Paul Zane Pilzer’s book, The Next Millionaires, has great information on how to position yourself to take advantage of the next wave of wealth.

Now you may be thinking that this book is out dated because it was written before the latest economic issues arose and so his forecast missed the mark. In fact just the opposite is the case; Pilzer’s arguments make even more sense in the context of the recent economic downturn.

I highly recommend Chapter 2 “A Short History of Civilization” for those who want to understand the origin of the free enterprise economic situation. In addition Chapter 3 “The Economics of Scarcity” is great for those who want to understand why our thought process can get caught in downward spiral.

The central argument of the book is in Chapter 4; “The Economics of Abundance”. Here Pilzer presents his six laws of Economic Alchemy.

  1. The First Law: Resources are unlimited because our minds are unlimited
  2. The Second Law: Technology determines the supply of any given resource
  3. The Third Law: The advance of technology is determined by the exchange of information
  4. The Fourth Law: Technology determines need
  5. The Fifth Law: There is no limit to our economy because there is no limit to demand
  6. The Sixth Law: Your immediate economic potential is defined by your technology gap

A key point Pilzer makes is it used to be that one was born, lived and died in the same “T” or type of technology. But now “T” can change over the course of a life time. Pilzer gives several examples that are instructive. Because I had a great uncle who owned three sections of land in Kansas and almost two sections of land in Oklahoma, my favorite example is how technology has impacted farming.

In 1930, 30 million, or one third of the 100 million U.S. population were farmers. And those 30 million struggled to feed 100 million people. 50 years later in 1980, even though the population had increased to 300 million, there were now only 3 million farmers, or one percent of the population. And yet those 3 million farmers would feed 300 million, with an additional 50% of the food remaining for export. That is a 4,500% increase per farmer. A 1,000% increase per acre. Thus “T” created 100 times more land.

 

W = P W = P X T
1930 30 million farmers 1980 3 million farmers
Struggle to feed 100 million Feed 300 million
  With 50% remaining
  4,500% increase per farmer
  1,000% increase per acre
  “T” created 100 times more land

 

Note this shift in “T” took 50 years. But since then, “T” shifts have occurred at a much faster pace.

  • From 1976 to 1996 there were 130 million VCR’s sold in the US. That change in "T" took  only 20 years.
  • CD’s over took vinyl records in less than five years.
  • And it took less than two years to move from the VCR to DVD’s.

When technology is created, and those without it discover it, this creates what Pilzer calls a “T” Gap. When there is a “T” Gap the technology is transferred from those who have it to those who do not, but want it. The key to wealth is to position oneself in a “T” gap and take advantage of the wealth transfer from those who have the technology to those who do not have.

In the old Economics of Scarcity wealth was equal to physical resources. Pilzer represents this in the form of an equation:

W=P
(where W=Wealth and P=Physical Resources).

But in the Economics of Abundance wealth is equal to the physical resources times the technology applied to those physical resources. Pilzer represents this in the form of an equation:

W=PxT
(where W=Wealth, P=Physical Resources and T=Technology)

Pilzer points out that the equation W=PxT not only applies to nations but to the individual entrepreneur. Individually our wealth equals our personal resources “P”, times our technology “T”.

Pilzer states that in the new system the “P” are not just the physical resources, but are the people we know. “P stands for your relationships, knowledge and available hours.”

Pilzer’s Fourth Law states that “demand” and “need” do not drive technology. Rather, technology creates a new product and the new product creates the need. He gives the Sony Walkman as an example. Once the Walkman was created, people started finding all kinds of uses for it. It was possible to listen to music in a crowded café and not disturb others. And it could be used while working or jogging. Suddenly everyone had a use for a Walkman and they wanted one. This created the need.

The dynamics of how millionaires are created has changed over time as well.

  • Resource Millionaires: When the world was ruled by the old economics of W=P, millionaires were created through acquiring resources. The most common was land.
  • Distribution Millionaires: Starting in the 1950’s millionaires were created through physical distribution. The best example here is Wal-Mart.
  • Intellectual Millionaires: The next millionaires will be created through the process of educating consumers about products and services that will improve their lives. Product and services that a consumer currently does not know exist. This is where the fortunes of the future will be made.

“The gap between what people are using and what they could be using if they only know about it is huge and growing huger even as you read these words. And if you are the one to tell them about this technology, you stand to make a fortune.” (Page 71)

Pilzer makes a great point when he states that Direct Selling is almost wholly intellectual distribution. In addition;

“A person to person conversation is the most effective way, the most efficient way, and often the only way, to help bridge another person’s technology gap.” (page 85)

“In direct selling, the “property” that you develop is the network of direct sellers whose sales volume generates a commission to you, the creator of the network.” (page 87)

This type of enterprise has a spiritual nature to it.

“More than any other business, direct selling starts with the core: not with the product or the service, but with the process of helping other people, by teaching other people how to succeed, regardless of their education or what business or field they’ve been in. This is why I say that at its heart, building a direct selling business is a theological act every bit as much as it is an economic act.” (page 95)

I highly recommend "The Next Millionaires" as a base and framework from which to grow your business at any time, but especially during these current challenging economic times.

 

© 2011, VoiceWind. . .Greg Loveless. All rights reserved.

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