Monday, October 25, 2010

The Future of Money

Posted by Laura Lee at 7:18 AM
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2 comments:

  1. I like the spirit of the video, but something one commenter said sort of irked me, about allowing people to have wealth based on their future potential.

    I'm sorry, but that sounds a lot to me like one of two things:

    1. Future potential? It sounds a lot like future credit. I'm going to be a doctor, so let's loan me $100k to pay for my tuition based on my future potential and earnings

    2. If someone is making ceramic pots and saying that they are just as productive and as wealthy as someone who is saving lives as a doctor, I'm seeing a lot of BS there.

    I think the market demands and supplies what is in need. Just because I'd much rather making jewellery and play the piano doesn't mean that I should demand wealth and position for being a contributing member based on my potential.

    (I haven't hashed this out fully, but I feel strongly about it).

    Based on my (lack of) marketable skills and ability, why should I be paid $100k/year to do that versus a doctor who is more valued in society?

    I think the video is nice, but too idealistic and bordering a bit of on socialism. We're forgetting that we live in a world powered by capitalism and at the core of our human natures we are competitive and unable to be balanced in the sense of what I mentioned above.

    A doctor will feel more valued than someone who'd play the piano and make jewellery, and the market pays for what the value is to society.

    Not everyone can be a doctor or a jewellery maker, but I daresay more people can be jewellery makers than doctors.

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  2. What this clip expresses is that wealth is not money. Wealth is what is created with money.

    The idea of receiving payment based on future potential is actually not new. It's what banks do every day when they lend money. They take a bet about your future prospects, your ability to pay them back with interest.

    What is different about what the speaker proposes is how those bets are made and what kind of system administers it- what do you take into consideration when assessing a person's future potential, and who funds/facilitates that? Innovations that might be too local/novel to be of economic value to a big bank can be funded and/or supported through another means.

    I didn't hear anyone suggesting something like a universal salary for everyone regardless of what they do. In terms of innovations, they are most likely speaking in terms of new software design, new solutions for third world nations to combat hunger and disease, new businesses, independent film, etc rather than jewelery making, which has low start up costs.

    As the market exists today the most valued is not necessarily the most well compensated. Based on what is best compensated, we could well assume that investment banking in risky derivatives is far more "valuable" than being a doctor in our society. Measured solely with money we value CEOs with the ability to lobby more than we value, say, soldiers or teachers, two groups which are more poorly compensated.

    The fact that a person has money is not a good measure of his value to society. It can be, but it is not necessarily so. It is only a measure of how much money he has been able to amass.

    If the jewelery maker of your example doesn't have the aptitude to be a doctor, no amount of salary is going to draw her to the medical field, nor would we want her to be a doctor if she lacks those skills.

    When speaking about the arts we should not forget that there is a difference between an amateur and a professional. Is it fair to define a concert pianist who has trained all her life and who has a once-in-a-generation gift for music as "a piano player" and say she should not receive as much as the doctor?

    It may turn out that the system as it is designed is the ideal way to ensure that we have doctors. (Or it may not be.) It may also be that there are things we could be accomplishing that are falling through the cracks of the current system and that we could facilitate through other means.

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