Enlightened Capitalism

Essays about how to harness people's natural desire to create wealth and improve their quality of life to solve global problems such as war and poverty.

Thursday, January 06, 2005

How to get wealth producers to come back to a poor neighborhood

There are behaviors that produce wealth, and behaviors that destroy wealth. By "wealth" I mean "factors leading to high quality of life" -- so it isn't just money and property; wealth includes education, harmonious relationships, a satisfying career, clean air to breathe, a variety of entertainment options, etc.

Planting trees produces wealth -- unless you plant them right next to the foundation of your house, in which case it may destroy wealth. Cutting down a tree and turning it into lumber produces wealth, unless you cut them down faster than they are growing back, and destroy forests. Going to work produces wealth, unless your job ruins your health, in which case the net effect of working might be to lower your quality of life instead of raise it.

In every situation you find yourself in, you can produce wealth or destroy wealth. Some people produce wealth everywhere they go. They focus constantly on improving their quality of life, and work persistently at it. At the other end of the spectrum, some people are incredibly destructive. Most of us are somewhere in the middle, we produce wealth in some situations, and destroy it in others.

People generally earn more money at their jobs than they spend each day. Likewise, the employer produces more wealth from the employee than the value of their paycheck. Both the employer and the employee are getting richer every day the employee works. This is a wealth producing relationship.

But the employee probably drives a car to work, spewing toxins into the air. The smog and acid rain lower our quality of life. So while driving to work, they destroy wealth, whereas at work, they create wealth. It's like that with just about everything we do. Wealth is created and destroyed at every step of the food growing, packaging, and distribution process. By purchasing a loaf of bread, we are paying for the whole process, from the manufacturing of the plastic wrapper, to the heating of the oven, to the refining of the diesel fuel that powers the delivery truck and also the tractor used to harvest the wheat.

But when was the last time we considered all of that before making a purchase? It's an enormous tangled web of transactions. This is behind the mystery of poverty in rich countries. Most people are going about their business, creating vast quantities of wealth and destroying vast quantities of wealth, without even realising it.

In some neighborhoods, the balance is positive; the quality of life keeps going up and up. In other neighborhoods, the balance is negative, and the quality of life keeps going down. It doesn't help to blame the people who are there. My goal is to turn this situation around.

Neighborhoods go downhill when wealth-producing people leave. When neighborhood crime rises, the small retail businesses tend to disappear, and storefronts get boarded up. Wealth producing people tend to want to be around other wealth producing people, so when the highest producers leave, it makes the neighborhood less attractive for the medium wealth producing people. Eventually, as happened in Oakland, Long Beach, Compton, and Los Angeles, certain neighborhoods wind up with a negative wealth flow.

To turn that around, we need to get wealth producing people to come back to the neighborhood. Even just making an appearance there makes a difference. People who produce more wealth than they destroy exhibit behaviors that young people instinctively want to emulate.

It's tricky to get high wealth producing people to come to a place where all the high wealth producing people already left. But one way to start is to be a high wealth producing person and go there first. Other people feel more comfortable going there too when they see me there. Another way is to buy into the community and tie our own financial success with the quality of life in the community. High wealth producers like to produce wealth, and it is relatively easy in places where the real estate is underpriced.

Note that I said "produce wealth" and not "make money". Slumlords make money but destroy wealth. Because they are destroying wealth, by allowing their buildings to fall apart and allowing their tenants to break the laws and sell drugs and annoy their neighbors, they limit the amount of money they can make, because the value of their property doesn't rise, but it still seems like a good deal to them to make a short term profit on rent. And eventually someone like me comes along and creates wealth in the community, which results in the slumlords making huge profits too.

But slumlords are not my concern. My point is that when we buy up underpriced properties in a run down neighborhood, and improve them and improve the neighborhood, we create wealth, which attracts other wealth producing people, and it also attracts copycats among the residents, who would have been high wealth producers if they had any examples to follow, but because they grew up in a run down neighborhood, most of what they saw was people collecting welfare and destroying more wealth than they produced.

The cool thing about this is that when the neighborhood turns around, we make lots of money. I have done this over and over now, so I have a long track record of successes. When high wealth producers see that, they realise they can create wealth and make money at the same time, while reducing crime and urban blight. It's an enticing formula.

But aren't you just yuppifying poor neighborhoods and kicking the people out?

I will answer this question in my next post.

3 Comments:

  • At 8:17 pm, Blogger tanja said…

    I enjoyed the examples of how we make wealth. It encourages me and makes me want to start doing more...right away. It's healthy to recognize the balance, too, that sometimes making wealth destroys it in another way. This is being conscious. I enjoy reading your column because it is "enlightened." I know you are awake and not in the state of waking sleep so many of us walk around in and that is because I see what you do and how it effects others. The energy you produce is wonderful.

    Keep up the good work. And it's amazing how you do so much and can write so clearly and forcefully.

    I appreciate who you are.

     
  • At 8:33 pm, Blogger david said…

    Tanja,

    Thanks for the acknowledgement. YOU are clearly awake and alive, and I appreciate that you are putting out positive energy to encourage someone like me to keep opening up to new, satisfying ways of being and acting.

    -dav

     
  • At 12:20 am, Blogger Unre Visagie said…

    You are so right. I enjoy your examples to explain to more people the great fun and profit when people become productive.
    We are making South Africa productive by investing competencies and relationships in currently economically poor people. They are so rich in talnets, enthusiasm and potentiality in general.

     

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