The Power of Money …

Money, what is it? Why is it so powerful? Does it change us, our character and our personality?

Strange stuff, this money. Until 1931 sterling was valued on the gold standard. You could bring a pound note to the Bank of England and it would have to give you actual gold. Now your Pound is noughts and ones in a computer.

Do you have any money? Cash? Or do you just believe the screen in your online bank? Use your phone to pay the butcher, go online to pay for your fuel. Trust that the bank is treating you fairly. And since last month your money is worth less, due to inflation.

The practical nature of money is simple, I transfer it to you or you to me for a product or service. A transaction. Done. The value of the item or service is dependent on the market, impacted by supply and demand. We use money to establish the worth of my work, the cost or production, or, in the modern world, the brand.

Currencies are valued on the trade of the home country, in almost the same way, selling products and services. The value of the currency is set against the most stable and widely used currency, in today’s world, which is the dollar. In the 13th and 14th centuries, the ducat, the Venetial currency, was the dollar of its day, the coin that all others were valued against. Venice was the trading heart of the Western world. In the 17th Century, the Spanish accidentally developed inflation by bringing so much silver from the Americas that there was a surplus ad it lost its value due to a lack of demand. How much silver can one need?

But those are all the practical elements of this human creation.

The interesting impact of money is on the people who are able to get more than they need and begin to accrue it, leading to an endless need for more.

And we see the growth in greed.

Greed does not come from not having enough, it grows from having too much. It would seem that having enough to buy everything you thought you ever wanted is the trigger for a life devoted to getting even more.

Take a simple example. If you have £100 and a friend asks to borrow a tenner, you are quite likely to be generous, without much thought. You will get it back, easily, and if not, well, it’s only £10.

Multiply by ten, and the ask is for £100, from your stack of £1000. Mmm, maybe, sure, but can you pay me back by nest week?

Multiply by ten again and you are at £10,000 and being asked for £1000. Or £100,000 and you are asked for £10,000.

Where did you stop lending the money?

Yet each rise in the ask leaves you more comfortable. If I have £100,000 and lend £10,000 I am left with £90,000. When all I had was £10,000 I was happier to lend to my friend, but no longer. Suddenly there are a lot more elements involved. . Has the relationship with my pal changed? Is there now a hierarchy in our friendship, where before we were equals, money has interfered. Am I being greedy not lending it, as the amount rises?

More people are greedy now than when I was young.

Why?

Because there have been a number of changes in society.

More people are wealthy.

The rise in the standard of living is reflected across the population. Go back in history and you can discover that in 1840, 12% of the people of Manchester and 20% in Liverpool lived in cellars, packed two or three to a bed, damp, without heating, with a very short life expectancy. They started work at the age of eight and were in the factories for twelve to fourteen-hour days. The factory owners were part of the growing middle class, making fortunes, but already not prepared to pay their workers. Is it any wonder that Marx got a lot of interest.

Move to the 1950s, when I was born, and the UK was still riven with slums, smog, food shortages, and a standard of living where the middle class lived better but were still not accruing wealth. Houses were bought, and the number of cars grew from 1.5 million in 1948 to 10 million by 1960, bought by the middle classes to travel but also demonstrate their success. (I worked for Peugeot Talbot in the 1980s. The reason for there being so many models and specs of a particular car was because they were bought as fleets of 1000s in England, and the model designated your position in the company. A GE was not as good as a GX by an electric window or different headlight bulb, but to all of those travelling around on motorways, they signalled the status of the driver in his work,)

But as we saw economies grow, more people were able to put a bit aside, and then a bit more. They could afford a car, a bigger house, and a holiday in Spain. And have some left over.

And it is the bit left over that feeds the greed.

Meanwhile, in 1979 the goddess of the middle class was elected. Margaret Thatcher. Maggie was middle class herself, and she had seen her father earn money, but then as soon as he reached a certain level the government took more tax. Why? Because they needed it and he could afford it, but it was very annoying. Old man Thatcher was having to pay for the poor to go to school and get money for not working. The unions were the enemy, still wanting a proper wage for their day’s work, and having to fight for it. Her Dad was not alone.

As soon as people started to earn enough to put some away, they began resenting their contribution to society. Ironically the more they were able to support a better society, the less they wanted to. And Maggie then told them they were right, there was no such thing as society. We are all individuals, and we should look after ourselves, not the layabouts and those that have jobs that don’t pay well. That’s their own fault. (There is another blog coming about the education system, class hierarchies etc).

So she decided to reward the hard-working middle classes and gave them lots of opportunities to make their money grow into more money. Privatisation. The selling of shares in publicly owned corporations to those with spare money. The middle class. Cheaply. The shares became more valuable as soon as they were freely available on the market, and there was an instant profit for those that had bought.

Money for the telephone systems, trains, water pipes, gas pipes, and airlines, all of which had been paid for by the public purse, but were now owned by those that could afford to make money for nothing. Which is of course, what had annoyed the middle class about the working class in the first place.

Meanwhile, money was working at changing society. Houses becoming bigger and more expensive built in suburbia, and holidays in Spain were now affordable by the working class, so the middle-class head to other parts of the coast, or Portugal, Greece, and then America becomes a destination.

The car was no longer distinguished by the model of a UK manufacturer, it was the brand. German cars became must-haves, with a huge growth in the number of BMWs, Mercedes, and Audis. The UK car industry collapsed for a number of reasons, but included was the lack of brand value, the money that people will spend to show that they have the money to spend.

Owning stuff is no longer enough, you have to own stuff that is expensive. For no other reason than because it is expensive.

Brands arrive that no longer signify quality, they show how much the item costs. A beanie with a Prada label for £500 does nothing that a beanie from Tesco will do, except tell people how much you can afford to spend on a Prada beanie. Things are bought purely BECAUSE they are expensive. The key motivation for the accrual of wealth is now to have the wealth and for no other reason. The demonstration of that wealth becomes an end in itself. And keeping more and more becomes a gauge of success.

It is greed.

And it seems to have no end. Look at our society and all you can see is that everything is valued by how much more, not how much. Ronaldo is going to play a version of football in Saudi Arabia and will get paid $75 million a year. Why? Is he short of money? Or is it just to add more cars worth more than most houses. He certainly doesn’t seem to think his reputation is worth more than the dollars.

Business people, bankers, and financiers that have been successful and have enough to last them and their families for generations, spend huge sums to smart accountants to avoid paying taxes.It would make not a jot of difference to their lives to contribute. It would make a huge difference to our society’s health and well-being. But they want to tell their buddies, who will mostly be wealthy, how much they have in the bank, or how much their investments have made.

I have butted up against such people, in Portugal in the early 2000s. Friends of my wife from Dublin were very successful and sold a business, so they moved to Portugal for five years to avoid the Irish tax liability of making millions. They bought property and invested in making more from the money they saved from paying taxes. They are good people, but they changed. Their friends in Portugal were also saving money by avoiding their taxes. They chatted about what they were investing in, what shares they should buy, and what the next car would be, and I have to say, it became very boring after the sheen wore off. I looked at the guy who had sold an airline for £200 million and was envious, for a day or two. But then I realised he was one of the dullest people I had ever met. Consumed by greed and showing off his money.

So you see it all around now, Brands are appealing to people of all levels of income, who want to tell their friends that they can afford a Burbury belt for £400, or a pair of Chanel sunglasses for £395 (I’m old enough to remember when Polaroids were the pricey shades, for about a fiver.)

It was all possible, Inflation had disappeared, wages had gone up, disposable income had grown, and costs had gone down. Take the holiday, Ryanair sells tickets for £35, to destinations that were unavailable thirty years ago. The first flat-screen TV I saw cost £10,000. Now you can pick up a bigger one for £250. Mortgages were cheap, and the banks were happy to lend more than the house value on the premise that it would definitely go up, so people took the money and bought a beanie for £500.

Now we are seeing the impact of a greed-driven society. Underfunded health and education, but for the wealthy, all is well, because they can buy their way out. The very basics of a modern democracy are falling by the wayside, with a government that still favours greed over society. Bankers are being given the green light to take even more at the same time as nurses are leaving the NHS because they are unable to live on their income. And the greedy point at them and ask, “why can they not survive on £30,000?” when they cannot live on £300,000.

But maybe, just maybe, we are going to see a turning point.

Greed is no longer seen as good, available for all.

Real people in real jobs are seeing the divide, between those that Thatcher created, the bankers and finance people, who just know the right people to get a job, earning amounts of money that no one actually needs. Meanwhile, those that deliver real value in health, education, transport, energy, and a lot more are struggling to get by. They are being told to be happy with £35,000 when for years they were told to be greedy. Being greedy is no longer an option. Buying expensive brands is not cool. My daughter tells me that fashion is moving away from brands.

Greed is not good.

Wall Street, the movie had that as a mantra, but the satire was missed and many people took it at face value.

Society is good. Working together is good. Helping other people is good. Paying your taxes is good.