Thread by @punk6529

1/ Wealth is a claim on other people's time

There are a lot of theories on what money is, on what wealth is.

Economists have written very long books on this. It is debt, it is the evolution of barter, it is an information system, etc, etc.

All of these are true in their way

2/ And if you are a serious Austrian or Keynesian economist, assume for the purposes of this thread that I have read and understood these theories.

Today I would like to go in a specific direction, not a macro or micro-economic direction, but a conceptual one.

3/ When I was a kid - maybe 10 years old - I would daydream how awesome it might be if one day everyone vanished and the world was mine.

The nature of the daydream was something like "I could drive all the sports cars" or "I could go jump in everyone's swimming pool"

(I was 10)

4/ I got a little older and the daydream got a bit more sophisticated.

Maybe not everyone would disappear, maybe it would be me and my girlfriend and also maybe my "boys" and also yeah probably my parents should be somewhere, but not at the pool party with my girlfriend.

5/ And then I got a little bit older and I realized this would get pretty boring actually.

Your friends are fun and cool but if you have to spend eternity with 10 people, what happens if you, umm, "drift apart"

And so I stopped this daydream.

6/ And then I got quite a bit older and thought about it again and realized

😱😱😱😱😱😱😱

This daydream wasn't a daydream but a complete nightmare because within days and weeks and months, without people, everything would collapse.

7/ Gas for the sports car, chemicals for the pool, but, more importantly, power plants that provide electricity for the fridge, farmers that grow tomatoes and raise hogs, the supply chains that bring you bananas and coffee, the dentists who fill your cavities - it is all people!

8/ Every single thing we use requires a vast endless global chain of people to get it to you.

Think for a second how many things needed to happen to get that Nachos flavor in your mouth.

For example, sunflower oil since it is in the news since Ukraine is a major producer

9/ It is obvious that you need farmers to grow the sunflowers and processing facilities to create the oil and trains and ships to get the sunflower oil to your country and trucks to get it to your grocery store and your grocery store to sell it to you

But that is only part of it

10/ Did the farmer use a tractor to plough the field? You bet they did.

So start the vast supply chain of components needed to build a John Deere tractor. including the equipment used in the factory that requires its own supply chain.

11/ Does your tractor use petroleum? Oh, ok, let's start the upstream, midstream and downstream oil and gas supply chain.

From Scots on rigs in the North Sea to French engineers in a refining plant to Greek shipowners with Filipino crews guiding the tanker to your country.

12/ And who built the ship? Who made the engine for the ship? Who built the GPS navigation chip in the ship? Who is running the GPS satellites to guide the ship? Who is planting chili peppers for the stew of the Indian engineer on the ship?

It is a never-ending chain.

13/ And that is just the sunflower oil. Now let's do it for the other ingredients.

And the factory that turns this into Nacho Flavor.

And the chemical engineers and the food science folks who run the factory.

And the universities that trained them.

14/ The next time you bite into a Dorito, give a word of thanks for the millions of people (yes, millions) who each played a small role across the planet to make it possible for you to have that much Nacho flavor for only $3.29.

15/ Sorry 6529, I am an organic fanatic, I would never eat that dirty Dorito.

Great! Then this applies even more so.

Organic food may or may not be more delicious or good for you but it is certainly less efficient to produce and needs more humans.

That is why it costs more!

16/ I too have marveled at the joys of the organic food at the Whole Foods on Houston Street in New York (and marveled at the size of my receipt).

But I also look at that as a luxury good of a vastly wealthy society with a global supply chain.

17/ The system that allows you to pick up grass-fed beef from Colorado and wild giant pink shrimp from Argentina and organic avocados from Mexico in winter in NYC is not some "back to nature" system, but a system that only a very industrialized globalized society can deliver.

18/ Oh, you are not going to do that? You are moving to Montana to run your own farm, eat only what is in season, produce it all yourself?
a) I salute you (if true)
b) It is, possibly, not true
c) not having to spend all our time farming is a major societal accomplishment

19/ We have cars and laptops and Caribbean resorts and airplanes and Netflix and Ethereum because we have freed up enough human brain cycles from food production to allow us to invent these things

This tweet is unironically true

https://twitter.com/MatthewPCrowley/status/621078253827002368?s=20&t=jlVPBMHRHvbX1zYa-7YDIA

20/ I hope I have convinced you that everything around you - the goods you buy, the services you enjoy, the procedures that keep you alive - depends on the labor of other people, all over the world, most of which you will never meet.

OK, so what does this mean?

21/ Well, there are many things that I do not want to cover today.

How price signals in a capitalist system coordinate these activities.

How globalization is a good thing (but still some resiliency is good).

Classic Adam Smith Econ 101

22/ What I want to come back to is simply this:

***Wealth is a claim on other people's time***

This might seem obvious but it is not how people think intuitively.

23/ The more normal way people think is "If I am rich, I can buy stuff"

That stuff might be a mansion, a sports car, caviar, fancy purses or a Rolex.

But as your dad said "sports cars don't grow on trees"

What you are actually buying is the labor needed to make the sportscar

24/ When I buy a bag of Doritos at the check-out counter I wonder what I am doing.

And what I think I am doing is sending (tiny) amounts of money to the Ukrainian farmer, French oil refiner, Texan chemical engineer to buy their recent labor that ultimately added up to a Dorito.

25/ "Wait, you really think like this?"

Yeah, basically.

I check into a hotel, I buy a taco, I order a cocktail, half the time my mind races through "how does this hotel run, what are the labor costs, how was it built, how long will it last?"

26/ And its rawest, the money I give ultimately translates into a successful business that translates into a salary for someone that translates into someone feeling excited (or obligated) to shower, get dressed and go to the SoHo Grand Hotel to mix a martini

27/ This is how capitalism works, the worst system except for all the others we have invented so far.

The spending you do or don't do makes certain activities viable or not viable so you get more of the viable ones and fewer of the non-viable ones.

But this is still abstract.

28/ Wealth is a claim on other people's time.

If you have $18, you can get Martini at the SoHo Grand and you are paying the bartender to mix it, the waiter to serve it, the manager to manage, the cleaning lady to clean, the farmer to make potatoes for the vodka and so on

29/ So from here start the interesting questions.

What is wealth?

Well, for many people it is the simple answer: the money in the bank account.

This is true, you can use the money to claim other people's time

30/ A more financially sophisticated person will say "but this applies to stocks, bonds, private equity investments and so on"

No, you can't buy a martini with your limited partner interests in KKR's latest fund directly, but there is a pathway to turning them into cash to do so

31/ OK, what about crypto? Sure, fungible tokens are like that too.

A small number of bars accept BTC, but you can turn BTC into USD and use it to buy a Grand Martini.

But online many people accept BTC directly - for example in exchange for ETH or Rare Pepes.

32/ But think broader. Let's say you the general manager of a factory. You are an employee, you don't own it, but you run it

Do you have wealth by this definition? Do you have claims on people's time?

I think you do. I think you are in a way wealthy in other people's time.

33/ What if you are exceptionally good looking, either as a man or as a woman, a famous actor or model?

Are you wealthy in other people's time? I think you are.

If Brad Pitt or Kimmy asked most people for a favor, most people would do it, even for free.

34/ What about the President of the United States?

Is the President wealthy in other people's time? Incredibly so!

The President can impact to greater and lesser degrees the time of 2.1M employees.

And, through the power of the office, billions of people around the world

35/ There is a reason that certain people are obssesed with the Presidency.

That reason is not the $400K salary.

Most people would say it is "power" I find this basically a useless construct.

What is more useful is "The President is wealthy in other people's time"

36/ I find this to be a unifying principle, it allows us to understand why Jeff Bezos and Joe Biden and Brad Pitt and the Eric Adams are all wealthy in the exact same way.

They can make claims on other people's time.

37/ Those claims are limited in different ways for different people.

Joe Biden cannot use the federal employees to build himself a yacht and is term-limited in his wealth.

But Jeff Bezos can't order 100,000 troops to potentially die invading a foreign country.

38/ Regardless, on July 13, 2022, both Joe & Jeff are very wealthy.

They have claims on the only thing that matters in society -- people's time.

Remember, "stuff" is a distraction, it is not real.

Thinking stuff is real is the error that 10 year old 6529 made.

39/ This also clarifies how you might feel differently about wealthy people.

Jerk kid of a billionaire blowing money on consumption goods - creates a feeling of revulsion in many. Why?

Well, because "should that jerk kid have a claim on so many people's time?"

40/ On the other hand, Elon Musk has many fans (as well as the haters) and I think a coherent view might be:

"in the domain of electric cards and rockets, there is probably no better person in the world right now to have a claim on people's time"

41/ As a society we have many mechanisms to store information about "who has claims on people's time" and they are (encoded) in different ways

✅Money and financial instruments (numbers)
✅Roles (org charts)
✅Fame, culture, religion (vibes)

42/ So this is a way to think about the present.

And the present is decent, certainly better than the past, in terms of how we can encode information about an advanced economy.

Advanced financial systems, the internet, more developed orgs, make us more capable than the past

43/ But can it get better? Can we open up more use cases? Can we fill in some niches?

BTC filled in some use cases that the traditional system did not do a great job at.

It is another tool in society's toolkit. Not the only tool, but another tool.

44/ I wonder about NFTs. My sense is that they can encode some information.

I can give you a trivial, dumb case.

"Here is an NFT that gives you 10 minutes of 6529 helping you with threading your tweets"

It is a claim on another person's time; it is a minor form of wealth.

45/ "But 6529, isn't this just a step backwards to barter? That card could be sold for money or someone could pay you money and skip the NFT?"

Maybe, could be. But it is not obviously true to me. I could imagine a case where I honor an NFT for something but not cash.

46/ I can't tell you what that case is. I am not sure that case exists. But I have a sense that there is something in that direction. We will have to find out over time.

In the meantime, maybe you have a new framework to use.

"Wealth is a claim on other people's time"

47/ If you are new around here, we are trying to make sure that the metaverse of 2030 is not a dystopian nightmare but open, fun and accessible to all

Lots of tweets here:

https://twitter.com/punk6529/status/1429399888786333697