Highlands Blog

Creating Wealth

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Posted in Highlands Blog under Uncategorized

Mike has nothing. He lives in a hole in the ground. He does have some strength, his mind, and his ambition. There is a piece of land near the hole he lives in with large trees on it. He strikes a deal with the landowner that if he’ll let Mike chop down one of his trees, Mike will carve a canoe out of it and give him half of the $10 he thinks he can sell it for. Mike goes to a hardware store and asks the owner to lend him a saw and hatchet for a few days in exchange for a day’s worth of free labor.

So far, Mike has used only his mind to devise a plan and his wits to make a few deals. We all have these gifts. He has no experience carving canoes but has seen a wooden canoe before and thinks it’s not too difficult a project. Really good canoes sell for $20, so he thinks he can get $10 for an ok one.

He chops down the tree, carves a canoe over a week and sells it for $10. He gives $5 to the owner of the tree and $2 to the hardware store owner for the tools. He now has $3 that he didn’t have before plus a saw and a hatchet that are still good as well as a relationship with two other humans who are profiting from his work.

The landowner has a lot of trees and he values the $5 more than the trees. The hardware owner is excited about the possibility of selling the canoes at his store which will bring in more customers. Mike strikes another deal to put the canoe at the store and agrees to give him $1 if one sells.

So for the next canoe, Mike makes $10 minus the $5 to the landowner and $1 to the store owner. He now has $4 from his work. In this scenario, he can feed and shelter himself for $1 a day.

How has society benefited from Mike? He took a tree that was not really valued and turned it into a canoe that was highly valued. He enriched a landowner and a store owner. The world now has two more canoes and these will benefit the purchaser’s life. Mike himself has $7 that he can now trade for food and shelter enriching the owners of the local motel and grocery. He has money to survive while he builds his business.

The pie has expanded. That magic of God’s capitalism is that the little community now has lots of things that it didn’t have before. $20 worth of gain is helping at least five different people or even families.

With further ingenuity, Mike can take on a helper if he thinks the demand is there for more canoes. He can pay the helper $1.50 a day, more than what the man needs to survive. Mike strikes a new deal with the landowner to chop down more trees and make more canoes but because he is now buying more, he’ll need to pay the landowner less per tree. But, because they’ll be buying many more trees, the landowner will be further enriched.

Mike finds that with time, his canoes are better and with a helper and more experience they are building them faster.

Now, every week, Mike makes three canoes with his helper and is about to sell them for $12 each. He pays his helper $10, more than enough to support himself. $36 of canoe value is created. The landowner’s new deal gives him $9 for the three trees, the shop owner gets $3 for selling them and Mike has $14 from his week’s work whereas before he only had $4. He landowner and shop owner are getting more, Mike is getting more and the formerly unemployed man has a good job.

As Mike uses his mind and relationships and the goodwill he is creating in the community, he’ll have more opportunities. As his trees are cut down, the landowner can plant more or even purchase more land that has large trees on it. The store owner expands his shop by adding more goods that will benefit the lives of more customers. The employee can support himself and buy goods and services from the other shopkeepers in town.

Mike is making now more than he needs to survive. He has excess wealth. He can spend that on himself, give it to the homeless, or use it to expand his business even further.

Trees get turned into canoes and lots of people benefit. That’s the essence of God’s system. Turning the unwanted thing into the wanted.

Each motivated, hard-working person can produce more than they consume and the whole society benefits in the process, even if the man’s goal is just to enrich himself. Isn’t God great?!

 

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