Everyone Can Be Rich

Naval Ravikant, a successful Indian-American entrepreneur and investor, talks about building wealth on his podcast.

Naval believes that everyone can be rich. There’s a popular notion that making money is evil and we hear that money is the root of all evil, and that banks steal our money, etc. And there is some truth to this because there is a lot of theft in our world.

Takers Take

Bernie Madoff, American fraudster and financier who ran the largest Ponzi scheme in history, worth about $64.8 billion

In history, the majority of society is made up of makers and takers. The makers build things and earn an honest living, while the takers take by force whether it’s through taxes, capitalism, communism, a sword, or a gun. There are many ways to steal both legally and illegally.

Even in nature, there are more parasites than there are non-parasitical organisms: We have a ton of parasites inside our bodies who are living off of you. We also have organisms that are symbiotic and give something back, but the majority just take. This is simply the nature of how any complex system is built; there will always be takers who take without giving.

Abundant Wealth

Naval mentions the other side of wealth-building which he calls true wealth creation. This comes not from taking money or taking something from somebody else, but from creating abundance. 

If you think about it, there is not a finite number of jobs or wealth in our world. If it were limited, then we would still be sitting in caves figuring out how to divide pieces of firewood and the occasional hunted animal meat.

This is proof that all existing wealth since the beginning of civilization has been created resulting from people, technology, productivity, and hard work.

Everybody in the world can have a house. And because you have a house doesn’t take away from my ability to have a house. On the flip side, (wealth creation) the more houses that are built, the easier it becomes to build houses, and the more houses there are for people. So wealth is a positive-sum game.

We Are Far Wealthier Than Previous Societies

Jakob Fugger, German merchant, mining entrepreneur, and banker. Net worth of over $400 billion with inflation adjusted 

The reality is that everyone can become rich. We see that this is true by looking at our progression over the years. In our world today, everyone is richer than almost anyone who was alive 200 years ago.

Back then, nobody had antibiotics, nobody had cars, nobody had electricity or plumbing, nobody had a cellphone, etc. All of these were inventions that have made us wealthier as a species. Naval continued to say I would rather be a poor person today in a first-world country, than a rich person back in the 1600s.

The poorest person today with a cheap car is far wealthier than the richest person in the middle ages because they have access to far better technology, education, healthcare, resources, food, etc.

The reason it may be difficult for some to realize this is because billionaires can make well-off middle-class citizens feel poor although they’re not. Modern media and marketing make it easy to feel that there is a lot we can’t afford. It’s all relative based on what you compare it to. 

Imagine if everybody had the knowledge of a good software/hardware engineer and had the ability to build robots and computers, and could program them. If every human knew how to do that, what would society look like in 20 years?

If this were the reality, then as a society we would have built robots, machines, software, and hardware to do everything for us and we would all be living in massive abundance. We would essentially all be retired and none of us would have to work for any of the basics. 

We would have machine-driven hospitals, self-driving cars, automated farms, and clean energy. At that point, we could use technology breakthroughs to get everything that we wanted. And if anyone is still working at that point, they’re doing so to express their creativity or because it’s in them to contribute and to build and design things.

Wealth vs Money

The idea that wealth is stolen is a zero-sum game is played by people who are trying to gain status. Wealth is the thing that you want. It’s assets that compound while you sleep. Wealth is the factory with robots creating things. It’s the computer program running 24/7 serving customers. The purpose of wealth is freedom and nothing more than that.

Money is how we transfer wealth. It’s social credits and the ability to have credits and debits on other people’s time. Money is a reliable I-owe-you from society that lets you know you are owed something for something you did in the past—and we can transfer these IOUs.

So money is how we transfer wealth but it is not inherently valuable in and of itself. We simply trust that a $100 bill will be able to purchase $100 worth of goods in the future.

The Status Game 

There are fundamentally two games in life that people play. One is the money game because while it won’t solve all your problems, it solves all your money problems—which is significant. The second game is the status game where people try to be high-status in the eyes of people watching by saying they don’t need or want money. Status is your ranking in the social hierarchy.

Wealth is positive-sum in that we create things and at the end of it something brand-new will be created. Status, on the other hand, is a zero-sum game. It’s an old game that has existed since monkey tribes.

Status is hierarchical meaning there’s a number one, a number two, a number three, etc. And for number three to move up into number two’s slot, number two must move out of that slot, hence why it is zero-sum. 

Politics and sports are examples of status games. To be a winner there must be a loser. Status, however, does play an important role in our society. It exists so that we understand who is the leader and who is in charge. But fundamentally you play them because they’re a necessary evil.

There is always a subtle competition between status and wealth. For example, when journalists attack rich people or the technology industry, they’re bidding for status. They’re saying that the people are more important and that journalists themselves represent the people and therefore they are more important.

The problem is that to win at a status game, you have to put somebody else down. That is why Naval believes people should try to avoid status games in life. Status games will always exist, and there are no ways around it, but just realize that when you’re trying to create wealth, you will always get attacked by someone else who is trying to up their own status at your expense.