"A society grows great when old men plant trees whose shade they will never sit in," says the Greek Proverb. Wealth compounds. The most powerful investment force is time, and the reality is that our working life is incredibly short. About 80,000 hours. If the main aim of that working life is to meet your consumption needs, you never get to the compounding. You are always starting. Yet we have a dilemma. Who is it fair to pass that wealth on to? Step one is survival. If fair means everyone starts from scratch, then all we will be about is survival. There is more.
The European Wars of Religion were partly a push back on inherited wealth. The Conspicuous Consumption of the Aristocrats and Church in the face of overwhelming poverty. Refugees and fortune seekers fled to America to start again in an industrialising nation where creative destruction allowed an opportunity to change your path in double quick time. Then what happens for the next generation?
Warren Buffett says he wants his kids to have "enough money so that they would feel they could do anything, but not so much that they could do nothing." His son, Howard, has recently written a book looking at how to reapply Dad's investment techniques to the world of Social Value. Social Value Investing looks at how to provide a management framework for effective partnerships between the public, private and philanthropic sectors.
The problem with both Governments, and the majority of people, living hand-to-mouth is that salaries (and income tax) never get the chance to compound, because they are consumed. There is a whole other world on the other side of the looking glass. To become a custodian rather than a consumer, you need to change the maths. That starts with changing the time frame. Organised people sometimes have 5 year plans. What would a 1,000 year plan look like? That ceases to be about you. That ceases to be about your immediate family. That busts open the possibilities of what can be achieved.
Through the Looking Glass
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