Well, while I was referring to personal economics, my statement applies to businesses as well. Really it goes all the way back to Adam Smith (which I suppose is classical economics, but I think some would disagree), but I believe he was essentially correct.

The way to grow in wealth is to produce more than you consume. (And by "produce," I'm refering to anything that's of value to someone else, of course. It does you no good to "produce" something if nobody values it, as many big companies are finding out. When we say someone is being "productive," we are usually not referring to busywork, we usually mean high-value labor.)

I recently picked up a lecture by Earl Nightingale called The Top 5%. He addresses the "produce" part of the equation by saying: if you wish to increase your rewards, you must increase your service.

I like his choice of words -- they are very deliberately chosen. Really, that's all that anybody who makes money does: increase their service. Some do it literally; they have a service business and they constantly work at improving the customer's overall experience. Some do it by owning several companies, each one providing a service to many people. Product businesses also provide service -- after all, we buy products for the "services" they provide us (a "service" business can be thought of as just a big product). Some people use leverage in their businesses to either provide more service to some people or some service to more people (or both).

And, I think it's important to not take "service" too narrowly. I mean it in terms of the overall customer experience -- not just the actual product or work. For example, I've worked with several contractors on my house who have done good work, but my experience with them was so lousy that I'd rather not call on them again.

Money, in essence, is a representation of value for labor. (That idea also comes from Adam Smith, not the communists. The communists twisted the idea to include any labor, whether or not it was valuable to others. Smith was referring to valuable labor and he felt that the free market, in general, was the best directory -- indicated by the changing prices and wages -- to reveal which labor was valuable and which was not. And his idea is correct; everything you buy with money had to be produced by the labor of one or more people. It's ultimately that labor which you pay for.)

I think the really wealthy work on this aspect, but also address the "consume" part of the equation. They generally live below their means and take the extra and compound it: invest, reinvest, reinvest, reinvest, relentlessly...

So, I'm saying a few things:[*]Produce more than you consume.[*]To produce more, increase your service -- or you can think of in terms of the value of your service -- and you increase your reward. It's a cause-and-effect relationship.[*]To consume less, live below your means and compound.


Ok, that was a mouthful, but hopefully it was helpful. (It was helpful to me to just get it out of my mind and put it into words.)

Best,
Phil

P.S. -- I realize that the above is overly simplistic and I haven't addressed important issues like giving/tithing, attitude/relationship to God, planning, etc. But I think the above gets at some fundamentals that are sorely neglected by many.