Thanks for engaging with this in a quantitative way. I particularly appreciate the earnings/valuation accounting, this really helps anchor the discussion.
I agree you’ve demonstrated that there is enough economic growth to not contradict PG’s hypothetical numbers. But I think we should strive for a deeper understanding than “all they had to do was capture… 0.05% of the increase in GDP”.
Just as a counter-example, a Robber Baron could monopolize all the profits in the rail sector and run a drug mafia on the side, and it would show up the same in your numbers; “all they did was capture 5% of the increase in GDP”. In other words, like PG you don’t actually prove the point you’re arguing; you just provided a story that doesn’t contradict it. (Capturing the annual wealth creation of ~350m*0.05% ~= 175,000 people doesn’t seem on its face to be obviously fair or routine, rather it seems like a tail outlier worthy of further investigation.)
The way I would frame it is, what we actually need to do is look at the firm level metrics and figure out what is going on. (A founder becoming a billionaire typically means their company grew to the order of $10b - let’s look at the business practices of $10b companies or founders with confirmed liquidity valuations in our range.)
If you look at founders like Jobs, I think it’s pretty clear he made his first $b (via Pixar) just by making things people loved. Companies like Uber obviously relied to some extent on regulatory arbitrage, and you can debate the timing of e.g. Google founders’ shift to monopoly rent extraction, I would likely argue they got their $b “fairly”.
The second order question of course - would markets price your company at $10b if they didn’t think you had a future monopoly opportunity? Expectation vs current reality makes this all more complex.
But I think for PG’s purposes you can ignore the second order and just talk about successful, billionaires who built things that people loved.
The problem of course is that nobody likes billionaires these days (except politicians of course) and so it’s a much less marketable narrative. And there is the crux of the problem; this post is not an honest attempt to increase our understanding of the world, it’s a political slogan.
Agreed, and I think this is reasonable. There are a great many examples of people who amassed wealth in unsavory or illegal ways. And my sense is that almost nobody defends all forms of wealth acquisition as moral and good.
That said, I think there are a great many people who believe that all forms of wealth acquisition (above a certain scale) are fundamentally immoral. And that belief is held because they believe, "The only way you get a billion dollars is taking advantage of working people, not earning it."
So, my read is that PG's point is not to defend all billionaires. But instead, to debunk the incorrect folk-belief that all billionaires necessarily are exploitative.