Monday, September 14, 2015

Different Shades of Bread

The way we think about things matters. We are 'essentialists'. Most people believe very strongly that something is made up of more than just its parts. There is something else that binds this all together. The story. The soul. When a story is described in a way that doesn't resonate, we feel deeply uncomfortable. This includes the language we choose to describe things. It is great to have a Chinese Wall between things that seem commercial and things that are 'the stuff of life'. We don't want to talk about investing in friendships. We don't want to think of ourselves or those we care about as our greatest asset

In one way I agree. Branko Milanovic objects to the use of the term 'human capital' and 'social capital'.  Words only mean what they are understood to mean, so if people want to use those terms it is fine. But, the difference he points out is a good one. 'Labour' means actual human engagement. Someone lifting something. Someone building something. The person and the task are intimately linked. Capital allows you to separate the commercial and the stuff of life. For most people, they are their greatest asset. Their ability to work and earn an income makes them an 'income generating machine'. But they aren't Capital. I haven't heard of places where you can sell yourself up front. That is considered slavery, and while slavery is still a big global problem, normally the beneficiary of the sale is not the slave.

There is something very useful in the fact that we can't sell our salaries for lump sums. Very few people save enough for retirement. Many who come close spend a big chunk of it on a holiday or a flash TV when they get the chance. It is very difficult to understand that the savings are effectively a mini-me working for you. Every time you spend more than you and your money can make (Out > In), you are firing your employees. It would be like selling part of your future salary in order to do that thing you want to do. Do it too often and that is when the Debt trap and Slavery become quite hard to separate whether speaking in metaphor or reality.

I am earning nothing from my labour at the moment and loving it. What this means though is that me, 'the asset' is worth nothing in financial terms. My savings have become the breadwinner. So when I spend, I can't think of my savings in the same way any more. If I spend more than my money earns, my lifestyle is not sustainable. This means I have had to do a complete mindset shift in terms of my relationship with money. I can't think of my savings, I have to think of my saving's salary. I have to be much more conscious of frugality. I have to be a custodian of my savings rather than a drain on them.

When I went to dinner with mates while I was working, I was in the fortunate position of not having to check the prices. A few drinks afterwards didn't matter. I now have to be much more conscious of what a night out costs, and how often I can do that. It is a good reminder that the value of money is relative. Same bread, different shades. It is why 'splitting the bill' is so contentious. The poor sod who picks at a salad and drinks water so they can be in the company of their buddies, but then gets their 'fair share' of the gazillion bottles of schmancy wine and prime cuts of Kobe beef.

Money is one of those things we don't like to think or talk about. It spoils the story. The problem is that it is one of those uncomfortable conversations that is very necessary. Often if we choose not to think about something, it ends up being more of a burden on our thoughts then if we give it the necessary attention... but no more. Then focus can then really be on the things that really matter.
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