Brad Wardell's views about technology, politics, religion, world affairs, and all sorts of politically incorrect topics.
Where the super rich come from
Published on September 22, 2007 By Draginol In Democrat

Why don't garbage men or teachers or factory workers make as much as CEOs? We need teachers right? Our society would get pretty dirty in a hurry without garbage men and the things we rely on every day wouldn't exist without factory workers.  How can we justify living in a world in which some CEO makes 1000X as much as these people?

A garbage man doesn't make as much as a CEO because the number of people who can be a garbage man are far more than the number of people who can be a CEO.

As I mentioned elsewhere, the reason why CEOs and pro basketball players make so much is because only a tiny percentage of the population can do what they do at their level.

So what makes people mega rich? Again, it boils down to supply and demand: In a capitalistic system, how much we make is tied to how much wealth we produce combined with the competition for people who can produce that wealth.

The value of what we produce is determined by other people (which is what makes capitalism work in the first place).  Bill Gates doesn't get to decide he's rich.  Society does by valuing what he does enough to pay him for the products and services he provides.

Let's use the inventor analogy to illustrate how becoming "mega rich" works. The supply/demand pipeline we'll call it:

Our creative inventor invents a robot in his basement.  He made it because he enjoyed making it.  But its value to society is nil because it's a robot in his basement at this point.

Making a robot was enjoyable to our inventor and our inventor is one of the few people who can produce such a robot.

But to make the robot really change the world, it needs to be available to people everywhere.  To do that, our inventor needs that robot to be able to be mass produced, mass distributed, mass marketed.

But many of those things are NOT enjoyable to do.  The number of people who want to hop on a 6am flight to Tokyo to meet with component vendors and then fly to New York 3 days later to meet with Ingram Micro for a distribution meeting with buyers from major retailers is very small. Definitely not fun.  Our inventor would also need to raise investment capital in order to pay for the mass production of this robot, pay for marketing, and other up front costs so he would have to build a business plan, travel around to meet with investors, etc.

The items I list above involve skills that very few people have.  And out of those few people who have those skills, very few people are willing to do them because they are not fun, especially given the risk -- our inventor could do all these things and have the product fail and all this work and pain would be for nothing.

But every once in a long while, someone steps forward who not only has all or most of the skills necessary to take an idea and get it out there (Henry Ford being an example) but also the willingness to actually go and do it.

And as a result, they become mega rich.

But they don't do it simply because they want to be rich. They start out because they like doing what they're doing.  Material wealth, however, becomes a key ingredient because they won't love every part of what they have to do. 

The super rich make enormous sacrifices that most people simply wouldn't be willing to do to maek their visions a reality.  They miss family time. They have to often do mind numbing work (try putting together a distribution schedule while on a plane at 3am to Hong Kong to meet with a parts supplier and see how fun that is). 

But those sacrifices are much easier to tackle when they thought of compensation comes into play. Our inventor thinks to himself "Well, going to a robotics trade show in Tokyo during Thanksgiving is a pain but I'll be able to afford a nice Ocean vacation house for my family to go and relax at and have enough money to put into my next invention."

The ones who REALLY benefit from this, however, are the rest of us.  Our friendly inventor ultimately succeeds with his robot idea and the rest of us can buy a cool household robot for $299 at Best Buy that cleans houses, does wash, whatever.

Of course, that won't stop some academic at a left-wing site from writing an article arguing that our inventor is greedy and shouldn't be allowed to have his vacation house and the fact that he's worth $5 billion is a disgrace even as one of the inventor's robots is quietly cleaning his house in the background...


Comments
on Sep 22, 2007
This is what I would really love to tell all those lefties:

1. If you feel that the social welfare system is inadequate, don't use it. Team up with all your friends and help yourself!

2. If you don't like some guy, don't give him money. Live without his products or services and give money to some worthier cause!


And in case somebody left-wing reads the above:

"help yourself" does not mean "help yourself to other people's money".

"give money to some worthier cause" does not mean "give his money to some worthier cause".

on Sep 22, 2007
In Germany thousands protested against the new welfare system introduced a few years ago. "No to Hartz IV!" was their call (Hartz 4 being the code name of the payments). But "No to Hartz IV" does not mean that the protesters didn't want Hartz 4 payments. It meant they wanted more money than Hartz IV would give them. It did not mean that they would tell the German government where they could put their welfare system. They were not going to work now instead of demand free money.

East-German farmers still have to hire Poles to work on their farms and economies that need workers, like Ireland, still do not get many East-German immigrants. There are jobs available in the European Union, but the German unemployed do NOT care for them.

My second point is perhaps best illustrated by the old "Microsoft forces people to use Windows" myth.

I have only ever bought two Windows computers, one was a PDA.

I used OS/2, and BeOS, Linux, and now, since 2001, Mac OS X (I had Mac hardware since 1998). People kept telling me how they were forced to use Windows and how they refused to buy anything but Windows PCs. They would not try OS/2, they would not learn Linux, and they would not spend more to buy a Mac. It had to be Windows.

They chose the convenience of the market leading system over their "ideal" that there must not be a monopoly. They wanted to have their cake and eat it too. They wanted to use the same platform as everybody else but they did not want that platform to make its owner rich and the market a quasi-monopoly. They refused to realise that Windows' value was the quasi-monopoly, that the convenience of having a standard platform was not a feature of Windows but an effect of Windows' market share.

on Sep 22, 2007
(Sorry for highjacking the post like this!)

Just so everyone knows what I am talking about:

http://en.wikipedia.org/wiki/Hartz_concept

The German version details the amount of money:

http://de.wikipedia.org/wiki/Arbeitslosengeld_II

A single individual receives €347 per month.

A family of five (three children) receive €2,082 per month.

Rent and heating are also paid for by the system.

And they have free health insurance, of course.

I assume it goes without saying that those who actually WORK for their income are regarded as greedy and evil by many of the recipients of the above.

on Sep 22, 2007
I don't begrudge the super rich their money.  If they earned it, they earned it.  That's how the world works.  Sometimes it doesn't seem right that some have so much and others are struggling to keep the electric on but a maximum wage is ridiculous.  I agree that many are not willing to make the sacrifices that an owner/operator of a start up business makes.  They put the blood, sweat and tears into their product or service and usually provide jobs for others.  Many make multiple charitable contributions.  I am definately left leaning but I think some of the extreme people, just get it completely wrong and they really aren't helping the cause.   
on Sep 23, 2007
Of course, that won't stop some academic at a left-wing site from writing an article arguing that our inventor is greedy and shouldn't be allowed to have his vacation house and the fact that he's worth $5 billion is a disgrace even as one of the inventor's robots is quietly cleaning his house in the background...

I dont think the main-stream left agrees with the philosophy of that article at all. I dont agree with you on the role that a government can play in making the society better. However, i do agree with all what you said in this article. Some say sometimes an individual's wealth becomes "outrageous", i dont agree with that at all. whatever an individual can gain (wealth, prestige, ..etc)with his/her honest effort regardless of the amount is a well-deserved reward for that effort. What to do with that wealth is another issue of course. but there is nothing better for any society than to let everyone achieve the most with whatever skills or talents they have.

Those who wrote that article and others like them give the main-stream left a bad name for sure.
on Sep 23, 2007
You're a funny one. You get a new 2008 Porsche, you park it in the drive and take photos of it so you can put them online and then you LEAVE IT parked in the driveway while you spend all weekend ONLINE banging on about how you hate the poor and their apologists.

Get off the computer and go for a fucking drive man. At 200 mph everyone looks the same anyway. Jeez.
Maybe they should cap wealth because clearly some people dont know how to enjoy it either way.

on Sep 23, 2007
I don't begrudge the super rich their money. If they earned it, they earned it. That's how the world works. Sometimes it doesn't seem right that some have so much and others are struggling to keep the electric on but a maximum wage is ridiculous. I agree that many are not willing to make the sacrifices that an owner/operator of a start up business makes. They put the blood, sweat and tears into their product or service and usually provide jobs for others. Many make multiple charitable contributions. I am definately left leaning but I think some of the extreme people, just get it completely wrong and they really aren't helping the cause.


Loca,

And this is the crux of why I get frustrated in arguments. Because the people you describe in the last sentence have TAKEN OVER the Democratic Party. Maybe you don't see it in Texas, but I've seen it all over the country. Look at MoveOn.org. Like it or not, these idiots control the party.

This is something Democrats need to realize if they're going to regain any control of the party. Hillary healthcare will not HELP America, it will help the same fatcat bureaucrats they accuse the GOP of helping. And "maximum wage laws" are so absurd, they shouldn't even be MENTIONED in a free market economy.

One other thing: if maximum wage laws are implemented, fraud is GUARANTEED to increase. Because if people really, REALLY want money, they find a way!
on Sep 23, 2007

Like it or not, these idiots control the party.

I don't think they control the party but I think they are a very vocal minority.

on Sep 23, 2007
I don't think they control the party but I think they are a very vocal minority.


Honestly, I think the perception in Texas doesn't fit with the nation.

Look at Hillary's heallth care proposal, realizing she is one of the most prominent members of the party. Will you really feel better making failing to carry health insurance a criminal act, as she has proposed?

Incidentally, Loca, Hillary's proposal would effectively put my earnings below minimum wage. If her plan to MANDATE insurance were put into play today, when I become eligible for insurance on October 5th, I would be required BY LAW to take it. Because premiums for my family under my work's insurance plan would eat up approximately half of my wages, once I had paid my insurance premiums, my net earnings would be under $5.75/hour. That's definitely out of kilter.

Of the Democratic Party leaders, Barak Obama is the only one in my opinion that approaches being sane. And the national party is working as hard as it can to ensure that he does NOT get elected (incidentally, I've found myself an unlikely Oprah fan, as I believe her support for Obama may well put him over the edge).

on Sep 24, 2007

I don't think they control the party but I think they are a very vocal minority.

He did not say majority, only that they control it.  And what else are we to assume when the leaders are pandering to such hate sights as du.org and the dailykos?  Both of which would love to have posted that article on the chimp one first.

on Sep 24, 2007
The question is:

Do you want to allocate more power the the government or to the citizens?

Everyone will make their own decisions, but the more you study history and economic performance, the more you'll answer "the citizens".
on Sep 24, 2007
I don't think they control the party but I think they are a very vocal minority.


just look at the response of the democrats to the ad. from moveon.com