I was browsing a vintage market today and bought a few items, which prompted me to examine the meaning of “worth”. We say an item is “worth” something, but this is just an arbitrary value ascribed to an object based on the value of other similar objects. For art and homes, the item is worth the highest amount someone is willing to pay. The same goes for stocks. Sure, there may be price guidelines that the stock should trade within based on the company financials, but these guidelines are the result of someone’s formula and historic precedent. There is no true value.

True Value in Finance

But, on the other hand, imagine if there was a “true” value for everything. We would suddenly have within our hands a valuable tool for understanding aggregate predictions about the future. A stock trading at a value differing from it’s true value would indicate that the market collectively felt bullish or bearish (bullish = you think price/value will increase in future, bearish = you think it'll decrease) towards this company or industry or simply the economy.

I imagine that the degree to which the market price differed from the true price would indicate the strength with which the bull/bear convictions are held. I also imagine that this would be a logarithmic or exponential scale. A $1 deviation from a true price of $45, not a huge deal. However, a $5 deviation would indicate serious market sentiment.

This is *kind of* how the market works now. Money managers and baby bankers make a career out of creating valuations based on historical precedents, consumer sentiment, and company financials. These words seem academic and reputable, but are code words for "educated guess". How could a tech company possibly have worth if they aren’t making any money or creating physical products? How can you possibly decide how to price an IPO?¹ I guess we shouldn't be surprised about this, because humanity is compelled to try and find the answers for everything, but how could there be a "right" answer regarding an index of aggregate human greed and emotion? People get advanced degrees and spend their lifetimes trying to make new formulas and theories about stocks and pricing. This is insane, because the best way to make money off the stock market is to put your money in and leave it alone. Literally no one achieves alpha (beating the market return %) for life, except maybe Warren Buffett.

Secret Sales

A disconnect arises here, because financiers portray themselves as monetary scientists while they are merely salespeople in the store Stocks n’ Stuff. Peter Thiel makes a really great point about this in his book Zero to One:

Like acting, sales works best when hidden. This explains why almost everyone whose job involves distribution—whether they’re in sales, marketing, or advertising—has a job title that has nothing to do with these things. People who sell advertising are called “account executives”. People who sell customers work in “business development”. People who sell companies are “investment bankers”. And people who sell themselves are called “politicians”. There’s a reason for these redescriptions: none of us wants to be reminded when we’re being sold.

On Wall Street, a new hire starts as an “analyst” wielding technical expertise, but his goal is to become a dealmaker… The most fundamental reason that even businesspeople underestimate the importance of sales is the systematic effort to hide it at every level of every field in a world secretly driven by it.” –pg. 129. Read this book!

All these salespeople who exist—disguised—at the top of the world have performed a very important and clever trick. Their salespeople ancestors have long, long ago changed the very definition of worth. Before money existed, a person was worth what they could create. The best hunters and craftsmen were worth the most, and the brainy, scrawny types weren’t good for much at all. There were no org charts to create or companies to merge or IPO fees to collect. Humans evolved, as we tend to do, and bartering advanced to the creation of money for exchange. Obviously gold is not actually “worth” anything. You can’t do stuff with it.² In the pre-money days, only useful items were worth something. You could pretty easily say “this deer is smaller than that deer, so it is worth less chickens in exchange”, or whatever they ate back then. Suddenly, there is money, and you can assign a value to things that don’t have an obvious use. For a while, this system still favored those who came up with the most items of value (food mainly), although the whole serfdom thing really put a damper on upward mobility. Pay close attention, because this is where the real trick occurred.

The Medicis and Shifting Human Value

In the 1400s the Medicis figured out something very clever. They (and some other European families) were merchant-bankers. Wealthy merchants began to extend credit to customers, and gradually the "banking" overshadowed the whole "merchant" thing.³ They leant from their own money and earned interest. Along the way, they also began to accept deposits. The Medicis were like, “Wow, we have all this money people aren’t using. What could we do with it?” So, they started using the money people had given to them to lend to others, make investments, arbitrage, etc. And *voila! Fractional-reserve banking and modern capitalism was born! It wasn't quite that simple in practice, because banking was still a pretty big sin then. It was called usury to charge interest on loans, and they were pretty dramatic about it.

A picture of usuerers in hell. This seems dramatic, but "A usurer did nothing to help his community, he forsook husbandry or merchandise and instead was a parasite, worse than a thief, since thieves only stole from the rich and out of necessity. He wished for others to lack that he might profit."-  Source

A picture of usuerers in hell. This seems dramatic, but "A usurer did nothing to help his community, he forsook husbandry or merchandise and instead was a parasite, worse than a thief, since thieves only stole from the rich and out of necessity. He wished for others to lack that he might profit."- Source

Hopefully you are aware that usury is literally the business model of banks today. They don’t just keep your money in the vault and twiddle their thumbs all day, collecting .25% fees a year or whatever. They use most of your money and the interest they make on giving you money to make more money on other things—loans, leveraged debt, mortgages, you know, the usual.

What the Medicis did was so revolutionary, because suddenly the people at the top of society weren’t those who provided real-time physical value. Investments and other opportunities became more common, and starting a company or research became easier as more capital accumulated thanks to the merchant-bankers. Humans began to view value and worth as forward looking. Those who would be able to provide the most worth (and wealth) for others and themselves in the future became the most highly valued. No longer was usury and parasitic behavior considered abhorrent, it became a way of life! If you entered an investment banking interview today with an animal you killed, they’d be like “Why is there a bleeding deer on my desk? That’s disgusting! You’ve ruined my sample pitchbooks!” But go into that interview and tell them “I have a strategy to harness Gen Z consumer desires into huge IPO deals within 10 years” and you’re hired! Suddenly, you’re making bank, and all for doing what a stoned business student or well-trained monkey could probably do (Excel)! But, because it’s all about the sales, the bank needs to hire a person who looks credible and has a pedigree.

Human Worth Today

The transference of worth from immediate needs (hunger) to future potential (the best app ever!) is so interesting, because today the people creating those immediate needs aren’t doing so hot. Farmers, ranchers, dairy people, mechanics, factory workers, and plumbers don’t (on average) get paid that well, despite providing the most obvious source of value in society. Somewhere along the way, we decided that Snapchat and Twitter are much more valuable than working toilets or high-quality foods. Unless these workers own their company or head-up a large scale organization (A big dairy farm, for example), they don’t make much.

This transference was necessary in order for us to continue evolving—we place a huge premium on new ideas—but could be problematic in the future. Everyone wants to go to college, because the message is sent loud and clear: “You will be most richly compensated if you can create value in the future through your ideas (and sell them)”. Think of the most promising careers today, and tell me this isn’t true: advertising, banking, law, engineering, tech, software development, data science, etc. It is so wonderful that these people will help us achieve a brighter future (theoretically). But why shouldn’t those who keep life going smoothly for the big thinkers be richly compensated as well? As the premium paid for intellectual ingenuity continues to grow, I fear that we will find ourselves short-staffed in the “people who provide practical services” department and/or in a two-class sort of world: those who serve, and those who are served.

How Apps Can Increase Disparities in Human Worth 

Apps like Uber, Favor, and all the convenient home cleaning and grocery delivery services really make life easier. It seems inevitable, however, that there will become a distinct separation between those who staff these services and the patrons thereof. Most well-off individuals enjoy help in the form of day-care, a babysitter, or cleaning service occasionally or regularly. This is the way it has been for thousands of years. Only now is it affordable for most people to take an Uber once in a while or have a maid come once every few months. Maybe this isn’t a separation to be worried about, and the so-called “sharing economy” will make formerly elite services more accessible to the masses. My feeling, however, is that we will increasingly see the “ideas people” using their wealth to outsource menial tasks at a rather low-wage rate. The ideas people enjoy more time to think of ideas and make money, while those providing physical services for the world see their worth continue to dwindle. A job as a maid or housekeeper used to be fairly highly prized—it really beat working the fields or tending after livestock. Our desire to complete menial tasks is decreasing, but for some reason so is the pay and prestige for those who do them.

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My hope is that people will realize they have created a new kind of indentured servitude under the guise of a well-designed app interface. People are sold the desire to outsource things like grocery shopping and other negligible pain points. Every time you add an item to the Amazon cart, there is human being running to get that and meet their strict time quota so they are not fired. When you hire a home cleaner from a service, you can forget they are not receiving benefits, good wages, or establishing relationships with their employers. It feels much easier and more beneficial for you, so you assume it's beneficial for those on the flip side. In many ways, a housekeeper will be better off in a long-standing relationship with a homeowner where they can gain a sense of belonging, appreciation, and purpose. With the shift to modern technologies, both the monetary and emotional worth of a physical contributor is diminished.

We are all far too prone to forgetting the ugly undersides to things with a pretty exterior. We know the Nike shoe on our foot was created in a sweatshop, but do you see this color scheme? Flawless! It’s really easy to get caught up in establishing your worth and justifying your privileged existence by saying you work harder and are smarter than others. This can be 100% true, but I believe that everyone should have the chance and ability to create their own sense of worth. That means a society in which people take pride in completing their job to the best of their abilities, and others recognize and applaud them for doing so. It is instrumental to our collective psyches that each person feels that what they do is important and valuable.

Our society’s values are deeply misaligned if we consider a few misogynistic college kids who created a photo-sharing app to be worth much more than hard-working individuals who truly run our society. No transfer of money is required to recognize others’ worth. You don’t have to redesign the tax brackets or even go out of your way, though doing all these things could be positive. All it takes is looking at everyone as your equal. The garbage collection man isn’t someone to look away from as you are too busy on a conference call or typing an email. Acknowledgement, a smile, a nod, is all takes to make a human connection. No one should have to feel like they are lesser than you for not doing as prestigious a job. It makes us feel good to be superior, but you may just find it makes you feel even better to make others feel worthy. After all, somethings' worth is simply the value you assign to it. 

The Gist:

Human and material worth used to be determined by practicality. With the introduction of banking and capitalism, a premium was placed upon potential future worth, with the result of "thinkers" and "ideas people" having the most worth. Today, the individuals who contribute present, physical value (farmers, maintenance people, maids) have the least worth, but it doesn't have to be this way. As humans now invent the amount something is worth, we have the capability to do the same for our fellow humans. 

¹Where a company enters the stock market and all the founders cash out $$$$

²Besides make jewelry, which is pretty important, but I digress.

³More on the Medicis: "Banking and trade went together. Italian merchants might, for example, lend to English sheep farmers or wool merchants, in return for lower prices. This was also one way for banks to circumvent the church's ban on the charging of interest. Another was to use foreign currency: the bank could lend, or accept a bill of exchange, in one currency and collect its debt in another, building a hidden rate of interest into the exchange rate." - The Economist

⁴If our political climate and though process remains the same.

If the homeowner is nice, which we will hope they are.