Thursday, August 6, 2015

QUORA: 'How is becoming a billionaire even possible, chronologically?'

Quora is a nice little social media website founded by two former Facebook employees. According to Wikipedia:

Quora is a question-and-answer website where questions are created, answered, edited and organized by its community of users. The company was founded in June 2009, and the website was made available to the public on June 21, 2010.[3] Quora aggregates questions and answers to topics. Users can collaborate by editing questions and suggesting edits to other users' answers.[4]

You can also reply to other users’ answers.

I left this answer:

I’ll assume we’re talking about making a billion dollars, as opposed to appropriating it by hook or by crook (and leaving aside inheritance). To make money is to create an economic value that others are willing to pay to acquire from you. To make a lot of money results from creating a lot of value for a lot of people. Billionaires typically create mass market products that are profitable, yet affordable to and desired by a large number of people.

So how is it possible for anyone to create enough desirable, affordable products to make a billion dollars? The question seems to imply a basic misunderstanding of how wealth is created; that wealth creation is primarily a product of an individual’s own physical labor. This is called the “labor theory of economic value.” On that basis, no one can ever rise much above poverty—let alone make a fortune—because an individual’s time is obviously limited. Chronologically, who would have time to make a billion dollars? No one; and that’s beside the point. The question misses a crucial truth: The labor theory of economic value is wrong.

Making money—i.e., creating wealth—is not primarily a result of physical labor. The fundamental cause of wealth creation is intellectual labor—ideas, imagination, intelligence, leadership, logic; i.e., reason. A productive billionaire, like all successful entrepreneurial businessmen, is a person whose intellectual ambitions far exceed his own meager physical ability to realize those ambitions. So creative geniuses like a John D. Rockefeller, Henry Ford, Bill Gates, Steve Jobs, et-al, create, direct, and grow great companies that employ thousands of other productive people, whose work is integrated and directed by the industrial leader toward the productive mission envisioned by the leader. Thanks to the current internet and information technology revolution—what some have called the Second Industrial Revolution—we can see examples of productive billionaires all around us, and see the evidence in the myriad creative results we all enjoy.

Once one understands that man’s mind, not his muscles, is the fundamental source of wealth creation, one can easily observe how becoming a billionaire is chronologically possible. With each consumer that opts to buy the innovator’s idea, in the form of the final product, the innovator’s fortune grows. Since intellectual potential is essentially limitless—and given a free trade, freedom of contract  economy—the potential for a single individual to make money is effectively limited only by the potential number of consumers in the market. Not only that, but given the growing world consumer market, the opportunity for anyone with an innovative idea and the appropriate drive to become a billionaire is correspondingly expanding. And that’s great news for all of us.

Related Reading:

Steve Jobs’ Philosophy of Life—Craig Biddle for The Objective Standard

Atlas Shrugged—Ayn Rand

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