Money and life

Problem

1. Why brilliant people with more money than they’ll ever need allow their hunger for even more money to cause them to lose everything?

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2. How much is enough, and why are people willing to risk so much to get more?
3. If money is so alluring, how is it that so many people of great wealth also seem so unhappy?

Cause

The single-minded pursuit of wealth often leads smart people to do incredibly stupid things, things that destroy what money can’t buy. Examples given in the article:

• A Sri Lankan American former hedge fund manager and billionaire founder of the Galleon Group, a New York-based hedge fund management firm. On October 16, 2009, he was arrested by the FBI on allegations of insider trading, which also caused the Galleon Group to close and on May 11, 2011 was found guilty on all 14 counts of conspiracy and securities fraud.
• On October 13, 2011, Rajaratnam was sentenced to 11 years in prison and fined a criminal and civil penalty of over $150 million combined. The resignation and humiliation of Berkshire Hathaway’s David Sokol David Sokol was one of the people being groomed to succeed Warren Buffett as CEO of Berkshire Hathaway. He was forced to resign in an insider trading scandal. Often referred to as Buffett's Mr. Fix-It, Sokol was tasked with rescuing underperforming Berkshire divisions Johns Manville and NetJets.
• Under Sokol's leadership Johns Manville was brought back on track and NetJets swung from a $157 million loss in 2009 to a $207 million gain in 2010. Sokol purchased 96,060 shares of Lubrizol at a limit price of $104 per share between January 5 and 7, 2011. He presented the idea of Berkshire acquiring Lubrizol to Buffett on January 14 or 15, 2011, and again after a January 25 meeting with Lubrizol's CEO. Berkshire Hathaway's board voted to acquire Lubrizol at $135 per share on March 13, 2011. On March 28, 2011, Sokol tendered his resignation from Berkshire Hathaway.
• HBO-TV adaptation of the bestseller “Too Big to Fail” Based on the bestselling book by Andrew Ross Sorkin, 'Too Big to Fail' offers an intimate look at the epochal financial crisis of 2008 and the powerful men and women who decided the fate of the world’s economy in a matter of a few weeks. An exercise in collective greed that came pretty close to destroying the world as we know it.

Criteria (theory or perspective)

Jacob Needleman, a professor of philosophy at San Francisco State University published a book called “Money and the Meaning of Life” 20 years ago and following answers are derived from the interview Jacob Needleman did with Fast Company years ago. Money may be the root of all evil, but only if you’re not honest about what it means to you.

One should know how they are towards money and really understand that relationship and if a person does not know then he/she simply don’t know themselves. Needleman said “Money is about love and relationships”. It has a wonderful power to bring people together as well as tear them apart. Money truly can’t buy happiness, especially if you’re unhappy to begin with. Apart from our obvious physical needs, life is not determined by external factors rather than inner ones. So having money will not change your internal makeup. If you are an anxious person without money, you will be anxious person with money. Jacob said “If you are worrying about vegetables now, you’ll be worrying about yachts then.” Being rich does not make you smart — especially about things other than money.

The key is to be not fooled by money- Needleman gave an example of a guy he met who worked his way up from zero to a half-billion dollars and Needleman asked him what was the most surprising thing that you discovered when you got rich he replied “Everybody asks my opinion about things because they think I know something. All I really know is how to make a lot of money.” Being rich does not automatically lead to a rich life.

There is a difference between success and money. In order for one to be successful one needs to develop character, look for the joy, the struggle, and the challenge of work. What you bring forth from your own guts and heart. The happiness of hard work. No amount of money can buy that. Those are things of the spirit.

Alternatives

Maslow's hierarchy of needs

Abraham Maslow theorized that human happiness is the outcome of meeting a set of needs. He listed these in order of priority, leading to a pyramid called Maslow's hierarchy of needs. The set of needs includes physiological, safety, love/belonging, esteem, and self-actualization needs. These needs can be used as a basis for evaluating the overall happiness level of individuals.

In order to achieve personal fulfilment you need to balance every aspect of your life, not just financially, but spiritually.

Self-Determination Theory (SDT)

Researchers have begun exploring the types of consumer choices that will satisfy a person’s psychological needs. SDT predicts that a person will be happiest when three basic psychological needs are satisfied: autonomy, competence, and relatedness. A person feels autonomous when his or her actions are freely chosen, self-guided, and internally (as opposed to externally) motivated. A person feels competence when they use their talents and abilities to master a skill or learn a new task. A person feels relatedness and connected to other people when their activities develop supportive relationships and when a person feels understood by others.

Easterlin paradox

The Easterlin Paradox is a key concept in happiness economics. It is named for the economist and USC (University of Southern California) professor Richard Easterlin, who discussed the factors contributing to happiness in a 1974 book chapter. Easterlin found that within a given country people with higher incomes were more likely to report being happy. However, in international comparisons, the average reported level of happiness did not vary much with national income per person, at least for countries with income sufficient to meet basic needs.

Gross national happiness

The assessment of gross national happiness was designed in an attempt to define an indicator and concept that measures quality of life or social progress in more holistic and psychological terms than only the economic indicator of gross domestic product (GDP). Elements that contribute to GNH
are subject to quantitative measurement:

• Economic Wellness
• Environmental Wellness
• Physical Wellness
• Mental Wellness
• Workplace Wellness
• Social Wellness
• Political Wellness

Analysis

Maslow's hierarchy of needs

Advantages: This theory provides a useful summary of human needs.

Disadvantages: The major problem with Maslow's hierarchy-of-needs theory is that it cannot be tested empirically – there is no way to measure precisely how satisfied one level of need must be before the next higher need becomes operative.

The model is too simplistic: The same product or service can satisfy several needs at once. The model lacks empirical support for the rank-ordering of the needs. The model is too culture-bound: it lacks validity across different cultures and the assumptions of the hierarchy may be restricted to Western cultures. Self-Determination Theory (SDT)

Advantages

• STD aims to explain individuals’ goal-directed behavior. Covers both intrinsic and extrinsic motivation factors.
• Consistent approach.

Disadvantages

• The impact of rewards, which SDT argues can powerfully exert control over behavior, but often at the cost of subsequent intrinsic motivation or internalization. Controversy is the cross-cultural generalizability of SDT. SDT suggest that whether collectivist or individualist, male or female, people function most, effectively and experience greater mental health when their behavior is autonomous rather than controlled.

Easterlin paradox

Advantages

• Focuses on every stage of product life cycle.
• Focus is not on one’s own objective condition, but on a comparison of one’s objective situation with a subjective (or internalized) living level norm, and this internal norm is significantly affected by the average level of living of the people around us. At any given time, the living conditions, or real incomes, of others are fixed, and happiness differences depend, therefore, only on differences in people’s own, actual, income.

Disadvantages

• The point-of-time result seemingly confirms the economists’ assumption that more money makes you happier, the life cycle result contradicts it.

Gross national happiness (GNH)

Advantage

• More accurate measure of well-being of the people.

Disadvantage

• No way to compute it accurately or objectively, or to make it comparable between countries or states with different attitude to complaining.

Select/implementation

The link between Maslow’s theory and happiness:

Well, to feel happy you need to be in a positive state of mind or feeling that is characterized by satisfaction or pleasure. Maslow suggests that to be able to experience those positive feelings one has to first satisfy needs. The upper you climb in the stair, the more intense, lasting and conscious the feelings of happiness will be. Maslow classifies the human needs in a pyramid shape. The basic, most primary needs, are put in the bottom of the pyramid. The other “less basic” needs are put on top of that level and so on. Through Maslow’s theory we can see that we can only attain self-actualization through accomplishing the blend of financial and spiritual needs. When the human being reach self-actualization he/she has achieved his/her true potential and achieved its purpose.

In other words, when the basic needs that are so important are not met, particularly those involving early childhood, the individual will continuously struggle to meet those needs as a survival mechanism. As a result, the social, ethical, and moral needs become neglected. Neglecting social, ethical, and moral needs renders the individual uncultivated and such inadequacy of character is often the foundation for pathological behavior because pathological behavior entails the execution of dynamics that are considered anti-social, anti-ethical, and immoral when viewed from that specific perspective and hence this explain the hunger for more and willingness to lose everything. “It is not success that make people happy but happiness that makes people successful.”

Religion

All religion disapprove of greed and especially in Islam greed is haram. Greed enslaves man and causes him grief. The greedy cares only for collecting fortunes without stopping at any limit. Whenever he achieves a goal, he works for achieving another and, so, he becomes the slave of hunger until death strikes him. He, also, exerts laborious efforts for collecting riches, but he is the less beneficiary. He tires for gaining fortunes, but death comes unexpectedly upon him to deprive him of enjoying that fortune. The heirs, then, enjoy his fortune very easily. Furthermore, greed takes to the slips of sinful matters that produce problematic situations in the world to come. It also hinders from doing charity. If one need to be successful in this life and after life they should follow in the footsteps of Prophet Muhammad (PBUH).

Amir al-Muminin (as) said: "A greedy man will always find himself in the shackles of humility." Amir al-Muminin (as) said: "Greed is the key to trouble and carries man to hardship. It causes him to commit sin."

“God does not love such as are proud and boastful, who hoard their wealth and encourage greed in others, and hide that which God has bestowed on them of His bounty – for disbelievers We prepare a shameful doom – nor those who spend their wealth to impress men, but who do not believe in God nor in the Last Day.” (The Holy Qur’an, 4:36-38)

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