I Regret to Admit That A-Rod Is a Capitalist
And a dumb one...
Last week, Alex Rodriguez went on something called The Pivot, which is apparently a show for athletes hosted by some retired NFL players, to talk about investing advice. In a clip Rodriguez himself shared on social media, he was talking about the difference between assets and liabilities.
Here’s the full text, in case you don’t want to hear Rodriguez say it:
“If we all make a million dollars today, we can go say ‘Hey, let’s go on a vacation,’ ‘Hey, let me go buy a Rolls Royce,’ ‘Let’s go buy a boat.’… My whole thing is, I’ll be like, ‘I want to take this million and buy assets; I don’t want to buy any liabilities.’ Because ultimately, you’re going to get in an elevator. Either one is going to go up, or it’s going to go down. Nothing’s going to stay the same. You’ve gotta pay Uncle Sam, and then I believe in buying assets. And we have to educate our community: What is the difference between an asset and a liability? When people look at their homes, they say, ‘This is an asset.’ Well, they’re wrong. Your home is a liability. My muti-family is an asset. Now you ask, ‘Why?’ Number one, very simple: If something takes money out of your pocket every month, that’s a liability. If an asset puts money in your pocket, that’s an asset. And the more assets we can have, and the less liabilities we can have, we’re going to be better off.”
Hoo boy, that is… a lot of words. Let’s clear up a couple of things:
First: If you make a million dollars today, you can go on vacation. It’s fine. You have a million dollars!
Second: It is true that, if you get on elevator, it will go either up or down. It won’t stay the same. But that’s because it’s AN ELEVATOR. If you want to stay the same, you just gotta get off that elevator!
Third, and this is the big one: That is a truly TERRIBLE explanation of the difference between an asset and a liability. A home is ABSOLUTELY an asset—for most people, it’s the only significant asset they own. Yes, it can “take money out of your pocket every month” in the form of a mortgage payment, but in exchange, you get additional equity in that home! This is called “buying something.”
It is true that, occasionally, especially if there is some kind of housing crash or natural disaster, the amount you owe on a mortgage can exceed the value of the home itself, in which case a home is more liability than asset. But Rodriguez is not cautioning borrowers to be sensible in what loans they get, or warning about the perils of the housing market—he’s telling people that their home is literally not an asset because it doesn’t generate a positive cash flow, which is just not how assets work.*
*What’s kind of funny about A-Rod’s logic is that, while it makes a degree of intuitive sense (Money going in my pocket=good; money leaving my pocket=bad), it would mean most of the things rich assholes like him own are not actually assets. Stocks that don’t pay dividends? No money in my pocket, so that’s a liability. Rare art collections? That’s a liability. And, of course, something as capital intensive as a pro sports team? Oh, you better believe that’s a liability. If you believe A-Rod, the richest people in the world are actually some of the most financially illiterate people on the planet… Those poor suckers keep buying liabilities!
Why should anyone care about some dumb shit Alex Rodriguez said? People don’t even like his baseball analysis, to I doubt very many people are taking his financial advice… But I think his comments help illustrate something important about Hustle Culture.
If you are familiar with the term “Hustle Culture” it’s probably from one of the million think pieces about it, associating it with overwork and burnout among millennials and Gen Z. These pieces can never really agree on a definition, but it generally describes a cultural response to stagnant wages and declining work stability of simply doubling down on capitalist work ethic. Remember this ad from a few years ago?
That’s Hustle Culture. Instead of finding stable employment that pays a living wage, you are supposed to cobble together a salary from a variety of never-ending side hustles, living your life with a kind of entrepreneurial spirit that monetizes every interest you have and every moment of the day. Drive for Uber; trade crypto; sell stuff on Etsy; start a podcast; etc.
Prestige media’s coverage of this stuff is generally pretty negative, associating it with various mental health issues. But it has a real appeal, promising reward for those willing to work for it. It’s just a modern update on the Protestant Ethic.
Which brings us back to Rodriguez’s comments. The substance of his comments is straight out of Max Weber. From “The Protestant Ethic and the Spirit of Capitalism”:
“Impulsive enjoyment of life, which leads away both from work in a calling and from religion, was as such the enemy of rational asceticism, whether in the form of seigneurial sports, or the enjoyment of the dance-hall or the public—house of the common man.”
Or, to put it another way: Don’t go on vacation, or buy a Rolls Royce, or a boat.
And:
“Remember, that money is of the prolific, generating nature. Money can beget money, and its offspring can beget more, and so on.”
Or, to put it another way: Buy assets, not liabilities.
The reason this stuff is so appealing is the same reason it has always been appealing: It lends a measure of moral order to the hierarchies of capitalism. It suggests that the people who become wealthy do so by delaying gratification, by not indulging in frivolous or decadent purchases, and by simply being intelligent and prudent in their investments.
That last part is really important. One thing Hustle Culture people LOVE to talk about is “passive income.” Honestly, go on Twitter and search that phrase and find the weird world of self-help, how-to-be-your-own-boss-and-retire-by-age-30 shit that comes up. When A-Rod incorrectly defines an asset as an investment that “puts money in your pocket,” he is echoing that love of “passive income.”
Of course, “passive income” is just rent extraction—it is appropriating the hustle of others. When Rodriguez says, “Your home is a liability; my multi-family is an asset,” he is not touting any innovation or productive investment earning him a return—he’s just pocketing the rent money of families who (maybe because they took his advice that owning a home is a liability) are not owners but have to live somewhere. It’s pure exploitation, a simple transfer of money from the poor to the rich.
But it’s the only way to make Hustle Culture work. You can’t actually get rich on your own hustle—there are not enough sustainable side gigs or hours in the day. According to Pew, only 16% of Americans have ever earned ANY money from any gig economy job, let alone enough to support themselves. So you have to exploit other people, which Hustle Culture reimagines as somehow virtuous. And the only way to do that is to contrast it with consumer spending that looks selfish and decadent, like buying a Rolls Royce or a boat.
What’s so enraging about Alex Rodriguez echoing this bullshit, though, is that he actually DID get rich from work. He is one of the few rich people on the whole fucking planet who can honestly answer the question of where his money comes from with, “I worked really hard and became really good at my job.” And yet he pretends that the real reason he’s rich is that he knows the difference between an asset and a liability—and he doesn’t even get that right!
The dangers of Hustle Culture are, at this point, well-known, but we should not ignore its appeal. If even someone like Rodriguez, who has every reason not to, can fall for it, then imagine how enticing it is for someone just looking for a way to get ahead in this rotten economic system. What a relief it would be if all it took to get ahead was some clever investing advice about buying assets versus liabilities! But it’s a lie, and someone should tell A-Rod.