The Next Millionaires - Review

Brrrrr,

So where the heck did Summer go?!? All year it was cold, cold, cold, 2 days of sun & heat, then BLAM!! Fall's here... I gues welcome to Michigan eh? :)

Anways, I can't complain too much since usually the colder it gets, the more likely I am to study, read, learn. A blessing in disguise indeed since I had the chance to pull out a book I haven't touched in a while. A book titled "The Next Millionaires" - by Paul Sane Pilzer. This book is very pregnant with concepts and statistics. The main premis of the book Pilzer is underlining are the trends of commerce our econemy is climbing. He is predicting the increase of more and more millionaires and of less and less billionaires emerge. Pilzer is also predicting that between 2006 & 2016, there will be a wave of 10 million NEW millionaires!

Out of this book, there was a section on Unemployment that gave me a very interesting perspective. I wanted to copy this section of the book so you can read it too. I hope this perspective will ignite a great conversation with you.



"Unemployment is the first and only true sign of economic growth." Paul Pilzer



The Truth About Amployment (pg 39 - 41)

Today we hear quite a bit about unemployment. While the media focuses its attention on human-interest stories of people displaced from jobs, politicians vie to top each other's promises as to how much more unemployment their policies will eliminate than their competitor's will. But what their promises would really mean ( if they could fulfill them) would be to turn back the clock and reverse the natural progression of events.

What they are missing is the connection that only unempolyment - the kind that results from a change to a newer technology - can create new jobs and grow the size of the economic pie for everyone.

Imagine a self-sufficient desert island community with only ten families, all of whom subsist on fish. Every day, all 10 men go out in their communal boat with their fishing poles, while the ten women stay home to take care of the huts and the children.

Now along comes a missionary who shows the men a new and better technology for fishing: a large net. Using the single net instead of the ten individual poles and lines, now it takes only two fisherman to catch the same number of fish: one to pilot the boat and one to throw the net. The same number of fish, or even more. Amazing!

But now they have a problem. Unemployment in their little island community has just risen from zero to 80 percent! Notice that the island society as a whole is still just as wealthy as it was before; in fact, since it can preserve te little bit of extra fish it catches, it's growing even slightly wealthier. But eight of the ten fishermen are now out of jobs. How will it feed and clothe these eight unemployed fishermen and their families?

It could pass a law against nets, to prevent unemployment.
Sound Ludicrous? That's exactly what many societies do. Or, when a new technology displaces people from jobs, different groups will picket and protest to try to get their politicians to do something to stop the advance.

Or, it could "solve" its "problem' by taxing the two working fishermen and redistributing the earnings to the unemployed fishermen. All this would take would be an income tax rate of, let's see...hmm, 80 percent.

"Ridiculous," you say. "What kind of society would increase the marginal tax rate to 80 percent on the producers of siciety?" Us! That's who! During the first half of the twentieth centure, that is exactly what we did. This was the world's primary response to short-term unemployment as the implementation of technological advances made certain people far richer than their neighbors. Between 1912 and 1960, the United States and Western Europe instituted highly progressive income taxes, increasing the personal marginal income tax rate to as high as 91 percent (in 1959) on the producers of society.

Let's return to our island community for a moment. What could our island friends do instead? They could help the eight unemployed fishermen develop new jobs that will add to the wealth of the community. One could learn medicine and help raise the level of health for everyone on the island. One could specialize in roofing, and develop stronger and more protective huts. One could specialize in teaching the children, and increase the level of intellectual and creative skills throughout the next generation. And they could both arter their skills with the remaining fishermen as well as with each other - which is exactly why we call it "playing their trade" - and thereby increase both the welfare and the wealth of everyone in the community.

Note that in our island community, none of these jobs or professions - healer, roofer, teacher - existed before. There were only fishermen, and they got by as best they could. It was only after a better technology had increased the productivity of the fishermen 500 percent and caused 80 percent unemployment that these new jobs began to exist.

Just as economic alchemy teachs us that resources don't exist until the human mind creates them, and "demand" doesn't exist until the human mind creats it (through technology), here we can see that new jobs don't exist until the human mind creats them.

And what will they do in these jobs? Innovate. Invent. Create. Find better ways of doing each of those tasks.

This is one of the most difficult concepts to understand because of the enormous paradigm shift it represents: Unemployment is the first and only true sign of economic growth.

Wow!!! This is incredible!! This helped me put into perspective when we hear people say "We are no longer in the Industrial age. We are now in the Information age"

Hey, c'mon, take it easy...Just because I love to learn, doesn't mean I'm the fastest learner... ;)

So how do you feel about Paul Pilzer's point? And, why do you feel that way?

I know for me, the opportunity of economic growth in the information age seems so much more abundantly these days with the unemployment rates being higher than they ever have been.

Looking forward to reading your thoughts.

God Bless,

-Larry