Wednesday, February 11, 2015

Custodian

We need to be very careful that the measures we choose to set goals by actually reflect what is important to us. Liberal anger at wealth/income inequality is one of the measures that concerns me. It doesn't make sense to me if you think other things are more important than money, that money should be the measure that riles you the most. In 'Big Hand to Big Mouth' I highlight Branko Milanovic's point that someone can have a very high income but zero or negative wealth, because they are spending all or more than all of what they earn. Sorry, they are not poor.

I agree 100% that absolute poverty is something worth directing Liberal energy at. I spoke about some of the big problems facing us in 'Ignoring Cape Town', 'No Hero' and 'Free'. I am not at all convinced that someone who is happily living a simple life need be very concerned about someone who is incredibly rich. An incredibly rich person still just has one mouth, one tummy and can only sleep in one bed. It is the incredibly poor person who deserves more concern. Most of the very rich's wealth is invested in businesses that are making stuff, not big swimming pools of unused gold.

This is actually an interesting difference between the rich who live hand to mouth (high income) and those rich who have a lot of wealth. The best way to think of money is as your employee. You have to hire your own money by investing it rather than spending it. Once you do that, your money will grow if you don't spend everything it makes. At some point, your employee should be earning as much as you and then work becomes a choice. Money will work for you rather than you working for money. The sustainably wealthy think of themselves as custodians of their wealth. In the same way as green minded people realise that we can't destroy the planet if we want a home, the sustainably wealthy know that you need to be spending less than your money is earning. If Governments thought like the wealthy, there would eventually be no need for tax. If national assets were invested rather than spent (think mineral wealth), they would be able to generate a salary from which people could live. This would be more fair on future generations too. Why should a country's wealth be consumed now? 

For both wealth and the environment, it makes a huge difference if you think of yourself as a custodian rather than a consumer.


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