10 ms·

How the .0001% Made Its Money

176 points by ruswick 13y ago

brianbreslin 13y ago
I would love to see this article applied to the .0000001% who control 35% of Russia's wealth got their money. ;-)
suyash 13y ago
So what is the point of this..we all knew whose making money, this was nothing new to me.
Sagat 13y ago
I wonder when we will have the first dollar trillionaire. (Rockefeller doesn't count) It's likely that some people will own entire planets in the future.
- Romoku 13y ago
  I think on paper you can get close with derivatives although you'll never be able to liquidate them.
- a3voices 13y ago
  This reminded me of a Star Wars book where Han Solo won a planet in a game. >Han Solo won the deed to Dathomir from Drackmarian Warlord Omogg in a game of sabacc in 8 ABY. http://starwars.wikia.com/wiki/Dathomir http://starwars.wikia.com/wiki/Dathomir
- arca_vorago 13y ago
  I remember a documentary by a wealthy persons son who interviewed one of the founders of Kinkos who makes a comment something along the lines of wanting to look down on Earth from the Moon someday and being able to say, "I own (part?) of that."
loceng 13y ago
That doesn't say where they made their money - it shows where their money went, meaning where the highest profits were possible. Of course you can recycle those profits into those high-profit systems. Important distinction to make if you're wanting to understand these systems.
sgloutnikov 13y ago
Personally, the "Finance" growth part of the graph over the years worries me. Creating wealth from thin air and lobbying :|
- gcb1 13y ago
  like putting a fence on some land? like having rights to some nation natural resources (energy on the graph if not clear) all wealth is created out of thin air for the 1%. they just adapt every time the not 1% comes closer to their turf.
  - NhanH 13y ago
    I might well be very wrong here, but the main difference is that the other type of wealth-creation process actually creates more wealth (more products for everyone). While finance seems more like wealth-accumulation without the creation process - I'm aware that redistribution of resource in an efficient way is supposedly the part finance does in the wealth creation process, I'm just unconvinced of how much does that help, in relation with the return the finance sector on average get.
    - seferphier 13y ago
      I agree. Finance created lots of value for the British Empire when they were colonizing countries - where they could raise money to buy navy ships and soldiers. Finance does create value in the long run. However, it creates minimal value in the short run. Debt being traded in the short run is a zero sum game which does not create any value for the society. Considering that we allocate the best and the brightest people in finance, I would consider it creates negative value to society.
      - count 13y ago
        Aside from the VC's in the valley, what business in America runs without using debt in the short term today? Finance enables the day to day operations of the entire economy - I'd say it creates a ton of new wealth, in every segment.
CoachRufus87 13y ago
Why doesn't 'VC' fall under 'Finance'?
- aspir 13y ago
  It could be argued that VC involves the building of technology businesses, rather than simply investing in a hands off manner. It's a fine line, but the famous VCs that come to my mind (Doerr, Andreessen) help mentor and grow a company, and similar financiers (Buffett, Soros) are more industry analysts and money managers. It's a gross simplification, but it may be what they were thinking.
  - yummyfajitas 13y ago
    You could make the same argument about a lot of private equity - that tends to involve the restructuring/managing of various brick&mortar.
mmagin 13y ago
It's kind of alarming how in recent years, "Finance" pulled ahead of "Tech & VC", according to the second graph. But there's one line on the graph that's missing from the legend. Sloppy.
- jfoutz 13y ago
  Blue, retail; orange, real estate; yellow,finance; green, energy; purple, tech. I only count five lines.
Shivetya 13y ago
the good take-a-way is that more people created than inherited
- werner34 13y ago
  Exactly my opinion. And even though I normally lean towards free market related views when it comes to regulation and government, I think a high inheritance tax would be justified in western countries. With it universities & infrastructure could be funded and possibly enable more people to get a university degree. My underlying reasoning: Every new generation is a giant possiblity for mankind. Now who do we want to command the most resources? If we had kings, it would be the kings heir, no matter if he is clever or not. Thats bad obviously. If we have capitalism without a high inheritance tax, we might have people like Paris Hilton commanding massive fortunes even though some poor kids might have done a lot better with it if they had a chance of acquiring wealth in the first place. By having a high inheritance tax one would avoid unbelievable fortunes being handed down to people that are not qualified at all. Another aspect is obviously that the state needs to motivate people to work better than their peers. If - like in communism - it doesn't matter anymore if I work harder than my peers, so I don't work hard. Assuming that most people work for personal gain, wealth, and so that they children have it better than themselves, you need to leave them their wealth during their lifetime and enable them to hand down some part of their income to their kids, and not give all back to the public. If they would have to give everything to the public, the really bright people might stop working at 35 when they accumulated enough wealth for themselves, knowing their children won't benefit from it anyways. Good article.
  - icebraining 13y ago
    Though I'm attracted to the idea, inheritance tax was always a concept that I see (probably due to ignorance) as extremely vulnerable to "an extra layer of indirection". You see, I'm not actually transferring the company to my son, I'm transferring it to a trust in Switzerland that is controlled by my daughter-in-law.
    - Zimahl 13y ago
dxbydt 13y ago
Needs a lot more granularity - in particular, the "Finance" bar needs its own bar graph ie. what exactly does making money in Finance entail - working for a retail/commercial bank ? IB ? Prime Brokerage ? Wealth Management ? Equities ? Derivatives ? FX ? Algorithmic Trading ? Mutual funds ? StatArb ? LBO ? ...
- alexmayyasi 13y ago
  The original paper breaks down finance between 3-4 categories. (If you google the title you can find free pdfs.) We combined them to make it more clear for the casual reader. ~priceonomicist
ffrryuu 13y ago
Off the rest of us.
- AsymetricCom 13y ago
  No, no. "Finance"
  - ffrryuu 13y ago
    They print the money, we get the left overs! Trickle down!
Florin_Andrei 13y ago
> The popular view of America's upper class is that of an ossified aristocracy. But research from the National Bureau of Economic Research shakes up this view, at least among America's richest individuals. > The individuals of the Forbes 400 List are the wealthiest people in America - the top .0001% Am I the only one who sees the contradiction? On one hand, they say things are not that bad. But then they turn around and start talking about the 0.0001%. In other words, it's not too bad - if you're one of those 1 in 1 million.
- pg 13y ago
  They're talking about these people's origins, not their current wealth.
  - Florin_Andrei 13y ago
    Let me emphasize it again - perhaps by sheer repetition, the main point will become obvious: It's not something relevant to the general population, the middle class in general, or the concept of social mobility, IF IT ONLY APPLIES TO 1 PERSON IN 1 MILLION.
    - klochner 13y ago
      The article presents that caveat straightforwardly: The popular view of America's upper class is that of an ossified aristocracy. But research from the National Bureau of Economic Research shakes up this view, at least among America's richest individuals. And elaborates: Over the last 30 years, income inequality has grown and intergenerational mobility has decreased. The rich are getting richer and drawing up the ladder to the upper class with them. The story differs for the members of the Forbes 400 List. So I'd say you're in violent agreement with the author.
      - vidarh 13y ago
        The problem is that on one hand the try to talk about "America's upper class", on the other hand they restrict themselves to looking at members of the Forbes 400. In other words: They're seemingly trying to make the story sound more relevant than it is, by framing it as if they have something to say about "America's upper class", when the data they look at consists only of a tiny subset of extreme outliers.
firstOrder 13y ago
The first paragraph says: > The popular view of America's upper class is that of an ossified aristocracy. But research from the National Bureau of Economic Research shakes up this view, at least among America's richest individuals. Not much has shaken up this view. Half of the list inherited $400 million or more upon turning 18. Even the other half of the list are from among a small percentage of America's upper middle class. #1 Bill Gates. Father a wealthy lawyer. His grandfather was a national bank president. He went to an elite private grammar school, which had teletypes and computer timesharing back in the 1960s. His mother was on the board of United Way with the CEO of IBM - a helpful thing for a son who became a billionaire by riding IBM's coattails. Despite all of this, he is still on the bootstrapped, self-made side of the F400 list. He is not one of the heirs. Next is Warren Buffett. His father was a congressman. His grandfather owned a string of stores. And so on. The rest of the top ten are the Waltons, who inherited Wal-Mart on birth, the Koch brothers, who inherited an oil company on birth, plus Larry Ellison and Michael Bloomberg. Ellison and Bloomberg are the only middle class people on the list. I do think there are new trends happening at this level, but they don't point to what the blog post authors are pointing to.
- morley 13y ago
  The article goes on to address your point. From the article: During the period the researchers investigated, the number of individuals on the Forbes 400 who were the first in their family to run a business rose from 40% to 69%. Sixty percent of individuals on the list grew up wealthy in 1982 while only 32% did in 2011.
  - stormbrew 13y ago
    This strikes me as likely to be just a delayed propagation of the increase in upward mobility seen in the post-war years. It seems entirely reasonable for that to take a couple of generations of people building on their parent's wealth accumulation to propagate upwards to the very top. How many of those people's success could you trace back to the GI bill? Gates' father attended university because of it, for example.
    - 13y ago
pc86 13y ago
> America’s .0001% is becoming more meritocratic, but the means of a middle class background remain a necessary launching board. Doesn't this directly contradict the preceding statement that those "born into poverty stayed level at 20%?" Maybe I'm being too pedantic with my interpretation of "necessary" but 20% seems a sizable chunk.
programminggeek 13y ago
> The economic story of the past decades is supposed to be the death of the American Dream. Income inequality has risen, the wealth of the middle class stagnated, and stories of the poor working their way to prosperity became just stories. I think the article doesn't really do a good job to change that view. The inequality has risen and the wealth of the middle class has stagnated. This is absolutely true. Things like raises are no longer the norm, bonuses in many jobs have disappeared, prices and debt have risen much faster than the rise in income. At the same time, wealthy people continue to grow their wealth. The fact the top 0.0001% gained their wealth not by inheriting it doesn't change what is happening to the poor, middle class, etc. as a result.
- Samuel_Michon 13y ago
  > The top 0.0001% gained their wealth not by inheriting it How did you come to that conclusion? I looked for that in the figures, but I couldn’t find what percentage came into money from an inheritance. Perhaps it’s placed in the 12% ‘Diversified/Other’ category, but the impression I got from the article was that they tallied how the money was earned in the first place, not where the ones holding the purse got it from. I believe your interpretation of the article in this aspect is incorrect. For instance, 4 of the top 10 spots are taken up by members of the Walton family. Those people inherited their wealth from Bud and Sam Walton, the founders of Wal*Mart. http://en.wikipedia.org/wiki/Walton_family http://en.wikipedia.org/wiki/Walton_family
  - alnis 13y ago
    From the article: > Kaplan and Rauh find that America’s wealthiest are no longer a collection of Rockefellers and Carnegies. During the period the researchers investigated, the number of individuals on the Forbes 400 who were the first in their family to run a business rose from 40% to 69%. Sixty percent of individuals on the list grew up wealthy in 1982 while only 32% did in 2011. > Although being born into wealth is less and less necessary for admission to the club of America’s wealthiest individuals, ...
    - Samuel_Michon 13y ago
scotty79 13y ago
Surest way is real estate. Just buy real estate and rent it. Repeat over 3 or 4 generations. Congratulations. You created a rich family. All other ways involve luck.
- cylinder 13y ago
  What you're saying is "The surest way to get rich is to be rich." Real estate is just a way to invest money you already have. It doesn't generate wealth unless you have access to capital and can put deals together to develop properties and take a chunk. But that might as well put you in the "Finance" category.
  - scotty79 13y ago
    You can build real estate gradually, starting with one, two, three apartments paid for with your job and rent your tenants pay. At some point, pretty early you could stop working but if you don't you can buy additional apartments faster. During first generation, I think, you could buy around 10 if you have a good job. Your children will be able buy faster, their grandchildren even faster.
    - deleted 13y ago
      [deleted]
    - erichocean 13y ago
      A friend of mine from college had parents that started from scratch and bought and rented ~1200 homes in Indiana during their working years. So, it can be done.
- msellout 13y ago
  The stock market has performed better than real estate over the same 4 generations.
yodsanklai 13y ago
"America’s .0001% is becoming more meritocratic" They make it sounds it should be comforting somehow. But I don't think it makes any difference. Does it matter whether they won the lottery, inherited, or "earned" their money? the fact is that very few people own much of the wealth.
sigil 13y ago
It's also hard to stay on top, and it gets harder the closer you are: the turnover of individuals in these extreme upper brackets is high [0]. The composition of the very top income groups changed dramatically over time. Less than half (39% or 42% depending on the measure) of those in the top 1% in 1996 were still in the top 1% in 2005. Less than one-fourth of the individuals in the top 1/100th percent in 1996 remained in that group in 2005. [0] http://ntj.tax.org/wwtax/ntjrec.nsf/F95C00D9840D35F2852575F40047B159/$FILE/Article%2005-Auten(F).pdf http://ntj.tax.org/wwtax/ntjrec.nsf/F95C00D9840D35F2852575F4...
- humanrebar 13y ago
  Year-to-year income of the top 1% is probably a poor measure of "staying on top". I would like to see those numbers controlled for wealth. Some of those people whose incomes move in and out of the top 1% are just in boom-or-bust jobs or own boom-or-bust businesses or investments. Others are big earners who recently retired to extremely comfortable fixed incomes. Neither category really fits what I would think of as someone losing his or her "on top" status. On the other hand, moving from a high-income high cost-of-living area (SF or NYC) to a lower-income, low cost-of-living area (Boulder, KC, or Charlotte) will technically move you out of the 1% while improving your standard of living.
Yhippa 13y ago
> the rising share of the Forbes 400 List accounted for by technology and finance supports theories that explain America’s rising income inequality by how technology has favored the accumulation of wealth and made certain sectors more scaleable. Tech moguls like Mark Zuckerberg and Sergey Brin account for a rising share of new fortunes. Reading that reminded me of this: http://www.theonion.com/articles/economists-advise-nations-poor-to-invent-the-next,33573/ http://www.theonion.com/articles/economists-advise-nations-p...
holograham 13y ago
I am curious on this articles definition of poverty. The statement that 20% of the forbes 400 was born in poverty is insufficient on it's own. More telling would be that percentage compared to the percentage of poor in America. That number could be very favorable (or very unfavorable) depending on the metric for poverty used.
anovikov 13y ago
You somehow forget that less than 20% of Americans live, or are born into poverty. With 20% of Forbes list having poverty background, this kind of, means that if you are poor in childhood, you have higher chances to get to Forbes list than if you are middle (well, really middle) class. Hard to explain. Maybe because poor have nothing to lose so they are more prone to risky things that stand at the root of their business? Or reverse, they have medicaid so can afford more risk being less dependent on employers paying for their health insurance?
- anovikov 13y ago
  I think i understood why is this. Middle class kids are usually taught by their parents to obey the rules, learn and work hard and be loyal. Which is a way to keep in the middle class but hardly a way get to upper class. Most poor kids are probably not taught by their parents anything because parents are busy drinking and smoking pot, except the very valuable teaching of not trusting anyone at all.
balsam 13y ago
My favorite use of extreme statistics to justify the superiority of one culture over another is Nobel Prizes per capita. #sarcasm http://en.wikipedia.org/wiki/List_of_countries_by_Nobel_laureates_per_capita http://en.wikipedia.org/wiki/List_of_countries_by_Nobel_laur...
adsr 13y ago
Is 0.0001% really that useful for drawing any conclusions at all. I mean it's one in a million.
deleted 13y ago
[deleted]
- twoodfin 13y ago
  Why should it?
joeldidit 13y ago
The 0.0001% made their money from oil, tech, and the stock market. Simple. If you want to make that kinda money these days, then you have to get into the tech industry.
anovikov 13y ago
I wonder how are things going in U.K. in this respect? Their upper class must be mostly still with roots from 1066AD?

176 points by ruswick 13y ago

brianbreslin 13y ago

I would love to see this article applied to the .0000001% who control 35% of Russia's wealth got their money. ;-)

suyash 13y ago

So what is the point of this..we all knew whose making money, this was nothing new to me.

Sagat 13y ago

I wonder when we will have the first dollar trillionaire. (Rockefeller doesn't count) It's likely that some people will own entire planets in the future.

Romoku 13y ago
I think on paper you can get close with derivatives although you'll never be able to liquidate them.
a3voices 13y ago
This reminded me of a Star Wars book where Han Solo won a planet in a game. >Han Solo won the deed to Dathomir from Drackmarian Warlord Omogg in a game of sabacc in 8 ABY. http://starwars.wikia.com/wiki/Dathomir http://starwars.wikia.com/wiki/Dathomir
arca_vorago 13y ago
I remember a documentary by a wealthy persons son who interviewed one of the founders of Kinkos who makes a comment something along the lines of wanting to look down on Earth from the Moon someday and being able to say, "I own (part?) of that."

loceng 13y ago

That doesn't say where they made their money - it shows where their money went, meaning where the highest profits were possible. Of course you can recycle those profits into those high-profit systems. Important distinction to make if you're wanting to understand these systems.

sgloutnikov 13y ago

Personally, the "Finance" growth part of the graph over the years worries me. Creating wealth from thin air and lobbying :|

gcb1 13y ago
like putting a fence on some land? like having rights to some nation natural resources (energy on the graph if not clear) all wealth is created out of thin air for the 1%. they just adapt every time the not 1% comes closer to their turf.
- NhanH 13y ago
  I might well be very wrong here, but the main difference is that the other type of wealth-creation process actually creates more wealth (more products for everyone). While finance seems more like wealth-accumulation without the creation process - I'm aware that redistribution of resource in an efficient way is supposedly the part finance does in the wealth creation process, I'm just unconvinced of how much does that help, in relation with the return the finance sector on average get.
  - seferphier 13y ago
    I agree. Finance created lots of value for the British Empire when they were colonizing countries - where they could raise money to buy navy ships and soldiers. Finance does create value in the long run. However, it creates minimal value in the short run. Debt being traded in the short run is a zero sum game which does not create any value for the society. Considering that we allocate the best and the brightest people in finance, I would consider it creates negative value to society.
    - count 13y ago
      Aside from the VC's in the valley, what business in America runs without using debt in the short term today? Finance enables the day to day operations of the entire economy - I'd say it creates a ton of new wealth, in every segment.

CoachRufus87 13y ago

Why doesn't 'VC' fall under 'Finance'?

aspir 13y ago
It could be argued that VC involves the building of technology businesses, rather than simply investing in a hands off manner. It's a fine line, but the famous VCs that come to my mind (Doerr, Andreessen) help mentor and grow a company, and similar financiers (Buffett, Soros) are more industry analysts and money managers. It's a gross simplification, but it may be what they were thinking.
- yummyfajitas 13y ago
  You could make the same argument about a lot of private equity - that tends to involve the restructuring/managing of various brick&mortar.

mmagin 13y ago

It's kind of alarming how in recent years, "Finance" pulled ahead of "Tech & VC", according to the second graph. But there's one line on the graph that's missing from the legend. Sloppy.

jfoutz 13y ago
Blue, retail; orange, real estate; yellow,finance; green, energy; purple, tech. I only count five lines.

Shivetya 13y ago

the good take-a-way is that more people created than inherited

werner34 13y ago
Exactly my opinion. And even though I normally lean towards free market related views when it comes to regulation and government, I think a high inheritance tax would be justified in western countries. With it universities & infrastructure could be funded and possibly enable more people to get a university degree. My underlying reasoning: Every new generation is a giant possiblity for mankind. Now who do we want to command the most resources? If we had kings, it would be the kings heir, no matter if he is clever or not. Thats bad obviously. If we have capitalism without a high inheritance tax, we might have people like Paris Hilton commanding massive fortunes even though some poor kids might have done a lot better with it if they had a chance of acquiring wealth in the first place. By having a high inheritance tax one would avoid unbelievable fortunes being handed down to people that are not qualified at all. Another aspect is obviously that the state needs to motivate people to work better than their peers. If - like in communism - it doesn't matter anymore if I work harder than my peers, so I don't work hard. Assuming that most people work for personal gain, wealth, and so that they children have it better than themselves, you need to leave them their wealth during their lifetime and enable them to hand down some part of their income to their kids, and not give all back to the public. If they would have to give everything to the public, the really bright people might stop working at 35 when they accumulated enough wealth for themselves, knowing their children won't benefit from it anyways. Good article.
- icebraining 13y ago
  Though I'm attracted to the idea, inheritance tax was always a concept that I see (probably due to ignorance) as extremely vulnerable to "an extra layer of indirection". You see, I'm not actually transferring the company to my son, I'm transferring it to a trust in Switzerland that is controlled by my daughter-in-law.
  - Zimahl 13y ago

dxbydt 13y ago

Needs a lot more granularity - in particular, the "Finance" bar needs its own bar graph ie. what exactly does making money in Finance entail - working for a retail/commercial bank ? IB ? Prime Brokerage ? Wealth Management ? Equities ? Derivatives ? FX ? Algorithmic Trading ? Mutual funds ? StatArb ? LBO ? ...

alexmayyasi 13y ago
The original paper breaks down finance between 3-4 categories. (If you google the title you can find free pdfs.) We combined them to make it more clear for the casual reader. ~priceonomicist

ffrryuu 13y ago

Off the rest of us.

AsymetricCom 13y ago
No, no. "Finance"
- ffrryuu 13y ago
  They print the money, we get the left overs! Trickle down!

Florin_Andrei 13y ago

> The popular view of America's upper class is that of an ossified aristocracy. But research from the National Bureau of Economic Research shakes up this view, at least among America's richest individuals. > The individuals of the Forbes 400 List are the wealthiest people in America - the top .0001% Am I the only one who sees the contradiction? On one hand, they say things are not that bad. But then they turn around and start talking about the 0.0001%. In other words, it's not too bad - if you're one of those 1 in 1 million.

pg 13y ago
They're talking about these people's origins, not their current wealth.
- Florin_Andrei 13y ago
  Let me emphasize it again - perhaps by sheer repetition, the main point will become obvious: It's not something relevant to the general population, the middle class in general, or the concept of social mobility, IF IT ONLY APPLIES TO 1 PERSON IN 1 MILLION.
  - klochner 13y ago
    The article presents that caveat straightforwardly: The popular view of America's upper class is that of an ossified aristocracy. But research from the National Bureau of Economic Research shakes up this view, at least among America's richest individuals. And elaborates: Over the last 30 years, income inequality has grown and intergenerational mobility has decreased. The rich are getting richer and drawing up the ladder to the upper class with them. The story differs for the members of the Forbes 400 List. So I'd say you're in violent agreement with the author.
    - vidarh 13y ago
      The problem is that on one hand the try to talk about "America's upper class", on the other hand they restrict themselves to looking at members of the Forbes 400. In other words: They're seemingly trying to make the story sound more relevant than it is, by framing it as if they have something to say about "America's upper class", when the data they look at consists only of a tiny subset of extreme outliers.

firstOrder 13y ago

The first paragraph says: > The popular view of America's upper class is that of an ossified aristocracy. But research from the National Bureau of Economic Research shakes up this view, at least among America's richest individuals. Not much has shaken up this view. Half of the list inherited $400 million or more upon turning 18. Even the other half of the list are from among a small percentage of America's upper middle class. #1 Bill Gates. Father a wealthy lawyer. His grandfather was a national bank president. He went to an elite private grammar school, which had teletypes and computer timesharing back in the 1960s. His mother was on the board of United Way with the CEO of IBM - a helpful thing for a son who became a billionaire by riding IBM's coattails. Despite all of this, he is still on the bootstrapped, self-made side of the F400 list. He is not one of the heirs. Next is Warren Buffett. His father was a congressman. His grandfather owned a string of stores. And so on. The rest of the top ten are the Waltons, who inherited Wal-Mart on birth, the Koch brothers, who inherited an oil company on birth, plus Larry Ellison and Michael Bloomberg. Ellison and Bloomberg are the only middle class people on the list. I do think there are new trends happening at this level, but they don't point to what the blog post authors are pointing to.

morley 13y ago
The article goes on to address your point. From the article: During the period the researchers investigated, the number of individuals on the Forbes 400 who were the first in their family to run a business rose from 40% to 69%. Sixty percent of individuals on the list grew up wealthy in 1982 while only 32% did in 2011.
- stormbrew 13y ago
  This strikes me as likely to be just a delayed propagation of the increase in upward mobility seen in the post-war years. It seems entirely reasonable for that to take a couple of generations of people building on their parent's wealth accumulation to propagate upwards to the very top. How many of those people's success could you trace back to the GI bill? Gates' father attended university because of it, for example.
  - 13y ago

pc86 13y ago

> America’s .0001% is becoming more meritocratic, but the means of a middle class background remain a necessary launching board. Doesn't this directly contradict the preceding statement that those "born into poverty stayed level at 20%?" Maybe I'm being too pedantic with my interpretation of "necessary" but 20% seems a sizable chunk.

programminggeek 13y ago

> The economic story of the past decades is supposed to be the death of the American Dream. Income inequality has risen, the wealth of the middle class stagnated, and stories of the poor working their way to prosperity became just stories. I think the article doesn't really do a good job to change that view. The inequality has risen and the wealth of the middle class has stagnated. This is absolutely true. Things like raises are no longer the norm, bonuses in many jobs have disappeared, prices and debt have risen much faster than the rise in income. At the same time, wealthy people continue to grow their wealth. The fact the top 0.0001% gained their wealth not by inheriting it doesn't change what is happening to the poor, middle class, etc. as a result.

Samuel_Michon 13y ago
> The top 0.0001% gained their wealth not by inheriting it How did you come to that conclusion? I looked for that in the figures, but I couldn’t find what percentage came into money from an inheritance. Perhaps it’s placed in the 12% ‘Diversified/Other’ category, but the impression I got from the article was that they tallied how the money was earned in the first place, not where the ones holding the purse got it from. I believe your interpretation of the article in this aspect is incorrect. For instance, 4 of the top 10 spots are taken up by members of the Walton family. Those people inherited their wealth from Bud and Sam Walton, the founders of Wal*Mart. http://en.wikipedia.org/wiki/Walton_family http://en.wikipedia.org/wiki/Walton_family
- alnis 13y ago
  From the article: > Kaplan and Rauh find that America’s wealthiest are no longer a collection of Rockefellers and Carnegies. During the period the researchers investigated, the number of individuals on the Forbes 400 who were the first in their family to run a business rose from 40% to 69%. Sixty percent of individuals on the list grew up wealthy in 1982 while only 32% did in 2011. > Although being born into wealth is less and less necessary for admission to the club of America’s wealthiest individuals, ...
  - Samuel_Michon 13y ago

scotty79 13y ago

Surest way is real estate. Just buy real estate and rent it. Repeat over 3 or 4 generations. Congratulations. You created a rich family. All other ways involve luck.

cylinder 13y ago
What you're saying is "The surest way to get rich is to be rich." Real estate is just a way to invest money you already have. It doesn't generate wealth unless you have access to capital and can put deals together to develop properties and take a chunk. But that might as well put you in the "Finance" category.
- scotty79 13y ago
  You can build real estate gradually, starting with one, two, three apartments paid for with your job and rent your tenants pay. At some point, pretty early you could stop working but if you don't you can buy additional apartments faster. During first generation, I think, you could buy around 10 if you have a good job. Your children will be able buy faster, their grandchildren even faster.
  - deleted 13y ago
    [deleted]
  - erichocean 13y ago
    A friend of mine from college had parents that started from scratch and bought and rented ~1200 homes in Indiana during their working years. So, it can be done.
msellout 13y ago
The stock market has performed better than real estate over the same 4 generations.

yodsanklai 13y ago

"America’s .0001% is becoming more meritocratic" They make it sounds it should be comforting somehow. But I don't think it makes any difference. Does it matter whether they won the lottery, inherited, or "earned" their money? the fact is that very few people own much of the wealth.

sigil 13y ago

It's also hard to stay on top, and it gets harder the closer you are: the turnover of individuals in these extreme upper brackets is high [0]. The composition of the very top income groups changed dramatically over time. Less than half (39% or 42% depending on the measure) of those in the top 1% in 1996 were still in the top 1% in 2005. Less than one-fourth of the individuals in the top 1/100th percent in 1996 remained in that group in 2005. [0] http://ntj.tax.org/wwtax/ntjrec.nsf/F95C00D9840D35F2852575F40047B159/$FILE/Article%2005-Auten(F).pdf http://ntj.tax.org/wwtax/ntjrec.nsf/F95C00D9840D35F2852575F4...

humanrebar 13y ago
Year-to-year income of the top 1% is probably a poor measure of "staying on top". I would like to see those numbers controlled for wealth. Some of those people whose incomes move in and out of the top 1% are just in boom-or-bust jobs or own boom-or-bust businesses or investments. Others are big earners who recently retired to extremely comfortable fixed incomes. Neither category really fits what I would think of as someone losing his or her "on top" status. On the other hand, moving from a high-income high cost-of-living area (SF or NYC) to a lower-income, low cost-of-living area (Boulder, KC, or Charlotte) will technically move you out of the 1% while improving your standard of living.

Yhippa 13y ago

> the rising share of the Forbes 400 List accounted for by technology and finance supports theories that explain America’s rising income inequality by how technology has favored the accumulation of wealth and made certain sectors more scaleable. Tech moguls like Mark Zuckerberg and Sergey Brin account for a rising share of new fortunes. Reading that reminded me of this: http://www.theonion.com/articles/economists-advise-nations-poor-to-invent-the-next,33573/ http://www.theonion.com/articles/economists-advise-nations-p...

holograham 13y ago

I am curious on this articles definition of poverty. The statement that 20% of the forbes 400 was born in poverty is insufficient on it's own. More telling would be that percentage compared to the percentage of poor in America. That number could be very favorable (or very unfavorable) depending on the metric for poverty used.

anovikov 13y ago

You somehow forget that less than 20% of Americans live, or are born into poverty. With 20% of Forbes list having poverty background, this kind of, means that if you are poor in childhood, you have higher chances to get to Forbes list than if you are middle (well, really middle) class. Hard to explain. Maybe because poor have nothing to lose so they are more prone to risky things that stand at the root of their business? Or reverse, they have medicaid so can afford more risk being less dependent on employers paying for their health insurance?

anovikov 13y ago
I think i understood why is this. Middle class kids are usually taught by their parents to obey the rules, learn and work hard and be loyal. Which is a way to keep in the middle class but hardly a way get to upper class. Most poor kids are probably not taught by their parents anything because parents are busy drinking and smoking pot, except the very valuable teaching of not trusting anyone at all.

balsam 13y ago

My favorite use of extreme statistics to justify the superiority of one culture over another is Nobel Prizes per capita. #sarcasm http://en.wikipedia.org/wiki/List_of_countries_by_Nobel_laureates_per_capita http://en.wikipedia.org/wiki/List_of_countries_by_Nobel_laur...

adsr 13y ago

Is 0.0001% really that useful for drawing any conclusions at all. I mean it's one in a million.

deleted 13y ago

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twoodfin 13y ago
Why should it?

joeldidit 13y ago

The 0.0001% made their money from oil, tech, and the stock market. Simple. If you want to make that kinda money these days, then you have to get into the tech industry.

anovikov 13y ago

I wonder how are things going in U.K. in this respect? Their upper class must be mostly still with roots from 1066AD?