ANCIENT HISTORY AND MODERN CAPITALISM

IT’S wise to take a step back from our present challenges to gain a fresh perspective on the opportunities right here at our doorstep. Donald Trump’s antagonistic trade tariff impositions against China, Canada, Mexico and the European Union (EU) are causing justifiable jitters about slowing global growth.

Furthermore, you don’t want to get me started on the televised cruelty at the US-Mexico border where young kids were separated from their parents and incarcerated in large cages because those families were trying to enter the US illegally for a better life. Trump only backed down from that human rights outrage against innocent children because of widespread US voter push-back that threatened to hurt Republicans in the upcoming mid-term elections.

These aren’t the best examples of mighty America showcasing global compassion and soft leadership. Nonetheless, if we stop a moment to look at the world around us, we have to admit our lives are pretty great because of incremental human progress. To appreciate why I say that, try to view our present slice of time through a wide historical lens. Come with me now and cast your mind’s eye back 30,000 years...

It was a time when strength, speed and superior cooperation ruled. Dominant Homo sapiens were expert collective hunters who brought home protein-rich game to feed their tribes.

The hunters’ dominance continued for 19 millennia until the Agricultural Revolution, which started in one tiny region.

According to historian Dr Yuval Noah Harari in his book Sapiens:

“The transition to agriculture began around 9500-8500 BC in the hill country of south-eastern Turkey, western Iran and the Levant.”

And so agriculture started. Yet its progress was slow. Scholars today believe intentional agriculture and dairy domestication developed independently in fits and starts at roughly one or two millennia intervals in far flung sites: First, as mentioned, in the Middle East’s Fertile Crescent around 9000 BC and later in China, then in New Guinea, followed by Central America, South America, Africa, and finally, around 2000 BC, in North America.

Yuval writes, “From these initial focal points, agriculture spread far and wide. By the first century AD the vast majority of people throughout most of the world were agriculturists.”

With agriculture’s rise, the adulation that accrued to muscular hunters waned. Economic dominance flowed into the soft hands of feudal and royal elites who owned the land upon which crops grew and flocks multiplied under the sharp eyes and calloused fingers of peasants and slaves.

While that was a big step up the ladder of social evolution, which importantly gave birth to city living, unfortunately it lacked a legal framework that permitted and protected the ownership rights of regular people.

Only much later, in 1602, was the Dutch East India Company formed to reap astronomical colonial profits from trade with India and Southeast Asia. It became the first company in the world to be listed on a formal bourse, the Amsterdam Stock Exchange.

The democratisation of wealth began with that listing. Regular folk could ‘vote’ through wise capital allocation to legally purchase access to a portion of the economic gains of the human race. So, whether or not you’ve ever bought shares in a listed company, you must understand that development was, as Trump might say, a huge deal!

Companies then and now are set up to encapsulate risky businesses that may or may not turn a profit. When they do succeed, their shareholders can benefit from capital gains marked by rising share prices and dividends paid out from corporate profits.

Today, with public companies like Maybank, Singapore Telecom, Berkshire Hathaway and Apple respectively listed on Bursa Malaysia, the Singapore Stock Exchange, the New York Stock Exchange and NASDAQ, regular people can buy (and symmetrically sell) slivers of ownership of those companies and of tens of thousands of other listed ones worldwide.

Those equity slivers are what we call shares today, which if you think about it makes sense because possessing even a single share of a company grants you a legal slice of ownership in it.

Now let’s fast-forward not just to our present but also beyond to your future...

Within the context of your eventual retirement, you might consider funding a part of it through stock dividends. In Bruce Miller’s book, Retirement Investing for INCOME ONLY, he defines income investing, which means actively investing today for passive income tomorrow, this way:

“A method of selecting, purchasing and holding securities that pay reliable dividends, year after year, that cumulatively will provide the income the retirement household must have, throughout retirement.”

I love the last two words of Miller’s definition, ‘throughout retirement’, because that’s what we all need. Therefore, as part of your own evolutionary ascent in personal finance, I recommend you take the long view of human history, ignore short-term glitches caused by imperfect leaders, and proactively invest in solid companies that pay steady dividends and in dividend funds that specialise in harvesting the regular yield from a dynamically managed crop of high dividend payers.

© 2018 Rajen Devadason

Read his free articles at www.FreeCool Articles.com; he may be connected with on LinkedIn at www.linkedin.com/in/ rajendevadason, rajen@RajenDevadason. com and Twitter @RajenDevadason