I recently read in Forbes that the majority of those who made its "500 Richest People List" got there by starting their own businesses,.
In other words, these people were entrepreneurs. This phenomenon can be attributed to the meritocracy.
This is the time of year when high school seniors are considering college.
Back in the bad old days of the 30s, 40s and 50s, students had a better chance of gaining admittance to some prestigious colleges and universities due to their birth rather than their intellectual skills. It's not that way today as students get accepted after presenting high test scores and a portfolio of many extracurricular accomplishments.
Gone are the days when acceptance was based on social status. Today it's about brains and drive. This shift has caused a change in the economy.
In the last century men (I didn't mean anything sexist here - there were almost no women working in executive jobs then) made their fortune managing industrial concerns. Today, manufacturing has diminished to 9 percent of the gross national product from 30 percent just a couple of decades ago. We no longer get rich by making something, we earn prodigious sums today by trading things. We no longer build, we buy and sell. It is the way of the world.
Grain traders, commodity traders, derivative traders and investment bankers just buy and sell. I read a story of a smart, self-made guy who's net worth is $1.6 billion who has seven people in his office trading derivatives. These folks are in the money centers because that's where the money is and where the contacts are. These are driven people who hang around with other rich folks because deals cannot be done with poor folks.
This group literally works from breakfast until dinner making contacts. They spend their vacations where their clients vacation for fear of losing a huge monetary deal.
These people aren't after big salaries, they are after huge incomes. They want capital gains so they trade after the holding period to secure a 23.8 percent capital gain tax rather than a 40 plus percent income tax.
If your income is $100 million, then this taxation difference will gain you $20 million a year.
These people aren't like you and me. We worry about paychecks and they worry about deals.
The world is different today. The biggest difference is today's economy is being driven more and more by short-term goals and deals. The empire builders all are gone and the manufacturing jobs left with them. Today the economy is all about IPOs, supplemental offerings, trading desks, short-term returns, and short-term goals.
Water flows to the sea by following the easiest path. The same is true for money and talent - it will follow the path that leads to the greatest economic returns.