Wednesday, October 15, 2008

Creating Wealth

I have been reading a number of interesting articles over at Paul Graham's website about wealth creation. For me, the most new point that I picked up is that wealth is created. Many, along with me consider the point of view wanting to make money. But rather then consider making money, the point of view is of creating wealth. Since wealth is a more general view, and money is just a medium of exchange.

When you consider it from the point of view of creating wealth, then the idea of money being limited and only having so much to go around, goes out the window. To create a wealthier society, the society needs to be creating more wealth then it is consuming.

One of the main components of this is being able to have enough intrinsic reward to what you are doing that you are being satisfied by the process of wealth creation. Not only that, but the person who is being driven by a love of what they are doing will far outperform another person who is just doing it as a job, even if they are of comparable skills and ability.

Of course, the ability of someone to be rewarded based on their performance varies from profession to profession. Because for one to be rewarded based on performance, the performance needs to be measurable. Trying to reward excellent teachers is hard. How does one identify excellent teachers? It would have to be related to the students and having a positive impact on their lives. Even if one is created, how do you prevent teachers from gaming the system.

This pattern can be repeated from job to job. I think that any solution would require at least two parts. A way to measure and link performance and reward, and a policing type mechanism to reduce or discourage gaming of the system.

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