Our friends at Forbes have made a fortune out of ranking the nation’s and the world’s wealthiest people, and their annual billionaires list, published in March, is a fascinating look at how to get filthy, stinking, ugly rich in America — as remarkable for who is not on the list as for who is.
Ironically, the Forbes billionaires list contains some of the best evidence there is against the argument one hears from Senator Sanders et al. that the United States is an oligarchy characterized by hereditary privilege and corporate hoarding.
Two of the remarkable absences from the list: heirs and CEOs.
There are a few familiar surnames that crop up repeatedly on the list — Walton, Pritzker, Mars — but not very many. There are children of wealth at the top of the list, including Bill Gates, whose father was a successful attorney, and Charles and David Koch, whose father established a successful engineering business with an interest in a refinery and a cattle operation, which the brothers built into the modern business giant that is Koch Industries. (Disclosure: David Koch was on the board of a nonprofit where I once worked.) But there’s nobody in the top ten who simply inherited and husbanded a fortune, and very few elsewhere. (Three Waltons are Nos. 14, 15, and 16 on the list.) The wealthiest American on the list, Jeff Bezos, is the son of a teenaged mother who, after a short-lived marriage to Bezos’s father, married a Cuban immigrant and moved to Houston, one of the great cities for young people who aren’t rich but want to be. Bezos’s stepfather went to work for Exxon, and Bezos attended excellent public schools before enrolling at Princeton. He thought it might be a good idea to try to sell books online. It was.
According to the Bureau of Labor Statistics, inherited wealth accounts for about 15 percent of the assets of the wealthiest Americans. And wealth that was inherited came from somewhere. The Waltons probably will be very rich for several generations, but you do not see a lot of old names on the Forbes list. One exception: the Dorrances, heirs to the Campbell’s Soup fortune. Theirs is a familiar American story: John Dorrance, an MIT graduate, went to work for the Joseph Campbell Preserve Company, where he invented a method for condensing soup. He became president of the company, bought out the Campbells, and built the firm into a soupy empire. (The Dorrances’ enthusiasm for soup is boundless, as evidenced by the Dorrance wing at Winterthur, home of what is surely the world’s finest collection of soup tureens.) But that, too, is one of the great themes in American wealth: the inventor who makes a marked improvement to a humble consumer good, the “better mousetrap” model of striking it rich.
Few heirs, and few billionaires who made their fortunes as business executives. Which isn’t to say there aren’t a lot of CEOs on the list: The Forbes list is neck-deep in CEOs, but they are not, for the most part, men and women who got MBAs and made their money in business management. They are, overwhelmingly, business founders. The founding generation of Microsoft is all there, not just Bill Gates but also Steve Ballmer and Paul Allen. Current Microsoft CEO Satya Nadella? With an estimated net worth of $1.34 billion, he’s somewhere on the billionaires list, but not in the top 1,000, and his fortune is about half that of the aptronym-sporting vodka entrepreneur Bert Beveridge, nicknamed “Tito.” There’s a lesson in that: If you want to fly around on someone else’s jet, be a CEO. If you want to fly around on your own jet, start the company.
And what kind of companies did the wealthiest Americans start? Overwhelmingly, America’s billionaire entrepreneurs grew wealthy by providing goods and services to middle-class families and people of modest means. The wealthiest European on the list is Bernard Arnault, the guy behind Louis Vuitton, while the wealthiest Americans on the list brought you Amazon, Microsoft, Dairy Queen (one of Berkshire Hathaway’s many holdings), Facebook, Dixie Cups (a product of Koch Industries), Google, and everyday low prices at Walmart.
And consider those Walmart heirs. Yes, the subsequent generations of Waltons have undertaken a great deal of philanthropy with their fortunes, much of it admirable, but none of that philanthropy has done as much good for ordinary people — and for poor people — as Walmart itself. Progressives hate Walmart for its Arkansas roots and déclassé clientele, but in its 50-odd years of leaning on consumer-product giants such as Procter & Gamble and Coca-Cola to accept lower margins in exchange for access to its vast customer base, Walmart has done more to transfer wealth from the shareholder class to the poor than every tweedy Piketty-quoting intellectual in the Western world combined. By one estimate, Walmart alone knocked a full percentage point off the U.S. inflation rate, and its data-driven approach to business, combined with its 800-pound-gorilla position in the retail marketplace, has empowered it to force less forward-looking companies into adopting state-of-the-art inventory-management practices and logistics systems. In doing so, it has, penny by penny, shaved billions and billions of dollars off the grocery bills and other household expenditures of the people it serves — most of whom are not in M. Arnault’s demographic.
Another large contingent of billionaires comes from the world of finance, the people who manage the capital that helps to make the Googles and Apples of the world possible.
Give or take a Dorrance or two, both individually and corporately, the billionaires list is nouveau riche. (But then, it’s the riche that counts, as Jim Williams said.) And that’s the really interesting part: Very few of the wealthiest Americans are associated with businesses that are more than a few decades old. The firms with which the top ten Americans on the list are associated are on average less than 40 years old. (Berkshire Hathaway and Koch Industries are the outliers.) If Facebook were a child instead of a corporation, it would be in middle school. Google was founded in 1998, Amazon in 1994. The science-fiction fantasy of the eternal corporation, globe-bestriding and monolithic — which was also the anti-capitalists’ nightmare — has not come to pass. Instead, the opposite has happened. Upstart Google didn’t get swallowed up by some ancient corporate giant: It bought and sold them, most notably Motorola. Amazon has beaten the hell out of retail giants such as Barnes & Noble and now is whacking the stuffing out of long-established media companies. Old corporate bulls such as AT&T and IBM are obliged to watch their backs thanks to competition from companies that didn’t exist a few years ago. Companies that began in dorm rooms (Dell Computer) and California garages (take your pick) have transformed big chunks of the American economy — for the better — as much as Walmart, Amazon, and Dell have brought ordinary people lower prices and more choices.
There is a great deal that is wrong with the American economy. There is crony capitalism, subsidies, and favoritism, and advocates of free-market policies should be open about those abuses and rigorous in opposing them. But where our progressive friends are most mistaken is in this: If you want to see what’s wrong with American society, you won’t find the answers on the list of who is rich — you’ll find it in the account of who is poor, how they got that way, and why they stay that way. It isn’t Amazon keeping them down.