Editor's note: Yesterday, Casey Research chairman Doug Casey explained why robbing a bank is a less serious crime than stealing $5 from a candy store.
In today's essay – the second half of a terrific 2012 interview with senior editor Louis James that was eventually included in Doug's book, Right on the Money – he discusses the positive and negative effects money has on society...
Doug Casey – The Morality of Money, Part II
Doug Casey: Making money honestly means creating something other people, not you, value. The more money I want, the more I have to think about what other people want and find better, faster, cheaper ways of delivering it to them. The reason someone is poor – and, yes, I know all the excuses for poverty – is that the poor do not produce more than they consume. Or if they do, they don't save the surplus.
Louis James: The productive make things other people want: Adam Smith's invisible hand.
Doug: Exactly. Selfishness, in the form of the profit motive, guides people to serve the needs of others far more reliably, effectively, and efficiently than any amount of haranguing from priests, poets, or politicians. They tend to be profoundly anti-human, actually.
Louis: People say money makes the world go around, and they are right. Or, as I tell my students, there are two basic ways to motivate and coordinate human behavior on a large scale: coercion and persuasion. Government is the human institution that is based on coercion. The market is the one based on persuasion. Individuals can sometimes persuade others to do things for love, charity, or other reasons, but to coordinate voluntary cooperation society-wide, you need the price system of a profit-driven market economy. That's how money makes the world go around.
Doug: And that's why it doesn't matter how smart or well-intended politicians may be. Political solutions are always detrimental to society over the long run, because they are based in coercion.
If governments lacked the power to compel obedience, they would cease to be governments. No matter how liberal, there's always a point at which it comes down to force – especially if anyone tries to opt out and live by their own rules. Even if people try that in the most peaceful and harmonious way with regard to their neighbors, the state cannot allow separatists to secede. The moment it grants that right, every different religious, political, social, or even artistic group might move to form its own enclave, and the state disintegrates. I'd say that's wonderful – for everybody but the parasites who rely on the state – which is why serious secession movements almost always become violent.
I'm actually mystified at why most people not only just tolerate the state, but seem to love it. They're enthusiastic about it. Sometimes that makes me pessimistic about the future.
Louis: So you're saying that money is a positive moral good in society because the pursuit of it motivates the creation of value, because it's the bridge between selfishness and social good, and because it's the basis for voluntary cooperation, rather than coerced interaction. Anything else?
Doug: Yes, but first, let me say one more thing about the issue of selfishness – the virtue of selfishness – and the vice of altruism. Ayn Rand might never forgive me for saying this, but if you take the two concepts – ethical self-interest and concern for others – to their logical conclusions, they actually are the same. It's in your selfish best interest to provide the maximum amount of value to the maximum number of people – that's how Apple became the giant company it is. Conversely, it is not altruistic to help other people. I want all the people around me to be strong and successful. It makes life better and easier for me if they're all doing well. So it's selfish, not altruistic, when I help them.
To weaken others, to degrade them by making them dependent upon generosity, as we discussed in our conversation on charity, is not doing those people any good. If you really care about others, the best thing you can do for them is to push for totally freeing all markets. That makes it both necessary and rewarding for them to learn valuable skills and to become creators of value, and not burdens on society. It's a win-win all around.
Louis: That'll bend some people's minds. So, what was the other thing?
Doug: The accumulation of wealth is in and of itself an important social as well as a personal good.
The good to individuals of accumulating wealth is obvious, but the social good often goes unrecognized. Put simply, progress requires capital. Major new undertakings – from hydropower dams to spaceships to new medical devices and treatments – require huge amounts of capital. If you're not willing to extract that capital from the population via the coercion of taxes (i.e., steal it), you need wealth to accumulate in private hands to pay for these things.
In other words, if the world is going to improve, we need huge pools of capital, intelligently invested. We need as many obscenely rich people as possible.
Louis: Right then. So, money is all good – nothing bad about it at all?
Doug: Unfortunately, many of the rich people in the world today didn't get their money by real production. They got it by using political connections and slopping at the trough of the state. That's bad. When I look at how some people have gotten their money – Clinton, Pelosi, and all the politically connected bankers and brokers, just for a start – I can understand why the poor want to eat the rich.
But money itself isn't the problem. Money is just a store of value and a means of exchange. What is bad about that? Gold happens to be the best form of money the market has ever produced: It's convenient, consistent, durable, divisible, has intrinsic value (it's the second-most reflective and conductive metal, the most nonreactive, the most ductile, and the most malleable of all metals), and can't be created out of thin air. Those are gold's attributes.
People attribute all sorts of other silly things to gold, and poetic critics talk about the evils of the lust for gold. But it's not the gold itself that's evil – it's the psychological aberrations and weaknesses of unethical people that are the problem. The critics are fixating on what is merely a tool, rather than the ethical merits or failures of the people who use the tool and are responsible for the consequences of their actions.
Louis: Sort of like the people who repeat foolish slogans like "guns kill," as though guns sprout little feet when no one is looking and run around shooting people all by themselves.
Doug: Exactly. They're the same personality type – busybodies who want to enforce their opinions on everyone else. They're dangerous and despicable. Yet they somehow posture as if they had the high moral ground.
Louis: OK, so even if you cared only for money, that could be seen as a good thing. But you do care for more – like what?
Doug: Well, money is a tool – the means to achieve various goals. For me, those goals include fine art, wine, cars, homes, horses, cigars, and many other physical things. But it also gives me the ability to do things I enjoy or value, like spend time with friends, go to the gym, lie in the sun, read books, and do pretty much what I want when I want. Let's just call it as philosophers do: "the good life." It's why my partners and I built La Estancia de Cafayate.
But I don't take money too seriously. It's just something you have. It's much less important than what you do, and trivial in comparison to what you are. I could be happy being a hobo. As I said on that in the conversation on fresh starts, there have been times when I felt my life was just as good and I was just as happy without much money at all. That said, you can't be too rich or too thin.
Louis: Very good. Investment implications?
Doug: This may all seem rather philosophical, but it's actually extremely important to investors. What is the purpose of investing or speculating? To make money. How can anyone hope to do that well if they feel that there is something immoral or distasteful about making money?
Someone who pinches his or her nose and tries anyway because making money is a necessary evil will never do as well as those who throw themselves into the fray with gusto and delight in doing something valuable – and doing it well.
Louis: The law of attraction.
Doug: Yes, but I don't view the law of attraction as a metaphysical force – rather as a psychological reality. If you have a negative attitude about something, you're unlikely to attract it, even if you try to talk yourself into thinking the opposite.
Louis: OK, but that's not a stock pick.
Doug: Sure. We're talking basics here. No stock picks today, just a PSA: If you think money is evil, don't bother trying to accumulate wealth. On the other hand, if you want to become wealthy, you'd better think long and hard about your attitudes about money, work through the thoughts above and those you can find in the rest of our conversations via the links we provide. Cultivate a positive attitude about money, which is right up there with language as one of the most valuable tools man has ever invented. Think about it, and give yourself permission to become rich. It's a good thing.
Editor's note: If you share Doug's belief that we're headed for an all-out currency crisis, be sure to claim a copy of his newest book, Going Global 2015. In it, you'll learn which currencies will survive the storm (page 29)... which U.S. bank will let you purchase foreign currencies (page 131)... the best place to open a foreign bank account (page 117)... and much, much more. Right now, you can get your copy for less than HALF the regular price. Click here to get started.