You can be as sure as day that each time we circle the sun, government debts rise, the M2 money supply increases and scarce assets soar.

What did this create? A whole generation of humans who’ve mistaken Beta for Alpha.

And no, I don’t mean the Twitch streamed gen-z version of these terms. I’m referring to two concepts - shortcuts - born of necessity by William F Sharpe (yes, that Sharpe) built in the 1960s. He developed these terms to more easily compute Harry Markowitz’s latest theories in portfolio mathematics. The idea? Stop measuring stocks against each other and measure each one against the market.

Beta (β): how much you move with the market

Alpha (α): what is left once you take out what the market handed you

Hold those two definitions up against people around you and the mistake is hard to miss. The canonical example being of course a boomer homeowner, but it is everywhere, for those with eyes to see. The chief executive’s record-breaking bonus because the whole sector rose or the Treasurer who took credit for a surplus China delivered.

The cost, of course, is bigger than my frustration with an entitled and philosophically lukewarm generation. It’s much worse than that. The economic impacts are deep and longstanding.

When a levered, tax subsidized bet on a pile of old bricks pays more than inventing anything new, any ‘prudent’ allocator of capital will invest in the former. Meaning debt providers would also rather lend against bricks than ideas. A country that pays more for beta gets less alpha and fewer ideas.

Australia is a good place to watch this confusion play out: my birth country has cultivated a generation of people who believe Howard’s CGT discounted tsunami of Beta was - in fact - Alpha. And with it, entitled, confused attitudes to boot. And that misguided belief is understandably what keeps it in place: people who genuinely believe they earnt their riches will vote to protect the policy that produced it.

There is nothing wrong with Beta - just don’t mistake it for Alpha.