Wednesday, September 9, 2009

A surprising number of people retain from childhood the idea that there is a fixed amount of wealth i the world.When wealth is talked about in this context, it is often described as a pie."You can't make the pie larger,"it is said.When you're talking about the amount of money in one family's bank account, or the amount available to a government from one year's tax revenue,this is true.
What leads people astray here is the abstraction of money.Money is not wealth. It's just something we use to move wealth around.So although there may be,in certain specific moments a fixed amount of money available to trade with other people for things you want,there is not a fixed amount of wealth in the world. You can make more wealth
If you want to create wealth , it will help to understand what it is.But if wealth is the important thing, why does everyone talk about making money?It is kind of shorthand: money is a way of moving wealth, and in practice they are usually interchangeable. But they are not the same thing, and unless you plan to get rich by counterfeiting , talking about making money can make it harder to understand how to make money.
People think that what a business does is make money . But money is just the intermediate stage... What most business really do is make wealth.