A while ago I talked about CEOs and hedge fund managers and such, who these days routinely take home tens or hundreds of millions of dollars per year. And they keep on, year after year, ruthlessly grinding the poor, subverting political alternatives or even mild reforms that might tax some of their earnings, polluting, even killing (not with their own lily white hands, of course), just so they can get a bit more—so they can take home 30 million this year instead of 20 million, or 300 million instead of 200 million.
I realize this is cliche, but I can't stop wondering—what's the point? Why exactly are they so desperate for more money? I mean, I can't really imagine how any more than about $10 million could possibly improve my quality of life any further.
With that much I could buy outright a nice house with enough yard for some fruit trees, raspberries, rhubarb and whatnot. And I could make it green and solid, rebuild it from scratch if necessary using solid building materials to environmentally friendly specs, load it with solar panels and/or maybe a bit of compact wind, get geothermal heating, make sure it had a pantry and plenty of space for books, make sure it was wired well for cool computer stuff. All that wouldn't take more than a million and a half or so, at most, after which I'd have a great place to live and I'd be basically off the grid. And I could get a pretty snazzy computer, and an electric car, and good solid furniture and really good bookshelves and a really nice fridge and whatever other, you know, stuff I felt like. That would be maybe a hundred thousand. And I could quit my job and give myself like $80,000 a year for 50 years, and that would only be 4 more million. And with no mortgage or car payments and practically no utility bills, in reality I could live well, eat well, go to a restaurant or a show reasonably often, take a summer trip once in a while, and buy all the books I really want to for far less than that. And I'd still have a security backup of more than three million bucks plus interest in case anything happened. I don't get how anyone could genuinely improve the way their lives are lived using any more money than that. Many people who win lotteries don't even do that much.
What's the point here? Well, market theory involves this model of humans where they're intelligent maximizers—people know everything (we'll leave that alone), try to get the most they can, and figure a 50% chance of gaining $2 is always worth a 50% chance of losing $1.99 instead. Leaving altruism and community aside, and leaving perfect information aside, and even leaving aside that most people actually fear a loss more than they want a gain, because in terms of utility “losing your home” is more worse than “somewhat wealthier” is better, and so they're systematically not maximizers in that sense—leaving all that aside, the maximizing money thing ultimately derives from a maximizing utility thing. The idea is that people want money so they can buy goods that will improve their existence. But rich people don't want money for that reason, because they have all the goods they could ever actually use and then some. They want more money for other reasons. Significantly, for ego-related reasons—they want more money than other people, so they can rub the other people's nose in it. To the extent that they want to get goods with that money, the goods are positional and status-oriented, things you like having just because other people can't have it, not because it's actually any use or any fun in itself. And they want money because money gives you power, and people want power for deep down monkey-band reasons that intelligent maximizing doesn't touch. This kind of motivation can lead to other things than maximizing—control over others, or increasing relative rather than absolute wealth, will be objectives at least as important as simply piling up dollars. So, market theory's model of people is deeply unrelated to the motivations of actual rich people, even more so than to the motivations of actual normal people. By market theory standards (and indeed by most others), the decisions of rich people are likely to be destructive, even insane—they will be significantly and systematically different from market theory’s predictions. But it is the decisions of rich people that shape the economy most strongly, and more so every year its seems. Ergo, market theory is worthless for describing and predicting what goes on in a capitalist society.
There's an odd flip side—if rich people weren't motivated by power and status, but only by the desire for goods, they would quickly reach a point at which money would cease to motivate them, and then they'd quit. So after six months to a year of being a CEO, people would take the money, buy a house (not a mansion so huge as to be pointless to live in) and settle down to enjoying life. In which case, while they'd be behaving closer to the ultimate basis for homo economicus in market theory, they'd be even farther from the behaviour expected of homo economicus in the actual math, where dollars are treated as equal to utility, even though in the real world this rapidly ceases to be true at larger amounts of money.
So, my conclusions—theories of free markets are borked, but until the revolution comes I wouldn't turn down ten million dollars.
This reminds me of a question I was once asked. Someone asked me what I would do if I won the big lottery. My answer was "I'd do pretty much what I'm doing now - I'd just do it in considerably better style". I guess you and I both missed out on the super rich gene PLG.
Actually, I think it's primarily the urge to do something well, to do it better than everybody else. The gain of pelf is the only objective they have available to satisfy the competitive urge in a "way that matters." (Intuitively, in any conversation between businessmen and gamers, I would expect the businessmen to openly condescend and patronize any other form of scoring - even though past your $10M or so the distinction isn't actually all that large, as you point out.)
Which is not the same as lording it over others or rubbing their noses in it; many businessmen are their world's equivalent of "good sportsmen" who honour their opponents' efforts, even while they seek to maximize their own benefits and offload costs to those competitors. Inasmuch as there's unsportsmanlike behaviour (Enron etc), I submit that this is a separate pathology related to the ways in which the capitalist game is susceptible to creeping corruption and incentives to dishonesty.
In many ways it literally is the only game in town. If what you ask for out of a game is (a) nontrivial stakes, and (b) a perceived low incidence of chance, high incidence of skill, in victory... then it's fight to get rich, or join the army and just fight. And once you've chosen the former path, that environment shapes all sorts of subconscious assumptions and conclusions about how the world "should" work.
The outrage over seemingly minor taxes on mega-wealth has little to do with the utility value of the wealth itself. It's the vulgar-libertarian sense of entitlement - property rights trump all; how dare you take away some of my victory points? On what basis can someone else's needs supersede my right to play the game that I've chosen with my life? If they're poor, they should play the game better.
What's more, you're suggesting they should quit playing their favorite game just because they've accumulated enough points. That's not in general how we structure games (though it's an interesting thought of whether our world would be different if that was the norm in competition of all sorts). Suggest to an MMORPG addict that they should quit playing just 'cause "level 20 is enough for anyone" and wait for the reaction; it'll be much the same.
Alas, this particular game does have incentives to corruption, and does reward arrogance and evil, and does take bread from the mouths of the hungry in order to drive its reward system. Perhaps one day we'll see a progressive tax model (or some analogue) aggressive enough to counteract these downsides and leave the "wealth game" merely societally neutral. Or perhaps the MMORPG generation will grow up realizing that games are games, and be able to judge them on the merits as such.
Is it any wonder, after all, that they obsess over their games - when the older generation is so obviously addicted to theirs?
I remember an interview with Ted Turner many years back, he was talking about the Forbes ranking of the richest people in the world, and how negative an influence that was, because many of the richest people would like to give more to charity, but they were too competitive to concede ranking spots in the list of the world's richest people. He somewhat jokingly suggested that the superrich needed a mutual disarmament treaty wherbey they all agreed to give away the same amount, so they could do good work and leave the rankings unchanged.
This was in the U.S. of course, so the idea that higher taxes on the rich would accomplish this objective quite nicely was left unsaid.
You forget the wisdom of the ages expressed in "Key Largo" where our hero defines what Rocky the mafioso and people like him want out of life. The answer was "more".
Inherant, deep within the human phyche, are cells forcibly groomed by centuries of evolution that has created a non reversible, 'look at me syndrome' in all of us. So much so, that this inertia precludes all other human objectives. If we admit that evolving cellular structure in the brain tissue of humans began fetus formulation long before sticks, stones and clam shells became societies monetary standards then we must concur that inner egotistic drive had led all 'later comers' to cerebreal eons of 'covet your neighbour's' everything. Evidence that cultivated and jaundiced egotism still takes precedence in all homocentrics even now along the shores of the Amazon; in the tribal mentality of nomads of Mongolia; in Khuzistan, one's status is still measured in the number of goats one possesses. So why are our present day professorial. intelligensia so amazed and so reflective with the 'continuing realization' that accumulation of excessive monetary power for ego's sake - not simply for possessions sake - is where humans are still at!
The gloves are off and we are witnessing the triumph of naked greed that by its very nature cannot ever be satisfied.
The pendulum of history will swing back. It is the horrific cost in human misery we must pay before an outraged humanity summons the courage to redress the balance that I most fear. One hopes this beautiful blue green ball will not be left a smoking cinder before we get there.
As I carry on, trying to remember that Tommy said: "Come friends, its never too late to build a better world!", I keep a
song in my heart.
Apologies, the above link appears broken. Here's the truth, the whole truth and nothing but the truth:
(still) a song in my heart
Meanwhile in late-breaking news from Bolivia:
"I am even more convinced that the concentration of capital in a few hands is not the solution for humanity. Models that accumulate wealth in a few hands are not the solution for humankind, for life, and even less for the poor that inhabit this planet earth."
Read more here
While right next door in Paraguay its business as usual. (h/t to mahigan, eminance grise)
There is a confrontation towards the end of the film Chinatown betweeen the detective (Jack Nicholson) and the bad guy (John Houston). Houston has spent a lifetime subverting and corrupting everything and everyone for power and money. Nicholson, who has figured out Houston's latest scheme, asks the multi-billionaire who has everything, what more he could possibly want. "The Future!" Houston replies. "The Future!"
And that is it. That's what the superrich want. Whether it's the Borgias or the Carlyle Group that's the end-goal.
I have heard that very rich people seek more wealth out of fear - according to this view, rich people come very quickly to see themselves as different and better than ordinary people, and their greatest fear is losing their special status, and being returned to the ordinary. The only bulwark against this catastrophe is their money, and they are motivated by their fear to build an ever-larger hedge of wealth. This analysis holds the note of psychological truth, for me. And of course, the nature of drug addiction is often to require exponentially increasing doses of a drug to achieve the same high. The parallels between heroin addiction and wealth addiction seem strong.
"Significantly, for ego-related reasons—they want more money than other people, so they can rub the other people's nose in it."
Is this a 'big dick' theory of wealth? I am surprised no one has mentioned it so far.
Yet I note in science, particularly physics, wealth accumulation seems to be a secondary or lesser motivation. A chase for what they consider truth appears to be their motivation. Many times their personal habits conflict with any attempts at obtaining wealth - some are socialists and that has prevented them from many government financed ventures, the story of the Manhattan Project is filled with them: there have been Priests (the Big Bang theory was developed by a Priest). A desire for wealth seems to be lacking in this area.
Those few members of the 'filthy rich' I have known are too busy developing their riches, the 'how'; to question motivations; the why. K.C. Irving made the comment, when asked why he aquired and built so much, that: "I like to see wheels turn." He was concerned with process, not reasons behind it.
Did Ken Lay think he was doing evil, Conrad Black? Did either one contemplate the lives and careers they ruined in their dubvious quests for more wealth? It seems they were (are) so busy doing what they were doing to go into fallout or motivations.
Brett Mann - you come as close to my thinking as anyone - understand it by some kind of addiction theory.
Good subject PLG.