webb is doing this for the publicity.  It gives him good talking points when he goes back to his constituency (which he barely won over in the last election).

Whether for personal gain or simply because he wants to end the debate about TARP bonuses, I applaud Senator Webb for this attempt.  Perhaps he’ll start a trend with paying down the deficit a smidgen.  But I wouldn’t hold me breath.

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Do you know anyone that’s unemployed? I do. You probably do too. They collect checks from the government and their only responsibility is to continue to search for work. The job options are few and far between. Many go for extended periods of time without finding work, especially if they do not have transferable skills. Many wish they could do something, and wish the government would help them out on that end instead of just cutting a check, according to the Huffington Post. Many probably feel guilty about getting a free ride from the government (of course some of them are very happy there).

I could probably make an argument about setting up a giant temp agency. The government probably needs bodies in chairs somewhere and these people could fill them and continue to be paid their unemployment. But I’d rather the government figure out a way to eliminate that position instead of perpetually filling it with unemployed people. However, there are other places where the unemployed could be valuable.

Thousands of charities and organizations are in need of volunteers to help their causes. From licking envelops to fundraising to cleaning. Anything a normal volunteer can do an unemployed person can do too. Call them “Municipal Volunteers” or “Mutineers” “Muniteers” for short. It would be a corp of volunteers ready and willing to contribute to society. Their unemployment wages do not change, nor does the duration in which they receive them. They are simply required to volunteer for 10 hours or so each week.

This benefits the Muniteers as much as the organizations. Many people have difficulty explaining the employment gaps on their resume but everyone would know what a Muniteer is and they could potentially gain some kind of new skills. Aside from that they get to feel somewhat useful to society, which for many people, is more detrimental than the loss of income.

All plans have downsides. How would an organization qualify to use the Muniteers program? Who is responsible for reporting the Muniteer’s hours? Is the Muniteer punished for not showing up at scheduled times? What if there are more Muniteers than there are open positions? All good questions which I don’t have answers to. I’d need a boardroom full of minds and a whiteboard to figure all that stuff out.

But there are a few other things to address. I don’t feel that at present, the unemployed should feel compelled to volunteer. Were I unemployed I’m not 100% certain I’d volunteer either. But then again I have this website to help me continue to feel useful. What bothers me is people that complain that they want something to do (such as the people in the HuffPost article), but don’t ever consider volunteering. If building roads is all you ever wanted to do, then go find a construction company and volunteer your time. If you don’t then what you’re really saying is you want someone to pay you to do what you want to do. It’s a big difference. I want to do what I want to do, but I do want someone to pay me. I won’t pretend it’s so important I would do it for free.

I’m all about the freedom to choose, but I’m not above taking that freedom away. The human brain needs to be nudged sometimes. A formal program with just a basic requirement for completion would nudge a few million people away from watching soap operas all day, and help many feel less like freeloaders. I know most of you unemployeds aren’t freeloaders, but I also don’t blame you for feeling that way.

The Muniteer Corp is a good way for at least some people to continue to feel useful and gain skills while in the unemployment line. The networking opportunities could even lead to a few getting off unemployment. Should it be required? I’m not sure. But I do want the unemployed to feel useful, and I want the ones that need to feel useful to have a formal program in which to do it.

Photo: Editor B

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I accidentally found myself watching one of those wife swapping shows (which honestly sounds like something that shouldn’t be on TV) the other day and the parents were debating allowances. Since then a few blogs have starting talking about allowances and what’s right and what’s wrong with it. Like most blog posts (including my own) it’s crap. Half the time the parents are focused on the dollar amount a kid receives.

• “$10!!!??? When I was a kid I got a quarter!”
• “$20 is way too much, but $10 is too little”
• “$50, and they didn’t even do anything”

These aren’t direct quotes, but they do sum up what most parents mistakenly focus on when the topic of allowance comes up. What the correct amount is doesn’t matter at all. Depending on your own income level $10 might be too much, or $100 might be too little. It’s what is appropriate for your lifestyle. The same goes for increments, weekly, monthly, etc. Not important.

The allowance doesn’t exist to give kids spending money. If that were the case you’d just give them money when they asked for it. The allowance exists to teach children some level of understanding about money. At it’s most basic level, a monthly allowance teaches a child to save, appreciate patience, and learn there is a limited flow of money. But the allowance can teach so much more. Here’s how:

First and foremost, everything in the allowance system must be formalized. It doesn’t have to be written out in a contract or anything, just make the allowance system formal. Do some tracking, make “pay-day” a specific time and place so there is consistency. Keep documents in a notebook or spreadsheet. This is the most vital part of the system because it conveys the importance of the transaction. As children get older this formalized system will become less important, but by then the foundation should already be in place.

Next, don’t just give your kids an allowance. Make them earn it in some way. My parents made me keep my room clean. So, once a month I cleaned my room . You can be as strict or lenient as you want, so long as they do something for their allowance. On top of this, give your kids the option to earn more money around the house. Mow the grass, clean the dishes, get the paper, I don’t care. Just give them opportunities to earn more cash. These two things help your child understand that work must be completed and that money is earned.

Now for the nitty gritty stuff. As I said before, the amount you give doesn’t really matter, whatever you think is appropriate. What is important is that you empower your child to make their own decisions. You empower a child just like you empower a dog (sorry), using a reward system. Getting your child to save is difficult. The instant gratification that comes from making a purchase today far outweighs the puny interest rate they would get in a savings account. Even the 10-12% they would get in the stock market won’t work. Offer to double anything they save (up to a certain % maybe). Stipulate that it must be saved for 6 months, but go ahead and give them the money up front (more money = instant gratification). They are then able to decide how much they would like to spend now and how much they’d like to save. If you’re worried about paying out too much money, just decide their allowance is X dollars and give them 0.5X as their “allowance”.

This will serve as a sort of foundation for your allowance system. You can tweak it here and there to make it fit your plan. Here are some of the other ideas I was thinking about for my kids (whenever I have them).

• Don’t incent them to save for college. That’s the parents’ job. They won’t be interested until teenage years, nor will they understand.
• No other long-term stuff. Kids can’t wait until Christmas on Dec 24th, they aren’t going to wait for anything else either, no matter the incentive.
• Like a business, offer bonuses for a job well done. Could be annual, or just job-based. Humans (even you) get complacent with your normal income and develop a sense of entitlement to it, but a bonus is something else!
• Set up savings accounts for your children. That money is and should be theirs. Don’t let yourself get the feeling you can borrow from it.
• Don’t tax your kids, they won’t get it.
• With young children, use money as a tool for teaching math. I didn’t understand addition and subtraction with a bowl of apples, but I sure did with quarters.
• Have your own finances in order. If your income isn’t steady or you live paycheck to paycheck, focus on yourself and don’t worry about an allowance until you can pay yourself first.

That’s about all I got. Feel free to drop your tips in the comments or say what you do with your kids.

Photo: the ritters

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As I watch the end of the Winter Olympics in Vancouver, I can’t help but enjoy the competition. People from all over the world come together to compete for the chance to be called “best in the world”. Many of the athletes don’t make any money doing what they do, and so this is the chance to show off their sport and maybe get 15 minutes of fame.

On top of the athletes competing for themselves, they’re also competing for their countries. The Olympics are a matter of national pride. If you think that isn’t the case just consider Canada’s Own The Podium program, which invested over $100 million in developing their athletes to dominate the medal standings. It hasn’t paid off in the way they expected, but they are dominating the gold medal count.

The Olympics were started in ancient Greece. The reason has been disputed, but I know exactly why they stayed around for so long and were revived in the 19th century. Our world has been plagued by war since the dawn of man. We’ve fought over resources, controversies, and women. We don’t get along. Up until World War II almost every country used a strong protectionist policy. Keep jobs in your country and tariff the crap out of anything imported. The Olympics were a time when we all put down our guns and just waved our flags in the name of friendly competition. All of the major countries of the world came together to compete. With a few exceptions, even Soviet Russia and the United States willingly competed with each other.

But with the end of WWII, and eventually the Cold War, most of the world started to get along. Trade agreements were hammered out, companies started operating in countries all over the world, and cultures merged. Politicians of the world regularly meet to discuss global issues, many times a large number come to consensus agreements. For example, during the financial crisis all the major central banks cut rates collectively, and many of the countries also launched fiscal stimulus programs. Granted, we disagree on many things, but at least we’re all talking.

In the protected societies of the past, one of our major connections with the rest of the world was the Olympics. Countries and cities bid on being able to host the games to show off their respective cultures and other proud things. But as I first noticed in 2008 with China, I didn’t learn anything that I couldn’t have found on Wikipedia or YouTube. I even knew who a good portion of their celebrities were.

To quote Tom Friedman, “The World Is Flat.” And in a flat world, the Olympics just don’t matter anymore. They don’t serve any of the purposes they used to. Our national pride is no longer based on success in the Olympics (unless you’re Canadian ). Leading in industry, education, and global responsibility matter more. Corporations have noticed this as they’ve slowly started to wind down their funding for various Olympic teams.

And when I say the Olympics no longer matter, I’m mostly speaking for developed countries. Developing countries still have something to gain. Jamaica, aside from tourism and drug trafficking, doesn’t have much to offer the world. So it makes sense that Usain Bolt is a national hero. China wants to show the world that there’s more to them than cheap labor; that they can compete with the big boys (China, we already knew that, you’re the world bank now). Brazil will do the exact same thing when they host the summer games in 2016 in Rio. Same goes for South Africa, which hosts the FIFA World Cup this summer (another quadrennial event for those of you that don’t follow soccer).

It was fun watching the Olympics, and I will continue to watch the Olympics in the future for the same reason I do now, to see sports I normally don’t care about. But it’s not about national pride. Globalization has ended national pride for me. The US did wonderfully in the Vancouver games, but due to our partisan politics, international policing, and lack of industrial and educational leadership, I’m more ashamed than ever to be an American.

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