The Money Sickness

The founder of Sun Microsystems, who was also the first investor in Google back in 1998, when the company didn’t even have a bank account yet (it was basically just an idea being kicked around by three Stanford students), is probably doing OK financially. But not OK enough not to try to steal a little more:

Twenty one years later, Mr. Bechtolsheim may have seized a different kind of opportunity. He got a phone call about the imminent sale of a tech company and allegedly traded on the confidential information, according to charges filed by the Securities and Exchange Commission. The profit for a few minutes of work: $415,726.

Now that sounds like real money, but to somebody like Bechtolsheim it absolutely was not. He’s worth $16 billion, so if you do the math $415,726 is like the cost of a pizza (one topping) to a millionaire, even if we ignore the declining marginal utility of income, which is econ talk for the more money you have, the less more money is worth to you.

So why commit a serious crime for a payoff that was, for the criminal, almost literally nothing in practical terms? Keep in mind that for a Silicon Valley legend like this guy, incredibly juicy investment opportunities are never more than a thirty-second phone call away, so the call he made to make this trade probably had an opportunity cost higher than his prospective payoff from making it, even if you ignore the potential criminal liability. It’s totally nonsensical from the classical homo economicus standpoint, but of course homo economicus doesn’t actually exist.

Grifter, eh?

You’re one alright. Grifters got an irresistible urge to be the guy who’s wise.

There’s nothing to whipping a fool. Hell, fools were made to be whipped.

But to take your partner, who knows you, and has his eye on you — that’s a score.

No matter what happens.

So maybe this really isn’t even about money. Maybe it’s about the apparently irresistible urge to get over on the System, even when the System has rewarded you with so much money that more money should mean nothing.

On the other hand, in our world more money never means nothing, because the acquisitive habit can become as compulsive as any other perverse addiction:

When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals. We shall be able to rid ourselves of many of the pseudo-moral principles which have hag-ridden us for two hundred years, by which we have exalted some of the most distasteful of human qualities into the position of the highest virtues. We shall be able to afford to dare to assess the money-motive at its true value. The love of money as a possession -as distinguished from the love of money as a means to the enjoyments and realities of life -will be recognised for what it is, a somewhat disgusting morbidity, one of those semicriminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease. All kinds of social customs and economic practices, affecting the distribution of wealth and of economic rewards and penalties, which we now maintain at all costs, however distasteful and unjust they may be in themselves, because they are tremendously useful in promoting the accumulation of capital, we shall then be free, at last, to discard.

Keynes, 1929

Isn’t it pretty to think so?