Tuesday, September 1, 2015

Wealth Creation

 As I talk about improving in all areas of life, there is one area I'm sure that all of us wish we could improve in: money. Money is sometimes seen as the great evil, but all of us admittedly wouldn't mind having more of it. In order to succeed with money, we must first change our view of finances.

Firstly, money is not evil. More money simply gives you more opportunity. You can use money to do good (like donating it to charity) or to do evil (like buying yourself something that may be harmful to you).

Secondly, wealth can be created out of thin air. Read that again. Yes, wealth can be created out of virtually nothing. "How?" you ask. By taking resources that you have and improving upon them, you add value (i.e. wealth) to the world.

Let's say you have a bucket of sand. It's pretty worthless. You can basically get sand anywhere on earth. However, if you are a micro-chip engineer, with the right equipment, you can turn that sand (and other materials) into micro-chips. The micro-chips are worth more than the materials that you made it with, so you can sell them and make a profit. Don't miss what is happening here, you didn't steal someone's money or swindle anyone. You created something that benefited someone, and they benefited you by paying you. Yes I'm aware that micro-chip manufacture and sales is far more complex than this example, but it's the principle: you have created wealth. Wealth is anything of value, the chip is more valuable to us than the sand. You have added value to the world.

So here's the take home from this: don't look at your job as a "necessary evil". If you are blessed enough to have a job in this economy, look at it as a way to add value to the world... and get paid for it! Now let me take this concept of creating wealth one step further. Wealth is also defined as having more money than you need. Once you have more than you need, you are not just struggling to survive financially, and you can use that extra money to do good things like philanthropy. I understand that this will sound like a distant dream to many, myself included. Also, like the ancient Greeks, you can become wealthy enough to spend more time in other pursuits (like intellectual growth). Expand your horizons, make yourself better, and add value to yourself.

Since you pay money for goods and services, it is safe to say that you can create wealth by making products or providing services. Let's say I buy some canvas-paper and paints (cheap items). Now, lets imagine even farther from reality and pretend that I am a talented artist. As an artist of great skill, I use the materials that I have bought so inexpensively, and create a great masterpiece. Let's say that a rich patron likes my masterpiece and pays me for it. She has traded me from her abundance, for something she valued. She would rather have the painting, and I (the struggling artist) would rather have the money. Do you see how everyone wins?!

In one final analogy, let's say that I'm unemployed (which would be accurate to say). Let's say that you ask me to mow your lawn, and I agree to do it for 40 bucks an acre. I work hard in the sun, and when the job is done you are happy and pay me my money. You value the cut lawn more than whatever amount you wound up paying me.

So wealth is created by improving the world around us using creativity, ingenuity, and hard work. However, the key is intelligence. Knowledge is what separates us from our ancestors. As a society we have accumulated more scientific knowledge than our ancestors had. We are building on what they learned. Human intelligence is what gives us advancements in technology which add value to the world and improve society.

Humankind as a whole is wealthier than it was only fifty years ago. How so? Well for one example, more than 6 billion out of the 7 billion people in the world own cell phones. Cell phones didn't even exist fifty years ago, but we have invented them and made them affordable enough for even the poorest people. Today those in the lower economic class have luxuries that the richest people in centuries past wouldn't even have dreamed of.


On top of all of this, the potential wealth that can be created is virtually unlimited. Things left to themselves will decay. This in the phenomenon of entropy. We can reverse this decay by adding value to the world. This can only be done by applying intelligence to create wealth.

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