A Brief History of the Wealth Industry
The greatest distinguishing feature of the Roman Empire was that it built its wealth on “accumulating wealth” rather than “creating it.” Rome relied on its military superiority to conquer its neighbors, plundering gold and silver and enslaving peoples. But when there were no more neighbors to conquer, the Roman economy began to lose its momentum.
The United States, by contrast, was founded on a fundamentally different principle. For more than two centuries, it has enjoyed the greatest era of wealth creation in history, because its wealth was not built on plunder, but on innovation. Each new technological wave lowered the cost of a fundamental economic input, creating new fortunes and making society as a whole richer.
Consider the Forbes 400 list: in 1982, owning $100 million was enough to make the list, and the richest American possessed $2 billion. Today, you need several billion dollars to qualify, while Elon Musk’s wealth exceeds $400 billion. This did not happen because money simply moved from one pocket to another, but because technology created economic value that did not previously exist.
Before the Industrial Revolution, wealth was based on land ownership or trade, and energy relied on muscle, wind, or water. But in 1781, James Watt changed the game by inventing the rotary steam engine, making energy cheap and widely available. Production costs fell, factory profits rose, and consumers benefited from lower prices.
The same pattern repeated with the sewing machine, which reduced shirt production time from 16 hours to just two. Clothing prices dropped, and Isaac Singer amassed a huge fortune. Then came oil, when Benjamin Silliman discovered the possibility of refining crude into kerosene, which replaced expensive whale oil. This gave rise to the empires of John D. Rockefeller and Henry Flagler, with prices continuing to fall thanks to mass production.
The same occurred in the steel industry. After Henry Bessemer invented a mass-production method in 1856, steel became cheap enough to build railways and skyscrapers. Figures such as Andrew Carnegie emerged, becoming symbols of a new industrial era.
In the 20th century, the computer age began. Early computers were massive and expensive, usable only by governments and large corporations. But the emergence of the microprocessor in 1971 changed everything. The cost of processing and storing data plummeted, just as the steam engine had reduced the cost of energy two centuries earlier.
Steve Jobs and Steve Wozniak soon founded Apple, while Bill Gates provided software to IBM, making the personal computer accessible to everyone. Today, a school student carries in their backpack computing power that surpasses what the Pentagon possessed in the 1950s.
Then came the Internet, which once again transformed the global economy. Jeff Bezos realized that new technology could reinvent retail, turning Amazon into one of the largest companies and employers in the United States. At the same time, Sam Walton used low-cost computing to manage Walmart’s inventory efficiently, enabling lower prices for consumers.
Today, Elon Musk continues this path through SpaceX, which has reduced the cost of accessing space thanks to reusable rockets, while artificial intelligence promises to launch a new wave of innovation and wealth creation.
All of this process rests on “capital formation.” Billionaires do not hoard their money in locked vaults; instead, they reinvest it in projects that generate new wealth and create jobs and economic opportunities.
For this reason, I believe that many on the left confuse “wealth accumulation” with “wealth creation.” When they advocate imposing high taxes on wealth, they reduce the capital necessary for investment and economic growth. If there is a clear example of how ideology can blind its adherents to reality, it is this conflation between those who create wealth and those who merely redistribute it.
