Money

Throughout our twenties, I/we assiduously ignored money. Lived in a $50/mo apartment, worked part time as a student helper, and was notorious for not picking up my paychecks for months at a stretch.

Helped that tuition was $186 a quarter back then. :)

I was terrified of winding up as Bill Gates (across the Lake from me, in the same age cohort) wound up: Forty years old and nothing to show for it, unless you count money. Never had an original idea, and now never will.

That was good: I got lots of good work done with minimal distraction. Didn't get a phone until I got my first computer and acoustic coupler, and needed a line for the modem. :) (Before that, anyone who wanted to talk to me just dropped by the next local chess tournament.)

But then I/we ignored money through our thirties, as well.

That was a mistake.

It was due to not appreciating certain simple facts:

• While it is an under-appreciated truth that money is a wholly artificial game, and that letting pursuit of money dominate your life reduces in the end to letting other people -- unfriendly other people -- run your life, it is also true that money represents sort of bottled abililty-to-create-cool-stuff: Money isn't purely a distraction from doing fun stuff, but rather can actually assist in doing such, if one accumulates a proper pile of it.

• The US is first and foremost a plutocracy, the only major industrialized country never to have had a popular revolution, the only major country in world history to be born out of a tax revolt by the rich -- a group of men who decided that turning traitor and stabbing their country in the back in wartime by cutting a deal with the enemy sounded like a peachy-keen way to save money.

  "Tax cuts for the rich, service cuts for the rest!" has been the US establishment rallying cry ever since, right down through Reagan to Bush-men I and II.

  The US is a wholly owned subsidiary of the fraction of one percent of the population who own seventy percent of everything worth mentioning in the country outside of cars and single-family dwellings.

  This ruling elite regards and treats the US population as a vast flock of sheep to be sheared as frequently and profitably as possible. (Although only the churches have the gall to actually call their victims "sheep" to their faces. On the other hand, the church has historically only aspired to skimming off ten percent of their sheep's income, whereas the US government aims for closer to fifty percent, by the time income tax, so-called "social security" tax, sales tax and the various indirect taxes are all totted up. Fifty percent is clearly within a factor of two of optimal from the state's point of view: Double that and the sheep all die, which spoils the game.)

  The entire structure of the legal, political and economic system from top to bottom is engineered to the single unwavering goal of concentrating wealth as efficiently as possible, funnelling it from the sheep on up through the CEOs to the plutocracy proper.

  American workers have higher stress levels, longer hours, less vacation time, less job security, less healthcare, less safe working conditions, less right to strike, lower unionization levels and less influence over national policy than workers in any other industrialized country for the simple and sufficient reason that this is what maximizes the rate of wealth accumulation by the US plutocracy. Shepherds structure their operation to maximize income, not to maximize the well-being and happiness of the sheep.

  If one is going to live in this sort of a society at all, it makes sense to join the plutocracy. In other societies, the key to achieving cool stuff may be gaining the royal ear or the pope's indulgence or whatever: In contemporary America, the key to getting anything done is money. Without money, everything is difficult to impossible. With money, all doors and possibilities are open.

• As Heinlein's Joe Green noted (Gulf), the competition isn't that stiff! It is easy to shine by comparison when living in a society dominated by superstitious semi-morons "educated" in state indoctrination centers devoted primarily to instilling docile obedience and just enough technical skill to keep the engines of industry cranking out vast profits for their owners -- mass-produced worker bees who mostly have never read a book that wasn't assigned class reading, people who need hours of TV a day just to keep from dying from the sheer emptiness of their own minds. (Every problem is an opportunity!) It isn't enough to understand intellectually that one is three to four sigmas above the norm -- one has to appreciate what this means on a practical day-to-day level, and apply it.

• In the US, any geek worthy of the name can make millionaire from a standing start in a decade or so.

  The reason most don't is that they can't be bothered.

  This is a mistake: A few years devoted part-time to making a decent wad of money results in the longer run in much less time wasted doing uninteresting scutwork to pay the rent.

  The main two geek keys to becoming "financially independent" are:

  • Taking the problem seriously.

    Most geeks see immediately that money is a totally artificial, intellectually vacuous, culturally capricious game, and thereafter cease to take it seriously. It is important to treat making money as a first-class problem to be taken just as seriously as making it to the next level in a videogame.

  • Putting in the time and energy.

    You have to be willing to put in as much time and energy specifically focused on getting aboard the money train, as you would to complete a cool new videogame.

• There are as many ways to get rich as there are geeks. Think of it as life's intelligence test. Be ruthlessly rational about your advantages -- and disadvantages -- relative to others, play to your strengths, keep your eyes peeled for opportunities, keep trying when the first few tries fail, and you'll get there in the end. Same as beating a videogame. :)

  "I've always been lucky, and the more I practice -- the luckier I get!"

  That said, a few general principles may be discerned. Again, there are lots of ways to get rich going against or ignoring every one of these hints. They are just some particular paths of least action between you and financial freedom:

  • Go where the money is.

    It may be possible to get rich pumping gas at an isolated gas station in rural Louisiana.

    But your odds are much better working as a mega-acquisitions and take-overs specialist in New York!

    Find your personal optimum between those extremes.

  • Accept uncertainty!

    You don't get rich by waiting for a sure bet to come along.

    You get rich by repeatedly making favorable bets, and waiting for the law of averages to kick in. (Keeping a weather eye on Gambler's Ruin!)

    One of the stigmata of a mediocre mind is the inability to tolerate uncertainty.

    Cash in on your ability to do better.

  • Find an exponential and ride it.

    In general, you don't get rich by linearly accumulating money one cent at a time through hard manual labor.

    Rather, you get rich by finding a positive feedback cycle where the more money you have, the more you make.

    In general, this means being part of the capitalist class rather than of the working class: Owning your own business, even if it is just selling fresh-squeezed fruit juice in Santa Cruz from the back of an old van with "Odwalla" painted on the side.

    One exception is those professions where your income depends on the population of the planet rather than the sweat of your brow: Actors get paid according to the size of the audience, for example, which these days runs to the billions of people worldwide. Nevermind that it isn't "fair" in that they have no remotest responsibility for the world containing that many people -- that's the way today's economy functions.

    Nice work if you can get it, but don't waste too much time on unrealistic long-shots.

  • Consider real estate.

    About half of all "self-made" US millionaires do it via real estate.

    The reasons are glaringly obvious:

    • The house is the biggest single piece of property most Americans own, hence that most likely to make them rich through random fluctuation in value.

    • The house is virtually the only high-leverage bet open to the average American. Five percent down on a house amounts to a 20:1 margin bet on its appreciating: A five percent appreciation in real terms amounts to 100% return on investment.

    If you want to buy a house with a view to appreciation of value, keep these simple principles in mind:

    • Property values appreciate around growing economic centers. You can hold a property for decades in the Rust Belt without seeing a cent of appreciation, while values are rising sometimes thirty percent a year in places like the Bay Area. Where are the jobs and population growth? Buy property where all the U-Haul trucks and trailers are accumulating!

    • It is hard to drive a property above the average valuation in its neighborhood. It is much better to buy the cheapest property in a neighborhood than the most expensive. (With obvious caveats! Don't buy the one backing on the railroad track, unless you know the railroad is folding.)

    • The US economic game is rigged so that the rich keep getting richer no matter what is happening to everyone else. This means that the safest bets in terms of property appreciation are those of interest to the wealthy, or those soon to be of interest to the wealthy. Nice oceanfront property within 90 minutes drive of any high-tech money oasis is a good bet, for example. But watch out for spots that are merely trendy, rather than inherently valuable. A Bay Area house grandfathered into a state park overlooking a state beach fronting on a national marine park is inherently valuable -- they aren't making any more of that. But a house near where some trendy actor is vacationing this year may be passe next year when the glitterati get bored and move on.

  • Don't confuse creating value with making money.
    

    One of my great early mistakes was to suppose that creating great stuff would generate money more or less as a side-effect.

    In fact, there is an almost perfect inverse relation between the depth and value of an idea and its profitability.

    Make up a list of a few of the deepest ideas of the last five hundred years. You'll find the authors made basically nothing off them, and were often lucky to escape with their lives:

    • Michel Servetus, discoveror of pulmonary circulation of blood: Burned at stake.

    • Galileo Galilei, inventor of the scientific method: Barely escaped execution, spent the rest of his life under house arrest.

    • Charles Darwin, discoveror of evolution via natural selection, foundation of all modern biological sciences: Made a little money off the book in his old age.

    • Isaac Newton, creator of the reflecting telescope, the calculus, the universal theory of gravitation, and such: Escaped persecution by keeping his heretical opinions secret. Knighted for being a loyal political flack for the Queen in Parliament. Achieved financial security in old age through his work as Master of the Mint, not as a result of any of his scientific achievements.

    • Albert Einstein, creator of general relativity: Basically made nada off it. Even his modest book profits came from special relativity, not general relativity. Driven out of his home country for advocating "Jewish physics", he spent the rest of his life in exile. His Nobel Prize was awarded for the photoelectric effect -- his work on special relativity being considered too controversial and risky for the taste of the Nobel prize committee.

    • Kurt Godel, discoveror of the Incompleteness Theorem that shook the foundations of mathematics: Was awarded room and board by the Princeton Institute for Advanced Studies, where he starved himself to death convinced the cooks were trying to poison him.

    • Ed Witten, architect of the "second superstring revolution", widely regarded as the greatest living physicist: Hasn't made a red cent off it, but at least hasn't had to leave home. Yet.

    Now, make a list of a few of the most profitable ideas in recent memory:

    • Bill Gates, initially doing illicit commercial software development on university computers, later making his big jump by licensing to IBM an OS he didn't own and ruthlessly exploiting the resulting monopoly: $40,000,000,000.00

    • Warren Buffet, buying and holding well-run companies: $25,000,000,000.00

    • Jeff Bezos, selling books online: $5,000,000,000.00

    • Steve Jobs, initially marketing Woz-designed "blue boxes" to make illegal long distance phone calls, later marketing Woz-designed "Apple" computers, and finally marketing Pixar's computer animated movies: $1,500,000,000.00

    • Marc Andressen, using "worse is better" coding to build a combined ftp/telnet/http/gopher GUI client: $1,000,000,000.00

    • Larry Page and Sergey Brin, ranking web pages by the links to them: $1,000,000,000.00 apiece.

    However you cut it, it is clear that the truly deep ideas aren't very profitable, and the truly profitable ideas aren't very deep.

    Ten thousand years from now, Einstein, Newton and Witten will be revered, while Gates, Buffet and Jobs will be "who?".

    In the meantime, it is Steve Jobs who will be travelling by private jet, and Ed Witten who will be travelling coach class packed in the back of a 747 between a sneezing Scientology victim and a fat woman with a relentlessly screaming baby.

    If you're trying to get rich, the last thing you want is a truly profound idea.

    Look for something trivial but topical instead.

    Leave profundity for later.

    Pierre de Fermat made a lot of money and discovered a lot of profound mathematics precisely because he never confused the profound with the profitable.

    Ditto Newton, Gauss, and virtually everyone else successful in both spheres, right back to Thales of Miletus, possibly the first to demonstrate that uninteresting ideas make massive amounts of money.
    

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