Money can’t buy everything: Sridhar Vembu of Zoho says financialism is creating a generation without real skills

Sridhar Vembu, founder of Zoho Corporation, said modern economic thinking is leading to the loss of basic skills, warning that financial shortcuts and excessive reliance on market-based solutions may have long-term consequences. Vembu said in an article on X that the current economic model ignores the time and effort it takes to build key capabilities for generations.

Vembu compares economics with AI learning shortcuts

Vembu compares students who use artificial intelligence to perform homework, and how some economists view trade and production. “The arguments of economists ‘they give us goods, we give them paper, so it’s wrong’ are very similar to those of students.
Both arguments ignore the cost of missing out on real learning or skills, he said. “The obvious answer is that we lose or never acquire basic skills, they have a hard time learning and when they need them,” he said.

Vembu says economic models cannot capture long-term skills losses.

Vembu says many economic models do not take into account the difficulty of building skills from scratch. “The reason economists don’t appreciate this argument is that their world model does not include ‘may require a generation of hardship’ to acquire basic skills’. It’s wrong to think that everything can win the market when it needs it,” he said.

He said this belief leads to poor decision-making at the policy level and ignores the importance of building skills in society over time.

According to Vembu, the flaws of financial theory

Vembu said that this problem is getting deeper and deeper, and it stems from what he calls the “basic axiom of finance.” He described it as a belief that everything, including human abilities, could give a price when needed. “More in depth, it’s about “the basic axiom of financialism” (my term), assuming we can come up with monetary value for everything (including such core skills). The axiom is false, which is why there are so many modern economics,” he said.

“Wrong philosophy leads to bad economics”

Vembu ended his position, linking the problem to the core assumptions that drive economic thinking. “When we start with a wrong philosophy, we naturally produce bad economics.”

Vembu and Zoho often focus on local skills development, especially in rural India. His view is that the role of artificial intelligence, automation and globalization in shaping economies is being discussed in the policy and business community.