Some people are so poor, All they have is money

[jason_]

From the Peak Prosperity Podcast:

 

 

Published on Sep 28, 2015

Recently, author and "de-growth activist" Charles Eisenstein stopped by the Martenson homestead while traveling on business. Taking advantage of the opportunity, Chris sat him down to record an impromptu discussion on the nature of wealth.

As should come as little surprise to Peak Prosperity readers, financial wealth ("money") is just one component -- and given society's current over-fixation with it, its pursuit oftentimes limits our ability to be truly wealthy.

 

[TheSchoolofAthens]

I find it far more amazing that I can walk into a large variety of stores - sometimes at 3 AM - and find clean, fresh, grapes already packaged and ready to eat, compared to picking my own grapes.

I've seen some of Charles's work before, he is a communist/environmentalist. He is a "degrowth activist"; he is anti human and anti life.

I agree with him that money itself wont make you happy, but I believe that because one needs a healthy self esteem to be happy and that comes internally, not externally from wealth - or even organic, home grown grapes.

[jason_]

I find it far more amazing that I can walk into a large variety of stores - sometimes at 3 AM - and find clean, fresh, grapes already packaged and ready to eat, compared to picking my own grapes.

 

I've seen some of Charles's work before, he is a communist/environmentalist. He is a "degrowth activist"; he is anti human and anti life.

 

I agree with him that money itself wont make you happy, but I believe that because one needs a healthy self esteem to be happy and that comes internally, not externally from wealth - or even organic, home grown grapes.

 

Have you ever grown any food, or worked on a farm?

Are you aware of the damage that industrial farming has on the soil?

 

While you may pay a small monetary cost for those grapes there are lots of trade offs that molest the economy and compromise the health of the ecosystem in order to have our supermarkets. I think destroying long term productive capacity of the earth for short term gain is immoral. The agribusiness that makes these 'wonders' possible is not subject to full market discipline because it is one of the primary industries involved in government favoritism.

 

Check out what the CATO Institute has to say about it:

http://www.downsizinggovernment.org/agriculture/subsidies

 

Your supermarket grapes are more a result of central planning than free market capitalism. Believe it or not, it's actually in your best interest to have locally grown agriculture and free trade (not government controlled trade). This keeps the interests of the farmers in line with what's best for the environment (because they are not shielded from the risks from destroying the land) including the folks eating the food.

 

Here's a book written by a self described "Christian-libertarian-environmentalist-capitalist-lunatic-Farmer" who wants to do work outside of government control:

http://www.polyfacefarms.com/2011/07/25/everything-i-want-to-do-is-illegal-war-stories-from-the-local-food-front/

 

I'm not familiar with Mr. Eisenstein's work, but I didn't hear him suggest communist control in this video. Calling him anti-human and anti-life without any examples seems to be attempting to "poison the well".

[mlsv2f]

I care not to grow grapes in my yard as my skill set is better compensated for, and benefits society elsewhere. It really comes down to comparative advantage/opportunity cost.

 

If industrial farming within this statist context is as bad as you say (which it may be, I'm not very knowledgeable on it), then, in a free society, we would probably find an alternative to that in leveraging the capital of the best business minds, most skilled farmers, and most available land, which would result in an extremely efficient farming system delivering the products society demands the most. The result would  be a better system than the one we currently have. To suggest that in a free society we would all become farmers and spend 30-60 hours a week cultivating our food is inaccurate and against the above mentioned economic principles of opportunity cost and comparative advantage in my opinion. Not everyone should be a farmer, and society will thrive to a greater extent if people are able to use their skills outside of only farming.

 

I understand this may come off as poisoning the well, but for me, to hear another Burg/Stein or whatever his name his, who attended a university, which has an annual cost that's more than the value of the house I grew up in, sit there and rant about how anyone who is obtaining financial security is naive, was frustrating. Take a trip to Lagos or Mumbai and watch how families compete for trash piles with wild dogs in hopes of food, and you just might start to understand why some people do have anxiety about going back to, or ever becoming impoverished. I understand the argument that society, in some ways becomes materialistic, but how can one objectively say that home grown grapes are a virtuous pleasure, but relaxing on a sailboat is not? They are both subjective luxuries based on preference. 

 

I agree we should all do whats is best for the world, but I think you would have to really lay down the basis that any type of commercial farming, as mentioned above in a free society, is bad for earth before making the claim its immoral. 

[NotDarkYet]

I'm not sure the "over-fixation with wealth" is coming from the super-market users....

[jason_]

I care not to grow grapes in my yard as my skill set is better compensated for, and benefits society elsewhere. It really comes down to comparative advantage/opportunity cost.

 

If industrial farming within this statist context is as bad as you say (which it may be, I'm not very knowledgeable on it), then, in a free society, we would probably find an alternative to that in leveraging the capital of the best business minds, most skilled farmers, and most available land, which would result in an extremely efficient farming system delivering the products society demands the most. The result would  be a better system than the one we currently have. To suggest that in a free society we would all become farmers and spend 30-60 hours a week cultivating our food is inaccurate and against the above mentioned economic principles of opportunity cost and comparative advantage in my opinion. Not everyone should be a farmer, and society will thrive to a greater extent if people are able to use their skills outside of only farming.

 

I understand this may come off as poisoning the well, but for me, to hear another Burg/Stein or whatever his name his, who attended a university, which has an annual cost that's more than the value of the house I grew up in, sit there and rant about how anyone who is obtaining financial security is naive, was frustrating. Take a trip to Lagos or Mumbai and watch how families compete for trash piles with wild dogs in hopes of food, and you just might start to understand why some people do have anxiety about going back to, or ever becoming impoverished. I understand the argument that society, in some ways becomes materialistic, but how can one objectively say that home grown grapes are a virtuous pleasure, but relaxing on a sailboat is not? They are both subjective luxuries based on preference. 

 

I agree we should all do whats is best for the world, but I think you would have to really lay down the basis that any type of commercial farming, as mentioned above in a free society, is bad for earth before making the claim its immoral. 

 

I didn't find the point of the video to be "we should all grow grapes," or "we should all become farmers."

I think what was to be taken away from this discussion was a reexamination of wealth. Today there are many people who are considered wealthy because they have money. For example, think of the tech companies that have billions in market capitalization, but don't provide an anywhere near equivalent value to society.

 

"On February 19, 2014, months after a venture capital financing round at a $1.5 billion valuation, Facebook announced it was acquiring WhatsApp for US$19 billion"

 

"Private equity firm Cerberus Capital Management has offered to buy Safeway, Inc., the nation's second-largest grocery chain, for a reported $9.4 billion."

 

Look at the two quotes above. Think of the balance sheets of these two companies. What makes anyone believe that WhatsApp is 10 billion dollars more than a grocery chain that owns food, trucks, stores, etc. and employs hundreds or even thousands of people?

 

To me, the conversation provoked a question of what would our economy look like and what would be considered wealth in a truly free market? I don't think there was any point made that counters division of labor or the value of securing capital.

 

I picked up "An Economic History of Bengal" while at the library yesterday. In the first chapter the author described the value of social relationships in the agricultural sector in times of need. When crop yields were low, or farmers didn't have the capital to hire the labor to develop their lands arrangements of reciprocation were made to meet the needs of community members -- much like early American society.

 

"And a kind of insurance developed in these nights. A man with food fed a hungry man, and thus insured himself against hunger. And when a baby died a pile of silver coins grew at the door flap, for a baby must be well buried, since it has had nothing else of life. An old man may be left in a potter's field, but not baby."

 

- John Steinbeck, The Grapes of Wrath

 

Just as they're are different types of insurance not widely considered our current social paradigm, there are different types of wealth. I think it's incumbent upon anyone who wants to live in a free society to consider these concepts, otherwise it's easy for socialist and the like to compete in the idea-sphere and win because they rely on prevailing attitudes towards these concepts (e.g. wealth is for the greedy; you need government to protect you from the dangers of the world).

[mlsv2f]

I didn't find the point of the video to be "we should all grow grapes," or "we should all become farmers."

I think what was to be taken away from this discussion was a reexamination of wealth. Today there are many people who are considered wealthy because they have money. For example, think of the tech companies that have billions in market capitalization, but don't provide an anywhere near equivalent value to society.

 

"On February 19, 2014, months after a venture capital financing round at a $1.5 billion valuation, Facebook announced it was acquiring WhatsApp for US$19 billion"

 

 

"Private equity firm Cerberus Capital Management has offered to buy Safeway, Inc., the nation's second-largest grocery chain, for a reported $9.4 billion."

 

Look at the two quotes above. Think of the balance sheets of these two companies. What makes anyone believe that WhatsApp is 10 billion dollars more than a grocery chain that owns food, trucks, stores, etc. and employs hundreds or even thousands of people?

 

To me, the conversation provoked a question of what would our economy look like and what would be considered wealth in a truly free market? I don't think there was any point made that counters division of labor or the value of securing capital.

 

I picked up "An Economic History of Bengal" while at the library yesterday. In the first chapter the author described the value of social relationships in the agricultural sector in times of need. When crop yields were low, or farmers didn't have the capital to hire the labor to develop their lands arrangements of reciprocation were made to meet the needs of community members -- much like early American society.

 

"And a kind of insurance developed in these nights. A man with food fed a hungry man, and thus insured himself against hunger. And when a baby died a pile of silver coins grew at the door flap, for a baby must be well buried, since it has had nothing else of life. An old man may be left in a potter's field, but not baby."

 

- John Steinbeck, The Grapes of Wrath

 

Just as they're are different types of insurance not widely considered our current social paradigm, there are different types of wealth. I think it's incumbent upon anyone who wants to live in a free society to consider these concepts, otherwise it's easy for socialist and the like to compete in the idea-sphere and win because they rely on prevailing attitudes towards these concepts (e.g. wealth is for the greedy; you need government to protect you from the dangers of the world).

 

I think the reason money is seen as wealth because it is what can used as a medium of exchange to get a variety of items. You can easily buy a vineyard if you have money, but its much much more difficult to say, take a vineyard and try to barter for a certain item you want, does that make sense? How easily can a vineyard be transferred, compare that to cash/gold, bank wire?

 

As far as the apps,

 

I agree with you that there is some speculation going on here, but that is part of the pricing and resource allocation process, its going to probably take a massive failure of one of these apps to correct the pricing they have IMO. Speculative bubbles would occur in free societies as late entrants arrive.

 

In most cases though, If the companies don't provide anything of value to society, Surely they have to be producing or have the potential to produce something of value, and if not, in the medium/long term, the pricing would be corrected. Would you agree?

 

 

On side note regarding apps, I think one key point you may be missing is these apps can produce revenue in multiple ways that most users don't really see. For example, the geo-tags on apps can be sold to companies that may want to advertise to someone near by. Market information and consumer data can be acquired through the geo-tags. These apps generate a ton of information that can be mined and sold. Not to mention, patented technology often comes with these too. An obvious example of this is Facebook, they don't charge customers, but produce revenue in MANY ways.

 

A friend of mine from college started a company and they buy these apps in the early stages and then loads up the user base, monetizes them in various ways, and then sell them off. Most of them never charge the user a penny.

[Kaz Lokuciewski]

I think most people seek monetary wealth to provide security to their families. Wealth grows.

 

In my area a starter home is £300k. At a sensible interest rate that's about £1000 / month interest only AKA about 75% of the median take home.

 

This leaves no slack and you need to put something aside for your pensions, you kids education, their deposit..how much? Is £500k enough to have a good retirement?

 

We have a situation where both parents (no inherited wealth) working on median wage are required to have a comfortable life (child free) that may fund an ok retirement.

 

The kids in Nursery are £1000 / month. Most try to stagger 3.5 years to have one in school. If you have the kids...MOST must step up to double median wage..this means you have to become money orientated in your work. You have now sold your sole.

 

The people around you tend to be in the same situation and you start socializing...you always end up in the pub and it becomes round buying unless you insist on not partaking. So you put 20 in the kitty and get 2 drinks while a few others neck six and most have three, but you can afford it, your all mates..but three of you have £300k inheritance saving them £1800/month. They ask you if you would like to go on holiday with them. You don't know about the £1800/month inheritance saving and assume they are saving up the £3000 cost over the year..

 

My mission here is to say that many couples on £50k each are usually just people who are trying to raise a family..have ok cars, houses with a spare room for their parents and enough garden to host a birthday. They go on a nice holiday once a year and the rest is stacked up for their kids to have half a chance and buying the house they live in but even they could not buy at today's prices on their salary.

 

There are rich people with 'Only money' but they are few and far between, mostly they are in parliament banks and arms trade.

[jason_]

In my area a starter home is £300k. At a sensible interest rate that's about £1000 / month interest only AKA about 75% of the median take home...

 

There are rich people with 'Only money' but they are few and far between, mostly they are in parliament banks and arms trade.

 

I think property value is related to the quality of the community the property is located in, but I wonder if people took the time (or had the time) to examine their communities how they would find them? Would most people agree that the land is used best?

 

I've lived in different parts of America, and except for the old cities, the country's town and cites are characterless. There's endless repetition of fast food chains, big box retailers, car lots and gas stations, and strip malls (with most of the same stores and a check cashing place in each one). In my opinion, it's a sorry expression of human endeavor.

 

What's the value of living in a place you really want to live in? Are homes in the median price range the kind of homes and communities people really want to live in? The house I live in is in a neighborhood with homes the cost over $1 mil, but there's nothing special here. In my opinion people are paying so much just for the weather, big homes, low crime, and good access to the major metropolitan area.

 

There's not much one can do about the weather, but are people really wealthier just because they have a big home? If we had strong communities, could we not have low rates of crime almost everywhere? What if people could work and enjoy recreational activities in their communities? What's the point in being close to crime ridden metropolitan areas, if that was the case?

 

I believe free market capitalism can bring about better lives for individuals, and communities with strong free individuals could be great communities indeed. But Kas, as you detailed in your post, people are locked into the way things are. The good thing is, it looks like central banks around the world are going to fail, and I think the question is upon us to ask: is our society's popular valuation of things in line with what would truly make us happy?

I think the reason money is seen as wealth because it is what can used as a medium of exchange to get a variety of items. You can easily buy a vineyard if you have money, but its much much more difficult to say, take a vineyard and try to barter for a certain item you want, does that make sense? How easily can a vineyard be transferred, compare that to cash/gold, bank wire?

 

The point I would draw out of your example and tie back to the video is, that value of a vineyard is subjective. To the vigneron who make it his livelihood to tend the vine it maybe worth more that anything else in the world to him. But otherwise I agree with your point about currency. It facilitates transactions. But where does that money get it's value is a key question that ought to be answered.

 

 

As far as the apps,

 

I agree with you that there is some speculation going on here, but that is part of the pricing and resource allocation process, its going to probably take a massive failure of one of these apps to correct the pricing they have IMO. Speculative bubbles would occur in free societies as late entrants arrive.

 

In most cases though, If the companies don't provide anything of value to society, Surely they have to be producing or have the potential to produce something of value, and if not, in the medium/long term, the pricing would be corrected. Would you agree?

 

 

On side note regarding apps, I think one key point you may be missing is these apps can produce revenue in multiple ways that most users don't really see. For example, the geo-tags on apps can be sold to companies that may want to advertise to someone near by. Market information and consumer data can be acquired through the geo-tags. These apps generate a ton of information that can be mined and sold. Not to mention, patented technology often comes with these too. An obvious example of this is Facebook, they don't charge customers, but produce revenue in MANY ways.

 

A friend of mine from college started a company and they buy these apps in the early stages and then loads up the user base, monetizes them in various ways, and then sell them off. Most of them never charge the user a penny.

 

I agree that bubbles can form in markets in general. I think it's more likely and more likely to be bigger when markets are not free to correct on their own and molested by political intervention. I wish everyone afraid of big corporations realized that in a free market, business that doesn't provide a value to clients, would go away.

 

I know that software out there has contributed massively to productivity. Moving forward, I think those kinds of jumps will be further between. I think there's a lot of money on in the tech market because of "accommodative monetary policy," but many of the 'tech' companies are solutions looking for problems.

 

Something a little bit more useful like WhatsApp comes along and it gets adopted by lots of users. So what? The things runs on phones and networks but that has nothing to do with them (as far as company value is concerned). And it took one good programmer to come up with it. How hard is that? I could probably start a kickstarter and do it.

 

The situation with your friends and others doing the same (monetizing apps in a brick-a-brack ways and turning around and selling them) can only last so long. Think about what you said earlier, what value are they providing to society? Is it enough to reap sustainable returns on billions of investment dollars?