A Personal Exploration Of Income, Consumption, Savings and Taxation

I thought it’d be interesting to explore my personal budgeting efforts in broad terms to illustrate some of the problems with mainstream public thinking about personal incomes, taxation and “hoarding” of savings by the rich. Now, I am not rich, but I do alright and I think I am safely in the “productively contributing to society and paying more than my fair share” so I think my example can be illustrative for the principles involved.

I took a look at my budget sheet for the full year, 2015, and in terms of percentages it broke down like this:

  • Personal consumption, 35%
  • Savings, 33%
  • Taxes, 32%

A few things should be noted right away. The first is that these taxes are directly levied on my income at the time I get my paycheck, this doesn’t serve as a comprehensive register of all taxes I paid, such as sales tax, gasoline consumption taxes, etc. The second is that I included my tax refund for 2014 in my income for 2015, which makes my income higher than it would be and raises my savings rate while lowering my tax rate. I’m not going to make a big deal about it, but it is there and it actually makes my tax rate and my savings rate closer to even, if not swinging more toward taxation.

Taking my percentage rates as above, the way to think about it simply is that for every $100 I earn in income, I enjoy personally, in the present, $35 worth of it; I pay $33 to the government; and then I save/”hoard” $32 of it, which we will get into more detail below. But the immediate idea is that I earn $100, but I actually only get immediate benefit from $35– you might already think that is too much and I shouldn’t get to enjoy so much of my own money, but it’s worth belaboring the obvious point that I don’t spend $100 if I earn $100, I spend a fraction of it and for me, that fraction is about 1/3rd, meaning that a majority of my income is not something I personally, immediately benefit from. This principle would extend to any other person based on their rates of consumption, savings and taxation, including “the rich”, and I would imagine for “the rich” their consumption percentage would actually be much lower than mine (because it gets really difficult to spend large amounts of money on personal consumption), while their rates of taxation (assuming they don’t have a sophisticated tax sheltering scheme) and savings are higher than mine.

Let’s look at that tax portion of my income at 32%. One way to look at what I pay in taxes is to say that I derive valuable use of goods and services provided by the government — roads, police and firefighter services, public utilities — and my taxes are a user’s fee for these items. Of course, virtually no government services (not even roads and highways via the gasoline tax!) are 100% funded by direct charge of fees on a pro rata basis, so this is a strange argument. In addition, most governments at the state level, and certainly this is true of my current state, and the federal government, run consistent budget deficits, which means they spend more than they take in on tax revenue. So if we want to look at it as “user’s fees”, it’d be a weird situation where you are charged only part of the cost of your use, and then some financier makes up the difference by lending it to the service provider who plans to charge you for the rest of your use at some date in the future.

Another thing to consider is that some people make use of government goods and services without paying anything for them. In cases of direct welfare subsidy, this is obvious and purposeful, they’re never meant to. In other cases, people simply make more use because of their behavior than they pay into the system, because of their income generation efforts. For example, someone might call the cops all the time, or have ambulances summoned on their behalf with greater frequency, or be a much bigger user of Medicare, than what they pay in to the system. Without making a moral commentary on this, it’s clear that looking at taxation as a “user fee” is not really a reasonable way to considering things because some users aren’t paying anything and using it a lot, and other people are paying a lot and not using much (hint: I’d skew more toward that end of the spectrum, I can’t remember the last time I made use of or was the “victim” of emergency services, I drive on the roads less than most people because I work close to home, hate traffic and spend a lot of time reading on my couch, and I generally pose a lower risk/cost to other members of my community while being more productive than average — based on income).

The point of all of this is to support the idea that, of my annual tax contribution, I do not get 100% of the benefit but only some fraction. It’s not easy to calculate what that fraction is (is it greater than 50%? Less than 50%?) so of the 1/3rd of my income that I pay in taxes, some portion of it doesn’t benefit me but other people.

Now let’s look at the savings portion. This is the part that always trips up the income-worrier crowd. Savings are interesting because clearly, for savings to be accumulated, one must abstain from direct personal consumption in the present, right? To have $1 of savings, that must mean I had the opportunity to spend $1 on my personal enjoyment but chose not to do that. It’s possible that at some future date I will make use of that $1 of savings, and so my savings are a form of “time-delayed enjoyment”– but it’s also possible I never get to, either because I die, or I lose them through increased taxation or inflation, or I simply choose not to do so either to maintain my optionality in perpetuity, or because I want to deploy my savings in an investment.

If I decide to invest my savings, I do so because I have the expectation of earning a return over time. One could argue that earning myself more resources is a benefit to me and thus my savings are providing me personal enjoyment, but again, unless I directly consume the return as future income, it will just end up funding taxes or funding my growing savings (and investment) in which case I get no direct personal benefit from the resources. But if I don’t get any direct personal benefit during this process, who does benefit?

An investment of savings is a method by which an individual or group of individuals with a profitable social project can make use of the saved resources to fund their project. I might make a loan to a company, or buy some of their equity, which they then use to buy supplies, pay workers, cover rent, etc., in the course of providing valuable goods and services to other people. For example, all “public companies” that can be bought and sold in the stock market are funded by the investment of savings provided by people like me, who choose not to spend all their income and instead turn over some of their resources to these companies who use them to: serve people coffee (Starbucks) or hamburgers (McDonald’s) or build housing (Lennar) or provide mobile telecom networks (Verizon), etc. I might be a customer of one or many of these companies myself and thereby earn a small incremental benefit from their existence, but the point is that these companies are primarily serving other people than myself and so my savings, in so far as they are invested, are not being used for my benefit but for other people’s.

So what if we go back to my rates of “spending” (consumption, savings and tax) and start adjusting them. My consumption is lower than it appears, because part of what is baked into my spending is sales taxes I’ve paid on purchases which fund local governments. Although the average sales tax rate is higher than this, some of my spending is comprised of things like rent which do not have an explicit tax component I pay (that is paid as property taxes by the property owner) so it might average out to about 4% of my total income. My consumption is now 31% and my taxation component is closer to 36%. However, some portion of what I pay in taxes I personally benefit from as well. This is really hard to estimate but I think I could conservatively say that I don’t benefit directly from at least 25% of what I pay in taxes. So let’s add back 27% to my personal consumption, so I am at 58% personal consumption and 9% taxation on my income spending. We’ll leave my savings rate alone at 33%, and we’ll simplify our analysis by saying that I invest my entire savings in each period, which is very nearly true. I have good cash management practices so I don’t generally need to fund my personal consumption from my accumulated savings, and while I do keep a balance of cash for emergencies, it’s not under my mattress but in a bank account so it’s being loaned out (for essentially 0 interest!).

Using me as an example, then, we can see that in an annual period, I personally and directly consume about 58% of my income (via my own spending and benefits I derive from government-provided goods and services which I paid for via taxation) while I do not make use of 42% of my income in each period (via savings deployed as investment, and money that is taxed to fund government services for other people). For every $100 I earn, $42 is being consumed by other people.

What’s the problem with “hoarding” in this case? If my savings “hoard” increases, it just pushes the proportion of my income which benefits other people higher.

Also, what is the problem with me earning a higher income? I can only enjoy so much of it myself. As I earn more and more, it is harder and harder to spend it on my own enjoyment and I tend to use less and less government services as a percentage of what I pay in taxes, so the benefits are accruing largely to the rest of society. You might say, “Well, if you’re not using the money anyway, why not have the government tax more of it away from you, or legally restrict your income to a certain cap so others can be paid more?” but that misses the point that, assuming we’re talking about a free and competitive market, I created the value I earn as an income as evidenced by the fact that other people voluntarily give it to me in exchange. If you stop me from earning it, then I stop producing it and it doesn’t simply shift to other people in society to enhance their income, the real value of it disappears altogether!

As I said, I am not rich, though I do alright. But if I was rich, these numbers would just keep skewing further and further toward providing value to other people than myself. If I was earning a billion dollars a year (which is different from saying I am a billionaire based on asset value), would it be reasonable to believe I enjoy even $10M of (1%) my income as direct personal consumption each year? That is A LOT of government services, fine meals, first class air travel, fancy cars, etc. when we’re talking about pure, after-tax dollars. At that point, fully 99% of my annual income is providing benefit to persons other than myself. What is greedy about that?

This isn’t meant to be a defense of any specific wealthy or high-income individual. There might be a lot of people engaged in illicit or corrupt personal gain. I am trying to provide some logic about the general principle of personal incomes and who actually benefits from them. If anyone is “selfish” with their spending, it’s probably lower income people who pay zero to negative taxes and don’t manage to save much if any of their income. People with higher incomes and high propensity for savings are largely funding the enjoyment and well-being of people other than themselves.

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Review – The Life-Changing Magic Of Tidying Up

The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizing

by Marie Kondo, published 2014

This is a work of philosophy under cover of personal organization and household habit. The question at the center of the book is “Why do you own what you own?” Put more bluntly, it is, “Why do you have so much stuff you don’t use and never will?” If those don’t seem like profound questions, maybe you don’t live your life and enjoy your material existence in a thoughtful way.

The book’s weakness, ironically, is in the specific tidying, folding and organizing methods Kondo advocates. Reading on Kindle, I did not find any helpful pictures or diagrams (but thankfully, there is a wealth of videos on YouTube where people have demonstrated her techniques) and I found the text-explanations of how to fold or where to store different things in a closet generally confusing. I believe my confusion will be relieved with some practice and patience in experimenting with different techniques over time. But if you’re hoping to learn the “KonMari Method” for folding, storing and the like, I don’t think this book is the best resource.

Instead, the book’s strength is its principles– always key to the strength of any philosophical work. Kondo suggests a general method for tidying one’s living space– start with your own possessions, then move to shared possessions; begin with clothes, then work through to other easily accumulated items such as books, kitchen and toilet supplies and finally to trinkets and trash; when tidying by category, locate ALL such possessions throughout the home and dump them in a pile on the floor before sorting. Anyone can grasp the principles of this method regardless of their specific circumstances. Her criteria for keeping things (note: this is a positive criteria, NOT a negative criteria for determining what to eliminate) is to hold the object and ask oneself, “Does this spark joy?” It seems ambiguous, emotional… subjective. But that’s the point! It’s a deeply individual approach to tidying. Neither Kondo nor anyone else can tell you what objects bring happiness to your life and which you can do without, you have to sense that on your own.

As a rational person I was alarmed by this at first. It seemed goofy and mystic, maybe not even serious. “Spark joy”, I don’t think in those terms. But I gave it some time and realized it made sense. I started thinking about shirts and sweaters and pants I look for an excuse to wear. I have a pair of corduroys, for example, that almost make me excited for cold weather. And then I have articles that are just taking up space in my dresser and closet, items that I can never seem to find a good opportunity to use them but nonetheless I keep holding on to them because they still fit and they are nice and in good condition. But every sweater I have that I don’t wear and won’t get rid of is another sweater I can’t acquire that I might actually enjoy.

When Kondo pointed out the cost of storing all this useless stuff, I was floored. I would never pay for a “self-storage” unit somewhere, or turn my garage into anything other than a place to put my car. In fact, I regularly shake my head when I peer into neighbor’s open garages as I walk past with my dog seeing them bulging with stacked crap all the way up to the door. What on earth are these people thinking? They’re never going to use this stuff!!

But then I realized that all the items I keep around my home that I have no use for is effectively absorbing part of my rent each month– I am paying to store these items! And what’s worse, as Kondo points out, much of the time these are items I bought in bulk to “save money” but which are in such significant supply that they will last me multiple months if not years. I am effectively floating the manufacturer’s inventory and parking part of it in my home, or thought of another way, I am subsidizing his production by buying several items I don’t really need and won’t ever use with each one I do need. Rather than saving money, I am costing myself– once for buying more than I needed and twice for paying to store it in my home. For me, I’d argue a third time with the emotional cost of being aware of and surrounded by these unused possessions that continually fail to “spark joy.” Just the other day I bought a pack of 12 pens for annotating books as I read. I was unhappy with my previous pens and wanted to try something new. I didn’t need 12 pens, I needed 1 or 2. But I bought 12 for around $10 because I was “saving” money over buying a pack of 3 for $5. The problem is, it turns out I kind of hate these pens and now I have enough to last me a couple years at my current rate of use. Kondo made this so clear to me!

Another startling revelation was the way I’ve shifted some of my own tidying burden to family members. It’s hard to visit my childhood home at times because my parents have a bad case of hoarding. But I’ve had no problem storing my finished or unread books in an unused room of the house I used to occupy when I occasionally stop by. One part of me has been mentally scolding my parents for hoarding and not cleaning up their living space. But another part of me has been dumping off my own clutter on them, completely unaware! I have resolved to go over there and dump a bunch of the stuff that remains.

While I am excited to declutter clothes (and look forward to the opportunity to purchase new articles I might actually enjoy wearing with the newly freed space), hallway closets, linen storage, bathroom and kitchen cupboards and more, one area I struggled with was her suggestion for decluttering one’s library. I love books. Or, rather, I love the idea of reading my books. But Kondo helped me clarify another meaningful point– many of the books I purchase and do not read were meant only to gratify my own ego, ie, “It’d be so great to know more about X.” When I purchase a book and don’t read it for months, I probably won’t read it ever. The inspiration and desire to study that topic has come and gone. I have made the mistake, time and time again, of purchasing far more books than I could ever hope to read and that I will ever be able to sustain an interest in. It’s wasteful.

There are a few books I really do enjoy and which I will read again. There are books I’d like to keep which I may not read again, but which I believe my children will gain a benefit from studying at an appropriate time in their life as I did. You can argue that it’d be better to buy them their own copy at that time, which is true, but this is a limited case in which I am okay holding on to a few titles for them in the meanwhile. But most of the books I own that I haven’t read yet, won’t get read– they’ll remain as costly monuments to an ambition not realized. And many more which I have read and absorbed from them what I can will similarly sit on my shelves unused as a monument to the hope that there is more juice to squeeze. But the pulp is dry at this point. I have made another resolution, which is to keep the few titles I know I will re-read because I’ve re-read in the past, the few titles I want to share with my kids and the few titles I am excited to read in the next month or two at my normal pace of reading. Everything else (read, unread) is getting sold or donated. I want to have a limited library of titles that “spark joy” and feel good to see on my shelf and not a stack of paper that I subconsciously feel a burden to get to as some kind of project.

Marie Kondo’s “Life Changing Magic” invites us to live our lives more consciously and to purchase, use and store with purpose. Any book that helps me to resolve logical contradictions in my own thoughts and actions is valuable to me. I took far more away from this book than I thought I would going into it given that I already have a reputation for being a neat freak!

 

The Concentration Of Wealth Is A Social Blessing, Not A Curse

A common condemnation of a free economic system is the insistence that without periodic redistribution of wealth by a central authority (the government), wealth would come to be concentrated increasingly in the hands of a select few who would, via such concentration, deprive everyone else in society through their hoarding and thereby impoverish the great mass of the people. Even more horribly, over time, the economic wealth of a society comes to be vested in the hands of the do-nothing descendants of the original wealthy, meaning that not only is wealth controlled by a few but now those few didn’t even do anything (good or bad) to acquire the wealth save to be born into privilege.

Aside from the obvious and upfront nefarious implication of this belief (namely, that it’d be a social “good” for any private person to randomly steal from such a wealth accumulator, as such redistribution would be a form of dissipation of accumulated wealth which is itself a bad, making the theft a good), this fear rests on a multitude of fallacies and ultimately leads to several absurd conclusions.

None of these make any sense. Each will be examined in turn. But first, let us start with an exposition of the actual operation of an unencumbered (intervention/violent redistribution-free) economic system.

In a free market, capital is always in the most capable hands

According to the common criticism of free economic systems, the normal functioning of voluntary exchange amongst willing individuals will inevitably result in accumulation of real wealth by a select few and de-accumulation of real wealth by most others.

The insinuation is that exploitation is involved– the only way someone could come by “more than their fair share” is if they steal from or defraud others.

While this is certainly a true observation with regards to the operation of a band of thieves, or an agency of government (aka, an official crime syndicate), this makes no sense in the context of a market consisting of voluntary exchanges amongst willing individuals.

In a free economic system, wealth is defined subjectively according to individual preferences and values. Similarly and importantly, wealth is exchanged on a voluntary and subjective basis. The existence of an exchange implies that each party believes he is getting more than he is giving up. If this were not true, a voluntary exchange would not occur.

What people are exchanging is that which is produced. To be able to make more exchanges, one must therefore be more productive (defined as being more able in terms of producing things people want in quantity, or things people strongly desire above other things they might exchange for).

It follows, then, that wealth in a free economic system tends to concentrate in the hands of the “most able”, where “most able” is a synonym for “most productive” and where most productive is defined in terms of having strong ability to produce for others the things that they desire.

In short, in a free economic system, capital finds its way over time into the hands of those who are its most able owners, for the benefit of everyone in society.

The benefits of naturally occurring wealth concentration in able hands, even across generations

Why is this wealth concentration a benefit for all of society and not just those few who come to own it?

Because that wealth is only valuable insofar as it is used to produce goods and services for others.

This idea is dependent upon the fact of an economic technology known as “the division of labor”. The division of labor adds value to society through operation of what is known as “comparative advantage”, namely, that everyone is relatively more skilled in some forms of production and relatively less skilled in other forms of production and that individuals can increase their own productivity by specializing in those tasks which they are relatively best suited for and leaving those tasks which they are relatively unsuited for to others in society (the division of labor) who are relatively best suited for them and then exchanging part of their production for the product of others in these areas in which they chose not to specialize.

Further, it is by the concentration of wealth (the accumulation of savings, or capital) that allows for the supercharging of the division of labor. Capital supercharges the division of labor in two primary ways:

  • through the mechanism of time-saving
  • through the creation of certain technologies which enable production methods which can not be replicated by manual labor, no matter how vast

Capital provides a means of leveraging a productive process through time-saving (in essence, this is what capital is– labor-productivity stored across time for later use). It enhances the division of labor because the multiplier effect of saved time is akin to employing even more individuals in the division of labor and applying them to a specialized task. Similarly, capital allows for the creation of certain technologies which possess productive attributes that can not be matched by even an infinite number of skilled individuals (consider a nano-circuitry robot which is able to perform tasks on a circuit board at a scale no human can).

The only way to enjoy these benefits is through the accumulation of wealth. And the more wealth is accumulated by one individual, the more hyper-specialization through the leveraging of capital can occur with regards to a particular task or method of production.

And obviously, these effects persist across generations, so if X was accumulated in generation 1, the further accumulation of capital by a factor of Y in generation 2 means there is now X+Y capital available to enhance the division of labor in the current and subsequent generations.

The natural dissipation of wealth from unable hands

The fear of increasing concentration of wealth in unable hands across generations through the unencumbered operation of a free economic system is groundless.

As we have seen above, wealth only accumulates in the hands of the able– those who are more productive are more successful at accumulating wealth because other market participants are more eager to exchange for the value they produce.

The image of the lazy, idiotic wealthy heir to a fortune who comes by a greater fortune over time simply because he inherited much to begin with is a contradiction. Either such a person is unproductive and gradually manages to dissipate their accumulated, inherited wealth over time due to their inability, or else they have been mischaracterized for, as “lazy” and “idiotic” as they may be, if they as owners of their accumulated capital manage to grow it over time, they have demonstrated they are productive and to that extent they are able.

No one deserves condemnation for ableness in increasing their wealth simply because they were born with much to begin with– their ability to produce further wealth stands as a testament to their ability to produce and thereby “contribute to society”. And one does not need to be condemned for disability in this area, as the gradual diminishing of one’s accumulated wealth is punishment (and judgment) enough.

The subjectivity of ableness

Ableness with regards to wealth creation (productive ability) is at all times a subjective notion.

In terms of market exchanges, other individuals in the market place will only reward the production of wealth they find subjectively valuable.

Ableness is not constant nor is it objective. Ableness can grow and diminish within a person or organization over time. It is subject to dynamism, the constant changing whims and preferences of the market place. It is not permanent. One may be able at producing X but not Y and once the market favors Y, one is no longer able.

The contemporaneous nature of ablest hands

The caricature of “permanent wealth” is another fallacy, the idea of an indomitable tycoon who can’t help but grow his wealth ever larger and whose descendants only become wealthier still are phantasms.

Because ableness is a subjective consideration, it is also contemporaneous. A man who is a legend in creating wealth through horseshoes may be reduced to miserliness in an era of automobiles.

In a free economic system, concentrated wealth can only remain concentrated across time to the extent that the current owners of it respond to the popularity of certain goods and services through time. The aforementioned horseshoe-fortune can not perpetuate itself indefinitely following the advent of automobiles unless the heirs to the fortune re-allocate capital to this new technology (or some other profitable venture) and away from the now unprofitable technology of horseshoes.

In this way, the constant service of concentrated wealth is guaranteed toward the highest valued uses of society viewed as a whole. One can not create a fortune in horseshoes and then “hoard” this wealth in this useless industry as automobiles arrive on the scene and expect these riches to further accumulate over time.

How many John Rockefellers have begotten new John Rockefellers in the immediately subsequent generation?

Ableness is subjective. Few heirs can match their forefathers in ableness in the family industry and rarely does the value of the family industry to society at large persist for long periods of time (generation after generation).

The impossibility of wealth being “hoarded”

Only a very small fraction of a person’s fortune is being consumed by them at one time. If they suddenly consumed it all it’d be gone forever and they’d be impoverished.

True, wealth is accumulated by most people in order to be consumed. It is assumedly subjectively valued as wealth so that it can one day be consumed. But wealth can not be both possessed and consumed. One can not have their cake and enjoy its sweet, supple flavors at once. These ends are mutually exclusive, doing one makes impossible the other.

It makes no sense to accuse those who possess concentrated fortunes of “hoarding” wealth, of keeping it out of the hands of others.

Wealth can be:

  • consumed
  • invested
  • loaned

If it is loaned, it is being made useful to others. If it is invested, it is being made useful to others and is engaged in the production of further goods and services demanded by individuals in society. If it is consumed, it is used up by the one who had produced or exchanged for it and so long as they didn’t do anything criminal to acquire it in the first place, this is their right. Consumption could come in the form of literally consuming or using something up, such as eating a foodstuff or utilizing a machine which can wear down, or it could come in the form of accumulating a stockpile whose sole purpose is to aid its owner in providing the comfort of knowing it is there. Such a stockpile could only be acquired by voluntary exchange in a free economic system so it would be within an individual’s right to “waste” it in such a manner.

A man may be worth $100M. But this does not mean he enjoys the ability to consume $100M worth of wealth at all times. In reality, he might own a few homes of a few million each, wear clothes worth thousands of dollars, eat food costing hundreds. The vast majority of his millions of accumulated wealth are not utilized for direct consumption, not now and likely not ever.

If he ever actually utilized this wealth all at once, consumed it (likely, made his worth liquid by exchanging his capital for cash, and then spending it on consumption goods and services) it would be gone. Assuming he was not employed by someone else and in possession of a current income as a result, the liquidation of his various equity positions would leave him not only penniless after this consumptive spree, but wealthless. He would have had his “last supper.”

He would go, in a matter of moments, from a wealthy man, to a pauper.

Wealth can not be “hoarded” and kept away from others. And if it is consumed, it is consumed for good. Consumption is not a renewable process, unlike production.

Wealth implies capital accumulation and preservation

The individuals in society who manage to amass great fortunes (accumulate large amounts of wealth or capital) in a free economic system have demonstrated a great ability not only to produce, but to restrict their own consumption, that is, to save.

Without borrowing, a person can consume only that which they produce. And a highly productive person also has the privilege of being a highly consumptive person. They can make many more exchanges with their additional product and consume an equivalent amount of goods and services they have exchanged for.

However, if instead of maintaining a net worth of zero, their net worth grows over time, they are exhibiting their discipline for restricting their own ability to consume. This means, rather than consuming all that they could because of all they produce, they actually reserve part of it and, through loans, investments and even voluntary acts of charity, allow other people to use this wealth to produce and consume themselves.

The caricature of the wealth accumulator is one of a cruel miser– somehow, by managing to gather into his arms a great fortune, he has denied many others their ability to consume.

But the reality is just the opposite! The only person whose consumptive desires have been denied are the wealth accumulator’s, while instead everyone else in society is allowed to make use of his additional capital in their own projects and consumptive desires.

The act of saving, the presence of accumulated wealth or capital, indicates a disciplined decision to underconsume relative to productive capacity. It implies a permanent restriction on total ability to consume insofar as this pile of wealth is maintained or even grows.

The encumbered market

None of the above applies to the context of a system of exchanges which are partially or primarily involuntary in nature. In other words, none of the above applies to wealth accumulated via means of plunder, whether they be public or private means.

Outside of this context, however, the accumulation of wealth is not a curse for society and, in many ways, it is a blessing. Further, it is not permanent nor is it arbitrary. The concentration of wealth in an unencumbered market always, over time, reflects the greatest ableness as defined by the greatest social uses and values of the time in question. No one who comes by wealth comes by it accidentally and those who were the special beneficiaries of luck or heritage must demonstrate their own ableness lest their wealth get away from them and into the hands of those who are more capable than themselves.

No individual can consume his wealth in its entirety and expect to remain wealthy. And those who restrict their consumption in order to preserve their wealth merely act to make their wealth available to others for their productive or consumptive use.

Those who have amassed great wealth by voluntary means should be cheered, applauded and thanked for the service they provide to everyone in society. Those who come by their wealth through plunder and malice should rightfully be derided, castigated and even violently prevented from further predations, if judgment calls for it.

Review – The Richest Man In Babylon

The Richest Man In Babylon

by George S. Clason, published 1926, 1988

The Richest Man in Babylon

Do you want to know the secret to wealth? Do you want to know how the richest man in Babylon came to a prosperous life?

He never forgot, A part of all you earn is yours to keep.

Seven Cures for a Lean Purse

  1. Start thy purse to fattening; save at least 10% of everything you earn
  2. Control thy expenditures; budget your expenses so you never spend more than 90% of what you earn on necessities and luxuries alike
  3. Make thy gold multiply; put your savings to work and let your wealth multiply
  4. Guard they treasures from loss; always ensure first that you don’t lose what you have and that you can get your money back out of any investment you make
  5. Make thy dwelling a profitable investment; own your own home
  6. Insure a future income; your financial planning should take into consideration the fact that you will have decreased earnings power as you age, and that one day you may pass on and leave dependents behind who need financial sustenance
  7. Increase thy ability to earn; cultivate your own powers, study and grow wiser, learn new skills and enhance your ability and number of ways you can earn income

Meet the Goddess of Good Luck

Men of action are favored by the goddess of good luck

The Five Laws of Gold

  1. Gold comes easily to anyone who would put aside 10% of his earnings to provide for an estate for his future and his family
  2. Gold will work for the wise person who finds safe investments in which it can multiply on its own
  3. Gold clings to the owner who looks after its safety in his dealings
  4. Gold slips away from those who invest it carelessly or in ways he is not familiar with
  5. Gold flees the man who has unrealistic earnings expectations, listens to tricksters and schemers or who follows his passions and desires rather than consideration and experience

The Gold Lender of Babylon

Better a little caution than a great regret

The Walls of Babylon

We cannot afford to be without protection

The Camel Trader of Babylon

Where determination is, the way can be found