This Is How Money Works | Jordan Peterson

Video Transcript

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Investing into sound investments like big money does.

one percent of the people in the general population have the overwhelming amount of money and one tenth of that one percent has almost all of that right so i think it’s like the richest hundred people in the world have as much money as the bottom two and a half billion and you think well that’s a terrible thing and perhaps it is but what you have to understand is that that law governs the distribution of creative production across all creative domains right it’s something like a natural law and we can we’ll talk about that more but imagine what happens when you play monopoly you’ve all played monopoly what happens when you play monopoly one person ends up with all the money all right then you play another game of monopoly what happens one person ends up with all the money it’s actually the inevitable consequence of multiple trades that are conducted randomly so if you take a thousand people and you get them to play a trading game you each give them a hundred dollars say or ten dollars and they have to trade with another person by flipping a coin i win the coin toss you give me a dollar you win i give you a dollar if we all play that long enough one person will end up with all the money and everyone else will end up with zero so it’s a deeply built feature of systems of creative production and no one really knows what to do about it because of course the danger is is that all the resources get funneled to a tiny minority of people at the top and a huge section of the population stacks up at zero but to blame that on the oppressive nature of a given system is to radically underestimate the complexity of the problem no one actually knows how to effectively shovel resources from the minority that controls almost everything to the majority that has almost nothing in any consistent way because as you shovel money down it tends to move right back up and it’s a big problem but the thing you want to understand about that one percent issue that you always hear about is that it applies in every single realm where there’s difference in creative production every realm doesn’t matter number of records produced number of records sold number of compositions written so here’s an example five composers produce the music that occupies 50 percent of the classical repertoire right bach beethoven brahms tchaikovsky mozart that’s right those five so that’s another example of this prices law scaling it applies to all sorts of things like number of hockey goals scored is also distributed this way uh size of cities follows the same distribution so you know people talk about all the time about how unfair it is that one percent of the population has the vast amount of the money and one percent of the one percent has most of that money and one percent of the one percent of the one percent has most of that money but it is a it’s an inevitable conclusion of iterated trading games and we don’t know how to fight it we don’t know how to take from the people who have and move it to the bottom without instantly moving back up to the top different people maybe but still back up to the top because even the one percent churns a lot like i think you have a 10 chance if i remember correctly you have a 10 chance of being in the top 1 for at least one year of your life and a 40 chance of being in the top 10 for at least one year in your life that’s in canada and the us it’s less so in europe so there’s a fair bit of churning at the top end it’s not the same people all the time who have the money but it is a tiny fraction of the people all the time who have all the money anyways the reason i’m telling you about that is because after the peasants were granted their land and started to become farmers a tiny minority of them became extremely successful and those people produced almost all of the food for russia and the ukraine so what happened in the 1920s when bloody lenin came along and collectivized the farms was that they defined the kulaks who were these tiny minority of successful farmers who maybe had a brick house and were able to hire a couple of people and had some land and some livestock and were very productive people they defined them as socially unfriendly elements and they sent groups of intellectuals out into the towns to collectivize the farms and so the idea was that while you would pool your land and everyone would farm it collectively and the land was taken away of course from the tiny minority of people who were actually productive and had actually managed to own much of the land so you have to imagine how that would occur okay so it’s in the 1920s it’s after world war one russia is in pretty bad shape the villages are full of brutalized men who have post traumatic stress disorder and lots of people who are not doing well at all and the bloody intellectuals come into the town and they say you know those successful farmers up the street that you’ve always been pretty jealous about in your useless manner well they’re actually pigs and demons who are stealing from you so why don’t you come out we’ll form a nice little mob and we’ll take everything they’ve got and that’s exactly what happened and all those people were killed or raped or set off to siberia in the middle of the bloody winter where there wasn’t even anything for them to anywhere for them to live or anything for them to eat so they all died and then the consequence of that was a few years later six million people starved to death in the ukraine so the soviets really implemented and perfected the idea of class and ethnicity-based guilt it’s a very bad road to walk down and it’s something that we’re very much engaged in at the moment because there’s discussion everywhere in north america now about the idea of well race predicated guilt for example an ethnic predicated guilt it’s a very bad idea to classify an entire group of people as guilty of anything based on their group membership if you’re accustomed to keeping things in the fog in general you’re going to keep yourself in the fog with regards to your investments because in some sense everything you do is an investment i mean some of it’s quantified in monetary terms but you’re always investing in one man or another and so i think if your character has been disrupted by your persistent attempts to deceive yourself about the nature of reality you’re going to be a financial train wreck and i mean i’ve certainly seen that in my clinical practice seeing people burn through amounts of money that you wouldn’t think someone could burn through in that short period of time because of self-deceptive blindness if you have a high iq and you’re conscientious which is another trait then you’re more likely to be financially successful say by the time you’re in middle age and so that looks like two temperamental traits whose presence enables you to beat randomness over time so those traits work very well in this society at that this time but you can also argue that that’s also a matter of chance because there wouldn’t be unconscientious people if at some point in the past unconscientiousness hadn’t aided their survival so what constitutes beating a system depends on the parameters that you put around the system and you know you can think the same thing about well look at how successful he is okay you mean financially all right so then well how’s his health how’s his marriage how are his relationships with his children what price did he pay for his wealth you know like as you add dimensions of evaluation whether that particular person won or lost might not be so self-evident one idea that’s very common in our culture is that poverty is caused by lack of money and that’s a really stupid idea because money is very difficult to handle i had clients who were addicts and the worst possible thing that could happen to them was that they got some money they’re just done first of all you know they were hanging around with people who were little on the sociopathic side and so especially if they weren’t that bright and couldn’t defend themselves very well as soon as they got money while it was off to the bar with all the friends and you know one guy i remember in particular you know every time he got his disability check he was gone for five days he usually found him in a ditch you know because he’d just go to the bar spend every cent he had on alcohol and wake up in a ditch three quarters dead eventually completely and you know then he was ashamed and horrified and repentant and he’d straighten himself out again and then that was all well and good until as long as he was broke until the next check showed up and then bang the same thing so you know it’s not like money is necessarily a good for everyone it’s hard to manage money it’s really easy for it to disappear i mean elderly people have a hell of a time now because you know crooks are contacting them on the internet non-stop and so just giving people money it’s like pouring water in their hands it’s not that helpful not necessarily that helpful and then of course contributors to poverty are well it’s not so good to have a low iq you know people don’t like the idea of iq because it seems so arbitrary you know have a high iq well it’s not like you deserve it exactly it’s you’re set up that way pretty much right from the beginning it’s very very very very stable you can make a high iq person stupider by you know not educating them up to the level of their possibility but taking someone who has a low iq and trying to raise that it’s like if you can figure out how to do that well you know it’s nobel prize time for you because people have tried that a lot and our society is increasingly sophisticated so it’s by no means obvious you know the liberals think well this society is unfair because there’s unemployment and the conservatives think well there’s a job for everyone but none of them think well there are massive massive massive differences in people’s ability far greater than anyone realizes and that poses a structural problem i had a client and i go to him a volunteer job which is way harder than you think you need a police check for example like it’s harder to get a volunteer job than a real job but i got him in a volunteer job and he had to fold pieces of paper letters it was he worked at a charity he had to fold pieces of paper in three so that he could put them inside envelopes and then the letters which were in a pile had to be matched with the proper envelopes which were also in a pile but some of them were french and some of them were english so the french ones had to be matched carefully to the french envelopes and if there was one envelope out of order well then he had to figure out whether it was the papers that were out of order or the letters that were out of order and then some of the letters had photographs attached to them and you weren’t supposed to bend the photographs but they weren’t always in the same place so that meant you had to figure out how to fold the paper in three a bunch of different ways without creasing the photograph and then the other thing is and i never realized how difficult it is to put a piece of paper in an envelope until i watched someone who couldn’t do it and he probably had an iq of about 80. you know if you met him on the street you wouldn’t think anything different of him he was normal looking guy

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