Time is Money

September 14, 2004

Benjamin Franklin wrote this in a letter to a young man over 250 years ago.  It works both ways: money can buy you time, which is why we pay physicians and pharmaceutical companies after we have heart attacks.  We can trade one for the other.  But we can buy more money with time than we can buy time with money.  The system is asymmetrical.  There are people who are worth a billion dollars.  No one I know is going to live 300 years unless a major breakthrough in medicine takes place.  (If it does, Social Security’s “trust fund” will take another hit.)

A German man I know used to sell vacuum cleaners door to door.  In Germany, this is still common.  He sold the Vorwerk cleaner.  He even sold one to my wife, back when Americans could legally buy them.  It’s the best vacuum cleaner that my wife has ever seen.

The man who trained him in sales once asked a group of trainees if they would pay him the equivalent of $10 if he would show them how to earn 25% more money.  They all did.  Then he showed them how.  “Work 25% longer.”

Did he cheat them?  No.  The man who got that training never forgot this lesson.  For $10, that was cheap tuition.

Most people are not willing to work 25% longer.  That would mean a ten-hour work day.  Businesses are penalized for offering extra work to workers: overtime, a time-and-a-half wage penalty. They offer this only under special conditions.  The workers so benefited must be above average in their productivity. Otherwise, it would not pay businesses to pay them extra.

But 25% more pay is not the heart of the matter.  People who start businesses are more likely to get rich than anyone else.  I have never known a business owner who worked an eight-hour day. All of them work at least ten hours, and most work on Saturdays. Yet they make far more than 25% more or even 50% more.  If their business survives, they move into the top 20% of income earners.

It is not the fact that they work longer that makes the big difference.  It is that they decide to meet the demand of consumers in a unique way — a way worth the consumers’ money. To do this, they must work long hours, because the consumers are demanding.  The consumer says, “Work harder.  I’ll pay you a lot more if you do.”  So, the business owner does.

He also works smarter.  He makes more money.  So, he works longer.  The barrier to entry is three-fold: (1) his ability to work smarter; (2) his willingness to work longer; (3) his willingness to accept failure.  These are major barriers.

In effect, he invests his time in his business.  He sees that time is money, so he capitalizes his business with his time. When you’re starting out, that’s the asset you own.  You don’t have much money.

There is a young man in my church.  He is a radio announcer. He has already seen how the industry works.  “The guys driving the BMWs are the ones who sell air time.  The guys behind the microphones drive Honda Civics.”  He’s got it.  The man who can convert air time into money is not easily replaceable.  The man providing modulated air time is, unless he is Rush Limbaugh.

I told him to spend the next two years studying everything he can about how to sell air time.  He is in a good place to learn the basics of selling in a niche market.  He is getting paid to modulate air.  He must learn how to sell it.

He must therefore give up leisure.


In my report “Count Your Blessings,” one of them that I forgot was leisure.   A heads-up reader spotted that omission.

(If you spotted any others, send them to me at  gnorth@poetworld.net.)

Leisure was once the major blessing of slave-ownership. Aristotle spoke for the Athenian ruling class when he praised leisure as the basis of the good life.  The fact that Athenians were slave-owners made their leisure possible.  About a third of Athens’ population were slaves.  The good life, in Aristotle’s view, was civil.  It meant participation in politics and culture. He had contempt for manual labor and the work of artisans.  That was work fit only for slaves.

For most of man’s history, hard manual labor has been the norm.  Men have had to struggle with the earth to eke out a living.  Most of their children died before reaching adulthood. The words of Genesis have rung true:

And unto Adam he said, Because thou hast hearkened unto  the voice of thy wife, and hast eaten of the tree, of  which I commanded thee, saying, Thou shalt not eat of  it: cursed is the ground for thy sake; in sorrow shalt  thou eat of it all the days of thy life; Thorns also  and thistles shall it bring forth to thee; and thou  shalt eat the herb of the field; In the sweat of thy  face shalt thou eat bread, till thou return unto the  ground; for out of it wast thou taken: for dust thou  art, and unto dust shalt thou return (Gen. 3:17-19).

Capitalism changed all this.  Beginning in the mid-18th century, productivity began its steady upward rise: about 2.5% per annum.  That compounding process, over decades and then centuries, has multiplied our wealth by a factor of 500 or perhaps 1000, doubling ever 30 years.

Population grew, worldwide, as technology improved.  World population was still under a billion in 1800.  Today, it is over six billion.  It may hit nine billion by 2050.

The eight-hour day became a reality when Henry Ford figured out that he could run three shifts of eight hours each and keep his plants open 24 hours a day.  But the eight-hour day was no miracle.  Ford had been running a nine-hour day prior to the change in 1914.

After the mid-19th century, the shorter working day became a goal of American and British workers because it became possible. Output rose.  Income per hour worked rose as private capital provided the tools that made workers more productive.

When men can do it, most of them take their pay in extra leisure.  They agree to work for a fixed salary per time period: weekly, monthly, or whatever.  Then they negotiate a shorter work week.  They don’t ask for more money.  They ask for more time off.  Extra money is taxable.  Extra time off isn’t.


Thomas Edison’s light bulb turned night into day in the factory as well as the home.  Air conditioning has turned work places into perpetual spring.  The ancient rhythms of night and day and the seasons have been overcome in homes and work places. We can choose how much we want to work.

Most people decide that the battle with nature isn’t worth the extra effort.  The eight-hour work day is sufficient.  Then they want paid vacations.  They take their marginal income in leisure.

This is understandable.  Leisure is tax-free income.  We can spend our spare time doing what we want to do.  We can break the rhythm of work.  We don’t get paid, but we also don’t get taxed.

The fruits of our labor are paid in units of “free” time. Of course, time isn’t free.  It is the least free of all assets. It is non-renewable.  Once spent, it’s gone forever.  Yet it’s the form in which we want to take a great deal of our potential income from time.

Most of us overcome nature with tools, not with hard physical labor.  We overcome nature with capital and therefore thrift.  The division of labor has empowered us to buy time by reallocating it.

For most people in history, nature has provided little value above what was put into it.  The net productivity of autonomous nature is low.  Only through capital investment does nature produce sufficient output to provide lots of excess wealth, which is taken in the form of leisure.

It is the energy revolution, more than anything else, that has liberated mankind.  We employ energy rather than slaves to do our work.  We buy machines that run on energy to be our slaves.

Like the slave-owners of Athens, most people prefer leisure to more work.  They prefer consumption to investment, not just with their money but with their time.

But there are a handful of people who prefer work to leisure.  They would rather be creative than leisurely.  They are not lovers of leisure.  These people are the engines of creation in civilization.  They do what they enjoy doing, probably because they do it better than anyone else.  Work is more of a game than a burden.  They show off.  The goal is winning.  The form of reward is money, not gold medals.  If it were something else, these people would still compete for it.

If you are in this group, you are unique.  You have been given a tremendous advantage.  You will not make 25% more when you work 25% more.  You will make far more.  You will become the beneficiary of compound growth.  That extra 25% will not get away from you, as it would if you took extra income in the form of leisure.

Leisure disperses capital.  Work compounds it.  Therein lies the difference between wealth and poverty.


Because most people don’t like their work, they don’t like to work.  The pioneer likes his work.  He understand that the extra hours invested in his work are in fact invested in himself. He chooses his work in such a way that he is happy to invest the extra time in developing his skills and his business.

If you hate your work, you will find it difficult to work the extra hours needed to master the field.  This is why a young person would be wise to take less pay in a job that draws him deeper into it.  He will then be willing to invest that extra 25% or more that it takes to be successful in any field.

If you have above-average intelligence — that is, if “reality TV shows” bore you, with the possible exception of “The Apprentice” — an investment of 1,000 hours will make you competent in any field for which you have innate ability.  An investment of 5,000 hours will make you a master.

At two extra hours a day, 300 days a year, it will take you less than two years to become competent.  It will take less than a decade for you to become a master.  But you must not waver. Those extra two hours must not be skipped.  If you make no extra pay, no matter.  You’re paying tuition.

A bachelor’s degree takes most people five years to earn. If we think of a work week as 40 hours, that’s an investment of 50 x 40 x 5 = 10,000 hours.  Knock off 30% for vacations, where you get a low-paying part-time job: so, 7,000 hours.  When you graduate, you are not a master of anything except the ability to tolerate boredom.

My friend Peter Fortunato, the real estate investment guru, once told me that he regretted having earned a college degree. “I lost four years of compounding at the beginning of my career, when the long-term payoff is highest.”  But most people do not perform as productively as he does.  They are more bureaucratic, more leisure-driven, less consumer-driven.

If you can learn a unique form of consumer service, you will gain for yourself a niche market.  Your willingness to work extra hours, to master a field by investing time, to gain the painful experience of failure in a world of uncertainty, will pay off.

The cost of the move from competence (1,000 hours) to mastery (5,000 hours) is what blocks most people from becoming successful.  It shouldn’t.  The day-to-day experience of applying what you have learned is invaluable.

What most people do not recognize early enough is that they should find employment in a field in which the compounding process produces a sense of personal achievement that lures them back into an ever-greater investment of their time.  The compounding process is what produces success, but the front-end costs, especially psychological costs, keep out most people. They willingly serve as salary earners rather than creators.


Teachers are paid salaries.  The educational certification process screens out entrepreneurs.  Yes, there are super teachers who are masters.  But the inherently bureaucratic nature of formal education does not reward these people.  They may be great teachers, but they are not allowed to multiply themselves.  They are oddities.

John Taylor Gatto was such a teacher.  He won Teacher of the Year for New York City three times.  He won it once for the state.  Then, after decades of career success, he quit.  He realized that he had wasted his time.  The educational system is structured to grind down teachers and students alike.  He decided that students would do better in business situations or other non-bureaucratic productive environments.  He has a website devoted to alternative education:


Read his free, on-line book, “The Underground History of American Education.”

Teachers do what they are paid to do: baby-sit and give exams.  They multiply themselves.  But the system militates against the development of skills leading to consumer satisfaction.  The free market principle of consumer sovereignty gains little respect from employees who are paid by taxes and promoted in terms of formal criteria that have nothing to do with increased output.

Teachers push for smaller classes.  When I went to school, classes of 35 were common.  Today, classes of 25 are considered large.  Teachers are bureaucrats.  They are taking their pay in terms of less work, not more money.

The best high school teacher I ever had once made a proposal to the principal.  He volunteered to teach every class in senior problems (civics/family) if the school would pay for a part-time assistant to read exams.  He would have had to run classes of 60 students or more.  He was a master lecturer.  He could easily have done this, even with disciplinary problem students.  He asked that his salary be doubled.  The school turned him down. It would have saved the district money, but it would have established a precedent.  He could not have been replaced when he retired.  The principal wanted institutional continuity.  He could not personally pocket the money that the teacher would have saved the school.  Why change?

Time spent in school is money down the drain for creative students.  It is compounding time lost forever.  Schools teach to the best and the brightest a set of skills that are suitable for leisure-seeking wage-earners.  Schools do not teach business skills.  This is especially true of graduate schools of business, which are staffed by Ph.D-holding writers of unreadable term papers, which are called scholarly journal articles.

The educational system screens in terms of bureaucracy: taking exams.  This is why most of the investment in formal education is wasted on people who have business skills.

There is a man in my church who owns and operates motels. Back in the 1980s, he was in college, earning a degree in physical education.  He was also making $60,000 a year in the motel business.  His coach told him to quit school.  “You’re making more money than I am.  Why do you want to teach junior high school boys, whose parents will be on your back to give their kid more playing time?”  He wisely dropped out of college.

He has little leisure.  But the person who wants to be paid in leisure is either a reality TV viewer — a slug on a couch — or he has a hobby.  I would recommend that he convert his hobby into a part-time business.  The goal is to replace his job with his hobby, only get paid for it.  He has information that others don’t possess.  They will pay for this information.


Why don’t more people do this?  Because they don’t like marketing.  They are amused or delighted by their hobby, but they are unskilled in sharing this delight.  These people should work on telling their story.  Most people like to talk about their favorite subject.  Once they begin, you can’t politely get them to stop talking about it.  The art of salesmanship is the ability to convert a good story into a stream of income.

“Toastmasters” is an organization that teaches people how to tell their stories.  I recommend joining if you want to learn public speaking.  Or teach Sunday school to teenagers.  That will show you what it takes to keep people alert.  You can learn how to tell a good story.

If you have no story to tell, that’s your biggest problem. You don’t like your job.  You are in a career that does not lure you into greater service to consumers.  You are trapped by a career that does not tempt you to invest an extra 1,000 hours over the next two years.


Time is money.  You can’t slow down this outflow of capital. But you can get it to work for you if you can learn how to convert it into money or the things money can buy.

The Daily Reckoning