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Saturday, March 28, 2015

Apparent paradox of money and value

One of the more profound things that most people hear but maybe don't fully appreciate is the uselessness of money for things we value most! And I spent some time thinking about money where I concluded that it is an abstraction which allows us to enumerate value for a favor, and now I'd like to talk about its limits, in my opinion. So yes, I emphasize I'm expressing an opinion, where I'll claim that people do NOT pay for what they most value, and explain why, and I'll also talk about how I think you can become very wealthy, when I'm not! So lots of disclaimers up front. I may or may not justify various positions in this post.

One of the simplest things I say about money is, people will NOT pay you for things they value most.

The more something is seen as extremely important, and the more people who value it, the less likely any will under any circumstances pay for it, and in many cases they will refuse to pay anything at all.

To me that is one of the most fascinating things, ever. And it can trip you up! So if you produce something that's extremely valuable to most people they will refuse to pay for it.

I'll start with roads in the US. We do have toll roads, but most people don't think about paying for the roads on which they drive every day. They actually DO pay for them, but that's done through taxes, which many Americans hate. And I'm sure few if any Americans can tell you how much money is spent on keeping up roads of various kinds, where I include highways, even though they could not live their lives without them.

Next I'll bring up schools here in the US. Thankfully parents aren't forced to pay directly for their kids to go to school! Or many American kids might not go. There are parents who pay for their kids to go to private schools, which here means you pay, unlike in the UK I recently found out. But most people take it for granted that their kids can go to school without them paying someone directly. They DO pay through taxes though where most have no clue how much it costs.

You may say, but people DO pay for these things, even if not directly. So next like talk about friendship. Some people DO pay for friendship, but are usually wealthy people, and in general I think society expects you to feel sorry for them.

Next?

Facebook.

Notice that Facebook makes a point to inform you that you will never have to pay.

Just went there now to copy this quote: "It’s free and always will be."

I added the quote marks. Isn't that fascinating? And believe me, I find it odd that I am now admitting that I think people greatly value Facebook! What's wrong with them?

I call this refusal to pay for things MOST important to people an apparent paradox of money and value for good reason. That's because it makes sense! And I'm sure people reading through my various examples where I was very picky and could have put up many more feel very confident that they understand why people refuse to pay directly for these things.

And with some things some people DO have to pay directly, like education for children in certain countries, which I think is so sad. And I think that the fastest way for any poor country to greatly help its economy is to make education "free" for all its kids, and that is in quotes as you pay for it by taxation.

Oh yeah, taxes are those things where you're made to pay up by your government. And some people seriously fight those things! Wow.

Why do people get it wrong though about value and money?

I think many people believe wrongly that the way to make money is to find something many people greatly value, and sell it to them. But reality is that if you try they will hate you. So no one does it that way.

Try selling water to people dying of thirst, if you're evil enough that is. That's, do NOT do that.

Why does anyone get this wrong?

I think you can get it wrong if you don't understand that money is simply an abstract way to enumerate a favor, and people use it for things of less import to them.

Finding love? Not about money. Finding snacks? Of course!

There is a qualification here for pizza. Pizza is one of the great things that many people value for which they WILL pay. Thank God, life without pizza? Unimaginable. 

So money works great! And it can be very important for lots of things that are important, like food, but people are more willing to pay for food in countries where it's of least concern, and when it becomes an issue paying for it, then it's just given to people who desperately need it anyway.

To put it another way, I live in a country where lots of people are obese, and while people here in the US may worry quite a bit about putting food on the table, reality is they have lots of options if that becomes very difficult, so the number of people who starve to death here is probably about choice. That's a hard one, but I need to handle it as an obvious objection.

But if food were a major concern here in the US, then yes, more people would starve to death from lack of it.

So yes, in countries where people do starve to death, and food is of paramount importance, I'm saying you will have a different relation to it and money than here. For instance someone might be insulted if you tried to pay for a meal they offered you. And them offering you a meal can be a measure of great honor and great sacrifice which should be deeply appreciated.

But what about wealthy people? Don't they make their money by figuring out what's important to people and selling it to them?

Nope. Wealthy people who actually make their money in business do so by figuring out what's NOT important that enough people want that they will pay for it.

So for instance, Facebook cannot make money by connecting people as that's too important for them and they refuse to pay for it, so they have to find something LESS important to people for which they will pay, in some way or other.

It's the same problem for anyone trying to make money.

Figure out something NOT important to enough people who want it, and you will make money. If millions of people do NOT value something too highly then you can become a millionaire or higher by selling it to them. It's that simple.

Make something VERY important to MANY people and they will refuse to pay for it.

It may look like a paradox, but would you really buy love? If you could?

There's only one answer. No. 

(If you even have to think about that question, what's wrong with you?)


James Harris
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