Libertarianism/Free Market

I’ve never written ANYTHING about politics, and I don’t intend to start doing so. But since I’ve been traveling around the world, I’m inevitably brought to some interesting reflections about what it’s like to be an entrepreneur in this modern world, and which countries are the best places to do that.

I’ve spent a lot of time in Canada (where I’m from), and also in the United States. I’ve also traveled and studied to Europe and have been there over 10 times.

It seems to me that a lot of people in Europe are very skeptical about everything American, while Americans themselves tend to imagine that life is so much better in Europe and that they should be more like Europeans.

There’s also a lot of Europeans who have never been to North America and tend to have a very negative image of the United States, that is in my opinion quite incorrect.

There’s no doubt that the social climates in Europe and North America are completely different. The main source of that difference is that America was founded by Europeans we were fed up with the system, fed up with high taxes in their countries, fed up with the lack of opportunities, and decided to seek a better life somewhere else and brought their entrepreneurial spirit with them.

Europe is much older, with many more established traditions and therefore each country is much more homogenized and has its own distinct character.

It’s quite obvious that Europe (especially Northern Europe) is a much more organized, conformist society.

The social pressure to be like everybody else is much stronger, and generally most people don’t tend to try a different approach and would prefer stick with their expected role in society.

Overall, the governments of European countries and the general social climate in Europe doesn’t really encourage individuals to become entrepreneurs, to go their own way, to take risks and reap giant rewards if they succeed, or fail miserably if they don’t (and that being an “okay” thing).

There’s the absurdly high taxation that comes into play (in Denmark, there’s a Value-Added Tax of 25% on everything, including groceries, and that’s on top of a very high income tax!), but again it’s the general social climate that makes people less inclined to start their own businesses.

On the other hand, it’s true that it can “feel good” to live in Europe, because you can easily find your place in society and follow the established route that has been drawn for you.

The “American Spirit” (which I will apply to the entire North American continent), is much more one of risk-taking, entrepreneurship and innovation. Individualism and personal success is much more encouraged (or tolerated), and people view failure as more of a “personal learning experience” than a devastating event.

On the other hand, it’s also true that North Americans tend to feel more isolated, more lost and looking for answers.

When I say “American Spirit”, I really mean the spirit that the founders of America and the immigrants that came to the country, rather than the mediocrity mentality that some Americans now share. I’m talking about the driving force of the country, even though it’s being squashed and destroyed by the day.

If you want to get in touch with this “American Spirit” go to Los Angeles, where every other person you meet hopes to make it in Hollywood. They might not all succeed, but the “dream” is alive.

Go to San Francisco, where every other kid is starting a new social media site and hopes to become the next Facebook or Twitter.

You could even go to Toronto, and witness the entrepreneurial spirit of the many immigrants the city welcomes every year.

Even some countries in Europe have this entrepreneurial spirit, but overall you’ll find that most places in Europe don’t have a climate that is as friendly for entrepreneurs as North America.

If you want to succeed making a living doing what you love, you have to connect with this “American Spirit”.

Like I said, the American Spirit has nothing to do with American foreign policies, or even American culture and fast food, but rather the spirit of entrepreneurship that went into the fantastic creation of this country.

I’m not even American myself, but I’ve connected with this spirit and it’s what drives me every day.

When you want to make a living doing what you love, you don’t count on handouts from the state. You’re willing to take risks, and you’re willing to fail. And if you succeed fabulously, you should be able to enjoy the fruits of your efforts.

Beware! If you succeed, others are going to be mad at you. They’re going to call you a liar and a cheater, they’re going to be angry at your “sneaky” marketing techniques, and will even ask you to give away your best stuff for free, instead of selling it.

They will never be able to see all the hard work that went into your work. They will never be willing to take the risks that you took. Naturally, they will never be able to enjoy the life that you enjoy, and will resent you for it.

If you want to succeed making a living doing what you love, it’s imperative that you connect with this entrepreneurial spirit.

To do so, you have to spend time with other entrepreneurs, and visit places where you can feel that the “entrepreneurial energy” is just bubbling.

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So should America be more like Europe?

I love the best aspects of Europe, the culture, the people… but let’s not squash the Entrepreneurial spirit. There’s very little of it left in the world, and it would be a tragedy if it disappeared from America.

Economist Milton Friedman is said to have first coined the now popular saying “There’s no such thing as a free lunch”.

Of course, what Friedman meant by that is although some things may appear to be free such as “free” health-care, “free” roads and “free” public library — someone, somewhere — always ends up paying the bill.

We now live in a generation that more than ever seems to have totally embraced the word “free”.

A lot of kids nowadays think the only way to get their favorite music is to download it for “free” on the Internet and then sync it back to their iPod.

They might even laugh at those old people still buying old-fashioned CDs and supporting their favorite artists that way.

As for movies, a lot of people think they are so easily downloadable for “free” on the Internet that there is no reason to ever rent a DVD again. At the same time, we all complain that there are fewer good movies being released, and don’t seem to make the connection between the two.

As for the Internet, everybody thinks that everything should be “free” on the Internet, right?

And how dare some companies charge for a service that was once “free”, such as the Last.fm Internet Radio or online newspapers?

More and more, the masses have this sense of entitlement. They want free healthcare, free public transportation, free Internet, free music, free entertainment — and they get angry whenever the “evil” corporations dare to fight back and charge for their work.

In other words, they have forgotten Milton Friedman’s famous saying and believe they can get a free lunch, every single day, all the time.

Unfortunately, there is still no such thing as a free lunch.

Unless artists can earn some money, they will stop making great music.

Unless movie companies can get paid and hire great actors, they will stop making great movies.

And unless newspapers can pay their reporters and staff, they will stop writing great stories.

Companies Are Fighting Back

One of the biggest failures in old industries trying to adapt to the Internet world is the publishing industry.

We all know that newspapers are not like blogs. A blogger can write whatever comes to his mind and call that “journalism”. But true journalism involves a lot more than just writing random posts, and is also much more expensive to produce.

Think of the in-depth articles by Time magazine, or all the research involved to put out a daily newspaper.

When the Internet became popular, most newspapers started publishing their newspapers for free online, in the hope that people would upgrade to their paid services with more features.

But in practice, nobody did that. Why would you pay for essentially the same service you can get for free?

At the time, there were no Kindles or iPads or other device to read newspapers on the go (unless you wanted to carry your laptop everywhere and try to read it that way), so these companies didn’t really have any other option.

They tried to make some money with online advertising, and because a lot of people still read traditional newspapers, they hope to keep their readers faithful by publishing their news for free on the Internet as well.

Now that we have devices able to read newspapers and magazines on the go, publishing companies are still having a hard time to convince people to buy them that way.

When I got my iPad a few weeks ago, and one of the first things I did was to download a copy of Time magazine in an “iPad-optimized” version.

Time obviously invested a lot of money and efforts in turning their magazine into a beautiful, portable, digital version. They didn’t just take the magazine and turn it into a PDF that looks exactly the same.

They built a completely new, intuitive interface and navigation that takes advantage of the touch-screen of the iPad and makes it completely natural and fun to read a magazine on the device.

And for this, they charged $4.99 for one issue of the magazine.

I thought it was a fair deal because I know they have to get their investment back, and also because they cannot hope to earn the same amount in advertising on the digital version as they do with the printed version.

Yet, a lot of people were complaining about this price.
Why would I pay $4.99 for a digital magazine when I can subscribe for one year for just $19.95?

In reality, $4.99 is about the same price you’d pay for at the newsstand, but you have the advantage of portable, interactive interface and instant gratification. Complete with streaming photos and even videos.

But people don’t see it that way.

What companies are now finding is that they are having a hard time convincing people to pay for a service that was once free or really cheap.

Move the Free Line?

Eben Pagan is a very well-known Internet Marketer who is well-known for his concept of “moving the free line”.

What he meant by that is: give your best stuff away for free.

Eben thought that if you impress your audience with great free content, they will more likely want to upgrade to your paid content to get more of what you give away.

Although the concept works to some extent in practice, it can also fail miserably.

I have subscribed to Eben Pagan’s various mailing list and did not personally find that he “moves the free line” that much. Most of his ezines are pure promotions for his products and outside of his big product launches, you won’t find a lot of “free” stuff on his website.

A lot of marketers might be telling you to move the free line but often they don’t even do it themselves, because it just doesn’t work as well as advertised.

One of the worst thing you can do is build your own website by giving your content for free ALL the time, and then try to sell products to your readers after.

Often, they will resent you for it. You will get a lot of hate mail and it will be very difficult to turn that list around.

For example, a friend of mine has a great podcast on raw food he’s been running for a few years.

It’s a true high-quality podcast, and his website is top-notch. He gets thousands upon thousands of downloads per show, and has a decent amount of visitors to his website and signing up for his list.

Yet, in spite of all of this, he’s having a hard-time monetizing that list and he’s not able to give up his day-job yet.

When he tried to introduce a premium “paid” version of his podcasts, his sales were really low.

He found out the hard way that people are not willing to pay for something they were used to getting for free, even if it has more features and perks.

What Should You Give Away For Free?

The question for anyone starting a online business is: what should you give away for free?

On the one hand, you don’t want to just send promotions and come across as a greedy marketer.

On the other hand, you don’t want to attract an audience of freebie seekers that will only consume your free content and resent you for trying to sell anything and earn a living.

I do think it’s beneficial to give away some great content in the form of articles and great videos, but overall these pieces of content are more about building a relationship with your readers rather than actually giving away your best secrets.

You want your readers to feel a personal connection to you and also through your blog posts and video know what you’re about.

But when it comes to delivering your most complete and revolutionary content, the place to do that is within your paid products. If you give away your best stuff, your readers will not even appreciate it as something valuable.

A blog should have interesting news, stories and videos that relate to your topic, but your true “how to solve a problem” content is what you sell.

Another possibility to add to that is to post excerpts from your paid products on your blog. For example, for my Raw Vegan DVDs I posted short, 2-minute excerpts from the DVD series so people could get an idea what it was about, and had great success with that.

The purpose of the excerpts is more to build credibility and being transparent about the quality of your information.

Avoiding Freebie Seekers

One big problem that many people run into is that they build a great list of readers — but nobody buys anything from them because all they are used to is getting free information.

It’s very difficult to transform a list of freebie-seekers into a list of excited customers.

The way to avoid that is to sell from the start.

When your website visitors sign up for your mailing list, present them with your best offer immediately. This is when they are more likely to be interested in buying it anyway.

Give them a great free bonus in exchange for signing up to your list, but also show them immediately that you have some great products to sell — right from the start.

If you don’t have any product to sell yourself, then promote as an affiliate a product from an author that jives with your philosophy.

You might occasionally get some people who complain about your marketing, but it will be far less than if you give away everything for free and then suddenly, a year later, come up with a product that you try to sell to them.

You essentially — right from the start — want to filter out the people who are only interested in getting free stuff, and try to attract the genuine truth-seekers who are willing to pay you in exchange for your hard work and great content.

Are You Trying to Hide From Them?

In my travels, I meet more and more people who are trying to live off the grid. They think they can somehow avoid being part of the SYSTEM.

Who is the SYSTEM? Governments, banks, big business?

They are fooling themselves!

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I get asked advice all the time from people wanting to start a business online or trying to better support themselves in life, doing something that they love.

Unfortunately, a lot of young and not so young people nowadays would rather hide away in a cave, believing every single conspiracy out there and being AFRAID that the government is tracking their every move.

I can’t tell you how many of those types I’ve met. For example: one of my neighbours in a previous apartment in Costa Rica is so afraid that the economy will “crash” and that the US government will turn the country into a prison state, that he’s decided to live in Costa Rica, buy a plot of land  and try to grow his own food, living off the grid waiting for this *doomsday*.

The guy had no friends, no girlfriend, and lived off crackers and cheese, reading conspiracy theories on the Internet all day.

His face was so pale from the lack of sunshine that you’d think he was living in Alaska, even though he was under the sun of the tropics. At 31, he looked like he was 15 years older. Pretty sad, I know…

I think the government is already controlling his and affecting him negatively just by living this way, in fear and unhappy.

I get a lot of these kinds of people sending me emails, asking me questions or posting comments on my blog.

I got a comment the other day from an 18-year old kid who decided not to get a driver’s license because he doesn’t want to be on the “government’s radar”.

He was so afraid that as soon as he got a driver’s license, the government would be able to “track him down”.

For the same reasons, he didn’t want have a credit card, or “use banks”, or be part of the “system”, because “debt equals big corporation”, and he wants to stay as independent as possible.

He’s also conflicted about getting a passport, but because he wants to travel, he thinks he’ll probably get one someday.

Now I can tell you that this is probably a short-lived phase of youth rebellion, and that this kid is going to realize pretty soon that:

- As long as you’re born on this planet, you’re part of the system, whether you like it or not.

- If you want to be “out of the system”, the only way to do that is to live in a hut with no contact to human civilization whatsoever. But even then, this little idyllic world will be short-lived. Sooner or later, your interests will conflict with someone else’s interest (like the guy who owns the land where you live), and you’re going to have to be part of the system.

- If you want to travel, use airplanes and take advantage of what the world has to offer, you also have to play by the rules. Otherwise, it’s completely hypocritical to think that you can take advantage of the rules that are in your best interest while ignoring the rest.

- Ask any Personal Investigator and they’ll tell you than ANYONE can be found. The only limitation is how many resources are available to the person trying to track you down!

Of course, it makes sense to protect your privacy. There’s a great book out there called “How to Become Invisible” by JJ Luna that I recommend to read to discover basic ways to protect your privacy. Mostly, it’s about keeping your address private.

But don’t kid yourself that you can partake in what the world has to offer while NOT being part of the system.

Now, it’s not just young people who fall for that trap. I see it all the time with adults. Here’s a few examples:

- People who think they can get away with not paying their taxes because “there is no constitutional right for the Goverment to force people to pay taxes.”

- Some people even think they can get away with driving without a driver’s license because apparently an obscure interpretation of the law says “any person has the right to travel as long as it’s not for commerce.”

- People who think that they can hide their cash in a Swiss bank account where no one will ever know about it

Folks, it doesn’t matter what your interpretation of the law or constitution is. All that matters is what their interpretation of the law is.

Might is right!

If you don’t believe me, try speeding on the highway without a driver’s license and then when you get pulled over by the cops, recite that little paragraph you got on some conspiracy theory website about your “right to travel” and see how far that gets you…

If you want to not be part of the system, then go to the moon!

You can’t even end your life and not be part of the system. While dead, you’re still part of it.

You can dream about what it would be like to live off of the grid completely. Read “20,000 Leagues Under the Sea” by Jules Vernes if you want to dream away…

For those living in the real world, the only option left is to play by the rules, and make the best of it.

If you want to make a living doing what you love, you cannot be “off the grid”.

Instead of complaining about the way things are in the world, try to do something pro-active about it.

And surprisingly, the best way to do this is to be part of this world of commerce and business — yes, those “evil” things that every 18-year old kid from a rich family thinks they’ll do without.

Start your own business doing what you love, and offer a product or information that can really help the world — and do it with compassion, morality and love — while making a profit for yourself and earning a living — and you’ll do more in one year to improve the world than a hundred people living “off the grid” can hope to do in a hundred years.

This world isn’t so bad, after all, if you make the best of it.

Yours for health and success,

Frederic

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I admit it, I’m a renter.

At least a few times a year, I get told by my parents that I should buy a house, or put some money down on a condo.

“When you rent, you throw away your money”, they told me many times. “You want to end up with something in the future, like a house”.

In spite of hearing this advice many times, I still rent, and intend on doing so for a long time. Here’s why:

My Philosophy on Debt

“The borrower is servant to the lender” — Proverbs, 22:7

The modern tool for enslavement is debt. In fact, there’s never been a better tool designed to restrict people’s freedom. The path has been clearly laid out when you were born. The way to happiness is to get a good job with a good pension plan, get married and raise a family, and borrow money to fund your American dream.

It starts with your first credit card. Then you borrow money for your first depreciating asset: your car. But your most important expense of all will be your house, which you’re told is an asset, instead of the obvious: the biggest debt you’ve incurred so far. When you owe money to a bank or another lending institution, you cannot be free.

Debt is like an invisible leash tying you to your current circumstances. When you have payments to make, you cannot decide to do something different. If every month you must make payments for your car, your credit card and your mortgage, then you must continue slaving away at that job to make those “ends meet”.

Want to take a trip around the world? You can’t do it.

Want to quit your job and live on your savings? Impossible. Those monthly payments have to be made.

The numbers show that the average person in the USA has $8,500 in consumer debt. Keep in mind that this doesn’t include mortgage debt. That’s for every man, woman and child! Obviously, some people have much higher levels of debt for this average to be so high.

Debt in My Life

My first important step towards total freedom is realizing that any amount of debt will restrict my freedom. Therefore, the ideal amount of debt to have and be free is ZERO, just like the ideal amount of cigarettes to smoke for good health is NONE.

I had no problem with consumer debt like credit cards. I always paid them in full at the end of the month and did not feel I had to cut them down or freeze them like some debt-reduction experts recommend. I like the convenience of credit cards and in fact I could not run my business without them.

I never borrowed to buy depreciating assets like a TV or a computer. I’ve only owned three cars in my life and paid in full for them. I always bought them a few years old, which is the smartest thing to do. But there was one type of debt I was conditioned since birth to view as “good”, and had a very hard time to view as just “debt”. And that’s of course the house mortgage.

I’ve always rented, but almost three years ago I decided to buy a property in Costa Rica, this was a big mistake. But at least it taught me the danger of debt.

A lot of people will tell you that getting a mortgage on a house is a “good” debt, because you’re buying an appreciating asset. Very few people realize that a house mortgage is just a big debt that’s only potentially going to appreciate in value. Like all debt, it will restrict your freedom. But since it’s going to be your largest debt, it will be a more important factor working against your freedom than any other type of debt.

Consider the following:

1. A house is NOT an asset until you’ve paid in full for it. It’s only an asset for the bank who loaned you the money, because they can sell it in case you’re no longer able to pay your mortgage.
2. Paying a mortgage is NOT comparable to a “forced saving plan”. Only a tiny amount of your monthly payment goes towards your equity. The rest goes towards paying the debt. On a typical mortgage at the average interest rate, you will pay for  your house TWICE in the end, with half of the money going to the bank.
3. A house only potentially appreciates in value. It’s only worth what you can sell it for, not what you think you COULD sell it for. As many people have found out in the last two years, the real estate market does go down from time to time.
4. From 1978 until 2004, real estate appreciated about 8.6% per year on average. At the same time, the stock market appreciated 13.4%. So in the long run, there are much better ways to make a good return on your investment than buying a house.
5. As the author of the book “Rich Dad Poor Dad” said, “an asset is something that puts money in your pockets”. So buying a house for yourself is not an asset.
6. Renting is cheaper than buying, in most cases. The average homeowner will spend much more on “improvements” on a house than the average renter. If you value your time, you should also think about all the repairs that will go towards the house that the renter will not have to worry about.
7. A house mortgage restricts your freedom. If you want to live somewhere else, or take a year to travel, you can’t do it on a whim. Those payments have to be made, or the house has to be sold.
8. Buying a house only makes financial sense if you think you’re going to live at the same place and not sell it for at least a 5 to 10 years. At this point, I personally prefer not to be tied down somewhere for that long.
9. Buying is easier than selling. You can go any day and buy a house. But selling it is another story. This lack of liquidity can severely restrict your freedom.
10. Renters are not “throwing away their money”. They can be using it smarter. All the money you save renting (and not having to worry about repairs and house improvements) can be invested somewhere else, usually at a much better rate of return. It’s not just about the monthly payment.

Why I’m Renting and Not Buying

For me, renting is what makes the most sense, at this point in my life.

For one thing, I don’t want any debt for any reason. The only way I would buy a house is if I could pay for it 100% cash. But even then, I would think about it twice, and would make sure I could envision living there for a long period of time.

Of course, some people value other things above freedom. I’m not saying that getting a home mortgage is necessarily wrong for everybody. In your situation, it may be the right thing to do. But for someone who values freedom above everything else, a 100% debt-free life is the way to go.

Renting Increases Your Options

The other problem with the “buying is better” mentality is that it severely restricts your options. Most people think that they must own the place in which they live, and that the only way to drive a car is to buy it or lease it. But when you buy something, you’re stuck with it forever, until you sell it. Most of the time you’ll end up paying more than you can recoup later on.

Let’s say your dream is to own your own tropical island. Most beautiful tropical islands for sale cost at least one million dollars, and financing is generally not available. But did you know that you can rent an entire tropical island for as little as $2000 a month? I was shocked when I learned this! There are literally thousands of tropical islands you can rent in Thailand, Fiji, Panama, and the rest of the South Pacific.

Maybe if you rent a tropical island for a month, you might realize that it is not for you long-term. You spent $2000, got to live your dreams and learned something along the way. But if you spend years saving money to buy that island… you’re stuck with it for a long time! I imagine there might not be a huge market for tropical island buyers.

This is just an example to show you how the “buy-only” mentality can restrict your choices.

For example, let’s say your dream has always been to drive the latest BMW or Infiniti car model, but you felt like you couldn’t afford it, or it was too flashy. Why not rent that car for a weekend and try it out? Then you’ll know if it’s for you or not. At least you’ll get to live your fantasy. You don’t need a million dollars to live your dreams. There are beautiful million-dollars villas you can rent for a very reasonable price in many parts of the world. Why get stuck owning something when you can rent it, stress-free?

Practically anything you’ve always dreamed of doing but always felt you never could — can be done right now for much less than you imagine.