Wealthology

by Akinaw Bulcha

  How did he know we would stop being a producer nation and become a consumer nation? How did he know we‘d come off of the gold standard in 1971 and in that way, remove the only barrier in fully turning America‘s instrument of expansion into an institution? How did he know we would expand social welfare year after year, even as our debt kept rising? How did he know that military spending would not be reduced even in peace times?

  How did he know that George H. Bush (W‘s father) would get booted out of office for wanting to pay off the national debt? Papa Bush was an honest man but a bad politician because he didn‘t realize that spending had become an institution. Voters didn‘t want fiscal responsibility. How did Quigley know that the Federal Reserve would keep injecting credit into the economy in order to keep it from experiencing the pain of rebalancing? How did Quigley know that, as a result of all these actions, we would become a credit addicted economy?

  Here‘s something that‘s even more fascinating: We‘re doing all this unconsciously. People on the left and on the right are in complete denial. Quigley‘s predictions are also fascinating because he made them in 1961, a time when we had just become the most powerful nation on earth. We were an economic giant, producing products that shipped all over the world.

  “A people that values its privileges above its principles soon loses both.” ~Dwight D. Eisenhower.

  China’s Rise in the Age of Global Capitalism The second alarming thing about China‘s rise is the advantage of building an empire without enemies. China has no ongoing sanctions against any country on earth. They also don‘t have a history of conflict with the world‘s 1.2 billion Muslims. Chinese companies have greater access to these huge, growing export markets that American companies can‘t compete in.

  In Africa, the Chinese are shrewdly creating relationships and grabbing natural resources from the Nile to the tip of South Africa. In 2006, China invited the leaders of at least 50 African nations to Beijing to strengthen ties and make deals. The Chinese have loaned billions of dollars to help African nations build infrastructure—roads and bridges that must be built in order to transport natural resources to China and move their exports inland to one billion new customers.

  In response to China‘s leadership role, African organizations are even hosting their events in Beijing. China has essentially monopolized influence in Africa.

  But there‘s another way that China‘s influence in Africa affects America‘s interests. China will control a huge voting bloc in the U.N. by engaging these 50 African states in commerce (African nations represent about 25% of U.N. membership).

  To give you an illustration of how entrenched China is in Africa, when I visited Ethiopia, all the roads in the capital were built by the Chinese. China‘s not just after natural resources—it‘s after one billion new customers. The day will come when we‘ll not be able to go anywhere in Africa without traveling on roads and bridges they‘ve built to either transport natural resources out or move their exports inland.

  “Do good to your friends to keep them, to your enemies to win them.” ~Benjamin Franklin.

  The Domino Effect Theory Revisited

  Part of my thinking about global capitalism and why America is losing the battle for competitiveness is based on the domino theory of communism. After World War II, as the West saw communism spreading, they slowly realized that if it wasn‘t contained, it would continue to spread from one nation to another—if one nation fell, another will follow (just like dominoes).

  The same thing is happening in our world, except now, global capitalism is the thing that‘s spreading. China has adapted to this brave new world. They"re using capitalism as an instrument of expansion at the best possible time and we"re using capitalism as an institution at the worst possible time. This is very important to understand to get a clear picture of what the next 100 years will look like.

  The structure of Squirrelmerican policies and thinking are better suited for a previous age, not for the capitalistic one to come. And as Quigley predicted, the U.S. may be unwilling to change its ways before it falls. Here are two pieces of evidence that prove his point:

  1. Welfare. Instead of responsibly abolishing or reducing Medicare, Medicaid and Social Security costs, for example, every new administration creates larger and larger institutions that create more waste. Bush did this by passing a prescription drug bill that added $8 trillion of new debt (!) to a program that was already $15 to $20 trillion dollars in debt! Obama has also expanded the institution of welfare through the passage of the recent healthcare bill. Although the nonpartisan Congressional Budget Office estimates that the new bill will save $143 billion from 2010 to 2019, 32 million people will now become dependent on government spending. The bill passed while allowing wasteful health insurers to maintain a legal monopoly.

  2. Warfare. Recently, President Obama came out to call for a freeze on spending—on all federal spending ―except the military‖ (our largest expense). Think about this: The U.S. accounts for over 50% of the world‘s total war budget. But communism is dead. We haven‘t had any noteworthy enemies since the Soviet Union fell. Why is it so large? Well, because it‘s become an institution. Special interests depend on war spending for money.

  Both sides of the political spectrum are using spending as an institution. However, despite the fact that 4,000 civilizations have risen and fallen, I still believe that if there is any culture that can self-correct, it is ours. There‘s just something special about America. Maybe its destiny is to be the only civilization that self-corrects before destroying itself.

  Perhaps massive numbers of voters will learn that all of America‘s problems stem from the waste of capital. Maybe we can still beat Quigley‘s historical determinism.

  Regardless of what happens in the future, I hope this little lesson in global capitalism helps you understand what the next 100 years may look like. More importantly, I hope you understand the importance capital is playing in shifting global power. It was the accumulation of capital due to producing and saving that gave America such an edge in the world until it became a bureaucracy.

  In much the same way, it‘s the acquiring of capital through saving and production that‘s allowing the Chinese to expand so quickly across global.

  “I can predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.” ~Thomas Jefferson.

  Your Loving Uncle, Akinaw.

  Part IV

  The Secrets of Productivity

  How to Make Things

  Dear Kidus, Productivity should be one of the easiest concepts to understand about wealth consciousness. But even if it‘s simple to grasp, making the commitment to be productive isn‘t easy because of how Squirrelmerican society thinks about money.

  St. Paul understood productivity when he said, ―If a man will not work, he shall not eat.‖ Now as simple as that sounds, the modern squirrel has done his best to bury that truth in the forest floor (the evidence is the huge debt burden that future generations will have to pay for). Modern economists have come up with ways to undermine the productive spirit. We‘re told that our economy depends on consumerism and that we can get along without a manufacturing base.

  In the following letter, I‘ll show you that our biggest barrier to living a productive life is the thought forms we acquire from our society. Secondly, we‘ll pinpoint what it means to be productive and how to do it.

  Don’t Drink the Poison Our entire political system is based on the idea that there‘s a way to get something for nothing. Some call for trickledown economics while others call for trickle up economics. But little trickles always lead to an ocean of debt. I call both plans economic violence. Our complicated legal tax code is proof that our society is always looking to get something at the expense of other taxpayers. Participating in this way of thinking will have negative effects on your ability to be productive.

  “The state is that great fiction by which everyone tries to live
at the expense of everyone else.” ~Frederic Bastiat.

  Don’t Drink the Punch In my college days, I learned a lot of things—including that professors shouldn‘t tell jokes. I remember one instance when a professor told a joke that students thought was both a little crude and not that funny. It was a sociology class and our professor decided to make things a bit interesting: ―Why didn‘t Jim Jones make it as a comedian?‖ he asked. No response from the class.

  ―His punch line was too long!‖ We all kind of shook our heads. He told the joke because we were talking about some disturbing issues in class that day. He said something else that disturbed me: As human beings, we can never really escape the system completely. Like cult members who committed mass suicide by drinking poisoned punch, we also get in the punch line everyday to fill our cups. In other words, self-delusion is a human exercise. We rationalize our decisions— especially ones we know are unethical. People need excuses to alleviate the guilt of knowing what they‘re doing (to themselves or to others) is somehow wrong.

  That answers an economic question I‘ve found fascinating: ―How has our culture come to believe that deficits don‘t matter?‖ Think about it. Say ―deficits don‘t matter‖ slowly and listen to what you‘re saying. Maybe a good way to answer that question is to ask, ―Who stands to lose something if the public didn‘t believe that mantra?‖

  At first, I suspected the ―deficits don‘t matter‖ mantra was created to allow private hands to grab as much public money as possible through government spending before the public wakes to find out that deficits really do matter. But I don‘t think that‘s the whole story.

  The fact such a statement exists and works so well tells us something about the cleverness of politicians and political advisors but it also tells us something about the people who accept it. Propagandists know that there‘s a part of us all that wants to get something for nothing. But we‘d feel guilty about stealing from future generations because we know it‘s wrong. So, they‘ve created an alibi unproductive people were looking for to rationalize away the guilt. They coax us gently to accept the mantra so we don‘t have to feel bad about stealing (from our own children no less).

  There‘s an implicit promise: ―If you just accept this creed, you‘ll realize a benefit beside freedom from guilt—you‘ll get some of the new debt that others will have to pay for down the road.‖

  If you take this bait, you will undermine your ability to be productive. You must assume total responsibility for getting what you want by making something the world wants. Business coach Brian Tracy has said that accepting total responsibility for every area of your life is the starting point of achievement. I agree.

  Productivity starts with your mind and heart. It only has one prerequisite: Responsibility. You shouldn‘t believe that economic salvation comes from without because it comes from within. Refuse to participate in the get something for nothing idea. Don‘t think that credit will bring you economic salvation. If you allow the greed and the economic violence of Squirrelmerica to affect your mind and heart, you cannot become a productive individual and your life‘s work will not last.

  The American government is more than just wasteful, it‘s also spiritually corrosive. It corrupts the belief systems of its citizens because it sets the tone for our national identity. Emerson once said that ―an institution is the extended shadow of one‘s soul.‖ Programs like Social Security extend shadows of their own. Its existence requires that we accept a few ideas:

  1) People are inherently incapable of taking care of themselves.

  2) Because Social Security is in place, we don‘t have to save money—the State will take care of us.

  3) People cannot count on their family and friends to help them in case of emergencies. All government programs alienate people in this way.

  4) You don‘t need to invest in yourself—the State will look after your needs.

  5) The government is a better steward of your money.

  Beside the programs that require broken and impoverished spirits for their existence, other aspects of our economic system are also spiritually destructive.

  The over availability of credit makes us less productive. I once asked my students the following question which shows just how counterproductive easy credit is: ―If you woke up tomorrow and there was no more credit available, what would you do?‖

  One student replied, ―I‘d have to save a lot more.‖ Another replied, ―I‘d have to be very productive very quickly to make money.‖ The implication is that if credit isn‘t available, people will feel they‘d have to be cash rich, save more and become productive right now.

  Without our conscious realization, Americans have slowly come to believe that debt is money. If we cannot pay for our bills, we simply take out another line of credit. As long as the Fed keeps rates low and asset prices are artificially high, we have debt to pay for…debt.

  “The price of greatness is responsibility.” ~Winston Churchill.

  Making Things

  In the pages above, I‘ve outlined some of the social thinking that negatively affects our ability to make things, to be productive. Now that we‘ve gotten the counterproductive, negative thought forms out of the way, let‘s focus on what service or product you can make to transfer money into your bank account. First, there are only three ways for you to be productive:

  1) You can create things with your body (manual labor).

  2) You can make things with your mind (create ideas, services).

  3) You can have your money create products or services in your place. My purpose in writing you is to show you how to make money with the second and third options, with your mind and your money. Options 2 and 3 only need to be learned once; which is why the current economic collapse is one of the greatest gifts we could‘ve received. Anyone who has owned their own business during the crisis has learned all they need to know to create a life of sustained prosperity.

  Learning how money is made is mind work that‘ll pay dividends for the rest of your life. When you learn to protect and grow your capital, you‘re protecting and growing your financial freedom. Every dollar you save and invest wisely becomes an employee that you don‘t have to pay or train. Each dollar hires its own employees and those employees, in turn, hire more. The initial process of collecting enough of these no maintenance employees is the hardest aspect of becoming financially independent; but the ideas I‘ve shared will help shorten the time it takes to get there by making your current employees much more efficient.

  The letters on capital management were focused exclusively on the nuts and bolts of safely compounding the interest you earn on your capital by preserving it. As to what product or service you should make and when to make it has been answered for you in the letters on entrepreneurship. You may want to review them for clues. If you read them to find the right product or service to sell, you‘ll find it.

  “Today knowledge has power. It controls access to opportunity and advancement.” ~Peter Drucker.

  Making Things: Create Scarcity, Create Demand

  I can, however, give you a tip on how to make whatever product or service you choose to sell. To get the most out of the sale of your products or services, you must be the best at it. Let‘s face it, competition is an issue for everyone. People want to know how they can create an advantage. We still have only one answer: Create a scarce service or product. Value is scarcity. The scarcer something is, the more valuable it is. If you‘re going to have to sell something, sell something that is scarce.

  So the natural question now is, ―How do I create scarcity?‖ The answer to that question was beautifully illustrated by Seth Godin in his book, The Dip. His advice is to get through the dip. This is what the dip looks like:

  The dip is the in-between stage of initial excitement and completion of a marketable service or product. The dip is when things get hard as you move toward your goal. It‘s the red tape, regulations, exams, accreditation filings, bankruptcies, zoning, and all other barriers that stand betw
een you and your goal. The dip is the graveyard of most dreams. Without the dip, nothing would be scarce, everything would just be mediocre. And so, as Godin says, it‘s actually your friend.

  The bigger the dip, the fewer the survivors. And the fewer the survivors, the more valuable the service or product you have to offer. If you want to make a lot of money, pick a line of work with a longer, deeper dip few people can get through. If you want to keep the competition out, create a dip that no one else can get through.

  “Do your work with your whole heart, and you will succeed—there"s so little competition.” ~Elbert Hubbard.

  The Dip and Investing

  Every dollar you earn can go through a big dip or a small one on its path to duplicating itself. Unlike our labor, our money doesn‘t have to pass exams, take courses, network, and file permits. It doesn‘t have to pass through the valley of dead dreams to come out a winner. Here‘s why: The market makes your money scarce for you. The market can add value to your bottom line without you having to work grueling hours or intense labor.

  One of the great benefits of economic literacy is knowing the value of things at any given time. Once you have that intellectual capital, you‘ll know when to get in and out of markets. You‘ll know when to buy and hold. When the market goes through upswings and downswings, it‘s either lengthening or shortening the dip. Swings give you a pass from having to go through the dip or they can make it even longer and harder.

  Here‘s even better news about smart work: The results line stays the same while the effort line contracts. Your money gets to skip a few steps on the effort line.

  If you review the letters on entrepreneurship, a good entrepreneur is someone who can predict demand (demand is synonymous with scarcity since when there‘s a shortage of anything, demand will go up). A good entrepreneur has a way of making the dip smaller (less difficult) by doing something others don‘t see, by investing when others aren‘t and by not investing when others are.