Turning "Capitalism" Upside Down

Warren Buffett is an admirable capitalist; he is a pure capitalist. His entire career can be described as tirelessly, focusedly, and rationally moving money to enjoy the fruits of compound interest. I enjoy reading his letters to shareholders. For decades, he has repeated the same simple truths, repeating a purity that is not easy to achieve. In his empire, one hand is insurance, and the other hand is investment. One hand sells risk resistance, collecting money; the other hand puts money into orchards with moats that can generate compound interest.

Originally, when I started writing this public account, I wanted to write an article about insurance, tentatively titled "Insurance, the Ultimate Expression of Capitalism." I roughly wanted to say that insurance is very interesting and very representative of capitalism. "Rich people" have capital and "more money," therefore having a strong ability to resist risks. "Poor people" have "less money" and a weak ability to resist risks. So "poor people" need to buy this risk resistance from "rich people." Although insurance is indeed needed by many people and gives them a more stable life, at least a more peaceful state of mind, ultimately, insurance products further promote the transfer of wealth from the less wealthy to the wealthy. Saying it is the ultimate expression of capitalism is because it further amplifies the power of capital. The soft and intangible idea of "having money = being safer" is also realized through insurance. If the market is highly efficient and undisturbed, and the law guarantees the legitimacy of capital and its compound interest, then what is likely to happen is that the rich get richer and the poor get poorer.

The reason why Buffett is admirable, even labeled as great, I think, is because he is not entirely a highly talented capitalist who can play the game of capital to the extreme; he is more of a lovable person who clearly knows that money is not the goal. On one hand, he enjoys the happiness brought to him by the game of capital; on the other hand, he wisely donated most of his money to the younger Bill Gates, entrusting Gates to complete the due redistribution of wealth. At the same time, he is not afraid of criticism and advocates that other wealthy people also donate their money and that the state raise taxes on the wealthy, carrying out greater wealth redistribution from the mechanism. (The interesting thing is that Buffett's father was a Republican congressman, and what Buffett is advocating now doesn't seem like the Republican platform.)

In capitalist America, a magical Buffett was born. He gained happiness from the game of insurance and capital compound interest and lightly handed the burden of money to Bill Gates. This is so wise; this is probably the simplest and easiest way for a capitalist to gain happiness in a capitalist environment. Accumulating money first and then distributing it—in this cycle, Buffett mainly focuses on the first half. In the "post-capitalist" era, assuming that effective redistribution of money is equally important as accumulation, I can't help but wonder if it is possible to use insurance and compound interest, or rather, reversed insurance and compound interest, to make wealth distribution more even? Are there mechanisms that can allow poor people to also sell "insurance" to rich people, allowing poor people to sell some of their "soft power," their willingness, and their risk resistance to rich people, thereby achieving more refined feedback and a shorter cycle of money flowing back from rich to poor?

For example, if a thousand people think in the summer that they want to buy a certain style of down jacket in the winter, and they jointly write an order to a manufacturer and are willing to pay a 10% deposit based on last year's price, in this case, it is very likely that the factory is willing to give them a 30% discount. Because the factory obtains a kind of demand certainty from their joint order that the factory did not originally have. This certainty can be transformed into the convenience of production during production plan troughs, and it can also be transformed into confidence when purchasing raw materials. The factory can even further sell this certainty to upstream and supporting manufacturers to exchange for further reductions in factory costs. In terms of transaction form, this transaction is like a group of people jointly spending 1 yuan each to buy 3 yuan of limited-time vouchers. Then, because the factory sold these vouchers, it can also further buy similar limited-time vouchers from upstream and supporting manufacturers, for example, spending 1,000 to buy 3,000 yuan of limited-time vouchers. If these thousand people have certain credit records and they jointly place an order, expressing their willingness but not paying a deposit, would the factory be willing to give them a discount? I think they probably would, just maybe not 30%, but could it be 8%? This is like the factory using its own issued limited-time discount coupons to buy an insurance from ordinary consumers that guarantees future purchases. If we think further, there are actually many forms that can marketize, productize, and monetize the willingness of ordinary people and the certainty of their future needs. Suppose the system gives everyone only one chance to express their willingness to buy cotton clothes, which is like giving everyone a cotton clothes willingness voucher (this willingness voucher may be exchanged for with accumulated credit). Then, is this willingness voucher valuable to the capitalists who open factories? How is this price determined? What restrictions should there be on the bilateral transaction?

The essence here is that everyone (rich or poor) is often much clearer about their own willingness, their needs and plans at some point in the future than others. And this individual’s plan and willingness, as well as the individual’s grasp of the certainty of their own behavior, is often valuable to the supply side that meets the demand. It can reduce the uncertainty of organizing production and can help achieve more effective allocation of resources and capital. Therefore, I guess that capitalists and rich people are willing to buy this reverse insurance from ordinary people and poor people. This reverse insurance can monetize the credit and willingness of every ordinary person. This reverse insurance is no longer about poor people accumulating credit and money to borrow money from rich people and pay interest (in the case of borrowing, poor people, because they borrowed money, have to pay interest. Therefore, the things he buys are more expensive than what rich people buy) or spending money to buy certainty of life for rich people. Instead, it is the other way around: rich people and capitalists spend money to buy the certainty of production capital allocation from ordinary people and poor people. In the former kind of insurance and financial lending products, money flows from poor people to rich people, while in this reverse insurance, money flows from rich people to poor people. There should be a qualitative difference here.

The next question is how to productize this certainty of individual willingness and behavior for everyone (rich or poor); how to standardize it so that it can circulate like discount coupons; how to create forms to express willingness; how to create products to achieve this certainty transfer; and how to financialize and monetize this certainty transfer. In addition, we should consider decentralizing the productization process of this certainty transfer (because there are too many scenarios and too many situations) and being able to avoid fraud in this relatively decentralized "certainty product" production and circulation process and form a positive cycle of good money driving out bad money. I wonder if blockchain was born for this kind of "reverse insurance"…

(After finishing writing, thinking about this upside-down capitalism, it’s really a bit interesting :-) )