Paradigm Shift; Consumer v. Investor/Banker December 3, 2007Posted by shaferfinancial in paradigm shift.
Tags: Finance, Mortgage, paradigm shift, Wealth
I make it a habit to read extensively about a host of subjects. Currently, there is a major shift in human understanding of subjects ranging from science, spirituality, finance, politics, to social relationships. This paradigm shift is going on right under our noses, mostly unnoticed, and mostly uncommented on by the mass media. For those that like to hang out at book stores, you have definitely noticed it. Just walk the aisles of any subject in any bookstore; you will come across titles talking about this amazing change. Want proof of this happening? Up until last year General Motors, was insisting that American consumers would never base their car buying decisions on gas mileage. Now, they are marketing their “green” cars. Whether their cars are actually “green” or not is irrelevant to the fact that they are now telling us that American consumers want good gas mileage and lower polluting cars by the way they are marketing. Now this paradigm shift has been in the works for a while, at least since the first hybrid car was introduced, but GM (and many of you) didn’t notice this shift until recently. http://www.youtube.com/watch?v=luopS-xmQYI
I have decided to spend some blog time talking about the paradigm shift going on in the finance world. This is the first of a series of posts to address this issue.For the better part of the19th and 20th Centuries citizens of the western world were taught to become consumers. This was a major change from what had existed before, self reliance. No longer did we build our own homes, make our own soap, kill/grow our own food. With the advent of credit, we disconnected our purchases from our cash reserves. Let’s not fool ourselves into thinking that credit did not drive the success of our capitalistic system, which we all benefited from. So that evil (according to the bible) of credit did much to benefit our society, but it also played into developing our consumer mindset.This consumer paradigm, or way of thinking, developed two sides; the saver mentality and the purchaser mentality. Now most people think that there is some moral superiority to being a saver rather than a purchaser, but it is really just two sides of the same coin. One side, the saver, is able to put off into the future their consumerism, while the other side, the purchaser is incurring the cost of immediate gratification. No doubt, one is better off in the long run by being a saver over a purchaser, but both labor under a dying way of thinking.The emerging paradigm is the investor/banker paradigm. This paradigm was brought to the attention of millions most recently with the Kiyosaki, Rich Dad, Poor Dad series, but it has been emerging for quite a long time. Now there has been some critique on the veracity of Kiyoski’s original book, but it is really irrelevant to the message it articulates. The message in this and many other books is one of moving from a consumer paradigm to an investor/banker paradigm. Now, this is important to understand. We are changing our way of thinking as a society whether you personally change or not. Like General Motors, you can deny what is happening for a good amount of time, but eventually you will have to change your way of being to match the new reality.What does this investor/banker way of thinking require of us? Simply we will need to understand our lives and our goals in fundamentally different ways. This can only happen through an educational/emotional process.
Let me outline what this process might entail.
Here are some of the mindsets that enable the consumer way of being:
1. The conscious or unconscious belief that money and material wealth is our primary directive;
2. The conscious or unconscious belief that we exist in a zero sum game, that our success is predicated on overcoming someone or something else;
3. The conscious or unconscious belief that material things have intrinsic value;
4. The conscious or unconscious belief that there is a limited supply of wealth that must be competed for; and
5. The conscious or unconscious belief that time and money have a direct relationship.
Compare this to the ideas that animate the investor/banker way of thinking.
1. Happiness for us, our family, and our community, is the primary directive;
2. Success is predicated on positive relationships with others;
3. Only people have intrinsic value;
4. There is unlimited opportunity and prosperity available for all; and
5. Time and money have only indirect relationships.
Now the truth is that many of us will deny that we engage in the consumer mindset. But if we really are truthful with ourselves then we will recognize how deeply we are beholden to the consumer way of thinking. The investor/banking way of thinking should not sound foreign to us. That is because these ideas have been around for a long time, but we only give lip service to them. Our job is to do the academic/emotional work of engaging these ideas and making them work on an unconscious level, just as the consumer ideas do for us currently.
The next post will delve into the why’s and how’s of moving to this new paradigm.