The Only Normal Source of Wealth Must Be Production
The core reason why the vast majority of people fail is not because they don’t engage in production, nor is it because they never accumulate, but rather because they fail to accumulate for a sufficient period of time. Consequently, the amount of money is insufficient, and thus, they fail to acquire or master true wealth.
Life should be centered around production. Everything else, no matter what it is, must be ranked after it. Nothing is more important than production—at least, until basic necessities are met.
What Exactly Are the Means of Production?
- Time is the only means of production owned by the proletariat. Time is incompressible, time is uncrossable, and time is always indispensable.
- You must produce goods and services that can be sold. This means someone needs them, or even the entire society needs them, for someone to buy them. Otherwise, how good you feel your creation is is useless. If no one wants it, there is no exchange, and therefore, there is no money.
The Fundamental Reason for Life’s Hardship
To make money, you must produce, because the only legitimate source of wealth is production; conversely, if you don’t produce, you won’t earn money. Fundamentally speaking, the difference in people’s income primarily stems from their proximity to effective production. In other words, the closer you are to production, the more money you earn; or conversely, the farther you are from production, the less money you earn.
The Jobs People Dislike
In the past, apprentices mostly focused on the manufacturing process; but for today’s working professionals, the most profitable approach might be to choose the sales process—that is, working in the sales department.
The key here is that sales income has no upper limit. This is something that no other organized form of effective production can rival. The more developed society becomes, the larger the market gets, and the richer the variety of goods and services, the more essential sales become to the producers. Therefore, many sales positions have a “performance commission incentive mechanism”—how much you earn depends on your performance. Other positions, such as administration, accounting, and logistics, generally have fixed salaries. So, if you want to earn more, you should prioritize choosing sales.
Absurdly Selling the Means of Production
Time is our ultimate means of production. The tragic thing is that 99% of people rely on directly selling their time to earn income.
For the vast majority of people, their personal business model throughout their lives is simply selling their time without any processing. Then, they desperately compete at this level, striving to have the highest unit price for their time—that’s all.
The Business Acumen Not Taught in School
Customer Lifetime Value refers to the profit you can earn from a single customer who purchases your goods or services throughout their entire life.
- The shorter the time cost, the harder it is to make money in a business.
For a restaurant, it is actually a quite good business for the average person, and the probability of success is quite high. However, from the perspective of time cost, this business is not the most profitable. It has a certain learning time cost, and while the daily production time cost is not high, it requires continuous production, and every sale incurs a certain time cost.
In comparison,
Creating a book is relatively much more profitable because, although the learning time cost is relatively high (research and preparation), there is also some production time cost (the writing process). But the sales time cost and the reproduction time cost are zero for the author.
Money is a Social Ledger
From the essential nature of a social ledger, it can be seen that money is actually the debt of the entire society. It represents what the society owes you or the services it owes you. If you are very poor and lack money, it actually represents that you owe society a lot. You have made little contribution to society.
Since money can store anything, money can naturally also be a form of means of production.
Money is the means of production. Furthermore, it is also the most flexible form of storage.
Money is the most flexible means of production.
Money Has Two Different Uses
- For most people, money has only one use: consumption.
- The second, and far more important, use of money is: investment.
The desire for investment grows from nothing and becomes increasingly strong. It automatically overwhelms the desire for consumption, to the point where, without realizing it, you naturally use more money for investment rather than consumption, unless it is a necessity.
Consumption is certainly joyful because desires are satisfied. But in reality, investment is also joyful; it is also a way of satisfying desires, and perhaps even more joyful.
Knowledge is like this, and useful knowledge is even more so. Once you learn it, you cannot forget it. Right now, it is difficult for you to waste money carelessly because you feel it should be used to produce something; it is difficult for you to hate the rich because you know the wealthy are creditors; it is difficult for you to ignore financial management because you know money is the storage of all things, and your freedom is stored there; it is difficult for you to be content with simply selling your time because you know that is the worst personal business model.
The Fundamental Principle of Producing with Money
The essence of investment is actually lending and receiving interest. Even the core of finance is merely interest; and the entire financial market is driven by and exists solely because of the rate of return.
- Money is actually a form of means of production.
- Interest is compensation for the opportunity cost of capital.
Just like time, capital is a scarce resource. This means that its use incurs an opportunity cost.
Regarding Borrowing Money
All money lent to relatives and friends is essentially given away; do not expect them to pay it back.
Those who know how to produce with money cannot just lend money out casually because their opportunity cost is relatively higher. If you think deeply, many people lend money to others not because they consider themselves generous or benevolent, but because of ignorance or incompetence. The opportunity cost of the money they hold is actually zero, so they don’t care much. Of course, this statement is harsh, but the logic is sound.
Equity is Essentially Equivalent to Debt
- From the company’s perspective, the company has borrowed money that never needs to be repaid.
- From the lender’s perspective, there are suddenly many benefits: higher returns and stronger liquidity.
The Fundamental Difference Between Investment and Speculation
In the stock market, all investors are traders, but not all traders are investors. Only a tiny minority of traders follow a long-term holding strategy, while the vast majority of traders engage in frequent trading. What is the difference? Only investors consider time to be a necessary component of the means of production, whereas the vast majority of traders—let’s call them “speculators”—do not have time in their means of production.
Time is the Only Path to Development.
Traders play completely different games in the same arena. Speculators participate in what I consider to be the worst kind of limited game, called a “zero-sum game”: the money earned is precisely the money lost by others. But investors are different; if they succeed, they earn the “result of development.” What they participate in is actually an “infinite game.”
The Mirror Effect of Investment Risk
I am too lazy to even look at financial reports because the best companies are the ones that are least profitable when they falsify their reports. I have a background in accounting, so it’s not that I can’t understand financial reports; I just feel that picking stocks by looking at reports is like trying to find gold in a pile of garbage. But the problem is, the gold mountain is standing right there, so why bother? The way ordinary people choose stocks is simple: first, try to choose the best goods in life. Then, not only buy the goods, but also buy the stock simultaneously.
The Actual Shape of Individual Time
Time is like a container, and inside it are all the people who have lived up to the present, and all the things they have done. Obviously, the size of each person’s time container is different.
Time, this container, has a start and an end, but between the start and the end, time is more like a pipeline than just a straight line. Some people do more things in a unit of time and are more efficient; therefore, this person’s time is different from others’ time—it has a larger diameter, a thicker pipeline. Some people do nothing meaningful for a long period of time; then, this person’s time during that period is merely a straight line.
What should we do to earn money? Produce, sell, invest. In any case, we absolutely cannot waste this ultimate means of production, time, on things that yield no output.
How to Do More Things
- After spending time to earn money, we must do more things.
- More precious than financial freedom is actually time freedom.
For those without production capacity, time is merely a ray—instantaneously having no area, long-term having no volume; time is not even a means of production. Therefore, time can only be “bored,” bored to the point of “waste,” and must reach the point of being “killed.” For those with production capacity, time is simply too beautiful; it can be used to create anything, do countless things, and even nurture kinship or love. Furthermore, as production efficiency increases, the possibilities of time become more numerous and greater. This is probably the most exciting reason why we are obsessed with learning and unwilling to spare any skill!
Factors Acting Against Production
If you are a producer, or even an effective producer, or even just someone aspiring to be a producer, you must know that there are things that are naturally “anti-production” and must absolutely be avoided. First are drugs and gambling. The ultimate victims of these two things are likely to start innocently, based on the naive idea of “just trying” or “just playing,” holding the hope that “it won’t happen again.” Little do they know, these two things should not even be touched.
Of course, more common than drugs and gambling is vanity. The definition of vanity can be very clear: money used for consumption was not earned through one’s own production, yet one is not ashamed of it but is proud of it.
Affluence Index = Own Production Income / Own Consumption Expenditure
- If a person’s Affluence Index = 1, they are neither poor nor rich;
- If the Affluence Index < 1, they are poor, and the smaller the index, the poorer they are;
- If the Affluence Index > 1, they are affluent, and the larger the index, the richer they are.
Many so-called wealthy people actually face the dilemma that their consumption expenditure is very high, while their production income is equal to 0, or even less than 0.
Some people genuinely earn money through effective production, yet they often fall back into poverty—as the old saying goes, “Seeing the high building, seeing the banquet, seeing the building collapse.” The core reason for falling back into poverty is always the same: the growth rate of consumption expenditure far exceeds the growth rate of production income.
To put it in my own words, never increase your consumption level too quickly.
In the more than 40 years since the Reform and Opening Up, a large number of so-called “middle class” people have appeared. But once the economy declines, the vast majority of them fall back into poverty overnight. What happened? It wasn’t that they didn’t earn money; their problem was that they earned money but couldn’t control their spending. Too many expenditures in life are not necessities but stem from desires from various angles. Desire has no end; if it is not properly controlled, it actually has the power to make anyone fall back into poverty, no matter how strong their production capacity is.
Wealth Gap is Inevitable
Every carriage requires at least 4 people to carry it; there must inevitably be poor people, and society needs poor people to function normally.
Basic Principles for Improving Efficiency
The act of learning actually includes at least four levels: learning, practicing, applying, and creating. Therefore, just learning without applying is a waste of time and is the fundamental reason why most people fail to learn. What you learn must be used; what you learn must be practiced. The process of practice is actually the only way to improve efficiency. Through massive iteration (not just repetition), continuous accumulation, and continuous improvement. Efficiency can never happen overnight, because efficiency is something that must be developed.
Unexpected things will happen in life, and you will encounter bad people and bad events, but these are all external factors. Their existence or appearance has already damaged my development; you must absolutely not let them further devour my ultimate means of production. After all, all my wealth, whether material or spiritual, comes from my time, or more accurately, from the volume of my time. What time do I have to waste? What reason do I have to waste it on them? At all times, focusing on improving efficiency is the main task.
Summary
- Wealth comes from production, and it comes from oneself;
- Time is the ultimate means of production;
- Money is the storage of all things;
- Money is the most flexible means of production.
In this increasingly better era, as long as you spend your time on self-study, production, sales, and investment, you can earn money, and there are still many things worth doing.