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The maddest things I've learned about money.

I made my first million at aged 21 when I picked up 1,000,000 UgX working in Uganda. Since then, I've been fascinated by money, purchasing power parity, capital, shares, wealth, how people are rich, how they stay rich, and whether anyone can be rich.

What also fascinates me is how wealth impacts everything - education, health, opportunity, networks, housing, and how much you can save by pursuing economies of scale. I'll never forget reading an article detailing about how expensive poverty is. I'd thoroughly recommend reading "This Is Why Poor People’s Bad Decisions Make Perfect Sense" by Linda Tirado (link).

Seeing Kylie Jenner heralded as 'self made' seems to make invisible all the different ways one can be wealthy; often it's a case of not having to spend money that can help accumulate wealth or capitalising on things that you didn't have to invest in financially. For Kylie, the investment that was made in the attention economy underpins a large part of the success of her family, generates an income, and provides a platform worth millions of dollars from which to develop and sell make-up.

  1. If you can afford it, you can literally pick your own rules to solve a dispute; it’s called Arbitration - newly registered arbitral cases in 2017 represented an aggregate value in dispute of over US$ 30,850,000,000; the average amount in dispute in new cases? US$45,000,000 with over 60% of all cases filed having an amount in dispute exceeding US$2,000,000. Of the 1,548 pending cases at the end of 2017, the average value per dispute was US$137,325,630 (source). Really rich people literally have their own rules.

  2. Work contracts don't just make money, they take money; if you sign a new job contract, do not agree to take any disputes with your employer to private arbitration. Misty Ashworth signed a contract, started work at Five Guys, and later brought charges against them for “constructive retaliatory discharge, sexual harassment, hostile work environment, quid pro quo sexual harassment, outrage, and negligent hiring, supervision, and retention”. In court, her claims were dismissed because the arbitration clause “places arbitration agreements on equal footing with other contracts and requires courts to enforce them according to their terms” (source). If Misty chose to arbitrate, she would have had to pay for her own arbitral costs and the process and outcome would probably have been confidential.

  3. With enough money, you can buy the debt of countries and enforce repayment: it is possible and entirely legal to buy the debt of countries and enforce repayment; they are called ‘Vulture Funds’ and the Dart Brothers of the Cayman Islands make a lot of money doing this on loans that other organisations, would allow people to default on. Another example? Elliott, a hedge fund, bought debt that Argentina (the country) defaulted on in 2001. What happened next? “Elliott and a group of hedge funds rejected the government's debt restructuring offer and sued for full repayment … which involved the attempted seizure of an Argentine frigate and two SpaceX contracts”. They sued successfully - Elliott collected $2.4bn from the country after striking a deal with President Macri (source) – estimated to be almost four times the initial investment (source). This is insane.

  4. Unless you own your own capital or you own your company, you probably work for shareholders; if a firm's only responsibility is to its shareholders, the goal of the firm is to maximize returns to shareholders above all else (i.e. the planet and the health/ rights of the workers). This is seen as normal and a good approach to business as we pursue infinite growth on a planet with finite resources. I thought things like air and water would be protected outside of market mechanisms and there was no need to invest in water. I was wrong - it’s possible and Barclays bank has a handy guide on how to invest in water - link. The impact? You will need capital (i.e. spare money) to be able to invest in water. If you currently have no savings, you do not get to invest in water.

  5. To those that have, are given: Bank of Italy researchers Guglielmo Barone and Sauro Mocetti compared tax records of Florentine taxpayers in 1427 and 2011 to track inter-generational mobility, and found that there was “meaningful persistence of socioeconomic status across the centuries” (source). I.e. in 584 years - you and your family can stay rich if you do it right and regardless of wars, political upheaval, and disease. Meanwhile, in the UK IPPR looked into how wealth is twice as unequally distributed as income. In addition, income (i.e. what you earn from work) is taxed so much more than wealth (i.e. what you own) – in short, you’ll earn more from being taxed less by inheriting money instead of having a job (source).

Anyway, have a great weekend and here's a link to an "Essential Guide to Personal Finance".

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