The Wealth of the People:
Your Wealth
An Inquiry into the Relationship between
Wealth, Freedom, and Life
By
Fernando Urias
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SMASHWORDS EDITION
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PUBLISHED BY:
Fernando Urias on Smashwords
The Wealth of the People:
Your Wealth
An Inquiry into the Relationship between
Wealth, Freedom, and Life
Copyright © 2011 by Fernando Urias
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Dedication
This book is dedicated to the billions of people that live in poverty.
I hope that this inquiry may help in the improvement of any country that might
need it.

amplify, and supplement other texts. You are urged to read all the available
material and learn as much as possible about economics and human
organizations and tailor the information to your individual needs.
Every effort has been made to make this book as complete and as accurate
as possible. However, there may be mistakes, both typographical and in
content. Therefore, this text should be used only as a general guide and not as
the ultimate source on economic or social organizations. Furthermore, this
manual contains information on economics and social sciences that is current
only up to the publishing date.
The purpose of this book is to educate and entertain. The author and
publisher shall have neither liability nor responsibility to any person or entity
with respect to any loss or damage caused, or alleged to have been caused,
directly or indirectly, by the information contained in this book.
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The Wealth of the People:
Your Wealth
An Inquiry into the Relationship between
Wealth, Freedom, and Life
* * * * *
Summary
The wealth of a nation is its people. If this is true, why are there so many
nations that have so many people that are not wealthy? What is missing?
Ask a citizen of wealthy country to explain why this is so and he might
have some notion that he will express with insecurity. Ask a citizen of a poor
country why his country is not wealthy and he will have plenty of blame to
throw around but chances are that he might not even have a notion. It is a
simple question with a complex answer. If it had an easy answer, everybody
would answer correctly. Why some nations are wealthy and some others are
not? The answer must have elements of economics, philosophy, political
science, history, business, psychology, religion, and other disciplines. This

have to find out how to satisfy your thirst and hunger. You would have to find
or build a shelter to sleep at night free of any wild animals or nasty insects.
Eventually you would have to make clothes to replace the ones you are
wearing.
The Definition of Wealth
Upon your arrival in the island you would be poor. To be wealthy is to have
plenty of resources to sustain your life. You have your mind and your body
which are very valuable but they would not be sufficient to make you feel
wealthy. You would want to have plenty of water, food, clothing, and a good
shelter.
Your Assets
To satisfy your needs, you would have to use your mind and your body.
Your mind and your body are your assets. You would have to use your mind to
think where to find water to drink and you would have to use your legs to walk
until you find it. You would have to think what vegetables to eat and walk to
collect them. You have to use your assets, which at this point are only your
mind and your body, to produce the products that you need.
The Natural Resources
To satisfy your needs you would also have to use the natural resources of
the island. You would have to find fresh water in a creek that you could drink
without getting sick. You would have to pick vegetables that you could eat. You
would have to find out how to hunt an animal. You will have to figure out how
to start a fire to cook the animal. You would have to use earth material, such
as mud, stones, and sticks, to build a shelter.
The Production Process
To meet each of your needs you have to go through a production process.
You have to engage your mind and your body in a process that will give you the
products you need. Even the simple task of drinking water from a creek is a
production process that converts the natural resource “water in the creek” into
the product “water in your mouth”.

this pint of water is your income. If you go to the creek four times a day and
you drink one pint of water each time, your income would be four pints of
water at the cost of two hours of work. If you spend one hour collecting one
pound of vegetables, this pound of vegetables would be part of your income. If
you hunt a wild turkey in two hours, the turkey is your income for the hunting
work of two hours. The sum of all these products is your income for the day. In
a day like this, you might earn four pints of water, one pound of vegetables,
and one turkey at the cost of five hours of labor.
The Labor Principle of Wealth Production
To produce wealth you have to apply your mind, your body, and your time
into actions that will result in the products that you need. Wealth is the
result of working in a productive activity. Your income is the amount of
wealth produced by your work during the time that you work.
The Production of Wealth
The title of this paragraph: "The Production of Wealth" is meant to bring to
mind the work that needs to be done to produce wealth. It is suited better to
understand the essence of wealth than the more common title: "The Creation
of Wealth". The word "creation" gives the idea that wealth is created out of
nothing. Wealth has to be produced and its production requires the use of
human labor. If you think of an apple as wealth, you can think of an apple
hanging from a tree in the middle of a forest, like the forests that exist in fairy
tales, and say that this apple was created. The reality is that an apple
available in a supermarket is not created but produced. It has to be harvested,
packed, refrigerated, transported and it comes from an orchard where apple
trees are planted, fertilized, irrigated, pruned, and tended for several years by
people that get paid to do so. An apple in a supermarket is wealth that has to
be produced.
Your Time Budget
To produce the products that you need, you have a finite amount of
time. The day has twenty four hours and in this time, you have to sleep, eat,

there is no money but your time is literally your money. If you want to buy a
product, you have to buy it from nature using your time and your work. The
famous phrase could be restated more correctly as “time and work is money”.
In the process of working, you are exchanging your time and your work for the
products that you need.
Increasing Your Income
Since you would not have any tools, you would spend the whole day to
produce a very small amount of the products. The amount of products that you
can produce with your bare hands is very limited. Your income would be low.
You would be poor. You would want to consume more but to consume more you
have to produce more. How can you do it? How can you increase your income?
Working for the Longest Time
One of the ways to increase your income is to work as many hours as you
can. The quantity of products that you will produce will be in proportion to the
hours worked. If you work ten hours instead of eight, you income should be
twenty five percent greater because ten hours are twenty five percent greater
than eight hours. You can maximize your income by maximizing the hours
worked.
Working Fast
Another way to increase your income is by working fast. If you work
slowly, you will produce very few products. To increase your income working
fast, you have to work as fast as possible without causing damage to yourself or
to the material that you are working with. There is no use of spending three
hours collecting vegetables at a very fast pace if you hurt your back and you
have to stop for a week to heal or if the vegetables that you pick spoil easily
because they were damaged during the picking process. To maximize your
production output across many days, you have to work with quality, as fast as
possible, and at a pace that you can sustain for long periods of time. A good
approach is to work with high quality and carefully initially to do a product
well and increase the speed once you know how to do it right.

that will be more productive. When you decide to build the pouch, you will
have decided to invest your time in building a tool that is needed for the new
process. When you are making the pouch, you are investing your time in making
a tool that will make your process more productive.
To make a wise investment decision, you need to know how long it will
take to build it, how long it will last, and how much time it will save. If the
water pouch takes thirty hours to build and lasts for only ten days, then the
daily cost would be three hours. This is a greater cost than the one and one
half hours that it would save. At this cost and durability, the pouch is not a
good investment. Drinking water using the pouch would be more expensive
than walking to the creek four times per day. But if the water pouch was easier
to make and it would last longer, then it might be a good investment. If
building the pouch would take ten hours and it would last for twenty days, the
daily cost would be thirty minutes per day. This is less than the one hour and a
half that it could save. The total daily cost of drinking water would be less than
with the current process. The total cost would be one hour consisting of thirty
minutes for one daily trip to the creek and thirty minutes for the daily
replacement cost of the pouch. The net savings would be one hour since the
original cost was two hours. These are pretty good savings just for the
construction of a simple water pouch. You would be adding one hour to each
day of the rest of your life.
Your Investment Budget
Once you know that the pouch is a good investment, you would have to
decide how much time to allocate daily to the manufacturing of the pouch. You
could spend ten hours in a single day building it but you would go hungry and
thirsty. An alternative would be to allocate a smaller portion of your time
budget. The time that you would allocate is your investment budget. If you
invest half an hour every day, you can have the water pouch in twenty days. If
you invest one hour every day, you can have it in ten days. This investment
time would have to come from restricting your production and consumption of

of money, a stock of goods, and later it was used more broadly. It also has
been used to mean a stock of tools for production. The buildings, tractors,
machines, and other tools are all part of the physical capital of a business
enterprise. The pouch would be your first tool in a long list of physical assets
that can increase your income. Under this definition, all the tools that you
build to improve your production processes will be part of your physical
capital.
To increase your income, you have to develop and build many tools. You
would not be able to farm a small piece of land with your bare hands but you
could do it with a pick axe and a shovel. With a diesel tractor, you could farm
several acres.
The Increase in Your Mind Assets
By building the first pouch, you would learn how to do one. Learning
increases the capability of your mind. You would be increasing your mind
assets. An increase in knowledge that can help you in the production of wealth
is an increase in the power of your mind.
There are mind assets that their use in the production process is not
obviously apparent, for example, the knowledge of where things are. Locating
the creek the first time might have taken several hours but once you know
where it is, you do not have to spend time repeating the search. The value of
the knowledge of the location of the creek is worth several hours to you. Your
ability to think, talk, and read are all part of your mind assets.
Your Human Capital
The idea of making a pouch, the knowledge of its manufacture, the
willingness to invest the necessary time, and the method of using it are all
necessary elements of the water pouch production process. These attributes of
the mind are means of production. For this reason, they are called human
capital.
All the tools that are part of your physical capital have elements of
human capital in them. A new process starts with an idea, it needs a tool that

hour gained.
The Maintenance of the Human Capital
Physical assets decay with use and time. It is less obvious that is also
necessary to maintain your mind assets. The knowledge of the location of the
creek will be there as long as you can remember it, so it would seem that it
does not require maintenance. But the knowledge of a process can be forgotten
if not practiced and therefore it does require a maintenance that occurs while
practicing the process.
Another requirement for the maintenance of the mind assets is to give
the body the proper nutrition and not to poison it with drugs or alcohol. If you
do not follow this required maintenance for your mind, you will lose the ability
to remember, to think better methods of production, and its ability to produce
wealth.
In society, knowledge becomes obsolete when better processes are
devised by other people. Maintenance of the mind assets is understood as the
knowledge necessary to compete in the market. This is not true maintenance
but keeping up with competition. It is an upgrade of the knowledge necessary
to stay in business.

The Investment Maintenance Principle of Wealth Production
To maintain your level of wealth production capability, you have to
continue to invest in the maintenance of the tools and the knowledge of the
current production process. The maintenance of this investment preserves the
level of income achieved with the investment. If this is not done, the income
will drop to the levels before the original investment.
Your Capital Structure
Once you have several processes that require a constant investment for
their maintenance, you will have a way of producing that consists of several
tools and methods. These tools and methods are your capital structure. The
tools that you have, the processes that you know, and the investments that you

not invest the minimum half an hour to replace the water pouch you would be
disinvesting and in twenty days, when the water pouch breaks down, your
income would fall to the level before the existence of the pouch.
In society where money is available, you may think that an accumulation
of wealth is an accumulation of money. Most people would not think that
accumulating tools is the way that wealth should be accumulated. If you think
of a shovel that you need in the island, you would only need two. When one
breaks down, you would work on its replacement. You would not invest your
time accumulating many shovels. But to be wealthy in the island you need to
accumulate your wealth in many tools that are all different and each tool
makes your work easier and increases your income in a different way. This is
one of the keys to achieve wealth in the island and in society. Wealthy nations
have a large capital structure that is the accumulation of many physical tools
supported by their associated human capital of the people that know how to
use them and makes it possible to sustain their high income.
A capital structure can deteriorate rapidly if it is not maintained. A
reduction in the capital structure for lack of maintenance means that you
would drop to lower levels of income. If you do not maintain your capital
structure, the time to produce products will increase.
With the understanding of that physical and human capital are part of
your capital structure, the investment principle of wealth production can be
restated as follows:
The Capital Structure Principle of Wealth Production
To increase your wealth and your income, you have to invest in the
physical and mental assets of your capital structure in a quantity that would
be in excess of its maintenance requirements so that you have net increases in
its size and function.
The Wealth of Your Capital Structure
With tools, you can produce a higher quantity of products in the same
working time. This means that tools increase your income. Tools are wealth-

than before. You are more capable. You are freer because you are more
powerful. For example, with a shovel, you can dig more holes for cultivation
that with a stick. Third, since you are more productive with the use of the tool,
you have more time available in your hands. You are freer because you can
engage in other activities that you could not do before. Tools will free your
time to do other things.
The Life Given by Your Capital Structure
A tool increases the time that you have available. It frees time that you
can use to do something else. The length of your life is determined by many
factors, such as your health, but the ability to do more things in less time is
equivalent to increasing your life. With the extra time, you can experience
more things in the same life. Crossing the Atlantic Ocean a couple of hundred
years ago would take several months. Today it can be done in a few hours.
If you had to work fourteen hours a day to survive and by investing in
several tools you find a method to get the same product in seven hours, this is
the equivalent doubling the rest of your life. An increase in the availability of
your time is equivalent to an increase in your life.
Robinson Crusoe's Capital Structure
Instead of imagining the possibilities that you would have to increase
your capital structure in the island, it will be easier to review Robinson Crusoe's
capital structure. Daniel Defoe starts the narration by stating that Robinson
Crusoe was born in 1632 and hence, the story has many examples of the
advantages that a seventeenth century person has over the cannibals that
inhabit the area. Robinson has a more advanced human capital structure in his
mind that would be of some use in the island and its usefulness is augmented
with the physical capital that he will later find in the remains of the shipwreck.
Robinson has the bad luck of going through a shipwreck but then he has
the good luck of surviving it. He also has the good luck that he has more than
his clothes. He was carrying a knife with him and later he finds substantial
remains from the shipwreck. How long would it take you in the island to make

capital good. The shelter is where he lives and sleeps but it does not increase
his income other than the enjoyment and benefit of having a shelter. Robinson
has to spend considerable time in building his shelter even when uses cables
and wood that he found in the ship. For your shelter, you would not be able to
cut trees without an axe and you might have to find an alternative way to build
a shelter using bundles of palm leaves. You might have to use tied up bundles
of palm leaves to form the walls and the roof of a shelter as some of the huts
that are still being used in Africa and South America.
After having his immediate needs cared for, Robinson biggest worry is
not to lose his possessions, particularly the powder. He goes to great length to
split the powder so he will not lose it all in case of rain or lightning.
The first use of his powder was to kill a fowl that he found unfit to eat.
Soon afterwards, he spots goats in a hill. Later he shoots some other birds, like
ducks, that he is able to eat. He also finds a turtles and turtle eggs.
When he goes hunting for goats, he shows two examples of his human
capital. The first one is the knowledge associated with the use of the musket.
He knows what a musket is, how to load it, and how to aim with it. The second
type of human capital that he shows is the one associated with the hunting
process. He finds out that he is not able to hunt goats from the bottom of the
hills but he learns to hunt from the top of the hill and looking down at them.
The goats have very good vision looking downhill and they run away before he
could be at a shooting distance.
When he wants to expand his house, he wished he had a pickaxe, a
shovel, and a wheelbarrow. He is able to use an iron crow from the ship as a
pickaxe but has to go through several hours of investment to produce a shovel
made out of hard wood. He is never able ever to make a wheelbarrow so he has
to carry earth by dragging it in a flat panel.
Another interesting combination of human capital and a physical object
that he experiences by chance and he initially thinks that it was a miracle is
the finding of barley plants growing next to his house. He later remembers that

He was never able to develop wax candles. Eventually he is able to make
a candle that is not very good with fat from animals. This allows him the
flexibility to use some of the hours at night.
He suffers from the lack of human capital when he gets sick and has no
medicine. Medicine is a great deal of knowledge that is part of human capital
and is associated with knowing how to administer medicine. Medicine
production involves complex processes and sophisticated physical tools.
One of the improvements that he builds at a very high cost is a table and
a chair. A table is a capital good that can be used for consumption, like eating
meals, or it can also be used as a capital tool if it used for work.
After several years in the island, he becomes much wealthier and freer
because he is able to domesticate goats, grow corn, and build more tools that
help him to live better. His wealth and freedom increase substantially because
he works hard in the production processes and the investments required to
improve them. He takes advantage of his advanced western knowledge,
maintains the tools that he found in the remains of the shipwreck, and invests
significant time in new physical tools that improve his life.
Your Wealth
To increase your wealth and your income producing capability there are
two principles to follow: The Work Principle of Wealth Production and the
Capital Structure Principle of Wealth Production. The Work Principle of Wealth
Production states that you have you work to produce wealth. Wealth is the
availability of products to meet your needs and these products have to be
produced by working. The Capital Structure Principle of Wealth Production
states that you have to think about the production processes, discover better
methods, and make the tools necessary to support these methods. These
investments in the production processes make you more productive, require
less of your time, and make you wealthier. The Capital Structure Principle
applies to the two aspects of your capital structure, the physical tools that you
need in the production process and the human capital required to design them,