and wealth is: Invest in yourself.
Build your skills. Make your own decisions. Save in a variety of ways.
Wealth is something that holds intrinsic value. And there are many ways you can make yourself more intrinsically valuable.
Remember from Creating Your Life the section on Locus of Control?
Are you the cause of your life?
Or the effect?
Do you depend upon yourself primarily?
Or on others?
Do you make your life happen?
Or do you count on others to make it happen?
In the end, other people can be counted on to be focused on making their lives happen, not yours.
Taking responsibility for your money, your wealth, your finances, your investments, your ability to create a life, is the best way to acquire more freedom.
And freedom is what this series of books is all about.
As you think about money and creating your life, remember the fundamental idea that you can be a wealth creator. You can learn and grow, and develop a number of skills.
You can try your hand at being an entrepreneur. You can create your own business, as well as create your own life.
You create your life. That even includes when you give up your life to others. Sure, life does not always work out the way you expect. You have made decisions in the past that come back to you, whether you recall them or not.
That’s life.
But if you know enough about how other people take advantage of your economic life, you can take your life back. The key is to start now.
Be accountable for your thoughts, your actions, your decisions, your debts, your assets.
It’s really a better way to live.
It doesn’t matter what happens to you,
what matters is how you respond.
Real wealth comes from both being fairly self-sufficient and being part of a healthy community. Although we live in a Silver Island world, the people of Gold Island have something to teach us.
Build real skills,
both general and specific.
General skills sometimes appear to be useless skills, such as reading, writing, and mathematics.
You may think that studying literary works, writing an expository essay, learning new and complex words, and mastering algebra or complex math problems without a calculator, have little use.
But they all exercise mental faculties that come into play in your daily life. Often in ways you don’t realize.
Skills such as algebra, trigonometry, and calculus strengthen your ability to perceive complex abstractions, to hold more in your head. You may work on a farm and suddenly see mathematically new ways to improve the effectiveness of how you harvest a field.
Or you may meet someone who pulls at your heart and happens to love math.
Specific skills like...
• fixing a fence and programming a computer
• cooking a good meal and taking care of a baby
• learning how to type 40 words per minute and creating a PowerPoint presentation
• sewing on a button and writing a resume
...all of these build your capabilities. And the more capabilities you have, the more value you have to offer.
Neither of my parents went to college. They had no plan to prepare me for college.
I started working at a McDonald’s fast-food restaurant at the age of 16. I worked at an auto-wrecking yard at 18. I worked at a small 7-11 store at 19. I put myself through college managing that 7-11 store.
Along the way, I learned how to program a computer, write an essay, solve a differential equation, read Shakespeare, compose on a piano, type 40 words per minute, understand Plato and Aristotle, study Spanish, French, and Latin, and teach a college class.
I published my first magazine article in an Apple computer magazine.
Instead of a computer programming degree, I got a degree in English.
I later taught business writing at a business college. I had completed graduate work in forensic rhetoric (the language of lawyers), and the dean of a law school heard me lecture on writing. He offered me a chance to teach Legal Writing to paralegals. I did that for two years.
I consulted for the California Commission on Police Officers Standards and Training, and for Intel Corporation. I worked in Silicon Valley for start-up companies, teaching myself PowerPoint and video script writing.
I learned how to direct and edit corporate videos over the course of 10 years while consulting.
I helped a semiconductor company with process engineer training in problem solving. They offered me my first corporate job in Learning and Development.
I traveled abroad, learning how to develop engineers and managers in China, Japan, Korea, Taiwan, Singapore, France, and Germany.
My company offered a development program for advanced university degrees. They paid most of the cost of my degree in Organization and Management Development.
I wasn’t lucky. I was prepared. When the window of opportunity opened, I was ready to walk through it, even when I didn’t quite know what I was doing.
Nobody starts out knowing everything. I had no idea where I would end up. But by building a variety of skills and taking advantage of opportunities, new doors opened.
You have a choice.
Do you see life as luck? Or something you create?
Do you go through life depending mainly on others? Or is your plan to rely mainly on yourself?
Do you simply take from life and allow others to take from you? Or do you invest yourself and give to your community?
If you choose to live on the debt side of life, you choose being dependent on others. If you choose the asset side of life, you choose giving to yourself and your community.
True freedom is choosing… and choosing wisely.
Choose investing in yourself and your community. Choose true wealth.
And give up slavery.
The “Money and Wealth” Checklist
I am indeed rich,
since my income is superior to my expense,
and my expense is equal to my wishes.
Edward Gibbon, 1776
Wealth, trade, and jobs
__ Invest in yourself by building your specific skills and knowledge.
__ Be and do more; the more you can be and do, the more you have to trade, and to give.
__ Understand that you may have to sacrifice and pay your dues.
__ Let go of the lottery mentality (life is luck); cultivate the action mentality (life is created).
Government, taxes, and inflation
__ Be wary of supporting government debt.
__ Discover the difference between constructive and destructive taxes.
__ Understand how the government creates and benefits from inflation, a hidden tax.
__ Beware of supporting political programs that increase debt and dependency.
__ Support political programs that build in real accountability.
__ Don’t respond radically when you understand how governments operate; know them, and plan your finances accordingly.
Money, currency, and banking
__ Educate yourself on the differences between wealth and money.
__ Own real money: gold and silver coins.
__ When dealing with precious metals, deal with reputable businesses (for example, beware of eBay, or people who make extravagant claims); but be watchful, even of reputable brokers.
Debt, credit, and investments
__ Avoid debt where possible; live a life where your assets are greater than your debts.
__ When you use credit cards, pay off the total amount each month.
__ Save a part of every paycheck.
__ Buy when you have the money; learn the value of delayed gratification.
__ Avoid paying interest; have people pay you interest.
__ Practice the virtues of thrift and frugality.
__ Be wary of get-rich-quick schemes; they ar
e almost always a con.
__ Understand Harry Browne’s Bulletproof Portfolio.
__ Invest in yourself, in building your own skills so you can take advantage of opportunities.
__ Find ways to support your community.
__ Give up being a slave.
* * *
The strongest bond of human sympathy, outside of the family relation, should be one uniting all working people, of all nations, and tongues, and kindreds. Nor should this lead to a war upon property, or the owners of property. Property is the fruit of labor—property is desirable—is a positive good in the world. That some should be rich, shows that others may become rich, and hence is just encouragement to industry and enterprise. Let not him who is houseless pull down the house of another; but let him labor diligently and build one for himself, thus by example assuring that his own shall be safe from violence when built.
Abraham Lincoln, reply to New York Workingmen's Democratic Republican Association March 21, 1864.
Recommended Reading
Browne, Harry. (1999.) Fail-Safe Investing: Lifelong Financial Security in 30 Minutes. New York: St. Martin’s Press.
Friedman, Milton, and Friedman, Rose. (1979, 1990.) Free to Choose: A Personal Statement. Boston: Mariner Books.
Hazlitt, Henry. (1946, 1988.) Economics in One Lesson: The Shortest and Surest Way to Understand Basic Economics. New York: Three Rivers Press.
Maybury, Richard J. (2010.) Whatever Happened to Penny Candy?. Placerville, CA: Bluestocking Press.
Sowell, Thomas. (2015.) Basic Economics: A Common Sense Guide to the Economy. New York: Basic Books.
Sowell, Thomas. (2008.) Economic Facts and Fallacies. New York: Basic Books.
* * *
People are often reproached for wishing for money above all things and for loving it more than anything else; but it is natural and even inevitable for people to love that which, like an unwearied Proteus, is always ready to turn itself into whatever object their wandering wishes or manifold desires may for the moment fix upon.
Everything else can satisfy only one wish, one need: food is good only if you are hungry; wine, if you are able to enjoy it; drugs, if you are sick; fur for the winter; love for youth, and so on. These are all only relatively good. Money alone is absolutely good, because it is not only a concrete satisfaction of one need in particular; it is an abstract satisfaction of all.
Arthur Schopenhauer, from The Wisdom of Life (1897)
Appendix: Excerpts from Original Works
[edited without ellipses by Mark Andre Alexander]
Henry Hazlitt, from Economics in One Lesson
The bad economist sees only
what immediately strikes the eye;
the good economist also looks beyond.
The bad economist sees only
the direct consequences of the proposed course;
the good economist looks also
at the longer and indirect consequences.
The bad economist sees only
what the effect of a given policy has been
or will be on one particular group;
the good economist inquires also
what the effect of the policy will be on all groups.
Thomas Jefferson (1743-1826), from a letter to
Dr. Josephus B. Stuart (May 10, 1817)
In copying [England] we do not seem to consider that like premises induce like consequences. The bank mania is one of the most threatening of these imitations. It is raising up a moneyed aristocracy in our country which has already set the government at defiance.
These have taken deep root in the hearts of that class from which our legislators are drawn. Their principles lay hold of the good, their [money gained dishonestly] of the bad, and thus those whom the Constitution had placed as guards to its portals, are sophisticated or suborned from their duties.
That paper money has some advantages, is admitted. But that its abuses also are inevitable, and, by breaking up the measure of value, makes a lottery of all private property, cannot be denied. Shall we ever be able to put a constitutional veto on it?
James Madison (1751-1836),
from The Federalist Papers #44 (1788)
The extension of the prohibition to bills of credit must give pleasure to every citizen, in proportion to his love of justice and his knowledge of the true springs of public prosperity.
The loss which America has sustained since the peace, from the pestilent effects of paper money on the necessary confidence between man and man, on the necessary confidence in the public councils, on the industry and morals of the people, and on the character of republican government, constitutes an enormous debt against the States chargeable with this unadvised measure, which must long remain unsatisfied; or rather an accumulation of guilt, which can be expiated no otherwise than by a voluntary sacrifice on the altar of justice, of the power which has been the instrument of it.
Jack Weatherford, from “Prometheus Unbound”
in Lapham’s Quarterly: About Money, Vol. I, No. 2, Spring 2008
Money took away power from priests and armies; it had the transformative ability to turn gold into democracy...Compared with the physical force of the military and the spiritual authority of religion, money offered a third and completely novel way to organize society. Without regard to rank, class, or standing, anyone with the proper coin could buy a goat or a turnip, a jug of wine or a basket of fish, a parcel of land for a vineyard or a pinch of salt to flavor dinner.
John Maynard Keynes (1883-1946),
from Chapter VI of Economic Consequences of the Peace (1919)
Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.
By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth.
Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become “profiteers,” who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.
Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.
In the latter stages of the war all the belligerent governments practiced, from necessity or incompetence, what a Bolshevist might have done from design. Even now, when the war is over, most of them continue out of weakness the same malpractices.
But further, the Governments of Europe, being many of them at this moment reckless in their methods as well as weak, seek to direct on to a class known as “profiteers” the popular indignation against the more obvious consequences of their vicious methods. These “profiteers” are, broadly speaking, the entrepreneur class of capitalists, that is to say, the active and constructive element in the whole capitalist society, who in a period of rapidly rising prices cannot help but get rich quick whether they wish it or desire it or not.
If prices are continually rising, every trader who has purchased for stock or owns property and plant inevitably makes profits. By directing hatred against this class, therefore, the European Governments are carrying a step further the fatal process which the subtle mind of Lenin had consciously conceived.
The profiteers are a consequence and not a cause of rising prices. By combining a popular hatred of the class of entrepreneurs with the blow already given to social security by the violent and arbitrary disturbance of contract and of the established equilibrium of wealth which is the inevitable result of inflation, these Governments are fast rendering impossible a continuance of the social and economic order of the nineteenth century.
But they have no plan for replacing it.
A sentiment of trust in the legal money of the State is so deeply implanted in the citizens of all countries that they cannot but believe that some day this money must recover a part at least of its former value. To their minds it appears that value is inherent in money as such, and they do not apprehend that the real wealth, which this money might have stood for, has been dissipated once and for all.
If a man is compelled to exchange the fruits of his labors for paper which, as experience soon teaches him, he cannot use to purchase what he requires at a price comparable to that which he has received for his own products, he will keep his produce for himself, dispose of it to his friends and neighbors as a favor, or relax his efforts in producing it.
Frederic Bastiat (1801-1850),
from That Which is Seen, and That Which is Not Seen (1850)
In economics, an act, a habit, an institution, or a law gives birth not only to one effect, but also to a whole series of effects. Of these effects, the first only is seen immediately; it manifests itself simultaneously with its cause; it is seen. The others unfold in succession and they are not seen. But it would be well for us if they were foreseen.
Between a good and a bad economist this constitutes the whole difference: the one takes account of the visible effect; the other takes account both of the effects which are seen, and also of those which it is necessary to foresee.
I. The Broken Window
Have you ever witnessed the anger of the good shopkeeper when his careless son happened to break a square of glass? If you have been present at such a scene, you will bear witness to the fact, that one of the spectators would offer the unfortunate owner this consolation, “Everybody must live, and what would become of the glaziers if panes of glass were never broken?”
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