[commentary] Thoughts on Old Money

July 2016

I think our generation only understands the service industry. Accounting. Software. Banking. Real estate services. Architecture. Law. Medicine. It’s such a narrow view of the world. They forget that agriculture and manufacturing were once the building blocks of our economy. They still remain so. Globalization has allowed America to find prosperity in the service and high tech sector, while importing agriculture and manufacturing. These things are just not as visible as before.

 The newly educated sons and daughters of Immigrants are of course scrambling to find jobs and start companies in the service industry. It’s very understandable. It’s just about impossible to start a business in the agriculture and manufacturing industry. The cost of land and basic equipment is simply too high. The industry is so developed that margins are razor thin. The business only makes sense if you already possess the land/and or equipment. There is no competitive advantage that an be seized. Either you have the machines and land or you don’t. 

But the service industry is still new and the start up costs relatively low in comparison. This is where newcomers must invest their energies. But while low barrier to entry is advantageous to the new comer, it also makes the business that much more insecure and competitive. 

Old money resides in agriculture and manufacturing. The guys that raise cows and produce card boxes are some of the wealthiest men in our country. What’s interesting is that their company is set and stable. They simply keep the machines running and their revenue stream keeps flowing.

Old Money. We all know Great Gatsby, but I think really understanding the character of Old Money’s businesses requires one to enter one of these factories and actually witness these steel contraptions in motion.