Welcome to all of the beautiful new good young moneyers who have joined us since last Wednesday. We’re building a values movement.
Putting prices on things can change how we value them.
Take hobbies for example - things we love doing. Hobbies are an end in themselves. They are valuable for their own sake, for the joy of experience. We’ve all heard the adage; “find something you love to do, and you’ll never work a day in your life.”
If we love our hobbies, and believe in this advice, then it follows that we should try to find a way to make our hobbies into our career.
In doing so, our hobbies become a means to an end. The end being the achievement of external goals, such as wealth, status, or freedom. Monetised hobbies are no longer valuable for their own sake, they are valuable for the income they produce. The phenomenon is described by philosopher and Harvard professor Michael Sandel, in The Moral Limits of Markets as the tendency for market values to crowd out non-market ones:
“...Markets don’t only allocate goods; they express and promote certain attitudes toward the goods being exchanged... When we decide that certain goods may be bought and sold, we decide, at least implicitly, that it is appropriate to treat them as commodities, as instruments of profit and use.”
Market values govern much of our lives. We’ll call this mode of thinking Market Life. Market Life affects the way we think, and the decisions we make. In many ways, this makes sense - we live in a world organised around the existence of markets. But Market Life can degrade the intrinsic value of things - hobbies, but also civic participation, charitable giving, nature, social movements.
Consider savings. Simplified economic theory goes that saving is good for the economy, because a bank can use your deposits to create new credit to lend out to businesses, who will then invest in productive purposes which add value to GDP (economic growth). But too much saving is bad because then no one is spending money at all the businesses.
Savings are also good for you personally, because of the benefits of having a buffer in case of financial distress. But too much saving is bad because inflation always delivers you a negative return on your cash. As Billionaire hedge fund manager Ray Dalio says, “cash is trash.”
One generally accepted principle is to have enough savings to cover a few months of expenses. But most people don’t. Almost one third of Australians don’t have enough savings to cover a month’s worth of expenses, according to comparison website Finder’s research. This problem particularly affects young people - who are often in insecure (read: casualised) work, earn lower wages and have to pay the same rents as everyone else for an average residence.
To solve this ‘problem’ - IE. a lack of young people with savings - a whole host of startups work to ‘incentivise’ personal savings through gamification and sweepstakes. Making the ‘boring’ world of personal finance attractive to the youth and all that.
For every day that you check your budget in the personal finance app Mint, you get extra entries in a 10K-25K giveaway. Prize-linked savings accounts like Yotta or Save to Win, enter you into a sweepstakes for meeting a weekly savings goal.
The aim here is to encourage healthy financial habits. Let’s put aside the inherent contradiction in encouraging healthy financial habits via a lottery, and consider the values that cash incentives promote in youth who are struggling financially.
Inherent in the whole idea of gamification and incentives is this assumption that financial wellness (or lack thereof) is a personal problem. If you don’t have savings, it’s because you aren't disciplined enough, you’re not savvy enough, you’re not hustling hard enough - but if we turn it all into a game, we can trick your brain into saving.
It’s a rather libertarian ideal. Discipline and education certainly helps us achieve financial goals. These are useful tools for life and should be promoted. But this logic doesn’t apply across the board - it assumes we all start from similar positions in society.
Poverty and over-indebtedness are more often societal problems, say, from lack of adequate social security, or from Australia’s segregated education system (and unfair funding), than from the work of individual’s making poor financial decisions. Not only that, experiencing inequality changes your brain, inducing stress that reduces your impulse control and capacity to make long term decisions. Such as, say, your ability to make sound, long-term financial decisions, or, save!
It is also assumes that we all value financial literacy in the same way - that we all want the same things. At the 2021 Social Enterprise World Forum today, Koorie business woman Jirra Lulla Harvey spoke about the huge push in financial literacy programs for First Nations peoples as training in the wrong values systems; “It’s not that we’re not financially literate, it’s that our values are different.”
In our market world, young Australians are inheriting a society where real wages have increased by less than 30% since 2000, while real house prices have risen by more than 5x that amount, an 150% increase.
Sure, it’s exciting to save $25 and potentially win $250K. There can be very real benefits to these market-based solutions for the individuals who make use of them. But in the process, we can’t ignore the systems and structures that create these problems in the first place. And that’s exactly what market thinking does - it displaces other modes of thinking. It centres market problems and market solutions.
Public life is particularly susceptible to corrosive effects of market thinking. Would you accept a payment of $300 to get vaccinated against COVID-19? How does this change your feelings of your civic duty? The short-term effect of things like payments for vaccinations is achieving the outcomes we want. But what about the long-term? What values are we promoting?
The reality TV show ‘The Activist’ is perhaps peak Market Life ideology. Social movements are systematically underfunded in part because our financial structures are not set up to reward benefits that flow to the public. As a result, social justice initiatives are often forced to compete for scarce resources among a relatively small amount of funds relative to the world’s total wealth. Philanthropic Foundations, for example, typically distribute 5% of their resources per year to the causes they support. The Activist takes this reality and turns it into a prize show for entertainment, where social justice influencers compete for a small cash prize relative to their funding needs, in a series of challenges. The aim of the show was to ‘raise awareness’ of each of the respective causes. But we probably don’t need to raise more awareness.
We do, however, need more funding for solutions to social problems. The UN estimates the annual funding gap for the Sustainable Development goals is between US$2-4 trillion. Just one trillion would stretch end to end from the earth almost all the way to the sun. Then we repeat that 2-4 more times and we have the funding gap for our world’s social problems. Facing enormous backlash, the show has pivoted to a documentary format.
In Market Life, we have to actively choose which non-market values are worth caring about. And fight to keep them. Whether that’s hobbies for its own sake, civic participation, or building a just and equitable world.
Good Young Money will be back next Thursday. In the meantime, if you liked today’s piece why not tell a friend?