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The Importance, or Lack Thereof, of Making Money

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In my article earlier today about the recession era bail-out programs, I touched on the idea that sometimes, there are methods to judge a decision outside of its immediate profitability. The bail-outs may have provided a return on investment for taxpayers or they might not have. The idea that the programs could earn money was certainly used as a selling point when the programs were initially up for discussion in Congress, but the idea of preventing a full economic collapse trumps the possibility of walking away with “more” at the end than the money that was put into the efforts.

I recently read in the news about the U.S. Postal Service cutting its workforce by 150,000 workers between now and 2015. The Postal Service has announced the first round, offering buyouts of $15,000 to 45,000 mail handlers. This first round of buyouts would total $675 million but would help stave off the organization’s growing losses in the billions. Last year, I discussed the complete elimination of the Postal Service in favor of private companies that may do the job of delivering mail better — though at a higher price. A lively discussion ensued, with participants offering well-reasoned arguments in favor and against eliminating the U.S. Postal Service.

The final comment was from John, who added the following.

You people watch too much news, and learn too little real truth. You need to worry about your own lives, and stop thinking you can fix the world by balancing its books. Some things are not meant to make money.

Cash in handThis thought is worrisome. An enterprise that does not make money is not sustainable by itself. If we don’t proactively address the problems of mounting losses for the U.S. Postal Service, it will disappear on its own. The Postal Service does not receive any taxpayer funding, so it must pay for its own operations through its own declining revenue. Unless the organization finds a way to adapt to changing consumer demands, such as the declining need for mailing and delivery of letters, it will collapse under the weight of its own operating expenses. Reducing those expenses by cutting back its workforce and perhaps eliminating a day or two of service will provide some temporary aid. It’ll take a significant change in the business model to make the U.S. Postal Service viable over a longer period of time.

John’s point is interesting, though, because it points to an assumption that is easy to skip past without looking: that something is only worth doing if it makes money.

American society is built on this idea. Money is what we use to afford the things we need to survive first, such as food, water, and shelter, followed by everything else we would like to have that goes above and beyond the basic life needs. Without money, we would need to turn to bartering or indenture to survive. We could work for someone else who directly provides what we need to survive in return for that work, or use our skills in exchange for food and shelter. These are inefficient, so the use of money makes life infinitely more bearable and opens the opportunity for people to build wealth over time.

Sometimes, however, the things worth doing are not very profitable. People often work for non-profit organizations when they believe in the missions of those organizations, even if their skills could attract a higher salary working for a for-profit company. Investors don’t simply put their money into the investments with the highest possible returns, they invest in what’s relevant to their lives.

In my own life, I am looking to my future and attempting to decide on a number of possible paths in terms of my career. On the one hand, it would be nice to take what I’ve earned from investments and find new opportunities that allow me to make the best use of the skills I’ve developed to, I hope, provide a continuation of income. I’m openly looking for business opportunities and forming new partnerships. I’ve already been in several discussions with potential partners about ideas that could prove to be profitable, though some touch on my need for creativity a little more than others.

The impetus is to make money, whether by creating a product or service for which customers are willing to pay or by creating something of value for investors. Serial entrepreneurs start businesses with the intent of selling those businesses later on for a profit, and expert serial entrepreneurs are able to repeat this pattern several times. You almost have to lack a passion about your businesses in order to change directions frequently and to come to terms with putting your hard work behind you. I like to consider myself passionate about the work that I do when I have the flexibility to be in control of it, so the detachment that serial entrepreneurship requires might make it unattractive to me.

I’ve also considered other opportunities, not as much focused on the potential to sell either products, services, or the business itself. Having built up an emergency fund and safety net is essential in order to have the luxury of contemplating spending significant amounts of time, energy, and possibly money, on ventures whose path to profitability is murky or even impossible. I’m passionate about the arts, and I’d like to spend more time exploring that area of my brain.

One part of me would like to find an opportunity that has a path to profitability, but that isn’t going to be easy. The more I focus on determining how I can have a lucrative life involved in the arts, the less time I’m spending being involved doing something. My desire to find this balance probably started when I worked for an arts-related non-profit out of college, not earning any money and being very frustrated with my situation.

The market defines which activities are worthwhile, and a pure economic view makes that easy. The salaries for engineers are higher than the salaries for teachers, so from an economist’s perspective, the market has determined that engineers are more important to society than teachers. Supply and demand is at work, too. It may be harder to become an engineer than it is to become a teacher. If everyone placed the highest priority on earning money, more people would forget about teaching entirely and strive to become engineers (assuming I’ve simplified the economy so much that engineering and teaching are the only options for careers).

That might drive up supply and eventually force engineering salaries down, but obviously, society would not be able to function in the condition where earning money is the sole driver for life’s biggest choices. Yet that is exactly how a lot of advice-givers and gurus see the world. We must invest in the stock market for the long term to provide the highest chance of retiring with enough money. We must choose a career that doesn’t leave us moving back in with our parents. We must do the work as required of us by our bosses and exceed expectations in order to plead our cases for a minuscule raise that doesn’t have that much relevance over the course of our lifetime. We must negotiate with our credit card company to lower our APRs, avoid debt whenever possible, and cut out daily lattes.

This is a world that is focused primarily on money rather than on satisfaction with one’s life. Once you have enough money to survive your life in an acceptable condition, you can move beyond the limitation of needing income and can start to tackle problems and questions without the concern about whether it is profitable to do so.

Photo: stevendepolo

Updated May 30, 2012 and originally published May 29, 2012.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 5 comments… read them below or add one }

avatar 1 Anonymous

I think your last paragraph sums up the entirety of the situation. In era’s past you would do enough to provide for your basic survival needs or you would not survive. In the modern era that is mostly true except that you can get govt assistance that keeps you at minimal survival.

Once you are past basic survival then the extra is to provide a more luxurious lifestyle that can reach many different levels but none of it is required and you can certainly choose to do things for many reasons beyond financial. But until you reach basic survival its a near necessity to thinking financially first. People don’t take a second job because they love both jobs so much they can’t stand not to do them. They do them because they can’t make ends meet with the lifestyle they have chosen.

As to the comment by the reader that some things are not meant to make money, there is some truth to that. The fire dept is not meant to make money. However for any organization / business / activity / service that exists there are only 2 options. Either it is self sustaining in that it at a minimum makes enough to break even (and typically it needs to make profit not just break even or people will stop doing it), or it has to be something that the community has decided has value beyond a financial return and everyone decides to pay to subsidize and support that activity because they think it has other benefits that make it worth it for everyone to pay some money to have it. That is the situation with the fire dept. There are others like that as well.

The post office either has to make enough money to break even or we would have to change the law so that we all paid higher taxes so that some people who send a lot of mail can send it below cost. Who uses the mail system the most? A typical middle or low class household or businesses / organizations / etc? Why would we want to pay higher taxes so that large organizations can send us mail at below cost? I don’t think most people would think that was a very good idea when they stop and think about what it would mean for the post office to be allowed to operate at a loss.

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avatar 2 Luke Landes

Thanks for bringing up the idea that businesses are the primary customers of the U.S. Postal Service, not individuals sending letters or packages. Bulk mail discounts used by large companies and non-profit rates available to certain organizations are already subsidized by other customers. In other industries, it’s the bigger customers who subsidize others. For example, at least until recently, banking fees were concentrated among commercial customers, while individual customers received services practically for free. Now customers have been asked to pay up with new monthly fees and other increases. In the same respect, low-credit credit card customers and retailers helped subsidize middle class credit card customers, who receive rewards on their purchases for free. Various systems are set up that ensure that one class of customers subsidizes another class. We’re OK with wealth redistribution as long as it’s in our favor.

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avatar 3 Anonymous

Great article. If we live our whole life obsessed about making money and only doing things that are profitable, we will end up having a miserable and meaningless life.

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avatar 4 Anonymous

Great article! And good point, Carl. But… and you knew this was coming! :)

Like it or not, but the overwhelming majority of us are chasing our drop dead money, i.e. money that will allow us to tell bosses and others to drop dead. Call it what you will, that drive is almost universal. The only thing that changes is the number – some make do with less, others chase the pot of gold.

Those who elect to place a higher value on non-money things achieve those things only to the degree that the money part is also taken care of.

I have observed that there is much more love and peace in households where the finances are in order, i.e. there is an emergency reserve, expenses are less than income, debt is either decreasing or gone, etc.

We don’t live to breathe, but cut off our air and we’re toast. This is true for individuals and organizations alike, even the Fire Dept. An organization leader (such as the fire chief) who ignores his oxygen supply will soon preside over a corpse.

But, and this gets back to Carl’s point, if air is all we ever pursue, we live a pretty empty life.

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avatar 5 qixx

Money is just the means to an end. Life is not about money for anyone (not named scrooge). It is about what the money allows you to do. According to the Journal of Consumer Psychology “If money doesn’t make you happy, you probably aren’t spending it right”. They even have validated research to back up that claim. All the talk about money is really about finding happiness.

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