What's better: cash or stake? An analysis and critique of The Wealth of Billionaires: Where It Came From, Where It Is, and Why It Matters from The Heritage Foundation

Link to: https://www.heritage.org/taxes/report/the-wealth-billionaires-where-it-came-where-it-and-why-it-matters

Here are the three takeaways that the article presents:

The great wealth of America's richest people came from the businesses they created, not inherited wealth.

Ok good to know I guess. The richest people aren't always nepo-babies. But where does wealth and value in a business actually come from? It comes from the value of the goods and services which the business produces. The net worth of a business is the value of the goods and services produced minus the cost of production. To increase net worth, a firm will try to either increase prices (doesn't usually work) or decrease factor costs (labor). Thus, the wealth of American billionaires rests on the backs of employees - perhaps why large firms like Amazon try to prevent their workers form unionizing.

Billionaires' wealth is concentrated in company stock, and their companies' value lies mostly in ideas and processes, not cash and physical property.

Here is the question that prompted this post: is it better for society for the wealthy to hold value in stake in their own business or to hold cash? From a capitalist's perspective, it's better to hold stake in one's own business because then the value of their assets is dependent on their own actions and their own efforts to gain profit. What does it really mean that "companies' value lies mostly in ideas and processes[?]" Essentially, this means nothing. Valuing assets that are just ideas is not a steadfast way of determining the value of a company.

The economy depends on some people having more than they need to consume, as their investments of capital fund business operations and private lending.

Ok sure but the capital-owning class wants to maintain their wealth and accumulate more of it. I guess this idea is coming from Bill Gates and the idea of philanthropy, but in reality, the vast majority of "investment in the lower classes" is not effective in improving the material conditions of those who need it the most.

The rich became rich by creating companies and products that investors and consumers value.

What if I wanted to become rich? Let's look at maybe a not-so-realistic scenario. Starting from nothing, I decide based on market research that people value laptop computers, so I start a business that manufactures computers. I start by buying a small factory and hiring 100 employees to produce a small number of computers per week. I sell them for $1000 per unit while the cost to create them is $900 per unit. This means that my profit is $100 per unit. I sell 10 computers every week, so my weekly profit is $1000. This comes out to $52,000 per year. This is not really sustainable, so I decide I need to increase my profit. This can again be done a couple of different ways, but I decide to reduce my employees' wage. This is detrimental to their wellbeing, but does increase my profit and improves my material conditions. But does this not amount to stealing from the workers? The value of their product did not decrease, nor did the number of hours they worked. So essentially, I am extracting value from the workers by not giving them their fair share of the wealth that they are creating. Perhaps the problem is not the fact that rich people get rich by creating things that people value, but that the fact that in there process of creating these things, they often extract wealth from the laborers who are producing the products. The problem is not the products themselves, it is the way in which they are produced.