Friday, January 22, 2016

Building for Tomorrow

At the heart of figuring out what we do, and how we do it, is motivation and incentives. The why. History is wonderfully complex. Britain was at the centre of the darkness of colonialism, but was also one of the powers fighting slavery. Beyond the moral cesspit slavery was, it also made no economic sense. The only reward a slave gets is subsistence. They aren't allowed to own anything. The only way someone would produce more than they need to do to survive each day, is by force. Free people produce more because they have the opportunity to build something for tomorrow.

At the heart of Capitalism is the idea that your labour can be freed. If you produce more than you need for today, tomorrow that extra bit can also work. You can employ your money. Wealth is effectively capital available to work instead of, or in addition to, your labour. The difference is capital doesn't have human emotions, desires, relationships and needs. The only motivation it needs to produce is for it to do something productive. Eventually, if your capital grows enough to support you, you can allocate your time in whatever way you find meaningful, without having to think about monetising it. Capital frees Labour.

People get upset by those with excessive financial assets. I get more upset by people with excessive physical assets. A large house with lots of unused rooms. Property in the prime position sitting idle. Boxes and boxes of clothing and shoes sitting in cupboards in case. Food wastage. All these kinds of physical wealth effectively hoard their use from others. Financial assets are different. They just become a number. Warren Buffett has an estimated $67bn in financial wealth. He doesn't have an underground chamber of shoes, 1,000 cars and a house with 10,000 rooms. Instead he owns shares in real businesses making real things for real people.

Food v Finance

Capitalism shifts the incentives. Buffett says the reason he is so famously frugal in his spending is that he times the cost of everything by 10. Spending money is like firing it. Conspicuous consumption is a stupidity tax. If instead of spending it, he gives it a job, it will grow to 10 times the amount eventually. All he keeps is a 'number'. A number he tries to grow. That encourages him to carry on working well beyond what he needs.

I don't dispute the inequalities in the world. That there are almost 1 billion people in our world living on less than $1.25 a day boggles my mind and upsets me deeply. We have a lot of work to do to give people basic access to education, safety, nutrition and the foundation required to pursue a meaningful life. The basic access most of our parents gave us. I know a lot of Swamis (Yogic Monks) who own nothing but are far further along the road of well being than the richest people I know. They have far more power over their inner worlds. Obsessing over financial wealth is the opposite of what we should be doing.

We can't wave a wand and solve the world's problems. But each day we can do a little bit more. And we don't need permission. There are enough people who care to just get on with it
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