There is a lot of conversation these days about the very wealthy and their debt to society. In fact, one of the boards making up many political platforms is taxation of the wealthy at a greater rate simply because they are wealthy. The debate is simply this: to whom does the wealth belong? One fact that fuels the fire is that the top 1% of the wealthy is getting richer. People who view wealth as a fixed amount of goods and material objects use the metaphor of a pie. They point out that society owns the pie, and if people like Richard Branson get the lion’s share, there is less left for the rest of us. Many people argue that the pie should be distributed more equitably.
Wealth Creation: The Pie Isn’t Finite, It’s Infinite
According to a Forbes magazine article, that comparison might hold up if there were, indeed, a pie, and if the wealth was tangible and finite. The problem with the analogy is that today’s wealth lies in technology and in ideas that are infinite as far as we know. It goes on growing. Society does not own the skills that create the technology advances or the ideas that advance culture; the innovator owns them.
The article cited gives the example of Robinson Crusoe. Suppose the shipwrecked Englishman had grown tired of fishing with his bare hands and had invented a spear, garnering more fish for himself. Would Friday, who never thought of anything like a spear, be correct in claiming that Crusoe was getting an unfair amount of the fish?
It goes on to say that Richard Branson began by selling record albums out of the trunk of his car. The albums were his and so was the money he made selling them. He used the money he made to make more. That is, he made records cheaper and more accessible, made phones easier to use and improved air travel. The wealth he created from his ideas is his, even though they benefited society.
Stephen Wynn is another example. The man who is credited with revitalizing the Las Vegas Strip did not come from a poor family. Still, when he took over the family bingo operation in Maryland after his father’s death, he made a profit. Moving to Las Vegas, he revamped the famous Golden Nugget, attracting a new, more affluent clientele to the downtown area. He built the Mirage and the Bellagio, with its indoor lake and an art gallery with museum-quality pieces. His efforts have not only made him wealthier, they have increased the value of Las Vegas properties for others because of the updates he initiated.
Wealth creation, the idea that people have the right to the fruits of their labors, is the foundation of capitalism. The idea that great wealth compels you to share with others is valid as well. That is not why we should redistribute the “pie.” If there were a wealth “pie” society would not own it, but it certainly deserves a bite for being the consumers and investors. That is why so many of the top 1% in wealth give back through charities and foundations.
If you are in the 99% and aspire to become the 1%, here is my detailed guide for how to make it.
[Photo Credit: mseattle]