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Why we need the rich: A message to Americans and our leaders in Washington DC on wealth creation

By : Ziad K. Abdelnour| 23 June 2010
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It has an often repeated axiom that a person can learn a whole lot about a society by how it treats its poor. But just as much can be learned by looking at how that society treats its rich. Indeed, the economic future of the poor – and our nation – will be determined in the coming decades by how we treat the people in this country who create great wealth. It will be determined by our understanding of the so-called rich. And our ability to protect this minority.

It is an unpopular thing to say, I know. Rich people need help? Rich people need to be protected? Rich people a minority? Give me a break. They just seem to keep getting richer! Regrettably, too many Americans, and far too many intellectuals and politicians, don’t understand these people we call “the rich.” And how it is they got rich in the first place.

Because most of us don’t actually know any of these rich people, we instead experience them in the abstract, through policy debates and statistics, and always through the prism of our own ideological lens. We look at the raw data to state our case either against or for the richest among us. In the end, our view of the rich has much to do about how all of us view “capitalism” itself. Indeed, in that respect, our opinions about the rich are a sort of Rorsach test, revealing more about ourselves than anything else.

To those on The Left who think capitalism creates unfair outcomes, they have statistics to confirm their outlook. It seems absurd on its face that the top 1% of American families own 90% of the nation’s wealth.

Wouldn’t it be possible to contrive an economy that is just as prosperous but with a fairer distribution of wealth? Couldn’t we cap the earnings of the rich at $50 million? Or even $100 million?

Most defenders of capitalism and free markets say no. They contend that the bizarre inequalities we see are an indispensable part of the processes that create wealth. They imply capitalism doesn’t make sense, morally or rationally, but it makes wealth. So don’t knock it.

What nonsense it all is! And how little to do with the reality of the rich. And how sad that defenders of the rich – or the rich themselves – can’t come up with a better economic or moral case! Quoting Adam Smith and supply side economists just doesn’t cut it.

So who are the so called rich? As someone who is rich (and would love to be even richer), and has spent a lifetime working with people who create wealth, I thought I’d explain who they are, where they come from, and why we should care about their wealth – and their desire to hold on to it.

To begin, it is not exactly a list of the Who’s Who and Most Likely to Succeed in high school or college, this group of Americans called the rich. They are certainly not the best looking. They didn’t get the highest SAT or ACT scores in high school, they probably weren’t voted most likely to succeed in any yearbook, and they certainly didn’t get where they got through the force of their personalities, charisma or celebrity.

A great number of the richest among us never finished high school, and many who went to college never managed to graduate. That’s because the rich in this country are chosen not by blood, credentials, education, or services to the establishment. The rich are chosen for performance, and for their relentless desire to serve consumers.

The entrepreneurial knowledge that is the crux of wealth creation has little to do with glamorous work, or with the certified expertise of advanced degrees. Great wealth usually comes from doing what other people consider insufferably boring.

The treacherous intricacies of building codes or garbage routes or software languages or groceries, the mechanics of butchering sheep and pigs or frying and freezing potatoes, the murky lore of petroleum leases or housing deeds, the ways and means of pushing pizzas or insurance policies or hawking hosiery or pet supplies or scrounging for pennies in fast-food unit sales, all of those tasks are deemed tedious and trivial.

In short, our rich – America’s best entrepreneurs – perform work that most others spurn.

Whether it was Henry Ford or Apple’s co- founder Steve Wozniak, much of America’s greatest wealth creators began in the “skunk works” of their trades, with their hands on the intricate machinery that would determine the fate of their companies. Bill Gates began by mastering the tedious intricacies of programming languages. Familiarity with the very material, the grit and grease, the petty tedium of their businesses liberates entrepreneurs from the grip of established expertise and gives them the insight and confidence to turn their industries in new directions. All had to stoop to conquer the American economy.

Because these men and women often overthrow rather than undergird establishments, the richest among us usually begin as rebels and outsiders. Often they live in places like Bentonville, Ark.; Omaha; or Mission Hills, Kans.; mentioned in New York chiefly as the butt of a comedy routine.

The truth is, great wealth is often created by the launching of great surprises, not just the launching of great enterprises. Unpredictability is a fundamental part of great wealth creation, and as such, defies every econometric model or centralized planner’s vision. It makes no sense to most professors, who attain their positions by the systematic acquisition of credentials pleasing to the establishment above them. By definition, innovations cannot be planned

So we now know a bit more about who the rich are, and how they got rich. But the richest among us are faced with another equally daunting task once they have accumulated great wealth, and that is maintaining and increasing that wealth.

A pot of honey attracts flies as well as bears, and it doesn’t take long for the bureaucrats, politicians, raiders, robbers, revolutionaries, short-sellers, managers, business writers and missionaries who think they are entitled to a portion of the winnings (or who think they can spend the money better than the owners who created that wealth) to come calling.

All owners are besieged by aspiring spenders, but only the legal owners of a business have a clear interest in building wealth for others rather than squandering it on themselves. Leading entrepreneurs in general consume only a tiny portion of their holdings. Usually they are owners and investors. As owners, they are initially damaged the most by mismanagement or exploitation or waste of their wealth.

As long as Steve Jobs is in charge of Apple, it will probably grow in value. But you put some random manager in charge of Apple, and within minutes the company would be worth half its present value. As other software companies, such as Oracle and Lotus, discovered in the early 1990s, a software stock can lose most of its worth in minutes if fashions shift or investors distrust the management.

As a Harvard Business School study recently showed, even if you put “professional management” at the helm of great wealth, value is likely to grow less rapidly than if you give owners the real control. A manager of Google might benefit from turning it into his own special preserve, making self-indulgent “investments” in company planes or favored foundations that are in fact his own disguised consumption. It is only Sergey Brin and Larry Page who would see their respective wealth drop catastrophically if they began to focus less on their customers than on their own consumption.

The key to their great wealth is their resolution not to spend or abandon it, but to continue using it in the service of others. In a sense, they are as much the slaves as the masters of Google.

This is the other secret of the richest among us, and of capitalism itself. Under capitalism, wealth is less a stock of goods than a flow of ideas. Economist Joseph Schumpeter propounded the basic rule when he declared capitalism “a form of change” that “never can be stationary.” The landscape of capitalism may seem solid and settled and ready for seizure, but capitalism is really a mindscape.

Volatile and shifting ideas, and the human beings behind them– not heavy and entrenched establishments — are the source of our nation’s wealth. There is no bureaucratic net or tax web that can catch the fleeting thoughts of the greatest entrepreneurs of our past. Or future.

In this mindscape of capitalism, all riches finally fall into the gap between thoughts and things. Governed by mind but caught in matter, an asset must have an income stream that is expected to continue if the asset is to retain its value.

Wealth is valuable only to the extent that others think it will be valuable in the future, and that depends on running the fortune for the needs of the customers rather than for the interests of the owners. Its worth will collapse overnight if the market believes the company is chiefly serving its owner, rather than the owner serving it, or that it is being run chiefly for the managers rather than for the people who buy its wares. Look at the recent BP debacle and see for yourself.

Socialist regimes try to guarantee the value of things rather than the ownership of them. Thus socialism tends to destroy the value, which depends on dedicated ownership. In the United States, on the other hand, the government normally guarantees only the right to property, not the worth of it. The belief that wealth consists not in ideas, attitudes, moral codes, and mental disciplines but in definable and static things that can be seized and redistributed is the materialist superstition.

It stultified the works of Marx and other prophets of violence and envy. It betrays every person who seeks to redistribute wealth by coercion. It balks every socialist revolutionary who imagines that by seizing the so-called means of production he can capture the crucial capital of an economy. It baffles nearly all conglomerateurs, who believe they can safely enter new industries by buying rather than by learning them. Capitalist means of production are not land, labor, or capital but minds and hearts.

The wealth of America isn’t an inventory of goods; it’s an organic, living entity, a fragile, pulsing fabric of ideas, expectations, loyalties, moral commitments, visions, and people. To vivisect it for redistribution would eventually kill it. As Mitterrand’s French technocrats found early in the 1980s, the proud new socialist owners of complex systems of wealth soon learn they are administering an industrial corpse rather than a growing corporation.

That is why the single most important economic issue of our time – and one that impacts the poor and middle class alike – will be how we treat the very rich among us.

If the majority of Americans smear, harass, overtax, and over regulate this minority of wealth creators, our politicians will be shocked and horrified to discover how swiftly the physical tokens of the means of production collapse into so much corroded wire, eroding concrete, and scrap metal. They will be amazed at how quickly the wealth of America is either destroyed, or flees to other countries.

As someone who admires those men and women who create wealth, I hope this will serve as a “Wealth Creation 101 Course” to the millions of Americans – and the majority of our leaders in Washington DC – who don’t fully understand the economic implications of demonizing the rich. And the implications of enacting policies that treat them like villains in a cheap economic thriller.

Your feedback as always is greatly appreciated

Thanks much for your consideration

Comments

  1. Bob ABob A

    Ziad, your description of American entrepreneurial capitalism is poetic, and patriotic, and does justice to the hard working, wealth creating entrepreneurs in this country who worked for every penny they have. It shows the great injustices of indiscriminate class warfare politics directed toward the rich. Corruption and cronyism are indeed others ways of becoming wealthy, but entrepreneurs are a breed of their own and the economic fate of those who want to attack them for their wealth are intertwined with theirs, they just don’t know it. This is one of the best articles I have read on the topic and I look forward to seeing how the debate will change after the release of your new book because the views you put forth represent truths that cannot be ignored if this country wants to succeed in getting out of the economic crisis it put itself into.

  2. Dan StaffordDan Stafford

    Very well put, Ziad. And with this we can place all questions of taxation into the fold; fair taxes must be paid in any modern nation, but using supplemental taxation of the “rich” (defined now as those making $250K or more by our current administration) is simply confiscation, and confiscation for the sake of government influenced investment at that, which cannot build anything durable. We need to have fair, sensible regulation, and enforce it: Bernie Madoffs cannot and should not be allowed to go forth simply on the basis of schmoozing a few folks at the SEC, for example. But that is an enforcement question revolving around simple common sense as well as standard regulation. Our current administration believes that new regulation, new government hires, and new laws are the ways to put an end to such activities. The creation of Elizabeth Warren’s partisan and pointless consumer finance regulatory agency here in Washington is just one such example. (True, consolidation of regulation can be useful, but it opens the door to huge, taxpayer-funded investigative stormtroopers with deep pockets capable of intimidating and antagonizing innocent parties – which, in addition to being patently unfair, will chill and harm enterprise, and do very little that cannot be done already under existing regulations to protect the consumer). Not a worry? Consider our business. We offer securities-based credit lines through fully licensed, SIPC-member institutions at A. B. Nicholas & Co (www.abnicholas.com). Our negotiated rates are the best in the U.S. market; our record of service to our clients is impeccable. Yet we fear daily that one small word, one statement by one of our agents take out of context, could result in an interrogation by a faceless taxpayer-funded bureaucrat in Washington with time on his hands looking to bully still another small business into submission. Any word, any action can be blown out of proportion and turned into a transgression that the regulators can then spread across the net thereby destroying a small business’s reputation. And faced with paying lawyers to fight deep-pocketed government lawyers with virtually unlimited budgets, virtually any company will capitulate rather than spend all its treasure to clear its name. It’s a shake-down racket under today’s administration, and it is intimidating every small business in the country, no matter what field they are in. It happens constantly too – the news is filled with people who are “guilty” of nothing of any merit, who are then turned into sheepskins for overzealous, politicized anti-rich regulators to nail to their walls for credit from this administration. So yes, the wealthy are fair game in today’s America, as is the enterepreneur and all types of wealth creators across the country, and it’s time to get messages like these of Ziad out there, to help make clear just what wealth (and job) creation is all about. If we don’t take action now, we risk dis-incentivizing entrepreneurs, deflating the profound creative energy that has made this country a magnet for business genius for so long, and sending the vibrant America we have had for over 200 years into the history books forever. This is not just an American issue of course: America is the idea lab of the planet open to all, and all will suffer if the debate context is not altered. Good piece, Ziad, and I recommend it to all. I intend to post a link on my website. Dan Stafford, Sr. Consultant A. B. Nicholas & Co. http://www.abnicholas.com 202.379.4744 Washington, D. C

  3. Faisal MubaideenFaisal Mubaideen

    “The wealth of America isn’t an inventory of goods; it’s an organic, living entity, a fragile, pulsing fabric of ideas, expectations, loyalties, moral commitments, visions, and people”. Well said Dear Ziad, I am a Jordanian American and I lived in such capitalist society. You have my admiration and respect. Many before me did express enough of what I have in mind. Good luck with the upcoming new book. All the best, Faisal

  4. Steve WhitakerSteve Whitaker

    Many wealthy people I have known were very gracious and generous people on the whole with their wealth. Because the wealthy that I have known have been Christians through my church, they have seen their wealth as a blessing and they share it freely. But these characteristics do not necessarily manifest themselves because of economic conditions. These positive attributes are more associated with personality than with economic status.

  5. Lauren KennedyLauren Kennedy

    I do know the rich. My wedding shower was given by the wife of the CEO of Mead. They have a private jet and all the other material possessions of the rich. They happen to be rather nice people. And her husband was uneducated and worked his way up in the company. My father started his own Advertising Agency and did quite well. Very well, in fact. They both all their cars with cash. Porsche included. He did work very hard. But while there may have been certain tasks that are required to run a business that were not his favorite, he did like what he was doing very, very much. However, I regret to say, many wealthy people do not fit this mold. One only has to look at the recent (and on going) fiasco on Wall Street that plunged the country into recession. And many government people are well aware and acquainted with those same individuals. They worked for those same investment companies in the past. They deregulated many of the safe guards that were installed after the Great Depression to insure that it would never happen again. Sure they had some ideas, but they were all self serving. As for Rockefeller, he had one of his governor buddies call in the state police to stop the employees from unionizing. The workers lived in tent communities. The men had gone back into the woods because they expected trouble. The state police fired on the tent communities, unarmed women and children. Some people do work to build their dream business. Some people do come up with great ideas and market them. But there are other wealthy people who are not working hard, not working honest, and are certainly not doing unpleasant jobs. Most unpleasant jobs do not pay very well. Ask the trash collector how many homes he has. In addition, many individuals have come up with great ideas but because they were employed by a company, they get not one dime while the executives clean up. Ask the worker who developed Teflon. He got diddly squat. But the rich certainly got richer on his brilliance and sweat. It seems to be popular these days to idealize the wealthy. Some wealthy people have character, and some have the values of “wise guys”. When questioned about the recent financial rape of the country, one investment broker stated that it was up to the government and the citizens to make and enforce laws to prevent him from being able to do that. Easier said than done when they have buddies in high government offices, strong lobbying, and the citizens worshiping wealth and whomever has it. The same is true for those lacking wealth. Some have character, honesty and discipline, some do not. Better I think to view people as individuals rather than attach characteristics based on their financial worth or social status. The wealthy have done nothing for the country or for the citizens. Certain individuals, who happen to be wealthy have made great contributions. But some people of wealthy means have misused their financial influence and position for self serving ends. They believe that their wealth entitled them to special treatment, that they are above the law, that they are special, better, and more valuable than the pitiful poor who obviously deserved their lot in life. But who can blame them when everyone champions that view, treats them with great respect, believes they are special, believes their claims, and listens to their opinions, no matter what they may say behind their back. There are 800,000 people who die of starvation every year. More than from drugs, more than from crimes, more than from auto accidents. It seems to me that perhaps they need our concern, understanding, and consideration more than the wealthy. People listen when wealth and power speak. We seem to be deaf to those who are struggling or starving.

  6. JaneyBJaneyB

    The problem with your argument is what c2K nd said: it is the difference between capitalism and crony capitalism. No one, liberal or conservative, has any argument with creating wealth by the fair exercise of one’s imagination and hard work. What’s wrong in this country is that many of the very wealthy are buying government and getting privileges that grow their wealth without any work or thought whatsoever. Buying influence shuts out the real entrepreneurs and ruins the quality of life for everyone else. So my solution would be publicly funded elections, whereby private or corporate donations are illegal; along with a flat tax. Let everyone, rich or poor, pay their fair share.

  7. Erik VermeulenErik Vermeulen

    well spoken !! Most people semm to forget that most wealthy people are not born rich but are self made millionairs/billionairs and that they provide jobs, pay taxes, and give the most money to charity. There for all the not wealthy people should prosper the wealthy people !!

  8. Comedy PlusComedy Plus

    Very well said. Also the politicians are rich too. The elite public servants. Those on the left that want to redistribute wealth from the rich to the poor will do so as long as it’s not their money. They exempt themselves from all things they don’t want applied to them. Convenient isn’t it. Have a terrific day.

  9. Lee MillerLee Miller

    Nice article, can see how this works indeed its quite easy (now you pointed it out) especially in relation to Google, they are extremely proactive in their developement. Noted though you didn’t mention any bankers or should I say parasites!

  10. Lyn BensonLyn Benson

    Thank you! This is a fabulous, suscinct way of describing the difference between capitalism and socialism – how capitalism promotes growth for the many, and how socialism promotes death for the many. In biology – where there is no growth, there is death. The death of a dream can kill a person, and socialism leads to death – on every level, including the many. How many millions of people have been killed for disagreeing with socialism?

  11. K7DDOK7DDO

    “Great Wealth” is created out of thin air. A bank barrows it from the ATM in the sky and interest is gathered on that loan. Great Wealth is what the egyptians had as well…and look at what they made a huge pyrmaid of stone…we made the most elaborate systems of banks and beaucr(cockaroachy I don’t know how to spell it right now) that the world has ever seen. …We had to think of something to sell land/resources

  12. Chris GerribChris Gerrib

    1) Everything Ziad says is true – about entrepreneurs. About Paris Hilton, not so much. 2) I, and the vast majority of American liberals, do not want to cap anybody’s earnings. That does not mean that they can’t pay a few percentage points more of income on their taxes.

  13. PaigePaige

    You know, ever since I was little, and all growing up, I’ve had a different perspective of “rich”. To me, then and even still now, Rich was anyone earning $100K or more per year! Rich was (and still is) anyone who could afford the basics and a few nice things. Even if you were making $75K/year or more, you were still quite wealthy. It boggles my mind that a household can earn around $250K and then just be on the threshold of the “middle class”! I’m sure a lot, if not most, people would think I’m nuts for still having this opinion, because so many households are now making $100K or more each year and they struggle to get by. Those who have that kind of income and struggle to get by generally have LOTS of debt. The ridiculous kind… the kind that causes big monthly payments that steal their wealth, where if they would save and even invest the money, they could buy those same things without debt and therefore still be “rich”. That said, most people who badmouth “the rich” are badmouthing themselves and their family, friends, and neighbors…

  14. Damian PalmaresDamian Palmares

    I said this a long time ago and I’m glad someone is finally publishing something that is well written and explains exactly why we need the people who make and have money here in the US…Well written Ziad…kudos…they should make this mandatory for everyone to read here in the United States or else we will lose everything.

  15. Jon SJon S

    Ziad, A cherished friend, who holds a very prestigious position, and someone who has served as a tremendous mentor to me, sent your post over today with this note… “This reminds me of you” – As usual… He’s dead on point! I wanted to thank you for taking the time to share your thoughts on wealth creation, and let you know that I totally agree with your views. I am the living, breathing, and passionately driven prototype that you’ve just described. Everything from dropping out of High School, rebel and outsider too the relentless desire to serve consumers. I’ve never known the meaning of quit, or failure, and consider myself to be the definitions of persistence and determination. Fortunate to recognize my God-given creative gifts, and focusing my attention on making my skills razor sharp, has taken me to great heights in the highly competitive world of professional marketing. And now, it appears my star is about shine brighter than ever before. Not because the new company that I’m about to launch is a great idea, or a better business formula than what’s out there already (global icon to say the least), or because I’ve poured my whole heart and soul into every waking minute, but simply because it’s the morally sound and right thing to do for others… Period. Regardless of the size of the industry Goliath that I’m about to go up against, it doesn’t matter to me how daunting the task at hand will be once I’m out there and exposed. I have total confidence in the heart of the consumer, my talent and experience, and the careful steps I’ve taken to establish an element of surprise, and secure a bullseye distribution channel that will ensure our success for the next 36 months, at the very least. I’ve recently been told by several wealthy people who are a lot smarter than I, that this new property has the power to change millions of lives, defy a number of economic business models, and instantly impact market share with several leading companies… Time will tell. While I do stand to potentially become very wealthy from this concept, what’s most important to me is to always stay focused on the service of others, and not the lure of personal wealth. I realize that success will only come when consumers see the power of the purchase, and the life-changing benefit they can offer to others. I know this all sounds too good to be true, but I’m further along than I can share right now. I promise to keep you updated on my progress. Thanks-a-million for your wonderful insights… You inspire me to fight on! Jon

  16. Rob AdamsRob Adams

    Very well written article. I find it interesting that your article not drawn comments from the opposition. That would create a great dialog. I work with an organization of entrepreneurs and business professionals who come together to assist one another in doing and growing business. We work in an atmosphere we call cooperative capitalism. What so many have issue with is the greed that is nurtured in competitive capitalism… the dog eat dog world that so many see in corporate America. As I said, we work together to build businesses helping the inventor or start up put their business together and understand how to sequence their growth. We help the business owner who has been in business We are there to give guidance as they need it without government intervention. There have been those who have asked if you would teach them how to become rich. That is one of the great things about our organization. We have many highly successful entrepreneurs and business professionals who come to our forums and give their time freely to help others build their businesses diligently so ultimately they will build wealth. We would welcome you as a member.

  17. Steven ChaissonSteven Chaisson

    Well written article, with some truth to it. But even Adam Smith, said Capitalism could not work without one man’s sympathy to another, this is the true invisible hand, Smith was moral philosopher way before he was an economist. That said, What you failed to mention, that by nurturing and mentoring the bottom, we could create even more entrepreneurs and wealth. There is nothing special about the partners of Blackhawk,except they were nutured and mentored to success. Demings explain that America, with all its great potential, may be most undeveloped nation on earth. The Amercian conservative capitalist today have to explain how China in 30 year reduced their poverty rate from 85% to 4%. We have been sitting at 12% for 40 years and are arguing what to do. So lets not only take care of the rich, lets take care of the poor, its in our best interest to do so.

  18. Jim McKnightJim McKnight

    Hi Ziad … much thx., thoughtful & provocative with which I mostly agree … however, as in much, the devil is in the details … specifically, what about the Gini Coefficient? … history seems to suggest that if the income/asset differential is too steep, then that has a socially destabilizing effect … we as a society need to be much more concerned with equality of opportunity rather than equality of outcome, but if the top & bottom get too separate, are we courting our own doom? … best rgds. … j.

  19. Chuck GunnChuck Gunn

    Ziad: This is a fabulous article that should be read by everyone, especially Congress. Also, I would like to answer Jim’s questions: Q1. Why, if lowering taxes on the wealthy create more revenue, did Clinton raising of taxes increase revenues and create a surplus? A1: Clinton raised taxes in 1993 but then cut them in 1997. The surpluses occured in 1998, 1999, and 2000. Q2: Why when Bush lowered taxes on the rich, did revenues nose dive for six years and turn a surplus to deficit? A2: Bush’s so called taxes on the rich occured in 2003. Revenuse did not nose dive but went up in 2004 and then set records for revenue collected in 2005, 2006, and 2007 only droping slightly in 2008. The government provides all of the data. Feel free to read it. http://www.gpoaccess.gov/eop/tables08.html The first table under Government Finance.

  20. Pierre AccariPierre Accari

    Hi Ziad, Your article is a an honest and preventive message to the Administration since it shows them the benefits of not stiffling the activity of entrepreuners and taxing their productivity. In support of your argument, I add the following: 1. The government has proven its mismanagement of the public funds. The budget is increasing a great deal, the offerings to the public are decreasing a great deal and the debt is increasing a great deal. The programs such as Social Security and Welfare are in trouble and are not delivereing their intended purpose. So why would a new program be any different? 2. The legislative system is a corrective system, in the sense that it waits until a problem occurs and then it takes actions. It does not forsee the problems before they occur and take the necessary legislations. The way the current state of affairs is going, the new program will fail after a great amount of resources would be lost. 3. Capping the productivity and the ambitions of people would lead to the reverse affect. Those people would either flee this environment to find ways to make less taxed riches. Therefore, the amount of moeny going into the program would be less. 4. “Give a man a fish and you feed him for a day. Teach him how to fish and you feed him for life.” Giving money to the poor keeps them poor in most of the cases. 5. An interesting way to help the poor is Mother Theresa’s way. She got the rich talking to the poor and helping them. She did not take from one to give to the other which creates animosity. It would be interesting if the goverment or whomever can get the rich and the poor to finds way to work things together for the benefit of all and the government create the proper economy. American are very good hearted and I am sure they would not refrain from helping when it is coming from them. God bless you.

  21. williamwilliam

    there is one reason why Clinton left a surplus when he left eventhough he raised taxes and it would have happened under any president in the white house at the time. The whole world had been scared to death that at the turn of thr 2000 the whole whole world was going to go black because all systems that used a computer were going to fail. Every business, private or public, was spending like hell to upgrade the technology infracstructure. All it takes is to go back and read earnings reports of tehnology companies in the 90s. the economy boomed in spite of Clinton not because of him.

  22. Big BobBig Bob

    An excellent and thoughtful piece that should be required reading for every American. However, the white print on a dark background makes it difficult for some of to read. What’s wrong with black print on a light background? It’s served us well since the days of Johannes Gensfleisch zur Laden zum Gutenberg.

  23. TimTim

    Exactly right. The environment that allows all this to happen is private property which includes land, capital, and other assets. Once those are taxed or regulated to a certain tipping point, they are no longer really private property and the environment is spoiled. A stable, predictable government free from rampant corruption that defends and protects private property through law enforcement and its judicial system is the other required factor. These simple truths escape 90+% of the world’s population include a good 1/3 of Americans.

  24. ck2_ndck2_nd

    Great Article, two points that were touched on by DianneB and Jim that probably were not covered sufficiently. There is capitalism, and there is crony capitalism. Most liberals/socialists/progressives/collectivists don’t seem to get that in any economic systems the people who focus on the “correct” things for that system get ahead. In Capitalism the “Correct” thing is meeting customer demand ad Ziad points out. In Crony capitalism and statist systems the “correct” thing is working the government to game the system. As far as a new aristocracy. When Garth Brooks retired from County music he said that he made more money than his grand kids would ever be able to spend. Hank Williams Jr. relied that he thought that Garth was seriously underestimating the abilities of his future grand kids. There are plenty of examples of fortunes made and fortunes lost in real capitalism. In crony capitalism those who have money attempt to use the systems to protect from competitors and create barriers to entry.

  25. gary kuhngary kuhn

    Mr. Abdelnour, Thank you very much for making it clear that in America, we have the God given right to life, liberty and the ownership of property. We also have the right to pursue mediocrity, which is a right that Capitalists and entrepreneurs typically select as their quest.

  26. Joe KJoe K

    An excellent and long overdue article Ziad. Americans need to learn more about the nature of wealth creation as a means of achieving the same for themselves, instead of being envious and tyrying to us the “Nanny State” as a means of punishming the wealthy and redistributing the wealth (private property). And in response to Dianne B., put the Communist/Socialist playbook down long enough to realize that the realities of today, disprove your thesis. Capitalism does not lead to an “aristocratic oligachy, feudalism and ultimately totalitarianism”. The simple reason is competition in the marketplace. Using the example of GM. In the 70′s they owned the automobile industry and GM was the largest corporation in the world. Then there was a little event called the oil embargo happened and a small, unknown company offered a simple solution, better gas mileage. They did not compete on power and torque, not on flashy design and ornamentation, nope just better gas mileage. Today, that company, Toyota surpassed GM in production/sales and that was before the bailouts. There can be no oligarchy as long as there is competition and as long as the government doesn’t use regulation to choose winners and losers. Competition and innovation keep companies honest and nimble or it replaces them. Ford replaced the horse and buggy, MP3s replaceds CDs that replaced Cassette and 8-track tapes, that replaced albums. And so it goes. That is also why if you look at the Fortune 100 companies of ten years ago, it is different than the Fortune 100 of 20 years ago and different that the Fortune 100 of today. New problems create opportunity for new companies that provide the new solutions. And please understand the difference between the “producers” who create value for their customers as the means to create wealth – Bill Gates and Steve Jobs versus the children the wealthy who may be famous but are not wealth producers, merely high end consumers. As long as their are problems to solve, their will be individuals who will take the risk to create a solution as long as the potential reward is worth the risk.

  27. Morgan SeegmillerMorgan Seegmiller

    Thank you for taking the time to write this. IT’S URGENT THAT WE ALL BEGIN TO TAKE THE TIME OUT OF OUR LIVES TO ENSURE THAT THIS GREAT SOCIETY THAT WE ALL ENJOY REMAINS A GREAT SOCIETY. Basic economic understanding is fundamental to maintaining our capitalist system and we all must educate our kids and our friends. Thank you for doing your part in writing this essay. –Morgan Seegmiller

  28. Bob HalvinBob Halvin

    You can not tax wealth (income) unless you allow wealth to be created. Government does not create wealth but it can creat an enviornment to allow wealth to be created. If government creates an enviornment where no one can fail then the irresponsible will engage in high risk business activities knowing that the government will bail them out. If government creates an enviornment where a safty net becomes a way of life, those indiviuals rely on it will not work.

  29. DennisDennis

    Ziad, This is a very well-stated essay that explains pretty well how the wealthy (those who really produce, not just those who have or have been paid a lot of money like celebrities) are essential to the economy. Without taking care of this group we run the risk of them going elsewhere. Since when is the “American Dream” done better elsewhere? Since the entrepreneurial types among us have been restricted. It is not that the wealthy are essentially more moral than others, and they need to be ethical in their businesses, but if they are gone, this economy will go the way of Greece, Spain, and Portugal. Worse case scenario: we redistribute the wealth and then all of us become poor. Look at Cuba, the Soviet Union, and precapitalist China if you want to see what a culture without wealthy is like. Not for me, thank you very much.

  30. williamwilliam

    Jim… Buy a history book and read it. Facts are important and stubborn things. For example: One of great urban myths of American business history is that the head of GM once said “what’s good for General Motors is good for America.” That line is once again getting a lot of press today. There’s one problem — it’s not true. Here’s what happened. In 1953, President Eisenhower nominated GM’s CEO Charles “Engine Charlie” Wilson to be Secretary of Defense. During the hearings, when asked if as secretary of defense he could make a decision adverse to the interests of General Motors, Wilson answered affirmatively but added that he could not conceive of such a situation “because for years I thought what was good for the country was good for General Motors and vice versa.”

  31. JimJim

    There is a great deal of historical revisionism happening here. Liberals and progressives don’t hate or even begrudge wealthy people. We do have a problem with crooks who use our retirement to gamble on casino derivatives, and then expect the federal government to bail them out (there is an example of socialism for you–privatizing the profit and socializing the risk). Recent wall street action and other corporate maleficent beg the question of Ziad, does wealth accumulation really indicate moral integrity? Does that suggest that people who aren’t rich, don’t have moral integrity? I don’t think rich people necessarily lack moral integrity, but I don’t think it is an indication of it either. There are other great attempts to revise history by the far right especially in an attempt to make Hoover into a progressive, so conservatives don’t have to take the blame for the great depression. Hoover was against regulation. The favorite phrase of the Republican presidents in the 1920s was “What is good for GM is good for America.” This is what led to the great depression. Hoover did implement some tariffs after the depression hit, but that was a drop in the bucket compared to what came after FDR. The GDP drop from the great depression hit a few months after FDR took office. It skyrocketed up over the next several years–unemployment went down by half by 1937. Questions for you who see class envy from those espousing liberal policies? If redistribution is so bad then why, since the income tax was passed (1916), has the US built the strongest economy and middle class known to the world? If Keynesian economic is not successful, then why from 1933 to 1980 (Nixon said “we are Keynesians now) did the US experience explosive economic growth? If redistribution and Keynesian economics are so unfair to entrepreneurs, why was has there always been a thriving wealthy class since the US inception even during the New Deal and Great Society era? Why, if deregulation is so troublesome, did we not have banking and financial calamities like the Savings and Loan scandal, stock market crashes, and the derivative blowup from the time of FDR until Ronald Reagan come along and dismantled the regulatory infrastructure? And my favorite historical revision attempt: Why, if lowering taxes on the wealthy create more revenue, did Clinton raising of taxes increase revenues and create a surplus? Why when Bush lowered taxes on the rich, did revenues nose dive for six years and turn a surplus to deficit?

  32. Ronald WopereisRonald Wopereis

    Hi Ziad, A nice blog indeed! IMHO there is a rationale behind all this: people just don’t understand how money works. Recently i came across a very enthousiastic person. He was collecting money to build a school in Ghana, Africa. I asked him: what will you do with the money? He said: build a school in Ghana. I repeated: what will you do with the money? He gazed at me, and repeated: build a school in Ghana. He still did not understand what i was asking. I was asking what he was going to do with the money he collected. So i clarified my question. I said: will you give the money to a local construction company? Or will you buy materials in Europe (this was in Holland) and ship them to Ghana? Some other people in the room started to get where my question was leading. He still didn’t. He said: I haven’t thought about it yet. So i went on to explain. I said: i give you a 100 euro note. this is the physical money. when you give this note to a constructor in the local village in Ghana, he will have the money. so he will go to the bakery, and give the money to the baker. and the baker will pass the money on. This is how money works! Ziad, you’d think that people who ask for money know why they want it. But the reality is different. Best regards, Ron

  33. RM VeharRM Vehar

    “Oliver Stone, Carl Marx you insolent impertinent “putzes”, your character Gordon Gekko is a putz! It’s not greed that drives this nation, or the “doers”, or the titans of this great nation; it’s Ambition, incentive, and the pursuit of The American Dream!!….. (Not the European Dream, the Soviet Dream, ….the Socialist Dream,……or the “Obama Dream” ….it is THE AMERICAN DREAM!). ….Work ethic, hard work and taking risks for the enjoyment of the fruits it produces. …And it will be shared with whomever the producers are willing to share it with. You don’t decide with whom I share my prosperity (success)…………I DO! You have every right to pursue happiness and wealth. Be not ashamed of doing so. Your founding Fathers penned it in permanent ink: “…..We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness….” (The unanimous Declaration of the thirteen united States of America -In Congress, July 4, 1776) I am willing to pledge all I have to preserve this promise, this hope, this Dream. I will “not go quietly into the night”! The government will not take these liberties away without a fight to the end. As long as there is just one shred of a chance for the “pursuit” of happiness, The American Dream is alive and I will give my full measure, if necessary, to preserve Her for me and my family. Be “resolute”. Pass this on now or risk the fate of working the rest of your life to come out from under the tyranny of socialism, the strong arm of government and the suppression imposed on you by the “Statists”.

  34. Barack ObamaBarack Obama

    Your article is full of lies. You capitalists are evil thieves of the hard working laborors products. All you do is eat fine meals and fly around in your jets on the backs of the poor, just like slave owners of old. Workers of the world will unite and take you down from your thrones and palaces. Only the government can keep capitalists from continuing to steal the fruits of laborers.

  35. PaulPaul

    Excellent, but I was hoping that you would go on to explain that these same people know better than many elected officials who never built up any business how to help people and where to use their money for the greatest good. Yes, they know how to continue to grow wealth but also how to hold onto it and how to use it effectively. Who but they should be able to know where to help their fellow man. They have worked as you say to answer the needs of the consumer and have solved the problems of this society, and laws where at one time made to encourage and reward them if they used their gains to help in charitable ways. Look at the colleges, hospitals and many charities they have established that go on helping many years after they are gone. Should we take it away and expect the government to do this? I say no, let them enjoy the fruits of their labors, and the joy of sharing them.

  36. Michael AlvarezMichael Alvarez

    Poignant article with great content. Perhaps socialism appeals to congressmen because they have voted their own social net? If our congress had to retire on the common Social Security system we might lose a few Marxists and gain a few capitalists? What if congress had to do their own tax return … ? Speaking to a free market, “… labor is not a commodity or article of commerce…” 15 USC 17; US Const Art I Sec 9 Cl 4 too. Taxing labor as property is originally Marxist Plank #2 and cost this nation 1.4 TT annually. Over the long run this production hurtle is adding up to become insurmountable. Witness the debt mountain and an exodus of manufacturing spanning the same period. Indirect taxation / consumption based taxation was this countries tax mode virtually until the 1950s. Today, consumption based taxation is supported by this nations Largest Grassroots Organization, called FAIRTAX.org . HR25, before House Ways and Means committee since 1999. Formatted from this Republics beginning, FAIRTAX is supported by Harvard, Stanford, Rice, MIT, Yale, Cornell, Heritage, CATO, Argus etc. Tax Consumption, not Production. People are not property unless they want to be. Are you a Marxist? The Graduated Income Tax is. Makes me angry. What about you? Call 800-Fair-Tax now. Virtue before honor. Be well, good luck.

  37. Michael ClarkeMichael Clarke

    Excellent post. It says as much about the indomitable spirit of the entrepreneur as the misguided attitudes of the progressives. If one were to make a rich person poor it would not take long for that person to become rich again. It is all in the attitude of self responsibility and service to others. One thing that has occurred to me recently is that without the rich and entrepreneurs there is a diminishing economic return that sets in where, at some point, taxation of the rich reduces the rich’s ability to drive business to support the government infrastructure. For example, if there was no business to tax and everyone just worked for the government and paid 30% income tax, how would the government manage to pay out the other 60% in salaries? Where would it get it? (not to mention all the other overhead and infrastructure expenses)

  38. giscard maatoukgiscard maatouk

    DEAR MR ABDELNOUR I WOULD BE GLAD TO ENROLL IN UR COURSE ASASP WEALTH CREATION 101 . IT IS VERY CRUCIAL TEACHING AND SHARING EXPERIENCES ABOUT GETTING RICH RATHER TAKING FROM THE RICH TO GIVE THE POOR. I THINK THE POORS NEED OPPORTUNITIES NOT WEALTH REDISTRUBITION

  39. Jeffrey L. NelsonJeffrey L. Nelson

    Mr. Abdelnour: An interesting piece with many on target thoughts. The entrepreneurial thinking and drive normally provide benefits to the purchasers of the goods and services offered by a business. Without buyers with ample means to make purchases, they and the wealthy will each have less. Entrepreneurs have contributed greatly to the growth of many communities.

  40. Scott J. Andrews ~ Global EntrepreneurScott J. Andrews ~ Global Entrepreneur

    Mr. Abdelnour, thank you for taking the time to pen this incredible posting. I stumbled upon this via a LinkedIn Group posting. This is a master piece for free market capitalism. It’s akin to Martin Luther nailing his 95 Theses of Contention to the Wittenberg Church door. The “mindscape” and way of life explained herein is what drives this global entrepreneur who came from the lower-middle class to stay the course despite such volatile times.

  41. Nicholas A. EckhartNicholas A. Eckhart

    Mr. Z.K. Abdelnour, During my weekday routine of listening to “The Mike Gallagher Show”, I heard your interview regarding your recent blog: Why We Need the Rich. Needless to say, I was fascinated by both the dialogue and the article I later read. Actually, you’ve articulated the same sentiments I’ve had for years. Moreover, your blog was quite insightful. For me, it seemed to be just common sense and basic economics. I would pose a simple question to my peers, “Have you or somebody you know ever worked for a poor person?” The answer is, of course, “No”. Consequently, I never understood the constant barrage and assault from the general public, the media and our politicians on “The Rich.” It is an inherent fact that the rich possess the means of production. When you used wisely and honorably this benefits everyone from the middle-class to the poor. Someone once said, “A rising tide lifts all boats.” Take it from me. At best, I am a fledgling entrepreneur struggling to create wealth and therefore become a wealth creator like you. In fact, I am the one who went to college but never managed to graduate. I am the one with the background in sales, chosen for my performance because I knew the value in serving my clients well. I am a self-described student of life and voracious reader which manifests in becoming a self-educated man. Recently, I realized that I need to do the “insufferably boring” tasks (whatever that may be). I am not at all rich. However, I am the first to come to the defense of the rich because I know I desire to be that one day. Show me someone who doesn’t want to be rich and I’ll show you a liar. I also admire greatly those men and women who create wealth. Finally, I just wanted to point out your most profound statement in your article. One that will be immortalized in my mental database of axioms and that is, “Capitalist means of production are not land, labor, or capital but minds and hearts.” I thank you, sir, for your enriching blog. I have become an admirer and I will be reading your other articles. I hope that through my own prose in response to your article that I have graduated from your course in “Wealth Creation 101″–with honors. Regards, Nicholas A. Eckhart Valencia, CA P.S. Just curious, could a person such as yourself, a wealth creator, mentor a person like me on how to become a wealth creator?

  42. Jessica MoufawadJessica Moufawad

    Very interesting the way you have justified the non-attack of the rich, however there are two main points that have popped in my mind: First, I believe that as valuable and original such analysis is, as important it is to always consider the REST OF THE WORLD, especially with globalization, capitalism is not considered a local USA feature. Second, it has come to my attention a contradiction in the article concerning “value”. Is value decided by the ownership (recall the Google example) or is it decided by the market and the consumers? Thank you, Best Regards

  43. Richard ShattoRichard Shatto

    Ziad… excellent thoughts with superb execution! You’ve articulated the true essence of economic growth; untethered capital, coupled with brilliant ideas and superb execution. And, it only works when it serves the higher good. Both personal greed and covetous redistribution will bring it down.

  44. Mel AvanteMel Avante

    This my point of view. All Americans interest have to be protected. The Rich ca’t be taken advantage of or expected to tow the line. The poor or miidle class can’t be expected to tow thw line. I think we as Americans fail to see the big picture and the fact that everybody needs to grit their teeth, dig in and show some teamwork and comradery to begin to move forward. It’s absurd to think that the policies of a few will change the lives of many when there’s little cooperation no matter what the policies are, or who implements them. I do however think this article has some very good points. I played football for the winningest coach in Illinois history. He taught us this ” You are only as strong as your weakest link. “

  45. LesLes

    A simple thought, or explanation, usually makes the most sense. This was lengthly, but truly simple. It doeas make a tremedous amount of sense, and should thus be heeded.

  46. Lynda J. RothLynda J. Roth

    Fabulous post! I hope politicians and the American public are listening. I agree that how we treat ‘wealth creators’ will determine the future of this nation. After all Bill Gates, Warren Buffet, Steve Jobs et. al. did not just make themselves rich they made millions of others rich with them.

  47. Don CordierDon Cordier

    Mr. Abdelnour, You have stated most eloquently and succinctly the very thoughts that I have kept in my heart since my very first endeavors in business. Thank you very much! Don Cordier

  48. Plano JoePlano Joe

    Thank you for the beautifully written article, which I read after your appearance on the Mike Gallagher radio talk show. Recently, I have pondered the biblical tenth commandment. Its exhortation against covetousness is eminently practical, even if one doesn’t hold it sacred. It is honored by free market capitalism, and grossly violated by redistributive socialism. I view covetousness as the basic moral flaw of redistribution, and the primary motivation for it. I had reached a point where I understood how redistribution destroyed the raw capital of nations, as it did in the Soviet Union and the Eastern Bloc. After reading your message, I now see that the destruction of raw capital is the lesser portion of what is destroyed by forced redistribution. Far more damaging, is the destruction of a more valuable capital, the producing “minds and hearts”, the productive “ideas, attitudes, moral codes, and mental disciplines”. Raw physical capital is only a healthy manifestation of the more valuable capital, this “mindscape” of free market capitalism.

  49. Ruth MuttiRuth Mutti

    Well put! Thank you for expressing this so eloquently. This really needs to go viral and I will do my part in helping keep the structure of this country intact.

  50. LynnLynn

    I found your article very interesting and I was only taught that people sush as the Rockefellers & Vanderbuilts run the entire worlds economy, and even leaders as the president of the U.S. are merely a puppet on a stage where the rest of us are at their mercy. I know of one young man born into extreme wealth ( father is a billionaire) and made the comment to be that most Americans are ignorant and don’t know how to make money or even manage it. Afetr reading this, I am starting to believe he is correct, rather than his arrogance I once ignored.

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