Making Money Consciously (Blog)

[Savage]

Use this thread to discuss the following entry from Steve Pavlina's blog:

Making Money Consciously

[Dave Kaminski]

This is the exact problem I've been trying to solve in my thread about what to do for a living. I want to help people better their lives, but I'm holding myself back because I also care about what others think of me.

I think I'd make an excellent career coach as I'd be using my resources to help people who are motivated to succeed, but want to do this in addition to the job that I'm applying for now which is a job coach for people with developmental disabilities.

In your opinion, whoever reads this, should I discount what others think of my efforts and just go for it? Many conventional thinkers scoff at the idea of a personal coach; is there reason for ridicule or should I brush off their remarks?

If this is the plan of action I take, I'll feel extremely fulfilled, because I'll be helping the fortunate and the less fortunate!

[Savage]

Originally Posted by Dave Kaminski

In your opinion, whoever reads this, should I discount what others think of my efforts and just go for it? Many conventional thinkers scoff at the idea of a personal coach; is there reason for ridicule or should I brush off their remarks?

The only reason this would be an issue for you is if there's a part of you that agrees with other people's criticism. It doesn't sound like you fully respect and value the idea of being a personal coach... at least not 100%. If you're totally congruent about the idea, then other people's opinions won't matter. It's your self-doubt that's getting in your way.

Consider that if I criticize you about something you know isn't true, you'll simply brush me off as mistaken. In order for criticism to have any bite, there must be an element of truth to it, however small.

The solution is to figure out what you don't respect about personal coaching and discover what you can do to avoid succumbing to those problems yourself. Self-doubt often points to important info we need to bring to conscious awareness, so it doesn't bite us in the back later.

[Dave Kaminski]

Originally Posted by Steve Pavlina

The solution is to figure out what you don't respect about personal coaching and discover what you can do to avoid succumbing to those problems yourself. Self-doubt often points to important info we need to bring to conscious awareness, so it doesn't bite us in the back later.

Sort of like in marketing when your guarantee is based upon the usual downsides to the business you're in; e.g.: if you're a plumber, you guarantee that you won't be late and your won't leave a mess, as these are the two biggest complaints in the industry.

Am I correct to think that this is the kind of questioning I need to do?

I think I have the same problem when it comes to computer repair jobs & web design - I don't value having repair or design skills because they're practically inherent to me.

If I were practicing your suggestion of "find a need and fill it," I assume that I would value the coaching job if in fact people needed career coaching. You're right about self-doubt, I have a hard time convincing myself that people need my help, but I'm not sure why!

[Alarin]

Great post Steve, thank you !! I understand and agree with the principles involved but I'm still left wondering if there's some career paths which suffer from such low social value that they will never create abundance for a contributer, no matter how much social value they may generate.

For example - I'm currently working as an illustrator, it's an over saturated market because the work itself provides high personal value and so a lot of people choose it as a career. Because of this over-saturation there are illustrators out there who provide a high amount of social value, such as matte painters for big movie studios, people who write and illustrate books, etc, but they are not compensated very well because there's so many other contributers out there with the same skills making similar contributions.

The sheer volume of contributers lowers the social value of the contribution. This is what makes me think that some fields have a "glass ceiling" of income that can be earned simply because of the high volume of contributers in that field??

Dave Kaminski - Yes I think you should definately ignore the opinions of those who scoff at your efforts, most people scoff out of fear - the fear that you'll prove them wrong and actually do something worthwhile with your life while also doing something you love, something they only dream about because they're too afraid to take action themselves. I think your idea is very honorable and worthwhile and you should definately follow your heart!

[Kiba]

I have the belief that money itself isn't evil or good.

Also, I already have a contributor mindset. I know money isn't evil or good. I know that you don't have to hurt people in order to make money. So I want to make money honestly and contribute to society. With these gained resources, I could use these resources to help more people. And keep going.

But the blog post isn't entirely useless. It bring these ideas to my mind and help me understand other people along with my belief about money further. It also help me considered other things about money...Like the mixed social conditioning that I didn't think about.

Other then that, great post. I enjoy reading it.

[yeikow]

Sometimes I wonder whether Steve has some obscure way of getting into my thoughts before writing a new post. Scary

This is an area I have been tackling in depth lately. I am about to finish Atlas Shrugged and that book alone has shaken my values pretty rough, it hadn't happened in many months so it is welcome. I wholeheartedly recommended it if nothing else for the jaw-dropping sharpness of Rand's writing.

What this post really nails down for me is the concept that looters can get rich (filthy rich in this case hehe) just as contributors can. Sadly, this is the most widespread image of the rich individual. I liked the idea of having to offer value to create wealth but I kept finding a flaw in it, something was missing. The way this is so clearly and simply explained leaves me with a feeling of *duh*

I can now see why certain business methods, models and even careers made my stomach stiff. I knew something was not right. Now I see it clearly: they make you money, but you create zero or no value at all for society.

I am at the exciting point in my life of being really close to find a way to create wealth for myself and society without trashing my creative side. Those bursts of energy and excitement are more and more frequent!

[Dave Kaminski]

Originally Posted by Alarin

The sheer volume of contributers lowers the social value of the contribution. This is what makes me think that some fields have a "glass ceiling" of income that can be earned simply because of the high volume of contributers in that field??

That's a reflection of supply and demand, Alarin. The more abundant the resource, the less social value it has, lest it is addictive or has some extra hook(read:tobacco). The solution to this problem is niche-ing, finding an under-served area of said field.

This doesn't have to be limited to illustrating via paint on glass at retail locations (a niche), but can also mean extremely high quality graphic art (another niche). You've got to outsmart and outwork your competition to succeed, and this is doubly important in a thoroughly- or over-served field.

On another note, In my opinion, the scarcity/mooching mindset is what many unions end up as, but are not built upon. Founders and leaders of unions are usually deeply rooted in abundance, but the general member seems to be on the opposite pole of the conscious earning spectrum. For example, I know a tradesman who only works as often as he must in terms of the union he is in, as well as a myriad of teachers who do the same, 'because they can.' They are mooching off of taxpayer/consumer value, would you agree?

[Adam]

Alarin... The social value of someone exchanging your money for food is incredibly high... However, because it is such an easy career to be involved in (it just takes an application and successful interview at a fast food chain or grocery store), the social value of the individual changing your money into food is incredibly low. Human social value is just as controlled by supply vs demand as any other good and service.

Willingness and ability both control the adjusted value of each person's social value... The easier the job, the lower the pay. The trick is to find some way to increase the value beyond the normal level that others are willing to give.

One story of this is a 'special needs' person... born with slight mental retardation... who worked at a grocery store bagging groceries. He had the opportunity to attend a company sponsored propaganda seminar, and he actually picked up on some of the more subtle advice, and found a way to add value to his job of bagging groceries... He slipped in a piece of paper with some message of the day into one of each customer's bags. When the customers noticed it, they valued having this person being their bagger to such a degree that people were willing to wait in his line, no matter how long it was, even if there were other lines with nobody in them. The story doesn't say whether he got a raise or not (I certainly hope that he did), but it did show that even a small addition of value has a lot of social weight.

As far as art... Who values art the most? Advertisers, the opulent, and other artists, mostly... My grandfather raised the value of his art by painting in styles that appealed to other artists (not to mention, to himself ), which set him apart from the general 'noise' of other artists. He was a decently well known artist in Arizona, getting some of his paintings into the Phoenix Art Museum, and was able to retire without being a starving artist, though he never really did retire. (He painted until the day of his last trip to the hospital, and his only regret was that he couldn't get one more painting finished.) That reminds me, I need to work on the scripting for an online gallery for his art... Ahhh, the power of procrastination.

I'm not saying that you have to change your illustrations into "Artist's Art," but it is an area that could use some very imaginative, creative people...

[Savage]

Originally Posted by Alarin

The sheer volume of contributers lowers the social value of the contribution. This is what makes me think that some fields have a "glass ceiling" of income that can be earned simply because of the high volume of contributers in that field??

Social value is a function of supply and demand. If the supply is much greater than the demand, prices naturally fall.

In such situations, you can switch to a field that's in greater demand, or stick with the same field and separate yourself from the pack. In any given field, average performance earns average pay, while exceptional performance earns exceptional pay.

This is where personal development plays a key role, since it can provide the impetus to move from average to exceptional in any field.

[JohnLong]

Ok, so if Ayn Rand's philosophy is called "Objectivism", does this make Steve a Subjective Objectivist?

(Yes, he's just referencing one book, not the whole darn philosophy, but it was too funny to pass up).

Very nice explanation of some usually hard to understand concepts, Steve. Another great post.

[Michael Chui]

Actually, a number of my friends who are more familiar with Rand than I am say that Objectivism isn't Rand's individualism. Seeing as I can find within myself a lot more respect for Ayn Rand when I think of it this way, I'd say they're right.

[richie]

Great Post Steve! you have choosed my favourite topic
But what should those called who don't contribute but are a reason for other's contribution
for ex: an enterpreneur who doesn't make software but makes his employees write softwares and sell them.he can be called a contributor bcoz without him those software wouldn't have been written
but he can also be called as a moocher because he simply earns by other people's contribution

[Alarin]

Originally Posted by Dave Kaminski

On another note, In my opinion, the scarcity/mooching mindset is what many unions end up as, but are not built upon. Founders and leaders of unions are usually deeply rooted in abundance, but the general member seems to be on the opposite pole of the conscious earning spectrum. For example, I know a tradesman who only works as often as he must in terms of the union he is in, as well as a myriad of teachers who do the same, 'because they can.' They are mooching off of taxpayer/consumer value, would you agree?

Yes I'd completely agree and I've always avoided unions because in general I don't like the people who are part of them and what you've said there makes me (finally) understand why .

Originally Posted by Steve Pavlina

Social value is a function of supply and demand. If the supply is much greater than the demand, prices naturally fall.

In such situations, you can switch to a field that's in greater demand, or stick with the same field and separate yourself from the pack.

Very true! Thanks for replying Steve

Originally Posted by Adam

I'm not saying that you have to change your illustrations into "Artist's Art," but it is an area that could use some very imaginative, creative people...

Hehe I completely agree with you there Adam, although it can be a bit of a catch 22 when your main customers are often struggling financially themselves Thanks heaps for your ideas though, much appreciated! I also love the story about the grocery bagger, I remember catching a bus once in Brisbane and the bus driver gave me a big smile and a quote printed on a little bit of paper. I don't remember the quote now but I'll always remember his face fondly, such a little thing and it can make such a difference to someone's day.

[standrums]

Hi,

I know somebody who is suing owing to her belief that she was short changed in her divorce.

I'm suspicious of her motives though (after spending time in the company of her ex-husband for one gave me a more balanced view).

The divorce occurred, assets were split and the financial spoils large by average levels.

However, she hasn't earned anything else since the divorce, no job for example, only an allowance from her ex.

She lost the case, now owes a fortune in court costs and lawyers fees and is now appealing, however by any stretch of imagination she is bankrupt but hasn't admitted it.

She causes a lot of misery within her family, especially her children whom she blames and takes money from to make her feel better I think, although I am not sure.

Her argument is that she has no pension and winning the case is the pension, even though she's pretty much admitted (without actually saying it verbally) that she's lying and is trying to use the divorce courts for a sympathy vote.

I am very confused (as this person is my long term girlfriend's mother) and it sits in me very uneasily, I just don't possess this attitude to money and how it can be 'earned' in such a manner.

It's really stressing me out and I don't know what to do.

My girlfriend is learning to cope and is of a point of view now that her mother is unstable, however she believes both her parents are as bad as each other but in different ways; an opinion I would heartedly agree with.

Anyone else in such a situation or who could offer advice?

I believe this to be an unethical way to gain money.

[WanderingOak]

Fantastic post Steve! I've often seen the requirement for money as a bit of a distraction. If somebody is working on a noble project that is beneficial to society as a whole, why should it be spolied by a need for 'filthy lucre'? I have been working with friends on such plans for years now, only to be held up by lack of funding. We came to the conclusion that we needed some sort of 'cash cow' to fund our projects. However, how do we ensure that the cash cow doesn't become the major focus of our endeavors, and not the world-changing project? That question, in a way, is what lead me to your site, because with your Blog, you are doing what I hope to do myself someday, namely changing the world while paying my own way in the process.

[coma]

" 1. Make a social contribution, and receive payment commensurate with the social value of your contribution.

2. Take advantage of market inefficiencies to extract money without contributing any value. "

Steve, would you consider what most financial traders do to be activity number 2, ie. "mooching" ? I did ask this question in another section and I got some pretty good answers, but for the most part trading in markets such as futures/options are effectively zero-sum.

Thanks!
Coma

[ahimel]

Originally Posted by coma

2. Take advantage of market inefficiencies to extract money without contributing any value. "

Steve, would you consider what most financial traders do to be activity number 2, ie. "mooching" ? I did ask this question in another section and I got some pretty good answers, but for the most part trading in markets such as futures/options are effectively zero-sum.

Coma:

I'm not Steve (obviously) but I'd like to put my $.02 in...

I think that #2 unfairly characterizes "taking advantage of market inefficiencies" to be "not contributing any value." If you don't provide value, it means that you're mooching, but I don't think that merchants inheirently fail to provide value.

A market ineffieciency is just what it sounds like -- the seller is unable to find/reach the buyer, and so the transaction fails to take place, due to inefficiency of communication. Someone who fills in this gap - brings the buyer to the seller or the seller's goods to the buyer - is creating a more efficient market, and that's value.

In the days when it was impossible for British nobility to get silk or cinnamon without traveling to Asia, merchants traveled to Asia, bought these items at low prices, and traveled back to Britian to sell them at a higher price. For this service (actually doing the travelling, finding the goods, negotiating the goods, and transporting the goods back) they were paid fair compensation for their value. Were they "mooching"?

Not too many years ago, people often found themselves in a situation where they had too much stuff and not enough money. Surely there was a buyer out there who had too much money and not enough stuff, but how to find them? Often there was no easy way to find a buyer, and they couldn't wait until one came along. So the pawn shop broker stepped in, bought the goods at a lower-than-market price, which allowed the overstuffed person to extract value from their items immediatly. The broker took the risk of not selling the item and of having to wait for the value. For this service (being willing to just sit there with built-up value and no way to use it) he was paid the difference between the buying and the selling price.
Then, a couple of years ago, Pierre Omidyar realised that he could use technology to hook up buyers and sellers more quickly and convienently. He founded ebay, and now anyone can extract market value from anything they own, excepting organs and such . Omidyar provided much more value than any individual pawn shop broker, and thus is compensated much more highly. Both people provided value, and both were compensated.

In the case of day traders, I would point out that the people on the other end of the transaction want to sell. It may be a good reason (they had an emergency and needed cash) or a bad reason (they see the stock price falling and panic) but they want to sell. The stock market isn't some vast cloud where shares magically appear and disappear -- if they sell, someone has to buy. Someone has to hold onto those shares while they're low, and in most cases the issuing company isn't willing to do it. So the day trader provides that service. They buy it when other people don't want it, hold onto it until they want it back, and sell it when other people do want it. Because of market economics, this means they buy low and sell high, and so they are compensated for this service.

If you want to see a moocher, read Dilbert. Wally is a moocher: he's entered into a contract with the company to trade value (engineering services) for value (money.) But he's found a way to get the company to fulfill their end of the contract (paying him) without providing any value on his end. No one is helped by his presence or actions in any way.

IMHO, anyway.

[Savage]

Originally Posted by richie

Great Post Steve! you have choosed my favourite topic
But what should those called who don't contribute but are a reason for other's contribution
for ex: an enterpreneur who doesn't make software but makes his employees write softwares and sell them.he can be called a contributor bcoz without him those software wouldn't have been written
but he can also be called as a moocher because he simply earns by other people's contribution

To determine whether a person is mostly a contributor or a moocher, consider what the effect would be if they stopped working and stopped earning income. This makes it clear that leadership and management fall on the contribution side if the group being led/managed also does.

[Savage]

Originally Posted by WanderingOak

Fantastic post Steve! I've often seen the requirement for money as a bit of a distraction. If somebody is working on a noble project that is beneficial to society as a whole, why should it be spolied by a need for 'filthy lucre'? I have been working with friends on such plans for years now, only to be held up by lack of funding. We came to the conclusion that we needed some sort of 'cash cow' to fund our projects. However, how do we ensure that the cash cow doesn't become the major focus of our endeavors, and not the world-changing project? That question, in a way, is what lead me to your site, because with your Blog, you are doing what I hope to do myself someday, namely changing the world while paying my own way in the process.

I think splitting your focus isn't such a great idea. Even Bill Gates has decided to leave Microsoft to put all his energy behind the Bill and Melinda Gates Foundation instead of splitting his attention between both.

I think that even noble projects can be done in such a way that they provide social value and generate income. Income-generating projects are far more sustainable. Often the shift required is no big deal from an external standpoint -- it only seems like a big deal due to internal resistance.

It may require a bit of creativity to make a noble project financially sustainable, but most likely something similar has already been done, and you can borrow someone else's model.

[Savage]

Originally Posted by coma

Steve, would you consider what most financial traders do to be activity number 2, ie. "mooching" ? I did ask this question in another section and I got some pretty good answers, but for the most part trading in markets such as futures/options are effectively zero-sum.

If this person were to stop working and stop earning income, would any genuine social value be lost? If the answer is no, then you have a moocher. If the answer is yes, you have a contributor.

In the case of day trading, where the goal is to extract value from market inefficiencies, I'd say that on balance, we're usually on the moocher side. Look to the person's intentions for clarification. Is the focus of work on getting or on creating real value for others? I suppose you could be a day trader who focused on creating real value, but I've personally never met one.

However, if the goal is to invest for the long term, providing companies with extra capital so they can create more value, then we're on the contributor side -- if this work wasn't done, some social value would likely be lost.

On the other hand, if we invest in a moocher organization, such as a team of day traders, then we're mooching as well.

[The Wise Turtle]

Recently I've been trying to come up with a way to describe a business, such as the contributor business that you talk about in this blog entry, where you aren't looking for a profit (zero-sum) but a fair exchange of value. I'm talking about a business where what you offer is of equal value to what you recieve. It's the best way for a society and an economy to work, in my opinion, but it's considered crazy by most business people.

To make it more palatable, I've been hoping to find a term that will frame this contributor type business plan in a way that will make it seem attractive to even the most hardened yuppies. Obviously the term "non-profit business" just won't cut it. Mostly because it's basic frame is a negative (non). "Sustainable business" seems ok, but not really very catchy.

Any other suggestions? What term do you think would make my upper middle class parents proud to say when they told people the kind of company I'm starting?

-Turil

[JohnLong]

There is a tendency to see speculation and trading as not producing any social value. But it's nowhere near as simple as that. I'm sure there are some mooching traders, but generally I don't see that as the rule.

Think about a succesfull speculator. They are guessing that a product will be more valuable (more in demand or more rare) in the future. So they buy it when it is cheaper (in plentiful supply or low demand) and sell it when it is not. If they are good at it.

What they've done is raised the price (and gotten people to consume less) when there was plenty, and lowered the price (and allowed people to consume more) when there was little. Which is exactly the right thing for people to do anyhow! Save for a rainy day, in essence. You store up some food during the harvest so you can eat over the winter.

So I have a hard time seeing where this becomes mooching. Clearly, it could have an attitude of mooching, but it seems a lot of people have an attitude of mooching while still essentially remaining contributors. Ideas?

[JohnLong]

Originally Posted by The Wise Turtle

Recently I've been trying to come up with a way to describe a business, such as the contributor business that you talk about in this blog entry, where you aren't looking for a profit (zero-sum) but a fair exchange of value. I'm talking about a business where what you offer is of equal value to what you recieve. It's the best way for a society and an economy to work, in my opinion, but it's considered crazy by most business people.
-Turil

Not sure I follow you here. How are you going to determine what a fair value is? It's important to remember that a the social value of something isn't determined by how much it cost to make. Plenty of things cost a lot more to make than their social value (even succesful products), and only a few cost less. In the end, people getting something don't really care how much it cost, only how much it will cost them.

So, suppose you produce something and want to forgoe the profit. But that probably means you won't be able to produce enough of it to fill demand. How will you determine who to sell to?

Maybe you could give us some more specifics?

[Andrew Brunelle]

Contribution can be self-fulfilling without money, but without money, you cannot live in society. And that's unfortunate. When you contribute, creating value, mainly social value, is key. Like Steve said, finding an overlap between personal value and social value is where you will be able to make money consciously. I have been battling money for quite a long time. One day it's good, the next it's bad. But I was thinking inside the box, thinking that all people who are rich are liars and swindlers. So I thought if I were to start making lots of money, I would become like these people, greedy, cutthroat, and dishonorable, but I'm not that type of person now, and I can strive to be an honorable and compassionate person, regardless of my financial situation. Money isn't the root of all evil, but bad people with money is the root of all evil. I've been participating in the Million Dollar Experiment and I've been stressing "for the highest good of all," and one day, I'm talking to this woman I've never met about how I'm turning 21 and how I've decided not to drink alcohol and she hands me five dollars as good will towards sticking to that goal. There has been numerous other incidents where I received money unexpectedly out of kindness, so I now believe you can earn money being honorable and for the highest good of all.

[SuperJambo]

I'm not sure I like the 'Moocher mindset' Idea.
People coming from a perspective of scarcity in the west IS I agree a problem, but, it's not so much that it's bad for society as it's bad for the individual. I mean, yes in the long run it's bad for society as these people are miserable / make bad decisions. But I don't view it as them 'stealing' value.

To take the trading example. Stock and Futures exchanges are fundamentally useful, if they were not useful, companies would not use them to get investment and to sell risk and investors would not use them to buy risk. So the whole stock exchange apparatus is providing value.

The reason that exchanges set off the moocher alarm is that day traders and their organization make a whole lot of money on these exchanges without being obviously necessary for the functioning of the exchange. Why?

The answer is that pricing companies is very difficult and so you need these traders to price the companies so when 'real' investors want to sell shares the price is accurate. Do they really need to make such massive profits though? No, but they do manage, because companies getting investment and investors buying risk do not have the necessary information to force the exchanges to be honest.

And this is, I think, a better way of describing the problem of economic inefficiencies than 'mooching'.

Inefficient market rules, incomplete information and false beliefs are the root of all mooching. I think to tackle this problem you'd be better off educating the people buying the services such that they only buy real value than trying to stop the 'Moochers' themselves.

Although legislating against emotive advertising would probably be a good side act.

[simond]

I was surprised at the Steve's quote saying that the Catholic Church has $29 billion in gold, and did a little digging. According to Yahoo Answers the correct figure should be 29bn Italian Lira - around USD13 million. What's more - it's deposit money held against liabilities by the Vatican's bank, so not actually church money. Apparently the Vatican's actual assets are around USD1 billion, not insubstantial, but nowhere near what Steve suggests here.

[Savage]

Thanks, Simond. You're right -- that stat was incorrect. I replaced it with another one from a different source. One of the problems is that the Catholic Church has such extensive holdings, I'm not sure anyone knows for certain how much wealth they control. Most of their wealth seems to be in real estate, but it's spread all over the planet.

I saw a statement that the Boston Archdiosese alone has assets of more than $600 million USD and liabilities of about 1/10 that much, giving it a net worth of over $500 million. That figure was from before the molestation lawsuits though, so I'm not sure what it is now.

[Razzmatazz]

In the UK we now have a recognised business sector called 'Social Enterprise' which the government is heavily promoting and supporting. A social enterprise is essentially a business set up with the aim of providing some kind of social/environmental change and the sector has grown rapidly over the last few years.

Two you may heard of are Big Issue and Cafedirect.

These are not charities but professionally-run companies which in some cases have a multi-million pound turnover. I think to be classified as a social enterprise a certain percentage of your profit has to be reinvested back into the company/staff.

"there are at least 55,000 social enterprises in the UK with a combined turnover of £27billion per year. Social enterprises account for 5% of all businesses with employees and contribute £8.4billion per year to the UK economy - almost 1% of annual GDP"

Wouldn't it be good if other countries pushed and supported a similar initiative?

[Goyis]

There is a new book arriving in January called The Intention Experiment. I believe it will be some thing you may want to look into further. I just checked out the site and its still under construction, but you can sign up for the experiments now!

By the way, I just set up my blog, thanks to your NSA seminar, the name of it is agaponti.com (a greek word meaning ever present love)!

All the best!

Hector