Why it is Possible for Everyone to be Wealthy

By | May 22, 2014

1024px-Hoard_of_ancient_gold_coinsMost people think of wealth and money as finite things, but in reality, wealth is infinite and it is actually possible for everyone to be wealthy.

The reason why this is true is because wealth is actually created by producing value and the movement of money.

To give you a demonstration of how this works, let’s simplify it down to a smaller number of people and dollars.  Let’s say we have 100 people in the world, and a total of $100 of currency in the world.  This would mean that for every person, there is $1 in currency.

Lets’take this demonstration to a variety of economic systems and see how it works in each:

  1. Society with Scarcity Mindset
  2. Society with Mandatory Wealth Redistribution
  3. Society with Prosperity Mindset

Example 1: Society with a Scarcity Mindset

If you have a society where people have a mindset that wealth is scarce, people tend to horde their wealth, and taking advantage of people to get more wealth.  Here you typically wind up with the top 1% or 2% of the people having most of the money, while the rest have to fight over the pennies.  And the wealthy don’t even realize that they could be even richer if they allowed the money to flow, giving everyone more money to spend.

You typically see this in countries where most of the wealth and opportunity are in the hands of the ruling elite.

In such an unbalanced system, people start looking for alternatives to redistribute wealth more equitably.

Example 2: Society with Mandatory Wealth Redistribution

One reaction to a society with a scarcity mindset (or one with unequal distribution of wealth) is Communism, which attempts to treat everyone equally, or Socialism, which seeks to redistribute wealth from the rich to the poor, in varying degrees.

If we distributed the currency evenly to every person, or redistributed the wealth of the rich to the poor, every person in the world would have approx. $1, depending on how evenly the wealth is redistributed.  Such a system helps ensure that everyone has what they need, however, since the system is designed to regulate how much everyone is allowed to have, there is a cap on how wealthy each person can be.

But what if there was another way?

Example 3: Society with a Prosperity Mindset

If you take a look at how money works, it is actually possible that everyone can become wealthy by each creating increasing value and exchanging that for money.

People can create value in a variety of ways, which can include having certain skills that an employer or another person might need, or creating a new invention, or starting a business, or writing books, or teaching or anything that is valuable to someone.

Let’s say that we once again have 100 people with only $100 of currency in the world.  Instead of evenly distributing it, or having people horde it, what if everyone created value and got compensated for it.  If the first person has $100, and they give it to the next person in exchange for something $100 in value, and they did that for every person there is, we would no longer have only $100 in the world.  Everyone would be $100 richer with either $100 in their pocket or $100 worth of goods and services, turning that $100 into $10,000.  Repeat the cycle to create more wealth.

While the example obviously won’t work as smoothly in real life, due to competing factors and influences, it does serve to demonstrate that creating wealth and the movement of money does have a positive influence on society.  If we can encourage these positive influences, and mitigate the negative influences, we would have more wealth for everyone.

The key to a prosperous society is having individuals create value, and by encouraging the movement of money, while mitigating things that negatively affect wealth creation.

A Wealthy Society is made of Wealthy Individuals

You can’t have a wealthy society without wealthy individuals.  As an individual, you have to improve yourself and ask yourself what value are you creating in exchange for the money you wish to receive, and then take action.  As a society, we need to encourage people to create value, by encouraging education and small business and policies that encourage the movement of money.

We can all be rich, if we stopped thinking wealth was scarce.  Wealth is actually abundant, and isn’t just measured in money.

Scott M. Stolz

Entrepreneur, Educator, Author.
Helping people embrace life's opportunities.™


4 thoughts on “Why it is Possible for Everyone to be Wealthy

  1. none

    a) Your 3rd example is biased it wont work. If all the money in the world is $100 and its given to only one person for creating so called value then what would the rest do !! Die in hunger?

    b) Why cant the creation of value be applicable on 1st example and 2nd examples?

    Don’t over simplify and write something just for the sake of writing.

    Reply
  2. Scott M. Stolz Post author

    While it is true that the 3rd example is a very simplified one, the fact is that the movement of money and the creation of value is what creates wealth. This is why the Federal Reserve spends so much time and effort on policies that make money move.

    The whole point of the article is that wealth is not limited to the amount of currency in the world, it is limited by the creation of value and the movement of money.

    Reply
  3. Scott M. Stolz Post author

    And to answer your question on why creation of value is not enough for example 1 and 2, is because:

    a) In example 1, people tend to horde their money instead of spend it. Without spending and movement of money, less wealth is transferred to other people. You can create as much value as you want, but if no one is spending their money, no wealth is created.

    b) In example 2, the whole model is created on the assumption that wealth is scarce, and the government limits the wealth people can attain. While wealth redistribution is not necessarily bad, especially when the wealth is used to benefit all of society (like taxes going towards public works projects), if overdone, such as in a Communist country, it actually creates a disincentive to create value, since everyone gets paid the same regardless.

    Any policy the government makes should be focused on helping people create value (by helping them with their education, or by helping them start businesses), and by facilitating the movement of money in the economy.

    Taking money from one person and giving it to another only transfers wealth, not creates it. Creating value and having someone pay for that value creates wealth by benefiting both parties in the transaction.

    Reply
  4. Scott M. Stolz Post author

    I updated the article to make it clear that I don’t expect the world to actually work like the third example. There are too many factors working against it. The purpose of the example is to show that creating value, and the movement of money are positive influences that we should encourage. I also added the point that we need to mitigate negative influences on wealth creation at the same time.

    Reply

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