Money and Value

Don’t panic ... this isn’t an economic essay, nor a treatise on the price of gold, rather its a musing as a result of various things I have been involved in, including budget planning for the Nottingham Credit Union (www.nottinghamcu.co.uk) some personal reflections on spending and just possibility a small influence from the current UK and Global predictions on growth, recessions, unemployment etc.

Lets start with a very brief history lesson. Money was invented by people in ancient times, (blame the Chinese, they seem to have done things like this well before the West) as an answer to the ineffectiveness of the barter system. Its all well to trade three chickens for a goat but what if you want a sheep but the sheep owner wants hay ? or if you only want one chicken, how do you divide the goat and what bits are worth a chicken..............the exchange rate of chickens, goats, hay and sheep would trouble the Bank of England or other financial authorities as much as today’s system, so money was invented.

At its basis is a way of trying to measure what very different things are worth or VALUED. This is where we start to see flaws in the relationship between money, which has numbers attached to it................. in the old days we used to say pounds, shillings and pence, but what the coins and notes are called doesn’t matter to my argument............... what is important is how the numbers become measure of value in their own right, when they patently should not.

If you have £1000 and I have £5000, I have five times as much, but your £1000 may in fact be worth more to you than my £5K to me. You have more value or can purchase what is valued more by you for your £1000.

Value is therefore personal, people and business enterprises, for profit or non profit alike, all see value differently.

We can go all philosophical and talk about love, loyalty, integrity, power, praise etc that is things that cannot be readily measured in money terms, though it must be admitted that many have tried. The Insurance industry can tell you what a life, or loss of  a limb or an eye is worth but their figures tell us nothing about the person affected or in the case of death, those connected with the deceased, what was that life really worth ?

However lets not get too morbid, the dilemma applies to any situation where people need to be valued, like my budget planning. The Accountants, also called the ‘moneymen’ or by some less respectful people, ‘bean counters’ have little problem, the cost of employing people is easily calculated and is easily reduced by shedding staff. What is lost is the value that these people deliver to their organisation, never mind the value they may make to the future.

On a more personal level, I might value  a nice car more than a neighbour who is happy with an old runabout and who would rather spend their money on home improvements. That's fine, he would not pay my definition of a reasonable price for a car and I would not pay so much as he would for a new kitchen.

I might value control over my time, against working for someone who takes those decisions for me and people do become self employed for that sort of reason and maybe sacrifice money and perks for the personal freedom.

If I am starving in the desert and someone has food and water, then I might be very happy to pay rather more than the Asda Price for it. Staying alive is valued more in money terms than the money itself.

If I were rich and famous (maybe one day, we can still dream), I could easily become adjusted to the wealth so I may be happy to spend £50,000 on an expensive Swiss Timepiece, rather than £20 on one from China which is just as accurate. The argument there is of course that if I were rich, then I need to look like I am rich, so conspicuous consumption is necessary. (Apologies to all modest multimillionaires driving 1999 model Ford Escorts and wearing Hong Kong Digital watches.)

On a more mundane level, maybe as we get older our priorities change, for some this may mean choosing between eating or heating, .......... for others more fortunate, enjoyment in the twilight years has a value which means you spend the money on things, on trips and whatever else you fancy, as otherwise you would only leave it to your children. Others may of course have a sense of value in maximising the inheritance to their heirs and that is their right.

Conscious that I am rambling a bit, I will end with saying that a past boss of mine was fond of saying. He applied it to all the situations where the ‘bean counters’ got excited over small expenditures and really excited when the budget was overspent on one line and underspent on another and to the numerous requests to show the value of a project or course of action, a value expressed in money of course.......the phrase was and I quote

“You don’t fatten the pig by keep weighing it”

Money measures things, its people who create and add value.