> Suppose you own a beat-up old car. Instead of sitting on your butt next summer, you could spend the time restoring your car to pristine condition. In doing so you create wealth. The world is-- and you specifically are-- one pristine old car the richer. And not just in some metaphorical way. If you sell your car, you'll get more for it.
Wow. I know it sounds obvious, but for some reason this was an epiphany for me. If I just... do something, I can create value where there was none before. Suddenly it seems like there's infinite opportunities.
The flip side of the coin is that, if we use that definition of wealth, then that means wealth is also subject to entropy. A car that you restore to pristine condition will rust and decay over time, even if you don't drive it. It will lose its value.
So it seems like becoming wealthy isn't just a matter of generating value, but rather generating it faster than it disappears.
However, there is an old saying of "you can't polish a turd", and I think that makes his example a poor one. It is notorious that you can sink a lot of money into cars that you won't ever get back out of it. That is why people that restore cars drive all around the country trying to find "solid" cars to start with. On the other hand, if you can fix it up yourself and not have to put much money into it then that does make sense.
A better example would be houses. Although even with them, if you spend money on things that you can't get money back out of (like a hot tub) when you sell it you end up in the same situation.
Comments
> Suppose you own a beat-up old car. Instead of sitting on your butt next summer, you could spend the time restoring your car to pristine condition. In doing so you create wealth. The world is-- and you specifically are-- one pristine old car the richer. And not just in some metaphorical way. If you sell your car, you'll get more for it.
Wow. I know it sounds obvious, but for some reason this was an epiphany for me. If I just... do something, I can create value where there was none before. Suddenly it seems like there's infinite opportunities.
The flip side of the coin is that, if we use that definition of wealth, then that means wealth is also subject to entropy. A car that you restore to pristine condition will rust and decay over time, even if you don't drive it. It will lose its value.
So it seems like becoming wealthy isn't just a matter of generating value, but rather generating it faster than it disappears.
Well, wealth is subject to entropy. We usualy call it "expenses".
However, there is an old saying of "you can't polish a turd", and I think that makes his example a poor one. It is notorious that you can sink a lot of money into cars that you won't ever get back out of it. That is why people that restore cars drive all around the country trying to find "solid" cars to start with. On the other hand, if you can fix it up yourself and not have to put much money into it then that does make sense.
A better example would be houses. Although even with them, if you spend money on things that you can't get money back out of (like a hot tub) when you sell it you end up in the same situation.