11/7/2022: Affluence Without Abundance?

It's time to contemplate Keynes's words of wisdom 90+ years ago.

The past couple of weeks have been rough for many of my former Facebook co-workers. A lot of them still hold a significant portion of their wealth in META 0.00 . Some people even borrowed against it and suffered significant financial loss that would be hard to recover. I diversified a significant portion of my FB 0.00 holdings right after IPO as mentioned in the previous post. I sold the remaining over the years and divested completely earlier this year. I feel lucky I don’t have to go through the emotional roller coaster when META 0.00 stock tanked in the past few months. I tried hard to understand why people take so many risks. I believe some of them don’t realize there're risks but others recognize the risks but still take them because it’s part of the striving mentality and growth mindset that makes Silicon Valley a leader of technological progress and new inventions. At the same time, this culture of growth can become a corrosive force that turns people into greedy money chasers.

Growth means there’s not enough and we need more. From the financial perspective, this mindset shouldn’t apply to people who have accumulated enough to diversify and become financially independent. But apparently, many people took risks of money they need in order to have more money they don’t need. It’s mind boggling. On the other hand, if you look around Silicon Valley, you won’t be surprised why this excessive risk taking is happening. People who are worth 8-figures want to get to $100M+ and once they get there, they want to become billionaires. This behavior is usually disguised as future making or Warren Buffett style concentrated investing. But it’s more often a very unhealthy addiction to money that is oddly celebrated in our culture.

In his seminal essay “Economic Possibilities of Our Grandchildren“ published in 1930, John Maynard Keynes predicted that in 2030, our economy would compound so much due to technological improvements that people only need to work about 15 hours a week. He predicted that our economy would grow 4-8X in 100 years. According to Statistica, the real GDP for America grew 17.6X from 1930-2021 while the population grew 2.7X during the same period. Real GDP per capita hence grew 6.7X. Keynes was right about the economic progress but people are definitely not working 15 hours a week. He presciently predicted that while *the economic problem* might be solved, mankind will be deprived of its traditional purpose of solving it and will have difficulty adjusting to the new realities. What Keynes said is quite apt to our current environment where many affluent people couldn’t deal with losing the traditional purpose of solving *the economic problem” and blindly chase more money. The whole essay is amazing to read but I will just quote the following:

Thus for the first time since his creation man will be faced with his real, his permanent problem-how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well.

The strenuous purposeful money-makers may carry all of us along with them into the lap of economic abundance. But it will be those peoples, who can keep alive, and cultivate into a fuller perfection, the art of life itself and do not sell themselves for the means of life, who will be able to enjoy the abundance when it comes.

It is time for us to contemplate these words of wisdom from Keynes. Money is the means to the end, not the end itself. We should strive to enjoy the abundance to the fullest to elevate humanity when personal circumstances allow, instead of living in affluence without abundance by chasing growth at all costs.