Jay Abraham – His Ideas and My Comments

I have been reading about and applying the ideas of Jay Abraham for almost twenty years. He is a marketing genius. Of course that doesn’t mean that I agree with everything he says or recommends. The following is a list of ways to dominate your marketplace, paraphrased from his book, The Sticking Point Solution, followed by my own thoughts.

Ways To Position Yourself, Your Product, or Your Company as Preeminent in Your Marketplace

1. Abraham suggests that you take the attitude “In Your Service” with everything you do for your customers, and that you be their trusted advisor for life.

I think this is only appropriate in certain businesses. Honestly, if you sell a basic commodity, it is a bit much to expect that you’ll be “trusted advisor for life” to clients, and there is nothing wrong with just selling a decent product and limiting the service part of the transaction if that works for you.

2. Say what your competition doesn’t say. Tell clients what they’re not being told by your competitors.

I have to agree with this one. Being more honest and open is a good policy in business and in life.

3. Make clear your achievements and the value you bring to a client, but do it with humility and humanity.

This is part of being honest and open. Bragging is unpleasant, but if it is relevant, say it.

4. Be open about your deficiencies, and so acknowledge your humanity to clients.

Again, this is part of being honest, and if it is relevant, to do otherwise is a form of fraud.

5. Consider each relationship as a long-term investment, not a one-night stand.

This depends on the nature of your business and the transaction. Jay Abraham and others who work as consultants tend to think all business has to approached as they approach theirs. It may be a nice thought, but selling ice cream to tourists from other countries does not require a long-term investment of time.

6. Acknowledge your strengths and weaknesses, and play to your strengths.

This is a tough one, since we often want to correct our weaknesses more than use our strengths. But I think he is right on here, and this is not only the more profitable route, but the one that brings the most value to the world. We are born with different gifts, after all, and spending time fighting to do what we are not good at may just take away from using what we have.

7. Control your risk.

Abraham covers ways to do this throughout his books. A most obvious suggestion that he repeats many times, but we often don’t do, is to look for the low-cost, low-risk ways to increase sales before trying more risky ways. Calling former clients to see if they need your service, for example, costs only time – it is generally much cheaper than advertising for new clients.

8. Project the image of true success.

I have mixed feeling about this one. I guess I can never quite get used to the idea that we have to impress people beyond offering a decent product or service that they want or need. Of course, I understand that this may help with sales, but if it means pretending to be someone or something that i am not, I can live with lower sales instead.

This was actually only half of the list of ways to position your product or company in the marketplace that Jay Abraham covered in The Sticking Point Solution. And though I may have a few differences of opinion with him, there are few authors who have more valuable things to say about marketing.

Everyday Negotiation: Principles and Techniques

In our culture the average consumer often limits the use of negotiation to real estate transactions and a few other areas, while paying whatever the stated price is for most things purchased. This is a costly habit, and is based on the faulty idea that most things are not negotiable. But in fact, in a 2007 survey done by the Consumer Reports National Research Center it was found that of those consumers who negotiated, 90% had received discounts during the survey period, on everything from televisions to medical bills and furniture.

This isn’t a small matter. Most saved $50 or more each time they were successful in getting a discount. Along with the results they published online Consumer Reports also related a few true stories, like that of the couple who, after getting several quotes of around $25,000 for siding, negotiated one contractor’s price down to $17,000. For $8,000 it might be worth doing a little haggling.

Fair and Profitable Negotiation

Beyond outright hypnotizing of the salesman, which few of us could do in any case, almost any technique you use to negotiate a better price is most likely ethical. A smile has been proven to be an effective subliminal negotiating tactic, and we are probably all willing to do that. In any case, whatever we try, the salesman or owner of the business should know how low he or she can go while still making a profit, so we can hardly “take advantage” of him.

There are exceptions, of course, and you can use your own judgment as to how far to go. I once offered a desperate book store owner half price for a children’s book in Spanish, and she said yes, followed by going out of business two months later. Now some might think I took advantage of her, but the truth was that I really only wanted the book at that price, and although she made no profit (book seller typically pay 50% for their books), she was failing regardless, and got more than the 20% she probably got closing out the rest of her stock. In other words, I was honest and she had the right to say yes or no according to what she needed (which was cash flow at that moment).

Techniques

There are dozens of techniques that professional negotiators use. For our purposes – getting consumer items at a discount – we’ll look at just a few.

The most basic way to pay less is to ask. You can start with “Can you do any better on the price of this?” You might also let the salesman know an item is too much and ask if there is a sale coming up anytime soon, which may prompt him to offer a discount.

To make this work better, though, it helps to first establish some rapport. If you can find something you have in common with the sales person (you both fish, read a certain author, live in the same town), you’re more likely to get a discount. So spend some time talking a bit before asking for price reduction. If the owner or sales person likes you it is much more difficult to say no to your request.

Use what knowledge you have. If the item is priced lower at another store, ask if they can match or beat that. If it is a model that will soon be replaced and the store has a large inventory to get rid of, let them know that you know this – but in a nice way. If it is towards the end of the month and you lean that the sales people are paid on commission with monthly bonuses for volume, you know you can push a bit harder.

Be ready to walk away. Unless you absolutely need the item that day, be ready to politely walk away from the deal if you can’t get the discount you want. You can always return the next day and pay full retail if necessary, but walking away will often b the trigger that finally gets the price lowered. Business owners and sales people know that once a customers leave they almost never return to buy the item, so they often will offer whatever discount they can at this point.This most basic of negotiation techniques has always been one of the most powerful.

Fair Pay – How Do We Decide?

What constitutes fair pay for the work an employee does? Is there even a need for the concept at all, or is whatever the market determines all that matters? I happen to think that the market should determine this in general, but that does not exclude the possibility that people are paid an unfairly low wage at times.

A Market Wage

If you went out to buy a car, and one dealer was willing to sell the model you want for less than any other dealers, and even less than you think the car is worth, would you offer to pay more? Of course not. You also wouldn’t offer to pay more for your oranges or cookies if the grocery store was selling them for less than their cost for whatever reason. In general we all try to get the best price that we can on most of what we purchase.

Why would it be any different for an employer looking to buy labor? If you are willing to work for him for $8 per hour, isn’t it natural for him to pay just that and no more? If three competent guys offer to mow your lawn, you would likely choose to employ the cheapest, right? The point here is that there is nothing nefarious about an employer trying to hire help at the wages which have been determined by the market.

In good times wages rise because there are more jobs available than people to take them. In bad times we can see pay drop because when there are more workers than jobs employers are able to attract help at lower pay. But in all times in a free and open marketplace (and country) wages are generally an honest agreement between an employer and employee. In other words, whether we complain about the wage and whether it constitutes fair pay, we do not have to take the job. In taking it, we have decided that it is in our own best interest.

Looked at in this way, we can see that perhaps the concept of a “fair” wage is not all that it seems to be. In fact, there are some people who would love to be paid to sit and watch television and count commercials for $4 per hour, making that a fair wage, despite the fact that it is far below the minimum wage and such an arrangement would therefore be illegal. If an employer offers a certain wage and an person agrees to work for that, it is difficult to argue that it isn’t fair.

Fair Pay

As I said, it is difficult to argue that a freely agreed-upon wage is unfair, but not impossible. Sometimes other circumstances are involved, and that can make a difference. An obvious one is when the employee are not legal residents. His or her options are limited in that case, making it possible for an employer to exploit such employees, paying less than he would have to pay in a normal employment market. Some employers of undocumented workers are even known to withhold promised pay, since the employees have little recourse.

Then there are the many circumstances when the an employer has certain advantages that allow him to ignore the usual market forces which determine pay. For example, a business owner might hire employees who have criminal records, and even if the crimes are not relevant to the job, he might pay these employees less than others because he knows they have a hard time getting a job due to their records. This, at least in my opinion, can be unfair if it is simply an excuse to pay less.

On the other hand, even when there are times when pay is unfairly low, I still think it is best to leave the decision to the employees and the employers. There are many problems with a government trying to decide what is fair pay. One example: I did the math once and found that the entire profit at Wal-Mart would be eliminated is they raised everyone’s pay by $3 per hour (labor is on of their largest expenses). If the law forced even a $2 wage increase, most employees would be stuck at that new wage, since there would be little room for raises. This means that it would be difficult for the company to pay more to those who did a better job – not a good result.

There are many other reasons that government control of wages is a bad idea, but that’s a topic for another time. It’s worth noting though, that even employees sometimes have an unfair advantage against employers. If licensing requirements limit access to a given field, for example, the few who qualify can demand much higher wages than they would otherwise get (think of doctors, dentists, and even real estate agents). This is result not of the market, but of government manipulation of it. Then there are natural cases, such as the demand for roofers and construction workers after a hurricane, that allow employees to take advantage of employers.

In any case, there is fair pay, and there is unfair pay. Most of the time, though, we will be far better off deciding which is which as an honest negotiation between employer and employed, rather than turning to governments to make such decisions for us.

The Many Ways to Make Money

Among the many ways to make money we discover not only methods suited to the particular talents we each have, but also ways suited to our true goals. You see, we don’t actually get anything from having a pile of green paper or higher numbers on a bank statement. We don’t get anything, that is, until we use that money for what we truly need and want.

This is where it gets tricky. It would be simple if we could each simply determine what we needed, how much money that requires, and then find ways to make that much money. But in reality we cannot entirely separate our needs, desires and goals from HOW we make money. If we could, we would all be looking for the fastest most efficient way to make what we have determined we need. But it matters what we do, doesn’t it? It matters morally, and it matters according to our inherent ways of operating.

I don’t want to sell cigarettes to people to make a profit, for example, even if I was sure I can make more money doing that than what I am currently doing. There are some ethical issues there, but I don’t even want to be a singer if I was paid twice what I make. The money is not everything, and although the enjoyment of how we make it is not everything either, it is not nothing.

So when you look at ways to make money, start with some criteria other than just how to make a bunch quickly. Yes you can in theory get rich fast as a trader on Wall Street, but you might hate it so much that you do it wrong and don’t get rich. You also might get rich doing something you enjoy, and if it takes you twice as long you at least enjoyed the time getting there.

Let’s look at some more specific ways to make money as they work for satisfying other needs and goals. If you like a lot of flexible free time, you don’t want a job except as a temporary tool. You might save the money made at it and then invest in real estate rentals that can be managed for you at some point. Or if you love analyzing companies and working with numbers, you could invest in the stock market.

If you love to be outdoors more than anything else, find a way to make money that keeps you outside for most of each day. You might enjoy tending gardens, for example. If it is also important to make more money, you could look into being a geologist for oil and mineral extraction companies. If you want to be outdoors and get rich you might speculate in land or start an internet business that allows you to do your work with a laptop on a mountain top.

Whichever of the many ways to make money that you choose, always keep those other values in mind. Look for that healthy balance between making money for future dreams and making it in ways that satisfy goals and needs you have now.

Why Business and Morality Shouldn’t Be An Oxymoron

If you were to consider great examples of an oxymoron, business and morality would have to be right up there at the top of the list. The reason is simple: business in its purest form is all about trying to make as much money as possible and morality only enters into the picture when people allow their own emotions and morals to enter into the picture. That said, there are good reasons for businesses to engage in moral behavior. Here’s what you need to know:

Pure Capitalism

Pure capitalism is designed to maximize profits while minimizing losses. This means that in a pure capitalist system, companies would have the least number of safety precautions possible and pay the lowest amount of money to their employees they could possibly get away with. The reason for this is that capitalism at its purest form has nothing to do with morality. In fact, in a pure capitalist system, business and morality would probably never meet.

It Makes for Good Business to Add Morality

However, as noted above, there is a good reason for a business to consider adding morality to their bag of tricks – because it makes for good business. In essence, business and morality do go together in one way – public relations. Businesses that hope to make sales to the public need one of two things. Either they need a captive market (i.e. a monopoly or a cartel) or they need the public to like the company more than their competition. Now while a free market will allow even a morally reprehensible business to make some sales to the public simply by maintaining prices which are lower than that of their competitors, that same business could make even more money by combining morality with their business.

How to Combine Business and Morality

They say that all is fair in love and war. To that list, one should generally add the word business as in “all is fair in love, war and business.” That’s because business is in essence a war – a war for the hearts and minds of your customers, who presumably have a choice of where to go with their business (this is why monopoly companies rarely have good customer service by the way – because they know that people who need what they have to sell will buy from them anyway since there is no choice). Therefore, when in business, one must combine business and morality.

Be Fair

You can do this in a variety of ways. For example, a business wishing to engage in morality will ensure that their employees are paid fairly and that they source their raw materials from places which treat people fairly (Starbucks is a good example of this – offering health insurance to their employees, above minimum wage pay and sourcing from fair trade coffee growers).

Be Community Minded

Another way to go about combing business and morality is to be community minded. This may mean that the business sponsors a local school baseball team for example. Or perhaps your business sponsors low income projects of another kind (for example, an expensive restaurant may donate all leftovers to a homeless shelter and a drug manufacturer may donate their medicine to poor people who can’t afford it and don’t have insurance).

Don’t Use Religion

However, one area where businesses can get themselves into trouble when they try to engage in combining business and morality is when they use religion for the purpose. Mind you, there is nothing wrong with donating to religious charities, however when using religious morality as an exclusionary tactic (i.e. we only hire people who conform to our faith values and worship at our churches because we believe that all others are immoral), it will inevitably backfire because of laws preventing such discrimination and because of public backlash.

Money Ideas and Beliefs

My ideas and beliefs, like all of my thinking, are evolving. Call it inconsistency if you like, but it seems clear as day that total consistency of belief over long periods of time just demonstrates an unwillingness to learn. When we honestly explore and investigate our world and our selves, we necessarily change and grow as a result. Here are some of the things I currently believe about money and related subjects.

The Value

The value of money is in what it can be traded for and how it is used. It is often over-valued and chased after for without regard to what’s really important – in which case it becomes a “negative value” that tempts us away from what we need. It’s worth almost nothing intrinsically (though it can be used to help start a fire). If money buys us time and health and other things of value, it is used well. If we trade too much time and health and other things of real value for money, then we are throwing away things that matter for paper or numbers in an account.

The Importance

Despite being commonly over-valued, at the same time most people underestimate the importance of money in their lives. They even say such silly things as “money doesn’t matter to me,” while working jobs they hate just for a paycheck and giving up on dreams just because they don;t want to learn how to manage their money. A monk who wants to meditate in a monastery needs someone’s money to build it. A mother who cares about her child’s health needs some way to pay the doctor. A charity that wants to eliminate illiteracy needs cash to buy books. Money is very important.

The Moral Significance

Money is neither good nor evil, but is a powerful tool that can be used for either. In an entirely honest and healthy society making money would be a universally good thing, since making it requires serving the needs of others, and the wealthiest individuals would by definition be those who provided the most service.

More Money Ideas

Jobs and businesses should contribute real value to the world.

Profiting honestly and in accordance with true values is right and good.

Wealth is wonderful if honestly created, but more is lost than gained when we get rich in inappropriate ways.

This site covers jobs, businesses, investments and related areas, in case you are looking for more than philosophical ideas. But the questions of why we want it and how to make it and what holds us back internally matter tremendously even to wealth-seekers. After all, if “getting rich” was only a function of having good knowledge and techniques there would be a lot more rich folk out there, right?

Thinking of Money Once Again

I find myself thinking of money often, especially since I started this website. It is easy to get caught up in the simple ideas surrounding money. For example, we too easily assume that it is either not important or is worth almost any effort. Neither is true, of course, and the truth is always a bit more subtle than we would like. With that in mind, I want to present a few ideas and facts that may be new to you.

Investing From Another Perspective

Nassim Taleb, in his book The Black Swan, suggests that the usual portfolio of stocks and other investments people buy into with their retirement accounts are not nearly as safe as we like to think. Of course we know that because of recent history – but he wrote this book on uncertainty in early 2007. We also commonly suffer under the illusion that the stock market must always come back. The idea that real estate always goes up in value is another of these delusions we have suffered under until recently.

But what do we do about the unpredictability of all markets? How do we invest? One interesting idea that Taleb had in his book was to put almost everything in the safest possible places, and get very aggressive with the rest. In other words, you might put 95% of your money in government paper or even bank CDs, and then buy super-leveraged options with the rest of the money.

The basic idea here is to expose yourself to the possible huge returns available from unexpected events (it is reported by some that Taleb made $40 million dollars in one day when the stock market crashed in October of 1987), while playing it safe with most of what you have. Most people think they are playing safe with mutual funds and blue-chip stocks in their IRAs and 401Ks, but as we have seen, these “safe” investments can drop by as much as 50% in a short time.

Most people, then, are exposed to huge potential losses in a short time, while having no opportunity for fast and huge gains. Stocks can drop dramatically, but there are almost no instances of market moves that can quickly make you ten times what you’ve invested. Meanwhile, Taleb’s strategy allows for no great losses at all (unless governments and banks all fail – a possibility), while it makes possible the occasional big gain. Don’t take this as my advice, though – and I have not yet tried the strategy myself.

Revealed Preference

The concept of “revealed preference” is that people’s stated preferences are not as predictive as their past behavior and choices. For example, if I were to ask a man what he values, he might list a few things such as being with his children, traveling, and becoming financially independent. But what if i look at how he spends his time and money? That might reveal a different set of priorities. He might spend little time with his children, work at jobs that don’t allow much travel, and never take the simple steps necessary to start becoming more financially independent.

What do you really value? You might want to look at how you actually spend time and money. Those expenditures, to some extent, are a more honest reflection of your preferences.

Who Is To Judge?

We – meaning most of us humans – are quick to judge how others spend their money. But is that fair? If a man can afford to spend a million dollars to take a cruise in space, is it right to judge him harshly just because we might have spent the money differently? How would we spend the money, and does our answer correspond with how we are spending what we have now?

For example, you or I might think of the “good” that could be done with a million dollars. But then virtually every one reading this lives in a house that is larger than necessary, indulges in habits that are costly and unhealthy, and spends money on unnecessary things. If we didn’t spend money in these ways, think of the good thatmoney could do instead. Truly, we may need more than the “necessary,” and there is no clear line here, so why judge? If we prefer another way to use money, we are free to start with ourselves.

The Unpredictable Results of Capitalism

The fact that I generally favor capitalism versus other options does not mean I think it always encourages the best results in every case. For example, consider one of the ways that businesses target various price-points with a product. You see, I may be willing to pay $89 for something, while you might only pay $39 for the same thing. If the cost of production is $9, a manufacturer would love to sell it at both prices to get the maximum profit. But how? Here is an excerpt from the “More Secrets” section of my ebook “You Aren’t Supposed To Know,” a part of the Secrets Package:

184. Pricier Models May Cost Less To Produce

Think products always have higher prices when they cost more to produce? Not so. Often the cheaper product actually costs the manufacturer more to produce. For example, a few years ago IBM sold their higher-priced “LaserWriter” and their lower-priced LaserWriterE. The latter was simply the former with a chip added to slow it down. The extra chip meant it cost more to make, but the resulting slower printer gave customers reason to buy the higher-priced printer.

This was apparently the most effective way for IBM to “price target” their customers. Adding a chip to slow one version down was likely cheaper than actually producing two entirely different models for high-end and low-end customers.Software companies sometimes do this, making a “professional” version of a piece of software, and then modifying it to remove some of the functionality, to create the cheaper model.

Now, if you understood this, you know that companies sometimes have to purposely damage a product and make it more costly to produce in order to sell to buyers who will pay more and those who are cheap. Making something less useful and less efficient to produce is not an outcome that economic theorists would predict for capitalism, but there it is.

Is it Really My Money?

I like to think that as long as I do nothing dishonest in making it, my money is my own. I do give to several charitable causes, but this is entirely voluntary, and I don’t necessarily believe that other people have the “right” to my money unless I have agreed to some contractual arrangement that specifies what I owe. I haven’t ever agreed to most of the things our government takes my money for, by the way, but I pay my taxes because of the threat of prison.

My Money Is Stolen From the Poor?

It is easy to have a belief like this, until new information challenges the premises and logic behind it. In this case, a book i read, Confessions of an Economic Hit Man, made me rethink the concept of “my money.” In that book the author explained – as I briefly outlined on the page GDP Growth – Is it Always a Good Thing? – how various interested groups ranging from bankers to governments and corporations use fraud to effectively steal the resources of poor countries and make the poor of those countries pay for the whole process for generations to come.

Now, if you get my newsletter, Money Matters, you know I believe in free markets and in freedom in general. But these ideas – at least as I understand them – imply fair markets and fairness in general. If money is made in fraudulent ways it doesn’t really belong to those who profit, as far as I’m concerned. This seems simple enough, but then it raises another question.

What if the scale of the robbery is large enough, and the profits benefit the whole people of the United States by way of a better economy and the spreading of the wealth that happens (to some extent) in a capitalist society? Doesn’t this suggest that perhaps all, or at least many of us, have received stolen loot? And if so, is all of my money really mine?

Normally when something is stolen, it returned to the rightful owners even if it has since been sold or given to someone else who knows nothing of the original crime. This is complicated, of course, when that something stolen is a fungible item like money. If a man robs a another man of a million dollars and goes on a shopping spree, we generally don’t go to every store he visited and take the money back to return to the man who was robbed.

But really that’s only a matter of practicality. If he happened to buy a house for a wife or friend with the money he stole, the house would likely be taken and sold to recompense the victim. So really the issue of whether the money should be found, or the things it bought used to replace it is not the issue if there is a way to do it. We generally try to right a wrong if possible in a civilized society.

What about the case of large thefts of billions of dollars? What if a government plunders the citizens of another country and this is used for the benefit of its own citizens? What if corporations fraudulently profit at the expense of poor people in other countries, and the result is that we all get to pay less for some of the things we buy, as well as collect dividends from these corporations in our millions of retirement accounts? It seems impractical to determine how much was obtained in fraudulent ways, and which of us should return how much of the booty we received.

Justice is impractical, perhaps, but knowing what I know now does make me feel that perhaps I have more money than I would have were it not for these crimes – which continue to this day, by the way (a subject for another time). So I guess I really don’t mind if some of my money is used for foreign aid to poor countries, which at the moment only adds up to a little over a dollar weekly for each of us.

I understand that this is greatly complicated by a number of factors. I really don’t know the scale of these things, although the more I read the more discouraging it seems. And to the extent that unfair practices and fraud have enriched our economy in general, most of us benefit, just like the peasants of a kingdom who don’t have to work as hard once the King plunders a neighboring land to fill his coffers.

My Money – Other Qualifiers

There are some other potential arguments for why my money may not all be rightfully mine to keep or spend how I like. One is the simple fact of public services which benefit me and make it possible to have the level of income that I have. In other words, there may be some justice in forcing me to pay taxes that support the roads I use, the police that protect me, and the courts that keep me safe from fraud.

Some anarchist libertarians will argue that unless we freely choose to use these services, we cannot be obligated to pay for them. Nice theory, but it is not really possible to avoid going down those highways if I want to get somewhere, and the practical alternatives are not here yet. So I owe something.

On the other hand, I really haven;t agreed to anything that directly obligates me, so I don;t feel that it is right for others to take my money for any “services” I don’t value nor ask for. I don;t particularly like paying for wars I think are unnecessary, for example (nor do I believe that there is some secret knowledge I don’t have proving how necessary they are). I also think it is theft to take money from me or other middle-class and poor people to pay for public schools for children of millionaires. And I think they’ll manage to find a way to pay for their own kids’ education.

How much of my money is mine if I make it as honestly as I can? It’s a good question…

Is GDP Growth Always a Good Thing?

In measuring the economic direction of a country, economists generally focus on GDP growth. It is also assumed that if the gross domestic product is growing, the people in a country are better off. This seems to make sense at first glance. If there is more wealth people should be doing better. Even if we don’t believe that people get happier with more large-screen televisions and all the other pleasures money can buy, it is clear that money can also buy medical care, education, and other things that most of us could agree are real values.

There are two flaws with this thinking though. The first has to do with how money is used. If we don’t use it in ways that are actually beneficial, it doesn’t actually improve anything. In other words, if we do get richer as individuals, and as a country, we still can use that money in ways that don’t enrich our lives. It can be gambled away or spent on drugs, for example. These activities will become a part of the GDP as measured by economists, but won’t necessarily make life better. In that case, the nominal amount of wealth isn’t terribly relevant. Money doesn’t make things better if we don’t use it wisely. But there is a better example of why an economy that is larger as measured by GDP isn’t necessarily better.

GDP Growth is Just Numbers?

The gross domestic product simply measures the total economic output of a country. It doesn’t mean that everyone or even most people share in that increasing wealth. Imagine for a moment if a few billionaires like Bill Gates and Warren Buffet made a small country their new home. Their incomes would become part of the GDP of the country, and this would make the economy look like it is booming. But what relevance would that have to all the other residents of the country unless they started to spend and/or invest that money in their new home country? None.

The distribution of wealth is also important, in other words. It doesn’t necessarily mean much to citizens if their country becomes wealthier and nothing changes for them. Now this is an extreme example, but the reality isn’t always so different.In his book, “Confessions of an Economic Hit Man,” John Perkins described how in the 1970s and 1980s he helped to bring huge infrastructure projects to poor countries, by making the economic forecasts that justified them. I’ll give one quick example of how this worked.

A team goes into a poor country because there is oil there – oil that American companies want. In order to get the oil, roads and bridges and electricity are needed. The leaders of the country are told that these things would be wonderful for their country, and if they can build them, the economic activity that results will provide a tax base that will enable them to repay the huge loans necessary. The rosy forecasts that justify the whole scheme are faked by an “economic hit man.”

The country borrows billions of dollars from the IMF (International Monetary Fund) or World Bank – both largely controlled by the U.S. government – and construction begins. Part of the arrangement is that U.S. companies are hired for the projects, so the borrowed money quickly goes right back to the United States for the work done. The oil starts pumping, and the country gets a small share of the revenue (3% originally in Ecuador, for example). This is not enough to repay the loans, of course, but the additional economic activity generated is supposed to raise tax revenues to make repayment possible.

Since the economic forecasts were lies, the tax revenue doesn’t materialize, and soon half of all the tax revenue in the country is needed just to pay the interest on the loans. GDP does go up due to the oil drilling and associated activities, as well as the sale of electricity to the oil companies from the new hydroelectric plant. A few people in the country get wealthier, and a lot of people in the United States get wealthier. Meanwhile, since the lands for the roads, drilling and hydroelectric facility were stolen from the residents (for the “public good,” of course), and since the roads and bridges and electricity are in jungle areas where few people are served by them, few citizens see any benefit at all.

In fact, a generation later, millions of poor people who had no say in the matter and may not have even been born when the contracts were made, are forced to pay for the roads and bridges that they didn’t need. The 50% of total national tax revenue that is now required just to pay the interest on the loans precludes many government projects to build roads and bridges where they are actually needed by the people.

GDP growth is there in theory, and according to all the careful calculations of World Bank economists, and yet poverty actually increase in many of these cases. Obviously we need to get past this focus on gross domestic product. the amount of money doesn’t determine the success of a country. It matters how it is made, who makes it, and how it is spent.

Do You Need a Credit Card?

If you don’t already have one, you might wonder if you need a credit card. In most cases the answer is yes. If you live in any country with a well-developed economy, credit cards are more than just a convenience. For example, in the United States it is nearly impossible to do some things without them, like rent a car. We live a ways from the nearest airport, and without a card we would have to drive two hours round-trip just to buy plane tickets for any trip we planned.

You need a credit card if you want to travel easily in general. It is dangerous to carry large amounts of cash, and in some cases you will be unable to call ahead and make hotel reservations if you plan to pay by check. So for travel – and many other things – you need a credit card. A cash back credit card can be ideal if you’re able to pay your balance off in full each month. But what if you have difficulty getting one, or what if you can’t seem to stay out of trouble when you have credit cards?

First, if you have never had a card, or if you have ruined your credit and so can’t get one for that reason, don’t despair. There are a few things you can try. First, you can start to handle credit responsibly so you won’t run into this problem in the future. That, of course, may not help you right now, so what can you do to get that card this week?

You can be put on someone else’s card. If a spouse, family members or really good friends want to help you out, they can add you to a card that they rarely use, and allow you to use that account. This isn’t as risky for them as it might seem. They can add you to a card that has a low limit. If the limit is $300, for example, that is about the most they can lose if you cannot or do not pay the balance due. Furthermore, as the primary person on the account, your friend will get the statements and so know if you are paying on time.

Now, if you are planning to actually run a balance, be sure to pay attention to the interest rate. Many cards have a variable rate, which is based on the prime rate plus a percentage (Prime plus 5%, for example). If you have a balance on an existing card, you might want to see if you can do a 0% balance transfer, which some companies offer for a specified time.

A second option is to open a checking account and get a Visa or MasterCard debit card to go with it. This is often easier than getting actual credit, since your card will be limited to the amount that you keep in your account. That’s a great way to keep yourself out of trouble too. You can only spend everything you have, and as bad as that sounds, it’s a lot better than spending more than you have.

If you need a credit card and there are no friends who are willing to add you to theirs and no banks willing to trust you with a checking or savings account debit card, there is another option. Get a parent or friend to open a bank account with your name on it and get a debit card for you as well. This is often possible even when you do not qualify on your own.

The point here is that you will be the one to fund the account, so your friend will have less risk. He or she can just forget about the account as long as the statements look okay when they come in the mail. Meanwhile, you will have to deposit money to cover the debits. A Visa or MasterCard debit card typically functions just like a credit card with one exception; it can be more difficult to get false charges refunded to you, so handle it with care.

You can also get a prepaid credit card at many stores (WalMart carries them at the moment). If you need a credit card for travel or for unexpected needs, this is the quickest way to get one. You pay cash and the card can be activated immediately. Keep in mind though, that if you plan to rent a car using one of these, you will need a hefty balance on the card. Rental companies will need to charge you the full amount plus put a hold on $100 to $500 for any damage or extra charges that you may have to pay for.