Tuesday, February 3, 2009

Having An Intimate Relationship With Money

[This is being inspired by Sakmongkol's posts on the relative economic success of different cultural traits.]

Having a proper and intimate relationship with money is probably the most important thing that a modern person needs to master in order to be considered successful in the concrete jungle that we now live.

Those who fail to have a healthy monetary relationship are doomed to fall by the wayside of the economic mainstream - if they have no ancestral land to fall back on and they are landless, they become the disenfranchised, the homeless in their own land.

To put the whole thing in another way, success or failure in modern life is now centred upon one's management of money and wealth. This is what (almost) all of us are engaged every moment of our waking days (including some moments in our nightmares when we have to think about kids' education).

Money is a concept invented by human beings to placate their fears about the unknown future and the unforeseen circumstances that will incapacitate them and render them economic incompetents. So human beings sought out things in nature as well as things they invented themselves to embrace and hold on to. And the funny thing is that, as more people are seen to be hugging the same types of things, the more other people want to embrace whatever so many people are embracing.

In other words, value is created by demand.

And as a result, Say's Law follows: Supply creates its own demand. Hence, we have central banks creating money by lending to the government (to finance war and public monuments for national pride), banks and property developers creating physical assets to be paid for by the man in the street with his future income (if any), banks and businesses creating financial assets by selling shares of equity ownership, and banks and other financial institutions creating other financial assets by repackaging financial assets with value-enhancer such as insurance.

If the unschooled person is lost in this asset jungle, then this is why education is the key to success in the modern world - in order to be able to play this economic game of life.

But if the educated person is lost in this asset jungle, he or she can still survive by working hard (if he or she can find a job) and save (in order to buy car, house, tv, and a home entertainment system).

So, how do we have a proper and intimate relationship with money (and wealth):

Education. Why is education important? The modern society is an artificial construct of the education people. Therefore, education is important in order, first, to be at par with the thinking of the modern society (even if we do not understand the workings). Second, education is needed to support the modern soceity. In traditional times, it was religious knowledge, followed by science and technology for the purpose of saving labour. Now, it is science and technology but for entertainment. Third, education is needed in order to able to understand the workings of the modern society and how do the successes and the failures come about and how the defects of the modern society can be fixed. This latter function of education is much more specialised and harder, as evidenced by the difficulties that the current fixers of the world economy have. Qualification: Education refers to the broadest range of training and knowledge, not just that which is propagated by universities.

Work and Economic Opportunity. To be able to participate in the economic mainstream is important. To be excluded from the modern society for whatever reason and to disallow people to try to earn a living and feed their family is the greatest form of cruelty. People want to work. People must work.

Save. The Chinese dictum on saving is this: If you earn a dollar and spend ninety-nine cents, you are good; if you earn a dollar and spend a dollar and one cent, you are doomed. None of that rubbish that is being propagated by the illiterate policymakers who encourage ordinary people to spend until they are bankrupt so that some inefficient firms will stay alive - swapping personal indebtedness for corporate solvency.

Invest. This is the scourage of the modern society. People do not know where to invest, because people do not know what is wealth any more. Central banks around the world have printed so much money that the traditional money that we know it now has no more value. People now don't want money. People want value. Does the modern society have no more value?

Value. If you were to ask me, I would any time put my money in the proper education of my children so that they can learn and be trained in values that do not die, such as honesty, trustworthiness, truthfulness, integrity, grit, perseverance, self-reliance, self-realisation, clarity of thought, courage, bravery, firmness without aggression, gentleness without cowardice, generosity, kindness, understanding, sympathy, compassion, helpfulness, resourcefulness, service. Only after when I am comfortable that my children have some proper values would I then venture to think of helping them out on the real estate, something which I feel they should do on their own. I have seen too many adult spoilt brats. This country is being spoilt by them.

It is true. Money is quite a useless thing, without which we cannot survive in the modern society that we have constructed. Hence, most people try to opt out of the modern society and live in the kampung, in order to avoid the use of money. But then they run into timber companies. Money is quite a useless thing, as it is something that we must have and not use. Isn't this the meaning of treasure? Most people follow such pristine routines that they fail to live.

The problem with most obvious political solution to the economic problem of the electorate that they are trying to entice is that they try to hook the electorate to their political camp with economic drugs.

The problem with money is that it is easily printed. To print money thoughtlessly is akin to the mind of the thief who thinks that the cleverest way to make money is to steal. It is one of the greatest paradox of modern life - that the shortest route for the individual is not necessarily the best route for society as a whole. To take the short cut for oneself could have been done at the expense of our neighbours who have to toil so that we can live comfortably (and pontificate).

Conclusion: To have a proper relationship with money, don't be greedy; live.

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