It has an often repeated axiom that a person can learn a whole lot
about a society by how it treats its poor. But just as much can be
learned by looking at how that society treats its rich. Indeed, the
economic future of the poor – and our nation – will be determined in the
coming decades by how we treat the people in this country who create
great wealth. It will be determined by our understanding of the
so-called rich. And our ability to protect this minority.
It is an unpopular thing to say, I know. Rich people need help? Rich
people need to be protected? Rich people a minority? Give me a break.
They just seem to keep getting richer! Regrettably, too many Americans,
and far too many intellectuals and politicians, don’t understand these
people we call “the rich.” And how it is they got rich in the
Because most of us don’t actually know any of these rich people, we
instead experience them in the abstract, through policy debates and
statistics, and always through the prism of our own ideological lens. We
look at the raw data to state our case either against or for the
richest among us. In the end, our view of the rich has much to do about
how all of us view "capitalism" itself. Indeed, in that respect, our
opinions about the rich are a sort of Rorsach test, revealing more about
ourselves than anything else.
To those on The Left who think capitalism creates unfair outcomes,
they have statistics to confirm their outlook. It seems absurd on its
face that the top 1% of American families own 90% of the nation's
Wouldn't it be possible to contrive an economy that is just as
prosperous but with a fairer distribution of wealth? Couldn’t we cap the
earnings of the rich at $50 million? Or even $100 million?
Most defenders of capitalism and free markets say no. They contend
that the bizarre inequalities we see are an indispensable part of the
processes that create wealth. They imply capitalism doesn't make sense,
morally or rationally, but it makes wealth. So don't knock it.
What nonsense it all is! And how little to do with the reality of
the rich. And how sad that defenders of the rich – or the rich
themselves - can’t come up with a better economic or moral case! Quoting
Adam Smith and supply side economists just doesn’t cut it.
So who are the so called rich? As someone who is rich (and would love
to be even richer), and has spent a lifetime working with people who
create wealth, I thought I’d explain who they are, where they come from,
and why we should care about their wealth – and their desire to hold on
To begin, it is not exactly a list of the Who’s Who and Most Likely
to Succeed in high school or college, this group of Americans called the
rich. They are certainly not the best looking. They didn’t get the
highest SAT or ACT scores in high school, they probably weren’t voted
most likely to succeed in any yearbook, and they certainly didn’t get
where they got through the force of their personalities, charisma or
A great number of the richest among us never finished high school,
and many who went to college never managed to graduate. That’s because
the rich in this country are chosen not by blood, credentials,
education, or services to the establishment. The rich are chosen for
performance, and for their relentless desire to serve consumers.
The entrepreneurial knowledge that is the crux of wealth creation has
little to do with glamorous work, or with the certified expertise of
advanced degrees. Great wealth usually comes from doing what other
people consider insufferably boring.
The treacherous intricacies of building codes or garbage routes or
software languages or groceries, the mechanics of butchering sheep and
pigs or frying and freezing potatoes, the murky lore of petroleum leases
or housing deeds, the ways and means of pushing pizzas or insurance
policies or hawking hosiery or pet supplies or scrounging for pennies in
fast-food unit sales, all of those tasks are deemed tedious and
In short, our rich – America’s best entrepreneurs - perform work that
most others spurn.
Whether it was Henry Ford or Apple’s co- founder Steve Wozniak, much
of America’s greatest wealth creators began in the "skunk works" of
their trades, with their hands on the intricate machinery that would
determine the fate of their companies. Bill Gates began by mastering the
tedious intricacies of programming languages. Familiarity with the very
material, the grit and grease, the petty tedium of their businesses
liberates entrepreneurs from the grip of established expertise and gives
them the insight and confidence to turn their industries in new
directions. All had to stoop to conquer the American economy.
Because these men and women often overthrow rather than undergird
establishments, the richest among us usually begin as rebels and
outsiders. Often they live in places like Bentonville, Ark.; Omaha; or
Mission Hills, Kans.; mentioned in New York chiefly as the butt of a
The truth is, great wealth is often created by the launching of great
surprises, not just the launching of great enterprises.
Unpredictability is a fundamental part of great wealth creation, and as
such, defies every econometric model or centralized planner’s vision. It
makes no sense to most professors, who attain their positions by the
systematic acquisition of credentials pleasing to the establishment
above them. By definition, innovations cannot be planned
So we now know a bit more about who the rich are, and how they got
rich. But the richest among us are faced with another equally daunting
task once they have accumulated great wealth, and that is maintaining
and increasing that wealth.
A pot of honey attracts flies as well as bears, and it doesn’t take
long for the bureaucrats, politicians, raiders, robbers,
revolutionaries, short-sellers, managers, business writers and
missionaries who think they are entitled to a portion of the winnings
(or who think they can spend the money better than the owners who
created that wealth) to come calling.
All owners are besieged by aspiring spenders, but only the legal
owners of a business have a clear interest in building wealth for others
rather than squandering it on themselves. Leading entrepreneurs in
general consume only a tiny portion of their holdings. Usually they are
owners and investors. As owners, they are initially damaged the most by
mismanagement or exploitation or waste of their wealth.
As long as Steve Jobs is in charge of Apple, it will probably grow in
value. But you put some random manager in charge of Apple, and within
minutes the company would be worth half its present value. As other
software companies, such as Oracle and Lotus, discovered in the early
1990s, a software stock can lose most of its worth in minutes if
fashions shift or investors distrust the management.
As a Harvard Business School study recently showed, even if you put
"professional management" at the helm of great wealth, value is likely
to grow less rapidly than if you give owners the real control. A manager
of Google might benefit from turning it into his own special preserve,
making self-indulgent "investments" in company planes or favored
foundations that are in fact his own disguised consumption. It is only
Sergey Brin and Larry Page who would see their respective wealth drop
catastrophically if they began to focus less on their customers than on
their own consumption.
The key to their great wealth is their resolution not to spend or
abandon it, but to continue using it in the service of others. In a
sense, they are as much the slaves as the masters of Google.
This is the other secret of the richest among us, and of capitalism
itself. Under capitalism, wealth is less a stock of goods than a flow of
ideas. Economist Joseph Schumpeter propounded the basic rule when he
declared capitalism "a form of change" that "never can be stationary."
The landscape of capitalism may seem solid and settled and ready for
seizure, but capitalism is really a mindscape.
Volatile and shifting ideas, and the human beings behind them-- not
heavy and entrenched establishments -- are the source of our nation’s
wealth. There is no bureaucratic net or tax web that can catch the
fleeting thoughts of the greatest entrepreneurs of our past. Or future.
In this mindscape of capitalism, all riches finally fall into the gap
between thoughts and things. Governed by mind but caught in matter, an
asset must have an income stream that is expected to continue if the
asset is to retain its value.
Wealth is valuable only to the extent that others think it will be
valuable in the future, and that depends on running the fortune for the
needs of the customers rather than for the interests of the owners. Its
worth will collapse overnight if the market believes the company is
chiefly serving its owner, rather than the owner serving it, or that it
is being run chiefly for the managers rather than for the people who buy
its wares. Look at the recent BP debacle and see for yourself.
Socialist regimes try to guarantee the value of things rather than
the ownership of them. Thus socialism tends to destroy the value, which
depends on dedicated ownership. In the United States, on the other hand,
the government normally guarantees only the right to property, not the
worth of it. The belief that wealth consists not in ideas, attitudes,
moral codes, and mental disciplines but in definable and static things
that can be seized and redistributed is the materialist superstition.
It stultified the works of Marx and other prophets of violence and
envy. It betrays every person who seeks to redistribute wealth by
coercion. It balks every socialist revolutionary who imagines that by
seizing the so-called means of production he can capture the crucial
capital of an economy. It baffles nearly all conglomerateurs, who
believe they can safely enter new industries by buying rather than by
learning them. Capitalist means of production are not land, labor, or
capital but minds and hearts.
The wealth of America isn't an inventory of goods; it's an organic,
living entity, a fragile, pulsing fabric of ideas, expectations,
loyalties, moral commitments, visions, and people. To vivisect it for
redistribution would eventually kill it. As Mitterrand's French
technocrats found early in the 1980s, the proud new socialist owners of
complex systems of wealth soon learn they are administering an
industrial corpse rather than a growing corporation.
That is why the single most important economic issue of our time –
and one that impacts the poor and middle class alike – will be how we
treat the very rich among us.
If the majority of Americans smear, harass, overtax, and over
regulate this minority of wealth creators, our politicians will be
shocked and horrified to discover how swiftly the physical tokens of the
means of production collapse into so much corroded wire, eroding
concrete, and scrap metal. They will be amazed at how quickly the
wealth of America is either destroyed, or flees to other countries.
As someone who admires those men and women who create wealth, I hope
this will serve as a “Wealth Creation 101 Course” to the millions of
Americans - and the majority of our leaders in Washington DC - who
don’t fully understand the economic implications of demonizing the rich.
And the implications of enacting policies that treat them like villains
in a cheap economic thriller.
Your feedback as always is greatly appreciated
for your consideration