Welcome back, and thank you for all the kind comments and questions. This week’s letter is inspired by Hollywood’s latest fascination with alternative versions of the future…
Judging by most comments, it’s good to know so many readers embrace the entrepreneurial spirit that this country needs to get back on its feet. You see, an increasingly disturbing trend is the demonizing of the wealthy class. Yes, it’s outrageous what the bankers did to cause the crisis. Yes, it’s outrageous that pharmaceutical companies are deliberately suppressing natural cures (don’t get me started on that one!). BUT, the danger here is something called, ‘The Principle of Extension’.
The Principle of Extension is a bit like the precedent rule, if something is agreed upon, it ‘logically’ follows that XYZ is also true. In this case, it would go something like: Wall Street and Big Pharma are corrupt and greedy; therefore, ALL wealthy people are corrupt and greedy. This is a very dangerous thing to say, but very convenient for many to believe.
If you can convince yourself that ALL wealthy people are dishonest, you can release yourself from the pressure to strive for wealth and can stay trapped in slavery. After all, who wants to be a villain?
Mobs with pitchforks and torches currently sharpen the guillotines. There is growing unrest and anger aimed at the wealthy class. In the case of Wall Street, for example, this is completely justified because they genuinely were dishonest. BUT, what’s conveniently packaged up in this bundle is a very dirty and very dangerous demand: ‘Redistribute all wealth’.
In the unlikely event you’re tempted to use this phrase or be sucked in by others who do, let’s clarify what this phrase means. The idea is simple enough. Redistributing all wealth means that all money should be confiscated from everyone, put into a big pot, and then divided up equally amongst the people. The recent movie with Justin Timberlake, “In Time”, hints at a world like this. Instead of money, the currency is time, and it’s demonstrating how rich people need to share their ‘time’ (that they worked for).
Now, what’s wrong with that? That seems like a fair way to go, doesn’t it?
And then what? Okay, now that everyone has the same amount of money (through theft under threat of violence, a bit like a mugging), do we maintain a socialist system where all corporations are state run? This would be like communist Russia, or Cuba, or North Korea.
No? Yes, I see your point. We will still all want those lovely conveniences provided by corporations that make our life so easy, won’t we? For example, the people organizing riots in the name of redistributing wealth co-ordinate their efforts using Apple products (AAPL), discuss Marxism in Starbucks (SBUX), drink Coca Cola (KO) and wear clothing with their logo, and would probably have a melt down if they didn’t have a dishwasher. What would become of ‘The American Dream’? And while a socialist system could insist on keeping companies like Apple going, I doubt Apple would be very incentivized to keep improving our lives the way we want if there was no profit for them to do so.
Okay, so we’ll split up all the wealth equally and then go back to capitalism, right? After all, now that it’s a level playing field again it should be fair, right? Everyone has the same opportunities now, right?
Wrong. Here’s what will happen next…
Most people will blow all their money on stuff they don’t need. They’ll retire until the money runs out. They’ll make stupid ‘investments’. They’ll gamble it away. They’ll spend it on partying, clothes, jewelry, cars, watches, boats, flat screens, you name it, until their bank account reads ZILCH.
But a few people, the smart ones, the ENTREPRENEURS like YOU, those who understand money, will make their money grow. They will invest and save. They will be the ones to open online stores to sell the things the others are blowing their money on.
And then a new wealthy class will be formed, because you see, money has a homing instinct- it always flies home to its master. And then the yelling masses will return with their pitchforks. (Why do you think the Nazis vilified the Jews? It was an easy and popular scapegoat.)
Is that a fair system?
You know, there was once a very interesting social experiment conducted. Kind of a “Hunger Games” only without gratuitous bloodshed. They took around 20 young children around the age of 7, put them in a room together, and sat them in front of a single marshmallow. They were told a very simple premise by the facilitator: “I’m going to leave the room for just 2 minutes. If you can resist eating that marshmallow in front of you until I get back, I’ll give you a SECOND marshmallow, and then you can eat TWO marshmallows!”
What do you think happened next…?
Yep, all but a couple of the kids ate the marshmallow the second the facilitator walked out of the room. The two that didn’t, the two that demonstrated they had the discipline to postpone pleasure for greater pleasure in the future, were tracked through their life and needless to say they went on to become successful people.
Hey, I bet the other 18 kids grew up to be the politicians who’ve systematically bankrupted this country since 1971! Yes, and then they attempt to confiscate marshmallows from people who saved theirs for a rainy day, or from people who used their marshmallow as capital to acquire more marshmallows.
You live in a capitalist system. This is a FACT. Don’t create your own version of reality. You can either prosper by this fact, or you can exist/suffer by it. And if there is the revolution that certain people seek, remember that all revolutions in history go full circle (France ended up with an emperor after their revolution, Russia ended up with a brutal dictatorship).
(Sidebar: I am NOT saying that there should be no government assistance for worthy causes. There will always be lifeboat cases. I’m not saying there shouldn’t be any taxes to help build a community with all its services. This is an argument against TOTAL wealth redistribution- the plea that certain protestors are making, that, by The Principle of Extension, demonizes wealthy people and entrepreneurs.)
Someone heavily in debt and hopelessly trying to keep up with the Joneses at a dinner party once complained to me, “I hate money.”
I replied, “I suspect the feeling is mutual.”
“What do you mean?” she said.
“Money hates you too. Because you haven’t taken the time to learn about it. How to take care of it. Make it grow.”
Employees and government people often despise the wealthy entrepreneur, but without them, without entrepreneurs like YOU, they wouldn’t have a job. There is no magical pot of money that governments dole out from, there is no such thing as ‘government money’. ALL money in a capitalist system is generated by entrepreneurs (even the money the government borrows has to come from an entrepreneur somewhere), because someone somewhere had the guts and discipline to embrace free enterprise. Whether a person is paid by the government or by a corporation, it’s all possible because of an entrepreneur. They are the true heroes of our society, of which, I hope you are or aspire to be. And, as I said, they are the ones who will get America back on its feet. If you tax them too hard, penalize them, demonize them, they will either be discouraged or fly away to a country that will love them. And that, my friend, is why corporation tax will always remain fairly low and will stay that way. Because politicians, for all their pandering to the masses, know I speak the truth.
And by the same token, from the entrepreneur’s side of the fence, remember that with power comes responsibility. When you’re a rich person (and I know you will be one day if you hang around us for too long), don’t be a jerk. Be nice. Be honest and fair. Don’t be greedy. Be charitable. Show others the way. Don’t look down your nose at the rest or be a snob. Don’t give others the excuse they need to demonize the wealthy by being an a**hole.
And if you don’t see the irony in how the socialist revolutionaries are using the benefits of capitalism to complain about capitalism, you’re missing out on a lot of comedy. So, here’s a quick lesson in irony. What’s wrong with the picture below…?
(If you aren’t laughing, you don’t understand irony, and you really should. Look closely, consider what’s going on, where these people are going and why, and consider how they’re getting there).