Enron Corporation was an American energy juggernaut that employed over 29,000 people. With a revenue gain of astounding 750%, rising from $13.3 billion in 1996 to $100.7 billion in 2000, Enron was the apple of the eye of shareholders. Enron’s too good to be true progress even earned it many accolades, like Fortune’s “America's Most Innovative Company” for 6 consecutive years. But it was indeed too good to be true.
In 2001, it all came down as one of the biggest scandals in history. Before Enron declared bankruptcy, the share price already crashed from a high of $90.75 / share in mid-2000 to below $1 / share by the end of 2001. Billions of dollars of shareholder money and employee pensions were wiped off overnight. Later investigations revealed that Enron had been reporting false earnings for years. In the end, the greed of a select few had left thousands of lives devastated.
But this shouldn’t come off as a surprise. Money has been considered evil for ages, and the Enron story seems to be just one more reason to hate it. Or is it?
Not the Baby!
There’s something common between the Marshmallow Experiment, the fall of the USSR, and environmental destruction: short-term focus. To consider the long-term consequences of our immediate actions has always been a challenge for humanity, and history is full of such examples. But often money is considered the culprit.
The truth is that money is neither good nor bad. Its nature is defined by the person who holds it, just like a knife in the hands of a chef vs in the hands of a monkey. No one can deny the financial inequality problem and the greed that worsens it, but to despise money in this mess is to throw the baby out with the bathwater.
In fact, money can be used to do unimaginable good if used well, and this is our focus here. But for clarity’s sake, let’s get on the same page with two concepts first.
Wealth: It is the value of all the things you possess. Wealth can have many forms, like time wealth, financial wealth, intellectual wealth, or physical wealth. For this mission, we will stick to financial wealth, which is the collective value of all the assets you own, including car, land, shares, gadgets, etc.
Money: Money is a medium to exchange wealth. It can be a paper, gold, Dollar, Bitcoin, etc. as long as the transaction participants agree on the value it represents,
Now let’s see how these ideas come into play.
The Invisible Hand
We often hear old people telling us how life was more difficult in their days. But you know what was really difficult? Living 100,000 years ago! Remember, this was around 90,000 years before agriculture was invented. The smallest sickness could be fatal, hunting was necessary for nutrition, and there was no guarantee of seeing the next morning. But around the same time, we came up with the idea of trade.
Trade was a game-changer. It allowed us to exchange what we had for something that the other person had. Someone good at making spears could exchange their products with another person who made good pots and food. Such exchange of goods & services in exchange for other person’s goods & services is known as the barter system, and it meant that we did not need to do everything by ourselves anymore and freed up our time.
Eventually, with more time on hand, we came with a plethora of things, like the script, agriculture, and civilization. Finally, around 5000-7000 years ago, we upgraded trade itself with the invention of money, something that did not decay, was easy to carry, and was accepted by everyone, unlike the case earlier with the barter system. Fast forward to the last 250 years, less than 0.1% of human history, and we live a life beyond imagination for our ancestors.
Industrial Revolution popularized companies, where multiple people came together to create goods and services and traded them for money. As more companies started, buyers got more options to choose from. Whoever served at the least price won the buyers’ money, which fueled competition among sellers. So, companies started innovating faster to offer better products at lower prices. And this brings us to the present, where we can buy a smartphone for $300. But if you had to make one from scratch, could you have done it? Chances are slim, but even if you succeeded, then procuring the components itself will cost more than $3,000.
Thus, trading with money in a competitive market has been the invisible hand shaping our progress all this while.
Selfish, Yet Altruist
Here’s the point: Whether you want to help others or gather sustainable wealth, you need to be selfish.
Hear us out. We agree that selfishness can cause disasters like Enron and global warming, but that is because some people think of collecting wealth only with a short-term vision. But when we adopt a long-term lens, we can see how intricately all the lives and natural resources are interlinked.
A long-term vision brings out the truth: to help others is to help ourselves. Nature has always taught this lesson in how giving nectar to a bee, a flower also ensures the growth of its species. By giving their acorns to squirrels, oak trees get to spread in the whole forest. And similarly, by providing real value to the buyers, a company is bound to grow. This method naturally achieves the organic growth that every management guru preaches, and word-of-mouth marketing comes as a by-product. This is how a company becomes a beloved brand. This is the way to sustainable wealth.
What inspires a doctor to pay a huge fee and toil for years earning their degree? Maybe money, maybe a passion to help others. Most probably it’s both. The same applies to every endeavor. Entrepreneurs willing to sacrifice years after an idea without a guarantee of success do so because they care about the cause they are serving and there is a hope that it will earn them enough money to live well later. All these people are being selfish: they are chasing what they love (money, dream, idea, etc.).
Look at this not to justify the evils committed for money, but to realize that money is neutral. It is in our hands how we use it. When incentivized properly, humanity has shown that great benefits can be achieved by money. If there is a demand for something, like a cure for a disease or a social problem, incentivizing it ensures that the solution will soon be found. Yes, it can seem very selfish of the inventor, but the outcome benefits all. This is selfish altruism.
And even though there is a huge scope for improvement, but if we drop our negativity bias for a moment, we can appreciate the bright side better: today, diseases like malaria and cancer are curable, we can connect with our distant loved ones on video calls, global life expectancy has increased, an average person can afford electricity when even candle was a privilege centuries ago, and whole world’s information is at our fingertips with the internet. In fact, you are probably reading this from the comfort of your home with a bed, fan, TV, water, and AC around.
When Anita Roddick was fed up with companies hurting local communities they procured raw materials from, she created The Body Shop. When Elon Musk saw the steep price of space flights as a hurdle to his dream of making humanity a multi-planetary species, he created SpaceX. Masaru Ibuka started Sony to allow engineers and scientists to have fun inventing new things. All these people selfishly solved a problem that annoyed them. And so should you!
Selfishness is in our DNA to maximize survival. Therefore, it is not by resisting it, but by leveraging it wisely that we can ensure everyone’s benefit.