Prosperity-21How Individuals, Families and Society Can Prosper in the Twenty-First Century by Edwin deS. (Ned) Snead 8.5x11 format, 24 essays, 54 pages $12.95 |
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Introduction Every bar and cocktail party is full of people with great ideas for the U.S.A. and for the world, but with no authority to change anything. Most of us will not be able to make changes anywhere but in our own families. We can only decide what we think is going to happen, and then act to minimize our losses and maximize our gains. Better? Worse? Better? Worse? This is not an eye exam! For some people, some families, some cities, some counties, some states, some nations, and the world in general, some things are getting better, and some things are getting worse. And this applies to plants and animals other than humans. For this piece of literature I will narrow the scope first to human individuals, families and nations. The things to be considered might be limited to those related to our “Life, Liberty and Pursuit of Happiness.” Does “getting better or worse” mean today, this week, this quarter, this year, the next 2, 4 or 6 years, this generation, this century or forever? After we try to answer some of those questions, we must ask, “Is there anything we can do to change the trends we discover, or how can we best learn to live with them?” I am now 75 years old and have lived about as long as most individuals can expect. I have tried a lot of different things, including building up a family of about 24 descendants. Late in my mid-life crisis I campaigned for the US Senate and was handed an honorable discharge. I have thought a lot about national problems and opportunities, but have never been called upon to do anything about my big ideas for the nation. None of what I suggest is guaranteed to work. Even if it should, I have learned that it is much easier to make something work than it is to sell it. Good luck.
It sounds good, but it hasn’t happened often. Rich people were supporting most of the smart people we read about in history books. And most of the rich folks got rich by being friends of the king. There were not many ways to get friendly with kings. One way was to help him get to be a king, and another way was to save the king from being killed in battle. The idea that the smart get rich has become part of the folk history of the USA. Henry Ford and Thomas Edison are folk heroes. Wilbur and Orville Wright and Albert Einstein were plenty smart, but they didn’t get rich. Einstein worked in a small office in a University. Snead’s theory is that, “The best way for the poor to get rich is by SALESMANSHIP.” A kid with a paper route has to get up early and work hard, but that’s not enough. He’ll make a lot more money in less time if he can SELL subscriptions in the houses in between those where he is already delivering papers. Even selling is not enough. He has to collect the money every month, and that means listening to complaints and keeping the customers happy. For a few years I sold computers for IBM, one of the world’s most successful companies at the time. I was assigned a territory of about a dozen companies who were already using IBM equipment and a couple of dozen similar prospects. I was paid a salary of $650 a month whether I sold anything or not. (This was 1965, and Uncle Sam’s money was worth about six times more than it is now.) Nearly all the customers were renting computers then instead of buying them, and my quota was based on the number of dollars my customers paid IBM each month. (I don’t remember the numbers, but for example I’ll use $5,000 per month.) I was expected to INCREASE the rent IBM received from my list of customers and prospects by $5,000 per month. If I got a signed order for a computer that rented for $1,000 per month, I got 1,000 points toward my quota. A year or more later, when the computer was installed and the customer started paying $1,000 per month, I got another 1,000 points. Any time during the year that I accumulated 5,000 points my salary was doubled. If I accumulated 10,000 points, my salary would be tripled (or more). On the other hand, if I lost an order worth $1,000 per month, 1,000 points would be deducted from my account. Even worse, if I lost a customer and had to take out a computer renting for $1,000, I lost 2,000 points, because I (or last year’s salesman) had already been paid for installing that computer. Losing a customer meant that I had to find another customer just to break even, or two new customers to get any more commissions. I was lucky (or smart) enough to make my quota the first year and was invited to a big gathering of the “Hundred Per Cent Club” in Florida. However, in January I learned that a few of my customers were put into another salesman’s territory, and I was assigned a lot of new prospects. My salary was raised, and my quota was almost doubled. I may have been one of last year’s heroes, but I had to do even better if I wanted to make more money the next year. Every January IBM’s whole sales force threatened to quit, but most of them decided to try one more year. Those who had three successful years were given pay raises and moved into less stressful jobs. Many were assigned to teach the new recruits how to sell and maintain IBM’s equipment. After a few more years they might be back “on quota” again, but this time supervising ten salesmen, and paid on the success of those under their supervision. If they turned out to be good sales managers, the cycle would be repeated, and they might become Branch Managers, with a hundred salesmen reporting to them, and contributing to their earnings. Only a small fraction of IBM’s new salesmen stayed with the company and moved into the branch manager’s office 12 years later, but those who did KNEW HOW TO SELL and they knew how to train and motivate successful salesmen. Only a small fraction of IBM’s employees are salesmen. All of the rest know about the “sales plan,” and most of them have been given the opportunity to try it, but have decided that it’s too tough and uncertain. The people who have worked through it successfully describe it as a system to, “feed the eagles and starve the turkeys.” Not everybody can get into the IBM sales force. Back in the 1960’s new recruits had to get an A on a “programmers’ aptitude test.” But you don’t have to be smart to get a job selling on commission. Almost every insurance company will hire almost anybody and pay him for a few months until he learns to sell or until he quits. Every businessman in every field sees lots of people wanting a job. They all want the biggest salary and the most security they can get. Businessmen hardly ever see anybody who wants to sell, particularly if the salary depends on successful sales. There is a limit to what a person can earn on commission in most companies…the boss’s salary. It’s a rare boss who can tolerate a salesman making really big money. At some point, most company presidents (and others in the company) start saying thing like: “We’re all working harder and earning less than he is.” “We’re holding costs down so he can sell for lower prices.” “We’re keeping quality up so customers will be satisfied.” “We could have three salesmen for what we’re paying him.” They’re right of course, so eventually they will split up his territory or reduce his commissions. Even IBM did it, and they lost Ross Perot. He and I left IBM about the same time and started our own software companies. His has been much more successful than mine. IBM’s answer is to give successful salesmen a big pay raise and move them into new jobs, with the promise of even bigger opportunities. Elsewhere the good salesmen have to move on to bigger companies or go off on their own. It’s time to ask if there is a moral to this story. There is. The most essential skill in any business is SELLING. Notice, I did not say marketing. That is something that deals with advertising or market surveys, etc. and is taught in universities mostly by people who cannot SELL. You do not have to be smart to sell, but you have to be able to sell to get rich. On the other hand, we “Americans” have been part of a nation that got rich recently. Back in the 1930’s we had been suffering from a depression. We took part in the biggest war there had ever been and were able to keep all the fighting on somebody else’s land. We lost a bunch of young men, but when it was over we had the only big undamaged industrial machine in the world. For almost fifty years we could sell almost anything we could produce at almost any price we asked. It doesn’t take much of a salesman to prosper in that kind of environment. More than six million men in their 20’s and 30’s were away from home for five years. When the war was over they went to college at government expense. By the time the new babies started to school their dads were getting good jobs or starting their own businesses. Two whole generations of “Americans” grew up thinking, “If we’re so rich, we must be smart.” Successful businessmen can get the same idea. They don’t really know if they’ve been lucky or smart. Their friends, and the folks who want to be their friends, tell them they are smart, and it sounds so good they start to believe it. Lately I have heard some of our “leaders” tell us that we are so creative that we can develop new products faster than the Chinese can copy them. People who believe that should visit our big US universities and see who is teaching and studying in the graduate schools. I have a hard time pronouncing their names and understanding what they say about their research projects, even when they speak pretty good English. Going to college isn’t the only way to get an education and a high-paying job offer. A young person doesn’t even have to graduate from high school to get a job that could be good for life. The armed services teach LEADERSHIP better than any university. For getting ahead in business, that is almost as important as salesmanship.
Other chapters have dealt with ways that people with no inheritance and not much education might work and slowly save their way to a little prosperity. Most folks will think the slow way is a little too slow, and ask about short cuts. There are some, of course. One of the legal ways might be winning the Lottery. The odds are pretty long, and the payout ratio is pretty low, but it works for a few people almost every month. There is an old story about a guy who kept praying that he might win the Lottery. One day he got an answer, “Gimme a chance, Sammy. Buy yourself a ticket.” My own reaction to that is to say, “The first ticket you buy actually raises your odds…from zero to miserable. It’s the second ticket that’s really stupid.” In Texas we call the lottery a “moron tax.” So far I have not been able to learn the payout ratio for the Texas Lottery. However I ran across a “blog” saying the Kansas Lottery paid out about 57%. If that sounds like a reasonable investment, look at it from the “house” side. For example, let’s say that every week a million people each buy $100 worth of tickets, giving the “house” $100,000,000 to work with. After drawing the numbers, the “house” pays out $57,000,000, keeping $43,000,000 to cover printing cost, commissions to the merchants who sell the tickets, and anything else the politicians think is a good use for money. Every week some lucky guy gets a few million bucks, and a few thousand others get a little more than they paid for their tickets. But the average of all the people who spent $100 on lottery tickets get only $57 that they might use to buy more tickets next week. If the average player spends his average $57 payout on more lottery tickets, after two weeks he will still have about $32.50 to invest. After a month his investment kitty will have shrunk to about $10.50, and after three months he will have less than 7 cents left. Buying lottery tickets is not quite as stupid as it sounds. If the poor guy is making payments on a house and a car (and maybe alimony and child support), he can’t afford to quit the job he hates and miss a paycheck. He can’t see anything in the future but buying expensive gasoline and spending two hours in bumper-to-bumper traffic every day. He might spend less on lottery tickets than he spends on beer, and after all, he might get lucky. You could call it cheap entertainment. The 57% payout ratio for the lottery sounds pretty low compared to an auditor’s report of a 97.5% ratio for slot machines somewhere. But the numbers are not quite comparable. The 57% on the lottery translates to a negative interest rate of 43% per week, while the 97.5% on slot machines is minus 2.5% per minute. If you started to “work” on a slot machine at 8:00 AM with $100, in thirty minutes you could grind your $100 down to $53.10 (about the same as you would lose on the lottery in a week). By 9:00 AM you would have only about $22.50 left. In two hours or hard play your $100 would have shrunk to less than five bucks. If you call that entertainment, the price of the ticket was $47.50 per hour. You could reduce that entertainment price by playing for two more hours and reducing your original $100 investment down to 25 cents. By noon you would have lost $99.75 of the $100 you started with, but you would have been entertained for four hours at a price of a little less than $25 per hour. I hope that I have shown (at least indirectly) that playing any game with the odds against you is not a way to make money, but mostly a way to have a little excitement while you SPEND money.
Population Sometimes when I read a book that disturbs me, I turn to the last chapter to find out what the author sees as the main problem and what he proposes to do about it. I will save you the trouble. Although I see many things going on that I do not approve of, I see one over-riding problem whose solution would make all the others easier to deal with – population. It is also a problem we can do something about individually, in our families, and nationally, and expect to see positive results within our own lifetimes. Every environmental problem is a matter of too many living creatures trying to utilize resources faster that they can be renewed. Eventually these environmental problems become economic problems, and if they continue to get worse, they lead to society’s problems, even to famine, disease and war. Not all starvation, disease and war are directly and immediately caused by overpopulation, but if the problems turn out to be big enough, they have an immediate effect in reducing the population. We don’t have to do anything ourselves if we are content to wait for our numbers to be reduced by some really unpleasant processes. I have been a small part of the problem myself. With my first wife I produced three daughters. Since they all lived long enough to marry and produce children of their own, we produced 50 per cent more than enough to replace ourselves. My daughters then proceeded to provide me with seven grandchildren, again a little more than enough to replace themselves and their husbands. Two of my daughters went on to adopt three foreign babies into our prosperous family. For at least 60 years I have known about the activity and pleasure that produces babies, and I have never wanted to give up that source of pleasure. I turned down a suggestion that I might have myself sterilized, possibly because at that time I did not know that all my daughters would live to maturity. At the time abortion was illegal in Texas, and we never considered that possibility anyway. I have no regrets about the way my own family turned out. I only want to admit from the beginning that I am a small part of the greatest problem I foresee. If my father had been trying to make a living out of a 40-acre farm, my brother and sister and I might have inherited only 13 acres apiece, probably not enough to live on. Since my wife’s father was a traveling salesman, I would not have married any more land. My three daughters could then look forward to an inheritance of about four acres each. My middle daughter, who married a preacher’s son, and who is now raising five children, including two adopted, would have less than a acre apiece to pass on to her brood. That’s enough for a garden, but not for a farm. With only two percent of the population living on farms, this kind of property dilution doesn’t happen much in the USA, but it is common in the poor parts of the world. However, we have a parallel process here. Back about 1947, my father bought a very poor 200-acre farm covered mostly by rocks and cactus. Using some old machinery from a business venture that had failed earlier, he turned the farm into a rock quarry. Ten years later he had made enough money for a down payment on a 600-acre farm and some new machinery. By the time the loans came due, and the company was again near bankruptcy, I was active in the business. With the help of a rich uncle’s advice and some good luck I was able to keep the business going. Thirty years later my brother and sister and I each inherited several thousand acres of land and a business worth several million dollars. Even after Uncle Sam and the State of Texas claimed a big share, we were rich. My brother and sister each raised three kids, and I have lost track of their grandchildren. In my own case I have been giving away tax-exempt portions of my estate to 24 descendants. I am the oldest, and I expect my parents’ descendants to number between 75 and 100 within the next few years. All of these people will probably inherit more than most Americans expect to retire on, but none of them will be really rich. If the family members continue to produce 50% more children than would be needed to replace themselves, you can see that in a few more generations the family “farm” will eventually be divided into so many parts that the individual parts might not be enough to live on. This is not a tragedy, of course. Most people have to work anyway. Three kids per family do not seem like many by American standards. It could happen in a family that really wanted only two, but would prefer to have one of each gender. Everybody might consider two per family prudential. When Americans hear about the recent Chinese policy of “one child per family,” most seem to think in could only happen in a cruel dictatorship, and would not be tolerated in a democracy. However, seen from the viewpoints of the individual “only child,” the family, and the nation, it could be a recipe for prosperity in only one generation. A workingman and woman can save a little of their income by sleeping under the same roof and in the same bed, sharing a bathroom. They could probably support two cars, so they would not have to work at the same place. After five pm every day and for the whole weekend they would be free to do almost anything they want to do. The first baby makes a dramatic change in their life style. As soon as the baby is out of the womb it will begin to demand as much of the mother’s time as another job. Even if she is working for a prosperous, family-friendly employer, she has almost lost her freedom to change jobs until the baby starts to school. At first, feeding the baby costs less than the clean up, but by the time the youngster starts to high school it will be eating more than its father, and it will need another room in the house. In another chapter I will show some crude calculations on how two, minimum-wage paychecks might be expended on food and shelter for a couple. By keeping it simple for twelve years they might save enough with compound interest to take off a year or two without working. Or they might work for forty years and then live off their savings for the rest of their lives. If I were female, I think I would want to have one baby just to prove I could and to see what it’s like. I have never understood why any woman wants to go through that more than once. But, getting back to my simple minimum-wage exercise, it seems that a working couple might be able to raise one child for twelve years and still accumulate some surplus cash. However if our hypothetical couple had to support three teenagers or six preschoolers, there would be no cash left for savings, no retirement fund, and nothing for the kids to inherit. My plan for this book is for each subject covered to end with a showing that there is a prudent choice that can be applied by a single individual, a family, and a nation. My suggestion at this point is ONE CHILD PER FAMILY. This gives a man the opportunity to select any career and any employer that appeals to him, and freedom to change at will. The one child proves that he is a “real man,” and a dozen would only prove that he is a fool. The burden of bearing and raising children falls almost entirely on the woman. She certainly deserves to CHOOSE not to do it more than once (or not at all) and to do something with her life besides, or in addition to, being a mother. From the family viewpoint, the first child generally gets more attention from its parents and sometimes turns out to be more productive than its siblings. An only child could be fed and clothed better and might be healthier than the average of a whole brood. The family could save more to pay for one child’s education, and that might lead to a bigger salary, which could help if the parents’ savings run out. From the national viewpoint, we already have a larger population than domestic oil production can support. If we hope to enable a higher standard of living for everybody, they will want more automobiles, calling for more oil. Our existing population is already putting a lot of pressure on a half dozen other classes of resources, but none quite so obvious as liquid fuels. If there were an acceptable way to get our average birth rate down to one child per woman, we would see a dramatic improvement in our standard of living within one generation. The folks worried about the future of Social Security might prefer to see more young people being taxed to pay for the retirement and health care of the present old folks. In each family, fewer babies = better care for those born and the ability to pay for more education, which could lead to better-paying job, and the ability to pay more taxes. In a society with every baby wanted and cared for by both father and mother we can expect less crime, and less need for taxpayer-supported prisons. After all, prisons are a form of welfare for the least desirable citizens. In many of the most civilized countries the ladies have already started having fewer babies. Just last summer three unmarried young women in Switzerland told me that babies “were just too expensive.” Cost of BabiesNutrition Approximation Avg. male weighs about 15 stone = 210 lbs needs 2,700 calories/day Avg. female weighs about 10 stone = 140 lbs needs 1,800 cal/day Teenage male 10 stone = 140 lbs needs 3,600 cal/day Teenage female 8 stone = 112 lbs needs 2,700 cal/day Pregnant or Nursing female needs 3,000 cal/day 2-year-old baby needs 600 cal/day 3-year-old child needs 900 cal/day 4-year-old child needs 1,200 cal/day (each year a child needs 300 cal/day more) 12-year-old (teenager) needs 3,600 cal/day
US minimum wage in 2005 is about $6.00 per hour MacDonald Big Breakfast costs about $3.00 for about 900 calories That is ˝ hour of work for 900 calories 1.5 hours work for 2,700 calories (enough for one day) (minimum wage = 1,800 calories / hour )
2,700 cal/day x 365 = 985,500 calories/year for adult male 365 days/year x 1.5 hours/day = 548 hours work/year to feed man About one-quarter of minimum wage job goes for food
To feed baby during 9 month gestation 46 hours To feed baby during 1 year nursing 61 hours To feed 6-yr-old child for one year 365 hours To feed 12-yr-old child for one year 730 hours To feed child from conception to age 12 4,791 hours If invested @ 5% for 12 years yield = 5,815 hours (same as 2.9 years extra work)
Man & woman (both working) could earn for 4,000 hrs/yr 2,700+1,800=4,500 cal/day x 365=1,642,500 cal/yr -912 hrs/yr Assumed cost of shelter for two people -800 hrs/yr excess earning capacity 2,288 hrs/yr could feed 3 teenagers or 6 kids 6-yr-old WITH NOTHING LEFT
OR a couple could feed one child for 12 years AND Accumulate 17 years earnings in savings @ 5% interest
A BABY IS ALMOST THE MOST EXPENSIVE THING YOU CAN DO |
Prosperity-21by Edwin deS. (Ned) Snead 8.5x11 format, 24 essays, 54 pages $12.95 |