verging_on_random

Forget the good job, get a good financial adviser

July 8, 2007 on 4:25 pm | In Uncategorized |

A bloke I used to go to school made contact with me a few days ago. It started me thinking about where all the people who I’d known at school had ended up.

It was a good middle class public high school and it seems to have produced good solid middle class alumni. I’ve lost track of a lot of them of course but the ones I know have mainly had good solid middle class careers as doctors, public servants, teachers, managers and so on.

One thing that struck me was that none of them, to the best of my knowledge, have been too obsessed with getting rich. Sure they’re comfortably off, so far as I know, but they don’t have three investment properties and a share portfolio that they discuss with their financial advisers. The universal infatuation with acquiring wealth for the sake of it only seems to have become a widespread affliction of the generations that have grown up in the 1980s and since.

It’s a significant change when you think about it. For most of recorded history, people had wealth because they were either born into a class that owned land or because they were lucky (maybe brave and lucky in the case of adventurers like gold diggers and pioneer settlers). But for most people – or men, really - life’s main challenge was to make a career by getting educated, working hard and diligently, saving money and looking forward to a satisfying life and a chance to indulge oneself a bit in retirement.

This has all changed dramatically but our culture hasn’t quite kept up. I talk to my undergraduate students about it and they generally agree that somebody’s job is no longer regarded as the key to success in life. The important thing now is to be a successful trader. I’ve had 19 year olds tell me about the unit they’ve just bought to rent out while they still live at home.

It’s become the norm, at least for some young people, to regard the primary wealth-generating activity in their lives as the buying and selling of assets. Work remains important but it’s become a subsidiary source of wealth – it just provides a cash flow to cover routine living expenses. The important business of life is to acquire things that can be sold at a profit. Borrowing to fund these speculative activities is regarded as perfectly normal because the assets being bought will always appreciate in value.

I have no idea how sustainable this is economically – not very, I suspect, and when it ends it’s likely to be very ugly, but I don’t claim to have any special expertise to back up my gut instinct – but it has interesting implications for social beliefs and values.

When wealth depends not on the job you have but on how good you are at speculative investment, new patterns of status and class will presumably emerge. It will be interesting to watch it happening – but I don’t think I’ll like the results.