My brother-in-law lives in Golden, BC. With fewer than 4000 residents, I think it can be considered a small town. He is planning to get married and his fiancee is between jobs. My family was talking about what opportunities she has, and it quickly became obvious that there are fewer opportunities in a small town compared to a big city.
There’s only a certain amount of money in a small town. My brother-in-law drives big equipment, which has him travelling outside of town. In this way, he brings his income into the town from outside. But how much opportunity is there to make a six-figure income in a small town? How many patients would a doctor need? How many cases would a lawyer need? What happens when another professional sets up shop?
Not only is there a relatively stable amount of capital in a small town, the dynamics of money flows are more obvious. If the doctor or lawyer is making a six-figure income, that means there’s less for everyone else in town. When a professional goes to the big city to buy an imported car, that’s money leaving town. If it gets bad enough, jealousy might even cause people to travel to the next town and find a doctor or lawyer.
The situation is different in a big city. When the stock of capital is larger, it’s easier to accumulate a large share. It’s more likely that you can take a small amount from a large number of people. It’s also more likely to go unnoticed. Having said this, the economy grows when you produce value, which is rewarded with money. When a lawyer with expertise in an area of law protects her clients’ interests, the client is happy to reward that expertise with money. A more concrete example is an inventor who develops a better solution to a problem. Think of improving the efficiency of a production plant.
This is sometimes referred to as growing the pie. I started off by saying that a small town is a small pie. Everyone gets their piece, and it’s tough to get a super-sized piece of the pie. That’s easier to do in a big city. But if someone were to grow the pie, everyone would be better off. Inventing new products, new processes, new services or bringing forward new ideas can all grow the pie. And it can work in a small town as well as anywhere.To get rich from a valuable idea, it needs to benefit the largest number of people possible.