Posts Tagged ‘Objectivism’

The Root of All Evil?

July 15, 2009

moneyI have been thinking about this post for quite some time. I recently re-read “Francisco’s Money Speech” from “Atlas Shrugged” by Ayn Rand. I have no idea why I had this neatly stapled printout laying around in my apartment, but I did. I read it, and it got me thinking. The money speech, if you aren’t familiar with it, it deals with our tension with money as a medium of exchange, the value of it, and the effect is has on people and events.

“So you think that money is the root of all evil?” said Francisco d’Anconia. “Have you ever asked what is the root of money? Money is a tool of exchange, which can’t exist unless there are goods produced and men able to produce them.” It amazes me how often we forget this simple truth. The natural human response to a lack of money is to be jealous of and blame people with money. Too often we jump to this response that’s driven by a “zero-sum” thinking about money and we focus on splitting up the pie into smaller pieces and taking each other’s pieces vs. increasing the pie. From a business perspective, it pays to grow a category and thus growing the brands within the category, more so than splitting up the category of the same size into more pieces or stealing share away from others, because brand-switchers will do just that: switch from brand A to brand B and back to brand A.

There’s nothing wrong with taking share away from competitors; all I am saying is that enduring long-term growth comes from continuously developing the category, as well as your brand. Whichever way you choose to grow sales, the only way to do so is by providing value continuously to your customers and consumers. Providing value sometimes takes upfront investment and delayed profits. And herein lies the problem: in our society that’s overly focused on short-term (especially as perpetuated by Wall Street), investing in the long-term is often unpopular. Focus on short-term, sometimes at the expense of creating real value, is what brought this economy (and subsequently the world economy) to its knees. Toxic mortgages were repackaged in a way that allowed to benefit in the short term and delay the discovery of the toxicity into the future. Short term and greed won out. Creating value and long term became unpopular. And now we are reaping the fruits of this behavior. I especially love this humorous primer on toxic assets.

When people and corporations act this way, profiting without creating value, they are building a house of cards. When they let greed rule them, with no regard for long-term benefit for customers, stakeholders and employees, money becomes “the root of all evil” and stops being a medium of exchange. When you start to exchange money for assets and products without value, the whole system will eventually crumble, and this is a guarantee. Turns out, it’s not money that’s the root of all evil – not the honest money anyway. It’s greed that’s the root of all evil.

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