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>It's not like you're creating money out of thin air. No, but money (and value) is created out of ideas, of labor, and adding value to products. When an IPO happens, for example, and a company owner holding 50% of the company is suddenly valued at $20B, that value did not come from taking $20B from other people. It's the value of the company. It is value simply created out of thin air, that didn't exist before. If the next day, someone prices the stock 30% higher through market forces, the owners value shoots up 30% also. That 30% increase in a single day was not taken from anyone - it is made up out of thin air. When a craftsman buys a piece of wood for $10, crafts it such that others value it at $1000, that craftsman just added $900 of value. It might have taken a week, or might have taken 15 minutes. It's not simply some labor value per hour times hours. The amount of value is created out of thin air, but it took some labor to allow that increase to happen. The labor amount and value added is somewhat related, but varies greatly across all endeavors. And saying the employees could have just worked somewhere else is shuffling the truth - to have somewhere to work, someone has to start a company, which often takes significant money and risk to begin with, before thousands of workers can have a stable job. That money too was created previously through invention, innovation, labor, and previous investment. |
Unless you were the first to market in a completely new field, it's very possible that some of a firm's worth comes from gaining market share from existing players. That's the whole 'disruption' effect. This might be more economically efficient from one perspective, but that's not necessarily better - both because perfectly efficient systems lack slack, and because people are bad at valuing things.
So take Amazon back when it specialized in selling books. Good part - Amazon has pretty much any book you want, yay. Bad part - it kills brick-and-mortar bookstores. even today, while I'll go to Amazon for a specific book I want, I'll usually wait until I've looked around some other bookstores first. Not only do I like the chance discovery of books I might not otherwise have picked up in bookstores, I like bookstores themselves, especially used bookstores. And I don't like the fact that there are not as many bookstores as there used to be.
And saying the employees could have just worked somewhere else is shuffling the truth - to have somewhere to work, someone has to start a company, which often takes significant money and risk to begin with
So what? Make co-op financing better, figure out a tired grant system for allocating startup capital from a public pool. You're just underlining the article's hypothesis - rich people often get that way because they start out with or have access to more capital than others of equal or greater ability, rather than through any inherent virtue.
In a previous life where I worked at a boutique computer supplier, I got a client who was running a small stock market research/analysis business with only a few employees, and needed high power workstations. I'm not a big people person, and I was looking at his operation and thinking that I'd prefer it to what I was doing, and (from seeing his work product and helping him get going technically) that it was well within my capabilities. So I put in a bit of extra effort to get friendly with him and to figure out how he got his operation off the ground. Turned out his dad was an investment banker and had given him a million $ to set up (at a time when that was a much more significant investment than it is now). I also learned that his biggest obstacle was not his competitors but the chip he had on his shoulder about how his brother was the favorite son and had been given $10 million.
That was the day I realized that wealth isn't a meritocracy.