Families Nurture, Transfer Tools For Financial Success Generational Safety Net Allows Entrepreneurs To Fail, Try Again
It’s hard not to make money in this Golden Age of Pax Americana, where, as people said of the Eisenhower years, the only thing not booming is the guns.
More millionaires, stockholders and entrepreneurial success than at any time in the history of the planet - and yet it brings into even sharper relief the age-old question: How is wealth created? And more to the point: How are people making all this money in the New Economy?
The beginning of wealth creation is individual behavior, and to some degree, luck.
Take “social capital:” the basic skills and market virtues that people bring to their economic activities. Hard work, saving money, deferring gratification, working well with others and showing up to work on time are more than bromides for good living. The economy actually rewards them and punishes their opposite.
Some other fundamentals:
Generational wealth-building might be seen as making money the old-fashioned way - inheriting it. This is steadily building wealth from generation to generation within a family, ensuring the future for children yet unborn. This is the heart of countless immigrant success stories, where the first generation lived in a tenement so the third could live in a mansion.
Another point that must be made - although it can be misused by the intolerant - is that until a certain level of affluence and security, wealth is most efficiently created and sheltered by intact families.
Support networks, be they family or friends, provide collective action in the marketplace that is much more difficult for individuals alone. A network gives capital, labor, advice and a safety net for failure. And as everybody in Silicon Valley knows, failure is often necessary for future success; it’s how entrepreneurs gather information.
Information is important in other ways. In a market economy, the individual is the master whom all sellers must serve; the best-informed seller gains the advantage.
Advanced social capital is helpful for an advanced economy: flexibility, speed, the ability to turn on a dime, technological savvy, knowledge of other cultures and languages, continuing education and specialization.
Wealth creation depends on meeting unserved needs in a consumer economy, whether it be opening a dry cleaner in a new suburb or being a whiz in asset securitization.