Sunday, October 09, 2016

Reinvestment

One of the major innovations of Capitalism was reinvestment of profits. If you believe that wealth is something you have, then it is something you decide when to spend. If you think of wealth as something you manage, then it is like looking after a tree that produces fruit. You eat some of the fruit, you plant some of the fruit. Only part of the profit (fruits) are spent (eaten), but never the capital (tree). If you cut a trees down, the fruit supply ends. Modern Billionaires don't have big piles of cash or hoards of stuff. Most of their wealth will be working. The don't spend most of the money their wealth makes each year, they reinvest it. A true capitalist would be very scared of conspicuous consumption, and act as custodians. The first concern of a true capitalist is sustainability.


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