Wealth and What is Value?

When I look at the wealthy people I know, few of them ever achieved wealth by working for someone else. But at a young age with no capital other than my labor to sell, I had to work for others. Through this, I began to understand the limitations of employment capital. A clever and impatient person will not achieve happiness working for someone else. Leaving the employment capital world can be painful, though, and working for yourself is no guarantee of success; you'll just like your boss a lot more. 

The deal you make with an employer has no bearing on the value you add to a business. I remember regularly working into the small hours of the morning - my salary worked out to $8.25 an hour - gaining nothing except a possible raise, promotion, or bonus. That's how it works. For an employer, the trick is to get employees to buy into the extra effort, or to extract the most work at the lowest possible cost. 

This is, in a way, a business. You sell your labor. Because you compete with others who are also selling their labor, jobs always pay less than you need to live the way you want. You justify this compromise by rationalizing the current rate of pay with future growth. Even the most elementary entry-level job offers advancement. There is a pathway to sufficiency, if not wealth. You play the long game; year after year managing your expenses, saving what you can, living within your means, hoping for a windfall. 

Some people have made the long game work and lived happy lives. It takes a particular person, the right circumstances, and patience. But the long game can collapse with unanticipated events or even the most measured risk. 

The collapse didn't take long to happen for me. Though I was trying, I didn't have the patience for the long game. I'm glad for it now. My personal life made it go sideways, but it forced me to look for more financially rewarding ways to sell my labor. 

When I think about my relationship with wealth, I remember that even as a child I wanted the trappings of wealth. I didn't see the path to get there. It's like the joke; It's easy to be a millionaire. First, get a million dollars...

Looking back as far as my early childhood, I see now that I was being taught lessons about business and wealth, but I wasn't learning them. I didn't have a mentor to point out flaws in my thinking, show me the ropes to maximize opportunities, or tell me when it was time to take a partner. These are among the successful entrepreneurs' basic building blocks I missed. While I achieved some success, missing these impeded my accumulation of significant wealth. 

When I was a child I collected stamps. It was a  hobby. But like any collecting, it can generate income and wealth if you treat it like a business. You get skills along the way. Stamp collecting develops organizational skills for business. You have to categorize, inventory, manage duplicates. 

Entry-level stamp collecting requires almost no capital. You get letters by rummaging through discarded papers. Then you carefully steam and remove the canceled stamp from the envelope, inserting in your collection. Hours of fun!! In a short period of time, you start to realize certain stamps never appear on envelopes; rare items. To complete my collection I needed to purchase a rare stamp. This is where I missed the business proposition. I only thought of the buy-side of the equation. 

A good mentor would have taught me to evaluate the cost of the stamp in the context of what value making the purchase added to the collection. Was the collection now worth more, or did I just buy the stamp? Did I pay too much for the stamp? Is there another way to get the stamp? Can I create value by taking another approach, such as more systematically sourcing my raw stamps? Could I go out and find people like I am today; someone with a stamp collection with a potential value just sitting on the shelf?

This is the rich dad-poor dad experience. The poor dad rents the college dorm; the rich dad buys the building as an investment. The poor dad gives the kid money; the rich dad invests in the kid's business. You spend the same amount of money, but with the intent to invest instead of just spend.  

For me today, I still need to learn how to ascertain value. What is something worth? How do you sell it? Does it make more sense for me to sell my business or ride out the cash flow? I could have learned the skills to address these challenges as a young stamp collector. After all, I did the same thing as the young stamp collector. I started with something no one else thought was valuable and spun it into a business. 

The Road to Serfdom Today - Hayek's Fears Realized... In Reverse

It's a great title - The Road to Serfdom. For anyone who feels like his or her endless toil has not succeeded in achieving any advance towards freedom, it resonates loudly. Am I not a serf? I must work every day just to provide necessities for my family. Am I really free, or am I a wage slave after all?

Hayek's treatise doesn't address the individual, though. It's an intellectual analysis of political movements that highjack our economic torment to wrest power from the wealthy owners of the means of production. Eliminate poverty and take control of the government. Can you imagine a more powerful populist message? This is the promise of communism, but it conceals a darker intent. In "The Road to Serfdom" Hayek argues that totalitarianism disguises itself as socialism. It is the wolf in sheeps' clothing. Written in the era of Hitler and Stalin, he had rightful concerns. 

History shows how this totalitarianism ends badly. By professing to alleviate poverty for the common man, the totalitarian overtakes government for his own ends. Hence the flaw in communist regimes. After all, the end result of the communist government is the end of private ownership of the means of production. This means there are no checks and balances in government power; no private influence on the state's priorities. Further, the government cannot succeed without the volition of private capital; this is why quotas fail. 

Reading Piketty's "Capital" however, shows that capitalism, and governments who rely on free markets solely, create a reverse system of indentured servants/citizens. These systems fail because capital tends to concentrate and become moribund. If we agree that, like matter, there is a limited amount of capital, then when stores of capital become concentrated, there is less and less movement and, even when the movement which remains becomes more and more dynamic, there is less of it for everyone. This is 1% conundrum. Accumulated wealth doesn't help the state or the populace. In fact, it creates unrest because of the perception of an unfair advantage. The democratic republic needs a balance. Calling it socialism and badging it as anti-state is a totalitarian strategy. However, there are roles that citizens should take for themselves which government has co-opted in its opaque goal for dominance.

Collectivization has gotten a bad rap in this regard. Collective action and control of resources have a deep foundation in America as a means of achieving a common good. Commonwealth and State, for instance, have the same definition. Philosophically, though, there is a big difference. It means "for the common wealth" or the common good. THAT is the role of the state; not providing the resources, but providing the environment where common good can be achieved. WE have to do the work - not the state. 

That's what this series is about. How do we wrest control of our own capital to end our proletariat servitude, our wage indenture? We don't do it by ourselves. We do it by banding together and doing for ourselves what the government cannot or will not.  

Collectivization for US! Hacking the current system for the common good.