13 Days, 5 Countries, 1 Global Mindset Pratyush Dubey

January 4th

I flew into Los Angeles on Wednesday morning. I was very excited to develop my global mindset and better myself as a businessman. The first day was somewhat uneventful because I was tired. I wasn’t able to interact with anyone. I was, however, able to expand some of my intellectual capital by reading some of the KPMG study on professional judgment. At first this student monogram seemed self-evident. It talked about the importance of professional judgment in the auditing and accounting professions. This is because of the increasing use of principles-based standards and the more frequent use of fair value measurements. I got a grasp of what KPMG was talking about when they were talking about good judgment. They were referring to the ability to come to the best possible conclusion when choosing among a number of possible alternatives.

What I found most interesting about this reading was looking through all the different tendencies, the anchoring effects, bias effects, and all the different psychological effects and phenomena that are associated with practicing professional judgment. I’m very interested in improving my psychological capital. When it comes to making a purchase of a certain good, I assume that the appropriate price of this good should be around the first price that I see at a store. I do not question the price of the initial good as much as I do the subsequent goods. For example, I was trying to buy a blu-ray player over break. I saw that Best-Buy had one for 80 dollars. I assumed that all blu-ray players should be around that price. If I found anything substantially cheaper, I assumed that would be a steep drop in quality of the blu-ray player. Anything substantially more expensive must have been a rip-off. I found out that I often base decisions based on the first number I see. I found out there was a name for this. It is called the anchoring tendency. I also learned that I have a confirmation tendency, which meant that I just find information that backs up my initial beliefs and biases. I seem to have a lot of tendencies that inhibit professional judgment. As I learn about more of these throughout my trip, I am confident that my professional judgment will improve. I hope that last statement wasn’t an example of the overconfidence tendency!

January 5th

Today marked the first day of class on board the ship. We reviewed the first two chapters of the Professional Judgment monogram. It was a basic review of the components of good judgment. We had a good discussion on the most important part of professional judgment. I claimed that it was the ability to be unbiased. If one is biased that impacts his or her evidence-gathering capability as well as his or her logical thought process. Next, we talked about the Thunderbird’s capitals that make up a global mindset. They consisted of intellectual capital, psychological capital, and social capital. In class today, I primarily improved upon my intellectual capital. More specifically, I became more “Global Business” Savvy

because of our discussion of the Mexican economy. We learned about a brief history of the Mexican economy. They experienced big financial crises in 1982 and 1994 (the Tequila Crisis). We learned the possible reasons for these collapses. First, the government was overly involved in the economy. It made it difficult for the private sector and private banking to flourish. Tariffs were too high. They were at 100%. This made it hard for consumers to buy the cheaper foreign goods. In 1982, the government did not try to fight inflation and inflation became too high. The government had to devalue the peso by 50% because they wanted keep fixed-exchange rates. We learned about some of the common tendencies of a financial crisis in an emerging market such as Mexico. Large capital inflows precede the crises. This leads to high inflation. The majority of the debt that the country owes is foreign and is also short-term. They are not able to meet some of these debts so this influences many foreigners not to invest in Mexico. There is also lax bank supervision and banks do not perform their due diligence when lending money. This means that many banks have to shut down because they cannot meet their obligations with their assets. The debt-to-GDP ratio is very high. The interest rates spiral out of control. The debt far outweighs the domestic reserves of the country. Typical recipe for disaster. However, The Mexican economy has stabilized a great deal since the 1990s. It has not really experienced much growth but it has stabilized. The current reserves can actually cover all the short-term debt. It doesn’t really rely on short-term borrowing anymore. Foreign investors are not scared off by the upcoming elections because the risk premiums related to the election are still very low. This means that elections no longer have an enormously negative effect on the Mexican economy. In fact, Mexico became the first country to pay of its Brady debt. Inflation is no longer very high. Also, the Mexican Central Bank was established. This allowed the country to be wise about financing its private sector. Banks were more credit worthy due to the Central Bank.

In present day, the Mexican economy is not as volatile. However, it still has not experienced as much growth as its competitors in the emerging markets (China and India). Educational achievements have been disappointing, as well. Widespread tax evasion makes it difficult for the government to raise money to improve its infrastructure. What I found to be most interesting about this lecture was that Mexico’s economy is extremely dependent on that of the United States. 80% of the Mexican exports go to the US. A lot of US firms have shifted their production to Mexico because of low wages. What does all this mean for me as a future international businessman?

This chart is the business rankings of Mexico relative to the rest of the world. What I can take from all the information we learned in class is that I should only start a business in Mexico if there is an obvious need for it. I really need to do my due diligence and make sure that there is a demand for the product before I venture into Mexico with entrepreneurial pursuits. The real GDP growth rate has really slowed down and the unemployment rates have been rising. On top of that, the ease of starting a business is ranked as the 115th easiest in the world. That’s actually kind of difficult. Starting a business is much more difficult in Mexico than many other emerging markets. However, the ease of actually doing business is much easier and Mexico is ranked 56th. Therefore, I shouldn’t eliminate Mexico as an option for my future business if I have the right product because it’s actually not too hard to conduct business there. However, starting a business in Mexico is no easy task!

After class, we were able to use the other side of our brain. We painted a butterfly! It was a service project we did for a hospital in Los Cabos. It was a good bonding experience with other passengers from the ship. It improved our diplomacy (social capital) because we started conversations with strangers about what exactly we were working on. For example, we met Ben from Holland. He was quite interested in our painting.

Next, I met Ali from the Philippines. He was doing some painting of his own. From him, I learned that the capital of the Philippines was Manila, which was where he was from. This increased my social capital because I learned about foreign geography.

January 6th

Today was quite an eventful day in Los Cabos. It all started at the port of Cabos in front of Señor Rana.

This was a jam-packed four hours that really contributed to my global mindset. Not only was I able to practice my Spanish, but I was also able to improve upon all 3 types of capital: psychological, social, and intellectual. I made sure to speak in Spanish as much as possible. I was putting myself out of my comfort zone so I could better myself as a world citizen. By speaking in Spanish to strangers even though I hadn’t practiced my Español in over 6 years, I improved my psychological capital and my social capital. I was willing to try new things so I fulfilled my quest for adventure. I also took the risk of looking like a fool. Throughout the journey, I learned a great deal about Mexican language, culture and geography, thereby improving my intellectual capital. First, I met the Mexicans that drove us to Cabo San Lucas’ City Hall.

I only remember the name of the guy on the very right with the moustache. His name was Raphael. I commented on how much I liked his large mustache(pigote) and he was very pleased. On our drive, I saw that American companies have a significant influence on the Cabo economy. The entire

area was dominated by chains and stores that I knew to be popular United States companies. I was surprised to learn that Los Cabos was so open to American investment. The entire area was covered with stores such as Costco and Walmart. There were hotels such as Westin and Hilton. There were also many restaurants such as McDonalds, Hard Rock Café, and Dominos. Come to think of it, this actually fell in line with what we read about the Mexican economy. It is extremely dependent on the United States economy.

Next, we went to the city hall to meet the mayor of Los Cabos.

I learned a lot from the mayor’s speech. One thing I learned was that Cabo San Lucas generates the second highest revenue from tourism in the country. We also learned that the Cabo government does its best to allow foreign companies to conduct business in Cabo.

Typically, we think of the Mexican government as being very anti-business but Los Cabos is very pro-business. I also learned about some of the efforts that the mayor was working on. He was very proud of a water purification project which treated 200 liters of water per second. Cabo suffers from a lack of

water. He wants the residents to be able to have enough clean water to drink and the water treatment project fulfills a lot of that demand.

After the mayor’s speech, we exchanged gifts. He gave us a Los Cabos hat and a book full of picturesque

landscapes of Los Cabos. We gave him the painting we did so he could donate it to a hospital in Mexico.

Then, we learned about the history of Cabo and how it started off with the establishment of DMCs in the area. We also learned about the success of storage companies in Mexico from a businesswoman. They have a profit margin of over 40%. She was an international businesswoman. The main takeaway from her speech was that even though she was fulfilling such a high demand with her storage facility business, she could not have gotten anywhere without professional contacts in

Mexico, both in government and business. She was quite a successful and relevant speaker. The Global Mindset class that we are in is intended to make us as business savvy as she is in terms of conducting business internationally.

Finally, it was time to eat. We had some Mexican-style lobsters. I learned a great deal about Mexican culture from the conversation over the dinner table. I remembered some facts from high school about the Mexican revolution and this spurred some conversation about Mexican and Indian history. I was finally able to utilize all the time I spent watching ESPN Deporte and Mexican films. These were big

topics of conversation, also. I learned a lot about Mexico, things that I could not have learned in a classroom setting.

The name of the girl is Alicia.

January 7th

Today was a day at sea. It started off with class. We continued our discussion on professional judgment. We talked about some of the biases that I read about on the very first day of the trip. I learned that I may actually have an overconfidence tendency. I always thought I was underconfident in every which way but I realized that overconfidence can refer to many things. I may not be confident in my talents but I often think that I am right even when I’m not. I overestimate my decision-making skills and my ability to gauge a situation. Learning about this tendency will allow me to give more weight to others’ advice when it comes to important decisions. Therefore, I improved upon my social capital. The realization of my “overconfidence” hopefully means that I will be more diplomatic and be able to listen to what others have to say. Another important thing that I learned about was how a decision is framed. I need to take into account the way a choice is framed in order to determine which pros and cons are most important and relevant for each decision I make. I also have to be able to adopt a frame of mind that is not completely my own. I also need to consider the way someone frames a proposal to me. They can frame it in a way that seems extremely advantageous to me but still leave out potentially detrimental consequences of the proposal.

Next, we talked about 2 articles. The first was called “Why Good Accountants Do Bad Audits.” This was due to a self-service bias that exists in everyone, even accountants. Even the most objective auditors can get attached to their clients. They are not corrupt. Rather, they are unconsciously biased. This is due to several reasons. They do not want their clients to fire them. They also trust their clients. They lose some of that professional skepticism and show signs of confirmation and anchoring tendencies. They give their clients the benefit of the doubt a little too much. There are several other basic human instincts that result in this self-serving bias. One example is that we only think of short-term effects. Auditors may allow some accounting slip-ups if they foresee no short-term negative effects. This Harvard article argued that Sarbanes-Oxley did not do enough to prevent the massive accounting misstatements that can occur due to bias. For example, the current disclosure requirements from Sarbanes allows for too much ambiguity in interpreting audited financial statements. Some better reforms include fixed contracts for auditing firms so that their clients can’t fire them for a qualified opinion, rotation of auditing firms every five years, and not allowing auditors to join their client companies for 5 years after they leave their respective auditing firm. These criticisms of such an important act (Sarbanes-Oxley)

improved my cognitive complexity. I read about a complex issue and helped come up with potential solutions in our discussion.

The second article we talked about was about Intel establishing itself in Costa Rica. This was written from a human resources perspective. Intel had a golden economic opportunity to establish an assembly plant in Costa Rica. However, could Intel overcome the culture clash of establishing an American company in Costa Rica? Intel needed to be able to function in accordance with what was convenient for American companies. This differed from what was convenient for Costa Ricans. They needed to operate on American deadlines rather than Costa Rican deadlines. The Costa Ricans would have to significantly alter their ways of life in order to meet the demands of Intel. For example, punctuality was more valued in Intel than it was in Costa Rica. This was intolerable because a factory had to be up and running within 9 months. Also, Costa Ricans would not be motivated as much by individual accolades as they would by group success and awards. They were also much more progress-oriented rather than results-oriented when it came to big projects. This free-flowing natural attitude did not match Intel’s current needs. This article contributed to my cosmopolitan outlook, which is a part of my intellectual capital. I learned a bit about the culture of Costa Rica from this article. I suggested that Intel should benchmark their requirements off what labor unions require and what other foreign companies have done.

January 8th

Today was a free day, a perfect day to expand my social capital. In order to develop a more global way of thinking, I decided to interact with the crew which is full of internationals. I realized that there were a great number of Southern Filipinos working on this trip. I met Arnold and Ross. These 2 Filipinos were both from Laguna, a city in Southern Philippines.

I also talked to some guys from Mauritius and discovered that they were of Indian descent. They knew Hindi and I was able to speak to them in Hindi. I learned that all Indians in Mauritius originated from Bihar, which is the same state in India where I’m from. It was neat to find out we had this common background. It never would have happened if I hadn’t tried to work on my social capital and tried to become comfortable with talking to new people.

January 9th

Today was the first day of our discussion on sustainable business practices. Not only did our lecture increase our intellectual capital and increase our knowledge of the global business industry, but it was extremely relevant to the field of accounting. First, we learned about what sustainability in business is exactly. It is not just an environmental outlook, but a social and economic outlook as well. I was impressed to learn that the official definition of sustainability in business is so all-encompassing and practical for businesses. Sustainability reporting is the reporting on all 3 of these areas. The Global Reporting Initiative (GRI) determines the sustainability reporting principles. They are the equivalent to the FASB. Actually, I learned that the principles parallel US GAAP extremely. Some guidelines of GRI include society, product responsibility, economic, and labor.

Having learned all this, we decided to tackle the TBL technology case. For today, we had to answer this question: Should TBL adopt sustainability reporting and why? There was a unanimous consensus in our class that they should definitely adopt this reporting assuming they have done all their research on the required principles and will adopt it wholeheartedly. It would create more transparency, create a competitive advantage, ensure better quality control, and also help indirectly protect the environment. These were the reasons that my group came up with. My group consists of me, Dong, and Neil. Neil and Dong are both Chinese students. (Technically, Neil is from Taiwan…) Working with them will broaden my horizons. In Thunderbird terms, working with these two Chinese guys will improve my intercultural empathy. Learning to work with people from other parts of the world is crucial. Learning about that culture and engaging or appealing to Chinese students can serve as valuable experience for the future.

Later on in the day, I interacted with some more crew members. I met Maria, a bartender from Bulgaria. I obviously did not learn a lot about Bulgaria from a quick conversation with a bartender but I did learn

that Sofia was the capital of Bulgaria and that Bulgaria is right by Romania. Improving my geography slightly sounds very insubstantial but it is still an example of improving my intellectual capital and building a cosmopolitan outlook. I was astounded at how diverse the crew was, actually. In fact, the performers on this day were the famous Scottish MacDonald Brothers. They were on Britain’s X Factor. I rediscovered my love of the Irish/Scottish music that they performed. I realized that people will appreciate it a lot if you know a little bit about their country, even if it’s some simple geographical information.

The MacDonald Bros.

January 10th

Most of the day today was spent in Monteverde, Costa Rica. This was my favorite day so far. We had a discussion of sustainability the day before. We had learned about it in theory. Now, we got to see it in practice at the University of Georgia campus in Monteverde. It was a one hour, somewhat bumpy ride from the port to the campus. We traveled through many beautiful hills and mountains to get there.

Monteverde is a luscious green community with not a hint of pollution in the air. There is abundant animal and plant life. Everything consumed by the population is produced there. The community gives a strong importance to biodiversity. There is also a lot of research done there about potential medicines, as well as on the animals.

Fabricio is showing all the different butterflies that can be found in Monteverde.

When we finally did arrive at the campus, we met Fabricio Camacho. Fabricio was a passionate environmentalist who explained to us how Monteverde was completely locally self-sustainable. He said that Costa Rica is one of the best countries with respect to environmentalism because the constitution of Costa Rica, itself, requires business to be environmentally friendly. However, he said that the governments of the world (including Costa Rica) haven’t adopted the necessary reforms to sustain businesses. Politics aside, I saw some of the most innovative environmental designs I had ever seen. The manure of the pigs is run through a biodigester to make the methane gas to heat the stove that cooks the beans for the entire campus. It’s a cycle. 2 pigs can provide up to 3 hours of gas burning per day. The trash is composted to provide the energy and heat for the community. Forests are not fragmented like they are in the US. That allows for even more biodiversity. The people in that community seem to have the right mindset. They seem to be healthy and content, as well. I think that Monteverde demonstrated my passion for diversity (psychological capital) because I thoroughly enjoyed exploring a completely new part of the world. I also enjoyed getting to know some of the Costa Ricans such as Fabricio and Arturo.

Nothing goes to waste. For every student that flies into the area, the carbon dioxide that is produced from the flight is offset by the planting of 4 trees. Fabricio described a situation where he said the sewage produced by a college community is used to cook the food that they eat.

Then, we ate a delicious sustainable local meal of rice, beans, and coffee. Sustainable food is very healthy and good, I experienced.

Some of the natural composting done by Fabricio.

Our trip concluded with a nature hike that was led by Arturo, a heroic Costa Rican nationalist. We learned that there are over 12 thousand species of plants in Monteverde, very biodiverse. 1,500 of those are orchids, the national plant of Costa Rica.

Fabricio said that these reforms are perfect and exactly what is necessary. They are efficient and they will save small-time farmers a great deal of money. He explained that it fulfilled all 3 areas of a sustainable business: economical, social, and environmental. The reason it isn’t widely used is because the current energy companies have too strong an influence on the government. I realized that there was a tense politicized dynamic between environmental groups, the government, and the current energy companies. Thinking about this intricate relationship increased my global business savvy. I have a better understanding of global industry and global competitive business.

Next, we ate a locally-grown authentic Costa Rican food. There was an abundance of food in this community. Such a community is wonderful but I question whether the entire world can be like that. Maslow’s hierarchy of needs states that once people fulfill their lower needs, they will need to fulfill some of their higher needs such as status, distinction, and power. Clearly, the lower level needs of the people of Monteverde are satisfied but I do not think that everyone on the Earth will be willing to live like that anytime soon. I think it’s tough to have an egalitarian utopia like they do in Monteverde on a widespread scale because some people will want to make a big profit in a non-sustainable business because the short-term opportunity is there.

Also, I think that sustainability is definitely the right way to go but the necessary changes require a huge mindset change. Basic economic theory of free trade tells us that every microeconomy should specialize in its competitive advantage. Each country should specialize in what it is best at doing. This will result in

the most efficient economy. However, a big part of sustainability tells us to diversify. Every unit should actually diversify not specialize. This is partially why people do not want to change to a model of true sustainability. Having said all that, I am still very optimistic about the sustainability cause, especially after seeing what the University of Georgia was able to do in Monteverde.

January 11th

Today, the day started off with a documentary on the Panama Canal. I thoroughly enjoyed watching this documentary. I had no idea the Panama Canal was so important to the world’s commercial history. Also, I had no idea how difficult it was to build the Panama Canal. I thought it was built in 1 year in 1914, when in fact it was only finished in 1914. It was the culmination of 35 years of work, from both France and the US (not just the US). There was heavy use of West Indies labor. The United States used some propaganda to convince the West Indies residents that they would be rich if they worked on the Panama Canal. The West Indies provided much of the labor for the feat. The Panama Canal resulted in thousands of deaths from malaria and yellow fever. There were actually over 22 thousand casualties. The first chief engineer of the Canal was a French man named de Jessups. The task of building the Panama Canal drove this man to insanity. He spent the last few days of his life looking over a newspaper that was 3 years old. I find that to be fascinating. The only way that they were able to build the Canal was through several ingenuities in technology, as well as medical advances in preventing malaria and yellow fever. Some technological ideas include the use of railroads to transport materials to the center of Panama and the use of locks to raise the water of the Panama Canal above sea level. There was also a certain Doctor Gorgas who realized that killing mosquitoes would eliminate malaria and yellow fever. Fortunately, all these struggles amounted to something. The Canal sped up the trade between the Pacific and Atlantic significantly. The Panama Canal is also one of the Seven Wonders of the World.

What can I learn from this documentary with respect to becoming an international businessman? The most important thing is not to go into a foreign territory with overconfidence. I also learned that it is best to do your research and precisely calculate how much the initial investment should be in a foreign project. The United States kept underestimating the task at hand. They kept on having to spend more and more resources to get the job done because the resources they put in were ineffective. The other thing I learned about was socially-responsible business. The United States did not practice a socially responsible way of doing business in the area. They had extremely unclean working conditions at the beginning. There was a great deal of segregation. Segregation of employees, in which one race was treated much better than the others, resulted in low morale. Also, the propaganda to lure West Indians to come to build the Canal was quite questionable. I really enjoy learning about history and I think this movie definitely improved my intellectual capital.

We then concluded our lecture on professional judgment. The last two chapters were about reducing judgment biases and also about judgment in groups. To overcome the biasing tendencies, the best thing to do is to develop a sense of self-awareness and also be willing to consult with others about decisions. Professor Reza Espahbodi argued that group decision-making is always better. Lance counter argued

that group decision making can often result in worse decisions because of groupthink and a limitation of creativity. I think if the group is diverse and there is not too much conflict the group decision making will be better. On a more personal note, I do not mind group conflict. I do not mind if someone disagrees with me and explains why. However, the worst thing that can happen in a group is if someone in the group is not even acknowledged. I often make ideas for the group but an awkward silence follows. It’s as if the group members are saying “I’m not even going to dignify that with a response.” So whenever I am part of a group I make sure to never ignore anyone if they say something to me.

Finally, we continued our discussion about sustainability. We discussed more of the TBL case. We looked at sustainability reporting issue from the perspectives of different stakeholders: investors, CEO, CFO, audit committee, environmental groups, competitors, etc. The underlying conclusion that we came to was that sustainability reporting was a big deal because it would affect all the different stakeholders significantly. However, it could help everyone out a great deal. It could help the CEO with his goals to expand the company by forming new partnerships with new environmental groups and clean energy companies. It could help the COO because the quality control of the diodes would be higher with sustainability reporting because what gets measured gets managed. It would help the CFO because their processes would get more efficient and at a certain point, the bottom line will actually improve. It would help the audit committee provide more transparency and it would obviously help the investors make more well-informed decisions about businesses.

As the trip is progressing, I am becoming much more comfortable interacting with strangers. I know a lot of other passengers and crew members. I approached a random group of passengers from England today and played some trivia with them. We won first place. I actually contributed to the victory, as well. It helped build my psychological capital to ask a completely random group of strangers to hang out and play trivia with them.

January 12th

Today was spent travelling through the Panama Canal. We finally got to experience the locks that John Stevens designed in the early 1900s. We had no class today so I got a chance to develop a global mindset in other ways.

I know that the crew is very global and diverse but I realized that our very own class is also global and diverse. Today, I spent a great deal of time with Dong the Chinese and Ivan the Ukrainian.

I learned that Dong is from Xian, China. That is the 3rd biggest city in China after Shanghai and Beijing. It has over 8 million people and I had no idea it even existed! He talked about some of the things he likes. He enjoys this famous anime series called One Piece. It’s a very popular Japanese comic book series, the most popular of all time as a matter of fact.

I also spent a lot of time with Ivan. He is from Ukraine. He is from a town near Kiev (the capital) and his dad is in the fishing industry, which is very big in Ukraine. We talked about the famous Russian comedian, Yakov Smirnoff. He talked to me about the harsh prisons of Ukraine. They are very scary, he told me.

Today was a day mostly for expanding my social capital. I ate dinner with my classmates and got to know them better. They are very interesting and I was impressed by how worldly they were. I ate sushi and tried some food I had never even heard of before. I think it was called ngiri. This was an example of psychological capital because I exercised my capacity to try something new.

Also, we met Colin, the Australian piano player on board. As a very amateur piano player myself, it was inspiring to talk to him. By having all these conversations with people I normally wouldn’t, I was improving my diplomacy.

January 13th

Today, we got to leave the ship to go to Cartegena, Colombia. This was probably the most “cultural” experience we had so far. We did some volunteerism with the organization Granitos de Paz. It was a nonprofit organization that tried to help the poor children and senior citizens of Cartagena, Colombia. I made a connection with some people from a different country (intercultural empathy). By talking to the head of the program Daniel, I also built some strong networks with people from other cultures (interpersonal impact). We arrived at the port at around 9 am.

Cartagena, downtown

Once we got to Cartagena, we took a short bus ride to a very poor district of the city. On the bus ride, I saw that Cartagena was very similar to the big cities of India in terms of architecture and infrastructure. Also, the poor areas are completely blended with the rich areas. There are no completely distinct “out-of-sight” poor areas. Then, we saw a short documentary about Cartagena at the Granitos De Paz organization. In it, I learned that 50% of people in Cartagena are below poverty line and that 30% are below the misery line, which is much lower than poverty line.

After the documentary, some of the children performed choreographed dance for us.

Then, they got us to dance with them.

Then, Daniel told us some Colombian jokes and pointed out some cultural differences between Americans and Colombians. Some of these Colombians have more than 10 children and they eat rice a lot more frequently than Americans.

After, the senior citizens started playing music with some drums and dancing with us.

Then, we took a twenty minute walk through a ghetto of Cartagena. It was very hot. It was interesting to see that some people owned farms even though they lived in a city. It was sad to see all the children who could not even afford shoes so they had to walk on the hot ground. To bring them some joy, we gave them some candy.

Then, we met Alijisio. She was a self-made farmer. Her entrepreneurial spirit was remarkable. Against the odds, she started farming with help from Granitos de Paz. Her farm provides food for herself and also does a lot of good for the community.

Alijisio

Finally, we headed back to the bus and proceeded our way to the port. We still had a couple of hours left so we decided to take a taxi to the city and eat lunch there. I was with Jason, Rachel, and Allison. These next few hours demonstrated our quest for adventure.

We took a taxi to the clock tower plaza because we were told it was a sight to see. It connected the new part of the city to the old part of the city.

We waited for Natalie and Midori, native Spanish speakers. We waited in vain because they went to a different place. So we went into the plaza and looked for a place to eat. It took a while. We finally ate at this small restaurant. We ate some chicken soup, rice, beans, and plantains. It was quite delicious. Afterwards, I drank some Colombian coffee. It was a lot stronger and a lot sweeter than I expected.

Anyway, we were able to relax because we knew enough Spanish to order at the restaurant. So we walked around a bit more around the very colorful plaza.

Finally, it was approaching the time to return to the ship. We had to head back to the clock tower where all the taxis were. We asked the Colombian man to take us to the port where all the ships are. He nodded like he knew what he was talking about. We soon realized that he didn’t speak a word of English. He kept on speaking Spanish really fast though. We never even prompted him but he kept turning to us and speaking Spanish really fast. It was hard to pick up what he was saying.

I (incorrectly) remembered that “bota” meant boat. I didn’t know how to say ship so I asked him to drive us to the boat. I remembered how to say everything except things that are related to cruise lines or ships. “Bota” actually means boot (as in shoe). He ended up taking us to a big statue of a boot rather than to any boats! The taxi driver thought I must have been insane because I kept on asking him to take us to the “boot in the sea, the big boot in the sea” in Spanish.

Then, we all started panicking and demanded to be let out of the taxi. We thought we were lost in Coluobia. The boat was leaving in half an hour and we had no idea how to describe the ship or how to get back. Definitely, we were put in an uncomfortable situation.

Luckily, we saw some police officers and asked them how to get to the boat. The only way we were able to ask them was because Rachel drew a picture of a boat on a sheet of paper. Good thinking on her part. We realized that crusero is the way to say cruise. They wrote down the directions on a piece of paper. We finally found another taxi and gave him the paper with the directions. He knew how to get back to the cruise ships. We finally made it back to the port just in time. It was an unpredictable situation and the only way we got ourselves out of it was to think quickly and smartly on our feet (self-assurance).

January 14th

Today was a day at sea so we had a class on the basics of international taxation. In the next couple of journals, I will try to demonstrate my cognitive complexity by explaining complex tax and business issues in simple terms. The lecture today helped me understand the risks and rewards of conducting business in a foreign country on a tax basis.

First, we talked about the types of businesses that exist. There are sole proprietorships, partnerships, and corporations. While corporations have an advantage in terms of ease of formation, limited liability, and improved decision making, they have a disadvantage in terms of tax. They undergo double taxation (on the shareholders and the corporation, itself). The main thing that we established here was that tax plays a part in all aspects of business, even in the formation of a type of business.

There are 3 stages in the life cycle of an international business. There is the organization/formation, the operations, and the dissolution of the transfers. In the formation of the business, the debt-to-equity ratio of the business is important. If the business uses too much debt to finance itself, then it gets an unfair amount of tax write-offs from the interest payments. A business should make its financing decisions on factors that have economic substance rather than just tax reasons. There are several ways to expand a business internationally. You can export, license, or start a foreign branch. The way that is able to avoid or defer US taxes is by starting a foreign subsidiary in the country of expansion.

Why are there all these taxes in the first place? It is to raise revenue for the government, to equalize the wealth to some extent, to influence social behavior (reduce pollution via tax credits), for economic reasons (keep a certain industry alive), and also because of political reasons (congress wants

to tax the rich to improve their public image). Who comes up with the tax rules? The US treasury writes the rules and regulations and the IRS enforces these rules and regulations. Both of these organizations are part of the executive branch in the US government. But the legislative and judicial branches of government also determine the tax policies. The judicial branch, for example, uses an arm’s length perspective to determine the substance over form behind each business decision. They look at the substance of transactions to make sure they are proper even if the form of the transactions was legally and properly done.

We started to get more in-depth towards the end of class. There are two types of international taxation: territorial and worldwide. Nearly every country in the world except the United States follows the territorial policy. The US follows the worldwide policy. US citizens and corporations abroad get taxed at the rate of the US and the country in which they are earning their money. This means they undergo double taxation. On the other hand, territorial taxation means the entity only gets taxed in the country in which they are located. Fortunately, the United States citizens get foreign tax credits if they have to pay taxes abroad.

The 3 goals of tax planning are avoidance, deferral (like a 401k), and conversion. One of the best ways to defer taxes when it comes to international business is to not let the profits of the international business come back to the United States. An example of this is all the deferred income that countries have in the Cayman Islands.

This was a good segway into Tax Me If You Can, a documentary we watched that was about KPMG finding loopholes in international tax laws. Every year, US corporations save 50 billion dollars in taxes by transferring their money to Cayman Island bank accounts. The Cayman Islands are known as a tax haven. Apparently, KPMG was offering consulting services to corporations in order to help them save unfairly large amounts of earnings from being taxed by the US government. The Supreme Court looked at this case. They saw that KPMG was doing everything legal on paper but the substance of their actions were unfair and tortful. The tax authorities exercised their power, ruling substance over form, and found KPMG to be guilty.

January 15th

Today was kind of a setback in terms of developing a global mindset. I didn’t put myself in uncomfortable situations and I felt I was becoming stuck in some sort of routine. We were originally supposed to go to the Cayman Islands but the waters were too fierce to tender out to the island.

I played trivia again with the old folks from Ohio. This time a woman from Austria joined us. From her, I learned about the Carnival cruise ship (Costo) that crashed in the Mediterranean Sea. It was scary to hear because I was on a cruise. I was thankful to have such a professional captain, one who exercises proper professional judgment. It was a perfect example of poor judgment vs. good judgment. The captain of the Costo clearly exercised poor judgment in this situation.

I met one new person. Her name was Sajna. She was a stewardess from India. We had quite a long conversation. She was about to leave Crystal Cruises to go on vacation for two months. She was going

back home to Delhi, India. We talked about some of the landmarks in New Delhi that we had both been to. She told me about her huge family (4 sisters and 4 brothers), among other subjects.

Like I said, today was mostly a day to relax. I spent a lot of time with Ivan, my roommate. I think I have made a very good Ukrainian friend. We played Ping-Pong and also practiced piano in the bridge room. I actually took a very cool picture of Ivan playing Ping-Pong. The ball almost hit my camera lens. It was actually quite similar to a very famous Tiger Woods photo. In that picture, the ball actually hit and shattered the camera lens but the photographer was able to take the picture before the camera broke. That is why he was able to get a close-up of the ball (right before it hit the camera). In the background, Woods is hitting the ball. I got the same thing with Ivan in the background hitting a Ping-Pong ball. This is not really relevant to the Global Mindset class but I thought Professor White would enjoy it.

January 16th

Today was the last day of the trip. It started off with a continuation of the international taxation lecture. Once again, it was an exercise of increasing our intellectual capital. We talked a bit more in detail about the foreign tax credits the US grants an entity. The limit of the tax credit is the lesser of actual tax paid to foreign country or the following equation:

US Tax * (Foreign Tax Income / Total Tax Income)

Then, we talked about the difference between tax evasion and tax avoidance. Evasion is illegal and avoidance is just a smart strategy. However, the underlying decision-making when it comes to tax planning is also dependent on the ideas discussed in KPMG’s professional judgment monograph. Overly aggressive tax planning, while still legal, can draw a lot of attention from the government and also create a negative reputation. Professor Busbee posed this question to his clients: Are you ok with having your name in the newspaper for having done this action? If not, then you probably shouldn’t be avoiding taxes in that way.

Some other international tax avoidance techniques were discussed. One was called treaty shopping. This is where a company transfers its offshore profits to a separate foreign country. This way, it receives the benefits of more advantageous tax treaties. Another thing a company can do is to transfer their assets abroad right before they appreciate in value. The appreciation in value will be taxed at the lower rate of the foreign country. Also, a citizen can give up their US citizenship in order to not have to ever pay US taxes if they are living abroad.

Then, we discussed the differences between a tax haven and a tax shelter. A tax shelter refers to a particular transaction, whereas a tax haven refers to an area where taxes are very minimal. The Caribbean based countries (where we did our cruise) were tax havens. Some tax havens in the United States tax havens include Delaware, Texas, and Florida. One, they have favorable state income taxes. Two, they do not try to compensate for state income taxes with high sales taxes or property taxes. Corporations like to incorporate or base themselves in Delaware because it is easier to incorporate there. Also, they prefer Delaware for tax reasons. They can form a Delaware holding company by putting all their intangible assets in the holding company which is based in Delaware. This company does not have to pay taxes on the appreciation of these intangible assets. Some solutions to prevent these corporations from saving too much on paying taxes are things like more regulations and reporting requirements. FATCA is one of these legislative acts. There is also a proposal to reduce their territorial corporate tax rate to 25%.

Finally, the cruise director Joseph Matte came in to talk to our class. He explained all the complex logistics and supply chains that go into providing for a cruise ship. It was fascinating. In order to always supply fresh food to passengers even though no fresh food exists requires a lot of planning and precision. They also have to have many backup supply sources in case a supplier fails to deliver.

Then, we watched a video about the sustainable practices of the Crystal Symphony. Previously, ships would directly dump all their waste into the ocean. Nowadays, they do not allow that. They are very strict about it. If a crew member throws a cigarette overboard, then he is fired. They will store their waste until they get to land and that’s where they will dump it. They will dump their dirty water back into the ocean only after purifying it.

This was our last class of the trip. I decided to say goodbye to all the folks I had met on the trip. I said goodbye to John-John, Francis, Logan, Margie, Sajna, Chan, Kushal, and Mendra, who were all wonderful crew members. I also said goodbye to some of the entertainers I had talked to. I really liked Colin and

Brian, the ship’s piano players. I was able to listen to some good piano songs and I never had a chance to

do that.

This is Brian, an Australian pianist from Sydney. He accepted my request to play “Rhapsody in Blue” on the piano (AKA the United Theme Song).

My favorite entertainer was Nick, the magical comedian. I participated in his show as the guy who gave up 20 dollars to him and he made it disappear. So he remembered me and said goodbye to me.