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| I’m a huge game player.
My family owns at least 100 games: board games, card games, and dice games. (If we add in video games, we're into the thousands.) Most nights we play at least one game together.
Although I play for fun, a side benefit is that games sharpen your real-world strategy skills. (LinkedIn co-founder Reid Hoffman said that obsessive game-playing as a kid helped him build his personal fortune.)
Games can also make you a better investor, because so many of them -- especially modern ones -- involve some kind of in-game money. They give you a feel for "money mechanics," or the hidden laws that govern the universe of money. In my family, we go through phases: we’ll play the train-building game Ticket to Ride religiously for a year, then switch over to the jewel-collecting game Splendor. Our current favorite is the deck-building game Dominion, but next month it'll be something new. But there’s one game that we do not play: Monopoly. |
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| Now, I loved Monopoly as a kid. My friends and I would play these epic games that would last for weeks, rendering the dining room table unusable until we were finished. And if you remember Monopoly, that could be a very long time. Part of the reason that Monopoly took so long was that we played with the “Free Parking” rule. You may remember how this worked: instead of paying all your taxes and fees to the bank, you put them in a pot in the middle of the board. When someone landed on the “Free Parking” square, by luck, they received the entire pot. Hasbro, the makers of Monopoly, doesn’t recommend playing with this rule, because it makes the game intolerably long. This is why our childhoods were filled with Monopoly marathons: every time someone was close to winning, another player would hit the Free Parking lottery, extending the game for another two weeks. So why did we play with Free Parking? Sure, it was fun to hit the jackpot. But more importantly, it felt terrible to lose to the most powerful player.
It didn't seem fair. I vividly remember that feeling of one person amassing more and more wealth, buying up the most powerful properties and upgrading them until the rents were unpayable. Do you remember the terror of rolling a six and landing on Boardwalk with a hotel? If we wonder why capitalism has run amok in our society, the widening gulf between the rich and the poor, maybe we should stop encouraging kids to play Monopoly for their entire childhood. Seriously. Get as rich as possible, raise rents, and drive your opponents to bankruptcy? Thank you, Hasbro, for educating our children. |
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| Every child's dream: Boardwalk with a hotel. The Rise of the Super-Rich Few of us want to live in a society where the rich continue to get so rich that they drive everyone else to financial ruin. Yet this Monopoly dynamic is playing out, right now, in real life. In his excellent book Capital, a New York Times bestseller with over 2 million copies in print, economist Thomas Piketty shows – with some of the most rigorous data ever compiled – the staggering inequality that has grown across the world since World War II. I am generally not a fan of economics, which I consider a kind of pseudoscience, but Piketty won me over right away with this passage: "To put it bluntly, the discipline of economics has yet to get over its childish passion for mathematics and for purely theoretical and often highly ideological speculation, at the expense of historical research and collaboration with the other social sciences. Economists are all too often preoccupied with petty mathematical problems of interest only to themselves. This obsession with mathematics is an easy way of acquiring the appearance of scientificity without having to answer the far more complex questions posed by the world we live in." It was like he lifted this thought right out of my brain. All right, Piketty, I thought, I'm all in. I’ll read your 704-page magnum opus. To distill this master work into a sentence, Capital shows that wealth inequality is getting worse. The game of Monopoly is playing out, in real life: |
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If you let these numbers sink in, it's pretty sobering: The top 10% earn half of the income in the U.S., while the bottom half earn just 20%. It may help to see this as a chart: |
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| Since World War II, the top 10% are sucking up more and more wealth; the top 1% even more so.
Sure, we all kind of know that: every time we see a billionaire blast off into space, we’re reminded that the rich are getting richer. What Capital really brings to the table is the explanation of why. Why? Why, as a society, do we choose Monopoly over more cooperative games like Settlers of Catan? Like Einstein’s theory of relativity, the central premise of Capital comes down to one equation: r > g In simple language: when the rate of return on wealth (r) is greater than the rate of economic growth (g), the rich get richer and the Monopoly board tilts in their favor, driving everyone else to bankruptcy. In other words, the wealthy will always use their money to make more money (in the form of higher rents, offshore investments, and so on), but when these profits exceed the growth rate of the entire economy, the balance of wealth moves inexorably to the rich. Although this is exactly what happens in Monopoly, there’s one problem: we don’t want society to work like Monopoly. Unlike the game, which we hope will come to a merciful end, we want society to continue. We don’t want the top 10% to own most of the world, while the bottom half owns nothing.
Instead, we want some kind of wealth redistribution, like the “Free Parking” rule in Monopoly. Kids understand this. Why don’t adults? This is where blockchain can help. |
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One World, One Money, One Tax I have previously proposed that we move to a “one world, one money” system: a blockchain-based digital currency, used by all nations, overseen by a global bank like the International Monetary Fund. (More details here.)
"Isn't that bitcoin?" you ask. I don’t see bitcoin fulfilling this vision, at least in its current incarnation. The price is too unstable to use as a currency. It’s too energy-intensive. And the pace of innovation is too slow. But I believe bitcoin will be used as the model. This new supranational currency -- which our reader Chuck Coffey suggested calling “Unicoins” -- is possible for the first time in history, thanks to blockchain technology. It’s a Central Bank Digital Currency for the world. Such a currency would have world-changing advantages. It would make payments between countries faster and cheaper. It would help us better measure money flows between nations. And, importantly, it would help us make the world economy fairer. And it gets better.
One of Piketty’s answers to the growing divide between rich and poor is that we implement a global wealth tax. In other words, we tax the rich, at the same progressive tax rate, no matter where they live or hold their wealth. This tax would not only provide much-needed transparency on wealth flows (since the wealthy often hide their money in offshore tax havens), but provide a set of global rules for the global economy. Piketty admits this idea is “utopian,” as coordinating all the countries of the world to agree on a single tax seems futile. But he argues that a global wealth tax is the best and fastest way to flip r>g into rshare the wealth. It’s not just “tax the rich.” It’s “tax the rich, fairly and consistently, worldwide.”
With blockchain-based cryptocurrencies, this is no longer a utopian dream. We truly can flip the world onto a single digital currency, and program this tax into smart contracts. Remember: Digital money is programmable. To be sure, there are technical challenges to realizing such a vision. But the basic premise – a one-world global money, programmed with a global wealth tax – will transform human society. It will allow us to lift much of the world out of poverty, to offer more people education, to fund more businesses and innovation. It will allow us greater mobility between social classes (meaning you can move more easily from working class to middle class, or middle class to upper class). A global cryptocurrency, paired with a progressive global tax, will allow us to invest more money into education, healthcare, and business funding. This will make people better able to learn useful skills and work useful jobs, which will make them more productive, and help us grow the world economy. Everyone benefits from that. The rich didn’t earn their money in a vacuum. They benefited from excellent schools, excellent health care, and a government that encouraged private enterprise. We want to take more of that wealth and put it back into these public institutions, so more can benefit. Put simply, we want health, wealth, and happiness for all. |
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| Ironically, Hasbro has a monopoly on Monopoly.
Let’s Be Fair Few of us want society to operate like Monopoly, which is why we actually have anti-monopoly laws. (Though, sadly, still no anti-Monopoly laws.) This is because we fundamentally believe in fairness. We understand when one company, or the one percent, take over the world, it is increasingly difficult for others to play. For paid subscribers of our newsletter, we’re releasing a series of "Investor Mindset" podcasts – think of them like guided meditations for investors – to help you reprogram your brain to build health, wealth, and happiness.
Our latest episode is on helping you cultivate the virtue of Fairness. Click here to download Episode 12. TLDR: A global cryptocurrency, with a built-in global tax. It’s only fair. |
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| Health, wealth, and happiness, John Hargrave Publisher |
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Bitcoin has experienced astronomical growth over the last decade. Hopefully, this impressive growth will continue! |
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Could AOC become Alexandria Ocasio-Crypto? |
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