I’ll open with a thought that could probably just be a tweet on the limitation of markets.
I forget where I heard it, but it’s the idea that in capitalism, your wealth is a measure of “fucks given”. Did you give people what they want?
Ok. This isn’t wrong in the same way it’s not wrong to say ice cream comes from cows. It just leaves a lot out.
The 2 economic ideas that muddy the picture are consumer surplus and externalities. Consumer surplus lies on a spectrum depending on how competitive or monopolistic a particular market is. It’s not enough to create value to get paid, you have to also extract the value. If you’re in finance, how many underperforming asset gatherers do you know that would blow away the celebrity net worth of some of your favorite artists, musicians, authors, or actors. The value created vs extracted channel is very lossy.
The mediation of value created vs extracted is also downstream of rules, some of which are extremely sharp divides. Think of college athletes. They’ve always created tremendous value for their universities and alumni, but one day the most they can get is a scholarship and the next they can sign 7-figure NILs. Many of these athletes who don’t end up going pro are earning more in college than they ever will in their jobs later in life. Their value didn’t change. But their bargaining position did once their upside was allowed to float.
Finally, there are externalities. There’s a lot of rich Lee Garner Jrs out there. Or how about this one:
If you want a spicy example, just remember that a decent portion of the population would put pharma companies producing vaccines on this list.
Finally, you have businesses that derive the bulk of their income from a small percentage of their customers. The addicts power users. From Zynga-like game companies, to modern versions of casinos ranging from brokerages, exchanges, and even card companies like Panini. I’m sure TB12 is getting into a great business that’s gonna make him even richer. You can decide if every dollar made in his life created the same amount of value.