The Chapters of Organic Wealth, Part 1
Here’s a quick look at the first five chapters of Organic Wealth and a quotation from the book. There’s so much that’s left out that I would really encourage you should to read these chapters. Purchase Organic Wealth here. The last five chapters will appear in a future post.
1 Wealth is Created
In free market capitalism, wealth is created by providing value in a marketplace that’s demanded by others. It’s not distributed from the so-called wealth pie. Chapter one proves this is true.
By not consuming all of our salary, wealth can be created through saving and investing. As wealth grows, other investment opportunities present themselves. Maybe it’s in real estate, a business idea, a burst asset bubble, low priced shares of stock or some other opportunity. The old adage is true here; it takes money to make money.
2 Equal Transactions
Free market capitalism is based on equal transactions. This is where one side is incentivized to earn an income and the other has had their demand met. Because of equal transactions, wealth can be created and the standard of living continually improves for everyone.
In early 2019, Mr. Gates said, “I don’t deserve my fortune, nobody does. It has come through timing, luck, and through people I worked with. I certainly worked hard and I think software has been a beneficial thing, but I benefited from a structure too.”
His political correct answer is more about appeasing a woke crowd who’re looking to burn rich witches rather than a worthy critique of capitalism. The structure Gates benefited from was a free market. If the government put the brakes on the ability to generate income, then the next Microsoft won’t even come into existence, and customer demand will go unmet. Having unmet market demand doesn’t help society, but prohibits true progress.
Because the free market structure existed, the computer generation began and changed our world for the better.
3 Unlimited Wealth
This chapter is about the limitless potential of a free market. If every able-bodied person saved a portion of their income from the time they entered the workforce, we would all be rich.
People who forgo college and vocational education can become millionaires too even if their wage is less than the national average. Here’s a fictitious scenario of a guy named James who starts working soon after high school. He’ll just need to save $200 per month to reach a million at retirement, which is very doable by being intentional with a plan in place.
By utilizing a buy and hold strategy, after 50 years of investing $200 per month at only 7%, James would have $1.0 million. With a 10% return, he would have $3.0 million. If he saved $200/month for only 40 years at 10%, he would have $1.1 million.
Even if $1 million won’t have the same buying power in forty years because of inflation, James can increase his $200 per month saving plan as his income rises due to the dollar devaluing. By having the same level of saving and investing in relation to his income, it will result in nearly the same buying power as a million dollars would have today.
4 Effective Supply
When people are free to enter a marketplace to earn as much income as possible, our economy will grow and the American Dream will be alive and well. Chapter four is about supply side economics, which includes business supply and labor supply.
Supply side policies should ultimately be a win for both wage earners and business because they each make up supply. This is the only way to reach society’s objectives of economic opportunity for everyone and economic growth. There is a conflict, however, between these objectives and the interests of multinational corporations.
Over the last several decades of globalization, being pro-business has come to include the interests of global corporations. But we need to rethink that notion because many times those interests conflict with the goals for our economy. Being pro-business should only be a supply side stance benefiting the entire supply, which includes the supply of wage earners residing in the United States.
5 Private Property
Having laws that protect our natural right to obtain and accumulate property is paramount to our economic system’s success. Chapter five is all about private property within a free market and how the basis for such a system is natural law or our Creator’s intent for us to be free.
The freedom to engage in a competitive marketplace opens the door for everyone to prosper by building organic wealth. The promise is you get out what you put in. Even if what you put in means working a few more hours or taking on an extra side job, a free market allows members of society to prosper.
People can move out of poverty in America because no one was given the poverty imprisonment life sentence. Only within free market capitalism can people, who are willing to work for it, be self-empowered to improve their lives. Socialism promises to give you a lot of things, but it certainly doesn’t give you that.
Fundamentally, the right to own and accumulate private property is indispensable to a free market. Without the basic right to private property, there wouldn’t be the necessary incentive to compete in a marketplace. With private property protected, a competitive marketplace thrives as people work to create the most income as possible. The end result of having this incentive is the standard of living for all of society continually improves over time.