Merriam Webster defines the word “value” as “a fair return or equivalent in goods, services, or money for something exchanged.” More broadly, value is defined as something’s relative worth, but relative to what?
Mostly we think of value in economic or financial terms. Money, our commonly used medium of exchange for most goods and services, once had intrinsic value of its own. Gold became the de-facto standard of measure for monetary systems because of its stable value over time. “Good as gold” became a common metaphor for something representing consistent and stable — as opposed to relative — value.
We temporarily went off the “gold standard” in 1933 after the “Roaring Twenties,” the selfishly excessive predecessor to the go-go ’80s and ’90s which led to the Great Depression and ultimately World War II. By then, the ability to issue debt far in excess of the value of America’s gold became a matter of survival. President Richard Nixon took the United States off of the gold standard for good in 1971. Today even the value of our money is relative, in theory, to the value of goods and services produced by our economy.
For me, “value” has far greater meaning than the relative financial worth of currencies or goods and services. Our individual and collective judgments about what is valuable extend to all aspects of human life, financial and economic yes, but the relational, environmental, and communal elements of our lives are also vessels laden with value-based thinking only indirectly related to monetary transactions.
Genuine value represents far more than the cold transactional outcomes of our daily pursuit of financial success and survival. Our value-based decisions come from within. Genuine value is both personal and absolute, it is not relative.
Creating value means improvement. Forming raw materials into a finished product or assembling individual components into a single more useful tool — the construction of a house or the integration of the wheel and the steam engine into the locomotive — are basic examples of transactional value creation, innovations whose benefits spread widely while also rewarding those responsible for their construction.
We also add value to our own lives and the lives of others in relational ways. A kind word to a friend, a patient ear for the concerns of a neighbor, or the emotional support of a parent to a child are simple yet powerful examples of relational value creation — that societal web that ties us together and continually reinforces and strengthens our intertwined fates.
Value requires both the transactional and the relational. Unfortunately today more and more of our creative effort and energy is expended in ways that simply exchange value, or in many cases destroy value rather than create it.
Professional investors are trained to identify value and more importantly the potential for value creation, and then recommend such investments to their clients. Many — perhaps even most — still do, but more and more, investors react to externalities and short-term trends brought on by technical or environmental factors unrelated to the ultimate potential value of the investments in which they put their own and their clients’ money. Those who excel at this type of investing can create great wealth for themselves and their clients, but do they create value? They will tell you that they do, but I am not so sure.
When the federal government creates trillions of dollars in debt, not to finance new infrastructure, or otherwise beneficial public improvements, but to take onto its own balance sheet in order to artificially lower interest rates, it does so with the stated intent of stimulating economic growth, thereby creating value. Does the issuance of debt carrying a zero rate of return to the taxpayer, and an almost zero rate of return to the bondholder, actually create value? Some will tell you it does, but it looks to me like the manipulation of relative values, not the creation of anything resembling new value.
When an internationally famous ski town’s economic exactions and land use policies make development of a slope-side ski lodge economically impossible, or when that same town’s leaders decide that the exclusion of private residential development in its downtown core will somehow stimulate economic growth and vitality, something other than the creation of value motivates their actions.
Neither wealth, nor debt, nor regulation constitute value or the elements leading to its creation. Value simply stated is created by those who make and do for themselves while also benefiting others. It is the act of creating instead of taking. It is what we make and do, and who we make and do it for, that makes each of us who we are and no, there is nothing relative about it. If you don’t understand this concept, you have at some level succumbed to our world’s economically driven “divide and conquer” power politics.
While perfecting transactional strategies for wealth creation at the expense of others, we have forgotten the relational elements necessary for the creation of genuine value in business, in government, and in society. We need to rediscover these elements rapidly. The last time economic, moral and social relativism spread across the globe to current levels, it took a world war to bring us back to our senses.
Email Paul at Pmenter98388@gmail.com.