Reflection on The Sources of American Wealth
Reflection on the sources of American wealth illustrate a very important concept. Wealth disproportionately exists as a result of ownership of and participation in the component parts of markets. Businesses are the component parts and the representative share of the majority for America’s wealth.
The value of all productive business assets held skew roughly as follows:
Historical taxation data supports this skew. Information made public by the IRS shows that the greater share of revenues for government come from productive businesses.
- Wages and salary
- Business income
- Nontaxable interest
- Taxable interest
- Dividends
- Capital gain/loss
- Rent, royalties
- Unemployment
- Alimony, Pensions, annuities, SS
A simple conclusion can be drawn that there appear to be only three mechanisms for creating wealth:
- Economic participation in a business or service
- Ownership of existing productive assets
- Investment into existing or future productive assets
All of these activities require investment of time and or capital. In economic terms, there is no free lunch when it comes to asset accumulation and wealth building.
Wealth, it appears, is largely derived from exchanging a good or service with another person and participating in the production of that good or service. And, while participation materially aids wealth creation, it appears that the effect of ownership of assets disproportionality enhances those outcomes.
It can be concluded therefore that the study of business is an appropriate path to wealth creation and the good execution of commerce is the only source of wealth creation that exists.