Joshua Diedrich Blog
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Money and business are often scary, confusing things, that leave creatives, and people with powerful ideas feeling powerless.
To understand that world, you first need to understand your own place within it.
In 1916 the Dodge brothers, John and Horace, who owned a minority stake in Ford Motor Company, sued Henry Ford, claiming he was depriving them, as investors, of income by pricing his cars too low. Ford had plans to dramatically reinvest most of the money the company was taking in, to increase production while constantly lowering the price to boost sales. It seemed beneficial to the consumer who would be able to buy a car. It seemed beneficial to the workers who would be able to be employed and thus have the money to themselves buy cars.
Ford had plenty of bad ideas in his time, but he was unusually good at long term, holistic economic thinking– a strategy that recognized that any business is part of a larger ecosystem.
Ford had plenty of bad ideas in his time, but he was unusually good at long term, holistic economic thinking– a strategy that recognized that any business is part of a larger ecosystem.
A river can’t simply take water away from the sea and hoard it without eventually depriving itself, down the road. That’s not the way rivers flow anyway. As Ford said around 1928, “If we want the farmer to be our customer, we must find a way to be his customer.” A business the size of Ford Motor Company can’t simply maximize profit and take without giving back. Hoarded resources, like hoarded water, aren’t good for much. Rivers and rain are better than underground reservoirs. To be useful, to be worth their maximum worth, resources have to be constantly moving around.
The Michigan Supreme Court ruled against Ford in that case and established the principle of shareholder primacy– the idea that among all the many people who contribute to make any business function; customers, managers, workers– the only ones that really matter are the people who put up the money.
It’s an idea most of us accept without question today– that investors need to be protected above all other concerns, which is a shame, because it’s an incredibly stupid theory, for everyone involved.
The Michigan Supreme Court ruled against Ford in that case and established the principle of shareholder primacy– the idea that among all the many people who contribute to make any business function; customers, managers, workers– the only ones that really matter are the people who put up the money.
It’s an idea most of us accept without question today– that investors need to be protected above all other concerns, which is a shame, because it’s an incredibly stupid theory, for everyone involved.
But like most stupid, shortsighted, economic theories that benefit the powerful in the short-term, it’s extremely popular.
Common sense ought to disprove it immediately– if you’re running a small farm, you can take some of what you grow as profit, but some needs to be held back for seed for next year. Likewise, you an your workers can work hard, but not 24-7, some time needs to be held back to rest, and since we’re dealing with humans, to enjoy the fruits of your labor, otherwise, what’s the point of working? There are many factors like this, and every one of them has a balance point– a place where both profits this year, and next year, and ten years from now, are maximized. Profits are important sure, but they can never reach their full potential if they’re seen as more important than all the other, more human, less easily quantifiable, parts of any business.
That balance between profit and other factors can work in many ways, but the one way it absolutely *never* works best is to take all your food now, and save nothing for seed, to work your workers til they drop today, and have no-one left tomorrow. What never works best is to prioritize profit above all other factors.
As humans, we don’t ultimately want or need profits.
We want human things, that are rare, and harder to find.
Profits are just a way for us to eventually get to those things.
In our modern economy, these kinds of ideas only “work” because we’ve split all enterprise into multiple parts, so it’s possible to just be the guy who takes the food and eats it, and figuring out how to re-plant next year is someone else’s problem. It’s possible to just be the guy who rests and enjoys the fruits of labor, finding the energy to work more tomorrow is someone else’s problem.
It’s possible in a world like that to just look at the guy taking profits, playing with hoarded resources, and refusing to deal with the problems of where those resources come from tomorrow, and think he must be pretty smart and powerful.
That would be wrong, he is in fact *lucky*, and only in some ways, and only in the short term, but it’s easy to think that way.
That balance between profit and other factors can work in many ways, but the one way it absolutely *never* works best is to take all your food now, and save nothing for seed, to work your workers til they drop today, and have no-one left tomorrow. What never works best is to prioritize profit above all other factors.
As humans, we don’t ultimately want or need profits.
We want human things, that are rare, and harder to find.
Profits are just a way for us to eventually get to those things.
In our modern economy, these kinds of ideas only “work” because we’ve split all enterprise into multiple parts, so it’s possible to just be the guy who takes the food and eats it, and figuring out how to re-plant next year is someone else’s problem. It’s possible to just be the guy who rests and enjoys the fruits of labor, finding the energy to work more tomorrow is someone else’s problem.
It’s possible in a world like that to just look at the guy taking profits, playing with hoarded resources, and refusing to deal with the problems of where those resources come from tomorrow, and think he must be pretty smart and powerful.
That would be wrong, he is in fact *lucky*, and only in some ways, and only in the short term, but it’s easy to think that way.
This isn’t a post about economics though.
I’m only going down this path to make a difficult point for you, as someone who creates things. It’s a tough thing for artists and creatives, entrepreneurs, to understand: money is not special.
Money is not unique.
There are millions and millions of people with money out there, and none of them has money that is any better or worse than anyone else’s, except in their own mind. Money is a kind of power, but it’s like water. You need a source of it to survive. In a world like Ford was advocating for, a place like Michigan, water is everywhere, and always moving. In a poor, desert world like the Dodge’s and their successors today wanted, the world we got, water is horded by a few, and it’s possible for people to hold power over each other by having a cup of water, something that would be laughable in Michigan.
Money is a placeholder. No business person creates or destroys it. No business person is master of anything more than what they personally have in their hand, usually, not even in control of that much.
Money is a placeholder for things that people actually need and value, it is not valuable itself, and any person with money only has the ability to get other things that people value. Scarce things, special things, necessary things for survival. That’s it. That is their only power. They can not *make* food, or antiquities, or special, rare things. They can only ask other people to do it for them.
If one person with money doesn’t like you, you can always find others.
Money is not unique.
There are millions and millions of people with money out there, and none of them has money that is any better or worse than anyone else’s, except in their own mind. Money is a kind of power, but it’s like water. You need a source of it to survive. In a world like Ford was advocating for, a place like Michigan, water is everywhere, and always moving. In a poor, desert world like the Dodge’s and their successors today wanted, the world we got, water is horded by a few, and it’s possible for people to hold power over each other by having a cup of water, something that would be laughable in Michigan.
Money is a placeholder. No business person creates or destroys it. No business person is master of anything more than what they personally have in their hand, usually, not even in control of that much.
Money is a placeholder for things that people actually need and value, it is not valuable itself, and any person with money only has the ability to get other things that people value. Scarce things, special things, necessary things for survival. That’s it. That is their only power. They can not *make* food, or antiquities, or special, rare things. They can only ask other people to do it for them.
If one person with money doesn’t like you, you can always find others.
Easily.
Money is neither rare, nor scarce, nor special. It’s just a placeholder for more valuable things.
Here’s why this matters:
As a creative, as an entrepreneur, you have the power to make special, rare, valuable things out of thin air.
You are the rare thing. You are the valuable commodity. You are the thing of value that money is just an empty symbol for. You give meaning, both to the money itself, and to the *lives* of the people who hold it. You create meaning that they absolutely *can not* create or acquire without you. They need you. Not the other way around.
Act like it.
Be worthy of it.
Here’s why this matters:
As a creative, as an entrepreneur, you have the power to make special, rare, valuable things out of thin air.
You are the rare thing. You are the valuable commodity. You are the thing of value that money is just an empty symbol for. You give meaning, both to the money itself, and to the *lives* of the people who hold it. You create meaning that they absolutely *can not* create or acquire without you. They need you. Not the other way around.
Act like it.
Be worthy of it.
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