What are riches, anyway?

It’s funny sometimes how it feels like the bigger cycles in life and society are all so interconnected around the world.

And maybe that’s not true.

Maybe it’s just us humans trying to make patterns in the noise, where no such patterns exist.

And yet, the world is made up of humans all trying to make sense of the craziness that surrounds us.

Maybe there’s more to it.

Maybe we’re all connected because that’s what humans do.

They connect.

Right now feels like a particularly crazy time, where everything is changing. Like everything.

Everything we thought we knew is becoming undone.

From politics to technology to economics to… Bitcoin.

Anyway, just a thought I had when I was reading up on Facebook’s quarterly earnings.

Farhad Manjoo in this morning’s Bits newsletter:

But I’m fascinated by what happens next. Facebook, so far, has thrived on its promise of never-ending usage growth. Its shift to a new metric for success will be of enormous significance for the company and how its products fit into our lives. I doubt the transition will occur without eventual pushback from investors.

Facebook has gotten a lot of flack since the election, obviously.

So they’re shifting away from pure quantity to more of a quality approach.

And, you know, that sounds suspiciously like what’s going on with China.

Zuck and Xi are rattling off the exact same narrative.

Here’s Bill Bishop analyzing Xi’s performance at the 19th Party Congress back in October in his Sinocism newsletter:

 

Third, the Party has changed the “principal contradiction” the Marxists in China believe defines society. The principal contradiction since 1981, near the start of the Deng Era, had been “the ever-growing material and cultural needs of the people versus backward social production”. For the Xi Era that contradiction is now “between unbalanced and inadequate development and the people’s ever-growing needs for a better life”. The importance of this can not be understated as it will inform the underpinnings of most policies. It is not a coincidence the work report omitted the GDP target. That is not to say there will be changes overnight, or that they will be smooth or successful, but this is not just some slogan that can be ignored.

The “principal contradiction” is a big deal in China. It’s basically the Communist Party’s grand mission statement.

So China, like Facebook is no longer focused on growing faster but growing better.

Everyone’s moving the goalposts.

You could argue that the US is on a similar path even though it might not seem like it on the surface.

We’ve got an administration that is willing to compromise on things like the environment so we can drill more while backing out of climate change accords.

We’re juicing the economy with deep tax cuts, paying for it with a growing budget deficit.

We’re muddying global trade with talk that sounds suspiciously like protectionism or mercantilism.

But maybe there’s something more to it?

Because, really, if you look at it, the US for the last 20 years has been focused mostly on quantity and very little on quality.

Where financial alchemy became an outsized proportion of GDP.

Where multinational companies focus on cross-border accounting wizardry to pump their bottom line.

Where those same companies send jobs and factories overseas for financial gain, often, as a side effect, strengthening authoritarian and oppressive regimes ruling over developing nations.

Where we’ve gotten ourselves into multiple, expensive, ongoing wars (which, BTW also boosts military spending and in turn the economy—but at a huge opportunity cost).

Where we allowed globalization to enrich a scant few at the expense of the middle class.

And I could go on.

All of which is exacerbated by existing, longstanding policies.

There’s a nice piece about GE—the quintessential American company—that I was reading yesterday, that sort of encapsulates all of that:

Under Welch, GE’s net income swelled from $1.65 billion in 1981 to $12.7 billion in 2000, even as its workforce shrank from 404,000 to 313,000. But over time, less and less of that income came from technological innovations or manufacturing prowess or even the productivity gains Welch had wrung out early in his tenure. Instead it came from GE’s financial-services arm. From its humble beginnings financing family purchases of refrigerators and dishwashers during the Great Depression, GE Capital had ballooned into a behemoth whose global stable of investments ran from insurance to aircraft leasing to mortgages, giving GE a share of the action during a period when the financial sector was the fastest-growing part of a fast-growing U.S. economy.

In the hands of GE’s financial executives and tax lawyers, earnings from this division had special powers. GE Capital could borrow money in the U.S. to fund offshore businesses in countries where corporate taxes were much lower (or nonexistent), then turn around and use the interest charges on those loans to offset the income from GE’s onshore manufacturing businesses, making its U.S. tax bills disappear. And unlike a factory, GE Capital’s highly liquid assets could be bought or sold at the ends of quarters to ensure the smoothly rising earnings that investors loved. The term accountants use for earnings from these sorts of one-off asset sales is “low-quality,” but through the historic bull market during which Welch had the good fortune to run the company, investors tended not to get hung up on questions of quality. GE’s market capitalization grew from $14 billion in 1981 to more than $400 billion when Welch retired in 2001.

And so in that sense, GE, the company becomes a symbol of American malaise.

And yet I don’t feel so doom and gloom.

Because I feel like America, like Facebook and China, has turned a corner of sorts.

Because that’s how I feel what the idea of “America First” should really embody.

It should embody this turn from pure quantity to better quality.

Because we can’t help others before we help ourselves.

Because we’ve been sort of broken, you know?

That’s why we’re in this mess in the first place.

Whether or not a guy like Trump burns it all down and fixes it or at least leaves a cleaner slate for the next guy to start building something better—well, that is yet to be determined.

And whether or not that’s what “America First” really means, well I don’t know.

But that’s what I want it to mean, anyway.

And what it means to me is a return to the basics.

At least, that’s what it’s meant for me personally.

Because I’ve been turning the same corner myself in my own life.

At least that’s how it feels.

In my 20s, I was always chasing cheap gains, fast, short-term wins. I was impatient. I wanted to go high and I wanted to get there now.

And that was great.

And honestly, maybe I needed it a little.

And really, it was in line with the times.

It’s what we were all doing.

But in the last couple of years, all of that has changed for me.

I’m not looking for fast and fun. I’m looking for slow and boring.

I want to do things the right way—even if it’s harder, even if it will take that much longer.

Even if I have to forgo in the meantime all the things I once sought, things I once thought I held dear.

(Still, FOMO’s a bitch.)

I want to build myself into the person I really want to be, to give myself things no one can ever take away from me.

In a sense, I changed the goalposts from quantity to quality.

In my 20s, I left my friends and family to live across the country in search of riches.

Now I’m home because what else do you have but the people you love, the ones that really matter.

What are riches, anyway?

And isn’t that the question we’re all asking?

For Facebook, for China, and hopefully for America—we’re all starting to figure out a better answer.

(Hopefully GE figures it out, too, lol.)

Happy NFP Friday 🙂

Top photo: Me and my sister Nina (we took the photo in one of those automated booth things last year on my birthday—it was a good birthday)