> iSEE INSIGHTS
Image source:: https://www.dailymail.co.uk/news/article-6603399/Bill-Gates-63-photographed-waiting-line-local-Seattle-burger-shop.html
The world is 323% in debt. Who is this money owed to? Mars? :)
The global financial implosion started with the majority embracing beliefs that are not empirically backed. Now we have a gigantic financial bubble made of ill faith, lofty hopes, and misaligned dreams. It is easy to see why many make unwise financial decisions. The difference between the rich and poor is that the first, usually do not have a large bubble of wrong beliefs around their heads. However, because of the poor who are not honest with themselves, the rich have to live in a physical bubble (isolation).
To simplify, some people earn more than what they spend and others spend more than what they earn. Because the second types are the majority, sovereign states need to increase their debt perennially. By owing to the private sector, the financial markets wash away the state’s power. This is how the sovereign state has diminished its capacity to serve everybody and instead focuses on its creditors. If the states serve creditors more than citizens, how come the quality of life increased despite the inflation and the fall of the state that we are observing?
Because of innovation, today intercontinental flights are available to nearly everybody, as are smartphones, AI, fidget spinners, etc. It is only through entrepreneurial innovation that humanity can get many products relatively inexpensively compared to only 10 years ago. The average human in the USA in 2018 lives a better life than the Rockefellers 100 years ago. This is the power of innovation. However, as life gets too comfortable, many tend to work less and expect more. This is one important reason for the rise of the global credit bubble. The tradeoff, as mentioned, is again inflation that does not treat citizens equally.
If innovation was faster than inflation the relative inequality would not be felt so much, as the quality of life would still increase. This is exactly what did not happen in the past decades. The pace of inflation was a bit faster than the pace of innovation.
Here are the numbers:
The value of 1,000,000 USD in 2020 was only $146,528 in 1970. There were almost 400,000 patents granted in 2019, 52% of which were foreign, and 67,960 patents granted in 1970 in the USA 26% of which were foreign. It means the purchasing power of the dollar was decreasing faster than the increase of innovation.
The 2019/1970 the patent/inflation ratios are as follows:
Innovation increases with the total number of patents approved. However, unlike inflation, innovation is not always cumulative. What is the value to society of patenting round iPhone corners? Yes, Apple patented round corners. I predict not only that innovation will stall even further behind inflation, but that it will become less impactful and more meaningless in the forthcoming decades.
Thus, we have two main factors impacting welfare. Innovation and inflation and both work wonders for the wealthy but only innovation works for the masses.
With regard to inflation, billionaires can hedge their risks with creative financial instruments or fixed assets. They can also move wealth internationally and use tax and inflation optimization to protect their net worth. Ordinary people cannot. While it was weird for somebody to be a billionaire in the 70s today we have Jeff Bezos worth a whopping $200 billion dollars and many others who are worth north of $100 billion dollars. They have asymmetrical benefits from both innovation and inflation.
It is needless to say that innovation, from life extension to luxury items will become available to the wealthy first. Billionaires thus benefit from innovation not only economically for their businesses, but also personally. I predict that only billionaires who die forcefully will not get to live by 100. Good for the wealthy! We should be happy for them.
These people are very rich, but their wealth is made far larger than it is by the fact it is in a bubble with many fewer valuable things offered as an alternative. So, when value is scarce everything valuable appears bigger. And they created real value. For this reason alone, most ultra-high-net-worth individuals (UHNWI) do not take their net worth at face value. They see also the liability coming with the net worth. Some feel, if not explicitly understand, the unique historical context of their inflated relative wealth.
And here is the catch ‘ordinary people’ do not get. Billionaires would not be what they are if they were deluding themselves they deserve something they do not. They are highly-intelligent people with lots of power but with honest self-talk that is required to sustain that power. To become and remain self-made, billionaires had to be totally down-to-Earth, have zero ego, and play the business game as it was meant to be played but at no instance forget, that it is just a game they intend to win.
Then, others, envious and bitter people wanting more than they deserve, either curse them or declare them superstars to fill their own mindful vanity. They glorify money and fame, something most billionaires deeply despise. If ordinary people pass by billionaires on the street they would not believe they are real! Bill Gates thought people cannot recognize him on the street because he is wearing hats all the time. It is not true most of the time. Many just don't believe it is him or do not care and appreciate his privacy! It will be a problem if they recognize and start bothering him. In the eyes of those pesky pedestrians who may approach him he is a 'god' who should be somewhere high and unreachable only because they are in love with the material, not with hard work or business playfulness. They idolize wealthy people instead of treating them fairly. Then, billionaires have to pay $15000/night hotels and events only to feel adequate and find a place where others treat them equally.
To stay down-to-Earth, normal, and kind, billionaires have historically had to hide. It is not really a problem of billionaires as much as of the average person blowing their own bubble of delusions and the global economy with it. The wealthy cannot even use the subway without bodyguards or being photographed, not because they do not want to use it. Cars, even expensive ones, are very inappropriate in densely populated places such as NYC's Manhattan.
Do not blow a bubble. A personal, or a global one. Treat billionaires equally and yourself honestly.
Do you enjoy iSEE thoughts? Connect with iSEE to exchange ideas.