Robinson Crusoe: The Entrepreneur
Posted by Orrin Woodward on April 16, 2014
Financial Fitness Pack
This is part 2 of Hernando de Soto’s enlightening example of the savings process role in a non-State-interventionist’s free market economy. LIFE Leadership has taught, since its inception, the three keys to wealth (1. Long term Vision; 2. Delayed Gratification; 3. Utilize the Power of Compounding). Unfortunately, the State does not follow these concepts and, since 1913, it has rarely attempted to apply these principles. Instead, it chooses inflation, taxation, and debt accumulation, seeking short-term bandaid fixes while the underlying issues become a greater risk to society’s future.
Needless to say, the current lack of long term vision, delayed gratification, and positive power of compounding must be changed. I believe the only way to change the political process is to change the thinking of the populace. Instead of demanding the State take care of everything, what if we put the State on a fixed budget and demanded they balance it? Imagine someone in Washington having to balance the budget like practically every household in the world must.
The State must end the temporary stopgaps (printing money and debt growth) which only mortgage our children’s financial futures to satisfy the State’s financial lunacy.
What can we do? We can start by displaying financial literacy in our own home by applying the principles from the LIFE Leadership Financial Fitness Pack. On a weekly basis, I am receiving letters, emails, and LIFE Lines describing how the Financial Fitness Pack has changed their financial future. Indeed, how can we criticize the financial mess in Washington until we model the proper behavior personally?
Let’s lead our homes first and then find leaders who will do the same in every branch of government.
If you have applied the principles from the Financial Fitness Pack and have achieved progress in your personal financial situation then please share a comment below.
Sincerely,
Robinson Crusoe’s production process, like any other, clearly arises from an act of entrepreneurial creativity, the actor’s realization that he stands to benefit, i.e., he can accomplish ends more valuable to him, by employing action processes which require a longer period of time (because they include more stages). Thus action or production processes yield capital goods, which are simply intermediate economic goods in an action process whose aim has not yet been reached. The actor is only willing to sacrifice his immediate consumption (i.e., to save) if he thinks that by doing so he will achieve goals he values more (in this case, the production of ten times more berries than he could gather by hand).
Furthermore Robinson Crusoe must attempt to coordinate as well as possible his present behavior with his foreseeable future behavior. More specifically, he must avoid initiating action processes that are excessively long in relation to his savings: it would be tragic for him to run out of berries (that is, to consume all he has saved) halfway through the process of producing a capital good and without reaching his goal. He must also refrain from saving too much with respect to his future investment needs, since by doing so he would only unnecessarily sacrifice his immediate consumption. Robinson Crusoe’s subjective assessment of his time preference is precisely what enables him to adequately coordinate or adjust his present behavior in relation to his future needs and behavior.
On the one hand, the fact that his time preference is not absolute makes it possible for him to forfeit some of his present consumption over a period of several weeks with the hope of thus being able to produce the stick. On the other hand, the fact that he does have a time preference explains why he only devotes his efforts to creating a capital good he can produce in a limited period of time and which requires sacrificing and saving for a limited number of days.
If Robinson Crusoe had no time preference, nothing would stop him from dedicating all of his efforts to building a hut right away (which, for example, might take him a month minimum), a plan he would not be able to carry out without first having saved a large quantity of berries. Therefore he would either starve to death or the project, out of all proportion to his potential saving, would soon be interrupted and abandoned. At any rate, it is important to understand that the real saved resources (the berries in the basket) are precisely the ones which enable Robinson Crusoe to survive during the time period he spends producing the capital good and during which he ceases to gather berries directly.
9 Responses to “Robinson Crusoe: The Entrepreneur”
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Adam Konopka said
Using the principles and tools of the financial fitness pack, my wife and I found great (and predictable) results.
Here is a brief summary:
At the start of our financial recovery process, my wife and I had roughly $50,000 in total debt outside our house loan, a house going up for sheriff’s sale, and a repossession to my name (to name the big ones). I left my career as a Registered Nurse (where I made over $80K/yr) and took a military assignment dropping our annual income to $32,000 (about a 62% decrease).
Following the 3 keys to wealth, applying financial fitness, continuously checking with mentors and working consistently on the gameplan, in 3 1/2 years we were totally debt-free (outside the mortgage), tithing biblically, and had built a several thousand dollar savings account. We had two kids at the time.
We had no outside income when this happened!
We have not had a car payment in nearly 6 YEARS (nor anything else financed)!
We reached a point where we were living on LESS than 50% of our income. With the addition of two more kids that has adjusted slightly 🙂
We continue to PDCA and will continue toward higher goals, increased service to others and more effective stewardship of the ALL the blessings we receive. None of it is ours to begin with and we have been long parted from the days of abusing those blessings.
Thanks, Orrin!
Orrin Woodward said
Adam, Congratulations! Excellent testimony to the power of the right financial information applied consistently. God Bless, Orrin
Mike Gorski said
This product has been without a doubt the best investment my wife and I made for our future. Because of the information in this pack, last year we were able to get rid of $12,000 of consumer debt with no increase in our income I might add. Applying these principles wasn’t the easiest thing we’ve ever done but it was absolutely worth it. A huge thanks to the PC and the LIFE Leadership organization for everyone you folks do to produce world-class information that any hungry student can obtain and start to implement into their daily lives.
Steve Meixner said
The Financial Fitness Pack is a Great Investment. I made all the wrong choices, 90day same as cash on a Washer & Dryer, and other things, Credit card#1, transfered to #2 at a lower interest rate, then charged more on credit card#1. I racked up quite a Debt load on several different cards. I have stopped using and cut up the cards since reading the book and listening to the Cd’s and I’m following a plan to pay them all off. I will never again use a 90day same as cash or anything similar. I will never again have a Car loan or a loan for anything else that Depreciates. These Principles I have learned from The Financial Fitness Pack. I have a long way to go to be Debt Free but I am already seeing the Light at the end of the Tunnel! Thanks Orrin and LIFE!
Steve
Lewis Miller said
We are going through this information with four other households. We meet once a week to discuss one chapter and one cd. We are now on our fifth week and everyone has set up a separate account to save 10% . For us, we set our account and started funding it six months ago. It is amazing how this adds up over time. Another Gentleman in the group in his 50s mentioned that if he had this information when he was young, he wouldn’t have to go to a job anymore. The financial fitness pack has so much good information on what steps to take and when that it will change our future and the generation to come!
Elaine Mallios said
Wow. Those were really good. last and this one. So great an analogy. Thanks Orrin.
Chad Waters said
Hi Orrin!
May we all learn through your teaching and share this.
God Bless
Chad
Lindsey Padlo said
Hi Orrin!
I got the Financil Fitness pack back in January and I just started listening to the CDs and reading the book and I’m Obsessed with the CDs! I’ve listened to all 8 three times and I am so grateful for this new information, as a recent Masters grad in Teaching at MSU, I wish I knew this info before I went into more debt! I’m still new to the biz but I want you to know that the more I listen and spend time in the community, the more I see your hearts for people and that is SO attractive! Thank you for all you do! I proudly share Life Leadership with more and more people each day
Easton Kelsey said
By applying the principles of the FFP, we were able to get out of debt (about $120k), have a years savings, get food storage, invest in good and silver AND cut back my work from 6 days/week to about 3 days/ week! Thanks Life Leadership for the right tools, info, inspiration and Wisdom to change our lives drastically!
PS took our family of eight on our first cruise to the Bahamas and used no credit cards!!