EDUCATION NEEDED! Wealth Creation Misunderstood by the Public

Businesses exist to meet the needs, wants and expectations of their customers and clients at a profit or surplus (for “non-profits”) sufficient to meet their expenses and attract sufficient investment capital.  Jobs and wealth result from doing this successfully. 

With the exception of inheritance and/or over-compensated wage-hustlers, wealth is normally created by owning at least a portion of an enterprise or asset that increases in value via its free-market appreciation. 

Normally, significant wealth does not come from the public served by an enterprise, but rather from those who risked their investment capital in supporting the business’s creation, expansion, customer service, and growth.

Unfortunately, too many people think wealth comes from over-extracting money from customers and clients.  This is rarely the case.  Competitive, Free-Market Enterprise forces prices to decline quickly -– making more and more products and services available to the poor. 

Big companies like Exxon earns only 8.5 cents on every dollar of market value.  GE earns 5.1 cents.  General Motors earns 4.6 cents.  IBM earns 7.6 cents.  Apple earns 5.7 cents.  Wal-Mart earns 5.6%.  Shoprite earns 4.3 cents,  et cetera.

So why is the public so misled by the media – into thinking that people who have their wealth tied-up in the economy are gouging the public – when in fact they are serving the public? The market value of successful enterprises increases by investing wisely, by growing appropriately, and by competing successfully. 

Clearly, our educational system, business schools, and business media are failing to properly represent these facts.

Image: http://www.gurusblog.com/archives/bolsa-estamos-en-una-fase-de-compras/12/03/2013/

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William Pauwels

About the author, William Pauwels: William A. Pauwels, Sr. was born in Jackson Michigan to a Belgian, immigrant, entrepreneurial family. Bill is a graduate of the University of Notre Dame and served in executive and/or leadership positions at Thomson Industries, Inc., Dow Corning, Loctite and Sherwin-Williams. He is currently CIO of Pauwels Private Investment Practice. He's been commenting on matters political/economic/philosophical since 1980. View all articles by William Pauwels

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