Why and how the rich get richer

6:00

The expression "time is money" is intuitively understood by most people as meaning "time is valuable."

Yet, most people do not know how to capture the value of time.

Here's what I mean. If you stood underneath a waterfall, and I asked you to capture the water, you would just take a bucket and position it so that the water falls right into it. You have then capture the "value" of the waterfall.

Time is like a waterfall, it flows automatically. Yet, most people cannot capture time and, say, reuse it some other time. We cannot "save" time. It keeps flowing and flowing and flowing, and we keep losing it.

So what is it that rich people do, to capture the value of time?

Ah, finally we get to the secret that nobody has ever told you:

For rich people, time is not money. Time is capital.

In other words, with every passing unit of time, the rich have devised ways to create more and more capital (capital is defined here as "concentrated productive capacity").

The easiest way to understand this is to picture your savings account. It earns a certain interest rate. Yet, this rate doesn't change, no matter what you do.

However, for business people, this rate can increase all the time. They call it return on invesment or return on equity or return on assets, but the idea is that a savvy businessperson can structure, organize, motivate, processorize, etc. so that the rate of return keeps increasing.

This is why the rich get richer, and the poor (who cannot do anything to increase their rate of return on capital -- capital being their saved money in the bank) don't.