“a first principles thought on Money, Service, Government, Branding and Ethics”
When do you pay someone ? I do mostly when someone does something useful for me. Is this why money was created? I guess Yes.
Do you agree?
Let’s start with this presumption. Money you own is proportional to the amount of work you have done for others for which they have ‘thanked you’ by paying credits called money. So, money in your wallet is in some way, the number of ‘Thank Yous’ you earned! Great Job.
So, financial markets are a complex web of relationships between all individuals in terms of these ‘thank yous’. Thats the beauty of money system. The more useful work you do for someone, more money you will gather. But this is true for perfect markets but both of us know that most of the super rich actually don’t do anything!
Let’s rewind a bit and go back in history, Indian history for ease of imagination. 70 years back, mostly colonial administrators were the richest; 200 years before, Kings and satraps were the richest; 2000 years before, rent seeking dacoit tribes(protection rackets) were the richest!
How did they earn this wealth, by annexing it from you as extortion(tribes) then rent(civilised tribes), then crop shares(satraps and kings), then taxes(colonial administrators); we would come to the modern “welfare state” later!
So, it was pure power play, but came with limitations. The rent seeking tribes soon relaized they need to form armies to protect their rackets against competing tribes and even militant peasants who deny rent every now and then. This lead to warfare stage where multiple chiefs will fight with their armies for revenue rights of an area and survivor will get that! Problem partially solved, but internal peasant uprisings are still a headache because every now and then these people organize some revolt and dethrone the external chief and start their own racket. Some centuries pass in this conflict game and chiefs come with another solution, imitate the market! They start selling themselves as protectors of sovereignty of subjects’ lands and rent they collect is the service charge for that i.e these are the ‘thank you points’ in which market works. But hey, only chiefs will decide the amount of credits to take for protection though it’s negotiable upon weather and stability of state.
Cool, this has an additional benefit. The peasants view protection racket as useful and start supporting them making them the legitimate chief and the concept of Kingdom is born. These kings are different than dacoit chiefs as they are more considerate towards public issues and provide additional services like dispute resolution, judiciary, contingency support to justify the rents as ‘thank you points’. This sounds a reasonable business. The government now has two faces. One face can extort money with help of armed bandits while the other pretends to do something useful for people but mostly this servicing face is more of a face as they has very little to loose even if they don’t serve you well.
As the ostensible duties of state grows, so does the bureaucracy and size of staff and altogether a new model is born. The King collects thank you points from public, gives small portion to bureaucrats worth the service they do and keeps the max share. Of course he maintains the hierarchy and practises divide and rule so that this staff does not revolt for relatively meagre pay with respect to the King’s profit. The progression continues, people grow more educated and democracy feeling emerges to the envy of king. People realize his services are not worth the taxes he gets and series of movements lead to modern welfare state with the evolution still in progress.
Interestingly, Just like this kingdom, we have a lot of little kingdoms present in our economy. They evolve purely in economic space based upon same tendency of human beings to hack the thank you points called money and get maximum of them with minimum useful work. These are brands!
Brands start with value addition of standardising the product or service already available in peer to peer free market (uniformity of product everywhere is ensured in brand). In the mature stages, brands standardise a product to such an extent that new units in free market already make the same standards product and they have to pay for branch franchise as customer doesn’t know them and brands take profit share too. This is the point of inflection where the brand is getting Thank You points for actually not doing anything for customer. Doesn’t this seem against the basic principle of money we accepted in beginning, you should get it only for doing a useful work for others!
There can be a justification that brands or kings are getting paid for the historical services they provided while standardising the procedures and this is simply the recurring return on investment. But what they earned in that process by selling at scale had already compensated them. By now, if you really did something useful, you should have amassed enough to not want to be credited for doing nothing.
The ethical debate is from the point of inflection where you get ‘thank you points’ for not doing anything useful.
Wait, collective intelligence is not that stupid! We have evolved a solution for that too. Just as governments change after fixed tenure, there comes a board of directors with capable of rotation ownership. What also decides membership of board ? One parameter is the percentage of shares. It seems pretty reasonable that concept of going public in share markets evolved to mirror the democracy of political thought in economics. After going public, now public is the owner and public is getting served! To the people, for the people, by the people.
But evolution is still in progress. We have democratised ownership but anyone simply doesn’t have enough money to be the majority stakeholder. Mostly the founders still have largest stakes despite not in action anymore. They simply seem to get rewarded for historical success.
Reiterating, argument isn’t against the wealth of thank you points they amassed in past, they are justified. Ethical question is, should they keep getting new ‘Thank yous’ for doing nothing?
Well, easiest answer I see is, as long as you keep on thanking them 😉