Pick a Box

Wealth is created in boxes. The key challenge once you understand a problem, is understanding the box. The box is so important, that sometimes it is better to start with a box. Pick a box with money in it... then start looking for problems to solve. The box defines the shape and form of supply and demand. The barriers to entry. The barriers to exit. Who makes the rules? Who can compete? Who are you serving? One of the key measures of inequality looks at equality within the primary wealth creation box that we use. Nations. The Gini Coefficient would be 0.00 if everyone had the same, and 1.00 if one person had everything. South Africa is the worst box in the world (estimates of 0.63-0.70) and yet is at the level of the global income Gini coefficient (0.61-0.68). Our biggest box is as bad as our worst box. There are boxes within boxes... but one of the best ways to open opportunity is to chip away at barriers to entry and exit for the four freedoms (Goods, Services, Capital... AND People).

Learning Curve

I last lived in Cape Town in 2006. I was there for my four years of university, and two and a half years of work. Sitting around a dinner table at a conference with some colleagues, a job opening in Joburg was mentioned. I hadn’t been in my current role long enough to be bored. Most roles have a learning curve. A time when you are finding the toilet. A time when you start getting the hang of things. A time when you hit your stride. I was still in the learning phase, but the Joburg role was appealing. I had been doing technical work, and the marketing role meant I would get to speak to human beings. I had finished my professional exams, and my buddy had a few to go. A joke that this would be a (brief) chance to be his boss, turned into (brief) reality. I loved Cape Town. That was not why I left. Life decisions are complicated, and full of trade-offs. 14 years later, I am plotting a return to the mountain. Still on a life-long learning curve. With a different set of trade-offs.

Choose your Mountain

20-year-old Trev also had long hair. Grown during a two-year stint in the UK on a work-travel visa, in between school and university. It was the first time I had left South Africa (I had only ever even been to Cape Town once when I was two, which felt like the closest foreign place to Durban). My bravest previous adventures had been crossing the Vaal river to visit the family who said Fish with an accent. Young Trev was also a curious spirit, but those two years exposed him to how daunting a London you cannot afford is. Sitting on a bench in Kensington Gardens, he/I took the decision to accept the world hard. Money is made in containers. One of the most defendable containers is hard. Actuarial Science is not on the covers of flashy magazines, nor does it have sexy movie leads (“About Schmidt”). It does however require serious knuckling down, which creates a deep moat. A Competitive Advantage is not what you are good at. It is why others cannot do that. The mountain of professional exams is intimidating. I am grateful to young Trev that that did not scare him. It scares me. Money is made in National Containers. Salaried Containers. Professional Containers. Inherited Containers. Figure out the barriers to entry, and how to overcome them. Hard but possible is good for you.

Freedom of Movement

Freedom of movement is the way to dismantle privilege. Privilege is inherited barriers to entry. Bring down the walls. As a South African, I have always felt I will know Apartheid is truly over when the electric fences and burglar bars come down. Rich countries have the same issue, they just place the fences on the borders. GMB Fitness talks about the foundations for physical autonomy – strength, flexibility, and control. These are the keys to moving with ease. Financial autonomy is all about being able to move easily. That is why I believe so wholeheartedly in the Four Freedoms (Capital, Goods, Services, and Labour). To understand privilege, understand borders. Understand the monopoly of control in bubbles. If you want to dismantle privilege, start by letting people live where they want, work where they want, work for who they want to, and buy what they want to. Start by trusting people to make their own decisions. Empower the word yes. Empower the word no. Reduce the barriers to entry and let creative destruction do the rest. Trust people. From the bottom up.

Barriers to Entry

Reverse Darwinism

Homo Economicus is the imaginary human with an infinite ability to make rational decisions. This character doesn’t exist, but is useful in models of how real people make choices. Behavioural Finance focuses on painting a better picture of the more complicated ways we really engage with the world. The idea that businesses focus only on profit is also imaginary. Partly because incentives are complicated. Partly because businesses are imaginary models too. Businesses are collections of real people with real behaviours. The future is unknown, and the consequences of our actions are unknown. “Reverse Darwinism” is the idea that people hire people slightly less intelligent/more controllable than them so that their place is secure. People get promoted till the hit their level of incompetence, or a political ceiling. If someone promising threatens to leave, let them. There is always another promising, less demanding, person to fill their place. This all sounds cynical. My point isn’t that people are bad. It is that merit and profit aren’t clear. People are complicated with inconsistent goals to match an uncertain world.

Not a Democracy

“This isn’t a democracy” was a common phrase in my corporate career. Although there are legal minority shareholder protections, the reality is that control is concentrated… even if you are a part owner rather than a work taking employee. But, there are checks on power. Arguably more than over democratic majorities. Companies can fail if run badly, or if competitors attract away their staff and clients. They can fail slowly, if they have Capital to eat through while paying Corporate Zombies lots of money to do bad work. They can fail fast, if they live hand to mouth. Democracies don’t have the competitive pressures of the four freedoms of movement (Capital, Goods, Services, Labour) because we still live in a system of Global Apartheid where your rights depend on where, and to who, you were born. Citizenship isn’t voluntary and with enthusiastic consent. A system that ensures that Countries don’t fail like Companies in a way that frees the people and capital. I am a “small a” anarchist. Decision making should have as few layers as possible, be voluntary, and we should hire our bosses. Should isn’t reality. Human rights are built in the same way as Capital. From scratch. If that is the world we want, we need to build it.

Hierarchy from the Greek hierarkhēs "president of sacred rites, high-priest"

Showing Apples

Wealth Compounds. Even if you start from what seems like scratch, but isn’t. That is because despite the valuable notion of Private Property, wealth creation is a team sport. The best part of being human is we can learn from other people’s successes and failures. We don’t have to invent the wheel ourselves if we do the required reading. There is a scene in Good Will Hunting where a know-it-all tries to embarrass people he feels superior to. Will had done the reading, and showed the guy some apples. Meaning he taught him some best practice. A better way to live. One of the biggest lessons from history is progress doesn’t have to be Win-Lose. Countries like Singapore and the Asian Tigers have leapfrogged the middle steps. England, Germany, France and Japan all rebuilt after being torn apart by the World Wars. With conscious, direct, practical steps. Removing barriers to trade and prosperity is possible. It has been done before. We can let go of the mistakes and apply the learnings. We can open up.

Find a better way

Keyhole Solutions

Keyhole Surgery is a minimally invasive approach to fixing a problem that restricts the collateral damage. I had my appendix out when I was a little guy. Embarrassingly (now) I was quite excited about it. My Gran used to bring me sweets when I was sick, and my older brother seemed to have such fun when he had his out. Balloons, TV, comic books. Hospitals aren’t scary. I turned out not to have appendicitis, but just an ulcer. Fortunately, the surgeon still felt the surgery was necessary. I still have the scar. Mine was small for the time. Now they are tiny. We are getting better at dealing with the specific problem. Immigration would be a massive financial boost to the global economy. Economist Bryan Caplan calls it “Trillion Dollars Bills on the sidewalk”, but people have concerns. In his book “Open Borders”, he takes the concerns seriously and provides keyhole solutions. The step forward with Capitalism was realising win-win wealth creation beats win-lose wealth extraction. The same is true of Property Rights. Freedom of Movement (Capital, Goods, Services, Labour) doesn’t take anything away. You can surgically remove Global Apartheid while protecting the things we rightly value. Wealth Creation doesn’t require oppression. Holding someone down doesn’t lift anyone up.

Avoiding Knob Nuts

A few years back, I got some of my money a job at Colgate. I brush my teeth every day, twice a day. I plan to continue doing that. I like businesses that solve problems people recognise. That solve them in a way that the customer is happy. Buying toothpaste is not something I think about a lot. Regular, content, repeat business. I also like companies that laugh in the general direction of Nation States. Multi-national companies that recognise that where you are born is pretty random. That have suppliers, customers, and shareholders all over the world. The great thing about my money working at Colgate is it can’t be made redundant without the other owners and managers hurting too. Some knob nut can’t turn around and decide to let my money go because they had to make a “tough business decision”. My money’s life isn’t turned upside down by some clown with the power over a real person’s life. People need toothpaste. My money makes toothpaste. Can I think about something else?

In Your Face

South Africa is the world’s most unequal country. It is also only as unequal as the world. This is only possible because the primary tool of Global Apartheid is Nation States. While it has become less and less acceptable to discriminate opportunity by race, gender, and sexual preference, “where you were born” is still a legal tool of hereditary privilege and apartness. According to Bryan Caplan’s book “Open Borders”, we are willing to pay a Trillion Dollars in economic handcuffs to restrict the free flow of labour, goods, capital and services. The biggest loser in the restriction of four freedoms is people. I am a Soutie. One foot in South Africa and one foot in the UK. In the relief programs for 2020’s forced time to reflect, unemployed people in South Africa received R350/month (about £15). The furlough program in the UK saw about 7.5 million people receive 80% of their salaries. Capital Controls make it difficult to even send Unconditional Cash Transfers. The contrast is stark. I only see that because my eyes and heart are on both countries. South Africa takes the world’s inequality, squashes it, and shoves it in your face.

Hot Capital

I am an Anti-Apartheid Activist. I grew up in the regime that gave Separateness legal form. That makes defending and encouraging the four freedoms of movement (Capital, Goods, Services and Labour) close to my heart. But Spidey, with freedom comes responsibility too. A criticism of “Hot Capital” is that money just flows in and out without commitment. Real wealth creation takes time, so if you are making “investment decisions” based on less than a 5-10 year period, you aren’t investing, you are speculating or trading. The “Investment Behaviour Penalty” is the difference between what investment funds return, and the return achieved by underlying investors. Usually investors chase returns, switching between funds and in and out of cash as if they can guess short term market movements. Imagine if a real business owner did that? A stock is a slice of ownership in an underlying business. It isn’t an abstract idea. Imagine if every time something went wrong, an owner sold the business? Real creativity comes from the ability to endure through challenges, and respond with the resources available. It’s not a game. You don’t play the market. You commit to something and you build.

Responsibility

Boxing Opportunity

Money is made in containers. An ask, an offer, and a box. Meritocracy without a denominator is Privilege. The problem is we are seduced by numbers. It is easier to manage and reward things you can count. I came to the UK in 2008 on the Highly Skilled Migrant Program. Not dissimilar from the points-based system being suggested now. It is one of my most obvious hypocrisies for someone who believes in the four freedoms of movement. Without the free flow of Capital, Goods, Services and People, we live in a system of Global Apartheid. South Africa introduced Homelands and Dompas (internal passports) using Self-Determination and all the other tricks to justify the borders we see between nations. Nations put opportunity in boxes. Based simply on the lottery of birth. Money is made by actually solving problems, or artificially restricting our ability to solve problems and limiting who gets to benefit.

Power and Flexibility

My objection to Living Wage and Minimum Wage is the opposite of believing people shouldn’t have sufficient money to, at a minimum, survive. I believe in a world where we vote not just at the ballot box, but with our feet and our wallets. Real time. I believe in the Four Freedoms – Capital, Goods, Services, and Labour. My objection to Living/Minimum Wage is that it puts the burden on employers and small businesses, and makes the calculations of whether to create job opportunities favour machines. It also creates a dependency between the worker and work giver (even and particularly if there are wage subsidies). A Basic Income increases the negotiating power and flexibility of both parties. It empowers from the bottom, but leaves both the worker and the employer with power in their feet and wallets. The ability to say Yes. The ability to say No. The ability to create.

Freedom of Movement

Opening Up

Having grown up in Apartheid South Africa, I am a supporter of the Four Freedoms of Movement – Goods, Capital, Services, and Labour. Wealth compounds over the very long term. The marginal contribution is amplified or muted by what came before. A lottery of birth shouldn’t determine the impact of our effort. I believe in “Open Borders” (See the book by Caplan and Weinersmith) but ironically/hypocritically (?) came to the UK on a Highly Skilled Migrant Program that allowed me to arrive without a job offer. This opportunity wasn’t (and isn’t) open to everyone. I got a job offer before moving, but didn’t like the idea of being tied to a company. Still, I went through the process and now hold two passports. Two of the things I don’t believe in. Caplan calls this a “keyhole solution”. Better than closed borders by targeting the specific objections as narrowly as possible. Typical keyhole solutions include immigration tariffs, guest worker programs, and linguistic and cultural fluency requirements.

Veiled Rage

Too many lotteries still determine our success or otherwise. “The Veil of Ignorance” is the idea that the rules should be determined before these dice are thrown, when you theoretically know nothing of your natural abilities or your place in society. I have never been good at “knowing my place”. Never good at the struggle between accepting things the way they are, because that is the pragmatic approach, and raging when they are not as “they should be”. One of the cornerstones of my worldview is growing up in Apartheid. An ugly philosophy founded on a seemingly positive idea of “self-determination”. Meritocracy is a similarly seemingly positive idea. The problem is the magic of compounding. The “same merit” applied to different resources results in a different outcome. It is impossible to see squiggles and not words once you learn to read. We remember names we have heard before. We recognise skills we possess. We acknowledge knowledge we know. We are human. We are ignorant. We are connected. Sometimes to move forward, you have to unlearn. To put aside what you think you see. And see.

Behind the Veil

Release Prejudice

In a simple world where you did what your parent of the same gender did for a living, your path was decided. Our paths are still decided partly because of a coordination problem. We don’t know the complete menu of options, different people face different obstacles, and our GPS giving the route (skills and knowledge required) is like the glitchy ones that said, “you have arrived at your destination” when you are in the middle of the highway. Race, gender, sexual preference and class are slowly becoming less foundational in deciding what menu you have. Nationality is a horribly persistent sorting mechanism in a world of Global Apartheid that prohibits free movement of people (while treating capital, goods and services more kindly). Part of the advantage of building an Engine of Capital is that prejudice falls away. Money is fungible. Meaning it can change form in a laugh-in-the-general-direction of identity politics way. You can treat it like an Avatar. Send it off to work on your behalf prejudice-free, with the widest menu possible.

Let your Capital loose