Differing Views of Wealth Creation

What’s the latest news on wealth creation?

The great battle continues… Dow down 53. Gold up $23.

Up vs. Down

Zombies vs. Producers

Inflation vs. Deflation

The feds vs. the market

Expansion vs. contraction

Centralization vs. decentralization

Bull vs. Bear

And no one knows exactly how it will work out. Some are betting on a recovery and a new bull market. Others have put their money in gold or cash to preserve their wealth…expecting more crises and more calamities.

Mr Market is determined to deflate the debt bubble. The feds are determined to stop him. One destroys paper credits. The other prints more of them. The outcome is still in doubt.

Another way to look at this great battle – it’s a fight between the outsiders and the insiders. The outsiders are unruly…uncontrollable…and unpredictable. They’re the creative destroyers that Schumpeter was talking about, always finding new ways of doing things…and destroying the old ways. But in their chaotic, wham-bam approach…they actually build wealth.

Every new industry is created by outsiders. Henry Ford was the son of refugees from the Irish potato famine… Steve Jobs was a college dropout…who admired Edwin Land, another college dropout who invented the Polaroid film industry. Silicon chips were developed with money from potato farming.

But once the founders are gone, the insiders take over. Tech companies pass out of the control of the techies and into the control of salesmen and accountants. Business school grads take over. Their goal is not to create new wealth, but to preserve and expand their power, their status, and their wealth. (Just take a look at how GE keeps it self from paying taxes). They hire lobbyists to get special favors. They support laws to prevent competition. They favor regulation and licensing to keep out upstarts and give generously to politicians of both parties.

Outsiders create new wealth. Economy insiders protect and redistribute it mostly to themselves.


Bill Bonner
for Markets and Money

Bill Bonner

Bill Bonner

Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail Markets and Money.
Bill Bonner

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You speak the truth. Working for HP I see it everyday and just shake my head and try not to get my head chopped off.

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