Saturday, November 27, 2010

Making good accounts

This time of year, every year, I dread having to do my accounts for tax purposes.

I am fairly numerate, but when it comes to accounting, I wallow in the abyss between the debits and credits.

My dear husband, trained in accounting, thankfully tolerates sitting down with me to sort out the numbers. Always we row over my poor book-keeping(??), my lack of analysis, and ... O dear!

So last year, for Christmas, I was given Book-keeping for Dummies which I attempted to read, and even did exercises, etc.

Last Saturday we sat down to do the accounts.

I had made a start on the Trial Balance and the numbers on various bank accounts were adding up properly, etc. But still I managed to put some DRs and CRs in the wrong columns -- which he spotted, and I failed to find a record of my last payment to the accountant (!).

But, BUT, we managed to balance the account without getting too cross with each other. Whew!

Profit/Loss? Apparently I made a tiny, teeny profit, not enough to buy a half-decent handbag.

But I was surprised at the amount paid out on items like storage, postage, courier, stationery, website maintenance, consumeables, TAX, etc. apart from the actual goods purchased.

If I were not trading and crafting, even with this low turnover, it would mean even lower revenues for the purveyors of these goods and services, and therefore possibly more unemployment.

And so, multiply this by the number of small businesses up and down the country.

OK, we're not the Middletons with our barn in Berkshire or wherever. But one day I know our little business will grow.

The point is small businesses like ours go quite a long way in keeping other businesses going. And we certainly pay our taxes.

I could very well do nothing and make a zero contribution to this society.

But I've chosen to run Organic-Ally to do our bit for the environment, to promote ethical business ideas, fair trade, and to support co-ops such as
KV Kuppam (via Bishopston Trading) so that consumers this end of the globe could actually make life better for producers on the opposite end.

When I relate this to what's happening in the wider economy and in particular after watching "The Trillion Pound Horror Story" I come back again and again to: We must make (or grow) things to sell.

We must encourage small businesses, and give these small businesses time and opportunity to grow.

When I first came to this country nearly 20 years ago I noticed that manufacturing had declined. I was told the service/finance sector was the way to go. This country cannot compete with India and China in terms of labour costs.

Whilst that argument about China/India might be true, the service/finance sector has also failed us.

We must return to making things to sell to customers who want those things. Not just antique Chinese vases.

I also wonder how much the UK welfare system has sapped the entrepreneurial vigour that was so much a part of this nation.

I read of young people, graduates, school-leavers trained in hairdressing, eg, saying, "If I don't get a job I would have to sign on."

And I think back to my first graduating from university with no job in sight (and no welfare state). What did we do? We took on whatever jobs were available.

I worked at two-and-a-half jobs at any one time because I needed to support my family, plus I had a Rotary Club student loan to repay.

So I was part-time oral history interviewer, part-time university tutor, and freelance newspaper columnist. This last I became because I was fearless (shameless?) in bombarding editors with unsolicited articles.

Not quite a "manufacturing" job, I know, for I was trained in manufacturing ideas (including ideas that sell newspapers) rather than ... handbags.

If I were trained as a hairdresser I would definitely look to starting my own business.

Most interestingly some of my friends started a little craft business. OK it lasted only until they found a "proper" job. But it was their spirit of enterprise that impressed me. And I am sure it was this spirit of enterprise that impressed their eventual employers.

So why don't our young school-leavers think about starting their own business? Why does "business" seem a bad word to some people? What do young people in similar situations in countries with no welfare provision do?

I know parents who own shops who do not wish their children to remain shopkeepers "because it is such hard work". They would rather their children get a job in an office.

How do I say to such parents: "I worked in an office, too. From 8.30am to whenever. Sometimes all weekend. Made so much money I had not time to spend it." (I even needed a personal shopper to buy my clothes.)

We need businesses to generate revenue, to feed other businesses, to create employment.

What must this country make (or grow) to sell?

I would think not those things that the Chinese (and note I am an ethnic Chinese) can make cheaper and faster. But products that depend on changing the whole outlook on consumerism.

I don't believe we should spend our way out of the recession. But I think we really must evaluate our buying/spending patterns.

Finding that balance between buying organic/conventional, sustainable/disposable, fair trade/cheap and plentiful, supporting the local/global is not at all easy.

If I do not need another handbag it's probably only because I only buy good, well-made, handbags.


See also: Workshop, not Casino

Giving a Good Account (2)

Isn't it ironic that someone who does not know how to take good pictures to profit from market-place websites like Etsy should have one of her photos featured in the local papers?

Sadly it was the photo of my 'little brother' "Big Ben" in a tribute page.

We looked at our photos of Ben. They are either of him with hands in his pockets or arms around a little baby.

The photo here is actually one of him with our new-born son ten-and-something years ago.

We knew then that he would have made a good father, and we were right. Sadly his daughters now won't have him around any more.

Our prayers are with your family, Ben.

Thursday, November 25, 2010

The tax system explained in beer

This was going round the Internet. There is no certainty over its authorship, and the piece has been called a "hoax" and all that. Still it is worth reading, methinks.

When pondering the question of taxes and the structure of our tax system in general please refer to this explanation using the language of Beer !!

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100.

If they paid their bill the way we pay our taxes, it would go something like this;

The first four men (the poorest) would pay nothing.
The fifth would pay $1
The sixth would pay $3
The seventh would pay $7
The eighth would pay $12
The ninth would pay $18
The tenth man (the richest) would pay $59

So, that's what they decided to do.

The ten men drank in the bar every day and seemed quite happy withthe arrangement, until one day, the owner threw them a curve ball.

"Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by $20". Drinks for the ten men would now cost just $80.

The group still wanted to pay their bill the way we pay our taxes.

So the first four men were unaffected. They would still drink for free. But what about the other six men - the paying customers?

How could they divide the $20 windfall so that everyone would get his fair share?

They realised that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man's bill by a higher percentage the poorer he was, to follow theprinciple of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.

And so the fifth man, like the first four, now paid nothing (100%saving).
The sixth now paid $2 instead of $3 (33% saving).
The seventh now paid $5 instead of $7 (28% saving).
The eighth now paid $9 instead of $12 (25% saving).
The ninth now paid $14 instead of $18 (22% saving).
The tenth now paid $49 instead of $59 (16% saving).

Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.

"I only got a dollar out of the $20 saving," declared the sixth man.

He pointed to the tenth man, "but he got $10!"

"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar too. It's unfair that he got ten times more benefit than me!"

"That's true!" shouted the seventh man. "Why should he get $10 back, when I got only $2? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison, "we didn't get anything at all. This new tax system exploits the poor!"

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and government ministers, is how our tax system works.

The people who already pay the highest taxes will naturally get the most benefit from a tax reduction.

Tax them too much, attack them for being wealthy, and they just may not show up anymore.

In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.

David R. Kamerschen, Ph.D.
Professor of Economics.

For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.

Monday, November 22, 2010

Giving a good account

Yesterday was a very sad day at church.

Last Sunday we heard that we cannot put God in a box as we looked at the passage in the Book of Samuel and the way the Ark of the Covenant was treated and feared.

The congregation was bowed by the news of a serious house fire that left one of our church leaders and his wife (a paediatrician) in ICU.

Later that day we learned the news that Ben, a Microsoft engineer, had been called home. Smoke inhalation had led to cardiac arrest. And the young man who first came to our church 11 years ago, spent Christmas with us, gone away, come back, got married, had children, was now back in the arms of Jesus.

Yesterday was the first day back at church together for many of us.

There was such an outpouring of grief. Ben was special. Ben was much loved.

I spent time with his mum last Friday.

O, how we cried.

"Why? Why? Why did God take him at the prime of his life? Why did He not take me instead?" Ben's mum cried.

We will never understand. I could, and can, only feel the pain of a mother's heart.

Ben was her miracle baby. He grew up so well, so strong, so tall. (We called him "Big Ben". He kept walking into the light fixture in the middle of our sitting room.)

Most of all, he grew up strong in the knowledge of his loving heavenly Father despite ... despite his own father's irresponsible ways.

What mother wishes to say "goodbye" to a child like this? The child whose flesh and bones were knit in her very own body?

But why the grief from all those who had the privilege of knowing Ben, even for just a little while?

Because he was special. Because he was much loved. Because people only have good things to say about him.

And I am sure, this boy-young-man-husband-father who did not have a bad bone within him, would be able to give a good account of his own life when we come before God's throne.

Rest in peace, brother Ben. We will keep an eye on the wife and the two little girls you left behind.

Rest in peace.

Tributes paid to Santosh Benjamin-Muthiah who died in Wealdstone fire

See also follow-up post

Sunday, November 07, 2010

My sister is sixty! Or what is poverty?

I find it hard to believe that. My eldest sister. Sixty.

And she spent four hours working at McDonald's today, because the manager there could see that her work ethos was so different from that of Generation Y (or X or Z?). But she had a run-in with a much younger staff member who did not realize that she was a champion french fries fryer whose "just-in-time" technique was exemplary.

Sister has a full-time job in accounts. She 'retired' and started doing some hours at M's, but was soon offered a job elsewhere. M's called her up, asking her to work Sundays.

Actually Big Sister is very good at audit/accounts but never quite bothered to get her accountancy qualifications. I remember her talking for hours on the phone trying to explain to her best friend the difference between debits and credits, assets and liabilities.

I look back at my young life with great sentimentality today because the talk in the UK this week was -- still -- on cutting public spending. Today Iain Duncan Smith tells us that those on long-term benefits will be forced to do unpaid work in the community.

As you can imagine, uproar from the red corner: that's slave labour, exploitation, unfair.

From the blue corner (or whatever colour corner you choose to call it): about time, too, why should people be giving something for nothing?, three generations of workless households? they need help in being introduced to work, etc.


Incidentally magistrates often sentence minor criminals to unpaid "community work". This week we read of one such "Lazy thug chooses prison over community work 'because he doesn't like getting out of bed'".

Earlier this week BBC journalists went on strike. I personally found it very refreshing. None of that 24-hour dribble (drivel?) speculating as to who was going to say what at which platform. They were protesting against a 25% cut in pensions.

25% of what? 25% of a very large sum would still leave you with 75% of a lot. The BBC licence fee is something we have to pay, or face jail (if I'm not wrong, but of course the prisons are too full now for that).

They quibble over the big bosses having huge pay packets. That, as far as I am concerned, is quite a different issue from their pension cut. Everyone is facing a cut, so why should BBC journalists be different?

My eldest sister's birthday was significant because she was the first person who finished her education at sixteen, went to work in a factory to help support our family, and then learned her trade in audit/accounts in the evenings.

My family was materially poor. There were six of us children and we lived in a one bedroom flat in Tiong Bahru. The flat was kitchen, bathroom, bedroom and a large sitting room. So most of us slept on the floor in the sitting room.

We had one bed -- my parent's. Come evening, the mats -- we didn't even have mattresses then -- were rolled out and we slept on the floor.

We had no wardrobes, except the one dressing table/wardrobe that was part of my mum's dowry. Our clothes were kept in wooden boxes that used to hold vegetables/other goods. Mum collected these boxes from the market and cleaned them out. These were stacked, double decker, under my parents' bed. We each had a different box.

Under the bed, too, was a metal trunk, again from mum's wedding, where she kept some very beautiful dresses that belonged to my cousins. Every so often she would open this trunk to take out new (old) dresses when I outgrew the ones I was wearing.

Come Chinese New Year mum would take a pink dress out of a cardboard box, a very pretty lacey dress, from the wardrobe. How I loved that dress! It was very long when I first wore it. A few Chinese New Years later it got rather short.

Then my parents could not afford the rent and we had to move into Queenstown. Two bedrooms, but a much smaller flat.

We still only had one table. It was our dining table. In the evening the food was cleared away and we sat around it to do homework.

Someone gave us a second smaller bed. Two sisters shared this bed. The rest of us slept on the floor, in the bedroom, in the sitting room, anywhere we found space. Later we could afford mattresses. Then an old bunk bed was donated to us, complete with mattresses. Wow!

Someone else gave us an old wardrobe/cupboard. The sisters now each had one shelf. Such luxury!

When I read of "overcrowding" in this country, I chuckle.

Second sister went into nursing a year or so after she finished school (at 16). Third sister worked and studied in the evenings for five years to qualify as a quantity surveyor.

With the financial burden eased somewhat, Big Brother was able to finish his A Levels, finished his National Service and went into university to study engineering. Second Brother joined the navy and through a circuitous route is also an engineer now.

Yet when we were growing up we did not think of ourselves as poor. We were happy. We had food. We were always clean and tidy.

We might not have TV, but we had newspapers, in two languages. We had Rediffusion and radio, through which I learned my English. Mum collected discarded textbooks and I would read those. An uncle bought us a subscription of Readers Digest which we read avidly.

Ours is a reading family and we read everything we could put our hands on.

We were materially impoverished by today's standards in the UK, but boy! were we rich in our ambition and desire to succeed.

We did not have a choice. When you see your parents working their fingers to the bone to pay for school fees, to buy books at the beginning of the year, to keep us in school uniforms, etc. because nothing came free, you just want to do something about your life.

Yet when I look around me now I see young children considered "poor", with their satellite TV, annual holidays, expensive shoes, and parents not in work, I have to question: what has gone wrong?

My young son stared in disbelief when I recounted how when at university there were days when I literally had no money for the next meal -- only to find my grandmother visiting and giving me some cash "to buy something nice for yourself". Or it happened to be my birthday and aunties gave me small sums of money, as aunties do.

Was I poor? Perhaps. I remember mum telling me I must aim to get to university.

I said, "But we may not be able to afford university."

She said, "Don't worry. If you are good enough, we will find ways to pay for it. There's such a thing called 'scholarships'."

In the end my big brother, a young graduate himself, paid my fees. I worked throughout university to support myself. And yes, I graduated with a (Rotary Club) loan to repay, etc. I had to repay this even when I was jobless, having graduated in the midst of the first major recession my generation has ever seen. (I worked at two part-time jobs until I was awarded a graduate scholarship.)

What this nation needs is not money -- taxpayers' money, ie my money -- poured into a system to "eradicate" material poverty because some will always be poor when compared to others; "the poor you will always have with you", Jesus said.

What this nation needs is blue-sky thinking that will lift the millions mired in their so-called "benefits trap" out of their poverty of ambition.

And a very happy birthday to my sister for her contribution to our family since she was 16, making it possible for the younger siblings to move on to higher education. Wishing you God's every blessing!