You Cannot Become Wealthy In Isolation

This picture presents an interesting point and it requires some work to understand it all.  It comes from the Peace Corps in Malawi.

malawi womanSince we know that not all African women are millionaires, we must assume there are other factors.

Wealth is the result of a chain of situations and how they work together.  The chain includes:

The genetic variable.  Your parents and family.  To some extent there is a lucky gene.  To the extent parents influence and mold the self image of the child then I suppose you can be lucky, not lucky or just mediocre.  It is not dominant though.  There are many examples of people who became wealthy by their own activity, sometimes from very minimal beginnings. Some from good backgrounds have fared poorly.

Time and place matter.  Being in the right ones.  Being a bright person interested in software in Silicon Valley in 1995 probably worked okay.  It probably would not have done so well in Inuvik.  Wealth converges and depends on many interactions.

Society welcomes achievement or not.  Some cultures value wealth highly while others do not.  If a society does not value wealth then there will be too few infrastructure pieces in place to make it easy to acquire.  I have not paid a lot of attention to how long it takes to create a new business here, but I expect I could have most of it done in an afternoon.  There are many places in the world where it would take a year.

Society values order and predictability.  A system of law is fundamental.  Without law you cannot know what you own or control or how you must relate to others.  Ownership is fundamental to wealth.  Many countries have systems of law that make ownership difficult to establish.  No secured loans. Many have no contract law and no courts to enforce agreements. If predictability is not there, neither is the chance of wealth.

External control is antithetical to creation.  You can only control what exists, and that poorly.  You cannot control what does not exist and yet some bureaucracies try.  How long would it have taken to get approval for the iPhone if a governmental agency decided how and when to proceed?  Just do it, is the method where you can behave effectively.

So we have a chain of factors that work together for an environment where some could acquire wealth.

Why only some?

A person must acquire the skills needed by society.  They must develop the attitudes that fit well with society.  They must work diligently to make their product or service known and valued by society.  They must understand that entrepreneurial means to undertake the coordination of many resources: people, money, equipment, time and innovation, to create new products or services.  Few have the skill and the drive to accomplish success.  Fewer still have the ability to keep it.

Individual skills, work and attitudes are the connections that successfully plug a person into the society around us.  Without the connection, the societal structure that permits, but does not command wealth, cannot operate.  The interlocking of all the parts is the way to wealth.

You may recall president Obama causing a stir in 2011 in Roanoke Virginia with his, “You didn’t build it” claim.  His idea is that people with wealth have it because of government infrastructure, and programs.  Mr. Obama clearly chooses not to understand the interaction of the parts of society that permit wealth and the individual as operator within that structure.  Wealth is not present if any part is missing.

If he had said no one could be wealthy without society he would be right, but to deny the part of the individual is wrong. Probably on purpose.

The concern for the future is that people who with no obvious evidence, think wealth is selfish and lucky will tinker with the system that allows it to happen.  If people see wealth as the result of careful and clever interactions among many variables, and people, they will be less apt to tinker.  For those who think society owes them something, they will be wise to realize that the unguaranteed primary condition to wealth is the offering of skill and effort (value) to our fellow beings. No work no money.

No one can focus on just one facet of wealth building and come away with the right approach.  The right approach evolves in the marketplace.  But that is too slow for politicians.  Beware.

Don Shaughnessy is a retired partner in an international public accounting firm and is now with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.


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