On... Labor Versus Capital

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The economy is roughly made up of labor versus capital. Unfortunately, I feel that we are only taught to labor.


In the real world, it is not one versus the other but a range with labor at one extreme and capital at the other. Most people (myself included) grow up focusing on labor. And most of the people I know end up in that camp. Now, lets look at the extreme’s to see what I mean Labor versus Capital.  


Labor is where you use your time to earn money. And capital is where you use money to earn money. We go to school, college and University, training us to become an employee. That’s 25 years of life roughly to be at one end of the economy. Doctors, Lawyers, Engineers, Accountants, … and the list goes on. On the other extreme end, being an investor is where you use Capital to earn money. The most passive kind of investor being just putting your cash in a Fixed Deposit and earning 3 percent interest annually. I feel like this end of the spectrum has been more or less neglected. Ask any kids what they want to be when they grow up, less than 10 percent would say they want to be an investor or businessmen.


I myself grew up not knowing that money can be made from Capital. I only thought that you earn from labor. It was serendipity for me to be laid off from my professional career. Where I started to learn about the Capital side of the economy. About eight years in and Im still learning but I think this was the best thing that has happened to me. I cannot confirm it yet, until I reach my milestone. With the advent of AI, I believe that Capital will take a larger piece of the pie. We will probably see a meaningful change by 2030. 


Not only am I in the camp of capital but I would like to prepare my kids to acknowledge that there is another path in life. Of course, there is everything in between but let us not ignore Capital.




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