Let's Talk About Money
By Yaoyao Shi
We encounter money every day, but we don’t talk about it that often. To me, money means independence and options. Money enables me to do things that I want or feel passionate about, like traveling, great dining, shows, and more. Money enables me to see the world and have a greater vision of knowing what is out there. In short, money creates opportunities.
In the long term, money will be necessary to support my family, and beyond that, money can be used to make positive changes in the world. It can be used to support initiatives to invest in startups which bring positive changes, help NGOs grow, and make meaningful donations. Money or capital gives us power to contribute positive changes to the world.
In theory, Adam Smith’s “invisible hand” idea argues that an ultimate free market which is led by people’s selfishness is able to distribute wealth and have positive spillovers. This idea suggests that if businesses keep innovating and growing even without the intentions to bring a positive impact to the society, there should be positive externalities which lead to overall social progress. For the past ten years, we indeed have seen technological progress promoting overall economic growth.
Today is a little different, because in addition to businesses unintentionally creating positive externalities, entrepreneurs and venture capitalists also try to achieve social good on purpose. For example, Uber connects people who drive and deliver with riders, consumers, and restaurants. The success of Uber was hugely dependent on investments by venture capitalists. It was capital which made it happen and made different parties in the society benefit from it. Aristotle once said, “The life of money-making is one undertaken under compulsion. And wealth is evidently not the good we are seeking for it is merely useful and for the sake of something else.” If money is not the ultimate goal, it should be understood as a path to pursue the ultimate good—human flourishing. It seems like money really has contributed to the success of many businesses which aim to create social good. Is this really the case?
We would assume that the overall social good should greatly improve; unfortunately, the overall social good in the U.S. is suffering despite the growing capital wealth. Productivity has been going up, but the wages of half of Americans has been nearly stagnant since the 1970s. Specifically, middle-class wages have been stagnant that the hourly wage has only been up 6% since 1979. Low-wage workers’ wages have been in fact down 5%, while those with very high wages saw a 41% increase. As technological progress proceeded, the income inequality has become way worse. Therefore, we should ask if the model of the free market that Adam Smith fathered is a good path to societal good and human flourishing.
Today, we are in an age of political polarization, loss of trust in authority, and extreme inequality, not just in the United States but all over the world. We desire quick and easy solutions to the extreme inequality, which is why we see growing popularity of more entrepreneurs and venture capitalists starting and investing in businesses to promote the social good. They are “thought leaders” who claim their intention is to achieve an ultimate win-win situation for the businesses to make profits and also every common person to benefit from the innovation. Their ideas and speeches have been popularly accepted because they are hopeful, feasible, and quick. This seems to make sense in the short run on a surface level, but we have seen that the inequality has not been improved but in fact worsened, especially for the middle class and the lower class. The problem is that “thought leaders” today only focus on quick hopeful solutions rather than systematic changes.
Different from “thought leaders,” there is another declining group of “public intellectuals” who actually pursue the truth and the root causes. What are the root causes? Low-wage people cannot cope with technological disruptions because of the lack of education and training; the ultra-wealthy do not pay enough taxes to give back. “Public intellectuals” have been trying to tackle those problems but have encountered setbacks. At the same time, “thought leaders” tend to avoid those because systematic changes will hurt them and there will no longer be a win for themselves.
In short, I do believe capital can create positive social changes in the short run, but we need more “public intellectuals” who look to heal the roots. Only with systematic changes to education, fiscal policies, and welfare, we could see a true societal progress over the long run. How we could approach systematic changes in an age today is indeed a question for our generation.
