by Gary North
by Gary North
The fourth of July used to be used for attending a community celebration, which included a Fourth of July oration. The mayor would show up, and local politicians would show up, and everyone would sit in the sun and sweat, listening to a Fourth of July oration. This has not been done for at least a generation. People may go out to watch fireworks in the evening, and some people may watch a re-run of "Yankee Doodle Dandy," but that is about the extent of Fourth of July celebrations in our day. I must admit, watching James Cagney dance is a treat, but every other year is good enough for me.
When in the course of human events, it becomes necessary to save money like a maniac because the government has stolen 30% to 40% of everything you have made, it takes away a lot of the enthusiasm for celebrating the Declaration of Independence. When Jefferson wrote that document, the British were extracting approximately 1% of national income from the American colonies. For the southern colonies, it may have been 2.5%. If we could somehow get back to the tyranny of Great Britain in 1776, I would be willing to celebrate the Fourth of July with greater enthusiasm. But that would take a revolution.
THE THREE-DAY WEEKEND
Americans love their three-day weekends. Congress has readjusted national holidays to make certain that they take place on Mondays, rather than on the actual date of celebration. This is taken place over the last quarter century. It's obvious that Congress understands American voters.
The reason why people like three-day weekends is that longer stretches of time enable them to unwind from their jobs. A holiday in the middle of the week cannot be used to go on a trip, or to get anything done around the house that involves more than eight hours of work. We need longer holidays in order to make more efficient use of the time that we don't spend at our jobs. This makes sense, as long as you're convinced that it's a good idea to take time away from your job.
For those of us who do not spend time celebrating holidays, a three-day weekend is just the thing for gaining ground on our competitors. We know that our competitors are taking the day off. We also know that they're going to take Saturday off, too. So, those of us who work on Saturdays get an opportunity to work on Saturday and Monday, as well. We have two days to lap the competition instead of only one day.
This year, it's Friday and Saturday, but the result is the same.
Some people always work on both days of the weekend. This is common among immigrants, especially owners of Chinese restaurants. For many reasons, I think it's a bad idea, but the basic reason I think it's a bad idea is that we need to remind ourselves that our success is not based 100% our own efforts. So, one day a week should not be devoted to earning a living. This keeps us from getting frantic about concerns over our lack of competence, time, or capital, which we are tempted to think serve as the only basis of success. We think too much of ourselves.
On the other hand, as the Bible says, "six days shalt thou labor and do all thy work." So, I usually work six days. The Old Testament did have required national holidays. This involved a trip to Jerusalem for a religious celebration. Sometimes, this involved a week spent locally in public celebration. Again, this was a reminder that we are not 100% responsible for all of our success. It reminded the Israelites that there is more to life than our own efforts.
So, I am not opposed to all vacations, but I don't think much of three-day holidays. I don't think they are long enough to have much of a holiday, and they take time away from work. So, I did not celebrate the Fourth of July. I worked all day, just as I work every Friday. I will follow this with a full day of work on Saturday. I do this because I am convinced that output accumulates over time. I don't mean all of our output. I mean possibly 20% of it. Most of our daily efforts are devoted to just running in place. Because things wear out, we have to replace them. But we should take care to make certain that 10% to 20% of our days are devoted to getting ahead. We should devote this time to study, writing, earning extra money for savings, and anything else that accumulates over time. We need to use compound growth to advance our careers and our opportunities. Compound growth is applied to capital, and capital is the product of thrift.
This means that we have to schedule time for capital improvement projects every day. If we assume that these projects will take care of themselves, we are na´ve. The tyranny of the urgent will overwhelm anyone's schedule, unless that person is systematic in allocating time to what I call compound growth projects. These are projects that do not pay off in the short run, but in the long run will provide us with the passive income that we need to go along to the most important projects of our lives.
Generally, these projects do not earn money, so we have to fund them out of our own productivity or our own capital. I have in mind such things as becoming a medical missionary. A physician who plans become a medical missionary must save enough money out of his practice to accumulate enough capital so that age 50, he can close his practice to become a medical missionary. If he doesn't set this money aside on a systematic basis, he will wind up practicing medicine at age 60 as a way of earning a living. Everyone has a comparable area of service that he has to finance out of his own productivity in order to retire into this new area of service.
The reason why you have to allocate both time and money to building up capital is because this will not take care of itself. It requires conscious effort and conscious sacrifice to build up sufficient capital so that prior to age 65, you are in a position to do whatever it is you want to do with the rest of your life without having to worry about making a living.
It's also possible to build up a side business that requires a minimal input of time after 20 years, so that you can do whatever you want to do with your life, even though you don't have enough capital to support you on a completely passive basis. That's what I did. I planned to do this from the day that I started my newsletter in 1974. The goal is to create a part-time business that produces full-time income.
If you think of holidays as opportunities to invest time in your long-term capital growth project, you will not be tempted to spend the time goofing around. If you spend the time on projects at home that absolutely have to get done, that's a different matter. But I don't think most people systematically delay working on must-do projects until there is a holiday. I think they regard holidays as opportunities to fritter away time. I don't think this is a good use of holidays.
If families set aside time on a systematic basis to do something as a family on a three-day weekend, this would be different. I regard such times as a legitimate investment in family solidarity and good memories. But very few families do this. These days, with the price of gasoline what it is, fewer families will plan ahead for a weekend vacation. Weekend vacations are becoming luxuries. On the three-day weekends that are not systematically devoted to family excursions or activities, I recommend that you devote the time to a capital improvement project.
One of the great advantages that some fathers have is this: their skills can be transferred to their sons, and maybe their daughters. This was not true in my case, but it is true in the lives of many families. Holidays are an excellent time for family projects that involve the transfer of skills to the next generation.
A do-it-yourself family project is a great way to teach children time management, self-discipline, and productive subordination. If you can teach your child to use a tool, this is a good way to spend two days out of a three-day weekend. A child who masters the use of a tool has done something very important. Any time a parent can persuade a child to become actively interested in a tool, the parent should take advantage of this opportunity. It may not come again.
It takes a lot of time to master a tool. It usually takes some form of an apprenticeship program for someone to master a new tool. Holidays are a really good time for a parent to work with the child to master a tool, because the child has a longer period of time to devote to the project.
The earlier in a child's life that the parent does this on a regular basis, the better. If the parent waits until the child is a teenager, the child will resent the time spent in learning the tool because he sees that it is taking time away from his peers. His peers want to goof off. On the other hand, if the child has for years spent time with his parent learning new skills on the weekend, he will be less likely to resent the suggestion that he spend even more time learning to master another tool.
These days, with respect to digital tools, a parent may have a lot to learn from his children. Teenagers learn new programs a lot faster than adults do. A parent who pays his teenager to master a program and then teach him how to use it is spending his money wisely. The teenager learns how to use a new tool, and he makes money by teaching the parent. There is no better way to become highly skilled in the use of the tool than to teach someone else how to use it. This reverses the hierarchy of the old apprenticeship system, but it works just as well.
Usually a parent can gain cooperation from a teenager by offering positive sanctions for cooperation instead of negative sanctions for non-cooperation. This is also true of adults. So, if you're interested in learning new computer programs, pick one that your teenager might also want to learn. This will speed up the learning process for you. Your time is more valuable than whatever money you will pay to a teenager to learn the program and then teach you. The frustration level is also a lot less. Pay a teenager to climb the learning curve and to suffer the frustration. If the teenager is getting paid to do this, he will not resist as much as if he were simply told to do it.
There are always half a dozen programs out there that I would like to learn. If you look around, you will find your half dozen that you ought to learn. But if you don't have a teacher, you probably will not devote time to learning more than one or two of them. I see a weekend holiday is an excellent way for a teenager to sit down with a parent and teach him a program.
You probably cannot do this today. But if you ask your teenager to learn a program before the next three-day holiday arrives, you can use that holiday productively. It is usually easier to recruit your own teenager to do this, assuming he has the skills and interests to learn new computer programs, but you can do it with anyone who has the skills who lives nearby. It costs money, but the compounding effect is very high because you increase your productivity. If you can do this, the capital-compounding effect takes over. Your greatest rate of return on your investment is your investment in skills.
This is not the normal way to look at holidays. That's why time spent in improving your skills on holidays has such a high payoff. Your competitors will be frittering away the weekend.
July 5, 2008
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