Capitol Hill Blue Forums Misc. Topics General Stuff What is wealth? How is it made? How is it accounted?

Recent comments here combined with a book I'm reading called "The Overstory" by Richard Powers, got me to thinking about wealth. I just got started with the thinking, so I'm not ready to present any opinions.

Anybody who is, go for it!

this one is tricky. Good luck! I do know, however, that its relational depending on culture, nation, race, etc. I suspect its probably dependent on a number of external things as well as society. Again - good luck!

Lots of things this topic could touch on. Here's one:

Back when I was a kid, I was pretty naive about "the real world". I did start working after school and summers starting at 14 with a gig in the pilot year of the Youth Conservation Corps in Idaho City, Idaho, a quasi military sort of a Junior Forest Service summer program where we did a different job each week for seven weeks, ranging from trail maintenance to collection of wild plants for restoration work to gathering bitterbrush seeds for deer habitat improvement. After that I got a job for three years at a local greenhouse, nersery, floral operation, mostly "fixing glass", pulling weeds, and mixing dirt. My Dad was a career Mountain States telephone and telegraph employee, retiring after 37 years with "the Company", and Mom was a classic housewife turned lunch lady at a nearby grade school. Dad was handy and we did lots of projects around the house, I bought an old Jeep at 16 that we rebuilt, including an engine swap from the Willys four-banger to a Ford six. Always had a family garden, too.

I had always been a mountain boy, the family did a lot of camping and hunting, and I had vague aspirations to be a Jeremiah Johnson sort. I was a top student in school, though I couldn't say that I liked it all that much - but it was easy. Sports, orchestra, regular stuff - I was 4.0 (that was before you could get higher scores) - I got the second highest SAT scores in the state the year I took them, which got me a national merit scholarship, and I was interviewed by recruiters from Dartmouth, Harvard, and Princeton. But none of that meant much to me, I didn't have any real ambitions, and was so naive that I was actually worried about being able to make a living in the "real world".

My best friend's father was career military, and he used to talk about trying for a military academy appointment- four years of free school, twenty years service, then retire at 42 on the half pay of a captain (Navy) - the retirement was more than my Dad was making 25 years into his career. That relaxed my fears about making a living and I thought it would be great to do whatever the hell I wanted without working from 42 on. It was also somewhat of a motivator that the Vietnam war was still going and I had a lottery number that was sure to be a winner, so joining seemed like a better choice than being drafted. I applied and got two appointments to the Naval Academy and one to the Coast Guard Academy - I accepted the one from Senator Frank Church to the USNA. The full-ride National Merit Scholarship just evaporated.

Two months in and I had become painfully aware that the life of a navy officer was not for me, I pined for the mountains of Idaho. I realized that at 18 years old, my golden retirement was 24 years away, more life than I had already lived, to be spent doing things I had no interest in doing. As a smart guy with glasses, I was destined to be a nuclear engineer on some big boat or submarine. The cherry on top appeared during a field trip to an LST out in the Chesapeake Bay - everything was grey, the sky, the water, the boat, and it all smelled like diesel. Belowdecks we passed through the enlisted's berth and along a narrow passageway a black sailor on the top bunk said to me as I passed not a foot away, "Get out while you can, you stupid muthafukka!" I thought that was good advice. Coincidentally, the Vietnam conflict wound down at that time and my draft year was the first to not be called. It took another month to process out, during which I read the whole Tolkien series and ate some twenty large bags of M&Ms in my boxers while everyone else was doing Navy things.

I mistakenly thought that when I got back to Idaho I could get a job with the Forest Service, which was a misty part of my vague Jeremiah Johnson fantasy, but no such luck. The local University was already well into the first semester, so I went looking for a job. I landed one as a framing carpenter at minimum wage and worked at that until the next Fall when classes started again. Because of my academic history I felt compelled to pursue something in science or engineering, but still had no ambitions in those directions. I took the standard pre-engineering courses - calculus, electrical engineering, physics, along with some electives in geography, real estate, Chinese history, and a hippie thing lead by a gay guy called "Love and Sexuality", which was really out there for me. I had a 21 credit hour load, but school was still easy for me, and I continued to work part-time as a carpenter. The interesting thing is that, for the first time in my life, critical thinking began to be part of my consciousness, stirred mostly by the Love and Sexuality course - actually, I think, by the people who I was now associating with.

I reckon I've embarked on the 'walls of text' modality. Honest, this is all going to relate to the topic, but might take a few installments. I didn't have it all worked out in advance, so think of it as an adventure in discovering my concept of, "What is wealth? How is it made? How is it accounted?"

Way back in about 1989, I had sort of an epiphany: I realized that if you owned three rental houses in neighborhoods nice enough you could live in them, then you would always have about the same income as the people you rented to. At the time, people were paying about 1/3 of their income in rent or mortgage payments. So this seemed like a pretty sensible way to have an inflation-proof retirement income. All you had to do was never sell those houses as you moved to the next. Renters would make the mortgage payments. The only discipline needed was we had to come up with a down payment each time we wanted to move instead of using the equity by selling the old place. Most of that time, I worked as an embedded software engineer. That is the software inside cell phones, modems, consumer products, etc. I never worked on weapons. I never even worked for the military. But it still paid pretty well. That supplied a lot of the money we used for down payments.

Coming up with down payments was not a problem, because we had a fairly frugal life-style: No car leases. No new cars. No expensive vacations. No cosmetic surgery. No therapy. No expensive restaurants. No expensive entertainment. No tobacco or expensive alcohol. We continue in that vein even today: My wife and I have $30 flip phones.

My wife is all about the real estate investments. I also have traded a bit in the stock market. Back when we were first using dial-up modems, I discovered Ameritrade. I knew stock commissions could be really expensive, and here was a broker with $9 trades you could do on-line, for any number of shares. I knew they would be very successful, so I invested a lot of money (for me at that time) in their stock at the IPO. I watched it grow for several years, and finally sold it for 27 times the purchase price. The reason I sold it, is I had found and back tested a pretty sure thing to speculate in. Motley Fool Hidden Gems announced two new stocks once a month on a certain day at 9 AM Eastern time. These stocks were small caps, and they had enough clients that their recommendation would move the market. I back tested several different algorithms to best take advantage of that, and found a very good one. So once a month I would wake up at 5:30 and prepare to buy the two stocks. When they announced at 6, I generally got my Ameritrade orders in by 6:02. Then I would put in sell orders for when the stocks went up by a certain percentage. Sometimes that happened the same day. Other times it took a couple of weeks. It happened about 95% of the time. I did that for about two years, and I did very well. Then Motley Fool changed their announcement behavior and I had to stop. One of the nice things is that money made it's way into my Roth IRA, so it's all tax-free forever.

So now we are retired with rental income and tax-free dividend income, as well as social security near the top tier. I don't feel bad about any of it. We are great landlords, letting people have dogs, never raising the rent, and never keeping security deposits. We also maintain those houses very well. We've never done anything unethical, cheated anybody, etc. When we die, most of the estate will go to charities. I suspect if karma is real, we have accumulated plenty of good karma. We would let rents slide for Covid-19 unemployment, but all our tenants have jobs and keep on paying rent!

Are we wealthy? As wealthy as we want to be.

The intro to my story was awfully long - but from where it left off until today has been completely dominated by doing whatever I felt inclined to do, with little thought for accumulating lots of money and things, or planning for retirement. From logging and musical instrument wood; to sawmilling, timberframing, and natural log truss innovations; to building contracting and a furniture/woodworking shop; to environmental activism - citizen participation in NEPA planning, monitoring, and appeals; to forest restoration and product development for using low grade biomass in value-adding ways; to founding a green chamber of commerce and starting a local investment network; to farming and ranching in sustainable ways; to grant writing and project development and formation of non-profits; to the invention and commercialization of biochar+energy, with all its remarkable globally systemic triple-bottom-line benefits; ... the list is really long... none of it has had common "wealth" creation and accumulation as a top priority - at least after my 17 year-old dive into the American Dream of making a lot of money and retiring early.

Today, all these years later, I recognize that there is a steady theme throughout my 'song of the open road', and that is an affinity for healthy ecosystems of mountains, streams, and forests. They are the foundations for the wealth that I have lusted after all my life. It is why the works of the Civilian Conservation Corps are among the strongest of inspirations for me. People working together, taking care of one another, doing good things for society, the economy, and the planet.

My most beautiful and fulfilling memories are of simple things, times of great awareness - wind blowing through pines, fish swimming in a crystal clear creek, tremendous thunder, lightning and rain pounding all around while huddled under a tarp in the wilderness, plants sprouting up in the garden, the clean bite of a sharp double-bitted axe into a fresh log, the astoundingly detailed colors and patterns on all manner of creatures - butterflies, birds, rock squirrels, sunflowers... none of which have any derivative relationship to what we usually think of as wealth.

Song of the Open Road -Walt Whitman

I was stupid. Too cool for school. I fell into carpentry because pretty much anybody could do it. Health issues prevented me from holding most jobs so I spent my life building houses. Never made much money but I built myself a nice house.

I'm dirt poor, live like a king, and am the happiest man on the planet.

Wealth isn't money and even the stupid can come out on top.

Christamitey... I wasted two walls of text trying to say that!

I could get all Buddhist here, and talk about getting what you need, as opposed to getting what society deems the latest necessity. Some are content with their begging bowl and saffron robe. What do humans really need?

When you start with the premise that we are all going to die, and all you can do is to put that off for a while, it gets a lot simpler. Air to breath, water to drink, food to eat. Cleaner is better, for all three. The most expensive of those is way more expensive than "good enough". Healthy relationships with others is pretty important: People in solitary confinement tend to go crazy. Health care is important when you need it, but Christian Scientists tend to do pretty well without. Everything else is gravy.

But I do enjoy some nice gravy.

I built a raised bed yesterday. Two more to go. The irrigation supply is hooked up. Most of the seeds have arrived. I've figured out I can't start the cauliflower or snap peas until the end of summer. The tomatoes in containers are already knee-high and flowering. Crook-neck squash, bunching onions, and lettuce are going in the first bed.

How is wealth made? A first thought is that wealth is made by producing something of tangible value that didn't exist before. The thing made should have a value greater than the stuff it was made from.

This is a good question and, as several posters have noted, how you answer depends on your definitions.

I will distinguish between "wealth", which I will define roughly as economic resources, and "living a rich life", which includes a material baseline, sure, but also includes things like friends, family, purpose, and contentment.

Living a Rich Life, I believe, probably requires a number of inputs. One has to find joy (which isn't happiness, but they overlap) in your personal associations, joy in achieving a purpose, and a degree of earned success.

Wealth can be part of living a rich life. It establishes the baseline, and is often the marker of earned success. Economic resources, which form the basis of "wealth" are increased when current resources are shifted into more productive uses.