Thursday, October 07, 2010

Where Wealth Is Made

Walking through a thrift store the other day, my friend Bob latched on to a piece of glossy brass pipe, a converted gas-light lamp fixture that someone had taken down from a ceiling.

"See those rings?", he said, pointing to two circles of brass that had once held the glass shades. "I have to pay $5 just for one of these. Here, for $5 I'm getting the rings and the fixture. And I have a place for it."

He paid $5 and walked out of the store a wealthier man.

The world is round and money moves through a finite universe. Suppose we shrink the world down to five people.

Suppose Harriet the hairdresser pays Joe the plumber $50 to unclog the drain on her shampoo sink. Then Joe pays Mike the mechanic $50 to rotate his tires and bleed his brakes. Mike pays Brenda's Room and Board $50 for his room and board. Brenda pays Glenda the geek $50 to polish her web page. And Glenda gets her hair done over at Harriet's, who does a really good job and only charges $50.

Each is wealthier by $50. $250 for the group. No one has more money than they had before, yet each is wealthier. Each has created value for another.

By having a special skill none of the others had, each could give less and get more.

The more special the skill, the less time it takes to give.

Wealth collects vertically when money moves laterally.

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