Last week, I mentioned that most Americans have no objections to wealth if they feel that it’s the product of hard work rather than luck or political favors. AEI’s Arthur Brooks, for instance, wrote:
Most Americans believe we live in an opportunity society. The General Social Survey has asked Americans since 1973 to answer whether people get ahead because of “their own hard work”or because of “lucky breaks and help from other people.”For four decades, 60 to 70 percent of Americans have said “hard work,”while never more than 16 percent have said “lucky breaks.”
It’s hardly a shock that seven in 10 Americans believe in the American dream. If you descended from immigrants, ask yourself: Why did my ancestors come here? I suspect it wasn’t to find a fairer system of forced income redistribution. It was to find a place where they could get a fair shake, where they could start their own business, and where hard work and good ideas would be rewarded.
Yet, when you listen to the president these days you would think that today’s entrepreneurs and small business owners are job creators because they are hard-working, but millionaires got their money because of lucky breaks. This is why I am really glad to see an increasing number of those millionaires speaking up about how they got to where they are now. Dan Foster yesterday linked to Ted Leonsis’s account of his upbringing:
My dad was a waiter. My mom was a secretary. Neither attended college. I grew up in Brooklyn, NY and Lowell, Massachusetts. I attended public schools. My parents – in their best year – earned $31,000 combined. My dad worked for tips – often received in change – as he worked a counter for breakfast and lunch at a diner. My dad, too, once lost his job. I remember the angst in our household.
I attended Georgetown University which at the time wasn’t a need blind school via college loans. I paid them all back five years after I graduated.
I have great empathy for middle class or lower middle class America. My horizons as a young adult were not expansive. I was programmed to be a produce department manager at a grocery store in my neighborhood. That was my dad’s aspiration for me. I would have been proud to work hard to become a leader in a grocery store and I bet I would have been good at it, too. By luck and hard work, my career took a different path.
This morning, Charles Schwab tells his story in the Wall Street Journal. He didn’t get a government loan and he didn’t get a hand-out. He was not a trust-fund baby.
Private enterprise works. I founded Charles Schwab in 1974, when America was confronting a crisis of confidence similar to today’s. We had rapidly rising inflation and unemployment, economic growth grinding into negative territory, and paralyzed markets. The future looked pretty bleak.
Yet I had faith that our economy would recover. My vision was simple: Investors deserve something better than the status quo. I launched the company with four employees, a personal loan on my home, and an audacious dream. I didn’t know exactly how we were going to do it, nor could I foresee that over the decades we would end up building a business that serves over 10 million accounts. But we went for it.
Better yet, Schwab goes on to explain that while his success benefited him, it has always benefited everyone around him, too — his employees, his customers, and even the government:
What’s the potential power of the entrepreneur’s simple leap of faith? The success of a single business has a significant payoff for the economy. Looking back over the 25 years since our company went public, Schwab has collectively generated $68 billion in revenue and $11 billion in earnings. We’ve paid $28 billion in compensation and benefits, created more than 50,000 jobs, and paid more than $6 billion in aggregate taxes. In addition to the current value of our company, we’ve returned billions of dollars in the form of dividends and stock buybacks to shareholders, including unions, pension funds and mom-and-pop investors.
The wealth created for our shareholders—a great many of them average Schwab employees—has been used to reinvest in existing and new businesses and has funded a myriad of philanthropic activities. We’ve also spent billions buying services and products from other companies in a diverse set of industries, from technology to communications to real estate to professional services, thereby helping our suppliers create businesses and jobs.
I wish that of more of these success stories were made public so people would understand that, yes, there are very rich people in America, but most of them made their fortunes through hard-work and their fortunes have benefited all of us.