Defending the Rich from the Author of ‘Economic Warfare’
It is an oft-repeated axiom that a person can learn a whole lot about a society by how it treats its poor; but just as much may be learned by looking at how that same 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 by our need to foster and protect this minority of true wealth creators.
It is an unpopular thing to say...Rich people need help?
Rich people need to be protected?
Rich people a minority?
“Give me a break,” people say. “They just seem to keep getting richer!”
Consider the entrepreneur who risks all of the capital he can muster from his family and friends to build a company that fills an undeserved niche in the market, provides a needed service, or develops a new technology. These are the people bureaucrats and career politicians have deemed “the rich.” These are the people they have targeted for appropriation to support their unsustainable way of life.
In their narrow view of the world, rich people become “rich” by either inheriting their money or appropriating wealth through manipulation of the system with their cronies, or are self-made entrepreneurs. The first group is so small that they don’t really matter. The second group is easy for the bureaucrats to intimidate and the politicians to plunder with ever-widening regulations and more oppressive oversight; but, again, there are not that many people who fall into the crony-capitalist category.
The overwhelming majority of people I refer to as “the rich” are independent-minded, maverick entrepreneurs and business owners who risk their own capital, sweat, and tears to provide a good or service of value to the world around them.
Regrettably, too many Americans, and far too many of the intellectuals and politicians, understand neither these people we call “the rich” nor the methods they have used to become rich in the first place. Did hedge fund managers and investment bankers game the system and walk off with a lot of money? Yes. But, again, having a lot of money no more makes you rich than growing up next door to the Greenwich Country Club gives you class. The rich are people like Bill Gates , Warren Buffett , and Michael Dell . They have provided value to the world and been rewarded for their efforts. They also know, better than the government, how they should best utilize that wealth.
Our opinions about the rich are a sort of societal inkblot test, revealing more about ourselves than anything else. Our analysis of the raw data confirms our deeply held notions about the rich and, in the end, has more to do with our views on capitalism itself.
Regrettably, too many Americans, and far too many of the intellectuals and politicians, understand neither these people we call “the rich” nor the methods they have used to become rich in the first place.
Those who are vested in the philosophy of the Left, believing capitalism creates unfair outcomes, have statistics to confirm their outlook. It seems absurd on its face that the top 1 percent of American families control 90 percent of the nation’s wealth. Wouldn’t it be possible, they ask, 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? The defenders of capitalism and free markets on the Right say “no.” They contend that the bizarre inequalities we see are an indispensable part of the processes that create wealth. They imply that capitalism doesn’t make sense, morally or rationally, but it does make wealth. So don’t knock it, they say.
It has very little to do with the reality of the rich. It is really quite sad that defenders of the rich or even the rich themselves can’t come up with a better economic or moral case! Quoting Adam Smith and supply side economists just doesn’t suffice. American novelist and homespun philosopher Mark Twain reportedly noted that a person can lie with the numbers but the numbers don’t lie. The rich have most of the money. That’s why they are called “the rich.” So who are the rich?
The rich in this country are chosen not by blood, credentials, education, or service to the establishment. The rich become rich based on their performance and their relentless desire to serve the customer.
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 rarely comes from speculating and creating nothing. The John Paulsons of the world are a very small and very lucky group.
Most major wealth creation comes from doing what other people consider insufferably boring: navigating the tedious intricacies of software languages, designing more efficient garbage collection routes, or designing a system for stocking fresh products on the shelves in grocery stores is not glamorous.
Because these men and women often overthrow rather than embrace established norms, the richest among us are usually considered rebels and outsiders. Often, they come from places like Omaha, Nebraska; Blackfoot, Idaho; or Mission Hills, Kansas—places usually mentioned in New York either with a condescending smirk or as the punch line of a comedy routine. From Henry Ford to Apple cofounder 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.
Leading entrepreneurs in general consume only a tiny portion of their holdings. They are often owners and investors. As owners, they are initially damaged the most by mismanagement or exploitation or waste of their wealth. Only the person who created the wealth has a true appreciation of its value and what it represents.
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 set the basic parameters 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, are the source of our nation’s wealth, not heavy and entrenched establishments. There is no tax web or bureaucratic net that can catch the fleeting thoughts of the greatest entrepreneurs of our past or our future.
Mr Odoni is President and CEO of Ipocampus Holding Odoni Partner, Dubai based.