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K.C. was born in
a rural southern Indian village in 1937. Unlike his other siblings, he sought
to leave India for greater economic opportunity. For him, immigrating would
have to be through education, specifically through engineering. Completing high
school, and undergraduate studies in India, K.C. was granted the opportunity to
receive a Master’s in Engineering at Oklahoma State University. In 1965, once
out of graduate school, K.C. attained a job in San Francisco, California,
working as a Construction Engineer at Fred Early Construction. Three years
later he was promoted to Construction Project Manager within Fred Early. While
in San Francisco, K.C. bought his first house, in the suburbs, and got married.
In 1970, in San Francisco, K.C. began work with a larger construction company,
Dillingham. Working as a Project Manager, K.C. eventually was asked to
transition to Los Angeles, California to continue his work. When in Los
Angeles, K.C. had two daughters, and lived in a wealthy Los Angeles
neighborhood, in which he moved houses four times. K.C. continued to elevate up
the corporate ladder, attaining the title of Vice President, and eventually
Executive Vice President for Dillingham. A decade after obtaining the promotion,
K.C. was asked to become President of Ray Wilson Construction, where he worked
for 13 years, earning his highest salary, $275,000. In 1998, after leaving Ray
Wilson, K.C. became a consultant for several Los Angeles-based construction
firms. After officially retiring in 2005, K.C. moved to Portland, Oregon, to
surround himself with his daughters, and his grandchildren. Currently, on an
annual basis, K.C.’s retirement income is $120,000.
Assessing K.C.’s
life through the principles of the economic perspective, it becomes evident
that parallels emerge. With the economic belief that “institutions are the
rules of the game,” it’s apparent that K.C.’s economic success, is a product of
institutions. Beginning with the structure of education, K.C. was able to work
hard throughout high school and undergraduate studies, which allowed him to
received his Master’s in the United States. The institution of education, “was
a key determinant of my success,” stated K.C. Furthermore, the fifth principle,
“all choices have consequences that lie in the future and reshape what’s
possible,” applies to K.C., as his decision to dedicate his youth years to
academics, allowed for him to immigrate to America. His move to the United
States forever changed in his economic standing. “If I had stayed in India, I
would’ve worked in the fields and continued my life as a villager,” stated K.C.
His decision to use education as a means of expanding his opportunities, had a
profound impact on his economic well-being.
Much of K.C.’s
economic success, is attributed to his ability to escalate through the
corporate ladder. Beginning with his first job in San Francisco, K.C. was able
to secure a “strong wage,” due to his Master’s in Engineering. His depth of
study in the field of engineering directly boosted K.C.’s human capital. As a
master in his field, K.C. was of higher demand, and was immediately able to
ascend to, what he called, “an above entry level position,” as a Construction
Engineer. By starting at a higher position than most first-time workers, K.C.
was able to accelerate his way through Fred Early Construction. Additionally,
by quickly moving up to an executive position within Fred Early, K.C. became a
viable prospect to move into an executive position within a larger construction
company. The wealth of experience K.C. attained at Fred Early, built upon his
human capital. With each promotion K.C.’s services become more demanded.
Throughout his ascension, and ultimate arrival as the President of Ray Wilson
Construction, K.C. cited a growing demand for construction. Beginning in the
1970s, according to K.C., malls, and mass retailers became growingly popular.
The rise of the mall, meant a heightened demand for corporate construction. The
growing demand for construction, meant a growth of construction companies.
There is an apparent connection to the supply-demand curve: as demand for
construction increased, so did the size of construction companies. As construction
companies grew, Project Managers, like K.C., became more integral, and were
handsomely compensated. K.C. attributed his rising wages to scarcity. As he
gained more experience, people with K.C.’s repertoire became increasingly
numbered. Simply said, K.C.’s wages and human capital shared a linear
relationship: his wages increased at each level he was promoted. K.C. discussed
the role of taxation in his life, claiming, “Taxation didn’t significantly
alter my wealth, and I often felt that I was doing justice by putting money
back into the system.” Over the course of his professional, and retire life,
K.C. was assigned a exceedingly livable wage reflective of his human capital.
Throughout
K.C.’s professional life he experienced several recessions. As a member of the
workforce, he, firsthand, saw the business cycle playout. During the recessions
of the1970s, and early 1990s, K.C.’s construction companies saw significant
dips in clients, and often had to lay off lower-level employees, in order to
remain cash flow positive. However,
after recessions, K.C.’s companies would often experience periods of expansion,
in which their client list, number of employees, and wages would all increase.
The expansion was often catalyzed by the Federal Reserve’s lowering of interest
rates, which subsequently lowered the interest rates of commercial banks,
allowing companies, including K.C.’s constructions company, to borrow more. The
ability to borrow at a greater degree, had a multiplying effect, as more people
were hired by K.C.’s company, lowering unemployment, resulting in the expansion
of the consumer base.
The trends
expressed in K.C.’s companies were emblematic of the Phillip’s Curve, in which
unemployment and interest rates share an inverse relationship. During periods
of recession, as in the 1970s and 1990s, more people are unemployed, so the
Federal Reserve lowers interest rates, allowing companies to borrow more and
expand their firm, hence combatting mass unemployment.
The Phillip’s Curve
Another means to
which K.C. gained greater economic security was through investing. K.C.,
beginning with his first job, was able to make enough money to the point that
he could begin both saving and investing. K.C. throughout his life made it a
point to invest, as a means to actively expand his capital. However, he stated,
“I’m a risk-averse investor.” He elected to invest in companies with large
market caps, as larger market caps were symbols of stability. K.C. also
addressed taxes on capital gains, stating, “Similarly to Federal taxes, I felt
that my capital gains were taxed fairly. He recommended that younger people
follow his method of investing, due to the consistent, albeit relatively low,
returns. However, K.C. unlike many, was able to grow his wealth at an
exponential rate, due to the sheer amount of liquidity he had. With high-wage
jobs, K.C. was able to invest more, than the average-wage worker. K.C.’s story
of investing is reflective of Thomas Piketty’s idea that the wealthy get
wealthier, due to their ability to invest. K.C. had the luxury of being able to
invest starting at a younger age, which allowed him to have substantive amounts
of capital once retired.
Throughout my
interview with K.C., two interesting themes emerged: education and perspective
When interviewing K.C., it became clear that education plays a significant role
in future earnings, and the opening of opportunities. K.C.’s in-depth study in
engineering was integral in attaining economic security. Had K.C. chosen to not
study engineering, he would’ve never have had the opportunity to achieve the
same financial success, let alone immigrate. Yet, by far the most interesting
point K.C. made in the interview addressed the perspective of wealth. When
living in India, K.C.’s family was considered upper-middle class. And when I
asked K.C. what socioeconomic class he felt a part of, he stated, “upper-middle
class.” K.C. laughed when stating that, as there is a significant disparity
between upper-middle class in India, and in the United States. Upper-middle
class in India, for K.C., meant property ownership, whereas in the United
States, upper-middle class, in regard to K.C., meant having copious amounts of
liquidity. The dichotomy highlighted by K.C. suggests that economic terms and identifiers
are relative to their environments. A lack of proper global perspective when
assessing an individual’s economic story can have significant implications
regarding the interpretation of material. For example, had I not learned the
true meaning of upper-middle class in India, I would’ve assumed that the characteristics
of upper-middle class in the United States were identical to those in India.
Overall, the
opportunity to interview a retired immigrant, provided an intriguing insight
into how I want to live my own life economically. K.C. encouraged me to start
saving and investing capital as soon as possible, in order to obtain future
financial security. Yet, what I learned, from K.C., the value of pursuing
opportunities both big and small. K.C. remarked, “Had I not taken the
opportunity to move to the United States, I would’ve followed the footsteps of
my family, remaining a villager.” The global economy is built on individuals,
firms, organizations, and countries making choices. And much like the global
economy, K.C.’s economic life story was heavily dependent on his ability to
make decisions.
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