Lloyd Blankfield, CEO of Wall street firm, Goldman Sachs infamously said in a 2010 interview that he is “doing God’s work.”
In that same year, development economist Hernando De Sato, speaking at the Oslo freedom forum said those working for human rights “are doing God’s work”.
They may both be right.
De Soto spoke in the context of eradicating poverty for the billions of the world’s poor. Blankfield spoke about returns for shareholders and clients. While their disciples may be different, their principles are the same – the creation and distribution of wealth is a blessing. The matter then is one of utility. That is, who benefits more from the increase of wealth?
Wealth is one of the most potent and effective ways to improve the welfare of humanity. The most cited example of this today is China where 300 million people have been lifted from poverty in the last 30 years. Here exists an implicit agreement between the people and the state which holds that the oppression of poverty is less comfortable, more crushing, than the oppression of autocracy.
But what of other countries, how do we increase the well being of their citizens?
I don’t believe the answer is redistribution of wealth from the west to the rest, after all, weren’t all countries poor at one stage? Responsibility lies firstly with the Governments of developing countries, the officials elected by their people as a symbol of their aspirations. However if we look at many developing countries today we see a failure of authorities to aspire to much anything.
Africa, South East Asia and Latin America are pockmarked with countries where public institutions serve private interests, where deficits of trust impede progress and where social security nets, if they exist at all, are hoisted one inch from the ground. Ostensibly present, practically useless. The onus is on the governments of these countries to reform and develop an environment that empowers citizens and nurtures wealth creation.
At the same time we cannot overlook the skewed state of capitalism as it exists today. People should be free to accumulate and earn as much as they can however is there such thing as enough? If we see capital as a means of well being then I think so.
We have those with absolutely enough and those with absolutely not enough.
I define absolutely enough as owning assets exceeding 100 times the per capita GDP of one of the wealthiest countries in the world, let’s choose America. By this definition an individual would own assets of around $4.85 million, positioning them comfortably in the top percentile of the world’s highest net worth individuals.
I define absolutely not enough as having income of less than $800 a year. A state of existence where the decisions to feed, educate and shelter your family become zero sum. It’s being a member of the almost 2.5 billion humans who live on less than around $2 a day, those who cannot afford the universal values laid down in the declaration of Human rights.
So to answer my earlier question, who benefits more from an increase of wealth? It is those individuals, hugging the low end of the pareto distribution, with absolutely not enough.
More qualitatively though, and perhaps more importantly, wealth can be best described as the ability to spend one’s days unfettered by the issue of money. To spend the present not consumed with thoughts about cash flow in the future.
This is the goal we must aim for.
How do we get more people to this stage of wealth?
Providing money is not the whole answer, Providing opportunity is. Namely the opportunities available to those in the west. Opportunities concealed among strong educational, public, financial and legal institutions. And importantly, opportunities at financial education. As highlighted in Portfolios of the poor , “If you’re poor, managing your money well is absolutely central to your life—perhaps more so than for any other group.”
An interest in macro economic issues, and a realisation of the power of finance accumulated in me taking the CFA exam in 2011. Written on a whiteboard in my room, above my study desk was a quote from The ascent of money. It read: “The rewards for ‘getting it’ have never been so immense. And the penalties for financial ignorance have never been so stiff.” I’m determined to get ‘it’, get the rewards and help give others the opportunity to ‘get it’. Unlike race, or height, or background, wealth is fluid, changeable, fleeting. Attainable. It’s the most equalizing force on the planet.
To paraphrase William Gibson, the wealth is here, it’s just not evenly distributed yet.