Family Wealth Starts to Eclipse Earned New Wealth

[FayeforCure]

Remember that quintessential American saying: "they got there through hard work"?

No so anymore.

So how did the uber-rich get there?

Are we entering the age of inherited wealth?

September 25, 2011


The release of the latest Forbes 400 List of Americans is, once again, being billed as a triumph of self-made wealth.

Bill Gates, Warren Buffett and Larry Ellison â€" all self-made â€" topped the list, once again. And Forbes heralds that fact that “a record 70% of the Forbes listers are self-made.”

Yet their announcement obscures the fact that half of the top 10 on the Forbes list have inherited all or some of their wealth, making America’s billboard chart of opportunity look increasingly like the the lucky sperm club.

The Walton Family fortune towers over all others on the list. Christy Walton has a listed worth of $24.5 billion, Jim Walton has a listed worth of $21.1 billion, Alice Walton has a listed worth of $20.9 billion, and Robson Walton has a listed worth of $20.5 billion.

Yet if the Waltons were counted as a single family fortune â€" like many others on the list â€" they would have $87 billion, making them the richest family in America. They would easily surpass Bill Gates at the top of the list, with $59 billion. As he and Mr. Buffett give away more of their fortunes to charity, the individual Waltons could well wind up cracking the top five.

Along with the Waltons, we have the Koch brothers. They inherited the predecessor to Koch Industries from their dad. To their credit, they grew their fortune into much larger businesses, while lots of people inherit businesses and ruin them. Still, it would be a stretch to say the Koch brothers are entirely “self made.”

The rise of the heirs on the Forbes list signals a larger worry, however.  America may not be able to create new wealth the way it has for the past 20 years.  All of the forces that drove billionaire creation â€" strong economic growth, a 20-year-bull market, huge technological change and investment â€" are weakening.  We will still create new billionaires, with the occasional Zuckerbergs keeping the flame alive.

Yet preserved family wealth may well start eclipsing earned new wealth.  It’s possible that we could be heading into a period like the 1930s, 40s and 50s, when most of the large wealth in America came from one of two places â€" oil and trust funds.

I hope I’m wrong.

Do you think inherited wealth will outshine earned wealth on the Forbes list?

Attribution:

Are We Entering the Age of Inherited Wealth?
Robert Frank
September 22, 2011
The Wall Street Journal
http://blogs.wsj.com/wealth/2011/09/22/are-we-entering-the-age-of-inherited-wealth/?mod=WSJBlog

http://www.estateofdenial.com/2011/09/25/are-we-entering-the-age-of-inherited-wealth/

[BridgeTroll]

Your subject headline is sensational, emotional... and wrong...

Yet preserved family wealth may well start eclipsing earned new wealth.  It’s possible that we could be heading into a period like the 1930s, 40s and 50s, when most of the large wealth in America came from one of two places â€" oil and trust funds.

I hope I’m wrong.

In another thread you showed where 68% of millionaires are new ones... not too bad.

[FayeforCure]

Your subject headline is sensational, emotional... and wrong...

Yet preserved family wealth may well start eclipsing earned new wealth.  It’s possible that we could be heading into a period like the 1930s, 40s and 50s, when most of the large wealth in America came from one of two places â€" oil and trust funds.

I hope I’m wrong.

In another thread you showed where 68% of millionaires are new ones... not too bad.

BT, thank you again for giving me the opportunity to be a teacher..........lets examine what the article says and see if the topic title actually applies:

The article states this :

half of the top 10 on the Forbes list have inherited all or some of their wealth

Hmmm sounds to me that justifies the "sensational, emotional" headline, especially since it's observed as an ongoing trend.

[BridgeTroll]

The release of the latest Forbes 400 List of Americans is, once again, being billed as a triumph of self-made wealth.

Bill Gates, Warren Buffett and Larry Ellison â€" all self-made â€" topped the list, once again. And Forbes heralds that fact that “a record 70% of the Forbes listers are self-made.”

Shocking.  New self made millionaires have less money than family dynasties??  Hold the freeking phone!!  I just passed that little nugget of "learning" to my boss across the room!!!  His eyes literally popped right out of his head... He is actually crawling around on the floor trying to find em... It is pretty funny... the whole office is cracking up!

[FayeforCure]

The release of the latest Forbes 400 List of Americans is, once again, being billed as a triumph of self-made wealth.

Bill Gates, Warren Buffett and Larry Ellison â€" all self-made â€" topped the list, once again. And Forbes heralds that fact that “a record 70% of the Forbes listers are self-made.”

Shocking.  New self made millionaires have less money than family dynasties??  Hold the freeking phone!!  I just passed that little nugget of "learning" to my boss across the room!!!  His eyes literally popped right out of his head... He is actually crawling around on the floor trying to find em... It is pretty funny... the whole office is cracking up!

Cute.........VERY cute. You just gave my stomach mucles a great work-out 

Let me give a you a slightly larger quote signaling the most important message in the article, which is a dismal treand for America and the supposed land of opportunity:

Yet their announcement obscures the fact that half of the top 10 on the Forbes list have inherited all or some of their wealth, making America’s billboard chart of opportunity look increasingly like the the lucky sperm club.

The Walton Family fortune towers over all others on the list. Christy Walton has a listed worth of $24.5 billion, Jim Walton has a listed worth of $21.1 billion, Alice Walton has a listed worth of $20.9 billion, and Robson Walton has a listed worth of $20.5 billion.

Yet if the Waltons were counted as a single family fortune â€" like many others on the list â€" they would have $87 billion, making them the richest family in America. They would easily surpass Bill Gates at the top of the list, with $59 billion. As he and Mr. Buffett give away more of their fortunes to charity, the individual Waltons could well wind up cracking the top five.

Along with the Waltons, we have the Koch brothers. They inherited the predecessor to Koch Industries from their dad. To their credit, they grew their fortune into much larger businesses, while lots of people inherit businesses and ruin them. Still, it would be a stretch to say the Koch brothers are entirely “self made.”

The rise of the heirs on the Forbes list signals a larger worry, however.  America may not be able to create new wealth the way it has for the past 20 years.  All of the forces that drove billionaire creation â€" strong economic growth, a 20-year-bull market, huge technological change and investment â€" are weakening. 

[mtraininjax]

All wealth starts with growth in a business. Rockefeller had it with Oil, Carnegie with Steel, Gould with Railroads, Buffett has the same with his Berskshire businesses, all growth businesses. Wal-Mart was a growth business, but when buying stuff online is easier than travelling to a store, their model will be busted. I don't see wealth inherited more now than 100 years ago, but the industries have changed. Gone are the Industrial days when you needed 2000 people in a car factory, now we see 10% of that number. Multiply that across other labor businesses, sprinkle in technology, you get a lot more people out of work. It is important to note that most of the wealthy make money at the expense of the uneducated worker. Shows the value of education at a higher level.

[Captain Zissou]

Faye, your second quote actually supports your argument.  Your first quote does the opposite. 

I'd love for there to be a "How to use articles to support your argument" lecture for metjax posters.  Most of the time, people use an article that claims "20% of Americans unhappy with their breakfast" and they use that to make the point that "American's contemplate abolishing breakfast due to overwhelming dissatisfaction".  Also, that would be a less emotive title than the majority of threads on this forum.  What I would use that article to illustrate is that 80% of American's are at least not displeased with their breakfast. 

So, in an article that claims that of 70% of our nation's wealthiest people are self made, you make a claim that inherited wealth eclipses earned wealth.  You base this claim initially on the fact that 7 people inherited their wealth.  Lucky for you and me, even the richest 7 people ever to walk the earth can't prevent us from making a living here in America. 

Thankfully you included the point that we no longer are in a sustained bull market (that means the market is doing well, just FYI), which will in fact make it more difficult for self made people to really grow their wealth.  Without that point you were actually arguing to the contrary of the headline you created.

[Captain Zissou]

All wealth starts with growth in a business. Rockefeller had it with Oil, Carnegie with Steel, Gould with Railroads, Buffett has the same with his Berskshire businesses, all growth businesses. Wal-Mart was a growth business, but when buying stuff online is easier than travelling to a store, their model will be busted. I don't see wealth inherited more now than 100 years ago, but the industries have changed. Gone are the Industrial days when you needed 2000 people in a car factory, now we see 10% of that number. Multiply that across other labor businesses, sprinkle in technology, you get a lot more people out of work.

Well said.

[finehoe]

So, in an article that claims that of 70% of our nation's wealthiest people are self made, you make a claim that inherited wealth eclipses earned wealth. 

And you are making the claim that because these people are "self-made" that they must have started out as poor and penniless.  Nothing could be further from the truth.  Half of those on the Forbes 400 list started their economic careers by inheriting businesses or substantial wealth. Of these, most inherited sufficient wealth to put them immediately into Forbes' heaven. Only three out of ten on the Forbes list can be regarded as self-starters whose parents did not have great wealth or own a business with more than a few employees. These people were born on third base and we're supposed to be impressed because they made it to home?

What proportion of the Forbes 400 established successful companies? Perhaps a quarter. We lack data on employment and other benefits of these enterprises.

Rather than concocting fables about our supposed "opportunity society," the editors of Forbes really ought to be examining the starting-gate advantages that the bulk of the Forbes 400 enjoyed. And while they're at it, perhaps they could delve into a few other questions: Exactly how does the great wealth of a very few benefit ordinary people? Do great concentrations of wealth block out opportunities for others to innovate? Do the consumption patterns of the wealthy distort the values and ambitions of many others? Are materialism and commercialism promoted by the display of enormous wealth? Is the power of big money corrupting political democracy?

[manasia]

So, in an article that claims that of 70% of our nation's wealthiest people are self made, you make a claim that inherited wealth eclipses earned wealth. 

And you are making the claim that because these people are "self-made" that they must have started out as poor and penniless.  Nothing could be further from the truth.  Half of those on the Forbes 400 list started their economic careers by inheriting businesses or substantial wealth. Of these, most inherited sufficient wealth to put them immediately into Forbes' heaven. Only three out of ten on the Forbes list can be regarded as self-starters whose parents did not have great wealth or own a business with more than a few employees. These people were born on third base and we're supposed to be impressed because they made it to home?

What proportion of the Forbes 400 established successful companies? Perhaps a quarter. We lack data on employment and other benefits of these enterprises.

Rather than concocting fables about our supposed "opportunity society," the editors of Forbes really ought to be examining the starting-gate advantages that the bulk of the Forbes 400 enjoyed. And while they're at it, perhaps they could delve into a few other questions: Exactly how does the great wealth of a very few benefit ordinary people? Do great concentrations of wealth block out opportunities for others to innovate? Do the consumption patterns of the wealthy distort the values and ambitions of many others? Are materialism and commercialism promoted by the display of enormous wealth? Is the power of big money corrupting political democracy?

+1

[manasia]

All wealth starts with growth in a business. Rockefeller had it with Oil, Carnegie with Steel, Gould with Railroads, Buffett has the same with his Berskshire businesses, all growth businesses. Wal-Mart was a growth business, but when buying stuff online is easier than travelling to a store, their model will be busted. I don't see wealth inherited more now than 100 years ago, but the industries have changed. Gone are the Industrial days when you needed 2000 people in a car factory, now we see 10% of that number. Multiply that across other labor businesses, sprinkle in technology, you get a lot more people out of work. It is important to note that most of the wealthy make money at the expense of the uneducated worker. Shows the value of education at a higher level.

+1

[Captain Zissou]

Exactly how does the great wealth of a very few benefit ordinary people? Do great concentrations of wealth block out opportunities for others to innovate? Do the consumption patterns of the wealthy distort the values and ambitions of many others? Are materialism and commercialism promoted by the display of enormous wealth? Is the power of big money corrupting political democracy?

These are more relevant questions. 

The wealth described in the list is all but unattainable.  Even if you were born with $50M in your pocket, the chances of you making the list are still slim to none.  Granted you do have a much better chance. 

The big question is are these people preventing others from at least making a decent living?  Is there too much political influence held by the uber rich?  Are the barriers to entry now too high for the common man to compete?

I will never make the list, nor will I come anywhere close, so the demographics of the people on it aren't something I really care about.  I would like to create a decent sized nest egg, so any way that their wealth affects me would me more pertinent info.

[BridgeTroll]

I will never make the list, nor will I come anywhere close, so the demographics of the people on it aren't something I really care about.  I would like to create a decent sized nest egg, so any way that their wealth affects me would me more pertinent info.

The answer is boring... but true.  Go to school... work hard... save money... stay out of debt (except for home)... stop buying things you want and save for what you need.

Dorkiest guy on radio...

http://www.clarkhoward.com/

[Captain Zissou]

I will never make the list, nor will I come anywhere close, so the demographics of the people on it aren't something I really care about.  I would like to create a decent sized nest egg, so any way that their wealth affects me would me more pertinent info.

The answer is boring... but true.  Go to school... work hard... save money... stay out of debt (except for home)... stop buying things you want and save for what you need.

Dorkiest guy on radio...
http://www.clarkhoward.com/

That's what I'm doing.  Doubt I'll ever have more than two commas in my net worth (if I even get that far).

[BridgeTroll]

I will never make the list, nor will I come anywhere close, so the demographics of the people on it aren't something I really care about.  I would like to create a decent sized nest egg, so any way that their wealth affects me would me more pertinent info.

The answer is boring... but true.  Go to school... work hard... save money... stay out of debt (except for home)... stop buying things you want and save for what you need.

Dorkiest guy on radio...
http://www.clarkhoward.com/

That's what I'm doing.  Doubt I'll ever have more than two commas in my net worth (if I even get that far).

You will... keep doing what your doing.  It is a slow process... some make it quicker... but most who stick with the basic plan get there.