Friday, May 4, 2018

Money = Human Work

We often hear people say “money isn’t everything” or “it’s just money.” There are times when this is a healthy attitude to have, but more often it’s not the right way to think about money.

Money represents human work. With money you can get other people to do work for you, such as making houses, food, clothing, cars, and computers. If we change the familiar sayings to “human work isn’t everything” or “it’s just human work,” they don’t ring nearly as true.

Few of us would want to get by entirely on our own, living in the wild, finding our own food, and making our own clothes. We buy the work of others in just about every aspect of our existence.

There are those who make their lives worse by spending less than they should. But more often the person who says “money isn’t everything” works to get an income and gives too much of it away in foolish ways.

We shouldn’t focus on money to the point of worship. But we shouldn’t think that money is somehow separate from real life either. Human work matters, so money matters.

7 comments:

  1. hey just listened to your mostly money podcast interview great views on investing! ill be lurking here from now on

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    1. @King: I'll look forward to your comments on future posts!

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  2. I think that Money = Future Human Work.

    Let me explain.

    If I picked up a stick and made a carving (Human Work), and you came along and wanted it but had nothing to trade I would refuse. But if you grow potatoes I would be willing to accept a bag of potatoes in trade. If you won't have any potatoes available until next week you might write an I.O.U. which I accept. (Future Human Work)

    This theme can be expanded to include another party. If this person has produced something (Human Work) that I want, but I don't have any carvings at the moment, I would be able to trade your I.O.U. in exchange. If he knew you and trusted you he would accept it. You now owe him a bag of potatoes. (Future Human Work)

    Your I.O.U. represents your obligation to supply a bag of potatoes to the holder of that I.O.U.

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    1. @John: I think it's both past and future human work. If I buy something from you, I'm trading the work I did to earn the money in the past for the work you did in the past to create the thing I'm buying. You're trading your past work for some work you can have done in the future.

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    2. I'll have to disagree with you on the "past vs. future" point. I look at it as being a trade.

      Present transaction: Value traded for an I.O.U. (money). The I.O.U. is created when the transaction occurs. I think this is how you see money as representing past work.

      Future transaction: I.O.U. (money) traded for value. The I.O.U. is then destroyed and the transaction is complete. If I am holding money, it means that somebody owes me something of value now.

      I think this distinction becomes important when considering our modern money system where money is being created for future value without the benefit of present production. This is not entirely accurate. Money is created to match estimated future production plus a little bit. If it is controlled, as it is in The West, then there is no problem. Otherwise, Venezuela. Try equating the Venezuelan bolívar to past human work.

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