The 1% do not get wealthy from “hoarding the profitability gains.” This is a common misconception on HN and society in general. Profits of businesses are typically in 10% range for small businesses and even lower on average for large businesses [1].
Wealth is not income. It’s the value of owned assets: money, property, etc.
So where does the wealth come from? There are a couple of different answers-and I’m not going to discuss stealing, slavery, exploitation or other illegal and immoral practices-but generally the answer for lots of wealthy, legitimate people is it is CREATED from “deals.”
Wherever one person (or group) can sell something to someone else at a multiple of its current value, wealth is created.
The expectation that something of value will either generate income or grow in value in future years creates a higher price for that thing right now. That entices the buyer, and creates wealth for the seller.
How much wealth? If you have a rock today that you can tell a story about being potentially worth 100x in 10 years, then you can probably sell that rock for 10x of its actual value today. That is wealth creation.
This is related to the concept of “time value of money.”
Real estate is one example. Selling a business is another. Art is yet another example.
Have a great day.
Edit:
[1] https://www.aei.org/carpe-diem/the-public-thinks-the-average...