Henry David Thoreau once expressed the price of anything as the amount of life you exchange for it.
How do most people earn money – not specifically, but generally?
Most trade their time – really their time, energy, and effort for money.
The vast majority of our one hundred and sixty million workers in the United States are paid an hourly wage or receive a salary on the expectation of putting in a minimum specified amount of time. We trade our time – our energy and expertise – for money.
If you've been paying attention you know that salaries, income, earnings have generally been increasing over the years. The average and median earnings are higher this year than they were last year (except when taking Covid into account). Except for Covid, increasing earnings sounds pretty positive. At least on the surface, it does. It sounds like we're making more money.
I saw a headline before covid that read; in big bold letters: wages increasing at an annualized rate of 2.9%. Would a 3% raise be a decent raise for you this year?
Well, on the same day I saw a different headline; again; big bold letters proclaiming: annualized inflation rate is 2.9%.
Wages are flat.
Wages in the United States have essentially been flat for the last fifty years. If you were to examine wages across three strata some interesting things pop out. In the lowest third, real earnings have actually been declining relative to the cost of living for the last 50 years – the standard of living for people in this group has actually been declining.
The middle third of income earners – those more in line with average – have been treading water. The middle third has picked up a little ground, but in the big scheme of things, not much ground.
The top third of income earners however have been going through the roof. The top third is definitely better off.
Wage gains for most of the twentieth century corresponded to gains in productivity. The more productive people were the more they earned. When you look at productivity gains over the last fifty years we've increased productivity by leaps and bounds. The problem is those productivity gains are no longer going to workers – at least not those in the lower two-third earning ranges. What's going on?
Remember that 80-20 principle? Most things don't matter. Right now I want to talk to you about one thing that matters significantly. This one thing has implications for you, your family and friends, your community, this nation, and the world.
As we said there are three ways to acquire money. You can be given it – good for you. You can make it – good for you, good for us, good for everyone. Or you can take it – bad for you, bad for us, bad for everyone.
Money is a social system built on a foundation of trust. We trust other people are going to continue to do things we value. So money holds value.
Making money is the process of creating value; helping people get what they want. By making money, by creating value we "increase the pie" we add to our collective wealth.
Taking money is the process of competing to secure a piece of the pie. And since we think money is valuable, we take money. We don't expand the pie – we take what we can.
Thomas Hobbes, a seventeenth-century shall we say pessimistic philosopher, wrote in Leviathan that left to our own devices, our base human nature makes life nasty, brutish, and short. Hobbes did not think much of human nature.
Well, we human beings are after feelings. Collectively we've made money the means to get what we want. Most people don't know that money is a social construct built entirely on trust. Most people don't know that money really equates to people's time. And most people don't know that to make money you have to create value. People just want to feel something and they want money to get that feeling.
We human beings are the path of least resistance creatures. We choose the easy way until all easy alternatives have been exhausted. So if we can acquire money without creating value and putting in effort we'll actually manufacture a system to allow us to take instead of make. If people begin to believe taking is the easiest way to acquire money more and more people are going to take.
So here we are.
The U.S. federal debt is soaring; now past twenty-seven trillion. Add in the state, municipal and local government debt; and add more than five trillion. We've lit a fire and we're pouring on gasoline.
Our personal debt; debts you and I owe, have eclipsed fifteen and half-trillion dollars. We're closing on fifty trillion and I haven't mentioned corporate or financial debt and unfunded obligations.
Remember debt is money. Money is time. Debt is future time. The popular idea is party now; pay later. If possible have someone else pay later.
Far too many of us are deciding to take instead of make. And our government and corporate structure have codified and legitimized taking in law. This is why society is in such turmoil right now.
I wrote a simple, and what I think is a powerful story about making versus taking, the book is called Sheep, Herders, Wolves – Why We Are Where We Are: A Modern American Fable. I've condensed that parable into an audio program called _Leadership In An Age of Wolves. If you want to understand this better, look for those.
Everybody's scrapping; everybody's fighting to get theirs. Seeking to take, we are dismantling the productive class – what we used to call the middle class; people who actually work to create value. We are abandoning the necessity of creating value for the perceived convenience of taking what we want. Those who can compete well; who can dominate are content dividing up the spoils.
Corporate behemoths and their masters increasingly subscribe to take instead of make.
Our monetary system is built on a foundation of trust. Attempting to take instead of make erodes trust. We are destroying exactly what our monetary system relies on; which brings me to this next ominous revelation.
Fiat currency; as you recall the dollar, and Euro's and Yen; all national currencies are fiat dollars – nothing but trust; all fiat currencies fail. Fiat currencies have a 100% failure rate; 100%. The average life of a fiat currency is approximately twenty years. The U.S. dollar – the world's reserve currency – is closing on fifty years old and is declining fast.
Why? Because we are undermining trust. As we compete for every last scrap we destroy trust.
It's like we're at a gaming table on the Titanic as it hit the iceberg. The losers are already in the water; while the winners are busy counting their cash, not noticing what's about to happen. What does this happy prospect mean?
It means we'll all be better off if we understand the truth about money; which we summarize in our final session.