For many types of businesses, option 1 isn't a tenable option. Outside of the tech industry, the margins are lower and there is not a large network of VC angels for things like restaurants, farms, retail stores, home services, etc.
The classic example would be farming equipment. Sure, you could save for 10 years to buy an International Harvester Combine. Or you could borrow money to buy the Combine today, your efficiency goes up 10x and you pay off the loan with the higher profits you reap. Then, if you want to expand your farm, you might likewise save for 10 years to buy another plot of land...or you could borrow money today and buy that land and use leverage to grow quicker. The loan created wealth by enabling the farmer to become more productive.
And if they are speculating and the market goes south, they will lose their investment.
It’s not like there isn’t risk involved.
The people working 90 hour weeks and barely able to make rent apparently aren't working hard enough.
[1] https://www.statista.com/statistics/617390/us-millionaire-ho...
What you're saying is that the majority of people have a net worth
So working harder than the majority of people will still mean you end up with a tiny net worth, the fear of bankrupcy from medical bills at any point in life, the fear of losing your home (if you're lucky enough to get a home in the first place)
America is a country where cops arrest 6 year old girls for the crime of being black. The american dream? Hah. Look at the american reality.
1 in 30 'make it'. 29 in 30 don't, and life is hell for them.
Most businesses will fail, and most businesses are built on loans of some kind rather than bootstrapped.
Rent-seekers will try to profit from this because they will claw back their "investment" in the form of collateral - preferably physical, but IP as a last resort.
If businesses succeed, rent-seekers will profit from their "investment" with an aggressive term sheet that gives their return priority over returns for the people who did the work.
At the same time, rent-seekers will be investing in property. If there's a run of successful businesses in an area they will gain by increasing rents and speculating on property prices.
This is basically just asset inflation - very good for rent-seekers, very bad for people who need access to limited resources like housing and health care.
This isn't even getting into the costs of externalities.
The picture as a whole is a lot more complicated than "My business succeeded and now I'm making money, so there's no zero sum here."