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SEPTEMBER 23, 2010 11:17PM

Born with a Billion

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Forbes publishes their Richest Folks lists a couple of times a year: once for the planet and once for the U. S. of America. For the record, I'm not against being fabulously wealthy and, in fact, I'd love to make Forbes' list some day. While it does make me righteously angry that we tolerate an economic system that both allows the super-mega wealthy to become more ultra-super-mega wealthy and - at the same time - allows unemployment to climb and let poverty reach record levels in this land (which is, apparently, your land, and my land, but mostly their land), that's not what pisses me off about the mendacious a-holes over at Forbes. Injustice does make me cranky, but it seems to be an inherent part of the human condition and, frankly, I don't have a solution. Calling out disingenuous liars - now there's something I can do that's satisfying.

Forbes lies a couple of times a year when they list the billionaires, some of whom have inherited their wealth and some of whom are (apparently) "self-made." And there's the lie: Forbes claims that most of the billionaires on their list are "self-made." Now, again, I don't have a problem with inherited wealth. It's only right and fair that the children of the wealthy are allowed to benefit from their parents (and grandparents and great grandparents and great great grandparents) good fortune, ingenuity and hard work. It only becomes a problem if there's not enough to go around and a bunch of freeloaders are, well, freeloading. Oh, and if a kingly Aristocracy ruled the land, but that would never happen in America, which threw off that barbaric tradition long ago.

 And so, in America, the 2010 Forbes 400 list identifies the 400 mostly "self-made" American capitalist entrepreneurs who have embiggened themselves from rags to riches through the sweat of their brow and brilliance of their brains. According to Forbes, 68% of the wealthiest white men (they are mostly men and almost entirely white) are "self-made" John Waynes of business.[1] When I looked more closely at their list, I found something different. In fact, I found exactly the opposite: 70% of the Americans on the Forbes 400 list were born wealthy and 42% were simply born with a billion.[2,3] Another 20% were born comfortably middle class. Only 10% were truly "self-made" billionaires.

Born with a Billion

Which is fine. I sincerely don't have a problem with this as long as it is acknowledged. But it's not. Again, Forbes claims that 68% of the folks on their list are "self-made," when, in fact, only 10% are. A good chunk of billionaires are the heirs of Sam Walton, Frank Mars and Fred Koch - again, which is fine. Why do I have to even justify this? Oh, yea, because I'll be accused of being a pinko commie traitor if I don't.

It's worth noting, at this point, that I define "Born with a Billion" as being people that simply inherited a billion dollars, like the Mars, Kochs and Waltons (Good night, Mary Ellen). And I define "Born Rich" as those that maybe didn't inherit a billion, but they did inherit daddy's company, like Jim Kennedy and Sam Newhouse did.[4] And, once they took over the farm, they ran with it, to their credit, and made a billion.[5] Bully for them!

Then there's the "Comfortable" category, which is surprisingly broad (20%). This would includ all those folks that had the opportunity to go to private preparatory schools and Harvard and what not: William Gates the Third, Warren Buffet, Michael Bloomberg and Mark Zuckerberg, for example.[6] This is not to take anything away from any of these byallaccounts very acomplished individuals. I myself grew up "comfortable" with professional parents and a state college education (although I worked to pay my rent and expenses the whole time), but these people took the advantages I had and turned them into a few billion dollars.

Anyhow, surely there is a recipe for success that we can learn from the list, like "Buy pork bellies" or "Create an amazing tech startup." And, indeed there is:

Sourse of Billions

The Number One way to make a billion dollars is... to be born with a billion dollars (41%). Going into technology is a distant second (26%), with raping the common man through obscure, barely legal financial instruments close behind. Ahem. Sorry. Banking and finance is third, with a 24% stake. 

Why is any of this important, other than to let me write a long sour-grapes rant? Well, for one, the Republicans publicly claim (and the Democrats secretly hope) that it is important to leave the wealthy alone so they can create jobs for us, with the implication being that the rich are "self-made" hard-working entrepreneurs who have earned and deserve everything they've got and more. Frankly, the vast majority of wealthy people have inherited their wealth and are no smarter, harder working or better than you or me. And, clearly, they aren't creating jobs or lifting us out of poverty. It is simply and demonstrably not true that letting us fight over their table scraps is a good economic system. Secondly, if you dig a little deeper, it is clear that almost every billionaire (+90%) has benefited from a decent education and a chance, a shot, a roll of the dice at becoming unimaginably wealthy. That's not true for the poor and unemployed. If they are angry about this, I think they are justified. 

 
UPDATE (24.09.2010):
Sorry for the long-winded, wildly unsubstantiated rant. Here are my sources, methodology (for what it is) and notes.

[1] Source: Forbes - I just went through their list(s) and noted who they claimed were "self-made".

[2] Source: Da Internets - I looked up the bios of the people I could and made a judgement call on whether the person was really "self-made" or not. I'll leave it to you to assess the real value of myjudgement + wackipedia.

[3] Notes: Here's the spreadsheet I made for the first 50 on the list. I'm not citing this as evidence, but you can see some of my thinking.

[4] Biggest Lies: The following examples are what really set me off. These are a sample of the most egregious lies of "self-made" billionaires that are simply NOT "self-made" in any reasonable sense of the word.

* Ron Perelman - started with $800,000; married $100,000,000
* George Kaiser
- inherited dad's oil company
* Edward Johnson - inherited dad's Fidelity Investments
* Philip Anschutz - granddad started Farmers State Bank, dad was land investor and oilman
* Rupert Murdoch - inherited newspaper magnate Sir Keith Murdoch's empire

And an extra bonus from the World's Billionaires List that REALLY got this whole rant started for me last year:

* Prince Alwaleed Bin Talal Alsaud is a "self-made" billionaire, according to Forbes. Yes, a Saudi Prince is considered "self-made".

[5] There are many (most?) folks on the list that are still admirable even though they were born with a billion. All I'm saying is that we probably shouldn't worship them as being somehow better than me or you.

[6] There are many (most?) folks on the list that had huge head starts, but weren't born with a billion. Almost all of the people that made a billion in technology started with private prep schools, then went on to Harvard or Yale and then were entirely free to do what they did without having to work part-time at MacDonalds. Or full-time. Or work on anything other than their big dream. I think this is fantastic! And some of these people are freakin' workaholic geniuses, but describing them as "self-made" is a bit disingeuous.

[7] And, finally, a secret bonus footnote that ends on a positive note, YES, there are billionaires on the list that were formerly poor, penniless immigrants or All-American dirt farmers. Here's a sample:

* Lawrence Ellison
* George Soros
* Len Blavatnik
* Harold Hamm

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America does have opportunity, but it often takes more than one generation. Going from rags to comfortable middle class takes one or two generations, depending on the education level. From there, you can springboard into the billionaire class, if you are lucky.

America has a serious illegal immigrant problem because we are a land of opportunity.
I agree! To act as if these people excelled because of their hard work is crazy! Many were born to a life that allowed them to reap the rewards of their parents! R
I dwell on this more than a lower class girl should. My speculation (entirely theoretical) is that it is a combination of three factors- working obsessively, money makes more money with time, right connections = more opportunity.
The poor people that broke through were just plain lucky...or lucky and talented, though I know plenty of talented folks who will never make it, so talent is not enough in itself, but luck might be.
Can you give more information about how you reach your conclusions? Your information conflicts with the Forbes info. but you don't really give a specific example of where they have made a mistake.
It is all designed to keep the lie of the "American Dream" going so that folks will vote against their own interests. Hey, someday, I could be rich! Yeah, right.
There is very little upward mobility in this country. Now it is mostly downward.
Thanks for this!
Nobody is self made. All the infomation they have, all the knowledge they have, was dumped into them by their parents, family, schools, friends, associates, and in general other people. Nobody ever has a truly original idea. At most on a rare occasion someone puts together a few ideas absorbed from other people to create what we call a new idea. These so called new ideas are always and can only be built upon a huge efifice of previously generated ideas, ideas generated and built upon other ideas. And of course any new idea only works to make money in the context of our whole culture, all our laws, customs, traditions and correct assumptions about the behavior of others. Nobody is self made.

And your work demonstrates what I just said, and I do not denigrate your work to say this: Probably anyone who undersands your piece could have written it. But they didn't. You did. Thanks for an excellent piece of work.
def: Great work. Next time, to help with methodology and smooth the process along, I suggest checking out C. Wright Mills' The Power Elite.
Okay I see now that you've added it. Thanks very much for doing that and thank you for this very interesting article (and colorful pie charts!).
I think Eli Broad is another who would qualify as self-made.

"Broad attended Detroit public schools; he was a 1951 graduate of Detroit Central High School, and the youngest Michigan native to become a Certified Public Accountant (CPA). He made his initial fortune in real estate at his company Kaufman & Broad (now KB Home). He is also a founder of the financial giant SunAmerica. He was CEO of SunAmerica, now a subsidiary of the American International Group, until the year 2000."

source: wiki
The myth of the self-made rich individual is hard to dispell because it's based in part on all the mystifications surrounding innovation. Gladwell's little book "Blink" is a good example---like all such work it focuses in a monocular way on the idea, and ignores the fallout in the world of political economy. In fact the innovative companies in the market, so called "gazelles" that race ahead of the pack in terms of growth and market expansion, are simply those companies that move from exploitation (domestic) to super-exploitation (exporting misery) faster and more efficiently. Under the present globalized system, it is impossible for anyone to claim that a fortune of, say, more than a few hundreds of thousands was not accumulated out of the misery of large numbers of people. This is obvious in the case of manufacturing which is increasingly dependent on slave labor, or frozen wages, but it's just as true in the case of a financial fortune. We've seen just how dependent financial markets are upon exploitation and super-exploitation recently. The situation gets worse as one moves up the ladder of "success." This is an awful, inhumane system, and it produces awful people at the top.

rated.
incredible research. rated and faved
some call it a land of opportunity, i call it an economic free-fire zone.
Great post. My father, an immigrant, loves to claim he is a "self made man." In reality he utilized other people to do a lot of jobs and paid them to do the work while he was the overseer. It's funny that he really thinks he did so much.

Being an immigrant was a huge asset because he didn't understand discrimination, he would hire anyone who would work for less. I used to suggest we hire men to do some of the heavy work. He had tried in the past and said it was a waste of extra money. He said women would work harder for less, what a cutting edge thinker.

He started in retail but as soon as trade opened with China he switched to importing and wholesaling from there. I used to go on buying trips there with him in the early 80's. Boy did I hate lugging heavy suitcases around for him, the Shanghai airport had a lot of stair and there were no porters back then. Bosses don't like to do much actual work.

It took a long time before others figured this method out. Self made, haha, it always makes me laugh when he talks about the two years back in the early 50's he struggled. He'll have spent the last of it before he dies, easy come, easy go. He has no reason to care, he has no sons to leave a business too. If he had a lot he'd become a big philanthropist when he died too. Men are funny sometimes.
Oh shoot, I didn't read comments, I could have just said ditto to BOKO. Plus add that it's acceptable that women cost 25-30% less. Sorry.
Eeek! Thanks all! I had no idea anyone would actually read this or, better still, comment. Forgive me if I don't exactly get how to respond or how the culture here works:

@Mr. Rebholz: I get what you are saying, but disagree with the blanket "no one is self-made". Yea, every American benefits from (more or less) nice roads, police protection, public education, parks, etc., but if we had to define "self-made" (and I argue we should if we are going to talk about it), then I say "self-made" means you don't inherit daddy's company. Are you still "self-made" if daddy paid for your college education and you never had to work a day in your life until you started your own business?

@retablo: Eli Broad? Maybe. I put him in the "middle class" category and not "rags to riches". Still very, very impressive, admirable and inspirational and, I would agree, self made.

@(others) Thanks for the criticism, compliments and reading homework!
Thanks, this is a great post
Interesting fact that #1 and #2, Gates and Buffett are giving their fortunes away in combination. That is, Buffett is giving everything to Gates to spend on reducing human suffering. And Gates quit business to devote all his time to the endeavor.
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