On Wealth

Under Construction

Paul Stivers, 4/28/2025

Introduction

This article attempts to clear up some common misconceptions about financial wealth and the contributions of billionaire entrepreneurs. The author recognizes that there are other types of wealth than financial, though focuses in this article on financial.

Billionaire's Percent of Wealth

Bernie Sanders often cites the statistic that the top three wealthiest individuals in the U.S. own more wealth than the bottom half of the population. This is true, but misleading.

Here's a few more statistics. The top 3 wealthiest people in the U.S. own about 0.4% of the nation's wealth.¹ Also, the top 50% of U.S. households own about 98% of the nation's wealth.² The bottom 50% own about 2% of the nation's wealth.

The sleight of hand here is that the bottom 50% of households, in relative terms, have almost no wealth— meaning little to no equity or savings. As a result, almost any group with a significant amount of wealth will have more than the bottom 50% of the population. This is of course a problem, but billionaire entrepreneurs are not the cause.

Creation of Wealth

Money is sometimes referred to as power or freedom. I think the most direct definition of money is that it's a proxy—or placeholder—for work. This becomes most obvious when we realize that we work for money. When we buy something, we trade our work-proxies for the work required to provide that product or service. For example, when we purchase a vacation cruise package, we exchange some of our work-proxies for a portion of the work it takes to build and maintain the ship, produce the fuel, staff the vessel, manage the company, and so on.

Whenever something can be accomplished with less work, the saved work can be used elsewhere—and wealth is created. When people create and grow large companies that deliver products or services more efficiently than before, tremendous amounts of new wealth are generated. Good examples include Amazon and SpaceX.

• Amazon provides highly efficient product selection and delivery, eliminating the need for each customer to drive to various locations to search for products.
• Amazon web services (AWS) revolutionized and lowered the cost of compute power for businesses.³
• SpaceX launches satellites into space at about one-twentieth the previous cost of NASA. If Starship achieves its projected costs, it could offer launches at about 1.3% of the cost of NASA's average launch expenses.

The work saved through these efficiency improvements can then be applied to other products and services. Money—work-proxies—is literally created. Approximately a quarter-trillion dollars of new wealth is generated by just 5 of the larger tech companies in the U.S. (See Table 1).

Table 1. Yearly New Wealth Created by Just 5 U.S.-Based Tech Companies⁴

On the Backs of Workers?

Hugely successful companies require huge amounts of at least six ingredients; innovative insight, capital investment, raw entrepreneurial determination, risk taking, diligent management, and labor. Laborers of course provide one of those ingredients. Without the structure of the company though, laborers wouldn't have any work to do. It's more of a partnership than it is a one-sided deal.

The company generates wealth per employee equal to many times the salary and other financial benefits of the employee. That's exactly the point! To generate wealth. I'm sure that the software that I've written for companies have generated much more wealth than my salary and benefits. Similarly, in my youth when I was a bus boy and bartender for a thriving nightclub, I'm sure that my labor generated many times my salary and tips, in revenue. However, I'm grateful for every one of my employers. I simply don't have the entrepreneurial skills, extreme fortitude, nor risk appetite, to try to generate similar or greater incomes from creation of my own business. One could view the relationship as the company riding on my back, or as my riding on the company's back. Basically it's a partnership.

Methods of Acquisition of Wealth

Labor

Direct work for money.

Investment

Any adult in the U.S. can buy a piece of any publicly traded business, or groups of businesses, and share in that creation of wealth. You need to provide only two of the six ingredients previously mentioned, investment and risk. If the individual invests in a diversification of companies for the long term, then reward is high and risk is very low. Without these billionaire entrepreneurs, the biggest wealth generating companies would not exist. And yes, they retain a portion of the very substantial wealth that is generated.

Methods of Consumption of Wealth

Theft

Thieves do work to steal someone else's wealth. The victim then has to do work or spend money (trade work-proxies) to replace the theft and often to repair damage to property or person. Wealth is consumed in this process.

Declines in efficiency

Enterprises with declining efficiency consume wealth. It can be argued that the auto industry, with inflation adjusted prices that exceed the increased value of new features, consumes wealth. Similar arguments can be made about most government-run enterprises.

Footnotes

1. ChatGPT: In the U.S. what percentage of wealth is owned by the top 3 wealthiest people?

2. ChatGPT: What percent of U.S. wealth is owned by the top 50%?

3. This website runs on AWS S3 for $0.50/month.

4. Generated by issuing the following instructions to ChatGPT: