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Why ‘Eating the Rich’ Undermines Everyone’s Prosperity

by David Hebert
September 1, 2025
in Finance
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A latest report from The Heritage Basis argues that “the rich” will not be “idle idols” however are as an alternative house owners and buyers of wealth-creating ventures. By means of their possession of productive property, they’re the driving power behind general wealth creation within the nation and, in some circumstances, the world.  The report reveals a vital fact that’s typically misplaced in immediately’s political rhetoric: the overwhelming majority of American wealth among the many most rich (88.2 p.c) consists of property linked on to companies and financial manufacturing. Regardless of the generally accepted perception that millionaires maintain their cash in actual property or “yachts, sports activities automobiles, personal planes, gold bars, and jewellery,” most of that wealth is funding, not consumption items.

Constructing on this vital fact, we emphasize two further insights that will inform our present coverage debates, notably because the Trump administration seeks to increase authorities possession stakes in personal firms.

First, we should acknowledge that capitalism, for all its flaws in observe, is basically a system that rewards serving others, not exploiting them. Take a look at Henry Ford: he benefited tremendously from determining methods to mass produce automobiles such that the widespread man was in a position to afford a automobile. However I undergo you that, whereas he grew to become fabulously rich from his improvements, the true winners of this trade have been individuals such as you and me. On a regular basis Individuals obtained higher entry to transportation, basically reworking our lives. Folks like Ford already had entry to this then-privilege, so whereas he could command extra wealth on account of his efforts, the efforts themselves improved our lives way more than his.

The individuals who create medical remedies and vaccines towards illness additionally typically turn out to be rich. However when individuals all around the globe are free of contracting illnesses, having fun with a basically higher and happier life, the wealth gained by their inventors appears small. 

Or consider tech moguls like Invoice Gates, Steve Jobs, and Tim Prepare dinner. By bringing computing energy to the lots, they basically reworked the way in which all of us stay our on a regular basis lives.

Contemplate this advert for computer systems from 1990:

In immediately’s {dollars}, these things would price $6,590, $2,533, and $5,829, respectively. Additionally in 1990, the common nominal pay for the entire United States was $23,602, that means that the common particular person must work 220 hours, 84 hours, and 194 hours respectively, to purchase these things. As we speak, with a median wage of $36.44 ($72,880 yearly), the hours labored to afford these things (at their 2025 costs) could be 181, 70, and 160.

However we wouldn’t be shopping for laptop gear from 1990, anyway. Pc costs have really fallen dramatically. On the time of this writing, a comparable baseline iMac prices $1,299 (35 hours of labor).  The newest LaserJet printer from HP prices $169 (4.6 hours).  IBM offered its laptop {hardware} division to Lenovo in 2005, and a Lenovo desktop laptop now prices $859 (23.5 hours). Even when we ignore the large enhancements in high quality and the explosion of computing energy contained in these gadgets, computing energy has by no means been extra inexpensive. Tens of millions of careers have been reworked by the efforts of Invoice Gates, Steve Jobs, Tim Prepare dinner, and everybody else from engineer to meeting line at Microsoft and Apple. And whereas the CEOs and staff of those firms have absolutely turn out to be wealthier, the true winners of the improvements are on a regular basis individuals such as you and me.

In a free society characterised by capitalism, wealth is generated by serving others. Those that can greatest serve others — and devour lower than they generate — discover themselves amassing what we outline as “wealth.”

The second lesson we are able to glean from the Heritage examine is what the ultra-wealthy really do with the wealth they amass. Practically 90 p.c of their fortunes are tied up in productive financial exercise, not luxurious consumption. Solely three p.c of the highest one p.c’s wealth is in client durables — issues like automobiles, furnishings, and jewellery. For the underside quintile, that ratio is prone to be 15-20 p.c.  

Removed from being “idle wealthy,” the rich make investments their fortunes, offering the capital essential to fund elevated financial exercise. For the remainder of us, which means extra jobs, extra manufacturing, and higher entry to the products and companies that allow us to stay healthily and wealthily, nonetheless we select to outline these phrases.

That funding cycle additionally helps clarify why “consuming the wealthy” is a recipe for catastrophe. Sticking the wealthy with exorbitant federal taxes can solely imply that wealth is faraway from productive financial makes use of to pay for public sector malfeasance. Policymakers will not be taking gold cash out of a swimming pool à la Scrooge McDuck, they’re taking investments out of the personal sector. The lack of capital impacts not the wealthy, primarily, however the prosperity that the remainder of us have come to take pleasure in and rely upon.

The truth is that the wealth of the wealthiest individuals in America largely represents the market’s evaluation of their potential to proceed serving their clients sooner or later. As new data involves mild, this evaluation can and does change. Tesla, for instance, began off white-hot, with inventory costs skyrocketing. However these days, after the abysmal launch of the Cybertruck and delays in its manufacturing and supply, mixed with a few of Musk’s stupendously unhealthy investments, the market has revised its evaluation of Tesla downward.  Because of this, Musk has misplaced greater than $80 billion in wealth so far in 2025 alone.

This brings us to a troubling growth: President Trump, Congressional Republicans, and members of the so-called New Proper have lately floated the concept that we should always tax the wealthy extra. Much more alarmingly, these identical individuals maintain that the federal authorities ought to take fairness stakes in personal firms. This can be a elementary departure from the rules that allowed for the creation of the wealth policymakers now want to strip away, and a whole rejection of lower-tax, small-government Republicanism.

President Trump is “taking a ten p.c stake in Intel,” making the federal authorities the one largest stakeholder of the corporate. Earlier this 12 months, the sale of US Metal to Nippon was authorised, contingent on the US authorities receiving a “golden share.” Whereas Trump is in workplace, this golden share is held by the President (i.e. Donald Trump), and after he leaves workplace, it’s going to revert to being held by the Treasury and Commerce Departments. Importantly, whereas he’s in workplace, the President may have veto energy over some manufacturing and wage choices. Not wishing to be left behind, the Pentagon is taking a 15 p.c stake in MP Supplies, a producer of rare-earth magnets, amongst different issues.

All of this shifts the nation away from the capitalism that created an financial system (and certainly, society) the likes of which has by no means been seen in human historical past and towards the kind of capitalism present in, say, China. Making an attempt to “out-China” China is a idiot’s errand.
The truth is that economies, societies, and the nation itself are greatest served when particular person persons are given the liberty and instruments to succeed, not when authorities bureaucrats choose winners and losers. In a free-market, capitalist system just like the one the US for essentially the most half enjoys, one of the simplest ways to serve oneself is by serving others.



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