Humans have made gigantic leaps of progress in the last 50-plus years, whether in digital communication, biomedicine, quantum mechanics, or harnessing of solar and wind powers, and the list can continue endlessly.
We have broadened the frontiers of our reach from the depth of the oceans to the vastness of the galaxies. Leveraged our inquisitiveness, perseverance, and innovation to increase longevity, turned the world into a microcosm, and has bought it into the palms of people in the form of smartphones. In the process, there has been massive wealth creation, with the global wealth reaching a staggering $413 trillion in the twelve months to mid-2021 based on the Global Wealth Report published by Credit Suisse.
The remarkable progress in wealth creation and subsequent consumerism has bought along with many positives, its own set of significant negatives. The race to material wealth is so competitive that other aspects of growth, like the human development index, income and wealth equality, poverty rates etc., have suffered in many parts of the world. The divide between the haves and have-nots is widening, and the glass ceiling to break from low income into wealth is becoming tougher. Add to it the politics, super egos, and domination designs, and you have the perfect recipe for the misuse of wealth for purposes other than overall human prosperity. The inequality in wealth has reached a staggering level, with 70% of the world population having a pittance of 3% of global wealth.
There are bright spots like the Scandinavian countries, Switzerland, Singapore, Canada, and many other countries where material wealth (though they have more than enough) is just one of many considerations. In countries like Denmark, talking about wealth is not considered good. Equal education and development opportunities are provided to every child, and the state offers top-class medical facilities. Unfortunately, the world's significant populations reside in countries with a distorted version of capitalism (a philosophy that wealth is everything) that is affecting the bigger population of the world.
In this article, we will not solve the issue of global wealth disparity or the lack of human development (in most of the world). Still, we will look at how to live well in mind and develop real wealth (not just, but also material wealth) to enjoy the experience of life.
1. Offer gratitude for the opportunities and blessings in life.
According to the United Nations, as of 2021, approximately 22% of the world's population does not have access to essential healthcare services, and about 10% lacks access to safe drinking water. Additionally, the World Bank estimates that around 16% of the world's population is illiterate and lacks primary education. Finally, 70% of the world's population has only 3% of global wealth. If we have an education, a good job, the ability to care for our loved ones and icing on the cake, some wealth, we are better than 70% of the world. Do we offer gratitude for being in this position? Instead, we believe life has given us the short end of the stick.
The privileged life we have is not our own doing. We get lucky by the dice of the probability of life. Lucky to be born into families or communities that can provide us with good education, care, love, and opportunities for growth. Then our teachers, societies, friends, colleagues, and leaders at work or communities all help shape us to reach the position we have achieved. The universal dice could have been unkind to make us born unhealthy, in a not fortuitous war-torn zone or in a family or society that offers no opportunities. Imagine a child not getting basic vaccination, getting sick, and living a hellish life. Gratitude and more gratitude should be the order of the day as we continue to build our careers, wealth, and lives on the platform of generously giving our sincere gratitude, appreciation, wealth, and love to the less fortunate.
2. Zoom out to keep things in the right perspective.
One of the reasons for not appreciating what we have is getting so zoomed into the day-to-day activities and continuously comparing ourselves with a selected few or feeling the want for an exclusive thing that we forget the bigger picture. A simple solution is to zoom out to see the bigger picture and keep it in perspective as you zoom into the day to accomplish your activities and goals.
Let’s see how the zooming out works. Assume a person faces a personal challenge or setback, such as losing a job. Instead of getting bogged down in the immediate stress and difficulties of the situation (zoomed in on the issue), the person may choose to zoom out and take a broader perspective. This could involve reflecting on their skills, interests, and values to identify potential new career paths or opportunities for personal growth. They may also consider the current job market and economic conditions to help inform their decision-making process. By stepping back and zooming out to see the bigger picture, the person can gain a better perspective and develop a more strategic and proactive approach to navigating their challenges. This can help them make more informed decisions and take actions that align with their broader goals and values.
An excellent example of zooming out is that of a bell boy at a Dubai hotel whom I met several years back. His positive outlook and courage still resonate in my mind. The bellboy used to greet me cheerfully every day. One day as I was waiting for my car, I enquired about where he was from and how long has, he been in Dubai. He told me he was a professor at a university in Katmandu, and after the earthquake, he lost his job and house. He was stressed and worried. However, he soon zoomed out and looked at the bigger picture. He was healthy and had the skills and age to rebuild his life. He left Nepal and came to Dubai to earn dirhams which can support his family. The bellboy position is just a transitionary phase. I am sure he is doing much better now with an attitude of steel; who can stop such a courageous individual from progressing?
3. Develop deep knowledge before trying to create wealth on steroids.
Post the global financial crisis of 2008, the central banks started to cut interest rates, and by 2014 many central banks, including ECB, Danish National Bank and Swiss National Banks, had negative deposit rates. As a result, most of the developed world was near-zero interest rates over the following years. Moreover, the low-interest rates and qualitative easing (central banks buying government debts and other assets) made funds cheap and risk appetite higher to stimulate economic growth.
Leverage is the steroid of wealth creation. It can be helpful if you know how to use it, when to stop, and have contingency plans. For example, when the interest rates were lower, taking fixed mortgages would be great to leverage on real estate as long as you know the fundamentals of investing in real estate and its challenges. On the other hand, not adjusting to situations when interest rates rise leads to what happened with Silicon Valley Bank (SVB). With its sudden influx of deposits, SVB invested the money—as all banks do. Only a few of a bank's assets are normally kept as cash. So SVB decided to invest billions in long-dated U.S. government bonds, including mortgage-backed securities. These investments didn't look bad back then, as the bank was likely to hold on to the bonds for some time and see them through to maturity. But several recent factors combined to turn these financial decisions into the beginning of SVB's demise. Last year, the Federal Reserve moved to hike interest rates to slow inflation. As rates rose, the price of SVB's mortgage-backed securities bonds fell, and the bank's bond portfolio lost significant value.
Excess money should only be channelled into productivity and economic growth projects. Printing more money can stimulate economic growth, but it can also lead to inflation. For example, the government's response to the COVID-19 pandemic caused money flooding, which compelled central banks to raise rates fast to curb inflation. This has consequences on the recent stock market corrections, bank defaults and impending global recession. The bottom-line leverage is a double-edged sword, so use it carefully.
4. Be a source of inspiration and a helping hand to those who need it.
According to the Global Wealth Report 2021 published by Credit Suisse, the top 1% of adults worldwide held 43.8% of global wealth in mid-2021. The same report also states that the top 10% of adults held 82.4% of global wealth in mid-2021, up from 81.9% the previous year. On the other hand, the bottom 50% of adults had just 1.2% of global wealth. Imagine the challenge faced by 50% of the worldwide population to raise its living situation given the disadvantage they start their lives. The least that can be done to create a somewhat equal playing field is to make quality education accessible and compulsory and make essential food, shelter, medicine, and clean water available to every child worldwide.
Corruption and wealth inequality are closely linked in poor countries due to a lack of transparency and accountability. As a result, influential individuals use their influence to accumulate wealth at the expense of the poor, hindering economic growth and development. In addition, corruption undermines the government's ability to provide essential services, leaving the poor behind and exacerbating inequality.
So, what can be done and is done in many poor countries is the creation of a parallel economy where individuals help the poor as the governments don't take care of them. I saw this as part of growing up with my family supporting many people and my mom ensuring many were fed. Even more, than money, our time is even rarer. Taking time to coach, guide and encourage individuals who might be down temporarily or have a rough period is a more significant contribution than just offering money. Teaching to fish is better than providing a fish.
5. The goal is always value creation, offer more value than money received, and you will keep your clients and thrive.
Western countries have increased their wealth despite declining populations by adapting to changing economic conditions and investing in comparative advantage and value-creation areas. This includes investing in technology and innovation, specializing in high-value industries, expanding into new markets, improving efficiency, reducing waste, and investing in renewable energy to reduce their dependence on fossil fuels and lower energy costs in the long run. As per Jim Rohn, one of the greatest personal development gurus, “Our wealth is directly proportional to the value we create for others.” Suppose we offer more value to our clients compared to the remuneration. In that case, we have a comparative advantage and can keep the client longer. The problem today is that everyone wants to make quick money. The focus is on value shift versus an overall improvement in value creation for both the service provider and receiver. Finally, we must become more valuable by investing in our skills and capabilities to create more value for others and, in the process, for ourselves.
6. Focus on real wealth creation versus shifting of value.
The wealth generated by individuals can be seen as a form of real wealth creation if it results from increased productivity or innovation, leading to the creation of new goods and services or the improvement of existing ones. For example, suppose an entrepreneur starts a successful company and creates new products or services that meet consumer needs and preferences. In that case, this can lead to increased economic activity, job creation, and wealth generation. However, the wealth generated by individuals can also result from a shifting of value between individuals and companies, particularly in cases where there is a significant power imbalance between the two. This can occur when companies use their market power to extract wealth from individuals through exploitative labour practices or price-gouging. In such cases, the wealth generated by individuals may be more accurately seen as a transfer of value from one group to another rather than actual wealth creation.
Size has leverage, and I have seen as a consultant that companies would be more willing to pay a higher price tag to a brand than to smaller firms or individuals, irrespective of the performance. So, we cannot change how the world works, but we can say No when we feel that our just remuneration is not paid. No point in working for less as it establishes your services at a lower price, and you are giving the most important resource, your time which could be used more productively.
7. Reducing wealth outflow can benefit developing countries by increasing investment, creating job opportunities, and generating wealth.
This investment can come through foreign direct investment or portfolio investment. Reducing capital flight can also help increase investment by implementing effective tax policies and addressing political instability. In addition, fair trade policies and reduced trade barriers can provide developing countries with greater access to global markets, and technology transfer can help improve productivity and lead to economic growth.
On an individual basis, this means protecting your core business and try not to spread yourself or your wealth thin. The best business models for wealth creation are replicable, scalable, and challenging to emulate. For example, if you are knowledgeable about investing in stocks, stay with it instead of investing in assets you have limited knowledge of. The biggest problem is running from one investment ideology to the other with an approach of ‘hope’ instead of ‘data-based knowledge and track record.’
Conclusion
As individuals, we must recognize our privileged position and offer gratitude for our opportunities while remaining focused on creating real wealth through value creation and skill development. We should also zoom out to gain perspective, invest in deep knowledge before leveraging resources, and inspire and help those who need it. By reducing wealth outflow and contributing to fair trade policies, we can help build a more equitable world. By adopting these approaches, we can navigate the upsides and downsides of global progress to live fulfilling lives of true wealth and prosperity.
One of the biggest challenges we face is the constant barrage of marketing that entrenches distorted concepts into our minds as fundamental beliefs that affect how we prioritize our life. To set ourselves fear from running like a hamster on a wheel, we should develop our core beliefs/concepts and use these to live happily inside our minds and with our families and not be affected by others' expectations and judgments.
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