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What I don't get about this argument (and others similar to it) is that the US seems to have a pretty good turnover of money. According to Forbes' billionaires

What I don't get about this argument (and others similar to it) is that the US seems to have a pretty good turnover of money. According to Forbes' billionaires list, "[f]ully 1,191 members of the list are self-made billionaires, while just 230 inherited their wealth"[1]. The top 3 richest people on the planet at this point made their money themselves, and 2 of them (Gates & Buffett) are not going to pass their wealth down the family tree. We're less than 100 years from one of the richest people of all time, JD Rockefeller (net worth ~$300+bn). His family is essentially dedicated to giving that money away at this point, and I believe the family's net worth at this point is in the $15bn range--not peanuts, but hardly growing. Money doesn't last, but there are always rich people. Paris Hilton, trust fund baby, has made more money from her own businesses than she'd ever inherit from her grandfather. Same with Julia Louis-Dreyfus. But after a couple of generations, the old money is usually gone. As much as people like to complain about "the rich", there really aren't as many generationally-rich people as some make it seem. [1] http://www.forbes.com/sites/kerryadolan/2015/03/02/inside-the-2015-forbes-billionaires-list-facts-and-figures/ http://www.forbes.com/sites/kerryadolan/2015/03/02/inside-th...

andosa 11y ago
That doesn't really refute gp's point. In medieval times, there were periods where dynasties didn't last, and every generation had new warlords from new families. That doesn't mean it wasn't a feudal society.
Swizec 11y ago
The main issue, as I see it, is that going from upper middle class (or even mid-range middle class) to mega rich is easier than it is to go from poor to lower middle class. Most rags to riches stories we have these days, are really a relatively well off to riches stories when you look at them. The only exceptions are people who won the celebrity lottery. It's surprisingly hard to accumulate wealth when you're struggling to keep the lights on.
- rnovak 11y ago
  Why wouldn't it be easier? Someone who has more discretionary income can take on more risk than someone who can't keep their lights on, and a failed venture doesn't have the same consequences. Just by virtue of taking more risk, those in the middle class are expanding their chance of success by orders of magnitude more. I'd dare say it's impossible for the middle class to not to become "mega rich" at a greater incidence than poor becoming middle class.
  - Swizec 11y ago
    I agree. I'm just saying that a lot of the people who normally discuss these "But it's not that hard or impossible to become rich, what are you talking about?" stories, are the kind of people who somehow magically were able to go to an ivy league school or similar. They say they became rich on their own, and that most of the mega rich also became rich on their own, but forget that compared to the vast majority of the population, even confined to the US, they were already born rich and have a massive leg-up in the world from day 1. edit: As Donald Trump would say "I made all my own money. My dad only gave me a small 1 million dollar loan, and with that I was able to make my own fortune."
    - JonFish85 11y ago
      The problem with that quote is that no entrepreneur now can say anything less. Any company founder at this point has likely taken over a million dollars in venture capital--are they not to be called self-made if their company does well? Nobody is ever "self made" if you take that argument.
      - Swizec 11y ago
        I would assume there is a big difference between your dad giving you a loan and investors who don't have social ties with you since childhood. The assumption is that the dad will be less stringent on due diligence, more forgiving in what he gets in return, and most importantly, will have brought you up all your life in such a way that you are primed for handling those kinds of money. The wider point is that someone who grew up in a trailer park, doesn't even have access to investors in the first place. For example: how are you going to get an investment, if you can't afford to to schmooze with investors? What if a $50 dinner is completely out of your price range? What if buying someone a $5 coffee is a big deal financially? And then there's the issue of safety net. There's a big difference between your venture failing meaning you end up living on the streets, or in your parents' garage.
FD3SA 11y ago
The good old "Bill Gates the bootstrapped college dropout" argument. These myths never die. William Henry Gates the Third had a trust fund before he was born. His downside risks for anything he chose to do in life were completely nonexistent. Same with Zuck. Same with Spiegel. Same with 99% of the entrepreneurs HN idolizes. Here's some light reading: http://qz.com/455109/entrepreneurs-dont-have-a-special-gene-for-risk-they-come-from-families-with-money/ http://qz.com/455109/entrepreneurs-dont-have-a-special-gene-... http://philip.greenspun.com/bg/ http://philip.greenspun.com/bg/ EDIT: Removed potentially inflammatory line, which went as follows: "Just a bunch of rich kids trying to prove a point to their parents". This is definitely a personal opinion, but one that has merit if you examine the evolutionary psychology of parent-child relationships. The conversation is a bit in depth, but please understand that I was not trying to simply fire off an ad hominem. I was instead trying to hint at the incentives which drive an already rich child to strive for more wealth. For the vast majority of us who have to work for a living, such behaviors seem confusing. Only upon deeper analysis do the pyschological incentives for such individuals begin to make sense.
- drumdance 11y ago
  It's a bunch of rich kids trying to get richer than their parents to prove a point. You had me until there. Why question their motives? Is it really so hard to believe that Gates really loved computers? If he was just thinking in terms of outstripping his parents, there were lots of other more-credible avenues available to him. The very idea of a personal computer was scoffed at. Not just by non-techies, but people like DEC founder Ken Olsen.
  - Anechoic 11y ago
    Why question their motives? Is it really so hard to believe that Gates really loved computers? Did Gates' love of computers motivate Microsoft's anticompetitive moves in the 1990s?
    - drumdance 11y ago
      I don't see what one has to do with the other. Professional athletes get caught cheating all the time, but I don't doubt they still love their sports. One may as well doubt that Hitler actually liked being a vegetarian.
ryguytilidie 11y ago
Would a self made billionaire include someone who inherited say 800 million and turned it into a billion?
- bko 11y ago
  From the article: > There’s no doubt that entrepreneurship is thriving globally. Fully 1,191 members of the list are self-made billionaires, while just 230 inherited their wealth. Another 405 inherited at least a portion but are still working to increase their fortunes. Not sure how "at least a portion" is defined, but I imagine less than half had significant inheritance. That's not to say the self-made billionaires were born middle class, but it does suggest that wealth does not necessarily beget wealth.
  - coldtea 11y ago
    Again, 635 out of 1191 started out rich (either for the whole sum, or a portion of it). That's 53% of them. But even if 1190 of them had gone "rich from zero" and only 1 had inherited his wealth, it wouldn't be that comforting by itself. What you generally want in a society is: lots of poor people to be able to get out of poverty (into middle class), middle class to have a decent chance to become upper middle class, etc -- and of course most middle class to be stable and not fall into poverty. That is, things that affect the majority of the population. A society with a middle class that shrinks and worse prospects for 99% of kids compared to their parents is not absolved if it has 1000 billionaires emerge out of poverty (or middle class). A society with just 10 billionaires but far better social mobility (e.g. like in the 50's) would be much better to live in. That's just relevant as an opportunity to a mere .0002857% of the population.
    - JonFish85 11y ago
      >635 out of 1191 I know it's pretty minor, but it's actually 1,826 in total, so it's 35%. >A society with a middle class that shrinks and worse prospects for 99% of kids compared to their parents is not absolved if it has 1000 billionaires emerge out of poverty (or middle class). A society with just 10 billionaires but far better social mobility (e.g. like in the 50's) would be much better to live in. I don't follow this logic at all. Does number of billionaires created affect anything else? They seem somewhat unrelated to me, especially in light of what I said before about the rich constantly turning over.
fauigerzigerk 11y ago
That's what you get when you focus on the outliers. I doubt that causality plays a big role in determining who becomes a billionaire (Zuckerberg, Gates, Buffett) and who stays a mere doctor, lawyer or congressman (father of Zuckerberg, father of Gates, father of Buffett). But that is a question of who belongs to the 0.01% and who belongs to the 1%. It's not a very interesting social mobility study and I agree with you that the "rich get richer" argument makes no sense for the super rich outliers. Unfortunately, things do get a lot more predictable at the lower percentiles.
subdane 11y ago
The post is about "An investment mentality that hollows out our culture." Even if the folks that profit from the hollowing give the money away, the hole's still there. To be specific to the example in the article, it's not like Rockefeller's heirs are literally giving money to Mom and Pop delis to compete with banks for New York's street corners.
bitbuilder 11y ago
Doesn't your Paris Hilton example prove GPs point, rather than refute it? It's precisely due to her family's considerable wealth that she was able to make more than she'll inherit. Would Julia Louis-Dreyfus have been able to pursue an acting career so easily without family wealth? But I'm not sure it's even useful to consider celebrities when discussing wealth acquisition in our country. I'd consider them outliers, in the grand scheme of things.
- marknutter 11y ago
  She is definitely an outlier. I would venture to guess that the success rate of trust fund babies in business is about on par with the success rate of inner city kids. They both lack the proper incentives to succeed, but in dramatically different ways.
  - jpapon 11y ago
    That's just ridiculous. Inner city kids don't lack the proper incentives to succeed (they're poor, after all), they lack the resources needed to succeed.
    - oberstein 11y ago
      Is IQ a resource?
    - workitout 11y ago
      I grew up poor in the south. People don't need to be handed incentives to succeed. Some people don't mind being poor. Some people will be poor before long even if you give them a million dollars. If success is important to you, you work for it. Success is defined differently for all of us. Lifelong welfare is not helping someone, it is not incentivizing them. That has to some from within.
    - omonra 11y ago
      I think he meant to say that trust fund kids lack motivation while inner city kids lack the skills.
marincounty 11y ago
I've only met, or overheard one wealthy man give proper credit to his families wealth(money, access to power, access to good attorneys, the best schools, the best loans, the best business advisors, etc.), reguarding the fortune they amassed, and that was George Sorows. George said in numerious interviews, 'I owe everything to my father. With out him, and his money, I wouldn't have anything.' I'm paraphrasing. The rest of the rich boys always leave out the inside help they received in critical points in their career, or climb to the top. I guess what I'm saying is they all want the world to think they made their own money. All are modern day Horiatio Algiers? So, I don't buy Forbes figures; "There’s no doubt that entrepreneurship is thriving globally. Fully 1,191 members of the list are self-made billionaires, while just 230 inherited their wealth. Another 405 inherited at least a portion but are still working to increase their fortunes." Exactly how did Forbes come up with these numbers? I quickly looked at the list, and I buy the athletes didn't have much help, but the rest; I wouldn't bet on it. They had a lot of unseen help. Yea, you can always find a few exceptions, but I bet it's less than 10 individuals.
zasz 11y ago
If you look at the overall trends, economic mobility is decreasing for most Americans. http://www.pewtrusts.org/en/research-and-analysis/reports/2015/07/economic-mobility-in-the-united-states http://www.pewtrusts.org/en/research-and-analysis/reports/20... Calling the US a 'feudal' state is obviously hyperbolic, but it's most definitely a classist society.
nickbauman 11y ago
Gates is the son of a wealthy corporate lawyer. He went to one of the only high schools in the US that allowed their students computer access at the time. If you consider his wealth "self-made", I'd like to know what you define as self-made. Bill Gates, Dreyfus, Hilton only prove rich parents can produce even richer kids. Buffet's father was a congressman, not exactly the definition of wealthy (although these days it is), but definitely enfranchised.

andosa 11y ago

That doesn't really refute gp's point. In medieval times, there were periods where dynasties didn't last, and every generation had new warlords from new families. That doesn't mean it wasn't a feudal society.

Swizec 11y ago

The main issue, as I see it, is that going from upper middle class (or even mid-range middle class) to mega rich is easier than it is to go from poor to lower middle class. Most rags to riches stories we have these days, are really a relatively well off to riches stories when you look at them. The only exceptions are people who won the celebrity lottery. It's surprisingly hard to accumulate wealth when you're struggling to keep the lights on.

rnovak 11y ago
Why wouldn't it be easier? Someone who has more discretionary income can take on more risk than someone who can't keep their lights on, and a failed venture doesn't have the same consequences. Just by virtue of taking more risk, those in the middle class are expanding their chance of success by orders of magnitude more. I'd dare say it's impossible for the middle class to not to become "mega rich" at a greater incidence than poor becoming middle class.
- Swizec 11y ago
  I agree. I'm just saying that a lot of the people who normally discuss these "But it's not that hard or impossible to become rich, what are you talking about?" stories, are the kind of people who somehow magically were able to go to an ivy league school or similar. They say they became rich on their own, and that most of the mega rich also became rich on their own, but forget that compared to the vast majority of the population, even confined to the US, they were already born rich and have a massive leg-up in the world from day 1. edit: As Donald Trump would say "I made all my own money. My dad only gave me a small 1 million dollar loan, and with that I was able to make my own fortune."
  - JonFish85 11y ago
    The problem with that quote is that no entrepreneur now can say anything less. Any company founder at this point has likely taken over a million dollars in venture capital--are they not to be called self-made if their company does well? Nobody is ever "self made" if you take that argument.
    - Swizec 11y ago
      I would assume there is a big difference between your dad giving you a loan and investors who don't have social ties with you since childhood. The assumption is that the dad will be less stringent on due diligence, more forgiving in what he gets in return, and most importantly, will have brought you up all your life in such a way that you are primed for handling those kinds of money. The wider point is that someone who grew up in a trailer park, doesn't even have access to investors in the first place. For example: how are you going to get an investment, if you can't afford to to schmooze with investors? What if a $50 dinner is completely out of your price range? What if buying someone a $5 coffee is a big deal financially? And then there's the issue of safety net. There's a big difference between your venture failing meaning you end up living on the streets, or in your parents' garage.

FD3SA 11y ago

The good old "Bill Gates the bootstrapped college dropout" argument. These myths never die. William Henry Gates the Third had a trust fund before he was born. His downside risks for anything he chose to do in life were completely nonexistent. Same with Zuck. Same with Spiegel. Same with 99% of the entrepreneurs HN idolizes. Here's some light reading: http://qz.com/455109/entrepreneurs-dont-have-a-special-gene-for-risk-they-come-from-families-with-money/ http://qz.com/455109/entrepreneurs-dont-have-a-special-gene-... http://philip.greenspun.com/bg/ http://philip.greenspun.com/bg/ EDIT: Removed potentially inflammatory line, which went as follows: "Just a bunch of rich kids trying to prove a point to their parents". This is definitely a personal opinion, but one that has merit if you examine the evolutionary psychology of parent-child relationships. The conversation is a bit in depth, but please understand that I was not trying to simply fire off an ad hominem. I was instead trying to hint at the incentives which drive an already rich child to strive for more wealth. For the vast majority of us who have to work for a living, such behaviors seem confusing. Only upon deeper analysis do the pyschological incentives for such individuals begin to make sense.

drumdance 11y ago
It's a bunch of rich kids trying to get richer than their parents to prove a point. You had me until there. Why question their motives? Is it really so hard to believe that Gates really loved computers? If he was just thinking in terms of outstripping his parents, there were lots of other more-credible avenues available to him. The very idea of a personal computer was scoffed at. Not just by non-techies, but people like DEC founder Ken Olsen.
- Anechoic 11y ago
  Why question their motives? Is it really so hard to believe that Gates really loved computers? Did Gates' love of computers motivate Microsoft's anticompetitive moves in the 1990s?
  - drumdance 11y ago
    I don't see what one has to do with the other. Professional athletes get caught cheating all the time, but I don't doubt they still love their sports. One may as well doubt that Hitler actually liked being a vegetarian.

ryguytilidie 11y ago

Would a self made billionaire include someone who inherited say 800 million and turned it into a billion?

bko 11y ago
From the article: > There’s no doubt that entrepreneurship is thriving globally. Fully 1,191 members of the list are self-made billionaires, while just 230 inherited their wealth. Another 405 inherited at least a portion but are still working to increase their fortunes. Not sure how "at least a portion" is defined, but I imagine less than half had significant inheritance. That's not to say the self-made billionaires were born middle class, but it does suggest that wealth does not necessarily beget wealth.
- coldtea 11y ago
  Again, 635 out of 1191 started out rich (either for the whole sum, or a portion of it). That's 53% of them. But even if 1190 of them had gone "rich from zero" and only 1 had inherited his wealth, it wouldn't be that comforting by itself. What you generally want in a society is: lots of poor people to be able to get out of poverty (into middle class), middle class to have a decent chance to become upper middle class, etc -- and of course most middle class to be stable and not fall into poverty. That is, things that affect the majority of the population. A society with a middle class that shrinks and worse prospects for 99% of kids compared to their parents is not absolved if it has 1000 billionaires emerge out of poverty (or middle class). A society with just 10 billionaires but far better social mobility (e.g. like in the 50's) would be much better to live in. That's just relevant as an opportunity to a mere .0002857% of the population.
  - JonFish85 11y ago
    >635 out of 1191 I know it's pretty minor, but it's actually 1,826 in total, so it's 35%. >A society with a middle class that shrinks and worse prospects for 99% of kids compared to their parents is not absolved if it has 1000 billionaires emerge out of poverty (or middle class). A society with just 10 billionaires but far better social mobility (e.g. like in the 50's) would be much better to live in. I don't follow this logic at all. Does number of billionaires created affect anything else? They seem somewhat unrelated to me, especially in light of what I said before about the rich constantly turning over.

fauigerzigerk 11y ago

That's what you get when you focus on the outliers. I doubt that causality plays a big role in determining who becomes a billionaire (Zuckerberg, Gates, Buffett) and who stays a mere doctor, lawyer or congressman (father of Zuckerberg, father of Gates, father of Buffett). But that is a question of who belongs to the 0.01% and who belongs to the 1%. It's not a very interesting social mobility study and I agree with you that the "rich get richer" argument makes no sense for the super rich outliers. Unfortunately, things do get a lot more predictable at the lower percentiles.

subdane 11y ago

The post is about "An investment mentality that hollows out our culture." Even if the folks that profit from the hollowing give the money away, the hole's still there. To be specific to the example in the article, it's not like Rockefeller's heirs are literally giving money to Mom and Pop delis to compete with banks for New York's street corners.

bitbuilder 11y ago

Doesn't your Paris Hilton example prove GPs point, rather than refute it? It's precisely due to her family's considerable wealth that she was able to make more than she'll inherit. Would Julia Louis-Dreyfus have been able to pursue an acting career so easily without family wealth? But I'm not sure it's even useful to consider celebrities when discussing wealth acquisition in our country. I'd consider them outliers, in the grand scheme of things.

marknutter 11y ago
She is definitely an outlier. I would venture to guess that the success rate of trust fund babies in business is about on par with the success rate of inner city kids. They both lack the proper incentives to succeed, but in dramatically different ways.
- jpapon 11y ago
  That's just ridiculous. Inner city kids don't lack the proper incentives to succeed (they're poor, after all), they lack the resources needed to succeed.
  - oberstein 11y ago
    Is IQ a resource?
  - workitout 11y ago
    I grew up poor in the south. People don't need to be handed incentives to succeed. Some people don't mind being poor. Some people will be poor before long even if you give them a million dollars. If success is important to you, you work for it. Success is defined differently for all of us. Lifelong welfare is not helping someone, it is not incentivizing them. That has to some from within.
  - omonra 11y ago
    I think he meant to say that trust fund kids lack motivation while inner city kids lack the skills.

marincounty 11y ago

I've only met, or overheard one wealthy man give proper credit to his families wealth(money, access to power, access to good attorneys, the best schools, the best loans, the best business advisors, etc.), reguarding the fortune they amassed, and that was George Sorows. George said in numerious interviews, 'I owe everything to my father. With out him, and his money, I wouldn't have anything.' I'm paraphrasing. The rest of the rich boys always leave out the inside help they received in critical points in their career, or climb to the top. I guess what I'm saying is they all want the world to think they made their own money. All are modern day Horiatio Algiers? So, I don't buy Forbes figures; "There’s no doubt that entrepreneurship is thriving globally. Fully 1,191 members of the list are self-made billionaires, while just 230 inherited their wealth. Another 405 inherited at least a portion but are still working to increase their fortunes." Exactly how did Forbes come up with these numbers? I quickly looked at the list, and I buy the athletes didn't have much help, but the rest; I wouldn't bet on it. They had a lot of unseen help. Yea, you can always find a few exceptions, but I bet it's less than 10 individuals.

zasz 11y ago

If you look at the overall trends, economic mobility is decreasing for most Americans. http://www.pewtrusts.org/en/research-and-analysis/reports/2015/07/economic-mobility-in-the-united-states http://www.pewtrusts.org/en/research-and-analysis/reports/20... Calling the US a 'feudal' state is obviously hyperbolic, but it's most definitely a classist society.

nickbauman 11y ago

Gates is the son of a wealthy corporate lawyer. He went to one of the only high schools in the US that allowed their students computer access at the time. If you consider his wealth "self-made", I'd like to know what you define as self-made. Bill Gates, Dreyfus, Hilton only prove rich parents can produce even richer kids. Buffet's father was a congressman, not exactly the definition of wealthy (although these days it is), but definitely enfranchised.