What Is Wealth?

It’s not money that makes life better, it’s wealth.
You don’t have to have a lot of money;
you want wealth.
Richard Maybury, Early Warning Report, June/July 2008

What is wealth?

If you answered “Money,”
Bzzzt! Wrong.
Thanks for playing.

Money as it exists today can be a sign of wealth. It can be used to measure or trade wealth.

But money is not wealth. Knowing the difference can make all the difference in how you choose to make a living. And how you choose to view people with wealth and those who want your wealth.

Later, we will talk about what real money is. First, let’s look at wealth…

Here’s a clue:

If governments could create wealth,
they would have no need for taxes.

Wealth is goods and services—food, clothing, homes, tools, auto repair, plumbing services, literature and the arts, entertainment, personal and professional skills—just about everything that makes life better is wealth.

Money makes trading wealth easier. I can use money to specify the value of my professional skills and physical work in relation to the products you are selling.

A monetary value can be placed on goods and services; therefore, money is one method of measuring your wealth.

Money can also predict your ability to acquire wealth. If you have a wage or salary, you have an idea about what kinds of, and how much, wealth is available to you.

But money itself is not wealth.

Let’s break it down…

Imagine three small islands, each with a village of about 100 people:

  • Gold Island
  • Silver Island
  • Iron Island

The people on Gold Island are, by nature, good and ethical people who trust each other. They appear good, and are good inside. They all have to work hard just to survive day to day.

They live by a high standard of ethics.

The people on Iron Island are just the opposite. They are bandits and pirates: dishonest, ruthless, manipulative, selfish, and dangerous. They appear bad, and are bad on the inside.

In other words, they are openly bad, and do not care who knows it. They form thieving bands that believe in “honor among thieves,” mostly. They do not want to work hard to survive. They enjoy taking from others who do have to work hard.

The people on Silver Island are a mix. They are inherently both good and bad, and everything in between. Some of them can appear good, but be bad on the inside. Some of them are good on both the outside and inside in some situations, but not in other situations. They can work hard to survive, but cut ethical corners when the opportunity arises.

Let’s first focus on the people of Gold Island.

Each day in order to survive, each person on Gold Island has to catch one fish, get one coconut, and drink two gallons of water. It takes twelve hours of work each day on average for each person to get the food to survive.

Everyone barely manages to live.

One day, one man, let’s call him Tor, gets an idea. Tor labors extra hard to get an extra fish, an extra coconut, and extra water. He now has enough for a free day.

He spends that day inventing a fishing pole. He practices with the fishing pole until he develops the ability (the skill) to use it. The next day he catches ten fish.

This man, this inventorusing his imagination and creativity, and sacrificing for his visionjust created wealth. Specifically, labor-saving wealth.

Labor-saving wealth is created out of two things:

  1. A valuable labor-saving idea
  2. The work necessary to manifest that idea

Wealth is created out of
imagination and work.

Labor-saving wealth often saves people time,
freeing them from mere survival.
Wealth has inherent value to you or others.

Notice that money is not necessary to create wealth. If you have good ideas or good skills, you can create wealth out of your work, or out of the work of others.

On Gold Island, both the fish and the ability to catch fish are actual wealth.

Because our inventor, Tor, can now catch ten fish in the time it used to take to catch one fish, he has more free time. (Fishing used to take four hours; it’s hard to catch a fish in the ocean with your hands.)

He and his wife Sophia can now go several days without having to fish (if they salt the fish).

In fact, Sophia doesn’t have to fish or get coconuts anymore. Tor is skilled at getting coconuts (two hours on average to get one). His wife is strong, and willing to walk the six hours, round trip, to get enough water for them both.

Meanwhile, in his free time, Tor is fixing the roof and building an additional room, since Sophia is newly pregnant.

One day Sophia has a good idea. She’s been thinking of ways to get coconuts more quickly. Throwing rocks at coconuts works sometimes when they are overly ripe. But often, coconuts grow higher than her husband can throw. And the ones that are ripe will not always drop when hit by a hand-thrown rock.

Sophia dreams up the idea of a slingshot.

Working together in their spare time, they create the slingshot. They both practice until they have the skill to knock down ten coconuts in the time it once took to knock down one.

Tor and Sophia now have even more wealth, more time to do other things.

Wealth is one of the most important things anyone can create.

Wealth frees people from drudgery.
Wealth grants time to do other work,
or time to play.
Wealth is essentially good.

In other words,

Wealth grants freedom.

There are other kinds of wealth.

Ver is a great storyteller. He can gather the community together around a bonfire and begin telling tales of old.

Tales of monsters and heroes, and stories of great passions, both hateful and loving.

Ver has the extraordinary ability to voice many characters. He can act out the parts. Villagers from miles away will come to hear his stories.

Ver enriches everyone’s life with sorrows and tears, and laughter and joy, and all the passions his characters experience.

His tales provide moral examples of what happens to those who do right. And what happens to those who do wrong.

And because he is such a unique and wonderful storyteller, he becomes known as Ver the Great Storyteller.

The villagers are willing to give him food and drink and other goods in order for him to keep telling his stories.

People who are free from constant labor may write a song or a book, or may paint a picture that someone else wants. These provide pleasure. They may not create something that saves time and labor, but they may still create something that others want.

Something others value. Something that enhances their lives.

Great music, great art, great literature, great storytelling: these are all kinds of wealth that, when created with noble ideals, can uplift, improve, and generally better people.

Leisure-enhancing wealth.

When someone like Ver the Great Storyteller creates something that others value, they have created wealth. Not necessarily labor-saving wealth, but it is still a kind of wealth. It has value, or at least someone sees value in it.

Wealth has intrinsic value;
that is, wealth has value in and of itself.

Ten salted fish have value when others know that they have to work four hours to catch a fish. Even if no one else wants the fish I have, I can eat it. It has intrinsic value, not just an official value that some authority, like government, declares it to have.

The same is true of gold or silver. If someone has it, they can make jewelry out of it. The value is intrinsic, in the thing itself.

People use their imagination and develop skills to create, out of thin air in a sense, things with intrinsic value. Wealth. Both labor-saving wealth, and leisure-enhancing wealth.

Like debt, wealth is a habit.
Wealthy people realize
that life is more than luck.

Life is action. Life is imagination.
Active, hardworking people create wealth.

******

from Money and Wealth: What You Should’ve Learned as a Teen, Book 2

02-Money-res100

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