There’s a confabulation that frequently circulates among a few of my financially successful friends that being rich is their Divine Right. “If all the money in the world was taken from the rich and redistributed to the poor, in a very short time it would be back in the original hands of the rich” they argue. They have a point, and while I would argue things are considerably more complex than that, neuroscience – in one sense – comes down in their camp where the acquisition and management of money is concerned. But not necessarily for the reasons they think.
Money Is as Money Does
From a purely neural network perspective, if you have done the work to become wealthy with respect to money (and as Buddhist poet Gary Snyder points out – there are many, many ways to become wealthy that have little to do with money), the brain cells in your network have become connected in massively large, dedicated networks. Robust money networks in the brain deploy greater amounts of energy and information when it comes to money than do the networks of people who don’t have much money (poor people’s networks do all they can to try and manage the excessive levels of stress having little money generates). The more you immerse yourself in any field, the more your brain grows nerve cells and makes connections related to that field. It’s called learning, and the neurological underpinnings of learning are universal (an interesting corollary: 90% of people who inherit money, that is, people who themselves have NOT spent decades with their brains immersed in learning about money and finance, eventually dissolve their accumulated wealth – they typically go from “shirtsleeves to shirtsleeves” – in three short generations!).
Among many things that Bill Gates is known for, one is his apparently well-earned observation that, “It’s harder to give money away well, than it is to earn it in the first place.” Right, unless the people he’s giving it to have neural networks learned in managing money well. In which case, they probably don’t need his money! Better would be to require recipients to grow money-management networks first. Who does Warren Buffet give all his charity money to? Why, Bill and Melinda Gates, of course.
Attention Must Be Paid
There’s a neurological truism that suggests whatever we pay ongoing attention to tends to increase. There’s a common descriptive term that applies. It’s one that we’re all familiar with: kung fu. Kung Fu essentially translates as “skill acquired through hard work.” At a very basic level Muhammed Yunus took advantage of this neurological truism and won the Nobel Peace Prize in 2006 for establishing micro-credit and micro-loans. He essentially taught money kung fu by making small loans to people to start small businesses. Once that loan was paid off from business profits, borrowers could borrow incrementally larger amounts of money. Rinse and repeat.
Along the way, the people Yunus’s Grameen Bank funded significantly changed their brains: money was no longer this mysterious commodity that mostly caused them anxiety and that they never had enough of. Their brains increas- ingly learned to simply use borrowed money as a tool, just like Apple Com- puter does with the $85 billion dollars of debt they currently have on their books.
The Effect Effect
The Matthew Effect, first coined by CASBS fellow Robert Merton in 1968, underscores this neurological reality. Matthew 25:29 from the King James bible, declares: “For unto every one that hath, more shall be given, and he shall have abundance; but from him that hath not shall be taken even that which he hath.” And while Merton primarily applied the meaning to scientists and their ability to garner fame and research funding, the Effect clearly generalizes to other activities where human brains operate.
Two neuroscience corollaries are worth noting. The first is Hebb’s Law: “Neurons that fire together wire together.” The learning that Yunus’s borrowers experi- enced by borrowing money to start and expand small businesses changed their brains, expanding and wiring together network connections in the process. They had to grow in their knowledge and ability to recognize and creatively address the money challenges that every small business owner has to recognize and overcome. In other words, they had to do hard work, i.e. practice kung fu.
Lose It or Use It
The second corollary is, “If you don’t use it, you lose it.” Tracey Shors and her colleagues at Rutgers University have shown that adults – even old fogies like me – grow thousands of new brain cells every day. Unfortunately, many of them fail to thrive. The reason: they are not placed into productive service. By productive what Shors means is – deploying them in the service of new learning.
My own experience can serve as a cautionary tale. Hailing from a background and ancestry rooted in poverty, I was cognitively and emotionally overwhelmed when I suddenly found myself with a net worth of several million dollars as the result of a series of successful Silicon Valley real estate trans-actions (building and selling expensive spec homes). I simply had insufficient knowledge (brain networks and people network connections) that I could draw upon to guide me in successfully putting that acquired capital skillfully to work (Bill Gates was busy). Nothing in my background – models, mentors or living examples – was available to light the way. And while I struggled to find and figure out how best to intelligently deploy those resources, I unwittingly made bad choice after increasingly stressful bad choice, until eventually all the money was gone. If I had it to do over, with the benefit of diamond-brilliant hindsight, I would have used a significant portion of that capital to buy farmland or other raw acreage on Whidbey Island where I currently live. I already possessed networked knowledge of how to add value to raw land and skillfully leverage its appreciation. Plus, and this is a critical piece … transforming and creating is something I truly love to do. It’s one reason why I’m a neuroscientist!