| 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. 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. |
It is possible, but you can simply check that the size of the US and world economy has grown tremendously, so that argument doesn't explain the growth.
>So what? Make co-op financing better,
There are plenty of ESOP companies. If they consistently did well enough, then the excess capital they generate could be used to start more employee owned companies.
That this doesn't happen perhaps points to an inefficiency in this process for company creation. Perhaps simply having workers is not enough to drive the economy. It shouldn't be a surprise that when an investor takes a risk to allocate capital to a fledgling company, that the investor would expect a return for resulting growth.
Creating companies without investment is possible, but likely less capable overall.
>That was the day I realized that wealth isn't a meritocracy.
Nothing is a meritocracy - everyone has luck and genetics. Income correlates both with IQ and hours worked, and I suspect most would consider the latter factor merit, and some consider the former merit too.
But wealth, correlating with many things one can control, is also not simply a random variable completely detached from merit.
[1] https://www.sciencedirect.com/science/article/abs/pii/S01602... [2] https://www.nber.org/digest/jul06/w11895.html