Future wealth will be different

There’s a world of difference between material and mental worlds

The human race has reached a watershed, a tipping point, between the two where the mature benefits of the former seem to be peaking whilst the early benefits of the latter are rapidly taking hold

So how do we differentiate between them?

Material wealth = A mix of valuable tangible assets e.g. income, investments, capital assets or infrastructure which determine a standard of living:

• Such assets enable people to produce and afford a variety of goods and services
• The more people have of them, the better off they’re said to be – they’re material asset rich – and the better-off they are, the more they are respected, even revered
• However, increasing material wealth can become addictive – some people are insatiable – enough is never enough – they always want more, sometimes through sheer greed, more often through envy of what others have
• But their joy in attaining more material wealth becomes less and less with each extra pound, eventually being valued close to zero – so many look elsewhere for purpose and pleasure, often in vain, and end up depressed and/ or divorced
• Not so for the rest of us however
• Widespread productivity improvement has transformed the lives of at least 95% of the population of developed nations
• What were once luxuries for a few in one generation soon became necessities for the many in the next
• Walk down any street or into any club or pub, nowadays, and we all look and act the same – the super-rich can only differentiate themselves by the few outrageous luxuries only they can still afford and which most people are quite happy to do without

Mental wealth = A mix of valuable intangible assets which determine our quality of lives:

• Whilst material wealth is limited by the finite resources needed to produce goods and services, mental wealth is unlimited and has infinite potential
• Individually, mental wealth includes having a close family, good friends, several leisure/ hobby activities, and an impressive hinterland e.g. skills achievement, broad experience, specialist knowledge, creative imagination
• Society-wise, mental wealth embraces personal and corporate social responsibility – for example:
  • Altruistic and empathetic attitudes
  • Charity and voluntary work
  • Concern for workers, animal welfare, not aggressively avoiding taxes, environment protection
• The more mental wealth individuals have, the more content (if not happy) they tend to be with their lives – they lead richer lives – they’ve climbed their own defined ladders of achievement and done things they’re proud of
• And the more social responsibility that organisations display, the more customers prefer them to others which also enhances their bottom-lines and helps secure their future

The cost of obtaining material and mental wealth is also very different:

• If you and I have a good worth £1 or a £1 coin, and then exchange them, we each still have assets to the value of £1 – it’s a zero-sum exchange
• But if you and I each have a good idea, and then exchange them, we each end up with two good ideas – our wealth of knowledge has doubled, at little if any cost

So, given IT and the internet already make much of the world’s knowledge freely available to all with just a click or two, the scope to increase the mental wealth of all people in all nations is truly vast

But it is only in the last 25 years that this has become a realistic prospect

Back in the 18th century, the English philosopher Jeremy Bentham said: “The best society is the one where citizens are happiest – and the greatest happiness of the greatest number is the measure of right and wrong”

A wise insight but it needed many major productivity improvements, unimagined at the time, if such a society was to be realised:

• At first, people focused on satisfying the first rungs of their hierarchy of  personal needs i.e. hunger, thirst and sex – followed by defence and shelter
• Then organisations, large and small, were established which enabled many to satisfy their social and ego needs on top of providing them with an income
• Now, thanks to IT and the internet, not only can people satisfy more of their social and ego needs but also their fulfilment needs
• And the potential for a whole new lifestyle of leisure and pleasure is also opening up before them

Hence the watershed – consider how attitudes are changing towards wealth:

• Until only recently, superstars were leaders – kings and queens, popes and arch-bishops, all looking down on their flocks from resplendent palaces or cathedrals, festooned with crowns and grand clothes – 99% of people were ignorant peasants who needed to be led and told what to think and do – they held their leaders in awe and even bowed to them
• Nowadays, the myth of such elite has been punctured – deference towards them is mostly dead – education has enabled most people to think for themselves, run their own show and question the role and purpose of these past superstars

But, at this tipping point, people still admire hour-glass female bodies or six-packs, or supercars and beautiful boats

However, modern heroes are no longer those simply born in the right bed or idle inheritors of piles of money – they’re people who have climbed ladders and achieved something worthy in life through their talent, effort or kindness

Modern superstars now include:

• Microsoft founder and philanthropist Bill Gates, for using his wealth to help millions of poor people
• Saint Mother Teresa, for tending the sick in Calcutta
• Professor Stephen Hawking, for his contribution to our knowledge of the Universe despite being seriously ill for decades
• Olympic podium winners
• Top pop stars/ footballers/ opera singers

EXTRA – NATIONAL WEALTH:

National prosperity

• • National prosperity = GDP/ capita  but GDP = only one year’s output value
  • What of all previous years
  • Plus inheritance re stolen from empire/ slavery etc
• National income derived from:
  • Private sector profits/ corporation tax = max sales and effy/effv
  • Employee taxes = max # employed + quality/ wages paid
  • VAT = max sales = max output
  • Council Tax – for local services
  • Investments at home and abroad = max income
  • Borrowings
• National outgoings pay for services people want/ need:
  • Health, Social Services, Education, Defence, Police, Fire, def, law and order
  • Transport, Housing
  • Debt interest
• Wealth maybe now needs to be redefined, at least for developed nations:
  • Currently, wealth = tangible/ countable wealth = Sum of:
    • Tangible assets owned – property – beware such assets rising simply because of supply << demand, as with UK house prices
    • Value of goods bought/ sold/ exchanged
    • Net incomes
    • Value of essential services
    • Interest/ gains on investments/ shares/ bonds/ dividends/ savings

Questions:

• Why should total output in one year somehow equate to total wealth when latter accumulated over many years past, with more in prospect in future?
• Welfare = the health, happiness and fortunes of a person or group – the basic physical and material well-being of people in need?
• Why even try to measure national output/ income/ economic activity?
• Surely, as with any company, it’s gross and net profit that matters most i.e. the spare cash one has after covering basic needs to improve the quality of lives and invest in new/ more/ better things
• x
• x
• GDP is not = Economic output but merely spend during a period, more a proxy for public confidence

Conclusion: For most people, life is already richer than ever before – and the future is brighter still