by Tom Baugh
Am I a moderate? Probably not. When you are done reading this book, assess me in this regard yourself. I think it is OK to take an extreme position on anything you like, provided that you came to that extreme position by your own thought. And so long as you don't try to force those opinions on anyone else. Try convincing them instead. But be warned, if you approach a discussion with a pure heart you may wind up walking away with your own mind changed. Which is why discussion is so often stunted.
We can discuss opinions and ideas all day long, as heatedly as need be. But when those opinions begin to express themselves as coercion of others, through law or custom, then a line has been crossed. And what suffers as a result is individual liberty as one collective or another uses force to suppress, at first, ideas, and then uses force to constrain action.
Just as my faith in God cannot be shaken by anyone, I am not threatened by anyone else having a different opinion. I could have a great conversation with an atheist or a pope or a rabbi or a mullah or a pagan with equal irreverence. The latter probably has cuter outfits for the chicks, though. Some of these guys, on the other hand, will have a hard time having that conversation with me.
If you are the kind who will have a hard time having that conversation, then you are not going to be able to finish this book. Go ahead and put it down now and get back to your orthodoxy. You'll sleep better that way.
Now that you have been exposed to some of the underlying principles of this book, it is time to talk about where money comes from. Or more appropriately, where money came from, and how the monkey ethic evolved from that.
Chapter 4, Caveman CapitalismTM
People start their own businesses, or prepare for crises, for a variety of reasons. In all cases, one key reason for these actions is to provide a source of money, or equivalently, resources, under their own control. So, for any degree of success, one needs to be able to answer the following question:
Where does money (or other resources) come from? Or, with more flourish:
From whence come money (or other resources)?
This is a simple question. Why do some people have more money or other resources than they need, but others barely have any? This is a question which has been about since the dawn of man. The answer has nothing to do with anything you have ever been told. If you had been told the right answer before, you wouldn’t need to be reading this book!
One might also ask the related question: And whither is money traveling? For if you can be at its destination it will flow to you naturally. As it turns out, money flows to specific places just as water will find its own level by flowing downhill. Or at least until someone builds a money dam upstream of you. Remarkably, preparing for a crisis, manmade or otherwise, is equivalent to operating a small business. And, done correctly, either can provide an unlimited amount of resources by trading with your fellow productive man, while avoiding the monkeys who eat from your plate.
We now travel back in time to that dawn of man and observe from a safe vantage point. Imagine you are Johnny Caveman. Picking berries is OK, but rats and squirrels just feel better on the tummy. If they are cooked, of course. But how do you know that? You really don’t, but cooking over a fire just seems, well, right.
The reason it seems that way is that all the grubby cavemen and cavebabes who don’t cook their rats tend to keel over at a faster rate than those who do. Over time, the cavelings from the cookers’ loins outnumber those from the salmonellated, e-coliated, and trichinosated crowd. Not only is there a cultural influence at work here (Mommy Do, Baby See), but also this natural selection starts to weave its way into the genes. And so, cooked meat imbues an unparalleled satisfaction to our modern palettes. Or provides a way for the collective to identify individuals who might be inclined to crack cheaters in the head if said cheaters steal from them.
Perhaps one tribesman, Og, big, burly and strong, isn’t stealthy at all while hunting squirrels, but can haul around a lot of those sticks. And then break them up into smaller sticks with that big rock. Meanwhile, Pok, being small, wiry and fast, can catch squirrels like there is no tomorrow. The day that Pok and Og agree that “Pok give Og four squirrel, Og give Pok halfwoman-weight wood”, commerce is born, at least in Tribe 1.
On the other hand, over the hill at Tribe 2 a different transaction takes place. If “Og.2 take squirrel from Pok.2” is followed closely by “Pok.2 stick squirrel poke in Og.2 squishy place”, then all hell breaks loose. Correspondingly, Tribe 2 will have fewer resources being produced and more fighting. This may, evolutionarily speaking, produce better fighters, but will necessarily result in fewer resources to fight over.
Natural selection and cultural influences tended to make cooking more likely. Similarly, the commerce version of events cause some tribes (Tribe 1) to be more successful than the Og vs. Pok variety (Tribe 2). For one thing, there wind up being more Og.1 and Pok.1 with rocks and pointy sticks than the remaining Og.2 and Pok.2.
One day, this theory of evolution was put to the test when Og.2 and/or Pok.2 wandered upon Tribe 1. Og.2 and Pok.2 may get away with a raid or two. But eventually, Mar (Og.1’s son) and Cor (Pok.1’s son), both of which are great at hunting deer, decide to go into the combined arms business on behalf of Tribe 1. In exchange for a squirrel or two and some wood, these guys, using a combination of forward defenses and flank raids, wipe out all opposition to the relatively peaceful and commerce-driven Tribe 1. And chicks dig it. Tribe 1 just got bigger.
Big enough, in fact, to put some guys in business hollowing out gourds with which Mar and Cor carry berries and dried squirrel meat to the front. In exchange for some squirrels and wood, of course. And those same gourds work great for soaking acorns in (thanks, squirrels!) once Tan found out that acorn juice makes squirrel and deer skins tough and long-lasting. Vin finds out that if he leaves some berry juice in a gourd after his cavebabe stepped on them while gathering, then what results is a nice juice which chicks also dig. More growth for Tribe 1, as well as another tribal startup.
Hidden within the few paragraphs of that little tale are all the elements of modern society. Free will versus force, collectivism versus individualism, creation versus destruction, fraud and theft and envy, good and evil, virtue and vice. We'll handle the dark sides of these balances in a bit. The commercial side of these concepts is fleshed in much more fully in the classic volume of economics. Be sure to put "The Wealth of Nations" on your reading list to fully comprehend these points. If possible, start giving yourself daily reading assignments out of it right now. Just don't be lulled into thinking, as I did, that when Adam Smith discusses employees that you have to hire employees as we define them today. More on this distinction later, including the idea that most of the best employees either don't work for you at all, or live in a metal box and look a lot like a computer. Or have hydraulic hoses all over them and get paid in diesel and grease.
So back to our tribe. Clearly, Tribe 1 created money in the form of wood, squirrels, gourds, deer meat, leather and wine. Using this currency, other goods and services are available to anyone with the will to acquire these. In the case of each of the tribe members, the requisite will simply involves work, and not violence or theft or fraud. Og goes out into the forest and drags back wood while Pok traps squirrels and so on.
Each individual in our tribe has decided for themselves how they might best add value for themselves. And at each exchange, each individual's quality of life has improved, sometimes by imperceptible amounts. Should an exchange be offered at a deficit to either party, in a fair marketplace each party has the option to decline the exchange.
Consider what might happen if Og were to try to trap squirrels instead of hauling wood. Perhaps his approach might be to knock down a tree with a squirrel nest atop it. Clearly, the squirrel might leap away to safety, or decide that this forest is a little too uncertain and the whole lot moves out entirely. Maybe on average Og might get a squirrel a day or, generously two, that way. In that same amount of time Pok might get eight squirrels, o
r Og himself might gather an entire woman-weight of wood.
Now let's turn the tables and set out Pok to haul in wood. Whereas Og could drag home a fallen tree knocked down in the storm last month, little Pok might only be able to uproot and drag home saplings or fallen sticks. Maybe on average Pok hauls home a leg-weight (or equivalently, one quarter-woman-weight) of fallen or uprooted fresh wood each day, leaving the larger fallen trees to rot.
Notice also the effects on resource management. Pok's squirrel-hunting approach leaves the nests, and thus future generations of squirrels, undamaged. His approach results in an ongoing maintenance, and possibly growth, of the squirrel population. But Og's more clumsy efforts totally strips the forest of squirrels quickly.
On the wood side of the economy, Og hauls out large falls, with relatively drier wood. This wood is a better fuel, woman-weight for womanweight, than the rotten sticks or fresh saplings which Pok can get. Og's forest management will leave an entire range of growth available, including protective mulch on the ground.
But Pok's efforts will segregate the forest into very large and very small trees, the medium growth having been aborted while very young. Yet a storm might wipe out the entire large growth, leaving the bulk to rot unused while Pok strips out the remaining saplings. Worse, these saplings now struggle against encroaching weeds without the protective overhead cover of their older generations, or protective mulch preventing erosion. One day, no wood. But by focusing on the resources which each can best manage, the cooperation between Og and Pok produces more resources for both.
Consider one scenario, then, of how Og and Pok might spend two days, one day gathering wood and one day hunting squirrels. On the first day, Og and Pok each spends his time with his favored resource. At the end of that day, Og has one woman-weight of wood, while Pok has eight squirrels:
The next day they switch tasks, and Og manages to get two squirrels, while Pok gets a quarter-woman-weight of wood:
At this point, Og has one woman-weight of wood and two squirrels, while Pok has a quarter-weight of wood and eight squirrels.
Now let our heroes focus solely on their respective specialties, and then trade for their other resources. At the end of the first day, Og gathers a woman-weight, and Pok gets eight squirrels. They then meet on the hilltop at the lightered post to trade. Og and Pok exchange a half-woman-weight of wood and four squirrels respectively. Each then walks away with a halfwoman-weight and four squirrels.
The next day, the same gather-hunt-trade cycle repeats, and now each has a woman-weight of wood, and eight squirrels:
Note now that Og still has a woman-weight of wood, but now has eight squirrels instead of only two. Similarly, Pok still has eight squirrels, but now has an entire woman-weight of wood rather than only one quarterweight. Each man gained significantly from the trade alone.
Equality of outcome, meaning that each actor winds up with equal resources, was an accident in this case, and not instrumental to the point. I could have just as well adjusted the numbers to result in unequal outcome, but then I wouldn't have had the opportunity to explain the accident. Enforcing equality of outcome would be called socialism.
Had each man just simply decided to meet and share the wealth, then one might decide to be lazy, or otherwise cheat the other. Pok may one day decide to show up with only six squirrels, perhaps, or Og with only a halfwoman's weight of wood. Whichever man starts to bring less to the sharing table, the other would soon learn his lesson and bring less also. In a socialist economy, there would be no incentive to provide one's best, since each would expect the other to provide his best, regardless. Any scheme to attain equality of outcome will always lead to a progressive downward spiral of resources for all.
But with their free trade model, each man gets more for himself by providing the best he can offer in trade to the other. So, the self-interested trade itself, almost as if by magic, has increased the quality of life of each man, as well as having protected future resources.
Classical wealth comes from providing value, specifically, a higher quality of life, to other people. Each man has worked two days for these resources. Alone, each would spend one day on his favored resource, and then have to spend four days on the other to get to the same condition. By trading their best work, each man has effectively accomplished five days of work in only two:
Outcome With Work Alone
Outcome With Work Plus Trade
Recognizing this, each tribesman elects to spend one of those saved days in careful reflection by a babbling brook, considering the wisdom of his past actions, and planning future work.
One thing which occurs to each of them is that to each man the trades he made are positive experiences from his own perspective. Wood is more valuable to Pok than squirrels, while to Og squirrels are the more valuable resource. And so, Pok happily accepts a half-woman-weight of wood, representing a two-day effort, to give up four squirrels, which represents a half-day of work for him. The reverse trade would not appear to be a good deal for Pok. Similarly, Og is happy with the direction of trade, but not its reverse.
Each man has decided for himself which trades to accept and which to decline. These selfish decisions lead to not only greater resources for a given amount of work, but also a feeling of good will and well-deserved selfesteem. And, each is willing to continue to make this trade each day, knowing that each benefits more than they would without trading. To the recipient, each trade improves their condition.
Consistently providing more value than you are getting paid will lead to endless opportunities. Now expand this single pair of trades over the entire population. It then becomes clear that, in a short period of time, goods and services of all kinds will soon become more available to all. And each week, more and more people will be spending time sitting around thinking instead of scrambling for subsistence. Most of this thinking turns in productive directions, each remembering how tough it was to haul in wood and trap squirrels and fish and gather berries each day. And they think about how things are looking pretty good now. But for some, their thoughts begin to wander off the path.
Let's peek in on some of the productive thoughts first, we'll return to the darker side of things later. Sitting by the stream with daddy Pok, Pok Jr., Cor's little brother, thinks about how things are good, but squirrels are just too darn three-dimensional. But rabbits, he notices, don't climb trees.
So one day Pok, Jr. wanders off into the storm fall and comes back with a whole tangle of fresh branches, too small and green to be useable firewood. Toiling away in his off hours from trapping squirrels, Pok Jr. constructs the world's first bunny hutch and begins breeding rabbits. Soon, Pok Jr.'s bunny ranch provides the ability to spend the day gathering shoots and grasses to feed the bunnies. And yet, with less work, Pok Jr. can provide the same amount of meat for trade which would otherwise require setting and checking squirrel traps. Lucky rabbit's foot, indeed.
An investment in effort or knowledge effectively allows you to store value for later use. Before long, Pok's back yard was full of bunny pellets from junior's bunny ranch. Pok grew weary of this, and sent his daughter Pokette out to haul the bunny pellets away and throw them into the adjacent field. Scantily clad in her tail-tasseled squirrel bikini and fuzzy bunny lace-up slippers, she started hauling the pellets into the field by the gourd-load.
This activity soon attracted the attention of Ahks, Og's younger son, who found reason to be tramping through the field each day. This trampling effectively plowed the pellets under, and soon the grasses were growing like crazy. Soon, the Poks spent less time wandering around in search of grasses, and more time tending their rabbit herd. Productivity improved once again.
Removing a quality of life detractor from yourself or someone else will often present unique opportunities for you which didn't exist before. Amidst the grasses grew brambles as well. One day, about a year back, Pokette was hanging out with Beri, Vin's daughter. Beri had come back from gathering those delicious purple fruit when the two of them got
into a giggling berry fight, much to the amusement of Ahks and Pok Jr.
A year later Beri had a baby who looked strangely like Pok Jr. While tending this child a now-harried Beri noticed that those green brambles where she had berry-fought Pokette. She realized that those brambles looked like half of the brambles in her favorite gathering patches. Sitting by the stream washing the baby one day the light comes on in her head, and she realizes that there are two phases of bramble fruit. One year, green shoots grow but bear no fruit, while the next year what had been green shoots are now brown but bear fruit. She realizes now that in her ignorance she had been stomping out of the way the next year's brambles to get to this year's fruit. Which explained, of course, why the brambles which do bear fruit look so trampled and the fruit so hard to reach.
Beri decided to act on this knowledge and prepared an experiment. She arranged with Pok Jr. to haul off all the rabbit pellets he can manage to produce. Finding a little field near her father's hut, she spread the pellets out and called a berry fight among the local ladies. On a whim, Beri charged the interested gentlemen a squirrel or rabbit there, an armful of wood or gourds or leather there, and opened for business.
Sure enough, the next year her field was full of green brambles, and the original field outside of Pok's hut had bearing brambles. These latter have been trampled out of the way to get to those grasses which the bunnies so enjoy. She then decided to cultivate a second field, fertilized with another growing mound of rabbit pellets courtesy of Pok Jr. And, to make her harvest the next year easier, she tied the growing green brambles into stands using honeysuckle vines, leaving easy lanes between the stands.
The next year, Beri's stand of brambles and her annual berry fight proceeds made her the richest girl in the tribe. The bramble stands were so easily managed that even little purple-faced Beryl could toddle among them eating the low berries. The child learned to walk among them with hardly a scratch.
