One of the many things that has struck me about Donald Trump is the quickness and frequency with which he likes to say, “I’ve made a lot of money.” Every interview, every debate, every rally, ever present is his desire for everyone else to know just how wealthy he is. This, ironically, stands in stark contrast to both old money and the newer tech billionaires — if anything, the enlightened mega-rich have focused far less on conspicuous consumption than conspicuous giving.
True Wealth Creation and the Net Worth Fallacy
Sociologists and evolutionary psychologists could do a far better job than I explaining why we as people care so much about net worth. Similarly, many others can proffer why individual net worth is potentially an antiquated notion. Maybe it is. Maybe it isn’t. But we will certainly not be giving it up any time soon. Instead, I’d like to suggest that net worth is an incomplete metric, and I have to thank Trump’s constant reminders of his net worth for this idea.
I would wager that we as people assume that not only does net worth describe an individual’s wealth, it also describes a person’s contribution to economic and social life (i.e. the creation of jobs). And that is the fundamental problem with net worth. While it describes an individual’s wealth, it doesn’t tell us what they have made or contributed elsewhere. I’m not talking about how much they have given away charitably, but how much additional wealth has been generated as part of their personal accumulation and subsequent impact. This is why I think Silicon Valley respects entrepreneurship so much, perhaps without even knowing it.
Now, back to Trump. Should net worth be a qualification for office? Should we think of him as better qualified because of his individual success? No. We should think of him as better qualified because of the impact his individual success has had on others — how many jobs his wealth has directly created. After all, isn’t that what we’re hoping for in a President?
For illustrative purposes, let’s compare Trump to Bill Gates or Mark Zuckerberg. In both cases, the individual has a greater net worth than any employee, and in many cases, a greater net worth than the sum of their employees’ net worth. But, have Trump’s businesses created 1,000’s of millionaires as a result of his individual vision and success? Not likely, however this is precisely what happened when Facebook IPO’d in 2012.
Perhaps a slight exaggeration, but I wouldn’t be surprised if Mark Zuckerberg via Facebook created more millionaires than Trump has created in long-term, sustainable employment. More important to me is what happened after the IPO and thousands of new millionaires were created. Both they and many of the “rank and file” went on to build new businesses, creating even more jobs and wealth. In the case of Bill Gates, we are talking at least 100,000 jobs and almost two generations of employees. Today, that is a quantifiable metric that matters and one that we can also now track.
Not all wealth is created equal. Some forms of wealth creation engender ongoing sustainable businesses, as well as industries and activities that go well beyond how much a founder has in their bank account. One’s true impact cannot be measured just in dollars and cents, but in the way he or she enriches others and society over the long term. As a result, we should be tracking not just how much wealth someone has but how much they have created.
A net worth metric that simply tells you how much a person extracts for themselves is an impoverished way of measuring things. It tends to encourage a superficial attitude. The tired notion of “if you have it, flaunt it” might work for Donald Trump, but I would argue that if we want to “make America great again,” the answer isn’t focusing on one’s self.
Just imagine what might happen if we track how much wealth one has created not in place of how much one has obtained but in addition to it. Imagine what would happen if that led to even a small change in behavior. The impact would be exponential, and if there ever could be real top-down economics, that would be it. After all, simply being rich shouldn’t engender admiration. It is what a person does to make other people better off that deserves praise.