James Barry

Compounding interest is life’s most valuable phenomenon.

It’s often discussed alongside money, where it is a simple mathematical equation. For example, let’s say you had $100 and earned a return of 20% per year for 5 years.

Here is what it would look like:

• Year 1: $120 | Income: $20
• Year 2: $144 | Income: $24
• Year 3: $173 | Income: $29
• Year 4: $207 | Income: $34
• Year 5: $249 | Income: $42

Overtime, your income will keep on growing because it compounds.

Returns are not always positive though.

Sometimes they are negative, and history is littered with peopled who have lost everything you have chasing high returns.

Compounding interest isn’t just a financial term though. It exists everywhere.

Our Collective Knowledge

Today, humanity’s collective knowledge is vast. It wasn’t always that way though.

Before we were able to write, every piece of information was passed via word of mouth.

The amount we could retain was limited to the collective memory of a group of individuals.

Then, 5,500 years ago in Mesopotamia, the first written language was invented.

From that point on, knowledge began to build upon itself.

Sometimes it grew in massive spurts during periods such as the Renaissance Era.

Other times, it shrank in times of upheaval, like the public burning of books in 1993 Nazi Germany.

On average though, knowledge was constantly built to the point that every piece of public information now fits in your pocket.

We all benefit from 5 centuries of compounded knowledge.

Which all started with someone recording a small, tiny piece of knowledge.

Why Should This Matter To You?

Apart from the fact that compounding is responsible for the device you are reading this on, it is also the most powerful power you can harness.

We all start somewhere.

Some of us have won the lottery and are born into privilege and wealth. I was.

Others are born into poverty, under an oppressive governments, or with extreme disabilities.

Regardless, each one of us has ~73 years (the average life expectancy) to compound our own skills and knowledge.

If you are reading this, then you’re likely on a computer connected to the internet. 4/10 people in this world don’t have access to the internet.

It does necessarily matter where you started though in life. Many people have gone from rags to riches, just like many have gone from riches to rags.

What matters is that every single day you have a choice to add a positive number to what compounds, or a negative number.

You don’t even need to focus on improving 1% better each day. All that matters is that you stay positive.

What a drag it is getting old. – The Rolling Stones

On Nov 15th, 1963, Valium was approved by the FDA.

It was initially marketed to “reduce psychic tension” and it went on to become one of the world’s most widely prescribed drugs. Also, the first drug to reach $1 billion in sales.

It was so pervasive, it made its way into pop culture through song like Mother’s Little Helper.

“Even though she’s not really ill, there’s a little yellow pill. She goes running for the shelter of her mother’s little helper.”

– The Rolling Stones

Mother’s little helper (aka Valium) was a blockbuster success in part due to the new world of pharmaceutical advertising. The pharmaceutical companies took out ads targeted at doctors, who then prescribed the drug to their patients.

After a few years of Valium’s explosive growth, it slowly became clear to the public that the drug was not as described. For one, it had negative side effects (which the ads stated it did not), including a range of withdrawal symptoms.

This resulted in a high chance of abuse and addiction, which the companies blamed on the users and their “addictive personalities”. Valium was not even an illicit drug, it was one prescribed by medical professionals, which made it all that much more alluring.

When investigations were launched against the drug, the defense always came down to one core rebuttal “Doctor are smart enough to not be fooled by advertisements”.

This argument used the widespread public assumption that medical professionals, specifically those who graduated from medical school, had superior judgement to the rest of the population because of their education. They could not be fooled, as the rest of us could, by deceptive and misleading advertising.

Now though, the negative societal effects of these blockbuster drugs like Valium and OxyCotin are abundantly clear: addiction and sometimes, death.

Clearly, the doctors were not smart enough to know the fallout that prescribing these small yellow pills would have.

In reality, few people could have known, because it was something that nobody had seen before. Mass addiction to a pharmaceutical drug was a new concept, especially one that was was created for, sold to, and supported by doctors.

While there are many lessons to take away from Valium, OxyCotin, and their other counterparts, the biggest one is to be careful of blindly trusting other. Regardless of their background, education, or anything else that gives them authority.

Everybody is fallible. Everybody makes mistakes.

And nobody cares as much about yourself as you do.

In the 1700s, the Porous Empire was expanding.

But not through the traditional means… of war and of blood.

They were expanding via surplus. Buying out their neighbors land from underneath them and ushering in a new age of technological innovation.

Most neighboring states quickly complied. Why wouldn’t they?

They would make outrageous demands – which were always met.

Until one day they came upon a state which demanded nothing.

The Governor, Lopt, told them “We shall not sell our land to you, there is nothing more valuable than that”.

Lopt held his ground for weeks. He was offered jewels, power, government positions, but he turned them all down.

That was… until the Boy King of Porous arrived.

He told Lopt that he would fulfill any request, as long as they received their land in return.

The alternative would be the complete annihilation of Lopt and his people.

So Lopt complied and asked for one thing – “One kernel of corn” this year. 2 kernels of corn the next year. 4 the following, and so on and so forth.

The young king laughed and shouted “Fine! Your request is granted. Have your petty kernels”.

The next day, a servant showed up with one kernel in his hand.

He kept coming by every year until the 6th year – When he brought the corn in a small coin bag.

Dropping it at on the ground he laughed “This is what you exchanged for your land for?” and promptly left.

On the 12th year, the servant came with a larger bag weighing in at just over 1lb.

On the 18th year, a new servant came, this one two 40lb bags of corn over his back.

The year after, two servants came. 160lbs of corn total.

As the years progressed, the corn started coming by the truckload.

On the 25th year, 5 tons of corn arrived.

By this time, Lopt had grown old and had watched the wealth of Porous Empire slowly deteriorate over the years.

Their mines overmined.

Their oceans overfished.

Their fields over-tilled.

On the 29th year, the corn came by train. One rail car.

By the 35th year, there were 60 rail cars filled with 5350 tons of corn.

The corn didn’t pile up though. Lopt began selling it back to the nation, enriching himself and his people.

On the 39th year, 85,000 tons of corn were delivered in 950 separate rail cars. 6 separate trains were required.

Then, on the 40th year, only one train car arrived.

Out of it stepped an old and wizened king King of Porous, now in his early 50s.

He told Lopt that he couldn’t send the corn this year. There just was not enough.

In exchange for breaking his promise, he returned the land and left defeated.

Lopt knew one thing the boy king didn’t: The power of time.

With enough time, something as small as a kernel of corn can grow large enough to defeat an empire.