Arguably most societies over millennia existed without financial products, particularly the current conception of them in forms like bitcoin and global prediction markets. Financial products in our current conception of them are, at the most charitable, only about 400 years old when the Dutch invented stock markets. Before that we might have had banks, loans, currency, and contracts, but that’s when modern (in a literal sense) financial products were invented. Since World War 2, we’ve seen the invention of postmodern financial products; financial products totally disconnected from creating any sort of tangible good or service.

Bitcoin in particular is a poster child for this problem. You have a currency with a multi-billion dollar market cap that you can’t use to buy most tangible goods and services in existence today.

Tesla is another example. While you might be tempted to believe that Elon Musk’s Tesla is a company that became valuable by making cool things, you’d be mistaken. Tesla is the smallest car company on a public stock exchange by sales, and while most companies have multiple product categories, Tesla became incredibly valuable selling only passenger cars. Only in the past year did they even get a pickup truck model. Despite that, it’s a company more valuable than the rest of the auto sector combined. Elon Musk didn’t create an auto company, he created a financial instrument that routinely goes up.

When money ends up chasing games that play money instead of things that produce tangible goods and tangible services that people require, and actually starts to become a cancer, eating up good people and good resources that could have been spent on real wealth. Money going into things because they make money and nothing else is like an ouroboros trying to grow fat by eating its own tail. It may feel sated because it’s belly is full, but in reality it slowly starves itself to death because while it consumes itself it uses up resources that are no longer being added to the system.

For this reason, a society that is so focused on financial products and so derisive of real manufacturing or other forms of production of tangible goods or services cannot last the Long haul, and I think we’re seeing that right now because the actual quality of life of individuals is worse today than it was 25 years ago. Real incomes have been stagnant for a very long time, but moreover the lack of real tangible productivity has meant that the tangible things that we have left has become increasingly expensive. Because we have entire industries full of people working at desks pushing piles of beans around metaphorically, we aren’t building enough homes and so an entire generation, arguably multiple generations of people are completely priced out of the housing market for the rest of their lives. Food is going up in price, which has caused instability in developing nations. Energy has become scarcer, and people always focus on the idea of energy as frivolous but people need to eat their homes or they die. Perhaps most importantly, the spiritual toll that comes from a civilization that knows that they don’t actually do anything is cataclysmic.

Now I don’t want you to get me wrong here, I’m not saying that we don’t need financial products or that I want Bitcoin or prediction markets to disappear, and certainly not just because they’re part of a certain product category. What I am saying is our priorities are completely misplaced. I think that it will mean the end of our society and our civilization if we don’t course correct. We’re already starting to see it where other civilizations that aren’t like ours are starting to be much more dominant culturally and in terms of tangible power of us. The amount of sleep lost over the island of Taiwan (that actually manufactures important stuff) should be an eye-opener for all of us.

The realignment would require focusing less on postmodern financial products that are removed entirely from tangible goods or services, and instead focus on financial products which enable efficiency, innovation, or risk mitigation in ways that indirectly support tangible industries. In the case of something like bitcoin, it would require actually solving the problems it has to make it a viable alternative to fiat or commodity currencies in day to day use. This would inherently free up resources tied up in postmodern financial products and would lead to a reallocation of resources towards things with tangible productivity, which ought to be the final goal of financial products in general.

There are two types of change we need to see: Cultural and legislative.

Culturally, we need to see a move away from valuing making money by making money and towards making money by doing something of tangible value in the world. Bitcoin’s current market cap is based entirely on people gambling that they will own a piece of all the money on earth when more people use bitcoin, and that’s not a healthy attitude or a moral one. The reason China is so powerful and Taiwan is so important is that they make tangible goods people around the world use, and that’s because of a cultural philosophical difference in the way Confuscian thought which even in Communist China dominates the mindset in the region. That philosophy holds doing real stuff as important for a harmonious society. We need the same viewpoint in our society or the ouroborus will starve eating its own tail.

Legally, we need to make moves to reintroduce natural forces that would limit the size of a company. Part of the reason everyone is trying to create monopolies they can price as if they’ll own the market always and forever is that huge megacorps are so competitive despite being so damn inefficient. Eliminating corporate personhood would be one good step, as well as setting up fines or punishments for crimes to be proportional to the size of the company’s market cap so as your company’s size grows the risk of gaps in compliance and the like grow disproportionately. We might want to consider for particularly heinous crimes a “corporate jail sentence” where all the assets in a company are frozen and cannot be used for a certain period of time, and a “corporate death sentence” where a corporate charter is revoked entirely and the company assets are individually put up for auction. The idea would be that as companies grow, the risk of running the company grows so much that it doesn’t make sense to bother taking on multiplied risk for additional gains.

In a sane world, Tesla should be priced for what it is – a barely profitable lower tier auto manufacturer. In a sane world, Bitcoin should be priced for what it is – a rarely used computer science experiment whose actual utility is fairly minimal – I’d be surprised if more than a few million dollars a year in bitcoin is used as an actual currency, so its market cap should reflect that reality, not the guess that one day it will be all the money.