Goals

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This
is not a book review. Michael Masterson's new book, Automatic
Wealth: The Six Steps to Financial Independence
inspired
me to write an article because it illustrates the tremendous potential
and performance of the free market economy. With a title such as
Automatic Wealth, one would expect the book to describe how
to swell your bank account, and it does not disappoint. Mr. Masterson's
techniques for becoming financially independent seem very sound
to me (who is not, currently, financially independent) and I am
already starting to follow his advice. Yet the highlight of the
book for me was the non-monetary aspects of wealth. He shows how
wealth can take many forms, and it is up to the individual to achieve
his own brand of wealth.

The
six steps Mr. Masterson outlines include the step of planning to
become wealthy. To come up with an overall set of goals, he uses
the analogy of Tom Sawyer and Huck Finn viewing their own funeral
in The
Adventures of Tom Sawyer
. Mr. Masterson comments on what
an "eye-opening experience" it is for the two young lads to
hear what people really thought about them. He then asks the reader
to imagine what the reader's family, friends and colleagues would
say at the reader's funeral. Mr. Masterson makes it a point to say
most people would not like to hear they were very rich. The supposition
is that every reader will have a different idea of what they would
want to hear. If people are truly wealthy, then they have managed
to persuade others that they possess the qualities they hold most
dear.

Herein
lies the essence of liberty and capitalism. People strive for so
much more than money in life. Money is one means among many to achieve
what Mr. Masterson calls your personal core values. For many people,
financial independence will be one of those values. But there are
many other values, each one customized by the individual. To achieve
these values, there are goals that must be set. Some examples of
goals Mr. Masterson gives include good health, relationships and
personal growth and development. Wealth is increased in society
when each person achieves their own goals and thus fulfills their
core values. In this respect Mother Theresa was as wealthy (if not
more so) than Bill Gates.

Freedom
provides people with the opportunity to go after those goals. Nobody
can align the hopes and dreams of all individuals by force, even
if there are common goals and values among large majorities of certain
groups. Therefore people must be free to seek goals on their own,
based on their own set of values. By achieving these goals, wealth
is created. By preventing the goals from being achieved wealth is
destroyed.

Once
the reader determines their goals, Mr. Masterson goes on to explain
how to accomplish your financial goals. I believe he realizes the
other goals are more personal, and therefore the reader is the one
who should determine how to accomplish them. Mr. Masterson just
provides a structural framework for their achievement.

All
of the goals, however, are accomplished through the "medium of exchange."
Financial goals are achieved through purchases and sales of investment
vehicles. Health goals require reading and learning from the research
of others, as well as the trading of time spent on other pursuits
for time at the gym in order to be around when the grandkids and
possibly great grandkids show up. Personal relationship goals drive
your behavior to obtain the respect and admiration of others so
you exchange conversation with long lost friends. Growth and development
goals allow you to become accomplished at some skill which you learn
from others, and which others may eventually seek out from you.
Each time the individual becomes wealthier in any aspect of his
life, he has exchanged something less valuable to him for something
more valuable. The exchange may only involve his time, but in each
case, each individual walks away from the exchange with larger individual
profits than they had before, measured mostly in that individual's
mind.

It
is true that there is risk. Buying a stock that tanks does not seem
like a profitable venture. However, the individual may still have
profited in the long run because he learned from his mistake. Individuals
weigh the transaction in terms of whether it would be profitable
for them to make the exchange, and then either abstain or go ahead
depending on the likelihood of that exchange helping him to progress
towards one of their chosen goals. When the exchange does not work
out as planned, the individual will readjust, examine what he did
wrong, and look for a more profitable exchange. While I agree that
many people do not seem to do much analysis and continue, for example,
to buy lottery tickets, they have still determined that a certain
amount of tickets are all right to buy. Even a gambling addict at
some point determines they need help. Automatic Wealth is
one possible way to perform that analysis and structure the changes
necessary.

The
destruction of wealth comes in when individuals are forced to behave
in ways that are not consistent with the achievement of their specific
goals. Prevention of an individual's pursuits through coercion means
that individuals are left with less wealth in a transaction than
they had before, whether that coercion comes from criminal behavior
or governmental interference (is this redundant?). Even if the coercion
appears to be compatible with the goals of many people, the ones
who believe they have a better way to achieve their goals will give
up the difference between what they are forced to do versus what
they believe is in their best interest. Wealth is taken away from
them. An example would be the idea of Social Security "Privatization."
Putting 15 percent of a person's money in the stock market (Mr.
Masterson keeps only 10) and in companies that are "approved" puts
capital at risk that individuals do not believe is the best use
of their money. The choices of bonds and government debt still limits
an individual's opportunities and thus destroys wealth.

This
is why Von Mises kept repeating that Socialism is the destruction
of society. Society is wealthy when people have the freedom to go
after their dreams and accomplish their goals. No one group of people
can determine the goals of an entire society — goals are an intensely
individual idea. People often form groups to accomplish goals, but
the goals are ultimately the goals of the individuals in that group,
and the group is formed voluntarily. When people are forced to behave
a certain way and coerced into joining a group, they are abandoning
their goals and thus abandoning their wealth.

I
am looking forward to achieving the core values I have laid out
for myself, using Automatic Wealth as a tool to do so. It
is good to know that by achieving my goals, I am also providing
an opportunity for the increase of wealth for others. If I accomplish
my goals, they will enrich the lives of those around me. Then, hopefully,
people will someday have good things to say about me.

March
29, 2005

Hal
Cranmer [send him mail]
is an Air Force Academy graduate and former military and commercial
pilot. He now works for an industrial manufacturing company
in Minnesota.

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