Wednesday, March 29, 2006

So You Want to be Wealthy?

First of all, it is important to define exactly what wealth is, which is easy in general terms and nearly impossible in specific terms.

What is wealth?

Wealth is simply goods and services which people desire. For example, money is a good, which its service to you is what you desire. Unavoidably, this means that wealth means different things to different people. A man with an entire library of hip-hop music might consider himself wealthy. I, in the same position, would be looking to trade the hip-hop library away for some heavy metal and punk rock CDs. When I accomplish the trade, I might consider myself wealthy. So how does a person become wealthy? By being able to produce more and more goods and services per capita. In order to do this, businesses and entrepreneurs must invest in capital.

What is capital?

Capital is any good, which aids in the production of further goods or services. Equipment, machinery, education, etc are all capital goods, and purchasing them is a capital investment.

What is capital investment?

When businesses and entrepreneurs invest in capital, they are doing so with an eye towards increasing productivity, which is what makes us all wealthier.

Workers working with machinery command higher wages than workers who must use their bare hands, and business owners profit from it as well.

When Americans first started investing in farm equipment we went from being a nation that was 90% agricultural to a largely industrial one. Nowadays, people are talking about the withering industrial base without realizing that we are actually producing more with fewer workers, which is exactly the point (although very recently this trend has been a bit erratic).

Summing It Up

The way to wealth is by investing in capital to increase productivity.

Any person who wants to pull him/herself out of poverty, or just get richer than they already are, should also look to vote against any tax, law or regulation, which impedes capital accumulation.

You don’t have capital to invest? Check out this post and find a way to secure capital for investment in your future. There is no easy way. It’ll take work and time to do this.

However, it’s not impossible.
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