Posted May 11, 2011 at 3:04 am
by Gary North
“If I had just known at age 18 what I know today!” That lament is among the most universal among people aged 50 or older. Is there any society in which itr cannot be heard?
I was reminded of this when I watched a video of half a dozen of coach John Wooden’s most talented basketball players. It was produced in 2010, just after his death at age 99. He had retired 35 years earlier, yet he was still remembered and admired.
The story was basically the same for each of those now middle aged – or older – men. Wooden had been a great teacher, not just a coach. They all said how much sense his principles of living had meant to them two or more decades later. But all of them said that they had not paid much attention at the time. I had heard the same thing before he died from other former players.
Here was a legendary coach who taught some of the finest athletes in America. He was a very smart man, and more to the point, a very wise man. His chart of the pyramid of success has been seen by millions of people. Yet he was unable to get the basics of his outlook across to young men who had come from all over the nation to play for him. (Oddly, the group in the video had all come from southern California.) You can see it here.
What does this tell us? That youth is wasted on the young – a lament of oldsters throughout history and across many borders.
It is not a matter of brains. It is a matter of character. From time to time, we do hear of young men who seem to understand as teenagers how little time men have, and how large the payoff is for hard work, high thrift, and dedication to the mastery of some field. These are the super-performers discussed in books like Malcolm Gladwell’s Outliers. They invest their crucial 10,000 hours before they reach age 21.
But it is not just character. It is something else. It is their understanding of time. They recognize that effort and assets invested early in life have a compounding effect. This makes an enormous difference at age 40 or 50, if a person finds the right niche in which to invest his time.
To do this, a young person needs future-orientation. This is exceedingly rare among the young. As Ben Franklin put it in 1750, “A child thinks that twenty pounds and twenty years can never be spent.” A few musical artists figure it out early, or at least consent to their parents’ demands while they are still forming their habits in life. But few understand it with respect to money.
GET RICH SLOWLY
You have heard the phrase, “Get rich slowly.” That is good advice. It applies to societies as well as individuals.
Why should getting rich take so long? Because it takes a long time to accumulate capital: the tools of production.
Economists have understood this for over a century. But, sadly, most people are into middle age before they figure out that it takes time to accumulate sufficient capital to provide for a comfortable retirement. When we are young, we rarely understand how much we must save, and how long we must save, to accumulate capital.
In Chapter XVIII of his magnum opus, Human Action (1949), Ludwig von Mises presented the case for the importance of time perspective as a source of thrift, capital formation, and wealth. He called this outlook “time-preference.” Some people are present-oriented. They want satisfaction now. They will not lend money at low rates of interest. They borrow at high rates. Others are future-oriented. They save at low rates of interest. They refuse to pay high rates of interest when borrowing.
He made a profound observation on why we are rich compared to earlier generations.
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