Nicholas T. Rafael Jr. explains that finance is what makes the world go round.
Yeah, so do oil, trade, food, tech, healthcare and a few other industries, but finance is what drives it all. Without capital, there is no way to fund new AI innovations that improve work efficiency or pharmaceutical research on new drugs to save lives. Finance delivers bananas from South America, oil in your gas tank to go to the mall, and the products you buy when you get there.
While generosity certainly exists, modern economies are largely built around incentives. People provide goods and services because they are compensated for their work and that compensation buys them food, clothes, and a place to sleep to continue on to another day on this Earth. That is why finance is so important, because people would cease to exist without it. No different than when a car turns off when the gas tank is empty. Finance keeps us going. From the money in your pocket to buy groceries to the billion dollar deals that large corporations make to create jobs and industry.
I have been a financial professional for over 10 years working in New York City and I have seen first-hand the importance of money and what it can create. I witnessed billion-dollar real estate fund after billion-dollar real estate fund receive full commitments every year that would subsequently double in size each time. These funds would go on to build hundreds of multifamily housing complexes for people to live in. They would also finance large infrastructure projects to construct public services like bridges and roads. None of which would be possible without the capital to fund these endeavors.
The Future
Advancements in science, medicine and agriculture have benefited so many billions of people over the last century and have directly contributed to why society has grown and advanced so much and so rapidly. Over the last 100 years the world population has gone from approximately 1.6 billion people in the year 1900 to over 8 billion today, doubling over four times in the last century alone. It took the world thousands of years to hit its first one billion people and now we do it roughly every 15 years. I dare to boldly say finance and capital were the pillars on which these advancements and rapid growth stand on over the last century. Without them how would you fund the research, the manufacturing, the development for all the good things man has created in our history.
Doctors and scientists certainly want to develop cures for diseases because helping people is an obviously positive thing to do in this world. But not all actors in every industry are as altruistic. For example, since the modern common use of money, every human being in the world now has the financial incentive not to just build a house for himself, but to build one for every person in his immediate vicinity because he will get paid to do it and therefore, he gladly does.
He borrows money from the bank for supplies and hires dozens of laborers to build them. Once finished, society has a house for a doctor or factory worker to live in and therefore they can also contribute to the community. This will continue on and on for as long as there are people around with money to buy homes. There is no reason to stop…. unless the money runs dry.
If money instantly vanished, then the man only builds a home for himself because he is no longer getting paid to build homes for others. Once all the home builders stop, then the availability of new homes stops, and people start to live on the streets and are unsafe, society slows down and life gets worse.
It’s simple, but it’s true. Money is the first reason we have so many homes. Most people lack the skill or knowledge to build a home, but perhaps they are pretty good accountants or nurses. And so, they earn their wage and can buy a home. Without money as a medium of exchange, I don’t know where those accountants and nurses would live.
Homes are just one vital aspect of survival. This kind of scenario can be applied to every industry and field that exists on this Earth whether its healthcare, energy or manual labor. Select individuals have specialized skills and they apply those skills to deliver goods and services to others for money. Each person does this for one another and it’s how society thrives and grows. Without finance people would be compartmentalized and secluded and only take care of themselves. Society would stagger and remain relegated to small communities and all the interconnectivity and innovation would cease.
