May 1, 2020•1,578 words
This is the first quote about the first chapter you'll read in the Godfather book, yes the Godfather is book before it becomes a movie. This quote has kinda never left my head, the hypothesis of how fortunes are made and the means used to get them is quite interesting. It is in some sort the essence of the Economy (or shall I say capitalism).
Create value, find a consumer, repeat. This cycle is used by everyone of us knowingly or unknowingly. Unfortunately in schools they don't teach us the economy cycles and wealth management and creation (except maybe business schools), that's why the majority of people grow into adulthood without even knowing the basics of economics.
Here's my personal experience with this, I went to school until end of high school, dad working as an engineer providing income, food and shelter. I had some interesting projects when I was young, I did some door to door selling, we fabricated me and my brother a game and rent it out to our neightbours and friends and some small projects here and there. But I never thought of this projects as a way of creating value, getting money out of it and compounding this wealth to create more. In our family it was all about studying and becoming a doctor, engineer... we never had discussions about money or business, teachers at school never talked about these subjects. So I assume that naturally, as kid, we think of money like this thing that we have to have in order to live, we don't have enough of, and we have to study hard so that we can earn some as employees in adulthood. So we were predestined to become employees ? that's a scary though, because it's very limitative for a person.
But that was our norm, the same I assume all over the world. This norm this so tight that even if you have business ideas as a kid, your entourage will gladly reminds you the norm and that studies are the most important thing. We kinda viewed merchants and business people like bad guys to be honest, as if those people will always steal you money or scam you. In a way that's true, because when you work for a boss they are borrowing your time, making value out of it and sharing a very minus wage, because you know they'll not pay you at all if they can but slavery is abolished "unfortunately for them".
Ah slavery! this sweet profitable business. The other day I was watching a documentary on Arte about work, since today is "Labour day". It discussed the history of work, especially in England and Europe. The first part of the documentary talked about the history of the land owners, the lords and the royals and how they treated labour in the industrial revolution. The industry, growing, poorly mechanised, was in need for human labour to function. The plants was situated in the outskurts of the cities (London for example) and the problem was that there's wasn't enough people living in these areas. So what did the lords do ? they simply went to the rural areas, put in fire lands, obliged peasants to relocate near the cities. Once a peasant has no land, living in the city, there isn't much choice but to work for the industry. Conditions were tough, accidents happen often and wages were miniscule. Lords did everything to keep these poor poeple poor and hungry. If they are hungry, they won't have thre energy to figh back right ?
After that the documentary went on to state the labour revolutions that happened, the mechanisation of the industry and so on. But what is interesting related to our topic here, wealth creation is how the lords did proceed to exploit ressources, material or immaterial in order to compound wealth. It stroke me to see that these lords employed nasty tactics to oblige people to come work for them for a negligeable cost. To me this relates directly the quote of mario puzzo in the Godfather book, if the lords didn't commit these atrocities by exploiting fellow humans, would they be as rich as they were today ? That's for sure debatable, but I'm sure that this "Crime" they commited, enabled them to x10 their initial investments and cut costs by a huge margin.
When you start to analyze wealth creation, there's like a patterns that emerges. Just like the english lords, I speculate that the majority of the big fortunes in the world today, and i'm talking about the huge ones not your average rich neighnour, did something not legal or barely legal in order to build wealth. Let's take a few examples: financial industry, media and adverstisement.
If you take the top rich people on the planet, a good portion of them come, in a way or another from the financial industry. The concept of banks is quite intriguing, to make it simple let's just say that they make money on interest rates when you borrow money. You want to borrow a 100$ for you project, they give you the 100$ and you have to give back 105$ after 5 years so the bank makes 5$. The problem is that banks don't have that money in the first place, they receive your request for a loan, they print the money from thin air (it's just a number in some database nowadays) and they give it to you. You take the 100$, you take risk with your project, you spend time and energy working on it in order to make a profit. Either way, your project is a success or not, you have to reimburse the bank the 105$, and when you do that, the bank simply destroy the paper money they printed (or numeric number) and they get to keep the 5$ of profit. So to summarize, your have spend real time and energy on your project by creating real value, and the bank just created value from thin air. Imagine this business on a global level, individuals, businesses, governments, you name it. All of them help banks create wealth from thin air. Banks don't take risk, they just wait for you to make them some money. In a way it's just like slavery, you make people work for you for free. If banks belonged to governments, one can say it's the for benefit of the nation. But banks are private corporations belonging to a few individuals and families, so why would they have this huge privilege to create wealth this way ? So behind every great fortune there is a crime indeed.
Media and advertisement industry is here to help other industries to use these tools. Take for example the tobacco industry. It's crazy in 2020 to think that in the 60' and 70' tobacco was advertised in television and was presented as a cool product that only real man would smoke. There were even doctors (or fake doctors) suggesting to mass population to that smoking is good and beneficial for them. It was heavily advertised in the movies, especially western movies very popular at that time. This mass media manipulation had a unique goal is to make people buy a product they don't need, and more importantly a product that would kill them. It's just nonce sense, how would people buy a product that would kill them ? well human behavior is complex and has some loop holes of some sort. You can manipulate people easily but activating some core psychological needs. Fear, hunger, Sex are all basic human needs that are so strong that when activated you can make people do things that they wouldn't normally do. That's why media is a very important part of wealth creation. Every business needs some kind of a media presence to advertise it's products (good or bad) and push people to buy these products by any means necessary. So behind every great fortune there is a crime indeed, Tobacco industry is still present to this day and flourishing.
The tobacco epidemic is one of the biggest public health threats the world has ever faced, killing more than 8 million people a year around the world. More than 7 million of those deaths are the result of direct tobacco use while around 1.2 million are the result of non-smokers being exposed to second-hand smoke.
We can talk about Big pharma in another article, or the tech industry and data trafficking. But the pattern is obvious now, if you need to make big money you need to pass a legal and moral boundary at some point, hence comiting a crime. The world we live in has become too much unequal dues this unsaciable human (some humans more than others) need to compound wealth. When 1% of the population controls 99% of wealth there's something wrong here. The rich keep getting richer and the poor poorer more and more than ever before.
Maybe the majority of people just accepted the fact that crime can be commited against them without punishment ? maybe it's easier for people to be enslaved and taken care of by a few lords ?
After reflecting on all this, i'm sure of two things. The first is that "Behind every great fortune there is a crime" and the second is that in order for this to happen you need a forgiving system and people who lets you do that.