(London, UK) What London is about…

After a (rough) internship search process, I have accumulated some interesting interview experiences from the trenches that other university students might appreciate hearing about. I actually enjoyed the recruiting process. It is always enjoyable talking myself to a captive audience.

For some people, job interviews open doors to opportunities, for me it is about opening wrong doors. The following three incidents took place at one single final round of interviews.

Door 1: Once while interviewing at a hotel, I spent 30 minutes arguing against my interviewer who upon reading my resume, decided that I was more suited to doing a PhD in Economics or a MPA at the Kennedy School of Government. He told me that I would not find the work at their organization intellectually stimulating and would quit in a year. After concluding the interview, I stood up and headed for the door and found a complicated series of locks on it. I struggled to open them and heard him shouting “turn right!” Upon hearing the advice, I turned the lock to the right and it opened up to reveal the closet. What he meant was that the exit was on my right. I guess he revised his high opinion of my intelligence at this point – rightly so!

Door 2: During the interviews at the hotel, we were held in a common holding room and assigned rooms to go to. I was given a number and promptly left for my room. When I got there, I knocked on the door. No response. I knocked again. A voice inside shouts “10 minutes!” I thought my interviewer was in the bathroom, and waited for about 8 minutes when I received a phone call. The head recruiter was frantically asking whether I was lost. I told her what happened and we realized that I was given the wrong room number.

Door 3: For the last session, we were to work on a case together with other interviewees. As I walked into the room with the other interviewees, it dawned on me that I had not been to the washroom having had three back-to-back interviews before this. I dashed into the bathroom, and as I turned the door handle, the sight of a vice-president half-naked sitting on the toilet bowl revealed itself to me. I closed the door. 5 minutes later, he came out saying “It looks like we all go to know each other already, maybe a little too well. Now we can start the interview.” Good thing he had a great sense of humor.

My other mishaps included an email where I put down the name of a rival firm. The person was ticked off enough to send a two paragraph reply (the longest reply he wrote for a recruiting email according to him) of which an excerpt is below:

Thank you for the very kind email, with one noteworthy exception…I work for [firm 1] not [firm 2], perhaps a subtle distinction to you, but an important one for me. I have not chosen to write this email to be preachy or obnoxious (or at least not that preachy and obnoxious), but a huge part of success in [industry] comes from attention to detail (please understand this is coming from someone who misspelled Bear Stearns ‘Bear Sterns’ on a cover letter two years ago and was still offered a job, perhaps such lapses are correlated to their recent quandaries).

I also flew to London to  interview there for a certain position, but upon getting there, was informed that I would interview with another area of the firm. It was not the nicest thing for them to do to spring this surprise on me after an 8 hour flight, but I felt compensated for it by having some of the nicest interviewers I ever met.

I just returned from a talk by Robert Feldman, Morgan Stanley’s very capable Chief Economist in Japan. He spoke on Japan’s political economy, and was an engaging and knowledgeable speaker. In particular, I enjoyed his frameworks for analyzing the political economic situation.

Briefly, maintaining Japan’s standard of living can be summed up by the following equation:

Y/P = Y/L * L/P

Where Y is GDP, L is Labor, and P is Population.

Y/P is the output per person, which measures the standard of living. Hence, the standard of living is driven by the labor productivity (Y/L) and the participation rate (L/P).

Takeaway 1: Increasing L/P is not helped by increasing the participation of females in the workforce

Many commentators have claimed that increasing the participation of women in the workforce can help raise the standard of living. Feldman argues that this will do little to stem the decreased labor participation rate. Graph 1 shows that the female participation rate has increased since 1990 to 2005. While the participation rate has increased, the absolute number of females in the workforce has decreased. This is because the female population has decreased across the board except for those aged over 60.

Graph 1: Female Participation Rate By Age Group

This dynamic is repeated among the male half of the population. Hence, increasing L/P substantially would require the economy to better capitalize on the skills of workers over 65 and require new ways to keep these workers in the workforce.

Takeaway 2: Increasing Labor Productivity Depends on CRIC Cycle

Two ways of increasing productivity would involve either increasing the capital per worker or increasing the total factor productivity through structural reforms. There are decreasing limits to the former, and the latter is where Japan problems lie. Feldman points out that economic policy-making runs in CRIC cycles: there is a crisis, then a reform response, followed by improvement in the economy, and finally complacency sets in again leading to a crisis (see Graph 2).

Graph 2: CRIC Cycle

The Economic Response curve (upward sloping) indicates that GDP (or some other performance variable) improvements follow an increase in reforms. The Reform Response curve (downward sloping) refers to the demand for response according to the economic performance. Feldman argues that Japan is currently in a complacency phase after the reforms under Koizumi led to improved economic performance. Koizumi also “reformed the Reform Process”, leading to a higher level of reforms for any given GDP level (see Graph 3).

Graph 3: Reforming the Reform Process Shifts “Reform Demand” Curve Outwards

Takeaway 3: Japanese Politics Could Remain the Same after Elections

The two major debates in Japanese politics revolve around whether there should be a big government or a small government, and whether there should be an active or passive foreign policy (see Graph 4). The current problem is that the two major parties span a wide gamut of political stances on these topics, and voters cannot properly express their interests through their votes.

Graph 4: Japanese Political Parties and Their Political Orientation

Post-reform, there are likely to be three key groups in the political process (see Graph 5). However, these three groups might not win enough seats to form a government, leading to coalitions between either the left or the right with the old LDP at the center. This brings us back to the situation in graph 4, where government policy again breaks down into incoherence.

Graph 5: Post-Reform Japanese Politics

(Ho Chi Minh, Vietnam) I am interested in understanding the systems for delivering services for development, as I feel that it is not solutions that we lack, but means for delivering those solutions effectively.

One employee was so confused by Kerviel’s explanation about why his counterparty had such a high risk level that she didn’t pursue it, according to the bank’s internal probe published Feb. 20. She was one of four people from the back, middle and risk- management offices who initially questioned Kerviel on eight forward trades beginning Jan. 2. - From Bloomberg.

The scandal surrounding Societe Generale and rogue trader Jerome Kerviel reveals how the “soft” infrastructure for risk control is highly important. The “soft” infrastructure deals with systematic controls exerted by people running the risk control systems, while the “hard” infrastructure deals with the technology we use to detect risks. The “soft” infrastructure deals with values, informal codes of conduct, and the (unequal) relationship between the profit-earners and the risk-control staff.

The “hard” infrastructure at most banks are effective enough to detect most anomalies in trading activities. The improper trades by Kerviel were detected by the trading systems, but Kerviel was able to easily brush past the risk control personnel with complicated explanations. This weakness in “soft” infrastructure is common at many banks, where profit-earners are superstars who refused to be questioned by “backroom” staff who do not understand their “brilliance.” Long before the sub-prime mess, a friend at a Swiss bank told me how their top trader refused to talk to the risk-control staff. I am not sure how that trader’s trades are holding up now, but this attitude is common.

The sub-prime mess further reveals the weakness in the human controls. Collaterized Debt Obligations (CDOs) were new instruments which people had difficulty pricing. With this uncertainty, it is even easier for aggressive traders to explain away the concerns of risk management by arguing that the downsides of such products are over-estimated. In this uncertain environment, having stronger “soft” infrastructure is even more important.

(Da Lat, Vietnam) M stands for MGMT and MAFIA

For MGMT 101 class, each team needs to pick an organization and analyze the organization’s strategic challenges and options. While most teams usually stick to the tried and tested business organizations, our team picked a different path by selecting the Hillary campaign, NBC, and the a Mafia family in Naples as possible choices. The TA liked my idea of studying the Mafia business. The write-up is below:

Camorra – The Naples Mafia

Camorra is a Mafia organization native to the Naples region in Italy. Camorra operates a diversified business. Domestically, it is active in providing loans at usurious rates to garment sweatshops, racketeering, drug pushing, and participating in the garbage disposal market. In recent years, they have internationalized their operations by engaging in money laundering in Asia and the US, and invested heavily in foreign properties. Unlike its counterparts in Sicily who adhere to a hierarchal organizational structure, Camorra is organized into various clans who occasionally compete with each other.

Despite their growing wealth, Camorra faces a range of challenges. Domestically, they are facing greater pressures from the Italian government. Recent crackdowns in Sicily on the Mafia, and resistance from businessmen in their racketeering business, could potentially spillover to affect their business. There are limited domestic opportunities for expansion as their rivals are well-established in the South. Hence, growth of their business requires internationalization and they will need to examine what foreign markets they should enter and how they should do so. In addition, their loose organization and internal rivalries could prevent them from successful international expansion, and a past attempt at unifying the clans had failed.

(Camorra-specific news appeared in the Economist on Jan 10th 2008. On Dec 6 2007, news on the business troubles faced by the Italian mafia in general appeared in the Economist.)

N.b. My friend from Naples informed me that the Mafia is a separate organization from the Camorra, and not an overall heading for such organizations.

Apologies for the long absence: I had been busy undergoing recruiting, working on various projects, midterms, and surviving my eight classes. After I had time to gather my thoughts on the intense but fun recruiting process, I will write about some of the interesting anecdotes I picked up along the way. Today, I would like to talk about the Big Brother high school in South Korea.

Minjok Leadership Academy is one of the top high schools in South Korea, sending the bulk of students to the top American universities every year, along with its rival Daewon Foreign Language High School. Every year, intelligent (and mostly well-to-do) students make the pilgrimage to spend the next three years of their lives living in mountains of northern South Korea at Minjok. A friend from Daewon claims that living in the mountain makes Minjok students socially awkward, and they compensate for this by drinking heavily. Considering that some Minjok students read my site, I issue the disclaimer that the view is not shared by me.

The scariest part of Minjok is the Big Brother atmosphere. In the past, every dormitory room and corridor were equipped with security cameras and loudspeakers. A friend told me how she once studied with her feet on the desk, when someone admonished her for doing so over the loudspeaker. Another of her friend had the brilliant idea that as long as he skulked along the far wall from the camera, he would not be seen. Obviously it did not work out for him.