“Create more than you spend”

“Create more than you spend” that was the sentence that most impressed me in the Jeff Bezos’ letter to Amazon’s stakeholders (2020).

I’ve never been crazy about Amazon and never had (still don’t have) stock (I actually don’t have any stock, just #BTC). First I was even ignorant. It was just another store in which you could buy stuff. Then I saw @John Brown talking about innovation and saying that Amazon expected to have 50% of its revenue in 5 years from things they didn’t invented yet. Wow! That was an innovative company (and innovative stockholders)! And when a friend working as a programer at Amazon explained to me how their AI could predict better than any human who would buy what… I was still impressed. But then came the tax exemptions stories and employees dissatisfactions. I got so disappointed. Maybe that is why I wanted to read Bezos’ letter: to try to understand. I could never anticipate what I read. I turned 180o back and now I’m sure not only Amazon is an amazing company, but also that Bezos deserves my respect and admiration. I hope that if you read the letter you will agree with me.

But the letter made me realize something more profound: If you want wealth to be distributed, then you are a capitalist! Because, to be distributed, wealth has first to be created and Capitalism is the system that best rewards wealth creation (and that is why there was no economical growth before it, as I learned reading Piketti).

The ability to create wealth, however, is not equally distributed. Not all humans are equal and some aggregate more value than others (now I finally understand what @Pedro Moneo said on the first day of our EFellowship). And some add desproporcional value, being disproportionally rewarded. That is part of the incentive system and that is fair.

Why then, if we assume for a moment that I’m correct, capitalism feels so unfair? I’ve been thinking a lot about it.

I narrowed down to 3 conclusions:

1. We are not there yet – It takes time to evert choices from the past, change incentives system, public opinion, migrate from one system of believes to another. It takes generations, because people don’t change their minds. Planck and Thomas Kuhn showed that. In the mean time, things get a lot better, but not in a nice way.
2. We will never be satisfied: greed my prevent us from from accepting the risks and the downsides, leading to the corruption that can prevent them. The power to corrupt is the ultimate imbalance that destroy capitalism. Phony capitalism. That is why rules without rulers blockchain and proof-of-work systems (aka Bitcoin) are so important for the future.
3. We blame the messenger: Some business models (ok, many. Ok, maybe most of them) are greed and do not rightfully reward or compensate aggregation of value (and risk taking). Natural resources and natural resources rich nations have been disproportionally uncompensated in these predatory business models. Workers and, ironically, consumers too. But it’s not about capitalism, it’s about business models and the way some companies manage to make their customers hostages.

Capitalism is all about incentives, risk and the assumption that some things are more scarce than others, specially talent, and specially very good talent. Capitalism allow for outliers to become attractors and become new influencers. Which other system does that?!

That is why I’m impressed with Bezos and Amazon, and I’ll be until I find evidence that instead of innovating and competing to maintain their leadership and market share, they are lobbying and corrupting to the same end.

Because when you corrupt to exempt your company from risk, you are stealing reward from those staking and risking in the opposite direction, which balances the system.