"Do you think it is right that passive income can earn so much?"
One of my friends asked me this recently and I replied that I don't think it is right, but this itself comes with caveats. Firstly, this is the system in which we currently live, where those with money are able to passively earn at a greater rate than those who work are able to earn. Secondly, passive earning isn't actually the issue, it is where it is earning that is important. These two things are related.
Currently, passive income can earn by investing into economic vehicles that are not actually doing anything of practical value, with 75% of the world's wealth being tied into the derivative market, which is a largely unregulated and over the counter blackhole for wealth, that keeps it out of the view of everyone. The "authorities" complain about Bitcoin is used for criminal activity, but have almost no visibility on the 1.5 quadrillion dollar industry of derivatives.
Don't worry, I am sure all the people trading peer to peer in the derivative market are paying the appropriate proportion of tax to connect their wealth to the community, like the rest of us do on our employed earnings, before we even have the money in our hands.
So, this connects to the second part, the importance of "where" the passive income is being generated. For example, Person A starts a company and needs investment and Person B has wealth and says they will back the company for a percentage share of profits. This generates passive income on the wealth for Person B, but enables Person A to also generate income from their business, as without investment it would be impossible to get it off the ground. Now, People C are the rest of us, and if we use the company it generates value and if what it does is improve our well-being, everyone is pretty much happy. The passive income generated by Person B is exposed to risk, because it requires People C to validate the business model, which is a proof-of-Brain mechanism of sorts.
So in my opinion, the problem with earning on passive income isn't the earning, it is when that earning isn't attached to the reality of practical activity that adds value to the world in which we live, meaning our own well-being as a global society in some way. Should there be a huge amount of passive wealth generated from trading in oil futures? Or should that wealth be able to ern more by trading in the future of renewable and sustainable energy production that benefits us all?
Traders look for ROI, so we should be looking to make the highest ROI connected to the most valuable practical activities that provide benefit to us as people, not just benefit in wealth generation and especially not in what is harmful. It is about incentivizing social well-being through the businesses we support and when the incentive is there, the wealth generated will be rolled back into more value-adding business models for passive ROI.
And it is us as consumers who support these businesses at the end of the day, so it is our responsibility to support what we think adds value to our lives and it is us who will pay the consequences of aligning our own activity with our own well-being poorly. When we support what adds real value (whatever that might be), we will notice the difference in our lives from the ground up, rather than just seeing the rich get richer using mechanisms that we don't see, not have access to. At the end of the day, if everyone can earn passively on non-value-adding activity, the system collapses in moments, which is why only a small fraction of us have access to this kind of system.
However, we are currently in the phase of building a better system, one that aims to not only tie value to activity, but also to tie the highest ROIs to activities that we as a group believe add value to our lives, in a far more transparent and responsible way. On top of this, we are decentralizing the ownership of the future business models so that everyone is able to have access to invest into what only the "precious few" were able to utilize earlier. This sets up a far more dynamic investment game, because rather than having an out of sight wealth vehicle to play within, value will be transparent, as will be what people can support. This will mean that the consumer is again empowered to direct the flow of wealth and affect the ROI of investing into the businesses.
Then there is the replacement of what is considered wealth at all, because as the consumer starts to take a more direct role in generating value, that blackhole of 1.5 quadrillion in derivatives suddenly starts to look quite shaky and risky, as it is not tethered to the reality of practical value. When there is no connection to practical value, that wealth starts to be devalued quickly and the protection enjoyed by the few of having an exclusive club, diminishes rapidly. Since they do not want to lose their wealth in the void, this will drive them into the light to seek ROI investment, with the highest return being in business models that the consumer supports, which will increasingly be models that ad practical value to lives, that are partly owned by the consumers themselves.
This means that the ROI is now lower, as there are many more people in the pool and whenever the ROI climbs too high, the people will decide if it is still producing enough value to keep supporting it and providing passive income to investors. Over time, this creates a continual looping of value and opportunity, with us as a society directing the course toward our future, with what we are willing to support, hopefully becoming what adds value to our lives in practical and healthy ways.
Practical requires activity and the health of what we do requires us to build and grow, developing and supporting what we believe is value adding, through our own practical activity. Much of the problem in the world today is because we have largely become non-value-adding consumers, where we spend on passive activity that bleeds us, rather than builds us. The more we bleed, the less resources we have to build and in time, all the wealth lays in the hands of the few, who can do with it as they please and they are interested in extending their own ROI.
If we think about the ROI of a consumer, we have increasingly favored feeling good through the avoidance of practical activity, and we are getting increasingly ill in all ways that matter to our daily lives, where our bodies are failing, our minds are failing, our emotional states are failing. We are consuming our way into a void, because we are spending on activity that has very little practical value to improving our well being, but provides the highest ROI to investors.
The system is broken and it doesn't need fixing, it needs replacing. The paradigm shift needed to improve the world is to make the decision to invest into the models that replace the system, not maintain it. This is hard when we feel that to do so takes away from our current quality of life, so most of us will continue to support the status quo until we die from it. Perhaps the next generation will learn the lessons we have taught them through our own failure to invest into our own well-being.
Taraz
[ Gen1: Hive ]
