Friday, December 22, 2006

Who Makes All The Money?

Phinneas comments on Dr. Walter Block's post on the Mises Blog on Why Be An Economist? To Be Happy, That's Why:

There are really only 3 ways of earning a large amount of money:

1. Finance (i.e., money lending, in all its various forms);

2. Speculation (i.e., buying things that you predict will either appreciate on their own, or will appreciate with a minimum of effort on your part); and

3. Selling a product or service (usually a product, but not always) that you can commodify, unitize and promote with a brand. This can lead to great wealth because doubling your sales of commodified, unitized products requires less than double the amount of work. Efficiencies, I think economists call that.

People think that there is a fourth way, but it's really just an illusion. It's the highly-skilled service-provider option. Lawyers. Doctors. Architects. Commercial artists. Anyone doing highly skilled piece-work.

You might make an upper-middle class income doing these things, if you bust your ass and work twice as hard as everyone else and do nothing else all the time. But the truly successful (in monetary terms) members of these vocations are the ones who figure out a way to commodify and unitize what they do. Like the artist who does more than work on commissions, but creates something that he can replicate (i.e., unitize). Or the lawyer who spends his time schmoozing clients while other (younger) lawyers are back at the office doing all the actual work like a factory. He commodifies his legal services, establishing himself or his firm as the brand.

Who makes all the money -- the fashion designer who sells goods with his name on them in hundreds of stores, or the custom tailor who makes fantastic suits one at a time? The tailor on Saville Row who studied as an apprentice for decades may be a genius and a virtuoso, but his product isn't commodified and unitized, which means that in order to earn twice as much, he has to work twice as much. He has no leverage.

The person who is going to have the greatest impact on promoting libertarian ideals is going to be the one who writes the popular books (or produces movies, or TV shows, or or songs, etc.) that express libertarian ideals. In order to create a broad, social movement, you have to have broad appeal. It's going to be someone who is able to commodify and unitize his message, and then build a brand that sells that message to people far and wide.

Of course, another commentator brings up the alternative three ways to make money:

"The way I heard it, the only three ways to get rich these days are to marry it, inherit it, or steal it.