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MONEY MAKES MONEY. \u201cFor whoever has will be given more, and they will have an abundance. Whoever does not have, even what they have will be taken from them\u201d (Matthew 25:29). Albert Einstein made the same observation when he stated that compound interest was \u201cthe eighth wonder of the world,\u201d \u201cthe greatest mathematical discovery of all time,\u201d or even \u201cthe most powerful force in the universe.\u201d Whichever version you prefer, you can\u2019t miss his message: never underestimate exponential growth. Actually, there\u2019s no evidence that Einstein ever said any of those things\u2014the quotations are all apocryphal. But this very misattribution reinforces the message: having invested the principal of a lifetime\u2019s brilliance, Einstein continues to earn interest on it from beyond the grave by receiving credit for things he never said.<\/p>\n\n\n\n
Most sayings are forgotten. At the other extreme, a select few people like Einstein and Shakespeare are constantly quoted and ventriloquized. We shouldn\u2019t be surprised, since small minorities often achieve disproportionate results. In 1906, economist Vilfredo Pareto discovered what became the \u201cPareto principle,\u201d or the 80-20 rule, when he noticed that 20% of the people owned 80% of the land in Italy\u2014a phenomenon that he found just as natural as the fact that 20% of the peapods in his garden produced 80% of the peas. This extraordinarily stark pattern, in which a small few radically outstrip all rivals, surrounds us everywhere in the natural and social world. The most destructive earthquakes are many times more powerful than all smaller earthquakes combined. The biggest cities dwarf all mere towns put together. And monopoly businesses capture more value than millions of undifferentiated competitors. Whatever Einstein did or didn\u2019t say, the power law\u2014so named because exponential equations describe severely unequal distributions\u2014is the law of the universe. It defines our surroundings so completely that we usually don\u2019t even see it.<\/p>\n\n\n\n