A while ago I read a thought-provoking article about how wealth isn’t money. Last night I stumbled across a very different article by Naval Ravikant that echoed that sentiment but added to it in ways I found fascinating.
Wealth is the thing that you want. Wealth is assets that earn while you sleep. Wealth is the factory that’s cranking out things. Wealth is the computer program that’s running at night, serving other customers. Wealth is even money in the bank that’s being reinvested into other assets, and into other businesses… The reason you want wealth is because it buys you your freedom. So you don’t have to wear a tie like a collar around your neck. So you don’t have to wake up at 7am and rush to work and sit in traffic. The purpose of wealth is freedom. It’s nothing more than that. It’s not to buy fur coats, or drive Ferraris, or sail yachts, or jet around the world in your Gulfstream. That stuff gets really boring and really stupid, really fast. It’s really so that you are your own sovereign individual.
Money is how we transfer wealth. Money is social credits. It is the ability to have credits and debits of other people’s time. If I do my job right, if I create value for society, society says, “Oh, thank you. We owe you something in the future for the work that you did in the past. Here’s a little IOU. Let’s call that money.”
That definition of wealth, combined with the definition of money, resonates with me. I also like how he goes on to say:
Wealth is not a zero-sum game. Everybody in the world can have a house. Because you have a house doesn’t take away from my ability to have a house. If anything, the more houses that are built, the easier it becomes to build houses, the more we know about building houses, and the more people that can have houses. Wealth is a very positive sum game. We create things together.
And finally, he compares wealth with status:
Status, on the other hand, is a zero-sum game. It’s a very old game. We’ve been playing it since monkey tribes. It’s hierarchical. Who’s number one? Who’s number two? Who’s number three? And for number three to move to number two, number two has to move out of that slot. So, status is a zero-sum game.
So many people play the status game. “I’m better than you because…” or “I’m better than that entire group because…” And often status is associated (unfairly) with money. As humans it seems like we need a ruler to measure others with, and an easy ruler is how much money everyone has. That’s probably why it’s often a faux pas to talk about salaries or bank account balances or investments in more than broad terms. Any time we pull out that ruler, we either find ourselves lacking (leading to jealousy) or superior (leading to pride). We’re never going to find someone who’s in exactly the same place as us, measured by any social ruler, so that measuring isn’t really constructive.
It’s sad to watch so many so-called “leaders” in the world pull out their rulers, or tell us to pull out ours… it just leads to Bad Things. Instead, let’s play the game of wealth and growth and sharing. Let’s take that positive-sum game and turn it into a mechanism to lift everyone. We can all succeed together.