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the way to accumulate money is: you create wealth. you give it to other people in exchange for money -- for promises to pay you back in wealth later. then accu

by curi 19y ago

the way to accumulate money is: you create wealth. you give it to other people in exchange for money -- for promises to pay you back in wealth later. then accumulating money means you don't call in those promises, you just hold on to them. as long as you do that, other people got wealth you created, and you haven't gotten anything back yet. (well of course you spent some money, but the more you accumulate, the less you've asked in return for what you did)

bayareaguy 19y ago
That's what I would call first-order wealth (i.e. basic goods or services). It's the equivalent of the fish you give (or perhaps sell) that allows someone to eat for a day. Getting rich that way is a matter of knowing how much to charge and how much to spend so that you accumulate a surplus. The problem with this kind of "wealth" is that it doesn't have much of a network effect. I admire second-order wealth creators more. This kind of wealth is the knowledge you give (or sell) when you teach someone to fish. This creates the possibility of more first-order wealth without significantly diminishing the seller's wealth (unless the value of the knowledge itself is directly related to its scarcity). The guy in the original article is clearly a first-order rich guy. While I applaud him for helping worthy causes, I'd admire him more if he were a creator of second-order wealth, perhaps by starting a YC-like company which would help start new companies in that industry.
- curi 19y ago
  Look at amazon, ebay, and walmart -- very useful things to have. Selling lots of 'first-order' goods, cheaply, helps a lot of people tremendously. It's not clear to me how to judge which is better, but it is clear to me that both are awesome.
  - bayareaguy 19y ago
    While Walmart is basically a ruthlessly efficient first-order company, I'd say eBay is more of a second-order company since it sells a sales-enhancing service and Amazon is somewhere in between since it does both.
- mhb 19y ago
  Since money is fungible, the distinction you suggest is not meaningful. The money that a person saves by buying less expensive goods from a "first-order" business might very well be spent on training or other self-improvement. If a "first-order" business is better at its business than it would be at a "second-order" business, then, due to comparative advantage, everyone will be better off with the "first-order" business saving people money that they can spend on "second-order" businesses, your admiration for the latter notwithstanding.

by curi 19y ago

bayareaguy 19y ago

That's what I would call first-order wealth (i.e. basic goods or services). It's the equivalent of the fish you give (or perhaps sell) that allows someone to eat for a day. Getting rich that way is a matter of knowing how much to charge and how much to spend so that you accumulate a surplus. The problem with this kind of "wealth" is that it doesn't have much of a network effect. I admire second-order wealth creators more. This kind of wealth is the knowledge you give (or sell) when you teach someone to fish. This creates the possibility of more first-order wealth without significantly diminishing the seller's wealth (unless the value of the knowledge itself is directly related to its scarcity). The guy in the original article is clearly a first-order rich guy. While I applaud him for helping worthy causes, I'd admire him more if he were a creator of second-order wealth, perhaps by starting a YC-like company which would help start new companies in that industry.

curi 19y ago
Look at amazon, ebay, and walmart -- very useful things to have. Selling lots of 'first-order' goods, cheaply, helps a lot of people tremendously. It's not clear to me how to judge which is better, but it is clear to me that both are awesome.
- bayareaguy 19y ago
  While Walmart is basically a ruthlessly efficient first-order company, I'd say eBay is more of a second-order company since it sells a sales-enhancing service and Amazon is somewhere in between since it does both.
mhb 19y ago
Since money is fungible, the distinction you suggest is not meaningful. The money that a person saves by buying less expensive goods from a "first-order" business might very well be spent on training or other self-improvement. If a "first-order" business is better at its business than it would be at a "second-order" business, then, due to comparative advantage, everyone will be better off with the "first-order" business saving people money that they can spend on "second-order" businesses, your admiration for the latter notwithstanding.