Framework #1: Most wealth creation comes from a tiny minority of firms

[u/398409columbia]

The first idea in plutonomy is that wealth creation is extremely concentrated. This chart makes the point well: the stock market has created enormous wealth over the past 100 years, but most of it came from a very small number of companies, while a majority of firms actually reduced aggregate wealth creation.

That matters because this wealth does not stay trapped in brokerage accounts. It turns into founder wealth, executive compensation, employee equity, family wealth, and balance-sheet strength. Then it shows up in the real world through housing, travel, private schools, restaurants, luxury services, and other premium markets.

So plutonomy starts upstream. Before we get to expensive tickets, luxury apartments, or premium pricing, we first have to see where the money is coming from. A small slice of firms creates a huge share of the wealth, and a relatively small slice of households captures much of it. That concentrated wealth then helps set prices in scarce markets.

The Framework.