If you recall, this bank tax was meant to persuade the banks to build up their capital reserves by retaining 2009’s windfall profits (which at investment banks were gained trading the broken markets and Government special measures that the banks themselves caused).
Policymakers – who work partly out of a sense of civic good – underestimated bankers, who are driven entirely by money. Bankers paid the bonuses anyway. It’s shareholders who’ve lost out.
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The intersection of money, consumption, and happiness is a crucial topic.
Higher incomes do not make you happy, after a certain point. (After you’ve read this post and watched the video you’ll know the exact income required for happiness!)
Perhaps it’s our growing understanding of these truths that’s led to the new cultural trend (or revival) of seeking experiences instead of chasing money or material goods.
Ditch the consumer lifestyle, and consume life instead!
Best-selling writer Tim Ferriss has based his career around the idea you should generate just enough money for travel or other experiences – which he explicitly contrasts with grinding away to pay down a mortgage for 30 years.
Then there’s Man Vs Debt – one of a posse of leading bloggers who’ve forsaken material goods in favour of experience and travel.
Do you get what you pay for?
In a recent debate on the Financial Samurai blog, I was surprised how nearly everyone favoured spending money on experiences over stuff.
Don’t get me wrong – I don’t like spending money on either! When salesman see me coming, they scratch their chins awkwardly and sidle off to extract haemoglobin from nearby stones.
Yet I do question the new wisdom that says buying happy experiences is always better than buying something solid and real that will potentially bring you happiness today, tomorrow, and beyond.
It’s a more difficult question than it looks. If we spend money on, say, travel:
Are we buying the experience of being happy on a tropical beach?
Or are we buying the memory of being on that beach?
A week lasts for the blink of an eye, in comparison to a 70-year long life. The memories are forever – well, what you can remember are – but they cannot take you back to truly re-experience the beach for even a microsecond.
Why not buy a posterbook for 1/1,000th of the price, memorize the pictures, and try to convince yourself that you went?
Experience versus memory
I jest, but only a little. There is something profound at the heart of this debate.
Let’s bring in an expert, Daniel Kahneman. Perhaps the world’s greatest living psychologist, Kahneman won the Nobel prize for Economics for work on behavioral economics – exploring the irrational ways we make decisions about risk.
Kahneman recently gave a TED lecture about how we experience happiness very differently to how we later remember it. This difference has consequences for how we run our lives.
Beware: This video could change more than just how you spend your money.
A conclusion? Not likely
You’ll forgive me for not writing a snappy three line summary of what this video tells us about how to spend money. I’m not about to pick up the Nobel Prize for solving one of mankind’s deepest mysteries in a blog post.
But I do find this subject and Kahneman’s lecture fascinating.
My first thought is that what matters most is structuring your life in a way that’s important to you, and then using money to create not just memories or even happiness in the present, but also a future you can look forward to, and a sense of satisfaction about your past.
Like this you’re getting more from your money than just a memory – you’re getting aims, goals, and achievements, too.
Please do share your thoughts on whether the fleeting long-term memories from an experience are really worth the price of entry – or whether you’re better off buying a motorbike – in the comments section below.
Admittedly Blair’s warning of the financial crisis was 20 years too early… 🙂
This is a great news report from the 1987, which reminds you that there’s always something terrible going on in the markets. Panic is nothing new.
Doesn’t Tony Blair sound wise? And posh? And young?
And prescient, when it comes to the financial crisis:
“The real problem we’re left with is that we now have an economy which is so locked in to international trading, so dependent on what happens in America, that anything that happens in Wall Street reverberates around the world. Now the key lesson that we’ve got to take out of this is the necessity for governments of any political colour to work together to stop the excesses of the free market, because that’s what’s really been shown over the last few days.”
Perhaps Blair saw the writing on the wall for the markets while still Prime Minister, and so let Gordon Brown take his job – and later the blame for the financial crisis?
