In writing the series of posts on spreading the wealth and on financial frauds, I started musing on what wealth is and what it means to different people. For many people, becoming wealthy is seen as a desirable goal, an end in itself. Our media is soaked in wealth-porn, the endless regaling of how much wealthy people earn and the details of their lifestyles.
It seems to me that there are three pathways to becoming wealthy: inheriting wealth, acquiring wealth as a byproduct of trying to reach some other goal, and actively seeking it for its own sake because it is important to you.
There is not much one can say about the first category. One either has rich relatives who die leaving you their money, or one hasn’t.
The second type of person is like that of some artists, like J. K. Rowling the creator of the phenomenally successful Harry Potter books, who achieve massive and unexpected success. My guess is that what drives such people is similar to what drives academics, they want to do something for its own sake and seek above all to produce a successful work of art that is recognized as such. Commercial success is very welcome but is not the primary goal. Evidence for this lies in the fact that such people usually do not stop creating new works even when they have no financial reason to continue working. It is the very rare author or actor or painter or musician who stops producing new work simply because they have made lots of money. For such people their primary goal is to produce something they are proud of and is valued by their knowledgeable peers.
There is a subset of this second category that consists of inventors. Such people like Thomas Edison, Henry Ford, Bill Gates, and Steve Jobs are similar to artists in that they are trying to create something new. But at the same time, they necessarily must have a business orientation since their idea is to produce something useful and valuable, not a work of art, and the main yardstick by which that is measured is by selling a lot of it. So making a lot of money is an important measure of whether they have produced something of value. This is different from an academic or artist or poet who can be considered a success while still not being rich.
The third type of person is one for whom making a lot of money is the primary goal in life and it does not matter to them how they achieve it. Such people are willing to spend their entire lives doing something they dislike as long as it enables them to become rich. They tend to view life as a competition and the winner is the person who dies with the most money. They may, in the course of making money, produce something of value and merit, but their primary goal is to be rich. So for them, it does not really matter if they became so by producing a better widget or creating a chain of stores or winning the lottery. Those are just the means to the end of becoming wealthy.
This is why I will never be wealthy. I do not have rich relatives and can expect no inheritance. I do not do the kind of work that is likely to make a lot of money as a side effect. But most crucially, I simply have no desire to be wealthy. While I will of course work to make a living and to “put food on my family” (in George W. Bush’s memorable words), I simply cannot see myself doing something just for the sake of making a lot of money.
There are a very few occasions when I think it would be nice to have a lot of money. When I travel on long airline flights, I sometimes have to get to my coach seat by passing through the first and business class sections. When I see the comfortable and spacious seats they have compared to my cramped one, I think how nice it must be to be able to easily afford to pay the extra thousands of dollars for that luxury. But then I realize that in order to be able to be able to splurge for those few hours of comfort on a plane, I would have to work at a job I dislike on a daily basis all my life. That would not be a good trade-off.
In order to become rich for its own sake, you must be willing to spend a lot of time at it. If you want to become a successful investor in the stock market (say) you have to study the market and company reports and the business world and so on. The catch is that you would have to devote a lot of time towards this and that is something I have no wish to do.
What would be the point? My preferred lifestyle is one that is very simple. I don’t much like to travel to exotic places or stay at fancy hotels or resorts, eat at expensive restaurants (or eat out at all for that matter), go to shows and concerts, etc. I like to live what others might consider a really boring life: reading, writing, thinking, and spending time with friends. My idea of a great weekend or holiday is when I have no place that I must go to and nothing that I must do. If I were to sacrifice my time and other interests to make a lot of money, I would have lost more than I gained.
POST SCRIPT: Signs of the times
Kodak announces that after 74 years it is is discontinuing production of Kodachrome film due to the public shift to digital photography.
Don’t tell Paul Simon, he’s going to be really upset.
Mano- Great topic today. I’ve spent a lot of time thinking about this same issue, and feel much the same way. I’m probably a little more Hedonistic than you, but even so, I have no problem living comfortably on a middle income salary, and if I did make more, it would, as you say, be a byproduct of other pursuits.
There was a fantastic program on CNBC a while back about the new “super wealthy” (http://www.cnbc.com/id/24791078/). It’s disgusting how they talk about acquiring wealth as a competition, with total disregard for the fact that every penny they hoard is one less penny for the rest of us. Even Adam Smith noted how detrimental wealth hoarding is to the health of the free market, but over the centuries laissez faire has become an absolutism rather than a guiding principle. Is it right within the context of a free market and free society to curb wealth hoarding? And if so, how do you do it?
Josh,
I don’t know that there are are ways within a free society to curb some people’s drive to hoard wealth. What we can do is not admire them but see them as the losers they really are, who seem to think that money buys some kind of immortality.
I am preparing a series of posts dealing with how we face death (another fun topic after torture!) and that will touch on this.
two people same stories as kids different stories as adults. myself and another both grew up in eating lots of mac and cheese and other poor person food. Nowadays that is not the case. But the impact was.
Myself I have ennough for me and my famil and have actually given the shirt of my back, while the other person is building up lots and lots of extra money ( because he had to eat mac and cheese )
My view no one should be deprieved- his view it makes you stronger. So I says to him is that what happened to “W.” LOL
No but seriously we live in a country that feels deprivation is good for the “soul,” and have people discusses the redemptive merits of pain.
I blame it on surprise religion.
Mano,
Great post. Can’t wait to read part 2. I love the youtube video -- Kodachrome too!
Over the past couple of days I have not been able to get a similar subject off my mind. -- What is money?
The smallest fraction of money is actually coins and cash. The rest seems to exist in some virtual world of accounting ledgers and computer memory.
We no longer have an economy based on the gold standard -- the money (whatever that means) we have today is fiat money -- it is good because it is understood and accepted by the participants in the economy as a means of exchange and it is backed by the good will of the United States government.
What I cannot understand is -- if money is just an understood concept, an accepted entity, then why can’t we “understand” more money into the pocketbooks of the impoverished? Why can’t we accept more money for people who need health care or education?
It seems that money is a bit of a fantasy -- it doesn’t really exist. Why can’t we fantasize more money to more people who need it?
I’m not being flippant. I just have a hard time understanding why, in a nation that historically has been great at producing innovative goods and services, we can’t come up with a better way to see to it that more deserving people get a chance to have a qualitatively good life above the subsistence level, but free to pursue what makes them happy contributors to society?
Scott,
Not being an economist, I won’t attempt any abstract theory of money! But what I think is that the US has got into a mindset where they think that taxes are bad and that lower taxes are always better, even if it means reducing pubic services to a point where life becomes miserable.
We see this now. In the recent artificial boom times, my state of Ohio cut taxes, even on the wealthy, on the theory that reduced taxes would promote growth. That theory failed and now the state is having a huge budget shortfall. Are they going to raise taxes to the previous levels? No. They are going to cuts funding for public services like libraries, education, roads.
This is the problem. We do not start with what social services are needed.
If we were to do that just by changing the bank records of those groups so their accounts have more money, that would result in inflation—with more money available to buy the same actual goods and services, each dollar is worth less than it had been. Those who didn’t have their bank records altered would become poorer—it’s a zero-sum change. So this would be effectively equivalent to everyone making donations, or to having the government tax everyone and use the tax money to fund those groups. But donation has the advantage of being voluntary rather than coercive, and taxation has the advantage that it can be made progressive.
While we can “understand” more money, we can’t “understand” more goods and services, which are what really determine the total wealth of the world. The supply of those can only be increased through work.
We can, however, “understand” more contentment in our lives with less material wealth.