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The Business of Creating Wealth - Vito Rugani

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Vito Rugani, shared wisdom regarding the different phases of Structural-economic political development. Theocracy, Monarchy, Aristocracy, Constitutional Democracy.

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The Business of Creating Wealth - Vito Rugani

  1. 1. The Business of Creating Wealth Men cannot become wealthy through earning a wage only, we have to buy and sell our way to prosperity. In other words we have to have a second flow of income that does not depend on our labour only,
  2. 2. A Tale of two families….
  3. 3. The Progress of Ownership over the years… (Taken from book “The Age of Turbulence” by Alan Greenspan the gov of US Federal Reserve Bank) • Theocracy. • In the Judeo-Christian story it started with God owning everything and making all the Laws for His nation. • This lasted until the Hebrew Nation demanded a King and Saul was crowned king. • First family title deeds issued.
  4. 4. Monarchy (Autocracy) • The King owns everything and makes all the laws. • The King collects taxes from his subjects and spends it as he pleases. • The king depends on his army to maintain his influence. • The king provides protection from foreign invasion, and provision in times of famine. • The General Population have no access to wealth.
  5. 5. Aristocracy (Noblemen) • The feudal system will inevitably flow from a monarchy. • The monarch in order to consolidate his power, will begin to provide favours to those that are willing to support him. • This produces a social order where others begin to have access to production resources (like land) This is earned through favour. This privileged class of society becomes wealthy…. Aristocracy. • Now society pays the tax, but the aristocracy keep the king in power as long as their complex web of favour trading can be maintained. • The common man still has no access to wealth creation.
  6. 6. Constitutional Democracy • Technology, the industrial revolution, and education broadened the opportunities for wealth creation. People could access wealth through means other than land ownership. • A new class of society started rising…. The middle class. Self employed and able to create their own wealth. • The middle class produced the modern age of complex society. A complex power balance between Citizen and State. • The power was now vested in the hands of the Middle Class. They paid the taxes, they owned the means of production, they provided the jobs, they voted the government in-to or out-of power. • A fragile system upheld by the strength of the democratic institutions established around it. (The Constitution, the Rule of Law, Property rights, and so on.)
  7. 7. What we have learnt from these historic lessons • The wealth creation capacity of a society is an evolutionary process. Society has to evolve to that point by walking the road of Monarchy, Aristocracy and then Democracy. • The inability of society to provide fair opportunity for its citizens to create wealth, will see that society advance or retreat on this evolutionary journey. • When society fails, it will inevitably regress back into a more archaic system. E.g. Democracy slipping back into an Aristocracy.
  8. 8. The South African Journey….. • The question can be put, how far down the road have we evolved? • Was the apartheid era a Democracy, or was it simply a form of Aristocracy where a complex web of favour trading gave a minority of society access to wealth creation? • Can people who grew up in a tribal system (Monarchy) ever make the leap to a Democracy in one generation. History says that we will look towards a form of aristocracy first. (Tribal superiority battles, BEE legislation, Curtailment of Ownership Rights of ordinary citizens.) • The key no doubt is the leadership role that the Middle Class is willing to play. How much do we value the institutions of a Democratic society? • Can we produce a social order that gives equal opportunity to all our citizens to create wealth –and believe in Democracy- or will our lack of imagination drive the neglected back into the arms of an aristocracy?
  9. 9. “ I hear and I forget… I see and I remember... I do and then I understand” • A quote from Confucius

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